Earnings call transcript: Metso Q3 2025 earnings beat expectations, stock surges

Metso Oyj reported a strong performance for the third quarter of 2025, surpassing earnings expectations. The company posted an earnings per share (EPS) of €0.17, exceeding the forecasted €0.1591, and reported total sales of €1.328 billion, reflecting a 12% increase in constant currencies. Following the earnings announcement, Metso’s stock rose by 8.4%, reaching €13.165, nearing its 52-week high of €13.405. According to InvestingPro data, the stock has demonstrated remarkable momentum with a 33.2% return over the past six months, while maintaining relatively low price volatility. Based on InvestingPro’s Fair Value analysis, the stock appears to be trading near its fair value.

Key Takeaways

• Metso’s EPS exceeded analyst expectations, contributing to a positive market reaction.
• Total sales increased by 12% year-over-year, driven by growth in both the aggregates and minerals segments.
• The company’s strategic acquisitions and new product initiatives signal a focus on expanding market presence.
• Strong cash flow and a low net debt to EBITDA ratio highlight financial stability.

Company Performance

Metso demonstrated robust performance in Q3 2025, with significant sales growth across its segments. The aggregates segment reported a 13% order growth, while the minerals segment saw a 5% increase. The company’s focus on customer experience and sustainability, along with strategic acquisitions such as Simu in China, has strengthened its competitive position.

Financial Highlights

• Revenue: €1.328 billion, up 12% year-over-year
• Adjusted EBITDA: €222 million, up 9% year-over-year
• Earnings per share: €0.17, up €0.01 from the previous year
• Net debt: €1.1 billion
• Net debt to EBITDA ratio: 1.3x

Earnings vs. Forecast

Metso’s EPS of €0.17 surpassed the forecast of €0.1591, representing a positive surprise of approximately 6.8%. This performance outpaces previous quarters, indicating strong operational efficiency and market demand.

Market Reaction

Following the earnings release, Metso’s stock price surged by 8.4% to €13.165. This upward movement reflects investor confidence in the company’s growth prospects and strategic direction. The stock’s performance is notable against the backdrop of broader market trends, as it approaches its 52-week high.

Outlook & Guidance

Looking ahead, Metso aims for an annual sales growth target of 7% and an adjusted EBITDA margin of 18%. The company anticipates potential large mineral project orders in late 2025 or early 2026, which could further enhance financial performance. InvestingPro data shows the company has maintained a strong 5-year revenue CAGR of 12%, suggesting a track record of achieving its growth targets. While two analysts have recently revised their earnings expectations downward for the upcoming period, the consensus remains that Metso will maintain profitability this year. Access the full Pro Research Report for comprehensive analysis of Metso’s growth trajectory and market position.

Executive Commentary

CEO Sami Takaluoma emphasized the company’s commitment to customer experience, stating, "We are striving for being the best in the customer experience in our industries." CFO Pasi Kuokkanen highlighted the promising outlook for 2026, noting, "2026 is almost like guaranteed that these orders start to come through."

Risks and Challenges

• Tariff-related uncertainties could impact global economic growth.
• Fluctuations in currency exchange rates may affect financial results.
• Supply chain disruptions pose potential risks to operational efficiency.
• Market saturation in key regions could limit growth opportunities.

Q&A

During the earnings call, analysts inquired about the upgrades and modernization order pipeline, the impact of tariffs on the U.S. aggregates market, and the company’s inventory management strategies. Executives addressed these concerns, reinforcing confidence in Metso’s strategic initiatives and financial health.

Full transcript - Metso Oyj (METSO) Q3 2025:

Juha, Investor Relations, Metso: Good afternoon, good morning, everyone. This is Juha from Metso’s Investor Relations, and it’s my pleasure to welcome you to this conference call where we discuss our third quarter 2025 results that were published earlier this morning. The results will be presented by our President and CEO, Sami Takaluoma, and CFO, Pasi Kuokkanen. After that, we will have a Q&A session. As usually, we try and limit the length of this call to 60 minutes. Before we go, I want to remind about the forward-looking statements that will be made in this call. I think without further ado, it’s time to hand over to President and CEO, Sami Takaluoma. Sami, please go ahead.

