Metso Corporation · OMXHEX:METSO
Metso — Outotec — FY2014 Earnings Presentation
25 slides from Metso's earnings presentation, Feb 6, 2015
Slide 1: Sustainable use of Earth's natural resources – Financial Statements Review 2014
Sustainable use of Earth’s natural resources Financial Statements Review 2014
Slide 2: Challenging operating environment in 2014
Challenging operating environment in 2014 Outotec commodity exposures, 2006-2013 Copper Iron ore • Further reduction of mining and 6% Precious metals 7% metals industry’s Capex 4% 27% SAcid/Roasting 6% investments by est. 30% 6% Aluminium 8% Nickel 16% 10% 10% FeAlloys Zinc • Services market flat at
Slide 3: Outotec performance 2014 – negatives and positives
Outotec performance 2014 – negatives and positives • Significant decline in capex order • Service sales +9% in comparable intake, less small orders due to currencies in flat market lacking greenfield investments • Healthy margins in new orders • Low order intake for alternative and renewable energy
Slide 4: 2014 orders down -18% and service orders up 7% in comparable currencies
2014 orders down -18% and service orders up 7% in comparable currencies € million Q4 FY 2014 2013 2014 2013 Order intake, total 322 426 1,178 1,512 Change, % -24% -22% Change in comp. currencies, % -24% -18% Order intake, services 159 165 555 552 Change, % -4% +0% Change in comp. currencies, % -4%*
Slide 5: Several smelter modernization orders in Q4
Several smelter modernization orders in Q4 Order intake by region Americas 34 (11)% EMEA 48 (73)% APAC 19 (16)% Copper smelter and acid Nickel smelter modernization plant modernization for Norilsk Nickel, Russia for Codelco, Chile Value typically € 30-50 Approx. €64 million million Gas cleaning tech
Slide 6: In 2014 weak plant and equipment market, service orders flat
In 2014 weak plant and equipment market, service orders flat EUR million 2 400 • Order backlog at the end of 2 200 Q4 2014: EUR 1,138.0 (1,371.7) million, of which 2 000 services EUR 246.9 (218.8) 1 800 million 1 600 • 19 (29) projects with value in 1 400 excess of EUR 10 million, accounting for 58
Slide 7: Operating profit margin from business operations improved in the second half
Operating profit margin from business operations improved in the second half Q1 Q2 Q3 Q4 Q1-Q4 Q1-Q4 Change 2014 2014 2014 2014 2014 2013 % Sales, € million 343.9 335.2 320.3 403.2 1,402.6 1,911.5 -27 Gross margin, % 19.5 19.3 23.4 21.7 21.0 20.7 - Operating profit, € million 8.7 -0.3 -0.3 2.3 10.4
Slide 8: Low opening capex order backlog and intake reduced topline, good progress in services
Low opening capex order backlog and intake reduced topline, good progress in services Outotec sales, EUR million 2 000 1,912 -495 1 900 1 800 1 700 1 600 46 -60 1 500 1,403 1 400 1 300 1 200 Sales 2013 Capex: Capex, low low opening Service sales growth FX impact Sales 2014 backlog openingand order o
Slide 9: Profitability affected mainly by 27% sales decline
Profitability affected mainly by 27% sales decline Operating profit (excl. PPA and one-time items), EUR million 180 163 -147 160 140 120 100 65 -19 80 56 60 40 -33 27 20 -20 -40 Operating Sales down Project cost Share of Lower fixed FX Operating Profit 2013* by 27% overruns Service 26% costs gains/l
Slide 10: Minerals Processing: good profitability despite lower sales
Minerals Processing: good profitability despite lower sales Sales and operating profit development • Stabile service business despite EUR million 350 20% challenging market 300 18% 250 16% 14% • Solid capex execution 200 12% 150 10% • Further reduced fixed costs 8% 100 6% 4% 50 2% 0 0% Q1/2012 Q2/20
Slide 11: Metals, Energy & Water: profitability improved in H2
Metals, Energy & Water: profitability improved in H2 Sales and operating profit development • Improved project execution EUR million 400 15% • 2 out of 5 projects with cost overruns 350 300 10% are completed, remaining 3 are 95% 250 200 5% complete 150 100 0% • Strong growth in service sales in H2,
Slide 12: 2014 service sales grew 9% YoY in comparable currencies
2014 service sales grew 9% YoY in comparable currencies Service sales by quarters EUR million % • Sales grew in flat market 250 50 200 40 • Growth especially in upgrade 150 30 100 20 and O&M services 50 10 0 0 • Headcount fluctuates based Q3/2010 Q4/2010 Q1/2011 Q2/2011 Q3/2011 Q4/2011 Q1/2012 Q2/20
