2007-10-25 08:00:45 CEST
2007-10-25 08:00:45 CEST
REGULATED INFORMATION
Outotec Oyj - Quarterly report
Outotec Oyj - Interim Report January-September 2007
OUTOTEC OYJ STOCK EXCHANGE RELEASE OCTOBER 25, 2007 AT 9:00 am
Interim Report January-September 2007
Operating profit more than doubled
Q1-Q3/2007 reporting period in brief (2006 corresponding figures in
parentheses):
- Sales: EUR 684.6 million (EUR 500.9 million)
- Operating profit: EUR 63.1 million (EUR 28.6 million)
- Profit before taxes: EUR 68.7 million (EUR 33.2 million)
- Earnings per share: EUR 1.20 (EUR 0.48)
- Order intake: EUR 1,078.8 million (EUR 796.9 million)
- Order backlog at the end of the period: EUR 1,264.4 million (EUR
878.6 million)
- Net cash flow from operating activities: EUR 97.7 million (EUR 20.4
million)
Q3/2007 in brief (2006 corresponding figures in parentheses):
- Sales: EUR 245.9 million (EUR 179.9 million)
- Operating profit: EUR 26.0 million (EUR 14.5 million)
- Profit before taxes: EUR 28.8 million (EUR 17.5 million)
- Order intake: EUR 417.9 million (EUR 370.9 million)
CEO Tapani Järvinen:"Outotec's third quarter was as strong as the second quarter, which
is evidenced by many record high figures. Our order backlog
strengthened to an all-time high level. New orders are based on our
proprietary technologies, and we have also succeeded in
commercializing some new technologies and in expanding the scope of
our deliveries. Our internal efficiency and global resource network
together with higher volumes continued to have a positive impact on
profitability. The continuing robust market activity in mining and
metals sector gives us good visibility and a solid platform for
2008."
Summary of key figures
Q3 Q3 Q1-Q3 Q1-Q3 Q1-Q4
2007 2006 2007 2006 LTM*) 2006
Sales, EUR million 245.9 179.9 684.6 500.9 924.2 740.4
Gross margin, % 19.9 20.9 20.3 19.9 20.8 20.7
Operating profit,
EUR million 26.0 14.5 63.1 28.6 86.1 51.6
Operating profit in
relation to sales, % 10.6 8.1 9.2 5.7 9.3 7.0
Profit before taxes,
EUR million 28.8 17.5 68.7 33.2 92.1 56.6
Net cash from operating
activities, EUR million 75.4 19.8 97.7 20.4 145.1 67.8
Net interest-bearing
debt at end of period,
EUR million -247.8 -126.6 -247.8 -126.6 -247.8 -170.0
Gearing at end of
period, % -131.6 -99.7 -131.6 -99.7 -131.6 -118.0
Return on investment, % 66.3 54.6 56.9 38.4 60.6 45.4
Return on equity, % 53.7 37.7 40.5 22.6 42.7 29.1
Order backlog at end of
period, EUR million 1,264.4 878.6 1,264.4 878.6 1,264.4 866.4
Order intake, EUR
million 417.9 370.9 1,078.8 796.9 1,314.1 1,032.2
Average number of
personnel for the
period 2,091 1,833 1,980 1,830 1,937 1,825
Earnings per share, EUR 0.56 0.27 1.20 0.48 1.60 0.88
*Last twelve months.
OUTLOOK FOR 2007
Demand for Outotec's minerals and metals technologies and services
continues to be strong. Following good financial performance, strong
order intake and backlog, coupled with sufficient resources, the
management expects that:
- sales for the full-year of 2007 will moderately exceed EUR 1
billion; and
- operating profit will grow significantly from the 2006 level and is
expected to moderately exceed EUR 90 million, subject to the timing
of project completions and the product mix of the new orders
received.
INTERIM REPORT JANUARY-SEPTEMBER 2007
MARKETS
Market demand for Outotec's products and services for the mining and
metals industry continued to develop favorably during the reporting
period. New prospects further increased, because of the strong cash
position of mining and metals companies. Outotec's customers have
initiated projects related to technologies for iron ore, aluminum,
copper, nickel, zinc, and precious metals. Also, other process
industries, outside mining and metals industries, were more active in
the reporting period.
In the reporting period, major mining and metals companies have
updated their investment plans for the next three to five years in
anticipation of continuing growth in the global consumption of
metals. In addition, these companies are actively looking for new
expansion opportunities and avenues for rapidly satisfying the growth
in demand foreseen for metals.
ORDER INTAKE
Orders received in January-September 2007 totaled EUR 1,078.8 million
(Q1-Q3/2006: EUR 796.9 million), representing growth of 35.4 % from
the previous year's corresponding figure. Third-quarter order intake
totaled EUR 417.9 million (Q3/2006: EUR 370.9 million). Orders
received in the third quarter, included deliveries to new customers
and several repeat orders from the existing customers.
In the third quarter, two major technologies were commercialized in
connection with the anode plant delivery for the Dubai Aluminium
smelter and the Talvivaara nickel project.
Major new orders in the third quarter of 2007 included:
- an alumina calcination plant for Companhia Brasileira de Aluminio
S.A. in Aluminio, Sao Paulo state, Brazil (EUR 40 million);
- a new green anode plant and spent anode crushing facility for Dubai
Aluminium Company's aluminum smelter in Abu Dhabi (EUR 100 million);
- a chromite pelletizing and sinter plant for Samancor Chrome in
South Africa (EUR 15 million);
- iron ore sintering technology for Tata Steel's new Kalinganagar
steel plant in India (EUR 35 million);
- metals recovery technology including reactors and thickeners for
Talvivaara nickel project in Sotkamo, Finland (EUR 40 million);
- grinding technology for Boliden Aitik in Sweden and Tara Mine's
lead-zinc ore project in Ireland;
- grinding technology for Kazzinc of Kazakhstan;
- a new zinc roaster with gas cleaning and sulfuric acid plant for
OZK Kardzhali for the zinc smelter expansion in Bulgaria (EUR 25
million);
- an iron ore sinter plant for JSW Steel's integrated steelworks at
Toranagulla, India; and
- a drinking water treatment facility for the eastern coastal towns
of Ampara District in Sri Lanka (USD 100 million). The order will
become effective after the approval of the finance agreement between
the government of Sri Lanka, the Australian and New Zealand Banking
Group Ltd., and Export Finance Insurance Corporation of Australia.
