Valmet Corp · OMXHEX:VALMT
Valmet — Non-Deal Roadshow (June 2017)
81 slides from Valmet's roadshow presentation, June 2017
Slide 1: Valmet – unique offering with process technology, automation and services
Valmet – unique offering with process technology, automation and services Roadshow presentation June 2017
Slide 2: Agenda
Agenda Valmet roadshow presentation 1 Valmet in brief 2 Investment highlights 3 Financials 4 Conclusion 2 June 2017 © Valmet | Roadshow presentation
Slide 3: Valmet in brief
Valmet in brief Valmet <>
Slide 4: Key figures in 2016
Key figures in 2016 Stable business net sales EUR 1.5 billion Orders received Net sales by business line Net sales by area EUR 3,139 million 12% 22% 22% Net sales 12% EUR 2,926 million 39% 7% Comparable EBITA EUR 196 million 30% Comparable EBITA 10% 47% margin 6.7% Services North America Automation
Slide 5: Valmet's development
Valmet’s development Comparable EBITA target 8–10% from 2017 onwards Orders received Net sales Comparable EBITA Comp. EBITA margin (EUR million)1 (EUR million)1 (EUR million)1 (%)1 3,341 3,071 3,139 2,878 2,928 2,926 2,945 2,613 2,473 2,182 1,812 1,658 2,016 1,537 1,572 1,473 1,495 1,581 1,484 1,147
Slide 6: Our four business lines serve the same customer base
Our four business lines serve the same customer base #1–2 #1–3 #1–3 #1 Services Automation Pulp and Energy Paper Mill and plant Supplies and develops Technologies and Technologies and improvements, roll and automation and solutions for pulp solutions for board, tissue, workshop services, parts infor
Slide 7: Strong, global presence is a good platform for growth
Strong, global presence is a good platform for growth Over 120 service centers, 86 sales offices, 34 production units, 16 R&D centers China North America • 8 service centers • 6 production units • 17 service centers • 3 sales offices • 7 production units • 8 sales offices 1,700 1,270 EMEA • 16 R&D c
Slide 8: Process technology, services and automation
Process technology, services and automation Valmet’s unique offering differentiates the company from its competitors Process- technology Customer Services Automation 8 June 2017 © Valmet | Roadshow presentation
Slide 9: Significant, customer focused research and development work
Significant, customer focused research and development work R&D focus areas • Advanced and competitive technologies and services • Raw material, water and energy efficiency • Promotion of renewable materials 16 EUR 64 million ~1,500 research and R&D spending protected development in 2016 inventions
Slide 10: Sustainability360º agenda
Sustainability360º agenda Contributing to business growth Sustainable supply Health, safety and People and Sustainable Corporate chain environment (HSE) performance solutions citizenship Recent achievements in sustainability • Inclusion in the Dow Jones World Sustainability Index (DJSI) for the thir
Slide 11: Financial targets
Financial targets Growth • Net sales for stable business to grow over two times the market growth • Net sales for capital business to exceed market growth Profitability • Comparable EBITA: 8–10% ROCE • Comparable return on capital employed (pre- tax), ROCE1: 15–20% Dividend • Dividend payout at leas
Slide 12: Investment highlights
Investment highlights Valmet <>
Slide 13: Investment highlight summary
Investment highlight summary 1 Strong market position in markets that grow Stable business, with EUR 1.5 billion of net sales, 2 offering stability, growth and profitability Capital business, with flexible cost structure, offering 3 growth and profitability potential 4 Continuous systematic developm
Slide 14: Strong market position in markets that grow
1 2 3 4 5 Strong market position in markets that grow Services Automation Pulp Energy Tissue Board Paper #1–2 #1–3 #1–2 #1–3 #1 #1 #1 EUR EUR EUR EUR EUR EUR EUR 8.0 ~1-2% 2.0 ~1% 1.4 ~1% 2.0 ~1% 0.7 ~3% 1.0 ~2-3% 0.3 ~-1% p.a. p.a. p.a. p.a. p.a. p.a. p.a. bn bn bn bn bn bn bn • Capacity • Investme
Slide 15: Stable business offering stability, growth and profitability
