Fourth quarter and full year 213 results Matti Kähkönen, President and CEO Harri Nikunen, CFO February 6, 214 www.metso.com
Forward looking statements It should be noted that certain statements herein which are not historical facts, including, without limitation, those regarding expectations for general economic development and the market situation, expectations for customer industry profitability and investment willingness, expectations for company growth, development and profitability and the realization of synergy benefits and cost savings, and statements preceded by expects, estimates, forecasts or similar expressions, are forward-looking statements. These statements are based on current decisions and plans and currently known factors. They involve risks and uncertainties which may cause the actual results to materially differ from the results currently expected by the company. Such factors include, but are not limited to: 1) general economic conditions, including fluctuations in exchange rates and interest levels which influence the operating environment and profitability of customers and thereby the orders received by the company and their margins 2) the competitive situation, especially significant technological solutions developed by competitors 3) the company s own operating conditions, such as the success of production, product development and project management and their continuous development and improvement 4) the success of pending and future acquisitions and restructuring. 2
Content 1. Q4 and full year 213 highlights 2. Strategic development 3. Financial performance 4. Outlook and guidance 3
HSE (Health, Safety & Environment) An essential element in all our activities We are committed to taking personal responsibility for our own safety and for the safety of others We believe that all incidents can be prevented We always emphasize our high HSE standards of conduct when dealing with customers, suppliers, and other stakeholders We aim to minimize our environmental footprint throughout the entire value chain Lost time incident frequency 16. 14. 12. 1. 8. 6. 4. 2.. 4
Q4 and full year 213 highlights Matti Kähkönen President and CEO
Highlights Full year 213 Oil & gas-related demand was good - mining market was soft Orders received were EUR 3,79 million (EUR 4,215 million), of which EUR 2,38 million (2,153 million) services orders Net sales were EUR 3,858 million (EUR 4,282 million), of which EUR 1,976 million (EUR 2,72 million) services sales EBITA before NRE was EUR 496 million, 12.8% of net sales (EUR 486 million, 11.4%) Non-recurring expenses totaled EUR 54 million Pulp, Paper and Power businesses were separated to Valmet Corporation The Board proposes a dividend of EUR 1. per share, i.e. 63% of earnings per share Fourth quarter 213 Orders received EUR 885 million (EUR 982 million), of which EUR 457 million (EUR 494 million) services orders Net sales were EUR 1,18 million (EUR 1,132 million), of which EUR 59 million (EUR 55 million) services sales EBITA before NRE was EUR 147 million, 14.4% of net sales (EUR 138 million and 12.2%) Non-recurring expenses totaled EUR 33 million 6 Figures in the brackets refer to same period last yer unless otherwise stated
Order intake 1,6 1,4 1,2 1, 8 6 Metso 767 826 85 838 558 55 563 637 1,117 1,466 1,55 828 1,168 1,1 965 982 1,31 968 825 885 5, 4, 3, 2, 2,37 3,281 4,466 4,215 3,79 4 2 1, 29 21 211 212 213 FY FY FY FY FY Services orders received Automation Capital orders received 29 21 211 212 213 Services orders received Capital orders received Mining and construction 3 1,4 1,263 254 25 1,2 239 22 225 224 225 155 159 177 177 174 179 197 191 26 964 2 29 1, 914 886 891 2 787 794 786 167 8 743 66 686 688 15 651 134 68 635 691 129 6 491 1 414 423 449 4 5 2 29 21 211 212 213 Services orders received Capital orders received 29 21 211 212 213 Services orders received Capital orders received 7
Order intake in top 1 countries Country 213 212 Change % % of total USA 486 58-16 13 China 317 265 19 8 Brazil 314 414-24 8 Chile 245 177 38 7 Australia 213 283-25 6 Finland 183 175 5 5 Sweden 163 21-19 4 Canada 148 193-24 4 Russia 141 3-53 4 India 121 195-38 3 US is clearly our biggest market; orders declined in Mining and Construction, grew in Automation Orders from China increased in both segments Emerging markets accounted for 56 percent (55%) of orders received and 52 percent (49%) of services orders received 8
