Investor presentation - metso.com industry profitability and investment willingness, expectations...
Transcript of Investor presentation - metso.com industry profitability and investment willingness, expectations...
© Metso2
Forward looking statements
It should be noted that certain statements herein which are not historical facts, including, without limitation, those regarding expectations for general economic development and the market situation, expectations for customer industry profitability and investment willingness, expectations for company growth, development and profitability and the realization of synergy benefits and cost savings, and statements preceded by ”expects”, ”estimates”, ”forecasts” or similar expressions, are forward looking statements. These statements are based on current decisions and plans and currently known factors. They involve risks and uncertainties which may cause the actual results to materially differ from the results currently expected by the company.
Such factors include, but are not limited to:1) general economic conditions, including fluctuations in exchange rates and interest levels which
influence the operating environment and profitability of customers and thereby the orders received by the company and their margins
2) the competitive situation, especially significant technological solutions developed by competitors3) the company’s own operating conditions, such as the success of production, product development and
project management and their continuous development and improvement4) the success of pending and future acquisitions and restructuring.
Investor presentation June 2018
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Best choice for sustainable processing and flow of natural resources
Minerals Flow Control
Valves, pumps and related services for oil & gas and chemical industries, mines, pulp and paper and other process industries.
Minerals processing equipment, solutions and services for mining customers.Crushing and screening products for aggregates customers.
Organic growth focus, complemented with acquisitionsInvestor presentation June 2018
© Metso© Metso
2017 key financials
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Adjusted EBITA EUR million
244
Orders received EUR million
2,982
ROCE Return on capital employed
10.3%
SalesEUR million
2,706
Adjusted EBITA% of sales
9.0%
Europe 25%North America 20%South and Central America 20%Asia-Pacific 25%Africa and Middle East 10%
Minerals 76%Flow Control 24%
Services salesEUR million
1,595Services share of sales
~60%
Sales by Market Area
Sales by segment
Investor presentation June 2018
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Profitable growth with asset light and agile organization
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50 countries
80service centres
12,000professionals
€2,706MSALESin 2017
Financial targets
ADJUSTED EBITAin 2017 9.0%
ROCEin 2017 10.3%
ORDERS RECEIVEDin 2017 €2,982M
Financials Business areas
Tel. +358 20 484 [email protected]
Segments
Flow ControlValves, pumps and related services7 global
businessesbuilt around
similar customer,
competitive and business
dynamics
Mining Equipment
Aggregates Equipment
Minerals Services
Minerals Consumables
Recycling
Valves
~60% services
Pumps>15%
Adjusted EBITA
>30%ROCE
Good margin business model
Improving capital efficiency
Growing faster than the market by implementing own initiatives
> MarketGROWTH
• Customer centricity
• - Decision-making close to the customer- Technologies to address future needs
• Service leadership
• - Increased penetration on installed base- Advanced services solutions
• Innovation
• - Differentiation- Digitalization- In-built captive aftermarket- Standardization
• Operational excellence
• - Process and product quality- Asset-light supply chain- Optimized footprint
• People and leadership
• - Competent people with right capabilities- Strong performance culture- Agility & speed
Strategic fundamentals driving growth and performance
76 % of sales
24 %of sales
MineralsEquipment for minerals processing,
crushing and screening as well as related services.
Investor presentation June 2018
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Seven business areas with clear accountabilities
President and CEO
Digital Development
CFO’s Office
Human Resources
ValvesPumpsMining Equipment
Minerals Consu-mables
MineralsServices
Aggregates Equipment
Recycling
Business areas are fully responsible for their profit and loss and balance sheet.
Focused and agile approach.
Investor presentation June 2018
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In demolition and recycling of asphalt and construction materials
In quarries for productionof aggregates
In petrochemical plantsto control the flow of materials and fluids
In pulp and paper millsto control the flow of pulpand other liquid media
In scrapyards and recycling facilities to process metal scrap and waste
In mines to process minerals
Investor presentation June 2018
Customers use our industry-leading solutions to process various raw materials
© Metso
High services proportion, good geographical split
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• Leading technology and services provider for end-to-end minerals processing
• Leading flow control provider for oil & gas, mining and process industries
12,000 employees worldwide
Sales by industry Sales by type Sales by region
Investor presentation June 2018
© Metso Investor presentation June 201810
Our view into 2018
Market outlookGrowth in demand to remain stable for Minerals equipment and services.Growth in demand to remain stable for Flow Control equipment and services.
