we have a clear path to growth - neles

© Metso © Metso Capital Markets Day 2015 Capital Markets Day 2015

We have a clear path to growth

John Quinlivan

President, Flow Control

© Metso © Metso Capital Markets Day 2015 Capital Markets Day 2015 Flow Control by John Quinlivan

Flow Control will continue as a high performer - and will aggressively seek growth

2

Our performance

has continued to

be strong

We have been

resilient to market

drop

We have a lot of

growth

opportunities to

tap into

Expanding our channels to market

Expanding our market presence horizontally

Continuing to improve our service capabilities

and network

We will grow by

Making acquisitions in flow control

Developing our portfolio to support growth

Continuing to build and strengthen our

operational excellence


1 Q3/2014 – Q2/2015, rolling 12 months without Process Automation Systems

2 Personnel figure based on the most up-to-date information

3

Valves

• 85% of business area net sales

• Strong niche position in oil & gas downstream,

process industries and leader in pulp & paper

Pumps

• 15% of business area net sales

• Serving a wide range of slurry applications

with pumps, hoses, and slurry valves,

predominantly in mining industry

Net sales EUR 723 million¹

Personnel ~2,700²

We have a strong platform in valves and pumps Where are we today?


We continue to deliver strong results

Note: Figures include valves and pumps, excluding Process Automation Systems

* Before non-recurring items

4

• Valve business strong

performance

continues -

development has

outpaced the market

and the leading

competitors.

• Pumps has high

profitability with a

main focus on high-

wear applications.

Net sales, EUR million

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

0

100

200

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Q1

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Q2

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Q2

Capital Services EBITA%

Where are we today?


The markets have been challenging

5

Oil price1

Brent crude oil price

EPC order trend2

Rolling 12-month order intake (FX=Dec 2014)

Mining equipment providers order trend3

(Rolling 12-month order intake, FX=Dec 2014)

Pulp & Paper equipment providers order trend4

Rolling 12-month order intake

1. Source: Thomson Datastream

2. Selected EPC companies include: Technip, JGC, Chiyoda, Tecnimont, KBR, Linde Engineering, Fluor, CB&I, Saipem, Jacobs Engineering, Samsung Engineering and GS Engineering & Construction

3. Selected mining equipment providers include Atlas Copco (segment), Metso (Mining Capital), Sandvik (segment) and Weir (segment)

4. Selected Pulp & Paper equipment providers include: Andritz (segment), and Valmet (corporate level)

0

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EUR billion

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06 2012

06 2013

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USD/barrel

Where are we today?


Flow Control valve business rolling 12-month

EBIT % development vs. peers*

Flow Control valve business rolling 12-

month net sales development vs. peers*

Indexed (Q1/11 =100)

90

100

110

120

130

140

150

160

Jun 2011 Jun 2012 Jun 2013 Jun 2014 Jun 2015

Metso valves

Valve peers

Jun 2011 Jun 2012 Jun 2013 Jun 2014 Jun 2015

Valve peers

Metso valves

*Including Emerson Process Management, Flowserve Flow Control Division, Cameron Valves & Measurement, Pentair Control & Valves and Velan

Our valve business has been resilient to market decline, while competitors have suffered

6 Flow Control by John Quinlivan

Where are we today?


We have a favorable business mix with a large service share

1. Percentage shares are for valves and pumps only – excluding Process Automation Systems, based on rolling 12 month ending Q2 2015

2. Oil & Gas industry includes Oil & Gas production, transportation, refining, energy & process, bioenergy, petrochemicals as well as industrial gas

3. Other industries includes among others chemicals, food processing, agriculture, pharma

Limited exposure to most

affected oil and gas segments Well-balanced

geographical presence

Most of the sales are

service driven

41%

59%

Capital 41%

Services 59%

Net sales split services / capital equipment1


27 %

36 %

6 %

24 %

6 %

Europe 27%

North America 36%

South America 6%

Asia Pacific 24%

Middle-East and Africa 6%

Net sales split1

10%

46% 15%

15%

14%

Oil & Gas midstream 10%

Oil & Gas downstream² 46%

Pulp & Paper 15%

Mining 15%

Other³ 14%

Net sales by industry1

Where are we today?


