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Contents
Report of the Board of Directors 2023 ...........................	2
Financial indicators .............................................................	31
Formulas for calculation of indicators ..........................	32
Consolidated financial statements ..................................	33
Consolidated statement of income .................................	33
Consolidated statement of comprehensive income .....	34
Consolidated statement of financial position ................	35
Consolidated statement of cash flows ............................	37
Consolidated statement of changes in equity ...............	38
Notes to the consolidated financial statements ............	39
Parent company financial statements ...........................	94
Parent company statement of income, FAS ...................	94
Parent company statement of financial position, FAS	95
Parent company statement of cash flows, FAS .............	96
Notes to parent company financial statements ............	97
Signatures of Board of Directors’ report and financial statements ..............................................................................	110

Notes to the consolidated financial statements.........		39
1.	Basis of preparation........................................	39
2.	Reporting segments and geographic information..	41
3.	Revenue recognition.......................................	45
4.	Intangible assets and property, plant and equipment....................................................	48
5.	Leases......................................................... .	53
6.	Net working capital........................................	55
7.	Inventories....................................................	56
8.	Financial assets and liabilities...........................	56
9.	Derivative financial instruments........................	61
10.	Financial income and expenses.........................	65
11.	Provisions.....................................................	65
12.	Other current liabilities...................................	67
13.	Personnel expenses and number of personnel......	67
14.	Share-based payments....................................	68
15.	Employee benefit obligations...........................	71
16.	Income taxes.................................................	75
17.	Equity..........................................................	78
18.	Selling, general and administrative expenses.......	79
19.	Other operating income and expenses................	79
20.	Business combinations....................................	80
21.	Financial risk management..............................	81
22.	Investments in associated companies.................	85
23.	Audit fees.....................................................	88
24.	Contingencies and commitments.......................	88
25.	Related party information................................	89
26.	Subsidiaries..................................................	91
27.	Events after the reporting period.......................	93
28.	New accounting standards...............................	93

Report of the Board of Directors

January–December 2023

Governance

Current legislation, the Company’s Articles of Association and

the rules and regulations of organizations regulating and

supervising the activities of listed companies are complied within

Valmet Oyj and Valmet Group corporate governance. Valmet Oyj

complies without deviation with the Finnish Corporate

Governance Code for listed companies. The Code is publicly

available at www.cgfinland.fi .

Corporate Governance Statement and

Remuneration Report

Valmet has published a separate Corporate Governance

Statement and a Remuneration Report for 2023, which comply

with the recommendations of the Finnish Corporate Governance

Code for listed companies. The statements also cover other

central areas of corporate governance. The statements have

been published on Valmet’s website, separately from the Board

of Directors’ Report, at www.valmet.com/governance.

Annual General Meeting

The Annual General Meeting is the Company’s highest decision-

making body, and its tasks are defined according to the Articles

of Association and the Finnish Limited Liability Companies Act.

The Annual General Meeting decides on the adoption of the

financial statements, the distribution of profit, discharging the

members of the Board of Directors and the President and CEO

from liability, appointing the members, Chair and Vice Chair of

the Board as well as the auditor, their remunerations, and other

matters requiring a decision by the Annual General Meeting

according to the Finnish Limited Liability Companies Act that are

presented to the Annual General Meeting. The General Meeting

convenes at least once a year. The Board of Directors convenes

the Annual General Meeting.

The Board of Directors

The Board of Directors shall see to the administration of the

Company and the appropriate organization of its operations, and

ensures that the monitoring of the Company’s accounting and

asset management is arranged appropriately. The Board of

Directors monitors the Group’s activities, finances and risk

management, and its task is to promote the interests of

shareholders and the Group by ensuring the appropriate

organization of the entire Group’s governance and operations.

According to Valmet’s Articles of Association, the Board of

Directors shall include at least five (5) members and at most

eight (8) members. The term of office of Board members ends at

the end of the first Annual General Meeting following the

elections. The Annual General Meeting selects the Chair, Vice

Chair, and other members of the Board.

President and CEO

The Board of Directors selects a President and CEO for the

Company and decides on the salary and remuneration of the

President and CEO as well as other terms related to the position.

The Board of Directors monitors the work of the CEO.

The President and CEO is responsible for the Company’s daily

administration according to the instructions and regulations of

the Board of Directors. The President and CEO is responsible for

ensuring the legality of the Company’s accounting and for the

reliable organization of the Company’s asset management.

Update on the integration of Flow Control into

Valmet

The merger of Neles into Valmet was completed on April 1,

2022. The integration of Flow Control (former Neles) is

completed and the targeted annual run rate synergies of EUR 25

million have been achieved.

Valmet's results in 2023

Figures in brackets, unless otherwise stated, refer to the

comparison period, i.e., the same period of the previous year.

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | REPORT OF THE BOARD OF DIRECTORS

2

Key figures1

EUR million	2023	2022	2021
Orders received	4,955	5,194	4,740
Order backlog2	3,973	4,403	4,096
Net sales	5,532	5,074	3,935
Comparable earnings before interest, taxes and amortization (Comparable EBITA)	619	533	429
% of net sales	11.2%	10.5%	10.9%
Earnings before interest, taxes and amortization (EBITA)	605	550	448
% of net sales	10.9%	10.8%	11.4%
Operating profit (EBIT)	507	436	399
% of net sales	9.2%	8.6%	10.1%
Profit before taxes	473	431	395
Profit for the period	359	338	296
Earnings per share, EUR	1.94	1.92	1.98
Earnings per share, diluted, EUR	1.94	1.92	1.98
Adjusted earnings per share, EUR	2.28	2.37	2.09
Equity per share2, EUR	13.93	13.54	8.87
Dividend per share, EUR	1.353	1.30	1.20
Cash flow provided by operating activities	352	36	482
Cash flow after investing activities	-181	56	382
Comparable return on capital employed (Comparable ROCE) before taxes	15%	17%	23%
Return on capital employed (ROCE) before taxes	14%	18%	24%
Return on equity (ROE)	14%	18%	24%
Net debt to EBITDA ratio4	1.46	0.78	-0.17
Gearing2	40%	20%	-7%
Equity to assets ratio2	43%	49%	42%

1 The calculation of key figures is presented in the section ‘Formulas for calculation of indicators’.

2 At the end of period.

3 Board of Directors’ proposal.

4 Net debt to EBITDA ratio is a new alternative performance measure. It enables users of the financial information to prepare more meaningful analysis on Valmet's performance.

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | REPORT OF THE BOARD OF DIRECTORS

3

Orders received remained at the

previous year’s level and amounted to

EUR 4,955 million in 2023

Orders received, EUR million	2023	2022	Change
Services	1,760	1,756	0%
Automation	1,340	1,081	24%
Flow Control	789	576	37%
Automation Systems	551	505	9%
Process Technologies	1,856	2,356	-21%
Pulp and Energy	854	1,072	-20%
Paper	1,002	1,285	-22%
Total	4,955	5,194	-5%

Orders received, comparable foreign exchange rates, EUR million 1	2023	2022	Change
Services	1,812	1,756	3%
Automation	1,372	1,081	27%
Flow Control	808	576	40%
Automation Systems	563	505	11%
Process Technologies	1,909	2,356	-19%
Pulp and Energy	877	1,072	-18%
Paper	1,032	1,285	-20%
Total	5,092	5,194	-2%

1 Indicative only. January to December 2023 orders received in euro calculated by

applying January to December 2022 average exchange rates to the functional

currency orders received values reported by entities.

Orders received, EUR million	2023	2022	Change
North America	1,271	1,260	1%
South America	503	353	42%
EMEA	1,846	2,098	-12%
China	638	711	-10%
Asia-Pacific	698	771	-10%
Total	4,955	5,194	-5%

Orders received remained at the previous year’s level and

amounted to EUR 4,955 million (EUR 5,194 million) in 2023.

Orders received increased in the Automation segment, remained

at the previous year's level in the Services segment, and

decreased in the Process Technologies segment. Flow Control

was not yet part of Valmet in January–March, 2022. Tissue

Converting (the acquired Körber's Business Area Tissue), which

was integrated into Valmet on November 2, 2023, increased

orders received by EUR 61 million. Stable business (Services and

Automation segments) accounted for 63 percent (55%) of

Valmet’s orders received.

Orders received increased in South America, remained at the

previous year's level in North America and decreased in EMEA

(Europe, Middle East and Africa), China and Asia-Pacific.

Measured by orders received, the top three countries were the

USA, China and Indonesia, which together accounted for 41

percent of total orders received.

Changes in foreign exchange rates compared to the exchange

rates in 2022 decreased orders received by approximately EUR

137 million in 2023.

In 2023, Valmet received among others an order for a coated

board machine to the United States, typically valued between

EUR 140 and 180 million, a major order of multiple technologies

to China, an order for a biomass power plant to Sweden, an

order for a fine paper making line with automation, spare parts

and consumables packages to China, an order for a tissue paper

making line and a biomass boiler to Brazil, a pulp technology

order to Portugal, an order for key pulp and paper technologies

to India, typically valued between EUR 40 and 60 million, an

order for a tissue production line including an extensive

automation package, flow control valves and Industrial Internet

solutions to the USA, an order to convert a coal-fired district

heat boiler to bubbling fluidized bed (BFB) combustion in

Finland, a tissue line order with an extensive package of stock

preparation, automation and service solutions to Sweden, an

order for key pulp mill technology to a new pulp mill in China,

orders for an automation system and valve solutions to a lithium

refinery in Finland, and an order for a three-year service

agreement with a biomass power plant in Spain.

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | REPORT OF THE BOARD OF DIRECTORS

4

Order backlog amounted to EUR 3,973 million

	As at Dec 31,
Order backlog, EUR million	2023	2022	Change
Total	3,973	4,403	-10%

Order backlog amounted to EUR 3,973 million at the end of year

2023 and was 10 percent lower than at the end of 2022.

Approximately 25 percent of the order backlog relates to the

Services segment, 15 percent to the Automation segment, and

60 percent to the Process Technologies segment (at the end of

December 2022, 20%, 15% and 65% respectively).

Approximately 85 percent of the order backlog is currently

expected to be realized as net sales during 2024 (at the end of

2022, approximately 75% was expected to be realized as net

sales during 2023).

Net sales increased 9 percent to EUR 5,532

million in 2023

Net sales, EUR million	2023	2022	Change
Services	1,784	1,606	11%
Automation	1,328	1,040	28%
Flow Control	777	551	41%
Automation Systems	551	489	13%
Process Technologies	2,420	2,428	0%
Pulp and Energy	1,067	1,081	-1%
Paper	1,353	1,347	0%
Total	5,532	5,074	9%

Net sales, comparable foreign exchange rates, EUR million1	2023	2022	Change
Services	1,833	1,606	14%
Automation	1,357	1,040	31%
Flow Control	796	551	45%
Automation Systems	561	489	15%
Process Technologies	2,475	2,428	2%
Pulp and Energy	1,093	1,081	1%
Paper	1,382	1,347	3%
Total	5,665	5,074	12%

1 Indicative only. January to December 2023 net sales in euro calculated by applying

January to December 2022 average exchange rates to the functional currency net

sales values reported by entities.

Net sales, EUR million	2023	2022	Change
North America	1,275	1,058	20%
South America	585	718	-19%
EMEA	2,219	1,876	18%
China	609	829	-27%
Asia-Pacific	845	593	43%
Total	5,532	5,074	9%

Net sales increased 9 percent to EUR 5,532 million (EUR 5,074

million) in year 2023. Approximately half of the increase came

from Flow Control, which has been consolidated into Valmet as

of April 1, 2022. Net sales increased in the Automation and

Services segments and remained at the previous year's level in

the Process Technologies segment. Tissue Converting (the

acquired Körber's Business Area Tissue), which was integrated

into Valmet on November 2, 2023, increased net sales by EUR

76 million. Stable business (Services and Automation segments)

accounted for 56 percent (52%) of Valmet’s net sales.

Net sales increased in Asia-Pacific, North America and EMEA,

and decreased in China and South America. Measured by net

sales, the top three countries were the USA, China and

Indonesia, which together accounted for 38 percent of net sales.

Changes in foreign exchange rates compared to the exchange

rates in 2022 decreased net sales by approximately EUR 133

million in 2023.

Organic growth1

	Orders received	Net sales
2022, EUR million	5,194	5,074
Organic growth	-7%	7%
Mergers and acquisitions	5%	5%
Changes in foreign exchange rates2	-3%	-3%
Total change	-5%	9%
2023, EUR million	4,955	5,532

1 Indicative only.

2 2023 orders received and net sales in euro calculated by applying 2022 average

exchange rates to the functional currency orders received and net sales values

reported by entities.

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | REPORT OF THE BOARD OF DIRECTORS

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In 2023,Valmet's orders received decreased organically by 7

percent while net sales increased organically by 7 percent.

In 2023, Valmet completed two acquisitions, Novatech

Automation's Process Solutions on January 3, 2023, and Körber

Group’s Business Area Tissue (now Tissue Converting) on

November 2, 2023. Merger with Neles took place on April 1,

2022, so Flow Control was not yet part of Valmet in January–

March 2022. Flow Control and the acquisitions increased

Valmet's orders received and net sales by 5 percent in 2023.

Changes in foreign exchange rates compared to the exchange

rates in 2022 decreased Valmet's orders received and net sales

by 3 percent in 2023. Foreign exchange rate impacts were

mainly due to the Swedish krona, Chinese yuan and US dollar.

Comparable EBITA increased 16 percent

and Comparable EBITA margin increased

to 11.2 percent in 2023

Comparable EBITA, EUR million	2023	2022	Change
Services	312	237	32%
Automation	248	190	30%
Process Technologies	110	145	-24%
Other	-50	-39	29%
Total	619	533	16%

Comparable EBITA, % of net sales	2023	2022
Services	17.5%	14.8%
Automation	18.6%	18.3%
Process Technologies	4.5%	6.0%
Total	11.2%	10.5%

In 2023, Valmet's comparable earnings before interest, taxes

and amortization (Comparable EBITA) increased 16 percent to

EUR 619 million, corresponding to 11.2 percent of net sales (EUR

533 million and 10.5%). Items affecting comparability amounted

to EUR -14 million (EUR 17 million).

Comparable EBITA of the Services segment increased to EUR

312 million in 2023, corresponding to 17.5 percent of the

segment's net sales (EUR 237 million and 14.8%). Comparable

EBITA increased due to higher net sales.

Comparable EBITA of the Automation segment increased to

EUR 248 million in 2023, corresponding to 18.6 percent of the

segment's net sales (EUR 190 million and 18.3%).

Comparable EBITA of the Process Technologies segment

decreased to EUR 110 million in 2023, corresponding to 4.5

percent of the segment's net sales (EUR 145 million and 6.0%).

Comparable EBITA decreased as the margins in some pulp

projects were impacted by cost inflation and due to cost

overruns in some tissue projects.

Operating profit

Operating profit (EBIT) in 2023 was EUR 507 million, i.e. 9.2

percent of net sales (EUR 436 million and 8.6%). In the

comparison period, Valmet recorded a gain of EUR 59 million

under other operating income from remeasurement of Valmet's

previously held equity interest in Neles.

Net financial income and expenses

Net financial income and expenses amounted to EUR -34 million

(EUR -5 million) in 2023. Financial expenses increased due to

higher interest rates and increased amount of debt.

Profit before taxes and Earnings per share

Profit before taxes was EUR 473 million (EUR 431 million) in

2023. The profit attributable to owners of the parent was EUR

357 million (EUR 337 million), corresponding to earnings per

share (EPS) of EUR 1.94 (EUR 1.92). Adjusted EPS was EUR

2.28 (EUR 2.37).

Return on capital employed (ROCE) and Return

on equity (ROE)

The comparable return on capital employed (comparable ROCE)

before taxes was 15 percent (17%) and return on capital

employed (ROCE) before taxes was 14 percent (18%). Return on

equity (ROE) was 14 percent (18%) in 2023.

Segments and business lines

Services: Orders received totaled EUR 1,760 million in 2023

Services segment	2023	2022	Change
Orders received (EUR million)	1,760	1,756	0%
Net sales (EUR million)	1,784	1,606	11%
Comparable EBITA (EUR million)	312	237	32%
Comparable EBITA, %	17.5%	14.8%
Personnel (end of period)	6,493	6,307	3%

Orders received by the Services segment remained at the

previous year’s level and amounted to EUR 1,760 million (EUR

1,756 million) in 2023. Services accounted for 36 percent (34%)

of Valmet's orders received. Orders received increased in South

America, remained at the previous year's level in Asia-Pacific,

China and EMEA and decreased in North America. Orders

received increased in Pulp and Energy Solutions, remained at the

previous year's level in Performance Parts, and Board, Paper and

Tissue Solutions and decreased in Fabrics, and Rolls. Tissue

Converting (the acquired Körber's Business Area Tissue), which

was integrated into Valmet on November 2, 2023, increased

Services' orders received by EUR 21 million. Changes in foreign

exchange rates compared to the exchange rates in 2022

decreased orders received by approximately EUR 53 million.

Net sales for the Services segment amounted to EUR 1,784

million (EUR 1,606 million) in 2023, corresponding to 32 percent

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | REPORT OF THE BOARD OF DIRECTORS

6

(32%) of Valmet’s net sales. Tissue Converting increased

Services' net sales by EUR 26 million. Changes in foreign

exchange rates compared to the exchange rates in 2022

decreased net sales by approximately EUR 49 million.

Comparable EBITA of the Services segment increased to EUR

312 million, corresponding to 17.5 percent of the segment's net

sales (EUR 237 million and 14.8%). Comparable EBITA increased

due to higher net sales.

Automation: Orders received totaled EUR 1,340 million in

2023

Automation segment	2023	2022	Change
Orders received (EUR million)	1,340	1,081	24%
Net sales (EUR million)	1,328	1,040	28%
Comparable EBITA (EUR million)	248	190	30%
Comparable EBITA, %	18.6%	18.3%
Personnel (end of period)	5,171	4,842	7%

Orders received by the Automation segment increased 24

percent to EUR 1,340 million (EUR 1,081 million) in 2023,

mostly due to Flow Control being consolidated into Valmet as of

April 1, 2022. Automation accounted for 27 percent (21%) of

Valmet’s orders received. Changes in foreign exchange rates

compared to the exchange rates in 2022 decreased orders

received by approximately EUR 32 million.

Net sales for the Automation segment amounted to EUR 1,328

million (EUR 1,040 million) in 2023, corresponding to 24 percent

(20%) of Valmet’s net sales. Changes in foreign exchange rates

compared to the exchange rates in 2022 decreased net sales by

approximately EUR 29 million.

Comparable EBITA of the Automation segment increased to

EUR 248 million, corresponding to 18.6 percent of the segment's

net sales (EUR 190 million and 18.3%).

Flow Control business line	2023	2022	Change
Orders received (EUR million)	789	576	37%
Net sales (EUR million)	777	551	41%
Personnel (end of period)	2,841	2,792	2%

Orders received by the Flow Control business line amounted to

EUR 789 million (EUR 576 million) and accounted for 16 percent

(11%) of Valmet's orders received. Flow Control was not yet

part of Valmet in January–March 2022.

Net sales for the Flow Control business line amounted to EUR

777 million (EUR 551 million), corresponding to 14 percent

(11%) of Valmet’s net sales.

Automation Systems business line	2023	2022	Change
Orders received (EUR million)	551	505	9%
Net sales (EUR million)	551	489	13%
Personnel (end of period)	2,330	2,050	14%

Orders received by the Automation Systems business line

increased 9 percent to EUR 551 million (EUR 505 million) in

2023. Automation Systems accounted for 11 percent (10%) of

Valmet’s orders received. Orders received increased in North

America, Asia-Pacific and China, remained at the previous year's

level in EMEA and decreased in South America. Orders received

increased in Energy and Process and remained at the previous

year's level in Pulp and Paper.

Net sales for the Automation Systems business line amounted

to EUR 551 million (EUR 489 million) in 2023, corresponding to

10 percent (10%) of Valmet’s net sales.

Process Technologies: Orders received totaled EUR 1,856

million in 2023

Process Technologies segment	2023	2022	Change
Orders received (EUR million)	1,856	2,356	-21%
Net sales (EUR million)	2,420	2,428	0%
Comparable EBITA (EUR million)	110	145	-24%
Comparable EBITA, %	4.5%	6.0%
Personnel (end of period)	6,707	5,647	19%

Orders received by the Process Technologies segment decreased

21 percent to EUR 1,856 million (EUR 2,356 million) in 2023.

Process Technologies accounted for 37 percent (45%) of

Valmet's orders received. Tissue Converting (the acquired

Körber's Business Area Tissue), which was integrated into

Valmet on November 2, 2023, increased Process Technologies'

orders received by EUR 40 million. Changes in foreign exchange

rates compared to the exchange rates in 2022 decreased orders

received by approximately EUR 53 million.

Net sales for the Process Technologies segment amounted to

EUR 2,420 million (EUR 2,428 million) in 2023, corresponding to

44 percent (48%) of Valmet’s net sales. Tissue Converting

increased Process Technologies' net sales by EUR 50 million.

Changes in foreign exchange rates compared to the exchange

rates in 2022 decreased net sales by approximately EUR 55

million.

Comparable EBITA of the Process Technologies segment

decreased to EUR 110 million in 2023, corresponding to 4.5

percent of the segment's net sales (EUR 145 million and 6.0%).

Comparable EBITA decreased as the margins in some pulp

projects were impacted by cost inflation and due to cost

overruns in some tissue projects.

Pulp and Energy business line	2023	2022	Change
Orders received (EUR million)	854	1,072	-20%
Net sales (EUR million)	1,067	1,081	-1%
Personnel (end of period)	1,948	1,892	3%

Orders received by the Pulp and Energy business line decreased

20 percent to EUR 854 million (EUR 1,072 million) in 2023. Pulp

and Energy accounted for 17 percent (21%) of Valmet's orders

received. Orders received increased in China and South America

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and decreased in EMEA, North America and Asia-Pacific. Orders

received decreased in both Pulp and Energy.

Net sales for the Pulp and Energy business line amounted to

EUR 1,067 million (EUR 1,081 million) in 2023, corresponding to

19 percent (21%) of Valmet’s net sales.

Paper business line	2023	2022	Change
Orders received (EUR million)	1,002	1,285	-22%
Net sales (EUR million)	1,353	1,347	0%
Personnel (end of period)	4,759	3,755	27%

Orders received by the Paper business line decreased 22 percent

to EUR 1,002 million (EUR 1,285 million) in 2023. Paper

accounted for 20 percent (25%) of Valmet's orders received.

Orders received increased in South America, remained at the

previous year's level in North America and decreased in EMEA,

China and Asia-Pacific. Orders received increased in Small and

Medium size Machines and in Tissue, and decreased in Stock

Preparation and Recycled Fiber, and in Board and Paper. Tissue

Converting (the acquired Körber's Business Area Tissue), which

was integrated into Valmet on November 2, 2023, increased

Paper business line's orders received by EUR 40 million.

Net sales for the Paper business line amounted to EUR 1,353

million (EUR 1,347 million) in 2023, corresponding to 24 percent

(27%) of Valmet’s net sales. Tissue Converting increased Paper

business line's net sales by EUR 50 million.

Cash flow and financing

Cash flow provided by operating activities amounted to EUR 352

million (EUR 36 million) in 2023. Change in net working capital

in the statement of cash flows was EUR -180 million (EUR -399

million) in 2023.

Net working capital totaled EUR 191 million (EUR -82 million)

at the end of the reporting period. Tissue Converting, which

became part of Valmet on November 2, 2023, increased net

working capital by approximately EUR 92 million. Valmet’s net

working capital profile has changed due to increased portion of

stable business, which typically ties up more net working capital

than capital business. In addition, inventories have remained at

an elevated level and payment schedules of large long-term

projects have a significant impact on net working capital

development.

Cash flow after investing activities totaled EUR -181 million

(EUR 56 million) in 2023.

In compliance with the resolution of the Annual General

Meeting, on April 5, 2023, Valmet paid out the first installment

of dividend for year 2022, EUR 120 million, corresponding to

EUR 0.65 per share. The second installment, also EUR 0.65 per

share and in total EUR 120 million, was paid on October 12,

2023.

At the end of 2023, net debt to EBITDA ratio was 1.46 (0.78)

and gearing 40 percent (20%). Equity to assets ratio was 43

percent (49%). Interest-bearing liabilities amounted to EUR

1,484 million (EUR 809 million), and net interest-bearing

liabilities totaled EUR 1,027 million (EUR 502 million) at the end

of the reporting period. The increase in net debt and gearing is

mainly related to the acquisition of Tissue Converting.

The average interest rate of Valmet's total debt was 4.5

percent and average maturity of non-current debt was 3.0 years

at the end of 2023. Lease liabilities have been excluded from

calculation of these two key performance indicators.

On September 27, 2023, Valmet announced that it has signed

a EUR 175 million loan agreement with the European Investment

Bank (EIB). The loan was drawn on October 5, 2023, and its

maturity is eight years. The loan will support Valmet’s Research

and Development (R&D) activities focusing on technologies that

replace fossil fuels with renewables. The loan agreement is

linked to Valmet’s R&D activities in 2023–2026.

On July 7, 2023, Valmet announced that the acquisition of

Körber Group’s Business Area Tissue will be financed with two

facilities, a EUR 250 million term loan facility maturing in

January 2028 and a EUR 150 million term loan facility maturing

in November 2025. Loans were drawn at the closing of the

acquisition on November 2, 2023.

Valmet’s liquidity was strong at the end of the reporting

period, with cash and cash equivalents amounting to EUR 432

million (EUR 277 million) and interest-bearing current financial

assets totaling EUR 25 million (EUR 30 million). Valmet’s

liquidity was secured with a committed revolving credit facility of

EUR 300 million, which was undrawn at the end of the reporting

period. In October, Valmet utilized the second and last 1-year

extension option and the maturity of the revolving credit facility

was extended until October 2026. Liquidity was additionally

secured by an uncommitted commercial paper program worth of

EUR 300 million, of which EUR 44 million was outstanding at the

end of the reporting period.

Capital expenditure

Gross capital expenditure (excluding business combinations and

right-of-use assets) totaled EUR 125 million (EUR 112 million) in

2023, of which maintenance investments amounted to EUR 57

million (EUR 37 million).

Acquisitions and disposals

Acquisitions

NovaTech Automation's Process Solutions

On November 9, 2022, Valmet announced that it has entered

into an agreement to acquire the U.S. based NovaTech

Automation’s Process Solutions business. On January 3, 2023,

Valmet announced that the acquisition has been completed. The

value of the acquisition was not disclosed. The acquired business

specializes in process control and optimization solutions for

batch, continuous and hybrid processes. It serves customers

mainly in process industries such as food and beverage,

pharmaceuticals and chemical products. It had net sales of

approximately USD 18 million and employed 76 people in the

United States and the Benelux countries. The acquisition

excluded NovaTech Automation’s other divisions. The NovaTech

Automation Process Solutions business was integrated into

Valmet’s Automation Systems business line and is included in

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | REPORT OF THE BOARD OF DIRECTORS

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Valmet’s financial reporting since the interim report for January–

March, 2023.

Körber Group’s Business Area Tissue

On July 7, 2023, Valmet announced that it has entered into an

agreement to acquire Körber Group’s Business Area Tissue. On

November 3, 2023, Valmet announced that the acquisition has

been completed. The Business Area Tissue specializes in

innovative converting and packaging technologies and services

for the tissue industry. In 2022, its net sales amounted to EUR

305 million and adjusted EBITDA margin was approximately 12

percent. In 2023, net sales of the business amounted to EUR

296 million, of which EUR 76 million was booked to Valmet. The

company has a strong and growing services business, which

accounted for 36 percent of total net sales in 2022. The business

employs around 1,170 employees in Italy, Brazil, the U.S., China

and Japan.

The enterprise value of the acquisition was approximately EUR

380 million on a cash and debt free basis subject to ordinary

post-closing adjustments. The transaction consideration was

paid in cash upon the completion. Valmet financed the

acquisition with debt. The financing package consisted of two

facilities, a EUR 250 million term loan facility maturing in

January 2028 and a EUR 150 million term loan facility maturing

in two years from the closing of the acquisition.

Valmet estimates that the acquisition will bring sales, service

and cost synergies worth of EUR 8 million by the end of 2026.

The acquired business formed a separate business unit under

Valmet’s Paper business line called Tissue Converting. It is

included in Valmet’s financial reporting since the fourth quarter

of 2023. The process technology part of the business is

consolidated to Paper business line and the services part to the

Services business line.

Process Gas Chromatography business of Siemens AG

On July 17, 2023, Valmet announced that it has entered into an

agreement to acquire the Process Gas Chromatography business

of Siemens AG. The value of the acquisition is EUR 102.5 million

on a cash and debt-free basis subject to customary adjustments.

The acquisition is estimated to be completed on April 1, 2024, at

the earliest, upon completion of carve-out measures and

customary closing conditions.

The Process Gas Chromatography business of Siemens AG is a

market leader with its Maxum II Gas Chromatograph platform,

Systems Integration, and Customer Services offering. Gas

Chromatographs are used to measure the chemical composition

in gases and evaporable liquids in all stages of production. In

2022, net sales of the business amounted to approximately EUR

120 million and pro-forma adjusted EBITDA margin was

approximately 10 percent. The business employs around 300

people, and its main locations are in the USA, Germany, and

Singapore. The acquired business is planned to be integrated

into Valmet’s Automation Systems business line as a separate

business unit.

Demuth

On December 22, 2023, Valmet announced that it has entered

into an agreement to acquire Demuth, a Brazilian company

specializing in wood handling solutions for the pulp industry. The

value of the acquisition was not disclosed. The acquisition is

subject to relevant competition authority approvals and is

estimated to be completed during the second or third quarter of

2024.

Demuth operates two manufacturing facilities in southern

Brazil. The company's net sales are around EUR 20–30 million

annually and it employs around 300–400 people. Demuth

comprises of companies “Demuth Máquinas” and “Estruturas

Metálicas Demuth”. 

Disposals

Valmet made no disposals during 2023.

Research and development

Valmet’s research and development (R&D) expenses in 2023

amounted to EUR 114 million, i.e. 2.1 percent of net sales (EUR

95 million and 1.9%). Research and development work is carried

out predominantly in Finland and Sweden, within the business

lines’ R&D organizations and pilot facilities. In addition, research

and development takes place within a network of customers,

suppliers, research institutes and universities. In the end of

2023, R&D employed 551 (508) people. Valmet’s R&D

headcount has increased due to the R&D and innovation

program Beyond Circularity, where Valmet and its ecosystem

come together to innovate, renew and enable their customer

industries to shift to carbon neutrality and to facilitate green

transition.

Valmet’s R&D work is based on customers’ needs, such as

improving production and resource efficiency, maximizing the

value of raw materials, providing new revenue streams, and

developing new innovations and technologies.

Valmet develops competitive, leading production and

automation technologies and services. To enhance raw material,

water and energy efficiency in its customers’ production

processes, Valmet combines digitalization, process technology,

flow control, automation systems and services. Valmet also

develops solutions for replacing fossil materials with renewable

ones and for producing new high-value end products.

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | REPORT OF THE BOARD OF DIRECTORS

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Personnel

	As at Dec 31,
Personnel by business line	2023	2022	Change
Services	6,493	6,307	3%
Automation	5,171	4,842	7%
Flow Control	2,841	2,792	2%
Automation Systems	2,330	2,050	14%
Process Technologies	6,707	5,647	19%
Pulp and Energy	1,948	1,892	3%
Paper	4,759	3,755	27%
Other	789	752	5%
Total	19,160	17,548	9%

	As at Dec 31,
Personnel by area	2023	2022	Change
North America	2,273	2,040	11%
South America	1,164	833	40%
EMEA	11,644	10,787	8%
China	2,432	2,323	5%
Asia-Pacific	1,647	1,565	5%
Total	19,160	17,548	9%

During 2023, Valmet employed an average of 18,130 (16,554)

people. The number of personnel at the end of the year was

19,160 (17,548). Personnel expenses totaled EUR 1,292 million

(EUR 1,171 million) in 2023, of which wages, salaries and

remuneration amounted to EUR 1,019 million (EUR 920 million).

Changes in Valmet’s Executive Team

On February 14, 2023, Valmet announced that Vesa Simola,

Area President, EMEA at Valmet, has decided to continue his

career outside the Company. Vesa Simola continued as member

of Valmet's Executive Team and lead the Company's EMEA Area

until the end of May, 2023.

On April 28, 2023, Valmet announced that Tero Kokko, Ph.D.

(Eng.), M.Sc. (Econ.), has been appointed President, EMEA at

Valmet as of June 1, 2023. In his new position, Tero Kokko is a

member of Valmet's Executive Team and reports to President

and CEO Pasi Laine. Tero Kokko previously worked in Valmet's

Services business line as Vice President, Fabrics business unit.

Prior to this, he worked in various management positions at

Cargotec and its subsidiary Kalmar since 2011 and in Metso's

Automation business between 2004–2011.

On June 21, 2023, Valmet announced that Petri Rasinmäki,

M.Sc. (Eng.), MBA, has been appointed Business Line President,

Paper, at Valmet as of September 1, 2023. In his new position,

Petri Rasinmäki is a member of Valmet’s Executive Team

reporting to President and CEO Pasi Laine. Petri Rasinmäki

previously held the position of Vice President, Board and Paper

Mills business unit at Valmet’s Paper business line. Prior to this,

he worked in various management positions at Valmet and

Metso since 2004. Jari Vähäpesola, the former Business Line

President, Paper, retired after a long, successful career at

Valmet as of December 1, 2023.

On August 18, 2023, Valmet announced that Valmet’s Board of

Directors has accepted the resignation of Valmet’s President and

CEO Pasi Laine and related terms and conditions. The Board of

Directors has initiated the search for a successor. Pasi Laine will

continue as the President and CEO of Valmet until the successor

is appointed and ready to step in.

On August 22, 2023, Valmet announced that Julia Macharey,

Senior Vice President Human Resources and Operational

Development of Valmet has decided to leave the Company to

move into a new position outside Valmet. Julia Macharey

continued in her role until the end of January 2024.

Investments in production

On May 2, 2023, Valmet announced that it will further

strengthen its press felt production capabilities in Tampere,

Finland, by investing in a new weaving machine and a new heat-

setting machine in addition to the ongoing press felt investment

announced in August 2022. The value of the new investment will

not be disclosed. The investments will safeguard Valmet's press

felt production capacity for years to come and strengthen

Valmet's position as one of the leading press felt suppliers

globally.

Update on the impacts of Russia's invasion of

Ukraine

Valmet's withdrawal from Russia was completed in December

2023. During the second half of the year, Valmet did not have

employees in Russia (at the end of 2022, there were

approximately 30 employees in Russia).

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Strategic goals and their implementation

Valmet’s strategy is: Valmet develops and supplies competitive

and reliable process technologies, services and automation to

the pulp, paper and energy industries. Our automation business

covers a wide base of global process industries. We are

committed to moving our customers’ performance forward with

our unique offering and way to serve.

Valmet's mission is converting renewable resources into

sustainable results. Valmet’s vision is to become the global

champion in serving its customers and in moving the industries

forward.

Valmet seeks to achieve its strategic targets by continuous

improvement and renewal. Valmet has the following Must-Win

initiatives: ‘Customer excellence’, ‘Leader in technology and

innovation’, ‘Excellence in processes’ and ‘Winning team’, as well

as selected Business Accelerators.

Valmet’s product and services offering consists of process

technologies that increase the value of the customers’ end

products, automation systems and flow control solutions,

productivity enhancing services, plant upgrades and rebuilds,

new cost-efficient equipment and solutions for optimizing raw

material and energy usage.

Valmet has an annual strategy process, where, among others,

Valmet’s strategy, Must-Wins and financial targets are reviewed.

Valmet's financial targets are the following:

Financial targets

• Net sales for Services and Automation segments to grow over two times the market growth

• Net sales for Process Technologies segment to exceed market growth

• Comparable EBITA: 12–14%

• Comparable return on capital employed (ROCE) before taxes: at least 15%

• Dividend payout at least 50% of net profit

Actions to reach Comparable EBITA target of 12–14%

Valmet continues to focus on improving profitability through

implementing its four Must-Win initiatives: ‘Customer

excellence’, ‘Leader in technology and innovation’, ‘Excellence in

processes’ and ‘Winning team’. Valmet targets to increase the

comparable EBITA margin in all three segments (Services,

Automation and Process Technologies).

Customer excellence

Valmet aims to strengthen its customer base by implementing

effective sales management practices and cultivating close

relationships with customers. Valmet is targeting to increase its

market share in Services and Automation segments by growing

over two times the market growth. In Process Technologies

segment, Valmet aims to maintain and improve its market

share.

