Welcome to Valmet's Capital Markets Day 2023. My name is Pekka Rouhiainen, I'm the Head of Investor Relations here at Valmet, I will be today also moderating this event. It's great to see a full room of people here at Hanasaari, we have hopefully a large virtual audience present today as well. Valmet became an independent company nine years ago, during these years, the development of Valmet has been rather strong. The profitability has grown, net sales have grown as well. Going forward, we can see several mega trends supporting Valmet's growth, we have new sustainable innovation to grow as well. Today, Valmet consists of three strong segments: Services, Automation, and Process Technologies. Today's agenda is built around Valmet's new segment structure.
If we then take a look at the agenda of today we'll start with opening words by the President and CEO, Pasi Laine. We will first go to the Services segment presented by Aki Niemi, followed by a Q&A session. After that, there will be presentations on the Automation segment on Flow Control by Simo Sääskilahti and Automation Systems by Emilia Torttila-Miettinen. There will be after that a joint Q&A session for Simo and Emilia. After Automation, there will be a 25-minute break. Here at Hanasaari, there's a chance to see Valmet 3D Fiber products here in the hall, and clothes made using recycled and Spinnova fabrics.
After the break, we will then resume at 1:55 and go to the Process Technology segment presentations by Jari Vähäpesola on paper and then by Sami Riekkola on pulp and energy. Then a joint Q&A session for Sami and Jari on Process Technologies. After that, Katri Hokkanen, Valmet's CFO, will be presenting, and today will be concluded on the presentation by Pasi Laine, the President and CEO of Valmet. After Pasi's presentation, there will be ample time, around half an hour, for a Q&A session for CEO and CFO, but also you can then address questions to the other presenters as well. All the presentations will last for approximately 15 minutes, and we have reserved another 15 minutes for the Q&A sessions.
Also the webcast audience can post questions through the platform, and I will be then reading them to the presenters. Then after each presentation, there is a poll question popping up to the virtual audience, and then everybody here have a paper with the poll questions. Please answer those. We would highly appreciate your feedback. That's it for the introduction. Pasi, the stage is yours.
Thank you, Pekka. Nice to be here again in a Capital Markets Day for Valmet. This is a little bit a special day for CEO and CFO because normally you all analysts and investors, you are making the questions to Katri and myself. Now we have the pleasure that you can put the pressure on my colleagues. So it's a relaxing day actually for us. I'm sure that it's exciting day for my colleagues. Good. Then of course, it's very nice to have our new management team here. You will meet new faces here. You can challenge new faces. It's of course nice to have the introductory of the team to you in this meeting.
First, I'll go through the general story to get everybody on the same page with Valmet. Valmet has unique offering, and the offering is widest in the market. My colleagues will go through that more in detail. We make board paper and tissue machines, we make pulp mills, we make bioboilers for energy production, that's the widest offering anybody has in this industry. Of course, because we have the widest offering, our services offering is the widest as well because we do the services for the technologies what we offer. During the nine years, we have been able to build a third leg in Valmet called Automation segment. There we have Automation Systems business since 2015.
Last year we merged with Neles, and now we have flow controls there as well. We have very good offering for automation as well. For pulp and paper and energy customers, we can offer services and products and technology from all these corners and cover all the needs of the customers. Of course, automation has special roles. Automation is of course serving with its product big variety of industries. Our offering is good and serves very, very well the needs of our customer base. Like Pekka mentioned, we have had reasonably good development in Valmet. We started as a company with net sales about EUR 2.5 billion order intake close by as well.
Our EBITA was EUR 50 million, and EBITA margin before the non-recurring cost was about 2%. What has happened over the years because of the organic growth and because of acquisitions and mergers, our net order intake and net sales has climbing to little bit over EUR 5 billion. We have doubled the size of the company. Comparable EBITDA has been growing from EUR 50 million, EUR 53 million, if I remember correctly, to EUR 533 million. It's 10 times more than it was in the beginning of Valmet. Comparable EBITDA margin, like I said, was 2% in the beginning, and then it climbed up to 11%, and then there's a disappointing figure, 10.5%, which I don't like too much, but sometimes you fail in your target setting, and it was only 10.5%.
My colleagues will tell how we try to turn the development back to positive trend again. All in all, I think we can be reasonably satisfied with the development of Valmet after the demerge. Katri will go through the new numbers more in details, but just as a summary again to get everybody on the same page, our orders received last year was about EUR 5.2 billion, net sales about EUR 5.1 billion, EBITDA EUR 533 million, and we employed about 17,500 people. Net sales wise by the segments were such that process technologies contributed little bit less than a half, 48%, services 32%, and automation 20%. Of course, in this automation there are only three quarters of Flow Control included.
Geographically, we have good distribution of the activity. We are strong here in Europe, 37%. North America was strong last year, 21%. This South America, China, Asia Pacific, which all are of course in the long term growing markets, we had very good position. From 12%-16%, net sales and net sales was coming from those ones. I think one of the strengths of Valmet is that we have good segments which can be balancing each other, and then we are strong in all the corners of the worlds, with balanced business volumes. Sustainability is, of course, important topic, and we mentioned the word sustainability in our mission statement as well.
That's why we have taken sustainability very seriously from the beginning of 2014. We are very proud that we have been included now nine times in a row in Dow Jones Global Sustainability Index, where roughly 300 most advanced sustainability companies are included. We have done that now nine times, nine years in a row, and I think it's a good achievement. Of course, we have been getting some other good ratings as well, but somehow this Dow Jones is a very good achievement by our organization. We are managing our sustainability as part of normal management. So we don't have management and then sustainability management. We have just one management system, and we have included all these activities in the normal management.
The concept what we launched new concept a couple years ago, there we have environmental actions, social actions, and governance actions. In environmental we have circularity. Of course, our industry is based on circular, so biomass is circulating in the globe. We have climate action and environmental efficiency actions, and my colleagues will tell examples of what we are doing there. We are talking about social impact, so engaged workplace, health and safety, and corporate citizenship. On governance side, ethical business practices, sustainability in supply chain, and transparent reporting. All these activities are included in the normal management in the company and are not managed as a separate topic. One sub-segment of this ESG is climate. In climate, Valmet has of course climate program.
We have set following targets to ourselves with which targets should be reached by 2030. First, in supply chain, we want to reduce the emissions of our supply chain by 20%. We of course have to work with what kind of steel we are using and what kind of transportation we are using and so on. Many activities there to decrease the CO2 emissions in supply chain. In our own operation, we want to reduce CO2 emissions by 80%. We have been using the fossil fuels, and we have to get rid of it and replace that with CO2 neutral electricity and CO2 neutral heat. We can reduce the CO2 emissions in our own operations.
Then of course, the biggest impact what we have is in the use phase of our technologies. There the target setting is such that we have to reduce 20% from the existing level, the energy and energy use in the production of paper, board or tissue or whatever our end product is or customer's end product is. Jari will tell some examples how much we have been able to do that during the last 10 years. 20% is the target.
Another target is that we have to give our customers opportunity to choose 100% carbon neutral production if they want to produce pulp, paper, tissue, board, or bioenergy. Then it's of course up to them whether they choose to select those technologies, but we have to have the technologies available by which the customers can use, make their production 100% kind of carbon neutral. Those are the target settings, and we are working towards these. Of course, R&D is important topic, not only because of the sustainability, but because of competitiveness and innovation and growth on many aspects. In R&D, we are focusing in topics like promotion of renewable materials. We have two new examples here today what you can see.
Of course, raw material, water, and energy efficiency are important. If you reduce raw material usage to make same kind of product, then of course everybody's saving. Emission reduction is important topic. Circularity, so the raw material has to circulate as many times in the loop as possible. Productivity and environmental improvement with digitalizations. We have 28 research centers. We have several pilot machines, so our pilot machines are machines where we can test actually all the applications what we have before we test them with the customers, and that gives of course us a good competitive advantage. Last year, we spent EUR 95 million in R&D, so we are not putting it balance sheet.
We spend it, if you calculate the whole year Flow Control, then it's about EUR 100 million. We invest quite much in or spend quite much every year in R&D to keep us developing well in the future as well. Our strategy has been almost the same now for nine years, some modifications. Like I said, our mission is to convert renewable resources into sustainable results, we thought 2013 that it's good place for Valmet, and we still think that it's good place for a company to be. In strategy, we have modified the sentences a little bit. Valmet develops and supplies competitive and reliable process technology, services, and automation to the pulp, paper, and energy industries. There we work with the whole offering.
We are saying that our automation business covers a wide base of global process industry. Automation has a lot of wider customer base than the rest of Valmet. Important topic, we are committed to moving our customers' performance forward with our unique offering and way to serve. All the time we have to think that how we can improve the customer's performance. If we manage to do that, then of course we will be successful in the future as well. We have built up quite a solid way how to manage the strategy downwards in the organization. We are talking about continuous improvement and continuous renewal. We have selected topics like Customer Excellence, Leader and Technology, and Innovation, Excellence Process, and Winning Team.
With those topics, we have been now working several years. We have of course improved a lot, but we still need room for improvement. Those topics are such that they are actually never ready. You can never say that your technology is ready or that your processes are so excellent that you can't do anything anymore. We still see after nine years room for improvement in all these items, even if we have improved a lot. Our vision is to become global champion in serving our customers and moving the industry forward. There we want to place ourselves under the customers, because if you are successful, then there's a risk that you become arrogant. In vision statement, we clearly say that we are here to serve somebody, which means that we are under somebody.
That's to remind us that even if we are successful, we should not become arrogant, because if you become arrogant, doesn't take too many quarters, and then your results are not that good anymore. Today, my colleagues are giving good presentations, and here are some highlights, and there are a lot of more highlights as well, but some highlights what we are talking about. Of course, we are presenting the whole offering what we have. You will see examples what everything Valmet is doing and can do. Then in process technologies, we are telling how the market has been developing, why it has been growing, and why there is so much rebuilt market and replacement market as well.
That's, you know, the presentation is giving like Pekka said, by Sami and Jari. Aki is telling about the large and growing global installed base, which is then helping us to develop services further. In automation, Emilia and Simo are talking what are the growth aspects for the industry and how we can continue to grow and keep profitability. Some of the presentations will include also some things what new we have been launching to the markets. Of course, as a summary, we are saying that Valmet is working on markets which has positive mega trends, and we have good strategy to renew and continuous develop our operation, and that's why we see that the future for Valmet will be successful as well. Good.
That was my part, and then I have pleasure to announce Aki as the next speaker.
Good afternoon. Service segment orders received was EUR 1.756 billion, net sales was EUR 1.606 billion. EBITA was EUR 237 million and 14.8%. Services demand driven by large and growing global installed base. We are operating in a large and growing market, and we have proven track record on continuous market share growth. We have the widest offering in the market enabling good growth opportunities to grow market share with our customers. We are serving all key corporations in all main markets with our strong local teams. We have a solid track record for profitable growth during past 10 years, and we have grown over twice the market growth. First, some key information about the market development. We are operating in a very large pulp, board, and paper market.
Production is still growing, with the estimated pace of about 2%. Service market is also large, about EUR 8 billion. It has been growing 1%-2% on average and has had relatively stable development. Our market share has grown steadily, through organic growth and acquisitions to estimated 21%. Megatrends, E-commerce, urbanization, and replacing plastics are supporting further market development for pulp, paper, and board, and bioenergy. Service demand is growing due multiple reasons. Sustainability, digitalization, need for efficiency and safety drive demand for services. Customers focus on core business challenges with getting skilled workforce drive digitalization and expert services. Decline of graphical paper will continue in the future, but all in all, market is large, and it is growing. Next, I will share some key figures for services.
Stable growth in orders and net sales during past 10 years. CAGR has been 5%-6%. We have grown from EUR 1 billion to close to EUR 1.8 billion. Performance Parts is clearly the largest business unit. Other business units are quite equal in size, Fabrics being the smallest with 13%. EMEA and North America are the largest markets forming about 70% of our orders, and China, Asia Pacific, and South America are quite equal in orders around 10% each. Pulp and Board form over 70% of our market, Paper is 20%, and Tissue and Energy are around 5% each. Short introduction to our offering. We have five business units with a strong and markets' widest offering for our customers. Spare Part Business Unit is offering spare parts and process consumables.
Our competitive advantage is a large installed base, high quality, and process knowledge that supports process consumables business. Fabrics Business Unit is also offering process consumables, fabrics for pulp and paper industries, and filtration products to many industries, including pulp and paper, energy, and mining and chemicals. Paper machine clothing is used to transfer the moist and weak paper web through the machine. Fabrics are changed with the interval of some weeks to a year.
Our strength is application expertise, high quality, and high market share in new projects. Rolls and Workshop Services are offering workshop services for roll covering, roll maintenance, and fiber processing equipment. Paper and board machine has tens of rolls, rotating rolls inside the machine for paper web transfer with the help of fabrics. We have strong network of workshops in all key markets. We have leading technology and strong references.
