Valmet Corp · OMXHEX:VALMT
Valmet — Non-Deal Roadshow (February 2019)
77 slides from Valmet's roadshow presentation, February 2019
Slide 1: Valmet – unique offering with process technology, automation and services
Valmet – unique offering with process technology, automation and services Roadshow presentation February 2019
Slide 2: Agenda
Agenda Valmet roadshow presentation 1 Valmet in brief 2 Investment highlights 3 Financials 4 Conclusion 2 February 2019 © Valmet | Roadshow presentation
Slide 3: Valmet in brief
Valmet in brief Valmet <>
Slide 4: Unique offering with process technology, automation and services
Unique offering with process technology, automation and services #1–2 #1–3 #1–3 #1 Services Automation Pulp and Energy Paper Mill and plant improvements, Supplies and develops Technologies and solutions for Technologies and solutions for roll and workshop services, automation and information pulp pr
Slide 5: Key figures in 2018
Key figures in 2018 Net sales by business line Net sales by area Orders received EUR 3,722 million 12% 20% Net sales 28% EUR 3,325 million 37% 16% Comparable EBITA 5% EUR 257 million Comparable EBITA margin 7.7% 26% 9% Order backlog 46% EUR 2,829 million Services North America Employees Automation S
Slide 6: Valmet's development
Valmet’s development Comparable EBITA target 8–10% Orders received Net sales Comparable EBITA Comparable EBITA margin (EUR million) (EUR million) (EUR million) (%) 3 722 3 272 3 325 3 071 3 139 3 058 2 878 2 928 2 926 2 613 2 077 2 473 2 182 1 713 1 799 1 658 1 584 2 016 1 537 1 572 1 473 1 581 1 48
Slide 7: Strong, global presence is a good platform for growth
Strong, global presence is a good platform for growth More than 12,500 professionals at a total of 156 locations in 33 countries EMEA 8,303 employees China ~120 87 1,752 employees service centers sales offices North America 1,202 employees 36 16 production units R&D centers Asia-Pacific 761 employee
Slide 8: Process technology, services and automation
Process technology, services and automation Valmet’s unique offering differentiates the company from its competitors Paper Pulp Energy • Board, paper and tissue production lines • Wood and pulp handling • Heat and power generation • Rebuilds • Fiber processing • Air emission control • Stand-alone pr
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 66 million ~1,500 research and R&D spending protected development in 2018 inventions
Slide 10: Acknowledged leader in sustainability
Acknowledged leader in sustainability 360° approach to sustainability Most material UN Sustainable • In Dow Jones Sustainability Index Development Goals for the fifth consecutive year for Valmet • Received RobecoSAM Silver Class 2018 Sustainability Award • Achieved A rating in CDP’s climate program
Slide 11: Financial targets
Financial targets 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 policy • Dividend payout a
Slide 12: Investment highlights
Investment highlights Valmet <>
Slide 13: Investment highlights
Investment highlights 1 Strong position in the growing market of converting renewables Widest offering combining process technology, services and automation in a 2 unique way 3 Large stable business offering growth and profitability 4 Strong capital business with high market share and flexible cost
Slide 14: Strong position in the growing market of converting renewables
1 2 3 4 5 Strong position in the growing market of converting renewables Services Automation Pulp Energy Tissue Board Paper #1-2 8.0 ~1-2% #1-3 2.0 ~1% #1-2 1.4 ~1% #1-3 2.0 ~1% #1 0.7 ~3% #1 1.0 ~2-3% #1 0.3 ~-1% EUR bn p.a. EUR bn p.a. EUR bn p.a. EUR bn p.a. EUR bn p.a. EUR bn p.a. EUR bn p.a. •
Slide 15: Widest offering combining process technology, services and automation in a unique way
