Business News
Metsos Financial Statements Review, January 1 – December 31, 2009: Strong cash flow and satisfactory profitability in a demanding market environment
Tuesday 09. February 2010 - Highlights of 2009 New orders worth EUR 4,358 million were received in 2009, i.e. 32 percent less than in the previous year (EUR 6,384 million in 2008).
Highlights of 2009
New orders worth EUR 4,358 million were received in 2009, i.e. 32 percent less than in the previous year (EUR 6,384 million in 2008).
At the end of 2009, the order backlog was 16 percent lower than at the end of December 2008, amounting to EUR 3,415 million (EUR 4,088 million on December 31, 2008).
Net sales decreased by 22 percent from the previous year, and were at EUR 5,016 million (EUR 6,400 million in 2008).
Earnings before interest, tax and amortization (EBITA) were EUR 334.3 million, i.e. 6.7 percent of net sales (EUR 680.9 million and 10.6% in 2008).
Operating profit (EBIT) was EUR 293.6 million, i.e. 5.9 percent of net sales (EUR 637.2 million and 10.0% in 2008).
EBITA and EBIT include approximately EUR 75 million in non-recurring expenses relating to capacity adjustment measures, before which the EBITA margin was 8.2 percent.
Earnings per share were EUR 1.06 (EUR 2.75 in 2008).
Free cash flow was EUR 717 million (EUR 29 million in 2008).
Return on capital employed (ROCE) before taxes was 10.0 percent (23.2% in 2008).
The Board proposes a dividend of EUR 0.70 per share (EUR 0.70 in 2008).
Highlights of the fourth quarter of 2009
New orders worth EUR 1,365 million were received in October-December, i.e. 54 percent more than in the comparison period (EUR 889 million in Q4/2008).
Net sales decreased by 26 percent on the comparison period, and were at EUR 1,353 million (EUR 1,839 million in Q4/2008).
Earnings before interest, tax and amortization (EBITA) were EUR 66.2 million, i.e. 4.9 percent of net sales (EUR 200.0 million and 10.9% in Q4/2008).
Operating profit (EBIT) was EUR 55.0 million, i.e. 4.1 percent of net sales (EUR 190.1 million and 10.3% in Q4/2008).
EBITA and EBIT for October-December include approximately EUR 31 million in non-recurring expenses relating to capacity adjustment measures. The EBITA margin before the non-recurring expenses was 7.2 percent.
Earnings per share were EUR 0.18 (EUR 0.79 in Q4/2008).
Metsos President and CEO Jorma Eloranta is satisfied with the financial performance and achievements in 2009. Our most significant achievement was the strong cash flow. Also our profitability was at a satisfactory level despite the demanding market situation. We strengthened our product and services portfolio through acquisitions, continued with our key investments and enhanced our operating model. We also estimate that we have maintained our market position in all our core customer segments. Metso is now more competitive as the markets gradually begin to recover. I appreciate the efforts of our employees in achieving these good results in a difficult year.”
The Board of Directors dividend proposal of EUR 0.70 per share reflects not only our confidence in the gradual recovery in our operating environment, but also our solid financial position.
“In the last quarter of the year our profitability was hampered, as expected, by high non-recurring expenses related to the capacity adjustment measures and to the development of our operating model. It was encouraging that we saw a nice increase in our order intake. This indicates that our customers are regaining their confidence in the recovery of their operating environment and in the availability of financing. For 2010 we estimate our net sales to remain at about the same EUR 5 billion level as in 2009 and profitability to remain satisfactory,” Eloranta notes.
“Winning new orders continues to be a key priority. Price competition in the markets has escalated, so we will continue developing our operating model to maintain competitiveness and profitability. Key priorities are also continuing to further develop our services business and our solutions based on bioenergy and other renewable energy sources.”
Metsos key figures
EUR million
Q4/
2009
Q4/
2008
Change %
2009
2008
Change %
Net sales
1,353
1,839
-26
5,016
6,400
-22
Net sales of services business
524
651
-20
2,052
2,343
-12
% of net sales
39
36
41
37
EBITA before non-recurring capacity adjustment expenses
97.3
200.0
-51
409.0
680.9
-40
% of net sales
7.2
10.9
8.2
10.6
Earnings before interest, tax and amortization (EBITA)
66.2
200.0
-67
334.3
680.9
-51
% of net sales
4.9
10.9
6.7
10.6
Operating profit
55.0
190.1
-71
293.6
637.2
-54
% of net sales
4.1
10.3
5.9
10.0
Earnings per share, EUR
0.18
0.79
-77
1.06
2.75
-61
Orders received
1,365
889
54
4,358
6,384
-32
Order backlog at end of period
3,415
4,088
-16
Free cash flow
268
-22
n/a
717
29
n/a
Return on capital employed (ROCE) before taxes, %
10.0
23.2
Equity to assets ratio at end of period, %
35.7
30.9
Gearing at end of period, %
32.5
75.7
Short-term outlook
In the fourth quarter of 2009 we began to see the first signs of gradual recovery in the global economy and in the demand of some of our customer industries. Nevertheless, we estimate that our operating environment will continue to be demanding at least in the first half of 2010.
Our customers are still cautious in their investment decisions, which will affect our equipment and project businesses in particular. We estimate that our customers capacity utilization rates will slowly improve, assuming that the general positive development of the global economy continues. We expect this to have a gradual positive effect on our services business.
There have been signs of improvement in mining companies quotations for equipment and projects. We expect that this will gradually have a positive impact on orders in 2010. Due to our strong product and services offering, as well as our large installed equipment base, we expect the demand for our mining equipment spare and wear parts as well as related services to gradually improve from the current level.
We anticipate that demand for equipment used in aggregates production by the construction industry will continue to be weak, with the exception of the Asia-Pacific and Brazilian markets, where infrastructure construction projects are maintaining demand. Many countries have introduced stimulus measures relating to infrastructure development. Though these measures have not yet had any significant effect, we expect them to positively affect the demand in the long-term. 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 strengthen in Europe and North America and to be good as the availability of financing improves. Several countries have published targets to increase the use of renewable energy. This is expected to support demand for our power plant solutions fuelled by biomass and waste. Demand for services business is expected to be satisfactory.
We estimate that demand for our automation products will gradually increase in 2010, as the oil, gas and petrochemical industries increase their investments due to the improvement in energy prices and demand. Demand for our services business for automation solutions is expected to be satisfactory.
We expect the demand for metal recycling equipment to be weak due to the low production volumes of steel, and demand for solid-waste recycling equipment to be satisfactory. Demand for services in metal recycling is expected to remain weak in 2010.
We estimate that demand for new fiber lines will continue to be weak, but demand for rebuilds and services will strengthen during the year. Demand for paper, board and tissue lines is expected to be satisfactory. We expect the capacity utilization rates of the paper and board industry to improve during the year, which should gradually increase the demand for our services business.
We estimate our net sales in 2010 to remain at about the same EUR 5 billion level as in 2009, and profitability to remain satisfactory. Our estimate is based on our order backlog, which contains about EUR 2.7 billion worth of deliveries for 2010, and on the expectation of continued gradual recovery of global economy.
The net sales and profitability estimates are based on Metsos current market outlook and business scope.