Valmet's Interim Review January 1 - March 31, 2023: Orders received increased to EUR 1.55 billion and Comparable EBITA to EUR 133 million in the first quarter

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Apr 26, 2023, 06:51 ET

Valmet Oyj's stock exchange release on April 26, 2023 at 1:00 p.m. EEST

ESPOO, Finland, April 26, 2023 /PRNewswire/ --

Figures in brackets, unless otherwise stated, refer to the comparison period, i.e., the same period of the previous year.

Net debt to EBITDA ratio, Comparable gross profit, and Comparable selling, general and administrative expenses (Comparable SG&A expenses) are new alternative performance measures. They enable users of the financial information to prepare more meaningful analysis on Valmet's performance and are presented with comparatives from Q1/2023 onwards.

January–March 2023: Orders received, Net sales, Comparable EBITA and Comparable EBITA margin increased

Orders received increased 17 percent to EUR 1,552 million (EUR 1,324 million).

Orders received increased in the Automation and Services segments and decreased in the Process Technologies segment.
Orders received increased in South America, North America and EMEA (Europe, Middle East and Africa), remained at the previous year's level in Asia-Pacific, and decreased in China.

Net sales increased 38 percent to EUR 1,321 million (EUR 960 million).

Net sales increased in all three segments.

Comparable earnings before interest, taxes and amortization (Comparable EBITA) increased 68 percent to EUR 133 million (EUR 79 million).

Comparable EBITA increased in the Automation and Services segments and decreased in the Process Technologies segment.

Comparable EBITA margin was 10.1 percent (8.3%).
Earnings per share were EUR 0.38 (EUR 0.30). Adjusted earnings per share were EUR 0.51 (EUR 0.33).
Items affecting comparability amounted to EUR -2 million (EUR -5 million).
Cash flow provided by operating activities was EUR 208 million (EUR 19 million).

Guidance for 2023

Valmet estimates that net sales in 2023 will increase in comparison with 2022 (EUR 5,074 million) and Comparable EBITA in 2023 will increase in comparison with 2022 (EUR 533 million).

Short-term market outlook

Valmet reiterates the good short-term market outlook for services, flow control, automation systems, energy, and board and paper, the good/satisfactory short-term market outlook for pulp, and the satisfactory short-term market outlook for tissue.

The short-term market outlook is given for the next six months from the end of the reported period. It is based on customer activity (50%) and Valmet's capacity utilization (50%), and the scale is 'weak–satisfactory–good'.

President and CEO Pasi Laine: Strong quarter in order intake and profitability

"Valmet's orders received increased to EUR 1.55 billion in the first quarter of 2023. This is a record-high quarterly order intake for us. Orders received increased in the Services and Automation segments and decreased in the Process Technologies segment. Orders received in Valmet's stable business totaled EUR 3.2 billion during the last four quarters. Valmet has a strong order backlog amounting to EUR 4.6 billion at the end of the quarter.

The first quarter was good also in terms of net sales and Comparable EBITA, which both increased. Net sales increased in all segments. Comparable EBITA margin was 16.1% in Services, 16.3% in Automation and 4.7% in Process Technologies. Valmet's Comparable EBITA increased to EUR 133 million and margin to 10.1%."

Update on the integration of Flow Control into Valmet

The merger of Neles into Valmet was completed on April 1, 2022. The integration of Flow Control (former Neles) into Valmet is proceeding according to the plan. Most of the cost synergy actions regarding function costs, common locations and supply chain were implemented already during 2022. Sales synergies have developed well. Valmet expects to generate annual run rate synergies of approximately EUR 25 million, of which approximately 60 percent are expected to be achieved by the end of 2023 and approximately 90 percent by the end of 2024.

Russia's invasion of Ukraine and sanctions on Russia

Valmet's withdrawal from Russia is proceeding according to plan, and the liquidation of the two legal entities is expected to be completed by the end of the third quarter 2023. At the end of March 2023, Valmet's number of personnel in Russia was 7 (approximately 30 at the end of 2022).

