Stora Enso s strategy and market environment. Nordea Forest Products & Paper Seminar, 28 May 2014 CFO Seppo Parvi Stora Enso

Transcription

1 s strategy and market environment Nordea Forest Products & Paper Seminar, 28 May 2014 CFO Seppo Parvi

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. 28 May

3 Growth businesses around 60% of sales European paper 33% of sales in Q Printing and Living* Biomaterials* Renewable Packaging* Printing and Reading Sales EUR million Operational EBITDA EUR 290 million Operational ROOC 1.4 % CAPEX EUR 137 million Sales EUR million Operational EBITDA EUR 153 million Operational ROOC 3.8% Sales EUR million Operational EBITDA EUR 522 million Operational ROOC 13.3% Building and Living Sales EUR million Operational EBITDA EUR 115 million Operational ROOC 13.9 % CAPEX EUR 28 million CAPEX EUR 368 million 28 May 2014 CAPEX EUR 204 million *2013 FY figures 3

4 Company strategy Transformation from a European pulp and paper company to a value creating, growth markets renewable materials company 28 May

5 Growth Renewable Packaging Plantation based pulp Building and Living Cash Printing and Reading Nordic market pulp Low cost base saw milling 5

6 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Annualized demand [kt/a] Y-o-Y change % European paper demand continued to decline, at slightly lower rate European paper demand trend development % 4% 2% 0% % -4% -6% -8% Y-o-Y Paper Annualized Paper -10% -12% % SA = seasonally adjusted Source: PPPC, Euro-Graph 28 May

7 Transforming to value creating growth Skoghall, Sweden, woodyard logistics, investment started up on time, in Nov 2012 Sunila, Finland, lignin extraction plant and dryer, lignin dust burners in the lime kilns and a packing line, start up during Q1 of 2015 Varkaus, Finland, conversion of fine paper machine to light-weight containerboard, start up during Q4 of 2015 Montes del Plata. Uruguay Start-up in the coming weeks Bulleh Shah Packaging Limited, Pakistan JV, Q Completed In implementation Inpac acquisition: India and China, Q Ostroleka, Poland Container board machine, investment started up in Jan 2013, 6 weeks ahead of schedule Guangxi, China Pulp and Board mills, investment in two phases 28 May

8 Montes del Plata entering the market with 1.3 Mt/a Chemical market pulp demand to increase from 55.1 to 60.0 Mt in (Kt) % % % % % % Capacity Demand Supply/Demand balance 70% Source: Pulp and Paper Products Council, May

9 Global Market Pulp demand by end use 2013 Coated WF 15 % Mechanical P&R 4 % Tissue 27 % Uncoated WF 20 % Fluff 10 % Packaging 8 % Speciality 16 % Source: Hawkins Wright 28 May

10 Guangxi consumer board machine operational in 2016 The Chinese overall board market will maintain stable growth in the near future Estimated Chinese virgin fibre based Consumer Board market growth China Consumer Board market incl. WLC*, demand-supply (Kt) % CAGR (Kt) Capacity Production Demand Source: Pöyry, Ipsos, RISI, PIRA, Euromonitor & Internal Estimates Source: Ipsos *White lined chipboard 10

11 Varkaus fine paper conversion to kraftliner in 2015, Ostrołęka added RCP-based containerboard in 2013 Market development - Corrugated packaging Nordic SC Fluting Global market size (kt) RCP based containerboard Europe (kt) (Kt) (Kt) Kt + 1.4% Kt + 1.8% Kraftliner Europe (kt) Corrugated packaging* (kt) (Kt) (Kt) Kt + 2.3% Kt + 2.8% Market Source: Pöyry 2013, ICCA, PIRA, Analysis *Sweden, Finland, Poland, Russia, Baltic, Hungary 11

12 s plantations and forest assets Bergvik Skog, Sweden 2.3 million ha of land in Sweden, ha in Latvia (ownership of 49%) Tornator, Finland ha of forestland in Finland, ha in Romania, and ha in Estonia (ownership 41%) Guangxi, Southern China (leased) ha of land of which ha eucalyptus, ha other species Veracel plantations, Brazil ha of land of which ha eucalyptus plantations Rio Grande do Sul, Brazil ha of land of which ha eucalyptus plantations Montes del Plata, Uruguay ha of land of which ha planted In addition, leased plantations: - Laos: trial plantation, ha - Russia: ha - Czech Republic: ha Fair value of Biological assets and Group s indirect share of forest assets is as of 31 Dec 2013, in total EUR million 28 May

13 Transformation on-going Sales XX -2% 11% 18 % 41 % 30 % 24% 66% 31 % 70 % 10 % Publication Paper, Fine Paper and Paper Merchants Packaging Boards Wood Products Wood Supply and Other 28 May

14 Q1 financial results

15 Lower costs improved profits Q year-on-year Clearly higher Operational EBIT due to lower costs, lower depreciation and restructuring Operational EBIT EUR 182 million or 7.1% (4.4%), increase EUR 64 million Nearly all of the original cost reductions of the EUR 200 million programme visible in the financial results, earlier than anticipated Net debt to Operational EBITDA decreased to 2.8 (3.1) Operational ROCE 8.6% (5.1%) Jouko Karvinen has decided to leave his position. He will continue as CEO until a successor is found. 28 May

16 Printing and Reading improved Operational EBIT by EUR 33 million Q year-on-year Operational EBIT: Costs significantly lower EUR 21 million lower depreciation Capacity closures MEUR Seasonally lower cash flow Veitsiluoto PM 1 closure No production at Corbehem since January May

17 divests its Uetersen Mill in Germany Specialty and coated fine paper ( tonnes) To be completed in mid-july 2014 In line with strategic transformation Annual sales reduction EUR 155 million Operational EBIT and cash flow enhancing from the Q3 Capacity reduction around tonnes 28 May

18 Biomaterials Q MdP Pulp Mill ready for start-up after receiving operation permits In 2014 s share of production tonnes Biorefinery investment to Sunila 14% 12% 10% 8% Softwood pulp prices increased in Q (y-o-y and q-o-q) 6% 4% Hardwood pulp prices were somewhat stable in Q1 (q-o-q), with a slight decrease y-o-y 2% 0% Q Q ROOC (%) ROOC (%) excl str. projects 28 May

19 Building and Living continued solid performance Q year-on-year Operational EBIT: Sales prices higher Costs clearly lower, partially due to early cost reductions MEUR Efficiency improvement: Closure of Sollenau, Austria and Investment to Murow, Poland 28 May

20 Renewable Packaging increased profit by EUR 24 million Q year-on-year Operational EBIT: Higher sales prices Clearly lower costs Guangxi: IFC equity and loan 2/3 of the levelling work completed Key equipment selected Harvesting the plantations and selling the wood Board machine operational early 2016 as previously announced Q2 maintenance Ostrołęka and Imatra pulp MEUR 28 May

21 Forecast for Capex and Equity Injections in 2014 EUR million Forecast 2014* Capital expenditure Equity injections 30 Total Depreciation * Capital expenditure includes approximately EUR 260 million for the project in Guangxi, China and approximately EUR 125 million for Montes del Plata Pulp Mill in Uruguay. 28 May

22 Guidance Compared to Q Sales expected to be similar Operational EBIT in line with EUR 182 million Maintenance in Biomaterials and Renewable Packaging Ostrołęka Mill shutdown extended by Polish national electricity grid maintenance break in Q2 28 May

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