Leader in technology and innovation

Valmet is known for its world-class technology and is always

looking to bring advanced and innovative solutions to the

market. Furthermore, Valmet is placing a strong emphasis on

product cost competitiveness.

Excellence in processes

Valmet is continuously developing and improving its processes.

Valmet aims to ensure excellent project management and

project execution. Supply chain management and efficient

procurement are key for Valmet. Valmet is also streamlining its

processes and renewing the ERP system.

Winning team

Valmet has a strong home base in the Nordic region but has also

been increasing procurement, production, and engineering

resources in cost-competitive countries. The Company is

investing heavily in its people, particularly through the global

training portfolio, which supports the execution of the Must-

Wins.

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Disclosure of non-financial information

Valmet reports its non-financial information in accordance with

the Non-Financial Reporting Directive (NFRD), the Finnish

Accounting Act, the European Union (EU) Taxonomy Regulation,

and the Task Force on Climate-related Financial Disclosures

(TCFD) recommendations.

Business model and value creation

Valmet is a leading global developer and supplier of process

technologies, automation and services for the pulp, paper and

energy industries. With our automation systems and flow control

solutions we serve an even wider base of process industries.

Valmet’s mission is to convert renewable resources into

sustainable results.

Our strong technology offering includes pulp mills, tissue,

board and paper production lines, air emission control solutions,

and power plants for bioenergy production. Our services,

automation systems and flow control solutions improve

production performance and increase the environmental

efficiency and cost-effectiveness of Valmet’s customers’

production processes, while ensuring safe and reliable

operations. Our product and service portfolio consists of

productivity-enhancing services, plant upgrades and rebuilds,

cost-effective new equipment and solutions for optimizing

energy and raw material use, and technologies increasing the

value of our customers’ end products. Valmet’s technologies

maximize the value of renewable raw materials, while

minimizing their environmental impact.

Valmet’s technologies and services enable customers to apply

and increase circularity in their operations to produce end

products with less energy and water and significantly reduced

emissions, chemicals, and raw materials, and to further improve

flexibility in fuel source selection to replace fossil fuels with

renewable ones. Valmet sees the transition to a carbon-neutral

economy as an opportunity and believes technology plays a key

role in mitigating the impacts of climate change. Valmet is

enabling the transition of the pulp and paper industry to carbon

neutrality.

In Valmet’s own operations, more efficient processes, energy

efficiency investments and purchasing CO2-free electricity and

district heat enable us to significantly reduce CO2 emissions , as

well as the use of natural resources. In our own operations, we

are constantly improving our processes to increase resource

efficiency by reducing the use of water, chemicals and various

waste streams, and we aim to increase the use of recycled

materials, such as recycled steel in our technology offering.

Valmet strives to develop the transparency and traceability of

its entire value chain, from the sourcing of raw materials to the

recycling of its products. Valmet mainly purchases raw materials

(metals, minerals and polymers), metal-based components,

energy and services from 30,000 suppliers in nearly 60

countries.

Valmet works closely with its customers throughout its key

processes – from product development to the commercialization

of new solutions. Valmet has the financial strength to invest in

innovation development and growth. In 2023, Valmet continued

its R&D and innovation program, called Beyond Circularity, which

improves Valmet’s readiness to support the green transition in

Valmet’s customer industries based on the Company’s

technology vision 2030. The program aims to further strengthen

Valmet’s R&D work to develop process technologies, automation

and services for utilizing renewable materials and recycled waste

and side streams. The program also allows Valmet to further

improve the energy efficiency of its process technologies and

enables a shift to the use of fossil-free energy in its pulp and

paper industry customers’ production processes.

In addition to value for its owners, Valmet creates economic

and social value as an employer, taxpayer and customer for its

suppliers. Valmet provides employment and business

opportunities to a wide range of stakeholders and indirectly

builds wealth in local societies.

Sustainability, including climate-related matters, is at the core

of Valmet’s business strategy, operations, and value creation.

Sustainability is integrated into our strategy and main processes

through Valmet’s comprehensive Sustainability360° Agenda,

which covers Valmet’s entire value chain including the supply

chain, Valmet’s own operations and the use phase of Valmet's

technologies.

One main material topic in Valmet’s Sustainability360° Agenda

is our Climate Program, which supports the Paris Climate

Agreement’s 1.5-degree pathway and the United Nations

Sustainable Development Goals. Our Climate Program’s CO2

emissions reduction targets have been approved by the Science

Based Targets initiative.

Materiality and management

Valmet’s Sustainability360° Agenda covers the most material

sustainability topics for Valmet. Valmet’s material topics are

grouped around three focus areas: Environment; Social; and

Governance. Each focus area has three main material topics with

concrete targets and action plans integrated into the Company’s

annual planning process as a part of the strategy

implementation. Valmet’s Sustainability360° Agenda, its related

targets and all supporting policies are owned, driven and

monitored by Valmet’s Executive Team.

Valmet’s Climate Program steering team drives and follows the

progress of the program toward the targets providing status

updates and guidance on implementation quarterly. The

progress of Valmet’s Climate Program is also monitored by the

Executive Team.

All Valmet’s corporate functions, business lines and areas are

responsible for ensuring that Group-wide initiatives are

implemented to meet Valmet’s sustainability goals. Valmet has

tied selected sustainability topics such as health, safety and

quality, as well as sustainable supply chain KPIs, to

remuneration. Valmet's Board of Directors has also linked ESG

targets to Valmet’s Executive Team’s long-term share-based

incentive plan. The potential reward for the 2022–2024

performance period is based on an ESG Index with predefined

targets linked to implementing Valmet’s Climate Program and

Sustainability Agenda.

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Valmet has a systematic company-wide risk management

process for regularly assessing the probability and impact of

risks and opportunities, in which sustainability, including

climate-related matters, is integrated. Valmet has several

Group-wide policies to mitigate these risks and promote

opportunities. The basis of Valmet’s operations is its Code of

Conduct, which creates a uniform ethical foundation for all our

business transactions and work assignments globally. It also

describes our approach to sustainable business operations,

people and society, and environmental issues. Valmet strives for

globally consistent and transparent management practices to

ensure all its stakeholders can reliably assess the Company’s

operations and development.

Valmet has a global supplier sustainability management

process which is fully integrated into its supply chain processes

to assess potential risks related to human and labor rights,

ethical business practices, climate and environmental

management, and health and safety. All Valmet’s suppliers are

assessed for sustainability risks and are required to commit to

the minimum requirements set by Valmet’s Sustainable Supply

Chain Policy. Compliance is assessed through self-assessments

and audits.

Valmet’s global management system (GMS) supports an

efficient process-oriented way of working toward the satisfaction

of customer and other stakeholder expectations. Valmet’s global

management system provides a common platform for quality

and HSE management in all operations. Our main operations are

certified in accordance with the ISO 14001:2015

(environmental), ISO 45001:2018 (health and safety) and ISO

9001: 2015 (quality) management standards.

Material topics

Valmet has integrated environmental, social and employee,

respect for human rights, and anti-corruption and bribery related

sustainability topics into Valmet’s Sustainability360° Agenda.

Environmental and climate-related matters

Valmet has estimated that around 4 percent of its environmental

impact arises from its supply chain, and around 1 percent from

its own operations. Most of Valmet’s value chain’s environmental

impact, i.e., 95 percent, originates in the customer use of its

technologies.

Valmet is actively developing its offering and its new products

and services to reduce CO2 emissions, water, chemical and raw

material consumption and waste, while increasing energy

efficiency. Valmet monitors the demand for environmentally

efficient and carbon-neutral technologies and aims to maintain

the orders received from new products and services above 25

percent of total orders received annually.

Valmet has also set climate-related targets across the value

chain as part of its Climate Program. Today, Valmet already

provides bioenergy self-sufficient chemical pulp mills and

enables carbon-neutral production for pulp, paper, heat, and

power customers with access to fossil-free energy sources with

our current process technologies and biomass-based energy

solution offering. By 2030, Valmet’s target is to improve the

energy efficiency of our current offering by 20 percent and

developing technologies that do not depend on the energy

source. Valmet also targets a reduction of 20 percent in CO2

emissions in its supply chain and 80 percent in its own

operations by 2030. As part of its own operations’ environmental

program, Valmet has also defined targets for reducing energy

and water consumption and for increasing the share of recycled

or reused waste.

Valmet has a comprehensive climate-related e-learning course,

available for its employees and suppliers.

Valmet has a stand-alone budget and action plan to improve

environmental efficiency at its production facilities. The

Company also continuously develops the resource and energy

efficiency of its technology and solutions, based on R&D action

plans and through the Beyond Circularity program.

Social and employment-related matters

Valmet has more than 19,000 employees in over 40 countries

around the world. Valmet values active dialogue and teamwork

as an important part of its success and emphasizes respectful

behavior and a safe, healthy and well-managed working

environment in all locations. The Company sets clear

expectations for managers and employees through its senior

manager, manager and employee role descriptions, which focus

on driving performance, building engagement, supporting

development, and living the Company’s values. As an employer,

Valmet is committed to promoting equal opportunities for

everyone and respecting its employees’ right to freedom of

association and collective bargaining.

Valmet strives to protect the health, safety and wellbeing of its

own people and partners. We invest in a positive safety culture

collaborating with customers and partners and constantly

improving our processes and practices toward our common goal

of zero harm.

Valmet participates in public discussions of its operating

environment and regulations. Valmet builds trust and reputation

by operating both sustainably and profitably.

Respect for human rights

As a global process technology, automation and services

supplier, Valmet operates in a very multicultural environment.

Valmet recognizes its responsibility to respect human rights and

requires its business partners to do the same.

Valmet is committed to international frameworks related to

human rights, such as the UN Guiding Principles on Business and

Human Rights. Valmet’s commitment to respect human rights is

laid out in its Human Rights Statement.

Valmet has a comprehensive due diligence process to monitor

and manage human rights in its own operations and supply

chain. Valmet has integrated human rights into company policies

and related processes to ensure human rights are respected and

promoted in all our operations. Valmet conducts human rights

impact assessments in high-risk locations and provides human

rights training to its employees through an e-learning course

that is globally available to all Valmeteers.

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Anti-corruption and bribery

Valmet’s Code of Conduct requires Valmet and its employees to

act with honesty and integrity. It sets Valmet’s commitment of

zero tolerance for corruption and bribery. It also defines

Valmet’s expectation that all its business partners fully comply

with applicable anti-bribery laws and regulations. Valmet’s Code

of Conduct is complemented by Valmet’s Sustainable Supply

Chain Policy, which also sets Valmet’s requirements for its

suppliers regarding business ethics and legal compliance,

including refusing to participate in any form of corruption,

bribery or money laundering. Valmet also has a global Anti-

Corruption Policy and other internal policies and guidelines

containing the rules, which ensure Valmet’s business or

employees are not involved in any form of corruption or bribery.

Valmet has a Code of Conduct and Anti-bribery Compliance e-

learning course for employees. Valmet also arranges regular

training for targeted groups on the Code of Conduct, anti-

corruption, and other ethics and compliance topics to enforce the

principles and rules set by the related policies and guidelines.

Non-financial indicators

	CO2 emissions from energy consumption in own operations 1		Orders received from new products and services 2		Number of corporate internal audits performed		Sponsorships and donations

     

	New direct suppliers screened over sustainability3		Employees completed Valmet's Code of Conduct training4		Employees covered by collective bargaining agreements		Workforce represented in formal management-worker health and safety committees

                       

1 Direct emissions (Scope 1) from used fuels and indirect emissions (Scope 2, market based) from purchased electricity, district heat and steam in Valmet’s own operations.

Please read GRI Supplement 2023 for the CO2 emission factors used. Newly acquired Tissue Converting business unit excluded from the reported figure.

2 Valmet’s new products and services reduce CO2 emissions, water and raw material consumption, and waste, while increasing energy efficiency. Valmet monitors the market

demand for more environmentally efficient technologies by monitoring the share of orders received from new products and services. Valmet’s target in 2023 was that at least

25 percent of orders received should come from new products and services.

3 Supplier data from the 2023 acquisitions is not included in the reported figure.

4 All active employees, including blue-collar workers, trained in the Code of Conduct. External workforce and employees from newly acquired Tissue Converting business unit

excluded from the reported figure.

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | REPORT OF THE BOARD OF DIRECTORS

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Breakdown of employees by contract type, employment type, region and gender

Number of employees by employment contract and gender1
	Female		Male		Total
	2023	2022	2023	2022	2023	2022
Permanent	3,462	3,185	13,799	12,595	17,263	15,781
Temporary	562	508	1,334	1,259	1,897	1,767
Total	4,024	3,693	15,133	13,854	19,160	17,548

Number of permanent employees by employment type and gender1
	Female		Male		Total
	2023	2022	2023	2022	2023	2022
Full-time	3,321	3,066	13,614	12,441	16,937	15,508
Part-time	141	119	185	154	326	273
Total	3,462	3,185	13,799	12,595	17,263	15,781

Workforce by geography and gender1
	Female		Male		Total
	2023	2022	2023	2022	2023	2022
North America	405	338	1,866	1,701	2,273	2,040
South America	232	163	932	670	1,164	833
EMEA	2,595	2,443	9,048	8,344	11,644	10,787
China	575	551	1,857	1,772	2,432	2,323
Asia-Pacific	217	198	1,430	1,367	1,647	1,565
Total	4,024	3,693	15,133	13,854	19,160	17,548

Workforce by region and employee contract
	Regular 2023	Fixed term 2023	Total 2023
North America	2,267	6	2,273
South America	1,091	73	1,164
EMEA	10,846	798	11,644
China	1,437	995	2,432
Asia-Pacific	1,622	25	1,647
Total	17,263	1,897	19,160

Lost time incident frequency, total recordable incident frequency, number of fatalities and absentee rate, own personnel
	2023	2022
LTIF2	1.5	1.6
TRIF3	3.0	3.2
Fatalities	0	0
Absentee rate	2.7%	2.9%

Lost time incident frequency, total recordable incident frequency and number of fatalities, external workers
	2023	2022
LTIF2	1.9	2.3
TRIF3	4.6	4.7
Fatalities	0	2

1 The gender category includes the options Female, Male and Not Declared. In 2023, the number of individuals in the Not Declared category was too small enough to be included

in a separate column.

2 LTIF reflects the number of injuries resulting in an absence of at least one workday per million hours worked.

3 LTIF + medical treatment and restricted work cases.

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | REPORT OF THE BOARD OF DIRECTORS

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Valmet’s management approach to non-financial impacts

	ENVIRONMENTAL AND CLIMATE-RELATED MATTERS		SOCIAL AND EMPLOYMENT-RELATED MATTERS
Policies and standards	International frameworks and Valmet's policies covering all topics:	• UN Global Compact • UN Sustainable Development Goals • United Nations Universal Declaration of Human Rights • UN Guiding Principles on Business and Human Rights • Declaration on Fundamental Principles and Rights at Work of the International Labour Organization (ILO) • OECD’s Guidelines for Multinational Enterprises
	• Health, Safety and Environment (HSE) Policy: Defines Valmet’s approach to managing HSE performance in its own operations and in customer industries • Instructions for sustainable and responsible research, product development, and design: support the implementation of Valmet’s HSE policy • Guidance on hazardous substances and restricted materials: Describes the management approach and provides instructions for compliance with regulatory requirements regarding the prohibition and reporting of materials found in Valmet’s products		• Health, Safety and Environment (HSE) Policy: Defines Valmet’s approach to managing HSE performance in its own operations and in customer industries • Human Resources Policy: Framework for the management of the human resources function, which is committed to developing an engaged and performance-driven community and continuously driving the global development of Valmet employees’ capabilities • Equal Opportunity and Diversity Policy: Defines Valmet’s approach to promoting equal opportunities for all employees • Non-Discrimination and Anti-Harassment Policy: Outlines the measures Valmet takes to ensure a respectful and inclusive workplace free from discrimination and harassment • Minimum Safety Standards and Life Saving Rules: Defines minimum requirements for safety at work for specific high-risk activities and critical safety rules
Due diligence processes	• The HSE event reporting and management system is used to monitor and prevent HSE-related incidents and hazards • Compliance with HSE-related laws and regulations is ensured by complying with Valmet’s related processes • Internal and external audits executed globally to evaluate compliance with internal, legal and other HSE requirements and to correct non-conformities		• The HSE event reporting and management system is used to monitor and prevent HSE-related incidents and hazards • Compliance with laws and regulations is ensured by complying with Valmet’s related processes • Internal and external audits executed globally to evaluate compliance with internal, legal and other HSE requirements, and to correct non- conformities
Risks and risk management	Risks: • Non-compliance with environmental regulations may result in fines, creating reputational and business risks • Climate-related regulation may impact Valmet’s technologies, its customers’ operations and business environments • Climate-related physical risks: extreme weather events and variability in weather patterns, water shortages and scarcity of raw materials may cause production interruptions throughout Valmet’s value chain • Risks related to Valmet’s suppliers may create significant reputational or business risks Risk management: • ISO 14001:2015 environmental management systems in all operations • Risk management of environmental and climate-related matters is integrated into all activities to ensure proactive risk identification and mitigation • Climate scenario analysis to support strategy and risk management • Global supplier sustainability management process, including risk assessments and audits		Risks: • Valmet’s own employees’ and partners’ health and safety risks are related to work-related injuries and illnesses, and work-life integration • Non-compliance with occupational health and safety regulations may result in fines, creating reputational and business risks • Retention and engagement of key employees and a slowing down of the resourcing process due to the hot labor market and talent shortage • Risks related to Valmet’s suppliers may create significant reputational or business risks Risk management: • ISO 45001:2018 health and safety management systems in all operations • HSE event management system • HSE committees covering all personnel • Development of global training portfolio and ensuring necessary competence is in place across regions • Development of engagement and retention through employee survey action execution • Debottlenecking of resourcing process • Global supplier sustainability management process, including risk assessments and audits
Outcomes of policies and  due diligence processes	• New products and services that meet environmental requirements and help customers produce sustainable products which require less water and energy and fewer raw materials, enable the use of renewable resources producing less waste and lower emissions • Supplier sustainability audits and corrective actions in accordance with Valmet’s global supplier sustainability management process • CO2 reduction and other environmental targets for renewable energy, energy efficiency, water consumption and waste management • Climate training, including e-learning		• Healthy and safe workplaces for Valmet’s own employees and partners • Operations free of life-changing incidents, reduction in overall incident frequencies • Training programs developed to enhance skills • Supplier sustainability audits and corrective actions in accordance with Valmet’s global supplier sustainability management process

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | REPORT OF THE BOARD OF DIRECTORS

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	RESPECT FOR HUMAN RIGHTS		ANTI-CORRUPTION AND BRIBERY
Policies and standards	International frameworks and Valmet's policies covering all topics:	• Valmet's Code of Conduct • Valmet's Human Rights Statement • Valmet's Sustainable Supply Chain Policy • ISO 9001:2015 Quality management system • ISO 14001:2015 Environmental management system • ISO 45001:2018 Occupational health and safety management system
	• Equal Opportunity and Diversity Policy: Defines Valmet’s approach to promoting equal opportunities for all employees • Non-Discrimination and Anti-Harassment Policy: Defines Valmet’s zero tolerance of discrimination or harassment in any form		• Anti-Corruption Policy: Defines Valmet's zero-tolerance approach to bribery and corruption in more detail • Compliance reporting guideline: Defines how Valmet employees can voice their concerns about potential violations of the Code of Conduct, Anti-Corruption Policy, unethical behavior and other misconduct • Approval guideline for Agency agreements and Agent approval process: Describes Valmet’s due diligence process and requirements for agent approval
Due diligence processes	• Valmet’s human rights due diligence process is based on the UN Guiding Principles for Business and Human Rights and OECD Guidelines for Multinational Enterprises and includes location-level human rights impact assessments, a supplier sustainability management process and other sustainability impact assessments		• Risk management evaluation helps Valmet find the best ways to manage risks and train the unit’s personnel to use existing tools and procedures • Internal audits executed globally to evaluate compliance with anti- corruption and bribery-related rules and to implement necessary corrective actions • Global supplier sustainability management process to evaluate compliance and correct non-conformities
Risks and risk management	Risks: • Potential violations of human rights may impact Valmet’s reputation and thus its financial position Risk management: • Valmet’s human rights due diligence framework for identifying and mitigating potential negative human rights impacts and risks • Global supplier sustainability management process, including risk assessments and audits		Risks: • Unethical business practices may impact Valmet’s reputation and thus its financial position Risk management: • Internal risk management audits • Anti-Corruption Policy works as a tool to set the tone for preventive misconduct and mitigate potential risks • Global supplier sustainability management process, including risk assessments and audits
Outcomes of policies and  due diligence processes	• Reporting system in place for violations of Code of Conduct • Continuous human rights training to increase awareness of potential negative impacts • External third-party location-level human rights impact assessments and improvement actions, in accordance with Valmet’s human rights due diligence process • External third-party supplier sustainability audits and corrective actions in accordance with Valmet’s global supplier sustainability management process		• Reporting system in place for violations of Code of Conduct, including anti-corruption and bribery and other misconduct • Anti-corruption and bribery training, including an e-learning course • External third-party supplier sustainability audits and corrective actions in accordance with Valmet’s global supplier sustainability management process

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | REPORT OF THE BOARD OF DIRECTORS

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EU taxonomy for sustainable finance

The European Union Sustainable Finance Taxonomy Regulation

2020/852 (the EU taxonomy) requires large companies subject

to the Non-Financial Reporting Directive (NFRD) to disclose the

extent to which their economic activities have a substantial

positive environmental impact. The EU taxonomy is intended to

encourage financial markets to invest and finance more

sustainably. It sets the criteria for activities that the EU has

classified as environmentally sustainable. The activities

described in the taxonomy are referred to as eligible activities.

Eligible activities that also meet set criteria of (1) a substantial

contribution to one of the six environmental objectives, (2) do

no significant harm to the remaining five environmental

objectives, and (3) meet minimum safeguards are referred to as

taxonomy-aligned activities. Only with the cumulative fulfillment

of all three requirements is the economic activity taxonomy-

aligned.

The currently available criteria allow companies to demonstrate

their contribution to the following environmental objectives:

Climate change mitigation; Climate change adaptation;

Sustainable use and protection of water and marine resources;

Transition to a circular economy; Pollution prevention and

control; and Protection and restoration of biodiversity.

Eligibility and alignment assessment

Valmet has reviewed its offering against the Taxonomy activities

to assess eligibility based on the eligible economic activities

listed in the Climate and Environmental Delegated Acts and

related Annexes. Valmet has also taken into consideration the

amendments to the Climate Delegated Act.

Valmet’s economic activities contribute substantially to the

objectives of Climate change mitigation and Transition to a

circular economy. Valmet reports eligibility and alignment for the

Climate change mitigation objective in accordance with the

Taxonomy Regulation. For the Transition to a circular economy

objective, the requirement is to report eligibility, but not

alignment, in accordance with the Taxonomy Regulation in 2023.

In 2023, Valmet’s approach to identifying and reporting

sustainable economic activities consisted of:

1. Eligibility assessment: Mapping of economic activities to

taxonomy activity descriptions and NACE codes.

2. Substantial contribution assessment: Screening of activities

against technical screening criteria.

3. Do no significant harm (DNSH) assessment: Screening of

Valmet’s procedures to ensure that our operations do not

cause significant harm to relevant environmental objectives. 

4. Minimum safeguards assessment: A review of Valmet’s

corporate safeguards to ensure that our operating

instructions, company policies, and management system are

compliant with the OECD Guidelines for Multinational

Enterprises (OECD), the UN Guiding Principles on Business and

Human Rights (UNGP) and the International Labour

Organization (ILO) Declaration on Fundamental Principles and

Rights at Work. The minimum safeguards assessment covers

the following social and governance aspects: human and

labour rights; taxation; corruption and bribery; and fair

competition.

As a result of the 2023 assessment, the following economic

activities in the taxonomy were identified where Valmet has

taxonomy-eligible activities:

• CCM 3.1 Manufacture of renewable energy technologies

• CCM 3.6 Manufacture of other low-carbon technologies

• CE 4.1 Provision of IT/OT data-driven solutions

• CE 5.1 Repair, refurbishment and remanufacturing

According to the taxonomy, the Circular economy is a system in

which the value of products, materials and other resources in the

economy are maintained for as long as possible. When defining

its activities under 5.1 Repair, refurbishment and

remanufacturing, Valmet has considered and reports its services

and solutions that target the extension of the lifecycle of

machinery and equipment. Valmet provides services, automation

and technologies for the pulp, paper and energy industries, and

offers paper machine modernization solutions and maintenance

services that cover the entire machine life cycle. Valmet’s

solutions include rebuilds, upgrades, conversions, and

maintenance services for various types of paper machines and

industrial processes, such as renewable energy plants. 

Paper machine modernization and single section business are

the process of upgrading and improving the performance and

extending the lifetime of papermaking machines and equipment.

It can involve replacing old or obsolete parts, installing new

technologies, optimizing process parameters, and enhancing

quality and efficiency. The paper machine modernization

business can help paper manufacturers increase productivity,

while improving product quality, extending lifetime and meeting

environmental standards. Although spare parts, performance

parts and consumables play a key role in keeping machinery and

equipment functional, they were excluded in the analysis, which

was conducted conservatively, based on the argument that it

might be difficult to prove their substantial contribution to

exclusively extending the lifetime of equipment.

Key performance indicators

Valmet has made some estimations in the calculation of the key

performance indicators (KPIs), net sales1, capital expenditure

(CapEx), and operating expenditure (OpEx), due to our

interpretation of the Taxonomy Regulation. Double counting has

been avoided by classifying external revenue streams into

taxonomy-eligible economic activities only once. The shares of

eligible and aligned net sales have been used as a key for

calculating eligible and aligned OpEx and CapEx. Intangible and

tangible assets as well as right-of-use assets acquired in

business combinations were not included in the calculation of

eligible and aligned CapEx based on net sales key.

Taxonomy net sales2 are calculated according to the EU

Taxonomy definition of turnover and in line with IFRS 15, and

are included in Valmet’s total net sales presented in Valmet’s

consolidated financial statements. It includes the external sales

of taxonomy eligible activities. Net sales have been calculated

separately in each business line for eligible and aligned

activities.

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | REPORT OF THE BOARD OF DIRECTORS

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Taxonomy CapEx3 is presented and measured in line with the

CapEx presented in the Group’s financial statements. It consists

of additions to property, plant and equipment, and intangible

assets as well as investments in right-of-use assets. Total CapEx

also covers additions to tangible and intangible assets as well as

right-of-use assets resulting from business combinations.

Additions to goodwill are not included in CapEx.

The Taxonomy Regulation’s definition of OpEx consists of

expenses related directly to the maintenance and servicing of

assets, including facility improvements and research and

development projects supporting the transition to a low-carbon

economy. Valmet has applied a conservative interpretation of

the Taxonomy OpEx definition. Raw materials, and salaries of

employees performing repairs, maintenance and services of

eligible fixed assets, are excluded.

The following tables present Valmet’s 2023 Taxonomy KPIs

associated with Valmet’s taxonomy-eligible economic activities:

1 Valmet uses the term net sales in its financial statements, while the EU Taxonomy Regulation refers to the term Turnover.

2 Consolidated financial statements, note 3. Revenue recognition.

3 Consolidated financial statements, note 4. Intangible assets and property, plant and equipment and note 5. Leases.

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | REPORT OF THE BOARD OF DIRECTORS

19

Turnover4

2023

Substantial Contribution Criteria

DNSH criteria ('Does Not Significantly Harm')

Economic activities

Code

Turnover (EUR million)

Proportion of turnover 2023

Climate change mitigation

Climate change adaptation

Water

Pollution

Circular economy

Biodiversity

Climate change mitigation

Climate change adaptation

Water

Pollution

Circular economy

Biodiversity

Minimum safeguards

Proportion of taxonomy- aligned (A.1.) or -eligible (A.2.) turnover, 2022

Category enabling activity

Category transitional activity

A. TAXONOMY-ELIGIBLE ACTIVITIES

A.1 Environmentally sustainable activities (taxonomy-aligned)

Manufacture of renewable energy technologies

CCM 3.1

291

5.3%

Y

N/EL

N/EL

N/EL

N/EL

N/EL

Y

Y

Y

Y

Y

Y

Y

4.2%

E

Manufacture of other low carbon technologies

CCM 3.6

3

—%

Y

N/EL

N/EL

N/EL

N/EL

N/EL

Y

Y

Y

Y

Y

Y

Y

E

Turnover of environmentally sustainable activities (Taxonomy- aligned) (A.1)

294

5.3%

5.3%

—%

—%

—%

—%

—%

Y

Y

Y

Y

Y

Y

Y

4.2%

Of which Enabling

294

5.3%

5.3%

—%

—%

—%

—%

—%

Y

Y

Y

Y

Y

Y

Y

4.2%

E

Of which Transitional

0

—%

—%

0.0%

T

A.2 Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)

Manufacture of renewable energy technologies

CCM 3.1

103

1.9%

EL

N/EL

N/EL

N/EL

N/EL

N/EL

0.2%

Manufacture of other low carbon technologies

CCM 3.6

17

0.3%

EL

N/EL

N/EL

N/EL

N/EL

N/EL

0.2%

Provision of IT/OT data- driven solutions

CE 4.1

16

0.3%

N/EL

N/EL

N/EL

N/EL

EL

N/EL

Repair, refurbishment and remanufacturing

CE 5.1

1,291

23.3%

N/EL

N/EL

N/EL

N/EL

EL

N/EL

Turnover of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2)

1,427

25.8%

2.2%

—%

—%

—%

23.6%

—%

0.5%

A. Turnover of Taxonomy-eligible activities (A.1 + A.2)

1,721

31.1%

7.5%

—%

—%

—%

23.6%

—%

4.7%

B. TAXONOMY-NON-ELIGIBLE ACTIVITIES

Turnover of taxonomy-non- eligible activities

3,811

68.9%

TOTAL

5,532

100%

For the Transition to a circular economy objective, the requirement is to report eligibility, but not alignment, in accordance with the Taxonomy Regulation in 2023. Therefore,

Valmet has not reported the alignment figures for the Transition to a circular economy objective.

4 Net Sales is used in other parts of Valmet's financial statements, while the EU Taxonomy Regulation uses the term Turnover.

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | REPORT OF THE BOARD OF DIRECTORS

20

CapEx

2023

Substantial contribution criteria

DNSH criteria ('Does Not Significantly Harm')

Economic activities

Code

CapEx (EUR millions)

Proportion of CapEx, 2023

Climate change mitigation

Climate change adaptation

Water

Pollution

Circular economy

Biodiversity

Climate change mitigation

Climate change adaptation

Water

Pollution

Circular Economy

Biodiversity

Minimum safeguards

Proportion of Taxonomy aligned (A.1.) or eligible (A.2.) CapEx,  2022

Category enabling activity

Category transitional activity

A. TAXONOMY-ELIGIBLE ACTIVITIES

A.1 Environmentally sustainable activities (Taxonomy-aligned)

Manufacture of renewable energy technologies

CCM 3.1

3

0.6%

Y

N/EL

N/EL

N/EL

N/EL

N/EL

Y

Y

Y

Y

Y

Y

Y

2.1%

E

Manufacture of other low carbon technologies

CCM 3.6

0

—%

Y

N/EL

N/EL

N/EL

N/EL

N/EL

Y

Y

Y

Y

Y

Y

Y

E

CapEx of environmentally sustainable activities (Taxonomy- aligned) (A.1)

3

0.6%

0.6%

—%

—%

—%

—%

—%

Y

Y

Y

Y

Y

Y

Y

2.1%

Of which Enabling

3

0.6%

0.6%

—%

—%

—%

—%

—%

Y

Y

Y

Y

Y

Y

Y

2.1%

E

Of which Transitional

0

—%

—%

—%

T

A.2 Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)

Manufacture of renewable energy technologies

CCM 3.1

1

0.2%

EL

N/EL

N/EL

N/EL

N/EL

N/EL

0.1%

Manufacture of other low-carbon technologies

CCM 3.6

0

—%

EL

N/EL

N/EL

N/EL

N/EL

N/EL

0.1%

Provision of IT/OT data driven solutions

CE 4.1

1

0.1%

N/EL

N/EL

N/EL

N/EL

EL

N/EL

Repair, refurbishment and remanufacturing

CE 5.1

45

10.6%

N/EL

N/EL

N/EL

N/EL

EL

N/EL

CapEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2)

46

11.0%

0.2%

—%

—%

—%

10.7%

—%

0.2%

A.CapEx of Taxonomy eligible activities (A.1 + A.2)

49

11.6%

0.9%

—%

—%

—%

10.7%

—%

2.4%

B. TAXONOMY-NON-ELIGIBLE ACTIVITIES

CapEx of Taxonomy-non-eligible activities

373

88.4%

TOTAL

422

100%

For the Transition to a circular economy objective, the requirement is to report eligibility, but not alignment, in accordance with the Taxonomy Regulation in 2023. Therefore,

Valmet has not reported the alignment figures for the Transition to a circular economy objective.

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | REPORT OF THE BOARD OF DIRECTORS

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OpEx

2023

Substantial contribution criteria

DNSH criteria ( 'Does Not Significantly Harm')

Economic activities

Code

OpEx (EUR millions)

Proportion of OpEx, 2023

Climate change mitigation

Climate change adaptation

Water

Pollution

Circular economy

Biodiversity

Climate change mitigation

Climate change adaptation

Water

Pollution

Circular economy

Biodiversity

Minimum safeguards

Proportion of Taxonomy- aligned (A.1) or eligible (A.2) OpEx, 2022

Category enabling activity

Category transitional activity

A. TAXONOMY-ELIGIBLE ACTIVITIES

A.1 Environmentally sustainable activities (Taxonomy-aligned)

Manufacture of renewable energy technologies

CCM 3.1

2

0.7%

Y

N/EL

N/EL

N/EL

N/EL

N/EL

Y

Y

Y

Y

Y

Y

Y

2.0%

E

Manufacture of other low carbon technologies

CCM 3.6

0

0.1%

Y

N/EL

N/EL

N/EL

N/EL

N/EL

Y

Y

Y

Y

Y

Y

Y

E

OpEx of environmentally sustainable activities (Taxonomy- aligned) (A.1)

2

0.9%

0.9%

—%

—%

—%

—%

—%

Y

Y

Y

Y

Y

Y

Y

2.0%

Of which Enabling

2

0.9%

0.9%

—%

—%

—%

—%

—%

Y

Y

Y

Y

Y

Y

Y

2.0%

E

Of which Transitional

0

—%

—%

—%

T

A.2 Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)

Manufacture of renewable energy technologies

CCM 3.1

5

2.3%

EL

N/EL

N/EL

N/EL

N/EL

N/EL

0.1%

Manufacture of other low-carbon technologies

CCM 3.6

0

0.1%

EL

N/EL

N/EL

N/EL

N/EL

N/EL

—%

Provision of IT/OT data driven solutions

CE 4.1

0

0.1%

N/EL

N/EL

N/EL

N/EL

EL

N/EL

Repair, refurbishment and remanufacturing

CE 5.1

54

23.4%

N/EL

N/EL

N/EL

N/EL

EL

N/EL

OpEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2)

59

26.0%

2.5%

—%

—%

—%

23.5%

—%

0.2%

A.OpEx Taxonomy eligible activities (A.1 + A.2)

61

26.9%

3.4%

—%

—%

—%

23.5%

—%

2.2%

B. TAXONOMY-NON-ELIGIBLE ACTIVITIES

OpEx of Taxonomy-non-eligible activities

168

73.1%

TOTAL

229

100%

For the Transition to a circular economy objective, the requirement is to report eligibility, but not alignment, in accordance with the Taxonomy Regulation in 2023. Therefore,

Valmet has not reported the alignment figures for the Transition to a circular economy objective.

Tables are based on the templates for KPIs presented in Annex 5 of the Commission Delegated Regulation (EU) 2020/852.

