Slide 1: Orders received, net sales and profitability increased
Orders received, net sales and profitability increased Interim Review, January–March 2016 April 27, 2016 Pasi Laine, President and CEO Kari Saarinen, CFO
Slide 2: Agenda
Agenda Interim Review, January–March 2016 1 Q1/2016 in brief 2 Business lines’ development 3 Financial development 4 Guidance and short-term market outlook 5 Summary of Interim Review Q1/2016 6 Appendix
Slide 3: Q1/2016 in brief
Q1/2016 in brief Valmet <>
Slide 4: Q1/2016 in brief
Q1/2016 in brief Orders received and net sales increased in stable business1 Orders received and net sales increased in capital business2 Order backlog at EUR 2.2 billion Profitability improved compared to Q1/2015, but was below the targeted level Net debt EUR 192 million 1) Stable business = Servic
Slide 5: Net sales split in Q1/2016
Net sales split in Q1/2016 Net sales by business line Net sales by area Orders received EUR 803 million 11% 24% 24% Net sales 14% EUR 652 million 39% Comparable EBITA1 7% EUR 31 million Comparable EBITA1 28% 9% 45% margin 4.8% Services North America Automation South America Employees Pulp and Energy
Slide 6: Orders received increased to EUR 803 million in Q1/2016
Orders received increased to EUR 803 million in Q1/2016 Orders received (EUR million) Orders received in Q1/2016, by area Asia-Pacific North 1,400 3,500 America 7% China 13% 1,200 3,000 11% 1,000 1,101 2,500 1,023 South 800 2,000 America 781 793 803 14% 600 725 1,500 580 400 466 480 1,000 200 500 0
Slide 7: Stable business orders received totaled EUR 1,468 million during the last 4 quarters
Stable business orders received totaled EUR 1,468 million during the last 4 quarters Orders received (EUR million) in stable business 500 1,500 450 402 1,350 394 400 1,200 330 342 350 95 81 1,050 293 300 267 273 273 75 900 242 78 250 750 200 600 150 293 307 313 450 267 273 242 273 252 267 100 300 50
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 ~25% 2,000 2,208 2,117 2,207 1,998 2,064 2,074 1,972 1,500 1,000 ~75% 500 0 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Stable business Capital business • Order backlog EUR 133 m
Slide 9: Business lines’ development
Business lines’ development
Slide 10: Orders received and net sales increased in Services in Q1/2016
Orders received and net sales increased in Services in Q1/2016 Orders received (EUR million) Net sales (EUR million) 2014: 2015: 2014: 2015: EUR 1,055 million EUR 1,119 million EUR 989 million EUR 1,128 million 350 307 313 1,400 350 304 314 1,400 293 278 300 267 273 273 267 1,200 300 268 257 1,200 2
Slide 11: Orders received in Automation totaled EUR 81 million in Q1/2016
1 Orders received in Automation totaled to EUR 81 million in Q1/2016 Orders received2 (EUR million) Net sales2 (EUR million) 120 450 120 101 450 95 100 81 375 100 6 375 10 78 75 79 72 80 62 300 80 66 300 8 8 15 55 11 6 60 225 60 9 225 85 95 40 70 150 40 150 67 66 68 66 58 20 75 20 75 0 0 0 0 Q1/15 Q
Slide 12: Orders received increased and net sales decreased in Pulp and Energy in Q1/2016
Orders received increased and net sales decreased in Pulp and Energy in Q1/2016 Orders received (EUR million) Net sales (EUR million) 2014: 2015: 2014: 2015: EUR 1,344 million EUR 864 million EUR 956 million EUR 913 million 700 622 1,400 350 312 1,400 600 560 1,200 300 1,200 229 234 231 245 500 1,00
Slide 13: Orders received and net sales increased in Paper in Q1/2016
