Valmet's Half Year Financial Review 2024: Orders received remained at the previous year's level and amounted close to EUR 1.3 billion and Comparable EBITA decreased to EUR 141 million in Q2

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24 Jul, 2024, 11:54 GMT

ESPOO, Finland, July 24, 2024 /PRNewswire/ --

Valmet's Half Year Financial Review January 1 – June 30, 2024: Orders received remained at the previous year's level and amounted close to EUR 1.3 billion and Comparable EBITA decreased to EUR 141 million in the second quarter

Valmet Oyj's stock exchange release on July 24, 2024 at 2:00 p.m. EEST

Figures in brackets, unless otherwise stated, refer to the comparison period, i.e., the same period of the previous year.

April–June 2024: Orders received remained at the previous year's level

Orders received remained at the previous year's level and amounted to EUR 1,283 million (EUR 1,268 million).
- Orders received increased in the Services segment, remained at the previous year's level in the Automation segment, and decreased in the Process Technologies segment.
- Orders received increased in EMEA (Europe, Middle East and Africa), North America and China, and decreased in Asia-Pacific and South America.
Net sales decreased 7 percent to EUR 1,324 million (EUR 1,417 million).
- Net sales remained at the previous year's level in the Automation and Services segments and decreased in the Process Technologies segment.
Comparable earnings before interest, taxes and amortization (Comparable EBITA) decreased 8 percent to EUR 141 million (EUR 153 million).
- Comparable EBITA remained at the previous year's level in the Services and Automation segments and decreased in the Process Technologies segment.
Comparable EBITA margin was 10.6 percent (10.8%).
Earnings per share (EPS) were EUR 0.31 (EUR 0.54). EPS decreased mainly due to lower operating profit and higher net financial expenses. Adjusted EPS was EUR 0.43 (EUR 0.60). Adjusted EPS decreased mainly due to lower EBITA and higher net financial expenses.
Items affecting comparability amounted to EUR -9 million (EUR 2 million).
Cash flow provided by operating activities totaled EUR 128 million (EUR -37 million).

January–June 2024: Orders received amounted to EUR 2,333 million

Orders received decreased 17 percent to EUR 2,333 million (EUR 2,821 million).
- Orders received remained at the previous year's level in the Services segment and decreased in the Process Technologies and Automation segments.
- Orders received remained at the previous year's level in EMEA and decreased in China, South America, Asia-Pacific and North America.
Net sales decreased 7 percent to EUR 2,536 million (EUR 2,738 million).
- Net sales remained at the previous year's level in the Services and Automation segments and decreased in the Process Technologies segment.
Comparable EBITA decreased 9 percent to EUR 262 million (EUR 286 million).
- Comparable EBITA remained at the previous year's level in the Automation and Services segments and decreased in the Process Technologies segment.
Comparable EBITA margin was 10.3 percent (10.5%).
EPS was EUR 0.62 (EUR 0.92). Adjusted EPS was EUR 0.84 (EUR 1.11).
Items affecting comparability amounted to EUR -16 million (EUR 0 million).
Cash flow provided by operating activities totaled EUR 267 million (EUR 172 million).

Guidance for 2024

Valmet reiterates its guidance issued on June 13, 2024, in which Valmet estimates that net sales in 2024 will remain at the previous year's level in comparison with 2023 (EUR 5,532 million) and Comparable EBITA in 2024 will increase in comparison with 2023 (EUR 619 million).

Short-term market outlook

Valmet estimates that the short-term market outlook for pulp has increased to satisfactory (previously weak) and that the short-term market outlook for board and paper has increased to satisfactory (previously weak/satisfactory, in which weak referred to customer activity and satisfactory to Valmet's capacity utilization). Furthermore, Valmet estimates that the short-term market outlook for energy has decreased to satisfactory (previously good). Valmet reiterates the good short-term market outlook for services, flow control and automation systems, and the satisfactory short-term market outlook for tissue.

The short-term market outlook is given for the next six months from the end of the reported period. It is based on customer activity (50%) and Valmet's capacity utilization (50%), and the scale is 'weak–satisfactory–good'.

