Metso’s Half-Year Report for January-June 2024
Metso Corporation’s stock exchange release on July 24, 2024, at 09:00 a.m. EEST
Figures in brackets refer to the corresponding period in 2023, unless otherwise stated.
Second quarter 2024 in brief
- Customer activity remained at the previous quarter's level with continued delayed decision-making
- Orders received declined 14% to EUR 1,162 million (EUR 1,344 million), equipment
-23% and services -6% - Sales declined 13% to EUR 1,214 million (EUR 1,396 million), equipment -21% and services -6%
- Adjusted EBITA was EUR 205 million, or 16.9% of sales (EUR 238 million, or 17.1%)
- Operating profit was EUR 195 million, or 16.1% of sales (EUR 222 million, or 15.9%)
- Cash flow from operations improved to EUR 152 million (EUR 62 million)
January-June 2024 in brief
- Orders received declined 11% to EUR 2,523 million (EUR 2,829 million)
- Sales declined 11% to EUR 2,431 million (EUR 2,729 million)
- Adjusted EBITA declined 10% to EUR 405 million, or 16.7% of sales (EUR 449 million, or 16.5%)
- Operating profit declined to EUR 383 million, or 15.8% of sales (EUR 416 million, or 15.2%)
- Earnings per share were EUR 0.30 (EUR 0.34) and for continuing operations EUR 0.31 (EUR 0.34)
- Cash flow from operations improved to EUR 309 million (EUR 173 million)
President and CEO Pekka Vauramo:
We maintained robust profitability during the second quarter, thanks to our focused actions. However, market dynamics evolved as anticipated: customer decision-making remained slow in Minerals, and Aggregates faced challenges in the North American mobile equipment market. Consequently, our total order intake declined by 14% year-on-year, primarily due to a decrease in equipment orders. Although the services businesses remained more stable, the aforementioned issues led to a slight decline in services orders, which were further affected by exchange rates.
Our income statement for the quarter closely resembles that of the first quarter. Lower equipment backlogs and the timing of deliveries led to reduced sales compared to the same period last year, but the Group’s sales were sequentially at the same level. Thanks to a healthy gross margin, supported by ongoing cost management and a higher proportion of services in the sales mix, we achieved an adjusted EBITA margin of 16.9% for the quarter. This confirms that we are making progress in fortifying our financial performance against cyclicality. Another positive development was in the cash flow from operations, which improved to EUR 152 million.
The Aggregates segment sales declined 14% compared to the previous year, primarily due to reduced orders in the preceding quarters. Despite this decrease in volume, the segment achieved a solid adjusted EBITA margin of 16.6%, underscoring the effectiveness of efforts made to enhance business resilience. In May, we launched the Lokotrack EC range, bringing a new diesel-electric power line to the aggregates market. Designed with modularity in mind, these units can adapt to customers’ future requirements and run on interruptible renewable energy. Furthermore, the process functions in these mobile units operate entirely on electricity, significantly reducing the use of hydraulic oil in crushing operations. Additionally, in June, we committed to investing EUR 150 million in a state-of-the-art aggregates technology center in Tampere, Finland. The production of track-mounted Lokotrack crushing plants is scheduled to commence at the new site in the third quarter of 2027, with plans to eventually relocate all our existing Tampere operations to this modern facility.
Minerals experienced a 13% decline in sales, primarily due to reduced equipment backlog and delivery timing. However, the segment demonstrated increased resilience, reporting an adjusted EBITA margin of 17.3%. This positive performance can be attributed to the favorable impact of effective cost management and sales mix on the gross margin. Notably, during the quarter, we received a substantial order from India for recycling electronic waste. Our e-scrap solutions offer compelling opportunities for customers by enabling the recovery of valuable metals from waste.
We anticipate that customer decision-making in Minerals will gain momentum during the second half of the year, driven by favorable copper prices. Additionally, Minerals services are poised for sustained demand, thanks to robust mine production volumes. However, in Aggregates, activity is expected to continue at a lower level year-on-year. This can be attributed to the surplus of distributor inventories in the North American mobile equipment market.
Internally, we have successfully maintained strong profitability, and our focus remains on cost control and cash flow, while delivering value-added products and services to our customers.
Market outlook
Metso expects that the market activity in both Minerals and Aggregates will remain at the current level.
In its previously published outlook, Metso expected that the market activity in both Minerals and Aggregates will remain at the current level.
According to the company's disclosure policy, Metso’s market outlook describes the expected sequential development of market activity, adjusting for seasonality, during the following six-month period using three categories: improve, remain at the current level, or decline.
Key figures
| EUR million | Q2/2024 | Q2/2023 | Change % | Q1–Q2/2024 | Q1–Q2/2023 | Change % | 2023 |
| Orders received | 1,162 | 1,344 | -14 | 2,523 | 2,829 | -11 | 5,252 |
| Orders received by services business | 701 | 742 | -6 | 1,516 | 1,597 | -5 | 2,955 |
| % of orders received | 60 | 55 | – | 60 | 56 | – | 56 |
| Order backlog | 3,091 | 3,311 | -7 | 2,951 | |||
| Sales | 1,214 | 1,396 | -13 | 2,431 | 2,729 | -11 | 5,390 |
| Sales by services business | 690 | 734 | -6 | 1,417 | 1,423 | 0 | 2,891 |
| % of sales | 57 | 53 | – | 58 | 52 | – | 54 |
| Adjusted EBITA | 205 | 238 | -14 | 405 | 449 | -10 | 887 |
| % of sales | 16.9 | 17.1 | – | 16.7 | 16.5 | – | 16.5 |
| Operating profit | 195 | 222 | -12 | 383 | 416 | -8 | 805 |
| % of sales | 16.1 | 15.9 | – | 15.8 | 15.2 | – | 14.9 |
| Earnings per share, continuing operations, EUR | 0.16 | 0.18 | -11 | 0.31 | 0.34 | -9 | 0.65 |
| Cash flow from operations | 152 | 62 | 143 | 309 | 173 | 79 | 550 |
| Gearing, % | 40.6 | 35.5 | – | 40.6 | 35.5 | – | 33.8 |
| Personnel at end of period | 17,105 | 16,836 | 2 | 17,134 |
Audiocast and conference call details
An audiocast and a conference call for analysts and investors will be arranged today at 1:00 p.m. EEST.
The audiocast can be followedat the company’s website. A recording and a transcript will be available at the same webpage after the event has finished.
The teleconference can be accessed by registering on the link below.
https://palvelu.flik.fi/teleconference/?id=50048707
The complete Half-Year Report for January-June 2024 is available as an attachment to this release.
Further information, please contact:
Juha Rouhiainen, Vice President, Investor Relations, Metso Corporation, tel. +358 20 484 3253, email: juha.rouhiainen(a)metso.com
Distribution:
Nasdaq Helsinki Ltd
Main media
www.metso.com
Metso is a frontrunner in sustainable technologies, end-to-end solutions and services for the aggregates, minerals processing and metals refining industries globally. We improve our customers’ energy and water efficiency, increase their productivity, and reduce environmental risks with our product and process expertise. We are the partner for positive change.
Headquartered in Espoo, Finland, Metso employs over 17,000 people in close to 50 countries and sales for 2023 were about EUR 5.4 billion. The company is listed on the Nasdaq Helsinki. metso.com, x.com/metsoofficial