Valmet Oyj (VALMT) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to Valmet's Capital Markets Day 2021. My name is Pekka Rouhiainen, and I'm the Head of Investor Relations here at Valmet. I will also be the moderator for today's event. This is a live event recorded in Helsinki, but due to the current COVID situation, we won't have a physical audience here at the premises. Valmet has made consistent progress in the strategy during the recent years, and this is also visible in our financial performance. The aim of today's event is to provide information and an update on Valmet's strategy and the business outlook. This morning, we have also published our climate program, and that will be also discussed in the event. Furthermore, we will also be presenting Valmet's leading market positions and the global mega trends impacting our business. If we then take a look at the agenda a little bit more detail. So in a couple of minutes, we will be keying off the event with a presentation by our President and CEO, Pasi Laine, that will be followed by presentations by our 4 business line heads. CFO, Kari Saarinen, will be presenting. And at 4, there will be concluding remarks by Pasi Laine. We will have a 20-minute break in between, starting at 2:25 p.m. And the event will conclude at 4:30 Finnish time. Then some of the practicalities shortly before we start. So we will have a Q&A session after each of the presentations, and we, of course, wish to have active participation by you. So please participate by asking questions. [Operator Instructions] The presentation slides are available at our website, and they are also attached to the webcast platform. And after each of the presentations, there will be a poll question that will be popping up. So we appreciate your feedback. But without further ado, let's get started. And Pasi, the floor is yours.

So hello on my behalf as well, and welcome to this virtual event. So my presentation title is technological leadership and favorable megatrends. And I'll try to present the overview of Valmet, and then, of course, my colleagues will go more deep in business lines and numbers. So first, I will have overview of Valmet, thereafter, recent developments and then investment highlights. This is a familiar picture to many of you. So Valmet's way forward. So we introduced this picture in 2013. And since then, it has been guiding the development of Valmet. So we are saying that -- and have been saying that our mission is to convert renewable resources into sustainable results. And it's, of course, understandable that we all see that it will be a very good mission for coming years as well. Our strategy is to develop competitive process technology to our customers, including Services and Automation. That's one part. And then the other part is to bring the -- to move the industry forward. And my colleagues will be giving some examples of that. So be cost competitive and move the industry forward. To develop our company, we have defined must-win topics: customer excellence, leader in technology, innovation, excellence in processes and winning team. We have been now working with these same themes for 7 years, and we still see room for improvement. And of course, the topics under the headings have been changing. But still, those 4 topics are guiding us. Then on top of that, we have 2 growth accelerators: How to grow faster in field services and how to grow in industrial Internet and digitalization. And our vision is to become the global champion in serving our customers, meaning that we are all the time below somebody serving customers. And even if we were successful, we shouldn't become too arrogant. So this has been the Valmet's way forward, and we believe that it will be the way forward in the future as well. How we have been developing? Orders received, 2013 was difficult. Thereafter, we have been growing from EUR 3 billion up to 4 -- close to EUR 4 billion, which was the order intake level in 2019. Last year was about EUR 3.6 billion, a little bit more. Net sales has been growing steadily from EUR 2.5 billion to EUR 3.7 billion. Comparable EBITDA first grew because of the restructuring acquisitions but thereafter after 2015 because of the continuous improvement from EUR 200 million -- EUR 180 million level to EUR 365 million level. And EBITDA percentage has been growing also from 2% first to 6%. And then because of the continuous improvement up to 9.8%, which was the end of last year. So solid development in all the -- all the major numbers in Valmet. Now some comments about the market trends and market situation. First of all, we have to remember that the megatrends are supporting our growth. Demand for pulp, board and tissue continues to increase. And it increases because e-commerce is getting more and more popular, packaging needs are still growing. And of course, hygiene needs are growing as well in the world. At the same time, our customers want to develop the efficiency and safety, which drives also demand for Services and Automation. So long-term market drivers are positive to Valmet. In geographical areas, market is, of course, changing all the time. Last year, China was very good. Beginning of this year, it looks that China is still good, but of course, other areas like South America and Asia have been active both in pulp and paper. So market activity varies. But globally, it has been good. In capital business, last year was good. Paper and board machine market was active. Tissue machine market became active in the end of the year. And Jari will talk about that more in the coming presentations. There were mega mill decisions earlier in earlier years. But actually, the market has continued to be active this year as well, like we just announced very big order in Finland for pulp mills in February. So -- and market activity continues to be good in pulp as well. In energy, we have seen a little bit weakened market, but I'll come back to that later in my presentation. So market activity in capital has been good. Stable business has been impacted by COVID, especially Services, where travel restrictions and capacity utilization, graphical paper mills have reduced the demand for our Services. And Aki will talk about the future more in details about that. In Automation, we saw the same impact in our direct sales to customers, but then because of good package sales to cater capital, our Automation actually was on par with last year. Then how we have been developing Valmet over last years, so -- over last year. We made PMP acquisition in Poland and in China and U.S., and that brought us new market segments. So now we can serve with our technology also small to medium-size paper mills, board mills and tissue mills, and that's very important. We launched a new services concept. And we saw very big need to very -- to utilize our area organization to serve our customers, and that was very, very big step-up to our area organizations last year. In technology, we are developing something new. As an example, here is the collaboration with Metso Spring where we -- where we develop products and technologies how to make molded products or 3D fiber products, and that's very interesting area. In Automation, we launched new user interface. In last year, we utilized industrial Internet applications and capability a lot to help our customers and also to help ourselves in situations where we can't travel. In processes, we have continued to develop project management. We had a small cost reduction. We used a lot of remote capabilities and continued to install the ERP as well. In people topics, last year, the main topic was, of course, to make sure that we keep ourselves safe and customers safe from COVID. Then as an example, our lost time incident frequency dropped to 1.5, which is the record in all times, and it's at a good level. And still, we continue to train our personnel even if there are some challenges now with traveling. Then in sustainability, we were selected 7th year in Dow Jones Global Sustainability Index. And that's, of course, a good achievement for our organization. And we don't have any secrets here. We have included sustainability in normal management of all the topics what we manage. So we are not managing sustainability separately. But it's part of the normal management what my colleagues are doing. That explains the good results in sustainability. And to continue that, we have, today, launched a Valmet's climate program where the title is forward to carbon neutral future. We all know that we all have to reduce CO2 emissions to atmosphere. And we have set ourselves to target by 2030 to reduce 80 -- by 80% our own CO2 emissions. We do it by reducing energy consumption and then also increasing the utilization of energy, which is produced in CO2 neutral way and so on. Then for supply chain, we have set the target to reduce our supply chain emissions by 20%. And there, we target to cooperate with our suppliers to make sure that we reach this target. Of course, one big part is like, for example, steel companies from whom we are buying our steel raw materials. Then an important topic is that a big part of the emissions are happening in the usage phase of our products. And there, we have 2 targets. We try to reduce energy consumption by 20% compared to today's technology by 2030. And then another target is that we want to have solutions to our customers for 100% carbon neutral production in pulp, in tissue, in board and in paper. And of course, energy helps there as well. So 4 different targets and pragmatic targets, and we want to achieve this by 2030. Then one hot topic last year was that we acquired a 29.5% ownership in Neles. We are saying that we have an active long-term role in developing Neles, and we are saying that in long term, we see that Valmet and Neles should be combined to make a Nordic-based global leader with very good offering. The combination would create a company, which would have very strong margin profile. It would have very big share or volume of high margin, growing, stable business, including Services, Automation, systems and valves. And it would, of course, create very nice platform to grow in Automation business further. And then, of course, like I said earlier, we would have tangible revenue technology development cost synergies with Neles. Then some highlights, how we see ourselves as an investment. So first of all, we have strong position in growing markets of converting renewables. We have very wide technology and services offering. In Services, we have the wide offering. We have very strong geographical presence. In Automation, we help our customers to maximize efficiency and safety of their operations. In paper, we have world-class technology for packaging and hygiene needs. In Pulp and Energy, we have strong pulp business with good market share and flexible cost structure. And of course, as one topic, we are systematically building the future of Valmet. And if I go a little bit more in details with following slides. Here, you see the customer segments where we work. And of course, we all know that print-grade paper demand is declining. But one has to remember that, for example, last year, the capital business, which came from that was 3% of our net sales. So important, but not too big. Then board consumption is growing. Jari will talk more about it because of -- it's growing because of e-commerce and packaging needs. Tissue consumption is growing globally. And because both tissue and textiles are growing, then pulp business is growing as well. Pulp demand is growing. In energy, we have weak situation currently. But in long term, when this decarbonization is having effect in energy production, then I'm sure that our biomass boilers and waste-to-energy boilers will have a good market. Because of board, tissue, pulp and energy are growing, then, of course, our Automation market is growing as well. Then Automation is serving other industries and -- as well where we see increasing digitalization demands, and Automation has a very good offering for those markets. In Services, because board, tissue, pulp, energy are growing, we are seeing also that our services market is growing. So all in all, the markets we serve have -- could -- not very dramatic growth rates, but they all are growing, except paper. Then our technology offering, we have the widest technology offering. We make paper machines, board machine, tissue machines. We can supply the whole pulp mill or parts of pulp mill, and we have also products for CO2-neutral energy production and emission controls. Because of wide technology offering, our Services has the widest offering. So we can, of course, serve all those industries where -- for whom we have the technology as well. And there, we -- our Services starts from spare parts and end up to process optimization. So very good offering there as well. In Automation, we have single measurements starting from there and ending up in quality management system and distributed control system. So all in all, with this total offering, we can serve our customers very well in their challenges. In Services, like I said, we have good offering, but we have also very strong geographical presence, meaning that whenever the market is active, we can help our customers. We, of course, benefit from the growing installed base, which we are creating all the time in our capital businesses. We have a track record of growing the business from EUR 1 billion to -- or EUR 1.4 billion last year, it declined because of COVID. But still, if we take that into account, our growth has been 4% a year from 2014 to 2019. So -- and Aki will tell more how we'll continue to grow our Services further. In Automation. Automation is helping our customers to maximize the efficiency and safety of the operation. That's, of course, a very good market to be in, in today's world, where everybody wants to improve efficiency and reduce emissions and so on. Our solutions are starting from single measurements going to plant-wide process automation systems. We have very good R&D organization in Automation, which is making all the time new products and then also making all the time addition and new features to all products so that they are competitive as well. We have a good track record since we acquired Automation in 2015. And here, you see how the orders received has been growing from EUR 337 million to EUR 416 million. And like I said, it was very good achievement that actually even if there was COVID last year, we stayed at the same level at 2019. So good development. And Sami will talk more about the future trends in Automation. In Paper, we have world-class technology for package and hygiene needs and, of course, for papermaking as well. So we have now offering for the wide machines, but also now for the small to medium-sized machines. Long-term megatrends are supporting our paper machine business, e-commerce and packaging needs are increasing. And then, of course, the hygiene -- demand for the hygiene products is increasing as well. We have high market share in this product. We have technological advantage, and we have excellent results also. Our R&D has been able to bring new products to the markets all the time. And then what is important is that we have flexible cost structure. So here, you see that the capacity cost, which means all the costs we have in the organization have gone from EUR 270 million to EUR 301 million, and that's because of the acquisition actually -- acquisitions. So actually, organically, we have kept the capacity cost at the previous year level. And this, of course, means flexibility in our organization. Net sales has been developing nice as well, and I'm sure Jari will say a couple of words about it. In Pulp and Energy, we have strong business with high market share and flexible cost structure. So we start from the cost structure. So here, you see that our capacity cost has actually declined from 2015. So it was EUR 218 million. And last year, it was EUR 196 million. And net sales has been going up, which means that, of course, comparing to net sales, our capacity cost has been declining. We have good offerings, so we can sell the whole pulp mill. We can sell all the energy solutions and emission controls and, of course, parts of pulp mill. Long-term demand is favorable to our pulp mill business as well because of the earlier mentioned things. And then pulp is also used as a raw material for textiles and maybe in the future for other products as well. So we are actually quite -- we are confident that the pulp market will be a good market in the future as well. We have good market share. We have good R&D, and we have flexible organization. And Bertel will talk more about the future of Pulp and Energy in his presentation. Then the seventh point was that we are systematically building the future. So you have seen that what the track record for Valmet has been. And we continue to have the same topic, so customer, technology, process and people in our management agenda and will continue to develop Valmet in all these topics. So want to have even better services to our customers, want to have even better industrial Internet applications, make sure that our good market position continues in capital business, and we want to increase our market share in stable business. In technology, develop new products, but then also increase the energy efficiency of our offering all the time. In process, continue to make sure that our operations starting from sales to project management to are effective, taking care of the climate program as well. And then as a backbone, of course, continue to develop our personnel so that Valmet can continue to be the leader in this industry. Good. That was my presentation. Now if I understood Pekka, correctly, there is time for lively discussion.

