Metsos fjerdekvartalstall på linje med våre estimater

Metso slapp fjerdekvartalstallene tidlig og disse var betydelig lavere enn både ledelsen og markedet ventet. 

Morningstar Equity Analysts 16.01.2018 | 9:16
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Metso pre-released fourth-quarter EBITA numbers that were in line with our estimates but substantially below management and market expectations. As expected, Metso returned to growth in 2017 (up 4.7% compared with the year-ago period), but 2017 adjusted EBITA for minerals decreased to EUR 168 million (Morningstar estimate EUR 165 million) from EUR 190 million in 2016, owing to cost overruns and write-downs related to mining projects (especially in the third quarter), negative mix effects (lower margin equipment and wear parts), and continued pricing pressure for equipment sales, as well as services.We believe the weak margin of the services business in the fourth quarter is due to discounting on extensions of the normally high-margin service contracts.

We previously indicated that the shares were overvalued in our note following Metso's third-quarter results, as the share price had already fully built in the strong recovery underpinned by strong order-book growth in first-quarter through third-quarter 2017 (up 12%) and strong order growth for the services business during the same period (up 13%). For this backlog to translate into profitability, Metso would have to deliver flawless execution, which in our view is a big ask.

Management's fourth-quarter profit warning corrected market’s bullish expectations for 2017 profitability, but despite the current share price correction, we still believe shares are overvalued. As fourth-quarter developments were in line with our expectations, we have not changed our estimates and maintain our fair value estimate of EUR 24 per share, along with our no-moat rating.

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