Valmet's Financial Statements Review January 1- December 31, 2018: Orders received increased to EUR 3.7 billion and Comparable EBITA to EUR 257 million in 2018
Valmet Oyj's stock exchange release on February 7, 2019 at 1:00 p.m. EET
Figures in brackets, unless otherwise stated, refer to the comparison period, i.e. the same period of the previous year. The comparison period figures have been restated following the adoption of IFRS 15 as of January 1, 2018.
October-December 2018: Comparable EBITA margin increased to 11.5 percent
· Orders received increased 41 percent to EUR 1,026 million (EUR 727 million).
- Orders received increased in the Pulp and Energy, and Services business lines, remained at the previous year's level in the Automation business line and decreased in the Paper business line.
- Orders received increased in South America, Asia-Pacific and EMEA (Europe, Middle East and Africa) and decreased in China and North America.
· Net sales remained at the previous year's level at EUR 984 million (EUR 967 million).
- Net sales increased in the Services, and Pulp and Energy business lines, remained at the previous year's level in the Automation business line and decreased in the Paper business line.
· Comparable earnings before interest, taxes and amortization (Comparable EBITA) were EUR 113 million (EUR 81 million), and the corresponding Comparable EBITA margin was 11.5 percent (8.4%).
- Profitability improved due to higher gross profit and improved project execution.
· Earnings per share were EUR 0.49 (EUR 0.33).
· Items affecting comparability amounted to EUR -3 million (EUR -12 million).
· Cash flow provided by operating activities was EUR 143 million (EUR 89 million).
January-December 2018: Orders received and Comparable EBITA increased
· Orders received increased 14 percent to EUR 3,722 million (EUR 3,272 million).
- Orders received increased in the Pulp and Energy, and Services business lines and remained at the previous year's level in the Automation and Paper business lines.
- Orders received increased in all other areas except China, where orders received decreased.
· Net sales increased 9 percent to EUR 3,325 million (EUR 3,058 million).
- Net sales increased in the Paper, and Pulp and Energy business lines and remained at the previous year's level in the Services and Automation business lines.
· Comparable earnings before interest, taxes and amortization (Comparable EBITA) were EUR 257 million (EUR 218 million), and the corresponding Comparable EBITA margin was 7.7 percent (7.1%).
- Profitability improved due to higher net sales.
· Earnings per share were EUR 1.01 (EUR 0.81).
· Items affecting comparability amounted to EUR -16 million (EUR -17 million).
· Cash flow provided by operating activities was EUR 284 million (EUR 291 million).
Dividend proposal
The Board of Directors proposes for the Annual General Meeting that a dividend of EUR 0.65 per share be paid. The proposed dividend equals to 64 percent of the net result.
Guidance for 2019
Valmet estimates that net sales in 2019 will remain at the same level as in 2018 (EUR 3,325 million) and Comparable EBITA in 2019 will increase in comparison with 2018 (EUR 257 million).
Short-term outlook
General economic outlook
The global expansion has weakened. IMF now projects the global economy to grow at 3.5 percent in 2019 and 3.6 percent in 2020, 0.2 and 0.1 percentage point below last October's projections, which had already been revised downward. Risks to global growth tilt to the downside. An escalation of trade tensions remains a key source of risk to the outlook. Financial conditions have already tightened since the fall. A range of triggers beyond escalating trade tensions could spark adverse growth implications, especially given the high levels of public and private debt. These potential triggers include a "no-deal" withdrawal of the United Kingdom from the European Union and a greater-than-envisaged slowdown in China. (International Monetary Fund, January 21, 2019)
Short-term market outlook
Valmet estimates that the short-term market outlook in tissue has decreased to a satisfactory level (previously good level).
Valmet reiterates the good short-term market outlook for services, automation, and board and paper, and the satisfactory short-term market outlook for pulp, and energy.
President and CEO Pasi Laine: A strong year for Valmet
"In 2018, orders received in the stable business increased 6 percent to EUR 1.7 billion1. The Paper business line had another exceptionally strong year, as orders received increased to EUR 1.1 billion. Orders received in the Pulp and Energy business line also reached EUR 1 billion in 2018, with growth in both Energy and Pulp. All in all, Valmet's orders received increased 14 percent to EUR 3,722 million, and order backlog reached a record-high level of EUR 2.8 billion.
