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Valmet's Interim Review January-September 2015

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Valmet's Interim Review January-September 2015

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Interim Review January-September 2015: Strong development in orders received in China - profitability in the targeted range in Q3/2015

Presentation material at the news conference on October 28, 2015.

Interim Review January-September 2015: Strong development in orders received in China - profitability in the targeted range in Q3/2015

Presentation material at the news conference on October 28, 2015.

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Valmet's Interim Review January-September 2015

  1. 1. Strong development in orders received in China – profitability in the targeted range in Q3/2015 Interim Review, January–September 2015 October 28, 2015 Pasi Laine, President and CEO Markku Honkasalo, CFO
  2. 2. Agenda Q3/2015 in brief Business lines’ development Financial development Summary of Interim Review Q3/2015 Appendix 1 2 3 5 6 Interim Review, January–September 2015 Guidance and short-term market outlook4
  3. 3. Q3/2015 in brief
  4. 4. • Orders received increased compared with Q3/2014 in Pulp and Energy, and Paper business lines • Net sales increased in Paper and decreased in Pulp and Energy compared with Q3/2014 Orders received and net sales increased in capital business • Orders received remained stable compared with Q3/2014 in Services, orders received EUR 70 million in Automation • Net sales increased in Services compared with Q3/2014, net sales EUR 66 million in Automation Orders received and net sales increased in stable business1 October 28, 2015 © Valmet4 Q3/2015 in brief 1) Stable business = Services and Automation business lines 2) EBITA = Earnings before interest, taxes and amortization and non-recurring items • EBITA2 increased to EUR 47 million • EBITA2-margin improved and was in the targeted range at 6.4 percent Good development in profitability Net debt EUR 229 million • Gearing 28% • Cash flow provided by operating activities EUR 16 million • Order backlog EUR 90 million lower than at the end of Q2/2015 Order backlog at EUR 2.1 billion
  5. 5. 36% 9% 29% 25% Net sales split in Q3/2015 October 28, 2015 © Valmet5 22% 7% 50% 11% 11% Net sales split by geographic area Net sales split by business lineOrders received EUR 725 million Net sales EUR 734 million EBITA before NRI1 EUR 47 million Employees 12,296 1) NRI = non-recurring items Stable business net sales EUR 334 million Services Automation Pulp and Energy North America EMEA South America Asia-Pacific ChinaPaper
  6. 6. Key figures Q3/2015 October 28, 2015 © Valmet6 1) At the end of period 2) Before non-recurring items 3) After non-recurring items 4) Annualized EUR million Q3/2015 Q3/2014 Change Q1–Q3/2015 Q1–Q3/2014 Change Orders received 725 466 56% 2,085 2,590 -19% Order backlog1 2,117 2,312 -8% 2,117 2,312 -8% Net sales 734 590 25% 2,074 1,697 22% EBITA2 47 32 45% 120 58 >100% % of net sales 6.4% 5.5% 5.8% 3.4% EBIT3 33 26 25% 78 35 >100% % of net sales 4.4% 4.4% 3.8% 2.1% Earnings per share, EUR 0.14 0.11 25% 0.33 0.14 >100% Return on capital employed (ROCE), before taxes4 11% 6% Cash flow provided by operating activities 16 117 -86% 14 206 -93% Gearing1 28% -20% Non-recurring items: EUR -4 million in Q3/2015 (EUR -1 million in Q3/2014), EUR -16 million in Q1–Q3/2015 (EUR -7 million in Q1–Q3/2014).
