Slide 1: The new slower growth period started
The new slower growth period started Aki Niemi Area President, China December 10, 2014
Slide 2: Valmet in China
Valmet in China Contents 1 Valmet in China in brief 2 Market position and drivers 3 Main competitors 4 Strategy and competitive edges 5 References in China 6 Summary
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 Valmet full scope service for pulp and paper customers We have strong position at high end t
Slide 5: Valmet's operations in China
Valmet’s operations in China Serving the pulp, paper and energy industries ~2,000 employees serving customers through a local network of production, sales and service units Four production units and three service centers with the support of Valmet’s global network Valmet’s first deliveries to
Slide 6: Valmet's milestones in China
Valmet’s milestones in China 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 Paper Technology (Shanghai), Jiading 2003 Metso Paper (Sh
Slide 7: Local presence in China
Local presence in China Factories • Jiading factory • Xi’an factory • Waigaoqiao factory • Fabrics Tianjin Beijing Tianjin Service centers • Wuxi service Zibo center • Guangzhou Xi’an Shanghai service center Wuxi • Zibo service center Office • Beijing Guangzhou 7 December 10, 2014 © Valmet | Aki Nie
Slide 8: Strong regional customer base across China
Strong regional customer base across China Serving pulp, paper and energy customers Services Services Pulp and Energy Paper Valmet is a registered trademark of Valmet Corporation. Other trademarks appearing here are trademarks of their respective owners. 8 December 10, 2014 © Valmet | Aki Niemi, Are
Slide 9: Market position and drivers
Market position and drivers Valmet <>
Slide 10: Market drivers
Market drivers Services Pulp Paper • Growth supported by • Increasing standard of • Emerging markets, e.g. significant amount of new living in Asia driving China, expected to drive capacity being installed demand for paper, board containerboard demand in during the last 15 and tissue based • Higher
Slide 11: RISI Annual review 2014
RISI Annual review 2014 Thousand tonnes Production Apparent consumption 2012 Change 2013 Change 2012 Change 2013 Change Paper and Board 101,522 3.4% 104,691 3.1% 99,393 2.8% 101,357 2.0% Newsprint 3,800 -2.6% 3,600 -5.3% 3,931 0.8% 3,624 -7.8% Printing & Writing 25,570 3.4% 26,092 2.0% 23,081 1.6% 2
Slide 12: Estimated production and consumption
Estimated production and consumption Thousand metric tonnes Production Consumption 2014 2015 Change 2014 2015 Change Paper and Board 108,444 112,441 3.7% 104,329 107,427 3.0% Newsprint 3,401 3,257 -4.2% 3,335 3,221 -3.4% Printing & Writing 26,368 26,988 2.4% 23,710 24,285 2.4% Tissue 7,348 7,989 8.7
Slide 13: 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 – Industry integration and elimination of out of date capacity will continue – Paper and board export can grow,
Slide 14: Customers' competition and investment
Customers’ competition and investment Customers’ competition – Paper industry competition is hard and currently has low profitability Centralization by 3-4 players covering 70% capacity will be likely formed by acquisition or mergers, but it will take time. Some changes in strategies can be se
Slide 15: Development of net sales and orders received
Development of net sales and orders received Orders received Orders received and net sales 800 25% 30% have decreased since the record 25% 600 15% 20% years following the financial crisis 400 11% 11% 15% 646 10% – Record order intake and net sales years 200 345 358 just after financial crisis 241
Slide 16: Consumption in China
Consumption in China Board and paper Tissue 180,000 35% 18,000 35% 160,000 30% 16,000 30% 140,000 14,000 25% 25% 120,000 12,000 100,000 20% 10,000 20% 80,000 15% 8,000 15% 60,000 6,000 10% 10% 40,000 4,000 20,000 5% 2,000 5% 0 0% 0 0% 1992 1996 2000 2004 2008 2012 2016 2020 2024 2028 1992 1996 2000
Slide 17: Production in China
Production in China Board and paper Tissue 180,000 35% 20,000 35% 160,000 30% 30% 140,000 15,000 25% 25% 120,000 100,000 20% 20% 10,000 80,000 15% 15% 60,000 10% 5,000 10% 40,000 20,000 5% 5% 0 0% 0 0% 1992 1996 2000 2004 2008 2012 2016 2020 2024 2028 1992 1996 2000 2004 2008 2012 2016 2020 2024 202
Slide 18: Consumption per capita
Consumption per capita Chinese consumption far away from the level in the Western world Paper and board consumption per Tissue consumption per capita vs. capita vs. population1 population1 250 2,500 2,500 25 200 2,000 2,000 20 150 1,500 1,500 15 100 1,000 1,000 10 50 500 500 5 0 0 0 0 China China La
Slide 19: 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 1,920 • Bioenergy market is expected to grow fast, but not in focus 1,600 70 now. 50 550