Major new orders in the second quarter of 2007 included:
- grinding technology for Mirabela Nickel of Australia, for the Santa
Rita nickel sulfide project in Bahia state, Brazil;
- grinding technology for Adanac Molybdenum of Canada for the Ruby
Creek molybdenum project in British Columbia, Canada;
- grinding technology for Shalkiya Zinc for the Shalkiya zinc-lead
project in Kazakhstan;
- a second gas cleaning plant for the new 208 MW Bluewaters Power
Station for IHI Engineering in Australia;
- design and expansion of heavy mineral sands processing plants for
Sierra Rutile Ltd., a subsidiary of Titanium Resources Group Ltd. in
Sierra Leone, Western Africa;
- two turntable anode vibrocompactors for Gansu Hualu Aluminum Co.
Ltd. in Gansu Province, China;
- two sow casting systems for Henan Wanji Aluminum Co. Ltd. in China;
- one vibrocompactor to Qingtongxia Qingxin Fangyuan Carbon Co. Ltd,
which belongs for Qingtongxia Aluminum Group Co. Ltd. in Ningxia
Province, China;
- a second chromite pellet plant for Kazchrome's Donskoy chrome mine
in Kazakhstan. The new pellet plant, in combination with Outotec's
earlier delivery of a similar plant in 2005, will be the world's
largest production unit for chromite pellets (EUR 40 million);
- the world's largest sulfuric acid plant delivery, to Ma'aden (EUR
270 million);
- two alumina calciners for ZAO Komi Aluminium's Sosnogorsk Alumina
Refinery in the Republic of Komi, Russia (EUR 20 million).
Major new orders in the first quarter of 2007 included:
- silver refinery equipment for the JSC Krasnoyarsk Non-Ferrous
Metals Plant in Russia;
- a complete thickening circuit for Boddington Gold Mine in
Australia;
- a zinc plant expansion with new, environmentally advanced leaching
technology for Hunan Zhuye Torch Metals Co. Ltd. in China (EUR 30
million);
- modernization of a Flash Smelting production line for Norilsk
Nickel's Nadezha metallurgical plant in Russia (EUR 16 million);
this project was in the backlog already at year-end 2006, due to the
effectiveness of the contract;
- three TankCell®-300 flotation cells for OceanaGold's Macraes
operation in New Zealand;
- a gas cleaning plant for the new 208 MW Bluewaters Power Station
for IHI Engineering in Australia;
- KALDO precious metals technology for Tongling Nonferrous Metals
(Group) Inc. in China;
- a copper converter and gas handling technology for Engineering
Dobersek GmbH's new copper smelter of Kazzinc in Kazakhstan.
ORDER BACKLOG
The order backlog at the end of September 2007 totaled EUR 1,264.4
million (September 30, 2006: EUR 878.6 million). The value of the
order backlog represents growth of 44% from the previous year's
corresponding figure and increased by 46% from the year-end 2006
level due to the record high order intake in the reporting period.
At the end of the third quarter of 2007, the order backlog included
25 projects with a value in excess of EUR 10 million, accounting for
65% of the total backlog. Due to the timing of the projects, the
fluctuations in quarterly order intake and backlog do not in
themselves represent the overall market conditions, and they indicate
no trend change. According to the management's estimate, some 25% of
the current backlog will be delivered in 2007, and the rest in 2008,
2009, and beyond.
SALES AND FINANCIAL RESULT
Outotec's sales in the reporting period totaled EUR 684.6 million
(Q1-Q3/2006: EUR 500.9 million), up 37% from the 2006 corresponding
figure. All divisions contributed to the organic growth of the
company. After-sales business, which is included in the divisions'
sales figures, contributed EUR 51.8 million (Q1-Q3/2006: EUR 39.1
million) to the sales. Third-quarter sales came to EUR 245.9 million
(Q3/2006: EUR 179.9 million), up 37% from the corresponding 2006
level.
The operating profit for the reporting period was more than double
that of the same period in 2006 and was EUR 63.1 million (Q1-Q3/2006:
EUR 28.6 million), representing 9.2% of sales (Q1-Q3/2006: 5.7%).
Operating profit for the third quarter of 2007 was EUR 26.0 million
(Q3/2006: EUR 14.5 million), and the corresponding profit margin was
10.6% (Q3/2006: 8.1%).
During the reporting period, the positive profit development was
attributable to the increased volume of sales, better project mix,
successful project execution, releases of project provisions, and
license fee income. In the third quarter, the operating profit
further improved, because of the impact of license fee income,
successful project deliveries, and the higher than planned percentage
of completion in certain projects.
Profitability improvement was also impacted by the fair valuation of
the unrealized currency hedging contracts between the euro and the
U.S. dollar, which are not included in hedge accounting.
At the beginning of the third quarter in 2007, Outotec started to
apply cash flow hedge accounting to one project in accordance with
IAS 39 to hedge its exposure to EUR/USD foreign exchange rate
fluctuations inherent to USD denominated cash flows. In the third
quarter, Outotec recognized gains of EUR 0.2 million in the income
statement and reserved gains of EUR 7.6 million in equity.
