OUTOTEC OYJ STOCK EXCHANGE RELEASE APRIL 23, 2008 AT 9:00AM
INTERIM REPORT JANUARY-MARCH 2008
Order intake grew 78%, and good profit performance continued
January-March 2008 in brief (2007 corresponding figures in
parentheses):
- Sales: EUR 225.6 million (EUR 211.7 million)
- Operating profit: EUR 21.0 million (EUR 13.6 million)
- Profit before taxes: EUR 23.1 million (EUR 15.3 million)
- Earnings per share: EUR 0.39 (EUR 0.25)
- Order intake: EUR 298.8 million (EUR 168.1 million)
- Order backlog: EUR 1,359.6 million (EUR 836.5 million)
- Net cash flow from operating activities: EUR 40.7 million (EUR 21.1
million)
- Outotec reiterates its full-year 2008 outlook for sales and
operating profit; furthermore, the order backlog at year-end 2008 is
estimated to exceed that of the previous year-end.
CEO Tapani Järvinen:"The demand for Outotec's technologies and services continued strong
in the first quarter and our order intake was successful. Several new
orders had high proportion of proprietary technology. Our order
backlog strengthened further from the record high year-end figure and
the good profit performance continued in the first quarter of 2008.
I am also pleased with the development of our services and after
sales business, particularly with the new three-year service
contracts with Boliden and Norilsk Nickel plants in Finland. These
agreements demonstrate our capability of delivering value-adding
services to our customers and are well in line with our intention to
grow the services and after sales business significantly in the next
few years. The first quarter performance together with the continuing
favorable market outlook in the mining and metals industry gives us
confidence for the rest of 2008."
Summary of key figures
Q1 Q1 Q1-Q4
2008 2007 LTM*) 2007
Sales, EUR million 225.6 211.7 1,014.0 1,000.1
Gross margin, % 20.4 19.0 20.7 20.4
Operating profit, EUR million 21.0 13.6 103.4 96.1
Operating profit in relation to sales,
% 9.3 6.4 10.2 9.6
Profit before taxes, EUR million 23.1 15.3 112.6 104.8
Net cash from operating activities,
EUR million 40.7 21.1 162.6 143.0
Net interest-bearing debt at the end
of period, EUR million -316.8 -187.8 -316.8 -292.9
Gearing at the end of period, % -178.2 -121.7 -178.2 -136.4
Working capital at the end of period,
EUR million -176.7 -129.7 -176.7 -153.9
Return on investment, % 47.4 44.5 68.1 59.8
Return on equity, % 33.2 27.6 50.3 43.3
Order backlog at the end of period,
EUR million 1,359.6 836.5 1,359.6 1,317.2
Order intake, EUR million 298.8 168.1 1,593.8 1,463.0
Personnel, average for the period 2,185 1,860 2,113 2,031
Earnings per share, EUR 0.39 0.25 1.99 1.85
*) Last twelve months
OUTLOOK FOR 2008
Outotec's market outlook is expected to remain good in 2008. The
mining and metals industry's outlook continues robust, and the
tightness in the supply of metals encourages Outotec's customer
industry to invest extensively in new plants, modernization projects,
and expansions. Driven by the good market situation, the demand for
Outotec's process technologies and services is expected to continue
on a good level in 2008.
Outotec reiterates its full-year outlook in terms of sales and
operating profit. Based on the strong existing order backlog and new
order prospects, the management expects that in 2008:
- sales will grow over 25% compared to 2007, and
- operating profit will improve from 2007 and the operating profit
margin will be moderately above the 2007 level, depending on the mix
of new orders received and the timing of project completions.
Furthermore, the management estimates that the closing order backlog
for 2008 will exceed that of the previous year-end.
INTERIM REPORT JANUARY-MARCH 2008
MARKETS
In the first quarter, the positive sentiment and strong investment
activity in the mining and metals industry continued, driven by
healthy global industrial production and consumption of metals.
Customer-industry consolidation has continued and these changes may
affect individual project developments. However, as long as the
underlying demand and consumption for metals continues there will be
a need to invest in new capacity. At the same time, ore bodies are
depleting, environmental regulations are tightening and requirements
for energy efficiency are growing, which all provide new
opportunities for Outotec and its advanced technologies.
In the first quarter, Outotec's customers initiated projects related
to technologies applicable to base metals and aluminum, but also
strong demand prevailed for technologies applicable to ferrous
metals, ferroalloys and sulfuric acid.
New potential projects continued to emerge in the rapidly developing
economies such as India and China as well as in the traditional
mining countries like Australia and Chile. Market activity in the
Middle East also continued robust.
ORDER INTAKE
Order intake in the first quarter amounted to EUR 298.8 million
(Q1/2007: EUR 168.1 million), representing 78% growth from the
previous year's corresponding order intake figure. The orders
received in the first quarter were rather narrow in scope but
included a large proportion of proprietary technologies and
equipment.
