Metso's Interim Review January 1 - March 31, 2016
Metso's Interim Review January 1 - March 31, 2016
Metso Corporation's stock exchange release on April 22, 2016 at 09:00 a.m. local time
Metso will arrange a results audiocast today at 13:00 EET (6:00 EST, 10:00 UTC, 11:00 CET). The audiocast is viewable at www.metso.com/latestreports . A simultaneous conference call will be arranged, allowing participants to ask questions. A recording of the event is available at the earliest after the event has finished and a transcript will be available for downloading.
This is a summary of Metso's January-March 2016 Interim Review. The complete report is attached to this release as a pdf-file and is also available at www.metso.com/latestreports .
Figures in brackets refer to the corresponding period in 2015, unless otherwise stated. The Process Automation Systems (PAS) business was divested on April 1, 2015. The comparison numbers for Metso Group and Flow Control including the PAS business can be found in the tables section.
First quarter 2016 in brief
- Challenging market conditions had a negative impact on the demand for services in the mining and aggregates industry as well as on the demand for valves sold to the oil & gas transportation segment in North America.
- Orders for aggregates equipment increased and those for mining equipment were at the same level compared to the first quarter of 2015.
- Orders received totaled EUR 663 million (EUR 737 million), of which EUR 433 million (EUR 507 million) were services orders.
- Net sales were EUR 601 million (EUR 733 million), of which EUR 409 million for services (EUR 441 million). The decline was mainly due to a slowdown in project deliveries
- Adjusted EBITA totaled EUR 56 million, or 9.3% of net sales (EUR 78 million, 10.6%). The profitability of the services business remained healthy as expected, whereas profitability of the mining equipment business was weak.
Outlook for 2016 (changes in brackets)
Metso's overall trading conditions in 2016 will be somewhat weaker 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 services
- remain satisfactory for Flow Control products related to customers' new investments and good for Flow Control services
From our end of March, 2016 backlog we expect to invoice EUR 1.1 billion during 2016. Internal efficiency actions will continue to improve competitiveness and mitigate the price pressure that can be seen in markets that are facing weak or satisfactory demand. Restructuring costs are expected to be on the same level as in 2015 (previously: lower than in 2015). Capital expenditure without acquisitions and net financial costs are expected to be lower than in 2015 (previously: at the same level as in 2015).
President and CEO Matti Kähkönen:
Orders and net sales were at a low level in the project businesses during the first quarter, as uncertainties in the markets tend to slow down both the decision-making relating to new orders and the execution of ongoing projects. This is most visible in the mining business and to some extent also in the oil & gas-related valve business in North America. In addition, the low order volume for capex driven engineered services in particular resulted in a slow start for mining services in the first quarter. Positive development was seen in the aggregates business, where equipment orders grew in India and some other regions.
Despite the challenges with volumes in the equipment businesses, our profitability remains at a satisfactory level, thanks to the services business and overall cost control. Services net sales have been somewhat impacted by our customers' cost cutting, which we have offset with internal initiatives; profitability of the services business in both Minerals and Flow Control improved in the first quarter. Going forward, we do not foresee any significant changes in the activity of our end-markets and our focus continues to be on developing our cost competitiveness and our product and services offering to help our customers to improve their productivity.
| EUR million || Q1/|
| Change % || 2015* |
| Orders received || 663 || 737 || -10 || 2,965 |
| Orders received by the services business || 433 || 507 || -15 || 1,879 |
| % of orders received || 65 || 69 || || 63 |
| Order backlog at the end of the period || 1,300 || 1,445 || -10 || 1,268 |
| Net sales || 601 || 733 || -18 || 2,923 |
| Net sales of the services business || 409 || 441 || -7 || 1,840 |
| % of net sales || 68 || 60 || || 63 |
| Earnings before interest, tax and amortization (EBITA), adjusted || 56 || 78 || -28 || 356 |
| % of net sales || 9.3 || 10.6 || || 12.2 |
| Personnel at the end of the period || 12,386 || 14,015 || -12 || 12,619 |
| *Comparison numbers including the divested PAS business can be found in the tables section of the interim review |
| || Q1/|
| Change % || 2015 |
| Operating profit || 50 || 65 || -23 || 555 |
| % of net sales || 8.4 || 8.3 || || 18.7 |
| Earnings per share, EUR || 0.18 || 0.25 || -28 || 2.95 |
| Free cash flow || 62 || 87 || -29 || 341 |
| Return on capital employed (ROCE) before taxes, annualized, % || 9.4 || 12.9 || || 25.7 |
| Equity-to-asset ratio at the end of the period, % || 43.9 || 36.6 || || 48.3 |
| Net gearing at the end of the period, % || 6.9 || 41.4 || || 10.6 |
Metso is a world leading industrial company serving the mining, aggregates, recycling, oil, gas, pulp, paper and process industries. We help our customers improve their operational efficiency, reduce risks and increase profitability by using our unique knowledge, experienced people and innovative solutions to build new, sustainable ways of growing together.
Our products range from mining and aggregates processing equipment and systems to industrial valves and controls. Our customers are supported by a broad scope of services and a global network of over 80 service centers and about 6,400 services professionals. Metso has an uncompromising attitude towards safety.
Metso is listed on the NASDAQ OMX Helsinki, Finland, and had net sales of about EUR 2.9 billion in 2015. Metso employs over 12,000 persons in more than 50 countries. Expect results.
For further information, please contact:
Matti Kähkönen, President and CEO, Metso Corporation, tel. +358 20 484 3000
Harri Nikunen, CFO, Metso Corporation, tel. +358 20 484 3010
Juha Rouhiainen, VP, Investor Relations, Metso Corporation, tel. +358 20 484 3253
VP, Investor Relations
NASDAQ OMX Helsinki Ltd
Conference call details
Conference call participants are requested to dial in five minutes before the scheduled time on:
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other countries: +44 (0)20 3427 1905
The confirmation code for joining the conference call is 7546996
A recording of the event is available at www.metso.com/latestreports at the earliest after the event has finished and a transcript of the event will be available.