Outotec's fixed costs in the reporting period were slightly higher
than in the corresponding period of 2006. An increase in
administration costs came from the change in Outotec's company status
to a listed company on October 10, 2006, and subsequent strengtheningof some management and support functions as well as the finalization
of the information technology separation from the former parent
company. Research and technology development expenses were somewhat
higher in the reporting period than in the corresponding period of
2006.
Outotec's profit before taxes for the reporting period was EUR 68.7
million (Q1-Q3/2006: EUR 33.2 million). The profit before taxes was
affected by the net interest income from high net cash position. Net
profit for the reporting period was EUR 50.4 million (Q1-Q3/2006: EUR
20.1 million). In addition, the net profit was improved by the
effective tax rate reduction due to tax reform enacted in Germany.
Earnings per share were EUR 1.20 (Q1-Q3/2006: EUR 0.48).
Outotec's return on equity for the reporting period was 40.5%
(Q1-Q3/2006: 22.6%), and return on investment was 56.9% (Q1-Q3/2006:
38.4%).
Sales and operating profit by segment
Q3 Q3 Q1-Q3 Q1-Q3 Q1-Q4
EUR million 2007 2006 2007 2006 2006
Sales
Minerals Processing 72.7 67.5 192.4 161.3 256.6
Base Metals 64.1 43.3 188.6 138.8 192.3
Metals Processing 113.0 71.0 311.4 201.4 292.2
Other Businesses 11.1 6.0 26.7 20.7 32.6
Unallocated items*)
and intra-group sales -15.0 -7.9 -34.5 -21.3 -33.2
Total 245.9 179.9 684.6 500.9 740.4
Operating profit
Minerals Processing 3.6 5.2 8.9 -0.4 12.7
Base Metals 12.1 4.1 34.7 16.9 23.6
Metals Processing 11.5 5.6 26.6 15.9 21.2
Other Businesses 1.3 -0.3 1.9 -0.7 0.3
Unallocated **)
and intra-group items -2.5 -0.2 -8.9 -3.1 -6.1
Total 26.0 14.5 63.1 28.6 51.6
*)Unallocated items primarily include invoicing of internal
management and administrative services.
**)Unallocated items primarily include management and administrative
services and share of the result of associated companies.
Minerals Processing
The Minerals Processing division's sales in the reporting period
totaled EUR 192.4 million (Q1-Q3/2006: EUR 161.3 million). Operating
profit was EUR 8.9 million, showing a significant increase from the
previous year's level (Q1-Q3/2006: EUR -0.4 million). The improvement
in the division's operating profit resulted from growth in sales,
efficiency improvement in project implementation and better project
mix. Profit generation for the Minerals Processing division is
typically weaker in the first half of the year and stronger in the
second half due to the seasonality within a fiscal year.
Base Metals
The Base Metals division's sales in the reporting period totaled EUR
188.6 million (Q1-Q3/2006: EUR 138.8 million) and operating profit
was EUR 34.7 million (Q1-Q3/2006: EUR 16.9 million). The growth in
sales and the increased proportion of proprietary technologies in
deliveries significantly improved the division's profitability. In
addition, some license fee income and the completion of four
long-term projects in the reporting period had a favorable impact on
the operating profit.
Metals Processing
The Metals Processing division's sales grew significantly during the
reporting period and totaled EUR 311.4 million (Q1-Q3/2006: EUR 201.4
million). The growth came from the ferrous technologies at the
beginning of the year and new aluminum and sulfuric acid plant as
well as roasting plant orders during the reporting period. The
operating profit improved to EUR 26.6 million (Q1-Q3/2006: EUR 15.9
million), which was due to the volume growth, releases of
contingencies after some successful project completions and project
margin improvement.
BALANCE SHEET, FINANCING, AND CASH FLOW
Net cash flow from operating activities for the reporting period was
strong, EUR 97.7 million (Q1-Q3/2006: EUR 20.4 million). Compared to
the corresponding period in 2006, significant improvement in net cash
flow from operating activities was achieved. The main reasons for the
improvement were good result and decrease in working capital. The
parent company paid EUR 14.7 million in dividends in April 2007.
Outotec's working capital amounted to EUR -145.6 million on September
30, 2007 (September 30, 2006; EUR -97.9 million). Significant
positive improvement on the working capital was impacted mainly by
the advances received in relation to new project orders and payment
terms.
The balance sheet remained strong. Net interest-bearing debt on
September 30, 2007, was EUR -247.8 million (September 30, 2006: EUR
-126.6 million). The advances received at the end of the reporting
period totaled EUR 167.6 million (September 30, 2006: EUR 156.4
million). Outotec's gearing at the end of the reporting period was
-131.6% (September 30, 2006: -99.7%), and the equity-to-assets ratio
was 40.1% (September 30, 2006: 40.9%).
The company's capital expenditure in the reporting period was EUR 9.9
million (Q1-Q3/2006: EUR 5.5 million), which consisted mainly of
costs related to the separation from the former parent company in
terms of information technology, investments in intellectual property
rights (IPRs), and maintenance investments.
Guarantees for commercial commitments, including advance payment
guarantees issued by the parent and other Group companies, came to
EUR 347.1 million at the end of the reporting period, showing an
increase from the previous year's level relative to business growth
(September 30, 2006: EUR 192.9 million).
RESEARCH AND TECHNOLOGY DEVELOPMENT
Outotec's research and technology development expenses for the
reporting period totaled EUR 14.3 million (Q1-Q3/2006: EUR 12.8
million), representing 2.1% of sales (Q1-Q3/2006: 2.6%). Outotec
filed 28 new priority patent applications, and 211 new national
patents were granted in the reporting period.
Development of bioleaching technology began in 1987 at Outotec's
research center in Pori, Finland, in order to find a process that
could be used to recover metals from the low-grade Talvivaara nickel
ore. The progress of the Talvivaara nickel project in Sotkamo,
Finland, represents an important step in the commercialization of
bioleaching. The new bioleaching technology is now in commercial use,
providing economical use of the low-grade nickel deposits.