Major new orders in the first quarter included:
- several aluminum technology orders in China: among them a sow
casting system for Huomei Hongjun Aluminium-Power company, a
vibrocompactor and rodshop process equipment for China Aluminium
International Trading, and a sow casting system and key rodshop
equipment for Yellow River Hydropower Development Company (EUR 17
million);
- minerals processing technology for Mirabela Mineração of Brazil for
a new nickel sulfide concentrator and a slag concentrator for Umicore
Med for the Pirdop copper smelter in Bulgaria (EUR 21 million);
- modernization of a copper flash smelting furnace for KGHM in Poland
(over EUR 10 million);
- a chromite ore pelletizing plant and preheating kilns for ASA
Metals in South Africa (EUR 25 million); and
- a three-year service agreements with Boliden's Harjavalta and
Kokkola plants and with Norilsk Nickel's Harjavalta plants in
Finland.
ORDER BACKLOG
The order backlog at the end of the first quarter totaled EUR 1,359.6
million (Q1/2007: EUR 836.5 million), representing a growth of 63%
from the previous year's corresponding figure. On March 31, 2008, the
company's order backlog was valued at EUR 20 million less than in
December 31, 2007, due to the changes in the exchange rates.
On March 31, 2008, Outotec's order backlog included 32 projects with
a value in excess of EUR 10 million, accounting for 63% of the total
backlog. According to the management's estimate, some 60% of the
current backlog will be delivered in 2008, and the rest in 2009 and
beyond.
The drinking water treatment facility project for the eastern coastal
towns of Ampara District in Sri Lanka (USD 100 million) is pending
the customer's financing agreement. It is not included in the order
backlog on March 31, 2008.
SALES AND FINANCIAL RESULT
Outotec's sales in the first quarter totaled EUR 225.6 million
(Q1/2007: EUR 211.7 million). Delays in the execution of certain
projects, beyond Outotec's project scopes, slowed down the sales
recognition in the reporting period. However, these projects will be
recognized as sales later in 2008. Services and After Sales business,
which is included in the divisions' sales figures, contributed EUR
20.8 million (Q1/2007: EUR 15.3 million) to the sales, up 36% from
the corresponding 2007 level.
The operating profit for the first quarter improved compared to the
same period in 2007 and was EUR 21.0 million (Q1/2007: EUR 13.6
million), representing 9.3% of sales (Q1/2007: 6.4%). Good profit
performance continued largely because of the successful execution of
large turnkey and other technology projects. Increased sales volume
and a better project mix also contributed to the positive profit
development.
In addition, the fair valuation of the unrealized currency hedging
contracts between the euro and the U.S. dollar, which are not
included in hedge accounting, improved the profitability by EUR 0.6
million (Q1/2007: EUR -0.1 million). According to the cash flow hedge
accounting, which was started on July 1, 2007, Outotec recognized
hedge gains of EUR 3.5 million in the income statement and recognized
net gains of EUR 2.6 million in equity in the first quarter of 2008.
In the first quarter, Outotec's fixed costs were some EUR 1.9 million
higher than in the corresponding period of 2007. The increase in
administration costs was mainly related to business growth,
recruiting of new personnel worldwide, and the investments in
building the information technology infrastructure for the newly
established companies in India and Kazakhstan.
Outotec's profit before taxes for the first quarter was EUR 23.1
million (Q1/2007: EUR 15.3 million). Profit before taxes was affected
favorably by the net interest income from the high net cash position.
Net profit for the first quarter was EUR 16.3 million (Q1/2007: EUR
10.3 million). Earnings per share were EUR 0.39 (Q1/2007: EUR 0.25).
Outotec's return on equity for January-March 2008 was 33.2% (Q1/2007:
27.6%), and return on investment was 47.4% (Q1/2007: 44.5%).
Sales and operating profit by segment
Q1 Q1 Q1-Q4
EUR million 2008 2007 2007
Sales
Minerals Processing 60.1 55.2 302.9
Base Metals 60.1 60.1 274.2
Metals Processing 104.6 97.5 432.3
Other Businesses 9.1 6.7 37.8
Unallocated items*) and intra-group sales -8.3 -7.8 -47.0
Total 225.6 211.7 1,000.1
Operating profit
Minerals Processing 4.1 1.9 25.2
Base Metals 6.3 9.4 43.9
Metals Processing 12.3 4.7 38.1
Other Businesses 0.4 0.0 2.2
Unallocated**) and intra-group items -2.2 -2.4 -13.3
Total 21.0 13.6 96.1
*) Unallocated items primarily include invoicing of internal
management and administrative services.
**) Unallocated items primarily include management and administrative
services and share of the result of associated companies.
Minerals Processing
The Minerals Processing division's sales grew 9% in the first quarter
and totaled EUR 60.1 million (Q1/2007: EUR 55.2 million). Operating
profit was EUR 4.1 million (Q1/2007: EUR 1.9 million). The growth in
sales and the higher proportion of process solution projects under
implementation improved the division's operating profit. In addition,
the division's profit included EUR 2.8 million gain related to the
fair valuation of the unrealized currency hedging contracts. Profit
generation for the Minerals Processing division is typically weaker
in the first half of the year and stronger in the second half, due to
the seasonality within a fiscal year.
