Valmet (VALMT) Q3 2024 earnings summary

Executive summary

• Q3 2024 delivered a record-high comparable EBITA/EBITDA margin of 12.0%, despite slower-than-expected market activity and order intake, with stable business and automation diversification supporting resilience.

• Orders received increased 6% year-over-year to EUR 1,041 million, but order backlog declined 14% to EUR 3.5 billion, with stable business now representing over 70% of orders.

• Net sales were flat year-over-year at EUR 1.3 billion, with Automation and Services growth offsetting Process Technologies decline.

• Major Arauco order for over EUR 1 billion signed, to be booked in Q4, expected to boost future results.

• CEO transition completed in August 2024, with Thomas Hinnerskov taking the helm.

Financial highlights

• Q3 2024 orders received: EUR 1,041 million (+6% YoY); Q1–Q3: EUR 3,374 million (-11% YoY).

• Q3 net sales: EUR 1,295 million (flat YoY); Q1–Q3: EUR 3,831 million (-5% YoY).

• Comparable EBITA/EBITDA margin Q3: 12.0% (record for Q3), driven by favorable sales mix and acquisitions.

• Operating profit (EBIT) Q3: EUR 109 million (-14% YoY); Q1–Q3: EUR 299 million (-17% YoY).

• Cash flow from operating activities Q3: EUR 110 million (+93% YoY); Q1–Q3: EUR 376 million (+65% YoY).

• Net debt to EBITDA: 1.59; gearing: 43%; net interest-bearing liabilities: EUR 1,057 million.

• Comparable ROCE (LTM): 13% (down from 16% prior year); adjusted EPS Q3: EUR 0.49 (-7% YoY).

Outlook and guidance

• 2024 net sales and comparable EBITA expected to remain at 2023 levels (EUR 5,532 million and EUR 619 million, respectively).

• Short-term market outlook for services downgraded to satisfactory; board and paper weak; automation and flow control good; pulp, energy, and tissue satisfactory.

• Q4 expected to benefit from the Arauco order and higher sales from backlog compared to last year.