In July 2007, Outotec achieved a new breakthrough with its aluminum
technology when an agreement was signed with Dubai Aluminium Company
for the supply of a new green anode plant and spent anode-crushing
facility for the aluminum smelter in Abu Dhabi. The new plant is
based on the latest technical development; including a special
grinding and mixing concept as well as innovative Regenerative
Thermal Oxidization technology for efficient pitch fume treatment.
In June 2007, Outotec strengthened its halide technology know-how, on
which the HydroCopper® process is based, by entering into a
collaboration agreement in the field of chloride hydrometallurgy with
Intec Ltd. of Australia. Under the agreement, Intec makes available
to Outotec its globally patented mixed halide technology, which
enhances the recovery of gold and other precious metals from mineral
ores and concentrates.
During the first quarter of 2007, Outotec commercialized two new
products. First, Outotec signed an agreement with the leading Chinese
zinc producer, Hunan Zhuye Torch Metals Co. Ltd., on the design and
delivery of a zinc plant expansion with new environmentally advanced
leaching technology. Secondly, Outotec agreed to deliver three
TankCell®-300 flotation cells to OceanaGold's Macraes operation in
New Zealand. The TankCell®-300, with an active capacity of over 300
m3, is the largest mechanical flotation cell in the world.
In the first quarter, Outotec complemented its technologies by
acquiring the Chena® (Chemistry Navigator) trademark from the Finnish
company Liqum. The technology acquisition will further improve
Outotec's competitiveness in the fields of minerals processing and
hydrometallurgical process solutions. Chena® technology is a patented
technique for improving the efficiency of production processes.
Outotec's research centers in Pori and Frankfurt were active in
carrying out in-house development and implementation projects as well
as test-work for customers.
PERSONNEL
At the end of the reporting period, Outotec had a total of 2,121
employees (September 30, 2006: 1,815). Over the first three quarters,
Outotec had an average of 1,980 employees (Q1-Q3/2006: 1,830). The
number of personnel increased by 306 from the corresponding period of
2006 due to business growth and the accompanying active recruitment.
Temporary employees accounted for some 15% of the total number of
employees.
Distribution of personnel by country
September 30, September 30, Change, %
2007 2006
Finland 831 737 12.8
Germany 309 355* -13.0
Rest of Europe 222 193 15.0
Americas 446 277 61.0
Australia 204 160 27.5
Rest of the world 109 93 17.2
Total 2,121 1,815 16.9
*Reporting method in Germany included also subcontractors.
In addition to the personnel on Outotec's payroll, at the end of the
reporting period the company was using for project engineering,
management and construction roughly 500 subcontractors (full-time
equivalent). The number of subcontractors at any given time changes,
depending on the active project mix and local rules and regulations.
SHARE-BASED INCENTIVE PROGRAM FOR KEY PERSONNEL
On March 23, 2007, Outotec published a share-based incentive program.
The purpose of the incentive program is to obtain key employees'
commitment and to encourage them in achieving the company's financial
targets, as well as to increase the company's shareholder value. Some
20 key employees are participants in the two-year share-based
incentive program. The earnings period started on January 1, 2007 and
ends on December 31, 2008.
The reward paid to the key personnel is determined by the achievement
of the targets set for the development of the company's net profit
and order backlog. The reward is paid in shares and as a cash payment
(which roughly covers income taxes payable for the reward). The
shares will be allocated to the key personnel in the spring of 2009.
The maximum reward of the incentive program is EUR 6.7 million.
SHARE AND SHARE CAPITAL
Outotec's shares were entered in the Finnish Book-Entry Securities
System on September 22, 2006. The company's share capital is EUR 16.8
million, consisting of 42.0 million shares. The counter-book value of
the share is EUR 0.40 per share. Each share entitles its holder to
one vote at general meetings of shareholders of the company. At the
end of the reporting period, the company did not hold any treasury
shares. At the end of the reporting period, shares held in 15 nominee
registers accounted for 87.66% of all Outotec shares.
TRADING AND MARKET CAPITALIZATION
Outotec's shares are listed on the OMX Nordic Exchange Helsinki
(OTE1V). In the reporting period, the highest quotation for a share
in the company was EUR 49.55 and the lowest EUR 19.25. The trading of
Outotec shares during the reporting period exceeded 103.7 million
shares, with a total value of over EUR 3,430 million. On April 27,
2007, the former parent company, Outokumpu Oyj, sold its remaining
stake, 12%, in Outotec Oyj. On September 30, 2007, Outotec's market
capitalization was EUR 2,079 million.
RESOLUTIONS OF THE ANNUAL GENERAL MEETING 2007
The Outokumpu Technology Oyj's Annual General Meeting (AGM) was held
on April 2, 2007, in Espoo, Finland. The AGM approved the parent
company's and the group's Financial Statements, and discharged the
members of the Board of Directors and the CEO from liability for the
2006 financial year. The AGM decided that a dividend of EUR 0.35 per
share be paid for the financial year that ended on December 31, 2006.
The dividend record date was April 5, 2007, and the dividends
(totaling EUR 14.7 million) were paid on April 17, 2007.
The AGM decided that the number of Board members, including Chairman
and Vice Chairman, should be five (5). Mr. Carl-Gustaf Bergström, Mr.
Karri Kaitue, Mr. Hannu Linnoinen, Mr. Anssi Soila and Mr. Risto
Virrankoski were re-elected as members of the Board of Directors for
the term expiring at the end of the next AGM. The AGM re-elected Mr.
Risto Virrankoski as the Chairman and Mr. Karri Kaitue as the Vice
Chairman of the Board of Directors.
The AGM confirmed the monthly remunerations paid to the Board members
as follows: Chairman EUR 3,000, Vice Chairman EUR 2,500, and other
Board members EUR 2,000, and in addition a meeting remuneration of
EUR 500 per meeting for each Board member.
