Valmet Corp · OMXHEX:VALMT
Valmet — Non-Deal Roadshow (February 2015)
89 slides from Valmet's roadshow presentation, February 2015
Slide 1: Valmet becomes stronger as a result of acquiring Process Automation Systems
Capital Markets Day 2015 March 19, London www.valmet.com/cmd Valmet becomes stronger as a result of acquiring Process Automation Systems Roadshow material February 2015
Slide 2: Agenda
Agenda Valmet Roadshow 1 Valmet overview 2 Investment highlights 3 Financials 4 Acquisition of Process Automation Systems 5 Conclusions 6 Appendix
Slide 3: Valmet overview
Valmet overview Valmet <>
Slide 4: Valmet's road to becoming a global market leader
Valmet’s road to becoming a global market leader 1797 Tamfelt 1951 1968-1996 End of 2013 1856 Tampella Valmet Several M&As i.e. Demerger to create 1858 Beloit 1986 KMW Valmet and Metso 1987 Wärtsilä paper finishing machinery 1860 KMW 1992 Tampella Papertech 1868 Sunds Defibrator 1942 1951-1995 1999
Slide 5: Capitalizing on the growing pulp, energy, tissue, and packaging board needs globally
Capitalizing on the growing pulp, energy, tissue, and packaging board needs globally Global market leader with Net sales (2014) #1-2 market positions in all markets served Stable, growing and profitable EUR 1 billion services business 15% 18% High barrier to entry capital business with good long-ter
Slide 6: Our three business lines serve the same customer base
Our three business lines serve the same customer base Services Pulp and Energy Paper Description Mill and plant improvements, roll and Technologies and solutions for pulp Technologies and solutions for workshop services, parts and fabrics, production, power generation, and board, tissue, and paper a
Slide 7: Strong global presence – good platform for growth
Strong global presence – good platform for growth North America 1,141 EMEA China • Large installed base employees • Large installed base to • Capital project opportunities to be serviced be serviced in board and tissue • Growth opportunity in • Growth opportunity in • Good services market increased
Slide 8: Valmet's way forward
Valmet’s way forward Our Vision To become the global Our Must-Wins champion in serving our customers Our Strategy Customer excellence Valmet develops and Leader in technology supplies competitive and innovation Our Mission technology and services to Excellence in processes Converting renewable
Slide 9: Investment highlights
Investment highlights Valmet <>
Slide 10: Investment highlight summary
Investment highlight summary Established market leader with #1-2 market positions 1 in all markets served Stable, growing, and profitable services business 2 with over EUR 1 billion sales provides good visibility and resilience Long-term growth potential in capital business 3 from increase in pulp,
Slide 11: Established market leader with #1-2 market positions in all markets served
1 Established market leader with #1-2 market positions in all markets served Services (~EUR 1 bn)1 Capital (~EUR 1.5 bn)1 Pulp Energy Paper Market position Machines Services #1-2 Pulping #1-2 Bioenergy generation #1-2 Board #1-2 Tissue #1 Paper #1-2 Large installed base • 3,800 pulp and paper mills
Slide 12: EUR 1 billion of net sales from stable and growing services
2 EUR 1 billion of net sales from stable and growing services Strong trends driving services Comprehensive offering market expansion Customers outsource non-core operations Capacity increases in China, South America and Asia-Pacific Customer cost pressure and efficiency requirements increase d
Slide 13: Pulp, energy, board, and tissue capital business on long-term growth trajectory
3 Pulp, energy, board, and tissue capital business on long-term growth trajectory Pulp and Energy Paper Energy Pulp Board Tissue Printing and writing papers and newsprint ~1% 2.0 ~1-2% 1.4 ~3% 1.0 ~3% 0.6 ~-1% 0.6 p.a. bn p.a. bn p.a. bn p.a. bn p.a. bn Demand drivers • Growth in energy • Growth in
Slide 14: Global diversified footprint with large exposure to growing emerging markets
