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Investing.com -- Shares of Metso (OTC:MXTOF) (HEX:MEO1V) climbed 5% after the company reported its fourth-quarter earnings, which revealed orders and cash flow that exceeded expectations.
Despite a slight miss on adjusted EBITA compared to consensus, the company’s performance, particularly in order intake and cash flow, provided a positive sentiment among investors.
Metso’s fourth-quarter orders totaled €1,391 million, a 13% increase year-on-year (YoY) and 6% above consensus. Sales were in line with consensus at €1,272 million, although they represented a 4% decline YoY. The adjusted EBITA was €203 million, just 1% below the consensus.
The proposed dividend of €0.38 per share also exceeded expectations by €0.03.
The company’s Aggregates division saw a 7% decline in order intake YoY, but still managed to surpass consensus by 6%. The adjusted EBITA for this division beat expectations by 5%, with a margin of 16.0%, which was 50 basis points ahead of consensus.
The Minerals division experienced a robust 20% growth in order intake YoY, with equipment orders up by 40% and service orders increasing by 3%. Despite a few million euros in negative impact from warranty costs, the division’s book-to-bill ratio was a solid 1.12x.
A significant improvement was seen in Metso’s free cash flow, which rose to €216 million from €88 million in the third quarter of 2024, bolstered by a €43 million reduction in net working capital (NWC).
This financial strength was highlighted in the RBC analyst comment, which stated, "Orders came in ahead of expectations in both divisions while cash flow – which has been a source of frustration for some time – showed a good improvement." The analyst continued to express a positive outlook on Metso, citing its advantageous position in the mining capex upcycle and its "better-than-appreciated quality."
Looking ahead, Metso’s near-term market outlook remains stable, with expectations that market activity in both the Minerals and Aggregates divisions will continue at the current level.
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