Neles’ Financial Statement Review January 1 – December 31, 2020

Neles Corporation, Stock exchange release, February 3, 2021 at 09:00 am EET

This is a summary of Neles’ financial statements review for January 1 - December 31, 2020. The complete report is attached to this release and is also available at

Reporting period in brief: Good profitability and strong cash flow 

  • Pulp and Paper projects continued at a good level; Chemicals and Oil & Gas projects were at a satisfactory level, but down from the good level in the first half of the year  
  • Market activity improved in the Services business, but overall, the Services and Maintenance, Repairs and Operations-driven (MRO) businesses remained at a weak level compared to 2019 due to postponements of large maintenance shutdowns and customers’ tight cash management  
  • Supported by cost saving actions, a solid adjusted EBITA margin continued in the fourth quarter despite still challenging Covid-19 pandemic situation  
  • Strong free cash flow due to active management of net working capital 
  • Board of Directors dividend proposal: EUR 0.18 per share   

The partial demerger of Metso Group took place on June 30, 2020, and the continuing operations were renamed Neles Group. Until the end of 2020, Neles Group will be reported as continuing operations and the demerged Metso Minerals business as discontinued operations (for the period January 1–June 30, 2020).

In this report, in addition to IFRS financial information, a comparable balance sheet and a cash flow statement are disclosed. Figures in parentheses refer to the corresponding period in 2019 unless otherwise stated.

Neles Group is reported as one segment, starting on June 30, 2020.

Summary of key figures

Operative key figures,
Neles, continuing operations
EUR million
10-12/20 10-12/19 Change, % 1-12/20 1-12/19 Change, %
Orders received1 134 154 -13 590 681 -13
Order backlog at end of period 270 280 -3 270 280 -4
Sales1 155 166 -7 576 660 -13
Service sales 2 36 44 -18 129 152 -15
% of sales 23 26   22 23  
Adjusted EBITA, continuing operations 23 18 28 85 97 -12
% of sales 14.6 10.9   14.8 14.7  
Adjustment items 3 3 -   11 -  
Operating profit 19 17 12 70 93 -25
% of sales 12.0 10.4   12.2 14.0  
Earnings per share, continuing operations, EUR 0.08 0.08 - 0.32 0.46 -30
Free cash flow 37 -14 - 69 34 103


Balance sheet key figures, IFRS Neles4)
Return on capital employed (ROCE) before taxes, % 15.6 19.2
Balance sheet total 644 3,887
Net debt 81 798
Equity to assets ratio, % 42.6 42.3
Net debt / EBITDA, rolling 12 months 0.9 -
Gearing, % 30.9 52.3
Personnel at end of period, continuing operations 2,840 15,821

1 Orders received in comparable currencies declined by 9% in 1–12/2020, and 6% in 10–12/2020. Sales in comparable currencies declined by 9% in 1–12/2020 and increased by 1% in 10–12/2020.

 2 Services sales include the sales volume from the Services business

3 Adjustment items amounted to EUR 11.3 million in 1–12/2020 and EUR 3.3 million in 10–12/2020. No adjustment items were included in 10–12/2019 and full-year 2019. The adjustments were attributable to advisory, brand, IT and other costs related to the creation and rebranding of Neles, establishing a new operating structure and developments around Neles’ shareholding. See Note 5. 

3 Neles continuing operations. 

Creation of Neles on June 30th

Metso’s Extraordinary General Meeting on October 29, 2019, approved the partial demerger of the company. The registration of the completion of the partial demerger was executed on June 30, 2020. According to the demerger plan, the Metso Minerals businesses were carved out and combined with Outotec Group. Metso’s valves business formed the continuing operations and on July 1, 2020, Metso Group was renamed Neles Group. Metso’s shareholders continue as shareholders of Neles Corporation. Additionally, shareholders received 4.3 new Outotec shares for one old Metso share as consideration for the distributed net assets of the Minerals business. The partial demerger of Metso was completed on June 30, 2020, with share trading continuing under the Neles name on Nasdaq Helsinki on July 1. In IFRS reporting, a gain of EUR 2,022 million was recorded on the distribution of the Minerals net assets at fair value and is included in Profit for the period, discontinued operations.    

Public tender offer by Alfa Laval and stake building by Valmet

On July 13, Alfa Laval AB (publ) published its intention of making a Public Tender Offer (PTO) for all the shares of Neles Oyj at a price of EUR 11.50 per share. The Tender Offer was published on August 12, 2020. On October 15, Alfa Laval amended its PTO terms by lowering the minimum acceptance threshold to more than 50% of outstanding Neles shares (previously 2/3 of outstanding Neles shares) and extending the PTO until October 30 (previously October 22). Neles’ Board recommended the PTO on August 12 and again on October 19 regarding the changed PTO terms. On November 4, 2020, Alfa Laval announced it would not complete the PTO, as it had received approximately 32.82% (of the 50% threshold) of Neles shares during the offer period. On December 31, 2020, Alfa Laval’s shareholding in Neles was 8.46%.

Valmet Oyj, which acquired a stake of 14.88% in Neles Oyj on July 1, had a shareholding of 29.54% as of December 31, 2020. On September 29, Valmet published a proposal for a merger between Valmet Oyj and Neles Oyj. On October 12, Neles’ Board announced that there were no ongoing discussions with Valmet and reiterated its recommendation regarding Alfa Laval’s PTO.

