Valmet’s Interim Review January 1 – September 30, 2023: Orders received amounted to EUR 980 million and Comparable EBITA increased to EUR 150 million in the third quarter

Valmet’s Interim Review January 1 – September 30, 2023: Orders received amounted to EUR 980 million and Comparable EBITA increased to EUR 150 million in the third quarter

Valmet Oyj’s stock exchange release on October 25, 2023 at 1:00 p.m. EEST

Figures in brackets, unless otherwise stated, refer to the comparison period, i.e., the same period of the previous year.

July–September 2023: Net sales remained at the previous year's level, Comparable EBITA margin increased

•         Orders received decreased 17 percent to EUR 980 million (EUR 1,178 million).

–        Orders received decreased in all three segments.

–        Orders received increased in China and North America, and decreased in Asia-Pacific, EMEA (Europe, Middle East and Africa) and South America.

•         Net sales remained at the previous year’s level and amounted to EUR 1,295 million (EUR 1,288 million).

–        Net sales increased in the Services and Automation segments and decreased in the Process Technologies segment.

•         Comparable earnings before interest, taxes and amortization (Comparable EBITA) increased 11 percent to EUR 150 million (EUR 136 million).

–        Comparable EBITA increased in the Services and Automation segments and decreased in the Process Technologies segment.

•         Comparable EBITA margin was 11.6 percent (10.5%).

•         Earnings per share (EPS) were EUR 0.47 (EUR 0.38). Adjusted EPS was EUR 0.52 (EUR 0.51).

•         Items affecting comparability amounted to EUR -4 million (EUR -4 million).

•         Cash flow provided by operating activities totaled EUR 57 million (EUR 115 million).

January–September 2023: Net sales, Comparable EBITA and Comparable EBITA margin increased

•         Orders received remained at the previous year’s level and amounted to EUR 3,801 million (EUR 3,809 million).

–        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.

–        Orders received increased in South America and North America, remained at the previous year's level in China and Asia-Pacific and decreased in EMEA.

•         Net sales increased 14 percent to EUR 4,033 million (EUR 3,534 million).

–        Net sales increased in the Automation and Services segments and remained at the previous year's level in the Process Technologies segment.

•         Comparable earnings before interest, taxes and amortization (Comparable EBITA) increased 29 percent to EUR 437 million (EUR 337 million).

–        Comparable EBITA increased in the Services and Automation segments and decreased in the Process Technologies segment.

•         Comparable EBITA margin was 10.8 percent (9.5%).

•         EPS was EUR 1.38 (EUR 1.25). Adjusted EPS was EUR 1.63 (EUR 1.56).

•         Items affecting comparability amounted to EUR -4 million (EUR 23 million).

•         Cash flow provided by operating activities totaled EUR 229 million (EUR 49 million).

Guidance for 2023
Valmet reiterates its guidance issued on February 2, 2023, in which Valmet estimates that net sales in 2023 will increase in comparison with 2022 (EUR 5,074 million) and Comparable EBITA in 2023 will increase in comparison with 2022 (EUR 533 million).

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’.

President and CEO Pasi Laine: Comparable EBITA increased in the third quarter

"During the first nine months of 2023 Valmet’s orders received remained at the previous year's level. Orders increased in Automation, remained at the previous year's level in Services and decreased in Process Technologies. Automation’s orders grew well and the market activity was good. In Services, the market activity was at a very good level at the start of the year, and order intake in the first quarter was record breaking. The market activity in Services decreased during the second and third quarter. Even though there are projects in the pipeline and customers are discussing investments, we have seen some delays in project decision schedules in the Process Technologies segment. In the third quarter of 2023 Valmet’s orders received amounted to EUR 980 million.

Orders received in Valmet’s stable business totaled EUR 3.1 billion during the last four quarters. During this period, stable business represented 60% of Valmet’s orders received. This is a clear change in the company compared to 2014, when stable business represented 34% of orders received. Our order backlog amounted to EUR 4.1 billion.

During the third quarter, Valmet’s net sales remained at the previous year’s level and Comparable EBITA increased. Net sales increased in the Services and Automation segments, and decreased in Process Technologies. Comparable EBITA margin was 18.4% in Services, 18.7% in Automation and 4.5% in Process Technologies. Valmet’s Comparable EBITA increased to EUR 150 million and margin to 11.6%.

Valmet’s Climate Program is progressing well. I am very pleased to announce that we have already reached the first target in the program: Valmet can now enable carbon neutral production for all pulp and paper industry customers. We achieved this target well ahead of schedule, as the initial target year was 2030. In addition to this achievement, we’re on track with our three other Climate Program goals. By 2030, Valmet aims to enhance the energy efficiency of its existing technology offering by 20%. We are also committed to reducing our own operations’ CO₂ emissions by 80% and decreasing our supply chain’s CO₂ emissions by 20%.

On August 18, 2023, Valmet’s Board of Directors accepted my resignation as President and CEO and initiated the search for my successor. After a decade as CEO and 33 years as a Valmeteer, it is time for a new leader to continue the work alongside our renewed Executive Team. Until my successor is appointed and ready to step in as Valmet’s new CEO, I will remain fully committed to enhancing Valmet’s financial performance and serving our customers."

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) into Valmet is proceeding according to the plan. Most of the cost synergy actions regarding function costs, common locations and supply chain were implemented already during 2022. Sales synergies have developed well. Valmet expects to generate annual run rate synergies of approximately EUR 25 million, of which approximately 60 percent are expected to be achieved by the end of 2023 and approximately 90 percent by the end of 2024.

Key figures1

1   The calculation of key figures is presented on page 55.

2   At end of period.

3   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 and is presented with comparatives from Q1/2023 onwards.

4   Last twelve months' EBITDA

 LTM = Last twelve months

Segment key figures

News conference and webcast for analysts, investors and media

Valmet will arrange a news conference in English as a live webcast at https://valmet.videosync.fi/q3-2023 on Wednesday, October 25, 2023, at 2:00 p.m. Finnish time (EEST). President and CEO Pasi Laine and CFO Katri Hokkanen will be presenting the results.

Recording of the webcast will be available shortly after the event at the same address.

It is possible to take part in the news conference through a conference call by registering through the link below:

http://palvelu.flik.fi/teleconference/?id=1009890

After the registration you will be provided phone numbers and a conference ID to access the conference. If you wish to ask a question during the conference, please dial *5 on your telephone keypad to enter the question queue.

All questions should be presented in English.

The event can also be followed on social media platform X at http://www.x.com/valmetir.

Further information, please contact:

Pekka Rouhiainen, VP, Investor Relations, Valmet, tel. +358 10 672 0020

VALMET

Katri Hokkanen

CFO

Pekka Rouhiainen

VP, Investor Relations

DISTRIBUTION:

Nasdaq Helsinki

Major media

www.valmet.com

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. Our 17,500 professionals around the world work close to our customers and are committed to moving our customers’ performance forward – every day.

The company has over 220 years of industrial history and a strong track record in continuous improvement and renewal. In 2022, a major milestone was achieved when the flow control company Neles was merged into Valmet. Valmet’s net sales in 2022 were approximately EUR 5.1 billion.
 

Valmet’s shares are listed on the Nasdaq Helsinki, and the head office is in Espoo, Finland.

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