Metso Interim Review January-March 2013 presentation

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Metso Interim Review January-March 2013 presentation. More information www.metso.com/investors

Metso Interim Review January-March 2013 presentation. More information www.metso.com/investors

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  • 1. © Metso www.metso.comMatti Kähkönen, President and CEOHarri Nikunen, CFOApril 23, 2013
  • 2. © MetsoForward looking statementsIt should be noted that certain statements herein which are not historical facts, including, withoutlimitation, those regarding expectations for general economic development and the market situation,expectations for customer industry profitability and investment willingness, expectations for companygrowth, development and profitability and the realization of synergy benefits and cost savings, andstatements preceded by ”expects”, ”estimates”, ”forecasts” or similar expressions, are forward-lookingstatements. These statements are based on current decisions and plans and currently known factors.They involve risks and uncertainties which may cause the actual results to materially differ from theresults currently expected by the company.Such factors include, but are not limited to:1) general economic conditions, including fluctuations in exchange rates and interest levels whichinfluence the operating environment and profitability of customers and thereby the ordersreceived by the company and their margins2) the competitive situation, especially significant technological solutionsdeveloped by competitors3) the company’s own operating conditions, such as the success of production, productdevelopment and project management and their continuous development and improvement4) the success of pending and future acquisitions and restructuring.April 23, 20132
  • 3. © Metso1. Quarterly highlights2. Strategic priorities3. Financial performance4. Outlook and guidance3Presentation contentsApril 23, 2013
  • 4. Q1/2013 HighlightsMatti KähkönenPresident and CEO
  • 5. © MetsoMargin improved in an uncertain marketenvironment• Market activity in line with Q4/12 levels• Capital orders lower year-on-year, servicesremained at a good level• EBITA margin improved to 8.3% (8.0%) despitea decline in capital equipment sales• Performance was driven by a higher share ofthe services business and a flexible business model• Strategic study started to review the potential forsplitting Metso into two independent listedcompaniesApril 23, 20135
  • 6. © MetsoOrder intake• Capital equipment orders declined• Services remained at a good levelApril 23, 20136942 1,020 1,0311,3654,3581,3661,6711,409 1,4985,9441,8472,8831,9181,3137,9611,920 1,7351,511 1,6996,8651,58401,0002,0003,0004,0005,0006,0007,0008,000Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q12009 2009 2009 2009 2009 2010 2010 2010 2010 2010 2011 2011 2011 2011 2011 2012 2012 2012 2012 2012 2013EUR millionServicesorders Capital orders Exceptionally large orders
  • 7. © MetsoNet salesApril 23, 20137• Services remained high at Q1/12 levels, book-to-bill of 1.2 supporting the backlogand growth• Capital net sales lower in Mining and Construction as well as in Pulp, Paper andPower• Automation was as expected1,220 1,247 1,196 1,3535,0161,170 1,370 1,3251,6875,5521,444 1,567 1,5612,0746,6461,755 1,897 1,7542,0987,5041,59001,0002,0003,0004,0005,0006,0007,0008,000Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q12009 2009 2009 2009 2009 2010 2010 2010 2010 2010 2011 2011 2011 2011 2011 2012 2012 2012 2012 2012 2013EUR millionServicesnetsales Capital net sales
  • 8. © MetsoEBITA* margin improved thanks to gross marginsApril 23, 20138* before non-recurring itemsQ1/2013 Q1/2012TargetrangeMining and Construction 12.3% 10.4% 10-15%Automation 8.8% 6.2% 11-16%Pulp, Paper and Power 4.5% 7.7% 6-9%Metso total 8.3% 8.0%• Mining and Construction improvedsignificantly• Automation progressing wellaccording to plan• Pulp, Paper and Power weak, asexpected92 851348839988125 129 150491124 140 163202629141178 171 1976881327,56,811,26,58,07,59,19,78,9 8,8 8,6 8,910,49,7 9,58,09,49,89,4 9,28,3024681012140100200300400500600700Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q12009 2009 2009 2009 2009 2010 2010 2010 2010 2010 2011 2011 2011 2011 2011 2012 2012 2012 2012 2012 2013%EUR millionEBITA * EBITA% *
  • 9. © MetsoServices business developmentApril 23, 20139Strategicpriority #1• Services activity remained good• The largest order in Q1/2013 was a multi-year, EUR 140 million life-cycle contractwith Russian Copper• Non-booked portion of multi-year servicescontracts amounts to EUR 400 millionOrders by type Q1/2013Rolling 12-month net salesServices orders by segment Q1/2013881 87302004006008001,000Q1 2012 Q1 2013EUR millionMining and Construction Automation Pulp,Paper and Power57%43%ServicesbusinessProductand projectbusiness1,0001,5002,0002,5003,0003,500Q12007Q3 Q12008Q3 Q12009Q3 Q12010Q3 Q12011Q3 Q12012Q3 Q12013EUR millionServices netsales, rolling 12 months
