Financial Insights. Finnish and Swedish Forest Industry Q Tieto Forest Industry Consulting

Transcription

1 Financial Insights Finnish and Swedish Forest Industry Q3 Tieto Forest Industry Consulting

2 Executive summary In the manufacturing and forest sector, there is a strong digitalization trend and manufacturing and forest sector companies are seeking new business and service models to ensure steady revenues, often based on Industry 4.0/Internet of Things. In Q3 companies sales decreased due to significantly lower pulp prices, especially in hardwood compared to the previous year. In Europe, demand increased for kraftliner and solid-wood products. Demand in Europe for publication papers continued to fall. Demand for logs and pulpwood in Sweden was normal in the third quarter. Sales prices were largely unchanged. The market for paperboard was stable in the third quarter. In January September, demand in Europe was unchanged compared with the same period last year. Demand for printing paper in Europe decreased by 3 per cent in January August compared with the same period in Sales prices were largely unchanged in the third quarter. Market conditions for wood products in Europe were stable during the third quarter and prices were largely unchanged. Compared to the same period last year the market prices were significantly lower. Popularity of electronic services increases among Metsä Group s forest management services (approx. 25%) and wood acquiring from private forests (approx. 20%).

3 Tieto s view of tomorrow Personalized for every individual Infinite possibilities The world of information A world, rapidly developing with every new bit of information Industries are increasingly interconnected Data is everywhere technology enabling new business models

4 Content Sales and EBIT margin development on Group Level EBIT Margin and Sales development on Product level Forest Operations Pulp Packaging Paper Wood Products Tissue Special Papers EBIT Margin development Group Level including non recurring items Contacts

5 Financial Insights Tieto Forest Industry Consulting

6 Sales of Finnish forest companies continues to grow while the Swedish forest companies sales was stable Average sales growth all forest companies Swedish forest companies GDP Commonwealth of Independent States GDP ASEAN-5 Source: Annual Reports, International Monetary Fund Excluding Billerudkorsnäs and Munksjö. Finnish companies: Ahlstrom sales development is compared to 2010 (than 2009) Finnish forest companies GDP European union GDP Latin America and the Caribbean GDP Africa Swedish and Finnish companies have grown in sales after 2013, but still the growth among Swedish forest companies have been quite stable in In Q3, the consumer confidence index of the euro area in Q3 stood at a similar level to that of the first half of the year. There is a strong digitalization trend observed in the Q3 fore the forest industry. Forest companies are seeking new business and service models to ensure steady revenues, often based on Industry 4.0/Internet of Things. At the same time, companies seek cost savings and automation in traditional IT services. The core process renewals for improved efficiency are moving towards cloud-enabled ERP solutions. 7

7 EBIT Margin EBIT Margin Development Group Level excl. IAC (Items Affecting Comparability) 30% Yearly trend Quarterly Margin trend UPM s comparable EBIT increased by 31% to EUR 314 million in Q3 compared to Q2. 20% Stora Enso s operational EBIT was EUR 219 (EUR 246) million mainly due to a negative impact of the ramp-up of Beihai. 10% 0% Q1 Q2 Q3 Solid-wood products showed lower prices (including exchange rate effects) and higher volumes. Pulp and kraftliner showed lower prices (including exchange rate effects) and lower volumes. Publication papers showed higher prices (including exchange rate effects) and lower volumes. -10% -20% Years Ebit margin average Metsä Group s Business developed as expected. Comparable operating result was 9.5% of sales (EUR 332 million) Source: Annual Reports, Finnish Forest Industries Federation homepage. All companies excl. Munksjö and Billerudkorsnäs Total SCA Group 8

8 Sales Development Group Level Recovery 20% Boom In Q3 Stora Enso s sales (EUR 2393 million) decreased 5.3% compared to Q2/. 10% Q3/ sales for UPM were 3% lower than Q3/2015. Sales were impacted by lower sales prices in several businesses, as well as the sale of Tilhill Forestry business in the UK in Q Ahlstrom SCA Sales 0% // Development -50% -30% -10% 10% 30% 50% 260% 2015 vs Billerudkorsnäs Stora Enso UPM Sveaskog Holmen Metsä -10% Setra Suominen Ahlstrom have been able to grow their net sales for the past two quarters on a comparable basis. In Q3 net sales EUR million growth was 3.7% compared with Q3/2015. Depression -20% Slowdown 9 Source: Annual Reports Sales Development Q3 vs. Q *)Ahlstrom has adjusted their net sales and operating profit, starting from Q1/2015.