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | REPORT OF THE BOARD OF DIRECTORS

22

Shares and shareholders

Share capital and share data1

	2023	2022	2021
Share capital, December 31, EUR million	140	140	100
Number of shares, December 31:
Number of outstanding shares	184,161,105	184,184,830	149,471,196
Treasury shares held by the Parent Company	368,500	344,775	393,423
Total number of shares	184,529,605	184,529,605	149,864,619
Average number of outstanding shares	184,151,827	175,617,981	149,467,939
Average number of diluted outstanding shares	184,151,827	175,617,981	149,467,939
Trading volume on Nasdaq Helsinki Ltd.2	103,147,588	125,393,868	97,242,422
% of total shares for public trading	56	68	65
Earnings per share, EUR	1.94	1.92	1.98
Earnings per share, diluted, EUR	1.94	1.92	1.98
Adjusted earnings per share, EUR	2.28	2.37	2.09
Dividend per share, EUR	1.353	1.30	1.20
Dividend, EUR million	2493	239	179
Dividend payout ratio	70%3	68%	61%
Effective dividend yield	5.2%3	5.2%	3.2%
Price to earnings ratio (P/E)	13.5	13.1	19.1
Equity per share, EUR	13.93	13.54	8.87
Highest share price, EUR	32.99	38.59	38.53
Lowest share price, EUR	19.64	19.95	23.02
Volume-weighted average share price, EUR	26.35	26.90	32.58
Share price, December 31, EUR	26.11	25.16	37.72
Market capitalization, December 31, EUR million	4,818	4,643	5,653

1 The formulas for calculation of the figures are presented in the section ‘Formulas for Calculation of Indicators´.

2  In addition to Nasdaq Helsinki Ltd, Valmet’s shares are also traded on other marketplaces, such as CBOE DXE, Turquoise, BATS, Chi-X and Frankfurt. A total of approximately

50 million Valmet shares were traded on these five alternative marketplaces in 2023. (Source: www.valmet.com/investors/valmet-share/trading-volumes/).

3  Board of Directors’ proposal.

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | REPORT OF THE BOARD OF DIRECTORS

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Largest shareholders on December 31, 2023

		Shares	% of share capital
1	Solidium Oy	18,640,665	10.10%
2	Oras Invest Ltd	16,700,000	9.05%
3	Varma Mutual Pension Insurance Company	7,795,983	4.22%
4	Ilmarinen Mutual Pension Insurance Company	5,738,366	3.11%
5	Elo Mutual Pension Insurance Company	2,711,000	1.47%
6	Finnish State Pension Fund	2,400,000	1.30%
7	OP Finland	1,039,946	0.56%
8	Evli Finland Select Fund	743,261	0.40%
9	Finnish Cultural Foundation	720,684	0.39%
10	Sigrid Jusélius Foundation	716,954	0.39%
11	Samfundet folkhälsan i Svenska Finland rf	661,923	0.36%
12	Aktia Capital Mutual Fund	659,080	0.36%
13	Nordea Pro Finland Fund	594,792	0.32%
14	Danske Invest Finnish Equity Fund	574,836	0.31%
15	FIM Fenno Mutual Fund	544,023	0.29%

Source: Euroclear Finland

Number of shareholders

The number of registered shareholders at the end of year 2023

was 100,752 (89,056).

Shareholdings of the Board of Directors in Valmet Oyj on

December 31, 2023

		Shares
Mäkinen, Mikael	Chair of the Board	9,364
Eskola, Jaakko	Vice Chair of the Board	3,472
Cantell, Aaro	Member of the Board	9,247
Hämälainen, Anu	Member of the Board	3,078
Kemppainen, Pekka	Member of the Board	5,417
Lindberg, Per	Member of the Board	2,473
Maurer, Monika	Member of the Board	5,417
Söderström, Eriikka	Member of the Board	6,547
Total		45,015
% of outstanding shares		0.02%

Shareholdings of the Executive Team in Valmet Oyj on

December 31, 2023

		Shares
Laine, Pasi	President and CEO	185,946
Hokkanen, Katri	CFO	7,145
Kokko, Tero	Area President, EMEA	2,608
Macharey, Julia	SVP, Human Resources and Operational Development	41,110
Niemi, Aki	Business Line President, Services	65,762
Paukkunen, Petri	Area President, Asia Pacific	11,658
Rasinmäki, Petri	Business Line President, Paper	1,717
Riekkola, Sami	Business Line President, Pulp and Energy	19,105
Salonsaari-Posti, Anu	SVP, Marketing, Communications, Sustainability and Corporate Relations	33,693
Sääskilahti, Simo	Business Line President, Flow Control	4,401
Tacla, Celso	Area President, South America	97,742
Tiitinen, Jukka	Area President, North America	96,822
Torttila-Miettinen, Emilia	Business Line President, Automation Systems	734
Zhu, Xiangdong	Area President, China	33,607
Total		602,050
% of outstanding shares		0.33%

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | REPORT OF THE BOARD OF DIRECTORS

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Flagging notifications

During the review period, Valmet received one flagging notification referred to in the Securities Market Act:

			% of shares and voting rights
Transaction date	Shareholder	Threshold	Direct	Through financial instruments	Total, %
December 27, 2023	The Goldman Sachs Group, Inc.	Above 5%	0.05%	6.66%	6.71%

Trading of shares

Trading of Valmet shares on Nasdaq Helsinki	2023	2022
Number of shares traded	103,147,588	125,393,868
Total value, EUR million	2,718	3,369
High, EUR	32.99	38.59
Low, EUR	19.64	19.95
Volume-weighted average price, EUR	26.35	26.90
Closing price on the final day of trading, EUR	26.11	25.16

The closing price of Valmet’s share on the final day of trading for

the reporting period, December 29, 2023, was EUR 26.11, i.e., 4

percent higher than the closing price on the last day of trading in

2022 (EUR 25.16 on December 30, 2022).

In addition to Nasdaq Helsinki Ltd, Valmet’s shares are also

traded on other marketplaces, such as CBOE DXE, Turquoise,

BATS, Chi-X and Frankfurt. A total of approximately 50 million

Valmet shares were traded on these five alternative

marketplaces in 2023 (Source: www.valmet.com/investors/

valmet-share/trading-volumes/).

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Board authorizations regarding shares

Valmet Oyj’s Annual General Meeting on March 22, 2023,

authorized Valmet’s Board of Directors to decide on the

repurchase of a maximum number of 9,200,000 of the

Company’s own shares in one or several tranches. This

corresponds to approximately 5.0 percent of all the shares in the

Company. The Company's own shares may be repurchased

otherwise than in proportion to the shareholdings of the

shareholders (directed repurchase). The Company's own shares

may be repurchased using the unrestricted equity of the

Company at a price formed on a regulated market on the official

list of Nasdaq Helsinki Ltd on the date of the repurchase or at a

price otherwise formed on the market.

The Company's own shares may be repurchased for reasons of

developing the Company's capital structure, financing or carrying

out acquisitions, investments or other business transactions, or

for the shares to be used in an incentive scheme, however so

that a maximum of 500,000 shares may be repurchased to be

used in an incentive scheme, which corresponds to

approximately 0.3 percent of all the shares in the Company. The

Board of Directors decides on all other terms related to the

repurchasing of the Company's own shares.

Valmet Oyj’s Annual General Meeting 2023 also authorized

Valmet’s Board of Directors to decide on the issuance of shares

as well as the issuance of special rights entitling to shares in one

or several tranches. The issuance of shares may be carried out

by offering new shares or by transferring treasury shares held by

Valmet Oyj. Based on this authorization, the Board of Directors

may also decide on a directed share issue in deviation from the

shareholders’ pre-emptive rights and on the granting of special

rights subject to the conditions mentioned in the Finnish

Companies Act. Based on this authorization, a maximum number

of 18,500,000 shares may be issued, which corresponds to

approximately 10.0 percent of all the shares in Valmet. The new

shares and treasury shares may be issued for consideration or

without consideration.

The Board of Directors may decide on all other terms of the

issuance of shares and special rights entitling to shares pursuant

to Chapter 10, Section 1 of the Finnish Companies Act. The

Board of Directors may use this authorization, for example, for

reasons of developing the Company’s capital structure, in

financing or carrying out acquisitions, investments or other

business transactions, or for the shares to be used in incentive

schemes, however so that the Board of Directors may issue a

maximum of 500,000 shares to be used in incentive schemes,

which corresponds to approximately 0.3 percent of all the shares

in the Company.

The authorizations shall remain in force until the close of the

next Annual General Meeting, and they cancel the authorizations

granted by the Annual General Meeting 2022.

Based on the authorization granted by the Annual General

Meeting 2023, Valmet’s Board of Directors decided on June 20,

2023, on a directed share issue related to the reward payment

of Valmet’s share-based long-term incentive plans for the

performance period 2022. In the share issue on June 27, 2023,

a total of 11,795 Valmet’s treasury shares were conveyed

without consideration to the participants of the plans, in

accordance with the terms and conditions of the plans.

The Board of Directors decided in its meeting on December 20,

2023, to use the authorization granted by the Annual General

Meeting 2023 to repurchase the Company's own shares. Based

on the authorization, the Board decided to initiate a fixed-term

share buy-back program for the purpose of acquiring the

Company's own shares to meet part of the obligations arising

from the LTI Plans and the Restricted Pool incentive. The share

acquisitions will begin at the earliest on February 12, 2024, and

will end at the latest on March 1, 2024. The maximum number

of shares to be acquired is 100,000. The shares will be acquired

at market price in public trading on Nasdaq Helsinki Ltd.

Share-based incentive plans

Valmet’s share-based incentive plans are part of the total

compensation offered for Valmet’s key personnel. The aim of the

plans is to align the interests of the shareholders and the key

employees to increase the value of Valmet in the long run, to

steer the key employees towards achieving the Company’s

selected strategic targets, to commit the key employees to the

Company, and to offer them a competitive reward plan based on

holding the Company's shares. Any shares to be potentially

awarded are, or have been, acquired through public trading, and

therefore the incentive plans have no diluting effect on the share

value.

Long-term incentive plans – Performance Share Plan and

Deferred Share Plan

In its meeting on December 17, 2020, the Board of Directors of

Valmet Oyj decided on new share-based long-term incentive

plans, a Performance Share Plan and a Deferred Share Plan, for

Valmet's key employees. The Board of Directors decides on a

continuation of its share-based long-term incentive plans (LTI

plans) each year.

The Performance Share Plan is directed to the Executive Team

members. The Performance Share Plans include a three-year

performance period parallel to a one-year performance period.

Valmet's Board of Directors decides on the predefined

performance measures and targets in the beginning of each

performance period.

The Deferred Share Plan is directed to other key employees

and management talents. It has a one-year performance period.

The predefined performance measures and targets are decided

by Valmet’s Board of Directors and are aligned with the targets

of the Performance Share Plan. The Deferred Share Plan is

directed to approximately 200 participants, of which

approximately 150 are key employees in management positions,

and approximately 50 are management talents.

The Performance Share Plan includes a recommendation for

the members of Valmet's Executive Team to own and hold an

amount of Company shares equaling their gross annual base

salary (100 percent ownership recommendation). Management

shareholding is presented on Valmet's website at

www.valmet.com/investors/shareholders/management-

shareholding.

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	Long-term incentive plans 2021–2023		Long-term incentive plans 2022–2024
Plan name	Performance Share Plan and Deferred Share Plan	Performance Share Plan	Performance Share Plan and Deferred Share Plan	Performance Share Plan
Performance period	2021	2021–2023	2022	2022–2024
Incentive based on	Comparable EBITA as a percentage of net sales, and orders received growth in the stable business	Predefined strategic target	Comparable EBITA as a percentage of net sales, and orders received growth in the stable business	ESG Index, targets linked to implementing Valmet’s Climate Program and Sustainability Agenda
Reward payment	In spring 2022	In spring 2024	In spring 2023	In spring 2025
Participants
Performance Share Plan	13	10	14	12
Deferred Share Plan	102		125
Total gross number of shares earned	Approximately 355,000 shares	Approximately 42,000 shares	Approximately 185,000 shares	Approximately 31,000 shares

	Long-term incentive plans 2023–2025		Long-term incentive plans 2024–2026
Plan name	Performance Share Plan and Deferred Share Plan	Performance Share Plan	Deferred share plan	Performance Share Plan
Performance period	2023	2023–2025	2024	2024, 2024–2026
Incentive based on	Comparable EBITA as a percentage of net sales, and orders received growth of the stable business	Development of a valuation multiple of Valmet’s share in comparison to peer group	Comparable EBITA as a percentage of net sales, and orders received growth of the stable business	Comparable EBITA as a percentage of net sales, and orders received growth of the stable business Development of a valuation multiple of Valmet’s share in comparison to peer group
Reward payment	In spring 2024	In spring 2026	In spring 2025	In spring 2027
Participants
Performance Share Plan	15	14		14
Deferred Share Plan	128		~200
Total gross number of shares earned	As at December 31, 2023, a total of approximately 365,000 shares were allotted to participants.	As at December 31, 2023, approximately 48,000 shares were allotted to participants.	The rewards to be paid will correspond to a maximum total of approximately 683,000 Valmet shares.

In its meeting on December 20, 2022, the Board of Directors of

Valmet decided to use the authorization granted by the Annual

General Meeting 2022 to acquire the Company's own shares.

The Board decided to initiate a fixed-term share buy-back

program to acquire Valmet's own shares. The shares were

acquired to meet part of the obligations arising from Valmet’s

share-based long-term incentive plans and the restricted pool

incentive. The share acquisitions began on February 6, 2023,

and ended on February 16, 2023. The number of shares

acquired totaled 125,000.

Based on the authorization granted to the Board of Directors

by the Annual General Meeting 2022, Valmet’s Board of

Directors decided in December 2022 on a directed share issue

related to the reward payment of Valmet’s share-based long-

term incentive plans for the performance period 2022. In the

share issue on March 15, 2023, a total of 91,646 Valmet’s

treasury shares were conveyed without consideration to the

participants of the plans, in accordance with the terms and

conditions of the plans.

Based on the authorization granted by the Annual General

Meeting 2023, Valmet’s Board of Directors decided on June 20,

2023, on a directed share issue related to the reward payment

of Valmet’s share-based long-term incentive plans for the

performance period 2022. In the share issue on June 27, 2023,

a total of 11,795 Valmet’s treasury shares were conveyed

without consideration to the participants of the plans, in

accordance with the terms and conditions of the plans.

The Board of Directors decided in its meeting on December 20,

2023, to use the authorization granted by the Annual General

Meeting 2023 to repurchase the Company's own shares. Based

on the authorization, the Board decided to initiate a fixed-term

share buy-back program for the purpose of acquiring the

Company's own shares to meet part of the obligations arising

from the LTI Plans and the Restricted Pool incentive. The share

acquisitions will begin at the earliest on February 12, 2024, and

will end at the latest on March 1, 2024. The maximum number

of shares to be acquired is 100,000. The shares will be acquired

at market price in public trading on Nasdaq Helsinki Ltd.

At the end of the reporting period, the Company held 368,500

treasury shares related to the share-based incentive programs.

More information about share-based incentive plans can be

found in Valmet’s Remuneration Report, which is available at

www.valmet.com/governance.

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | REPORT OF THE BOARD OF DIRECTORS

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Resolutions of Valmet Oyj’s

Annual General Meeting

The Annual General Meeting 2023 was held in Helsinki on March

22, 2023. The Annual General Meeting adopted the Financial

Statements for 2022 and discharged the members of the Board

of Directors and the President and CEO from liability for the

financial year 2022. The Annual General Meeting adopted the

remuneration report for governing bodies. The decision is

advisory. The Annual General Meeting approved the Board of

Directors' proposals concerning authorizing the Board of

Directors to decide on repurchasing the Company’s own shares,

on the issuance of shares and on the issuance of special rights

entitling to shares.

The Annual General Meeting decided to pay dividends of EUR

1.30 per share for the financial period ended on December 31,

2022.

The Annual General Meeting confirmed the number of Board

members as eight and reappointed Mikael Mäkinen as Chair of

Valmet Oyj's Board and Jaakko Eskola as Vice Chair. Aaro

Cantell, Anu Hämäläinen, Pekka Kemppainen, Per Lindberg,

Monika Maurer and Eriikka Söderström continue as members of

the Board. The term of office of the members of the Board of

Directors expires at the close of the Annual General Meeting

2024.

PricewaterhouseCoopers Oy was re-elected as the Company's

auditor for a term expiring at the end of the next Annual General

Meeting.

Valmet published a stock exchange release on March 22, 2023,

concerning the resolutions of the Annual General Meeting and

the organizing meeting of the Board of Directors. The stock

exchange release and meeting materials can be viewed on

Valmet’s website at www.valmet.com/investors/governance/

annual-general-meeting/2023/.

Lawsuits and claims

Several lawsuits, claims and disputes based on various grounds

are pending against Valmet in various countries, including

product liability lawsuits and claims as well as legal disputes

related to Valmet’s deliveries. Valmet is also a plaintiff in several

lawsuits. Although some of the claims are substantial, Valmet’s

management does not expect to the best of its present

understanding that the outcome of these lawsuits, claims and

disputes will have a material adverse effect on Valmet in view of

the grounds currently presented for them, provisions made,

insurance coverage in force and the extent of Valmet’s total

business activities.

Risks and business uncertainties

Valmet’s operations are affected by various strategic, financial,

operational and hazard risks. Valmet takes measures to exploit

emerging opportunities and to limit the adverse effects of

potential threats. The assessment of risks related to sustainable

development holds an important role in risk management. If

such threats materialized, they could have material adverse

effects on Valmet’s business, financial situation and operating

result, or on the value of shares and other securities.

The objective of Valmet’s risk management is to ensure the

implementation of an effective and successful strategy for

achieving both long- and short-term goals. The task of Valmet’s

management is to regulate risk appetite. In assessing risks,

Valmet takes into consideration the probability of the risks and

their estimated impact on net sales or financial results. Valmet’s

management estimates that the Company’s overall risk level is

currently manageable in proportion to the scope of its operations

and the practical measures available for managing these risks.

Financial uncertainty in the global economy, coupled with

fluctuations in exchange rates, rising interest rates and

tightening financial market regulations may have an adverse

effect on the availability and price of financing from banks and

capital markets and could reduce the investment appetite of

Valmet’s customers. Valmet estimates that the high proportion

of business derived from stable business (Services and

Automation segments) and the geographical diversification will

reduce the possible negative effects that market uncertainties

may have.

If global economic growth weakens, it might have adverse

effects on new projects under negotiation or on projects in the

order backlog. Some projects may be postponed, suspended, or

canceled. In the case of long-term delivery projects, initial

customer advance payments are typically 10–30 percent of the

value of the project, and customers make progress payments as

the project is implemented. This significantly decreases the risks

and financing requirements related to Valmet’s projects. Valmet

continually assesses its customers’ creditworthiness and their

ability to meet their obligations. As a rule, Valmet does not

finance customer projects. If economic growth slows down

significantly, the markets for Valmet’s products may shrink,

which may lead to, for example, tougher price competition.

Increasing geopolitical tensions, change in political narratives,

increase of protectionist and more political regulation, trade

tensions and sanctions may create uncertainty to customers’

investment activity and impact Valmet’s operations. Changes

and uncertainty in future regulation and legislation can have

effects, especially on the energy business and the use of data.

Large fluctuations in energy prices can affect the global

economy. These fluctuations can also affect Valmet and its

customers.

Should the global issues with component availability and

logistics continue, it could have adverse effects on Valmet's

business.

Changes in labor costs and the prices of raw materials and

components can affect Valmet’s profitability. Valmet’s goal is to

offset inflation through increased productivity and price

increases. It is possible, however, that tough competition in

some product categories will make it difficult to pass on cost

increases to product prices. On the other hand, some of Valmet’s

customers are raw material producers and their ability to

operate and invest may be enhanced by strengthening

commodity prices and hampered by declining commodity prices.

There may be changes in the competitive situation of Valmet’s

individual businesses, such as the emergence of new, cost-

effective competition in the markets. Valmet can safeguard its

market position by developing its products and services, and

through good customer service and local presence.

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | REPORT OF THE BOARD OF DIRECTORS

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To ensure a high level of quality in both production and

services, it is important to sustain a high level of competence

and talent availability. This includes, for example, maintaining

efficient recruitment programs, utilization of existing talent and

sharing knowledge globally.

Through acquisitions, Valmet may become exposed to risks

associated with new markets and business environments. The

actual acquisition process also includes risks. Other risks

associated with acquisitions include, but are not limited to,

integration of the acquired business, increased financial risk

exposure, retention of key personnel and achieving the targets

set for the acquired business.

Valmet’s operations, products and services rely largely on data

networks, software and digital solutions. Any malfunctions and

cybersecurity breaches in such networks, software and solutions

as well as potential failures in information system development

projects may adversely affect Valmet’s business and financial

position and lead to reputational damage.

Epidemic outbreaks and potential other pandemics remain a

risk to Valmet’s operations also after COVID-19. Pandemics

might have an impact on customers' investment activity, the

supply chain and business operations by increasing the likelihood

of interruptions. Valmet’s operations are dispersed all around the

world, Valmet has a global customer base and our suppliers

operate in several countries. This mitigates the overall impacts

of risks to Valmet, should there be any disruptions in some

isolated country or case.

Management of project business risks important

An important part of Valmet’s business consists of project

business. Pulp business projects in particular can be large, thus

project-specific risk management is crucial. Key risks related to

projects are project cost estimation, scheduling, project risk

management, quality and performance risks, and materials

management risks. Risk analysis shall, as a minimum, take place

for all significant project quotations. The work concerning threat

and opportunity assessment continues during the execution

phase of the project. Risk management is based on careful

planning and continuous, systematic monitoring and evaluation.

Project risks are managed by improving and continuously

developing project management processes and the related

systems.

Availability of financing crucial

Securing the continuity of Valmet’s operations requires sufficient

available funding under all circumstances. Valmet estimates that

its liquid cash assets and committed credit limits are sufficient to

secure its immediate liquidity and to ensure the flexibility of

financing. The average maturity of Valmet’s non-current debt,

excluding lease liabilities, is 3.0 years. Loan facilities include

customary covenants, and Valmet is in clear compliance with the

covenants at the balance sheet date.

Net working capital and capital expenditure levels have a key

impact on the adequacy of Valmet’s financing. Setting aside

investments into the renewal of the ERP system, Valmet does

not expect any significant increase in annual capital expenditure

and estimates that it is well-positioned to keep capital

expenditure approximately at the level of total depreciation.

Of the financial risks that affect Valmet’s profit, currency

exchange rate risks and rising interest rates are among the most

substantial. Exchange rate changes can affect Valmet’s business,

although the wide geographical scope of the Company’s

operations reduces the impact of any individual currency.

Economic insecurity typically increases exchange rate

fluctuations and can impact interest rates as well. Valmet hedges

its currency exposures linked to firm delivery and purchase

agreements.

Changes in legislation and the way authorities interpret

regulation, for example regarding taxation, can also have an

impact on Valmet’s financials.

As at December 31, 2023, Valmet had EUR 1,735 million (EUR

1,611 million ) of goodwill on its statement of financial position.

Valmet assesses the carrying value of its goodwill for impairment

annually, or more frequently if facts and circumstances indicate

that carrying value may not be recoverable. Valmet has not

identified any indications of impairment during the reporting

period. The principles used for impairment testing are presented

in the financial statements.

Valmet has a strong balance sheet and liquidity. In order to

diversify and mitigate the financial credit risk, funds are held

with several financially-sound banks. Valmet is carefully

evaluating counterparty risk and selecting only counterparties

with high creditworthiness. Valmet's project business is typically

cash positive, as the customers pay us advance and progress

payments. Around half of Valmet's business consists of services

and automation, where single orders are small. Furthermore,

Valmet has hundreds of customers around the globe, which

gives us natural hedge.

Conflicts and geopolitical tensions

Russia's invasion of Ukraine causes significant risks and

uncertainties to the markets affecting the entire global economic

environment and financial markets. The conflict in the Middle

East causes supply chain issues and increases transport prices.

If the conflicts are further prolonged or geopolitical tensions

further increase, there could be additional adverse impacts on

Valmet’s operations, customer investment activity, project

deliveries, availability and prices of components, supply chain

and availability of financing for both Valmet and its customers.

Valmet monitors the situation and manages the Company's

response to the impacts of the conflicts.

Events after the reporting period

There have been no subsequent events after the reporting

period that required recognition or disclosure.

Guidance for 2024

Valmet estimates that net sales in 2024 will remain at the

previous year's level in comparison with 2023 (EUR 5,532

million) and Comparable EBITA in 2024 will remain at the

previous year's level or increase in comparison with 2023 (EUR

619 million).

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | REPORT OF THE BOARD OF DIRECTORS

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Market outlook

General economic outlook according to World Bank

Global growth is set to slow further in 2024, amid the effects of

tight monetary policy, restrictive financial conditions, and feeble

global trade and investment. World Bank's global growth

forecast for 2024 is 2.4 percent. Downside risks to the outlook

include an escalation of the conflict in the Middle East and

associated commodity market disruptions, financial stress amid

elevated debt and high borrowing costs, persistent inflation,

weaker-than-expected activity in China, and climate-related

disasters.

(World Bank Global Economic Prospects, January 2024)

Short-term market outlook

Valmet reiterates the good/satisfactory short-term market

outlook for services (capacity utilization good, customer activity

satisfactory), the good short-term market outlook for flow

control, automation systems and energy, and the satisfactory

short-term market outlook for pulp, board and paper, and tissue.

The short-term market outlook is given for the next six months

from the end of the reported period. It is based on customer

activity (50%) and Valmet’s capacity utilization (50%), and the

scale is ‘weak–satisfactory–good’.

Board of Directors' proposal for the distribution

of profit

Valmet Oyj’s distributable funds on December 31, 2023, totaled

EUR 1,502,676,727.91 of which the net profit for the year 2023

was EUR 296,787,891.20 (according to Finnish Generally

Accepted Accounting Standards). The Board of Directors

proposes to the Annual General Meeting that a dividend of EUR

1.35 per share be paid based on the statement of financial

position to be adopted for the financial year ended on December

31, 2023, and the remaining part of profit be retained and

carried further in the Company’s unrestricted equity.

The dividend shall be paid in two installments. The first

installment of EUR 0.68 per share shall be paid to shareholders

who on the dividend record date of March 26, 2024, are

registered in the Company’s shareholders’ register held by

Euroclear Finland Ltd. The dividend shall be paid on April 11,

2024. The second installment of EUR 0.67 per share shall be

paid in October 2024. The second installment shall be paid to

shareholders who on the dividend record date are registered in

the Company’s shareholders’ register held by Euroclear Finland

Ltd. The dividend record date and payment date shall be

resolved by the Board of Directors in its meeting scheduled for

September 26, 2024. The dividend record date for the second

installment would be October 1, 2024, and the dividend payment

date October 10, 2024.

All the shares in the Company are entitled to a dividend except

for treasury shares held by the Company on the dividend record

date.

In Espoo, Finland, on February 7, 2024

Valmet’s Board of Directors

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | REPORT OF THE BOARD OF DIRECTORS

30

Financial indicators

	As at and for the twelve months ended Dec 31
EUR million	2023	2022	2021	2020	2019
Orders received	4,955	5,194	4,740	3,653	3,986
Order backlog at end of year	3,973	4,403	4,096	3,257	3,333
Net sales	5,532	5,074	3,935	3,740	3,547
Net sales change, %	9%	29%	5%	5%	7%
Comparable EBITA	619	533	429	365	316
% of net sales	11.2%	10.5%	10.9%	9.8%	8.9%
EBITA	605	550	448	355	315
% of net sales	10.9%	10.8%	11.4%	9.5%	8.9%
Operating profit	507	436	399	319	281
% of net sales	9.2%	8.6%	10.1%	8.5%	7.9%
Profit before taxes	473	431	395	307	269
% of net sales	8.5%	8.5%	10.0%	8.2%	7.6%
Profit for the period	359	338	296	231	202
% of net sales	6.5%	6.7%	7.5%	6.2%	5.7%
Profit attributable to owners of the parent	357	337	296	231	201
Amortization	-98	-114	-49	-36	-34
Depreciation, property, plant and equipment (excl. right-of-use assets)	-58	-55	-47	-47	-48
Depreciation, right-of-use assets	-41	-34	-24	-24	-23
Depreciation and amortization, total	-196	-203	-120	-106	-105
% of net sales	-3.6%	-4.0%	-3.0%	-2.8%	-3.0%
Cash flow provided by operating activities	352	36	482	532	295
Cash flow after investing activities	-181	56	382	-60	58
Gross capital expenditure (excl. business combinations and right-of-use assets)	-125	-112	-97	-89	-79
Business combinations, net of cash acquired and loans repaid	-415	117	-15	-48	-163
Additions to investments in associated companies	—	—	—	-456	—
Comparable return on capital employed (ROCE) before taxes, %	15%	17%	23%	22%	23%
Return on capital employed (ROCE) before taxes, %	14%	18%	24%	22%	23%
Total assets	7,064	6,271	4,420	3,959	3,452
Equity attributable to owners of the parent	2,565	2,494	1,326	1,137	1,040
Total equity	2,572	2,499	1,332	1,142	1,046
Interest-bearing liabilities	1,484	809	477	497	268
Net interest-bearing liabilities	1,027	502	-88	149	-90
Net working capital (NWC)	191	-82	-673	-595	-426
Return on equity (ROE), %	14%	18%	24%	21%	20%
Net debt to EBITDA ratio	1.46	0.78	-0.17	0.35	-0.23
Gearing, %	40%	20%	-7%	13%	-9%
Equity to assets ratio, %	43%	49%	42%	39%	41%
Average number of personnel	18,130	16,554	14,163	13,615	13,235
Personnel at end of year	19,160	17,548	14,246	14,046	13,598

VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | FINANCIAL INDICATORS

31

Formulas for calculation of indicators

In addition to financial performance indicators as defined by IFRS Accounting Standards, Valmet publishes certain other widely used

measures of performance that can be derived from figures in the Consolidated statement of income and financial position, as well as

notes thereto. The formulas for calculation of these alternative performance measures are presented below.

EBITA:			Comparable return on capital employed (ROCE) before taxes, %:
Operating profit + amortization			Profit before taxes + interest and other financial expenses +/- items affecting comparability		X 100
			Total equity + interest-bearing liabilities (average for the period)
Comparable EBITA:			Equity to assets ratio, %:
Operating profit + amortization +/- items affecting comparability			Total equity		X 100
			Balance sheet total - amounts due to customers under revenue contracts
Earnings per share:			Gearing, %:
Profit attributable to shareholders of the Company			Net interest-bearing liabilities		X 100
Average number of outstanding shares during period			Total equity
Diluted earnings per share:			Net interest-bearing liabilities:
Profit attributable to shareholders of the Company			Non-current debt + non-current lease liabilities + current debt + current lease liabilities - cash and cash equivalents - other interest-bearing assets
Average number of diluted shares during period
Adjusted earnings per share:			Net debt to EBITDA ratio:
Profit attributable to shareholders of the Company - expensing of fair value adjustments recognized in business combinations, net of tax			Net interest-bearing liabilities
Average number of outstanding shares during period			Operating profit + amortization + depreciation
Equity per share:			Dividend per share:
Equity attributable to owners of the parent			Dividend for the financial period
Number of outstanding shares at end of period			Number of shares at end of period
Return on equity (ROE), %:			Dividend payout ratio, %:
Profit for the period		X 100	Dividend per share		X 100
Total equity (average for period)			Earnings per share
Return on capital employed (ROCE) before taxes, %:			Effective dividend yield, %:
Profit before taxes + interest and other financial expenses		X 100	Dividend per share		X 100
Total equity + interest-bearing liabilities (average for period)			Closing share price at end of period
			Price / earnings ratio:
			Closing share price at end of period
			Earnings per share

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | FORMULAS FOR CALCULATION OF

INDICATORS

32

Consolidated statement of income

		Year ended Dec 31,
EUR million	Note	2023	2022
Net sales	2, 3	5,532	5,074
Cost of goods sold	4, 5, 7, 13	-4,136	-3,857
Gross profit		1,396	1,217
Selling, general and administrative expenses	4, 5, 13, 18	-920	-852
Other operating income	19	64	100
Other operating expenses	19	-36	-36
Share in profits and losses of associated companies, operative investments	22	3	7
Operating profit		507	436
Financial income	10	17	15
Financial expenses	10	-52	-20
Share in profits and losses of associated companies, financial investments	22	—	—
Profit before taxes		473	431
Current tax expense		-135	-112
Deferred taxes		21	18
Income taxes, total	16	-114	-94
Profit for the period		359	338
Attributable to:
Owners of the parent		357	337
Non-controlling interests		2	—
Profit for the period		359	338
Earnings per share attributable to owners of the parent:
Earnings per share, EUR		1.94	1.92
Diluted earnings per share, EUR		1.94	1.92

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | CONSOLIDATED FINANCIAL STATEMENTS

33

Consolidated statement of comprehensive income

		Year ended Dec 31,
EUR million	Note	2023	2022
Profit for the period		359	338
Items that may be reclassified to profit or loss:
Gains and losses on cash flow hedges	8, 9, 17	-12	-4
Change in fair value reserve	8	—	-2
Currency translation on subsidiary net investments	17	-21	-4
Share of other comprehensive income of associated companies accounted for using equity method	22	—	-1
Income tax relating to items that may be reclassified	16	2	1
Total items that may be reclassified to profit or loss		-31	-10
Items that will not be reclassified to profit or loss:
Remeasurement of defined benefit plans	15	-18	58
Share of other comprehensive income of associated companies accounted for using equity method	22	—	1
Income tax relating to items that will not be reclassified	16	3	-12
Total items that will not be reclassified to profit or loss		-15	47
Other comprehensive income for the period		-46	38
Total comprehensive income for the period		312	375
Attributable to:
Owners of the parent		311	375
Non-controlling interests		1	—
Total comprehensive income for the period		312	375

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | CONSOLIDATED FINANCIAL STATEMENTS

34

Consolidated statement of financial position

Assets

		As at Dec 31,
EUR million	Note	2023	2022
Non-current assets
Intangible assets
Goodwill		1,735	1,611
Other intangible assets		1,142	1,030
Total intangible assets	4	2,877	2,641
Property, plant and equipment
Land and water areas		40	41
Buildings and structures		169	152
Machinery and equipment		263	217
Right-of-use assets		145	105
Assets under construction		81	85
Total property, plant and equipment	4, 5	698	600
Other non-current assets
Investments in associated companies	22	16	15
Non-current financial assets	8, 9	31	22
Deferred tax assets	16	90	60
Non-current income tax receivables	16	41	33
Other non-current assets		15	14
Total other non-current assets		193	143
Total non-current assets		3,768	3,384
Current assets
Inventories
Materials and supplies		249	216
Work in progress		472	424
Finished products		327	294
Total inventories	7	1,049	934
Receivables and other current assets
Trade receivables	8	973	834
Amounts due from customers under revenue contracts	3	475	485
Other current financial assets	8, 9	53	89
Income tax receivables		56	45
Other receivables		258	223
Cash and cash equivalents	8	432	277
Total receivables and other current assets		2,247	1,953
Total current assets		3,296	2,887
Total assets		7,064	6,271

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | CONSOLIDATED FINANCIAL STATEMENTS

35

Consolidated statement of financial position

Equity and liabilities

		As at Dec 31,
EUR million	Note	2023	2022
Equity
Share capital		140	140
Reserve for invested unrestricted equity		1,372	1,369
Cumulative translation adjustments		-42	-20
Hedge and other reserves		-1	8
Retained earnings		1,096	997
Equity attributable to owners of the parent	17	2,565	2,494
Non-controlling interests		6	5
Total equity		2,572	2,499
Liabilities
Non-current liabilities
Non-current debt	8	1,240	555
Non-current lease liabilities	5, 8	98	63
Employee benefit liabilities	15	154	132
Non-current provisions	11	42	38
Other non-current liabilities	8, 9	12	8
Deferred tax liabilities	16	283	238
Total non-current liabilities		1,828	1,034
Current liabilities
Current debt	8	103	155
Current lease liabilities	5, 8	43	35
Trade payables	8	520	442
Current provisions	11	169	181
Amounts due to customers under revenue contracts	3	1,151	1,205
Other current financial liabilities	8, 9	34	50
Income tax liabilities		85	79
Other current liabilities	12	558	591
Total current liabilities		2,664	2,738
Total liabilities		4,492	3,772
Total equity and liabilities		7,064	6,271

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | CONSOLIDATED FINANCIAL STATEMENTS

36

Consolidated statement of cash flows

		Year ended Dec 31,
EUR million	Note	2023	2022
Cash flows from operating activities
Profit for the period		359	338
Adjustments
Depreciation and amortization	4, 5	196	203
Financial income and expenses	10	34	5
Income taxes	16	114	94
Other non-cash items1		-11	-73
Change in net working capital	6	-180	-399
Interest paid		-31	-12
Interest received		13	11
Dividends received		—	1
Income taxes paid		-143	-131
Net cash provided by (+) / used in (-) operating activities		352	36
Cash flows from investing activities
Capital expenditures on fixed assets	4	-125	-112
Proceeds from sale of fixed assets		6	2
Business combinations, net of cash acquired and loans repaid	20	-415	117
Investments in associated companies	22	2	13
Net cash provided by (+) / used in (-) investing activities		-532	20
Cash flows from financing activities
Redemption of own shares		-4	-5
Dividends paid	17	-240	-180
Proceeds from non-current debt		725	400
Repayments of current portion of non-current debt		-40	-587
Repayments of lease liabilities	8	-44	-39
Net proceeds from (+) / repayments of (-) current debt		-58	96
Financial investments		7	23
Net cash provided by (+) / used in (-) financing activities		346	-292
Net increase (+) / decrease (-) in cash and cash equivalents		165	-236
Effect of changes in exchange rates on cash and cash equivalents		-10	-4
Cash and cash equivalents at beginning of year	8	277	517
Cash and cash equivalents at end of year		432	277

1 Includes in 2022 a gain of EUR 59 million from remeasurement of Valmet's previously held equity interest in Neles with no cash flow impact.

