2012-07-27 08:00:00 CEST
2012-07-27 08:03:57 CEST
REGULATED INFORMATION
Outotec Oyj - Interim report (Q1 and Q3)
Outotec's Interim Report January-June 2012
OUTOTEC OYJ INTERIM REPORT JULY 27, 2012 AT 9.00 AM
INTERIM REPORT JANUARY-JUNE 2012
Continued very strong profitable growth, slightly upgraded sales guidance for
2012
Reporting period January-June 2012 in brief (2011)
* Order intake: EUR 1,160.8 million (EUR 875.7 million), +33%
* Order backlog: EUR 2,218.4 million (EUR 1,664.1 million), +33%
* Sales: EUR 934.8 million (EUR 536.0 million), +74%
* Operating profit from business operations (excluding one-time items and
purchase price allocation (PPA) amortizations): EUR 75.1 million,
representing 8.0% of sales (EUR 32.3 million, 6.0% of sales), +133%
* Net cash flow from operating activities: EUR 66.9 million (EUR 105.7
million), -37%
* Earnings per share: EUR 1.04 (EUR 0.45), +131%
April-June 2012 in brief (2011)
* Order intake: EUR 735.5 million (EUR 532.1 million), +38%
* Sales: EUR 524.4 million (EUR 288.4 million), +82%
* Operating profit from business operations (excluding one-time items and
purchase price allocation (PPA) amortizations): EUR 44.5 million (EUR 12.1
million), +268%
* Net cash flow from operating activities: EUR 57.0 million (EUR 45.9
million), +24%
Revised financial guidance for 2012
Outotec revises its sales guidance for 2012. Based on the first six months
financial performance, strong order backlog at the end of June, market outlook
and customer tendering activity, the management expects that in 2012:
* sales will grow to approximately EUR 1.8-2.0 billion, especially driven by
the project revenue recognition, and
* operating profit margin from business operations will be approximately
9-10% (excluding one-time items and PPA amortizations).
Achieving the guidance is subject to sales mix and relative share of Services,
fluctuation in foreign exchange rates, project progress in the order backlog,
timing of new orders, license fee income and project completions as well as the
general development of the world economy and financial markets.
Previous financial guidance for 2012
Based on a strong order backlog at the end of 2011, market outlook and customer
tendering activity, management expects that in 2012:
* sales will grow to approximately EUR 1.7-1.9 billion, and
* operating profit margin from business operations will be approximately
9-10% (excluding one-time items and PPA amortizations).
Achieving the guidance is subject to the general development of the world
economy and financial markets, project progress in the order backlog, exchange
rates, product mix, timing of new orders, license fee income and project
completions.
President and CEO Pertti Korhonen:"Market activity continued robust and when coupled with Outotec's successful
strategy implementation and operational execution, the result has been very
strong and profitable growth for us. Our customers are investing in capacity
increases and the latest technology to address the growing demand for metals and
increasing requirements for environmental sustainability and energy efficiency.
The demand for our sustainable technology solutions has been high due to the
competitiveness of our offerings. We grew our order intake substantially thanks
to the Cristal Global ilmenite smelter order. Due to the record-high order
backlog, successful deliveries, project completions and service business, we
achieved over 70% sales growth, which has further contributed to our improved
operating profit. Services continued on a strong growth path, sales increasing
30% from previous year. The cash flow has been strong and our balance sheet
strengthened further with improved working capital and gearing due to our
scalable asset light operating model. All in all, this resulted to a very good
return on investment and return on equity.
In line with our strategy it is our target to increase value for our customers
through life cycle solutions. The acquisition of Demil Manutenção Industrial
Ltda, a Brazilian provider of industrial maintenance services for iron ore
agglomeration plants in May supports this target. Encouraged by our earlier
success, we will continue to pursue acquisitions to enhance our organic growth.
Indeed, the first half of 2012 has been very successful for Outotec. Despite the
macro-economic uncertainties, our business outlook for 2012 remains solid and
our focus is on securing the profitability and growth in 2013 and beyond.
However, the potential escalation of Euro zone crisis and other uncertainties of
the world economy may cause our customers to delay their investment decisions."
Summary of key figures Q2 Q2 Q1-Q2 Q1-Q2 Last 12 Q1-Q4
2012 2011 2012 2011 months 2011
--------------------------------------------------------------------------------
Sales, EUR million 524.4 288.4 934.8 536.0 1,784.4 1,385.6
Gross margin, % 20.4 20.9 20.9 23.5 22.5 24.0
Operating profit from business
operations, EUR million 44.5 12.1 75.1 32.3 164.3 121.5
Operating profit from business
operations, % 8.5 4.2 8.0 6.0 9.2 8.8
Operating profit, EUR million 40.8 10.9 68.4 29.8 150.5 111.9
Operating profit margin, % 7.8 3.8 7.3 5.6 8.4 8.1
Profit before taxes, EUR million 40.1 11.2 67.9 29.2 151.9 113.3
Net cash from operating
activities, EUR million 57.0 45.9 66.9 105.7 208.2 247.0
Net interest-bearing debt at the
end
of period, EUR million -334.7 -250.6 -334.7 -250.6 -334.7 -339.1
Gearing at the end of period, % -80.5 -74.6 -80.5 -74.6 -80.5 -84.9
Working capital at the end of
period, EUR million -271.0 -196.5 -271.0 -196.5 -271.0 -270.3
Return on investment, % 33.4 12.0 29.7 16.6 35.2 26.4
Return on equity, % 28.1 9.4 23.2 11.8 28.3 20.9
Order backlog at the end of
period, EUR million 2,218.4 1,664.1 2,218.4 1,664.1 2,218.4 1,985.1
Order intake, EUR million 735.5 532.1 1,160.8 875.7 2,290.5 2,005.4
Personnel, average for the
period 4,384 3,428 4,202 3,325 3,955 3,516
Earnings per share, EUR 0.62 0.17 1.04 0.45 2.34 1.75
--------------------------------------------------------------------------------
INTERIM REPORT JANUARY-JUNE 2012
OPERATING ENVIRONMENT
For the reporting period, the overall market activity was good in all of
Outotec's market areas. Though some companies have announced revised investment
plans, the mining and metals industry's investments in general were supported by
a positive long-term outlook for metals demand.
Sales and tendering activities continued to be strong. Outotec has succeeded
well in scaling up its delivery capacity. The competitive landscape remained
relatively unchanged, however, varying by country and technology. Industry
consolidation continued.
Despite continued macro-economic turbulence, investment financing continued to
be available for customers with strong cash flows and balance sheets. Ever
tightening environmental regulations were reflected in the growing demand for
Outotec's sustainable technology solutions. In some projects prolonged approval
times of a customer's environmental permits and the complexity of financing
packages slowed down sales negotiations. Furthermore, in certain regions,
political conditions are delaying investments in alternative energy solutions.