Net sales increased 9 percent in 2018 and amounted to EUR 3.3 billion. Net sales increased in the capital business and remained at the previous year's level in the stable business. Comparable EBITA increased 18 percent to EUR 257 million. The Comparable EBITA margin for the full year was 7.7 percent, making 2018 another successive year of margin improvement.
During the year, we developed our industrial internet offering, made progress in research and development, continued to develop our personnel and maintained our position as a sustainability leader. The total recordable incident frequency (TRIF) decreased 20 percent, making Valmet a safer workplace.
Overall, 2018 was a strong year for us and I am pleased with the good progress we made during the year. At the same time we still have room to improve going forward. The record-high backlog gives us a strong starting point for 2019."
1 Including internal orders received of the Automation business line.
Key figures1
| EUR million | Q4/2018 | Q4/2017 | Change | 2018 | 2017 | Change |
| Orders received | 1,026 | 727 | 41% | 3,722 | 3,272 | 14% |
| Order backlog2 | 2,829 | 2,458 | 15% | 2,829 | 2,458 | 15% |
| Net sales | 984 | 967 | 2% | 3,325 | 3,058 | 9% |
| Comparable earnings before interest, taxes and amortization (Comparable EBITA) | 113 | 81 | 39% | 257 | 218 | 18% |
| % of net sales | 11.5% | 8.4% | 7.7% | 7.1% | ||
| Earnings before interest, taxes and amortization (EBITA) | 110 | 69 | 60% | 241 | 202 | 20% |
| % of net sales | 11.2% | 7.1% | 7.2% | 6.6% | ||
| Operating profit (EBIT) | 102 | 61 | 69% | 211 | 170 | 24% |
| % of net sales | 10.4% | 6.3% | 6.4% | 5.6% | ||
| Profit before taxes | 100 | 57 | 73% | 205 | 158 | 30% |
| Profit for the period | 74 | 49 | 50% | 152 | 121 | 25% |
| Earnings per share, EUR | 0.49 | 0.33 | 51% | 1.01 | 0.81 | 25% |
| Earnings per share, diluted, EUR | 0.49 | 0.33 | 51% | 1.01 | 0.81 | 25% |
| Equity per share, EUR2 | 6.31 | 6.09 | 4% | 6.31 | 6.09 | 4% |
| Cash flow provided by operating activities | 143 | 89 | 61% | 284 | 291 | -3% |
| Cash flow after investments | 119 | 70 | 69% | 208 | 227 | -9% |
| Return on equity (ROE)3 | 16% | 13% | ||||
| Return on capital employed (ROCE) before taxes3 | 19% | 14% | ||||
| Equity to assets ratio2 | 43% | 42% | ||||
| Gearing2 | -23% | -11% |
1 The calculation of key figures is presented on page 45.
2 At the end of period
3 In the calculation of 2017 figures, non-restated data points from 2016 have been used.
| Orders received, EUR million | Q4/2018 | Q4/2017 | Change | 2018 | 2017 | Change |
| Services | 325 | 282 | 15% | 1,315 | 1,242 | 6% |
| Automation | 94 | 91 | 3% | 330 | 317 | 4% |
| Pulp and Energy | 451 | 151 | >100% | 1,000 | 678 | 47% |
| Paper | 156 | 203 | -23% | 1,077 | 1,035 | 4% |
| Total | 1,026 | 727 | 41% | 3,722 | 3,272 | 14% |
| Order backlog, EUR million | As at Dec 31, 2018 | As at Dec 31, 2017 | Change | As at Sep 30, 2018 |
| Total | 2,829 | 2,458 | 15% | 2,791 |
| Net sales, EUR million | Q4/2018 | Q4/2017 | Change | 2018 | 2017 | Change |
| Services | 366 | 340 | 8% | 1,219 | 1,178 | 3% |
| Automation | 106 | 104 | 3% | 306 | 296 | 3% |
| Pulp and Energy | 232 | 219 | 6% | 863 | 800 | 8% |
| Paper | 280 | 304 | -8% | 937 | 784 | 19% |
| Total | 984 | 967 | 2% | 3,325 | 3,058 | 9% |
News conference and webcast for analysts, investors and media
Valmet will arrange a news conference in English for analysts, investors, and media on Thursday, February 7, 2019 at 3:00 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 2:55 p.m. (EET), at +44 2071 928000. The participants will be asked to provide the following conference ID: 4272378.
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 2018 were approximately EUR 3.3 billion. Our more than 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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