Valmet Automotive Annual Review 2019: Successful entry into battery business, significant improvement in EBITDA and cash flow despite challenging environment

Sales of EUR 651.5 million, EBITDA significantly improved

Valmet Automotive’s net sales in 2019 were EUR 651.5 million (662.6 in 2018), which was 2% lower than in the previous year. However, the Group EBITDA improved significantly by 39% to EUR 78.8 (56.9) million. Furthermore, the Group operating profit grew to EUR 18.1 (17.8) million, or 2.8% of net sales (2.7%) despite expenses related to the establishment of the new EV Systems business and losses in Engineering Services. The slight increase in profitability was due to improved operational performance in Vehicle Manufacturing and in Roof & Kinematic Systems. Engineering Services’ loss was due to the deteriorated market conditions and continued refocusing of the service offering, in EV Systems to the ramp-up year of the business line, the first manufacturing plant and the customer program.

Cash flow significantly improved

Net cash flow from operating activities more than doubled to EUR 82.2 (39.1) million. The Group cash flow after investments was EUR 40.9 (-34.4) million. The substantial improvement was due to the higher cash flow from operations, lower net investments and favorable working capital level at the year-end. Investments made according to the plan in vehicle manufacturing were mainly related to replacement, productivity and flexibility. Significant investments were made in the Salo, Finland plant battery production lines during the year.

Record production volume of 114,000 cars

2019 was an eventful year for the company. It included the successful launch of the new EV Systems business line with its first large-scale battery plant in Salo, Finland and investments into Battery Test Center in Bad Friedrichshall, Germany. Furthermore, the Uusikaupunki, Finland car plant reached yet another production record with 114,000 vehicles despite the volatile market in the second half of the year. Valmet Automotive has made the passenger car a leading Finnish export product, says Jarkko Sairanen, Chairman of the Board, Valmet Automotive.

Positive long-term future outlook

In 2019, Valmet Automotive continued to improve its operational performance and maintained a strong market position. Currently, there are factors causing uncertainty in the market, including the coronavirus pandemic. For Valmet Automotive, health and safety of our personnel is the number one priority. Even though the coronavirus will have an impact on the company operations in the short-term, we see that in the long-term our prospects are good owing to our improved financial and operational performance and to the several recent and expected new long-term program awards from our customers across the business lines. Our most important asset is the highly skilled, agile and innovative personnel, who made the great achievements of 2019 possible. For all this, I wish to express my gratitude to all Valmet Automotive employees, says Olaf Bongwald, CEO, Valmet Automotive.

Financial statements

The company prepares its financial statements in accordance with International Financial Reporting Standards (IFRS) and the company is applying the new accounting standard of IFRS 16 (Leases) as of January 1, 2019. The adoption of IFRS 16 standard had a sizable impact on the balance sheet. Leased ‘right of use’ assets increased by EUR 19.2 million and lease liabilities by 19.4 million at adoption on January 1, 2019. The first-year operating profit impact was EUR 0.6 million, resulting from a 7.4 million decrease in rental expenses and EUR 6.7 million increase in depreciation.

Valmet Automotive’s consolidated financial statements are available at the company website.