Consumables

Financial statements review 2010: Another successful year for Metso

Friday 04. February 2011 - Highlights of 2010

New orders worth EUR 5,944 million were received in 2010, i.e. 36 percent more than in the previous year (EUR 4,358 million in 2009).
At the end of 2010, the order backlog was 18 percent higher than at the end of December 2009, amounting to EUR 4,023 million (EUR 3,415 million on December 31, 2009).
Net sales increased 11 percent from the previous year, and were EUR 5,552 million (EUR 5,016 million in 2009).
Earnings before interest, tax and amortization (EBITA), before non-recurring items, were EUR 491.0 million, i.e. 8.8 percent of net sales (EUR 399.0 million and 8.0% in 2009).
Operating profit (EBIT) was EUR 445.2 million, i.e. 8.0 percent of net sales (EUR 293.6 million and 5.9% in 2009).
EBIT includes EUR 11.8 million in positive non-recurring items (EUR 64.7 million in negative non-recurring items in 2009).
Earnings per share were EUR 1.71 (EUR 1.06 in 2009).
Free cash flow was EUR 435 million (EUR 717 million in 2009).
Return on capital employed (ROCE) before taxes was 13.5 percent (10.0% in 2009).
The Board proposes a dividend of EUR 1.55 per share equaling to 91 percent of earnings per share (EUR 0.70 and 66% of earnings per share in 2009).
Highlights of the last quarter of 2010
New orders worth EUR 1,498 million were received in October-December, i.e. 10 percent more than in the comparison period (EUR 1,365 million in Q4/2009).
Net sales increased 25 percent on the comparison period, and were EUR 1,687 million (EUR 1,353 million in Q4/2009).
Earnings before interest, tax and amortization (EBITA), before non-recurring items, were EUR 149.8 million in October-December, i.e. 8.9 percent of net sales (EUR 88.0 million and 6.5% in Q4/2009).
Operating profit (EBIT) was EUR 132.2 million, i.e. 7.8 percent of net sales (EUR 55.0 million and 4.1% in Q4/2009).
The EBIT includes EUR 3.1 million in negative non-recurring items (EUR 21.8 million in negative non-recurring items in Q4/2009).
Earnings per share were EUR 0.50 (EUR 0.18 in Q4/2009).
Metso’s President and CEO Jorma Eloranta expresses his satisfaction with the achievements last year. “We made good progress on many fronts: we saw clear recovery in our orders, we maintained strong cash flow throughout the year in spite of growing business volumes and all of our profitability indicators improved, too. I am especially pleased with our services business which grew strongly and represented 45 percent of our business. Likewise we saw the benefits of our strong presence in emerging markets with one half of our net sales coming from those growth areas. I appreciate the efforts of our employees in achieving these good results and want to thank all for making 2010 another successful year for Metso.”
“At an annual level we delivered about EUR 100 million improvement in our underlying operational performance. This we achieved despite our fourth-quarter profitability being somewhat hampered by some low margin projects in Paper and Fiber Technology and by overall increase in our fixed costs. The increase in our fixed costs was largely driven by our getting prepared for continued growth in our delivery and order volumes.”
“The Board of Directors’ dividend proposal of EUR 1.55 per share reflects not only our solid financial position but also confidence in Metso’s future performance. At the same time, we are maintaining a strong balance sheet to develop Metso further.
“Based on the development last year and assuming that the gradual recovery of the global economy will continue, we estimate that Metso’s net sales in 2011 will grow over 10 percent compared to 2010 and EBITA before non-recurring items will improve,” Eloranta notes.
“This year will not be without challenges: there is the fragility of the economic recovery in certain areas, climbing inflation especially in the emerging markets, exchange rate fluctuations and tough competition in large pulp and paper projects to mention a few. On the positive side the outlook in the Mining business continues to improve and prospects for services across our businesses remain strong. The past years have clearly proven Metso’s agility and competitiveness. The new Metso Executive Team is ready to take over from March onwards and I am confident that under Matti Kähkönen’s leadership Metso is in a strong position to deliver continued profitable growth,” Eloranta concludes.
Short-term outlook
There have not been material changes in our market situation since the third quarter of 2010 and we estimate that the gradual recovery will continue in most of our customer industries this year. In the emerging markets the outlook continues strong. The uncertainty caused by the budget deficits in several European countries and the United States, availability of funding and fluctuations in the exchange rates may, however, slow down the recovery, especially in Europe and North America. We anticipate that the improving capacity utilization rates of our customer industries will support our services business, and most of our customers are expected to gradually regain their confidence to invest in existing and new capacity.
