OUTOTEC OYJ INTERIM REPORT APRIL 27, 2016 AT 9:00 AM
INTERIM REPORT JANUARY-MARCH 2016
Order intake declined due to challenging market and timing of capex orders
January-March 2016 in brief (comparison period January-March 2015):
Financial guidance for 2016 reiterated
Based on the current market outlook, customer business activity and order backlog, management expects that in 2016:
The market weakened last year and this weakening accelerated towards the end of the year. The wide guidance range reflects the current volatility and limited visibility of the market.
We expect the profits to be weighted towards the second half of the year. Normal seasonality, the expected timing of project deliveries from the order backlog and the timing of savings from the restructuring program are expected to drive the annual phasing of the profit.
* Excluding restructuring and acquisition-related costs as well as purchase price allocation amortizations.
Summary of the Group's key figures
|Order intake, EUR million||170.2||259.7||1,100.5||1,189.9|
|Service order intake, EUR million||101.9||131.2||467.3||496.6|
|Share of services in order intake, %||59.9||50.5||42.5||41.7|
|Order backlog at the end of the period, EUR million||1,004.5||1,132.2||1,004.5||1,102.8|
|Sales, EUR million||239.8||277.5||1,163.6||1,201.2|
|Service sales, EUR million||114.1||118.3||507.0||511.3|
|Share of services in sales, %||47.6||42.6||43.6||42.6|
|Gross margin, %||24.3||28.4||27.0||27.9|
|Adjusted EBIT 1 , EUR million||-4.8||7.7||43.5||56.0|
|Adjusted EBIT 1 , %||-2.0||2.8||3.7||4.7|
|EBIT, EUR million||-12.3||3.6||-28.2||-12.3|
|Profit before taxes, EUR million||-14.6||1.0||-38.4||-22.9|
|Net cash from operating activities, EUR million||-33.6||-35.3||71.2||69.5|
|Net interest-bearing debt at the end of the period, EUR million||-69.5 2||51.2||-69.5 2||39.9|
|Equity at the end of the period||538.4||448.0||538.4||404.7|
|Equity-to-assets ratio at the end of the period, %||40.6 2||34.0||40.6 2||31.1|
|Gearing at the end of the period, %||-12.9 2||11.4||-12.9 2||9.9|
|Working capital at the end of the period, EUR million||-58.3||-2.0||-58.3||-89.4|
|Return on investment, %, LTM||-2.4||0.2||-2.4||-1.5|
|Return on equity, %, LTM||-5.9||-0.8||-5.9||-4.0|
|Personnel at the end of the period||4,552||4,966||4,552||4,859|
|Earnings per share, EUR||-0.07||0.00||-0.17||-0.10|
1 Excluding restructuring and acquisition-related costs and PPA amortizations.
2 If the hybrid bond would be treated as liabilities: equity-to-assets ratio would be 29.3%, gearing 20.7%, and net interest-bearing debt EUR 80.5 million.
President and CEO Pertti Korhonen:
"The market environment continued to be very challenging in the mining and metals industry during the first quarter of 2016. Most commodity prices have returned to pre-super-cycle levels. This, combined with uncertainty in China's growth outlook and shrinking profitability of the industry, has caused producers to cut production, postpone investments, and seek all possible measures to maximize cash flow and reduce costs. As a result, both investment goods and service markets have weakened.
The order intake, regarding plant, equipment and services, declined. The orders for spare and wear parts increased compared to the fourth quarter of 2015. However, the overall service order intake declined as the producers continued to postpone their upgrade and modernization activities. The timing of large orders, especially in the Metals, Energy, & Water segment, impacted capex order intake.
The sales contracted due to the timing of plant and equipment orders in 2015 and customer induced slowdown in project deliveries, as well as lower demand for upgrade and modernization services. The spare parts sales grew slightly.
The adjusted EBIT was negative. We were able to reduce our fixed costs in the first quarter in line with our plans, however this was not enough to mitigate the impact of the lower sales and particularly lower provision releases. The profit before taxes was negative due to restructuring costs and risk provisions related to an old litigation case.
During the reporting period, Outotec has issued a EUR 150 million hybrid bond. The hybrid bond strengthens Outotec's capital structure and it is for the refinancing of existing debt and for Outotec's general corporate purposes. In addition, improving free cash flow and ensuring a solid balance sheet continue to be key priorities for us.
The market outlook in the mining and metals industry is difficult to predict. We expect the plant and equipment market to contract in 2016 and the service demand to be weaker due to postponements of maintenance and modernization activities and the general operating cost savings of producers. In response to the soft outlook of the mining and metals markets, we will continue actions to adjust our fixed costs to counter the lower sales. We see opportunities in the environmental, waste to energy and water treatment solutions, and spare and wear parts businesses."
This text is a summary of Outotec's January-March 2016 Interim Report. The full report is available as an attachment to this report.
Pertti Korhonen, President and CEO
tel. +358 20 529 211
Jari Ålgars, CFO
tel. +358 20 529 2007
Rita Uotila, Vice President - Investor Relations
tel. +358 20 529 2003, mobile +358 400 954 141
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Date: Wednesday, April 27, 2016
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FINANCIAL REPORTING SCHEDULE IN 2016
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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.