Metso Outotec sees recovery in aggregates equipment business

Metso Outotec says its aggregates equipment business saw a gradual improvement from a weak April to the end of June.
Crushing Static & Mobile / August 5, 2020
By Liam McLoughlin
Metso Outotec CEO says the second quarter had been "exceptional in many ways" due to COVID-19
Metso Outotec CEO says the second quarter had been "exceptional in many ways" due to COVID-19

Reporting its second quarter performance the Finnish group says results were heavily impacted by the COVID-19 pandemic but that equipment demand globally had recovered to about 75% of normal levels by June 30.

It adds that the overall situation was most challenging in the beginning of the quarter with lockdowns keeping its own and its customers’ operations closed in several key markets as well as widespread restrictions relating to travel and workforce mobility affecting operations.

The Metso Outotec group was created on 1 July 2020, after Metso's global Minerals business was combined with Outotec, a leading provider of process technologies and services for the world's metals and mining, industrial water treatment, alternative energy, and chemical industries.

The group says that most aggregates equipment was its most affected business during Q2, where the investment activity of customers and distributors was significantly lower than during the normal high season. The only exception being the business in China.

Metso Outotec says the aggregates equipment market environment gradually improved during Q2, as lockdowns and restrictions were lifted. Market activity in China, which saw a sharp decline in Q1, recovered quickly during the second quarter, with especially strong demand in infrastructure.

In the Metso Outotec half-year report, the segment reporting is still based on the legacy segment structure of the companies (Metso’s Minerals business and Outotec’s Minerals Processing and Metals Refining segments). The segment reporting based on the new Metso Outotec organisation will be effective as of July 1, 2020, and will form the basis for the Q3/2020 reporting.

The group's pro forma sales for the second quarter increased year-on-year, with Metso Minerals reporting growth and Outotec sales declining. During Q2 total orders received were €976m, with the Metso Minerals business accounting for €762m and Outotec €214m.
Q2 sales totalled €1,047m (Metso Minerals €751m; Outotec €294m). Adjusted EBITA was €143m or 13.6% (Metso Minerals €110m or 14.6%; Outotec €31m or 10.5%).

For the six months from January-June 2020, pro forma orders received were €2,090m (Metso Minerals €1,636m; Outotec €454m), and sales totalled €2,027m (Metso Minerals €1,447m; Outotec €579m).

Adjusted EBITA for H1 was €236m or 11.7% (Metso Minerals €184m or 12.7%; Outotec €51m or 8.9%).

In terms of market outlook, Metso Outotec says that restrictions on mobility continue in many countries and risk further impacting the group during the second half. The situation continues to be challenging particularly in North and South America.

The group expects expects market activity to remain at the current level during H2, being subject to a possible worsening of the Covid-19 pandemic.
Metso Outotec president and CEO Pekka Vauramo said that the second quarter was "exceptional in many ways" due to the Covid-19 situation.

"Quarterly orders increased in Metso Minerals, while the slowdown in decision-making related to larger projects resulted in a decline in Outotec’s orders," said Vauramo. "The demand for smaller new mining equipment was healthy, whereas demand in aggregates was weaker in the beginning of the quarter and recovered somewhat towards the end of June. The services business saw good demand, thanks to our global presence and capabilities to secure customers’ production in difficult circumstances."

He added that virtual and digital dialogue with customers has taken major steps forward in recent months during the pandemic, with over 2,000 customers participating in the group's webinars during the first month and a significant number of sales leads coming in through its digital marketing channels.

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