Q1-Q Interim Report

Transcription

1 Pertti Korhonen President and CEO October 3, 213

2 Continued uncertainty in global economy and customers cash flow optimization has slowed down investments Significant differences between markets Slight improvement in metal prices and industry sentiment but hesitance to invest continues Many currencies have devalued China growth concerns easing, positive signs from Australia Reasonable tendering activity in copper, aluminum, sulfuric acid and precious metals Alternative energy investments slow due to regulation uncertainties Fewer projects and increased competition Project financing available, but takes time 2

3 Progress of Outotec s 213 focus areas Focus area Ensure continuous sales growth through order intake and services growth as well as earnings logic enhancement Improve profitability through value based pricing, supply savings and sales mix improvement Continue making acquisitions to strengthen the offering portfolio and accelerate growth Continue investments in developing and rolling out global platforms to ensure future growth and profitability improvement Progress in Jan-Sept Services sales +22% year-on-year Good traction for life cycle solutions with O&M Delays in large orders, strong prospects funnel Value pricing and supply savings progressing, share of services growing, some weaker projects in the portfolio in H1/213 Good funnel of acquisition prospects New operating model as of July 1, 213 Implementation of global platforms progressing Status 3

4 Order intake declined in Q3 due to further delays in closing large orders and weaker service orders Order intake in Q1-Q3 213 totaled EUR 1,86.3 (1,613.2) million, -33% YoY Service order intake in Q1-Q3 213 totaled EUR (362.8) million, +7% YoY Order intake in Q3 213 totaled EUR (452.4) million, -49% YoY Americas 22% Flash smelting technology to copper smelter upgrade, Rio Tinto, USA EUR 14 million Minerals processing technology, Grupo Peñoles, Mexico Over EUR 47 million EMEA 54% Green anode plant and rodding shop, ETI Alüminyum, Turkey EUR 15 million Technology license, engineering for an alumina refinery, DUBAL, UAE Value not disclosed Asia Pacific 23% Modernization of copper smelter, PASAR Philippines Over EUR 12 million 4

5 Order intake declined as mining companies have cut their capex and opex EUR million Order backlog at the end of Q3: EUR 1,512.3 (2,155.8) million, service representing EUR (26.2) million 38 (43) projects with value in excess of EUR 1 million, accounting for 79 (7) % of the backlog Roughly 38 (27)% (or approx. EUR 58 (58) million) of the backlog is estimated to be delivered in 213 Order backlog at the end of the period Share of unannounced orders Order intake by quarter 5

6 Sales in Q3 fell mainly due to declined order intake in 213, operating profit margin improved mainly due to sales mix EUR million Q1-Q3 213 Q1-Q3 212 Change % Q3 213 Q3 212 Sales 1, , Gross margin, % Operating profit from business operations one-time items*) +3.9**) PPA amortization Operating profit FX impact (unrealized, realized) Operating profit margin, % from business operations, % *) One-time costs related to M&A **) Acquisition related costs of EUR.3 million and positive impact of EUR 4.2 million related to reduction of earn-out payment liabilities from EPI and TME Group acquisitions. 6

7 Development of Outotec s sales and operating profit from business operations (last twelve months) EUR million 2 5 Sales LTM 1 % Operating Profit %, LTM* 2 9 % % 1 7 % 5 6 % 5 % *) from business operations excl. one-time items and PPA amortizations 7

8 Minerals Processing Comprehensive offering for processing of virtually all ore types Sustainable solutions from pre-feasibility studies to complete plants and life cycle services. More than a century of experience and strong R&D capabilities for continuous creation of world-leading technologies in-house. Solutions for Concentrators Comminution Flotation Dewatering Services Operation & maintenance Peers and competitors Andritz, BGRIMM, CITIC, FLSmidth, Krupp Polysius, Metso, PERI, Tenova (Delkor), Thermo Fisher, WesTech, Xstrata Technology 8

9 Minerals Processing Sales and operating profit *) development Sales Operating profit, %*) *) excl. one time items and PPA 2 % 18 % 16 % 14 % 12 % 1 % 8 % 6 % 4 % 2 % % Highlights in Q1-Q3 Strong service sales, lower sales from capex Profitability impacted by lower overall sales and service product mix (higher share of expert service vs proprietary spares) Significant minerals processing technology orders from Grupo Peñoles (EUR 47 million) EUR million Q1-Q3 213 Q1-Q3 212 Change % Q3 213 Q Sales Operating profit from business operations *) Operating profit margin from business operations, % *) The unrealized and realized exchange gains related to currency forward contracts increased profitability by EUR 3.6 (.) million in Q1-Q

