Questions and answers related to Financial Statements Review 2015

Why did the profitability (EBITA %) increase y-o-y? (Compared to Q4 2014)

• Profitability improved due to increased net sales in Services and Paper business lines, improved gross profit, and the acquisition of Automation.

Why did the profitability (EBITA %) increase q-o-q? (Compared to Q3 2015)

• Higher business volumes especially in stable business.

Why did the profitability (EBITA %) increase in 2015? (Compared to 2014)

• Profitability improved due to increased net sales in Services and Paper business lines, improved gross profit, and the acquisition of Automation.

Why was the cash flow weaker in 2015 than in 2014?

• Change in net working capital, net of effect from business combinations and disposals in the condensed consolidated statement of cash flows was EUR -121 million (EUR 103 million) in 2015. Payment schedules of large capital projects have significant impact on net working capital development.

Why did orders received in Services decline by 7% at constant currencies?

• Orders received increased in North America and decreased in other areas.
• Orders received increased in Rolls, remained stable compared with Q4/2014 in Fabrics, and Performance Parts, and decreased in other business units.
• High comparison figures.
• Key issues to grow services are related to increase long term agreements, being close to customers.
• Long term outlook for services intact, service growth is strategic priority for Valmet.

Which are the most active areas from geographical point of view?

• Good overall activity, orders received increased in all areas in Q4/2015
• China was strong in Q4/2015, orders tripled y-o-y, North America almost doubled, EMEA largest in euros.
• Quarterly variations have been and will be large.

Has the margin on the order backlog improved?

• When we have reasonable backlog, we have better possibilities to be selective on new orders.
• Pricing environment has remained challenging.

How has the pricing been in new orders?

• No change in pricing environment.
• New orders sold at market price.

SG&As increased to EUR 141 million (EUR 109 million Q4/2014), how much was related to Automation? Are the cost starting to increase?

• Increase without Automation was EUR 1 million.
• We have continuous focus on cost control.
• We have focused our competences close to our customers.

What are the assumptions for the guidance for 2016?

• Guidance is based on our order backlog and internal estimates for 2016.
• Our internal estimates are based on year-end currencies.

What are the key drivers for higher EBITA in 2016?

• Automation in Valmet for full year in 2016.
• Implementation of our Must Wins.
• Better internal efficiency, better project execution, savings in quality and procurement.

How much more orders can you take based on current capacity?

• Capacity situation varies between business areas, but we certainly have the possibility to take more orders.