Valmet’s Half Year Financial Review January 1 – June 30, 2019: Orders received increased to EUR 1.1 billion and Comparable EBITA to EUR 69 million
Valmet Oyj’s stock exchange release on July 23, 2019 at 3:00 p.m. EET
Figures in brackets, unless otherwise stated, refer to the comparison period, i.e. the same period of the previous year. As of January 1, 2019, Valmet has adopted IFRS 16 without restating the figures for the comparison period.
April–June 2019: Orders received amounted to EUR 1.1 billion
- Orders received increased 25 percent to EUR 1,083 million (EUR 865 million).
- Orders received increased in the Pulp and Energy, Paper, and Services business lines and remained at the previous year’s level in the Automation business line.
- Orders received increased in South America, North America, EMEA and Asia-Pacific, and decreased in China.
- Net sales increased 7 percent to EUR 901 million (EUR 844 million).
- Net sales increased in the Services and Automation business lines and remained at the previous year’s level in the Paper, and Pulp and Energy business lines.
- Comparable earnings before interest, taxes and amortization (Comparable EBITA) were EUR 69 million (EUR 61 million), and the corresponding Comparable EBITA margin was 7.7 percent (7.2%).
- Profitability improved due to increased net sales and higher gross profit.
- Earnings per share were EUR 0.26 (EUR 0.23).
- Items affecting comparability amounted to EUR -5 million (EUR -4 million).
- Cash flow provided by operating activities was EUR -44 million (EUR 3 million).
January–June 2019: Orders received increased and profitability improved
- Orders received increased 9 percent to EUR 1,918 million (EUR 1,756 million).
- Orders received increased in the Pulp and Energy, Automation and Services business lines and remained at the previous year’s level in the Paper business line.
- Orders received increased in South America and Asia-Pacific, remained at the previous year’s level in EMEA, and decreased in China and North America.
- Net sales remained at the previous year’s level at EUR 1,587 million (EUR 1,575 million).
- Net sales increased in the Services and Automation business lines and decreased in the Pulp and Energy, and Paper business lines.
- Comparable earnings before interest, taxes and amortization (Comparable EBITA) were EUR 117 million (EUR 82 million), and the corresponding Comparable EBITA margin was 7.3 percent (5.2%).
- Profitability improved due to higher gross profit.
- Earnings per share were EUR 0.47 (EUR 0.29).
- Items affecting comparability amounted to EUR -3 million (EUR -7 million).
- Cash flow provided by operating activities was EUR -14 million (EUR 22 million).
Guidance for 2019 unchanged
Valmet reiterates its guidance presented on February 26, 2019 and confirmed on April 1, 2019, in which Valmet estimates that net sales in 2019 will increase in comparison with 2018 (EUR 3,325 million) and Comparable EBITA in 2019 will increase in comparison with 2018 (EUR 257 million).
Short-term outlook
General economic outlook
Global economic growth is forecast to ease to a weaker-than-expected 2.6% in 2019 before inching up to 2.7% in 2020. Growth in emerging market and developing economies is expected to stabilize next year as some countries move past periods of financial strain, but economic momentum remains weak.
Emerging and developing economy growth is constrained by sluggish investment, and risks are tilted to the downside. These risks include rising trade barriers, renewed financial stress, and sharper-than-expected slowdowns in several major economies. Structural problems that misallocate or discourage investment also weigh on the outlook. Growth among advanced economies as a group is anticipated to slow in 2019, especially in the Euro Area, due to weaker exports and investment. (The World Bank Global Economic Prospects, June 2019)
Short-term market outlook
Valmet reiterates the good short-term market outlook for services, automation, pulp, and board and paper, and the satisfactory short-term market outlook for energy, and tissue.
President and CEO Pasi Laine: Orders received exceeded EUR 1 billion and profitability improved
“In the second quarter of 2019, orders received increased in the Pulp and Energy, Paper, and Services business lines and remained at the previous year’s level in the Automation business line. Valmet’s orders received increased to over EUR 1 billion, lifting the order backlog to a new record-high level of EUR 3.2 billion. Net sales increased and Comparable EBITA improved. The Comparable EBITA margin was 7.7 percent in the second quarter, 0.5 percentage points higher than a year ago.
