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Metso's Interim Review January 1 - March 31, 2014. Presentation.
Metso reported orders received of EUR 875 million in Q1 2014, down 15% year-over-year due to currency fluctuations. Net sales totaled EUR 817 million, down 11% year-over-year. EBITA before non-recurring expenses was EUR 88 million, or 10.7% of net sales. Orders from the US and Canada increased while orders from China grew in Mining and Construction. Mining and Construction net sales declined 15% to EUR 631 million due to lower volumes, but margins were maintained. Automation reported stable margins and cost savings.
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Metso's Interim Review January 1 - March 31, 2014. Presentation.
- 1. Matti Kähkönen, Presidentand CEO Harri Nikunen, CFO April 24, 2014
- 2. © Metso© Metso Forwardlooking statements It should be noted that certain statements herein which are not historical facts, including, without limitation, those regarding expectations for general economic development and the market situation, expectations for customer industry profitability and investment willingness, expectations for company growth, development and profitability and the realization of synergy benefits and cost savings, and statements preceded by ”expects”, ”estimates”, ”forecasts” or similar expressions, are forward-looking statements. These statements are based on current decisions and plans and currently known factors. They involve risks and uncertainties which may cause the actual results to materially differ from the results currently expected by the company. Such factors include, but are not limited to: 1) general economic conditions, including fluctuations in exchange rates and interest levels which influence the operating environment and profitability of customers and thereby the orders received by the company and their margins 2) the competitive situation, especially significant technological solutions developed by competitors 3) the company’s own operating conditions, such as the success of production, product development and project management and their continuous development and improvement 4) the success of pending and future acquisitions and restructuring. 2
- 3. © Metso© Metso 1.Quarterly highlights 2. Metso value creation 3. Financial performance 4. Outlook and guidance Content 3
- 4. © Metso© Metso •We are committed to taking personal responsibility for our own safety and for the safety of others • All incidents can be prevented • Our LTIF has been trending down Safety is our top priority 4 LTIF = Lost time incident frequency (per million working hours) NMF= Near miss and risk observation frequency (per million working hours) Target: LTIF less than 1 Long term occupational safety target: LTIF 0 Our lost time incident frequency in 2013 was 4.2 0 50 100 150 200 250 300 350 400 0 2 4 6 8 10 12 14 16 Lost time incident frequency(LTIF) Nearmiss and riskobservationfrequency(NMF)
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- 6. © Metso© Metso •Oil and gas demand remained strong; construction is recovering • Services business picked up sequentially • Demand for mining equipment and projects seems to be bottoming out • Profit improvement program proceeded according to plan • Fluctuation of currencies had a significant impact on net sales and order intake • Orders received totaled EUR 875 million (EUR 1,031 million), of which EUR 545 million (EUR 589 million) were services orders • Net sales totaled EUR 817 million (EUR 915 million), of which services accounted for EUR 438 million (EUR 466 million) • EBITA before non-recurring expenses was EUR 88 million and 10.7% of net sales (EUR 103 million and 11.2%) • In April, Metso Board rejected approach by The Weir Group Quarterly highlights 6 Figures in the brackets refer to same period last year unless otherwise stated
- 7. © Metso© Metso Orderintake Metso 7 Automation Mining and construction Metso 558 550 563 637 767 826 850 838 1,117 1,466 1,055 828 1,168 1,100 965 982 1,031 968 825 885 875 0 200 400 600 800 1,000 1,200 1,400 1,600 2009 2010 2011 2012 2013 2014 EUR million Services ordersreceived Capital ordersreceived 2,307 3,281 4,466 4,215 3,709 0 1,000 2,000 3,000 4,000 5,000 2009 2010 2011 2012 2013 EUR million Services ordersreceived Capital ordersreceived 155 134 129 159 177 177 174 167 220 225 179 197 224 225 191 206 254 239 200 209 252 0 50 100 150 200 250 300 2009 2010 2011 2012 2013 2014 EUR million Services ordersreceived Capital ordersreceived 414 423 449 491 608 660 686 688 914 1,263 886 651 964 891 787 794 786 743 635 691 624 0 200 400 600 800 1,000 1,200 1,400 2009 2010 2011 2012 2013 2014 EUR million Services ordersreceived Capital ordersreceived
