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Metso Interim Review January-September 2012 presentation

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Metso Interim Review January-September 2012 presentation. Read more: www.metso.com/investors

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Metso Interim Review January-September 2012 presentation

  1. 1. Interim ReviewJanuary – September 2012 Matti Kähkönen, President and CEO Harri Nikunen, CFO October 25, 2012
  2. 2. 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 willingness, expectations for company growth, development and profitability and the realization of synergy benefits and cost savings, and statements preceded by ”expects”, ”estimates”, ”forecasts” or similar expressions, are forward-looking statements. 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 the results 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 which influence the operating environment and profitability of customers and thereby the orders received by the company and their margins 2) the competitive situation, especially significant technological solutions developed by competitors 3) the company’s own operating conditions, such as the success of production, product development and project management and their continuous development and improvement 4) the success of pending and future acquisitions and restructuring.2 © Metso October 25, 2012
  3. 3. Presentation contents 1. Q3/2012 highlights 2. Strategic priorities 3. Financial performance 4. Outlook and guidance3 © Metso October 25, 2012
  4. 4. Q3 highlights Matti KähkönenPresident and CEO
  5. 5. Steady progress forward • Customer activity well in line with expectations • Services continued to develop strongly, order intake up 16% year-on-year • Order intake EUR 1,511 million; no large orders in Pulp, Paper and Power • Net sales increased by 12% year-on-year • EBITA before non-recurring items was EUR 171 million, compared to EUR 163 million in Q3/2011 • EBITA margin was 9.7%, compared to 10.4% in Q3/20115 © Metso October 25, 2012
  6. 6. Services orders strong, capital orders moderateEUR million3,000 2,8832,500 1,847 1,918 1,9202,000 1,671 1,735 1,498 1,5111,500 1,365 1,366 1,409 1,313 1,020 1,031 9421,000 500 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 Services orders Capital orders Exceptionally large orders • Order level was reasonable, given the lack of large project orders in Pulp, Paper and Power • Services orders increased 16% year-on-year • Positive 4%-point benefit from currency rates6 © Metso October 25, 2012
  7. 7. Net sales increased by 12%EUR million2,500 2,0742,000 1,897 1,755 1,754 1,687 1,567 1,561 1,4441,500 1,353 1,370 1,325 1,220 1,247 1,196 1,1701,000 500 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 Services net sales Capital net sales • All segments grew, Mining and Construction in particular • Capital net sales increased by 14% and services by 11% • Positive 5%-point benefit from currency rates • Growth during the last 12 months was 20% (annual CAGR target >10%)7 © Metso October 25, 2012
  8. 8. Consistent EBITA* developmentEUR million %700 11.2 12 10.4600 9.7 9.7 9.5 9.4 9.7 9.1 8.9 8.9 10 8.8 8.6500 8.0 8.0 7.5 7.5 8 6.8 6.5400 6300 629 491 4200 399100 202 2 150 163 177 171 134 125 129 124 140 140 92 85 88 88 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2009 2009 2009 2009 2009 2010 2010 2010 2010 2010 2011 2011 2011 2011 2011 2012 2012 2012 EBITA * EBITA% * Q3/2012 Q3/2011 Target range • Mining and Construction performed well 12.3 11.0 10-15 % • Automation good but slightly down y-o-y 13.8 15.1 11-16 % • Pulp, Paper and Power well in line with targets 7.0 9.2 6-9 % • Metso excl. non-core businesses 10.2 11.0 *) before non-recurring items8 © Metso October 25, 2012
  9. 9. Other key figures Q1-Q3/2012 Q1-Q3/2011 Earnings per share, EUR 2.00 1.57 Return on capital employed (ROCE) before taxes, % 20.1 16.6 (annualized) Free cash flow, EUR million 188 330 Cash conversion, % 63 141 Gearing at the end of the period, % 16.7 13.89 © Metso October 25, 2012
  10. 10. Strategic Good development in services priority #1 Orders by type in Q1-Q3/2012 Services orders by segment EUR million 3,000 Services business 2,000 49% 51% Product and project business 1,000 0 Q1-Q3 Q1-Q3 2011 2012 Mining and Construction Automation Pulp, Paper and Power Services net sales Services development in Q3/2012EUR million3,500 • Mining and Construction: orders up by 24%, net sales up by 17%3,000 • Automation: orders up by 20%, net sales by 13%2,500 • Pulp, Paper and Power: orders increased by 10%, net2,000 sales by 4%1,500 • Net sales growth during the last 12 months: 14% (annual target >10%)1,000 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 Services net sales, rolling 12 months10 © Metso October 25, 2012
