Valmet's Interim Review January 1 – March 31, 2020: Orders received increased to EUR 1.2 billion and Comparable EBITA to EUR 52 million
Valmet Oyj’s stock exchange release on April 23, 2020 at 12:00 p.m. EET
Figures in brackets, unless otherwise stated, refer to the comparison period, i.e. the same period of the previous year.
January–March 2020: Record-high orders received
- Orders received increased 42 percent to EUR 1,187 million (EUR 835 million).
- Orders received increased in the Pulp and Energy, Paper and Services business lines and remained at the previous year’s level in the Automation business line.
- Orders received increased in South America, China and EMEA (Europe, Middle East and Africa), and decreased in Asia-Pacific and North America.
- Net sales increased 20 percent to EUR 821 million (EUR 686 million).
- Net sales increased in all business lines.
- Comparable earnings before interest, taxes and amortization (Comparable EBITA) were EUR 52 million (EUR 47 million), and the corresponding Comparable EBITA margin was 6.3 percent (6.9%).
- Earnings per share were EUR 0.20 (EUR 0.21).
- Items affecting comparability amounted to EUR -1 million (EUR 2 million).
- Cash flow provided by operating activities was EUR 173 million (EUR 30 million).
Dividend proposal
The Board of Directors proposes for the Annual General Meeting that a dividend of EUR 0.80 per share be paid for the financial year 2019. The proposed dividend equals to 59 percent of Valmet’s net result in 2019.
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 outlook
General economic outlook
As a result of the COVID-19 pandemic, the global economy is projected to contract sharply by 3 percent in 2020, much worse than during the 2008–2009 financial crisis. In a baseline scenario, which assumes that the pandemic fades in the second half of 2020 and containment efforts can be gradually unwound, the global economy is projected to grow by 5.8 percent in 2021 as economic activity normalizes, helped by policy support. The risks for even more severe outcomes, however, are substantial. (International Monetary Fund, April 14, 2020)
Short-term market outlook
Valmet estimates that the short-term market outlook in services has decreased to a satisfactory/weak level (previously good level) and the short-term market outlook in automation has decreased to a good/satisfactory level (previously good level).
Valmet reiterates the good short-term market outlook for pulp, and board and paper, and the satisfactory short-term market outlook for energy, and tissue.
President and CEO Pasi Laine: Orders received and Comparable EBITA increased
“Valmet’s orders received increased and amounted to EUR 1,187 million in the first quarter of 2020. This is a record-high quarterly order intake for us. The development was strong in the capital business, where orders received totaled EUR 697 million and almost doubled from the comparison period. Orders received in the stable business1 increased 12 percent (4% without the acquired businesses). Our order backlog increased to a record high of EUR 3,557 million. Net sales and Comparable EBITA increased as well.
The main global news headline of the first quarter was the COVID-19 pandemic. The pandemic impacted our operations and led to delays in certain capital projects and delays in execution in services and automation. Valmet has a solid foundation to cope with the virus and our long-term growth drivers have not changed. However, the spread of the coronavirus has increased uncertainty for the rest of the year. Due to the increased uncertainty, Valmet has withdrawn its guidance for 2020.”
[1] Including internal orders received for the Automation business line.
Key figures2
| EUR million | Q1/2020 | Q1/2019 | Change | 2019 |
| Orders received | 1,187 | 835 | 42% | 3,986 |
| Order backlog3 | 3,557 | 3,001 | 19% | 3,333 |
| Net sales | 821 | 686 | 20% | 3,547 |
| Comparable earnings before interest, taxes and amortization (Comparable EBITA) | 52 | 47 | 9% | 316 |
| % of net sales | 6.3% | 6.9% | 8.9% | |
| Earnings before interest, taxes and amortization (EBITA) | 51 | 49 | 3% | 315 |
| % of net sales | 6.2% | 7.1% | 8.9% | |
| Operating profit (EBIT) | 42 | 43 | -1% | 281 |
| % of net sales | 5.1% | 6.2% | 7.9% | |
| Profit before taxes | 40 | 41 | -3% | 269 |
| Profit for the period | 30 | 31 | -5% | 202 |
| Earnings per share, EUR | 0.20 | 0.21 | -4% | 1.35 |
| Earnings per share, diluted, EUR | 0.20 | 0.21 | -4% | 1.35 |
| Equity per share, EUR3 | 6.72 | 5.82 | 15% | 6.95 |
| Cash flow provided by operating activities | 173 | 30 | >100% | 295 |
| Cash flow after investments | 156 | 13 | >100% | 58 |
| Return on equity (ROE) (annualized) | 12% | 14% | 20% | |
| Return on capital employed (ROCE) before taxes (annualized) | 13% | 15% | 23% | |
| Equity to assets ratio3 | 41% | 37% | 41% | |
| Gearing3 | -22% | -20% | -9% |
2 The calculation of key figures is presented on page 37.
3 At the end of period
| Orders received, EUR million | Q1/2020 | Q1/2019 | Change | 2019 |
| Services | 398 | 358 | 11% | 1,459 |
| Automation | 92 | 95 | -3% | 359 |
| Pulp and Energy | 376 | 201 | 87% | 1,125 |
| Paper | 321 | 182 | 76% | 1,043 |
| Total | 1,187 | 835 | 42% | 3,986 |
| Order backlog, EUR million | As at Mar 31, 2020 | As at Mar 31, 2019 | Change | As at Dec 31, 2019 |
| Total | 3,557 | 3,001 | 19% | 3,333 |
| Net sales, EUR million | Q1/2020 | Q1/2019 | Change | 2019 |
| Services | 295 | 276 | 7% | 1,374 |
| Automation | 69 | 64 | 8% | 341 |
| Pulp and Energy | 240 | 160 | 50% | 919 |
| Paper | 217 | 186 | 16% | 913 |
| Total | 821 | 686 | 20% | 3,547 |
News conference and webcast for analysts, investors and media
Valmet will arrange a news conference in English as a live webcast at www.valmet.com/webcasts on Thursday, April 23, 2020 at 1:30 p.m. Finnish time (EET).
It is 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: 3685355. All questions should be presented in English.
The event can also be followed on Twitter at www.twitter.com/valmetir.
Due to the COVID-19 pandemic, the news conference cannot be attended at Valmet Headquarters in Espoo.
Further information, please contact:
Pekka Rouhiainen, Director, Investor Relations, Valmet, tel. +358 10 672 0020
Kari Saarinen, CFO, Valmet, tel. +358 50 317 1830
VALMET
Kari Saarinen
CFO
Pekka Rouhiainen
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.
Read more www.valmet.com, www.twitter.com/valmetglobal
Follow Valmet IR on Twitter www.twitter.com/valmetir
