April 24, 2009
Interim report January-March 2009
OUTOTEC OYJ INTERIM REPORT APRIL 24, 2009 AT 9:00 AM
INTERIM REPORT JANUARY-MARCH 2009
Good result in challenging market conditions
Reporting period Q1/2009 in brief (Q1/2008):
* Sales: EUR 231.6 million (EUR 225.6 million)
* Operating profit: EUR 16.3 million (EUR 21.0 million),
including gains from currency forward contracts: EUR 0.3 million
(gains of EUR 3.3 million)
* Profit before taxes: EUR 18.0 million (EUR 23.1 million)
* Earnings per share: EUR 0.30 (EUR 0.39)
* Order intake: EUR 139.3 million (EUR 298.8 million)
* Order backlog: EUR 1,090.4 million (EUR 1,359.6 million)
* Net cash flow from operating activities: EUR -10.7 million
(EUR 40.7 million)
Outotec reiterates its outlook for 2009.
CEO Tapani Järvinen:"The market situation continued challenging during the first quarter.
However, there has been some recovery of the base metals prices and
increased demand for metals in China, but it is premature to judge
whether these indicate a more permanent market recovery. Although we
continue to receive inquiries and have ongoing engineering studies,
the customers' decision-making process is slow.
We use a lot of subcontracted local engineering and manufacturing
resources in projects, which adds operating flexibility. In addition,
we have started to optimize our cost structure and resource base. We
believe that we can continue to develop and grow our Services
business despite of the challenging markets, because Outotec has
delivered numerous plants and equipment around the world. In
addition, we can sell our existing technologies and apply our
expertise in the energy and industrial water treatment sectors."
Summary of key figures Q1 Q1 Last 12 Q1-Q4
2009 2008 months 2008
Sales, EUR million 231.6 225.6 1,224.0 1,217.9
Gross margin, % 20.4 20.4 21.5 21.5
Operating profit, EUR million 16.3 21.0 115.5 120.2
Operating profit in relation to 7.0 9.3 9.4 9.9
sales, %
Profit before taxes, EUR million 18.0 23.1 131.2 136.3
Net cash from operating activities, -10.7 40.7 55.2 106.6
EUR million
Net interest-bearing debt at the end -254.8 -316.8 -254.8 -314.6
of period, EUR million
Gearing at the end of period, % -129.2 -178.2 -129.2 -139.0
Working capital at the end of period, -146.8 -176.7 -146.8 -171.2
EUR million
Return on investment, % 34.7 47.4 69.4 61.6
Return on equity, % 23.7 33.2 48.1 42.6
Order backlog at the end of period, 1,090.4 1,359.6 1,090.4 1,176.7
EUR million
Order intake, EUR million 139.3 298.8 994.3 1,153.8
Personnel, average for the period 2,599 2,185 2,586 2,483
Earnings per share, EUR 0.30 0.39 2.16 2.25
INTERIM REPORT JANUARY-MARCH 2009
MARKETS
The uncertainty in the worldwide economy has continued to be
uncertain and the investment activity of the mining and metals
industry has fallen from the previous year's level. However, there
have been some positive developments in the markets, such as
increased demand for metals in developing countries, picking up of
base metals prices and continued demand for gold technologies.
Many of Outotec's customers are evaluating project scopes and prices.
There are feasibility studies in progress, which may turn into new
orders, but the decision-making process takes time. Many customers
still face difficulties in arranging financing packages.
There is a continuous need for energy efficient and environmentally
sound technologies and various services at mine sites and processing
plants. When ore grades decline, there is a need for more processing
capacity, and complex ore bodies require new solutions, which enable
better metals recovery.
New opportunities arise for Outotec in improving water treatment of
mining and metallurgical plants. In addition, the energy sector
continues to invest in alternative energy resources. Outotec offers
applications and services for example for oil shale and oil sand
processing, as well as bioenergy production.
ORDER INTAKE
Order intake in the reporting period amounted to EUR 139.3 million
(Q1/2008: EUR 298.8 million). Orders received in the first quarter
included plant deliveries, several smaller equipment deliveries and
services to existing customers.
Major new orders in the first quarter included:
* delivery of a sulfuric acid plant for Noracid S.A. in
Mejillones, Chile (EUR 51 million);
* several service contracts for industrial and maintenance
services in Chile and Canada (EUR 15 million); and
* delivery of flotation cells and thickeners for Polymetal's
Albazino gold mine project in Russia.
ORDER BACKLOG
The order backlog at the end of the reporting period totaled EUR
1,090.4 million (March 31, 2008: EUR 1,359.6 million), representing a
20% decline from the comparison period.
At the end of the reporting period, Outotec's order backlog included
21 projects with an order backlog value in excess of EUR 10 million,
accounting for 69% of the total backlog. According to the
management's estimate, some 53% 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 that
are developing their first processing plants.