Slide 20: Signs of improvement on the market conditions
Signs of improvement on the market conditions Signs of improvement – Several board makers are planning new project investments Traditional players start the investments again – Sun Paper, Bohui, LCPC, JiAn, ChenMing etc. – Several projects come to final negotiation – Investment not only focus on
Slide 21: Main competitors
Main competitors Valmet <>
Slide 22: Valmet's market position in China
Valmet’s market position in China Services Pulp Paper 8% 30% 37% Valmet’s market share of target market Valmet’s market share of target market Valmet’s market share of target market The service market is Valmet #1 in Pulp in China. Valmet #1 in Board and fragmented, with Valmet, Andritz the main Pap
Slide 23: Competitors
Competitors Number of competitors in all business segments Service business Global 1st tier competitors expand local presence Voith Paper Andritz Pulp & Paper Global 2nd tier competitors finding Number of suppliers strong in selected products / cooperation with local suppliers for new tech
Slide 24: Market share
Market share Competition expected to remain tough, localization critical Currently weak market and growing competition Services competition is fragmented Market share by business (%) Market share by SER segment (%) (2011-13) (2011-13) (2013) 45% 40% 63% 78% 75% 73% 83% 8% 23% 17% 16% 6% 30% 37% 6% 1
Slide 25: Strategy and competitive edges
Strategy and competitive edges
Slide 26: 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 CAP business and SER business • Market has changed growth CAP business has shifted from f
Slide 27: 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 Value of our services 27 December 10, 2014 © Valmet | Aki Niemi, Area President, China
Slide 28: Major part of paper and board investments have been done in China
Major part of paper and board investments have been done in China Paper and board capacity changes 2006-2014:III, By region and change reason, 1,000 t/a 28 December 10, 2014 © Valmet | Aki Niemi, Area President, China Source: Pöyry SmartTerminal
Slide 29: 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 30: Old facility closure in pulp and paper industry
Old facility closure in pulp and paper industry Closure accelerate from 2010 12,000 10,000 Target closure Actual closure 8,000 6,000 10,570 9,954 8,311 8,196 7,414 4,000 5,332 4,640 1,080 2,000 2,300 2,100 1,650 510 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 30 December 10, 2014 © Valmet | Aki N
Slide 31: 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 3,000 9,000 8,000 2,500 7,000 2,000 6,000 5,000 1,500 4,000 1,000 3,000 2,000 500 1,000 0 0 2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 2012 20
Slide 32: 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 33: Summary
Summary Valmet <>
Slide 34: Summary
Summary China is the largest single country for Valmet based on sales in 2013 The installed base is 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 impac
Slide 35: Appendix: References in China
Appendix: References in China
Slide 36: Achievements in China
Achievements in China New orders in 2014 Stora Enso Tiger – Liquid Package Board Project, 450,000t/y – Chemi-mechanical pulp production line Nine Dragons – Liner board project, 400,000 ton/y – Complete paper machine from headbox to Winder Lee & Man – Toilet and Facial tissue project, 60,000 to
Slide 37: Achievements in China
Achievements in China New start-ups in 2014 Anhui Shanying Paper, PM5 and PM6 – PM5: container board, multifourdrinier machine, 1,200 m/min – PM6: fluting, Gapformer machine, 1,600 m/min, 1,540 ton/d Confidential – Folding box board (Ivory), 1,400 m/min, 2,394 ton/d Lee & Man, Vantage Dragon,
Slide 38: Achievements in China
Achievements in China New developments in 2014 Production capacity New SPR workshop opened in Jiading, Shanghai on 28th of October, 2014 Valmet cleaning doctor blade production line inauguration on November 18, 2014 in WaiGaoQiao, Shanghai Service capacity 5,000th roll delivery from Wuxi servi
Slide 39: OptiConcept M well accepted by market in China and Asia-Pacific
OptiConcept M well accepted by market in China and Asia-Pacific OptiConcept M containerboard line for Siam Kraft Industry, Ratchaburi, Thailand Start-up in 2014 Annual capacity 300,000 ton of recycled fluting OptiConcept M containerboard line for Lee & Man, China Start-up in 2014 Annual capa
Slide 40: References: Paper, Board and Tissue Production
References: Paper, Board and Tissue Production Fujian Liansheng PM5, state of the art linerboard machine with world’s first OptiFlo Fourdrinier Layering HengAn (China) TM10 headbox Advantage DCT 200 tissue machine with ViscoNip Fujian Liansheng PM6, world’s first OptiConcept M shoe press, speed
Slide 41: References: Pulp Production Processes
