Valmet's Financial Statements Review January 1 - December 31, 2017: Orders received amounted to EUR 3.3 billion and Comparable EBITA to EUR 226 million in 2017
Valmet Oyj's stock exchange release on February 6, 2018 at 12:30 p.m. EET
Figures in brackets, unless otherwise stated, refer to the comparison period, i.e. the same period of the previous year.
October-December 2017: Comparable EBITA margin increased to 8.1 percent
- Orders received decreased to EUR 727 million (EUR 857 million).
- Orders received increased in the Automation business line, remained at the previous year's level in the Services business line and decreased in the Pulp and Energy, and Paper business lines.
- Orders received increased in North America, remained at the previous year's level in EMEA (Europe, Middle East and Africa) and decreased in Asia-Pacific, South America and China.
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- Net sales increased to EUR 936 million (EUR 785 million).
- Net sales increased in all business lines.
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- Comparable earnings before interest, taxes and amortization (Comparable EBITA) were EUR 76 million (EUR 56 million) and the corresponding Comparable EBITA margin was 8.1 percent (7.2%).
- Profitability improved due to higher net sales.
- Earnings per share were EUR 0.30 (EUR 0.10).
- Items affecting comparability amounted to EUR -12 million (EUR -8 million).
- Cash flow provided by operating activities was EUR 89 million (EUR 88 million).
January-December 2017: Net sales increased and profitability improved
- Orders received remained at the previous year's level and were EUR 3,272 million (EUR 3,139 million).
- Orders received increased in the Paper, Automation, and Services business lines and decreased in the Pulp and Energy business line.
- Orders received increased in China and North America and decreased in South America, Asia-Pacific and EMEA.
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- Net sales increased to EUR 3,159 million (EUR 2,926 million).
- Net sales increased in the Paper, and Pulp and Energy business lines and remained at the previous year's level in the Automation and Services business lines.
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- Comparable earnings before interest, taxes and amortization (Comparable EBITA) were EUR 226 million (EUR 196 million), and the corresponding Comparable EBITA margin was 7.2 percent (6.7%).
- Profitability improved due to higher net sales.
- Earnings per share were EUR 0.84 (EUR 0.55).
- Items affecting comparability amounted to EUR -17 million (EUR -13 million).
- Cash flow provided by operating activities was EUR 291 million (EUR 246 million).
Dividend proposal
The Board of Directors proposes for the Annual General Meeting that a dividend of EUR 0.55 per share be paid. The proposed dividend equals to 65 percent of the net result.
Guidance for 2018 to be announced in March 2018 at the latest
Following the adoption of the new principles of IFRS 15, effective as of January 1, 2018, Valmet's revenue recognition will change in 2018. As a result, Valmet will publish restated figures for 2017 in March 2018 at the latest. Valmet will announce its financial guidance for 2018 in conjunction with the restated figures.
Short-term outlook
General economic outlook
Global economic activity continues to firm up. Global output is estimated to have grown by 3.7 percent in 2017, while growth forecasts for 2018 and 2019 have been revised upward to 3.9 percent. The revision reflects increased global growth momentum and the expected impact of the recently approved U.S. tax policy changes. Risks to the global growth forecast appear broadly balanced in the near term, but remain skewed to the downside over the medium term. If global sentiment remains strong and inflation muted, then financial conditions could remain loose into the medium term, leading to a buildup of financial vulnerabilities in advanced and emerging market economies alike. (International Monetary Fund, January 22, 2018)
Short-term market outlook
Valmet estimates that the short-term market outlook has improved to a good level in automation (previously satisfactory level).
Valmet reiterates the good short-term market outlook for services, board and paper, and tissue, the satisfactory short-term market outlook for energy, and the weak short-term market outlook for pulp.
President and CEO Pasi Laine: A strong year in the Paper business line
"In 2017, Valmet's orders received increased by EUR 132 million to EUR 3.3 billion. The market activity was exceptionally high in the Paper business line, where orders received increased over 40 percent and exceeded EUR 1 billion. Orders received increased also in the stable business (Services and Automation business lines). In 2017, stable business orders received increased by 6 percent to EUR 1.6 billion, i.e. almost half of total orders received.
During the four years as an independent company, Valmet has improved its profitability every year. In 2017, Comparable EBITA amounted to EUR 226 million, corresponding to a 7.2 percent margin. However, we aim higher with our target margin range of 8-10 percent. The work with profitability and efficiency continues, and I am convinced that we will reach our target.
