Valmet’s Interim Review January 1 – September 30, 2020: Orders received decreased to EUR 700 million and Comparable EBITA increased to EUR 91 million in the third quarter

Valmet’s Interim Review January 1 – September 30, 2020: Orders received decreased to EUR 700 million and Comparable EBITA increased to EUR 91 million in the third quarter

Valmet Oyj’s stock exchange release on October 27, 2020 at 1:00 p.m. EET

Figures in brackets, unless otherwise stated, refer to the comparison period, i.e. the same period of the previous year.

July–September 2020: Orders received decreased and comparable EBITA increased

  • Orders received decreased 34 percent to EUR 700 million (EUR 1,058 million).
    • Orders received increased in the Paper business line, and decreased in the Pulp and Energy, Automation and Services business lines.
    • Orders received increased in China, and decreased in South America, North America, Asia-Pacific and EMEA (Europe, Middle East and Africa).
  • Net sales remained at the previous year’s level and amounted to EUR 832 million (EUR 857 million).
    • Net sales increased in the Paper business line, remained at the previous year’s level in the Automation business line, and decreased in the Pulp and Energy, and Services business lines.
  • Comparable earnings before interest, taxes and amortization (Comparable EBITA) were EUR 91 million (EUR 81 million), and the corresponding Comparable EBITA margin was 10.9 percent (9.5%).
    • Comparable EBITA increased due to lower selling, general and administration (SG&A) expenses.
  • Earnings per share were EUR 0.38 (EUR 0.34).
  • Items affecting comparability amounted to EUR -3 million (EUR 1 million).
  • Cash flow provided by operating activities was EUR 94 million (EUR 126 million).

January–September 2020: Strong cash flow from operating activities

  • Orders received decreased 9 percent to EUR 2,712 million (EUR 2,976 million).
  • Orders received remained at the previous year’s level in the Paper and Services business lines, and decreased in the Pulp and Energy, and Automation business lines.
  • Orders received increased in China, and decreased in South America, North America, Asia-Pacific and EMEA.
  • Net sales increased 5 percent to EUR 2,573 million (EUR 2,444 million).
    • Net sales increased in the Pulp and Energy, and Paper business lines, remained at the previous year’s level in the Automation business line, and decreased in the Services business line.
  • Comparable earnings before interest, taxes and amortization (Comparable EBITA) were EUR 218 million (EUR 198 million), and the corresponding Comparable EBITA margin was 8.5 percent (8.1%).
  • Comparable EBITA increased due to higher net sales and as SG&A expenses did not increase.
  • Earnings per share were EUR 0.88 (EUR 0.80).
  • Items affecting comparability amounted to EUR -11 million (EUR -2 million).
  • Cash flow provided by operating activities was EUR 418 million (EUR 113 million).

Guidance for 2020 unchanged

Valmet reiterates its guidance issued on October 13, 2020, in which Valmet estimates that net sales in 2020 will remain at the previous year’s level in comparison with 2019 (EUR 3,547 million) and Comparable EBITA in 2020 will increase in comparison with 2019 (EUR 316 million).

Short-term market outlook

Valmet reiterates the good short-term market outlook for pulp, and board and paper, the good/satisfactory short-term market outlook for automation, the satisfactory short-term market outlook for energy, and tissue and the satisfactory/weak short-term market outlook for services.

President and CEO Pasi Laine: The strong development in Paper continued

“Valmet’s orders received amounted to EUR 700 million in the third quarter of 2020. Orders received increased in the Paper business line and in China. Orders received decreased in the Pulp and Energy, Automation and Services business lines. Our order backlog amounted to EUR 3,311 million. The short-term market outlook for pulp, and board and paper is good. 

Valmet’s net sales remained at the previous year’s level, and the Comparable EBITA increased to EUR 91 million, corresponding to a margin of 10.9 percent. Our balance sheet remained strong with a gearing of 18 percent.

The COVID-19 pandemic continued to impact our operations in the third quarter. Travel restrictions and lower capacity utilization in graphical paper mills had a negative impact on Services order intake and net sales. Despite COVID-19, Automation services order intake remained at the previous year's level, while capital order intake in Automation decreased. COVID-19 has not caused major impacts on Valmet's capital business. Our whole organization has  performed well under the new circumstances and found new ways to operate, which can be utilized to improve Valmet's processes also after the pandemic.  Furthermore, certain expenses were lower due to the pandemic.

