Creating long-term value. Matti Kähkönen President and CEO Capital Markets Day December 11, 2012 Vantaa, Finland

Transcription

1 Creating long-term value Matti Kähkönen President and CEO Capital Markets Day December 11, 2012 Vantaa, Finland

2 Content 1. Achievements 2. Strategy and portfolio 3. Services business in Metso 4. Conclusions and outlook 2

3 HSE (Health, Safety and Environment) is an essential element in all Metso activities We are committed to taking personal responsibility for our own safety and for the safety of others, and we believe that all injuries and incidents can be prevented Our safety performance has improved steadily We always emphasize our high HSE standards of conduct when dealing with customers, suppliers and other stakeholders We aim to minimize our environmental footprint throughout the entire value chain Lost time incident frequency 01/11 04/11 11/11 04/12 10/12 3

4 We have continued to perform strongly Net sales (EUR million) 3,602 4,221 4,955 6,250 6,400 5,016 5, : +9% CAGR 6,646 5,406 Earnings per share (EUR) : +11% CAGR / ** /12 * ) from continuing operations EBITA * (EUR million) : +21% CAGR ROCE% * 10.7% 18.9% 22.5% 26.1% 23.2 % 13.5% 10.0% 18.4% 20.1% / /30/12 * ) EBITA before NRE *) before tax 4

5 We are well-positioned for value creation Focused strategy and capital allocation policy to drive profitable growth Balanced portfolio to capitalize on global opportunities Strong position in service businesses across the Group Global resources and capabilities close to customers Deep understanding of customer processes Robust balance sheet and financial position Metso s total shareholder return EUR Total shareholder return (TSR), %: Change in share price + dividend paid during period Share price at the end of previous period +300% in 10 years X 100 5

6 Our financial achievements KPI Targets /2012 Net sales growth >10% average annual growth (CAGR) +20% +18% Services net sales growth >10% services business net sales growth annually +17% +13% EPS EPS growth higher than sales growth (EPS growth-% / NS growth-%) +39%/ +20% +27%/ +18% ROCE-% >20% ROCE 18.4% 20.1% Segment EBITA%* MAC: 10-15% 11.7% 12.2% Dividend AUT: 11-16% PPP: 6-9% >50% of EPS 13.5% 11.5% 8.1% 6.9% 71% * EBITA before NRE 6

7 Recent business achievements ( ) Mining and Construction: Record orders, very strong growth (+20%) in services, life-cycle services, M&A in China Automation: Strong growth, operational excellence, expansion into new market segments, acquisition of a globe valve business Pulp, Paper and Power: Record-high orders in delivery, satisfactory profitability, footprint and productivity, gasification, pyrolysis, successful product launches 7 Metso December 11, 2012

8 Strategy and portfolio Targeting long-term shareholder value

9 Capabilities Metso s value creation framework A leading technology and service provider in all our businesses Paper Pulp Process Automation Flow Control Power Mining Construction Industry-leading technology Deep understanding of customer processes Global sales network close to our customers Business skills Compelling services offering, high-quality products, and project management know-how Megatrends Demographic changes Globalizing economy Sustainability and climate change Growth markets 9

10 Characteristics of our segments Mining and Construction Automation Pulp, Paper and Power % of net sales* % of EBITA** % of cap employed*** ROCE**** Services content Growth industry NWC 44% 12% 39% 58% 15% 27% 43% 9% 22% 30% 31% 28% ~50% ~45% ~40% Mining, Construction Oil & gas Biotech Moderate Moderate Negative 10 * )10/11-09/12, **) 10/11-09/12, before non-recurring items and excluding Group Head Office and others, ***) per Sep 30, 2012, ****) 1-9/12 annualized

11 High Low Most of our profit is coming from areas that are growing and are less cyclical Cyclicality Illlustrational Size of bubbles represents EBITA contribution PPP ser Constr. ser AUT ser Mining ser AUT cap Paper cap Power cap Mining cap Constr. cap Low Pulp cap Long-term growth High 11

12 Capital allocation policy As a top priority, we will maintain a capital structure and liquidity position that secures: investment grade credit rating ability to execute our dividend policy (>50% of EPS) Use of available capital 1. Organic growth 2. M&A 3. Return excess cash to shareholders Services in all businesses 1. Mining 2. Construction, Automation, Biotech 3. Pulp & Paper 12

13 Metso will continue to offer a competitive dividend EUR/share 3,0 2,5 2,0 1,5 1,0 0,5 Average EUR 197 million, equaling EUR 1.36 per share Cumulative payout of EUR 1,573 million in , EUR million 13

14 ENABLING CUSTOMER & MARKET INTERFACE The Group s strategic must-wins Tool for strategy implementation 1. Services Growth in services and solutions through full-scope offering Service centers and hubs 2. Growth countries Focus on China, Brazil, and India Successful entry into the mid-market(s) 3. Technology Portfolio that supports services business and sustainable process solutions Fit-for-purpose solutions for the mid-market 4. Operating model Secure global supply chain excellence through cost efficiencies Focus on sourcing and procurement 5. People Develop a working environment that makes a real contribution to our business success 14

15 Growth through acquisitions and JVs Criteria for M&A Customer industry priority according to our capital allocation policy Match with must-wins to: - Strenghen our services business - Expand our geographic presence to better cover growth markets - Improve our overall technology position - Speed up the development of our global operating models - Strengthen our talent pool, especially in growth markets Financial criteria - To support the Group s financial targets 15

