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

Transcription

1 Financial Results for Q CEO Karl-Henrik Sundström and CFO Seppo Parvi 22 April 2015

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 quarter supported by FX tailwinds Q year-on-year Sales decreased by 3% Sales excluding the structurally declining paper and divested businesses increased by 3% mainly due to Montes del Plata ramp-up Operational EBIT EUR 220 million 21% increase due to FX gains and lower costs Net debt to EBITDA 2.6 (2.8) Operational ROCE 10.1% (8.6%) Excluding transformational investment project 11.3% 3

4 Operational EBIT increased by 21% in Q1 y-o-y MEUR Q1 Consumer Board Packaging Solutions Biomaterials Wood Products Paper Other 15Q1 4

5 Sensitivity analysis 10% change, impact on operational EBIT 10% decrease in Impact* Energy prices Wood prices Chemical and filler prices Positive EUR 8 million Positive EUR 173 million Positive EUR 66 million 10% increase in Impact* Market pulp price, total Positive EUR 120 million 10% strengthening against Euro in the value of US dollar Swedish krona British pound Impact* Positive EUR 116 million Negative EUR 82 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. 5

6 Guangxi proceeding as planned 6

7 Transformation in Progress Consumer Board Guangxi consumer board mill 800 MEUR (phase one), increase of 40 MEUR due to FX rates Construction of the consumer board mill is in full speed Start up in mid-2016 Investment in Imatra mills 27 MEUR to improve quality and costcompetitiveness Increases consumer board capacity by tonnes Start up in Sep

8 Transformation in Progress Packaging Solutions and Wood Products Varkaus conversion 110 MEUR for conversion EBITDA margin above 15% Capacity tonnes of kraftliner Uncoated fine paper capacity to reduce by tonnes Start up Q Wooden elements 43 MEUR investment in a new production line for wooden building elements Based on peeling technology Yearly capacity ~ m 3 Sales 50 MEUR, ROOC >13% Start up Q Murow Sawmill 28 MEUR to modernise and develop Murow Sawmill in Poland Increases consumption of Polish saw logs Capacity increase to m³/shift/year Start up Q

9 Transformation in Progress Biomaterials Montes del Plata Total investment MEUR, of which Stora Enso s 50% share 850 MEUR Annual capacity 1.3 million tonnes, Stora Enso s 50% share tonnes Ramp-up proceeding according to plan Sunila Mill Biorefinery investment 32 MEUR completed Lignin extracted from the black liquor Commercialization is expected to begin in the second half of 2015 Virdia & demonstration plant Virdia acquisition 17 MEUR with potential payouts maximum of 21 MEUR by 2017 The construction of 32 MEUR Xylose Demo Plant in the US is proceeding well and on schedule 9

10 Transformation journey continues Growth businesses with 63% of sales and 92% of operational EBIT 2006 Sales Q1/2015 Sales 20XX Sales 30% 63% 21 % -3 % 32 % 2 % 37 % 30 % 12 % 70 % 16 % 14 % 70 % 38% -3 % 92% 4 % 8 % Paper Growth businesses 35 % 62 % 48 % 33 % 6 % 7 % 2006 Operational EBIT Q1/2015 Operational EBIT In 2006, all pulp used internally 10

11 Summary financials Q EUR million Q1/15 Q1/14 Change% Change % Q1 15 / Q1 15 / Q1 14 Q4/14 Q4 14 Sales % % Operational EBITDA % % Operational EBITDA, % 13.6% 11.8% 12.1% Operational EBIT % % Operational EBIT margin, % 8.8% 7.1% 8.2% Profit before tax excl. NRI % 32 n/m EPS excl. NRI, EUR EPS (basic), EUR Operational ROCE, % 10.1% 8.6% 9.7% Operational ROCE, % excl. transformation projects 11.3% 10.9% 13.1% Cash Flow from Operations % % Net debt/last 12 months operational EBITDA

12 Net FX of EUR 64 million year-on-year MEUR Q1 Local sales price and mix FX on sales Variable costs Fixed costs Fx on costs Other 15Q1 Net FX impact of 64 MEUR mainly due to a stronger US dollar and a weaker Brazilian real Approximately 40 MEUR of this relates to Biomaterials division Stora Enso is primarily a euro and Swedish crown cost based company Selling significant volumes in other currencies such as the US dollar and British pound causes material impacts on operational EBIT through price and currency movements 12

13 Cash flow from operations and balance sheet strength Q Q Q1 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 14Q4 15Q1 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Q1 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 14Q4 15Q1 3,5 3,0 2,5 2,0 1,5 1,0 0,5 0,0 Cash flow from operations, MEUR Cash flow to sales Net Debt, MEUR Net Debt to Operational EBITDA* *Last twelve months operational EBITDA 13

