Valmet's Interim Review January 1 - March 31, 2016: Orders received, net sales and profitability increased
Figures in brackets, unless otherwise stated, refer to the comparison period, i.e. the same period of the previous year. Automation has been consolidated into Valmet's financials since April 1, 2015, when the acquisition of Automation was completed.
Due to new regulation by the European Securities and Market Authority concerning alternative performance measures, Valmet has decided to replace the performance measure 'EBITA before non-recurring items' with 'Comparable EBITA'. The content of items affecting comparability, i.e. items previously disclosed as non-recurring, remain unchanged and therefore 'Comparable EBITA' equals previously disclosed 'EBITA before non-recurring items'. Items affecting comparability consist of income and expenses arising from activities that amend the capacity of Valmet's operations or are incurred outside its normal course of business. Valmet discloses alternative performance measures to describe the underlying business performance and to improve comparability between reporting periods.
January-March 2016: Orders received, net sales and profitability increased
- Orders received increased to EUR 803 million (EUR 580 million).
- Orders received increased in the Pulp and Energy, Paper, and Services business lines.
- Automation contributed to orders received with EUR 66 million.
- Orders received more than doubled in EMEA (Europe, Middle East and Africa) and South America.
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- Net sales increased to EUR 652 million (EUR 561 million).
- Net sales increased in the Paper and Services business lines and decreased in the Pulp and Energy business line.
- Automation contributed to net sales with EUR 58 million.
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- Comparable earnings before interest, taxes and amortization (Comparable EBITA) were EUR 31 million (EUR 19 million), and the corresponding Comparable EBITA margin was 4.8 percent (3.5%).
- Profitability improved due to the higher level of net sales in Paper and Services business lines, improved gross profit, and the acquisition of Automation.
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- Earnings per share were EUR 0.08 (EUR 0.05).
- Items affecting comparability amounted to EUR -2 million (EUR 0 million).
- Cash flow provided by operating activities was EUR 3 million (EUR -20 million).
Valmet reiterates its guidance for 2016
Valmet is reiterating its guidance presented on February 9, 2016 in which Valmet estimates that net sales in 2016 will remain at the same level with 2015 (EUR 2,928 million) and Comparable EBITA in 2016 will increase in comparison with 2015 (EUR 182 million).
Due to new regulation by the European Securities and Market Authority, Valmet has decided to replace the performance measure 'EBITA before non-recurring items' with 'Comparable EBITA'. The content of items affecting comparability, i.e. items previously disclosed as non-recurring, remain unchanged and therefore 'Comparable EBITA' equals previously disclosed 'EBITA before non-recurring items' (EUR 182 million in 2015). Items affecting comparability consist of income and expenses arising from activities that amend the capacity of Valmet's operations or are incurred outside its normal course of business.
Short-term outlook
General economic outlook
The baseline projection for global growth in 2016 is a modest 3.2 percent, broadly in line with last year, and a 0.2 percentage point downward revision relative to the January 2016 World Economic Outlook Update. The recovery is projected to strengthen in 2017 and beyond, driven primarily by emerging market and developing economies, as conditions in stressed economies start gradually to normalize. But uncertainty has increased, and risks of weaker growth scenarios are becoming more tangible. The fragile conjuncture increases the urgency of a broad-based policy response to raise growth and manage vulnerabilities. (International Monetary Fund, April 12, 2016)
Short-term market outlook
Valmet reiterates the good short-term market outlook for board and paper, and the satisfactory short-term market outlook for services, automation, pulp, energy, and tissue.
President and CEO Pasi Laine: Solid start of the year with increase in orders received, net sales and profitability
Valmet had a solid start of the year 2016 with an increase in orders received, net sales and profitability. Orders received increased in Pulp and Energy, Paper, and Services business lines. As a result of both customer activity and good work in all parts of the organization, the orders received development has been trending upwards in all business lines. The orders received were at an all-time high level in the Services business line. Profitability improved in the first quarter of the year compared to the first quarter of 2015.
Automation has now been a part of Valmet for a full year, and I am very pleased with the development. Summing up the year from the Automation perspective, the integration was a success. Both customers and employees are pleased and energized, we launched new automation products during the year, strengthened Valmet's position in Industrial Internet and, in financial terms, we can be satisfied with the development of the Automation business line. Furthermore, our four business lines have found a good and continuously improving way to cooperate in the customer interface and to bring benefits of our unique and market's widest offering to our customers.
