Automation Industry Growth by Acquisition: Automation Specialist Metso Targets new Markets
Metso strengthens their automation services portfolio: With the acquisition of American ExperTune and its products and services portfolio, the company is likely to target the global oil and gas industry...
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Starting off the New Year much as promised in recent investor briefing presentations, the Metso Corporation of Helsinki, Finland announces the acquisition of the US based software company ExperTune, for an undisclosed sum. The move follows their commitment to grow the scope of the services business globally, within the Metso Automation business, particularly targeting their identified growth areas in the oil and gas and petrochemicals industries.
Mikko Keto, president of the services business within Metso Automation said “The combination of ExperTune’s products and Metso’s services portfolio extends our capability to offer solutions targeted to improving process and business performance.”
ExperTune products will be sold as standalone solutions that can be used in any automation system environment, and as part of Metso’s performance business solutions, aimed at optimizing plant performance. The acquisition expands and strengthens the Metso ability to globally provide business-enhancing services to customers.
Expanded Portfolio for Added Efficiency
ExperTune will lead to Metso solutions Keto summarizes the Metso approach by saying “With ExperTune we can provide more versatile and more cost effective customer value solutions to our customers, so that they can meet their most pressing business challenges, such as reducing raw material consumption, energy usage, product variability and environmental impact. ExperTune products will help our customers find areas of improvement in their processes for which Metso has customer value solutions.”
ExperTune was founded in 1986, employs under 50 people, and is based in Milwaukee, Wisconsin: the annual sales total is below Euro10m (US$13m). ExperTune is said to design pre-packaged industrial software which helps maximize productivity and efficiency and reduce waste in the process industries worldwide, with brand names like PlantTriage, ProcessApex and PID Loop Optimizer.
Metso suggest that ExperTune has an extensive sales representative network on all continents: their partnerships include a significant global relationship with Invensys Operations Management, plus reseller relationships with Honeywell and Siemens. Whilst such companies will probably wish their ExperTune sales relationship to continue, and might have no problem in working with the Metso control valve products, further expansion of Metso into services contracts via these sales routes might not be so straightforward.
The Metso Business Profile
At a Capital Markets Day in December, the Metso group management presented their current operating profile and business plans to analysts and investors. Year end is 31 December, so 2012 results are as yet unknown, but on the basis of Q3 will be better than 2011, with sales around Euro7Bn ($9Bn). The major parts of the business are in mining and construction (44%), paper, board, tissue and pulp (30%): then follow automation at 12% and power at 11%.
In pulp, paper and power, which is one division, they have developed significantly in bio-refining for pulp and paper mills – possibly mainly in South America, and biomass and waste fired boilers for heat and power – mainly in Europe.
Automation is Key Industry for Finnish Company
The automation division, run by Perttu Louhiluoto, occupies a key position within the whole business, supplying automation systems and control valves in support of the other divisions: they see this division as having the potential for higher than average growth and margin in the main Metso vertical markets, as well as on its own initiative in external markets like oil and gas. Within all their businesses Metso Group see the service element as important, and giving opportunity for growth and increased profitability from the existing installed base of equipment.
The automation objective was also defined as ‘Helping the process industries generate more output from less input’: hence the interest in ExperTune. Automation business structure There are two main business areas: valves and automation systems.
The valves are control valves and actuators – their brands are Neles, Jamesbury and Mapag, but they have recently acquired Valstone Control, a globe valve manufacturer in South Korea. Interestingly, their valve newsletter claims that 60% of the world’s LNG flows through their valves, having supplied projects in most LNG producing areas (See the similar comments from IMI, on page 6). They suggest the valve business operates in a Euro10Bn sector of the Euro44Bn flow control market, which is defined to also include positive displacement and centrifugal pumps – although hopefully these are not areas being considered for other acquisitions!
In their flow control (valve) sector Metso claim #1 position in pulp and paper, #4 in oil and gas, #4 in refining and #6 in chemicals. Their objectives for next year are to grow and develop this business, since they see growth in all main markets: also they plan to gain volume leverage, plus introduce the globe valve ranges from Korea.
Control Systems, Running in the Metso DNA
The process automation systems (PAS) business uses the Metso DNA control system, and is active in a Euro5Bn sector of this Euro25Bn market. This PAS was developed for the pulp and paper industry, where they are #3, and is also used in their power plants, where they consider themselves #9. The current low level of PAS business from pulp and paper has been disappointing, in contrast to the increased business this market provided for valves: the control systems business had to look to new markets for growth, and in 2012 the PAS orders in such new markets were the highest ever.
Future Developments – For Markets in Asia and Beyond
The plan is to further develop Metso DNA, and a JV has been established with Guodian Nanjing Automation covering control systems for thermal power customers in China. In addition there is interest in further developing Metso analytical instruments for use in mining automation.