Valmet Corp · OMXHEX:VALMT
Valmet — Q3 2015 Earnings Presentation
44 slides from Valmet's earnings presentation, Oct 28, 2015
Slide 1: Interim Review, January–September 2015
Strong development in orders received in China – profitability in the targeted range in Q3/2015 Interim Review, January–September 2015 October 28, 2015 Pasi Laine, President and CEO Markku Honkasalo, CFO
Slide 2: Agenda
Agenda Interim Review, January–September 2015 1 Q3/2015 in brief 2 Business lines’ development 3 Financial development 4 Guidance and short-term market outlook 5 Summary of Interim Review Q3/2015 6 Appendix
Slide 3: Q3/2015 in brief
Q3/2015 in brief Valmet <>
Slide 4: 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 5: Net sales split in Q3/2015
Net sales split in Q3/2015 Stable business net sales EUR 334 million Net sales split by Net sales split by Orders received business line geographic area EUR 725 million 11% 25% 22% Net sales 11% EUR 734 million 36% 7% EBITA before NRI1 EUR 47 million Employees 29% 12,296 9% 50% Services North Americ
Slide 6: 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 7: 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 8: 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 9: 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 10: 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 11: 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 12: Leader in technology and innovation: Examples of our R&D results
Leader in technology and innovation: Examples of our R&D results OptiConcept M board and paper machine Advantage NTT tissue machine Cost-efficient, high-quality, safe and flexible board High flexibility and energy efficiency making concept – Swing from production of conventional to textured tiss
Slide 13: 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 14: Business lines' development
Business lines’ development
Slide 15: 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 16: 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 17: 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 18: 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 19: Financial development
Financial development Valmet <>
Slide 20: Cash flow provided by operating activities
Cash flow provided by operating activities Cash flow provided by operating activities (EUR million) 140 120 100 117 80 60 40 46 43 20 30 17 16 0 -20 -20 -40 Q1/2014 Q2/2014 Q3/2014 Q4/2014 Q2/2015 Q3/2015 Q1/2015 • CAPEX excluding business acquisitions (EUR -11 million) less than depreciation (EUR -
Slide 21: 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 22: Net debt increased due to Automation acquisition
Net debt increased due to Automation acquisition Net debt (EUR million) and gearing (%) Equity to assets ratio (%) 350 29% 28% 35% 45% 41% 42% 300 30% 40% 40% 250 25% 40% 34% 35% 35% 200 238 229 20% 35% 150 15% 100 10% 30% 50 5% 25% 0 -39 0% -50 -54 -5% 20% -100 -5% -158 -166 -134 -10% 15% -150 -7%
Slide 23: Capital employed and ROCE
Capital employed and ROCE Return on capital employed1 (ROCE), before taxes and NRI2 1,239 1,240 1,214 985 967 14% 902 12% 877 10% 10% 54 2% 2% 48 47 1% 32 22 19 4 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Capital employed EBITA ROCE (before taxes and NRI), rolling 12 months • Return on capital emplo
Slide 24: 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 25: Guidance and short-term market outlook
Guidance and short- term market outlook
Slide 26: 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 27: Summary of Interim Review Q3/2015
Summary of Interim Review Q3/2015
Slide 28: 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 29: Financial Statements Review 2015 and upcoming site visit
Financial Statements Review 2015 February 9, 2016 www.valmet.com/investors Upcoming site visit: Automation Tampere, Finland November 26, 2015
Slide 30: Appendix
Appendix Valmet <>
Slide 31: 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 32: Largest shareholders on September 30, 2015
Largest shareholders on September 30, 2015 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 Solero Luxco S.A.R.L 5,349,756 3.57% 3 Varma Mutual Pension Insurance Company 4,208,46
Slide 33: Ownership structure on September 30, 2015
Ownership structure on September 30, 2015 14.4% Nominee registered and non-Finnish holders 11.1% Finnish institutions, companies and foundations 52.1% Solidium Oy Finnish private investors 22.4% Sector Number of shareholders % of total shareholders Number of shares % of shares Nominee registered and
Slide 34: 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 35: 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 36: 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 37: Paper and board consumption growth trends
Paper and board consumption growth trends Paper and board consumption per capita vs. population Population growth in 250 2,500 emerging markets is 200 2,000 larger than in developed markets 150 1,500 100 1,000 Level of consumption per capita in 50 500 emerging markets 0 0 clearly below that in China
Slide 38: Tissue consumption growth trends
Tissue consumption growth trends Tissue consumption per capita vs. population New products and 2,500 25 consumption models 2,000 20 based on tissue are helping increase 1,500 15 consumption in 1,000 10 developed markets 500 5 0 0 Consumption in emerging markets is China Rest of Asia Oceania Africa L
Slide 39: Pulp and paper price trends
39 1,000 1,200 0 200 400 600 800 Source: Bloomberg 1-Dec-07 October 28, 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
Slide 40: 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 1-Jul-15 CIF ARA steam coal (USD/t) (LHS) Brent crude oil (USD/barrel) (LHS)
Slide 41: 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 1-Jul-15 FOB steam coal Richards Bay (USD/t) (LHS) WTI crude oil (USD/barrel) (LHS) Henry Hub
Slide 42: European Carbon Emission Allowance price
42 0 1 2 3 4 5 7 8 9 6 2-Nov-12 2-Dec-12 Source: Bloomberg 2-Jan-13 2-Feb-13 October 28, 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 43: 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
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