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Outotec's Interim Report January-September 2013

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OUTOTEC OYJ   INTERIM REPORT   OCTOBER 30, 2013 AT 9.00 AM

INTERIM REPORT JANUARY-SEPTEMBER 2013

Order intake declined in uncertain market conditions, solid profitability

Reporting period January-September 2013 in brief (2012 corresponding period):

  • Order intake: EUR 1,086.3 (1,613.2) million, -33% 

  • Order backlog: EUR 1,735.6 (2,155.8) million, -19% 

  • Sales: EUR 1,454.4 (1,437.6) million, +1% 

  • Service sales: EUR 355.2 (291.9) million, +22% 

  • Operating profit from business operations1): EUR 122.4 (119.8) million, +2% 

  • Earnings per share: EUR 0.44 (0.42), +5% 

July-September 2013 in brief (2012 corresponding period):

  • Order intake: EUR 229.6 (452.4) million, -49% 

  • Sales: EUR 440.1 (502.8) million, -12% 

  • Service sales: EUR 116.8 (101.7) million, +15% 

  • Operating profit from business operations1): EUR 44.1 (44.7) million, -1% 

Lowered financial guidance for 2013 (published on October 17, 2013)

Outotec's sales guidance has been lowered due to several reasons. The continued macroeconomic uncertainty has slowed down customers' capex investments. Some projects have progressed slower than expected due to delays in customer payments. In addition, a EUR 30 million order was cancelled in September. The lower sales volume is the main reason for lowering the operating profit margin guidance.

Outotec expects that in 2013:

  • Sales will be approximately EUR 1.9-2.1 billion, and 

  • Operating profit margin from business operations1) will be approximately 8.5-9.5% 

Previous financial guidance:

Based on the strong order backlog, current market outlook, and customer tendering activity, the management expects that in 2013:

  • Sales will be approximately EUR 2.1-2.3 billion, and 

  • Operating profit margin from business operations1) will be approximately 9.5-10.5% 

1) Excluding one-time items and purchase price allocations (PPA) amortizations

Summary of key figures Q3
2013 		Q3
2012 		Q1-Q3
2013 		Q1-Q3
2012 		Last 12
months 		Q1-Q4
2012
Sales, EUR million 440.1 502.8 1,454.4 1,437.6 2,104.2 2,087.4
Gross margin, % 22.5 19.3 20.8 20.3 21.1 20.8
Operating profit from business operations, EUR million 44.1 44.7 122.4 119.8 196.4 193.8
Operating profit from business operations, % 10.0 8.9 8.4 8.3 9.3 9.3
Operating profit, EUR million 45.0 41.0 116.5 109.4 191.4 184.3
Operating profit margin, % 10.2 8.1 8.0 7.6 9.1 8.8
Profit before taxes, EUR million 43.1 39.6 110.9 107.4 183.1 179.7
Net cash from operating activities, EUR million -61.1 13.4 -39.5 80.4 -42.8 77.1
Net interest-bearing debt at the end of period, EUR million -112.4 -301.4 -112.4 -301.4 -112.4 -264.7
Gearing at the end of period, % -23.5 -71.2 -23.5 -71.2 -23.5 -56.0
Working capital at the end of period, EUR million -45.4 -255.9 -45.4 -255.9 -45.4 -191.3
Return on investment, % 29.8 34.9 27.3 31.4 34.6 37.0
Return on equity, % 26.3 27.0 22.1 24.6 29.1 29.4
Order backlog at the end of period, EUR million 1,735.6 2,155.8 1,735.6 2,155.8 1,735.6 1,947.1
Order intake, EUR million 229.6 452.4 1,086.3 1,613.2 1,557.5 2,084.4
Personnel, average for the period 4,984 4,663 4,929 4,356 4,886 4,456
Earnings per share, EUR 0.17 0.16 0.44 0.42 0.73 0.70

President and CEO Pertti Korhonen:

"The continued uncertainty of the global economy as well as the further slowdown of the mining industry's capex investments and cuts in opex spending resulted in a disappointingly low order intake in the third quarter. Accumulated slowdown in the current year's order intake started to have an impact also on our sales. This, combined with some delayed deliveries due to customers' late payments in a few projects and the cancellation of one order, triggered a downgrade of our full-year sales and profit guidance.

