Deco Media Thurs, 7 th February :00 Hrs UK time Chaired by Rita Uotila

Transcription

1 Deco Media Thurs, 7 th February :00 Hrs UK time Chaired by Rita Uotila Rita Uotila Good afternoon everybody ladies and gentlemen, and welcome to Outotec s full year 2012 Financial Statement Review Briefing. Before we let Pertti Korhonen tell us about last year s results, I d like to remind you that this will be recorded. This is a live webcast and the recording will be available on our website later this afternoon, and also after the briefing, you have the possibility to ask questions. We take questions from Helsinki first, and then from the telephone lines. So now we hear from our CEO, President and CEO, Pertti Korhonen. Please, Pertti. Pertti Korhonen CEO Outotec So, thank you, Rita, and good afternoon everybody here in Helsinki and also on the webcast and conference call lines. So, as you have read today, 2012 was really a very nice year for Outotec. We were able to progress very nicely with our strategy implementation, and actually in 2012 we passed the 2 billion milestone, which has been one of the milestones in our strategy, and actually, we have even surprised ourselves with the speed of the progress that we have been able to make. So things have really gone very well. If we look at the four key focus areas that we had for 2012, of course, first one was to make sure that we continue the growth momentum for the business. So order intake, scalability of the operations, the execution excellence to really make sure that we can continue on the growth path, and that went very well indeed. One could of course say that the order intake growth of 4% was a slow one, but one has to put that to the perspective of the quite big uncertainty of the global macro economy, and I think that in that sense, having had results where our order intake also grew in absolute terms, I think that that was a good achievement. Then, of course, in line with our long term targets, we have been working on actions to enhance our profitability, and there learning to price better, learning to better extract the value of what we are delivering, supply chain efficiency, supply savings, and then of course, operational scalability were the key sources for the profitability improvement. And then as a third area, continuing to strengthen our offerings, continuing to strengthen our earnings logic, we made also there good progress, with a strong growth of services, with very nice system solution deals, life cycle solution deals, and all in all, enhancing what we offer to the market. So green dot, also there.

2 2 M&A, in our strategies, as an important role, we are executing a bolt on M&A strategy, and we made really good progress in services, in enhancing the energy business, and then also some technology bolt on acquisitions like the Numcore and Backfill Specialists. We were not able to complete any acquisitions from the industrial waterside - that has been an area where we have been looking at suitable candidates, and we have been scanning through a long list of companies, but we haven t found a good fit this far, so this remains on our execution list, and of course, always, acquisition is not the only alternative, also partnering, licensing, and so on. Those are also alternatives to acquire technologies. But all in all, very good progress on our strategic focus areas. If we then move forward to the market and to the numbers. So the demand for our solutions remained on a good level, and actually strengthened, and that was due to our competitive offering, and also due to the good market position that we have, not only geographically, but also what comes to our offerings across different metals and natural resources. So this is really a strength that has been helping us a lot, amongst this quite uncertain macro economic environment. The long term outlook for metals, that continues to be positive, and metals prices recovered towards the year end quite nicely, including also the strong recovery of iron ore prices. There were new capacity investments, especially non ferrous metals, and areas like, special areas like ilmenite, and there seems to be a shift in the market that customers are a little bit more careful with huge green field investments, which require a lot of infrastructure investment, and they are more looking at capacity expansions and modernisations, refurbishments, and of course, this is a good opportunity for company like Outotec, who has a strong ongoing relationship with basically with all the customers around the world. The capacity utilisation rates, they were supporting the services, business growth, in all business areas, and we were receiving increasing and quite intensive interest towards our new operation and maintenance, and shut down services that we had been building during the last years, so this contributed nicely to the growth of our services business. If we look at let s say the regulatory side of the market environment, local legislations, tighter environmental permitting, and then on the other hand the complexity of last financing packages, those were slowing down some, negotiations and some large projects. On the other hand, as you can see from our order announcements last year, tighter environmental regulations also brought a lot of new business for Outotec, because that created opportunities for fixing some environmental problems of plant operations, and that of course gave us nice opportunities. An alternative energy solutions, in some markets we did not make as fast progress as we would have wanted, that was due to low energy prices, and uncertainties in political regulation in some countries, but on the other hand we made very nice progress in other areas of energy, especially in the thermal processing side. And our company mission is sustainable use of earth s natural resources, and the fact that almost 90% of our 2012 order intake consisted of environmental goods and services, really tells us that that it is really the core of our business today.

