Valmet's Half Year Financial Review January 1 - June 30, 2017: Orders received increased - profitability at the previous year's level
Valmet Oyj's stock exchange release on July 27, 2017 at 2:20 p.m. EET
Figures in brackets, unless otherwise stated, refer to the comparison period, i.e. the same period of the previous year.
April-June 2017: Orders received more than doubled in the Paper business line
- Orders received increased to EUR 796 million (EUR 692 million).
- Orders received increased in the Paper and Automation business lines, remained at the previous year's level in the Services business line and decreased in the Pulp and Energy business line.
- Orders received increased in China and South America, remained at the previous year's level in Asia-Pacific and EMEA (Europe, Middle East and Africa), and decreased in North America.
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- Net sales remained at the previous year's level at EUR 803 million (EUR 804 million).
- Net sales increased in the Paper business line, remained at the previous year's level in the Automation and Services business lines, and decreased in the Pulp and Energy business line.
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- Comparable earnings before interest, taxes and amortization (Comparable EBITA) were EUR 57 million (EUR 57 million) and the corresponding Comparable EBITA margin was 7.1 percent (7.1%).
- Earnings per share were EUR 0.22 (EUR 0.21).
- Items affecting comparability amounted to EUR -1 million (EUR -1 million).
- Cash flow provided by operating activities was EUR 31 million (EUR 33 million).
January-June 2017: Orders received increased more than 20 percent
- Orders received increased to EUR 1,802 million (EUR 1,495 million).
- Orders received increased in the Paper, Automation and Services business lines and remained at the previous year's level in the Pulp and Energy business line.
- Orders received increased in China, Asia-Pacific, North America and EMEA and decreased in South America.
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- Net sales remained at the previous year's level at EUR 1,475 million (EUR 1,456 million).
- Net sales increased in the Paper business line and remained at the previous year's level in the other business lines.
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- Comparable earnings before interest, taxes and amortization (Comparable EBITA) were EUR 91 million (EUR 88 million), and the corresponding Comparable EBITA margin was 6.2 percent (6.1%).
- Earnings per share were EUR 0.34 (EUR 0.28).
- Items affecting comparability amounted to EUR 2 million (EUR -3 million).
- Cash flow provided by operating activities was EUR 125 million (EUR 36 million).
Valmet reiterates its guidance for 2017
Valmet reiterates its guidance presented on April 12, 2017, in which Valmet estimates that net sales in 2017 will increase in comparison with 2016 (EUR 2,926 million) and Comparable EBITA in 2017 will increase in comparison with 2016 (EUR 196 million).
Short-term outlook
General economic outlook
The mood in the global economy has brightened during the past year, with confidence indicators and industrial production increasing, and investment and trade improving in most economies. Global growth is projected to rise modestly from 3 percent in 2016 to just over 3.5 percent by 2018. However, financial stability risks persist and could affect the modest recovery. Geopolitical shocks and trade protectionism could catalyze snap-backs in asset prices and realize downside risks through a variety of channels. Current market expectations imply a rising divergence in short-term interest rates between the major advanced economies in the coming years. This creates risk of sharp exchange rate movements, or other instabilities in financial markets. (OECD Economic Outlook, June 7, 2017)
Short-term market outlook
Valmet reiterates the good short-term market outlook for services, energy, board and paper, and tissue, the satisfactory short-term market outlook for automation and the weak short-term market outlook for pulp.
President and CEO Pasi Laine: High customer activity continued and orders received increased
"The first six months of 2017 were characterized by high market activity, and since the beginning of the year, Valmet was able to increase its orders received over 20 percent. In the capital business, the tissue, board and paper, and energy markets have been active. Orders received in the Paper business line increased almost 90 percent during the first half of the year, while the orders in the Pulp and Energy business line remained at the previous year's level. In the stable business, orders received in the Automation business line increased 10 percent and the order growth in the Services business line was 7 percent.
Despite the success in orders, we need to continue to focus on improving profitability. Comparable EBITA margin in the second quarter remained at the previous year's level at 7.1 percent, and for the last 12 months we now stand at 6.8 percent. There is still some way to go to reach our long-term margin target of 8-10 percent. It is an ambitious target, but I strongly believe we can get there.