SALES AND FINANCIAL RESULT
Outotec's sales in the reporting period totaled EUR 231.6 million
(Q1/2008: EUR 225.6 million), representing 3% growth from the
comparison period. The growth resulted from the good progress in
delivery projects, especially in the Minerals Processing division.
The Services business, which is included in the divisions' and other
businesses' sales figures, totaled EUR 30.9 million in the reporting
period (Q1/2008: EUR 20.8 million), up 49% from the comparison
period. Part of the increase came from Outotec Auburn, which was
acquired in October 2008.
The operating profit for the reporting period was EUR 16.3 million
(Q1/2008: EUR 21.0 million), representing 7.0% of sales (Q1/2008:
9.3%). The gains related to currency forward contracts, which are not
included in the hedge accounting, increased profitability by EUR 0.3
million (Q1/2008: gains of EUR 3.3 million).
In the reporting period, Outotec's fixed costs were EUR 3.2 million
higher than in the comparison period. The increase was mainly caused
by higher selling and marketing costs, such as developing business
operations in India, fixed costs of Outotec Auburn, and development
of the Services business worldwide.
Outotec's profit before taxes for the reporting period was EUR 18.0
million (Q1/2008: EUR 23.1 million). Profit before taxes was impacted
favorably by the net financial income of EUR 1.7 million (Q1/2008:
EUR 2.2 million) from the high net cash position. Net profit for the
period was EUR 12.5 million (Q1/2008: EUR 16.3 million). Taxes
totaled EUR 5.5 million (Q1/2008: EUR 6.9 million). This represents
an effective tax rate of 30.4%. Earnings per share were EUR 0.30
(Q1/2008: EUR 0.39).
Outotec's return on equity for the reporting period was 23.7%
(Q1/2008: 33.2%), and return on investment was 34.7% (Q1/2008 47.4%).
Sales and operating profit by segment Q1 Q1 Q1-Q4
EUR million 2009 2008 2008
Sales
Minerals Processing 84.5 60.1 419.6
Base Metals 44.8 60.1 295.3
Metals Processing 97.2 104.6 494.7
Other Businesses 18.3 9.1 56.0
Unallocated items*) and intra-group sales -13.2 -8.3 -47.7
Total 231.6 225.6 1,217.9
Operating profit
Minerals Processing 6.1 4.1 22.5
Base Metals 4.3 6.3 48.7
Metals Processing 8.9 12.3 61.1
Other Businesses -0.4 0.4 3.9
Unallocated**) and intra-group items -2.7 -2.2 -16.0
Total 16.3 21.0 120.2
*) 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.
Minerals Processing
The Minerals Processing division's sales in the reporting period grew
41% from the comparison period and totaled EUR 84.5 million (Q1/2008:
EUR 60.1 million). Operating profit was EUR 6.1 million (Q1/2008: EUR
4.1 million). The growth in sales resulted from a high starting order
backlog, good project execution and reduced bottlenecks in the
delivery pipeline. Operating profit for the reporting period also
included a realized and unrealized loss of EUR 0.3 million related to
currency forward contracts (Q1/2008: realized and unrealized gains of
EUR 4.1 million).
Base Metals
The Base Metals division's sales in the reporting period decreased by
25% from the comparison period and totaled EUR 44.8 million (Q1/2008:
EUR 60.1 million). The decrease in sales was mainly due to lower
order intake since September 2008, lower order backlog, and
rescheduling of some projects. The operating profit was EUR 4.3
million (Q1/2008: EUR 6.3 million). The lower sales figure was the
main reason for the division's lower operating profit.
Metals Processing
The Metals Processing division's sales in the reporting period
decreased 7% from the comparison period to EUR 97.2 million (Q1/2008:
EUR 104.6 million). Operating profit came to EUR 8.9 million
(Q1/2008: EUR 12.3 million). Operative profit declined because of
lower volume and decreased license fee income, but remained still on
a good level because of project margin improvements. Operating profit
for the reporting period also included realized and unrealized gains
of EUR 0.7 million related to currency forward contracts. (Q1/2008:
realized and unrealized loss of EUR 1.0 million).
BALANCE SHEET, FINANCING, AND CASH FLOW
Net cash flow from operating activities in the reporting period was
negative at EUR -10.7 million (Q1/2008: EUR 40.7 million). The change
was mainly caused by a significant increase in working capital in
2009 as compared to the significant decrease in working capital in
2008. The net change in cash and cash equivalents was also affected
by the dividend payment of EUR 42.0 million in March 2009 (April
2008: EUR 39.9 million).
In the first quarter, Outotec's cash and cash equivalents totaled EUR
257.5 million (Q1/2008: EUR 317.6 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 March 31, 2009, no money market investment had
remaining maturity exceeding three months.
