sustainable use of earth’s natural resources13 april 27 q1 2016 interim report q1 2016 q1 2015 net...

Sustainable use ofEarth’s natural resources

Interim ReportQ1 2016

© Outotec – All rights reserved

Safety performance in Q1/2016

Q1 2016 Interim Report2 April 27

0

1.2 (2015: 2.8)

4 279

Fatal accidents

Lost-Time Injury Rateper million hours incl. employees and subcontractors

Lost timeinjuries reported

Reported nearmisses


Challenging operating environment continued in Q1

April 27 Q1 2016 Interim Report3

• Challenging market in the mining and metals industry

• Competition continued at an intense level

Volatility in metal prices continued

• Producers postpone investments, maximize cash flow and reduce costs

• Investments to projects with fast returns

Markets in Europe and the Middle East more active

• Weak iron ore investments

• Gold and environmental projects were active

• Active waste-to-energy market


Q1 in a nutshell


• Order intake declined in challengingmarkets

• Sales contracted due to the timing of larger orders in 2015 and customer-induced slowdown in projectdeliveries

• Adjusted EBIT negative due to lowersales and particularly lower provision releases

• Service order intake declined

• Fixed costs reduced 9% and EUR 70 million cost structure program is on track

• Spare part orders and sales grew slightly

• Service sales -4%, growth 5% in comparable currencies

• EUR 150 million hybrid bondstrengthened equity and cash and cashequivalents

• Market showed some signs of stabilization towards end of Q1

+

_


Capex order intake impacted by timing of large MEW orders; spare and wear parts orders improved, upgrade & modernization service orders declined


EMEA

46%APAC

25%129

68

131

102

0

50

100

150

200

250

300

Q1/2015 Q1/2016

Serviceorders

Capexorders

AMERICAS

29%

Sulfuric acid planttechnology for BolidenHarjavalta, FinlandValue not disclosed

• Minerals Processing order intake: EUR 104 million, -11% (-2% in comparable currencies)

• Metals, Energy & Water order intake: EUR 66 million, -54% (-51% in comparable currencies)


Order backlog declined due to low order intake


€ million

Iranian projects not included in Q1 end backlog:EUR 220 (198) million

240

371

235168

493418

384299

475

260

120139 106

202111

419350

269357 344

532

803

327425

736

452 471 491366

230

426

210

380266

322260

395268 267

170

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

2 200

2 400Q

2/20

06

Q3/

2006

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2006

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2007

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2007

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2015

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2015

Q1/

2016

Order backlog at the end of the period Share of unannounced orders Order intake by quarter

Roughly EUR

600 million of the

Q1 end backlog

to be delivered in

2016


Fixed cost savings did not fully mitigate lower sales and particularly lower provision releases


EUR million Q1 2016 Q1 2015 Change, %Change, %

in comparablecurrencies

Sales 240 278 -14% -8%Service sales 114 118 -4% +5%Share of services in sales, % 48 43Gross Margin, % 24 28

Adjusted EBIT* -5 8Adjusted EBIT*, % -2 3- Restructuring and acquistion-related costs -6 -2- PPA amortization -2 -2

EBIT -12 4EBIT, % -5 1Profit for the period -12 1

* Excl. restructuring and acquisition-related costs and PPA amortizations.


Profitability impacted by volume and neutral provision releases, partly off-set by fixed cost savings


Fixed cost decrease

Provisionreleases Q1/2015

FX gain on derivatives (+1M€ in

Q1/16 vs. -6M€ in Q1/15)

Other

-5M€

Adjusted EBIT Q1/2016

Adjusted EBIT Q1/2015

Sales decrease

8M€


Minerals Processing – fewer plant and equipment ordersweakened sales, profitability improved


0%2%4%6%8%10%12%14%16%18%20%

050

100150200250300350

Q1/

2012

Q2/

2012

Q3/

2012

Q4/

2012

Q1/

2013

Q2/

2013

Q3/

2013

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2013

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2014

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2014

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2014

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2014

Q1/

2015

Q2/

2015

Q3/

2015

Q4/

2015

Q1/

2016

Sales EBIT*, %

Sales and adjusted EBIT development

• Fewer plant and equipment projects reduced sales.

• Spare parts sales were flat y-o-y.• Adjusted EBIT improved despite lower sales

due to lower fixed costs.

Minerals Processing

EUR million

Q1 2016

Q1 2015

Change, %

Change in comp

currency,%Order intake 104 117 -11 -2Sales 113 136 -18 -10Service sales 64 76 -16 -5Adjusted EBIT*) 5 1Adjusted EBIT*), % 4 1Unrealized and realized losses related to valuation of FX forward agreements

2 -6

*) Excl. restructuring and acquisition-related costs.


-5%-3%-1%1%3%5%7%9%11%13%

050

100150200250300350400

Q1/

2012

Q2/

2012

Q3/

2012

Q4/

2012

Q1/

2013

Q2/

2013

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2013

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2013

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2014

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2014

Q4/

2014

Q1/

2015

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2015

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2015

Q4/

2015

Q1/

2016

Sales EBIT*, %

Metals, Energy & Water – order intake and profitabilitydropped, spare parts sales grew• Timing of large plant orders reduced order intake.• Sales declined due to fewer projects in implementation

and their timing. • Spare part sales grew moderately.• Profitability weakened due to lower sales, lack of

project provision releases and still too high fixed costs


Metals, Energy & WaterEUR million

Q1 2016

Q1 2015

Change, %

Change in comp.

currency, %Order intake 66 143 -54 -51Sales 127 141 -10 -7Service sales 50 42 19 24Adjusted EBIT*) -9 8Adjusted EBIT*), % -7 5Unrealized and realized losses related to valuation of FX forward agreements

-1 -0

*) Excl. restructuring and acquisition-related costs.

