Valmet’s Half Year Financial Review January 1 – June 30, 2023: Orders received amounted close to EUR 1.3 billion and Comparable EBITA increased to EUR 153 million in the second quarter
Valmet’s Half Year Financial Review January 1 – June 30, 2023: Orders received amounted close to EUR 1.3 billion and Comparable EBITA increased to EUR 153 million in the second quarter
Valmet Oyj’s stock exchange release on July 26, 2023 at 2:00 p.m. EEST
Figures in brackets, unless otherwise stated, refer to the comparison period, i.e., the same period of the previous year.
April–June 2023: Net sales, Comparable EBITA and Comparable EBITA margin increased
• Orders received remained at the previous year’s level and amounted to EUR 1,268 million (EUR 1,306 million).
– Orders received increased in the Automation segment and decreased in the Process Technologies and Services segments.
– Orders received increased in Asia-Pacific and South America, and decreased in EMEA (Europe, Middle East and Africa), North America and China.
• Net sales increased 10 percent to EUR 1,417 million (EUR 1,286 million).
– Net sales increased in all three segments.
• Comparable earnings before interest, taxes and amortization (Comparable EBITA) increased 25 percent to EUR 153 million (EUR 122 million).
– Comparable EBITA increased in the Services and Automation segments and remained at the previous year's level in the Process Technologies segment.
• Comparable EBITA margin was 10.8 percent (9.5%).
• Earnings per share (EPS) were EUR 0.54 (EUR 0.55). Adjusted EPS was EUR 0.60 (EUR 0.68).
• Items affecting comparability amounted to EUR 2 million (EUR 32 million).
• Cash flow provided by operating activities totaled EUR -37 million (EUR -85 million).
January–June 2023: Orders received, Net sales, Comparable EBITA and Comparable EBITA margin increased
• Orders received increased 7 percent to EUR 2,821 million (EUR 2,631 million).
– Orders received increased in the Automation and Services segments and decreased in the Process Technologies segment.
– Orders received increased in Asia-Pacific, South America and North America and decreased in China and EMEA.
• Net sales increased 22 percent to EUR 2,738 million (EUR 2,246 million).
– Net sales increased in all three segments.
• Comparable earnings before interest, taxes and amortization (Comparable EBITA) increased 42 percent to EUR 286 million (EUR 202 million).
– Comparable EBITA increased in the Automation and Services segments and decreased in the Process Technologies segment.
• Comparable EBITA margin was 10.5 percent (9.0%).
• EPS was EUR 0.92 (EUR 0.87). Adjusted EPS was EUR 1.11 (EUR 1.05).
• Items affecting comparability amounted to EUR 0 million (EUR 27 million).
• Cash flow provided by operating activities totaled EUR 172 million (EUR -65 million).
Guidance for 2023
Valmet estimates that net sales in 2023 will increase in comparison with 2022 (EUR 5,074 million) and Comparable EBITA in 2023 will increase in comparison with 2022 (EUR 533 million).
Short-term market outlook
Valmet estimates that the short-term market outlook for services has decreased to good/satisfactory (previously good), the short-term market outlook for board and paper has decreased to satisfactory (previously good) and the short-term market outlook for pulp has decreased to satisfactory (previously good/satisfactory). Valmet reiterates the good short-term market outlook for flow control, automation systems and energy, and the satisfactory short-term market outlook for tissue.
The short-term market outlook is given for the next six months from the end of the reported period. It is based on customer activity (50%) and Valmet’s capacity utilization (50%), and the scale is ‘weak–satisfactory–good’.
President and CEO Pasi Laine: Net sales and Comparable EBITA increased in the second quarter
“Valmet’s orders received remained at the previous year’s level and amounted close to EUR 1.3 billion in the second quarter of 2023. Orders received increased in the Automation segment, and decreased in the Process Technologies and Services segments. Orders received in Valmet’s stable business totaled EUR 3.2 billion during the last four quarters. During this period, stable business represented 60% of Valmet's orders received. This is clearly more than in 2014, when stable business represented 34% of orders received. Our order backlog amounted to EUR 4.4 billion, which is at the same level as at the end of 2022.
The second quarter was good in terms of net sales and Comparable EBITA, which both increased. Net sales increased in all segments. Comparable EBITA margin was 17.5% in Services, 17.9% in Automation and 4.8% in Process Technologies. Valmet’s Comparable EBITA increased to EUR 153 million and margin to 10.8%.