ORDER INTAKE
Order intake in the reporting period totaled EUR 1,160.8 million (Q1-Q2/2011:
EUR 875.7 million), up 33% from the comparison period. Orders included plant,
technology and equipment deliveries as well as services. Orders from EMEA
(Europe including the CIS, Middle East and Africa) represented 61%, Americas
24% and Asia Pacific 15% of the total order intake. Orders received in the
second quarter totaled EUR 735.5 million (Q2/2011: EUR 532.1 million). The
second quarter order intake includes Cristal Global's ilmenite smelter order
(EUR 350 million).
Published orders in the second quarter:
* llmenite smelter for Cristal Global, Saudi Arabia (value over EUR 350
million)
* Solvent extraction and electrowinning technology for Grupo México, Mexico
(value approx. EUR 22 million)
* Iron ore sintering technology for BPSL, India (value approx. EUR 20
million)
* Filtration technology for MMX Mineração e Metálicos, Brazil (value some tens
of millions of EUR)
* Filtration technology for lithium processing pilot plant for Corporación
Minera de Bolivia, Bolivia (some millions of EUR)
* Flotation technology for Kennecott Utah Copper concentrator in the U.S.
(booked in Q1 order intake)
* Iron ore pelletizing plant for Gol-E-Gohar Mining & Industrial, Iran (value
approx. EUR 80-85 million with EUR 25 million booked in Q2 order intake)
Published orders in the first quarter:
* Concentrator technology for a slag treatment plant for Codelco, Chile (value
some EUR 10 million)
* Gas cleaning system and a sulfuric acid plant for Kansanshi Mining, Zambia
(value over EUR 80 million)
* Copper concentrator technology for Grupo México, Mexico (value nearly EUR
28 million)
* Feasibility study for a smelter-grade alumina refinery for PT ANTAM
(Persero), Indonesia
ORDER BACKLOG
The order backlog at the end of the reporting period was EUR 2,218.4 million
(June 30, 2011: EUR 1,664.1 million), up 33% from the comparison period. At the
end of the reporting period, Outotec had 44 projects with an order backlog value
in excess of EUR 10 million, accounting for 73% of the total backlog. Based on
the quarter-end project evaluation, management estimates that roughly 42%
(approximately EUR 930 million) of the June-end order backlog value will be
delivered in 2012 and the rest in 2013 and beyond.
SALES AND FINANCIAL RESULT
Outotec's sales in the reporting period totaled EUR 934.8 million (Q1-Q2/2011:
EUR 536.0 million), up 74% from the comparison period. Sales growth resulted
from a strong opening order backlog, received new orders, good execution in
plant, technology and equipment deliveries as well as service sales growth.
Foreign exchange rates did not have material effect on sales growth. Sales in
the second quarter of 2012 totaled EUR 524.4 million (Q2/2011: EUR 288.4
million), up 82% from the comparison period.
Sales in the Services business, which is included in the sales figures of the
three reporting segments totaled EUR 190.2 million in the reporting period (Q1-
Q2/2011: EUR 146.7 million), up 30% from the comparison period and accounting
for 20% of Outotec's sales (Q1-Q2/2011: 27%). Sales in the Services business in
the second quarter of 2012 totaled EUR 100.7 million (Q2/2011: EUR 75.6
million), up 33% from the comparison period and accounting for 19% of Outotec's
sales (Q2/2011: 26%).
Operating profit from business operations in the reporting period was EUR 75.1
million (Q1-Q2/2011: EUR 32.3 million), up 133% from the comparison period and
representing 8.0% of sales (Q1-Q2/2011: 6.0%). The operating profit margin in
the reporting period was improved by sales growth, license fees and successful
project completions. Furthermore, the unrealized and realized exchange losses of
EUR 3.8 million (Q1-Q2/2011: gain of EUR 4.8 million) related to currency
forward contracts decreased the operating profit margin. Operating profit for
the reporting period was EUR 68.4 million (Q1-Q2/2011: EUR 29.8 million),
representing 7.3% of sales (Q1-Q2/2011: 5.6% of sales). The total impact of PPA
amortizations in the reporting period was EUR 6.0 million (Q1-Q2/2011: EUR 2.4
million). The increase in the PPA amortizations primarily resulted from the
Energy Products of Idaho and Kiln Services Australia acquisitions in December
2011. In 2012, the total impact for PPA amortizations from completed
acquisitions is estimated to be approximately EUR 12 million. One-time costs
which were related to acquisition costs were EUR 0.7 million (Q1-Q2/2011: no
one-time costs) in the reporting period. Operating profit from business
operations in the second quarter of 2012 was EUR 44.5 million (Q2/2011: EUR
12.1 million), representing 8.5% of sales (Q2/2011: 4.2%) and operating profit
was EUR 40.8 million (Q2/2011: EUR 10.9 million), representing 7.8% of sales
(Q2/2011: 3.8%).
Fixed costs in the reporting period were EUR 121.8 million (Q1-Q2/2011: EUR
101.0 million). The increase was primarily due to increased personnel in project
implementation and services, expanding Outotec's market reach as well as
continued investments in developing and deploying the company's global
operational model. In addition, fixed costs increased due to R&D investments and
acquisitions. Profit before taxes in the reporting period was EUR 67.9 million
(Q1-Q2/2011: EUR 29.2 million). It included a net finance expenses of EUR 0.5
million (Q1-Q2/2011: net finance expenses EUR 0.6 million). Net profit for the
reporting period was EUR 47.3 million (Q1-Q2/2011: EUR 20.4 million). Taxes
totaled EUR 20.5 million (Q1-Q2/2011: EUR 8.8 million). Earnings per share were
EUR 1.04 (Q1-Q2/2011: EUR 0.45), up 131%.
Outotec's return on equity for the reporting period was 23.2% (Q1-Q2/2011:
11.8%), and the return on investment was 29.7% (Q1-Q2/2011: 16.6%).
Sales and Operating Profit by Segment Q2 Q2 Q1-Q2 Q1-Q2 Q1-Q4
EUR million 2012 2011 2012 2011 2011
--------------------------------------------------------------------------------
Sales
Non-ferrous Solutions 335.9 191.4 596.5 353.4 947.6
Ferrous Solutions 81.8 42.6 151.8 86.3 221.1
Energy, Light Metals and Environmental Solutions 106.8 57.7 192.7 103.8 236.1
Unallocated items*) and intra-group sales 0.0 -3.4 -6.3 -7.5 -19.2
--------------------------------------------------------------------------------
Total 524.4 288.4 934.8 536.0 1,385.6
Operating profit
Non-ferrous Solutions 35.0 12.6 60.4 30.7 107.7
Ferrous Solutions 2.2 -1.9 7.6 1.3 6.7
Energy, Light Metals and Environmental Solutions 7.3 5.2 11.2 8.6 23.8
Unallocated**) and intra-group items -3.6 -5.0 -10.8 -10.7 -26.3
--------------------------------------------------------------------------------
Total 40.8 10.9 68.4 29.8 111.9
*) 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 totaled
EUR 596.5 million (Q1-Q2/2011: EUR 353.4 million), up 69% from the comparison
period. The increase was due to progress in deliveries from order backlog,
continued strong order intake and growth in Services sales. The operating profit
from business operations in the reporting period was EUR 62.2 million, 10.4% of
sales (Q1-Q2/2011: EUR 32.8 million, 9.3% of sales) and operating profit was EUR
60.4 million, 10.1% of sales (Q1-Q2/2011: EUR 30.7 million, 8.7% of sales). The
unrealized and realized exchange losses related to currency forward contracts
decreased profitability by EUR 1.0 million (Q1-Q2/2011: gain of EUR 4.2
million).
