Valmet’s Interim Review January 1 – September 30, 2019: Orders received were over EUR 1 billion and profitability continued to increase
Valmet Oyj’s stock exchange release on October 24, 2019 at 1:00 p.m. EET
Figures in brackets, unless otherwise stated, refer to the comparison period, i.e. the same period of the previous year. As of January 1, 2019, Valmet has adopted IFRS 16 without restating the figures for the comparison period.
July–September 2019: Orders received amounted to EUR 1.1 billion
- Orders received increased 13 percent to EUR 1,058 million (EUR 940 million).
- Orders received increased in the Pulp and Energy, Automation and Services business lines and decreased in the Paper business line.
- Orders received increased in South America and North America, remained at the previous year’s level in Asia-Pacific and EMEA (Europe, Middle East and Africa), and decreased in China.
- Net sales increased 12 percent to EUR 857 million (EUR 765 million).
- Net sales increased in the Services, Automation and Paper business lines and remained at the previous year’s level in the Pulp and Energy business line.
- Comparable earnings before interest, taxes and amortization (Comparable EBITA) were EUR 81 million (EUR 61 million), and the corresponding Comparable EBITA margin was 9.5 percent (8.0%).
- Profitability improved due to increased net sales and higher gross profit.
- Earnings per share were EUR 0.34 (EUR 0.23).
- Items affecting comparability amounted to EUR 1 million (EUR -6 million).
- Cash flow provided by operating activities was EUR 126 million (EUR 119 million).
January–September 2019: Orders received increased and profitability improved
- Orders received increased 10 percent to EUR 2,976 million (EUR 2,696 million).
- Orders received increased in the Pulp and Energy, Automation and Services business lines and decreased in the Paper business line.
- Orders received increased in South America and Asia-Pacific, remained at the previous year’s level in EMEA, and decreased in China and North America.
- Net sales remained at the previous year’s level at EUR 2,444 million (EUR 2,340 million).
- Net sales increased in the Services and Automation business lines and remained at the previous year’s level in the Pulp and Energy, and Paper business lines.
- Comparable earnings before interest, taxes and amortization (Comparable EBITA) were EUR 198 million (EUR 144 million), and the corresponding Comparable EBITA margin was 8.1 percent (6.2%).
- Profitability improved due to higher gross profit.
- Earnings per share were EUR 0.80 (EUR 0.52).
- Items affecting comparability amounted to EUR -2 million (EUR -13 million).
- Cash flow provided by operating activities was EUR 113 million (EUR 141 million).
Guidance for 2019 unchanged
Valmet reiterates its guidance presented on February 26, 2019 and confirmed on April 1, 2019, in which Valmet estimates that net sales in 2019 will increase in comparison with 2018 (EUR 3,325 million) and Comparable EBITA in 2019 will increase in comparison with 2018 (EUR 257 million).
Short-term outlook
General economic outlook
IMF’s global growth forecast for 2019 is 3.0 percent, which is lowest level since 2008–2009 and a 0.3 percentage point downgrade from April 2019. Growth is projected to pick up to 3.4 percent in 2020, reflecting primarily a projected improvement in economic performance in a number of emerging markets in Latin America, the Middle East, and emerging and developing Europe that are under macroeconomic strain. Yet, with uncertainty about prospects for several of these countries, a projected slowdown in China and the United States, and prominent downside risks, a much more subdued pace of global activity could well materialize. (International Monetary Fund, October 2019)
Short-term market outlook
Valmet reiterates the good short-term market outlook for services, automation, pulp, and board and paper, and the satisfactory short-term market outlook for energy, and tissue.
President and CEO Pasi Laine: Orders received were over EUR 1 billion and profitability continued to increase
“The favorable development of orders received continued in the third quarter. Orders received increased in Services, Automation, and Pulp and Energy business lines, and exceeded EUR 1 billion for the second quarter in a row. Orders received for the last twelve months amounted to EUR 4 billion, which is a record-high level for Valmet. Order backlog now amounts to EUR 3.4 billion.
The Comparable EBITA margin was within our target range at 9.5 percent, which is 1.5 percentage points higher than a year ago. Our profitability increased also during January–September 2019, and the Comparable EBITA margin of 8.1 percent was within the target range.
We have progressed well with our Sustainability360˚ agenda emphasizing continuous improvement of sustainable business practices. As one proof of the good progress, in September Valmet was included in the Dow Jones Sustainability Index (DJSI) already for the sixth consecutive year.
We acquired GL&V and J&L during the second quarter of 2019. The integration of the acquired businesses is proceeding according to our plan.”