Yes, that is correct. So we will now take a Q&A session with Pasi. And as mentioned earlier, we will have another little bit longer one at the end of the event. But please participate and post questions. So here are already some, but I will try to read this in order as they come. So there is first question about recent market trends. So that was pointed out that market activity in China is especially high in board, tissue and paper. Why not in pulp since some Chinese pulp and paper companies have announced large expansions in pulp?

That was in the recent developments. So we started, first of all, paper, board and tissue have been active last year, like you saw in our order intake, that our order intake total in China was EUR 885 million last year which grew over EUR 600 million comparing to very low level in 2019. So the market was active. And like we announced this week, last year, we had also EUR 100 million order roughly, if I remember correctly, coming from pulp side as well. So the pulp market started to become active in the end of the year. And now we know as well that customers have announced future further investments in pulp production in China as well.

Yes. Then a question about Automation. So do you have any plans to become active in warehouse automation? Or do you keep your focus on production?

We don't have -- no. Yes and no. Sami can then later on maybe open this one a little bit up more. So not directly in warehouse automation, but we have -- we have developed products where we can help our customers to distribute, for example, LNG or biogas so not automating only the plant itself, but also helping in the distribution of the products. So that's not warehousing, but we are expanding our Automation capability more to the whole value chain of customer. And that has been one of the topics, how to grow Automation further. Sami, did it go correct?

Yes.

Good. And then a question relating to climate program, a little bit longer one. So I read it from here. So a question relating to the climate program last year, yes. So in climate program, you wrote about reducing emissions with increased usage of biomass. However, in the future, there will be competition on limited resources, for example, biomass and burning it is not the best way to use it, says the questioner here. Why is your strategy relying so much on burning biomass and not using carbon-neutral electricity or another technologies?

So carbon-neutral electricity. So of course, if we are using electricity, we want to use carbon-neutral electricity. And by the way, the electricity, which is produced by biomass is carbon-neutral as well. So we, of course, increase that, and that's part of the program. Then in biomass, there will be that kind of biomass available and continue to be, which can't be used for any other purposes. And that part of the biomass in the future will be burned as well. So let's take examples that you have some construction wood, which is not anymore. We can't use it anywhere else or it's somehow other way polluted and can't be utilized in any other construction, then that kind of biomass will be also burned in the future. The other example is the forest residuals. So there's certain size of -- out of which you can still try to make products with higher value than just burning, but there will be biomass available in small amounts also for heat production from -- in the future. But it's good, and it's very relevant question.

Yes. Yes. All right. Then there is a question regarding the Neles situation. So why do you think Valmet will be a better company, combined with Neles comparing to Valmet being on a stand-alone company? So from the Valmet shareholders' point of view, from Valmet customer point of view and from -- also from Neles' point of view, what do you see are the benefits?

Valmet shareholder and...

Customers and Neles.

Customers and Neles. So if we start from -- I start from customer. So of course, from Neles' net sales, about 30% is coming from pulp and paper where we are strong as well. So for those customers, we could deliver the whole mill, whole automation and a big part of the -- important part of the valve offering as well. And combine that with the digitalization so that we could give them remote support from wherever, making sure that the production plants including process automation and valves is working as effectively as possible. And of course, in that business, we could generate synergy as well that we could help Neles to improve its market share in tissue and board, where we see that currently Neles is not as strong as it could be. So there would be synergy benefit out of that. For Valmet and Neles, we could develop our Services offering better to make sure that the common installed base is working even better than it's today. Then if we take Neles view on this, we can help Neles with pulp and paper. We can help them with the digitalization through our automation colleagues. So I've been actually running that company so that we develop future digitalization tools together. We can help in there. Then the combined company would be very strong. So very strong in pulp and paper, in energy, very strong services, and then it would have very strong automation offering, including valves and including automation systems as well. Profitability would be good. It would be stable income company, having big share of volume coming from services and coming from automation together. And that would, of course, make it possible to develop the company further and also develop the automation offering with acquisitions so that our future automation would be a lot of more than just Neles and our current systems offering together. And we see that this combination would be beneficial for Neles shareholders, and it would be good also for Valmet shareholders.

Good. Then there's a question on Services activity. So do you see any improvement on the Services front?

Aki will comment more on Services later on. But -- now, of course, we have to be careful. We gave our market outlook in February. But I think since then, we have seen some improvement in some markets and Services. So there is some positive momentum. But then, of course, in many countries, there are still lockdowns and different kind of restrictions. So -- but we see improving demand in Services comparing to quarter 3 when the market was at the lowest point.

Good. Then we still have a little bit of time left. So there is a question regarding the climate program again. Are you able to quantify the carbon emissions that are saved or avoided because of your products? Even if you can just quantify carbon savings from 1 product, that would be great. So how many tons of CO2 emissions are avoided due to Valmet's activities?

Yes, we have actually done quite a lot of research work before we launched this campaign. So of course, in terms of the emissions what we are causing, it's -- they are easy to calculate -- not easy but we can calculate. Then for the products which we supply, then of course, we can, for example, measure what is the energy consumption currently for board machine. And then calculate how much actually with best available technologies we could reduce. And then it all ties the CO2 to savings. And we have that kind of calculations, and we continue to monitor that. We really can say that we have we have made technology, which is saving 20% in CO2 emissions with our technology compared to today's situation. So that must be one part of the program. Otherwise, it would be not very credible in eyes of investors, but not in eyes of our customers either.

Sure. I guess we have still room for one question. So let's take it now. So the questioner here is assuming that we have not done any changes to the market growth expectations for the different segments. And the question is that do you see any potential to change any growth outlook after the pandemic, given expected changes to the way we live our lives?

In regards to Valmet's business or? I think -- no. I think -- I think we all have learned now to use even more e-shopping. I think it's very difficult to see that we would somehow return. Then understanding of hygiene things, that will not go back. Of course, we have learned also to live without printing and writing papers more and more. So that will continue. Then not depending maybe on the pandemic, but climate, CO2-free energy will be more important, different kind of remote helps like Valmet industrial Internet applications will pay more important role. So I would actually say that almost all the things which are now changing are paying not a lot, but a little bit in our favor, except the printing and writing. So all in all, I think the future life after COVID or it will continue actually with many vaccinations, but I think it will be good for Valmet.

Okay. So thank you, Pasi. At this stage. And as mentioned, there will be another Q&A session a bit longer towards the end of the event starting at 4:00 p.m., but now we continue. And next up is Services. So Aki, stage is yours.

Good afternoon. In Services, we will continue to focus on profitable growth. First, I start with our way to serve. We have the right combination of services for the every stage of the customer process life cycle. Our offering covers spare and process parts, workshop and roll services, fabrics, maintenance, development and outsourcing, field services, process upgrades and industrial Internet solutions. We deliver service products, service agreements and service projects. And our life cycle approach means that we are seeking collaboration with the customer throughout the life cycle of their line, starting from the planning phase over the start-up and operation phase. Our core commitments are safety comes first, close to you, people you can trust and solutions to your needs. We have 5 business units: Performance parts with spare parts and consumables; rolls and workshop services for rolls, roll covers, roll maintenance and also workshop services; fabrics for paper machine clothing and filter fabrics; and then board, paper and tissue solutions; and Pulp and Energy solutions for improvement projects, field services, life cycle agreements and outsourcing for those customer segments. Our key figures. So like Pasi told, we have been having quite steady development with the orders received growth with the exception of last year. Our key market by size is Europe, Middle East, Africa with 44% last year. North America being 29%. And then the other 3 market areas, Asia Pacific, China, South America, being quite equal, somewhere 8% to 11%. Our biggest business unit is performance parts with 36%. And then the other business units, board, paper and tissue solutions and Pulp and Energy solutions, fabrics and rolls being also very close to each other. And we estimate our market position to be #1 to #2 in all key markets, and our market share roughly being 17%, 18% currently. We estimate the market size to be about EUR 8 billion, with a growth of 1% to 2%. Then market drivers. So as Pasi told and how we foresee, there is still growth in pulp, tissue, board and energy production, which increases the installed base. Also, we see that the customers are having higher demand for resource efficiency, productivity, end-product quality, industrial Internet services and then reduced environmental impact. Also, we see that customers quite commonly focus more on their core, decreasing owned resources, optimizing their own cost base and increasing demand for expert services and also outsourcing their noncore operations. The average size of the lines is growing. Also, the lines are aging. So the installed base is offering more service opportunities. Also, we still see capacity increases in China, South America and Asia Pacific. And as heard also, there are closures and conversions of noncompetitive production lines. Underlying outlook, we see that support services growth and profitability improvement. Of course, last year, the COVID induced economic slowdown and restrictions had a negative impact on the pulp and paper production and also service demand. Especially graphical papers declined sharply, and we don't expect recovery on that side. However, board had a temporary decline, but the outlook is positive driven by this e-commerce, home delivery and for instance, replacing plastics. And tissue continued growth with positive outlook also in the future, driven by increased hygiene standards. Then going to our must wins, first, starting with the customer excellence. We have been working to improve our customer experience through our Valmet way to serve. And we have launched the new concept with the globally unified services approach. We have developed our agreement-based business model. We have worked to improve our customer satisfaction and quality. And we have increased our offering with acquisitions of GLV, J&L and PMPoland recently. And we continue to focus on market share growth, especially on board, tissue, pulp and energy. Also, we focus growing our service sales and agreements together with our project business. And we also focus on developing our on-site and remote services through field services, industrial internet and customer portal. And here, we have an example, a case example from our customer mill, Opal Botany, Australia, where we have been working with the customer in a collaborative way since the start-up of the line 2012. The delivery includes Automation and Services also. And we have had maintenance outsourcing agreement, performance agreements and industrial Internet service as a part of service agreement. And we have helped customer to achieve significant savings in costs, for maintenance, water consumption and energy. And also, we have helped customer to increase efficiency and productivity. Then our must win for technology. So recent development. So we have a very wide product and technology portfolio. So our focus is on continuous offering renewable to keep the competitiveness. Recent development, we have several product launches. Also last year, we have developed, especially our remote services and industrial Internet services. We have improved our cost competitiveness with investments, product development and productivity improvements. And we continue to focus on developing new offerings for growing tissue, board and pulp customer segments. Our R&D focus is on offering renewal, cost competitiveness, digitalization and sustainability. And also, we will continue investments and development for productivity and cost competitiveness. And recent example for this COVID time customer case is from our shutdown work at CMPC Guaiba Brazil from last summer where we provided remote services with augmented reality classes and expert support from Nordics for our local team at customer site. And we were able to help the customer to execute successful shutdown and safe operation. And right after the shutdown, the mill reached its historic record pulp production. Then must win, process. So here, again, we seek continuous improvement in cost competitiveness. We have recently developed our footprint with improved cost competitiveness. We have had capacity cost reductions. We have increased savings in procurement, and we have improved our safety and quality. And we continue to focus on developing project operations. We continue our ERP rollouts and internal digitalization projects. And also, we continue to improve our profitability, safety and quality. And case example here is our relocation of dryer fabric and wide filter fabric manufacturing from Finland to Portugal, which will take place this year. And the target is to ensure the competitiveness and profitability of the business, of course, going forward. Then the last must win, people. So here, our focus as a service organization is, of course, develop our expertise and capability to serve customers. And we have had high focus on talent development programs. And recently, we have been working on with the management talent development programs. We have had global field services certificate program. And also we started the program for excellence in project management in stable business. And we will continue attracting, developing and retaining talent. And we are working to develop our strategic competencies, especially at our customer areas. And also, we continue to develop our leadership and management capabilities. And here, the case example is now from excellence in project management training program, which we launched last year for stable business. And the target, of course, is to improve predictability, transparency, efficiency, and in the delivery projects, we should result in improved profitability and also this unified way to operate enhances the customer satisfaction. Then growth accelerator: Field services. So we earlier announced that our target was to grow from roughly EUR 200 million to EUR 300 million level, and we have updated the target for EUR 350 million level. We estimate the market size to be roughly EUR 1 billion, and field services in our business means maintenance and process supporting services and/or shutdowns, maintenance shutdowns, daily maintenance and remote services. And the drivers why customer buy or outsource field services is, of course, improved operational efficiency and safety, improved operator support, improve predictability for services, improved maintenance planning and, of course, improved shutdown services. We have recently working on to develop our capabilities and offerings. So we have renewed our field service offerings, both on-site and other remote services. We have been implementing and developing digital tools as our @Field platform, which will improve maintenance predictability, efficiency and customer value. And also, we have had this field service certificate program. And so far, we have 101 graduates from the program. And we are also developing this digitalization in the sales front. So we have this field service contact center ready to be launched. And then we have been working in our subcontractor network. So we have made 67 new key supplier agreements. That's showed in Services.

