Transformation driving sales growth

Transcription

1 Transformation driving sales growth Martin Ros SVP, Group Treasurer

2 Disclaimer It should be noted that Stora Enso and its business are exposed to various risks and uncertainties and 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. 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. All statements are based on management s best assumptions and beliefs in light of the information currently available to it and Stora Enso assumes no obligation to publicly update or revise any forward-looking statement except to the extent legally required. 2

3 Stora Enso in brief Leading global provider of renewable solutions in packaging, biomaterials, wooden constructions and paper Focus on sustainable businesses with approximately employees across 35 countries and EUR 9.8bn in 2016 sales Positive credit ratings outlook supported by strong balance sheet and further deleveraging Stora Enso shares are listed on NASDAQ Helsinki and Stockholm. In addition, the shares are traded in the USA as ADRs

4 Stora Enso responds to global megatrends Major global trends drive the world s demand for renewable materials Global warming Growing population Urbanisation Digitalisation Changing lifestyles Growing middle class Eco-awareness Bio-based products are not only reusable, but also renewable 4

5 Majority of the portfolio is aimed at growth Stora Enso 2016: Sales MEUR / Operational EBIT 884 MEUR / Operational ROCE 10.3% / Operational ROCE excluding Beihai 13.0% + Consumer Board Expansion of relative market share in profitable niches + Packaging Solutions Selective profitable growth Biomaterials Strengthening current business and creating new profitable growth Wood Products Accelerating growth Paper Strategy for maximum cash generation 5

6 Film: What a tree can do 6

7 The global consumer board market is growing Growth of 9 million tonnes expected Above region average FBB CUK WLC FSB LPB SBS FBB FSB CUK FSB FBB CUK LPB FSB FBB CUK SBS FBB FSB CUK SBS LPB FSB WLC 3.0% 0.4% 1.8% 4.0% 3.3% 3.1% 3.3% Below region average Latin America North America Europe China Rest of Asia Africa OTHER SBS WLC LPB OTHER SBS LPB WLC OTHER WLC OTHER LPB WLC OTHER CUK FBB SBS OTHER FBB = Folding boxboard, CUK = Coated unbleached kraftboard, WLC = White lined chipboard, FSB = Food service board, LPB = Liquid packaging board, SBS = Solid bleached sulfate board, OTHER = Grey Chipboard, Mech Woodpulp Board, Wet Machine Board, Recycled Solid Board. Source: Pöyry Management Consulting 7

8 Packaging for online shopping has the strongest growth Europe Online retail market grows faster than other retail markets % p.a. Different retail categories face different challenges for successful online packaging. China % p.a New reality for brand owners and retailers packaging is clearly a strategic tool to gain from the growth in online retailing Excluding categories services and large travel SOURCE: Euromonitor May

9 Pulp demand keeps growing, especially in segments selected in Stora Enso strategy Pulp demand to 2025 in million tonnes (Mt) CAGR: + 2.3%~ million tonnes (Mt) /year Tissue Graphic Papers Speciality Papers Packaging Hygiene/Fluff Dissolving Pulp Grade Mt Hardwood 9.7 Softwood 1.2 Source: Hawkins Wright, Pöyry, Stora Enso Fluff 2 Dissolving Pulp 2.6 9

10 Getting the right log is critical for profitability in Wood Products Customer demand Sawing pattern Log pricing Cutting Purchasing $ Demand flow Material flow 10

11 Innovations taking wood to new heights Växjö, Sweden, apartment buildings, 7 000m 3 CLT Ris-Orangis, apartment buildings, Paris France, 1 800m 3 CLT Moholt 50 50, student homes, Trondheim, Norway, 6 500m 3 CLT International House Sydney, office building, Barangaroo, Australia, 2 000m 3 CLT 11

12 Innovations taking wood to new heights Wood City, apartment buildings, Helsinki, Finland, 2 600m 3 LVL Crome Court, student accommodation, Norfolk, UK, 1 680m 3 CLT Geological research base, Svalbard, Norway, 300m 3 CLT La Cité du Vin, wine museum, Bordeaux, France 12