  7. 7. 267 273 242 273 293 307 252 85 70 622 560 96 66 138 259 206 212 190 128 142 149 129 197 1,101 1,023 466 480 580 781 725 0 500 1,000 1,500 2,000 2,500 3,000 3,500 0 200 400 600 800 1,000 1,200 1,400 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Services (LHS) Automation (LHS) Pulp and Energy (LHS) Paper (LHS) Last 4 quarters (RHS) Orders received increased especially in China, stable business orders received EUR 322 million • Orders received stable in Services: Year-to-date growth at 9% • Orders received EUR 70 million in Automation • Orders received increased in Pulp and Energy: Main equipment to a pulp mill project in China • Orders received increased in Paper: One board machine and three tissue machines • Orders received more than doubled in China, and increased in EMEA and North America October 28, 2015 © Valmet7 Orders received (EUR million), by business line Orders received (EUR million), by area 185 82 135 88 189 196 170 24 194 23 40 50 38 22 437 567 189 277 202 443 248 35 121 54 35 54 45 224 420 59 66 41 85 58 61 1,101 1,023 466 480 580 781 725 0 500 1,000 1,500 2,000 2,500 3,000 3,500 0 200 400 600 800 1,000 1,200 1,400 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 North America (LHS) South America (LHS) EMEA (LHS) China (LHS) Asia-Pacific (LHS) Last 4 quarters (RHS)
  8. 8. 1,972 2,406 2,312 1,998 2,064 2,208 2,117 0 500 1,000 1,500 2,000 2,500 3,000 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Order backlog at EUR 2.1 billion • Order backlog EUR 90 million lower than at the end of Q2/2015 • Approximately 30% of the order backlog relates to stable business October 28, 2015 © Valmet8 Order backlog (EUR million) ~30% ~70% Stable business Capital business Structure of order backlog
  9. 9. 224 251 235 278 242 371 334 519 588 590 777 561 779 734 0.7% 3.7% 5.5% 6.1% 3.5% 6.9% 6.4% Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Capital business Stable business EBITA-% EBITA target 6–9% EBITA margin in the targeted range October 28, 2015 © Valmet9 Net sales and EBITA before NRI (EUR million) • Net sales and profitability increased compared with Q3/2014 - Profitability improved due to the higher level of net sales, improved gross profit, and the acquisition of Automation - Changes in foreign exchange rates1 increased net sales by approximately EUR 14 million and EBITA by approximately EUR 1 million2 EBITA before NRI (EUR million) 194 22 32 48 1) Compared with the exchange rates for July–September 2014 2) Indicative only 54 47
  10. 10. 21% 0% 5% 10% 15% 20% 25% 0 40 80 120 160 200 Q1/2014 Q2/2014 Q3/2014 Q4/2014 Q1/2015 Q2/2015 Q3/2015 EUR million (LHS) % of net sales (RHS) 16% 0% 5% 10% 15% 20% 25% 0 40 80 120 160 200 Q1/2014 Q2/2014 Q3/2014 Q4/2014 Q1/2015 Q2/2015 Q3/2015 EUR million (LHS) % of net sales (RHS) Good development in gross profit compared to Q3/2014 October 28, 2015 © Valmet10 Gross profit (EUR million and % of net sales) • Gross profit increased, also when excluding the impact of Automation • Selling, general & administrative (SG&A) expenses under control • Further actions to improve gross profit through Must-Win implementation SG&A (EUR million and % of net sales)
  11. 11. Key Must-Win objectives to develop Valmet further and continue to improve profitability October 28, 2015 © Valmet11 • Nurture shared values • Drive high performance • Continue globalization of our capabilities • Strengthen our presence close to customers and growth markets • Strengthen Key Account Management to serve customers with our full offering • Provide customer benefits by combining process technology, automation and services • Develop Valmet service concept, remote services and drive growth through service agreements • Improve product cost competitiveness to increase gross profit and reduce customer investment and operational costs • Develop new products and technologies to create new revenue • Sales and project management process to improve product margin • Implement Lean to reduce quality costs and lead times • Save in procurement and ensure sustainable supply chain • Improve health and safety • Continue to improve cost competitiveness Must-Win implementation objectives for 2016Must-Wins Leader in technology and innovation Excellence in processes Customer excellence Winning team
