Valmet's Interim Review January-March 2016
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Transcript of Valmet's Interim Review January-March 2016
Orders received, net sales and profitability increased
Interim Review,
January–March 2016
April 27, 2016
Pasi Laine, President and CEO
Kari Saarinen, CFO
AgendaInterim Review, January–March 2016
Q1/2016 in brief
Business lines’ development
Financial development
Summary of Interim Review Q1/2016
Appendix
1
2
3
5
6
Guidance and short-term market outlook4
Q1/2016 in brief
Order backlog at EUR 2.2 billion
Orders received and net sales increased in capital business2
April 27, 2016 © Valmet | Interim Review, January–March 20164
Q1/2016 in brief
1) Stable business = Services and Automation business lines
2) Capital business = Pulp and Energy, and Paper business lines
Net debt EUR 192 million
Profitability improved compared to Q1/2015, but was below
the targeted level
Orders received and net sales increased in stable business1
Net sales split in Q1/2016
April 27, 2016 © Valmet | Interim Review, January–March 20165
Net sales by area Net sales by business lineOrders received
EUR 803 million
Net sales
EUR 652 million
Comparable EBITA1
EUR 31 million
Comparable EBITA1
margin
4.8%
Employees
12,297
39%
9%
28%
24%
Services
Automation
Pulp and Energy
Paper
24%
7%
45%
14%
11%
North America
South America
EMEA
China
Asia-Pacific
1) 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.
1,1011,023
466 480580
781725
793 803
0
500
1,000
1,500
2,000
2,500
3,000
3,500
0
200
400
600
800
1,000
1,200
1,400
Q1/1
4
Q2/1
4
Q3/1
4
Q4/1
4
Q1/1
5
Q2/1
5
Q3/1
5
Q4/1
5
Q1/1
6
Orders received (LHS) Last 4 quarters (RHS)
Orders received increased to EUR 803 million in Q1/2016
April 27, 2016 © Valmet | Interim Review, January–March 20166
• Orders received increased in the Pulp and Energy, Paper, and Services
business lines
• Automation contributed to orders received with EUR 66 million
• North America and EMEA accounted for 69% of orders received in Q1/2016
Orders received (EUR million) Orders received in Q1/2016, by area
North America
13%
South America
14%
EMEA55%
China11%
Asia-Pacific7%
Stable business orders received totaled EUR 1,468 million during the last 4 quarters
April 27, 2016 © Valmet | Interim Review, January–March 20167
Orders received (EUR million) in stable business
267 273 242 273 293 307252 267
313
95
78 75
81
267 273242
273293
402
330 342
394
0
150
300
450
600
750
900
1,050
1,200
1,350
1,500
0
50
100
150
200
250
300
350
400
450
500
Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16
Services (LHS) Automation, total (including internal) (LHS) Last 4 quarters (RHS)
• Stable business orders received totaled to EUR 394 million in Q1/2016
• Stable business rolling 12 months orders received have increased from
about EUR 1.1 billion to almost EUR 1.5 billion
1,972
2,4062,312
1,998 2,0642,208
2,117 2,0742,207
0
500
1,000
1,500
2,000
2,500
3,000
Q1/1
4
Q2/1
4
Q3/1
4
Q4/1
4
Q1/1
5
Q2/1
5
Q3/1
5
Q4/1
5
Q1/1
6
Order backlog at EUR 2.2 billion
• Order backlog EUR 133 million higher than at the end of Q4/2015
• About 70% of the order backlog is currently expected to be realized as net sales
during 2016
• Approximately 25% of the order backlog relates to stable business
April 27, 2016 © Valmet | Interim Review, January–March 20168
Order backlog (EUR million)
~25%
~75%
Stable business Capital business
Structure of order backlog
Business lines’ development
