Metso Interim Review Q3 2015 presentation

Metso Interim Review Q3 2015 presentation

• 1.
  Matti Kähkönen, Presidentand CEO Harri Nikunen, CFO October 22, 2015
• 2.
  © Metso Forward lookingstatements 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 0 50 100 150 200 250 300 350 400 0 2 4 6 8 10 12 14 Lost timeincident frequency (LTIF) Total number of lost time incidents 3 * LTIF September 2015 Safety is an important driver for success Continuous focus on our LTIF target of less than 1 leads to results • Demand from customers: license to play • Safe working environment for the whole personnel • Improved safety performance supports productivity • Actions leading to improvement  Active and visible management support  Safety being part of every decision  Safety included in incentive plans  Development of safety culture  Development of safe working methods  Learning from every incident LTIF 2.9 *
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  © Metso • Mining: -weak demand for new equipment - demand for services satisfactory, affected by miners’ cost cutting with large regional differencies • Aggregates: - both equipment and services demand has declined in the emerging markets - better demand in North America and Europe • Flow Control: - oil & gas project-related demand satisfactory - other process industries (e.g. pulp) stable Markets in brief 4 Orders received totaled EUR 647 million Excluding PAS 372 186 91 81 339 136 96 76 0 50 100 150 200 250 300 350 400 450 500 Minerals Services Minerals Capital Flow Control Services Flow Control Capital 2014 Q3 2015 Q3 -9% -27% +5% -6% EUR million
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  © Metso Orders receivedby market area Order intake in Q3/15 and change year-on-year (excluding PAS) 5 North America EUR 140 million, -3 % South and Central America EUR 125 million, -16 % Europe EUR 154 million, -11 % Africa and Middle East EUR 60 million, -34 % China EUR 36 million, -41% Asia-Pacific EUR 132 million, +19 % 51% from the emerging markets
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  © Metso Financial highlights •Good performance in a challenging market situation • Net sales declined largely due to lower equipment sales in Minerals • Minerals’ profitability holding up fairly well, thanks to mix and cost control • Very good profitability at Flow Control • Free cash flow increased to EUR 117 million (EUR 46 million) • Extra dividend of EUR 0.40 was paid at the beginning of August * Before non-recurring items6 Quarterly orders received, net sales and EBITA%* Current structure 791 834 727 721 738 823 647 757 885 799 921 733 756 680 11.4 13.7 12.4 13.0 10.6 12.4 13.6 0 2 4 6 8 10 12 14 16 0 200 400 600 800 1 000 1 200 1 400 1 600 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2014 2014 2014 2014 2015 2015 2015 Orders received Net sales Ebita-% %EUR million
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  © Metso • Ouroffering and competitiveness remain strong • Significant differences in market activity between regions • Minerals - Performance services orders at a good level - Miners’ cost cutting actions impact wear and spare business - Orders from Central and South America, excluding Brazil, increased - China and North America declined • Flow Control -Orders grew 5% (fastest growth was in pumps) Services development 7 Current structure Services orders and net sales Excluding PAS 500 500 463 446 507 495 436 410 476 459 525 440 483 435 0 100 200 300 400 500 600 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2014 2014 2014 2014 2015 2015 2015 Services orders received Services net sales EUR million
• 8.
  Harri Nikunen CFO Financial performance
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  © Metso Group keyfigures 9 *Before non-recurring items ** According to old structure EUR million Q3/2015 Q3/2014 Change % Q1-Q3/ 2015 Q1-Q3/ 2014 Change % 2014 Orders received 647 727 -11 2,207 2,353 -6 3,074 without currency impact -11 -11 Service orders received 436 464 -6 1,434 1,459 -2 1,905 without currency impact -5 -6 Net sales 680 799 -15 2,168 2,443 -11 3,363 without currency impact -16 -16 Services net sales 435 459 -5 1,365 1,344 1 1,883 without currency impact -4 -3 EBITA* 92 99 -7 265 306 -13 426 % of net sales 13.6 12.4 12.2 12.5 12.7 EBIT ** 76 72 5 488 250 95 351 Earnings per share**, EUR 0.29 0.26 12 2.60 0.89 192 1.25 Return on capital employed (ROCE) before taxes, annualized, %** 26.5 15.5 16.4 Free cash flow** 117 46 154 282 141 100 204 Current structure except when noted
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  © Metso Positive marginand SG&A impact on EBITA 10 * Before non-recurring items Note: Volume, margin and SG&A changes calculated with constant currencies. Currency impact is included in ’FX rates & Others’. Current structure, illustrative 306 265 0 50 100 150 200 250 300 350 Q3/2014 EBITA* Volume Margin S, G & A FX rates & Others Q3/2015 EBITA* EUR million
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  © Metso11 Gross marginsremain healthy Current structure • The mix has improved (services vs. equipment) • Margins in all businesses at a good level 211 252 240 261 222 235 224 27.9 28.4 30.0 28.3 30.3 31.2 32.9 0 5 10 15 20 25 30 35 0 50 100 150 200 250 300 350 400 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2014 2014 2014 2014 2015 2015 2015 EUR million Gross profit Gross margin
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  © Metso12 • Peoplecosts and spend down year-on-year • Total y-t-d 7% down in constant currencies • Biggest decline in the mining equipment business Actions to reduce SG&A continue Current structure 139 151 142 167 147 147 127 18.4 17.0 17.7 18.1 20.1 19.4 18.6 0 5 10 15 20 25 0 50 100 150 200 250 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2014 2014 2014 2014 2015 2015 2015 EUR million SGA SGA-%
• 13.
