Metso Outotec flags 2nd half growth with orders jump
Finnish mining equipment maker Metso Outotec on Wednesday missed expectations for second-quarter operating profit but reported a jump in orders driven by rebounding metals markets and broad economic recovery.
The group’s order intake, an indication of future revenue, grew 43% from the pandemic-hit quarter last year to 1.36 billion euros ($1.61 billion).
“Market activity is at a very high level which is visible in our orders,” chief executive Pekka Vauramo told Reuters. He added, however, that the coronavirus pandemic and container shortage still had an impact, weighing especially on Metso’s maintenance business.
While equipment orders were strong, the mineral services, which have the highest backlog, were hit by logistics problems and restructuring after technology company Outotec acquired Metso’s minerals business in June 2020.
Vauramo said he saw strong demand continuing and the company returning to normal services business by the end of the year.
Metso’s shares were flat in early morning trading.
“Metso is still not firing on all cylinders as most of the maintenance business is done in areas still heavily hit by the pandemic. Lifting travel restrictions will boost revenue and profitability,” analyst Anssi Raussi from OP markets said.
Metso’s April-June operating profit rose to 97 million euros from 89 million last year, missing the 129.5 million euros in a Refinitiv poll of analysts.
Following the merger of mining equipment businesses, Metso’s valve-making division became Neles, which is being acquired by forestry equipment maker Valmet.
#Metso Outotec cited supply issues caused by a post-COVID-19 economic boom as it reported a slight fall in sales for the first half of the year.
Metso Outotec saw sales fall 1% to €1 billion (US$1.1 billion) in the first half of 2021, while operating profit rose to €97 million from €89 million last year.
The company said the minerals and metals segments were impacted by the timing of deliveries, as a backlog was created in the second half of the year by a post-pandemic financial upturn.
“The rapid economic recovery has put pressure on global supply chains and logistics, and as this has coincided with the implementation of our internal footprint and warehouse consolidation, it resulted in delivery delays in our Minerals business,” said president and CEO Pekka Vauramo.
It also noted that travel restrictions were also still in effect in several countries, while in some other markets, such as North America and Australia, domestic travel had recovered, enabling a resumption in on-site activity.
A shift in sentiment was suggested by the growth in orders by 21% in the first half of 2021 to €2.4 billion.
“The Minerals and Metals segments had a steady flow of small and mid-size orders, and in addition, received a few larger orders [in 1H 2021],” noted Vauramo.
Vauramo also said that the Metso Outotec integration, which was completed in July 2020, had already achieved a run-rate of €105 million in cost synergies.