Sami Takaluoma, President and CEO, Metso: Thank you, Juha, and good morning, good afternoon also from my side. Without further ado, let’s start to look for the Q3 highlights. The market activity was very much in line with our expectations, and that also resulted in us then to deliver healthy order growth. We had also strong sales growth for the quarter, and our adjusted EBITDA was good, normal, strong. For this quarter, cash generation was very solid and gave us quite a clean sheet for the Q3. Looking more then from the group perspective of the key figures, orders received growth compared to the previous Q3 last year was 2%. As we have highlighted in the Q3 2024, we did have significant large minerals CapEx orders that we did not have in the Q3 2025. Sales growth was then 10% compared to the previous quarter last year, and adjusted EBITDA grew by 9%.

All in all, the EBITDA as the second quarter was having this dip, we are now back in the normal Metso EBITDA numbers. Looking for our two segments, let’s start from the aggregates. We had healthy orders growth coming in the quarter, €280 million. That is 13% in constant currencies. This growth was mainly driven by the normalized market in North America and the pickup that we have seen coming from Europe. Equipment orders did represent a growth of 11% and the aftermarket 2% of the order growth. Sales was also stronger than a year ago. Equipment sales growth was 14% and aftermarket 1%. Aftermarket share now with these numbers was then 32% compared to 35% that it was one year ago. Adjusted EBITDA improvement by €3 million, so €48 million for the quarter, and that represents then 15.6% margin for the segment.

Minerals had a very solid quarter in many ways. Orders grew 5% in the constant currencies, and aftermarket orders growth was now 12%. We saw in the CapEx side very solid order intake when it comes to the small and mid-sized equipment orders, and in the aftermarket side, increase of the upgrades and modernizations as we have commented that they are in the pipeline. Regarding the sales, €1 billion plus compared to the €928 million year before, aftermarket was delivering 4% growth, and the equipment side was now a 19% growth for the quarter. Aftermarket share of the sales in this quarter was 60%. The adjusted EBITDA euros, €184 million was reported, and that gives the margin of 18.0%, which is pretty much in line from the last year, 18.1%. Now, Pasi, CFO, will go more in detail to financial aspects.

Pasi Kuokkanen, CFO, Metso: Thank you, Sami, and good day, everyone, on my behalf. I would like to start by reminding that we have restated our comparative figures for 24 quarters and the first two quarters this year regarding the metals and chemical processing business that we decided to retain, and consequently, we have reclassified the comparative information. Let’s then look at our group income statement more in detail. I mean, sales increased 12% in constant currencies from the comparative period to €1.328 billion. Adjusted EBITDA €222 million, which is €18 million or 9% improvement from the comparison period. Net financials slightly up, reflecting the higher debt load that we have in our balance sheet, and income tax rate for the quarter 24% and for the first nine months or three quarters this year 25%, so very much within the standard range that we expect.

Earnings per share from continuing operations, €0.17 up by €0.01 from the comparative period. If we then look at our financial position, the average interest rate for the period was 3.4%. Our net debt, roughly €1.1 billion. Liquid funds continue to be solid, €460 million end of September. Our net debt to EBITDA KPI, when using rolling 12 months in EBITDA, was 1.3 times, which is below our 1.5 times targets and also down from 1.5 that we had end of second quarter, thanks to good earnings in the quarter as well as strong cash flow during the third quarter. When it comes to available credit facilities, our position is unchanged. We have our fully undrawn RCF, and then we have also a CP program, which is currently not in use. Our ratings also no changes, so BBB flat from S&P and Ba2 from Moody’s.

If we then move to cash flow, we delivered a healthy cash flow during the quarter. The strongest quarterly cash flow this year, €266 million from operations. Overall, we have delivered during the first nine months €609 million. A positive note is that working capital is not a drag for us anymore. Of course, the release €12 million is small, but given that the business growth was solid, we are quite happy with this and continue to work with further working capital efficiency improvements. With that, I would like to hand back to Sami to talk about our strategy execution and outlook.

Sami Takaluoma, President and CEO, Metso: Thank you, Pasi. In Q3, we also launched our new strategy, We Go Beyond. We are very happy of the launch, both internally and also externally. In a nutshell, we are striving for being the best in the customer experience in our industries. We are working for the higher and higher aftermarket share of our businesses. We also set a target for ourselves to be the front runners when it comes to sustainability and safety. All this combined will then also ensure that we do deliver the financial excellence. This is a growth strategy. We have set the target for ourselves for annual growth. Excellence means everything that Metso does. That will be resulting then that Metso will be the number one in our selected areas. We do count a lot to our very engaged employees, Metsonites out there. The customer-centric growth culture is one of the key success factors.

