Valmet's Interim Review January 1 - September 30, 2024: Record-high third quarter margin, but slower market activity than expected

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Oct 30, 2024, 09:05 ET

ESPOO, Finland, Oct. 30, 2024 /PRNewswire/ --

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

July–September 2024: Orders received increased to EUR 1,041 million

Orders received increased 6 percent to EUR 1,041 million (EUR 980 million).
- Orders received increased in the Services and Automation segments and decreased in the Process Technologies segment.
- Orders received increased in South America, EMEA (Europe, Middle East and Africa) and Asia-Pacific, remained at the previous year's level in North America, and decreased in China.
Net sales remained at the previous year's level and amounted to EUR 1,295 million (EUR 1,295 million).
- Net sales increased in the Automation and Services segments and decreased in the Process Technologies segment.
Comparable earnings before interest, taxes and amortization (Comparable EBITA) remained at the previous year's level and amounted to EUR 156 million (EUR 150 million).
- Comparable EBITA increased in the Automation segment, remained at the previous year's level in the Services segment, and decreased in the Process Technologies segment.
Comparable EBITA margin was 12.0 percent (11.6%).
Earnings per share (EPS) were EUR 0.37 (EUR 0.47). EPS decreased mainly due to lower operating profit and higher net financial expenses. Adjusted EPS was EUR 0.49 (EUR 0.52).
Items affecting comparability amounted to EUR -17 million (EUR -4 million) and were mainly related to Process Technologies and Services segments.
Cash flow provided by operating activities totaled EUR 110 million (EUR 57 million).

January–September 2024: Orders received amounted to EUR 3,374 million

Orders received decreased 11 percent to EUR 3,374 million (EUR 3,801 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 remained at the previous year's level in South America and EMEA and decreased in China, Asia-Pacific and North America.
Net sales decreased 5 percent to EUR 3,831 million (EUR 4,033 million).
- Net sales increased in the Automation segment, remained at the previous year's level in the Services segment, and decreased in the Process Technologies segment.
Comparable EBITA remained at the previous year's level and amounted to EUR 417 million (EUR 437 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 10.9 percent (10.8%).
EPS was EUR 0.99 (EUR 1.38). EPS decreased mainly due to lower operating profit and higher net financial expenses. Adjusted EPS was EUR 1.33 (EUR 1.63).
Items affecting comparability amounted to EUR -33 million (EUR -4 million) and were mainly related to Process Technologies and Services segments.
Cash flow provided by operating activities totaled EUR 376 million (EUR 229 million).

Guidance for 2024

Valmet reiterates its guidance issued on October 11, 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 remain at the previous year's level in comparison with 2023 (EUR 619 million).

Short-term market outlook

Valmet estimates that the short-term market outlook for services has decreased to satisfactory (previously good) and that the short-term market outlook for board and paper has decreased to weak (previously satisfactory). Valmet reiterates the good short-term market outlook for flow control and automation systems, and the satisfactory short-term market outlook for pulp, energy and 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 Thomas Hinnerskov: A new chapter for Valmet

"I had the honor to join Valmet as President and CEO in mid-August. I have spent my first months meeting Valmet's people and customers across different continents. Valmet's strong relationship with customers, committed people and the amazing legacy of more than 225 years creates a solid foundation for Valmet's next chapter. I am fully committed to making Valmet a success for our customers, shareholders, employees, and society.

The third quarter was two-sided. On one hand, Comparable EBITA margin was 12.0%, the best third quarter margin for Valmet ever. On the other hand, the market activity in Services and board and paper process technologies was slower than we earlier expected, and some customers postponed their final investment decisions. As a result, Valmet's Comparable EBITA guidance for 2024 was changed in October.

Looking ahead, we are excited about the opportunities ahead of us. We have recently launched Valmet DNAe, Valmet's next-generation industrial automation system, which is an important step in our strategy for growing the automation business further to a wide base of process industries globally. In Services, we continue to provide unique value to customers and service the growing global installed base.

We are proud to have been selected to supply the world's largest single-phase pulp mill. This project, valued at over a billion euros, will be included in our fourth quarter orders and will feature full-scope automation and flow control solutions. Importantly, it will serve as a showcase for Valmet's sustainable technologies, reinforcing our commitment to moving our customers' performance forward and environmental stewardship."

