The second quarter saw particularly strong market activity in the Finnish quarrying and mining plant manufacturer's mining equipment and services business. Orders received increased 18% to €1,610 million (€1,360 million in Q2 2021).
Quarter sales grew 28% to €1,295 million (€1,010 million). Adjusted EBITA increased to €155 million, or 12.0% of sales (€131 million, or 12.9%); volatility in currencies negatively impacted adjusted EBITA by around €34 million (0 million).
Metso Outotec's operating profit in Q2 was €-13 million, or -1.0% of sales (€97 million, or 9.6%), due to a €150 million non-recurring charge related to the wind-down of business in Russia.
January-June 2022 orders received by Metso Outotec increased 23% to €3,034 million (€2,462 million). Sales grew 27% to €2,459 million (€1,935 million). Adjusted EBITA increased to €312 million, or 12.7% of sales (€245 million, or 12.7%).
Metso Outotec's operating profit for the half year was €127 million, or 5.1% of sales (€188 million, or 9.7%), including a €150 million non-recurring charge related to the wind-down of the business in Russia.
Commenting on the H1 and Q2 2022 trading picture, Metso Outotec President and CEO Pekka Vauramo said: "We delivered a strong order intake and healthy underlying results in the second quarter. The quarter included some unusual elements, mainly related to the wind-down of our business in Russia and high volatility in the currency market, which had an impact on both our volumes and results.
"Our orders increased 11% year-on-year in constant currencies, thanks to the strong activity and demand in the mining markets as well as our strong position and Planet Positive product offering. Orders received in the Minerals segment grew 40% in constant currencies, with strong growth in both equipment and services orders. Orders in the Aggregates segment were flat year-on-year, despite softening of the European markets, and the Metals segment reported somewhat low order intake due to the timing of customers' investments.
"Our sales growth of 21% in constant currencies was supported by the backlog built during the previous quarters, and both equipment and services reported double-digit growth rates."
Vauramo said Metso Outotec's underlying performance was healthy, although "still somewhat under pressure due to high raw material, component, logistics and energy costs". He continued: "This pressure is most visible in our consumables business, where the mitigation actions continue. Unusually high volatility in the currency market had a €34 million negative impact on adjusted EBITA, due to the strengthening of the US dollar and the weakening of currencies in some key mining countries."
Metso Outotec's top executive said the company continued to make good progress in sustainability during the second quarter, completing a number of actions that will result in emission reductions in the business's operations.
"Our Planet Positive product portfolio was expanded with several launches of new products, for example, for real-time monitoring of crushers and screens and sustainable tailings management. We received a significant order for a comminution circuit flowsheet developed for a new concentrator plant, which represents the most sustainable technology currently available and features a combination of HRCe high-pressure grinding rolls (HPGR) and Vertimill grinding mills that help to achieve the best energy efficiency with the lowest operating and life cycle costs.
"In addition, we took an important step in linking our overall strategy implementation to financing by publishing a Sustainability-Linked Finance Framework, which specifies several performance indicators measuring our own, our suppliers and our customers' emission reductions as an input to our future financing instruments."
Looking ahead, Vauramo said Metso Outotec sees strong activity continuing in the mining markets during the second half of the year despite the metal prices recently trending down from very high levels. Following the expected softening of the overall economy due to inflation and the continuing war in Europe, the company is slightly cautious regarding the activity in the aggregates market in Europe in particular.
"While volatility is likely to continue in the global economy and in our key markets, I'm confident that we are well-placed to continue delivering on our strategy, including the review of the Metals segment, as part of the continuous development of our portfolio," he added.
In a statement accompanying the H1 and Q2 results, Metso Outotec said it condemns Russia's military offensive against Ukraine and is deeply saddened by the humanitarian crisis it has caused. "The offensive continues to have an impact on Metso Outotec's business and operations. The company continued to wind down its business operations and customer contracts in Russia during the second quarter, in line with the disclosure in its January-March 2022 interim report. The possibilities to wind down through final deliveries or termination agreements have been limited due to the continuation of the conflict, sanctions and export control restrictions, as well as the availability of banking services and logistics.
"At the end of March 2022, Metso Outotec had an order backlog of €479 million to Russia. Around €315 million was originally expected to be recognised as sales in 2022; approximately €215 million of it was to non-sanctioned customers at the end of March.
"Metso Outotec made deliveries worth €67 million to non-sanctioned Russian customers during the second quarter. In early July, the company decided to make a provision totalling €150 million, including wind-down and restructuring costs, which is expected to cover the remaining exposure in Russia. The provision was booked as a non-recurring adjustment in the company's second-quarter financials and therefore had no impact on adjusted EBITA. The negative impact of the wind down in the Group's order backlog at the end of June is approximately €380 million. Metso Outotec has not recognised any revenue from sanctioned customers or contracts and is not taking new orders for deliveries to Russia."
Metso Outotec says it will continue to monitor the situation closely, as further changes are expected in the sanctions and export control restrictions, as well as in the availability of banking facilities and logistics.