Outotec's working capital amounted to EUR -146.8 million on March 31,
2009 (March 31, 2008: EUR -176.7 million). The change in working
capital was caused by low order intake and because there were no
major project completions in the first quarter.
The balance sheet structure remained strong, and the financing
structure was healthy. Net interest-bearing debt on March 31, 2009,
came to EUR -254.8 million (March 31, 2008: EUR -316.8 million). The
advances received at the end of the reporting period totaled EUR
225.1 million (March 31, 2008: EUR 231.9 million), representing a
decrease of 3% from the comparison period. Outotec's gearing at the
end of the reporting period was -129.2% (March 31, 2008:
-178.2%), and the equity-to-assets ratio was 35.6% (March 31, 2008:
34.3%).
The company's capital expenditure in the reporting period was EUR 4.7
million (Q1/2008: EUR 3.3 million), which consisted mainly of the
establishment of a joint venture company for bioenergy technology
business, investments in information technology, intellectual
property rights, and machinery for the Outotec Turula workshop.
Guarantees for commercial commitments, including advance payment
guarantees issued by the parent and other Group companies decreased
from the comparison period and were EUR 350.1 million (March 31,
2008: EUR 400.1 million) at the end of the reporting period.
Outotec has 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
the underlying cash flow risk, the service provider has purchased
285,000 Outotec shares in 2009 (2008: 265,000) that have been funded
by Outotec and accounted as treasury shares in Outotec's consolidated
balance sheet.
RESEARCH AND TECHNOLOGY DEVELOPMENT
Outotec's research and technology development expenses in the first
quarter totaled EUR 5.1 million (Q1/2008: EUR 4.6 million),
representing 2.2% of sales (Q1/2008: 2.0%). Outotec filed 12 new
priority patent applications (Q1/2008: 8), and 26 new national
patents (Q1/2008: 26) were granted.
In January, Outotec launched a new OKTOP® reactor family. While
previously all reactors were designed individually, the new OKTOP®
reactors are built from modules, which are tailored to get optimum
results.
In March, Outotec reported that it is expanding its offerings to the
energy industry and for industrial water treatment. Outotec has
established two new business units that will focus on these
technologies. Oil shale combustion test work was started at Outotec's
Frankfurt Research Center. The test work relates to basic engineering
for the oil-shale-based oil production plant to be built in Narva,
Estonia. Furthermore, Outotec and Codelco finished testing of the
TankCell® 300 flotation cells at Chuquicamata, Chile. The results
showed a better recovery and lower energy consumption than the
previous solution.
Outotec is currently commissioning a new automated Courier® 6i SL
slurry analyzer and sampling system at Australia's largest
underground mine. It is one of the world's most advanced systems in
the field of minerals processing.
PERSONNEL
At the end of the reporting period, Outotec had a total of 2,557
employees (March 31, 2008: 2,318). The greatest increase in personnel
was seen in the Americas, due to the acquisition of Outotec Auburn.
For the reporting period, Outotec had on average 2,599 employees
(Q1/2008: 2,185). The average number of personnel increased by 414
persons from the comparison period through the acquisition, business
growth, and active recruitment in 2008. Temporary employees accounted
for about 11% of the total number of employees.
Distribution of personnel by March 31, March 31, Dec 31,
country
2009 2008 Change % 2008
Finland 907 867 4.6 925
Germany 397 334 18.9 380
Rest of Europe 241 229 5.2 249
Americas 673 576 16.8 758
Australia 197 196 0.5 225
Rest of the world 142 116 22.4 137
Total 2,557 2,318 10.3 2,674
The number of employees has been reduced by 117, or 4%, since
year-end 2008. The reductions were mainly related to the temporary
workers in the Americas, Australia, and some parts of Europe. At the
end of March 2009, the company had, in addition to the personnel on
Outotec's payroll, approximately 520 (December 31, 2008: 560)
full-time-equivalent contracted people working in project execution.
The number of contracted workers at any given time changes with the
active project mix and project commissioning, local legislation and
regulations, and seasonal fluctuations.
In the reporting period, salaries and other employee benefits totaled
EUR 41.0 million (Q1/2008: EUR 36.2 million).
SHARE-BASED INCENTIVE PROGRAMS
Outotec has two share-based incentive programs for the company's key
personnel: the first, Incentive Program 2007-2008, was announced on
March 23, 2007, and the second, Incentive Program 2008-2010, was
announced on March 3, 2008.
Share-based incentive program 2007-2008
Some 20 key employees participated in the two-year share-based
incentive program. The program started on January 1, 2007, and ended
on December 31, 2008. The reward paid to the key personnel was
determined by the reaching of the targets set for the development of
the company's net profit and order backlog. The reward under the
incentive program is EUR 6.5 million, and it is spread over the
earnings period. The reward is paid in shares and as a cash payment,
with the shares allocated to the key personnel in the spring of 2009.
