Valmet Corp · OMXHEX:VALMT
Valmet — Non-Deal Roadshow (November 2015)
103 slides from Valmet's roadshow presentation, November 2015
Slide 1: Valmet – unique offering with process technology, automation and services
Valmet – unique offering with process technology, automation and services Roadshow material November 2015
Slide 2: Agenda
Agenda Valmet Roadshow 1 Valmet overview 2 Investment highlights 3 Financials 4 Automation – excellent strategic fit 5 Conclusions 6 Appendix
Slide 3: Valmet overview
Valmet overview Valmet <>
Slide 4: Valmet has over 200 years of industrial history
Valmet has over 200 years of industrial history 1797 Tamfelt 1951 1968-1996 End of 2013 1841 Götaverken Valmet Several M&As i.e. Demerger to 1856 Tampella 1986 KMW Valmet and Metso 1987 Wärtsilä paper finishing machinery 1858 Beloit 1992 Tampella Papertech 1860 KMW 1868 Sunds Defibrator 2015 Metso P
Slide 5: Key figures 2014
Key figures 2014 Excluding Automation business line Net sales split by Net sales split by Orders received business line geographic area EUR 3,071 million 15% 18% Net sales 21% 40% EUR 2,473 million EBITA before NRI1 11% EUR 106 million 13% Employees 10,464 39% Market position 43% #1-2 Services Servi
Slide 6: Our four business lines serve the same customer base
Our four business lines serve the same customer base Services Automation Pulp and Energy Paper Description Mill and plant improvements, Supplies and develops Technologies and solutions for Technologies and solutions for roll and workshop services, automation and information pulp production, power bo
Slide 7: Strong global presence provides a good platform for growth
Strong global presence provides a good platform for growth North America EMEA China • Large installed base to be served • Large installed base to be served • Services growth potential through • Capital project • Machine closures in growing installed base opportunities in pulp, printing and writing •
Slide 8: Valmet’s way forward
Valmet’s way forward Our Vision To become the global Our Must-Wins champion in serving our customers Our Strategy Customer excellence Valmet develops and Leader in technology supplies competitive and innovation Our Mission technology and services Excellence in Converting renewable processes to
Slide 9: Key Must-Win objectives to develop Valmet further and continue to improve profitability
Key Must-Win objectives to develop Valmet further and continue to improve profitability Must-Wins Must-Win implementation objectives for 2016 • Strengthen our presence close to customers and growth markets Customer • Strengthen Key Account Management to serve customers with our full offering excelle
Slide 10: Automation – excellent strategic fit
Automation – excellent strategic fit
Slide 11: Valmet becomes a stronger company as a result of acquiring Automation
Valmet becomes a stronger company as a result of acquiring Automation The acquisition was announced on January 15, 2015 and closed on April 1, 2015 The acquisition has an excellent strategic fit Combination of Valmet and Automation creates a unique customer offering Automation is a strong, establish
Slide 12: Automation in brief (2014)
Automation in brief (2014) Supplies and develops automation and information management systems, applications and services Net sales by Net sales by Global market leader with Orders #1 received market position in pulp and business line geographic area EUR 336 million paper Industry-leading 9% Net sal
Slide 13: Automation is a strong, established business
Automation is a strong, established business Long-term customer relations High level of technology and know-how Strong service business, based on large installed base and captive business model ~1,600 automation professionals working close to customers at ~80 locations around the world Sig
Slide 14: Valmet with Automation
Valmet with Automation Increased stability and improved profitability Illustrative net sales in 20141 Improving profitability Automation has a solid financial track record 19% 15% - Historically continuous double-digit EBITA 18% margin of 10–12% 36% 11% 13% - Stable net sales, with slight growth 3
Slide 15: Investment highlights