Metal and oil price development Top 20 miners’ capex and guidance
Focus areasGrowth and margin improvementOperational excellenceR&D and digitalization
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Iron Ore Domestic Index 62% LME-Copper Grade A Cash
Gold Bullion LBM Brent Oil
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Q1/2018 in brief
Healthy market activity in all businesses
Strong order intake
Significant profitability improvement
New operating model up and running
Implementation of the profitable growth strategy continued
Investor presentation June 2018
© Metso
Group quarterly financials
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Orders received up 17% (+27% in constant currencies) to EUR 859 million
Sales grew 10% (+19% in constant currencies) to EUR 714 million
Adjusted EBITA was EUR 85 million or 11.9% of sales (66 million or 10.2%)
Operating profit was EUR 80 million or 11.3% of sales (59 million or 9.2%)
Earnings per share were EUR 0.33 (0.23)
Free cash flow totaled EUR 2 million (39 million)
Orders, sales and profitability
Quarterly and full-year figures for 2017 have been restated to reflect the adoption of the IFRS 15 standard and the revision in the reporting of the Flow Control segment’s services business.The figures in brackets refer to the corresponding period in 2017, unless otherwise stated.
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Investor presentation June 2018
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Minerals quarterly financials
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Orders, sales and profitabilityOrders up 17% (+26% in constant currencies)
- Orders up in all businesses, supported by shift in orders from Q4/2017
- Aggregates equipment growth driven by India, China and North America
- Mining equipment grew on small and medium-sized orders
- Services up in spares, wears and professional services
- Recycling up thanks to metal recycling
Sales grew 13% (+22% in constant currencies)- Both equipment and services sales increased
Adjusted EBITA margin was 11.4% (8.9%)- Sales growth and good mix within services- Improved operational efficiency 0
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Orders received, EUR million Sales, EUR million Adjusted EBITA %
Investor presentation June 2018
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Flow Control quarterly financials
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Orders, sales and profitabilityOrders increased 18% (+29% in constant currencies)
- Record-high orders; double-digit growth in both valves and pumps
- Increase in project orders and healthy distributor market activity
Sales grew 1% (+10% in constant currencies)- North America represents ~30% of sales
Adjusted EBITA margin was 15.8% (15.6%)- Good operational performance
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Investor presentation June 2018
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Income statement
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EUR million Q1/2018 Q1/2017 Change % 2017
Orders received 859 733 17 2,982
Services business orders received 490 451 9 1,717
Sales 714 647 10 2,699
Services business sales 422 383 10 1,595
Adjusted EBITA 85 66 28 244
% of sales 11.9 10.2 9.0
Operating profit 80 59 36 218
% of sales 11.3 9.2 8.1
Profit for the period 50 34 47 102
Earnings per share, EUR 0.33 0.23 43 0.68
Investor presentation June 2018
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Balance sheet
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EUR million Mar 31, 2018 % of total Dec 31, 2017 % of total
Tangible assets 283 8.5% 287 8.7%
Intangible assets 538 16.1% 545 16.6%
Financial and other assets 126 3.8% 130 4.0%
Inventories 792 23.8% 750 22.8%
Receivables 644 19.3% 631 19.2%
Current financial assets 255 7.7% 271 8.2%
Cash and cash equivalents 694 20.8% 673 20.5%
TOTAL ASSETS 3,332 3,287
Total equity 1,240 37.2% 1,351 41.1%
Interest-bearing liabilities 851 25.5% 854 26.0%
Non interest-bearing liabilities 1,241 37.2% 1,082 32.9%
TOTAL EQUITY AND LIABILITIES 3,332 3,287
Investor presentation June 2018
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Cash flow
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EUR million Q1/2018 Q1/2017 2017
Profit 50 34 102
Adjustments 45 45 192
Change in net working capital -44 -21 -23
Financial items, paid -2 -4 -21
Taxes paid -38 -12 -64
Net cash provided by operating activities 11 42 185
Capital expenditure on fixed assets -13 -6 -38
Other 1 2 -28
Net cash from investments -11 -5 -66
Free cash flow 2 39 158
Investor presentation June 2018
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124 120129
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Cash flow from operations Cash flow from operations, rolling 12 months
Cash flow, indebtness, gross margin and SG&A
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126 130 125 135 126 127 128 129 130
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© Metso
Financial position
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March 31, 2018 December 31, 2017
Return on capital employed before taxes, %, annualized 15.2 10.3
Return on equity (ROE), %, annualized 15.4 7.3
Net gearing at the end of the period, % 2.2 1.8
Cash conversion, % 4 155
Equity-to-assets ratio at the end of the period, % 40.9 44.5
Debt to capital, % 40.7 38.7
Net debt / EBITDA 0.1 0.1
Interest cover (EBITDA) 10.2 8.0
