Slide 1: Strong start for Automation as part of Valmet
Strong start for Automation as part of Valmet – profitability reached the targeted range in Q2/2015 Interim Review, January–June 2015 July 30, 2015 Pasi Laine, President and CEO Markku Honkasalo, CFO
Slide 2: Agenda
Agenda Interim Review, January–June 2015 1 Q2/2015 in brief 2 Business lines’ development 3 Financial development 4 Guidance and short-term market outlook 5 Summary of Interim Review Q2/2015 6 Appendix
Slide 3: Q2/2015 in brief
Q2/2015 in brief Valmet <>
Slide 4: Q2/2015 in brief
Q2/2015 in brief Strong start for Automation as part of Valmet • Acquisition of Process Automation Systems was completed on April 1, 2015 • Automation became Valmet’s fourth business line – Q2/2015 the first reported quarter for Automation • Positive feedback from customers and employees Orders rece
Slide 5: Net sales split in Q2/2015
Net sales split in Q2/2015 Stable business net sales EUR 371 million Net sales split by Net sales split by Orders received business line geographic area EUR 781 million 17% 21% 23% Net sales EUR 779 million 39% 10% EBITA before NRI1 9% EUR 54 million Employees 29% 12,524 9% 43% Services North Americ
Slide 6: Key figures Q2/2015
Key figures Q2/2015 EUR million Q2/2015 Q2/2014 Change Q1–Q2/2015 Q1–Q2/2014 Change Orders received 781 1,023 -24% 1,360 2,124 -36% Order backlog1 2,208 2,406 -8% 2,208 2,406 -8% Net sales 779 588 33% 1,340 1,107 21% EBITA2 54 22 >100% 73 26 >100% % of net sales 6.9% 3.7% 5.5% 2.3% EBIT3 32 16 96% 4
Slide 7: Growing trend in orders received – stable business
Growing trend in orders received – stable business orders received EUR 392 million 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 2,500 190 781 420 121 781 800 2,0
Slide 8: Order backlog at EUR 2.2 billion
Order backlog at EUR 2.2 billion Order backlog (EUR million) Structure of order backlog 3,000 2,500 2,406 2,312 ~30% 2,000 2,208 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 Stable business Capital business • About 60% of the order backlog is currently expected to be
Slide 9: EBITA-margin reached the targeted range
EBITA-margin reached the targeted range Net sales and EBITA before NRI (EUR million) 777 779 EBITA target 6–9% 6.1% 588 590 6.9% 561 519 3.7% 5.5% 3.5% Capital business Stable business 0.7% EBITA-% 371 251 235 278 242 224 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 EBITA before 4 22 32 48 19 54 NRI (EUR mil
Slide 10: 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) 200 50% 200 50% 180 45% 180 45% 160 40% 160 40% 140 35% 140 35% 120 30% 120 30% 23% 100 25% 100 25% 17% 80 20% 80 20% 60 15% 60 15% 40 10% 40 10% 20 5% 20 5% 0 0% 0 0% Q1/2014 Q2/2014
Slide 11: Key Must-Win objectives to increase the profitability
Key Must-Win objectives to increase the profitability 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 on cost processes developm
Slide 12: Business lines' development
Business lines’ development
Slide 13: 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) Q1–Q2/2014: Q1–Q2/2015: Q1–Q2/2014: Q1–Q2/2015: EUR 540 million EUR 600 million EUR 475 million EUR 546 million 350 307 1,400 350 304 1,400 293 278 300 267 273 273 1,200 300 1,200 242 251 235 24
Slide 14: Strong start for Automation as part of Valmet
Strong start for Automation as part of Valmet Orders received1, 2 (EUR million) Net sales2 (EUR million) 160 160 140 140 120 95 120 100 84 100 79 10 74 80 62 80 55 11 60 60 40 85 40 68 20 20 0 0 Average quarter Q1/15 Q2/15 Average quarter Q1/15 Q2/15 in 2014 in 2014 Orders received, internal (from o
Slide 15: Pulp and Energy orders received, net sales stable
Pulp and Energy orders received EUR 259 million, net sales stable Orders received (EUR million) Net sales (EUR million) Q1–Q2/2014: Q1–Q2/2015: Q1–Q2/2014: Q1–Q2/2015: EUR 1,182 million EUR 397 million EUR 410 million EUR 453 million 800 1,600 400 1,600 700 622 1,400 350 312 1,400 600 560 1,200 300
Slide 16: Paper orders received, net sales increased