Investment highlights Valmet <>
Slide 16: Investment highlight summary
Investment highlight summary 1 Strong market position in growing markets Growing, profitable and stable service and 2 automation business with EUR 1.3 billion sales Strong in cyclical capital business with long-term growth 3 potential and increased flexibility in cost structure Unique offering with
Slide 17: Strong market position in growing markets
1 2 3 4 5 Strong market position in growing markets Services Automation Pulp Energy Board Tissue Paper #1-2 #1-3 #1-2 #1-3 #1-2 #1 #1-2 ~2% 7.5 ~1% 2.0 ~1% 1.4 ~1% 2.0 ~3% 1.0 ~3% 0.6 ~-1% 0.6 p.a. bn p.a. bn p.a. bn p.a. bn p.a. bn p.a. bn p.a. bn • Customers • Investments in • Growth in • Growth i
Slide 18: Growing, profitable and stable service and automation business with EUR 1.3 billion sales
1 2 3 4 5 Growing, profitable and stable service and automation business with EUR 1.3 billion sales Growing Services net sales growth on average over 3% p.a. during the last 5 years Slight growth in Automation net sales over the last 10 years Profitable Relatively stable margins in Automation
Slide 19: Strong in cyclical capital business with long-term growth potential and increased flexibility in cost structure
1 2 3 4 5 Strong in cyclical capital business with long-term growth potential and increased flexibility in cost structure Pulp and Energy Paper Market position: Market position: #1-3 #1-2 Headcount reduction1: Headcount reduction1: ~500 ~800 Capacity cost reduction: Capacity cost reduction: 10% 20%
Slide 20: Unique offering with process technology, automation and services
1 2 3 4 5 Unique offering with process technology, automation and services Process technology • Valmet is a technology and service company with full automation offering • Strengthened competitiveness from combination of paper, pulp and power plant technology, process know-how and automation Customer
Slide 21: Continued focus on profitability, more effort into renewal
1 2 3 4 5 Continued focus on profitability, more effort into renewal Continued focus on • Improve project and service margin profitability • Reduce quality costs and lead times improvement • Savings in procurement measures • Continue to improve cost competitiveness • Improve cost competitiveness to
Slide 22: Financials
Financials Valmet <>
Slide 23: Financial targets
Financial targets Growth Net sales growth to exceed market growth Profitability EBITA1 before non-recurring items: 6-9% ROCE Return on capital employed (pre-tax), ROCE 2: minimum of 15% Dividend Dividend payout at least 40% of net profit policy 1) EBITA before non-recurring items = operating profit
Slide 24: Q3/2015 in brief
Q3/2015 in brief Orders received and net sales increased in stable business1 • Orders received remained stable compared with Q3/2014 in Services, orders received EUR 70 million in Automation • Net sales increased in Services compared with Q3/2014, net sales EUR 66 million in Automation Orders receiv
Slide 25: Key figures Q3/2015
Key figures Q3/2015 EUR million Q3/2015 Q3/2014 Change Q1–Q3/2015 Q1–Q3/2014 Change Orders received 725 466 56% 2,085 2,590 -19% Order backlog1 2,117 2,312 -8% 2,117 2,312 -8% Net sales 734 590 25% 2,074 1,697 22% EBITA2 47 32 45% 120 58 >100% % of net sales 6.4% 5.5% 5.8% 3.4% EBIT3 33 26 25% 78 35
Slide 26: EBITA margin in the targeted range
EBITA margin in the targeted range Net sales and EBITA before NRI (EUR million) 777 779 734 EBITA target 6–9% 6.1% 588 590 6.9% 561 6.4% 519 3.7% 5.5% 3.5% Capital business Stable business 0.7% EBITA-% 371 334 251 235 278 242 224 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 EBITA before 4 22 32 48 19 5
Slide 27: Guidance and short-term market outlook
Guidance and short-term market outlook Guidance for 2015 (as given on February 6, 2015) Valmet estimates that, including the acquisition of Process Automation Guidance for Systems, net sales in 2015 will increase in comparison with 2014 (EUR 2015 2,473 million) and EBITA before non-recurring items i
Slide 28: Conclusion
Conclusion Valmet <>
Slide 29: Investment highlight summary
