Welcome to Tampere, home of Valmet's automation, and welcome also to Valmet's Capital Markets Day 2025. The main themes of today's presentations will of course touch upon Valmet's new strategy that was published yesterday and also the new financial targets published yesterday. We will have key management of Valmet presenting here today and also they're available for Q& A sessions after their presentations. We will take questions, of course, here in the live audience. Excellent to see such a big crowd here and then also from the digital platforms. The webcast viewers, please be active also and post the questions through the digital platforms. After the presentations, there will be a dedicated breakout session where you can get to know the people here on site at Tampere, get to know a little bit more about Valmet's automation solutions offering.
With that, I hand over to Thomas.
Also a very warm welcome from me. I'm very happy that you have taken the time to actually spend your afternoon with us here in Tampere. I know my team and I, we've been very excited about actually sharing some of the thoughts that we've had and we've spent a lot of time on the last couple of months and really sort of the insight into that. I really hope we'll have great discussions and a great afternoon together. I started middle of August last year. The first six months, I really traveled extensively throughout the Valmet world.
To one end of the world to another end, really to visit as many sites and as many Valmet employees and as many customers as possible, really to sort of get the, you know, get the feeling of the business, get the feeling of the culture, get the feeling of what Valmet is really all about. I want to share one story for some of those travels. End of last year, we were meeting a very large and important customer of ours and me and the CEO were having sort of a casual conversation over coffee before sort of the actual, or was it after the actual meeting? He said to me, you know what, Thomas, one thing you should know is you guys actually come across as two.
You saw the equipment capital part of Valmet and then sort of there is the service part of Valmet. Okay, tell me more. It really is a little bit of an issue because you should know when we make our CapEx or investments decisions, we don't think of it as a project or this is it. We think about this is you're in our core business. This is manufacturing equipment for us. This is our core business. That I'm investing in and that needs to deliver an outcome over the next 25, 30 years. Your service performance, your ability to make sure that that equipment runs in an optimal way, giving the optimal output actually impacts our decision, our buying decision upfront.
Later on, several other customers that I've met really have sort of confirmed that, you know, that thinking, which is, of course, when you think about it, quite obvious. That is also what you're going to hear today. That full life cycle thinking about we're in the core business of our customers. We deliver our equipment, delivers an outcome for them that they're actually eventually going to sell to their customers, right? That you're going to hear a lot about today. You might have noticed we're really raising the bar in terms of our ambition, right? We want to deliver 5% organic growth. We want to deliver 15% comparable EBITDA margin. We want to deliver, then 5 +1 5= 20% comparable ROCE.
We're very confident that we're going to do that. There's basically three things that make us confident about that. First, we're launching the new strategy Lead the Way. More focused, more bold, more executable than before. We're basing on strong fundamentals. You're going to see some of that fundamentals today when you're here in Tampere. We're basing it also as being supported by a new operating model that we already are implementing as we speak. We announced that back in end of March this year, and it'll go live first of July. Let's first look at the strategy and the strategic direction that we are traveling in. Lead the Way. What is it all about? We are going to transform industries towards a more regenerative tomorrow. That's our purpose. That's why we exist as a company.
That's why we get up in the morning as Valmet employees. That's why we are excited. That's why we are engaged. This is why we are here. You can then ask, what do you really mean with regenerative? For us, it's quite simple. It basically means reuse raw material and use less raw material. We live in a world where raw materials are scarce, so we really need to reuse them. We really need to use less of them. That's why we're going to deliver that purpose with two missions. One for our Biomaterial Solutions and Services, which is about reuse, so advanced circularity. The other one is Process Performance Solutions, which is about unlocking resource efficiency, so use less. Simo and Emilia are going to talk about the Process Performance Solutions and Petri and Sami are going to talk more about our biomaterial business.
Some of the fundamentals in these two different parts of our business, these two missions are actually a bit the same. This life cycle that I talked about that, you know, we need to take good care of our customers all the way through, right? We are in their core business, we are the reason why they produce and sell. If we can do it more, help them be more effective, they can have a better business rate. That's why this life cycle is so important across. Also, when it comes to our Process Performance Solution, we might not be the actual manufacturing equipment that they get an outcome, but we are part of it and we are for sure mission critical. That's also why if we can help our customers solve problems in a better, more effective way than anyone else, we have an advantage.
This innovation, using technology to solve customers' problems, is really important. That is also why in the future we are going to try to do more co-creation together with customers. We are already doing it to a large extent today, but we want to do more together, partner with our customers. Figuring out what is really that would add the most value to you that we can help you solve. We have an opportunity in biomaterial, and Aki is going to talk more about that, which is really about driving cost competitiveness, consolidating our whole footprint, using our scale to a larger extent, and being more cost competitive, which of course also can expand the margin. We have done that consolidation already in our Process Performance Solutions. They are together as one, and they are actually driving that in a similar way as we want to do on the biomaterial.
However, then with and you're gonna see more of that today. This thing, if you really want to optimize the resource use, you really want to sort of be resource efficient, you need to use technology. That's also why we took you here today, because here we're actually doing that and we need to do more of that, have more innovations around that that is going to drive the future. That is where we're going. This is the strategic direction. Let's just talk briefly about where are we starting from. We have a 225 years of amazing Finnish industrial legacy. We've basically done everything you can possibly think of or come across of with steel, right? We've done ships, we've done metro cars, we've done elevators. There was an L chain elevator in this town.
I know from not that long ago, we've done all sorts of things and it's pretty amazing. W e've always, during those 225 years, been able to stay relevant to our customers in the market. Right. You don't have a successful business for that long if you are not really on your toes. That's also why we're confident that we can continue doing that. The business we have today, we are still technology leader in it. We are still one of number two or number one in it. So we've got a good platform that we're starting from. It's also clear that our performance from a financial perspective has plateaued the last couple of years and we're not happy with that. The question of course is, can we do better than what we've done the last couple years?
The answer is absolutely, there's no doubt that we can do better. Let's talk a little bit about how we're going to do that. We have this starting point. We are world leading technology. We've got a big install base. We're out with the customers. We need to help them. We've got an opportunity to help them to be more successful in their markets. We've got great people with a lot of capabilities. When I've traveled around the world meeting all these, having all these town halls, all these meetings, these fireside chats, et cetera, I have to say that I've been impressed with the functional expertise, the passion for it. I'm sure if we redirect that a little bit more, we can really get a lot out of it. Standing on that, we're going to pull three levers to really up our game.
More focused, more bold strategy. That is what we are here to hear more about today. Renewed operating model. We launched it in March, we are implementing as we speak, implementation. It goes live first of July. We are going to evolve our culture a bit to be bolder and more fast in the execution and we will talk more about that as well. Let us look at these three individually and go a little bit more into the depth of this. The strategy, customer success. We have technology. We are great at technology and the purpose of that is to drive or help the customer be successful, solve their problems with technology. That is what it is all about. We need to do it over the life cycle. That is why we say lifecycle commitment. Then comes the global competitiveness. You need to be competitive from a global perspective.
We need to utilize our global footprint. We need to utilize our scale in a better and more effective way than we've ever done before. That is what we are gonna do when we consolidate all that manufacturing supply chain part into our global supply. When it comes to the biomaterial alcohol, we'll talk more about that today. Really exciting what we, what we think we sort of the opportunity that lies there. Accountability. Some of us talked about in the lunch. We live in a very dynamic world, right? The only way to really run a business in an effective way in such a dynamic world is to solve the problems, the challenges, the issues, whatever comes up close to where they are. You have the context, you have the knowledge to solve them. Let's solve them there.
That's why we need this operating model to get role clarity so that we can fully empower and saying you figure it out, right? And you're fully accountable for the outcome of it. That's why our accountability becomes such a big thing for us. You can really act in the most dynamic world things can happen. When we have capable, engaged team who are willing to take that accountability, that empowerment and run with it, you solve problems. That's also how you get the clock speed up in an organization that is so big, so diverse, so distributed as ours. Let's talk a little bit more about that operating model as well. We've got one purpose, transform industries to a more regenerative tomorrow. That would be delivered by two focused missions. One for biomaterial, which is about advancing circularity.
One for Process Performance Solutions which is about unlocking resource efficiency. That will be delivered by five strong business areas with some additional investment into customer proximity. When it comes to Latin America and China, we will have great cost competitiveness with our global supply where we really will utilize our size and our strength and our footprint around the world. Finally, we are taking that overlaps out of our global functions and really making them true global and integrated so that they can support the business as best as possible with the right data, the right information, the right people, the right capabilities, the right talent management, et cetera. One reflection maybe as well, in the latest travels that I made late after we announced the new operating model end of March.
I've done some town halls, some very large important sites, just to sort of first of all being transparent, tell people about what we really are trying to achieve, create more clarity around the change and also just get the feeling of how do people really feel about this because of course when you say that you're going to take out 1,000 people, it does sort of create some touch and emotions within the employees that we have. Clear enough. One other thing I really was actually very positively surprised about and I understand as a CEO you don't get all the truth, right? You do get a bit of a tinted picture. Still, a lot of people on these town halls really came up to me and said finally Thomas, someone is taking this, been so complex. We have too many people that I need to align with.
It's taken me too long to really act right. Especially the service people have come up with that, which is even more comforting because we are going to double the service growth going forward. That's our target. We're not happy with the market share development in our service. We want to drive it further. We're going to make three strategic shifts. First one is this one team that takes care of the customer, making sure we convert from the equipment sales to the service sales to the modernization or whatever comes in the future so that we help the customer in an optimal state all the time with their manufacturing equipment in their core business. You're going to stay close to our customers with end-to-end accountability, fewer people to align with, fewer people to ask, let's just go and do it.
You know the business, you know what to do, you're fully empowered to do it. Let's solve the problems for the customer. With these five business areas, we're taking a more customer-segmented approach. You really need to start to understand, or we are able to understand, the customer's real true pain points in this segment and help solve and develop together with them maybe digital solutions that unlock value for them so they can be more successful in their markets.
Right.
That is why we believe that we can deliver double the organic growth that we have seen so far. If you really think about it, let's talk about the mindset, the essence of a lot of this and a lot of these discussions that we have had so far. The essence really is about six strategic mind shifts that we are going to do, we are going to make in the organization. One is I talked about this passion for technology. We love technology. I mean there is nothing more cool than technology. If you go here, if you could go a little bit behind the scenes, you would feel that it is just like whoa, right. And you, Thomas, I need to show you this.
