Valmet Corp · OMXHEX:VALMT
Valmet — Q3 2014 Earnings Presentation
38 slides from Valmet's earnings presentation, Oct 24, 2014
Slide 1: Profitability continued to improve and is moving towards the targeted level
Profitability continued to improve and is moving towards the targeted level Interim Review, January–September 2014 October 24, 2014 Pasi Laine, President and CEO Markku Honkasalo, CFO
Slide 2: Agenda
Agenda Interim Review, January–September 2014 1 Q3/2014 in brief 2 Business lines’ development 3 Financial development 4 Guidance and short-term market outlook 5 Summary of Interim Review Q3/2014 6 Appendix 2 October 24, 2014 © Valmet
Slide 3: Q3/2014 in brief
Q3/2014 in brief Valmet <>
Slide 4: Q3/2014 in brief
Q3/2014 in brief Orders received on a par with Q3/2013 in services • Services orders on a par with Q3/2013 • Net sales decreased compared with Q3/2013 Orders received slowed down in capital business from high level in H1/2014 • Orders received increased in Paper, and Pulp and Energy compared with Q3
Slide 5: Key figures Q3/2014
Key figures Q3/2014 EUR million Q3/2014 Q3/2013 Change Q1-Q3/2014 Q1-Q3/2013 Change Orders received 466 382 22% 2,590 1,754 48% Order backlog1 2,312 1,658 39% 2,312 1,658 39% Net sales 590 601 -2% 1,697 1,946 -13% EBITA2 32 31 4% 58 79 -27% % of net sales 5.5% 5.1% 3.4% 4.1% EBIT3 26 -17 35 7 >100%
Slide 6: Orders received EUR 2.6 billion in Q1-Q3/2014
Orders received EUR 2.6 billion in Q1-Q3/2014 Orders received (EUR million), Orders received (EUR million), by business line by area 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 47 120 800 128 2,000 800 103 2,000 600 511 1,500 600 511 214 34 1,500 42
Slide 7: Order backlog at EUR 2.3 billion
Order backlog at EUR 2.3 billion Order backlog (EUR million) Structure of order backlog 3,000 2,500 ~20% +65% 2,406 2,312 2,000 1,883 1,972 1,807 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 Services business Capital business Cancelled Fibria order of EUR 331 million
Slide 8: Net sales and profitability development
Net sales and profitability development Net sales and EBITA before NRI (EUR million) 714 666 631 601 588 590 519 5.1% 5.5% EBITA target 6–9% 4.1% 3.7% 3.1% 0.7% -3.7% Services Capital 243 256 256 274 251 235 224 EBITA-% Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 EBITA before 26 22 31 -25 4 22 32 NRI
Slide 9: Good development in gross profit and SG&A expenses
Good development in gross profit and SG&A expenses Gross profit (EUR million and % of net sales) SG&A (EUR million and % of net sales) 140 35% 140 35% 120 30% 120 30% 100 25% 100 25% 80 20% 80 20% 60 15% 60 15% 40 10% 40 10% 20 5% 20 5% 0 0% 0 0% Q2/2013 Q1/2013 Q2/2013 Q3/2013 Q4/2013 Q1/2014 Q2/20
Slide 10: Key Must-Win objectives to improve profitability to the targeted level of 6–9%
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 increase gross profit Harmonization of Com
Slide 11: Business lines’ development
Business lines’ development
Slide 12: Stable development in Services
Stable development in Services Orders received (EUR million) Net sales (EUR million) Q1-Q3/2013: Q1-Q3/2014: Q1-Q3/2013: Q1-Q3/2014: EUR 799 million EUR 782 million EUR 756 million EUR 711 million 300 282 281 273 1,200 300 274 1,200 267 256 256 237 242 243 251 250 233 1,000 250 224 235 1,000 200 800
Slide 13: Orders received about EUR 1.3 bn in Q1-Q3/2014 in Pulp and Energy
Orders received about EUR 1.3 bn in Q1-Q3/2014 in Pulp and Energy Orders received (EUR million) Net sales (EUR million) Q1-Q3/2013: Q1-Q3/2014: Q1-Q3/2013: Q1-Q3/2014: EUR 579 million EUR 1,279 million EUR 667 million EUR 644 million 800 1,600 400 1,600 700 622 1,400 350 1,400 600 560 1,200 300 1,20
Slide 14: Orders received exceeded EUR 500 million in Q1-Q3/2014 in Paper
Orders received exceeded EUR 500 million in Q1-Q3/2014 in Paper Orders received (EUR million) Net sales (EUR million) Q1-Q3/2013: Q1-Q3/2014: Q1-Q3/2013: Q1-Q3/2014: EUR 376 million EUR 530 million EUR 524 million EUR 342 million 300 900 300 900 250 212 750 250 218 750 190 200 168 600 200 167 600 13
Slide 15: 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 16: Financial development
Financial development Valmet <>
Slide 17: Good cash flow
