2011-10-27 08:00:00 CEST
2011-10-27 08:01:22 CEST
REGULATED INFORMATION
Outotec Oyj - Interim report (Q1 and Q3)
Outotec Oyj : Interim report January-September 2011
OUTOTEC OYJ INTERIM REPORT OCTOBER 27, 2011 AT 9.00 AM
INTERIM REPORT JANUARY-SEPTEMBER 2011
Record-high order intake, very strong sales growth and profitability development
Reporting period January-September 2011 in brief (2010):
* Order intake: EUR 1,678.4 million (EUR 1,038.2 million), +62%
* Order backlog: EUR 2,052.5 million (EUR 1,332.2 million), +54%
* Sales: EUR 888.8 million (EUR 639.4 million), +39%
* Operating profit from business operations (excluding one-time items and
purchase price allocation (PPA) amortizations): EUR 66.6 million (EUR 41.2
million), +62%
* Net cash flow from operating activities: EUR 225.8 million (EUR 92.3
million), +145%
* Earnings per share: EUR 0.93 (EUR 0.18), +408%
July-September 2011 in brief (2010):
* Order intake: EUR 802.7 million (EUR 269.1 million), +198%
* Sales: EUR 352.8 million (EUR 228.5 million), +54%
* Operating profit from business operations (excluding one-time items and
purchase price allocation (PPA) amortizations): EUR 34.3 million (EUR 26.4
million), +30%
* Net cash flow from operating activities: EUR 120.1 million (EUR 50.3
million), +139%
Financial guidance for 2011 reiterated
Based on strong order intake in 2011 and good progress in project execution, the
management expects that:
* order intake is expected to continue to grow,
* sales are expected to grow to approximately EUR 1.35-1.45 billion (raised on
September 19, 2011,
previously EUR 1.25-1.35 billion), and
* operating profit is expected to improve from 2010 and operating profit
margin from business operations is expected to be approximately 8 - 9%.
Operating profit is dependent on exchange rates, product mix, timing of new
orders and project completions.
President and CEO Pertti Korhonen:"The demand for Outotec's technology solutions and services continued strong
also in the third quarter. Particularly the non-ferrous, aluminum and steel
industries were investing in new production capacity. Record-high order intake
in the third quarter led to an all-time-high over 2 billion euro order backlog
at the end of September. Due to the high order backlog, successful execution and
strong services sales, all our business areas are now on solid growth track and
our profitability continued to improve. Services sales were 29% higher than in
the comparison period, demonstrating very strong organic growth. Our cash flow
was very strong due to advance and milestone payments.
I am pleased that our investments in the development of our operational model
and organization as well as our efforts to recruit new professionals have
started to deliver strong growth and improving profitability towards our long-
term targets. Despite the turbulence within the financial markets in Europe and
North America, Outotec's market outlook has remained positive as well over half
of our sales is coming from emerging markets. Our flexible and asset light
business model based on extensive use of partnering and outsourcing and our
strong balance sheet help us to adapt to possible changes in market conditions.
We have successfully integrated the seven acquisitions we have made during the
last three years and they are positively contributing to our growth and
profitability development. Our strong balance sheet enables us to continue
pursuing further acquisitions which are an important aspect of our strategy.
I am grateful for the trust our customers have in us by giving us a great deal
of new business and I would like to extend my special thanks to all of our
Outotec's personnel around the world for their very strong performance."
Summary of key figures Q3 Q3 Q1-Q3 Q1-Q3 Last 12 Q1-Q4
2011 2010 2011 2010 months 2010
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Sales, EUR million 352.8 228.5 888.8 639.4 1,219.1 969.6
Gross margin, % 24.9 27.3 24.0 25.8 24.8 26.2
Operating profit from business
operations, EUR million 34.3 26.4 66.6 41.2 100.1 74.7
Operating profit from business
operations, % 9.7 11.5 7.5 6.4 8.2 7.7
Operating profit, EUR million 33.2 18.1 63.0 13.5 91.1 41.6
Operating profit margin, % 9.4 7.9 7.1 2.1 7.5 4.3
Profit before taxes, EUR million 33.3 16.7 62.5 12.1 87.5 37.1
Net cash from operating
activities, EUR million 120.1 50.3 225.8 92.3 221.0 87.5
Net interest-bearing debt at the
end of period, EUR million -356.7 -206.0 -356.7 -206.0 -356.7 -200.9
Gearing at the end of period, % -101.6 -62.8 -101.6 -62.8 -101.6 -56.2
Working capital at the end of
period, EUR million -269.6 -141.3 -269.6 -141.3 -269.6 -113.5
Return on investment, % 34.6 18.5 21.8 3.9 24.2 9.2
Return on equity, % 25.5 14.2 15.9 3.3 17.9 7.6
Order backlog at the end of
period, EUR million 2,052.5 1,332.2 2,052.5 1,332.2 2,052.5 1,393.1
Order intake, EUR million 802.7 269.1 1,678.4 1,038.2 2,034.9 1,394.7
Personnel, average for the
period 3,610 3,143 3,420 3,160 3,346 3,151
Earnings per share, EUR 0.48 0.25 0.93 0.18 1.34 0.59
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INTERIM REPORT JANUARY-SEPTEMBER 2011
OPERATING ENVIRONMENT
The overall market activity remained strong during the reporting period. The
mining and metals industry's investments were supported by the positive long-
term outlook for metals demand and good metals prices. Production capacity
utilization rates continued to be healthy increasing the demand for spare parts
and services. Markets in South America, Australia and India continued to be
rather robust, but - especially in the third quarter - activity also picked up
in the CIS, the Middle East and China. In terms of metals, the strongest demand
was seen in copper, gold, and iron technologies. In addition, orders for
alumina, aluminum and ferrochrome technology were received. The market for
sulfuric acid and gas cleaning technologies also remained good, due to
investment activity in copper projects and high production levels of metals in
general. In some Outotec technology areas, the workload of key experts was quite
high due to intensive sales activity and delivery execution. In addition, there
were some signs of lengthening delivery times in certain areas of the
subcontractor network which, however, remained well below the levels of the last
up-cycle. In addition to minerals and metals processing solutions, the demand
for alternative energy, industrial water treatment and environmental solutions
also rose.
The financial market in the emerging economies has remained operational despite
turbulence in Europe and North America and the financial institutions have been
willing to provide funding for projects in emerging markets. Mining companies'
strong cash flows and balance sheets have been supporting their financing of new
investments.
Tightening environmental regulations are reflected in prolonged approval times
of environmental permits for Outotec's customers' investment projects. The
stricter requirements in all market areas are having a positive impact on the
demand for Outotec's sustainable solutions since much of the legislation places
limits on the use of inefficient plants and processes. Outotec's advanced
technology solutions allow customers to minimize their life cycle costs for
processes as well as their environmental impacts, while maximizing the recovery
of valuable materials.
ORDER INTAKE
In the reporting period, order intake, including plant deliveries, technology
and equipment deliveries as well as services, increased by 62% and totaled EUR
1,678.4 million (Q1-Q3/2010: EUR 1,038.2 million). Orders from EMEA (Europe
including CIS, Middle East and Africa) represented 52%, Americas 34% and Asia
Pacific 14% of the total order intake. The orders received in the third quarter
of 2011 totaled EUR 802.7 million (Q3/2010: EUR 269.1 million).
