Metso Oyj (METSO) Earnings Call Transcript & Summary

Dear Shareholders, my name is Kari Stadigh and I have acted as the Chairman of the Board of Metso Outotec since the termination of last year's AGM. The year 2021 feels distant now. There's war in Europe, something tragic and something to be absolutely condemned, which affects and worries us all. However, at this point, prior to the Annual General Meeting, it's important to comment last year's events. Next, a few words of the year 2021 from the Board's point of view on the financial year. Metso Outotec Board of Directors worked hard in 2021 and had 13 meetings. Attendance rate in board meetings was nearly 100 and the committee meetings 100. The 7 members of the Board have background of both Metso and Outotec, which made it easy to follow up the progress of integration, for example. The Shareholders' Nomination Board proposes to the AGM that the number of Board members be 9 and that Brian Beamish and Terhi Koipijärvi be elected as new members. The Shareholders' Nomination Board holds that they would, with their international industry background and experience, strengthen the Board's competence in developing sustainable business and industries. As for the financial year, two important things are to be noted. First, the improvement of results, which led to strengthening of the company's financial position, and thus, finalization of Metso Outotec integration. The Metso Outotec integration that started in June 2020 progressed effectively in 2021. The Board actively monitored this integration process, and we are very happy with this process in difficult pandemic conditions. The objectives set for cost and sales synergies were achieved by the end of 2021, actually earlier than planned. Also, cost synergies were achieved much more than originally planned. Metso Outotec customer industries started to recover from the pandemic shock towards the end of 2021. The positive development went on throughout 2021, and annual orders received clearly grew from the year before. Due to strong order books, sales started to increase during the second half of the year. Profitability increased and the balance sheet was strengthened. As a conclusion, the first full financial year of Metso Outotec was successful and it gives a good start for the coming years. On the basis of this, the Board proposes to the AGM that a dividend of EUR 0.24 per share of the financial year 2021 be paid to shareholders in 2 equal installments, one in May and one in November. In year 2022, we focus on growth, both organically and by carrying out complementing acquisitions and continue our strategic review of the Metals segment. At the same time, we keep on reacting to business environment changes in the best possible way. Lastly, I would like to thank the entire Metso Outotec management and staff work for well done in 2021. Now after the successful integration, Metso Outotec is in an excellent position to create significant value to its customers, shareholders, staff and other stakeholders. I would also like to thank our shareholders for their trust. I hope that you continue this journey with us. Again, we organized the AGM under exceptional circumstances due to corona pandemic. Therefore, we only have the President and CEO, Pekka Vauramo, the Chairman of the AGM, Attorney-at-law Mikko Heinonen; and the scrutinizer of the minutes, Metso Outotec's General Counsel, Nina Kiviranta, present here at the venue. Even though we organized a meeting without the presence of shareholders at the venue, the company has actively distributed information and made it possible for shareholders to follow this meeting online in real-time. The shareholders have also had the possibility to submit their questions in advance. In addition, after the general meeting, our CEO, Pekka Vauramo, is happy to answer any shareholder's questions as stated in the notice to this meeting. I establish that the Metso Outotec Annual General Meeting 2022 is now opened. And next, I give the floor to the Chairman of the meeting as stated in the notice to this meeting, Attorney-at-law, Mikko Heinonen. You have the floor.