1 2 3 4 5 Stable business, with EUR 1.5 billion of net sales, offering stability, growth and profitability Key potential in stable business Stable business orders received Organic growth • Valmet Way to Serve (EUR million) • Industrial Internet Growth ~5% ~14% CAGR CAGR Services • Strengthening the
Slide 16: Capital business with flexible cost structure
1 2 3 4 5 Capital business, with flexible cost structure, offering growth and profitability potential Key potential in capital business Orders received (EUR million) • Product cost competitiveness to support the 2,015 growth 1,812 1,537 1,657 • Cost structure development and increasing 1,147 flexibi
Slide 17: Continuous systematic development
1 2 3 4 5 Continuous systematic development Supporting growth: New Valmet way to serve Improved sales process for complete offering Supporting profitability improvement: Reducing procurement costs Reducing quality costs Project management, R&D and ERP 17 June 2017 © Valmet | Roadshow prese
Slide 18: Technology leader with unique offering
1 2 3 4 5 Technology leader with unique offering Cost-competitive, focused Complete pulp mill delivery Comprehensive offering for solutions in Paper capability energy customers • 12 OptiConcept M • State-of-the-art technology for • Solutions for machines sold all types of demanding fuels pulps • 9 A
Slide 19: Financials
Financials Valmet <>
Slide 20: Key figures
Key figures EUR million Q1/2017 Q1/2016 Change 2016 2015 Change Orders received 1,005 803 25% 3,139 2,878 9% Order backlog1 2,613 2,207 18% 2,283 2,074 10% Net sales 671 652 3% 2,926 2,928 0% Comparable EBITA 35 31 10% 196 182 7% % of net sales 5.1% 4.8% 6.7% 6.2% EBITA 37 30 26% 183 157 17% Operati
Slide 21: Comparable EBITA margin development
Comparable EBITA margin development Net sales and Comparable EBITA (EUR million and %) 854 779 804 785 777 734 Target 8–10% 7.3% 685 652 7.1% 7.2% 6.9% 671 588 590 6.4% 6.1% 561 7.5% 519 5.1% 4.8% 445 375 5.5% 408 427 Capital business 3.7% 3.5% 400 334 409 338 411 360 Stable business 498 371 377 337
Slide 22: Guidance and short-term market outlook
Guidance and short-term market outlook Guidance for 2017 (net sales guidance revised upwards on April 12, 2017) Valmet estimates that net sales in 2017 will increase in comparison with Guidance for 2016 (EUR 2,926 million) and Comparable EBITA in 2017 will increase in 2017 comparison with 2016 (EUR
Slide 23: Conclusion
Conclusion Valmet <>
Slide 24: Conclusion
Conclusion 1 Strong market position in markets that grow Stable business, with EUR 1.5 billion of net sales, 2 offering stability, growth and profitability Capital business, with flexible cost structure, offering 3 growth and profitability potential 4 Continuous systematic development 5 Technology l
Slide 25: Important notice
Important notice It should be noted that certain statements herein which are not historical facts, including, without limitation, those regarding expectations for general economic development and the market situation, expectations for growth, profitability and investment willingness, expectations fo
Slide 26: Appendix
Appendix 1 Financials 2 Focus areas and actions 3 Area development 4 Shareholders and share price development 5 Offering 6 Management 26 June 2017 © Valmet | Roadshow presentation
Slide 27: Appendix: Financials
Appendix Financials Valmet <>
Slide 28: Services: orders received and net sales
Services: Orders received increased and net sales remained at the previous year’s level in Q1/2017 Orders received (EUR million) Net sales (EUR million) 2015: 2016: 2015: 2016: EUR 1,119 million EUR 1,182 million EUR 1,128 million EUR 1,163 million 400 355 1,600 400 1,600 350 313 321 1,400 350 314 3
Slide 29: Automation: orders received and net sales
Automation: Orders received increased and net sales remained at the previous year’s level in Q1/2017 Orders received1 (EUR million) Net sales1 (EUR million) 2015: 2016: 2015: 2016: EUR 310 million EUR 337 million EUR 308 million EUR 316 million 120 450 95 120 101 450 88 87 88 99 100 81 375 10 78 75
