Valmet Corp · OMXHEX:VALMT
Valmet — Non-Deal Roadshow (May 2015)
103 slides from Valmet's roadshow presentation, May 2015
Slide 1: Valmet – unique offering with process technology, automation and services
Valmet – unique offering with process technology, automation and services Roadshow material May 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’s road to becoming a global market leader
Valmet’s road to becoming a global market leader 1797 Tamfelt 1951 1968-1996 End of 2013 1856 Tampella Valmet Several M&As i.e. Demerger to create 1858 Beloit 1986 KMW Valmet and Metso 1987 Wärtsilä paper finishing machinery 1860 KMW 1992 Tampella Papertech 1868 Sunds Defibrator 1942 1951-1995 1999
Slide 5: A leading service and technology company
A leading service and technology company Net sales (2014) Strong market position in all markets served Stable, growing and 15% 18% profitable services business 21% Strong capital business with 40% 11% high technological know- how 13% 2014 figures Orders received EUR 3,071 M 39% Net sales EUR 2,473 M
Slide 6: Our four business lines serve the same customer base
Our four business lines serve the same customer base Services Pulp and Energy Paper Automation Description Mill and plant improvements, Technologies and solutions for Technologies and solutions for Supplies and develops roll and workshop services, pulp production, power board, tissue, and paper auto
Slide 7: Strong global presence – good platform for growth
Strong global presence – good platform for growth North America China • Large installed base to be serviced EMEA • Service growth potential through • Capital project growing installed base • Large installed base to be serviced opportunities in pulp, • Capital project opportunities energy, board, and
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: Investment highlights
Investment highlights Valmet <>
Slide 10: 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 11: Strong market position in growing markets
1 2 3 4 5 Strong market position in growing markets Services Pulp Energy Board Tissue Paper Automation #1-2 #1-2 #1-3 #1-2 #1 #1-2 #1-3 ~2% 7.5 ~1% 1.4 ~1% 2.0 ~3% 1.0 ~3% 0.6 ~-1% 0.6 ~1% 2.0 p.a. bn p.a. bn p.a. bn p.a. bn p.a. bn p.a. bn p.a. bn • Customers • Growth in • Growth in • World trade,
Slide 12: Growing, profitable and stable service and automation business
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 13: Strong in cyclical capital business with long-term growth potential
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 14: Unique offering with process technology, automation and services
1 2 3 4 5 Unique offering with process technology, automation and services Process • Valmet is a technology and technology service company with full automation offering • Strengthened competitiveness from combination of paper, pulp and power plant technology, process know-how and automation • Full s
Slide 15: 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 16: Financials
Financials Valmet <>
Slide 17: 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 18: Q1/2015 in brief
Q1/2015 in brief Orders received and net sales increased in services • Services orders received increased compared with Q1/2014 • Net sales increased compared with Q1/2014 in Services Orders received decreased and net sales increased in capital business • Orders received decreased in Pulp and Energy
Slide 19: Key figures Q1/2015
Key figures Q1/2015 EUR million Q1/2015 Q1/2014 Change Orders received 580 1,101 -47% Order backlog1 2,064 1,972 5% Net sales 561 519 8% EBITA2 19 4 >100% % of net sales 3.5% 0.7% EBIT3 13 -8 % of net sales 2.4% -1.5% Earnings per share, EUR 0.05 -0.04 Return on capital employed (ROCE), before taxes
Slide 20: EBITA-margin increased compared with Q1/2014
EBITA-margin increased compared with Q1/2014 Net sales and EBITA before NRI (EUR million) 777 EBITA target 6–9% 6.1% 588 590 561 519 3.7% 5.5% 3.5% 0.7% Services Capital 251 235 278 242 224 EBITA-% Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 EBITA before 4 22 32 48 19 NRI (MEUR) • Net sales and profitability incr
Slide 21: 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 22: Automation – excellent strategic fit
