OUTOTEC OYJ INTERIM REPORT JULY 27, 2016 AT 1:00 PM
INTERIM REPORT JANUARY-JUNE 2016
Minerals Processing stabilizing; Metals, Energy & Water remains challenging
Profitability guidance range narrowed
January-June 2016 in brief (comparison period January-June 2015):
- Order intake: EUR 451 (654) million, -31% (in comparable currencies -26%)
- Service order intake: EUR 214 (249) million, -14% (in comparable currencies -5%)
- Order backlog: EUR 1,017 (1,207) million, -16%
- Sales: EUR 507 (588) million, -14% (in comparable currencies -9%)
- Service sales: EUR 214 (244) million, -12% (in comparable currencies -4%)
- EBIT: EUR -13 (12) million
- Adjusted EBIT*: EUR 0 (24) million
- Adjusted EBIT*: 0 (4)%
- Net cash flow from operating activities: EUR -50 (-43) million
- Earnings per share: EUR -0.09 (0.03)
April-June 2016 in brief (comparison period April-June 2015):
- Order intake: EUR 281 (395) million, -29% (in comparable currencies -23%)
- Service order intake: EUR 112 (118) million, -5% (in comparable currencies +5%)
- Sales: EUR 268 (311) million, -14% (in comparable currencies -9%)
- Service sales: EUR 100 (126) million, -20% (in comparable currencies -13%)
- EBIT: EUR -1 (8) million
- Adjusted EBIT*: EUR 5 (16) million
- Adjusted EBIT*: 2 (5)%
Financial guidance for 2016: sales reiterated, profitability guidance range narrowed
Based on the continued challenges of the Metals, Energy & Water segment, current order backlog and uncertain market condition, the management narrows its profitability guidance range and expects that in 2016:
- Sales will be approximately EUR 1.0-1.2 billion, and
- Adjusted EBIT* will be approximately 2-4% (previously 2-5%)
The wide guidance range reflects the current volatility of the market.
* Excluding restructuring and acquisition-related costs as well as purchase price allocation amortizations.
| Summary of the Group's key figures | Q2 | Q2 | Q1-Q2 | Q1-Q2 | Last 12 | Q1-Q4 |
| 2016 | 2015 | 2016 | 2015 | months | 2015 | |
| Order intake, EUR million | 280.7 | 394.7 | 450.9 | 654.3 | 986.5 | 1,189.9 |
| Service order intake, EUR million | 112.2 | 117.8 | 214.1 | 249.0 | 461.7 | 496.6 |
| Share of services in order intake, % | 40.0 | 29.9 | 47.5 | 38.1 | 46.8 | 41.7 |
| Order backlog at the end of the period, EUR million | 1,017.3 | 1,207.2 | 1,017.3 | 1,207.2 | 1,017.3 | 1,102.8 |
| Sales, EUR million | 267.6 | 310.8 | 507.4 | 588.3 | 1,120.3 | 1,201.2 |
| Service sales, EUR million | 100.2 | 125.8 | 214.3 | 244.1 | 481.5 | 511.3 |
| Share of services in sales, % | 37.5 | 40.5 | 42.2 | 41.5 | 43.0 | 42.6 |
| Gross margin, % | 26.1 | 28.8 | 25.2 | 28.6 | 26.3 | 27.9 |
| Adjusted EBIT 1 , EUR million | 4.9 | 16.1 | 0.1 | 23.7 | 32.4 | 56.0 |
| Adjusted EBIT 1 , % | 1.8 | 5.2 | 0.0 | 4.0 | 2.9 | 4.7 |
| EBIT, EUR million | -0.8 | 8.0 | -13.0 | 11.6 | -36.9 | -12.3 |
| EBIT, % | -0.3 | 2.6 | -2.6 | 2.0 | -3.3 | -1.0 |
| Profit before taxes, EUR million | -3.1 | 5.8 | -17.6 | 6.7 | -47.3 | -22.9 |
| Net cash from operating activities, EUR million | -16.1 | -7.6 | -49.7 | -42.9 | 62.8 | 69.5 |
| Net interest-bearing debt at the end of the period, EUR million | -49.8 2 | 105.0 | -49.8 2 | 105.0 | -49.8 | 39.9 |
| Equity at the end of the period, EUR million | 539.7 2 | 444.1 | 539.7 2 | 444.1 | 539.7 | 404.7 |
| Equity-to-assets ratio at the end of the period, % | 41.7 2 | 33.4 | 41.7 2 | 33.4 | 41.7 | 31.1 |
| Gearing at the end of the period, % | -9.2 2 | 23.7 | -9.2 2 | 23.7 | -9.2 | 9.9 |
