Sustainable use of Earth s natural resources Interim Report 2017
Safety performance Rate per million hours 14 12 10 8 6 4 2 0 Outotec global safety statistic 12-months running average Lost Time Incident Total Recordable Incident Lost Time Incidents per million working hours (LTIR) includes Outotec employees and contractors working under Outotec supervision. Since 2015, Outotec has had less working hours than in 2013-14 when there where large projects with extraordinary safety performance compared to global peers. 2 May 4 Interim Report 2017
Market development in CEO Markku Teräsvasara 3
in a nutshell Improved order intake: equipment, plant and service orders increased Fixed cost savings and higher sales improved profitability Low level of advance payments and mature order backlog impacted cash flow Good performance in MP MEW s profitability weak, cost savings continue 4
Improved order intake, markets in EMEA and Americas most active Americas 35 (29) % EMEA 53 (46) % Filtration plant to copper concentrator expansion in Peru >15 M APAC 12 (25) % Aluminium technology to Bahrain N/D EUR million COPPER Aluminium 400 300 115 Zinc plant technology to Mexico Approx. 24 M 200 100 ZINC MP order 5 May 4 Interim Report 2017 Service orders MEW order 102 Capex orders 203 68 0 /2016 /2017
Seasonality in MP orders, MEW showing signs of recovery MEUR Minerals Processing MEUR Metals, Energy & Water 1100 1700 1000 1500 900 1300 800 1100 700 900 600 700 500 500 400 300 Order intake 6 months rolling, annualized Sales 6 months rolling, annualized Order intake 6 months rolling, annualized Sales 6 months rolling, annualized 6
Spare part orders increased, fewer shutdown service contracts Service orders increased 13% Sales declined 13% due to fewer shutdown service contracts in MEW Services represent 37 (48)% of sales 650 600 550 500 450 400 350 Services Order intake 6 months rolling, annualized Sales 6 months rolling, annualized Split in service order intake Recurring services Shut-downs and modernizations 7
Improved order intake YoY, book to bill rate above one Roughly EUR 680 million to be delivered in 2017 EUR million 2 400 2 200 2 000 1 800 1 600 1 400 1 200 1 000 800 600 400 200 0 240 371 235 168 493 418 384 299 475 260 120 139 106 202 111 419 350 269 357 344 532 803 327 425 736 452 471 491 366 230 426 210 380 266 322 260 395 268 267 170 EUR 1,051 million, some 21% services 281 274 283 318 Q2/2006 Q3/2006 Q4/2006 /2007 Q2/2007 Q3/2007 Q4/2007 /2008 Q2/2008 Q3/2008 Q4/2008 /2009 Q2/2009 Q3/2009 Q4/2009 /2010 Q2/2010 Q3/2010 Q4/2010 /2011 Q2/2011 Q3/2011 Q4/2011 /2012 Q2/2012 Q3/2012 Q4/2012 /2013 Q2/2013 Q3/2013 Q4/2013 /2014 Q2/2014 Q3/2014 Q4/2014 /2015 Q2/2015 Q3/2015 Q4/2015 /2016 Q2/2016 Q3/2016 Q4/2016 /2017 Order backlog at the end of the period Share of unannounced orders Order intake by quarter 8
Key financials CFO Jari Ålgars 9
Sales reflecting increased equipment orders in 2016 EUR million 2017 2016 Change, % In comparable currencies Sales 268 240 12% 7% Service sales 99 114-13% -18% Share of services in sales, % 37 48 Gross margin, % 23 24 Adjusted EBIT * 1-5 Adjusted EBIT *, % 0-2 - Restructuring and acquisition-related costs -0-6 - PPA amortization -2-2 EBIT -1-12 EBIT, % -0-5 Result for the period -3-12 Unrealized and realized gains related to valuation of FX forward agreements 2 1 * Excl. restructuring and acquisition-related costs and PPA amortizations. 10