Base Metals
The Base Metals division's sales in the first quarter totaled EUR
60.1 million (Q1/2007: EUR 60.1 million), and operating profit was
EUR 6.3 million (Q1/2007: EUR 9.4 million). The sales remained on the
same level as in the corresponding period of 2007 and this was mainly
due to delays in the execution of certain projects beyond Outotec's
project scopes. The division's profitability compared to that in the
corresponding period of 2007 was lower, because of less license fee
income and fewer project completions.
Metals Processing
The Metals Processing division's sales grew 7% from the previous
year's figure to EUR 104.6 million (Q1/2007: EUR 97.5 million). The
growth came from the aluminum and sulfuric acid plant projects as
well as roasting plant projects. Operating profit improved to EUR
12.3 million (Q1/2007: EUR 4.7 million). The positive impacts came
from the volume growth, license fee income, project margin
improvements, and profitable change orders.
BALANCE SHEET, FINANCING AND CASH FLOW
Net cash flow from operating activities in the first quarter was
strong at EUR 40.7 million (Q1/2007: EUR 21.1 million). Compared to
the corresponding period in 2007, the first quarter saw an
improvement of over 93% in net cash flow from operating activities.
The main reasons for the improvement were the good result, the
decrease in working capital, and interest income created by the
strong cash position. The parent company paid EUR 39.9 million in
dividends on April 1, 2008, subsequent to the March 31, 2008, balance
sheet date.
Outotec's working capital amounted to EUR -176.7 million on March 31,
2008 (March 31, 2007: EUR -129.7 million). The working capital
improved because of favorable payment terms and conditions in
customer, subcontractor, and sub-supplier contracts.
The balance sheet structure remained strong. Net interest-bearing
debt on March 31, 2008, came to EUR -316.8 million (March 31, 2007:
EUR -187.8 million). The advances received at the end of the first
quarter totaled EUR 231.9 million (March 31, 2007: EUR 141.0
million), representing an increase of more than 64%. Outotec's
gearing at the end of the reporting period was -178.2% (March 31,
2007: -121.7%), and the equity-to-assets ratio was 34.3% (March 31,
2007: 35.6%).
The company's capital expenditure in the first quarter was EUR 3.3
million (Q1/2007: EUR 4.6 million), which consisted mainly of
investments in information technology, intellectual property rights,
and machinery in the Outotec Turula workshop. In 2007, capital
expenditure included one-time investments related to the separation
from the ex-parent company.
Guarantees for commercial commitments, including advance payment
guarantees issued by the parent and other Group companies, came to
EUR 400.1 million at the end of March 2008, showing an increase from
the previous year's level relative to business growth (March 31,
2007: EUR 248.8 million).
In the first quarter, Outotec entered into an agreement with a
third-party service provider concerning the administration and
hedging of share-based incentive program for key personnel. As part
of this agreement, in order to hedge the underlying cash flow risk,
the service provider has purchased 250,000 Outotec shares 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 4.6 million (Q1/2007: EUR 5.0 million),
representing 2.0% of sales (Q1/2007: 2.4%). Outotec filed 8 new
priority patent applications (Q1/2007: 7), and 26 new national
patents (Q1/2007: 49) were granted.
Outotec and the Geological Survey of Finland made a partnership
agreement in March 2008 for developing collaboration in the research
and development of mineral technology. This collaboration includes
process development for new ore deposits on laboratory, minipilot,
and demonstration plant scale as well as process improvements in
existing concentrators. Outotec and the Geological Survey of Finland
have also agreed on researcher exchange in demonstration plant tests
and in commissioning of new plants for Outotec's customers. The
partnership agreement further deepens the long-term relationship
between the Geological Survey of Finland and Outotec in exploitation
of natural resources and in development of new technologies for
minerals processing.
PERSONNEL
At the end of the first quarter, Outotec had a total of 2,318
employees (March 31, 2007: 1,921). The average number of employees in
the first quarter was 2,185 employees (Q1/2007: 1,860). The average
number of personnel increased by 325 from that of the corresponding
period in 2007, through business growth and the accompanying active
recruitment. Temporary employees accounted for some 17% of the total
number of employees.
Distribution of personnel by country
March 31, March 31, Change, %
2008 2007
Finland 867 778 11.4
Germany 334 297 12.5
Rest of Europe 229 205 11.7
Americas 576 337 70.9
Australia 196 205 -4.4
Rest of the world 116 99 17.2
Total 2,318 1,921 20.7
At the end of the first quarter, in addition to the personnel on
Outotec's payroll, the company had more than 500 full-time-equivalent
contracted people working in project execution. The number of
contracted workers at any given time changes with the active project
mix, local legislation and regulations, and seasonal fluctuations.