Share-based incentive program 2008-2010
The incentive program for 2008-2010 comprises three earning periods:
calendar years 2008, 2009, and 2010. The Board of Directors shall
determine the amount of the maximum reward for each person and the
earning criteria and the targets established for them separately on
an annual basis. The reaching of the targets established for the
earning criteria will determine how great a portion of the maximum
reward will be paid to the key persons. For the 2009 and 2010 earning
periods, the incentive program concerns approximately 60 employees.
The reward is paid in shares and as a cash payment. The reward will
not be paid if the person's employment ends before the close of the
earning period. The person must also hold the earned shares and
remain employed with the company for at least two years after the
close of the earning period.
RESOLUTIONS OF THE 2009 ANNUAL GENERAL MEETING
Outotec Oyj's Annual General Meeting was held on March 18, 2009, in
Helsinki, Finland. The Annual General Meeting approved the parent
company and the consolidated Financial Statements, and discharged the
members of the Board of Directors and the CEO from liability for the
2008 financial year.
Dividend
The Annual General Meeting decided that a dividend of EUR 1.00 per
share be paid for the financial that year ended on December 31, 2008.
The dividends, totaling EUR 42.0 million, were paid on March 30,
2009.
The Board of Directors
The Annual General Meeting decided on the number of the Board
members, including Chairman and Vice Chairman, to 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
Annual General Meeting.
The Annual General Meeting re-elected Mr. Risto Virrankoski as the
Chairman of the Board of Directors. In its assembly meeting, the
Board re-elected Mr. Karri Kaitue as the Vice Chairman of the Board
of Directors. In addition, the Board re-elected Mr. Carl-Gustaf
Bergström and Mr. Hannu Linnoinen as members of the Audit Committee,
Mr. Linnoinen acting as the Chairman of the Audit Committee.
The Annual General Meeting confirmed the remunerations to the Board
members as follows: Chairman EUR 5,000 per month and other Board
members EUR 3,000 per month each, Vice Chairman and Chairman of the
Audit Committee in addition EUR 1,000 per month each, and each Board
member EUR 500 for attendance at each Board and Committee meeting as
well as reimbursement for direct costs arising from Board work.
Board's authorizations
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 on the
NASDAQ OMX Helsinki at the price established in the trading at the
time of acquisition.
The authorization shall be in force until the next Annual General
Meeting.
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. 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 next Annual General
Meeting. These above-mentioned authorizations have not been exercised
as of April 24, 2009.
Auditors
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.
The Annual General Meeting decided to amend Section 9 of the Articles
of Association so that notice to convene the General Meeting shall be
issued no later than 21 days prior to the General Meeting.
SHARES AND SHARE CAPITAL
Outotec's shares are listed on the NASDAQ OMX Helsinki (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 first quarter, the volume-weighted average price for a share
in the company was EUR 11.83, the highest quotation for a share being
EUR 14.19 and the lowest EUR 9.30. The trading of Outotec shares in
the reporting period exceeded 28.6 million shares, with a total value
of over EUR 338.4 million. On March 31, 2009, Outotec's market
capitalization was EUR 543.5 million and the last quotation for the
share was EUR 12.94. On March 31, 2009, the company did not hold any
treasury shares for trading purposes. Outotec has an agreement with a
third-party service provider concerning administration and hedging of
share-based incentive program for key personnel. As part of this
agreement, for hedging the underlying cash flow risk, the service
provider has purchased 285,000 Outotec shares in 2009 (2008: 265,000)
that have been funded by Outotec and accounted as treasury shares in
Outotec's consolidated balance sheet.
EVENTS AFTER THE REPORTING PERIOD
Outotec and Pattison Sand Company reached in April an amicable
settlement in all disputes related to the Pattison Sand project.
There will be a one-time positive effect of approximately USD 3.6
million (approximately EUR 2.7 million) on Outotec's second quarter
2009 result.
Barclays Global Investors UK Holdings Ltd's holding in shares of
Outotec Oyj exceeded 5% in April. Barclays Global Investors UK
Holdings Ltd's holding in shares of Outotec is 2,111,054 shares,
which represents 5.02% of the share capital and votes in the company.
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 economic uncertainty affects all of Outotec's
market areas. If the demand for metals especially in developing
economies, such as China, India, Brazil, and the CIS countries,
decreases significantly, further reduction in 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 first
quarter, there have been some negotiations with customers concerning
suspension or cancellation of their projects. As of the end of the
reporting period, Outotec's order backlog included some EUR 100
million of suspended projects. Based on the latest review, further
postponements, suspensions and cancellations may still arise.
Also, the number of requests for export credit has been increasing.
Possible limitations on the availability of export credits may
further 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
- called 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 Services business has been
growing strongly in recent years, the challenging market situation
may slow down the growth.
