Valmet AftermarketagreementsFor Reduced Cost and IncreasedAvailabilityMikko ViljamaaDirector Service Agreements

Content

Valmet in North-America

Aftermarket Agreements

Example Case – Mill Maintenance Agreement

Example Case – Performance Agreement

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Valmet in North-America

Montreal, QCThunder Bay, ON

Florence, AL

Winthrop, ME

Aiken, SC

Appleton, WI

Beloit, WI Biddeford, ME

Clarks summit, PA

Columbus, MS

Federal Way,WA Neenah, WI

Charlotte, NC

Niagara Falls, NY

Lancaster, SC

Strong Presence in North America

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Service Center

Mill Site Unit

Service Point

Service Production Unit

Atlanta, GALithia Springs, GA

Toronto, ONJay, ME

Lansdale, PA

Services OfferingComprehensive Life-Cycle Services Offering

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Rolls and Workshop Services• Rolls

• Roll covers and maintenance

• Workshop services

Fabrics

• Paper machine clothing

• Filter fabrics

Mill Improvements• Upgrades

• Components

• Expert services

Performance Parts• Original

equipment manufacturer (OEM) spare parts

• Consumables

Energy and Environmental• Services for

evaporation plants, power and recovery boilers and environmental equipment

PressRhino composite roll cover for press rolls Greenpac board mill Valmet’s eServices online application Filter fabrics Evaporation plant in Metsä Board’s mill in Kaskinen

Aftermarket Agreements

Rearranged Values

© Valmet | Mikko Viljamaa / Director, Service Agreements7

Shared Objectives

Lowest Total Cost

Promises Openness

Partnership

Long-Term Partner3 Value Drivers for Buying Service Agreements

Source; Hahn Consulting8

Cost Control25%

Minimize Downtime 35%

Peace of Mind, 40%

© Valmet | Mikko Viljamaa / Director, Service Agreements

Valmet Aftermarket Agreements

Typically 3 – 5 years at the time Tailored for each customer need Aligns with customer targets and KPI’s Is based on a mutual win-win concept where a capable partner will

deliver the best program in the most cost effective and efficient manner possible

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Typical for Valmet Agreements

Each agreement has its own nominated Agreement Manager Baseline pricing for all goods and services is provided in the Market

Basket– Pricing firm always for 12 months

Continuous Improvement (CI) program– Upon agreed spend Valmet promises to find savings / improvements from the

customer processes, typically a certain percentage (10 - 25%)

Volume Credit Program– Agreement mills receive an annual credit towards future purchases from supplier– Typically excluded from this credit are capital project expenditures or other products

covered under a separate agreement with supplier

Reporting & meetings are important and take place regularly during the agreement

22 March, 2016 © Valmet | Author / Title10

Typical for Valmet Agreements

Own nominated AgreementManager

Continuous improvement (CI) Program 10-25% savings/improvements from

the customer processes

Baseline pricing provided in the Market Basket Pricing firm always for 12 months

Volume Credit Program Annual credit towards future

purchases from supplier Capital project expenditures or other

products covered under separateagreemen excluded

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Regular reporting and meetings

Valmet Agreement Portfolio

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Aftermarket Agreements

Performance Agreements

Multiple Levels

Outsourcing Agreements

Maintenance Agreements

Other “ATM” Agreements

Purchasing Agreements

Unlimited

Limited

Product Agreements

Consignment Agreements

Fee Based Agreements

Flat Rate Agreements

Roll Agreements

AMP

TRR

Pricing

© Valmet | Mikko Viljamaa / Director, Service Agreements

Over 40% of the N-A Paper Mills

Major Aftermarket Agreements in N-AAlready Over 125 Paper Mills and 200 Machines

PPP Service Agreements• International Paper 24 mills• Hood Container 2 mills• Georgia-Pacific 26 mills

• SAPPI 3 mills• Boise - PCA 8 mills• Weyerhaeuser 7 mills• Glatfelter 1 mill• Evergreen Packaging 2 mills• Domtar 1 mill• West-Rock 26 mills • Verso 2 mills• Kimberly-Clark 6 Mills

PPP Performance Agreements• Irving Paper 1 mill• Greenpac 1 mill• Wayagamack 1 mill

PPP Clothing Agreements Domtar 5 mills

Jackson Paper 1 mill

International paper x mills

Verso 6 mills Pratt Industries 4 mills

Greenpac 1 mill

Port Hawkesbury Paper 1 mill

West Linn 1 mill

© Valmet | Mikko Viljamaa / Director, Service Agreements

Tissue Service Products 1 (2)

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Tissue Service Products 2 (2)

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Example Case – Mill Maintenance Agreement

Maintenance Efficiency Over Time

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Performance Management Compared to Traditional Concept

Years

MaintenanceHours / ton

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0.2

0.3

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0.5

0.6

Performance management concept

Traditional maintenance concept

• Higher costs• More corrective maintenance• Lower technical availability

• Long-term cost optimization• Fewer failures and repairs• Highest efficiency and quality

Remarkable savings by optimizing

maintenance operations

From Maintenance to Improving Mill’sPerformance and Profitability

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A changefrom traditional maintenance to

performance management

Improved profitability by

releasing hidden mill potential

Integrated Maintenance and Production Efficiently

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Typical Way

Cleaning facilities

Engineering Material mgmt.

PurchasingMaintenance Production

Logistics Purchasing

Valmet Way

Cleaning facilities

Engineering Material mgmt.

PurchasingMaintenance Production Logistics

PurchasingOperate and

maintain team

Valmet Lean Tissue Maintenance Concept

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Own site org

Valmet services

Externals

Materials

Operator Maintenance

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Maintenance Management in Valmet payroll

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Roll services

Valmet special services

Results Through a Unique Combination of Know-how

Valmet’s combination of machinery, automation, process and maintenance know-how results in:

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Flexibility andexperience tooffer customized service

The right maintenance decisions to optimize maintenance costs

Highestefficiency of operations based onprocess know-how

Maintenance is a critical success factor

Because it Makes Business Sense

Valmet maintenance compared to the industry average– up to 30% lower maintenance costs– up to 80% less unplanned maintenance-

related shutdowns– The annual value of reducing unplanned

shutdowns by 1% can total €1 million

Optimization of net working capital– consignment stock for wear parts and

consumables– spare parts inventory optimization

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Example Case –Performance Agreement

Valmet Experts

New Insights Thru Audits

Worldwide Benchmarking

Remote Diagnostics

Guaranteed Results

What is A Performance Agreement?

A program designed to improve and maintain the customer’s competitiveness and profitability throughout the mill operations.

Valmet’s role is to bring in new ideas and to find the best solutions for development items.

Usually 3 - 5 years long and based on monthly flat fee payments.

A program designed to improve and maintain the customer’s competitiveness and profitability throughout the mill operations.

Valmet’s role is to bring in new ideas and to find the best solutions for development items.

Usually 3 - 5 years long and based on monthly flat fee payments.

Performance Agreements - Principal Idea

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Time

Production /Efficiency /Savings /Etc.

Continuous Improvement Program Improved Efficiency and Profitability

Today

Valmet Commitment

Maintenance Development

Operational Development

Phase 1 – Solving Main Process Issues

• Strong pre-analyses• Justified trials • Bottleneck solutions

Phase 2 – Continuous Long-term process Development

• Fine-tuning and Optimizing

• Optimizing Processes and Practices

© Valmet | Mikko Viljamaa / Director, Service Agreements