Transformation driving sales growth

Transcription

1 Transformation driving sales growth CEO Karl-Henrik Sundström

2 Disclaimer It should be noted that 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 assumes no obligation to publicly update or revise any forward-looking statement except to the extent legally required. 2

3 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 3

4 Majority of the portfolio is aimed at growth 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 4

5 Low Annual real growth rate Division Consumer Board: expansion of relative market share in profitable niches? Selective growth FBB Strong position (Europe) Average margins LPB FSB CUK #1: World leader and European leader Strong margins Good position 30% 60% Grow WLC Barcelona exited 2015 Exit SBS SP Good position (Europe) Good margins Stagnant markets Maintain 10% Low Relative market share High 5

6 Low Market Attractiveness PRODUCTS PRODUCTS PRODUCTS High PRODUCTS Division Packaging Solutions: selective profitable growth? Packaging China Selective growth 10% 50% Kraftliner Testliner & integrated corrugated packaging Semi-chemical fluting Grow Corenso (Done) India (Done) Hungary offset (Done) Exit 40% Russian corrugated packaging Baltics corrugated packaging Nordic corrugated packaging Maintain market share Low ability to win High 6

7 Pulp demand keeps growing, especially in segments selected in 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, Fluff 2 Dissolving Pulp 2.6 7

8 Pulp market expected to remain balanced new capacity added, old disappearing New capacities and exits (Mt) PM Capacity, 1000 t/a 1000 Softwood Strong Hardwood PM Capacity, 1000 t/a Strong 900 New ~3.6 Mt/year Increasing demand sustaining ratios above 90% Exits ~2.2 Mt/year Weakest assets 12Mt Technical age, years Weakest assets 8Mt Technical age, years 5 0 Softwood Hardwood New capacity growth *: 11Mt (2.2 Mt/year) Source: Pöyry, Hawkins Wright, RISI * Based upon existing capacity announcements 8 3Mt 7.9Mt

9 Getting the right log is critical for profitability in Wood Products Customer demand Sawing pattern Log pricing Cutting Purchasing $ Demand flow Material flow 9

10 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 10

11 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 11

12 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 12

13 Faster Demand decline PRODUCTS PRODUCTS Slower PRODUCTS High PRODUCTS Division Paper: strategy for maximum cash generation? Office Paper Coated Fine Paper Selective growth of market share 47% Book Paper Uncoated Magazine Paper Improved news Grow market share 37% 0% Coated Magazine Paper (Kabel and Arapoti divested 2016) Newsprint 16% Reduce Maintain market share Low Market share in Europe 13

14 Transformation Beihai board mill is ramping up ahead of plan First LPB and CUK commercial deliveries kt EBITDA break-even in Q1/18 Ramp-up ahead of plan and first commercial deliveries of LPB and CUK FBB deliveries have continued well with increasing prices and volumes Full production expected in the first half of 2018 Production tonnes in Q PE coating investment ready by mid-2017 * *End of the year situation 14

15 Varkaus ramp-up tonnes Full production expected in second half 2017 kt EBITDA break-even in Q3/16 EBIT break-even in Q2/17 15

16 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 16

17 Transformation journey Growth businesses 70% of sales and 80% of operational EBIT Sales 2006 Sales Q1/2017-3% 21% 30% 2% 70% 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% 11% 25% 17

18 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

19 Capital allocation Capex on its way to the level of depreciation 19

20 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 20

21 Guidance for Q Compared to Q Sales are estimated to be similar to or slightly higher than the amount of MEUR recorded in Q Operational EBIT is expected to be in line with the 215 MEUR recorded in Q Operational EBIT estimate includes negative impact of the ramp-up of Beihai operations of 18 MEUR Impact of the annual maintenance shutdowns is expected to be approximately 30 MEUR higher than in Q Annual maintenance in Q2: Packaging Solutions: Biomaterials: Paper: 21 Ostrołęka Mill Montes del Plata and Sunila mills Oulu Mill

22 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 Healthy cash flow generation Moving from asset transformation to innovation and sales transformation 22

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24 Welcome to CMD on 8 November 2017 in London 24

25 Sponsored ADR Programme has established a sponsored Level I ADR programme in the US. The ADRs trade on the premier tier of Over-The-Counter ( OTC ) market in the US. Details are as follows: Ticker Symbol CUSIP Ratio ADR depositary SEOAY 86210M106 1 ADR : 1 Ordinary Shares Citibank Share price information or Please contact the Citibank s dedicated ADR broker desks: Scott Pollak (New York) Mike Woods (London) Tel: Tel: scott.h.pollak@citi.com michael.woods@citi.com 25

26 Capex allocation 2017 Both strategic and maintenance MEUR Target: Operational ROOC > 20% Target: Operational ROOC > 20% Target: Operational ROOC > 15% Target: Operational ROOC > 18% Target: cash flow after investing activities to sales > 7% 26

27 More information in s Investor kit storaenso.com downloads Strategy Businesses Capacities Markets Financial performance Cost structure Capex Dividend policy Ownership structure Management Most recent quarterly results 27