9 EBIT Margin Average Average EBIT Margin Development Q3 vs. Q2 25% In Europe, demand increased for kraftliner and solid-wood products. 20% Q2 Q3 Hardwood and softwood pulp demand and price were quite stable, harwood had only some minor decrease in price. 15% 10% 5% Q2 Q3 Q2 Q3 Q2 Q3 Q2 Q3 Q2 Q3 Q2 Q3 In Q3 the markets for food packaging materials were quite strong, particularly for cooking applications in Europe. Demand for consumer boards remained stable in Europe while price levels were slightly lower. Virgin fibre-based containerboard demand globally had slightly stronger feature. 0% Forest Operations Source: Annual Reports Pulp Packaging Paper Wood Product Tissue Special Papers In Finland uncertainties related to Act on the Financing of Sustainable Forestry will have a negative impact on demand for forest management services. 10

10 Public Product Group: Forest Operations 10

11 EBIT Margin Public EBIT Margin Development Forest operations excl. IAC (Items Affecting Comparability) 30% Yearly trend Quarterly Margin trend For Holmen earnings from operations for January September amounted to SEK 485 million (481). Harvesting decreased to a normal level but this was offset by reduced costs and higher prices. 15% Metsä Forest s sales in Q1-Q3 totalled EUR 1,135.2 million (Q1-Q3/2015: 1,153.2) and its comparable operating result was EUR 22.0 million (22.7). 0% Q1 Q2 Q3 During Q1-Q3 the supply of wood was good throughout the Baltic Sea region even some regions experienced an oversupply of birch pulpwood. -15% Years Holmen Skog Sveaskog Södra Skog Metsä Forest EBIT Margin Average Source: Annual Reports 13

12 Public Sales Development Forest Operations* Recovery 10% 5% Boom In Q3 Metsä Forest delivered a total of 22.7 million cubic metres of wood. Nearly 20% of wood acquired from private forests was purchased electronically and same time nearly 25% of forest management services was sold electronically. Metsä Forest 0% -40% -30% -20% -10% 0% 10% 20% 30% 40% Sales Development 2015 vs Metsä Group s sales in Q3 of the year amounted to EUR million, which increased 2% from Q3/2015. Furthermore sales of forest management services continued at a good level in Q3. -5% Sveaskog Holmen Skog Depression -10% Slowdown 14 Source: Annual Reports Sales Development Q3 vs. Q *) Concerns only companies that clearly distinguish forest operations

13 Public Product Group: Pulp 13

14 EBIT Margin Public EBIT Margin Development Pulp excl. IAC (Items Affecting Comparability) 40% 30% Yearly trend Quarterly Margin trend In Q3 EBIT for UPM Biorefinery decreased compared to Q2 mainly due to the negative impact of the scheduled maintenance shutdown at the UPM Kaukas pulp mill. 20% 10% Metsä Fibre s sales for the Q3 were EUR million (Q3/2015: 349.6) and the comparable operating result was EUR 49.2 million (85.5). 0% -10% -20% Q1 Södra Cell Years Q2 Stora Enso Biomaterials Q3 Operational EBIT in Q3 for Stora Enso was 24,6% lower compared to Q2, mainly due to significantly lower hardwood pulp prices. At the end of September, the Metsä Group s bioproduct mill project was nearly 75 per cent complete. Metsä Fibre UPM Biorefining Source: Annual Reports EBIT Margin Average 16

15 Public Sales Development Pulp Recovery 40% 30% 20% Boom Stora Enso stated that its sales decreased (2,3%) due to significantly lower pulp prices, especially in hardwood, and slightly lower deliveries mainly due to the timing of the annual maintenance shutdowns compared to Q3/2015 Södra Cell (- 10% 8%) 0% // -50% -30% -10% 10% 30% 50% -10% -20% -30% Metsä Fibre Stora Enso Biomaterials UPM Biorefining Sales Development 260% 2015 vs Metsä Fibre s sales volume of pulp was 1,687,000 tonnes, which is approximately 3 per cent less than in the corresponding period in 2015). The price difference between long- and short-fibre pulp at the end of Q3 was USD 146, whereas the corresponding difference at the beginning of the year was USD 13. Depression -40% Slowdown Source: Annual Reports Sales Development Q3 vs. Q

16 Public Product Group: Packaging 16

17 EBIT Margin Public EBIT Margin Development Packaging excl. IAC (Items Affecting Comparability) 25% 15% 5% -5% Yearly trend Q1 Quarterly Margin trend Q2 Q3 In Q3 Stora Enso s Packaging Solutions and Consumer Board division sales increased compared with Q2. Consumer Board sales increase by 3.2% while Packing Solutions increase by 14.6%, driven by Varkaus kraftliner mill and higher volumes. Holmen s paperboard deliveries amounted to tonnes for January September, which was 2 per cent lower than the same period last year as a result of production losses owing to the rebuild of a board machine in Workington. -15% Billerudkorsnäs Consumer Board Years BillerudKorsnäs Packging paper BillerudKorsnäs Corrugated Solutions Metsä Board Stora Enso packaging solutions & consumer board Holmen Iggesund Paperboard EBIT Margin Average Source: Annual Reports Billerudkorsnäs financial data from