Automation – excellent strategic fit
Slide 23: 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 24: Combination of Valmet and Automation creates a unique customer offering
Combination of Valmet and Automation creates a unique customer offering Valmet is a technology and Valmet is a unique company service company with full Process automation offering technology Strengthened competitiveness from combination of paper, pulp and power plant technology, process know-how
Slide 25: 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 26: 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 11% 15% - Historically continuous double-digit EBITA 18% margin of 10–12% 36% 19% 11% - Stable net sales, with slight growth 1
Slide 27: Conclusion
Conclusion Valmet <>
Slide 28: 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 29: 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 30: Appendix
Appendix 1 Management, ownership and share price development 2 Financials 3 Automation 4 Market statistics
Slide 31: Management, ownership and share price development
Appendix Management, ownership and share price development
Slide 32: Experienced management team
Experienced management team Corporate Pasi Laine Markku Honkasalo Kari Saarinen Julia Macharey Anu Salonsaari-Posti President and CEO Chief Financial Officer SVP, Strategy and SVP, Human Resources SVP, Marketing & Share ownership: 49,021 Share ownership: 5,148 Operational Development Share ownership
Slide 33: 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 34: Largest shareholders on April 30, 2015
Largest shareholders on April 30, 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 Nordea Funds 4,665,146 3.11% 3 Skagen Global Verdipapirfond 3,202,627 2.14% 4 Ilmarinen Mutual Pension Insuranc
Slide 35: Ownership structure on April 30, 2015
Ownership structure on April 30, 2015 14.1% Nominee registered and non-Finnish holders 11.1% Finnish institutions, companies and foundations 55.3% Solidium Oy Finnish private investors 19.5% Sector Number of shareholders % of total shareholders Number of shares % of shares Nominee registered and non
Slide 36: Share of non-Finnish holders and number of shareholders
Share of non-Finnish holders and number of shareholders 57% 60,000 55% 58,000 53% 56,000 51% 54,000 49% 52,000 47% 50,000 45% 48,000 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 Non-Finnish holders (LHS) Total
Slide 37: Share price development and trading volume
37 Million shares 0 1 2 3 4 5 6 7 8 10.00 12.00 6.00 7.00 8.00 9.00 11.00 01/14 01/14 May, 2015 01/14 01/14 01/14 01/14 02/14 02/14 02/14 02/14 03/14 03/14 03/14 © Valmet 03/14 04/14 04/14 04/14 04/14 05/14 05/14 05/14 05/14 06/14 06/14 Valmet 06/14 06/14 07/14 07/14 07/14 07/14 07/14 07/14 08/14 08
Slide 38: Financials
Appendix Financials Valmet <>
Slide 39: Latest development in sustainability
Latest development in sustainability Valmet has defined a sustainability agenda as part of the implementation of its business strategy Valmet has been selected for the world’s leading Dow Jones Sustainability Index among three (3) other Finnish companies Valmet scored high points in CDP climat
Slide 40: Customer activity increased in 2014 (H1 orders)
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 41: Customer activity increased in 2014 (H2 orders)
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 42: Announced orders in 2015
Announced orders in 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 USA
Slide 43: Orders received declined from the high level in Q1/2014
Orders received declined from the high level in Q1/2014 Orders received (EUR million), Orders received (EUR million), by business line by area 1,400 3,500 1,400 3,500 1,200 1,101 3,000 1,200 1,101 3,000 1,023 1,023 1,000 212 2,500 1,000 59 2,500 190 420 121 800 2,000 800 2,000 580 480 580 35 466 600
Slide 44: 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 ~25% 2,312 2,000 1,972 1,998 2,064 1,500 1,000 ~75% 500 0 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Services business Capital business • About 75% of the order backlog is currently expected to be realized a
Slide 45: Growth in orders received and net sales in Services