Slide 30: Pulp and Energy: orders received and net sales
Pulp and Energy: Orders received and net sales increased in Q1/2017 Orders received (EUR million) Net sales (EUR million) 2015: 2016: 2015: 2016: EUR 864 million EUR 939 million EUR 913 million EUR 826 million 700 622 1,400 350 312 1,400 600 560 1,200 300 1,200 262 229 234 245 500 1,000 250 222 231
Slide 31: Paper: orders received and net sales
Paper: Orders received increased and net sales remained at the previous year’s level in Q1/2017 Orders received (EUR million) Net sales (EUR million) 2015: 2016: 2015: 2016: EUR 673 million EUR 718 million EUR 659 million EUR 647 million 350 314 1,050 350 1,050 300 900 300 900 246 250 212 750 250 75
Slide 32: 2016 orders received split
2016 orders received split EUR million and % of total 381 12% 588 718 19% 23% 342 1,182 11% 38% 235 7% 939 30% 1,594 299 51% 10% Services North America South America Automation EMEA Pulp and Energy China Paper Asia-Pacific 32 June 2017 © Valmet | Roadshow presentation
Slide 33: Net sales split, by business unit
Net sales split, by business unit Net sales split, business units (2016) Net sales split, Valmet (2016) Services Automation Stable business 12% 19% 28% 15% Paper Rolls 28% Board 26% 72% Mill Improvements 5% 8% Tissue 9% Rolls Pulp and Paper 11% Mill Improvements Energy and Process Performance Parts
Slide 34: Net sales split, by area
Net sales split, by area Net sales split, areas (2016) Net sales split, Valmet (2016) Services Automation Stable business 11% 5% 8% 23% 9% 28% 12% 4% 22% 9% 44% 60% 12% North America North America South America South America 7% EMEA EMEA China China Asia-Pacific Asia-Pacific Pulp and Energy Paper Ca
Slide 35: Announced orders in H1/2017
Announced orders in H1/2017 Date Booked Description Business line Country Value quarter Jan 3 Q4 Modernization of a flue gas desulphurization (FGD) at a Pulp and Energy Poland Not disclosed. The value of a project of this size and scope is combined heat and power (CHP) plant typically around EUR 2 m
Slide 36: Announced orders in H1/2016
Announced orders in H1/2016 Date Booked quarter Description Business line Country Value Jan 15 Q4 Grade conversion rebuild Paper Canada Not disclosed Jan 26 Q4 Flue gas desulphurization plant Pulp and Energy Poland Around EUR 20 million Jan 28 Q4 New high consistency bleaching system Pulp and Energy
Slide 37: Announced orders in H2/2016
Announced orders in H2/2016 Date Booked Description Business line Country Value quarter Jul 1 Q1 Automation technology Automation Malaysia Not disclosed1 Jul 4 Q2 Biomass-fired boiler plant and related automation and Pulp and Energy Russia Not disclosed environmental systems Jul 12 Q1 Advanced proce
Slide 38: Orders received increased to EUR 1,005 million in Q1/2017
Orders received increased to EUR 1,005 million in Q1/2017 Orders received (EUR million) Orders received in Q1/2017 by area 1,400 3,500 Asia-Pacific North 13% 1,200 3,000 America 24% 1,000 2,500 China 9% 800 2,000 600 1,500 South 1,101 America 1,023 1,005 400 781 725 793 803 692 788 857 1,000 3% 580
Slide 39: Stable business orders received last 4 quarters
Stable business orders received totaled EUR 1,567 million during the last 4 quarters Orders received (EUR million) in stable business1 500 1,750 443 402 394 409 400 371 88 1,400 330 342 344 95 81 88 293 87 300 267 273 273 75 80 1,050 242 78 200 700 321 355 293 307 313 284 267 273 242 273 252 267 264
Slide 40: Order backlog at EUR 2,613 million
Order backlog at EUR 2,613 million at the end of Q1/2017 Order backlog (EUR million) Structure of order backlog 3,000 2,500 2,613 2,406 ~25% 2,312 2,283 2,000 2,208 2,207 2,192 2,117 2,074 2,106 1,972 1,998 2,064 1,500 1,000 ~75% 500 0 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/1
Slide 41: Gross profit margin and SG&A
Gross profit margin and SG&A at the previous year’s level Gross profit (EUR million and % of net sales) SG&A (EUR million and % of net sales) 200 23% 25% 200 25% 19% 160 20% 160 20% 120 15% 120 15% 80 10% 80 10% 40 5% 40 5% 0 0% 0 0% Q2/2016 Q1/2014 Q2/2014 Q3/2014 Q4/2014 Q1/2015 Q2/2015 Q3/2015 Q4
