Valmet's Interim Review January 1 - September 30, 2014: Profitability continued to improve and is moving towards the targeted level
Valmet Corporation's stock exchange release on October 24, 2014 at 12:00 noon EET
Valmet has formed a separate legal group as of December 31, 2013. The financial information presented in this Interim Review is based on actual figures as an independent group after the consummation of the demerger and carve-out figures prior to the consummation of the demerger. The carve-out financial information presented in this Interim Review reflects the performance and financial position of the entities that have historically formed the Pulp, Paper and Power segment within Metso Group. Figures in brackets, unless otherwise stated, refer to the comparison period, i.e. the same period of the previous year. The Interim Review is unaudited.
July-September 2014: Profitability continued to improve
- Orders received amounted to EUR 466 million (EUR 382 million).
- Orders received increased in the Paper, and Pulp and Energy business lines, and remained on a par with Q3/2013 in the Services business line.
- Net sales remained on a par with Q3/2013 at EUR 590 million (EUR 601 million).
- Net sales increased in the Pulp and Energy business line and decreased in the Services and Paper business lines.
- Earnings before interest, taxes and amortization (EBITA) and non-recurring items were EUR 32 million (EUR 31 million), and the corresponding EBITA margin was 5.5 percent (5.1%).
- Profitability improved compared with Q3/2013 and Q2/2014.
- Profitability improvement program, with the target to save EUR 100 million by the end of 2014, was finalized.
- Earnings per share were EUR 0.11 (EUR -0.10).
- Non-recurring items amounted to EUR -1 million (EUR -41 million).
- Cash flow provided by operating activities was EUR 117 million (EUR 12 million).
January-September 2014: More orders received than during the full year of 2013
- Orders received amounted to EUR 2,590 million (EUR 1,754 million).
- Orders received increased in the Pulp and Energy, and Paper business lines, and remained at the previous year's level in the Services business line.
- Net sales declined 13 percent to EUR 1,697 million (EUR 1,946 million).
- Net sales remained at the previous year's level in the Pulp and Energy business line, and decreased in the Services and Paper business lines.
- Earnings before interest, taxes and amortization (EBITA) and non-recurring items were EUR 58 million (EUR 79 million), and the corresponding EBITA margin was 3.4 percent (4.1%).
- Earnings per share were EUR 0.14 (EUR -0.01).
- Non-recurring items amounted to EUR -7 million (EUR -52 million).
- Cash flow provided by operating activities was EUR 206 million (EUR -5 million).
Valmet reiterates its guidance for 2014
Valmet is reiterating its guidance presented on February 6, 2014 in which Valmet estimates that net sales in 2014 will decline from the 2013 level and EBITA before non-recurring items will increase in comparison with 2013.
General economic outlook
Despite setbacks, an uneven global recovery continues. Largely due to weaker-than-expected global activity in the first half of 2014, the growth forecast for the world economy has been revised downward to 3.3 percent for this year. The global growth projection for 2015 was lowered to 3.8 percent. Downside risks have increased since the spring. Short-term risks include a worsening of geopolitical tensions. Medium-term risks include stagnation and low potential growth in advanced economies and a decline in potential growth in emerging markets. (International Monetary Fund, October 7, 2014)
Short-term market outlook
Valmet is reiterating its short-term market outlook presented on July 31, 2014. Valmet estimates that activity in board and paper markets will remain on a good level. The activity in the services, pulp, energy, and tissue markets is estimated to remain satisfactory.
President and CEO Pasi Laine: Success on many fronts, profitability improved
Valmet was successful on many fronts in the third quarter of the year. Even though the level of orders received was lower compared with the high level in the first half of the year, we have already, after three quarters of 2014, received more orders than during the full year of 2013. This is a clear indication of how customers perceive Valmet and trust us, and that we have the skills and technology to move our customers forward. This was proven again in the third quarter, as Valmet received the first OptiConcept M board production line and the first Advantage NTT tissue line orders to the USA. The orders received by the Services business line in the third quarter remained on the previous year's level.
Our profitability improved in the third quarter compared with the previous quarter. Since becoming an independent company, Valmet has been able to improve profitability every quarter and we are moving towards our targeted level. We have been able to steadily reduce our selling, general and administrative expenses, and increase our gross profit. Going forward, Valmet will continue to focus on improving profitability. After finalizing the savings program, we still have further profitability improvement potential through savings in procurement and quality, by actions to improve project and service margin, by continuing to improve cost competitiveness, and by improving product cost competitiveness to increase gross profit.