  © Metso Minerals quarterlyperformance 13 • Good profitability despite declining topline • Net sales of new equipment declined close to 40% • Gross margins held up well and SG&A declined overall 9% • Strong cash flow • Operational ROCE of 17.4% (18.9%) 597 662 558 544 558 642 475 608 706 619 743 563 560 501 11.3 13.6 11.9 13.5 9.9 10.8 11.2 0 2 4 6 8 10 12 14 16 0 100 200 300 400 500 600 700 800 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2014 2014 2014 2014 2015 2015 2015 EUR million Minerals orders received Minerals net sales Minerals EBITA-% %
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  © Metso Flow Controlquarterly performance 14 • Strong performance continued • Good gross margins and lower SG&A • Strong cash flow • Operational ROCE of 40.4% (34.9%) Current structure 194 172 172 178 179 181 172149 177 185 173 170 194 179 14.2 17.3 20.2 14.2 16.7 18.6 20.7 0 5 10 15 20 25 0 50 100 150 200 250 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2014 2014 2014 2014 2015 2015 2015 EUR million Flow Control orders received Flow Control net sales Flow Control EBITA-% %
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  © Metso Strong cashgeneration 15 EUR million Q1-Q3/15 Q1-Q3/14 Comments EBITDA 538 305 Adjustments -235 54 Change in net working capital 70 -54 Lower inventories and receivables Financial items and taxes, paid -79 -137 NET CASH FROM OPERATIONS 294 168 Capex on fixed assets -31 -46 FY 2015 well below FY 2014 Acquisitions and divestments 247 -19 PAS disposal Proceeds from (+)/Investments in (-) financial assets -50 1 NET CASH FROM INVESTING ACTIVITIES 166 -64 Cash flow from operations and investing activities 460 104
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  © Metso Capital employedand net working capital 16 EUR million Sep 30, 2015 Dec 31, 2014 Change Net working capital 592 681 -89 Tangible assets 345 398 -53 Intangible assets 552 560 -8 Other 160 176 -16 Cash 537 277 +260 TOTAL 2,186 2,092 94 Turnover 1.4 1.7 EUR million Sep 30, 2015 Dec 31, 2014 Change Inventories 752 842 -90 Trade receivables 486 645 -159 Trade payables -279 -333 +54 Advances + POC -155 -145 -10 Customer NWC 804 1,009 -205 Other -212 -328 +116 TOTAL 592 681 -89 % of net sales 19.2% 20.2% NWC declined thanks to lower inventories and receivablesLarger cash position increased capital employed
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  © Metso Solid balancesheet and financial position *Annualized **Excluding PAS17 EUR million Sep 30, 2015 Sep 30, 2014 Dec 31, 2014 Return on equity (ROE), % * 33.3 15.0 15.7 Return on capital employed (ROCE) before taxes, %* 26.5 / 17.1** 15.5 16.4 Gearing at the end of the period, % 15.0 49.6 45.6 Cash conversion, % 206 105 108 Debt to capital, % 37.4 42.8 41.2 Net debt / EBITDA * 0.3 1.5 1.3 Interest cover (EBITDA) 17.4 5.9 6.2
• 18.
  Matti Kähkönen President andCEO Outlook and guidance
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  © Metso 27% ofnet sales* of which 55% services Outlook: • Oil & gas-related project pipeline is soft; demand from other process industries remains stable • Good demand for replacements and services Short-term market outlook 19 46% of net sales* of which 75% services Outlook: • Weakness to continue in the equipment and systems business • A few large orders being negotiated; timing is uncertain • Demand for services satisfactory, impacted by miners’ cost actions 23% of net sales* of which 45% services Outlook: • Lower demand in the emerging markets compared to the US and Europe Mining Aggregates Flow Control *year-to-date 2015
• 20.
  © Metso Order backlog 20 FlowControl Minerals, services Minerals, capital Current structure 1 780 1 735 1 672 1 402 1 445 1 411 1 289 0 500 1 000 1 500 2 000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2014 2014 2014 2014 2015 2015 2015 EUR Million Deliveries in 2015 Deliveries after 2015 Deliveries in 2014 Deliveries after 2014 0 200 400 600 800 1 000 1 200 1 400 1 600 1 800 Order backlog Sep 30, 2014 Order backlog Sep 30, 2015 EUR million • Healthy backlog and good mix, supporting our guidance
• 21.
  © Metso Confirming theguidance for 2015 21 • Our net sales in 2015 will be between EUR 3,000 and 3,200 million • Our EBITA margin before non-recurring items for 2015 will be around 12.5% (12.0-13.0%) The guidance takes into account the current market activity in our customer industries and current exchange rates.
• 22.
  company/metso metsogroup metsoworldmetsoworldmetsogroup www.metso.com