Highlights of the site visit to Cernay

Valmet’s third site visit for investors and analysts was arranged on September 16, 2014 in Cernay, France. Cernay Service Technology Center is the center for Valmet’s Services business in SEMEA area (Southern Europe, Middle East and Africa) and it provides roll services, covers and field services.

Valmet’s Cernay location has had operations for over 100 years and nowadays it focuses on roll services. Board, paper, and tissue machines can contain up to 100 different rolls, and the roll covers wear out in 2 to 5 years, depending of the type of the cover. The rolls to be maintenanced are delivered to Cernay and after the operations back to the customer, who can still use the machines with spare rolls while the maintenance is under way. Eloi Risacher, General Manager, told that Cernay workshop maintenances approximately 750 rolls per year.

Valmet’s presence in SEMEA is divided in five areas, which are France, Iberia, Italy, Middle East and South-Africa. The share of France and Iberia together amount to 70 percent of Service net sales in SEMEA. Currently the major share of SEMEA area’s revenues are coming from Board and Paper services. Smaller share is coming from Tissue, Pulp, and Energy services, but Philippe Bentz, Vice President, Sales, SEMEA, sees room for growth in these markets and intends to grow the share of these.

The market for services in SEMEA has changed from large-sized (width more than 8 meters) to small- (3-5 meters) and mid-sized (5-8 meters) machines, which today represent over 50 percent of all board, paper, and tissue production in SEMEA. Bentz sees many possibilities to grow Services in SEMEA. Valmet has already adapted to the mid-sized market and continues to take market share in this segment. The technical age of the installed base in SEMEA is favorable for service and rebuild. Boosting agreement based business will also strengthen derivative business, as a Valmet team at the customer’s site will be able to suggest further improvements for the equipment.

The sales process starts already in project negotiation phase where Services are strongly present. Closeness to customer and readiness to act quickly are vital issues. Bentz considers, that after the demerger Valmet has been able to improve fast decision making, which helps reacting in situations where customers demand fast actions. Sales follow-up is an important part of developing sales. The sales persons will receive weekly sales statistics and wider sales activity reviews are done monthly. Benzt emphasized that people are the key to success.

Valmet’s competitors in services business in SEMEA include both global and regional companies. Voith and Andritz are global competitors with a wide offering, and Valmet competes with them by reducing costs of ownership, with local presence and continuous contact with customers. Global or regional product focused competitors are for example PMT, Bellmer, Alimand, Xérium and Kaiker. Valmet’s competitive advantages are a broad offering, application support, confirming promised results and continuous relationship. Against regional competitors, such as Comecart, Efacec, Endel and RIF, Valmet competes with broad expertise and local presence. This shows that as global company, localization and being close to customers are ones of the main factors that make Valmet successful in services in SEMEA.

Improving profitability is also a focus area in SEMEA. Sales cost will be optimized, for example by maximizing the number of met customers during business trips. Production costs in operations will be revised in order to get more accurate references for price discussions with customers. Adapting pricing and negotiation behavior to procurement behavior will improve negotiation outcomes. Valmet has a good reputation among its customers as technological leader.

We warmly thank all the participants for the successful trip to Cernay. The next Valmet site visit will be in December in China as a part of Finnish Engineering Roadshow.