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Interim Review Q1/2021

Metso Outotec Interim Review January 1 – March 31, 2021

The demerger of Metso Corporation and the combination of Metso’s Minerals business and Outotec was completed on June 30, 2020. In the transaction, the legal acquirer Outotec issued new shares to Metso shareholders and received all assets, rights, debts, and liabilities related to Metso’s Minerals business.

This transaction is treated in IFRS reporting as a reverse acquisition, where Metso Minerals is the accounting acquirer and Outotec the accounting acquiree. The historical IFRS-based information for January-June 2020 includes only Metso Minerals carve-out information.

Metso Outotec has prepared both illustrative and IFRS-based historical quarterly segment information for January-June 2020. The illustrative historical segment information is presented as a combination of Metso Minerals carve-out information and Outotec information, according to the Metso Outotec segment structure. The Outotec information is based on Outotec’s historical accounting principles; Outotec’s Minerals Processing segment is included in Metso Outotec’s Minerals segment, and Outotec’s Metals Refining segment is included in Metso Outotec’s Metals segment.

Figures in brackets refer to the corresponding period in 2020, unless otherwise stated.

First-quarter 2021 in brief, IFRS (comparison period illustrative combined)

  • Orders received EUR 1,102 million (EUR 1,084 million)
  • Sales EUR 925 million (EUR 947 million)
  • Adjusted EBITA EUR 115 million, or 12.4% of sales (EUR 95 million, or 10.0%)
  • Operating profit EUR 91 million, or 9.8% of sales (EUR 68 million, or 7.2%)
  • Earnings per share EUR 0.08
  • Cash flow from operations EUR 165 million
  • EUR 83 million annual run rate of the Metso Outotec cost synergies realized by the end of the quarter

President and CEO Pekka Vauramo:

We continued to see positive development in many areas across the company during the first quarter. The integration and synergy work are proceeding according to plan and the results are clearly visible in our performance. In cost synergies we reached a run rate of EUR 83 million by the end of March, and we are well in line with the target of reaching the 120 million run rate at the end of the year. Good progress has been achieved also in realizing revenue synergies, and we expect them to support our sales during 2021 and beyond.

Covid-19 continued to have an impact on the market activity. Despite this, our orders received increased 2% during the quarter, which was largely driven by a strong demand in the aggregates market. In addition, both the Minerals and Metals segments have seen overall customer activity improving. Our quarterly sales were affected by the timing of deliveries from the order backlog. Despite the slightly lower volumes year-on-year, our profitability improved significantly, and adjusted EBITA margin increased to 12.4%. The Aggregates and Minerals segments benefited from realized synergies and business improvement actions and the loss in the Metals segment narrowed sequentially. In addition, operating profit improved year-on-year and cash flow from operations was good at EUR 165 million.

Sustainability is one of our strategic priorities, and we saw good development also on that front during the first quarter. In January, Metso Outotec was recognized as 8th most sustainable company in the world by Corporate Knights, which proves our strong starting point to add value in this area. In March, we introduced an all-encompassing approach to sustainability, Planet Positive. The Planet Positive portfolio focuses on the most environmentally efficient technologies in our current portfolio, responding to our customers’ the sustainability requirements relating to energy or water efficiency, reduction of emissions, circularity, and safety. We are committed to limiting global warming to 1.5°C by minimizing the environmental impact of our own operations and our supply chain. To achieve this, we have published targets validated by the Science Based Targets initiative. For our customers, we aim to maximize our handprint, which already is significantly bigger than our footprint.

Going forward, our focus will be on completing the integration and realizing the full potential of the related synergies. At the same time, we are ready to maximize opportunities in our end markets, where I expect to see recovery during the year.

Covid-19 market update

The Covid-19 pandemic continued to affect Metso Outotec’s end markets and customer operations during the first quarter. The most severe impact is resulting from restrictions on workforce mobility and limited access to customer sites. This has affected especially the services business in all segments and, to some extent, also decision-making and commissioning related to customers’ large investments. The demand for spare parts and consumables has continued to be good, supported by healthy utilization rates at mines thanks to high metal prices. Metso Outotec’s own operations have been running with additional health and safety measures and without major disruptions.

The positive news related to the roll out of Covid-19 vaccinations as well as the gradual opening of domestic travel in several countries support the view that the impact of the pandemic could diminish towards the end of 2021.

Market outlook

According to its disclosure policy, Metso Outotec’s market outlook describes the expected sequential development of market activity during the following six-month period using three categories: improve, remain at the current level, or decline.

Metso Outotec expects the market activity to improve, subject to the development of the Covid-19 pandemic.

Key figures (Q1/2021 IFRS, other periods illustrative combined)

 

EUR million

IFRS

Q1/2021

Restated*

Q1/2020

 

Change %

 

2020

Orders received

1,102

1,084

2

4,150

Orders received by services business

559

561

0

2,071

% of orders received

51

52

-

50

Order backlog

2,569

-

-

2,366

Sales

925

947

-2

3,897

Sales by services business

482

499

-3

2,017

% of sales

52

53

-

52

Adjusted EBITA

115

95

20

448

% of sales

12.4

10.0

-

11.5

Operating profit

91

68

33

253

% of sales

9.8

7.2

-

6.5

Earnings per share, continuing operations, EUR (IFRS)

0.08

-

-

0.20

Cash flow from operations (IFRS)

165

-

-

587

Gearing, % (IFRS)

31.7

-

-

39.2

Personnel at end of period

15,773

-

-

15,466

*Excluding Recycling business, which is classified as discontinued operations

Audiocast and conference call details 

Metso Outotec’s President and CEO Pekka Vauramo and CFO Eeva Sipilä will present the results in an audiocast and a conference call for analysts and investors on the same day at 12:30 p.m. EEST. 

The audiocast can be followed at https://metso-outotec.videosync.fi/2021-q1-results

A recording and a transcript will be available at this webpage after the event has finished. 
 
Conference call participants are requested to dial in five minutes before the event on: 
United States: +1 631 913 1422 
other countries: +44 333 300 0804 

The confirmation code for joining the conference call is 14437477# 

 

Further information, please contact:

Juha Rouhiainen, VP, Investor Relations, Metso Outotec Corporation, tel. +358 20 4843253, email: juha.rouhiainen@mogroup.com