Right.
They really have this which is amazing, right? I have to give it to the Finns, right? They are just amazing engineers. They just really love their technology. They're great at it. We just need to sort of think about the purpose of having great technology is to solve real difficult customer problems, right? Because then you can commercialize and you help your customer, you sell it. That is why we go from this sort of technology first to customer success first. Right. We still are passionate and should be passionate about technology. Then it is about back to the CEO I met, where we talked about that I met, they said you are two, you are separated, your projects, your service. We need to have one. Valmet, we need to have one.
The customer need to think of us as a key partner no matter where they are in that chain of life cycle. M atrix and complex. That's what we are addressing with the new operating model. We're taking complexity out for the sake of the organization. Too many people to align with. When you're three in a box, it just becomes very difficult and very challenging. That's why we need to simplify. We need to go this fully empowered, fully accountable, capable person who just solves the problem where the problem is. That's also some of our employee engagement survey shows that we really have an opportunity there to simplify our internal processes, simplify how we work together and just speed up. Continuous improvement to bold multi- year targets. There might be question later on also on R& D and investment and so on.
It is much easier when you have a multi-year target than if you think sort of 12 months at a time. Because 12 months at a time, it is hard to make a really bold move that moves the needle and saying, okay, I might not get the return this year, but I for sure will it next year or the year after. It is the right thing to do. You might ask, but continuous improvement, Thomas, is not that a great thing? Is not that a wonderful thing? Is not that something a lot of companies talk about? It is an amazing thing. It is so powerful, right? Super powerful. It is in our DNA. It is something we do every day, day in and day out. Everybody should think about how do I improve the role or the function, what I do, how can I take waste out of that? It is not strategic.
It's not the choices. The big strategic needle moving things.
Whoa.
It's just something that's in our DNA and blood that we do day in and day out. That's also why we're going from this must win battles with 100+ initiative on a global scale to much more target saying these 20 initiative, they are going to deliver big time. They are strategic. All the other stuff is just operational. You're going to focus it down to stop doing certain things because then you really get traction on the things you really know they are strategic. It's actually great to see that. During the strategy process we've run some different work streams. We've had CEO challenge sessions, and you can sort of see the movement from the first time we had it to the last time we had it. Right. The first time we came up much more with this continuous mindset improvement.
Lots of things, small impact, great stuff. Yeah, just go and do it. Let's not have it as a strategic thing. Think about things that really are making the difference for Valmet in your area of responsibility. It's good to see that we are already on this mindset journey of changing the culture, setting the bar higher for ourselves and being willing to also communicate it externally to say we will. The last thing, some of you, we've talked about it before. We need accounting focus, it's great. We need to grow the EBITDA, no doubt about it. We also need to think about what's the return on capital employed. That's why we are putting more financial performance metrics into how we do our performance management within the company. ROCE, for example, capture, we will talk about.
There's no, you know, that's the reason why it's also up in the targets.
Right.
I need to be able to go to the organization, say great, super good idea. How's that going to help us on our five, 15, 20. Right. It's a, and then they say, but you need to choose one source. No, I want them all. This thing is that sort of, that's a really good way. That's why we're going to lead the way. We're going to take, we'd be more ambitious than anyone else in the industry. We're going to really take charge over our own destiny. We're basing it on strong fundamentals. We're standing on solid ground, great technology, technology leader in all our, most of our areas of expertise. We're going to support that with a new operating model, clearer roles, full empowerment, full accountability for what you do.
It is going to be delivered by passionate, engaged, capable, and empowered team, what we call Valmeteers. With that we will get to five, 15, 20 and you are going to hear much more about that. Thank you very much.
Thank you, Thomas. Now it is time to go to the Q& A session. Please raise your hand and indicate if you have a question. We will then deliver the microphones. We start here with Antti Kansanen.
Thank you. Antti Kansanen, SE B. Two questions from me. First, Thomas, on the ambition to get higher growth on services. I fully understand the cultural change and it appears that when you are selling new equipment, you want to get the aftermarket guys more involved. If you look at your installed base currently, where I would assume your clients face mainly your aftermarket guys anyways, what kind of a potential do you see kind of tapping into the existing installed base? Do you need more resources? Do you need to invest more in local presence in certain areas? How do you look upon that?
Good question. I think we need to think about it in two ways. One is there's a very large installed base. Absolutely right. There's also a very large aging installed base. There is also a modernization part to that. That is also where then historically capital have been come more into play and it's a bit more two teams again. That is where one of the unlocks actually so that we get more both conversion from new, but also new modernization and therefore conversion from that. It is really about this thing about speeding things up both in terms of the development of service, let's just call it stuff here, but solutions that can actually help the customer even more. That will speed up also with this simpler organization and the go to market will be simpler.
Do you think you need to kind of strengthen your local presence on any certain areas to kind of gain that market share growth on services?
It depends a bit on where you are, where you're talking. If you're talking biomaterial or talking Process Performance Solutions. Right. So biomaterial, I generally think we cover the market. Process Performance Solutions, they would actually need to invest into certain pockets of capturing growth there where we think we've got a good opportunity.
Okay. The second question was on the complexity and are you kind of, I understand the organizational complexity and you've been talking about that for some time already. If you look upon your offering, do you have too many technologies, too many products, you've gone through in the past 10 months, kind of what you have in your hand after making a lot of acquisitions in the past 10 years, how do you look at the portfolio that you have? Are we going to see divestments?
It's always, a good question. It's always, as business leaders you always need to think about complexity and because like we talked about as well, you know, growth creates complexity. Correct. Complex or growth from the top. Growth creates complexity, complexity kills growth. Right. Of course all the time you need to think about have you got complexity in your organization? We're clearly taking that out now. Of course there can be a step of saying I have real complexity in our offering. I think it's hard to sort of. There's no slam dunks in that regard.
Right.
We've done a few smaller things very much under the radar, I would say, just recently.
All right, thank you.
All right. There was a question. Panu Laitinmäki here in the.
Thank you.
It's Panu Laitinmäki from Danske Bank. I have one question on capital allocation. Those were organic targets, but how do you see potential for M&A and also for example for share buybacks going forward?
Maybe let's take that under Katri's point so that we're not getting ahead of the curve now in the whole presentation. Good question.
Okay, thank you.
Then question here in the, i n the middle.
Hi, Sindre Soerbye from Arctic Asset Management. I was a little surprised that you did not mention something specific about R&D at all. Should we expect more targeted R&D, nominal increase in R&D or more focused?
Do you have any? Of course you have any ideas, but can you.
Can I elaborate? Disclose them. I think it's important to think about R&D. Let's think about the shifts we're making. I think that's an easier way to talk about it. That is sort of the real question, is when we. Internally as well. Then the focus in terms of R&D, what do we focus on? Back to are we solving big problems for our customers or is it just cool technology?
Right. That's also where we will have more. If we see opportunities, there could be more of these co-creation opportunities where we really together with this customer solve their problems and sort of invest R&D money into that. The third part we see in terms of the change in mindset on the R&D is that we go from this more annual planning cycle to a multi-year strategy where then it is actually easier to say we're going to invest in this part. It'll pay off in two years when it comes to R&D. We will have certain things. You can say our mindset changes to be more focused on customers, problem co-creation, but also being able to make longer term investments.
Right. You're going to see one where we've actually made a very long-term investment. You think about DNAe, that's been a very long journey in terms of actually investing into that over the years to get to where we are. Last week we even launched the DNAe for the marine business as well. Maybe just to be another, just a further clarification for you, I clearly see R&D investments or spend, let's call it that, as a way to generate future income and return, not a cost. That's why we need to sort of look at it, right. We need to of course have a focus on it, but also be able to kill projects that said, okay, this is actually going into a dead end. Let's not throw good money after it anymore.
We need to have a good thorough process when we actually look at the milestones in our whole R&D system, if you like.
All right, Timo Heinonen, Handelsba nken.
I was a bit surprised that you do not have a separate margin target for services and again given your background that you have run the service businesses so, so well. I mean you have a target for the whole business segment and in a way it is included. Where do you see the service margin i n five years?
I think if you do that, I know you've done the math, Timo, I'm sure you've done the math. You can probably, there's probably an indirect service margin there as well because otherwise the math just doesn't stack up. Right.
Savings, it means that the business line will be at that 40%.
If you think about it, I think the important thing is also this thing about someone will probably have the question why I'm not showing the service margins as well. Right. It really boils down to that operating model wise we have to look at from a customer perspective outside in and saying they're looking at the lifecycle, of course, then we also have to look at that from a lifecycle perspective. That's one. That's why we are also, you know, not that's why we are showing the bottom line for the whole lifecycle, not for individual parts of it. That's one. That's actually also what we've done in the Process Performance Solution business. In automation and flow control we've shown the whole thing, we've shown the lifecycle margin and that's the same approach that we are, we're taking now.
Okay.
All right, let's take a, also from the digital platforms, a question. This coming from Sven Weier. There's a 8% target to grow in the biomaterial services. How does the kind of a bridge work to go into group growth of 5%?
Yeah, that's a good question. Good question, Sven. And thanks, nice that you're joining. I'm sure you're watching as we speak. There's of course a couple of things to that. We do see the growth over the cycle, but we are also saying CAGR as well. I think it's also another thing that we much rather internally rely on service growth, that we are, sort of, the install base is there. So let's actually take that share that we should have when we look at our install base markets here as well.
Right.
That's something that you can much more drive. The overall growth will be impacted by cyclicality in the business and therefore can be actually quite sort of binary from one year to the other because of large projects as well. I guess I assume he's looking, thinking about the biomaterial business, not the overall. Or does that say.
Yes, the overall group 5% target.
Then a nother one here on the online platform is about customer relationships. How will you as a new CEO ensure that Valmet has strong customer relationships?
Of course as CEO you are sort of the, you're also a very high key account manager at the end of the day. I've been visiting a lot of customers throughout these first 10 months and continue doing that. I'm actually having a customer meeting next week quite far away from here. Like I talked about, talked with a lot of different customers and it is of course important that I have the relationship on the right level with these customers and that's also what is happening and I really enjoy doing it. It is a fun thing as well.
Good. Do we still have questions here on the live audience? There seems to be here by Antti.
Yeah, I'll ask a follow up. I mean on the lifecycle approach and not really looking at aftermarket or OE margins separately. Do you think it will change your approach on pricing on the OE side? Do you think growth and expanding our installed base becomes even more critical for you or do you think you will be more conscious on the margins that you are booking on the OE side even if it's not separately reported?
