Valmet's Interim Review January 1-September 30, 2018: Orders received increased in all business lines - Comparable EBITA increased
Valmet Oyj's stock exchange release on October 23, 2018 at 12:00 noon EET
Figures in brackets, unless otherwise stated, refer to the comparison period, i.e. the same period of the previous year. The comparison period figures have been restated following the adoption of IFRS 15 as of January 1, 2018.
July-September 2018: Comparable EBITA margin increased to 8 percent
- Orders received increased 27 percent to EUR 940 million (EUR 743 million).
- Orders received increased in all business lines.
- Orders received increased in Asia-Pacific, North America and EMEA (Europe, Middle East and Africa), remained at the previous year's level in China, and decreased in South America.
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- Net sales increased 7 percent to EUR 765 million (EUR 715 million).
- Net sales increased in the Paper, Pulp and Energy, and Automation business lines, and remained at the previous year's level in the Services business line.
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- Comparable earnings before interest, taxes and amortization (Comparable EBITA) were EUR 61 million (EUR 56 million), and the corresponding Comparable EBITA margin was 8.0 percent (7.8%).
- Profitability improved due to higher net sales.
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- Earnings per share were EUR 0.23 (EUR 0.18).
- Items affecting comparability amounted to EUR -6 million (EUR -6 million).
- Cash flow provided by operating activities was EUR 119 million (EUR 78 million).
January-September 2018: Orders received and net sales increased
- Orders received increased to EUR 2,696 million (EUR 2,544 million).
- Orders received increased in the Paper business line and remained at the previous year's level in all other business lines.
- Orders received increased in North America, South America and Asia-Pacific, and remained at the previous year's level in China and EMEA.
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- Net sales increased 12 percent to EUR 2,340 million (EUR 2,091 million).
- Net sales increased in the Paper, and Pulp and Energy business lines and remained at the previous year's level in the Services and Automation business lines.
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- Comparable earnings before interest, taxes and amortization (Comparable EBITA) were EUR 144 million (EUR 138 million), and the corresponding Comparable EBITA margin was 6.2 percent (6.6%).
- Profitability decreased due to a loss of EUR 15 million recognized in a project in the Pulp and Energy business line in the first quarter of 2018.
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- Earnings per share were EUR 0.52 (EUR 0.48).
- Items affecting comparability amounted to EUR -13 million (EUR -5 million).
- Cash flow provided by operating activities was EUR 141 million (EUR 203 million).
Guidance for 2018 unchanged
Valmet reiterates its guidance presented on July 17, 2018, in which Valmet estimates that net sales in 2018 will increase in comparison with 2017 (EUR 3,058 million) and Comparable EBITA in 2018 will increase in comparison with 2017 (EUR 218 million).
Short-term outlook
General economic outlook
The steady expansion under way since mid-2016 continues, with global growth for 2018-19 projected to remain at its 2017 level (3.7 percent). At the same time, however, the expansion has become less balanced and may have peaked in some major economies. Downside risks to global growth have risen in the past six months and the potential for upside surprises has receded. While financial market conditions remain accommodative in advanced economies, they could tighten rapidly if, for example, trade tensions and policy uncertainty were to intensify. (International Monetary Fund, October 2018)
Short-term market outlook
Valmet estimates that the short-term market outlook has improved to a satisfactory level in pulp (previously weak level). Valmet reiterates the good short-term market outlook for services, automation, board and paper, and tissue, and the satisfactory short-term market outlook for energy.
President and CEO Pasi Laine: Orders received increased in all business lines and pushed the order backlog to a record-high level
"The third quarter of 2018 was characterized by high market activity, and Valmet's orders received increased 27 percent to EUR 940 million. Orders received for the last twelve months now stand at EUR 3.4 billion. Orders received increased in all business lines in the third quarter, and Valmet's order backlog reached a record-high level of EUR 2.8 billion.
Net sales increased 7 percent in the third quarter while Comparable EBITA increased 10 percent. The Comparable EBITA margin reached the lower end of our margin target, 8.0 percent, which is the second-highest quarterly margin for Valmet. There is still a lot of work to be done to keep the margin within the target range for longer than a single quarter.
In September, Valmet was included in the Dow Jones Sustainability Index (DJSI) for the fifth consecutive year. Maintaining our position among the sustainability leaders in the world is an excellent achievement. It shows that our systematic work to integrate sustainability into our business processes has been successful and we have managed to improve our performance every year."
