Short-term outlook
This short-term outlook was published in accordance of Metso's January-September 2011 Interim Review on October 27, 2011
During July-September, the demand was healthy in most of our customer industries with certain variability by customer industry and geographic area. We estimate that in the emerging markets the operating environment continues to be good. 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 during the rest of 2011 and in the early part of 2012. We anticipate that even in a case of a slowdown in western economies, most of our customer industries will continue to utilize their capacity at a good or satisfactory level supporting our services business.
Metal prices have come down from the peak levels of the early part of the year, but remain still relatively high. The activity level for quotations for equipment and projects from mining companies has been excellent. We expect the mining market to be at a good level for the rest of the year and in the early part of 2012. However, a potential further tightening of availability of financing and a continued decline in metal prices may have a negative impact on the demand for new equipment. Due to the expected high utilization rates of mines and our large installed equipment base, we expect demand for our mining services to continue 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 relatively low level going forward. 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 and in the early part of 2012. There is continuous need to replace old energy sources and build new capacity. 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 to be good this year and early next year, while we anticipate the activity from the pulp and paper industry to somewhat slow down. We expect the demand for our automation solution services to continue excellent.
Demand for paper, board and tissue lines is expected to be satisfactory in 2011 and in the early part of 2012. Capacity utilization rates in the paper and board industry may fall somewhat, yet keep the demand for our services at a good level.
We expect the market for pulp mills to slow down after recent large project orders. The demand for rebuilds and services is expected to continue good even though lower pulp prices and lower capacity utilization rates may stabilize the demand.
We expect the demand for metal and solid waste recycling equipment to be satisfactory. Demand for recycling equipment services is expected to stabilize as the production utilization rates in the steel industry have started to slow down.
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 compared to 2010. Our estimate is based on Metso’s development in January–September and on our order backlog, which contains orders worth about EUR 1.8 billion for delivery in 2011.
Assuming that the growth in the global economy will not be disturbed and the development in our customer industries remains at current levels, we are confident that our record-high order backlog, which contains approximately EUR 2.8 billion in orders for delivery in 2012, and our strong balance sheet give us a solid starting point for the year ahead.
The estimates for our financial performance in 2011 and 2012 are based on Metso’s current market outlook and business scope as well as on foreign exchange rates similar to those of September 2011.
Last updated Oct 27, 2011
