Metso Outotec publishes its new strategy and financial targets
Metso Outotec Corporation’s stock exchange release on October 28, 2020, at 09:05 a.m. EET
Metso Outotec, created through the combination of Metso Minerals and Outotec on June 30, 2020, has published its new strategy focusing on growth and improving profitability. The company aims to become a top-tier supplier of products, technologies and services in the aggregates and minerals industries and a top financial performer. Metso Outotec’s defined purpose is: “enabling sustainable modern life.”
Metso Outotec’s strong foundation for implementing its strategy and achieving its goals is based on the following factors:
1. Comprehensive product and service offering as well as process expertise throughout the customers’ value chain
2. Extensive installed base and a strong brand
3. Strong aftermarket presence and know-how close to customers
4. Industry-leading, sustainability-focused technology, research and product development expertise
Growth in key customer segments
Metso Outotec’s key customer segments are aggregates, minerals processing, and certain areas of metals refining. The company’s target markets offer attractive growth prospects and have significant potential for further growth and development of the aftermarket business. Several recognized global megatrends, like urbanization, infrastructure projects, electrification of societies, and climate change mitigation, will support market growth.
Metso Outotec’s primary target in the selected segments is to develop its product and service business by leveraging its comprehensive process expertise. In order to reduce business risks and to improve profitability, extensive project deliveries will be limited when they include other than the company’s own technology and expertise.
Four priority areas of strategy implementation
Metso Outotec’s strategy will be implemented through four priorities:
- Integration and financial performance
- Customer centricity
- Sustainability
- Performance culture
These priority areas are visible in each business area’s action plans and their realization is measured and managed with several performance indicators.
“We will become an industry-leading company”
“Metso Outotec’s new strategy is coherent and clear, and it will help us to become an industry-leading company in customer satisfaction, sustainability and financial performance,” says Metso Outotec’s President and CEO Pekka Vauramo.
“Based on a careful assessment of our businesses and the opportunities they offer, we have selected the areas we will focus on. The aggregates and minerals industries have clear roles at the core of our strategy. Global megatrends are driving their development, and we are well positioned to offer products, solutions and services that satisfy customer demands. In the Metals business, we will initiate a restructuring and turnaround program to improve financial performance and ensure more granular management of the various businesses and resources. This work will lead us to scope our offering and resources in a more efficient way,” Vauramo continues.
Planned divestment of the Recycling business
As a result of the strategy work, Metso Outotec has decided to divest its Recycling business. The Recycling business sells products and services for metal and waste recycling. Its sales in 2019 were EUR 156 million, and it reported an adjusted EBITA margin of approximately 6%. The business has around 300 employees and its main locations are Horsens, Denmark; Düsseldorf, Germany; and San Antonio, Texas.
“We have made a strategic decision to exit the Recycling business. We have concluded that even though the circular economy and other market drivers offer attractive opportunities for developing the Recycling business, it has limited synergies with the core of the new Metso Outotec, and therefore we will not be the best owner to fully leverage its opportunities. This being the case, we have started preparations to divest the business. I am confident that we will reach a solution that is good for Metso Outotec as well as for the Recycling business and its personnel,” Pekka Vauramo says.
Profitability to a new level
As part of the strategy work, Metso Outotec’s Board of Directors has approved the following financial targets:
- Adjusted EBITA margin of >15% over the cycle
- Maintaining an ‘investment-grade’ credit rating
- Dividend pay-out of at least 50% of earnings per share
- Progress in sustainability in alignment with the 1.5 °C commitment
“The financial targets underline our intention to improve the company’s profitability and drive sustainable solutions in our industry. The most significant factors in this development are the benefits related to integration and synergies, the businesses’ own profitability improvement actions, increasing market shares, and developing our business portfolio. At the same time, we will strengthen the company’s balance sheet by using cash from operations to reduce indebtedness. For shareholders, Metso Outotec’s ambition is to be a good payer of dividends,” says the President and CEO Vauramo.
Sustainability leadership
Metso Outotec aims to be a sustainability leader in its industry. The company strives for a net positive impact on the planet and is committed to the 1.5 °C journey, with targets that are validated by the Science Based Targets initiative. This will be implemented through a focus on sustainable offerings and innovations and by being a responsible and trusted partner.
Metso Outotec has set targets to reduce the emissions of its own operations by 50% by 2030, compared to the 2019 baseline, and to reduce the emissions of logistics by 20% by 2025. It is also targeting that 30% of the supplier spend by the end of 2025 is with partners who have set a CO2 target.
Metso Outotec will continuously develop sustainable solutions for its customers, with a focus on energy and emission efficiency, water efficiency, circular solutions and safety. Over 90% of the company’s R&D projects are targeted to have energy, emissions or water targets.
Capital Markets Day
Metso Outotec’s management will present the company’s strategy and business plans in more detail at the virtual Capital Markets Day on November 11, 2020. Additional information about the event is available at www.mogroup.com.
Further information, please contact:
Pekka Vauramo, President and CEO
Juha Rouhiainen, VP, IR
tel. +358 50 4057984 or juha.rouhiainen@mogroup.com
Metso Outotec Corporation
Distribution:
Nasdaq Helsinki Ltd
Main media
www.mogroup.com
Metso Outotec is a frontrunner in sustainable technologies, end-to-end solutions and services for the aggregates, minerals processing, metals refining and recycling industries globally. By improving our customers’ energy and water efficiency, increasing their productivity, and reducing environmental risks with our product and process expertise, we are the partner for positive change. Headquartered in Helsinki, Finland, Metso Outotec employs over 15,000 people in more than 50 countries and its pro forma sales for 2019 were about EUR 4.1 billion.
The company is listed on the Nasdaq Helsinki. mogroup.com, twitter.com/metsooutotec