Key messages from the Capital Markets Day

Valmet held a Capital Markets Day on March 10, 2021. The virtual event consisted of presentations by the president and CEO, the CFO and all four business line presidents. More than 200 participants followed the live event, the recording of which is available here together with the presentation slides.

Pasi Laine, President and CEO, started the event by reconfirming Valmet’s strategy. Looking at the numbers, the strategy has proven effective. Due to the COVID-19 pandemic, orders received declined in 2020, but net sales, comparable EBITA and comparable EBITA margin continued to increase year over year. The long-term market trends are positive for Valmet, and the company has improved its operations from all four strategic perspectives: customer, technology, process and people. The systematic development in these four fronts continues.

Pasi also introduced Valmet’s Climate Program Forward to carbon neutral future which was launched on the same day. It sets targets to reduce CO₂ emissions in Valmet’s supply chain by 20% and in own operations by 80% by year 2030. As the biggest potential impact is in the use phase of Valmet’s technologies, we also set targets to reduce energy use of our current technologies by 20% and to enable a carbon neutral production for our customers by 2030. The program is aligned with the Paris Climate Agreement’s 1.5-degree pathway and UN Sustainable Development Goals, and Valmet is in process to send its climate targets for the Science Based Targets Initiative for validation.

Aki Niemi, President of the Services business line, started his presentation with Valmet’s comprehensive service offering. The market drivers backing up services demand include increasing pulp, tissue, board and energy production, as well as customer demand for resource efficiency and productivity. Valmet has strengthened its services business in recent years e.g. through acquisitions and development of remote services and Industrial Internet. Next steps include developing new offering e.g. in field services and services personnel’s strategic competencies.

Valmet’s automation offering consists of distributed control systems, quality management applications, analyzers and measurements, Industrial Internet solutions and automation services. Like for services, raw material savings, process efficiencies and sustainability are key drivers also for automation demand. Aging machines and automation systems, investments in new production lines and digitalization also play their part in the good market outlook for automation. Sami Riekkola, President of the Automation business line, said that Valmet’s new, web-based DNA User Interface for control rooms has been well received by the customers. The business line will further develop utilization of virtual support concepts to strengthen local competencies close to customers and aims to grow outside of pulp and paper.

The Paper business line’s annual order intake has exceeded EUR 1 billion in the last four years. World trade, e-commerce and emerging market growth drive packaging, as well as shift from plastics to renewable materials. Tissue demand is driven by rising purchasing power and living standards, urbanization, and recently also by higher hygiene standards. The president of the Paper business line, Jari Vähäpesola, said that after the acquisition of the PMP Group last year, the business line is now introducing PMP’s technology offering through Valmet’s global sales network. New development is ongoing e.g. to produce fossil free 3D fiber products and to create non-plastic barriers for liquids packaging. Together with customers, Valmet has remotely commissioned and started up new tissue and board machine installations. The development of Industrial Internet solutions continues.

According to the President of the Pulp and Energy business line Bertel Karlstedt, the very active investment cycle in pulp will continue. Most of the new mega mills will come to South America, but some also to Asia, while the demand for northern softwood is driving investments in the Nordics. Valmet announced recently that it will supply technology for a new textile recycling plant in Sweden. Textile recycling is still in its infancy, providing business opportunities for Valmet. In the energy side, decarbonization of energy production and tightening air emission regulation drive modernization of power plants.

The CFO Kari Saarinen said that Valmet’s total shareholder return up to the end of February had been EUR 3.8 billion, or 380%. Share price has increased by as much as 318%, and on top of that Valmet has paid dividends of more than 50% of net profit every year. The total dividend payout since 2013 has been EUR 610 million, when including also the proposed dividend for 2020. The financial targets set in February 2020 are still valid. Valmet aims for margin improvement with the same means as before: stable business growth, project management and execution, design-to-cost and supplier relations, global footprint development and R&D. Digitalization improves internal efficiency, and the new ERP will bring savings from 2023 onwards. Valmet’s acquisition strategy is to make selective acquisitions with a clear industrial logic.

We got many questions to the presenters through the chat. Valmet’s business opportunities in textile recycling and other new areas evoked discussion, as well as the plan with Neles ownership, other acquisition plans and management’s debt appetite. Other discussion topics included the ERP renewal project and machine conversions from paper to board. Thank you for the interest towards Valmet and the active participation!