Slide 1: Interim Review January 1 — June 30, 2016
Interim Review January 1 — June 30, 2016 \ i ‘ : mz | ep Dmetso
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 Continuous focus on safety leads to results 14 400 • Safe working environment for all employees 12 Lost time incident frequency (LTIF) 350 • Improved safety performance supports Total number of lost time incidents productivity 10 300 • Demand from customers:
Slide 4: The second quarter 2016 in brief
The second quarter 2016 in brief • Challenging market environment continued Orders received: EUR 761 million, -8% • Mining equipment market seems to have stabilized Net sales: • Minerals services activity on the level seen in the previous quarters; EUR 671 million, -11% services profitability health
Slide 5: Markets in Q2/16
Markets in Q2/16 Orders received totaled EUR 761 million, -8% EUR million • Mining (orders -8%): 500 - Equipment orders increased 6% due to one large order from South America 450 - Services orders declined 15% mainly due to low 400 388 demand for engineered services (24% decline from the comparison
Slide 6: Orders received by market area
Orders received by market area Year-on-year comparison Europe North America Q2/ EUR 140 million, -22% Q2/ EUR 171 million, +0% H1/ EUR 286 million, -17% H1/ EUR 343 million, -3% China Q2/ EUR 40 million, -56% H1/ EUR 85 million, -38% Africa and Middle East South and Central America Q2/ EUR 79 millio
Slide 7: Financial highlights
Financial highlights Quarterly orders received, net sales and adjusted EBITA margin EUR million % • Book-to-bill was good at 1.13 1,400 16 13.7 13.6 13.0 14 • Healthy profitability in current market situation 1,200 12.4 12.4 12.0 11.4 11.5 12 10.6 1,000 • Profitability of the services business remai
Slide 8: Services development
Services development Services orders and net sales EUR million • Our offering and competitiveness remain 600 strong; internal actions support keeping 525 500 500 507 495 margins healthy 500 464 483 481 476 458 446 441 436 441 433 444439 435 • Mining 400 410 409 - Customers’ cost cutting has continue
Slide 9: Financial performance
Financial performance Harri Nikunen CFO
Slide 10: Group key figures
Group key figures EUR million Q2/2016 Q2/2015 Change % H1/2016 H1/2015 Change % 2015 Orders received 761 823 -8 1,424 1,560 -9 2,965 without currency impact -3 -5 Service orders received 444 495 -10 877 1,002 -12 1,879 without currency impact -6 -7 Net sales 671 756 -11 1,272 1,489 -15 2,923 without
Slide 11: Cost savings compensate for volume decline
Cost savings compensate for volume decline Illustrative EUR million 200 180 160 140 120 172 133 100 80 60 40 20 0 H1/2015 Volume Margin SG&A FX rates & Others H1/2016 Adjusted EBITA Adjusted EBITA Note: Volume, margin and SG&A changes calculated with constant currencies. Currency impact is included
Slide 12: Gross margins are holding up
Gross margins are holding up EUR million % 350 32.9 35 • Healthy product margins in all businesses indicate 30.0 30.3 31.2 successful cost and pricing management 29.2 29.2 29.2 300 27.9 28.4 28.3 30 • Gross margins in the capital businesses negatively affected by low net sales 250 261 25 252 • All b
Slide 13: Actions to reduce SG&A costs continue
Actions to reduce SG&A costs continue EUR million % 250 25 • SG&A headcount reduced by around 600 (-13%) since the end of 2014 and is expected to decline further 20.9 20.1 19.8 - Personnel cost accounts for about 55% of total 19.4 19.4 200 18.4 18.6 20 17.7 18.1 SG&A 17.0 • Discretionary spend was s
Slide 14: Minerals quarterly performance
Minerals quarterly performance Quarterly orders received, net sales and adjusted EBITA margin EUR million % • One large mining equipment order booked in 800 16 the quarter; underlying activity unchanged 13.6 13.5 700 14 11.9 12.1 • Good adjusted EBITA development, thanks to 600 11.3 10.8 11.2 10.8 1
Slide 15: Flow Control second quarter performance
Flow Control second quarter performance Quarterly orders received, net sales and adjusted EBITA margin EUR million % • Net sales decline driven by North American 250 25 oil & gas market 20.2 20.7 200 18.6 20 • Decline of profitability is largely volume driven, 17.3 16.7 as gross margins are holding
Slide 16: Solid balance sheet and financial position
Solid balance sheet and financial position EUR million June 30, 2016 December 31, 2015 Return on equity (ROE), %* 9.8 33.1 Return on capital employed (ROCE) before taxes, %* 11.0 16.1** Gearing at the end of the period, % 12.8 10.6 Cash conversion, % 197 180 Debt to capital, % 37.0 36.3 Net debt / E
Slide 17: Good cash generation continued
Good cash generation continued EUR million H1/2016 H1/2015 2015 Comments EBITDA 151 447 624 Adjustments 7 -255 -232 2015 includes PAS disposal Change in net working capital 4 52 64 Financial items and taxes, paid -15 -69 -96 NET CASH FROM OPERATIONS 147 175 360 Capex on fixed assets -15 -23 -46 Proc
Slide 18: Capital employed and net working capital
Capital employed and net working capital EUR Million EUR million 2,500 1,500 2,323 2,267 2,292 2,186 2,164 206 186 185 160 193 Other 2,000 577 330 1,000 486 482 476 Trade receivables 373 343 450 345 331 Tangible assets 645 609 Net working capital 592 598 588 1,500 557 550 542 500 552 541 Intangible
Slide 19: Outlook and backlog
Outlook and backlog Matti Kähkönen President and CEO
Slide 20: Short-term market outlook largely unchanged
Short-term market outlook largely unchanged Mining Aggregates Flow Control 50% of net sales of which 71% services* 23% of net sales of which 45% services* 24% of net sales of which 58% services* Outlook: Outlook: Outlook: • Weakness to continue in the • Satisfactory for both equipment and • Oil & ga
Slide 21: Order backlog
Order backlog EUR Million EUR million 2,000 1,600 1,780 1,735 1,672 1,400 1,445 Deliveries after 1,500 1,402 1,411 1,399 Deliveries after 1,200 2015 1,290 1,268 1,300 2016 1,000 1,000 800 Deliveries in Deliveries in 600 500 2015 2016 400 0 200 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2014 2015 2016 0 Minerals,
Slide 22: Outlook for 2016
Outlook for 2016 Metso’s overall trading conditions will be somewhat weaker 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 mining services • remain satisfactory for aggregates equipment and ser
Slide 23: www.metso.com
www.metso.com company/metso metsoworld metsogroup metsoworld metsogroup