Stock exchange release
July 31, 2014 12:00 PM EEST
Metso to continue its transformation by adopting a new strategy focusing on growth in its higher-margin businesses
Metso to continue its transformation by adopting a new strategy focusing on
growth in its higher-margin businesses
Metso Corporation's stock exchange release on July 31, 2014 at 12:00 noon local
Metso Corporation has decided on a new strategy and a new operating model,
designed to drive growth in the company's core businesses and strengthen its
financial performance and value creation. This will also help Metso continue its
transformation into a services and products-focused industrial player with
attractive structural growth and high margin opportunities across its portfolio
of services, products, and system deliveries.
Under the new strategy, Metso's core customer industries will be mining, oil &
gas, and aggregates. Metso's goal is to strengthen its position as the leading
technology and services provider for end-to-end minerals processing and to
become a leader in flow control within the oil & gas and mining industries.
As part of its new strategy, Metso will study strategic alternatives, including
potential divestment, for its current Process Automation Systems business, which
primarily serves the pulp, paper, and power industries.
Metso's new strategy and operating model will underpin its transformation into a
focused company with businesses that are largely driven by its customers'
production activities. Metso's goal is a business model, where more than 50% of
activities consists of services, products account for a sizable proportion of
net sales, and system deliveries concentrate on proprietary technology that
supports its future services business. This type of portfolio will offer the
opportunity for positive long-term profitability and resilience to the
cyclicality typical of Metso's customer industries.
Increased ambition level
Metso's higher level of ambition is also reflected in the company's the new
- net sales growth exceeding market growth
- EBITA margin (before non-recurring items) exceeding 15% within the next three
- return on capital employed (ROCE) before taxes of at least 30%
Metso's growth over the short term will be driven by opportunities in services,
flow control, and aggregates, which together represent about 80% of the
company's total net sales. Longer-term growth is also anticipated in the mining
Services growth will be achieved through new products, both in spare and wear
parts, as well as in performance services. Metso will also continue to expand
its offering and develop an ever-stronger presence close to its customers.
In flow control, the best opportunities are seen in continued expansion of the
addressable market in oil & gas, as well as in mining flow control. Metso's
current valve and pump offering offers a good position to grow in both of these
In aggregates, we will continue to leverage our strong position in the global
market and the ongoing growth being driven by a variety of megatrends. Our
initiatives will prioritize developing our footprint, improving profitability,
as well as developing our mid-market offering and global distribution.
The mining capital business faces lower demand over the short term, while its
mid- and long-term prospects are supported by megatrends that are set to
increase demand for more efficient technologies and process know-how. Metso's
short-term focus here will be to further improve the competitiveness of its
offering and to develop its operating model for higher operational and capital
efficiency. Development work on intelligent solutions aimed at improving
customers' process efficiency in selected areas of the minerals processing
offering will also be accelerated.
Metso will continue to develop leaner operating models with an even stronger
customer focus, achieve cost savings, improve its business model by growing its
higher-margin products and services businesses, and improve its capital
efficiency across the board. In addition, operational excellence will be driven
by developing common global platforms, processes, and operational approaches in
sales and support functions.
Metso's policy of paying at least 50% of annual earnings per share as dividend
will remain unchanged. Metso will also aim to maintain a balance sheet structure
that supports its current investment grade credit rating.
To ensure efficient execution of the new strategy, Metso will update its
operating model to include three business areas:
- Services: providing primarily minerals customers with full-scope services
solutions, ranging from spare and wear parts all the way to high-value adding
- Flow Control: responsible for developing and growing both the valve offering
mainly for oil & gas customers as well as pumps for mining customers by pursuing
new opportunities in these markets
- Minerals: responsible for providing minerals processing solutions for mining
customers and crushing and screening products for aggregates customers, as well
as system deliveries
The new operating model will enable a clear improvement in management focus in
each business, all of which have distinct opportunities and challenges, as well
as different business models. In addition, it will enable Metso to react more
rapidly to market demand and execute its plans more effectively, ultimately
supporting profitable growth.
Metso will report its financial performance externally in two segments: Minerals
and Flow Control.
The new operating model and organization will be effective as of October
1, 2014, after which the Metso Executive Team will consist of Matti Kähkönen,
President and CEO; Harri Nikunen, EVP & CFO, Deputy to the CEO; João Ney
Colagrossi, President, Minerals; Juha Silvennoinen, President, Services; Perttu
Louhiluoto, President, Flow Control; Merja Kamppari, SVP, HR; and Simo
Sääskilahti, SVP, Strategy and Business Development.
President and CEO Matti Kähkönen:
"Our new strategy, together with our new operating model, marks the beginning of
a new era for Metso. In essence, we will continue to move ahead with our
transformation into a focused company, with businesses that offer growth
potential with higher margins. This will translate into higher profitability and
better returns - and ultimately greater value for our shareholders. Our
customers will also benefit from a closer relationship with us and better access
to our full-scope services offering, delivery capability, and market-leading
process and application know-how. They will also be able to rely on us for
reliable, leading technologies and a competitive offering - all delivered by
highly competent and committed industry professionals worldwide every day."
Metso is a leading process performance provider, with customers in the mining,
oil and gas, and aggregates industries. Metso's cutting-edge services and
solutions improve the availability and reliability in minerals processing and
flow control, providing sustainable process and profit improvements. Metso is
listed on the NASDAQ OMX Helsinki, Finland. In 2013, Metso's net sales totaled
EUR 3.8 billion. Metso employs approximately 16,000 industry experts in 50
countries. Expect results.
Further information, please contact:
Matti Kähkönen, President and CEO, Metso Corporation, tel +358 20 484 3001
VP, Investor Relations
NASDAQ OMX Helsinki Ltd