  12. 12. Leader in technology and innovation: Examples of our R&D results October 28, 2015 © Valmet12 Advantage NTT tissue machineOptiConcept M board and paper machine  Cost-efficient, high-quality, safe and flexible board making concept  Significant savings in energy, water and raw material use – Energy efficiency improvement up to 30%  Modular and compact size – Short delivery times, quick start-ups, and less production space  Functional design brings increased safety and accessibility  High flexibility and energy efficiency – Swing from production of conventional to textured tissue in a few hours – Low energy consumption  Premium product quality  Fiber savings – 10–30% less fiber consumption  High speed and capacity – 2,000 m/min in conventional mode, 1,800 m/min in textured mode 10 OptiConcept M machines sold 5 Advantage NTT machines sold
  13. 13. Excellence in processes: Good development in work safety and sustainability  Valmet has made excellent progress in health and safety – LTIF has declined to 3.5 in Q3/2015  Valmet has been included in the Dow Jones Sustainability Index (DJSI) for the second consecutive year – Valmet maintains its position among 317 companies recognized as world's sustainability leaders in Dow Jones Sustainability Index – Valmet was listed both in the Dow Jones Sustainability World and Europe indices – In addition to Valmet, three other companies from Finland are included in the World index this year October 28, 2015 © Valmet13 1) Lost time incident frequency (LTIF) reflects the number of injuries resulting in an absence of at least one workday per million hours worked. The LTIF numbers are for own employees and calculated for the last 12 months. Lost time incident frequency (LTIF)1 Sustainability Valmet is committed to the safety and wellbeing of our employees, customers and partners. Together, we take safety forward Long-term goal ZERO harm 3.5 0 2 4 6 8 10 12 14 16 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15
  14. 14. Business lines’ development
  15. 15. Orders received remained stable and net sales increased in Services in Q3/2015 October 28, 2015 © Valmet15 Net sales (EUR million)Orders received (EUR million) • Services orders received remained stable compared with Q3/2014 - Orders received increased in China, remained stable compared with Q3/2014 in North America, EMEA and Asia-Pacific, and decreased in South America - Orders received increased in Mill Improvements and Fabrics, remained stable compared with Q3/2014 in Performance Parts and decreased in Energy and Environmental, and Rolls - Changes in foreign exchange rates1 increased orders received by approximately EUR 11 million • Net sales increased compared with Q3/2014 1) Compared with the exchange rates for July–September 2014 Q1–Q3/2014: EUR 782 million Q1–Q3/2015: EUR 852 million Q1–Q3/2014: EUR 711 million Q1–Q3/2015: EUR 814 million 267 273 242 273 293 307 252 0 200 400 600 800 1,000 1,200 1,400 0 50 100 150 200 250 300 350 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Orders received (LHS) Orders received, last 4 quarters (RHS) 224 251 235 278 242 304 268 0 200 400 600 800 1,000 1,200 1,400 0 50 100 150 200 250 300 350 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Net sales (LHS) Net sales, last 4 quarters (RHS)
  16. 16. Orders received in Automation totaled EUR 78 million in Q3/2015 October 28, 2015 © Valmet16 Net sales (EUR million)Orders received1 (EUR million) • Orders received EUR 78 million in Q3/2015 - Internal orders received amounted to EUR 8 million - EMEA accounted for ~50% and North America for ~30% of orders received - Pulp and Paper accounted for ~70% and Energy and Process for ~30% of orders received • Net sales EUR 72 million in Q3/2015 - Internal net sales amounted to EUR 6 million 1) Q1/2015 orders received is calculated from Metso’s reported figures and pro forma figures excluding Process Automation Systems and are therefore indicative only. Q2/2015 and Q3/2015 figures are Automation business line figures. 85 70 10 862 95 78 0 20 40 60 80 100 120 140 160 Q1/15 Q2/15 Q3/15 Orders received, internal (from other business lines) Orders received, reported Orders received, total (including internal) 68 66 11 655 79 72 0 20 40 60 80 100 120 140 160 Q1/15 Q2/15 Q3/15 Net sales, internal (from other business lines) Net sales, reported Net sales, total (including internal)
