Metso maintained "robust profitability" in Q2 2024 despite declining sales due to tough market conditions. The Finnish quarrying and mining machine and linked technology giant reports that customer activity remained at the previous quarter's level due to further delays in investment decision-making.
Orders received declined by 14% to €1,162mn (€1,344mn in Q2 2023), equipment -by 23% and services -by 6%. Sales declined 13% to €1,214mn (€1,396mn), equipment -21% and services -6%. Adjusted EBITA was €205mn, or 16.9% of sales (€238mn, or 17.1%). Operating profit was €195mn, or 16.1% of sales (€222mn, or 15.9%). Cash flow from operations improved to €152mn (€62mn).
Further published figures for the first half of this year show Metso’s orders received declined 11% to €2,523mn (€2,829mn), and sales fell 11% to €2,431mn (€2,729mn). Adjusted EBITA declined 10% to €405mn, or 16.7% of sales (€449mn, or 16.5%). Operating profit declined to €383mn, or 15.8% of sales (€416mn, or 15.2%). Metso’s H1 cash flow from operations rose to €309mn (€173mn).
Reacting to the new company trading numbers, Metso President and CEO Pekka Vauramo said: “We maintained robust profitability during the second quarter, thanks to our focused actions. However, market dynamics evolved as anticipated: customer decision-making remained slow in Minerals, and Aggregates faced challenges in the North American mobile equipment market. Consequently, our total order intake declined by 14% year-on-year, primarily due to a decrease in equipment orders. Although the services businesses remained more stable, the aforementioned issues led to a slight decline in services orders, which were further affected by exchange rates.
“The Aggregates segment sales declined 14% compared to the previous year, primarily due to reduced orders in the preceding quarters. Despite this decrease in volume, the segment achieved a solid adjusted EBITA margin of 16.6%, underscoring the effectiveness of efforts made to enhance business resilience.”
Vauramo noted that in May this year, Metso launched the Lokotrack EC range, bringing a new diesel-electric power line to the aggregates market. Designed with modularity in mind, these units can adapt to customers’ future requirements and run on interruptible renewable energy. Furthermore, the process functions in these mobile units operate entirely on electricity, significantly reducing the use of hydraulic oil in crushing operations.
“Additionally, in June, we committed to investing €150 million in a state-of-the-art aggregates technology centre in Tampere, Finland. The production of track-mounted Lokotrack crushing plants is scheduled to commence at the new site in the third quarter of 2027. We plan to eventually relocate all our existing Tampere operations to this modern facility.”
Metso’s Minerals business experienced a 13% Q2 2024 decline in sales, primarily due to what Vauramo said was a reduced equipment backlog and delivery timing. “However, the segment demonstrated increased resilience, reporting an adjusted EBITA margin of 17.3%. This positive performance can be attributed to the favourable impact of effective cost management and sales mix on the gross margin. Notably, during the quarter, we received a substantial order from India for recycling electronic waste. Our e-scrap solutions offer compelling opportunities for customers by enabling the recovery of valuable metals from waste.
“We anticipate that customer decision-making in Minerals will gain momentum during the second half of the year, driven by favourable copper prices. Additionally, Minerals services are poised for sustained demand, thanks to robust mine production volumes. However, in Aggregates, activity is expected to continue at a lower level year-on-year. This can be attributed to the surplus of distributor inventories in the North American mobile equipment market.”
Vauramo stressed how, internally, Metso had successfully maintained strong profitability, and the company’s focus remains on cost control and cash flow while delivering value-added products and services to customers.
Metso expects that the market activity in both Minerals and Aggregates will remain at the same level in the second half of 2024.