I think we become more strategic about it overall because it is about driving the overall margin up. It's also why we are also boiling down on sort of the cost competitiveness. Of course, also that improvement in cost competitiveness is not going to go to us, all of it. It also has to throw some of that into actually winning market share in that. We need to think it overall strategically and be cognizant also about the individual projects as well. Where is the price point for this project in the margin or in the market for this kind of solution in this part of the world? Then be cognizant about do we want to bid for it or we rather avoid it. Of course, overall pricing is also a topic.
You're not going to subsidize loss making stronger?
We'll try not to. I think the real answer is Antti, I think the purpose of reporting it as one is actually that's how we should manage it and that is how we are managing it and will be managing from 1st of July. Right. That's the real answer. That's not about going into a lot of negative margin projects to then later on recoup from that.
Right.
Thank you, Thomas. Thank you for the good questions. We now move on to the Biomaterial Solutions and Services part.
Thank you.
Good afternoon for my behalf as well. We need some extra support for the next topic as we have something more new and important to tell about. The new things will be delivered with a lot of expertise. We have together with Petri and Aki over 80 years of Valme t experience. So whatever news will be delivered it's coming with the expertise. We will be now talking about the Biomaterial Solutions and Services business segment and we will be talking a lot about the lifecycle install base technology and co-creation and co-innovation with our customers and we are then happy to receive your questions and comments particularly on those service parts and the targets related to growing the services. That's essentially what we are now going to be talking about. Biomaterial Solutions and Services business segment.
Having three business area organizations with full life cycle accountability being the Pulp, Energy and Circularity, Packaging and Paper, and our Tissue business areas. Altogether the segment is about EUR 4 billion business segments delivering 10.5% of EBITDA margin. As you can see already 50% is basically services and we have been growing. The growth across the past 10 years has been approximately 3% and targets are to grow that and we are going to be looking at these growth elements, what the position in the market is, what we are going to be doing with our installed base, with our technologies and how we will be then innovating with our customers. Most importantly, looking at how we are driving the cost competitiveness, basically then boosting and serving us to win the market share and be more competitive.
Strategic priorities. A s Thomas already mentioned, we aim to grow our services by more than double of our track record being the 8% target. We are in the path and in the mission to grow our profitability to be 14% of EBITDA margin. We are doing that with new operating model which is supporting the lifecycle approach, tying in the services, offering to what we do in capital projects and then working with the lifecycle towards our customers' benefit. We are also organizing our troops in a way of fastest possible service level to the customers. We are driving the cost competitiveness and innovating together with our customers. Let's look at the starting points where we are in terms of different parts of the market being Pulp and Energy and Circularity, Packaging and Paper and the Tissue. Pulp, Energy and Circularity.
As one of the business segments, we are either one or two in our markets. In Packaging and Paper and also in Tissue. Petri has a pretty good starting point of being the number one in the technology segment throughout the world. In fact, those of you who are not influencers and having the phones in your hands are only holding our booklets, there is a 50% chance that that booklet is being manufactured on Valmet's made technology. Actually, Petri and the team have been secured that it is actually made on Valmet technology. I n the services. We are either number one or two depending on the market segment. We do consider these to be good market segments in which we are co-innovating with our customers and developing the technology forward.
There still is room to grow both in the technology parts and in the services. As I already said, it's a good market to be in that we believe in, and we can even still serve our customers better. How the market then is developing? Let's look at the market space over here. The global part market is growing about 2% in annual terms. The growth is coming and driven by the growth in hygienic products, mainly tissue, and also packaging. The global board demands also is growing. However, there are currently market areas which are particularly suffering from the overcapacity. This market space will be gradually filled up with the demand increase and whether they are efficiency related improvements or new capacity that is being built.
Our customers need our support in both of that and then including the service is the demand growth is providing and driving the further growth on the service demand, and then tissue where our market position is already very strong from the manufacturing to the converting lines down to the customer pact r ole of Tissue growth is strong and driven by the standard of living, increases in urbanization and so on. We are in good markets with strong positions and our market position as already shown is good. We see a lot of potential still through the integrated life cycle offering and focus to grow further. We are going to be looking at further about the life cycle, what we mean by that and what the targets are. Petri, you are on.
Thanks, Sami. Yeah, the life cycle like Thomas started, it's extremely important. It's important for our customers simply because they are making sizable investments in our equipment and they want to make sure that it's not just started up, but it's ramped up to full capacity as efficiently as fast as possible and so that the asset continues to remain current and at high capacity also for the years and decades to come. It's very important actually. It's one of the main value drivers why the customers are actually buying the capital technology from us. It's very important for us. It's one of the main areas in our past was biomaterial service growth of 8% and the comparable EBITDA margin of 14%. It's important clearly what is life cycle services? By definition, it is the entire life cycle of the customer value creation.
From the initial capital sales quotation to the startup to the actual end life of the equipment, it is long and actually I'm gonna talk a little bit more on the initial phase of our lifecycle potential and Sami is gonna continue on the installed base opportunities. This lifecycle thing concept, it's not a new thing. Valmet's been talking about it also in the past. What's actually changing? That's a good question. To put it short, we have identified additional growth areas and we are changing our operational model to grasp it. That's it. With our new operational model, we are actually increasing the focus on services in the new business areas. We have the capital process equipment and the services organized next to each other, very close to each other.
That will amplify the service focus on the initial capital delivery phase. And indeed we have identified great potential there. Our best projects deliver twice the service value than the average one. There are opportunities there, we're gonna grasp it. Another benefit, clear benefit, is that we are more flexibly able to cross utilize our resources, no matter for R& D or product management or delivery operations. Also in the new operational model, the business areas are organized by the customer industries and that brings a significant value for us so that the customer is the same for everybody in the organization and that's very valuable and important.
We are better able to focus on the customer industry specific value creation and delivery, and the service and support needs, they vary between the customer industry, so we will have a better focus on that, and we will also be better able to utilize our existing customer or segment specific offering. Those will be improved. We have a great market position. We have the widest offering in the market, we are operating in the demand growth areas, we have identified growth opportunities, and we are changing our operational model to grasp it. That's great. What about the customer? What do the customers think about our value creation from a lifecycle perspective? Let's hear it. Here is Francisco Razzolini and Mr. Cardoso from Klabin.
Our history with Valmet began many years ago, actually decades, with the supply of a recovery boiler and has been expanding over time.
Over time, Valmet committing, understanding our needs, our challenges, brought a very experienced t eam to help our developments.
One example was a joint development of the Klabin PM27, the world's first 100% eucalyptus-based kraft liner machine. The success case gave us confidence to expand our partnership with Valmet and again led to another nice project. Over the last 10 years, Valmet's technology helped Klabin to install 2.5 m illion tons of pulp and paper capacity.
Which represents today 55% of Klabin's total portfolio.
I see Valmet as a strategic partner.
Our life cycle for me is from the design to the quality of the r elationship after the startup.
That has been very good for us. An example of that is our g eneral shutdown last year which we designed t ogether, every detail for that with Valmet. As a result, we resumed the operations on time and with very good results in quality targets and safety.
They were clearly quite content about the additional value Valmet has brought over the life cycle. Klabin is about board making, Klabin is about pulp making. What about tissue? Did Valmet acquire additional technology with the tissue converting, add it to the portfolio? Yes, we did, a year and a half ago. Now the tissue converting has been fully integrated into our portfolio and we have a full middle scale end-to-end portfolio available for our customers from stock preparation to the tissue machine, tissue making to the tissue converting and its packaging. That is unique in the market. Nobody else has it, which is great from a capital business perspective, as the customers are very positive .
Happy how the customers even be positively surprised how well they have understood the synergy of the full mill scale project from one supplier. It is also benefiting the lifecycle support and approach and it has a big impact to that. With the mill scale possibilities that we have and the understanding we are able to better support the customer already from the planning phase. When they are planning the investment regarding the layouts, the calculations for the capacities, et cetera, we have now that capability. Of course, we are able to also develop the products if they require the maintenance establishment, et cetera. That is a great way to start a relationship for a new project, especially with a new customer. For the tissue machine we already have good support concepts where the startups, the important ramp ups are done as fast as possible.
We reach 20% faster ramp ups compared to some of the competitors and the speed level with our machine are the highest in the world. The biggest probably new thing is on the converting side. Especially after last year's acquisition of the FactoryPal, which is an artificial intelligence-based copilot for the operator's help, it will actually assist the operator to run the machines more efficiently. I think the results have been quite remarkable. 3%-8% overall equipment efficiency improvements and the customers have been very happy. That's unique. Maybe the most unique is the possibility for us now to combine the full mill level efficiency. Now that we have the full technology offering and as we know traditionally the tissue mills have been run like two islands. The paper machine is one island and the converting another one.
They're not really connected. One produces the pay stuff for the other end. It runs as it possibly can. With our full technology approach, we are actually able to utilize the data from the paper machine for the benefit of the converting efficiency. That is really new and unique. In fact, if we look at our key capabilities in the tissue making and compare to really there's no comparison in the market with our competition. Especially if you look at the service offering and the digital solutions area. I think that's a great opportunity. That is one part of our journey going towards the 8% service growth, 14% EBITDA. Sami, what about the installed base opportunities?
Yes, not only that, the booklets in your hands at the 50% probability are manufactured. Sorry. With our equipment our installed base is truly providing us a unique opportunity of increasing and improving our services sales and services collaboration with the customers. Now then how to unlock these opportunities and potential further for going to 4% services growth to 8%. We are seeing this installed base of being the number one driver over there. However, it has been enabled with the new operating model of unifying the troops, addressing the customer industry segments. Further utilizing the data that we have of our installed base. As you know we have made in Tampere automation systems with most of our installed base which is now producing at our customer base.
We have rather unique opportunity of also providing the customers the insight of the condition of their goods and the installed base that we have. Of course we have been looking at our offering, we have been looking at our markets, compared that with the market share of the others. We have been identifying the growth pockets with targeted investments. We are able to address for example spare parts consumables and then certain market areas which we are not yet fully tapping the potential provided already with the existing installed base but then taking the full lifecycle offering and delivering that in the upcoming and new delivery projects to the customers in the form of agreements, spare parts consumables and the shutdown services. Going forward our targets ultimately 8% services growth.