16 Long track record of acquisitions and JV s 2000 MAX Control Systems StoneL Corporation Santasalo Powdermet Oy Beloit service operations 2001 Valmet-Raisio Oy Compusystems Oy Pulpexpert Oy Valvcon Corporation Svedala Industri AB 2006 Aker Kvaerner Pulping and Power Svensk Gruvteknik AB Svensk Pappersteknik AB Shanghai-Chenming Paper Machinery Co. Ltd 2008 Flash drying technology from Nilsen Engineering PSP Slévárna MW Power Oy * Fastpap Oy Ab GE Energy s Lachine main plant Grabitech Solutions AB Kemotron A/S LignoBoost AB MAPAG Valves GmbH Mitsubishi Heavy Industries* 2010 Wyesco of Louisiana L.L.C. service business Camoplast Finntrack Oy s rubber belt-related business Service business of Wyesco of Louisiana L.L.C. Viconsys machine vision systems business 2011 Joint venture (33%) with Guodian Nanjing Automation Co., Copperstate Industrial Services Holzmag technology 1999 W.S. Tyler Helser Division Santasalo- JOT Gears Kvaerner Panel Systems GmbH 2002 Scandinavian Mill Service Oy 2005 Texas Shredder Inc Valmet Automotive Oy (10%) 2007 Mueller Engineering Inc Bender Machine Services Ltd Mecanique et Depannage Industries s.a.r.l. Bulk Equipment Systems and,technologies Inc. SHI Joint venture in Japan 2009 M&J Industries A/S Tamfelt 2012 Iron ore pelletizing technology and know-how from Jacobs Engineering Wärtsilä s 40 percent holding in MW Power Valstone Control valve technology company JV with LiuGong Group (50%) Shaorui Heavy Industries. 16 * Joint Venture with Wärtsilä Biopower and Metso's Heat & Power business (part of Metso Power) ** Paper machinery technology and Beloit's paper machinery intellectual property Metso

17 Services business in Metso

18 Services business as the key value driver We have a good starting-point for further growth Extensive and growing installed base Good extended offering; wear and spare parts, solutions and engineering Deep customer process understanding and solid global presence Broad range of life-cycle services High internal recognition and similar organizations in each segment Services business has grown 64% since March Q107 Q108 Q109 Q110 Q111 Q112 18

19 Why are services important for Metso? Three perspectives Financial Benefits to the customer Customer relationship 19

20 Services Value for the customer Energy savings and environmental compliance through sustainable technology and processes. Process performance and availability to increase revenue and margin. Metso service solutions improve the financial and operational performance of customers processes. Reduced losses. Metso service solutions reduce downtime, loss of revenue and the related direct and indirect costs. Improved expertise. Access to a global network of Metso experts and development of in-house competences. 20

21 Services Customer relationships Improved understanding of our customers businesses and operations by being close to our customers Value quantification to the customer. Improved understanding of customers businesses and KPIs create a solid basis for quantifying the business impact for the customer. Add-on sales. Basis for up- and crossselling (both CAPEX and OPEX). Competitive advantage. Services create competitive advantage, particularly in developed markets. 21

22 Services Financial aspects Group net sales 2011 Group EBITA 2011 Services EBITA margin % % 1-9/ % 45% 55% 65% 35% Services annual net sales are approx. EUR 3.2 billion today Our target is to grow services to EUR 4.5 billion by 2016 We are also aiming to increase our services EBITA margin Capital Services Capital Services Services profitability varies between different segments and product categories 22

23 Conclusions and outlook

24 Conclusions Services growth remains the top priority across the Group. Extended presence in the growth markets will enable us to capitalize on the growth potential of each business. All our businesses offer growth opportunities - mining continues to be the most attractive customer industry. Costs and productivity: maintaining our competitiveness across all businesses. We have a good platform and strategy to add value to shareholders, customers and other stakeholders. 24

25 Market outlook Relatively stable demand, but increasing uncertainties Mining 32% of net sales 50% service intensity Positive for capital and services Good in capital business but somewhat softer quarters expected. Services excellent. Construction 11% of net sales 40% service intensity Positive in emerging markets; flat in developed markets Satisfactory for capital and services Automation 11% of net sales 45% service intensity Positive for oil & gas customers; flat in pulp & paper Good in oil & gas, softer in pulp & paper. Services good. Power 11% of net sales 30% service intensity Positive, partly subject to legislation Satisfactory for projects and services. Long-term demand Short-term demand Paper, Board, Tissue 21% of net sales 50% service intensity Demand for board and tissue growing; other grades flat or down Weak for paper and board machines. Services good. Share of Metso net sales in January - September 2012 Pulp 9% of net sales 40% service intensity Positive, mainly due to packaging board and tissue Good for rebuilds and services. Pulp mill market activity satisfactory. 25

26 Assessment for 2013 Based on our current view on the global economy, market outlook, and our order backlog for 2013, we estimate that: Our net sales and result (EBITA before non-recurring items) for 2013 will be at around the same level compared to 2012 Segments EBITA before non-recurring items is expected to develop in 2013 compared to 2012 as follows: Mining and Construction and Automation improvement Pulp, Paper and Power decline 26

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