Outotec’s interim report January-March 2020
OUTOTEC OYJ INTERIM REPORT MAY 7, 2020 AT 9:00 AM
Outotec’s interim report January-March 2020
Growth in sales and adjusted EBIT, uncertain operating environment affected order intake
“COVID-19 caused rapid uncertainty impacting the global operating environment and prompting travel restrictions, sourcing challenges and limiting access to customer sites.
Order intake decreased by 28% compared to the comparison period because customers started to slow down decision-making relating to large projects. In the Minerals Processing segment, smaller equipment orders continued to be at a good level.
Sales grew by 16%. Large projects received last year contributed to 22% growth in the Minerals Processing segment and 5% growth in the Metals Refining segment. Currencies and sales mix had a negative impact on profitability.
In the service business, travel restrictions and site closures restricted our field service personnel’s access to customer sites. Customers also postponed service projects. This resulted in a 23% decline in service orders. Service sales were at the level of the comparison period. Spare parts continued to grow in spite of various challenges.
Net cash flow from operating activities was EUR -59 (-18) million. The cash flow was negative mainly due to inventory build-up related to the delivery phase of the three large projects received last year.
As we started to see signs of market uncertainty, we initiated actions on several fronts. Securing our employee’s health and safety has been the key priority. I am pleased with the way we have been able to shift to remote working where necessary and actively continue to support our customers. Examples of our virtual support include remote installation and commissioning services, advanced process and control systems, as well as virtual seminars and trainings. We have also initiated cost-saving actions covering the whole organization.
Our planned merger with Metso’s Minerals business is proceeding and the closing of the transaction is expected to take place on June 30 subject to regulatory approvals.
We are working actively with the existing market opportunities and strong backlog as well as achieving our cost-savings targets,” concludes President & CEO Markku Teräsvasara.
THE COMBINATION OF OUTOTEC AND METSO’S MINERALS BUSINESS
Outotec and Metso expect the completion of the combination of Outotec and Metso’s Minerals business to take place on June 30, 2020, subject to the receipt of all required regulatory and other approvals, including competition clearances.
Summary of key figures
| Q1 | Restated3Q1 | Change, | Q1-Q4 | |
| EUR million | 2020 | 2019 | % | 2019 |
| Order intake | 240.0 | 332.2 | -28 | 1,501.2 |
| Service order intake | 120.0 | 156.0 | -23 | 586.3 |
| Order backlog at end of period | 992.3 | 926.9 | 7 | 1,069.6 |
| Sales | 285.2 | 245.6 | 16 | 1,210.3 |
| Service sales | 109.7 | 109.3 | 0 | 550.1 |
| Gross margin, % | 24.7 | 28.0 | 29.8 | |
| Adjusted EBITA1 | 20.6 | 18.9 | 141.7 | |
| Adjusted EBITA1, % | 7.2 | 7.7 | 11.7 | |
| Adjusted EBIT2 | 15.5 | 13.8 | 121.8 | |
| Adjusted EBIT2, % | 5.4 | 5.6 | 10.1 | |
| EBIT | 9.3 | 12.7 | 107.3 | |
| EBIT, % | 3.3 | 5.2 | 8.9 | |
| Net cash from operating activities | -58.6 | -18.3 | 67.9 | |
| Earnings per share, continuing operations, EUR | 0.01 | 0.03 | 0.35 | |
| Earnings per share, discontinued operations, EUR | -0.00 | -0.02 | -0.25 | |
| Earnings per share, EUR | 0.01 | 0.02 | 0.10 |
1Excluding all amortizations, as well as adjustment items consisting of restructuring and capacity adjustment costs, costs related to mergers and acquisitions, the outcome of material intellectual property rights disputes, gains and losses on business disposals and goodwill impairments. Since the second quarter of 2019, Outotec has added adjusted EBITA to the reported numbers at the Group level to reflect the planned combination.
2Excluding restructuring- and acquisition-related items as well as PPA amortizations.
3Comparison figures related to the income statement, order intake and order backlog have been restated due to business divestments in the Metals, Energy & Water segment being classified as discontinued operations.
OUTLOOK FOR 2020 REVISED
Due to the ongoing COVID-19 pandemic, market activity and visibility in the minerals processing and metals refining market have weakened. The timing of larger investments in particular is uncertain.
The previous outlook, issued on February 6, 2020: The market activity in minerals processing and metals refining is currently expected to remain at the present level. Copper, gold and nickel projects are expected to continue to be the most active. The timing of large investments is uncertain.
This text is a summary of Outotec's January-March 2020 Interim Report. The full report is available as an attachment to this report.
FURTHER INFORMATION
Outotec Oyj
Markku Teräsvasara, CEO
Tel. +358 20 529 2000
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
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