Valmet Corp · OMXHEX:VALMT
Valmet — Q2 2014 Earnings Presentation
37 slides from Valmet's earnings presentation, Jul 31, 2014
Slide 1: Interim Review, January–June 2014
Strong development in orders received continued – profitability improvement proceeding according to plan Interim Review, January–June 2014 July 31, 2014 Pasi Laine, President and CEO Markku Honkasalo, CFO
Slide 2: Agenda
Agenda Interim Review, January–June 2014 1 Q2/2014 in brief 2 Business lines’ development 3 Financial development 4 Guidance and short-term market outlook 5 Summary of Interim Review Q2/2014 6 Appendix 2 July 31, 2014 © Valmet
Slide 3: Q2/2014 in brief
Q2/2014 in brief Valmet <>
Slide 4: Q2/2014 in brief
Q2/2014 in brief Stable development in services • Services orders received on a par with Q2/2013 • Net sales stable compared with Q2/2013 Success in orders received continued in capital business • Orders received increased in the Paper, and Pulp and Energy business lines • Net sales remained on a pa
Slide 5: Key figures Q2/2014
Key figures Q2/2014 EUR million Q2/2014 Q2/2013 Change Q1-Q2/2014 Q1-Q2/2013 Change Orders received 1,023 861 19% 2,124 1,372 55% Order backlog1 2,406 1,883 28% 2,406 1,883 28% Net sales 588 714 -18% 1,107 1,345 -18% EBITA2 22 22 -3% 26 48 -47% % of net sales 3.7% 3.1% 2.3% 3.4% EBIT3 16 5 >100% 9 2
Slide 6: Continued strong development in orders received
Continued strong development in orders received 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 2,500 190 422 120 800 128 2,000 800 47 2,000 103 600 511 1,500 600 511 214 34 1,500
Slide 7: Order backlog increased by EUR 434 million compared with Q1/2014
Order backlog increased by EUR 434 million compared with Q1/2014 Order backlog (EUR million) Structure of order backlog 3,000 2,500 ~20% 2,406 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 Services business Capital business Cancelled Fibria order of E
Slide 8: Net sales and profitability development
Net sales and profitability development Net sales and EBITA before NRI (EUR million) 714 666 631 601 588 519 EBITA target 6–9% 5.1% 4.1% 3.7% 3.1% 0.7% -3.7% Services Capital 243 256 257 274 251 224 EBITA-% Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 EBITA before 26 22 31 -25 4 22 NRI (MEUR) • Net sales dec
Slide 9: Profitability improvement continues to be focus area for Valmet
Profitability improvement continues to be focus area for Valmet 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% Q1/2013 Q2/2013 Q3/2013 Q4/2013 Q1/2014
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 business line
Stable development in Services business line Orders received (EUR million) Net sales (EUR million) Q1-Q2/2013: Q1-Q2/2014: Q1-Q2/2013: Q1-Q2/2014: EUR 563 million EUR 540 million EUR 499 million EUR 475 million 300 282 281 273 1,200 300 274 1,200 267 256 257 237 243 251 250 233 1,000 250 224 1,000 2
Slide 13: Orders received continued on a good level in Pulp and Energy
Orders received continued on a good level in Pulp and Energy Orders received (EUR million) Net sales (EUR million) Q1-Q2/2013: Q1-Q2/2014: Q1-Q2/2013: Q1-Q2/2014: EUR 513 million EUR 1,182 million EUR 461 million EUR 410 million 800 1,600 400 1,600 700 622 1,400 350 1,400 600 560 1,200 300 1,200 452
Slide 14: Strong development in orders received in Paper
Strong development in orders received in Paper Orders received (EUR million) Net sales (EUR million) Q1-Q2/2013: Q1-Q2/2014: Q1-Q2/2013: Q1-Q2/2014: EUR 296 million EUR 402 million EUR 384 million EUR 222 million 300 900 300 900 250 212 750 250 218 750 190 200 168 600 200 167 600 138 152 150 128 450
Slide 15: Customer activity has increased in 2014
Customer activity has increased in 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 power boiler Pulp and Energy Sw
Slide 16: Financial development
Financial development Valmet <>