Board, paper and tissue solutions, and Pulp and Energy solutions are offering field services, improvement projects, and expert services for our customers. Our strength is large installed base, technology leadership, and project excellence with strong references. I will share more details about our business units, areas and customer segments and their performance. First, I will start with the business units or product perspective. As you can see, all business units have been growing and we have been able to grow minimum twice the market growth in all businesses. In Performance Parts, we have doubled our business volume with organic growth and acquisitions. CAGR has been almost 9% in 10 years. We have grown with systematic sales, successful trial runs, investments and some acquisitions. Fabrics business unit is having CAGR of 4%.
Key actions for growth are increase in agreements, mining focus at filtration, and investment in capacity. Rolls and Workshop Services have grown 4.6% CAGR. We have grown with agreements, replacement equipment business, and focus on maintenance of pulping equipment. Board, paper, and tissue solutions have CAGR of 3.4%. Key actions for growth have been field service and local capability development and performance agreements. Development in pulp and energy solutions has been faster than the average, CAGR exceeding 8%. Key actions for growth have been also field service and local capability development and also process and reliability services. Next, some key data about global service market. Strong area organization is a competitive advantage for us. We have almost 100 service locations, eight performance centers and 6,300 service professionals. Largest market is EMEA.
Production is almost 200 million tons with strong installed base for pulp, board, and paper. We have about 3,600 employees in EMEA and 45 service locations. About half of the employees are for area operations and another half for global operations. China's development is quite well known. There has been significant increase in new capacity, partly also replacing old production lines, and the total capacity is very close to EMEA, with roughly 200 million tons. Board and paper are dominating grades. Large new installed base offers very good opportunities for future growth in China. We have about 630 employees and seven service locations at China. North America is the third-largest market area, with about 140 million tons. Installed base is large for pulp, paper, and board.
Market has also activated with the replacement capacity and growth in board. We have about 1,100 employees and 25 service locations at North America. Asia Pacific is an area with developed countries like Japan, South Korea, Australia, and developing countries like India, Indonesia, and many other smaller growth countries. Total production is also about 140 million tons, installed base is also strong for pulp, paper, and board. We have about 500 employees and 15 service locations at Asia Pacific. South America has been historically more pulp production market, we have seen in recent years also new installations for board and tissue. Total market production is approaching 60 million tons, we have about 380 employees and seven service locations at South America.
We have grown in all markets more than twice the market growth. North America is the second-largest market where we have grown organically and with acquisitions to a level of EUR 600 million. We have increased our market share with systematic sales, agreements growth, and developing local capability, especially at pulp side. EMEA is our largest market with the order intake of EUR 670 million. COVID and war in Ukraine with energy crisis and inflation has impacted most in Europe. Our CAGR has been close to 4%. We have grown with systematic sales, agreements, optimization services, and local capability development outside Nordics. Asia Pacific, China, and South America are currently quite equal in orders, but China and South America have been growing faster, close to 9% per annum.
In these three areas, we have had more new installations and services growth potential. We have grown with systematic sales and developing our local capability and capacity. In Asia Pacific, we have developed our presence in developing countries, and in China, we have been growing with agreements and developing pulp services. In South America, we have also grown lately with the board and paper services. Next, I will have some new information about our customer segments. We have been following these customer segments more in detail during past three years. As you can see, most of the segments have been growing. Board segment has grown almost 20% after pandemic, and it's about 30% of our total volume. Market is large, investment activity is high, and there is a need for services for optimized performance.
Paper segment orders have also grown after pandemic, and that shows that the focus on growing market share in all segments is important. Total paper production will continue to decline, but we target to increase our market share in that market anyway. There are market machine conversions to board and a need for optimization services. Tissue has been growing well, but it's only 5% of our total orders. There is a demand especially for energy optimization. Service spend overall is less in tissue as the total market production is smaller, the machines are smaller and the machines are more simple than in board or paper. Pulp has been growing 15% after pandemic, and pulp is the biggest segment for us with about 34% share.
Pulp segment is looking positive with large market and investments in new capacity and upgrades. Our energy segment order intake was growing last year, but it was still below 2020 order intake. Our main market is Europe and the demand is impacted by the legislation and also the cost of other energy sources. We expect the market to be more active going forward because of the energy crisis and also for the need to reduce CO2 emissions. Our unified way to serve aims at excellent customer experience. From customer point of view, we are having quite normal corporate account management for our key customers. In the mill level, we have appointed mill teams led by mill sales manager. Purpose of the operations to have easy one point of contact for the customer.
Our annual sales planning is with the mill team is based on customer-specific actions considering customer strategy and targets, and how we can help the customer to meet their targets. As a result, we have had around 10,000 actions annually. Our wide offering and services for different phases of production line enable us to work with the customer through the whole life cycle of the line. We aim to increase our market share with each customer through continuous collaboration with projects, agreements and products. We measure our success through business result, through market share, and through customer satisfaction with Net Promoter Score. Our target is high over 70% in all businesses. Our strategic focus areas and focus is profitable growth. We aim to capture higher market share from large installed base.
We have high market share in new projects. Business units have wide offering. They develop new products and services for cost competitiveness, digitalization and sustainability. Areas grow with customer closeness with mill teams, systematic sales, customer-specific solutions, agreements and unified way to serve. We are improving our profitability with sales management, pricing and optimizing our offering. We are continuously improving our supply base, optimizing our footprint and investing in productivity. We have strong continuous improvement culture for operative efficiency and product development on cost competitiveness. In summary, services. We are operating in a large and growing market. We have proven track record on market share growth. We have widest offering in the market enabling good growth opportunities with our customers. We are serving all key corporations in all main markets with strong teams.
We have a solid track record for profitable growth and during 10 past years, we have grown over twice the market growth, and we aim to continue that pace going forward. Thank you, ladies and gentlemen. Next we move to the Q&A.
All right. It's now time for the Q&A session for services. We will be taking first questions here from the floor. Please indicate if you have a question, and you will be handed a microphone. We will start from here. Antti, please.
It's Antti Kansanen from SEB. The first question would be on your strategy when your process technologies division is selling new equipment or new process island. How are you guys involved in these processes? What kind of a, let's say, capture rates of parts and consumables or field service agreements do you nowadays get?
Well, we have quite good cooperation nowadays, so we are basically from the early phase. We are thinking that how customer likely wants to By the project. We have to, of course, respect customers' wish, so if they want to focus on OpEx only or whether they want to discuss about services included. Of course, we try to be active promoting and offering our services with it. We have not disclosed any percentages, but of course, our aim is that we will grow with that arena too, and we max out our potential in that.
Is there any color on, let's say, differences between a paper machine, a board machine, a pulp project, energy boiler?
I think that we have opportunities to improve in all segments, and I would think that it's more dependent on also customers that how the customers want to behave. I think there is opportunities in all segments to improve.
Okay. The second question is, as you highlighted, I mean, China and APAC are, on production-wide, similar size of markets as Europe and North America. Let's look at five years forward. I mean, what are the differences in the market dynamics between kind of APAC market and the traditional ones. Obviously, the potential is big from production point of view, but what are the differences in the service market dynamics?
Well, I think that in Asia Pacific, it's a quite diverse market, like I said that there are developing countries and developed countries. I would say that developed countries are more like Japan, South Korea, Australia. The growing countries, they are then the different story and there we see different activity level, of course. That's the opportunity. I think that overall Asia Pacific is considered from population growth point of view also, quite attractive market going forward in the future.
I mean the kind of opportunity for you, for example, in China, it's a big market. Is there any structural reasons why it wouldn't at some year be as sizable as the traditional ones?
Yeah, of course, and we have been growing in China with quite nice pace and that is our target to continue that growth.
Okay. Thank you.
Hello. Annareetta Lumme-Timonen from Solidium. Thanks, Aki, for a most interesting presentation. My question actually goes to your aim to capture higher market share in your large global installed base. That's of course not a new target. It certainly always will be there. Can you please give some flavor on how, where, why, what are the main advantages? Why do you believe that you this time can capture even more into the larger installed base?
Well, that's a very good question. We have been, I think, working quite systematically on developing our market share, and I think that I showed that we have some track record on that. Of course, I think that we aim to continue that same work we have been doing. Continuous improvement in many arenas, working with the customers, working with our offering, working with our capability at the areas and of course, developing our supply base. I think that we need all of that to be able to be competitive. Of course, keeping customers happy at the end is the final factor. They continue working with us if we can keep them happy.
Is this mill sales team approach that you now described, is it something that's now recently developed or is that one key to what you just described?
No, I would say that we have had that concept, for many years, but of course it has been developing and evolving over the years, and of course we continue to do so. We try to develop our way of working, but like looking at the customer feedback and reaction.
Okay. Thank you.
Here at the front row.
Hello. Christian at Pareto Asset Management. The revenues or the order intake in North America seems to be quite close to Europe. I would suspect that you have a lower installed base over there. Does that mean that your sort of service penetration is deeper in North America, or how do you explain the ratio?
I think that we haven't disclosed or shared our market shares per area, so this is an average and of course, globally, it's a clear thing that market share varies based on the area, based on the technology, based on the segment, based on the customer and even based on the mill level. So this number is average and of course you can calculate based on the market sizes that where we are.
Secondly on Performance Parts, it seems like you had quite big jumps in order intake in 2019 and 2022. Is there any non-recurring items or particular issues that we should be aware of?
Well, we acquired this GL&V business and also the J&L business in 2019. That impacted. After that it has been organic development.
Yeah. 2022, is there any sort of recovery from COVID?
I would say that, it's very difficult to say how much there is a pent-up demand from COVID and how much it is. I would say that when you look at our customers, they have been having good business cycle and good business activity, and I think that our demand is very much linked with the customer operational rates. I think that is more the factor that-
Okay
that how the operation is going with our customers. Thank you.
All right. Thank you. Perhaps at this moment, some questions from the online audience, and then, I will now say that we will have a chance, and you will have a chance to ask more from Aki during the last Q&A session of the day. Aki, you've gone from a much lower market share in services globally to now around 20%, 21%. Do you have any near, mid, or long-term target for the, for the market share?
I think that it's quite simple to answer. Our target is to grow. That's the answer.
Another question here from online is that you've been gaining this market share. Who are the competitors that have been then kind of losing market share?
I think that we have not been calculating that. I don't have a direct answer. Maybe you can then compare to our competitors how they have been developing. I think that we are focusing on our own activities and developing that.
All right. Do we have some final question here from the, from the live audience? At least here was a hand raised, so let me bring microphone. Here.
Hi. Tomi Railo, DNB. Pricing is one of the key elements to drive your profitability up to the targeted levels. Any way you can comment on the pricing element in the historic development of services numbers and maybe also going forward, what do you see happening with the prices?
I think that Pasi and Katri has been saying also in our earlier calls that we have been working with the pricing and we continue to do so. Of course it's an element of margin improvement also, but it's not the only element. Of course we have to work in other arenas also, operative efficiency and supply chain. It is part of the so-called activities we are having.
All right. Thank you, Aki. Thank you for the questions. We will now move on to Flow Control. Simo, please.
Good afternoon. Before going into Flow Control, a few words about the Valmet Automation segment, which consists of the Flow Control business line as well as the Automation Systems business line. Together, we were about a bit over EUR 1 billion in 2022, and our profitability was 18.3% at the EBITDA margin level. Please note that these figures now stand for the Flow Control is only reported here for three quarters, i.e. the period we were part of Valmet, while in my presentation I will have full year 2022 numbers for Flow Control. All right. We move on and talk about the Flow Control. I will first say a few words about the large and growing Flow Control market. I will talk about our market position.
We are a leader in many segments. I will cover that. I will talk about our very resilient business model, where a lot of the business comes from aftermarket or services. I will cover also about the value proposition, why we are successful in the market. In the end, talk about our proven strategy, which we have been able to accelerate and focus even further now being part of Valmet. These are the assets that we enable us to reach our target to grow two times faster than the market. Flow Control is about $30 billion-$35 billion USD market, it's expected to be growing at a rate of 3% annually in the next few years. Flow Control is quite fragmented market.
There are hundreds of companies active in that market. When you look at the segment we are playing in, this is the mission-critical high-quality valves. There, the number of capable players is much less, but I would still say it's pretty fragmented. Valves are a relatively small part of a capital investment, but they can have a huge impact or a big impact on the profits or safety or efficiency of a process plant. That's why customers don't want to take risks with the critical valves. Credible players, leading players here need to go through a lot of approvals. You need to have a lot of track record and be qualified to be in the game. This is one part of the dynamic that makes this a pretty attractive industry for leading players.
