Slide 1: Half Year Financial Review, January–June 2018
Orders received increased in Paper and Services – Comparable EBITA increased Half Year Financial Review, January–June 2018 July 25, 2018 Pasi Laine, President and CEO Kari Saarinen, CFO
Slide 2: Agenda
Agenda Half Year Financial Review, January–June 2018 1 Q2/2018 in brief 2 Development of the business lines 3 Financial development 4 Guidance and short-term market outlook 5 Summary of Q2/2018 6 Appendix 2 July 25, 2018 © Valmet | Half Year Financial Review, January–June 2018
Slide 3: Q2/2018 in brief
Q2/2018 in brief Valmet <>
Slide 4: Q2/2018 in brief
Q2/2018 in brief Orders received increased to EUR 445 million in stable business1 Orders received increased to EUR 438 million in capital business2 Net sales increased to EUR 844 million Order backlog remained at the previous year’s level at EUR 2.6 billion Comparable EBITA increased to EUR 61 milli
Slide 5: Valmet in Q2/2018
Valmet in Q2/2018 Orders received by business line Orders received by area Orders received 6% EUR 865 million 15% Net sales 23% 7% EUR 844 million 41% 40% Comparable EBITA EUR 61 million Comparable EBITA margin 7.2% 10% 10% 49% Employees Services North America 12,668 Automation South America Pulp an
Slide 6: Orders received increased to EUR 865 million in Q2/2018
Orders received increased to EUR 865 million in Q2/2018 Orders received (EUR million) Orders received in Q1–Q2/2018 by area 1,400 3,500 Asia-Pacific 9% North America 1,200 3,000 23% 1,000 2,500 China 17% 800 2,000 600 1,500 South 1,101 America 1,023 1,005 857 890 865 6% 400 781 725 793 803 788 796 7
Slide 7: Stable business orders received totaled EUR 1,626 million during the last four quarters
Stable business orders received totaled EUR 1,626 million during the last four quarters Orders received (EUR million) in stable business1 600 1,800 500 445 1,500 443 439 409 424 402 394 372 383 400 344 88 359 93 102 1,200 330 342 88 103 95 81 293 87 75 101 300 267 273 273 75 80 900 242 78 200 600 32
Slide 8: Order backlog at EUR 2,621 million at the end of Q2/2018
Order backlog at EUR 2,621 million at the end of Q2/2018 Order backlog (EUR million) Structure of order backlog 3,000 2,500 2,704 2,714 2,720 2,583 2,621 2,406 2,458 2,312 2,283 2,000 2,208 2,207 2,192 2,117 2,074 2,106 1,972 1,998 2,064 ~30% 1,500 1,000 ~70% 500 0 Stable business Capital business Q
Slide 9: Development of the business lines
Development of the business lines
Slide 10: Services: Orders received and net sales increased
Services: Orders received and net sales increased Orders received (EUR million) Net sales (EUR million) Q1–Q2/2017: Q1–Q2/2018: Q1–Q2/2017: Q1–Q2/2018: EUR 676 million EUR 690 million EUR 554 million EUR 572 million 400 1,600 400 1,600 355 346 344 340 350 313 321 321 1,400 350 314 316 325 1,400 293
Slide 11: Automation: Orders received remained at the previous year's level and net sales increased
Automation1: Orders received remained at the previous years level and net sales increased Orders received2 (EUR million) Net sales2 (EUR million) Q1–Q2/2017: Q1–Q2/2018: Q1–Q2/2017: Q1–Q2/2018: EUR 192 million EUR 195 million EUR 152 million EUR 159 million 120 103 450 120 115 450 101 102 101 99 95
Slide 12: Pulp and Energy: Orders received decreased and net sales increased
Pulp and Energy: Orders received decreased and net sales increased Orders received (EUR million) Net sales (EUR million) Q1–Q2/2017: Q1–Q2/2018: Q1–Q2/2017: Q1–Q2/2018: EUR 406 million EUR 278 million EUR 381 million EUR 408 million 700 1,400 700 1,400 622 600 560 1,200 600 1,200 500 1,000 500 1,000