KPMG Oy Ab, Authorized Public Accountants, was re-elected as the
company's auditor, with Mauri Palvi as auditor in charge. The fees
for the auditor are paid according to invoice.
Amendment to the Articles of Association and company's business name
The AGM approved the amendments to the Articles of Association,
including the change of the company's business name, to Outotec Oyj.
The change of business name became effective on April 24, 2007. Other
amendments include the technical revision of the company's line of
business and the election procedure of the Vice Chairman of the
Board, and other amendments of a technical nature.
BOARD'S AUTHORIZATIONS
The AGM authorized the Board of Directors to resolve upon issues of
shares as follows:
- The authorization includes the right to issue new shares,
distribute own shares held by the company, and the right to issue
special rights referred to in Chapter 10, Section 1 of the Companies
Act. This authorization to the Board of Directors does not, however,
entitle the Board of Directors to issue share option rights as an
incentive to the personnel.
- The total number of new shares to be issued and own shares held by
the company to be distributed under the authorization may not exceed
4,200,000 shares.- The Board of Directors is entitled to decide on the terms of the
share issue, such as the grounds for determining the subscription
price of the shares and the final subscription price as well as the
approval of the subscriptions, the allocation of the issued new
shares, and the final amount of issued shares.
The authorization shall be in force until the end of the next AGM.
The Annual General Meeting authorized the Board of Directors to
resolve upon the repurchase of the company's own shares as follows:
- The company may repurchase the maximum number of 4,200,000 shares
using free equity and deviating from the shareholders' pre-emptive
rights to the shares, provided that the number of own shares held by
the company will not exceed ten (10) percent of all shares of the
company.
- The shares are to be repurchased in public trading at the OMX
Nordic Exchange Helsinki at the price established in the trading at
the time of acquisition.
The authorization shall be in force until the end of the next AGM.
The authorizations have not been exercised by October 25, 2007.
EVENTS AFTER THE REPORTING PERIOD
In October, Outotec was awarded a contract by Votorantim Metais for
the supply of a complete zinc roasting plant including roasting, gas
cleaning and sulfuric acid plant, to be built in Cajamarquilla, Peru.
The value of the contract exceeds EUR 80 million.
Also in October, the company announced a contract with Hellas Gold in
Greece for the supply of a large technology package for Hellas Gold's
copper-gold concentrator plant in Skouries in northern Greece.
Outotec's delivery for the project covers proprietary technologies
for grinding, flotation, thickening, and automation - including
engineering and commissioning services. The value of the contract
exceeds EUR 30 million.
SHORT-TERM RISKS AND UNCERTAINTIES
Depending on the size and type of a project, project risks related to
offering and implementation phase are evaluated on a monthly and
quarterly basis. Because of the continuing robust global market
conditions, the company may experience some challenges in recruiting
and retaining skilled and experienced personnel in certain regions.
In the third quarter risk assessment, it was noted that a
construction cost related risk in one large ongoing project had been
realized and therefore some contingencies were used. There is still a
further risk that material and labor costs may rise later during the
implementation of the project.
Generally, high demand has led to a shortage of certain components
and equipment, and availability has remained tight in some regions
affecting delivery times and profit recognition.
Risks related to new commercialized products were evaluated and
quantified, and the necessary provisions were reserved.
More than half of Outotec's total cash flow is denominated in euros,
and the rest is divided among various currencies, which include U.S.
dollar, Brazilian real, and Australian dollar. However, depending on
the new projects, the weight of any given currency can change
materially, the majority of cash-flow-related risks are hedged in the
short and long term. The forecasted and probable cash flows are
hedged selectively and are always based on separate decisions and
risk analysis.
OUTLOOK FOR 2007
Demand for Outotec's minerals and metals technologies and services
continues to be strong. Following good financial performance, strong
order intake and backlog, coupled with sufficient resources, the
management expects that:
- sales for the full-year of 2007 will moderately exceed EUR 1
billion; and
- operating profit will grow significantly from the 2006 level and is
expected to moderately exceed EUR 90 million, subject to the timing
of project completions and the product mix of the new orders
received.
Espoo, October 25, 2007
Outotec Oyj
Board of Directors
For further information, please contact:
Outotec Oyj
Tapani Järvinen, CEO
tel. +358 20 529211
Vesa-Pekka Takala, CFO
tel. +358 20 529211, mobile +358 40 5700074
Eila Paatela, Vice President - Corporate Communications
tel. +358 20 5292004, mobile +358 400 817198
Rita Uotila, Vice President - Investor Relations
tel. +358 20 5292003, mobile +358 400 954141
Format for e-mail addresses: firstname.lastname(at)outotec.com
INTERIM FINANCIAL STATEMENTS (unaudited)
Income statement
Q3 Q3 Q1-Q3 Q1-Q3 Q1-Q4
EUR million 2007 2006 2007 2006 2006
Sales 245.9 179.9 684.6 500.9 740.4
Cost of sales -196.9 -142.3 -545.8 -401.2 -587.5
Gross margin 48.9 37.6 138.9 99.7 153.0
Other operating income 1.8 0.6 4.7 2.0 3.7
Selling and marketing expenses -10.2 -9.9 -32.8 -33.0 -46.1
Administrative expenses -10.2 -8.2 -31.8 -24.0 -35.0
Research and development
expenses -4.0 -4.3 -14.3 -12.8 -19.2
Other operating expenses 0.0 -1.1 -0.5 -2.6 -3.8
Share of results of associated
companies -0.3 -0.2 -1.0 -0.6 -1.1
Operating profit 26.0 14.5 63.1 28.6 51.6
Financial income and expenses
Interest income and expenses 3.3 3.5 8.7 7.2 9.3
Market price gains and losses 0.3 -0.2 -0.1 -1.6 -1.4
Other financial income and
expenses -0.8 -0.3 -3.0 -1.1 -2.9
Total financial income and
expenses 2.8 3.0 5.6 4.6 5.0
Profit before taxes 28.8 17.5 68.7 33.2 56.6
Income taxes -5.4 -6.1 -18.2 -13.1 -19.6
Net profit for the period 23.4 11.5 50.4 20.1 37.0
Attributable to:
Equity holders of the Company 23.4 11.5 50.5 20.1 37.1
Minority interest -0.0 -0.0 -0.0 -0.0 -0.0
Earnings per share for profit
attributable to the equity
holders of the Company:
Earnings per share, EUR 0.56 0.27 1.20 0.48 0.88
Diluted earnings per share, EUR 0.56 0.27 1.20 0.48 0.88
All figures in the tables have been rounded; consequently, the sum of
individual figures may deviate from the sum presented. Key figures
have been calculated using exact figures.