The real long term target towards 2030 is to own 25% of the market we are presently serving and take that 21% which is already after a good growth. In the past 10 years we have been growing our services to be EUR 2 billion as it is presently, taking that then into the new level and new market share level as well and increasing that by being better serving our customers faster in terms of speed, react, utilizing the installed base data, utilizing digital tools, e.g. e-commerce, better on, and then those growth pockets that have been identified. There is a plan and the plan is heavily also based on further improving our cost competitiveness. It is the base on which we have now decided to implement this global supply organization.
Aki will then be telling more about the cost competitiveness and how our Global Supply organization will be driving that forward.
Thank you, Sami. I started our China operations roughly 14 years ago. Now I'm taking to the global level. Like Thomas said, it's a big change for Valmet. What does this global supply mean in Valmet context.
Sorry.
It signals a step change in our ambition for cost competitiveness. For Biomaterial Solutions and Services we deliver direct procurement, most production activities, logistics, and warehousing. For Valmet we deliver indirect procurement, health, safety, environment, quality management, and facilities access. What is the potential upside if we and when we succeed in this initiative? It will be EUR 100 billion by 2030. It comes through cost competitive sourcing. We have plenty of opportunity to increase cost competitiveness through sourcing. Outside Nordics, we can further consolidate our supply base and get volume benefits. We can also optimize our production footprint over 37 production facilities. What will change? Today we are organized around business lines, each business line having their own supply organization and own manufacturing facilities. That has led to a certain degree of fragmented supply base and also partly sub-optimized production footprint.
Therefore, when we move now into that single centrally managed Global Supply organization, it will enable us to first consolidate our global volumes and seek benefits through the volumes, but also through selecting our partners globally. It also enables us to share production assets. We can optimize the loading and the footprint and the needs for different kind of capability around the globe. By having central teams, we have naturally much stronger category teams, much stronger competence pools to execute needed actions. We have heard already today that we have a very volatile world. This kind of central capability is very necessary to react fast on changing environment. Of course, this centralized organization will give us faster decision making and execution. We have roughly 4,500 employees working in Global Supply and, like said, 37 facilities in nine countries. What are the benefits?
We will, like said, target step improvement in our competitiveness. It comes through cost competitiveness and resiliency. We drive it, like said, through cost competitive country sourcing. We have a potential to improve that significantly. We can consolidate our supply base and get this global volume benefits. We will also, for the resiliency, implement minimum dual sourcing strategy. We have resiliency when the tides of global trade will change. We have seen in the past five years that that is really necessary. Also, through this global organization, we can optimize our production footprint. We have five different kind of businesses that we serve, but still we have capability to optimize inside those businesses. We have also very clear plan how we optimize our inventories and how we improve our logistic efficiency.
Through this central capability, we have actually then faster capability to move and develop our capability, for instance in India, for delivering cost competitive supplies. I think that it is very relevant also to think about how we protect our intellectual property rights when you go to cost competitive countries, because the protection is not necessarily so good. You have to have a strategy, how you manage it in company's benefit. We are after this EUR 100 million benefits, but I think cost competitiveness alone is not going to be enough. We want to be the technology leader, right?
Better, absolutely. As we know, another big value driver for our customers to buy not just our capital equipment, but also the service products such as consumables, purpose, etc., is price to performance. Global Supply certainly will support with that equation, but so will our innovation on R&D. Obviously, we will be doing the R&D with our customers, to our customers, to address their problems, often doing more with less raw materials, et cetera, improving the efficiency and production capacity and output, all that, but also reducing the cost. That is a part of our R&D. We are actually doing cost competitiveness work there as well. That is a big part of our DNA. That is what we are known for and we will nurture that in our work and doing also in the future.
There are also additional opportunities addressing bigger problems, not maybe tackling our target market, but more adjacent new growth opportunities and heavily related to the circularity. I'll give you a couple of examples. The other one aimed to reduce the use of plastics and the other one is targeting to handle the actual plastic waste problem. I'll start from molded fiber, which is actually a very interesting segment. It's the fastest growing packaging segment at the moment in absolute terms. Of course, the main target for us is to address the food serving market, replacing plastic there. Our concept is with our technology, high capacity, less resources, operators with high automation, good quality, and thus good cost competitiveness for the end product.
We are doing that work at the moment with Metsä and we have a demo plant in Äänekoski and Metsä has announced already the feasibility study for the first mill scale investment. The market segment, et cetera, in general are going further in the future of course looks very good and we have the full possibility for the fully circular approach as well. Recycled fiber can be used in the process. Sami, what about the plastic waste?
Thanks, Petri. Petri is working and we are working to get rid of the plastic in as many value streams as possible. Removing and replacing with regenerative alternatives, for example the molded fiber. We have been developing and as already stated in the previous CMD as well on the pyrolysis technology adjacent to our fluidized bed technology. We spoke of biomass to bio oil and biomass to chemicals. We have been further developing the pyrolysis technology actually here in Tampere in our research center and have now been developing the pyrolysis to be the platform for providing us scale efficient alternative for recycling the plastic waste. One of the most significant problems in the current society is to recycle plastic waste efficiently. One alternative naturally is to incinerate that as waste to energy where we have solutions as well.
Providing this circular economy directed alternative, this is now going forward. We are ready with the commercial scale pilots and trials with our partner and are working next to provide the solution for the mixed plastic waste, which we think will be a significant opportunity. We are working to develop the technology, and it's always good that we are addressing the technology questions. Here, it's not only ROCE, but really focusing on the technologies which are helping us to proceed with the ROCE and the relevant KPIs as well. Working with customers.
That continues to be very essential for us going forward with the technology development and co-innovating and really solving those problems, focusing on our pilot facilities which continue to be unique in the scale that we are having to demonstrate the applications, building the concepts together with the clients and helping us to remain in that technology leadership position, since that is vital and going to be one of the core elements of the competitiveness.
We are aiming to double the services growth and raise the comparable EBITDA to 40% by 2030. The elements over there are utilizing better the unique installed base we are having, utilizing the organic growth opportunities in the services, and investing in those pockets as well that have been identified to increase market share and, importantly, driving cost out of the entire lifecycle chain and maintaining the technology leadership position. With that, thank you. We are ready for the Q& A.
Fantastic. Thank you guys. Let's go to a Q& A. We have about 10 minutes reserved for it. First here from the front. Mikael.
Yes, thank you Mikael Doepel w ith Nordea, still on the organic growth target in service of 8%. So you're talking about tapping into the own installed base, you're talking about market share gains, but what are the underlying market growth that you're expecting for the years, and you also target to do bolt-on acquisitions, which you had done in the past?
Looking at each other. Thank you for the question. 8% comes naturally with the organic growth, which is then partly also related to the pricing and the elements of growing. The services are, as said, better tapping into the entire life cycle and into customers' life cycle and the entire use phase of the technologies from the design to the services phase. With that comes services, comes spare parts, consumables, and so on.
We intend to use better the existing installed base and the data we have in there to get better solutions in a faster time and utilizing the potential which clearly is there with our rather unique position related to the installed base.
The underlying growth 2% then the inflation impact to that and the rest half roughly is with our targeted actions to boost the growth pockets.
There is a second one. In terms of your installed base, how much of that do you cover today with your own service offering? Out of the total mills you have out there, how much do you cover and where could that go in the next five to 10 years?
On the board side, roughly 40% of the installed base is Valmet legacy based. So that's roughly the installed base in the world. Thus Sami referred that it's almost 50/50 chance that anywhere you go you get the Valmet machine produced paper. Whereas our market share on the services is half of that or a little bit more than half. So that's the, that's the, those are the dimensions.
Do you see that you could actually bring that gap to zero?
Zero is our target. Now it is to increase that to 25% overall market share. Of course, we will continue towards the zero gap. That is the ultimate goal, I suppose, in a little bit more longer term.
Thank you.
All right, here we have two questions here. Let's take first Panu from Danske Bank.
Thank you. It's Panu Laitinmäki, Danske Bank.
I have two questions on the EUR 100 million cost savings.
Firstly on the timing. How do you expect them to k ind of come true? Is it like you will get some e asy gains quite soon or is it l ike more back end loaded or 20 million in five years?
Like we stated, we have a target to achieve them by 2030. It is true that there are items that are faster to execute and then there are items that take more time. I would say in general that I see that the procurement related actions are typically more faster to execute. What comes to actions, for instance optimizing our production footprint, it typically requires more effort, possibly some investments or other development type of activities. Therefore they normally take more time than a quarter or two. They tend to take some years to grow up some capability. That is why we need both and they will impact. I think that probably in the beginning more procurement heavy and then later on we will get also more benefits out of this other access.
Okay, thanks.
The second question was on how d o you think this will roughly be split into procurement and production? And in 37 units, do you expect that to be a much lower number by 2030?
Well, f irst of all, I would like to remind that we have been doing actions throughout the years. If you look at our past, we have been constantly working with our footprint. We have been investing and then we have been also reducing the capacity. As an example, today we are investing in India to grow our facility there. Of course, once we optimize the capability and the need together with the businesses, there might be some decisions regarding some units. Those decisions we will make by financial means or financial criteria and they come one by one. We have not pre decided anything. For instance, now we have a plan how we develop the footprint.
Okay, thank you.
Here in the front, in the middle.
Sorry, Antti?
Thank you. Antti Kansanen SEB, just a question on the reorganization that you're doing right now. I mean Valmet has historically always targeted higher growth on the services than on the OE side, but you've been a little bit siloed into OE people differently and aftermarket people on the other side. There must be a reason for it. I just wanted to understand, is that the industry standard, how your clients are set up? I mean, are you talking with the same people when you are quoting for an equipment delivery versus when you are agreeing on the aftermarket? Is this some kind of a different way to operate than let's say the industry standard on pulp and paper has been?
Very good question, Antti. We have been of course looking at how customers are buying, how customers are doing business, and how essentially customers are also valuing and comparing the vendors. Very often the judgment is based on total cost of ownership and the full life cycle of the cost at least 10+ years. Of course, based on that, we've been already looking to ways to further collaborate and we've been doing that in the previous organizational setup. We do see potential of further aligning the tropes working throughout this life cycle targets of the customer and truly also optimizing the customer's life cycle cost and in fact the value that they get. Very often this life cycle value is the main driver.
CapEx is one component that, and then the overall equipment efficiency and the outputs and the quality and the safety and all the other aspects are then following. Maybe not in this industry yet, but we intend to be the ones who are taking the benefit of that first.