Okay. Thank you, Aki, and then we will move on to the Q&A part. And as a reminder, please be active in posting your questions. So let's get going. The market share for Services has increased. So we are now at 17% to 18% market share estimated. From who have we won market share in the recent years?

I think that we have probably also gained market share from the customer own operations. So I think that in many areas, we are still competing against customer-owned operations, whether they in-source or whether they buy certain services outside. Of course, there has been also -- we have been acquiring some businesses, like we mentioned, GLV, J&L. So we have been growing also through acquisitions, but we have also grown organically, and I think that we have improved our market share in different sectors. But because the range is very wide, it's very difficult to pinpoint one area. So I think that it's a steady development of organic growth acquisitions and also, I think, having customer in-sourced operations outsourced.

Good. And then a question on -- which such technological reasons are there pushing the Services market to become more consolidated favoring Valmet such as more advanced way to serve remotely, et cetera? So are there some technological reasons, which could be in favor for a company like Valmet, especially in Services?

For remote services or?

Well, for example, in case of remote services.

Well, I think that, of course, one benefit that was mentioned by Pasi is that our geographical presence gives us leverage. So we can serve our customers in all key markets, and we have a strong area organization, which gives us more leverage close to the customer. Of course, the scale of economics helps that if you have for it a certain product, you can more easily distribute it to the whole market. And of course, in developing, together with the Automation, for instance, this digitalization is something that we can share very much with the Services and Automation. So I see that there are this economic scale helping in many fronts. Valmet's presence, technology coming from capital that supports Service and then the Automation that supports service. So I think this Valmet triangle is really the strong point.

Okay. And then a question on demand going forward. Now after COVID, so do you see that there is some pent-up demand in Services?

Yes, that's the -- of course, the challenge to estimate, and we have seen that there has been some shutdowns and works that have been postponed because of current restrictions. And we know that there are customers considering improvements, for instance. But it's very difficult to estimate the customers' decision-making, whether they will release or go forward and when they will go forward. So very difficult to estimate how much there is, this kind of pent-up demand.

Okay. And then a question relating to the dynamics of the customers in terms of outsourcing versus in-house. And where do you think the percentage of outsourcing will stabilize in the long term and where we are currently? So is there a lot of room to growth through outsourcing of customers' operations to Valmet?

I guess, there is, of course, room for improvement still. And -- but I would say that if you look at customers by market area and individually, so you can see that different customers may have different strategies what they see core and noncore operations. So therefore, there is no one number that one could say. But I think that, of course, the more advanced technology you have, maybe the more challenging is to upkeep the know-how needed for the good maintenance. So I think that when the lines are developing more likelihood that some expertise needs to be outsourced. So then the question is that what happens to the basic maintenance and how this maintenance will continue to develop, for instance, with the more sensoring, more digitalization, if there comes more predictability in the maintenance. So those can influence, of course, on the future demand. But I would say that definitely, there is still room for growing that. And that's why we have been focusing on field services. And also we are developing our customer closings and agreement business, which we see potential for growth.

Okay. So then question, both Valmet and ANDRITZ had good margin performance in 2020. Despite significant services declines, which historically always has been key group margin driver, is assuming the person here. Apparently, service earnings held up better than feared. Is this due to a positive mix change within services, for example, more spare parts and less people-intensive sales? Or is this mainly due to aggressive temporary cost savings?

I think that we have had many years a systematic target to improve all businesses and services. So all the businesses have target to improve. And I think that, of course, temporary cost savings may be helped with traveling, so certain part of traveling costs reduced, but also our volumes reduced. So I would say that the result of our strong performance is a target of improving all the businesses, and we were successful in improving our operations last year.

Okay. And then a little bit looking at the Neles -- potential Neles merger. So how would services benefit from combination of Valmet and Neles? And what kind of synergies would there be between these 2 companies in terms of services?

We have been thinking that, for instance, we could more cooperate with our service network. So if considering possible maintenance of valves, we could possibly do some cooperation with our service network. And of course, there is probably some service agreements that we could do combined in our common customer segments and so forth. So I think that those are at least obvious ones where we see immediate closeness with Services.

Could you remind us how do you bundle your aftermarket offering with new equipment sales? How are you involved in the quoting process? How much new annual sales, large pulp mill projects or an average board machine provide to you?

Well, I would say that this has been one of the focus areas for us to improve. So of course, we are not yet happy the level we are. So we have, of course, room for improvement there. And I think that this is one of the development areas we are still having. But I think that the -- let's say, the service demand better line, a little bit varies based on what kind of customer strategies so whether customer do a lot of in-house or whether customer outsource more and then what kind of grade they are producing and also in which market area they are. So that depends a little bit on the service consumption. And I think that we have very -- in a way, if you look at our product portfolio, so then depends on how wide portfolio we are able to, to serve and sell to the customers. So I think the opportunity, as we saw from market share is still quite sizable. But I wouldn't go to one number to define because it can vary quite a lot based on the size of the line and the, let's say, the grade they are producing.

Yes. So could you repeat the field services growth target and the time table? And what is the main reason why Valmet would differ so much from its competitors in terms of field services?

Yes, our target is to grow from EUR 200 million to EUR 350 million level. And I think that we are working towards that target. When exactly we will meet that, time will tell. But I think that we are systematically building our capabilities, our products, our tools and our area organizations. And I think that the value really comes from the fact that we have the technology, we have the Services, and we have Automation. So then we can help customer to reduce their own cost by having the expertise for the shutdowns, helping them to plant the shutdowns, which will reduce their own fixed costs in the operations.

Good. Then maybe still time for one more question. So let's take this one. The service market growth in the presentation, the long-term growth, I guess, this is referring to was 1% to 2%. Yet the production growth you presented on Slide #6 of your presentation goes to 3.5%. So why would Valmet grow below the production growth? Or am I missing something here?

Yes. Well, I think that maybe the time span is a little bit different. So we see that this 1% to 2% is like a long-term growth over the cycles. And then the percentages we were showing for different segments were referring to maybe the period of the COVID, and that is, of course, an estimation. So that is to be seen. That will be the reality. But I think that, of course, we have clearly stated our target is to grow twice the market growth. So if there is strong market growth, of course, we expect ourselves to deliver also accordingly. But time will show then that what is the development. One has to remember, of course, that there is also a decline in graphical papers so that will also impact on the, let's say, the total result.

Yes. All right. So now we will move on. Thank you, Aki, and thank you for the questions from the audience. And next up, we have Automation and Sami Riekkola. So Sami, please.

Good afternoon. I'm here to explain a little bit on Automation. And our target is to continue on the way towards profitable growth and continue on the development path at that. The ingredients related to the growth and doing it profitably, rely on our future-proof automation solutions. Sustainable automation solutions covering from distributed control systems to the industrial applications, quality management solutions, industrial Internet offering, analyzers and services. This, we are delivering to our customers through individual products or technology, as automation projects or through life cycle services. And in the same way, as Aki presented, the Services throughout the life cycle start from commonly planning the investments, providing the right solutions to the customer needs and then being great in executing the projects and delivering reliably. And then, of course, importantly, optimizing and ensuring the performance during the life cycle of the assets. And we are sharing the core commitments, being close to the customer, ensuring the safety in all our operations and having the right solutions delivered by the people that the customer prefers to work with. A little bit deeper into the Automation business line offering. Our distributed control system offering covers from single unit operations to the large plant-wide automation solutions integrated with condition monitoring. We have quality management solutions from individual measurements to the full-scale quality management solutions from measurement to the control and optimization. We have analyzers and measurements which are ensuring reliable measurements for good process control. Then our industrial Internet solutions covered advanced process controls and data-driven applications, either giving the operator the advice or optimizing the full even plant-wide operations. We are delivering the remote -- sorry, the automation industrial Internet offering through Valmet Performance Centers and engaging with customers through Valmet customer portal. Services throughout the life cycle then to ensure the high availability, efficiency, reliability and safety of the operations, pipelining and executing services effectively. Key figures shortly. As already explained, COVID pandemics did have an impact on the Automation order intake. But it was then offset by the good success in packetizing automation offering into the Valmet packages. Our net sales grew to EUR 400 million. Geographical split, still a very immediate focus. However, some differences and impacts were coming from the COVID impact, particularly from North America. Still 2/3 of the business is coming from the pulp and paper and 1/3, 29% from energy and process industries. Capital versus Services split is basically 50-50 for the Automation. And our market position in our core industry segments is rather strong or very strong, and we are continuously also expanding and winning over the installed base and market share from our competitors from the existing installed base. And the existing installed base and aging machines is an important market driver for the Automation. There continuously will be and presently also are new investments into the pulp and paper production lines. Also, industrial decarbonization is a big driver in the energy segment, also requiring for good precise control, reporting and management. Demand for efficiency in raw material usage in processes and sustainability is naturally also driving the automation demand. And overall, digitalization amongst the industry, digitalized companies are more efficient. And this is, of course, an important driver for the Automation business, for us as well. And then the outlook. Outlook for the Automation products, systems and services is good. Our services demand has remained and will remain good. It has been driven by our strong presence close to the customers. We have over 700 automation professionals serving our customers globally. There is a good demand also on new projects and new digitalized systems that are helping the customers to be more efficient. Remote services continues still to develop. And there is new demand also driven by the new technology we are introducing to the market. And starting off with our strategic priorities that we call must-wins. Starting with customers and what we have been doing and achieving together with our customers. We've had good initial success during the last year in selling the new Valmet DNA user interface, first ever web-based user interface for industrial scale process control that is new technology providing better usability and totally new way to control large and complex plant operations. We have developed a new web-based user interface that integrates then our industrial Internet applications and tools for the customers' benefit. And as an example, here, we have a hydropower plant or a network of hydropower plants, which have been remotely controlled from a centralized operation center, and this is the kind of the project and deliveries which are now emerging more and more that we have been also recently announcing. In terms of the technology, as Pasi already said, we have an excellent development organization and continuously renewing our product offering. So we are continuously renewing and aiming to bring something new into the existing offering and at the same time developing new value-adding offering to our customers. And this new offering, for example, this DNA user interface is presently already providing us both new customer potential, new industries to be served up, but also the new upgrade potential, which then will boost our Services business. And the new web-based user interface deliveries are at full speed, and we have also been gaining some efficiency into the delivery process with the new technology. And working on the processes, our third must-win example. Integrating new offering to the deliveries has worked out fine. And at the same time, we have been increasing our internal efficiency. We have, at the same time, been also expanding our supply center capabilities, a major investment here in Finland, ensuring the production capacity to supply, for example, quality control systems to our customer demand. And at the same time, been continuously strongly investing in ensuring our solutions are cyber secure. And as a proof of that, we have recently been awarded with the ISO 27001 cyber security certificate. And then with people. Needless to say, our operations were changed quite dramatically during the last year. However, we have been using remote connections also already in the past. So the change was not that big. But naturally, the remote operations grew by over tenfold compared to the previous time. And at the same time, we have been able to maintain engagement and also the motivation of our troops, which naturally is the key behind the success. We have also, at the same time, been focused in developing the capabilities of our local teams serving the customers close by and then providing to support from the Finland or the European or Asian hubs. And this is the development we intend to be doing and continuing also in the future. And as an example, in here of a board machine start-up that was completely managed, an automation system start-up that was managed by the local competent team in China. Then the second accelerator within Valmet, the industrial Internet is already a substantial business for us. We have been launching new customer value-adding solutions to all customer industries and segments. We have been developing a unique mill-wide optimization algorithm that is able to act and helps the operation to optimize the -- also the complex, for example, pulp mill operations. We have been working to develop new asset performance management applications to help our service business to better manage the installed base. And then we are going to continue on this path of further providing data-driven applications to our customers' benefit in the future as well moving in towards to the more autonomous production processes. And as an example of our industrial Internet progress we have been making, Valmet Performance Center is already delivering significant customer support throughout our global network. For example, serving and solving more than 1,500 customer ticket issues through our data connections as we are having more than 80 of them to, for example, paper machine product -- paper production lines or board production lines. We have over 800 remote connections through which our specialists are in contact and supporting our customers 24/7. And advanced control applications are, of course, already pretty much a standard of our offering, and we have hundreds of them optimizing the customers' process every day. That was all for Automation, and we can go to the Q&A. Thank you.

