OUTOTEC OYJ FINANCIAL STATEMENTS REVIEW FEBRUARY 9, 2016 AT 9.00 AM
FINANCIAL STATEMENTS REVIEW JANUARY-DECEMBER 2015
Orders and service sales maintained, sales declined
January-December 2015 in brief (comparison period in 2014):
- Order intake: EUR 1,190 (1,178) million, 1% (in comparable currencies -2%)
- Order backlog: EUR 1,103 (1,138) million
- Sales: EUR 1,201 (1,403) million, -14% (in comparable currencies -15%)
- Service sales: EUR 511 (519) million, -1% (in comparable currencies -2%)
- EBIT: EUR -12 (10) million
- EBITA (excluding one-time items): EUR 56 (56) million
- EBITA (excluding one-time items), %: 5 (4)
- Net cash flow from operating activities: EUR 70 (20) million
- Earnings per share: EUR -0.10 (0.00)
- Dividend: Due to the negative net profit in 2015, the Board of Directors proposes that the AGM not to pay out a dividend
October-December 2015 in brief (comparison period in 2014):
- Order intake: EUR 267 (322) million, -17% (in comparable currencies -20%)
- Sales: EUR 306 (403) million, -24% (in comparable currencies -23%)
- Service sales: EUR 138 (166) million, -17% (in comparable currencies -15%)
- EBIT: EUR -31 (2) million
- EBITA (excluding one-time items): EUR 18 (26) million, -31%
- EBITA (excluding one-time items), %: 6 (6)
- Net cash flow from operating activities: EUR 48 (38) million
Financial guidance for 2016
Based on the current market outlook, customer business activity and order backlog, management expects that in 2016:
- Sales will be approximately EUR 1.0-1.2 billion, and
- Adjusted EBIT* will be approximately 2-5%
The market weakened last year and the weakening accelerated towards the end of the year. The wide guidance range reflects the current volatility and limited visibility of the market.
We expect the profits to be weighted towards the second half of the year and expect a loss at the start of the year. Normal seasonality, expected timing of project deliveries from the order backlog and the timing of savings impact from the restructuring program drive the annual phasing of the profit.
* Excluding restructuring and acquisition-related costs as well as purchase price allocation amortizations.
|Summary of the Group's key figures||Q4||Q4||Q1-Q4||Q1-Q4|
|Order intake, EUR million||267.2||322.4||1,189.9||1,177.9|
|Service order intake, EUR million||109.3||159.1||496.6||555.0|
|Share of services in order intake, %||40.9||49.4||41.7||47.1|
|Order backlog at the end of the period, EUR million||1,102.8||1,138.0||1,102.8||1,138.0|
|Sales, EUR million||305.7||403.2||1,201.2||1,402.6|
|Service sales, EUR million||138.0||166.1||511.3||519.0|
|Share of services in sales, %||45.1||41.2||42.6||37.0|
|Gross margin, %||26.4||22.9||27.9||22.9|
|EBITA (excluding one-time items), EUR million||17.6||25.5||56.0||56.0|
|EBITA (excluding one-time items), %||5.8||6.3||4.7||4.0|
|EBIT, EUR million||-30.6||2.3||-12.3||10.4|
|Profit before taxes, EUR million||-32.1||-1.1||-22.9||0.2|
|Net cash from operating activities, EUR million||47.7||37.9||69.5||19.9|
|Net interest-bearing debt at the end of the period, EUR million||39.9||-5.8||39.9||-5.8|
|Gearing at the end of the period, %||9.9||-1.3||9.9||-1.3|
|Working capital at the end of the period, EUR million||-89.4||-28.2||-89.4||-28.2|
|Return on investment, %, LTM||-1.5||1.7||-1.5||1.7|
|Return on equity, %, LTM||-4.0||0.0||-4.0||0.0|
|Personnel at the end of the period||4,859||4,571||4,859||4,571|
|Earnings per share, EUR||-0.13||0.00||-0.10||0.00|
|Dividend per share, EUR||-||-||-1||0.10|
1 Board of Directors' proposal for AGM
President and CEO Pertti Korhonen:
Year 2015 was extremely challenging in the mining and metals industry. The growth of metals demand slowed down and metals prices weakened on average by 30% and hit the low levels of year 2009. Increased uncertainty of China's growth outlook and accelerated weakening of metals prices led to further deterioration of the market environment in the second half of 2015. Continued uncertainty and shrinking profitability have caused producers to cut production, postpone investments, and seek all possible measures to maximize cash flow and reduce costs, which also had an impact on the service market towards the end of the year.
I am pleased that we were able to achieve a flat order intake in the very difficult market conditions. Although our mining and metals related orders went down in line with the market, we were able to win orders in the waste-to-energy sector due to competitive offering and a more active market. Many governments are seeking ways to decarbonize energy production and produce energy from waste rather than dump it to landfills. Our service order intake declined as the producers continued to postpone their modernization activities. On the other hand, orders for spare and wear parts increased as we continue to increase the coverage of our installed base.
Our full year sales contracted due to customers' fewer investment projects and slower progress in them. Full year service sales were equal to the previous year's level despite the market having declined. Customer-induced slowdown in project deliveries as well as lower demand for modernization services were reasons for declining sales in the fourth quarter.
Our EBITA before one-time costs and purchase price allocations of M&A cases was on the same level as in 2014. Our gross profit deteriorated due to lower sales, but gross margin improved significantly due to the larger share of services in sales and improved project margins. The 45 million euro cost savings program reached its gross cost reduction targets, but its net effects were diluted by lower than planned resource utilization, currency exchange effects, and extraordinary IPR litigation costs.
The profit before taxes was negative due to significant one-time costs from restructuring programs and risk provisions related to certain old litigation cases. The cash flow from operations improved due to positive development in working capital. Outotec made four acquisitions in order to strengthen the service and technology offerings in promising growth segments.
The market outlook in the mining and metals industry is challenging and difficult to predict due to the slower outlook for global economic and metals demand growth, weak metal prices, supply overcapacity, and the highly leveraged balance sheets of many producers. We expect the plant and equipment demand to further contract in 2016 and the service demand to be weaker due to postponements of maintenance and modernization activities. In response to the soft market outlook, we are implementing the previously announced actions to adjust our operating model and fixed costs to counter the lower sales. These actions are progressing as planned and are key to improving our profitability. Improving the free cash flow and ensuring a solid balance sheet are key priorities for us in 2016.
This text is a summary of Outotec's January-December 2015 Financial Statements review. The full report is available as an attachment to this report.
Pertti Korhonen, President and CEO
tel. +358 20 529 211
Jari Ålgars, CFO
tel. +358 20 529 2007
Rita Uotila, Vice President - Investor Relations
tel. +358 20 529 2003, mobile +358 400 954 141
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FINANCIAL REPORTING SCHEDULE IN 2016
- The Annual General Meeting 2016 planned to be held on April 11, 2016
- January-March Interim Report will be published on April 27, 2016
- January-June Interim Report will be published on July 27, 2016
- January-September Interim Report will be published on October 28, 2016
The Financial Statements for 2015 will be published on company's web site in week 8/2016 at the latest.
Outotec provides leading technologies and services for the Sustainable use of Earth's natural resources. As the global leader in minerals and metals processing technology, we have developed many breakthrough technologies over the decades for our customers in the metals and mining industry. We also provide innovative solutions for the treatment of industrial water, the utilization of alternative energy sources and the chemical industry. Outotec shares are listed on Nasdaq Helsinki.
|Outotec's Financial Statements Review 2015||Download|