In connection with Outotec's risk assessment for the first quarter of
2009, all unfinished projects and projects using the 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 the first
quarter of 2009, there were no material credit losses related to the
payments by Outotec's counter parties. If the uncertainty in the
financial market continues, the counter parties may face the need to
renegotiate some payment terms. In addition, there is a risk that
customers and suppliers will experience financial difficulties and
that lack of financing will result in bankruptcies, which can also
result in some losses also to Outotec.
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, currency fluctuations may
create volatility in the operating profit. The forecasted 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's business model is based on customer advance payments and
mainly on-demand guarantees issued by Outotec's relationship banks.
Changes in advance payments received have an impact on the liquidity
of Outotec. Furthermore, high exposure to on-demand guarantees may
increase the risk of claims. The cash held by Outotec is invested
mainly in short-term bank deposits and to a lesser extent in Finnish
corporate short-term commercial papers. The lower interest rate
levels reduce the interest income generated from these investments.
Outotec is involved in a few legal and arbitration proceedings. The
management believes that the outcome of the pending proceedings will
not have a material effect on Outotec's financial result.
OUTLOOK FOR 2009 REITERATED
The investments in the mining and metals industry will fall from the
previous year because of the uncertainty in the worldwide economic
conditions. There are feasibility studies in progress, which may turn
into new orders, but the decision-making process takes time. Many
customers are evaluating project scopes and prices, but they still
face difficulties in arranging financing packages.
The prevailing uncertainty continues to obscure the outlook for the
mining and metals industry. On the basis of the first quarter result,
existing order backlog, and new order prospects, the 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 April 24, 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
INTERIM FINANCIAL STATEMENTS (unaudited)
Statement of comprehensive income Q1 Q1 Q1-Q4
EUR million 2009 2008 2008
Sales 231.6 225.6 1,217.9
Cost of sales -184.4 -179.5 -956.2
Gross profit 47.2 46.1 261.7
Other income 0.6 3.4 0.9
Selling and marketing expenses -13.2 -10.8 -48.0
Administrative expenses -13.2 -12.9 -55.1
Research and development expenses -5.1 -4.6 -20.2
Other expenses -0.0 -0.1 -19.1
Operating profit 16.3 21.0 120.2
Finance income and expenses
Interest income and expenses 1.8 3.8 16.4
Market price gains and losses 1.0 -0.5 3.2
Other finance income and expenses -1.1 -1.1 -3.4
Net finance income 1.7 2.2 16.1
Profit before income taxes 18.0 23.1 136.3
Income tax expenses -5.5 -6.9 -42.4
Profit for the period 12.5 16.3 93.9
Other comprehensive income
Exchange differences on translating foreign 3.6 -5.7 -21.7
operations
Cash flow hedges -1.1 3.6 -12.6
Income tax relating to cash flow hedges 0.5 -1.0 3.1
Available for sale financial assets -0.2 -1.2 -2.1
Other comprehensive income for the period 2.8 -4.3 -33.3
Total comprehensive income for the period 15.4 12.0 60.6
Profit for the period attributable to:
Equity holders of the parent company 12.5 16.3 94.0
Minority interest - -0.0 -0.0
Total comprehensive income for the period
attributable to:
Equity holders of the parent company 15.4 12.0 60.6
Minority interest - -0.0 -0.0
Earnings per share for profit attributable to
the equity
holders of the parent company:
Basic earnings per share, EUR 0.30 0.39 2.25
Diluted earnings per share, EUR 0.30 0.39 2.25
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 statement of financial March 31, March 31, December 31,
position
EUR million 2009 2008 2008
ASSETS
Non-current assets
Intangible assets 82.0 74.5 81.4
Property, plant and equipment 31.1 24.6 29.5
Non-current financial assets
Interest-bearing 0.2 2.6 0.5
Non interest-bearing 22.5 17.4 21.3
Total non-current assets 135.9 119.0 132.7
Current assets
Inventories *) 91.7 109.6 87.7
Current financial assets
Interest-bearing 0.5 0.8 0.4
Non interest-bearing 293.9 202.7 323.2
Cash and cash equivalents 257.5 317.6 317.8
Total current assets 643.6 630.7 729.1
TOTAL ASSETS 779.4 749.7 861.8
EQUITY AND LIABILITIES
Equity
Equity attributable to the equity 197.2 177.8 226.4
holders of the parent company
Total equity 197.2 177.8 226.4
Non-current liabilities
Interest-bearing 2.5 1.2 2.6
Non interest-bearing 69.1 63.4 74.3
Total non-current liabilities 71.6 64.6 76.9
Current liabilities
Interest-bearing 1.0 2.9 1.5
Non interest-bearing
Advances received **) 225.1 231.9 214.0
Other non interest-bearing 284.6 272.4 343.0
liabilities
Total current liabilities 510.7 507.2 558.4
Total liabilities 582.3 571.8 635.4
TOTAL EQUITY AND LIABILITIES 779.4 749.7 861.8
*) Of which advances paid for inventories amounted to EUR 18.9
million at March 31, 2009 (March 31, 2008: EUR 30.1 million and at
December 31, 2008: EUR 16.4 million).