Valmet’s short-term market outlook continues to be good for flow control, automation systems and energy and satisfactory for tissue. For pulp as well as for board and paper we estimate that the short-term market outlook has decreased to satisfactory. Even though there are projects in the pipeline and customers are discussing investments, we have seen some delays in project decision schedules. The short-term market outlook for services has decreased to good/satisfactory, as Valmet’s capacity utilization is good but the market is not as active as earlier.
The execution of Valmet’s acquisition strategy took important steps forward after the end of the second quarter of 2023. On July 7, we entered into an agreement to strengthen our Process Technologies and Services segments by acquiring Körber’s Business Area Tissue, and on July 14, we entered into an agreement to acquire the Process Gas Chromatography business of Siemens AG to strengthen our Automation segment. These acquisitions strengthen all of Valmet’s three segments, complement Valmet’s current offering and enable us to serve our customers even better in the future. We are happy and proud to warmly welcome all the new colleagues to become part of Valmet."
Update on the integration of Flow Control into Valmet
The merger of Neles into Valmet was completed on April 1, 2022. The integration of Flow Control (former Neles) into Valmet is proceeding according to the plan. Most of the cost synergy actions regarding function costs, common locations and supply chain were implemented already during 2022. Sales synergies have developed well. Valmet expects to generate annual run rate synergies of approximately EUR 25 million, of which approximately 60 percent are expected to be achieved by the end of 2023 and approximately 90 percent by the end of 2024.
Update on the impacts of Russia's invasion of Ukraine
Valmet's withdrawal from Russia is proceeding according to plan, and the liquidation of the two legal entities is expected to be completed by the end of the third quarter 2023. At the end of June 2023, Valmet did not have employees in Russia anymore (at the end of 2022, Valmet had approximately 30 employees in Russia).
Key figures1
|
EUR million |
Q2/2023 |
Q2/2022 |
Change |
Q1–Q2/ |
Q1–Q2/ |
Change |
|
Orders received |
1,268 |
1,306 |
-3 % |
2,821 |
2,631 |
7 % |
|
Order backlog2 |
4,414 |
4,784 |
-8 % |
4,414 |
4,784 |
-8 % |
|
Net sales |
1,417 |
1,286 |
10 % |
2,738 |
2,246 |
22 % |
|
Comparable EBITA |
153 |
122 |
25 % |
286 |
202 |
42 % |
|
% of net sales |
10.8 % |
9.5 % |
|
10.5 % |
9.0 % |
|
|
EBITA |
155 |
154 |
1 % |
286 |
229 |
25 % |
|
% of net sales |
11.0 % |
12.0 % |
|
10.5 % |
10.2 % |
|
|
Operating profit (EBIT) |
136 |
120 |
13 % |
232 |
183 |
27 % |
|
% of net sales |
9.6 % |
9.4% |
|
8.5 % |
8.2 % |
|
|
Profit before taxes |
129 |
120 |
8 % |
220 |
182 |
21 % |
|
Profit for the period |
99 |
101 |
-1 % |
170 |
146 |
17 % |
|
Earnings per share, EUR |
0.54 |
0.55 |
-1 % |
0.92 |
0.87 |
5 % |
|
Adjusted earnings per share, EUR |
0.60 |
0.68 |
-12 % |
1.11 |
1.05 |
6 % |
|
Equity per share, EUR2 |
12.93 |
12.77 |
1 % |
12.93 |
12.77 |
1 % |
|
Cash flow provided by operating activities |
-37 |
-85 |
-57 % |
172 |
-65 |
|
|
Cash flow after investments |
-71 |
18 |
|
104 |
12 |
>100% |
|
Comparable return on capital employed (Comparable ROCE) before taxes (LTM) |
|
|
|
15 % |
16 % |
|
|
Return on capital employed (ROCE) before taxes (LTM) |
|
|
|
15 % |
18 % |
|
|
Return on equity (ROE) (LTM) |
|
|
|
15 % |
18 % |
|
|
Net debt to EBITDA4 ratio3 |
|
|
|
0.77 |
0.90 |
|
|
Gearing2 |
|
|
|
23 % |
22 % |
|
|
Equity to assets ratio2 |
|
|
|
45 % |
46 % |
|
1 The calculation of key figures is presented on page 56.
2 At end of period.
3 Net debt to EBITDA ratio is a new alternative performance measure. It enables users of the financial information to prepare more meaningful analysis on Valmet's performance and is presented with comparatives from Q1/2023 onwards.
