Release Date: April 23, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Valmet Oyj (VOYJF, Financial) reported a strong start to the year with orders received increasing to EUR1.3 billion, particularly driven by the Services and Automation segments.
- The order backlog increased to EUR4.6 billion, indicating a positive development compared to the end of Q4.
- Cash flow remained robust, with a strong cash conversion leading to EUR217 million in Q1.
- The company announced a strategic renewal plan aimed at improving customer service, operational efficiency, and simplifying the organizational structure.
- Automation segment showed strong performance with a 12% organic growth in orders, driven by activities in pulp and paper as well as other process industries.
Negative Points
- Net sales were flat year-over-year, with a decrease in the Process Technologies segment due to subdued market conditions.
- Comparable EBITA remained at the same level as last year, indicating no growth in profitability.
- The Process Technologies segment experienced a low comparable EBITA margin of 1.5%, reflecting weak profitability.
- Market activity in Process Technologies remains low, with a book-to-bill ratio below 1, indicating challenges in securing new orders.
- The strategic renewal process will impact up to 1,150 roles globally, indicating potential workforce reductions and associated costs.
Q & A Highlights
Q: Can you provide more details on the strong Q1 margin in the Services business and whether this is expected to continue?
A: The Q1 margin was strong due to effective pricing strategies and increased volumes. The team has been proactive with pricing, which has positively impacted margins. There were no extraordinary factors affecting the margin, and we expect normal seasonality moving forward. - Thomas Hinnerskov, President and CEO
Q: How are potential tariffs affecting customer activity, particularly in Process Technologies?
A: While the market in Process Technologies is subdued, tariffs may extend decision-making timelines. However, the pipeline remains unchanged. We ensure that contracts allow us to pass on tariff impacts to customers, maintaining fairness in pricing. - Thomas Hinnerskov, President and CEO
Q: What are the expected costs and benefits of the EUR80 million cost-saving initiative?
A: The provisions for the cost-saving initiative will be booked in Q2. While the exact costs are yet to be determined, they are expected to be significant. The full run rate of savings is anticipated by the beginning of 2026, with more details to be shared in the Q2 results. - Katri Hokkanen, CFO
Q: How do you view the current margin trends in Process Technologies, and are additional cost savings planned?
A: The margin in Process Technologies is currently low, partly due to decreased sales volumes. We are implementing a global supply unit to create a more agile supply chain, which should help improve margins. However, we do not expect significant margin improvement this year. - Thomas Hinnerskov, President and CEO
Q: How does the strong Swedish krona impact your competitive position, particularly in tissue and pulp?
A: We have a significant cost exposure to the Swedish krona, but we manage currency risks through hedging. While we have major manufacturing in Sweden, our global business and subcontracting help mitigate currency impacts. - Thomas Hinnerskov, President and CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