Thank you very much. And I would also like to wish all our webcast viewers warmly welcome to follow our general meeting. My name is Mikko Heinonen and I act as the Chairman of this meeting and also I keep the minutes of this meeting. Before the actual items on the agenda, let's go through some practical matters. The meeting will be conducted in Finnish and it will be interpreted into English. Metso Outotec will record the meeting for the company use. As stated in the notice to this meeting, according to the decision of the company's Board of Directors, the general meeting is organized based on the temporary legislative act without shareholders and their proxy representatives present at the venue. Shareholders could participate in the general meeting only by voting in advance, by submitting counterproposals and by asking questions in advance. A pre-recorded presentation by the Chair of the Board, Kari Stadigh, and company's President and CEO, Pekka Vauramo, was published on the company's website on April 1 and the presentation is not a part of the general meeting. The general meeting can be followed via webcast on the company's website, but following the webcast is not considered to be official participation in the general meeting and it is not possible to ask questions or vote during general meeting online. The list of votes is confirmed based on advanced voting only. After the general meeting, the streaming will continue in the form of a separate virtual event in which participants of the event will have the possibility to ask questions of the company representatives. This virtual event is not an official part of the AGM. And the questions asked during it are not questions referred to in Chapter 5, Section 25 of the Limited Liability Companies Act. Shareholders and their proxy representatives have been able to only vote in advance. Voting has already been carried out on all decision items on the agenda. According to the temporary legislation, shareholders were able to vote against the proposal without presenting a counterproposal. A summary of votes given in advanced voting will be attached to the minutes. On the basis of advanced voting, we can establish that all proposals put to the general meeting have been adopted. We go through the voting results in each agenda item, and they will also be available in the minutes of this meeting. All the formalities related to this general meeting are included in the notice to this meeting and the Limited Liability Companies Act. They will be available also in the minutes of this meeting, and I would invite you to familiarize yourself with the minutes of this meeting. They will be available on the company's website on May 5 at the latest. Due to the nature of this meeting, I will not read out all the formalities that will be included in the minutes. Next, point 3, election of a person to scrutinize the minutes and to supervise the counting of votes. As stated in the notice to this meeting, Nina Kiviranta, the company's General Counsel, will scrutinize the minutes and supervise the counting of votes at the General Meeting. Point 4, regarding the legality of the meeting. We can establish that the notice to the general meeting has been published according to the Board's decision on the company's website and as a stock exchange release on February 10, 2022. Also, the notice to the general meeting has been published on Helsingin Sanomat on February 10, 2022. The company has not received any counterproposals from the shareholders to be voted or by the deadline mentioned in the notice to this meeting nor has the company received any questions in advance by the deadline mentioned in the notice to this meeting. We can establish that the AGM has been convened according the company's Articles of Association, the Limited Liability Companies Act and the temporary legislation, and it has therefore been legally convened and constitutes a quorum. The notice of the meeting will be appended to the meeting minutes. Then we move on to agenda item 5 regarding the attendance at the meeting and adoption of the list of votes. Here at the meeting venue, only the Chairman of the meeting, i.e. myself, Attorney-at-law Mikko Heinonen; and Nina Kiviranta, the company's General Counsel, who will scrutinize the minutes and supervise the counting of votes and the Chairman of the Board, Kari Stadigh; and the company's President and CEO, Pekka Vauramo; and technical staff are present. Due to the exceptional situation and the application of the temporary legislation, no other members of Metso Outotec Board or management team are present at the venue. As stated in the notice to this meeting, only shareholders who have registered to this general meeting, either personally or by their proxy representative, and voted in advance in accordance with the instructions set out in this notice and who have the right to attend the general meeting in accordance with Chapter 5, Section 6 and 6A of the Limited Liability Companies Act will be recorded to have attended the general meeting. Innovatics Oy has drafted a list of participants on the basis of information delivered to it. The company is not aware of any technical or other problems related to advanced voting. Therefore, the shareholders' right to participate and the legality of the counting of votes have been reliably established. 1,138 shareholders representing 583,759,471 shares and 580 -- and the equal number of votes have participated in the advanced voting representing approximately 70.42% of the total number of shares and votes of the company. We have established that the majority of votes as required by law has voted in favor of each proposal made to the AGM. The list of participants and the list of votes are thereby established and will be appended to the minutes of this meeting. We move to the actual agenda items. And the first one is agenda item 6, presentation of the financial statements, the consolidated financial statements, the report of the Board of Directors and the auditor's report for the year 2021. As noted in the notice to the meeting, the annual report, including the financial statements, the report of the Board of Directors and the auditor's report have been published as a stock exchange release and on the company website on March 16, 2022. Company President and CEO, Pekka Vauramo's video presentation recorded in advance including a review of the company's operations in the financial year 2021 has been available since April 1, 2022 on the company website. In the President and CEO's video review, the following is noted, among other things. The company's financial results strengthened significantly last year. Organizational culture and employee engagement developed positively and progress was made in sustainability work and its objectives. Customer industries have continued to recover from the shock caused by the pandemic and orders grew by 31%. Turnover grew last year by 9%. Adjusted EBITA increased by 22% to EUR 547 million, and adjusted EBITA margin increased by almost 1.5% to 12.9%. Metso Outotec's financial position was strong at the end of the financial year. The company's net debt ratio was 21% and equity ratio 43%. It was also noted in the video review that at the end of 2021, the company had reached its integration targets approximately 1 year in advance and the cost synergies were exceeded. Thus, the integration project and its monitoring was concluded at the end of the year. Russia's invasion of Ukraine has caused changes in the business environment of the company. Russia accounted for 10% of Metso Outotec's net sales in 2021, and more about this was also shared in the first quarterly review of this year published today. The company announced in early March that deliveries -- the company will further focus on growth after this integration process. So this, in regards to the financial statements, and we will now move to deal with the auditor's report, which is included in the financial review of the annual report and has been available for shareholder review prior to the AGM. I shall now present the opinion of the auditor in the auditor's report. In our opinion, the consolidated financial statements give a true and fair view of the group's financial position as well as its financial performance and its cash flows in accordance with International Financial Reporting Standards, IFRS, as adopted by the EU, and that the financial statements give a true and fair view of the parent company's financial performance and financial position in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory requirements. As participation in the AGM has been possible only by voting and presenting counterproposals and questions in advance, the company's annual report 2021, which includes the company's financial statements, the report of the Board of Directors and the auditor's report is deemed to