  17. 17. Orders received increased in Pulp and Energy in Q3/2015 October 28, 2015 © Valmet17 Net sales (EUR million)Orders received (EUR million) • Orders received more than doubled compared with Q3/2014 - Orders received increased in China and North America, remained stable in EMEA and decreased in Asia-Pacific and South America - Orders received increased in Pulp and remained stable compared with Q3/2014 in Energy • Net sales decreased compared with Q3/2014 Q1–Q3/2014: EUR 1,279 million Q1–Q3/2015: EUR 603 million Q1–Q3/2014: EUR 644 million Q1–Q3/2015: EUR 668 million 622 560 96 66 138 259 206 0 200 400 600 800 1,000 1,200 1,400 1,600 0 100 200 300 400 500 600 700 800 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Orders received (LHS) Orders received, last 4 quarters (RHS) 181 229 234 312 222 231 215 0 200 400 600 800 1,000 1,200 1,400 1,600 0 50 100 150 200 250 300 350 400 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Net sales (LHS) Net sales, last 4 quarters (RHS)
  18. 18. Orders received and net sales increased in Paper in Q3/2015 October 28, 2015 © Valmet18 Net sales (EUR million)Orders received (EUR million) • Orders received increased compared with Q3/2014 - Orders received increased in China, EMEA, Asia-Pacific and North America - Orders received increased in both Tissue, and Board and Paper • Net sales increased compared with Q3/2014 Q1–Q3/2014: EUR 530 million Q1–Q3/2015: EUR 474 million Q1–Q3/2014: EUR 342 million Q1–Q3/2015: EUR 459 million 212 190 128 142 149 129 197 0 150 300 450 600 750 900 0 50 100 150 200 250 300 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Orders received (LHS) Orders received, last 4 quarters (RHS) 114 108 120 186 97 177 185 0 150 300 450 600 750 900 0 50 100 150 200 250 300 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Net sales (LHS) Net sales, last 4 quarters (RHS)
  19. 19. Financial development
  20. 20. 43 46 117 30 -20 17 16 -40 -20 0 20 40 60 80 100 120 140 Q1/2014 Q2/2014 Q3/2014 Q4/2014 Q1/2015 Q2/2015 Q3/2015 Cash flow provided by operating activities October 28, 2015 © Valmet20 • CAPEX excluding business acquisitions (EUR -11 million) less than depreciation (EUR -14 million) Cash flow provided by operating activities (EUR million)
  21. 21. -257 -249 -345 -353 -355 -265 -244 1,101 1,023 466 480 580 781 725 -20% -10% 0% 10% 20% 30% -1,000 -500 0 500 1,000 1,500 Q1/2014 Q2/2014 Q3/2014 Q4/2014 Q1/2015 Q2/2015 Q3/2015 Orders received (LHS) Net working capital (LHS) Net working capital/rolling 12 months orders received (RHS) Net working capital development October 28, 2015 © Valmet21 • Net working capital EUR -244 million, which equals -10% of rolling 12 months orders received Net working capital and orders received (EUR million) Historically, net working capital has been on average -9% of rolling 12 months orders received
  22. 22. Net debt increased due to Automation acquisition October 28, 2015 © Valmet22 • Gearing (28%) and net debt (EUR 229 million) increased due to the acquisition of Automation • Equity to assets ratio at the same level as in Q2/2015 Net debt (EUR million) and gearing (%) Equity to assets ratio (%) -39 -54 -158 -166 -134 238 229 -5% -7% -20% -21% -17% 29% 28% -35% -30% -25% -20% -15% -10% -5% 0% 5% 10% 15% 20% 25% 30% 35% -350 -300 -250 -200 -150 -100 -50 0 50 100 150 200 250 300 350 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Net debt (EUR million) Gearing (%) 40% 40% 41% 42% 34% 35% 35% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15
  23. 23. Capital employed and ROCE October 28, 2015 © Valmet23 985 967 902 877 1,239 1,240 1,214 4 22 32 48 19 54 47 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Capital employed EBITA ROCE (before taxes and NRI), rolling 12 months 1% 2% 2% 10% 10% 12% 14% • Return on capital employed (ROCE) on an improving trend Return on capital employed1 (ROCE), before taxes and NRI2 1) Return on capital employed (ROCE), before taxes, rolling 12 months. Carve-out figures from 2013 have been used in calculating figures for Q1/14, Q2/14 and Q3/14. 2) NRI = non-recurring items