Thank you, Sami. And then we start Q&A straight away. So which business unit has -- which business unit and geography has best growth opportunities for Automation?

Very good question. Of course, last year, we saw already good development over in China. However, of course, where overall, the economies are developing then to be more in the Asia Pacific side. But we definitely can be growing and will be growing globally. But that's a very good question. And of course, something we are contemplating every day as well.

Sure. And then historically, you have sold to segments such as marine automation. What is the scope for growth outside of pulp and paper and process industry? Well, I guess, especially outside of the pulp and paper industries.

Outside of the pulp and paper, definitely, yes. Yes. So outside of pulp and paper, the scope has previously been a multitude of different process industries from energy to LNG to biogas. And then, of course, marine has been an important and significant segment already as such. And then additional ones, naturally, we are looking -- and now, particularly through the new user interface, we are able to master and control and provide this intelligent control opportunities for other process industries very credibly already.

Okay. And then a question relating to the market share. So your market share is slightly lower comparing to the capital market share as was shown in the previous slide. So why is that?

Yes. Of course, if we look only the capital, then, of course, our market share is a lot higher than 25%, for example, in the key segments of pulp and paper. But then if we look the entire installed base of the pulp and paper, for example, DCS, then, of course, although we have been successful in replacing competitors' installed base and growing our own, there still is lot room to grow in the global overall, for example, Automation market still even on pulp and paper. So the -- our estimate reflects over the full installed base of pulp and paper and not just the new deliveries or new extended capacity.

Good. Good. Then a question relating to the long-term growth potential, which you -- which is estimated to be a little bit lower than what growth rate for Valmet's Automation has been. So Valmet has been growing 5%, and the estimated long-term market growth for Automation business is slightly lower. So why is that?

Yes. So I expect that the market growth rate that we estimated to be within 1% to 2% with the pulp and paper. So as already mentioned, we have been successful in winning the market share from the competitors. And this competitor replacement continue to be one source, which will -- through which we can grow then faster than the market itself is growing, and that continues to be the case.

Okay. And then then a question on the monetization and growth rates for the industrial Internet. So what is the situation there? Are you able to monetize on your Valmet industrial Internet offering?

Yes, as already mentioned, it is a business already for us. And we have been successful in integrating industrial Internet offering into our standard offering. We have been also selling industrial Internet, for example, through data discoveries, and even agreements, even outcome-based agreements to our customers, even through profit sharing mechanisms. So monetization is proceeding, yes.

Good. So are there more questions for Sami? We still have a couple of minutes' time. So please post questions here. Potential Neles acquisition, how could you drive sales of automation solutions to non pulp and paper industries through Neles' strong customer relations, oil, gas, chemicals? What scope of Automation offering you could offer to these industries? And would you have required application knowledge?

As already previously mentioned, we have both common and then we have noncommon existing installed base and customer base, which we are serving. And there, of course, 1/3 of Neles is coming from pulp and paper and 2/3 from our side is coming from pulp and paper. And there, of course, lie the main, I think this kind of offering synergies. However, then, of course, the question on how can we leverage the non pulp and paper is then, of course, a little bit more challenging in terms of direct synergies. Naturally, we have industrial Internet offering, which then also helps Neles to serve the customers better. And we also have the asset performance applications, which are helping to manage the installed base of existing fleet and then naturally built on to services and optimization. And of course, having complementary customer segments is never a bad thing for the future opportunities.

Okay. And maybe on that front, a little bit related question on M&A potential more generally. So do you see potential for M&A to add new end markets or to speed the growth in general?

Maybe then a short answer, yes. We, of course, are open to the synergetic opportunities, also inorganic opportunities, which then would be fitting either to the existing scope or providing new industry segments through M&As. And we have been also doing those in the -- also in the not-so-distant future -- sorry, past, previously already.

Okay. And then there are now more questions regarding the Neles. So as you have surely done co-operation with Neles already in different projects, how would you describe the compatibility of your analysis offering? So trying to figure out how much you would have to do software integration, et cetera, if Valmet and Neles were combined?

Software integration. I now assume that we are talking about then systems that are working at the customer interface, not speculating about the internal ones. So we have been doing a lot of common development in the past. So I think this kind of a compatibility is there for the -- related to the valves and the systems and then even the maintenance data-based solutions. Then, of course, how much of the further integration would be needed is then, of course, depends on the end user applications. But I think compatibility in terms of integrating valve or valve controller to an automation system, and then smart controls is relatively ready.

Okay. Then a question on what are the key technology differences do you have for DCS and QCM products versus larger industrial players like ABB? So why would a customer choose Valmet's Automation in terms of DCS and QCS?

In controller point of view, how, for example, field devices are being controlled, definitely, not that big differences but where the really big difference presently is and what we have introduced through our new user interface, being a completely web-based native HTML5-based user interface delivers cybersecurity and delivers capabilities to an operator being dependent on the location, being independent of the device managing the process is rather unique with our solution presently.

Good. Why -- all right. And then analysts is asking, why do you not mention ANDRITZ as a major competitor in your slides usually despite the fact that they are active in Automation? So what are they missing in your view? What kind of offering Valmet has versus ANDRITZ, I guess, in terms of Automation, is the question.

Well, we have our own proprietary DCS from single unit controllers to the optimization algorithms, even optimizing the entire mill-level plant operations. We have -- own DCS competition is not having own but integrating somebody else's. I think that is the main difference. And we have our own quality control system as well, which is another differentiator in this case, really valid one.

All right. So if there are more questions, please present them via the platform. We will wait just a short time. And seems to be no more questions popping up at this stage. So thank you, Sami. We will now move on to a break. And we will continue at 2:45 Finnish time, so a little bit more than 20 minutes break. [Break]

Good afternoon to all of you. It's my pleasure to go through the Paper business line and world-class technology for packaging and hygiene needs. We start with the Paper business line offering, which has experienced some changes during the last few years, thanks to the acquisitions we have made. GL&V acquisition has complemented our recycled fiber lines and stock preparation systems by adding cleaners, disk filters and disk refiners to our product portfolio. So it means that now we are able to serve our customers with even wider scope of the recycled fiber lines and stock preparation lines, which we are selling together with our machinery, but also as separate owned islands. On top of that, we are also selling the rebuilds and stand-alone products for those lines. Especially for the refiners, which is one of our key products for these systems because of the energy efficiency. The PMP Group acquisition has increased also our product portfolio in the board and paper and tissue lines by adding the small and medium-sized machinery to our product portfolio. And this is the market segment, we have not been focusing on earlier. So it's real add-on to our business. We are -- in the board and paper, we are able to serve our customers now with all size of the machinery for all paper and board grades. On top of that, the rebuilds are important part of our business. Especially because of the great conversions we are doing from paper to board. We are also selling here stand-alone products like [indiscernible] headboxes, seizures and winders. On tissue side, also thanks to the PMP Group acquisition, we are able to sell all sizes of the machinery to our customers to all tissue crates and products. And we are the only supplier who has all the technologies available for conventional, textured and structured tissue production. We also do some rebuilds and sell stand-alone products for our tissue customers. It has been already mentioned that in the Paper business line, we have experienced quite good market activity and at the same time, we have been able to increase our market share that we have been over EUR 1 billion in order intake last few years. Also, last year was the year -- first year we broke EUR 1billion in net sales. Because the projects are taking a few years, so the net sales is following the order intake in a couple of years' period. Our net sales are -- the biggest marketplace for us has been the EMEA and it is EMEA today. But the last few years, the China has been really good and especially last year, and hence, the China portion in our net sales has increased. But I'm really happy that also the Asia Pacific and South America has increased their share. It's not a surprise to anybody that -- from the paper grade point of view, the board is the biggest segment to us. And tissue has been on that 22% to 25% level in early years as well. And paper, even it is only 9%, but still, it's EUR 200 million business to us, so it is important. And as Pasi said, we have been able to maintain our capacity cost even the revenue has increased. And that's thanks to our flexibility in our organization and all our subcontracting networks and supply networks we have built during the years. Today, we can say that we are clearly #1 in each of the Paper grade segment. And our market share in board and paper is around 50%. And if we go to the bigger machines, so it is even higher. On the tissue side, where there are more players in the market, our market share is around 35%. We have good market drivers, which are supporting our business. It has been mentioned already e-commerce, which is increasing the board demand, the same is the shift from the plastic packaging to renewable materials. But there are also demand for lightweight board, which means that the lighter board with the better strength properties, and that is increasing the demand for high-quality, high-technology products, what we have in our product scope. On the tissue side, urbanization and improved hygiene and living standards are increasing the demand for tissue. And also, the demand for higher quality is increasing demand for high technology, what we are offering to our customers. On Paper machine side, there is -- on a paper side, there is still some need for specialty papers, which we are serving. But it's known that the paper, especially the printing and newsprint is going down, and it has some impact to the big business, but not really a big impact. To take a look at the outlook, so we are in the growing business. World demand for paper, board and tissue is forecasted to grow around 1.3% per annum in long term. So meaning that from 2019, 414 million tons, it is expected to grow up to 486 million tons in 2030. And if take a look on the different paper grades, the containerboard growth is the biggest one, 2.5% per annum, which means that every year, there is more than 10 new machines needed for containerboard production. On the cartonboard side, 2.3% annual increase means also around 5 new machines. And the biggest demand is on tissue side, where 3% growth means that around 40 new middle-sized machines are needed per annum in the market. So there is a clear demand for our products also in the future. Going to these different must wins and actions we have taken on term. So I would say that from the customer side, the PMP Group acquisition has the big impact. It has increased our technology offering, and now we are able to serve all customers everywhere in the world with all the size of the machines from the small and slow machines up to high technology, high speed, wide machinery, in tissue, board and paper. And at the same time, it has increased our expertise in our strategic market areas in Asia and Europe. And also, at the same time, we have some new engineering and production capabilities available. Now at the moment, we are integrating the operations to our organization. And we are going through the product portfolio, how to maximize the utilization and the benefit of those. And then also, the biggest benefit, I think, is coming from the fact that we have really good net sales globally to sell these products, what we have now in our product portfolio. On the technology side, we can say that we are the technology leader in the world. And this is 1 reason why we have been successful in this business, together with our references what we have. We have already years focus on the resource efficient production. We have solutions to produce high-value end products with variety of raw materials. It means the different raw materials, but also the lower quality materials, what is the need for nowadays because of the recycled fiber quality going down. We have also long-term development actions ongoing for enhanced raw material reduction, water reduction, energy efficiency and reduction in CO2 emissions in all the paper,board and tissue production. And the latest, which has been already mentioned here is this collaboration project with Metsä Spring to produce fossil-free 3D fiber products. On the right-hand side, you see the picture of the typical product, which will be made in the future from the fiber. So it is the different kind of the food packages and this type of serving products like plate and so on. We also are focusing in the future for energy and material efficiency and solutions to reduce the carbon footprint. We are also focusing on the barrier development for packaging grades because that's what is essential to replace the plastic in the food with the fiber-based products. And then last but not least, we are also focusing on the microfibrillated cellulose applications, which are now interest -- where there are interest from most of our customers in that area. And to improve, especially the strength properties of the end product. On the process side, the last year has been quite a different year and full of surprises, and it has been a quick turnaround to remote mode. We have not been able to travel, and we have had to change our processes significantly. But we have been successful because of our tools we have available already now. We have commissioned and start-up a new machinery in tissue and board machine side remotely with a limited number of the Valmet personnel on site. And on the right-hand side, you see one case where we remotely started up the tissue machine without a single Valmet person on-site during the startup. But we have also add-on pilot trials remotely in our paper technology centers in Finland and Sweden. And also the remote factory assembly test and customer inspections has been done remotely. So there's a number of new ways how to work together with customers today remotely. We continue to evaluate and develop our way of working and way to operate and how to support our customers remotely. And we continue to develop our Industrial internet solutions, what Sami mentioned, to increase the efficiency and reliability and automated operations in the future. On the people side, we started last year a new training program to ensure the future competencies for Valmet. So this is the pilot, which is going on now, where we have hired graduated students from the university to go through the training with Valmet, and which provides a broad understanding of the business and operations and our delivery process to these young talents. We have theoretical and practical training for them, and they go through the different position and job rotation inside the Valmet in order to help us in the future to our needs, what we have. At the moment, we have a recruitment process going on for the second graduate program, which will start later this year. And that will be more international focus. And as I said, this Valmet graduate program is now the pilot, and the plan is to utilize that globally in Valmet. So that's what I had about the Paper business line. So thank you very much. And I think it's time for the questions.