Orders received and net sales increased in Paper in Q1/2016 Orders received (EUR million) Net sales (EUR million) 2014: 2015: 2014: 2015: EUR 671 million EUR 673 million EUR 528 million EUR 659 million 250 750 250 750 212 190 197 199 200 200 186 600 200 186 177 185 600 149 157 142 150 128 129 450 15
Slide 14: Progress in ‘Leader in technology and innovation’
Progress in ‘Leader in technology and innovation’ IQ Portfolio – Product: Quality measurements, controls, profilers and machine vision for paper machines and pulp dryers – Customer benefit: Improved quality – Sustainability: Raw material savings OptiFlo Aqua Layering – Product: OptiFlo aqua laye
Slide 15: A successful year with Automation
A successful year with Automation Integration – Integration process successfully finalized Personnel – Automation employee engagement high New products – Several new products launched, such as Valmet IQ quality management solution Cross-selling – 31 automation packages sold together with Val
Slide 16: Financial development
Financial development Valmet <>
Slide 17: Key figures Q1/2016
Key figures Q1/2016 EUR million Q1/2016 Q1/2015 Change 2015 Orders received 803 580 38% 2,878 Order backlog1 2,207 2,064 7% 2,074 Net sales 652 561 16% 2,928 Comparable EBITA2 31 19 61% 182 % of net sales 4.8% 3.5% 6.2% EBITA 30 19 56% 157 Operating profit (EBIT) 19 13 43% 120 % of net sales 2.9% 2.
Slide 18: Stable business net sales increased EUR 73 million compared to Q1/2015
Stable business net sales increased EUR 73 million compared to Q1/2015 Net sales bridge, Q1/2015 vs. Q1/2016 (EUR million) 58 -41 60 15 652 561 Net sales in Services Automation Pulp and Energy Paper Net sales in Q1/2015 business line business line business line business line Q1/2016 Change in net sa
Slide 19: Good development in gross profit compared to Q1/2015
Good development in gross profit compared to Q1/2015 Gross profit (EUR million and % of net sales) SG&A (EUR million and % of net sales) 200 23% 25% 200 25% 20% 160 20% 160 20% 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 Q4/2015 Q1/2016
Slide 20: Comparable EBITA margin development
Comparable EBITA margin development Net sales and Comparable EBITA (EUR million) 854 777 779 734 7.3% 6.9% Target 6–9% 6.4% 652 590 6.1% 588 561 519 4.8% 5.5% 445 3.7% 3.5% 408 Capital business 400 338 498 409 Stable business 337 319 371 295 354 334 314 Comparable EBITA % 278 251 235 242 224 0.7% Q1
Slide 21: 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 64 40 46 43 20 30 17 16 3 0 -20 -20 -40 Q1/2014 Q2/2014 Q3/2014 Q4/2014 Q1/2015 Q2/2015 Q3/2015 Q4/2015 Q1/2016 • Change in net working capital1 EUR -41 million in Q1/2016 • CAPE
Slide 22: Net working capital -8% of rolling 12 months orders received
Net working capital -8% of rolling 12 months orders received Net working capital and orders received (EUR million) 1,500 30% 1,000 20% 1,101 1,023 500 781 725 793 803 10% 480 580 466 0 0% -257 -249 -345 -353 -355 -265 -244 -238 -247 -500 -10% -1,000 -20% Q1/2014 Q3/2014 Q4/2014 Q1/2015 Q2/2015 Q3/20
Slide 23: Net debt increased compared to Q4/2015
Net debt increased compared to Q4/2015 Net debt (EUR million) and gearing (%) Equity to assets ratio (%) 29% 45% 42% 300 28% 30% 40% 40% 41% 24% 40% 21% 36% 35% 34% 35% 35% 200 238 20% 35% 229 178 192 30% 100 10% 25% 0 -39 0% 20% -54 -100 -5% -134 -10% 15% -7% -158 -166 10% -200 -20% -17% 5% -20% -2
Slide 24: Capital employed and Comparable ROCE
Capital employed and Comparable ROCE Capital employed (EUR million) and Comparable return on capital employed (ROCE), before taxes1 (percent) 1,239 1,240 1,214 1,231 1,184 985 967 14% 14% 902 877 13% 12% 10% 10% 2% 2% 1% Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Capital employed Comparab