Investor presentation June 2018
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Executing the profitable growth strategy with expansioninvestment in India and two acquisitions
21 Note: Acquisitions were made public after the reporting period on April 4 and April 9. They are expected to be closed during the third quarter of 2018
Capacity investment at the Metso Park plant (India)- EUR 8 million in total- Production capacity increase of 35%- Improves the availability of the crushing and screening
equipment in India as well as for export market
Acquisition of P.J. Jonsson och Söner (Sweden)- Strengthens our product and services offering for the
aggregates industry in the Nordics- Sales of EUR 33 million- 40 employees
Acquisition of Rotex Manufacturers and Engineers (India)- Complements and broadens existing offering and introduces
new products to our Flow Control portfolio- Sales of EUR 19 million- 275 employees
Investor presentation June 2018
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Market outlook
The outlook represents expected sequential market development with a rolling six-month view. Our market conditions are expected to develop as follows:
Growth in demand to remain stable for Minerals equipment and services.Growth in demand to remain stable for Flow Control equipment and services.
Investor presentation June 2018
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Our businesses: MineralsMining and aggregates equipmentMinerals Sevices and ConsumablesRecycling
Investor presentation June 2018
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We are the leader in comminution
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Exploration Development Extraction Materials handling Comminution Separation Refining
Sandvik
Epiroc (Atlas Copco)
Boart Longyear
Furukawa
Joy / Komatsu
Caterpillar
MetsoFLSmidth
Outotec
Citic Heavy Industries
Weir
Sigdo-Coppers
One Steel
Market value > EUR 14 billion
Terex
Investor presentation June 2018
Exploration for mineral resources:‒ Remote sensing‒ Geophysical
/geochemical tests‒ Samples‒ Feasibility studies
‒ Drilling and modeling of the ore body
‒ Selection of appropriate mining technique
‒ Capital investment in mine infrastructure.
‒ Mining of the ore body‒ Rock breaking‒ Surface mining‒ Underground mining
‒ Mined minerals transported to processing site
‒ Use of loaders, trucks, trains, at the face mining systems and conveyors
‒ Materials are crushed and ground to achieve finer particles
‒ Particles sized for optimum recovery of minerals species
Flotation, leaching, sedimentation, and filtration are used to increase mineral content to an economic level
Refining to increase mineral concentration e.g. through pyro-metallurgy and electro-winning
© Metso
Products and systems for mining customers
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Grinding mills Pyro processing
Bulk material handling Process equipment
Mining crushers Mining systems
Investor presentation June 2018
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Products and systems for aggregates customers
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Crushers Portable plants
Screens and feeders Mid-market products
Lokotrack Aggregates systems
Investor presentation June 2018
© Metso
We have a full scope services offering
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• Mill linings and trommels• Grinding media• Crusher wear parts• Screening media• Wear lining• Conveyor wear parts • Slurry pump wear parts• Chamber optimization• Training
• Spare parts for crushers, screens, feeders, conveyors, grinding mills, pyro processing equipment, bulk handling equipment, slurry pumps, process equipment, VPA filter cloths
• Training
• Supervision, maintenance and repairs
• Diagnostic and planning• Shutdown services• Emergency services• Audit and inspection• Installation & Commissioning• Training
• Rebuilds• Refurbishments• Upgrades • Training
• Scheduled inspections • Shutdown and wear parts
optimization• Shutdown and process
optimization• Maintenance and process
optimization• Process and Control Optimization
Services
Economic performance as key buying factor
Maintenance deficit and restocking
Process and mine-to-mill optimization
Expert services to optimize performance of operationsProduction essentials to ensure availability and quality of operations
Wear parts
~35% of sales
Spare parts
~25% of sales
Field service and repairs
~10% of sales
Refurbishments and upgrades~15% of sales
Life Cycle Services
~15% of sales
Investor presentation June 2018
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Products and systems for the recycling customers
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Metal shredders PreShredder stationary and mobile units
Crushers Metal balers and briquetters
Metal shears N series for scrap industry
Investor presentation June 2018
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Services for metal recycling
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Parts services Performance services Field services
Maximizing value with the right parts at the right time
Wear parts, spare parts, packages, replacements
Improving performance of installed equipment as a true partner
Engineered solutions, upgrades, process optimization, process monitoring
Dependable and skilled service team always close to customers
Inspection and maintenance, repairs, troubleshooting, training, plant relocation
