Figures in brackets, unless otherwise stated, refer to the comparison period, i.e. the same period of the previous year. Automation has been consolidated into Valmet's financials since April 1, 2015, when the acquisition of Automation was completed.
Due to new regulation by the European Securities and Market Authority concerning alternative performance measures, Valmet has decided to replace the performance measure 'EBITA before non-recurring items' with 'Comparable EBITA'. The content of items affecting comparability, i.e. items previously disclosed as non-recurring, remain unchanged and therefore 'Comparable EBITA' equals previously disclosed 'EBITA before non-recurring items'. Items affecting comparability consist of income and expenses arising from activities that amend the capacity of Valmet's operations or are incurred outside its normal course of business. Valmet discloses alternative performance measures to describe the underlying business performance and to improve comparability between reporting periods.
April-June 2016: Profitability improved
January-June 2016: Orders received, net sales and profitability increased
Valmet reiterates its guidance for 2016
Valmet is reiterating its guidance presented on February 9, 2016 in which Valmet estimates that net sales in 2016 will remain at the same level with 2015 (EUR 2,928 million) and Comparable EBITA in 2016 will increase in comparison with 2015 (EUR 182 million).
Due to new regulation by the European Securities and Market Authority, Valmet has decided to replace the performance measure 'EBITA before non-recurring items' with 'Comparable EBITA'. The content of items affecting comparability, i.e. items previously disclosed as non-recurring, remain unchanged and therefore 'Comparable EBITA' equals previously disclosed 'EBITA before non-recurring items' (EUR 182 million in 2015). Items affecting comparability consist of income and expenses arising from activities that amend the capacity of Valmet's operations or are incurred outside its normal course of business.
General economic outlook
The outcome of the U.K. vote, which surprised global financial markets, implies the materialization of an important downside risk for the world economy. As a result, the global outlook for 2016-17 has worsened, despite the better-than-expected performance in early 2016. This deterioration reflects the expected macroeconomic consequences of a sizable increase in uncertainty, including on the political front. This uncertainty is projected to take a toll on confidence and investment, including through its repercussions on financial conditions and market sentiment more generally. (International Monetary Fund, July 19, 2016)
Short-term market outlook
Valmet reiterates the good short-term market outlook for board and paper, and the satisfactory short-term market outlook for services, automation, pulp, energy, and tissue.
President and CEO Pasi Laine: Strong development in stable business continued
Orders received have increased 10 percent in the first half of the year and the increase has been supported by both the stable business and the capital business. The development especially in the stable business has been strong, with all-time high orders received in the Services business line in two consecutive quarters.
After adding automation and related services to our offering in 2015, the natural next step was to start unifying our services offering and way to serve our customers. We have now renewed our services offering and unified our way to serve in order to enable better customer experience and growth in the services business.
Valmet has increased its financial targets from 2017 onwards. We now aim to grow over two times faster than the market in the stable business, while net sales growth in the capital business is targeted to exceed market growth. Our target margin range for Comparable EBITA has been both hiked and narrowed to 8-10 percent, and the Comparable ROCE target now stands at 15-20 percent. Also, the dividend payout target has been increased from at least 40 percent to at least 50 percent of net profit. The financial targets are demanding, but we have, since the demerger, strengthened our offering and market position, and succeeded in reaching good results in our internal efficiency programs. To reach the new targets, we will continue to implement our strategy with our four Must-Win initiatives, which are customer excellence, leader in technology and innovation, excellence in processes, and winning team.
|EUR million||Q2/2016||Q2/2015||Change|| Q1-Q2/ |
| Q1-Q2/ |
|Comparable earnings before interest, taxes and amortization (Comparable EBITA)||57||54||6%||88||73||21%|
|% of net sales||7.1%||6.9%||6.1%||5.5%|
|Earnings before interest, taxes and amortization (EBITA)||55||42||32%||85||61||39%|
|% of net sales||6.9%||5.4%||5.8%||4.6%|
|Operating profit (EBIT)||47||32||45%||66||46||45%|
|% of net sales||5.8%||4.1%||4.5%||3.4%|
|Profit before taxes||44||31||43%||60||42||44%|
|Profit / loss||31||21||45%||43||29||46%|
|Earnings per share, EUR||0.21||0.14||45%||0.28||0.19||44%|
|Earnings per share, diluted, EUR||0.21||0.14||45%||0.28||0.19||44%|
|Equity per share, EUR||5.58||5.38||4%||5.58||5.38||4%|
|Cash flow provided by operating activities||33||17||92%||36||-3|
|Cash flow after investments||16||-321||8||-351|
|Return on equity (ROE) (annualized)||10%||7%|
|Return on capital employed (ROCE) before taxes (annualized)||11%||9%|
*The calculation of key figures is presented on page 37.
**At the end of period.
|Equity to assets ratio and gearing|| As at June |
| As at June |
| As at March |
|Equity to assets ratio at end of period||36%||35%||35%|
|Gearing at end of period||27%||29%||24%|
|Orders received, EUR million||Q2/2016||Q2/2015||Change|| Q1-Q2/ |
| Q1-Q2/ |
|Pulp and Energy||180||259||-31%||417||397||5%|
|Order backlog, EUR million|| As at June |
| As at June |
|Change|| As at March |
|Net sales, EUR million||Q2/2016||Q2/2015||Change|| Q1-Q2/ |
| Q1-Q2/ |
|Pulp and Energy||262||231||14%||443||453||-2%|
News conference and webcast for analysts, investors and media
Valmet will arrange a news conference in English for investment analysts, investors, and media on Thursday, July 28, 2016 at 4:00 p.m. Finnish time (EET). The news conference will be held at Valmet Head Office in Keilaniemi, Keilasatama 5, 02150 Espoo, Finland. The news 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 3:55 p.m. (EET), at +44 1452 560304. The participants will be asked to provide the following conference ID: 30049930.
During the webcast and the conference call, all questions should be presented in English. After the webcast and the conference call, media has a possibility to interview the management in Finnish.
The event can also be followed in Twitter at www.twitter.com/valmetir.
Further information, please contact:
Hanna-Maria Heikkinen, Vice President, Investor Relations, Valmet, tel. +358 10 672 0007
Kari Saarinen, Chief Financial Officer, Valmet, tel. +358 10 672 0031
VP, Investor Relations
Valmet is the leading global developer and supplier of process technologies, automation and services for the pulp, paper and energy industries. We aim to become the global champion in serving our customers.
Valmet's strong technology offering includes pulp mills, tissue, board and paper production lines, as well as power plants for bioenergy production. Our advanced services and automation solutions improve the reliability and performance of our customers' processes and enhance the effective utilization of raw materials and energy.
Valmet's net sales in 2015 were approximately EUR 2.9 billion. Our 12,000 professionals around the world work close to our customers and are committed to moving our customers' performance forward - every day. Valmet's head office is in Espoo, Finland and its shares are listed on the Nasdaq Helsinki.
Follow Valmet IR in Twitter www.twitter.com/valmetir