Refinery capacity3

Total Refinery capacity (CDU mmbd)

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Despite the market turmoil, we remain positive on the mid-term development of Flow Control end markets

Flow Control by John Quinlivan 8

Oil price1

Brent price (USD/barrel)

O&G CAPEX & OPEX2

USD Billion

Chemicals CAPEX growth4

1. Forecasts from Citi, Deutsche bank, Morgan Stanley, EIA, Economist Intelligence Unit, OECD

2. Morgan Stanley forecasts

3. Global Data forecasts

4. IHS forecasts

-5%

0%

5%

10%

15%

20%

25%

20

05

20

07

20

09

20

11

20

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1,200

1,500

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2,100

900

600

300

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20

14

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20

16

20

17

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20

13

Average

forecast

6% -15%

6%

Forecasts in 2014

Forecasts in 2015

Where are we today?



9

Our performance

has continued to

be strong

We have been

resilient to market

drop

We have a lot of

growth

opportunities to

tap into




and network

We will grow by






We are developing additional channels to market globally

- Stocking distributors serving our customers in their day-to-day

needs

- Partnering with existing flow control channel partners that are

expanding their global footprint

- Growing our OEM customer base

- Expanding our industry-specific partners network

We have the portfolio to be attractive to additional channels

to market and we will further expand the portfolio

We are expanding our channels to market

10

What will we do?


We are expanding our market presence horizontally

11

• Strengthening our position in core

industries of oil and gas, mining and

process while enhancing our product

portfolio to grow our presence

horizontally

• Entering into other industries with our

slurry pumps portfolio - expanding

beyond mining

• Acquisitions of businesses to expand

our horizontal position

What will we do?


We continue to expand our service capabilities and network

• Large installed base creating a lot of opportunities

• Continue developing our strong local presence

- 5 new service centers in 2015 further expanding our network

• Installed base information management providing our

customers with more efficient use of their flow control

assets

• Introducing new service capabilities increasing our

customers productivity

• Improving service processes and tools

Flow Control by John Quinlivan 12

Most of the sales are

service driven

41%

59%

Capital 41%

Services 59%

Net sales split services / capital

equipment*

* Percentage shares are for valves and pumps only – excluding process automation systems, based on rolling 12 month ending Q2 2015

What will we do?


We continue to build and strengthen our operational excellence to support growth

13

Productivity improved

from 77% to 89% globally

Productivity improvements since

2012 in all hubs

Efficiency improved by over 6%

Order engineering and management

revamped between 2013-2015

Annual savings achieved:

4% of direct material spend

Global procurement cost-saving

model, KPIs and tools implemented

2012/13

Product transfers to cost

competitive countries,

New facility investments

Continuous footprint and capacity

optimization

LTIF improved from 6.2 to 3.2 in three years Continuous HSE development

What will we do?


Major initiatives to develop front-end processes and tools leading to commercial excellence

14

• We focus strongly on commercial

excellence and creating best-in-class

front-end processes and tools

globally

- Sales process development

- Product configurator

- Implementing Salesforce.com

- Pricing

What will we do?


Neles® globe valve

expansion globally

Developing control

valve offering

Portfolio development to support growth

Coal Launching new

Neles NDX positioner

Target to boost OEM business

Channel partners

development

Expanding mining

pumps range

Competitive Mill Discharge

Pump for mining

Expanded global sales

network

Introducing new service

solutions and products


Increasing service

solution portfolio

What will we do?



16

Our performance

has continued to

be strong

We have been

resilient to market

drop

We have a lot of

growth

opportunities to

tap into




and network

We will grow by





we have a clear path to growth - neles

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