1 2 3 4 5 Widest offering combining process technology, services and automation in a unique way Paper Pulp Energy • Board, paper and tissue production lines • Wood and pulp handling • Heat and power generation • Rebuilds • Fiber processing • Air emission control • Stand-alone products • Recovery • B
Slide 16: Large stable business offering growth and profitability
1 2 3 4 5 Large stable business offering growth and profitability Orders received (EUR million) Services • 16% market share offers room for growth • Wide offering to support customers’ all service needs 1 701 1 609 • Opportunities to win new customers and increase share 1 519 of wallet with existing
Slide 17: Strong capital business with high market share and flexible cost structure
1 2 3 4 5 Strong capital business with high market share and flexible cost structure Paper business line Market share • High market share in all businesses Orders received (EUR million) Net sales (EUR million) Board and paper Tissue Pulp Energy ~40% ~35% ~40% ~20% 1 035 1 077 937 671 673 718 674 659
Slide 18: Systematically building the future
1 2 3 4 5 Systematically building the future • Shared Journey Forward: a unified and unique way to serve Technology Customer • Add value to customers through Industrial Internet solutions • Ensure strong market position in capital business • Develop new products and technologies • Improve product co
Slide 19: Financials
Financials Valmet <>
Slide 20: Key figures
Key figures EUR million Q4/2018 Q4/2017 Change 2018 2017 Change Orders received 1,026 727 41% 3,722 3,272 14% Order backlog1 2,829 2,458 15% 2,829 2,458 15% Net sales 984 967 2% 3,325 3,058 9% Comparable EBITA 113 81 39% 257 218 18% % of net sales 11.5% 8.4% 7.7% 7.1% EBITA 110 69 60% 241 202 20% Op
Slide 21: Comparable EBITA margin development
Comparable EBITA margin development Net sales and Comparable EBITA, rolling 12 months (EUR million and %)1 3 257 3 308 3 325 3 145 3 019 3 044 2 995 3 058 2 851 2 928 2 926 2 919 2 846 2 876 Target 8–10% 2 707 7,7% 2 500 2 473 2 515 7,1% 2 374 2 363 6,8% 6,7% 6,8% 6,7% 6,7% 6,7% 6,8% 6,4% 6,5% 6,6%
Slide 22: Guidance and short-term market outlook
Guidance and short-term market outlook Guidance for 2019 Valmet estimates that net sales in 2019 will remain at the same level as in 2018 (EUR 3,325 million) and Guidance Comparable EBITA in 2019 will increase in comparison with 2018 (EUR 257 million). Short-term market outlook Q1/2018 Q2/2018 Q3/20
Slide 23: Conclusion
Conclusion Valmet <>
Slide 24: Conclusion
Conclusion 1 Strong position in the growing market of converting renewables Widest offering combining process technology, services and automation in a 2 unique way 3 Large stable business offering growth and profitability 4 Strong capital business with high market share and flexible cost structure 5
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 Shareholders, share price development and sustainability 3 Strategy and offering 4 Management 26 February 2019 © Valmet | Roadshow presentation
Slide 27: Appendix: Financials
Appendix Financials Valmet <>
Slide 28: Quarterly Comparable EBITA margin development
Quarterly Comparable EBITA margin development Net sales and Comparable EBITA (EUR million and %) 11,5% 967 984 854 844 777 779 804 785 8,4% 765 Target 8–10% 734 732 715 732 7,3% 7,1% 685 7,2% 7,2% 6,9% 652 645 588 590 6,4% 6,5% 8,0% 6,1% 561 7,8% 7,5% 519 5,5% 5,3% Capital business 4,8% 512 523 445
Slide 29: Services: Orders received increased to EUR 1,315 million in 2018
Services: Orders received increased to EUR 1,315 million in 2018 Orders received (EUR million) Net sales (EUR million) 2017: 2018: 2017: 2018: EUR 1,242 million EUR 1,315 million EUR 1,178 million EUR 1,219 million 400 1 600 400 366 1 600 355 346 344 340 350 313 321 321 325 1 400 350 314 316 325 1 4