Minerals Processing - further improved performance Equipment orders increased, order intake up 40% Sales increased 36% Profitability improved Minerals Processing EUR million 2017 2016 Change, % In comp currency, % Order intake 146 104 40 35 Sales 153 113 36 31 Service sales 68 64 6-0 Adjusted EBIT *) 11 5 Adjusted EBIT *), % 7 4 Unrealized and realized gains/losses related to valuation of FX forward agreements -0 2 * Excl. restructuring and acquisition-related costs and PPA amortizations Sales and adjusted EBIT development, quarter 350 300 250 200 150 100 50 0 Sales aebit*, % /2012 Q2/2012 Q3/2012 Q4/2012 /2013 Q2/2013 Q3/2013 Q4/2013 /2014 Q2/2014 Q3/2014 Q4/2014 /2015 Q2/2015 Q3/2015 Q4/2015 /2016 Q2/2016 Q3/2016 Q4/2016 /2017 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 11
Metals, Energy & Water order intake improved but result still negative 161% increase in order intake Sales declined 10% due to low opening order backlog Profitability weak, savings actions continue Metals, Energy & Water EUR million 2017 2016 Change, % In comp currency, % Order intake 172 66 161 160 Sales 114 127-10 -12 Service sales 30 50-39 -40 Adjusted EBIT *) -9-9 Adjusted EBIT *), % -8-7 Unrealized and realized gains/losses related to valuation of FX forward agreements 3-1 * Excl. restructuring and acquisition-related costs and PPA amortizations Sales and adjusted EBIT development, quarter 400 350 Sales aebit*, % 300 250 200 150 100 50 0 /2012 Q2/2012 Q3/2012 Q4/2012 /2013 Q2/2013 Q3/2013 Q4/2013 /2014 Q2/2014 Q3/2014 Q4/2014 /2015 Q2/2015 Q3/2015 Q4/2015 /2016 Q2/2016 Q3/2016 Q4/2016 /2017 20% 10% 0% -10% -20% -30% -40% 12
Mature order backlog, timing, and low level of advance payments impacted cash flow EUR million 2017 2016-3 -12 Result for the period Adjustments - Depreciation & amortization 10 10 - Other adjustments 3 7 Change in working capital -42-37 Interest Taxes -1 0-2 -2 NET CASH FROM OPERATING ACTIVITIES -34-34 NET CASH USED IN INVESTING ACTIVITIES (incl. Capex and acquisitions) -4-3 Repayments & borrowings of non-current debt -0-60 Hybrid bond - 150 Interest paid on hybrid bond -11 - Other financing activities 11-0 NET CASH FROM FINANCING ACTIVITIES -1 90 NET CHANGE IN CASH AND CASH EQUIVALENTS -39 53 Foreign exchange rate effect on cash and cash equivalents 2-2 Cash and cash equivalents at March 31 195 352 13
Liquidity and equity remained solid 2017 2016 Net interest-bearing debt*, EUR million 44-69 Gearing*, % 9-13 Equity-to-assets ratio*, % 39 41 Return on investment, %, LTM -8-2 Return on equity, %, LTM -12-6 Working capital at the end of the period, EUR million 18-58 Advances received 178 229 Equity, EUR million 490 538 Balance sheet total, EUR million 1,422 1,556 * If the hybrid bond were treated as a liability the net interest-bearing debt EUR 194.1 million, gearing 57.1% and equity-toassets ratio would be 27.4% (March 31, 2016: EUR 80.5 million, 20.7% and 29.3% respectively). 14
Market outlook and guidance CEO Markku Teräsvasara 15
Market outlook MP opportunities in process improvements, smaller equipment deliveries and services MEW technology portfolio provides opportunities in a number of end markets Gold and copper projects most active, improved activity also in other base metals projects Timing of large orders remains difficult to foresee 16
Reiterated guidance: The guidance for 2017 is based on the current order backlog and market outlook, as well as achieved cost savings Expected sales in 2017 ~ EUR 1,050 1,150 million = sales EUR 268 million + From backlog ~EUR 680 million, or 65% + From new orders ~EUR 100 200 million Adjusted EBIT * is expected to be approximately 3-5% * Excluding restructuring and acquisition-related costs as well as purchase price allocation amortizations. 17
Our focus areas for 2017 - towards profitable growth! Continue to win orders in a competitive market Growth Continue cost savings to reach stability in the Metals, Energy & Water Strong focus on service business, new Services business unit since April 1 Profitability Improve competitiveness of products Strengthen customer centricity Stability Strategy work 18