Valmet Automotive Inc., press release 14 October 2022, at 9.10 AM EEST

Valmet Automotive Inc. (to be renamed Valmet Automotive Plc, “Valmet Automotive” or the “Company”) is a provider of advanced systems and services that support automotive Original Equipment Manufacturers (“OEMs”) in their transition to electrified mobility. The Company is a Finnish contract manufacturer of complete vehicles and battery systems, and a system supplier of battery solutions as well as convertible roof and kinematic systems for automotive and industrial applications. The Company is planning an initial public offering (the “Offering”) and a listing of its shares on the official list of Nasdaq Helsinki Ltd (“Nasdaq Helsinki”) (the “Listing”).
 
The objective of the Offering is to allow Valmet Automotive to accelerate its growth strategy, continue to make investments in production and to finance working capital as well as strengthen Valmet Automotive’s balance sheet. The Offering will enable the Company to obtain access to capital markets, expand its ownership base and increase the liquidity of the Company’s shares. Additional visibility is also expected to further increase Valmet Automotive’s recognition among the public, customers and suppliers and as an employer, and thus enhance Valmet Automotive’s competitiveness. The Listing would also allow Valmet Automotive to use the Company’s shares more effectively as a means of consideration in potential acquisitions and in incentive programmes for Valmet Automotive’s personnel.
 
The Company aims to raise gross proceeds of approximately EUR 140 million by offering new shares in the Company for subscription. The Company expects to use the net proceeds from the Offering to fund the Company’s near-term capital expenditures, including investments and technology development in its Electric Vehicle Systems (“EVS”) business line’s ramp-up, and Vehicle Contract Manufacturing (“VCM”) and Roof and Kinematic Systems (“RKS”) business lines’ new programme launches, as well as corporate-level expenditures, to finance net working capital needs, to strengthen its balance sheet and to fund general corporate purposes and further growth opportunities.
 
Certain cornerstone investors (together the “Cornerstone Investors”) have each given subscription undertakings in relation to the Offering, under which they have committed to subscribe for shares in a possible Offering, subject to certain conditions being fulfilled.
 
Jarkko Sairanen, Chair of the Board of Directors of Valmet Automotive, comments:
 
“The global need to address climate change requires a fundamental transformation from the automotive industry, and we believe that this offers significant opportunities for Valmet Automotive. By 2025–2026, the company aims to reach EUR 1 billion in net sales, with approximately 40 per cent coming from its EVS business line. The planned Listing would support the execution of this growth strategy, and allow new investors to join Valmet Automotive's journey as it shifts into a higher gear.”
 
Olaf Bongwald, CEO of Valmet Automotive, comments:
 
“We believe in Valmet Automotive’s capabilities to support the automotive industry in its ongoing disruption. For decades, we have been a trusted partner for the world’s most premium OEMs, and in the past few years we have risen to be one of the leading suppliers of battery system solutions. Supported by the planned listing, we are proud to be enabling the transition towards zero-emission transportation, and more broadly, societies.”
 
Press Conference
 
We kindly invite you to attend Valmet Automotive’s virtual press conference held today 14 October 2022 at 11:00 AM EEST through the following link: valmetautomotive.worksup.com (the conference will be held in English).
 
Overview of Valmet Automotive
 
Valmet Automotive is a provider of advanced systems and services that support automotive Original Equipment Manufacturers (“OEMs”) in their transition to electrified mobility. The Company was founded in 1968. Valmet Automotive’s special areas of expertise are contract manufacturing of complete vehicles and battery systems, and system supply of convertible roof and kinematic systems and battery solutions for automotive and industrial applications. As a system supplier and contract manufacturer, Valmet Automotive develops and manufactures hundreds of thousands of battery systems annually for mild hybrid, plug-in hybrid and battery electric vehicles. In addition, Valmet Automotive develops and manufactures convertible roofs and kinematic systems that, among other things, improve aero efficiency and thus also optimize the driving range of electric vehicles, as well as manual and active charging flap solutions for electric vehicles. Valmet Automotive is one of the largest vehicle contract manufacturers in Europe, and in 2021, it was ranked 86th in the Top 100 Automotive Suppliers Global Ranking 2022.
 