Paper orders received EUR 129 million, net sales increased Orders received (EUR million) Net sales (EUR million) Q1–Q2/2014: Q1–Q2/2015: Q1–Q2/2014: Q1–Q2/2015: EUR 402 million EUR 278 million EUR 222 million EUR 273 million 300 900 300 900 250 212 750 250 750 190 186 177 200 600 200 600 142 149 150
Slide 17: Financial development
Financial development Valmet <>
Slide 18: 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 0 -20 -20 -40 Q1/2014 Q2/2014 Q3/2014 Q4/2014 Q1/2015 Q2/2015 • CAPEX excluding business acquisitions (EUR -9 million) less than depreciation (EUR -15 million)
Slide 19: Net working capital development
Net working capital development Net working capital and orders received (EUR million) 1,500 30% 1,000 20% Net working 1,101 1,023 capital has been 500 781 10% 580 on average -9% 466 480 0 0% of rolling 12 -257 -249 -345 -353 -355 -265 months orders -500 -10% received -1,000 -20% Q1/2014 Q2/2014 Q3/2
Slide 20: 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% 35% 45% 41% 42% 300 40% 40% 250 25% 40% 34% 35% 200 238 35% 150 15% 100 30% 50 5% 25% 0 -39 -50 -54 -5% 20% -100 -5% -158 -166 -134 15% -150 -7% -15% -200 10% -250 -17% -25% -20
Slide 21: Structure of loans and borrowings
Structure of loans and borrowings Interest-bearing debt EUR 428 million as at June 30, 2015 Amount of outstanding interest-bearing debt Main financing sources (EUR millions) Amount Lender 400 350 EUR 129 million European Investment Bank 300 EUR 100 million Skandinaviska Enskilda Banken 250 200 EUR 7
Slide 22: Guidance and short-term market outlook
Guidance and short- term market outlook
Slide 23: 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 24: Summary of Interim Review Q2/2015
Summary of Interim Review Q2/2015
Slide 25: Q2/2015 in brief
Q2/2015 in brief Strong start for Automation as part of Valmet • Acquisition of Process Automation Systems was completed on April 1, 2015 • Automation became Valmet’s fourth business line – Q2/2015 the first reported quarter for Automation • Positive feedback from customers and employees Orders rece
Slide 26: Interim Review January–September 2015
Interim Review January– September 2015 October 28, 2015 www.valmet.com/investors Upcoming site visits: Sundsvall, Sweden September 10, 2015 Shanghai, China September 24, 2015
Slide 27: Appendix
Appendix Valmet <>
Slide 28: Largest shareholders on June 30, 2015
Largest shareholders on June 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 Varma Mutual Pension Insurance Company 4,208,465 2.81% 3 Nordea Funds 3,994,491 2.67% 4 Ska
Slide 29: Ownership structure on June 30, 2015
Ownership structure on June 30, 2015 14.0% Nominee registered and non-Finnish holders 11.1% Finnish institutions, companies and foundations 54.0% Solidium Oy 20.8% Finnish private investors Sector Number of shareholders % of total shareholders Number of shares % of shares Nominee registered and non-
Slide 30: 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 Non-Finnish hol
Slide 31: 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 32: 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 33: 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 34: 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 35: Pulp and paper price trends
35 1,000 1,200 0 200 400 600 800 Source: Bloomberg July 30, 2015 1-Dec-07 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 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 tr
Slide 36: 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 37: 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 38: European Carbon Emission Allowance price
38 0 1 2 3 4 5 7 8 9 6 2-Nov-12 2-Dec-12 Source: Bloomberg 2-Jan-13 July 30, 2015 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 2-Aug-14 2-Sep-14 European Energy Exchange (EEX
Slide 39: Important notice
Important notice IMPORTANT: The following applies to this document, the oral presentation of the information in this document by Valmet (the “Company”) or any person on behalf of the Company, and any question-and-answer session that follows the oral presentation (collectively, the “Information”). In
Slide 40: Forward
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