Slide 1: Q2 2015 Interim Review
Matti Kähkönen, President and CEO Harri Nikunen, CFO July 23, 2015 1
Slide 2: Forward looking statements
Forward looking 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 willingn
Slide 3: Safety is our top priority
Safety is our top priority Continuous focus on our LTIF target of less than 1 leads to results 14 400 Actions leading to improvement Lost time incident frequency (LTIF) 12 Total number of lost time incidents 350 • Active and visible management 10 support 300 8 • Safety is part of every decision 6 LT
Slide 4: Markets in brief
Markets in brief Orders received totaled EUR 823 million Excluding PAS • Demand for customers’ capex projects remained 500 EUR million soft; services demand stable 450 -3% 399 388 400 • Equipment pricing under pressure. Services 350 prices holding up better. -3% 300 263 254 • Mining equipment orders
Slide 5: Orders received by market area
Orders received by market area Order intake in Q2/15 and change year-on-year (excluding PAS) North America Europe EUR 179 million, +12 % EUR 171 million, -2 % China EUR 91 million, +44 % South and Central Africa and Middle America East EUR 183 million, -5 % EUR 77 million, -26 % Asia-Pacific EUR 122
Slide 6: Financial highlights
Financial highlights Current structure Quarterly orders received, net sales and EBITA - %* EUR million • Net sales decline was primarily due to lower 1,400 13.7 13.0 % 14 12.4 12.4 mining equipment sales 1,200 11.4 10.6 12 • Book-to-bill 1.09 1,000 885 921 10 834 800 823 791 757 • Very good profitab
Slide 7: Services development
Services development Services orders and net sales Current structure Excluding PAS EUR million • Total services sales grew 1.5% 600 525 500 500 507 • Book-to-bill 1.02 500 476 464 458 495 483 446 440 410 • Minerals 400 - Performance services orders declined (timing) 300 - Good demand for life-cycle
Slide 8: Financial performance
Financial performance Harri Nikunen CFO
Slide 9: Group key figures
Group key figures Current structure except when noted Q1-Q2/ Q1-Q2/ EUR million Q2/2015 Q2/2014 Change % 2015 2014 Change % 2014 Orders received 823 833 -1 1,560 1,625 -4 3,074 without currency impact -8 -10 Service orders received 495 500 -1 1,002 1,000 0 1,910 without currency impact -7 -6 Net sal
Slide 10: Positive margin and SG&A impact on EBITA
Positive margin and SG&A impact on EBITA Current structure, illustrative EUR million 250 200 150 206 172 100 50 0 Q1-Q2/2014 Volume Margin S, G & A FX rates & Others Q1-Q2/2015 EBITA* EBITA* Note: Volume, margin, and SG&A changes calculated with constant currencies. Currency impact is included in 10
Slide 11: Gross margins remain healthy
Gross margins remain healthy Current structure EUR million % 350 30.0 30.3 31.2 35 • The mix has improved (services vs. equipment) 28.4 28.3 300 27.9 30 • Margins in all businesses have remained healthy 250 252 240 261 235 25 • Cost competitiveness an important element of 200 211 222 20 RTD 150 15 •
Slide 12: Actions to reduce SG&A continue
Actions to reduce SG&A continue Current structure EUR million % 250 25 • 6% (300 persons) reduction in headcount from 20.1 2Q- 2014 and a reduction > 500 since 2013 19.4 200 18.1 20 18.4 17.0 17.7 • People costs and spend down from 2Q/2014 150 151 167 147 147 15 • Total y-t-d 4% down in constant cur
Slide 13: Minerals quarterly performance
Minerals quarterly performance EUR million % • Mining equipment sales declined 55% y-o-y; 800 13.6 13.5 16 orders were high and book-to-bill 1.77 700 14 11.9 11.3 • Lower SG&A could not compensate for the 600 9.9 10.8 12 volume drop 500 10 • Stable gross margins 400 706 743 8 608 662 619 642 • Opera
Slide 14: Flow Control quarterly performance
Flow Control quarterly performance Current structure EUR million % • Strong quarter in all respects 250 25 • Profitability improvement driven by net sales 200 20.2 18.6 20 17.3 16.7 • Stable margins in both valves and pumps 14.2 14.2 150 15 • Operational ROCE of 38.2% (32.0%) 100 194 10 172 177 172
Slide 15: Strong cash generation
Strong cash generation Q1-Q2/15 Q1-Q2/14 Comments EBITDA 447 215 Adjustments (255) 19 Change in net working capital 52 (14) Inventories and receivables declined Financial items and taxes, paid (69) (110) NET CASH FROM OPERATIONS (CFFO) 175 110 Capex on fixed assets (23) (25) FY2015 significantly low
Slide 16: Capital employed and net working capital
Capital employed and net working capital Larger cash position increased capital employed NWC declined thanks to lower investories and receivables EUR million June 30, Dec 31, Change EUR million June 30, Dec 31, Change 2015 2014 2015 2014 Net working capital 645 681 -36 Inventories 784 842 -58 Tangib
Slide 17: Solid balance sheet and financial position
Solid balance sheet and financial position Jun 30, 2015 Jun 30, 2014 Dec 31, 2014 Return on equity (ROE), % * 32.5 16.4 15.7 Return on capital employed (ROCE) before taxes, %* 26.2/17.1** 16.6 16.4 Gearing at the end of the period, % 16.6 53.4 45.6 Cash conversion, % 186 100 108 Debt to capital, % 3
Slide 18: Outlook and guidance
Outlook and guidance Matti Kähkönen President and CEO
Slide 19: Challenging outlook for new equipment demand
Challenging outlook for new equipment demand Mining Aggregates Flow Control 48% of net sales* of which 75% services 24% of net sales* of which 40% services 24% of net sales* of which 50% services Outlook: Outlook: Outlook: • Weakness to continue in equipment • Demand for equipment and services in •
Slide 20: Order backlog
Order backlog Current structure EUR million EUR Millio n 2 000 2,000 1,780 1 800 1,735 1,672 1 600 Deliveries 1,500 1,402 1,445 1,411 after 2014 1 400 1 200 Deliveries 1,000 after 2015 1 000 800 Deliveries in 500 2014 Deliveries in 600 2015 400 0 Q1 Q2 Q3 Q4 Q1 Q2 200 2014 2014 2014 2014 2015 2015 0
Slide 21: Updated guidance for 2015
Updated guidance for 2015 Excluding the Process Automation Systems business • Our net sales in 2015 will be between EUR 3,000 and 3,200 million (previously between 3,000 and 3,300) million and • Our EBITA margin* before non-recurring items for 2015 will be around 12.5% (12.0-13.0%), previously aroun
Slide 22: Appointments in the Metso Executive Team
Appointments in the Metso Executive Team Perttu Louhiluoto, President, Services - born 1964, Finnish citizen - previously President, Flow Control (2014-2015) and Automation (2012-2014) - joined Metso in 2008 John Quinlivan, President, Flow Control - born 1961, US citizen - previously SVP, Global Ope
Slide 23: Invitation: Metso Capital Markets Day
Invitation Metso Capital’Markets Day September 29, 20157) London a - D> metso 23 © Metso
Slide 24: www.metso.com
www.metso.com company/metso metsoworld metsogroup metsoworld metsogroup