have been presented to the general meeting. The financial statement documents shall be attached to the meeting minutes. And we move to agenda item 7, adoption of the financial statements. In this agenda item, the total number of shares and votes was 583,751,899 shares and votes corresponding to approximately 70.42% of all shares and votes in the company. For the adoption of the financial statements, 583,324,043 votes were cast representing more than 99.99% of the total votes cast. And 215 votes were cast against the adoption of the financial statements representing less than 0.01% of the total votes cast. And 427,641 shares were represented in this item that abstained from casting a vote. Based on this advanced voting result, the AGM has adopted the financial statements for the financial year 2021. Next, agenda item 8, resolution on the use of the profit shown on the balance sheet and the payment of dividend. As the Chairman of the Board noted in the beginning of the meeting, the Board has proposed to the AGM that a dividend of EUR 0.24 per share be paid based on the balance sheet to be adopted for the financial year 2021. The main points of the proposal of the Board of Directors will now be shown on the screen. The full proposal is available on the company website and is included in the notice to the meeting. It shall be shortly noted that this EUR 0.24 per share dividend, altogether about EUR 199 million, will be paid in 2 installments so that the first dividend installment, EUR 0.12 per share, shall be paid to the shareholders who are registered as shareholders in the company's register of shareholders as maintained by Euroclear Finland Oy on the dividend record date April 25, 2022. And according to the proposal, the first dividend installment is to be paid on May 2, 2022. And the second dividend installment, also EUR 0.12 per share, shall be paid in November 2022 to the shareholders who are registered as shareholders in the company's register of shareholders as maintained by Euroclear Finland Oy on the dividend record date. And the Board of Directors shall resolve on the dividend record date and the date of payment of the second dividend installment in its meeting agreed to be held on October 27, 2022. Based on the current rules of the Finnish book entry system, the dividend record date would be October 31. And according to the Limited Liability Companies Act, in order to distribute profits, the company must be solvent and the proposed profit distribution may not compromise the liquidity of the company. All shares in the company are entitled to a dividend with the exception of own shares held by the company on the record date for dividend payment. In this agenda item, the total number of shares and votes represented was 583,746,716 corresponding to approximately 70.42% of all shares and votes in the company. And for this proposal, 583,133,461 votes were cast representing approximately 99.9% of the total votes cast. And against the proposal, altogether, 609,835 votes were cast representing approximately 0.1% of the total votes cast. The number of those shares that abstained from casting a vote were 3,420. Based on the advanced voting results, the AGM has decided on the distribution of profit in accordance with the proposal of the Board of Directors. And then agenda item 9, discharging the members of the Board of Directors and the CEO from liability for the financial year that has ended at the end of 2021 and the discharge from liability concerns all those who have acted as members of the Board or as the President and CEO during the financial year 1st of January 2021 and 31st of December 2021. The total number of shares and votes represented in this agenda item was 583,688,094 corresponding to approximately 70.41% of all shares and votes in the company. And for the discharge from liability, 577,926,987 votes were cast representing approximately 99.12% of the total votes cast. And against the discharge from liability, altogether 5,159,534 votes were cast representing approximately 0.88% of total votes cast. And the number of those shares that abstained from casting a vote was 601,000. Based on the advanced voting, the AGM has decided to discharge the members of the Board of Directors and the President and CEO from liability for the financial year 2021. Next, point #10, adoption of the company's remuneration report for governing bodies. According to the notice of this meeting, our next item on the agenda is adoption of the company's remuneration report for 2021. According to the company's remuneration policy of 2021, we publish that our shareholders and their proxies may have participated in the AGM only by voting in advance and by putting questions and counterproposals in advance. The company's remuneration report that has been published by stock exchange release on March 16, 2022, and on the company's website has been presented to the general meeting. The Board of Directors has proposed to the AGM that it adopts through an advisory resolution the company's remuneration report for governing bodies. In this agenda item, a total of 583,749,329 shares and votes were represented representing approximately 70.42% of the total numbers -- number of shares and votes of the company. So altogether, 542,140,717 votes were cast in favor of adopting the remuneration report representing approximately 92.88% of the total number of votes and 41,000 -- 41,570,787 votes were cast against the adoption of the remuneration report representing approximately 7.12% of the total number of votes and 37,285 shares abstained from voting. On the basis of this advanced voting, the AGM resolved the adoption of the company's remuneration report for governing bodies through an advisory resolution. The company's remuneration report for governing bodies will be appended to the minutes of this meeting. Next, point 11, a resolution on the remuneration of the members of the Board of Directors. Next, I'll show on the screen the main points of the Shareholders' Nomination Board proposal for resolution on the remuneration of the members of the Board. The entire proposal is available on the company's website and attached to the meeting notice. In this agenda item, well, the main points are that the Chairman of the Board, EUR 156,000; Vice Chair, EUR 82,500; and other Board members, EUR 67,000; and the Chairman of the Audit and Risk Committee an additional EUR 23,800; and other members an additional remuneration of EUR 10,300 each. And then the Chair of Remuneration and Personnel Committee, EUR 12,400 and other members of that committee EUR 5,150. And also, the Shareholders' Nomination Board has proposed at the general meeting that as a condition for the annual remuneration the Board members be obliged directly based on the general meetings decision to use 20% or 40% of their fixed total annual remuneration for purchasing Metso Outotec shares from the market at a price formed in public trading and the purchase be carried out within 2 weeks from the publication of the interim report for January 1, March 31, 2022 and April 21, 2022, i.e., from this day onwards. Also, the Shareholders' Nomination Board has further proposed at the general meeting that the members of the Board of Directors be paid the following meeting fees for attendance at each Board and Committee meeting: EUR 900 for meetings requiring travel within the Nordic countries, EUR 1,800 for meetings requiring travel within a continent, and EUR 3,000 for meetings requiring intercontinental travel and EUR 900 for meetings with remote attendance. In this agenda item, 583,749,399 shares and votes were represented corresponding again approximately 7.42% of all of the company's shares and votes. 