Strong and getting stronger
in Services
João Ney Colagrossi
President, Services Business
Mining and Construction
November ...
1

Services business in Mining and
Construction

2

Services business in Automation

3

Metso’s Services business
Services business
in Mining and Construction
Mining market drivers
High or low market – Good services are always in demand
Infrastructure spending

Commodity prices
Mi...
Growth driven by services solutions
Mining and Construction services
Strong growth over last 5 years

Flat development ove...
Strong focus on services for the mining industry
Mining and Construction services
Net sales
by industry*

Net sales
by min...
Mining and Construction services strategy
Four strategic objectives to drive growth and competitiveness
New
growth
markets...
Expanding our offering
Wide offering ranging from spare parts to performance services
Spare and wear parts
solutions for

...
Offering expansion: New product development
Differentiating and expanding our offering
Differentiating our comminution wea...
Offering expansion: Full comminution offering
Acquisitions make us the only OEM with full comminution offering
JX foundry ...
Offering expansion: Performance services
We provide RCC with full comminution
offering
Boliden – Sweden
LKAB – Sweden

Cli...
Offering expansion: Performance services
Our full comminution offering helps RCC to improve its profitability
RCC Mikheevs...
Market expansion: Service center network
Continued expansion to bring us closer to our customers

Gälliväre
Lab City

SW U...
Market expansion: Antofagasta service center
Recently opened location that is already sold out and expanding

March 2013

...
Operating model development
Work on our operating model is already being reflected in our GP-%
Operating model development...
Services business in
Automation
Automation services business
Overview
Our mission is to maximize the profitability
of our customers’ businesses.

>1,000

...
Automation services continued to grow with
improved profitability
Net sales, rolling 12 months

Q1-Q3/2013 vs. Q1-Q3/2012
...
Automation services business
Increasing exposure to Oil & Gas industry
Net sales
by industry

Net sales
by service type

N...
Automation Services growth strategy
Intelligent Services create differentiation
Deliver
customer value
solutions

Performa...
Continued expansion in Oil & Gas
Some example references

Deliver
customer value
solutions

Metso is working with a major ...
ExperTune is a strategic fit
to provide business-enhancing solutions

Metso’s target industries
22

© Metso

Capital Marke...
Metso’s services business
Metso’s services business: Rationale
Accelerating growth and improving efficiency and scalability
Metso’s services busines...
Net sales of Metso’s services business
Stable EUR ~2 bn business with significant growth potential
EUR million

Mining and...
Intelligent performance solutions
Building on our strong equipment and services businesses
Intelligent
solutions

Embed in...
Metso’s services business: Full slurry handling
offering

Developing a complete range for an attractive worth EUR ~2.5 bil...
Our service centers

Sharing capabilities to drive efficiency and scalability

Mining and Construction
service centers
Aut...
Conclusions
 Metso’s services business is a stable
EUR ~2 billion business
 Strong market outlook, especially in
Mining ...
Metso Capital Markets Day 2013 presentations: João Ney Colagrossi, President, Services business
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Metso Capital Markets Day 2013 presentations: João Ney Colagrossi, President, Services business

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Metso Capital Markets Day 2013 presentations: João Ney Colagrossi, President, Services business