Major new orders in the third quarter:
* concentrator technology for the Petropavlovsk Group gold mine, Russia (EUR
25 million);
* alumina calcination technology for Ma'aden Bauxite Aluminium Company, Saudi
Arabia (EUR 62 million, of which roughly EUR 50 million booked in Q3 order
intake);
* copper concentrator technology for ZAO Miheevsky, Russia (EUR 60 million);
* gas cleaning and sulfuric acid technology for Almalyk Mining & Metallurgical
Company, Uzbekistan (EUR 30 million);
* aluminum smelter technology for Emirates Aluminium, Abu Dhabi (EUR 100
million);
* copper concentrator technology for Codelco, Chile (EUR 24 million, half of
which was booked in Q2 and the rest in Q3 order intake);
* magnetic separation solution for London Mining Plc's iron ore project,
Sierra Leone (over EUR 10 million);
* iron ore pelletizing plant for NLMK Novolipetsk Metallurgisk Kombinat,
Russia (EUR 150 million); and
* ferrochrome plant for Mintal Group, China (value not disclosed).
Major new orders in the second quarter:
* gold recovery technology for Petropavlovsk Group's JSC Pokrovskiy Mine,
Russia (value not disclosed);
* copper flash smelting technology for National Iranian Copper Industries
Company, Iran (EUR 61 million); and
* iron ore pelletizing plant for Samarco Mineração, Brazil (EUR 200 million).
Major new orders in the first quarter:
* copper flash smelting furnace and related services for RTB Bor, Serbia (EUR
60 million);
* oil shale preparation plant for Eesti Energia, Estonia (EUR 20 million);
* effluent treatment plant for Codelco, Chile (EUR 18 million); and
* key process technologies and services for a copper/gold concentrator for
Sandfire Resources, Australia (EUR 15 million).
ORDER BACKLOG
The order backlog at the end of the reporting period was all-time high and
reached EUR 2,052.5 million, which is 54% higher than at the end of the
comparison period (September 30, 2010: EUR 1,332.2 million).
At the end of the reporting period, Outotec had 35 projects with an order
backlog value in excess of EUR 10 million, accounting for 68% of the total
backlog. Management estimates that roughly 25% (approximately EUR 510 million)
of the September-end backlog value will be delivered in 2011 and the rest in
2012 and beyond. At the end of the reporting period, the suspended projects in
the order backlog have been reduced to EUR 20 million (September 30, 2010: EUR
60 million). Roughly 4% of the projects in Outotec's current backlog are from
mining companies who are developing their first processing plants.
SALES AND FINANCIAL RESULT
Sales in the reporting period totaled EUR 888.8 million (Q1-Q3/2010: EUR 639.4
million), a 39% increase from the comparison period. Currencies did not have
material effect on sales growth which resulted from a strong opening backlog for
2011, continued strong order intake in first half of the year and good progress
in project, equipment and service deliveries especially in the Non-ferrous
Solutions and Ferrous Solutions business areas. Sales for the third quarter
totaled EUR 352.8 million (Q3/2010: EUR 228.5 million).
Services business area sales, which is included in the sales figures of the
three reporting segments, totaled EUR 234.4 million in the reporting period (Q1-
Q3/2010: EUR 182.0 million), up 29% from the comparison period and accounting
for 26% of Outotec's sales (Q1-Q3/2010: 28%). Services sales in the third
quarter totaled EUR 87.7 million (Q3/2010: EUR 69.5 million).
Operating profit from business operations for the reporting period was EUR 66.6
million (Q1-Q3/2010: EUR 41.2 million), representing 7.5% of sales (Q1-Q3/2010:
6.4%). The increase from the comparison period resulted from higher sales,
license fee income, good project execution and related provision releases. In
addition, unrealized and realized exchange gains related to currency forward
contracts increased profitability by EUR 2.3 million (Q1-Q3/2010: unrealized and
realized exchange gain of EUR 3.3 million). PPA amortizations for the reporting
period were EUR 3.6 million (Q1-Q3/2010: EUR 7.6 million). Operating profit for
the reporting period was EUR 63.0 million (Q1-Q3/2010: EUR 13.5 million).
Operating profit from business operations in the third quarter of 2011 was EUR
34.3 million (Q3/2010: EUR 26.4 million), representing 9.7% of sales (Q3/2010:
11.5%). Operating profit in the third quarter of 2011 was EUR 33.2 million
(Q3/2010: EUR 18.1 million. Timing of project completions and related provision
releases, higher fixed costs related to long-term growth targets and impact from
unrealized and realized exchange losses related to currency forward contracts
were the main reasons for lower operating profit margin than in the third
quarter of 2010.
Fixed costs for the reporting period were EUR 153.1 million (Q1-Q3/2010: EUR
134.0 million). The increase was primarily due to investments in developing and
deploying Outotec's global operational model, personnel increases supporting
especially the development of Services business and growth of overall supply
capability, fixed costs of acquired companies, business development projects,
bonuses and costs related to the share-based incentive program. Profit before
taxes for the reporting period was EUR 62.5 million (Q1-Q3/2010: EUR 12.1
million). It included net finance expense of EUR -0.5 million (Q1-Q3/2010: net
finance expense EUR -1.4 million). The net finance expense decreased primarily
due to increased interest income. Net profit for the reporting period was EUR
42.3 million (Q1-Q3/2010: EUR 8.3 million). Taxes totaled EUR 20.2 million (Q1-
Q3/2010: EUR 3.7 million). Earnings per share were EUR 0.93 (Q1-Q3/2010: EUR
0.18). Earnings per share in the comparison period of 2010 were impacted by the
one-time costs related to the company's cost savings program.
Outotec's return on equity for the reporting period was 15.9% (Q1-Q3/2010:
3.3%), and return on investment was 21.8% (Q1-Q3/2010: 3.9%). Profitability
improvement and decreased purchase price amortization allocations improved the
reporting period's return on equity and return on investment compared to 2010.
Sales and Operating Profit by Segment Q3 Q3 Q1-Q3 Q1-Q3 Q1-Q4
EUR million 2011 2010 2011 2010 2010
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Sales
Non-ferrous Solutions 235.5 144.6 588.9 399.4 623.3
Ferrous Solutions 60.0 35.5 146.3 88.4 131.5
Energy, Light Metals and Environmental Solutions 61.4 50.3 165.2 157.5 222.8
Unallocated items*) and intra-group sales -4.1 -1.8 -11.5 -5.9 -8.0
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Total 352.8 228.5 888.8 639.4 969.6
Operating profit
Non-ferrous Solutions 24.6 13.5 55.3 2.9 26.1
Ferrous Solutions 6.0 4.2 7.3 3.1 11.3
Energy, Light Metals and Environmental Solutions 11.7 3.5 20.2 15.3 26.8
Unallocated**) and intra-group items -9.1 -3.1 -19.9 -7.9 -22.6
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Total 33.2 18.1 63.0 13.5 41.6
*) Unallocated items primarily include invoicing of group management and
administrative services.
**) Unallocated items primarily include group management and administrative
services.
