Valmet Corp · OMXHEX:VALMT
Valmet — Investor Presentation (September 2015)
46 slides from Valmet's investor presentation, Sep 18, 2015
Slide 1: Valmet – unique offering with process technology, automation and services
Valmet – unique offering with process technology, automation and services Management presentation September 18, 2015 Markku Honkasalo CFO
Slide 2: Agenda
Agenda Management presentation 1 Valmet overview 2 Investment highlights 3 Area development 4 Managing foreign exchange risks 5 Research and development 6 Conclusions
Slide 3: Valmet overview
Valmet overview Valmet <>
Slide 4: Key figures 2014
Key figures 2014 Excluding Automation business line Net sales split by Net sales split by business line geographic area Orders received EUR 3,071 million 15% 18% Net Sales 21% 40% EUR 2,473 million EBITA before NRI1 11% EUR 106 million 13% Employees 10,464 39% Market position 43% #1-2 Services North
Slide 5: Our four business lines serve the same customer base
Our four business lines serve the same customer base Services Automation Pulp and Energy Paper Description Mill and plant improvements, Supplies and develops Technologies and solutions for Technologies and solutions for roll and workshop services, automation and information pulp production, power bo
Slide 6: Financial targets
Financial targets Growth Net sales growth to exceed market growth Profitability EBITA1 before non-recurring items: 6–9% ROCE Return on capital employed (pre-tax), ROCE 2: minimum of 15% Dividend Dividend payout at least 40% of net profit policy 1) EBITA before non-recurring items = operating profit
Slide 7: Investment highlights
Investment highlights Valmet <>
Slide 8: Investment highlight summary
Investment highlight summary 1 Strong market position in growing markets Growing, profitable and stable service and 2 automation business with EUR 1.3 billion sales Strong in cyclical capital business with long-term growth 3 potential and increased flexibility in cost structure Unique offering with
Slide 9: Strong market position in growing markets
1 2 3 4 5 Strong market position in growing markets Services Pulp Energy Board Tissue Paper Automation #1-2 #1-2 #1-3 #1-2 #1 #1-2 #1-3 ~2% 7.5 ~1% 1.4 ~1% 2.0 ~3% 1.0 ~3% 0.6 ~-1% 0.6 ~1% 2.0 p.a. bn p.a. bn p.a. bn p.a. bn p.a. bn p.a. bn p.a. bn • Customers • Growth in • Growth in • World trade,
Slide 10: Growing, profitable and stable service and automation business
1 2 3 4 5 Growing, profitable and stable service and automation business with EUR 1.3 billion sales Growing Services net sales growth on average over 3% p.a. during the last 5 years Slight growth in Automation net sales over the last 10 years Profitable Relatively stable margins in Automation
Slide 11: Strong in cyclical capital business with long-term growth potential
1 2 3 4 5 Strong in cyclical capital business with long-term growth potential and increased flexibility in cost structure Pulp and Energy Paper Market position: Market position: #1-3 #1-2 Headcount reduction1: Headcount reduction1: ~500 ~800 Capacity cost reduction: Capacity cost reduction: 10% 20%
Slide 12: Unique offering with process technology, automation and services
1 2 3 4 5 Unique offering with process technology, automation and services Process technology • Valmet is a technology and service company with full automation offering • Strengthened competitiveness from combination of paper, pulp and power plant technology, process know-how and automation Customer
Slide 13: Continued focus on profitability, more effort into renewal
1 2 3 4 5 Continued focus on profitability, more effort into renewal Continued focus on • Improve project and service margin profitability • Reduce quality costs and lead times improvement • Savings in procurement measures • Continue to improve cost competitiveness • Improve cost competitiveness to
Slide 14: Area development
Area development Valmet <>
Slide 15: North America
