Valmet plans to renew its operating model to better serve customers with a lifecycle approach, and to increase efficiency
As announced in Valmet’s Financial Statements Review 2024, Valmet has initiated work to renew its strategy. The goal is to identify future growth areas, boost the expansion of its current business, and streamline operations to enhance organizational efficiency. As a first action to support this, Valmet plans to renew its operating model to serve customers better with a lifecycle approach, and to increase efficiency.
“Valmet has a rich history spanning more than 225 years, regularly reinventing itself. During the past 11 years as an independent stock-listed company, we have achieved remarkable milestones and become a technology leader in our industries with a global footprint. We have grown both organically and through acquisitions. We are currently creating a strategy to initiate the next wave of renewal. As a first concrete action to support this, we are planning to change our operating model.
The proposed operating model is designed to deliver more value to our customers throughout the lifecycle of their installed base and to empower our employees with clear accountability leading to faster decision-making, clearer responsibilities and an improved way-to-operate. We expect this to lead to improvements in our key financial metrics, such as organic growth, comparable EBITA and return on capital employed, that have plateaued in the past few years. Furthermore, as the market activity in the pulp and paper industry remains low, we need to make sure we have the right set-up to perform also in a challenging market. Finally, over the past years our overhead costs have been increasing more than our sales and we need to improve the cost efficiency and cost competitiveness of our operations. I am confident that with these changes we will be better positioned for the future,” says Valmet’s President and CEO Thomas Hinnerskov.
Proposed organizational changes
Valmet wants to further strengthen its ability to create customer value throughout the lifecycle of its installed base. To support this, Valmet plans to create strong business areas, which are responsible for driving the profitability and growth of both capital equipment and related aftermarket services. These proposed business areas are: Automation Solutions; Flow Control; Pulp, Energy and Circularity; Packaging and Paper; and Tissue.
The planned simplified organizational structure allows Valmet to optimize resource allocation, establish clearer responsibilities, and ensure clarity and speed in decision making. Valmet plans to integrate its current geographical areas into these proposed business areas enabling the strong local knowledge to be closer to the business. The business areas would be supported by separate Latin America unit with the role of ensuring successful execution of the Arauco project, and China Chair installed to secure sufficient local senior presence in the region.
In addition, to increase efficiency, Valmet also plans to establish a Global Supply unit and renew its corporate functions. The role of the Global Supply unit is to support cost-competitiveness by optimizing and leveraging Valmet’s global scale in procurement and production. Other functions under the proposed operating model include People, Communications and Culture, Finance, Strategy and Transformation, as well as Legal.
Valmet is expecting that this operating model change would result in a maximum reduction of 1,150 of its over 19,000 roles globally. These reductions will only impact white collar employees. Reductions in Finland are expected to be a maximum of 395 employees (out of approximately 4,800 white collars) and a maximum of 755 employees in other countries (out of approximately 9,200 white collars).
Valmet estimates that the corresponding annual cost savings would be approximately EUR 80 million, with full run-rate achieved by the beginning of 2026.
The proposed organizational structure and potential reductions are subject to negotiation in several Valmet countries. Valmet is committed to working closely with its employees and their representatives to ensure a smooth negotiation process. The company will keep everyone informed and consulted about the proposals, providing support to employees throughout this change.
Composition of the Executive Leadership Team under the proposed operating model
The proposed organizational changes will affect the structure and composition of the Executive Team of Valmet. As a result, the new Executive Leadership Team will, as of July 1, 2025, consist of the following members:
- Thomas Hinnerskov, President and CEO
- Katri Hokkanen, CFO
- Petri Rasinmäki, EVP Packaging and Paper, and interim EVP Tissue
- Sami Riekkola, EVP Pulp, Energy and Circularity
- Emilia Torttila-Miettinen, EVP Automation Solutions
- Simo Sääskilahti, EVP Flow Control
- Celso Tacla, EVP Latin America
- Xiangdong Zhu, EVP China Chair
- Aki Niemi, EVP Global Supply
- Anu Pires, EVP People, Communications and Culture
- Olli Hänninen, EVP Strategy and Transformation
- Rasmus Oksala, EVP Legal, and General Counsel
- Executive Vice President Tissue will be announced and appointed at a later stage.
The current Executive Team will continue leading their respective units until July 1, 2025.
“I would like to thank Tero Kokko, Petri Paukkunen and Janne Pynnönen for their valuable contributions in the Executive Team. Their next steps within Valmet will be determined later. I understand that this operating model renewal represents a significant change for more than 19,000 Valmeteers. We are committed to leading through this transition responsibly. While the proposed changes may result in reductions, which are never easy, they are necessary to move forward at this time,” says Thomas Hinnerskov.
Next steps in Valmet’s strategy and operating model renewal
Valmet is currently working on detailing out its renewed strategy which is expected to be communicated by June 5 when the Capital Markets Day is planned to take place. The proposed operating model is planned to be effective as of July 1, 2025. Valmet will communicate on the outcomes of the detailed planning and change negotiations during the process.