Orders received and net sales increased in Services in Q1/2016
April 27, 2016 © Valmet | Interim Review, January–March 201610
Net sales (EUR million)Orders received (EUR million)
• Orders received increased compared with Q1/2015- Orders received increased in China and South America, and remained stable in
EMEA, North America and Asia-Pacific
- Orders received increased in Mill Improvements, Performance Parts and Fabrics,
remained stable in Rolls, and decreased in Energy and Environmental
- Changes in foreign exchange rates1 decreased orders received by approximately
EUR 3 million
• Net sales increased compared with Q1/2015
1) Compared with the exchange rates for January–March 2015
2015:
EUR 1,119 million
2015:
EUR 1,128 million
267 273242
273293 307
252 267
313
0
200
400
600
800
1,000
1,200
1,400
0
50
100
150
200
250
300
350
Q1/1
4
Q2/1
4
Q3/1
4
Q4/1
4
Q1/1
5
Q2/1
5
Q3/1
5
Q4/1
5
Q1/1
6
Orders received (LHS)
Orders received, last 4 quarters (RHS)
224251
235
278242
304268
314
257
0
200
400
600
800
1,000
1,200
1,400
0
50
100
150
200
250
300
350
Q1/1
4
Q2/1
4
Q3/1
4
Q4/1
4
Q1/1
5
Q2/1
5
Q3/1
5
Q4/1
5
Q1/1
6
Net sales (LHS)
Net sales, last 4 quarters (RHS)
2014:
EUR 1,055 million
2014:
EUR 989 million
Orders received1
in Automation totaled to EUR 81 million in Q1/2016
April 27, 2016 © Valmet | Interim Review, January–March 201611
• Orders received EUR 66 million in Q1/2016
- EMEA accounted for ~55% and North America for ~25% of orders received
- Pulp and Paper accounted for ~75% and Energy and Process for ~25% of
orders received
- Internal orders received amounted to EUR 15 million
• Net sales EUR 58 million in Q1/2016
- Internal net sales amounted to EUR 9 million
Net sales2 (EUR million)Orders received2 (EUR million)
1) Includes internal and external orders received.
2) Q1/2015 orders received and the underlying figures for ‘Orders received, last 4 quarters’ and ‘Net sales, last 4 quarters’ are calculated based on Metso’s reported
figures and pro forma figures excluding Process Automation Systems and are therefore indicative only.
8570 67 66
10
8 8 1562
95
78 7581
0
75
150
225
300
375
450
0
20
40
60
80
100
120
Q1/15 Q2/15 Q3/15 Q4/15 Q1/16
Orders received, internal (from other business lines)
Orders received, external
Orders received, total (including internal)
Orders received, last 4 quarters (RHS)
68 66
95
58
11 6
6
955
7972
101
66
0
75
150
225
300
375
450
0
20
40
60
80
100
120
Q1/15 Q2/15 Q3/15 Q4/15 Q1/16
Net sales, internal (from other business lines)
Net sales, external
Net sales, total (including internal)
Net sales, last 4 quarters (RHS)
Orders received increased and net sales decreased in Pulp and Energy in Q1/2016
April 27, 2016 © Valmet | Interim Review, January–March 201612
Net sales (EUR million)Orders received (EUR million)
• Orders received increased compared with Q1/2015
- Orders received decreased in North America and increased in all other areas
- Orders received increased in both Pulp and Energy
• Net sales decreased compared with Q1/2015
2015:
EUR 864 million
2015:
EUR 913 million
622560
96 66138
259206
261 238
0
200
400
600
800
1,000
1,200
1,400
0
100
200
300
400
500
600
700
Q1/1
4
Q2/1
4
Q3/1
4
Q4/1
4
Q1/1
5
Q2/1
5
Q3/1
5
Q4/1
5
Q1/1
6
Orders received (LHS)
Orders received, last 4 quarters (RHS)
181
229 234
312
222 231215
245
181
0
200
400
600
800
1,000
1,200
1,400
0
50
100
150
200
250
300
350
Q1/1
4
Q2/1
4
Q3/1
4
Q4/1
4
Q1/1
5
Q2/1
5
Q3/1
5
Q4/1
5
Q1/1
6
Net sales (LHS)
