Discussions around Q4/2024 results release
Feb 27, 2025
Feb 27, 2025
Valmet reported its Q4 and full year 2024 figures on February 13, 2025. Valmet’s orders received increased to EUR 2,463 million in Q4/2024 and to EUR 5,837 million in full year 2024. Net sales amounted to EUR 1,528 million and EUR 5,359 million respectively, while comparable EBITA amounted to EUR 192 million during Q4/2024 and EUR 609 million in FY2024. Comparable EBITA margin increased to 12.6% in Q4 and 11.4% in FY2024.
The year 2024 was marked by multiple achievements and key events for Valmet. The main highlights were the successful launch of Valmet DNAe, our next-generation industrial automation system, and the landmark order to supply the world’s largest single-phase pulp mill project, valued at over a billion euros, to Arauco in Brazil. The big order from Arauco meant that we set a record for quarterly order intake for Valmet.
Towards the end of the year, we have initiated work to renew our strategy with the aim of defining our future growth areas, accelerating growth, and simplifying our ways of working. We believe the changes we are planning will enable us to be faster and more focused as an organization for the upcoming years.
In the following we will highlight the main hot topics and questions we’ve received in connection with 2024 results and in recent months.
Can you tell us more about your 2025 guidance and the renewed short-term market outlook?
In 2025 guidance Valmet estimates that net sales in 2025 will remain at the previous year's level in comparison with 2024 (EUR 5,359 million) and comparable EBITA in 2025 will remain at the previous year's level in comparison with 2024 (EUR 609 million).
Furthermore, Valmet has made changes to its short-term market outlook reporting. The target is to serve investors better by simplifying and aligning it with Valmet’s segment reporting. Previously, we gave the short-term market outlook for 7 different categories, which started to be a bit complex for the readers, and we also considered feedback from investors. The short-term market outlook is given for January–June 2025 compared with October–December 2024. It is Valmet’s estimate of the customer activity and should not be interpreted as guidance for Valmet’s orders received.
For Process Technologies, Valmet estimates that the customer activity will remain stable. It is typical that customers’ large investment decisions can have a major impact on the market activity.
For Services, Valmet estimates that the customer activity is gradually improving, but the capacity utilization rates and profitability levels of customers cause uncertainty to the short-term market outlook.
For Automation, Valmet estimates that the customer activity will remain stable.
What is the impact of tariffs on Valmet?
USA announced on February 1 that a 25% tariff will be applied to imports from Mexico and Canada, and an additional 10% tariff on imports from China. [TO1] [EV2] Good to note that Chinese tariffs have been 25% already previously. Then, Canada has announced retaliatory tariffs on imports from the US. The situation is evolving and we are monitoring it closely. It is still too early to give exact answers, but we can provide our initial views regarding segments.
In Process Technologies, approximately 10% (EUR ~250 million) of orders came from North America. We do not have manufacturing in the US, but neither do our competitors. A total pulp mill or board machine investment includes a significant portion of locally sourced work. Thus, the tariffs’ impact on the total investment value for our customers is limited.
In Services, North America accounted for 33% of our orders received in 2024 (EUR ~630 million). A big portion of that is “Made in America”, i.e. sourced locally. The tariffs can have some impacts on the costs here.
In Automation segment, approximately 34% (EUR ~490 million) of orders received in 2024 came from North America. The local portion is large and we have readiness to react with commercial and supply chain actions. We do have some imports from EU, and in Flow Control also from China.
Why are you not increasing dividend?
Our dividend policy is over 50% payout ratio. We don’t have a target to increase the dividend each year, but rather to maximize total return to shareholders. However, our dividend payout ratio increased to 89% from 70% as EPS decreased by 22% compared with 2023. We need to ensure we have capital to develop Valmet strategically, including acquisitions.
Can you tell a bit more about the renewed strategy?
We are currently working on our renewed strategy, and will communicate the outcomes in our Capital Markets Day on June 5th, so save the date! We will define future growth areas and find ways to accelerate growth. We also want to simplify our ways of working, which will enable us to be faster and more focused as an organization.
Why were the Services orders so strong in Q4/24?
We saw our orders received in Services develop nicely in Q4/2024 with good growth. Reported order growth from previous year was +19% from previous year, and even excluding the inorganic impact from Tissue Converting, the growth was +16%. The order intake for mill improvement projects was somewhat better than we expected, and the Arauco deal also supported the growth in Services.
Why were Paper’s orders so strong in Q4?
Paper’s orders received were 376 million in Q4/2024. We published two big orders: a complete papermaking line to Asia-Pacific, typically valued EUR 90–120 million, and a tissue machine to Irving in USA. We had a good quarter in tissue, where market is active. Tissue Converting was included in Valmet's figures only for two months in the comparison period Q4/2023. The orders received of Tissue Converting were EUR 56 million in Q4/2024. It’s good to remember that the orders in Q3/2024 were low, and timing between the quarters played a role here as well.
Why did Process Technologies’ margin decrease to 2.8% in Q4?
Comparable EBITA of the Process Technologies segment decreased to 15 million in Q4/2024, which corresponds to a 2.8% margin (25 million and 4.1% in Q4/2023). Comparable EBITA was impacted by lower net sales, with net sales decreasing by 13% (78 million).
Why did the Comparable EBITA margin decrease in Automation?
Comparable EBITA of the Automation segment remained at the previous year’s level and amounted to 81 million in Q4/2024, corresponding to 19.1% of the segment's net sales (79 million and 21.1%). Comparable EBITA margin decreased from the high margin in comparison quarter partly due to integration of Analyzer Products and Integration.
Have you received orders for the new DNAe, and what are your expectations for 2025?
Yes, we have already received many orders for DNAe, for example Mercer and Sucuriu Arauco and many for Valmet DNA (DCS and related applications were ~50% of Automation Systems’ orders received in 2024).
We are very excited about DNAe and feedback from customers has also been very positive. The system has many tangible benefits for customers in their digitalization journey and it differentiates Valmet from competitors. However, it is good to remember that changing a DCS system is a long process for customers and discussions can take months or even years.
How does Valmet mitigate the risks of the Arauco project?
Even though the mill will be the largest ever delivered, Valmet’s delivery scope will include proven technologies creating a good foundation for this mega mill project. We have a strong organization and subcontractor network in Brazil, which gives us confidence. Furthermore, we have done a thorough pre-engineering and there is good amount of preparation time, which mitigates risk. We have good references from large projects from Brazil, such as Klabin and Lenzing-Duratex Celulose.