572,201 votes were cast in favor of adopting the proposal representing approximately 99.97% of the total number of votes. And 158,577 votes were cast against the proposal of the Shareholders' Nomination Board. And approximately -- well, 18,621 shares abstained from voting. On the basis of this advanced voting, the AGM resolved that the members of the Board of Directors be paid according to the proposal of the Shareholders' Nomination Board. Next item on the agenda, point 12, resolution on the number of members of the Board of Directors. And also here, the Shareholders' Nomination Board has proposed to the general meeting that the number of members of the Board of Directors shall be 9. In this agenda item, 583,746,121 shares and votes were represented, approximately 70.42%, and altogether, 583,737,335 votes were cast in favor of adopting this proposal representing approximately 99.99% of the total number of votes. Only 5,366 votes were cast against the proposal and 3,420 shares abstained from voting. On the basis of this advanced voting result, the AGM resolved that the number of members of the Board of Directors shall be 9. Next, point 13 on the agenda, election of members and Chair as well as Vice Chair of the Board of Directors. Well, here, the Shareholders' Nomination Board has made some preparations and the Shareholders' Nomination Board has proposed to the general meeting that the following current members of the Board of Directors be reelected as members of the Board for the term ending at the closing of the Annual General Meeting 2023. So the current members are Klaus Cawen, Christer Gardell, Antti Makinen, Ian W. Pearce, Emanuela Speranza, Kari Stadigh and Arja Talma. The Shareholders' Nomination Board has also proposed that the general meeting resolves to reelect Kari Stadigh as the Chair of the Board of Directors; and Klaus Cawen as the Vice Chair of the Board of Directors for the term ending at the closing of the Annual General Meeting 2023. The Shareholders' Nomination Board has also proposed that Brian Beamish and Terhi Koipijärvi be elected as new board members for the term ending at the closing of the Annual General Meeting 2023. Here on the screen, you can see further information on the proposed person. More information of the nominees is available on the company's website. In this agenda item, approximately 583 million votes were represented corresponding to approximately 70.42% of all company shares and votes. 504,652,983 votes were cast in favor of adopting the proposal representing approximately 86.6% of the total number of votes. And 78,091,176 votes were cast against the proposal representing approximately 13.40% of the total number of votes. 1,008,261 shares abstained from voting on this agenda item. On the basis of advanced voting, the AGM resolved to elect the Chair as well as Vice Chair and the members of the Board of Directors as proposed by the Shareholders' Nomination Board. Next, we have agenda Item 14, resolution on the remuneration of the auditor. On the recommendation of the Audit and Risk Committee, the Board of Directors proposes to the general meeting that the auditor's fees be paid according to the auditor's reasonable invoice approved by the company. In this agenda item, the total number of shares and votes represented was 583 million shares and votes corresponding to approximately 70.42% of all shares and votes in the company. For the Board of Directors' proposal based on the recommendation of the Audit and Risk Committee, 583,736,720 votes were cast representing approximately 99.99% of total votes cast. And against the proposal of the Board of Directors, 31 votes were cast. And in this agenda item, the number of votes abstaining from casting a vote were 6,823 shares. Based on the advanced voting results, the Annual General Meeting has decided in accordance with the proposal of the Board of Directors, based on the recommendation of the Audit and Risk Committee, that the remuneration of the auditor will be paid according to an invoice approved by the company. Agenda item 15, election of the auditor. In this agenda item, the Audit and Risk Committee has recommended and the Board of Directors proposed to the Annual General Meeting that the authorized public accountants, Ernst & Young Oy, be reelected as the company's auditor for a term ending at the closing of the Annual General Meeting 2023. Ernst & Young Oy has announced that it will appoint Mikko Järventausta, APA as the principally responsible auditor. The total number of shares and votes represented in this agenda item was 583,746,596. And altogether, 583, 667,000 were given -- were cast in favor representing about 99.99% of the total votes cast. And 72,273 votes were cast against the proposal representing approximately 0.01% of the total votes cast. And 6,823 shares were represented in this agenda item that abstained from casting a vote. Based on the voting results of the annual -- the Annual General Meeting has decided in accordance with the proposal of the Board of Directors based on the recommendation of the Audit and Risk Committee, to reelect Ernst & Young Oy as the company's auditor with APA, Mikko Järventausta as the auditor with principal responsibility for a term expiring at the end of the Annual General Meeting in 2023. Now agenda item 16, authorizing the Board of Directors to decide on the repurchase of the company's own shares. The Board of Directors has proposed to the AGM that the Board of Directors be authorized to decide on the repurchase of the company's own shares in such a way that the number would be aggregate maximum of 82 million of the company's own share and this corresponds to approximately 9.9% of all the current shares of the company. Shares -- own shares may be repurchased on the basis this authorization only by using unrestricted equity, and own shares can be repurchased at a price formed in trading on regulated market on the date of the repurchase or otherwise at a price formed on the market. The Board of Directors is entitled to decide how shares are repurchased and owned shares may be repurchased otherwise than in proportion to the shares held by the shareholders. In other words, as a directed repurchase. And the authorization shall be enforced until the closing of the Annual General Meeting 2023. In this agenda item, the total number of shares and votes represented was 583,743,166. And for the proposal, 582,018,418 votes were cast representing approximately 99.83% of the total votes cast and approximately 99.7% of the shares represented in the meeting. Against the proposal, 985,000,367 votes were cast corresponding to approximately 0.17% of the total votes cast and approximately 0.17% of the shares represented in the meeting. And 739,381 shares abstained from casting a vote. Based on the voting results, the AGM has decided in accordance with the proposal of the Board of Directors to authorize the Board of Directors to decide on the repurchase of the company's own shares. And we move now to the last agenda item 17, authorizing the Board of Directors to decide on the issuance of shares and of special rights entitling to shares. The Board of Directors of Metso Outotec proposes to the AGM that the Board directors be authorized to decide on the issuance of new shares and the transfer of the company's own shares as well as the issuance of special rights referred to in Chapter 10 Section 1 of the Limited Liability Companies Act. The main points of are now shown on the screen and the full proposal is available on the company website and is also included in the notice to the meeting. According to the proposal, the Board of Directors would be authorized to decide on the issuance of shares in the aggregate maximum of 82 million shares, which corresponds to approximately 9.9% of all the current shares of the company. And the Board is entitled to decide on all terms of the issuance of shares and of special rights entitling to shares and it has the right to deviate from the shareholders' preemptive subscription rights. In other words, as a directed issue. And this authorization applies to both the issuance of new shares and the conveyance of own shares held by the company. And this authorization shall also be enforced until the closing of the Annual General Meeting in 2023. Again, the approximate number of 583,736,866 votes and shares were represented in this agenda item. And in favor of the proposal, 569,609,409 votes were cast representing approximately 97.58% of the total votes cast and approximately the same percent of shares represented in the meeting. And 14,124,312 votes were cast against the proposal representing approximately 2.42% of the total votes cast and approximately 2.42% of shares represented in the meeting. 3,145 shares were represented in the agenda item that abstained from casting a vote. It is noted that based on the advanced voting results, the Annual General Meeting has decided in accordance with the proposal of the Board of Directors to authorize the Board to decide on the issuance of shares as well as on the issuance of special rights entitling to shares. And we move to the very last item on the agenda, closing of the meeting. And I note that all the matters pertaining to the AGM have been dealt with and no further matters to be handled have been presented. The minutes of this AGM shall be available for inspection by the shareholders on May 5, 2022, at the latest on the company's website. Before we close the meeting, I want to remind everyone that the company management is pleased to answer any questions by the shareholders and questions may be presented through the same online portal that has been used to follow the meeting. This event will be organized immediately after the closing of this meeting or just after a very short technical transition period. This meeting is declared closed at 14:43 p.m. and we shall now move to the questions-and-answer event, which will be moderated by Vice President, Investor Relations, Juha Rouhiainen. Juha, the floor is yours.

