January 30, 2009
Financial Statements Review January-December 2008
OUTOTEC OYJ STOCK EXCHANGE RELEASE JANUARY 30, 2009 AT 9.00 AM
FINANCIAL STATEMENTS REVIEW JANUARY-DECEMBER 2008
Good sales growth and profitability
- Dividend proposal EUR 1.00 per share
Financial year January 1-December 31, 2008 in brief (corresponding
2007 figures):
- Sales: EUR 1,217.9 million (EUR 1,000.1 million)
- Operating profit: EUR 120.2 million (EUR 96.1 million)
- Profit before taxes: EUR 136.3 million (EUR 104.8 million)
- Earnings per share: EUR 2.25 (EUR 1.85)
- Order intake: EUR 1,153.8 million (EUR 1,463.0 million)
- Order backlog: EUR 1,176.7 million (EUR 1,317.2 million)
- Unrealized and realized losses or gains related to fair valuation
of currency forward contracts: a loss of EUR 9.5 million (a gain of
EUR 3.7 million)
Fourth quarter of 2008 in brief (corresponding 2007 figures):
- Sales: EUR 398.8 million (EUR 315.5 million)
- Operating profit: EUR 47.5 million (EUR 33.0 million)
- Profit before taxes: EUR 52.4 million (EUR 36.1 million)
- Order intake: EUR 119.9 million (EUR 384.2 million)
CEO Tapani Järvinen:"In 2008, we implemented our strategy of continuous profitable growth
successfully. Markets in the mining and metals industry were strong
at the beginning of the year, but uncertainty in the world economy
weakened the demand for Outotec's products and services toward the
end of the year.
Our sales continued to grow from the previous year's level and
exceeded EUR 1.2 billion. I am particularly pleased with the increase
in the Services business. We also continued improving our operating
profit and margin, which was close to ten percent. The closing order
backlog was strong despite some minor cancellations and suspensions.
This gives us a good start for 2009.
In 2009, we will focus on our order intake and keeping our market
shares. We are also continuously looking for various ways to enhance
the sales. This includes cross-selling to new customer industries,
such as the energy industry and the water treatment sector. Our clean
technologies will provide a true competitive edge for Outotec in the
coming years.
We have analyzed various scenarios, and the first few months will
indicate how extensive cost-savings may be needed in order to
optimize the cost structure in response to changed business volume.
However, thanks to our flexible business model based on efficient use
of subcontractors, outsourcing, and temporary resources, we are in a
good position to adjust our operations to a changing market
situation."
Summary of key figures
Q4 Q4 Q1-Q4 Q1-Q4
2008 2007 2008 2007
Sales, EUR million 398.8 315.5 1,217.9 1,000.1
Gross margin, % 22.8 20.6 21.5 20.4
Operating profit, EUR million 47.5 33.0 120.2 96.1
Operating profit in relation to
sales, % 11.9 10.5 9.9 9.6
Profit before taxes, EUR million 52.4 36.1 136.3 104.8
Net cash from operating activities,
EUR million -36.7 45.3 106.6 143.0
Net interest-bearing debt at the end
of period, EUR million -314.6 -292.9 -314.6 -292.9
Gearing at the end of period, % -139.0 -136.4 -139.0 -136.4
Working capital at the end of period,
EUR million -171.2 -153.9 -171.2 -153.9
Return on investment, % 92.7 71.9 61.6 59.8
Return on equity, % 64.1 53.9 42.6 43.3
Order backlog at the end of the
period, EUR million 1,176.7 1,317.2 1,176.7 1,317.2
Order intake, EUR million 119.9 384.2 1,153.8 1,463.0
Personnel, average for the period 2,628 2,185 2,483 2,031
Earnings per share, EUR 0.84 0.65 2.25 1.85
Dividend per share, EUR - - 1.00*) 0.95
*) Board of Directors' proposal for dividend per share.
OUTLOOK FOR 2009
The investment activity in the mining and metals industry is low
because the worldwide economic climate is uncertain. Furthermore, the
crisis in the financial markets impacts the investments of the
industry, especially concerning major greenfield projects and
companies with weak capital structure. Customers who have financing
available for their new investments are re-evaluating project scopes
and prices in anticipation of possibly lower capital costs.
The prevailing uncertainty obscures the current outlook for the
mining and metals industry. However, Outotec has a relatively good
starting point for 2009. On the basis of the existing order backlog
and new order prospects, management expects that in 2009:
- Sales will contract by approximately one quarter from 2008 figure,
- Gross margin will continue on a healthy level, and
- Operating profit margin will be lower than in 2008 because of lower
sales volume.
Operating profit is dependent on exchange rates, product mix, timing
of new orders and project completions. Operating profit tends to
accrue more toward the year-end.
FINANCIAL STATEMENTS REVIEW JANUARY-DECEMBER 2008
MARKETS
Markets in the mining and metals industry were strong in the
beginning of the year, but uncertainty in the world economy weakened
the demand for Outotec's products and services towards the end of the
year. In 2008, customers initiated various ferrous metals, base
metals, and sulfuric acid projects. There was also demand in aluminum
and ferroalloys technologies. Opportunities for selling existing
technologies to other process industries, such as fertilizer and
energy industry, continued to emerge.
When metal prices are low, customers need to reduce their unit costs
and improve competitiveness by investing in plant modernization,
equipment, and services. In addition, mining companies still face the
challenge of declining ore grades. The financial crisis has also hit
the developing markets such as China and India, but it is expected
that countries with a vast population and strong economic growth will
continue to need both ferrous and non-ferrous metals. Even though the
decrease in metal prices is currently delaying investments, the
global mining houses still have long-term investment plans. In
addition, tightening environmental regulations and rising energy and
other production costs require mining and metals companies to invest
in more energy efficient and environmentally sustainable processes.
As long as the worldwide economic conditions continue to be
uncertain, also investment activity in the mining and metals industry
will be low. Some of Outotec's customers have difficulties in
arranging financing packages, especially for greenfield projects. In
addition, customers who have financing available are re-evaluating
project scopes and prices in order to benefit from the lower capital
costs of their new investments. Also delivery times are expected to
decrease as more resources become available. However, the mining and
metals companies' updated investment plans are still above the
historical levels, and they see that in the long-term demand for
metals will continue.
ORDER INTAKE
The order intake in 2008 amounted to EUR 1,153.8 million (2007: EUR
1,463.0 million). The fourth quarter 2008 order intake totaled EUR
119.9 million (Q4/2007: EUR 384.2 million). Orders received in the
fourth quarter included smaller equipment deliveries and services to
existing customers.
Major new orders in the fourth quarter included:
- expansion of a phosphate concentrator for Yara in Siilinjärvi,
Finland (EUR 28 million); and
- basic engineering for oil shale plant of Eesti Energia in Narva,
Estonia.