Slide 30: Automation: Orders received remained at the previous year's level
Automation1: Orders received remained at the previous year’s level at EUR 386 million in 2018 Orders received2 (EUR million) Net sales2 (EUR million) 2017: 2018: 2017: 2018: EUR 368 million EUR 386 million EUR 335 million EUR 357 million 140 420 140 124 420 115 120 109 360 120 360 103 101 102 101 99
Slide 31: Pulp and Energy: Orders received increased to EUR 1,000 million in 2018
Pulp and Energy: Orders received increased to EUR 1,000 million in 2018 Orders received (EUR million) Net sales (EUR million) 2017: 2018: 2017: 2018: EUR 678 million EUR 1,000 million EUR 800 million EUR 863 million 700 1 400 700 1 400 622 600 560 1 200 600 1 200 500 451 1 000 500 1 000 400 800 400
Slide 32: Paper: Orders received remained at the previous year's level
Paper: Orders received remained at the previous year’s level and were EUR 1,077 million in 2018 2017: 2018: 2017: 2018: EUR 1,035 million EUR 1,077 million EUR 784 million EUR 937 million 400 1 200 400 1 200 353 350 314 1 050 350 1 050 299 304 300 275 270 900 300 280 900 246 243 250 212 750 250 223
Slide 33: Orders received and net sales split in 2018
Orders received and net sales split in 2018 Orders received (EUR million and % of total) Net sales (EUR million and % of total) 1 077 937 29% 1 315 28% 1 219 35% 37% Services Services Automation Automation Pulp and Energy Pulp and Energy Paper Paper 330 863 306 1 000 9% 26% 9% 27% 383 396 10% 730 12
Slide 34: Business lines in 2018: Stable business
Business lines in 2018: Stable business Services business line Automation business line 9% 18% 11% 9% 25% 7% 21% 14% 10% 32% Orders received Orders received 3% 8% 30% 68% 29% 46% 60% Rolls North America Pulp and Paper North America Mill Improvements South America Energy and Process South America Per
Slide 35: Business lines in 2018: Capital business
Business lines in 2018: Capital business Pulp and Energy business line Paper business line 14% 3% 15% 6% 22% 28% 29% Orders received Orders received 10% 26% 51% 49% 7% 45% 64% 33% Pulp North America Tissue North America Energy South America Board South America EMEA Paper EMEA China China Asia-Pacifi
Slide 36: Areas: Orders received and net sales development
Areas: Orders received and net sales development North America South America EMEA China Asia-Pacific 1 594 1 606 (EUR million and % of total) 1 470 1 508 Orders received 1 320 804 717 686 730 588 533 51% 572 586 490 480 48% 46% 46% 523 414 43% 428 381 383 281 37% 342 323 24% 235 244 244 247 166 183
Slide 37: Areas: Business line split in 2018
Areas: Business line split in 2018 North America South America EMEA China Asia-Pacific Orders received 16% 18% 22% 22% 24% 41% 38% 38% 46% 2% 53% 4% 28% 18% 37% 12% 8% 10% 60% 4% Services Automation Services Automation Services Automation Services Automation Services Automation Pulp and Energy Paper
Slide 38: Announced orders in H1/2019
Announced orders in H1/2019 Date Booked Description Business line Country Value quarter Jan 10 Q1 Flue gas condensing and asphaltene combustion systems Pulp and Energy Finland Not disclosed. The value of an order of this type is typically around EUR 10-20 million. Jan 14 Q4 Automation for liquefied
Slide 39: Announced orders in H1/2018
Announced orders in H1/2018 Date Booked Description Business line Country Value quarter Jan 4 Q3 Anti-surge and load-sharing control Automation Russia Not disclosed.1 Jan 17 Q4 OptiConcept M board production line Paper USA Not disclosed. The value of an order of this type is typically around EUR 40-
Slide 40: Announced orders in H2/2018
