Financial Results Q CEO Karl-Henrik Sundström and CFO Seppo Parvi

Transcription

1 Financial Results Q CEO Karl-Henrik Sundström and CFO Seppo Parvi 22 October 2014

2 It should be noted that certain statements herein which are not historical facts, including, without limitation those regarding expectations for market growth and developments; expectations for growth and profitability; and statements preceded by believes, expects, anticipates, foresees, or similar expressions, are forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of Since these statements are based on current plans. estimates and projections, they involve risks and uncertainties which may cause actual results to materially differ from those expressed in such forward-looking statements. Such factors include, but are not limited to: (1) operating factors such as continued success of manufacturing activities and the achievement of efficiencies therein, continued success of product development, acceptance of new products or services by the Group s targeted customers, success of the existing and future collaboration arrangements, changes in business strategy or development plans or targets, changes in the degree of protection created by the Group s patents and other intellectual property rights, the availability of capital on acceptable terms; (2) industry conditions, such as strength of product demand, intensity of competition, prevailing and future global market prices for the Group s products and the pricing pressures thereto. price fluctuations in raw materials, financial condition of the customers and the competitors of the Group, the potential introduction of competing products and technologies by competitors; and (3) general economic conditions, such as rates of economic growth in the Group s principal geographic markets or fluctuations in exchange and interest rates. 2

3 Solid quarterly performance transformation journey continues Q year-on-year Renewable Packaging continued its strong performance for the third quarter in a row Operational EBIT increased by 30% Biomaterials improved its performance despite Montes del Plata ramp-up Building and Living performance similar to last year s good Q3. Stable performance in Printing and Reading Cash flow from operations to sales ratio 7.5% (5.4%) Group operational ROCE 13% (10.2%) excluding strategic investments 3

4 Quarterly sales at EUR million up by 3% y-o-y, excluding structurally declining paper Group sales, MEUR Group sales, MEUR % % Q3 14Q Q YTD Q YTD Sales, excluding Printing and Reading, MEUR Sales, excluding Printing and Reading, MEUR % % Q3 14Q Q YTD Q YTD 4

5 Operational EBIT increased sequentially by 14% and YTD y-o-y by 41% MEUR % % Q3 14Q3 Q YTD Q YTD 5

6 Investing in sustainable business Montes del Plata Pulp mill investment of EUR million in Uruguay, joint operation Annual production capacity 1.3 million tonnes - Stora Enso s share tonnes - Stora Enso s share of 2014 production tonnes, due to typical instability of the ramp-ups Guangxi Partnering with IFC (equity and loan) FSC certified plantation Key equipment selected Site levelling work mainly completed, next steps waiting for the permits Phase one: board machine operational early 2016 as previously announced Varkaus conversion EUR 110 million for conversion EBITDA margin above 15% Start up Q Capacity tonnes of kraftliner Uncoated fine paper capacity to reduce by tonnes Virdia demonstration plant New investment in a demonstration and market development plant in the USA for the extraction and separation of highly pure sugars from biomass to be converted into differentiated biochemicals. Demonstration and market development plant to be built at Raceland, Louisiana, USA 6

7 Non-core asset divestment and restructuring Non-core asset divestments: Corenso core and coreboard operations to Powerflute, cash consideration approximately EUR 75 million expected Q4, announced Q Thiele Kaolin, cash consideration EUR 56 million, Q Restructuring: Uetersen Mill sales purchase agreement was discontinued in Q3 Planned divestment cancelled 7

8 Transformation journey continues Sales and operational EBIT 2006 Sales Q Sales 20XX Sales 21 % -3 % 34 % 0 % 38 % 30 % 12 % 70 % 17 % 11 % 70 % Paper Growth businesses -3 % 1 % 16 % 35 % 11 % 6 % 62 % 62 % 10 % 2006 Operational EBIT Q Operational EBIT 8

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10 Summary financials Q EUR million Q3/14 Q3/13 Change % Change % Q3 14 / Q3 13 Q2/14 Q3 14 / Q2 14 Sales Operational EBITDA Operational EBITDA, % Operational EBIT Operational EBIT margin, % Profit before tax excl. NRI EPS excl. NRI, EUR EPS (basic), EUR Operational ROCE, % Operational ROCE, % excl. transformation investments Cash Flow from Operations Net debt/last 12 months operational EBITDA

11 Renewable Packaging operational EBIT increased by 30% Q year-on-year Sales increased by 2.7% Higher volumes, especially Consumer board Higher wood sales in Guangxi Sales, MEUR 1.6% Operational EBIT EUR 130 million Higher volumes and prices Lower variable costs Improved operational efficiency Operational ROOC increased from 16.9% to 20.2%, excluding Guangxi project from 19.3% to 27.0% % Q3 14Q3 Q YTD Q YTD Operational EBIT, MEUR % % Q3 14Q3 Q YTD Q YTD Stora Enso Q Financial Results 22 October

