Metso Outotec Corp

Good afternoon. 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 second quarter 2024 results, which were published earlier this morning. We will start with the presentation by our president and CEO, Pekka Vauramo, and CFO, Eva Sipilä. And after that, we will be taking your questions. And we try and limit the length of this call to 60 minutes, so please keep that in mind and try to limit the number of the questions you'll be asking. In the beginning of the presentation, we'll be discussing forward-looking statements. Please take that into account. And with these remarks, I'll be handing over to Pekka to start the presentation. Please go ahead.

Thank you and welcome to our second quarter earnings call. If we start with the highlights of the quarter, first of all, we didn't see any major changes in the market outlook, so it was very much in line with our expectations in both of our segments. We saw continued headwind in orders in both of our segments, and since we have had headwind with the orders already already for a couple of quarters, then that starts to be very visible in our sales. So both our top lines negative development as such for the quarter. What was very positive during the quarter was that our margin development continued to be very resilient. We are showing almost stable margin with reduced sales levels and that of course shows that we are doing in-house what we can in this kind of situation when there is a very much delayed decision making in equipment orders in minerals and at the same time we've seen some slowdown in destocking in aggregates equipment. We are seeing some signs of cash flow improving, still not satisfied with the development in that area, but we are moving in the right direction with the cash conversion. And the group numbers as such, so both top lines orders and sales down, orders 14%, sales 13%. There's a minor currency impact there as well, maybe 2% out of those numbers are because of the currency, but main contribution is obviously the volume. And adjusted EBITDA came down naturally, the millions from 238 to 205. Margin remained fairly stable in this kind of conditions, similar drop in operating profit Profit, Eva will comment a little bit on that development later on in her part. EPS came down two cents and cash flow shows an improvement, but still room to improve from 150 million to get the cash conversion on the level where it should be. Looking at segments, aggregates, orders, 314, that's down 16 million from last year. Market activity remained more or less on same level. We saw sort of earlier geographically wide recovery or signs in the market. Now we see more of a mixed picture in the market at this moment. And maybe the notable situation which became evident towards the end of the second quarter was that the North American mobile equipment market slowed down, and in fact the destocking of dealer stocks slowed down quite much towards the end of the second quarter. So equipment orders down 5 percent and services 3 percent. With the outlook that we have for this part of the business, it's evident that we'll end up below last year's sales numbers, order numbers and sales numbers in aggregates, as the situation will be the same for minerals as well. Sales numbers 331 down clearly from the year before and that is of course because of the thinner backlog that we do have. Margin supported very well by the mix improvement. being more stable than the equipment order services share being 33% and the total adjusted EBITDA for the segment 55 million down 11 million margin 16.6% versus 17 a year before. We have continued good cost management and sales mix is contributing and like we have said many times we have done some medium-sized and minor acquisitions in aggregates area, and we keep on finding more synergies in this area, and that contributes to the cost side and margin development as well, despite all the lower volumes in our aggregates business. Then moving on to minerals, major change, really, the equipment orders down 34%, really no major orders, or there is one, in fact – order that we booked, e-scrap smelter order, but that was the only one, the major one that we booked during the quarter. Services down 6%, some sort of seasonality and lumpiness in services side, but that clearly shows that it's much more stable business as such. Good strong pipeline but delayed customer making, the system making really here is the name of the game and this is just something we need to live through. Those things will finally come through. We see some signs of that one now. But since there have been so many delays so difficult really to commit and say that they will come now or fourth quarter or so, but we see some possibilities there. Sales follows naturally the lower order intake from the previous quarters. Equipment down 22 percent, services down 7 percent, and services share now at 66, supporting through mix the margin development. Same as in the aggregate side, we have managed, in our opinion, our costs well in minerals as well. We made some changes in the way of operating. We have finalized those actions, and that contributes nicely to the cost development in aggregates. Margin, 17.3, 152 million euros. down from 18.2 a year before. But good resilient performance there in the mineral side as well. Emma, please.

Thank you. Good morning, good afternoon to all on my behalf as well. If I start with the group income statement, so a few additional comments to what Pekka already mentioned. So the operating profit was €195 million, and it's high relative to the adjusted EBITDA of €205 million for the quarter. Now, this is due to the adjustments in the quarter being positive. The adjustments were plus €6 million, thanks to a provision release of €13.13 million from the remaining tail of the Russia wind-down related provision. we successfully completed a settlement agreement in the second quarter for the remaining couple of big projects that were signed before the start of the Ukraine war, and hence now marking the end of a very long legal process to exit all the business that we had ongoing when the attack in Ukraine happened. Regarding taxes, our effective tax rate for the quarter was 25%, which is in line sequentially and also with last year. And then earnings per share were 16% for the quarter, and this is both for continuing operations as well as including the discontinued operations, i.e. for the full reported EPS number. Regarding our group balance sheet, so the total is down a few hundred million euros from the end of March or from the beginning of the year for that matter. And the main impact comes from the fact that we paid back the last bit of our 24 bond, public bond. Some 196 million euros was paid back in June and obviously reduced significantly. both the liquid funds as well as the interest-bearing liabilities on the other side of the balance sheet. And our net debt now at the end of June was roughly a billion euros. Moving to cash, so group cash flow from operations before financial items and taxes was on a similar level as in Q1 with 152 million euros. Cash flow remains supported by the healthy profitability, and our resilience obviously is very important. Unfortunately, the net working capital change was still negative in the quarter. We did manage to achieve a reduction in our finished goods inventories. and work continues with multiple initiatives across our business in the inventory space. However, projects tied more capital in inventories and also had a negative impact on payables in the quarter, and hence the total of minus 102 as the change figure. Now, such fluctuations as such are part of our business and not easy to predict in timing. But certainly in this quarter we were aiming for a better cash flow. So work continues throughout. And then my final slide on our financial position. Liquid funds consisting of cash and cash equivalents amounted to 348 million euros. And this is taking into account the already mentioned repayment of the bond, but also then our first dividend installment of 149 million that was paid out in May. Both are gearing an equity to asset stand at about 41%. And with that, I would hand it back to you, Bek.