3 3 If we then look at the orders received in Q4, we received nice new breakthroughs in especially environmental solutions. So in Switzerland we delivered the world s most, or agreed to deliver the world s most modern sewage slots thermal treatment plant, and EPI s technology was actually a pivotal role in winning this deal, when integrating that to all the technologies that we already had inhouse. In Turkey, a biomass power plant, also a new breakthrough, and then very exciting from Namibia, a 130 million deal which was totally an environmental investment. So gas cleaning systems, sulphuric acid to recover the sulphur, and relate the technologies, including effluent treatment, and so on. It was purely an environmental investment, and this shows that in our business, it s not only the demand for capacity, but it is also the necessity to improve the environmental performance that are the key drivers for the business. If we look at the development of our order backlog and order intake, we had a very solid and slightly growing order intake, despite of the uncertain and turbulent global macro economics, and this allowed us to end the year with a very strong year end backlog, despite the strong growth of sales. And we are estimating that roughly 77% and approximately 1.5 billion out of this backlog would be estimated this year. The development of unannounced orders also was stable, so they stayed on a high level, and I already covered those announced last quarter. If we then look at the profit and loss statement, indeed there is strong profitable growth, the sales growth was 51% year on year, and of course we are very pleased with this performance, and the fact that we were able to scale the deliveries, and scale the whole organisation to deliver this. If we then look at the operating profit from business operations, that was up by 60%, to million, and reported operating profit up to million, so up 65%. And the operating profit margin from business operations improved from 8.8% to 9.3%, so we are progressing towards our long term goal of 10% average EBIT margin over this cycle. If we look where the sales growth was coming from, mostly it came organically, so our Capex growth was very strong because of the very strong order intake in 2011, and also Services was growing both organically and then somewhat through acquisitions, and all in all, this then led to this 51% sales growth. Operating profit from business operations improved 60% year on year. Mainly it came through sales volume, and resulting operating leverage, so that was the biggest positive contributor in the bridge. If we then look at the diluting factors, our gross margin percentage went down by 3% because of sales mix, and then also less licence income compared to previous year, and then timing of the project completions, that is very normal in our business, that the project completions timing is fluctuating, and then the negative impact from the two ELE projects as we have reported.

4 4 And then some minor contributions from FX gains, other incomes, EPIs and so on, and all in all this resulted to this 60% year on year improvement in the operating profit. Our sales split is nicely diversified, so roughly two thirds of our sales is coming from emerging markets, and of course this is a very nice position to be in. Americas represented 36% of our sales, Asia Pacific almost 20%, and then Europe, Middle East, and Africa 46%. Here at the Eurozone area, is quite small, and the strongest sales are coming really from Middle East, and then Sub-Saharan Africa. If we then look at the sales by end product, that shows the strength of our diversified portfolio. So even with the slow iron ore market, we were able to make 14% of our sales from that area, and then copper, that was one third, and all in all the rest was splitting over quite a broad range of end products, and this really shows the strength of our portfolio, and with this I think that we are in a very nice position to go forward. The sales and profitability developed very nicely. If we look at the last 12 months graphs, those are going nicely in line with our long term targets, both what comes to the sales growth, and then the profitability improvement. Let me next elaborate by business area. In non ferrous, very strong performance with all matrix, so nice success in winning larger scope orders, as per our strategy, very strong services growth, very solid project execution, improved profitability because of operating leverage, and then also some good bolt on acquisitions. And going forward to 2013, very much the focus is in winning new orders, and larger scopes, continuing strong growth in services, and then of course always the execution, and if we look at the numbers, sales was growing 38%, operating profit from business operations were growing 44%, so very, very good progress. In ferrous, we made a nice turnaround. So 2011 was not that good a year for ferrous. But in 2012 we were able to record 68% growth in sales, and more than 200% improvement in profitability, and the operating profit from business operations improved from 4.4 to 8.5%, which was really a very good achievement. The highlights were the largest order in Outotec s history, to Saudi Arabia, the ilmenite smelter, and then very solid project execution improving profitability, service acquisition to expand the service offering, and then going forward this year, of course we will further develop our services offering. We have a lot to execute, we have a very strong backlog there, and then we are looking forward to new opportunities, especially in India and China, because of tightening environmental regulations there, and we believe that we are in a good position to win new business there. Then if we go to ELE, and if you like metals and environmental solutions, there we had very strong sales growth, however, profitability was impacted by execution issues in two customer projects. So the sales were growing 81% to 427 million. The operating profit decreased from 10.9% to 5.3% because of these execution issues in two projects, but if we look at the underlying business otherwise, that made good progress, and it s in good shape going forward. We made good progress in the industrial water treatment business, winning new order there, and also very nice progress, especially in this ways to energy and alternative energy area.