Condensed balance sheet
Sep 30 Sep 30 Dec 31
EUR million 2007 2006 2006
ASSETS
Non-current assets
Intangible assets 75.3 73.0 72.7
Property, plant and equipment 25.1 27.6 26.7
Non-current financial assets
Interest-bearing 1.7 1.1 1.1
Non interest-bearing 19.9 15.0 13.0
Total non-current assets 122.0 116.6 113.5
Current assets
Inventories *) 96.4 60.0 84.4
Current financial assets
Interest-bearing 0.3 0.8 1.0
Non interest-bearing 169.9 159.7 214.7
Cash and cash equivalents 248.9 129.5 171.4
Total current assets 515.4 350.1 471.4
TOTAL ASSETS 637.3 466.7 584.9
EQUITY AND LIABILITIES
Equity
Equity attributable to the equity
holders of the Company 188.3 127.0 144.0
Minority interest 0.0 0.0 0.0
Total equity 188.4 127.0 144.1
Non-current liabilities
Interest-bearing 2.0 3.6 2.2
Non interest-bearing 42.7 34.3 35.6
Total non-current liabilities 44.7 37.9 37.8
Current liabilities
Interest-bearing 1.1 1.2 1.2
Non interest-bearing **) 403.2 300.6 401.7
Total current liabilities 404.3 301.7 403.0
TOTAL EQUITY AND LIABILITIES 637.3 466.7 584.9
*)Of which advances paid for inventories amounted to EUR 17.8
million on September 30, 2007 (EUR 12.9 million on September 30,
2006 and EUR 30.0 million on December 31, 2006).
**)Of which advances received amounted to EUR 167.6 million on
September 30, 2007 (EUR 156.4 million on September 30, 2006, and EUR
194.8 million on December 31, 2006).
Statement of changes in equity
A = share capital, B = premium fund, C = other reserves, D = fair
value, reserves, E = cumulative translation differences, F = retained
earnings, G = minority interest, H = total equity
Attributable to the equity holders
EUR million of the Company
A B C D E F G H
Equity on Jan. 1,
2006 16.8 20.2 0.1 0.0 9.3 64.2 0.1 110.7
Fair value losses on
available-for-sale
financial assets - - - -0.0 - - - -0.0
Change in translation
differences - - - - -3.6 - 0.0 -3.6
Items recognized
directly in equity - - - -0.0 -3.6 - 0.0 -3.6
Net profit for the
period - - - - - 20.1 -0.0 20.1
Total recognized
income
and expenses - - - -0.0 -3.6 20.1 -0.0 16.5
Management stock
option
program:
Value of received
services - - - - - -0.2 - -0.2
Equity on Sep 30,
2006 16.8 20.2 0.1 -0.0 5.7 84.2 0.0 127.0
Equity on Jan. 1,
2007 16.8 20.2 0.1 - 5.8 101.1 0.0 144.1
Cash flow hedges:
Hedge result
deferred
to equity - - - 7.6 - - - 7.6
Deferred tax in
equity - - - -2.2 - - - -2.2
Change in translation
differences - - - - 3.1 - 0.0 3.1
Items recognized
directly in equity - - - 5.4 3.1 - 0.0 8.5
Net profit for the
period - - - - - 50.5 -0.0 50.4
Total recognized
income
and expenses - - - 5.4 3.1 50.5 -0.0 59.0
Dividends paid - - - - - -14.7 - -14.7
Equity on Sep 30,
2007 16.8 20.2 0.1 5.4 8.9 136.9 0.0 188.4
Condensed statement of cash flows
Q1-Q3 Q1-Q3 Q1-Q4
EUR million 2007 2006 2006
Cash flow from operating activities
Net profit for the period 50.4 20.1 37.0
Adjustments for
Depreciation and amortization 8.4 7.7 10.1
Impairments - 2.6 3.3
Other adjustments 18.2 6.1 10.9
Decrease (+) / increase (-) in working capital 24.5 -16.1 12.4
Interest received 7.8 7.8 9.8
Interest paid -0.1 -0.7 -0.4
Income tax paid -11.4 -7.1 -15.3
Net cash from operating activities 97.7 20.4 67.8
Purchases of assets -9.4 -5.5 -8.0
Proceeds from sale of assets 0.5 0.2 0.3
Change in other investing activities -0.6 -0.3 -0.3
Net cash from investing activities -9.5 -5.6 -8.0
Cash flow before financing activities 88.2 14.8 59.8
Repayments of long-term debt -0.3 -0.0 -0.4
Increase (+) / decrease (-) in current debt 0.0 -5.1 -4.8
Dividends paid -14.7 - -
Change in other financing activities -0.2 -1.2 -0.9
Net cash from financing activities -15.2 -6.2 -6.1
Other adjustment - 0.1 -
Net change in cash and cash equivalents 73.0 8.6 53.6
Cash and cash equivalents at the beginning
of the period 171.4 126.3 126.3
Foreign exchange rate effect on cash and
cash equivalents 4.4 -5.4 -8.6
Net change in cash and cash equivalents 73.0 8.6 53.6
Cash and cash equivalents
at the end of the period 248.9 129.5 171.4
Key figures
Q3 Q3 Q1-Q3 Q1-Q3 Q1-Q4
2007 2006 2007 2006 LTM **) 2006
Sales, EUR million 245.9 179.9 684.6 500.9 924.2 740.4
Gross margin, % 19.9 20.9 20.3 19.9 20.8 20.7
Operating profit,
EUR million 26.0 14.5 63.1 28.6 86.1 51.6
Operating profit in
relation to sales,
% 10.6 8.1 9.2 5.7 9.3 7.0
Profit before
taxes,
EUR million 28.8 17.5 68.7 33.2 92.1 56.6
Profit before taxes
in relation to
sales, % 11.7 9.7 10.0 6.6 10.0 7.6
Net cash from
operating
activities, EUR
million 75.4 19.8 97.7 20.4 145.1 67.8
Net
interest-bearing
debt
at the end of
period,
EUR million -247.8 -126.6 -247.8 -126.6 -247.8 -170.0
Gearing at the end
of
the period, % -131.6 -99.7 -131.6 -99.7 -131.6 -118.0