Non-ferrous Solutions
Sales in the Non-ferrous Solutions business area in the reporting period
increased 48% over the comparison period and totaled EUR 588.9 million (Q1-
Q3/2010: EUR 399.4 million). The increase in sales was due to a robust starting
order backlog, continued strong order intake, growth of service business sales
and good progress in project execution during the reporting period. Operating
profit from business operations was EUR 58.6 million (Q1-Q3/2010: EUR 26.6
million) and operating profit was EUR 55.3 million (Q1-Q3/2010: EUR 2.9
million). The unrealized and realized exchange gains related to currency forward
contracts increased profitability by EUR 1.0 million (Q1-Q3/2010: unrealized and
realized gain of EUR 0.6 million). The increase in operating profit was due to
higher sales and successful deliveries. Sales in the third quarter of 2011 were
EUR 235.5 million (Q3/2010: EUR 144.6 million). Operating profit from business
operations in the third quarter was EUR 25.7 million (Q3/2010: EUR 20.7 million)
and operating profit was EUR 24.6 million (Q3/2010: EUR 13.5 million). The
unrealized and realized exchange losses related to currency forward contracts
decreased profitability by EUR 3.1 million (Q3/2010: unrealized and realized
gain of EUR 4.0 million).
Ferrous Solutions
Sales in the Ferrous Solutions business area during the reporting period totaled
EUR 146.3 million (Q1-Q3/2010: EUR 88.4 million). The 66% increase in sales
compared to 2010 was due to the execution of long-term projects from the backlog
and new orders received during the reporting period. The operating profit from
business operations was EUR 7.3 million (Q1-Q3/2010: EUR 4.4 million) and
operating profit was EUR 7.3 million (Q1-Q3/2010: EUR 3.1 million). The
operating profit improved due to successful project completions during the
reporting period. Third quarter 2011 sales were EUR 60.0 million (Q3/2010: EUR
35.5 million). Operating profit from business operations and operating profit in
the third quarter was EUR 6.0 million (Q3/2010: EUR 4.2 million).
Energy, Light Metals and Environmental Solutions
Sales in the Energy, Light Metals and Environmental Solutions business area in
the reporting period totaled EUR 165.2 million (Q1-Q3/2010: EUR 157.5 million).
Operating profit from business operations for the reporting period was EUR 20.6
million (Q1-Q3/2010: EUR 17.4 million) and operating profit was EUR 20.2 million
(Q1-Q3/2010: EUR 15.3 million). The reporting period's operating profit was
positively impacted by increased sales and project completions. The unrealized
and realized exchange gains related to currency forward contracts improved
profitability by EUR 1.4 million (Q1-Q3/2010: unrealized and realized gain of
EUR 1.7 million). Third quarter 2011 sales were EUR 61.4 million (Q3/2010: EUR
50.3 million). Operating profit from business operations in the third quarter
was EUR 11.7 million (Q3/2010: EUR 4.4 million) and operating profit was EUR
11.7 million (Q3/2010: EUR 3.5 million). The unrealized and realized exchange
gains related to currency forward contracts increased profitability by EUR 0.7
million (Q3/2010: unrealized and realized gain of EUR 0.2 million).
BALANCE SHEET, FINANCING AND CASH FLOW
The consolidated balance sheet total was EUR 1,295.2 million at the end of the
reporting period (September 30, 2010: EUR 972.5 million).The equity to
shareholders of the parent company was EUR 350.2 million (September 30, 2010:
EUR 326.9 million), representing EUR 7.71 (September 30, 2010: EUR 7.22) per
share.
The net cash flow from operating activities in the reporting period was strong
at EUR 225.8 million (Q1-Q3/2010: EUR 92.3 million). The net cash flow from
operating activities increased due to advance and milestone payments. Gearing
further improved over the comparison period and was -101.6% (September
30, 2010: -62.8%).
Outotec's working capital amounted to EUR -269.6 million at the end of the
reporting period (September 30, 2010: EUR
-141.3 million). Working capital developed positively due to advance payments
related to projects under execution and new orders received.
At the end of the reporting period, Outotec's cash and cash equivalents totaled
EUR 423.9 million (September 30, 2010: EUR 264.8 million). The cash and cash
equivalents was affected by the dividend payment of EUR 34.3 million (EUR 0.75
per share) in April 2011 (April 2010: EUR 32.0 million). The company invests its
excess cash in short-term money market instruments such as bank deposits and
corporate commercial certificates of deposit.
Outotec's financing structure strengthened further and liquidity was good. Net
interest-bearing debt at the end of the reporting period was EUR -356.7 million
(September 30, 2010: EUR -206.0 million). The advance and milestone payments
received at the end of the reporting period totaled EUR 401.0 million (September
30, 2010: EUR 189.4 million), representing an increase of 112% from the
comparison period. Outotec's equity-to-assets ratio was 39.3% (September
30, 2010: 41.9%). The company's capital expenditure in the reporting period was
EUR 23.4 million (Q1-Q3/2010: EUR 86.9 million) including investments primarily
in developing and deploying Outotec's global operational model, machinery and
intellectual property rights.
At the end of the reporting period, guarantees for commercial commitments,
including advance payment guarantees issued by the parent and other Group
companies were EUR 450.7 million (September 30, 2010: EUR 326.0 million).
RESEARCH AND TECHNOLOGY DEVELOPMENT
In the reporting period, Outotec's research and technology development expenses
totaled EUR 22.7 million (Q1-Q3/2010: EUR 20.6 million), representing 2.6% of
sales (Q1-Q3/2010: 3.2%). Outotec filed 28 new priority applications (Q1-
Q3/2010: 40), and 223 new national patents were granted (Q1-Q3/2010: 170).
In August, Outotec announced that it had agreed to collaborate with the Ministry
of Minerals Resources and Energy of Mongolia (MME) to support MME in its
development of mining and metallurgical processes for Mongolian mineral
resources using the most sustainable approaches possible.
In the reporting period Outotec also acquired new technologies to supplement its
portfolio; the vertical pressure filter (VPF) technology used in alumina
refining and its intellectual property rights from Australian Process Technology
Pty Ltd (April 2011) and technologies, trade marks and patents for extracting
phosphorus fertilizer from ash from ASH DEC Umwelt AG (February 2011).
SUSTAINABILITY
In June, Outotec published its first sustainability report, describing the
company's approach to sustainability and disclosing its performance in 2010 as
well as providing future targets. The report conforms to Application Level B+ of
the Global Reporting Initiative, as confirmed by the GRI and is third-party
assured by Ecobio Ltd.
PERSONNEL
At the end of the reporting period, Outotec had a total of 3,667 employees
(September 30, 2010: 3,126). Outotec had on average 3,420 employees (Q1-Q3/2010:
3,160). The average number of personnel increased by 260 over the comparison
period, which supports overall business growth objectives. Temporary personnel
accounted for approximately 9% (2010: 7%) of the total number of employees.
Distribution of Personnel by Region Sep 30, Sep 30, change Dec 31,
2011 2010 % 2010
------------------------------------------------------------------
EMEA (including CIS) 2,237 1,971 13.5 1,945
Americas 881 732 20.4 759
Asia Pacific 549 423 29.9 426
------------------------------------------------------------------
Total 3,667 3,126 17.3 3,130
At the end of the reporting period, the company had, in addition to its own
personnel, approximately 480 (September 30, 2010: 290) full-time equivalent,
contracted professionals working in project execution. The number of contracted
workers at any given time changes with the active project mix and project
commissioning, local legislation and regulations as well as seasonal
fluctuations.
In the reporting period, salaries and other employee benefits totaled EUR 202.0
million (Q1-Q3/2010: EUR 161.1 million). The increase from the comparison period
was due to personnel increases, wage inflation, bonuses and share-based
incentive programs.