5 5 And in 2013, of course, the focus will be to further capitalise the solid demand for environmental solutions, increased sales for water treatment solutions, expanding the market feeds of renewable solutions, growing the services business, and of course, naturally, improving the profitability back to the levels where it should be. In services, very strong growth. We almost hit the 2015 sales target that we gave two years ago. So 476 million was the services sales, and we had to announce a new target in our capital market day, so now the new target is that 2017, we are shooting for one billion sales revenue. The sales growth was 39%, acquisitions accounted approximately 9% of the sales growth, and of course they will be then contributing going forward, and we introduced quite nicely new services offerings, especially in the areas of operate and maintain. And in 2013 the focus is to further penetrate to install base. We continue to have nice opportunities there, leveraging new life cycle services offerings, especially operator maintenance shut down, where we have nice momentum, and we will continue to make acquisitions to enhance our global footprint and services offering. The financing structure continued to be strong. Liquidity was good, so in all this matrix, if we look, we are the nett interest bearing debts are on the negative side, working capital is negative, the cashflow decreased from the previous year, and that was basically a function of paid dividends and then acquisitions, sale purchases, and then yes, the prepayments continue to flow in, but we delivered a strong growth in delivering from the backlog. So all this nett to nett resulted to the cashflow that we had. But a healthy cashflow. And very nice improvement in return on investment and return on equity, because of strong financial results, so ROI close to 60% in Q4, ROI around 45% in Q4, so these are, of course, very nice numbers. In the area R&D and innovation, we have been continuously increasing our investments to R&D and technology development in general, and we can see that not only in the quite big number of new products and solutions that we introduced to the market last year, but also in our patenting activities, so we filed 70 new prior independent applications. We received almost 300 new national patents, and in the end of 2012, we had 630 patent families, and almost 6,000 national patents, and we will continue to increase our investments in R&D going forward. Personnel increased by almost 1,000 and in the end of the year we were 4,805. From acquisitions the increase was 450, and then the split you can see on the left hand side, where especially in the emerging markets, the headcount has been growing strongly. If we then look at the events after the reporting period, in end of January we announced that we have won a deal for renewable energy solution in the USA, and this is related to our EPI acquisition. Also in January we announced a contract for operate and maintenance with Mikheevsky copper concentrator in Russia, the value is exceeding higher than 40 million, during the life cycle of roughly six years. Only a small portion of this will be booked in 2013.

