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Interim Report Q3/2021

Metso Outotec's Interim Report for January-September 2021 

Metso Outotec has prepared both illustrative and IFRS-based historical segment information for January-June 2020, prior to the merger of Metso Minerals and Outotec. The illustrative combined historical information is presented as a combination of Metso Minerals carve-out information and Outotec information, according to the Metso Outotec structure.

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

Third-quarter 2021 in brief, IFRS

  • Strong market activity in all segments
  • Orders received more than doubled to EUR 1,649 million (EUR 809 million)
  • Sales grew by 7 percent to EUR 1,023 million (EUR 957 million)
  • Adjusted EBITA improved to EUR 139 million, or 13.6% of sales (EUR 111 million, or 11.6%)
  • Operating profit improved to EUR 107 million, or 10.5% of sales (EUR 51 million, or 5.4%)

January-September 2021 in brief, IFRS (1-6/2020 illustrative combined)

  • Orders received grew by 44 percent to EUR 4,111 million (EUR 2,846 million)
  • Sales totaled EUR 2,958 million (EUR 2,920 million)
  • Adjusted EBITA increased to EUR 384 million, or 13.0% of sales (EUR 345 million, or 11.8%)
  • Operating profit EUR 295 million, or 10.0% of sales (EUR 209 million, or 7.2%)
  • Earnings per share EUR 0.24
  • Cash flow from operations EUR 444 million
  • EUR 116 million annual run-rate of the Metso Outotec cost synergies achieved by the end of September

President and CEO Pekka Vauramo:

The market activity continued to be strong across our businesses during the third quarter, resulting in a record-high order intake. All three of our segments saw strong demand for our Planet Positive product portfolio, which is designed to help customers improve the sustainability of their operations. We also saw improvement in our aftermarket businesses, as customers’ utilization rates remain high and a gradual easing of the pandemic-related restrictions support productivity investments, such as rebuilds and modernizations. The aggregates market saw normal seasonality compared to the second quarter, but the market activity during this low season has been higher compared to previous years. Our orders received totaled EUR 1,649 million, which is more than two times higher compared to the same quarter in 2020. The order growth was supported by large orders booked in the Minerals and Metals segments.

The Group’s sales increased 7 percent during the quarter and totaled EUR 1,023 million. Sales grew slower than orders, due to our backlog consisting of more longer lead-time equipment orders and supply chain and logistics constraints. We continue to focus on mitigating these challenges and improving our delivery capabilities. Our quarterly result was good, and all our segments were able to improve their profitability, resulting in an increase of the Group’s adjusted EBITA margin to 13.6%, compared to 11.6% a year ago. The improvement is largely thanks to realized synergies and actions related to our footprint and pricing. In addition to the adjusted EBITA, our cash flow from operations has been strong at EUR 172 million in the third quarter and EUR 444 million during the nine-months period.

The Metso Outotec integration continued to proceed ahead of plan. As of the end of September, we had achieved a run-rate of EUR 116 million in cost synergies, and we are confident that the target of EUR 120 million will be delivered by year-end. Revenue synergies have also been realizing at a good pace, with EUR 68 million booked so far as sales and an additional EUR 158 million in the backlog. Despite a couple of months remaining in 2021, I can say that we are very happy with the integration process since Day 1, and we aim to conclude the project at the end of the year. Going forward our focus will be on growth and customer success, while continuing internal improvements as part of the normal course of business.

We continue to make progress in sustainability, which is a strategic priority. The latest IPCC report calls for faster action to ensure that global warming is limited to 1.5°C. Accordingly, we have updated our target for reducing emissions in our own operations. Our updated target is to achieve a 50% reduction in our own CO2 emissions by 2024 and achieving net-zero by 2030. This compares to the previous target of a 50% reduction in own CO2 emissions by 2030. We are making good progress in cutting our emissions, as several of our sites have already switched to renewable energy and we are continuously taking actions and making investments to reduce energy use on our sites. Also central to our sustainability efforts is our Planet Positive product portfolio, consisting of about 100 products that are demonstrably more energy, carbon, or water efficient than the market standard, or help achieve other sustainability priorities for customers such as circularity. Demand for Planet Positive products has lately been growing faster than the market. We expect this growth to continue, and we aim to develop our portfolio to have a Planet Positive product offer for every part of the process.  

Covid-19 market update

Local and regional restrictions and lockdowns continue limiting access to customer sites; despite gradual easing of restrictions, there are still challenges related mainly to international travel. These are apt to slow down decision-making and overall cooperation with customers. Metso Outotec’s own operations have been running without any significant disruptions.

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 remain at the current strong level, subject to the development of the Covid-19 pandemic.

Key figures (IFRS, except for 1-6/2020 illustrative combined)

EUR million

IFRS Q3/2021

Restated* Q3/2020

 

Change %

Q1-Q3/2021

Restated Q1-Q3/2020

 

Change %

 

2020

Orders received

1,649

809

104

4,111

2,846

44

4,150

Orders received by services business

573

460

25

1,710

1,552

10

2,071

% of orders received

35

57

-

42

55

-

50

Order backlog

-

-

-

3,496

2,049

-

2,366

Sales

1,023

957

7

2,958

2,920

1

3,897

Sales by services business

504

522

-3

1,497

1,533

-2

2,017

% of sales

49

54

-

51

53

-

52

Adjusted EBITA

139

111

25

384

345

11

448

% of sales

13.6

11.6

-

13.0

11.8

-

11.5

Operating profit

107

51

108

295

209

41

253

% of sales

10.5

5.4

-

10.0

7.2

-

6.5

Earnings per share, continuing operations, EUR (IFRS)

0.09

0.03

250

0.24

-

-

0.20

Cash flow from operations (IFRS)

172

-

-

444

-

-

587

Gearing, % (IFRS)

-

-

-

26.5

-

-

39.2

Personnel at end of period

-

-

-

15,558

-

-

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 1:00 p.m. EET.  

The audiocast can be followedat https://metso-outotec.videosync.fi/2021-q3-results

A recording and a transcript will be available on 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 40871352#

Further information, please contact: 
 
Juha Rouhiainen, Vice President, Investor Relations, Metso Outotec Corporation, tel. +358 20 484 3253, email: juha.rouhiainen(a)mogroup.com