CHANGES IN TOP MANAGEMENT
In August, Outotec announced the appointments of two new members to the
Executive Board: Mr. Robin Lindahl (M.Sc. Econ.) as Executive Vice President -
Market Operations and Mr. Kari Knuutila (Dr. Tech.), Chief Technology Officer of
Outotec. Appointments have been effective since October 1, 2011.
Outotec Executive Board as of October 1, 2011:
Pertti Korhonen, President and CEO
Jari Rosendal, President, Non-ferrous Solutions business area
Pekka Erkkilä, President, Ferrous Solutions business area
Peter Weber, President, Energy, Light Metals and Environmental Solutions
business area
Kalle Härkki, President, Services business area
Robin Lindahl, Executive Vice President - Market Operations
Michael Frei, Senior Vice President - Supply
Kari Knuutila, Chief Technology Officer
Tapio Niskanen, Senior Vice President - Business Infrastructure
Mikko Puolakka, Chief Financial Officer
Ari Jokilaakso, Senior Vice President - Human Capital
Mika Saariaho, Chief Strategy Officer
SHARE-BASED INCENTIVE PROGRAMS AND EXECUTIVE BOARD SHARE OWNERSHIP PLAN
Share-based Incentive Program 2010-2012
Outotec's board of directors decided on April 23, 2010 to adopt a share-based
incentive program for the company's key personnel. The program incorporates
three earning periods: calendar years 2010, 2011 and 2012. The board of
directors determines the amount of the maximum reward for each individual, the
earning criteria and the targets established for them separately on an annual
basis. The maximum value of the rewards for the entire program equals
approximately 1,000,000 shares, including a cash payment which equals income
taxes.
Earning period 2010
The reward paid to 68 individuals was determined by reaching the targets set by
the board of directors for cost savings, order intake and earnings per share.
The total reward for the 2010 earning period was EUR 9.8 million with 138,144
shares allocated and EUR 6.1 million paid in cash to cover income taxes.
Earning period 2011
The board of directors approved (March 1, 2011) 94 individuals for the program's
2011 earning period and set targets for order intake, earning per share and
sales growth. The maximum total reward for 2011 earning period, depending on
achievement of set targets, is 172,257 allocated Outotec shares and cash to
cover income taxes.
Executive Board share ownership plan
In 2010, Outotec's board of directors determined a new share ownership plan
directed to the members of the Outotec executive board. As part of the plan, the
executive board members established Outotec Management Oy company, whose entire
share capital is owned by them. The company's board of directors granted Outotec
Management Oy an interest-bearing loan at the maximum amount of EUR 4,980,000 to
finance the acquisition of the Outotec shares. The executive board members hold
approximately 0.34% of Outotec shares through the company.
Outotec has consolidated Outotec Management Oy into the Group's balance sheet.
At the end of the reporting period, Outotec Management Oy held 191,211 (October
27, 2011: 191,211) Outotec shares which have been accounted as treasury shares
in Outotec's balance sheet.
SHARES AND SHARE CAPITAL
Outotec's shares are listed on the NASDAQ OMX Helsinki (OTE1V). At the end of
the reporting period, Outotec's share capital was EUR 17,186,442.52 consisting
of 45,780,373 shares. Each share entitles its holder to one vote at the
company's general shareholder meetings.
The annual general meeting 2011 authorized Outotec's board of directors to
determine the repurchasing of company's own shares, and to issue new shares. The
maximum number of shares related to both authorizations is 4,578,037.
Authorizations are in force until the next annual general meeting. The board has
not executed its authorizations per October 27, 2011.
TRADING, MARKET CAPITALIZATION AND SHAREHOLDERS
In the reporting period, the volume-weighted average price for a share in the
company was EUR 36.30; the highest quotation for a share was EUR 46.78 and the
lowest EUR 24.54. The trading of Outotec shares in the reporting period exceeded
61 million shares, with a total value of over EUR 2,224 million. At the end of
the reporting period, Outotec's market capitalization was EUR 1,236 million and
the last quotation for a share was EUR 27.00. At the end of the reporting
period, the company did not hold any treasury shares for trading purposes.
Outotec has an agreement with a third-party service provider concerning
administration and hedging of the share-based incentive program for key
personnel. These shares are accounted as treasury shares in Outotec's
consolidated balance sheet. At the end of the reporting period, the amount of
these treasury shares was 194,399. There have been no purchases of Outotec
shares based on this agreement during the reporting period.
Outotec has consolidated Outotec Management Oy (incentive plan for Outotec
executive board members) into the Group's balance sheet. At the end of the
reporting period, Outotec Management Oy held 191,211 (October
27, 2011: 191,211) Outotec shares which have been accounted as treasury shares
in Outotec's balance sheet.
At the end of the reporting period, Outotec had 14,013 shareholders. Shares held
in 17 nominee registers accounted for 59.3% and Finnish households held 11.9% of
all Outotec shares.
EVENTS AFTER THE REPORTING PERIOD
On October 21, the Carbon Disclosure Project announced that for the third
consecutive year Outotec would be featured in CDP's Nordic Carbon Disclosure
Leadership Index.
SHORT-TERM RISKS AND UNCERTAINTIES
Risks related to the global operating environment
Outotec's global business operations are subject to various political, economic
and social conditions. Operations in global markets may present risks related to
economic and political instability. Turbulence in financial and banking markets
and the potential escalation of sovereign debt crisis may have a severe negative
impact on the outlook of the global economy. Conditions may rapidly change and
create delays and changes in order placement and execution as well as in the
availability and conditions of project financing for mining companies.
Risks related to Outotec's business
As part of the overall project delivery, Outotec gives performance guarantees
and is liable for the warranty period defects. In the project risk assessment
during the reporting period, all unfinished projects were evaluated and
provisions for performance guarantees and warranty period guarantees were
updated. There were no material changes in the Group's project risk provisions.
Global economic uncertainty may reduce the demand for Outotec's products and
services. Volatility in sales may affect the operating profit margin since the
adjustments in fixed costs may become effective with a delay. Outotec's gross
margin is also impacted by product mix. Particularly orders which include
license fees may have a major impact on the gross margin. Changes in labor
costs, especially when operating in high inflationary countries, as well as
changes in raw materials and subcontracting prices and the availability of
components can affect Outotec's profitability. Outotec hedges these risks mostly
contractually.
The nature of international project business, different interpretations of
international and local tax rules and regulations may cause additional direct or
indirect taxes for Outotec which would reduce the company's net result.
Acquisitions are an integral part of Outotec's growth strategy. There is a risk
that the estimated synergy benefits will not materialize as planned.
Outotec is involved in a few arbitral and court proceedings. Management expects
that these cases and their outcomes will have no material effect on Outotec's
financial result.
Financial risks
There is a risk that customers and suppliers may experience financial
difficulties and a lack of financing may result in project and payment delays as
well as bankruptcies, which can also result in losses for Outotec. These risks
are reduced by advance and milestone payments as well as letters of credit. In
the reporting period, there were no material credit losses related to payments
by Outotec's counter-parties and at the end of the reporting period all
receivables were reviewed and credit loss provisions were updated.
