Slide 1: Q4 2015 Interim Review
Matti Kähkönen, President and CEO Harri Nikunen, CFO February 4, 2016 1 © Metso
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 an important driver for success
Safety is an important driver for success Recorded incidents declined 28 percent in 2015 14 400 • Safe working environment for all employees Lost time incident frequency (LTIF) • Improved safety performance supports 12 350 Total number of lost time incidents productivity 10 300 • Demand from custome
Slide 4: Highlights in 2015
Highlights in 2015 Current structure Order intake: Fourth quarter 2015 EUR 758 million, 5% Orders increased and were higher than net sales Net sales: Mining orders 26% higher y-o-y EUR 754 million, -18% Unfavorable mix in Flow Control impacted EBITA EBITA margin*: 12.0% (13.0%) Full year 2015
Slide 5: Strategic achievements in 2015
Strategic achievements in 2015 Implementing the strategy outlined in summer 2014 • New service centers, services offering and capabilities • Product renewal, expansion and digitalization • Flexible and lean operating models • Focus on customers and growth • Focus on people and leadership • Successor
Slide 6: Markets in Q4
Markets in Q4 Orders received totaled EUR 758 million, +5% Excluding PAS • Mining (orders +26%): - A couple of larger equipment orders; market 500 EUR million still depressed 450 - Mining services orders stable y-o-y -3% 400 • Aggregates (orders -13%): 350 353 344 - Continued weakness in the emergin
Slide 7: Orders received by market area
Orders received by market area Q4/15, FY15 and change year-on-year (excluding PAS) Europe North America Q4 EUR 157 million, +5% Q4 EUR 170 million, +12% FY EUR 642 million, +3% FY EUR 678 million, 0% China Q4 EUR 32 million, -52% FY EUR 204 million, -22% Africa and Middle East South and Central Amer
Slide 8: Financial highlights
Financial highlights Current structure Quarterly orders received, net sales and EBITA*% • Fairly good performance in a challenging market EUR million % and competitive environment 13.7 13.0 13.6 1400 12.4 12.4 14 • Net sales declined largely due to lower equipment 1200 11.4 10.6 12.0 12 sales in Min
Slide 9: Services development
Services development Services orders and net sales Current structure Excluding PAS EUR million • Our offering and competitiveness remain strong 600 525 500 500 507 • Mining 500 476 464 458 495 483 481 - Performance services orders at a good level 410 446 440 436 435 440 - Miners’ cost cutting action
Slide 10: The Board's dividend proposal of EUR 1.05
The Board’s dividend proposal of EUR 1.05 EUR 3.5 2.95 3 2.5 2 1.59 1.5 1.25 1.00 1.05** 1.05* 1 0.5 0 2013 2014 2015* Dividend policy (at least 50% of EPS) DPS (Dividend per share) EPS (Earnings per share) Gain from divestment of PAS • Proposal in line with the dividend policy • Targeting stable an
Slide 11: Financial performance
Financial performance Harri Nikunen CFO
Slide 12: Group key figures
Group key figures Current structure except when noted EUR million Q4/2015 Q4/2014 Change % 2015 2014 Change % Orders received 758 721 5 2,965 3,074 -4 without currency impact 4 -7 Service orders received 440 446 -1 1,879 1,910 -2 without currency impact 0 -4 Net sales 754 921 -18 2,923 3,363 -13 wit
Slide 13: Positive margin and SG&A impact on EBITA
Positive margin and SG&A impact on EBITA Current structure, illustrative EUR m illion 450 400 350 300 426 356 250 200 150 100 50 0 2014 Volume Margin S, G & A FX rates & Others 2015 EBITA* EBITA* Note: Volume, margin and SG&A changes calculated with constant currencies. Currency impact is included i
Slide 14: Gross margins were healthy
