Metso Outotec to divest Recycling business

Company announces its new strategy and financial targets.

Subscribe
November 2, 2020

Metso Outotec, headquartered in Helsinki, has announced plans to divest its Recycling business as part of a new strategy focused on growth and improving profitability.

Metso Outotec was created earlier this year through the combination of Metso Minerals and Outotec.

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.

Metso Outotec’s Recycling business sells products and services for metal and waste recycling, including balers, briquetters, metal crushers, shears, shredders, preshredders and services for processing virtually every type of metal scrap as well as shredders, preshredders and services for reducing municipal solid waste, commercial and industrial waste, construction and demolition waste, plastics, paper and cardboard. Its sales in 2019 were 156 million euros, or $181 million, and it reported an adjusted earnings before interest, taxes and amortization (EBITA) margin of approximately 6 percent. The Recycling business employs roughly 300 people, and its main locations are in Horsens, Denmark; Düsseldorf, Germany; and San Antonio.

“We have made a strategic decision to exit the Recycling business,” company President and CEO Pekka Vauramo says. “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.” 

Metso Outotec says its foundation for implementing its strategy and achieving its goals is based on its comprehensive product and service offering as well as process expertise throughout customers’ value chains, an extensive installed base and strong brand, strong aftermarket presence and know-how and industry-leading, sustainability-focused technology, research and product development expertise. 

As part of the strategy work, Metso Outotec’s board of directors has approved the following financial targets:

  • adjusted EBITA margin of more than 15 percent over the cycle;  
  • maintaining an investment-grade credit rating;  
  • dividend payout of at least 50 percent of earnings per share; and
  • progress in sustainability in alignment with the 1.5 °C commitment.

“The financial targets underline our intention to improve the company’s profitability and drive sustainable solutions in our industry,” Vauramo says. “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.”  

Metso Outotec says its key customer segments are aggregates, minerals processing and certain areas of metals refining. The company adds that its target markets “offer attractive growth prospects and have significant potential for further growth and development of the aftermarket business” and benefit from trends toward urbanization, infrastructure projects, electrification of societies and climate change mitigation.

Metso Outotec says its primary target in the selected segments is to develop its product and service business by leveraging its comprehensive process expertise.

The company says its strategy will be implemented through four priorities: integration and financial performance, customer centricity, sustainability and performance culture. These priority areas are visible in each business area’s action plans and their realization is measured and managed with several performance indicators.

“Metso Outotec’s new strategy is coherent and clear, and it will help us to become an industry-leading company in customer satisfaction, sustainability and financial performance,” Vauramo says.

“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 program 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,” Vauramo continues.

The company says its management will present its strategy and business plans in more detail at the virtual Capital Markets Day Nov. 11. Additional information about the event is available at www.mogroup.com