Valmet's Half Year Financial Review January 1 – June 30, 2020: Orders received decreased to EUR 826 million and Comparable EBITA increased to EUR 76 million in the second quarter
Valmet Oyj’s stock exchange release on July 23, 2020 at 3:00 p.m. EET
Figures in brackets, unless otherwise stated, refer to the comparison period, i.e. the same period of the previous year.
April–June 2020: Orders received decreased and comparable EBITA increased
- Orders received decreased 24 percent to EUR 826 million (EUR 1,083 million).
- Orders received remained at the previous year’s level in the Pulp and Energy, and Automation business lines and decreased in the Paper and Services business lines.
- Orders received increased in China and decreased in South America, North America, EMEA (Europe, Middle East and Africa) and Asia-Pacific.
- Net sales remained at the previous year’s level and amounted to EUR 919 million (EUR 901 million).
- Net sales increased in the Pulp and Energy business line, remained at the previous year’s level in the Paper business line, and decreased in the Services and Automation business lines.
- Comparable earnings before interest, taxes and amortization (Comparable EBITA) were EUR 76 million (EUR 69 million), and the corresponding Comparable EBITA margin was 8.3 percent (7.7%).
- Comparable EBITA increased due to lower selling, general and administration (SG&A) expenses.
- Earnings per share were EUR 0.29 (EUR 0.26).
- Items affecting comparability amounted to EUR -6 million (EUR -5 million).
- Cash flow provided by operating activities was EUR 151 million (EUR -44 million).
January–June 2020: Orders received remained at the previous year’s level
- Orders received remained at the previous year’s level and amounted to EUR 2,013 million (EUR 1,918 million).
- Orders received increased in the Pulp and Energy business line, remained at the previous year’s level in the Services and Automation business lines and decreased in the Paper business line.
- Orders received increased in China, remained at the previous year’s level in EMEA, and decreased in Asia-Pacific, North America and South America.
- Net sales increased 10 percent to EUR 1,740 million (EUR 1,587 million).
- Net sales increased in the Pulp and Energy, and Paper business lines and remained at the previous year’s level in the Automation and Services business lines.
- Comparable earnings before interest, taxes and amortization (Comparable EBITA) were EUR 128 million (EUR 117 million), and the corresponding Comparable EBITA margin was 7.4 percent (7.3%).
- Comparable EBITA increased due to higher net sales.
- Earnings per share were EUR 0.49 (EUR 0.47).
- Items affecting comparability amounted to EUR -7 million (EUR -3 million).
- Cash flow provided by operating activities was EUR 324 million (EUR -14 million).
Guidance for 2020
Valmet announced on April 16, 2020 that the company withdraws its guidance for 2020 due to increased uncertainty related to the COVID-19 pandemic.
Short-term market outlook
Valmet reiterates the good short-term market outlook for pulp, and board and paper, the good/satisfactory short-term market outlook for automation, the satisfactory short-term market outlook for energy, and tissue, and the satisfactory/weak short-term market outlook for services.
President and CEO Pasi Laine: Decent quarter despite the pandemic
“Valmet’s orders received amounted to EUR 826 million in the second quarter of 2020. Orders received remained at the previous year’s level in Pulp and Energy, and in Automation, decreased in Services and decreased from the previous year’s high level in Paper. Our order backlog amounted to EUR 3,492 million. Valmet’s net sales remained at the previous year’s level, and the Comparable EBITA increased to EUR 76 million, corresponding to a margin of 8.3 percent. Our balance sheet was strong with a gearing of -23 percent.
The COVID-19 pandemic impacted our operations in the second quarter. Many of our customers restricted access to their sites, which led to disturbances especially in Valmet’s field services and mill improvement projects. The pandemic had a negative impact on Services’ order intake and net sales. In the capital business, COVID-19 caused progress delays in projects and led to some delays in the supply chain network. On the other hand, the pandemic resulted in lower travel expenses.
During the quarter we agreed to acquire 14.9 percent of Neles Corporation. Neles is a good quality global company with a large share of recurring business and a strong position in the pulp and paper industry. It has demonstrated good growth and has potential to grow further. Valmet’s goal is to have an active long-term role in the development of Neles. The strategic rationale of the share acquisition is further supported by the fact that Valmet and Neles have a common heritage, serve similar global industries and benefit from same global megatrends.”
|Comparable earnings before interest, taxes and amortization (Comparable EBITA)||76||69||10%||128||117||10%|
|% of net sales||8.3%||7.7%||7.4%||7.3%|
|Earnings before interest, taxes and amortization (EBITA)||70||64||9%||121||113||6%|
|% of net sales||7.6%||7.1%||6.9%||7.1%|
|Operating profit (EBIT)||62||56||11%||104||99||6%|
|% of net sales||6.8%||6.2%||6.0%||6.2%|
|Profit before taxes||60||52||15%||100||93||7%|
|Profit for the period||44||39||15%||74||70||6%|
|Earnings per share, EUR||0.29||0.26||15%||0.49||0.47||6%|
|Earnings per share, diluted, EUR||0.29||0.26||15%||0.49||0.47||6%|
|Equity per share, EUR2||6.43||5.96||8%||6.43||5.96||8%|
|Cash flow provided by operating activities||151||-44||324||-14|
|Cash flow after investments||124||-217||280||-204|
|Return on equity (ROE) (annualized)||15%||15%|
|Return on capital employed (ROCE) before taxes (annualized)||16%||17%|
|Equity to assets ratio2||38%||38%|
1 The calculation of key figures is presented on page 42.
2 At end of period.
|Orders received, EUR million||Q2/2020||Q2/2019||Change||Q1–Q2/|
|Pulp and Energy||215||210||3%||591||411||44%|
|Order backlog, EUR million||As at|
|Net sales, EUR million||Q2/2020||Q2/2019||Change||Q1–Q2/|
|Pulp and Energy||265||212||25%||506||372||36%|
News conference and webcast for analysts, investors and media
Valmet will arrange a news conference in English for analysts, investors, and media on Thursday, July 23, 2020 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 +44 2071 928000. The participants will be asked to provide the following conference ID: 8574587. 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 on Twitter at www.twitter.com/valmetir.
Further information, please contact:
Pekka Rouhiainen, Director, Investor Relations, Valmet, tel. +358 10 672 0020
Kari Saarinen, CFO, Valmet, tel. +358 50 317 1830
Director, 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 2019 were approximately EUR 3.5 billion. Our more than 13,000 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 on Twitter www.twitter.com/valmetir