Valmet's Half Year Financial Review January 1-June 30, 2018: Orders received increased in Paper and Services - Comparable EBITA increased
Valmet Oyj's stock exchange release on July 25, 2018 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. The comparison period figures have been restated following the adoption of IFRS 15 as of January 1, 2018.
April-June 2018: Comparable EBITA margin increased to 7.2 percent
- Orders received increased 9 percent to EUR 865 million (EUR 796 million).
- Orders received increased in the Paper and Services business lines and decreased in the Pulp and Energy, and Automation business lines.
- Orders received increased in South America and EMEA (Europe, Middle East and Africa), remained at the previous year's level in China, and decreased in Asia-Pacific and North America.
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- Net sales increased 15 percent to EUR 844 million (EUR 732 million).
- Net sales increased in all business lines.
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- Comparable earnings before interest, taxes and amortization (Comparable EBITA) were EUR 61 million (EUR 48 million), and the corresponding Comparable EBITA margin was 7.2 percent (6.5%).
- 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 -4 million (EUR -1 million).
- Cash flow provided by operating activities was EUR 3 million (EUR 31 million).
January-June 2018: Net sales increased, but Comparable EBITA margin decreased
- Orders received remained at the previous year's level at EUR 1,756 million (EUR 1,802 million).
- Orders received increased in the Paper business line, remained at the previous year's level in the Services and Automation business lines, and decreased in the Pulp and Energy business line.
- Orders received increased in South America and China, remained at the previous year's level in North America, and decreased in Asia-Pacific and EMEA.
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- Net sales increased 14 percent to EUR 1,575 million (EUR 1,376 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 82 million (EUR 82 million), and the corresponding Comparable EBITA margin was 5.2 percent (5.9%).
- 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 0.29 (EUR 0.30).
- Items affecting comparability amounted to EUR -7 million (EUR 2 million).
- Cash flow provided by operating activities was EUR 22 million (EUR 125 million).
Guidance for 2018
On July 17, 2018, Valmet revised upwards its net sales guidance for 2018.
Revised guidance (on July 17, 2018)
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).
Previous guidance (on March 21, 2018)
Valmet estimates that net sales in 2018 will remain at the same level as in 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
Global growth is projected to reach 3.9 percent in 2018 and in 2019. The rate of expansion appears to have peaked in some major economies, and growth has become less synchronized. In the United States, near-term momentum is strengthening, and the US dollar has appreciated by around 5 percent in recent weeks. Growth projections have been revised down for the euro area, Japan, and the United Kingdom. Among developing economies, growth projections have been revised down for Argentina, Brazil, and India, while the outlook for some oil exporters has strengthened. Tariff increases by the United States and retaliatory measures by trading partners have increased the likelihood of escalating and sustained trade actions. These could derail the recovery and depress medium-term growth prospects. (International Monetary Fund, July 16, 2018)
Short-term market outlook
Valmet reiterates the good short-term market outlook for services, board and paper, tissue and automation, the satisfactory short-term market outlook for energy, and the weak short-term market outlook for pulp.
President and CEO Pasi Laine: Orders received and Comparable EBITA increased in the second quarter
"Valmet's orders received increased 9 percent and amounted to EUR 865 million in the second quarter of 2018. Orders received increased in the Paper and Services business lines, and the customer activity was high especially in the board and paper market. During the first half of the year, orders received remained at the previous year's level. Orders received increased in the Paper business line, remained at the previous year's level in the Services and Automation business lines and decreased in the Pulp and Energy business line, where orders have accumulated mainly from smaller projects.
Net sales increased 15 percent during the second quarter. The increase was supported by all business lines, of which Paper had the strongest growth. During the first half of the year, net sales in the Paper business line increased almost 50 percent following the strong customer activity and high orders received in the previous quarters.
