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Released July 27, 2015 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Metso (OMX:MEO1V) (Helsinki, Finland), a supplier to the mining and oil & gas industries, took a hit in sales in second-quarter 2015 as demand declined for mining, oil and gas equipment. Profits were reported to be 310 million euros ($340 million), compared with 53 million euros ($58 million) in second-quarter 2014; much of the total was attributed to the 258 million-euro ($283 million) gain from the company's divestment of its Process Automation Systems (PAS) business in April.
Industrial Info is tracking more than $1 billion in projects involving Metso, including Antofagasta plc's (London, England) $350 million expansion of its Centinela Sulfuro Copper Mine in Sierra Gorda, Chile. The project involves add a 7.3 million-ton-per-year crushing and screening circuit at the mine, whose copper concentrator currently has a capacity of 86,000 tons per day. Metso's Chilean subsidiary is performing engineering, procurement and construction services.
Net sales stood at 756 million euros ($830 million), a 21.41% decrease from the same period last year, or a 14.48% decrease when excluding the PAS segment from the previous year's numbers. Although demand for mining services remained strong during the quarter, demand for mining equipment proved weak; order intake in the Minerals segment exceeded that of the first quarter only because of a few large orders related to copper projects, and declined from that of second-quarter 2014.
When excluding the PAS business, the Flow Control segment saw orders grow, largely from mining pumps and pulp & paper valves, although orders declined from the oil & gas markets. When including the PAS business in the year-over-year comparison, Flow Control orders declined 37%.
Gross capital expenditures for the first half of the year, not including any acquisitions, totaled 23 million euros ($25 million), compared with 25 million euros ($27 million) in the same period last year. About 70% of second-quarter 2015's total was related to maintenance.
The company's book-to-bill ratio stands at 1.09; a ratio of more than 1 indicates a company has a demand for orders that exceeds what it can immediately supply. The largest order growth during the second quarter came from North America and China, while orders declined in Europe, South America, Africa and the Middle East.
"We are not going to make the 10% [growth target for the year], that is for sure," said Matti Kahkonen, the president and chief executive officer of Metso, in a conference call. "I haven't been pleased overall. Many good things have been done in the service [businesses], and many things has been improved and clarified. But overall, we haven't been totally pleased with the growth rates and the profitability issues. ... But I feel that we can get more out of higher growth [and] further improved profitability."
Gross capital expenditures for full-year 2015 are now expected to be lower than 2014's 74 million euros ($81 million). Net sales for 2015 are expected to total between 3 billion and 3.2 billion euros ($3.3 billion to $3.5 billion), not including gains from the sale of the PAS business. Demand for mining equipment is expected to remain weak throughout the remainder of the year, although the demand for mining services is expected to remain positive. "There are few large orders in pipeline," Kahkonen said. "Timing is uncertain. And demand for services remained healthy, because the utilization rates are quite, quite good. On the other hand, there are mine closures. Obviously, if the mine is closed, there won't be any services business available, and some constructions are holding the impact to the services market."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
Industrial Info is tracking more than $1 billion in projects involving Metso, including Antofagasta plc's (London, England) $350 million expansion of its Centinela Sulfuro Copper Mine in Sierra Gorda, Chile. The project involves add a 7.3 million-ton-per-year crushing and screening circuit at the mine, whose copper concentrator currently has a capacity of 86,000 tons per day. Metso's Chilean subsidiary is performing engineering, procurement and construction services.
Net sales stood at 756 million euros ($830 million), a 21.41% decrease from the same period last year, or a 14.48% decrease when excluding the PAS segment from the previous year's numbers. Although demand for mining services remained strong during the quarter, demand for mining equipment proved weak; order intake in the Minerals segment exceeded that of the first quarter only because of a few large orders related to copper projects, and declined from that of second-quarter 2014.
When excluding the PAS business, the Flow Control segment saw orders grow, largely from mining pumps and pulp & paper valves, although orders declined from the oil & gas markets. When including the PAS business in the year-over-year comparison, Flow Control orders declined 37%.
Gross capital expenditures for the first half of the year, not including any acquisitions, totaled 23 million euros ($25 million), compared with 25 million euros ($27 million) in the same period last year. About 70% of second-quarter 2015's total was related to maintenance.
The company's book-to-bill ratio stands at 1.09; a ratio of more than 1 indicates a company has a demand for orders that exceeds what it can immediately supply. The largest order growth during the second quarter came from North America and China, while orders declined in Europe, South America, Africa and the Middle East.
"We are not going to make the 10% [growth target for the year], that is for sure," said Matti Kahkonen, the president and chief executive officer of Metso, in a conference call. "I haven't been pleased overall. Many good things have been done in the service [businesses], and many things has been improved and clarified. But overall, we haven't been totally pleased with the growth rates and the profitability issues. ... But I feel that we can get more out of higher growth [and] further improved profitability."
Gross capital expenditures for full-year 2015 are now expected to be lower than 2014's 74 million euros ($81 million). Net sales for 2015 are expected to total between 3 billion and 3.2 billion euros ($3.3 billion to $3.5 billion), not including gains from the sale of the PAS business. Demand for mining equipment is expected to remain weak throughout the remainder of the year, although the demand for mining services is expected to remain positive. "There are few large orders in pipeline," Kahkonen said. "Timing is uncertain. And demand for services remained healthy, because the utilization rates are quite, quite good. On the other hand, there are mine closures. Obviously, if the mine is closed, there won't be any services business available, and some constructions are holding the impact to the services market."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
