Outotec's January-September 2015 Interim Report

OUTOTEC OYJ                         INTERIM REPORT                    OCTOBER 29, 2015 AT 9.00 AM

INTERIM REPORT JANUARY-SEPTEMBER 2015

Solid order intake, strong cash flow, financial guidance narrowed

January-September 2015 in brief (comparison period in 2014):

• Order intake: EUR 923 (855) million, 8% (in comparable currencies 5%)
• Order backlog: EUR 1,117 (1,217) million, -8%
• Sales: EUR 895 (999) million, -10% (in comparable currencies -11%)
• Service sales: EUR 373 (353) million, 6% (in comparable currencies 4%)
• EBITA (excluding one-time items): EUR 38 (30) million, 26%
• EBITA (excluding one-time items), %: 4 (3)
• Earnings per share: EUR 0.03 (0.00)
• Net cash from operating activities: EUR 22 (-18) million

July-September 2015 in brief (comparison period in 2014):

• Order intake: EUR 268 (266) million, 1% (in comparable currencies 1%)
• Sales: EUR 307 (320) million, -4% (in comparable currencies -2%)
• Service sales: EUR 129 (127) million, 2% (in comparable currencies 4%)
• EBITA (excluding one-time items): EUR 15 (14) million, 3%
• EBITA (excluding one-time items), %: 5 (4)
• Net cash from operating activities: EUR 65 (-25) million

Financial guidance for 2015 narrowed

Based on the current market outlook, customer business activity and order backlog, the management expects that in 2015:

• Sales will be approximately EUR 1.2-1.3 (previously 1.2-1.4) billion, and
• EBITA (excluding one-time items) will be approximately 5-6 (previously 5-7)% 

Summary of the Group's key figures	Q3	Q3	Q1-Q3	Q1-Q3	Last 12	Q1-Q4
	2015	2014	2015	2014	months	2014
Order intake, EUR million	268.4	265.6	922.7	855.5	1,245.1	1,177.9
Service order intake, EUR million	138.3	114.9	387.4	395.9	546.5	555.0
Share of services in order intake, %	51.5	43.2	42.0	46.3	43.9	47.1
Order backlog at the end of the period, EUR million	1,116.7	1,217.3	1,116.7	1,217.3	1,116.7	1,138.0
Sales, EUR million	307.2	320.3	895.5	999.4	1,298.7	1,402.6
Service sales, EUR million	129.2	127.0	373.3	352.9	539.4	519.0
Share of services in sales, %	42.1	39.6	41.7	35.3	41.5	37.0
Gross margin, %	27.9	25.6	28.4	22.8	26.7	22.9
EBITA (excluding one-time items), EUR million	14.7	14.2	38.4	30.5	63.9	56.0
EBITA (excluding one-time items), %	4.8	4.4	4.3	3.0	4.9	4.0
EBIT, EUR million	6.7	-0.3	18.3	8.1	20.6	10.4
EBIT, %	2.2	-0.1	2.0	0.8	1.6	0.7
Profit before taxes, EUR million	2.5	-3.1	9.2	1.4	8.1	0.2
Net cash from operating activities, EUR million	64.8	-25.3	21.9	-18.0	59.8	19.9
Net interest-bearing debt at the end of the period, EUR million	74.3	9.0	74.3	9.0	74.3	-5.8
Gearing at the end of the period, %	17.4	2.0	17.4	2.0	17.4	-1.3
Working capital at the end of the period, EUR million	-12.0	6.7	-12.0	6.7	-12.0	-28.2
Return on investment, %, LTM	3.7	5.1	3.7	5.1	3.7	1.7
Return on equity, %, LTM	1.5	2.9	1.5	2.9	1.5	0.0
Personnel at the end of the period	4,913	4,948	4,913	4,948	4,913	4,571
Earnings per share, EUR	0.01	-0.02	0.03	0.00	0.03	0.00

President and CEO Pertti Korhonen:

"The market environment in the minerals and metals processing industry has deteriorated in the third quarter due to increased uncertainty of China's growth outlook, weakened metal prices, and weakening of emerging market economies. Continued uncertainty has caused many producers to cut production and postpone investments further.

Markets in Europe and the Middle East were more active, while those in Asia Pacific, Africa, Eurasia, and the Americas continued slow. Predominantly, investments were directed to improve the efficiency of existing operations. In the reporting period, investments into zinc, copper, and aluminum projects were more active, while gold and iron ore investments continued to be weak. Good production rates supported demand for spare parts. Our customers, however, continued to postpone discretionary upgrades and modernizations. Competition continued on an intense level.

The demand for sustainable energy solutions increased in some geographical markets as governments seek to promote waste-to-energy production. In the third quarter, Outotec won several waste-to-energy projects in the UK and Canada, demonstrating the competitiveness of our technology.

Our service orders in the third quarter grew 21% in comparable currencies as we were able to grow shut-down as well as operation and maintenance orders. The total order intake was flat year-on-year due to weaker capex market. Sales in the third quarter were down by 2% in comparable currencies. Our service sales grew 4% in comparable currencies. Despite the lower sales, EBITA (excluding one-time items) improved, thanks to better project execution and a higher share of services. While the company's fixed cost reduction program has progressed according to plan, the market has deteriorated more than expected, which has caused customer delays in certain projects, resulting to underutilization of resources. This combined with currency impacts, IPR related litigation costs, and acquisitions has resulted to increased fixed costs. Our net cash flow improved significantly in the third quarter.

The market outlook continues to be weak due to depressed metal prices and postponements of investments in the mining and metals sector. However, Outotec has good sales opportunities relating to certain commodities, geographies, and customers as well as waste-to-energy solutions. In anticipation of prolonged market weakness, we continue looking for areas to further streamline our cost structure and improve our profitability. Our priority going forward, in addition to improving our profitability, is to secure order intake and increase service business in a difficult market."

This text is a summary of Outotec's January-September 2015 Interim Report. The full report is available as an attachment to this report.

FURTHER INFORMATION

Outotec Oyj

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

Format for e-mail addresses: firstname.lastname@outotec.com

BRIEFING

Date: Thursday, October 29, 2015

Time: 2.00 PM (Finnish time)

Venue: Bank, Unioninkatu 20, Helsinki

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FINANCIAL REPORTING SCHEDULE IN 2016

• Financial Statements Review 2015 will be published on February 9, 2016
• January-March Interim Report will be published on April 27, 2016
• January-June Interim Report will be published on July 28, 2016
• January-September Interim Report will be published on October 28, 2016

The Financial Statements for 2015 will be published in week 8/2016 at the latest. The Annual General Meeting 2016 is planned for April 11, 2016.

DISTRIBUTION

Nasdaq Helsinki
Main media
www.outotec.com

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 industrial water treatment, the utilization of alternative energy sources and the chemical industry. Outotec shares are listed on Nasdaq Helsinki.