6 6 And then we announced nice placements in the sustainability ranking and reporting, so, for example, incorporates nice evaluation and assessment, we ended up being the twelfth most sustainable company in the world. And from Sweden we announced a gas cleaning plant for LKAB, an order of value of 38 million. One thing that I would like to highlight is that a significant part of Outotec s employers are becoming shareholders in the company. We launched a new employee share savings plan, and altogether, roughly one third of our people will start to invest into this share savings plan, and there are actually seven countries, where more than 50% of our people will be becoming investors in the company. So I think that this is really a very nice vote of confidence to the future of the company, and also means that we are all aligned with our rest of the shareholders to really continue to deliver good shareholder return. If we then look at the focus in 2013, so of course the priority number one is to make sure that we continue our growth momentum, therefore ordering growth, and then the services growth, and further and further enhancing our earnings logic in key focus. In the property improvement the other major sources for property improvement will be the mix changed. So the high growth of services and then supply savings, and then also implementation of value based pricing. If we then look at the other priority areas, we will continue to make acquisition to strengthen our offering portfolio in the pattern we have been doing it this far. We have made 12 acquisitions since 2010, and we have succeeded quite well in the integration, and they are contributing to the strength of the company, and we plan to continue on this road. And then in the fourth asset area we will continue to invest in developing and rolling out our global operating platforms to make sure that we can ensure future growth and profitability improvement through improved efficiency. I would then like to move to the market outlook and financial guidance. So the drivers for our industry, they continue to be there. The positive drivers of a combination of increasing demand for metals and depleting ore grades, and then all the other drivers which are coming from sustainability, the need to reduce energy consumption, the need to rid use emissions, the need to use less water and protect and clean water, and then the need for new alternative energy sources, and then the need to do more recycling. These are all very positive drivers for Outotec s business. If we look at the market outlook, as we said in the report, the market sentiment has been improving during the recent months, and let s hope that the world economy will be a little bit less turbulent this year. We believe that there are very strong underlying factors which make the market favourable for us, so strengthening of the macro economic indicators, the positive outlook for minerals and metals demand, the need for alternative energy, the growing GDP and middle class, especially in emerging markets, which is driving metal s demand, new projects being developed, especially in the emerging markets, developing countries investing to capture more value from their natural resources in their own country, the increased focus to social and environmental sustainability, the mining and

7 7 metals companies seeking ways to increase production of their existing operations, and then all in all, demand for alternatives and ways to energy solutions. So all in all, these trends, they are creating favourable opportunities for Outotec s life cycle solutions, and we believe that when we leverage our unique technological strengths and competencies, we should be in a good position to enjoy growth also, going forward. We have today revised the guidance that we gave before our capital market base in November, and our guidance for the sales revenue is 2.1 to 2.3 billion approximately, and the guidance for operating profit margin from business operations is 9.5 to 10.5%. Today, our Board also has announced the proposals for our AGM, and the proposal for dividend is 1.2 per share, so this is in line with our dividend policy, and of course means that when the profit is improving also, the absolute value of dividend is growing. In addition to the dividend, the Board of Directors also has proposed to AGM that we would issue a share split, so for every one share we would issue three new shares, so resulting to a split ratio of four. I think now it s time for questions and answers. Sampsa Karhunen D&B Questions and Answers Good afternoon. Congratulations for the nice result. It s just two questions, quickly, if I may. Basically, I noticed that the tax rate was improving compared to the full year level. How would you describe? Should we see going forward that the tax rate might be improving even further, and is this a temporary thing, or basically due to the fact that where you get profits geographically, or is it something that you re managing yourself? I think that as a company, when we are implementing our more and more integrative global operating model, we also have opportunities to improve the tax efficiency that we have. So we do have a plan to continuously look how do we operate in a tax efficient manner, not through aggressive tax plannings, or we want to pay taxes in every country where we are operating, and we want to be a good corporate citizen, but we believe that we have inefficiencies that we are able to improve when we are further and further rolling out our global way of operating, and of course, then that is when successful that we ll then also be one source of inhousing our EPS. Thank you. The second question is regarding the service business. Would you be able to describe how the margins are developing in the service business,, as we see that the share is increasing quite rapidly? So is this the main source of the way to get into the order cycle 10% margin level? No. It s not the main source. So it is one of the sources, but actually I would say that the main sources are really the improving our ability to extract true value for what we are delivering. We have not always been so good in the pricing, so we are delivering great technologies and solutions, and we believe we have an opportunity to improve that. Then the second thing is that we see a lot of opportunities to improve the cost efficiency of our