You can have quite solid profitability as a leader in the mission-critical valves. Looking at our performance, our orders have grown over 7% and net sales over 5%, since 2016, so faster than the market. Our business consists of three business units. We have the MRO and services, which is about 2/3 of our business. This is mainly driven by customer OpEx spending, customer production volumes. Projects, about 15% of the business is then more linked to customers' capital spending, bigger capital or bigger projects. Then we have about 19% of the business is so-called valve controls and actuators, and I will explain that business in a while. We are well-positioned in all the main geographical markets.
North America and MEA are the biggest, we also have a very good position in Asia-Pacific, China, and South America. We have chosen four key industries, core industries, where we focus for growth. Pulp and Paper is a traditional area of strength. We are the market leader there, and it's about a bit less than 30% of our business. Refining and Chemicals, another traditional area of strength for us, is a bit over 45% of our business. Here, our position is that we are among the global leaders, perhaps between number five to 10. We have a segment we call Renewable Energy and Gases. Mainly, the biggest business there is this industrial gases: oxygen, hydrogen, et cetera. I will come back to this later. In this sector, we are number one or number two.
The fourth core industry we is Metals and Mining. Now with the acquisition of Flowrox, we have actually a pretty solid position there as one of the leading players, and it stands for about a bit less than 10% of the business at the moment. A word about our products. Here you can see a valve package. The bottom part is called valve. This is the thing in the pipeline that opens and closes or regulates the flow. Actuator is the muscle that making the valve open and close. We have valve controllers, which are the brains of the valve package. This is the digital element. This is the link to the, for example, Valmet DNA control systems.
When I talk about our MRO and Services and Project business, they sell these entire packages more than the valves. Our position globally is about number 10 in that business. Our VC&A business sells actuators and valve controllers as standalone products. The reach to different customer segments for this business is broader, and our market position is also stronger. In actuators, we estimate to be number five to number seven, and in the valve controllers, the digital part, number two or number three. We have very strong brands. Neles, Jamesbury are our traditional brands, product brands, that we continue to go to market with. Flowrox is the newest addition, and in particular, a well-known brand for mining.
All of these have a very clear kind of role in our portfolio, and a role in terms of the technologies. We are known for high quality, and we are also known for our over-the-lifecycle approach for services. We want to, and we work with our customers from planning the projects and after the project, providing spare parts, field services, upgrades, replacements. Also, very importantly, we have strong capabilities, leveraging our the data we have about the installed base and our experience to provide services, value-add services for customers, how they can optimize their maintenance strategies, how they can plan better shutdowns. This is an important part for us, a differentiator. Looking at the business units. MRO and Services, really driven by customers, operation volumes, operational spending. Normally quite steadily growing business, very resilient business.
You see here a drop in 2020. That's of course because of COVID, but since then we have recovered quite well. Digitalization is a trend here that we see accelerating the growth here in this segment. Projects, normally a bit more volatile business or kind of, yeah, volatile. This is linked basically to customers' larger investment, customer CapEx. Still, from 2016 onwards, over 7% growth on average. Valve Controls and Actuators, it has been a very fast-growing business, close to 15% CAGR in this period. One element here is that the level of automation and digitalization, as this is growing, it's one driver that makes gives us more growth opportunities in this area.
We have a global footprint in terms of operations or manufacturing. Our biggest manufacturing locations: Finland, the USA, China, India. I would say more important in this picture is to look at the number of service centers, the number of countries we cover, either directly or with our partners. This is another pretty important competitive asset for us. We are close to the customers and we are able to work with them over the lifecycle, and I think this sets us apart from many competitors. Looking at the main industries, pulp and paper, close to 10% growth. My colleagues will give much more flavor about the growth trends in this, so I will not say more about that. Refining and chemicals also, you can see a good bounce from the 2020 levels.
Quite interestingly, we see that there's a lot of opportunities making or around the sustainability theme here, making the operations more sustainable, reducing emissions and ensuring the kind of the safety. These are very good trends for a player like us with high quality products and services. Renewable energy and gases here is mainly industrial gases for us, but we are seeing quite a lot of activity around this renewable energy. I talk about green or various colors of hydrogen, bioenergy, et cetera. Relatively small still in the numbers, but clearly things happening in the market. Metals and mining, you can see a big jump. This is the acquisition of Flowrox, which we used to have already offering there for there, but now our offering is much more complete.
We have a stronger channel and brand to continue to grow in that market, which is quite exciting to be. It gives us new growth drivers for the megatrends like electrification and infrastructure build. A few words about then this, the energy transition. This is an opportunity for us. We have As I mentioned, we are a leader in industrial gases, so we have been there for long time. We know hydrogen, oxygen and other gases, how to create solutions for them. Now, we have been working with our existing partners or traditional partners, but also actively finding new partners to work in the very wide area of renewable energy and carbon capture, methane capture, et cetera. We are getting opportunities, we are getting wins there.
Now being part of Valmet is actually quite exciting that we are enhancing this approach, working with Automation Systems to create bigger packages addressing this industry and also getting, for example, for us, access to the bioenergy side is something that where we are much stronger now. Integration with Valmet or the Neles Valmet integration is proceeding well. I think we can say that the first year we have proven that the industrial logic is solid. We have already won growth, or we have achieved growth synergies, in particular in paper, tissue and board side. We are working on creating Valmet level packages with valves included and also with automation. We are working, as I mentioned, even on a broader set of customer industries, helping each other grow in them.
Also mining is another area where we are working together in cases to create broader offering or to grow together. Cost synergy capture and the kind of the admin integration has been very efficient. Pasi has been reporting that how we have already done a lot of the actions, in particular in the kind of the group side, to capture a lot of synergies, some of which were already visible in our numbers last year. I would say we are well on track to meet the EUR 25 million synergy target. Our growth strategy has many elements that we had before and have proven to be successful, but now we have been able to focus it a bit.
We now talk very clearly about the four core industries, which have a little bit different megatrends driving each other. I'm quite happy with this kind of growth portfolio for us. Valve Controls and Actuators as a standalone business, you saw that we've already made good progress there. We continue to grow that and invest in that business. Overall services and MRO, being close to customers, offering them value is important. We continue to develop our channels for that. Now digitalization is a very important angle that can give us further growth, and we've seen a big kind of acceleration of that development now being part of Valmet. Our business models inherently has a high operating leverage, so growth typically gives profit yields profitability.
Other activities we do on the profit side is we work on the global supply chains, further balancing them, finding opportunities for increased competitiveness. A very important topic for us is to really improve the way our responsiveness for customers. How can we be more responsive, faster in response? How can we cut lead times? This is an area which I believe can, when we work on that, improve, of course, the long-term growth and unlock further opportunities. Good. That was a pretty fast one, but I hope I have been able to cover now the main points. Flow Control is a large and growing market where leading players having the right assets can have very solid profitability. We are a leading player. We are a leading player in number of interesting growing segments that will give us growth.
We have a strong value proposition, we have strong assets to grow, and in particular develop, the recurring business in MRO and services, which gives resilience to our business model. We have, I would say, pretty good track record driving the strategy, and now we, being part of Valmet, we can accelerate that further, and our target is to grow two times faster than the market. Thank you. Now before we go into Q&A, I'm asking my colleague Emilia to join and, or, come and talk about Automation Systems. Thank you.
Good afternoon, ladies and gentlemen. I'm the new face in this scene, so very short introduction of myself. I have been starting with the heading Automation Systems business lines in basically November last year, and I have been within the company for 20 years and, well, before starting as a business line head, I was heading our automation systems operations. Without further ado, let's go to the actual agenda and to automation growing profitably in attractive market. Our growth is driven by global mega trends of automation and digitalization. We are in number one to number three in pulp and paper automation globally, and we have solid growth position in energy and process automation. We have widest offering in pulp and paper, and leading renewing DCS technology with application portfolio in energy and process.
We have actually over 5,000 individual customers globally with whom we have long-term relationship. We have been growing over 7% CAGR since 2015 with improving profitability. Our financial target is to grow in net sales two times the market growth. If we take a look at the target market, it has been growing with 3% since 2015 to 2022, and we consider it to grow similar pace for the next three years. Our market is driven by automation investment and services because of sustainability, digitalization, and operational efficiency. Our market is characterized by process-critical systems requiring deep domain expertise. We have high share of recurring service business on installed base with cross-selling opportunities. Automation Systems market share increase in pulp and paper is driven by value-adding solutions and high technology and cost-competitive solutions in energy and process.
We see further market share expansion opportunities via wider offering continuous technology development and replacing aging competitor installed base. We have been growing over 7% in orders and hitting EUR 505 million orders last year. If we take a look at the more detailed about the split by product, we are dominantly of course 50% is coming from the distributed control system, DCS, and industrial applications, and a little bit over 20% both from quality management systems and analyzers and measurements. 2/3 of the orders are coming from pulp and paper industry, and 1/3 is coming from energy and process. In area-wise, we are EMEA and North America dominant with 2/3 coming from those areas, but very solid footprint in South America, China, and Asia Pacific.
Our market share in pulp and paper is about 26%, and in energy and process 14%. Our market position there is between two and four. We go more detailed into our products and high technology and competitive offering, what we actually do is distributed control system, DCS, is highly integrated, renewing Valmet DNA automation system for process control, monitoring, and applications for different industries. It is integrated industrial-ready automation platform with wide applications offering for different industries. We have been developing especially our user experience of the user interface, which is now totally web-based, which enables our customers to use it anywhere, anytime, at any time. Of course, high focus on cybersecurity. We are also concentrating on developing DCS with the future-proof technology lifetime compatibility in our mind, which enables us to do modular upgrades of the systems.
If we go to another product area, it's quality management system, Valmet IQ control system for pulp and paper. It is basically quality management applications, measurements, camera systems to optimize and resource usage and quality of the paper machine. We have the world's widest offering in quality management for board and paper. It is integrated into the DCS, and we have possibility optimize the quality from fibers to final product. If we take a look at the analyzers and measurements, for those we are basically measuring and optimizing different variables in the process from the liquids, for example. We have the world's widest and Excuse me. World's widest and trusted offering for pulp and paper with the measurements to adjacent like wastewaters as well. We have unique combination of advanced process controls and optimization packages around these measurements.
If we take a look at how we have been doing with all of these product categories, all of these have increased in orders quite nicely. We have strong order intake in DCS over 7% where we are of course growing due to the market growth, and also with the life cycle replacements of our own systems. We are also changing and replacing over 650 competitor systems since 2015. In quality management systems, we have been growing even faster with 7.6%, and there we have been able to replace over 700 competitor systems. Of course, we are doing also our own life cycle replacements. In analyzers and measurements, we are having also growth via life cycle replacements. Excuse me. Thanks.
We continuously develop our technology to expand the offering and target market in all of these categories. If we take a look at the segments, how we have been doing in pulp and paper, we have been able to grow over twice the market growth in 7.8% CAGR coming from customers investing in improving their operations. We have unparalleled offering and capability combining automation with process technology, services, and valves, which of course, contributes to this growth. We have been doing these life cycle upgrades to our customers and adding also value-adding services, since our installed base has been growing throughout the years. We are also targeting on aging competitor installed base and have been able to do changes in that as well.
When our customers then are investing into improving their operations, this next slide is to illustrate how we are involved in that business. In the heart of everything is the DCS, which is actually controlling and showing everything around the process. Here we are providing the DCS system, Valmet DNA, reliable process controls basically. Then, in it is controlling our intelligent process equipment and gathering information from those. We are also having the analyzers and measurements and valves around the process, which is connected to the DCS, which is controlling and gathering more data out of those. Then, on the paper side and board mill side, we have quality management system on top of DCS, optimizing our product quality and resource usage like water, energy, and raw materials.
On top of all of this, we can have optimization applications, which is used on this data, which is gathered in DCS system, and we can enable our customers to optimize the whole mill, plant, or fleet. It is supported by our local service specialists nearby customers or then our Valmet Performance Centers, which are supporting our customers through the lifetime with remote support. The similar things we do also in other industries, but of course the product portfolio is not that wide. However, also in energy and process, we have been able to grow profitably 6.2%. Sustainable investments in energy and fuels are driving these investments further and our market there. Further digitalization of process industry is also driving this part and expanding target market with technology development.
Growth in life cycle services and value-adding services is also enabling this growth as growing installed base results also in growing services. We are doing, of course, a lot of automation systems offering to different industries. In our recent track record, we have been able to grow into leading DCS supplier position in European waste to energy industry and multi-fuel boilers. As and number two in DCS supplier in demanding cruise vessels, we are serving multiple customers globally. We have breakthrough orders in new growth segments like bioethanol, biochemicals, renewable products, and hydropower. For example, Neste Rotterdam's new plant is operated with our DCS.
Expanding addressable market and offering, we have targeted DCS growth in selected new segments like chemical, pharma, food and beverage, and alternative energies. There we are, of course, working very closely, as Simo was saying, with the Flow Control, which is having a little bit more footprint on this area already. We also do continuous DCS technology renewal combined with the digitalization, which is improving our competitiveness on this field. We have also announced this year, beginning of this year, a NovaTech acquisition, where we have acquired a batch automation system which is enabling us to provide technology which is needed especially on those mentioned new segments. If we go to our strategic focus areas, our actions to grow is to support the customers in their digitalization journey further.