In the second quarter of 2012, sales were EUR 335.9 million (Q2/2011: EUR 191.4
million), operating profit from business operations was EUR 36.0 million, 10.7%
of sales (Q2/2011: EUR 13.7 million, 7.2% of sales) and operating profit EUR
35.0 million, 10.4% of sales (Q2/2011: EUR 12.6 million, 6.6% of sales). The
unrealized and realized exchange losses related to currency forward contracts
decreased profitability by EUR 1.8 million (Q2/2011: gain of EUR 0.3 million).
Ferrous Solutions
Sales in the Ferrous Solutions business area for the reporting period totaled
EUR 151.8 million (Q1-Q2/2011: EUR 86.3 million), up 76% from the comparison
period. The increase was due to the execution of long-term projects from the
backlog and growth in Services sales. Operating profit from business operations
in the reporting period was EUR 8.2 million, 5.4% of sales (Q1-Q2/2011: EUR 1.3
million, 1.5% of sales) and operating profit was EUR 7.6 million, 5.0% of sales
(Q1-Q2/2011: EUR 1.3 million, 1.5% of sales). Operating profit improved due to
higher sales which resulted from progress of large projects received in 2011.
The unrealized and realized exchange losses related to currency forward
contracts decreased profitability by EUR 0.4 million (Q1-Q2/2011: loss of EUR
0.1 million).
In the second quarter of 2012, sales were EUR 81.8 million (Q2/2011: EUR 42.6
million). Operating profit from business operations was EUR 2.7 million, 3.3% of
sales (Q2/2011: EUR -1.9 million, -4.5% sales) and operating profit EUR 2.2
million, 2.6% of sales (Q2/2011: EUR -1.9 million, -4.5% of sales). The
unrealized and realized exchange losses related to currency forward contracts
decreased profitability by EUR 0.3 million (Q2/2011: loss of EUR 0.0 million).
Energy, Light Metals and Environmental Solutions
Sales in the Energy, Light Metals and Environmental Solutions business area in
the reporting period totaled EUR 192.7 million (Q1-Q2/2011: EUR 103.8 million),
up 86% from the comparison period. The increase was due to the good progress in
the execution of long-term projects, acquisitions and growth in Services sales.
Operating profit from business operations for the reporting period was EUR 15.4
million, 8.0% of sales (Q1-Q2/2011: EUR 8.9 million, 8.5% of sales) and
operating profit was EUR 11.2 million, 5.8% of sales (Q1-Q2/2011: EUR 8.6
million, 8.3% of sales). Operating profit in the reporting period was improved
by successful project completions. Unrealized and realized exchange losses of
EUR 2.1 million (Q1-Q2/2011: gain of EUR 0.7 million) related to currency
forward contracts weakened the profitability.
In the second quarter of 2012, sales were EUR 106.8 million (Q2/2011: EUR 57.7
million), operating profit from business operations was EUR 9.5 million, 8.9% of
sales (Q2/2011: EUR 5.4 million, 9.3% of sales) and operating profit EUR 7.3
million, 6.9% of sales (Q2/2011: EUR 5.2 million, 9.1% of sales). The unrealized
and realized exchange losses related to currency forward contracts decreased
profitability by EUR 1.5 million (Q2/2011: gain of EUR 0.6 million).
BALANCE SHEET, FINANCING AND CASH FLOW
The consolidated balance sheet total was EUR 1,530.4 million at the end of the
reporting period (June 30, 2011: EUR 1,195.6 million). The equity to
shareholders of the parent company was EUR 414.5 million (June 30, 2011: EUR
335.1 million), representing EUR 9.11 (June 30, 2011: EUR 7.38) per share.
The net cash flow from operating activities in the reporting period was EUR
66.9 million (Q1-Q2/2011: EUR 105.7 million). The reporting period's cash flow
from operating activities was impacted by change in working capital including
received advance payments and increased inventory levels due to business growth.
Gearing for the reporting period was -80.5% (June 30, 2011: -74.6%).
Outotec's working capital amounted to EUR -271.0 million at the end of the
reporting period (June 30, 2011: EUR -196.5 million). The advance and milestone
payments at the end of the reporting period were EUR 465.2 million (June
30, 2011: EUR 289.2 million), representing an increase of 61% from the
comparison period reflecting the strong order intake.
At the end of the reporting period, Outotec's cash and cash equivalents totaled
EUR 393.7 million (June 30, 2011: EUR 313.5 million). Cash and cash equivalents
was affected by the dividend payment of EUR 38.9 million (EUR 0.85 per share) on
April 11, 2012 (April 2011: EUR 34.3 million) and acquisitions. The company
invests excess cash in short-term money market instruments such as bank deposits
and corporate commercial certificates of deposit. In addition, Outotec had EUR
150 million of committed undrawn credit facilities available at the end of the
reporting period.
Outotec's financing structure continued to strengthen and liquidity was good.
Net interest-bearing debt at the end of the reporting period was EUR -334.7
million (June 30, 2011: EUR -250.6 million). Outotec's equity-to-assets ratio
was 39.0% (June 30, 2011: 37.1%). The company's capital expenditure in the
reporting period was EUR 34.0 million (Q1-Q2/2011: EUR 14.8 million) including
acquisitions as well as investments in IT systems, R&D related equipment 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 513.9 million (June 30, 2011: EUR 377.6 million).
CORPORATE STRUCTURE
On June 1, 2012 Outotec completed the acquisition of Demil Manutenção Industrial
Ltda. The Brazilian company provides industrial maintenance services for iron
ore agglomeration plants and is located in Guarapari, Espírito Santo.
On March 12, Outotec acquired all of the shares in Numcore Ltd, which is a
technology company that develop and market innovative online process control
solutions based on 3D imaging.
In 2012, the total impact for PPA amortizations from completed acquisitions is
estimated to be approximately EUR 12 million.
RESEARCH AND TECHNOLOGY DEVELOPMENT
In the reporting period, Outotec's research and technology development expenses
totaled EUR 18.8 million (Q1-Q2/2011: EUR 15.2 million), increasing 23% from the
comparison period and representing 2.0% of sales (Q1-Q2/2011: 2.8%). Outotec
filed 30 new priority applications (Q1-Q2/2011: 18), and 109 new national
patents were granted (Q1-Q2/2011: 131). At the end of the reporting period,
Outotec had 601 patent families, including a total of 5,520 national patents or
patent applications.