Comparable EBITA increased in the second quarter, and the margin improved to 7.2 percent. Despite the low first quarter, Comparable EBITA for the first half of 2018 amounts to EUR 82 million. We are now at the same level as a year ago, and need to continue the hard work to reach our Comparable EBITA target."
Key figures1
| EUR million | Q2/2018 | Q2/2017 | Change | Q1-Q2/ 2018 | Q1-Q2/ 2017 | Change |
| Orders received | 865 | 796 | 9% | 1,756 | 1,802 | -3% |
| Order backlog2 | 2,621 | 2,714 | -3% | 2,621 | 2,714 | -3% |
| Net sales | 844 | 732 | 15% | 1,575 | 1,376 | 14% |
| Comparable earnings before interest, taxes and amortization (Comparable EBITA) | 61 | 48 | 27% | 82 | 82 | 1% |
| % of net sales | 7.2% | 6.5% | 5.2% | 5.9% | ||
| Earnings before interest, taxes and amortization (EBITA) | 57 | 47 | 22% | 76 | 84 | -10% |
| % of net sales | 6.7% | 6.4% | 4.8% | 6.1% | ||
| Operating profit (EBIT) | 49 | 39 | 27% | 61 | 68 | -10% |
| % of net sales | 5.9% | 5.3% | 3.9% | 4.9% | ||
| Profit before taxes | 48 | 36 | 33% | 59 | 62 | -6% |
| Profit for the period | 35 | 27 | 32% | 43 | 45 | -4% |
| Earnings per share, EUR | 0.23 | 0.18 | 32% | 0.29 | 0.30 | -4% |
| Earnings per share, diluted, EUR | 0.23 | 0.18 | 32% | 0.29 | 0.30 | -4% |
| Equity per share, EUR | 5.63 | 5.71 | -1% | 5.63 | 5.71 | -1% |
| Cash flow provided by operating activities | 3 | 31 | -91% | 22 | 125 | -83% |
| Cash flow after investments | -18 | 15 | -9 | 95 | ||
| Return on equity (ROE) (annualized)3 | 10% | 10% | ||||
| Return on capital employed (ROCE) before taxes (annualized)3 | 11% | 11% | ||||
| Equity to assets ratio2 | 41% | 41% | ||||
| Gearing2 | 0% | 4% |
1 The calculation of key figures is presented on page 41 of the Half Year Financial Review.
2 At the end of period
3 In the calculation of 2017 key figures, data points from 2016 that have not been restated have been used.
| Orders received, EUR million | Q2/2018 | Q2/2017 | Change | Q1-Q2/ 2018 | Q1-Q2/ 2017 | Change |
| Services | 344 | 321 | 7% | 690 | 676 | 2% |
| Automation | 84 | 91 | -8% | 166 | 163 | 1% |
| Pulp and Energy | 85 | 141 | -39% | 278 | 406 | -32% |
| Paper | 353 | 243 | 45% | 623 | 557 | 12% |
| Total | 865 | 796 | 9% | 1,756 | 1,802 | -3% |
| Order backlog, EUR million | As at June 30, 2018 | As at June 30, 2017 | Change | As at March 31, 2018 |
| Total | 2,621 | 2,714 | -3% | 2,583 |
| Net sales, EUR million | Q2/2018 | Q2/2017 | Change | Q1-Q2/ 2018 | Q1-Q2/ 2017 | Change |
| Services | 325 | 302 | 8% | 572 | 554 | 3% |
| Automation | 76 | 73 | 5% | 136 | 132 | 3% |
| Pulp and Energy | 205 | 192 | 7% | 408 | 381 | 7% |
| Paper | 237 | 165 | 43% | 460 | 310 | 49% |
| Total | 844 | 732 | 15% | 1,575 | 1,376 | 14% |
News conference and webcast for analysts, investors and media
Valmet will arrange a news conference in English for analysts, investors, and media on Wednesday, July 25, 2018 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 2071 928000. The participants will be asked to provide the following conference ID: 9398496.
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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