**) Gross advances received before percentage of completion revenue
recognition amounted to EUR 983.9 million at March 31, 2009 (March
31, 2008: EUR 725.3 million and at December 31, 2008: EUR 909.3
million).
Condensed statement of cash flows Q1 Q1 Q1-Q4
EUR million 2009 2008 2008
Cash flows from operating activities
Profit for the period 12.5 16.3 93.9
Adjustments for
Depreciation and amortization 2.8 2.8 11.0
Other adjustments 2.6 6.7 13.5
Increase (-) / decrease (+) in working capital -22.1 21.4 7.9
Interest received 1.9 4.0 17.2
Interest paid -0.2 -0.2 -0.4
Income tax paid -8.3 -10.4 -36.6
Net cash from operating activities -10.7 40.7 106.6
Purchases of assets -4.3 -3.3 -15.2
Acquisition of subsidiaries, net of cash -2.7 - -7.6
Proceeds from sale of assets 0.1 0.0 0.7
Change in other investing activities 0.0 - -
Net cash used in investing activities -7.0 -3.3 -22.1
Cash flow before financing activities -17.7 37.4 84.5
Borrowings (+) / repayments (-) of non-current debt -0.0 -0.0 0.2
Increase (+) / decrease (-) in current debt -0.5 2.0 1.1
Purchase of treasury shares -3.3 -9.3 -9.4
Dividends paid -42.0 - -39.9
Change in other financing activities -0.2 -0.1 0.8
Net cash used in financing activities -45.9 -7.4 -47.3
Net change in cash and cash equivalents -63.7 30.0 37.3
Cash and cash equivalents at the beginning of the 317.8 291.0 291.0
period
Foreign exchange rate effect on cash and cash 3.4 -3.4 -10.5
equivalents
Net change in cash and cash equivalents -63.7 30.0 37.3
Cash and cash equivalents at the end of the period 257.5 317.6 317.8
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 parent
company
EUR million A B C D E F G H I
Equity at January 1, 16.8 20.2 0.2 7.9 - 5.7 164.0 0.1 214.8
2008
Dividends paid - - - - - - -39.9 - -39.9
Purchase of treasury - - - - -9.3 - - - -9.3
shares *)
Share-based
payments:
value of received - - - - - - 0.0 - 0.0
services
Acquisition of - - - - - - - -0.0 -0.0
minority interest
Total comprehensive
income for the - - - 1.3 - -5.7 16.3 -0.0 12.0
period
Other changes - - -0.0 - - - 0.2 - 0.2
Equity at March 31, 16.8 20.2 0.1 9.2 -9.3 0.1 140.7 - 177.8
2008
Equity at January 1, 16.8 20.2 0.1 -3.7 -9.4 -16.0 218.5 - 226.4
2009
Dividends paid - - - - - - -42.0 - -42.0
Purchase of treasury - - - - -3.3 - - - -3.3
shares *)
Share-based
payments:
value of received - - - - - - 0.1 - 0.1
services
Total comprehensive
income for the - - - -0.8 - 3.6 12.5 - 15.4
period
Other changes - - - - - - 0.6 - 0.6
Equity at March 31, 16.8 20.2 0.1 -4.5 -12.7 -12.4 189.6 - 197.2
2009
*) Outotec has 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 285,000
Outotec shares during year 2009 (2008: 265,000) that have been funded
by Outotec and accounted as treasury shares in Outotec's consolidated
balance sheet.