In the first quarter, salaries and other employee benefit expenses
totaled EUR 36.2 million (Q1/2007: EUR 29.4 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 published on
March 23, 2007, and the second, Incentive Program 2008-2010, was
published on March 3, 2008.
Share-based incentive program 2007-2008
Some 20 key employees participate in the two-year share-based
incentive program. The program started on January 1, 2007, and ends
on December 31, 2008. The reward paid to the key personnel is
determined by the achievement of the targets set for the development
of the company's net profit and order backlog. The reward is paid in
shares and as a cash payment. The shares will be allocated to the key
personnel in the spring of 2009. The maximum reward of the incentive
program is EUR 6.7 million.
Share-based incentive program 2008-2010
The second incentive program comprises three earning periods:
calendar years 2008, 2009, and 2010. For the 2009 and 2010 earning
periods, the incentive program concerns approximately 60 employees.
The number of shares granted as incentive depends on the achievement
of the annual corporate growth targets defined and set by the Board
of Directors for earnings per share, order backlog, and the services
and after sales business. The potential incentives for the earning
period 2008 will be paid in 2009. Approximately half of the
incentives will be paid as Outotec shares and half in cash.
In the 2008 earning period, the incentive program concerns
approximately 30 key employees. Those approximately 20 key employees
who belong to Outotec's first share-based incentive program for 2007
and 2008 are not included in the new 2008-2010 program in the 2008
earning period.
The maximum gross value of the new incentive program (2008-2010) will
equal approximately 500,000 Outotec shares (including the proportion
to be paid in cash), of which for the 2008 earning period the maximum
amount will equal 80,000 shares. Accounted with the February 29, 2008
quotation for the company's share (EUR 36.83), the incentives for the
2008 earning period would be some EUR 3 million, but the maximum
value for the incentive in 2008 earning period may not be more than
double that.
RESOLUTIONS OF THE 2008 ANNUAL GENERAL MEETING
Outotec's Annual General Meeting was held on March 18, 2008, in
Espoo, 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
financial year 2007.
Dividend
The Annual General Meeting decided that a dividend of EUR 0.95 per
share be paid for the financial year ended on December 31, 2007. The
dividends, totaling EUR 39.9 million, were paid on April 1, 2008.
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 and in
its assembly meeting the Board of Directors elected Mr. Karri Kaitue
as the Vice Chairman of the Board of Directors.
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.
Auditors
KPMG Oy Ab, Authorized Public Accountants, was re-elected as the
company's auditor, with Mauri Palvi as Auditor in charge.
Board's authorizations
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 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 at the OMX
Nordic Exchange Helsinki at the price established in the trading at
the time of acquisition.
The above-mentioned authorizations shall be in force until the next
Annual General Meeting.
SHARES AND SHARE CAPITAL
Outotec's shares are listed on the OMX Nordic Exchange 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 34.12, the highest quotation for a share being
EUR 39.86 and the lowest EUR 27.06. The trading of Outotec shares in
the reporting period exceeded 34.6 million shares, with a total value
of over EUR 1,183 million. On March 31, 2008, Outotec's market
capitalization was EUR 1,415 million and the last quotation for the
share was EUR 33.70. On March 31, 2008, the company did not hold any
treasury shares.
On March 25, 2008, Morgan Stanley's group holding in shares of
Outotec Oyj exceeded 5% and amounted to 3,517,978 shares, which
represented 8.37% of the share capital and votes in the company.
On March 31, 2008, shares held in 12 nominee registers accounted for
some 83% of all Outotec shares.
EVENTS AFTER THE REPORTING PERIOD
In April, Outotec announced a contract (EUR 18 million) signed with
Bhushan Steel for the basic engineering and proprietary and special
equipment for two iron ore sinter plants, to be built in Meramandali,
Orissa State, India. This order is included in Outotec's 2008
first-quarter order backlog.
In April, Outotec received two grinding technology orders (EUR 25
million), including spare parts and services, from Nordic Mines AB of
Sweden for the Laiva gold project in Finland and from Polymetal
Trading of Russia for Albazino and Dukat projects.
Also in April, the company signed a contract (EUR 29 million) with
Shougang Jingtang United Iron & Steel for the delivery of new,
environmentally sound technology for Shougang's iron ore pelletizing
plant project in Caofeidan, China.
SHORT-TERM RISKS AND UNCERTAINTIES
Outotec monitors its key risks through active risk management in
order to increase transparency and manage the risks related to the
business operations.
In the first quarter risk assessment, all unfinished projects under
the method of the percentage of completion and completed contracts
were evaluated and contingencies were updated. Projects, where the
stage of completion was close to 100%, were evaluated and provisions
for performance guarantees and warranty period guarantees and
possible provisions for project losses were updated. There were no
material increases in the project risk provisions.
Rising costs, issues of quality and shortage of certain components
and equipment as well as global challenges in recruiting skilled
people and finding suitable subcontractors may affect sales growth,
delivery times, and timing of project completions and subsequent
profit recognition.