4 Global diversified footprint with large exposure to growing emerging markets Emerging markets expansion1 Exposure to emerging markets2 Net sales (EUR million) 80% 1,153 1,234 1,077 1,116 972 70% Approximate share of sales generated in emerging markets2 FLSmidth Outotec 60% Wärtsilä Atlas Copco 50%
Slide 15: Strong focus on profitability improvement
5 Strong focus on profitability improvement Key Must-Win objectives to improve profitability to the targeted level of 6–9% Improve project Reduce quality Savings in Continue to Improve product and service costs and lead procurement improve cost cost margin times competitiveness competitiveness to in
Slide 16: Financials
Financials Valmet <>
Slide 17: 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 18: Q4/2014 in brief
Q4/2014 in brief Orders received increased in services in Q4/2014 • Orders received increased by 17% • Services net sales stable Orders received increased in capital business • Orders received increased in Paper and decreased in Pulp and Energy • Net sales increased in Paper, and Pulp and Energy Ord
Slide 19: Key figures Q4/2014
Key figures Q4/2014 EUR million Q4/2014 Q4/2013 Change 2014 2013 Change Orders received 480 428 12% 3,071 2,182 41% Order backlog 1,998 1,398 43% Net sales 777 666 17% 2,473 2,613 -5% EBITA1 48 -25 106 54 94% % of net sales 6.1% -3.7% 4.3% 2.1% EBIT2 38 -66 72 -59 % of net sales 4.8% -9.9% 2.9% -2.2
Slide 20: Orders received exceeded EUR 3 billion in 2014
Orders received exceeded EUR 3 billion in 2014 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 1,000 861 212 2,500 1,000 861 60 2,500 190 422 120 800 128 2,000 800 47 2,000 103 600 511 480
Slide 21: Order backlog approximately EUR 2 billion
Order backlog approximately EUR 2 billion Order backlog (EUR million) Structure of order backlog 3,000 2,500 ~20% 2,406 2,312 2,000 1,972 1,998 1,807 1,883 1,500 1,658 1,398 1,000 ~80% 500 0 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Services business Capital business • Management estimates tha
Slide 22: EBITA margin in the targeted range in Q4/2014
EBITA margin in the targeted range in Q4/2014 Net sales and EBITA before NRI (EUR million) 777 714 666 631 601 588 590 EBITA target 6–9% 519 5.5% 6.1% 5.1% 4.1% 3.7% 3.1% -3.7% 0.7% Services Capital 243 256 256 274 251 235 278 224 EBITA-% Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 EBITA before
Slide 23: Good development in gross profit – SG&A at a normalized level
Good development in gross profit – SG&A at a normalized level Gross profit (EUR million and % of net sales) SG&A (EUR million and % of net sales) 160 35% 140 35% 140 30% 120 30% 120 25% 100 25% 100 20% 80 20% 80 15% 60 15% 60 40 10% 40 10% 20 5% 20 5% 0 0% 0 0% Q1/2013 Q2/2013 Q3/2013 Q4/2013 Q1/201
Slide 24: Services orders received stable in 2014, growth in Q4/2014
Services orders received stable in 2014, growth in Q4/2014 Orders received (EUR million) Net sales (EUR million) 2013: 2014: 2013: 2014: EUR 1,035 million EUR 1,055 million EUR 1,032 million EUR 989 million 300 282 281 273 273 1,200 300 274 278 1,200 267 256 256 237 242 243 251 250 233 1,000 250 224
Slide 25: Pulp and Energy orders received almost doubled in 2014
Pulp and Energy orders received almost doubled in 2014 Orders received (EUR million) Net sales (EUR million) 2013: 2014: 2013: 2014: EUR 680 million EUR 1,344 million EUR 907 million EUR 956 million 800 1,600 400 1,600 700 622 1,400 350 312 1,400 600 560 1,200 300 1,200 452 221 240 240 229 234 500 1
Slide 26: Paper orders received approximately EUR 670 million in 2014
Paper orders received approximately EUR 670 million in 2014 Orders received (EUR million) Net sales (EUR million) 2013: 2014: 2013: 2014: EUR 467 million EUR 671 million EUR 674 million EUR 528 million 300 900 300 900 250 212 750 250 218 750 190 186 200 168 600 200 167 600 142 139 152 150 128 128 45
Slide 27: Dividend proposal
Dividend proposal Dividend policy Dividend payout at least 40% of net profit Board of Directors’ dividend proposal to the Annual General Meeting EUR 0.25 per share 27 February, 2015 © Valmet
Slide 28: Guidance and short-term market outlook
