Valmet Corp · OMXHEX:VALMT
Valmet — Non-Deal Roadshow (May 2020)
78 slides from Valmet's roadshow presentation, May 2020
Slide 1: Valmet – unique offering with process technology, automation and services
Valmet – unique offering with process technology, automation and services Roadshow presentation May 2020
Slide 2: Agenda
Agenda Valmet roadshow presentation 1 Valmet in brief 2 Investment highlights 3 Financials 4 Conclusion 2 May 2020 © Valmet | Roadshow presentation
Slide 3: Valmet in brief
Valmet in brief Valmet <>
Slide 4: Strong market shares, unique offering and over 220 years of history
We have strong market shares, unique offering and over 220 years of history Paper Pulp and Automation Services Energy Market position Market position Market position Market position #1 #1–3 #1–2 #1–2 Market share Market share Market share Market share ~40% 20-40% 10-20% ~17% Valmet’s road to becomin
Slide 5: Valmet's development since 2013
Valmet’s development since 2013 New Comparable EBITA target 10–12% from 2020 onwards Orders received Net sales Comparable EBITA Comparable EBITA margin (EUR billion) (EUR billion) (EUR million) (%) 4.5 4.5 350 10% 4.0 4.0 9% 300 8% 3.5 3.5 250 7% 3.0 3.0 6% 2.5 2.5 200 5% 2.0 2.0 150 4% 1.5 1.5 100
Slide 6: Key figures 2019
Key figures 2019 Net sales by business line Net sales by area Orders received EUR 3,986 million 11% Net sales 26% 22% EUR 3,547 million 13% 39% Comparable EBITA EUR 316 million 10% Comparable EBITA margin 8.9% 26% 10% Order backlog 44% EUR 3,333 million Services North America Employees Automation So
Slide 7: Strong, global presence is a good platform for growth
Strong, global presence is a good platform for growth EMEA ~100 96 8,648 employees service centers sales offices China 1,802 employees North America 1,652 employees 39 16 production units R&D centers Asia-Pacific 910 employees 8 South America Performance Centers 556 employees Personnel as at March 3
Slide 8: Process technology, services and automation
Process technology, services and automation Valmet’s unique offering differentiates the company from its competitors Process technology Customer Services Automation 8 May 2020 © 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 71 million ~1,300 research and R&D spending protected development in 2019 inventions
Slide 10: Acknowledged leader in sustainability
Acknowledged leader in sustainability Sustainability360° approach Most material UN Sustainable • In Dow Jones Sustainability Index Development Goals for the sixth consecutive year for Valmet • AAA rating in the MSCI ESG Ratings assessment in 2019 • Rating A in CDP’s climate program ranking in 2019 3
Slide 11: Valmet strengthened its stable business through acquisitions
Valmet strengthened its stable business through acquisitions Valmet completed the acquisitions of GL&V and J&L Fiber Services in Q2/2019 • GL&V is a supplier of technologies, upgrade and process • J&L Fiber Services is a manufacturer and provider of refiner optimization services, rebuilds and spare
Slide 12: New and increased financial targets
New and increased 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: 10–12% ROCE • Comparable return on capital employed (ROCE) before taxes1: >20% Dividend polic
Slide 13: Investment highlights
Investment highlights Valmet <>
Slide 14: 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 15: Strong position in the growing market of converting renewables
1 2 3 4 5 Strong position in the growing market of converting renewables Paper Board Tissue Pulp Energy Automation Services #1 0.3 ~-1% #1 1.0 ~2-3% #1 0.7 ~3% #1-2 1.4 ~1% #1-3 2.0 ~1% #1-3 2.0 ~1% #1-2 8.0 ~1-2% 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 16: Widest offering combining process technology, services and automation
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 • Emission control • Stand-alone products • Recovery • Biofu
Slide 17: Large stable business offering growth and profitability
1 2 3 4 5 Large stable business offering growth and profitability Orders received (EUR million) Services • 17% market share offers room for growth • Wide offering to support customers’ all service needs • Opportunities to win new customers and increase share of wallet with existing customers Growth