In June, we launched our new Industrial Internet offering. With our new offering of reliability and performance services, and by opening a Performance Center for each of our four customer industries, we are taking our Industrial Internet services to the next level. Valmet is the leading process technology, automation and services provider for the pulp, paper and energy industries globally, and our Industrial Internet applications and services are built on the experience and know-how we have gained from this unique offering over the years."
Key figures1
| EUR million | Q2/2017 | Q2/2016 | Change | Q1-Q2/ 2017 | Q1-Q2/ 2016 | Change |
| Orders received | 796 | 692 | 15% | 1,802 | 1,495 | 21% |
| Order backlog2 | 2,551 | 2,106 | 21% | 2,551 | 2,106 | 21% |
| Net sales | 803 | 804 | 0% | 1,475 | 1,456 | 1% |
| Comparable earnings before interest, taxes and amortization (Comparable EBITA) | 57 | 57 | 0% | 91 | 88 | 4% |
| % of net sales | 7.1% | 7.1% | 6.2% | 6.1% | ||
| Earnings before interest, taxes and amortization (EBITA) | 56 | 55 | 1% | 93 | 85 | 9% |
| % of net sales | 6.9% | 6.9% | 6.3% | 5.8% | ||
| Operating profit (EBIT) | 48 | 47 | 2% | 77 | 66 | 17% |
| % of net sales | 6.0% | 5.8% | 5.2% | 4.5% | ||
| Profit before taxes | 45 | 44 | 3% | 72 | 60 | 19% |
| Profit / loss | 33 | 31 | 7% | 52 | 43 | 21% |
| Earnings per share, EUR | 0.22 | 0.21 | 8% | 0.34 | 0.28 | 22% |
| Earnings per share, diluted, EUR | 0.22 | 0.21 | 8% | 0.34 | 0.28 | 22% |
| Equity per share, EUR | 5.82 | 5.58 | 4% | 5.82 | 5.58 | 4% |
| Cash flow provided by operating activities | 31 | 33 | -7% | 125 | 36 | >100% |
| Cash flow after investments | 15 | 16 | -4% | 95 | 8 | >100% |
| Return on equity (ROE) (annualized) | 12% | 10% | ||||
| Return on capital employed (ROCE) before taxes (annualized) | 13% | 11% |
1 The calculation of key figures is presented on page 38.
2 At the end of period.
| Equity to assets ratio and gearing | As at June 30, 2017 | As at June 30, 2016 | As at March 31, 2017 | |
| Equity to assets ratio at end of period | 38% | 36% | 37% | |
| Gearing at end of period | 4% | 27% | -3% |
| Orders received, EUR million | Q2/2017 | Q2/2016 | Change | Q1-Q2/ 2017 | Q1-Q2/ 2016 | Change |
| Services | 321 | 321 | 0% | 676 | 634 | 7% |
| Automation | 91 | 82 | 12% | 163 | 148 | 10% |
| Pulp and Energy | 141 | 180 | -22% | 406 | 417 | -3% |
| Paper | 243 | 109 | >100% | 557 | 295 | 88% |
| Total | 796 | 692 | 15% | 1,802 | 1,495 | 21% |
| Order backlog, EUR million | As at June 30, 2017 | As at June 30, 2016 | Change | As at March 31, 2017 |
| Total | 2,551 | 2,106 | 21% | 2,613 |
| Net sales, EUR million | Q2/2017 | Q2/2016 | Change | Q1-Q2/ 2017 | Q1-Q2/ 2016 | Change |
| Services | 302 | 304 | -1% | 554 | 561 | -1% |
| Automation | 73 | 73 | -1% | 132 | 131 | 1% |
| Pulp and Energy | 245 | 262 | -7% | 449 | 443 | 1% |
| Paper | 184 | 165 | 12% | 340 | 321 | 6% |
| Total | 803 | 804 | 0% | 1,475 | 1,456 | 1% |
News conference and webcast for analysts, investors and media
Valmet will arrange a news conference in English for analysts, investors, and media on Thursday, July 27, 2017 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 3:55 p.m. (EET), at +44 1452 560304. The participants will be asked to provide the following conference ID: 50508494.
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 2016 were approximately EUR 2.9 billion. Our 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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