Valmet Corp · OMXHEX:VALMT
Valmet — Metso — Merger or Acquisition (October 2019)
34 slides from Valmet's merger presentation, Oct 29, 2019
Slide 1: Important information
Important information This presentation has been prepared by, and the information contained herein (unless otherwise indicated) has been provided by Metso Corporation (“Metso”) and Outotec Oyj (“Outotec”). This presentation does not constitute a demerger and listing prospectus and as such, does not
Slide 2: Creating two industry-leading companies
Creating two industry- leading companies Mikael Lilius, Chair of the Board of Directors Extraordinary General Meeting of Metso Corporation October 29, 2019 2 © Metso
Slide 3: Background of the transaction
Background of the transaction • Mutual aspiration • Metso Minerals and Outotec combination is highly complementary • Compelling opportunities for faster-than-market growth • Joint product portfolio provides resilience against cycles • Significant cost and revenue synergies • Forerunner in sustainabi
Slide 4: We are creating two industry leading companies
We are creating two industry leading companies… ... and in flow control ... in process technology, equipment and services EUR EUR 2.91) Minerals 1.3 Flow Control billion billion Metso Outotec Neles EUR 4.2 billion2) EUR 600 million3) Transaction creates value for shareholders, customers, employees a
Slide 5: Metso Outotec would be one of the biggest companies in its industry
Metso Outotec would be one of the biggest companies in its industry Key industry participants based on 2018 annual sales (EUR billion)1) 4.2 4.2 3.7 2.9 2.8 2.6 1.4 1.3 Sandvik 2) 3) Epiroc Weir FLSmidth4) (Mining and Rock (Minerals) Technology) Minerals McCloskey sales3) Source: Company materials 1
Slide 6: Proposed Metso Outotec Board composition
Proposed Metso Outotec Board composition Mikael Lilius Matti Alahuhta Chair Vice Chair Christer Gardell Antti Mäkinen Kari Stadigh Arja Talma To be appointed Klaus Cawén Hanne de Mora Ian W. Pearce at Metso’s AGM 2020 Current Metso Board member Current Outotec Board member 6 © Metso
Slide 7: Metso Outotec management
Metso Outotec management Pekka Vauramo Markku Teräsvasara Eeva Sipilä President and CEO Deputy CEO CFO, Deputy CEO Born: 1957 Born: 1965 Born: 1973 Education: Education: Education: M.Sc. (Tech.) Mining B.Sc.Civil M.Sc. (Econ.) Engineering engineering Key experience: Key experience: Key experience: C
Slide 8: Neles is an interesting new listed company
Neles is an interesting new listed company • Right time to create an independent and focused valves company • Neles is well-positioned for growth • Global sales and services network • Well-known and highly respected technologies, knowledge and brands • Flexible cost base • Global customer base • Mod
Slide 9: Neles' management appointments
Neles’ management appointments Olli Isotalo Simo Sääskilahti President and CEO CFO Born: 1959 Born: 1971 Education: M.Sc. (Eng.) Education: M.Sc. (Eng.), M.Sc. (Econ.) Key experience: CEO of Patria, 2016 – 2019 Several leading positions at Metso, 2011 – Several leading positions at Cargotec, Several
Slide 10: Execution of the transaction
Execution of the transaction Simultaneous demerger and merger Post transaction Demerger of Metso Merger of Metso Minerals and Outotec Metso shareholders will receive as demerger consideration 4.3 shares in Outotec for each share owned in Metso Current shareholders 100% Minerals Minerals Current Curr
Slide 11: Schedule of the transaction
Schedule of the transaction Important dates for shareholders 2019 2020 July 4, 2019 October 29, 2019 March 20, 2020 Q2/2020 Metso’s Board signed Extraordinary General Meeting Metso’s Annual General Completion of the the combination will decide upon the demerger Meeting demerger and combination agree
Slide 12: Creating two industry-leading companies
Creating two industry- leading companies Pekka Vauramo, President and CEO Extraordinary General Meeting of Metso Corporation October 29, 2019 12 © Metso
Slide 13: Metso Outotec
Metso Outotec Leading company in process technology, equipment and services serving the minerals, metals and aggregates industries 13 © Metso
Slide 14: Metso Outotec in brief
Metso Outotec in brief A complimentary and compelling combination Orders received1): Sales2): Adjusted EBITA3): Sales by geography6) EUR 4,123 million EUR 4,159 million 9.4% 23% 29% 55% 16% Aggregates Mining Metal, energy, water and 42% recycling of sales4) of sales4) of sales4) 35% ~15,600 ~50 52%5
Slide 15: Metso Outotec in the mining value chain
2 1 3 4 Metso Outotec 6 in the mining value chain 5 Metso strengths Outotec strengths Operations preceding mine 1 2 3 4 5 6 Refining of ore Crushing Screening Grinding Separation Dewatering bodies Metso Outotec has an end-to-end offering in minerals processing 15 © Metso
Slide 16: Services and aggregates balance mining investment cycles
