Valmet's Interim Review January 1 - March 31, 2024: Orders received amounted to EUR 1,050 million and Comparable EBITA to EUR 121 million in the first quarter

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Apr 24, 2024, 07:23 ET

Valmet Oyj's stock exchange release on April 24, 2024 at 1:00 p.m. EEST

ESPOO, Finland, April 24, 2024 /PRNewswire/ --

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

January–March 2024: Orders received, Net sales and Comparable EBITA decreased

Orders received decreased 32 percent to EUR 1,050 million (EUR 1,552 million).
- Orders received decreased in all three segments.
- Orders received decreased in all areas.
Net sales decreased 8 percent to EUR 1,212 million (EUR 1,321 million).
- Net sales remained at the previous year's level in the Services and Automation segments and decreased in the Process Technologies segment.
Comparable earnings before interest, taxes and amortization (Comparable EBITA) decreased 9 percent to EUR 121 million (EUR 133 million).
- Comparable EBITA remained at the previous year's level in the Automation and Services segments and decreased in the Process Technologies segment.
Comparable EBITA margin was 10.0 percent (10.1%).
Earnings per share (EPS) were EUR 0.30 (EUR 0.38). Adjusted EPS was EUR 0.41 (EUR 0.51).
Items affecting comparability amounted to EUR -7 million (EUR -2 million).
Cash flow provided by operating activities totaled EUR 138 million (EUR 208 million).

Guidance for 2024 unchanged

Valmet reiterates its guidance issued on February 7, 2024, in which Valmet estimates that net sales in 2024 will remain at the previous year's level in comparison with 2023 (EUR 5,532 million) and Comparable EBITA in 2024 will remain at the previous year's level or increase in comparison with 2023 (EUR 619 million).

Short-term market outlook

Valmet estimates that the short-term market outlook for services has increased to good (previously good/satisfactory), that the short-term market outlook for pulp has decreased to weak (previously satisfactory) and that the short-term market outlook for board and paper has decreased to weak/satisfactory (previously satisfactory). In board and paper, customer activity is weak and Valmet's capacity utilization satisfactory. Valmet reiterates the good short-term market outlook for flow control, automation systems and energy, 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: Orders received amounted to EUR 1,050 million and Comparable EBITA margin to 10.0%

"Valmet's orders received amounted to EUR 1,050 million in the first quarter of 2024. Compared to the record-high comparison quarter, orders received decreased in all three segments. Orders received in Valmet's stable business totaled close to EUR 3.0 billion during the last four quarters, representing 67% of Valmet's orders received. This is a clear change in the company compared to 2014, when stable business represented 34% of orders received. Orders received in Process Technologies segment decreased and amounted to EUR 1,466 million during the last four quarters. Valmet's order backlog amounted close to EUR 3.8 billion at the end of the quarter.

Valmet's net sales amounted to EUR 1,212 million in the first quarter. Net sales remained at the previous year's level in Services and Automation segments, and decreased in Process Technologies. Comparable EBITA margin was 16.5% in Automation, 14.6% in Services and 4.2% in Process Technologies. Valmet's Comparable EBITA amounted to EUR 121 million and margin was 10.0%.

The customer activity in services has improved, and the short-term market outlook for services has increased to good. As the market outlooks for flow control and automation systems remained good, all our stable businesses now have a good market outlook for the second and the third quarter of 2024.

In Process Technologies, the customer activity is good in energy and satisfactory in tissue. For pulp, the short-term market outlook has decreased to weak. For board and paper, the outlook has decreased to weak/satisfactory, as the customer activity is weak while Valmet's capacity utilization remains satisfactory. Even though the short-term market outlook has decreased in Process Technologies, the long-term megatrends have not changed and continue to be favorable for all Valmet's three segments.

Integration of Tissue Converting, which Valmet acquired during the fourth quarter of 2023, has proceeded well. The orders received of Tissue Converting developed well in the first quarter and customers have appreciated Valmet's combined tissue offering. We have already received synergetic orders including both Valmet's tissue making line and the converting equipment.

Valmet completed the acquisition of the Process Gas Chromatography business from Siemens soon after the first quarter ended, on April 2. The acquisition was completed as planned and we are very happy to welcome the new colleagues as well as the customers of former Siemens Process Gas Chromatography to Valmet. The acquired business complements our automation offering well, opening the opportunity to serve both businesses' current and future process automation customers with a wider offering.

Valmet's automation business reached a major milestone on April 9, when Valmet launched its new distributed control system (DCS), Valmet DNAe. The new system helps customers improve efficiency, productivity, sustainability and safety of their operations and provides a solid platform for moving towards more digitalized and autonomous operations in the future. The launch is an important step in Valmet's strategy for growing its automation business further to a wide base of process industries globally."

Chair of the Board of Directors Mikael Mäkinen: Thomas Hinnerskov appointed President and CEO of Valmet

"On February 19, Valmet's Board of Directors appointed Thomas Hinnerskov President and CEO of Valmet. He will start in the position during the second half of the year and at the end of September 2024 at the latest. Thomas Hinnerskov succeeds Pasi Laine, who will continue as the President and CEO of Valmet until his successor starts.