Also ensuring that we do have the industry-leading capabilities in our organization to help our customers for the upcoming years. Talking about the revised financial targets, just a reminder here. Annual sales growth target is 7%. We’re starting point now looking for the year-to-date 2025 numbers. 22% we have been able to do. This is clearly the ambition to accelerate this growth. Adjusted EBITDA margin, we upgraded that to 18% from the 17% previously, divided by the segments. That aggregates to deliver more than 17% and minerals more than 20%. Year-to-date so far, we are in 15.7%. Net debt to EBITDA, the target for ourselves is that we will be below 1.5%. That one currently, we are well on track already. We are targeting to keep that way. Regarding the dividends, the payout is going to be at least 50% of the earnings per share.

As you all remember, 2024, that was 63%. The strategy execution is already ongoing. We have done investments, acquisitions to improve our selected areas. Screening business, Simu, was acquired in China. That made Metso to be in top three in the Chinese market for this business. Two smaller ones, TL Solution, which is a sustainability-related mill liner recycling technology company. QNR Industrial Hoses, which is linked to our pump businesses, where we are also having accelerated growth targets. We are currently reviewing some of our businesses. One of them is the loading and hauling business. Looking for the next strategic steps regarding that business. Investments we have done already during the last year. Some investments, especially to support our intentions to grow our aftermarket share. One of them, the latest one, is a screening manufacturing center that we are currently building up in Romania.

When it comes to the market outlook, we expect that the market activity in both of our segments, minerals and aggregates, will remain at the current level. We also want to highlight in this context now that the tariff-related turbulence is not over. We do hear this from our customers, and there is a potential effect then for the global economic growth and also the market activity.

Juha, Investor Relations, Metso: All right, thank you, gentlemen, for the presentation. Operator, we are now ready for Q&A.

Conference Call Operator: To ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Michael Harlow from Morgan Stanley. Please go ahead.

Good morning, and thank you very much for the presentation and for taking our questions. I have two, if I may. The first one would be on your impressive aftermarket order growth. If you could help us unpack what’s underlying and if there are any one-offs in that, that would be very helpful. Then regarding the aggregates segments, one of your competitors mentioned a dealer restocking. I was wondering if you could tell us if you are seeing any of that happening. Thank you very much.

Sami Takaluoma, President and CEO, Metso: Thank you. Excellent questions. Regarding the aftermarket growth in orders especially, we have commented in these calls earlier that one element of the aftermarket portfolio that we have is the upgrades and modernizations. They do have a small cyclic element, and that has affected them so that the comparison period, especially last year, did not see almost any of those coming through. Our pipeline has been quite solid at the funnel. We know that the cases are there. There has been slight hesitation from the customers to make the decision, the timing of the decision. Now in Q3, they started to come through from the funnel as an order. That was in line of our expectation in that sense. When it comes to the aggregates, the distributor network, especially in the U.S., had a situation that in 2024, the end customers did not purchase machines at the normal pace.

That created the situation that the distributor stocks were quite full. What we have seen from our side is that the normalization of the U.S. market started to happen at the end of last year, beginning of this year. That’s visible for us when we look at the stock levels of our distributors. They have gradually, month after month, come down from the very high levels that they were at the mid-2024. From that perspective, there is an element of distributor stock has an impact also to our numbers. We also see that the market has normalized from that behavior during this year.

Thank you. That was very helpful.

Conference Call Operator: The next question comes from Edward Hussey from UBS. Please go ahead. The next question comes from Christian Hinderaker from Goldman Sachs. Please go ahead.

Morning, Sami. Morning, Pasi. Thanks for the time. I want to start on aggregates. At the CMD, you mentioned equipment utilization was down 20% or so from the year before. Obviously, interested then in the OE order growth in that segment at 11% and some of the comments in the release that you’re seeing a better demand environment in both North America and Europe. What’s driving that? I wonder if you could perhaps give an indication on the average age of the installed fleet on that side of the business.

