Norske Skog. Alfred Berg Forest Product Conference, Jan Kildal, CFO

Transcription

1 Norske Skog Alfred Berg Forest Product Conference, Jan Kildal, CFO

2 Contents From local player to global frontrunner Strategy and development 1H and Market Update 2

3 Largest producers of newsprint - World Global market position in Newsprint Market share Abitibi/Donohue 19% Norske Skog 13% Stora Enso 9% Bowater 7% UPM Kymmene 5% mill. tonnes Abitibi: Inc. of brokered tonnage and value-added papers, excl. of SC Abitibi and Norske Skog: Incl. 1/3 of Pan Asia 3

4 Norske Skog - Rapid expansion 70 Assets NOK bill. *) 25 Equity *) NOK bill. 35 Revenues NOK bill , , , Pro forma Pro forma Pro forma *)Incl. of minor interests 4

5 Norske Skog - Rapid expansion Norway 86 % Production capacity publication paper Europe 14 % Europe 32 % Norway 52 % Asia 14 % Latin America 2 % S. America 8 % Asia 10 % Europe 19 % NSI + FCP N. America 18 % Norway 29 % Australasia 16 % 1.8 mill. tonnes 3.3 mill. tonnes 5.8 mill. tonnes 5

6 Actively focusing on core grades Acquisitions Papeteries de Golbey, France (minorities) Bruck mill, Austria ROTO newsprint mill, Czech Republic Chongwon newsprint mill, Korea Shin Ho Paper, Thailand Pan Asia created Norske Skog Klabin Union Fletcher Challenge Paper Divestments Corrugated 6 Sawmills Speciality paper Flooring European fibre division

7 Norske Skog s goal and strategy Create a total return to shareholders on level with the best Pulp and Paper companies Important strategy points: Core Area: Publication Paper Growth, and global business operation Low-cost production Contribute to market balance Wise spending 7

8 Why publication paper? Among the most consolidated paper grades Norske Skog has high competence both on manufacturing and marketing Norske Skog has already built a strong position Highly profitable products, WACC has been covered by a good margin ROCE Publication Paper W. Avg.=16,5%

9 Ownership structure Norske Skog: Founded by forest owners in the 60-ies Now: Return on investment is most important also for them Not interested in selling shares at present - expected future return is high BUT: In the case of FCP, they have abandoned their negative control Voting shares (73% of total) Non- Norwegian 19 % Others Norway 49 % Non- Norwegians 16 % Forest owners 32 % Total capital Forest owners 25 % 9 Others Norway 59 %

10 Balance Sheet Development 70 Bill/NOK Gearing 1,6 60 *) 1,4 50 1, ,8 30 0,6 20 0,4 10 0, (E) 0 *) Gearing excluding minorities = 1,4 10

11 Recent strategic events Acquisition of Fletcher Challenge Paper is closed: Payment as planned on July 28 No further equity issue due to the acquisition High speed on integration process The pulp mills in Norway are sold - NOK 184 mill. gain plus profit split until end 2002 Norske Skog Klabin (Brazil): Consolidated (50%) as from Saw mills transferred to Moelven Laminated flooring: Sold as of

12 Norske Skog after acquisition of Fletcher A truly global company, more than any other paper company Strong presence in all important growth markets 21 mills in 13 countries: Unique possibilities for mapping and implementation of best practice Very good fibre knowledge: Virgin fibre in Europe and North America Recycled fibre in Europe and Asia Plantations in South America and Australasia Highest margins in the industry, except for Canada Increase customer base, and almost no overlap 12

13 Accounts 1 H Market Update

14 1st H - operational High profit: EBIT margin 17%, Publication Paper: Pulp: Costs: EBITDA margin 25% Good demand all over the world Prices newsprint: Stable in Europe, price increases in US and Asia Magazine paper: Stable on SC, price increases on LWC as of July 1st. Strong market, high prices Price increase on waste paper, but levelling out during the summer 14

15 Profit and loss account (NOK mill.) 1st Q 2nd Q 1st H 1st H Operating revenue Operating expenses Depreciation OPERATING PROFIT Affiliated companies Net financial items PROFIT AFTER FINANCIAL 681 ITEMS Other items PROFIT BEFORE TAXES Taxes/minorities NET PROFIT Earnings per share 21,62 20,78 32,71 Fully diluted 21,62 20,78 32,71 15