14 Consumer Board operational EBIT increased by 27% Q year-on-year Sales increased to EUR 569 (EUR 564) million due to higher board deliveries Sales, MEUR 0.9% Operational EBIT improved 27% to EUR 79 (EUR 62) million Positive FX and lower costs Operational ROOC 17.3% (15.7%) Operational ROOC 30.0% (20.8%) excluding Guangxi investment Q1 15Q1 Operational EBIT, MEUR 27.4% Q1 15Q1 Stora Enso Q Results 22 April

15 Packaging Solutions Q1 sales decreased due to Corenso divestment Q year-on-year Sales decreased to EUR 221 (EUR 267) million due to Corenso divestment Excluding Corenso divestment the sales grew 1.2% Sales excl. Corenso, MEUR 1.2% Operational EBIT decreased to EUR 26 (EUR 30) million Excluding Corenso divestment operational EBIT was flat Lower sales prices in local currencies and lower variable costs Fixed costs and volumes were lower due to Corenso divestment Operational ROOC 12.9% (13.5%) Q1 15Q1 Operational EBIT excl. Corenso, MEUR 0% Maintenance in Q2: Ostrołęka Stora Enso Q Results 22 April Q1 15Q1 15

16 Biomaterials Q1 sales increased by 35% Q year-on-year Sales increased to EUR 354 (EUR 263) million mainly due to Montes del Plata deliveries and FX impact Sales, MEUR 34.6% 354 Operational EBIT increased to EUR 73 (EUR 21) million FX impact of approximately 40 EUR million, partly offset by lower USD based softwood pulp prices Higher MdP volumes, partly offset by higher depreciation and fixed costs MdP maintenance went as planned in Q1 Operational ROOC 11.4% (4.0%) Q1 15Q1 Operational EBIT, MEUR % 21 Maintenance in Q2: Veracel and Enocell 0 14Q1 15Q1 16

17 Wood Products sales declined by 12% Q year-on-year Sales declined by 12% to EUR 392 (EUR 445) million mainly due to lower deliveries to Japanese and Middle East market Sales, MEUR -11.9% Operational EBIT decreased by 25% to EUR 15 (EUR 20) million Lower production and delivery volumes related to oversupply and lack of profitable orders Fixed costs lower Operational ROOC 11.7% (15.3%) Q1 15Q1 Operational EBIT, MEUR -25.0% Curtailments 6% (3%) 0 14Q1 15Q1 17

18 Paper cash flow to sales improved to 7% Q year-on-year Sales declined by 9% to EUR 914 (EUR 999) million Sales, MEUR -8.5% Asset closures and demand decline Uetersen mill disposal completed in Q Operational EBITDA decreased by 28% to EUR 61 (EUR 85) million Doubtful receivable provision of EUR 7 million Lower volumes Lower prices were partly offset by positive FX impact Q1 15Q1 Operational EBITDA, MEUR % 61 14Q1 15Q % Cash flow to sales improved from 1% to 7% % 15% % Maintenance in Q2: Langerbrugge s energy, Oulu, Sachsen and Nymölla Q1 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 14Q4 15Q1 5% 0% Cash flow from operations, MEUR Cash flow to Sales 18

19 Forecast for capex in 2015 EUR million Forecast 2015 Capital expenditure* Depreciation * The capital expenditure forecast includes EUR 110 million for biological assets and approximately EUR 390 million for the project in Guangxi, China. The Guangxi forecast has increased by EUR 40 million due to the weakening of the euro against the Chinese Renminbi. 19

20 Guidance for Q Compared to Q Q2 Sales are estimated to be slightly higher than the Q1 amount of EUR million Q2 Operational EBIT is expected to be in line with the Q1 amount of EUR 220 million Q2 negative maintenance impact is expected to be EUR 30 million higher than in Q1 Maintenance in Veracel, Enocell, Ostrołęka, Oulu, Sachsen, Nymölla, and at Langerbrugge energy production in Q2 20

21 Summary Solid quarter supported by FX tailwinds Transformation in progress Sales excluding paper and divested businesses increased by 3% y-o-y Operational EBIT 21% higher y-o-y Net debt to EBITDA 2.6 (2.8) Operational ROCE 10.1% (8.6%) 21

22 Capital Markets Day (CMD) Welcome to CMD on 28 th of May 2015 in London 22

23 23

24 Operational EBIT by segments EUR million Q1/15 Q1/14 Change % Change % Q1 15 / Q1 14 Q4/14 Q1 15 / Q4 14 Consumer Board % % % of sales 13.9% 11.0% 7.9% Packaging Solutions % % % of sales 11.8% 11.2% 11.4% Biomaterials % % % of sales 20.6% 8.0% 10.8% Wood Products % % % of sales 3.8% 4.5% 2.4% Paper % % % of sales 2.0% 3.5% 6.9% Other % % % of sales 1.4% 2.0% 3.6% 24

