Valmet's Interim Review January 1 - September 30, 2016: Orders received increased and profitability improved

Valmet Oyj's stock exchange release on October 27, 2016 at 1:00 p.m. EET

Figures in brackets, unless otherwise stated, refer to the comparison period, i.e. the same period of the previous year. Automation has been consolidated into Valmet's financials since April 1, 2015, when the acquisition of Automation was completed.

July-September 2016: Comparable EBITA margin at 7.5 percent

• Orders received increased to EUR 788 million (EUR 725 million).
  • Orders received increased in the Pulp and Energy business line, remained at the previous year's level in the Services and Automation business lines and decreased in the Paper business line.
  • Orders received increased in EMEA (Europe, Middle East and Africa), South America and Asia-Pacific and decreased in China and North America.
• Net sales decreased to EUR 685 million (EUR 734 million).
  • Net sales increased in the Services business line, remained at the previous year's level in the Automation business line and decreased in the Paper and Pulp and Energy business lines.
• Comparable earnings before interest, taxes and amortization (Comparable EBITA) were EUR 52 million (EUR 47 million) and the corresponding Comparable EBITA margin was 7.5 percent (6.4%).
  • Profitability improved due to the higher level of net sales in the Services business line.
• Earnings per share were EUR 0.17 (EUR 0.14).
• Items affecting comparability amounted to EUR -2 million (EUR -4 million).
• Cash flow provided by operating activities was EUR 122 million (EUR 16 million).

January-September 2016: Orders received increased and profitability improved

• Orders received increased to EUR 2,282 million (EUR 2,085 million).
  • Orders received increased in the Pulp and Energy and Services business lines and remained at the previous year's level in the Paper business line.
  • The Automation business line contributed to orders received with EUR 221 million.
  • Orders received increased in South America and EMEA, remained at the previous year's level in Asia-Pacific and decreased in China and North America.
• Net sales remained at the previous year's level at EUR 2,141 million (EUR 2,074 million).
  • Net sales remained at the previous year's level in the Services, Paper and Pulp and Energy business lines.
  • The Automation business line contributed to net sales with EUR 196 million.
• Comparable earnings before interest, taxes and amortization (Comparable EBITA) were EUR 140 million (EUR 120 million) and the corresponding Comparable EBITA margin was 6.5 percent (5.8%).
  • Profitability improved due to improved gross profit and the acquisition of Automation.
• Earnings per share were EUR 0.46 (EUR 0.33).
• Items affecting comparability amounted to EUR -5 million (EUR -16 million).
• Cash flow provided by operating activities was EUR 158 million (EUR 14 million).

Valmet reiterates its guidance for 2016
Valmet is reiterating its guidance presented on February 9, 2016 in which Valmet estimates that net sales in 2016 will remain at the same level with 2015 (EUR 2,928 million) and Comparable EBITA in 2016 will increase in comparison with 2015 (EUR 182 million).

Short-term outlook

General economic outlook

Global growth is projected to slow to 3.1 percent in 2016 before recovering to 3.4 percent in 2017. The forecast, revised down by 0.1 percentage point for 2016 and 2017 relative to April, reflects a more subdued outlook for advanced economies following the June U.K. vote in favor of leaving the European Union (Brexit) and weaker-than-expected growth in the United States. These developments have put further downward pressure on global interest rates, as monetary policy is now expected to remain accommodative for longer. (International Monetary Fund, October 4, 2016)

Short-term market outlook

Valmet estimates that the short-term market outlook has increased to a good level (previously satisfactory) in tissue and in energy and decreased to a satisfactory level (previously good level) in board and paper.

Valmet reiterates the satisfactory short-term market outlook for services, automation and pulp.

President and CEO Pasi Laine: Orders received increased and profitability continued to improve

Orders received has increased 9 percent since the beginning of the year, supported by the stable business but also by the good progress in our energy business. In 2016, orders received in the Services business line has increased 5 percent and the Automation business line has contributed with over EUR 220 million in orders. In energy, orders received has more than doubled. We have received several large energy orders and also expanded to new geographical areas. For example, we have received our first order for a waste to energy boiler plant delivery to China.

In the third quarter of 2016, Valmet reached a Comparable EBITA margin of 7.5 percent, which is the highest figure since becoming an independent company. For the last twelve months, the margin stands at 6.8 percent. The improvement in profitability is the result of the systematic work that we have put into, for example, procurement costs. We will continue to focus on improving profitability also going forward.

Valmet has been included in the Dow Jones Sustainability Index (DJSI) for the third consecutive year. This means that we maintain our position among the world's sustainability leaders, which is an excellent achievement. It shows that we have been able to improve our sustainability performance year by year, which is a key criteria for inclusion in the index. Sustainability is very important for us and sustainability is at the core of Valmet's business strategy and operations.

Key figures¹

¹ The calculation of key figures is presented on page 37.     
² At the end of period.

News conference and webcast for analysts, investors and media

Valmet will arrange a news conference in English for analysts, investors, and media on Thursday, October 27, 2016 at 2:00 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 1:55 p.m. (EET), at +44 2071 928000. The participants will be asked to provide the following conference ID: 93428439.

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, Chief Financial Officer, 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 2015 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.

Read more www.valmet.com, www.twitter.com/valmetglobal

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