Slide 13: Personnel development since the start of the first savings program, September 2013
Personnel development since the start of the first savings program, September 2013 Service 4,978 -749 5000 Capex and shared functions 342 4,571 4500 1,500 4000 1506 1,506 3500 0 September 2013 Reductions* Additions** December 2014 Headcount Headcount *) EUR 50 million program: 470 and 100 voluntary
Slide 14: Working capital stabilized
Working capital stabilized EUR million 200 100 0 -100 -200 -300 Q1/2011 Q2/2011 Q3/2011 Q4/2011 Q1/2012 Q2/2012 Q3/2012 Q4/2012 Q1/2013 Q2/2013 Q3/2013 Q4/2013 Q1/2014 Q2/2014 Q3/2014 Q4/2014 14 Feb 6, 2015 Financial Statements Review 2014 © Outotec – All rights reserved
Slide 15: Working capital stabilization supporting cash flow improvement
Working capital stabilization supporting cash flow improvement EUR million Jan-Dec 2014 Jan-Dec 2013 Cash from operations 54.5 178.7 Change in working capital -1.2 -160.2 Interest -3.1 2.5 Taxes -30.3 -63.1 CASH FROM OPERATING ACTIVITIES 19.9 -42.1 Capital expenditure -57.1* -46.1 Acquisitions -8.0
Slide 16: Solid financing structure, weak ROI & ROE due to low profitability
Solid financing structure, weak ROI & ROE due to low profitability 12 / 2014 12 / 2013 Net interest-bearing debt -5.8 -87.1 Gearing, % -1.3 -18.2 Equity-to-assets ratio, % 36.1 38.5 Return on investment, %, LTM 1.7 25.7 Return on equity, %, LTM 0.0 19.4 Equity, EUR million 445.3 477.4 Balance sheet
Slide 17: Capital expenditure has increased due to roll-out of common business processes and IT tools
Capital expenditure has increased due to roll-out of common business processes and IT tools to improve productivity MEUR % of sales 120 5,0% 4,5% 100 4,0% 3,5% 80 3,0% 60 2,5% 2,0% 40 1,5% 1,0% 20 0,5% 0 0,0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 Capital expenditure Mergers & Acquisitions Cap
Slide 18: Key events after December 31, 2014
Key events after December 31, 2014 • Franklin Templeton Investment Funds’ shareholding fell below 5% • Edinburgh Partners shareholding exceeded 5% • Outotec ranked 12th on the 2015 Global 100 Most Sustainable Corporations in the World • Nomination Board gave its proposal for composition and remunera
Slide 19: EUR 45 million cost efficiency program proceeding
EUR 45 million cost efficiency program proceeding • Launched in October 2014 EUR 45 million 4 • EUR 45 million savings in fixed costs, with full Other 4 gross effect in 2015 7 • Up to 400 full time equivalent employees or External services contractors expected to be reduced, personnel negotiations s
Slide 20: Value creation in continued uncertain market environment
Value creation in continued uncertain market environment 2016 Profitable growth and 2015 Stabilize and improve profitability reduced volatility 2015 Strategic programs Customer focused sales Service growth and profitability Product competitiveness Delivery excellence One Outotec • Strengthening ea
Slide 21: The short to mid-term market outlook continues to be challenging
The short to mid-term market outlook continues to be challenging Outotec addressable Capex and Opex spend, EUR bn 60 Outotec addressable opex OPEX Bull case Bear case • The service business is expected to 50 Outotec addressable capex develop in line with the industry’s production volumes 40 • Short-
Slide 22: Market outlook for 2015
Market outlook for 2015 • The market outlook for 2015 is highly uncertain due to volatile metal prices, continued global macroeconomic uncertainty and geopolitical instability. Investments in the mining and metals sector are estimated to be somewhat lower than in 2014. • Demand in specific markets a
Slide 23: Financial guidance for 2015
Financial guidance for 2015 Based on the 2014 year-end backlog and current operating environment, the management estimates that in 2015: Sales Sales Sales will be from 2014 from new approximately = year-end backlog + orders EUR 1.2-1.4 billion ~EUR 0.925 billion ~EUR 0.3-0.5 billion EBITA (excluding
Slide 24: Board of Directors dividend proposal to the AGM
Board of Directors dividend proposal to the AGM Dividend Payout ratio, % EUR/share 0,35 140 Payout ratio 0.30 10,500% 0,30 120 0.25 0,25 0.24 100 0.21 0.20 0,20 0.19 80 0.18 0,15 60 0.09 0.10 0,10 40 0,05 20 0,00 0 2007 2008 2009 2010 2011 2012 2013 2014 2015* Dividend / share Payout ratio (%) Year
Slide 25: O utotec i ee sean i ral re sou rces
O utotec i ee sean i ral re sou rces