President and CEO Pasi Laine: Orders received remained at the previous year's level and amounted close to EUR 1.3 billion in the second quarter

"Valmet's orders received remained at the previous year's level and amounted close to EUR 1.3 billion in the second quarter. Orders received increased in Services, remained at the previous year's level in Automation and decreased in Process Technologies. Orders received in Valmet's stable business totaled close to EUR 3.1 billion during the last four quarters, representing 69% of Valmet's orders received. This is a clear change in the company compared to 2014, when stable business represented 34% of orders received. Valmet's order backlog amounted to EUR 3.8 billion at the end of the quarter.

Valmet's net sales amounted to EUR 1.3 billion. Net sales remained at the previous year's level in Services and Automation, and decreased in Process Technologies. Comparable EBITA margin was 16.9% in Services, 16.5% in Automation and 3.0% in Process Technologies. Comparable EBITA totaled to EUR 141 million and amounted to EUR 80 million in Services, EUR 58 million in Automation and EUR 15 million in Process Technologies.

Valmet's short-term market outlook remains good for Services and Automation segments. Today, we have increased Process Technologies' short-term market outlook for pulp, and for board and paper to satisfactory. The short-term market outlook for energy was decreased to satisfactory. The market activity overall has improved compared to the end of Q1/2024 and we have a good starting point in terms of market activity going into the second half of the year. During the quarter, Valmet revised upwards its Comparable EBITA guidance for 2024. In the new guidance, Valmet estimates that net sales in 2024 will remain at the previous year's level in comparison with 2023 and Comparable EBITA in 2024 will increase in comparison with 2023.

I have been working in different positions at Valmet and its predecessors for several decades and as Valmet's President and CEO since Valmet became an independent company in 2013. Since 2013, Valmet has created approximately EUR 5 billion in total shareholder value, taking the full dividend for 2023 into account. I am extremely proud of this and many other important milestones that we have achieved together as Valmeteers during these years.

As I prepare to step down from my role, I am confident that the foundation we have built positions Valmet well for continued success in the future. I wish to extend my deepest thanks to our customers and partners for the good cooperation we have enjoyed over the years, to our shareholders for your trust, and to all my colleagues at Valmet for your hard work, dedication and passion."

Chair of the Board Mikael Mäkinen

"This interim review is the last one under Pasi Laine's leadership as the President and CEO of Valmet. The Board of Directors gratefully thank Pasi for his contribution in developing Valmet into a strong and unique company. Valmet has a solid foundation to continue its excellent performance path also in the future", says Mikael Mäkinen, Chair of the Board, Valmet.

Thomas Hinnerskov to start as the President and CEO of Valmet as of August 12, 2024

On February 19, 2024, Valmet's Board of Directors appointed Thomas Hinnerskov as the President and CEO of Valmet. He will start in the position on August 12, 2024. Thomas Hinnerskov succeeds Pasi Laine, who will continue as the President and CEO of Valmet until August 11, 2024.

Key figures¹

EUR million, or as indicated	Q2/2024	Q2/2023	Change	Q1–Q2/ 2024	Q1–Q2/ 2023	Change
Orders received	1,283	1,268	1 %	2,333	2,821	-17 %
Order backlog²	3,828	4,414	-13 %	3,828	4,414	-13 %
Net sales	1,324	1,417	-7 %	2,536	2,738	-7 %
Comparable EBITA	141	153	-8 %	262	286	-9 %
% of net sales	10.6 %	10.8 %		10.3 %	10.5 %
EBITA	132	155	-15 %	245	286	-14 %
% of net sales	9.9 %	11.0 %		9.7 %	10.5 %
Operating profit (EBIT)	103	136	-24 %	189	232	-18 %
% of net sales	7.8 %	9.6 %		7.5 %	8.5 %
Profit before taxes	84	129	-35 %	157	220	-29 %
Profit for the period	58	99	-41 %	114	170	-33 %
Earnings per share, EUR	0.31	0.54	-42 %	0.62	0.92	-33 %
Adjusted earnings per share, EUR	0.43	0.60	-28 %	0.84	1.11	-24 %
Equity per share, EUR²	13.21	12.93	2 %	13.21	12.93	2 %
Cash flow provided by operating activities	128	-37		267	172	55 %
Cash flow after investing activities	-14	-71	-81 %	95	104	-8 %
Comparable return on capital employed (Comparable ROCE) before taxes (LTM)				14 %	15 %
Return on capital employed (ROCE) before taxes (LTM)				13 %	15 %
Return on equity (ROE) (LTM)				13 %	15 %
Net debt to EBITDA ratio³				1.63	0.77
Gearing²				45 %	23 %
Equity to assets ratio²				40 %	45 %

