Valmet Corp · OMXHEX:VALMT
Valmet — Non-Deal Roadshow (August 2015)
99 slides from Valmet's roadshow presentation, August 2015
Slide 1: Valmet – unique offering with process technology, automation and services
Valmet – unique offering with process technology, automation and services Roadshow material August 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: 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 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 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: 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 19: 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 20: 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 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 technology automation offering 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 19% 15% - Historically continuous double-digit EBITA 18% margin of 10–12% 36% 11% 13% - Stable net sales, with slight growth 3
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 Offering 5 Market statistics
Slide 31: Appendix: Management, ownership and share price development
Appendix Management, ownership and share price development
Slide 32: Experienced Executive Team
Experienced Executive Team Corporate Pasi Laine Markku Honkasalo Kari Saarinen Julia Macharey Anu Salonsaari-Posti President and CEO CFO SVP, Strategy and SVP, Human Resources SVP, Marketing & Share ownership: 49,021 Share ownership: 5,148 Operational Development Share ownership: 2,591 Communication
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 July 31, 2015
Largest shareholders on July 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 Cevian Capital 10,323,191 6.89% 3 Varma Mutual Pension Insurance Company 4,208,465 2.81% 4 Nordea Funds 3,919,02
Slide 35: Ownership structure on July 31, 2015
Ownership structure on July 31, 2015 14.1% Nominee registered and non-Finnish holders 11.1% Finnish institutions, companies and foundations 53.7% Solidium Oy 21.0% Finnish private investors 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 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 Non-Fin
Slide 37: Share price development and trading volume
37 Million shares 6.00 7.00 8.00 9.00 10.00 11.00 12.00 0 1 2 3 4 5 6 7 8 01/14 01/14 01/14 01/14 August, 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 Valmet 07/14 07/14 08/14 08/14 09/14 09/14 10/14 10/14 10/14 10/14 11/14 11/14 12/14
Slide 38: Appendix: 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)
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)
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: 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 44: 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 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) 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 46: Strong start in Automation
Strong start in Automation Orders received1, 2 (EUR million) Net sales (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 other business lines)
Slide 47: 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 48: 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 49: 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% Q2/2014 Q3/2014
Slide 50: 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 51: 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 52: 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 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% 41% 42% 40% 40% 34% 35% 117 238 -39 46 -54 43 -5% -158 -166 -134 30 -7% 17 -20 -17% -20% -21% Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/
Slide 54: 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 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 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 59: Strong balance sheet to support large orders
Strong balance sheet to support large orders Financial position as of June 30, 2015 (EUR million) 276 97 161 397 29 3,015 331 2,342 238 812 Non-current Current debt Cash and Other Net debt Total equity Balance Advances Billings in Adj. balance debt equivalents financial sheet total received excess o
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–Q2/ Q1–Q2/ Q1–Q4/ 2015 2014 2014 Earnings per share, EUR 0.19 0.03 0.31 Diluted earnings per share, EUR 0.19 0.03 0.31 Equity per share at end of period, EUR 5.38 5.19 5.36 Return on equity (ROE), % (annualized) 7% 1% 6% Return on capital employed (ROCE) before taxes, % (annualized) 9%
Slide 63: Consolidated statement of income
Consolidated statement of income Q2/2015 Q2/2014 Q1–Q2/ Q1–Q2/ EUR million 2015 2014 Net sales 779 588 1,340 1,107 Cost of goods sold -599 -475 -1,047 -897 Gross profit 180 113 293 210 Selling, general and administrative expenses -136 -97 -239 -200 Other operating income and expenses, net -12 1 -8 -
Slide 64: Balance sheet as at June 30, 2015 (assets)
Balance sheet as at June 30, 2015 Assets As at June As at June As at December EUR million 30, 2015 30, 2014 31, 2014 Non-current assets Intangible assets Goodwill 624 441 446 Other intangible assets 245 99 91 Total intangible assets 869 540 537 Property, plant and equipment Land and water areas 27 2
Slide 65: Balance sheet as at June 30, 2015 (equity and liabilities)
Balance sheet as at June 30, 2015 Equity and liabilities As at June As at June As at December EUR million 30, 2015 30, 2014 31, 2014 Equity Share capital 100 100 100 Reserve for invested unrestricted equity 404 403 403 Cumulative translation adjustments 24 -4 9 Fair value and other reserves 0 -2 -3
Slide 66: Condensed Consolidated Statement of Cash Flows
Condensed Consolidated Statement of Cash Flows Q2/2015 Q2/2014 Q1–Q2/ Q1–Q2/ EUR million 2015 2014 Cash flows from operating activities Profit / loss 21 11 29 5 Adjustments Depreciation and amortization 25 18 43 36 Dividend income and net interests 1 0 2 0 Income taxes 9 5 13 2 Other non-cash items
Slide 67: Appendix: Automation
Appendix Automation Valmet <>
Slide 68: 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 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: 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 70 August, 2015 © Valmet
Slide 71: 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 72: 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 73: 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 74: 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 75: Appendix: Offering
Appendix Offering Valmet <>
Slide 76: 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 77: 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 78: 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 79: 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 80: 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 81: 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 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 82: Continuous investment in research and development
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 83: Example of our R&D work - OptiConcept M
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 84: Appendix: Market statistics
Appendix Market statistics Valmet <>
Slide 85: 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 86: 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 87: 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 88: 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 89: 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 90: 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 91: 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 92: 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 93: 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 94: Pulp and paper price trends
94 1,000 1,200 0 200 400 600 800 Source: Bloomberg August, 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 tre
Slide 95: 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 June, 2015: $56 Canada and the Nordic 900 250 countries. NBSK is based on long fibre woo
Slide 96: 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 97: 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 98: European Carbon Emission Allowance
98 0 1 2 3 4 5 7 8 9 6 2-Nov-12 2-Dec-12 Source: Bloomberg 2-Jan-13 August, 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 99: FORWARD
FORWARD