  11. 11. Strategic Extended presence in emerging markets priority #2 Net sales in emerging markets Orders received in Q1-Q3/2012EUR million4,0003,5003,000 Emerging markets2,500 46% 54% Developed markets2,0001,5001,000 2007 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 2008 2008 2009 2009 2010 2010 2011 2011 2012 Net sales in EM, rolling 12 months Services in emerging marketsEUR million1,400 • All BRIC countries were among the top 10 in Q3 orders received1,300 • Eastern Europe was strong in Mining and Construction1,2001,100 • Services in emerging markets have grown by 14%* through larger installed base and extended presence1,000 • Share of emerging markets in services orders was 40% 900 in Q3/2012 800 2010 Q2 Q4 Q2 2011 2011 2012 Services net sales in EM, rolling 12 months *) last 12 months11 © Metso October 25, 2012
  12. 12. Strategic Growth in the mining business priority #3 Mining order intake Q3/2012 mining orders by market area EUR million1,2001,000 18% 800 600 45% 400 21% 200 0 16% Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2009 2009 2010 2010 2011 2011 2012 2012 Mining, services Mining, capital Exceptionally large orders EMEA North America South and Central America Asia Pacific Mining order backlogEUR million2,000 • Some softening in capital demand experienced towards the end of the quarter1,600 • Strong development in services:1,200 - three-year extension of services contract with 800 Boliden in Sweden 400 - more service hubs to be opened - investment in mill linings manufacturing capacity 0 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 • More smaller orders than last year 2009 2009 2010 2010 2011 2011 2012 2012 Services backlog Capital backlog12 © Metso October 25, 2012
  13. 13. FinancialperformanceHarri Nikunen, CFO
  14. 14. Mining and Construction supported EBITA* growth Q1-Q3/2012 vs. Q1-Q3/2011 EUR million 600 488 500 426 400 300 200 100 0 Q1-Q3 Mining and Construction Automation Pulp, Paper and Power Others Q1-Q3 2011 2012 *) before non-recurring items14 © Metso October 25, 2012
  15. 15. Mining and Construction continues to improve EUR million % 3,500 16 3,000 14 12 2,500 10 2,000 8 1,500 6 1,000 4 500 2 0 0 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 Q1 Q2 Q3 2005200620062006200620072007200720072008200820082008200920092009200920102010201020102011201120112011201220122012 Services net sales, rolling 12 months Capital net sales, rolling 12 months EBITA% *, rolling 12 months • Mining has grown rapidly; construction has been stable EBITA% * target range • Strong growth in services *) before non-recurring items15 © Metso October 25, 2012
  16. 16. Mining and Construction continues to improve EUR million Q3/2012 Q3/2011 Change % Q1-Q3/2012 Q1-Q3/2011 Change % 2011 Orders received 754 840 -10 2,512 2,866 -12 3,464 Services orders received 436 353 24 1,293 1,157 12 1,497 Net sales 830 678 22 2,424 1,902 27 2,760 Services net sales 408 350 17 1,170 996 17 1,378 % of net sales 49 52 48 52 50 EBITA* 102 75 37 295 201 47 322 % of net sales 12.3 11.0 12.2 10.5 11.7 Return on capital 30.0 23.2 27.4 employed** Q3/2012 vs. Q3/2011 • Strong sales growth in both services and capital businesses • Gross margins were stable, volumes supported EBITA% growth to 12.3% • Solid backlog with no cancellations or exceptional postponements • ROCE increased to 30.0% *) before non-recurring items16 © Metso October 25, 2012 **) excluding cash and other non-operative balance sheet items, annualized
  17. 17. Automation – stable development EUR million % 900 18 800 16 700 14 600 12 500 10 400 8 300 6 200 4 100 2 0 0 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 Q1 Q2 Q3 2005200620062006200620072007200720072008200820082008200920092009200920102010201020102011201120112011201220122012 Services net sales, rolling 12 months Capital net sales, rolling 12 months EBITA% *, rolling 12 months • Improved performance at Flow Control, driven by growth in oil & gas EBITA% * target range and stronger operations • 2011 was exceptionally strong for Process Automation Systems *) before non-recurring items17 © Metso October 25, 2012
  18. 18. Automation – stable development EUR million Q3/2012 Q3/2011 Change % Q1-Q3/2012 Q1-Q3/2011 Change % 2011 Orders received 190 180 6 639 625 2 822 Services orders received 96 80 20 297 277 7 352 Net sales 212 185 15 626 526 19 770 Services net sales 95 84 13 275 238 16 345 % of net sales 49 50 47 49 48 EBITA* 29 28 5 72 68 7 104 % of net sales 13.8 15.1 11.5 12.8 13.5 Return on capital 30.5 35.1 39.0 employed** Q3/2012 vs. Q3/2011 • Solid sales growth in both services (13%) and capital (19%) businesses • EBITA% was 13.8%, somewhat down from Q3/2011 • Performance of the Flow Control business is continuing to improve • ROCE remains good at 30.5% *) before non-recurring items18 © Metso October 25, 2012 **) excluding cash and other non-operative balance sheet items, annualized
