Slide 1: The new normal – balancing continues
The new normal – balancing continues Aki Niemi Area President, China September 24, 2015
Slide 2: Valmet in China contents
Valmet in China Contents 1 Valmet in China in brief 2 Market position, drivers and market review 3 Main competitors 4 Strategy and competitive edges 5 Summary 6 Appendix: References in China
Slide 3: China area overview
China area overview Focusing on businesses in pulp and paper industry Our business Our customers Our achievements • We serve customers by • Our customers are in leading • Large installed base in pulp providing technology and position in pulp and paper and paper industry services for the pulp, paper
Slide 4: Valmet offering in China
Valmet offering in China Comprehensive offering in pulp and paper industry Complete paper, board and tissue making lines, rebuilds and key components Complete fiber lines and recovery islands, rebuilds Complete Automation offering for mainly pulp and paper customers Valmet full scope service
Slide 5: Valmet's operations in China
Valmet’s operations in China Serving the pulp, paper and energy industries A technology and services company with a unique customer offering – also including full automation offering for pulp, paper, energy and other selected process industries. About 2,000 employees serving customers through a
Slide 6: Valmet's milestones in China
Valmet’s milestones in China 2015 Valmet acquire Metso’s Process Automation Business 2014 Starts serving customers with new company name - Valmet 2013 Fabrics Tianjin extended 2010 Zibo service center 2010 Fabrics Tianjin 2009 Guangzhou service center 2008 Metso Paper Technology (Xi’an) 2006 Metso P
Slide 7: Local presence in China
Local presence in China Factory • Shanghai (3) • Xi’an • Tianjin (2) Beijing Service center Tianjin • Wuxi Ji’nan Zibo • Guangzhou Xi’an Shanghai • Zibo Wuxi Chengdu Office Taiwan • Beijing Guangzhou • Ji’nan • Chengdu • Guangzhou • Taiwan 7 September 24, 2015 © Valmet | Aki Niemi, Area President, C
Slide 8: Strong regional customer base across China
Strong regional customer base across China Serving pulp, paper and energy customers Services Pulp and Energy Paper Automation Valmet is a registered trademark of Valmet Corporation. Other trademarks appearing here are trademarks of their respective owners. 8 September 24, 2015 © Valmet | Aki Niemi,
Slide 9: The share of China in Valmet
The share of China in Valmet Financial figures in 2014 China is still an important market for new board and tissue machines However, China’s relative weight in Valmet’s business is balanced Orders received Net sales Personnel Asia- Pacific 6% South Asia- North America Asia- North North 4% Pacifi
Slide 10: Market position, drivers and market review
Market position, drivers and market review
Slide 11: Market drivers
Market drivers Services Automation Pulp Paper • Growth supported • Increasing demand • Increasing standard • Developing by significant for saving costs of of living in Asia markets, e.g. amount of new raw materials, driving demand for China, expected to capacity being energy and labor paper, board a
Slide 12: Annual review 2013 vs. 2014 vs E2015
Annual review 2013 vs. 2014 vs E2015 Production and consumption in paper and pulp industry Paper Review Pulp Review 120,000 120,000 -4.2% -9.7% 3,200 -3.4% 3,250 -11.3% 3,200 100,000 3,600 3,210 100,000 +2.4% 3,620 7,000 0% 25,500 +2.4% 24,900 +0.2% 23,100 7,550 24,900 22,540 8,290 -7.5% 22,500 -9.0
Slide 13: Production/Consumption: Containerboard
Production/Consumption: Containerboard Market outlook by RISI Linerboard 25,000 Healthy balance with supply and demand. 20,000 The growth is linked with economic activity. 15,000 On-line shopping supports recyclable 10,000 packaging growth. 5,000 0 Containerboard Demand/Capacity 2005 2006 2007 2008
Slide 14: Production/Consumption: Cartonboard
Production/Consumption: Cartonboard Market outlook by RISI Cartonboard Annual Change in Chinese Board 18,000 Demand/Capacity, 2007–2018 (RISI) 16,000 14,000 Recycled boxboard demand will continue 12,000 10,000 to drag down overall growth, and a larger 8,000 demand and supply gap has lead to 6,000
Slide 15: Packaging grade summary & outlook
Packaging grade summary & outlook Some positive news Packaging Production/Consumption Rebate of 50% on the value- (ktons) Forecast added tax (VAT) on recovered 100,000 1,500 fiber (RCF) based paper and 90,000 1,200 board products from July. 80,000 900 70,000 600 60,000 300 Recent investments oft
Slide 16: Production/Consumption: Tissue
Production/Consumption: Tissue Market outlook by RISI Tissue 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Production Export Consumption Import China will continue to be the main driving force of global tissue industry expansion, f
Slide 17: Production/Consumption: Graphic paper & newsprint
Production/Consumption: Graphic paper & newsprint Market outlook by RISI UWF(Uncoated Woodfree) Newsprint: Permanent Decline 20,000 18,000 Printing & writing paper: 16,000 14,000 – Most Asian markets are growing 12,000 – The more mature markets will see continued decline. 10,000 8,000 6,000 4,00
Slide 18: Production & Consumption outlook in China
