Stora Enso transformation. CFO Karl-Henrik Sundström

Transcription

1 Stora Enso transformation CFO Karl-Henrik Sundström 7 May 2013

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 Stora Enso portfolio Q Group Sales, EUR million Operational EBIT, EUR 118 million Printing and Reading Biomaterials Building and Living Renewable Packaging Other 31% 1% 42% 19% 2% 19% 6% 17% 10% 58% 3

4 Stora Enso s strategy 4

5 Strategy Transformation from a European pulp and paper company to a value creating, growth markets renewable materials company Stora Enso presentation 7 May

6 Stora Enso s engines Cash engines Printing and Reading Nordic market pulp Low cost base saw milling Growth engines Renewable Packaging Plantation based pulp Building and living Stora Enso presentation 7 May

7 Ensuring cash generation 7

8 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 European paper demand [Jan-2007 = 100%] European paper demand growth y-o-y [%] European paper* demand /Mar 2007/Jan = 100% 105% 5% 100% 0% 95% -5% 90% -10% 85% -15% 80% 75% SA European paper demand y-o-y SA European paper demand -20% -25% *Paper: News, UMO, UMI, SC, CM, WFC & WFU Source: EuroGraph & PPPC SA = seasonally adjusted 8

9 Capacity utilization rate, % European Paper Capacity utilization rates after capacity closures 31 March % Capacity utilization Theoretical capacity utilization with closures 100% 90% 80% 70% 60% 50% NEWS SC CMR WFC Office* Paper * Potential restart of Alizay mill not taken into account (Jun-2013) 9

10 Time to rethink structures Focus, simplification and clarity Plan to create a platform for transformation Divisions with clear accountability focusing on growth and cost competitiveness Simplified corporate structures Driving towards a value creating growth markets renewable materials company Expected cost savings of some EUR 200 million* Full impact starting from Q *including a EUR 30 million reduction in Building and Living 10

11 Rethink organisation Building and Living with Printing and Reading to one Division planned Led by Karl-Henrik Sundström, currently Chief Financial Officer The leadership of Renewable Packaging and Biomaterials remains unchanged Divisions and corporate functions planned to go through organisational streamlining. Plan for further outsourcing alternatives in group shared services and sale of non-core assets. Divisional changes planned to be effective 1 July,

12 Timeline for the restructuring announcements in 2013 February 2013 Announcement of Hylte PM 2 and Kvarnsveden PM 11 closures EUR 24 million Full impact Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 February 2013 Building & Living EUR 30 million Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 April 2013 Business structure and organisation EUR 200 million (out of which EUR 30 million B&L) Impact starts Impact starts Impact starts Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Full impact Full impact 12

13 Stora Enso s transformation 13

14 Stora Enso transformation Skoghall, Sweden Ostroleka, Poland Montes del Plata Uruguay Guangxi, China Inpac acquisition: India and China Bulleh Shah Packaging Limited, Pakistan 14

15 Q performance as expected 15

16 Q1 Performance as expected in a structurally declining European paper market Operational EBIT EUR 118 million Cash flow from Operations EUR 101 million Liquidity EUR 1.7 billion Operational ROCE %

17 EUR million Low operational EBIT due to Printing & Reading performance Cash Flow from Operations Operational EBIT* Operational EBIT margin %, 4Q rolling Cash flow from operations, 4Q rolling 11Q1 11Q2 11Q3 11Q4 12Q1 12Q2 12Q3 12Q4 13Q1 *Operational EBIT comprises the operating profit excluding NRI and fair valuations of the segments and Stora Enso s share of the operating profit excluding NRI and fair valuations of its equity accounted investments (EAI). Fair valuations include equity incentive schemes, synthetic options net of realised and open hedges, CO 2 emission rights and valuations of biological assets related to forest assets in EAI. 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 17

18 EUR million Seasonally higher working capital Q Q Higher wood inventories (EUR 50 million) Higher trade receivables (EUR 120 million) 28% 26% 24% 22% % 18% 16% 14% 12% 10% 11Q1 11Q2 11Q3 11Q4 12Q1 12Q2 12Q3 12Q4 13Q1 Operative Working Capital at the end of Q Working Capital per Sales ratio *Operative working capital = trade receivables + inventories trade payables 18

