Valmet Corp · OMXHEX:VALMT
Valmet — Non-Deal Roadshow (October 2016)
79 slides from Valmet's roadshow presentation, October 2016
Slide 1: Valmet – unique offering with process technology, automation and services
Valmet – unique offering with process technology, automation and services Roadshow presentation October 2016
Slide 2: Agenda
Agenda Valmet roadshow presentation 1 Valmet in brief 2 Investment highlights 3 Financials 4 Conclusion 2 October 2016 © Valmet | Roadshow presentation
Slide 3: Valmet in brief
Valmet in brief Valmet <>
Slide 4: Key figures during the last 12 months
Key figures during the last 12 months Stable business net sales EUR 1.4 billion Orders received Net sales by business line Net sales by area EUR 3,012 million 11% 23% 22% Net sales 12% 37% EUR 3,044 million Comparable EBITA 9% EUR 197 million Comparable EBITA 30% 10% margin 46% 6.5% Services North A
Slide 5: Valmet’s development
Valmet’s development Orders received Net sales Comparable EBITA Comp. EBITA margin (EUR million)1 (EUR million)1 (EUR million)1 (%)1 3 500 3 500 200 9% 3 071 3 012 3 044 2 928 180 8% 3 000 2 878 3 000 2 613 160 7% 2 473 2 500 2 500 140 2 182 6% 1 575 1 610 1 572 2 000 2 016 1 537 2 000 120 5% 1 581
Slide 6: Our four business lines serve the same customer base
Our four business lines serve the same customer base #1–2 #1–3 #1–3 #1 Services Automation Pulp and Energy Paper Mill and plant Supplies and develops Technologies and Technologies and improvements, roll and automation and solutions for pulp solutions for board, tissue, workshop services, parts infor
Slide 7: Strong, global presence is a good platform for growth
Strong, global presence is a good platform for growth Over 120 service centers, 86 sales offices, 34 production units, 16 R&D centers China North America • 8 service centers • 6 production units • 17 service centers • 3 sales offices • 7 production units • 8 sales offices 1,887 1,334 EMEA • 16 R&D c
Slide 8: Process technology, services and automation
Process technology, services and automation Valmet’s unique offering differentiates the company from its competitors Customer 8 October 2016 © Valmet | Roadshow presentation
Slide 9: Significant, customer focused research and development work
Significant, customer focused research and development work R&D focus areas • Advanced and competitive technologies and services • Raw material, water and energy efficiency • Promotion of renewable materials 16 EUR 64 million ~1,500 research and investment in protected development R&D during last in
Slide 10: Sustainability360º agenda
Sustainability360º agenda Contributing to business growth Sustainable supply Health, safety and People and Sustainable Corporate chain environment (HSE) performance solutions citizenship Recent achievements in sustainability • Valmet has been included in the Dow Jones Sustainability Index (DJSI) for
Slide 11: New financial targets from 2017 onwards
New financial targets from 2017 onwards Growth • Net sales for stable business to grow over two times the market growth • Net sales for capital business to exceed market growth Profitability • Comparable EBITA: 8–10% ROCE • Comparable return on capital employed (pre- tax), ROCE1: 15–20% Dividend • D
Slide 12: Investment highlights
Investment highlights Valmet <>
Slide 13: Investment highlight summary
Investment highlight summary 1 Strong market position in markets that grow Stable business, with EUR 1.5 billion of net sales, 2 offering stability, growth and profitability Capital business, with flexible cost structure, offering 3 growth and profitability potential 4 Continuous systematic developm
Slide 14: Strong market position in markets that grow
1 2 3 4 5 Strong market position in markets that grow Services Automation Pulp Energy Tissue Board Paper #1–2 #1–3 #1–2 #1–3 #1 #1 #1 EUR EUR EUR EUR EUR EUR EUR 8.0 ~1-2% 2.0 ~1% 1.4 ~1% 2.0 ~1% 0.7 ~3% 1.0 ~2-3% 0.3 ~-1% p.a. p.a. p.a. p.a. p.a. p.a. p.a. bn bn bn bn bn bn bn • Capacity • Investme
Slide 15: Stable business offering stability, growth and profitability