Gross margins were healthy Current structure EUR million % 350 30.3 31.2 32.9 35 • Underlying margins remained at good level 30.0 300 27.9 28.4 28.3 29.2 30 throughout the year 250 25 • Q4 mix was project-heavy and also included 261 252 240 235 sizeable restructuring costs of about EUR 12 200 222 22
Slide 15: Actions to reduce SG&A continue
Actions to reduce SG&A continue Current structure EUR million % 250 25 • Full-year SG&A was down by EUR 50 million in 20.1 19.4 19.8 constant currencies (-20 million in reported 200 18.4 18.1 18.7 20 17.7 17.0 currencies). The full year SG&A includes around 167 EUR 20 million restructuring costs, ma
Slide 16: Minerals quarterly performance
Minerals quarterly performance EUR million % 800 16 • Good profitability despite difficult market and 700 13.6 13.5 14 lower net sales 11.3 11.9 12.1 600 10.8 11.2 12 • Net sales of new equipment declined 500 9.9 10 2014 close to 40% 12.6% 2015 400 11.0% 8 • Gross margins held up well and SG&A decli
Slide 17: Flow Control quarterly performance
Flow Control quarterly performance Current structure • Orders declined driven by lower demand for oil & EUR million % 240 24 gas valves. Services and other process 20.2 20.7 220 22 industries orders increased 200 18.6 20 17.3 16.7 • Net sales of pumps increased; valve sales were 180 160 14.2 14.2 18
Slide 18: Solid balance sheet and financial position
Solid balance sheet and financial position EUR million 2015 2014 Return on equity (ROE), % * 33.1 15.7 Return on capital employed (ROCE) before taxes, % 25.7 / 16.1** 16.4 Gearing at the end of the period, % 10.6 45.6 Cash conversion, % 180 108 Debt to capital, % 36.3 41.2 Net debt / EBITDA * 0.2 1.
Slide 19: Strong cash generation
Strong cash generation EUR million 2015 2014 Comments EBITDA 624 426 Adjustments -232 74 Change in net working capital 64 -75 Lower inventories and receivables Financial items and taxes, paid -96 -169 NET CASH FROM OPERATIONS 360 256 Capex on fixed assets -46 -74 FY 2015 well below FY 2014 Proceeds
Slide 20: Capital employed and net working capital
Capital employed and net working capital Larger cash position increased capital employed NWC declined thanks to lower inventories and receivables EUR million 2015 2014 Change EUR million 2015 2014 Change Net working capital 598 681 -83 Inventories 715 842 -127 Tangible assets 343 398 -55 Trade recei
Slide 21: Outlook and backlog
Outlook and backlog Matti Kähkönen President and CEO
Slide 22: Short-term market outlook
Short-term market outlook Mining Aggregates Flow Control 48% of net sales of which 75% services 23% of net sales of which 45% services 25% of net sales of which 55% services Outlook: Outlook: Outlook: • Weakness to continue in the • Weak demand in the emerging • Oil & gas capex-related demand is equ
Slide 23: Order backlog
Order backlog Current structure EUR Million EUR m illion 2 000 1 600 1 780 1 735 1 672 1 400 Deliveries after 2015 1 445 1 200 Deliveries 1 500 1 402 1 411 after 2016 1 289 1 268 1 000 1 000 800 Deliveries in Deliveries in 600 2015 2016 500 400 200 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Order backlog Dec 31, O
Slide 24: Outlook for 2016
Outlook for 2016 Financial guidance discontinued as of the beginning of 2016 Metso’s overall trading conditions are expected to weaken somewhat in 2016 compared to 2015. Demand for our products and services is expected to develop as follows: • remain weak for mining equipment and satisfactory for mi
Slide 25: Eeva Sipilä appointed Metso's CFO
Eeva Sipilä appointed Metso’s CFO • Eeva will start in her new position on August 1st, 2016 • She is currently member of Metso’s Board of Directors (since 2012) and CFO of Cargotec Corporation (since 2008) • Previously, she has served as the Head of IR and communications at Cargotec (2005-2008) and
Slide 26: www.metso.com
www.metso.com company/metso metsoworld metsogroup metsoworld metsogroup