Slide 1: Valmet – unique offering with process technology, automation and services
Valmet – unique offering with process technology, automation and services Calle Loikkanen Director, Investor Relations September 5, 2018
Slide 2: Agenda
Agenda 1 Valmet in brief 2 Investment highlights 3 Conclusion 4 Appendix 2 September 5, 2018 © Valmet | Roadshow presentation
Slide 3: Valmet in brief
Valmet in brief Valmet <>
Slide 4: Key figures in 2017
Key figures in 2017 Net sales by business line Net sales by area Orders received EUR 3,272 million 10% 26% 20% Net sales EUR 3,058 million 13% 39% Comparable EBITA 8% EUR 218 million Comparable EBITA margin 26% 7.1% 10% 49% Order backlog Services North America EUR 2,458 million Automation South Amer
Slide 5: Valmet's development
Valmet’s development Comparable EBITA target 8–10% Orders received Net sales Comparable EBITA Comparable EBITA margin (EUR million)1 (EUR million)1 (EUR million)1 (%)1 3,272 3,226 3,257 3,071 3,139 3,058 2,878 2,928 2,926 2,613 2,473 2,182 1,713 1,651 1,762 1,658 1,584 2,016 1,537 1,572 1,473 1,581
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 improvements, Supplies and develops Technologies and solutions for Technologies and solutions for roll and workshop services, automation and information pulp production, po
Slide 7: Process technology, services and automation
Process technology, services and automation Valmet’s unique offering differentiates the company from its competitors Paper Pulp and Energy • Recycled fiber lines • Complete pulp mills • Tailor-made board and paper machines • Sections and solutions for pulp production • Modularized board and paper ma
Slide 8: 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 2017 inventions
Slide 9: Acknowledged leader in sustainability
Acknowledged leader in sustainability 360° approach to sustainability Corporate Sustainable Most material citizenship supply chain UN Sustainable • In Dow Jones • We ensure that our people • We continue to develop sustainable Development Goals Sustainability Index for the know and understand Valmet’
Slide 10: 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 policy • Dividend payout a
Slide 11: Investment highlights
Investment highlights Valmet <>
Slide 12: Investment highlight summary
Investment highlight summary 1 Strong market position in markets that grow Stable business, with EUR 1.5 billion of net sales, offering stability, growth 2 and profitability Capital business, with flexible cost structure, offering growth and 3 profitability potential 4 Continuous systematic developm
Slide 13: 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% ~1% 1.4 ~1% ~1% ~3% ~2-3% 0.3 ~-1% p.a. 2.0 p.a. p.a. 2.0 0.7 1.0 p.a. bn p.a. p.a. p.a. bn bn bn bn bn bn • Increasing pulp, pa
Slide 14: Stable business, with EUR 1.5 billion of net sales, 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 Organic Stable business orders received (EUR million) growth Growth Key potential in stable business ~11% ~4% CAGR • Valmet Way to Serve • Industrial Internet CAGR 1,624 Services 1,609 1,519 •
Slide 15: Capital business, with flexible cost structure, offering growth and profitability potential
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 growth 2,015 • Cost structure development and increasing flexibility 1,657 1,713 1,537 1
Slide 16: 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 16 September 5, 2018 © Valmet | Roadsh
Slide 17: Technology leader with unique offering
1 2 3 4 5 Technology leader with unique offering Cost-competitive, focused Complete pulp mill Comprehensive offering solutions in Paper delivery capability for energy customers • 15 OptiConcept M machines sold • State-of-the-art technology for • Solutions for demanding fuels • 10 Advantage NTT machi
Slide 18: Conclusion
Conclusion Valmet <>
Slide 19: Conclusion
Conclusion 1 Strong market position in markets that grow Stable business, with EUR 1.5 billion of net sales, offering stability, growth 2 and profitability Capital business, with flexible cost structure, offering growth and 3 profitability potential 4 Continuous systematic development 5 Technology l
Slide 20: Valmet's Capital Markets Day 2018
Valmet’s Capital Markets Day 2018 Watch live webcast on September 18, 2018 at 12:00 noon EET. More information at www.valmet.com/cmd2018 20 September 5, 2018 © Valmet | Roadshow presentation
Slide 21: 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 22: Appendix