Sami Takaluoma, President and CEO, Metso: Yeah, so the running hours is having an impact mainly for the aftermarket demand. The new equipment need is not always clearly linked for this because the new technology will enable more cost-efficient operation for the customers. The renewal of fleet is depending on customers’ own behavior in his or her business case. From that perspective, it varies based on the customer. Normally, we have a very wide portfolio and deliveries every year. That makes that there is also a second owner or even a third owner for the equipment normally. This is how the aggregates mobile equipment business works. The typical full lifetime, if well maintained, is between 15 and 20 years when the life is fully ended.

Thank you. That’s helpful. Maybe we can turn to working capital. At the CMD, you set out ambitions to take share in the aftermarket. I guess keen to understand if we should think about this requiring higher inventory levels over the coming years, either in your million terms or in % of sales, or whether you think you can unlock some efficiencies that mean you can grow the top line whilst improving that inventory number.

Pasi Kuokkanen, CFO, Metso: Thanks, Christian. Excellent question. Indeed, one of our main pillars in the strategy is to grow the aftermarket business. I mean, it’s not a straightforward question to answer, but of course, if we grow the business in absolute terms, it will require more inventory. What we also believe is that in relative terms, when it comes to inventory turns or inventory in comparison to our top line, there is room for improvement across the board, also in the aftermarket part of the business. That’s how we are looking at that.

Thank you, Pasi.

Conference Call Operator: The next question comes from Chitrita Sinha from JPMorgan. Please go ahead.

Good afternoon. Congrats on the strong session results, and thank you for taking my questions. I have two, please. My first one is just on the minerals margin, which was broadly flat at 18% despite the aftermarket mix. Could you provide more color on the organic development here?

Pasi Kuokkanen, CFO, Metso: Yes, I think 18% is something that at this point we are happy with. It’s okay. It’s in line with our expectation as we built the roadmap in the Capital Market Day, how we are going to be reaching the 20% targeted number for the strategy period. There are several elements. In this quarter, the aftermarket was having a good contribution for that one. There is a need for the capital equipment sales to be higher in terms of leveraging that part as well. We continue to work with our self-help initiatives. As 75% of the company is the minerals segment, the impact will be mostly seen there when we do company-wide actions. I would like to complement a bit. I think what you have also seen or what we have experienced in the third quarter is the strength of our capital business.

The relative share of the capital increased overall, but especially in the minerals. We have a good, healthy business there. It supports also delivering this kind of margins. We are quite satisfied with that.

Great, very clear. My second question is on the aggregates margin where you’ve brought back some costs, I think, in Q2 in anticipation for a ramp. What is the best way to think about the volume threshold where you can comfortably achieve more than 16% again? I’m trying to drive at whether we should expect a pickup in Q4. Will it be more 2026?

Yeah, so first of all, this cost that we have taken gradually back in Aggregates refers to our Finnish operations there, and the fact that the local legislation here enables laying people off on a temporary basis. During the slow period, we have used that opportunity. Now, during the first half of this year, when our order books have been strengthening, we have taken people back to work, and they are busy currently working with the order book that we have. I’m afraid we are not in a position to give you exact volume guidance on when certain thresholds when it comes to margins are reached. Overall, we delivered a few percentage points below 16% now in the third quarter. This is also a volume gain. There is still capacity in the system to deliver higher volumes without, for example, increasing manpower.

The drop through from additional business comes with significantly higher margins.

Thank you so much.

Conference Call Operator: The next question comes from Vivek Mida from Citi. Please go ahead.

Thank you very much, everyone. Good morning. Hope you can hear me well. It’s Vivek on behalf of CLAAS. First question is around the restatement to the Minerals EBITDA from discontinued operations. That impact grew in the second quarter. Curious to know, what was the uplift to the Minerals EBITDA from this in the third quarter? Was it similar to the second quarter? Appreciate that it doesn’t impact the organic growth in margin. Just curious about the absolute impact. Thank you.

Pasi Kuokkanen, CFO, Metso: Yeah, no, thanks, Vivek, for that. We published the restated numbers with quarterly breakup of 2024 and first half of 2026 earlier this month. While we will not provide specific third-quarter numbers and going forward, we’ll not comment specific business lines. What we can say is that the impact was sort of similar in third quarter as we experienced in average during these periods that we have restated. I note that in the second quarter with these numbers, it was slightly higher than in average. What we had was sort of the average from these restated periods.