Thomas Hinnerskov is a Danish citizen and was born in 1971. He joins Valmet from Mediq B.V. where he has been working as the CEO since 2022. Prior to his current position, Thomas Hinnerskov was Executive Vice President at Kone responsible for South Europe, Middle East and Africa between 2021–2022 and Executive Vice President for Central Europe between 2016–2021. Earlier in his career Thomas Hinnerskov has had several leadership positions in ISS A/S between 2003–2016, and before that he worked in versatile management positions in a private equity fund, in consulting and in investment banking sector. He has a Master's degree in Economics (Finance and Accounting) from Copenhagen Business School.

Thomas Hinnerskov has a strong track record in successfully leading versatile businesses in a global business environment. He has extensive international experience which he has gained by living and working in several countries across three continents over the years. He has successfully generated growth, developed people and organizations, and delivered solid financial results. Valmet is a truly unique and high performing company with a strong global organization and consistent upward performance trajectory. I am convinced that with his background Thomas has a good foundation to take Valmet forward together with the rest of the Executive Team from the company's excellent position built since 2013. We look forward to working with Thomas and wish him the best of success in his new demanding position. At the same time, I would like once again to express the deep gratitude and respect for the exceptional and committed work Pasi Laine has done in creating Valmet and in competently guiding and developing the company through an exceptional period of growth."

Key figures¹

EUR million, or as indicated	Q1/2024	Q1/2023	Change	2023
Orders received	1,050	1,552	-32 %	4,955
Order backlog²	3,790	4,595	-18 %	3,973
Net sales	1,212	1,321	-8 %	5,532
Comparable EBITA	121	133	-9 %	619
% of net sales	10.0 %	10.1 %		11.2 %
EBITA	114	131	-13 %	605
% of net sales	9.4 %	9.9 %		10.9 %
Operating profit (EBIT)	87	97	-10 %	507
% of net sales	7.2 %	7.3 %		9.2 %
Profit before taxes	73	91	-20 %	473
Profit for the period	56	71	-21 %	359
Earnings per share, EUR	0.30	0.38	-20 %	1.94
Adjusted earnings per share, EUR	0.41	0.51	-19 %	2.28
Equity per share, EUR²	12.93	12.50	3 %	13.93
Cash flow provided by operating activities	138	208	-34 %	352
Cash flow after investing activities	109	175	-38 %	-181
Comparable return on capital employed (Comparable ROCE) before taxes (LTM)	15 %	19 %		15 %
Return on capital employed (ROCE) before taxes (LTM)	14 %	20 %		14 %
Return on equity (ROE, LTM)	15 %	20 %		14 %
Net debt to EBITDA ratio³	1.36	0.49		1.46
Gearing²	39 %	15 %		40 %
Equity to assets ratio²	39 %	45 %		43 %

¹ The calculation of key figures is presented on page 51.
² At end of period.
³ Last twelve months' EBITDA
LTM = Last twelve months

Segment key figures

Orders received, EUR million	Q1/2024	Q1/2023	Change	2023
Services	527	577	-9 %	1,760
Automation	328	391	-16 %	1,340
Flow Control	194	217	-10 %	789
Automation Systems	134	175	-23 %	551
Process Technologies	195	584	-67 %	1,856
Pulp and Energy	57	212	-73 %	854
Paper	138	372	-63 %	1,002
Total	1,050	1,552	-32 %	4,955

Net sales, EUR million	Q1/2024	Q1/2023	Change	2023
Services	406	389	4 %	1,784
Automation	309	304	2 %	1,328
Flow Control	188	188	0 %	777
Automation Systems	121	116	4 %	551
Process Technologies	497	628	-21 %	2,420
Pulp and Energy	225	286	-21 %	1,067
Paper	272	342	-21 %	1,353
Total	1,212	1,321	-8 %	5,532

Comparable EBITA, EUR million	Q1/2024	Q1/2023	Change	2023
Services	60	63	-5 %	312
Automation	51	50	3 %	248
Process Technologies	21	30	-30 %	110
Other	-11	-9	15 %	-50
Total	121	133	-9 %	619

Comparable EBITA, % of net sales	Q1/2024	Q1/2023	2023
Services	14.6 %	16.1 %	17.5 %
Automation	16.5 %	16.3 %	18.6 %
Process Technologies	4.2 %	4.7 %	4.5 %
Total	10.0 %	10.1 %	11.2 %

EBITA, EUR million	Q1/2024	Q1/2023	Change	2023
Services	56	62	-10 %	302
Automation	50	44	12 %	245
Process Technologies	21	33	-35 %	116
Other	-14	-9	51 %	-58
Total	114	131	-13 %	605

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/q 1 -202 4 on Wednesday, April 24, 2024, 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:

https://palvelu.flik.fi/teleconference/?id=5004 8300

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 to enter the question queue.

All questions should be presented in English.

The event can also be followed on social media platform X at www.x.com/ValmetIR.

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

VALMET

Katri Hokkanen
CFO

Pekka Rouhiainen
VP, Investor Relations

DISTRIBUTION:
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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 more than 19,000 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. Valmet's net sales in 2023 were approximately EUR 5.5 billion.

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