- 8. © Metso© Metso Orderintake by country 8 • Orders from the US and Canada were significantly higher • Orders from China grew in Mining and Construction • No big project orders from South America EUR million Q1/2014 Q4/2013 Change % % of all orders USA 135 114 19 15 China 75 51 47 9 Brazil 70 94 -24 8 Canada 54 27 100 6 Australia 48 45 7 5 Finland 38 42 -11 4 Chile 37 135 -72 4 India 35 25 40 4 Russia 30 27 11 3 Sweden 27 23 17 3
- 9. © Metso© Metso 2,9023,018 3,672 4,282 3,858 0 1,000 2,000 3,000 4,000 5,000 2009 2010 2011 2012 2013 EUR million Services net sales Capital net sales 735 746 685 736 647 726 748 898 744 871 901 1,156 959 1,1161,075 1,132 915 988 937 1,018 817 0 200 400 600 800 1,000 1,200 1,400 1,600 2009 2010 2011 2012 2013 2014 EUR million Services net sales Capital net sales Net sales Metso 9 Automation Mining and construction Metso 177 180 152 166 146 156 151 198 165 176 185 244 182 232 211 233 184 207 214 249 186 0 50 100 150 200 250 300 2009 2010 2011 2012 2013 2014 EUR million Services net sales Capital net sales 568 581 540 579 509 584 609 717 592 711 736 928 787 899 882 924 744 800 742 784 631 0 200 400 600 800 1,000 2009 2010 2011 2012 2013 2014 EUR million Services net sales Capital net sales
- 10. © Metso© Metso* Before non-recurring items EBITA* and EBITA* margin 10 EBITA-% target range EBITA* % Q1/2014 Q1/2013 Mining and Construction 11.4 12.3 Stable margins, lower volumes Automation 10.5 8.8 Stable margins, cost savings Metso total 10.7 11.2 Reasonably good result in this market environment 292 328 399 486 496 10.1 10.9 10.9 11.4 12.8 0 2 4 6 8 10 12 14 0 100 200 300 400 500 600 FY FY FY FY FY 2009 2010 2011 2012 2013 % EBITA * EBITA* % 80 65 89 59 61 74 86 107 67 75 107 149 83 136 129 138 103 118 129 147 88 10.8 8.7 13.0 8.0 9.4 10.2 11.6 11.9 9.1 8.7 11.9 12.9 8.7 12.2 12.0 12.2 11.2 11.9 13.7 14.4 10.7 0 2 4 6 8 10 12 14 16 18 0 50 100 150 200 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2009 2010 2011 2012 2013 2014 %EUR million EBITA * EBITA* %
- 11. © Metso© Metso •Significant shareholder value has been created through the demerger • Both Metso and Valmet share prices have shown positive development • We will continue leveraging our • unrivaled services presence and capabilities • strong global market positions to capitalize on growth opportunities • competitive advantage through a unique combined offering • ongoing profit improvement and capital efficiency programs • strong financial track record Metso value creation 11
- 12. © Metso© Metso Ourvalue creation platform 12 * Before taxes Well-positioned to benefit from long-term growth trends Global footprint, with leading positions in all the markets we serve Services-driven business model Competitive advantage through unique combined offering Strong financial track record to support superior performance Assets Strategy Targets ≥ 30% ROCE % * 11-16% EBITA margin > 10% p.a. Services sales > Market growth Sales growth Services Technology offering Growth countries Operational excellence People and leadership
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- 14. © Metso© Metso Groupkey figures 14 * Before non-recurring items ** Q1/2014 includes non-recurring expenses of EUR 6.6 million and FY 2013 of EUR 54 million EUR million Q1/2014 Q1/2013 Change % 2013 Orders received 875 1,031 -15 3,709 without currency impact -8 Services orders received 545 589 -7 2,038 without currency impact 2 Net sales 817 915 -11 3,858 without currency impact -3 Services net sales 438 466 -6 1,976 % of net sales 54 51 51 EBITA * 88 103 -15 496 % of net sales 10.7 11.2 12.8 EBIT ** 76 98 -22 423 Earnings per share, EUR 0.28 0.38 1.59
- 15. © Metso© Metso 103 88 -36 5 17-1 0 20 40 60 80 100 120 Q1/2013 EBITA* Volume Margin S,G&A Others Q1/2014 EBITA* EUR million Stable margins and visible cost savings 15 * Before non-recurring items
- 16. © Metso© Metso Balancesheet key figures 16 • Our capital structure and financial position remains strong Q1/2014 Q1/2013 2013 14.9 18.2 19.0 14.3 17.0 18.6 42.8 32.7 41.6 114 84 105 48.9 49.4 47.0 1.2 0.8 1.0 6.9 7.7 9.2Interest cover (EBITDA) Return on equity (ROE), % Return on capital employed (ROCE) before taxes, % Gearing at the end of the period, % Cash conversion, % Debt to capital, % Net debt / EBITDA * All figures annualised but cash conversion
