Metso Outotec Corp

All right, good morning, everyone. This is Juha from Metsos Investor Relations, and I want to welcome you all to this conference call where we discuss our first quarter 2024 results that were announced earlier this morning. As earlier announced, this presentation will be held by our CFO, Eeva Sipilä, and this is due to some scheduling conflicts, nothing more dramatic than that. Before we start, In the presentation, we have forward-looking statements that is good to remember, and also a reminder that we will have our annual general meeting of shareholders after this call, so that's why we try and limit the length of the call to 60 minutes. So please ask questions one or, let's say, max two at a time so we can accommodate all the questions during the duration of the call. Without further ado, I will hand over to you, Eva.

Thank you, Johan. Good morning, good afternoon to all of you on my behalf. I will start with the highlights of the first quarter. Market activity was in line with our expectations and with what we guided in our market outlook in February. We saw the pickup in aggregates activity. In minerals, the activity levels were unchanged, with equipment being somewhat muted, whereas aftermarket activity was healthy. Operationally, it was a solid quarter in the sense that we were able to grow after market sales on back of the healthy backlog. Our adjusted EBITDA margin shows resilience despite sales being lower year over year, and also cash flow development showed progress. Moving to the first quarter key figures. In orders, we had a tough comparison and ended 8% down year on year, although sequentially growing over 10%. In constant currencies, orders were down 5% year over year. Sales at 1.2 billion were down roughly 100 million, or 9%, in constant currencies, 7%. Adjusted EBITDA in euros was down only 5%, which meant that we delivered a 16.5% margin on our sales. This resilience is obviously something we have worked hard on, working with various structural business improvement topics over the past, but also supported by tight cost management in the past months. I will revert to the other key figures a bit later in the presentation. Moving then to our segments, I'll start with aggregates. We were very satisfied with our order intake of €365 million for the quarter. While down 6% year-over-year, this is a significant pickup from the second half of 23 levels. The market remains below the unit levels of a year ago, and whilst dealer inventories have come down, we expect to see dealers focusing on reducing them further in Q2. But this order intake will give us some operational support in the coming months. With the 300 million quarterly sales level our end-of-year backlog gave us, it is a very good achievement from the team to deliver 17% adjusted EBITDA margin. In our minerals segment, we saw similarly to aggregate orders being down year over year, but the 997 million order, a number for Q1, is growth on the previous year. We received one bigger copper project order that we announced in January. Otherwise, customer slowness on making decisions in equipment continued, and service orders were the key contributor for the order intake. Sales in this segment are largely a derivative of the order intake of mid-last year, and the 914 million level is 68% made of services sales. Whilst this mix supported margins, the overall sales remaining on the low side pulled in the other direction, resulting in the 17.5% adjusted EBITDA margin. Then a few slides on the group overall financials next. From our group income statement, I would comment a few additional lines. Net financial expenses are up year over year due to the higher amount of debt, but on similar levels as in the second half of 2023. We have a bond maturing in Q2, so the amount of debt will decrease by almost 200 million. in next month. Then again, relatively, that older debt has a lower interest cost compared to the more recent bonds. Regarding taxes, our effective tax rate for the quarter was 25%, which is in line with that of last year's levels. Earnings per share were 15 cents for the quarter, both for continued operations as well as for the overall, one including also discontinued Regarding our balance sheet, the total is slightly below that of the year, and the changes may lean lower receivables on the asset side and lower payables on the liability side. These both reflect slower sales, but also our actions to improve cash flow. Inventories remain flat. With the logistical challenges in the Red Sea and in Finland due to the strikes, we weren't exactly getting much support to improve, but we have actions in place and do expect them to yield results in lower inventories in the coming quarters. Net debt was down slightly to 825 million euros. Group cash flow from operations before financial items and taxes was 158 million euros, supported by the profitability. The net working capital change was still slightly negative, but less than in the previous quarter. So for seasonally, usually a bit of a challenging quarter where we are quite satisfied with the cash. Finally, on our net financial position, so no changes as such in the quarter. The second quarter, indeed, will be busier when we expect to pay out the first installment of the dividend, assuming our AGM later today approves the Board's proposal. And then as well, indeed, what I mentioned earlier, the final 197 million of our earlier bond maturing. Now, this we did refinance already in November when we launched the 300 million bond, and hence we have, as you see from the figure on liquid funds, we have more than normal liquid funds awaiting for this repayment. Moving then to sustainability and our outlook. good progress in delivering on our sustainability key performance indicators continued also in Q1. We are on target in three out of the four targets. In logistics, the CO2 emissions reduction is only 6%, which means that we have work to do to reach the 20% reduction target we have set for ourselves to reach by 2025. Even if the number of shipments is slightly lower, the longer routes on some of these shipments do increase the challenge from a CO2 point of view. And then to conclude with our market outlook. So we expect the market activity on both the minerals and aggregates to remain at the current level. Previously, we expected the aggregates market to improve. This did materialize, as you see from our numbers. So now we are expecting the market to continue on this level of activity. And with that, I think we are ready for your questions.

Thanks, everyone. Operator, we can now open lines for questions.