Metso's Interim Review January 1 - June 30, 2016

Metso's Interim Review January 1 - June 30, 2016

Metso's Interim Review January 1 - June 30, 2016

Metso Corporation's stock exchange release on July 21, 2016 at 09:00 a.m. local time

Metso will arrange a results audiocast today at 13:00 EEST (5:00 EST, 10:00 UTC, 11:00 CET). The audiocast is viewable at A simultaneous conference call will be arranged, allowing participants to ask questions. A recording of the event is available at the earliest after the event has finished and a transcript will be available for downloading on the same page.

This is a summary of Metso's January-June 2016 Interim Review. The complete report is attached to this release as a pdf-file and is also available at

Figures in brackets refer to the corresponding period in 2015, unless otherwise stated. The Process Automation Systems (PAS) business was divested on April 1, 2015. The January-June 2015 comparison numbers for Metso Group and Flow Control including the PAS business are presented in the tables section.

Second quarter 2016 in brief

  • Mining equipment orders increased 6 percent year-on-year
  • Minerals services markets have stabilized; profitability of the business remains healthy
  • Valve orders in Flow Control were stable outside the North American market
  • Orders received totaled EUR 761 million (EUR 823 million), of which EUR 444 million (EUR 495 million) were services orders
  • Net sales totaled EUR 671 million (EUR 756 million), of which services accounted for EUR 439 million (EUR 483 million)
  • Adjusted EBITA totaled EUR 77 million, or 11.5 percent of net sales (EUR 94 million, 12.4%) 
  • Free cash flow totaled EUR 74 million (EUR 78 million)

Outlook for 2016 (changes in brackets)
Metso's overall trading conditions in 2016 will be somewhat weaker compared to 2015. Demand for our products and services is expected to develop as follows:

  • remain weak for mining equipment and satisfactory for mining services
  • remain satisfactory for aggregates equipment and services
  • remain satisfactory for Flow Control products related to customers' new investments and good for Flow Control services

From our end of June 2016 backlog, we expect to invoice about EUR 1.0 billion during the remainder of 2016. Internal efficiency actions will continue to improve competitiveness and mitigate the price pressure that can be seen in the markets that are facing weak or satisfactory demand. Restructuring costs are expected to be higher than in 2015 (on the same level as in 2015). Capital expenditure without acquisitions is expected to be lower than in 2015. Net financial costs are expected to be on the same level as in 2015.

President and CEO Matti Kähkönen:
In the second quarter, the market activity and demand for our products and services continued at roughly the same level seen in the first quarter. The mining equipment market seems to have stabilized and the demand for valves outside the North American market has held up well. We booked one large order for mining equipment during the quarter, which improved our total order intake sequentially. Overall, our orders received declined year-on-year, due to the fact that the activity both in the mining services market and in the North American oil & gas valve market softened to their current levels already during the second half of 2015.

Our financial performance during the quarter was largely dictated by a year-on-year decline in net sales in both segments. I'm pleased to see that our own cost efficiency initiatives have been timely and resolute in keeping our profitability at a good level in these circumstances. Profitability of the mining equipment business improved compared to the first quarter, and the profitability of the services business was at the same healthy level as in the comparison period. Flow Control's profitability will continue to be impacted by lower net sales in North America, which we will continue to compensate for with cost control and by making advances in other markets.

Overall, our end markets are not expected to provide us with any significant support in the near future, which means that we will continue to enhance our customer service and cost efficiency and develop our operating models to make Metso an even better company in the future.   

Key figures

EUR million Q2/
Change % Q1-Q2/
Change % 2015*
Orders received 761 823 -8 1,424 1,560 -9 2,965
Orders received by the services business 444 495 -10 877 1,002 -12 1,879
  % of orders received 58 60   62 64   63
Order backlog at the end of the period       1,399 1,411 -1 1,268
Net sales 671 756 -11 1,272 1,489 -15 2,923
Net sales of the services business 439 483 -9 848 924 -8 1,840
  % of net sales 65 64   67 62   63
Earnings before interest, tax and amortization (EBITA), adjusted 77 94 -18 133 172 -23 356
  % of net sales 11.5 12.4   10.5 11.6   12.2
Personnel at the end of the period       12,099 13,550 -11 12,619
* Comparison numbers including the divested PAS business are presented in the tables section
Metso has adopted the ESMA European Securities and Markets Authority guidelines on Alternative Performance Measures which were effective from July 3, 2016. Metso uses alternative performance measures to reflect the underlying business performance and to improve comparability between financial periods. These alternative performance measures should, however, not be considered as a substitute for measures of performance in accordance with the IFRS. Metso changes the previously referenced "before non-recurring items" with "adjusted items". Adjusted items affecting comparability and alternative performance measures used by Metso are defined in the tables section of this interim report.
IFRS figures


EUR million

Change % Q1-Q2/
Change % 2015
Operating profit 70 347* -80 120 412* -71 555*
  % of net sales 10.3 45.9   9.4 26.7   18.7
Earnings per share, EUR 0.28 2.06** -86 0.46 2.31* -80 2.95*
Free cash flow 74 78 -5 136 165 -18 341
Return on capital employed (ROCE) before taxes, annualized, %       11.0 26.2*   25.7
Equity-to-asset ratio at the end of the period, %       47.4 46.0   48.3
Net gearing at the end of the period, %       12.8 16.6   10.6
*Including a capital gain on the disposal of PAS

Metso is a world leading industrial company serving the mining, aggregates, recycling, oil, gas, pulp, paper and process industries. We help our customers improve their operational efficiency, reduce risks and increase profitability by using our unique knowledge, experienced people and innovative solutions to build new, sustainable ways of growing together.

Our products range from mining and aggregates processing equipment and systems to industrial valves and controls. Our customers are supported by a broad scope of services and a global network of over 80 service centers and about 6,400 services professionals. Metso has an uncompromising attitude towards safety.

Metso is listed on the NASDAQ OMX Helsinki, Finland, and had net sales of about EUR 2.9 billion in 2015. Metso employs over 12,000 persons in more than 50 countries. Expect results.,

For further information, please contact:
Matti Kähkönen, President and CEO, Metso Corporation, tel. +358 20 484 3000
Harri Nikunen, CFO, Metso Corporation, tel. +358 20 484 3010
Juha Rouhiainen, VP, Investor Relations, Metso Corporation, tel. +358 20 484 3253                 
Metso Corporation
Harri Nikunen

Juha Rouhiainen
VP, Investor Relations

NASDAQ OMX Helsinki Ltd

Conference call details
Conference call participants are requested to dial in five minutes before the scheduled time on:
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other countries: +44 20 3427 1913

The confirmation code for joining the conference call is 9547270

A recording of the event is available at at the earliest after the event has finished and a transcript of the event will be available.