The news conference can be followed through a live webcast at metso.com/webcasts or through a simultaneously arranged conference call (details at the end of this release).
This is a summary of Metso’s January-June 2011 Interim Review and the complete report is attached as a pdf-file to this release and is also available on our website at metso.com/investors.
Figures in brackets, unless otherwise stated, refer to the comparison period, i.e. the same period in the previous year.
Highlights of the second quarter of 2011
• All-time-high quarter in order intake due to strong demand in all our segments in both capital equipment and in the services business.
• New orders worth EUR 2,883 million were received in April–June, i.e. 73 percent more than in the comparison period (EUR 1,671 million). Orders received from the services business increased and were EUR 866 million, i.e. 31 percent of all orders received (EUR 680 million and 41%).
• Net sales increased 14 percent on the comparison period, and were EUR 1,567 million (EUR 1,370 million). Our services business net sales totaled EUR 691 million and accounted for 46 percent of total net sales (EUR 612 million and 45%).
• Earnings before interest, tax and amortization (EBITA), before non-recurring items increased 12 percent and were EUR 139.8 million, i.e. 8.9 percent of net sales (EUR 125.0 million and 9.1%).
• Earnings per share were EUR 0.45 (EUR 0.56).
• Free cash flow was EUR 49 million (EUR 164 million).
Metso’s President and CEO Matti Kähkönen comments on the second quarter:
“Metso continued to make strong progress in the second quarter; we received more new orders in April-June than ever before. Demand in all of our customer industries was at a good or satisfactory level, both in capital equipment and in the services business. Emerging markets continued to account for an impressive share of orders received, at 60 percent. However, in spite of healthy demand, there is increased uncertainty in the global economy.
Our comparable EBITA increased by 12 percent. The higher delivery volumes improved our capacity utilization and increased our net sales giving a positive impact on our profitability development. As a result of clearly higher business activity we have recruited about 700 new employees since the beginning of the year in order to respond to strong order intake and increased delivery volumes. This has to some extent hit our good profitability in the short-term. Furthermore the pricing environment was challenging in some product categories.
We have a very solid base for the future, and we will now further increase our focus on successful and cost-effective delivery, while continuing to win profitable orders. We expect the level of good business activity in our customer industries to continue for the rest of 2011 despite the economic and financial uncertainties.
Thanks to the favorable market development and strong order backlog, the outlook for the rest of the year is good. As a result, our guidance for the current year remains unchanged. It is estimated that our net sales for 2011 will grow by approximately 15 percent compared to 2010 and profitability (EBITA margin before non-recurring items) will improve.”
Metso's key figures is available online.
Demand in most of our customer industries is healthy with some variability by customer industry and geographic area. We estimate, in the emerging markets the operating environment will continue strong and the outlook in the mining business is excellent. The uncertainty in the euro zone, the budget deficit in the United States, the availability of financing and fluctuations in the exchange rates may, however, slow down market activity. Political unrest in recent months in the Middle East and North Africa, as well as the natural disaster in Japan, have also contributed to the overall uncertainty. However, we anticipate that our customer industries will continue to utilize their capacity at a good level supporting our services business. Furthermore most of our customers are expected to invest in existing and new capacity.
Metal prices have been at a high level primarily due to strong demand in China and India and to the momentum in the global economy. At the same time, copper and iron ore production has fallen short of demand. The activity for quotations for equipment and projects from mining companies has stayed at a good level. This has had a clearly positive impact on our orders received and we expect the mining market to stay at the current high level for the remainder of the year. Since several mining companies have confirmed significant capital investment programs for the coming years, we expect good quoting activity in larger projects this year. Due to the strengthening demand for minerals and our large installed equipment base, we expect demand for our mining services to be excellent.
In the Asia-Pacific region and Brazil, economic growth continues and infrastructure construction projects are maintaining demand for construction equipment at a good level. We anticipate that demand for equipment used in aggregates processing by the construction industry in Europe and in North America will stay at the current satisfactory level during the second half of 2011. We estimate that demand for our services for the construction industry will remain satisfactory.
Demand for power plants that utilize renewable energy sources is expected to continue satisfactory in 2011. Several European countries and the United States have published targets to increase the use of renewable energy and this is expected to support demand for our power plant solutions fuelled by biomass and recycled waste. However, the pending policies over subsidy mechanisms for renewable energy are estimated to have a key impact on investment decisions. Demand for the power plant services business is expected to be good.
We estimate that demand for our automation products will continue good this year, as the oil, gas and petrochemical industries continue investing due to the improvement in energy prices and demand. Demand for automation products in the pulp and paper industry is also expected to be good and for automation solutions services excellent.
We expect the demand for metal and solid waste recycling equipment to be good. Demand for recycling equipment services is expected to continue improving over the coming quarters as the capacity utilization rates of our customers’ plants and equipment improve.
Demand for paper, board and tissue lines is expected to be satisfactory in 2011. We expect the high capacity utilization rates of the paper and board industry to keep the demand for our services at a good level.
Demand for new pulp mills, rebuilds and services continues to be good. However, we expect the market for pulp mills to slow down after recent large project orders and the market for pulp mill services and rebuilds to continue to be healthy.
As earlier, we estimate that our net sales in 2011 will grow by around 15 percent and that our profitability (EBITA margin before non-recurring items) will improve, both compared to 2010. Our estimate is based on Metso’s development in January–June and on our order backlog, which contains orders worth about EUR 2.7 billion for delivery in 2011.
The estimates for our financial performance in 2011 are based on Metso’s current market outlook and business scope, as well as on foreign exchange rates similar to the first half of this year.
Metso Corporation’s Board of Directors
Metso (metso.com) is a global supplier of sustainable technology and services for mining, construction, power generation, automation, recycling and the pulp and paper industries. We have about 29,000 employees in more than 50 countries.
Further information, please contact:
Matti Kähkönen, President and CEO, Metso Corporation, T: +358 20 484 3000
Harri Nikunen, CFO, Metso Corporation, T: +358 20 484 3010
Marja Mäkinen, Investor Relations Manager, Metso Corporation, T: +358 20 484 3211
Invitation to news conference
Metso will hold a news conference for media, investors and analysts in Helsinki today, on Thursday, July 28, 2011 at
8:00 EST / New York
13:00 BST / London
14:00 CEST / Paris
15:00 EEST / Helsinki
The event will take place at Metso Group Head office, Fabianinkatu 9 A, Helsinki, Finland. The news conference will be in English.
The news conference can also be followed through a live webcast at metso.com/webcasts or through simultaneously arranged conference call. It is possible to ask questions during the event both by through webcast and by conference call.
Due to the live webcast, we are kindly asking those attending the news conference to be present 5 minutes prior to the start of the event.
Conference call details:
Conference call participants are requested to dial in a few minutes prior to the start of the teleconference
• US: +1 334 323 6201
• Other countries: +44 20 7162 0025 or +44 20 7162 0077
• Access code: 885 198
A replay will be available for 14 days until August 11, 2011 on the following phone numbers:
• US: +1 954 334 0342
• Other countries: +44 20 7031 4064
• Access code: 885 198
After the news conference there will be an audio file (mp3) available for downloading and at the latest on Friday July 29, a transcript of the event at metso.com/webcasts. The presentation material will be available after the publishing of the interim review at metso.com/investors.
You are most welcome to participate in the event!
Metso’s Financial Reporting in 2011
The Interim Review for January–September 2011 will be published on October 27, 2011.
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.