Yes, it's time for questions. Thank you, Jari. So first question here on the line already. And the question is on PMP Group. So how big is the addressable market for this product segment?

No, that's few hundred millions, it's hard to really say how is the future to be in the area. But because now the trend has been to the bigger machines. But we see that especially in Asia, it is the main market for the small machines, but we are talking about hundreds of millions.

Okay. And could you talk also more broadly on your views on the PMP before the acquisition was done? So was PMP performing well? Or did they struggle due to the lack of small size? And do you think that they have invested enough in R&D? So what kind of company PMP was before?

PMP was really a really good company in the small machine size segments. They are cost competitive, and they have a quite good market share in the field they are working. And as I said, it is something where we have not been focusing on. It's a real add-on to us. They have not focus that much on the R&D, and that's why now there is a great opportunity for us to develop their machinery, improved their cost competitiveness, but at the same time, improve our cost competitiveness as well. So I think that it's a combined benefit for both of us now when we are combining our forces.

Okay. And then on your loyal Chinese customers, like, for example, Nine Dragons. Nine Dragons has a sizable expansion plan with a lot of board, paper capacity expect expected to start-up late '22 and '23. When would these deals be awarded to the suppliers? What do you expect?

Okay. It's always hard to tell on behalf of our customers because the planning might sometimes take long time. But I know that there is plans in place. They have announced those, and there is discussions going on. So I expect that maybe this year, late this next year, we hear something.

Okay. What about then -- activity outside of China? So now there have been discussions on this and one good order from China received lately, but how is the activity outside of China? How would you describe it?

No. I would say that the activity in China is still good, but I'm happy to see, and we are happy to see that the activity outside of China is also increasing. And most likely, we will see a bit more activity also outside China already this year.

Good. Then there is a question on the market share. So according to the materials, the market share for paper has increased. Why do you think Valmet has been able to gain market share?

I think that there is a number of reasons. But as I said, we are a technology leader and the tech. We are the supplier who is bringing a new technology to market. Some of the customers always want to get the latest technology. So that's 1 reason. But I think that maybe even the bigger reason is our references in most of the cases we have supplied, we have excellent references. We have a good start-up curves because we are working together with our automation. So we have a full package in place together with the service, we are able to continue to cooperation with our customers in the long run. So I think that this kind of the customer care cooperation and a good references is another big reason for that.

Okay. And how -- for how long do you think the paper to board conversion, I guess, market can continue to exist?

Actually that's a quite interesting and good question. I personally already, a couple of years back, was expecting that it's going to go down, but that's not -- has not taken place. So as long as we have a good paper machines in the market, which can be transferred easily to that board machine. So I think that long it's going to take place. But really hard to say. It depends on also how the paper market is developing.

And then -- Analyst is asking Voith has introduced board machines where you can recycle water, do you have similar products in your offering?

No. We have -- I don't know if it's similar, but we have cases where we are utilizing the water, which is coming out from the machine, we are utilizing those to generate energy. And then already long time, we have had our systems in place, which are cleaning the water, and we can recycle the same water in the machine, for instance, in our pilot machine in new vascular it has been already in use number of the years. And we have customers who are utilizing our system to recycle the water from machine -- back to the machine. So it's not a new technology for us.

Okay. Then interesting question regarding Coca-Cola, who is said to be testing paper bottles, but still with the plastic layer and technology, I guess, is Paboco. Regarding your board machine, R&D, are you cooperating with your clients to develop machines that could help industrialize such package types?

We are working continuously with our customers for different kind of the project. And of course, quite many of them are confidential. But when I mentioned this barrier development, it's exactly the area where we are developing the technologies, where we can build up the barriers to replace the plastic for the different kind of the food packages. And of course, the liquid is one of the kind of the food package.

Okay. Thank you, Jari, and I will now just wait for small moment to see if we have another follow-up question. So please feel free to ask there still a couple of minutes' time to post a question to Jari, if something is on your mind. All right. There are a couple more. So you got manufacturing capacity significantly in 2013 to 2015 and have sort of kept your capacity cost stable since that, is there a need to increase capacity again? Or are you just happy seeing delivery leap increasing instead of -- if board demand continues to be strong?

Of course, we got some additional capacity now together with the PMP Group acquisition. But mainly, we have been focusing on building up the new supplier network and we have been, in my mind, quite successful in that area so that we have been able to increase our flexibility with the supplier network we have in place globally. But -- so we are happy with the situation we have today.

Okay. It appears capacity expansion is stepping up in the market. What explains the large expansion plans in China and even outside of China? From where does demand for the new capacity come from?

I think that the first thing is these new regulations what we have in place in different parts of the world and globally. So there is the need for replace the packages. And that's where the main increase of the capacity and demand is coming from is the food packages. So the environmental needs closing the older machines and replacing them with the new one and with these needs for the new type of the food packages, those are the main reasons to increase of the demand.

And then final question we will take. Given how fast package delivery due to e-commerce, I assume, is growing globally, why do we expect board to grow only 2% to 3% per annum?

No. Our estimations are based on the outside companies estimation, and we have not done our own estimate so much because it's -- anyhow, it's varying quite a lot from year-to-year, and that is the average demand increase expectation. So it might -- 1 year be much, much higher and 1 year, a little bit lower. That's the average value.

All right. Thank you, Jari.

Thank you.

And we will now move on with the agenda. And next up is Bertel Karlstedt who will be presenting the Pulp and Energy business line.

