Metso to continue its transformation by adopting a new strategy focusing on growth in its higher-margin businesses

Metso to continue its transformation by adopting a new strategy focusing on growth in its higher-margin businesses

Metso Corporation's stock exchange release on July 31, 2014 at 12:00 noon local time

Metso Corporation has decided on a new strategy and a new operating model, designed to drive growth in the company's core businesses and strengthen its financial performance and value creation. This will also help Metso continue its transformation into a services and products-focused industrial player with attractive structural growth and high margin opportunities across its portfolio of services, products, and system deliveries.

Under the new strategy, Metso's core customer industries will be mining, oil & gas, and aggregates. Metso's goal is to strengthen its position as the leading technology and services provider for end-to-end minerals processing and to become a leader in flow control within the oil & gas and mining industries.

As part of its new strategy, Metso will study strategic alternatives, including potential divestment, for its current Process Automation Systems business, which primarily serves the pulp, paper, and power industries.

Metso's new strategy and operating model will underpin its transformation into a focused company with businesses that are largely driven by its customers' production activities. Metso's goal is a business model, where more than 50% of activities consists of services, products account for a  sizable proportion of net sales, and system deliveries concentrate on proprietary technology that  supports its future services business. This type of portfolio will offer the opportunity for positive long-term profitability and resilience to the cyclicality typical of Metso's customer industries.

Increased ambition level

Metso's higher level of ambition is also reflected in the company's the new financial targets:

- net sales growth exceeding market growth
- EBITA margin (before non-recurring items) exceeding 15% within the next three years,
and
- return on capital employed (ROCE) before taxes of at least 30%

Metso's growth over the short term will be driven by opportunities in services, flow control, and aggregates, which together represent about 80% of the company's total net sales. Longer-term growth is also anticipated in the mining equipment business.

Services growth will be achieved through new products, both in spare and wear parts, as well as in performance services. Metso will also continue to expand its offering and develop an ever-stronger presence close to its customers.