References: Pulp Production Processes Shandong Chenming, world’s highest- Asia Symbol (Shandong) yield BCTMP line World’s largest Kraft pulp chemical pulping plant, Shandong Bohui, repeated orders for Shandong Rizhao 4,800 adt/day BCTMP line, biggest mechanical fiber Asia Symbol (Shandong) , one
Slide 42: Gigantic Cartonboard Machine
Gigantic Cartonboard Machine Producing folding boxboard and art board grades Grades – folding boxboard and Shandong IP & Sun PM 26, art board China Case Board Mill Design speed - 950 m/min The PM 26 startup was excellent: Wire width – 6,850 mm Three weeks after start-up, the production exceede
Slide 43: Efficient Board Making with OptiConcept M
Efficient Board Making with OptiConcept M Producing high-quality containerboard using fewer resources Cost-efficient, high-quality, Liansheng Paper PM 6, China safe and flexible board making Board Mill Case concept – 100% recycled lightweight fluting – Annual capacity 300,000 tonnes High product
Slide 44: Optimization of Raw Material Costs
Optimization of Raw Material Costs Multilayer curtain coating reduces the use of bleached virgin pulp Base paper sheet is covered Zhejiang Ji’an PM 3, China by engineered multilayer coating Board Mill Case structure that follows the contour of the sheet perfectly The same quality of print and phys
Slide 45: OptiConcept M: Cost-efficient Paper Making Line
OptiConcept M: Cost-efficient Paper Making Line Several customers have already chosen OptiConcept M The OptiConcept M family suits both containerboard grades and fine paper production – simple, well-functioning solutions that meet our customers’ needs Fluting Valmet has already sold five OptiCon
Slide 46: Leading Tissue Technology for Best Performance
Leading Tissue Technology for Best Performance Highlights 2013 Orders from China Yunnan YunJing Forestry and Pulp Mill, Advantage DCT 100+ tissue line with Advantage ViscoNip press Start up in China Wuhan Chenming Hanyang Paper, Advantage DCT 200+ Valmet Tissue global More than 200 tissue mach
Slide 47: Repeated Success: Advantage DCT Tissue Lines
Repeated Success: Advantage DCT Tissue Lines Latest repeat orders HengAn Group China Outstanding start-up 8 Advantage DCT 200 machines 1,900 m/min within 9 days. 3 pcs. Shandong Hengan Paper, Weifang, start-up 2010, 2014 and 2015 2 pcs. Hengan Wuhu Paper, Wuhu Xiamen Sinyang, Advantage DCT 200 w
Slide 48: Pulp and Energy: Latest Orders in China
Pulp and Energy: Latest Orders in China CTMP lines Bohui Dafeng , two lines 1,500 adt/d, June 2013 FBO Defibrators Furen MDF, 750cbm/d, Jan 2014 Baishida, 600cbm/d, Jan 2014 Chemical pulping line Oji Nantong, complete pulp mill – 700,000 tonnes of bleached hardwood pulp annually. – Start up
Slide 49: Services: Latest Investments and Development
Services: Latest Investments and Development Service center expanded in Tianjin, China Manufacturing of forming, dryer and filter fabrics All Valmet fabrics production in China now concentrated to Tianjin TwinRoll Press Roll services in China Maintenance in Zibo center – Valmet has delivered c
Slide 50: Optimization of Dryer Section Ventilation Reduces Electricity Consumption by 500KW
Optimization of Dryer Section Ventilation Reduces Electricity Consumption by 500KW The target of the project was to Guangzhou Paper Co., LTD, reduce the energy consumption PM9 Case of the 10.2 meter wide newsprint Guangdong Province, China machine Valmet upgraded 36 blow boxes with new designs w
Slide 51: Advanced DryOnyx H Recoating Technology Helps Customer Improve Paper Quality
Advanced DryOnyx H Recoating Technology Helps Customer Improve Paper Quality The target was International Paper & – To reduce break time Sun Cartonboard Co., Ltd. Case – To improve end product quality Shandong province, China – To solve the stick problem and decrease fluff on the paper The relea
Slide 52: Roll Grinding Cooperation Agreement
Roll Grinding Cooperation Agreement Lee&Man Paper, Guangdong Agreement principles Lee & Man Guangdong, Case – Lee & Man owns the machinery and China Case workshop – Valmet provides operators and grinding technology – Valmet handles cover condition follow-up ”With Valmet we and reporting can secure
Slide 53: Revolutionary Fine Paper Machine
Revolutionary Fine Paper Machine With the latest technology Grade - woodfree uncoated Zhanjiang Chenming PM1, Case China Design speed - 2,000 m/min Board Mill Wire width – 11,150 mm 2013 The fastest PM 24-hour record Basis weight - 45 to 120 g/m2 Capacity - 600,000 tpy “We are very proud t
Slide 54: Paper, Board and Tissue Machine References China
Paper, Board and Tissue Machine References 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 Sishu
Slide 55: 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 56: FORWARD
FORWARD