Announced orders in H2/2018 Date Booked Description Business line Country Value quarter Jul 11 Q2 Valmet Pulp Analyzer and Valmet Kappa Analyzer Automation China Not disclosed.1 Jul 13 Q2 Advantage DCT 200 tissue line Paper Turkey Not disclosed. Aug 6 Q2 Advantage DCT100HS tissue production line and
Slide 41: Orders received increased to EUR 3,722 million in 2018
Orders received increased to EUR 3,722 million in 2018 Orders received (EUR million) 1 600 4 000 4 000 1 400 3 500 3 500 383 1 200 3 000 3 000 323 523 572 1 000 2 500 2 500 800 2 000 2 000 1 606 600 1 500 1 500 1 508 1 101 1 026 1 005 1 023 890 865 940 400 781 725 793 803 692 788 857 796 743 727 1 0
Slide 42: Stable business orders received totaled EUR 1,701 million in 2018
Stable business orders received totaled EUR 1,701 million in 2018 Orders received (EUR million) in stable business1 600 1 800 500 445 1 500 443 439 435 409 424 402 394 372 383 381 400 344 88 359 93 102 1 200 330 342 88 103 109 95 81 81 293 87 75 101 300 267 273 273 75 80 900 242 78 200 600 321 355 3
Slide 43: Order backlog at EUR 2,829 million at the end of 2018
Order backlog at EUR 2,829 million at the end of 2018 Order backlog (EUR million) Structure of order backlog 3 000 2 791 2 829 2 500 2 704 2 714 2 720 2 583 2 621 2 406 2 458 2 312 2 283 2 208 2 207 2 192 2 000 2 117 2 074 2 106 ~25% 1 972 1 998 2 064 1 500 1 000 ~75% 500 0 Stable business Capital b
Slide 44: Gross profit and SG&A development
Gross profit and SG&A development Gross profit (EUR million and % of net sales) SG&A (EUR million and % of net sales) 300 30% 300 30% 25% 250 25% 250 25% 200 20% 200 20% 15% 150 15% 150 15% 100 10% 100 10% 50 5% 50 5% 0 0% 0 0% Q1/2014 Q2/2014 Q3/2014 Q4/2014 Q1/2015 Q2/2015 Q3/2015 Q4/2015 Q1/2016
Slide 45: Cash flow provided by operating activities
Cash flow provided by operating activities Cash flow provided by operating activities (EUR million) 2014: 2015: 2016: 2017: 2018: EUR 236 million EUR 78 million EUR 246 million EUR 291 million EUR 284 million 160 140 143 120 100 117 122 119 80 88 94 89 60 78 64 40 43 46 20 30 17 16 3 33 31 19 3 0 -2
Slide 46: Net working capital at -13% of rolling 12 months orders received
Net working capital at -13% of rolling 12 months orders received Net working capital and orders received (EUR million) 1 500 30% 1 000 1 101 1 023 20% 1 005 1 026 857 890 865 940 781 725 793 803 788 796 743 727 500 692 10% 580 466 480 0 0% -235 -249 -345 -317 -265 -244 -238 -194 -181 -265 -294 -335
Slide 47: Capital employed and Comparable ROCE
Capital employed and Comparable ROCE Capital employed (EUR million) and Comparable return on capital employed (ROCE), before taxes1 (%) 20% 1 239 1 240 1 214 1 231 1 184 1 194 1 167 1 195 18% 1 138 1 141 1 137 1 150 1 112 Target 1 079 16% 1 033 1 049 985 15–20% 967 17% 902 14% 14% 14% 14% 14% 877 13
Slide 48: Dividend and balance sheet
Dividend and balance sheet Track record Balance sheet figures Dividend per share (EUR) and payout ratio (%) Gearing (%) 21% Proposal >100% by the Board of Directors 6% 0,65 81% -11% 76% -21% 0,55 -23% 68% 68% 64% 2014 2015 2016 2017 2018 0,42 0,35 Target Debt maturity structure (EUR million) >50% 35
Slide 49: Orders received and profitability development, annual
Orders received and profitability development, annual Orders received (EUR million)1 Net sales and Comparable EBITA (EUR million)1 3 722 3 325 3 014 3 058 Pulp and 3 225 3 272 2 928 2 926 Energy, and 3 071 3 139 2 703 2 878 2 613 Paper business 2 453 2 473 2 584 lines 2 445 2 077 2 061 7,6% 7,1% 7,7
Slide 50: Appendix: Growth and profitability improvement
Appendix Growth and profitability improvement
Slide 51: Recent development at Valmet
Recent development at Valmet Recent development • Good progress with Shared Journey Forward • #1 position in tissue, board and paper Technology Customer service concept • Increased orders received from small and • All-time high Valmet package sales in Automation medium sized pulp projects • Industri