North America Orders received Net sales Number of personnel 1,348 490 572 1,141 1,147 1,141 414 385 475 449 367 422 356 290 28% 22% 15% 19% 16% 15% 18% 19% 16% 18% 11% 11% 9% 10% 2010 2011 2012 2013 2014 H1/15 2012 2013 2014 2012 2013 2014 H1/15 H1/15 Orders received % of total Net sales % of total
Slide 16: North America
North America Market environment Large installed base to be served - Opportunities in customer agreement based business Growth opportunities in increased outsourcing Capital project opportunities in tissue and board - Technology project activity level at high level currently - Bio project acti
Slide 17: South America
South America Orders received Net sales Number of personnel 570 512 526 421 409 418 432 358 325 281 26% 182 172 103 9% 88 13% 17% 16% 13% 13% 7% 3% 4% 4% 4% 4% 5% 2010 2011 2012 2013 2014 H1/15 2012 2013 2014 2012 2013 2014 H1/15 H1/15 Orders received % of total Net sales % of total Orders received
Slide 18: South America
South America Market environment Capital project opportunities in pulp, tissue and bioenergy - Continued pulp mega mill projects planned - 2nd generation ethanol emerging Good services growth potential - Installed base and leaner customer operations Growing interest and pipeline for optimizati
Slide 19: EMEA
EMEA Orders received Net sales Number of personnel 1,470 1,223 1,208 8,265 7,897 1,096 1,053 7,514 1,020 1,075 6,376 50% 804 66% 64% 48% 645 42% 40% 40% 42% 43% 61% 63% 37% 550 47% 41% 2010 2011 2012 2013 2014 H1/15 2012 2013 2014 H1/15 2012 2013 2014 H1/15 Orders received % of total Net sales % of
Slide 20: EMEA
EMEA Market environment Large installed base to be serviced Growth opportunity in customer agreement based business Growth process improvements and service agreements Capacity closures in printing and writing Capital project opportunities in board, pulp, tissue, and bioenergy Market positi
Slide 21: China
China Orders received Net sales Number of personnel 682 2,227 2,061 2,043 512 1,927 398 389 358 241 241 266 28% 19% 18% 18% 18% 16% 15% 11% 8% 99 13% 15% 11% 120 7% 9% 2010 2011 2012 2013 2014 H1/15 2012 2013 2014 2012 2013 2014 H1/15 H1/15 Orders received % of total Net sales % of total Orders rece
Slide 22: China
China Market environment Capital project opportunities in board and tissue - Investments in lower cost, small and mid-sized machines Good services market with growth potential - Increased capacity Market position Valmet has a strong position in Paper. Recent successes with modular board machin
Slide 23: Asia-Pacific
Asia-Pacific Orders received Net sales Number of personnel 589 710 625 588 505 394 381 324 283 285 190 213 208 16% 19% 143 9% 9% 10% 11% 11% 15% 16% 4% 5% 6% 6% 10% 2010 2011 2012 2013 2014 H1/15 2012 2013 2014 2012 2013 2014 H1/15 H1/15 Orders received % of total Net sales % of total Orders receive
Slide 24: Asia-Pacific
Asia-Pacific Market environment Capital project opportunities in pulp, tissue, and board: - Increased investments in multi-fuel and renewable energy development plans in Asia-Pacific countries - Opportunities related to customer's portfolio changes or production line upgrades Good services marke
Slide 25: Managing foreign exchange risks
Managing foreign exchange risks
Slide 26: Foreign exchange risk management in Valmet
Foreign exchange risk management in Valmet All operating units are required to hedge in full their foreign currency exposures Hedging takes place when firm commitment arises or at the latest immediately after operating units have reported their monthly currency exposure Valmet is not hedging a
Slide 27: Foreign currency exposure
Foreign currency exposure The exposure is a net of all assets and liabilities denominated in foreign currencies derived from sales and purchase contracts, projected cash flows and firm commitments A 10 percent appreciation or depreciation of EUR against all other currencies would have an effect
Slide 28: Split of net sales and costs per currency in 2014