Russian Copper Company's Miheevsky concentrator project (EUR 175
million), which was announced on October 3, 2008, was suspended. The
customer decided to suspend the project because of difficulties in
arranging financing. The order was not reported in Outotec's order
intake or backlog at any point.
Major new orders in the third quarter of 2008 included:
- an iron ore pelletizing plant for Tata Steel in Jamshedpur, India
(EUR 70
million); and
- an iron ore sinter plant for SAIL's Rourkela Steel Plant in Orissa,
India (over EUR 25 million).
Major new orders in the second quarter of 2008 included:
- grinding technology for a major international mining company (EUR
75 million);
- grinding technology, including spare parts and services for Nordic
Mines of Sweden for its gold project in Finland and for Polymetal
Trading of Russia for the Albazino and Dukat projects (EUR 25
million);
- new environmentally sound technology for Shougang Jingtang United
Iron & Steel for Shougang's iron ore pelletizing plant project in
Caofeidan, China (EUR 29 million);
- engineering and equipment delivery for a new sulfuric acid plant in
Moron, Venezuela for Petroquimica de Venezuela (EUR 90 million);
- flotation and thickening technology for Salobo Metais in Brazil
(EUR 9 million); and
- a copper solvent extraction and electrowinning plant for Southern
Peru Copper Corporation in Peru (USD 150 million, or over EUR 90
million, out of which USD 90 million was already included in the
second quarter order backlog).
Major new orders in the first quarter of 2008 included:
- basic engineering and proprietary and special equipment for two
iron ore sinter plants for Bhushan Steel in Orissa State, India (EUR
18 million);
- several aluminum technology orders in China, among them a sow
casting system for Huomei Hongjun Aluminium-Power Company, a
vibrocompactor and rodshop process equipment for China Aluminium
International Trading, and a sow casting system and key rodshop
equipment for Yellow River Hydropower Development Company (EUR 17
million);
- minerals processing technology for Mirabela Mineração of Brazil for
a new nickel sulfide concentrator and a slag concentrator for Umicore
Med for the Pirdop copper smelter in Bulgaria (EUR 21 million);
- modernization of a copper flash smelting furnace for KGHM Polska
Miedz in Poland (over EUR 10 million);
- a chromite ore pelletizing plant and preheating kilns for ASA
Metals in South Africa (EUR 25 million); and
- three-year service agreements with Boliden's Harjavalta and Kokkola
plants and with Norilsk Nickel's Harjavalta plants in Finland.
ORDER BACKLOG
The order backlog at the end of 2008 totaled EUR 1,176.7 million
(2007: EUR 1,317.2 million), representing an 11% decrease from the
2007 corresponding figure. The closing backlog at year-end 2008 would
have been approximately EUR 60 million higher when valued at previous
year-end's exchange rates.
At the end of 2008, Outotec's order backlog included 24 projects with
a value in excess of EUR 10 million, accounting for 70% of the total
backlog. According to the management's estimate, some 60% of the
current backlog will be delivered in 2009 and the rest in 2010 and
beyond. Roughly 3% of the projects in Outotec's current backlog
belong to mining companies, which are building their first processing
plants.
Outotec's third drinking water treatment facility project in Sri
Lanka (USD 100 million), which was published on September 3, 2007,
will not be implemented, on account of further delayed financing.
Because the original supply contract was conditional and subject to
financing, it has never been included in Outotec's order backlog.
In the fourth quarter, some customers initiated negotiations
concerning suspensions and minor cancellations of their projects, the
total value concerned being some EUR 100 million.
SALES AND FINANCIAL RESULT
Outotec's sales in 2008 totaled EUR 1,217.9 million (2007: EUR
1,000.1 million), representing 22% growth from 2007. Sales for the
fourth quarter were EUR 398.8 million (2007: EUR 315.5 million). The
increase in sales was a result of higher delivery volumes and better
pricing. Historically, the fourth quarter has been the highest in
terms of sales volume.
The Services business, which is included in the divisions' sales
figures, contributed EUR 141.2 million to sales in 2008 (2007: EUR
80.6 million), up 75% from the corresponding 2007 level. The sales of
the Services business in the fourth quarter totaled EUR 54.2 million
(Q4/2007: EUR 28.8 million), up 88% from the corresponding 2007
level. The growth of the Services business is result from strong
efforts to develop the business globally. Outotec's large installed
base and high operating levels have provided a good foundation for
growth.
The operating profit for 2008 was EUR 120.2 million (2007: EUR 96.1
million), representing 9.9% of sales (2007: 9.6%). Realized and
unrealized losses related to fair valuation of currency forward
contracts, which are not included in the hedge accounting, weakened
profitability by EUR 9.5 million in 2008 (2007: a gain of EUR 3.7
million). The shares of Intune Circuits Ltd were sold, and a loss of
EUR 1.1 million was recognized from the divestment.
Typically, the operating profit accrues more toward the year-end. In
the fourth quarter, the operating profit was EUR 47.5 million
(Q4/2007: EUR 33.0 million), and the corresponding profit margin was
11.9% (Q4/2007: 10.5%). There were major successful final project
completions including releases of project provisions in Brazil,
China, Chile, and Australia. The interim award of the arbitration
tribunal in the USA related to the Pattison project caused a one-time
cost of over EUR 8.5 million.
In 2008, Outotec's total fixed costs were EUR 123.3 million (2007:
EUR 111.5 million). The increase in fixed costs was caused by higher
administration costs as well as sales and marketing costs related to
business development and growth, recruiting of new personnel
worldwide, management and employee bonuses, and information
technology (IT) costs. The increase in IT costs stemmed from
Outotec's independent status, purchasing of IT licenses and tools
necessitated by business growth, and increased personnel numbers, as
well as infrastructure costs for the newly established companies in
India and Kazakhstan. The figure for fixed costs also included costs
related to human resources development, as well as strengthening of
the Services business.
Outotec's profit before taxes for 2008 was EUR 136.3 million (2007:
EUR 104.8 million). Net finance income, EUR 16.1 million,
strengthened profit before taxes. Net profit for 2008 was EUR 93.9
million (2007: EUR 77.6 million). Taxes totaled EUR 42.4 million
(2007: EUR 27.2 million), representing an effective tax rate of 31.1%
(2007: 26.0%), including the negative tax effect of the Pattison
project. In 2007, the Group's effective tax rate was exceptionally
low because of the tax reform enacted in Germany. In the long-term,
the Group's tax rate is estimated to be at a level of 30%. Earnings
per share were EUR 2.25 (2007: EUR 1.85).
Outotec's return on equity for 2008 was 42.6% (2007: 43.3%), and
return on investment was 61.6% (2007: 59.8%).