Slide 52: Actions to keep growing faster than the market
Actions to keep growing faster than the market Stable business Capital business • Long term co-operation with • Continue to bring advanced technology customers through agreements to the market • Develop local service capability • Improve product cost competitiveness • Leverage and develop Field serv
Slide 53: Actions to reach Comparable EBITA target of 8–10%
Actions to reach Comparable EBITA target of 8–10% Track record Actions to reach Comparable Comparable EBITA margin (%) and stable business EBITA target: net sales (EUR million) 1 525 1 453 1 474 1 357 7,7% • Grow the stable business 7,1% 6,7% • No negative margin deviation in capital 6,2% projects 1
Slide 54: Procurement and quality cost development
Procurement and quality cost development Implemented procurement savings of annual direct spend Quality costs (% of net sales) 4,3% 4,4% 4,3% 4,0% 3,8% 3,9% 3,6% 3,7% 3,1% >3,0% 2,6% 2,8% 2,4% <1,3% 2013 2014 2015 2016 2017 2018 Annual 2013 2014 2015 2016 2017 2018 Long-term goal goal Targeting >3%
Slide 55: Acquisitions
Acquisitions • Focus on organic growth • Selective acquisitions can be done to support growth Acquisition themes • Strengthening Services - Complementing existing portfolio - Expansion in consumables • Strengthening Automation - Stronger Pulp & Paper automation - Expansion in Industrial Internet - S
Slide 56: Appendix: Shareholders, share price development and sustainability
Appendix Shareholders, share price development and sustainability
Slide 57: Largest shareholders on January 31, 2019
Largest shareholders on January 31, 2019 Based on the information given by Euroclear Finland Ltd # Shareholder name Number of shares % of shares and votes 1 Solidium Oy 16,695,287 11.14% 2 Ilmarinen Mutual Pension Insurance Company 3,650,000 2.44% 3 Elo Pension Company 3,600,000 2.40% 4 Varma Mutual
Slide 58: Shareholder structure on January 31, 2019
Shareholder structure on January 31, 2019 The shareholder structure is based on the classification of sectors determined by Statistics Finland 0,0% 12,6% 11,1% 54,9% 21,3% Nominee registered and non-Finnish holders Finnish institutions, companies and foundations Solidium Oy* Finnish private investor
Slide 59: 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 and number of Approximate geographical split shareholders of institutional shareholders* 56% 59 000 10% 57 000 6% 54% 55 000 8% 52% 43% 53 000 50% 51 000 12% 48% 49 000 46% 47 000 21% 44% 45 000 Finland United S
Slide 60: Progress on Sustainability 360° agenda
Progress on Sustainability 360° agenda Targets Key actions for 2018 • Develop sustainable procurement • Continue supplier sustainability audits (min. 50 / year) • Continue with sustainability training for global supply chain Sustainable practices globally • Continue to increase traceability in suppl
Slide 61: Appendix: Strategy and offering
Appendix Strategy and offering
Slide 62: Valmet's way forward
Valmet’s way forward Our Vision Our Must-Wins To become the global champion Customer excellence in serving our customers Our Strategy Leader in technology and Valmet develops and supplies innovation competitive process technology, Excellence in processes services and automation to the pulp, pa
Slide 63: Business opportunities
Business opportunities eCommerce Replacing plastic Emerging markets Global sales in 2017 reached 2017 - Total size of packaging Expected to drive the global USD 2.3 trillion business EUR 600 billion p.a. tissue growth, accounting for Forecasted to grow 141% Fiber based 36% 83% of incremental demand
