A deep dive into Valmet’s tissue business
Valmet is the global market leader in supplying technologies and solutions for board, tissue and paper manufacturers. Valmet has a clear technological edge in this business, and unlike its competitors, Valmet can also supply the automation for the machines. In 2016, Valmet’s Paper business line’s net sales was EUR 647 million, corresponding to 22 percent of Valmet’s total net sales. Of the Paper business line, the Tissue business accounted for 40 percent.
The paper market has been very active during the last quarters. In January–September 2017, orders received in the Paper business line increased 76 percent from the corresponding period in 2016. Tissue and board manufacturers have invested in new machinery, and China, North America and EMEA (Europe, Middle East and Africa) have been the most active regions. The level of activity has indeed been exceptional, and the view of Valmet’s management is that one should not expect this very high level of order intake to continue for a very long time. At the Q3 results publication Valmet gave a short-term market outlook (until the end of March 2018), in which the outlook for both the board and paper, and tissue markets is ‘good’ (on a scale weak-satisfactory-good).
On November 28, 2017, Valmet organized a site visit for institutional investors and analysts to Karlstad, Sweden, the center of Valmet’s Tissue technology. With its 570 employees, the Karlstad site is a supplier of complete tissue mills, equipment and services to customers in the tissue industry worldwide. In addition to Karlstad, Valmet has tissue operations in China, Italy and the USA.
The global demand for tissue paper is growing approximately 3 percent per year. The growth rates are highest in the developing countries, where the increasing population, rising living standards and purchasing power as well as urbanization are driving the demand for toilet paper, hankies and towels. However, the use of tissue is growing also in the western world, and the consumers have increasing demands for tissue quality. The tissue producers in turn want to increase efficiency in raw material and energy consumption of their production. These are the underlying megatrends driving growth in Valmet’s tissue business. Furthermore, tissue faces few substitution threats. When people start using tissue paper, they find it hard to live without.
Valmet’s offering for the tissue producers covers complete tissue mills, tissue production lines, as well as rebuilds and stand-alone products. So far Valmet has sold altogether 248 tissue machines worldwide. Valmet supplies three types of tissue production lines. The Advantage DCT technology is for cost-efficient and reliable production of high quality plain tissue paper. The Advantage NTT technology has more flexibility and allows production of both plain and textured tissue with premium quality. With the Advantage NTT, the customer can also get higher capacity and significant energy savings. The third technology is called Advantage Thru-Air. It produces ultra-premium quality structured tissue with excellent absorbency and softness. This technology is most common in the North American market, where the consumers have very high demands for tissue quality.
Industrial Internet offers growth opportunities for Valmet. Already today, customers are extensively using our Industrial Internet capabilities. For example, Valmet has 540 online connections with its customers and 90 performance agreements with remote connections. In our Performance centers, one of which is located in Karlstad, our experts remotely monitor and analyze data from the customers’ machines and processes, and provide expert support and preventive maintenance. The Industrial Internet solutions not only improve the reliability and performance of the customers’ processes, but also Valmet’s own operational efficiency: the experts do not have to travel to the customer’s site as much, as they can solve problems remotely.
During the site visit, the investors got to see Valmet’s pilot tissue machine in action. The pilot machine is used by customers for productions trials, and more than a thousand customer trials have taken place in Karlstad. The pilot machine is also used for joint development and customer training, as well as for Valmet’s own R&D. Finally, the investors made a tour in production, where they familiarized themselves with preassembly of tissue machines, manufacturing of Yankee cylinders (a central device in tissue drying), and roll cover manufacturing.
We would like to thank all the participants for the visit and hope that it offered interesting new information on both the tissue market and Valmet’s operations and technologies.