Dear shareholders, dear viewers, welcome to the Q&A session after the Annual General Meeting of 2022. I'm Juha Rouhiainen, responsible for Investor Relations. And next to me is Pekka Vauramo, CEO and the President of the company. And our intention is to go through the questions sent by you. You can still submit your questions. And depending on the questions, I also add other questions that have been put to us by shareholders in recent times. So with this word, I'd like to open this Q&A session. And Pekka, why don't we start the latest news, the results -- first quarter results that were published today. What do you think?

Well, markets are in good shape. Sales are increasing. It's been a very strong beginning of the year. Orders received grew significantly compared to Q1 2021, approximately 29%. Sales grew by 26%. And the integration process was finalized at the turn of the year and cost savings were achieved. And as a result, our result was very positive in Q1. And also other good news as well. Sustainable development progressed well. The sales of Planet Positive products went really well, and their sales increased in Q1. Of course, the deplorable Ukrainian war, of course, it overshadows everything now. And also our good development was shadowed by the Ukrainian situation. And of course, this also affects us and our future. We'll come back to this later on.

Okay. About the balance sheet, what is your financial position thinking about future growth?

Well, our cash flow has been very strong in recent times for the past 2 years or so. So during the entire existence of Metso Outotec approximately 2 years, and we've been able to strengthen our balance sheet in a significant manner. And our gearing is less than EUR 400 million -- EUR 500 million. So of course, it gives us freedom and room for maneuver for acquisitions, for investment planning and for future in general.

Okay, we'll delve into this in detail later on how to spend money. But somebody from the audience send us a question related to Q1 report. And he says that, well, Metso Outotec shares, very general market outlook. Market activity will move on in a positive way, while share price has increased a lot today. So this illustrates that the markets don't understand what's going on in the company. Why don't you give a more specific future outlook?