Understood. Thank you. A second question is just following up on the outlook and your comments around tariff uncertainty and so on. We’re seeing very good growth in minerals, excluding the larger orders. Appreciate maybe the Section 232 and tariff concerns might be more applicable to aggregates. Curious, given the strong commodity price backdrop, why you’ve not potentially raised that minerals outlook. Thank you.

Yeah, it’s true that the tariff situation has impact on both of our segments, but it’s also true that the impact potentially is higher for the aggregates. Tariff in the minerals side is a little bit related to the U.S.-based customers and projects. Generally, globally, the uncertainty, which is not helping making the significant decisions of the investments of multibillion for the new projects. That hopefully is stabilizing and not having an impact on that side. In the aggregates, it’s really all about how the U.S. market will be reacting because the tariff situation is having an impact on, for example, what is the end customer pricing and these kinds of elements. That might slow down the U.S. now normalized market from that perspective, potentially. When it comes to aggregates, you made a reference to this Section 232.

The cross-section screens have been something that had been earlier excluded, and now it seems that they will be included in the tariff. Certainly, it will have some impact on the aggregates market in the U.S. going forward.

Understood. Thank you.

Conference Call Operator: The next question comes from Panu Laitinmäki from Danske Bank. Please go ahead.

Hi, thanks. I have a couple of questions. Firstly, on the minerals market outlook, how do you see the kind of likelihood of receiving very large orders still in this year? We haven’t seen any so far, and it’s a bit more than two months left. Do you think it’s still likely, or is it more like 2016? Maybe related to that, what is the kind of pipeline or sales funnel for these large projects now compared to what it was like a year ago, for example?

Pasi Kuokkanen, CFO, Metso: Yeah, thank you. Very good question. This is something that we also are very interested to get the answers. The unchanged situation, how we read the customer negotiations and discussions, meaning that there are these projects, they are there, they are having a lot more tangible way of discussing, meaning that there is already customer organizations for the greenfield projects and so forth. That’s the answer maybe for your second question, that this is something that we see as a difference for one year or two years ago, that there is more concrete, tangible actions happening already at the customer side. We remain in the same view that we have had. 2026 is almost like guaranteed that these orders start to come through. Still staying on a positive that one, two might be even coming at the end of this year.

As you said, the clock is ticking and there are two months to go. That remains to be seen. Beginning of 2026, definitely. From a split point of view, these are cold and a couple of projects that are more advanced in our pipeline.

Okay, let’s hope for that. Secondly, I wanted to ask about the aggregates and the European outlook. You talk about European recovery. Can you talk a bit more about what you see, which countries are driving this? Is it the German infra package already, or what is driving this?

Yeah, we believe that the German infra package actually had an impact. The orders that we have been receiving in the last two quarters are not so much from Germany, but that decision created the trust in the European countries close by for the future. The orders are coming from multiple countries in Europe, and they are related to infrastructure projects in those countries moving forward, and the customers making the equipment orders to be ready to serve what they have promised to serve.

Okay, thanks. I have a third one, if I may. On minerals aftermarket, really good growth in orders, obviously from the service projects. If you take that out, how has the kind of underlying spare parts, spare parts business growth developed? Is it at the same level, or has that accelerated significantly?

No major changes there. We have seen already a long time solid, good single-digit growth for that, what we call day-to-day spare parts and consumables and service orders. That continues the same way also in the Q3.

Okay, thank you.

Conference Call Operator: The next question comes from David Richard Farrell from Jefferies. Please go ahead.

Hi, morning, both. Thanks very much for taking my questions. I’ll go one at a time. First question relates to aggregates. I was wondering, in terms of the 9% organic order intake growth, what percentage of that is related to tariff-related surcharges on your U.S. business? Can you kind of unpick that element for us, please?

Pasi Kuokkanen, CFO, Metso: Thanks, David. Very, very good question. A small part is from that factor, but it’s not very material. I’m afraid we can’t quantify it, but that’s the way to look at it.

Okay. My second question relates to the minerals margin. It looks kind of like the increase in OE revenue and the impact that has on absorbing fixed costs probably played quite an important role in driving the margin up. Yet, if I look at the book to build for OE so far this year, we’re below one time. Is there a risk that that is a bit of a headwind as we think about 2026 margins, that you simply don’t have the OE levels that you had this year, and therefore margins will face an incremental headwind?