Investment highlight summary 1 Strong market position in growing markets Growing, profitable and stable service and 2 automation business with EUR 1.3 billion sales Strong in cyclical capital business with long-term growth 3 potential and increased flexibility in cost structure Unique offering with
Slide 30: 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 31: Appendix
Appendix 1 Management, ownership and share price development 2 Financials 3 Automation 4 Offering 5 Market statistics
Slide 32: Appendix: Management, ownership and share price development
Appendix Management, ownership and share price development
Slide 33: Experienced Executive Team
Experienced Executive Team Corporate Kari Saarinen has been appointed CFO at Valmet as of November 15, 2015, as Markku Honkasalo (previously CFO) has Pasi Laine Kari Saarinen Julia Macharey Anu Salonsaari-Posti decided to leave President and CEO CFO SVP, Human Resources SVP, Marketing & Share owners
Slide 34: Board of Directors
Board of Directors Bo Risberg Mikael Von Frenckell Friederike Helfer (b. 1956) (b. 1947) (b. 1976) Chairman of Vice Chairman of Board member the Board the Board Austrian citizen Swedish citizen Finnish citizen • BSc in Mech. Engineering, MBA • MSc in Social Sciences • MSc in Real Estate Development,
Slide 35: Largest shareholders on October 31, 2015
Largest shareholders on October 31, 2015 Based on the information given by Euroclear Finland Ltd. # Shareholder name Number of shares % of shares and votes 1 Solidium Oy1 16,695,287 11.14% 2 Solero Luxco S.A.R.L 5,374,482 3.59% 3 Varma Mutual Pension Insurance Company 4,208,465 2.81% 4 Nordea Funds
Slide 36: Ownership structure on October 31, 2015
Ownership structure on October 31, 2015 14.4% Nominee registered and non-Finnish holders 11.1% Finnish institutions, companies and foundations 51.8% Solidium Oy Finnish private investors 22.6% Sector Number of shareholders % of total shareholders Number of shares % of shares Nominee registered and n
Slide 37: 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 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 07/2015 08/2015
Slide 38: Share price development and trading volume
38 Million shares 6.00 7.00 9.00 10.00 11.00 12.00 8.00 0 1 2 3 4 5 6 7 8 01/14 01/14 01/14 01/14 November, 2015 02/14 02/14 03/14 03/14 03/14 03/14 04/14 04/14 © Valmet 05/14 05/14 05/14 05/14 06/14 06/14 07/14 07/14 07/14 07/14 Valmet 08/14 08/14 09/14 09/14 10/14 10/14 10/14 10/14 11/14 11/14 12/
Slide 39: Appendix: Financials
Appendix Financials Valmet <>
Slide 40: Excellence in processes: Good development in work safety and sustainability
Excellence in processes: Good development in work safety and sustainability Lost time incident frequency (LTIF)1 Sustainability 16 14 Valmet has been included in the Dow 12 Jones Sustainability Index (DJSI) for the 10 8 second consecutive year 6 3.5 4 – Valmet maintains its position among 317 2 0
Slide 41: Customer activity increased in 2014
Customer activity increased in 2014 Announced orders during H1/2014 Date Description Business line Country Value Jan 9 Prehydrolysis system (pilot scale) Pulp and Energy Netherlands Not disclosed Jan 27 Multi-fuel boiler Pulp and Energy Finland Not disclosed Jan 31 Upgrade of recovery boiler and pow
Slide 42: Customer activity increased in 2014
Customer activity increased in 2014 Announced orders during H2/2014 Date Description Business line Country Value Jul 2 Advantage DCT 200 tissue line Paper Middle East Not disclosed Jul 8 Wood chipping plant Pulp and Energy Sweden Around EUR 20 million Aug 4 Advantage NTT line Paper USA Not disclosed
Slide 43: Announced orders in H1/2015
Announced orders in H1/2015 Date Description Business line Country Value Jan 23 Key board machine solutions Paper China Not disclosed Feb 4 Flue-gas cleaning and condensation plant Pulp and Energy Finland Around EUR 8 million Feb 17 Equipment for fluff conversion project Pulp and Energy, and Paper U
Slide 44: Announced orders in H2/2015
Announced orders in H2/2015 Date Description Business line Country Value Jul 6 Winding technology for paper machine grade Paper Netherlands Not disclosed conversion rebuild Jul 7 White liquor handling system Pulp and Energy Sweden Not disclosed Aug 18 Main equipment to a pulp mill project Pulp and E