Slide 13: Paper: Orders received and net sales increased
Paper: Orders received and net sales increased Orders received (EUR million) Net sales (EUR million) Q1–Q2/2017: Q1–Q2/2018: Q1–Q2/2017: Q1–Q2/2018: EUR 557 million EUR 623 million EUR 310 million EUR 460 million 400 1,200 400 1,200 353 350 314 1,050 350 1,050 304 300 275 270 900 300 900 246 243 250
Slide 14: Financial development
Financial development Valmet <>
Slide 15: Key figures
Key figures EUR million Q2/2018 Q2/2017 Change Q1–Q2/2018 Q1–Q2/2017 Change Orders received 865 796 9% 1,756 1,802 -3% Order backlog1 2,621 2,714 -3% 2,621 2,714 -3% Net sales 844 732 15% 1,575 1,376 14% Comparable EBITA 61 48 27% 82 82 1% % of net sales 7.2% 6.5% 5.2% 5.9% EBITA 57 47 22% 76 84 -10
Slide 16: 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) 250 23% 25% 250 25% 200 20% 200 20% 16% 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 Q2/2016 Q3/2016
Slide 17: Comparable EBITA margin development
Comparable EBITA margin development Net sales and Comparable EBITA (EUR million and %) 967 Target 8–10% 854 7.8% 844 804 7.5% 777 779 785 8.4% 7.2% 734 732 715 732 6.1% 685 7.3% 652 7.1% 7.2% 645 588 590 6.9% 5.3% 561 6.4% 6.5% 519 4.8% Capital business 5.5% 523 3.7% 3.5% 445 375 442 Stable business
Slide 18: Cash flow provided by operating activities
Cash flow provided by operating activities Cash flow provided by operating activities (EUR million) 2014: 2015: 2016: 2017: Q1–Q2/2018: EUR 236 million EUR 78 million EUR 246 million EUR 291 million EUR 22 million 140 120 117 122 100 80 88 94 89 60 78 64 40 43 46 20 30 33 31 17 16 3 19 3 0 -20 -20 -
Slide 19: Net working capital at -11% of rolling 12 months orders received
Net working capital at -11% of rolling 12 months orders received Net working capital and orders received (EUR million) 1,500 30% 1,000 1,101 20% 1,023 1,005 857 890 865 781 725 793 803 788 796 743 727 500 692 10% 580 466 480 0 0% -235 -249 -317 -265 -244 -238 -194 -181 -265 -294 -335 -345 -353 -378
Slide 20: Net debt decreased compared with Q2/2017
Net debt decreased compared with Q2/2017 Net debt (EUR million) and gearing (%) Equity to assets ratio (%) 300 27% 30% 45% 24% 42% 41% 41% 42% 41% 21% 38% 39% 39% 40% 37% 200 231 20% 36% 35% 36% 15% 35% 178 192 100 126 6% 10% 30% 4% 52 31 0% 25% 0 -3% -3% 0% -27 -30 -4 20% -100 -102 -100 -10% 15% -1
Slide 21: Capital employed and Comparable ROCE
Capital employed and Comparable ROCE Capital employed (EUR million) and Comparable return on capital employed (ROCE), before taxes1 (%) 1,239 1,240 1,214 1,231 1,184 1,194 1,167 1,195 1,112 1,138 1,141 1,137 Target 16% 1,033 1,049 985 15–20% 967 17% 902 14% 14% 14% 14% 14% 877 13% 13% 13% 16% 12% 12
Slide 22: Guidance and short-term market outlook
Guidance and short-term market outlook
Slide 23: Guidance and short-term market outlook
Guidance and short-term market outlook Guidance for 2018 (as announced on July 17, 2018) Valmet estimates that net sales in 2018 will increase in comparison with 2017 (EUR 3,058 million) and Guidance Comparable EBITA in 2018 will increase in comparison with 2017 (EUR 218 million). Short-term market
Slide 24: Summary of Q2/2018
Summary of Q2/2018 Valmet <>
Slide 25: Q2/2018 in brief
Q2/2018 in brief Orders received increased to EUR 445 million in stable business1 Orders received increased to EUR 438 million in capital business2 Net sales increased to EUR 844 million Order backlog remained at the previous year’s level at EUR 2.6 billion Comparable EBITA increased to EUR 61 milli