Outotec's business model is based primarily on customer advance payments and on-
demand guarantees issued by Outotec's relationship banks. Changes in advance
payments received due to e.g. change in business volume have an impact on the
company's liquidity. Exposure to on-demand guarantees has remained high. Cash
held by the company is primarily invested in short-term bank deposits and in
Finnish corporate short-term certificates of deposit. The lower interest rate
levels reduce the interest income generated from these investments.
More than half of Outotec's total cash flow is denominated in euros. The rest is
divided among various currencies, including the Australian dollar, US dollar,
Brazilian real, Canadian dollar, and South African rand. The weight of any given
currency in new projects can fluctuate substantially, but most cash-flow-related
risks are hedged in the short- and long-term. In the short-term, currency
fluctuations may create volatility in the operating profit. The forecasted and
probable cash flows are selectively hedged and are always on the basis of
separate decisions and risk analysis. Natural hedging is used as widely as
possible and the remaining open foreign exchange exposures related to committed
cash flows are fully hedged using forward agreements. The cost of hedging is
taken into account in project pricing.
MARKET OUTLOOK
The market activity is expected to continue being robust based on the long-term
metals demand projections, declining ore grades and tightening environmental
regulations. However, in the short-term, issues related to the somewhat
uncertain outlook of the global economy and availability of customers' financing
may delay or postpone their planning and decision-making process. Quarterly
order intake will continue to fluctuate considerably depending on the progress
and maturity of sales negotiations, permitting and the availability of
customers' financing. Currently, project financing is available especially for
companies with good cash flows and investments in projects in the emerging
countries. However, more complex structures of the financing packages and
stricter permitting requirements, especially in large investments, lengthen
customers' ordering process.
Tightening efficiency and environmental regulations and the declining ore grades
continue to attract investments in plant modernization, optimization, services
and increased automation. In addition, rising energy prices are driving the
industry to improve processes in order to achieve lower unit costs. Global
relocation of production is driving the investments to new capacity.
Non-ferrous Solutions
The strong activity in the non-ferrous technology market is expected to
continue. Not only are gold, copper, silver and platinum group metals projects
being activated and developed, but also zinc and some nickel projects are coming
to the market. Investments in new mines and concentrators are progressing fast
and the investment activity in the downstream metals refining technologies is
continuing. Competition remains tight in new projects; however, there are no
material changes to the competitive landscape. Long-term fundamentals remain
strong as ore grades decline; thus more processing capacity and advanced
technology solutions will be needed in both concentrators and metals refining.
Meanwhile, environmental regulations grow tighter and the cost of energy and
water rise; increasing the need for new and modern technological solutions.
Ferrous Solutions
The demand growth for iron ore and coking coal used in steel production, is
expected to continue. The demand for stainless steel raw materials also shows
strong growth and the activity in ferroalloy projects is increasing for instance
in China where the authorities are creating tighter environmental and energy
efficiency requirements. Outotec received its first ferrochrome project in China
in the third quarter and sees further demand. Brazil, India and South Africa
continue to rapidly develop their infrastructure and to utilize their large
natural resource base. There are several iron ore processing plant expansions
and new investments under development particularly in Brazil and India. In
addition, the depletion of lump ore deposits is driving sinter and pellet plant
investments in India. Outotec's sustainable solutions - both in iron ore as well
as ferroalloys sintering and pelletizing technologies - continue to be in strong
demand because of their energy efficiency, capacity and environmental aspects.
This trend is expected to continue gaining momentum to reduce energy consumption
of existing facilities as well as build environmentally more sustainable
solutions. In the future, unconventional techniques, such as the direct
reduction of iron ore, offer increasingly more opportunities to use lower grade
raw material resources as well as optimized energy production and the reduction
of CO(2) emissions. Deliveries in the Ferrous Solutions business area are mainly
large, turnkey projects and fluctuations in sales and profit recognition based
on the timing and completion level of a particular project are inherent in this
type of business.
Energy, Light Metals and Environmental Solutions
Rising oil prices and the depletion of oil reserves increase the demand for
alternative energy sources, such as oil shale, oil sands and biomass. The
world's recoverable oil shale and oil sand resources are at least ten times
greater than those of conventional oil reserves, with large deposits found in
the US, Canada, Brazil, China, Jordan, Russia and Estonia. Outotec and Eesti
Energia have jointly developed a new technology solution, Enefit, utilizing
Outotec's circulating fluidized bed technology. This technology will be used in
Eesti Energia's oil shale plant currently under construction in Narva, Estonia.
The Enefit technology can be applied anywhere in the world for processing oil
shales as well as oil sands in the future.
The demand for aluminum is also growing. Consequently, aluminum and thus bauxite
and alumina projects are expected to further activate. The Middle East is
leveraging its advantageous energy position by building new smelters and
refining capacity. Outotec with its digestion and calcination technology - an
application based on circulating fluidized bed technology - is providing key
solutions to the alumina refining process. Furthermore, with its carbon plant
solutions, Outotec is a vital partner to the aluminum industry.
The business area's environmental solutions include sulfuric acid plants as well
as applications for gas cleaning and heat recovery systems. The outlook for the
sulfuric acid technology market remains positive due to the strong activity in
copper projects which require sulfuric acid in hydrometallurgical processes.
Additionally sulfuric acid is produced as a by-product in pyro-metallurgical
processes including those which minimize the impact on the environment. The
sulfuric acid market is also driven by an ongoing need from the fertilizer
industry. In addition to sulfuric acid plants, any metallurgical process
requires off-gas cleaning and effluent and water treatment technologies to
reduce its environmental impact.
New opportunities in environmental technologies, such as materials recycling and
waste management, are steadily increasing. Interest in industrial waste water
treatment solutions is also growing. The technologies acquired by Outotec in the
reporting period further strengthen the business area's portfolio.
Services
Outotec's Services business is driven by a life cycle service concept and
capacity utilization rates. In addition to operational spares, life cycle
services include increasing capacity utilization levels, modernizations,
upgrading existing operations as well as new capital investment projects.
Customers' need for spare parts, services and modernizations are expected to
further increase due to re-commissioning of production lines and higher capacity
utilization rates. The scope of services varies from single spare parts to
outsourced service agreements. This industry trend creates new growth
opportunities on many levels and supports the company's goal to be a life cycle
partner for its customers. The businesses acquired in 2010 further strengthen
Outotec's service offering and strengthen its capabilities globally.
FINANCIAL GUIDANCE FOR 2011
Based on strong order intake in 2011 and good progress in project execution, the
management expects that:
* order intake is expected to continue to grow,
* sales are expected to grow to approximately EUR 1.35-1.45 billion (raised on
September 19, 2011,
previously EUR 1.25-1.35 billion), and
* operating profit is expected to improve from 2010 and operating profit
margin from business operations is expected to be approximately 8 - 9%.
Operating profit is dependent on exchange rates, product mix, timing of new
orders and project completions.
FINANCIAL REPORTING SCHEDULE IN 2012
* Financial Statements for FY 2011 and Q4 Interim Report: Thursday, February
9, 2012
* Interim Report for January-March 2012: Thursday, April 26, 2012
* Interim Report for January-June 2012: Friday, July 27, 2012
* Interim Report for January-September 2012: Friday, October 26, 2012
Annual General Meeting 2012 is expected to be held on Friday, March 23, 2012.