Good cash flow Cash flow provided by operating activities (EUR million) 140 120 100 117 80 60 40 43 46 20 12 0 -5 -12 -20 -38 -40 -60 Q1/2013 Q2/2013 Q3/2013 Q4/2013 Q2/2014 Q3/2014 Q1/2014 • At the end of September 2014, net working capital was EUR -345 million • CAPEX less than depreciation 17 Oct
Slide 18: Net debt, gearing and equity to assets ratio
Net debt, gearing and equity to assets ratio Net debt (EUR million) and gearing (%) Equity to assets ratio (%) 200 20% 45% 150 15% 8% 41% 41% 100 10% 40% 40% 40% 3% 40% 39% 39% 50 71 5% 0% 0% 0 30 0% 0 -1 -39 -54 -50 -5% 35% -5% -100 -7% -10% -158 -150 -15% -20% -200 -20% 30% Q1/13 Q2/13 Q3/13 Q4/13
Slide 19: Structure of loans and borrowings
Structure of loans and borrowings Amount of outstanding interest-bearing debt: EUR 100 million (Sep 30, 2014) Maturity profile of interest-bearing debt Main financing sources (EUR millions) EUR 82 million EIB loan 250 Maturing in: H2/2016 200 EUR 18 million other financing sources 150 100 200* Bac
Slide 20: Guidance and short-term market outlook
Guidance and short- term market outlook
Slide 21: Guidance and short-term market outlook
Guidance and short-term market outlook Guidance for 2014 (as given on February 6, 2014) Guidance for Valmet estimates that net sales in 2014 will decline from the 2013 2014 level and EBITA before non-recurring items will increase in comparison with 2013 Short-term market outlook Q4/2013 Q1/2014 Q2/2
Slide 22: Summary of Interim Review Q3/2014
Summary of Interim Review Q3/2014
Slide 23: Summary of Interim Review Q3/2014
Summary of Interim Review Q3/2014 Orders received stable in services and slowed down in capital business from high level in H1/2014 Net sales on previous year’s level in Q3/2014 Order backlog at EUR 2.3 billion Profitability improved according to plan Strong balance sheet and good cash flow 23 Octob
Slide 24: Questions & Answers
Questions & Capital Markets Answers Day 2015 Financial Statements Review for March 19, London 2014 will be published on February 6, 2015 24 October 24, 2014 © Valmet
Slide 25: Appendix
Appendix Valmet <>
Slide 26: Largest shareholders on September 30, 2014
Largest shareholders on September 30, 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 7,400,342 4.94% 3 Solero Luxco Sarl 5,349,756 3.57% 4 Ilmarinen Mutual Pension Insurance Compa
Slide 27: Ownership structure on September 30, 2014
Ownership structure on September 30, 2014 14.9% Nominee registered and non-Finnish holders 11.1% Finnish institutions, companies and foundations 52.0% Solidium Oy Finnish private investors 21.9% Sector Number of shareholders % of total shareholders Number of shares % of shares Nominee registered and
Slide 28: Share of non-Finnish holders and number of shareholders
Share of non-Finnish holders and number of shareholders 55% 60,000 54% 59,000 53% 58,000 52% 57,000 51% 56,000 50% 55,000 49% 54,000 48% 53,000 47% 52,000 46% 51,000 45% 50,000 12/2013 01/2014 02/2014 03/2014 04/2014 05/2014 06/2014 07/2014 08/2014 09/2014 Non-Finnish holders (LHS) Total number of s
Slide 29: 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 30: 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 31: Paper and board consumption growth trends
Paper and board consumption growth trends Paper and board consumption per capita vs. population Population growth in 250 2,500 emerging markets is 200 2,000 larger than in developed markets 150 1,500 100 1,000 Level of consumption per capita in 50 500 emerging markets 0 0 clearly below that in China
Slide 32: Tissue consumption growth trends
Tissue consumption growth trends Tissue consumption per capita vs. population New products and 2,500 25 consumption models 2,000 20 based on tissue are helping increase 1,500 15 consumption in 1,000 10 developed markets 500 5 0 0 Consumption in emerging markets is China Rest of Asia Oceania Africa L
Slide 33: Pulp and paper price trends
33 1,000 1,200 200 600 800 0 400 Source: Bloomberg 1-Dec-07 October 24, 2014 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
Slide 34: 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 35: 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 36: European Carbon Emission Allowance price
36 0 1 2 3 4 5 6 7 8 9 2-Nov-12 23-Nov-12 Source: Bloomberg 14-Dec-12 4-Jan-13 October 24, 2014 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
Slide 37: 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 38: Forward
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