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© Metso 
The leader in value- adding services 
Juha Silvennoinen 
President, Services business area
© Metso 
1. 
Services today 
2. 
Services market outlook 
3. 
Services strategic priorities 
4. 
Conclusions Metso Capital...
Services today 
Global capabilities close to customers
© Metso 
Metso Services business area today Metso Capital Markets Day 2014: 
Services by Juha Silvennoinen 
4 
A leading s...
© Metso 
Serving our customers close to their operations 
Services business area net sales rolling 10/2013-9/2014 
Metso C...
© Metso 
Services orders continues to grow 
Services business area orders received, rolling 12 months Metso Capital Market...
© Metso Metso Capital Markets Day 2014: 
Services by Juha Silvennoinen 
Services provides stable profitability 
Services b...
Services market outlook 
Market potential is not limiting our growth
9 © Metso 
37 
39 
2008 
2007 
47 
44 
Latin America 
50 
2011 
2012 
38 
42 
63 
2013 
54 
2016 
2015 
58 
Europe 
China ...
10 © Metso 
Source: Raw Materials Group, March 2014 
8,5 
2010 
8,0 
2012 
2011 
8,2 
7,5 
2009 
7,0 
2008 
6,6 
2007 
6,0...
© Metso 
High or low market – Good services are always in demand Metso Capital Markets Day 2014: 
11 Services by Juha Silv...
Services strategic priorities 
Aiming at aggressive organic 
growth and improved profitability
© Metso 
Key principles 
Global services approach 
Delivered efficiently 
Global sourcing 
Efficient utilization of global...
© Metso 
Key principles 
Global services approach 
Delivered efficiently 
Global sourcing 
Efficient utilization of global...
© Metso 
Peñoles lead-zinc mine in Mexico 
A life-cycle of improved results 
Metso Capital Markets Day 2014: 
15 Services ...
© Metso 
• 
Detailed analysis of historical plant data to define bottlenecks in the plant 
• 
Ore characterisation testing...
© Metso Metso Capital Markets Day 2014: 
Services by Juha Silvennoinen 
Targeting increased market share 
Proactive instal...
© Metso 
Targeting increased market share 
Huge untapped potential in installed base Metso Capital Markets Day 2014: 
18 S...
© Metso 
Productized services: Full comminution offering 
Wear solutions have direct impact to productivity 19 
Full commi...
© Metso 
Increasing customer value and share-of-wallet 
Performance Services evolution 
Development journey with our offer...
© Metso Metso Capital Markets Day 2014: 
Services by Juha Silvennoinen 
Targeting increased market share 
Easy-to-sell pro...
© Metso 
Service center expansion close to customers continues 
• 
Metso has the industry-leading services center network ...
© Metso 
Improved availability with less inventories 
Creating a global virtual inventory Metso Capital Markets Day 2014: ...
© Metso 
• 
Intensified focus to commodity management will drive substantial savings 
• 
Presently only <20% of external m...
© Metso 
Continuous improvement of our own global manufacturing base Metso Capital Markets Day 2014: 
25 Services by Juha ...
Conclusions
© Metso 
Conclusions 
Capital Markets Day 2014 Metso Capital Markets Day 2014: 
Services by Juha Silvennoinen 
27 
• 
Mets...
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Leader in value-adding services - Juha Silvennoinen

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Metso's head of services Juha Silvennoinen introduces value-adding services for the mining, aggregrates, oil and gas and other industries. This presentation was delivered at the Capital Markets Day in Amsterdam on 26 November 2014.

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Leader in value-adding services - Juha Silvennoinen

  1. 1. © Metso The leader in value- adding services Juha Silvennoinen President, Services business area
  2. 2. © Metso 1. Services today 2. Services market outlook 3. Services strategic priorities 4. Conclusions Metso Capital Markets Day 2014: 2 Services by Juha Silvennoinen © Metso
  3. 3. Services today Global capabilities close to customers
  4. 4. © Metso Metso Services business area today Metso Capital Markets Day 2014: Services by Juha Silvennoinen 4 A leading supplier of value-adding services to improve productivity and reduce operational cost throughout the total life cycle of customer’s processes • Cost-per-ton contracts and life-cycle services • In-depth knowledge of customer technology and processes • Solid operational ability to optimize the use of customers’ assets • 36% of Services business area’s net sales • 35% of Services business area’s net sales • 29% of Services business area’s net sales Performance services Wear solutions Spare parts Net sales 2013: EUR 1,386 million Personnel ~6,500 2,000 field service engineers working close to the customer operations improving customer productivity on a daily basis. • Regional and local inventory ensures availability and fast delivery times • Optimized wear parts throughout plant life cycle • The use of original equipment manufacturer (OEM) parts assures optimal performance and equipment availability, resulting in a lower production cost per ton.
