CEO s review. Annual General Meeting on March 30, 2017

Transcription

1 CEO s review Annual General Meeting on March 30, 2017

2 Contents 1. Safety 2. Outotec today in a nutshell 4. Market situation 5. Assessment of the company s situation and focus areas 6. Outlook for

3 Safety performance improved in Fatal accidents 1.8 (2015: 2.8) 23 (2015: 41) Lost-Time Injury Rate per million hours incl. employees and subcontractors Lost time injuries reported 1,532 Reported near misses 3

4 Contents 1. Safety 2. Outotec today in a nutshell 4. Market situation 5. Assessment of the company s situation and focus areas 6. Outlook for

5 Outotec in numbers Services 42% of sales Appr. 4,200 employees Deliveries to more than 80 countries Sales 1bn EUR Experts of over 60 nationalities 90% of orders Environmental Goods and Services (OECD) Offices in 34 countries Wide supplier network with established long-term relationships 5

6 Contents 1. Safety 2. Outotec today in a nutshell 4. Market situation 5. Assessment of the company s situation and focus areas 6. Outlook for

7 2016 a weak year, outlook improved towards the end of the year Restructuring in service business Two segments in different phases EUR 70 million cost savings Good profitability in Minerals Processing One project weakened profitability 7

8 Profitability declined due to weak result in one project EUR million Sales Service sales Share of services in sales, % Gross margin, % Adjusted EBIT Adjusted EBIT *, % Restructuring and acquisition-related costs PPA amortization -7-9 EBIT EBIT, % -6-1 Result for the period * Excl. restructuring and acquisition related costs and PPA amortizations 8

9 Largest orders in 2016 Americas 33% EMEA 49% APAC 18% GOLD Process equipment for Goldcorp, Mexico Approx. 23 M COPPER & ACID 2 modular solvent extraction plants, Macedonia and Egypt 25 M GOLD & ZINC 2 mine backfill plants, Philippines and Australia Approx. 20 M COPPER Copper smelter and acid plant revamp, South America Over 33 M ACID Two sulfuric acid plants for NICICO, Iran Approx. 50 M IRON Process equipment for SDM iron concentrator, Iran Approx. 10 M LITHIUM Lithium beneficiation plant for AMG, Brazil Over 35 M COPPER Flotation and dewatering technology, Russia Approx. 30 M GOLD Process equipment for Bakyrchik Mining, Kazakhstan Approx M COPPER Concentrator equipment, Chile 18 M GOLD Modular flotation cplant for Ma aden Gold, Saudi Arabia < 10 M GOLD Process equipment for greenfield gold project, Senegal Approx. 10 M Q1-Q4/2015 Q1-Q4/2016 Service orders Capex orders ACID COPPER Sulfuric acid plant for Intesca Industrial, Egypt Over 30 M Process equipment for Acacia Maden, Turkey Approx. 14 M GOLD ACID Process equipment for Houndé Gold, Burkina Faso 13 M Sulfuric acid plant technology for Boliden Harjavalta, Finland Value not disclosed MEW order MP order 9

10 Q2/2006 Q3/2006 Q4/2006 Q1/2007 Q2/2007 Q3/2007 Q4/2007 Q1/2008 Q2/2008 Q3/2008 Q4/2008 Q1/2009 Q2/2009 Q3/2009 Q4/2009 Q1/2010 Q2/2010 Q3/2010 Q4/2010 Q1/2011 Q2/2011 Q3/2011 Q4/2011 Q1/2012 Q2/2012 Q3/2012 Q4/2012 Q1/2013 Q2/2013 Q3/2013 Q4/2013 Q1/2014 Q2/2014 Q3/2014 Q4/2014 Q1/2015 Q2/2015 Q3/2015 Q4/2015 Q1/2016 Q2/2016 Q3/2016 Q4/2016 Order backlog remained at approx. EUR 1 billion, of which 20% services Iranian projects not included in backlog: EUR 200 (230) million Roughly EUR 740 million of 2016 YE backlog to be delivered in 2017 EUR million

11 Order intake and sales of Minerals Processing recovered, Metals, Energy & Water stabilized towards the end of the year MEUR 1100 Minerals Processing MEUR 1700 Metals, Energy & Water Order intake 6 months rolling, annualized Order intake 6 months rolling, annualized Sales 6 months rolling, annualized Sales 6 months rolling, annualized 11

12 Recurring service orders grew slightly from previous year Split in service order intake EUR million Spare parts & technical services Projects 12

13 Satisfactory profitability in Minerals Processing Order intake up 33% in comparable currencies Sales flat due to low order intake in Q4/2015 and H1/2016 Satisfactory profitability at the end of the year due to cost savings In comparable Minerals Processing EUR million currencies, % Order intake Sales Service sales aebit * aebit *, % 7 4 * Excluding restructuring and acquisition-related costs and PPA amortizations 13

14 Weak result for Metals, Energy & Water Lack of large plant orders Low service volumes Significant negative impact from risk provisions More cost saving actions ongoing In comparable Metals, Energy & Water EUR million currencies, % Order intake Sales Service sales aebit * aebit *, % * Excluding restructuring and acquisition-related costs and PPA amortizations 14