In 2017, while celebrating 220 years of Valmet's industrial history, we strengthened our Industrial Internet offering, progressed in sustainability as well as in research and development, and made Valmet a safer workplace by reducing the total recordable incident frequency (TRIF). This, combined with an order backlog of EUR 2.3 billion, offers us a sound basis for 2018."
Key figures1
| EUR million | Q4/2017 | Q4/2016 | Change | 2017 | 2016 | Change |
| Orders received | 727 | 857 | -15% | 3,272 | 3,139 | 4% |
| Order backlog2 | 2,292 | 2,283 | 0% | 2,292 | 2,283 | 0% |
| Net sales | 936 | 785 | 19% | 3,159 | 2,926 | 8% |
| Comparable earnings before interest, taxes and amortization (Comparable EBITA) | 76 | 56 | 34% | 226 | 196 | 15% |
| % of net sales | 8.1% | 7.2% | 7.2% | 6.7% | ||
| Earnings before interest, taxes and amortization (EBITA) | 63 | 48 | 31% | 209 | 183 | 14% |
| % of net sales | 6.8% | 6.1% | 6.6% | 6.2% | ||
| Operating profit (EBIT) | 56 | 40 | 38% | 178 | 147 | 21% |
| % of net sales | 5.9% | 5.1% | 5.6% | 5.0% | ||
| Profit before taxes | 52 | 38 | 38% | 165 | 136 | 22% |
| Profit / loss | 46 | 14 | >100% | 127 | 82 | 54% |
| Earnings per share, EUR | 0.30 | 0.10 | >100% | 0.84 | 0.55 | 53% |
| Earnings per share, diluted, EUR | 0.30 | 0.10 | >100% | 0.84 | 0.55 | 53% |
| Equity per share, EUR | 6.19 | 5.88 | 5% | 6.19 | 5.88 | 5% |
| Cash flow provided by operating activities | 89 | 88 | 0% | 291 | 246 | 18% |
| Cash flow after investments | 70 | 72 | -2% | 227 | 188 | 21% |
| Return on equity (ROE) | 14% | 9% | ||||
| Return on capital employed (ROCE) before taxes | 15% | 12% |
1 The calculation of key figures is presented on page 42.
2 At the end of period
| Equity to assets ratio and gearing | As at Dec 31, 2017 | As at Dec 31, 2016 | As at Sep 30, 2017 | |
| Equity to assets ratio at end of period | 39% | 37% | 38% | |
| Gearing at end of period | -11% | 6% | -3% |
| Orders received, EUR million | Q4/2017 | Q4/2016 | Change | 2017 | 2016 | Change |
| Services | 282 | 284 | -1% | 1,242 | 1,182 | 5% |
| Automation | 91 | 78 | 16% | 317 | 299 | 6% |
| Pulp and Energy | 151 | 247 | -39% | 678 | 939 | -28% |
| Paper | 203 | 246 | -18% | 1,035 | 718 | 44% |
| Total | 727 | 857 | -15% | 3,272 | 3,139 | 4% |
| Order backlog, EUR million | As at Dec 31, 2017 | As at Dec 31, 2016 | Change | As at Sep 30, 2017 |
| Total | 2,292 | 2,283 | 0% | 2,523 |
| Net sales, EUR million | Q4/2017 | Q4/2016 | Change | 2017 | 2016 | Change |
| Services | 340 | 316 | 7% | 1,178 | 1,163 | 1% |
| Automation | 104 | 94 | 10% | 296 | 290 | 2% |
| Pulp and Energy | 260 | 187 | 39% | 929 | 826 | 12% |
| Paper | 232 | 188 | 24% | 755 | 647 | 17% |
| Total | 936 | 785 | 19% | 3,159 | 2,926 | 8% |
News conference and webcast for analysts, investors and media
Valmet will arrange a news conference in English for analysts, investors, and media on Tuesday, February 6, 2018 at 2:30 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 2:25 p.m. (EET), at +44 1452 555566. The participants will be asked to provide the following conference ID: 6399939.
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 on Twitter at www.twitter.com/valmetir.
Further information, please contact:
Calle Loikkanen, Director, Investor Relations, Valmet, tel. +358 10 672 0020
Kari Saarinen, CFO, Valmet, tel. +358 10 672 9603
VALMET
Kari Saarinen
CFO
Calle Loikkanen
Director, 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 2017 were approximately EUR 3.2 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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