Valmet's Strategic Pivot: A Potential Separation to Unlock Value

The second quarter of 2026 delivered solid results for Valmet, with organic net sales growth of 6% and comparable EBITA of €152 million, but it was the announcement of a strategic review that truly moved the needle. The company has initiated a review to evaluate the potential separation of its two business segments—Biomaterial Solutions and Services (BSS) and Process Performance Solutions (PPS)—into standalone publicly listed companies. This marks a pivotal moment for Valmet, reflecting the evolution of both segments into distinct, high-performing platforms.

The Strategic Review: A New Chapter

Thomas Hinnerskov, President and CEO, articulated the rationale: “The purpose of the review is solely to assess where that separation could create additional long-term shareholder value compared to with the current combined structure.” — Thomas Hinnerskov, President and CEO · 2026-07-24 He elaborated that the two segments now serve largely different customer bases and have different growth and capital allocation profiles, making a separation potentially more value-accretive. The review will assess the costs and synergies, with a decision expected no later than the full-year 2026 results.

This is a strategic review that has not been seen before in the company's recent history. While the company has discussed portfolio evolution, the explicit potential separation is a fresh, company-unique theme.

PPS and the Severn Acquisition

The Severn acquisition, completed just after the quarter, strengthens the Process Performance segment, adding approximately €205 million in annual net sales and expanding its installed base. The acquisition aligns with the company's strategy to grow beyond traditional biomaterial markets. In the call, Hinnerskov noted, “The acquisition of Severn further strengthened these characteristics.” — Thomas Hinnerskov, President and CEO · 2026-07-24 The PPS segment already contributes nearly half of Valmet's comparable EBITA, and its order intake now sees close to 70% from industries outside pulp and paper. This transformation is central to the separation thesis.

The recent announcement of the strategic review builds on this momentum. As Hinnerskov stated in the Q&A,

Yes. Good question. I mean, like we said in – also in this presentation, we've developed over the years, two very strong segments. We introduced them the segments last year on our Capital Market. Now it really is about how can we position these structurally to be in the best position to development.

Market Context and Outlook

Despite a softer market, Valmet reiterated its 2026 guidance: net sales flat and comparable EBITA flat or higher. The company sees early signs of stabilization in biomaterial services, with parts and consumables recovering. However, the capital project environment remains uncertain. The Severn acquisition and ongoing cost savings provide a tailwind, but service activity remains a key swing factor.

Prior to this quarter, management had signaled a cautious outlook. In the February call, Hinnerskov had said, “It is very important to clarify that Severn is not included in our guidance. It's too early to do that. We will, of course, include it once we close it in the second quarter.” — Thomas Hinnerskov, President and CEO · 2026-02-06 This quarter, the guidance has been updated to include Severn's contribution, though modest.

The market has broadly been weak, and Valmet's performance demonstrates resilience. With the strategic review, the company is positioning itself for a potential unlock of shareholder value.

Conclusion: The combined effects of the Severn acquisition, the operational improvements, and the strategic review make this a defining quarter for Valmet. The potential separation is a bold move that could simplify the investment case for each business.