Valmet's Interim Review January 1 - March 31, 2018: Orders received continued on a good level in Paper - Comparable EBITA was low
Valmet Oyj's stock exchange release on April 27, 2018 at 12:00 noon 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.
January-March 2018: Second-best quarter in more than three years in orders received
- Orders received decreased 11 percent to EUR 890 million (EUR 1,005 million).
- Orders received increased in the Automation business line, remained at the previous year's level in the Services business line and decreased in the Pulp and Energy, and Paper business lines.
- Orders received increased in South America, China and North America, and decreased in EMEA (Europe, Middle East and Africa) and Asia-Pacific.
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- Net sales increased 13 percent to EUR 732 million (EUR 645 million).
- Net sales increased in Paper, and Pulp and Energy business lines and remained at the previous year's level in the Automation and Services business lines.
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- Comparable earnings before interest, taxes and amortization (Comparable EBITA) were EUR 22 million (EUR 34 million), and the corresponding Comparable EBITA margin was 3.0 percent (5.3%).
- Profitability decreased due to a loss of EUR 15 million recognized in a project in the Pulp and Energy business line.
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- Earnings per share were EUR 0.05 (EUR 0.12).
- Items affecting comparability amounted to EUR -3 million (EUR 3 million).
- Cash flow provided by operating activities was EUR 19 million (EUR 94 million).
Guidance for 2018 unchanged
Valmet reiterates its guidance presented on March 21, 2018, in which 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
The global economic upswing has become broader and stronger. At 3.8 percent, global growth in 2017 was the fastest since 2011, and growth is expected to tick up to 3.9 percent in both 2018 and 2019. For most countries, current favorable growth rates will not last, and global growth is projected to soften beyond the next couple of years. Downside concerns include a possibly sharp tightening of financial conditions, waning popular support for global economic integration, growing trade tensions and risks of a shift toward protectionist policies, and geopolitical strains. Most advanced economies are poised to return to growth rates well below precrisis averages, held back by aging populations and lackluster productivity. (International Monetary Fund, April 17, 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 at a high level but profitability low
"Valmet's orders received amounted to EUR 890 million in the first quarter of 2018, making it the second-best quarter in more than three years. This shows that the high customer activity in 2017 has continued in the beginning of 2018. The activity in Board and Paper has continued at a high level. Orders received increased in the Automation business line and remained at the previous years' level in the Services business line.
Despite the slow start to the year in terms of profitability, we keep our financial guidance unchanged. We estimate that Valmet's net sales in 2018 will remain at the same level as in 2017, and Comparable EBITA in 2018 will increase in comparison with 2017."
Key figures1
| EUR million | Q1/2018 | Q1/2017 | Change | 2017 |
| Orders received | 890 | 1,005 | -11% | 3,272 |
| Order backlog2 | 2,583 | 2,704 | -4% | 2,458 |
| Net sales | 732 | 645 | 13% | 3,058 |
| Comparable earnings before interest, taxes and amortization (Comparable EBITA) | 22 | 34 | -36% | 218 |
| % of net sales | 3.0% | 5.3% | 7.1% | |
| Earnings before interest, taxes and amortization (EBITA) | 19 | 37 | -49% | 202 |
| % of net sales | 2.6% | 5.7% | 6.6% | |
| Operating profit (EBIT) | 12 | 29 | -60% | 170 |
| % of net sales | 1.6% | 4.5% | 5.6% | |
| Profit before taxes | 11 | 26 | -60% | 158 |
| Profit for the period | 8 | 18 | -56% | 121 |
| Earnings per share, EUR | 0.05 | 0.12 | -56% | 0.81 |
| Earnings per share, diluted, EUR | 0.05 | 0.12 | -56% | 0.81 |
| Equity per share, EUR | 5.52 | 5.54 | 0% | 6.09 |
| Cash flow provided by operating activities | 19 | 94 | -80% | 291 |
| Cash flow after investments | 9 | 80 | -89% | 227 |
| Return on equity (ROE) (annualized)3 | 4% | 8% | 13% | |
| Return on capital employed (ROCE) before taxes (annualized)3 | 5% | 10% | 14% | |
| Equity to assets ratio2 | 39% | 39% | 42% | |
| Gearing2 | -12% | -3% | -11% |
1 The calculation of key figures is presented on page 38 of the interim 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 | Q1/2018 | Q1/2017 | Change | 2017 |
| Services | 346 | 355 | -2% | 1,242 |
| Automation | 82 | 72 | 14% | 317 |
| Pulp and Energy | 192 | 265 | -27% | 678 |
| Paper | 270 | 314 | -14% | 1,035 |
| Total | 890 | 1,005 | -11% | 3,272 |
| Order backlog, EUR million | As at March 31, 2018 | As at March 31, 2017 | Change | As at December 31, 2017 |
| Total | 2,583 | 2,704 | -4% | 2,458 |
| Net sales, EUR million | Q1/2018 | Q1/2017 | Change | 2017 |
| Services | 247 | 252 | -2% | 1,178 |
| Automation | 59 | 59 | -1% | 296 |
| Pulp and Energy | 203 | 189 | 7% | 800 |
| Paper | 223 | 144 | 55% | 784 |
| Total | 732 | 645 | 13% | 3,058 |
News conference and webcast for analysts, investors and media
Valmet will arrange a news conference in English for analysts, investors, and media on Friday, April 27, 2018 at 2:30 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 2:25 p.m. (EET), at +44 2071 928000. The participants will be asked to provide the following conference ID: 7349687.
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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