Net sales, last 4 quarters (RHS)
2014:
EUR 1,344 million
2014:
EUR 956 million
Orders received and net sales increased in Paper in Q1/2016
April 27, 2016 © Valmet | Interim Review, January–March 201613
Net sales (EUR million)Orders received (EUR million)
• Orders received increased compared with Q1/2015
- Orders received increased in EMEA and China and decreased in other
areas
- Orders received increased in both Board and Paper, and Tissue
• Net sales increased compared with Q1/2015
2015:
EUR 673 million
2015:
EUR 659 million
2014:
EUR 671 million
2014:
EUR 528 million
212190
128142 149
129
197 199186
0
150
300
450
600
750
0
50
100
150
200
250
Q1/1
4
Q2/1
4
Q3/1
4
Q4/1
4
Q1/1
5
Q2/1
5
Q3/1
5
Q4/1
5
Q1/1
6Orders received (LHS)
Orders received, last 4 quarters (RHS)
114 108120
186
97
177 185200
157
0
150
300
450
600
750
0
50
100
150
200
250
Q1/1
4
Q2/1
4
Q3/1
4
Q4/1
4
Q1/1
5
Q2/1
5
Q3/1
5
Q4/1
5
Q1/1
6
Net sales (LHS)
Net sales, last 4 quarters (RHS)
Progress in ‘Leader in technology and innovation’
April 27, 2016 © Valmet | Interim Review, January–March 201614
IQ Portfolio
– Product: Quality measurements, controls, profilers and machine
vision for paper machines and pulp dryers
– Customer benefit: Improved quality
– Sustainability: Raw material savings
OptiFlo Aqua Layering
– Product: OptiFlo aqua layering for liner and fluting
– Customer benefit: Two plies with single headbox, improved strength
properties, and wet end chemical savings (30% less chemicals)
– Sustainability: Energy, raw material and chemical savings
Advantage™ ReTurne
– Product: Turbine for regaining energy from paper machine headbox
– Customer benefit: Electric energy recovery
(50% of jet energy ~4,800 MWh/year)
– Sustainability: Electric energy savings
PolySulfide System
– Product: Polysulfide generation plant and cooking system
– Customer benefit: Lower production cost and stronger softwood
pulp adapted for packaging grade paper and board
– Sustainability: Raw material savings
A successful year with Automation
April 27, 2016 © Valmet | Interim Review, January–March 201615
Integration
– Integration process successfully finalized
Personnel
– Automation employee engagement high
New products
– Several new products launched, such as Valmet IQ quality
management solution
Cross-selling
– 31 automation packages sold together with Valmet’s pulp, energy
and paper projects
Industrial Internet
– Strengthened Valmet’s position in Industrial Internet
Increased Valmet’s stable business
– Contributed with EUR 329 million of orders received and EUR 318
million of net sales during the 12 months ended March 31, 2016
Valmet IQ quality management solution
Financial development
Key figures Q1/2016
April 27, 2016 © Valmet | Interim Review, January–March 201617
EUR million Q1/2016 Q1/2015 Change 2015
Orders received 803 580 38% 2,878
Order backlog1 2,207 2,064 7% 2,074
Net sales 652 561 16% 2,928
Comparable EBITA2 31 19 61% 182
% of net sales 4.8% 3.5% 6.2%
EBITA 30 19 56% 157
Operating profit (EBIT) 19 13 43% 120
% of net sales 2.9% 2.4% 4.1%
Earnings per share, EUR 0.08 0.05 43% 0.51
Return on capital employed (ROCE), before taxes3 7% 6% 12%
Cash flow provided by operating activities 3 -20 78
Gearing1 24% -17% 21%
Items affecting comparability: EUR -2 million in Q1/2016 (EUR 0 million in Q1/2015)
1) At the end of period
2) 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’. 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.