INTERIM REPORT JANUARY-SEPTEMBER 2011 BRIEFING
Date: Thursday, October 27, 2011
Time: 14.00 (Finnish time)
Venue: Hotel Scandic Simonkenttä, Simonkatu 9, 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 for
the teleconference and Q&A session, please dial 5 to 10 minutes before the
beginning of the event:
FI/UK: +44 20 7162 0025
US/CANADA: +1 877 491 0064
Password: 891320
In addition, an instant replay service of the conference call will be available
for three days until October 30, 2011 midnight using the following numbers:
FI/UK: +44 20 7031 4064
US: +1 888 365 0240
Access code: 891320
The contact information is gathered for registration purposes only and is not
used for commercial purposes.
Espoo, October 27, 2011
Outotec Oyj
Board of Directors
For further information, please contact:
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 954141
Eila Paatela, Director - Corporate Communications
tel. +358 20 529 2004, mobile +358 400 817198
Format for e-mail addresses: firstname.lastname@outotec.com
INTERIM FINANCIAL STATEMENTS (unaudited)
Consolidated Statement of Comprehensive Q3 Q3 Q1-Q3 Q1-Q3 Q1-Q4
Income
EUR million 2011 2010 2011 2010 2010
--------------------------------------------------------------------------------
Sales 352.8 228.5 888.8 639.4 969.6
Cost of sales -265.1 -166.1 -675.1 -474.4 -715.7
--------------------------------------------------------------------------------
Gross profit 87.8 62.4 213.7 164.9 253.9
Other income -2.4 6.1 2.9 7.6 7.1
Selling and marketing expenses -21.5 -19.5 -63.1 -61.7 -85.0
Administrative expenses -23.2 -15.2 -67.3 -51.7 -75.1
Research and development expenses -7.5 -6.9 -22.7 -20.6 -28.5
Other expenses 0.0 -8.7 -0.4 -24.8 -30.6
Share of results of associated companies -0.0 0.0 -0.1 -0.3 -0.3
--------------------------------------------------------------------------------
Operating profit 33.2 18.1 63.0 13.5 41.6
Finance income and expenses
Interest income and expenses 1.8 0.8 4.1 1.9 1.5
Market price gains and losses -0.7 -1.5 -1.4 -0.9 -1.7
Other finance income and expenses -1.0 -0.7 -3.2 -2.4 -4.4
--------------------------------------------------------------------------------
Net finance income 0.1 -1.4 -0.5 -1.4 -4.5
Profit before income taxes 33.3 16.7 62.5 12.1 37.1
Income tax expenses -11.4 -5.1 -20.2 -3.7 -10.4
--------------------------------------------------------------------------------
Profit for the period 21.9 11.6 42.3 8.3 26.7
--------------------------------------------------------------------------------
Other comprehensive income
Exchange differences on translating foreign -6.1 -2.6 -15.6 15.0 25.5
operations
Cash flow hedges -2.4 1.2 -2.4 0.8 0.9
Income tax relating to cash flow hedges 0.7 -0.3 0.7 -0.2 -0.2
Available for sale financial assets -0.1 0.2 -0.2 0.2 0.3
Income tax relating to available for sale - - - - 0.0
financial assets
--------------------------------------------------------------------------------
Other comprehensive income for the period -7.9 -1.5 -17.5 15.9 26.5
Total comprehensive income for the period 14.0 10.0 24.8 24.2 53.1
--------------------------------------------------------------------------------
Profit for the period attributable to:
Equity holders of the parent company 21.9 11.6 42.3 8.3 26.7
Non-controlling interest - - - - -
Total comprehensive income for the period
attributable to:
Equity holders of the parent company 14.0 10.0 24.8 24.2 53.1
Non-controlling interest - - - - -
Earnings per share for profit attributable to the
equity
holders of the parent company:
Basic earnings per share, EUR 0.48 0.25 0.93 0.18 0.59
Diluted earnings per share, EUR 0.48 0.25 0.93 0.18 0.59
All figures in the tables have been rounded and consequently the sum of
individual figures may deviate from the sum presented. Key figures have been
calculated using exact figures.
Condensed Consolidated Statement of September 30, September 30, December 31,
Financial Position
EUR million 2011 2010 2010
--------------------------------------------------------------------------------
ASSETS
Non-current assets
Intangible assets 224.0 214.9 223.8
Property, plant and equipment 54.9 51.2 52.7
Deferred tax asset 42.9 37.4 37.8
Non-current financial assets
Interest-bearing 2.4 2.2 2.5
Non interest-bearing 1.3 1.2 2.3
--------------------------------------------------------------------------------
Total non-current assets 325.5 306.9 319.0
Current assets
Inventories *) 156.1 115.3 101.0
Current financial assets
Interest-bearing 0.1 0.4 0.5
Non interest-bearing 389.6 285.1 367.2
Cash and cash equivalents 423.9 264.8 280.3
--------------------------------------------------------------------------------
Total current assets 969.7 665.6 748.9
TOTAL ASSETS 1,295.2 972.5 1,068.0
--------------------------------------------------------------------------------
EQUITY AND LIABILITIES
Equity
Equity attributable to the equity 350.2 326.9 356.7
holders of the parent company
Non-controlling interest 1.0 1.1 1.0
--------------------------------------------------------------------------------
Total equity 351.2 328.0 357.7
Non-current liabilities
Interest-bearing 51.6 30.8 56.6
Non interest-bearing 102.9 97.7 98.1
--------------------------------------------------------------------------------
Total non-current liabilities 154.5 128.5 154.7
Current liabilities
Interest-bearing 18.2 30.6 25.7
Non interest-bearing
Advances received **) 401.0 189.4 198.7
Other non interest-bearing 370.4 296.0 331.1
liabilities
--------------------------------------------------------------------------------
Total current liabilities 789.5 516.0 555.5
Total liabilities 944.0 644.5 710.2
TOTAL EQUITY AND LIABILITIES 1,295.2 972.5 1,068.0
--------------------------------------------------------------------------------
*) Of which advances paid for inventories amounted to EUR 38.9 million at
September 30, 2011 (September 30, 2010: EUR 25.4 million, December 31, 2010: EUR
17.9 million).
**) Gross advances received before percentage of completion revenue recognition
amounted to EUR 1,416.4 million at September 30, 2011 (September 30, 2010: EUR
1,102.8 million, December 31, 2010: EUR 1,042.1 million).