12 Biomaterials operational EBIT improved by 41% Q year-on-year Sales increased by 18.8% Mainly due to MdP Operational EBIT EUR 24 million Higher volumes Activity in innovation (lignin and Virdia) increased fixed costs Softwood pulp prices higher, hardwood lower Operational ROOC increased from 3.3% to 4.2%, excluding MdP from 9.0% to 11.1% Sales, MEUR % % Q3 14Q3 Q YTD Q YTD Operational EBIT, MEUR % % Q3 14Q3 Q YTD Q YTD Stora Enso Q Financial Results 22 October

13 Millions Building and Living operational EBIT EUR 22 million Q year-on-year Sales decreased by 6.7% Lower volumes in Japanese market Operational EBIT EUR 22 million Lower volumes and slightly lower prices Lower fixed costs Operational ROOC decreased from 17.7% to 16.0% Murow Sawmill investment proceeding as planned Sales, MEUR % % Q3 14Q3 Q YTD Operational EBIT, MEUR Q YTD % % 22 13Q3 14Q3 Q YTD Q YTD 13

14 Printing and Reading cash flow to sales improved from 5.4% to 7.5% Q year-on-year Sales declined by 7.9% Corbehem and Veitsiluoto PM1 closure Structural paper demand decline Operational EBITDA EUR 84 million, improved by 3.7% Lower costs Sales prices in local currencies lower Lower volumes due to machine closures Operational ROOC increased from 1.9 % to 6.7% Cash flow improved y-on-y and q-on-q Sales, MEUR % % Q3 14Q3 Q YTD Q YTD Operational EBITDA, MEUR 23.5% % Q3 14Q3 Q YTD Q YTD 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 13Q1 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 Cash flow from operations, MEUR Cash flow to Sales 14

15 Sensitivity analysis 10% change, impact on operational EBIT 10% decrease in Impact* Energy prices Wood prices Chemical and filler prices Positive EUR 13 million Positive EUR 187 million Positive EUR 59 million 10% increase in Impact* Market pulp price, total Positive EUR 95 million 10% strengthening against Euro in the value of US dollar Swedish krona British pound Impact* Positive EUR 103 million Negative EUR 74 million Positive EUR 46 million *Impact on operational EBIT for the next twelve months. An increase of energy, wood or chemical and filler prices or decrease of pulp prices, as well as weakening of the currencies would have the opposite impact. 15

16 Forecast for capex in 2014 EUR million Forecast 2014* Capital expenditure Depreciation * Capital expenditure includes approximately EUR 260 million for the project in Guangxi, China. These figures do not include the acquisition of Bergvik Skog and Virdia shares. 16

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18 Guidance for Q Compared to Q Sales are estimated to be roughly similar to the EUR million Operational EBIT is expected to be somewhat lower than EUR 210 million Due to normal seasonal weakness in the Renewable Packaging and Building and Living divisions 18

19 Conclusion y-o-y comparison Transformation journey continues Solid third quarter Operational EBIT increased by 14% Net debt /EBITDA improved from 3.1 to 2.8 Operational ROCE improved from 8.3% to 9.7% 19

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21 Operational EBIT by segments EUR million Q3/14 Q3/13 Change % Change % Q3 14 / Q3 13 Q2/14 Q3 14 / Q2 14 Renewable Packaging % % % of sales 15.3% 12.1% 13.4% Biomaterials % % % of sales 8.5% 7.1% 4.1% Building and Living % % % of sales 5.1% 5.2% 7.6% Printing and Reading % % % of sales 3.4% 1.2% 3.7% Other % % % of sales 0.2% 4.9% 1.8% 21

22 Balance sheet strength Q Q Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 3,5 3,0 2,5 2,0 1,5 1,0 0,5 0,0 Net Debt, MEUR Net Debt/Operational EBITDA* *Last twelve months operational EBITDA 22

23 Cash flow from operations Q1 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Cash flow from operations, MEUR Cash flow to sales 23

24 Cash flow by divisions in Q Printing and Reading Biomaterials Building and Living Renewable Packaging Other -100 Cash flow from operations, MEUR Cash flow after investments, MEUR 24