3) Annualized
Stable business net sales increased EUR 73 million compared to Q1/2015
April 27, 2016 © Valmet | Interim Review, January–March 201618
Net sales bridge, Q1/2015 vs. Q1/2016 (EUR million)
561
1558 -41 60
652
Net sales inQ1/2015
Servicesbusiness line
Automationbusiness line
Pulp and Energybusiness line
Paperbusiness line
Net sales inQ1/2016
Change in net sales
• Net sales increased in Services and Paper business lines compared to Q1/2015
• Net sales decreased in Pulp and Energy business line
• Automation became part of Valmet as of April 1, 2015
Good development in gross profit compared to Q1/2015
April 27, 2016 © Valmet | Interim Review, January–March 201619
Gross profit (EUR million and % of net sales)
• Gross profit increased compared to Q1/2015
• Selling, general & administrative (SG&A) expenses increased compared to
Q1/2015 due to Automation acquisition
• Further actions to improve gross profit through Must-Win implementation
SG&A (EUR million and % of net sales)
23%
0%
5%
10%
15%
20%
25%
0
40
80
120
160
200
Q1/2
014
Q2/2
014
Q3/2
014
Q4/2
014
Q1/2
015
Q2/2
015
Q3/2
015
Q4/2
015
Q1/2
016
EUR million (LHS) % of net sales (RHS)
20%
0%
5%
10%
15%
20%
25%
0
40
80
120
160
200
Q1/2
014
Q2/2
014
Q3/2
014
Q4/2
014
Q1/2
015
Q2/2
015
Q3/2
015
Q4/2
015
Q1/2
016
EUR million (LHS) % of net sales (RHS)
Target 6–9%
Comparable EBITA margin development
April 27, 2016 © Valmet | Interim Review, January–March 201620
Net sales and Comparable EBITA (EUR million)
• Net sales and profitability increased compared with Q1/2015
- Profitability improved due to the higher level of net sales in the Paper and Services business lines,
improved gross profit, and the acquisition of Automation
• The first quarter was the weakest quarter in 2014 and 2015
Comparable EBITA
(EUR million)
224251 235
278242
371334
409
314295337 354
498319
408400
445
338
519
588 590
777
561
779734
854
652
0.7%
3.7%5.5%
6.1%
3.5%
6.9%6.4%
7.3%
4.8%
Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16
Capital business
Stable business
Comparable EBITA %
19 54 47 63 314 22 32 48
43 46
117
30
-20
17 16
64
3
-40
-20
0
20
40
60
80
100
120
140
Q1/2
01
4
Q2/2
01
4
Q3/2
01
4
Q4/2
01
4
Q1/2
01
5
Q2/2
01
5
Q3/2
01
5
Q4/2
01
5
Q1/2
01
6
Cash flow provided by operating activities
April 27, 2016 © Valmet | Interim Review, January–March 201621
• Change in net working capital1 EUR -41 million in Q1/2016
• CAPEX excluding business combinations EUR -11 million in Q1/2016
• Cash flow provided by operating activities EUR 3 million in Q1/2016
Cash flow provided by operating activities (EUR million)
1) Change in net working capital, net of effect from business combinations and disposals in the consolidated statement of cash flows
-257 -249 -345 -353 -355 -265 -244 -238 -247
1,101 1,023
466 480 580781 725 793 803
-20%
-10%
0%
10%
20%
30%
-1,000
-500
0
500
1,000
1,500
Q1/2
01
4
Q2/2
01
4
Q3/2
01
4
Q4/2
01
4
Q1/2
01
5
Q2/2
01
5
Q3/2
01
5
Q4/2
01
5
Q1/2
01
6
Orders received (LHS)Net working capital (LHS)Average net working capital/rolling 12 months orders received (RHS)Net working capital/rolling 12 months orders received (RHS)
Net working capital -8% of rolling 12 months orders received
April 27, 2016 © Valmet | Interim Review, January–March 201622
• Net working capital EUR -247 million, which equals -8% of rolling 12 months orders received