¹ The calculation of key figures is presented on page 60
² At end of period
³ Last twelve months' EBITDA
LTM = Last twelve months

Segment key figures

Orders received, EUR million	Q2/2024	Q2/2023	Change	Q1–Q2/ 2024	Q1–Q2/ 2023	Change
Services	497	430	15 %	1,024	1,007	2 %
Automation	352	340	4 %	681	732	-7 %
Flow Control	195	211	-7 %	389	427	-9 %
Automation Systems	157	130	21 %	291	304	-4 %
Process Technologies	434	497	-13 %	628	1,082	-42 %
Pulp and Energy	187	277	-32 %	243	489	-50 %
Paper	247	221	12 %	385	593	-35 %
Total	1,283	1,268	1 %	2,333	2,821	-17 %

Net sales, EUR million	Q2/2024	Q2/2023	Change	Q1–Q2/ 2024	Q1–Q2/ 2023	Change
Services	473	457	4 %	880	846	4 %
Automation	351	338	4 %	659	642	3 %
Flow Control	201	202	0 %	389	389	0 %
Automation Systems	150	136	10 %	271	252	7 %
Process Technologies	500	623	-20 %	997	1,251	-20 %
Pulp and Energy	221	263	-16 %	447	549	-19 %
Paper	279	360	-23 %	550	702	-22 %
Total	1,324	1,417	-7 %	2,536	2,738	-7 %

Comparable EBITA, EUR million	Q2/2024	Q2/2023	Change	Q1–Q2/ 2024	Q1–Q2/ 2023	Change
Services	80	80	0 %	140	142	-2 %
Automation	58	61	-5 %	109	110	-1 %
Process Technologies	15	30	-50 %	36	59	-40 %
Other	-12	-17	-26 %	-23	-26	-11 %
Total	141	153	-8 %	262	286	-9 %

Comparable EBITA, % of net sales	Q2/2024	Q2/2023	Q1–Q2/ 2024	Q1–Q2/ 2023
Services	16.9 %	17.5 %	15.9 %	16.8 %
Automation	16.5 %	17.9 %	16.5 %	17.2 %
Process Technologies	3.0 %	4.8 %	3.6 %	4.7 %
Total	10.6 %	10.8 %	10.3 %	10.5 %

EBITA, EUR million	Q2/2024	Q2/2023	Change	Q1–Q2/ 2024	Q1–Q2/ 2023	Change
Services	78	81	-4 %	134	143	-7 %
Automation	58	63	-8 %	107	107	0 %
Process Technologies	9	29	-67 %	31	61	-50 %
Other	-13	-16	-20 %	-27	-25	6 %
Total	132	155	-15 %	245	286	-14 %

News conference and webcast for analysts, investors and media

Valmet will arrange a news conference in English as a live webcast at https://valmet.videosync.fi/q2-2024 on Wednesday, July 24, 2024, at 3:00 p.m. Finnish time (EEST). President and CEO Pasi Laine and CFO Katri Hokkanen will be presenting the results.

Recording of the webcast will be available shortly after the event at the same address.

It is possible to take part in the news conference through a conference call by registering through the link below:

https://palvelu.flik.fi/teleconference/?id=50048301

After the registration you will be provided phone numbers and a conference ID to access the conference. If you wish to ask a question during the conference, please dial *5 to enter the question queue.

All questions should be presented in English.

The event can also be followed on social media platform X at www.x.com/valmetir.

Further information, please contact:

Pekka Rouhiainen, VP, Investor Relations, Valmet, tel. +358 10 672 0020

VALMET

Katri Hokkanen
CFO

Pekka Rouhiainen
VP, Investor Relations

DISTRIBUTION:
Nasdaq Helsinki
Major media
www.valmet.com

Valmet is a leading global developer and supplier of process technologies, automation and services for the pulp, paper and energy industries. With our automation systems and flow control solutions we serve an even wider base of process industries. Our more than 19,000 professionals around the world work close to our customers and are committed to moving our customers' performance forward – every day.

The company has over 220 years of industrial history and a strong track record in continuous improvement and renewal. Valmet's net sales in 2023 were approximately EUR 5.5 billion.

Valmet's shares are listed on the Nasdaq Helsinki and the head office is in Espoo, Finland.