Delivering greater shareholder value - CEO Matti Kähkönen

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This is the presentation of Matti Kähkönen, Metsoo's President and CEO at the 2014 Capital Markets Day event in Amsterdam. http://www.metso.com/cmd Metso has a solid strategy to drive growth and profitability and ultimately deliver greater value to shareholders.

Transcript of Delivering greater shareholder value - CEO Matti Kähkönen

  • 1. MetsoDelivering greater shareholder valueMatti KhknenPresident & CEO

2. MetsoContent1.Value creation: Strong track record2.Strategy: Strong portfolio3.Financial targets: Roadmap4.Our investment proposition Metso Metso Capital Markets Day 2014: CEO's2 opening by Matti Khknen 3. Metso357911131550100150200250300350400450Safety is our top priorityContinuous focus on our LTIF target of less than 1 leads to results* LTIF in September 2014 3Actions leading to improvementActive and visible management support, follow up and action plansHealth, safety and environment mindset development and self auditsLearning from every incidentFull compliance with minimum safety standardsContinuous development of professional abilityLost time incident frequency (LTIF)Total number of lost time incidents (LTI)Lost Time Incident FrequencyNumber of LTI'sLTIF 3.3*LTIF and number of LTIs development 2010 through September 2014 Metso Capital Markets Day 2014: CEO'sopening by Matti Khknen 4. MetsoThis is Metso416,000employees in 270 locations in more than50 countriesNet sales:EUR 3,658 million 53% of sales from services 56% of sales from growth marketsNet sales by customer industryNet sales by geographic areaOrders received: EUR 3,493 millionEBITA**:EUR 469 million12.8% of net sales23%31%20%13%9%4%Mining, capital 23%Mining, services 31%Aggregates, 20%Oil and Gas, 13%Pulp and Paper, 9%Other, 4%27%19%22%23%9%Europe, 27%North America, 19%South and Central America, 22%Asia-Pasific, 23%Africa and Middle East, 9%*Net Sales, Orders received and EBITA 10/2013 9/2014**Before non-recurring items Metso Capital Markets Day 2014: CEO'sopening by Matti Khknen Metso 5. Value creationStrong track record 6. MetsoAdded value for shareholders: - Higher profitability - Reduced volatilityOur value creation roadmapStrong execution to continue6Metso recognized as best in class in value creation2011-2012Metso was a diversified company with several business models and broad management agenda2011-122013Demerger implemented on Dec 31st, 2013 and Valmet listed as of Jan 2nd, 2014Future20132014 New strategy designed to deliver greater shareholder value 2014-2017 New financial targets:Net sales growth exceeding market growthEBITA margin before non- recurring items >15%Return on capital employed (ROCE) before taxes >30%20142015 -2017Added value for shareholders: - Annual dividend of more than 50% of annual EPS - Significant value unlocked by the demergerMetso Capital Markets Day 2014: CEO'sopening by Matti Khknen 7. MetsoOur business mix is strong and balancedMining capital represents around 20% of net sales7Share of total net sales21%21%23%28%25%19%24%24%21%19%20%22%22%25%26%26%28%29%26%24%24%23%25%27%7%6%6%5%3%3%200920102011201220131-9/2014Mining ServicesAggregatesFlow ControlOthersMining Capital Metso Capital Markets Day 2014: CEO'sopening by Matti Khknen 8. MetsoSuccessful (mining) downturn management Group net sales and EBITA%, rolling 12 months 80%2%4%6%8%10%12%14%16%18%05001 0001 5002 0002 5003 0003 5004 0004 500Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q32009 2010 2011 2012 2013 2014%EUR MillionServices net sales, rolling 12 months Capital net sales, rolling 12 months EBITA* %, rolling 12 mthsCost efficiency actions started early 2013Global procurement initiativesMix improvement thanks to growth of Services and Flow ControlDemerger had no impact on the daily business Metso Capital Markets Day 2014: CEO'sopening by Matti Khknen 9. MetsoProven resilience to the mining downturnMinerals segment EBITA margin shows stability against peer group9*Indexed operating margin adjusted for non-recurring itemsPeers include: Atlas Copco Mining and Rock Excavation Technique and Construction Technique, FLSmidth Minerals Processing & Customer Services, Outotec Minerals Processing, Sandvik Mining and Construction, Weir MineralsPeer group average operating margin ~ - 20%Metso Minerals segment EBITA ~ + 20% Metso Capital Markets Day 2014: CEO'sopening by Matti Khknen0%20%40%60%80%100%120%140%160%Q1/2012 Q2/2012 Q3/2012 Q4/2012 Q1/2013 Q2/2013 Q3/2013 Q4/2013 Q1/2014 Q2/2014 Q3/2014Peers operating margin average, %* Metso Minerals index operating margin, %* 10. MetsoMinerals segment profitability not largely affected by lower volumes 10Note: Published figures including currency impact * Before non recurring items Metso Capital Markets Day 2014: CEO'sopening by Matti Khknen0%2%4%6%8%10%12%14%05001,0001,5002,0002,5003,0003,5004,000Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q32009 2010 2011 2012 2013 2014%EUR millionServices net sales, rolling 12 months Capital net sales, mining, rolling 12 months Capital net sales, aggregates, rolling 12 months EBITA* %, rolling 12kk 