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© Metso © Metso Capital Markets Day 2015 Capital Markets Day 2015
We have a clear path to growth
John Quinlivan
President, Flow Control
© Metso © Metso Capital Markets Day 2015 Capital Markets Day 2015 Flow Control by John Quinlivan
Flow Control will continue as a high performer - and will aggressively seek growth
2
Our performance
has continued to
be strong
We have been
resilient to market
drop
We have a lot of
growth
opportunities to
tap into
Expanding our channels to market
Expanding our market presence horizontally
Continuing to improve our service capabilities
and network
We will grow by
Making acquisitions in flow control
Developing our portfolio to support growth
Continuing to build and strengthen our
operational excellence
© Metso © Metso Capital Markets Day 2015 Capital Markets Day 2015 Flow Control by John Quinlivan
1 Q3/2014 – Q2/2015, rolling 12 months without Process Automation Systems
2 Personnel figure based on the most up-to-date information
3
Valves
• 85% of business area net sales
• Strong niche position in oil & gas downstream,
process industries and leader in pulp & paper
Pumps
• 15% of business area net sales
• Serving a wide range of slurry applications
with pumps, hoses, and slurry valves,
predominantly in mining industry
Net sales EUR 723 million¹
Personnel ~2,700²
We have a strong platform in valves and pumps Where are we today?
© Metso © Metso Capital Markets Day 2015 Capital Markets Day 2015 Flow Control by John Quinlivan
We continue to deliver strong results
Note: Figures include valves and pumps, excluding Process Automation Systems
* Before non-recurring items
4
• Valve business strong
performance
continues -
development has
outpaced the market
and the leading
competitors.
• Pumps has high
profitability with a
main focus on high-
wear applications.
Net sales, EUR million
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
0
100
200
300
400
500
600
700
800
20
09
Q1
20
09
Q2
20
09
Q3
20
09
Q4
20
10
Q1
20
10
Q2
20
10
Q3
20
10
Q4
20
11
Q1
20
11
Q2
20
11
Q3
20
11
Q4
20
12
Q1
20
12
Q2
20
12
Q3
20
12
Q4
20
13
Q1
20
13
Q2
20
13
Q3
20
13
Q4
20
14
Q1
20
14
Q2
20
14
Q3
20
14
Q4
20
15
Q1
20
15
Q2
Capital Services EBITA%
Where are we today?
© Metso © Metso Capital Markets Day 2015 Capital Markets Day 2015 Flow Control by John Quinlivan
The markets have been challenging
5
Oil price1
Brent crude oil price
EPC order trend2
Rolling 12-month order intake (FX=Dec 2014)
Mining equipment providers order trend3
(Rolling 12-month order intake, FX=Dec 2014)
Pulp & Paper equipment providers order trend4
Rolling 12-month order intake
1. Source: Thomson Datastream
2. Selected EPC companies include: Technip, JGC, Chiyoda, Tecnimont, KBR, Linde Engineering, Fluor, CB&I, Saipem, Jacobs Engineering, Samsung Engineering and GS Engineering & Construction
3. Selected mining equipment providers include Atlas Copco (segment), Metso (Mining Capital), Sandvik (segment) and Weir (segment)
4. Selected Pulp & Paper equipment providers include: Andritz (segment), and Valmet (corporate level)
0
20
40
60
80
100
120
140
06 2011
06 2012
06 2013
06 2014
06 2015
0
1
2
3
4
5
6
7
06 2011
06 2012
06 2013
06 2014
06 2015
0
2
4
6
8
10
12
06 2012
06 2013
06 2014
06 2015
EUR billion
EUR billion
EUR billion
0
20
40
60
80
100
120
140
06 2011
06 2012
06 2013
06 2014
06 2015
USD/barrel
Where are we today?
© Metso © Metso Capital Markets Day 2015 Capital Markets Day 2015
Flow Control valve business rolling 12-month
EBIT % development vs. peers*
Flow Control valve business rolling 12-
month net sales development vs. peers*
Indexed (Q1/11 =100)
90
100
110
120
130
140
150
160
Jun 2011 Jun 2012 Jun 2013 Jun 2014 Jun 2015
Metso valves
Valve peers
Jun 2011 Jun 2012 Jun 2013 Jun 2014 Jun 2015
Valve peers
Metso valves
*Including Emerson Process Management, Flowserve Flow Control Division, Cameron Valves & Measurement, Pentair Control & Valves and Velan
Our valve business has been resilient to market decline, while competitors have suffered
6 Flow Control by John Quinlivan
Where are we today?
© Metso © Metso Capital Markets Day 2015 Capital Markets Day 2015
We have a favorable business mix with a large service share
1. Percentage shares are for valves and pumps only – excluding Process Automation Systems, based on rolling 12 month ending Q2 2015
2. Oil & Gas industry includes Oil & Gas production, transportation, refining, energy & process, bioenergy, petrochemicals as well as industrial gas
3. Other industries includes among others chemicals, food processing, agriculture, pharma
Limited exposure to most
affected oil and gas segments Well-balanced
geographical presence
Most of the sales are
service driven
41%
59%
Capital 41%
Services 59%
Net sales split services / capital equipment1
7 Flow Control by John Quinlivan
27 %
36 %
6 %
24 %
6 %
Europe 27%
North America 36%
South America 6%
Asia Pacific 24%
Middle-East and Africa 6%
Net sales split1
10%
46% 15%
15%
14%
Oil & Gas midstream 10%
Oil & Gas downstream² 46%
Pulp & Paper 15%
Mining 15%
Other³ 14%
Net sales by industry1
Where are we today?