President and CEO Olli Isotalo:

As anticipated, the market conditions changed little during the fourth quarter. There were several positive developments in our Services business. Service orders received grew quarter-on-quarter, although there were big differences between geographical markets. We won some major orders for our digital service concepts relating to advanced installed base management and process monitoring. Despite the positive trends in Services, the overall Services and MRO-driven businesses remained at a weak level due to customers’ tight cash management, and postponements of large service and upgrade projects due to the Covid-19 pandemic.  

In 2020, project business developed well. We received many orders particularly during the first half of the year and second half orders were also at a good level. Project sales increased quarter by quarter, peaking in the fourth quarter. The share of the Services and MRO-driven businesses was slightly over 60% of total orders received in 2020, compared to a bit less than 70% in 2019. We continue to see a healthy project funnel in Pulp and Paper for 2021. We are also seeing activity in Chemicals and Oil & Gas projects, but at a lower level than a year ago and with uncertainties around the timing of orders.  

We continued tight cost management to keep our profitability at a good level, despite the low sales volume. We will also continue many cost saving measures at the beginning of 2021. We completed personnel negotiations for temporary layoffs at our Helsinki plant and will continue our ongoing global efforts to reallocate resources to support our strategy execution. In 2020, we reported EUR 11 million in adjustment items associated with the partial demerger, the launch of Neles, the share ownership developments which started in the second quarter, and restructuring. The activities associated with these adjusting items are largely completed. Certain development activities, in particular our ongoing ERP harmonization project, will continue in 2021 and will be reported as part of our operating costs instead of adjusting items.

We completed our annual customer satisfaction survey, and the results were very pleasing. Customer satisfaction, measured by a net promoter score, improved from 29 in 2019 to an all-time high of 38 in 2020. I feel this is strong testimony to the great commitment of Neles personnel in serving our customers and co-operating with our partners for the long-term, even in difficult times.  

Market outlook

We expect the market activity in Pulp and Paper projects to continue at a good level.

Market activity in Chemicals and Oil & Gas projects is expected to continue at a satisfactory level, as it did during the second half of 2020. Postponements of projects and global uncertainties continue to reduce visibility in the Chemicals and Oil & Gas project businesses.

Market activity for the Services and the customer Maintenance, Repair and Operations-driven (MRO) businesses is expected to gradually improve during the second quarter of 2021 from the weak levels of the second half of 2020. Large shutdowns are still being postponed due to the Covid-19 pandemic and customers’ tight cash management. 

The ongoing Covid-19 pandemic continues to create uncertainties and risks of abrupt changes in all markets important for Neles.

Market outlook reflects management’s expectation for the next six months unless otherwise stated.

Covid-19 pandemic update

The Covid-19 pandemic continues to present significant short-term risks and uncertainties for the markets. It continues to be difficult to predict the pandemic’s spread and severity. Abrupt measures taken by various national and local governments to restrict the spread of the virus have increased the unpredictability of the demand for Neles’ products and services. The pandemic-related mobility restrictions have impacted Neles’ operations by restricting Neles’ ability to provide services at customer sites, as well as the running of manufacturing sites when lockdowns have been imposed. These uncertainties are expected to continue in the first half of 2021.

The business situation did not change significantly from the third to the fourth quarter. Customers have returned to more normal operations than in the second quarter, but large maintenance projects remain largely postponed due to mobility restrictions and customers’ tight cash management. The situation has caused a slowdown in the Services and MRO-driven businesses. The company’s supply chains have been operational, and the delays in delivery times reported in the third quarter have eased. Thus far, Neles has experienced no material credit losses or order cancelations in the order backlog.

Since the second quarter, management has taken proactive measures to ensure the safety of employees, control costs and preserve cash flow to protect Neles’ financial position. The measures have included a variety of enforced safety procedures at manufacturing sites, remote working and strict travel restrictions, cuts to external spending across the organization, and cost-saving and optimization activities. Increased attention has also been paid to managing net working capital. 

There is an increased risk that global economic growth will significantly deteriorate because of the pandemic, which, with uncertain political and trade-related developments, could affect Neles’ customer industries, and reduce investment appetite and customer spending, weakening the demand for Neles’ products and services, as well as affecting the company’s business operations and profitability. Other market- and customer-related risks could also cause planned and ongoing projects to be postponed, delayed or discontinued.  

Audiocast and conference call details

Neles’ President and CEO Olli Isotalo and CFO Simo Sääskilahti will present the financial results in an audiocast and a conference call for analysts and investors today at 2:00 p.m. EET. The audiocast can be followed at A recording and a transcript will be available at the same webpage after the event has finished.

Conference call participants are requested to dial in five minutes before the event on:

Finland Toll: +358 981 710 310
Sweden Toll: +46 856 642 651
United Kingdom Toll: +44 333 300 0804
United States Toll: +1 631 913 1422

Participant PIN: 31267299# 

Neles Corporation

Simo Sääskilahti, CFO
Rita Uotila, VP, Investor Relations

For more information, please contact:

Rita Uotila, Vice President, Investor Relations, Tel. +358 400 954141, E-mail:

Neles is one of the leading providers of mission-critical flow control solutions and services for process industries. With our global team of experts and innovative solutions, we help our customers to improve their process performance and ensure the safe flow of materials. Neles is listed on the Nasdaq Helsinki in Finland and had sales of about EUR 576 million in 2020. Neles employs about 2,850 people in approximately 40 countries.,