Sales by destination, % 2008 2007
Europe (including CIS) 23 27
Africa 12 11
Asia (including Middle East) 29 15
Australia and Pacific 8 11
North America 5 4
South America 23 32
Total 100 100
Sales by metals, % 2008 2007
Copper 22 28
Iron 12 25
Aluminum 12 10
Ferroalloys 6 2
Precious metals 10 7
Zinc 9 6
Nickel 7 5
Sulfuric acid 13 9
Other 9 8
Total 100 100
Sales and operating profit by segment
Q4 Q4 Q1-Q4 Q1-Q4
EUR million 2008 2007 2008 2007
Sales
Minerals Processing 144.8 110.5 419.6 302.9
Base Metals 86.4 85.6 295.3 274.2
Metals Processing 163.9 120.8 494.7 432.3
Other Businesses 18.8 11.1 56.0 37.8
Unallocated items*) and intra-group sales -15.1 -12.5 -47.7 -47.0
Total 398.8 315.5 1,217.9 1,000.1
Operating profit
Minerals Processing 12.1 16.3 22.5 25.2
Base Metals 17.2 9.3 48.7 43.9
Metals Processing 22.1 11.5 61.1 38.1
Other Businesses 0.7 0.3 3.9 2.2
Unallocated**) and intra-group items -4.6 -4.4 -16.0 -13.3
Total 47.5 33.0 120.2 96.1
*) Unallocated items primarily include invoicing of internal
management and administrative services.
**) Unallocated items primarily include internal management and
administrative services and the share of the result of associated
companies.
Minerals Processing
Minerals Processing division's sales grew 39% in 2008 from the
previous year's level and totaled EUR 419.6 million (2007: EUR 302.9
million). The growth in sales came from the higher proportion of
process solution projects and larger equipment deliveries under
execution. The division completed the deliveries for the Boddington
gold mine in Australia and the Macraes gold mine in New Zealand.
Operating profit was EUR 22.5 million (2007: EUR 25.2 million),
representing 5.4% of the division's sales (2007: 8.3%). Two major
items reduced the division's operating profit. In the fourth quarter,
the interim award of the U.S. arbitration tribunal in Iowa,
sustaining Pattison Sand Company's claim and rejecting Outotec's
counterclaim, caused over EUR 8.5 million one-time cost. In addition,
the fair valuation of the currency forward contracts, mainly between
the Australian dollar and the U.S. dollar and between the euro and
Swedish krona caused a realized and unrealized loss of EUR 8.9
million (2007: a gain of EUR 3.0 million). With the seasonal nature
of the fiscal year, profit generation for the Minerals Processing
division is typically weaker in the first half of the year and
stronger in the second half.
Base Metals
Base Metals division's sales grew 8% in 2008 from the 2007 level,
totaling EUR 295.3 million (2007: EUR 274.2 million). The operating
profit was EUR 48.7 million (2007: EUR 43.9 million), representing
16.5% of the division's sales (2007: 16.0%). Base Metals completed a
new flash smelting - flash converting plant project in Yanggu, China.
Operating profit for the reporting period included also a realized
and unrealized gain of EUR 1.2 million related to fair valuation of
currency forward contracts between the Chilean peso, euro, and U.S.
dollar (2007: a loss of EUR 0.4 million).
Metals Processing
Metals Processing division's sales in 2008 grew over 14% from the
previous year's figure, to EUR 494.7 million (2007: EUR 432.3
million). The growth came mainly from the good progress in sulfuric
acid plant, roasting plant, and aluminum projects. Operating profit
improved significantly and was EUR 61.1 million (2007: EUR 38.1
million), representing 12.3% of the division's sales (2007: 8.8%).
The positive effect came from the volume growth, license fee income,
project margin improvements, change orders, and a number of
successful project completions. The division completed large
pelletizing plant project for Samarco, in Brazil, as well as the
Lurec sulfuric acid technology delivery in Yanggu, China. The
division received Samarco's Excellence Award for its performance in
project implementation.
BALANCE SHEET, FINANCING AND CASH FLOW
Net cash flow from operating activities in 2008 continued strong at
EUR 106.6 million (2007: EUR 143.0 million). The biggest changes in
2008 lowering the net cash flow from operating activities were in
taxes paid and financing needs for business operations. The main
positive influences were the good result and the interest income
created by the strong cash position. The parent company paid out EUR
39.9 million (2007: EUR 14.7 million) in dividends in April 2008.
In 2008, Outotec's cash and cash equivalents totaled EUR 317.8
million (2007: EUR 291.0 million). The company invests its excess
cash in short-term money market instruments such as bank deposits and
corporate commercial papers. Investments are made within pre-approved
counterparty-specific limits and tenors, which Outotec reviews
regularly. On December 31, 2008, no money market investment had
remaining maturity exceeding three months.
Outotec's working capital amounted to EUR -171.2 million on December
31, 2008 (December 31, 2007: EUR -153.9 million). The working capital
improved mostly because of advances received from customers and low
inventory levels.
The balance sheet structure remained strong, and the financing
structure was healthy. Net interest-bearing debt on December 31,
2008, came to EUR -314.6 million (December 31, 2007: EUR -292.9
million). The advances received at the end of 2008 totaled EUR 214.0
million (December 31, 2007: EUR 190.1 million). Advances received
reduced in the fourth quarter 2008 because of the lack of large new
orders. Net advances at the end of 2008 amounted to EUR 197.6
million, taking into account the EUR 16.4 million advances paid to
subcontractors. Outotec's gearing at the end of the reporting period
was -139.0% (December 31, 2007: -136.4%), and the equity-to-assets
ratio was 35.0% (December 31, 2007: 38.2%).
The company's capital expenditure in 2008 was EUR 23.9 million (2007:
EUR 11.6 million), which consisted largely of the acquisition of
Auburn Group in the fourth quarter. In addition, investments were
made in information technology, intellectual property rights,
equipment and machinery. The maintenance capital expenditure is
estimated to be on the annual level of EUR 15 million.
The committed multi-currency guarantee facility, with a nominal value
of EUR 480 million, is Outotec's main credit agreement. In the third
quarter, the final maturity date of this agreement was extended to
2011. In addition to this facility, the company has other bilateral
facility agreements. These enable business volume growth for the
company.
Guarantees for commercial commitments, including advance payment
guarantees issued by the parent and other Group companies, came to
EUR 353.8 million on December 31, 2008 (December 31, 2007: EUR 391.9
million), showing an increase from the previous year's corresponding
level relative to business growth.
Outotec has entered into an agreement with a third-party service
provider concerning administration and hedging of the share-based
incentive program for key personnel. As part of this agreement, for
hedging of the underlying cash flow risk, the service provider has
purchased 265,000 Outotec shares that have been funded by Outotec and
accounted for as treasury shares in Outotec's consolidated balance
sheet.
ACQUISITIONS AND DIVESTMENTS
In the fourth quarter, Outotec closed the acquisition of Auburn
Group, a Canadian service provider for the mining and metals
industries. The company provides maintenance and technical services
mainly in Canada and Chile. In 2008, the sales for Auburn Group were
approximately EUR 20.0 million (CAD 31.2 million) and the operating
profit approximately EUR 0.1 million (CAD 0.2 million). The sales of
the acquired company for October 10, 2008 - December 31, 2008 totaled
EUR 3.0 million and the operating profit EUR -0.2 million.
