Slide 1: Orders received increased and profitability improved
Orders received increased and profitability improved Interim Review, January–September 2016 October 27, 2016 Pasi Laine, President and CEO Kari Saarinen, CFO
Slide 2: Agenda
Agenda Interim Review, January–September 2016 1 Q3/2016 in brief 2 Business lines’ development 3 Financial development 4 Guidance and short-term market outlook 5 Summary of Interim Review Q3/2016 6 Appendix
Slide 3: Q3/2016 in brief
Q3/2016 in brief Valmet <>
Slide 4: Q3/2016 in brief
Q3/2016 in brief Orders received remained at the previous year’s level and net sales increased in stable business1 Orders received increased and net sales decreased in capital business2 Order backlog at EUR 2.2 billion Profitability improved – Comparable EBITA margin at 7.5% Net debt EUR 126 million
Slide 5: Net sales split in Q3/2016
Net sales split in Q3/2016 Net sales by business line Net sales by area Orders received EUR 788 million 12% 20% 20% Net sales 13% EUR 685 million 42% 8% Comparable EBITA EUR 52 million 29% Comparable EBITA margin 10% 47% 7.5% Services North America Automation South America Employees Pulp and Energy
Slide 6: Orders received increased to EUR 788 million in Q3/2016
Orders received increased to EUR 788 million in Q3/2016 Orders received (EUR million) Orders received in Q3/2016, by area 1,400 3,500 Asia-Pacific North 10% America 1,200 3,000 China 19% 5% 1,000 2,500 South 800 2,000 America 4% 600 1,500 1,1011,023 400 781 725 793 803 692 788 1,000 580 200 466 480
Slide 7: Stable business orders received totaled EUR 1,490 million during the last 4 quarters
Stable business orders received totaled EUR 1,490 million during the last 4 quarters Orders received (EUR million) in stable business1 500 1,500 450 402 409 1,350 394 400 1,200 330 342 344 350 95 81 88 1,050 293 300 267 273 273 75 80 900 242 78 250 750 200 600 150 293 307 313 321 450 267 273 242 273
Slide 8: Order backlog at EUR 2.2 billion at the end of Q3/2016
Order backlog at EUR 2.2 billion at the end of Q3/2016 Order backlog (EUR million) Structure of order backlog 3,000 2,500 2,406 2,312 ~30% 2,000 2,208 2,207 2,192 2,117 2,074 2,106 1,972 1,998 2,064 1,500 ~70% 1,000 500 0 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Stable busin
Slide 9: 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 10: Business lines' development
Business lines’ development
Slide 11: Orders received at previous year's level and net sales increased in Services
Orders received at the previous year’s level and net sales increased in Services in Q3/2016 Orders received (EUR million) Net sales (EUR million) Q1–Q3/2015: Q1–Q3/2016: Q1–Q3/2015: Q1–Q3/2016: EUR 852 million EUR 898 million EUR 814 million EUR 846 million 350 313 321 1,400 350 314 1,400 293 307 27
Slide 12: Orders received and net sales at previous year's level in Automation
Orders received and net sales at the previous year’s level in Automation in Q3/2016 Orders received1 (EUR million) Net sales1 (EUR million) 120 450 120 101 450 95 100 88 375 100 6 375 10 78 81 80 79 81 75 6 72 80 300 80 66 69 300 62 8 15 7 11 8 8 55 6 4 60 225 60 9 225 85 95 40 82 72 150 40 73 150 7
Slide 13: Orders received increased and net sales decreased in Pulp and Energy
Orders received increased and net sales decreased in Pulp and Energy in Q3/2016 Orders received (EUR million) Net sales (EUR million) Q1–Q3/2015: Q1–Q3/2016: Q1–Q3/2015: Q1–Q3/2016: EUR 603 million EUR 692 million EUR 668 million EUR 640 million 700 622 1,400 350 312 1,400 600 560 1,200 300 1,200 26
Slide 14: Orders received and net sales decreased in Paper
