Outotec Oyj - Interim report (Q1 and Q3)

Outotec's Interim Report January-June 2014

OUTOTEC OYJ                         INTERIM REPORT                    JULY
31, 2014 AT 9.00 AM



INTERIM REPORT JANUARY-JUNE 2014

Order intake improved 80% from Q1, lower profitability due to higher project
costs

January-June 2014 (comparison period in 2013):

  * Order intake(1)): EUR 589.8 (856.7) million, -31%, in comparable currencies
    -23%
  * Service order intake(1)): EUR 281.0 (272.0) million, 3%, in comparable
    currencies 18%
  * Order backlog: EUR 1,259.7 (1,761.3) million, -28%
  * Sales: EUR 679.1 (1,014.3) million, -33%, in comparable currencies -28%
  * Service sales: EUR 225.9 (238.4) million, -5%, in comparable currencies 5%
  * Operating profit from business operations(2)): EUR 16.3 (78.3) million, -79%
April-June 2014 (comparison period in 2013)

  * Order intake(1)): EUR 379.5 (365.6) million, 4%, in comparable currencies
    15%
  * Service order intake(1)): EUR 147.8 (138.5) million, 7%, in comparable
    currencies 21%
  * Sales: EUR 335.2 (511.4) million, -34%, in comparable currencies -30%
  * Service sales: EUR 118.4 (134.6) million, -12%, in comparable currencies -3%
  * Operating profit from business operations(2)): EUR 3.9 (43.3) million, -91%
Financial guidance for 2014 (published on July 28, 2014)

Based on the current market outlook, customer tendering activity and assessment
of order backlog, the management expects that in 2014:

  * Sales will be approximately EUR 1.4-1.6 billion, and
  * Operating profit from business operations(2)) will be approximately 4-6%.
The main reasons for the change in financial guidance were:

  * Lower sales in Capex business due to delayed order intake in the beginning
    of the year, and slowness in project implementation in Russia due to
    increased geopolitical uncertainty.
  * Cost overruns in five large Capex projects which have been won during
    2009-2012, the majority of which are expected to be completed by the end of
    2014.
Previous financial guidance

Based on the year-end order backlog, the current market outlook, customer
tendering activity, and volatility in exchange rates, the management expects
that in 2014:

  * Sales will be approximately EUR 1.5-1.8 billion, and
  * Operating profit from business operations(2)) will be approximately 5-8%.

(1)) The change in the service reporting principles increased January-June 2014
order intake by approximately EUR 35 million (Q2 2014 approximately EUR 25
million).
(2)) Excluding one-time items and purchase price allocations (PPA) amortizations

 Summary of key figures              Q2      Q2   Q1-Q2   Q1-Q2 Last 12   Q1-Q4

                                   2014    2013    2014    2013  months    2013
-------------------------------------------------------------------------------
 Sales, EUR million               335.2   511.4   679.1 1,014.3 1,576.3 1,911.5
-------------------------------------------------------------------------------
 Gross margin, %                   19.3    20.9    19.4    20.0    20.6    20.7
-------------------------------------------------------------------------------
 Operating profit from business
 operations, EUR million            3.9    43.3    16.3    78.3   100.9   162.9
-------------------------------------------------------------------------------
 Operating profit from business
 operations, %                      1.2     8.5     2.4     7.7     6.4     8.5
-------------------------------------------------------------------------------
 Operating profit, EUR million     -0.3    39.9     8.4    71.5    78.8   141.9
-------------------------------------------------------------------------------
 Operating profit margin, %        -0.1     7.8     1.2     7.1     5.0     7.4
-------------------------------------------------------------------------------
 Profit before taxes, EUR
 million                           -2.0    37.8     4.4    67.7    69.0   132.2
-------------------------------------------------------------------------------
 Net cash from operating
 activities, EUR million            2.6    55.2     7.3    21.6   -56.3   -42.1
-------------------------------------------------------------------------------
 Net interest-bearing debt at
 the end of period, EUR million   -29.6  -192.4   -29.6  -192.4   -29.6   -87.1
-------------------------------------------------------------------------------
 Gearing at the end of period,
 %                                 -6.6   -42.5    -6.6   -42.5    -6.6   -18.2
-------------------------------------------------------------------------------
 Working capital at the end of
 period, EUR million              -22.4  -143.8   -22.4  -143.8   -22.4   -14.0
-------------------------------------------------------------------------------
 Return on investment, %, LTM      13.9    40.0    13.9    40.0    13.9    25.7
-------------------------------------------------------------------------------
 Return on equity, %, LTM          10.5    29.8    10.5    29.8    10.5    19.4
-------------------------------------------------------------------------------
 Order backlog at the end of
 period, EUR million            1,259.7 1,761.3 1,259.7 1,761.3 1,259.7 1,371.7
-------------------------------------------------------------------------------
 Order intake, EUR million        379.5   365.6   589.8   856.7 1,245.5 1,512.4
-------------------------------------------------------------------------------
 Personnel, average for the
 period                           4,864   4,979   4,847   4,902   4,900   4,927
-------------------------------------------------------------------------------
 Earnings per share, EUR          -0.01    0.15    0.02    0.27    0.26    0.51
-------------------------------------------------------------------------------