Because of the shortage of skilled personnel in certain regions, the
company may face wage inflation and limited growth potential.
Therefore, the company continuously develops its global subcontractor
network.
More than half of Outotec's total cash flow is denominated in euros,
and the rest is divided among various currencies, which include the
Australian dollar, Brazilian real, Canadian dollar, South African
rand, and U.S. dollar. In new projects the weight of any given
currency can fluctuate substantially, but the majority of
cash-flow-related risks are hedged in the short and long term. 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.
Development in the global economy and uncertainty in the financial
markets in short term may have an impact on Outotec's business
prospects in the future; however, these uncertainties have not
stopped any of the ongoing negotiations between Outotec and its
customers.
OUTLOOK FOR 2008
Outotec's market outlook is expected to remain good in 2008. The
mining and metals industry's outlook continues robust, and the
tightness in the supply of metals encourages Outotec's customer
industry to invest extensively in new plants, modernization projects,
and expansions. Driven by the good market situation, the demand for
Outotec's process technologies and services is expected to continue
on a good level in 2008.
Outotec reiterates its full-year outlook in terms of sales and
operating profit. Based on the strong existing order backlog and new
order prospects, the management expects that in 2008:
- sales will grow over 25% compared to 2007, and
- operating profit will improve from 2007 and the operating profit
margin will be moderately above the 2007 level, depending on the mix
of new orders received and the timing of project completions.
Furthermore, the management estimates that the closing order backlog
for 2008 will exceed that of the previous year-end.
Espoo, April 23, 2008
Outotec Oyj
Board of Directors
For further information, please contact:
Outotec Oyj
Seppo Rantakari, debuty 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)
Income statement
Q1 Q1 Q1-Q4
EUR million 2008 2007 2007
Sales 225.6 211.7 1,000.1
Cost of sales -179.5 -171.5 -796.4
Gross margin 46.1 40.2 203.8
Other operating income 3.4 0.2 5.9
Selling and marketing expenses -10.8 -11.2 -44.6
Administrative expenses -12.9 -10.2 -47.0
Research and development expenses -4.6 -5.0 -19.9
Other operating expenses -0.1 -0.0 -0.7
Share of results of associated companies - -0.3 -1.4
Operating profit 21.0 13.6 96.1
Financial income and expenses
Interest income and expenses 3.8 2.6 12.4
Market price gains and losses -0.5 0.3 0.2
Other financial income and expenses -1.1 -1.2 -3.9
Total financial income and expenses 2.2 1.7 8.7
Profit before taxes 23.1 15.3 104.8
Income taxes -6.9 -5.0 -27.2
Net profit for the period 16.3 10.3 77.6
Attributable to:
Equity holders of the Company 16.3 10.3 77.6
Minority interest -0.0 -0.0 0.0
Earnings per share for profit attributable to the equity
holders of the Company:
Earnings per share, EUR 0.39 0.25 1.85
Diluted earnings per share, EUR 0.39 0.25 1.85
All figures in the tables have been rounded and consequently the sum
of individual figures may deviate from the sum presented. Key figures
have been calculated using exact figures.
Condensed balance sheet
March 31 March 31 Dec 31
EUR million 2008 2007 2007
ASSETS
Non-current assets
Intangible assets 74.5 74.9 74.8
Property, plant and equipment 24.6 26.3 24.6
Non-current financial assets
Interest-bearing 2.6 1.4 3.4
Non interest-bearing 17.4 12.4 17.3
Total non-current assets 119.0 115.0 120.0
Current assets
Inventories *) 109.6 131.7 117.0
Current financial assets
Interest-bearing 0.8 1.0 0.8
Non interest-bearing 202.7 137.8 224.0
Cash and cash equivalents 317.6 188.8 291.0
Total current assets 630.7 459.3 632.8
TOTAL ASSETS 749.7 574.2 752.8
EQUITY AND LIABILITIES
Equity
Equity attributable to the equity holders of
the Company 177.8 154.3 214.7
Minority interest - 0.0 0.1
Total equity 177.8 154.3 214.8
Non-current liabilities
Interest-bearing 1.2 2.2 1.2
Non interest-bearing 53.2 38.0 47.4
Total non-current liabilities 54.4 40.1 48.6
Current liabilities
Interest-bearing 2.9 1.2 1.0
Non interest-bearing **) ***) 514.4 378.6 488.5
Total current liabilities 517.4 379.8 489.5
TOTAL EQUITY AND LIABILITIES 749.7 574.2 752.8
*) Of which advances paid for inventories amounted to EUR 30.1
million on March 31, 2008 (on March 31, 2007: EUR 45.1 million and on
December 31, 2007: EUR 34.8 million).
**) Of which gross advances received amounted to EUR 725.3 million on
March 31, 2008 (on March 31, 2007: EUR 497.1 million and on December
31, 2007: EUR 589.7 million). Net advances received after percentage
of completion revenue recognition amounted to EUR 231.9 million on
March 31, 2008 (on March 31, 2007: EUR 141.0 million and on December
31, 2007: EUR 190.1 million).