Guidance and short-term market outlook Guidance for 2015 Guidance for Valmet estimates that, including the acquisition of Process Automation 2015 Systems1, net sales in 2015 will increase in comparison with 2014 (EUR 2,473 million) and EBITA before non-recurring items in 2015 will increase in compar
Slide 29: Acquisition of Process Automation Systems
Acquisition of Process Automation Systems
Slide 30: Valmet becomes a stronger company
Valmet becomes a stronger company The acquisition has an excellent strategic fit Combination of Valmet and Process Automation Systems creates a unique customer offering Process Automation Systems is a strong, established business Acquisition makes Valmet more stable and more profitable 30 February,
Slide 31: Combination of Valmet and Process Automation Systems creates a unique customer offering
Combination of Valmet and Process Automation Systems creates a unique customer offering Valmet becomes a technology Valmet becomes a unique company and service company with full Process automation offering technology Strengthened competitiveness from combining paper, pulp and power plant technol
Slide 32: Process Automation Systems is a strong, established business
Process Automation Systems is a strong, established business Long-term customer relations High level of technology and know-how Strong service business, based on large installed base and captive business model ~1,600 automation professionals working close to customers at ~80 locations around
Slide 33: Increasing stability and improving profitability
Increasing stability and improving profitability Increasing stability Improving profitability Valmet will have approximately EUR Process Automation Systems has 1,300 million of stable business solid financial track record - Existing services EUR 1,000 million - Relatively stable margins during t
Slide 34: Conclusion
Conclusion Valmet <>
Slide 35: Valmet becomes a unique market leader
Valmet becomes a unique market leader Services Pulp Energy Paper Process Automation #1-2 #1-2 #1-2 #1-2 #1-3 3,800 pulp and 200 wood-handling 270 fluidized bed 700 board machines 4,500 delivered paper mills in the systems boilers 180 tissue machines automation systems world, of which over 470 cookin
Slide 36: Important notice
Important notice IMPORTANT: You must read the following before continuing. The following applies to this document, the oral presentation of the information in this document by Valmet (the “Company”) or any person on behalf of the Company, and any question-and-answer session that follows the oral pre
Slide 37: Appendix
Appendix 1 Management, ownership and share price development 2 Financials 3 Process Automation Systems 4 Market statistics
Slide 38: Appendix: Management, ownership and share price development
Appendix Management, ownership and share price development
Slide 39: Experienced management team
Experienced management team Corporate 23 1 2 1 1 23 6 2 10 19 Pasi Laine Markku Honkasalo Kari Saarinen Julia Macharey Anu Salonsaari-Posti President and CEO Chief Financial Officer SVP, Strategy and SVP, Human Resources SVP, Marketing & Share ownership: 30,046 Share ownership: 700 Operational Devel
Slide 40: Board of Directors
Board of Directors Jukka Mikael Von Friederike Erkki Pehu- Viinanen Frenckell Helfer Lehtonen (b. 1948) (b. 1947) (b. 1976) (b. 1950) Chairman of Vice Chairman of Board member Board member the Board the Board Austrian citizen Finnish citizen Finnish citizen Finnish citizen • MSc in Engineering • MSc
Slide 41: Largest shareholders on January 31, 2014
Largest shareholders on January 31, 2014 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 Nordea Funds 5,099,644 3.40% 3 Skagen Global Verdipapirfond 3,202,627 2.14% 4 Ilmarinen Mutual Pension Insura
Slide 42: Ownership structure on January 31, 2014
Ownership structure on January 31, 2014 13.9% Nominee registered and non-Finnish holders 11.1% Finnish institutions, companies and foundations 55.5% Solidium Oy Finnish private investors 19.5% Sector Number of shareholders % of total shareholders Number of shares % of shares Nominee registered and n
Slide 43: Share of non-Finnish holders and number of shareholders