25 Cash flow by divisions in Q Consumer Board Packaging Solutions Biomaterials Wood Products Paper Other Cash flow from operations, MEUR Cash flow after investments, MEUR 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 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

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 Sollenau Sawmill Mar Total

28 Net Financial Items EUR million Q1/ 2015 Q1/ 2014 Change % Q115/ Q114 Q4/ 2014 Change % Q115/ Q414 Net interest expense Foreign exchange gains and losses 6-10 n/m -31 n/m Other financial items. of which 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. 28

29 Net cash flows and foreign exchange hedges Q million USD SEK GBP Estimated annual net operating cash flow exposure Transaction hedges as at 31 Mar 2015 Hedging percentage for the next 12 months % 52% 52% 29

30 Curtailments of capacity % of the capacity Paper and Board Wood Products Stora Enso Q Results 22 April

31 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 14Q4 15Q1 USD/tonne Pulp price development Bleached softwood kraft pulp Bleached hardwood kraft pulp Source: FOEX 31

32 Pulp sensitivity analysis 10% change in prices, impact on operational EBIT 10% increase in Impact* Softwood pulp prices Hardwood pulp prices Fluff pulp prices Dissolving pulp prices Market pulp price, total Positive EUR 45 million Positive EUR 45 million Positive EUR 20 million Positive EUR 10 million Positive EUR 120 million * Impact on operational EBIT for the next twelve months. A decrease of pulp prices would have the opposite impact. 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 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 14Q4 15Q1 Pulp wood and saw log prices Wood prices in Finland Pulpwood, Pine Sawlogs, Pine EUR/m Source: METLA 33

34 07Q1 07Q3 08Q1 08Q3 09Q1 09Q3 10Q1 10Q3 11Q1 11Q3 12Q1 12Q3 13Q1 13Q3 14Q1 14Q3 15Q1 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 MEUR Bonds Other loans / liabilities Commercial paper Revolving Credit Facility 700 million matures in January 2018 and is fully undrawn 35

36 Energy balance * Q Impact** on operating profit from 10% change in: EUR million p.a. Electricity market price ~0,4 Fossil fuel price ~7,1 *) Pulp. paper and board mills. Europe and overseas **) Remaining impact on non-hedged volume 36

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

38 People & Ethics Global Responsibility update KPI results Q (1/2) Focus Area Key Performance Indicator Q Target to be reached by end of TRI rate (Incidents per 1m working hours) ,5 Health &Safety LTA rate (lost time accidents per 1m working hours) ,2 Human Rights Extent of implementation of the Group's approach to human rights issues. Group-wide planning for actions was initiated to address the human rights impacts identified in the Human Rights assessments that had not been dealt with Human Rights Assessment to be conducted in all countries with production units, forestry and/or plantation operations by end of % Ethics & Compliance Employees' perception of adherence to Code of Conduct (YourVoice) Positive trend in annual employee survey. 69 % Sustainable Leadership Leadership Index (YourVoice) Positive trend in annual employee survey 76,0 Responsible Sourcing % of supplier spend covered by supplier Code of Conduct (CoC) 77% 90% of supplier spend covered by the Supplier Code of Conduct by end of % 38

39 Environment & Efficiency Global Responsibility update KPI results Q (2/2) ENVIRONMENTAL PERFORMANCE COMPARED TO BASELINE LEVELS* Focus Area Key Performance Indicator Q1 2015** Target 2014 Climate & Energy Reduction of CO₂ emissions per saleable tonne of pulp, paper and board (kg/t)*** -24% -35% by end of % Process Water Discharges Reduction of volume per saleable tonne of pulp, paper and board (m³/t) -5% -6% by end of % Process Water Discharges Reduction of Chemical Oxygen Demand (COD) per saleable tonne of pulp, paper and board (kg/t) -4% -7% by end of % *From baseline levels: year 2006 in CO₂ emissions, year 2005 in the volume (m³) of process water discharges, and year 2007 in the Chemical Oxygen Demand (COD) levels of process water discharges. Historical figures recalculated due to changes in baseline or data revision. **Including performance in January and February. The Q1 performance will be completed with performance in March in the Interim Review for the Q2. ***Covering direct fossil CO₂ emissions from production and indirect fossil CO₂ emissions related to purchased electricity and heat (Scope 1 and 2). Stora Enso Q Results 22 April