Thank you, Pekka, and good afternoon, everybody. Pulp and Energy up next, and my intention is to go through achievements and forward-looking actions to further strengthen our position in the market. To begin with a short recap of the offering we are quoting to our customers worldwide. On the pulping side, we have the complete capability for all the fiber processing needs that the customer has and, of course, also the chemical recovery processes and equipment needed for the biorefinery mill of today and the future. Also very interesting is the fact that we have a good set of biomass conversion based technologies and readiness and forward looking, these are really, as I said, interesting. Energy side, the base technology is the fluidized bed boiler technology applicable for big boilers as well as for smaller modular power plants. And also here, big interest looking into the future is the gasification and pyrolysis processes making us -- making it possible for us to offer opportunities to use biomass waste and side streams from the customers' processes for energy and fuel production. And also very interesting is, of course, the portfolio products and readiness we have for the emission control, strongly supported by regulation and legislation, becoming more and more stringent. Both sides are today strongly supported by Industrial Internet and remote support capabilities and offering that we have in-house. Looking at the numbers, recent history, also, in our case, 3 good years, looking at orders received roughly EUR 1 billion, slightly below in 2020. But nevertheless, those 3 good years led to the fact that also P&E, Pulp and Energy, actually went above EUR 1 billion in net sales in 2020, for the first time ever. That net sales, an unchanged setup, looking at the global market, EMEA still being the clearly biggest or I should say, still the biggest area of ours, South America, almost the same size in 2020 due to the fact that we have multiple big pulp projects ongoing in delivery there as we speak. Asia Pacific 14%, China, North America, both fairly modest still net sales-wise in 2020. Looking between the 2 businesses, pulp, 66% growing as a relative share and energy, 34% in 2020. Capacity cost, as mentioned already earlier, we are still now at the EUR 200 million, even below in 2020, looking at the capacity cost volume. And of course, that is only 20% of the net sales, meaning that we have a flexible and efficient setup in the market. And also a good setup to meet future fluctuations in the market that we know will be there also as we go forward. Market share-wise, we are on the podium in both Pulp and Energy, market share in pulp increased to 45% in 2020. Market size is unchanged and expected long-term growth is 1% year-over-year. In energy, I would say, a stable market share of roughly 20% and size of the market unchanged there as well and also there an expected 1% year-over-year growth as we go forward. Now looking a little bit more in-depth into the market, the drivers and the outlook looking at the pulp side first, the active market will continue. That is driven by the growing demand for sustainable packaging, tissue and hygiene and now also textile products. That has been mentioned before here by many of the speakers already today. And we also see the increased environmental and strict regulation actually demanding us to develop our processes further and also to come up with new process applications to meet these demands in the key processes that we have. And fiber replacing plastic as well as second-generation bioethanol are both strong drivers when we look forward into the future. Based on that outlook, our expectation is that the big investment will come -- investment activity will continue in the area of pulp. Mainly the big mills will go into South America and Far East, China and Southeast Asia based on Southern hardwood, but we also see continued plans and projects going forward in the Nordics based on Nordic softwood species. The good thing is also to balance the whole thing, we have a good set of small and medium-sized projects also being taken forward for a stable development in the market that otherwise would be very fluctuating with the big projects. And of course, textile recycling and sustainable fiber-based textiles is of very big importance, or I say, should I say, interest and potential importance for us as we go forward. More about that on a coming slide. The energy market is in a similar rate, drivers and outlook. The driver here is definitely the decarbonization as 1 part of energy transformation that continues. We still see a good future for the combustion-based utilization of biomass and residual wastes, especially for heat and process steam production. And of course, the legislation and the regulation related to emissions and environmental targets will support the environmental products and solutions portfolio. The outlook here, based upon those drivers is that there will be continued need for investments in the installed base, looking at thermal power plants. We expect a multitude of industrial segments, including pulp and paper, to be continuing to use biomass and like I said, waste streams on their own main process for steam production and the air emission control with ever more stringent regulations and requirements as well as the use of new fuels as such in energy production also brings about new challenges, whether we're talking applications, order performance and capabilities of these applications. Looking at the future 2021 and looking back, the only really significant COVID-19 effect we can see in the market is the fact that the marine scrubber segment was almost nonexisting in 2020. The expectation for 2021 is, should I say, modest as well. The reason for that was, of course, the fact the uncertainty in the market, the energy price spread as well as the fact that 2020 was a good opportunity now for end customers and suppliers I like to verify and evaluate the concepts and the deliveries. So if we look at our achievements and the future through the must wins. Starting with the customers, I would say that we have been able to strengthen our position in the market based upon offering and cooperation. The market share is based on the fact that we have a good technology that is appreciated by the customer, giving us the orders. And I also bring -- want to bring forward, on the cooperation side, 2 dimensions. First of all, I think we have been learning to ever better work together with other business lines, service automation and paper in the market and the customer interface from day 1. And of course, altogether, we are developing the Industrial Internet that glues us altogether as a customer supporter and a good partner for the years to come through the life cycle. The other dimension I want to bring forward is the fact that 2020 really showed us the strength of our area organizations locally close to the customers. They helped us to reach these orders received volumes with efficient close customer relation, and that is something that we will continue to build further upon. The case that I bring forward here is delivery to Copenhagen in Denmark. Valmet delivered the fuel handling and the biomass boiler, a key step for Denmark to reach for Copenhagen to reach its carbon neutrality targets set for the city of Copenhagen for the future. Next steps put it simply, we are going to further improve our market share in both Pulp and Energy, driven by the offering and the cooperation strengths that we can leverage. Next, technology. I mentioned that 1 key to success in reaching the market share and orders received was the technology. And here, we really can report, as we say here, breakthrough in multiple fronts and with quite many different technologies. We can report today, we actually released yesterday another order that gave us another set of references and sold projects for our new continuous cooking generation 3, G3, technology, something that was well awaited by the market, well-developed by us and now ready to be launched, and we have more than 2 handfuls of orders already. We have, of course, also recently been able to release the fact that we are together with Renewcell in the forefront of developing a process and an industry and an opportunity for us as well when talking about recycling textiles to dissolving pulp and from there on, through spinning and yarn production to a recycled textile and recycled garment for the market. And we have also, during the last year, been able to release the fact that we have sold now multiple references for second-generation bioethanol production in Europe and into Asia as well based upon the pre-hydrolysis technology that we have developed during the recent years. And further to that, Industrial Internet and remote support, we are well on our way to have a good reference base and a good customer appreciation and experiences on that side as well, both in Pulp and Energy, as we speak. So really breakthrough on multiple fronts. The case that we bring forward is the Klabin Puma project in Brazil, an upgrade of the customers' existing mill, a prime example where we are working together with the total Valmet delivery encompassing paper volume automation system as well as P&E, Pulp and Energy, portions. And actually, Klabin Puma is one of the first generation 3 continuous cooking deliveries and references sold. We'll start-up later on this year. Technology, next steps and development actions, I will bring forward the fact that resource efficiency is whether we are talking in energy or pulp, a key topic for our customers. Raw material efficiency, consumption numbers, whether we are talking water, electricity, chemical consumption are all key operative expenditures for them. And also the emission side with the tighter regulation, where we are talking about noise abatement or emissions to air or waters are all going to be key in our technology development as we go forward. So continued focus on resource efficiency. And another thing that we have ongoing, starting in the energy side of the business, is to look at modularization as a way to improve our competitiveness, internal competitiveness and efficiency, talking about the concept generation but also competitiveness and efficiency of the supply chains, looking at both cost and delivery time dimensioning. Processes, the third must win. I think that Pulp and Energy business line has been developing very favorably and has strongly contributed to Valmet's development, looking at profitability. And we have been improving in our delivery and project management excellence. And I would all start the recent developments with health and safety. First, on my agenda always as a leader. And here, I can really say proudly that the health and safety statistics of our business line has improved significantly in 2020, especially so when looking at the statistics for our own personnel. The fact remains though that on the contractor side, we still have issues, and we still have room for improvement, and that is, as we will see later, in the continued focus. During the last 3 to 4 years, we have invested quite significantly internally in Pulp and Energy to improve our capabilities in project management and delivery. We have built competence. We have generated and created tools. We have changed our ways to operate and our processes. And the results can really be seen when we look at our performance and our profitability today. And 1 example of us taking new things into use is the fact that we can report that in the case of the new ERP that Valmet is rolling out. We have in Pulp and Energy in Finland been going live all through 2020 with good success without any major problems and the implementation and rollout of that ERP will continue in Sweden in 2021 and in China and India as our countries of operation during the coming years. Good success on that side. The case that I bring forward, actually from the Marine scrubber side, DSME, Daewoo Shipbuilding and Marine Engineering as a customer of ours, actually a repeat customer, looking at the repeat order that we have received earlier this year. We have delivered the 7 ships that we sold to them some years back with success in 2020. Everything went according to plan. The performance of the equipment is according to plan, the time schedule is according to the requirements of the customer. What didn't go according to plan was that we had to do it based on local resources in our area organization in China. Once again, a sign that we were able to build the capability locally, we were able to support remotely through our Internet -- Industrial Internet and remote support opportunities and setups, and we were able to do this work with good success. Going forward, I said that we have done significant competence building, new tools, new processes. We are by no means we have not leveraged and harvested that to the full yet. I see continued improvement opportunities of ours on that side. And last but not least, we need to focus on the contractor safety performance. Their safety performance is part of our safety performance at the customer side and becomes part of the customer's safety performance and profile. So important to find a way to improve that further during the years to come. And then last, but definitely not the least, the most valuable asset we have, our people. We have continued to invest in our key resources, the key asset, our personnel, and I'm proud to say that we have, through all the challenges we saw during the last 12 months, the year of COVID in 2020. We have been able to stay safe, we have been able to stay operational and efficient. And we have, as a consequence of necessity, been able to build the strengthened capacity role and cooperation with the area organizations on multiple fronts. The plans that we had for internal further training had to be adapted to go from face-to-face to virtual, but we were able to commence with the important programs, nevertheless. The picture is from a lead engineered training program, a program we have had on now for 3 years from 2018 to 2020. More than 100 participants in this important discipline of ours. And the teams coming together working on topical items and challenges in the business with business sponsors as supporting. And of course, the picture is taken in September 2019, hardly a picture taken during COVID times. Going forward, I still see the importance of building the competence and also transferring as impossible and needed of the competence to the area organizations. By doing that, we can further build and ensure a flexible and efficient resource utilization for a global business with cyclical nature and sometimes also with external preconditions or circumstances that strongly affect the way we need to go about our business. That was the achievements and the further forward-looking actions aimed at strengthening our position in the market, and then we go over to questions and answers.

Yes. Thank you, Bertel. So there is a question that came already a little bit earlier, and this is regarding the long-term -- medium or long-term potential for technology-related to lignin focused business. So can you elaborate a little bit on that?

Lignin has, of course, been readiness we have had now for, well, between 5 to 10 years. And I guess it's an example of a process that was a little bit ahead of its time. I think when I look at the biorefinery mill, formerly called a pulp mill for our customers, lining is definitely of interest because it utilizes a sidestream that is considered waste. Otherwise, you can create a fuel or a chemical that we can reuse, and it also have an effect on the load of some of the key components in the chemical recovery side of the pulp mill or biorefinery mill. I think we see a really good interest. And the change that I see now happening is that the end use of this recovered lignin starts to take form. We start to see the request for and demand for this lignin in the market and I foresee that we will see many orders coming during the coming years. We are still selling small pilot units, I should say, not say frequently, but now and then to key customers. So many customers are looking into it and investigating the opportunity and the potential of it.

Okay. Okay. Good. And next one is on China. So every time when Chinese cartonboard and pulp producers are announcing new capacity, there is the fear that there will be overcapacity. Any views on the offer demand dynamics in China?

Well, we are, of course, seeing good activity on the pulp side as well. And one can only speculate about the reasons and the drivers behind the Chinese pulp and paper industry development that we see right now. The activity that we see is mainly for integrated pulp mills, meaning pulp means that are built adjacent to the paper machine and are an integrated entity. And I see that as a consequence, partly of the recycled pulp ban that China applied a few years back. So now the paper mills need to secure their fiber source by importing typically chips and processing it in an integrated mill setup. I think that is not as such creating an unbalance. But you can, of course, ask that is there me too type of investment decisions made right now, I have to admit that the market is almost overheated. But I don't see a real issue and problem as such in the setup.

Okay. So marine scrubbers, how much sales in 2020, did you get? And is there anything left for 2021 in the backlog?

The number of new orders have -- was low. It was only EUR 6 million in 2020, for the marine scrubbers. And we still have, I would say, a good volume of orders that we are in the delivery phase of looking back at the really high numbers that we saw in 2018 and 2019. So there is still an order backlog that we're working with, yes. 2021, like I said earlier, is perhaps -- was almost nonexistent year. For 2021, we expect to see some kind of a bounce back. We have 1 order already, a repeat order from DSME, not a big one, but the repeat order anyway. But the market will change, whereas we earlier retrofitted scrubbers into existing ships, now the market is a new build market, where the system will be installed originally into the ship as it has been built. And the other part of the market is the rebuild market of the installed base, the scrubbers that are out there, most of them is operating on an open loop function setup where you actually tie the sulfur to water and you pump it into the sea. Those will need to be rebuilt to closed loop, where you find a way to tie it chemically to a compound and you don't pump it or you don't shift it from air emission to water emission, but you shift it to a chemical residue that you hopefully find an end-use for. So the rebuild from closed-loop to open -- from open loop to closed-loop and new builds. That is the market of the future. It will still be there, but timing and volume remains to be seen.

Okay. Thanks. Interesting. And then you mentioned an active greenfield pipeline, I guess, in the pulp side. So do you believe this continues to gather for at least 2 projects per year, this year and after 2021 as well? And can you comment on greenfield pricing? So one would expect that with both players well loaded and good pipeline, pricing should be okay. Is this correct in your opinion?

Let's put it like this that like Jari said earlier, it's difficult to speculate on customer actual decision-making. There is a huge number of plans that are being taken forward, whether it will all go remains to be seen. What we will see during the first half of 2021, what we can see during the second half of 2021, decision-making wise, remains to be seen as well. But if you look back, we all know that we have seen years with 5 decisions we have seen that follow a bit 2 or 3 years without decisions, whether that is going to be the case in the future as well remains to be seen. But I'm trustful that many of these plans will go forward. I won't speculate on the timing. And the pricing of what we sell is, of course, a function of how good we are at selling and how good the customer is at buying.

Good. And then regarding the textile opportunity, how much could the annual 140 million tons pulp demand grow because of the textile opportunity?

Well, the future of the textile recycling is interesting. There are projections that we will see in 10 years' time an equally big recycling volume on the textile side as we see on the paper side today. And if that happens, I do not necessarily see that we will see a huge impact on virgin fiber for that demand as such. The main volume will be something that recycles or cycles rotates in that recycling scheme. How many times you can recycle fiber -- wood-based fiber for textile needs remains to be seen in the future as well. So I don't necessarily see that affecting the virgin pulp demand that much, but I'm looking with interest into the future and for the future volumes that actually will cycle in that recycling setup.

Then regarding scrubbers -- follow-up question on the scrubbers. If you look at the rising fuel prices, do you expect the new boom in scrubbers? Oil price has been increasing, I guess.

Yes, the price spread has grown some. And like I said, 2020 was partly due to the price spread, partly due to the uncertainty and perhaps partly the fact that our key customers took the time to evaluate the installed systems and the different suppliers. Like I said, the demand continues to be there, and as the energy price spread increases, that will further support that market to take off 1 more time.

Good. And still a little bit time left here. So we will utilize everything. China, where does the previously exported recycled fiber to China go now after the ban end? Can it crowd out pulp capacity outside of China?

I would say that part of that fiber, rather than to be shipped back to China for recycling and cleaning purposes, is being processed elsewhere. I don't have the exact number here, but of course, it affects the balance of material flows and what type of fibers is needed where. The consequence of that, like I said, is we see more imported chips and raw material to China for local processing of virgin fiber. We see an increased need for Latin American-based virgin process pulp already for the Chinese market. And we also have seen some activity in processing that elsewhere than China. So it has, I would say, 3 different effects on the market and the market activities that we see.

All right. Thank you, Bertel. And we will now move on to the presentation by our CFO, Kari Saarinen.

