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Introduction & Market Context
Valmet Oyj (HEL:VALMT) presented its Half Year Financial Review for January-June 2025 on July 23, revealing a mixed performance with strong order growth but declining sales. The industrial machinery company’s stock closed at €26.46 on July 22, down 2.58% ahead of the earnings presentation, reflecting cautious investor sentiment.
The presentation comes after a strong first quarter, where Valmet had exceeded analyst expectations with EPS of $0.53 and revenue of 1.53 billion euros. The second quarter shows some moderation in performance, particularly in sales figures, while maintaining order momentum.
Quarterly Performance Highlights
Valmet reported a significant 19% increase in orders received for Q2 2025, reaching €1.52 billion compared to €1.28 billion in Q2 2024. However, net sales decreased by 6% to €1.24 billion from €1.32 billion in the same period last year.
As shown in the following chart of quarterly orders received, Valmet has maintained positive momentum in this key metric:
Despite the sales decline, profitability improved with comparable EBITA remaining at the previous year’s level at €143 million, while the margin increased to 11.5% from 10.6% in Q2 2024. This improvement reflects the company’s focus on operational efficiency and cost management.
The comprehensive financial comparison between Q2 2025 and Q2 2024 shows mixed results across key metrics:
Cash flow provided by operating activities decreased significantly to €79 million, down 38% from €128 million in Q2 2024. Meanwhile, the order backlog continued to strengthen, reaching €4.7 billion at the end of Q2 2025, which was €259 million higher than at the end of 2024.
Strategic Initiatives & New Targets
A major highlight of the presentation was the introduction of Valmet’s new "Lead the Way" strategy and ambitious 2030 financial targets. The strategy focuses on transforming industries toward sustainability through two main business segments: Biomaterial Solutions and Services, and Process Performance Solutions.
The company has set aggressive 2030 financial targets that represent a significant step up from previous goals:
These targets reflect a substantial increase in ambition, particularly for the comparable EBITA margin (from 12-14% to 15%) and comparable ROCE (from at least 15% to 20%).
As part of its strategic execution, Valmet has implemented a new operating model effective July 1, 2025, which is expected to deliver annual cost savings of approximately €80 million. This restructuring affects up to 1,150 roles globally, with full run-rate savings expected by early 2026. The company recorded €61 million in restructuring costs in Q2 2025 related to these changes.
Segment Performance Analysis
Valmet’s new reporting structure divides the company into two main segments: Biomaterial Solutions and Services, and Process Performance Solutions. The Q2 2025 performance breakdown by segment shows:
The Process Performance Solutions segment (formerly Automation) demonstrated strong performance in Q2, with orders up 11% organically and comparable EBITA increasing by 15% to €66 million, with margin rising to 17.8%.
Meanwhile, the Biomaterial Solutions and Services segment showed strong order growth but faced profitability challenges, particularly in the Process Technologies area:
The segment-level analysis reveals that Services and Automation continued to perform well with margin improvements (Services:18.1% vs 16.9%; Automation:17.8% vs 16.5%), while Process Technologies experienced a significant decline in profitability (1.0% vs 3.0%).
Financial Position & Outlook
Valmet’s net debt and gearing increased from the previous quarter, with net debt to EBITDA ratio rising to 1.60 from 1.30 in Q1 2025:
For the full year 2025, Valmet maintained its guidance that net sales and comparable EBITA will remain at the previous year’s level (€5,359 million and €609 million, respectively). The company noted that uncertainty related to the global economic outlook remains high, particularly for Biomaterial Solutions and Services, while customer activity for Process Performance Solutions is expected to remain stable.
This outlook appears more cautious compared to the strong Q1 2025 performance reported earlier, where Valmet had significantly exceeded analyst expectations. The moderation in performance and unchanged guidance suggest that management anticipates continued challenges in the second half of the year, despite the strong order book.
The presentation highlighted Valmet’s strategic focus on advancing circularity through future-ready combined heat and power (CHP) plants with carbon capture potential, with specific projects highlighted in Sweden and Spain. This aligns with the company’s sustainability focus and positions it to capitalize on the growing demand for environmentally friendly industrial solutions.
Full presentation:
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