  1. 1. Strong and getting stronger in Services João Ney Colagrossi President, Services Business Mining and Construction November 27, 2013 London, UK
  2. 2. 1 Services business in Mining and Construction 2 Services business in Automation 3 Metso’s Services business
  3. 3. Services business in Mining and Construction
  4. 4. Mining market drivers High or low market – Good services are always in demand Infrastructure spending Commodity prices Minerals consumption New business models and installed base Demand HIGHER than production capacity  HIGHER capacity utilization CAPEX impact  Green field projects  Brown field projects  More exploration  Plant modernization 4 © Metso OPEX impact  Maximize capacity  Delivery  Availability  Utilization  More people Capital Markets Day 2013 Demand LOWER than production capacity  LOWER capacity utilization CAPEX impact − No green field − Minimal brown field − Reduced exploration  Maintenance capex OPEX impact  Operational efficiency  Cost reduction  Repair and rebuild  Improved planning − Less spare parts and engineering services
  5. 5. Growth driven by services solutions Mining and Construction services Strong growth over last 5 years Flat development over last 12 months* (EUR million) Net sales (EUR million) 2,000 Mining and Construction services Net sales, Q4/11-Q3/12 12% p.a. 1,662 Change in exchage rates - 47 Change in mining + 44 Change in construction -21 Net sales, Q4/12-Q3/13 1,000 500 2009 2010 2011 Spare and wear parts 5 -1 Change in recycling 1,500 © Metso Capital Markets Day 2013 2012 2013* Services solutions 1,637 Flat development over the last 12 months* • Geological inflation driving demand • Consumables growth ~9% p.a. • Large underserved own installed base • Growth not limited to own installed base • Performance services *) Rolling 12 months 10/12-9/13
  6. 6. Strong focus on services for the mining industry Mining and Construction services Net sales by industry* Net sales by mineral** 5% 17% 20% Net sales by geography* 10% 21% 21% 21% Employees by region*** 14% 26% 18% 75% 23% 23% 33% 17% 20% 26% 10% Iron ore Europe Gold North America North America Mining Copper South America South America Construction Aggregates Asia-Pacific Asia-Pacific Recycling 6 Europe Other Africa and Middle East Africa and Middle East © Metso Capital Markets Day 2013 *) Rolling 12 months 10/12-9/13 **) 1/2013-6/2013 ***) November 2013
  7. 7. Mining and Construction services strategy Four strategic objectives to drive growth and competitiveness New growth markets Existing core markets 3. Market expansion Service center network Stronger local presence 1. Market share growth Installed base penetration Upgrades, rebuilds & repairs Existing offering 4. Operating model development 7 © Metso Capital Markets Day 2013 2014-2016 2. Offering expansion New product development Full comminution offering Performance services New offering
  8. 8. Expanding our offering Wide offering ranging from spare parts to performance services Spare and wear parts solutions for Engineered services solutions Performance services solutions • • • • • • • • • • • Process upgrades and engineered-to-order solutions • Machine upgrades and repairs • Rebuilds • Field services • Process technology and innovation • Cost-per-ton contracts • Availability guarantees • Performance-per-ton contracts • Intelligent features and solutions Grinding mills Unit crushers Mobile crushers Screens & feeders Bulk material handling Conveyors Process equipment Pyro-processing Recycling equipment Complete plants Expansion 8 © Metso Capital Markets Day 2013
  9. 9. Offering expansion: New product development Differentiating and expanding our offering Differentiating our comminution wears Expanding our slurry handling offering Mill discharge pumps for grinding circuits Megaliners for safe and fast installation Cyclones Ultra-fine screens HRC liners for easy installation 9 © Metso Capital Markets Day 2013 Slurry valves
  10. 10. Offering expansion: Full comminution offering Acquisitions make us the only OEM with full comminution offering JX foundry acquisition Full comminution offering SABO acquisition Services • Equipment installation • Maintenance and upgrades • Process optimization Wear parts Main offering • Metallic mill linings (steel) • Crusher wears (manganese) Grinding media Key plants: • Quzhou, China • Rubber/polymet mill linings Metso acquisition rationale • Metallic mill linings • Full comminution offering • Performance services • Presence in China and APAC 10 © Metso Capital Markets Day 2013 • Crusher wears Metallic mill linings Spare parts • Mill heads and shells • Suspension bearings • Other spare parts Capital equipment • Grinding mills • Crushers • Other equipment Main offering • Forged grinding media balls • Rolled grinding media balls Key plants: • Bilbao, Spain • Sevilla, Spain Metso acquisition rationale • Grinding media • Full comminution offering • Performance services • Presence in EMEA
