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Classified in: Science and technology, Business
Subjects: ERN, ACC

Valmet's Interim Review January 1 - March 31, 2022: Orders received amounted to EUR 1.3 billion and Comparable EBITA to EUR 79 million in the first quarter


HELSINKI, April 27, 2022 /PRNewswire/ -- Valmet's Interim Review January 1 ? March 31, 2022: Orders received amounted to EUR 1.3 billion and Comparable EBITA to EUR 79 million in the first quarter

Valmet Oyj's stock exchange release on April 27, 2022 at 1:00 p.m. EEST

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

Starting from January 1, 2022, Valmet has a new financial reporting structure consisting of three reportable segments (segments): Services, Automation and Process Technologies. Services segment includes the Services business line. Automation segment includes the Automation Systems business line (previously called Automation), and as of April 1, 2022, also the Flow Control business line. Process Technologies segment includes the Pulp and Energy, and Paper business lines.

January?March 2022: Orders received and Comparable EBITA remained at the previous year's level

Guidance for 2022

Valmet reiterates its guidance issued on April 1, 2022, in which Valmet estimates that, including the merger with Neles, net sales in 2022 will increase in comparison with 2021 (EUR 3,935 million) and Comparable EBITA in 2022 will increase in comparison with 2021 (EUR 429 million).

Short-term market outlook

Valmet reiterates the good short-term market outlook for services, automation systems,  pulp, and board and paper, and the satisfactory market outlook for energy, and tissue. Valmet estimates that the short-term market outlook for flow control is good.

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 record-high level in the first quarter

"Valmet's orders received remained at the previous year's level and amounted to EUR 1,324 million in the first quarter of 2022. This is a good achievement, as orders received were record high also in the comparison period. Orders received increased in Automation and Services segments, and decreased in the Process Technologies segment. Our order backlog increased to EUR 4,459 million, which is EUR 362 million higher than at the end of 2021.

Net sales increased and Comparable EBITA remained at the previous year's level. Despite the increase in net sales, Comparable EBITA margin decreased. Comparable EBITA increased in Automation, and decreased in Services and Process Technologies. The availability of certain components has reduced and costs increased, which impacted margins. Furthermore, Valmet's SG&A costs increased. Valmet's goal is to offset the cost inflation at least partly through increased productivity, procurement savings and strict price discipline.

In March, we received all competition approvals for the merger of Neles into Valmet and the merger was completed on April 1, 2022. Valmet now has a unique, even stronger offering for global process industries and a solid platform for further business growth especially in automation systems and flow control solutions. From the beginning of the merger process, we have had a strong view on the excellent long-term value potential to the shareholders, the industrial logic and synergy potential. With our team of 17,000 professionals around the world we will now work together in realizing these targets.

To better highlight the performance of Valmet's businesses, we have decided to change our financial reporting structure. Valmet now consists of three segments: Services, Automation and Process Technologies. Earlier Valmet reported its profitability only on group level, but now we publish the Comparable EBITA and certain other financial figures also for the three segments."

Merger with Neles

On July 2, 2021, Valmet announced that the Boards of Directors of Valmet Oyj and Neles Corporation had signed a combination agreement and a merger plan to combine the two companies through a merger. Both companies held an Extraordinary General Meeting on September 22, 2021, and both EGMs approved the merger. Valmet and Neles had received all competition approvals for the merger of Neles into Valmet on March 21, 2022.  Valmet's Annual General Meeting on March 22, 2022, resolved to pay a dividend of EUR 1.20 per share and the Neles Annual General Meeting on March 22, 2022, resolved to pay a dividend of EUR 0.266 per share in accordance with the combination agreement. In addition, the Neles' Board of Directors decided on March 22, 2022, on an extra distribution of funds in total of EUR 2.00 per share in accordance with the combination agreement. The dividends and the Neles extra distribution of funds of EUR 2.00 per share were executed on March 31, 2022. The merger of Valmet and Neles was registered with the Finnish Trade Register on April 1, 2022.

On July 2, 2021, Valmet had entered into EUR 350 million term loan facilities agreement with Danske Bank A/S and Nordea Bank Abp. The syndication of the term loan facilities was closed on October 20, 2021. The loan was used for refinancing existing indebtedness of Valmet and Neles in connection with the merger. EUR 215 million (originally 301 million) bridge facility agreement originally entered into by Neles was transferred to Valmet in connection with the completion of the merger. The bridge loan facility was used for financing of the extra distribution to shareholders of Neles. EUR 345 million term loan facility dated July 2, 2021 for the purposes of financing potential cash redemptions of Neles' shares from Neles' shareholders opposing the merger was cancelled on October 6, 2021.

The Boards of Directors of Valmet and Neles had on March 22, 2022, approved a loan agreement between the companies concerning the part of the extra distribution of funds of EUR 2.00 per share payable to Valmet. According to the loan agreement, the part of the extra distribution payable to Valmet as a shareholder of Neles was not paid in cash to Valmet in connection with payment of the extra distribution to other shareholders of Neles, but the amount payable to Valmet was recorded as debt owed by Neles to Valmet.

Valmet and Neles were separate listed companies prior to the merger, and Neles is consolidated into Valmet as of April 1, 2022.