Growth in orders received and net sales in Services Orders received (EUR million) Net sales (EUR million) 2014: 2014: EUR 1,055 million EUR 989 million 300 273 273 293 1,200 300 278 1,200 267 242 251 242 250 1,000 250 224 235 1,000 200 800 200 800 150 600 150 600 100 400 100 400 50 200 50 200 0 0 0
Slide 46: Orders received decreased and net sales increased in Pulp and Energy
Orders received decreased and net sales increased in Pulp and Energy Orders received (EUR million) Net sales (EUR million) 2014: 2014: EUR 1,344 million EUR 956 million 800 1,600 400 1,600 700 622 1,400 350 312 1,400 600 560 1,200 300 1,200 229 234 222 500 1,000 250 1,000 400 800 200 181 800 300 600
Slide 47: Orders received and net sales decreased in Paper
Orders received and net sales decreased in Paper Orders received (EUR million) Net sales (EUR million) 2014: 2014: EUR 671 million EUR 528 million 300 900 300 900 250 212 750 250 750 190 186 200 600 200 600 142 149 150 128 450 150 120 450 114 108 97 100 300 100 300 50 150 50 150 0 0 0 0 Q1/14 Q2/14
Slide 48: Good development in gross profit
Good development in gross profit Gross profit (EUR million and % of net sales) SG&A (EUR million and % of net sales) 160 40% 160 40% 140 35% 140 35% 120 30% 120 30% 100 25% 100 25% 80 20% 80 20% 60 15% 60 15% 40 10% 40 10% 20 5% 20 5% 0 0% 0 0% Q1/2014 Q2/2014 Q3/2014 Q4/2014 Q1/2015 Q1/2014 Q2/2014
Slide 49: 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 50: Strategy implementations through Must-Wins
Strategy implementations through Must-Wins Must-Wins Must-Win implementation objectives for 2015 • Strengthen our presence close to customers and growth markets Customer • Strengthen Key Account Management to enhance growth at the customer excellence • Drive services growth through long-term agreeme
Slide 51: Key Must-Win objectives to improve profitability to the targeted level of 6–9%
Key Must-Win objectives to improve profitability to the targeted level of 6–9% Improve project Reduce quality Savings in Improve product and service costs and lead procurement cost margin times competitiveness to increase gross profit Harmonization of Common quality Increase sourcing Focus o
Slide 52: Cash flow provided by operating activities negative due to net working capital
Cash flow provided by operating activities negative due to net working capital development Cash flow provided by operating activities (EUR million) 140 120 100 117 80 60 40 46 43 20 30 0 -20 -20 -40 Q1/2014 Q2/2014 Q3/2014 Q4/2014 Q1/2015 • Change in net working capital was EUR -49 million1 • CAPEX
Slide 53: Strong balance sheet and negative gearing
Strong balance sheet and negative gearing Net debt (EUR million) and gearing (%) Equity to assets ratio (%) 200 20% 45% 41% 42% 40% 40% 150 15% 40% 34% 100 10% 35% 50 5% 30% 0 0% 25% -39 -54 -50 -5% 20% -100 -5% -10% 15% -7% -134 -158 -166 -150 -15% 10% -200 -17% -20% 5% -250 -20% -21% -25% 0% Q1/14
Slide 54: Strong development in net working capital in 2014
Strong development in net working capital in 2014 Orders received and net working capital (EUR million and %) Net working capital has been 1,000 on average -9% of rolling 12 25% 800 months orders received 20% 600 15% 400 10% 200 5% 0 0% -200 -5% -400 -10% -600 -15% -800 -20% -1,000 -25% 2014 Q1 2010
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 445 million as at March 31, 2015 Amount of outstanding interest-bearing debt Main financing sources (EUR millions) Amount Lender 400 350 EUR 147 million European Investment Bank 300 EUR 100 million Skandinaviska Enskilda Banken 250 200 EUR
Slide 59: Strong balance sheet to support large orders
Strong balance sheet to support large orders Financial position as of March 31, 2015 (EUR million) 113 186 332 557 2,860 2,674 -134 794 22 Non-current Current debt Cash and Other Net debt Total equity Balance sheet Advances Adj. balance debt equivalents financial total received sheet total assets Ne
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: Key ratios
Key ratios Q1/2015 Q1/2014 Earnings per share, EUR 0.05 -0.04 Diluted earnings per share, EUR 0.05 -0.04 Equity per share at end of period, EUR 5.26 5.12 Return on equity (ROE), % (annualized) 4% -3% Return on capital employed (ROCE) before taxes, % (annualized) 6% -2% Equity to assets ratio at end
