Feb 5, 2021
The year 2020 was an exceptional one due to the global COVID-19 pandemic. Even though the pandemic impacted certain Valmet’s businesses, the year as a whole was a relatively good one for Valmet, as most of our key operating metrics improved. For example, the Comparable EBITA increased for the seventh year in a row.
But let’s start first with orders, which unfortunately decreased. The total order intake for the year amounted to 3.7 billion euros, eight percent lower than last year. Orders received remained at the previous year’s level of over one billion euros in Paper, and also remained at the previous year’s level in Automation, when including package sales to capital projects. Orders decreased in the Pulp and Energy and Services business lines.
While the COVID-19 pandemic has not caused major impacts on Valmet’s capital and automation businesses, the service business has been under pressure due to the various travel restrictions, access restrictions to customers’ sites, as well as lower capacity utilization in graphical paper mills.
Our net sales amounted to 3.7 billion euros. Net sales increased in the capital business and remained at previous year’s level in the stable business. Net sales have grown nicely during Valmet’s journey as an independent company – in 2014 our net sales amounted to EUR 2.5 billion. This translates into 51 percent growth, or 7% on average per annum.
Profitability developed well, and the Comparable EBITA increased 16 percent to 365 million euros. This represents 9.8 percent of net sales, close to our new target range, which was introduced one year ago, of 10–12 percent. The Comparable EBITA increased due to higher net sales and lower SG&A expenses. For example, COVID-19 led to increased use of industrial internet and remote connections and less travel, resulting in lower travel expenses in 2020. It is also worth mentioning, that Valmet’s share of Neles’ net profit is not included in the Comparable EBITA and therefore did not impact the Comparable EBITA figure.
The Board of Directors has decided to propose a dividend of EUR 0.90 per share. This would equal 58 percent of the net result and it would be EUR 0.10 higher than the dividend for 2019. We have been able to increase the dividend steadily every year since 2014. Valmet’s AGM will decide, among other things, on the payment of dividend. The AGM will be held on March 23, 2021 at 1:00 p.m.
Let’s then discuss briefly acquisitions. In recent years, Valmet has followed its acquisition strategy of making well-considered acquisitions with a clear industrial logic. In 2020, we strengthened our board and tissue technology offering by acquiring PMP Group in Poland. PMP’s offering of small and medium-sized tissue machines and board and paper machine rebuilds complements Valmet’s offering for wide and fast machines and rebuilds well. The net sales of the company were approximately EUR 70 million in the fiscal year 2019, and PMP employs about 650 people in Poland, China, USA and Italy. PMP is included in Valmet’s financial reporting from the fourth quarter 2020 onwards. The acquired business became a part of Valmet’s Paper business line. In June 2020, we also acquired a 14.9 percent ownership in Neles and gradually increased the ownership to 29.5 percent of the company. We see that the potential merger of Valmet and Neles would create a Nordic-based global leader with a unique offering for global process industries and with excellent potential for long-term shareholder value creation. We have discussed the Neles share acquisitions more in our previous blog posts last year in June and September.
So, how does the year 2021 look for Valmet? Our guidance for 2021 is for both the net sales and Comparable EBITA to remain at the previous year’s level in comparison with 2020. The short-term market outlook was upgraded to Good in Automation and Tissue, but downgraded to Weak in Energy. The short-term market outlook for Pulp, and for Board and Paper continued to be Good. The COVID-19 pandemic related restrictions continue to impact our services business and therefore the outlook for Services is Satisfactory / Weak.
Looking at the bigger picture, Valmet's business is supported by favorable megatrends, we have a solid order backlog and have been able to improve our profitability every year since we became an independent company at the end of 2013. Valmet is starting the year 2021 from a good position.