Production & Consumption outlook in China Compared with Asia totals by different grades Containerboard Cartonboard 100,000 35,000 90,000 30,000 80,000 70,000 25,000 60,000 Asia consumption 20,000 Asia consumption 50,000 40,000 15,000 30,000 10,000 20,000 China consumption 5,000 China consumption 10,
Slide 19: Consumption per capita
Consumption per capita Chinese consumption far away from the level at the Western world Population 30 Tissue Consumption (kg/per) 25 NA 20 W.Europe 15 JPN E.Europe SA Oceania 10 AFRICA 5 China ME 0 -50 0 50 100 150 200 250 Rest of Asia Paper, Board -5 Consumption (kg/per) 19 September 24, 2015 © Val
Slide 20: China will remain important market for new machines
China will remain important market for new machines 2015–2017 Paper & board (ktons) capacity changes forecast Cartonboard 7,000 Containerboard 6,000 P&W 5,000 News/Closure P&W/Closure 4,000 3,000 2,000 1,000 0 -1,000 China India Vietnam Taiwan Indonesia Japan Thailand 20 September 24, 2015 © Valmet
Slide 21: Environmental issues
Environmental issues Government fight against water pollution Dongguan city has shut down 57 paper mills by June – According to the plan, some 104 industrial plants, including 57 paper mills, was shut down permanently. The campaign was targeting board mills with a capacity below 200,000 tons/a and
Slide 22: Old facility closure in pulp and paper industry
Old facility closure in pulp and paper industry Closures on high level in the past 5 years 12,000 10,000 Target closure Actual closure 8,000 6,000 10,570 9,954 8,311 8,310 8,196 7,414 4,000 5,332 4,922 4,640 1,080 2,000 2,300 2,100 1,650 510 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Min
Slide 23: Total new installations by startup year
Total new installations by startup year Overcapacity in coated boards, tissue and coated fine papers Wood pulp startups, kton/a Board startups, kton/a 1,200 6,000 1,000 5,000 800 4,000 600 3,000 400 2,000 200 1,000 0 0 2013 2014 2015 2013 2014 2015 2016 Chem. Pulp Mech. Pulp Other Cartonboard Flutin
Slide 24: Development of paper industry in China
Development of paper industry in China Long-term trends – Production and consumption will grow, but growth rate will be slower – Competition will be tougher, winners and losers expected - consolidation – Industry integration and elimination of out of date capacity will continue – Paper and board e
Slide 25: Development of net sales and orders received
Development of net sales and orders received Orders received and net sales Orders received have been levelling in the past 2-3 700 years 600 500 – Record order intake and net sales years 400 just after financial crisis 300 631 480 – Strong stimulus-driven investments led to 200 358 279 345 241 241
Slide 26: Changes in the market environment
Changes in the market environment Market • Growth opportunities in services, market growth mainly in Target market size services (EUR million) environment • Fiber market will remain about the same level as today 2,060 • Bioenergy market is expected to grow fast, but not in focus 1,790 80 50 now. 550
Slide 27: Exchange rate affect pulp and paper industry
Exchange rate affect pulp and paper industry China plays an important role in global paper industry China as a high portion of global demand and global growth Cost structure is critical to the paper and board mills in current market China is largely dependent on fiber imports (almost 48% in to
Slide 28: Main competitors
Main competitors Valmet <>
Slide 29: Valmet's market position in China
Valmet’s market position in China Services Automation Pulp Paper 8% 20% 35% 40% Valmet’s market share of target Valmet’s market share of target Valmet’s market share of target Valmet’s market share of target market market market market The service market is Valmet #1-3 in Valmet #1 in Pulp in Valmet
Slide 30: Competitors
Competitors Number of competitors in all business segments Global 1st tier competitors expand local presence Global 2nd tier competitors finding cooperation with local suppliers for new installations and actively competing with key components Local competitors are seeking technology developmen
Slide 31: Strategy and competitive edges
Strategy and competitive edges
Slide 32: We achieve our strategic targets through the implementation of must-wins
We achieve our strategic targets through the implementation of must-wins The facts Our way Forward • Valmet has established strong position • Maintain our leading market position in in pulp and paper industry capital business and service business growth • Market Equipment business has levelled to
Slide 33: Valmet's competitive edges
Valmet’s competitive edges Why has Valmet premium pricing? Value of our technology and engineering Value of our quality of manufacturing Value of our smooth start-up and lower OPEX Value of our services 33 September 24, 2015 © Valmet | Aki Niemi, Area President, China
Slide 34: Capitalizing the service potential
Capitalizing the service potential Installed base Large installed base providing good opportunity to increase services. Key Account Strengthen Key Account Management to improve contribution from key Management accounts. Agreement- Continue to develop agreement-based business. based business Cost Cos
Slide 35: How to improve profitability in China?