Condensed Consolidated Statement of Cash Flows Q1-Q3 Q1-Q3 Q1-Q4
EUR million 2011 2010 2010
---------------------------------------------------------------------------
Cash flows from operating activities
Profit for the period 42.3 8.3 26.7
Adjustments for
Depreciation and amortization 14.0 15.5 19.0
Other adjustments 17.5 19.0 28.1
Decrease in working capital 160.1 70.8 41.0
Interest received 5.6 3.1 5.2
Interest paid -1.2 -1.0 -0.9
Income tax paid -12.5 -23.6 -31.6
---------------------------------------------------------------------------
Net cash from operating activities 225.8 92.3 87.5
Purchases of assets -22.0 -9.8 -16.8
Acquisition of subsidiaries, net of cash - -36.8 -38.8
Acquisition of business operations - -2.2 -2.3
Acquisition of shares in associated companies - - -0.2
Proceeds from disposal of subsidiaries - - 0.8
Proceeds from sale of assets 0.5 4.2 5.2
Change in other investing activities -0.0 - -
---------------------------------------------------------------------------
Net cash used in investing activities -21.5 -44.6 -52.1
Cash flow before financing activities 204.3 47.7 35.3
Repayments of non-current debt -6.9 -13.6 -17.3
Borrowings of non-current debt - - 30.0
Decrease in current debt -6.1 -17.0 -17.7
Increase in current debt 1.4 16.5 11.4
Related party net investment to Outotec Oyj shares - -4.1 -4.1
Dividends paid -34.3 -32.0 -32.0
Change in other financing activities 0.5 0.5 0.4
---------------------------------------------------------------------------
Net cash used in financing activities -45.4 -49.8 -29.4
Net change in cash and cash equivalents 158.9 -2.1 5.9
Cash and cash equivalents at the beginning of the period 280.3 258.5 258.5
Foreign exchange rate effect on cash and cash equivalents -15.3 8.3 15.9
Net change in cash and cash equivalents 158.9 -2.1 5.9
---------------------------------------------------------------------------
Cash and cash equivalents at the end of the period 423.9 264.8 280.3
---------------------------------------------------------------------------
Consolidated Statement of Changes in Equity
A = Share capital
B = Share premium fund
C = Other reserves
D = Fair value reserves
E = Treasury shares
F = Reserve for invested non-restricted equity
G = Cumulative translation differences
H = Retained earnings
I = Non-controlling interest
J = Total equity
Consolidated Statement of Changes in Equity
-------------------------------------------------
Attributable to the equity holders of the
parent company
-------------------------------------------------
EUR million A B C D E F G H I J
--------------------------------------------------------------------------------
Equity at January
1, 2010 16.8 20.2 0.3 1.1 -4.6 63.4 3.5 214.3 27.4 342.4
--------------------------------------------------------------------------------
Dividends paid - - - - - - - -32.0 - -32.0
Share Issue 0.4 - - - - 24.3 - - - 24.7
Management incentive
plan for Outotec
Executive Board *) - - - - -5.2 - - - 1.1 -4.1
Share-based
compensation - - - - - - - 0.5 - 0.5
Total comprehensive
income for the
period - - - 0.8 - - 15.0 8.3 - 24.2
Non-controlling
interest related to
Larox Group
acquisition - - - - - - - - -27.4 -27.4
Other changes - - 0.1 - - - - -0.3 - -0.2
--------------------------------------------------------------------------------
Equity at September
30, 2010 17.2 20.2 0.4 1.9 -9.7 87.7 18.5 190.7 1.1 328.0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Equity at January
1, 2011 17.2 20.2 0.4 2.1 -9.7 87.7 29.0 210.0 1.0 357.7
--------------------------------------------------------------------------------
Dividends paid - - - - - - - -34.3 - -34.3
Management incentive
plan for Outotec
Executive Board *) - - - - - - - - 0.0 0.0
Share-based
compensation - - - - 2.4 - - -0.1 - 2.3
Total comprehensive
income for the
period - - - -1.8 - - -15.6 42.3 - 24.8
Other changes - - 0.0 - - - - 0.6 - 0.6
--------------------------------------------------------------------------------
Equity at September
30, 2011 17.2 20.2 0.4 0.2 -7.3 87.7 13.3 218.4 1.0 351.2
--------------------------------------------------------------------------------
*) Consolidation of Outotec Management Oy (incentive plan for Outotec executive
board members). At the end of the reporting period, Outotec Management Oy held
191,211 Outotec shares which have been accounted as treasury shares in Outotec's
consolidated statement of financial position.
Key figures Q3 Q3 Q1-Q3 Q1-Q3 Last 12 Q1-Q4
2011 2010 2011 2010 months 2010
--------------------------------------------------------------------------------
Sales, EUR million 352.8 228.5 888.8 639.4 1,219.1 969.6
Gross margin, % 24.9 27.3 24.0 25.8 24.8 26.2
Operating profit, EUR million 33.2 18.1 63.0 13.5 91.1 41.6
Operating profit margin, % 9.4 7.9 7.1 2.1 7.5 4.3
Profit before taxes, EUR million 33.3 16.7 62.5 12.1 87.5 37.1
Profit before taxes in relation
to sales, % 9.4 7.3 7.0 1.9 7.2 3.8
Net cash from operating
activities, EUR million 120.1 50.3 225.8 92.3 221.0 87.5
Net interest-bearing debt at the
end of period, EUR million -356.7 -206.0 -356.7 -206.0 -356.7 -200.9
Gearing at the end of period, % -101.6 -62.8 -101.6 -62.8 -101.6 -56.2
Equity-to-assets ratio at the
end of period, % 39.3 41.9 39.3 41.9 39.3 41.2
Working capital at the end of
period, EUR million -269.6 -141.3 -269.6 -141.3 -269.6 -113.5
Capital expenditure, EUR million 8.5 6.2 23.4 86.9 33.2 96.7
Capital expenditure in relation
to sales, % 2.4 2.7 2.6 13.6 2.7 10.0
Return on investment, % 34.6 18.5 21.8 3.9 24.2 9.2
Return on equity, % 25.5 14.2 15.9 3.3 17.9 7.6
Order backlog at the end of
period, EUR million 2,052.5 1,332.2 2,052.5 1,332.2 2,052.5 1,393.1
Order intake, EUR million 802.7 269.1 1,678.4 1,038.2 2,034.9 1,394.7
Personnel, average for the
period 3,610 3,143 3,420 3,160 3,346 3,151
Profit for the period in
relation to sales, % 6.2 5.1 4.8 1.3 5.0 2.8
Research and development
expenses, EUR million 7.5 6.9 22.7 20.6 30.6 28.5
Research and development
expenses in relation to sales, % 2.1 3.0 2.6 3.2 2.5 2.9
Earnings per share, EUR 0.48 0.25 0.93 0.18 1.34 0.59
Equity per share, EUR 7.71 7.22 7.71 7.22 7.71 7.87
Dividend per share, EUR - - - - 0.75 0.75
--------------------------------------------------------------------------------
NOTES TO THE STATEMENT OF COMPREHENSIVE INCOME AND FINANCIAL POSITION
These interim financial statements are prepared in accordance with IAS 34
Interim Financial Reporting. The same accounting policies and methods have been
applied in these interim financial statements as in the recent annual financial
statements and also the following revised standards have been applied which have
been effective from the beginning of 2011. These interim financial statements
are unaudited.
Adoption of new and revised IFRS standards and IFRIC interpretations
Outotec has applied the following revised or new standards and interpretations
since the beginning of 2011, which do not have material impact on the Group's
interim financial statements or financial statements:
* IAS 24 Related Party Disclosures. The changed standard simplifies the
disclosure requirements for government-related entities and clarifies the
definition of a related party.
* IAS 32 Financial Instruments: Presentation: Classification of Rights Issues.
The amendment concerns the accounting of rights issues denominated in a
currency other than the issuer's operating currency. A derivative associated
with the party's equity is an equity instrument if it entitles to receive a
fixed number of shares in the company for a fixed amount of currency or
other financial receivable. Previously, such subscription rights were
classified as derivative liabilities.
* IFRIC 14 - Prepayments of a Minimum Funding Requirement (an interpretation
of IAS 19). The interpretation removes unintended consequences arising from
the treatment of prepayments when there is a minimum funding requirement.
The amendment results in pre-payments of contributions in certain
circumstances recognized as an asset rather than as an expense.
* IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments.