Key figures Q1 Q1 Last 12 Q1-Q4
2009 2008 months 2008
Sales, EUR million 231.6 225.6 1,224.0 1,217.9
Gross margin, % 20.4 20.4 21.5 21.5
Operating profit, EUR million 16.3 21.0 115.5 120.2
Operating profit in relation to 7.0 9.3 9.4 9.9
sales, %
Profit before taxes, EUR million 18.0 23.1 131.2 136.3
Profit before taxes in relation to 7.8 10.3 10.7 11.2
sales, %
Net cash from operating activities, -10.7 40.7 55.2 106.6
EUR million
Net interest-bearing debt at the end -254.8 -316.8 -254.8 -314.6
of period, EUR million
Gearing at the end of period, % -129.2 -178.2 -129.2 -139.0
Equity-to-assets ratio at the end of 35.6 34.3 35.6 35.0
period, %
Working capital at the end of period, -146.8 -176.7 -146.8 -171.2
EUR million
Capital expenditure, EUR million 4.7 3.3 25.3 23.9
Capital expenditure in relation to 2.0 1.5 2.1 2.0
sales, %
Return on investment, % 34.7 47.4 69.4 61.6
Return on equity, % 23.7 33.2 48.1 42.6
Order backlog at the end of period, 1,090.4 1,359.6 1,090.4 1,176.7
EUR million
Order intake, EUR million 139.3 298.8 994.3 1,153.8
Personnel, average for the period 2,599 2,185 2,586 2,483
Profit for the period in relation to 5.4 7.2 7.4 7.7
sales, %
Research and development expenses, 5.1 4.6 20.7 20.2
EUR million
Research and development expenses in 2.2 2.0 1.7 1.7
relation to sales, %
Earnings per share, EUR 0.30 0.39 2.16 2.25
Equity per share, EUR 4.76 4.26 4.76 5.43
Dividend per share, EUR - - 1.00 1.00
NOTES TO THE INCOME STATEMENT AND BALANCE SHEET
These interim financial statements are prepared in accordance with
IAS 34 Interim Financial Reporting. The same accounting policies and
methods have been applied in these interim financial statements as in
the recent annual financial statements. These interim financial
statements are unaudited.
Adoption of new interpretations
Outotec has applied the following revised standards from the
beginning of 2009:
* IAS 1 Presentation of financial statements. The revised
standard aims to separate the transactions in equity into
transactions with owners and other changes in equity. The changes
have impact on the presentation of financial statements.
* IFRS 8 Operating segments. The new standard is aimed at
the entity adopting a management-based approach in reporting on the
segments' financial performance. The application of the new
standard has not changed the operating segments of Outotec, because
the company has previously been reporting the same segments as in
management reporting. The new standard's main impact will be on the
disclosure information.
In addition Outotec has applied the following revised standards and
interpretation from the beginning of 2009, which do not affect the
Group's interim financial statements or financial statements.
* IFRS 2 Share-based Payment - Vesting Conditions and
Cancellations (effective date January 1, 2009).
* IAS 23 Borrowing costs (effective date January 1, 2009).
* 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).
* IFRIC 16 Hedges of a Net Investment in a Foreign Operation
(effective date October 1, 2008).
Outotec will estimate the impacts of the following standards and will
apply the new standards from the financial period beginning January
1, 2010 onwards:
* IFRS 3 Business combinations (effective date for annual
periods beginning on or after July 1, 2009). The amended standard
has not yet been approved to be applied in the EU.
* IAS 27 Consolidated and separate financial statements
(effective date for annual periods beginning on or after July, 1
2009). The amended standard has not yet been approved to be applied
in the EU.
* IAS 39 Financial instruments: Recognition and Measurement
(effective date for annual periods beginning on or after July, 1
2009). The amended standard 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 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
interim financial statements.
Major non-recurring items in Q1 Q1 Q1-Q4
operating profit
EUR million 2009 2008 2008
Loss on sale of Intune Circuits Ltd. - - -1.1
Arbitration cost - - -8.5
Income tax expenses Q1 Q1 Q1-Q4
EUR million 2009 2008 2008
Current taxes -5.5 -3.4 -37.4
Deferred taxes 0.1 -3.4 -5.0
Total income tax expenses -5.5 -6.9 -42.4
Property, plant and equipment March 31, March 31, December 31,
EUR million 2009 2008 2008
Historical cost at the beginning of 87.6 81.3 81.3
the period
Translation differences 0.9 -1.5 -3.3
Additions 2.8 2.4 10.7
Disposals -0.1 -0.1 -3.3
Acquired subsidiaries - - 2.1
Reclassifications -0.0 -0.1 0.0
Historical cost at the end of the 91.2 82.0 87.6
period
Accumulated depreciation and
impairment at the beginning of the -58.1 -56.7 -56.7
period
Translation differences -0.4 0.9 2.0
Disposals 0.0 0.1 3.1
Reclassifications 0.0 - 0.0
Depreciation during the period -1.6 -1.7 -6.4
Accumulated depreciation and -60.1 -57.4 -58.1
impairment at the end of the period
Carrying value at the end of the 31.1 24.6 29.5
period
Commitments and contingent March 31, March 31, December 31,
liabilities
EUR million 2009 2008 2008
Pledges 1.8 1.8 3.0
Guarantees for commercial 196.4 167.1 166.5
commitments
Minimum future lease payments on 68.2 47.5 68.7
operating leases
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 March 31, 2009 (March 31, 2008: EUR
0.4 million and at December 31, 2008: EUR 8.5 million) and for
commercial guarantees including advance payment guarantees EUR 350.1
million at March 31, 2009 (March 31, 2008: EUR 400.1 million and at
December 31, 2008: EUR 353.8 million).