President and CEO Pertti Korhonen:"Investment sentiment in the mining and metals industry improved in the second
quarter and this is also visible in our order intake which was up 80% from the
first quarter. Despite the challenging market, there were no cancellations and
the margins of the new orders were on a solid level. Our sales decreased from
the comparison period due to the low opening order backlog for 2014, delayed
order intake in the beginning of the year, and slowness in project
implementation in Russia because of increased geopolitical uncertainty.

The demand for services continued solid due to the reasonably good production
levels in the industry. I am pleased that, despite the fact that our customers
currently focus on reducing their operational costs, we were able to continue to
grow our service order intake by offering new service concepts, increasing the
penetration to our installed base and expanding geographical and technology
coverage of our services.

Our profitability in the second quarter was disappointing due to the negative
result of Metals, Energy & Water business caused by cost overruns in five large
Capex projects. These projects have been won between 2009 and 2012, and the
majority of which are expected to be completed by the end of 2014.

I am very pleased with the good profitability of the Minerals Processing
business. I am also satisfied with our service margins which have continued to
be on a healthy level despite the market pressures.

Our EUR 50 million efficiency improvement program announced in October 2013 has
progressed well and this far achieved EUR 40 million annualized savings. In
addition to the efficiency program, our continuous operational improvement
activities reduced our January-June 2014 operational fixed costs by EUR 44
million compared to previous year.

Despite some positive signs from the recovering mining and metals investment
market, we want to be prepared for possible continued Capex market slowness and
possible effects of geopolitical uncertainties in Russia and other markets.
Therefore to complement the EUR 50 million efficiency improvement program, we
have initiated further actions, such as right-sizing of our resources in the
areas were we have excess capacity or inefficiencies, and improving cost-
competitiveness of our products and supply chain. In addition, we continue to
drive the growth of services business to improve profitability and decrease
volatility.

Outotec's sales funnel is solid and there is a wide range of projects under
development and negotiations. However, visibility to timing of new orders
remains challenging. Our large installed base and customers' need to optimize
operations continue to provide good opportunities for growing our value-adding
life-cycle services business."

CHANGE IN REPORTING OF SERVICE CONTRACTS FROM JANUARY 1, 2014

In order to improve the transparency of Outotec's service business, the long-
term service contracts, which have a production-based volume-dependent variable
portion, are recognized in the order intake with the estimated sales value of
the next 12 months. The fixed value contracts are recognized as full value when
the order becomes effective. According to old principles, the current calendar
year's portion of the long-term service contract was booked once per year into
the order intake. The change in the service reporting principles increased
January-June 2014 order intake by approximately EUR 35 million (Q2 2014:
approximately EUR 25 million).

This text is a summary of Outotec's January-June 2014 Interim Report. The full
report is available as an attachment to this report.

FURTHER INFORMATION

Outotec Oyj

Pertti Korhonen, President and CEO
tel. +358 20 529 211

Mikko Puolakka, CFO
tel. +358 20 529 2002

Rita Uotila, Vice President - Investor Relations
tel. +358 20 529 2003, mobile +358 400 954 141

Format for e-mail addresses: firstname.lastname@outotec.com

BRIEFING

Date: Thursday, July 31, 2014

Time: 2.00 pm (Finnish time)

Venue: Bank, Unioninkatu 20, Helsinki

Joining via webcast

You may follow the briefing via a live webcast at www.outotec.com. The webcast
will be recorded and published on Outotec's website for on-demand viewing.

Joining via teleconference

You may also join the briefing by telephone. To register as a participant in the
teleconference and Q&A session, please dial 5 to 10 minutes before the start of
the event:

FI: +358 9 8171 0465
SE: +46 8 5199 9355
UK: +44 20 3194 0550
US: +1 855 2692 605 (toll free)

Contact information is gathered for registration purposes only and is not used
for commercial purposes.

FINANCIAL REPORTING SCHEDULE IN 2014

  * Interim Report for January-September: October 30, 2014
  * Capital Markets Day, Outotec headquarters Espoo, Finland: December 4, 2014

DISTRIBUTION

NASDAQ OMX Helsinki Ltd
Main media
www.outotec.com

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 metals and mining industry. We also provide
innovative solutions for industrial water treatment, the utilization of
alternative energy sources and the chemical industry. With a global network of
sales and service centers, research facilities and over 4,800 experts, Outotec
generated annual sales of approximately EUR 1.9 billion in 2013. Outotec shares
are listed on NASDAQ OMX Helsinki.




[HUG#1844492]

Attachments:

Outotec s Interim Report January-June 2014.pdf