The final acquisition price was approximately EUR 10 million (CAD
15.6 million). The final purchase price allocation will be completed
in the first quarter of 2009.
In the third quarter, Outotec sold its holding in Intune Circuits
Ltd, a RFID (radio frequency identification) antenna producer, to
Savcor Group Ltd. The transaction had a EUR 1.1 million negative
effect on Outotec's 2008 operating profit.
RESEARCH AND TECHNOLOGY DEVELOPMENT
In 2008, Outotec's research and technology development expenses
totaled EUR 20.2 million (2007: EUR 19.9 million), representing 1.7%
of sales (2007: 2.0%). Outotec filed 45 new priority patent
applications (2007: 45), and 277 new national patents were granted
(2007: 303).
In the fourth quarter, Outotec and Eesti Energia agreed to establish
a joint venture for development and marketing of sustainable, energy
efficient, and economically viable oil shale processing methods. The
suitability of the circulating fluidized bed (CFB) technology was
tested at the Frankfurt pilot plant. In December, the companies
signed an agreement for basic engineering of the first CFB-based oil
shale plant, to be built in Narva, Estonia.
In the fourth quarter, the continuous pilot-scale HydroCopper® test
run with Zangezur's copper concentrate was carried out in the
HydroCopper demonstration plant in Pori, Finland. The test run with
280 tonnes of concentrate started in October 2008 and continued until
January 2009. In April 2008, the companies signed a Heads of
Agreement for the basic engineering and implementation of a
HydroCopper plant in Armenia.
In November, Outotec's Research Center in Pori received a "Recognised
for Excellence" quality award in Finland.
In the third quarter, an internal assessment of Outotec's
technologies and their energy efficiency and environmental impact was
completed. According to OECD definitions, some 70% of the 2008 (2007:
80%) order intake can be classified as Environmental Goods and
Services (EGS). The study also showed that 63% of Outotec's
technologies are EGS technologies and, depending on the application,
further 33% can be considered as EGS.
In the second quarter, Outotec granted 22 employees a technology
award for their innovative work in developing new and existing
technologies. The awards totaled EUR 96,000.
Moreover, Outotec joined the energy research program of Helsinki
University of Technology in the second quarter. One of the research
topics is minimization of energy losses in combustion processes.
In the first quarter of 2008, Outotec and the Geological Survey of
Finland reached a partnership agreement for enhancing collaboration
in research and development of mineral technology.
PERSONNEL
At the end of 2008, Outotec had a total of 2,674 employees (December
31, 2007: 2,144). For 2008, Outotec had, on average, 2,483 employees
(2007: 2,031). The average number of personnel increased by 452 since
2007 because of business growth and active recruitment. Temporary
employees accounted for close to 15%, or about 400, of the total
number of employees at the end of 2008.
Distribution of personnel by country
December 31, 2008 December 31, 2007 Change, %
Finland 925 835 10.8
Germany 380 323 17.6
Rest of Europe 249 219 13.7
Americas 758 463 63.7
Australia 225 185 21.6
Rest of the world 137 119 15.1
Total 2,674 2,144 24.7
The most notable increase in personnel was seen in North America,
where the Auburn acquisition increased the number of personnel by
224. At the end of 2008, the company had, in addition to the
personnel on Outotec's payroll, more than 560 full-time-equivalent
contracted people working in project execution. The number of
contracted workers at any given time changes in response to the
active project mix and project commissioning, local legislation and
regulations, and seasonal fluctuations. The flexible use of resources
such as subcontracted personnel is a key for Outotec's business
model.
In 2008, salaries and other employee benefits totaled EUR 157.7
million (2007: EUR 135.4 million).
SHARE-BASED INCENTIVE PROGRAMS
Outotec has two share-based incentive programs for the company's key
personnel: Incentive Program 2007-2008 and Incentive Program
2008-2010.
Some 20 key employees participate in the Share-based Incentive
Program for 2007-2008, which started on January 1, 2007, and ended on
December 31, 2008. The reward payable is determined by the
achievement of the targets set by the Board of Directors for the
development of the company's net profit and order backlog. The reward
is paid in shares and as a cash payment. The shares will be allocated
to the key personnel in the spring of 2009. The maximum reward in the
incentive program is EUR 6.7 million. For more information, please
see Outotec's stock exchange release of March 23, 2007.
Incentive Program 2008-2010 comprises three calendar-year periods.
For the 2009 and 2010 earning periods, the incentive program covers
approximately 60 key employees. The reward payable is determined by
the achievement of the annual corporate growth targets set by the
Board of Directors for earnings per share, order backlog, and the
company's Services business. The potential incentives for the 2008
earning period will be paid in 2009. Approximately half of the
incentives will be paid as Outotec shares and half in cash. For the
2008 earning period, the incentive program covers approximately 30
key employees. Those some 20 key employees who belong to Share-based
Incentive Program 2007-2008 are not included in the 2008 earning
period of the 2008-2010 program. For more information, please see
Outotec's stock exchange release of March 3, 2008.
RESOLUTIONS OF THE 2008 ANNUAL GENERAL MEETING
The Outotec Annual General Meeting was held on March 18, 2008, in
Espoo, Finland. The Annual General Meeting decided that a dividend of
EUR 0.95 per share should be paid for the financial year that ended
on December 31, 2007. The dividends, totaling EUR 39.9 million, were
paid on April 1, 2008.
The Annual General Meeting decided that the number of Board members,
including the Chairman and Vice Chairman, should be five. 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
Annual General Meeting. The Annual General Meeting re-elected Mr.
Risto Virrankoski as the Chairman of the Board of Directors, and in
its assembly meeting the Board of Directors elected Mr. Karri Kaitue
as its Vice Chairman.
The Annual General Meeting confirmed the remuneration of Board
members as follows: Chairman EUR 5,000 per month, other Board members
EUR 3,000 per month each, and Vice Chairman and Chairman of the Audit
Committee in addition EUR 1,000 per month each. In addition, each
Board member will be paid EUR 500 for attendance of each Board and
Committee meeting, as well as reimbursement for direct costs arising
from Board work.
KPMG Oy Ab, Authorized Public Accountants, was re-elected as the
company's auditor, with Mr. Mauri Palvi as Auditor in charge.
The Annual General Meeting 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. However, this authorization to the Board of Directors does not
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 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 NASDAQ
OMX Helsinki Ltd at the price established in the trading at the time
of acquisition.
The above-mentioned authorizations shall be in force until the next
Annual General Meeting. The authorizations had not been exercised as
of January 30, 2009.
SHARES AND SHARE CAPITAL
Outotec's shares are listed on the NASDAQ OMX Helsinki Ltd (OTE1V).