1 2 3 4 5 Stable business, with EUR 1.5 billion of net sales, offering stability, growth and profitability Key potential in stable business Stable business orders received Organic growth • Valmet Way to Serve (EUR million) • Industrial Internet Growth ~4% ~15% CAGR CAGR Services • Strengthening the
Slide 16: Capital business offering growth and profitability potential
1 2 3 4 5 Capital business, with flexible cost structure, offering growth and profitability potential Key potential in capital business Orders received (EUR million) • Product cost competitiveness to support the 2 015 growth 1 537 1 575 • Cost structure development and increasing 1 147 flexibility 1
Slide 17: Continuous systematic development
1 2 3 4 5 Continuous systematic development Supporting growth: New Valmet way to serve Improved sales process for complete offering Supporting profitability improvement: Reducing procurement costs Reducing quality costs Project management, R&D and ERP 17 October 2016 © Valmet | Roadshow pr
Slide 18: Technology leader with unique offering
1 2 3 4 5 Technology leader with unique offering Cost-competitive, focused Complete pulp mill delivery Comprehensive offering for solutions in Paper capability energy customers • 10 OptiConcept M • State-of-the-art technology for • Solutions for machines sold all types of demanding fuels pulps • 7 A
Slide 19: Financials
Financials Valmet <>
Slide 20: Key figures
Key figures EUR million Q2/2016 Q2/2015 Change Q1–Q2/2016 Q1–Q2/2015 Change Orders received 692 781 -11% 1,495 1,360 10% Order backlog1 2,106 2,208 -5% 2,106 2,208 -5% Net sales 804 779 3% 1,456 1,340 9% Comparable EBITA2 57 54 6% 88 73 21% % of net sales 7.1% 6.9% 6.1% 5.5% EBITA 55 42 32% 85 61 39
Slide 21: Comparable EBITA margin development
Comparable EBITA margin development Net sales and Comparable EBITA (EUR million and %) New target 8–10% from 2017 onwards 854 779 804 777 734 7,3% 652 7,1% 6,9% Target 6–9% 588 590 6,4% 6,1% 561 519 4,8% 445 5,5% 408 427 Capital business 3,7% 3,5% 400 409 338 Stable business 498 371 377 337 354 319
Slide 22: 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 23: Conclusion
Conclusion Valmet <>
Slide 24: Conclusion
Conclusion 1 Strong market position in markets that grow Stable business, with EUR 1.5 billion of net sales, 2 offering stability, growth and profitability Capital business, with flexible cost structure, offering 3 growth and profitability potential 4 Continuous systematic development 5 Technology l
Slide 25: 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 26: Appendix
Appendix 1 Financials 2 Focus areas and actions 3 Area development 4 Shareholders and share price development 5 Offering 6 Management 26 October 2016 © Valmet | Roadshow presentation
Slide 27: Appendix: Financials
Appendix Financials Valmet <>
Slide 28: Orders received and net sales at previous year’s level in Services
Orders received and net sales at the previous year’s level in Services in Q2/2016 Orders received (EUR million) Net sales (EUR million) Q1–Q2/2015: Q1–Q2/2016: Q1–Q2/2015: Q1–Q2/2016: EUR 600 million EUR 634 million EUR 546 million EUR 561 million 350 313 321 1 400 350 314 1 400 293 307 278 304 304
Slide 29: Orders received and net sales in Automation
Orders received at the previous year’s level and net sales increased in Automation in Q2/2016 Orders received1 (EUR million) Net sales1 (EUR million) 120 450 120 101 450 95 100 88 375 100 6 375 10 78 81 79 81 75 6 72 80 62 300 80 66 8 300 8 8 15 55 11 6 60 225 60 9 225 85 95 40 82 150 40 73 150 70 6
Slide 30: Orders received decreased and net sales increased in Pulp and Energy
Orders received decreased and net sales increased in Pulp and Energy in Q2/2016 Orders received (EUR million) Net sales (EUR million) Q1–Q2/2015: Q1–Q2/2016: Q1–Q2/2015: Q1–Q2/2016: EUR 397 million EUR 417 million EUR 453 million EUR 443 million 700 622 1 400 350 312 1 400 600 560 1 200 300 1 200 26
Slide 31: Orders received and net sales decreased in Paper