18 Public Sales Development Packaging Recovery 20% 10% Billerudkorsnäs Stora Enso Consumer board (-2% in short term 0% -25% -15% sales) -5% 5% 15% 25% Billerudkorsnäs Packaging Paper (-3% in short term sales) -10% Boom Billerudkorsnäs Corrugated Solutions -1% in short term sales) Holmen Paperboard Sales Development 2015 vs In September, Stora Enso announced its plans to consolidate the corrugated packaging production in Finland to its Lahti plant with an investment of approximately EUR 19 million. For Holmen Profit for the third quarter was SEK 235 million, which was SEK 35 million higher than in the second quarter as a result of seasonally lower costs and increased deliveries. Metsä Depression -20% Slowdown Sales Development Q3 vs. Q Source: Annual Reports Stora Enso result is calculated for packaging solutions and consumer board. 20

19 Public Product Group: Paper 19

20 EBIT Margin Public EBIT Margin Development Paper excl. IAC (Items Affecting Comparability) 15% 10% Yearly trend Quarterly Margin trend Comparable EBIT for UPM Paper ENA increased mainly due to lower costs and seasonally higher delivery volumes. Cost efficiency was strong due to high capacity utilisation, partly for seasonal reasons. 5% 0% -5% -10% Q1 Holmen Paper UPM Specialty Papers (pre.paper Asia) Years Stora Enso Paper UPM Paper ENA Q2 Q3 UPM Speciality Paper (prev. UPM Paper Asia) Production ramped up at the new specialty paper machine at the UPM Changshu mill in China, Fine paper demand remained stable in the Asia- Pacific region. Same time overcapacity in fine papers prevailed and price competition was intense. For Holmen, Operating profit increased in the third quarter by SEK 9 million compared with the second quarter and amounted to SEK 82 million. EBIT Margin Average Source: Annual Reports UPM ENA & Speciality Papers (prev. Paper Asia) financial data after 2012 and UPM Paper financial data before

21 Public Sales Development Paper Recovery 30% Boom In Q3 EBIT increased significantly for UPM Paper ENA in the comparison period in 2015 mainly due to lower variable and fixed costs. Stora Enso Paper 20% 10% UPM Paper Asia (7% in short term sales) 0% -50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% -10% UPM ENA (-4% in short term sales) Sales Development 2015 vs Holmen s deliveries for the first nine months amounted to tonnes, which was 13 per cent lower than the same period last year as a result of the Spanish newsprint mill being divested and production losses following the fire at Hallsta Paper Mill. Depression Holmen Paper -20% -30% Slowdown Sales Development Source: Annual Reports Q3 vs. Q UPM ENA & Asia results are calculated. 23

22 Public Product Group: Wood Products 22

23 EBIT Margin Public EBIT Margin Development Wood Products excl. IAC (Items Affecting Comparability) 20% Yearly trend Quarterly Margin trend In Q3 EBIT for UPM Plywood decreased from Q2 result mainly due to seasonally lower delivery volumes. 10% Stora Enso s operational EBIT in Q3 remained 33,3% lower than in Q2/ one reason for that was significantly weaker demand. 0% -10% Q1 Q2 Q3 Sawn timber demand was good, while market prices remained stable at low levels in the Q3. Holmen s deliveries of wood products for January September amounted to cubic metres, which was 5 per cent higher than for the same period last year. -20% Source: Annual Reports Holmen Timber Södra Timber Moelven Metsä Wood Years Stora Enso Wood Products Setra Bergs Timber UPM Plywood In Q1-Q3 Metsä Group s profitability of sawing operations was weaker than in comparison period due to declined prices. Furthermore, delivery volumes and sales in plywood products decreased. 25

24 Public Sales Development Wood Products Recovery 0% // -45% -25% -5% 15% 35% UPM Plywood Depression 20% 15% 10% 5% -5% -10% -15% -20% Setra Metsä Wood Stora Enso Boom Holmen timber Slowdown 140% Sales Development 2015 vs Sales for Stora Enso increased mainly due to higher volumes, supported by the investment at Murow sawmill in Poland, and the Varkaus LVL plant in Finland. UPM Plywood sales in Q3 were in same level compared to the previous year. Higher delivery volumes offset the negative impact of slightly lower sales prices and higher costs. For Holmen, Earnings for the third quarter were SEK -1 million, which was unchanged compared with the second quarter. In Q3 Metsä Wood s sales decreased 9% from corresponding period in Sales Development Q3 vs. Q Source: Annual Reports 26