Equity-to-assets
ratio at
the end of period,
% 40.1 40.9 40.1 40.9 40.1 36.9
Capital
expenditure,
EUR million 2.9 1.7 9.9 5.5 12.4 8.0
Capital expenditure
in
relation to sales,
% 1.2 1.0 1.4 1.1 1.3 1.1
Return on
investment, % 66.3 54.6 56.9 38.4 60.6 45.4
Return on equity, % 53.7 37.7 40.5 22.6 42.7 29.1
Order backlog at
the end
of period, EUR
million 1,264.4 878.6 1,264.4 878.6 1,264.4 866.4
Order intake, EUR
million 417.9 370.9 1,078.8 796.9 1,314.1 1,032.2
Personnel average
for
the period 2,091 1,833 1,980 1,830 1,937 1,825
Net profit for the
period
in relation to
sales, % 9.5 6.4 7.4 4.0 7.3 5.0
Research and
development
expenses, EUR
million 4.0 4.3 14.3 12.8 20.7 19.2
Research and
development
expenses in
relation to sales,
% 1.6 2.4 2.1 2.6 2.2 2.6
Earnings per share,
EUR *) 0.56 0.27 1.20 0.48 1.60 0.88
Equity per share,
EUR *) 4.48 3.02 4.48 3.02 4.48 3.43
Dividend per share,
EUR - - - - 0.35 0.35
*)Outotec Oyj shares have been split on August 10, 2006 from 8.4
million to 42.0 million shares, after which counter-book value of a
share is EUR 0.40. Earnings per share and equity per share have been
calculated with 42.0 million shares.
**)Last twelve months
NOTES TO THE INCOME STATEMENT AND BALANCE SHEET
Interim financial statements are prepared in accordance with IAS 34
Interim Financial Reporting in keeping with the accounting policies
and methods as in the recent annual financial statements. These
interim financial statements are unaudited.
The comparison figures for 2006 are based on combined financial
statements, which have been prepared so that business structure and
combined financial information of Outotec would fairly present the
result of operations, cash flows and financial position of Outotec's
current operations.
Adoption of hedge accounting according to IAS 39 Financial
instruments: recognition and measurement
Starting from July 1, 2007, Outotec is applying cash flow hedge
accounting for one project to hedge its exposure to EUR/USD foreign
exchange rate fluctuations inherent to USD denominated cash flows.
The hedge results are recognized in the income statement in the same
periods as the project revenue. The hedged cash flows are customer
prepayments that are recognized as revenue in the income statement
using the percentage of completion method. The respective proportion
of the hedge results has been recognized in the income statement as
an adjustment to sales, and the remaining part in the cash flow hedge
reserve in equity. The amounts in the cash flow hedge reserve also
include a respective proportion of the realized result of hedges of
customer prepayments that have already taken place but not recognized
in income statement.
Use of estimates
The preparation of the financial statements in accordance with IFRS
requires management to make estimates and assumptions that 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 and other items. Although these estimates are
based on management's best knowledge of current events and actions,
actual results may differ from the estimates.
Adoption of new and amended standards and interpretations
Outotec has adopted the following new standards, renewed standards
and interpretations when they are effective.
- IFRS 7 Financial instruments: Disclosures (effective date January
1, 2007) and
- Amendment to IAS 1 - Presentation of financial statements: Capital
disclosures (effective date January 1, 2007).
The adoption of these new standards will mainly have impact on the
disclosure information on the 2007 financial statements.
- IFRIC 8 - Scope of IFRS 2 (effective date May 1, 2006)
- IFRIC 9 - Reassessment of Embedded Derivatives (effective date June
1, 2006) and
- IFRIC 10 Interim Financial Reporting and Impairment (effective date
November 1, 2006).
The adoption of these interpretations will not have impact on 2007
financial statements.
Outotec will estimate the impacts on the disclosure information for
the following standard in 2008:
IFRS 8 Operating segments (effective date January 1, 2009). The
standard has not yet been approved to be applied in the EU.
Major non-recurring items in operating profit for the period
Q1-Q3 Q1-Q3 Q1-Q4
EUR million 2007 2006 2006
One-time expenses related to the
listing - -0,8 -1,3
Income taxes
Q1-Q3 Q1-Q3 Q1-Q4
EUR million 2007 2006 2006
Current taxes -18.0 -11.2 -17.9
Deferred taxes -0.2 -1.8 -1.7
Total income taxes -18.2 -13.1 -19.6
The effective tax rate of the Group is 5.5 percentage points lower in
the third quarter than in the second quarter of 2007.
The decrease is mainly due to the tax reform enacted in Germany,
reducing the Group's net deferred tax liability as of January 1,
2007.