• Payment schedules of large capital projects have significant impact on net working capital
development
Net working capital and orders received (EUR million)
Net debt increased compared to Q4/2015
April 27, 2016 © Valmet | Interim Review, January–March 201623
• Gearing (24%) and net debt (EUR 192 million) increased compared to Q4/2015
• Equity to assets ratio decreased from Q4/2015
• Automation acquisition was completed on April 1, 2015
Net debt (EUR million) and gearing (%) Equity to assets ratio (%)
-39-54
-158 -166 -134
238 229178 192
-5% -7%
-20% -21%-17%
29% 28%
21%24%
-30%
-20%
-10%
0%
10%
20%
30%
-300
-200
-100
0
100
200
300
Q1/1
4
Q2/1
4
Q3/1
4
Q4/1
4
Q1/1
5
Q2/1
5
Q3/1
5
Q4/1
5
Q1/1
6
Net debt (EUR million) Gearing (%)
40% 40% 41% 42%
34% 35% 35% 36% 35%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Q1/1
4
Q2/1
4
Q3/1
4
Q4/1
4
Q1/1
5
Q2/1
5
Q3/1
5
Q4/1
5
Q1/1
6
985 967902 877
1,239 1,240 1,214 1,2311,184
1%2% 2%
10% 10%
12%
14% 14%13%
Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16
Capital employed Comparable ROCE (before taxes), rolling 12 months
Capital employed and Comparable ROCE
April 27, 2016 © Valmet | Interim Review, January–March 201624
• Return on capital employed (ROCE) target: 15%
Capital employed (EUR million) and Comparable return on capital employed (ROCE),
before taxes1 (percent)
1) Rolling 12 months
Valmet continues to invest in operational excellence
April 27, 2016 © Valmet | Interim Review, January–March 201625
New ERP solution renews and improves Valmet’s operational capability
Objectives of the program
• The purpose of the program is to renew and improve Valmet’s operational capability through
- Process harmonization and standardization
- ERP platform for renewal and modernization
- Data & reporting quality improvement
• The program benefits are based on process efficiency, data quality accuracy and savings on IT platform simplification
• The program is expected to take 4 years
Estimated costs in Phase Nordics
• Total investment approximately EUR 50 million, of which EUR 30 million external investment and EUR 20 million expenses
• External investment will be capitalized and depreciated over expected useful life
• Annual global benefits expected to exceed EUR 30 million from 2020
Risk management
• Strong Valmet team, supported by global technology partner
• Standard operating procedure utilization: best practice based standards for processes, data and system build
• Phased roll out starting in Nordics, experiences will be utilized in other countries
Guidance, and short-term market outlook
Guidance and short-term market outlook
27 April 27, 2016 © Valmet | Interim Review, January–March 2016
SatisfactoryPulp and
Energy
Paper
Satisfactory
Pulp
Energy
Board and Paper
Tissue
Guidance for
2016
Services
Short-term market outlook
Guidance for 2016 (as given on February 9, 2016)
Good
Weak
Good
Satisfactory
Satisfactory
Good
Weak
Satisfactory
Satisfactory
Q2/2015 Q3/2015
Satisfactory
Satisfactory
Satisfactory
Good
Satisfactory
Q4/2015
Satisfactory
Satisfactory
Good
Satisfactory
Q1/2016
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).
Satisfactory Satisfactory Satisfactory SatisfactoryAutomation
The short-term market outlook is given for the next six months from the ending of the respective quarter.
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.
