Metso Corporation's Interim Review January 1 - March 31, 2011
Good progress in growth and profitability
Metso Corporation's stock exchange release on April 28, 2011 at 15:30
A news conference will be held today, on April 28, 2011 at 4:00 p.m. in English at Metso Group Head Office, Fabianinkatu 9 A, Helsinki, Finland. The news conference can be followed through a live webcast at www.metso.com/investors or through a simultaneously arranged conference call (details at the end of this release).
This is a summary of Metso's January-March 2011 Interim Review and the complete report is attached as a pdf-file to this release and is also available on our website at www.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 first quarter of 2011
New orders worth EUR 1,847 million were received in January-March, i.e. 35 percent more than in the comparison period (EUR 1,366 million). Orders received from the services business accounted for 48 percent of the total and were EUR 848 million (48% and EUR 648 million).
Net sales increased 23 percent on the comparison period, and were EUR 1,444 million (EUR 1,170 million). The share to total net sales for our services business was 47 percent, i.e. EUR 641 million (44% i.e. EUR 512 million).
Earnings before interest, tax and amortization (EBITA), before non-recurring items, were EUR 123.6 million, i.e. 8.6 percent of net sales (EUR 87.6 million and 7.5%).
Earnings per share were EUR 0.49 (EUR 0.20).
Free cash flow was EUR 68 million (EUR 35 million).
Matti Kähkönen started as President and CEO as of March 1, 2011, and at the same time the new Metso Executive Team took office.
Metso's President and CEO Matti Kähkönen comments: "Metso's good progress continued during the first quarter. I am especially excited about the growth - in both new orders and in net sales. Increasing volumes also positively contributed to our profitability.
Demand in most of our customer industries is back to a relatively normal level with some variations by customer industry and geographic area. While demand picture is generally favorable there are also uncertainties related to fragility of economic recovery, inflationary pressures as well as high oil price. On the positive side, the operating environment is estimated to continue strong in the emerging markets and the outlook in the mining business is good.
Based on a favorable development in the market environment and order intake, we upgraded our estimate on the 2011 financial performance on April 20. We estimate that our net sales will grow about 15 percent compared to 2010 and profitability (EBITA margin before non-recurring items) will improve.
Our operational priorities are clear. We continue to pursue new profitable orders and to secure our delivery capability, while keeping a tight reign over costs."
Metso's key figures
|EUR million||Q1/2011||Q1/2010||Change %||2010|
|Net sales of services business||641||512||25||2,453|
|% of net sales||47||44||45|
|Earnings before interest, tax and amortization (EBITA) and non-recurring items|| |
|% of net sales||8.6||7.5||8.8|
|% of net sales||7.8||5.9||8.0|
|Earnings per share, EUR||0.49||0.20||145||1.71|
|Orders received of services business||848||648||31||2,637|
|Order backlog at end of period||4,300||3,720||16||4,023|
|Free cash flow||68||35||94||435|
|Return on capital employed (ROCE) before taxes, annualized, %||15.2||8.1||13.5|
|Equity to assets ratio at end of period, %||35.0||34.0||38.1|
|Gearing at end of period, %||13.8||32.8||15.0|
Demand in most of our customer industries has come back to a relatively normal level with some variations by customer industry and geographic area. In the emerging markets the operating environment is estimated to continue strong and the outlook in the mining business good. The uncertainty caused by the budget deficits in many European countries and the United States, the availability of financing and fluctuations in the exchange rates may, however, slow down market activity, especially in Europe and North America. 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. We anticipate that the improving capacity utilization rates of our customer industries will support our services business, and most of our customers are expected to gradually invest in existing and new capacity.
Metal prices have been at a high level primarily due to strong demand in China and India and the general upswing in the global economy. At the same time, copper and iron ore production has fallen short of demand. The number of quotations for equipment and projects from mining companies has strongly increased. This has already had a clearly positive impact on our orders and we expect demand to be good this year. Since the industry players have confirmed significant capital investment programs for the coming years, we expect strong 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 production by the construction industry in Europe and in North America will continue to gradually recover in 2011 thanks to the growing need for replacement investments. 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 be satisfactory in Europe and North America 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 waste. However, the pending policies over support 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 at a good level this year, as the oil, gas and petrochemical industries increase their investments 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 too. Demand for automation solutions services is expected to be good.
We expect the demand for metal and solid waste recycling equipment to be satisfactory. 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 improved 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 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.
Based on a favorable development in the market environment and order intake, we changed our estimate on the 2011 financial performance on April 20, 2011.
We estimate that our net sales in 2011 will grow about 15 percent and profitability (EBITA margin before non-recurring items) will improve, both compared to 2010. Our estimate is based on Metso's development in January-March as well as our order backlog, which contains orders worth about EUR 3.1 billion for 2011.
The estimates for our financial performance in 2011 are based on Metso's current market outlook and business scope as well as foreign exchange rates similar to the first quarter.
Previous guidance (from 2010 Financial Statements Review, published on February 3, 2011):
"Based on the development in 2010 and assuming that the gradual recovery of the global economy will continue, we estimate that our net sales in 2011 will grow over 10 percent compared to 2010 and EBITA before non-recurring items will improve. Our estimate is based on our order backlog of EUR 4.0 billion at the end of 2010, which contains orders worth about EUR 3.1 billion for 2011."
Helsinki, April 28, 2011
Metso Corporation's Board of Directors
Metso 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 28,500 employees in more than 50 countries. www.metso.com
Further information, please contact:
Matti Kähkönen, President and CEO, tel. +358 20 484 3000
Harri Nikunen, CFO, tel. +358 20 484 3010
Johanna Henttonen, Vice President, Investor Relations, tel. +358 20 484 3253
Invitation to news conference
Metso will hold a news conference for media, investors and analysts in Helsinki on Thursday, April 28, 2011 at
09:00 EDT / New York
14:00 BST / London
15:00 CEST / Paris
16:00 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 be followed through a live webcast at www.metso.com/investors or through a simultaneously arranged conference call. It's 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 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 6203
other countries: +44 20 7162 0125 or +44 20 7162 0177.
access code: 885197
A replay will be available for 14 days until midnight on May 12, 2011 on the following phone numbers:
US: +1 954 334 0342
other countries: +44 20 7031 4064
access code 885197
After the news conference there will be an audio file (mp3) available for downloading and at the latest on Friday, April 29, a transcript of the event at www.metso.com/Investors. The presentation material will be available after the publishing of the Interim Review at www.metso.com/Investors.
You are most welcome to participate in these events.
Metso's Financial Reporting in 2011
The Interim Review for January - June 2011 will be published on July 28, and the Interim Review for January - September 2011 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.
Vice President, Investor Relations
NASDAQ OMX Helsinki Ltd