OUTOTEC OYJ FINANCIAL STATEMENTS REVIEW FEBRUARY 8, 2019 AT 9:00 AM
Outotec's Financial Statements Review January-December 2018
Significant improvement in performance excluding ilmenite smelter project provision
"In 2018, we made significant progress in several areas. In the beginning of the year, the market for minerals and metals technologies improved, but global macroeconomic uncertainties and reduced metal prices started to affect the market sentiment, and we saw several larger investment decisions being delayed into 2019. This was demonstrated in our order intake, which increased 4% year-on-year (in comparable currencies 8%) but declined in the fourth quarter from the comparison period. Service orders increased 8% in 2018 (in comparable currencies 13%). Our largest order in the fourth quarter was the delivery of battery chemicals technology in Finland.
Our sales increased 12% in 2018 (in comparable currencies 16%). Our service business development during the second half was encouraging as the supplier situation improved. The profitability continued to improve in the Minerals Processing segment. Excluding the provision for the ilmenite smelter project, our adjusted EBIT would have almost doubled from EUR 34 million in 2017 to EUR 64 million in 2018. Our cash flow strengthened and was EUR 70 million.
Outotec has made a EUR 110 million provision for possible costs relating to the ilmenite smelter project in Saudi Arabia (Stock Exchange Releases on May 31, 2012; October 26, 2018; October 30, 2018 and February 8, 2019). The currently estimated provision is based on progress made with the analysis of the furnace. The provision is booked in Outotec's fourth quarter 2018 result. The outcome of the analysis, together with other factors such as Outotec's contractual position, will determine the eventual liability and financial impact of this incident for Outotec.
We simplified our organizational structure during the first half of the year to support our long-term strategic targets. With our industry experts, simplified organization and must-win battles, we will strengthen our customer focus, service business, product competitiveness and project capabilities to further improve our profitability.
Leading technologies are our core strength. We continued to develop our technological capabilities and grow our patent portfolio. I want to mention two examples of our recent product development. Firstly, a new lithium hydroxide process to respond to the market demand for battery chemicals and, secondly, a new, 40% lighter and more competitive Hybrid filter plate design to complement our spare and wear parts offering. R&D investments represented 5% of our sales and totaled EUR 57 million last year.
With our process technologies and services, our customers will obtain the best value from their assets and operations over the course of their life cycle. We expect the demand for our products and services to remain solid in 2019", summarizes President & CEO Markku Teräsvasara.
The Board of Directors proposes to the Annual General Meeting on March 14, 2019, that no dividends are distributed for the financial year 2018.
Summary of key figures
|Q4|| Q4 ||Q1-Q4|| Q1-Q4 |
| EUR million ||2018|| 2017 ||%1|| %2||2018|| 2017 ||%1|| %2|
| Order intake ||298.9|| 365.8 ||-18|| -16 ||1,251.3|| 1,204.6 ||4|| 8 |
| Service order intake ||129.3|| 125.5 ||3|| 5 ||532.5|| 494.9 ||8|| 13 |
| Order backlog at end of period ||946.6|| 1,005.4 ||-6|| - ||946.6|| 1,005.4 ||-6|| - |
| Sales ||338.0|| 340.8 ||-1|| 2 ||1,276.5|| 1,143.8 ||12|| 16 |
| Service sales ||163.2|| 146.0 ||12|| 15 ||496.6|| 480.4 ||3|| 9 |
| Gross margin, % ||-4.4|| 24.2 ||15.4|| 23.6 |
| Adjusted EBIT3 4||-79.3|| 18.3 ||-46.2|| 33.5 |
| Adjusted EBIT3 4, % ||-23.5|| 5.4 ||-3.6|| 2.9 |
| EBIT ||-84.5|| 16.2 ||-66.1|| 26.0 |
| EBIT, % ||-25.0|| 4.8 ||-5.2|| 2.3 |
| Net cash from operating activities ||-17.6|| 47.0 ||70.4|| 39.6 |
| Earnings per share, EUR ||-0.42|| -0.00 ||-0.42|| -0.03 |
1 Change, %
2 Change in comparable currencies, %
3 Excluding restructuring- and acquisition-related items as well as PPA amortizations.
4 aEBIT for the full year was EUR 63.8 million (5.0%) and EUR 30.7 million (9.1%) for Q4/2018, excluding the provision for the ilmenite smelter project.
Financial guidance for 2019
Based on the current market outlook, we expect our sales to increase, and our aEBIT* to increase significantly from the 2018 aEBIT (EUR 63.8 million) without the provision for the ilmenite smelter project.
*Excluding restructuring- and acquisition-related items, as well as PPA amortizations.
This text is a summary of Outotec's January-December 2018 Financial Statements review. The full report is available as an attachment to this report.
Markku Teräsvasara, CEO
Tel. +358 20 529 2000
Jari Ålgars, CFO
Tel. +358 20 529 2007
Rita Uotila, Vice President - Investor Relations
Tel. +358 20 529 2003, mobile +358 400 954 141
Format for e-mail addresses: [email protected]
Date: February 8, 2019
Time: 2:00 PM EET
Venue: Outotec House, Rauhalanpuisto 9, Espoo, Finland
Joining the teleconference
To register as a participant for the teleconference and Q&A session, please dial in 5 to 10 minutes before the beginning of the event using the confirmation code and numbers below. The teleconference will be recorded and published on Outotec's website. The contact information is gathered for registration purposes only and it is not used for commercial purposes.
Dial in numbers:
Finland: +358 9 8171 0310
Sweden: +46 8 5664 2651
United Kingdom: +44 33 3300 0804
United States: +1 63 1913 1422
This announcement is distributed by West Corporation on behalf of West Corporation clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Outotec Oyj via Globenewswire