Well, we work in a very cyclical industry. And on top of that, during the past 2, 3 years, we've had a lot of events going on around us and they have caused a lot of uncertainty. It's almost impossible to forecast anything in this situation. It's very difficult to see into the future, and therefore, we have focused on describing verbally on how we see the future 6 months ahead of us, how we see markets developing ahead of us. And this is the change that we have established now in our Q1 report. We, of course, discussed the Ukrainian situation and Russian situation. Well, changes have been very quick and a lot of things have already changed compared to Q1 review. So a lot of new developments have taken place in Russia in terms of sanctions and industries and import bans and export bans. So a lot of new things are coming up all the time. So it's almost impossible to describe our future outlook in more detail.

Well, okay. So let's move on to something that interests us all, Russia. So how do you see the importance of Russian situation to Metso Outotec business?

Well, Russia has been Important to us, approximately 10% of our sales last year and it would have been the same this year as well. In our order books for the 3 remaining quarters of this year, we would have had more than EUR 300 million sales to Russian customers. And of course, part of it -- well, majority of this, will not be realized due to war. But as I indicated in Q1 review, things develop all the time. We don't know what will happen in terms of sanctions and import bans. It's impossible to give you a more exact figure at this stage.

Another specific question here. What do you think is the worst case scenario for Metso Outotec if you think of Russia?

Well, the orders received from Russia are quite important. If a majority of them would not be realized this year, of course, this creates a massive risk to us. And of course, it does have an impact on our results and profitability, even balance sheet. But -- well, the situation is very much alive. We don't know what happened and when and how it will stabilize. Well, Russia corresponded to approximately 10% of total sales last year. It would have been the same this year as well.

And what about Ukraine, Belarus, what about these markets?

Well, in Ukraine and in Belarus, we have had activities and business going on. We had orders received from Ukraine and Belarus as well, and it's impossible to carry out business in Ukraine and in that area in general. So in Belarus, we also had something in our order books from Belarus, and well, not that important. And of course, this business has stopped as well. At the moment, it is very important to bear in mind that we have to take care of our personnel. We have to make sure that our staff in those countries, in Ukraine, are safe. And we offered our staff members in Ukraine possibility to relocate to another country. And we had 7 people working for us in Ukraine and they -- well, some of them are now relocated in Czechia and they already work for Metso Outotec there.

Okay. Thank you very much. And then -- well, Metso Outotec is working to abolish these agreements and contracts with these customers.

Yes. Well, we will terminate these contracts within the next 2 months with our Russian customers. And in the 1st of July, export restrictions will enter into force, and of course, they will make our business in Russia more difficult than ever. And before that date, we have to agree with our customers how to terminate these contracts. And if we terminate these contracts now, we try to deliver the parts that have already been ordered and paid.

Well, I'm sure that we'll hear more about the Russian situation in Q2 review.

Yes. You will, certainly.

Okay. Well, let's take a look at the more comprehensive markets. If you think that you're abolishing Russian business, where do you find the new markets?

I do hope that Russia will return to be our customer. Well, raw material and metals are needed and Russia is an important trade partner for metals and raw materials, and we have our shared challenge of tackling climate change. We need copper. We need different metals, and we need copper wire in electricity grids and network. We need aluminum and copper in important amounts, and Russia is a major producer in precious metals. And therefore, there have been some interesting projects for mining businesses in Russia and we have to find alternatives for these projects, of course. Of course, and nickel, platinum, palladium, all these precious metals they've been very interesting in Russia. And also iron ore, we have exported iron ore from Russia to produce steel for European markets. On these markets, of course, well, there will be changes, and well, price increases maybe and markets will change.

Have you seen any concrete developments yet? Have you seen any concrete changes?

Well, we have seen some changes. Let's take a look at the steel markets. We have had days where it has been impossible to define prices on the steel market and this is due to fluctuating raw material prices in recent times. So it's been impossible to define prices on certain raw material markets.

What about the sales staff of Metso Outotec? Have your customers contacted them?

Yes. Our customers have contacted our staff members more than ever. And our customers, mining companies all over the world, of course, they have looked for other alternatives, whether they could open a closed mine somewhere in the world. And for those projects, of course, they need drills and other equipment and personnel who could open a closed mine. It is possible that mines will be opened elsewhere.

Let's move on to growth. We already touched upon that. Well, first, Q1 review had some good growth figures. Looking into midterm and longer term, what are the major growth opportunities for Metso Outotec?

Well, metals are our key driver in terms of demand. And climate change, of course, leads to higher demand for certain metals. Copper and other metals and copper mines will be increased twofold in -- by 2040. Opening a big copper mine is not a small thing, and it takes more than 10 years in general to open a brand-new copper mine. And there are not too many mine projects in the pipeline. So this means that we have to look for new sites and we need more efficient technology in order to be -- in order to build profitable copper mines in the world. Not only copper, also nickel, which is needed for batteries and other raw materials for modern demands and modern products. So raw materials are very much needed all over the world. As we know, e-cars have become more common in every country of the world and there is very strong demand for electric cars.

And digitalization. How do you see digitalization in Metso Outotec?