Slide 63: Consolidated statement of income
Consolidated statement of income EUR million Q1/2015 Q1/2014 Net sales 561 519 Cost of goods sold -448 -422 Gross profit 113 97 Selling, general and administrative expenses -104 -102 Other operating income and expenses, net 4 -2 Share in profits and losses of associated companies 0 0 Operating profi
Slide 64: Balance sheet as at March 31, 2015 (assets)
Balance sheet as at March 31, 2015 Assets As at March As at March As at December EUR million 31, 2015 31, 2014 31, 2014 Non-current assets Intangible assets Goodwill 455 442 446 Other intangible assets 89 103 91 Total intangible assets 544 545 537 Property, plant and equipment Land and water areas 2
Slide 65: Balance sheet as at March 31, 2015 (equity and liabilities)
Balance sheet as at March 31, 2015 Equity and liabilities As at March As at March EUR million 31, 2015 31, 2014 As at December 31, 2014 Equity Share capital 100 100 100 Reserve for invested unrestricted equity 404 402 403 Cumulative translation adjustments 33 -2 9 Fair value and other reserves -7 -2
Slide 66: Condensed Consolidated Statement of Cash Flows
Condensed Consolidated Statement of Cash Flows EUR million Q1/2015 Q1/2014 Cash flows from operating activities Profit / loss 8 -6 Adjustments Depreciation and amortization 18 18 Dividend income and net interests 1 0 Income taxes 3 -3 Other non-cash items 1 5 Change in net working capital, net of ef
Slide 67: Automation
Appendix Automation Valmet <>
Slide 68: Automation in brief
Automation in brief Supplies and develops automation and information management systems, applications and services Net sales (2014) Global market leader with #1 market position in pulp and 9% paper 19% 9% Industry-leading product portfolio Comprehensive services High barriers to entry and a limited
Slide 69: 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 70: Strengthened presence close to customers
Strengthened presence close to customers Valmet: Over 100 locations in 30 countries • 70 service centers Automation: • 50 sales offices • 1,600 automation professionals • 30 production units • 80 locations • 13 technology centers Valmet location Automation location 70 May, 2015 © Valmet
Slide 71: Valmet and Automation serve mainly the same customer base
Valmet and Automation serve mainly the same customer base Pulp Energy Paper Process 80% of Automation’s sales to Valmet’s current 20% of Automation’s sales to customer industries other process industries • 10% of Automation’s sales together with Valmet project deliveries • 90% of Automation’s sales
Slide 72: 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 73: 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 74: 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 75: Price and financing the acquisition
Price and financing the acquisition Enterprise value of acquisition1: EUR 340 million The acquisition will be financed with committed long-term financing Average maturity of long-term debt will increase to over 4 years2 1) Refers to the debt-free enterprise value of the acquisition. 2) Average m
Slide 76: 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 77: Market statistics
Appendix Market statistics Valmet <>
Slide 78: 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 Comprehensive life-cycle services offering serving global customer base with over 2,000 plants purchasing services from Valmet annually Spare and wear parts Fabric
Slide 79: 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 11% 7% Fabrics 10% Energy and Environmental 8% 29% 3% 9% 25% 8% 5% Pulp and 4% 15% Energy 4
Slide 80: North America
North America Orders received Net sales Employees (EUR million and % of total) (EUR million and % of total) (number and % of total) +18% +6% -1% 490 449 1,147 1,141 414 422 19% 16% 16% 18% 10% 11% 2013 2014 2013 2014 2013 2014 Orders received by Net sales by business line business line (2014) (2014)
Slide 81: North America
North America Mature services focused market with recurring opportunities in paper, tissue and biotechnology Market environment Market position & competition Actions for Valmet • Large installed base to be served • Strong position and market share • Continue to develop and grow - Opportunities in cu
