Stock Exchange release October 22, 2015 11:00:00 AM CET

Metso's Interim Review January 1 - September 30, 2015

Metso's Interim Review January 1 - September 30, 2015

Metso Corporation's stock exchange release on October 22, 2015 at 12:00 noon local time

Metso will arrange a results audiocast today at 15:00 EEST (8:00 EDT, 13:00 BST, 14:00 CEST). The audiocast is viewable at www.metso.com/latestreports. A simultaneous conference call will be arranged, allowing participants to ask questions. You can also send your written questions during the audiocast via chat function.

Recording of the event is available at the earliest after the event has finished and a transcript will be available for downloading.

This is a summary of Metso's January-September 2015 Interim Review. Complete report is attached to this release as a pdf-file and is also available at www.metso.com/latestreports .

Figures in brackets refer to the corresponding period in 2014, unless otherwise stated. The Process Automation Systems (PAS) business was divested on April 1, 2015, and is not included in the Flow Control segment's figures for July-September 2015. Figures for January-September 2015 and all comparison periods prior to the divestment include PAS. Like-for-like comparisons are made with a separate note. 

Third quarter 2015 in brief

  • Low commodity prices continued to have a negative impact on the demand for capital equipment in the mining and oil & gas industries. Demand for services has softened due to mine closures and customers' cost saving actions.
  • Orders received EUR 647 million (EUR 786 million, or EUR 727 million excluding PAS), of which EUR 436 million (EUR 493 million, or EUR 464 million excluding PAS) were services orders.
  • Net sales EUR 680 million (EUR 861 million, or EUR 799 million excluding PAS), of which EUR 435 million services (EUR 490 million, or EUR 459 million excluding PAS).
  • EBITA before non-recurring items EUR 92 million and 13.6% of net sales (EUR 104 million and 12.1%, or EUR 99 million and 12.4% excluding PAS).
  • Free cash flow totaled EUR 117 million (EUR 46 million).
  • An extra dividend of EUR 0.40 per share was paid at the beginning of August.

Financial guidance for 2015 (updated on July 23, 2015)
We estimate that our net sales, excluding the Process Automation Systems business, in 2015 will be between EUR 3,000 million and EUR 3,200 million and that our EBITA margin before non-recurring items will be around 12.5 percent (12.0-13.0%).

The guidance for 2015 is based on the current market activity in our customer industries, our current backlog and the current exchange rates.

President and CEO Matti Kähkönen:
We have been successful in keeping our profitability healthy despite the challenging market environment. Thanks to the cost actions across the Group and the high proportion of the services business in our sales mix, our gross margins have improved and SG&A costs are continuously declining. This resulted in a strong EBITA margin of 13.6 percent in the third quarter. Flow Control's performance was particularly strong with a 20.7 percent EBITA margin, reflecting the multi-industry characteristics of the business. The profitability of the Minerals segment was satisfactory given the current market situation which is expected to remain. Our focus in Minerals is to continue to improve our competitiveness in the equipment business and to turn the services business back to a growth mode.     

Key figures

EUR million Q3/
2015
Q3/
2014
Change % Q1-Q3/ 2015 Q1-Q3/ 2014 Change % 2014
Orders received 647 786 -18 2,269 2,608 -13 3,409
Orders received by the services business 436 493 -12 1,473 1,572 -6 2,052
  % of orders received 67 63   65 60   60
Order backlog at the end of the period       1,289 1,872 -31 1,575
Net sales 680 861 -21 2,223 2,640 -16 3,658
Net sales of the services business 435 490 -11 1,388 1,435 -3 2,007
  % of net sales 64 57   62 54   55
Earnings before interest, tax and amortization (EBITA) and non-recurring items 92 104 -11 257 323 -20 460
  % of net sales 13.6 12.1   11.5 12.2   12.6
Operating profit* 76 72 5 488 250 95 351
  % of net sales 11.1 8.4   21.9 9.5   9.6
Earnings per share, EUR 0.29 0.26 12 2.60 0.89 192 1.25
Free cash flow 117 46 154 282 141 100 204
Return on capital employed (ROCE) before taxes, annualized, %**       26.5 15.5   16.4
Equity-to-asset ratio at the end of the period, %       46.4 38.9   40.5
Net gearing at the end of the period, %       15.0 49.6   45.6
Personnel at the end of the period       12,664 15,939 -21 15,644
               

Figures for Q1-Q3/2015, Q3/2014, Q1-Q3/2014, and full-year 2014 include Process Automation Systems.
*Operating profit for Q1-Q3/2015 includes the gain on the disposal of the PAS business.
** ROCE for Q1 - Q3/2015 includes the gain on the disposal of the PAS business, which is not annualized.

Key Figures excluding PAS

EUR million Q3/
2015
Q3/
2014
Change % Q1-Q3/
2015
Q1-Q3/
2014
Change % 2014
Orders received 647 727 -11 2,207 2,353 -6 3,074
 Services orders, % of total 67 64   65 62   62
Net sales 680 799 -15 2,168 2,443 -11 3,363
  Services net sales, % of total 64 57   63 55   56
Earnings before interest, tax and amortization (EBITA) and non-recurring items 92 99 -7 265 306 -13 426
  % of net sales 13.6 12.4   12.2 12.5   12.7
Return on capital employed (ROCE) before taxes, annualized, %       17.1      
Personnel at the end of the period       12,664 14,349 -12 14,072

Market development
We expect the demand for mining equipment, products and projects to remain weak. We expect the demand for our mining services to be satisfactory and impacted by mine closures and customers' cost-savings initiatives. The demand for both aggregates equipment and services is expected to be satisfactory. The demand for Flow Control products related to customers' new investments is expected to be satisfactory. The demand for Flow Control services is expected to be good. 

Metso is the world's leading industrial company in the mining and aggregates industries and in the flow control business. Our knowledge, people and solutions help drive sustainable improvements in performance and profitability in our customers' businesses.

Metso has an uncompromising attitude towards safety. Our products range from mining and construction equipment and systems to industrial valves and controls. Our solutions are delivered and supported by decades of process knowledge and a broad scope of services backed by a global footprint of over 90 service centers, thousands of service employees, and an extensive logistics network.

Metso is listed on the NASDAQ OMX Helsinki, Finland. In 2014, Metso's net sales totaled EUR 3.7 billion. Metso employs approximately 13,000 industry experts in more than 50 countries. Expect results.

www.metso.comwww.twitter.com/metsogroup

For further information, please contact:
Matti Kähkönen, President and CEO, Metso Corporation, tel. +358 20 484 3000
Harri Nikunen, CFO, Metso Corporation, tel. +358 20 484 3010
Juha Rouhiainen, VP, Investor Relations, Metso Corporation, tel. +358 20 484 3253                 
                                  
Metso Corporation
Harri Nikunen
CFO

Juha Rouhiainen
VP, Investor Relations

Distribution:
NASDAQ OMX Helsinki Ltd
Media
www.metso.com

Conference call details
Conference call participants are requested to dial in five minutes before the scheduled time at:
United States: + 16 46 254 3374
other countries: + 44 20 3427 1928

The confirmation code for joining the conference call is 6384592

Recording of the event is available at www.metso.com/latestreports at the earliest after the event has finished and a transcript of the event will be available.