  19. 19. Pulp, Paper and Power in the target rangeEUR million %3,500 9 83,000 72,500 62,000 51,500 4 31,000 2 500 1 0 0 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 Q1 Q2 Q3 2005200620062006200620072007200720072008200820082008200920092009200920102010201020102011201120112011201220122012 Services net sales, rolling 12 months Capital net sales, rolling 12 months EBITA% *, rolling 12 months • Services business has grown steadily EBITA% * target range • Business mix is impacting performance • Paper has weakened during the last 12 months19 © Metso October 25, 2012 *) before non-recurring items
  20. 20. Pulp, Paper and Power in the target range EUR million Q3/2012 Q3/2011 Change % Q1-Q3/2012 Q1-Q3/2011 Change % 2011 Orders received 504 794 -37 1,767 2,813 -37 3,225 Services orders received 278 253 10 864 915 -6 1,145 Net sales 635 593 7 2,089 1,859 12 2,703 Services net sales 261 250 4 782 735 6 1,048 % of net sales 41 42 38 40 39 EBITA* 44 55 -19 144 170 -15 219 % of net sales 7.0 9.2 6.9 9.2 8.1 Return on capital 27.5 26.7 27.2 employed** Q3/2012 vs. Q3/2011 • Services orders and net sales increased • EBITA% was 7.0%, down from the strong figure seen in Q3/2011 • Under-absorption and project performance had a negative impact • ROCE good at 27.5% *) before non-recurring items20 © Metso October 25, 2012 **) excluding cash and other non-operative balance sheet items, annualized
  21. 21. Strong capital structure and liquidity position Q1-Q3/2012 Q1-Q3/2011 Net working capital / net sales, % 6.0 3.4 Free cash flow, EUR million 188 330 Cash conversion, % 63 141 Net interest-bearing liabilities, EUR million 366 278 Gearing at the end of the period, % 16.7 13.8 Return on capital employed (ROCE) before taxes, 20.1 16.6 annualized, % Equity to assets ratio at the end of the period, % 41.8 38.421 © Metso October 25, 2012
  22. 22. Net debt and net working capital Net debt and gearing Net working capital and NWC to net salesEUR million % EUR million % 1200 75.7 80 800 12 10.5 70 700 1000 10 60 600 800 8 50 500 6.0 6.0 672 33.4 32.5 600 40 400 6 1,099 4.8 4.5 30 300 4.2 447 540 375 400 3.4 4 583 15.0 16.7 13.8 12.2 20 200 281 242 247 213 200 2 310 366 10 100 278 260 0 0 0 0 2007 2008 2009 2010 Q3 2011 Q3 2007 2008 2009 2010 Q3 2011 Q3 2011 2012 2011 2012 Net debt Gearing Net working capital NWC / Net sales22 © Metso October 25, 2012
  23. 23. Outlook and guidance Matti Kähkönen President and CEO
  24. 24. Market outlook Relatively stable demand, but increasing uncertainties Mining Construction Automation 32% of net sales 11% of net sales 11% of net sales 50% service intensity 40% service intensity 45% service intensity Long-term Positive for capital and services Positive in emerging markets; Positive for oil & gas customers; developed markets flat pulp & paper flat Short-term Good demand in capital Satisfactory demand for capital Good demand in oil & gas, softer business but somewhat softer and services. in pulp & paper. Services good. quarters expected. Services excellent. Power Paper, board, tissue Pulp 11% of net sales 21% of net sales 9% of net sales 30% service intensity 50% service intensity 40% service intensity Long-term Positive, partly subject to Demand for board and tissue Positive due to demand for . legislation growing; other grades flat or down packaging board, tissue and new applications Short-term Satisfactory demand for Weak demand for paper and board Good demand for rebuilds and projects and services. machines. Services good. services. Pulp mill market activity satisfactory. © Metso N.B. Shares of Metso´s net sales in January - September 201224 October 25, 2012
  25. 25. Healthy order backlog of EUR 5.0 billion EUR million 6000 7,000 6,000 5000 5,000 4000 4,000 3000 3,000 2000 Around 42% of 2,000 deliveries for 2012 consist of services orders 1000 1,000 0 0 2008 2009 2010 2011 Q3 Q3 2011 2012 Mining and Construction Automation Pulp, Paper and Power Other Total backlog Deliveries in 2012 Deliveries after 201225 © Metso October 25, 2012
  26. 26. Guidance for 2012 In line with our earlier statement, we estimate that: • Our net sales for 2012 will grow compared to 2011, and that • Our result (EBITA before non- recurring items) for 2012 will improve compared to 2011 The estimates for our financial performance in 2012 are based on Metso’s current market outlook, strong order backlog for 2012 and current business scope, as well as on foreign exchange rates remaining similar to those in September 2012.26 © Metso October 25, 2012
  27. 27. Fit for the future • Q3 summary: - satisfactory order intake - strong services orders - consistent net sales growth and overall performance • Healthy backlog, with EUR 3.2 billion to be delivered after 2012 • Strong balance sheet • Good strategy for driving profitable growth • Strategic priorities: services, emerging markets and mining27 © Metso October 25, 2012
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