Well, digitalization is definitely an opportunity for us. It contributes to growth and profitability. And digitalization is an important factor in quality improvement. In our industries, it means that we can improve the usability and functionality of our equipment or that we can extract better the ores that we mine. And this all contributes to more sustainable development and we see potential growth in these areas as well.

And the audience has asked another question. Let's go back to Russia once more. What about other markets, can they replace diminishing Russian markets? So what about the supply period, delivery period? How long does it take until you can compensate lost Russian markets by new markets?

We have a lot of opportunities for compensating diminishing Russian markets. One option is, of course, if we can free capacity elsewhere, i.e., in Russia, of course, then we can deliver this equipment with a very short notice and respond to new demand in an efficient way. I also believe that the situation brings more opportunities to our maintenance services. Closed mines are one important alternative. If closed mines are reopened, they, of course, need knowledgeable staff, spare parts and components. And of course, if we lose some markets in Russia, we have alternative supplies and we can deliver them very quickly. And of course, as things evolve, we look for new market opportunities very actively all the time and look for new customer ships all over the world.

And then another question on integration, Metso Outotec integration 2 years ago. Have you finalized the integration process by now? Or is there still something to be done?

Well, the main elements have been integrated already. The major targets have been achieved. We were ahead of schedule in terms of some key objectives, EUR 142 million cost savings were achieved within a year. So that's something, really. And I'd like to thank all our organization for that. At the same time, we've been able to create new sales, attract new orders and this is an indication of being more efficient together and being more able to cover customer needs. Well, we think that we have progressed very well in integration. But also there still remains something to be done. We need to be more efficient internally. And we need to improve our efficiency. And well, of course, it takes time. We completed our integration process during corona pandemic. So this is an achievement in itself. The 1st of July 2020 was the first day of our integration, exactly the same year when corona restrictions entered into force. So we had to implement our integration under very difficult circumstances without any international travel. And of course, we have to recover this in some way to meet people, and internally, finalize the integration process. I think our staff have been very flexible in this journey, and they deserve all my thanks.

Okay. That's interesting. So there must be many staff members who haven't met their managers yet in real world.

Yes. That is true. But now, international travel has restarted and we have our calendars full of travel. And of course, well, we try to travel less than before, of course, as everyone else. But we do want to meet our new colleagues. Well, there are still many things that you cannot handle online. It is important to meet people. It is important to meet face-to-face in order to collaborate well and develop shared corporate culture. And well, some practical matters can, of course, be taken care of online.

Again, a question from the audience. Let's go back to Russia. This is a very simple question. Why do you continue deliveries to Russia?

Well, we are considering all the interests of different parties and that is undeniably always a compromise. We have the legislation in different countries governing our contracts with our customers. And when sanctions do not apply or there aren't other restrictions, if money transfers function and transportation functions, we have the obligation to deliver and supply. And we, of course, work very hard at keeping within the limits and limitations of sanctions and that we are operating on the right side and then attempt to wind down these contracts in a schedule that is to the benefit of all parties involved.

Good. Thank you. Then a question regarding the Metals business. In the beginning of the year, the company announced that they will be assessing the Metals business in a strategic way. Why is this done? And how has it proceeded?

Well, the process has proceeded -- progressed well. Of course, the situation in Russia with their fairly large market does delay things to some extent and we have to create some clarity on what we will be able to deliver to Russia and what we cannot deliver. But the process continues. The reasons for this review, for this assessment, come from the fact that the synergy that Metals possesses with the rest of Metso Outotec, but the line is fairly thin. And our perspective is that in all businesses that we are involved, maintenance should play a significant part. And when we look at our 3 segments, Aggregates, Minerals and Metals, the share of maintenance is the lowest in the Metals business. And this is one factor that makes Metals very sensitive to different seasons and phases and dependent on large projects, and it is our goal to lower our dependency on large projects. So we are now assessing and looking at different businesses. Metals is divided into 4 different businesses and one of them, hydrometallurgy, we have already decided to move to the Minerals business segment. And with the other 3 businesses, we are now assessing what is the best way to develop these businesses. And we look at this from different perspectives. From the perspective of the employees, the customers and we are considering what is the best environment to develop these businesses. They do include very interesting technologies that support sustainable development, for example. So I do believe that we have interest in this business.

Does this project have some sort of a schedule where we might hear end results?

Well, we haven't set any clear schedule. And due to the situation in Russia, this project is going to experience some delays, but we will report as soon as we have something to report.

We already noted that the balance sheet is in good shape and the company is going after growth. What about the role of acquisitions in this -- in all of this?

Well, like we said, as we merged, if we have 1.5 to 2 years good cash flow and that helps us to strengthen our balance sheet, we're able to pay off some of the more expensive loans that we have. And we've managed to do this. Our cash flow has been very strong in 2020 as well as in 2021. And right now, our position is such that for the balance sheet perspective, considering things from that perspective, we are able to finance as well as merge acquisitions. Of course, the situation in Russia and its impact on our finances is something that we need to keep in mind, but I do not see that restricting our opportunities in recent future. And I think we will see some further acquisitions. We just announced that we purchased a Tesab product line from Northern Ireland and that is going to complement our offering.

