September 22, 2010 9.00 am EET
Today Outokumpu's Capital Markets Day for investors and analysts is held in London. The programme includes a review of Outokumpu's strategy, presentations on Outokumpu's latest investments and an external presentation on the ferrochrome markets. Outokumpu's strategic direction remains the same, but there are some adjustments in priorities of the strategy and its implementation.
The company's vision 'to be the undisputed number one in stainless steel' remains unchanged. The number one position means, first-of-all, the best financial performance in the industry. This is targeted by becoming the industry leader in customer satisfaction, the most efficient and environmentally friendly in operations and the most attractive employer.
CEO Juha Rantanen: "Outokumpu's strategy is targeting better and more stable profitability and good customer satisfaction. The adjustments in our priorities emphasise utilisation of Tornio's cost competitiveness in high-volume products as well as fast transformation to special grades and products. Our short-term focus is on efficient and speedy strategy execution followed up by certain key performance indicators. The long-term growth in demand for stainless steel is supported by several global trends - urbanisation and need for clean energy and water - which makes this a fascinating business."
The adjusted strategic priorities are focusing on improving the performance of the current operations as well as putting more effort on developing future growth. The priorities on improving the performance are:
Loading Tornio with high-volume products
Due to its size, sufficient capacity utilisation is critical for sustainable profitability at Outokumpu's biggest production site in Tornio, Finland. Tight focus on high-volume products, utilising the plants cost-leadership in Europe and increasing productivity are key development areas in returning capacity utilisation to pre-crisis levels.
Fast transformation to special grades and products
Increasing sales of special grades and products continues to be in the core of Outokumpu's strategy. Special grades and products offer high growth potential and provide significant value for customers. Outokumpu's efforts to develop the market for duplex and other special grades will be accelerated and co-operation with end-user and project customers intensified.
Excel in sales and customer service
Increasing end-user and project sales, building stable relations with key distributors and processors and further investing in sales skills and own global service network are critical for the transformation to special grades and products as well as for Tornio's capacity utilisation.
Excel in operations
Safe working conditions and reliable production demonstrate the quality of operations. Outokumpu will continue its focus on operational excellence and long-term improvement work, which leads to less variability in production, cost savings in raw materials and procurement, lower inventory levels and safe and clean working environments.
The priorities developing future growth are:
Ferrochrome expansion
Outokumpu differentiates from its competitors by having its own chromium mine and ferrochrome production. The ability to source ferrochrome, an important stainless raw material, internally, brings Outokumpu unique cost savings in raw materials, energy and logistics. The doubling of the ferrochrome production will provide Outokumpu an attractive growth business as the company becomes a significant supplier for the external markets as well.
Growth outside Europe
The most attractive growth markets for stainless steel are outside Outokumpu's traditional home market in Europe. Outokumpu will continue to strengthen its global sales network and aims for the leading position in the global project-based, industrial applications. Longer term, the target is to increase Outokumpu's presence in high-growth markets and attractive opportunities will be considered.
Outokumpu's strategic direction is supported by the people strategy, which aims to attract, retain and develop the company's employees globally as well as to enhance the desire and capability to support Outokumpu in becoming the undisputed number one in stainless steel. The key development areas in the people strategy focus on leadership skills, execution capability and competence renewal.
Outokumpu's progress in the implementation of the strategy will be followed by strategic key performance indicators. They are in the areas of safety (lost-time injuries), profitability (EBIT), customer satisfaction (net-promoter score), delivery performance (on-time deliveries %) and inventory turnover.
Outokumpu's financial targets will remain unchanged. The main target is to generate maximum sustainable economic value added, and more specifically:
- Grow faster than markets
- Return on Capital Employed (ROCE) more than 13% and always the best among peers
- Gearing below 75%
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