Slide 45: Orders received increased especially in China, stable business orders received EUR 322 million
Orders received increased especially in China, stable business orders received EUR 322 million Orders received (EUR million), Orders received (EUR million), by business line by area 1,400 3,500 1,400 3,500 1,101 1,200 1,101 3,000 1,200 1,023 3,000 1,023 1,000 212 2,500 1,000 59 2,500 190 420 121 781
Slide 46: Order backlog at EUR 2.1 billion
Order backlog at EUR 2.1 billion Order backlog (EUR million) Structure of order backlog 3,000 2,500 2,406 2,312 ~30% 2,000 2,208 2,117 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 Stable business Capital business • Order backlog EUR 90 million lower than at the
Slide 47: Orders received remained stable and net sales increased in Services in Q3/2015
Orders received remained stable and net sales increased in Services in Q3/2015 Orders received (EUR million) Net sales (EUR million) Q1–Q3/2014: Q1–Q3/2015: Q1–Q3/2014: Q1–Q3/2015: EUR 782 million EUR 852 million EUR 711 million EUR 814 million 350 307 1,400 350 304 1,400 293 278 300 267 273 273 1,2
Slide 48: Orders received in Automation totaled EUR 78 million in Q3/2015
Orders received in Automation totaled EUR 78 million in Q3/2015 Orders received1 (EUR million) Net sales (EUR million) 160 160 140 140 120 95 120 100 78 100 79 10 72 80 62 8 80 55 11 6 60 60 40 85 70 40 68 66 20 20 0 0 Q1/15 Q2/15 Q3/15 Q1/15 Q2/15 Q3/15 Orders received, internal (from other busines
Slide 49: Orders received increased in Pulp and Energy in Q3/2015
Orders received increased in Pulp and Energy in Q3/2015 Orders received (EUR million) Net sales (EUR million) Q1–Q3/2014: Q1–Q3/2015: Q1–Q3/2014: Q1–Q3/2015: EUR 1,279 million EUR 603 million EUR 644 million EUR 668 million 800 1,600 400 1,600 700 622 1,400 350 312 1,400 600 560 1,200 300 1,200 229
Slide 50: Orders received and net sales increased in Paper in Q3/2015
Orders received and net sales increased in Paper in Q3/2015 Orders received (EUR million) Net sales (EUR million) Q1–Q3/2014: Q1–Q3/2015: Q1–Q3/2014: Q1–Q3/2015: EUR 530 million EUR 474 million EUR 342 million EUR 459 million 300 900 300 900 250 212 750 250 750 190 197 186 185 200 600 200 177 600 14
Slide 51: Good development in gross profit compared to Q3/2014
Good development in gross profit compared to Q3/2014 Gross profit (EUR million and % of net sales) SG&A (EUR million and % of net sales) 200 25% 200 25% 21% 160 20% 160 20% 16% 120 15% 120 15% 80 10% 80 10% 40 5% 40 5% 0 0% 0 0% Q1/2014 Q2/2014 Q3/2014 Q4/2014 Q1/2015 Q2/2015 Q3/2015 Q1/2014 Q2/2014
Slide 52: Development of capacity costs and quality costs
Development of capacity costs and quality costs Capacity costs1 Personnel Personnel costs Quality costs (EUR million and % of net sales) (EUR million) (EUR million) By the end of 2016, quality costs reduced 1,180 1,141 12,547 11,765 1,001 10,464 721 697 by 50% 609 compared to 2012 baseline 2012 2013
Slide 53: Cash flow, net debt, gearing and equity ratio
Cash flow, net debt, gearing and equity ratio Cash flow provided by operating Net debt (EUR million) and Equity to assets ratio (%) activities (EUR million) gearing (%) 29% 28% 42% 40% 40% 41% 117 34% 35% 35% 238 229 -39 46 -54 43 30 -5% -7% -158 -166 -134 17 16 -20 -17% -20% -21% Q1/14 Q2/14 Q3/14
Slide 54: Net working capital development
Net working capital development Net working capital and orders received (EUR million) 1,500 30% 1,000 20% Historically, net 1,101 1,023 working capital 500 781 725 10% 580 has been on 466 480 0 0% average -9% of -257 -249 -345 -353 -355 -265 -244 rolling 12 -500 -10% months orders received -1,000 -2
Slide 55: Foreign exchange risk management in Valmet
Foreign exchange risk management in Valmet All operating units are required to hedge in full their foreign currency exposures Hedging takes place when firm commitment arises or at the latest immediately after operating units have reported their monthly currency exposure Valmet is not hedging a
Slide 56: Foreign currency exposure
