Metso's Half-Year Financial Review January 1 - June 30, 2017
Metso's Half-Year Financial Review January 1 - June 30, 2017
Metso's Half-Year Financial Review January 1 - June 30, 2017
Metso Corporation, Stock exchange release, July 21, 2017 at 09:00 a.m. EEST
Metso will arrange a results audiocast today at 1:00 p.m. EEST. The audiocast is viewable at www.metso.com/latestreports. A simultaneous conference call will be arranged, allowing participants to ask questions. Details of the audiocast at the end of this release.
This is a summary of Metso's Half-Year Review January 1 -June 30, 2017. The complete report is attached to this release and is also available at www.metso.com/latestreports.
Figures in brackets refer to the corresponding period in 2016, unless otherwise stated.
Second-quarter 2017 in brief (compared to the second quarter of 2016)
· Market activity remained healthy overall and improved in mining equipment.
· Sales have not yet reflected the order growth, which in addition to mix had the most significant impact on profitability.
· Orders received decreased 2 percent and totaled EUR 749 million (EUR 761 million), but were 12 percent higher when adjusting for a large mining equipment order in the comparison period. Services orders increased 8 percent to EUR 480 million (EUR 444 million)
· Sales increased 1 percent to EUR 675 million (EUR 671 million). Services sales increased 1 percent and totaled EUR 445 million (EUR 439 million)
· Adjusted EBITA decreased to EUR 70.0 million, or 10.4 percent of sales (EUR 77.3 million, or 11.5%)
· Earnings per share totaled EUR 0.24 (EUR 0.28)
Half-Year 2017 in brief (compared to the half-year of 2016)
· Orders received increased 4 percent and totaled EUR 1,482 million (EUR 1,424 million). Services orders increased 11 percent to EUR 976 million (EUR 877 million)
· Sales increased 4 percent to EUR 1,323 million (EUR 1,272 million). Services sales increased 2 percent and totaled EUR 868 million (EUR 848 million)
· Adjusted EBITA increased to EUR 136.5 million, or 10.3 percent of sales (EUR 133.0 million, or 10.5%)
· Earnings per share totaled EUR 0.47 (EUR 0.46)
· Free cash flow was EUR 43 million (EUR 136 million) and was negatively affected mainly by an increase in net working capital
Outlook for 2017 (changes in brackets)
Metso's overall trading conditions are expected to be better than in 2016. Demand for our products and services in 2017 is expected to develop as follows:
- Improve to satisfactory for mining equipment (previously: weak) and remain good for mining services
- Remain good for aggregates equipment and services
- Remain good for flow control products related to customers' new investments and services
At the end of June 2017, our backlog for 2017 totaled approximately EUR 1 billion. In the current market conditions, we continue to expect some postponements to planned delivery timetables. Capital expenditure excluding acquisitions is expected to increase compared to 2016, but to remain below depreciation and amortization.
President and CEO Matti Kähkönen:
Market sentiment has turned slightly better in our customer industries during the first half of the year and we saw good activity during the second quarter. Orders grew in both segments, when adjusting for a large mining equipment order from the comparison period. Our aggregates business has continued to improve, thanks to favorable market development in several regions. In mining, we have seen a positive change in the equipment business, and services orders have continued to grow year-on-year across our offering. Activity in Flow Control has been in line with expectations, and the second quarter saw orders remaining at a healthy level in valves and increasing in pumps.
Metso's sales and thus profitability were slightly disappointing but we think this is largely related to timing. The improved order book is expected to provide a good starting point for the second half of the year. Minerals suffered from low sales in mining equipment as well as high raw material costs and weak sales mix in the services business. Flow Control's margin was affected by low volumes and related under-absorption as well as sales mix.
Beyond the financial performance, we made good progress in our strategic initiatives across our businesses. We took our digital strategy forward by forming a strong partnership to deliver a global industrial Internet of Things (IoT) platform to better serve our mining and aggregates customers. We also decided on investments to increase production of both wear part castings for mining crushers and Lokotrack mobile crushing plants. In Flow Control, we expanded our distribution network in the UK, Benelux, and Spain.
Finally, I have the pleasure to welcome Nico Delvaux to Metso as the new President and CEO as of August 1. I am confident that Metso will further develop under his leadership.
Key figures
| EUR million | Q2/2017 | Q2/2016 | Change % | Q1-Q2/ 2017 | Q1-Q2/ 2016 | Change % | 2016 | |
| Orders received | 749 | 761 | -2 | 1,482 | 1,424 | 4 | 2,724 | |
| Orders received by the services business | 480 | 444 | 8 | 976 | 877 | 11 | 1,741 | |
| % of orders received | 64 | 58 | 66 | 62 | 64 | |||
| Order backlog at the end of the period | 1,411 | 1,399 | 1 | 1,320 | ||||
| Sales | 675 | 671 | 1 | 1,323 | 1,272 | 4 | 2,586 | |
| Sales of the services business | 445 | 439 | 1 | 868 | 848 | 2 | 1,703 | |
| % of sales | 66 | 65 | 66 | 67 | 66 | |||
| Earnings before interest, tax and amortization (EBITA), adjusted | 70.0 | 77.3 | -9 | 136.5 | 133.0 | 3 | 274.0 | |
| % of sales | 10.4 | 11.5 | 10.3 | 10.5 | 10.6 | |||
| Operating profit | 59.8 | 69.3 | -14 | 119.2 | 119.7 | 0 | 227.1 | |
| % of sales | 8.9 | 10.3 | 9.0 | 9.4 | 8.8 | |||
| Earnings per share, EUR | 0.24 | 0.28 | -14 | 0.47 | 0.46 | 2 | 0.87 | |
| Free cash flow | 4 | 74 | -95 | 43 | 136 | -68 | 339 | |
| Return on capital employed (ROCE) before tax, annualized, % | 11.1 | 11.0 | 10.4 | |||||
| Equity-to-asset ratio at the end of the period, % | 45.9 | 47.4 | 48.0 | |||||
| Net gearing at the end of the period, % | 7.5 | 12.8 | -1.8 | |||||
| Personnel at the end of the period | 11,788 | 12,099 | -3 | 11,542 | ||||
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 6,000 services professionals. Metso has an uncompromising attitude towards safety.
Metso is listed on the Nasdaq Helsinki in Finland, and had sales of about EUR 2.6 billion in 2016. Metso employs over 11,000 people in more than 50 countries. Expect results.
metso.com , twitter.com/metsogroup
For further information, please contact:
Matti Kähkönen, President and CEO, Metso Corporation, tel. +358 20 484 3000
Eeva Sipilä, CFO, Metso Corporation, tel. +358 20 484 3010
Juha Rouhiainen, VP, Investor Relations, Metso Corporation, tel. +358 20 484 3253
Metso Corporation
Eeva Sipilä
CFO
Juha Rouhiainen
VP, Investor Relations
Distribution:
NASDAQ OMX Helsinki Ltd
Media
www.metso.com
Conference call details
Conference call participants are requested to dial in five minutes before the scheduled time on:
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other countries: +44 330 336 9105
The confirmation code for joining the conference call is 4874171.
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 on Monday, July 24 at the latest.