Slide 18: 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 1,043 1,182 937 913 943
Slide 19: 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 20: Financials
Financials Valmet <>
Slide 21: Key figures
Key figures EUR million Q1/2020 Q1/2019 Change 2019 Orders received 1,187 835 42% 3,986 Order backlog1 3,557 3,001 19% 3,333 Net sales 821 686 20% 3,547 Comparable EBITA 52 47 9% 316 % of net sales 6.3% 6.9% 8.9% EBITA 51 49 3% 315 Operating profit (EBIT) 42 43 -1% 281 % of net sales 5.1% 6.2% 7.9%
Slide 22: Comparable EBITA margin development
Comparable EBITA margin1 development Net sales and Comparable EBITA, rolling 12 months (EUR million and %)1 3,682 Target 10-12% 3,547 3,429 3,257 3,308 3,325 3,279 3,337 3,019 3,044 2,995 3,058 3,145 8.9% 8.7% 2,851 2,928 2,926 2,919 2,846 2,876 7.7% 9.1% 2,707 8.6% 8.7% 2,500 2,473 2,515 7.1% 2,374
Slide 23: Guidance and short-term market outlook
Guidance and short-term market outlook Guidance for 2020 Guidance Valmet announced on April 16, 2020 that the company withdraws its guidance for 2020 due to increased uncertainty related to the COVID-19 pandemic. Short-term market outlook Q2/2019 Q3/2019 Q4/2019 Q1/2020 Services Good Good Good Satis
Slide 24: Conclusion
Conclusion Valmet <>
Slide 25: 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 26: 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 27: Appendix
Appendix 1 Financials 2 Shareholders, share price development and sustainability 3 Strategy and offering 4 Management 27 May 2020 © Valmet | Roadshow presentation
Slide 28: Financials
Appendix ; Financials Valmet <>
Slide 29: Quarterly Comparable EBITA margin development
Quarterly Comparable EBITA margin development Net sales and Comparable EBITA (EUR million and %) 1,103 11.5 % 984 10.7 % 967 Target 10–12% 901 854 844 857 804 821 777 779 785 8.4 % 765 734 732 732 9.5 % 715 7.7 % 7.3 % 652 7.1 % 685 7.2 % 7.2 % 686 6.9 % 645 588 590 6.1 % 6.4 % 6.5 % 8.0 % 6.3 % 561
Slide 30: Services: Orders received and net sales increased
Services: Orders received and net sales increased Orders received (EUR million) Net sales (EUR million) 2018: 2019: 2018: 2019: EUR 1,315 million EUR 1,459 million EUR 1,219 million EUR 1,374 million 400 358371 395 398 1,600 400 366 361 400 1,600 355 346344 325 335 340 336 350 313321 321 1,400 350 3
Slide 31: Automation: Orders received and net sales increased
Automation1: Orders received and net sales increased Orders received (EUR million) Net sales (EUR million) 2018: 2019: 2018: 2019: EUR 386 million EUR 416 million EUR 357 million EUR 393 million 140 480 140 124 137 420 109 112 116 420 115 17 120 103 101 102 103 104 120 101 18 360 95 97 99 11 95 88 8
Slide 32: Pulp and Energy: Orders received and net sales increased
Pulp and Energy: Orders received and net sales increased Orders received (EUR million) Net sales (EUR million) 2018: 2019: 2018: 2019: EUR 1,000 million EUR 1,125 million EUR 863 million EUR 919 million 700 1,400 700 1,400 622 600 560 1,200 600 1,200 500 451 1,000 500 1,000 395 376 400 800 400 800 3
Slide 33: Paper: Orders received and net sales increased
Paper: Orders received and net sales increased Orders received (EUR million) Net sales (EUR million) 2018: 2019: 2018: 2019: EUR 1,077 million EUR 1,043 million EUR 937 million EUR 913 million 450 419 1,200 450 1,200 400 1,050 400 1,050 353 350 314 321 900 350 304 900 299 300 275 270 300 280 267 246
Slide 34: Orders received and net sales split in 2019
Orders received and net sales split in 2019 Orders received (EUR million and % of total) Net sales (EUR million and % of total) 1,043 913 26% 26% 1,459 1,374 37% 39% Services Services Automation Automation Pulp and Energy Pulp and Energy Paper Paper 1,125 919 359 341 28% 26% 9% 10% 479 375 12% 880 1
Slide 35: Business lines in 2019: Stable business
Business lines in 2019: Stable business Services business line Automation business line 11% 17% 11% 9% 5% 22% 9% 28% 28% 13% Orders received Orders received 4% 27% 8% 72% 33% 44% 60% Rolls North America Pulp and Paper North America Mill Improvements South America Energy and Process South America Per
