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CORRECTION: Valmet's Financial Statements Review January-December 2013: Solid performance in services - focus on profitability improvement

This is a correction of the announcement from 12:00 06.02.2014 EET. Reason for the correction: The dividend will be paid on April 11, 2014. In the Financial Statements Review the incorrect date was April 12, 2014. The corrected Financial Statements Review as an attachment to this Stock Exchange Release. 
 
 

Valmet's Financial Statements Review January-December 2013: Solid performance in services - focus on profitability improvement

Valmet Corporation's stock exchange release on February 6, 2014 at 12:00 noon EET

Metso Corporation's partial demerger was concluded on December 31, 2013.The financial carve-out data presented in these Financial Statements depicts the financial data of the companies that formerly made up Metso Corporation's Pulp, Paper and Power segment. The balance sheet as at December 31, 2013 is based on actual figures, while the income statement, cash flow and all comparison figures are based on financial carve-out data. Figures in brackets, unless otherwise stated, refer to the comparison period, i.e. the same period previous year.

 

October-December 2013: Challenging final quarter

  • Orders received amounted to EUR 428 million (EUR 678 million). 

    • Orders received remained on a par with the Services business line's 2012 level and declined in the Energy, and Board and Paper business units. 

  • Net sales declined by 28 percent to EUR 666 million (EUR 925 million). 

    • Net sales for the service business remained on the previous year's level, while net sales for the capital business declined. 

  • Earnings before interest, taxes and amortization (EBITA) and non-recurring items were EUR -25 million (EUR 54 million), and the corresponding EBITA margin was -3.7 percent (5.8%). 

    • Profitability decreased, mainly because of a delay linked to an individual, major pulp project delivery and the project's higher-than-estimated costs (about EUR 30 million). Capacity utilization in the Board and Paper, and Energy business units was also low. 

  • Earnings per share were EUR -0.41 (0.04). 

  • Non-recurring items related to the profitability improvement program amounted to EUR 29 million (EUR 24 million) and expenses related to the demerger totaled EUR 5 million.  

  • Operational cash flow was EUR -38 million (EUR -81 million). 

  • Cash flow after investments was EUR -48 million (EUR -98 million). 

January-December 2013: A year of restructuring

  • Orders received amounted to EUR 2,182 million (EUR 2,445 million). 

    • Orders received remained on a par with the Services business line's 2012 level and declined in the Energy, and Board and Paper business units. 

  • Net sales declined by 13 percent to EUR 2,613 million (EUR 3,014 million).  

    • Net sales for the service business remained on the previous year's level, while net sales for the capital business declined. 

  • Earnings before interest, taxes and amortization (EBITA) and non-recurring items declined 72 percent to EUR 54 million (EUR 192 million), and the corresponding EBITA margin declined to 2.1 percent (6.4%). 

    • Profitability declined in the capital business and remained at the previous year's level in the services business. 

  • Non-recurring items related to the profitability improvement program amounted to EUR 76 million (EUR 24 million) and those related to the demerger totaled EUR 10 million. 

  • Earnings per share were EUR -0.42 (0.51). 

  • Operational cash flow was EUR -43 million (EUR -53 million). 

  • Cash flow after investments was EUR -97 million (EUR -106 million). 

Dividend proposal

The Board proposes a dividend of EUR 0.15 per share.

Guidance for 2014

Valmet estimates that net sales in 2014 will decline from the 2013 level and EBITA before non-recurring items will increase in comparison with 2013.

Short-term outlook

General economic outlook

 

Global growth is projected to be slightly higher in 2014 compared to 2013, at around 3.7 percent. Downward revisions to growth forecasts in some economies highlight continued uncertainty. The risks for weaker than expected development remain significant.  (International Monetary Fund, January 21, 2014)

Short-term market outlook

 

Valmet estimates that activity in the service, pulp, and tissue markets will remain satisfactory. Activity on board and paper market is assessed to have improved and to be on satisfactory level (previously on weak level). Valmet also assesses that market activity for power plants utilizing renewable energy sources has improved to satisfactory level (previously on weak level).

President and CEO Pasi Laine: Our focus is on improving profitability

2013 was a year of change: a new, independent Valmet was created as a result of the partial demerger of Metso. All in all, our operating environment in 2013 was challenging due to the transition of the paper industry and changes on the bioenergy market. Our net sales declined and our profitability weakened. Our services business remained stable and it will play an important role also in 2014.

The short-term outlook for our business lines presents a somewhat challenging overall picture. The short-term outlook for the services, pulp, and tissue businesses is satisfactory. The outlook for the energy and board and paper businesses has increased to satisfactory level. Our key focus in 2014 will be on improving profitability. We will continue to carry out the profitability improvement measures already underway, and we will adapt our offering to meet market demand. An excellent example of this is OptiConcept M board and paper machine, which has already received positive feedback from our customers for its great functionality and modularity.

Valmet is a unique combination of technology, capital business and services. Our target is to become the global champion in serving our customers. Together with our committed and skilled personnel, we are ready to bring success to Valmet and its shareholders and customers. Valmet is heading forward.