Net sales Metso 1,6 5, 1,4 4, 1,156 1,2 1,116 1,132 1,75 898 871 91 959 915 988 937 1,18 1, 3, 735 746 736 685 726 748 8 744 647 2, 6 2,92 3,18 3,672 4,282 3,858 4 1, 2 29 21 211 212 213 FY FY FY FY FY 29 21 211 212 213 Services net sales Capital net sales Services net sales Capital net sales Automation Mining and construction 3 1, 928 899 924 882 25 244 249 232 211 233 717 711 736 787 744 8 8 742 784 198 27 214 2 177 18 152 166 165 176 185 182 184 268 581 579 584 69 592 6 54 59 146 156 151 15 4 1 5 2 29 21 211 212 213 Services net sales Capital net sales 29 21 211 212 213 Services net sales Capital net sales 9
Profitability has developed well 2 % 18 6 12.8 % 14 15 1 5 1.8 8 8.7 65 13. 89 11.6 11.9 9.4 1.2 9.1 8.7 8. 86 17 74 59 61 67 75 12.9 11.9 149 17 8.7 83 13.7 14.4 12.2 12. 12.2 11.2 11.9 136 129 138 147 129 118 13 16 14 12 1 8 6 4 2 5 4 3 2 1 1.1 292 1.9 1.9 328 399 11.4 486 496 12 1 8 6 4 2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY FY FY FY FY 29 21 211 212 213 EBITA * EBITA-% * EBITA-% target range 29 21 211 212 213 EBITA * EBITA-% * EBITA*-% Q4/213 Q4/212 Mining and Construction 14.3 12.9 Improved gross margins in all businesses Automation 15. 13.2 Good performance in the Flow Control business Metso total 14.4 12.2 Sales mix, cost savings 1 * Before non-recurring items
Financial targets 213 Net sales Growth to exceed market growth +/- Services net sales >1% annual growth on average -5% Profitability (EBITA %) 11-16% before NRE 12.8% Return on capital employed (ROCE) At least 3% (before taxes) 19.3%* Earnings per share To grow faster than net sales + Capital structure Dividend payout Supporting a solid investment-grade credit rating At least 5% of annual earnings per share BBB, Baa2 63% ** 11 * Illustrative ** The Board proposes a dividend of EUR 1. per share, i.e. 63% of earnings per share
Strategic development in 213 Services Technology offering Growth countries Operational excellence People and leadership We became the only full-scope supplier of comminution wears (Sabo acquisition) New services hubs opened and under construction Good progress in life-cycle services Development of MetsoDNA automation platform High-pressure grinding mill (HRC ) Cost efficient high pressure ball valve for demanding shut-down applications Acquisitions and a new JV in China Development of area organizations Procurement and cost-efficiency actions Gross profit improvement Health and safety performance Leadership development Share of personnel in emerging market increased to 46% Performance culture 12
Financial performance Harri Nikunen, CFO
Group key figures Q4/213 Q4/212 Change % 213 212 Change % Orders received 885 982-1 3,79 4,215-12 Services orders received 457 494-7 2,38 2,153-5 Net sales 1,18 1,132-1 3,858 4,282-1 Services net sales 59 55-7 1,976 2,72-5 % of net sales 5 49 51 48 EBITA * 147 138 6 496 486 % of net sales 14.4 12.2 12.8 11.4 EBIT ** 18 125-14 423 458-9 Earnings per share, EUR 1.59 1.71 Non-recurring items excluded from EBITA Q4/213 Q4/212 213 212 Restructuring 24.1 11.2 23.9 13.2 Other 9. - 2.4 29.7-2.5 Total 33 9 54 1.7 14 * Before non-recurring items ** Q4/213 includes non-recurring expenses of EUR 33 million and full-year 213 EUR 54 million
Group key figures Balance sheet Return on equity (ROE), % Return on capital employed (ROCE) before taxes, % Gearing at the end of the period, % 213 212 2.3 19.8 19.3 2.1 41.6 24.5 Balance sheet structure is different after the demerger About EUR 8 million of equity was transferred to Valmet 15 Balance sheet figures for Metso s continuing operations for 212 are unaudited and illustrative. Accounting principles were presented in a stock exchange release published on November 12, 213
Indebtedness and net working capital Net debt and gearing Net working capital 5 491 % 5 7 692 % 18 4 316 41.6 4 6 5 627 15.9 16. 16 3 3 4 14 2 24.5 2 3 12 2 1 1 1 1 212 213 212 213 8 Net debt Gearing Net working capital, EUR NWC, as % of net sales 16 Balance sheet figures for Metso s continuing operations for 212 are unaudited and illustrative. Accounting principles were presented in a stock exchange release published on November 12, 213
