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Future Neles Corporation publishes growth strategy and financial targets

Published by , Editorial Assistant
World Pipelines,

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

Neles vision and strategy

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

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

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

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

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

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

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

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

Neles’ strategic targets are mid-term ambitions and should not be viewed as guidance for the near-term performance of Neles as the current Covid-19 pandemic will adversely impact the Neles’ business in the short-term, as disclosed in Metso’s Q120 interim report on 7 May, 2020.

Operating model

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

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

Olli Isotalo, President and CEO

  • Heads of business lines: Timo Hänninen, Equipment, Sami Nousiainen, Services, and Kalle Suurpää, Valve Controls & Actuators.
  • Heads of market areas: Patrick Dunn, North America, Fabio Maia, South America, Jon Jested-Rask, EMEIA, Tan HangPheng, Asia-Pacific
  • Head of operations: Kevin Tinsley
  • Heads of corporate functions: Simo Sääskilahti, Finance (CFO), Hanne Peltola, Human Resources, Kaisa Voutilainen, Communications and Marketing

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

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

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

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

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

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

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