  5. 5. © Metso Serving our customers close to their operations Services business area net sales rolling 10/2013-9/2014 Metso Capital Markets Day 2014: 5 Services by Juha Silvennoinen 28% 11% 27% 19% 15% Europe North America South America Asia-Pacific Africa and Middle East 24% 19% 25% 22% 9% Europe North America South America Asia-Pacific Africa and Middle East 27% 28% 19% 15% 11% Aggregates Mining/Copper Mining/Iron Mining/Gold Mining/Other Net sales by customer segment Net sales by geographic area Employees by geographic area
  6. 6. © Metso Services orders continues to grow Services business area orders received, rolling 12 months Metso Capital Markets Day 2014: 6 Services by Juha Silvennoinen With constant currencies 0 200 400 600 800 1,000 1,200 1,400 1,600 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2012 2013 2014 EUR million • High utilization rates at customer mines create demand for services • Large installed base and strengthened service center network • Proactive sales approach and productization of services
  7. 7. © Metso Metso Capital Markets Day 2014: Services by Juha Silvennoinen Services provides stable profitability Services business area net sales and GP-%*,rolling 12 months** 7 * Before non-recurring items ** Fixed currencies • Leaner operating model • Manufacturing footprint and sourcing improvements, especially in foundry operations • Increased share of value-adding services • Efficient pricing management 0 20 40 60 80 100 120 140 0 200 400 600 800 1 000 1 200 1 400 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2012 2013 2014 EUR million Services net sales, rolling 12 months GP -%, Indexed
  8. 8. Services market outlook Market potential is not limiting our growth
  9. 9. 9 © Metso 37 39 2008 2007 47 44 Latin America 50 2011 2012 38 42 63 2013 54 2016 2015 58 Europe China 2017 2014 Africa & ME Rest of APAC 2010 North America 4-6% 2009 36 2018 4% 63 Crushed stone production output value (USD bn) -3% 7% 18% 10% -4% 4% 1% 6% 25% 11% 5 % 7 % Global aggregates production expected to grow ~5 % p.a. driven by emerging markets 2007-12 CAGR 2012-17 CAGR Source: Construction Intelligence Center, Sep 2014 Metso Capital Markets Day 2014: Services by Juha Silvennoinen
  10. 10. 10 © Metso Source: Raw Materials Group, March 2014 8,5 2010 8,0 2012 2011 8,2 7,5 2009 7,0 2008 6,6 2007 6,0 2,8 Iron Copper Gold 2,4 3,2 2,8 2,9 3,0 3,4 3,0 2,9 2,9 2,9 1,3 2,4 1,6 1,7 8,8 2017 2016 8,7 2015 8,6 2014 8,4 2,4 1,6 5% 1,6 2% 2013 1,2 1,7 1,6 2,5 1,2 1,7 2,7 1,4 3,6 3,7 3,8 3,9 4,0 4,1 4,2 Global ore production by commodity (000 Mt) 5% -1% 7% 2% 3% 2% Global mining production expected to grow ~2 % p.a. but dynamics are different by commodity 2007-14 CAGR 2014-17 CAGR 3-4% 1% 2% Grade erosion Metso Capital Markets Day 2014: Services by Juha Silvennoinen
  11. 11. © Metso High or low market – Good services are always in demand Metso Capital Markets Day 2014: 11 Services by Juha Silvennoinen Infrastructure spending Commodity prices Minerals consumption New business models and installed base Demand LOWER than production capacity  LOWER capacity utilization Demand HIGHER than production capacity  HIGHER capacity utilization CAPEX impact  Green field projects  Brown field projects  More exploration  Plant modernization OPEX impact  Maximize capacity  Delivery  Availability  Utilization  More people CAPEX impact − No green field − Minimal brown field − Reduced exploration  Maintenance capex OPEX impact  Operational efficiency  Cost reduction  Repair and rebuild  Improved planning − Less capital spares
  12. 12. Services strategic priorities Aiming at aggressive organic growth and improved profitability
  13. 13. © Metso Key principles Global services approach Delivered efficiently Global sourcing Efficient utilization of global production footprint World-class availability Close to customers Strategic partnership with selected customers Local sales & technical support for all markets Local service delivery capabilities Global offering Installed base mgmt Easy-to-sell productized service offerings Expand offering to meet customers’ process needs 13 Common enablers People, processes and tools Dedicated service product development Investments and acquisitions Metso Capital Markets Day 2014: Services by Juha Silvennoinen Value-adding services to improve productivity and reduce operational cost throughout the total life cycle of customer’s processes