How to improve profitability in China? Competitive cost of raw Manufacturing efficiency and materials and other procurement WTO China is still competitive sourcing Further optimize capacity cost area Basic productivity development Increase the share of Modular manufacturing subcontracting
Slide 36: Summary
Summary Valmet <>
Slide 37: Summary
Summary The installed base is still young and the service culture yet underdeveloped, which offers good possibilities to grow in services Board and tissue consumption is growing – Supported by megatrends – Overcapacity still impacting market in short-term Valmet has adapted to current market s
Slide 38: Appendix: References in China
Appendix: References in China
Slide 39: Our success in moving forward in China
Our success in moving forward in China New orders in 2015 About EUR 110 million order from Huanggang Chenming – Able to produce softwood kraft pulp and dissolving pulp depending on the market needs. Estimated start-up in 2017. Lee & Man PM21 – Container board, Testliner, 1,100m/min, 1,060 ton/d
Slide 40: Our success in moving forward in China
Our success in moving forward in China Well recognition from Tissue makers Lee & Man TM4 ordered in 2014 Site: Chongqing New tissue machine: Advantage DCT 200 HS Design speed: 2000 m/min Estimate start-up: In 2015 Placed repeat orders in 2015: TM5 &TM6 Site: Chongqing New tissue machine:
Slide 41: Our success in moving forward in China
Our success in moving forward in China Successful new startups in 2015 Zhanjiang Chenming PM3, “The Zhanjiang Chenming PM3 relocation first parent roll in the reel” after – Old Jilin Shixian PM10 relocated to Zhanjiang startup. 31.7.2015 – Grades: Offset, LWC, Art Paper – Design speed at reel 1600
Slide 42: Our success in moving forward in China
Our success in moving forward in China New developments in 2015 Services capacity Xian improved environmental performance Valmet LiteFit and LiteCompact holders In 2014, Xian workshop replaced old coal production launched in August, 2015, in boilers with a natural gas heating system, WaiGaoQiao,
Slide 43: Contributing to the well-being of communities and the education
Contributing to the well-being of communities and the education We continue the programs that are helping to education and build the well-being of communities Donate 2 sets of water filters to Kengzheng Primary school at Jiaxian, Yulin, Shaanxi Province in June, 2015. Valmet (China) Co., Ltd. aw
Slide 44: Paper, board and tissue machine references in China
Paper, board and tissue machine references in Jilin Paper Black Dragon Paper, Qiqihar Jia Mu Si Paper Mill China Jilin Shixian Paper, Tumen MCC Paper Yinhe Shandong Chenming Hebei Longteng PanAsia Shandong Huatai Changle Numat Paper Shandong Sun Paper Shandong Bohui Paper MCC Paper Yinhe Shandong Si
Slide 45: Pulping references in China
Pulping references Black Dragon Paper, Qiqihar in China Jilin Paper Jiamusi, Heilongjiangl Heilongjiang Dare Wood Jilin Hongshi Jilin Helong Yingkou Paper Zhalantun Shandong Chenming Xinjiang Bositenghu Shandong Huatai April Rizhao Xinjiang Tianxi Sun Paper Bohui Paper Shandong MCC Yinhe Shandong Si
Slide 46: Automation references in China
Automation references in China Mudanjiang Hengfeng Jilin Chenming Tangshan C&S April SSYBOL ND Tianjing Shandong Huatai Shandong Chenming Hebei Huatai Zhengda Shandong Changle Shandong Quanlin Weifang HengAn MCC Yinhe Shandong Bohui Puyang Longfeng IPSP & Sunpaper Xinxiang Xinya Jiangsu L&M, Taixing
Slide 47: FORWARD
FORWARD