In the beginning of July, Valmet acquired 14.9 percent of Neles. During the quarter, Valmet increased its ownership gradually to 29.5 percent and proposed a statutory merger between Valmet and Neles. We see that the combination would create excellent long-term value to the shareholders of both companies. It has excellent industrial logic and would form a strong platform for further business growth especially in automation systems and valves.

During the quarter, we entered into an agreement to acquire PMP Group in Poland. PMP supplies process technologies and services for tissue, board and paper machines globally, focusing on small and medium-sized tissue machines and board and paper machine rebuilds. PMP's product portfolio and presence in strategic markets will create new business opportunities for Valmet. The company employs about 650 people and we warmly welcome the new colleagues to Valmet.”

Key figures1

EUR million Q3/2020 Q3/2019 Change Q1–Q3/
2020		 Q1–Q3/
2019		 Change
Orders received 700  1,058  -34  % 2,712  2,976  -9  %
Order backlog2 3,311  3,425  -3  % 3,311  3,425  -3  %
Net sales 832  857  -3  % 2,573  2,444  5  %
Comparable earnings before interest, taxes and amortization (Comparable EBITA) 91  81  11  % 218  198  10  %
% of net sales 10.9  % 9.5  % 8.5  % 8.1  %
Earnings before interest, taxes and amortization (EBITA) 87  83  5  % 208  196  6  %
% of net sales 10.5  % 9.7  % 8.1  % 8.0  %
Operating profit (EBIT) 79  73  9  % 184  172  7  %
% of net sales 9.5  % 8.5  % 7.1  % 7.0  %
Profit before taxes 75  70  6  % 174  164  6  %
Profit for the period 57  51  12  % 131  121  9  %
Earnings per share, EUR 0.38  0.34  12  % 0.88  0.80  9  %
Earnings per share, diluted, EUR 0.38  0.34  12  % 0.88  0.80  9  %
Equity per share, EUR2 6.81  6.13  11  % 6.81  6.13  11  %
Cash flow provided by operating activities 94  126  -25  % 418  113  >100%
Cash flow after investments -380  102  -100  -102  -2  %
Return on equity (ROE) (annualized) 17  % 17  %
Return on capital employed (ROCE) before taxes (annualized) 17  % 19  %
Equity to assets ratio2 38  % 38  %
Gearing2 18  % 6  %
  1. The calculation of key figures is presented on page 44.
  2. At end of period.
Orders received, EUR million Q3/2020 Q3/2019 Change Q1–Q3/
2020		 Q1–Q3/
2019		 Change
Services 288  335  -14  % 1,014  1,064  -5  %
Automation 65  86  -25  % 238  263  -10  %
Pulp and Energy 52  395  -87  % 643  805  -20  %
Paper 295  243  22  % 818  844  -3  %
Total 700  1,058  -34  % 2,712  2,976  -9  %

 

Order backlog, EUR million As at Sep 30,2020 As at Sep 30,2019 Change As at June 30,2020
Total 3,311  3,425  -3  % 3,492 

 

Net sales, EUR million Q3/2020 Q3/2019 Change Q1–Q3/
2020		 Q1–Q3/
2019		 Change
Services 307  336  -9  % 924  973  -5  %
Automation 72  75  -4  % 218  221  -1  %
Pulp and Energy 211  231  -9  % 717  604  19  %
Paper 242  214  13  % 713  646  10  %
Total 832  857  -3  % 2,573  2,444  5  %

News conference and webcast for analysts, investors and media

Valmet will arrange a news conference in English as a live webcast at https://valmet.videosync.fi/2020-q3  on Tuesday, October 27, 2020 at 2:00 p.m. Finnish time (EET). President and CEO Pasi Laine and CFO Kari Saarinen will be presenting the results.

Recording of the webcast will be available shortly after the event at the same address.

It is 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

United Kingdom +44 3333000804
France +33 170750711
Germany +49 6913803430
Norway +47 23500243
Sweden +46 856642651
United States +1 6319131422

The participants will be asked to provide the following conference PIN: 25170683#. All questions should be presented in English.

The event can also be followed on Twitter at www.twitter.com/valmetir

Due to COVID-19 pandemic, the news conference cannot be attended on the spot.

Further information, please contact:

Pekka Rouhiainen, Director, Investor Relations, Valmet, tel. +358 10 672 0020
Kari Saarinen, CFO, Valmet, tel. +358 50 317 1830

VALMET 

Kari Saarinen
CFO

Pekka Rouhiainen
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 2019 were approximately EUR 3.5 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.

Read more www.valmet.com, www.twitter.com/valmetglobal

Follow Valmet IR on Twitter www.twitter.com/valmetir

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