Valmet's Interim Review January 1 - March 31, 2019: Orders received amounted to EUR 835 million and Comparable EBITA to EUR 47 million in Q1/2019
Valmet Oyj's stock exchange release on April 26, 2019 at 9:00 a.m. EET
Figures in brackets, unless otherwise stated, refer to the comparison period, i.e. the same period of the previous year. As of January 1, 2019, Valmet has adopted IFRS 16 without restating the figures for the comparison period.
January-March 2019: Profitability improved
- Orders received decreased 6 percent to EUR 835 million (EUR 890 million).
- Orders received increased in the Automation business line, remained at the previous year's level in the Pulp and Energy, and Services business lines and decreased in the Paper business line.
- Orders received increased in Asia-Pacific and decreased in other areas.
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- Net sales decreased 6 percent to EUR 686 million (EUR 732 million).
- Net sales increased in the Services and Automation business lines and decreased in the Pulp and Energy, and Paper business lines.
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- Comparable earnings before interest, taxes and amortization (Comparable EBITA) were EUR 47 million (EUR 22 million), and the corresponding Comparable EBITA margin was 6.9 percent (3.0%).
- Profitability improved due to improved sales mix, higher gross profit and unchanged level of SG&A costs.
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- Earnings per share were EUR 0.21 (EUR 0.05).
- Items affecting comparability amounted to EUR 2 million (EUR -3 million).
- Cash flow provided by operating activities was EUR 30 million (EUR 19 million).
Guidance for 2019 unchanged
Valmet reiterates its guidance presented on February 26, 2019 and confirmed on April 1, 2019, in which Valmet estimates that net sales in 2019 will increase in comparison with 2018 (EUR 3,325 million) and Comparable EBITA in 2019 will increase in comparison with 2018 (EUR 257 million).
Short-term outlook
General economic outlook
Global growth is now projected to slow from 3.6 percent in 2018 to 3.3 percent in 2019, before returning to 3.6 percent in 2020. Conditions have eased in 2019 as the US Federal Reserve signaled a more accommodative monetary policy stance and markets became more optimistic about a US-China trade deal. The projected pickup in the second half of 2019 is predicated on an ongoing buildup of policy stimulus in China, recent improvements in global financial market sentiment, the waning of some temporary drags on growth in the euro area, and a gradual stabilization of conditions in stressed emerging market economies.
While global growth could surprise favorably if trade differences are resolved quickly, the balance of risks to the outlook remains on the downside. A further escalation of trade tensions and the associated increases in policy uncertainty could further weaken growth. (International Monetary Fund, April 9, 2019)
Short-term market outlook
Valmet estimates that the short-term market outlook in pulp has improved to a good level (previously satisfactory level).
Valmet reiterates the good short-term market outlook for services, automation, and board and paper, and the satisfactory short-term market outlook for energy, and tissue.
President and CEO Pasi Laine: Profitability improved and order backlog increased to EUR 3 billion
"In the first quarter of 2019, Valmet's orders received amounted to EUR 835 million. Orders received increased in the Automation business line, remained at the previous year's level in the Pulp and Energy, and Services business lines, and decreased from the high levels of 2018 in the Paper business line. Valmet's order backlog increased to a record-high of EUR 3,001 million. Net sales decreased in the first quarter of the year, but Comparable EBITA increased. The corresponding margin was 6.9 percent.
During the quarter we announced the acquisition of GL&V, a North American-based global provider of technologies and services to the pulp and paper industry. The acquisition is an excellent strategic fit as it strengthens Valmet's global services business, complements our technology offering and builds further our local presence and capabilities especially in North America. The combination of Valmet's global reach and GL&V's product and services offering for chemical pulping, stock preparation, papermaking and finishing create a good basis for new business opportunities and for serving our customers even better. The 630 experts from GL&V are a great reinforcement to the global Valmet team."
Key figures1
| EUR million | Q1/20192 | Q1/2018 | Change | 2018 |
| Orders received | 835 | 890 | -6% | 3,722 |
| Order backlog3 | 3,001 | 2,583 | 16% | 2,829 |
| Net sales | 686 | 732 | -6% | 3,325 |
| Comparable earnings before interest, taxes and amortization (Comparable EBITA) | 47 | 22 | >100% | 257 |
| % of net sales | 6.9% | 3.0% | 7.7% | |
| Earnings before interest, taxes and amortization (EBITA) | 49 | 19 | >100% | 241 |
| % of net sales | 7.1% | 2.6% | 7.2% | |
| Operating profit (EBIT) | 43 | 12 | >100% | 211 |
| % of net sales | 6.2% | 1.6% | 6.4% | |
| Profit before taxes | 41 | 11 | >100% | 205 |
| Profit for the period | 31 | 8 | >100% | 152 |
| Earnings per share, EUR | 0.21 | 0.05 | >100% | 1.01 |
| Earnings per share, diluted, EUR | 0.21 | 0.05 | >100% | 1.01 |
| Equity per share, EUR3 | 5.82 | 5.52 | 5% | 6.31 |
| Cash flow provided by operating activities | 30 | 19 | 59% | 284 |
| Cash flow after investments | 13 | 9 | 40% | 208 |
| Return on equity (ROE) (annualized) | 14% | 4% | 16% | |
| Return on capital employed (ROCE) before taxes (annualized) | 15% | 5% | 19% | |
| Equity to assets ratio3 | 37% | 39% | 43% | |
| Gearing3 | -20% | -12% | -23% |
1 The calculation of key figures is presented on page 40.
2 Valmet implemented IFRS 16 - Leases as of January 1, 2019 by applying the simplified transition method and therefore 2018 figures are not restated.
3 At the end of period
| Orders received, EUR million | Q1/2019 | Q1/2018 | Change | 2018 |
| Services | 358 | 346 | 3% | 1,315 |
| Automation | 95 | 82 | 16% | 330 |
| Pulp and Energy | 201 | 192 | 4% | 1,000 |
| Paper | 182 | 270 | -33% | 1,077 |
| Total | 835 | 890 | -6% | 3,722 |
| Order backlog, EUR million | As at Mar 31, 2019 | As at Mar 31, 2018 | Change | As at Dec 31, 2018 |
| Total | 3,001 | 2,583 | 16% | 2,829 |
| Net sales, EUR million | Q1/2019 | Q1/2018 | Change | 2018 |
| Services | 276 | 247 | 12% | 1,219 |
| Automation | 64 | 59 | 8% | 306 |
| Pulp and Energy | 160 | 203 | -21% | 863 |
| Paper | 186 | 223 | -17% | 937 |
| Total | 686 | 732 | -6% | 3,325 |
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 26, 2019 at 1:00 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 +44 2071 928000. The participants will be asked to provide the following conference ID: 2184774.
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 50 317 1830
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 2018 were approximately EUR 3.3 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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