Valmet Automotive operates three business lines: EVS, which focuses on the integration of cells into battery modules and complete battery packs, including the integration of the battery management system into complete battery system solutions; VCM, which offers end-to-end complete vehicle manufacturing, covering body-in-white manufacturing, painting and general assembly, including end-of-line testing; and RKS, which operates exclusively as a system supplier for kinematic system and convertible roof products. For the year ended 31 December 2021, Valmet Automotive’s gross sales were EUR 2,977 million, net sales were EUR 570 million, comparable EBITDA was EUR 105 million, operating profit was EUR 36 million and comparable operating profit was EUR 38 million.
 
The Group is formed by the parent company Valmet Automotive Inc. and the six fully owned subsidiaries located in Finland, Germany and Poland. Valmet Automotive has its headquarters in Uusikaupunki, Finland, and it operates 11 facilities across Finland, Germany and Poland. At the end of June 2022, Valmet Automotive employed a total of approximately 4,450 people.
 
Valmet Automotive’s Strategy
 
Valmet Automotive operates in a number of end markets, including the automotive, truck and bus and off-highway vehicle markets, with a historical focus on the automotive industry. The automotive industry has recently begun a significant industry transformation, with advancements in connected car, automated/autonomous driving, sharing subscription, and electrification technologies having had a profound impact on the strategic direction of, and success criteria for, both OEMs and suppliers. Electrification in particular is expected to be the major driver of transformation for the automotive industry in the current decade and beyond, as powertrains pivot rapidly away from internal combustion engines and major European premium OEMs seek to meet accelerated timelines and ambitious targets for the electrification of their entire vehicle portfolio.
 
Valmet Automotive has developed its entire product and service portfolio across all three business lines to offer products and services that seek to meet evolving customer needs in the rapidly transforming automotive industry, with no Valmet Automotive offering being dependent on or tied to internal combustion engines propulsion. Valmet Automotive believes that this strategic and product portfolio positioning, combined with Valmet Automotive’s deeply embedded relationships with leading OEMs, leaves it well positioned as an important partner for its customers in addressing the challenges they face as a result of the accelerated transformation towards electric mobility taking place in the European and global automotive industry.
 
Valmet Automotive’s vision is to be an international and leading systems and service provider in ‘electric mobility’ and ‘renewable energy’ storage, as key means for climate protection and a ‘truly green’ world. In addition to being guided by Valmet Automotive’s vision and mission, each business line has its own vision and strategic framework which underpins decision making at a business line level: the EVS business line’s vision is to be the technology and market leader in electric vehicle (“EV”) battery systems globally, serving as a preferred partner for customers in automotive, off-highway vehicle and truck and bus end-markets, from concept development through to system supply; the VCM business line’s vision is to be the most attractive, sustainable, and smart VCM partner, supporting customers in their transformation to e-mobility; the RKS business line’s vision is to be the leading European provider of active exterior kinematic systems for EVs and convertible roof systems for passenger cars, enhancing end-customer experience with innovative features.
 
Valmet Automotive’s Key Strengths
 
The Company believes that it benefits from the following key strengths and competitive advantages:

• Technological know-how, capabilities and strategic vision oriented towards supporting the significant industry disruption from EV transition that is requiring rapid OEM portfolio and supply chain evolution;
• Complementary business lines and well positioned as a critical, trusted strategic partner, based on expertise, innovative mind-set, and proven track record;
• Attractive financial and growth profile underpinned by multi-year visibility from booked business;
• Differentiated positioning and strong existing relationships with leading OEMs, together with newly established relationships with new market entrants;
• EVS business line with rapid growth, broad customer base, significant booked business and further upside opportunities;
• Sustainability at the core of Valmet Automotive’s vision, mission, strategy and culture; and
• Strong management and committed, satisfied and skilled personnel.

 
Valmet Automotive’s Financial Targets and Dividend Policy
 
The Board of Directors of the Company has adopted the following financial targets for Valmet Automotive:

• Growth: Net sales of EUR 1,000 million reached by 2025-2026, with EVS to account for approximately 40 per cent of net sales.
• Profitability: Maintain comparable EBITDA margin between 16-19 per cent.
• Dividend policy: Valmet Automotive is in growth phase and will therefore prioritise profitable growth over dividends in the coming years.

