OUTOTEC OYJ HALF YEAR REPORT JULY 26, 2019 AT 9:00 AM
Outotec’s half year financial report 2019
Strong growth in order intake and service sales, significant improvement in profitability
“The market for minerals and metals processing technologies continued to be active during the first half of the year. Our order intake increased by 10% from last year in the reporting period and by 18% in the second quarter. Received orders included approximately EUR 140 million gold processing plant as well as a copper concentrator and hydrometallurgical plant of approximately EUR 250 million, of which EUR 35 million was recorded in the second quarter order intake.
Sales were slightly lower for the reporting period compared to the previous year. Sales for the second quarter were on the same level as during the previous year. This was primarily due to fewer plant and equipment deliveries resulting from the lower order intake during H2 2018. Our efforts to improve the service supply chain and delivery achieved good results. Service sales increased by 27% during the reporting period and 41% during the second quarter. Profitability significantly improved both in absolute and relative terms due to the sales mix and better project execution. The profitability of the Metals, Energy & Water segment is developing in the right direction but is still unsatisfactory. Cash flow for the reporting period was solid as a result of positive development in trade receivables and for the second quarter due to increased customer advance payments.
R&D activities continued to provide valuable benefits to our customers. For example, we introduced a next generation Outotec Paste Thickener, designed especially for tailings treatment. Tailings dewatering and disposal is a challenge that every mining operation has to confront. We also introduced the FP-S Filter Press as a cost-effective product for a wide range of standard filtration applications.
Negotiations concerning the ilmenite smelter project are ongoing, and we remain confident that the EUR 110 million provision made in the last quarter of 2018 is adequate.
On July 4th, we announced the planned combination of Outotec and Metso Minerals. The strengths of these companies are highly complementary and with this merger we are creating a leading company in process technology, equipment and services serving the minerals, metals and aggregates industries. Completion is expected in the second quarter of 2020. The new company Metso Outotec will be able to leverage the heritage of both companies: technology and R&D, product and process excellence, scale and global service footprint. I am excited about this new strategic direction into which we are heading.
We expect the market outlook for mining and metals to remain positive as global GDP growth and new uses for metals, such as electric vehicles, drive long-term demand,” concludes President & CEO Markku Teräsvasara.
Metso Minerals and Outotec combination: addition to reported figures
Starting from the second quarter of 2019, Outotec has added adjusted EBITA to the reported numbers on the Group level to reflect the planned combination. The definition of adjusted EBITA appears on page 14.
Summary of key figures
|Service order intake||163.1||154.3||6||7||323.0||285.0||13||14||532.5|
|Order backlog at end of period||1,163.8||1,084.9||7||-||1,163.8||1,084.9||7||-||946.6|
|Gross margin, %||25.8||21.8||26.4||22.3||15.4|
|Adjusted EBITA3, %||7.1||3.8||6.8||4.0||-2.0|
|Adjusted EBIT4 , %||5.6||2.3||5.0||2.4||-3.6|
|Net cash from operating activities||48.6||-24.4||30.2||44.2||70.4|
|Earnings per share, EUR||0.03||-0.04||0.05||-0.04||-0.42|
1 Change, %
2 Change in comparable currencies, %
3 Excluding all amortizations, as well as adjustment items consisting of restructuring and capacity adjustment costs, costs related to mergers and acquisitions, outcome of material intellectual right property disputes, gains and losses on business disposals and goodwill impairments.
4 Excluding restructuring- and acquisition-related items as well as PPA amortizations.
Financial guidance for 2019 reiterated
Based on the current market outlook, we expect sales to increase, and adjusted EBIT* to increase significantly from the 2018 adjusted EBIT (EUR 63.8 million), excluding provision for the ilmenite smelter project.
*Excluding restructuring- and acquisition-related items, as well as PPA amortizations.
This text is a summary of Outotec's Half year financial report 2019. The full report is available as an attachment to this report.
Markku Teräsvasara, CEO
Tel. +358 20 529 2000
Jari Ålgars, CFO
Tel. +358 20 529 2007
Rita Uotila, Vice President - Investor Relations
Tel. +358 20 529 2003, mobile +358 400 954 141
Format for e-mail addresses: firstname.lastname@example.org
Date: July 26, 2019
Time: 2:00 PM EEST
Venue: Outotec House, Rauhalanpuisto 9, Espoo, Finland
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