Split of net sales and costs per currency in 2014 Net sales by currency (2014) Costs by currency (2014) Others Others BRL BRL 7% 7% 5% 4% RMB RMB 5% 8% EUR 44% USD EUR USD 52% 20% 14% SEK SEK 15% 20% • Sales and costs in different currencies fairly balanced • More costs than sales in EUR, vice versa
Slide 29: Research and development
Research and development Valmet <>
Slide 30: Research and development in Valmet
Research and development in Valmet R&D predominantly in Finland and Sweden, within the business lines’ technology and R&D organizations – In addition, R&D takes place together with customers, research facilities and universities Valmet has several testing facilities that are used in demonstratio
Slide 31: Valmet's Technology Centers
Valmet’s Technology Centers Jyväskylä Kajaani Board and Paper Automation Juankoski Technology Technology Fabrics Technology Karlstad Tissue Technology Cooking and Biotechnologies Inkeroinen Fiber Technology Gothenburg Järvenpää 70 Evaporators Finishing Technology new products Sundsvall Tampere launc
Slide 32: Continuous investment in research and development to improve customers' processes
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 33: Valmet's R&D targets
Valmet’s R&D targets Ensure advanced Enhance raw material Promote renewable and competitive and energy efficiency materials technologies and services We develop cost competitive, We combine process technology, We develop solutions to replace modern and fit for purpose automation and services to foss
Slide 34: 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 35: New launches in April 2015
New launches in April 2015 Next generation machine vision solution Tool for choosing optimal roll covers Valmet IQ Web Inspection System Valmet IQ Web Monitoring System Allows customers to increase machine Interactive user-friendly tool that enables speed while simultaneously reducing users to l
Slide 36: Valmet IQ
Valmet IQ Valmet IQ Measurements and Scanners for accurate sheet quality measurements Total quality management in demanding machine conditions. system by the experts Your local service team with P&P skills secure best performance at all Valmet IQ Applications with a times. joint user interface give
Slide 37: Conclusion
Conclusion Valmet <>
Slide 38: 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 39: Investment highlight summary
Investment highlight summary 1 Strong market position in growing markets Growing, profitable and stable service and 2 automation business with EUR 1.3 billion sales Strong in cyclical capital business with long-term growth 3 potential and increased flexibility in cost structure Unique offering with
Slide 40: 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 41: FORWARD
FORWARD
Slide 42: Appendix: Q2/2015 in brief
Appendix Q2/2015 in brief Valmet <>
Slide 43: Q2/2015 in brief
Q2/2015 in brief Strong start for Automation as part of Valmet • Acquisition of Process Automation Systems was completed on April 1, 2015 • Automation became Valmet’s fourth business line – Q2/2015 the first reported quarter for Automation • Positive feedback from customers and employees Orders rece
Slide 44: Key figures Q2/2015
Key figures Q2/2015 EUR million Q2/2015 Q2/2014 Change Q1–Q2/2015 Q1–Q2/2014 Change Orders received 781 1,023 -24% 1,360 2,124 -36% Order backlog1 2,208 2,406 -8% 2,208 2,406 -8% Net sales 779 588 33% 1,340 1,107 21% EBITA2 54 22 >100% 73 26 >100% % of net sales 6.9% 3.7% 5.5% 2.3% EBIT3 32 16 96% 4
Slide 45: Growing trend in orders received – stable business
Growing trend in orders received – stable business orders received EUR 392 million 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 2,500 190 781 420 121 781 800 2,0
Slide 46: EBITA-margin reached the targeted range
EBITA-margin reached the targeted range Net sales and EBITA before NRI (EUR million) 777 779 EBITA target 6–9% 6.1% 588 590 6.9% 561 519 3.7% 5.5% 3.5% Capital business Stable business 0.7% EBITA-% 371 251 235 278 242 224 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 EBITA before 4 22 32 48 19 54 NRI (EUR mil