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | CONSOLIDATED FINANCIAL STATEMENTS

37

Consolidated statement of changes in equity

EUR million	Share capital	Reserve for invested unrestricted equity	Cumulative translation adjustments	Hedge and other reserves	Retained earnings	Equity attributable to owners of the parent	Non- controlling interests	Total equity
Balance at January 1, 2023	140	1,369	-20	8	997	2,494	5	2,499
Profit for the period	—	—	—	—	357	357	2	359
Other comprehensive income for the period
Gains and losses on cash flow hedges
Fair value gains and losses, net of tax	—	—	—	—	—	—	—	—
Transferred to profit or loss, net of tax	—	—	—	-10	—	-10	—	-10
Change in fair value reserve, net of tax	—	—	—	—	—	—	—	—
Currency translation on subsidiary net investments	—	—	-21	—	—	-21	—	-21
Remeasurement of defined benefit plans, net of tax	—	—	—	—	-15	-15	—	-15
Other comprehensive income for the period, total	—	—	-21	-10	-15	-46	—	-46
Total comprehensive income for the period	—	—	-21	-10	341	311	1	312
Transactions with owners in their capacity as owners
Dividends	—	—	—	—	-239	-239	-1	-240
Purchase of treasury shares	—	—	—	—	-4	-4	—	-4
Share-based payments, net of tax	—	3	—	—	1	4	—	4
Balance at December 31, 2023	140	1,372	-42	-1	1,096	2,565	6	2,572
Balance at January 1, 2022	100	426	-16	13	804	1,326	6	1,332
Change in accounting principles¹	—	—	—	—	-2	-2	—	-2
Restated balance at January 1, 2022	100	426	-16	13	802	1,324	6	1,330
Profit for the period	—	—	—	—	337	337	—	338
Other comprehensive income for the period
Gains and losses on cash flow hedges
Fair value gains and losses, net of tax	—	—	—	-13	—	-13	—	-13
Transferred to profit or loss, net of tax	—	—	—	10	—	10	—	10
Change in fair value reserve, net of tax	—	—	—	-1	—	-1	—	-1
Currency translation on subsidiary net investments	—	—	-4	—	—	-4	—	-4
Remeasurement of defined benefit plans, net of tax	—	—	—	—	47	47	—	47
Other comprehensive income for the period, total	—	—	-4	-4	46	38	—	38
Total comprehensive income for the period	—	—	-4	-4	384	375	—	375
Transactions with owners in their capacity as owners
Dividends	—	—	—	—	-179	-179	-1	-180
Issue of ordinary shares as consideration for a business combination, net of transaction costs	40	937	—	—	—	977	—	977
Purchase of treasury shares	—	—	—	—	-5	-5	—	-5
Share-based payments, net of tax	—	6	—	—	-5	2	—	2
Balance at December 31, 2022	140	1,369	-20	8	997	2,494	5	2,499

1Net impact arising from the adoption of IAS 12 amendments, as of January 1, 2022.

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | CONSOLIDATED FINANCIAL STATEMENTS

38

Notes to the consolidated financial statements

1 | Basis of preparation

General information

Valmet Oyj (the “Company” or the “parent company”), a public

limited liability company, and its subsidiaries (together “Valmet ,”

“Valmet Group” or the “Group”) form a global developer and

supplier of process technologies, automation and services for the

pulp, paper and energy industries. Valmet Oyj is domiciled in

Helsinki, and its registered address is Keilasatama 5, 02150

Espoo, Finland. The Company’s shares are listed on the Nasdaq

Helsinki Ltd as of January 2, 2014. The copies of the

consolidated financial statements are available at

www.valmet.com or the parent company’s head office,

Keilasatama 5, 02150 Espoo, Finland. The consolidated financial

statements were authorized for issue by Valmet’s Board of

Directors on February 7, 2024, after which, in accordance with

Finnish Limited Liability Company Act, the financial statements

are either approved, amended or rejected in the Annual General

Meeting. The consolidated financial statements have been

prepared in accordance with the basis of presentation set out

below and accounting policies described in connection with each

note.

These consolidated financial statements were prepared in

accordance with the IFRS Accounting Standards as adopted by

the European Union. The financial statements figures are

presented mainly in millions of euros subject to rounding, which

may cause some rounding inaccuracies in aggregate column and

row totals.

Where necessary, comparative information has been

reclassified to achieve consistency in disclosure with current

financial year amounts.

Basis of presentation

Subsidiaries

Subsidiaries are all entities over which Valmet Group has control.

Control over an entity exists when the Group is exposed, or has

rights, to variable returns from its involvement with the entity

and has the ability to affect those returns through its power over

the entity. When the Group has less than a majority of the

voting or similar rights of an entity, the Group considers all

relevant facts and circumstances in assessing whether it has

control over an entity, including the contractual arrangement

with the other vote holders of the entity, rights arising from

other contractual arrangements and the Group’s voting rights

and potential voting rights.

The Group reassesses whether it controls an entity if facts and

circumstances indicate that there are changes to one or more of

the three elements of control. Subsidiaries are fully consolidated

from the date on which control is transferred to the Group. They

are deconsolidated from the date that control ceases.

Intercompany transactions, balances and unrealized gains and

losses arising from transactions between Group companies are

eliminated.

Associated companies

The consolidated financial statements include associated

companies in which Valmet either holds between 20 percent to

50 percent of the voting rights or in which Valmet otherwise has

significant influence but not control. Investments in associated

companies are accounted for using the equity method of

accounting. Investments in associated companies are initially

recorded at cost, and the carrying amount is increased or

decreased to recognize Valmet’s share of changes in net assets

of the associated companies after the date of the acquisition.

The Group’s investment in associated companies includes

goodwill identified on acquisition. The Group determines at each

reporting date whether there is any objective evidence that the

investment in the associate is impaired.

Valmet’s share of post-acquisition profit or loss is recognized in

Consolidated statement of income and its share of post-

acquisition movements in other comprehensive income (OCI) is

recognized in Consolidated statement of comprehensive income

with a corresponding adjustment to the carrying amount of the

investment. The share of results of associated companies is

presented in Consolidated statement of income either included in

Operating profit or adjacent to Financial income and expenses

below Operating profit depending on the nature of the

investment.

Foreign currency translation

Items included in the financial statements of each of Valmet

Group’s entities are measured using the currency of the primary

economic environment in which the entity operates (the

functional currency). These consolidated financial statements are

presented in euros, which is the Group’s presentation currency.

The statements of income of foreign Group companies are

translated into euros using the average exchange rate for the

reporting period. The statements of financial position are

translated at the closing exchange rate of the reporting date.

Translating the net income for the period using different

exchange rates in the Consolidated statement of income and in

the Consolidated statement of financial position results in a

translation difference, which is recognized in the Consolidated

statement of comprehensive income.

Goodwill and fair value adjustments arising on the acquisition

of a foreign entity are treated as assets and liabilities of the

foreign entity and translated at the closing rate. Exchange rate

differences arising are recognized in the Consolidated statement

of comprehensive income.

When a subsidiary is disposed of or sold, exchange rate

differences that were recorded in equity are recognized in profit

or loss as part of the gain or loss on sale.

VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | NOTES TO THE CONSOLIDATED FINANCIAL

STATEMENTS

39

Foreign currency transactions

Foreign currency transactions are translated into the functional

currency using the exchange rates prevailing on the date of

transaction. Non-monetary items that are measured at fair value

are translated into functional currency using the exchange rate

of the transaction date.

Foreign exchange gains and losses resulting from the

settlement of such balances and from the translation of

monetary assets and liabilities denominated in foreign currencies

at year-end exchange rates, are recognized in Consolidated

statement of income. Foreign exchange gains and losses that

relate to borrowings and cash and cash equivalents are

presented in Consolidated statement of income within Financial

income and expenses. All other foreign exchange gains and

losses are presented in Other operating income and expenses, or

in Net sales or Cost of goods sold.

Key exchange rates:

		Average rates		Year-end rates
		2023	2022	2023	2022
USD	(US dollar)	1.0816	1.0563	1.1050	1.0666
SEK	(Swedish krona)	11.4563	10.6258	11.0960	11.1218
CNY	(Chinese yuan)	7.6589	7.0836	7.8509	7.3582

Critical accounting estimates and judgments

The preparation of financial statements in conformity with IFRS

Accounting Standards requires management to make estimates

and exercise judgment in the application of the accounting

policies. Estimates and judgments are continually evaluated and

are based on historical experience and other factors, including

expectations of future events that are believed to be reasonable

under the circumstances. The resulting accounting estimates

will, by definition, seldom equal the related actual results.

Material accounting policies applied, and critical accounting

estimates and judgments made are described adjacent to each

note as follows:

• Revenue recognition	Note 3
• Intangible assets and property, plant and equipment	Note 4
• Leases	Note 5
• Inventories	Note 7
• Financial assets and liabilities	Note 8
• Derivative financial instruments	Note 9
• Provisions	Note 11
• Employee benefit obligations	Note 15
• Income taxes	Note 16

VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | NOTES TO THE CONSOLIDATED FINANCIAL

STATEMENTS

40

2 | Reporting segments and geographic

information

Accounting policies

The Group’s Chief Operating Decision Maker (CODM) is the

President and CEO of Valmet. Valmet has three operating

segments and three reportable segments for financial reporting

purposes: Services, Automation and Process Technologies.

Corporate functions are presented as Other.

The Services segment provides customers with flexible and fit-

for-purpose services throughout the lifecycle to improve process

performance and reliability. The Automation segment delivers

automation solutions ranging from single measurements to mill-

or plant-wide process automation systems, and mission-critical

flow control technologies and services for the process industries.

The Process Technologies segment provides technology solutions

for pulp and energy production, as well as for biomass

conversion and emission control, and complete production lines,

machine rebuilds and process components for board, tissue and

paper production.

The financial reporting structure reflects Valmet’s operational

model, and is aligned with the way the CODM evaluates the

operational performance of the segments and allocates

resources. One key indicator of performance reviewed by the

CODM is Earnings before interest, taxes and amortization

(EBITA). Performance is also assessed through Comparable

EBITA, i.e., with EBITA excluding certain items of income and

expense that reduce the comparability of the Group’s

performance from one period to another. The alternative

performance measures of EBITA and Comparable EBITA, are

published by Valmet as part of regulated financial information to

enable users of the financial information to prepare more

meaningful analysis on Valmet’s performance. Items affecting

comparability consist of income and expenses arising from

activities that amend the capacity of Valmet’s operations, such

as restructuring costs, gains or losses on sale of businesses or

non-current assets, and transaction costs related to business

combinations, and income and expenses incurred outside

Valmet’s normal course of business, such as impairment charges

and income and expenses recorded as a result of settlement

payments to/from third parties (e.g., penalties incurred as a

result of tax audits or settlements to closed lawsuits), share in

profits and losses of associated companies as well as expenses

arising from changes in legislation expected to affect Valmet

temporary only (e.g., customs or other tariffs imposed by

authorities on Valmet’s products).

Orders received:

	Year ended Dec 31,
EUR million	2023	2022
Services	1,760	1,756
Automation	1,340	1,081
Process Technologies	1,856	2,356
Total	4,955	5,194

Net sales:

	Year ended Dec 31,
EUR million	2023	2022
Services	1,784	1,606
Automation	1,328	1,040
Process Technologies	2,420	2,428
Total	5,532	5,074

Comparable EBITA:

	Year ended Dec 31,
EUR million	2023	2022
Services	312	237
Automation	248	190
Process Technologies	110	145
Other	-50	-39
Total	619	533

VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | NOTES TO THE CONSOLIDATED FINANCIAL

STATEMENTS

41

Comparable EBITA, % of net sales:

	Year ended Dec 31,
EUR million	2023	2022
Services	17.5%	14.8%
Automation	18.6%	18.3%
Process Technologies	4.5%	6.0%
Total	11.2%	10.5%

EBITA:

	Year ended Dec 31,
EUR million	2023	2022
Services	302	228
Automation	245	170
Process Technologies	116	134
Other	-58	18
Total	605	550

EBITA, % of net sales:

	Year ended Dec 31,
EUR million	2023	2022
Services	16.9%	14.2%
Automation	18.5%	16.3%
Process Technologies	4.8%	5.5%
Total	10.9%	10.8%

Items affecting comparability:

	Year ended Dec 31,
EUR million	2023	2022
Services	-10	-9
Automation	-2	-20
Process Technologies	6	-10
Other	-8	57
Total	-14	17

Amortization:

	Year ended Dec 31,
EUR million	2023	2022
Services	-10	-7
Automation	-63	-84
Process Technologies	-8	-7
Other	-17	-16
Total	-98	-114

VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | NOTES TO THE CONSOLIDATED FINANCIAL

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Reconciliation between Comparable EBITA, EBITA and Operating profit:

	Year ended Dec 31,
EUR million	2023	2022
Comparable EBITA	619	533
Items affecting comparability in cost of sales
Expenses related to capacity adjustments	-8	-3
Expensing of fair value adjustments recognized in business combinations	-8	-13
Other items affecting comparability1	-17	-31
Items affecting comparability in selling, general and administrative expenses
Expenses related to capacity adjustments	—	-1
Expenses related to acquisitions	-6	-11
Other items affecting comparability1	-14	-11
Items affecting comparability in other operating income and expenses
Income and expenses related to capacity adjustments	3	—
Expenses related to acquisitions	—	—
Other items affecting comparability2	32	77
Items affecting comparability in share in profits and losses of associated companies, operative investments
Other items affecting comparability	3	9
EBITA	605	550
Amortization included in cost of sales
Other intangibles	-2	-2
Amortization included in selling, general and administrative expenses
Intangibles recognized in business combinations	-76	-92
Other intangibles	-21	-18
Amortization included in share in profits and losses of associated companies, operative investments
Other intangibles	—	-2
Operating profit	507	436

1 2023 and 2022 figures include expenses related to the fire that happened in 2022 at Valmet’s Rautpohja factory site in Jyväskylä, Finland and expenses from Valmet’s

withdrawal from Russia.

2 2023 and 2022 figures include income related to the fire that happened in 2022 at Valmet’s Rautpohja factory site in Jyväskylä, Finland and expenses from Valmet’s withdrawal

from Russia. Also, in 2022 includes a gain of EUR 59 million from remeasurement of Valmet's previously held equity interest in Neles.

VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | NOTES TO THE CONSOLIDATED FINANCIAL

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Entity-wide information

Valmet has operations globally in over 40 countries. Measured

by net sales, the top three countries in 2023 were the USA,

China and Indonesia, which together accounted for 38 percent of

total net sales. In 2022, the top three countries were the USA,

China, and Brazil, which together accounted for 45 percent of

total net sales.

Net sales from Finland (the country of domicile) amounted to

EUR 385 million in 2023 (EUR 565 million).

Net sales by destination 2023, EUR 5,532 million

Net sales by destination 2022, EUR 5,074 million

Non-current assets by location:

EUR million	Finland	North America	South America	EMEA excluding Finland	China	Asia-Pacific	Non- allocated	Total
2023	352	204	35	177	91	42	2,732	3,633
2022	325	180	20	164	104	46	2,450	3,288

Non-current assets comprise intangible assets, property, plant

and equipment, investments in associated companies, and non-

current income tax receivables. Non-allocated assets include

mainly goodwill, investments in associated companies,

non-current income tax receivables and other fair value

adjustments arising from business combinations that have not

been pushed down to adjust the value of assets in the

subsidiaries’ books.

Gross capital expenditure (excluding business combinations and right-of-use assets) by location:

EUR million	North America	South America	EMEA	China	Asia-Pacific	Total
2023	16	7	82	15	4	125
2022	6	3	80	15	8	112

Major customers

Valmet enters into large long-term projects which however

individually rarely contribute more than 10 percent of annual

revenue. In 2023 and 2022, there was no single customer with

revenue exceeding 10 percent of net sales.

VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | NOTES TO THE CONSOLIDATED FINANCIAL

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3 | Revenue recognition

Accounting policies

Valmet supplies process technologies, automation systems,

valves and services primarily for the pulp, paper and energy

industries as well as municipal and industrial heat and power

producers. Valmet’s customer base also includes other process

industries and marine, where automation solutions are widely

used. In the process technologies business, the Group’s revenue

arises from projects, the scope of which ranges from delivery of

complete mill facilities on a turnkey basis to single section

machine rebuilds, that may or may not include process

automation solutions. Service business revenue includes revenue

from short-term and long-term maintenance contracts, smaller

improvement and modification contracts, rebuilds, as well as

sale of spare parts and consumables. Process technologies and

service business revenue largely arises from the same customers

with service offering being focused on maintaining installed base

of equipment and automation solutions.

Revenue is recognized to depict the transfer of promised goods

or services to the customers in an amount that reflects the

consideration to which Valmet expects to be entitled to in

exchange for those goods or services. The timing and method as

well as unit of revenue recognition are determined in accordance

with the five-step model of IFRS 15 as follows:

Step 1:	Identification of the contract(s) with a customer
Step 2:	Identification of the performance obligations in the contract
Step 3:	Determination of the transaction price attached to the contract
Step 4:	Allocation of the transaction price to the performance obligations identified in the contract
Step 5:	Recognition of revenue when (or as) the entity satisfies a performance obligation

In long-term projects involving delivery of both equipment and

services, one or more performance obligations are identified.

The identification of performance obligations depends on the

scope of the project and terms of the contracts, and largely

follows the level at which quotes are being requested by the

customers.

In short-term service contracts that involve delivery of a

combination of equipment and services, depending on the scope

of the contract and terms attached thereto, one or more

performance obligations are identified. When scope of the

contract involves services provided at the customer site, such as

installation, maintenance, technical support or mechanical

audits, these are typically considered as a separate performance

obligation from delivery of significant equipment and services

provided off-site. On the other hand, when services in the scope

of the contract are performed at Valmet premises only, such as

workshop services, material and services typically cannot be

identified separately, and consistently only one performance

obligation is identified.

In long-term service contracts where Valmet’s activities are

largely performed at the customer’s site, depending on the

contract and terms attached thereto, one or more performance

obligations are identified. When the scope of the contract

involves various service elements that are sold separately on a

stand-alone basis, these elements would typically be determined

to consist of performance obligations on their own.

Revenue is recognized when a customer obtains control of a

good or service. A customer obtains control when it has the

ability to direct the use of and obtain the benefits from the good

or service, either over time or at a point in time.

When Valmet determines that control on goods or services is

transferred over time, this is typically based on either that

customer simultaneously receives and consumes benefits as

Valmet performs, or that Valmet’s performance creates an asset

with no alternative use throughout the duration of a contract and

Valmet has enforceable right to payment for performance

completed to date.

Deliverables within Valmet’s product offering that have the

characteristics of the first criterion include mill maintenance

services or other field services provided under long-term

contracts, in which the receipt and simultaneous consumption by

the customer of the benefits of Valmet’s performance can be

readily identified. Deliverables with the characteristics of the

second criterion include projects where the scope of the contract

involves design and construction of an asset according to

customer specifications. The assets created in these projects do

not have alternative use because the design is based on specific

customer needs. When revenue is recognized over time,

progress towards complete satisfaction of the performance

obligation is measured using the cost-based input method (cost-

to-cost method). The cost-to-cost method is estimated to result

in a revenue profile that best depicts the transfer of control on

the deliverables to the customer.

Recognition of revenue at a point in time is applicable, among

others, in contracts where services are performed at Valmet’s

premises, and deliveries of spare parts, valves and consumables.

Control of deliverables typically transfers based on the delivery

terms used, at the takeover, or at a later point in time when

customer acceptance is received.

Valmet’s contracts often involve elements of variable

consideration, such as penalties, liquidated damages or

performance bonus arrangements. Variable consideration is

estimated by using either the expected value or the most likely

amount -method, depending on the type of variable element and

related contractual terms and conditions. Amount of variable

consideration is included in transaction price only to the extent

that it is highly probable that a significant reversal of revenue

does not occur later. Transaction prices are reassessed at each

reporting date. Variable elements are generally allocated

proportionately to all performance obligations in the contract, or

when terms of the variable payments relate to satisfying a

specific performance obligation and allocated amount depicts the

amount of consideration to which Valmet expects to be entitled

in exchange for transferring related goods or services, variable

VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | NOTES TO THE CONSOLIDATED FINANCIAL

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consideration is allocated to that specific performance obligation,

and not all performance obligations in the contract.

Valmet provides its customers with standard payment terms. If

extended payment terms exceeding one year are offered to

customers, the invoiced amount is discounted to its present

value and interest income is recognized over the credit term.

When Valmet incurs costs in fulfilling its contractual

obligations, these are expensed as incurred, unless costs can be

capitalized as inventory. The latter is typically the case in

performance obligations for which revenue is recognized at a

point in time. Costs to obtain a contract that are expected to be

recovered are capitalized when amortization period is one year

or more. Otherwise, these costs are expensed as incurred.

	Critical accounting estimates and judgments For performance obligations satisfied over time, the progress and the profitability are based on the management’s estimates, which require significant judgement concerning the stage of completion, the cost to complete, and the time of completion. Management regularly reviews the progress and execution of performance obligations. As part of the process, management reviews information including, but not limited to, key contractual obligations outstanding, project schedule, identified risks and opportunities, as well as changes in estimates of revenues and costs. A projected loss on a customer contract is recognized in full through profit or loss when it becomes known.

	Valmet regularly enters into contracts where the consideration includes one or more variable elements. Variable consideration is estimated by using either the expected value or the most likely amount -method, depending on the type of the arrangement. In making judgments about variable consideration, Valmet considers historical, current and forecast information. Impact of changes in estimates is recognized in revenue in the period when the estimate is updated.

Disaggregation of revenue

Valmet’s revenue is reported, and monitored by management,

by business line and area. Paper, and Pulp and Energy business

lines’ revenue is derived from large long-term projects, for which

revenue is mostly recognized over time based on the cost-to-

cost method. For the projects that do not meet the over time

revenue recognition criteria, revenue is recognized at a point in

time. Service business line’s revenue is generated from large

volume of short-term contracts with relatively low individual

value, for which revenue is mainly recognized at a point in time.

Flow Control business line's valves equipment sales are

recognized at a point in time. Automation business line’s

revenue consists of long-term contracts and short-term service

contracts. The nature of long-term contracts, and therefore also

the revenue recognition method, is similar to process

technologies projects although with average contract values

being lower. Revenue for short-term service contracts is

recognized at a point in time. Nature of revenue in each area in

any given reporting period is driven by volume and size of

ongoing projects.

Net sales by business lines:

	Year ended Dec 31,
EUR million	2023	2022
Services	1,784	1,606
Flow Control	777	551
Automation Systems	551	489
Pulp and Energy	1,067	1,081
Paper	1,353	1,347
Total	5,532	5,074

Timing of revenue recognition:

	Year ended Dec 31,
EUR million	2023	2022
Performance obligations satisfied at a point in time	2,670	2,321
Performance obligations satisfied over time	2,862	2,753
Total	5,532	5,074

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Contract balances

In order to mitigate credit risk and compensate for contract

costs incurred upfront, Valmet regularly requires advance

payments from its customers. During the reporting period

Valmet had not entered into any material contracts where the

period between when Valmet transfers a promised good or

service to a customer and when the customer pays for that good

or service will be one year or more. Neither were there any

ongoing projects from previous reporting periods for which the

former would apply.

The creditworthiness of a customer is verified before entering

into a contract. However, if a risk of non-payment arises after

contract inception, the probability of collection of consideration is

re-evaluated and if assessed improbable, recognition of revenue

is discontinued. An allowance for non-collectability of open

receivables and contract assets is established as concluded

appropriate.

Valmet receives payments from customers based on invoicing

schedules as set out in the customer contracts. Changes in

contract assets and liabilities are due to Valmet’s performance

under the customer contracts. Amounts due from customers

under revenue contracts primarily relate to Valmet’s right to

consideration for work completed but not yet invoiced at the

reporting date. These assets are transferred to trade receivables

when right to consideration becomes unconditional, which is

typically at the time when Valmet has contractual right to issue

an invoice. A significant part of amounts due to customers relate

to advance consideration received from customers in long-term

contracts for which revenue is recognized over time. These

amounts are recognized as revenue as (or when) Valmet

performs under the contracts.

The following tables show movements in amounts due from

customers under revenue contracts and amounts due to

customers under revenue contracts during the reporting period.

Revenue recognized in the period also includes revenue

recognized related to performance obligations satisfied in

previous periods, the amount of which however is insignificant.

Amounts due from customers under revenue contracts:

EUR million	2023	2022
Balance at beginning of the period	485	280
Translation differences	-1	-6
Acquired in business combinations	—	—
Revenue recognized in the period	1,148	1,179
Transfers to trade receivables	-1,157	-968
Balance at end of the period	475	485

Amounts due to customers under revenue contracts:

EUR million	2023	2022
Balance at beginning of the period	1,205	1,263
Translation differences	-18	-7
Acquired in business combinations	66	29
Revenue recognized in the period	-2,505	-2,090
Consideration invoiced and/or received	2,403	2,011
Balance at end of the period	1,151	1,205

	As at Dec 31,
EUR million	2023	2022
Amounts due to customers under revenue contracts for which revenue is recognized
Point in time	362	359
Over time	789	846
Carrying value at end of the period	1,151	1,205

Valmet typically issues contractual product warranties under

which it guarantees the mechanical functioning of equipment

delivered during the agreed warranty period. Valmet does not

issue service-type warranties.

As at December 31, 2023, Valmet had no costs to obtain or

fulfil contracts capitalized under IFRS 15.

The aggregate amount of transaction price allocated to

unsatisfied or partially satisfied performance obligations as at

December 31, 2023, was EUR 3,973 million (EUR 4,403 million).

Approximately 85 percent of the order backlog is currently

expected to be realized as net sales during 2024 (at the end of

December 2022, approximately 75% was expected to be

realized as net sales during 2023).

VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | NOTES TO THE CONSOLIDATED FINANCIAL

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4 | Intangible assets and property, plant

and equipment

Accounting policies

Fixed assets consist of intangible assets and property, plant and

equipment. Intangible assets, which comprise goodwill,

intangible assets recognized in business combinations (such as

technology and customer relationships), capitalized software and

other intangible assets, are stated at historical cost less

accumulated amortization and impairment losses, if any.

Goodwill is not amortized, but tested for impairment.

Property, plant and equipment is stated at historical cost, less

accumulated depreciation and impairment losses, if any. Land

and water areas are not depreciated.

Subsequent improvement costs related to an asset are

included in the carrying value of such an asset or recognized as

a separate asset, as appropriate, only when the future economic

benefits associated with the costs are probable, and the related

costs can be separated from normal maintenance costs.

Depreciation and amortization

Amortization of intangible assets with a definite useful life is

calculated on a straight-line basis over the expected economic

lives of the assets, being the following:

Patents and licenses	5–10 years
Capitalized software	3–5 years
Technology	3–20 years
Customer relationships	3–20 years
Other intangibles	1–40 years

Depreciation of property, plant and equipment is calculated on a

straight-line basis over the expected useful lives of the assets,

being the following:

Buildings and structures	15–40 years
Machinery and equipment	3–20 years

Expected useful lives are reviewed at each balance sheet date

and if they differ significantly from previous estimates the

remaining depreciation periods are adjusted accordingly.

Impairment

The carrying value of fixed assets subject to amortization or

depreciation is reviewed for impairment whenever events and

changes in circumstances indicate that the carrying amount of

an asset may not be recoverable. The recoverable amount of an

asset is the higher of its fair value and its value in use. An asset

is impaired if its carrying amount exceeds its recoverable

amount, at which time an impairment loss is recognized in the

Consolidated statement of income in Other operating expenses.

The previously recognized impairment loss may be reversed if,

and only if, there is exceptional and significant improvement in

the circumstances having initially caused the impairment.

The carrying value of goodwill is reviewed for impairment

annually or more frequently, if the facts and circumstances, such

as decline in sales, operating profit or cash flows, or material

adverse changes in the business environment, suggest that

carrying value may not be recoverable. Valmet has three cash

generating units (CGUs) that establish the first aggregation

levels at which impairment testing can be done. The testing of

goodwill for impairment is performed at the CGU level as

goodwill does not generate cash flows independent from the

CGUs. Valmet uses value in use method to measure the

recoverable amount of goodwill subject to testing. Value in use

is estimated through discounted cash flow method. A previously

recognized impairment loss on goodwill is not reversed even if

there is significant improvement in circumstances having initially

caused the impairment.

	Critical accounting estimates and judgments Impairment testing Preparation of impairment analysis requires use of numerous estimates. The valuation is inherently judgmental and highly susceptible to change from period to period, because it requires management to make assumptions about future supply and demand related to its individual business units, future sales prices and achievable cost levels. The value of the benefits and savings expected from the efficiency improvement programs are inherently subjective. All outsized improvements are excluded from future cash inflows and outflows. The value in use of a cash generating unit is determined by discounting estimated future cash flows with a discount rate approximating the weighted average cost of capital (WACC). The WACC is based on comparable peer industry betas and capital structure. Triggering events for impairment reviews at Valmet include the following: • Material permanent deterioration in the economic or political environment of the customers’ or of own activity • Businesses or asset’s significant under-performance relative to historical or projected future performance • Significant changes in Valmet’s strategic orientations affecting the business plans and previous investment policies.

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Intangible assets:

EUR million	Goodwill	Intangible assets recognized in business combinations	Capitalized software	Other intangible assets	Total
2023
Acquisition cost at beginning of the period	1,611	1,320	206	78	3,215
Translation differences	-3	—	—	—	-3
Capital expenditure	—	—	—	27	27
Acquired in business combinations	128	182	1	—	311
Retirements	—	—	—	-2	-2
Reclassifications	—	—	28	-28	—
Other changes and disposals	—	—	—	-3	-3
Acquisition cost at end of the period	1,735	1,502	234	72	3,545
Accumulated amortization and impairment losses at beginning of the period	—	-407	-111	-56	-575
Translation differences	—	—	—	—	—
Amortization charges for the period	—	-76	-19	-4	-98
Impairment losses	—	—	—	—	—
Retirements	—	—	—	2	2
Other changes and disposals	—	—	—	3	3
Accumulated amortization and impairment losses at end of the period	—	-483	-130	-55	-668
Carrying value at end of the period	1,735	1,020	105	17	2,877

EUR million	Goodwill	Intangible assets recognized in business combinations1	Capitalized software	Other intangible assets1	Total
2022
Acquisition cost at beginning of the period	730	492	178	75	1,475
Translation differences	4	-1	—	-1	2
Capital expenditure	—	—	—	32	32
Acquired in business combinations	876	830	4	1	1,712
Retirements	—	—	-2	-4	-6
Reclassifications	—	—	26	-26	—
Other changes and disposals	—	-1	—	—	-1
Acquisition cost at end of the period	1,611	1,320	206	78	3,215
Accumulated amortization and impairment losses at beginning of the period	—	-319	-97	-55	-471
Translation differences	—	4	—	—	4
Amortization charges for the period	—	-92	-16	-4	-112
Impairment losses	—	—	—	-2	-2
Retirements	—	—	2	4	6
Other changes and disposals	—	—	—	—	—
Accumulated amortization and impairment losses at end of the period	—	-407	-111	-56	-575
Carrying value at end of the period	1,611	913	95	22	2,641

1 Presentation of intangible assets has changed in 2023. Intangible assets recognized in business combinations are presented separately and Patents and licenses are included in

Other intangible assets.

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Property, plant and equipment (excluding right-of-use assets):

EUR million	Land and water areas	Buildings and structures	Machinery and equipment	Assets under construction	Total
2023
Acquisition cost at beginning of the period	41	428	975	84	1,528
Translation differences	-1	-6	-13	-1	-21
Capital expenditure	—	1	12	85	98
Acquired in business combinations	—	12	16	1	29
Disposals	—	-7	-18	—	-25
Retirements	—	—	-8	—	-9
Reclassifications	—	21	67	-87	—
Other changes	—	—	—	-1	-1
Acquisition cost at end of the period	40	449	1,030	81	1,599
Accumulated depreciation and impairment losses at beginning of the period	—	-276	-758	—	-1,034
Translation differences	—	3	10	—	13
Depreciation charges for the period	—	-14	-43	—	-58
Impairment losses	—	—	—	—	—
Disposals	—	7	16	—	23
Retirements	—	—	8	—	9
Other changes	—	—	1	—	—
Accumulated depreciation and impairment losses at end of the period	—	-280	-767	—	-1,046
Carrying value at end of the period	40	169	263	81	553

EUR million	Land and water areas	Buildings and structures	Machinery and equipment	Assets under construction	Total
2022
Acquisition cost at beginning of the period	25	395	942	72	1,434
Translation differences	—	-4	-6	-1	-11
Capital expenditure	4	1	8	67	80
Acquired in business combinations	12	26	34	2	74
Disposals	—	—	-8	—	-8
Retirements	—	-7	-32	—	-40
Reclassifications	—	18	37	-56	—
Other changes	—	—	—	—	-1
Acquisition cost at end of the period	41	428	975	85	1,528
Accumulated depreciation and impairment losses at beginning of the period	—	-272	-759	—	-1,030
Translation differences	—	2	5	—	7
Depreciation charges for the period	—	-13	-42	—	-55
Impairment losses	—	-1	-1	—	-2
Disposals	—	—	6	—	6
Retirements	—	7	32	—	38
Other changes	—	1	1	—	2
Accumulated depreciation and impairment losses at end of the period	—	-276	-758	—	-1,034
Carrying value at end of the period	41	152	217	85	495

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Depreciation and amortization 2023,

EUR 196 million

Depreciation and amortization 2022,

EUR 201 million

Depreciation and amortization by function:

	Year ended Dec 31,
EUR million	2023	2022
Cost of goods sold	-64	-58
Selling, general and administrative expenses
Marketing and selling	-7	-7
Research and development	-5	-4
Administrative	-120	-132
Total	-196	-201

Table does not include amortization included in share in profits and losses of associated companies, operative investments.

Goodwill impairment testing

At the acquisition date goodwill arising from business

acquisitions is allocated to the cash generating unit or cash

generating units expected to benefit from the synergies of the

combination, irrespective of whether other assets and/or

liabilities of the acquiree are assigned to the CGU or CGUs.

In 2023, Valmet has changed the composition of CGUs for

2023 and retrospectively for 2022. The CGU composition has

been aligned with Valmet's operating segments following the

change in the financial reporting structure in 2022. The new

CGUs are Services, Automation and Process Technologies. In

2022, Valmet had identified three CGUs. The first CGU

comprised of Valmet’s Paper business line and the paper

business related part of Valmet’s service business. The second

CGU comprised of Valmet’s Pulp and Energy business line and

the pulp and energy related part of Valmet’s service business.

The third CGU consisted of Valmet’s Automation Systems and

Flow Control business lines, and has remained unchanged.

The goodwill previously allocated to Paper business line and

the paper business related part of Valmet's service business

(EUR 366 million at the end of 2022) and Pulp and Energy

business line and the pulp and energy related part of Valmet's

service business (EUR 386 million at the end of 2022) has been

reallocated to Services and Process Technologies based on the

relative values of the CGUs.

Valmet assesses the value of its goodwill for impairment

annually or more frequently, if facts and circumstances indicate,

that a risk of impairment exists. Testing is performed by

comparing the carrying value of the CGU to its recoverable

amount, which is determined based on a value in use

calculation. This calculation uses pre-tax cash flow projections

based on financial budgets approved by Valmet’s management

and Board of Directors covering a five-year period. The terminal

values representing the cash flows beyond the five-year period

are calculated using the estimated long-term growth rates stated

below.

The following table sets out the allocation of goodwill as at

December 31, 2023, and 2022, and the key assumptions applied

in the value in use calculations. In both financial years, testing

was performed as at September 30. Comparative figures have

been restated with the new CGU composition.