Strengthen the leading position to grow further as Automation provider in pulp and paper industry, expand further to new markets in energy and process industries, continue to win market share via competitor replacements, continuously develop our products and services further and see that we are providing what our customers are needing. Key actions to improve profitability is, of course, we are working in high operating leverage business model. We have R&D for market-leading cost-competitive technology, and we have focused on having winning team close to our customers. In Automation Systems, we are in good attractive market doing profitable growth, which is driven by mega trends of automation and digitalization. We have strong footprint in and strong position in pulp and paper globally. We have solid growth position in energy and process automation.
We have competitive offering for pulp and paper and even leading renewing DCS technology with application portfolio for energy and process. Over 5,000 customers globally, with whom we have long-term relationship, we have been growing solidly for 7% CAGR since 2015. Our target is to grow still two times the market growth in net sales. I think that that's it from my part. Thank you. Glad to be here because that's, of course, a new thing for us, we are having questions and answers with Simo next, I think.
All right. Now we go to the Q&A session. I saw at least hand raised there on the back row.
Yes, hello. This is Tom Skogman from Carnegie. If I start with Automation Systems, how large share of sales comes from customer expansion projects, and how much is kind of from replacements and upgrades?
In general, we are saying that, about 50% of our orders intake was coming from services, but it's split, of course, this value-adding services and then this lifetime, lifecycle replacement. Some of that service is part.
The remaining part is then to customer projects basically, to growth projects.
Yes, and also very large-
Yeah
replacements.
Is there any meaningful profitability difference if it's kind of a small service or upgrade or, you know, tied to a, let's say, a new board project?
When we are doing, of course, modularly things, we have a little bit different situation when comparing to total mill automation systems replacement. It is a very big item to be replaced as it is controlling all the important parts of the basically process.
Okay. To Simo about Flow Control, can you elaborate a bit about your strategy in hydrogen? I mean, it's been a hot topic for several years, and you are one of the biggest gas valves providers in Europe at least. Will you focus on the electrolyzers or the logistics, and does it need to be a really large electrolyzer for you to be interested, et cetera?
Well, I mean, the thing is that, our plan, our strategy, the key thing is that you need to be in the game and learn all the time. You may start to look at. We looked a lot about the electrolyzers, but then we've seen that there's actually a lot of other opportunities also in the carbon capture side now. We also talk about the kind of the bioenergy, et cetera. It's not just about, you know, one niche, but I would say that it's the whole, the whole concept of looking at the energy transition gives us opportunities and we want to have partners, we want to be in many of these games. I'm not just talking about hydrogen, but also broadly, I mentioned methane capture, carbon capture, et cetera. These are all businesses for us.
My final question is Valmet has a very strong balance sheet again. Where would it be easier to find good targets on your side or on your side?
I don't know which one is to answer, but.
Of course, we are hoping to find joint good possibilities as well.
Yeah. We have a growth strategy and acquisitions is a tool to accelerate many of these things. As you said, as I showed, Flow Control is there are a lot of companies around.
Okay. Thank you. All right. Are there more questions here in the audience? All right.
I need to say, though, that, Valmet is very disciplined in the M&A approach, though.
Yeah. Hi, it's Antti from SEB. Just a question on something, Simo, that you mentioned, selling larger packages together with the automation system. Question from the systems point of view, like I understand your background and technical capabilities on the pulp and paper side, but if you kind of sell DCSs to other process industries, perhaps valves can open the doors, but is it about technical capabilities? Is it about reference cases? How do you kind of unlock the doors on the process energy, process and energy side?
Of course, as said, we have a quite large customer base. We are operating in several industries as such already, but of course, globally, to have, for example, relationships which is and knowledge and this kind of thing, globally about our automation systems is important. There, of course, cooperation with Flow Control can help to bring that kind of visibility to our systems as well.
From customer point of view, what's the kind of added value of the valves and the automation systems coming from one place? Does it really matter from their point of view?
Well, I think the key here is to look at over the life cycle how we can serve our customers there, and there the value comes that there's one partner-
Mm
that can look pretty holistically on your automation needs and develop, because these processes are changing all the time. You need to be doing changes there. Having a partner that has broader capabilities, we believe clearly adds value.
We are, for example, offering control performance services where of course it is supportive if we have the valves as part of our technology portfolio to-
And then-
enable-
Yeah
our customers better product.
Examples like developing Industrial Internet capabilities for valves has been greatly boosted by solutions or platforms that Valmet has been working on. That again kind of combines the offering and where it comes together in the area of digitalization.
All right. Thank you.
All right. Maybe here from the front row we can continue.
Is it on? Yeah, Annareetta here. Can you please, and I think this goes in particular to Emilia, so can you elaborate a bit on the industrial internet solutions? It was kind of a big thing couple of years back.
Mm.
What is the status now? What kind of a value creation role it has? What kind of opportunities are the customers more ready to share their data? Will it be a kind of a small add-on or maybe something bigger in the future for you? Thank you.
Of course, it has a big part in this digitalization role, what we are providing and as explained, it can of course even play as a big role as full autonomous mill operating almost as itself or then it can be an advisory, especially when our customers are also seeing, for example, retirements of their personnel and lack of, or losing knowledge, for example. These things can support them with all of the advisory and control possibilities, and it is highly, of course, integrated into many of the things we are doing currently. I think that's, that is there in all the aspects when what we are doing this Industrial Internet as well.
All right. Thanks. Let's take now question from online. This goes to Simo. How much of your offering relates to fossil energy, and how much of that can be in the future replaced by some kind of future renewable fuels or chemicals? In more general terms, is the energy transition a threat or an accelerated growth opportunity for Flow Control?
If the question was how much of our business is related to fossil power generation, that is a very small piece. We see the energy transition clearly as an opportunity coming from the backgrounds I explained about our capabilities working now with automation, and we see a lot of activity there. We see that as a opportunity definitely.
Good. There's an online question to Emilia as well here. Your market share was indicated in the presentation, but it seems that some revenues come also from competitor replacements. Do you have some kind of estimate on what's your market share on the existing installed base? Probably referring to the especially to the pulp and paper side.
Okay. There we are, as said, in a little bit depending on the process area and a little bit about the product mix as well. What we are saying is we are market leaders in top one to three positions there. So.
All right. Good. Then more questions here on the, on the floor, perhaps. Please indicate if you wanna ask something. There is a question here.
Thank you. It's Panu Laitinmäki from Danske Bank. Actually, I had two related to Flow Control. Firstly, it's been almost a year since the acquisition closing. Just wondering how successful have you been in cross-selling the Flow Control products to Valmet customer base and vice versa? Can you give any examples of did you win any deals because of the wider offering or how much additional revenue came from that?
Yes, we have won, cases which are clearly synergistic. There are cases we would not have been otherwise, let's say, aware of that in, kind of, early enough. We've been able to bid there and win there. We've been able to work with our colleagues and, you know, talk about the full value proposition of Valmet. I think it's been a good year, and we have met the targets for the first year in that respect.
All right. Thanks. Secondly, on the profitability potential of Flow Control as part of Valmet, how do you see that? Is it, should we kind of take the latest standalone figures and then add the cost synergies on top? Or how much more potential do you see for improvement, as part of Valmet?
We will continuously drive the profitability growth also. We have a target to grow faster than the market. It's very clear that we aim to all the time improve our profitability.
It's mainly like operating leverage on top of the synergies.
We also are working on I mentioned, actually, on quite a number of things. I didn't talk about that we have. Of course, we are continuously renewing our offering for better performance, better competitiveness. We work on our supply chains and global footprint, and very importantly, this customer responsiveness. It's not just operating leverage.
All right. Thanks.
Okay. Here we have a question.
Tomi Railo, DNB. A follow-up on that, maybe to both of you. What would you consider to be a good benchmark or target level? What sort of levels do you think is possible in terms of profitability? What your, let's say, dream peer would be making?
We try to improve our profitability, so the answer is more.
Yes. We aim to improve with all of these actions mentioned.
Very clear.
I mean, I showed the last year figure 18.3 for the segment, and I think the, what we're saying is that we continuously on both sides try to improve that.
Very clear. Thank you.
Sorry. Yes, here.
Yeah, a follow-up on flow control and the M&A strategy. Is kind of the Flowrox a good benchmark that you are kind of looking at similar type of businesses of scale and kind of adding a new end market, or is there something else that could you could kind of complement your existing portfolio? Is the kind of the flow businesses are pretty good, so the sellers have usually got them pretty good valuation. Have you seen any kind of a movement on that lately? Is the market getting easier or tougher?
Well, I think starting with the, with the Flowrox, I think it's a good example of a value creation logic that we have. It had a very, a quite narrow portfolio, but it was still a very well-known high company in that industry that we wanted to kind of grow. Being part of Flow Control, we've been able to accelerate its global growth. We're able to take it into bigger situations. We have complementary offering. You know, overall, our infrastructure, I mentioned about our service network, something that a small company like Flowrox used to be cannot afford. There are a lot of these kind of synergies that are applicable and I think that this can be repeated also.
We have the four core industries we want to grow and expand our offering as an example. We have also, we're talking about the VC&A, we talk about the services. All these growth actions, we have organic plans, but M&A can accelerate them. Then about the market, hard for me to comment really on that.
Okay. Thank you for the, for the good questions and answers, Simo and Emilia. We'll now move on to a break. There's a chance to take a look at the Valmet 3D Fiber products, and Sampo Immonen, the director of that field, will be presenting them. There are some clothes made from Spinnova fibers, and Sami Riekkola will be presenting them. We will continue in 25 minutes.
Back to the second session of today's Capital Market Days. It's really great to be here again with you. I start my presentation with the short introduction to Process Technologies. Last year, the orders intake in Process Technologies was almost EUR 2.4 billion. 55% of that came from the Paper business line, and 45% came from the Pulp and Energy business line. Our net sales was a bit over EUR 2.4 billion, and comparable EBIT, EBITDA was EUR 145 million, and margin 6%. We employed 5,650 people around last year. Now I'm focusing on the Paper business line and how our business is supported by global megatrends.
In my presentation, I go through how we are in the growing market, how we are, how we have a good, excellent market position, how we have a competitive offering, actually the only supplier with full offering, how is our business model, and then that what we are really proud of is that we have had a improved performance year-over-year already nine years in a row. Our target is to grow faster than market is growing. Let's start with the, with the market demand, which has been 0.5% during the last 10 years. Of course, there is significant dip in the graphic paper, but all the other paper grades have grown, and we are also expecting the whole market to grow 1.2% in coming years.
The board demand is growing around 3%, it is based on the fiber-based packaging, which are supported by e-commerce, retail practices, and plastic replacement. Tissue growth is even a bit higher, 3.6% what is expected, this is driven by increased hygiene awareness and standard of living, especially on those developing economies. Our customers are not only building the new capacity, they are also rebuilding their existing assets, repurposing them, and relocating them. One thing what I would like to highlight what is important to understand also is that all the production built is not to add the new capacity. During the last 10 years, one-third of the capacity built was to replace closed or obsolete assets.
Taking a look on our performance and our key figures, we see that our order intake has grown quite nicely during the years, and 2021 was really excellent year by almost EUR 1.7 billion order intake. Also the last year was a good one with EUR 1.3 billion order intake. Thanks to this good order intake, we have been able to increase our net sales continuously. Last year we reached almost EUR 1.4 billion net sales, which actually is 2.6 times higher than what we had in 2014. Looking at the net sales by different views, so first of all, we can see based on the paper grade that the board is a dominating business for us with 68% of the order intake.
Oh, sorry, net sales coming from the paper, board, followed by paper and tissue. What we can be happy about is the area distribution. It's quite good. We have a good market position in every single area we are working with. The biggest one still is China, but all the other areas have been active, and we have been successful on those. By scope, we can see that the new installation is really the backbone of our business. 79% of the net sales came from the new installations. With all these figures, what I'm presenting here, we are, at the moment, we are number one in the business today.
As I told in the beginning that we are full-scope supplier and only supplier who has all the full offering to offer our customers. When we are selling new installations and new machines, we are not only delivering paper board or tissue machine, we are also delivering stock preparation and recycled fiber lines. We discussed earlier with the automation, we quite seldom, if ever, we sell a machine line without our own automation. We include pretty much the whole product portfolio Emilia presented in our deliveries. From the beginning of last year, we started to include also valves to our deliveries. As Simo said, it has been pretty good and successful start up with that.