Investor presentation June 2018
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Waste recycling solutions for various customer needs
Biomass plant
Mechanical biological treatment (MBT)
Refuse-derived fuel (RDF)
Recycling plant
Waste-to-energy plant
Landfill sites
Investor presentation June 2018
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Examples of our latest innovations and service offering development for minerals customers
Metso MX™ Multi-Action Industry-changing cone crusher technology combining piston and bowl into one machine: increased uptime and lower operational costs
Life Cycle ServicesComprehensive LCS programswith value-adding digital tools to improve production, total cost of ownership and reliability of operations. Available for aggregates and mining industries
Lokotrack®
Urban SeriesCommunity-friendlymobile crushing plants for sustainable aggregates operations in urban environments
Megaliner™Advanced mill lining solution for reduced downtime and increased safety
Investor presentation June 2018
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The intelligent MX crusher: Giant leap in profitability
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Selective production
More uptime
+10%
Safe and simple
Operational costs
-10%
Multi-Action technology
Wear partutilization
up to70%Patented technologywith dynamic setting and automatic optimization
Higher production rate with extended maintenance intervals
Brings down cost per ton in quarry and mining applications
Investor presentation June 2018
© Metso© Metso
Lokotrack Urban: Maximizes crushing potential in urban environments
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Cuts dust emissions remarkably
Safe and sustainable solution
Cost benefit for the customer
Noise reduction
up to60%Water spraying system absorbs most dust particles from the air
Significant protection as the required protection distance drops significantly
Minimizes the impact for urban people living and working around construction sites
No transfers between sites
Reduced emissions
Investor presentation June 2018
+=
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Wide and innovative valve product portfolioStrong expertise to meet customers’ requirements
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Standard and severe
service control valves
Emergency shutdown
valves
Extensive ball and butterfly
valves offering
Automated on-off valves
Intelligent valve
controllers
Investor presentation June 2018
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Focused product innovation in valves
Severe service materials
• We are ramping up our additive manufacturing capabilities • Novel solutions that were earlier impossible to manufacture• On-demand spares• Several patents pending
Additive manufacturing
• Solutions for very demanding applications with superior performance• Own and collaborative development with partners• Potential for patented solutions
Focused innovation strategy allows fast time to market
Investor presentation June 2018
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Flow control solutions for the mining industry
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Slurry pumps Competitive valve solutions Neles® – Jamesbury®
Complementary products and applications Metso’s Performance Solutions
Control valves On/off valves Special valves
PlantTriage, PID Loop Optimizer, and Control Performance
Investor presentation June 2018
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Serving a wide range of slurry applications with pumps, slurry hoses, and slurry valves
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Hard metal and rubber-lined horizontal
slurry pumps
Hard metal and rubber-lined
vertical pumps, tank
and froth pumps
Slurry valvesRubber-lined pipe, slurry hoses and
fittings
Tailored life-cycle solution
service packages
Investor presentation June 2018
© Metso
Neles NDX®
Unique valve controller with accurate, safe and reliable performance for virtually all valves
Metso MD series MDM mill discharge slurry pumps offer sustained performance withmaximum time between mill shutdowns
Neles BWX Unique metal-seated butterfly valve design meets requirements of various process industries
Examples of our latest innovations and service offering development for flow control customers
Installed Base Management ServicesImprove availability and reliability for field devices in the oil and gas industry
Investor presentation June 201839
© Metso© Metso
Digital program to accelerate business growth
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Solving customer challenges with digital solutions
Helping customersunderstand and improve their comminution assets and processes with the use of the Internet of Things (IoT) and analytics
Revamping online capabilities and providing an engaging digital customer journey for the entire equipment lifecycle
Building new digital tools to better respondand deliver on the changing customer requirements in the project business
Other selected digital innovation areas
Mining Aggregates Flow Control
Investor presentation June 2018
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Maintenance crewMetso on-site crew
Customer crewShutdown planning
Metso Performance Center24/7 first-line support
Support from Metso’s equipment and process experts
Metso Metrics CloudPredictive capabilities based on IoT technology