Metal prices have continued to increase primarily due to strong demand in China and India as well as stabilization of the US economy, together with tight supply in several metals such as copper and iron ore. The number of quotations for equipment and projects from mining companies has strongly increased since the beginning of 2010, especially during the latter half of the year. This has had a clear positive impact on our orders so far, and we expect stronger activity in larger projects this year since the industry players have confirmed significant capital investment programs for the coming years. Due to the strengthening demand for minerals and our large installed equipment base, we expect demand for our mining services to continue strong.
In the Asia-Pacific region and Brazil strong economic growth continues and infrastructure construction projects are maintaining good demand for construction equipments. We anticipate that demand for equipment used in aggregates production by the construction industry in Europe and in North America will gradually start to recover in 2011 thanks to the delayed replacement cycle but still remain weak. We estimate that demand for our services business for the construction industry will remain satisfactory.
Demand for power plants that utilize renewable energy sources is expected to be good in Europe and North America in 2011. Several European countries and the United States have published targets to increase the use of renewable energy and this is expected to support demand for our power plant solutions fuelled by biomass and waste. However, uncertainty in the financial markets and pending policies over support mechanisms for renewable energy may delay final decisions in some of the projects under negotiations. Demand for the power plant services business is expected to be good.
We estimate that demand for our automation products will continue to be good in 2011, as the oil, gas and petrochemical industries increase their investments due to the improvement in energy prices and demand. Demand for automation products in the pulp and paper industry is also expected to develop favorably. Demand for our services business for automation solutions is expected to be good.
We expect the demand for metal and solid waste recycling equipment to be satisfactory. Demand for recycling equipment services is expected to continue improving over the coming quarters as the capacity utilization rates of our customers’ plants and equipment improve.
Demand for new fiber lines, rebuilds and pulp mill services has clearly recovered from the low levels of the past few years. We expect the fiber line equipment market to continue to be active in 2011 with a tight competitive environment for large new projects. Demand for paper and board lines is expected to be satisfactory and for tissue lines good in 2011. We expect the improved capacity utilization rates of the paper and board industry to boost the demand for our services business.
Based on the development in 2010 and assuming that the gradual recovery of the global economy will continue, we estimate that our net sales in 2011 will grow over 10 percent compared to 2010 and EBITA before non-recurring items will improve. Our estimate is based on our order backlog of EUR 4.0 billion at the end of 2010, which contains orders worth about EUR 3.1 billion for 2011.
The estimates for our financial performance in 2011 are based on Metso’s current market outlook and business scope as well as foreign exchange rates similar to the end of 2010.
Previous guidance (from January-September 2010 Interim Review, published on October 28, 2010): “Our orders received for the first nine months of this year (2010) exceed the net sales for the same period by 15 percent. Based on this and assuming that the gradual recovery of global economy will continue we estimate that in 2011 our net sales will grow about 10 percent compared to this year and EBITA before non-recurring items will improve.”
Board of Directors’ proposal for the use of profit
The Parent Company’s distributable funds totaled EUR 1,525,868,957.58 on December 31, 2010, of which the net profit for the year was EUR 264,850,234.96.
The Board of Directors proposes based on the balance sheet to be adopted for the financial period ended on December 31, 2010, that a dividend of EUR 1.55 per share be distributed. The proposed dividend takes into consideration Metso’s strong financial position and dividend policy. Furthermore, it should be noted that the dividend paid in 2009 was 25 percent of earnings per share because of the financial market turmoil at that point of time.
The dividend is paid to a shareholder who on the record date April 4, 2011 is registered as a shareholder in the company’s shareholders’ register maintained by Euroclear Finland Ltd. The dividend is paid on April 12, 2011.
All the outstanding shares on the dividend record date will be entitled to a dividend, except for the own shares held by the Parent Company.
Annual General Meeting 2011
The Annual General Meeting of Metso Corporation will be held at 3:00 p.m. on Wednesday, March 30, 2011 at the Helsinki Fair Centre (Messuaukio 1, FI-00520 Helsinki).