49
CONSTRUCTION EUROPE
DECEMBER 2013-JANUARY 2014
A
fter nearly a full year of planning,
Metso is set to split into two in a
partial demerger which will see
the automation, mining and construction
elements separated from the pulp, paper and
power divisions.
Metso’s CEO, Matti Kähkönen, explained that
the automation, mining and construction part
of the business would continue under the
Metso name, although at the moment they are
referring to it as “new Metso” to differentiate it
from the rest, which will use the Valmet name.
From 2 January, 2014, Valmet will be listed
on the Helsinki, Finland, stock exchange under
the same ownership structure as Metso.
Kähkönen said, “We came to the conclusion
that it was an obvious, natural point in time,
and that we would be better off going ahead
as two different companies.”
The current Metso was established in 1999.
Kähkönen said that during those 14 years, its
growth had been developed organically.
“But also a very important part of the
development has been the acquisitions during
those years, and an important part of the
mining/construction development took place
when we bought a company called Svedala
fromSweden. That was the platform for mining
and construction, even though we already had
a crushing and screening operation called
Nordberg, and then we built on that.”
DEMERGER APPROVED
An Extraordinary General Meeting on 1
October this year approved the Metso
demerger.
“The purpose of this demerger,” said
Kähkönen, “is how to accelerate the growth
and the development of both companies by
having more focused management, starting
with the board of directors. Now there will be
two boards of directors, and they can focus on
their respective industries.
“It will mean that we will go deeper into
construction, mining and automation, and
to look at the opportunities within those
customer industries even more actively.”
He said, “In many cases, our customers need
to see better production and better services,
and more cost competitive solutions from
their point of view – otherwise this type of
deal doesn’t make any sense.”
He described the demerger as being a case
of long-term value creation.
“Because infrastructure building will take
place for years to come, we see good potential
in all of those businesses to go forward. It was
a fairly natural split in a way.”
Looking at new Metso, Kähkönen said,
“Construction is an important part, though
of course mining is a little more than half
our revenues. Construction is about 30% –
but construction and mining are related very
strongly to each other in terms of technology.”
For construction customers, Metso offers
mainly crushing and screening equipment.
Kähkönen said, “We are everywhere in
the world when it comes to mining and
construction. For construction, Europe and
North America have been, and still are, the
main markets – if I remember correctly, 70 to
80% of our construction volume. Europe is a
little bigger than North America.”
He said that while Europe and North America
had been fairly flat since 2008/9, there had
been bright spots elsewhere such as Brazil,
which has been benefiting from the Olympics
and the football World Cup.
He admitted that Metso had not been a big
player in the Chinese construction market.
“It’s more like a sort of mid-market,” he
said. “We are strong in the upper end of the
market, but last year we made an acquisition,
a company called Shaorui, which is only for the
mid-market construction business in China.”
Metso has also established a partnership
with Liugong to produce mobile crushers for
the Chinese market. “This mobile market is
very developed in Europe and North America,”
said Kähkönen. “It’s not developed very much
in China, but it is getting to the point where
the mobile crusher market is beginning to
develop in China as well. It is for that reason
we established the relationship with Liugong."
Liugong itself has been increasing its
footprint in Europe.
“Right now we are focusing purely on this
joint venture for the Chinesemarket. It remains
to see how it develops.”
He added that there might come a time to
consider a tie-up with Liugong in Europe,
and that there could be other opportunities
outside China too.
INDIAN MARKET
Elsewhere in the world, Metso claimed a
strong position in the fast-growing Indian
market. Indeed, the manufacturer has been
developing its own factories there since the
1990s.
Kähkönen said, “In construction, you need
to be local because a big part of our business
comes from local contractors, so it might
be within one country or one region. This
sales and service network is important from a
construction point of view.
“It goes for Europe, as well,” he added. “We
have a strong footfall traditionally in Europe,
so we have main manufacturing units in
Finland and in France.”
He said the factories in Finland and France
were sufficient. “We can serve the European
need and also some other areas. We are in
China, have a strong foothold in India and
manufacture in Brazil.”
He said, “We see there is more and more
need for intelligent machines, embedding
intelligence into the machines or then
building up to intelligent services or processes
to improve our customers’ productivity and
their operating costs.”
“The whole organisation should get more
focused,” said Kähkönen. “It will lead to better
services and products for our customers, and
also mean that we are reacting more quickly
when there is something happening in the
marketplace, so that the flow of information
will be fast within the company.
“This will be how we can truly help our
customers do better business, improve their
processes and increase their productivity.”
ce
New year,
new focus
A partial demerger at Metso is designed to
allow the company to concentrate on core
parts of the business, according to CEO
Matti Kähkönen
. He spoke to
Sandy Guthrie
INTERVIEW
Kähkönen, “We see good
potential in all of those
businesses”
