The fourth quarter did not offer significant news, as market sentiment was more or less unchanged compared to the third quarter. Our customers remained cautious regarding new investments and the demand for equipment and projects was low. More stable development was seen in Minerals’ wear and spare part orders as well as Flow Control’s services business. A timely delivery and an extensive offering of services is clearly in demand regardless of the business cycle, and maximizing uptime is even more essential when utilization rates are high.
Fewer projects and equipment deliveries affected our topline, and sales declined across the Group’s business areas during 2016. A lot was done in order to adapt structure and footprint to current markets; The adjusted EBITA of 10.6 percent is a demonstration of Metso’s ability to adjust its cost base to these challenging conditions. A number of internal actions, by which we target organic growth and stronger foothold, proceeded in 2016. Standardization and digitalization can both streamline and improve our way of conducting business. Finding new channels to market and broadening our distribution network was also topical in 2016.
Our balance sheet is in excellent shape and Metso went into 2017 net debt-free. Financial leverage could be higher and Metso will not hesitate to use its large cash position when suitable investment opportunities arise. Investment opportunities may arise, e.g. within digitalization in 2017, which is why we expect capital expenditure to grow from last year. Given the cash position and an EPS of EUR 0.87, the Board’s proposal of a EUR 1.05 dividend per share was in line with expectations and Metso’s dividend policy.
We are not expecting a large turnaround, but the growing economies of the United States, Europe and India shed some optimism on the outlook for 2017. The demand for aggregates equipment and services has changed to “good,” while we’ve seen some recovery in the demand for oil & gas projects at the beginning of the year. The activity in the mining sector is expected to be on the same level as in 2016.
Metso’s President and CEO Matti Kähkönen and IR met with investors and analysts during a two-day roadshow in London, and the discussions were almost 100% about outlook and market development. Some companies have shown growth in their mining-related businesses during the last two quarters, and investors are very interested to know when the same trend will be visible in Metso’s numbers. In addition to the demand and market outlook, other prevailing themes in the meetings included development of our profitability, cost savings and industry consolidation. Everyone seemed to agree on one thing: like last year, also 2017 might offer some surprises that no one is clued in to yet.