Slide 26: Appendix
Appendix Valmet <>
Slide 27: Structure of loans and borrowings
Structure of loans and borrowings Interest-bearing debt EUR 201 million as at June 30, 2018 Amount of outstanding interest-bearing debt Main financing sources and facilities (EUR million) 250 Source Amount outstanding Loans from banks and EUR 201 million 200 financial institutions 150 EUR 200 millio
Slide 28: Largest shareholders on June 30, 2018
Largest shareholders on June 30, 2018 Based on the information given by Euroclear Finland Ltd. Largest shareholders # Shareholder name Number of shares % of shares and votes 1 Solidium Oy1 16,695,287 11.14% 2 Varma Mutual Pension Insurance Company 4,165,465 2.78% 3 Elo Pension Company 3,600,000 2.40
Slide 29: Shareholder structure on June 30, 2018
Shareholder structure on June 30, 2018 Nominee registered and non-Finnish holders 49.5% Solidium Oy 11.1% Finnish private investors 13.4% Finnish institutions, companies and foundations 25.9% Sector Number of shareholders % of total shareholders Number of shares % of shares Nominee registered and no
Slide 30: Share of non-Finnish holders and number of shareholders
Share of non-Finnish holders and number of shareholders 56% 59,000 57,000 54% 55,000 52% 53,000 50% 51,000 48% 49,000 46% 47,000 44% 45,000 42% 43,000 01/2014 04/2014 07/2014 10/2014 01/2015 04/2015 07/2015 10/2015 01/2016 04/2016 07/2016 10/2016 01/2017 04/2017 07/2017 10/2017 01/2018 04/2018 Non-F
Slide 31: Pulp and paper price trends
Pulp and paper price trends 1,300 1,200 1,100 1,000 900 800 700 600 500 400 300 200 Jan-13 Jan-16 Jan-18 Jan-14 Jan-15 Jan-17 May-13 May-14 May-15 May-16 May-17 May-18 Jul-13 Jul-15 Jul-17 Jul-18 Jul-14 Jul-16 Nov-13 Nov-14 Nov-15 Nov-16 Nov-17 Sep-13 Sep-16 Sep-14 Sep-15 Sep-17 Mar-14 Mar-16 Mar-13
Slide 32: Crude oil, steam coal, natural gas and electricity: Europe
Crude oil, steam coal, natural gas and electricity Europe 140 120 100 80 60 40 20 0 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 CIF ARA steam coal (USD/t) Brent crude oil (USD/barrel) Natural gas spot price NBP (GBP/therm) 100 80 60 40 20 0 -20 Jan-13 Jul-13 J
Slide 33: Crude oil, steam coal, natural gas and electricity: United States
Crude oil, steam coal, natural gas and electricity United States 120 6 100 5 80 4 60 3 40 2 20 1 FOB steam coal Richards Bay (USD/t) (LHS) WTI crude oil (USD/barrel) (LHS) Henry Hub gas (USD/MMBtu) (RHS) 250 85 200 80 150 75 100 70 50 0 65 Electricity spot price, PJM (USD/MWh) (LHS) Electricity spot
Slide 34: European Carbon Emission Allowance
34 16 10 12 14 18 0 2 4 6 8 Jan-13 Mar-13 July 25, 2018 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 © Valmet | Half Year Financial Review, January–June 2018 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 European Carbon Emission Allowance Jul-16 Sep-16 Europ
Slide 35: Important notice
Important notice IMPORTANT: 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 presentation (collectively, the “Information”). In
Slide 36: Interim Review January–September 2018 and Capital Markets Day
January–September 2018 Interim Review October 23, 2018 www.valmet.com/investors Register now for Valmet’s Capital Markets Day September 18, 2018 Helsinki, Finland For more information, contact Valmet’s IR 36 July 25, 2018 © Valmet | Half Year Financial Review, January–June 2018
Slide 37: Forward
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