| Working capital at the end of the period, EUR million | -36.5 | 38.7 | -36.5 | 38.7 | -36.5 | -89.4 |
| Return on investment, %, LTM | -3.9 | 1.8 | -3.9 | 1.8 | -3.9 | -1.5 |
| Return on equity, %, LTM | -7.3 | 0.4 | -7.3 | 0.4 | -7.3 | -4.0 |
| Personnel at the end of the period | 4,298 | 4,948 | 4,298 | 4,948 | 4,298 | 4,859 |
| Earnings per share, EUR | -0.03 | 0.02 | -0.09 | 0.03 | -0.21 | -0.10 |
1 Excluding restructuring and acquisition-related costs and PPA amortizations. 2 If the hybrid bond were treated as a liability: the equity-to-assets ratio would be 30.1%, gearing 25.7%, and net interest-bearing debt EUR 100.2 million.
CFO and acting CEO Jari Ålgars:
"Low metal prices, China's uncertain growth outlook and the profitability challenges of the industry continue to put pressure on producers to cut production and postpone investments. There was slight recovery from the particularly weak first quarter especially in the Minerals Processing segment's market. The Metals, Energy & Water segment's market was slow, translating into lower order intake.
In the second quarter, our order intake declined 23% and sales declined 9% from the comparison period in comparable currencies. We were able to reduce our fixed costs and the adjusted EBIT was EUR 5 million. The net profit was EUR -3 million due to restructuring costs. Outotec repaid EUR 30 million debt and the company's liquidity and equity remained solid. Improving our free cash flow and ensuring a solid balance sheet continue to be our key priorities.
We continued to invest in R&D with a focus on cost competitive solutions to better meet our customers' demanding environment. We are currently delivering the first demo cells of one of our achievements, the new modular cPlant Flotation, which is enabling fast track to production.
The market outlook in the mining and metals industry remains weak, and therefore the timing of projects is difficult to predict. Service demand is expected to be weaker due to postponements in maintenance and modernization projects and customers' focus on reducing their production costs. In the current environment, it is increasingly difficult to finalize projects and collect overdue receivables, and we have increased our efforts in both of these areas.
While we have made significant progress in right-sizing our fixed costs, we were not able to fully compensate for the lower sales and the continued challenges of the Metals, Energy & Water segment. Thus, we will continue our saving efforts."
This text is a summary of Outotec's January-June 2016 Interim Report. The full report is available as an attachment to this report.
FURTHER INFORMATION
Outotec Oyj
Jari Ålgars, CFO, acting CEO 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: Wednesday, July 27, 2016
Time: 3:00 PM
Venue: Outotec House, Rauhalanpuisto 9, Espoo, Finland
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FINANCIAL REPORTING SCHEDULE IN 2016
- Interim Report for January-September: October 28, 2016
DISTRIBUTION
Nasdaq Helsinki Main media 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, we have developed many breakthrough technologies over the decades for our customers in the metals and mining industry. We also provide innovative solutions for the treatment of industrial water, the utilization of alternative energy sources and the chemical industry. Outotec shares are listed on Nasdaq Helsinki.
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