Valmet's new financial reporting structure

Starting from January 1, 2022, Valmet has a new financial reporting structure consisting of three reportable segments (segments): Services, Automation and Process Technologies. Services segment includes the Services business line. Automation segment includes the Automation Systems business line (previously called Automation), and as of April 1, 2022, also the Flow Control business line. Process Technologies segment includes the Pulp and Energy, and Paper business lines. For the segments, Valmet reports orders received, net sales, Comparable EBITA, EBITA, items affecting comparability and amortization.

Russian government's invasion of Ukraine and sanctions on Russia

Due to the Russian government's invasion of Ukraine, Valmet has reviewed key contractual obligations, project schedules, and identified risks for projects that are delivered to Russia. Based on the review, Valmet has identified projects that it estimates no longer meet the criteria of a customer contract for revenue recognition purposes, and has consequently made a reversal of approximately EUR 70 million to its order backlog as at March 31, 2022.

Other than the reversal made to Valmet's order backlog, the Russian government's invasion of Ukraine did not have a material impact on the results or financial position of Valmet, or its financial reporting for the first quarter of 2022. Valmet employed approximately 120 employees in Russia at the end of March, 2022, and Valmet´s net sales in Russia were around 2 percent of Valmet´s total net sales in 2021.

Valmet complies with all sanctions and export regulations impacting business with Russia and Belarus and monitors the development actively. 

Key figures1

EUR million

Q1/2022

Q1/2021

Change

2021

Orders received

1,324

1,312

1 %

4,740

Order backlog2

4,459

3,709

20 %

4,096

Net sales

960

858

12 %

3,935

Comparable earnings before interest, taxes and amortization (Comparable EBITA)

79

80

-1 %

429

% of net sales

8.3 %

9.4 %


10.9%

Earnings before interest, taxes and amortization (EBITA)

74

89

-16 %

448

% of net sales

7.7 %

10.3 %


11.4%

Operating profit (EBIT)

63

76

-17 %

399

% of net sales

6.5 %

8.9 %


10.1%

Profit before taxes

62

75

-17 %

395

Profit for the period

45

57

-21 %

296

Earnings per share, EUR

0.30

0.38

-21 %

1.98

Earnings per share, diluted, EUR

0.30

0.38

-21 %

1.98

Equity per share, EUR2

8.34

7.18

16 %

8.87

Cash flow provided by operating activities

19

148

-87 %

482

Cash flow after investments

-6

125


382

Return on equity (ROE) (annualized)

14 %

21 %


24%

Return on capital employed (ROCE) before taxes (annualized)

15 %

20 %


24%

Equity to assets ratio2

40 %

37 %


42%

Gearing2

0 %

3 %


-7%

1  The calculation of key figures is presented on page 51.

2  At end of period.

Segment key figures

Orders received, EUR million

Q1/2022

Q1/2021

Change

2021

Services

451

383

18%

1,481

Automation

147

123

19%

467

Automation Systems

147

123

19%

467

Process Technologies

727

807

-10%

2,793

Pulp and Energy

327

458

-29%

1,160

Paper

400

349

15%

1,634

Total

1,324

1,312

1%

4,740

Net sales, EUR million

Q1/2022

Q1/2021

Change

2021

Services

317

288

10%

1,360

Automation

88

67

31%

412

Automation Systems

88

67

31%

412

Process Technologies

555

503

10%

2,163

Pulp and Energy

276

227

22%

1,022

Paper

279

275

1%

1,141

Total

960

858

12%

3,935

Comparable EBITA, EUR million

Q1/2022

Q1/2021

Change

2021

Services

30

36

-16%

204

Automation

11

5

>100%

79

Process Technologies

41

43

-5%

175

Other

-3

-4

-29%

-30

Total

79

80

-1%

429

Comparable EBITA, % of net sales

Q1/2022

Q1/2021


2021

Services

9.6 %

12.6 %


15.0 %

Automation

12.1 %

7.2 %


19.2 %

Process Technologies

7.3 %

8.5 %


8.1 %

Total

8.3 %

9.4 %


10.9 %

EBITA, EUR million

Q1/2022

Q1/2021

Change

2021

Services

30

41

-27%

210

Automation

10

4

>100%

83

Process Technologies

38

43

-10%

173

Other

-4

?


-18

Total

74

89

-16%

448

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/2022-q1 on Wednesday, April 27, 2022, at 2:00 p.m. Finnish time (EEST). President and CEO Pasi Laine will be presenting Valmet's results. Flow Control Business Line President Simo Sääskilahti will present highlights of Neles' first quarter 2022 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. Conference call participants are requested to dial in at least five minutes prior to the start of the conference at

Finland +358 981710310
United Kingdom +44 3333000804
France +33 170750711
Germany +49 6913803430
Norway +47 23500243
Sweden +46 856642651
United States +1 6319131422

The participants will be asked to provide the conference PIN: 92595845#

All questions should be presented in English.

The event can also be followed on Twitter at www.twitter.com/valmetir.

Further information, please contact:

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

VALMET

Kari Saarinen
CFO

Pekka Rouhiainen
Director, 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.

We aim to become the global champion in serving our customers. Our 17,000 professionals work close to our customers and are committed to improving our customers' performance ? every day.

The company has over 220 years of industrial history and a strong track record in continuous improvement and renewal. In 2022, a major milestone was achieved when the flow control company Neles was merged into Valmet. The combined company net sales in 2021 was approximately EUR 4.5 billion based on the respective company figures.

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

Follow us on valmet.com | Twitter | Twitter (IR) | LinkedIn | Facebook | YouTube | Instagram |

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The following files are available for download:

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Interim Review Q1 2022 English


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