Slide 25: Valmet continues to invest in operational excellence
Valmet continues to invest in operational excellence New ERP solution renews and improves Valmet’s operational capability Objectives of the program • The purpose of the program is to renew and improve Valmet’s operational capability through - Process harmonization and standardization - ERP platform
Slide 26: Guidance, and short-term market outlook
Guidance, and short- term market outlook
Slide 27: Guidance and short-term market outlook
Guidance and short-term market outlook Guidance for 2016 (as given on February 9, 2016) Valmet estimates that net sales in 2016 will remain at the same level with Guidance for 2015 (EUR 2,928 million) and Comparable EBITA in 2016 will increase in 2016 comparison with 2015 (EUR 182 million). Due to n
Slide 28: Summary of Interim Review Q1/2016
Summary of Interim Review Q1/2016
Slide 29: Q1/2016 in brief
Q1/2016 in brief Orders received and net sales increased in stable business1 Orders received and net sales increased in capital business2 Order backlog at EUR 2.2 billion Profitability improved compared to Q1/2015, but was below the targeted level Net debt EUR 192 million 1) Stable business = Servic
Slide 30: Appendix
Appendix Valmet <>
Slide 31: Structure of loans and borrowings
Structure of loans and borrowings Interest-bearing debt EUR 371 million as at March 31, 2016 Amount of outstanding interest-bearing debt Main financing sources (EUR millions) Amount Lender 350 300 EUR 88 million European Investment Bank 250 EUR 86 million Skandinaviska Enskilda Banken 200 EUR 61 mil
Slide 32: Largest shareholders on March 31, 2016
Largest shareholders on March 31, 2016 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 6,108,465 4.08% 3 Solero Luxco S.A.R.L 5,374,482 3.
Slide 33: Ownership structure on March 31, 2016
Ownership structure on March 31, 2016 14.7% Nominee registered and non-Finnish holders 11.1% 46.5% Finnish institutions, companies and foundations Solidium Oy Finnish private investors 27.6% Sector Number of shareholders % of total shareholders Number of shares % of shares Nominee registered and non
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 1,200 200 400 600 800 0 Source: Bloomberg April 27, 2016 1-Dec-07 1-Mar-08 1-Jun-08 1-Sep-08 1-Dec-08 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 © Valmet | Interim Review, January–March 2016 1-Dec-10 1-Mar-11 1-J
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-Aug-10 1-Mar-11 1-Oct-11 1-May-12 1-Dec-12 1-Jul-13 1-Feb-14 1-Sep-14 1-Apr-15 1-Nov-15 CIF ARA steam coal (USD/t) (LHS) Brent crude oil (USD/barrel) (LHS) Natural
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-Aug-10 1-Mar-11 1-Oct-11 1-May-12 1-Dec-12 1-Jul-13 1-Feb-14 1-Sep-14 1-Apr-15 1-Nov-15 FOB steam coal Richards Bay (USD/t) (LHS) WTI crude oil (USD/barrel) (LHS) Henry Hub gas (USD/
Slide 42: European Carbon Emission Allowance price
42 10 0 1 2 3 4 5 6 7 8 9 2-Nov-12 2-Dec-12 2-Jan-13 Source: Bloomberg April 27, 2016 2-Feb-13 2-Mar-13 2-Apr-13 2-May-13 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 © Valmet | Interim Review, January–March 2016 2-May-14 2-Jun-14 2-Jul-14 2-Aug-
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
Slide 44: Interim Review January–June 2016 Capital Markets Day
Interim Review January–June 2016 July 28, 2016 www.valmet.com/investors Capital Markets Day September 20, 2016 Helsinki, Finland More information to follow!
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