Now that it is two months since Valmet hosted its Capital Markets Day, it is a good time to recap the day. The CMD included presentations from the CEO, CFO and business line presidents, as well as break-out sessions on Industrial Internet and sustainability. Focus was on strategy execution and Valmet’s actions to grow and improve profitability. Valmet’s financial targets remained unchanged.
President and CEO Pasi Laine opened the day by introducing two growth accelerators to Valmet’s strategy: Field services, and Industrial Internet and digitalization. As part of the Services business line, field services refer to daily maintenance, maintenance shutdowns and process support at the customer mill. The customer drivers for field services include outsourcing of complete shutdowns, operations safety, digitalization, as well as aging work force. The field services market size is currently estimated to be roughly EUR 1 billion, and Valmet aims to grow this business from the current level of EUR 100 million to EUR 200 million.
The other growth accelerator is Industrial Internet and digitalization. Here, Valmet’s strength is in analyzing process data, which can be collected on company, mill or plant, process and equipment level. As a result, customers can reduce raw material usage, energy consumption, downtime and unplanned stoppages, as well as improve maintenance predictability and product quality. Valmet’s orders received in Industrial Internet are estimated to be roughly EUR 15 million in 2018. In addition to growing orders received and expanding the offering, the key point will be how much Industrial Internet can accelerate growth e.g. in spare parts and services, and help Valmet to win capital projects.
Each of the business line presidents introduced their actions for growth and profitability improvement. In addition to growing field services, focus areas in the Services business line include long term co-operation with customers through agreements, developing local service capability and improving project performance. Apart from the growth accelerator Industrial Internet, focus in Automation will continue to be on competitor replacements and entering new industries, such as LNG.
In the Paper business line, key actions to grow and improve profitability include improving product cost competitiveness, maintaining technology leadership, increasing business in low market share countries and focusing on products with low market share. In the long run, the demand for Valmet’s offering in the Paper business line is driven by big trends, such as e-commerce and increasing living standards.
In October, Valmet signed a letter of award (LoA) to supply key pulp mill technology for ARAUCO’s new mega mill in Chile. More decisions by pulp producers on mill investments are likely, as pulp price is at all-time high level and the market has room for new capacity. Naturally, Valmet aims to win pulp mega mill projects, but the focus will also be kept on small and medium-scale deliveries. Project management and execution require continuous improvement.
In Energy, Valmet aims to harvest growth in the Asia-Pacific and China regions, where there is a drive towards biomass and waste-to-energy applications. The Capital Markets Day also highlighted marine scrubbers, which are part of Valmet’s Energy offering. International Marine Organization’s regulation for sulfur fuel oil used on ships is causing a boom in the scrubber market. Valmet possesses the necessary knowhow from its land-based applications and is an active player in the market. In the third quarter of 2018, Valmet ‘s orders received from scrubbers totaled approximately EUR 100 million.
Valmet’s Capital Markets Day has attracted a lot of interest from investors. We have seen that from the webcast recording statistics and visitor information on Valmet’s website, and have also received many questions on the CMD in investor meetings.
For Capital Markets Day webcast and presentation, please visit the CMD website