  • 10. © MetsoEmerging marketsNet sales in emerging marketsApril 23, 201310Strategicpriority #2Net sales in top 10 growth countries(EUR million)Country Q1/2013 Q1/2012 Change %Brazil 180 201 -10China 146 174 -16Russia 59 66 -11Chile 54 58 -7India 45 45 0South Africa 42 44 -5Mexico 37 40 -7Peru 29 26 +12Turkey 23 33 -30Indonesia 20 19 18009001,0001,1001,2001,3001,400Q12011Q22011Q32011Q42011Q12012Q22012Q32012Q42012Q12013EUR millionServicesnetsales in EM, rolling 12 monthsServices in emerging markets• Emerging markets represented 49%(50%) of net sales• Share of orders received was 55% (45%)• Book-to-bill was 1.11,0001,5002,0002,5003,0003,5004,000Q12008Q32008Q12009Q32009Q12010Q32010Q12011Q32011Q12012Q32012Q12013EUR millionNet sales in EM, rolling 12 months
  • 11. © MetsoMining business developed wellMining order intakeApril 23, 201311Q1/2013 mining orders by market areaStrategicpriority #3Mining order backlog• Mining services continue to be strong• Capital equipment demand softer than inearly 2012• Backlog is strong, providing good visibilityfor the rest of the year• Our flexible operational model providesresilience in changing market situations38%20%20%22%EMEA North America South and Central America AsiaPacific02004006008001,0001,200Q12009Q32009Q12010Q32010Q12011Q32011Q12012Q32012Q12013EUR millionMining, services Mining, capital Exceptionally large orders04008001,2001,6002,000Q12009Q32009Q12010Q32010Q12011Q32011Q12012Q32012Q12013EUR millionServicesbacklog Capital backlog
  • 12. FinancialperformanceHarri Nikunen, CFO
  • 13. © MetsoGroup key figuresApril 23, 201313EUR million Q1/2013 Q1/2012 Change % 2012Orders received 1,584 1,920 -18 6,865Services orders received 873 881 -1 3,264Net sales 1,590 1,755 -9 7,504Services net sales 727 721 1 3,174% of net sales 47 43 44EBITA * 131.5 141.2 -7 687.5% of net sales 8.3 8.0 9.2EBIT ** 119.2 129.0 -8 601.7Earnings per share, EUR 0.48 0.56 2.46Return on equity (ROE), % 13.5 17.1 17.3Return on capital employed (ROCE)before taxes, %15.3 17.9 19.7Free cash flow 74 116 -36 257Cash conversion, % 104 136 70Gearing at the end of the period, % 13.5 7.6 14.2* before non-recurring items** Includes non-recurring items of EUR -36 million in FY 2012
  • 14. © MetsoMining and ConstructionApril 23, 201314EUR million Q1/2013 Q1/2012 Change % 2012Orders received 786 964 -18 3,436Services orders received 471 477 -1 1,771Net sales 744 787 -5 3,492Services net sales 383 388 -1 1,692% of net sales 51 49 48EBITA * 91.2 82.1 11 419.9% of net sales 12.3 10.4 12.0Return on capital employed ** 25.3 25.0 28.9* before non-recurring items** excluding cash and other non-operative balance sheet itemsNote: Figures include recyclingQ1/2013 vs. Q1/2012• Capital equipment orders declined in line with lower market activity year-on-year• A somewhat slow start for the year in terms of net sales• Gross margins improved in all businesses• Very positive development in EBITA* and EBITA* margin
  • 15. © MetsoMining and ConstructionApril 23, 201315* before non-recurring itemsNote: Figures include RecyclingEBITA % * target range024681012141605001,0001,5002,0002,5003,0003,5004,000Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q12005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013%EUR millionServicesnetsales, rolling 12 months Capital net sales, rolling 12 months EBITA-% before non-necurringitems, rolling 12 months
  • 16. © MetsoAutomationApril 23, 201316* before non-recurring items** excluding cash and other non-operative balance sheet itemsEUR million Q1/2013 Q1/2012 Change % 2012Orders received 254 224 13 845Services orders received 118 104 13 382Net sales 184 182 1 859Services net sales 83 83 0 380% of net sales 45 46 44EBITA * 16.1 11.1 45 101.2% of net sales 8.8 6.2 11.8Return on capital employed ** 19.9 15.0 31.8Q1/2013 vs. Q1/2012• Orders received increased in all businesses; 13% in services and 24% in capital• Net sales unchanged at Q1/2012 level• Clear improvement in gross margin (pricing, cost savings)• EBITA* and EBITA* margin improved but were not satisfactory; coming quarters to bestronger
  • 17. © Metso02468101214161801002003004005006007008009001,000Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q12005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013%EUR millionServicesnetsales, rolling 12 months Capital net sales, rolling 12 months EBITA-% before non-necurringitems, rolling 12 monthsAutomationApril 23, 201317* before non-recurring itemsEBITA % * target range
  • 18. © MetsoPulp, Paper and PowerApril 23, 201318* before non-recurring items** excluding cash and other non-operative balance sheet itemsEUR million Q1/2013 Q1/2012 Change % 2012Orders received 511 677 -25 2,444Services orders received 284 300 -5 1,111Net sales 631 721 -12 3,014Services net sales 260 250 4 1,102% of net sales 41 35 37EBITA * 28.3 55.8 -49 203.8% of net sales 4.5 7.7 6.8Return on capital employed ** 12.7 29.8 23.8Q1/2013 vs. Q1/2012• New projects are in the pipeline but no decisions were made during Q1/2013• Services business continued to grow and provide stable profitability• Weak EBITA* and EBITA* margin driven by low volumes, under-absorption and lowgross margins in capital businesses• Further action will be taken to increase competitiveness of the business