Summary of Interim Review Q1/2016
Order backlog at EUR 2.2 billion
Orders received and net sales increased in capital business2
April 27, 2016 © Valmet | Interim Review, January–March 201629
Q1/2016 in brief
1) Stable business = Services and Automation business lines
2) Capital business = Pulp and Energy, and Paper business lines
Net debt EUR 192 million
Profitability improved compared to Q1/2015, but was below
the targeted level
Orders received and net sales increased in stable business1
Appendix
0
50
100
150
200
250
300
350
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Structure of loans and borrowings
April 27, 2016 © Valmet | Interim Review, January–March 201631
Amount of outstanding interest-bearing debt
(EUR millions)
• Average maturity of long-term loans is 3.4 years- Average interest rate is 1.2%
Main financing sources
Back-up facilities
Interest-bearing debt EUR 371 million as at March 31, 2016
EUR 88 million
EUR 86 million
European Investment Bank
Skandinaviska Enskilda Banken
Nordic Investment Bank
Amount Lender
EUR 61 million Swedish Export Kredit
EUR 95 million
None outstanding
EUR 200 million domestic commercial
paper program
EUR 200 million syndicated revolving
credit facility
Amount Outstanding
EUR 40 million
© Valmet | Interim Review, January–March 201632 April 27, 2016
Largest shareholders on March 31, 2016Based on the information given by Euroclear Finland Ltd.
# Shareholder name Number of shares % of shares and votes
1 Solidium Oy1 16,695,287 11.14%
2 Varma Mutual Pension Insurance Company 6,108,465 4.08%
3 Solero Luxco S.A.R.L 5,374,482 3.59%
4 Nordea Funds 3,395,486 2.27%
5 Ilmarinen Mutual Pension Insurance Company 3,388,055 2.26%
6 Elo Pension Company 2,510,000 1.67%
7 The State Pension Fund 1,695,000 1.13%
8 Keva 1,502,166 1.00%
9 Danske Invest Funds 1,318,700 0.88%
10 Mandatum Life Insurance Company Limited 1,217,307 0.81%
10 largest shareholders, total 43,204,948 28.83%
Other shareholders 106,659,671 71.17%
Total 149,864,619 100.00%
Largest shareholders
1) A holding company that is wholly owned by the Finnish State
• The holding of Cevian Capital Partners Ltd. decreased on March 4, 2016 to 0 shares (previously 10,323,191 shares),
corresponding to an ownership of 0.00% (previously 6.89%) of Valmet’s shares.
© Valmet | Interim Review, January–March 201633 April 27, 2016
Ownership structure on March 31, 2016
1) A holding company that is wholly owned by the Finnish State
The ownership structure is based on the classification of sectors determined by Statistics Finland.
Sector Number of shareholders % of total shareholders Number of shares % of shares
Nominee registered and non-Finnish holders 314 0.7% 69,694,143 46.5%
Finnish institutions, companies and foundations 2,649 5.5% 41,428,708 27.6%
Solidium Oy10 0.0% 16,695,287 11.1%
Finnish private investors 45,291 93.9% 22,046,481 14.7%
Total 48,254 100.0% 149,864,619 100.0%
46.5%
27.6%
11.1%
14.7%
Nominee registered and non-Finnish holders
Finnish institutions, companies and foundations
Solidium Oy
Finnish private investors
© Valmet | Interim Review, January–March 201634 April 27, 2016
Share of non-Finnish holders and number of shareholders
47,000
49,000
51,000
53,000
55,000