8 8 supply chain, and we have now been investing to that for two years, and we are starting to see fruits coming from there, and then of course operating leverage. So I didn t mention it in my presentation, but our SGNA costs reduced to 12% of sales last year, showing that there is operating leverage, and of course this then allowed us to increase our investments into R&D. So these are kind of the main long term drivers, and we are not counting for services to only enhance our profitability. We believe that we do have opportunities to improve the profitability across the line. Thank you. Alex Whight JP Morgan Good afternoon everybody. I ve got three questions please. The first one is on Q4 services sales. They saw a much stronger sequential increase from Q3 than what we ve seen historically. I wonder if you could just talk us through that sequential development, where there s some larger items invoiced, or do you think that this is perhaps a non sustainable quarterly run rate going forward. Second question is, could you be kind enough to quantify the higher provisions that were taken in ELE during Q4? And the third question is on the underlying orders. So excluding the announced large orders. The underlying orders seem to have taken a step down in Q4. Give us an idea of which end markets in particular have softened in that regard, and I guess, what you think the sustainable level of those orders are. Alright. Thanks for the questions. So I try to remember all of those three. So first of all, Q4 services sales. So we had indeed a very strong services sales in Q4. We had some invoicing and completion of some large shut down service cases there, so that brought an extra revenue there, and then also there were quite significant spare parts deliveries happening in Q4, and then all in all, the demand for services was very good. So it happened to be a strong quarter. There will also be fluctuations in services business going forward, but we are of course counting on a steadily improving trend in our services business. Then the second question was about the provisions in ELE. If I heard your question right, so indeed related to those two projects that we have commented without names, we made some provisions there, because of the need to put more work into those projects and also to compensate some subcontractors issues there. So that impacted ELE s profitability in Q4. However, going forward, I believe that we are now on solid basis, and we should be able to look forward to an improving trend. Then vis-à-vis the unannounced orders. So December was a short month, and there also this kind of factors, but I would really look at the trend there by saying that the demand for our equipment and services and plants continued on a good level. Year ago we saw quite a big dip in Q4 order intake, showing that there can be a lot of fluctuation. This year if it continued on a higher level of Q3. And as I said, the momentum or the spirit in the market has developed to a more positive direction, so hopefully we will not get any new surprises in the global macro economy, and hopefully this trend will continue to go forward, and that should be giving a good basis for this year.

9 9 Okay, thanks. Just on the provision in Q4 and ELE, were you able to quantify them in euro terms for us? Now I have to turn to our CFO. I don t remember if we have announced that number. No, we have not announced the number. Okay, thanks very much for your answers. Thank you. Aaron Ibbotson Goldman Sachs Hi there, good afternoon. A couple of questions from my side, some of which were clarified in the previous question. But firstly, I just wanted to have a question on your revenue guidance for 2013, so the midpoint thrown to.2 billion, and my question is basically, it seems to me that you ve got about 150 million more than you had last year of backlog to be delivered this year, versus what you had at the beginning of 12. So in light of that, it seems a little bit conservative, and particularly if you add the fact of the run rate on services is much higher now, and also you ve made some acquisitions. So that was the first question. And then on services specifically, I just wanted clarification here. I ve got 35 million roughly of annual sales from the Demil acquisition consolidated in September. Is that correct? So should that have been roughly 5, 6 million additional in Q4 that was not organic? And then finally, just on ELE, a follow up, obviously you ve had taken some provision in Q4, but I just wanted to hear your view on the underlying development x-ing out that. Is it still realistic to see this position trend towards group margins, maybe already towards the end of 13? Thank you. Okay, again, I try to remember. So first one was the guidance. So the guidance that we have given is the best understanding of management views going forward to the year end of course, when we see how the year is developing. If things start to develop towards being out of the guidance we will of course then automatically revise that, but that is the current best understanding. Then the impact of Demil acquisition, yes in the ballpark, I think that your figure is right, isn t it, Mikko? Yes, roughly right. And then regarding the ELE profitability, as I already mentioned, we are very confident that the profitability of ELE will now start to develop to a better direction so we should see that coming through during the Thank you. Can I ask my first question in a slightly different way, then? Because my understanding is that you ve taken on a couple of larger projects versus historically, and I will have expected that to make your order book slightly more slower churn, but you re now expecting to deliver more than three quarters of the order book in 13, which is, or at least to my knowledge, the highest you ve ever had. So does that indicate that you were actually managed to take quite a lot of smaller project than there is, is this because of service mix, or what is driving the fact that you expect to deliver such a high proportion of your order backlog already in 13? I obviously see it as positive, but I just wanted to try to understand why it is. Okay, so that figure is coming from our basically from our bottom up planning of each individual s projects, and the business. So that is really the nature of the mix that we have