Valmet places considerable focus on developing sustainability, and on improving health and safety. During the third quarter, Valmet was included in the Dow Jones Sustainability Index, an index consisting of the world's leading companies in terms of economic, environmental and social criteria. The selection of Valmet illustrates our commitment to sustainability, and the transparency in our reporting.
|Q3/2014||Q3/2013||Change|| Q1-Q3/ |
| Q1-Q3/ |
|Earnings before interest, taxes and amortization (EBITA) and non-recurring items||32||31||4%||58||79||-27%|
|% of net sales||5.5%||5.1%||3.4%||4.1%|
|Earnings before interest, taxes and amortization (EBITA)||31||-10||51||27||87%|
|% of net sales||5.3%||-1.7%||3.0%||1.4%|
|Operating profit (EBIT)||26||-17||35||7||>100%|
|% of net sales||4.4%||-2.8%||2.1%||0.4%|
|Profit before taxes||24||-23||31||-1|
|Profit / loss||16||-15||21||-1|
|Earnings per share, EUR||0.11||-0.10***||0.14||-0.01***|
|Earnings per share, diluted, EUR||0.11||-0.10***||0.14||-0.01***|
|Equity per share, EUR||5.32||5.60***||-5%||5.32||5.60***||-5%|
|Cash flow provided by operating activities||117||12||>100%||206||-5|
|Cash flow after investments||107||-5||179||-49|
|Return on capital employed (ROCE) before taxes (annualized)||6%||1%|
* The calculation of key figures is presented in the Tables section of the Q1-Q3/2014 Interim Review.
** At the end of period.
*** The earnings per share information was computed as if the shares issued in conjunction with the Demerger had been outstanding for the comparison period.
|As at September 30, 2014||As at September 30, 2013||As at June 30, 2014|
|Equity to assets ratio and gearing||Carve-out|
|Equity to assets ratio at end of period||41%||39%||40%|
|Gearing at end of period||-20%||0%||-7%|
|Q3/2014||Q3/2013||Change|| Q1-Q3/ |
| Q1-Q3/ |
|Orders received, EUR million||Carve-out||Carve-out|
|Pulp and Energy||96||66||46%||1,279||579||>100%|
|As at September 30, 2014||As at September 30, 2013||Change||As at June 30, 2014|
|Order backlog, EUR million||Carve-out|
|Q3/2014||Q3/2013||Change|| Q1-Q3/ |
| Q1-Q3/ |
|Net sales, EUR million||Carve-out||Carve-out|
|Pulp and Energy||234||206||14%||644||667||-3%|
News conference for analysts, investors and media
Valmet will arrange a news conference in English for investment analysts, investors, and media on October 24, 2014 at 2:00 p.m. Finnish time (EET). The news conference will be held at Valmet's Head Office in Keilaniemi, Keilasatama 5, 02150 Espoo, Finland. The conference can also be followed through a live webcast at www.valmet.com/webcasts.
It is also possible to take part in the news conference through a conference call. Conference call participants are requested to dial in at least five minutes prior to the start of the conference, at 1:55 p.m. (EET), at +44 2071 928000. The participants will be asked to provide the following conference ID: 2551611.
During the webcast and conference call, all questions should be presented in English.
Further information, please contact:
Hanna-Maria Heikkinen, Vice President, Investor Relations, Valmet Corporation, +358 10 672 0007
Markku Honkasalo, Chief Financial Officer, Valmet Corporation, +358 10 672 0008
VP, Investor Relations
Valmet Corporation is a leading global developer and supplier of services and technologies for the pulp, paper and energy industries. Our 11,000 professionals around the world work close to our customers and are committed to moving our customers' performance forward - every day.
Valmet's services cover everything from maintenance outsourcing to mill and plant improvements and spare parts. Our strong technology offering includes entire pulp mills, tissue, board and paper production lines, as well as power plants for bio-energy production.
The company has over 200 years of industrial history and was reborn through the demerger of the pulp, paper and power businesses from Metso Group in December 2013. Valmet's net sales in 2013 were approximately EUR 2.6 billion. Valmet's objective is to become the global champion in serving its customers.
Valmet's head office is in Espoo, Finland and its shares are listed on the NASDAQ OMX Helsinki Ltd.