  24. 24. 0 50 100 150 200 250 300 350 400 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Structure of loans and borrowings October 28, 2015 © Valmet24 Amount of outstanding interest-bearing debt (EUR millions) • Average maturity of long-term loans is 3.6 years - Average interest rate is 1.4% Main financing sources Back-up facilities Interest-bearing debt EUR 399 million as at September 30, 2015 EUR 122 million EUR 100 million European Investment Bank Skandinaviska Enskilda Banken Nordic Investment Bank Amount Lender EUR 70 million Swedish Export Kredit EUR 95 million EUR 0 million EUR 200 million domestic commercial paper program EUR 200 million syndicated revolving credit facility Amount Outstanding EUR 10 million
  25. 25. Guidance and short- term market outlook
  26. 26. Guidance and short-term market outlook 26 October 28, 2015 © Valmet Good Pulp and Energy Paper Satisfactory Pulp Energy Board and Paper Tissue Guidance for 2015 Services Short-term market outlook Guidance for 2015 (as given on February 6, 2015) Satisfactory Satisfactory Good Satisfactory Satisfactory Good Weak Good Satisfactory Q4/2014 Q1/2015 Satisfactory Good Weak Good Satisfactory Q2/2015 Satisfactory Weak Satisfactory Satisfactory Q3/2015 Valmet estimates that, including the acquisition of Process Automation Systems, net sales in 2015 will increase in comparison with 2014 (EUR 2,473 million) and EBITA before non-recurring items in 2015 will increase in comparison with 2014 (EUR 106 million). - Satisfactory Satisfactory SatisfactoryAutomation
  27. 27. Summary of Interim Review Q3/2015
  28. 28. October 28, 2015 © Valmet28 Q3/2015 in brief • Orders received increased compared with Q3/2014 in Pulp and Energy, and Paper business lines • Net sales increased in Paper and decreased in Pulp and Energy compared with Q3/2014 Orders received and net sales increased in capital business • Orders received remained stable compared with Q3/2014 in Services, orders received EUR 70 million in Automation • Net sales increased in Services compared with Q3/2014, net sales EUR 66 million in Automation Orders received and net sales increased in stable business1 1) Stable business = Services and Automation business lines 2) EBITA = Earnings before interest, taxes and amortization and non-recurring items • EBITA2 increased to EUR 47 million • EBITA2-margin improved and was in the targeted range at 6.4 percent Good development in profitability Net debt EUR 229 million • Gearing 28% • Cash flow provided by operating activities EUR 16 million • Order backlog EUR 90 million lower than at the end of Q2/2015 Order backlog at EUR 2.1 billion
  29. 29. Financial Statements Review 2015 February 9, 2016 www.valmet.com/investors Upcoming site visit: Automation Tampere, Finland November 26, 2015
  30. 30. Appendix
  31. 31. October 28, 2015 © Valmet31 Announced orders in 2015 Date Description Business line Country Value Jan 23 Key board machine solutions Paper China Not disclosed Feb 4 Flue-gas cleaning and condensation plant Pulp and Energy Finland Around EUR 8 million Feb 17 Equipment for fluff conversion project Pulp and Energy, and Paper USA Not disclosed Mar 2 OptiConcept M containerboard line Paper Taiwan Not disclosed Mar 3 Softwood line rebuild Pulp and Energy Sweden Not disclosed Mar 11 Biomass based boiler plant Pulp and Energy Finland Not disclosed Mar 30 Tissue machine rebuild Paper Turkey Not disclosed Apr 20 Key technologies for paper machine grade conversion Paper Finland Not disclosed Apr 22 Key technologies to bioproduct mill Pulp and Energy Finland About EUR 125–150 million Jun 9 Modernize automation and remote control Automation Finland Not disclosed1 Jun 16 Upgrade of the evaporation plant Pulp and Energy Sweden Not disclosed Jun 23 Repeat order for two energy recovery systems Paper Italy and Poland Not disclosed Jun 24 Automation to a new waste-to-energy plant Automation UK Not disclosed1 Jun 29 Two orders for automation technology Automation Finland Not disclosed1 Jun 30 OptiConcept M fine paper making line Paper Indonesia Not disclosed Jul 6 Winding technology for paper machine grade conversion rebuild Paper Netherlands Not disclosed Jul 7 White liquor handling system Pulp and Energy Sweden Not disclosed Aug 18 Main equipment to a pulp mill project Pulp and Energy China Approximately EUR 110 million Aug 20 Tissue machine rebuild Paper Germany Not disclosed Aug 21 OptiConcept M paper making line Paper China Not disclosed Aug 24 Analyzers and quality control system Automation Finland Not disclosed1 Aug 27 Flue gas desulphurization and denitrification installation Pulp and Energy Poland Approximately EUR 40 million Sep 2 Automation to new power plant Automation Finland Not