Neles’ Interim Review January 1 – September 30, 2021

Neles Corporation, Stock exchange release, October 27, 2021, at 09:00 a.m. EEST

This Interim Review is not an offer of merger consideration shares in the United States. The merger consideration shares have not been and will not be registered under the U.S. Securities Act of 1933 (the “Securities Act”), and may not be offered, sold, or delivered within or into the United States, except pursuant to an applicable exemption of, or in a transaction not subject to, the Securities Act. There will be no public offering of securities in the United States. This Interim Review does not constitute an offer of or an invitation by or on behalf of, Neles, Valmet, or any other person, to purchase any securities.

This is a summary of Neles’ Interim Review for January 1 - September 30, 2021. The complete review is attached to this release and is also available at

January-September in brief: Solid profitability driven by good sales volumes

  • Strong market situation continued in the Pulp, Paper and Bioproducts project business. Services demand continued on a good level
  • Still slow development in Chemicals and Oil & Gas projects
  • In the third quarter, Sales up by 12% and adjusted EBITA strong at 15.5%
  • Acquisition of Flowrox valves and pumps business signed to strengthen Neles’ position in growing Metals and Mining markets

In this Interim Review, a comparable cash flow statement is disclosed in addition to IFRS financial information. Figures in parentheses refer to the corresponding period of the continuing operations in 2020 unless otherwise stated. Neles Group has been reported as one segment since June 30, 2020.

Summary of key figures

Operative key figures,
EUR million
7–9/21 7–9/20 Change, % 1–9/21 1–9/20 Change, % 2020
Orders received1 149.6 133.8 12 454.8 455.6 0 590.1
Order backlog at end of period 292.0 292.8 0 292.0 292.8 0 270.3
Sales2 161.5 144.0 12 436.8 421.5 4 576.3
Adjusted EBITA, continuing operations 25.0 22.8 10 59.9 62.4 -4 85.0
% of sales 15.5 15.8 13.7 14.8 14.8
Adjustment items3 4.4 2.4 5.3 8.0 11.3
Operating profit 19.8 19.5 2 52.2 51.8 1 70.3
% of sales 12.3 13.5 11.9 12.3 12.2
Earnings per share, continuing operations, EUR 0.09 0.09 - 0.24 0.24 2 0.32
Free cash flow 15.0 17.2 -12 42.8 31.9 34 68.7


Balance sheet key figures, IFRS 9/21 9/20 2020
Balance sheet total, EUR million 664.6 624.6 643.8
Net debt, EUR million 73.7 117.9 81.4
Net debt / EBITDA, rolling 12 months 0.8 1.3 0.9
Gearing, % 26.6 46.5 30.9
Personnel at end of period, continuing operations 2,812 2,840 2,840

1 Of which EUR 102.6 million in 79/2021 and EUR 321.4 million in 19/2021 (EUR 85.2 million in 79/20 and EUR 269.4 million in 19/20) were for Services and MRO-driven businesses including EUR 35.1 million in 79/2021 and EUR 117.5 million in 19/2021 (EUR 29.7 million in 79/20 and EUR 98.5 million in 1–9/20) for Services orders received. Orders received in comparable currencies increased by 10% in 79/2021 and by 3% in 19/2021.
2 Of which EUR 104.6 million in 79/2021 and EUR 291.8 million in 19/2021 (88.6 million in 79/20 and 272.0 million in 19/20) were for Services and MRO-driven businesses including EUR 39.9 million in 79/2021 and EUR 109.6 million in 19/2021 (EUR 32.5 million in 79/20 and EUR 93.3 million in 1–9/20) for Services sales. Sales in comparable currencies increased by 11% in 79/2021 and by 7% in 19/2021.
3 Adjustment items amounted to EUR 4.4 million in 7–9/2021 and to EUR 5.3 million in 1–9/2021 (EUR 2.4 million in 79/2020 and EUR 8.0 million in 19/2020). See Note 5.

President and CEO Olli Isotalo:

The market situation in the third quarter stayed mainly the same as in the second quarter of 2021. Pulp, Paper and Bioproducts project business continued to be strong, and we continued to win new projects, as well as additions to the existing projects. In Chemicals and Oil & Gas and projects, the market was slow. The decisions of the projects in the funnel are being postponed to the fourth quarter or early 2022.

The Services and MRO-driven businesses’ orders received were slightly down from the second quarter of 2021, but 20% up compared to the comparison period. The Services market situation continues to be good; the decline in services orders sequentially was mainly due to seasonality. The MRO-driven business developed positively in the third quarter and orders were 22% higher than in the 2020 comparison period. However, the MRO-driven business is still clearly below pre-Covid levels. This is due to persistent Covid-19-related issues and tight customer demand in APAC and EMEIA, while in North and South America demand is already at pre-Covid levels.

Thanks to good sales volumes, we were able again to achieve more than 15% adjusted EBITA in the third quarter. This was despite the continuing challenges in logistics and availability of electronics components. These challenges create risks also for fourth quarter deliveries.