Share of non-Finnish holders and number of shareholders 57% 60,000 55% 58,000 53% 56,000 51% 54,000 49% 52,000 47% 50,000 45% 48,000 12/2013 01/2014 02/2014 03/2014 04/2014 05/2014 06/2014 07/2014 08/2014 09/2014 10/2014 11/2014 12/2014 01/2015 Non-Finnish holders (LHS) Total number of shareholders
Slide 44: Share price development and trading volume
44 Million shares 6.00 7.00 8.00 9.00 11.00 12.00 10.00 0 1 2 3 4 5 6 7 8 01/14 01/14 01/14 01/14 February, 2015 01/14 01/14 02/14 02/14 02/14 02/14 © Valmet 03/14 03/14 03/14 03/14 04/14 04/14 04/14 04/14 05/14 05/14 Valmet 05/14 05/14 06/14 06/14 06/14 06/14 07/14 07/14 07/14 07/14 07/14 07/14 08/
Slide 45: Appendix: Financials
Appendix Financials Valmet <>
Slide 46: Latest development in sustainability
Latest development in sustainability Valmet has defined a sustainability agenda as part of the implementation of its business strategy Valmet has been selected for the world’s leading Dow Jones Sustainability Index among three (3) other Finnish companies Valmet scored high points in CDP climat
Slide 47: Customer activity increased in 2014
Customer activity increased in 2014 Announced orders during H1/2014 Date Description Business line Country Value Jan 9 Prehydrolysis system (pilot scale) Pulp and Energy Netherlands Not disclosed Jan 27 Multi-fuel boiler Pulp and Energy Finland Not disclosed Jan 31 Upgrade of recovery boiler and pow
Slide 48: Customer activity increased in 2014
Customer activity increased in 2014 Announced orders during H2/2014 Date Description Business line Country Value Jul 2 Advantage DCT 200 tissue line Paper Middle East Not disclosed Jul 8 Wood chipping plant Pulp and Energy Sweden Around EUR 20 million Aug 4 Advantage NTT line Paper USA Not disclosed
Slide 49: Valmet's Must-Win initiatives and objectives
Valmet’s Must-Win initiatives and objectives Must-Wins Primary Must-Win objectives 1. Customer • Strengthen our presence close to customers and growth markets excellence • Strengthen Key Account Management to enhance growth at the customer • Drive service growth through long-term agreements and expa
Slide 50: Positive cash flow
Positive cash flow Cash flow provided by operating activities (EUR million) 140 120 100 117 80 60 40 43 46 20 30 0 -20 -38 -40 -60 Q1/2014 Q2/2014 Q3/2014 Q4/2014 Q4/2013 • At the end of 2014, net working capital was EUR -353 million • CAPEX less than depreciation 50 February, 2015 © Valmet
Slide 51: Strong balance sheet with negative gearing
Strong balance sheet with negative gearing Net debt (EUR million) and gearing (%) Equity to assets ratio (%) 200 20% 45% 150 15% 42% 100 10% 41% 41% 40% 40% 50 5% 40% -1 0 0% 0% -39 -54 -50 -5% -100 -5% -10% 35% -7% -158 -150 -166 -15% -200 -20% -250 -20% -21% -25% 30% Q4/13 Q1/14 Q2/14 Q3/14 Q4/14
Slide 52: ROCE on improving trend
ROCE on improving trend Capital employed (EUR million) Return on capital employed (ROCE), before taxes1 (%) 1,200 20% 1,000 15% 1,024 985 967 902 9% 800 877 10% 6% 600 5% 3% 400 0% -2% -4% 200 -5% 0 -10% Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 ROCE (before taxes) Target, 15% • De
Slide 53: Long-term financing
Long-term financing Amount of outstanding interest-bearing debt: EUR 68 million (Dec 31, 2014) Maturity profile of interest-bearing debt Main financing sources (EUR millions) EUR 64 million EIB loan 250 Maturing in: H2/2016 200 EUR 4 million other financing sources 150 100 2001 Back-up facilities
Slide 54: Strong balance sheet to support large orders
Strong balance sheet to support large orders Financial position as of December 31, 2014 (EUR million) 51 16 146 192 -166 2,412 2,266 41 809 Non-current Current debt Cash and Other Net debt Total equity Balance sheet Advances Adj. balance debt equivalents financial total received sheet total assets N
Slide 55: Net sales and profitability development, annual
Net sales and profitability development, annual Net sales and EBITA before NRI (EUR million)1 2,925 3,014 2,735 2,703 2,613 2,453 2,473 2,092 EBITA target 6-9% 2,061 7.1% 7.6% 6.3% 6.5% 6.4% 5.5% 5.6% 4.3% 2.1% Services Capital 877 974 1,011 1,032 989 EBITA-% 636 834 847 715 2006 2007 2008 2009 2010
Slide 56: Key ratios