Orders received and net sales decreased in Paper in Q2/2016 Orders received (EUR million) Net sales (EUR million) Q1–Q2/2015: Q1–Q2/2016: Q1–Q2/2015: Q1–Q2/2016: EUR 278 million EUR 295 million EUR 273 million EUR 321 million 250 750 250 750 212 190 197 199 186 200 200 600 200 186 177 185 600 157 16
Slide 32: 2015 orders received split
2015 orders received split EUR million and % of total 247 673 9% 717 23% 25% 428 15% 1 119 39% 166 6% 864 1 320 30% 222 46% 8% Services North America South America Automation EMEA Pulp and Energy China Paper Asia-Pacific 32 October 2016 © Valmet | Roadshow presentation
Slide 33: Net sales split, by business unit
Net sales split, by business unit Net sales split, business units (2015) Net sales split, Valmet (2015) Services Automation Stable business 12% 19% 15% 33% Paper Rolls 28% 67% Tissue Mill 26% Improvements 3% 7% Board 8% Rolls Pulp and Paper 11% Mill Improvements Energy and Process Performance Parts
Slide 34: Net sales split, by area
Net sales split, by area Net sales split, areas (2015) Net sales split, Valmet (2015) Services Automation Stable business 10% 6% 8% 22% 8% 29% 5% 13% 21% 7% 45% 59% 10% North America North America South America South America EMEA EMEA 11% China China Asia-Pacific Asia-Pacific Pulp and Energy Paper C
Slide 35: Announced orders in H1/2016
Announced orders in H1/2016 Date Booked quarter Description Business line Country Value Jan 15 Q4 Grade conversion rebuild Paper Canada Not disclosed Jan 26 Q4 Flue gas desulphurization plant Pulp and Energy Poland Around EUR 20 million Jan 28 Q4 New high consistency bleaching system Pulp and Energy
Slide 36: Announced orders in H2/2016
Announced orders in H2/2016 Date Booked Description Business line Country Value quarter Jul 1 Q1 Automation technology Automation Malaysia Not disclosed1 Jul 4 Q2 Biomass-fired boiler plant and related Pulp and Energy Russia Not disclosed automation and environmental systems Jul 12 Q1 Advanced proce
Slide 37: Announced orders in H1/2015
Announced orders in H1/2015 Date Booked Description Business line Country Value quarter Jan 23 Q4 Key board machine solutions Paper China Not disclosed Feb 4 Q4 Flue-gas cleaning and condensation plant Pulp and Energy Finland Around EUR 8 million Feb 17 Q1 Equipment for fluff conversion project Pulp
Slide 38: Announced orders in H2/2015
Announced orders in H2/2015 Date Booked Description Business line Country Value quarter Jul 6 Q2 Winding technology for paper machine grade Paper Netherlands Not disclosed conversion rebuild Jul 7 Q2 White liquor handling system Pulp and Energy Sweden Not disclosed Aug 18 Q3 Main equipment to a pulp
Slide 39: Orders received decreased to EUR 692 million in Q2/2016
Orders received decreased to EUR 692 million in Q2/2016 Orders received (EUR million) Orders received in Q2/2016, by area 1 400 3 500 Asia-Pacific North 12% America 1 200 3 000 22% China 1 000 2 500 9% 800 2 000 South 600 1 500 America 1 101 1 023 5% 400 781 725 793 803 692 1 000 580 200 466 480 500
Slide 40: Stable business orders received during the last 4 quarters
Stable business orders received totaled EUR 1,475 million during the last 4 quarters Orders received (EUR million) in stable business1 500 1 500 450 402 409 1 350 394 400 1 200 330 342 88 350 95 81 1 050 293 300 267 273 273 75 900 242 78 250 750 200 600 150 293 307 313 321 450 267 273 242 273 252 26
Slide 41: Order backlog at EUR 2.1 billion at end of Q2/2016
Order backlog at EUR 2.1 billion at the end of Q2/2016 Order backlog (EUR million) Structure of order backlog 3 000 2 500 2 406 2 312 ~30% 2 000 2 208 2 207 2 117 2 074 2 106 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 Q3/15 Q4/15 Q1/16 Q2/16 Stable business Capital
Slide 42: Gross profit at the previous year’s level
Gross profit at the previous year’s level Gross profit (EUR million and % of net sales) SG&A (EUR million and % of net sales) 200 23% 25% 200 25% 160 20% 160 20% 17% 120 15% 120 15% 80 10% 80 10% 40 5% 40 5% 0 0% 0 0% Q2/2015 Q1/2014 Q2/2014 Q3/2014 Q4/2014 Q1/2015 Q3/2015 Q4/2015 Q1/2016 Q2/2016 Q1