4 Last twelve months' EBITDA
LTM = Last twelve months
Segment key figures
|
Orders received, EUR million |
Q2/2023 |
Q2/2022 |
Change |
Q1–Q2/ |
Q1–Q2/ |
Change |
|
Services |
430 |
460 |
-6% |
1,007 |
911 |
11% |
|
Automation |
340 |
305 |
12% |
732 |
452 |
62% |
|
Flow Control |
211 |
198 |
6% |
427 |
198 |
>100% |
|
Automation Systems |
130 |
107 |
22% |
304 |
253 |
20% |
|
Process Technologies |
497 |
542 |
-8% |
1,082 |
1,268 |
-15% |
|
Pulp and Energy |
277 |
254 |
9% |
489 |
581 |
-16% |
|
Paper |
221 |
288 |
-23% |
593 |
688 |
-14% |
|
Total |
1,268 |
1,306 |
-3% |
2,821 |
2,631 |
7% |
|
Net sales, EUR million |
Q2/2023 |
Q2/2022 |
Change |
Q1–Q2/ |
Q1–Q2/ |
Change |
|
Services |
457 |
403 |
13% |
846 |
720 |
18% |
|
Automation |
338 |
292 |
16% |
642 |
380 |
69% |
|
Flow Control |
202 |
177 |
14% |
389 |
177 |
>100% |
|
Automation Systems |
136 |
115 |
19% |
252 |
203 |
24% |
|
Process Technologies |
623 |
591 |
5% |
1,251 |
1,146 |
9% |
|
Pulp and Energy |
263 |
266 |
-1% |
549 |
542 |
1% |
|
Paper |
360 |
325 |
11% |
702 |
604 |
16% |
|
Total |
1,417 |
1,286 |
10% |
2,738 |
2,246 |
22% |
|
Comparable EBITA, EUR million |
Q2/2023 |
Q2/2022 |
Change |
Q1–Q2/ |
Q1–Q2/ |
Change |
|
Services |
80 |
57 |
39% |
142 |
88 |
62% |
|
Automation |
61 |
50 |
22% |
110 |
60 |
83% |
|
Process Technologies |
30 |
31 |
-4% |
59 |
71 |
-17% |
|
Other |
-17 |
-15 |
8% |
-26 |
-18 |
44% |
|
Total |
153 |
122 |
25% |
286 |
202 |
42% |
|
Comparable EBITA, % of net sales |
Q2/2023 |
Q2/2022 |
|
Q1–Q2/ |
Q1–Q2/ |
|
|
Services |
17.5 % |
14.2 % |
|
16.8 % |
12.2 % |
|
|
Automation |
17.9 % |
17.0 % |
|
17.2 % |
15.9 % |
|
|
Process Technologies |
4.8 % |
5.2 % |
|
4.7 % |
6.2 % |
|
|
Total |
10.8 % |
9.5 % |
|
10.5 % |
9.0 % |
|
|
EBITA, EUR million |
Q2/2023 |
Q2/2022 |
Change |
Q1–Q2/ |
Q1–Q2/ |
Change |
|
Services |
81 |
49 |
64% |
143 |
80 |
80% |
|
Automation |
63 |
41 |
54% |
107 |
51 |
>100% |
|
Process Technologies |
29 |
24 |
19% |
61 |
62 |
-1% |
|
Other |
-16 |
40 |
|
-25 |
36 |
|
|
Total |
155 |
154 |
1% |
286 |
229 |
25% |
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/q2-2023 on Wednesday, July 26, 2023, at 3:00 p.m. Finnish time (EEST). President and CEO Pasi Laine and CFO Katri Hokkanen 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 by registering through the link below:
http://palvelu.flik.fi/teleconference/?id=1009889
After the registration you will be provided phone numbers and a conference ID to access the conference. If you wish to ask a question during the conference, please dial *5 on your telephone keypad to enter the question queue.
All questions should be presented in English.
The event can also be followed on Twitter at www.twitter.com/valmetir.
Further information, please contact:
Pekka Rouhiainen, VP, Investor Relations, Valmet, tel. +358 10 672 0020
VALMET
Katri Hokkanen
CFO
Pekka Rouhiainen
VP, Investor Relations
DISTRIBUTION:
Nasdaq Helsinki
Major media
Valmet is a leading global developer and supplier of process technologies, automation and services for the pulp, paper and energy industries. With our automation systems and flow control solutions, we serve an even wider base of process industries. Our 17,500 professionals around the world work close to our customers and are committed to moving our customers’ performance forward – every day.
The company has over 220 years of industrial history and a strong track record in continuous improvement and renewal. In 2022, a major milestone was achieved when the flow control company Neles was merged into Valmet. Valmet’s net sales in 2022 were approximately EUR 5.1 billion.
Valmet’s shares are listed on the Nasdaq Helsinki, and the head office is in Espoo, Finland.
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