57,000
59,000
44%
46%
48%
50%
52%
54%
56%
12/2
01
3
01/2
01
4
02/2
01
4
03/2
01
4
04/2
01
4
05/2
01
4
06/2
01
4
07/2
01
4
08/2
01
4
09/2
01
4
10/2
01
4
11/2
01
4
12/2
01
4
01/2
01
5
02/2
01
5
03/2
01
5
04/2
01
5
05/2
01
5
06/2
01
5
07/2
01
5
08/2
01
5
09/2
01
5
10/2
01
5
11/2
01
5
12/2
01
5
01/2
01
6
02/2
01
6
03/2
01
6
Non-Finnish holders (LHS) Total number of shareholders (RHS)
Paper, board, and tissue production trends
April 27, 2016 © Valmet | Interim Review, January–March 201635
Source: RISI
North America (million tonnes) Europe (million tonnes)
China (million tonnes) Asia-Pacific (million tonnes)
10
20
30
40
4
6
8
10
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
Tissue (LHS) Newsprint (LHS)Printing & Writing (RHS) Containerboard (RHS)Cartonboard (RHS)
10
15
20
25
30
35
40
5
7
9
11
13
15
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
Tissue (LHS) Newsprint (LHS)Printing & Writing (RHS) Containerboard (RHS)Cartonboard (RHS)
5
15
25
35
45
55
2
4
6
8
10
12
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
Tissue (LHS) Newsprint (LHS)Printing & Writing (RHS) Containerboard (RHS)Cartonboard (RHS)
5
10
15
20
25
30
35
40
3
4
5
6
7
8
9
10
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
Tissue (LHS) Newsprint (LHS)Printing & Writing (RHS) Containerboard (RHS)Cartonboard (RHS)
Paper, board, and tissue operating rates
April 27, 2016 © Valmet | Interim Review, January–March 201636
Source: RISI
North America Europe
China Asia-Pacific
75%
80%
85%
90%
95%
100%
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
Tissue Newsprint Printing & WritingContainerboard Cartonboard
80%
85%
90%
95%
100%
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
Tissue Newsprint Printing & WritingContainerboard Cartonboard
70%
80%
90%
100%
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
Tissue Newsprint Printing & WritingContainerboard Cartonboard
75%
80%
85%
90%
95%
100%
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
Tissue Newsprint Printing & WritingContainerboard Cartonboard
Paper and board consumption growth trends
April 27, 2016 © Valmet | Interim Review, January–March 201637
Population growth in
emerging markets is
larger than in
developed markets
Level of consumption
per capita in
emerging markets
clearly below that in
developed markets
This offers us long-
term growth potential
Paper and board consumption per capita vs. population
Average global consumption: 53 kg per capita
Source: RISI
0
500
1,000
1,500
2,000
2,500
0
50
100
150
200
250
Easte
rn E
uro
pe
We
ste
rn E
uro
pe
No
rth
Am
erica
Latin
Am
eri
ca
Ja
pa
n
Chin
a
Rest o
f A
sia
Ocea
nia
Afr
ica
Mid
dle
Ea
st
Consumption per capita, kg (LHS) Population, million (RHS)
0
5
10
15
20
25
0
500
1,000
1,500
2,000
2,500
Easte
rn E
uro
pe
We
ste
rn E
uro
pe
Nort
h A
me
rica
Latin
Am
eri
ca
Ja
pa
n
Ch
ina
Rest o
f A
sia
Ocea
nia
Afr
ica
Mid
dle
Ea
st
Population, million (LHS) Consumption per capita, kg (RHS)
Tissue consumption growth trends
April 27, 2016 © Valmet | Interim Review, January–March 201638
New products and
consumption models
based on tissue are
helping increase
consumption in
developed markets
Consumption in
emerging markets is
still low, but growing
Offers us long-term