David, good question there. I mean, we are not thinking that way. I think when it comes to minerals capital, you know, book to bill, we have basically sold a similar amount as we have gotten orders this year. Obviously, some of the orders that we are receiving now in the fourth quarter will still play a role also in 2026 sales delivery. Under the assumption that we continue to get healthy order book builds during the fourth quarter, maybe some of those larger projects moving forward that we discussed earlier, we don’t see that situation. Obviously, already this year and also going forward, when we look at within minerals, there is quite a different situation in the underlying business lines. Some of them are more busy than the others.

That’s also the reason you may have seen that we announced and started some labor discussions earlier this month just to adjust our capacity in some of the business lines where we have less work currently.

Okay, thanks very much.

Conference Call Operator: The next question comes from Vas Panavari from Barclays. Please go ahead.

Yes, good afternoon, gentlemen. It’s Vlad from Barclays. I’ll ask three questions, if I may, and go one by one. Firstly, could you give us some maybe initial idea what directional sales growth outlook could we have for 2026? On one hand, commodity prices are super supportive, but on the other, book to bill slightly below one this quarter, backlog broadly flat. Do you think you could grow next year top line in line with strategic target which you recently released, or it will be some kind of different phases here?

Pasi Kuokkanen, CFO, Metso: Yeah, Vlad, excellent question. You know also that we are not in a position to give such guidance. However, what we can confirm is that our target is to grow 7% CAGR going forward, and with that, the clock starts ticking January 1 next year. We are working hard day in and day out to make sure that we can grow. If I look across the portfolio from January 1 onwards to the end of September, our order book has increased by $200 million, or $180 million to be specific. That gives us a much stronger starting point for next year compared to the starting point that we had when we entered 2025.

Excellent. That’s great to hear. If I could ask you on the consolidation point, the changes you have made this quarter, I appreciate you are not giving the precise numbers for Q3. Would you be able to give us some idea what was the impact on the orders? Because orders for this business that you are consolidating have been super volatile. I think in the comparative quarter, it was almost no orders Q3 last year. Any color you can give us here would be very helpful.

Yes, I can comment on that order specifically. It was a very low order number also in the third quarter this year. The order growth is certainly not driven by this MCB business.

Excellent. The final one from me, on the inventory trade receivable, obviously, they are optically up sequentially this quarter compared to what we saw before. Is it largely driven by the gain, the consolidation scope that you’ve done, or are there some underlying changes there as well?

Yes, thanks, Vlad. The consolidation change, for example, in inventory terms has some tens of millions impact on our inventories, i.e., increasing when we brought the MCB business back from discontinued to be part of the normal business, so to say. What we see overall happening in the underlying inventories is that we continue to decline the finished product inventories. If I look one level below the balance sheet that we publish, the finished products have continued to decline from end of June to end of September, order of magnitude $50 million. We see a bit growth in the other areas, which is work in process and then raw materials. You may remember that this $200 million inventory program that we completed by end of June this year was really focused on finished goods. We continue on that journey.

Overall, both inventory trade receivables, but then over the larger working capital, continues to be a focus area going forward.

Wonderful. Thank you very much.

Conference Call Operator: The next question comes from William Mackie from Kepler Cheuvreux. Please go ahead.

Good afternoon. A couple of questions. Firstly, could you perhaps talk a little about the pricing environment and the price realization you’ve achieved across minerals and aggregates in Q3 in your efforts to fully offset any other remaining inflationary pressures? Secondly, against the review in minerals of the backlog up and the orders strong in the smaller and conversion business, can you talk a little to the seasonality of the business revenue realization in the fourth quarter? Historically, there has been seasonality. What should we think about the Q4 versus Q3 in this year regarding your bookings and realization of revenues off backlog? Thank you.

Sami Takaluoma, President and CEO, Metso: Thank you, William. I can take the pricing one. Two segments. In the minerals side, we see very little pushback for our pricing. We use our pricing power where we see that applicable, and that part is working okay. There are some discussions with the customers when they are not sure when they will be ready to release the orders for the capital side to get the price validity longer than we usually do. So far, we have not gone that route. In the aggregates side, it is a little bit more the current situation in the markets under pressure. It is difficult to use our normal way, the pricing power, and that is quite obvious at the moment in the aggregates markets.