13 Transformation continues towards higher margin innovative solutions in Wood Products Sales 2006 Sales 2015 Target % 24% >35 % Classic sawn Building Components and System % share of Wood Products sales 13

14 Profitable growth Asset transformation nearly completed now the focus is on sales and innovation MdP Mill investment Beihai Mill investment Varkaus Mill conversion Murow sawmill investment Varkaus LVL investment Imatra de-bottlenecking Sunila bio-refinery Innovation Centre Helsinki Innovation Centre Stockholm Rennovia JDA Launch of first MFC product Intelligent packaging Launch of Performa Brilliance Launch of CKB Nude Asset transformation Innovation & customer focus 14

15 Transformation journey Growth businesses 70% of sales and 80% of operational EBIT Sales 2006 Sales Q1/2017-3% 30% 2% 70% 21% 24% 30% 12% 12% 70% 17% 15% Operational EBIT 2006 Operational EBIT Q1/2017 Consumer Board Packaging Solutions (1) Biomaterials Wood Products Paper (2) Other & eliminations -3% 38% 80% 6% (1) In 2006 included in Consumer Board (2) In 2006 includes merchants 35% 20% 28% 62% 6% 10% 25% 11% 15

16 Group sales growth 2% Summary financials Q EUR million Q1/17 Q1/16 Change% Q1/17 / Q1/16 Q4/16 Change% Q1/17 / Q4/16 Sales % % Operational EBITDA % % Operational EBITDA margin 14.1% 14.8% 12.7% Operational EBIT % % Operational EBIT margin 8.6% 10.1% 7.8% Profit before tax excl. IAC % % EPS excl. IAC, EUR EPS (basic), EUR Operational ROCE 10.0% 11.3% 8.9% Operational ROCE excl. Beihai project 12.9% 13.7% 12.1% Cash Flow from Operations Net debt/last 12 months operational EBITDA

17 Capital allocation Capex on its way to the level of depreciation 17

18 Strategic targets ambitious, but reachable Group targets Q1 16 Q1 17 Dividend To distribute 50% of net income over the cycle Growth* To grow faster than the relevant market 2.4% (YoY) 9.7% (YoY) Net debt to operational EBITDA <3.0x Fixed costs to sales <20% 24.4% 24.1% Debt to equity <80% 58% 46% Operational ROCE >13% 11.3% 10.0% Operational ROCE excl. Beihai 13.7% 12.9% Divisional targets Q1 16 Q1 17 Consumer Board Operational ROOC > 20% 14.3% 12.2% Consumer Board excl. Beihai 34.2% 38.0% Packaging Solutions Operational ROOC > 20% 3.2% 11.1% Biomaterials Operational ROOC > 15% 13.1% 7.9% Wood Products Operational ROOC > 18% 12.3% 16.4% Paper Cash flow after investing activities to sales > 7% 5.3% 4.3% *Excluding Paper 18

19 Financial Policy and Debt Funding Conservative financial policy with focus on net debt / operational EBITDA and debt / equity metrics Credit Ratings Dividend policy to distribute 50% of net income through the cycle Rating agency Long / Shortterm rating Valid from Strong liquidity position with limited refinancing risk and established access to bank and capital markets financing Standard & Poor's BB (positive)/b Outlook revised to positive August 2016 New 2.5% 300m 10y bond issued 31 st of May followed by 298m tendered of outstanding 2018/2019 (82/216m ) Moody's Ba2 (positive)/np Outlook revised to positive - August 2016 Fully undrawn EUR 700m RCF maturing Jan 2019 Debt Maturity Profile Q MEUR Bonds Other loans / liabilities Revolving Credit Facility 700 MEUR matures in January 2019 and is fully undrawn Commercial papers

20 ESG indices and other external recognition 20

21 Promising start for 2017 transformation projects start to deliver sales growth Sales growth of 9.7% excluding Paper Underlying business shows good progress and strong promise for the future Strengthened balance sheet and healthy cash flow generation Good access to funding through various sources Moving from asset transformation to innovation and sales transformation 21

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23 More information in Stora Enso s Investor kit storaenso.com downloads Strategy Businesses Capacities Markets Financial performance Cost structure Capex Dividend policy Ownership structure Management Most recent quarterly results 23