© Metso © Metso Capital Markets Day 2015 Capital Markets Day 2015
Refinery capacity3
Total Refinery capacity (CDU mmbd)
0
20
40
60
80
100
120
140
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
Despite the market turmoil, we remain positive on the mid-term development of Flow Control end markets
Flow Control by John Quinlivan 8
Oil price1
Brent price (USD/barrel)
O&G CAPEX & OPEX2
USD Billion
Chemicals CAPEX growth4
1. Forecasts from Citi, Deutsche bank, Morgan Stanley, EIA, Economist Intelligence Unit, OECD
2. Morgan Stanley forecasts
3. Global Data forecasts
4. IHS forecasts
-5%
0%
5%
10%
15%
20%
25%
20
05
20
07
20
09
20
11
20
13
20
15
20
17
20
19
0
20
40
60
80
100
120
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
1,200
1,500
1,800
2,100
900
600
300
0
20
20
20
19
20
14
20
15
20
16
20
17
20
18
20
13
Average
forecast
6% -15%
6%
Forecasts in 2014
Forecasts in 2015
Where are we today?
© Metso © Metso Capital Markets Day 2015 Capital Markets Day 2015 Flow Control by John Quinlivan
Flow Control will continue as a high performer - and will aggressively seek growth
9
Our performance
has continued to
be strong
We have been
resilient to market
drop
We have a lot of
growth
opportunities to
tap into
Expanding our channels to market
Expanding our market presence horizontally
Continuing to improve our service capabilities
and network
We will grow by
Making acquisitions in flow control
Developing our portfolio to support growth
Continuing to build and strengthen our
operational excellence
© Metso © Metso Capital Markets Day 2015 Capital Markets Day 2015 Flow Control by John Quinlivan
We are developing additional channels to market globally
- Stocking distributors serving our customers in their day-to-day
needs
- Partnering with existing flow control channel partners that are
expanding their global footprint
- Growing our OEM customer base
- Expanding our industry-specific partners network
We have the portfolio to be attractive to additional channels
to market and we will further expand the portfolio
We are expanding our channels to market
10
What will we do?
© Metso © Metso Capital Markets Day 2015 Capital Markets Day 2015 Flow Control by John Quinlivan
We are expanding our market presence horizontally
11
• Strengthening our position in core
industries of oil and gas, mining and
process while enhancing our product
portfolio to grow our presence
horizontally
• Entering into other industries with our
slurry pumps portfolio - expanding
beyond mining
• Acquisitions of businesses to expand
our horizontal position
What will we do?
© Metso © Metso Capital Markets Day 2015 Capital Markets Day 2015
We continue to expand our service capabilities and network
• Large installed base creating a lot of opportunities
• Continue developing our strong local presence
- 5 new service centers in 2015 further expanding our network
• Installed base information management providing our
customers with more efficient use of their flow control
assets
• Introducing new service capabilities increasing our
customers productivity
• Improving service processes and tools
Flow Control by John Quinlivan 12
Most of the sales are
service driven
41%
59%
Capital 41%
Services 59%
Net sales split services / capital
equipment*
* Percentage shares are for valves and pumps only – excluding process automation systems, based on rolling 12 month ending Q2 2015
What will we do?
© Metso © Metso Capital Markets Day 2015 Capital Markets Day 2015 Flow Control by John Quinlivan
We continue to build and strengthen our operational excellence to support growth
13
Productivity improved
from 77% to 89% globally
Productivity improvements since
2012 in all hubs
Efficiency improved by over 6%
Order engineering and management
revamped between 2013-2015
Annual savings achieved:
4% of direct material spend
Global procurement cost-saving
model, KPIs and tools implemented
2012/13
Product transfers to cost
competitive countries,
New facility investments
Continuous footprint and capacity
optimization
LTIF improved from 6.2 to 3.2 in three years Continuous HSE development
What will we do?
© Metso © Metso Capital Markets Day 2015 Capital Markets Day 2015 Flow Control by John Quinlivan
Major initiatives to develop front-end processes and tools leading to commercial excellence
14
• We focus strongly on commercial
excellence and creating best-in-class
front-end processes and tools
globally
- Sales process development
- Product configurator
- Implementing Salesforce.com
- Pricing
What will we do?
© Metso © Metso Capital Markets Day 2015 Capital Markets Day 2015
Neles® globe valve
expansion globally
Developing control
valve offering
Portfolio development to support growth
Coal Launching new
Neles NDX positioner
Target to boost OEM business
Channel partners
development
Expanding mining
pumps range
Competitive Mill Discharge
Pump for mining
Expanded global sales
network
Introducing new service
solutions and products
15 Flow Control by John Quinlivan
Increasing service
solution portfolio
What will we do?
© Metso © Metso Capital Markets Day 2015 Capital Markets Day 2015 Flow Control by John Quinlivan
Flow Control will continue as a high performer - and will aggressively seek growth
16
Our performance
has continued to
be strong
We have been
resilient to market
drop
We have a lot of
growth
opportunities to
tap into
Expanding our channels to market
Expanding our market presence horizontally
Continuing to improve our service capabilities
and network
We will grow by
Making acquisitions in flow control
Developing our portfolio to support growth
Continuing to build and strengthen our
operational excellence
© Metso © Metso Capital Markets Day 2015 Capital Markets Day 2015 Flow Control by John Quinlivan 17
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