In April Outotec launched the world's largest flotation cell, the Outotec
TankCell® e500. It has been designed for plants with high material throughputs
such as large copper and gold concentrators. Outotec offers the broadest size
range of flotation cells on the market (from 5 m³ to 500 m³) which allows for a
flexible layout with symmetrical design. Benefits include lower equipment costs
and energy consumption, less installation work as well as a smaller plant
footprint. Fewer units per installation result in fewer components, spare parts
and maintenance.
In April Outotec received exclusive rights from Swiss Tower Mills Minerals Ltd
to distribute and sell its Tower Mills (STM) grinding technology. High-intensity
grinding mills marketed as Outotec® HIGmill bring a new option to the market,
enabling Outotec to compete for the position of market leader in fine and ultra-
fine grinding.
Based on the cooperation agreement with the Ministry of Minerals Resources and
Energy of Mongolia Outotec was organizing in Finland together with Aalto
University a training course in Minerals Engineering and Metallurgy for
Mongolian Bachelor of Science Graduates. The training was held from April to
June and totally 10 B.Sc. students were participating in the course.
Outotec is providing a continuously processing Minipilot Plant for ore
beneficiation to the Oulu Mining School at the University of Oulu. The minipilot
has a scale of 1:5000 and it is based on the Pyhäsalmi Mine's beneficiation
process. The pilot equipment is based on Outotec's technologies and it gives
almost an authentic education and research environment for the minerals
processing students of Oulu Mining School.
In March Outotec launched the Outotec® Larox PF 180, the world's largest
pressure filter. The PF 180 series are 50% larger than the previous model.
SUSTAINABILITY
On April 3, 2012, Outotec published its sustainability report for 2011, which is
based on the Global Reporting Initiative (GRI) guidelines. The report conforms
to Application Level B+ and is third-party assured by Ecobio Ltd.
PERSONNEL
At the end of the reporting period, Outotec had a total of 4,525 employees (June
30, 2011: 3,496). New employees were primarily recruited for project
implementation and for the service business. In addition, acquisitions increased
personnel from the comparison period by 305. Outotec had on average 4,202
employees (Q1-Q2/2011: 3,325). The average number of personnel grew by 877
compared to the comparison period, which supports overall business growth
objectives. Temporary personnel accounted for approximately 10% (Q1-Q2/2011:
10%) of the total number of employees.
Distribution of Personnel by Region June 30, June 30, change Dec 31,
2012 2011 % 2011
--------------------------------------------------------------------
EMEA (including CIS) 2,561 2,164 18.3 2,327
Americas 1,351 837 61.4 972
Asia Pacific 613 495 23.8 584
--------------------------------------------------------------------
Total 4,525 3,496 29.4 3,883
At the end of the reporting period, the company had, in addition to its own
personnel, approximately 660 (June 30, 2011: 430) 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 164.3
million (Q1-Q2/2011: EUR 133.2 million). The increase from the comparison period
was due to personnel additions, wage inflation and wage increases.
SHARE-BASED INCENTIVE PROGRAM
Outotec's board of directors decided on April 23, 2010 to adopt a share-based
incentive program 2010-2012 for the company's key personnel.
Earning period 2010
Total of 138,144 Outotec shares were allocated for the 2010 earning period with
a cost of approximately EUR 9.6 million which is booked for the financial
periods 2010-2012.
Earning period 2011
Total of 130,063 Outotec shares were allocated for the 2011 earning period with
a cost of approximately EUR 9.6 million which is booked for the financial
periods 2011-2013.
Earning period 2012
The board of directors approved (March 28, 2012) 148 individuals for the
program's 2012 earning period and set targets for order intake, earnings per
share and sales growth. The maximum total reward for 2012 earning period,
depending on achievement of set targets, is 194,875 allocated Outotec shares and
cash to cover income taxes.
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.
Board authorizations
The annual general meeting 2012 authorized Outotec's board of directors to
determine the repurchasing of the company's own shares, and to issue new shares.
The maximum number of shares related to both authorizations is 4,578,037. The
authorizations shall be in force until the next annual general meeting.
The annual general meeting further gave the board of directors the authority to
donate an aggregate amount of 100,000 euro to non-profit purposes or to
universities. Authorization shall be in force until December 31, 2012.
The board has not yet executed these authorizations as of July 27, 2012.
TRADING, MARKET CAPITALIZATION AND SHAREHOLDERS
In the reporting period, the volume-weighted average price for a share in the
company was EUR 38.01; the highest quotation for a share was EUR 46.67 and the
lowest EUR 30.31. The trading of Outotec shares in the reporting period exceeded
48 million shares, with a total value of over EUR 1,828 million. At the end of
the reporting period, Outotec's market capitalization was EUR 1,644 million and
the last quotation for a share was EUR 35.91. 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 the
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 64 327 (March 31, 2012: 194,390). 130 063 shares were
allocated as part of the long-term incentive plans in the reporting period.
Outotec has consolidated Outotec Management Oy into the Group's balance sheet.
At the end of the reporting period, Outotec Management Oy held 203,434 or 0.44%
(July 27, 2012: 203,434) Outotec shares which have been accounted as treasury
shares in Outotec's balance sheet.
At the end of the reporting period, Outotec had 14,308 shareholders. Shares held
in 17 nominee registers accounted for 50.7% and Finnish households held 10.5% of
all Outotec shares.
Changes in share holdings
On April 18, 2012 holdings of BlackRock, Inc. - voting right held by BlackRock
Investment Management (UK) Limited - in shares of Outotec Oyj exceeded 5% and
were 2,311,857 shares representing 5.05% of the shares and votes.
On March 6, 2012 holdings of Solidium Oy in shares of Outotec Oyj exceeded 5%
and were 2,314,000 shares representing 5.05% of the shares and votes.
On March 1, 2012 group holdings of Goldman Sachs Group, Inc. in shares of
Outotec Oyj exceeded 5% and were 2,458,638 shares representing 5.37% of the
shares and votes and fell below 5% on March 2, 2012 and were 191,499 shares
representing 0.42% of the shares and votes.
EVENTS AFTER THE REPORTING PERIOD
On July 10, 2012, Outotec announced an agreement to acquire the business of
Australian-owned TME Group. TME is a mining services company providing grinding
mill relining and mineral processing plant maintenance services to customers -
primarily in Australia, Africa and Southeast Asia. With annual sales of
approximately EUR 35 million, TME has 130 permanent employees and offices
throughout Australia and South Africa. The completion of the transaction is
subject to certain conditions expected to be fulfilled by the end of August
2012. The acquisition price was not disclosed.
On July 10, 2012, Outotec announced that it had been awarded multiple orders,
totaling EUR 265 million, for technology deliveries to National Iranian Copper
Industries Company's copper and molybdenum projects in Iran. Approximately EUR
58 million of these contracts will be booked in Outotec's third quarter order
intake with the revenues gradually recognized during 2012-2016.
SHORT-TERM RISKS AND UNCERTAINTIES
Risks related to the global operating environment
Uncertainty in financial and banking markets has increased, which together with
potential further escalation of sovereign debt crisis may have a negative impact
on the global economy and investment decisions of Outotec's customers. Outotec's
global business operations are subject to various political, economic and social
conditions. 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. Political unrest or trade restrictions may cause
delays or even prevent project execution.