  11. 11. Offering expansion: Performance services We provide RCC with full comminution offering Boliden – Sweden LKAB – Sweden Cliff Resources– Canada • Mill lining replacement & general maintenance • 3-5 employees • 3 years • Primary gyratory liner replacements • 3 years: 5 M EUR Buenavista – Mexico • Maintenance of crushing & grinding equipment • 80 employees • 1 year (since 2009) Peñoles – Mexico • Mill inspection • 12 employees • 5 years MDC – Mexico • Crusher liner replacements • 3-12 employees • 1 year (since 2006) • • • • Mills maintenance 5-50 employees 5 years (Since 2010) • Plant maintenance, including wears and spares • 30 employees • 6.5 years :73 MEUR Southern Europe BHP – Chile Anglo - Chile • Maintenance of crushing, screening, and primary grinding equipment • 40 employees • 3 years 11 © Metso Capital Markets Day 2013 Anglo – Ghana Freeport – Indonesia • Maintenance supervision • 6 employees • 3 years: 5.4 MEUR • Plant maintenance, including spares and Wears • 100 employees • 5 years • Maintenance of crushing & screening equipment • 12-16 employees • 2 years. Cost/ton • Pumps maintenance • 6 employees • 1 year (since 2006) • Crushing and screening inspection services • 3 years • Screens maintenance • 16 employees • Since 2004 South West Mining – India Vale Sossego– Brazil Lafarge – Brazil Alrosa – Russia Lafarge – France 250 Crusher inspection contracts • Screens repairs • 26 employees • 3 years • Crushing & screening equipment full maintenance • 120 employees • 3 years RCC – Mikheevsky • Plant maintenance & operation including spares and wears • Grinding Media • 90 employees • 6.5 years • 260 MEur Northland – Sweden Vale – Brazil RCC – Tominsky • Plant maintenance & operation including spares and wears • 70 employees • 6.5 years • 85 MEur Aquarius – South Africa • Crusher liner replacement • 1-4 employees • 1 year • Mobile plant maintenance • Cost/ton • 3 years BHP – Australia • Primary crushing maintenance • 3 years Barrick – Australia • Maintenance of primary crushing equipment • Since 2006
  12. 12. Offering expansion: Performance services Our full comminution offering helps RCC to improve its profitability RCC Mikheevsky RCC Tominsky RCC grinding media • Location: Kartaly, Russia, Mikheevsky copper mine • Cost-per-ton contract value: EUR 115 million • Duration: 6.5 years • Scope: full comminution circuit and performance services (maintenance, parts and optimization) • Metso employees on site: >80 • Location: Chelyabinsk, Russia, Tominsky copper mine • Cost-per-ton contract value: EUR 85 million • Duration: 6.5 years • Scope: full comminution circuit and performance services (maintenance, parts and optimization) • Metso employees on site: >70 • Location: Mikheevsky mine • Cost-per-ton contract value: EUR 145 million • Duration: 6.5 years • Scope: grinding media supply Note: Future objective is to sign a grinding media agreement at Tominsky as well. Metso’s full comminution offering for Russian Copper Company 12 © Metso Capital Markets Day 2013
  13. 13. Market expansion: Service center network Continued expansion to bring us closer to our customers Gälliväre Lab City SW USA Cananea Paraubebas Bangalore Arequipa Existing service center Planned service center 13 © Metso Capital Markets Day 2013 Antofagasta Vereenigeng Perth Newcastle
  14. 14. Market expansion: Antofagasta service center Recently opened location that is already sold out and expanding March 2013 September 2013 Late 2014 Antofagasta opened with large repair bays and full service capabilities Capacity sold out to local mining companies in just six months after opening Capacity expansion will come online to meet demand for our services 14 © Metso Capital Markets Day 2013
  15. 15. Operating model development Work on our operating model is already being reflected in our GP-% Operating model development Mining and Construction Services GP % index Footprint rationalization • • • • 15 service or distribution center (DC) locations closed 2009-2013 27 locations sold as a part of the conveyor belt divestment in 2013 Manufacturing locations consolidated in Europe and North America Increased outsourcing of selected spare and wear parts Investments and acquisitions • • • • Major investments to expand rubber press and foundry capacity Acquisition of JX foundry (metallic mill linings and Chinese presence) Acquisition of SABO Spain (expansion into grinding media) New service centers: Lab City, Cananea, and Southwest US 108 100 105 102 103 Processes and systems • • • • 15 Significant efforts made to improve our supply chain processes ~1,400 parts delivered every hour with >90% availability Development of advanced logistics platform ongoing Continuous services training for our over 2,000 service technicians © Metso Capital Markets Day 2013 2009 2010 2011 2012 2013
  16. 16. Services business in Automation
  17. 17. Automation services business Overview Our mission is to maximize the profitability of our customers’ businesses. >1,000 Services • • • • Process and control optimization Intelligent maintenance services Replacement products and spare parts Automation system upgrades and extensions Latest service presence expansion • New valve service centers in Brazil, the Netherlands, Germany, Finland, and Thailand Key industries • • 17 Oil & Gas Paper & Pulp © Metso Capital Markets Day 2013 services personnel >55 automation service hubs >35 valve service centers