Key ratios 2014 2013 Carve-out Earnings per share, EUR 0.31 -0.421 Diluted earnings per share, EUR 0.31 -0.421 Equity per share at end of period, EUR 5.36 5.39 Return on equity (ROE), % (annualized) 6% -7%2 Return on capital employed (ROCE) before taxes, % (annualized) 9% -4% Equity to assets ratio
Slide 57: Consolidated statement of income
Consolidated statement of income Q4/2014 Q4/2013 Q1-Q4/ Q1-Q4/ 2014 2013 EUR million Carve-out Carve-out Net sales 777 666 2,473 2,613 Cost of goods sold -633 -591 -2,004 -2,172 Gross profit 144 75 469 441 Selling, general and administrative expenses -109 -126 -401 -469 Other operating income and ex
Slide 58: Balance sheet as at December 31, 2014
Balance sheet as at December 31, 2014 Assets As at December 31, 2014 As at December 31, 2013 EUR million Non-current assets Intangible assets Goodwill 446 443 Other intangible assets 91 107 Total intangible assets 537 550 Property, plant and equipment Land and water areas 22 21 Buildings and structu
Slide 59: Balance sheet as at December 31, 2014
Balance sheet as at December 31, 2014 Equity and liabilities As at December 31, 2014 As at December 31, 2013 EUR million Equity Share capital 100 100 Reserve for invested unrestricted equity 403 402 Cumulative translation adjustments 9 2 Fair value and other reserves -3 5 Retained earnings 296 299 E
Slide 60: Appendix: Process Automation Systems
Appendix Process Automation Systems
Slide 61: Process Automation Systems in brief
Process Automation Systems in brief Supplies and develops automation and information management systems, applications and services Global market leader with Process Automation Systems’ net sales1 #1 market position in pulp and paper 8% Industry-leading product portfolio 19% 10% Comprehensive service
Slide 62: Process Automation Systems' offering
Process Automation Systems’ offering Distributed • Complete control system platform for several processes: process, Control machine, drive controls and information management System (DCS) • Used for monitoring and controlling distributed equipment in process plants and industrial processes Quality C
Slide 63: Valmet and Process Automation Systems serve mainly the same customer base
Valmet and Process Automation Systems serve mainly the same customer base Pulp Energy Paper Process 80% of Process Automation 20% of Process Automation Systems’ sales to Valmet’s current Systems’ sales to other customer industries process industries Valmet is a registered trademark of Valmet Corpora
Slide 64: Recent development
Recent development Orders received (EUR million)1 Net sales (EUR million)1 400 400 350 333 350 322 304 309 310 296 300 261 300 250 250 200 200 200 150 150 100 100 50 50 0 0 2011 2012 2013 2014 2011 2012 2013 2014 1-9/ 1-9/ Orders received Net sales Process Automation Systems is relatively stable bus
Slide 65: Price and financing the acquisition
Price and financing the acquisition Enterprise value of acquisition1: EUR 340 million The acquisition will be financed with committed long-term financing Average maturity of long-term debt will increase to over 4 years2 1) Refers to the debt-free enterprise value of the acquisition. 2) Average m
Slide 66: Valmet will have a strong balance sheet also after the acquisition
Valmet will have a strong balance sheet also after the acquisition Process Automation Systems had net assets of approximately EUR 55 million on June 30, 2014 Valmet will have a strong balance sheet also after the acquisition To illustrate, if the transaction would have taken place on September
Slide 67: Automation will be Valmet's fourth business line
Automation will be Valmet’s fourth business line Services Pulp and Energy Paper Automation North America business line business line business line business line South America EMEA China Asia-Pacific • Acquisition is estimated to be completed by April 1, 2015 and is subject to approval by the competi
Slide 68: Appendix: Market statistics
Appendix Market statistics Valmet <>
Slide 69: 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 Comprehensive life-cycle services offering serving global customer base with over 2,000 plants purchasing services from Valmet annually Spare and wear parts Fabric
Slide 70: Services market