AssetsSensors and gateways, edge analytics, automation
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Metso
LifecycleServices
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Building analytics capabilities for mining comminution
Investor presentation June 2018
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Benefits of analytics to minerals processing plants are numerous
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Shorter, safer and less frequent planned shutdown
Condition-based maintenancePredictive maintenancePreventive maintenanceMaintenance schedulingRemote supportEquipment performance monitoringProcess optimization
Elimination of unplanned downtime
Optimization of circuit and operating parameters
Investor presentation June 2018
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New eCommerce platforms for aggregates
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Next generation B2B eCommerceFor aggregates spares, wears and equipmentLaunched for pilot distributors in November 2017To be expanded to full aggregates distributor space in 2018
Distributor community collaboration toolfor a more liquid preowned marketReleased in October 2017
Investor presentation June 2018
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Aiming to be the preferred partner to our valve customers
Digital front end EPC data exchange automization
Faster response and better quality of quotationsIncreased internal efficiency at Metso and customerPilot done 2017 and implementing with selected EPCs during 2018
Transitions Metso Valves from catalog to mass-customized salesBeing globally rolled out and already in use in +30 countries and several channel partners
We are developing innovative digital solutions that make it easy to co-operate with Metso Investor presentation June 2018
© Metso Investor presentation June 201847
Sustainability at Metso
Our sustainability model provides support and knowledge to transform strategic business targets into sustainable business results.
Metso is included in the following sustainability indices:
- CDP Leadership level- RobecoSAM Sustainability
yearbook 2017- FTSE4GOOD index- Ethibel Sustainability Index- OMX GES Sustainability
Finland Index- Vigeo Rating- STOXX Global ESG Leaders
Indices
© Metso© Metso
Our sustainability agenda includes four focus areas with measurable targets
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Environmentalefficiency and safetyinnovation targets:
Building customer success
Responsiblesupply chain
Performingtogether
Contributing to the environment
Long-termtarget:
LTIF*<1Energy consumptionand CO2 emissions:
–20%by 2020
Mid-term safety target:
100%of new R&D projects
with set targets
100%of new suppliers in
high-risk areas screened
Investor presentation June 2018 * LTIF = Lost time incident frequency.
Long-term target zero
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Sustainability targets and recent achievements
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We work closely with our customers to solve their challenges.We offer sustainable solutions to help them improve their performance.
Our customers’ sustainability challenges are Metso’s business opportunities.We create value and well-being for our stakeholders.
Investor presentation June 2018
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Sustainable value creation: Non-financial contribution to Metso’s value creation
Metso’s Code of Conduct is our key corporate standard and commitment to integrity
We have defined sustainability criteria and evaluation processes for our suppliers.
Employee safety, risk observations, safety discussions and safety training hours are continuously measured at Metso.
Increased stakeholder dialogue, identifying sales opportunities, effective and customer-centric operational processes support innovation, safety and a minimized environmental footprint, as well as build reputation and brand.
Value is created by improved internal and customer processes, procurement efficiencies and decreased risk of misconduct. More about value creation available online at www.metso.com/2017
Customer relationshipsProduct responsibilityComplianceSupply chainPeople
Extending equipment life cycle
Prolonging maintenance cycles
Maintaining and improving customer safety
Mitigating the environmental load
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Examples of Metso’s sustainable products
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Total emissions reduction in 2017 through the use of Metso Lokotrack™ and Vertimill™ technologies:
- 613,100 metric tonnes of CO2 emissions
Metso Lokotrack Urban TL160- simplifies crushing operations
- significant noise protection (the required protection distance drops up to 60%)
- cuts dust emissions remarkably (water spraying system absorbs most dust particles from the air)
- minimizes the impact for urban people living and working around construction sites
Metso Vertimill- lower total cost of ownership
with reduced media consumption, lower installation cost and high availability
- can substantially improve the profitability of a concentrator
- 35% more energy efficient than a ball mill
Investor presentation June 2018
24,664,000 liters of diesel and 66,100 tonnes of CO2 -emissions saved through use of Metso Lokotracks™ in 2017
924,000 MWh of energy and 547,000 tonnes of CO2 -emissions saved through use of Metso Vertimill™ in 2017