Do we see other small- or middle-sized acquisitions in the future? Is that the route?

Yes. I believe small acquisitions will be the norm, perhaps some middle-sized acquisitions as well. But I do not think we will go after anything bigger.

R&D is, of course, one area that improves the competitive advantage of companies in the long term. What are the focus points for R&D in Metso Outotec?

Sustainable development is one of the -- or the most important engine driving us forward. We talk about equipment, productivity, the technological features of different equipment, but sustainable development more and more -- is more and more important. The energy efficiency, emissions as a whole, also factors related to well-being at work, the different conditions that our employees work in that really guide our product development activities as well. It has been our goal to use EUR 100 million in R&D. Last year, unfortunately, we didn't quite reach that number. But on the other hand, our capacity and design capacity were directed to different projects, to commercial agreements. And in that situation, we were not able to proceed as quickly as we would have liked to in the area of R&D. But we will get back to that EUR 100 million fairly quickly in the future. And I'm sure we will see a lot of interesting product launches as well.

Sustainable development, responsibility, those are topics that we've heard about a few times. If you consider the main focus points for Metso Outotec, what would they be?

We have -- the company has reported on sustainable development for a few quarters now heavily. Well, the responsibility, corporate responsibility and sustainable development, defining that as well as measuring it is important. We have Science Based Targets for a couple of years already and we are reporting on those externally as well. That is the kind of transparency that is expected and required nowadays. And those are important factors also in the company financing. We have already a few loan agreements, and our loan terms depend on how well we're able to reach the sustainable targets and we want to keep on that track. And that brings us financial gains as well. But of course, there are many other perspectives into sustainable development. For us, we have so many opportunities and possibilities to deliver technology and equipment, which means that our customers will be able to reduce their emissions, which is very important. Then we have other sustainable projects like equality that we have made progress in. Also other diversity and inclusion issues, we have special programs for those areas as well. We are quite active and we want to be active. That is how we want to profile our company.

Planet Positive products are often talked about in the communications of Metso Outotec. Could you share a bit more with us about those products? What are they all about?

Well, planet-positive products, we compare our products to the best available products on the market or on the best available technology. And if we are able to improve something, create something, the equipment that its emissions are 10% below, whatever is available already, that is the main objective for us. We try to create products that have low emissions and the lowest on the market. That is a good target for us. And those products, we call Planet Positive products.

And are your customers willing and ready to listen to your views on Planet Positive products?

Yes. Absolutely. Measuring activities began last year for the Planet Positive products. And last year, we used quite a lot of time to define carefully what is a Planet Positive product and we used an external party so that we would avoid becoming blind to our own actions and operations. And last year, we sold a bit under EUR 600 million of Planet Positive products. And now in the first quarter this year, we have already EUR 640 million rolling. So backwards, 12 months. So on an annual level, we created 5% increase in 1 quarter. So I think that's a good result, good performance. And I think we will see this speed moving forward, accelerating towards the year 2023. I think all we're going to have our Planet Positive products because I don't think anybody can afford to buy anything else except what is the best product available on the global market.

Metso Outotec in Planet Positive products and other sustainable actions that they have. How do you see Metso Outotec compare to its peers?

Well, I think in that case, it's best to look at external indicators. We have received a couple of prices already for 2 years. Metso Outotec, we have been in a Global 100 list in slightly different points of the list, but we are the only actor in this industry, the only company in this industry. And we have some highly valued peers on that list, and it is a very sought-after list because any company in the world potentially can end up on that list. And if that is the best 100, I think that is a very, very excellent result. I think there are 4 Finnish companies on that list of 100 companies, and we were the second best of the Finnish ones.

And apparently, one of the few in this industry.

Yes. If I remember correctly, we were the only one or perhaps one of our customer organizations was also included on that list.

One further question regarding sustainability. Do you see any risk in not having stopped business in Russia yet as many other international companies have done?

Well, like I said before, we have to look at this from the perspective of all parties involved and what the consequences are going to be for Metso Outotec. And personally, I feel that it is my obligation to make those decisions and promote those decisions that, in the long term, enable us to remove our business in a controlled way from the Russian market. And also making way, making sure that one day when it will be possible again to enter that market, we can also do that. And in this light, I believe it's important to pay attention to the shareholders' benefit as well. It's our obligation, I feel.

Very good. Now it seems that we have presented all the audience questions and all the preprepared questions that I have in my notes I have also been presented. Would you still have something to add as to information for the shareholders why is it good to be involved with Metso Outotec?

Well, we have gone through these topics quite extensively. We have 4 different businesses that we realized in 3 different segments. We want to succeed together with our customers. That is important to us. We want to promote sustainable development, be a leading operator in that respect. We have a good culture in the company. We are improving all our operations continuously. And when we succeed in these 3 areas, the financial results and performance will follow.

Very good. Thank you. Dear audience, we have gone through the most important topics. We want to thank you for your participation and for your questions. And at this point, we would like to wish all of you a sunny spring. [Statements in English on this transcript were spoken by an interpreter present on the live call.]