Okay. The second question was on the production footprint and I mean, do you think is there any way to kind of get more flexibility and shared resources? I mean, you have different business cycles, sometimes paper is doing fine, pulp not. Is there any way to share resources between the business units more going forward?
Yes, if I little bit elaborate more. We have different kind of products that we manufacture for businesses. We have this pulp and paper related production which is very much similar type of capabilities, welded structure, machining, a lot of engineering, etc. We have tissue converting type of production which is more mechanical assembly, electromechanical structures, etc. We have this pressure parts for boilers which is more like welded tube structures. We have this consumables manufacturing which is different kind of consumables for paper and pulp industry. Amongst those similar type of capabilities we can optimize and there we can find synergies and of course some common development themes. Of course when you have for instance fabrics, which is totally different kind of product, it's very difficult to find synergies with the pulp and paper equipment.
Within those boundaries you can optimize.
Thank you.
Thank you for the good questions. As a reminder, there will be a joint Q& A session also towards the end. Now it is time to take a break. We will go into a break for 20 minutes and stay tuned. We continue in 20 minutes. Let's now start to continue on the agenda and next up is the Process Performance Solutions. I invite Emilia and Simo here to the stage.
Good afternoon ladies and gentlemen and warm welcome to Tampere. I'm so happy you are all here in the home of automation. I'm here today with my colleague Simo to tell you all about the Process Performance Solutions great growth segment which is all about unlocking resource efficiency for our customers with our intelligent solutions. This is the former Valmet's automation segment and this name is more describing our mission as Thomas was describing towards our customers. Let's take a look at how we have earned our rights to grow and how we plan to accelerate the growth further. This segment is formed of two business areas, automation solutions and flow control. During the past years we have grown to be EUR 1.5 billion business almost with reasonably good profitability.
A bit less than 18% in the last 12 months we have been growing organically 6% in a market that has been growing 2%-3%, inorganically 8%. We have been very systematically focusing on developing our offering and technology. Latest releases we have done with our technology investments in the DCS market, distributed control systems, with Valmet DNAe, which is the most modern web-based technology there is in the world. Before that we have announced this Mill-Wide Optimization to the world for pulp mills first, and with this, of course, offering has been expanded also with acquisitions. For that, those have been very strategically carefully thought. They are either expanding our technology or our geographical exposure to customers in different areas, as well as getting domain expertise in different customer segments. Flowrox has been that for flow control, especially in mining.
For Automation Solutions, it has been Siemens Gas Chromatography last year. This is of course exposing us more to chemical refining and industrial gases. Those are definitely not the only reasons for our growth. Let's take a look at our fundamentals. In our growth, there are basically three factors. Our unique leadership position in pulp and paper is a great base to grow, development environment for most demanding process technologies in automation wide. Those are excellent, excellent bases. We have a very diversified and attractive portfolio for a wide range of industries and really strong positions in those as well. Last, but definitely most importantly, all our solutions are mission critical to our customers, which creates a very attractive business mix and sustainability advantage to our businesses.
Before going to these last two, let's talk a little bit about pulp and paper and excellent position in that we have the broadest offering in automation and flow control. In the segment on the left hand side you can see an integrated pulp mill and how our segments offering is truly integrated in all the areas we are measuring, we are analyzing. We are actually controlling with all the valves, all the process that all data is coming into the DCS control system which is actually controlling everything in the plant. With our latest releases we have integrated also this AI-based Mill-Wide Optimization tools so that customer can truly optimize their full production, open their bottlenecks in production, but also get to their sustainability targets.
With this kind of offering also combined to our biomaterials services, we are truly a companion for our customers to really get good success throughout the life cycle with the equipment they have purchased. Let's go to secondly to diversified industries. Simo, you can continue further.
Yeah, thank you Emilia. Of course pulp and paper is very important for us and we are pretty unique in that. If you look at our position, it's only about 40% of our story, actually less than that. The strategy of this segment and both of the businesses is really to provide efficiency and reliability across process industries. Already in Automation Solutions you can see that half of the business, almost half of the business, is coming outside of pulp and paper, for example, energy and marine being areas of particular strength. In Flow Control, w e have defined four core industries, four global growing core industries that we focus on. For example, if you look at the refining and chemicals and renewable energy and gases, they together are over half of Flow Control business.
Pulp and paper is a bit over a quarter. Then our newest core industry, metals and mining, touch less than 10%. Of course, we have a long tail of other industries where our products are or we are selling our products to customers like food and bev and even pharmaceuticals. Let's talk a bit about our markets that we serve. I think the first thing to note is that we are actually quite happy about the markets that we have decided to focus on and also very happy and proud about the positions that we have created in them. The market potential is about EUR 16 billion for Automation Solutions and EUR 15 billion or so for Flow Control. You can note that we are not really. Our growth is not really constrained about the market shares or the size of the market.
Despite being very large markets, we have very strong position in these core markets. You can see that. I mean in pulp and paper, of course, no doubt we are the leader. Like I mentioned, in cruise ship automation systems, we are the market leader. Another area where our systems are very well positioned leading in the market is in bioenergy type of solutions. Important to note that in addition to that, there's a long list of industries where our DNA has strong references. Interestingly, when you look at where the acquisition of the gas chromatography business takes us, it creates us a leadership position in that product area in refining, chemicals, and industrial gas markets. In Flow Control we are a top 10 player in our core industries.
We are five to seven in refining and chemicals, where we have been working for decades to establish this position. Industrial gas, we are a number one or number two. Also, metals and mining with the support of Flowrox acquisition. Not only that, it has actually put us on the radar in mining and we are able to combine also the Neles offering there to have a really broader offering for our customers. When we talk about the growth opportunities in these industries, I want to make three points here. First, the beauty of having strong positions in multiple industries is giving us a diversified platform of growth opportunities. Different cycles for different industries, slightly different drivers even, and we are in a good position to capture them.
Secondly, in all of these areas, the demand for the end product or energy is growing and hence the production volumes. Thirdly, all of the customers here are working hard in making their processes more sustainable, more safe. They're launching new products. That of course means that they need to touch the processes, they need to touch the controls, valves. For a player like us, that really works over the life cycle. These three dynamics and our position give us very good growth opportunities in all of these industries. Mission criticality has been mentioned. Let's talk a little bit about what that really means. Let me take the example of valves. Valves are not the biggest part of the investment. Maybe in a big process facility, 2% or even less.
Of course they can be critical in controlling the flows and ensuring the process safety and efficiency. Of course the same applies for control systems. Customers do not want to take risks here. They want to work, play, they want to trust their processes, the mission critical parts to somebody that they can trust. Successful players here have very strong technologies, a lot of references and capabilities to work over the life cycle, close to the customer service capabilities. Nowadays of course we are seeing more and more talk about digitalization capabilities. All of these assets take time and effort to build and maintain. When you have them, it creates you license to play and it creates you sustainable advantage. For example, in Flow Control.
We are well known and respected for the quality of our products and the knowledge of our people about the applications and the processes and the support they can provide over the life cycle for our customers. We have of course long list of references, customer approvals, industry approvals in these industries, which gives us the license to play. I will actually talk in a while more about our service capabilities, which I feel and I see is really something that gives us a differentiating edge in this industry.
Good for mission criticality in Automation Solutions is something that is really in the core. Basically the DCS system is the heart of every process. Nothing works without the controlling system actually telling that something has to move, some valve or something else has to happen. It has to be reliable, it has to be available every time. Of course there is a lot of other things in addition that our customers are requiring from operating systems. Today many of the operating and the other operating systems are based on 1990s, beginning of 2000s technologies.
We felt that it is extremely important that we support our customers with not only reliable technology, which is mandatory anyways, but also putting the persons in the center so that we are supporting our customers, for example, with their resource efficiency, helping customers to operate these systems so that they actually understand what is critical, where they have to focus on, and how they will proceed further. In addition to that, we can build different kinds of optimizations. With our, for example, analyzers and measurements, we can guide our customers to really understand what they need to do with their processes. That is the value adding that also Thomas was talking about earlier. It is really, really important for our customers, and that is the technology we are investing in. This availability, these references, these are extremely important.
When we are talking about whether it's an energy plant, whether it's wastewater treatment or whether it is pulp mill, whether it is actually a cruise ship with 5,000 people in the middle of Caribbean. Nothing can fail. Everything has to work. With this kind of references we have extremely good position globally to expand to whatever industries we are dealing with. In Finland we have a huge variety of almost all the industries where we are serving globally. Also from India to Europe to South America. That's why actually we have to have excellent project offices nearby the customers. Because these are big projects done with EPCs or with the final customers. We have to have excellent resources technically to support those lifetime. Also what we are investing in our technology development is always this backwards compatibility.
You don't have to invest into a totally new system, but you can actually upgrade it very gradually and take all the advantages of new technologies bit by bit. Whatever is benefiting your process controls, for example. That is actually also making this a very sticky business with our customers as well. Let's go next a little bit more into this technology, which you will see both from our greatest, our most modern in the world. The only web-based, fully cyber secured, which is built-in cybersecurity and certified DCS system in the world. You will hear more in the breakout session and how we are actually integrating different kinds of applications. Even the mill-wide production optimization, which is also in the other breakout session later on.
This is a really unique way to actually operate and also combine data from outside resources, for example to optimize let's say hydrogen plant based on electricity prices. All of these things can be done in this one system which is guiding our customers to operate most efficiently. For that we have already presence in 37 countries for a wide range of industries specialists. That is fairly good coverage already. Simo has a bit more still.
Yeah, over the time we've built a pretty wide coverage of our service capabilities close to customers. We cover 40 countries, not all of them ourselves, but with our partners. You may have remembered earlier we talked about also working with distributor partners. Anyways, the service experience is there, this lifetime support is there. The interesting thing is how do we kind of, or the investment in the digital capabilities. I'll take the example of the install base data. We have systematically over the years recorded where our valves are being installed and gathered that data. We know over 50% of the current active valves, where they are, what are they doing, and now so what does that mean for customers?
Let's take the example that when a customer is planning a shutdown, which is a huge project and there are many valves and a lot of valves in a plant, some are critical, some are even more critical, some are moving a lot of times, some of them may not be moving that often, but they really need to move when they need to move. How do the customers really figure out where to focus? This is where it comes that we have the data about their valves, we have their expertise being decades in this industry, we have the closeness so we work close with them to really help them choose where to put the efforts to ensure efficiency, reliability of the process. I think that adds a lot of value.