Services and aggregates balance mining investment cycles Mining is global Aggregates is local Global cycles Local fluctuations Services business is more resilient to cycles Thanks to the McCloskey acquisition, the and represents share of aggregates equipment is over 50%1) ~20% of Metso Outotec sales
Slide 17: Strong services business is a significant benefit
Strong services business is a significant benefit Minerals Metso Outotec Services Services Services 57%1) 39% 52%1) Key combination benefits for services • Complimentary global services network Over 4 0002) Over 702) • Potential for cross-selling through combined installed base Service employees Ser
Slide 18: Forerunner in sustainability and R&D
Forerunner in sustainability and R&D Increase in consumption, and degradation of mineral grades are a challenge • Resource efficiency and tailings management Metso Outotec’s total Metso Outotec’s total amount R&D investments of patents • Energy and water efficiency ~EUR 100 million1) ~8,2002) (~2.5%
Slide 19: Metso Outotec pro forma key figures
Metso Outotec pro forma key figures EUR million 2018 H1/2019 Sales 4,159 2,155 Adjusted EBITA 279 229 adjusted EBITA, % of sales 9.41) 10.6 Profit for the period 14 122 Earnings per share 0.02 0.15 Total number of shares 826,874,237 826,961,4512) Gearing, % 48.8 Equity-to-assets ratio, % 38.0 Balanc
Slide 20: Combination will unlock significant synergies
Combination will unlock significant synergies At least EUR 100 million run-rate annual cost synergies Operations Supply chain and procurement ~60% ~40% At least EUR 150 million run-rate annual revenue synergies Cross-selling opportunities Growth of the services business Enhanced porfolio offering 10
Slide 21: Neles
Neles Independent listed company focused on flow control 21 © Metso
Slide 22: Neles in brief
Neles in brief Leading flow control supplier for process industries Geographically diverse sales Sales EBIT margin1) EUR 593 million 14.1% 25% 33% ~40 ~40 Employees ~2,900 Countries Service centers 42% ◼ Europe, Middle East and Africa, 33% ◼ North and South America, 42% ◼ Asia-Pacific, 25% 1) Neles’
Slide 23: Extensive portfolio of valve products for challenging conditions
Extensive portfolio of valve products for challenging conditions Standard and severe Emergency Ball, butterfly, segment Intelligent valve Automated on-off valves service control valves shutdown valves and globe valves controllers 23 © Metso
Slide 24: Neles' industries and breakdown of sales
Neles’ industries and breakdown of sales Neles is strong in its Share of services and selected industries day-to-day is significant 14% Services Sales to customer projects 37% 27% 22% ◼ Oil & gas refining 37% ◼ Pulp and paper 27% Day-to-day ◼ Chemical industry 22% ◼ Others 14% Note: these figures ar
Slide 25: Top-level profitability in the industry
Top-level profitability in the industry EUR million % 700 20% 18% 600 16% 500 14% 12% 400 10% 300 8% 200 6% 4% 100 2% 0 0% 2016 2017 2018 H1/2019 Sales, rolling 12 months EBITA %, rolling 12 months Note: these figures are reported figures of Metso’s Flow Control segment for 2018. 25 © Metso
Slide 26: Neles will have a good starting point
Neles will have a good starting point • Market leader in the selected customer industries • Growth exceeding the market and resilience to cycles • Diversified sales mix and geographical split • First-class products and customer centricity • Engaged employees 26 © Metso
Slide 27: Conclusion
Conclusion 27 © Metso
Slide 28: The transaction will create shareholder value
The transaction will create shareholder value Metso Outotec: Benefits of combination Neles: Benefits of demerger • Global presence in the aggregates and mining • Leading position in flow control solutions in industries the selected industries • Significant potential for synergies • Strong strategic
Slide 29: Q3 update
Q3 update 29 © Metso
Slide 30: Metso's Q3 highlights
Metso’s Q3 highlights Healthy market activity; strong services and valves orders Orders received up 1% year-on-year EUR 894 million Sales up 19% year-on-year EUR 933 million Adjusted EBITA up 36% year-on-year EUR 131million 30 © Metso
Slide 31: Minerals quarterly highlights
Minerals quarterly highlights Orders, sales and profitability EUR million Orders received -2% to EUR 722 million (734 million) 1 000 20 - Services orders grew 14% 900 18 - Aggregates equipment orders up slightly during 800 16 seasonally low quarter - Slow decision-making related to new mining projec
Slide 32: Flow Control quarterly highlights
Flow Control quarterly highlights Orders, sales and profitability EUR million Orders received up 15% to EUR 171 million (149 million) 200 24 - Strong 20% growth in services 180 - Increased orders from oil & gas and pulp & paper 160 20 140 16 Sales up 16% to EUR 170 million (146 million) 120 - Double
Slide 33: Market Outlook
Market Outlook Market activity in both segments, Minerals and Flow Control, is expected to remain at the current level in both the equipment and services business. Metso’s market outlook describes the expected sequential development in market activity during the following six-month period using thre
Slide 34: Slide 34