Derivative instruments March 31, March 31, December 31,
Currency forwards 2009 2008 2008
EUR million
Fair values, net -11.0*) 20.8**) -12.7***)
Nominal values 369.5 327.9 378.3
*) Of which EUR -6.2 million designated as cash flow hedges.
**) Of which EUR 16.3 million designated as cash flow hedges.
***) Of which EUR -5.1 million designated as cash flow hedges.
Related party transactions
Balances with key management
At March 31, 2009, there was an outstanding loan payable of EUR 0.1
million (December 31, 2008: EUR 2.2 million) to the President of
Auburn Group. The payable is related to payment terms of Auburn Group
acquisition. Total acquisition cost was EUR 10.8 million including
the acquisition related costs EUR 0.5 million. The final loan payable
will be paid to the President of Auburn Group according to
acquisition contract during the second quarter of 2009.
Transactions and balances with associated companies Q1 Q1 Q1-Q4
EUR million 2009 2008 2008
Trade and other receivables - 0.1 -
Business combinations
Acquisition of Auburn Group
Outotec acquired 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 2008, the sales of Auburn Group was approximately EUR 20.0 million
(CAD 31.2 million) and the operating profit approximately EUR 0.1
million. The sales of the acquired Auburn Group for October 10, 2008
- December 31, 2008 totaled EUR 3.0 million and the operating profit
EUR -0.2 million. Outotec Auburn is reported in Other Businesses
segment.
The acquisition price was EUR 10.3 million (CAD 15.8 million). The
total acquisition cost of EUR 10.8 million includes acquisition
related costs of EUR 0.5 million.
Fair values Carrying amounts
recorded on prior to
EUR million acquisition acquisition
Trademarks and patents (included in 0.7 -
intangible assets)
Customer contract and customer 0.6 -
relationships (included in intangible
assets)
Property, plant and equipment 2.3 2.3
Inventories 0.6 0.6
Trade and other receivables 3.9 3.9
Cash and cash equivalents 0.4 0.4
Total assets 8.5 7.2
Interest-bearing liabilities 0.9 0.9
Deferred tax liabilities 0.4 -
Trade and other payables 3.4 3.4
Total liabilities 4.7 4.2
Net assets 3.8 3.0
Acquisition cost 10.8
Goodwill 7.0
Acquisition cost, paid 10.7
Cash and cash equivalents in 0.4
subsidiaries acquired
Cash outflow on acquisition 10.3
Acquisition cost as liability at March 0.1
31, 2009
Effect of the Auburn Group acquisition on Outotec Group's sales and
operating profit in 2008
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 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 Q4/08 Q1/09
Sales
Minerals 55.2 64.6 72.7 110.5 60.1 92.7 122.0 144.8 84.5
Processing
Base Metals 60.1 64.5 64.1 85.6 60.1 72.0 76.9 86.4 44.8
Metals 97.5 100.9 113.0 120.8 104.6 109.2 116.9 163.9 97.2
Processing
Other 6.7 8.9 11.1 11.1 9.1 16.7 11.4 18.8 18.3
Businesses
Unallocated
items *) and -7.8 -11.7 -15.0 -12.5 -8.3 -15.0 -9.2 -15.1 -13.2
intra-group
sales
Total 211.7 227.1 245.9 315.5 225.6 275.5 318.1 398.8 231.6
Operating
profit
Minerals 1.9 3.3 3.6 16.3 4.1 3.2 3.1 12.1 6.1
Processing
Base Metals 9.4 13.2 12.1 9.3 6.3 11.9 13.3 17.2 4.3
Metals 4.7 10.5 11.5 11.5 12.3 11.8 14.9 22.1 8.9
Processing
Other 0.0 0.6 1.3 0.3 0.4 1.2 1.7 0.7 -0.4
Businesses
Unallocated and
intra-group -2.4 -4.1 -2.5 -4.4 -2.2 -5.1 -4.1 -4.6 -2.7
items **)
Total 13.6 23.4 26.0 33.0 21.0 22.9 28.9 47.5 16.3
*) 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 × 100
income
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
INTERIM REPORT JANUARY-MARCH 2009 BRIEFING
A briefing, at which CEO Tapani Järvinen and CFO Vesa-Pekka Takala
will present the interim report January-March 2009, will be held in
Helsinki, Finland.
BRIEFING
Date: Friday, April 24, 2009
Time: 3:00-4:00pm (EEST)
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 April 27, 2009 midnight at the following numbers:
UK: +44 20 7031 4064
US: 1 954 334 0342
Access code: 831829
FINANCIAL REPORTING SCHEDULE FOR 2009
Outotec's will publish the following financial reports in 2009:
Interim Report for January-June 2009 on July 24
Interim Report for January-September 2009 on October 23
DISTRIBUTION
NASDAQ OMX Helsinki Ltd
Main media
www.outotec.com
Downloads
| Name | |
|---|---|
| Interim report January-March 2009 | Download |