Slide 42: Cash flow provided by operating activities
Cash flow provided by operating activities Cash flow provided by operating activities (EUR million) 2014: 2015: 2016: EUR 236 million EUR 78 million EUR 246 million 140 120 117 122 100 80 88 94 60 64 40 43 46 20 30 33 17 16 3 0 -20 -20 -40 Q1/2014 Q2/2014 Q3/2014 Q4/2014 Q1/2015 Q2/2015 Q3/2015 Q4/2
Slide 43: Net working capital
Net working capital at -13% of rolling 12 months orders received Net working capital and orders received (EUR million) 1,500 30% 1,000 20% 1,101 1,023 1,005 781 793 803 788 857 500 725 692 10% 466 480 580 0 -181 0% -257 -249 -345 -353 -355 -265 -244 -238 -247 -265 -294 -428 -500 -10% -1,000 -20% Q1/
Slide 44: Net debt decreased
Net debt decreased compared with both Q1/2016 and Q4/2016 Net debt (EUR million) and gearing (%) Equity to assets ratio (%) 29% 28% 45% 42% 300 27% 30% 40%40%41% 24% 40% 38%37%37% 21% 36%35%36% 34%35%35% 200 238 229 231 15% 20% 35% 178 192 6% 30% 100 126 10% 52 -3% 25% 0 -39 0% 20% -54 -27 -100 -5%
Slide 45: Capital employed and Comparable ROCE
Capital employed and Comparable ROCE Capital employed (EUR million) and Comparable return on capital employed (ROCE), before taxes1 (%) 1,239 1,240 1,214 1,231 1,184 1,194 1,167 1,195 Target 1,122 15%–20% 985 14% 14% 14% 14% 967 13% 13% 902 877 12% 12% 10% 10% 2% 2% 1% Q1/14 Q2/14 Q3/14 Q4/14 Q1/15
Slide 46: Structure of loans and borrowings
Structure of loans and borrowings Interest-bearing debt EUR 277 million as at March 31, 2017 Amount of outstanding interest-bearing debt Main financing sources and facilities (EUR million) 300 Source Amount outstanding 250 Loans from banks and EUR 277 million financial institutions 200 150 EUR 200 m
Slide 47: Strong balance sheet to support large orders
Strong balance sheet to support large orders Financial position as of March 31, 2016 (EUR million) 234 47 433 274 230 2,977 2,310 845 30 27 Non-current Current debt Cash and Other Net debt Total equity Balance Advances Amounts due Adj. balance debt equivalents financial sheet total received to custo
Slide 48: Net sales and profitability development, annual
Net sales and profitability development, annual New EBITA target Net sales and Comparable EBITA (EUR million)1 8–10% from 2017 onwards 2,925 3,014 2,928 2,926 2,735 2,703 2,613 2,453 2,473 6.2% 6.7% 2,092 2,061 EBITA target 6–9% 7.1% 7.6% 6.3% 6.5% 6.4% 2.1% 5.5% 5.6% 4.3% 1,473 1,572 2,003 1,581 1,
Slide 49: High volatility in market activity
High volatility in market activity Orders received1 (EUR million) 3,225 3,071 3,139 2,878 • Volatility in market 2,584 2,445 activity is high in the 2,182 1,658 capital business 1,999 2,080 1,537 2,016 1,585 1,390 1,147 1,362 Capital business Stable business 1,341 1,481 999 1,145 1,055 1,035 1,055 6
Slide 50: Appendix: Focus areas and actions
Appendix Focus areas and actions
Slide 51: Summary of key actions by business
Summary of key actions by business Stable business Key actions in stable business • Financial target: • Systematic promotion of whole offering – Valmet way to serve Net sales for stable • Localize the engineering resources in growing service areas business to grow over two • New service center in In
Slide 52: Summary of key actions by area
Summary of key actions by area North America EMEA China • Strengthened service presence in • Increase services market share in • Strengthen key account Mexico Central and Eastern Europe management to continue service • Grow automation market share via • Grow automation market share via growth compet
Slide 53: Actions to reach EBITA target
Actions to reach EBITA target Comparable EBITA margin in 2015 6.2% Net sales (EUR million) and Comparable EBITA margin (%) Sales process management ~1% 2,928 2,926 Project management and project ~1% 6.2% 6.7% execution 4.3% 2,613 Procurement & quality ~1% 2.1% 2,473 Technology, R&D and ERP ~1% 2013
Slide 54: Procurement and quality cost development
