Outotec's interim report January-September 2019
OUTOTEC OYJ INTERIM REPORT OCTOBER 25, 2019 AT 9:00 AM
Outotec's interim report January-September 2019
Strong growth in order intake and service sales, significant improvement in profitability
“The market for minerals and metals processing technologies continued to be positive during the reporting period. Our order intake increased by 26% from last year in the reporting period and by 69% in the third quarter. In the second and third quarter, we booked two large greenfield orders related to both minerals processing and metals refining. Brownfield investments remained at the previous year’s level. Our service business continued to develop well during the reporting period with order intake increasing 15% from last year and 20% during third quarter.
Sales were slightly lower for the reporting period and for the third quarter remained on previous year’s level, primarily due to lower order intake in the second half of 2018. I am pleased with the 27% growth in service sales during the reporting period and the 26% increase during third quarter showing that our efforts to further develop our service business are bringing good results. Profitability improved both in absolute and relative terms during the comparison period, due to higher share of services, sales mix and improved project execution. The profitability of the Metals, Energy & Water segment improved due to better project execution but is still unsatisfactory. All our must-win battle programs are developing as planned and contributing to our improved performance and competitiveness.
Our R&D activities continued to produce innovative solutions for customer needs. For example, we expanded our grinding portfolio with a new range of mills and a new polymer bearing system. Both products meet the need to improve availability even in the most challenging grinding operations as well as to shorten delivery times and lower the manufacturing costs.
Negotiations concerning the ilmenite smelter project are ongoing, in cooperation with the customer. We remain confident that the EUR 110 million provision made in the last quarter of 2018 is adequate.
Steps have also been taken for the planned combination of Outotec and Metso Minerals, announced on July 4. We received approval for the demerger prospectus for the EGM and credit ratings for the future Metso Outotec. Anti-trust filings and integration planning are on-going. The transaction is expected to be completed in the second quarter of 2020.
We remain positive about the current market outlook for mining and metals and reiterate our guidance for 2019,” concludes President & CEO Markku Teräsvasara.
Summary of key figures
| Q3 | Q3 | Q1-Q3 | Q1-Q3 | Q1-Q4 | |||||
| EUR million | 2019 | 2018 | %1 | %2 | 2019 | 2018 | %1 | %2 | 2018 |
| Order intake | 457.5 | 271.5 | 69 | 68 | 1,203.2 | 952.4 | 26 | 26 | 1,251.3 |
| Service order intake | 141.5 | 118.1 | 20 | 18 | 464.5 | 403.2 | 15 | 16 | 532.5 |
| Order backlog at end of period | 1,231.9 | 1,007.2 | 22 | - | 1,231.9 | 1,007.2 | 22 | - | 946.6 |
| Sales | 322.3 | 320.2 | 1 | -0 | 903.7 | 938.5 | -4 | -4 | 1,276.5 |
| Service sales | 153.1 | 121.2 | 26 | 26 | 422.1 | 333.4 | 27 | 27 | 496.6 |
| Gross margin, % | 27.1 | 23.0 | 26.6 | 22.5 | 15.4 | ||||
| Adjusted EBITA3 | 28.2 | 23.7 | 67.8 | 48.8 | -23.9 | ||||
| Adjusted EBITA3, % | 8.8 | 7.4 | 7.5 | 5.2 | -1.9 | ||||
| Adjusted EBIT4 | 23.2 | 18.5 | 52.4 | 33.1 | -46.2 | ||||
| Adjusted EBIT4 , % | 7.2 | 5.8 | 5.8 | 3.5 | -3.6 | ||||
| EBIT | 23.7 | 16.0 | 47.8 | 18.4 | -66.1 | ||||
| EBIT, % | 7.4 | 5.0 | 5.3 | 2.0 | -5.2 | ||||
| Net cash from operating activities | 28.0 | 43.8 | 58.3 | 88.0 | 70.4 | ||||
| Earnings per share, EUR | 0.07 | 0.04 | 0.12 | 0.00 | -0.42 |
1 Change, %
2 Change in comparable currencies, %
3 Excluding all amortizations, as well as adjustment items consisting of restructuring and capacity adjustment costs, costs related to mergers and acquisitions, outcome of material intellectual rights property 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 on the Group level to reflect the planned combination.
4 Excluding restructuring- and acquisition-related items as well as PPA amortizations.
Financial guidance for 2019 reiterated
Based on the current market outlook, we expect sales to increase, and adjusted EBIT* to increase significantly from the 2018 adjusted EBIT (EUR 63.8 million), excluding provision for the ilmenite smelter project.
*Excluding restructuring- and acquisition-related items, as well as PPA amortizations.
This text is a summary of Outotec's January-September interim report 2019. 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
BRIEFING/TELECONFERENCE
Date: October 25, 2019
Time: 2:00 PM EET
Venue: Outotec House, Rauhalanpuisto 9, Espoo, Finland
Joining the teleconference
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