 
Financial Guidance
 
Net sales are estimated to be in the range of EUR 580-620 million in financial year 2022. Comparable EBITDA margin is estimated to be in the range of 14.5-16.5 per cent of net sales in the financial year 2022.
 
Net sales are expected to decrease in financial year 2023 compared to financial year 2022. The expected decrease in net sales is due to an expired, significant VCM contract, however, the impact is expected, to a large extent, to be offset by the aggregate growth of EVS, RKS and other VCM volumes. Comparable EBITDA margin is estimated to decrease to the range of 10-12 per cent of net sales in financial year 2023 due to an ended VCM contract.
 
Information on the Offering
 
The contemplated Offering is expected to consist of a share issue by the Company. The Offering will consist of (i) a public offering to private individuals and entities in Finland, (ii) an institutional offering to institutional investors in Finland and, in accordance with applicable laws, internationally and (iii) a personnel offering to the Company´s and its subsidiaries’ personnel. The Company, its current owners, the members of the Board of Directors of the Company and the members of the Group Management Team are expected to commit to customary lock-up restrictions. The current owners of the Company will not sell shares in the Company in the Offering, and will, therefore, remain significant shareholders even after the Offering.
 
Carnegie Investment Bank AB, Finland Branch is acting as sole global coordinator and joint bookrunner for the Offering (the “Global Coordinator”) and Swedbank AB (publ) is acting as joint bookrunner (together with the Global Coordinator, the “Managers”). Hannes Snellman Attorneys Ltd is acting as legal adviser to the Company in connection with the Offering. Roschier, Attorneys Ltd. is acting as legal adviser to the Managers in connection with the Offering. Miltton is acting as communications adviser to the Company.
 
The following Cornerstone Investors have each given subscription undertakings in relation to the Offering, under which the Cornerstone Investors have committed, subject to certain ordinary conditions, to subscribe for offer shares with approximately EUR 70 million in total, provided that the value of the Company’s outstanding shares prior to the Offering does not exceed EUR 280 million.
 

• Varma Mutual Pension Insurance Company approximately EUR 40 million
• Ilmarinen Mutual Pension Insurance Company approximately EUR 30 million

 
Valmet Automotive’s Financial Performance Measures
 
The selected consolidated financial information set forth below has been derived from Valmet Automotive’s unaudited consolidated half-year financial information as at and for the six months ended 30 June 2022 and 2021 prepared in accordance with “IAS 34 – Interim Financial Reporting”, and from the consolidated special purpose financial statements as at and for the years ended 31 December 2021, 2020 and 2019 prepared in accordance with the International Financial Reporting Standards (“IFRS”).
 
The following table sets forth Valmet Automotive’s key figures as at the dates and for the periods indicated.

 
The following table sets forth Valmet Automotive’s segment information as at the dates and for the periods indicated.
 

 
Further enquiries
 
Olaf Bongwald, CEO, Valmet Automotive
olaf.bongwald@valmet-automotive.com
callback requests Nadja Doyle, tel. +358 50 317 0538
 
Media requests:
 
Maiju Röysky, Miltton
maiju.roysky@miltton.com
tel. +358 50 574 7028

Disclaimer and Important Information
 
It may be unlawful to distribute this announcement in certain jurisdictions. This announcement is not for distribution in or into the United States, Australia, Canada, Hong Kong, Japan, New Zealand, Singapore, South Africa or any other jurisdiction where such distribution would be unlawful. The information in this announcement does not constitute an offer of securities for sale in such jurisdictions.
 
The issue, exercise or sale of securities in connection with the Offering is subject to specific legal or regulatory restrictions in certain jurisdictions. The Company and the Managers assume no responsibility in the event there is a violation by any person of such restrictions.
 
This announcement is not a prospectus for the purposes of the Prospectus Regulation (EU) 2017/1129 (the “Prospectus Regulation”) and underlying legislation. A prospectus prepared pursuant to the Prospectus Regulation and approved by the Finnish Financial Supervisory Authority will be published, and when published can be obtained from the Company and other places indicated in the prospectus. Investors should not subscribe any securities referred to in this announcement except on the basis of information contained in the prospectus.
 