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Allocation of goodwill:

	As at Dec 31,
EUR million	2023	2022
Services	643	564
Automation	862	859
Process Technologies	231	188
Total	1,735	1,611

Key assumptions applied:

	2023	2022
Long-term growth rate, (%)
Services	2.0%	2.0%
Automation	2.3%	2.3%
Process Technologies	2.1%	2.0%
Pre-tax discount rate, (%)
Services	11.9%	10.3%
Automation	11.2%	9.6%
Process Technologies	16.8%	16.0%

The provisional goodwill arising from the acquisition of Körber's

business area Tissue, EUR 125 million, has been allocated to

Services and Process Technologies CGUs based on how the CGUs

are expected to benefit from the combined business, with EUR

86 million allocated to Services and EUR 39 million to Process

Technologies.

The key assumptions are based on past performance and

management’s and Board of Directors’ expectations on market

development. Assumptions on product mix are in line with the

Group’s financial targets with stable business growth exceeding

that of process technologies business. Profitability margin

assumptions are reflecting improvements similarly in line with

the Group’s financial targets as communicated. External sources

are also used to obtain data on growth, demand, and price

developments that is used in establishing the assumptions. The

discount rate used in testing is derived from the weighted

average cost of capital based on comparable peer industry betas

and capital structure. The long-term growth rates used for

calculating the terminal values are based on Valmet's

assessments for the market growth drivers and have been

corroborated against the long-term inflation expectations. The

assumptions requiring most judgment are the market

development and product mix.

As a result of the annual impairment tests, no impairment loss

was recognized on goodwill in 2023, or in 2022.

Sensitivity analysis

Valmet’s management has assessed that no reasonably possible

change in any of the key assumptions would cause any of the

CGU’s carrying amount to exceed its recoverable amount.

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5 | Leases

Accounting policies

Valmet assesses at the inception of a contract whether it is or

contains a lease. A contract is considered to contain a lease if it

conveys a right to use an either explicitly or implicitly identified

asset for a period of time in exchange for consideration. In lease

contracts where Valmet is the lessee, a right-of-use asset and a

lease liability is recognized at lease commencement date to

reflect Valmet's right to use the underlying asset and the unpaid

future lease payments respectively.

Lease liability is initially measured at an amount equal to the

present value of the future lease payments that are not yet paid

at the commencement date. Lease payments are discounted

using either the interest rate implicit in the lease or, if the

interest rate implicit in the lease cannot be readily determined,

Valmet’s incremental borrowing rate. As interest rate implicit in

the contract is not commonly readily available, incremental

borrowing rates reflecting entity-specific factors and lease term

are used to calculate the present value of the lease liability.

Incremental borrowing rates are estimated based on market

prices adjusted with calculated margins representing the entity-

specific factors such as credit and country risk.

In subsequent periods the lease liability is measured using the

effective interest rate method, and the carrying amount of lease

liability is increased with the interest on the lease liability,

reduced with the amount of lease payments made, and adjusted

to reflect any reassessments or lease modifications made. When

the lease liability is remeasured, the corresponding adjustment

is reflected in the right-of-use asset. Variable lease payments

not based on index or rate are not included in the liability but

are expensed as incurred.

A right-of-use asset is initially measured at cost comprising of

the amount of the initial measurement of the lease liability and

any lease payments made at or before the commencement date,

any initial direct costs incurred by Valmet, and restoration costs,

less any lease incentives received. Subsequently, the right-of-

use asset is depreciated on a straight-line basis over the shorter

of lease term or the useful life of the asset.

Valmet applies exemptions provided by IFRS 16 not to

recognize a right-of-use asset and corresponding lease liability

for leases with a contract term of 12 months or less, and for

leases of low-value assets. The payments for these leases are

recognized as an expense on a straight-line basis over the lease

term. Further, Valmet separates non-lease components from

lease components only for asset classes in which the amount of

non-lease components is significant.

	Critical accounting estimates and judgments Valmet has a significant volume of open-ended real estate lease contracts which carry a short notice period only, or which have an initial fixed term but carry extension or termination options. Estimating the likely lease term for these contracts and assessing if the options will be exercised requires significant judgement. When assessing the lease term for these contracts, management considers the relevant facts and circumstances. The likely lease term is typically assessed following the three-year financial forecasts established by management. In case there are specific circumstances in place, such as beneficial market rates, significant leasehold improvements, or other significant direct or indirect costs associated with exiting the lease, lease term can be above three years. Considering other than real estate leases, the need for assets leased under open-ended contracts is commonly short-term in nature, and as such open-ended contracts where the notice period is 12 months or less are accounted for as short-term leases.

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Valmet’s leasing activities

Majority of Valmet’s lease arrangements concern real estate,

vehicles, and machinery and equipment located primarily on

Valmet’s premises. The length of these lease arrangements is

typically 3 to 5 years and contracts may include options to

extend the lease.

The below tables present the right-of-use assets recognized in

the Consolidated statement of financial position and the

movements during the period and the future minimum lease

payments as at December 31, 2023.

EUR million	Land and water areas	Buildings and structures	Machinery and equipment	Right-of-use assets total
2023
Carrying value at beginning of the period	11	80	14	105
Translation differences	-1	-1	—	-2
Additions	—	34	14	48
Acquired in business combinations	—	36	1	37
Depreciation	-1	-30	-10	-40
Other changes	—	-2	-1	-3
Carrying value at end of the period	10	116	18	145

EUR million	Land and water areas	Buildings and structures	Machinery and equipment	Right-of-use assets total
2022
Carrying value at beginning of the period	9	42	13	65
Translation differences	—	-1	—	-1
Additions	3	21	9	32
Acquired in business combinations	—	44	3	46
Depreciation	—	-25	-8	-34
Other changes	—	-2	-2	-3
Carrying value at end of the period	11	80	14	105

	As at Dec 31,
EUR million	2023	2022
Not later than 1 year	44	35
Later than 1 year and not later than 2 years	37	25
Later than 2 years and not later than 3 years	24	19
Later than 3 years and not later than 4 years	14	10
Later than 4 years and not later than 5 years	11	6
Later than 5 years	39	15
Total	169	110

Lease payments related to short-term leases and leases of low-

value assets, as well as variable lease payments that are not

based on index or rate, are not included in the lease liability but

are recognized as an expense as incurred in either Cost of goods

sold or Selling, general and administrative expenses. The below

table presents lease payments for such leases. Interest expense

related to leases included in Financial expenses is presented in

Note 10.

	Year ended Dec 31,
EUR million	2023	2022
Expenses related to short-term leases	-3	-2
Expenses related to leases of low-value assets	-7	-6
Expenses related to variable lease payments not included in lease liabilities	-1	-1
Total	-11	-9

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6 | Net working capital

Payment schedules of large long-term projects have a significant

impact on net working capital development.

Net working capital does not include non-operative items such as

taxes, interest-bearing assets and liabilities, or other items

related to funding of the Group’s operations.

	As at Dec 31,		Impact
EUR million	2023	2022	2023
Assets included in net working capital
Non-current trade receivables	8	—	-8
Other non-current assets	15	14	-2
Inventories	1,049	934	-114
Trade receivables	973	834	-139
Amounts due from customers under revenue contracts	475	485	9
Derivative financial instruments (assets)	40	69	30
Other receivables	257	223	-34
Liabilities included in net working capital
Employee benefits	-154	-132	23
Provisions	-211	-219	-8
Other non-current non-interest-bearing liabilities	-1	-1	—
Trade payables	-520	-442	78
Amounts due to customers under revenue contracts	-1,151	-1,205	-53
Derivative financial instruments (liabilities)	-46	-56	-11
Other current liabilities	-544	-588	-44
Total net working capital	191	-82	-273
Effect of changes in foreign exchange rates			5
Remeasurement of defined benefit plans			-18
Change in allowance for doubtful receivables and inventory obsolescence provision			-16
Acquired in business combinations			122
Change in net working capital in the Consolidated statement of cash flows			-180

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7 | Inventories

Accounting policies

Inventories are valued at the lower of cost and net realizable

value. Net realizable value is the estimated selling price in the

normal course of business less the estimated costs of completion

and the estimated costs necessary to make the sale.

Materials and supplies and finished products are valued on a

weighted average cost basis or on a first in, first out (FIFO)

basis. Work in progress includes costs related to ongoing

projects, for which revenue is recognized at a point in time.

Work in progress typically includes costs for direct labor and

material and allocated overhead costs.

	Critical accounting estimates and judgments Provision for slow-moving and obsolete inventory is based on the best estimate of such amounts at the balance sheet date. The estimate is based on a systematic ongoing review and evaluation of inventory balances. As part of this evaluation, Valmet also considers the composition and age of the inventory compared to anticipated future needs.

Specification of changes in inventory obsolescence provision:

EUR million	2023	2022
Balance at beginning of the period	55	36
Translation differences	-1	—
Additions charged to profit or loss	24	16
Acquired in business combinations	13	16
Used reserve	-12	-4
Reversal of reserve	-13	-9
Balance at end of the period	67	55

The cost of inventories recognized as expense was EUR 3,831

million and EUR 3,607 million for the years ended December 31,

2023, and 2022, respectively.

8 | Financial assets and liabilities

Accounting policies

Valmet classifies its financial assets into the following categories:

at amortized cost, at fair value through other comprehensive

income and at fair value through profit or loss. Measurement

category of financial assets is determined based on related

business model and contractual cash flow characteristics of a

given instrument. Financial assets are derecognized when the

contractual rights to cash flows have expired, or the rights to

cash flows together with substantially all risks and rewards of

ownership, have transferred.

Financial liabilities are classified either at amortized cost or at

fair value through profit or loss. Financial liabilities are

derecognized when they are extinguished, that is when the

obligation specified in the contract is discharged, cancelled or

expires.

Financial assets and liabilities are recognized when Valmet

becomes party to the contractual provisions of the instrument.

Both financial assets and liabilities are presented as non-current

when their maturity exceeds 12 months.

Financial assets at amortized cost

The Group’s financial assets measured at amortized cost include

trade, loan and other receivables together with cash and cash

equivalents. These assets are recognized initially at fair value

including transaction costs and trade receivables at their

transaction price. Subsequently the assets are recognized at

amortized cost using the effective interest rate method. Trade

receivables are the most significant of these assets, and for

them the amortized cost equals to the original amount invoiced

to customers, net of allowance for expected credit losses. If

extended payment terms exceeding one year are offered to

counterparty, the receivable is discounted to present value and

interest income is recognized over the credit term.

Valmet evaluates changes in credit risk associated with

different financial assets at each reporting date as required by

general impairment guidelines set out in IFRS 9. If credit risk

has not changed significantly since initial recognition, allowance

amounting to expected credit losses for next 12 months is

recognized. Should the credit risk have changed significantly,

valuation of allowance is based on lifetime expected credit

losses.

For trade receivables and contract assets arising from

customer contracts for which revenue is recognized over time,

simplified impairment model is applied and valuation of

allowance is based on lifetime expected credit losses which are

recognized at first reporting date. Valmet’s application of the

simplified impairment model considers historical credit loss

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experience, time value of money and forward-looking

information relevant to estimate future credit losses, and the

inputs used in the model are updated on a regular basis. The

model applied includes statistical model together with an option

to apply case-by-case analysis for significant trade receivables

overdue more than 90 days. Final bad debts are written off when

official announcement of receivership, liquidation or bankruptcy

is received confirming that the receivable will not be honored by

the customer. Changes in allowance together with final bad

debts are reported under Other operating income and expenses.

Financial assets at fair value through other comprehensive

income

Majority of Valmet’s financial assets measured at fair value

through other comprehensive income (OCI) are interest-bearing

financial assets managed centrally by the Group treasury.

Business model for these assets involves both holding until

maturity and selling before maturity date approaches, depending

on prevailing market circumstances and Group treasury’s

operational requirements. Gains and losses from these assets

are recognized in the fair value reserve of Equity and at

derecognition these are recycled through OCI to Consolidated

statement of income.

Valmet also applies fair value through other comprehensive

income option to certain publicly traded equity investments.

Change in fair value of the related shares is recognized in the

fair value reserve of Equity. Should the investments be divested

in the future, any cumulative gain or loss remains in Equity, and

is not recycled through OCI to Consolidated statement of

income. Fair value of the equity investments classified at fair

value through other comprehensive income as at December 31,

2023, was EUR 8 million (EUR 8 million).

Financial assets and liabilities at fair value through profit or

loss

The majority of the Group’s financial assets and liabilities

measured at fair value through profit or loss are derivative

financial instruments, for which the related accounting policies

are presented in Note 9. Valmet’s other equity holdings,

excluding publicly traded equity investments, include various

industrial participations, shares in real estate holdings and other

shares which are measured at fair value through profit or loss.

For these other equity ownerships, if reliable market value does

not exist, historical cost is considered best available estimate of

fair value. Valmet has not voluntarily assigned any financial

assets or liabilities to be measured at fair value in addition to

items designated to this category mandatorily in accordance with

IFRS 9.

Financial liabilities at amortized cost

Valmet’s financial liabilities measured at amortized cost consist

of loans from financial institutions, lease liabilities and trade

payables. Loans from financial institutions are initially recognized

at fair value, net of transaction costs incurred. Subsequently

these liabilities are measured at amortized cost by using the

effective interest rate method. Loans from financial institutions

are classified as current liabilities unless Valmet has an

unconditional right to defer settlement of the liability for at least

12 months after the end of the reporting period. Accounting

policies for leases are presented in Note 5.

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Fair value estimation

For those financial assets and liabilities, which have been

recognized at fair value in the Consolidated statement of

financial position, the measurement hierarchy and valuation

methods described below have been applied. There have been

no transfers between fair value levels.

Level 1

Quoted unadjusted prices at reporting date in active markets.

The market prices are readily and regularly available from an

exchange, dealer, broker, market data provider, pricing service

or regulatory agency. The quoted market price used for financial

assets is the current bid price. Level 1 financial instruments

include equity investments classified as financial assets at fair

value through other comprehensive income.

Level 2

The fair value of financial instruments in Level 2 is determined

using valuation techniques. These techniques utilize observable

market data readily and regularly available from an exchange,

dealer, broker, market data provider, pricing service or

regulatory agency. Level 2 financial instruments include over-

the-counter (OTC) derivatives classified as financial assets and

liabilities at fair value through profit or loss or derivatives

qualified for hedge accounting and all other financial assets and

liabilities except for equity investments.

Level 3

A financial instrument is categorized into Level 3 if the

calculation of the fair value cannot be based on observable

market data. Level 3 financial instruments include equity

investments classified as financial assets at fair value through

profit or loss. There were no changes in Level 3 instruments for

the 12 months ended December 31, 2023.

	Critical accounting estimates and judgments Under the simplified impairment model applied to trade receivables and contract assets, an allowance amounting to lifetime expected credit losses is recognized at first reporting date. The amount of this allowance is estimated based on a model that considers historical credit loss experience, time value of money and forward-looking information relevant to estimate future credit losses. The inputs used in the model are updated on a regular basis. Application of the guidance for impairment of financial assets, in particular estimation of future expected credit losses and application of case-by-case analysis to significant trade receivables overdue more than 90 days, requires significant management judgment and includes consideration of available customer and market information. Resulting impairment of financial assets is best estimate based on information available and may differ from the actual result.

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Classification of financial assets and liabilities as at December 31:

	As at Dec 31,
EUR million	2023	2022
Non-current financial assets
Equity investments at fair value through other comprehensive income	8	8
Equity investments at fair value through profit or loss	2	2
Loan receivables at fair value through profit or loss	—	—
Trade receivables at amortized cost	8	—
Derivative financial instruments at fair value through profit or loss	—	—
Derivative financial instruments qualified for hedge accounting	12	11
Carrying value at end of the period	31	22
Current financial assets
Interest-bearing financial assets at fair value through other comprehensive income	25	30
Non-interest-bearing financial assets at amortized cost	3	5
Trade receivables at amortized cost	973	834
Derivative financial instruments at fair value through profit or loss	8	8
Derivative financial instruments qualified for hedge accounting	20	50
Cash and cash equivalents at amortized cost	432	277
Carrying value at end of the period	1,460	1,205

	As at Dec 31,
EUR million	2023	2022
Non-current financial liabilities
Loans from financial institutions at amortized cost	1,240	555
Lease liabilities at amortized cost	98	63
Derivative financial instruments at fair value through profit or loss1	—	—
Derivative financial instruments qualified for hedge accounting1	11	7
Carrying value at end of the period	1,349	625
Current financial liabilities
Loans from financial institutions at amortized cost	40	40
Lease liabilities at amortized cost	43	35
Interest-bearing liabilities at amortized cost	63	115
Trade payables at amortized cost	520	442
Derivative financial instruments at fair value through profit or loss	8	15
Derivative financial instruments qualified for hedge accounting	26	35
Carrying value at end of the period	700	681

1 Included in Other non-current liabilities in the Consolidated statement of financial position.

Carrying values presented in the table above approximate fair

values, except for the loans from financial institutions where fair

value approximates to EUR 1,317 million (EUR 598 million).

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Non-current equity investments comprised EUR 8 million listed

shares (EUR 8 million) and various industrial participations,

shares in real-estate holdings and other shares amounting to

EUR 2 million as at December 31, 2023 (EUR 2 million). Current

interest-bearing financial assets managed centrally by the Group

treasury amounted to EUR 25 million (EUR 30 million).

Valmet manages its cash by investing in financial assets with

varying maturities. Interest-bearing financial assets with

maturities at the date of acquisition exceeding three months are

classified as Other current financial assets and assets with

maturities of three months or less are classified as Cash and

cash equivalents in the Consolidated statement of financial

position. Cash and cash equivalents comprised of cash at bank

and in hand of EUR 421 million (EUR 264 million) and other

short-term financial assets with maturities of three months or

less of EUR 11 million (EUR 13 million) mainly comprising of

banker’s acceptance drafts and bank deposits. For more

information on derivative financial instruments, see Note 9.

Analysis of trade receivables by age:

	As at Dec 31,
EUR million	2023	2022
Trade receivables, not due	625	591
Trade receivables 1–30 days overdue	182	146
Trade receivables 31–60 days overdue	93	38
Trade receivables 61–90 days overdue	32	18
Trade receivables 91–180 days overdue	22	18
Trade receivables more than 180 days overdue	27	24
Total	981	834

Movement in allowance for trade receivables and contract assets:

EUR million	2023	2022
Balance at beginning of the period	21	19
Translation differences	-1	—
Additions charged to profit or loss	7	6
Acquired in business combinations	4	4
Used reserve	-3	-5
Reversals	-3	-3
Balance at end of the period	25	21

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Net debt reconciliation:

	As at Dec 31,
EUR million	2023	2022
Cash and cash equivalents	432	277
Current interest-bearing financial assets	25	30
Loans from financial institutions and other current debt	1,343	710
Lease liabilities	141	99
Net debt	-1,027	-502

	2023
	Liabilities from financing activities		Other assets
EUR million	Loans from financial institutions and other current debt	Lease liabilities	Cash and cash equivalents	Current interest- bearing financial assets	Total
Balance at beginning of the period	710	99	277	30	-502
Translation differences	—	-1	-10	2	-7
Cash flows	633	-44	165	-7	-431
Additions to lease liabilities	—	54	—	—	-54
Acquired in business combinations	—	37	—	—	-37
Other changes	—	-3	—	—	3
Net debt at end the of period	1,343	141	432	25	-1,027

	2022
	Liabilities from financing activities		Other assets
EUR million	Loans from financial institutions and other current debt	Lease liabilities	Cash and cash equivalents	Current interest- bearing financial assets	Total
Balance at beginning of the period	417	60	517	47	88
Translation differences	—	-1	-4	6	3
Cash flows	-91	-39	-236	-23	-129
Additions to lease liabilities	—	36	—	—	-36
Acquired in business combinations	384	46	—	—	-431
Other changes	—	-3	—	—	3
Net debt at end of the period	710	99	277	30	-502

9 | Derivative financial instruments

Accounting policies

Derivative financial instruments

Derivative financial instruments are used to hedge the Group’s

exposure to foreign exchange rate, interest rate and commodity

price risks arising from operational, investment and financing

activities in accordance with Valmet’s treasury policy, which is

discussed further in Note 21.

Trade date accounting is applied to Group’s derivative financial

instruments and these are measured at initial recognition and at

each reporting date at fair value in balance sheet. Fair value of

open derivative contracts is calculated as present value of future

cash flows using currency, interest and commodity price

quotations at reporting date. The instruments are classified as

non-current assets or liabilities when the remaining maturities

exceed 12 months and as current assets or liabilities when the

remaining maturities are 12 months or less.

When hedge accounting is applied derivatives are designated

at inception either as hedges of firm commitments or highly

probable forecasted sale and purchase transactions. When hedge

accounting criteria are not met derivatives are measured at fair

value through profit or loss.

Application of hedge accounting

Valmet has designated certain forward exchange contracts,

interest rate swaps, and electricity forward contracts to cash

flow hedge accounting relationships. When hedge accounting is

applied, relationship between hedging instrument and hedged

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item is documented, including related risk management strategy

and objectives. Both at hedge inception and at each reporting

date a forward-looking assessment is performed to ensure that

changes in cash flows of the hedging instrument are expected to

offset changes in cash flows from the hedged item. When

performing this assessment, if critical terms of hedging

instrument and hedged item match, economic relationship exists

and hedge accounting relationship is considered effective. In

Valmet’s hedge accounting relationships hedge ratio is 1:1 (i.e.

the relationship between the quantity of hedging instrument and

quantity of hedged risk in their relative weighting).

For derivatives that have been designated to a cash flow hedge

accounting relationship, the effective portion of change in fair

value is recognized through other comprehensive income (OCI)

in the hedge reserve under Equity and reclassified to profit or

loss concurrently with the underlying hedged transaction. The

gains or losses relating to the ineffective portion of derivatives

hedging operative items (e.g. foreign currency denominated

sales and purchase transactions) are reported in profit or loss.

Both the ineffective portion and the reclassification from Equity

are reported either in Net sales and Cost of goods sold or under

Other operating income and expenses on a case-by-case basis.

Net loss from foreign exchange related to operative items was

EUR -12 million in 2023 (EUR -13 million). Respectively, the

ineffective portions of derivatives hedging non-operative items

(e.g. interest-bearing financial assets and liabilities, and other

items related to Group’s funding) are reported under Financial

income and expenses in profit or loss. Ineffectiveness arising

from application of hedge accounting during the reporting period

was insignificant. Should a hedged transaction no longer be

expected to occur, any cumulative gain or loss previously

recognized under Equity is reclassified through OCI to profit or

loss.

When hedging for changes in foreign currency denominated

firm commitments or highly probable forecasted sale and

purchase transactions, currency component of forward exchange

contracts has been designated as hedging instrument in hedge

accounting relationships in every case. In addition, based on a

case-by-case designation, the interest component of forward

exchange contracts can also be designated as hedging

instrument in hedge accounting relationships. In cases where

interest component is not designated as part of Valmet’s hedge

accounting relationships, it is recognized in profit or loss.

Valmet has designated all open interest rate swaps as hedging

instruments to hedge future changes in cash flows arising from

Valmet’s floating rate loans from financial institutions. Interest

arising from interest rate swaps is reported under Financial

income and expenses concurrently with interest expense arising

from hedged floating rate loans from financial institutions.

For highly probable forecasted purchases of electricity, the

Group has designated system-price component of electricity

purchases as hedged risk and electricity forward contracts as

hedging instruments to hedge accounting relationships. The

realized gains and losses related to effective portion of the

electricity forward contracts are recognized in Consolidated

statement of income under Cost of goods sold.

Derivatives at fair value through profit or loss

Certain forward exchange contracts and commodity derivatives

do not qualify for hedge accounting and change in fair value is

recorded through profit or loss. Gains or losses arising from

derivatives hedging operative items are recognized case-by-case

either in Net sales and Cost of goods sold or in Other operating

income and expenses. When the forward exchange contracts

hedge exchange rate risk arising from foreign currency

denominated non-operative items, gains and losses are

recognized in Financial income and expenses in profit or loss.

	Critical accounting estimates and judgments Financial instruments In accordance with the disclosure requirements on financial instruments, the management is obliged to make certain assumptions of the related future cash inflows and outflows associated with different financial assets and liabilities. Management assumes that the fair values of derivatives, especially fair values of forward exchange contracts, materially reflect the present values of future cash inflows or outflows to be realized from such instruments. Hedging of foreign currency denominated firm commitments or highly probable forecasted sale and purchase transactions Under Valmet’s treasury policy, all Valmet entities are required to hedge their foreign currency risk when they have become engaged in a firm commitment denominated in a currency different from their functional currency. The commitment can be between Valmet entities or external to Valmet Group. In addition, certain highly probable forecasted sales and purchases are hedged in co-operation with the Group treasury. When revenue for a customer contract is recognized over time, the entity applies cash flow hedge accounting to both foreign currency denominated sales and purchases and recognizes the effect from the hedging instruments in the OCI until the hedged sales and/or purchases are recognized in Consolidated statement of income. Although the exposure hedged by Valmet entities has been clearly defined in Valmet treasury policy, the final realization of the hedged items depends also on factors beyond management’s control, which cannot be foreseen when initiating the hedge relationship. Such factors include change in the market environment causing the other party to postpone or cancel the commitment or highly probable forecasted sale or purchase. Management tries to the extent possible to include clauses in the related contracts to reduce the impact of such adverse events to the Consolidated statement of income.

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Notional amounts and fair values of derivative financial

instruments as at December 31:

EUR million	Notional amount	Fair value, assets	Fair value, liabilities	Fair value, net
2023
Forward exchange contracts1
Under hedge accounting	2,263	26	-31	-5
Not designated for hedge accounting	931	8	-6	2
Total	3,194	34	-38	-4
Electricity forward contracts2
Under hedge accounting	153	1	-1	—
Nickel commodity swaps3
Not designated for hedge accounting	588	—	-2	-2
Steel scrap commodity swaps3
Not designated for hedge accounting	1,523	—	—	—
Interest rate swaps1
Under hedge accounting	510	5	-5	—
Total		40	-46	-6
Netting fair values of derivative financial instruments subject to ISDAs4		-43	43
Total, net		-3	-2	-6
2022
Forward exchange contracts1
Under hedge accounting	2,404	43	-41	2
Not designated for hedge accounting	1,111	7	-15	-8
Total	3,515	50	-56	-6
Electricity forward contracts2
Under hedge accounting	169	9	—	9
Nickel commodity swaps3
Not designated for hedge accounting	192	1	—	1
Steel scrap commodity swaps3
Not designated for hedge accounting	1,048	—	—	—
Interest rate swaps1
Under hedge accounting	125	9	—	9
Total		69	-56	13
Netting fair values of derivative financial instruments subject to ISDAs4		-45	45
Total, net		24	-11	13

1 Notional amount in EUR million.

2 Notional amount in GWh.

3 Notional amount in metric tons.

4 Group’s derivatives are carried out under International Swaps and Derivatives Association’s Master Agreements (ISDA). In case of an event of default under these Agreements

the non-defaulting party may request early termination and set-off of all outstanding transactions. These agreements do not meet the criteria for offsetting in the statement of

financial position.

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Maturities of financial derivatives as at December 31:

	2024	2025	2026	2027	2028 and later	Total
2023
Notional amounts
Forward exchange contracts1	2,840	315	39	—	—	3,194
Electricity forward contracts2	92	44	18	—	—	153
Nickel commodity swaps3	588	—	—	—	—	588
Steel scrap commodity swaps3	1,523	—	—	—	—	1,523
Interest rate swaps1	65	95	160	150	40	510
Fair values, EUR million
Forward exchange contracts	-4	1	—	—	—	-4
Electricity forward contracts	—	—	—	—	—	—
Nickel commodity swaps	-2	—	—	—	—	-2
Steel scrap commodity swaps	—	—	—	—	—	—
Interest rate swaps	—	—	—	—	—	—

	2023	2024	2025	2026	2027 and later	Total
2022
Notional amounts
Forward exchange contracts1	3,289	220	6	—	—	3,515
Electricity forward contracts2	120	48	—	—	—	169
Nickel commodity swaps3	192	—	—	—	—	192
Steel scrap commodity swaps3	1,048	—	—	—	—	1,048
Interest rate swaps1	25	—	30	25	45	125
Fair values, EUR million
Forward exchange contracts	—	-6	—	—	—	-6
Electricity forward contracts	8	1	—	—	—	9
Nickel commodity swaps	1	—	—	—	—	1
Steel scrap commodity swaps	—	—	—	—	—	—
Interest rate swaps	—	—	2	1	6	9

1 Notional amount in EUR million.

2 Notional amount in GWh.

3 Notional amount in metric tons.

The notional amounts presented in the tables above give an

indication of the volume of derivative contracts entered into, but

do not provide an indication of the exposure to risk.

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10 | Financial income and expenses

	Year ended Dec 31,
EUR million	2023	2022
Dividends received	—	1
Interest income on financial assets (excl. derivatives)	14	8
Net gain from foreign exchange	3	3
Interest component from forward contracts	—	4
Financial income total	17	15
Interest expenses on financial liabilities measured at amortized cost (excl. leases)	-36	-10
Interest expenses on lease liabilities	-5	-3
Net interest from defined benefit plans	-5	-3
Interest component from forward contracts	-1	—
Other financial expenses	-5	-4
Financial expenses total	-52	-20
Financial income and expenses, net	-34	-5

Exchange rate differences included in financial income and expenses:

	Year ended Dec 31,
EUR million	2023	2022
Exchange rate differences from interest-bearing financial assets and liabilities, and other items related to Group’s funding	16	17
Exchange rate differences from derivative financial instruments	-13	-14
Net gain or loss from foreign exchange	3	3

Interest expenses on financial liabilities at amortized cost (excl.

leases) includes interest expenses on interest-bearing loans and

interest rate swaps.

11 | Provisions

Accounting policies

A provision is recognized when Valmet has a present legal or

constructive obligation as a result of a past event, payment is

probable, and Valmet is able to estimate the amount of the

obligation reliably. Provisions are reviewed at the end of each

reporting period and adjusted to reflect the current best

estimate or reversed if they are no longer needed. Long-term

provisions are discounted to their present value based on the

expected timing of cash outflows when the effect of the time

value of money is significant.

Warranty provisions

The Group typically issues contractual product warranties under

which it generally guarantees the mechanical functioning of

equipment delivered during the agreed warranty periods,

ranging from 12 to 24 months. The main principle in measuring

the warranty provision is to book a certain percentage, based on

past experience, of total revenue of a deliverable as a provision

for expected warranty work. For sales involving new technology

and long-term delivery contracts, additional warranty provision

may be established on a case-by-case basis to take into account

the potentially increased risk. The actual warranty costs of each

project are booked against the warranty provision and thus the

remaining warranty provision of each project can be followed.

Actual warranty costs incurred on projects are monitored

regularly in order to assess the need for amending the

percentage based on which warranty provisions are recognized

going forward.

Restructuring provisions

A provision for restructuring costs is recognized only when

general recognition criteria for provision are met and after

management has prepared and approved a formal plan to which

it is committed, and it has raised a valid expectation in those

affected by the measures that it will carry out the restructuring

by starting to implement that plan or announcing its main

features.

The costs included in a provision for restructuring are those

costs that are either incremental or incurred as a direct result of

the plan or are the result of a continuing contractual obligation

with no continuing economic benefit to Valmet or a penalty

incurred to cancel the contractual obligation. Restructuring and

capacity adjustment expenses are recognized in either Cost of

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goods sold or Selling, general and administrative expenses

depending on the nature of the expense. Restructuring costs can

also include other costs incurred as a result of a restructuring

plan, which are recorded under Other operating income and

expenses, such as asset impairment charges.

Provisions for onerous contracts

A provision for an onerous contract is recognized when the

Group has a contract in which the unavoidable costs of meeting

the obligations under the contract exceed the economic benefits

expected to be received under it. The unavoidable costs under a

contract reflect the least net cost of exiting from the contract,

which is either the cost of fulfilling contractual obligations or

penalties arising from the failure to fulfil those obligations.

Other provisions

Other provisions include provisions related to environment,

personnel, legal and tax related processes. These provisions are

recognized when general provision recognition criteria are met.

	Critical accounting estimates and judgments The amount recognized as a provision is the best estimate of the expenditure required to settle the obligation at the reporting day, taking into account related risks and uncertainties, management judgment supplemented by experience with similar transactions and future events when there is sufficient evidence that they will occur and affect the amount of payment. Under contractual warranty clauses, Valmet generally guarantees the performance of products delivered for a certain warranty period. The warranty provision is based on historical realized warranty costs for deliveries of standard products. The warranty period typically commences from the date of customer acceptance of the delivered equipment. For more complex contracts, including long-term projects, the warranty reserve is calculated contract by contract and updated regularly to ensure its appropriateness. Provisions for restructuring costs are recognized when the requirements for recognition are satisfied. For reasons beyond the control of management the final costs may differ from the initial amount for which the provision has been established. Valmet recognizes a provision for losses associated with environmental remediation obligations when such losses are probable, and a reliable estimate of amounts can be made. Following initial recognition, the amount of provision is adjusted later if further information is obtained or circumstances change.

Specification of changes in provisions:

	2023
EUR million	Warranty provisions	Restructuring provisions	Provisions for onerous contracts	Other provisions	Total
Balance at beginning of the period	190	5	18	6	219
Translation differences	—	—	—	—	-1
Additions charged to profit or loss	91	8	15	3	118
Acquired in business combinations	3	4	—	1	7
Used reserve	-67	-3	-4	—	-75
Reversal of reserve	-48	—	-9	—	-57
Balance at end of the period	169	14	19	9	211
Non-current	35	3	—	4	42
Current	134	11	19	5	169

Provisions for expected contract losses relate primarily to long-

term projects. The Group did not have material environmental or

product liabilities as at December 31, 2023, or December 31,

2022.

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12 | Other current liabilities

	As at Dec 31,
EUR million	2023	2022
Accrued personnel costs	224	210
Accrued project costs	115	103
Accrued interest	14	4
Other payables	206	274
Other current liabilities total	558	591

The maturity of payables is largely determined by local trade

practices and individual agreements between Valmet and its

suppliers and rarely exceeds six months. Accrued personnel

costs, which include holiday pay, are settled in accordance with

local laws and stipulations.

13 | Personnel expenses and number of personnel

Personnel expenses:

	Year ended Dec 31,
EUR million	2023	2022
Salaries and wages	-1,013	-913
Pension costs, defined contribution plans	-98	-87
Defined benefit plan costs1	-4	-7
Other post-employment benefits	-11	-9
Share-based payments2	-7	-7
Other indirect employee costs	-159	-148
Total	-1,292	-1,171

1 For more information, see Note 15.

2 For more information, see Note 14.

Number of personnel:

	2023	2022
Personnel at end of the period	19,160	17,548
Average number of personnel during the period	18,130	16,554

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14 | Share-based payments

Accounting policies

Valmet’s share-based incentive plans are part of the

remuneration and retention program for Valmet’s key personnel.

In majority of jurisdictions where key employees participating in

the Group’s long-term incentive (LTI) plans reside, Valmet has

an obligation to withhold an amount for the key employee’s tax

obligations associated with the share-based payment rewards,

and transfer that amount directly to the tax authorities on the

key employee’s behalf. Thus, the arrangements carry net

settlement feature and both equity and cash settled portions of

the plans are accounted for against equity.

Non-market vesting conditions, such as Comparable EBITA as

a percentage of net sales, and orders received growth in the

stable business, are used for calculating the number of shares

related to Group’s LTI plans that are expected to vest. These

estimates are revised at the end of each reporting period and

impact of the revision to previous estimate is recognized through

profit or loss with corresponding adjustment to equity.

The compensation expense for the shares is recognized as an

employee benefit expense evenly during the required service

period whereas the compensation expense resulting from the

cash portion is recognized as an employee benefit expense on

accrual basis between grant and payment date. Valuation of the

related expenses is based on number of shares expected to vest,

remaining vesting period at the reporting date and Valmet’s

closing share price as at the grant date.

Granted share amounts of the share-based incentive plans, as rounded to thousands:

	Plan 2021– 2023	Plan 2022– 2024	Plan 2023- 2025
2023
At beginning of the period	46,000	220,000	—
Maximum number of shares to be granted	-4,000	-2,000	412,000
Changes due to achievement criteria	—	-2,000	-209,000
Actual number of shares granted	—	-185,000	—
Shares returned by plan participants	2,000	—	—
Shares transferred to treasury shares	-2,000	—	—
At end of the period	42,000	31,000	203,000

Long-term incentive plans – Performance

Share Plan and Deferred Share Plan

The Board of Directors of Valmet Oyj decided in December 2020

on new share-based long-term incentive plans, a Performance

Share Plan and a Deferred Share Plan for Valmet’s key

employees. The Performance Share Plan is directed to Valmet’s

Executive Team and the Deferred Share Plan is directed to other

key employees in management positions, and management

talents.