Key figures¹

EUR million	Q1/2023	Q1/2022	Change	2022
Orders received	1,552	1,324	17 %	5,194
Order backlog²	4,595	4,459	3 %	4,403
Net sales	1,321	960	38 %	5,074
Comparable EBITA	133	79	68 %	533
% of net sales	10.1 %	8.3 %		10.5 %
EBITA	131	74	76 %	550
% of net sales	9.9 %	7.7 %		10.8 %
Operating profit (EBIT)	97	63	54 %	436
% of net sales	7.3 %	6.5 %		8.6 %
Profit before taxes	91	62	47 %	431
Profit for the period	71	45	57 %	338
Earnings per share, EUR	0.38	0.30	25 %	1.92
Adjusted earnings per share, EUR	0.51	0.33	56 %	2.37
Equity per share, EUR²	12.50	8.32	50 %	13.54
Cash flow provided by operating activities	208	19	>100%	36
Cash flow after investments	175	-6		56
Comparable return on capital employed (Comparable ROCE) before taxes (LTM)	19 %	24 %		17 %
Return on capital employed (ROCE) before taxes (LTM)	20 %	24 %		18 %
Return on equity (ROE) (LTM)	20 %	24 %		18 %
Net debt to EBITDA ratio³	0.49	0.01		0.78
Gearing²	15 %	0 %		20 %
Equity to assets ratio²	45 %	40 %		49 %
¹ The calculation of key figures is presented on page 48.
² At end of period.
³ Net debt to EBITDA ratio is a new alternative performance measure. It enables users of the financial information to prepare more meaningful analysis on Valmet's performance and is presented with comparatives from Q1/2023 onwards.
LTM = Last twelve months

Segment key figures

Orders received, EUR million	Q1/2023	Q1/2022	Change	2022
Services	577	451	28 %	1,756
Automation	391	147	>100%	1,081
Flow Control	217	—		576
Automation Systems	175	147	19 %	505
Process Technologies	584	727	-20 %	2,356
Pulp and Energy	212	327	-35 %	1,072
Paper	372	400	-7 %	1,285
Total	1,552	1,324	17 %	5,194

Net sales, EUR million	Q1/2023	Q1/2022	Change	2022
Services	389	317	23 %	1,606
Automation	304	88	>100%	1,040
Flow Control	188	—		551
Automation Systems	116	88	32 %	489
Process Technologies	628	555	13 %	2,428
Pulp and Energy	286	276	4 %	1,081
Paper	342	279	22 %	1,347
Total	1,321	960	38 %	5,074

Comparable EBITA, EUR million	Q1/2023	Q1/2022	Change	2022
Services	63	30	>100%	237
Automation	50	11	>100%	190
Process Technologies	30	41	-27 %	145
Other	-9	-3	>100%	-39
Total	133	79	68 %	533

Comparable EBITA, % of net sales	Q1/2023	Q1/2022	2022
Services	16.1 %	9.6 %	14.8 %
Automation	16.3 %	12.1 %	18.3 %
Process Technologies	4.7 %	7.3 %	6.0 %
Total	10.1 %	8.3 %	10.5 %

EBITA, EUR million	Q1/2023	Q1/2022	Change	2022
Services	62	30	>100%	228
Automation	44	10	>100%	170
Process Technologies	33	38	-14 %	134
Other	-9	-4	>100%	18
Total	131	74	76 %	550

News conference and webcast for analysts, investors and media

Valmet will arrange a news conference in English as a live webcast at https://valmet.videosync.fi/q1-2023 on Wednesday, April 26, 2023, at 2:00 p.m. Finnish time (EEST). President and CEO Pasi Laine and CFO Katri Hokkanen will be presenting the results.

Recording of the webcast will be available shortly after the event at the same address.

It is possible to take part in the news conference through a conference call by registering through the link below:

http://palvelu.flik.fi/teleconference/?id=1009888

After the registration you will be provided phone numbers and a conference ID to access the conference. If you wish to ask a question during the conference, please dial *5 on your telephone keypad to enter the question queue. All questions should be presented in English. The event can also be followed on Twitter at www.twitter.com/valmetir.

Further information, please contact:
Pekka Rouhiainen, Vice President, Investor Relations, Valmet, tel. +358 10 672 0020

VALMET

Katri Hokkanen
CFO

Pekka Rouhiainen
Vice President, Investor Relations

DISTRIBUTION:
Nasdaq Helsinki
Major media
www.valmet.com

Valmet is a leading global developer and supplier of process technologies, automation and services for the pulp, paper and energy industries. With our automation systems and flow control solutions, we serve an even wider base of process industries. Our 17,500 professionals around the world work close to our customers and are committed to moving our customers' performance forward – every day.

The company has over 220 years of industrial history and a strong track record in continuous improvement and renewal. In 2022, a major milestone was achieved when the flow control company Neles was merged into Valmet. Valmet's net sales in 2022 were approximately EUR 5.1 billion.

Valmet's shares are listed on the Nasdaq Helsinki, and the head office is in Espoo, Finland.