- Email: [email protected]
Metso Corp, Finland
August 2003
Filtration Industry Analyst
Metso Corp, Finland
Mykrolis Corp, USA
million) Key Figures ( Second quarter ended 30.6
Key Figures (US$ million) Second quarter ended 2002
1072
1178
Cost of Goods Sold
803
853
Gross Profit
269
325
Operating Profit
14
42
Income/(Loss) before Taxes
(3)
22
Net Income/(Loss)
(5)
10
Net Sales
Six months ended 30.6 2003
2002
Net Sales
2055
2289
Cost of Goods Sold
1539
1654
516
635
19
73
Income/(Loss) before Taxes
(16)
36
Net Income/(Loss)
(18)
16
Gross Profit Operating Profit
COMMENT Demand for Metso’s products in its second quarter 2003 was lower than expected. Although demand in its European and US markets continued at first quarter levels, the strengthening of the euro saw heightened competition. Its sales in the Chinese market also eased. The results continued a difficult first half year for the group, which has seen net sales fall 10% on the comparable period in 2002 to 2055 million. Net income for the half year has plunged from last year’s 16 million to a loss of 18 million. The poor results have prompted Metso to accelerate the strategic reorganization of its business that it initiated at the beginning of the year. In response to changing market demands, Metso is aiming to
broaden its product and service offering so that it can contribute to all phases of its customers’ production process lifecycle. As part of its strategic reorientation, Metso is targeting improvements in operational efficiency, aiming to achieve annual savings of 100 million across its Paper, Mineral and Automation divisions. The efficiency improvement programme is budgeted at 80 million, most of which will fall in the third quarter of 2003. Metso is expecting to post significantly improved results for the second half year compared with its first six months. Its forecast is based on its order backlog, the relative stability of its key aftermarket and maintenance business areas, and its cost containment initiatives. ■
28.6.2003
30.6.2002
Net Sales By Geographical Destination: North America Japan Asia Europe
42.7
48.5
11.8 14.6 11.8 4.5
15.8 16.9 10.9 4.9
Gross Profit
18.6
16.1
Operating Loss
(4.0)
(6.0)
Loss before Income Taxes
(2.8)
(4.2)
Net Loss
(5.5)
(6.8)
Six months ended 30.6 28.6.2003 Net sales By Geographical Destination: North America Japan Asia Europe
30.6.2002
83.2
84.2
22.4 29.5 22.4 8.9
28.9 27.5 19.2 8.6
Gross Profit
35.1
27.2
Operating Loss
(8.3)
(17.1)
Loss before Income Taxes
(6.5)
(15.2)
(10.9)
(19.2)
Net Loss
COMMENT Mykrolis posted second quarter revenues of US$42.7 million, 12% lower than the comparable quarter a year ago. Gross margin for the period was 43.6% of sales, up from 40.8% in the first quarter due to favourable product mix and the completion of certain manufacturing consolidation initiatives. Sales of consumable filtration and purification products were US$31 million, or 72% of second quarter sales. The results for the quarter included a restructuring charge of US$1.8 million, primarily related to a 4% cut in the company’s worldwide workforce in May 2003.
For the first six months of 2003, Mykrolis has earned revenues of US$83.2 million compared with US$84.2 million for the comparable period a year ago. “Our priorities continue to be on achieving profitability while continuing to expand our market opportunities,” said William Zadel, chairman and CEO. “We made good progress on both fronts in the second quarter. The steps taken to reduce our cost structure have further lowered our revenue break-even level.” Third quarter sales are forecast to be in the range of US$42–46 million. ■
9
COMPANY WATCH
2003
Filtration Industry Analyst
Metso Corp, Finland
Mykrolis Corp, USA
million) Key Figures ( Second quarter ended 30.6
Key Figures (US$ million) Second quarter ended 2002
1072
1178
Cost of Goods Sold
803
853
Gross Profit
269
325
Operating Profit
14
42
Income/(Loss) before Taxes
(3)
22
Net Income/(Loss)
(5)
10
Net Sales
Six months ended 30.6 2003
2002
Net Sales
2055
2289
Cost of Goods Sold
1539
1654
516
635
19
73
Income/(Loss) before Taxes
(16)
36
Net Income/(Loss)
(18)
16
Gross Profit Operating Profit
COMMENT Demand for Metso’s products in its second quarter 2003 was lower than expected. Although demand in its European and US markets continued at first quarter levels, the strengthening of the euro saw heightened competition. Its sales in the Chinese market also eased. The results continued a difficult first half year for the group, which has seen net sales fall 10% on the comparable period in 2002 to 2055 million. Net income for the half year has plunged from last year’s 16 million to a loss of 18 million. The poor results have prompted Metso to accelerate the strategic reorganization of its business that it initiated at the beginning of the year. In response to changing market demands, Metso is aiming to
broaden its product and service offering so that it can contribute to all phases of its customers’ production process lifecycle. As part of its strategic reorientation, Metso is targeting improvements in operational efficiency, aiming to achieve annual savings of 100 million across its Paper, Mineral and Automation divisions. The efficiency improvement programme is budgeted at 80 million, most of which will fall in the third quarter of 2003. Metso is expecting to post significantly improved results for the second half year compared with its first six months. Its forecast is based on its order backlog, the relative stability of its key aftermarket and maintenance business areas, and its cost containment initiatives. ■
28.6.2003
30.6.2002
Net Sales By Geographical Destination: North America Japan Asia Europe
42.7
48.5
11.8 14.6 11.8 4.5
15.8 16.9 10.9 4.9
Gross Profit
18.6
16.1
Operating Loss
(4.0)
(6.0)
Loss before Income Taxes
(2.8)
(4.2)
Net Loss
(5.5)
(6.8)
Six months ended 30.6 28.6.2003 Net sales By Geographical Destination: North America Japan Asia Europe
30.6.2002
83.2
84.2
22.4 29.5 22.4 8.9
28.9 27.5 19.2 8.6
Gross Profit
35.1
27.2
Operating Loss
(8.3)
(17.1)
Loss before Income Taxes
(6.5)
(15.2)
(10.9)
(19.2)
Net Loss
COMMENT Mykrolis posted second quarter revenues of US$42.7 million, 12% lower than the comparable quarter a year ago. Gross margin for the period was 43.6% of sales, up from 40.8% in the first quarter due to favourable product mix and the completion of certain manufacturing consolidation initiatives. Sales of consumable filtration and purification products were US$31 million, or 72% of second quarter sales. The results for the quarter included a restructuring charge of US$1.8 million, primarily related to a 4% cut in the company’s worldwide workforce in May 2003.
For the first six months of 2003, Mykrolis has earned revenues of US$83.2 million compared with US$84.2 million for the comparable period a year ago. “Our priorities continue to be on achieving profitability while continuing to expand our market opportunities,” said William Zadel, chairman and CEO. “We made good progress on both fronts in the second quarter. The steps taken to reduce our cost structure have further lowered our revenue break-even level.” Third quarter sales are forecast to be in the range of US$42–46 million. ■
9
COMPANY WATCH
2003