Slide 43: 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%28% 42% 24% 27% 40%40%41% 21% 36%35%36% 117 34%35%35% 238 229 231 178 192 64 -39 -54 43 46 30 33 -5% -7%-158-166-134 17 16 3 -20
Slide 44: Net working capital -6% of rolling 12 months orders received
Net working capital -6% 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% 692 480 580 466 0 -181 0% -257 -249 -345 -353 -355 -265 -244 -238 -247 -500 -10% -1 000 -20% Q1/2014 Q3/2014 Q4/2014 Q1/2015 Q2/2
Slide 45: Structure of loans and borrowings
Structure of loans and borrowings Interest-bearing debt EUR 351 million as at June 30, 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 mill
Slide 46: Strong balance sheet to support large orders
Strong balance sheet to support large orders Financial position as of June 30, 2016 (EUR million) 224 75 103 296 17 2,874 276 2,352 231 843 Non-current Current debt Cash and Other Net debt Total equity Balance Advances Amounts due Adj. balance debt equivalents financial sheet total received to custo
Slide 47: Net sales and profitability development, annual
Net sales and profitability development, annual New EBITA target Net sales and Comparable EBITA (EUR million)1 8–10% from 2017 onwards 2 925 3 014 2 928 2 735 2 703 2 613 2 453 2 473 2 092 2 061 EBITA target 6–9% 7,1% 7,6% 6,3% 6,5% 6,4% 2,1% 6,2% 5,5% 5,6% 4,3% 1 572 2 003 1 581 Services 1 576 1 72
Slide 48: High volatility in market activity
High volatility in market activity Orders received1 (EUR million) 3 225 3 071 2 878 • Volatility in market 2 584 2 445 activity is high in the 2 182 capital business 1 999 2 080 1 537 2 016 1 585 1 390 1 147 1 362 Capital Services 1 341 999 1 145 1 055 1 035 1 055 637 2009 2010 2011 2012 2013 2014 2
Slide 49: Appendix: Focus areas and actions
Appendix Focus areas and actions
Slide 50: Summary of key actions by business
Summary of key actions by business Stable business Key actions in stable business • Financial target: • Systematic promotion of whole offering – Valmet way to serve Net sales for stable • Localize the engineering resources in growing service areas business to grow over two • New service center in In
Slide 51: Summary of key actions by area
Summary of key actions by area North America EMEA China • Strengthened service presence in • Increase services market share in • Strengthen key account Mexico Central and Eastern Europe management to continue service • Grow automation market share via • Grow automation market share via growth compet
Slide 52: Actions to reach EBITA target
Actions to reach EBITA target Comparable EBITA margin in 2015 6.2% Net sales (EUR million) and Comparable EBITA margin (%) Sales process management ~1% 3 044 2 928 2 613 2 473 Project management and project ~1% 6,2% 6,5% execution 4,3% 2,1% Procurement & quality ~1% Technology, R&D and ERP ~1% 2013
Slide 53: Procurement and quality cost development
Procurement and quality cost development Implemented procurement savings of Quality costs (EUR million and % of net sales) annual direct spend 3,6% 3,1% 4,3% 4,4% 2,6% 2,7% 3,8% 4,0% >3,0% <1,3% 2013 2014 2015 LTM Annual 2013 2014 2015 LTM Long- goal term goal Original three-year target to reduce qu
Slide 54: Currency exposure and foreign exchange risk management
Currency exposure and foreign exchange risk management Currency exposure Foreign exchange risk management All operating units are required to hedge in The exposure is a net of all assets and full their foreign currency exposures liabilities denominated in foreign currencies derived from sales an
Slide 55: Appendix: Area development
Appendix Area development Valmet <>
Slide 56: North America
North America Mature services focused market with recurring opportunities in paper, tissue and automation Orders received Net sales Employees Orders received by Net sales by business (EUR million and % of total) (EUR million and % of total) (number and % of total) business line (2015) line (2015) 71
Slide 57: South America