Risks related to Outotec's business
As part of its overall project delivery, Outotec often gives performance
guarantees and takes liabilities for the warranty period defects. Projects in
Outotec's order backlog may contain risks related to delivery, quality,
functionality or costs. Large turnkey projects may involve more risks for
example due to their complex scope, long delivery time and contractual
liabilities. According to standard practice, all unfinished projects are
evaluated quarterly and provisions for performance guarantees and warranty
period guarantees are updated.
Sales negotiations, especially in large projects, may advance more slowly due to
scope, permitting and complexity of financing packages. Outotec may operate in
politically unstable countries where potential economic sanctions and possible
future changes in the regulatory framework may have an adverse effect on
Outotec's business operations. In these cases, Outotec aims to mitigate project
contract risks through advance and milestone payments as well as gradual booking
of orders in backlog according to actual project progress. This significantly
reduces the company's risk and financing requirement related to these projects.
Outotec also assesses a customer's creditworthiness and ability to meet its
obligations. Furthermore, global competitive landscape may change and intensify
due to industry consolidation.
Global economic uncertainty may reduce the demand for Outotec's products and
services. Outotec's gross margin fluctuates according to product mix and timing
of project execution. 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 component availability can also affect Outotec's
profitability. Outotec hedges these risks mostly contractually.
Outotec follows the percentage of completion method for the project revenue
recognition. Based on project time schedules, management estimates the revenues
to be recognized from the order backlog for the calendar year. Thus, deviations
in project time schedules may have an impact on the company's financial
projections.
Availability of skilled personnel is important for the growth of Outotec's
business. Especially in some fast growing market areas and challenging project
environments personnel resourcing may be challenging. Business growth, which is
in line with Outotec's strategy, results in a permanent increase to the
workforce raising the company's fixed cost base and lowering cost structure
adjustability.
The nature of international business, different interpretations of international
and local tax rules and regulations may cause additional direct or indirect
taxes for Outotec thus reducing 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. Goodwill
may be generated through acquisitions. The company annually conducts goodwill
impairment tests.
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 or
bankruptcies, which can also result in losses for Outotec. These risks can be
reduced by advance and milestone payments as well as letters of credit or other
trade finance instruments. According to standard practice, all receivables are
evaluated quarterly and credit loss provisions are updated.
Outotec's business model is primarily based on customer advance and milestone
payments and on-demand guarantees issued by Outotec's relationship banks.
Exposure to on-demand guarantees has remained normal. Changes in advance
payments received due to changes in business volume or industry's business
practices may have an impact on the company's liquidity. Securing the continuity
of Outotec business operations requires that the company has sufficient funding
available under all circumstances. Cash held by the company is primarily
invested in short-term bank deposits and in Finnish corporate short-term
certificates of deposit.
More than 50% 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 substantially fluctuate, 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 subject to 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 primarily forward agreements. The cost of hedging is
taken into account in project pricing.
The company is closely monitoring the developments in the EURO currency and has
internal policies for managing business in the potentially affected countries.
MARKET OUTLOOK
The long-term outlook for metals demand is expected to remain good and support
further investments in new production capacity, modernizations and services
since current production capacity and ongoing investments in new capacity are
not sufficient to fulfill the metals demand for the emerging market
infrastructure development and growing middle class. In addition, industry-
specific trends such as declining ore grades, scarcity of water, higher energy
prices, global relocation of production and stricter environmental regulations
increase the need for more sustainable technology. According to a number of
large mining companies' announcements, their CAPEX spending in 2012 will remain
high and Outotec expects good demand from all market areas. However, the
potential escalation of Euro zone crisis and other uncertainties of the world
economy may cause Outotec's customers to delay their investment decisions.
Many countries are developing new export regulations to increase their value
capture from their natural resources and promote domestic industries, which
creates additional business opportunities for Outotec. Financial resources
continue to be available for good projects and for companies with strong cash
flows and balance sheets. Export financing agencies are also actively involved.
However, in general customer expectations for return on investments are higher.
In the Non-ferrous Solutions business area, the demand for copper, gold and
silver technologies is expected to continue. Activity is seen in the entire ore-
to-metal technology value chain and in several markets such as Southeast Asia,
Sub-Saharan Africa, the CIS, South America and the Middle East. The Services
business is expected to continue to grow strongly driven by customers' high
capacity utilization rates and aging plant and equipment base. There are no
material changes expected to the business area's competitive landscape.
Competition for new projects remains tight but varies by market and offering.
The business area's deliveries include technology and service solutions ranging
from spare parts to equipment as well as entire plant solutions.
In the Ferrous Solutions business area, the solid demand for iron ore and
ferroalloy technologies is expected to continue. Good potential for new orders
is seen primarily in iron ore beneficiation and agglomeration technologies in
India and Brazil. The depletion of lump ore deposits is driving sinter and
pellet plant investments. There are also additional opportunities for
sustainable technologies in China due to the increased environmental awareness.
Strong demand for Outotec's energy efficient ferrochrome technologies is
expected to continue. Deliveries in the Ferrous Solutions business area are
primarily 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.
The Energy, Light Metals and Environmental Solutions business area continues to
see solid demand in alternative energy solutions as well as aluminum and
sulfuric acid technologies. There continues to be a high demand in the Middle
East for aluminum refining and smelting technologies. Sulfuric acid technologies
are needed in different markets to replace old and inefficient capacity and in
metals production - especially in capturing sulfur dioxide at copper and nickel
smelters - as well as to grow the fertilizer industry, which needs to meet the
growing fertilizer demand. These investments are also driven by stricter
environmental regulations as well as the relocation of production due to cost
factors. The demand is growing in alternative energy-based solutions such as
biomass and waste-to-energy technologies but also oil sands and oil shale
technologies. However, energy-driven investments are large strategic investments
and thus often impacted by governmental regulations and ruling, which sometimes
results in a longer decision making process. The global market for industrial
water treatment solutions continues to be active with many feasibility studies
ongoing. Industrial water treatment projects are driven by tighter regulations
for water purification and recycling. Deliveries in the Energy, Light Metals and
Environmental Solutions business area are primarily 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.
The Services business in general is driven by industry's capacity utilization
rates, long lifetime and performance improvements of processing plants as well
as increasingly more challenging raw materials. Growth in Services business is
mainly achieved by further penetrating Outotec's large installed base, new CAPEX
orders and customer capacity utilization rates. Modernizations, which require
relatively short downtime, are done to optimize metals recovery and reduce
operating costs. Spare and wear parts are needed as capacity utilization rates
are high. In addition to traditional service offerings, more and more customers
are interested in "operate and maintain" -types of services due to a lack of
skilled employees and increasingly challenging raw materials.
Outotec's global supply network includes thousands of partners and because of
its scalability, it allows for a flexible delivery capacity and relatively fast
adoption to changes in the demand. There are no signs of change in delivery
times or the subcontractor network.