We have already years and years, we have included different service packages and service agreements to our deliveries. We include those also to rebuilds, but of course it depends on the rebuild type, how big share can be built on those other areas. Taking a look on the net sales by paper grade, we see that board is the dominating, it has been the growing business in each of the market. It includes also the paper machine conversions to board. As a surprise, maybe it was already presented by Aki, the paper machinery business has grown as well. Not a lot, steady growth there. We are selling every year, we are selling paper machines as well, the main market is in China and in Southeast Asia.
Tissue is a growth market. It is out of these three paper grades maybe the most cyclical one. That's why we see some differentiation and differences between the different years. Looking at the geographical areas, we see that North America has grown and that is actually the market area. We have the old installed base and because of the packaging growth, there has been a lot of activity in North America and we expect that to continue. The South America has been known as a pulp production area, but our customers are integrating to paper board and tissue production as well, and that has now been an active market, and we have been successful to gain the market share in South America as well.
As you can see from these pictures, EMEA and China are the big markets for us. They are quite stable market, if we may say so, and we expect that to continue as well. The Asia-Pacific's a bit similar to South America from that point of view that economic growth drives all the segments and we have been able to grow there, and we also expect that market area to be active in the future. Behind of our success, I would say is the winning business model. We have been able to reduce our capacity cost by 25% points since 2014. It is partly because of the increased net sales, but we have invested to productivity and delivery capacity.
Today, we have a strong home base in Nordic countries, in Finland and Sweden, but we also have competitive operations in our cost-competitive countries like Poland, India and China. One thing in our business is that we get advance payment and cash generation is positive and we have, in a way, self-financing projects what we are making. We also have few competitive advantage compared to our competitors. First of all, this is reference business, and we have excellent references, and we also have a good customer relationship and good customer satisfaction. We also have a quite efficient procurement and supplier network, which is creating savings for us.
One what was also mentioned by Pasi is that we have a really state-of-the-art pilot facilities, the best one in this industry, where we can also develop our products, and our R&D work today is aligned with sustainability megatrends. We have developed and done a lot of R&D work in order to develop products which improve the resource-efficient board production and tissue production and paper production. There's plenty of different development and innovations done in this area. If I want to highlight some of the achievements we have, is that during the last year we have been able to reduce the energy consumption by 18% in that average typical recycled container board line.
We have developed technology towards the lightweight production, meaning that we are getting the same strength properties with the lower grammage what we used to have earlier. That is giving us an average 10% fiber savings. We are, thanks to these performance centers and VII development, also able to optimize the performance of the machine, including all the saving targets, what we have for that. We have done similar work on the tissue side as well. We have had maybe a bit bigger, a longer development work going on there. We can see that during the last 30 years we have been able to reduce the energy usage by 47% and water usage by 80% per produced ton. If we compare the last 10 years, what was the pre-previous slide?
We are talking about 20% and 50% savings. Quite significant savings we have been able to reach. Most likely you studied those 3D molded fiber products, what are available there, but this is one of the development work we are doing together with Metsä. Why we are there is that we feel that it is the good business and good technology for us to be because we have a wide knowledge of fiber technology, and also we can utilize our paper machine technology in those production lines. I would like to let my colleagues to explain this a bit more in detail, I have a short video here, I would like to run that through now.
Plastic packaging is not the entire problem, but it's not the solution either. A renewable raw material, wood fibers, together with a resource-efficient production line make three-dimensional fiber products a perfect sustainable alternative to plastics.
The production method is unique, enabling layered structure, which gives new possibilities to optimize the end product quality. The capacity of the production line will be clearly the highest in the market, and the degree of automation will be exceptional. The novel 3D Fiber technology is a great innovation based on our joint development between Metsä Spring and Valmet and our top-class network of professionals.
We want to strengthen the already strong fiber ecosystem even further. Join our journey towards greener tomorrow. Together, we will reform the world of packaging.
Good example of this type of business expansion project we are participating today, and we see in the future what type of the results we will get. Shortly going through our strategic focus area. The key actions to grow is to keep our high hit ratio we have today in this business by improving our competitiveness. To increase the capacity through supplier network as needed, and continue investing in R&D to support our customers' targets in growth and in sustainability.
Also to keep investing on this new business expansion project like this 3D fiber, as well as for the textile, which my colleague will explain more in his presentation, but this is the business we are participating as well. Key actions to improve the profitability are the product cost competitiveness, continuous attention on productivity, and more efficient supplier network, especially in the cost-competitive countries. This was what I had to tell you. I think that I showed you that we are in the attractive market. Board and tissue is growing. We are number one in the market. We are technology leader with the full offering to offer our customers. We have business model which is flexible, and we have a solid track record to improve our performance from year-over-year.
We have said our financial target is to increase our net sales and exceed with market growth. Thank you very much. Now I would like to invite my colleague, Sami, to come here and tell a bit more about the Pulp and Energy.
Hello, good afternoon. From my behalf also, I'm a known face but in the new position, I'm gonna be this time talking not about automation, but Pulp and Energy business line. Pulp and Energy, we are to strengthen our position in the growing markets of biomass conversion, and we'll be addressing the market we are in. We are in an attractive market.
We have the mega trends on our side. We also have a strong market position thanks to our leading technology in multiple fronts on the required technical assets related to the biomass conversion. We'll be also addressing and talking about our business model and then the focus areas to the future, intending then, as already mentioned previously, to grow faster than the market. Pulp market is an attractive market, it is a growing, stably growing market as well.
It has been driven by the new greenfield installation or production capacity, which is being continuously erected by about 1-2 million tons a year in an annual basis. Significant investments are also continuously made to refurbish the existing installed base, and those installations then and refurbishments are then particularly sold and won on performance. I'm gonna be talking about our answer to that. Of course, the legislation and company's own targets are driving the continuous improvement as well and particularly the environmental performance. Energy markets. Now I'm taking our own view on the energy market, stating that we had a record year, 2022, in the energy and in the boilers market.
Our order intake was close to EUR 600 million. Market, which is active, it is presently being driven by the mega trends of decarbonization of the industries but then also the energy generation. There naturally biomass and the local residual fuels, fuel sources are playing a key role when energy producers and the industrial customers are assessing how the energy mix is gonna be looking in the future. Also tightening air emission controls or norms are boosting further and nurturing the demand. Pulp and energy key figures. Our order intake 2022 were EUR 1.071 billion. As you can see, the energy was the very active one. The activity on the pulp side was more to the single island deliveries and projects.
Net sales was 1.08 billion EUR. Pretty much in the, in the same ballpark as the, as the net sales. The net sales focused to the pulp last year, and then also to the energy, sorry, the European, Middle Eastern, and African market area. We can say Europe. By scope, which is interesting, and where we also have been rather successful in selling and delivering single island pulp deliveries, which I, as mentioned, have been normally won. Those projects have been won through performance and through the competitiveness of the technology. That was really active in terms of the deliveries and the net sales last year. Sorry, how do I go back in the presentation?
The red.
Red one, of course. Yeah. Thank you. In the pulp, we have room to grow. We are number two in the market, with a market share of 30%-35% in a total market, which is fluctuating according to the investment cycles between EUR 2 billion-EUR 3 billion annually. There, of course, is our position where we intend to grow and strengthen our position through a market share growth. In energy, we are depending a little bit on the segments, from one to three. We are strong in biomass, power generation and power plants, in the total market of EUR 1.5 billion-EUR 2 billion market shares within 15%-25% range.
Growth potential, and how do we see that across the segments of pulp and energy and the geographic areas. North America traditionally is of rather aged installed base when it comes to pulp. That also means that there is a lot of needs to refurbish and improve the efficiency of the existing installed base. The demand over in North America is presently being driven by the rebuilds and refurbishments. Also, there is some visibility of activity rising up in the new capacity as well. South America traditionally has been new mega mills, that of course remains to be the trend also in the future including the extensions of the existing large assets over there. Europe, we are seeing pulp mill expansions, extensions as well.
Of course, China and Asia Pacific, some investments will be going ahead as well in pulp side as well. When it comes to energy, we are of course pretty much Europe-focused presently, where the fossil phase out is driving the new capacity build-up. Of course, the supply security resulting from the Ukraine war is emerging as the next market driver in Europe. In China and in Asia Pacific, we do see opportunities in the waste to energy market and also in the biomass-based waste. The biomass-based energy production. The offering. Sorry for the busy slide, but we have a lot to offer and a lot of competitive technologies to offer for the pulp and energy customers.
We are offering full mill capabilities with unmatched technical scope, including flow controls, including the automation, and then pulp mill-wide project delivery and project management and execution, including then fully optimized production of the entire plant assets throughout the life cycle. So it is rather a strong offering we are having for the pulp. And then when it comes to the single islands, they're really the core of the technical capabilities and competitiveness lies. We have really strong cooking technology. We have good washing and bleaching technology. And when it comes to, for example, CTMP that Jari needs in his delivered folding box board machines, we are market leaders in the chemically treated mechanical wood pulp.
When it comes to energy, also full offering for the biomass-based energy generation, including then also the emission controls. For the different islands, when it comes then to novel technologies like gasifiers, pyrolyzers, and so on, I will be mentioning in a short while. We have large installed base, large reference base, which is then giving a good platform for the continuous development, positive development of the business. Coming to the business model, We want to be, and we are efficient and flexible in our operating model. We are focusing on manufacturing of the core equipment on our own hands. We are at the same time also developing the footprint of the both own, but then also subcontracted manufacturing and engineering, and focusing on flexibility and cost competitiveness.
We are working heavily on the risk management and project management, starting from the scope of supplies and managing the scope-related risk throughout the project, but then of course, taking good care of the project both from the risk, but then also the performance point of view. R&D, as already Jari as well mentioned, is an important part of our operating model.
We have our own product, production scale R&D facilities in which we can then pilot and in which we are presently also developing also those novel technologies I'm about to mention in a while. When it comes to these new and novel technologies coming and resulting from our production scale facility, for example, the different derivatives out of the biomass and conversion end results like bio chemicals, biofuels, and different materials, whether they are pellets or whether if it's bio oil or different chemicals driven out of the, for example, pyrolysis process. Those are based on our own piloting and own development work in our own facilities.
As couple of examples, the pre-hydrolysis of the biomass to produce, for example, second generation bioethanol is one of those examples, and then naturally, very importantly nowadays, the lignin extraction through our LignoBoost provides then customers the ability to, for example, utilize lignin as the replacement of the fossil-based carbon in, for example, battery materials. Own R&D facilities, own laboratories and demo scale facility is really important in this development that we also do, of course, heavily in the collaboration with our customers. These mentioned few cases are now already proceeding in the commercial phases, like for the biochemicals and second generation bioethanol, and then naturally lignin, as you most likely know already.
A common new topic for both Paper Business Line and for Pulp and Energy are naturally the recycling and the cellulose-based fiber textiles that Jari and myself were not acting as models, but we were explaining the end products of our customers. That also is proceeding to the commercial phase of recycling existing or the reused textiles or thrown out textiles. Then also the second stream over there are the cellulose-based fibers in which we are using the technologies we have at house, both already existing ones, but then also adapting and developing new technologies which, for example, enable energy-efficient drying of the recycled textiles or the cellulose-based textile fibers.
These are really important that we are not only working together with the business lines, but then also incorporating automation, flow control, and the services into these new initiatives we are looking to generate growth in the future. For the remote audience, the textiles that were here visible also and are visible still here on site, not for sale, are from the Renewcell and the Woodspin facilities. To summarize, gradually, the strategic focus areas for Pulp and Energy are the growth and improved profitability. The growth needs to come and will be coming from the growing our market share on pulp.
We also intend to grow and further strengthen our position in the energy market through this energy transition, and now also still continue in demand as we see it. We intend to also expand the and further grow through these new technologies, or as already mentioned. Importantly, to be competitive, we are continuously working on our technology and our delivery efficiency to further improve our cost competitiveness going forward. That also applies naturally to the engineering, to the supply chain, and the whole chain of operations. Naturally, we have been successful in commercializing new technologies, and that will need to continue. We are in a market that is being supported by the global megatrends.
We have a really strong position with our technology, we do see potential to grow further, particularly in the pulp through market share growth. We have good and full offering that we are continually developing forward as well. These new technologies will be providing additional growth for the future. Target remains to be growing faster than the market, we are determined to do so. That was my part. Thank you, now we are ready for the lively questions and answers, I will rejoin with--w e'll be rejoined by Jari on stage.
All right, let's start with the Q&A session, and I see a raised hand here. Just wait a second for the microphone.
Stephen Kusmierczak , Columbia Threadneedle. In North America, both in pulp and in container board, it's really lagged in new investment for a long time. Could you explain what, you know, describes that? I guess you have seen some new investment in board. What's causing that? Do you think the same is gonna happen in pulp now?
Shall I start with the board?
Maybe you'll start. Yeah.
As I said, as I said in my presentation.
There is the old installed base in North America. For some reason, there has not been too much investment in past, let's say 10 years ago and before that. I don't know exactly what is the reason for that, but now in the recent year, we have clearly seen the investment amount increasing. Of course, the behind of that is the need for the container port for the different packages applications. That's the clear reason. It has been now maybe five, six years when there has been a really good investment activity and looks like it's gonna continue.