Key figures*
| EUR million | Q1/2016 | Q1/2015 | Change | 2015 |
| Orders received | 803 | 580 | 38% | 2,878 |
| Order backlog** | 2,207 | 2,064 | 7% | 2,074 |
| Net sales | 652 | 561 | 16% | 2,928 |
| Comparable earnings before interest, taxes and amortization (Comparable EBITA) | 31 | 19 | 61% | 182 |
| % of net sales | 4.8% | 3.5% | 6.2% | |
| Earnings before interest, taxes and amortization (EBITA) | 30 | 19 | 56% | 157 |
| % of net sales | 4.6% | 3.4% | 5.3% | |
| Operating profit (EBIT) | 19 | 13 | 43% | 120 |
| % of net sales | 2.9% | 2.4% | 4.1% | |
| Profit before taxes | 17 | 11 | 46% | 108 |
| Profit / loss | 12 | 8 | 46% | 78 |
| Earnings per share, EUR | 0.08 | 0.05 | 43% | 0.51 |
| Earnings per share, diluted, EUR | 0.08 | 0.05 | 43% | 0.51 |
| Equity per share, EUR | 5.38 | 5.26 | 2% | 5.70 |
| Cash flow provided by operating activities | 3 | -20 | 78 | |
| Cash flow after investments | -8 | -30 | -74% | -287 |
| Return on equity (ROE) (annualized) | 6% | 4% | 9% | |
| Return on capital employed (ROCE) before taxes (annualized) | 7% | 6% | 12% |
* The calculation of key figures is presented in the Interim Review January-March 2016 on page 34.
** At the end of period.
| Equity to assets ratio and gearing | As at March 31, 2016 | As at March 31, 2015 | As at December 31, 2015 | |
| Equity to assets ratio at end of period | 35% | 34% | 36% | |
| Gearing at end of period | 24% | -17% | 21% |
| Orders received, EUR million | Q1/2016 | Q1/2015 | Change | 2015 |
| Services | 313 | 293 | 7% | 1,119 |
| Automation | 66 | - | - | 222 |
| Pulp and Energy | 238 | 138 | 72% | 864 |
| Paper | 186 | 149 | 25% | 673 |
| Total | 803 | 580 | 38% | 2,878 |
| Order backlog, EUR million | As at March 31, 2016 | As at March 31, 2015 | Change | As at December 31, 2015 |
| Total | 2,207 | 2,064 | 7% | 2,074 |
| Net sales, EUR million | Q1/2016 | Q1/2015 | Change | 2015 |
| Services | 257 | 242 | 6% | 1,128 |
| Automation | 58 | - | - | 229 |
| Pulp and Energy | 181 | 222 | -18% | 913 |
| Paper | 157 | 97 | 62% | 659 |
| Total | 652 | 561 | 16% | 2,928 |
News conference and webcast for analysts, investors and media
Valmet will arrange a news conference in English for investment analysts, investors, and media on Wednesday, April 27, 2016 at 2:00 p.m. Finnish time (EET). The news conference will be held at Valmet Head Office in Keilaniemi, Keilasatama 5, 02150 Espoo, Finland. The news 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 1:55 p.m. (EET), at +44 1452 560304. The participants will be asked to provide the following conference ID: 82571086.
During the webcast and the conference call, all questions should be presented in English. After the webcast and the conference call, media has a possibility to interview the management in Finnish.
The event can also be followed in Twitter at www.twitter.com/valmetir.
Further information, please contact:
Hanna-Maria Heikkinen, Vice President, Investor Relations, Valmet, tel. +358 10 672 0007
Kari Saarinen, Chief Financial Officer, Valmet, tel. +358 10 672 0031
VALMET
Kari Saarinen
CFO
Hanna-Maria Heikkinen
VP, Investor Relations
Valmet is the leading global developer and supplier of process technologies, automation and services for the pulp, paper and energy industries. We aim to become the global champion in serving our customers.
Valmet's strong technology offering includes pulp mills, tissue, board and paper production lines, as well as power plants for bioenergy production. Our advanced services and automation solutions improve the reliability and performance of our customers' processes and enhance the effective utilization of raw materials and energy.
Valmet's net sales in 2015 were approximately EUR 2.9 billion. Our 12,000 professionals around the world work close to our customers and are committed to moving our customers' performance forward - every day. Valmet's head office is in Espoo, Finland and its shares are listed on the Nasdaq Helsinki.
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