disclosed1 Sep 3 Advantage NTT tissue production line Paper USA Not disclosed Sep 7 Consumables and roll service agreement Services Sweden Not disclosed Sep 8 Automation for new-generation LNG-powered fast ferry Automation Finland Not disclosed Sep 14 Advantage NTT tissue production line Paper Portugal Not disclosed Sep 15 Two Advantage DCT tissue production lines Paper China Not disclosed Sep 24 District heat network optimization and a production planning system Automation Finland Not disclosed Oct 2 Pulp cooking system Pulp and Energy USA Not disclosed Oct 7 Solids measurement and sludge dewatering optimizer Automation Finland Not disclosed Oct 14 Online fiber analyzer Automation USA Not disclosed 1) Typically the order value of automation system deliveries ranges from below EUR 1 million to EUR 3 million
  32. 32. © Valmet32 October 28, 2015 Largest shareholders on September 30, 2015 Based on the information given by Euroclear Finland Ltd. # Shareholder name Number of shares % of shares and votes 1 Solidium Oy1 16,695,287 11.14% 2 Solero Luxco S.A.R.L 5,349,756 3.57% 3 Varma Mutual Pension Insurance Company 4,208,465 2.81% 4 Nordea Funds 3,681,332 2.46% 5 Ilmarinen Mutual Pension Insurance Company 2,980,055 1.99% 6 The State Pension Fund 1,520,000 1.01% 7 Keva 1,502,166 1.00% 8 OP Funds 1,298,549 0.87% 9 Danske Invest funds 1,269,000 0.85% 10 Mandatum Life Insurance Company Limited 1,217,307 0.81% 10 largest shareholders, total 39,721,917 26.51 % Other shareholders 110,142,702 73.49 % Total 149,864,619 100.00% Largest shareholders 1) A holding company that is wholly owned by the Finnish State • The holding of Franklin Templeton Institutional, LLC decreased on June 9, 2015 to 7,196,324 shares (previously 7,517,629 shares), corresponding to an ownership of 4.80% (previously 5.02%) of Valmet’s shares. • The holding of Capital Partners Ltd. decreased on February 12, 2015 to 10,323,191 shares (previously 20,813,714 shares), corresponding to an ownership of 6.89% (previously 13.89%) of Valmet’s shares.
  33. 33. 52.1% 22.4% 11.1% 14.4% Nominee registered and non-Finnish holders Finnish institutions, companies and foundations Solidium Oy Finnish private investors © Valmet33 October 28, 2015 1) A holding company that is wholly owned by the Finnish State Ownership structure on September 30, 2015 Sector Number of shareholders % of total shareholders Number of shares % of shares Nominee registered and non-Finnish holders 293 0.6% 78,047,951 52.1% Finnish institutions, companies and foundations 2,630 5.5% 33,564,662 22.4% Solidium Oy1 0 0.0% 16,695,287 11.1% Finnish private investors 44,984 93.9% 21,556,719 14.4% Total 47,907 100.0% 149,864,619 100.0% The ownership structure is based on the classification of sectors determined by Statistics Finland.
  34. 34. © Valmet34 October 28, 2015 Share of non-Finnish holders and number of shareholders 47,000 49,000 51,000 53,000 55,000 57,000 59,000 44% 46% 48% 50% 52% 54% 56% 12/2013 01/2014 02/2014 03/2014 04/2014 05/2014 06/2014 07/2014 08/2014 09/2014 10/2014 11/2014 12/2014 01/2015 02/2015 03/2015 04/2015 05/2015 06/2015 07/2015 08/2015 09/2015 Non-Finnish holders (LHS) Total number of shareholders (RHS)
  35. 35. Paper, board, and tissue production trends October 28, 2015 © Valmet35 Source: RISI North America (million tonnes) Europe (million tonnes) China (million tonnes) Asia-Pacific (million tonnes) 10 20 30 40 4 6 8 10 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Tissue (LHS) Newsprint (LHS) Printing & Writing (RHS) Containerboard (RHS) Cartonboard (RHS) 10 15 20 25 30 35 40 5 7 9 11 13 15 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Tissue (LHS) Newsprint (LHS) Printing & Writing (RHS) Containerboard (RHS) Cartonboard (RHS) 5 15 25 35 45 55 2 4 6 8 10 12 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Tissue (LHS) Newsprint (LHS) Printing & Writing (RHS) Containerboard (RHS) Cartonboard (RHS) 5 10 15 20 25 30 35 40 3 4 5 6 7 8 9 10 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Tissue (LHS) Newsprint (LHS) Printing & Writing (RHS) Containerboard (RHS) Cartonboard (RHS)