Slide 64: Services business line offering
Services business line offering Shared Journey Forward offering Services business units Reliability Performance Parts • Spare parts and components • Spare parts and consumables • Maintenance and shutdown services • Outsourcing services Fabrics • Paper machine clothing and filter fabrics Performance
Slide 65: Automation business line offering and market overview
Automation business line offering and market overview Advanced automation and process monitoring solutions and services: Over 4,500 Distributed Control System (DCS) – Valmet DNA Industrial internet solutions automation systems Performance solutions Automation services and over 40,000 Quali
Slide 66: Automation projects and services: Board and Tissue machines
Automation projects and services: Board and Tissue machines Automation delivery content and service scope Control room Information Engineering and Remote Office users Operator interface management maintenance connections Board machine 3,000-7,000 I/O Price: EUR 2-6 million Tissue machine 1,000-3,000
Slide 67: Pulp and Energy business line offering
Pulp and Energy business line offering Pulp Energy • Wood and pulp handling • Heat and power generation – Wood handling, fuel handling, pulp drying – Fluidized bed boilers, bio-grate boilers, biomass and waste gasification • Fiber processing – Boiler islands and small power plants – Complete fiber l
Slide 68: Paper business line offering
Paper business line offering Board and paper Tissue Board and paper production lines Tissue production lines – Recycled fiber lines – Advantage DCT – Tailor-made OptiConcept machines – Advantage NTT/QRT/eTAD – OptiConcept M modularized machines – Advantage Thru Air (TAD) Rebuilds Rebuilds –
Slide 69: 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 plant improvements (DCS) • Spare and wear parts 2 Heat and power 7 Mechanical fiber • Performance solutions • Paper machine clothing productio
Slide 70: 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 71: Continuous investment in research and development to improve customers' processes
Continuous investment in research and development to improve customers’ processes Example of our R&D work – OptiConcept M board and paper Customers’ needs Valmet’s R&D focus Valmet’s R&D resources machine • Increase production • Modularized and • Own R&D centers and • Cost-efficient, high-quality, s
Slide 72: Customers are extensively utilizing our Industrial Internet capabilities
Today, customers are extensively utilizing our Industrial Internet capabilities Valmet’s competence network Customer’s Valmet expert experts 420 Ongoing 800 81,000 350 540 90 Valmet-supplied 420 Condition Advanced Online Performance Co-creation of lines with Valmet Monitoring (CM) process control co
Slide 73: Typical dimensions of pulp mills, and paper, board and tissue machines
Typical dimensions of pulp mills, and paper, board and tissue machines Paper and board machine Pulp mill Length 140 m, equivalent to a line of ~30 cars Speed: 72 km/h Production: 400,000 t/a Width 7 m Tissue machine Length 40 m, equivalent to a line of ~9 cars • Mill site area: 500,000 – 5,000,000 m
Slide 74: Appendix: Management
Appendix Management Valmet <>
Slide 75: Executive Team
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: 116,244 Share ownership: 32,671 Share ownership: 22,036 Operational Development Communications Share o
Slide 76: Board of Directors
Board of Directors Bo Risberg Aaro Cantell Pekka Kemppainen Monika Maurer (b. 1956) (b. 1964) (b. 1954) (b. 1956) Chairman of Vice-Chairman of Board member Board member the Board the Board Finnish citizen German citizen Swedish citizen Finnish citizen • BSc (Mech. Eng), MBA • M.Sc. (Tech.) • Lic.Sc.
Slide 77: FORWARD
FORWARD