Outotec Cuts 500 Jobs on Lower Profits as Miners Spend Less
Outotec Oyj (OTE1V) fell the most in more than three years in Helsinki trading after the Finnish mining equipment supplier lowered its 2013 sales and profit forecasts and started talks on dismissing 500 workers globally.
Outotec seeks 50 million euros ($68 million) of annual cost savings by the end of 2014 as mining customers reduce capital spending, the Espoo-based company said in a statement today. Clients are questioning the sustainability of a global economic recovery as some projects have have been bogged down by delays in customer payments and a 30 million-euro project was canceled last month, it said.
Outotec dropped as much as 14 percent in Helsinki, the largest intraday decline since Feb. 9, 2010. The shares fell 12 percent to 8.485 euros at 11:34 a.m., the biggest decline among companies in the Stoxx Europe 600 index. Trading volume was more than three times the three-month daily average.
Mining equipment makers, including Outotec and Metso Oyj (MEO1V), will face at least a five-year decline in demand after benefiting from booming markets since early 2000s, analysts at Goldman Sachs Group Inc. said last week. Miners including BHP Billiton Ltd., Anglo American Plc (AAL) and Rio Tinto Group are stalling investments and focusing on savings as metal prices remain low.
Outotec said 2013 sales will be as high as 2.1 billion euros, compared with the previous forecast of as high as 2.3 billion euros. The company lowered its annual operating-profit margin forecast, excluding one-time costs, by 1 percentage point to as much as 9.5 percent.
Outotec’s third-quarter orders of 229 million euros were 49 percent lower than a year ago, according to preliminary numbers published today. Estimated one-time costs from its efficiency program may reach 30 million euros, it said.
Metso shares fell as much as 5.4 percent after the Helsinki-based competitor also cut its forecast today, citing a “substantial loss” in its Valmet Automotive unit. It said mining and construction equipment sales will be “somewhat” lower than last year.
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