2014-07-31 14:00:00 CEST
2014-07-31 14:00:49 CEST
REGULATED INFORMATION
Valmet Corporation - Interim report (Q1 and Q3)
Valmet's Interim Review January 1 - June 30, 2014: Strong development in orders received continued - profitability improvement proceeding according to plan
Valmet Corporation's stock exchange release on July 31, 2014 at 3:00 p.m. 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.
April-June 2014: Profitability improved during the second quarter
* Orders received amounted to EUR 1,023 million (EUR 861 million).
* Orders received increased in the Pulp and Energy, and Paper business
lines.
* Net sales declined by 18 percent to EUR 588 million (EUR 714 million).
* Net sales remained on a par with Q2/2013 in Services, and Pulp and
Energy business lines, and declined in Paper business line.
* Earnings before interest, taxes and amortization (EBITA) and non-recurring
items were EUR 22 million (EUR 22 million), and the corresponding EBITA
margin was 3.7 percent (3.1%).
* Profitability improved compared with both Q2/2013 and Q1/2014.
* Full impact of savings program visible in selling, general and
administrative expenses.
* Earnings per share were EUR 0.07 (EUR 0.01).
* Non-recurring items amounted to EUR 0 million (EUR -11 million).
* Cash flow provided by operating activities was EUR 46 million (EUR -12
million).
January-June 2014: Strong development in orders received
* Orders received amounted to EUR 2,124 million (EUR 1,372 million).
* Orders received increased in the Pulp and Energy, and Paper business
lines.
* Net sales declined 18 percent to EUR 1,107 million (EUR 1,345 million).
* Net sales declined in capital business, and remained at the previous
year's level in services business.
* Earnings before interest, taxes and amortization (EBITA) and non-recurring
items were EUR 26 million (EUR 48 million), and the corresponding EBITA
margin was 2.3 percent (3.4%).
* Earnings per share were EUR 0.03 (EUR 0.09).
* Non-recurring items amounted to EUR -6 million (EUR -11 million).
* Cash flow provided by operating activities was EUR 89 million (EUR -17
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.
Short-term outlook
General economic outlook
The global growth projection for 2014 has been marked down by 0.3 percent to
3.4 percent, reflecting both the legacy of the weak first quarter, particularly
in the United States, and a less optimistic outlook for several emerging
markets. With somewhat stronger growth expected in some advanced economies next
year, the global growth projection for 2015 remains at 4 percent. (International
Monetary Fund, July 24, 2014)
Short-term market outlook
Based on Valmet's improved utilization of adjusted capacity and expectations for
customer activity, the short-term market outlook for board and paper has
improved to a good level (previously satisfactory level).
Valmet reiterates the satisfactory short-term market outlook for services, pulp,
energy, and tissue, as presented on February 6, 2014.
President and CEO Pasi Laine: Focus remains on improving profitability
Customer activity revived in the first quarter of 2014 and continued on the same
level in the second quarter. During the first half of 2014, we have received
almost as much orders as during the full year of 2013. In addition to a few
major orders, we have continued to receive orders from different customer
industries and geographical areas. Particularly the orders received by the Paper
business line and Energy business increased strongly in the second quarter,
while the orders continued to be on a good level in Pulp. The development of the
Services business line was stable during the second quarter.
Our profitability improved in the second quarter compared with both Q2/2013 and
the first quarter of 2014. We have proceeded well with our savings program,
which was initiated in 2013, and the full impact of the savings program is
visible in selling, general and administrative expenses. However, the
profitability is still below our target level. Therefore, Valmet's key focus
remains on improving profitability. In addition to the implementation of the
savings program, we are also focusing on improving our processes, for example
reducing quality costs and saving on procurement, to reach the targeted level. A
stronger order backlog combined with the executed cost savings gives us a good
starting point for the rest of 2014.
We have upgraded the short-term market outlook in board and paper to a good
level, based on our expectations for customer activity and improved utilization
of our adjusted capacity.
Key figures*
Q2/2014 Q2/2013 Change Q1-Q2/ Q1-Q2/ Change
2014 2013
EUR million Carve-out Carve-out
-------------------------------------------------------------------------------
Orders received 1,023 861 19% 2,124 1,372 55%
Order backlog** 2,406 1,883 28% 2,406 1,883 28%
Net sales 588 714 -18% 1,107 1,345 -18%
Earnings before interest,
taxes and amortization 22 22 -3% 26 48 -47%
(EBITA) and non-recurring
items
% of net sales 3.7% 3.1% 2.3% 3.4%
Earnings before interest,
taxes and amortization 22 12 87% 20 38 -48%
(EBITA)
% of net sales 3.7% 1.6% 1.8% 2.8%
Operating profit (EBIT) 16 5 >100% 9 24 -63%
% of net sales 2.8% 0.7% 0.8% 1.8%
Profit before taxes 16 3 >100% 7 21 -67%
Profit 11 2 >100% 5 14 -68%
Earnings per share, EUR 0.07 0.01(2) >100% 0.03 0.09*** -67%
Earnings per share, diluted, 0.07 0.01(2) >100% 0.03 0.09*** -67%
EUR
Equity per share, EUR 5.19 5.65 -8% 5.19 5.65 -8%
Cash flow provided by 46 -12 89 -17
operating activities
Cash flow after investments 36 -31 71 -44
Return on capital employed
(ROCE) before taxes 3% 5%
(annualized)
* The calculation of key figures is presented in the Tables section of the Q1-
Q2/2014 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 June 30, 2014 As at June 30, 2013 As at March
31, 2014
Equity ratio and Carve-out
gearing
-------------------------------------------------------------------------------
Equity ratio at 40% 39% 40%
end of period
Gearing at end of -7% 8% -5%
period
Q2/2014 Q2/2013 Change Q1-Q2/ Q1-Q2/ Change
2014 2013
Orders received, EUR million Carve-out Carve-out
------------------------------------------------------------------------------
Services 273 281 -3% 540 563 -4%
Pulp and Energy 560 452 24% 1,182 513 >100%
Paper 190 128 48% 402 296 36%
------------------------------------------------------------------------------
Total 1,023 861 19% 2,124 1,372 55%
------------------------------------------------------------------------------
As at June As at June Change As at March
30, 2014 30, 2013 31, 2014
Order backlog, Carve-out
EUR million
-------------------------------------------------------------------------------
Total 2,406 1,883 28% 1,972
-------------------------------------------------------------------------------
Q2/2014 Q2/2013 Change Q1-Q2/ Q1-Q2/ Change
2014 2013
Net sales, EUR million Carve-out Carve-out
------------------------------------------------------------------------
Services 251 256 -2% 475 499 -5%
Pulp and Energy 229 240 -5% 410 461 -11%
Paper 108 218 -50% 222 384 -42%
------------------------------------------------------------------------
Total 588 714 -18% 1,107 1,345 -18%
------------------------------------------------------------------------
News conference for analysts, investors and the media
Valmet will arrange a news conference in English for investment analysts,
investors, and the media on July 31, 2014 at 4:00 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 3:55 p.m. (EET), at
+44 1452 555566. The participants will be asked to provide the following
conference ID: 65328995.
During the webcast and conference call, all questions should be presented in
English. At the end of the event the media will also be given a chance to
present questions in Finnish.
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
VALMET CORPORATION
Markku Honkasalo
CFO
Hanna-Maria Heikkinen
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.
Read more www.valmet.com , www.twitter.com/valmetglobal
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