Orders received and net sales decreased in Paper in Q3/2016 Orders received (EUR million) Net sales (EUR million) Q1–Q3/2015: Q1–Q3/2016: Q1–Q3/2015: Q1–Q3/2016: EUR 474 million EUR 472 million EUR 459 million EUR 459 million 250 750 250 750 212 190 197 199 186 200 200 176 600 200 186 177 185 600 15
Slide 15: Financial development
Financial development Valmet <>
Slide 16: Key figures Q3/2016
Key figures Q3/2016 EUR million Q3/2016 Q3/2015 Change Q1–Q3/2016 Q1–Q3/2015 Change Orders received 788 725 9% 2,282 2,085 9% Order backlog1 2,192 2,117 4% 2,192 2,117 4% Net sales 685 734 -7% 2,141 2,074 3% Comparable EBITA 52 47 10% 140 120 17% % of net sales 7.5% 6.4% 6.5% 5.8% EBITA 49 43 15% 13
Slide 17: Net sales EUR 50 million lower compared with Q3/2015
Net sales EUR 50 million lower compared with Q3/2015 Net sales bridge, Q3/2015 vs. Q3/2016 (EUR million) 18 -1 -18 -48 734 685 Net sales in Services Automation Pulp and Energy Paper Net sales in Q3/2015 business line business line business line business line Q3/2016 Change in net sales • Net sales i
Slide 18: Increase in gross profit to net sales in Q3/2016
Increase in gross profit to net sales in Q3/2016 Gross profit (EUR million and % of net sales) SG&A (EUR million and % of net sales) 200 23% 25% 200 25% 160 20% 160 17% 20% 120 15% 120 15% 80 10% 80 10% 40 5% 40 5% 0 0% 0 0% Q1/2014 Q3/2014 Q3/2016 Q2/2014 Q3/2014 Q4/2014 Q1/2015 Q2/2015 Q3/2015 Q4/
Slide 19: Comparable EBITA margin development
Comparable EBITA margin development Net sales and Comparable EBITA (EUR million and %) New target 8–10% from 2017 onwards 854 779 804 777 7.5% 734 7.3% 7.1% 6.9% 685 6.4% 652 590 6.1% Target 6–9% 588 561 519 4.8% 5.5% 445 3.7% 3.5% 408 427 Capital business 400 334 409 338 Stable business 498 371 377
Slide 20: Cash flow provided by operating activities
Cash flow provided by operating activities Cash flow provided by operating activities (EUR million) 140 120 117 122 100 80 60 64 40 46 43 20 30 33 17 16 3 0 -20 -20 -40 Q1/2014 Q2/2014 Q3/2014 Q4/2014 Q1/2015 Q2/2015 Q3/2015 Q4/2015 Q1/2016 Q2/2016 Q3/2016 • Change in net working capital1 EUR 81 mil
Slide 21: Net working capital improved to -9% of rolling 12 months orders received
Net working capital improved to -9% of rolling 12 months orders received Net working capital and orders received (EUR million) 1,500 30% 1,000 20% 1,101 1,023 500 781 725 793 803 788 10% 692 480 580 466 0 -181 0% -257 -249 -345 -353 -355 -265 -244 -238 -247 -265 -500 -10% -1,000 -20% Q2/2014 Q3/2014
Slide 22: Net debt decreased compared with both Q2/2016 and Q3/2015
Net debt decreased compared with both Q2/2016 and Q3/2015 Net debt (EUR million) and gearing (%) Equity to assets ratio (%) 29% 28% 45% 42% 300 27% 30% 40% 40% 41% 24% 40% 38% 21% 36% 35% 36% 34% 35% 35% 200 238 229 231 15% 20% 35% 178 192 30% 100 126 10% 25% 0 -39 0% 20% -54 -100 -5% -7% -158 -166
Slide 23: Capital employed and Comparable ROCE
Capital employed and Comparable ROCE Capital employed (EUR million) and Comparable return on capital employed (ROCE), before taxes1 (percent) 1,239 1,240 1,214 1,231 1,184 1,194 1,167 985 Target 967 14% 14% 14% 902 13% minimum 877 12% 12% 15% 10% 10% 2% 2% 1% Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/1
Slide 24: Guidance, and short-term market outlook
Guidance, and short- term market outlook
Slide 25: Guidance and short-term market outlook
Guidance and short-term market outlook Guidance for 2016 (as given on February 9, 2016) Valmet estimates that net sales in 2016 will remain at the same level with Guidance for 2015 (EUR 2,928 million) and Comparable EBITA in 2016 will increase in 2016 comparison with 2015 (EUR 182 million). Short-te
Slide 26: Summary of Interim Review Q3/2016
Summary of Interim Review Q3/2016
Slide 27: Q3/2016 in brief