One, I mean there are many things that we talked about the mission criticality. Of course one of the important outcomes is that is what you can see here. In our business mix, about 2/3 of the segment revenues is related to services or more broadly speaking kind of OpEx spending. It may be services, it may be upgrades or et cetera. Already also in automation solutions, that's about half of the business is coming from install base and in Flow Control the number is actually even larger. 2/3 of Flow Control business is spare parts, field services, upgrades, et cetera. We have additionally a little bit less than 20% of business selling valve automation components, which is also mainly OpEx driven.
Of course among other things this mix of business gives us good solid growth opportunities like we talked about earlier now, which leads me to talk a bit about the way forward. I hope we kind of established that we have a pretty good track record of growth, profitable growth, value adding growth. We have leading positions in a number of industries. We have the technologies, the service capabilities, the expertise to be the trusted reliability provider in mission critical solutions. I think we have a mandate to grow and our target is to accelerate the growth and beat the market growth by or be over two times the market growth, which we estimate that it's going to be somewhere around 3%. These businesses that we have have also a pretty good operating leverage. Volumes normally improve margins.
Our target is that of course with the growth and our strategic competitive actions, we will hit the 20% EBITDA target by 2030. Emilia, would you open a little bit about Automation Solutions plans?
Sure. Thank you, Simo. Accelerating organic growth over double. The market is really focusing on accelerating the growth in energy, process, and marine. We have currently a better offering stack than ever to this market. We have the newly released Valmet DNAe, which is very suitable for small processes but also extremely large ones. As you know, it was sold also to Arauco Mill. That is definitely one of the advances. We have also acquired new analyzer business, which is opening very much doors for us, combining also this DCS technology. Also, with this analyzer technology, our optimization capabilities, what we have built in other industries, energy as well as in pulp and paper, are really helping us to really grow in that area as well.
There we are of course looking for example especially chemicals and other segments in marine for example to state a couple of those. Of course hydrogen is in general very active as well. We are also investing into expanding our offering via partner network especially to broader geographies as well as to subsegments where our domain expertise is not yet that strong. In pulp and paper we extend to be number one with all the product areas. With this kind of digital enablement to unlock the process bottlenecks as well as improving the efficiencies in both maintenance and operations are really critical for us. There with this kind of superior technology offering we also see and we have already seen in those growth numbers a really good growth in the competitor replacements.
Last but definitely not least, services as such are very strong growth factors. As you can see from the first slides. We have been very heavily growing during the past years and our installed base has been growing. Our new technology also with this value adding AI- based solutions are really driving also the services growth. While we are together all the time with all our customers really looking at the roadmapping how they get most out of the new technology out. Those are the means to accelerate the growth in automation solutions. Please tell more about Flow Control.
Sure.
The target of course is the same. Accelerate growth, achieve two times market growth. At least portfolio is something where we can work on. I mean the four core industries we talked about. We have opportunities organically but also maybe with acquisitions prone. Our portfolio provide more or bigger solution scopes. It is not only about the products and technologies here. It is also looking at the business mix portfolio and for example we are at the moment, investing in capabilities to add larger valve automation solution opportunities in our components business, building the capabilities to broaden the business portfolio. Services continues to be a theme. I talked about the understanding of the install base and the value that we can provide to customers with that. It also works for us.
We have pretty good understanding of where the install base is and where we are kind of serving our customers excellently and where we could do even better. We can do targeted growth, smart growth on services, accelerate that growth. We go to market directly, selling direct to our customers with distribution and with EPCs. This is the way that we will continue to do. We will strengthen our channel capabilities, generally speaking, our capabilities close to customers to provide the expertise and work with them over the life cycle. Finally, we will of course work with our supply chains, our manufacturing fleet, looking at ways to improve competitiveness but also ensure resilience in different scenarios. Another theme there which is important is to be close to customers.
For example, we made an investment some years ago and we have a facility in Saudi Arabia which gives us a very strong position to grow in that very interesting Middle Eastern market. There are other places we can look at, like South America, etc. where we want to improve these capabilities. We're coming to the end of the presentation, so I just want to summarize what we've been talking about. Strong track record of profitable growth, attractive leadership positions in number of process industries, capability hard to develop, capabilities to play in the mission critical segment and attractive business mix is the basis that we will continue to grow. We target to accelerate that, making sure we grow twice the market and reach 20% EBITDA by 2030. Thank you.
Thank you, Simo. Emilia, let's go to the Q& A. We have 10 minutes reserved for the Q& A session. We start again here, hear from the live audience. Raise your hand if you want to ask a question. While waiting for the questions here, let's take from the digital platforms. Firstly, about the launch of Valmet DNAe, the next generation industrial automation system. How does Valmet plan to leverage this innovation to drive growth across its segments?
Good question. Thank you, Pekka. As I was mentioning, this is a totally new technology in the market and already within several industries we have a lot of deliveries ongoing already. Also, the interest is really there and really what we are seeing is that this is one of the drivers across the customer segments we are serving because this really has all the facilities that we can provide to actually help all our customers to work with their processes or energy production or ships. Of course, we are leveraging this with the targeting that 20% EBITDA with the market over double the market growth.
Thank you. Let's take a question here from the audience, Antti, please.
Thank you. This is a question on automation systems and the industries excluding pulp and paper and marine, the ones that are sort of like niche positions. I think previous CMD a couple of years ago you identified a couple of different target industries that you want to grow into. How has that progressed and could you highlight any kind of customer wins, new exciting reference cases or certain industries that you see the most potential from here onwards?
Yes, thank you. Very good question. Of course with the chemical industries we were highlighting at that time as well we have acquired the batch technology, which was the earlier acquisition as well, and together with them we have significant, of course, further with that installed base, worked on and also working on getting that technology inside our technology. Of course with these customer references we have always to agree what we are telling, but we are having good traction on that side as well.
All of course with alternative fuels we have been working on those ones that have been proceeding quite nicely, and of course I think we were discussing also a little bit more about marine at that time. Now, as Thomas was mentioning, we just released this one with DNAe to further grow in marine, also now looking outside the cruise .
Then the second question is on how do you collaborate with the pulp and paper side of things. Do you share any R&D resources? Are you totally independent?
Of course we collaborate quite a lot because they also have significant process knowledge and domain expertise. We have our own R&D resources and of course the cooperation is with these certain projects together, what we do, but we have own resources.
Thank you.
All right, some other questions here in the middle.
Yes, thank you. Mikael Doepel, Nordea. In the Automation Solutions, you talk about accelerating growth and you talk about the energy process in marine as one, and there you mentioned expanding the partner networks. Just wondering if you could elaborate a bit on that. What kind of a partner networks do you have? How do you work with partners?
The second question is also on the point of aligning capabilities with customer needs. If you could elaborate a bit on that as well. Thank you.
Thank you for a good question. We do have technological partnerships with technology providers, which is not Valmet technologies. That's one part, and we look into working with also expanding that a bit more. It is also about the partners for certain areas where, for example, we have, let's say, in India, we have had a long-term partner in energy where we actually have supplied quite a lot of energy production, for example, optimizations lately through our partner who are very then in the core of energy production business in India. This type of things we have, and of course where we want to grow is also to expand in, for example, in, let's say, for example, South America, Middle East, working together with similar kind of partners as well. The other question was regarding just can you just.
You mentioned aligning capabilities with customer needs. What does that mean in practice ?
Technology, for example, our customers are really in all of our customer industries, they are having difficulties to find, for example, capable new operators. For what we do in our technology, we build on kind of guiding capabilities so that customer new operators can really concentrate on the right things, do the right choices in order to either increase the production or keep it as high as it can mathematically be. It, for example, highlights that now you need to take concentration on this one. If you, for example, combine different processes into one person's control, you can actually with this new design have only one person to control several different operations. That is one example how to support our customers to operate.
Thank you.
Here a question from Timo.
Yes, thank you.
Thank you.
What is the typical auto size in marine?
Very good question. There are of course very different sizes of order.
that the cruise i s the biggest potential.
Right?
There are different sizes as of course typically many orders are in series of ships. It can very much vary.
If you think the value per vessel?
Of course there is a very large scale of when we are controlling everything from air conditioning to, to well, water slides and everything in between, energy productions and wastewater treatment. Yes, it's of course the largest one. Yes, we are talking millions.
Yeah, thanks. If I can ask other question. I mean I understand that you have a good position in cruise given that Finland is just landfall all cruise ships.
How do you aim to address the other Western categories?
We also have maybe a little bit elaborating on still on this partnership as well. For example, this LNG type of carriers and what we have as ferries as well. We do have also partnerships how we operate in China where, for example, at the moment the biggest ferries and those productions are currently in. We have a way to work in that one as well and look into growing that as well.
Okay, thanks.
Thank you. Question here from the online platform regarding the Flow Control. M&A opportunity. Can you discuss those a little bit?
Like I mentioned that it's a big industry, it's a fragmented industry, we are a top 10 player, we have the global reach, global service capabilities. You know, when I talked about our portfolio development, I said there are clearly opportunities to widen our portfolio serving our customers in the four core industries. I think for example, the Rotex acquisition in 2018 is a good example. We acquired an actuation company giving us new technologies, but also it gave us a very good position in India to build on. They were very strong in that area and now we are scaling them globally. Flowrox, they had a good brand in mining, but of course a smaller company, not able to address the markets. We have now combined the offerings. It makes us much stronger and in certain areas we have made very good progress.
That's the kind of logics we want to create and we see operations opportunities there.
All right, thanks, Thomas. I think Sindre here indicated a question.
Yes, just a question on you have had DCS systems for a long time now and I guess you must have a lot of data from those systems and obviously they are helping for instance with preventive maintenance and so forth, both local and maybe also from your side. Are you getting the, let's say, are you getting so much out of those data as you can? I mean those data for let's say hundreds of paper machines and so forth, that must be a valuable source of knowledge both for, let's say, product development for other players in the pulp and paper industry. Could that be either a source of, let's say, revenue or that you do more centrally and get, let's say, the benefit of the data back to your customers?
Of course, that's a very good question as such. With this data, it's always something that we have to agree with customers. How do we utilize the data? Because it's something that we focus, of course, on to get clear signals that how it can be utilized. We are very effectively using it already. As Petri and Simo were mentioning, we are aiming to even better utilize the data when it's kind of complementing both sides, customer benefits and, of course, that we can leverage that as well.
Could we see in like 10 years time that you actually say half the way around the mill, if for instance small tissue producer with two machines, I mean you have the capability to basically r un that operation from here or from a center.