Foreign currency exposure The exposure is a net of all assets and liabilities denominated in foreign currencies derived from sales and purchase contracts, projected cash flows and firm commitments A 10 percent appreciation or depreciation of EUR against all other currencies would have an effect
Slide 57: Split of net sales and costs per currency in 2014
Split of net sales and costs per currency in 2014 Net sales by currency (2014) Costs by currency (2014) Others Others BRL BRL 7% 7% 5% 4% RMB RMB 5% 8% EUR 44% USD EUR USD 52% 20% 14% SEK SEK 15% 20% • Sales and costs in different currencies fairly balanced • More costs than sales in EUR, vice versa
Slide 58: Structure of loans and borrowings
Structure of loans and borrowings Interest-bearing debt EUR 399 million as at September 30, 2015 Amount of outstanding interest-bearing debt Main financing sources (EUR millions) Amount Lender 400 350 EUR 122 million European Investment Bank 300 EUR 100 million Skandinaviska Enskilda Banken 250 200
Slide 59: Strong balance sheet to support large orders
Strong balance sheet to support large orders Financial position as of September 30, 2015 (EUR million) 245 90 348 139 31 2,901 309 2,308 229 815 Non-current Current debt Cash and Other Net debt Total equity Balance Advances Billings in Adj. balance debt equivalents financial sheet total received exc
Slide 60: High volatility in market activity
High volatility in market activity Orders received1 (EUR million) 3,225 3,071 • Volatility in market 2,584 2,445 activity is high in the 2,182 capital business 1,999 2,080 2,016 1,585 1,390 1,147 1,362 Capital Services 999 1,145 1,055 1,035 1,055 637 2009 2010 2011 2012 2013 2014 1) 2014 actual figu
Slide 61: Net sales and profitability development, annual
Net sales and profitability development, annual Net sales and EBITA before NRI (EUR million)1 2,925 3,014 2,735 2,703 2,613 2,453 2,473 2,092 EBITA target 6–9% 2,061 7.1% 7.6% 6.3% 6.5% 6.4% 5.5% 5.6% 4.3% 2.1% Services Capital 877 974 1,011 1,032 989 EBITA-% 636 834 847 715 2006 2007 2008 2009 2010
Slide 62: North America
North America Mature services focused market with recurring opportunities in paper, tissue and biotechnology 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 (2014) line (2014)
Slide 63: South America
South America Cyclical capital business relies on new pulp projects. Services, power 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 64: 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 (2014
Slide 65: China
China Paper market flat and Services growing, local low-cost competition present 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 (2014) line (2014) 682 2,227 512 2,061 1,999 1
Slide 66: Asia-Pacific
Asia-Pacific A key growth area for Valmet 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 (2014) line (2014) 589 706 625 588 15% 19% 14% 505 27% 394 381 324 287 283 285 204 21
Slide 67: Key ratios
Key ratios Q1–Q3/ Q1–Q3/ Q1–Q4/ 2015 2014 2014 Earnings per share, EUR 0.33 0.14 0.31 Diluted earnings per share, EUR 0.33 0.14 0.31 Equity per share at end of period, EUR 5.40 5.32 5.36 Return on equity (ROE), % (annualized) 8% 3% 6% Return on capital employed (ROCE) before taxes, % (annualized) 11
Slide 68: Consolidated statement of income
Consolidated statement of income Q3/2015 Q3/2014 Q1–Q3/ Q1–Q3/ EUR million 2015 2014 Net sales 734 590 2,074 1,697 Cost of goods sold -580 -474 -1,627 -1,371 Gross profit 154 116 447 325 Selling, general and administrative expenses -120 -92 -360 -292 Other operating income and expenses, net -2 3 -10
Slide 69: Balance sheet as at September 30, 2015
Balance sheet as at September 30, 2015 Assets As at September 30, As at September 30, As at December 31, 2014 EUR million 2015 2014 Non-current assets Intangible assets Goodwill 615 446 446 Other intangible assets 242 95 91 Total intangible assets 857 541 537 Property, plant and equipment Land and w
Slide 70: Balance sheet as at September 30, 2015
Balance sheet as at September 30, 2015 Equity and liabilities As at September 30, As at September 30, As at December 31, 2014 EUR million 2015 2014 Equity Share capital 100 100 100 Reserve for invested unrestricted equity 404 403 403 Cumulative translation adjustments 12 11 9 Fair value and other re