The Performance Share Plan includes a three-year performance

period parallel to a one-year performance period. The Deferred

Share Plan includes a one-year performance period. Valmet’s

Board of Directors decides on the predefined performance

measures and targets in the beginning of each performance

period.

In case the rewarded shares are paid after the one-year

performance period from both the Performance Share Plan and

the Deferred Share Plan those may not be transferred during a

two-year restriction period. Should a key employee’s

employment or service end during the restriction period, he or

she must, as a rule, gratuitously return the shares given as

reward to the Company. As a rule, no reward is paid if the key

employee’s employment or service at Valmet ends before the

reward payment. The earning under the Performance Share Plan

is limited by a pay cap determined by the Board of Directors in

order to avoid unexpectedly high pay-outs resulting from share

price volatility.

The Board has the right to cancel the reward or recollect paid

rewards that are subject to the Transfer Restriction, fully or

partly, if the LTI plan participant has acted against the law or

against the ethical guidance of the Company or otherwise

unethically. Additionally, the Board has the right to recollect paid

rewards after the plan has ended if the LTI plan participant has

caused a misstatement of the information based on which the

reward was paid.

The below tables summarize the key attributes of the long-

term incentive plans that existed during the current or previous

period:

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Performance Share Plans and Deferred Share Plans:

	Long-term incentive plans 2021–2023		Long-term incentive plans 2022–2024
Plan name	Performance Share Plan and Deferred Share Plan	Performance Share Plan	Performance Share Plan and Deferred Share Plan	Performance Share Plan
Performance period	2021	2021–2023	2022	2022–2024
Incentive based on	Comparable EBITA as a percentage of net sales, and orders received growth in the stable business	Predefined strategic target	Comparable EBITA as a percentage of net sales, and orders received growth in the stable business	ESG Index, targets linked to implementing Valmet’s Climate Program and Sustainability Agenda
Reward payment	In spring 2022	In spring 2024	In spring 2023	In spring 2025
Participants
Performance Share Plan	13	10	14	12
Deferred Share Plan	102		125
Total gross number of shares earned	Approximately 355,000 shares	Approximately 42,000 shares	Approximately 185,000 shares	Approximately 31,000 shares
Valmet’s closing share price as at the grant date	26.51	26.51	33.63	33.63
Vesting period	February 2021 to March 2024	February 2021 to March 2024	February 2022 to March 2025	February 2022 to March 2025

	Long-term incentive plans 2023–2025		Long-term incentive plans 2024–2026
Plan name	Performance Share Plan and Deferred Share Plan	Performance Share Plan	Deferred Share Plan	Performance Share Plan
Performance period	2023	2023–2025	2024	2024, 2024–2026
Incentive based on	Comparable EBITA as a percentage of net sales, and orders received growth in the stable business	Development of a valuation multiple of Valmet’s share in comparison to peer group	Comparable EBITA as a percentage of net sales, and orders received growth in the stable business	Comparable EBITA as a percentage of net sales, and orders received growth in the stable business Development of a valuation multiple of Valmet’s share in comparison to peer group
Reward payment	In spring 2024	In spring 2026	In spring 2025	In spring 2027
Participants
Performance Share Plan	15	14		14
Deferred Share Plan	128		~200
Total gross number of shares earned	As at December 31, 2023,  approximately 365,000 shares were allotted to participants.	As at December 31, 2023, approximately 48,000 shares were allotted to participants.	The rewards to be paid will correspond to a maximum total of approximately 683,000 Valmet shares
Valmet’s closing share price as at the grant date	28.77	28.77
Vesting period	February 2023 to March 2026	February 2023 to March 2026	February 2024 to March 2027	February 2024 to March 2027

Restricted shares pool

As part of total remuneration, for example for retention

purposes, the Board of Directors decided on an additional

incentive element in December 2018, the restricted shares pool,

from which shares can be granted to selected key employees.

Restricted share pools are intended to be annually commencing,

and the annual restricted shares pool is subject to separate

approval by the Board of Directors. In 2023, 1 ,450 shares were

allocated from the restricted shares pool. In 2024, a maximum

of 101,240 Company shares can be allocated to possible

participants in the restricted shares pool. As a rule, the

restriction period for these shares is three years. Plan

nominations as well as detailed terms of allocation will be

proposed by the President and CEO to the Chairman of the

Board of Directors for approval. A precondition for the payment

of the share reward based on the restricted shares pool is that a

threshold Valmet Comparable EBITA is exceeded and that the

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employment relationship of the individual participant with

Valmet continues until the payment date of the reward.

Share ownership recommendation

To recognize and highlight the importance and value of having

the members of Valmet’s Executive Team own and hold

Company shares, the Board of Directors has approved in

December 2017 a share ownership recommendation for Valmet’s

Executive Team members. All members of Valmet’s Executive

Team are recommended to own and hold Company shares

equaling to their gross annual base salary (100 percent

ownership recommendation).

Costs recognized for the share ownership

plans

The compensation expense for the shares is recognized as an

employee benefit expense evenly during the required service

period with corresponding entry in equity. The compensation

expense resulting from the cash portion is recognized as an

employee benefit expense on accrual basis between grant and

payment date with a corresponding entry made to equity.

Valuation of the related expenses is based on number of shares

expected to vest, remaining vesting period at the reporting date

and Valmet’s closing share price as at the grant date.

Costs arising from share-based payments plans:

	Year ended Dec 31,
EUR thousand	2023	2022
Plan 2018–2020	—	-553
Plan 2021–2023	-1,973	-2,757
Plan 2022–2024	-1,915	-3,524
Plan 2023-2025	-2,770	—
Total	-6,657	-6,834

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15 | Employee benefit obligations

Accounting policies

Pensions and coverage of pension liabilities

Valmet has various employee benefit schemes in place in line

with local regulations and practices in countries in which Valmet

operates. In certain countries, the schemes involve defined

benefit plans with retirement, disability, death, and other post-

retirement benefits, such as health benefits, and termination

income benefits. Defined benefit plans are post-employment

benefit plans other than defined contribution plans. In defined

benefit plans the benefits are usually based on the number of

service years and the salary levels of the final service years. The

schemes are generally funded through payments to insurance

companies or to trustee-administered funds as determined by

periodic actuarial calculations.

In addition, certain entities within Valmet Group have

multiemployer pension arrangements classified as defined

contribution plans. The contributions to defined contribution

plans and to multi-employer and insured plans are charged to

profit or loss concurrently with the payment obligations. In

defined contribution plans, the Group pays fixed contributions

into a separate entity and the Group will have no legal or

constructive obligation to pay further contributions.

In the case of defined benefit plans, the net defined benefit

liability recognized from the plan is the present value of the

defined benefit obligation as at end of the reporting period,

reduced by the fair value of the plan assets. Independent

actuaries calculate the defined benefit obligation by applying the

projected unit credit method under which the estimated future

cash flows are discounted to their present value using a duration

specific discount rate. The cost of providing pension and other

employee benefits is charged to profit or loss concurrently with

the service rendered by the employees. The service cost is

recorded as part of personnel expenses in profit or loss and the

net interest is recorded under financial income and expenses.

Actuarial gains and losses arising from experience adjustments,

changes in actuarial assumptions and actual return on plan

assets (excluding interest income on plan assets) are recognized

through OCI into equity.

The acquisition of former Neles plans have been recognized as

a transfer in amount as of April 1, 2022 and fresh start approach

has been adopted, i.e., no historical figures have been reported.

To the former Neles plans, service cost and net interest have

been determined for the period of April 1 to December 31, 2022.

	Critical accounting estimates and judgments The benefit expense and liabilities arising from defined benefit arrangements are calculated based on assumptions that include the following: • The discount rates used to discount employee benefit obligations (both funded and unfunded): These rates are determined by reference to market yields at the end of the reporting period on high quality corporate bonds. In countries where there is no deep market in such bonds, the market yields (at the end of the reporting period) on government bonds have been used. The currency and term of the corporate bonds or government bonds are consistent with the currency and duration of the post- employment benefit obligations. • Estimated rates of future pay increases, which include general pay rise expectations as well as merit increases. Actual increases may not reflect estimated future increases. Due to the significant uncertainty of the global economy, these estimates are difficult to project.

Amounts recognized in the Consolidated statement of financial position:

	As at Dec 31,
	2023			2022
EUR million	Funded	Unfunded	Total	Funded	Unfunded	Total
Present value of funded obligation	214	—	214	216	—	216
Fair value of plan assets	-220	—	-220	-216	—	-216
Net surplus (-) / deficit (+) of funded plans	-6	—	-6	—	—	—
Present value of unfunded obligation	—	152	152	—	124	124
Asset (-) / liability (+)	-6	152	146	—	124	124
Amounts in the Consolidated statement of financial position
Liabilities	3	152	154	8	124	132
Assets	9	—	9	7	—	7
Net liability	-6	152	146	—	124	124

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Amounts recognized in the Consolidated statement of income:

	Year ended Dec 31,
	2023			2022
EUR million	Funded	Unfunded	Total	Funded	Unfunded	Total
Employer's current service cost	2	2	4	2	4	7
Net interest on net surplus / deficit	—	5	5	—	3	3
Settlements	—	—	—	—	1	—
Total expenses	1	7	9	2	8	10

Changes in the present value of the defined benefit obligation:

	2023			2022
EUR million	Funded	Unfunded	Total	Funded	Unfunded	Total
Present value of obligation at beginning of the period	216	124	340	203	172	375
Other adjustments	—	—	—	—	1	1
Acquired in business combinations	—	5	5	66	13	79
Employer's current service cost	2	2	4	2	5	7
Interest expense	10	5	15	7	3	10
Liabilities extinguished on settlements	—	—	—	-3	—	-3
Actuarial gain (-) / loss (+) due to change in financial assumptions	7	12	19	-61	-64	-124
Actuarial gain (-) / loss (+) due to change in demographic assumptions	—	1	1	—	-1	-1
Actuarial gain (-) / loss (+) due to experience	1	7	8	3	8	11
Benefits paid from the arrangements	-14	—	-15	-14	—	-14
Benefits paid directly by employer	—	-5	-6	—	-5	-6
Translation differences	-7	1	-6	12	-9	3
Present value of defined benefit obligation at end of the period	214	152	366	216	124	340
- of which related to active members			127			109
- of which related to deferred members			51			49
- of which related to pensioner members			187			181

Changes in the fair value of the plan assets during the period:

	2023			2022
EUR million	Funded	Unfunded	Total	Funded	Unfunded	Total
Fair value of plan assets at beginning of the period	216	—	216	188	—	188
Other adjustments to the fair value of assets	-1	—	—	-3	—	-3
Acquired in business combinations	—	—	—	76	—	76
Interest income on assets	10	—	10	7	—	7
Return on plan assets excluding interest income	9	—	9	-56	—	-56
Employer contributions	6	—	6	6	—	6
Benefits paid from the arrangements	-14	—	-15	-14	—	-14
Translation differences	-7	—	-7	12	—	12
Fair value of plan assets at end of the period	220	—	220	216	—	216

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Remeasurement of the net defined benefit liability / asset reported in other comprehensive income:

	Year ended Dec 31,
	2023			2022
EUR million	Funded	Unfunded	Total	Funded	Unfunded	Total
Experience gain (-) / loss (+) on assets	-9	—	-9	56	—	56
Actuarial gain (-) / loss (+) on liabilities due to change in financial assumptions	7	12	19	-61	-63	-124
Actuarial gain (-) / loss (+) on liabilities due to change in demographic assumptions	—	1	1	—	-1	-1
Actuarial gain (-) / loss (+) on liabilities due to experience	1	7	8	3	8	11
Translation differences	—	—	—	—	—	—
Total gain (-) / loss (+)	-2	20	18	-2	-57	-58

The major categories of plan assets as a percentage of total plan assets of Valmet’s defined benefit plans:

	2023			2022
As at Dec 31	Quoted	Unquoted	Total	Quoted	Unquoted	Total
Equities	20%	—	20%	21%	—	21%
Bonds	69%	—	69%	68%	—	68%
Other	1%	10%	11%	2%	10%	11%
Total	90%	10%	100%	90%	10%	100%

At December 31, 2023, there were no plan assets invested in

affiliated companies or property occupied by affiliated

companies.

The principal actuarial assumptions used to determine the defined benefit obligation (expressed as weighted averages):

	2023			2022
As at Dec 31	Funded	Unfunded	All plans	Funded	Unfunded	All plans
Discount rate	4.7%	3.6%	4.3%	5.0%	4.1%	4.7%
Salary increase	2.0%	2.9%	2.4%	2.0%	2.9%	2.3%
Pension increase	1.2%	2.0%	1.5%	1.2%	2.0%	1.5%
Medical cost trend rates	—	4.5%	4.5%	—	4.8%	4.8%

The weighted average life expectancy used for the major defined benefit plans:

	Life expectancy at age 65 for a male participant currently aged 65		Life expectancy at age 65 for a female participant currently aged 65
Expressed in years	2023	2022	2023	2022
Sweden	22	22	24	24
Canada	22	22	24	24
USA	21	21	23	23
Finland	21	21	26	26

	Life expectancy at age 65 for a male participant currently aged 45		Life expectancy at age 65 for a female participant currently aged 45
Expressed in years	2023	2022	2023	2022
Sweden	24	24	26	26
Canada	23	23	25	25
USA	22	22	24	24
Finland	24	24	28	28

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Life expectancy is allowed for in the assessment of the defined

benefit obligation using mortality tables, which are generally

based on experience within the country in which the

arrangement is located, with in many cases an allowance made

for anticipated future improvements in longevity.

Sensitivity analysis on present value of the defined benefit obligation:

	As at Dec 31,
	2023			2022
EUR million	Funded	Unfunded	Total	Funded	Unfunded	Total
Discount rate
Increase of 0.25%	-5	-6	-11	-5	-5	-10
Decrease of 0.25%	5	6	12	5	5	10
Salary increase rate
Increase of 0.25%	—	4	4	—	3	3
Decrease of 0.25%	—	-3	-4	—	-3	-3
Pension increase rate
Increase of 0.25%	1	4	5	1	2	3
Decrease of 0.25%	-1	-4	-4	—	-3	-4
Medical cost trend
Increase of 1%	—	—	—	—	—	—
Decrease of 1%	—	—	—	—	-1	-1
Life expectancy
Increase of one year	6	5	12	6	4	10
Decrease of one year	-6	-5	-12	-6	-5	-11

The table above presents the changes in the value of the defined

benefit obligation when major assumptions are changed while

holding the others constant.

Weighted average duration of the defined benefit obligation:

	2023			2022
Expressed in years	Funded	Unfunded	All plans	Funded	Unfunded	All plans
As at December 31	10	18	13	9	17	12

Valmet sponsors both defined contribution and defined benefit

arrangements. Valmet operates various defined benefit pension

and other long-term employee benefit arrangements pursuant to

local conditions, practices and collective bargaining agreements

in the countries in which it operates. The majority of Valmet’s

defined benefit liabilities relate to arrangements that are funded

through payments to either insurance companies or to

independently administered funds based on periodic actuarial

calculations. Other arrangements are unfunded with benefits

being paid directly by Valmet as they fall due. All arrangements

are subject to local tax and legal restrictions in their respective

jurisdictions. Valmet’s defined benefit arrangements in the USA,

Canada and Sweden together represent 85 percent of Valmet’s

defined benefit obligation and 90 percent of its pension assets.

These arrangements provide income in retirement, which is

substantially based on salary and service at or near retirement.

In the USA and Canada annual valuations are carried out to

determine whether cash funding contributions are required in

accordance with local legislation.

Defined benefit pension arrangements in Sweden are offered in

accordance with collective labor agreements and are unfunded.

The liability recorded on Valmet’s balance sheet and cash

contributions to funded arrangements are sensitive to the

assumptions used to measure the liabilities, the extent to which

actual experience differs to the assumptions made and the

returns on plan assets. Therefore, Valmet is exposed to the risk

that balance sheet liabilities and/or cash contributions increase

based on these influences.

Assets of Valmet’s funded arrangements are managed by

external fund managers. The allocation of assets is reviewed

regularly by those responsible for managing Valmet’s

arrangements based on local legislation, professional advice and

consultation with Valmet, based on acceptable risk tolerances.

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The expected contributions to defined benefit type

arrangements in 2024 are EUR 0.8 million in respect of Finnish

plans and EUR 10 million in respect of foreign plans. Valmet paid

contributions of EUR 98 million (EUR 87 million) to defined

contribution arrangements during 2023.

16 | Income taxes

Accounting policies

Tax expense in the profit or loss comprises current and deferred

taxes. Taxes are recognized in profit or loss, except when they

are associated with items recognized in Consolidated statement

of comprehensive income or directly in equity.

Current taxes are calculated on the taxable income on the

basis of the tax rates enacted or substantively enacted for each

country as at the balance sheet date. Additionally, non-

recoverable foreign taxes on financing transactions or

transactions with shareholders that are not based on taxable

profits are reported in Current tax expenses. Non-recoverable

withholding taxes and foreign taxes on operative items are

reported in Other operating income and expenses. These non-

recoverable foreign taxes include, for example, taxes paid that

are not creditable based on applicable Double Tax Treaty. Taxes

are adjusted for taxes of prior financial periods, if applicable.

Interest calculated for the unpaid tax amounts is reported under

Financial expenses.

Management evaluates positions taken in tax returns with

respect to situations in which applicable tax regulation is subject

to interpretation. The tax provisions recognized in such

situations are based on evaluations by management on the

probability that the items subject to interpretation reported to

tax authorities can be substantiated on examination.

Deferred taxes are calculated on temporary differences

between the tax bases of assets and liabilities and their carrying

amounts in the financial statements. Deferred taxes have been

calculated using the statutory tax rates or the tax rates enacted

or substantively enacted as at reporting date. Deferred tax

assets are only recognized to the extent that it is probable that

future taxable profit will be available against which the

temporary differences can be utilized.

The most significant temporary differences arise from

differences in revenue recognition methods applied for tax

purposes, depreciation differences relating to property, plant and

equipment, treatment of costs arising from defined benefit

pension plans, provisions deductible at a later date, fair value

measurement of assets and liabilities in connection with business

combinations and unused tax losses. Deferred taxes are not

recognized on initial recognition of an asset or liability in a

transaction other than a business combination that does not

affect accounting or tax profit and does not give rise to equal

taxable and deductible temporary differences. Deferred tax

assets and liabilities are offset when there is a legally

enforceable right to offset current tax assets against current tax

liabilities and when the deferred income tax assets and liabilities

relate to income taxes levied by the same taxation authority on

either the same taxable entity or different taxable entities where

there is an intention to settle the balances on a net basis.

The legislation implementing the OECD Pillar Two model rules

was enacted in Finland in 2023 and will come into effect from

January 1, 2024, onwards. Valmet applies the exception to

recognizing and disclosing information about deferred tax assets

and liabilities related to Pillar Two income taxes, as provided in

the amendments to IAS 12 issued in May 2023.

Since the Pillar Two legislation was not effective at the

reporting date, no current tax exposure related to Pillar Two

taxes exists at December 31, 2023. Valmet is in the process of

assessing its exposure to the Pillar Two legislation for when it

comes into effect. This assessment indicates that Pillar Two

legislation is not expected to have a material impact on Valmet's

income taxes.

		Critical accounting estimates and judgments Deferred tax assets and liabilities are recognized for temporary differences. They are expected to be realized through the income statement over extended periods of time in the future. Valmet management has made certain assumptions regarding future tax consequences and used certain estimates when calculating differences between carrying amounts of assets and liabilities and their tax bases. Key assumptions underlying tax calculations include, e.g., likelihood that recoverability periods for tax loss carryforwards will not change, and that existing tax laws and rates remain unchanged into foreseeable future. At each balance sheet date deferred tax assets are assessed for recoverability and when circumstances indicate that it is no longer probable that deferred tax assets can be recovered, balances are reduced to their recoverable amounts. Liabilities and assets are recognized with respect to income tax amounts management is expecting to pay and recover, respectively. Management has chosen not to discount non- current tax balances. Valmet entities are subject to tax audits on an ongoing basis. Complex and constantly changing regulations in multiple jurisdictions where Valmet operates create uncertainties relating to tax obligations towards authorities. Changes in the tax authorities’ interpretations could have unfavorable impact on Valmet’s financials.

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The differences between income tax expense computed at the

Finnish statutory rate (20 percent in 2023 and 2022) and income

tax expense recognized in profit or loss are shown in the table

below.

	Year ended Dec 31,
EUR million	2023	2022
Profit before taxes	473	431
Taxes calculated according to tax rate in Finland	-95	-86
Impact of changes in tax rates	—	-1
Income tax for prior years	5	1
Effect of different tax rates in foreign subsidiaries	-14	-16
Utilization of tax losses carried forward	—	1
Non-recoverable foreign taxes	-12	-3
Effect of tax-free income and non-deductible expenses1	-1	9
Other	2	2
Income tax expense	-114	-94
Effective tax rate, (%)	24.2%	21.7%
Effective tax rate, (%) excluding income tax for prior years	25.2%	21.9%

1 Includes in 2022 the effect from the tax-free gain of EUR 59 million from remeasurement of Valmet's previously held equity interest in Neles.

Tax effects of components in other comprehensive income:

	Year ended Dec 31,
	2023			2022
EUR million	Before taxes	Tax	After taxes	Before taxes	Tax	After taxes
Gains and losses on cash flow hedges	-12	2	-10	-4	1	-3
Change in fair value reserve	—	—	—	-2	—	-1
Remeasurement of defined benefit plans	-18	3	-15	58	-12	47
Currency translation on subsidiary net investments	-21	—	-21	-4	—	-4
Total comprehensive income for the period	-52	6	-46	48	-10	38
Deferred tax	—	6	—	—	-10	—
Total	—	6	—	—	-10	—

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Reconciliation of deferred tax balances:

EUR million	Balance at beginning of the period	Translation differences	Change in accounting principles2	Charged to income statement	Charged to other compre- hensive income	Acquired in business combination	Balance at end of the period
2023
Deferred tax assets
Tax losses carried forward	6	—	—	—	—	—	5
Fixed assets	11	—	—	-2	—	—	8
Leases	23	—	—	-1	—	9	31
Inventory	13	—	—	—	—	4	16
Provisions	37	—	—	4	—	1	41
Accruals	4	—	—	1	—	7	11
Employee benefits	5	—	—	-4	4	1	6
Other	23	—	—	6	-2	1	28
Total deferred tax assets	121	-1	—	3	3	23	148
Offset against deferred tax liabilities1	-60						-59
Net deferred tax assets	60						90
Deferred tax liabilities
Purchase price allocations	261	-1	—	-16	—	48	292
Fixed assets	9	—	—	—	—	1	9
Leases	24	—	—	—	—	9	33
Other	5	—	—	—	-3	5	7
Total deferred tax liabilities	299	-1	—	-17	-3	64	341
Offset against deferred tax assets1	-60						-58
Net deferred tax liabilities	238						283
2022
Deferred tax assets
Tax losses carried forward	4	—	—	-1	—	3	6
Fixed assets	9	—	—	1	—	1	11
Leases	1	—	12	—	—	10	23
Inventory	4	—	—	—	—	9	13
Provisions	30	—	—	4	—	2	37
Accruals	2	—	—	1	—	1	4
Employee benefits	21	-1	—	-3	-11	—	5
Other	5	—	—	6	3	9	23
Total deferred tax assets	77	-1	12	6	-8	34	121
Offset against deferred tax liabilities1	-11						-60
Net deferred tax assets	66						60
Deferred tax liabilities
Purchase price allocations	74	1	—	-10	—	195	261
Fixed assets	4	—	—	—	—	5	9
Leases	1	—	14	—	—	9	24
Other	1	—	—	-2	2	4	5
Total deferred tax liabilities	80	2	14	-12	2	213	299
Offset against deferred tax assets1	-11						-60
Net deferred tax liabilities	69						238

1 Deferred tax assets and liabilities are offset when there is legally enforceable right to offset tax assets against tax liabilities and when the deferred income taxes relate to the

same fiscal authority.

2 Impact arising from implementation of amendments to IAS 12 Income Taxes on deferred tax related to assets and liabilities arising from a single transaction in 2022.

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A deferred tax liability on undistributed profits of Valmet’s legal

entities located in countries where distribution generates tax

consequences is recognized when it is likely that earnings will be

distributed in the near future. For the years ended December 31,

2023, and 2022, earnings of EUR 57 million and EUR 46 million,

respectively, would have been subject to recognition of a

deferred tax liability, had Valmet regarded a distribution in the

near future as likely. A deferred tax asset is recognized for tax

loss carryforwards to the extent that the realization of the

related tax benefit through future taxable profits is probable.

There were no material tax loss carryforwards for which a

deferred tax asset had not been recognized. Valmet has tax loss

carryforwards of EUR 9 million (EUR 9 million) that will expire

within the following five years.

17 | Equity

Share capital and number of shares

	2023	2022
Share capital at end of the period, EUR	140,000,000	140,000,000
Number of shares at end of the period	184,529,605	184,529,605
Treasury shares at end of the period	368,500	344,775
Shares outstanding at end of the period	184,161,105	184,184,830
Average number of shares outstanding during the financial year	184,151,827	175,617,981

Valmet Oyj has one series of shares. The shares of Valmet Oyj

do not have a nominal value.

Treasury shares

As at December 31, 2023, Valmet Oyj held 368,500 ( 344,775)

of its own shares. These shares have been acquired through

purchase on the Helsinki Stock Exchange (Nasdaq Helsinki Ltd).

The total amount paid to acquire Valmet’s own shares during the

reporting period, including transaction costs, was EUR 4 million

(EUR 5 million) and it has been deducted from Retained earnings

in Equity. Own shares have been acquired for the purposes of

Valmet’s long-term incentive plans.

Dividends

The Board of Directors proposes that a dividend of EUR 1.35 per

share will be paid out based on the Consolidated statement of

financial position to be adopted for the financial year ended

December 31, 2023, and that the remaining part of the Retained

earnings will be carried forward in Valmet Oyj’s unrestricted

equity. These financial statements do not reflect this dividend

payable of EUR 249 million.

In compliance with the resolution of the Annual General

Meeting, Valmet paid out dividend of EUR 239 million for 2022,

corresponding to EUR 1.30 per share. The dividend was paid in

two installments, both corresponding to EUR 0.65 per share. The

first installment, EUR 120 million was paid on April 5, 2023. The

second installment, EUR 120 million was paid on October 12,

2023.

Reserve for invested unrestricted equity

Reserve for invested unrestricted equity includes other equity-

related investments and share subscription prices to the extent

not designated to be included in share capital. The reserve for

invested non-restricted equity fund in Valmet’s Consolidated

statement of financial position consists of the fund held by the

parent company Valmet Oyj.

Hedge and other reserves

Hedge reserve includes effective portion of fair value movements

related to derivative financial instruments, which qualify for

hedge accounting.

Fair value reserve includes the change in fair values of

interest-bearing financial assets classified as fair value through

other comprehensive income.

Legal reserve consists of restricted equity, which has been

transferred from distributable funds under the Articles of

Association, local company law or by a decision of the

shareholders.

Cumulative translation adjustments

Cumulative translation adjustments consist of currency

translation differences, which relate to translation of foreign

operations from their functional currencies to Valmet Group’s

reporting currency euro.

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18 | Selling, general and administrative expenses

Selling, general and administrative expenses 2023, EUR 920 million	Selling, general and administrative expenses 2022, EUR 852 million

19 | Other operating income and expenses

	Year ended Dec 31,
EUR million	2023	2022
Gain on sale of fixed assets	4	1
Reversal of allowance for doubtful receivables and contract assets	4	4
Net gain from foreign exchange	3	—
Interest component from forward contracts	4	—
Commodity derivatives	—	1
Gain from remeasurement of Valmet's previously held equity interest in Neles	—	59
Insurance compensation1	34	22
Post-acquisition period remeasurement of contingent consideration	—	2
Income related to tax and customs duty adjustments	2	2
Other income	12	10
Other operating income, total	64	100
Loss on sale of fixed assets	-1	—
Impairment of fixed assets and right-of-use assets	-2	-4
Net loss from foreign exchange	—	-9
Interest component from forward contracts	—	-1
Commodity derivatives	-5	—
Non-recoverable foreign taxes	-12	-8
Allowance for doubtful receivables and contract assets	-7	-7
Other expenses	-8	-6
Other operating expenses, total	-36	-36
Other operating income and expenses, net	28	64

1 Insurance compensation mainly (EUR 34 million in 2023 and EUR 21 million in 2022) relates to income compensating the costs of fire that happened in May 2022 at Valmet’s

Rautpohja factory site in Jyväskylä. The outstanding receivable towards the insurance company as at 31 December 2023 is EUR 32 million (EUR 11 million in 2022). Only the

compensation for the damages and losses that have been considered virtually certain based on the insurance terms have been booked as income and receivable. Judgement

has been used and prudence has been followed in the assessment. Valmet has received a total of EUR 23 million as interim cash payments in 2022 and 2023.

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Exchange rate differences included in Other operating income and expenses:

	Year ended Dec 31,
EUR million	2023	2022
Exchange rate differences from trade receivables and payables	-15	2
Exchange rate differences from derivative financial instruments	18	-11
Net gain/loss from foreign exchange	3	-9

20 | Business combinations

Acquisition of NovaTech Automation's Process

Solutions business

On January 3, 2023, Valmet has completed the acquisition of the

U.S. based NovaTech Automation’s Process Solutions business.

The acquired business specializes in process control and

optimization solutions for batch, continuous and hybrid

processes. It serves customers mainly in process industries such

as food and beverage, pharmaceuticals and chemical products.

It had net sales of approximately USD 18 million and employed

76 people in the United States and the Benelux countries. The

acquisition excluded NovaTech Automation’s other divisions. The

acquired business has been consolidated into the Group

financials from the acquisition date onwards.

The acquisition of NovaTech Automation's Process Solutions

business did not have a material impact on the results or

financial position of Valmet, or its financial reporting in 2023.

Acquisition of Körber's Business Area Tissue

The acquisition of Körber's Business Area Tissue, announced on

July 7, 2023, was completed on November 2, 2023. Control of

the acquiree was obtained through the purchase of 100 percent

equity interests in Körber Tissue S.p.A. and Körber Tissue Fold

S.r.l. The enterprise value of the acquisition was approximately

EUR 380 million on a cash and debt free basis. The transaction

consideration was paid in cash upon the completion.

Körber’s Business Area Tissue offers process technologies and

related services for converting the jumbo reels of tissue paper

into final tissue products. It has the broadest offering in the

tissue converting industry with converting lines for tissue rolls

and for folded tissue including product packaging, as well as

services and digital solutions. With the acquisition, Valmet

strengthens both its Process Technologies and Services

segments.

In 2022, Körber’s Business Area Tissue’s net sales amounted

to EUR 305 million and its adjusted EBITDA margin was

approximately 12%. The company has a strong and growing

services business, which accounted for 36% of total net sales in

2022. The business employs around 1,170 employees in Italy,

Brazil, the USA, China and Japan.

The acquired business has been consolidated into Valmet as of

November 2, 2023. The assumed accounting for the acquisition,

including estimated purchase consideration, is based on

provisional amounts and the associated purchase accounting is

not final.

Fair values of assets acquired, liabilities assumed, and goodwill

recognized at the date of acquisition and net cash flow impact

are summarized in the following tables. The net assets acquired

are denominated in euro. Goodwill arising from the business

combination is attributable to the assembled workforce, value of

geographic presence and market position, future customers,

technologies and products, and synergies expected to be derived

from the combined businesses. The goodwill arising from the

merger is not expected to be tax-deductible.

From the date of acquisition, the acquired business has

contributed EUR 76 million to net sales and EUR 1 million to the

profit of the Group, including EUR 8 million amortization of

intangibles and inventory fair-value step-up recognized at

acquisition.

If the acquisition had occurred on January 1, 2023,

management estimates that Valmet's Consolidated statement of

income would show net sales of EUR 5,752 million and profit for

the period amounting to EUR 329 million, with the assumptions

that the fair value adjustments as at the date of acquisition

would have been the same if the acquisition had occurred on

January 1, 2023, and that the term loan facilities financing the

acquisition would have been drawn before January 1, 2023.

Acquisition related costs of EUR 4 million have been charged to

Selling, general and administrative expenses in the Consolidated

statement of income in 2023.

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Fair values of assets acquired and liabilities assumed and goodwill at the date of acquisition:

EUR million	As at November 2, 2023
Non-current assets
Goodwill	125
Other intangible assets	179
Property, plant and equipment	29
Right-of-use assets	35
Deferred tax asset	13
Other non-current assets	6
Total non-current assets	386
Current assets
Inventories	171
Trade receivables	73
Other receivables	15
Cash and cash equivalents	39
Total current assets	298
Non-current liabilities
Non-current lease liabilities	30
Non-current provisions	3
Deferred tax liabilities	53
Total non-current liabilities	87
Current liabilities
Current debt	53
Current lease liabilities	4
Trade payables	28
Current provisions	4
Amounts due to customers under revenue contracts	67
Other current liabilities	50
Total current liabilities	206
Net assets acquired	392

EUR million	As at November 2, 2023
Consideration transferred	-392
Cash and cash equivalents acquired	39
Loan repayment at closing	-52
Net cash outflow	-405

21 | Financial risk management

As a global Group, Valmet is exposed to a variety of business

and financial risks. Financial risks are managed centrally by the

Group treasury (hereafter Treasury) under annually reviewed

written policies approved by Valmet’s Board of Directors.

Treasury identifies, evaluates and hedges financial risks in close

co-operation with the subsidiaries. Treasury functions as

counterparty to the subsidiaries, manages centrally external

funding and is responsible for the management of financial

assets and appropriate hedging measures. The objective of

financial risk management is to mitigate potential adverse

effects of financial risks on Valmet’s financial performance.

Lease liabilities recognized in Consolidated statement of

financial position are part of Valmet’s interest-bearing liabilities.

To present information focused on Group’s long-term funding

and related financial risks, figures presented in this note

regarding liquidity and refinancing risk, capital structure and

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interest rate risk management, exclude the impact of lease

liabilities. More information regarding leases is presented in

Note 5.

Sensitivity analysis

Sensitivity analysis presented in connection with various

financial risks is based on the risk exposures at the end of the

reporting period.

Sensitivities are calculated by assuming a change in one of the

risk factors of a financial instrument, such as interest or

currency rate. Sensitivity calculations are based on the changes

in the relevant risk variable that are reasonably possible. The

reasonably possible changes are assumed to be a variation of 1

percentage point (100 basis points) in interest rates, and a 10

percent change in foreign exchange rates and in commodity

prices.

Liquidity and refinancing risk management

Liquidity or refinancing risk arises when a company is not able to

arrange funding at terms and conditions corresponding to its

creditworthiness. Cautious maturity distribution of interest-

bearing debt and sufficient cash, short-term investments and

committed and uncommitted credit facilities are maintained to

protect short-term liquidity and to manage refinancing risk.

Diversification of funding among different markets and an

adequate number of financial institutions are used to safeguard

the availability of liquidity at all times. Treasury monitors bank

account structures, cash balances and forecasts of the

subsidiaries and manages the utilization of the consolidated cash

resources.

At end of the reporting period Cash and cash equivalents

amounted to EUR 432 million (EUR 277 million) and current

interest-bearing financial assets managed centrally by Treasury

to EUR 25 million (EUR 30 million). Due to the global nature of

operations, some of the Valmet subsidiaries are located in

countries in which currency is subject to limited exchangeability

or capital controls. Given Valmet’s total liquidity position,

balances in such countries are immaterial.

In 2023, new term loans worth EUR 725 million were drawn of

which EUR 400 million related to the financing of Körber's

Business Area Tissue acquisition, EUR 175 million was a term

loan from the European Investment Bank and total of EUR 150

million were various bilateral term loans.

Valmet’s liquidity was additionally secured by a committed and

undrawn revolving credit facility worth EUR 300 million, which

matures in 2026, committed and undrawn overdraft limits of

EUR 15 million and an uncommitted commercial paper program

worth EUR 300 million of which EUR 44 million was outstanding

at the end of the reporting period.

Net working capital management is an integral part of the

liquidity risk management. Treasury monitors and forecasts net

working capital fluctuations in close co-operation with the

subsidiaries. Net working capital increased to EUR 191 million

(EUR -82 million) as at December 31, 2023, due to e.g.

milestone payments for large capital projects and increased

portion of stable business.