Outotec's share capital is EUR 16.8 million, consisting of 42.0
million shares. Each share entitles its holder to one vote at general
meetings of shareholders of the company.
TRADING AND MARKET CAPITALIZATION
In the reporting period, the volume-weighted average price for a
share in the company was EUR 26.28, the highest quotation for a share
being EUR 45.76 and the lowest EUR 8.52. The trading of Outotec
shares in the reporting period exceeded 158 million shares, with a
total value of over EUR 4,140 million. On December 31, 2008,
Outotec's market capitalization was EUR 454 million and the last
quotation for the share was EUR 10.80.
On December 31, 2008, the company did not hold any treasury shares
for trading purposes. In the first quarter 2008, Outotec entered into
an agreement with a third-party service provider concerning the
administration and hedging of the share-based incentive program for
key personnel. As part of this agreement, in order to hedge the
underlying cash flow risk, the service provider has purchased 265,000
Outotec shares that have been funded by Outotec and accounted (IFRS)
as treasury shares in Outotec's consolidated balance sheet.
On January 7, 2008, UBS AG's group holding in shares of Outotec Oyj
fell below 5% and amounted to 2,040,807 shares, which represented
4.86% of the share capital and votes in the company. On January 4,
2008, UBS AG's group holding in shares of Outotec Oyj exceeded 5% and
amounted to 2,331,573 shares, which represented 5.55% of the share
capital and votes in the company. On April 25, 2008, Morgan Stanley's
group holding in shares of Outotec Oyj fell to under 5% and amounted
to 2,062,917 shares, representing 4.91% of the share capital and
votes in the company. On March 25, 2008, Morgan Stanley's group
holding in shares of Outotec Oyj exceeded 5%, and amounted to
3,517,978 shares, which represented 8.37% of the share capital and
votes in the company. On October 15, 2008, Ilmarinen Mutual Pension
Insurance Company's holding in shares of Outotec exceeded 5%.
Ilmarinen's holding in shares of Outotec amounted to 2,138,448
shares, which represented 5.09% of the share capital. On December 31,
2008, shares held in 13 nominee registers accounted for some 60% of
all Outotec shares.
EVENTS AFTER THE REPORTING PERIOD
Outotec has agreed with Noracid S.A. on the delivery of a new
sulfuric acid plant to be built in Mejillones, Chile. The contract
value is approximately EUR 51 million.
SHORT-TERM RISKS AND UNCERTAINTIES
Outotec's customers operate mainly in the mining and metals industry
and in geographical areas that are at different stages of the
economic cycle. The financial crisis has started to manifest itself
in all Outotec's market areas. If the demand for metals in developing
economies, such as China, India, Brazil, and the CIS countries,
decreases significantly, further reduction in the demand for
Outotec's products and services is possible.
The uncertain financial conditions continue to influence Outotec
customers' investment activities in new projects. In the fourth
quarter, some customers initiated negotiations concerning suspension
and minor cancellation of their projects, the total value affected
being some EUR 100 million. Some further postponements, suspensions,
and cancellations may still arise.
At the same time, customers have in increasing numbers requested
export credits for their projects. This is evidenced by the increase
in total value of export guarantee applications linked to Outotec's
sales projects. If there will be export credit limitations for
certain countries, these types of restrictions may further complicate
and lengthen sales negotiations.
Some of Outotec's projects have proceeded more slowly than scheduled,
and the lengthening of delivery times, caused mainly by factors
outside Outotec's project scope, could generate more costs, quality
issues, and functionality problems. Outotec has systematic procedures
- Project Risk Identification and Management (PRIMA) - in place to
monitor these exposures and projects.
Outotec's Services business comprises different types of plant and
expert services. Although Outotec's large installed base offers great
growth potential for Services business, it will not be completely
immune to the effects of the financial crisis. If the situation
remains the same or becomes worse, customers may reduce their
purchase of services.
In connection with Outotec's risk assessment for the fourth quarter
of 2008, all unfinished projects using percentage of completion and
completed contract method were monitored and evaluated, and
contingencies were updated. Projects whose stage of completion was
close to 100% were evaluated, and provisions for performance
guarantees and warranty period guarantees, along with possible
provisions for project losses, were updated. There were no material
increases in the total project risk provisions. In 2008, there were
no material credit losses related to the payments by Outotec's
counterparties. If the uncertainty in the financial market continues,
the counterparties may face the need to renegotiate some payment
terms. In addition, there is a risk that in some market areas small
mining companies experience financial difficulties and that lack of
financing can result in bankruptcies among Outotec's current and
future customers.
More than half of Outotec's total cash flow is denominated in euros.
The rest is divided among various currencies, including the U.S.
dollar, Australian dollar, Brazilian real, Canadian dollar, and South
African rand. The U.S. dollar's proportion has been rising. The
weight of any given currency in new projects can fluctuate
substantially, but most cash-flow-related risks are hedged in the
short and long term. In the short-term, these currency fluctuations
may create volatility in the operating profit. The forecast and
probable cash flows are hedged selectively and always on the basis of
separate decisions and risk analysis. The cost of hedging is taken
into account in project pricing.
Outotec business model is based on customer advance payments and
mainly on-demand guarantees issued by Outotec relationship banks.
Changes in advance payments received have an impact on the liquidity
of Outotec. Furthermore, high exposure of on-demand guarantees may
increase the risk of claims. The cash held by Outotec is invested
mainly in short-term bank certificates of deposits and to lesser
extent in corporate short-term notes. The lower interest rate levels
reduce the interest income generated from these investments.
Outotec is involved in a few legal and arbitration proceedings. The
reserves for these proceedings have been updated as of year-end 2008,
and the total value is approximately EUR 9 million.
OUTLOOK FOR 2009
The investment activity in the mining and metals industry is low
because the worldwide economic climate is uncertain. Furthermore, the
crisis in the financial markets impacts the investments of the
industry, especially concerning major greenfield projects and
companies with weak capital structure. Customers who have financing
available for their new investments are re-evaluating project scopes
and prices in anticipation of possibly lower capital costs.
The prevailing uncertainty obscures the current outlook for the
mining and metals industry. However, Outotec has a relatively good
starting point for 2009. On the basis of the existing order backlog
and new order prospects, management expects that in 2009:
- Sales will contract by approximately one quarter from 2008 figure,
- Gross margin will continue on a healthy level, and
- Operating profit margin will be lower than in 2008 because of lower
sales volume.
Operating profit is dependent on exchange rates, product mix, timing
of new orders and project completions. Operating profit tends to
accrue more toward the year-end.