Slide 36: Business lines in 2019: Capital business
Business lines in 2019: Capital business Pulp and Energy business line Paper business line 13% 5% 6% 14% 20% 32% 3% 32% 8% Orders received Orders received 29% 68% 32% 45% 74% 20% Pulp North America Tissue North America Energy South America Board South America EMEA Paper EMEA China China Asia-Pacific
Slide 37: 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 1,690 (EUR million and % of total) 1,470 1,508 Orders received 1,320 880 804 717 686 730 670 588 572 523 586 490 533 480 48% 46% 51% 46% 479 414 43% 42% 428 381 323 383 37% 342 24% 281 23
Slide 38: Areas: Business line split in 2019
Areas: Business line split in 2019 North America South America EMEA China Asia-Pacific 12% Orders received 18% 20% 31% 2% 30% 33% 38% 38% 47% 47% 34% 30% 7% 9% 49% 13% 7% 30% 7% Services Automation Services Automation Services Automation Services Automation Services Automation Pulp and Energy Paper
Slide 39: Announced orders booked in H1/2020
Announced orders booked in H1/2020 Booked Date Description Business line Country Value quarter Q1 Jan 23 Key pulp mill technology and automation (Lenzing & Pulp and Energy Brazil Not disclosed. The value of a delivery of this size and scope is typically around EUR 200-250 million. Duratex) Q1 Feb 18
Slide 40: Announced orders booked in H2/2019
Announced orders booked in H2/2019 Booked Date Description Business line Country Value quarter Q3 Jul 2 Two defibrator systems Pulp and Energy China Not disclosed. Q3 Aug 21 Boiler diagnostics system Automation China Not disclosed. Aug 29 Extended roll service agreement Services Southeast Asia Not d
Slide 41: Announced orders booked in H1/2019
Announced orders booked in H1/2019 Booked Date Description Business line Country Value quarter Q1 Jan 10 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. Q1 Feb 18 Grade conversion r
Slide 42: Orders received increased to EUR 1,187 million in Q1/2020
Orders received increased to EUR 1,187 million in Q1/2020 Orders received (EUR million) 1,800 4,500 1,600 4,000 1,400 3,500 1,200 3,000 1,000 2,500 800 2,000 600 1,500 1,101 1,005 1,026 1,083 1,058 1,009 1,187 1,023 857 890 865 940 835 400 781 725 793 803 692 788 796 743 727 1,000 480 580 200 466 50
Slide 43: Stable business orders received totaled EUR 1,928 million during last four quarters
Stable business orders received totaled EUR 1,928 million during last four quarters Orders received (EUR million) in stable business1 700 2,100 600 1,800 507 514 500 461 474 1,500 443 439 445 435 409 424 433 112 116 402 394 383 372 381 103 104 400 342 344 88 359 93 102 1,200 330 88 103 109 97 293 95
Slide 44: Order backlog at EUR 3,557 million at the end of Q1/2020
Order backlog at EUR 3,557 million at the end of Q1/2020 Order backlog (EUR million) Structure of order backlog 4,000 3,500 3,425 3,557 ~30% 3,333 3,000 3,216 3,001 2,500 2,704 2,714 2,720 2,791 2,829 2,583 2,621 2,406 2,458 2,312 2,283 2,000 2,208 2,117 2,207 2,106 2,192 1,972 1,998 2,064 2,074 ~70
Slide 45: 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 18% 20% 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 46: 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: 2019: EUR 236 million EUR 78 million EUR 246 million EUR 291 million EUR 284 million EUR 295 million 200 150 182 173 143 100 117 122 119 126 88 94 89 50 78 64 43 46 30 17
Slide 47: Net working capital at -14% of rolling 12 months orders received
Net working capital at -14% of rolling 12 months orders received Net working capital and orders received (EUR million) 1,500 30% 1,000 1,187 20% 1,101 1,026 1,083 1,058 1,009 1,023 1,005 890 865 940 781 793 803 788 857 796 835 725 692 743 727 500 580 10% 466 480 0 0% -235 -249 -345 -353 -317 -265 -2
Slide 48: Capital employed and Comparable ROCE
Capital employed and Comparable ROCE Capital employed (EUR million) and Comparable return on capital employed (ROCE), before taxes1 (%) 1,314 1,239 1,240 1,231 1,237 1,239 1,256 1,214 1,194 1,195 1,195 1,184 1,167 23% 23% 1,138 1,141 1,137 1,150 1,112 22% 1,079 24% 1,033 1,049 20% 23% 985 967 902 18
Slide 49: Dividend and balance sheet