10 Metals, Energy & Water Sustainable solutions for metals processing, renewable energy production and industrial water treatment Metals: Extensive range of solutions for processing virtually all types of ores and concentrates to refined metals Energy: Innovative solutions for biomass, coal, sludge, agricultural and industrial by-products as well as oil shale and phosphorus recycling from sewage sludge ashes Water: Our solutions produce water that meets environmental discharge standards, maximize water recycling, and reduce water and energy consumption Solutions for Non-ferrous metals Ferrous metals and ferroalloys Light metals Renewable & conventional energy Industrial water treatment Services Operation & maintenance Peers and competitors Alcan, Alstom, Andritz, Brochot, BSIET, Danieli, Downer, FLSmidth, Foster Wheeler, GEA, Jacobs (Aker), Kobelco, MECS, Mesco, Metso, Midrex, Siemens, SMS Meer, SMS Siemag, Solios, Stultz, Tenova (Bateman, Pyromet), Veolia Water, Xstrata Technology 1

11 Metals, Energy & Water Sales and operating profit *) development Sales 5 Operating profit, %*) *) excl. one time items and PPA 12 % 1 % 8 % 6 % 4 % 2 % % Highlights in Q1-Q3 Significant delays in large orders Profitability improved by higher sales and project mix New technology addition to aluminum value chain (cooperation with Hatch) Several copper smelter upgrades won and in implementation EUR million Q1-Q3 213 Q1-Q3 212 Change % Q3 213 Q Sales ,161.2 Operating profit from business operations *) Operating profit margin from business operations, % *) The unrealized and realized exchange gains related to currency forward contracts increased profitability by EUR 2.3 (-.3) million in Q1-Q

12 Service order intake dropped in Q3 due to decline in shut down and upgrade services, sales growth continued Sales Share of Outotec's sales, % EUR million EUR million Services Services sales Q1-Q % Q1-Q3 highlights Service orders EUR (362.8) million, +7% Service sales EUR (291.9) million, +22% Less shutdown, upgrade service and capex spares orders, high Q3/212 comparison point due to a large shutdown order Focus going forward is on Further penetrating to installed base Leveraging O&M and shutdown services offering Enhancing global footprint and offering through M&A EUR million Services order backlog 12

13 Strong financing structure and good liquidity, cash flow impacted by low order intake and delays in timing of some milestone payments Net interest-bearing debt Working capital Net cash flow from operating activities, quarterly 13

14 ROI and ROE on solid level ROI%, quarterly ROE%, quarterly

15 Personnel increased slightly due to acquisitions and selected recruitments to services and project delivery Personnel by region at the end of the period Personnel at the end of the period 17% EMEA % 57% Americas Asia Pacific Q1-Q3 213 Increase from acquisitions: 53 YoY, 41 from December-end Temporary personnel: 8 (8) % FTE contracted people: some 585 (8) 15

16 Events after reporting period Oct 18, 213, Outotec to further strengthen its position as a leader in dewatering solutions by establishing a Dewatering Technology Center in Lappeenranta, Finland. Oct 17, 213, Outotec lowers its financial guidance regarding sales and operating profit margin for 213. Oct 17, 213, Outotec starts an efficiency improvement program targeting up to EUR 5 million annualized savings in operational costs. Oct 8, 213, Outotec recognized in the Nordic Carbon Disclosure Leadership Index (CDLI) for the fifth consecutive year with regard to the quality of climate change data it has submitted. 16

17 EUR 5 million savings program to secure profitability in uncertain market conditions Efficiency improvement program targeting up to EUR 5 million annualized savings The majority of the savings will materialize in 214 The estimated one-time costs from the program max EUR 3 million Employee cooperation negotiations started globally Personnel reduction need max 5 (by mid 214) through redundancies, retirements, discontinuing fixedterm agreements. Temporary lay-offs if needed. Other actions include for example consolidation of locations and reduction in external services 17

18 Despite the lower total capex, market continues to provide opportunities for Outotec Mining companies are seeking ways to reduce investment risks and maximize free cash flow. Large project prospects exist in certain markets. Demand for services is expected to remain solid due to the need to optimize operations. Opportunity to grow services by further penetrating to the installed base with new service solutions. Project financing continues to be available for solid projects, financing takes time. Need for biomass and waste-to-energy solutions to produce energy while solving a local waste problem. 18 Lower Capex market with some growth pockets Service growth opportunities, some pricing pressures Changing customer demands offer opportunities for Outotec to provide: predictable investment cost and schedule guaranteed performance license to operate

19 Financial guidance for 213 lowered on Oct 17, 213 (previous guidance) Outotec s sales guidance has been lowered due to several reasons. The continued macroeconomic uncertainty has slowed down customers' capex investments. Some projects have progressed slower than expected due to delays in customer payments. In addition, a EUR 3 million order was cancelled in September. The lower sales volume is the main reason for lowering the operating profit margin guidance. Outotec expects that in 213: Sales will be approximately EUR ( ) billion, and Operating profit margin from business operations* ) be approximately ( ) % *) excluding one-time items and PPA amortizations In 213, PPA amortizations from completed acquisitions is estimated to be approximately EUR 13 million. 19

20 Q&A