11. MetsoFlow Control profitability is strong due to good margins and lower costs 11 Metso Capital Markets Day 2014: CEO'sopening by Matti Khknen0%2%4%6%8%10%12%14%16%18%20%01002003004005006007008009001,000Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q32009 2010 2011 2012 2013 2014%EUR MillionServices net sales, rolling 12 months Capital net sales, rolling 12 months EBITA* %, rolling 12 mthsNote: Published figures including currency impact * Before non recurring items 12. MetsoOur global presence has strengthenedMore personnel close to customers1248 %20 %8 %15 %9 %June 2004Total ~12,500June 2014 Total ~16,00039 %16 %20 %18 %7 %Europe, CIS and North America: 68% 55%APAC, South America, Africa and Middle East: 32% 45%Europe and CISSouth and Central AmericaAsia-PacificNorth AmericaAfrica and Middle EastEurope and CISSouth and Central AmericaAsia-PacificNorth AmericaAfrica and Middle East Metso Capital Markets Day 2014: CEO'sopening by Matti Khknen 13. StrategyStrong portfolio 14. MetsoGlobal megatrends are driving our futureAll Metsos businesses are supported by long-term trends14Challenges and opportunities affecting our customersDeclining ore grades in miningInfrastructure investmentsGrowth in energy consumptionShift to unconventional sources in Oil & GasIncreasing need for energy and water-efficient technologies and solutionsIncreasing performance, cost and capital efficiency awareness MetsoOur products and services yield concrete benefits to our customersImproved process efficiency and performanceLess shutdowns, more up-timeBetter reliability and safetyMore proficient use of energy, water and other valuable resources Metso Capital Markets Day 2014: CEO'sopening by Matti Khknen 15. Metso-Maintain leadership in Pulp & Paper valves-Evaluation of strategic options for Process Automation SystemsOur customer industries provide attractive opportunities Metso Capital Markets Day 2014: CEO'sopening by Matti Khknen15-Continuous growth of services-Improved resilience through operational efficiency- Product renewal-Tap into the growth of aggregate production-Opportunities in the mid-market-Operational efficiency- Organic and acquired growth in the current target market-Expansion to new market segments- Potential to grow in pumpsMiningAggregatesOil & GasOther process industries54% of net sales20% of net sales13% of net sales13% of net sales6-8%Long-term market growth, p.a.Long-term market growth, p.a.Long-term market growth, p.a.4-6%5-8% 16. MetsoWe have established strong global market position in all our customer industriesThey all offer attractive long-term growth opportunitiesGrowth is supported by industry trends and global megatrendsThe mining equipment business faces currently lower demand, but remains attractive in the mid- and long-termWe are well-positioned in all our core industries 16#1 in mining crushers and grinding mills#1 in aggregates crushing and screening#1 services provider with leading services center network and capabilities#5 in oil and gas control valves Metso Capital Markets Day 2014: CEO'sopening by Matti Khknen 17. MetsoCompetitive position built on customer experience 17Delivered by highly competentand committed industry professionalsall over the worldCustomer intimacyMarket-leading process and application knowledgeFull-scope servicesoffering anddelivery capabilityReliable, leading technologies and competitive offering Metso Capital Markets Day 2014: CEO'sopening by Matti Khknen 18. MetsoHighly skilled and experienced peopleRealiable What do our customers like about usMetso global customer survey, May 2014, 981 respondentsMetso Capital Markets Day 2014: CEO's18 opening by Matti KhknenGood reputation and referencesExcellent processknow-howExcellent technical supportLeading technologyReliable equipment andsolutionsThe most important attributes customers associate with Metso 19. MetsoProductsOur way of taking Metso to the next levelBusiness model offering higher profitability and lower volatilityA leader in flow control within oil & gas and miningThe leading technology and services provider for end-to-end minerals processingServicesSystemsBroad Oil & Gas and Mining platform, covering valves and pumpsGlobal sales and service channelsStrong process knowledgeLeading equipment technologies across the value chainLeading intelligent solutionsGlobal sales and service channels 19Our businesses and strategic objectives Metso Capital Markets Day 2014: CEO'sopening by Matti Khknen 20. MetsoLeveraging our new integrated operating modelExternal reporting segments: Flow Control and Minerals 20ServicesMineralsFlow ControlPerformance servicesMarket area organizationsMarket area organizationsAggregates equipmentMining equipmentSpareandwear partsOil and gas Aggregates MiningValves(equipment and services)Pumps(equipment and services) Metso Capital Markets Day 2014: CEO'sopening by Matti Khknen 21. Financial targetsRoadmap 22. MetsoAchieving profitable growth with strong returnsProfitability target to be reached within three years22Delivering greatershareholder valueTargetQ1-Q3/2014Net sales growth exceeding market growthIn line with targetEBITA margin be