Services market Market trends Total market for Valmet’s EMEA and North America Cost pressure and outsourcing ► Largest market for the services offering ~EUR 7bn1 Services BL where majority of • Pulp and paper services = ~EUR 6bn ► Customer cost pressure and machine installed base is located • Power
Slide 71: Pulp market
Pulp market Market trends Total market for Valmet’s pulp Virgin wood pulp growth due to EMEA and North America technology ~EUR 1.4bn1 ► Chemical pulp production • Chemical pulp accounts for ~70% of the total limitations of recycled paper growth growing by ~1% p.a. in 2010- volume of virgin papermaki
Slide 72: Energy market
Energy market Market trends Global biomass and waste power Growth in energy consumption and EMEA and North America plant market ~EUR 4.5bn1 ► EMEA region and North • Average estimate for global biomass and waste demand for sustainable energy America, represent ~50% of power plant market between 2013
Slide 73: Paper market
Paper market Market trends EMEA and North America Total market for Valmet’s1: General: Demand for increased energy, ► Market expected to mainly Board technology ~EUR 1bn water and raw material efficiency relate to rebuilds of existing • Containerboard consumption growing by ~2.7% ► Focus on environm
Slide 74: The majority of new pulp lines are being built in South America and Asia
The majority of new pulp lines are being built in South America and Asia Market fluctuates from year to year New chemical pulp lines in SA and Asia Market size1 Gross capacity additions 2011-20202 (EUR million) (Avg. ktons p.a.) Valmet New lines Other Other increases 600 3,500 200 700 1,000 700 1,30
Slide 75: Market for larger size biomass boilers has significantly declined in EMEA and North America
Market for larger size (> 50 MWth) biomass boilers has significantly declined in EMEA and North America New boiler market served by Valmet1 (EUR million) Key messages (only projects where Valmet has been involved) and implications • Strong market decline in EMEA Rest of the world 2013 and unclear fu
Slide 76: Major changes in the paper and board market
Major changes in the paper and board market Estimated net sales1 (EUR millions) Board machines: 1,000 Narrow, slow, 900 and lower 800 technology 700 600 500 400 Paper 300 machines: 200 100 Wide, fast, and 0 high technology 1996 1998 2000 2002 2004 2006 2008 2010 2012 Paper Board 1) Company estimate
Slide 77: Consumption development
Consumption development Growth in board and tissue consumption is expected to continue while newsprint is declining Paper consumption1 (Mton) 220 CAGR 2001-2013 2013-2025F 200 180 Containerboard +3.4% +2.5% 160 140 120 Printing & Writing +0.5% -0.3% 100 80 Cartonboard +2.6% +2.8% 60 40 Tissue +3.1%
Slide 78: Paper and board consumption growth trends
Paper and board consumption growth trends Paper and board consumption per capita vs. population1 250 2,500 Population growth in emerging markets is 200 2,000 larger than in 150 1,500 developed markets 100 1,000 Level of 50 500 consumption per capita in emerging 0 0 markets clearly Eastern Europe Chi
Slide 79: Demand has shifted more towards smaller paper and board machines
Demand has shifted more towards smaller paper and board machines • We are focusing more on modularized and standardized solutions • Competition is higher in smaller machines Capacity of start-ups1, by machine Valmet’s market share1, size by machine size 47 Mton 35 Mton XL 40-60% Competition is lower
Slide 80: Tissue consumption growth trends
Tissue consumption growth trends Tissue consumption per capita vs. population1 New products and 2,500 25 consumption models based on tissue are 2,000 20 helping increase 1,500 15 consumption in developed markets 1,000 10 500 5 0 0 Consumption in emerging markets is China Rest of Asia Oceania Africa
Slide 81: Tissue market growing long term
Tissue market growing long term • Recent market reduction due to heavy Chinese investments • Competition is high in all areas, Valmet is strongest in North America Capacity of start-ups1, by area Valmet’s market share1, by area 7 Mton 6 Mton South 20-40% America Number of competitors 5 Mton APAC ex.