Mining and Construction key figures Q4/213 Q4/212 Change % 213 212 Change % Orders received 691 794-13 2,855 3,436-17 without currency impact -5-13 Services orders received 361 49-12 1,616 1,771-9 Net sales 784 924-15 3,7 3,492-12 without currency impact -8-8 Services net sales 393 445-12 1,579 1,692-7 % of net sales 5 48 51 48 EBITA * 112 119-6 41 42-5 % of net sales 14.3 12.9 13.1 12. Return on capital employed ** 25.1 28.9 Q4/213 vs. Q4/212 Gross margin improved 17 * Before non-recurring items ** Excluding cash and other non-operative balance sheet items, annualized
Mining and Construction Rolling 12-month net sales and EBITA% 4, % 16 3,5 14 3, 12 2,5 1 2, 8 1,5 6 1, 4 5 2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 27 27 28 28 29 29 21 21 211 211 212 212 213 213 Services net sales, rolling 12 months Capital net sales, Construction, rolling 12 months Capital net sales, Mining, rolling 12 months EBITA-% *, rolling 12 months 18 * Before non recurring items
Automation key figures Q4/213 Q4/212 Change % 213 212 Change % Orders received 29 26 2 92 845 7 without currency impact 6 1 Services orders received 96 84 14 422 382 1 Net sales 249 233 7 854 859-1 without currency impact 11 2 Services net sales 116 15 1 398 38 5 % of net sales 47 45 47 44 EBITA * 37 31 22 116 11 15 % of net sales 15. 13.2 13.6 11.8 Return on capital employed ** 38.5 31.8 Q4/213 vs. Q4/212 Improvement driven again by Flow Control Services orders increased strongly, 14% year-on-year, 2% without currency impact 19 * Before non-recurring items ** Excluding cash and other non-operative balance sheet items
Automation Rolling 12-month net sales and EBITA% 1, 9 8 7 6 5 4 3 2 1 % 18 16 14 12 1 8 6 4 2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 27 27 28 28 29 29 21 21 211 211 212 212 213 213 Services net sales, rolling 12 months Capital net sales, rolling 12 months EBITA-% * before non-recurring items, rolling 12 months 2 * Before non-recurring items
EUR 1 million global efficiency program under way Fast track = A reduction of over 1 persons identified. Total savings potential between 214 215 is EUR1 13 million (including procurement) - About 4% of projects finalized with savings running - Most of the decisions for the remaining 6% have been taken with implementation in 214. Savings coming in partially in 214 and full impact in 215 - EUR 26.5 million of one-time costs were booked in 213 with more to come in 214 - Savings from all projects to be achieved during Q4/214 at the latest (except for 215 procurement) Structural and development projects -> additional savings - The fast track will be complemented with projects related to Metso s legal and support function structure. The action has been taken and results are expected during the second half of 214 and in 215 - Additional savings related to lower than expected demand from the mining industry being planned - The scope of actions and more specific targets will be announced during Q1/214 21
Outlook and guidance Matti Kähkönen President and CEO
Market outlook Mining Construction Automation 55% of net sales in 213 55% service intensity Current demand: Weak for the equipment and project business. Services good. 2% of net sales in 213 4% service intensity Current demand: Satisfactory for the equipment and services. 22% of net sales in 213 45% service intensity Current demand: Good in oil & gas; satisfactory in pulp & paper. Services good. 3-6 months market outlook ( ) Equipment Services Equipment Services Equipment Services 23
Order backlog 3, 3, 2, 1,731 2,56 2,324 1,927 2,5 2, 1,5 Deliveries after 213 Deliveries after 214 1, 1, Deliveries in 213 Deliveries in 214 5 21 211 212 213 Order backlog Dec 31, 212 Order backlog Dec 31, 213 Mining and Construction Automation Opening backlog for 214 was EUR 3 million lower than opening backlog for 213 Services backlog is EUR 25 million down compared with last year Automation backlog grew by EUR 49 million Biggest drop in mining equipment and projects 24
Guidance for 214 Based on our market outlook, backlog for 214, current exchange rates and ongoing cost-efficiency actions, we estimate that our net sales in 214 will be somewhat below 213 and EBITA margin before non recurring items for 214 will be at around 12% 25
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