Appendix 1 Financials 2 Shareholders 3 Strategy and offering 4 Management 22 September 5, 2018 © Valmet | Roadshow presentation
Slide 23: Appendix: Financials
Appendix Financials Valmet <>
Slide 24: Key figures
Key figures EUR million Q2/2018 Q2/2017 Change Q1–Q2/2018 Q1–Q2/2017 Change Orders received 865 796 9% 1,756 1,802 -3% Order backlog1 2,621 2,714 -3% 2,621 2,714 -3% Net sales 844 732 15% 1,575 1,376 14% Comparable EBITA 61 48 27% 82 82 1% % of net sales 7.2% 6.5% 5.2% 5.9% EBITA 57 47 22% 76 84 -10
Slide 25: Comparable EBITA margin development
Comparable EBITA margin development Net sales and Comparable EBITA (EUR million and %) 967 Target 8–10% 854 7.8% 844 804 7.5% 777 779 785 8.4% 7.2% 734 732 715 732 6.1% 685 7.3% 652 7.1% 7.2% 645 588 590 6.9% 5.3% 561 6.4% 6.5% 519 4.8% Capital business 5.5% 523 3.7% 3.5% 445 375 442 Stable business
Slide 26: Guidance and short-term market outlook
Guidance and short-term market outlook Guidance for 2018 (as announced on July 17, 2018) Valmet estimates that net sales in 2018 will increase in comparison with 2017 (EUR 3,058 million) and Guidance Comparable EBITA in 2018 will increase in comparison with 2017 (EUR 218 million). Short-term market
Slide 27: Services: Orders received and net sales increased
Services: Orders received and net sales increased Orders received (EUR million) Net sales (EUR million) Q1–Q2/2017: Q1–Q2/2018: Q1–Q2/2017: Q1–Q2/2018: EUR 676 million EUR 690 million EUR 554 million EUR 572 million 400 1,600 400 1,600 355 346 344 340 350 313 321 321 1,400 350 314 316 325 1,400 293
Slide 28: Automation: Orders received remained at the previous year's level and net sales increased
Automation1: Orders received remained at the previous years level and net sales increased Orders received2 (EUR million) Net sales2 (EUR million) Q1–Q2/2017: Q1–Q2/2018: Q1–Q2/2017: Q1–Q2/2018: EUR 192 million EUR 195 million EUR 152 million EUR 159 million 120 103 102 450 120 115 450 101 101 99 95
Slide 29: Pulp and Energy: Orders received decreased and net sales increased
Pulp and Energy: Orders received decreased and net sales increased Orders received (EUR million) Net sales (EUR million) Q1–Q2/2017: Q1–Q2/2018: Q1–Q2/2017: Q1–Q2/2018: EUR 406 million EUR 278 million EUR 381 million EUR 408 million 700 1,400 700 1,400 622 600 560 1,200 600 1,200 500 1,000 500 1,000
Slide 30: Paper: Orders received and net sales increased
Paper: Orders received and net sales increased Orders received (EUR million) Net sales (EUR million) Q1–Q2/2017: Q1–Q2/2018: Q1–Q2/2017: Q1–Q2/2018: EUR 557 million EUR 623 million EUR 310 million EUR 460 million 400 1,200 400 1,200 353 350 314 1,050 350 1,050 304 300 275 270 900 300 900 246 243 250
Slide 31: Net sales split by business unit
Net sales split by business unit Net sales split, business units (2017) Net sales split, Valmet (2017) Services Automation Stable business 11% 18% 27% 14% Paper Rolls 28% Board Mill 28% 73% Improvements 6% 7% Rolls Mill Improvements Pulp and Paper 10% 11% Tissue Performance Parts Energy and Process
Slide 32: Net sales split by area
Net sales split by area Net sales split, areas (2017) Net sales split, Valmet (2017) Services Automation Stable business 11% 8% 25% 6% 23% 10% 10% 4% 20% 9% 45% 13% 59% North America North America 8% South America South America EMEA EMEA China China Asia-Pacific Asia-Pacific Pulp and Energy Paper Ca
Slide 33: Profitability and orders received development, annual
Profitability and orders received development, annual Orders received (EUR million)1 Net sales and Comparable EBITA (EUR million)1 3,225 3,272 3,014 3,058 3,071 3,139 2,928 2,926 2,878 2,703 2,613 2,453 2,473 Services and 2,584 6.2% 6.7% 7.1% Automation 2,445 2,182 2,061 business lines 1,999 2,080 1
Slide 34: 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% 3,058 2,928 2,926 2,613 2,473 7.1% Project management and project execution ~1% 6.2% 6.7% 4.3% 2.1% Procurement & quality ~1% Technology, R&D and ER
Slide 35: Procurement and quality cost development
Procurement and quality cost development Implemented procurement savings of annual direct spend Quality costs (% of net sales) 4.0% 3.6% 4.3% 4.4% 4.3% 3.1% 3.8% 3.9% 2.6% 2.8% >3.0% <1.3% 2013 2014 2015 2016 2017 Annual 2013 2014 2015 2016 2017 Long- goal term goal Targeting >3% of procurement savi
Slide 36: Appendix: Shareholders
Appendix Shareholders Valmet <>