To further continue on the pulp side, I definitely do think that there continues to be and there will be further rebuilds on particularly energy efficiency and environmental efficiency, but also production efficiency. Let's see when then the next true greenfield asset will be brought online and will be planned, but I do expect this rebuild to be strengthened in the future. You are right that the installed base over there at the asset lifecycle definitely is at a very old age.
Yes. Hi, this is Tom Skogman from Carnegie. On the pulp side, I follow Valmet many years, but it's still a bit hard to understand in this, these larger projects whether there are any alternative ways to do that business. Now we see, from my perspective that many engineering companies are focusing on their high margin, low volatility kind of businesses, and it's clear, you know, that in Valmet, the pulp is creating a lot of at least order volatility, and there seems to be more kind of project cost overruns in pulp than in other parts of the business.
I wonder, could you just, you know, team up with some construction company in Brazil and, you know, give them, you know, a bit of the margin and have lower sales but much higher margin and lower volatility in the future somehow?
Yeah. Interesting, interesting thought. We are, of course, really focused on improving our own competitiveness within the market and working on our own deliverables and our own way to operate and deliver and focus on the own competitiveness and own operations to be as competitive as possible. Naturally, winning then the large projects might then be sometimes difficult, but we are definitely competing with our own strengths, which are technical advantages and technology competitiveness and also our delivery operations efficiency. In Brazil, we are rather good at that.
Could you know, focus like on the board side, on your own core products and equipment and then, you know, allow someone else to take care of the EPC project part of it?
Yeah. If we continue on the pulp side, we definitely, as I mentioned also in the presentation, we are rather strict on and rather kind of a careful on the risks related to our project portfolio already.
When you avoid risks, what does it mean? Certain customers, certain countries where you don't have a strong country organization or what are the other kind of risks you try to avoid in pulp projects there?
As you already mentioned, the risks related to the delivery scope and potentially also to the end destination country. When you mix those together, that is definitely something to be very aware of, and we try to continuously do that.
Okay. Thank you.
Right. Thanks, Tom. We have many questions online, so I will now take couple from here. First one on the energy order intake, which was pretty strong last year, close to EUR 600 million like mentioned. Are you close to the maximum capacity that you have in your energy organization? Do you have any possibilities to increase this capacity for energy?
We are, of course, all the time working on ensuring and continuously improving our flexibility, delivery capability, and starting from the project engineering and design phase all the way to the manufacturing and deliveries. Working also with, as already mentioned, with extensive range of the subcontractors to balance the load. We can still improve.
Within pulp, what are the key drivers for winning back market share in the future?
Well, as already mentioned, and that's of course something that I'm asking from myself every day as well. As mentioned, we need to focus on our own game and playing the game with our own strengths, which are efficient engineering, continuous development.
In certain cases. it's the matter of the to finalize our technology to suitable for those, but we have used those.
Maybe I'd complement that in the fiber processing technologies, we are already doing the cooking technologies for the annual fibers, as already mentioned.
Good. All right. More questions here from the hall. Here's one from Antti.
Antti Kansanen, SEB. Just a follow-up on the pulp market share, and you have an ambition to win back market share, so volume means something to you. At the same time, you're continuing to be risk-averse. That's been your strategy always or many years at least.
Mm.
What was the reason why you lost a little bit of the market share and you're continuing with the same strategy, Why focus so much still on the market share if you are more risk-averse and more margin-focused there?
That is true. We want to win over and win further the market share. We are not happy with that. Why individual projects are then being lost or won, it's of course something which is difficult and also speculative. Then also at the same hand, same time, we have been successful in these single island deliveries, and we are presently doing also large delivery projects and we are all the time improving our delivery operations as well, being then able in the future be successful also in those big deliveries and projects. At the same time, as already I'm repeating myself, the risk control definitely needs to be there and will be there. Every now and then, one probably has to take calculated risk and evaluate it, but this risk control definitely will be there.
The second question perhaps for both of you. If we look at these kind of a new growth verticals, whether it be textile or biomaterials, where are we? There's no addressable market number for it, or there's no exposure of sales. When are these commercially kind of a sizable businesses for you, so they are actually visible on the divisions, whether it be order growth or earnings?
Do you-
If I start, we have to remember now that we are on the development stage. Now, our target is to develop the production lines which are meeting our targets for the actual production. We have met those. Hopefully, by the end of this year, we have a running references on the pilot scale. After that, we start to discuss about the next steps. At the moment, we are focusing only on the development.
Thank you.
Okay. Any more questions? I see no questions here in the online version. Does somebody wanna. Please indicate if you wanna ask something. Tomi Railo here in the front.
Tomi Railo, DNB. Question relating to capacity. Firstly, on the pulp side, to what extent is winning the market share through potentially bigger deals, a capacity question? After not winning many larger orders, have you sort of spare capacity and which you need to fill in the coming quarters or years in order or by winning these bigger deals? Also a question on Jari, on capacity. You mentioned that you aim to improve delivery capabilities through supply network and so on. What is sort of? Are you capacity constraints or constraint, or can you still deliver more in terms of sales from last year's level?
Shall I start while-
Okay.
I can I still remember-
You start.
the question? The, we of course have been already focusing on flexible utilization of the, of the engineering and production capacity between the energy and pulp resourcing, manufacturing resourcing in internal capacity point of view. And we are not desperate in getting a big portion of the, or a big individual order in. Anyways, of course, we are all the time working and also being successful in the single island deliveries and also for managing with that, but we are not capacity by no means capacity limited. The flexibility development has been working so far.
Now, if you take a look on the numbers, what I presented, we have grown quite a lot. To be honest, we have been on the limit quite a long time. We have continuously increased our capacity. I wouldn't say that we have lost anything because of the capacity limitation, but we need to continue to increase our capacity capabilities in order to grow. That's why we are now focusing on building up the competitive network for that.
All right. Let's take one more question there from the back.
Yes. It's Tom again from Carnegie. I look at your customers, you know, in South America and Europe and Asia and of course they make clearly lower profits now than last year. No one knows how long the kind of the bear cycle will last in the pulp and paper markets. You know, when would you get worried that, you know, low price would start to have an impact for the demand and for the kind of confidence to go ahead with things in your sales funnel? Is it like a low price for 12 months, 18, 24, 36 months or?
That's a good question. We haven't seen any impact in our project pipeline and sales cases so far. Of course, the general business environment today is quite unstable, and that is creating some hesitation for our customers to make the investments. So far, we really haven't seen any major impact, and I can't estimate anything for the future.
Yeah. The investment horizon for our customers is definitely tens of years, so-
Mm-hmm.
Like long-term, based on long-term plans.
That's good point that when our customers are making investments, so they are, they plan this few years ahead of today's situation.
Do you see a risk that there will be too many board, new board machines starting up in certain parts of the world? I mean, given interest rates are going up, the consumer gets, you know, weaker with higher interest rates that.
That worry has been raised quite many times in this type of discussion during the last five years, and so far it seems that all the capacity what is built is needed, and I think this replacing plastic needs are increasing the need for the capacity. So far everything is good.
Then finally, in China, there has been a lot of small kind of polluting machines that are really being replaced with larger machines supplied by you and your main competitor. Where are we in this transition in China? You know, how much is done and how much is left?
That's a good question. There seems to be quite many of those small mills which has closed, and as I said, there is a continuous replacement going on for the old and obsolete capacity, and I think it continues still, but I don't exactly can say how the future looks like on that area.
Okay. Thank you, Sami and Jari, for the questions, and now it's time for CFO Katri Hokkanen. Katri, please.
Good afternoon, everybody, on my behalf as well. I'm also relatively new in the team, so I started as CFO last August, but I have been working for Valmet for very long time. They say that time flies when you're having fun, right? My presentation today is how Valmet is on solid growth track with concrete actions to reach the financial targets. As you all have heard today, we have three strong segments in Valmet, and last year our net sales was EUR 5.1 billion. If you look at the segment split, so Services and Automation segments, they were little bit over 50% of the total net sales. However, when you look at the comparable EBITA, so actually 3/4 was coming from these businesses.
When you look at also on the margins on the bar chart, they were relatively good. Services was at the level of 14.8%, Automation segment was at the level of 18.3% in comparable EBITA margin. However, it's also good to mention that we have very strong Process Technology segment in Valmet, last year the net sales was EUR 2.4 billion, comparable EBITA was EUR 145 million. Even if the profitability in the Process Technologies dropped by 2% last year, it was at 6% level. We are not happy about this, but this is where we start to improve again. Maybe it's good to mention that in our industry it's quite typical that project business has lower profitability than the stable business. A few words also about the net sales trends.
As you can see from the chart, in all of our segments, the net sales has been increasing over the years. If I start from Services, the net sales was EUR 1 billion when we started, and last year we were at EUR 1.6 billion. There has been almost EUR 600 million growth over the years. Part of that has come from acquisitions, but mostly it is organic growth. Moving to the Automation segment side, this is a business that we didn't have when we started as an independent company. First we acquired Automation Systems, and by that time it was EUR 300 million business. It has been growing over the years. Last year we had the merger with Neles. Together with that, the volume for Automation segment was EUR 1 billion. Very good development there as well.
Moving to the Process Technology side, this is a business which is often referred as cyclical. If you look at the trend, it has actually been also growing throughout the years, starting from EUR 1.6 billion to EUR 2.4 billion. As a summary, all of our segments have been growing in terms of net sales. How do we see the future? What kind of targets have we set for ourselves? These are unchanged now to the ones that we published last year. If I start from growth, I will repeat this, you have heard this from the Business Line Presidents already for many times, on Services and Automation segments, the target is to grow over two times the market growth. For Process Technologies target is to exceed the market growth.
When it comes to profitability, our target is to be between 12%-14%, and last year we were at 10.5%. Moving on to comparable Return on Capital Employed, there our target is to be at least 15%, and when it comes to dividends, our target is to pay out at least 50% of the net profit. How do we do all of this? As you heard from Pasi's presentation in the beginning, so we have these must-wins in Valmet. We have been working with them for many, many years already, and that's also the key to this improvement in the profitability. I have listed here some of the topics that I found that are relevant for my role. Of course, there are many, many more.
If I start from the customer side, there the target is to grow, on top of that, also improve the prices, doing the sales management, being close to our customers. This is something that the Business Line Presidents have been talking a lot already during today. When moving to the technology side, I think it's really fair to say that we have world-class technology, we all the time bring advanced technology to the market. On top of that, we are also having these new innovations that you have seen here today as well, like Valmet 3D Fiber and the textiles. On top of that, we are also putting a lot of focus on product cost competitiveness. This is a key thing when looking at the profitability in the future.
Even if I said that we have world-class technology, I also believe that we have world-class processes in Valmet, and this is something that we continue to develop further. We are not ready there, and I think we will never be. We have really good project operations. We have a mindset with our project managers, for example, that whenever they have a project, the target is to improve. To be able to improve the profitability, of course, supply chain, these cost savings we have play a really key role. Last year, our spend was EUR 2.5 billion, and we were able to save 3.3%. It is a significant amount of euros, and this is something that we continue to work also in the future, and we have potential there.
One topic also under the processes is to keep the quality costs low. This we have been quite successful also during the years. Moving to the fourth must-win related to people. It's good to say that we have strong home base here in the Nordic, but at the same time, we have been increasing our procurement, production, and engineering resources in cost-competitive countries. That is something also that we are doing in the future. We are also investing quite a lot in our people. One thing I wanted to mention here is that we have an excellent global training portfolio, which is built in such a manner that it's actually supporting these must-wins' execution. As you can see, the improvement in-
is coming from many different sources, so it's not one single thing, and we are continuing with the same work that we have been doing for many years already. With all of this, we are targeting to increase the comparable EBITDA margin in all three segments. Moving to the third financial target, which is the Return on Capital Employed. As you can see from the chart, so our ability to turn Capital Employed into profit has been relatively good over the years. Last year, we were at 17% level. It went down from the previous year, but that was because of the merger with Neles. When looking towards the future, of course, our target is to improve. That then comes through improving the comparable EBITDA. Moving to the fourth financial target related to dividends.
As you can also see from the chart here, we have been able to increase the dividend every single year. We have also exceeded the target to pay out at least 50%. When looking at all the years, including 2022, the payout has been EUR 1 billion, so that's also quite a lot. A few words also about the balance sheet. We have had strong balance sheet throughout the years, and at the end of last year, our net debt was at the level of EUR 502 million, and gearing was 20%. Gearing has been changing or varying between the years, so from -23% to +21%. When looking at our Net Debt to EBITDA ratio, that was 0.78 at the end of last year.