Espoo, on January 30, 2009
Outotec Oyj
Board of Directors
For further information, please contact:
Outotec Oyj
Tapani Järvinen, President and 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@outotec.com
CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Income statement
Q4 Q4 Q1-Q4 Q1-Q4
EUR million 2008 2007 2008 2007
Sales 398.8 315.5 1,217.9 1,000.1
Cost of sales -308.0 -250.6 -956.2 -796.4
Gross profit 90.8 64.9 261.7 203.8
Other income 0.6 2.2 0.9 5.9
Selling and marketing expenses -14.2 -11.8 -48.0 -44.6
Administrative expenses -15.7 -15.1 -55.1 -47.0
Research and development expenses -5.5 -5.6 -20.2 -19.9
Other expenses -8.5 -1.1 -19.1 -0.7
Share of results of associated
companies - -0.4 - -1.4
Operating profit 47.5 33.0 120.2 96.1
Finance income and expenses
Interest income and expenses 3.9 3.7 16.4 12.4
Market price gains and losses 1.6 0.3 3.2 0.2
Other finance income and expenses -0.6 -0.9 -3.4 -3.9
Net finance income 4.9 3.1 16.1 8.7
Profit before income taxes 52.4 36.1 136.3 104.8
Income tax expenses -17.3 -9.0 -42.4 -27.2
Profit for the period 35.1 27.2 93.9 77.6
Attributable to:
Equity holders of the parent
company 35.1 27.1 94.0 77.6
Minority interest - 0.0 -0.0 0.0
Earnings per share for profit attributable to
the equity holders of the parent company:
Basic earnings per share, EUR 0.84 0.65 2.25 1.85
Diluted earnings per share, EUR 0.84 0.65 2.25 1.85
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 balance sheet
December 31, December 31,
EUR million 2008 2007
ASSETS
Non-current assets
Intangible assets 81.4 74.8
Property, plant and equipment 29.5 24.6
Non-current financial assets
Interest-bearing 0.5 3.4
Non interest-bearing 21.3 17.3
Total non-current assets 132.7 120.0
Current assets
Inventories *) 87.7 117.0
Current financial assets
Interest-bearing 0.4 0.8
Non interest-bearing 323.2 224.0
Cash and cash equivalents 317.8 291.0
Total current assets 729.1 632.8
TOTAL ASSETS 861.8 752.8
EQUITY AND LIABILITIES
Equity
Equity attributable to the equity holders
of the parent company 226.4 214.7
Minority interest - 0.1
Total equity 226.4 214.8
Non-current liabilities
Interest-bearing 2.6 1.2
Non interest-bearing 74.3 58.2
Total non-current liabilities 76.9 59.5
Current liabilities
Interest-bearing 1.5 1.0
Non interest-bearing **) 557.0 477.6
Total current liabilities 558.4 478.6
Total liabilities 635.4 538.1
TOTAL EQUITY AND LIABILITIES 861.8 752.8
*) Of which advances paid for inventories amounted to EUR 16.4
million at December 31, 2008 (at December 31, 2007: EUR 34.8
million).
**) Of which gross advances received amounted to EUR 909.3 million at
December 31, 2008 (at December 31, 2007: EUR 589.7 million). Net
advances received after percentage of completion revenue recognition
amounted to EUR 214.0 million at December 31, 2008 (at December 31,
2007: EUR 190.1 million).
Condensed statement of cash flows
Q1-Q4 Q1-Q4
EUR million 2008 2007
Cash flows from operating activities
Profit for the period 93.9 77.6
Adjustments for
Depreciation and amortization 11.0 11.3
Other adjustments 13.5 25.8
Decrease in working capital 7.9 29.2
Interest received 17.2 11.8
Interest paid -0.4 -0.2
Income tax paid -36.6 -12.6
Net cash from operating activities 106.6 143.0
Purchases of assets -15.2 -11.6
Acquisition of subsidiaries, net of cash -7.6 -
Proceeds from sale of assets 0.7 0.2
Change in other investing activities - -0.6
Net cash used in investing activities -22.1 -12.1
Cash flow before financing activities 84.5 131.0
Borrowings (+) / repayments (-) of non-current debt 0.2 -1.0
Increase in current debt 1.1 -
Purchase of treasury shares *) -9.4 -
Dividends paid -39.9 -14.7
Change in other financing activities 0.8 -0.8
Net cash used in financing activities -47.3 -16.5
Net change in cash and cash equivalents 37.3 114.5
Cash and cash equivalents at January 1 291.0 171.4
Foreign exchange rate effect on cash and cash equivalents -10.5 5.1
Net change in cash and cash equivalents 37.3 114.5
Cash and cash equivalents at December 31 317.8 291.0
*) Outotec has entered into an agreement with a third-party service
provider concerning administration and hedging of share-based
incentive program for key personnel. As part of this agreement, for
hedging the underlying cash flow risk, the service provider has
purchased 265,000 Outotec shares that have been funded by Outotec and
accounted as treasury shares in Outotec's consolidated balance sheet.
Statement of changes in equity
A = Share capital
B = Share premium fund
C = Other reserves
D = Fair value reserves
E = Treasury shares
F = Cumulative translation differences
G = Retained earnings
H = Minority interest
I = Total equity
Attributable to the equity holders of the
EUR million parent company
A B C D E F G H I
Equity at 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 - - - 11.3 - - - - 11.3
Deferred tax
in
equity - - - -3.2 - - - - -3.2
Available for
sale financial
assets:
Fair value
changes
recognized in
equity - - - -0.2 - - - - -0.2
Deferred tax
in
equity - - - -0.0 - - - - -0.0
Change in
translation
differences - - - - - -0.1 - -0.0 -0.1
Other changes - - 0.0 - - - - - 0.0
Items recognized
directly in
equity - - 0.0 7.9 - -0.1 - -0.0 7.8
Profit for the
period - - - - - - 77.6 0.0 77.6
Total recognized
income and
expenses - - 0.0 7.9 - -0.1 77.6 0.0 85.4
Dividends paid - - - - - - -14.7 - -14.7
Equity at Dec
31, 2007 16.8 20,2 0.2 7.9 - 5.7 164.0 0.1 214.8
Equity at Jan 1,
2008 16.8 20.2 0.2 7.9 - 5.7 164.0 0.1 214.8
Cash flow
hedges:
Hedge result
deferred to
equity - - - -12.6 - - - - -12.6
Deferred tax
in
equity - - - 3.1 - - - - 3.1
Available for
sale financial
assets:
Fair value
changes
recognized in
equity - - - -2.1 - - - - -2.1
Change in
translation
differences - - - - - -21.7 - 0.0 -21.7
Items recognized
directly in
equity - - - -11.6 - -21.7 - 0.0 -33.3
Profit for the
period - - - - - - 94.0 -0.0 93.9
Total recognized
income and
expenses - - - -11.6 - -21.7 94.0 -0.0 60.6
Dividends paid - - - - - - -39.9 - -39.9
Purchase of
treasury shares
*) - - - - -9.4 - - - -9.4
Share-based
payments:
value of
received
services - - - - - - 0.1 - 0.1
Acquisition of
minority
interest - - - - - - - -0.0 -0.0
Other changes - - -0.0 - - - 0.2 - 0.2
Equity at Dec
31, 2008 16.8 20.2 0.1 -3.7 -9.4 -16.0 218.5 0.0 226.4
*) Outotec has entered into an agreement with a third-party service
provider concerning administration and hedging of share-based
incentive program for key personnel. As part of this agreement, for
hedging the underlying cash flow risk, the service provider has
purchased 265,000 Outotec shares that have been funded by Outotec and
accounted as treasury shares in Outotec's consolidated balance sheet.