Our service sales continued to grow and, despite lower level of total sales in the third quarter, we maintained solid profitability. In order to secure our future profitability in an uncertain market environment, we announced a program to reduce our annual operational costs by up to EUR 50 million.  

Going forward, we will continue to focus on growing our order intake and ensuring a solid order backlog. Our mid- to long-term sales funnel has remained strong and we expect to close some larger orders in the coming quarters. The demand for services, including long-term service contracts, is expected to grow. Mining companies have during the recent years suffered from exceeding their investment budgets and are now seeking to reduce their investment risks and maximize the return on assets. Although this has lead into a lower overall capex, it opens up opportunities for Outotec as we can offer our customers best return on investment with predictable investment cost, faster time to cash flow and guaranteed process performance."

CHANGES IN SEGMENT REPORTING

Outotec's two new business areas are forming the IFRS 8 operating segments. The new reporting segments are effective from this January-September Interim Report 2013.

Main changes relating to the new segment reporting are:

  • In the new segment reporting one segment is in charge of the customer delivery and thus all related sales and costs of sales are directly allocated to that segment. Previously, the customer delivery was reported and allocated by technology leading to several intra-group transactions between the segments. 

  • Based on the new operative reporting principles, costs related to share-based incentive programs have been allocated to the reported segments. Previously, these items were included in unallocated costs. 

Restated Q1-Q2 2013 figures were published on October 18, 2013. > Stock exchange release

This text is a summary of Outotec's January-September 2013 Interim Report. The full report is available as an attachment to this report.

Further information

Outotec Oyj

Pertti Korhonen, President and CEO
tel. +358 20 529 211

Mikko Puolakka, CFO
tel. +358 20 529 2002

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

BRIEFING

Date: Wednesday, October 30, 2013

Time: 2.00 pm (Finnish time)

Venue: Bank, Unioninkatu 20, Helsinki

Joining via webcast

You may follow the briefing via a live webcast at www.outotec.com. The webcast will be recorded and published on Outotec's website for on-demand viewing.

Joining via teleconference

You may also join the briefing by telephone. To register as a participant in the teleconference and Q&A session, please dial 5 to 10 minutes before the start of the event:

FI: +358 9 8171 0463
SE: +46 8 5199 9356
UK: +44 20 3194 0547
US: 877 679 2993 (US only)

Contact information is gathered for registration purposes only and is not used for commercial purposes.

FINANCIAL REPORTING SCHEDULE IN 2014

  • Financial Statements Review 2013: February 7, 2014 

  • Interim Report for January-March: April 29, 2014  

  • Interim Report for January-June: July 31, 2014 

  • Interim Report for January-September: October 30, 2014 

The Financial Statements for 2013 will be published in week 10. The Annual General Meeting 2014 is planned for March 31, 2014.

CAPITAL MARKETS DAY 2013

Outotec's CMD 2013 will be held on December 3-4, 2013 in London. Registration details and the agenda will be published on Outotec's web site in week 45.

DISTRIBUTION

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www.outotec.com

Outotec provides leading technologies and services for the sustainable use of Earth's natural resources. As the global leader in minerals and metals processing technology, Outotec has developed over decades many breakthrough technologies. The company also provides innovative solutions for industrial water treatment, the utilization of alternative energy sources, and the chemical industry. With a global network of sales and service centers, research facilities and approximately 5,000 experts, Outotec generated annual sales of approximately EUR 2 billion in 2012. Outotec shares are listed on NASDAQ OMX Helsinki. www.outotec.com

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