Procurement and quality cost development Implemented procurement savings of Quality costs (EUR million and % of net sales) annual direct spend 3.6% 3.1% 4.3% 4.4% 4.3% 2.6% 2.7% 3.8% >3.0% <1.3% 2013 2014 2015 2016 Annual 2013 2014 2015 Q3/15- Long- goal Q2/16 term goal Original three-year target to
Slide 55: Currency exposure and foreign exchange risk management
Currency exposure and foreign exchange risk management Currency exposure Foreign exchange risk management All operating units are required to hedge in The exposure is a net of all assets and full their foreign currency exposures liabilities denominated in foreign currencies derived from sales an
Slide 56: Appendix: Area development
Appendix Area development Valmet <>
Slide 57: North America
North America Mature services focused market with recurring opportunities in paper, tissue and automation Orders received Net sales Employees Orders received by Net sales by business (EUR million and % of total) (EUR million and % of total) (number and % of total) business line (2016) line (2016) 71
Slide 58: South America
South America Cyclical capital business relies on new pulp projects. Services, board and tissue provide growth opportunities Orders received Net sales Employees Orders received by Net sales by business (EUR million and % of total) (EUR million and % of total) (number and % of total) business line (2
Slide 59: EMEA
EMEA Valmet’s largest and most important area with significant services and technology markets in all Valmet’s businesses Orders received Net sales Employees Orders received by Net sales by business (EUR million and % of total) (EUR million and % of total) (number and % of total) business line (2016
Slide 60: China
China Capital business at new normal level, growth opportunities in Services Orders received Net sales Employees Orders received by Net sales by business (EUR million and % of total) (EUR million and % of total) (number and % of total) business line (2016) line (2016) 428 2,061 392 1,927 1,955 342 3
Slide 61: Asia-Pacific
Asia-Pacific Developing services market with growth potential Orders received Net sales Employees Orders received by Net sales by business (EUR million and % of total) (EUR million and % of total) (number and % of total) business line (2016) line (2016) 586 706 693 625 588 17% 378 35% 28% 381 372 34
Slide 62: Appendix: Shareholders and share price development
Appendix Shareholders and share price development
Slide 63: Largest shareholders on May 31, 2017
Largest shareholders on May 31, 2017 Based on the information given by Euroclear Finland Ltd. # Shareholder name Number of shares % of shares and votes 1 Solidium Oy 16,695,287 11.14% 2 Varma Mutual Pension Insurance Company 4,765,465 3.18% 3 Elo Pension Company 3,810,000 2.54% 4 Ilmarinen Mutual Pe
Slide 64: Ownership structure on May 31, 2017
Ownership structure on May 31, 2017 Sector Number of shareholders % of total shareholders Number of shares % of shares Nominee registered and non-Finnish holders 321 0.72 74,736,801 49.66 Finnish institutions, companies and foundations 2,320 5.16 38,476,074 25.68 Solidium Oy* 0 0.00 16,695,287 11.14
Slide 65: Share of non-Finnish holders and area split of shareholders
Share of non-Finnish holders and area split of shareholders Share of non-Finnish holders Approximate geographical split and number of shareholders of institutional shareholders* 56% 58,000 11% 6% 54% 56,000 52% 54,000 8% 45% 50% 52,000 48% 50,000 12% 46% 48,000 18% 44% 46,000 Finland United States 4
Slide 66: Share price development and trading volume
Million shares 66 0 2 4 6 8 10 6.00 8.00 10.00 12.00 14.00 16.00 18.00 01/14 01/14 02/14 02/14 June 2017 03/14 03/14 04/14 04/14 05/14 05/14 06/14 06/14 07/14 07/14 08/14 08/14 09/14 09/14 10/14 10/14 11/14 11/14 12/14 12/14 01/15 01/15 02/15 02/15 © Valmet | Roadshow presentation Valmet 03/15 03/15
Slide 67: Recognition from Dow Jones and CDP
Recognition from Dow Jones and CDP Valmet is in the Dow Jones World Sustainability Index (DJSI) for the third consecutive year, in CDP's Climate A List for actions and strategy to mitigate climate change and in Ethibel Sustainability Index (ESI) Excellence Europe Source: SustainAbility (2013) “Rate