10 10 in the backlog at the moment. So, yes there are lots of projects, but they happen to be in such kind of timing that they are actually generating, some of them quite rapid growth of POC, and then yes, a large healthy number of smaller orders which are turning faster and all in all, this is the outlook for this year. So you are quite right, 77% is the highest that we have ever said I think that it has historically been in the range of 68 to 70%, colleagues, help me if I m... So yes, you re right, but that s how the mix looks like. Okay, perfect, thank you very much. Thank you. Mikko Puolakka This is Mikko Puolakka. I could still comment about the 77% revenue recognition from the order backlog. If you recall we have basically announced the largest deal with Crystal last summer, and that s a project which is of a duration of roughly two and a half years. So we started it last year summer, and we are proceeding with that one quite fast. So this kind of larger projects are generating quite a lot revenue this year, and that s the reason for this excel that are really high, 77% revenue recognition. Guillermo Peigneux UBS Just maybe follow up on that given the backlog levels and the current order run rate, can I just basically refer to your guidance, and ask how much of your guidance is actually driven by organic growth, and how much of your guidance is actually driven by, or as you say in your press release boosted by acquisitions? Mostly it s coming from the organic growth. So if you look at the bridge which I showed regarding this year s growth, the plan going forward doesn t include anything more extraordinary than typically what has been coming from our acquisitions during last year, or year before, so it s really predominantly coming from organic growth. All those companies that we had purchased during the last two years are now included when counting the organic growth. Okay, thank you. And maybe a follow up. If you compare your Q4 order intake, and you basically assume what kind of order intake do you need in order to meet your guidance, do you have a rough figure that you can say with us? No, we are not sharing the order intake figure, but of course, as I said in our priorities, our first priority also in 2013 is to continue to grow our order intake, so that is of course extremely important. Okay, and that is even assuming that you re basically going to grow over large projects, such like the one you landed from Crystal Global, right? Yes. It s important to continue to grow the business. Okay, thank you. Antti Suttelin Danske Bank

11 11 Thank you. I would have two questions, and starting with the order intake outlook for 2013, I guess one can say that your customers on the mining side peaked with their earnings in 2011, and since then earnings have been coming down, and then also there seems to be a tendency to go away from large projects into smaller projects. And I guess these two factors are limiting the overall growth in mining Capex. So I just wonder what is your line of thinking and your confidence levels of being able to grow Outotec s order intake in 2013? Is this because of market share growth, or what is lying behind the expectation of being able to further increase order intake in 2013? This would be my first question, please. Alright, I will say that Outotec is still a tiny company with two billion revenues compared to the whole mining and metals industry Capex and Opex. So we believe that we can continue to strengthen our earnings logic and the value capture of that Capex and Opex. We are not limited, or saturated with our business moral as of yet. Also we have been growing faster than the market, so we have been taking market share during the last two years, and hopefully we can continue to do a good job on that side also going forward. Then if we look at the Capex forecasts for the industry, whether you take the lowest forecast or the highest forecast, it basically means that they will stay on a higher level. And if we look where the cuts have been coming from in that figure, they have been coming mostly from iron ore and coal side, and our exposure to those markets, our exposure to coal is zero, and iron ore value chain represents roughly 10 to 15% of our business. So the area where our business has been relatively much less impacted. And then also a lot of those Capex cuts have been coming from infrastructure. So the huge billions of infrastructure that are spent for greenfield projects. So I commented in my presentation that we expect that there will be a good development in our customers making investments to enhance capacity, increase capacity, modernise existing plants, and so on, because the return on investment is faster by doing it that way, and of course that is exactly the area which is strong for Outotec. So I wouldn t be that pessimistic for the mining Capex outlook for the next year. And then in addition as we have demonstrated, we have been able to grow our business in environmental solutions areas, which is not driven by capacity increases, but that is driven by environmental sustainability and from social sustainability, and this is a very meaningful part of our business today. Okay, thank you. And then my second question will be on the ELE business. I can see that you re EBITDA margin went to approximately half of what it has been over the past two years, 2010 and 2011, is this because of the provision you made, or is there something else which pressed the margin down as well? This is because of the provisions and higher than planned costs in two of our projects. Then there are some currency exchange rates impacts. So those are the main sources. Okay, and do you expect to make further provisions in 2013 in relation to these two projects? I hope not. No, as I said, seriously speaking, as I said, so we have confidence that things are under control and the profitability will start to improve. Thank you very much.