Key figures
Q4 Q4 Q1-Q4 Q1-Q4
2008 2007 2008 2007
Sales, EUR million 398.8 315.5 1,217.9 1,000.1
Gross margin, % 22.8 20.6 21.5 20.4
Operating profit, EUR million 47.5 33.0 120.2 96.1
Operating profit in relation to
sales, % 11.9 10.5 9.9 9.6
Profit before taxes, EUR million 52.4 36.1 136.3 104.8
Profit before taxes in relation to
sales, % 13.1 11.5 11.2 10.5
Net cash from operating activities,
EUR million -36.7 45.3 106.6 143.0
Net interest-bearing debt at the end
of period, EUR million -314.6 -292.9 -314.6 -292.9
Gearing at the end of period, % -139.0 -136.4 -139.0 -136.4
Equity-to-assets ratio at the end of
period, % 35.0 38.2 35.0 38.2
Working capital at the end of period,
EUR million -171.2 -153.9 -171.2 -153.9
Capital expenditure, EUR million 14.0 1.7 23.9 11.6
Capital expenditure in relation to
sales, % 3.5 0.5 2.0 1.2
Return on investment, % 92.7 71.9 61.6 59.8
Return on equity, % 64.1 53.9 42.6 43.3
Order backlog at the end of period,
EUR million 1,176.7 1,317.2 1,176.7 1,317.2
Order intake, EUR million 119.9 384.2 1,153.8 1,463.0
Personnel average for the period 2,628 2,185 2,483 2,031
Profit for the period in relation to
sales, % 8.8 8.6 7.7 7.8
Research and development expenses,
EUR million 5.5 5.6 20.2 19.9
Research and development expenses in
relation to sales, % 1.4 1.8 1.7 2.0
Earnings per share, EUR 0.84 0.65 2.25 1.85
Equity per share, EUR 5.43 5.11 5.43 5.11
Dividend per share, EUR - - 1.00*) 0.95
*) Board of Director's proposal for dividend per share
NOTES TO THE INCOME STATEMENT AND BALANCE SHEET
This financial statements review is prepared in accordance with IAS
34 Interim Financial Reporting. The same accounting policies and
methods have been applied in this financial statement review as in
the recent annual financial statements 2007. This financial
statements review is unaudited.
Starting from March 2008, Outotec is applying IFRS 2 Share-based
Payment for a new share-based incentive program for Outotec's key
personnel for the period 2008-2010.
Adoption of new interpretations
New interpretations, issued by IASB, for which the effective date is
January 1, 2008, will not have impact on 2008 financial statements.
The adoption of the following interpretations does not have impact on
Group's 2008 financial statements:
- IFRIC 12 Service Concession Arrangements (effective date January 1,
2008).
- IFRIC 14 IAS 19 The Limit on a Defined Benefit Asset, Minimum
Funding Requirements and their Interaction (effective date January 1,
2008).
- IAS 39 Financial Instruments: Recognition and Measurement and IFRS
7 Financial Instruments: Disclosures amendments (effective date July
1, 2008).
Outotec will estimate the impacts on the following standards and will
apply the new standards from the financial period beginning January
1, 2009 onwards:
- IFRS 2 Share-based Payment - Vesting Conditions and Cancellations
(effective date January 1, 2009) The amended standard has not yet
been approved to be applied in the EU.
- IFRS 8 Operating segments (effective date January 1, 2009).
- IAS 1 Presentation of Financial Statements (effective date January
1,2009). The amended standard has not yet been approved to be applied
in the EU.
- IAS 23 Borrowing costs (effective date January 1,2009). The amended
standard has not yet been approved to be applied in the EU.
- IAS 32 Financial Instruments: Presentation - Puttable Financial
Instruments and Obligations Arising on Liquidation and IAS 1
Presentation of Financial Statements (effective date January 1,2009).
The amended standard has not yet been approved to be applied in the
EU.
- IFRIC 16 Hedges of a Net Investment in a Foreign Operation
(effective date October 1, 2008) The interpretation has not yet been
approved to be applied in the EU.
Use of estimates
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 review to determine reported amounts, including
the realizability of certain assets, the useful lives of tangible and
intangible assets, income taxes, provisions, pension obligations,
impairment of goodwill. These estimates are based on management's
best knowledge of current events and actions, however, it is possible
that the actual results may differ from the estimates used in the
financial statements review.
Major non-recurring items in operating profit for the period
Q1-Q4 Q1-Q4
EUR million 2008 2007
Gain from available-for-sale financial assets *) - 1.9
Loss on sale of Intune Circuits Ltd -1.1 -
Arbitration cost -8.5 -
*) The value of shares owned by Outotec in Pacific Ore Ltd (UK) was
EUR 0.8 million on December 31, 2006. In 2007, the shares were
changed into shares of Trajan Minerals Limited. Trajan Minerals
Limited was listed to Australian stock exchange (ASX) on November 30,
2007. For Outotec, the listing resulted in EUR 1.9 million gain. The
change in the fair value of the shares between the listing and
December 31, 2008 EUR -2.4 million (December 31, 2007: EUR -0.3
million) is booked to the revaluation reserve for available-for-sale
financial assets in Outotec's equity.
Income tax expenses
Q1-Q4 Q1-Q4
EUR million 2008 2007
Current taxes -37.4 -24.5
Deferred taxes -5.0 -2.7
Total income tax expenses -42.4 -27.2
Property, plant and equipment
December 31, December 31,
EUR million 2008 2007
Historical cost at beginning of the period 81.3 77.4
Translation differences -3.3 0.0
Additions 10.7 5.1
Disposals -3.3 -1.5
Acquired subsidiaries 2.1 -
Reclassifications 0.0 0.2
Historical cost at the end of the period 87.6 81.3
Accumulated depreciation and impairment at
the beginning of the period -56.7 -50.7
Translation differences 2.0 0.1
Disposals 3.1 1.1
Reclassifications 0.0 0.0
Depreciation during the period -6.4 -7.2
Accumulated depreciation and impairment at
the end of the period -58.1 -56.7
Carrying value at the end of the period 29.5 24.6
Commitments and contingent liabilities
December 31, December 31,
EUR million 2008 2007
Pledges 3.0 2.1
Guarantees for commercial commitments 166.5 185.7
Minimum future lease payments on operating
leases 68.7 51.4
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 8.5 million at December 31, 2008 (at December 31,
2007: EUR 2.8 million) and for commercial guarantees including
advance payment quarantees EUR 353.8 million at December 31, 2008 (at
December 31, 2007: EUR 391.9 million).