REVISED FINANCIAL GUIDANCE FOR 2012
Outotec revises its sales guidance for 2012. Based on the first six months
financial performance, strong order backlog at the end of June, market outlook
and customer tendering activity, the management expects that in 2012:
* sales will grow to approximately EUR 1.8-2.0 billion, especially driven by
the project revenue recognition, and
* operating profit margin from business operations will be approximately
9-10% (excluding one-time items and PPA amortizations).
Achieving the guidance is subject to sales mix and relative share of Services,
fluctuation in foreign exchange rates, project progress in the order backlog,
timing of new orders, license fee income and project completions as well as the
general development of the world economy and financial markets.
PREVIOUS FINANCIAL GUIDANCE FOR 2012
Based on a strong order backlog at the end of 2011, market outlook and customer
tendering activity, management expects that in 2012:
* sales will grow to approximately EUR 1.7-1.9 billion, and
* operating profit margin from business operations will be approximately
9-10% (excluding one-time items and PPA amortizations).
Achieving the guidance is subject to the general development of the world
economy and financial markets, project progress in the order backlog, exchange
rates, product mix, timing of new orders, license fee income and project
completions.
Espoo, July 27, 2012
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
Format for e-mail addresses: firstname.lastname@outotec.com
FINANCIAL REPORTING SCHEDULE IN 2012
* Interim Report for January-September 2012: Thursday, October 25, 2012
INTERIM REPORT JANUARY-JUNE 2012 BRIEFING
Date: Friday, July 27, 2012
Time: 2.00 pm (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: +1 334 323 6201
Password: 918327
In addition, an instant replay service of the conference call will be available
until July 30, 2012 midnight using the following numbers:
FI/UK: +44 20 7031 4064
US: +1 954 334 0342
Access code: 918327
The contact information is gathered for registration purposes only and is not
used for commercial purposes.
INTERIM FINANCIAL STATEMENTS (unaudited)
Consolidated Statement of Comprehensive Q2 Q2 Q1-Q2 Q1-Q2 Q1-Q4
Income
EUR million 2012 2011 2012 2011 2011
--------------------------------------------------------------------------------
Sales 524.4 288.4 934.8 536.0 1,385.6
Cost of sales -417.3 -228.3 -739.9 -410.0 -1,053.1
--------------------------------------------------------------------------------
Gross profit 107.1 60.2 194.9 125.9 332.5
Other income 0.1 1.2 0.2 5.4 3.9
Selling and marketing expenses -26.1 -21.8 -49.8 -41.6 -86.4
Administrative expenses -25.8 -20.6 -53.2 -44.1 -97.7
Research and development expenses -9.7 -7.7 -18.8 -15.2 -33.5
Other expenses -4.7 -0.3 -4.9 -0.5 -6.7
Share of results of associated companies -0.1 -0.0 -0.1 -0.0 -0.0
--------------------------------------------------------------------------------
Operating profit 40.8 10.9 68.4 29.8 111.9
Finance income and expenses
Interest income and expenses 1.2 1.2 3.1 2.3 6.0
Market price gains and losses -0.8 -0.3 -0.4 -0.7 -0.3
Other finance income and expenses -1.2 -0.6 -3.2 -2.2 -4.4
--------------------------------------------------------------------------------
Net finance income and expenses -0.7 0.3 -0.5 -0.6 1.4
Profit before income taxes 40.1 11.2 67.9 29.2 113.3
Income tax expenses -12.1 -3.3 -20.5 -8.8 -34.0
--------------------------------------------------------------------------------
Profit for the period 28.0 7.8 47.3 20.4 79.3
--------------------------------------------------------------------------------
Other comprehensive income
Exchange differences on translating 5.9 0.1 4.7 -9.6 -3.9
foreign operations
Cash flow hedges -2.4 0.0 -0.7 -0.0 -4.3
Income tax relating to cash flow hedges 0.8 -0.0 0.2 0.0 1.3
Available for sale financial assets -0.1 -0.3 -0.1 -0.1 -0.2
--------------------------------------------------------------------------------
Other comprehensive income for the period 4.2 -0.1 4.2 -9.6 -7.2
Total comprehensive income for the period 32.2 7.7 51.5 10.8 72.1
--------------------------------------------------------------------------------
Profit for the period attributable to:
Equity holders of the parent company 28.0 7.8 47.3 20.4 79.3
Non-controlling interest - - - - -
Total comprehensive income for the period
attributable to:
Equity holders of the parent company 32.2 7.7 51.5 10.8 72.1
Non-controlling interest - - - - -
Earnings per share for profit attributable to the
equity
holders of the parent company:
Basic earnings per share, EUR 0.62 0.17 1.04 0.45 1.75
Diluted earnings per share, EUR 0.62 0.17 1.04 0.45 1.75
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 Financial June 30, June 30, December 31,
Position
EUR million 2012 2011 2011
--------------------------------------------------------------------------------
ASSETS
Non-current assets
Intangible assets 305.1 223.5 286.8
Property, plant and equipment 67.5 53.7 62.5
Deferred tax asset 50.3 41.5 47.3
Non-current financial assets
Interest-bearing 2.4 2.4 2.4
Non interest-bearing 1.9 2.6 2.5
--------------------------------------------------------------------------------
Total non-current assets 427.2 323.6 401.5
Current assets
Inventories *) 197.8 164.6 148.6
Current financial assets
Interest-bearing 1.6 0.5 0.7
Non interest-bearing 510.1 393.4 468.1
Cash and cash equivalents 393.7 313.5 402.5
--------------------------------------------------------------------------------
Total current assets 1,103.2 871.9 1,019.9
TOTAL ASSETS 1,530.4 1,195.6 1,421.4
--------------------------------------------------------------------------------
EQUITY AND LIABILITIES
Equity
Equity attributable to the equity holders of the 414.5 335.1 398.4
parent company
Non-controlling interest 1.2 1.0 1.1
--------------------------------------------------------------------------------
Total equity 415.7 336.1 399.5
Non-current liabilities
Interest-bearing 41.9 51.8 47.6
Non interest-bearing 97.7 103.0 107.0
--------------------------------------------------------------------------------
Total non-current liabilities 139.6 154.8 154.6
Current liabilities
Interest-bearing 21.2 14.0 18.9
Non interest-bearing
Advances received **) 465.2 289.2 399.0
Other non interest-bearing liabilites 488.8 401.4 449.4
--------------------------------------------------------------------------------
Total current liabilities 975.1 704.7 867.3
Total liabilities 1,114.7 859.5 1,021.9
TOTAL EQUITY AND LIABILITIES 1,530.4 1,195.6 1,421.4
--------------------------------------------------------------------------------
*) Of which advances paid for inventories amounted to EUR 38.7 million on June
30, 2012 (June 30, 2011: EUR 28.4 million, December 31, 2011: EUR 43.5 million).
**) Gross advances received before percentage of completion revenue recognition
amounted to EUR 1,560.1 million on June 30, 2012 (June 30, 2011: EUR 1,244.0
million, December 31, 2011: EUR 1,462.3 million).