This is an excellent topic that you will be discussing even more if you can go to the breakout session, because there we are telling more about, for example, how we can optimize and maybe also talk a little bit about how we are targeting, of course, with all this technology towards more autonomous operations even for customers so that we support them. Of course, with this kind of autonomous operations supported by the technology as such, it is of course in the very, a bit longer future, not really tomorrow, but there.
Thanks.
Thank you. That wraps up the Q& A session here. For the technical stuff, please, the monitors are now blank. If you could fix this, and while waiting for that, thank you, guys. We move next to the CFO presentation. Katri Hokkanen.
I actually want to go back to what Thomas said in the very beginning of this afternoon about Valmet shifting gears. We do want to go from this continuous improvement more towards bold long term ambition. Actually, that shift is already visible in our new financial targets. I will today summarize the key business levers, talk a little bit about capital allocation priorities, cash flow, and then how we intend to create value as a company. First, let's take a look at our new financial targets. For net sales, target is to grow 5% organically. If you look at our track record, actually the CAGR for last 10 years has been 4%. We want to go from 4% to 5%, and that actually means that we need to double the growth in biomaterial services and then also accelerate the growth in process performance solutions.
For comparable EBITDA, our target is to be at 15% and I will come back shortly how we are planning to do this. Then for comparable ROCE, target is to be at 20% and actually for us in Valmet this is very important target. When we talk about the mindset shifts, we want to go towards financial performance and allocate our capital very efficiently. As a new target we are introducing gearing to be below 50% and the question might be that okay, what does this mean and at the end of Q1 our gearing was 36% and it means that we do have some firepower to execute M&A. If we would find something interesting strategic that we would like to execute, we can actually go higher than 50%. It means that we target to go back to this below 50% again.
What does then this all mean to our segments? As we announced actually yesterday, starting from July onwards we will have two new reporting segments. They are driving both growth and profitability. Biomaterial Solutions and Services is combining the previous process technologies and services segments together. Process Performance Solutions is the former automation segment. Even if this might look to you just as a change in the reporting structure, actually this is much bigger transformation we are having inside of Valmet. From the numbers, net sales for Biomaterial Solutions and Services is roughly EUR 3.9 billion. Out of that, 50% is related to services. In Process Performance Solutions, net sales is about EUR 1.5 billion. When it comes to profitability, Biomaterial Solutions and Services is at 10.5% and Process Performance Solutions significantly higher at 17.6%.
How do we get to this 15% comparable EBITDA target? Actually, we do have key actions targets for both of these segments. In Biomaterial Solutions and Services, our target is to go from 10.5% to 14%. As you can also see from the bridge, it is quite a significant improvement. Here, the main thing is doubling the services growth to 8%. Secondly, delivering the EUR 100 million savings from Global Supply. Third, the renewed operating model is supporting this target. In Process Performance Solutions, our target is to go from 17.6% to 20%, and that is coming mainly through accelerated growth in net sales to over double the market rate. Also, the operating model is supporting this target as well.
For the operating model as we have announced, it will deliver roughly EUR 80 million savings with the full run rate from next year, beginning of next year. I also want to introduce first time ever capital allocation priorities and also segment mandates. We are introducing this to support the long term value creation in the company. The number one thing here is of course the organic growth and we want to allocate the capital to fund the organic growth. We are focusing on ROCE and competitiveness and we have also defined mandates for our segments. For Biomaterial Solutions and Services, it is growth, services, and dry cost competitiveness. On the Process Performance Solutions, it is to accelerate the growth. Secondly, strategic M&A is a very important thing for us. There, on the Biomaterial Solutions and Services, the potential is quite limited, mainly on the services side.
However, then on Process Performance Solutions there are a lot of opportunities, opportunities in the pipeline. It's very self-evident that Valmet has to be the natural owner and also that the price has to be right. In Process Performance Solutions, as said, high, high potential there. We are mainly focusing on bolt-on acquisitions outside of pulp and paper industry. A very good recent example is this API or gas chromatography business which we acquired a year ago. It's a very good proof of our execution and integration capabilities. It was a very complex carve-out global business, market leading position, and now after one year it's actually operating as a business unit and it's a very good platform for future acquisitions.
Also in the analyzer business. Thirdly, we are continuing with the existing dividend policy targeting to pay out at least 50% of the profit. We can also use share buybacks if balance sheet and capital allocation priorities. Of course, this is then also subject to the board's decision. The next question is how do we fund all of this? Actually, if you look at our cash conversion, it's been actually pretty strong for the last 10 years at 92% when we compare it against comparable EBITDA, which is one of our key KPIs. However, we have had challenges with the net working capital. It has been increasing and also it's visible here and the question here is why is that? Actually, between the years 2020-2024 there were a lot of external factors that were impacting our business.
There were the post- COVID times, war in Ukraine, prices peak in 2022 and of course also our inventories increased. We did suffer from some challenging projects and at the same time also the business mix changed. We doubled the net sales in the Process Performance Solutions and biomaterial services part. Actually the situation has been improving and cost conversion is much stronger now. When we go forward there are three things that we will be focusing on. First is to have cash flow positive project business also in the future, that the business model is very clear and it's unchanged. Secondly, it's to continue to grow both Process Performance Solutions and biomaterial services and that the business model is very efficient, it converts a lot of cash.
Thirdly, we need to keep eye on the inventories and there we do see some improvement potential especially in biomaterial services. That will be actually in the global supply scope in the future. How do we stack against our peers? We actually selected these high quality European industrials and as you can see our cash conversion is also strong compared to other industries and our intention is to keep it that way. We want to have strong cash conversion and that is also a thing that I will internally very much have a focus on. We have presented you today our new strategy and it is built on top of this fundamental shift in our mindset and in our culture. We are not afraid to set ourselves very ambitious, tough targets.
I personally believe that we have what it takes to actually deliver these targets. In 2030 Valmet will be a totally different company and I'm super excited to be part of that journey. Thank you.
Thank you, Katri. Now I invite all the presenters here to the stage for joint Q& A session where we have 25 minutes of time, roughly 25 minutes time prepared. As a reminder you can utilize the digital platform to ask questions and we'll be taking questions also through that channel. Let's start here from the in person audience. Please raise your hand if you want to pose a question and of course great if you can directly indicate who you want to ask that question from. Here in the middle.
Question still on the cost takeout measures that you have announced so late March. As Thomas said, EUR 80 million from streamlining, now it is EUR 100 million on top of that from various sourcing, procurement, logistics, various production platforms, so on and so forth. Could you maybe give a bit more details around this? I mean, what are the costs going to be associated with this? When are we going to see some sort of an impact, to what extent? Maybe would be great to get a bit more color, I guess, on this. Not sure who would like to answer, but.
I think yeah, thanks Mikael. There's of course like we said in end of March we said we're going to simplify the organization. We're going to reduce with up to 1,150 people that could we're also going to invest in some capabilities as well coming into the business that will sort of have a net impact of EUR 80 million run rate. Most of it is NEST DNA, but there's also a little bit of sort of engineering cogs part of that as part of the simplification. We haven't said yet what that actually costs to do to make that kind of.
We will of course, I'm sure we're going to talk about it in almost a little more than a month ago from now, sort of at the Q2. We will book, we'll make a booking, a provision for that cost in Q2, so there it will be fully visible then as you talk about the EUR 100 million. When it really comes to footprint and other consolidations of our supply chain, then that will also have a price tag on it of course, but it's about making the right choices even though they might be difficult for the future and making sure that you get a return on that investment.
I don't know if you want to.
Add a little bit, Katri, or?
Yes. Definitely a topic that we can then further discuss after the Q2 results are published.
Okay, thank you.
Okay, let's then take a question from the digital platforms about the ROCE target and the M&A potential. How do those two fit together with the target of going to 20% ROCE and then also doing M&A?
Very good question from the audience. As we talked about, we clearly intend to do strategic M& A, build our business foundation even further. That's, I think, where it's also very helpful that we actually split the business into the biomaterial and the process p erformance technology or solutions because they're sort of generally a bit two different price points on these, these kind of assets. Right. Of course, we need to evaluate how does that actually fit into our business. What synergies can we drive? Also from a top line synergy perspective, right? I mean, take the gas chromatography business we bought from Siemens. Yes, it was a good, good acquisition, we're very happy about it. It's also about driving top line synergies for other projects that we already have, other solutions as well.
We really have to sort of split up into biomaterial and process performance technologies or solutions.
All right, let's take an in- person question here in the middle.
Thank you. I guess this goes for Thomas. In the new organizational structures, what responsibilities are at the headquarter level? Which are the functions that are not within the divisions or the businesses? What are kind of general functions? For example, M&A. Is M&A kind of within the divisions or do you have a shared resource on that?
Yeah, so the overall, if you take M& A, that lies with Katri. So that's of course from a group perspective, we will drive, run any process that can be coming from the business that should be coming, you know, pipeline up and saying, you know, we really like this particular competitor or company as a potential add on acquisition. So there can be targets coming up, but process wise, we run it essentially same thing. We see HR as a global process, talent management as a global process, finance as a global process.
Okay. Then the second one either for Thomas or then maybe the division heads can comment as well. What is the benefit of having the automation business and the traditional pulp and paper business under the same roof? How do you guys help each other? How do you benefit versus being an independent two companies?
Maybe I take the first.
Let me, I think that there are two questions in that really or two answers in it that are important. One of the answers is actually, so historically until today we've had an organizational structure that sort of forces collaboration and that's what we're trying to release. Saying structure is not, collaboration doesn't come from structure. Collaboration is really a cultural thing. Good leaders or good employees collaborate if it adds value to them and their business and therefore also the culture, customarily. That's one piece. If you think about, let's go back to autumn last year when we won the Arauco case. Would we have won that without automation and flow, for that matter, together? I actually don't think so. I'm pretty certain that we would not have won it because what was the thing there?
It was really about back to what we talked about a lot of times today, really about optimizing the outcome and the return on the invested capital for the customer. How do you do that? You have the right pulp technology, you have the right valves, put it into it, you have the right automation system, you have the millwide optimization. You're going to see that later today. It's really about back to this resource efficiency process optimization thing. There we had sort and then we had the in house, the technology and owners on site, you know, one big room, 50 people. And then say, okay, how do we really get this right?
How do we optimize this for the sake of the customer so they actually get the best return on invested capital and can go to their capital market because they need to borrow money for the investment, saying, listen, we got the best in town. They say they can do it.
