The year has started in line with the Finnish-based group's expectations, with quarter-to-quarter improvements in minerals services and aggregates equipment orders in the first three months of 2024, while customer decision-making in the minerals equipment business was slow.
Orders received by Metso in the January to March 2024 period declined by 8% year-on-year to €1,361m (Q1 2023: €1,485m), and services orders declined by 5%. Sales in Q1 declined 9% to €1,217m (Q1 2023: €1,334m), while services sales increased by 6%.
Adjusted EBITA in Q1 this year was €200m or 16.5% of sales (Q1 2023: €211m, or 15.8%), and operating profit was €188m, or 15.4% of sales (Q1 2023: €193m, or 14.5%). Cash flow from operations increased to €158m (€110m).
Metso president and CEO Pekka Vauramo commented on the results: "Despite this quarter-on-quarter improvement, the Group's orders received were 8% lower year-on-year. Key metal prices such as that of copper have improved and hence customers continued to run their production at high rates, supporting the Minerals services business where orders almost achieved the same high level recorded a year ago."
Quarterly sales declined in both segments due to lower equipment order backlogs going into the year. However, the 8% year-on-year increase in sales of minerals services had a positive impact on the sales mix, and services accounted for 68% of the minerals segment sales.
Overall, Vauramo says the profitability was supported by an improvement in gross margin, thanks to successful cost management and overall operational performance, as well as a higher share of services in the sales mix: "I am proud to see that we can maintain very healthy margin levels in a softer demand environment. We also showed positive cash generation performance during the quarter, with cash flow from operations increasing to €158m. The first-quarter results confirm that actions to improve our financial performance have been successful, and we are on track to meet our profitability target.
"Our focused actions have resulted in resilient profitability in both segments. The adjusted EBITA margin of 17.0% in aggregates was only slightly lower year-on-year, despite the decline in the segment's top line. The minerals segment reported the same adjusted EBITA margin of 17.5% as in the comparison period. The negative impact of lower equipment sales in Minerals was offset by cost savings and services sales growth.
"Our safety performance faced a setback in March due to a major incident at our rubber plant in Irapuato, Mexico. Eleven of our colleagues were injured in a steam explosion at the site, which also resulted in property damage. The well-being of the injured is our top priority, and the investigation of the causes of the incident continues."
Vauramo says the focus areas of Metso's sustainability work continue to be the Planet Positive offering and innovations for its customers, its people and culture, as well as environmental efficiency in its own operations and a responsible supply chain. He added that in all these the company has made considerable progress, and h anticipates ongoing achievements throughout 2024.
Metso expects that the market activity in both Minerals and Aggregates will remain at the current level. In its previously published outlook, Metso expected that the market activity in Minerals will remain at the current level, while the activity in Aggregates was expected to improve.
"We expect the market activity to remain at the current level in both segments," said Vauramo. "There is general anticipation that higher metal prices and potential interest rate cuts could accelerate overall economic activity and demand in our industries later in the year. Under all market conditions, we will continue to control our costs, implement other actions to improve our profitability and cash flow and make sure that we are offering our customers the best service possible."
