Sunday, December 2, 2012

Metso corporation

Added Metso Corporation to our portfolio.
"Metso is a global supplier of technology and services to customers in the process industries, including mining, construction, pulp and paper, power, and oil and gas."
During first three quarters of this year (2012) 44,8% of net sales came from mining and construction segment. Paper and pulp related segment also includes recycling and Valmet Automotive. 38,6% of net sales came from this segment. Automation segment was responsible of 11,6% of the top line.

Metso is a global market leader in e.g. grinding mills, mining crushers, pulp and paper control valves, and tissue machines. It has many more products in globally in top 3 positions. About 50% of their sales come from developing markets. Services account for 46% of sales. Their order book look solid with approximately 5 billion euros worth of orders at end of Q3 2012. Half of this is for mining and construction. Net sales of Metso corporation was 5,4 billion euros in the first three quarthers of 2012 and 6,5 billion euros in 2011.

Metso pays good dividend and is expected to pay 2,2 euros per share in 2012. That would be 7,6% yield based on closing price of 28,91 euros per share in Helsinki stock exchange (30.11.12). According to Nordnet bank the P/E of Metso is 12,0 while P/B is 2,1 based on the same closing price. 

Metso certainly is not a defensive pick, but it does have quite a bit of service revenue along with its fat order book to carry it forward even if times are turbulent. I decreased our gold position to get money for this purchase. Going forward I believe companies like Metso are a far better bet than gold which itself does not produce yield. However, our remaing gold positions along with our positions in gold mining companies continue still to be significant part of our overall portfolio.

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