Slide 68: Appendix: Offering
Appendix Offering Valmet <>
Slide 69: Comprehensive life-cycle services offering and large customer base
Comprehensive life-cycle services offering and large customer base with significant potential Comprehensive life-cycle services offering Over 2,000 customer mills and plants served globally Spare and wear parts Fabrics Mill and plant Roll and workshop Energy and • All OEM spare parts and • Paper mac
Slide 70: Our automation offering
Our automation offering Pulp and paper Energy Oil and gas Marine Advanced automation and process monitoring solutions and services: Distributed Control System (DCS) – Industrial internet solutions Valmet DNA Automation services Performance solutions Process simulators Quality Control Sys
Slide 71: Automation offering and market overview
Automation offering and market overview Scope/product Market size Market position in Main competitors pulp and paper Distributed • DCS for process and Pulp and paper DCS market: • ABB Control System (DCS) machines controls • Condition monitoring • EUR 900 million #3 • • Honeywell Emerson • Informati
Slide 72: Full scope offering for the pulp and paper industry
Full scope offering for the pulp and paper industry Technologies Automation Services 1 Wood handling 6 Recycled fiber • Distributed Control System • Mill and plant improvements (DCS) • Spare and wear parts 2 Heat and power 7 Mechanical fiber • Performance solutions • Paper machine clothing productio
Slide 73: Our offering for energy industry and biotechnologies
Our offering for energy industry and biotechnologies Technologies Automation Services 1 Fuel handling 5 Modularized • Distributed Control System • Plant improvements power plants (DCS) • Rebuilds 2 Gasification • Performance solutions • Performance services 6 Prehydrolysis 3 Boiler and flue For biof
Slide 74: Our pulp and energy technology offering
Our pulp and energy technology offering Pulp Recovery Energy Biotechnologies • Wood handling • Evaporation systems • Circulating fluidized • Pyrolysis solutions for systems • Recovery islands bed boilers (CYMIC) bio-oil production • Cooking systems • Bubbling fluidized • LignoBoost for lignin • Comp
Slide 75: Our paper technology offering
Our paper technology offering Board and paper Tissue Board and paper production lines Tissue production lines – Recycled fiber lines – Advantage DCT – Tailor made OptiConcept machines – Advantage NTT – OptiConcept M modularized machines – Advantage Thru Air (TAD) Rebuilds Rebuilds – Moderniz
Slide 76: Continuous investment in research and development
Continuous investment in research and development to improve customers’ processes Customers’ needs Valmet’s R&D focus Valmet’s R&D resources • Increase production • Modularized and • Own R&D centers and efficiency standardized products pilot facilities • Improve competitiveness • Energy, water and r
Slide 77: Example of our R&D work - OptiConcept M
Example of our R&D work - OptiConcept M board and paper machine Cost-efficient, high-quality, safe and flexible board making concept Significant savings in energy, water and raw material use – Energy efficiency improvement up to 30% Modular and compact size – Short delivery times, quick start-
Slide 78: Appendix: Management
Appendix Management Valmet <>
Slide 79: Experienced Executive Team
Experienced Executive Team Corporate Pasi Laine Kari Saarinen Julia Macharey Juha Lappalainen Anu Salonsaari-Posti President and CEO CFO SVP, Human Resources SVP, Strategy and SVP, Marketing & Share ownership: 101,997 Share ownership: 26,753 Share ownership: 17,984 Operational Development Communicat
Slide 80: Board of Directors
Board of Directors Bo Risberg Jouko Karvinen Aaro Cantell Lone Fønss (b. 1956) (b. 1957) (b. 1964) Schrøder Chairman of Vice Chairman of the Board member (b. 1960) the Board Board Finnish citizen Board member Swedish citizen Finnish citizen Danish citizen • BSc (Mech. Eng), MBA • M.Sc. (Tech.) • M.S
Slide 81: FORWARD
FORWARD