Vauramo to lead Metso Outotec to 2023; group unveils strategic, financial targets

28th October 2020 By: Creamer Media Reporter

Pekka Vauramo will continue as president and CEO of Metso Outotec Corporation until the end of 2023.

Metso Outotec, a process technology, equipment and services company serving the minerals, metals and aggregates industries, was established in June after the fnalisation of a merger between global industrial company Metso and Finnish-listed technology company Outotec.

“This is a unique opportunity to lead the integration of the two great companies into Metso Outotec and to develop Metso Outotec to become an industry leader. We are in the beginning of our integration journey and Metso Outotec has a lot of potential to increase the effectiveness of its operations and to serve its customers even better and in a more sustainable way,” says Vauramo.  

Meanwhile, reporting on the group's financial performance for the quarter ended September 30, Vauramo comments that the group had, by the end of the quarter, reached an annual run rate of €31-million in cost synergies.

"In addition, we were able to realise the first revenue synergies during the quarter by capitalising on cross-selling opportunities in the services business," he points out.

Vauramo says the Covid-19 pandemic continued to have an impact on the group's end markets during the quarter.

"The most significant impacts resulted from the limited access to customer sites and the slow decision-making related to new project and modernisation orders and noncritical services. These affected our order and sales volumes. 

"Our operative result (adjusted earnings before interest, taxes and amortisation (Ebita)) was affected by lower sales year-on-year and the loss reported in the metals and recycling segment. Due to further weakening of the metals refining market, the metals business scope and cost structure will be addressed via a restructuring and turnaround programme, which is expected to show results next year.

"During the past months, we have worked on our strategy and targets for the new company and they will soon be ready for publication. We are confident that Metso Outotec has a strong and unique platform that we can develop further through synergies, innovation and sustainability, building the company into an industry-leading technology and services provider with strong financial performance," he says.

The group has also published its new strategy and financial targets.

The company says it aims to become a top-tier supplier of products, technologies and services in the aggregates and minerals industries and a top financial performer. To achieve that, it will focus on four priority areas: integration and financial performance, customer centricity, sustainability and a performance culture.

“Based on a careful assessment of our businesses and the opportunities they offer, we have selected the areas we will focus on. The aggregates and minerals industries have clear roles at the core of our strategy. 

"Global megatrends are driving their development and we are well positioned to offer products, solutions and services that satisfy customer demands. In the metals business, we will initiate a restructuring and turnaround programme to improve financial performance and ensure more granular management of the various businesses and resources. This work will lead us to scope our offering and resources in a more efficient way,” says Vauramo.

Metso Outotec has also decided to sell its recycling business, which sells products and services for metal and waste recycling. The business achieved sales of about €56-million in 2019 and it had an adjusted Ebita margin of about 6%. The business has about 300 employees and its main locations are Horsens, Denmark; Düsseldorf, Germany; and San Antonio, Texas. 

“We have made a strategic decision to exit the recycling business. We have concluded that even though the circular economy and other market drivers offer attractive opportunities for developing the recycling business, it has limited synergies with the core of the new Metso Outotec and, therefore, we will not be the best owner to fully leverage its opportunities. This being the case, we have started preparations to divest the business. I am confident that we will reach a solution that is good for Metso Outotec, as well as for the recycling business and its personnel,” says Vauramo.

The Metso Outotec board has, meanwhile, set a number of financial targets, including achieving an adjusted Ebita margin of above 15%; maintaining and investment-grade credit rating; and a dividend payout target of at least 50% of earnings a share.     

“The financial targets underline our intention to improve the company’s profitability and drive sustainable solutions in our industry. The most significant factors in this development are the benefits related to integration and synergies, the businesses’ own profitability improvement actions, increasing market shares and developing our business portfolio. 

"At the same time, we will strengthen the company’s balance sheet by using cash from operations to reduce indebtedness. For shareholders, Metso Outotec’s ambition is to be a good payer of dividends,” says Vauramo.

Further, in terms of sustainability, the group strives for a net positive impact on the planet and the company says it has a focus on sustainable offerings and innovations. 

Metso Outotec has also set targets to reduce the emissions of its own operations by 50% by 2030, compared with the 2019 baseline, and to reduce the emissions of logistics by 20% by 2025. 

It is also targeting that 30% of the supplier spend by the end of 2025 is with partners that have set a carbon dioxide reduction target. 

Metso Outotec says it will also continuously develop sustainable solutions for its customers, with a focus on energy and emission efficiency, water efficiency, circular solutions and safety.

"Over 90% of the company’s research and development projects are targeted to have energy, emissions or water targets," it states.