growth potential in
both developed and
emerging markets
Tissue consumption per capita vs. population
Average global consumption: 4.5 kg per capita
Source: RISI
0
200
400
600
800
1,000
1,200
1-D
ec-0
7
1-M
ar-
08
1-J
un-0
8
1-S
ep
-08
1-D
ec-0
8
1-M
ar-
09
1-J
un-0
9
1-S
ep
-09
1-D
ec-0
9
1-M
ar-
10
1-J
un-1
0
1-S
ep
-10
1-D
ec-1
0
1-M
ar-
11
1-J
un-1
1
1-S
ep
-11
1-D
ec-1
1
1-M
ar-
12
1-J
un-1
2
1-S
ep
-12
1-D
ec-1
2
1-M
ar-
13
1-J
un-1
3
1-S
ep
-13
1-D
ec-1
3
1-M
ar-
14
1-J
un-1
4
1-S
ep
-14
1-D
ec-1
4
1-M
ar-
15
1-J
un-1
5
1-S
ep
-15
1-D
ec-1
5
1-M
ar-
16
Eucalyptus pulp (USD/t) Northern bleached softwood pulp (USD/t)Uncoated (USD/t) Copy paper (EUR/t)Testliner (EUR/t)
Pulp and paper price trends
April 27, 2016 © Valmet | Interim Review, January–March 201639
Source: Bloomberg
0
10
20
30
40
50
60
70
80
90
100
0
20
40
60
80
100
120
140
160
180
1-Jan-10 1-Aug-10 1-Mar-11 1-Oct-11 1-May-12 1-Dec-12 1-Jul-13 1-Feb-14 1-Sep-14 1-Apr-15 1-Nov-15
CIF ARA steam coal (USD/t) (LHS) Brent crude oil (USD/barrel) (LHS) Natural gas spot price NBP (GBP/therm) (RHS)
0
20
40
60
80
100
120
0
20
40
60
80
100
1-Jan-10 1-Aug-10 1-Mar-11 1-Oct-11 1-May-12 1-Dec-12 1-Jul-13 1-Feb-14 1-Sep-14 1-Apr-15 1-Nov-15
European Energy Exchange, Phelix (EUR/MWh) (LHS) Nordpool Power (EUR/MWh) (LHS)
UK Baseload (GBP/MWh) (RHS)
Crude oil, steam coal, natural gas and electricity
April 27, 2016 © Valmet | Interim Review, January–March 201640
Source: Bloomberg
Europe
0
1
2
3
4
5
6
7
0
20
40
60
80
100
120
140
1-Jan-10 1-Aug-10 1-Mar-11 1-Oct-11 1-May-12 1-Dec-12 1-Jul-13 1-Feb-14 1-Sep-14 1-Apr-15 1-Nov-15
FOB steam coal Richards Bay (USD/t) (LHS) WTI crude oil (USD/barrel) (LHS) Henry Hub gas (USD/MMBtu) (RHS)
70
75
80
85
90
0
50
100
150
200
1-Jan-10 1-Aug-10 1-Mar-11 1-Oct-11 1-May-12 1-Dec-12 1-Jul-13 1-Feb-14 1-Sep-14 1-Apr-15 1-Nov-15
Electricity spot price, PJM (USD/MWh) (LHS) Electricity spot price, NEPOOL (USD/MWh) (LHS)US utility capacity utilization rate (RHS)
Crude oil, steam coal, natural gas and electricity
April 27, 2016 © Valmet | Interim Review, January–March 201641
Source: Bloomberg
United States
0
1
2
3
4
5
6
7
8
9
10
2-N
ov-1
2
2-D
ec-1
2
2-J
an-1
3
2-F
eb
-13
2-M
ar-
13
2-A
pr-
13
2-M
ay-1
3
2-J
un-1
3
2-J
ul-1
3
2-A
ug-1
3
2-S
ep-1
3
2-O
ct-
13
2-N
ov-1
3
2-D
ec-1
3
2-J
an-1
4
2-F
eb
-14
2-M
ar-
14
2-A
pr-
14
2-M
ay-1
4
2-J
un-1
4
2-J
ul-1
4
2-A
ug-1
4
2-S
ep-1
4
2-O
ct-
14
2-N
ov-1
4
2-D
ec-1
4
2-J
an-1
5
2-F
eb
-15
2-M
ar-
15
2-A
pr-
15
2-M
ay-1
5
2-J
un-1
5
2-J
ul-1
5
2-A
ug-1
5
2-S
ep-1
5
2-O
ct-
15
2-N
ov-1
5
2-D
ec-1
5
2-J
an-1
6
2-F
eb
-16
2-M
ar-
16
European Energy Exchange (EEX) spot price (EUR/t)
European Carbon Emission Allowance
April 27, 2016 © Valmet | Interim Review, January–March 201642
Source: Bloomberg
Important notice
April 27, 2016 © Valmet | Interim Review, January–March 201643
IMPORTANT: The following applies to this document, the oral presentation of the information in this document by Valmet (the “Company”) or any person on behalf of the Company,
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Interim Review January–June 2016
July 28, 2016
www.valmet.com/investors
Capital Markets Day
September 20, 2016Helsinki, Finland
More information to follow!