exchange release and meeting materials can be viewed on
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.
Valmet announced on September 13, 2021, that the Supreme
Administrative Court has partly accepted Valmet’s appeal related
to the reassessment decision received by Valmet Technologies
Inc concerning tax years 2010–2012. The reassessment decision
concerned compensation charged by Valmet Technologies Inc
from its foreign subsidiaries and based on the decision, Valmet
was imposed to pay additional taxes, late payment interest and
penalties in total of EUR 19 million during the first quarter 2017.
The Supreme Administrative Court ruled in its decision made on
September 13, 2021, that the company shall receive a refund of
about EUR 4 million for additional taxes, late payment interest
and penalties.
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
and 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 and tightening financial market
regulations, may have an adverse effect on the availability 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) 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.
Changes and uncertainty in future regulation and legislation
can also have critical effects, especially on the energy business.
Large fluctuations in energy prices can affect the global
economy. These fluctuations can also affect Valmet and its
customers, especially in the energy business.
Should 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. Wage inflation is
continuing, but Valmet’s goal is to offset this at least partly
through increased productivity and strict price discipline. 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.
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
cyber security 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.
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