Valmet's Interim Review January 1 - March 31, 2015: Orders received increased in Services - focus continues to be on profitability improvement
January-March 2015: Good performance in Services
- Orders received decreased to EUR 580 million (EUR 1,101 million).
- Orders received increased in the Services business line and declined from the high levels in Q1/2014 in the Pulp and Energy, and Paper business lines.
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- Net sales increased to EUR 561 million (EUR 519 million).
- Net sales increased in the Pulp and Energy, and Services business lines and decreased in the Paper business line.
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- Earnings before interest, taxes and amortization (EBITA) and non-recurring items were EUR 19 million (EUR 4 million), and the corresponding EBITA margin was 3.5 percent (0.7%).
- Earnings per share were EUR 0.05 (EUR -0.04).
- Non-recurring items amounted to EUR 0 million (EUR -6 million).
- Cash flow provided by operating activities was EUR -20 million (EUR 43 million).
Valmet reiterates its guidance for 2015
Valmet is reiterating its guidance presented on February 6, 2015 in which Valmet estimates that, including the acquisition of Process Automation Systems, net sales in 2015 will increase in comparison with 2014 (EUR 2,473 million) and EBITA before non-recurring items in 2015 will increase in comparison with 2014 (EUR 106 million).
Short-term outlook
General economic outlook
Global growth remains moderate, with uneven prospects across the main countries and regions. It is projected to be 3.5 percent in 2015, in line with forecasts in the January 2015 World Economic Outlook (WEO) Update. Relative to last year, the outlook for advanced economies is improving, while growth in emerging market and developing economies is projected to be lower, primarily reflecting weaker prospects for some large emerging market economies and oil-exporting countries. (International Monetary Fund, April 15, 2015)
Short-term market outlook
Due to increased customer activity in the pulp market, the short-term market outlook for pulp has increased to a good level (previously satisfactory level). Following, among others, increased uncertainty in the energy markets, the short-term market outlook for energy has decreased to a weak level (previously satisfactory level).
Valmet reiterates the good short-term market outlook for board and paper, and the satisfactory short-term market outlook for services, and tissue.
As of April 1, 2015, Valmet has a fourth business line, called Automation, and therefore begins to announce a short-term market outlook also for the automation business. Valmet estimates that the short-term market outlook for automation is satisfactory.
President and CEO Pasi Laine: Performance in Services and announced acquisition the highlights of the first quarter
The year 2015 started well in the Services business line. The increased focus that we started to put on this business line during 2014 is starting to show results. We can be pleased with the increase in both orders received and net sales, but we need to continue with the good work. Looking at the way our service professionals have taken on this challenge to begin with, I am confident that we will continue to be successful also in the future.
Even if profitability increased in the first quarter of 2015 compared with the first quarter of 2014, the profitability is below our targeted range. We have successfully developed our business model to be more flexible and we will continue to focus on controlling costs.
An important step in shaping Valmet's future was announced on January 15 and closed on April 1: The acquisition of Process Automation Systems. The acquisition, which has an excellent strategic fit, will make Valmet a technology and service company with full automation offering. We will have a unique customer offering and can serve our customers even better than before. This is a big step towards our vision - to become the global champion in serving our customers. I warmly welcome the 1,600 Automation employees to the Valmet team.
Key figures*
| EUR million | Q1/2015 | Q1/2014 | Change | 2014 |
| Orders received | 580 | 1,101 | -47% | 3,071 |
| Order backlog** | 2,064 | 1,972 | 5% | 1,998 |
| Net sales | 561 | 519 | 8% | 2,473 |
| Earnings before interest, taxes and amortization (EBITA) and non-recurring items | 19 | 4 | >100% | 106 |
| % of net sales | 3.5% | 0.7% | 4.3% | |
| Earnings before interest, taxes and amortization (EBITA) | 19 | -2 | 94 | |
| % of net sales | 3.4% | -0.4% | 3.8% | |
| Operating profit (EBIT) | 13 | -8 | 72 | |
| % of net sales | 2.4% | -1.5% | 2.9% | |
| Profit before taxes | 11 | -9 | 67 | |
| Profit / loss | 8 | -6 | 46 | |
| Earnings per share, EUR | 0.05 | -0.04 | 0.31 | |
| Earnings per share, diluted, EUR | 0.05 | -0.04 | 0.31 | |
| Equity per share, EUR | 5.26 | 5.12 | 3% | 5.36 |
| Cash flow provided by operating activities | -20 | 43 | 236 | |
| Cash flow after investments | -30 | 35 | 194 | |
| Return on equity (ROE) (annualized) | 4% | -3% | 6% | |
| Return on capital employed (ROCE) before taxes (annualized) | 6% | -2% | 9% |
* The calculation of key figures is presented in the Tables section of the January-March 2015 Interim Review.
** At the end of period.
| Equity to assets ratio and gearing | As at March 31, 2015 | As at March 31, 2014 | As at December 31, 2014 | |
| Equity to assets ratio at end of period | 34% | 40% | 42% | |
| Gearing at end of period | -17% | -5% | -21% |
| Orders received, EUR million | Q1/2015 | Q1/2014 | Change | 2014 |
| Services | 293 | 267 | 10% | 1,055 |
| Pulp and Energy | 138 | 622 | -78% | 1,344 |
| Paper | 149 | 212 | -30% | 671 |
| Total | 580 | 1,101 | -47% | 3,071 |
| Order backlog, EUR million | As at March 31, 2015 | As at March 31, 2014 | Change | As at December 31, 2014 |
| Total | 2,064 | 1,972 | 5% | 1,998 |
| Net sales, EUR million | Q1/2015 | Q1/2014 | Change | 2014 |
| Services | 242 | 224 | 8% | 989 |
| Pulp and Energy | 222 | 181 | 23% | 956 |
| Paper | 97 | 114 | -15% | 528 |
| Total | 561 | 519 | 8% | 2,473 |
News conference for analysts, investors and media
Valmet will arrange a news conference in English for investment analysts, investors, and media on April 29, 2015 at 2:00 p.m. Finnish time (EET). The news conference will be held at Valmet's Head Office in Keilaniemi, Keilasatama 5, 02150 Espoo, Finland. The 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 1:55 p.m. (EET), at +44 1452 560304. The participants will be asked to provide the following conference ID: 25528870.
During the webcast and conference call, all questions should be presented in English. After the webcast and conference call, media has a possibility to interview the management in Finnish.
Further information, please contact:
Hanna-Maria Heikkinen, VP, Investor Relations, Valmet, tel. +358 10 672 0007
Markku Honkasalo, Chief Financial Officer, Valmet, tel. +358 10 672 0008
VALMET CORPORATION
Markku Honkasalo
CFO
Hanna-Maria Heikkinen
VP, Investor Relations
Valmet is the leading global developer and supplier of technologies, automation and services for the pulp, paper and energy industries. Valmet's vision is to become the global champion in serving its customers.
Valmet's services cover everything from maintenance outsourcing to mill and plant improvements and spare parts. The strong technology offering includes pulp mills, tissue, board and paper production lines, as well as power plants for bio-energy production. Valmet's advanced automation solutions range from single measurements to mill wide turnkey automation projects.
Valmet's net sales in 2014 were approximately EUR 2.5 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 OMX Helsinki Ltd.
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