Derivative instruments
Currency forwards
December 31, December 31,
EUR million 2008 2007
Fair values, net 12.7 (* 13.9 (**
Nominal values 378.3 344.2
(* of which EUR -5.1 million designated as cash flow hedges
(** of which EUR 11.1 million designated as cash flow hedges
Related party transactions
Transactions and balances with associated companies
Q1-Q4 Q1-Q4
EUR million 2008 2007
Sales - 0.0
Finance income and expenses - 0.2
Loan receivables - 1.2
Trade and other receivables - 1.0
As a consequence of a directed share issue in Intune Circuits Ltd in
the last quarter of 2007 and in the first quarter of 2008, Outotec's
ownership in the company was decreased to 17.9%. Remaining ownership
in the company was sold in the third quarter of 2008. Due to these
ownership changes Intune Circuits Ltd is no longer consolidated to
Outotec Group.
Balances with key management
At December 31, 2008, there was an outstanding loan payable of EUR
2.2 million to the President of Outotec Auburn Inc. The payable is
related to payment terms of Auburn Group acquisition. Acquisition
cost was EUR 10.2 million of which EUR 8.0 million has been paid and
EUR 2.2 million was recognized as a liability at December 31, 2008.
The loan payable will be paid to the Outotec Auburn Inc's president
according to acquisition contract during the first quarter of 2009.
Business Combinations
Acquisition of Auburn Group
Outotec closed the acquisition of Canadian Auburn Group on October
10, 2008. The company provides maintenance and technical services for
the mining and metals industries mainly in Canada and Chile. In 2007,
the net sales for Auburn Group was approximately EUR 27 million (CAD
41 million).
The acquisition price was approximately EUR 10 million (CAD 15.6
million). According to the acquisition contract the seller has
prepared the closing balance sheet, as of October 10, 2008. The below
purchase price allocation is preliminary and the final purchase price
allocation will be completed during the first quarter of 2009.
Fair values Carrying amounts
recorded on prior to
acquisition acquisition
Trademarks and patents (included in
intangible assets) 0.6 -
Customer contract and customer
relationships (included in intangible
assets) 0.6 -
Property, plant and equipment 2.2 2.2
Inventories 0.5 0.5
Trade and other receivables 3.6 3.6
Cash and cash equivalents 0.4 0.4
Total assets 7.9 6.7
Interest-bearing liabilities 3.1 3.1
Deferred tax liabilities 0.4 -
Trade and other payables 0.4 0.4
Total liabilities 3.9 3.5
Net assets 4.0 3.2
Acquisition cost 10.2
Goodwill 6.3
Acquisition cost, paid 8.0
Cash and cash equivalents in
subsidiaries acquired 0.4
Cash outflow on acquisition 7.6
Acquisition cost as liability at Dec 31,
2008 2.2
In 2008, the sales for Auburn Group was approximately EUR 20.0
million and the operating profit approximately EUR 0.1 million. The
sales of the company for October 10, 2008 - December 31, 2008 totaled
EUR 3.0 million and the operating profit EUR -0.2 million.
Effect of Auburn acquisition on Outotec Group's sales and operating
profit
Outotec's sales for January 1, 2008-December 31, 2008 would have been
EUR 1,234.9 million and operating profit EUR 120.5 million if the
acquisition carried out during the period had been completed on
January 1, 2008.
Sales and operating profit by quarters
EUR million Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 Q4/08
Sales
Minerals
Processing 95.3 55.2 64.6 72.7 110.5 60.1 92.7 122.0 144.8
Base Metals 53.4 60.1 64.5 64.1 85.6 60.1 72.0 76.9 86.4
Metals
Processing 90.8 97.5 100.9 113.0 120.8 104.6 109.2 116.9 163.9
Other
Businesses 11.9 6.7 8.9 11.1 11.1 9.1 16.7 11.4 18.8
Unallocated
items *) and
intra-group
sales -11.9 -7.8 -11.7 -15.0 -12.5 -8.3 -15.0 -9.2 -15.1
Total 239,6 211.7 227.1 245.9 315.5 225.6 275.5 318.1 398.8
Operating
profit
Minerals
Processing 13.1 1.9 3.3 3.6 16.3 4.1 3.2 3.1 12.1
Base Metals 6.7 9.4 13.2 12.1 9.3 6.3 11.9 13.3 17.2
Metals
Processing 5.3 4,7 10.5 11.5 11.5 12.3 11.8 14.9 22.1
Other
Businesses 1.0 0.0 0.6 1.3 0.3 0.4 1.2 1.7 0.7
Unallocated**)
and intra-group
items -3.0 -2.4 -4.1 -2.5 -4.4 -2.2 -5.1 -4.1 -4.6
Total 23.0 13.6 23.4 26.0 33.0 21.0 22.9 28.9 47.5
*) Unallocated items primarily include invoicing of internal
management and administrative services.
**) Unallocated items primarily include internal management and
administrative services and share of the 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 + 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 = Research and development expenses
expenses in the income statement
(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
FINANCIAL STATEMENTS REVIEW JANUARY-SEPTEMBER 2008 BRIEFING
A briefing, at which CEO Tapani Järvinen and CFO Vesa-Pekka Takala
will present the Financial Statements Review for 2008, will be held
in Helsinki, Finland.
BRIEFING
Date: Friday, January 30, 2009
Time: 3:00-4:00pm (EET)
Venue: Hotel Kämp, Akseli Gallen-Kallela meeting room,
Pohjoisesplanadi 29, Helsinki
JOINING VIA WEBCAST
You may follow the briefing via a live webcast at www.outotec.com.
Please, click in and register approximately 5-10 minutes before the
briefing. The webcast will also be recorded and published on
Outotec's Web site 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 in
5-10 minutes before the beginning of the event:
FI/UK: +44 20 7162 0025
US/CANADA: +1 334 323 6201
Password: Outotec
In addition, an instant replay service of the conference call will be
available until February 2, 2009 midnight at the following numbers:
UK: +44 20 7031 4064
US: 1 954 334 0342
Access code: 823141
FINANCIAL REPORTING SCHEDULE FOR 2009
Outotec's will publish the following financial reports in 2009:
Interim Report for January-March 2009 on April 24
Interim Report for January-June 2009 on July 24
Interim Report for January-September 2009 on October 23
Annual General Meeting 2009 is scheduled to be held on March 18,
2009. Outotec's printed Annual Report 2008 will be published in week
11 and can be ordered via Outotec's Web site or from the address
investor.relations(at)outotec.com.
DISTRIBUTION
NASDAQ OMX Helsinki Ltd
Main media
www.outotec.com
Downloads
| Name | |
|---|---|
| Outotec Financial Statements Review 2008 | Download |