  18. 18. Automation services continued to grow with improved profitability Net sales, rolling 12 months Q1-Q3/2013 vs. Q1-Q3/2012 450 EUR million 400 300 Change % 326 282 297 275 10 3 Growth driven by Oil & Gas industry • • 250 200 Flow Control services Performance services Stable Paper & Pulp market • 150 100 • 50 System upgrade and maintenance investments postponed in Europe and North America South America & APAC are looking good Strong medium-term outlook • • • • 0 © Metso Q1-Q3/ 2012 Services orders Services net sales 350 18 Q1-Q3/ 2013 Capital Markets Day 2013 Oil & Gas industry Large Flow Control installed base Growth not limited to installed base Performance services
  19. 19. Automation services business Increasing exposure to Oil & Gas industry Net sales by industry Net sales by service type Net sales by geography 7% 12% 43% 57% 12% Employees by region 6% 44% 11% 23% 50% 9% 25% 12% 4% 14% 50% 21% 19 © Metso Capital Markets Day 2013 Europe Europe Spare parts North America North America Demand services South America South America Asia-Pacific Asia-Pacific Projects Pulp & Paper Replacements Contracts Oil & Gas Africa and Middle East Africa and Middle East Rolling 12 months 10/12-9/13
  20. 20. Automation Services growth strategy Intelligent Services create differentiation Deliver customer value solutions Performance services and consultancy OEM product-based services market Current core Expand our services scope General maintenance services market Scope 20 © Metso Capital Markets Day 2013 Maximize yield from the installed base
  21. 21. Continued expansion in Oil & Gas Some example references Deliver customer value solutions Metso is working with a major oil & gas producer to increase productivity both upstream and downstream. Orders received for three plants and global expansion planned Maximize yield from the installed base Expand our services scope 21 Qatar Shell has awarded a service contract to Metso linked to an earlier delivery of valves and intelligent positioners to the Pearl Gas to Liquids (GTL) project in Ras Laffan Industrial City Maintenance services agreement with the leading Polish refinery, Grupa Lotos © Metso Capital Markets Day 2013
  22. 22. ExperTune is a strategic fit to provide business-enhancing solutions Metso’s target industries 22 © Metso Capital Markets Day 2013 Other industries
  23. 23. Metso’s services business
  24. 24. Metso’s services business: Rationale Accelerating growth and improving efficiency and scalability Metso’s services business Mining and Construction services business Key figures • Net sales: EUR ~1,600 million • Employees: over 7,000 • Service centers: over 70 Customer industries • Mining • Construction • Recycling Service offering • Spare and wear parts • Engineered services • Performance services 24 © Metso Capital Markets Day 2013 Shared new businesses to accelerate services growth • Intelligent performance solutions • Full slurry handling offering Shared capabilities to drive efficiency and scalability • Service centers • Distribution centers • Service IT systems • Service processes Automation services business Key figures • Net sales: EUR ~400 m • Employees: over 1,000 • Service locations: over 90 Customer industries • Oil & Gas • Pulp & Paper and Power • Mining Service offering • Flow control services • Automation services • Performance services
  25. 25. Net sales of Metso’s services business Stable EUR ~2 bn business with significant growth potential EUR million Mining and Construction services Automation services 2,500 2,000 1,500 1,000 500 0 '08 Q4 '09 Q1 '09 Q2 '09 Q3 '09 Q4 Services net sales dropped by only ~13% 25 © Metso Capital Markets Day 2013 '10 Q1 '10 Q2 '10 Q3 '10 Q4 '11 Q1 '11 Q2 '11 Q3 '11 Q4 '12 Q1 '12 Q2 '12 Q3 Services is Metso’s fastest growing Metso business, EUR 700 million growth in net sales in 2010-12 '12 Q4 '13 Q1 '13 Q2 '13 Q3 Slowing market, but stable sales
  26. 26. Intelligent performance solutions Building on our strong equipment and services businesses Intelligent solutions Embed intelligence in our machines, services, and processes Process technology Multi-year contracts Standard services Spare and wear parts solutions Wear parts Spare parts Engineered services solutions Performance services solutions Capital equipment Transition from being an equipment and transactional services supplier to an intelligent solutions provider is ongoing across Metso 26 © Metso Capital Markets Day 2013
  27. 27. Metso’s services business: Full slurry handling offering Developing a complete range for an attractive worth EUR ~2.5 billion market Slurry valves Slurry pumps © Metso Cyclones & fine screens Slurry hoses & pipes
  28. 28. Our service centers Sharing capabilities to drive efficiency and scalability Mining and Construction service centers Automation service centers 28 © Metso Capital Markets Day 2013
  29. 29. Conclusions  Metso’s services business is a stable EUR ~2 billion business  Strong market outlook, especially in Mining and Oil & Gas  Expansion of geographical and new services offerings  Untapped potential in our installed base and competitor equipment  Customer value creation through performance services and solutions  New services: Intelligent mining solutions and full slurry handling  Strong assets and capabilities for all Metso’s service businesses 29 © Metso Capital Markets Day 2013

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