Group’s refinancing risk is managed by balancing the

proportion of current and non-current interest-bearing debt and

average maturity of non-current interest-bearing debt including

committed undrawn credit facility. The average maturity of non-

current interest-bearing debt, including current portion, and

committed undrawn credit facility as at December 31, 2023, was

3.0 years (3.3 years). The amount of current interest-bearing

debt, including current portion of non-current interest-bearing

debt, was 8 percent (22%) of total debt portfolio. As at

December 31, 2023, Valmet’s interest-bearing liabilities consist

of debt and lease liabilities, and debt portfolio includes loans

from financial institutions and commercial papers.

The tables below present undiscounted cash flows on the

repayments and interests on Valmet’s financial liabilities (excl.

lease liabilities and derivatives) by the remaining maturities from

the balance sheet date to the contractual maturity date. The

remaining maturities of lease liabilities are presented in Note 5,

and correspondingly remaining maturities of derivatives in

Note 9.

EUR million	2024	2025	2026	2027	2028 and later
Loans from financial institutions
Repayments	40	344	299	99	498
Interests	59	58	35	34	23
Trade payables and other current financial liabilities	582	—	—	—	—
Total	681	402	334	133	521

EUR million	2023	2024	2025	2026	2027 and later
Loans from financial institutions
Repayments	40	140	31	272	112
Interests	14	12	10	6	1
Trade payables and other current financial liabilities	557	—	—	—	—
Total	611	152	41	278	114

The information presented in above tables excludes the impact of lease liabilities and derivatives.

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Capital structure management

The capital structure management seeks to safeguard the

ongoing business operations, to ensure flexible access to capital

markets and to secure adequate funding at a competitive rate.

Capital structure management at Valmet comprises both equity

and interest-bearing debt. As at December 31, 2023, total equity

was EUR 2,572 million (EUR 2,499 million) and the amount of

interest-bearing debt was EUR 1,343 million (EUR 710 million).

Valmet has not disclosed any long-term financial ratio target

for its capital structure. However, the objective of Valmet is to

maintain strong capital structure in order to secure customers’,

investors’, creditors’ and market confidence. The capital

structure is assessed regularly by the Board of Directors and

managed operationally by Treasury. Loan facility agreements

include customary covenants and Valmet is in clear compliance

with the covenants at the end of the reporting period. Valmet

had no credit rating at December 31, 2023.

	As at Dec 31,
EUR million	2023	2022
Interest-bearing debt	1,343	710
Cash and cash equivalents	432	277
Interest-bearing financial assets	25	30
Interest-bearing net debt	886	403
Total equity	2,572	2,499

The information presented in above table excludes the impact of lease liabilities.

Interest rate risk management

Interest rate risk arises when changes in market interest rates

and interest margins influence finance costs, returns on financial

investments and valuation of interest-bearing items. The interest

rate risk is managed and controlled by Treasury. The interest

rate risks are managed through balancing the ratio between

fixed and floating interest rates and duration of interest-bearing

debt and interest-bearing financial assets. Additionally, Valmet

may use derivative instruments such as forward rate

agreements, swaps, options and futures contracts to mitigate

the risks arising from interest-bearing assets and liabilities. The

ratio of fixed rate debt of the total debt portfolio is required to

stay within the 10–60 percent range including the interest rate

derivatives. The duration of the non-current interest-bearing

debt, including the current portion, and the interest rate

derivatives is allowed to deviate between 6–42 months.

The fixed rate interest portion was 37 percent (30%), the

duration was 1.3 years (1.2 years) and the EUR denominated

debt was 100 percent (100%) of the total debt portfolio at the

end of 2023. The basis for the interest rate risk sensitivity

analysis is an aggregate Group level interest rate exposure,

composed of interest-bearing financial assets, interest-bearing

liabilities (excl. leases) and interest rate swaps, which are used

to hedge the underlying exposures. The sensitivity analysis does

not include interest component of foreign exchange derivatives

since the impact of a one percentage point change in interest

rates is not significant, assuming similar change in all currency

pairs at the same time. For all interest-bearing debt, assets and

interest rate derivatives to be fixed during the next 12 months a

change of one percentage point upwards or downwards in

interest rates with all other variables held constant would have

following effect, net of taxes:

EUR million	2023	2022
Profit for the period	-/+ 3.4	-/+ 1.2
Equity	+/- 9.0	+/- 2.4

The information presented in above table excludes the impact of lease liabilities.

Valmet has used interest rate derivatives to hedge the interest

rate risk of its debt portfolio. All interest rate swaps have been

designated to cash flow hedge accounting relationships. The

nominal and fair values of the outstanding interest rate

derivative contracts are presented in Note 9.

Foreign exchange rate risk management

Valmet operates globally and is exposed to foreign exchange risk

in several currencies, although the geographical diversity of

operations decreases the significance of any individual currency.

Substantial proportion of Valmet’s net sales and costs are

generated in euros (EUR), US dollars (USD), Swedish kronas

(SEK) and Chinese yuans (CNY).

Transaction exposure

Foreign exchange transaction exposure arises when a subsidiary

has commercial or financial transactions and payments in

another currency than its own functional currency and when

related cash inflow and outflow amounts are not equal or

concurrent.

In accordance with Valmet’s treasury policy, subsidiaries are

required to hedge in full the foreign currency exposures on

Consolidated statement of financial position and other firm

commitments. Cash flows denominated in a currency other than

the functional currency of the subsidiary are hedged with

internal forward exchange contracts with Treasury for periods,

which do not usually exceed two years. Subsidiaries also carry

out hedging directly with the banks in countries, where the

regulation does not allow corporate internal cross-border

contracts. Treasury monitors the net position of each currency

and decides to what extent a currency position is to be closed.

Treasury is responsible for entering into external forward

transactions corresponding to the internal forwards whenever a

subsidiary applies hedge accounting. Valmet’s treasury policy

defines upper limits on the open currency exposures managed

by Treasury; limits have been calculated on the basis of their

potential profit or loss impact. To manage the foreign currency

exposure Treasury may use forward exchange contracts and

foreign exchange options. Valmet is exposed to foreign currency

risk arising from both on and off-balance sheet items. The

foreign currency exposure is composed of all assets and

liabilities denominated in foreign currencies and their counter

values in local currencies. Calculation includes external and

internal short and long-term sales and purchase contracts,

projected cash flows for unrecognized firm commitments and

financial items, net of respective hedges.

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The following table illustrates Group’s outstanding foreign

currency risk at the end of the reporting period:

	As at Dec 31, 2023
EUR million	EUR	SEK	USD	CNY	Others
Operational items	53	-351	437	-178	39
of which trade receivables and other current assets	-45	-165	108	61	40
of which trade payables and other current liabilities	12	64	-16	-91	32
Financial items	193	-35	-104	-97	44
Hedges	-253	377	-288	244	-81
under hedge accounting	55	283	-285	138	39
not qualifying for hedge accounting	-308	95	-2	105	-120
Total exposure	-6	-9	46	-31	2

	As at Dec 31, 2022
EUR million	EUR	SEK	USD	CNY	Others
Operational items	229	-356	333	-211	5
of which trade receivables and other current assets	-56	-123	103	46	30
of which trade payables and other current liabilities	-13	35	-19	-38	34
Financial items	321	-135	-97	-120	31
Hedges	-579	485	-222	341	-26
under hedge accounting	-323	278	-224	235	35
not qualifying for hedge accounting	-256	207	3	106	-61
Total exposure	-29	-5	14	10	10

This Group level currency exposure is the basis for the sensitivity

analysis of foreign exchange risk. Assuming euro to appreciate

or depreciate 10 percent against all other currencies, the impact

on cash flows, net of taxes, would be:

	As at Dec 31, 2023
EUR million	SEK	USD	CNY	Others	Total
EUR +/- 10% change	+/- 0.7	-/+ 3.7	+/- 2.5	-/+ 0.2	-/+ 0.6

	As at Dec 31, 2022
EUR million	SEK	USD	CNY	Others	Total
EUR +/- 10% change	+/- 0.4	-/+ 1.2	-/+ 0.8	-/+ 0.8	-/+ 2.4

The sensitivity analysis as required by IFRS 7, includes financial

instruments, such as trade and other receivables, trade and

other payables, interest-bearing liabilities, deposits, cash and

cash equivalents and derivative financial instruments.

The table below presents the effects, net of taxes, of a +/- 10

percent change in EUR against all other currencies:

EUR million	2023	2022
Profit for the period	+/- 6.4	-/+ 0.5
Equity	-/+ 14.0	-/+ 25.8

Changes in fair value of derivative contracts that qualify for cash

flow hedge accounting are recorded in equity. The effect in profit

or loss is the change in fair value for all other financial

instruments exposed to foreign exchange risk.

The nominal and fair values of the outstanding forward

exchange contracts are presented in Note 9.

Translation or equity exposure

Foreign exchange translation exposure arises when goodwill or

fair value step ups, or equity of a subsidiary, is denominated in

currency other than the functional currency of the parent

company. As at December 31, 2023, the total non-EUR

denominated goodwill and fair value step ups, and equity of the

subsidiaries, was EUR 1,141 million (EUR 963 million). The

major translation exposures were in 2023 EUR 431 million in

USD and EUR 220 million in CNY, and respectively in 2022 EUR

377 million in USD and EUR 210 million in CNY. Valmet is

currently not hedging any equity exposure.

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Commodity risk management

Valmet is exposed to risk in variations of the prices of raw

materials and of supplies including energy. Subsidiaries have

identified their commodity price hedging needs and hedges have

been executed through Treasury using approved counterparties

and instruments. For commodity risks separate overall hedging

limits are defined and approved. Hedging is done on a rolling

basis with a declining hedging level over time. Electricity

exposure in the Nordic subsidiaries has been hedged with

electricity forwards and fixed price physical contracts. Hedging is

focused on the estimated energy consumption for the next two-

year period with some contracts extended to approximately five

years. The execution of electricity hedging has been outsourced

to an external broker. As at December 31, 2023, Valmet had

outstanding electricity forwards amounting to 153 GWh (169

GWh) and 158 GWh (158 GWh) under fixed price purchase

agreements.

To reduce its exposure to the volatility caused by the

surcharge for certain metal alloys (Alloy Adjustment Factor)

comprised in the price of stainless steel charged by its suppliers,

Valmet may enter into average-price swap agreements for

nickel. The Alloy Adjustment Factor is based on monthly

average-prices of its components of which nickel is the most

significant. Also, to reduce steel scrap price risk in Valmet's own

foundry operations, Valmet can hedge steel scrap prices using

average price swap agreements. As at December 31, 2023,

Valmet had 588 metric tons outstanding average-price swap

agreements for nickel (192 metric tons) and 1,523 metric tons

for steel scrap (1,048 metric tons).

The following table presenting the sensitivity analysis of the

commodity prices comprises the net aggregate amount of

commodities bought through forward contracts and swaps but

excludes the anticipated future consumption of raw materials

and electricity.

A 10 percent change upwards or downwards in commodity

prices would have the following effects, net of taxes:

EUR million	2023	2022
Electricity - effect in equity	+/- 0.5	+/- 1.0
Nickel - effect in profit for the period	+/- 0.7	+/- 0.5
Steel scrap - effect in profit for the period	+/- 0.0	+/- 0.0

Cash flow hedge accounting has been applied to electricity

forward contracts and the change in fair value is recognized in

equity. Hedge accounting is not applied to nickel and steel scrap

agreements and the change in the fair value is recorded through

Consolidated statement of income.

Credit and counterparty risk management

Credit or counterparty risk is defined as the possibility of a

customer, subcontractor or a financial counterparty not fulfilling

its commitments towards Valmet. Subsidiaries are primarily

responsible for credit risks pertaining to sales and procurement

activities. The subsidiaries assess the credit standing of their

customers, by taking into account their financial position, past

experience and other relevant factors. Advance payments,

letters of credit and third-party guarantees are actively used to

mitigate credit risks. Treasury provides centralized services

related to trade, project and customer financing and seeks to

ensure that the principles of Valmet’s treasury policy are

adhered to with respect to terms of payment and required

collateral. Valmet has no significant concentrations of credit risks

due to the large number and geographic dispersion of companies

that comprise the Group’s customer base.

The maximum credit risk equals the carrying value of trade

and other receivables, together with contract assets related to

contracts for which revenue is recognized over time. The credit

risk quality is evaluated both on the basis of aging of the trade

receivables and also on the basis of customer specific analysis.

The aging structure of trade receivables is presented in Note 8.

Management considers investments at fair value through other

comprehensive income to have low credit risk as they have a low

risk of default and the issuer has a strong capacity to meet its

contractual cash flow obligations in the near term. Counterparty

risk arises also from financial transactions agreed upon with

banks, financial institutions and corporations. The risk is

managed by careful selection of banks and other counterparties

and by applying counterparty specific limits and netting

agreements such as ISDA (Master agreement of International

Swaps and Derivatives Association), see Note 9. All financial

institutions Valmet associates with have investment grade

status. When measuring the financial credit risk exposure, all

open exposures such as cash at bank accounts, investments,

deposits and other financial transactions, for example derivative

contracts, are included. The compliance with financial

counterparty limits is regularly monitored by the management.

22 | Investments in associated companies

Valmet Group has the following associated companies:

Company name	Place of incorporation and principal place of business	Share of ownership		Measurement
		Dec 31, 2023	Dec 31, 2022
Nanjing SAC Valmet Automation Co., Ltd.	China	21.95%	21.95%	Equity method
Valpro gerenciamento de obras Ltda	Brazil	51.0%	51.0%	Equity method

Nanjing SAC Valmet Automation Co., Ltd. (SAC) is a company

established in 2011 between Metso Automation Co., Ltd. and

Guodian Nanjing Automation Co., Ltd. Guodian Nanjing

Automation Co., Ltd is a public company of which the majority is

VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | NOTES TO THE CONSOLIDATED FINANCIAL

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owned by Huadian Power International Corporation Limited, part

of one of the five biggest power producing companies in China.

The ownership of Metso Automation Co., Ltd. transferred to

Valmet when the Group completed its acquisition of Process

Automation Systems on April 1, 2015. Nanjing SAC Valmet

Automation Co., Ltd. concentrates on developing new

technology, products and solutions to the digital power plant

concepts by combining the resources of the parties. The

associated company is focusing especially on the Chinese

market.

Valpro gerenciamento de obras Ltda is classified as joint

venture, because Valmet has, together with the other

shareholder, joint power to govern the company.

Valpro gerenciamento de obras Ltda and Nanjing SAC Valmet

Automation Co., Ltd. are private companies and there are no

quoted market prices available for their shares. There are no

contingent liabilities relating to Valmet’s interest in Nanjing SAC

Valmet Automation Co., Ltd or Valpro gerenciamento de obras

Ltda.

The shares in Allimand S.A. were sold in 2023, and in

consequence Allimand S.A. is no longer classified as an

associated company. In the comparison period as at December

31, 2022, Valmet held 35.8 percent share of Allimand S.A.

Summarized financial information for Nanjing SAC Valmet

Automation Co., Ltd. is set out below. The summarized financial

information below represents amounts shown in Nanjing SAC

Valmet Automation Co., Ltd.’s most recent financial statements.

The current and non-current assets and liabilities, revenues and

results of Valpro gerenciamento de obras Ltda are not material

and thus not presented in the below tables.

	2022 2023
EUR million	SAC	SAC
Balance sheet
Non-current assets	17	17
Current assets	126	123
Non-current liabilities	1	1
Current liabilities	68	68
Net assets	74	71
Valmet’s share of net assets	16	15
Income statement
Revenue	121	108
Profit or loss	13	13
Total comprehensive income	13	13

Valmet had no material transactions with its associated

companies in 2023 or 2022, or material receivables or liabilities

as at December 31, 2023, or December 31, 2022.

Reconciliation to carrying values in Valmet Group:

	2022 2023
EUR million	SAC	SAC
Net assets at beginning of the period	71	64
Translation differences	-4	-1
Profit for the period	13	13
Other comprehensive income for the period	—	-1
Dividends paid	-6	-4
Net assets at end of the period	74	71
Valmet's share of net assets	16	15
Carrying value at end of the period	16	15

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Changes in investments in associated companies during the period:

	Year ended Dec 31,
EUR million	2023	2022
Historical cost
Historical cost at beginning of the period	8	464
Additions	—	—
Impairments	—	—
Reclassification1	—	-456
Other adjustments	—	—
Historical cost at end of the period	8	8
Equity adjustments
Equity adjustments at beginning of the period	7	-3
Profit for the period	3	9
Other comprehensive income for the period	—	—
Dividends received	-2	-90
Expensing of fair value adjustments	—	-2
Reclassification1	—	93
Other adjustments	—	—
Equity adjustments at end of the period	9	7
Carrying value at end of the period	16	15

1 Reclassifications relate to consolidation of Neles into Valmet in 2022 and includes a gain of EUR 59 million from remeasurement of Valmet's previously held equity interest in

Neles.

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23 | Audit fees

In 2023, the Annual General Meeting of Valmet Oyj elected

Authorised Public Accountants PricewaterhouseCoopers Oy as

Valmet Oyj’s auditor. The below table presents fees for audit and

other services provided by PricewaterhouseCoopers Oy and its

affiliates (PwC) to Valmet Group.

	Year ended Dec 31,
EUR million	2023	2022
Audit	-2.5	-2.3
Services under the Finnish Auditing Act, chapter 1, section 1(1), point 2	—	—
Tax consulting	—	—
Other services	-0.2	-0.1
Total	-2.7	-2.5

In 2023, PricewaterhouseCoopers Oy has provided non-audit

services to entities of Valmet Group in total of EUR 0.1 million

(EUR 0.1 million) with the services consisting of tax and other

services.

24 | Contingencies and commitments

Valmet Oyj, with its subsidiaries, and financial institutions have

guaranteed commitments arising from the ordinary course of

business of Valmet Group up to a maximum of EUR 1,127 million

and EUR 1,521 million as at December 31, 2023 , and 2022,

respectively.

Several lawsuits, claims and disputes based on various

grounds are pending against Valmet in various countries,

including product liability lawsuits and claims as well as legal

disputes related to Valmet’s deliveries. Valmet is also a plaintiff

in several lawsuits. Although some of the claims are substantial,

Valmet’s management does not expect to the best of its present

understanding that the outcome of these lawsuits, claims and

disputes will have a material adverse effect on Valmet in view of

the grounds currently presented for them, provisions made,

insurance coverage in force and the extent of Valmet’s total

business activities.

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25 | Related party information

Valmet’s related parties include Valmet Group companies (see

Note 26) and associated companies and joint ventures (see Note

22) as well as the members of Valmet’s Board of Directors and

Executive Team.

Remuneration of Chief Executive Officer and

other Executive Team members

The table below presents the expenses related to management

compensation that have been recognized in profit or loss. More

information about share-based payments is presented in

Note 14.

EUR thousand	Salaries and other short-term benefits	Performance bonuses	Share-based payments	Post- retirement benefits	Resignation benefits	Total
2023
President and CEO	-797	-674	-822	-393	-1,958	-4,645
Other Executive Team members	-3,175	-1,173	-2,803	-1,348	-150	-8,649
Total	-3,973	-1,847	-3,625	-1,741	-2,108	-13,294
2022
President and CEO	-767	-686	-781	-379	—	-2,613
Other Executive Team members	-3,412	-1,242	-2,666	-1,451	—	-8,771
Total	-4,179	-1,929	-3,447	-1,829	—	-11,384

On August 18, 2023, Valmet announced that Valmet's Board of

Directors has accepted the resignation of Valmet's President and

CEO Pasi Laine and related terms and conditions. Pasi Laine will

continue as the President and CEO of Valmet until the end of

September 2024. The remuneration of the President and CEO

was decided in August 2023 in conjunction with his resignation.

The Board of Directors decided to continue salary payments until

July 2025 and make a severance payment of EUR 1,125

thousand to the President and CEO on July 1, 2025. These and

other benefits related to the resignation of the President and

CEO accrued in 2023 totaled to EUR 1,958 thousand. The

President and CEO is considered a Good leaver for the purposes

of long- and short-term incentives and retains rights to all

earned incentives as well as future incentives for the

performance period 2024-2026.

Pension arrangements for the President and CEO follow local

market practice and legislation. Other Executive Team members

belong to the pension systems of their country of residence and

have a statutory retirement age. The President and CEO and

members of the Executive Team belong to supplementary

defined contribution pension plans.

Contributions to the plans are 15–20 percent of the employee’s

annual salary. Expenses are included in the post-retirement

benefits together with statutory pension benefits presented in

the table above. The final benefit received by the employee

depends on the return on the plan’s investments.

Remuneration paid to members of the Board of Directors

EUR thousand	2023
Mikael Mäkinen, Chair	-167
Jaakko Eskola, Vice Chair	-95
Aaro Cantell, Member	-82
Anu Hämäläinen, Member	-83
Pekka Kemppainen, Member	-82
Per Lindberg, Member	-72
Monika Maurer, Member	-92
Eriikka Söderström, Member	-92
Juha Pöllänen, Personnel Representative	-7
Total	-771

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As at December 31, 2023, the aggregate shareholding of the

Board of Directors, the President and CEO and other Executive

Team members was 647,065 shares (712,589 shares as at

December 31, 2022).

Valmet has no loan receivables from the Executive Team or the

members of the Board of Directors. No pledges or other

commitments have been given on behalf of management or

shareholders.

In 2023 and 2022, Valmet sold goods to entities controlled by

a member of the Board of Directors and purchased services from

the same entities. The value of these sales amounted to EUR

487 thousand and purchases to EUR 80 thousand (EUR 428

thousand of sales and EUR 25 thousand of purchases in 2022).

Outstanding current receivables were EUR 45 thousand (EUR

156 thousand) and outstanding current payables EUR 14

thousand (EUR 8 thousand) at the end of the reporting period.

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26 | Subsidiaries

Company name	Country of incorporation and place of business	Parent holding, %	Group ownership interest, %
Neles Australia Flow Control Pty Ltd1	Australia	—	100.0
Valmet Pty Ltd	Australia	—	100.0
Valmet GesmbH	Austria	—	100.0
Valmet Belgium B.V.	Belgium	—	100.0
Valmet Celulose, Papel e Energia Ltda.	Brazil	—	100.0
Valmet Engraving Solutions Ltda.	Brazil	—	100.0
Valmet Fabrics Tecidos Técnicos Ltda.	Brazil	—	100.0
Valmet Flow Control Ltda.	Brazil	—	100.0
Valmet Tissue Converting Ltda.	Brazil	—	100.0
Valmet Ltd.	Canada	—	100.0
Valmet Flow Control Ltd.	Canada	—	100.0
Neles Chile SpA	Chile	—	100.0
Valmet S.A.	Chile	—	100.0
Fabio Perini Shanghai Co., Ltd.	China	—	100.0
Körber Engineering Solutions (Nantong) Co., Ltd.	China	—	100.0
Neles (China) Investment Co. Ltd	China	100.0	100.0
Neles Taiwan Co., Ltd	China	—	100.0
Valmet (China) Co., Ltd.	China	—	100.0
Valmet Automation (Shanghai) Co., Ltd.	China	—	100.0
Valmet Fabrics (China) Co., Ltd.	China	—	100.0
Valmet Flow Control (Jiaxing) Co., Ltd	China	—	100.0
Valmet Flow Control (Shanghai) Co. Ltd	China	—	100.0
Valmet Paper (Shanghai) Co., Ltd.	China	—	100.0
Valmet Paper Machinery (Changzhou) Co., Ltd.	China	—	100.0
Valmet Paper Technology (China) Co., Ltd.	China	—	100.0
Valmet Paper Technology (Guangzhou) Co., Ltd.	China	—	100.0
Valmet Paper Technology (Xi'an) Co., Ltd.	China	—	75.0
Valmet Technologies Co., Ltd.	China	—	100.0
Valmet d.o.o.	Croatia	—	100.0
Valmet s.r.o.	Czech Republic	—	100.0
Valmet Automation Oy	Finland	100.0	100.0
Valmet Flow Control Oy	Finland	100.0	100.0
Valmet Kauttua Oy	Finland	—	100.0
Valmet Technologies Oy	Finland	100.0	100.0
Valmet Automation SAS	France	—	100.0
Valmet SAS	France	—	100.0
Valmet Flow Control SAS	France	—	100.0
Valmet Deutschland GmbH	Germany	—	100.0
Valmet Flow Control GmbH	Germany	—	100.0
Valmet GmbH	Germany	—	100.0
Valmet Plattling GmbH	Germany	—	100.0
Neles India Private Limited	India	—	100.0
Valmet Technologies and Services Private Limited	India	—	100.0
Valmet Technologies Private Limited	India	—	100.0
PT Valmet	Indonesia	—	100.0
PT Valmet Automation Indonesia	Indonesia	—	100.0
PT Valmet Technology Center	Indonesia	—	100.0
Valmet Engraving Solutions S.r.l.	Italy	—	100.0

1 Under liquidation.

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Company name	Country of incorporation and place of business	Parent holding, %	Group ownership interest, %
Valmet Flow Control S.p.A	Italy	—	100.0
Valmet S.p.A.	Italy	—	100.0
Valmet Tissue Converting S.p.A.	Italy	—	100.0
Valmet Tissue Converting S.r.l.	Italy	—	100.0
Valmet K.K.	Japan	—	100.0
Valmet Tissue Converting Co., Ltd.	Japan	—	100.0
Neles Flow Control Malaysia Sdn. Bhd.1	Malaysia	—	100.0
Valmet Sdn. Bhd.	Malaysia	—	100.0
Neles Mexico SA de CV	Mexico	—	100.0
Valmet Technologies S. de R.L. de C.V.	Mexico	—	100.0
NovaTech Automation Solutions B.V.	Netherlands	—	100.0
NovaTech Automation Solutions Holding B.V.	Netherlands	—	100.0
Valmet B.V.	Netherlands	—	100.0
Valmet AS	Norway	—	100.0
Valmet Flow Control S.A.C.	Peru	—	100.0
Valmet Automation Sp. z o.o.	Poland	—	100.0
Valmet Flow Control Sp. z o.o.	Poland	—	100.0
Valmet Services Jelenia Góra Sp. z o.o.	Poland	—	100.0
Valmet Services Sp. z o.o.	Poland	—	100.0
Valmet Technologies and Services S.A.	Poland	—	100.0
Valmet Technologies Sp. z.o.o.1	Poland	—	100.0
Valmet Lda	Portugal	—	100.0
Valmet Flow Control, Unipessoal Lda	Portugal	—	100.0
Valmet Trading and Contracting W.L.L.	Qatar	—	49.0
Neles Korea Co., Ltd.	Republic of Korea	—	100.0
Valmet Inc.	Republic of Korea	—	100.0
Valmet Flow Control S.R.L.	Romania	—	100.0
Neles Plant Saudi LLC	Saudi Arabia	—	70.0
Neles Asia Pacific Pte. Ltd.	Singapore	—	100.0
Valmet Pte. Ltd.	Singapore	—	100.0
Valmet Flow Control South Africa Pty Ltd	South Africa	—	100.0
Valmet South Africa (Pty) Ltd	South Africa	—	100.0
Valmet Technologies, S.A.U.	Spain	—	100.0
Valmet Technologies Zaragoza, S.L.	Spain	—	81.0
Valmet AB	Sweden	100.0	100.0
Valmet Flow Control AB	Sweden	—	100.0
Valmet Co., Ltd.	Thailand	—	100.0
Valmet Flow Control Co., Ltd.	Thailand	—	100.0
Valmet Flow Control Turkey Dis Ticaret A.S.	Turkey	—	100.0
Valmet Selüloz Kagit ve Enerji Teknolojileri A.S.	Turkey	—	100.0
Valmet Flow Control LLC2	United Arab Emirates	—	49.0
Valmet FZE	United Arab Emirates	—	100.0
Valmet Process Technologies and Services LLC2	United Arab Emirates	—	49.0
Neles UK Ltd	United Kingdom	—	100.0
Valmet Limited	United Kingdom	—	100.0
Neles-Jamesbury Inc.	USA	100.0	100.0
Valmet, Inc.	USA	73.5	100.0
Valmet Flow Control Inc.	USA	—	100.0
Valmet Tissue Converting, Inc.	USA	—	100.0
Valmet Co., Ltd.	Vietnam	—	100.0

1 Under liquidation.

2 Based on contractual arrangement, the Group has full control of the company and is consolidating the entity 100%.

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27 | Events after the reporting period

There have been no subsequent events after the reporting

period that required recognition or disclosure.

28 | New accounting standards

New IFRS Accounting Standards adopted

Valmet Group has applied new standards, amendments and

interpretations published by IASB that are effective for the first

time for financial reporting periods commencing on January 1,

2023. These standards, amendments and interpretations did not

have a material impact on the results or financial position of

Valmet Group, or the presentation of financial statements.

Amendments to IAS 12 Income Taxes on deferred tax related

to assets and liabilities arising from a single transaction became

effective as of January 1, 2023. The amendments narrow the

scope for the initial recognition exception and require companies

to recognize deferred tax on transactions that, on initial

recognition, give rise to equal amounts of taxable and deductible

temporary differences. Amendments are applied to transactions

that occur on or after the beginning of the earliest comparative

period presented. At the beginning of the earliest comparative

period, January 1, 2022, deferred taxes are recognized for all

temporary differences related to right-of-use assets and lease

liabilities at that date, with the cumulative effect recognized as

an adjustment to the opening balance of retained earnings.

Applying the amendments to IAS 12 resulted in cumulative

effect of EUR -1.8 million recognized as an adjustment to

opening retained earnings as at January 1, 2022, and EUR 0.3

million expense recognized for changes in deferred taxes in

2022.

New IFRS Accounting Standards not yet

adopted

Valmet Group has not identified any new standards,

amendments or interpretations published by IASB that apply for

the first time to financial reporting periods commencing on or

after January 1, 2024, that are expected to have a material

impact on the results or financial position of Valmet Group, or

the presentation of financial statements.

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Parent company statement of income, FAS

		Year ended Dec 31,
EUR	Note	2023	2022
Net sales		7,748,166.74	16,386,451.29
Other operating income	3	—	5,430,988.64
Personnel expenses	2	-22,702,350.55	-20,668,616.25
Depreciation and amortization	7	-745,499.74	-877,827.34
Other operating expenses	3, 4	-27,318,714.24	-33,540,575.65
Operating profit		-43,018,397.79	-33,269,579.31
Financial income and expenses, net	5	169,060,384.36	202,516,930.18
Profit before appropriations and taxes		126,041,986.57	169,247,350.87
Group contributions		199,697,436.77	164,643,000.00
Income taxes	6	-28,951,532.14	-24,389,074.25
Profit for the period		296,787,891.20	309,501,276.62

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Parent company statement of financial position, FAS

Assets

		As at Dec 31,
EUR	Note	2023	2022
Non-current assets
Intangible assets	7	844,017.31	1,345,901.45
Property, plant and equipment	7	3,971,492.15	4,135,299.65
Equity investments	8	2,270,937,770.34	2,281,489,498.87
Non-current receivables	10, 11	451,432,752.64	132,823,313.93
Total non-current assets		2,727,186,032.44	2,419,794,013.90
Current assets
Current receivables	10, 11	763,946,287.19	645,972,564.84
Cash and cash equivalents		179,508,561.43	114,030,701.19
Total current assets		943,454,848.62	760,003,266.03
Total assets		3,670,640,881.06	3,179,797,279.93

Equity and liabilities

		As at Dec 31,
EUR	Note	2023	2022
Equity	12
Share capital		140,000,000.00	140,000,000.00
Reserve for invested unrestricted equity		484,127,812.29	481,121,229.04
Hedge and other reserves		-290,496.00	6,943,646.00
Retained earnings		722,051,520.42	655,940,670.57
Profit for the period		296,787,891.20	309,501,276.62
Total equity		1,642,676,727.91	1,593,506,822.23
Provisions
Other provisions		2,275,620.12	—
Liabilities
Non-current liabilities	11, 13	1,258,462,004.41	572,235,388.82
Current liabilities	11, 14	767,226,528.62	1,014,055,068.88
Total liabilities		2,025,688,533.03	1,586,290,457.70
Total equity and liabilities		3,670,640,881.06	3,179,797,279.93

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Parent company statement of cash flows, FAS

	Year ended Dec 31,
EUR thousand	2023	2022
Cash flows from operating activities
Profit before appropriations and taxes	126,042	169,247
Adjustments
Depreciation and amortization	745	878
Financial income and expenses, net	-169,060	-202,517
Other non-cash items	9,097	3,627
Total adjustments	-159,218	-198,012
Change in working capital	16,106	-6,953
Interest and other financial expenses paid	-58,604	-27,598
Dividends received	193,085	134,177
Interest and other financial income received	32,726	18,162
Income taxes paid	-21,223	-41,226
Net cash provided by (+) / used in (-) operating activities	128,913	47,799
Cash flows from investing activities
Investments in tangible and intangible assets	-80	-32
Net increase (-) / decrease (+) in loan receivables from Group companies	-412,830	-32,970
Net cash provided by (+) / used in (-) investing activities	-412,910	-33,002
Cash flows from financing activities:
Purchase of treasury shares	-3,987	-4,830
Issue of treasury shares to Group companies	2,354	4,867
Dividends paid	-239,403	-179,426
Group contribution received	164,620	169,448
Proceeds from non-current debt	725,000	400,000
Repayments of current portion of non-current debt	-39,978	-587,000
Net proceeds from (+) / repayments of (-) current debt	-50,521	94,739
Net proceeds from (+) / repayments of (-) debt from Group companies	-15,971	-26,851
Net increase (+) / decrease (-) in Group pool accounts	-192,641	-153,511
Net cash provided by (+) / used in (-) financing activities	349,475	-282,563
Net increase (+) / decrease (-) in cash and cash equivalents	65,478	-267,767
Cash and cash equivalents transferred in merger	—	63,182
Cash and cash equivalents at beginning of the period	114,031	318,616
Cash and cash equivalents at end of the period	179,509	114,031

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Notes to parent company financial statements

1 | Accounting principles

The parent company’s financial statements have been prepared

in accordance with the Finnish Accounting Standards (FAS).

Where necessary, comparative information has been

reclassified to achieve consistency in disclosure with current

financial year amounts.

Non-current assets

Tangible and intangible assets are measured at historical cost,

less accumulated depreciation according to plan. Land and water

areas are not depreciated.

Depreciation and amortization are calculated on a straight-line

basis over the expected useful lives of the assets as follows:

Intangible assets	10 years
Buildings and structures	12–30 years
Machinery and equipment	5–10 years
Other tangible assets	20 years

Investments in subsidiaries and other companies are measured

at lower of acquisition cost or fair value.

Financial instruments

Valmet’s financial risk management is carried out centrally by

the Group treasury (hereafter Treasury) under annually

reviewed written policies approved by Valmet’s Board of

Directors. Treasury functions in co-operation with the operating

units to minimize financial risks to both the parent company and

the Group.

Forward exchange derivative contracts are used to hedge

foreign exchange rate risk, and these instruments are measured

at fair value. The change in the fair value of derivative

instruments used to hedge operative items (e.g. foreign

currency denominated sales and purchase transactions) is

reported under Other operating income and expenses in profit or

loss. The change in the fair value of derivatives used to hedge

non-operative items (e.g. interest-bearing financial assets and

liabilities, and other items related to funding) are reported under

Financial income and expenses in profit or loss. The fair value of

forward exchange contracts is determined using forward

exchange market rates at the balance sheet date.

Cash flow hedge accounting is applied to interest rate swaps

hedging future changes in cash flows arising from floating rate

debt. The fair value of the interest rate swaps is calculated as

the present value of the estimated future cash flows arising from

the contract. The gain or loss related to the ineffective portion of

hedging instruments is expensed immediately and is reported

under Financial income and expenses. Interest arising from

interest rate swaps is reported under Financial income and

expenses concurrently with interest expense arising from hedged

floating rate debt.

The derivative contracts used to hedge the commodity risk

related to electricity and nickel are measured at fair value, and

the changes in fair values are recognized in Other operating

income and expenses in profit or loss. The fair value of

commodity derivatives is based on quoted market prices at the

balance sheet date.

Interest-bearing financial investments managed centrally by

the Treasury are measured at fair value. The change in the fair

value is recognized in fair value reserve within Equity in the

Statement of financial position. The fair values of the interest-

bearing financial assets are determined using prevailing market

rates at the balance sheet date.

Pensions

An external pension insurance company manages the parent

company’s statutory and voluntary pension plans that are all

defined contribution in nature. Contributions are expensed to the

Statement of income as incurred.

Deferred taxes

A deferred tax liability or asset has been calculated for all

temporary differences between tax bases of assets and liabilities

and their amounts in financial reporting, using the tax rates

enacted or substantially enacted by the balance sheet date. The

deferred tax liabilities are recognized in the Statement of

financial position in full, and the deferred tax assets are

recognized when it is probable that there will be sufficient

taxable profit against which the asset can be utilized.