Q3/2016 in brief Orders received remained at the previous year’s level and net sales increased in stable business1 Orders received increased and net sales decreased in capital business2 Order backlog at EUR 2.2 billion Profitability improved – Comparable EBITA margin at 7.5% Net debt EUR 126 million
Slide 28: Appendix
Appendix Valmet <>
Slide 29: Structure of loans and borrowings
Structure of loans and borrowings Interest-bearing debt EUR 310 million as at September 30, 2016 Amount of outstanding interest-bearing debt Main financing sources (EUR millions) Amount Lender 350 300 EUR 81 million European Investment Bank 250 EUR 71 million Skandinaviska Enskilda Banken 200 EUR 61
Slide 30: Largest shareholders on September 30, 2016
Largest shareholders on September 30, 2016 Based on the information given by Euroclear Finland Ltd. Largest shareholders # Shareholder name Number of shares % of shares and votes 1 Solidium Oy1 16,695,287 11.14% 2 Varma Mutual Pension Insurance Company 5,465,465 3.65% 3 Elo Pension Company 3,810,000
Slide 31: Ownership structure on September 30, 2016
Ownership structure on September 30, 2016 13.9% Nominee registered and non-Finnish holders 11.1% 47.1% Finnish institutions, companies and foundations Solidium Oy Finnish private investors 27.8% Sector Number of shareholders % of total shareholders Number of shares % of shares Nominee registered and
Slide 32: Share of non-Finnish holders and number of shareholders
Share of non-Finnish holders and number of shareholders 56% 59,000 54% 57,000 52% 55,000 50% 53,000 48% 51,000 46% 49,000 44% 47,000 42% 45,000 12/2013 01/2014 02/2014 03/2014 04/2014 05/2014 06/2014 07/2014 08/2014 09/2014 10/2014 11/2014 12/2014 01/2015 02/2015 03/2015 04/2015 05/2015 06/2015 07/2
Slide 33: Pulp and paper price trends
33 1,000 1,200 200 600 800 0 400 Source: Bloomberg 1-Dec-07 1-Mar-08 October 27, 2016 1-Jun-08 1-Sep-08 1-Dec-08 1-Mar-09 Testliner (EUR/t) 1-Jun-09 Uncoated (USD/t) 1-Sep-09 1-Dec-09 Eucalyptus pulp (USD/t) 1-Mar-10 1-Jun-10 1-Sep-10 1-Dec-10 1-Mar-11 1-Jun-11 © Valmet | Interim Review, January–Sep
Slide 34: Crude oil, steam coal, natural gas and electricity: Europe
Crude oil, steam coal, natural gas and electricity Europe 180 180 160 160 140 140 120 120 100 100 80 80 60 60 40 40 20 20 0 0 1-Jan-10 1-Aug-10 1-Mar-11 1-Oct-11 1-May-12 1-Dec-12 1-Jul-13 1-Feb-14 1-Sep-14 1-Apr-15 1-Nov-15 1-Jun-16 CIF ARA steam coal (USD/t) (LHS) Brent crude oil (USD/barrel) (LHS
Slide 35: Crude oil, steam coal, natural gas and electricity: United States
Crude oil, steam coal, natural gas and electricity United States 140 7 120 6 100 5 80 4 60 3 40 2 20 1 0 0 1-Jan-10 1-Aug-10 1-Mar-11 1-Oct-11 1-May-12 1-Dec-12 1-Jul-13 1-Feb-14 1-Sep-14 1-Apr-15 1-Nov-15 1-Jun-16 FOB steam coal Richards Bay (USD/t) (LHS) WTI crude oil (USD/barrel) (LHS) Henry Hub
Slide 36: European Carbon Emission Allowance price
36 10 0 1 2 3 4 5 6 7 8 9 4-Jan-13 Source: Bloomberg 4-Mar-13 October 27, 2016 4-May-13 4-Jul-13 4-Sep-13 4-Nov-13 4-Jan-14 4-Mar-14 4-May-14 4-Jul-14 © Valmet | Interim Review, January–September 2016 4-Sep-14 4-Nov-14 4-Jan-15 4-Mar-15 4-May-15 4-Jul-15 European Energy Exchange (EEX) spot price (EU
Slide 37: Important notice
Important notice IMPORTANT: The following applies to this document, the oral presentation of the information in this document by Valmet (the “Company”) or any person on behalf of the Company, and any question-and-answer session that follows the oral presentation (collectively, the “Information”). In
Slide 38: Financial Statements Review 2016
Financial Statements Review 2016 February 8, 2017 www.valmet.com/investors
Slide 39: FORWARD
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