© Metso © Metso
Accelerating financial excellence
Harri Nikunen CFO
© Metso © Metso
Content
1. Financing needs and financing capacity
2. Capital employed efficiency
3. Cost savings
Metso Capital Markets Day 2014: FInancials by Harri Nikunen 2 © Metso
Financing needs and financing
capacity
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Our operations have limited needs for financing Funds available for growth opportunities
• Our global presence and global operational assets are in good shape after years of active development. • Gross capital expenditure to remain below depreciation and
amortization in the near term. • Net working capital offers clear improvement potential and opportunities
to release capital in the near term. • Our businesses generate stable cash flow even in low cycle due to high
share of services business. • The maturity structure of our gross debt is healthy. •We have maintained solid investment grade rating throughout 2013
and 2014 (despite the demerger and weakening mining cycle).
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© Metso © Metso Metso Capital Markets Day 2014: FInancials by Harri Nikunen
Investments to remain below depreciation Gross capital expenditure
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A2009 A2010 A2011 A2012 A2013 Q3 A2014
Gross capex Capex acquisitions Gross capex / depreciations and amortizations -%
EUR Million
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436 526 487
343 352 289 283 281 272
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Metso Capital Markets Day 2014: FInancials by Harri Nikunen
Adequate funding available Cash policy has been renewed
Revolving credit facility, EUR 500 Million Cash and cash equivalent
Liquidity profile
EUR million
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© Metso © Metso
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Bonds
Subs.short term debt
Subs. long term debt
Commercial paper
Term and other loans
Metso Capital Markets Day 2014: FInancials by Harri Nikunen
Favorable debt profile
570 Bonds 73 Subsidiary short term debt 30 Subsidiary LT debt 30 Commercial Papers 228 Term and other loans 931 Total
EUR million as per Q3/2014
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Our maturity profile is healthy No major refinancing needs short term
Metso Capital Markets Day 2014: FInancials by Harri Nikunen
YTD Monthly Maturities monthly >
EUR Million September 2014
Debt and maturity structure
Undrawn Committed Facilities
Other long-term Debt
Syndicated term Loan
Private Placements Euro Bond 2014
Euro Bond 2019
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© Metso © Metso Metso Capital Markets Day 2014: FInancials by Harri Nikunen
Funding is well in place Corporate level funding facilities
• EUR 1.5 billion EMTN program • EUR 400 million 2.75% bond due in 2019 • EUR 170 million private placements due in
2018 – 2022 • Syndicated long-term loans: EUR 215 million • Committed EUR 500 million 5-year syndicated
revolving credit facility available until 2019 with two extension options for one year
- Currently undrawn
• EUR 500 million domestic CP program • Uncommitted lines of credit • Stable credit outlook and rating maintained:
- Standard & Poor’s: BBB - Moody’s: Baa2
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Capital employed efficiency
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Capital Efficiency Program (CEP) under way
Feb Mar Apr May Jun Jul Aug Sep Oct
Diagnosis Design Implementation launch Execution
Q1/2014: Phase 1 Q3-Q4/2014: Phase 3
• The program was launched in Q1/2014 with following targets: • Strengthen the balance sheet management culture • Support strategic ROCE target (increase turns to >2) • Support the move to asset light operating model in cyclical businesses
• The program was moved to execution phase in late Q3/2014 • One of the core items in management teams • Clear responsibilities and targets
Q2/2014: Phase 2
Metso Capital Markets Day 2014: FInancials by Harri Nikunen 11
© Metso © Metso Metso Capital Markets Day 2014: FInancials by Harri Nikunen
Capital Efficiency Program (CEP) targets Capital employed components
Dec 31, 2013 (base, EUR million)
Improvement potential
Comments
Inventories 921 12-16% Inventory management
Project net -262
Trade receivables 665 10-15% Payment terms, collection
Trade payables -342 6-10% Payment terms
Non operational net working capital
-355
NET WORKING CAPITAL 627
Intangible assets 569 Including goodwill of EUR 456 milion
Tangible assets 376 15-20% Capex policy, asset divestments
Financial assets 227
FIXED AND FINANCIAL ASSETS
1,172
CASH & OTHER 431 50% Financial policy
TOTAL CAPITAL EMPLOYED
2,230 15-20% Capital employed was EUR 2,089 million at the end of Q3/2014
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Savings program 2013 - 2014
© Metso © Metso Metso Capital Markets Day 2014: FInancials by Harri Nikunen
• The current program scope encompasses gross headcount reduction of 1,300 – 1,400 • Net reduction depends on personnel needs in well
performing businesses
• Targeted gross savings are EUR 120-130 million • Including purchasing savings
• Completion rate 75%, full completion by the end of 2014 • Net personnel cost savings in Q1-Q3/2014
vs. Q1-Q3/2013 are about EUR 50 million (down by 8%), which is in line with targets
• S,G&A costs are down by 8% in Q3/2014 vs. Q3/2013 • The total year-to-date savings are EUR 75 million
including procurement • 100% savings run-rate to be achieved in H1/2015
Profit improvement program (PIP) update
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© Metso © Metso Metso Capital Markets Day 2014: FInancials by Harri Nikunen
• Program will be finalized during Q4/2014 • Completion rate will be 85-100% depending on
the success of last open action
• Continued work to improve both the short and long term cost position with following ongoing and planned actions: • Corporate actions: includes support functions
and legal structure simplification • Business area actions • Capital efficiency program
Profit improvement program (PIP) next steps
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© Metso © Metso Metso Capital Markets Day 2014: FInancials by Harri Nikunen
Note: Over the months we have approx. 180-200 trainees and seasonal workers in average.
PIP - Major structural changes in headcount during 2013 and Q3/2014 Headcount (December 31, 2012) 16,612
Acquisitions + 623
Divestments - 326
Headcount after structural changes 16,909
Comparable net reduction - 970
Headcount (September 31, 2014) 15,939
Reduction in Europe and North America ~1,100
Increase in emerging markets ~500
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Conclusions
• Financial capacity for strategy implementation • Strong balance sheet • Adequate funding available • No major refinancing needs
• Capital efficiency and cost actions
under way • Solid program designed to capital
release • Ongoing actions in both corporate level
and business areas