This announcement does not constitute an offer for sale, or a solicitation of an offer to purchase or subscribe for, any securities in the United States. The securities referred to in this announcement have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), and accordingly may not be offered or sold in the United States absent registration or an exemption from the registration requirements of the U.S. Securities Act and in accordance with applicable U.S. state securities laws. The Company does not intend to register any of the securities in the United States or to conduct a public offering of securities in the United States. Copies of this announcement are not being, and should not be, distributed in or sent into the United States.
 
This announcement does not constitute an offer of securities to the public in the United Kingdom. No prospectus has been or will be approved in the United Kingdom in respect of the securities referred to herein. In the United Kingdom, this announcement is for distribution only to and is directed only at persons who are “qualified investors” within the meaning of the Prospectus Regulation as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018 and (i) who have professional experience in matters relating to investments which fall within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the “Order”), (ii) who are high net worth entities falling within Article 49(2)(A) to (D) of the Order or (iii) other persons to whom this announcement may otherwise lawfully be communicated (all such persons together being referred to as “relevant persons”). Any person who is not a relevant person should not act or rely on this announcement or its content. Any investment or investment activity to which this announcement relates is available only to relevant persons and will be engaged in only with relevant persons.
 
This announcement has been prepared on the basis that any offer of securities in any Member State of the European Economic Area, other than Finland, where the Prospectus Regulation is applicable (each, a “Relevant Member State”), will be made pursuant to an exemption under the Prospectus Regulation from the requirement to publish a prospectus for offers of securities. As a result, the securities may only be offered in Relevant Member States (a) to “qualified investors” within the meaning of Article 2(e) of the Prospectus Regulation; or (b) in any other circumstances falling within Article 1(4) of the Prospectus Regulation. Neither the Company nor the Managers have authorised, nor do they authorise, the making of any offer of the securities through any financial intermediary, other than offers made by the Managers which constitute the final placement of the securities contemplated in this announcement. Neither the Company nor the Managers have authorised, nor do they authorise, the making of any offer of securities in circumstances in which an obligation arises for the Company or the Managers to publish or supplement a prospectus for such offer.
 
The information contained in this announcement is for informational purposes only and does not purport to be full or completed. No reliance may or should be placed by any person for any purposes whatsoever on the information contained in this announcement or on its completeness, accuracy or fairness. This announcement does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares or any other securities nor shall it (or any part of it) or its distribution, form the basis of, or be relied on in connection with, any contract therefor. The information in this announcement is subject to change. Investors must neither accept any offer for, nor acquire, any securities to which this announcement refers, unless they do so on the basis of the information contained in the prospectus published or offering circular distributed by the Company.
 
This announcement includes forward-looking statements, which include statements regarding the Company’s business, strategy, financial condition, profitability, results of operations, market data, and perceptions and objectives of the management of future operations and goals, as well as other statements that are not historical facts. Words such as “believe,” “anticipate,” “plan,” “expect,” “intend,” “target,” “estimate,” “project,” “predict,” “forecast,” “guideline,” “should,” “aim,” “continue,” “could,” “guidance,” “may,” “potential,” “will,” as well as similar expressions and the negative of such expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying these statements. By their nature, forward-looking statements are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements. Except for any ongoing obligation to disclose material information as required by the applicable law, the Company does not have any intention or obligation to publicly update or revise any forward-looking statements after it distributes this announcement, whether to reflect any future events or circumstances or otherwise.
 
The contents of this release have been prepared by, and are the sole responsibility of, the Company. Neither the Managers nor any of their directors, officers, employees, advisers or agents accept any responsibility or liability whatsoever for or make any representation or warranty, express or implied, as to the truth, accuracy or completeness of the information in this release or any other information relating to the Company, its subsidiaries or associated companies (or whether any information has been omitted from this release), whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this release or its contents or otherwise arising in connection therewith.
 
Information to Distributors
 
Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended (“MiFID II”); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the “MiFID II Product Governance Requirements”), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any “manufacturer” (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the shares have been subject to a product approval process, which has determined that the shares are (i) compatible with an end target market of retail investor and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II (the “Target Market Assessment”); and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II. Notwithstanding the Target Market Assessment, distributors should note that: the price of the shares may decline and investors could lose all or part of their investment; the shares offer no guaranteed income and no capital protection; and an investment in the shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to any transaction mentioned in this release. For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the shares. Each distributor is responsible for undertaking its own Target Market Assessment in respect of the shares and determining appropriate distribution channels.