19 % % Business Area ROOC, % Excl. and incl. strategic projects Montes del Plata, Ostroleka and Guangxi Renewable Packaging Operational ROOC, % Biomaterials Operational ROOC, % 25 Operational ROOC, % excl. transformation investments 25 Operational ROOC, % excl. transformation investments Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q

20 Summary financials Q EUR million Q1/13 Q4/12 Q1/12 Change % Change % Q1 13 / Q1 12 Q1 13 / Q4 12 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

21 Group Variance Operational EBIT Q vs Q Q vs Q

22 Guidance for Q Compared to Q1 2013: Sales slightly higher Operational EBIT in line with or slightly higher than Q

23 Strategic projects financial impact Ostroleka PM5 Immaterial impact to Group Sales, mainly used as internal raw material EBITDA margin at approximately 20% from H Montes del Plata Group Sales impact 2013 limited and slightly negative Operational EBIT impact Group Sales impact 2014 with tons (Stora Enso share) Full positive EBITDA impact in the latter part of 2014 provided that the current market conditions prevail 23

24 Summary Transformation continues Short term focus: Plan to create a platform for transformation Divisions with clear accountability focusing on growth and cost competitiveness Simplified corporate structures EUR 200 million cost savings planned Montes del Plata has initiated the commissioning of the main equipment and expects to begin the mill start-up process during Q3/2013 Bulleh Shah to be completed in Q2/2013 Cash flow and liquidity 24

25 25

26 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 Total Stora Enso presentation 7 May

27 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 Total Stora Enso presentation 7 May

28 Operational EBIT by segments EUR million Q1/13 Q4/12 Q1/12 Change % Change % Q1 13 / Q1 12 Q1 13 / Q4 12 Printing and Reading % of sales Biomaterials % of sales Building and Living % of sales Renewable Packaging % of sales Other n/m % of sales n/m

29 Net Financial Items EUR million Q1/2013 Q4/2012 Q1/2012 Change % Q113/Q112 Change % Q113/Q412 Net interest expense Foreign exchange gains and losses n/m n/m Other financial items. of which PIK notes Fair valuation of interest rate derivatives* Fair valuation of long-term debt NewPage lease provision Pension costs (IAS 19R) Other items Total net financial items *Not hedge accounted interest rate derivatives. 29

30 Transaction risk and hedges as at 31 March 2013 EUR million USD SEK GBP Estimated annual net operating cash flow exposure Transaction hedges as at 31 Mar Hedging percentage as at 31 Mar 2013 for the next 12 months Additional GBP hedges for months increase the hedging percentages by 2 %. Operational EBIT: Currency strengthening of + 10 % EUR million USD 111 SEK -91 GBP 54 The sensitivity is based on estimated next 12 months net operating cash flow. The calculation does not take into account currency hedges and assumes no changes occur other than a single currency exchange rate movement. Weakening would have the opposite impact. 30

31 EUR million Capital expenditure and depreciation Q Q % 200 8% 150 6% 100 4% 50 2% 0 0% Capex Depreciation and impairment excl NRI Capex % of sales 31

32 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 USD/tonne Softwood pulp prices Stora Enso s market pulp is softwood Bleached softwood kraft pulp Bleached hardwood kraft pulp 450 Source: FOEX 32

33 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 Wood prices in Sweden 600 Pulpwood Sawlogs SEK/m Pulpwood includes pine. spruce and birch. Sawlogs include pine and spruce. Source: SDC. Skogsstyrelsen 33

34 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 EUR/tonne Paper for Recycling prices 200 Mixed OCC De-inking German RCP price development. free delivered Source: Verband Deutscher Papierfabriken/Stora Enso 34

35 Maturity profile Q

36 Energy balance * Q Impact** on operating profit from 10 change in: EUR million p.a. Electricity market price ~7 Fossil fuel price ~13 *) Pulp. paper and board mills. Europe and overseas **) Remaining impact on non-hedged volume Stora Enso presentation 7 May

37 Stora Enso Electricity procurement * Q *) Pulp. paper and board mills. Europe and overseas Stora Enso presentation 7 May