Slide 17: Positive cash flow
Positive cash flow Cash flow provided by operating activities (EUR million) 60 50 40 46 43 30 20 10 12 0 -10 -5 -12 -20 -30 -38 -40 -50 Q1/2013 Q2/2013 Q3/2013 Q4/2013 Q1/2014 Q2/2014 • At the end of June 2014, net working capital was EUR -249 million • CAPEX less than depreciation 17 July 31, 2014
Slide 18: Net debt, gearing and equity ratio
Net debt, gearing and equity ratio Net debt (EUR million) and gearing (%) Equity ratio (%) 80 71 20% 45% 60 15% 41% 40 30 8% 40% 40% 40% 10% 40% 39% 39% 20 3% 5% 0 0% 0% 0 -1 0% -20 -5% -7% 35% -5% -40 -39 -60 -10% -54 -80 -15% 30% Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2
Slide 19: Structure of loans and borrowings
Structure of loans and borrowings Amount of outstanding interest-bearing debt: EUR 185 million (Jun 30, 2014) Maturity profile of interest-bearing debt Main financing sources (EUR millions) EUR 89 million EIB loan 250 Maturing in: H2/2016 200 EUR 72 million bank loan Maturing in: H1/2016 150 EUR
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 Q3/2013 Q4/2013 Q1/2
Slide 22: Summary of Interim Review Q2/2014
Summary of Interim Review Q2/2014
Slide 23: Q2/2014 in brief
Q2/2014 in brief Stable development in services • Services orders received on a par with Q2/2013 • Net sales stable compared with Q2/2013 Success in orders received continued in capital business • Orders received increased in the Paper, and Pulp and Energy business lines • Net sales remained on a pa
Slide 24: Appendix
Appendix Valmet <>
Slide 25: Largest shareholders on June 30, 2014
Largest shareholders on June 30, 2014 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 Ilmarinen Mutual Pension Insurance Company 4,292,126 2.86% 3 Nordea Nordenfonden 3,327,700
Slide 26: Ownership structure on June 30, 2014
Ownership structure on June 30, 2014 14.6% Nominee registered and non-Finnish holders 11.1% Finnish institutions, companies and foundations 53.7% Solidium Oy Finnish private investors 20.6% Sector Number of shareholders % of total shareholders Number of shares % of shares Nominee registered and non-
Slide 27: Share of non-Finnish holders and number of shareholders
Share of non-Finnish holders and number of shareholders 55% 59,000 54% 58,000 53% 57,000 52% 56,000 51% 55,000 50% 54,000 49% 53,000 48% 52,000 47% 51,000 46% 50,000 45% 49,000 44% 48,000 12/2013 01/2014 02/2014 03/2014 04/2014 05/2014 06/2014 Non-Finnish holders (LHS) Total number of shareholders (
Slide 28: 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 29: 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 30: 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 31: 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 32: Pulp and paper price trends
32 1,000 1,200 200 600 800 0 400 Source: Bloomberg 1-Dec-07 July 31, 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 Pulp and paper price trends 1-Jun-11 1-Se
Slide 33: 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 CIF ARA steam coal (USD/t) (LHS) Brent crude oil (USD/barrel) (LHS) Natural
Slide 34: Crude oil, steam coal, natural gas and electricity: United States
Crude oil, steam coal, natural gas and electricity United States 140 6 120 5 100 4 80 3 60 2 40 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 FOB steam coal Richards Bay (USD/t) (LHS) WTI crude oil (USD/barrel) (LHS) Henry Hub gas (USD/MM
Slide 35: European Carbon Emission Allowance price
35 0 1 2 3 4 5 6 7 8 9 2-Nov-12 16-Nov-12 Source: Bloomberg 30-Nov-12 July 31, 2014 14-Dec-12 28-Dec-12 11-Jan-13 25-Jan-13 8-Feb-13 22-Feb-13 © Valmet 8-Mar-13 22-Mar-13 5-Apr-13 19-Apr-13 3-May-13 17-May-13 31-May-13 14-Jun-13 28-Jun-13 12-Jul-13 26-Jul-13 9-Aug-13 23-Aug-13 6-Sep-13 20-Sep-13 4-O
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
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