Slide 1: Interim Review, January–March 2015
Orders received increased in Services – focus continues to be on profitability improvement Interim Review, January–March 2015 April 29, 2015 Pasi Laine, President and CEO Markku Honkasalo, CFO
Slide 2: Agenda
Agenda Interim Review, January–March 2015 1 Q1/2015 in brief 2 Business lines’ development 3 Financial development 4 Guidance and short-term market outlook 5 Summary of Interim Review Q1/2015 6 Appendix 2 April 29, 2015 © Valmet
Slide 3: Q1/2015 in brief
Q1/2015 in brief Valmet <>
Slide 4: Q1/2015 in brief
Q1/2015 in brief Orders received and net sales increased in services • Services orders received increased compared with Q1/2014 • Net sales increased compared with Q1/2014 in Services Orders received decreased and net sales increased in capital business • Orders received decreased in Pulp and Energy
Slide 5: Key figures Q1/2015
Key figures Q1/2015 EUR million Q1/2015 Q1/2014 Change Orders received 580 1,101 -47% Order backlog1 2,064 1,972 5% Net sales 561 519 8% EBITA2 19 4 >100% % of net sales 3.5% 0.7% EBIT3 13 -8 % of net sales 2.4% -1.5% Earnings per share, EUR 0.05 -0.04 Return on capital employed (ROCE), before taxes
Slide 6: Orders received declined from the high level in Q1/2014
Orders received declined from the high level in Q1/2014 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 2,500 190 420 121 800 2,000 800 2,000 580 480 580 35 466 600
Slide 7: 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 ~25% 2,312 2,000 1,972 1,998 2,064 1,500 1,000 ~75% 500 0 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Services business Capital business • About 75% of the order backlog is currently expected to be realized a
Slide 8: EBITA-margin increased compared with Q1/2014
EBITA-margin increased compared with Q1/2014 Net sales and EBITA before NRI (EUR million) 777 EBITA target 6–9% 6.1% 588 590 561 519 3.7% 5.5% 3.5% 0.7% Services Capital 251 235 278 242 224 EBITA-% Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 EBITA before 4 22 32 48 19 NRI (MEUR) • Net sales and profitability incr
Slide 9: 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) 160 40% 160 40% 140 35% 140 35% 120 30% 120 30% 100 25% 100 25% 80 20% 80 20% 60 15% 60 15% 40 10% 40 10% 20 5% 20 5% 0 0% 0 0% Q1/2014 Q2/2014 Q3/2014 Q4/2014 Q1/2015 Q1/2014 Q2/2014
Slide 10: Key Must-Win objectives to improve profitability to the targeted level of 6–9%
Key Must-Win objectives to improve profitability to the targeted level of 6–9% 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 o
Slide 11: Automation is Valmet's fourth business line
Automation is Valmet’s fourth business line The acquisition was announced on January 15, 2015 and completed on April 1, 2015 Enterprise value of acquisition EUR 340 million1 Automation is Valmet’s fourth business line January–June Interim Review will include Automation 1) Refers to the debt-
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) 2014: 2014: EUR 1,055 million EUR 989 million 300 273 273 293 1,200 300 278 1,200 267 242 251 242 250 1,000 250 224 235 1,000 200 800 200 800 150 600 150 600 100 400 100 400 50 200 50 200 0 0 0
Slide 14: Orders received decreased and net sales increased in Pulp and Energy
Orders received decreased and net sales increased in Pulp and Energy Orders received (EUR million) Net sales (EUR million) 2014: 2014: EUR 1,344 million EUR 956 million 800 1,600 400 1,600 700 622 1,400 350 312 1,400 600 560 1,200 300 1,200 229 234 222 500 1,000 250 1,000 400 800 200 181 800 300 600
Slide 15: Orders received and net sales decreased in Paper
Orders received and net sales decreased in Paper Orders received (EUR million) Net sales (EUR million) 2014: 2014: EUR 671 million EUR 528 million 300 900 300 900 250 212 750 250 750 190 186 200 600 200 600 142 149 150 128 450 150 120 450 114 108 97 100 300 100 300 50 150 50 150 0 0 0 0 Q1/14 Q2/14
Slide 16: Financial development
Financial development Valmet <>
Slide 17: Cash flow provided by operating activities negative due to net working capital development
Cash flow provided by operating activities negative due to net working capital development Cash flow provided by operating activities (EUR million) 140 120 100 117 80 60 40 46 43 20 30 0 -20 -20 -40 Q2/2014 Q3/2014 Q4/2014 Q1/2015 Q1/2014 • Change in net working capital was EUR -49 million1 • CAPEX
Slide 18: Strong balance sheet and negative gearing
Strong balance sheet and negative gearing Net debt (EUR million) and gearing (%) Equity to assets ratio (%) 200 20% 45% 41% 42% 40% 40% 150 15% 40% 34% 100 10% 35% 50 5% 30% 0 0% 25% -39 -54 -50 -5% 20% -100 -5% -10% 15% -7% -134 -158 -166 -150 -15% 10% -200 -17% -20% 5% -250 -20% -21% -25% 0% Q1/14
Slide 19: Structure of loans and borrowings
Structure of loans and borrowings Interest-bearing debt EUR 445 million as at March 31, 2015 Amount of outstanding interest-bearing debt Main financing sources (EUR millions) Amount Lender 400 350 EUR 147 million European Investment Bank 300 EUR 100 million Skandinaviska Enskilda Banken 250 200 EUR
Slide 20: Guidance and short-term market outlook
Guidance and short- term market outlook
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: Summary of Interim Review Q1/2015
Summary of Interim Review Q1/2015
Slide 23: Summary of Interim Review Q1/2015
Summary of Interim Review Q1/2015 Orders received and net sales increased in services • Services orders received increased compared with Q1/2014 • Net sales increased compared with Q1/2014 in Services Orders received decreased and net sales increased in capital business • Orders received decreased i
Slide 24: Interim Review January–June 2015
Interim Review January–June 2015 July 30, 2015 www.valmet.com/investors
Slide 25: Appendix
Appendix Valmet <>
Slide 26: Largest shareholders on March 31, 2015
Largest shareholders on March 31, 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 Cevian Capital Partners Ltd. 10,323,191 6.89% 3 Nordea Funds 4,610,779 3.08% 4 Skagen Glob
Slide 27: Ownership structure on March 31, 2015
Ownership structure on March 31, 2015 14.2% Nominee registered and non-Finnish holders 11.1% Finnish institutions, companies and foundations 54.5% Solidium Oy Finnish private investors 20.2% Sector Number of shareholders % of total shareholders Number of shares % of shares Nominee registered and non
Slide 28: Share of non-Finnish holders and number of shareholders
Share of non-Finnish holders and number of shareholders 57% 60,000 55% 58,000 53% 56,000 51% 54,000 49% 52,000 47% 50,000 45% 48,000 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 Non-Finnish holders (LHS) Total number
Slide 29: 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 30: 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 31: 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 32: 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 33: Pulp and paper price trends
33 1,000 1,200 200 600 800 0 400 Source: Bloomberg 1-Dec-07 April 29, 2015 1-Mar-08 1-Jun-08 1-Sep-08 1-Dec-08 © Valmet Testliner (EUR/t) 1-Mar-09 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 t
Slide 34: 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 35: 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 36: European Carbon Emission Allowance price
36 0 1 2 3 4 5 7 8 9 6 2-Nov-12 2-Dec-12 Source: Bloomberg 2-Jan-13 April 29, 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 European Energy Exchange (EEX) spot price (EUR
Slide 37: 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 38: Forward
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