Pasi Kuokkanen, CFO, Metso: When it comes to mineral seasonality overall, in aggregates, we see clear seasonality. For example, third quarter also this year was a slower period compared to some of the other quarters. In minerals, we see much less of that. We are delivering, we are completing the projects from our backlog also during the fourth quarter normally. We don’t expect anything specific there. Of course, if I compare to third quarter, for example, there is Christmas and there is holiday seasons. That may have some limited impact, but that’s how we see it.

Thank you. One follow-up, if I may. Building on the earlier question regarding the order pipeline in minerals, can you talk a little to the discussion around the upgrades and modernization pipeline rather than large, normally highlighted projects? Do you see the ongoing trend that we’ve seen in Q3 with exceptional strength continuing in the fourth quarter?

Sami Takaluoma, President and CEO, Metso: Yeah, that’s an excellent question. As you might remember, I was responsible for this business area. Typically, we had the funnel of these upgrades and modernizations six months ago. It was the largest ever in the euro value, so a lot of projects in a very good state of the discussions with the customer. Now we have started to see that they are released. Typically, I’m now referring to what has happened in the past. They tend to then follow for one, two, three quarters in a row as a cycle when the customers make these orders. The expectation is that we do see also those orders coming into Q4 and maybe also Q1.

Thank you very much.

Conference Call Operator: The next question comes from Tore Fangmann from Bank of America. Please go ahead. The next question comes from Mikael Doepel from Nordea Markets. Please go ahead.

Thank you. Good afternoon, everybody. I have two questions. I can take them one by one. Firstly, on the aggregates business and what you see there, particularly in the U.S. If I hear you correctly, you seem to expect Europe to continue to recover into the fourth quarter, but I didn’t really catch your views on the U.S. market clearly. Is it so that you see distributor inventory levels currently at normal levels, or do you also expect some restocking effects there? Have you seen any negative impact of tariffs thus far? Is it just an expectation that it might come? Just a bit of a clarification on how you see the demand in the U.S., please.

Sami Takaluoma, President and CEO, Metso: Thank you. I tried to open that a little bit. We have not seen yet, but what we look at is the distributor inventory levels. From that perspective, it supports that the business that we see coming from the U.S. would be the normal as the levels are not overhigh as they used to be one year ago, for example. On the other hand, there is a risk that the new tariff-included price levels of equipment and also parts might have an impact on how the end customers are evaluating their investment timing. Are they doing it now or expecting to look a little bit later? It even might have some challenges to fulfill the business plans with the new pricing coming through. These two are both there and giving this little bit uncertain situation, if I put it this way.

One is supporting that the business continues normally, and the other is putting a little bit of the dark clouds out there.

Okay. No, that’s helpful. Thank you very much. The second question relates to the mining business and maybe the project pipeline you talked about. Just wondering, if I’m not wrong remembering things, I think there should be a bit of a tail still left, for example, from the Uzbekistan fairly large copper smelting order you got back in 2024. There might also be some other tails from other bigger projects. I assume when you talk about larger projects, you are not referring to these ones. If you could maybe just give an update on the kind of the ones that you have won but haven’t yet gotten all the orders from the bigger ones.

Pasi Kuokkanen, CFO, Metso: Yes. First of all, Michael, you have understood it the right way. When we spoke earlier about the larger projects, we were talking about future orders, which we have not yet seen, and our expectation when they will realize, etc. When it comes to sort of existing pipeline, you are indeed correct that there is the Uzbekistan project, Alamaluk, which is ongoing. There is also a number of other not only tails, but activities from the past which are under delivery. They are moving forward as per the plans. From a financial statements point of view, you know we recognize revenue based on the percentage of completion. Typically, it takes quite some time from the order until we start deliveries because of, you know, either engineering needs to go forward, or if that is done, just manufacturing activities with some of these equipment takes quite some time.

The local construction projects also, they are not small by nature. It could be 24, 36 months from the order until we are complete with our deliveries. That’s part of the backlog realization that we see every quarter.

That’s fair. Maybe just a follow-up on that. What is the reason? I mean, why the tails from Uzbekistan are not coming through? Is it a question about the progress on site, which is slow, or is it financing, or is it anything else? Just wondering, you know, when we should expect that one to flow through.

Michael, which way are you thinking? I mean, the project execution is moving forward, and we are realizing revenue and so forth. How are you thinking about this?

No, I think there should be still some order value left from part of it. Have you already refilled everything?