  14. 14. © Metso Key principles Global services approach Delivered efficiently Global sourcing Efficient utilization of global production footprint World-class availability Close to customers Strategic partnership with selected customers Local sales & technical support for all markets Local service delivery capabilities Global offering Installed base mgmt Easy-to-sell productized service offerings Expand offering to meet customers’ process needs 14 Common enablers People, processes and tools Dedicated service product development Investments and acquisitions Metso Capital Markets Day 2014: Services by Juha Silvennoinen Value-adding services to improve productivity and reduce operational cost throughout the total life cycle of customer’s processes
  15. 15. © Metso Peñoles lead-zinc mine in Mexico A life-cycle of improved results Metso Capital Markets Day 2014: 15 Services by Juha Silvennoinen Today Metso supplies all mill linings and spare parts to this site. We also replaced two crushers to improve their production. We started with mill inspection contracts. Cooperation was later expanded to crushers. Customer was very satisfied  very little spare & wear business in the first years 2007 2 years ago we focused on one of their seven sites  Process Optimization and Integration project to help improve their operations 2012 2014 We are now in their second plant and there is potential for 3 more.
  16. 16. © Metso • Detailed analysis of historical plant data to define bottlenecks in the plant • Ore characterisation testing based on samples from blast audits • Development of blast fragmentation and comminution models • Simulations to evaluate performance improvement opportunities Metso Capital Markets Day 2014: 16 Services by Juha Silvennoinen Metso’s PTI Group offers a unique way to offer value-adding services to our customers 100110120130140150160170180190100012001400160018002000220024000.25 kg/m3135 mm30% 65 mm0.41 kg/m3135 mm30% 65 mm0.41 kg/m3110 mm30% 65 mm0.41 kg/m3110 mm0% 65 mm0.41 kg/m3110 mm0% 75 mm Overall P80, μmThroughput, tph Medium Coarse OreSPI:125 mins, Axb:33.9, BBMWi:19.3 kWh/t, ThroughputOverall P803.6 %6.2 %10.8 %13.3 % Powder FactorPrimary Crusher GapPebble Crusher BypassSAG Mill Grates Case example: • Potential benefit >13% increase in comminution circuit throughtput • Further opportunity with more aggressive operational mode • Additional benefit from optimised control
  17. 17. © Metso Metso Capital Markets Day 2014: Services by Juha Silvennoinen Targeting increased market share Proactive installed base management • Use existing installed base information to define “as-is” share of customer’s OPEX spending • Set customer specific targets for increased share of wallet • Develop and package service offerings to match more aggressive sales approach • Define and follow-up KPI’s to support sales growth 17 Installed base data available for sales and services professionals Knowing customer’s process and current production levels Targeted service suggestions through understanding customers needs Increased services sales: sale at every customer visit
  18. 18. © Metso Targeting increased market share Huge untapped potential in installed base Metso Capital Markets Day 2014: 18 Services by Juha Silvennoinen * Figures 1,000 USD • Metso has delivered thousands of crushers over the years • Market share of own installed base ~ 30% • With optimized service packages Metso can provide increased throughput, improved energy efficiency and guaranteed up-time 39% 15% 7% 30% 1% 8% Wears Spares Direct manpower Energy Lubrication & hydraulic fluids Straight-line depreciation cost Example: Annual operating cost estimate for a large mining crusher ~ USD 1 million
  19. 19. © Metso Productized services: Full comminution offering Wear solutions have direct impact to productivity 19 Full comminution offering Services • Equipment installation • Maintenance and upgrades • Process optimization Wear parts • Grinding media • Crusher wears • Metallic mill linings • Rubber/polymet mill linings Spare parts • Mill heads and shells • Suspension bearings • Other spare parts Capital equipment • Grinding mills • Crushers • Other equipment Metso Capital Markets Day 2014: Services by Juha Silvennoinen • Integrated performance • Total cost of operation reduced • Simpler package, approval by mid-management • No price/Kg discussion • Single point of responsibility • Multi-product, integrated margin • Simpler procurement Benefits
  20. 20. © Metso Increasing customer value and share-of-wallet Performance Services evolution Development journey with our offering, market areas & customers Metso Capital Markets Day 2014: 20 Services by Juha Silvennoinen Services in alpha phase Services 1.0 Services 2.0 Services 3.0 Optimize customers operations (solution business) • Performance based Life Cycle Services • Process performance agreements • Long-term consultancy services Optimize equipment total cost of ownership • Preventive maintenance agreements • Remote support agreement • Extended warranty services • Upgrades and modernizations • On-off consulting projects • Device management services Break-Fix Support • Spares and wear parts agreements • Repair services • Maintenance services • Software license sales • Service enter or spare and wear parts distributor No local presence • Spare and wear parts on-demand • Agent or no local Metso presence
