Financial Results Q CEO Jouko Karvinen and EVP Karl-Henrik Sundström

Transcription

1 Financial Results Q CEO Jouko Karvinen and EVP Karl-Henrik Sundström 19 July 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 Q2 results as expected Operational EBIT EUR 124 million Cash flow from Operations EUR 344 million Liquidity EUR 1.8 billion Net debt/operational EBITDA LTM 2.7x 3

4 Continued Solid Cash Flow from Operations Reduced working capital 4

5 All business areas contributed to cash flow generation in Q

6 European paper seasonally adjusted demand trend development and y-o-y change SA = seasonally adjusted Latest data point: Jun-2013 Source: Euro-Graph 6

7 Progress report: Streamlining and structure simplification programme EUR 200 million of annual net fixed cost savings, compensating also for inflation EUR million Fixed Costs Annualized (Qx4) Progress Q Q Change Programme impact % Other change The new divisional organizations announced EUR 200 million of annual fixed cost savings - full impact from Q EUR 43 million NRIs announced year to date - rest mainly planned in Q Other change represents impact of capacity closures, previously announced programmes, new businesses, significant currency movements and M&A 7

8 Progress report: Montes del Plata Estimated to begin the start-up at the end of Q Slightly negative impact on operational EBIT in

9 Progress report: Ostrołęka mill PM 5 Proceeding according to plan EBITDA margin approximately 20% during the latter part of 2013 as targeted 9

10 Accelerating transformation: Guangxi, China Final approval from Chinese NDRC received Faster access to the Chinese consumer board market Two phase implementation First phase consumer board machine operational in the beginning of 2016 Second phase chemical pulp mill Project clearly exceeds the ROCE target of 13% 10

11 Accelerating innovation: Biorefinery at Sunila EUR 32 million investment Replacing fossil raw materials: Insulation Adhesive for construction materials Scalable technology Start-up Q

12 19 July 2013 Stora Enso Q Financial Results 12

13 Printing and Reading Structural Paper Demand Decline Operational EBITDA Q vs Q Paper Market Year-on-Year demand decline 6% Structural decline continues Stora Enso Q Financial Results Stora Enso Printing and Reading Lower pricing mainly in News and SC Sales volume decline 6% or [110 kt] despite 3 PM closures No fixed cost improvement announced cost reduction top priority Limited savings impact from Hylte PM2 and Kvarnsveden PM11 during Q2 Solid cash flow generation Q2 needed for the transformation 19 July

14 Summary financials Q EUR million Q2/13 Q1/13 Q2/12 Change % Change % Q2 13 / Q2 12 Q2 13 / Q1 13 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

15 Fairly stable despite challenging paper market Group operational EBIT Q vs Q Q vs Q

16 Guidance for Q Compared to Q2 2013: Sales expected to be slightly lower Operational EBIT in line with or slightly higher 16

17 Summary Q2 result as guided Solid cash flow - strong liquidity EUR 200 million fixed costs savings on plan European paper - to get ahead of the game Accelerated transformation: MdP Ostrołęka Guangxi Sunila Biorefinery 17

18 18

19 Projected Capex and Equity Injections for 2013 Including China investment Capital Expenditure, Equity Injections and Depreciation Forecast 2013 EUR million Forecast 2013 Capital expenditure* Equity injections Total Depreciation *Capital expenditure includes approximately EUR [90] million for project in Guangxi, China 19

20 Working capital reduced Q Q *Operative working capital = trade receivables + inventories trade payables 20

21 Balance Sheet strength Q Q *Last twelve months operational EBITDA 21

22 Operational EBIT by segments EUR million Q2/13 Q1/13 Q2/12 Change % Change % Q213/Q212 Q213/Q113 Printing and Reading n/m % of sales n/m Biomaterials % of sales Building and Living n/m % of sales n/m Renewable Packaging % of sales Other n/m - % of sales n/m

23 Timeline for the restructuring announcements in 2013 February 2013 Announcement of Hylte PM 2 and Kvarnsveden PM 11 closures EUR 24 million Q Hylte PM 2, Kvarnsveden PM11 closed in May Q Impact starts Q Q Full impact Q February 2013 Building & Living EUR 30 million Q Impact starts Q Q Q Q Full impact April 2013 Business structure and organisation EUR 200 million (out of which EUR 30 million B&L) Q Q Q Q Q Full impact 23

24 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 Hylte PM2 May 2013 Newsprint Kvarnsveden PM11 May 2013 Newsprint Total Stora Enso Q Financial Results 19 July

25 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

26 Net Financial Items EUR million Q2/2013 Q1/2013 Q2/2012 Change % Q213/Q212 Change % Q213/Q113 Net interest expense Foreign exchange gains and losses Other financial items, of which n/m n/m 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. 26

27 Transaction risk and hedges as at 30 June 2013 EUR million USD SEK GBP Estimated annual net operating cash flow exposure Transaction hedges as at 30 Jun Hedging percentage as at 30 Jun 2013 for the next 12 months 48% 56% 49% Additional USD and GBP hedges for months increase the hedging percentages by 1% and 3% respectively. Operational EBIT: Currency strengthening of + 10 % EUR million USD 104 SEK -81 GBP 51 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. 27

28 Curtailments of capacity 28

29 Softwood pulp prices Stora Enso s market pulp is softwood Source: FOEX 29

30 Pulp wood and saw log prices Wood prices in Finland Source: METLA 30

31 Paper for Recycling prices German RCP price development. free delivered Source: Verband Deutscher Papierfabriken/Stora Enso 31

32 Maturity profile Q

33 Energy balance * Q Impact** on operating profit from 10% change in: EUR million p.a. Electricity market price ~2 Fossil fuel price ~13 *) Pulp, paper and board mills, Europe and overseas **) Remaining impact on non-hedged volume Stora Enso Q Financial Results 19 July

34 Stora Enso Electricity procurement * Q *) Pulp, paper and board mills, Europe and overseas Stora Enso Q Financial Results 19 July