Okay. So good afternoon on my behalf as well. So we are in a good position to grow and also increase profitability. So Valmet is today, top line-wise, so orders received as well as net sales, around EUR 3.7 billion company. Our EBITA is very close to 10%. So we were 9.8% last year. Our backlog, EUR 3.3 billion, and we are around 14,000 Valmeteers. Our order backlog or orders received typically is split 50-50 between capital business and stable business last year because of headwinds that we already discussed earlier today. So capital business was a bit higher than stable business orders received-wise. Now we are truly global. EMEA is our biggest area. Last year, China was strong and North America was weak. Then if we look at the development over the years. So we started with the top line of around EUR 2.5 billion, reaching now to this EUR 3.7 billion, EUR 3.8 billion levels last year. Looking at our profitability. So our profitability, we started from EUR 50 million or 2%, reaching then all the way up to EUR 365 million last year, which equals to this 9.8%. And then if we look at this financial development, so it also shows that our total shareholder return, where actually, our total shareholder return has been 380% since January 2, 2014. So in other words, that means that one of you who has invested EUR 10 million at Valmet share at that day, January 2, 2014, so that one now has EUR 48 million worth of Valmet shares. So that's quite okay. Looking at our financial targets. So we have 4 financial targets. The number one is the growth target, where stable business to grow double the market and capital business to exceed market growth. Important thing here to notice is that last year, where we hit the record high profitability, actually, we had some -- because of the pandemic, the stable business growth was limited and even negative. And then we had growth at the capital business and still like growing profitability there. Our profitability target, so that's now 10% to 12%. That was set a year ago, so after 2019, so beginning of February 2020. So we almost reached that during the first year. And if we look a bit back, so our first target was 6% to 9%. We reached that 6%. Then we increased the target to 8% to 10%, we reached that one. And our target is this 10% to 12%. Return on capital employed. There, the target is over 20%. And then our dividend policy or dividend payout target is we pay more than 50% of dividends, as of net profits. So how do we then grow faster than the market? So important thing is that we need to add new customers. And then also -- together with that, also, we will -- we increased the share of wallet with existing customers. We know what our wallet share is with the services in the needs of the customer, [ and as you know, Milan ], and we target to increase that. Also growing Services so that we do multi-service agreement and also sell Services together with the new projects, new greenfields as well as with renovations. And this is equally also important with the Automation. We have globally, like a very sizable field services teams. And those teams are now eagerly waiting for the pandemic to be over to increase their volumes there. Automation has been very successful with the competitor replacements. And the target is that we grow there. And then Sami already discussed that we are -- that Automation brought the new DNA user interface to the market. That actually then combines multiple control systems to one interface. And that actually creates us opportunities beyond pulp and paper. Capital business, both Jari and Bertel told that we have strong and favorable mega trends at pulp tissue -- board tissue, pulp and energy. And those are, of course, then impact also on the demand of customers' equipment there. And we are putting 2% of the revenue to R&D. And that means that we further like improve our competitiveness and -- on the technology and also our leadership there. And then also, we have new beginnings there and new products as discussed earlier. So we had this molded fiber with Metsä Spring. We have the coatings and then also the renewable fiber with the renew sales. So this is all like new there. And then how do we increase profitability? So of course, important thing is that we increased a stable business our volumes, as I said earlier. Then also other important thing is that, we said we have worked already quite long, is that we are improve our project execution, we improve our project management. And we have worked with that actually many, many years already. And I have to say that last year, 2020, was the best one there. Important thing is also that once we sell a project, so that, in the end, the actual margin for that project is better than the as-sold margin. And this is one of the key KPIs. And we actually follow that very thoroughly, and the organization knows that as well. We are -- with our procurement as well as with our R&D, we are bringing new design to cost product solutions to the market. And then also, we are working on our footprint. Important thing there was the acquisition of PMP Group, which actually then brought us 2 new workshops, one in Poland, one in China. Our return on capital employed. So our target there, as said, is over 20%. We have been over 20% now for 3 years in a row. Last year, we were 22%, even though we raised some loans for the acquisition of Neles shares. And looking at our peer group. So our peers last year, the return on capital employed was 11%. So it means that our return on capital employed, 22%, that's really world-class. Dividend and also then dividend payout. So we have paid more than 50% of net profits as dividend each year of our existence. And last year, it was EUR 0.90 per share, which equals to 58% of net profits. The important thing also here to note or detail to notice here is that our dividend per share has increased every year, even though that's not our promise. But that has come because of our profitability has increased. We have a strong balance sheet. We need to have a strong balance sheet because of -- in order to be able to take sizable contracts. Gearing last -- the net debt EBITDA was 0.4 last year. The highest ever was actually in the end of 2015 after the acquisition of Automation, when our net debt EBITDA was 0.8. So we have a strong balance sheet. And also one important thing why we need to have a strong balance sheet is that there's certain fluctuation at our cash flow. Acquisitions. We do selective acquisitions that have like clear industrial logic and then also that support our organic growth. We have done 7 acquisitions now since 2014. We were -- 2015, we had Automation as well as then for tissue technology. We had 2018 for power diagnostics, for Automation. 2019, we had two acquisitions for Services as well as pulp and paper technology. Last year, we did this PMP Group for paper and tissue and services. And then also, we acquired a 29.5% share of Neles. We evaluate approximately 50 cases per year. And then if we look at the money invested, so we have invested since 2014 around EUR 1 billion to acquisitions. So it's quite a sizable amount for us here. And then world is not ready. So we are systematically building the future. ERP project is one of the key things here. We started the project 2016. And we will be ready 2023. Project is progressing quite well. We have now had some headwind because of the travel bans, and the teams have not been able to travel, for instance, to China. And China, where we have a -- where we would need to have like a ERP team in order to progress. But anyway, as said, progress is progressing well. We have around 5,000 users. So that's pretty much 50% of the total amount of the users in the end. We get benefits because of digitalization projects. Processes will be more efficient. And then also, ERP is a foundation for other IT platform improvement as well. Then looking at the other operational development improvements, what we are now doing. So we are working on procurement. Each year, we have like exceeded or we have been at our savings targets at procurement. The team is working like every day better, and it's coming close to world-class. We are also working on the quality. We're working on the IT platforms. Also, as I said earlier, the project management, we started that activity at the beginning of Valmet. And last year was the best ever. And then also with R&D management, we are now managing that as a pipeline, and we look at the time to market, time to cost kind of KPIs there. So thank you very much. And then we go to Q&A.

Thank you, Kari. A so we will start with the Q&A session here. And there was some technical issue with the Q&A platform earlier on. So some of the questions, I didn't notice this here. But I will come back to those if there's a possibility later on. But Kari, when that 12% EBIT margin -- when would the 12% EBIT margin be feasible? And do you expect a gradual increase towards the 12% upper end of your range? Or do you expect some volatility in the margin over the next 5 years?

Of course, it's difficult to say how the future goes. But if we look at our track record, so we have improved every year. And of course, that would be very nice, that we are able to continue that kind of an improvement every year. But of course, there's no guarantees for that. And -- but we work extremely hard now to first go to 10%, and then look what's our next target there. And it's also then worth to notice that the good Nordic engineering company makes EBITA that's closer to 15% than 10%.

All right. Could you remind us, on the cost bridge from '20 to '21, impact of structural savings versus how much higher cost base year-over-year when COVID restrictions are lifted?

Okay. So we did some temporary like activities year 2020 that, of course, are coming back, but then that amount is actually quite limited. We did some structural -- restructurings, close to 300 people. But then also as business grows, then we also maybe to need grow someplace. And so there's some savings, but I wouldn't count a lot on those. And then of course important thing here is that, yes, business activity was low quarter 2 onwards. And there was less travel. And then at some point of time, world opens up. And -- but then we of course need to then also take some learnings out of that. And I don't believe that we go to the same levels with certain activities, what we had before the pandemic. So organizations have learned now to utilize various tools to communicate instead of traveling, and I think that these become a new norm as well.

Yes. Then regarding the financial targets, is a merger with Neles included in the Valmet financial targets?

No. No acquisitions either. That's just what we have now.

Good. Could you remind us on the numbers -- well, this was a little bit touched upon. But could you remind us on the numbers behind the ERP project? How much was -- has been invested? And what is the payback time or the cost savings per year from 2023 onwards?

I think that we have -- it's very difficult to communicate all the savings what we are getting. And of course, we have a figure in our mind, but I would not like to speculate that now. But of course, we -- there needs to be also then -- or there will be clear benefits once we have the ERP up and running.

Okay. Should we fear a significant negative margin impact in 2021 from strongly increasing raw material costs?

Well, I think that we are hedging against nickel growth. So some is hedged. And yes, there is some pressure on the raw material cost. But I think that so far, we have been able to work on those, but let's see now what the future is bringing to us. And of course, important thing is that we also keep the cost level down at the personnel front as well and also with the outsourcing as well.

Yes. And then this was maybe touched upon a little bit. But some of the cost actions have been done regarding personnel reductions, but what kind of inflationary pressures do you see in '21? Well, this was a little bit relating to that question just right now.

I would say that there are some. But at the moment, it's still -- it looks manageable. But as said, future is uncertain, but there are some.

All right. There are a lot of questions. I'm trying to do a bit screens on what is already asked. But well, maybe another question regarding the ERP. So what kind of cost impact did it have in 2020? And how do you see it '21, '22, '23?

Well, we have a cost around EUR 10 million each year that we put to SG&A on the project, and close to similar amount also then that we book as investment, and then we amortize that. So cash out is between EUR 15 million and EUR 20 million per year.

All right. And then a long-term question on Neles. So what is your long-term aim for the combination with Neles? Do you prefer to do a merger or a takeover?

Well, we have -- the thing what we have said is that we like Neles, and we would like to combine these companies one of these days. But we have not said what's the form. And so we like the company a lot, and we like to combine them.

Good. Have you considered hiking your return on capital employed targets since you have exceeded it in 3 consecutive years already?

Well, that's, of course, a good question. And -- but this return on capital employed is kind of -- it's a bit multidimensional in a way that, of course, it's net profit over capital employed itself. So it can increase because of various reasons. So over 20% is a good number already. And reaching at and staying there, so it's still like world-class. We are in a world-class position here.

Good. And then a question on the quality costs in percentage of sales last year. And what is your target right now? How have quality costs developed?

Well, our target is to reduce quality costs, and quality costs has been one of the items that has been a tough one to beat in a way. And because we book the -- if we are not successful with projects, so we booked kind of items to quality costs. And I think that last year was the lowest ever, but still, there -- but we still need to -- there's still like room to improve here. And I think that we are still not happy at the level where we are. So we know that we can improve here.

Okay. And then which regions and which divisions are the primary focus for your M&A strategy?

Well, actually, we haven't said that, so what is the target there? Because like, as said, we are looking around 50 cases per year. So that's quite a lot. So it's kind of one per week in a way. And our market position. We are such a big player at the market, so even though we would like something, some company, we just can't because of the market regulation. And so it's more so that if it makes like industrial logic and it supports our organic growth. So these are the things there. And we are not saying that if it's Services, if it's Automation or if it's technology. It's more so that it need to support us overall.

Okay. And then a little bit more technical-related question, the depreciation of the ERP CapEx. So is it depreciated over 5 years, or some other maybe even longer time period?

Oh boy. I'm guessing it's 10 years, but now it's an educated guess here.

All right. So I guess those were the questions at this stage for Kari. And we will now go on to concluding remarks by Pasi Laine. And at this stage, we will also open up the conference call line for questions. So from now on, you can present questions via conference call or via the platform here. So we're moving on.