  21. 21. © Metso Metso Capital Markets Day 2014: Services by Juha Silvennoinen Targeting increased market share Easy-to-sell productized service offerings • Pre-defined inspection programs, upgrade kits, installation work and maintenance programs • Simplify LCS sales approach with step- by-step training programs, argumentation kits and sales tools backed up by real-life examples • Launch productized service offerings to sales teams - Predefined launch schedules in all MA - Specs, sales tools and training programs - Sales ramp-up plans for each sales unit - Follow-up growth success with KPIs • Engage front-end sales teams in the development work of new productized offerings • Share best practices between MAs Bronze bushing inspection • Metso Service engineer inspection of the HP500 crushers at maintenance interval • Recommendation to ensure safe and reliable use of the crushers Bronze package options • Option 1: Eccentric –package • Option 2: Head –package • Option 3: Countershaft –package • Option 4: Socket liner –package Proposal of comprehensive service including • Part package option • Installation service • Competitive package pricing 21
  22. 22. © Metso Service center expansion close to customers continues • Metso has the industry-leading services center network with more than 50 service centers globally. • The expansion of the network continues: 5 new service centers inaugurated in 2013- 2014 or currently under construction: - Antofagasta, Chile, 2013 - Arequipa, Peru, 2014 - Cananea, Mexico, 2014 - Arizona, USA, 2015 - Labrador City, Canada, 2015 • Constant evaluation of footprint and local customer needs as the basis for further network expansion. Metso Capital Markets Day 2014: 22 Services by Juha Silvennoinen
  23. 23. © Metso Improved availability with less inventories Creating a global virtual inventory Metso Capital Markets Day 2014: 23 Services by Juha Silvennoinen • Improved availability and service capability with increased inventory turns and lower capital cost • Global distribution center network managed as one entity with full visibility to all local inventories - Right location and close to customers - Ensured availability for high volume items - Visibility to lower volume items for capital gains, inventory transfers instead of new purchase orders • Healthy inventory is an essential element to meet our ROCE targets
  24. 24. © Metso • Intensified focus to commodity management will drive substantial savings • Presently only <20% of external materials sourced from low cost countries Metso Capital Markets Day 2014: 24 Services by Juha Silvennoinen Improved sourcing through global supply base Savings target for 2014 1.1% of total spend Achieved so far: 1.0% of total spend Savings target for 2015: 3.2% of total spend Savings achieved through: • Global sourcing from lower cost base countries • Significant reduction of single source supplier situations • Stronger interaction between Product lines and Category management
  25. 25. © Metso Continuous improvement of our own global manufacturing base Metso Capital Markets Day 2014: 25 Services by Juha Silvennoinen • Better utilization of lowered cost base in our global foundry footprint - Fast ramp-up of Quzhou (China) and Ahmedabad (India)  2014 impact > EUR 5 million - Decision on Tampere foundry in 2015 • Continuous operational improvements in all foundries and rubber plants - Strong day-to-day operational management - Operational savings in 2014 > EUR 10 million • Medium to long term development of lower cost internal supply base - Expansion in China & India • Long-term development of rubber supply chain
  26. 26. Conclusions
  27. 27. © Metso Conclusions Capital Markets Day 2014 Metso Capital Markets Day 2014: Services by Juha Silvennoinen 27 • Metso’s services business in minerals market is a steadily growing EUR ~1.4 billion business • Strong demand for good services even during low investment cycles • Customer value creation through performance services and solutions • Proactive approach to grasp the untapped potential in the installed base • Strong push for easy-to-sell productized services offerings • Continuous improvement of cost base through global sourcing and better use of our own global footprint • Significant improvement in inventory turns

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