Thank you, thank you, thank you. Question for the Biomaterial Solutions and Services related to the services market share growth, where the ambition is to go from 21% to 25%. Is this an organic target, firstly? Secondly, can you remind the audience about the key levers on how to capture the market share from 21% to 25%?
Yeah, the growth is organic based certainly. We have identified growth elements mainly coming from the installed base, but also from the, together with the initial capital sales opportunity that we will be grasping in the future by developing and delivering new customer value and utilizing better the existing one with the new operational model that we have.
Thank you. Maybe a related question, but on the lifecycle approach, what are the key benefits to the customer from the lifecycle approach that we are now focusing on?
As already explained earlier, customers are not only buying equipment, they are not only acquiring technology, they are buying reliable, high performing, high efficiency production assets that are fulfilling their own market and the business need. When going back to the Arauco project as well, it is all about dimensioning the solution, fitting that to the customer need and then putting that technology, services, automation part together to solve the customer need for a long time. It is essentially then changing the language into the customer's tone or the language so that having the total cost of ownership as a kind of a key component of the offering.
Thank you, Sami. Then a similar one to the Process Performance Solutions. How to accelerate growth further, your track record is showing a decent 6% organic growth. What are the key things you are planning to do to accelerate even further? Also, there's actually another part here that does it come at the expense of your margins?
Good question again, maybe highlighting again first automation also, so excellent on offering stack what we have built and willingness to still invest into developing so that we are expanding the great offering already to new sub segments what we have been discussing. Of course, the strong bases in pulp and paper and really the services, a growing installed base which is really something that customers typically do not themselves or no one else can serve our system. Basically, that is in start basis growing our business and with the new technology really accelerating that as well.
Yeah, we talked about the portfolio. We talk about the four core industries which all give us opportunities to grow. We can enlarge the portfolio both in terms of technologies but also looking at new ways to serve customers, new kind of commercial segments. I would say I talked about the smart services growth really leveraging our existing capabilities, leveraging the data to make smart decisions where to invest and accelerate. I talked about working even closer to end customers but also our EPC partners and distributors and that way driving the channel based growth and of course supported then by having resilient efficient supply chains also investing in capabilities close to customers so that we can make sure that they get good turnaround times, et cetera availability and they see that we are kind of working with them long haul.
That's maybe a good point. The sort of availability theme in this dynamic world that we are living in is actually also becoming, I think, a competitive advantage of ours.
Good. Please indicate if you want to. There is a question here in the audience as well. Let's take it.
Now I need to ask a question on the services side of things and I guess Europe is or EMEA is the biggest kind of a market for your pulp and paper services. Have you kind of analyzed the installed base that you have there or your client base that is there a risk of closures or shutdowns that could perhaps impact negatively on your growth in the next coming years. Thinking, for example, the container board overcapacity in Europe?
Yeah, basically overcapacity situation in Europe on the container port side, that's clear. The demand is growing at the same time and it will catch up with a certain amount of time they need. There will be most probably, one could assume, need for closures as well. If you have seen that happening, that trend probably will continue and it will have of course an effect. Typically the closures happen on the oldest side of the assets, smallest ones. Maybe not so often even Valmet-based OEM machines either. Certainly that is an expectation also for the future that it will continue. However, we expect the overall market, the demand growth to catch up the overcapacity within a reasonable time horizon.
When considering our new technology and capital sales, it's good to remember that today when we discuss with the customer we are talking about 27 startups and 28 full capacity. Next year we're going to sell 29 full capacity. That's the delivery delay. That's good to remember.
That's also why it's important when you think service is also the real driver here is also it's not so much about new equipment coming in, it's also about the utilization rate.
Sure. Maybe a follow up on the services as well. Can you talk a little bit about kind of examples on aftermarket intensities in various regions or products like a board machine in Europe versus a tissue machine somewhere else? From your perspective, where's the best lifetime potential to sell your aftermarket offering and which has historically been the best business for you?
Historically the best area has been the kind of mature markets like North America, Europe. That's traditionally been the best life cycle service market for us. In Asia it's more concentrated on new machine support and ramping up to new capacities because there's been so much new capacity buildup in Asia. The overall life cycle potential for the installed base traditionally has been in the mature markets.
Now that you're maybe going after the installed base with a little bit new approach, where do you think we'll see the sales coming up? Most regions, product categories?
No, that is an excellent, excellent question. Of course we come back to this identified growth levers as a part of this whole life cycle strategy and the concept. There are the long term agreement components and there are parts and consumables and then of course areas which we consider that we can better serve and actually these activities will be implemented shortly. We also as strategic KPIs follow the execution of these selected priorities.
By 2030 we have a certain target setting, but we are gradually improving every day, so that doesn't disappear anyway.
Thank you.
Thank you. Then just a A utomation Solutions related question here on the digital platform. About gas chromatography business that was acquired quite recently. What's the strategic benefit in driving the organic sales growth?
Very good question and it is as maybe also Thomas was here mentioning, really driving also the top line growth for our full offering. We are working on several cases together for optimizations, DCSs, gas chromatographs, and we have already current deliveries ongoing to the same customers. I would say that that has been starting well and we are going to accelerate also that part.
I would add that it's also, you may have noticed that we have similar customers there, and that's something that also our teams are working together, so there's an additional benefit.
Good. A question on CEO, so what are the key risks with the new strategy and how you plan to mitigate those?
Yes, I think what I've been sort of, there's of course the whole environment that we are living in, it's so dynamic. We have to just manage that on a day to day basis. That's also why this empowerment and dealing with the problems close to where the problem is really comes into play. I think the biggest risk I've seen sort of short term wise or have been cognizant about, and that's also why I've been actually trying to travel quite a bit even in this quite intense strategy period, is our operating model implementation where we're really changing and there's lots of moving pieces to get that new organizational design through. You know, figure out who is actually in all of the boxes all the way through.
My biggest concern has actually been how will the organization deal with the uncertainty that they actually have is that we're doing this big shift. I might be 100% behind it. I think it's a great idea. However, I'm also personally in play. So that risk from an individual perspective of then saying start focusing too much on yourself rather than doing your job serving your customers. That's been probably my biggest short term concern I think so far. I think the organization has done a stunning job really keeping their eyes on the ball and making sure the best thing you can do is actually do your job really well.
Then w e'll go from there. That's been the sort of the, I think we're so far so good, really happy with it.
Thanks, Thomas. We have a question here by Mikael.
Thank you. I know this is very much about strategy and looking further out in time, but I just have to ask also about the short term market environment. I mean we've seen tariffs going back and forth. You also have a big business in the U.S. Maybe you could talk a bit about what you're seeing in the markets currently across the business segments.
Maybe we'll just take a, Mikael, overall, first and foremost, let's take the U.S. business to start with. We're actually in a relatively fortunate situation with roughly 2,400 employees in the U.S. or in North America. So we are in a very good position to serve our customers. We have local sourcing or local manufacturing production of a lot of the service things or solutions that we service with. So there we're actually in a pretty good position when it comes to the big capital things there. We say it's an even playing field. So there's no one who then produce certain big ticket. It's in the U.S. that we don't and we then compete sort of where there's a tariff fairness or unfairness between. That's not what we see.
U.S. market for me is more about how does that whole tariff situation impact the overall economy and therefore the overall consumption of the consumers. Are you going to buy less toilet paper, et cetera? That has been more it and I think that glows globally. Right then. It's been such a dynamic ride as we all know, since 2nd of April and that goes back to then this simplified clear roles and responsibility, empowered organization, empowered individuals with responsibility and accountability comes so much into play because then Kyle in the U.S. when it comes to Flow Control, he can manage the situation with his team and he can sort of on a very dynamic real time if he has to go all the way up, all the way down, it just takes too long time. That I think is the.
That is where an additional benefit of the new structure is as well. Another maybe comment overall is when we talked a bit like with customers on a very high strategic level. It is always sort of. You cannot really predict and we cannot sit on our hands. Let's move on.
Right. Kind of thing, mindset wise with all the uncertainty that there is in all the markets, not just our market but in every market. I guess basically, I do not know, you want to put a bit more segments flavor to it.
Yeah, of course related to Biomaterial Solutions and Services now Pulp, Energy and Circularity for sure that is impacting particularly our end customers' decisions and that is then the uncertainty we are living with. Currently we haven't seen any kind of a major issues going forward. As I said, it is mostly services that we are doing in North America through our local assets and the capabilities.
Yeah, the services are made in the U.S. by and large. On the capital side, I think from our perspective the customers are making the investments for the next two or three decades. That's their horizon. They are thinking about how to move forward for such a long time horizon.
So, I don't believe based on the activity, the customers are still very keen on discussing with us. No matter where they are located in the U.S. or somewhere else.
Also, think about the time from decision to delivery is pretty long.
It is, yeah.
The world can change a couple of times between them.
Even the tariffs. Yeah, yeah.
Thank you for the lively Q& A. Time is running, so we start to wrap things up. Thomas, I'm now handing over to you for closing remarks.
Thanks, Pekka.
First and foremost, really big thanks to all of you who have listened engagedly, you have participated with good questions, really been a pleasure. There are so many of you who actually also came to Tampere to be with us today. We are also having some very exciting stuff in store for you right after this. I really want to thank you all for spending your time and day with us.
Talking to me about. You do realize the conversations we're having, they're different conversations, they're happening in a different way. We talk about psychological safety, which we haven't talked about before. At the same time, which is important to have psychological safety. We can have spicy conversation, r ight?
We have had a lot of spicy conversations during this strategy period, which has been really good because that is the way you make better decisions. You challenge each other, but you challenge the view, not the person. This mind shift change has already started. That train has left the station and now we are embarking on another or further embarking on that shift. We systematically are going towards customer success, lifecycle commitment, full empowerment and accountability. We are going on that. That is also why I strongly believe, and the team as well, that we can and we will deliver those five, 15, 20. Just try to imagine what it will be, what the discussion would be when we meet here again in 2030 and that is on the walls, right? That is not targets, that is actuals.
Just imagine what are the next conversations we're going to have, the next horizon, the next growth, the next technology, the next business opportunity we're going to have. That is why I'm very excited about this strategy, period. I am so certain that we will lead the way not only in our industry, but also sort of as a benchmark industrial company. I fully believe in Valmet. I fully believe in this amazing team and I do believe all the Valmet tiers around the world will get on this journey and we will lead the way.
Thank you.