Sales and adjusted EBIT development


Service order intake by quarter

050

100150200

Q1/

12Q

4/11

Q3/

11Q

2/11

Q1/

11

Q1/

15Q

4/14

Q3/

14Q

2/14

Q1/

14Q

4/13

Q3/

13Q

2/13

Q1/

13Q

4/12

Q3/

12Q

2/12

Q1/

16Q

4/15

Q3/

15Q

2/15

EUR million

Service order intake and sales declined, spare part salesgrew slightly• Service orders -22% (-14% in comparable

currencies) due to weak market for upgrades and modernizations

• Spare and wear part orders improved from Q4

• Service sales -4% (+5% in comparable currencies)

• Spare part sales grew slightly


Service sales by quarterSplit in service order intake

050

100150200250

01020304050

EUR million

Q2/

11Q

3/11

Q1/

11

Q3/

14

Q1/

16

Q1/

15Q

2/15

Q4/

14

Q3/

15Q

4/15

%

Q2/

14

Q1/

13Q

2/13

Q3/

13Q

4/13

Q1/

14

Q4/

11

Q3/

12Q

2/12

Q4/

12

Q1/

12SalesShare of Outotec’s sales, %

Spare parts & other services

Service projects(incl. Capex spares)

Q1/

14

Q1/

15

Q2/

14

Q2/

15

Q3/

14

Q3/

15

Q4/

14

Q4/

15

Q1/

16


Ongoing projects progressed, tying more capital and impacting negatively working capital and cash flow, low prepayments from new orders


EUR million Q12016

Q1 2015

Cash from operations 6 11Change in working capital -37 -36Interest 0 -0Taxes -2 -10

NET CASH FROM OPERATING ACTIVITIES -34 -35

Capital expenditure -4 -16Acquisitions - -21Other investing activities 1 -0

CASH FLOW AFTER INVESTING ACTIVITIES -37 -72


Cash and equity were positively impacted by the drawdown of the hybrid bond


Q1 2016

Q1 2015

Net interest-bearing debt, EUR million -69* 51

Gearing, % -13* 11

Equity-to-assets ratio, % 41* 34

Return on investment, %, LTM -2 0

Return on equity, %, LTM -6 -1

Working capital at the end of the period, EUR million -58 -2

Equity, EUR million 538 448

Balance sheet total, EUR million 1.556 1.482*) If the hybrid bond would be treated as liabilities: Equity-to-assets ratio 29%, gearing 21%, and net interest-bearing debt would be EUR 81 million.


EUR 70 million cost efficiency program is proceeding on plan, EUR 8 million quarterly net savings achieved

14 April 27 Q1 2016 Interim Report

• Target is EUR 70 million annual fixedcost reductioncompared to the Q1-Q3/2015 run rate.

• Of this, EUR 8 million was reachedin Q1/2016.

Fixed cost Fixed cost2015 2016

278

348

84

95

82

Q2

Q1

Q3

Total Q1-Q3Annualized

Target fixed cost level

74

Cum.savings

8


Personnel development since September 2015


2574

154117904000

3500

5000

4500

3000

0

4,552

3011

March 2016 headcount

AdditionsAcquisitionsReductions

-460

September 2015 headcount

4,913

3123

ServiceCapex


Key events after March 31, 2016


April 11, 2016 April 18, 2016

Outotec’sAnnual General Meeting was held in Helsinki.

Outotec and Sarda Energy and Minerals settled their dispute over obligations in a filter delivery (press release on September 27, 2013).

April 25, 2016

Outotec to deliver process equipment for Houndé Gold Operation in Burkina Faso, EUR 13 million order booked in Q2/2016.

April 7, 2016

Outotec’s 'Working for resource efficiency' sustainability report was published.


Market outlook remains uncertain – investment forecast for 2016 lower than in 2015


Current metals supply capacity exceeds the demand, and further capacity adjustments are expected

The current market conditions and long-term metals price outlook is not supportive for investments

Waste-to-energy solutions are in demand in certain countries, but linked to subsidy and environmental regulations

Sustainable solutions are in demand

Some geographic areas, such as the Middle East are more active

Service business is dependent on the industry’s production volumes and modernization needs


Key focus in 2016


1. Improve fixed and product costs

2. Develop service business

3. Seek opportunities from growth segments

1

2

3


Based on the current market outlook, customer business activity and assessment of order backlog, the management expects that in 2016:

Financial guidance for 2016 reiterated

19

Expected salesfrom Q1

order backlog(incl. services)

~EUR 600 million

Expected salesfrom new

order intake(incl. services)

EUR 160-360 million

+=Sales will be

approx.EUR 1.0 - 1.2 bn

Adjusted EBIT*

will be approximately 2 – 5%* Excluding restructuring and acquisition-related costs as well as purchase price allocation amortizations.

The market weakened last year and the 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 impact from the restructuring program drive the annual phasing of the profit.

April 27 Q1 2016 Interim Report

+Sales from Q1EUR 240 million

sustainable use of earth’s natural resources13 april 27 q1 2016 interim report q1 2016 q1 2015 net...

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