During the quarter, Valmet completed the acquisitions of GL&V and J&L Fiber Services Inc. These acquisitions strengthen Valmet's services business and complement our technology offering for the pulp and paper industry customers. They also further strengthen Valmet’s capabilities globally and our local presence especially in North America. Following the acquisitions, the number of Valmet’s employees has increased to a total of 13,622.”
Key figures1
| EUR million | Q2/20192 | Q2/2018 | Change | Q1–Q2/ 20192 | Q1–Q2/ 2018 | Change |
| Orders received | 1,083 | 865 | 25% | 1,918 | 1,756 | 9% |
| Order backlog3 | 3,216 | 2,621 | 23% | 3,216 | 2,621 | 23% |
| Net sales | 901 | 844 | 7% | 1,587 | 1,575 | 1% |
| Comparable earnings before interest, taxes and amortization (Comparable EBITA) | 69 | 61 | 14% | 117 | 82 | 41% |
| % of net sales | 7.7% | 7.2% | 7.3% | 5.2% | ||
| Earnings before interest, taxes and amortization (EBITA) | 64 | 57 | 13% | 113 | 76 | 50% |
| % of net sales | 7.1% | 6.7% | 7.1% | 4.8% | ||
| Operating profit (EBIT) | 56 | 49 | 13% | 99 | 61 | 61% |
| % of net sales | 6.2% | 5.9% | 6.2% | 3.9% | ||
| Profit before taxes | 52 | 48 | 8% | 93 | 59 | 59% |
| Profit for the period | 39 | 35 | 10% | 70 | 43 | 62% |
| Earnings per share, EUR | 0.26 | 0.23 | 9% | 0.47 | 0.29 | 62% |
| Earnings per share, diluted, EUR | 0.26 | 0.23 | 9% | 0.47 | 0.29 | 62% |
| Equity per share, EUR3 | 5.96 | 5.63 | 6% | 5.96 | 5.63 | 6% |
| Cash flow provided by operating activities | -44 | 3 | -14 | 22 | ||
| Cash flow after investments | -217 | -18 | -204 | -9 | ||
| Return on equity (ROE) (annualized) | 15% | 10% | ||||
| Return on capital employed (ROCE) before taxes (annualized) | 17% | 11% | ||||
| Equity to assets ratio3 | 38% | 41% | ||||
| Gearing3 | 17% | 0% |
1 The calculation of key figures is presented on page 44.
2 Valmet implemented IFRS 16 – Leases as of January 1, 2019 by applying the simplified transition method and therefore 2018 figures are not restated.
3 At the end of period.
| Orders received, EUR million | Q2/2019 | Q2/2018 | Change | Q1–Q2/ 2019 | Q1–Q2/ 2018 | Change |
| Services | 371 | 344 | 8% | 729 | 690 | 6% |
| Automation | 82 | 84 | -1% | 177 | 166 | 7% |
| Pulp and Energy | 210 | 85 | >100% | 411 | 278 | 48% |
| Paper | 419 | 353 | 19% | 601 | 623 | -3% |
| Total | 1,083 | 865 | 25% | 1,918 | 1,756 | 9% |
| Order backlog, EUR million | As at June 30, 2019 | As at June 30, 2018 | Change | As at March 31, 2019 |
| Total | 3,216 | 2,621 | 23% | 3,001 |
| Net sales, EUR million | Q2/2019 | Q2/2018 | Change | Q1–Q2/ 2019 | Q1–Q2/ 2018 | Change |
| Services | 361 | 325 | 11% | 637 | 572 | 11% |
| Automation | 82 | 76 | 7% | 145 | 136 | 7% |
| Pulp and Energy | 212 | 205 | 3% | 372 | 408 | -9% |
| Paper | 246 | 237 | 4% | 432 | 460 | -6% |
| Total | 901 | 844 | 7% | 1,587 | 1,575 | 1% |
News conference and webcast for analysts, investors and media
Valmet will arrange a news conference in English for analysts, investors, and media on Tuesday, July 23, 2019 at 4:00 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 +44 2071 928000. The participants will be asked to provide the following conference ID: 2883129.
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 50 317 1830
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 2018 were approximately EUR 3.3 billion. Our more than 13,000 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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