Slide 37: Largest shareholders on August 31, 2018
Largest shareholders on August 31, 2018 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 4,165,465 2.78% 3 Elo Pension Company 3,600,000 2.40% 4 Ilmarinen Mutual
Slide 38: Shareholder structure on August 31, 2018
Shareholder structure on August 31, 2018 Sector Number of shareholders % of total shareholders Number of shares % of shares Nominee registered and non-Finnish holders1 340 0.76% 75,741,275 50.54% Finnish institutions, companies and foundations 2,375 5.27% 37,693,583 25.15% Solidium Oy2 0 0.00% 16,69
Slide 39: 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 and number of Approximate geographical split shareholders of institutional shareholders* 56% 59,000 10% 57,000 6% 54% 55,000 52% 8% 43% 53,000 50% 51,000 12% 48% 49,000 46% 47,000 21% 44% 45,000 Finland United S
Slide 40: Appendix: Strategy and offering
Appendix Strategy and offering
Slide 41: Valmet's Way Forward
Valmet’s Way Forward Our Vision To become the global champion Our Must-Wins in serving our customers Customer excellence Our Strategy Leader in technology and Valmet develops and supplies innovation competitive process technology, Excellence in processes services and automation to the Our Miss
Slide 42: Valmet Way to Serve – Services offering portfolio
Valmet Way to Serve – Services offering portfolio Shared Journey Forward Reliability Performance New Technology Maintenance Process Process and Industrial Spare parts Production Automation and Outsourcing support and automation Internet and and consumables projects shutdown services optimization upg
Slide 43: 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 Performance Parts Fabrics Mill Improvements Rolls and workshop services Energy and Environmental • All origina
Slide 44: Our automation offering and market overview
Our automation offering and market overview Advanced automation and process monitoring solutions and services: Over 4,500 Distributed Control System (DCS) – Valmet DNA Industrial internet solutions automation systems Performance solutions Automation services and over 40,000 Quality Control
Slide 45: 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 46: 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 47: Our pulp and energy technology offering
Our pulp and energy technology offering Pulp Recovery Energy Biotechnologies • Wood handling • Evaporation systems • Circulating fluidized bed • Pyrolysis solutions for systems • Recovery islands boilers (CYMIC) bio-oil production • Cooking systems • Bubbling fluidized bed • LignoBoost for lignin •
Slide 48: 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 49: Continuous investment in research and development to improve customers' processes
Continuous investment in research and development to improve customers’ processes Example of our R&D work – OptiConcept M board and paper Customers’ needs Valmet’s R&D focus Valmet’s R&D resources machine • Increase production • Modularized and • Own R&D centers and • Cost-efficient, high-quality, s
Slide 50: Today, customers are extensively utilizing our Industrial Internet capabilities
Today, customers are extensively utilizing our Industrial Internet capabilities Valmet’s competence network Customer’s Valmet expert experts 420 Ongoing 800 81,000 350 540 90 Valmet-supplied 420 Condition Advanced Online Performance Co-creation of lines with Valmet Monitoring (CM) process control co
Slide 51: Typical dimensions of pulp mills, and paper, board and tissue machines
Typical dimensions of pulp mills, and paper, board and tissue machines Paper and board machine Pulp mill Length 140 m, equivalent to a line of ~30 cars Speed: 72 km/h Production: 400,000 t/a Width 7 m Tissue machine Length 40 m, equivalent to a line of ~9 cars • Mill site area: 500,000 – 5,000,000 m
Slide 52: Appendix: Management
Appendix Management Valmet <>
Slide 53: Executive Team
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: 116,244 Share ownership: 32,671 Share ownership: 22,036 Operational Development Communications Share o
Slide 54: Board of Directors
Board of Directors Bo Risberg Aaro Cantell Pekka Kemppainen Monika Maurer (b. 1956) (b. 1964) (b. 1954) (b. 1956) Chairman of Vice-Chairman of Board member Board member the Board the Board Finnish citizen German citizen Swedish citizen Finnish citizen • BSc (Mech. Eng), MBA • M.Sc. (Tech.) • Lic.Sc.
Slide 55: FORWARD
FORWARD