Financial success is one of the fundamentals for being able to create value for stakeholders. Outotec’s long-term financial targets involve profitability and continuous growth. Good financial management is of key importance to Outotec’s success.
In the recent review of material topics with stakeholders, financial performance was raised as a topic having a major impact on stakeholders, a fundamental Outotec must take good care of. The company’s financial performance has a direct impact on employees’ wealth and commitment, stakeholder value, jobs available and tax income of local communities.
The key resources for value creation are the deep know-how of Outotec’s 4,012 experts, 6,467 national technology patents, three research and development centers, as well as the Outotec brand. In addition, long customer and supplier relationships are essential resources for the company.
Outotec generates employment and wealth in local communities as an employer and a buyer of goods and services. The company also contributes to local communities through university cooperation and subcontracting R&D work. Outotec technologies often improve the conditions of the environment surrounding customers’ plants.
In 2018, Outotec paid EUR 7 million in current income taxes. Outotec neither paid dividends nor contributions to charities in 2018 due to negative earnings per share in 2017. To enhance its ability to create value over the cycle, Outotec aims to maintain its leadership in sustainable technologies and grow its service business.
Our intellectual resources include
- Outotec brand and reputation
- IPR's consisting of 761 patent families, 6,467 national patents and trademarks
- Tacit knowledge
- 2 R&D centers, 1 dewatering technology center
Our operational resources consist of
- Operations, legal entities and branch offices in 42 countries
- 2 manufacturing units, 7 assembly or service workshops, 1 ceramic plate production unit, several warehouses
Key natural resources used for value creation
- Steel 3,481 tonnes
- Wood packaging 348 tonnes
- Energy 155 TJ
- Water withdrawal 63,175 m3
We have ISO 14001 global certification for environmental management.
The key resources for value creation are the deep know-how of Outotec’s
- 4,012 experts
- Outotec culture
- 2,750 supervised contractors
Long relationships with customers and suppliers are essential resources for Outotec since some 90% of our manufacturing (based on monetary value) is sourced from external suppliers.
- Long customer relationships
- 2,500 active and direct suppliers
- Relationships with the academic community
Capitalization in 2018 was EUR 377 million, of which
- EUR 227 million was funded by equity and
- EUR 150 million by a hybrid bond
Added value to stakeholders
With our technologies and services, customers can build profitable businesses sustainably. In addition, customers benefit from
- Sustainable products and services
- Long-term support and partnership
- Social license to operate
The key values on the planet Earth from Outotec operations are
- 6.2 million tonnes of CO2e emissions avoided annually through use of Outotec technologies, the monetary value is EUR 96 million
- Increased resource efficiency
As employees are Outotec's key asset, the most significant economic value distributed by Outotec is
- Wages and salaries EUR 313 million
In addition, we create added value to employees
- Wealth and professional growth
- Safe workplace, LTIR 1.9
- Respecting human rights
As the majority of Outotec’s manufacturing is sourced from external suppliers, we play an important role in supporting local businesses. In large projects, several hundred local engineers and other specialists, contractors and service providers work for us. A single large project can consist of over 10 million working hours at customer's site. Most of this work is done by local suppliers or subcontractors. Added value to our suppliers:
- Long-term partnerships
- Economic sustainability, EUR 570 million spent on suppliers.
- Responsible business practices
Outotec's university cooperation and subcontracted R&D work generates local jobs and enhances skills and knowledge development, creating value to the academic community:
- We subcontracted R&D work to universities and small and medium-sized enterprises for EUR 8 million in 2018.
- Thesis opportunities and internships for students
- Enhanced skills and knowledge of students
As the majority of Outotec’s manufacturing is sourced from external suppliers, we play an important role in supporting local businesses and generating employment and wealth in local communities.
- EUR 226 million spent on businesses local to our major operations in Finland, Australia, Germany, South Africa, and Chile
- Current income taxes EUR 7 million, we are committed to being a compliant taxpayer in each country where we operate.
- Community investments 0
- Enhancing skills through cooperation with local universities and students
- Often Outotec technologies help to improve the environmental conditions of the communities surrounding our customers' plants, which improves the living conditions of people, contributes to a healthier population and boosts agriculture and small businesses.
Investors and financiers
Outotec did not pay dividends in 2018 due to negative earnings per share in 2017. To enhance its ability to create value over the cycle, Outotec aims to maintain its leadership in sustainable technologies and grow its service business.
- Market capitalization EUR 563 million
- Compliance and transparency
- Net finance expenses EUR 7 million
- Interest on hybrid bond EUR 11 million
- Dividends 0
Economic value created
Economic value generated (GRI 201-1)
Sales EUR 1,276 million . /. Operating costs EUR 1,014 million = The economic value generated in 2018 was EUR 236 million
0 retained in the company
We made significant progress in several areas in 2018. Our order intake increased 4%, sales increased 12%, and profitability continued to improve in the Minerals Processing segment. The profitability turned negative due the EUR 110 million provision for the ilmenite smelter project booked in the fourth quarter of 2018. Excluding this provision, our adjusted EBIT would have almost doubled from EUR 34 million in 2017 to EUR 64 million. Due to the negative result in 2017, no dividend was paid to shareholders in 2018.
We simplified our organizational structure to support our long-term strategic targets. Our plan is also to strongly develop our service business to balance the cyclicality of the mining industry. Our service sales in 2018 were EUR 497 million and our target is to grow it annually by over 10%. Our long-term service contracts, as well as modernizations prolonging the lifetime of older equipment, counteract the highly cyclical mining and metals industry.
At the end of 2018, Outotec’s market capitalization was EUR 563 million.