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Metso's future valves business Neles publishes its ‘Strategy for Profitable Growth’ and mid-term financial targets

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Metso's future valves business Neles publishes its ‘Strategy for Profitable Growth’ and mid-term financial targets

May 25, 2020 - 02:17
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HELSINKI, May 25, 2020 (Press Release) -In preparation for the completion of the partial demerger of Metso Corporation, the management of the future Neles Corporation has defined its stand-alone ‘Strategy for profitable growth’ and mid-term financial targets with the support of the proposed Board of Directors of the future Neles. Neles Corporation will be created upon the completion of the transaction, which is currently expected to take place on June 30, 2020. The strategy and the mid-term financial targets of Neles will be formally approved and confirmed following the completion of the partial demerger of Metso.

Neles vision and strategy

Neles’ vision is to become a leading diversified valve and valve automation company, reinventing reliability in flow control. The company’s competitiveness is based on the high-quality of its products and services, its proven technologies as well as global expert team. With its own sales and service personnel in around 40 countries, the global presence of Neles is further enhanced by a growing network of channel partners.

Neles is a reliable partner offering sustainable solutions for its customer industries by helping to ensure the safe flow of materials. Neles achieves this through constant development of product quality, material efficiency and operations. As part of its strategy, Neles continues to integrate sustainability throughout the value chain.

Neles aims to achieve its profitable, faster than market growth by

  • Growing the business through expansion in selected markets and broadening the product offering
  • Accelerating growth in valve controls and actuators business
  • Continuing development and expansion of the multi-channel service, replacement and maintenance, repair, operations (MRO) business supported by digitalization
  • Pursuing targeted acquisitions supporting organic growth initiatives

Neles will continue to develop its organization and operations to ensure successful execution of its strategy. The key strategic initiatives include

  • Targeting best-in-class project delivery performance
  • Developing lean and scalable operations, systems and organization for cost efficiency. Based on initial assessment, Neles has identified opportunities to save and reallocate costs to compensate for additional costs related to becoming an independent company during next 18 months and to allow rightly timed investments to achieve its growth targets.
  • Further leveraging recent investments in China and India
  • Continuously improving the performance and cost-effectiveness of its product offering

Financial targets

The mid-term financial targets derived from the strategy for the future Neles Corporation are:

  • Orders received of more than EUR 1 billion around 2025
  • Annual organic growth ambition of at least 5%
  • EBITA margin of at least 15%, while investing in growth
  • Maintaining a strong balance sheet (net debt/EBITDA less than 2.5), while investing in growth
  • Dividend payout of approx. 40% of net earnings (excluding PPA amortization related to acquisitions)

Neles’ strategic targets are mid-term ambitions and should not be viewed as guidance for the near-term performance of Neles as the current Covid-19 pandemic will adversely impact the Neles’ business in the short-term, as disclosed in Metso’s Q1 interim report on May 7, 2020.

Operating model

Neles’ operating model will consist of three business lines, four market areas, operations and corporate functions. The business lines will be Equipment, Services, and Valve Controls & Actuators. The market areas will be North America, South America, EMEIA and Asia-Pacific. The main corporate functions will be Finance, Human Resources, and Communications and Marketing.

Neles Corporation's Executive Management Team will consist of President and CEO Olli Isotalo and the heads of its business lines, market areas, operations and corporate functions. The members of the Executive Management Team are:

Olli Isotalo, President and CEO

Heads of business lines:

Timo Hänninen, Equipment

Sami Nousiainen, Services

Kalle Suurpää, Valve Controls & Actuators

Heads of market areas:

Patrick Dunn, North America

Fabio Maia, South America

Jon Jested-Rask, EMEIA

Tan HangPheng, Asia-Pacific

Head of operations: Kevin Tinsley

Heads of corporate functions:

Simo Sääskilahti, Finance (CFO)

Hanne Peltola, Human Resources

Kaisa Voutilainen, Communications and Marketing

Olli Isotalo, President and CEO of the future Neles Corporation:

“Being close to our customers and serving them throughout their investment and operations life cycle is Neles’ priority. We have a culture of ensuring customer success and getting things done; this is something that our customers value and that we are very proud of. We will continue to develop our expertise and services network as well as improve our delivery performance and product availability with our channel partners.”

“Neles has been able to develop assets and capabilities that put us among the global leaders in the valve and valve automation business. We will ensure our technology leadership and product quality, and we will broaden our offering to new markets through increased investments in product development. With targeted investments in innovation and digitalization, we will create new levels of performance for our products and supporting services, continuously reinventing reliability in flow control.”

Jukka Moisio, Chair of the Board of Directors of the future Neles Corporation:

“Neles has decades of proven track record of operational improvement and best-in-class profitability. With a clear and measurable growth strategy building on the company’s unique strengths, Neles will have the means to capitalize on both organic and inorganic growth opportunities while continuing to focus on delivering intelligent solutions to serve customers’ needs.”

The above-mentioned mid-term financial targets reflect the company’s current view with respect to certain expected future events and resulting financial performance. Accordingly, future results of Neles may differ from those set out in the targets.

About future Neles Corporation

The future Neles Corporation is a well-known flow control solutions and services provider to the oil and gas refining, pulp, paper and bioproducts industries, chemicals and other process industries. Neles employs about 2,900 people and has operations in approx. 40 countries. Neles’ sales for full-year 2019 were EUR 660 million and operating profit was EUR 93 million.

Neles Corporation is planned to be created in the partial demerger of Metso, in which Metso’s Flow Control business would become the independent Neles Corporation and would continue Metso’s listing on Nasdaq Helsinki. Simultaneously, Metso’s Minerals Business would combine with Outotec to create Metso Outotec.

The completion of the transaction is currently expected to take place on June 30, 2020, subject to the receipt of all required regulatory and other approvals, including competition clearances. The Extraordinary General Meetings of both Metso and Outotec approved the transaction on October 29, 2019.

Metso is a world-leading industrial company offering equipment and services for the sustainable processing and flow of natural resources in the mining, aggregates, recycling and process industries. With our unique knowledge and innovative solutions, we help our customers improve their operational efficiency, reduce risks and increase profitability. Metso is listed on the Nasdaq Helsinki in Finland and had sales of about EUR 3.6 billion in 2019. Metso employs over 15,000 people in more than 50 countries.