Condensed Consolidated Statement of Cash Flows Q1-Q2 Q1-Q2 Q1-Q4
EUR million 2012 2011 2011
--------------------------------------------------------------------------------
Cash flows from operating activities
Profit for the period 47.3 20.4 79.3
Adjustments for
Depreciation and amortization 14.8 9.3 19.4
Other adjustments 18.9 10.2 28.6
Decrease in working capital 1.3 83.8 134.4
Interest received 4.0 3.2 8.0
Interest paid -1.1 -0.7 -2.0
Income tax paid -18.3 -20.5 -20.8
--------------------------------------------------------------------------------
Net cash from operating activities 66.9 105.7 247.0
Purchases of assets -21.1 -13.2 -34.4
Acquisition of subsidiaries and business operations, net of -11.6 - -34.5
cash
Acquisition of shares in associated companies - - -0.1
Proceeds from disposal of subsidiaries - - 0.0
Proceeds from sale of assets 0.1 0.6 1.4
Change in other investing activities -0.1 -0.0 -0.1
--------------------------------------------------------------------------------
Net cash used in investing activities -32.6 -12.6 -67.7
Cash flow before financing activities 34.3 93.1 179.3
Repayments of non-current debt -4.5 -6.0 -11.5
Decrease in current debt -1.4 -10.3 -4.9
Increase in current debt 0.6 0.0 0.0
Related party net investment to Outotec Oyj shares *) -0.2 - -0.2
Dividends paid -38.9 -34.3 -34.3
Change in other financing activities -0.5 -0.0 0.4
--------------------------------------------------------------------------------
Net cash used in financing activities -44.9 -50.7 -50.6
Net change in cash and cash equivalents -10.6 42.4 128.8
Cash and cash equivalents at the beginning of the period 402.5 280.3 280.3
Foreign exchange rate effect on cash and cash equivalents 1.8 -9.1 -6.6
Net change in cash and cash equivalents -10.6 42.4 128.8
--------------------------------------------------------------------------------
Cash and cash equivalents at the end of the period 393.7 313.5 402.5
--------------------------------------------------------------------------------
*) Consolidation of Outotec Management Oy (incentive plan for Outotec's
executive board members). At the end of the reporting period, Outotec Management
Oy held 203,434 (December 31, 2011: 199,747) Outotec shares which have been
accounted as treasury shares in Outotec's consolidated statement of financial
position.
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 on 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 - - -1.0 - 1.4
Total comprehensive
income for the period - - - -0.1 - - -9.6 20.4 - 10.8
Other changes - - 0.0 - - - - 0.4 - 0.4
--------------------------------------------------------------------------------
Equity on June
30, 2011 17.2 20.2 0.4 2.0 -7.3 87.7 19.4 195.4 1.0 336.1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Equity on January
1, 2012 17.2 20.2 0.4 -1.2 -7.5 87.7 25.1 256.5 1.1 399.5
--------------------------------------------------------------------------------
Dividends - - - - - - - -38.9 - -38.9
Management incentive
plan for Outotec
Executive Board *) - - - - -0.2 - - - 0.1 -0.1
Share-based
compensation - - - - 1.5 - - 1.9 - 3.4
Total comprehensive
income for the period - - - -0.6 - - 4.7 47.3 - 51.5
Other changes - - 0.0 - - - - 0.4 - 0.4
--------------------------------------------------------------------------------
Equity on June
30, 2012 17.2 20.2 0.5 -1.7 -6.2 87.7 29.8 267.2 1.2 415.7
--------------------------------------------------------------------------------
*) Consolidation of Outotec Management Oy (incentive plan for Outotec's
executive board members). At the end of the reporting period, Outotec Management
Oy held 203,434 (December 31, 2011: 199,747) Outotec shares which have been
accounted as treasury shares in Outotec's consolidated statement of financial
position.
Key figures Q2 Q2 Q1-Q2 Q1-Q2 Last 12 Q1-Q4
2012 2011 2012 2011 months 2011
--------------------------------------------------------------------------------
Sales, EUR million 524.4 288.4 934.8 536.0 1,784.4 1,385.6
Gross margin, % 20.4 20.9 20.9 23.5 22.5 24.0
Operating profit, EUR million 40.8 10.9 68.4 29.8 150.5 111.9
Operating profit margin, % 7.8 3.8 7.3 5.6 8.4 8.1
Profit before taxes, EUR million 40.1 11.2 67.9 29.2 151.9 113.3
Profit before taxes in relation
to sales, % 7.7 3.9 7.3 5.5 8.5 8.2
Net cash from operating
activities, EUR million 57.0 45.9 66.9 105.7 208.2 247.0
Net interest-bearing debt at the
end of period,
EUR million -334.7 -250.6 -334.7 -250.6 -334.7 -339.1
Gearing at the end of period, % -80.5 -74.6 -80.5 -74.6 -80.5 -84.9
Equity-to-assets ratio at the
end of period, % 39.0 37.1 39.0 37.1 39.0 39.1
Working capital at the end of
period, EUR million -271.0 -196.5 -271.0 -196.5 -271.0 -270.3
Capital expenditure, EUR million 20.0 11.3 34.0 14.8 117.5 98.3
Capital expenditure in relation
to sales, % 3.8 3.9 3.6 2.8 6.6 7.1
Return on investment, % 33.4 12.0 29.7 16.6 35.2 26.4
Return on equity, % 28.1 9.4 23.2 11.8 28.3 20.9
Order backlog at the end of
period, EUR million 2,218.4 1,664.1 2,218.4 1,664.1 2,218.4 1,985.1
Order intake, EUR million 735.5 532.1 1,160.8 875.7 2,290.5 2,005.4
Personnel, average for the
period 4,384 3,428 4,202 3,325 3,955 3,516
Profit for the period in
relation to sales, % 5.3 2.7 5.1 3.8 6.0 5.7
Research and development
expenses, EUR million 9.7 7.7 18.8 15.2 37.0 33.5
Research and development
expenses in relation to sales, % 1.8 2.7 2.0 2.8 2.1 2.4
Earnings per share, EUR 0.62 0.17 1.04 0.45 2.34 1.75
Equity per share, EUR 9.11 7.38 9.11 7.38 9.11 8.75
--------------------------------------------------------------------------------
NOTES TO THE STATEMENT OF COMPREHENSIVE INCOME AND FINANCIAL POSITION
Outotec has applied the following revised or new standards and interpretations
since the beginning of 2012, which do not have material impact on the Group's
financial statements:
* IFRS 7 - Financial Instruments, Disclosures - Transfer of Financial Assets
(Amendment to IFRS 7). The amendment introduces new disclosure requirements
about transfer of financial assets in two cases; financial assets that are
not derecognized in their entirety and financial assets that are
derecognized in their entirety but for which the entity retains continuing
involvement. This amendment will promote transparency and improve
understanding of the risk exposures relating to transfers of financial
assets. Currently Outotec Group does not have such transferred financial
assets and thus the amendment does not impact on the published information.