  • 19. © Metso012345678905001,0001,5002,0002,5003,0003,500Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q12005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013%EUR millionServicesnetsales, rolling 12 months Capital net sales, rolling 12 months EBITA-% before non-necurringitems, rolling 12 monthsPulp, Paper and PowerApril 23, 201319EBITA % * target range* before non-recurring items
  • 20. © MetsoImproving our competitiveness in Pulp, Paperand PowerApril 23, 201320• Permanent structural changescontinue in Pulp, Paper andPower’s markets• We have announced a newprogram to improvecompetitiveness in thesebusinesses• Targeted savings are up toEUR 100 million by 2016
  • 21. © MetsoNet debt and net working capitalNet debt and gearingApril 23, 201321Net working capital5401,099583311260149316 27733.475.732.515.012.27.614.213.50102030405060708002004006008001,0001,2002007 2008 2009 2010 2011 Q120122012 Q12013%EUR millionNet debt Gearing375672242 247281 286452 4616.010.54.84.54.2 4.16.0 6.302468101201002003004005006007008002007 2008 2009 2010 2011 Q120122012 Q12013%EUR millionNet working capital, EUR NWC, as % of net sales
  • 22. Outlook and guidanceMatti KähkönenPresident and CEO
  • 23. © MetsoMarket outlookApril 23, 20132332% of net sales50% service intensity Positive for capital and services Good in capital business withvolatility expected to continue.Services excellent.Mining11% of net sales40% service intensity Positive in emerging markets; flatin developed markets Satisfactory for equipment andservices11% of net sales45% service intensity Positive for oil & gas customers;flat in pulp & paper Good in oil & gas; softer in pulp &paper. Services good.Construction Automation11% of net sales30% service intensity Subject to the development of thebioenergy market Satisfactory for projects andservicesPower21% of net sales50% service intensity Demand for board and tissuegrowing; other grades flat or down Weak for paper and boardmachines. Tissue machines andservices good.9% of net sales40% service intensity Positive, mainly due to packagingboard and tissue Good for rebuilds and services.Pulp mill market activitysatisfactory.Paper, Board, Tissue PulpLong-term demand Short-term demandShare of Metso net sales in January – December 2012Uncertainties might impact the timing of large project orders
  • 24. © MetsoDeliveries in2013Deliveriesafter 2013Deliveriesin2012Deliveriesafter 201201,0002,0003,0004,0005,0006,000Order backlogMarch 31,2012Order backlogMarch 31,2013EUR millionOrder backlog* of EUR 4.5 billionApril 23, 201324 * At the end of March 2013Services orders: 30%Services orders: 33%4,0235,3104,515 4,55801,0002,0003,0004,0005,0006,0002010 2011 2012 Q12013EUR millionMining and Construction Automation Pulp,Paper and Power
  • 25. © MetsoWe estimate that• Our EBITA before non-recurringitems will be at around 2012 levelsand our net sales will be at 2012level or slightly below.The estimates for our financial performance in 2013 arebased on Metso’s current market outlook, order backlogfor 2013 and foreign exchange rates in March 2013.25Guidance for 2013April 23, 2013
  • 26. © MetsoDemerger study proceeding according to planApril 23, 201326• On March 25, the Board decided to start a process to study the potentialdemerger of Metso• The plan is to form a new company out of the Pulp, Paper and Powerbusinesses and list it on the NASDAQ OMX Helsinki stock exchange• The Mining and Construction and Automation businesses would remain inthe current company• If the go-ahead is given, the process would be completed by the end of2013• Next planned milestones:- Signing and registration of a demerger plan- Extraordinary General Meeting in the second half of 2013
  • 27. © Metso‘PPP’• Stable underlying market growth drivenby increasing board and tissueconsumption in emerging markets,service expansion and biorefiningopportunities• Global market leader – #1-3 player in allmarkets served• Competitive advantage in emergingmarkets, services offering andtechnologies• Share of services close to 40% and largebacklog provide good revenue visibilityand resilience• Stable growth, increasing profitability andasset-light operating model will supportgood returns on capital employedKey attributes of the planned new entities27‘MAC&AUT’• Strong underlying market growth in allserved markets: mining, construction andrelated automation• Strong global market position - #1-3 playerin core market segment• Competitive advantage in globaloperations, service offering andtechnologies• Share of services close to 50% andsignificant backlog provide good revenuevisibility and resilience• Significant potential for growth within thevalue chain and service markets, boththrough organic expansion and M&A