Metso's Financial Statements Review January 1 - December 31, 2016
Metso Corporation, Stock exchange release, February 3, 2017 at 09:00 a.m. EET
Metso will arrange a results audiocast today at 1:00 p.m. EET. The audiocast is viewable at www.metso.com/latestreports. A simultaneous conference call will be arranged, allowing participants to ask questions. A recording and a transcript of the event will be available on the same page on February 6, 2017, at the latest.
This is a summary of Metso's January-December 2016 Financial Statements Review. The 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 2015, unless otherwise stated.
Fourth-quarter 2016 in brief
· Demand for aggregates equipment improved and demand for mining services stabilized during the quarter.
· Orders received totaled EUR 672 million (EUR 758 million), of which EUR 442 million
(EUR 441 million) were services orders.
· Sales totaled EUR 676 million (EUR 754 million), of which services accounted for EUR 442 million (EUR 481 million).
· Adjusted EBITA totaled EUR 64 million, or 9.4 percent of sales (EUR 91 million, 12.0%). The lower EBITA resulted from lower volumes, project overrun costs and warranty costs in Minerals, as well as from a negative impact related to non-operative items in the Group head office.
Full-year 2016 in brief
· Market environment was challenging.
· Orders received totaled EUR 2,724 million (EUR 2,965 million), of which EUR 1,741 million
(EUR 1,879 million) were services orders.
· Orders clearly exceeded sales and consequently the year-end backlog grew 4 percent
· Sales totaled EUR 2,586 million (EUR 2,923 million), of which services accounted for
EUR 1,703 million (EUR 1,840 million).
· Adjusted EBITA totaled EUR 274 million, or 10.6 percent of sales (EUR 356 million, 12.2%).
· Operating profit totaled EUR 227 million, or 8.8 percent of sales (EUR 555 million, 18.7%), and was negatively impacted by net adjustment items resulting from continued restructuring to adapt the structure and footprint to market conditions.
· Strong free cash flow of EUR 339 million (EUR 341 million), resulting from a release of net working capital.
· The Board of Directors proposes a dividend of EUR 1.05 per share (EUR 1.05)
Outlook for 2017
Metso's overall trading conditions are expected to be slightly better than in 2016. Demand for our products and services in 2017 is expected to develop as follows:
· Remain weak for mining equipment and satisfactory for mining services.
· Improve to good for aggregates equipment and services (previously: satisfactory both for equipment and services)
· Remain satisfactory for Flow Control products related to customers' new investments and satisfactory for Flow Control services, with some positive signs seen in the oil & gas markets in the beginning of the year.
At the end of December 2016, our backlog for 2017 totaled approximately EUR 1.2 billion. In the current market conditions, we continue to expect some postponements to planned delivery timetables. Negative adjustment items from restructuring programs initiated in 2016 are expected to be EUR 10-15 million. Capital expenditure excluding acquisitions is expected to increase compared to 2016 but remain below depreciation and amortization.
President and CEO Matti Kähkönen:
Last year proved to be challenging, especially in the mining and oil & gas markets. The demand for mining equipment was more or less in line with 2015, and the demand for services seemed to stabilize in the last quarter. In aggregates we saw positive development as the demand for equipment strengthened in the US, Northern Europe, and India. The biggest change in 2016 was seen in the oil & gas market, where customers became clearly more cautious about downstream investments during the second half of the year.
On a positive note, our annual orders exceeded sales, and the Group's profitability was satisfactory, despite lower sales in both Minerals and Flow Control. In addition, we reported a strong free cash flow and our balance sheet strengthened significantly. Though I am pleased with the cost-efficiency measures we have carried out so far, we will continue to look after our costs and take measures where necessary also going forward.
We proceeded with many internal actions during the year. The digitalization of both our offering and business models is under way and good progress was made during 2016. We implemented a new operating model in the Minerals equipment business and made notable progress with the standardization of our products and projects for a smoother sales-to-delivery process. We also continued to broaden our distribution network and add new distributors in both Flow Control and Aggregates.
Our market outlook for 2017 illustrates some optimism, as we expect the market situation to be slightly better compared to 2016. The most prominent improvement, which started already last year, seems to be taking place in the aggregates business. In the mining and oil & gas markets the year has started in a relatively positive way, but it is still too early to announce a meaningful recovery.
|EUR million||Q4/2016||Q4/2015||Change %||2016||2015*||Change %|
|Orders received by the services business||442||441||0||1,741||1,879||-7|
|% of orders received||66||58||64||63|
|Order backlog at the end of the year||1,320||1,268||4|
|Sales of the services business||442||481||-8||1,703||1,840||-7|
|% of sales||65||64||66||63|
|Earnings before interest, tax and amortization (EBITA), adjusted||64||91||-30||274||356||-23|
|% of sales||9.4||12.0||10.6||12.2|
|Personnel at the end of the year||11,542||12,619||-9|
| * The Process Automation Systems (PAS) business was divested on April 1, 2015. The full-year 2015 comparison numbers for Metso Group and Flow Control including the PAS business are presented in the tables section. |
|EUR million||Q4/2016||Q4/2015||Change %||2016||2015||Change %|
|% of sales||6.6||8.9||8.8||18.7*|
|Earnings per share, EUR||0.17||0.35||-53||0.87||2.95*||-71|
|Free cash flow||97||59||64||339||341||-1|
| Return on capital employed (ROCE) |
before taxes, %
| Equity-to-asset ratio |
at the end of the year, %
|Net gearing at the end of the year, %||-1.8||10.6|
* Including a capital gain on the disposal of PAS
Metso is a world leading industrial company serving the mining, aggregates, recycling, oil, gas, pulp, paper and process industries. We help our customers improve their operational efficiency, reduce risks and increase profitability by using our unique knowledge, experienced people and innovative solutions to build new, sustainable ways of growing together.
Our products range from mining and aggregates processing equipment and systems to industrial valves and controls. Our customers are supported by a broad scope of services and a global network of over 80 service centers and about 6,000 services professionals. Metso has an uncompromising attitude towards safety.
Metso is listed on the NASDAQ OMX Helsinki, Finland, and had net sales of about EUR 2.6 billion in 2016. Metso employs over 11,000 persons in more than 50 countries. Expect results.
For further information, please contact:
Matti Kähkönen, President and CEO, Metso Corporation, tel. +358 20 484 3000
Eeva Sipilä, CFO, Metso Corporation, tel. +358 20 484 3010
Juha Rouhiainen, VP, Investor Relations, Metso Corporation, tel. +358 20 484 3253
VP, Investor Relations
NASDAQ OMX Helsinki Ltd
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A 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.