  36. 36. Paper, board, and tissue operating rates October 28, 2015 © Valmet36 Source: RISI North America Europe China Asia-Pacific 75% 80% 85% 90% 95% 100% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Tissue Newsprint Printing & Writing Containerboard Cartonboard 80% 85% 90% 95% 100% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Tissue Newsprint Printing & Writing Containerboard Cartonboard 70% 80% 90% 100% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Tissue Newsprint Printing & Writing Containerboard Cartonboard 75% 80% 85% 90% 95% 100% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Tissue Newsprint Printing & Writing Containerboard Cartonboard
  37. 37. Paper and board consumption growth trends October 28, 2015 © Valmet37 Population growth in emerging markets is larger than in developed markets Level of consumption per capita in emerging markets clearly below that in developed markets This offers us long- term growth potential Paper and board consumption per capita vs. population Average global consumption: 53 kg per capita Source: RISI 0 500 1,000 1,500 2,000 2,500 0 50 100 150 200 250 EasternEurope WesternEurope NorthAmerica LatinAmerica Japan China RestofAsia Oceania Africa MiddleEast Consumption per capita, kg (LHS) Population, million (RHS)
  38. 38. 0 5 10 15 20 25 0 500 1,000 1,500 2,000 2,500 EasternEurope WesternEurope NorthAmerica LatinAmerica Japan China RestofAsia Oceania Africa MiddleEast Population, million (LHS) Consumption per capita, kg (RHS) Tissue consumption growth trends October 28, 2015 © Valmet38 New products and consumption models based on tissue are helping increase consumption in developed markets Consumption in emerging markets is still low, but growing Offers us long-term growth potential in both developed and emerging markets Tissue consumption per capita vs. population Average global consumption: 4.5 kg per capita Source: RISI
  39. 39. 0 200 400 600 800 1,000 1,200 1-Dec-07 1-Mar-08 1-Jun-08 1-Sep-08 1-Dec-08 1-Mar-09 1-Jun-09 1-Sep-09 1-Dec-09 1-Mar-10 1-Jun-10 1-Sep-10 1-Dec-10 1-Mar-11 1-Jun-11 1-Sep-11 1-Dec-11 1-Mar-12 1-Jun-12 1-Sep-12 1-Dec-12 1-Mar-13 1-Jun-13 1-Sep-13 1-Dec-13 1-Mar-14 1-Jun-14 1-Sep-14 1-Dec-14 1-Mar-15 1-Jun-15 1-Sep-15 Eucalyptus pulp (USD/t) Northern bleached softwood pulp (USD/t) Uncoated (USD/t) Copy paper (EUR/t) Testliner (EUR/t) Pulp and paper price trends October 28, 2015 © Valmet39 Source: Bloomberg
  40. 40. 0 10 20 30 40 50 60 70 80 90 100 0 20 40 60 80 100 120 140 160 180 1-Jan-10 1-Jul-10 1-Jan-11 1-Jul-11 1-Jan-12 1-Jul-12 1-Jan-13 1-Jul-13 1-Jan-14 1-Jul-14 1-Jan-15 1-Jul-15 CIF ARA steam coal (USD/t) (LHS) Brent crude oil (USD/barrel) (LHS) Natural gas spot price NBP (GBP/therm) (RHS) 0 20 40 60 80 100 120 0 20 40 60 80 100 1-Jan-10 1-Jul-10 1-Jan-11 1-Jul-11 1-Jan-12 1-Jul-12 1-Jan-13 1-Jul-13 1-Jan-14 1-Jul-14 1-Jan-15 1-Jul-15 European Energy Exchange, Phelix (EUR/MWh) (LHS) Nordpool Power (EUR/MWh) (LHS) UK Baseload (GBP/MWh) (RHS) Crude oil, steam coal, natural gas and electricity October 28, 2015 © Valmet40 Source: Bloomberg Europe
  41. 41. 0 1 2 3 4 5 6 7 0 20 40 60 80 100 120 140 1-Jan-10 1-Jul-10 1-Jan-11 1-Jul-11 1-Jan-12 1-Jul-12 1-Jan-13 1-Jul-13 1-Jan-14 1-Jul-14 1-Jan-15 1-Jul-15 FOB steam coal Richards Bay (USD/t) (LHS) WTI crude oil (USD/barrel) (LHS) Henry Hub gas (USD/MMBtu) (RHS) 70 75 80 85 90 0 50 100 150 200 1-Jan-10 1-Jul-10 1-Jan-11 1-Jul-11 1-Jan-12 1-Jul-12 1-Jan-13 1-Jul-13 1-Jan-14 1-Jul-14 1-Jan-15 1-Jul-15 Electricity spot price, PJM (USD/MWh) (LHS) Electricity spot price, NEPOOL (USD/MWh) (LHS) US utility capacity utilization rate (RHS) Crude oil, steam coal, natural gas and electricity October 28, 2015 © Valmet41 Source: Bloomberg United States
  42. 42. 0 1 2 3 4 5 6 7 8 9 2-Nov-12 2-Dec-12 2-Jan-13 2-Feb-13 2-Mar-13 2-Apr-13 2-May-13 2-Jun-13 2-Jul-13 2-Aug-13 2-Sep-13 2-Oct-13 2-Nov-13 2-Dec-13 2-Jan-14 2-Feb-14 2-Mar-14 2-Apr-14 2-May-14 2-Jun-14 2-Jul-14 2-Aug-14 2-Sep-14 2-Oct-14 2-Nov-14 2-Dec-14 2-Jan-15 2-Feb-15 2-Mar-15 2-Apr-15 2-May-15 2-Jun-15 2-Jul-15 2-Aug-15 2-Sep-15 European Energy Exchange (EEX) spot price (EUR/t) European Carbon Emission Allowance October 28, 2015 © Valmet42 Source: Bloomberg