25 Permanent pulp, paper and board capacity reductions since 2006 Mill Date Grade Capacity reduction, t Corbehem PM 3 and PM 4 Jun 2006 LWC Varkaus PM 1 End 2006 WFC Berghuizer Mill Oct 2007 WFU Reisholz Mill End 2007 SC Summa Mill Jan 2008 Newsprint, uncoated mag, book paper Anjala Mill PM1 Feb 2008 Coated magazine paper Baienfurt Mill End 2008 FBB Kabel Mill PM 3 End 2008 Coated magazine Kemijärvi Pulp Mill April 2008 Long-fibre (SW) pulp Norrsundet Pulp Mill Dec 2008 Long-fibre (SW), pulp Varkaus Mill coreboard machine Dec 2008 Coreboard Imatra PM 8 Mar 2010 WFU Varkaus PM 2 and PM 4 Sep 2010 Newsprint, directory paper Maxau PM 7 Nov 2010 Newsprint Hylte PM1 Dec 2012 Newsprint Ostroleka PM2 Jan 2013 Containerboard Hylte PM2 May 2013 Newsprint Kvarnsveden PM11 May 2013 Newsprint Veitsiluoto PM1 Apr 2014 Coated magazine Corbehem MIll July 2014 LWC Total

26 Permanent sawn wood capacity reductions since 2006 Mill Date Capacity reduction, m 3 Veitsiluoto Sawmill Honkalahti Sawmill Sauga Sawmill Jun Sollenau Sawmill Näpi Sawmill Kotka Sawmill Paikuse Sawmill End Zdirec Sawmill Ybbs Sawmill 2008 & Jun Kitee Sawmill 2008 & Jun Varkaus Sawmill Jun Tolkkinen Sawmill End Kopparfors Sawmill End Sollenau Sawmill Mar Total

27 Net financial items EUR million Q3/ 2014 Q3/ 2013 Change % Q314/ Q313 Q2/ 2014 Change % Q314/ Q214 Net interest expense Foreign exchange gains and losses n/m 15 n/m Other financial items. of which PIK notes Fair valuation of interest rate derivatives* Fair valuation of long-term debt Pension costs (IAS 19R) Other items Total net financial items *Not hedge accounted interest rate derivatives. 27

28 Net cash flows and foreign exchange hedges Q million USD SEK GBP Estimated annual net operating cash flow exposure Transaction hedges Hedging percentage for the next 12 months 47%* 53% 50% Additionally there are USD hedges for months worth of EUR 30 million. 28

29 Curtailments of capacity % of the capacity Paper and Board Wood Products 0 11Q111Q211Q311Q412Q112Q212Q312Q413Q113Q213Q313Q414Q114Q214Q3 Stora Enso Q Financial Results 22 October

30 07Q1 07Q2 07Q3 07Q4 08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q3 09Q4 10Q1 10Q2 10Q3 10Q4 11Q1 11Q2 11Q3 11Q4 12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 USD/tonne Softwood pulp prices Stora Enso s market pulp is softwood Bleached softwood kraft pulp Bleached hardwood kraft pulp Source: FOEX 30

31 Pulp sensitivity analysis 10% change in prices, impact on operational EBIT 10% increase in Impact* Hardwood pulp** prices Softwood pulp prices Fluff pulp prices Dissolving pulp prices Market pulp price, total Positive EUR 35 million Positive EUR 35 million Positive EUR 15 million Positive EUR 10 million Positive EUR 95 million * Impact on operational EBIT for the next twelve months. A decrease of pulp prices would have the opposite impact. ** Includes tonnes from Montes del Plata 31

32 06Q1 06Q2 06Q3 06Q4 07Q1 07Q2 07Q3 07Q4 08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q3 09Q4 10Q1 10Q2 10Q3 10Q4 11Q1 11Q2 11Q3 11Q4 12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 Pulp wood and saw log prices Wood prices in Finland Pulpwood, Pine Sawlogs, Pine EUR/m Source: METLA 32

33 07Q1 07Q3 08Q1 08Q3 09Q1 09Q3 10Q1 10Q3 11Q1 11Q3 12Q1 12Q3 13Q1 13Q3 14Q1 14Q3 EUR/tonne Paper for recycling prices 200,0 Mixed OCC De-inking 160,0 120,0 80,0 40,0 0,0 German RCP price development. free delivered Source: Verband Deutscher Papierfabriken/Stora Enso 33

34 Maturity profile Q (including joint arrangements according to IFRS11) MEUR Bonds Other loans / liabilities Commercial paper Revolving Credit Facility 700 million matures in January 2017 and is fully undrawn 34

35 Energy balance * Q Impact** on operating profit from 10% change in: EUR million p.a. Electricity market price ~3 Fossil fuel price ~10 *) Pulp. paper and board mills. Europe and overseas **) Remaining impact on non-hedged volume 35

36 Stora Enso electricity procurement * Q *) Pulp. paper and board mills. Europe and overseas 36