12 12 Thank you. Anette Luomanperä Deutsche Bank Hi. How is your order book divided between services and equipment? And also, can you please remind us of how you book services orders into your order book? Thank you. We are not announcing the split of services and equipment in our order book. Regarding the services booking, we only book the value for the current year. So that s how we go. Mikko, our CFO, would you like to further elaborate? Mikko Puolakka Traditionally and also at the moment, basically the services order backlog which is in our total order backlog represents some less than two quarters worth of services sales, so that has been more or less similar kind of structure what we have had in the past. Okay, thank you. And then your announced orders were quite high in the ELE segment in Q4. Can you give us some indication of how the order intake was split between segments? That s going to be very volatile, like it always has been, because the large projects timing fluctuate a lot, so especially in ferrous and ELE, the order intake is very volatile, because typically there we are doing these larger projects. And in non-ferrous it is much more smooth, because in non-ferrous we have a lot of equipment business, smaller orders, yes, also large solution orders, but then also we have a lot of services. So in non-ferrous, it is typically much more stable. Okay, thank you. So also then in your order book, is it tilted more towards ferrous or nonferrous sales? No. No, it s not. No it s not what? It s not more tilted towards Okay, thank you. Johannes Grunselius ABG Stockholm Hello. A question on your split here in Q4, or rather the service sales was 184 million, if I get it right. You said that there was some positive impacts here of shut downs for what is the industrial steel plants, etc. But how should we view that number as such? Are you forseeing growth from that number going into 2013? No, there is just quarterly fluctuation for the reasons that I already explained, and as you know, services is typically a more smooth business. We just happen to have a very large shut down case there, and then some special spare parts deliveries, and all in all, high demand for services. So that s why it peaked, but normally it should be quite smooth. And we plan to continue to grow services very strongly also this year.

13 13 And then if we look then at your full year service sales, I guess that s something like a number like nearly 480 million for the full year I know you ve stressed Pertti, that you re very bullish here on the growth prospects, but could you help us what you foresee for 2013 in terms of growth from that number? As you have noticed, we have been very successful in scaling up our services business. So we met the 2015 target already in 2012, which is almost 480 million for last year. We announced this new target of one billion by You have seen us to announce some very concrete orders also this year, like this Mikheevsky operate and maintain deal, and we believe that we have very good opportunities to continue to increase our services offering, and increase our penetration to the market, and in that sense, increase the value capture from the industry Opex in that sense. So I do not see that we would have some kind of a limitation or glass ceiling there on the services side, and that s the reason why we very firmly believe through the growth, and that s the reason why we announced this one billion target for The opportunities are there, and we have confidence that we can execute them. Sure, your new EBITDA, or EBIT from the business operations, the new margin target, the range you have for 2013, that is up a bit year over year. Is that partly because you have a higher portion now on service going into 13, or is it because of other reasons? Well it s a combination of many things, so there is mix changes, and there is improved value in pricing, and then it is about supply chain efficiencies starting to come in from all those efforts that we have done over the last two years. So those are the main sources of improvement. Yes. And then a final question from my side. I know you took the very sizable order in Namibia recently, and that was driven of environmental reasons, rather than economical reasons, I suppose, in the short term at least, but are you forseeing a lot of these types of businesses in Africa and elsewhere in the near term perspective? Yes, I would say so, that ass I already commented, it s not only the need for new capacity, but very much the need to improve the environmental performance of our customers processes, and increasingly, the trend is there that in emerging markets, in rapidly growing markets, places like Africa, China and India, Southern America, environmental driven investments are growing. So that is of course a very nice opportunity for Outotec. Alright. Thank you very much now. Thank you. Aaron Ibbotson Goldman Sachs Hi there. Sorry, I just had a very quick follow up. Just looking at your backlog, it normally tracks sort of added orders less delivered sales very closely, and I was just wondering why there was a 30 million mismatch this year. Is that just FX that has reduced the value of the order book?

