With their merger completion still expected to complete in Q2 2020 (via Metso’s partial demerger and combination with Outotec to create Metso Outotec & Metso Flow Control spinning off to become Neles), mineral processing technology & equipment majors Metso and Outotec have updated markets on the impact of the coronavirus (COVID-19) pandemic to their businesses.
During February 2020, Metso’s operations in China were largely impacted by the coronavirus situation. The Chinese factories were nevertheless restarted successfully during the month and are now running at their normal capacity. The order intake from China in the first quarter is estimated to be on the planned level, while sales in China will be lower than planned, having a minor impact on Metso’s financial performance.
Metso adds that quickly enforced measures to contain the spreading of the virus in various countries around the world are limiting the mobility of its workforce and that this has started to have an impact on its field service operations. “Currently, Metso’s operations especially in India, Peru and South Africa are affected by the restrictions imposed by governments. If prolonged for several weeks, the restrictions might also affect supply chain activities.”
Under these circumstances, Metso will says it will continue to focus on the safety of its personnel and customers, as well as leveraging its global operations in order to provide a maximum flexibility to ensure continuation of its own and its customers’ operations. Simultaneously, the company continues to prepare actions to adapt to short-term challenges in various locations and focus on cost control and cash flow. As an example it is evaluating the potential closure or other alternatives for its operations in Vereeniging, South Africa.
Metso added: “The company has already earlier implemented a strong cost control, due to the upcoming demerger and its liquidity position is solid. The planned short-term activities could include reduction of worktime and reduced overall spend. Reduced worktime is likely to have a temporary negative impact on the compensation for many employees, and therefore the Metso Executive Team has decided to participate in this undertaking by lowering its own compensation during this period as well.”
The exceptional circumstances caused by the coronavirus pandemic are also impacting Outotec’s business. Due to this Outotec is initiating employee cooperation negotiations on March 31, 2020 with the personnel in Finland with regard to temporary lay-offs. The temporary lay-offs would last for a maximum of 90 days. The negotiations concern the entire personnel, approximately 1,400 employees in Finland.
”The coronavirus outbreak has hindered the global market environment, including our operations in Finland. Unfortunately, these measures are necessary in order to adjust our cost levels in the changed business situation,” said Outotec’s CEO Markku Teräsvasara.