Foreign currency transactions

Transactions in foreign currency are recorded at the exchange

rate prevailing on the date of the individual transaction. Foreign

currency denominated monetary items recognized in the

Statement of financial position have been translated into the

functional currency at the exchange rates prevailing at the

balance sheet date. Exchange rate gains and losses related to

operative items are reported under Other operating income and

expenses in the Statement of income, whereas exchange rate

gains and losses related to non-operative items are reported

under Financial income and expenses.

Receivables

Receivables are initially recognized at nominal amounts.

Subsequently they are measured at amortized cost, less

provision for impairment.

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Share-based incentive plan

Rewards arising from share-based incentive plans are settled

partly in shares and partly in cash. The shares to be transferred

as part of the plan are obtained in public trading. The acquisition

of shares is recognized as decrease in Retained earnings and

transfer of shares as increase in Reserve for invested

unrestricted equity and Personnel expenses. The part settled in

cash is recognized in the Statement of income under Personnel

expenses at the time of payment.

Leasing

Lease payments have been recognized as rental expenses in the

Statement of income.

2 | Personnel expenses

	Year ended Dec 31,
EUR thousand	2023	2022
Salaries and wages	-18,926	-17,225
Pension costs	-3,200	-2,975
Other indirect employee costs	-577	-468
Total	-22,702	-20,669

Remuneration to management:

	Year ended Dec 31,
EUR thousand	2023	2022
President and CEO	-4,645	-2,613
Members of the Board	-771	-761
Total	-5,416	-3,374

The President and CEO is entitled to retire when reaching 63

years of age. The President and CEO belongs to a supplementary

defined contribution plan. The contribution to the plan is 20

percent of his annual salary.

Expenses are included in the remuneration to management table

above. Additional information on management remuneration is

presented in Note 25 of the Consolidated financial statements.

Number of personnel:

	2023	2022
Personnel at end of the period	143	143
Average number of personnel during the period	144	140

3 | Other operating income and expenses

	Year ended Dec 31,
EUR thousand	2023	2022
Change in fair value of derivatives	—	5,431
Other operating income, total	—	5,431
Consulting and other services	-15,683	-27,573
IT	-1,017	-980
Change in fair value of derivatives	-8,428	—
Other	-2,191	-4,988
Other operating expenses, total	-27,319	-33,541

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4 | Audit fees

	Year ended Dec 31,
EUR thousand	2023	2022
Audit	-529	-469
Services under the Finnish Auditing Act, chapter 1, section 1(1), point 2	-2	-35
Tax consulting	—	—
Other services	-129	-84
Total	-660	-588

5 | Financial income and expenses

	Year ended Dec 31,
		2023			2022
EUR thousand	Group companies	Others	Total	Group companies	Others	Total
Dividends received	192,668	416	193,085	122,629	89,594	212,223
Interest income	27,783	7,182	34,965	9,824	1,468	11,292
Gain on sale of subsidiary	5,575	—	5,575	—	—	—
Interest expenses	-28,848	-33,888	-62,737	-7,256	-8,894	-16,149
Net gain/loss from foreign exchange	4,275	-3,783	492	-246	340	93
Interest component from forward contracts	994	-1,375	-381	-4,863	3,600	-1,263
Other financial expenses	—	-1,939	-1,939	—	-3,679	-3,679
Total	202,447	-33,387	169,060	120,088	82,429	202,517

6 | Income taxes

	Year ended Dec 31,
EUR thousand	2023	2022
Income tax for the financial period	-29,241	-24,562
Income tax for prior periods	-3	242
Change in deferred taxes	293	-69
Total	-28,952	-24,389

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7 | Intangible assets and property, plant and equipment

EUR thousand	Intangible assets	Land areas	Buildings and structures	Machinery and equipment	Other tangible assets	Tangible assets total	Total
2023
Acquisition cost at beginning of the period	2,757	809	9,476	592	596	11,472	14,229
Additions	—	—	50	26	3	80	80
Disposals	—	—	—	—	—	—	—
Reclassifications	-18	—	—	14	4	18	—
Acquisition cost at end of the period	2,739	809	9,526	632	603	11,570	14,308
Accumulated depreciation at beginning of the period	-1,411	—	-6,466	-592	-279	-7,337	-8,747
Depreciation charges for the period	-484	—	-233	-3	-26	-262	-745
Accumulated depreciation at end of the period	-1,895	—	-6,698	-594	-305	-7,598	-9,493
Carrying value at end of the period	844	809	2,827	38	298	3,971	4,816

EUR thousand	Intangible assets	Land areas	Buildings and structures	Machinery and equipment	Other tangible assets	Tangible assets total	Total
2022
Acquisition cost at beginning of the period	2,739	809	9,476	592	557	11,434	14,172
Additions	1,896	—	—	—	38	38	1,934
Disposals	-1,878	—	—	—	—	—	-1,878
Acquisition cost at end of the period	2,757	809	9,476	592	596	11,472	14,229
Accumulated depreciation at beginning of the period	-927	—	-6,097	-592	-254	-6,943	-7,870
Depreciation charges for the period	-484	—	-369	—	-25	-394	-878
Accumulated depreciation at end of the period	-1,411	—	-6,466	-592	-279	-7,337	-8,747
Carrying value at end of the period	1,346	809	3,010	—	316	4,135	5,481

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8 | Investments

EUR thousand	Shares in Group companies	Other shares	Investments in associated companies	Investments total
2023
Acquisition cost at beginning of the period	2,279,833	1,657	—	2,281,489
Additions	—	—	—	—
Disposals	-10,551	-1	—	-10,552
Acquisition cost at end of the period	2,269,282	1,656	—	2,270,938
Carrying value at end of the period	2,269,282	1,656	—	2,270,938

EUR thousand	Shares in Group companies	Other shares	Investments in associated companies	Investments total
2022
Acquisition cost at beginning of the period	1,405,474	1,492	456,164	1,863,129
Additions1	874,359	165	—	874,524
Disposals1	—	—	-456,164	-456,164
Acquisition cost at end of the period	2,279,833	1,657	—	2,281,489
Carrying value at end of the period	2,279,833	1,657	—	2,281,489

1 Neles Oyj has merged with Valmet Oyj on April 1, 2022. Valmet's previously held equity interest in Neles was reclassified and new subsidiaries were acquired in the merger.

More information regarding the new subsidiaries is presented in Note 9.

9 | Subsidiaries

Company name	Domicile	Ownership %
Valmet Technologies Oy	Finland	100.0
Valmet Automation Oy	Finland	100.0
Valmet Flow Control Oy	Finland	100.0
Valmet AB	Sweden	100.0
Valmet, Inc.	USA	73.5
Neles-Jamesbury Inc.	USA	100.0
Neles (China) Investment Co., Ltd.	China	100.0

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10 | Specification of receivables

Non-current receivables:

	As at Dec 31,
EUR thousand	2023	2022
Loan receivables from Group companies	432,445	115,496
Deferred tax assets	1,005	—
Derivatives from Group companies	6,262	6,742
Derivatives from others	11,721	10,585
Non-current receivables total	451,433	132,823

Current receivables:

	As at Dec 31, 2023			As at Dec 31, 2022
EUR thousand	Group companies	Others	Total	Group companies	Others	Total
Trade receivables from	10,295	—	10,295	14,979	—	14,979
Loan receivables from	187,931	—	187,931	97,523	—	97,523
Group pool accounts	264,678	—	264,678	242,683	—	242,683
Prepaid expenses and accrued income from	243,275	39,103	282,378	213,955	76,787	290,742
Other receivables from	—	18,664	18,664	—	45	45
Current receivables total	706,179	57,768	763,946	569,140	76,833	645,973

Specification of prepaid expenses and accrued income:

	As at Dec 31,
EUR thousand	2023	2022
Prepaid expenses and accrued income from Group companies
Group contribution receivables	199,720	164,643
Accrued interest income	8,884	2,771
Derivatives	33,581	45,321
Other	1,089	1,220
Total	243,275	213,955
Other prepaid expenses and accrued income
Derivatives	27,977	58,348
Other	11,126	18,440
Total	39,103	76,787

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11 | Financial assets and liabilities recognized at fair value

Notional amounts and fair values as at December 31:

EUR thousand	Notional amount	Fair value, assets	Fair value, liabilities	Fair value, net	Changes in fair value recognized in profit or loss	Changes in fair value recognized in hedge reserve
2023
Forward exchange contracts
With Group companies	2,985,423	37,880	-35,020	2,860	11,871	—
Others	3,148,645	34,229	-37,534	-3,306	-18,419	—
Interest rate swaps1
Others	510,000	4,681	-5,044	-363	982	-363
Electricity forward contracts2
Others	153	790	-800	-10	-8,728	—
Nickel commodity swaps3
With Group companies	588	1,957	—	1,957	3,591	—
Others	588	—	-1,957	-1,957	-3,591	—
Steel scrap commodity swaps3
With Group companies	1,523	15	-8	7	-34	—
Others	1,523	8	-15	-7	34	—

EUR thousand	Notional amount	Fair value, assets	Fair value, liabilities	Fair value, net	Changes in fair value recognized in profit or loss	Changes in fair value recognized in hedge reserve
2022
Forward exchange contracts
With Group companies	3,092,057	52,027	-50,331	1,697	34,838	—
Others	3,437,871	49,845	-54,983	-5,139	-50,176	—
Interest rate swaps1
Others	125,000	8,697	-18	8,680	315	8,680
Electricity forward contracts2
Others	169	8,772	-55	8,717	5,071	—
Nickel commodity swaps3
With Group companies	192	—	-1,322	-1,322	-1,248	—
Others	192	1,322	—	1,322	1,248	—
Steel scrap commodity swaps3
With Group companies	1,048	—	-3	-3	-3	—
Others	1,048	3	—	3	3	—

1 All interest rate swaps have been designated to cash flow hedge accounting relationships.

2 Notional amount in GWh.

3 Notional amount in metric tons.

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Maturities of financial derivatives as at December 31:

	2024	2025	2026	2027	2028 and later	Total
2023
Notional amounts
Forward exchange contracts1	5,415,352	640,819	77,898	—	—	6,134,068
Electricity forward contracts2	92	44	18	—	—	153
Nickel commodity swaps3	1,176	—	—	—	—	1,176
Steel scrap commodity swaps3	3,046	—	—	—	—	3,046
Interest rate swaps1	65,000	95,000	160,000	150,000	40,000	510,000
Fair values, EUR thousand
Forward exchange contracts	-544	94	3	—	—	-446
Electricity forward contracts	140	-72	-78	—	—	-10
Nickel commodity swaps	—	—	—	—	—	—
Steel scrap commodity swaps	—	—	—	—	—	—
Interest rate swaps	-194	77	-8	-253	14	-363

	2023	2024	2025	2026	2027 and later	Total
2022
Notional amounts
Forward exchange contracts1	6,074,786	443,889	11,253	—	—	6,529,928
Electricity forward contracts2	120	48	—	—	—	169
Nickel commodity swaps3	384	—	—	—	—	384
Steel scrap commodity swaps3	2,096	—	—	—	—	2,096
Interest rate swaps1	25,000	—	30,000	25,000	45,000	125,000
Fair values, EUR thousand
Forward exchange contracts	-3,510	63	5	—	—	-3,442
Electricity forward contracts	7,564	1,153	—	—	—	8,717
Nickel commodity swaps	—	—	—	—	—	—
Steel scrap commodity swaps	—	—	—	—	—	—
Interest rate swaps	-18	—	1,586	1,305	5,806	8,680

1 Notional amount in EUR thousand.

2 Notional amount in GWh.

3 Notional amount in metric tons.

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Classification of financial assets and liabilities as at December 31:

	As at Dec 31,
EUR thousand1	2023	2022
Non-current financial assets
Equity investments at amortized cost	2,269,282	2,279,833
Equity investments at fair value through profit or loss	1,656	1,657
Loan receivables at amortized cost	432,445	115,496
Derivative financial instruments at fair value through profit or loss	13,302	8,630
Derivative financial instruments qualified for hedge accounting	4,681	8,697
Carrying value at end of the period	2,721,366	2,414,313
Current financial assets
Loan receivables at amortized cost	187,931	97,523
Group pool accounts	264,678	242,683
Trade receivables at amortized cost	10,295	14,979
Derivative financial instruments at fair value through profit or loss	61,558	103,669
Cash and cash equivalents at amortized cost	179,509	114,031
Carrying value at end of the period	703,971	572,884

	As at Dec 31,
EUR thousand1	2023	2022
Non-current financial liabilities
Loans from financial institutions at amortized cost	1,240,044	555,022
Derivative financial instruments at fair value through profit or loss	13,354	7,409
Derivative financial instruments qualified for hedge accounting	4,850	18
Carrying value at end of the period	1,258,248	562,449
Current financial liabilities
Loans from financial institutions at amortized cost	39,978	39,978
Interest-bearing liabilities at amortized cost	73,793	125,907
Group pool accounts	562,548	733,194
Trade payables at amortized cost	6,741	3,222
Derivative financial instruments at fair value through profit or loss	61,920	99,577
Derivative financial instruments qualified for hedge accounting	194	—
Carrying value at end of the period	745,174	1,001,878

1 Carrying values presented in the table approximate fair values.

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12 | Statement of changes in equity

	Year ended Dec 31,
EUR thousand	2023	2022
Share capital at beginning of the period	140,000	100,000
Issue of ordinary shares as consideration for a business combination	—	40,000
Share capital at end of the period	140,000	140,000
Reserve for invested unrestricted equity at beginning of the period	481,121	430,864
Issue of ordinary shares as consideration for a business combination	—	43,860
Share-based payments	3,007	6,396
Reserve for invested unrestricted equity at end of the period	484,128	481,121
Hedge and other reserves at beginning of the period	6,944	-655
Change in reserves	-7,234	7,599
Hedge and other reserves at end of the period	-290	6,944
Retained earnings at beginning of the period	965,442	840,197
Dividends paid	-239,403	-179,426
Purchase of treasury shares	-3,987	-4,830
Retained earnings at end of the period	722,052	655,941
Profit for the period	296,788	309,501
Total equity at end of the period	1,642,677	1,593,507

Statement of distributable funds:

	As at Dec 31,
EUR	2023	2022
Reserve for invested unrestricted equity	484,127,812.29	481,121,229.04
Hedge and other reserves	-290,496.00	6,943,646.00
Retained earnings	722,051,520.42	655,940,670.57
Profit for the period	296,787,891.20	309,501,276.62
Total distributable funds	1,502,676,727.91	1,453,506,822.23

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13 | Non-current liabilities

	As at Dec 31,
EUR thousand	2023	2022
Loans from financial institutions	1,240,044	555,022
Derivatives from Group companies	7,003	730
Derivatives from others	11,202	6,696
Deferred tax liabilities	—	1,310
Other non-current liabilities	214	8,477
Non-current liabilities total	1,258,462	572,235

Maturities of financial liabilities as at December 31:

EUR thousand	2024	2025	2026	2027	2028 and later
Loans from financial institutions	39,978	344,440	298,901	98,901	497,802
Trade payables and other financial liabilities	80,534	—	—	—	—
Total	120,512	344,440	298,901	98,901	497,802

EUR thousand	2023	2024	2025	2026	2027 and later
Loans from financial institutions	39,978	139,978	30,978	271,978	112,088
Trade payables and other financial liabilities	129,129	—	—	—	—
Total	169,107	139,978	30,978	271,978	112,088

The information presented in above maturity tables excludes the impact of derivatives.

VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | NOTES TO PARENT COMPANY FINANCIAL

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14 | Current liabilities

	As at Dec 31, 2023			As at Dec 31, 2022
EUR thousand	Group companies	Others	Total	Group companies	Others	Total
Current portion of non-current loans	—	39,978	39,978	—	39,978	39,978
Trade payables	2,736	4,004	6,741	627	2,594	3,222
Accrued expenses and deferred income	29,161	54,430	83,591	53,029	57,635	110,664
Other current interest-bearing debt	29,574	44,219	73,793	31,168	94,739	125,907
Group pool accounts	562,548	—	562,548	733,194	—	733,194
Other liabilities and provisions	—	576	576	—	1,090	1,090
Current liabilities total	624,020	143,206	767,227	818,018	196,037	1,014,055

Specification of accrued expenses and deferred income:

	As at Dec 31,
EUR thousand	2023	2022
Accrued expenses and deferred income to Group companies
Accrued interest expenses	1,192	844
Derivatives	27,957	51,175
Other	12	1,010
Total	29,161	53,029
Accrued expenses and deferred income to others
Accrued interest expenses	14,064	3,540
Derivatives	34,157	48,402
Accrued salaries, wages and social costs	5,502	4,773
Other	706	920
Total	54,430	57,635

15 | Contingencies and commitments

Guarantees:

	As at Dec 31,
EUR thousand	2023	2022
Guarantees on behalf of Group companies	1,124,131	1,412,286
Guarantees on own behalf	216	216
Total	1,124,347	1,412,502

Lease commitments:

	As at Dec 31,
EUR thousand	2023	2022
Payments in the following year	833	790
Payments later	1,533	79
Total	2,366	869

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List of account books used in parent company

Voucher description	Voucher class	Voucher format
General journal and general ledger		In electronic format
Specifications of accounts receivable and payable		In electronic format
Fixed assets transactions	756, 770, 774, 778, 782, 783, 786, 905, 906	In electronic format
Bank transactions	424–426, 500–692, 694, 699, 950, 960, 970	In electronic format
Sales invoices	300, 305, 310, 320, 330, 350, 400, 410, 491– 499, 802, 815, 825–827, 834, 841, 930, 935, 940	In electronic format
Purchase invoices	100, 110, 115, 120, 130, 140, 150, 160, 190, 191, 290, 291–294, 297–299, 737, 801, 814, 824, 830, 832, 854, 855, 860, 861, 895, 910, 915	In electronic format
Travel invoices	755	In electronic format
Salary transactions	750	In electronic format
Journal vouchers	700, 710, 715, 720, 725, 730, 740, 767, 793, 865, 881, 900, 975, 980, 985, 990	In electronic format
Financial transactions	760, 765, 768	In electronic format
Opening balance	791, 792	In electronic format

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Signatures of Board of Directors’ Report and

Financial Statements

		Espoo, February 7, 2024
	Mikael Mäkinen		Jaakko Eskola
	Chair of the Board		Vice Chair of the Board
Aaro Cantell		Anu Hämäläinen		Pekka Kemppainen
Member of the Board		Member of the Board		Member of the Board
Per Lindberg		Monika Maurer		Eriikka Söderström
Member of the Board		Member of the Board		Member of the Board
		Pasi Laine
		President and CEO
	The Auditor’s Note
	Our auditor’s report has been issued today.
	Helsinki, February 7, 2024
	PricewaterhouseCoopers Oy
	Authorised Public Accountant Firm
		Pasi Karppinen
	Authorised Public Accountant

  VALMET | FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS 2023 | SIGNATURES OF BOARD OF DIRECTORS’

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Auditor’s Report (Translation of the Finnish Original)

To the Annual General Meeting of Valmet Oyj

Report on the Audit of the

Financial Statements

Opinion

In our opinion

• the consolidated financial statements give a true and fair view

of the group’s financial position, financial performance and

cash flows in accordance with IFRS Accounting Standards as

adopted by the EU

• the financial statements give a true and fair view of the parent

company’s financial performance and financial position in

accordance with the laws and regulations governing the

preparation of financial statements in Finland and comply with

statutory requirements.

Our opinion is consistent with the additional report to the Audit

Committee.

What we have audited

We have audited the financial statements of Valmet Oyj

(business identity code 2553019-8) for the year ended 31

December 2023. The financial statements comprise:

• consolidated statement of financial position, statement of

income, statement of comprehensive income, statement of

changes in equity, statement of cash flows and notes, which

include material accounting policy information and other

explanatory information

• the parent company’s balance sheet, income statement, cash

flow statement and notes.

Basis for Opinion

We conducted our audit in accordance with good auditing

practice in Finland. Our responsibilities under good auditing

practice are further described in the Auditor’s Responsibilities for

the Audit of the Financial Statements section of our report.

We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the parent company and of the group

companies in accordance with the ethical requirements that are

applicable in Finland and are relevant to our audit, and we have

fulfilled our other ethical responsibilities in accordance with these

requirements.

To the best of our knowledge and belief, the non-audit services

that we have provided to the parent company and group

companies are in accordance with the applicable law and

regulations in Finland and we have not provided non-audit

services that are prohibited under Article 5(1) of Regulation (EU)

No 537/2014. The non-audit services that we have provided are

disclosed in note 23 to the Financial Statements.

Our Audit Approach

Overview

• Overall group materiality: € 22.5 million, which represents approximately 5% of profit before tax • We conducted audit work in all major countries covering all key reporting units. The focus of our work was on the most significant reporting units in Finland, Sweden, USA, Brazil, China and India. • Accounting for long-term projects and long-term service contracts • Timing of revenue recognition for Services and Automation segment related contracts • Goodwill valuation

As part of designing our audit, we determined materiality and

assessed the risks of material misstatement in the financial

statements. In particular, we considered where management

made subjective judgements; for example, in respect of

significant accounting estimates that involved making

assumptions and considering future events that are inherently

uncertain.

Materiality

The scope of our audit was influenced by our application of

materiality. An audit is designed to obtain reasonable assurance

whether the financial statements are free from material

misstatement. Misstatements may arise due to fraud or error.

They are considered material if individually or in aggregate, they

could reasonably be expected to influence the economic

decisions of users taken on the basis of the financial statements.

Based on our professional judgement, we determined certain

quantitative thresholds for materiality, including the overall

group materiality for the consolidated financial statements as set

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out in the table below. These, together with qualitative

considerations, helped us to determine the scope of our audit

and the nature, timing and extent of our audit procedures and to

evaluate the effect of misstatements on the financial statements

as a whole.

Overall group materiality	€ 22.5 million (previous year € 21.5 million)
How we determined it	Approximately 5% of profit before tax
Rationale for the materiality benchmark applied	Profit before tax is a generally accepted benchmark. We chose 5%, which is within the range of acceptable quantitative materiality thresholds in auditing standards.

How we tailored our group audit scope

We tailored the scope of our audit, taking into account the

structure of the group, the accounting processes and controls,

and the industry in which the group operates.

We conducted audit work in all key countries covering all key

reporting units. The group audit scope was focused on the most

significant reporting units in Finland, Sweden, USA, Brazil, China

and India, where we performed an audit of the complete

financial information due to their size and their risk

characteristics. Additionally, we performed audits of one or more

financial statement line items or specified audit procedures at

other reporting components based on our overall risk

assessment and materiality. We also carried out specific audit

procedures over group functions and areas of significant

judgement, including taxation, goodwill and material litigation.

For the remaining reporting units, we performed other

procedures to confirm there were no significant risks of material

misstatement in the group financial statements.

Key Audit Matters

Key audit matters are those matters that, in our professional

judgment, were of most significance in our audit of the financial

statements of the current period. These matters were addressed

in the context of our audit of the financial statements as a

whole, and in forming our opinion thereon, and we do not

provide a separate opinion on these matters.

As in all of our audits, we also addressed the risk of

management override of internal controls, including among

other matters consideration of whether there was evidence of

bias that represented a risk of material misstatement due to

fraud.

Key audit matter in the audit of the group

Accounting for long-term projects and long-term service

contracts

Refer to note 3 to the consolidated financial statements for the

related disclosures.

Over time revenue recognition for long-term projects and long-

term service contracts is significant to the financial statements

based on the quantitative materiality and the degree of

management judgment required to account for revenue

recognition. The complexity and judgments are mainly related to

the estimation of project cost, which serves as a basis for the

determination of the percentage of completion, which the group

applies for recognizing revenues and for the assessment of

provisions for projects and potential loss-making contracts.

The total amount of revenue and profit to be recognized under

long-term projects and long-term service contracts can be

affected by changes in conditions and circumstances over time,

such as:

• modifications and scope changes to the original contract due

to changes in client specifications

• uncertainties and risks relating to assumptions utilized in the

estimation of project cost, components delays, overruns or

other circumstances that impacts the project cost of

completion.

This matter is a significant risk of material misstatement referred

to in Article 10(2c) of Regulation (EU) No 537/2014.

How our audit addressed the key audit matter

Our procedures included understanding of the end-to-end

revenue recognition process relating to long-term projects and

long-term service contracts. We identified and tested certain key

internal controls and IT systems supporting revenue recognition

and project management and accounting.

We have met and discussed regularly with business line and

corporate management to identify new significant and high-risk

projects, existing projects with significant fluctuations in gross

margins, and potentially loss-making projects, including those

with ongoing disputes and litigations.

We have performed detailed procedures on individually

significant and high-risk projects. This includes assessing the

reasonableness of estimated project cost of completion by

obtaining an understanding of the cost model and key

assumptions utilized in the estimates, and challenging

management’s judgments and estimates.  In addition, we have

also inspected pricing and sales forecasts, and other relevant

supporting evidences utilized in the development of cost

estimates such as historical data, price quotations, and

engineering specifications.

In addition, we have discussed the progress of projects with

business line management and certain project management

representatives.

Further, we have performed a lookback analysis by comparing

actual project outcomes to their related cost estimates to obtain

perspective on the accuracy of the estimation process.

With the outcome of those discussions and the results of our

audit procedures, we assessed management’s assumptions in

the determination of the project cost estimate.

Timing of revenue recognition for Services and Automation

segment related contracts

Refer to note 3 to the consolidated financial statements for the

related disclosures.

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The company has several revenue streams relating to Services

and Automation segments contracts where revenue is

recognised at a point in time.

We focused on this area because the significant portion of the

group net sales arises from these contracts and there is a risk

that revenue is recognised in the incorrect period.

How our audit addressed the key audit matter

Our procedures included understanding of the end-to- end

revenue recognition process.

Through this, we have identified the appropriate period before

and after year-end wherein risk of misstatement is likely to

arise, and tested revenue transactions in these periods and

inspected supporting evidences including customer contracts and

sales orders, invoices, delivery and freight documents, and

collection supports.

We have also tested credit notes issued subsequent to year-

end to identify potential indicators of premature revenue

recognition in relation to billing goods or services that do not

meet the agreed delivery terms.

Goodwill valuation

Refer to notes 4 and 20 to the consolidated financial statements

for the related disclosures.

At 31 December 2023 the group’s goodwill balance is valued at

1,735 million euro which includes 128 million euro goodwill from

the business combinations in 2023.

Under IFRS the company is required to annually test goodwill

for impairment. Goodwill valuation was important to our audit

due to the size of the goodwill balance and because the

assessment of the value in use of the group’s Cash Generating

Units is complex, involving judgement about the future results of

the business by estimating future, EBITDAs and inflation rates

and determining the discount rate for the calculations. We

focused on the risk that goodwill may be overstated.

Based on the annual goodwill impairment test management

concluded that no goodwill impairment was needed.

How our audit addressed the key audit matter

For the business combinations, we assessed the methodology

adopted by management for calculating the purchase price, fair

values of the acquired assets and liabilities, and the resulting

goodwill. We also tested the key assumptions in the valuation

models.

We evaluated management’s future cash flow forecasts and

the process by which they were drawn up, including comparing

them to the latest Board  approved budgets, and testing the

underlying calculations. We evaluated and challenged the

company’s future cash flow forecasts in a discussion with

management of the business involved, and the process by which

they were drawn up, and tested the underlying value in use

calculations. We compared the current year actual results to the

figures for the financial year ended 31 December 2022 included

in the prior year impairment models to consider whether any

forecasts included assumptions that have proven to be

optimistic.

We evaluated and challenged the discount rate used.

We assessed the sensitivity analysis that had been performed

by management around the key drivers of the cash flow

forecasts, which were:

• the projected EBITDAs

• the discount rate

to identify how much each of these key drivers needed to

change, either individually or collectively, before the goodwill

was impaired.

We also evaluated the likelihood of such a movement in those

key assumptions that would require for goodwill to be impaired.

We assessed the adequacy of the disclosures in note 4, by

checking that they were compliant with IFRS Accounting

Standards and that their presentation was consistent with our

understanding of the key issues and sensitivities in the

valuation.

We have no key audit matters to report with respect to our

audit of the parent company financial statements.

There are no significant risks of material misstatement referred

to in Article 10(2c) of Regulation (EU) No 537/2014 with respect

to the parent company financial statements.

Responsibilities of the Board of Directors and the

Managing Director for the Financial Statements

The Board of Directors and the Managing Director are

responsible for the preparation of consolidated financial

statements that give a true and fair view in accordance with

IFRS Accounting Standards as adopted by the EU, and of

financial statements that give a true and fair view in accordance

with the laws and regulations governing the preparation of

financial statements in Finland and comply with statutory

requirements. The Board of Directors and the Managing Director

are also responsible for such internal control as they determine

is necessary to enable the preparation of financial statements

that are free from material misstatement, whether due to fraud

or error.

In preparing the financial statements, the Board of Directors

and the Managing Director are responsible for assessing the

parent company’s and the group’s ability to continue as a going

concern, disclosing, as applicable, matters relating to going

concern and using the going concern basis of accounting. The

financial statements are prepared using the going concern basis

of accounting unless there is an intention to liquidate the parent

company or the group or to cease operations, or there is no

realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Financial

Statements

Our objectives are to obtain reasonable assurance about

whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error, and to

issue an auditor’s report that includes our opinion. Reasonable

assurance is a high level of assurance, but is not a guarantee

that an audit conducted in accordance with good auditing

practice will always detect a material misstatement when it

exists. Misstatements can arise from fraud or error and are

considered material if, individually or in the aggregate, they

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could reasonably be expected to influence the economic

decisions of users taken on the basis of these financial

statements.

As part of an audit in accordance with good auditing practice,

we exercise professional judgment and maintain professional

skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the

financial statements, whether due to fraud or error, design

and perform audit procedures responsive to those risks, and

obtain audit evidence that is sufficient and appropriate to

provide a basis for our opinion. The risk of not detecting a

material misstatement resulting from fraud is higher than for

one resulting from error, as fraud may involve collusion,

forgery, intentional omissions, misrepresentations, or the

override of internal control.

• Obtain an understanding of internal control relevant to the

audit in order to design audit procedures that are appropriate

in the circumstances, but not for the purpose of expressing an

opinion on the effectiveness of the parent company’s or the

group’s internal control.

• Evaluate the appropriateness of accounting policies used and

the reasonableness of accounting estimates and related

disclosures made by management.

• Conclude on the appropriateness of the Board of Directors’

and the Managing Director’s use of the going concern basis of

accounting and based on the audit evidence obtained, whether

a material uncertainty exists related to events or conditions

that may cast significant doubt on the parent company’s or

the group’s ability to continue as a going concern. If we

conclude that a material uncertainty exists, we are required to

draw attention in our auditor’s report to the related disclosures

in the financial statements or, if such disclosures are

inadequate, to modify our opinion. Our conclusions are based

on the audit evidence obtained up to the date of our auditor’s

report. However, future events or conditions may cause the

parent company or the group to cease to continue as a going

concern.

• Evaluate the overall presentation, structure and content of the

financial statements, including the disclosures, and whether

the financial statements represent the underlying transactions

and events so that the financial statements give a true and

fair view.

• Obtain sufficient appropriate audit evidence regarding the

financial information of the entities or business activities

within the group to express an opinion on the consolidated

financial statements. We are responsible for the direction,

supervision and performance of the group audit. We remain

solely responsible for our audit opinion.

We communicate with those charged with governance regarding,

among other matters, the planned scope and timing of the audit

and significant audit findings, including any significant

deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a

statement that we have complied with relevant ethical

requirements regarding independence, and to communicate with

them all relationships and other matters that may reasonably be

thought to bear on our independence, and where applicable,

related safeguards.

From the matters communicated with those charged with

governance, we determine those matters that were of most

significance in the audit of the financial statements of the

current period and are therefore the key audit matters. We

describe these matters in our auditor’s report unless law or

regulation precludes public disclosure about the matter or when,

in extremely rare circumstances, we determine that a matter

should not be communicated in our report because the adverse

consequences of doing so would reasonably be expected to

outweigh the public interest benefits of such communication.

Other Reporting Requirements

Appointment

We were first appointed as auditors by the annual general

meeting on 26 March 2014. Our appointment represents a total

period of uninterrupted engagement of 10 years.

Other Information

The Board of Directors and the Managing Director are

responsible for the other information. The other information

comprises the report of the Board of Directors and the

information included in the Financial Statements and information

for investors 2023 report, but does not include the financial

statements and our auditor’s report thereon. We have obtained

the report of the Board of Directors prior to the date of this

auditor’s report and the Financial Statements and information for

investors 2023 report is expected to be made available to us

after that date.

Our opinion on the financial statements does not cover the

other information.

In connection with our audit of the financial statements, our

responsibility is to read the other information identified above

and, in doing so, consider whether the other information is

materially inconsistent with the financial statements or our

knowledge obtained in the audit, or otherwise appears to be

materially misstated. With respect to the report of the Board of

Directors, our responsibility also includes considering whether

the report of the Board of Directors has been prepared in

accordance with the applicable laws and regulations.

In our opinion

• the information in the report of the Board of Directors is

consistent with the information in the financial statements

• the report of the Board of Directors has been prepared in

accordance with the applicable laws and regulations.

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If, based on the work we have performed on the other

information that we obtained prior to the date of this auditor’s

report, we conclude that there is a material misstatement of this

other information, we are required to report that fact. We have

nothing to report in this regard.

Helsinki 7 February 2024

PricewaterhouseCoopers Oy Authorised Public Accountants

Pasi Karppinen Authorised Public Accountant (KHT)

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Independent Auditor’s Reasonable Assurance Report on

Valmet Oyj’s ESEF Financial Statements (Translation of the Finnish

Original)

To the Management of Valmet Oyj

We have been engaged by the Management of Valmet Oyj

(business identity code 2553019-8) (hereinafter also “the

Company”) to perform a reasonable assurance engagement on

the Company’s consolidated IFRS financial statements for the

financial year 1 January - 31 December 2023 in European Single

Electronic Format (“ESEF financial statements”).

Management’s Responsibility for the ESEF Financial

Statements

The Management of Valmet Oyj is responsible for preparing the

ESEF financial statements so that they comply with the

requirements as specified in the Commission Delegated

Regulation (EU) 2019/815 of 17 December 2018 (“ESEF

requirements”). This responsibility includes the design,

implementation and maintenance of internal control relevant to

the preparation of ESEF financial statements that are free from

material non-compliance with the ESEF requirements, whether

due to fraud or error.

Our Independence and Quality Management

We have complied with the independence and other ethical

requirements of the International Code of Ethics for Professional

Accountants (including International Independence Standards)

issued by the International Ethics Standards Board for

Accountants (IESBA Code), which is founded on fundamental

principles of integrity, objectivity, professional competence and

due care, confidentiality and professional behaviour.

Our firm applies International Standard on Quality

Management 1, which requires the firm to design, implement

and operate a system of quality management including policies

or procedures regarding compliance with ethical requirements,

professional standards and applicable legal and regulatory

requirements.

Our Responsibility

Our responsibility is to express an opinion on the ESEF financial

statements based on the procedures we have performed and the

evidence we have obtained.

We conducted our reasonable assurance engagement in

accordance with the International Standard on Assurance

Engagements (ISAE) 3000 (Revised) Assurance Engagements

Other than Audits or Reviews of Historical Financial Information.

That standard requires that we plan and perform this

engagement to obtain reasonable assurance about whether the

ESEF financial statements are free from material non-compliance

with the ESEF requirements.

A reasonable assurance engagement in accordance with ISAE

3000 (Revised) involves performing procedures to obtain

evidence about the ESEF financial statements compliance with

the ESEF requirements. The procedures selected depend on the

auditor’s judgement, including the assessment of the risks of

material non-compliance of the ESEF financial statements with

the ESEF requirements, whether due to fraud or error. In making

those risk assessments, we considered internal control relevant

to the Company’s preparation of the ESEF financial statements.

We believe that the evidence we have obtained is sufficient

and appropriate to provide a basis for our opinion.

Opinion

In our opinion, Valmet Oyj’s ESEF financial statements for the

financial year ended 31 December 2023 comply, in all material

respects, with the minimum requirements as set out in the ESEF

requirements.

Our reasonable assurance report has been prepared in

accordance with the terms of our engagement. We do not

accept, or assume responsibility to anyone else, except for

Valmet Oyj for our work, for this report, or for the opinion that

we have formed.

Helsinki 7 February 2024

PricewaterhouseCoopers Oy Authorised Public Accountants

Pasi Karppinen Authorised Public Accountant (KHT)

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ASSURANCE REPORT ON VALMET OYJ'S ESEF FINANCIAL STATEMENTS

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