Because we have strong balance sheet, it has enabled us to perform our solid operations in the company. We have been able to pay the attractive dividend and also grow through acquisitions. My next slide is about that. When looking at the history, so since we started as a independent company, we have made 10 acquisitions, and the investment for those has been about EUR 2 billion. When we look at towards the future, so our strategy is such that we want to strengthen all the corners of Valmet's triangle, so services, automation, and process technologies. We can make selective acquisitions if they have a clear industrial logic and they bring synergies to us. Of course, it's also important that they will support us in reaching our financial targets.
We are quite active on this front as well, so we are evaluating 50 cases every year. how we have performed as a company since we started as a listed company. If we look at Valmet's total shareholder return, that has been almost 450%. Our share price has increased by 370%, and actually our market cap has gone from EUR 1 billion to close to EUR 6 billion during this period. When we look at our cumulative dividend payout, we have paid EUR 5.37 per share. If we compare ourselves against other large European industrial companies in terms of total shareholder return, we have actually outperformed 90% of them. All of this is something that we are really proud of. As a summary, as said, we have three strong segments in Valmet.
They have been growing, and that's also the expectation going forward. Our target is to be between 12%-14% in comparable EBITA margin. We have concrete actions. We continue the things that we have been doing for many years already. We have strong balance sheet. We have been able to pay attractive dividends, and we have also made acquisitions, and we have the ability to do those in the future as well. When comparing our performance against others, then I would say that it has been good. That was my presentation. Thank you, and I will give the floor to Pasi.
Thank you, Katri. Now it's my pleasure to conclude today's presentations. My present summary's title is Strong Position in Growing Markets and Building New Opportunities. Here are the key takeaways which I mentioned at the beginning of the presentation. I'll go through them one by one and then once again summarize in the end. First of all, we have a unique offering. We have process technology, we have services, and we have automation. That's very good setup because we can solve the process technology problems, we can solve the services and automation. Of course if you think about the digitalization and Valmet Industrial Internet opportunities and everything else, these three things are actually needed in modern company to be successful, and we have very good starting position now.
We have also good strong market drivers behind all these segments. In process technology, my colleagues went through, we have e-commerce, global trade, replacing plastics, we have energy transition, energy supply security, and tightening air emission legislation. Many drivers which continue to make sure that the process technology market continues to be active. In services, like Aki was saying, we have large and aging global installed base which we are serving. Customers have a lot of targets like CO2 reductions, energy and resource efficiency, and so on. There are many reasons why the services market continues to be active as well. In automation, it's easy to understand that the digitalization is going forward, and we have good position at that.
There's also big fleet and big amount of aging installed base of competitor systems which we can replace, and of course our own systems as well. Automation helps in raw material savings, process efficiency, and sustainability, customers will continue to invest on that. Of course safety, reliability, and emissions are important, that will help Flow Control business to continue as well. Good offering, strong market drivers. If we first go through the process technology segment, we are saying that it's benefiting from growing demand for bio-based products and energy.
The track record is that it has been growing, and then the market for pulp and paper is in the bottom part of the page then, and we see that the demand for pulp and paper continues to grow, which then of course means that there will be investments. Like both Jari and Sami were saying, this there's also large old installed base as well, and that needs to be replaced as well. Like somebody was asking about North America. North America was not a market 10 years ago for board machines, and now it's a market, and reasonably big market and active. One should not think only on the growth of the demand. One should also think about that how much there's replacement need in the old capacity.
We have good business model. My colleagues have taken good care of the capacity cost, so when we started, Jari's capacity cost was 47% against the net sale. Now it's 26%, which means that even if there would be a little bit bumpy road, we will survive, and we will have good operations even if the road would be bumpy. In Pulp and Energy, it has been from the beginning this case. We have good business model. Last year, our EBITA was 6%. two years ago, it was 8%.
I think now we are at 6%, therefrom we try to climb up, but I think now it's better for all of us to set up the comparison point to be at six. From there we start to work towards better margins. Six is also profitable technology business. In services segment, we have had long-term growth and good track record on that. Like said, global installed base is of course helping there. We have big installed base which needs to be maintained all the time, where the market is estimated to be about EUR 8 billion. We are saying that it continues to grow about 2% a year. We are saying also that we target to grow twice the market growth.
We have wide offering, like Aki went through very nicely that how wide the offering is and how well we have been able actually to growing all the business units. We have also strong presence in all the markets. One has to grow in the products, then also from the area perspective. We have a good organization in all the geographies, and we have also a good track record on growing all the areas. That continues to be our action plan further as well. Comparable EBITDA last year was 14.8%. Of course we continue to work on trying to improve that profitability, but already it has decent level.
Automation segment, like Katri said, and maybe I said in the beginning as well, that in the beginning we didn't have automation at all, then we were successful in acquiring systems business, and we have been able to grow that quite nicely year after year after year. Now, we were very, very happy that the merger was finalized last year, and we now we have flow controls there as well. We start from about EUR 1.1 billion net sales and order intake to grow it further. Automation system business, market is estimated to grow and flow controls as well, we are saying that roughly the markets are growing about 3% a year. Again, the target is to grow twice the market growth.
There are many drivers in automation which are helping, so digitalization, sustainability, operational efficiency, which means that there is increasing need for automation solutions in all the process industries. Flow Control has very good position in critical valves automation, and that's so difficult market that, like Simo was explaining, that it's difficult, very difficult for the new entrants to come to the market. So we have good position there to continue to grow. This comment could be also in the other segments, but of course we have possibilities to continue to make bold new acquisitions in automation to go to accelerate the growth in automation.
Last year, comparable EBITDA was 18.3%, so we have about EUR 1.1 billion segment with 18.3% EBITDA margin. Of course, one has to remember that last year there were only three quarters of the year of Flow Control in our numbers. We were talking a little bit about also about coming business ideas. Textile fibers were presented, so there are two streams. One is to transfer the recycled textiles again to pulp and then use that viscose pulp and then use them as a raw material for textiles. The other one is to make directly from wood pulp textile fibers.
We are active on both of these streams with our technology and working of course there with partners as well. We are not alone there. In 3D you saw the examples here. We are very excited about this possibility, what we are developing together with Metsä, that you could directly from pulp make the end product. Of course, if we can replace then plastic or if we can replace places where first board is made and then and the plate and there is a lot of waste, then of course we can increase the sustainability of the packaging solutions.
Like you saw, with the machine, what our team has been developing, we can make quite demanding structures already now, and this is only the first phase where we are. Let's see how far we can go. It can be used as a packaging application also in some food applications. Sami went through some of the other bio product issues like lignin. Lignin is of course old story. We sold lignin separation units 10 years ago, it takes a while before the market, you know, market starts to be active. Now we see more activity in lignin. We see also market activity in pyrolysis and biomass pretreatment units in for biofuels and other that kind of applications.
In flow controls and automation, green hydrogen was discussed by both Emilia and Sami. Renewal of our automation system gives one also opportunities to enter new customers and then at the same time helping growing energy and process automates. Maybe, or not maybe, I should have listed here also Valmet Industrial Internet. We don't have any slide about it. I can maybe tell some of the numbers if I Which I hope I remember roughly correctly.
We have been talking about Valmet Industrial Internet, where the idea is that we have connection to customer, and the connection we can use either to help the customer or collect the data to optimize the operation or even follow up what's the condition of the facility and of the equipment. Then business-wise, it's now order intake was about EUR 50 million business. We earn now from Industrial Internet. It's roughly about EUR 50 million. If it were a startup, then actually it would be a big startup. This Industrial Internet business is about EUR 50 million and we use that in all the products, in process technology, in services, in automation.
We have several performance centers and colleagues re-correct if I remember, roughly right, but we have sold last year about 3,000 cases remotely to help customers. Customer has a problem, then they contact us, and then we connect them their system and study the situation and then solve the issues. We have had about 3,000 that kind of cases last year. It starts to be already part of the normal organization. Now, are we utilizing it to the full extent? Yes. Yet? No. We have still long way to go to the situation that we would be collecting the data from the machines and then monitoring them and then helping the customer to by telling them in advance that now you should do something.
There's still a lot of room to improve, but we have already solid base for this business. As a summary of summary, we are saying that Valmet is building on positive megatrends and strategy of renewal and continuous development. We are saying that the demand for bio-based products and energy continues to grow. Pulp and paper market is growing by the megatrends. Energy transition is creating us opportunities, and we have strong market position and in couple units also possibility to improve our market position further. We have new growth opportunities like these new sustainable innovations we just discussed, and we have also opportunities in energy and process industries, in automation, including flow controls and systems business. We have steadily growing stable business, including systems, automation and services.
Last year, order intake it was about EUR 2.8 billion. It had a stable net sales, good good margin as well, the large installed base is helping us to keep that business developing favorably. We have good track strategy, we have good track record in making acquisition and integrating the acquisitions. It's one should not or we like I think Simo was saying that we have quite prudent process, that's needed because it's easy to make acquisition and then lose money. It's a lot of more challenging to make an acquisition and then earn money later on.
Our track record actually with acquisitions is good, and it's because we have been quite careful to what kind of acquisition we go, and that will be the case in the future as well. Of course it's limiting the acquisition amounts, but it's better to have good quality instead of good quantity and bad quality. Of course we continue to build the business in systematic way, renewing and with renewal and continuous improvement. Good. Now you have a pleasure to put pressure on Katri and myself, and because we have colleagues here, we cascade the pressure very quickly to my colleagues.
Like Pasi mentioned, now is the time to ask questions from Pasi and Katri, and also you can address them to the other presenters here. Do we have questions here in Hanasaari, at least here in the front?
Christian , Pareto Asset Management. The different sales growth targets that you have, you have twice the market growth for some segments and more than the market growth for paper-
Yeah.
and pulp and energy. I guess that's a combination of reasons, competitiveness, scalability, margin levels. Maybe you're more happy with the margin levels in the high growth areas. Could you just put some color on the reasons why you choose to have those different growth margins? Sorry, growth targets.
It's because of the nature of the business. In, in stable business, being it service flow controls or automation system, you can think linearly that the market is growing x percent and then you try to grow faster. In, in a cover process technology, the order intake is lumpy. It's very difficult actually to say that what would be the percentage.
Yeah.
Then I'm reluctant to tell a person if I'm not able to tell that where from it starts because somebody then starts to follow it from the peak and we go down, then it is, "Hey, Pasi, you have been lying.
Mm.
It's better to say that we try to improve our market position.
Yeah.
That's the thing.
Ambitions are not necessarily-
No, they are not.
lower.
No, they are not different. It's just that the signal is different where with which you compare.
Yeah, highly appreciated. Thank you.
Okay. There's a question, here in the middle.
Yeah.
Tomi Railo, DNB. First question to Katri.
Yeah.
Asking still a little bit more concrete commentary on the target setting to reach 12% clean EBITA at the bottom of the range? We start from 10.5%.
Yes.
If you would rank and still say something concrete, where does this improvement comes in terms of numbers?
Of course, it starts from the growth targets. We have to grow the business. That's for sure. Of course, together with the growth, we have to improve the profitability. If you look at how you can do that, of course, working closely with the customers, you know, getting new customers, increasing the wallet of share. Then also when looking at when we get the order, what can we do internally? Of course, making sure that we can do the project execution in cost-efficient way. I said one key topic here is the supply chain savings, which I mentioned in my presentation. Of course, managing the quality costs, making sure that there is this continuous improvement mindset. On top of that, of course, we need to make sure that we still have world-class technology in the future.
We have these new topics also on the agenda. Also investing in the people, thinking about the LCC countries when it comes to engineering, procurement, production. It is a combination of many things. You cannot put a price tag to all of them. Of course, we have internally very ambitious targets.
Then I asked earlier that, what would be a good level of or a benchmark level, let's say, in Flow Control or automation. If I'm thinking that probably the profitability improvement mostly come from process technologies, what would be a good benchmark level for process technology profitability?
We are benchmarking only. We are setting the targets only for the whole company, and then we are benchmarking only the whole company. When we started, we were in bottom of the Nordic engineering companies. Now we are somewhere a little bit on maybe about the average in Finland than comparing to Swedes, we are not. We of course still have room to improve, but we are comparing ourselves to other engineering companies and then maybe more to engineering companies which are making projects as well. If somebody's making only small products and then there is high amount of consumables, then profitability level is different. We try to be better Nordic engineering companies with project execution.
Third and final question to Pasi. Very good developments over the year. What are currently your main worries or risks? What could happen? What could go wrong?
Last year was so challenging that I hope that this year is not as challenging. If we think that there was still the inflation hit, then came the Ukraine war, which caused even more inflation. We had to close Russian operation. We had to source from different places. We had COVID in China. Then Jari unluckily had a fire in one of the production units. I wish that we just have a normal year with normal challenges. Then we can focus on daily work.
Maybe I was saying also during the break to other people that even if we had the challenges, we managed last year actually to work in the way that we isolated the challenges to units where there were worst challenges, and all the rest continued to work in normal way. That has been very important that you If you have challenge, you isolate it, and then the rest, they must continue to execute our must wins without any deltas. That has been the medicine actually in managing in this kind of turbulent situations.