Slide 82: Paper, board, and tissue production trends
Paper, board, and tissue production trends North America (million tonnes) Europe (million tonnes) 12 50 15 40 11 13 35 10 40 30 9 11 8 30 25 7 9 20 6 20 7 15 5 4 10 5 10 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Tissue (LHS) Newspri
Slide 83: Paper, board, and tissue operating rates
Paper, board, and tissue operating rates North America Europe 100% 100% 95% 95% 90% 90% 85% 85% 80% 75% 80% 2008 2009 2010 2011 2012 2013 2014 2015 2008 2009 2010 2011 2012 2013 2014 2015 Tissue Newsprint Printing & Writing Tissue Newsprint Printing & Writing Containerboard Cartonboard Containerboar
Slide 84: Pulp and paper price trends
84 1,000 1,200 200 600 800 0 400 Source: Bloomberg 1-Dec-07 February, 2015 1-Mar-08 1-Jun-08 1-Sep-08 1-Dec-08 © Valmet Testliner (EUR/t) Uncoated (USD/t) 1-Mar-09 1-Jun-09 Eucalyptus pulp (USD/t) 1-Sep-09 1-Dec-09 1-Mar-10 1-Jun-10 1-Sep-10 1-Dec-10 1-Mar-11 1-Jun-11 Pulp and paper price trends 1-S
Slide 85: Historically large spread in pulp prices
Historically large spread in pulp prices • In the autumn of 2014, many pulp producers announced NBSK price hikes Northern bleached Pulp prices, Europe: NBSK and BHKP (USD/ton) softwood kraft pulp is produced mainly in 1,100 350 Canada and the Nordic Spread at the end of October, 2014: $203 countries
Slide 86: Crude oil, steam coal, natural gas and electricity: Europe
Crude oil, steam coal, natural gas and electricity Europe 180 100 160 90 140 80 120 70 60 100 50 80 40 60 30 40 20 20 10 0 0 1-Jan-10 1-Jun-10 1-Nov-10 1-Apr-11 1-Sep-11 1-Feb-12 1-Jul-12 1-Dec-12 1-May-13 1-Oct-13 1-Mar-14 1-Aug-14 CIF ARA steam coal (USD/t) (LHS) Brent crude oil (USD/barrel) (LHS)
Slide 87: Crude oil, steam coal, natural gas and electricity: United States
Crude oil, steam coal, natural gas and electricity United States 140 7 120 6 100 5 80 4 60 3 40 2 20 1 0 0 1-Jan-10 1-Jun-10 1-Nov-10 1-Apr-11 1-Sep-11 1-Feb-12 1-Jul-12 1-Dec-12 1-May-13 1-Oct-13 1-Mar-14 1-Aug-14 FOB steam coal Richards Bay (USD/t) (LHS) WTI crude oil (USD/barrel) (LHS) Henry Hub
Slide 88: European Carbon Emission Allowance price
88 0 1 2 3 4 5 6 7 8 9 2-Nov-12 23-Nov-12 14-Dec-12 Source: Bloomberg 4-Jan-13 February, 2015 25-Jan-13 15-Feb-13 8-Mar-13 29-Mar-13 © Valmet 19-Apr-13 10-May-13 31-May-13 21-Jun-13 12-Jul-13 2-Aug-13 23-Aug-13 13-Sep-13 4-Oct-13 25-Oct-13 15-Nov-13 6-Dec-13 27-Dec-13 17-Jan-14 7-Feb-14 28-Feb-14 21
Slide 89: Forward
FORWARD