Market  outlook

The overall market sentiment is supported by growing metals demand in the emerging economies. China alone is expected to represent nearly 50% of the growth in 2010. Metals demand outside China also shows signs of recovery. In addition, there is a continuous need for modernizing and debottlenecking at mine sites and metals processing plants as well as for building more energy-efficient and sustainable plants. According to several mining and metals companies’ announcements, their investments will increase in 2010 compared to 2009.  Following the recession, there have been many active sales projects, but industry lead times tend to be long, especially in large investments.

Non-ferrous Solutions  

The activity in the Non-ferrous market is picking up. Gold, copper and zinc projects are becoming especially active. Investments in concentrator technologies are progressing faster than in smelting, refining and solvent extraction/electro-winning technologies. Competition continues to be intensive for new projects. Long-term fundamentals are strong and are improving as ore grades decline and more processing capacity and advanced technology solutions will be needed. At the same time, environmental regulations tighten and the cost of energy and water increases. Thus, new technologies and modern solutions are needed. Outotec’s leading market position in providing complete solutions to the ore-to-metal value chain is further strengthened by the acquisitions of Larox, Ausmelt and Millteam.  

Ferrous Solutions  

There are strong signs that the demand for raw materials used in steel making, iron ore and coking coal will continue at record levels. The demand for stainless steel raw materials shows strong growth and the activity in ferroalloy projects is picking up. Brazil, India and South Africa continue to rapidly develop their infrastructure and to utilize their large natural resource base. There are several steel plant expansions and new investments under development in Brazil and India, catering particularly to the Chinese market where concentrates and pellets are in continuous demand. Outotec’s sustainable solutions - both in ferroalloys as well as in iron ore sintering and pelletizing technologies - are in strong demand because of their energy efficiency and environmental aspects.  

Energy, Light Metals and Environmental Solutions  

The demand for aluminum is growing. Consequently, alumina and bauxite projects are revitalizing, particularly in China and in regions which cater to the Chinese market. The Middle East is also focusing more on building their refining capacity.   The business area’s environmental solutions include sulfuric acid plants, applications for gas cleaning and heat recovery systems and coke as well as industrial water treatment. Based on the continuous need for metals, and thus the processing of concentrates, the outlook for the sulfuric acid market remains positive as sulfuric acid is needed in hydrometallurgical processes and is produced as a by-product in the pyrometallurgical processes. The sulfuric acid market is also driven by the continuous need from the fertilizer industry. In addition to sulfuric acid plants, pyrometallurgical processes require off-gas cleaning and effluent and water treatment technologies. Outotec’s market position as a supplier of advanced sulfuric acid plants is further strengthened following its acquisition of Edmeston.   New opportunities in environmental technologies, such as materials recycling, are continuously increasing. Energy technology markets include the utilization of alternative energy resources, such as oil shale, oil sands and biomass. The Enefit technology developed for Eesti Energia’s oil shale plant under construction in Narva, Estonia, can be applied globally. The world's recoverable oil shale and oil sand resources are many times greater than those of conventional oil reserves, with large deposits found in the US, Canada, Brazil, China, Jordan, Russia and Estonia.  

Services business  

Outotec’s Services business is driven by capacity utilization levels, modernizations, upgrades and new capital investment projects. Customer needs for spare parts, services and modernizations are increasing due to re-commissioning of production lines. Customers have various needs for services ranging from single spare parts to completely outsourced service agreements. This industry trend gives growth opportunities on many levels and supports the company’s goal to be a life cycle partner for its customers. The acquired businesses will further strengthen Outotec’s service offering and capabilities globally.  

Financial guidance for 2010

Based on the order intake in the reporting period, management expects that in 2010:

• order intake will be significantly higher compared to 2009
• sales will grow to approximately EUR 1 billion due to acquisitions, and
• operating profit, which includes EUR 10 million purchase price allocation amortizations, will remain on the same level as in 2009, excluding one-time items.  

In 2010, one-time costs, which are included in one-time items, are estimated to be in the range of EUR 20-25 million. One-time costs related to the integration of the acquired businesses are estimated to be recorded in the financial results of the third quarter.  

Operating profit is dependent on exchange rates, product mix, timing of new orders and project completions.