So hello again. So now you have been listening to my colleagues. And now I have time to -- or time -- short time for the conclusion and concluding remarks. So as a concluding remark, I have the list of investment highlights that I still would like to highlight to you. So first is that we have strong position in growing markets of converting renewables. So we have strong market position, market shares are high and most of the markets are growing. And you have been asking also from my colleagues what are the growth numbers, and it has been discussed as well. But we are a company having strong position in markets that are growing. One of the competitive advantage is that we have the widest technology service and automation offering to all of our customers. So we have widest technology offering which results that we have widest services offering. And then on top of that, we have Automation, and our competition doesn't have this kind of automation offering. For it is close and it further away from us in that respect. But this offering gives us a very good opportunity to serve our customers well. Then in Services. Like said, widest offering plays an important role, but then strong geographical presence. So we are close to our customers wherever they are and we can help them. And then, of course, capital business is creating new installed base all the time, that gives also these growth opportunities. In Automation, we all talk about digitalization, the benefit of digitalization and the need to improve efficiency and safety. And that's what Automation is all about. And we have about 2,000 people working in our Automation business. We have long track record in digitalization, started in '79, first digital control system was delivered then. We have good offerings, starting from specialty measurements and ending up to plant-wide control systems. So offering is good. And this, of course, all gives us growth opportunities in Automation as well. In Paper, we all know that packaging needs continue to grow, hygiene needs continue to grow. And we are a world-class technology supplier for that industry, or those industries. We have good technology. We continue to develop the technology, and we have good references and market position is strong. In Pulp and Energy, we have strengthened our market position, we have good references, we have flexible cost structure. And in Pulp and Energy, we are also bringing new technologies like in paper as well. And today, Bertel has been talking about recycling textiles and Kari has been talking about molding fiber technology. In both units, we are bringing also new technologies to the market. And then what we have been emphasizing is that we are building our future systematically. So we believe that one has to work on all the topics in a company, not only to select one topic at the same time, but to develop how we deal with our customers and what we have to offer them, how to develop better technologies, better solutions for customers, how to develop our internal processes. And then, of course, as a backbone, how to make sure that our personnel is developing. And we have been doing that systematically last years, and we'll continue to do that. So that is a short summary of today's content. And then now it's time for lively discussion. And like said, we all are here. So whoever the question comes, then everybody is here available to answer the questions. Pekka.

Thank you, Pasi. So as said by Pasi already, you can address your questions to also other speakers of today than Pasi. But...

And hopefully to others as well.

And hopefully, to others as well. So please participate through the teleconference line. If we can have the slide showing the numbers on the screen, please. You can see the numbers from here. And we will soon go to the conference call. But now let's start with the questions that we have here for Pasi. What do you see as main risks in the market's competitive environment and own operations at the moment?

The main risks in the market, I think 1 risk has been that China has been so dominant. But like Jari and Bertel were both saying, actually Sami and Aki as well, that the activity has now started to be in all -- not all the regions, but in many, many regions. So we -- in the end of '21, '22, we are less dependent on China, based on our current market understanding. Then of course one risk internally is that we are heavy-loaded now, and we have to make sure that our organization is capable in doing all the projects, what we have been taking. And especially now when there is COVID, it's part of the teams are working from home and they are not enjoying the normal work/life, then it's challenging. So I would see that as one risk. And then one thing which is not risk, but we have to manage, is what was asked also, that there's of course risk of inflation of raw materials. And we have to work hard against that.

Good. Then, there are actually 2 little bit similar questions, but regarding the debt capacity of Valmet. So maybe summarizing this, would you have any problems with significantly higher net debt-to-EBITDA ratio, let's say, for example, 2x or 2.5x?

I'm sure that the banks would be willing to give us the money. But I think we have had a policy in Valmet to have strong balance sheet. And when having the strong balance sheet, we have been able to take big projects. We have been able to make small and medium-sized acquisitions without any hesitation. So our policy is to continue with a strong balance sheet in the future as well.

Okay. And a follow-up to this one, I guess, is that do you see that it would be a risk for Valmet if the leverage would be significantly higher for winning big projects?

Maybe -- we had that situation during Metso times and we got big project. But it's safer for all of us, it's good for customers that we have a strong balance sheet. It's good for management, it's good for the organization and then it's also good for our shareholders that we have a strong balance sheet.

Good. Then a question on Neles. What does long-term mean? And why would, let's say, a merger in 2 years from now be a better time than today? How much can Valmet integrate Neles into it due to its seat in Neles' Board? Or are Neles and Valmet to be considered completely separate companies at the moment?

It was timing, then the next was?

So it was what does long-term mean? And then how much can Valmet integrate Neles into Valmet due to the Board seat that we have?

Okay, Board seat. So we have been saying that our long-term goal is to merge the companies. And then, of course, timing has to be such that it makes sense from Valmet shareholder point of view and Neles shareholder point of view, and that there's willingness in our Board and in Neles Board to do it. So we have time. So the worst is that we now set up set short-term targets to ourselves. And then we make something which is not beneficial for the shareholders. And we have time, and we have strong position now in Neles and we take our time. And then of course we have one person in -- or 1 person is in Neles Board who is working in Valmet. But then, of course, all the Board members have the complication to think about Neles benefits. So of course, that's the legal requirement for all the Board members, that they have to work for the benefit of the company. And so it is -- so currently, we have good discussions, operational discussions, not on the Board level, but on the practical level, how to work together to enhance Neles' position in paper projects or tissue projects. And we work now on normal topics together with Neles.

Good. Then if I could ask Jari to stage for a while. So there was question addressed to Jari earlier. So board orders fell in 2020, as analyst calculated. Was it due to timing? And how does the pipeline look in board?

Yes, that's correct. So it came down a bit from the 2019. It was EUR 700 million-plus in 2019. Last year, it was EUR 550 million or something. That's the cyclicality inside the Paper business line with the different paper grades. So last year, the tissue grew; the year before, it was the board port which grew. And this is a bit of the timing issue. But that's the small changes and differentiation between the years. And now we have announced one paper machine and one board machine and -- but I think that this year will be a good year for the board machine like it has been the last few years. But really had to estimate if it's a EUR 500 million to EUR 700 million. But that's the -- there are differences between the years.

Okay. And then there was a question for tissue. You mentioned that because of the growing demand, was it 14 or 40?

40. 4-0.

40 middle-sized machines needed.

That's correct. Per year.

Good. And then for you as well, one more. So how do you see the declining graphic paper production playing out? How many have a realistic case for conversions? How many will just shut down? And how far are we until the market bottoms out and only the most cost-efficient machines are left?

Okay, tough one to answer. But if we start from the machine. So it's not only the machine itself, it's also the location and what region the machine is located and what is the customer base and who is the customer. So there's a number of things, what needs to be decide and which is defining what can be and what will be modified to board. So really hard to tell how many they are still to be converted. But I think that it will continue. And it will be -- in my mind, it looks like it's going to continue like it is now -- from now on the coming years, few conversion per year.

All right. Thank you, Jari. Then still, we will take from one question here before we move to the teleconference line. So Pasi, analyst, quoting here directly. Listening to the message, market almost overheated, China stepping up, demand even outside China stepping up. How much could Valmet revenues grow by 2023?

I think I was maybe a little bit hinting that the market will, at some point of time, cool down in China. And then we wait. And when that happens, then the other market starts to be back to the normal. Like last year, the other markets were not normal. I think we start to be in the situation in part of the businesses that we have to sell already now, long delivery times. So that will sort out part of the issue, that we can't have to big in the order intake and net sales at certain time because we have capacity limitations. And then next question is, is it easy to build up new capacity? No, it's not, and not personnel-wise or sub-supplier based or our own operations as well. So Jari and Bertel have certainly limitations in their capacity, and that might be one of the limiting factors. But of course, we want to grow in capital businesses. So both Jari and Bertel have shown long track record of growing the business, and we try to continue the same as well in coming years.

Good. So do we have -- if I may ask? So we -- I guess, at this moment, we have some questions over the teleconference lines. So we will now open the line. So operator, I hand over to you now.

We have a question from the line of Johan Eliason from Kepler Cheuvreux.

So I hope you can hear me well. Thank you for a very informative day. Just coming back to the Neles situation again. Obviously, you bought shares last year up to the sort of EUR 12 level but stopped before the 30% level. You could, obviously, last year, have decided to launch a mandatory bid for the rest if you had passed it. But we -- judging from what you say about the strong balance sheet, et cetera, it would obviously have to be a share issue, but that should be doable as well. So what stopped you? Did you think the EUR 12 price level were too high for you? Or is it just a timing thing that sort of stopped you. You see this as the long term rather than something you need to move on right now? Or was it really that you think EUR 12 is too much for the business [ at current. ]

I think we have been quite consequently saying that already after we bought the first part, that we are here in long term. And that's what we have been saying also when we increased our market -- our ownership to 29.5%. And that's what we are saying already also today. And like I said, we have been telling that the merger would be a good solution. And the merger could happen when all the requirements are in correct position. So that's what we are now following, and that has been the tactics all the time. And then why to make a merger? The merger would create a strong company to move forward. And that's why merger would be beneficial for both the company and the shareholders as well.

Our next question comes from the line of Antti Kansanen from SEB.

It's Antti from SEB. Just a kind of a broader question, I guess, to Pasi on the profitability potential, 12% is the target ceiling. And I guess Kari even mentioned a 15% as their benchmark. So I mean, you can't really change the market dynamics, competitive landscape and so forth. So if you are just looking at things that you can control. So what do you think is kind of the most fruitful growth avenue for Valmet in terms of closing the profitability gap? Is it just continuing to invest in the core business? Being an early mover in the emerging new businesses that you are seeing? Or is it just on kind of gaining your market share to higher levels on the Services side? Just broadly on this topic.

So now we are at 9.8% -- or we were at 9.8%. And the target, like you said, is 10% to 12%. And I think we have been many years already saying that, even if we increase it, then still, we are below the best Nordic engineering companies. And Antti, you are, of course, right there, that the best engineering companies, they don't have project business. And that's the big difference between us, from a profitability perspective, the best Nordic engineering companies. So we, of course, have to take into account in our target setting that difference between us and our competition in capital business cannot become too high. Now target-setting for us and on, it is actually quite equal. So that shouldn't actually make too big difference. But of course, to increase from 10% to 12%, which we haven't decided yet because we haven't even reached the 10% to 12%, we have to be able to increase the -- not -- the absolute number of our Services business and Automation business because they are, of course, in relative terms, more profitable. But then at the same time, of course, we have to push for the high market shares in capital business. Like we have been talking many years ago with you and with the other analysts, that the easiest way to improve profitability in percentages is to reduce your capital business. But then in the long run, you lose your market share, and that's not in interest of the shareholders either.

Okay. And maybe second question on kind of the new growth businesses that you see around biofuels, biochemicals, also on the textile side. So what do you see kind of the biggest potential? What are you most excited? And where do you allocate R&D the most currently?

I'm excited about all of these. And the thing is that it's difficult to say when the market will become active. Like I think Bertel was talking about lignin after somebody asked it. And we had big hopes 8 years ago with the lignin, and now it starts to become more a discussion. So it takes a long time. The same has happened with second-generation bio-ethanol. So we sold many pilot plants, was it 50 to 60 pieces, 2014, '15. And now last year, actually, we started to get the first commercial plants. So one sometimes underestimates how many years it will take for a new technology to become mature technology. But with this bio track, what we have now, it's a proven technology. We can sell it. Textile is very interesting also from a business point of view and then sustainability point of view. So if we, together with our customer, can develop technologies and plants, by which we can recycle the cotton and viscous cellulose-based textiles, that's, of course, big thing. And we work hard on that. And then the molded fiber products. So all of us, I assume, don't like the plastic things or the foam things, what you get when you buy a hamburger or whatever and you feel bad because you know that there's a lot of trash because of your meal. And if we can replace that kind of packages with 3D foam packages, which would be recyclable based on renewable raw materials, then I hope we all are excited.

Is there any M&A potential here? Or do you think you'll just do it organically with your clients?

We have analyzed the M&A potential. And sometimes, it happens that when we are ready to pay, let's say, EUR 1 million, then somebody else thinks that they believe the growth targets of the entrepreneur and they are ready to pay EUR 20 million. So we are quite careful in investing to big plans, but there are opportunities, but one has to be careful.

[Operator Instructions] There are no further audio questions registered.

And I pass it on to you.

So thank you from my behalf. I hope we have been able to tell you what Valmet is today and where Valmet would like to go in the future. And thanks a lot from my behalf and my colleagues' behalf, participating. And now I'll let Pekka to thank you.

All right. Thank you, Pasi, and thank you, everybody, for the active participation today. I hope it was a insightful CMD for you. So thank you, everybody, and have a nice evening.