Metso's Interim Review January 1 - June 30, 2015

Metso's Interim Review January 1 - June 30, 2015

Metso Corporation's stock exchange release on July 23, 2015 at 12:00 noon local time


Metso will arrange a results audiocast today at 15:00 EEST (8:00 EDT, 13:00 BST, 14:00 CEST). The audiocast is viewable at www.metso.com/latestreports. A simultaneous conference call will be arranged, allowing participants to ask questions. You can also send your written questions during the audiocast via chat function.

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-June 2015 Interim Review. 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 2014, unless otherwise stated. The Process Automation Systems (PAS) business was divested on April 1, 2015, and is not included in the Flow Control segment's figures for April-June 2015. Figures for January-June 2015 and all comparison periods prior to the divestment include PAS. Like-for-like comparisons are made with a separate note. 

Second quarter 2015 in brief

• Demand related to customers' capital investment projects continues to be soft, while services demand remains stable.
• Orders received EUR 823 million (EUR 947 million, or EUR 833 million excluding PAS), of which EUR 495 million (EUR 534 million, or EUR 500 million excluding PAS) were services orders.
• Net sales EUR 756 million (EUR 962 million, or EUR 884 million excluding PAS), of which EUR 483 million services (EUR 507 million, or EUR 477 million excluding PAS).
• EBITA before non-recurring items EUR 94 million and 12.4% of net sales (EUR 131 million and 13.6%, or EUR 121 million and 13.7% excluding PAS).
• An initial gain on disposal of about EUR 258 million was booked from the sale of PAS, resulting in operating profit of EUR 347 million for the quarter (EUR 102 million).

Updated financial guidance for 2015
Our guidance for 2015 (originally published on February 5, 2015) has been updated. We estimate that our net sales, excluding the Process Automation Systems business, in 2015 will be between EUR 3,000 million and EUR 3,200 million (previously between 3,000 and 3,300) and that our EBITA margin before non-recurring items will be around 12.5 percent (12.0-13.0%), previously around 13 percent (12.5-13.5%).

The updated guidance for 2015 is based on the current market activity in our customer industries, our current backlog and the current exchange rates.

President and CEO Matti Kähkönen:
The demand and outlook in our customer industries remained unchanged in the second quarter compared to the first months of the year. Our like-for-like order intake in the second quarter was one percent behind the comparison period, even though the situation in our end markets is more challenging. This was thanks to the few large mining equipment orders we booked during the quarter. While we are happy having received these it should not be read as a sign of recovery.

The softening of the oil & gas market has had only slight impact on our valve business, , primarily due to our position in specialized areas in mid and downstream markets. In addition, the demand for pulp & paper valves and mining pumps was good in the second quarter, which helped to mitigate the softness seen in the oil industry. 

In terms of results, Flow Control continues to perform well and shows good margin development resulting from sales growth and cost control. Minerals still suffers from rapidly declining volumes in the equipment business, and our right-sizing efforts will continue there. The services business continues to prove its resilience but we are taking more action to grow the business towards the end of the year and beyond.

Key figures

EUR million	Q2/ 2015	Q2/ 2014	Change %	Q1-Q2/ 2015	Q1-Q2/ 2014	Change %	2014
Orders received	823	947	-13	1,622	1,822	-11	3,409
Orders received by the services business	495	534	-7	1,037	1,079	-4	2,052
% of orders received	60	56		64	59		60
Order backlog at the end of the period				1,411	1,938	-27	1,575
Net sales	756	962	-21	1,543	1,779	-13	3,658
Net sales of the services business	483	507	-5	953	945	1	2,007
% of net sales	64	53		62	53		55
Earnings before interest, tax and amortization (EBITA) and non-recurring items	94	131	-28	164	219	-25	460
% of net sales	12.4	13.6		10.6	12.3		12.6
Operating profit*	347	102	241	412	178	131	351
% of net sales	45.9	10.6		26.7	10.0		9.6
Earnings per share, EUR	2.06	0.35	489	2.31	0.63	267	1.25
Free cash flow	78	47	66	165	95	74	204
Return on capital employed (ROCE) before taxes, annualized, %**				26.2	16.6		16.4
Equity-to-asset ratio at the end of the period, %				46.0	37.3		40.5
Net gearing at the end of the period, %				16.6	53.4		45.6
Personnel at the end of the period				13,324	16,248	-18	15,644

Figures for Q1-Q2/2015, Q2/2014, Q1-Q2/2014, and full-year 2014 include Process Automation Systems.
*Operating profit for Q2/2015 includes an initial gain on disposal of the PAS business.
** Roce for Q1 - Q2/2015 includes the initial gain on disposal of the PAS business, which is not annualized
  

Key Figures excluding PAS

EUR million	Q2/ 2015	Q2/ 2014	Change %	Q1-Q2/ 2015	Q1-Q2/ 2014	Change %	2014
Orders received	823	833	-1	1,560	1,625	-4	3,074
Services orders, % of total	60	60		64	62		62
Net sales	756	884	-15	1,489	1,644	-9	3,363
Services net sales, % of total	64	54		62	54		56
Earnings before interest, tax and amortization (EBITA) and non-recurring items	94	121	-22	172	206	-17	426
% of net sales	12.4	13.7		11.6	12.6		12.7
Return on capital employed (ROCE) before taxes, annualized, %				17.1	-
Personnel at the end of the period				13,324	14,591	-9	14,072

Market development
We expect the demand for mining equipment, products and projects to remain weak. We expect the demand for our mining services to remain good, despite being impacted by customers' cost savings initiatives. The demand for both aggregates equipment and services is expected to be satisfactory. The demand for Flow Control products related to customers' new investments is expected to be satisfactory. The demand for Flow Control services is expected to be good.

Metso is the world's leading industrial company in the mining and aggregates industries and in the flow control business. Our knowledge, people and solutions help drive sustainable improvements in performance and profitability in our customers' businesses.

Metso has an uncompromising attitude towards safety. Our products range from mining and construction equipment and systems to industrial valves and controls. Our solutions are delivered and supported by decades of process knowledge and a broad scope of services backed by a global footprint of over 90 service centers, thousands of service employees, and an extensive logistics network.

Metso is listed on the NASDAQ OMX Helsinki, Finland. In 2014, Metso's net sales totaled EUR 3.7 billion. Metso employs approximately 14,000 industry experts in more than 50 countries. Expect results.

www.metso.com,  www.twitter.com/metsogroup

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                 
  
                                
Metso Corporation
Harri Nikunen
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 at:

United States: +1 646 254 3366
other countries: +44 20 3427 1903
The confirmation code for joining the conference call is 6107586.

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.