14 14 Yes. FX. Part of the exchange rate fluctuates, and so in that kind of order book which is approximately two billion, even a slight change in foreign exchange rates causes fluctuations, so that s the reason. Okay, perfect, that s what I thought. Thank you very much. Thank you. Pekka Spolander Pohjola Bank Good afternoon. Two questions: first about the product mix outlook. So to say you said that the sales mix was not perhaps the most favourable last year, and you discussed that the focus in that activity will be more brownfield, and less greenfield. What do you expect? Is this a favourable trend for you, or could we wait for that? I don t think that I said that the sales mix was not favourable last year. No, I didn t say that. I mean that gross margin was slightly down and yield to a sales mix so that... Fine, but I wouldn t say that, I m not taking a stance that it would be worse or better. There is just fluctuation in the mix, and it s the timing and all those things, so there s nothing abnormal there. And then your question, the other part of the question, Pekka, was greenfield, brownfield. So I think that we have said that typically like two thirds of our business is coming from brownfield type of operations, and so we are very strong there, and we believe that actually this trend of customers being a little bit more wary about huge greenfield projects, and directing their investments to capacity enhancements and expansions of existing plans, we actually believe that this is a favourable thing for Outotec, because that means that the bigger share of the investment will be used for the actual adding value process, rather than to the ports and railways and infrastructure. So I think that this trend is fine. Okay, thank you. And the next question, just to check, this positive impact of 6.3 million from the reduction of EPI liability, in which quarter is it booked? It s booked in Q4. Okay, thank you. Ben Maslen Bank of America Good afternoon everyone. A couple of questions please. Firstly just on, you mentioned that we ve seen a reasonably healthy pick up in metal prices over the last couple of months. I just wondered how that feeds into tendering. Do you see minors stepping up their interest levels in business and projects in line with those metal prices, or do you think it takes a bit more time for confidence to return? Just what your view on how sensitive demand is to that. And then secondly, just on cashflow, it was a fairly weak year on the back of a working capital outflow. If the mix of your business next year is less large projects coming in, and then you re delivering more of the backlog out, do we

15 15 continue to see this kind of reversal of prepayments effect dragging on your cashflow? Or do you think that it unwinds, it s more neutral this year? Thank you. Alright, so, sorry I already forgot the first question. How quickly does it pick up in, about in the iron ore feed into your tender book? Let s see. The overall market activity has actually stayed on a high level and has been intensive in all the other areas, except the iron ore, which has been slow, which we already have commented earlier, and we are not counting on that activity increasing very rapidly. Let s see how it unfolds, but we are not counting on that. However, as I already commented, we are seeing other opportunities in the iron ore value change, perhaps geographically and also in different market segments, so also there we believe we have good opportunities. In non-ferrous metals in general, the activity level has continued to be good, and of course, the fact that the metals prices are on attractive level, it s making the investment cases for our customers attractive, counting on the long term outlook for the metals. And then regarding the second question, the cash flow. So there has been no degradation of the prepayments, what comes to larger orders. So those have kept on flowing in, but the reason for 2012 degradation of the cashflow picture was that we delivered so much from the prepayments and the backlogs that we already had, and then in addition dividends and share acquisitions and M&A. So that was the logic for Going forward to next year, Mikko, would you like to elaborate this a bit? Mikko Puolakka Yes, basically for this year the cashflow, especially the working capital, of course, is very much dependent on the order intake development. And like Pertti explained earlier, basically in 2012, one of the biggest items was the working capital change, which is very much driven by the fact that our order intake grew in 2011, 44%, and last year, 4%, and the advanced payments are very much linked to the order intake. So when the order intake is relatively flat, then the advanced payment level remains also relatively flat, not contributing so much to the working capital increase or decrease. So our cashflow, or the working capital is very much linked to the order intake. But just hypothetically, this year, if you had less large orders and more flow business, is that still a negative for your cash flow, theoretically? No, I wouldn t say so. Okay, thanks a lot. Closing Comments Thank you for good questions and participation. I think if that s all the questions this time around, we are ready to wrap up, and thank you. Thank you so much, thank you.