16 Cash flow (NOK mill.) 1st H 1st H Cash flow Change in working capital *) Net cash flow from operating activities Operational fixed assets, net *) Net cash from sale of subsidiaries 303 Net payment for acquisition of subsidiaries Other financial investments Dividend Net cash flow after investments and dividend New equity Acquisitions etc Change in net interest-bearing debt (minus = increase *) Inclusive of accrued investments

17 Balance sheet (NOK mill.) Operational fixed assets Securities and long-term financial items Fixed assets Stocks Receivables Liquid assets Current assets Total assets Shareholders' equity Minority interests Deferred taxes Long-term debt Current liabilities Total liabilities and shareholders' equity Net interest-bearing debt

18 Product Area Newsprint *) 1st Q 2nd Q 1st H 1st H Revenue Operating profit ,1 14,7 Operating margin 14,9 12,5 12, Production (1,000 tonnes) Good market, stable prices in Europe Increased WP prices: Offset by higher production and improved market mix *) Comprises Skogn, Follum PM 1 and PM 2, Union, Golbey, Štetí and Bruck PM 3 18

19 Product Area Magazine Paper *) 1st Q 2nd Q 1st H 1st H Revenue Operating profit ,3 15,8 Operating margin 18,9 19,8 18, Production (1,000 tonnes) Good market, stable prices in 1st half Negative effect from higher pulp prices 2nd quarter vs 1st quarter: Stock increases in 1st Q, decreasing stocks 2nd Q *) Comprises Saugbrugs, Bruck PM 4 and Follum PM 7 19

20 International *) 1st Q 2nd Q 1st H 1st H Revenue Operating profit ,9 17,4 Operating margin 18,0 19,0 16, Production (1,000 tonnes) Pan Asia: NSK: Strong demand Increased WP costs compensated by higher prices Maintenance stop and low production in 2nd quarter *) Comprises 1/3 of Pan Asia Paper, and 50% of Norske Skog Klabin as from

21 Waste paper prices Germany *) 400 DEM/tonne /95 2/95 3/95 4/95 1/96 2/96 3/96 4/96 1/97 2/97 3/97 4/97 1/98 2/98 3/98 4/98 1/99 2/99 3/99 4/99 1/00 2/00 *) Mixed news/pams, Germany Source: PPI Pricewatch 21

22 Waste paper prices (ONP) in Korea st Q 1995 = January - July 1st Q 1995 = /95 1/96 1/97 1/98 1/99 1/00 0 Dec 99 Jan 00 Feb Mar Apr May Jun Jul Source: Pan Asia. Imports from USA, delivered to Pusan 22

23 Market-Europe and USA General: Strong market, price increase outside Europe. Deliveries 1H compared to 1H 1999 Deliveries newsprint: To Europe from all suppliers +6% Total from European producers, incl. of exports +4% Canadian exports to Europe +22% Consumption USA +4% Deliveries SC: To Europe +10% Total from European producers, incl. of exports +10% Deliveries LWC: To Europe +12% Total from European producers, incl. of exports +16% 23

24 Prices newsprint Europe and USA USA east coast 45 gsm Singapore (USD) Germany(USD)

25 Asia: An impressive rebound Emerging Asia industrial sector has rebounded spectacularly after the crisis. Recovery has been broadbased across countries. After propelling out of the mid-1998 trough, growth rates are settling down around pre-crisis levels. Emerging Asia industrial production Index Over-year-ago growth IP Index average growth rate % oya

26 Asia: Strong growth expected Newsprint market balance, Asia '000 tons Chonju (1/3) Chongwon (1/3) Sing Buri (1/3) Shanghai (1/3) MNI (33%) Source: RISI Asian Demand Asian Supply 26

27 South America: A promising region Very strong market and high margins Five sales organisations to be merged into one PISA, Jaguariaiva, Brazil (51%) NS Klabin: Monte Allegre (50%) Bio-Bio, Concepcion, Chile 27

28 Australasia: High profit Fletcher s last fiscal year: 3-5% market increase in New Zealand and Australasia Prices: Linked to US prices, but less volatile Albury Mill, N.S.W., Australia Boyer Mill, Tasmania Tasman Pulp & Paper Mill Kawerau, New Zealand 28

29 Newsprint: World Shipment-To-Capacity Ratio 100 % Source: CEPIPRINT/CPPA, Apr. 29