Property, plant and equipment
Sep 30 Sep 30 Dec 31
EUR million 2007 2006 2006
Historical cost at the beginning of the
period 77.4 76.2 76.2
Translation differences 0.8 -1.2 -1.7
Additions 3.6 4.1 5.2
Disposals -0.7 -0.3 -2.6
Reclassifications - - 0.0
Historical cost at the end of the period 81.2 78.8 77.4
Accumulated depreciation and impairment
at
the beginning of the period -50.7 -45.7 -45.7
Translation differences -0.3 0.7 0.6
Disposals 0.3 0.2 2.3
Reclassifications - - 0.0
Depreciation during the period -5.4 -5.4 -7.0
Impairment during the period - -1.0 -1.0
Accumulated depreciation and impairment
at
the end of the period -56.1 -51.2 -50.7
Carrying value at the end of the period 25.1 27.6 26.7
Commitments and contingent liabilities
Sep 30 Sep 30 Dec 31
EUR million 2007 2006 2006
Pledges 32.8 2.1 27.8
Guarantees for commercial commitments 203.9 76.4 121.3
Minimum future lease payments on
operating leases 47.8 20.7 51.2
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 4.1 million at September 30, 2007(at September 30,
2006: EUR 1.6 million and at December 31, 2006: EUR 0.4 million) and
for commercial guarantees including advance payment guarantees EUR
347.1 million at September 30, 2007 (at September 30, 2006: EUR 192.9
million and at December 31, 2006: EUR 259.4 million).
Derivative instruments
Currency forwards
Sep 30 Sep 30 Dec 31
EUR million 2007 2006 2006
Net fair values 12.5 -0.1 2.0
Contract amounts 388 87 103
Related party transactions
Transactions and balances with associated companies
Q1-Q3 Q1-Q3 Q1-Q4
EUR million 2007 2006 2006
Sales 0.0 0.2 0.3
Financial income and expenses 0.1 0.0 0.1
Loan receivables 1.2 1.1 1.3
Trade and other receivables 1.1 0.0 0.9
Current liabilities - 0.4 2.2
Sales and operating profit by quarters
EUR million Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07
Sales
Minerals
Processing 49.6 69.8 36.4 57.4 67.5 95.3 55.2 64.6 72.7
Base Metals 39.6 64.2 44.9 50.6 43.3 53.4 60.1 64.5 64.1
Metals
Processing 44.6 70.2 62.9 67.5 71.0 90.8 97.5 100.9 113.0
Other
Businesses 5.9 10.5 6.6 8.1 6.0 11.9 6.7 8.9 11.1
Unallocated
items
*) and
intra-group
sales -6.5 -8.3 -6.7 -6.8 -7.9 -11.9 -7.8 -11.7 -15.0
Total 133.1 206.4 144.2 176.8 179.9 239.6 211.7 227.1 245.9
Operating
profit
Minerals
Processing 2.3 4.6 -3.7 -1.9 5.2 13.1 1.9 3.3 3.6
Base Metals 1.2 12.7 5.6 7.1 4.1 6.7 9.4 13.2 12.1
Metals
Processing 2.9 6.1 4.1 6.1 5.6 5.3 4.7 10.5 11.5
Other
Businesses -0.1 -0.1 -0.5 0.2 -0.3 1.0 0.0 0.6 1.3
Unallocated
items
**) -0.7 -1.1 -1.5 -1.5 -0.2 -3.0 -2.4 -4.1 -2.5
Total 5.5 22.2 4.1 10.0 14.5 23.0 13.6 23.4 26.0
*)Unallocated items primarily include invoicing of internal
management and administrative services.
**)Unallocated items primarily include management and administrative
services and share of result of associated companies.
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 + financial income × 100
Total assets - non interest-bearing
debt (average for the period)
Return on equity = Net profit for the period × 100
Total equity (average for the
period)
Research and development = Research and development expenses
costs in the income statement (including expenses covered by
grants received)
Earnings per share = Net profit for the financial period
attributable to the equity holders
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
OUTOTEC'S INTERIM REPORT JANUARY-SEPTEMBER 2007 BRIEFING
A briefing, in which CEO Tapani Järvinen and CFO Vesa-Pekka Takala
will present the interim report, will be held in Helsinki, Finland.
BRIEFING
Date: Thursday, October 25, 2007
Time: 2.15-3.00pm (EEST)
Venue: Hotel Marski, Meeting room Carl, Mannerheimintie 10
JOINING VIA AUDIO WEBCAST
You may follow the briefing via a live audio webcast at
www.outotec.com/Presentations. Please, click in and register
approximately 5 to 10 minutes before the briefing.
JOINING VIA TELECONFERENCE
You may also join the briefing by telephone. To register as a
participant for the teleconference, please dial in 5-10 minutes
before the beginning of the event:
FI/UK: +44 20 7162 0125
US/CANADA: +1 334 323 6203
Password: Outotec
In addition, an instant replay service of the conference call will be
available until October 28 midnight on the following numbers:
FI/UK: +44 20 7031 4064
US/CANADA: +1 954 334 0342
Access code: 770487
The contact information is gathered for registration purposes only
and it is not used for commercial purposes.
Welcome!
FINANCIAL REPORTING SCHEDULE FOR 2008
Outotec will disclose the following financial information in 2008:
Financial statements for January-December 2007, on Friday, February
1, 2008
Interim report for January-March 2008, on Wednesday, April 23, 2008
Interim report for January-June 2008, on Wednesday, July 23, 2008
Interim report for January-September 2008, on Thursday, October 23,
2008
The Outotec Annual General Meeting will be held on Wednesday, March
19, 2008, in Espoo, Finland.
Outotec's Annual Report 2007 will be published in week 10.
DISTRIBUTION:
OMX Nordic Exchange Helsinki
Main media
www.outotec.com
© 2024 Nasdaq, Inc. All Rights Reserved |