Key figures

Q4/2013 Q4/2012 Change 2013 2012 Change
Key figures*, EUR million Carve-out Carve-out Carve-out Carve-out
Orders received 428 678 -37% 2,182 2,445 -11%
Order backlog 1,398 2,249** -38%
Net sales 666 925 -28% 2,613 3,014 -13%
Earnings before interest, taxes and amortization (EBITA) and non-recurring items -25   54 54 192 -72%
% of net sales -3.7% 5.8% 2.1% 6.4%
Earnings before interest, taxes and amortization (EBITA) -59 30 -32 168
% of net sales -8.9% 3.3% -1.2% 5.6%
Operating profit -66 22 -59   138
% of net sales -9.9% 2.4% -2.2% 4.6%
Earnings per share, EUR -0.41 0.04 -0.42 0.51
Equity per share, EUR 5.39 -
Dividend per share, EUR 0.15*** -
Operational cash flow -38 -81 -43 -53
Cash flow after investments -48 -98 -97 -106
Return on capital employed (ROCE) before taxes -4% 12%****

*The calculation of key figures is presented in the Tables section of the Financial Statements Review 2013.
**Includes cancelled Fibria order (EUR 331 million).
***Board of Directors' proposal.
****In calculating these key ratios, an adjustment of EUR 468 million has been made from 'Long-term debt, Metso Group' to 'equity' in order to reflect the conversion of Metso Svenska AB's long term debt to Metso Group which took place in January 2013.

 

The trading in Valmet shares commenced on January 2, 2014. Therefore it's not possible to calculate key figures that are based on market value for years 2013 and 2012. This applies to following key figures: dividend/earnings ratio, effective dividend yield percentage, price/earnings ratio, share price development, market capitalization of shares, trading volume of shares as number and percentage, weighted average adjusted number of shares during the financial period, adjusted number of shares at the end of the financial period. For the following, the key figures are calculated for 2013: dividend per share.

 

31 Dec 2013 31 Dec 2012
Equity ratio and gearing Carve-out
Equity ratio at end of period 41% 38%*
Gearing at end of period 0% 6%*

*In calculating these key ratios, an adjustment of EUR 468 million has been made from 'Long-term debt, Metso Group' to 'equity' in order to reflect the conversion of Metso Svenska AB's long term debt to Metso Group which took place in January 2013.

Q4/2013 Q4/2012 Change 2013 2012 Change
Orders received, EUR million Carve-out Carve-out Carve-out Carve-out
Services 233 230 2% 1,035 1,055 -2%
Pulp and Energy 102 294 -65% 680 733 -7%
Paper 93 154 -39% 467 657 -29%
Total 428 678 -37% 2,182 2,445 -11%

2013 2012 Change
Order backlog, EUR million Carve-out Carve-out
Total 1,398 2,249* -38%

*Includes cancelled Fibria order (EUR 331 million)

 

Q4/2013 Q4/2012 Change 2013 2012 Change
Net sales, EUR million Carve-out Carve-out Carve-out Carve-out
Services 274 293 -6% 1,032 1,011 2%
Pulp and Energy 240 360 -33% 907 1,198 -24%
Paper 152 272 -44% 674 805 -16%
Total 666 925 -28% 2,613 3,014 -13%

Press conference for analysts, investors and the media

Valmet will arrange a news conference in English for investment analysts, portfolio managers, and the media on Thursday, February 6, 2014 at 1:30 p.m. Finnish time (EET). The news conference will be held at Valmet Head Office in Keilaniemi, Keilasatama 5, 02150 Espoo, Finland. It is also possible to follow the conference through a live webcast at www.valmet.com/webcasts.

The news conference can be participated also through a conference call. Conference call participants are requested to dial in at least five minutes prior to the start of the conference, at 1:25 p.m. (EET), in +44 1452 555566. The participants will be asked to provide the following conference ID: 37061206.

During the webcast and conference call, all questions should be presented in English. At the end of the event the media has the possibility to ask questions also in Finnish.

Further information, please contact:
Hanna-Maria Heikkinen, Vice President, Investor relations, Valmet Corporation, +358 10 672 0007
Markku Honkasalo, Chief Financial Officer, Valmet Corporation, +358 10 672 0008

VALMET CORPORATION

Markku Honkasalo
CFO

Hanna-Maria Heikkinen
VP, Investor Relations

Valmet Corporation is a leading global developer and supplier of services and technologies for the pulp, paper and energy industries. Our 11,000 professionals around the world work close to our customers and are committed to moving our customers' performance forward - every day.

 

Valmet's services cover everything from maintenance outsourcing to mill and plant improvements and spare parts. Our strong technology offering includes entire pulp mills, tissue, board and paper production lines, as well as power plants for bio-energy production.

 

The company has over 200 years of industrial history and was reborn through the demerger of the pulp, paper and power businesses from Metso Group in December 2013. Valmet's net sales in 2013 were approximately EUR 2.6 billion. Valmet's objective is to become the global champion in serving its customers.

 

Valmet's head office is in Espoo, Finland and its shares are listed on the NASDAQ OMX Helsinki Ltd.

 

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