Metso's Interim Review January 1 - June 30, 2015

Metso will arrange a results audiocast today at 15:00 EEST (8:00 EDT, 13:00 BST, 14:00 CEST). The audiocast is viewable at www.metso.com/latestreports. A simultaneous conference call will be arranged, allowing participants to ask questions. You can also send your written questions during the audiocast via chat function.

Recording of the event is available at the earliest after the event has finished and a transcript will be available for downloading.

This is a summary of Metso's January-June 2015 Interim Review. Complete report is attached to this release as a pdf-file and is also available at www.metso.com/latestreports.

Figures in brackets refer to the corresponding period in 2014, unless otherwise stated. The Process Automation Systems (PAS) business was divested on April 1, 2015, and is not included in the Flow Control segment's figures for April-June 2015. Figures for January-June 2015 and all comparison periods prior to the divestment include PAS. Like-for-like comparisons are made with a separate note. 

Second quarter 2015 in brief

• Demand related to customers' capital investment projects continues to be soft, while services demand remains stable.

• Orders received EUR 823 million (EUR 947 million, or EUR 833 million excluding PAS), of which EUR 495 million (EUR 534 million, or EUR 500 million excluding PAS) were services orders.

• Net sales EUR 756 million (EUR 962 million, or EUR 884 million excluding PAS), of which EUR 483 million services (EUR 507 million, or EUR 477 million excluding PAS).

• EBITA before non-recurring items EUR 94 million and 12.4% of net sales (EUR 131 million and 13.6%, or EUR 121 million and 13.7% excluding PAS).

• An initial gain on disposal of about EUR 258 million was booked from the sale of PAS, resulting in operating profit of EUR 347 million for the quarter (EUR 102 million).

Updated financial guidance for 2015

Our guidance for 2015 (originally published on February 5, 2015) has been updated. We estimate that our net sales, excluding the Process Automation Systems business, in 2015 will be between EUR 3,000 million and EUR 3,200 million (previously between 3,000 and 3,300) and that our EBITA margin before non-recurring items will be around 12.5 percent (12.0-13.0%), previously around 13 percent (12.5-13.5%).

The updated guidance for 2015 is based on the current market activity in our customer industries, our current backlog and the current exchange rates.

President and CEO Matti Kähkönen:

The demand and outlook in our customer industries remained unchanged in the second quarter compared to the first months of the year. Our like-for-like order intake in the second quarter was one percent behind the comparison period, even though the situation in our end markets is more challenging. This was thanks to the few large mining equipment orders we booked during the quarter. While we are happy having received these it should not be read as a sign of recovery.

The softening of the oil & gas market has had only slight impact on our valve business, , primarily due to our position in specialized areas in mid and downstream markets. In addition, the demand for pulp & paper valves and mining pumps was good in the second quarter, which helped to mitigate the softness seen in the oil industry. 

In terms of results, Flow Control continues to perform well and shows good margin development resulting from sales growth and cost control. Minerals still suffers from rapidly declining volumes in the equipment business, and our right-sizing efforts will continue there. The services business continues to prove its resilience but we are taking more action to grow the business towards the end of the year and beyond.

Key figures

Figures for Q1-Q2/2015, Q2/2014, Q1-Q2/2014, and full-year 2014 include Process Automation Systems.

*Operating profit for Q2/2015 includes an initial gain on disposal of the PAS business.

** Roce for Q1 - Q2/2015 includes the initial gain on disposal of the PAS business, which is not annualized

Key Figures excluding PAS

Market development

We expect the demand for mining equipment, products and projects to remain weak. We expect the demand for our mining services to remain good, despite being impacted by customers' cost savings initiatives. The demand for both aggregates equipment and services is expected to be satisfactory. The demand for Flow Control products related to customers' new investments is expected to be satisfactory. The demand for Flow Control services is expected to be good.