15 Product launches modular products in demand Several modular product concepts launched in recent years, such as cplant for flotation, VSF X plants for extraction of copper, zinc and cobalt as well as purifying of phosphoric acid New type of mine backfill system Outotec EWT-40 for treatment of contaminated waste waters and effluents in mining and metallurgical operations 15

16 Contents 1. Safety 2. Outotec today in a nutshell 4. Market situation 5. Assessment of the company s situation and focus areas 6. Outlook for

17 Positive signs in the market towards the end of the year Market for concentrator equipment and solutions started to recover mid-year. Challenging market continues for large metallurgical plants and energy solutions, some positive signs towards the end of the last year. Several countries invest in sulfuric acid plants and environmental solutions. Almost all discussions with the customers concern productivity improvement topics. Moderate market for spare parts and technical maintenance services, however, weaker market for shut-down services and long-term service contracts. 17

18 2016 was a multi-year low for global mining capex; going forward we expect slow capex growth - customers focus remain on productivity gains and sustaining capital Maintenance CAPEX to remain flat, while expansion CAPEX to grow slightly Expansion capex by metal MUSD +15% % % 2018 Expansion Sustaining Source: Woodmac % Lead Zinc Nickel Alumina Aluminium Gold Iron Ore Copper 18

19 Metals demand growth is moving forward for most metals; long term demand growth fundamentals are most supportive for aluminum, gold, zinc, and copper Long term demand growth fundamentals are most supportive Demand CAGR% e Aluminium Sulphuric Acid Gold Zinc Copper 2,0% 3,6% 3,0% 2,4% 1,9% Aluminium Outside China, the market remains in deficit. Short-term investments expected to decrease Deficit Metals production vs demand Surplus Surplus Some refineries coming online Copper Need for some new and replacement investment 3% CAGR reduction in supply 0 Deficit Zinc More investments expected in short term. Long term the market will be oversupplied by China -400 Deficit Surplus Surplus Deficit Nickel 2016 The price still needs to be more supportive before new investment Nickel growing but from a smaller base Iron ore fundamentals are weak Nickel Iron Ore 0,5% 1,6% Other factors: Stock movements: too high still for Al, Ni Investor sentiment: more optimistic, but cautious USD: weakness needed to support prices Total cash costs : deflation keeping prices low All costs and incentive margin: long term prices still weak 19 Source: HSBC, Macquarie 150 Surplus Deficit Iron ore High oversupply

20 The mining sector, largely driven by Australia, Chile, Peru, South Africa and the United Sates, is experiencing increased competitions for water from other industries Source: 2014, Water solutions for global mining 20

21 Energy investments are mainly driven by oil price Demand for Outotec wasteto-energy solutions in certain countries Investments depend on subsidy regulation, environmental legislation and energy price 21

22 Contents 1. Safety 2. Outotec today in a nutshell 4. Market situation 5. Assessment of the company s situation and focus areas 6. Outlook for

23 Outotec s strengths and opportunities Good mission Strong technological expertise Necessary to improve efficiency and increase customer focus Large installed base to build service business on 23

24 Development areas and initiated actions Customer focus Service business Profitability and cash flow Competitiveness of our products Employee satisfaction - New Strategic Customers & Business Development function focuses as of April 1 on developing key customer relationships, sales and marketing - More sales training - Services business unit as of April 1, Cost savings continue in Metals, Energy & Water to improve the profitability of the business unit - Continue developing modular concepts - Enhance best cost country (BCC) sourcing - Prioritization of product portfolio - Clarifying the organization - Open internal job market - More leadership training 24

25 Our focus areas for 2017; towards profitable growth! Grow Minerals Processing business Growth Reach stability in Metals, Energy & Water New Services business unit and strong focus on service business Profitability Strengthening of customer centricity New and more clear organization Stability Strategy work 25

26 Outotec Executive Board as of April 1, 2017 Markku Teräsvasara CEO Services, act. Kimmo Kontola Minerals Processing Kalle Härkki Metals, Energy & Water Adel Hattab Strategic Customers & Business Development Jari Ålgars CFO Kaisa Aalto-Luoto Human Resources and Communications Nina Kiviranta Legal, Contract Management & Corporate Responsibility Olli Nastamo Operational Excellence 26

27 Contents 1. Safety 2. Outotec today in a nutshell 4. Market situation 5. Assessment of the company s situation and focus areas 6. Outlook for

28 Market sentiment has improved Minerals Processing market expected to bring new opportunities Activity increased in the Metals, Energy & Water markets expected to continue Global economic and political uncertainty continues Timing of large orders remains uncertain 28

29 Financial guidance for 2017 is based on the current order backlog and market outlook as well as achieved cost savings Expected sales 2017 approx. EUR 1,050 1,150 million = Expected sales from year-end 2016 order backlog (incl. services) ~EUR 740 million + Expected sales from new order intake (incl. services) ~EUR million Adjusted EBIT * is expected to be approximately 3 5% * Excluding restructuring and acquisition-related costs as well as purchase price allocation amortizations. 29

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