  43. 43. Important notice October 28, 2015 © Valmet43 IMPORTANT: The following applies to this document, the oral presentation of the information in this document by Valmet (the “Company”) or any person on behalf of the Company, and any question-and-answer session that follows the oral presentation (collectively, the “Information”). In accessing the Information, you agree to be bound by the following terms and conditions. The Information is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of, or located in, any locality, state, country or other jurisdiction where such distribution or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction. The Information is not for publication, release or distribution in the United States, the United Kingdom, Australia, Canada or Japan. The Information does not constitute or form part of, and should not be construed as an offer or the solicitation of an offer to subscribe for or purchase any securities, and nothing contained therein shall form the basis of or be relied on in connection with any contract or commitment whatsoever, nor does it constitute a recommendation regarding any securities. Prospective investors are required to make their own independent investigations and appraisals of the business and financial condition of the Company before taking any investment decision with respect to securities of the Company. No securities of the Company are being offered or sold, directly or indirectly, in or into the United States and no shares in the Company have been, or will be, registered under the Securities Act of 1933, as amended (the “Securities Act”), or under the securities laws of any state of the United States and, accordingly, may not be offered or sold, directly or indirectly, in or into the United States (as defined in Regulation S under the Securities Act), unless registered under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act and in compliance with any applicable state securities laws of the United States. The Information is directed solely at: (i) persons outside the United Kingdom, (ii) persons with professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 as amended (the “Order”), (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order and (iv) persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any securities of the Company or any member of its group may otherwise lawfully be communicated or caused to be communicated (all such persons in (i)-(iv) above being “Relevant Persons”). Any investment activity to which the Information relates will only be available to and will only be engaged with Relevant Persons. Any person who is not a Relevant Person should not act or rely on the Information. By accessing the Information, you represent that you are a Relevant Person. The Information contains forward-looking statements. All statements other than statements of historical fact included in the Information are forward-looking statements. Forward- looking statements give the Company’s current expectations and projections relating to its financial condition, results of operations, plans, objectives, future performance and business. These statements may include, without limitation, any statements preceded by, followed by or including words such as “target,” “believe,” “expect,” “aim,” “intend,” “may,” “anticipate,” “estimate,” “plan,” “project,” “will,” “can have,” “likely,” “should,” “would,” “could” and other words and terms of similar meaning or the negative thereof. Such forward- looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company’s control that could cause the Company’s actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company’s present and future business strategies and the environment in which it will operate in the future. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the Information or the opinions contained therein. The Information has not been independently verified and will not be updated. The Information, including but not limited to forward- looking statements, applies only as of the date of this document and is not intended to give any assurances as to future results. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to the Information, including any financial data or forward-looking statements, and will not publicly release any revisions it may make to the Information that may result from any change in the Company’s expectations, any change in events, conditions or circumstances on which these forward-looking statements are based, or other events or circumstances arising after the date of this document. Market data used in the Information not attributed to a specific source are estimates of the Company and have not been independently verified.

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