***) On March 31, 2008 EUR 39.9 million dividend payable is included.
Condensed statement of cash flows
Q1 Q1 Q1-Q4
EUR million 2008 2007 2007
Cash flow from operating activities
Net profit for the period 16.3 10.3 77.6
Adjustments for
Depreciation and amortization 2.8 2.7 11.3
Other adjustments 6.7 2.6 25.8
Decrease in working capital 21.4 11.6 29.2
Interest received 4.0 2.4 11.8
Interest paid -0.2 -0.1 -0.2
Income tax paid -10.4 -8.4 -12.6
Net cash from operating activities 40.7 21.1 143.0
Purchases of assets -3.3 -4.3 -11.6
Proceeds from sale of assets 0.0 0.0 0.2
Change in other investing activities - -0.4 -0.6
Net cash from investing activities -3.3 -4.7 -12.1
Cash flow before financing activities 37.4 16.4 131.0
Repayments of long-term debt -0.0 -0.0 -1.0
Increase (+) / decrease (-) in current debt 2.0 -0.0 -
Dividends paid - - -14.7
Purchase of treasury shares*) -9.3 - -
Change in other financing activities -0.1 -0.1 -0.8
Net cash from financing activities -7.4 -0.1 -16.5
Net change in cash and cash equivalents 30.0 16.3 114.5
Cash and cash equivalents at the beginning of the
period 291.0 171.4 171.4
Foreign exchange rate effect on cash and cash
equivalents -3.4 1.1 5.1
Net change in cash and cash equivalents 30.0 16.3 114.5
Cash and cash equivalents at the end of the period 317.6 188.8 291.0
*) Outotec has entered into an agreement with a third party service
provider concerning the administration and hedging of share-based
incentive program for key personnel. As part of this agreement, in
order to hedge the underlying cash flow risk, the service provider
has purchased 250,000 Outotec shares that have been funded by Outotec
and accounted as treasury shares in Outotec's consolidated balance
sheet.
Statement of changes in equity
A = Share capital
B = 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
EUR million Attributable to the equity holders of the Company
A B C D E F G H I
Equity on
Jan 1, 2007 16.8 20.2 0.1 - - 5.8 101.1 0.0 144.1
Change in
translation
differences - - - - - -0.1 - 0.0 -0.1
Items
recognized
directly in
equity - - - - - -0.1 - 0.0 -0.1
Net profit
for the
period - - - - - - 10.3 -0.0 10.3
Total
recognized
income and
expenses - - - - - -0.1 10.3 -0.0 10.2
Equity on
March 31,
2007 16.8 20.2 0.1 - - 5.7 111.4 0.0 154.3
Equity on
Jan 1, 2008 16.8 20.2 0.2 7.9 - 5.7 164.0 0.1 214.8
Cash flow
hedges:
Hedge
result
deferred
to equity - - - 3.6 - - - - 3.6
Deferred
tax in
equity - - - -1.0 - - - - -1.0
Available for sale financial assets:
Fair
value
changes
recognized
in
equity - - - -1.2 - - - - -1.2
Change in
translation
differences - - - - - -5.7 - -0.0 -5.7
Items
recognized
directly in
equity - - - 1.3 - -5.7 - -0.0 -4.3
Net profit
for the
period - - - - - - 16.3 -0.0 16.3
Total
recognized
income and
expenses - - - 1.3 - -5.7 16.3 -0.0 12.0
Dividends - - - - - - -39.9 - -39.9
Purchase of
treasury
shares*) - - - - -9.3 - - - -9.3
Management stock option program:
value of
received
services - - - - - - 0.0 - 0.0
Acquisition
of minority
interest - - - - - - - -0.0 -0.0
Other
changes - - -0.0 - - - 0.2 - 0.2
Equity on
March 31,
2008 16.8 20.2 0.1 9.2 -9.3 0.1 140.7 - 177.8
*) Outotec has entered into an agreement with a third party service
provider concerning the administration and hedging of share-based
incentive program for key personnel. As part of this agreement, in
order to hedge the underlying cash flow risk, the service provider
has purchased 250,000 Outotec shares that have been funded by Outotec
and accounted as treasury shares in Outotec's consolidated balance
sheet.
