Finnish mining and metal manufacturing equipment provider Outotec has issued its financial results for the second quarter and the first half of 2014.
In the second quarter Outotec reported an operating loss of €300,000, compared to an operating profit of €39.9 million in the corresponding period of 2013. The company's sales revenues fell 34 percent to €335.2 million compared to the same quarter of the previous year. Meanwhile, Outotec's order intake was €379.5 million in the given quarter, increasing by 80 percent quarter on quarter and four percent year on year.
In the January-June period this year, Outotec's operating profit decreased by 88 percent to €8.4 million compared to the first half of 2013, due to approximately €20 million cost overruns in five large capital expenditure projects the majority of which are expected to be completed by the end of 2014, while the company's sales revenues was €679.1 million, down 8.5 percent year on year. During the first half of the year, Outotec's order intake amounted to €589.8 million, decreasing by 31 percent year on year.
Outotec has revised down the sales guidance from €1.5-1.8 billion to €1.4-1.6 billion for the whole year as a result of slowness in project implementation in Russia due to increased geopolitical uncertainty and lower sales in capital expenditure business due to delayed order intake in the beginning of the year.
Based on several market institutes' estimates, metals demand is expected to grow on average two to five percent year on year, in line with global GDP growth. In the short-term, however, uncertainties of the global economy, fluctuations in metal prices, and recent capacity additions especially in iron ore are expected to continue impacting both capital investments and operational spending. According to Outotec, uncertainty regarding China's growth is the main contributor for the current metals demand uncertainty as the country uses some 40-60 percent of all metals. The mining and metals industries' capital expenditure is expected to still contract in 2014.