South America Cyclical capital business relies on new pulp projects. Services, board and tissue provide growth opportunities Orders received Net sales Employees Orders received by Net sales by business (EUR million and % of total) (EUR million and % of total) (number and % of total) business line (2
Slide 58: EMEA
EMEA Valmet’s largest and most important area with significant services and technology markets in all Valmet’s businesses Orders received Net sales Employees Orders received by Net sales by business (EUR million and % of total) (EUR million and % of total) (number and % of total) business line (2015
Slide 59: China
China Capital business at new normal level, growth opportunities in Services Orders received Net sales Employees Orders received by Net sales by business (EUR million and % of total) (EUR million and % of total) (number and % of total) business line (2015) line (2015) 428 2 061 392 1 927 1 955 24% 3
Slide 60: Asia-Pacific
Asia-Pacific Developing services market with growth potential Orders received Net sales Employees Orders received by Net sales by business (EUR million and % of total) (EUR million and % of total) (number and % of total) business line (2015) line (2015) 586 706 625 588 21% 378 31% 32% 372 282 48% 24
Slide 61: Appendix: Shareholders and share price development
Appendix Shareholders and share price development
Slide 62: Largest shareholders on September 30, 2016
Largest shareholders on September 30, 2016 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 Varma Mutual Pension Insurance Company 5,465,465 3.65% 3 Elo Pension Company 3,810,000 2.54% 4 Ilmarinen Mu
Slide 63: Ownership structure on September 30, 2016
Ownership structure on September 30, 2016 13,9% Nominee registered and non-Finnish holders 11,1% 47,1% Finnish institutions, companies and foundations Solidium Oy Finnish private investors 27,8% Sector Number of shareholders % of total shareholders Number of shares % of shares Nominee registered and
Slide 64: Share of non-Finnish holders and area split of shareholders
Share of non-Finnish holders and area split of shareholders Share of non-Finnish holders Approximate area split of and number of shareholders shareholders 1% 0% 56% 59 000 3% 2% 4% 54% 57 000 11% 52% 55 000 50% 53 000 51% 13% 48% 51 000 46% 49 000 15% 44% 47 000 Finland United States Sweden United K
Slide 65: Share price development and trading volume
65 Million shares 0 2 3 4 5 7 8 9 10 1 6 6,00 7,00 8,00 9,00 10,00 11,00 12,00 13,00 14,00 01/14 01/14 02/14 02/14 October 2016 03/14 03/14 04/14 04/14 05/14 05/14 06/14 06/14 07/14 07/14 08/14 08/14 09/14 09/14 10/14 10/14 11/14 11/14 12/14 12/14 © Valmet | Roadshow presentation Valmet 01/15 01/15
Slide 66: Appendix: Offering
Appendix Offering Valmet <>
Slide 67: 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 68: 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 69: 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 70: 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 71: 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 72: 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 73: 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 74: 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 75: Example of our R&D work - OptiConcept M board and paper machine
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 76: Appendix: Management
Appendix Management Valmet <>
Slide 77: Experienced Executive Team
Experienced Executive Team Corporate Pasi Laine Kari Saarinen Julia Macharey Juha Lappalainen Anu Salonsaari-Posti President and CEO CFO SVP, Human Resources SVP, Strategy and SVP, Marketing & Share ownership: 70,031 Share ownership: 13,357 Share ownership: 8,779 Operational Development Communicatio
Slide 78: Board of Directors
Board of Directors Bo Risberg Mikael Von Aaro Cantell Lone Fønss (b. 1956) Frenckell (b. 1964) Schrøder Chairman of (b. 1947) Board member (b. 1960) the Board Vice Chairman of Finnish citizen Board member Swedish citizen the Board Danish citizen Finnish citizen • BSc (Mech. Eng), MBA • M.Sc. (Soc.)
Slide 79: FORWARD
FORWARD