No, I mean, there is further potential on this and some of the other cases, but you know we cannot really comment on single customer cases in such a manner.

All right. That’s fair. Thank you.

Conference Call Operator: The next question comes from Edward Hussey from UBS. Please go ahead.

Hi, Sami, Pasi. Can you hear me now?

Sami Takaluoma, President and CEO, Metso: Hello?

Pasi Kuokkanen, CFO, Metso: Yeah, Edward, we can hear you.

Okay, cool. Sorry about that earlier. Just sticking to the rebuild and modernization theme. First question is just on the order side, my understanding is that the comps in Q4 were also extremely weak. Should we expect to see a similar growth rate on the rebuild and modernization side in Q4?

Sami Takaluoma, President and CEO, Metso: Yeah, I said that these ones are those aftermarket orders that are not super critical from the timing perspective. That’s also the reason why they have this cyclic element. We do have now, we got the orders. We are happy of those. They were expected that they start to come during this year. We also expect that we see some of a similar way coming through in the Q4. Fully to be able to estimate or quantify the amount is challenging because they do not have this criticality the same way as other aftermarket products.

You are right that.

Pasi Kuokkanen, CFO, Metso: Okay, thanks. Just on.

Sorry, you are right that it’s a weak comparison point in Q4. We did not see these orders last year in Q4.

Correct.

Okay, thanks. Maybe just thinking about the mix in orders. I mean, is it when you think about these rebuild and modernization orders, do they make up a sort of normalized mix in Q3, or are they still below what you’d consider a normalized mix?

Sami Takaluoma, President and CEO, Metso: I would say that when looking at the backlog, for example, they look normal. Orders that we are expecting, once again, difficult to really estimate in a very accurate way how much we will get those, but I would say that they are normal if something.

Okay, that’s very helpful. Final question just on this theme is just on the revenue side. Clearly, it seems to be margin accretive from the aftermarket business. In terms of the revenue mix for rebuild and modernizations, are these at normalized levels now, or is there, I mean, could we potentially see a sort of acceleration in rebuild and modernization revenues in Q4 and therefore support from a margin perspective?

Generally, I can comment that much that upgrades and modernizations for us, they are good and very healthy business when it comes to the margins. They are in a good level from our sales mix perspective.

Okay, that’s very helpful. Thank you.

Conference Call Operator: The next question comes from Tore Fangmann from Bank of America. Please go ahead.

Hi, sorry. Can you hear me now?

Pasi Kuokkanen, CFO, Metso: Yes, we can.

Perfect. Thank you so much. Sorry for before. I had a bit of tech issues and cut out sometimes. Excuse me if this was asked before. Just one more question from my side. The aggregates margin has recovered quite nicely quarter on quarter despite the lower revenues total and also like in equipment itself. I was expecting before that the main kicker for a margin improvement would be basically the volumes coming back for the cost absorption. What would you say is the reason now quarter on quarter with the margin recovery that we’ve seen? Thank you.

Yeah, it’s a good question. Thor, you may remember that overall we had some extra costs in the second quarter. While, of course, Minerals is the one carrying a larger share, Aggregates was also impacted. From that angle, the situation has normalized. Overall, you know, not only in Aggregates, but generally, we had sort of a good cost control quarter. That helped also Aggregates to deliver the margins they did.

Okay. Just as a brief follow-up, if I remember correctly, the main part that could have impacted aside from the ramp-up of the production cost would have been the ERP implementation in Q2. Am I missing out something here? When you say good cost control, is this something that you would expect to continue into Q4? Is it basically structurally now better cost control, or is it a little bit more by circumstance that we’re better cost control in Q3?

I mean, I was mainly referring to the extra costs, i.e., ERP implementation that we had in the second quarter. Like we said three months ago, that was one-off costs. Those have not repeated in the third quarter. From a cost performance point of view, our expectation is to remain in a similar position going forward.

Great. Thank you.

Juha, Investor Relations, Metso: All right. There seems to be no further questions. We are able to wrap up this conference call well in time. Thanks again for listening. Thanks again for asking questions. We’ll be back with our fourth quarter and full-year results on February 12th next year. In the meantime, we’re sure to meet many of you on the road and at different events during the remainder of this year. Looking forward to that. We say thanks again and goodbye.

Pasi Kuokkanen, CFO, Metso: Thank you.

Thank you.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.