Slide 71: Condensed Consolidated Statement of Cash Flows
Condensed Consolidated Statement of Cash Flows Q3/2015 Q3/2014 Q1–Q3/ Q1–Q3/ EUR million 2015 2014 Cash flows from operating activities Profit / loss 21 16 50 21 Adjustments Depreciation and amortization 24 18 68 54 Dividend income and net interests 2 2 4 2 Income taxes 8 8 21 10 Other non-cash item
Slide 72: Appendix: Automation
Appendix Automation Valmet <>
Slide 73: Automation offering
Automation offering Distributed • Complete control system platform for several processes: process, Control machine, drive controls and information management System (DCS) • Used for monitoring and controlling distributed equipment in process plants and industrial processes Quality Control • A system
Slide 74: Strong global presence close to our customers
Strong global presence close to our customers 130 locations in 33 countries • Over 100 service centers • 80 sales offices • 34 production units • 15 technology centers Valmet location 74 November, 2015 © Valmet
Slide 75: Market position
Market position Anticipated Estimated market size for long-term market growth the current offering (EUR) ~1% 2.0 Market position p.a. bn • Global market leader with #1 Market drivers #1-3 market position in pulp and paper • Industry-leading product portfolio • Investments in new pulp and paper machi
Slide 76: 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 77: Recent development
Recent development Orders received (EUR million)1 Net sales (EUR million)1 400 400 333 336 350 350 310 322 304 309 297 296 300 300 250 250 200 200 150 150 100 100 50 50 0 0 2011 2012 2013 2014 2011 2012 2013 2014 Process Automation Systems is relatively stable business • Customers choose an automati
Slide 78: Balance sheet structure after the acquisition of Process Automation Systems
Balance sheet structure after the acquisition of Process Automation Systems Enterprise value Process Automation Systems’ net asset value1 approximately EUR 55 million of acquisition • Difference between enterprise value and net asset value will be split roughly equally between goodwill and purchase
Slide 79: Appendix: Offering
Appendix Offering Valmet <>
Slide 80: 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 plat improvements (DCS) • Spare and wear parts 2 Heat and power 7 Mechanical fiber • Performance solutions • Paper machine clothing production
Slide 81: 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 82: 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 83: 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 84: 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 85: Comprehensive life-cycle services offering and large customer base with significant potential
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 86: Continuous investment in research and development to improve customers’ processes
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 87: Example of our R&D work - OptiConcept M board and paper machine
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 88: Appendix: Market statistics
Appendix Market statistics Valmet <>
Slide 89: Net sales split, by business unit
Net sales split, by business unit Net sales split, business units (2014) Net sales split, Valmet (2014)2 12% 19% Services Rolls and Workshop Services Mill Improvements (EUR 989 million)1 15% Performance Parts 8% 7% Fabrics 3% 10% Energy and Environmental 8% 29% 9% 25% 15% 5% Pulp and 4% Energy 11% 4
Slide 90: Pulp mill market is cyclical and characterized by large orders
Pulp mill market is cyclical and characterized by large orders Market fluctuates from year to year Valmet is well prepared for the cyclical nature of the business Market size1 (EUR million) Own capacity has been reduced during the last few years Valmet Others Capacity cost reduced 10% in 2014
Slide 91: Consumption development
Consumption development Growth in board and tissue consumption is expected to continue while newsprint is declining Paper consumption1 (Mton) 220 CAGR 2001-2014 2014-2018F 200 180 Containerboard +3.7% +2.4% 160 140 120 Printing & Writing +0.4% -0.8% 100 80 Cartonboard +2.8% +2.6% 60 40 20 Tissue +3.