According to the interpretation, a debtor and creditor may renegotiate the
terms of a financial liability with the result that the liability is fully
or partially extinguished by the debtor issuing equity instruments to the
creditor. This way the debt is swapped for equity. Such equity instruments
are "consideration paid," in accordance with IAS 39.41 and the difference
between the financial liability (or part thereof) and the fair valuation
price of the granted equity instruments is recognized through profit and
loss statement.
* Annual Improvements of IFRS standards
Use of estimates
IFRS requires management to make estimates and assumptions which affect the
reported amounts of assets and liabilities as well as the disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of income and expenses during the reporting period.
Accounting estimates are employed in the financial statements to determine
reported amounts, including the realizability of certain assets, the useful
lives of tangible and intangible assets, income taxes, provisions, pension
obligations, impairment of goodwill. These estimates are based on management's
best knowledge of current events and actions; however, it is possible that the
actual results may differ from the estimates used in the financial statements.
Major Non-Recurring Items in Operating Profit Q1-Q3 Q1-Q3 Q1-Q4
EUR million 2011 2010 2010
--------------------------------------------------------------------------------
One-time costs related restructuring - -22.3 -26.5
Net effect from acquisition costs and revaluation of Ausmelt - 2.2 2.2
Ltd. Shares
--------------------------------------------------------------------------------
Income Tax Expenses Q1-Q3 Q1-Q3 Q1-Q4
EUR million 2011 2010 2010
-------------------------------------------
Current taxes -22.3 -18.4 -30.9
Deferred taxes 2.1 14.7 20.5
-------------------------------------------
Total income tax expenses -20.2 -3.7 -10.4
Property, Plant and Equipment September 30, September 30, December 31,
EUR million 2011 2010 2010
--------------------------------------------------------------------------------
Historical cost at the beginning of the 128.9 117.8 117.8
period
Translation differences -2.4 2.7 4.5
Additions 10.9 6.0 10.7
Disposals -1.4 -0.7 -3.6
Acquired subsidiaries - 2.1 1.6
Reclassifications -0.6 0.0 -2.0
--------------------------------------------------------------------------------
Historical cost at the end of the 135.4 127.9 128.9
period
Accumulated depreciation and impairment -76.2 -65.7 -65.7
at the beginning of the period
Translation differences 1.3 -1.6 -2.6
Disposals 1.1 0.3 2.2
Reclassifications -0.1 -0.2 1.9
Impairment during the period - -2.5 -2.4
Depreciation during the period -6.6 -7.0 -9.6
--------------------------------------------------------------------------------
Accumulated depreciation and impairment -80.5 -76.7 -76.2
at the end of the period
Carrying value at the end of the period 54.9 51.2 52.7
--------------------------------------------------------------------------------
Commitments and Contingent Liabilities September 30, September 30, December 31,
EUR million 2011 2010 2010
--------------------------------------------------------------------------------
Pledges and mortgages 0.0 0.8 0.6
Guarantees for commercial commitments 206.8 177.5 184.7
Minimum future lease payments on 71.6 68.3 70.5
operating leases
--------------------------------------------------------------------------------
The pledges and mortgages are used to secure credit facilities in Outotec
(Shanghai) Co. Ltd.
The above value of commercial guarantees does not include advance payment
guarantees issued by the parent or other group companies. The total amount of
guarantees for financing issued by group companies amounted to EUR 28.1 million
at September 30, 2011 (September 30, 2010: EUR 37.0 million, December 31, 2010:
EUR 36.5 million) and for commercial guarantees including advance payment
guarantees EUR 450.7 million at September 30, 2011 (September 30, 2010: EUR
326.0 million, December 31, 2010: EUR 308.1 million).
Derivative Instruments
Currency Forwards September 30, September 30, December 31,
EUR million 2011 2010 2010
---------------------------------------------------------------
Fair values, net -7.9*) 4.8**) -1.3 ***)
Nominal values 483.7 321.4 444.4
---------------------------------------------------------------
*) of which EUR -2.2 million designated as cash flow hedges.
**) of which EUR 0.0 million designated as cash flow hedges.
***) of which EUR 0.0 million designated as cash flow hedges.
Related Party Transactions
Balances with Key Management
----------------------------
Outotec's board of directors granted to Outotec Management Oy an interest-
bearing loan at the maximum amount of EUR 5.0 million to finance the acquisition
of the Outotec shares. The amount of the outstanding loan was EUR 4.1 million at
September 30, 2011. (December 31, 2010: EUR 4.1 million)
Transactions and Balances with Associated Companies Q1-Q3 Q1-Q3 Q1-Q4
EUR million 2011 2010 2010
---------------------------------------------------------------------
Sales 0.0 0.1 0.1
Other income 0.0 - -
Purchases -0.3 -0.2 -0.7
Trade and other receivables 0.5 0.0 0.4
Current liabilities 0.1 - 0.2
Loan receivables 0.2 0.0 0.2
---------------------------------------------------------------------
Segments' Sales and Operating Profit by Quarters
EUR million Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11
--------------------------------------------------------------------------------
Sales
Non-ferrous Solutions 104.6 115.9 113.5 141.3 144.6 223.9 162.0 191.4 235.5
Ferrous Solutions 34.9 49.9 20.0 32.9 35.5 43.2 43.6 42.6 60.0
Energy, Light Metals and
Environmental Solutions 51.3 56.3 54.6 52.6 50.3 65.3 46.1 57.7 61.4
Unallocated items *) and
intra-group sales -2.2 -2.3 -1.0 -3.0 -1.8 -2.2 -4.1 -3.4 -4.1
--------------------------------------------------------------------------------
Total 188.7 219.8 187.0 223.8 228.5 330.3 247.5 288.4 352.8
Operating profit
Non-ferrous Solutions 9.4 7.9 -15.4 4.8 13.5 23.2 18.1 12.6 24.6
Ferrous Solutions 2.6 5.1 -2.5 1.4 4.2 8.2 3.2 -1.9 6.0
Energy, Light Metals and
Environmental Solutions 4.6 6.8 10.0 1.9 3.5 11.4 3.3 5.2 11.7
Unallocated **) and intra-
group items -1.5 -6.5 -2.2 -2.6 -3.1 -14.7 -5.7 -5.0 -9.1
--------------------------------------------------------------------------------
Total 15.1 13.3 -10.1 5.5 18.1 28.1 19.0 10.9 33.2
*) Unallocated items primarily include invoicing of group management and
administrative services.
**) Unallocated items primarily include group management and administrative
services.
Definitions for Key Financial Figures
--------------------------------------------------------------------------------
Net interest-bearing debt = Interest-bearing debt - interest-
bearing assets
Gearing = Net interest-bearing debt × 100
----------------------------------------
Total equity
Equity-to-assets ratio = Total equity × 100
----------------------------------------
Total assets - advances received
Return on investment = Operating profit + finance income × 100
----------------------------------------
Total assets - non interest-bearing
debt (average for the period)
Return on equity = Profit for the period × 100
----------------------------------------
Total equity (average for the period)
Research and development expenses = Research and development expenses in
the statement of comprehensive income
(including expenses covered by grants
received)
Earnings per share = Profit for the period attributable to
the equity holders of the parent
company
----------------------------------------
Average number of shares during the
period, as adjusted for stock split
Dividend per share = Dividend for the financial year
----------------------------------------
Number of shares at the end of the
period, as adjusted for stock split
DISTRIBUTION:
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