Key figures1
| EUR million | Q3/2018 | Q3/2017 | Change | Q1-Q3/ 2018 | Q1-Q3/ 2017 | Change |
| Orders received | 940 | 743 | 27% | 2,696 | 2,544 | 6% |
| Order backlog2 | 2,791 | 2,720 | 3% | 2,791 | 2,720 | 3% |
| Net sales | 765 | 715 | 7% | 2,340 | 2,091 | 12% |
| Comparable earnings before interest, taxes and amortization (Comparable EBITA) | 61 | 56 | 10% | 144 | 138 | 5% |
| % of net sales | 8.0% | 7.8% | 6.2% | 6.6% | ||
| Earnings before interest, taxes and amortization (EBITA) | 55 | 49 | 12% | 131 | 133 | -1% |
| % of net sales | 7.2% | 6.9% | 5.6% | 6.4% | ||
| Operating profit (EBIT) | 48 | 41 | 16% | 109 | 109 | 0% |
| % of net sales | 6.3% | 5.8% | 4.7% | 5.2% | ||
| Profit before taxes | 46 | 38 | 22% | 105 | 100 | 5% |
| Profit for the period | 35 | 27 | 26% | 78 | 72 | 8% |
| Earnings per share, EUR | 0.23 | 0.18 | 26% | 0.52 | 0.48 | 8% |
| Earnings per share, diluted, EUR | 0.23 | 0.18 | 26% | 0.52 | 0.48 | 8% |
| Equity per share, EUR | 5.83 | 5.83 | 0% | 5.83 | 5.83 | 0% |
| Cash flow provided by operating activities | 119 | 78 | 52% | 141 | 203 | -31% |
| Cash flow after investments | 98 | 62 | 57% | 89 | 157 | -43% |
| Return on equity (ROE) (annualized)3 | 12% | 11% | ||||
| Return on capital employed (ROCE) before taxes (annualized)3 | 13% | 12% | ||||
| Equity to assets ratio2 | 43% | 41% | ||||
| Gearing2 | -11% | -3% |
1 The calculation of key figures is presented on page 43 of the interim review.
2 At the end of period
3 In the calculation of 2017 figures, non-restated data points from 2016 have been used.
| Orders received, EUR million | Q3/2018 | Q3/2017 | Change | Q1-Q3/ 2018 | Q1-Q3/ 2017 | Change |
| Services | 300 | 284 | 6% | 990 | 960 | 3% |
| Automation | 70 | 62 | 12% | 235 | 225 | 4% |
| Pulp and Energy | 272 | 122 | >100% | 549 | 527 | 4% |
| Paper | 299 | 275 | 9% | 921 | 832 | 11% |
| Total | 940 | 743 | 27% | 2,696 | 2,544 | 6% |
| Order backlog, EUR million | As at Sep 30, 2018 | As at Sep 30, 2017 | Change | As at June 30, 2018 |
| Total | 2,791 | 2,720 | 3% | 2,621 |
| Net sales, EUR million | Q3/2018 | Q3/2017 | Change | Q1-Q3/ 2018 | Q1-Q3/ 2017 | Change |
| Services | 282 | 284 | -1% | 854 | 838 | 2% |
| Automation | 64 | 60 | 6% | 200 | 192 | 4% |
| Pulp and Energy | 223 | 200 | 11% | 631 | 581 | 9% |
| Paper | 196 | 170 | 15% | 657 | 480 | 37% |
| Total | 765 | 715 | 7% | 2,340 | 2,091 | 12% |
News conference and webcast for analysts, investors and media
Valmet will arrange a news conference in English for analysts, investors, and media on Tuesday, October 23, 2018 at 1:30 p.m. Finnish time (EET). The news conference will be held at Valmet Head Office in Keilaniemi, Keilasatama 5, 02150 Espoo, Finland. The news conference can also be followed through a live webcast at www.valmet.com/webcasts.
It is also possible to take part in the news conference through a conference call. Conference call participants are requested to dial in at least five minutes prior to the start of the conference, at 1:25 p.m. (EET), at +44 2071 928000. The participants will be asked to provide the following conference ID: 2967268.
During the webcast and the conference call, all questions should be presented in English. After the webcast and the conference call, media has a possibility to interview the management in Finnish.
The event can also be followed on Twitter at www.twitter.com/valmetir.
Further information, please contact:
Calle Loikkanen, Director, Investor Relations, Valmet, tel. +358 10 672 0020
Kari Saarinen, CFO, Valmet, tel. +358 10 672 9603
VALMET
Kari Saarinen
CFO
Calle Loikkanen
Director, Investor Relations
Valmet is the leading global developer and supplier of process technologies, automation and services for the pulp, paper and energy industries. We aim to become the global champion in serving our customers.
Valmet's strong technology offering includes pulp mills, tissue, board and paper production lines, as well as power plants for bioenergy production. Our advanced services and automation solutions improve the reliability and performance of our customers' processes and enhance the effective utilization of raw materials and energy.
Valmet's net sales in 2017 were approximately EUR 3.1 billion. Our more than 12,000 professionals around the world work close to our customers and are committed to moving our customers' performance forward - every day. Valmet's head office is in Espoo, Finland and its shares are listed on the Nasdaq Helsinki.
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