- 17. © Metso© Metso Indebtednessand net working capital 17 Net working capitalNet debt and gearing 377 370 491 458 28.4 32.7 41.6 42.8 0.0 10.0 20.0 30.0 40.0 50.0 60.0 0 100 200 300 400 500 600 2012 Q1/2013 2013 Q1/2014 %EUR million Net debt Gearing 702 765 651 652 16.4 18.0 16.9 17.1 10 12 14 16 18 20 0 100 200 300 400 500 600 700 800 2012 Q1/2013 2013 Q1/2014 % EUR million Net working capital, EUR NWC, as % of net sales
- 18. © Metso© Metso18 *Before non-recurring items ** Excluding cash and other non-operative balance sheet items, annualized Mining and Construction key figures Q1/2014 vs. Q1/2013 • Margins have held up well and fixed costs are under control • Decline in net sales had a negative impact on results EUR million Q1/2014 Q1/2013 Change % 2013 Orders received 624 786 -21 2,855 without currency impact -12 Services orders received 413 471 -12 1,616 Net sales 631 744 -15 3,070 without currency impact -7 Services net sales 347 383 -10 1,579 % of net sales 55 52 51 EBITA * 72 91 -21 401 % of net sales 11.4 12.3 13.1 Return on operative capital employed ** 19.0 25.3 25.1
- 19. © Metso© Metso Miningand Construction Rolling 12-month net sales and EBITA%* 19 * Before non recurring items 0 2 4 6 8 10 12 14 16 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014 % EUR million Services net sales, rolling 12 months Capital net sales, mining, rolling 12 months Capital net sales, construction, rolling 12 months EBITA% *, rolling 12 months
- 20. © Metso© Metso *Before non-recurring items ** Excluding cash and other non-operative balance sheet items, annualized Automation key figures 20 Q1/2014 vs. Q1/2013 • Net sales up 6% and services 12% with constant currencies • Lower fixed costs • 5% higher order backlog EUR million Q1/2014 Q1/2013 Change % 2013 Orders received 252 254 -1 902 without currency impact 4 Services orders received 132 118 12 422 Net sales 186 184 1 854 without currency impact 6 Services net sales 91 83 10 398 % of net sales 49 45 47 EBITA * 20 16 22 116 % of net sales 10.5 8.8 13.6 Return on operative capital employed ** 26.5 19.9 38.5
- 21. © Metso© Metso Automation Rolling12-month net sales and EBITA%* 21 * Before non-recurring items 0 2 4 6 8 10 12 14 16 18 0 100 200 300 400 500 600 700 800 900 1,000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014 % EUR million Services net sales, rolling 12 months Capital net sales, rolling 12 months EBITA% *, rolling 12 months
- 22. © Metso© Metso •Program was announced in autumn 2013 • We are responding to the soft market environment in mining and adjusting to the new Group structure • The current scope encompasses headcount reduction of 1,300-1,400 • Targeted gross savings total EUR 120-130 million • Completion rate is 60%, targeting full completion by the end of 2014 • Savings to be fully achieved in H1/2015 Profit improvement program proceeding according to plan 22
- 23. © Metso© Metso Majorstructural changes in headcount during 2013 and Q1/2014 23 Headcount December 31, 2012 16,612 Acquisitions + 623 Divestments - 326 Headcount after structural changes 16,909 Profit improvement program and other changes - 711 Headcount March 31, 2014 16,198 Reduction in Europe and North America ~ 900 Increase in emerging markets ~ 530
- 24. Outlook and guidance MattiKähkönen President and CEO
- 25. © Metso© Metso Marketoutlook 55% of net sales 55% service intensity Current demand: • Weak for the equipment and project business • Services good 20% of net sales 40% service intensity Current demand: • Satisfactory for the equipment and services 22% of net sales 45% service intensity Current demand: • Good in oil and gas; satisfactory in pulp and paper • Services good 3-6 months market outlook Equipment Services Equipment Services 25 Equipment Services Mining Construction Automation
- 26. © Metso© Metso Orderbacklog 26 • Backlog about EUR 300 million lower than a year ago • 83% of the backlog expected to be recognized as sales during 2014 • Services account for 40% of the backlog for 2014 • Backlog is overall healthy with no major cancellations or delays 1,731 2,506 2,324 2,475 1,927 1,944 0 1,000 2,000 3,000 2010 2011 2012 Q1 2013 2013 Q1 2014 EUR million Mining and Construction Automation Deliveries in 2014 Deliveries after 2014 Deliveries in 2013 Deliveries after 2013 0 500 1,000 1,500 2,000 2,500 3,000 Order backlog Mar 31, 2013 Order backlog Mar 31, 2014 EUR million
- 27. © Metso© Metso27 Basedon our market outlook, backlog for 2014, current exchange rates and ongoing cost-efficiency actions, we estimate that • our net sales in 2014 will be somewhat below 2013 • and EBITA margin before non recurring items for 2014 will be at around 12% Guidance for 2014
- 28. company/metso metsogroup metsoworldmetsoworldmetsogroup www.metso.com