Slide 92: Paper and board consumption growth trends
Paper and board consumption growth trends Paper and board consumption per capita vs. population1 250 2,500 Population growth in emerging markets is 200 2,000 larger than in 150 1,500 developed markets 100 1,000 Level of 50 500 consumption per capita in emerging 0 0 markets clearly Eastern Europe Chi
Slide 93: Demand has shifted more towards smaller paper and board machines
Demand has shifted more towards smaller paper and board machines • We are focusing more on modularized and standardized solutions • Competition is higher in smaller machines Capacity of start-ups1, by machine Valmet’s market share1, size by machine size 47 Mton 35 Mton XL 40-60% Competition is lower
Slide 94: Tissue consumption growth trends
Tissue consumption growth trends Tissue consumption per capita vs. population1 New products and 2,500 25 consumption models based on tissue are 2,000 20 helping increase 1,500 15 consumption in developed markets 1,000 10 500 5 0 0 Consumption in emerging markets is China Rest of Asia Oceania Africa
Slide 95: Tissue market growing long term
Tissue market growing long term • Recent market reduction due to heavy Chinese investments • Competition is high in all areas, Valmet is strongest in North America Capacity of start-ups1, by area Valmet’s market share1, by area 7 Mton 6 Mton South 20-40% America Number of competitors 5 Mton APAC ex.
Slide 96: Paper, board, and tissue production trends
Paper, board, and tissue production trends North America (million tonnes) Europe (million tonnes) 10 40 15 40 13 35 8 30 30 11 25 9 6 20 20 7 15 4 10 5 10 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Tissue (LHS) Newsprint (LHS) Tissue
Slide 97: Paper, board, and tissue operating rates
Paper, board, and tissue operating rates North America Europe 100% 100% 95% 95% 90% 90% 85% 80% 85% 75% 80% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Tissue Newsprint Printing & Writing Tissue Newsprint Printing & Writing Containerb
Slide 98: Pulp and paper price trends
98 1,000 1,200 0 200 400 600 800 Source: Bloomberg 1-Dec-07 November, 2015 1-Mar-08 1-Jun-08 1-Sep-08 1-Dec-08 © Valmet 1-Mar-09 Testliner (EUR/t) Uncoated (USD/t) 1-Jun-09 1-Sep-09 Eucalyptus pulp (USD/t) 1-Dec-09 1-Mar-10 1-Jun-10 1-Sep-10 1-Dec-10 1-Mar-11 1-Jun-11 1-Sep-11 Pulp and paper price t
Slide 99: Pulp price spread
Pulp price spread NBSK Pulp prices, Europe: NBSK and BHKP (USD/ton) Northern bleached 1,100 350 softwood kraft pulp is Spread at the end of October, 2014: $203 produced mainly in 1,000 300 September, 2015: $30 Canada and the Nordic 900 250 countries. NBSK is based on long fibre wood 800 200 species.
Slide 100: Crude oil, steam coal, natural gas and electricity
Crude oil, steam coal, natural gas and electricity Europe 180 100 160 90 140 80 120 70 60 100 50 80 40 60 30 40 20 20 10 0 0 1-Jan-10 1-Jul-10 1-Jan-11 1-Jul-11 1-Jan-12 1-Jul-12 1-Jan-13 1-Jul-13 1-Jan-14 1-Jul-14 1-Jan-15 1-Jul-15 CIF ARA steam coal (USD/t) (LHS) Brent crude oil (USD/barrel) (LHS)
Slide 101: Crude oil, steam coal, natural gas and electricity
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-Jul-10 1-Jan-11 1-Jul-11 1-Jan-12 1-Jul-12 1-Jan-13 1-Jul-13 1-Jan-14 1-Jul-14 1-Jan-15 1-Jul-15 FOB steam coal Richards Bay (USD/t) (LHS) WTI crude oil (USD/barrel) (LHS) Henry Hub
Slide 102: European Carbon Emission Allowance price
102 0 1 2 3 4 5 7 8 9 6 2-Nov-12 2-Dec-12 Source: Bloomberg 2-Jan-13 2-Feb-13 November, 2015 2-Mar-13 2-Apr-13 2-May-13 2-Jun-13 © Valmet 2-Jul-13 2-Aug-13 2-Sep-13 2-Oct-13 2-Nov-13 2-Dec-13 2-Jan-14 2-Feb-14 2-Mar-14 2-Apr-14 2-May-14 2-Jun-14 2-Jul-14 2-Aug-14 2-Sep-14 2-Oct-14 2-Nov-14 European
Slide 103: Forward
FORWARD