Neles Oyj — Q3 2021 Earnings Presentation
22 slides from Neles Oyj's earnings presentation, Oct 27, 2021
Slide 1: Interim Review January–September 2021: Solid profitability driven by good sales volumes
Interim Review January–September 2021: Solid profitability driven by good sales volumes Olli Isotalo, President and CEO Simo Sääskilahti, CFO October 27, 2021
Slide 2: Merger consideration and forward-looking statements
Merger consideration and forward-looking statements This Interim Review is not an offer of merger consideration shares in the United States. The merger consideration shares have not been and will not be registered under the U.S. Securities Act of 1933 (the “Securities Act”), and may not be offered,
Slide 3: Important note about this financial information
Important note about this financial information In this Interim Review, a comparable cash flow statement is disclosed in addition to IFRS financial information. Figures in parentheses refer to the corresponding period of the continuing operations in 2020 unless otherwise stated. Neles Group has been
Slide 4: Contents
Contents Q3 highlights and results Financials in detail Strategy update and focus areas 4 Q1-Q3 Interim Review / October 27, 2021
Slide 5: Highlights of Q3
Highlights of Q3 • Market activity remained stable • Strong P&P and Bioproduct project activity continued • Services at a good level • Slowness in Chemicals and O&G project businesses • Project pipeline is healthy in all industries, orders are expected in the next 6 months • Solid profitability driv
Slide 6: Services back at pre-Covid level, MRO-driven business improved from 2020 but below 2019 levels
Services back at pre-Covid level, MRO-driven business improved from 2020 but below 2019 levels North America EMEIA • The market sentiment in the North American MA 80 continued good in Q3, orders grew by 24% from 100 59 53 56 45 58 35 38 37 55 60 100 69 63 70 64 53 52 55 55 56 Q3/20. Sequential drop
Slide 7: Market outlook
Market outlook Market activity in Pulp and Paper projects is expected to continue at a good level. Market activity in Chemicals and Oil & Gas projects was weak in the first nine months of 2021. The market activity is expected to return to a satisfactory level during the next 6 months. Postponements
Slide 8: Contents
Contents Q3 highlights and results Financials in detail Strategy update and focus areas 8 Q1-Q3 Interim Review / October 27, 2021
Slide 9: Profitability driven by good sales volume
Profitability driven by good sales volume EUR million % of sales 200 Group key figures – Q3/2021 180 • Orders +12% from Q3/20 (comp. curr. +10%) 20 160 • Sales +12% from Q3/20 (comp. curr. +11%) • Adj. EBITA +10% from Q3/20 at EUR 25.0 (22.8) million, or 140 15.5 (15.8) % of sales 15 120 • Cost cont
Slide 10: Services and MRO-driven businesses improving
Services and MRO-driven businesses improving Group key figures – Q1–Q3/2021 EUR million % of sales • Orders 0% from Q1-Q3/20 (comp. curr. +3%) 700 • Services and MRO businesses orders +19% from 600 20 Q1-Q3/20 • Sales +4% from Q1-Q3/20 (comp. curr. +7%) 500 15 • Services and MRO businesses sales +7%
Slide 11: Share of Services and MRO-driven businesses increased clearly y-o-y
Share of Services and MRO-driven businesses increased clearly y-o-y Business type, Orders received 1 CAPEX-driven 100% business 80% OPEX-driven 60% Services and MRO-driven businesses 40% 20% 0% 2015 2016 2017 2018 2019 2020 1–9/2020 1–9/2021 11 Q1-Q3 Interim Review / October 27, 2021
Slide 12: Logistics challenges and lack of electronic components impacted inventories
Logistics challenges and lack of electronic components impacted inventories Net working capital, EUR million Capital employed, EUR million 300 493 474 480 500 250 Intangible assets 95 425 80 Other non-interest 76 96 77 74 200 89 bearing liabilities, net 400 Tangible assets Advances received 81 60 16
Slide 13: IFRS Income Statement
IFRS Income Statement EUR million 1–9/2021 1–9/2020 Change, % 2020 Sales 436.8 421.5 4 576.3 Adj. EBITA 59.9 62.4 -4 85.0 of Sales, % 13.7 14.8 14.8 Operating profit 1 52.2 51.8 1 70.3 of Sales, % 11.9 12.3 12.2 Profit before taxes 48.1 47.5 1 63.8 Profit for the period, continuing operations 36.3 3
Slide 14: IFRS balance sheet
IFRS balance sheet EUR million Sep 30, 2021 Dec 31, 2020 Key figures Sep 30, 2021 Intangible assets 75.9 73.9 Net debt, EUR million 73.7 Tangible assets 60.2 62.3 Gearing, % 26.6 Right-of-use assets 45.4 50.5 Equity-to-assets ratio, % 43.2 Other non-current assets 34.2 30.6 Debt to capital, % 43.9 I
Slide 15: Cash Flow
Cash Flow EUR million 1–9/2021 1–9/2020 2020 Profit for the period 36.3 35.5 48.2 Adjustments 37.0 22.0 33.9 Change in NWC -9.7 -5.81 17.11 Financial income and expenses paid, net -4.1 -3.9 -6.4 Income taxes paid -11.3 -5.4 -11.8 Net cash flow from operating activities 48.3 42.4 81.1 Capital expendi
Slide 16: Contents
Contents Q3 highlights and results Financials in detail Strategy update and focus areas 16 Q1-Q3 Interim Review / October 27, 2021
Slide 17: Reinventing reliability
Our customer promise Reinventing reliability We draw on our long heritage, experience and know-how to feed our ambition to continuously develop and innovate solutions that redefine how process industries experience reliable flow control performance. 17 Q1-Q3 Interim Review / October 27, 2021
Slide 18: Growing through industry diversification
Growing through industry diversification On July 27, 2021, Neles signed an asset purchase of Flowrox valve and pump businesses, closing in November • Diversification of our customer industries is a key component of Neles’ long-term growth strategy • Metals and Mining is a fast-growth sector, with go
Slide 19: Flowrox valve and pump businesses in brief
Flowrox valve and pump businesses in brief Channel partners and Sales 2020 Founded in Employees transfering agents selling the product EUR 30 million 1977 ~110 ~200 Industry split Manufacturing locations and major sales offices Sales presence Construction, Mining, • Lappeenranta, Finland: Company he
Slide 20: Transaction and value creation
Transaction and value creation • Purchase Price: EUR 40.9 million + an additional orders received-based earn- out consideration of up to EUR 3 million for a one-year period after closing also payable in cash • Deal structure: Asset purchase agreement, consisting of intangible and tangible assets as
Slide 21: Neles and Valmet merger
Neles and Valmet merger • On July 2, 2021, Neles announced that the Boards of Directors of Valmet Oyj and Neles Corporation have signed a combination agreement and a merger plan to combine the two companies through a merger. Both companies held an Extraordinary General Meeting on September 22, 2021,
Slide 22: Reinventing reliability
Reinventing reliability neles.com @neles @nelesworld @nelesflow @Neles @nelesflow