Yes, this is Tom from Carnegie again. I wonder about capital allocation a bit. You know, when you acquired Neles, you said that you have really tried to screen the market for, you know, service companies and they have been hard to buy. Then you said that, you know, in process equipment, our market shares are so high that it's kind of hard to find, you know, many good targets to buy. Now you have, you know, Neles with a 2% global market share, a very profitable good business.
Mm.
Should we expect that capital allocation will focus from now on more on?
The Flow Control side and also I wonder in Automation, it doesn't sound like it's easy to buy another kind of big software system and integrate, but perhaps there are other parts you could buy to Automation to boost growth in that part.
We, I think we have been all the time saying that we focus on strengthening all of them, and then so process technology services and automation. Of course it's so that in services the amount of possible targets is more limited than in automation. That's of course true. We have possible dream targets in process technology. We have them in services, and we have them in automation and we are working actually or my colleagues are working with all those areas. In acquisitions it easily takes six years from idea to execution. Like first time when we wrote Neles as a target it was 2016, and 2022 we finally merged.
With several others it has taken four, five years from the initial discussion to closing. The processes last long and maybe I can say now publicly that we almost all the cases we have bought without auction. We have been buying in one-on-one processes and that's where you usually get actually better payback. If you are working on those ones, then it takes time that you find suitable position that the other seller is willing to sell on acceptable price from our perspective. It takes time, but we continue to work on all these. Of course it would be nice to strengthen Flow Controls, and it would be nice to strengthen systems business, but the same for process technologies and Services as well.
Given you have a strong global organization, I would assume that there are like small companies with good kind of highly advanced kind of analyzers or those type of, you know, things that you could perhaps, you know, buy and then spread out global. Is that the case?
There might be such, but. We are of course analyzing them. Our track record in integrating a little bit bigger units is better. It might be that the price tag for specialty analyzer company which has EUR 10 million turnover goes to sky high. It's actually very difficult to calculate that why in the hell should you buy it if the price is too high so. There might be that market, but one has to think also that does it make sense from our shareholders' point of view.
Thank you.
Okay, let's take one here from the web, and this one is going to Sami. If you can, Sami, come closer to the microphone here. Regarding the triangle offering of Valmet where there's a combination of services and Automation Systems and then process technologies, what kind of competitive advantage do you see the Automation Systems and the Pulp and Energy have together? Do you get competitive advantage from this setup?
We definitely do. I hope the microphone is working. All right. Yeah, we definitely do and see the competitive benefits of combining the automation systems to the particularly pulp mills, which are really demanding processes. Also in the pulp mills there is still a lot of untapped potential in optimization. With our DCS as a platform and then the Industrial Internet connected and hooked up on top to supervise the unit operations of the pulp mill, we can still create a lot of untapped potential and the savings and improve the performance that we have seen with our mill-wide optimization applications. Yes, there is potential in any competitive benefits, and the competitive benefit then is in this life cycle operations of the entities then.
All right. Thank you, Sami.
Also helping-
Yeah
our project execution naturally.
Thanks. Thanks. Then there's a question to Aki, follow-up for Aki regarding the field services that you had brought up earlier in your presentation. What's the status of field services?
Yes. I think we two years ago we mentioned that in this same arena, and field services is still a focused development area for us, but as many other development programs, so now we have moved it under service business line, so it's not any more company-wide program. It's still in a focus and we have continued to work on growing that, developing that capability, including processes, products and competencies. Of course COVID impacted field services also because of the limitation to travel and see our customers. We have had quite nice activity coming back, and we continue to work on it. We see a lot of potential synergies with parts business, synergies with remote services.
I think that it's a element of customer closeness that we definitely need in the future too.
Good. Thank you. There's a web question. I guess this goes to Pasi or Katri.
Katri. Let's see. If it's a difficult one, then it goes to Katri.
Yeah. What is the timeframe for the 12-14% comparably with the margin target?
It's difficult one it goes to Katri.
I cannot give you a timeframe, so that's the answer. Of course, we are working hard. We have ambitious targets. The business line presidents have been promising to improve their businesses as well, but the work continues. Sorry that I cannot give a more exact due date.
All right. Those were so far the questions from the online platform, but we still have a little bit of time left, or actually a nice amount of time left. Please raise your hand and indicate. Tom, on the back row.
I can just ask a small kind of detail question and that is on the flow control side and growth in renewables and hydrogen. I know that you have Linde's, you know, old valves factory in Germany, but what is the kind of capabilities in the U.S.? Isn't it so that in the U.S. the Jamesbury factory focus a lot on oil and chemicals, et cetera? Is that well suited for renewables and hydrogen as well?
Yes. We are also active in that market in the US and making progress there. And of course, our factories serve the technologies globally, so we can always supply the best technology for all the applications.
Okay. Thank you.
Anything else? Here, Mikael on the middle.
Yes, thanks, Mikael Doepel , Nordea. Sort of question on your. You mentioned install base quite a few times here. I was wondering, what is your share of the global pulp and paper install base really in terms of-
Mm
capacity or in terms of number of machine?
Mm.
Whichever way you want to measure it.
No, install base, we have installed about, in paper and board, about 40% of the world's capacity. Pulp the same. The number Sami showed, 30%-35% was the market for last couple years, but the history is that we have, we have had about the same market share with Andritz, about 40%. Both have about 40, and the 20 is done by the others. Then on big machines, Voith and ourselves share, have been sharing earlier the market 50/50, and now we are market leader. We have big market.
Right
In installed base. When talking about installed base, then it's maybe good to still say that we didn't mean our installed base only. Of course, like if you have board machines, old board machines, and customer decides to replace three of the old machines with one new, then it doesn't care whose machine will be replaced. One has to understand the installed base is the general term of the installed base, not on our own.
Right. given that you have, let's call it 40%-
Mm
of the installed base-
Mm
syou have a global share of services of only 20%.
No.
How I mean, is the ambition to get that 20 up to 40? I'm just trying to figure out, you know?
Mm.
What kind of a growth rate you're really expecting there?
The growth rate, what Aki showed in his presentation is what we have been able to do now with organic growth and some acquisitions and you have to. The installed base and the, our technology market and service market are a little bit different. Like in Aki's presentation, he was talking about paper machine clothing. In paper machine clothes is a big market where we have the business volume what we had, and then our market share there globally is under 10%, 'cause there are big companies like Albany who are focusing only on paper machine clothing, and they don't have process technology. That's why the markets are not the same.
Okay. Thank you.
Okay, Steven here in the middle.
Thank you. Pasi, Stephen Kusmierczak . If you would look back to 10 years ago when you were charting the new future, independent future of Valmet-
Mm-hmm
what has developed differently in the industry than you expected that's meaningful? Not about how you've shaped Valmet, but just overall the industry, whether that's geographies, whether that's where CapEx has been, technology.
If I take couple more years than 10 years back, then it's easier to answer. If we take the year from 2000 to 2010, then the, our end customer industry was not seen as a, as a future industry. Everybody saw only the paper declining, and maybe because of paper declining, pulp declining as well. Our customers were not earning money, so they were in a little bit in declining mode and not earning money because of overcapacity. Now if you think of last 10 years, our customers have transformed themselves. They are now more towards packaging. Packaging demand is growing. Because of that, pulp is growing. They have had good investment discipline as an industry, so generally our customers are earning money.
We are now serving different industry than we served 10, 15 years ago. We serve customers who have future ambitions and who see that their market has future potential. They have the finance and capability to invest for the future. That's the big change that has happened now between 2000, 2010 and compared to today's situation. Geographically, of course, there are differences like North, you were asking about North America and Jari and Sami were answering. Like 15 years ago, nobody thought that they would invest to a new board machine in North America. Now we are selling one to two big machines a year to North America.
There customers are seeing also that if they are not investing the new machinery, then their old assets cannot produce the lightweighted, eco-friendly, products which are needed now by the brand owners.
Here in the front.
You have a very capital light business.
Mm-hmm.
If you exclude the old goodwill, back in, which dates back to the 1990s, I think, you have an extremely high capital return.
Mm-hmm.
Frankly, we don't really want your dividends, we want you to re-deploy-
Mm.
capital. On the other hand, you say that, you know, you're very picky on acquisitions. Should you spend more or that's probably a conclusion you should spend more on R&D and to extend sort of the product range and the lead over competitors? If you could just shed some light on that, please?
You know, on R&D, we spend it, so then if we spend more, then the EBITDA goes down.
Yeah, that's fine. As long as the EBITDA in the future goes faster.
Because we spend it. Yes and no. We have been increasing R&D spending like Jari is building this nice 3-D machinery, of course he got more money. Sometimes actually you get more out of R&D organization if you reduce their spending. Like, let's take a very bad example. Emilia was telling that we have QMS system where we are market leader currently. When I restructured that 2004 or 2003 or whatever, I was young boy then, we spent a lot of money on R&D and nothing came out. We took 2/3 of R&D spend away, since then our market share has started to increase.
There has to be a good reason for R&D organization to get the money, and then it's well spent. If you just increase the spending, then maybe your payback-
Yeah, sure.
is not the best.
We are back to a lot of cash flow then.
Well, yeah, well. of course we increase our R&D spending whenever it's.
Mm.
we can afford it. When in--y ou were saying that we are picky, maybe, but then one has to think that the payback. If we are not selecting the acquisition targets well, then, our profitability will not improve and market share will not improve either. You can easily make a fancy acquisition and then two, three years later, you tell that market that that wasn't that good idea. Then we are long-term and our investors are long-term, and I hope they appreciate that we are reasonably careful.
Sure.
Thinking like, Katri was showing, we have spent EUR 2 billion in acquisitions and mergers. I think it shows that we have been actually quite active.
Thank you.
All right. There's a question from the middle.
Yes, Henri Parkkinen in OP Markets. One question regarding China. What do you see at the moment in China when you are discussing with your with your customers in China? Has there been some changes what comes to investment environment? Another question: What if something unexpected happens in China, what comes to political issues and something like that? What kind of impact it will have on your business?
Yeah. Unluckily, I haven't been traveling to China for some years now, which I have to admit, but I'm going there in April. Then I have to actually refer what I'm hearing from our Chinese organization. Customers were investing quite actively in 2020, 2021 and 2022. 2023 is of course still to be seen. Our service market has been active there, has been developing well. All in all, like you all have been reading, Chinese economy is growing less than earlier. Of course the absolute number where from the growth comes is bigger. Of course, the growth is still quite sizable.
We have active sales cases in China, and those customers are trusting to future. Like I think all of my colleagues were saying that we have possibilities in China. Thinking about if something bad happens in the relationship between China and Western world, then let's first of all say that let's hope that it will not happen. If it happens, China continues to be a big market, and we have good operation there, and we'll continue to be there. In almost all of the businesses, we have also other supply chains available, and we can serve the rest of the world if needed from other sources as well. There are a couple exceptions, but only a couple exceptions.
Okay. Many thanks.
Okay. There's some questions still here on the online front. First on the kind of a longer comment here regarding the strategy, which is, kind of unchanged-
Mm
and mentioned here that that's a good thing. What about on the pulp side? Now the market share has somewhat declined. Is there a need to somehow make some changes in the pulp?
You were watching at the not the correct person. Sami has answered to the question already once, let's hear another answer.
Another version of the answer. I think the change is what we are doing or how we are continuing to develop the pulp business is to further develop the competitiveness of our offering and our own operations in deliveries, including, like Katri also repeated, the supply chain engineering and the project operations. So many topics are underway, and a lot of development is happening. Some changes, I don't see that radical changes are needed, just basic work that we are already doing and actions that we are already in place.
Good. Thank you. On the services, regarding the M&A opportunities in services. Do you, Aki, see that there are still M&A opportunities in the services front?
I think this is partly answered today also. Of course there are some, but the number is of course more limited and we have different technology areas, so the answer is maybe varying based on the technology area too. We have some cases, and of course we are looking at activity market and looking at the opportunities. Like Pasi referred, so it takes time, if they move ahead and, we are actively working on that, and we will see whether something goes to material at some point.
Thanks, Aki. Then we can still take maybe one question here from the floor if somebody has some final concluding questions. If not, we will then start to conclude the event. Thank you for the audience for the active participation and the discussion, and thank you for the presenters, of course, the Valmet team. I would also like to thank my IR colleagues, Tuuli and Arttu. Thank you very much for the big job that you have made to make this event happen today. This is now the time to say goodbye for the virtual audience. Here at Hanasaari, I would still one more time ask people to fill out the questionnaire forms that we gave to you. Any feedback is highly appreciated.
You can give the feedback forms then when you are leaving to the members of the IR team, for example. For the live audience, we will be serving some refreshments still on the lounge area after the event, right now. Thank you.