Dividend and balance sheet Track record Balance sheet figures Dividend per share (EUR) and payout ratio (%) Gearing (%) 21% 6% Target >50% -11% -9% of net profit -21% -23% -22% 100% 81% 0.80 76% 68% 68% 64% Debt maturity structure (EUR million) 59% 200 0.65 Average debt maturity 0.55 • Net debt was
Slide 50: 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 3,986 3,547 Pulp and 3,722 3,325 Energy, and 3,014 3,058 Paper business 2,928 2,926 3,225 3,071 3,139 3,272 2,703 8.9% lines 2,878 2,613 2,453 7.6% 2,473 7.1% 7.7% 2,584
Slide 51: Growth and profitability improvement
Appendix Growth and profitability improvement
Slide 52: 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 pulp projects • All-time high Valmet package sales in Automation • Industrial Internet solutions a
Slide 53: 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 54: Actions to reach Comparable EBITA target of 10–12%
Actions to reach Comparable EBITA target of 10–12% Track record Actions to reach Comparable Comparable EBITA margin (%) and stable business EBITA target: net sales (EUR million) 1,715 8.9% 1,525 • Grow the stable business 1,453 1,474 7.7% • No negative margin deviation in capital 1,357 7.1% projects
Slide 55: 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% 3.7% 3.6% 3.1% 2.9% >3.0% 2.6% 2.8% 2.4% 2.2% < 1.3% 2013 2014 2015 2016 2017 2018 2019 Annual 2013 2014 2015 2016 2017 2018 2019 Long-term goa
Slide 56: 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 57: Shareholders, share price development and sustainability
Appendix Shareholders, share price development and sustainability
Slide 58: Largest shareholders on April 30, 2020
Largest shareholders on April 30, 2020 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 3,950,000 2.64% 3 Elo Mutual Pension Insurance Company 2,868,044 1.91%
Slide 59: Shareholder structure on April 30, 2020
Shareholder structure on April 30, 2020 The shareholder structure is based on the classification of sectors determined by Statistics Finland 0.0% 13.1% 11.1% 53.4% 22.3% Nominee registered and non-Finnish holders Finnish institutions, companies and foundations Solidium Oy Finnish private investors O
Slide 60: 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* Rest of Rest of Europe World 58% 64,000 14% 1% 56% 61,000 Norway 54% 58,000 6% Finland 40% 52% 55,000 United 50% 52,000 Ki
Slide 61: Sustainable performance and environment
Progress on Sustainability 360° agenda Targets Key actions for 2019 • Develop sustainable procurement • Continue supplier sustainability audits while ensuring high • Implement sustainability engagement program for key practices globally quality audit follow-up process suppliers globally supply chain
Slide 62: Strategy and offering
Appendix Strategy and offering
Slide 63: 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 64: 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 65: 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 66: 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 67: 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 68: 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 69: 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 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 plant improvements (DCS) • Spare and wear parts 2 Heat and power 7 Mechanical fiber • Performance solutions • Paper machine clothing productio
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: 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 73: Customers 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 74: 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 75: Management
Appendix Management Valmet <>
Slide 76: Executive Team
Executive Team Corporate Pasi Laine Kari Saarinen Julia Macharey Anu Salonsaari-Posti President and CEO CFO SVP, Human Resources and SVP, Marketing & Share ownership: 149,380 Share ownership: 44,778 Operational Development Communications Share ownership: 30,442 Share ownership: 25,141 Business lines
Slide 77: Board of Directors
Board of Directors Mikael Mäkinen 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 Finnish citizen Finnish citizen • MSc. (Eng.) • M.Sc. (Tech.) • Lic.Sc. (Tec
Slide 78: FORWARD
FORWARD