Key figures1
| EUR million | Q3/2019 | Q3/2018 | Change | Q1–Q3/ 2019 | Q1–Q3/ 2018 | Change |
| Orders received | 1,058 | 940 | 13% | 2,976 | 2,696 | 10% |
| Order backlog2 | 3,425 | 2,791 | 23% | 3,425 | 2,791 | 23% |
| Net sales | 857 | 765 | 12% | 2,444 | 2,340 | 4% |
| Comparable earnings before interest, taxes and amortization (Comparable EBITA) | 81 | 61 | 32% | 198 | 144 | 38% |
| % of net sales | 9.5% | 8.0% | 8.1% | 6.2% | ||
| Earnings before interest, taxes and amortization (EBITA) | 83 | 55 | 49% | 196 | 131 | 50% |
| % of net sales | 9.7% | 7.2% | 8.0% | 5.6% | ||
| Operating profit (EBIT) | 73 | 48 | 52% | 172 | 109 | 57% |
| % of net sales | 8.5% | 6.3% | 7.0% | 4.7% | ||
| Profit before taxes | 70 | 46 | 52% | 164 | 105 | 56% |
| Profit for the period | 51 | 35 | 48% | 121 | 78 | 56% |
| Earnings per share, EUR | 0.34 | 0.23 | 48% | 0.80 | 0.52 | 56% |
| Earnings per share, diluted, EUR | 0.34 | 0.23 | 48% | 0.80 | 0.52 | 56% |
| Equity per share, EUR2 | 6.13 | 5.83 | 5% | 6.13 | 5.83 | 5% |
| Cash flow provided by operating activities | 126 | 119 | 6% | 113 | 141 | -20% |
| Cash flow after investments | 102 | 98 | 4% | -102 | 89 | |
| Return on equity (ROE) (annualized) | 17% | 12% | ||||
| Return on capital employed (ROCE) before taxes (annualized) | 19% | 13% | ||||
| Equity to assets ratio2 | 38% | 43% | ||||
| Gearing2 | 6% | -11% |
Valmet implemented IFRS 16 – Leases as of January 1, 2019 by applying the simplified transition method and therefore 2018 figures are not restated.
1 The calculation of key figures is presented on page 44.
2 At the end of period.
| Orders received, EUR million | Q3/2019 | Q3/2018 | Change | Q1–Q3/ 2019 | Q1–Q3/ 2018 | Change |
| Services | 335 | 300 | 12% | 1,064 | 990 | 7% |
| Automation | 86 | 70 | 23% | 263 | 235 | 12% |
| Pulp and Energy | 395 | 272 | 45% | 805 | 549 | 47% |
| Paper | 243 | 299 | -19% | 844 | 921 | -8% |
| Total | 1,058 | 940 | 13% | 2,976 | 2,696 | 10% |
| Order backlog, EUR million | As at Sep 30, 2019 | As at Sep 30, 2018 | Change | As at June 30, 2019 |
| Total | 3,425 | 2,791 | 23% | 3,216 |
| Net sales, EUR million | Q3/2019 | Q3/2018 | Change | Q1–Q3/ 2019 | Q1–Q3/ 2018 | Change |
| Services | 336 | 282 | 19% | 973 | 854 | 14% |
| Automation | 75 | 64 | 18% | 221 | 200 | 11% |
| Pulp and Energy | 231 | 223 | 4% | 604 | 631 | -4% |
| Paper | 214 | 196 | 9% | 646 | 657 | -2% |
| Total | 857 | 765 | 12% | 2,444 | 2,340 | 4% |
News conference and webcast for analysts, investors and media
Valmet will arrange a news conference in English for analysts, investors, and media on Thursday, October 24, 2019 at 3:00 p.m. Finnish time (EET). The news conference will be held at Valmet Head Office in Keilaniemi, Keilasatama 5, 02150 Espoo, Finland. The news conference can also be followed through a live webcast at www.valmet.com/webcasts.
It is also possible to take part in the news conference through a conference call. Conference call participants are requested to dial in at least five minutes prior to the start of the conference, at
+44 (0) 2071 928000. The participants will be asked to provide the following conference ID: 1353259.
During the webcast and the conference call, all questions should be presented in English. After the webcast and the conference call, media has a possibility to interview the management in Finnish.
The event can also be followed on Twitter at www.twitter.com/valmetir.
Further information, please contact:
Pekka Rouhiainen, Director, Investor Relations, Valmet, tel. +358 10 672 0020
Kari Saarinen, CFO, Valmet, tel. +358 50 317 1830
VALMET
Kari Saarinen
CFO
Pekka Rouhiainen
Director, Investor Relations
Valmet is the leading global developer and supplier of process technologies, automation and services for the pulp, paper and energy industries. We aim to become the global champion in serving our customers.
Valmet’s strong technology offering includes pulp mills, tissue, board and paper production lines, as well as power plants for bioenergy production. Our advanced services and automation solutions improve the reliability and performance of our customers’ processes and enhance the effective utilization of raw materials and energy.
Valmet’s net sales in 2018 were approximately EUR 3.3 billion. Our more than 13,000 professionals around the world work close to our customers and are committed to moving our customers’ performance forward – every day. Valmet’s head office is in Espoo, Finland and its shares are listed on the Nasdaq Helsinki.
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