Key figures
Q1 Q1 Q1-Q4
2008 2007 LTM*) 2007
Sales, EUR million 225.6 211.7 1,014.0 1,000.1
Gross margin, % 20.4 19.0 20.7 20.4
Operating profit, EUR million 21.0 13.6 103.4 96.1
Operating profit in relation to sales,
% 9.3 6.4 10.2 9.6
Profit before taxes, EUR million 23.1 15.3 112.6 104.8
Profit before taxes in relation to
sales, % 10.3 7.2 11.1 10.5
Net cash from operating activities,
EUR million 40.7 21.1 162.6 143.0
Net interest-bearing debt at the end
of period, EUR million -316.8 -187.8 -316.8 -292.9
Gearing at the end of period, % -178.2 -121.7 -178.2 -136.4
Equity-to-assets ratio at the end of
period, % 34.3 35.6 34.3 38.2
Working capital at the end of period,
EUR million -176.7 -129.7 -176.7 -153.9
Capital expenditure, EUR million 3.3 4.6 10.4 11.6
Capital expenditure in relation to
sales, % 1.5 2.2 1.0 1.2
Return on investment, % 47.4 44.5 68.1 59.8
Return on equity, % 33.2 27.6 50.3 43.3
Order backlog at the end of period,
EUR million 1,359.6 836.5 1,359.6 1,317.2
Order intake, EUR million 298.8 168.1 1,593.8 1,463.0
Personnel average for the period 2,185 1,860 2,113 2,031
Net profit for the period in relation
to sales, % 7.2 4.9 8.2 7.8
Research and development expenses, EUR
million 4.6 5.0 19.4 19.9
Research and development expenses in
relation to sales, % 2.0 2.4 1.9 2.0
Earnings per share, EUR 0.39 0.25 1.99 1.85
Equity per share, EUR 4.23 3.67 4.23 5.11
Dividend per share, EUR - - 0.95 0.95
*) Last twelve months
NOTES TO THE INCOME STATEMENT AND BALANCE SHEET
This interim financial statements is prepared in accordance with IAS
34 Interim Financial Reporting in keeping with the accounting
policies and methods as in the recent annual financial statements.
This interim financial statements is unaudited.
Starting from March 2008, Outotec is applying IFRS 2 Share-based
payment for a new share-based incentive program for Outotec's key
personnel for the period 2008-2010.
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
interim 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 and other items. Although these estimates are
based on management's best knowledge of current events and actions,
actual results may differ from the estimates.
Adoption of new and amended standards and interpretations
- IFRIC 11 - IFRS 2 Group and Treasury Share Transactions (effective
date March 1, 2007)
- IFRIC 12 - Service Concession Arrangements (effective date January
1, 2008). The interpretation has not yet been approved to be applied
in the EU.
- IFRIC 14 IAS 19 - The Limit on a Defined Benefit Asset, Minimum
Funding Requirements and their Interaction (effective date January 1,
2008). The interpretation has not yet been approved to be applied in
the EU.
The adoption of these interpretations will not have impact on 2008
financial statements.
Outotec will estimate the impacts on the following standards and will
apply the new standards from the financial period beginning January
1, 2009 onwards:
- IFRS 2 Share-based Payment Vesting Conditions and Cancellations
(effective date January 1, 2009). The amended standard has not yet
been approved to be applied in the EU.
- IFRS 3 Business Combinations (effective date July 1, 2009). The
amended standard has not yet been approved to be applied in the EU.
- IFRS 8 Operating Segments (effective date January 1, 2009)
- IAS 1 Presentation of Financial Statements (effective date January
1, 2009). The amended standard has not yet been approved to be
applied in the EU.
- IAS 23 Borrowing Costs (effective date January 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 July 1, 2009). The amended standard has not yet been approved to
be applied in the EU.
- IAS 32 Financial Instruments: Presentation and IAS 1 Presentation
of Financial Statements Puttable Financial Instruments and
Obligations Arising on Liquidation (effective date January 1, 2009).
The amended standard has not yet been approved to be applied in the
EU.
Major non-recurring items in operating profit for the period
Q1 Q1 Q1-Q4
EUR million 2008 2007 2007
Gain from available-for-sale financial assets - - 1.9
The value of shares owned by Outotec in Pacific Ore Ltd (UK) was EUR
0.8 million on December 31, 2006. In 2007, the shares were changed
into shares of Trajan Minerals Limited. Trajan Minerals Limited was
listed to Australian stock exchange (ASX) on November 30, 2007. For
Outotec, the listing resulted in EUR 1.9 million gain. The change in
the fair value of the shares between the listing and March 31, 2008
EUR -1.5 million (December 31, 2007: EUR -0.3 million) is booked to
the revaluation reserve for available-for-sale assets in Outotec's
equity.
Income taxes
Q1 Q1 Q1-Q4
EUR million 2008 2007 2007
Current taxes -3.4 -3.0 -24.5
Deferred taxes -3.4 -2.1 -2.7
Total income taxes -6.9 -5.0 -27.2
Property, plant and equipment
March 31 March 31 Dec 31
EUR million 2008 2007 2007
Historical cost at the beginning of the
period 81.3 77.4 77.4
Translation differences -1.5 0.2 0.0
Additions 2.4 1.4 5.1
Disposals -0.1 -0.2 -1.5
Reclassifications -0.1 -0.0 0.2
Historical cost at the end of the period 82.0 78.9 81.3
Accumulated depreciation and impairment at
the beginning of the period -56.7 -50.7 -50.7
Translation differences 0.9 -0.1 0.1
Disposals 0.1 0.0 1.1
Reclassifications - - 0.0
Depreciation during the period -1.7 -1.8 -7.2
Accumulated depreciation and impairment at
the end of the period -57.4 -52.7 -56.7
Carrying value at the end of the period 24.6 26.3 24,6
Commitments and contingent liabilities
March 31 March 31 Dec 31
EUR million 2008 2007 2007
Pledges 1.8 29.7 2.1
Guarantees for commercial commitments 167.1 129.7 185.7
Minimum future lease payments on operating
leases 47.5 48.1 51.4
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 0.4 million on March 31, 2008 (on March 31,2007: EUR
0.4 million and on December 31, 2007: EUR 2.8 million) and for
commercial guarantees including advance payment quarantees EUR 400.1
million on March 31, 2008 (on March 31, 2007: EUR 248.8 million and
on December 31, 2007: EUR 391.9 million).