Slide 82: South America
South America Orders received Net sales Employees (EUR million and % of total) (EUR million and % of total) (number and % of total) -47% +3% 533 -23% 421 418 432 24% 281 325 16% 13% 9% 4% 4% 2013 2014 2013 2014 2013 2014 Orders received by Net sales by business line business line (2014) (2014) 3% 1%
Slide 83: South America
South America Cyclical capital business relies on new pulp projects. Services, power and tissue provide growth opportunities Market environment Market position & competition Actions for Valmet • Capital project opportunities in • Fierce competition in new pulp • Keep market share and improve pulp, t
Slide 84: EMEA
EMEA Orders received Net sales Employees (EUR million and % of total) (EUR million and % of total) (number and % of total) -15% +83% -4% 7,514 1,470 6,376 1,096 1,053 804 64% 61% 48% 42% 43% 37% 2013 2014 2013 2014 2013 2014 Orders received by Net sales by business line business line (2014) (2014) 1
Slide 85: EMEA
EMEA Valmet’s largest and most important area with significant services and technology markets in all Valmet’s businesses Market environment Market position Actions for Valmet • Large installed base to be serviced • Valmet has a strong position both • Grow Services with Key Account - Growth opportun
Slide 86: China
China Orders received Net sales Employees (EUR million and % of total) (EUR million and % of total) (number and % of total) -7% -32% 0% 389 2,061 1,927 241 241 266 18% 18% 11% 15% 8% 11% 2013 2014 2013 2014 2013 2014 Orders received by Net sales by business line business line (2014) (2014) 34% 27% 5
Slide 87: China
China Paper market flat and Services growing, local low cost competition present Market environment Market position Actions for Valmet • Capital project opportunities in • Valmet has a strong position in • Continue to develop and grow board and tissue Paper. Recent successes with Services: local low
Slide 88: Asia-Pacific
Asia-Pacific Orders received Net sales Employees (EUR million and % of total) (EUR million and % of total) (number and % of total) -6% >100% 625 588 589 +34% 381 285 190 5% 6% 19% 9% 11% 15% 2013 2014 2013 2014 2013 2014 Orders received by Net sales by business line business line (2014) (2014) 15% 1
Slide 89: Asia-Pacific
Asia-Pacific A key growth area for Valmet Market environment Market position Actions for Valmet • Capital project opportunities in • Valmet has a strong market • Localize Services business to be more pulp, tissue, and board position but relatively modest local cost competitive and closer to customer
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% +2.2% 160 140 120 Printing & Writing +0.6% +0.1% 100 80 Cartonboard +2.8% +2.8% 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 China Rest of Asia
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 Latin America Japan China Rest of
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 0 200 600 400 800 Source: Bloomberg May, 2015 1-Dec-07 1-Mar-08 1-Jun-08 1-Sep-08 1-Dec-08 © Valmet Testliner (EUR/t) 1-Mar-09 Uncoated (USD/t) 1-Jun-09 Eucalyptus pulp (USD/t) 1-Sep-09 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 trends
Slide 99: Historically large spread in pulp prices
Historically large spread in pulp prices 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 April, 2015: $82 Canada and the Nordic 900 250 countries. NBSK is based on long fibre wo
Slide 100: Crude oil, steam coal, natural gas and electricity (Europe)
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 CIF ARA steam coal (USD/t) (LHS) Brent crude oil (USD/barrel) (LHS) Natural
Slide 101: 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-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 FOB steam coal Richards Bay (USD/t) (LHS) WTI crude oil (USD/barrel) (LHS) Henry Hub gas (USD/
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 May, 2015 2-Jan-13 2-Feb-13 2-Mar-13 2-Apr-13 2-May-13 © Valmet 2-Jun-13 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 European Energy Exchange (EEX) spot price (EUR/t)
Slide 103: Forward
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