* IAS 12 - Income taxes, Deferred tax - Deferred tax accounting for investment
property at fair value (Amendment to IAS 12). The amendment introduces an
exception to the existing principle for the measurement of deferred tax
assets or liabilities arising on investment property measured at fair value
according to IAS 40 (Investment property). Outotec Group does not have
currently investment properties measured using the fair value model in IAS
40 and thus the amendment does not impact on the published information.
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 realisability of certain assets, the useful
lives of tangible and intangible assets, income taxes, provisions, pension
obligations and 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-Q2 Q1-Q2 Q1-Q4
EUR million 2012 2011 2011
-----------------------------------------------------------------------
One-time costs related to reorganization of business - - -3.7
One-time income related to reorganization of business - - 1.1
Costs related to acquisitions -0.7 - -2.0
-----------------------------------------------------------------------
Income Tax Expenses Q1-Q2 Q1-Q2 Q1-Q4
EUR million 2012 2011 2011
-------------------------------------------
Current taxes -32.6 -10.3 -33.5
Deferred taxes 12.0 1.5 -0.5
-------------------------------------------
Total income tax expenses -20.5 -8.8 -34.0
Property. Plant and Equipment June 30, June 30, December 31,
EUR million 2012 2011 2011
--------------------------------------------------------------------------------
Historical cost at the beginning of the period 144.8 128.9 128.9
Translation differences 1.0 -1.8 -0.5
Additions 9.9 7.0 17.9
Disposals -0.9 -1.5 -4.5
Acquired subsidiaries 1.3 - 3.5
Reclassifications -1.0 -0.5 -0.6
--------------------------------------------------------------------------------
Historical cost at the end of the period 154.9 132.1 144.8
Accumulated depreciation and impairment at the -82.2 -76.2 -76.2
beginning of the period
Translation differences -0.5 1.0 0.2
Disposals 0.7 1.2 3.4
Reclassifications 0.1 0.0 -0.3
Depreciation during the period -5.6 -4.4 -9.5
--------------------------------------------------------------------------------
Accumulated depreciation and impairment at the -87.4 -78.4 -82.2
end of the period
Carrying value at the end of the period 67.5 53.7 62.5
--------------------------------------------------------------------------------
Commitments and Contingent Liabilities June 30, June 30, December 31,
EUR million 2012 2011 2011
--------------------------------------------------------------------------------
Pledges and mortgages 0.2 0.0 0.0
Guarantees for commercial commitments 187.6 186.3 209.1
Minimum future lease payments on operating leases 156.5 69.1 161.3
--------------------------------------------------------------------------------
The pledges and mortgages are used to secure credit facilities in Numcore 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 22.9 million
on June 30, 2012 (June 30, 2011: EUR 28.3 million, December 31, 2011: EUR 25.8
million) and for commercial guarantees including advance payment guarantees EUR
513.9 million on June 30, 2012 (June 30, 2011: EUR 377.6 million, December
31, 2011: EUR 477.1 million).
Derivative Instruments
Currency Forwards June 30, June 30, December 31,
EUR million 2012 2011 2011
-----------------------------------------------------
Fair values, net -10.9 *) -2.2 **) -9.6 ***)
Nominal values 745.8 413.1 545.4
-----------------------------------------------------
*) of which EUR -2.9 million designated as cash flow hedges.
**) of which EUR 0.0 million designated as cash flow hedges.
***) of which EUR -3.6 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 4.4 million on
June 30, 2012 (December 31, 2011: EUR 4.3 million).
Outotec Oyj paid dividend to Outotec Management Oy EUR 0.2 million in April
2012 (EUR 0.1 million in April 2011).
Transactions and Balances with Associated Companies Q1-Q2 Q1-Q2 Q1-Q4
EUR million 2012 2011 2011
---------------------------------------------------------------------
Sales - 0.0 0.0
Other income 0.0 0.0 0.6
Purchases -0.1 -0.1 -0.3
Trade and other receivables 0.3 0.6 0.3
Current liabilities 1.6 - 0.6
Loan receivables 1.6 0.2 0.6
---------------------------------------------------------------------
Business Combinations
---------------------
Numcore Ltd
Outotec has strengthened its process control technologies by acquiring all
shares of Numcore Ltd in Kuopio, Finland. Numcore is a company developing and
marketing innovative online process control solutions based on 3D imaging. The
acquisition was completed on March 12, 2012. This acquisition supports Outotec's
growth strategy and strengthens Outotec's competitive edge in providing advanced
technology solutions. Numcore's technology is already proven in flotation and
thickener applications. Furthermore, it can be utilized in other Outotec's
business segments.
The purchase price has been allocated to technologies. The remaining goodwill
EUR 4.5 million is mainly based on experienced personnel of Numcore and synergy
benefits.
Demil Manutenção Industrial Ltda
Outotec announced the completion of the acquisition of Demil Manutenção
Industrial Ltda in Brazil on June 1, 2012. Demil provides industrial maintenance
services for iron ore pelletizing plants and is located in Guarapari, Espírito
Santo in Brazil. Demil has approximately 300 employees and its annual sales are
at the level of EUR 10 million. The acquisition provides a platform for further
developing Outotec's service business and capabilities in Brazil. Demil's
services can be offered to Outotec's Brazilian customers, pelletizing technology
users in particular.
The purchase price has been allocated mainly to customer relationships. The
remaining goodwill EUR 3.7 million is mainly based on the synergy benefits of
the customer relationship.
Segments' Sales and Operating Profit by Quarters
EUR million Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12
--------------------------------------------------------------------------------
Sales
Non-ferrous Solutions 141.3 144.6 223.9 162.0 191.4 235.5 358.8 260.7 335.9
Ferrous Solutions 32.9 35.5 43.2 43.6 42.6 60.0 74.8 70.0 81.8
Energy, Light Metals and 52.6 50.3 65.3 46.1 57.7 61.4 70.9 85.9 106.8
Environmental Solutions
Unallocated items *) and -3.0 -1.8 -2.2 -4.1 -3.4 -4.1 -7.7 -6.2 0.0
intra-group sales
--------------------------------------------------------------------------------
Total 223.8 228.5 330.3 247.5 288.4 352.8 496.8 410.4 524.4
Operating profit
Non-ferrous Solutions 4.8 13.5 23.2 18.1 12.6 24.6 52.4 25.4 35.0
Ferrous Solutions 1.4 4.2 8.2 3.2 -1.9 6.0 -0.6 5.5 2.2
Energy, Light Metals and 1.9 3.5 11.4 3.3 5.2 11.7 3.6 3.8 7.3
Environmental Solutions
Unallocated **) and intra- -2.6 -3.1 -14.7 -5.7 -5.0 -9.1 -6.5 -7.2 -3.6
group items
--------------------------------------------------------------------------------
Total 5.5 18.1 28.1 19.0 10.9 33.2 48.9 27.6 40.8
*) 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:
NASDAQ OMX Helsinki Ltd
Main media
www.outotec.com
[HUG#1630010]
© 2024 Nasdaq, Inc. All Rights Reserved |