CEO on sustainability

The tough market situation witnessed during recent years prevailed in 2016, making it yet another challenging year for Metso’s customer industries. Aggregates markets improved during the year, but demand for the mining business remained weak. The oil and gas downstream market took an unfavorable turn during the second half of the year, as customers became clearly more cautious with their investments.

All this considered, we pulled off a good result. With strong cash flow and a firm balance sheet, we have a healthy foundation. Our orders in 2016 exceeded sales and we maintained a satisfactory level of profitability despite overall lower sales. I believe we are well positioned, thanks to the determined work done to improve Metso’s structure and efficiency.

The best choice

Our ambition level is high: we want to be a leading provider in every business we are in. The key word of our strategy is growth. In addition to continuously striving to grow the existing business and capitalizing on the potential of our installed base, we are also looking into entirely new growth opportunities through an expansion to new markets and segments. Growing services is at the core of our strategy. Metso is the leading full-scope services supplier for minerals processing today, and we are continuously developing our offering and capabilities to provide even more customer value.

Our customers’ needs define our strategy and our priorities follow their priorities. There is no doubt that digitalization is opening growth opportunities for Metso. Intelligent products and processes and increased automation together with faster processing of large amounts of data will improve productivity and transparency and increase efficiency. We have taken a pragmatic approach to digitalization: strictly business driven, with no heavy organizational structures. The focus is on customer benefits.

We renewed our vision to state that Metso is the best choice for sustainable processing and flow of natural resources for our customers, employees, shareholders and other stakeholders. We work hard every day to live up to that vision and believe that Metso plays an important role as an enabler of a more sustainable global society. Together with our customers, we address complicated challenges and utilize our knowledge and advanced technology to meet their needs. As a result, raw material processing takes place in the most productive and efficient way.

Sustainable everywhere, every day

Metso’s sustainability strategy and targets were revised in 2016 and approved by top management and reviewed by the Board. We want to be considered a thought leader in sustainability by 2020. The sustainability strategy defines more concretely what sustainability means at Metso, grouped into four focus areas: performing together, building customer success, contributing to the environment and responsible supply chain. In our view, we can make the biggest difference by innovating new technologies and constantly improving our ways of operating. When selecting development actions, we maintain an active dialogue with our stakeholders. All the sustainability focus areas include defined targets, and we have over 20 key performance indicators in place to measure the impact. The achievements and the sustainability strategy will be covered in more detail later on in this report.

One sustainability topic that is crucial not only for us, but also for all our customers – due to the nature of their business – is safety. The key safety indicator LTIF (lost-time incident frequency) provides essential information on how we have succeeded in advancing safer working conditions. Metso’s LTIF

index in 2016 was 2.4 compared to 2.7 in 2015. In practical terms, the decrease translates to hundreds of individual acts, observations, reports and constant education to improve safety in our facilities everywhere we operate. The current level of accident frequency corresponds roughly to one reported incident per week among our more than 11,000 employees all over the world. We have every reason to  be proud of this achievement and the steep downward trend since we started meticulously following the LTIF. Our long-term target is zero accidents and I believe it is reachable.

Performing together is one of Metso’s values. Indeed, good performance always comes as a result of numerous individual contributions and intensive team work. I am grateful to all my Metso colleagues, customers, shareholders and partners for their sustained support and commitment.Let us continue with the same energy and focus in 2017.

Matti Kähkönen

President and CEO