Diversification to growing new industries is a cornerstone of our strategy. The acquisition of the valve and pump businesses of Flowrox is an important milestone in strengthening our position in the growing Metals and Mining markets. Neles has been providing solutions in these markets, but we have lacked certain important products from our own portfolio. With the acquisition, we not only incorporate these missing products in our offering, but also strengthen our knowledge of the metals and mining applications, broaden our sales channels for these sectors and get a brand that is well known and respected in Metals and Mining flow control. Integration planning is progressing well, and we will close the transaction in November.

Mergers and acquisitions

Asset purchase agreement of Flowrox valve and pump businesses

On July 27, 2021, Neles signed an asset purchase agreement to acquire the valve and pump businesses of the Finland-based technology company Flowrox. The acquisition complements Neles' offering and improves its market positioning the mining and metals industry. It also enables Neles to better leverage growth opportunities in minerals processing applications.

In 2020, Flowrox’s valve and pump businesses had sales of about EUR 30 million. The profitability of the carved-out businesses is comparable to Neles’ profitability in terms of the adjusted EBITA margin. The acquired businesses employ approximately 110 people, with manufacturing in Finland, Australia, South Africa, and the United States, as well as well-established sales channels in more than 80 countries.

The debt-free purchase price of EUR 40.9 million is payable in cash at closing, with an additional orders received-based earn-out consideration of up to EUR 3 million for a one-year period after closing, also payable in cash. The transaction is expected to be positive for Neles’ earnings per share already in 2022. The closing of the acquisition will take place in November 2021.

Merger of Neles and Valmet

On July 2, 2021, Neles announced that the Boards of Directors of Valmet Oyj and Neles Corporation have signed a combination agreement and a merger plan to combine the two companies through a merger. Both companies held an Extraordinary General Meeting on September 22, 2021, and both EGMs approved the merger. The planned closing date of the merger is January 1, 2022. The planned closing date may be delayed due to the regulatory processes ongoing. Should the closing be delayed from January 1, 2022, Valmet will issue a stock exchange release on the matter and the prospectus will be supplemented once there is more clarity on the timetable of the regulatory processes. Until the completion of the merger Valmet and Neles will carry out their respective businesses as separate and independent companies.

The shareholders in Neles will receive 0.3277 new shares in Valmet for each share they hold in Neles as merger consideration. Among other conditions, the combination is subject to, the obtaining of merger control and other regulatory approvals, and an extra distribution of funds in the amount of a maximum of EUR 2.00 per share to the shareholders in Neles prior to the completion of the merger.

On July 2, 2021, Neles signed a EUR 301 million bridge-to-bond facility, the purpose of which is to finance the extraordinary distribution of funds prior to the completion of the merger. If executed, the facility term is 12 months, with two 6-month extension options.

For more information, please see

Market outlook

Market activity in Pulp and Paper projects is expected to continue at a good level.

Market activity in Chemicals and Oil & Gas projects was weak in the first nine months of 2021. The market activity is expected to return to a satisfactory level during the next 6 months. Postponements of projects and global uncertainties continue to reduce visibility in the Chemicals and Oil & Gas project businesses.

Market activity was satisfactory for the Services and the customer Maintenance, Repair and Operations-driven (MRO) businesses during the first nine months of 2021. These markets are expected to continue to improve, reaching a good level at the beginning of 2022.

The ongoing challenges in global logistics, availability of electronic components and Covid-19 pandemic continues to create uncertainty and risks of abrupt changes in all markets important to Neles.

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

Covid-19 pandemic update

The global logistics situation continued to be challenging during the third quarter of 2021. The availability of transportation and difficulties in arranging logistics by Neles or its customers has caused delays in Neles’ deliveries. In addition, delays have occurred due to a shortage of electronic components. These challenges are also expected to continue in the fourth quarter of 2021.

During 2021, Neles’ Brazilian supply center was temporarily closed due to Covid-19 cases. The supply center reopened more quickly than initially expected due to the attentive management of the situation. There were similar challenges in Neles’ Indian factories at the beginning of the second quarter, leading to temporary closures. 

Neles has operations in several regions where the Covid-19 pandemic continues to cause disruptions. There continue to be risks of similar temporary closures of local Neles operations as those experienced earlier. Currently, all Neles factories are operational, and the Covid-19 situation is being followed closely by management, prioritizing the health and safety of Neles’ employees and partners.

In 2020, the Services and other MRO-driven businesses were negatively impacted by pandemic-related mobility restrictions and our customers’ tight cash management. Especially large maintenance shutdowns were postponed. The global situation in the Services and MRO-driven businesses has been improving clearly in 2021, but uncertainties and risks in certain regions are expected to continue.

Since the second quarter of 2020, Neles has taken proactive measures to ensure the safety of employees, control costs and preserve cash flow to protect the company’s financial position. The measures have included a variety of enforced safety procedures at manufacturing sites, remote working, travel restrictions, cuts to external spending across the organization, as well as cost-saving and optimization activities. Travel restrictions, cuts to external spending across the organization, as well as cost-saving and optimization activities have continued in 2021. Covid-19-related personnel cost-saving actions were mostly discontinued at the end of 2020.

Increased attention has also been paid to managing net working capital. There have been no material credit losses or order cancellations.

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. EEST. 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 981710310
Sweden Toll: +46 856642651
United Kingdom Toll: +44 3333000804
United States Toll: +1 6319131422

PIN: 86385953#

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.,