Derivative instruments
Currency forwards
March 31 March 31 Dec 31
EUR million 2008 2007 2007
Net fair values 20.8*) 1.7 13.9**)
Number of contracts 328 117 344
*) of which EUR 16.3 million designated as cash flow hedges
**) of which EUR 11.1 million designated as cash flow hedges
Related party transactions
Transactions and balances with associated companies
Q1 Q1 Q1-Q4
EUR million 2008 2007 2007
Sales - 0.7 0.0
Financial income and expenses - 0.0 0.2
Loan receivables - 1.6 1.2
Trade and other receivables 0.1 1.8 1.0
As a consequence of a directed share issue in Intune Circuits Oy in
the last quarter of 2007 and in the first quarter of 2008, Outotec's
ownership in the company was decreased to 17.9%. Due to this Intune
Circuits Oy is no longer accounted as associated company of Outotec
Group starting from 2008. Remaining ownership in the company has been
accounted as available-for-sale investment in the consolidated
balance sheet.
Sales and operating profit by quarters
EUR million Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08
Sales
Minerals
Processing 36.4 57.4 67.5 95.3 55.2 64.6 72.7 110.5 60.1
Base Metals 44.9 50.6 43.3 53.4 60.1 64.5 64.1 85.6 60.1
Metals
Processing 62.9 67.5 71.0 90.8 97.5 100.9 113.0 120.8 104.6
Other
Businesses 6.6 8.1 6.0 11.9 6.7 8.9 11.1 11.1 9.1
Unallocated
items*) and
intra-group
sales -6.7 -6.8 -7.9 -11.9 -7.8 -11.7 -15.0 -12.5 -8.3
Total 144.2 176.8 179.9 239.6 211.7 227.1 245.9 315.5 225.6
Operating
profit
Minerals
Processing -3.7 -1.9 5.2 13.1 1.9 3.3 3.6 16.3 4.1
Base Metals 5.6 7.1 4.1 6.7 9.4 13.2 12.1 9.3 6.3
Metals
Processing 4.1 6.1 5.6 5.3 4.7 10.5 11.5 11.5 12.3
Other
Businesses -0.5 0.2 -0.3 1.0 0.0 0.6 1.3 0.3 0.4
Unallocated
items **) -1.5 -1.5 -0.2 -3.0 -2.4 -4.1 -2.5 -4.4 -2.2
Total 4.1 10.0 14.5 23.0 13.6 23.4 26.0 33.0 21.0
*) Unallocated items primarily include invoicing of internal
management and administrative services.
**) Unallocated items primarily include 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 + financial income × 100
Total assets - non interest-bearing
debt (average for the period)
Return on equity = Net profit for the period × 100
Total equity (average for the
period)
Research and development = Research and development expenses
costs in the income statement
(including expenses covered by
grants received)
Earnings per share = Net profit for the financial period
attributable to the equity holders
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 2008 BRIEFING
A briefing, in which CFO Vesa-Pekka Takala and deputy CEO Seppo
Rantakari will present the interim report, will be held in Helsinki,
Finland.
BRIEFING
Date: Wednesday, April 23, 2008
Time: 3.00-4.00pm (EEST)
Venue: Hotel Kämp, Meeting room Akseli Gallen-Kallela,
Pohjoisesplanadi 29, Helsinki
JOINING VIA WEBCAST
You may follow the briefing via a live webcast at
www.outotec.com/Investors. Please, click in and register
approximately 5 to 10 minutes before the briefing. The webcast will
be recorded and published on Outotec's website.
JOINING VIA TELECONFERENCE
You may also join the briefing by telephone. To register as a
participant for the teleconference, please dial in 5 to 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 26 midnight on the following numbers:
FI/UK: +44 20 7031 4064
US/CANADA: +1 954 334 0342
Access code: 791802
The contact information is gathered for registration purposes only
and it is not used for commercial purposes.
FINANCIAL REPORTING SCHEDULE FOR 2008
Outotec will disclose the following financial information in 2008:
Interim report for January-June 2008, on Wednesday, July 23, 2008
Interim report for January-September 2008, on Thursday, October 23,
2008
DISTRIBUTION:
OMX Nordic Exchange Helsinki
Main media
www.outotec.com