Key figures¹

EUR million, or as indicated	Q3/2024	Q3/2023	Change	Q1–Q3/ 2024	Q1–Q3/ 2023	Change
Orders received	1,041	980	6 %	3,374	3,801	-11 %
Order backlog²	3,536	4,133	-14 %	3,536	4,133	-14 %
Net sales	1,295	1,295	0 %	3,831	4,033	-5 %
Comparable EBITA	156	150	4 %	417	437	-4 %
% of net sales	12.0 %	11.6 %		10.9 %	10.8 %
EBITA	138	147	-6 %	384	433	-11 %
% of net sales	10.7 %	11.3 %		10.0 %	10.7 %
Operating profit (EBIT)	109	127	-14 %	299	359	-17 %
% of net sales	8.4 %	9.8 %		7.8 %	8.9 %
Profit before taxes	92	120	-23 %	250	340	-27 %
Profit for the period	68	86	-21 %	182	256	-29 %
Earnings per share, EUR	0.37	0.47	-21 %	0.99	1.38	-29 %
Adjusted earnings per share, EUR	0.49	0.52	-7 %	1.33	1.63	-18 %
Equity per share, EUR²	13.42	13.49	-1 %	13.42	13.49	-1 %
Cash flow provided by operating activities	110	57	93 %	376	229	65 %
Cash flow after investing activities	69	31	>100%	165	135	22 %
Comparable return on capital employed (Comparable ROCE) before taxes (LTM)				13 %	16 %
Return on capital employed (ROCE) before taxes (LTM)				12 %	15 %
Return on equity (ROE) (LTM)				11 %	15 %
Net debt to EBITDA ratio³				1.59	0.74
Gearing²				43 %	21 %
Equity to assets ratio²				40 %	46 %

¹ The calculation of key figures is presented on page 62

² At end of period

³ Last twelve months' EBITDA

LTM = Last twelve months

Segment key figures

Orders received, EUR million	Q3/2024	Q3/2023	Change	Q1–Q3/ 2024	Q1–Q3/ 2023	Change
Services	412	349	18 %	1,436	1,356	6 %
Automation	322	289	11 %	1,002	1,021	-2 %
Flow Control	188	185	2 %	578	613	-6 %
Automation Systems	133	104	29 %	425	408	4 %
Process Technologies	307	343	-10 %	936	1,424	-34 %
Pulp and Energy	172	138	25 %	415	626	-34 %
Paper	136	205	-34 %	521	798	-35 %
Total	1,041	980	6 %	3,374	3,801	-11 %

Net sales, EUR million	Q3/2024	Q3/2023	Change	Q1–Q3/ 2024	Q1–Q3/ 2023	Change
Services	453	429	5 %	1,333	1,275	5 %
Automation	354	312	14 %	1,013	953	6 %
Flow Control	196	192	2 %	585	581	1 %
Automation Systems	158	120	32 %	429	372	15 %
Process Technologies	488	554	-12 %	1,485	1,805	-18 %
Pulp and Energy	203	250	-19 %	649	799	-19 %
Paper	285	304	-6 %	836	1,006	-17 %
Total	1,295	1,295	0 %	3,831	4,033	-5 %

Comparable EBITA, EUR million	Q3/2024	Q3/2023	Change	Q1–Q3/ 2024	Q1–Q3/ 2023	Change
Services	79	79	0 %	219	221	-1 %
Automation	65	58	11 %	174	169	3 %
Process Technologies	22	25	-13 %	57	84	-32 %
Other	-10	-12	-16 %	-32	-37	-13 %
Total	156	150	4 %	417	437	-4 %

Comparable EBITA, % of net sales	Q3/2024	Q3/2023	Q1–Q3/ 2024	Q1–Q3/ 2023
Services	17.4 %	18.4 %	16.4 %	17.3 %
Automation	18.3 %	18.7 %	17.1 %	17.7 %
Process Technologies	4.4 %	4.5 %	3.9 %	4.7 %
Total	12.0 %	11.6 %	10.9 %	10.8 %

EBITA, EUR million	Q3/2024	Q3/2023	Change	Q1–Q3/ 2024	Q1–Q3/ 2023	Change
Services	75	79	-4 %	209	222	-6 %
Automation	64	58	11 %	172	165	4 %
Process Technologies	8	25	-66 %	39	86	-55 %
Other	-10	-15	-35 %	-36	-40	-10 %
Total	138	147	-6 %	384	433	-11 %

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/q3-2024 on Wednesday, October 30, 2024, at 3:00 p.m. Finnish time (EEST). President and CEO Thomas Hinnerskov 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=50048302

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 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 has a global customer base across various process industries. We are a leading global developer and supplier of process technologies, automation and services for the pulp, paper and energy industries, and with our automation 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.