25 Public Product Group: Tissue 25

26 EBIT Margin Public EBIT Margin Development Tissue excl. IAC (Items Affecting Comparability) 15% Yearly trend Quarterly Margin trend The European market for consumer tissue showed low growth and increased competition. The European and North American markets for AfH tissue showed low growth. 10% Growth was slightly higher in Europe than in North America. The Chinese tissue market showed higher demand. 5% 0% Q1 SCA (Tissue) Ebit margin Average Years Q2 Q3 Metsä (Tissue)*Including Cooking paper Metsä Tissue s sales in Q1-Q3 were totalled EUR million, which were EUR 10.3 million lower than in Q1-Q3/2015. The decrease in sales is mainly due to the discontinuation of the consumer business in Russia. Metsä Tissue introduced new SAGA Baking Form, made from corrugated board and baking paper, to the Finnish market in Q3. Source: Annual Reports 28

27 Public Sales Development Tissue Recovery 20% 15% 10% 5% SCA Tissue 0% -60% -30% 0% Metsä 30% 60% -5% Tissue -10% Boom Sales Development 2015 vs For SCA, consumer tissue, organic sales growth was 3%. Growth is related to high growth in emerging markets, particularly China, Latin America and Russia. For AfH tissue, organic sales growth was 3%. The increase was related to western Europe and emerging markets. For SCA, consumer tissue, organic sales growth was 1%. Growth is mainly related to China, Latin America and Russia. Lower sales of mother reels in western Europe had a negative impact on growth. For AfH tissue, organic sales growth was 2% and was related to western Europe and emerging markets. Depression -15% -20% Slowdown In Q1-Q3/ Metsä Tissue s sales mix improved and costs of energy and logistics were lower than in previous year. Source: Annual Reports Sales Development Q3 vs. Q

28 Public Product group: Special Paper and Products 28

29 EBIT Margin Public EBIT Margin Development Special Paper and Products excl. IAC (Items Affecting Comparability) 20% Yearly trend Quarterly Margin trend In Q3 UPM s EBIT remained stable compared with Q2 15% 10% Ahlstrom s adjusted operating profit EUR 26.7 million, representing 9.8% of net sales, and the 12th consecutive quarter of year-on-year improvement. 5% Operating profit for Suominen decreased by 19% to EUR 7.9 million in Q3/ compared with Q3/ % -5% Q1 Years Q2 Q3 For Munksjö, delivery volumes were stable. The average price was lower as a result of a less favourable product mix. For Munksjö operating result was EUR 3,2 (2,7) million and the operating margin 8,5% (7,0%) Munksjö UPM Raflatac Source: Annual Reports *)Ahlstrom has adjusted their net sales and operating profit, starting from Q1/

30 Public Sales Development Special Papers and Products Recovery 20% 15% 10% 5% UPM Raflatac Ahlstrom Munksjö 0% // -80% -30% 20% 70% -5% -10% Boom 260% Suominen Sales Development 2015 vs In Q3 the global demand for self-adhesive label materials grew in the first nine months of. Even though in Europe the demand growth at a lower level than last year. Q3 was an excellent quarter for Ahlstrom, with very strong performance from their organization. Ahlstrom achieved 3.7% sales growth compared with Q3/2015. Net sales for Suominen decreased by 10% to the comparison period last year mainly due to deliveries that fell short. Depression Source: Annual Reports -15% -20% Sales Development Q3 vs. Q3 Slowdown 30

31 Public Contacts Adam Aljaraidah Heidi Metsola Associate Management Consultant Associate Management Consultant

32 Tieto strategy We aim to be our customers first choice for business renewal Services to accelerate customer value Build solutions and capabilities to accelerate our customers business performance and renewal. Nordic leadership and international expansion Further accelerate our strong market position in the Nordics and expand industry solutions internationally. Openness and co-innovation Co-innovate with customers and partners, access open talent networks and drive continuous skill and capability development. Business choices building on our strengths Vertical industry solutions Technology services and modernization New data-driven businesses

33 Our purpose Value for life Value for people Value for business Value for society

34 Tieto strategy We aim to be our customers first choice for business renewal

35 Public Notes 1. Alhstrom 1. group level 2. Starting from Q1/2015 Ahlstrom has adjusted their net sales and operating profit. These tables and figures are updated based on change: Adjusted net sales starting from Q1/2015. Before Q1/2015 Operating profit excluding non-recurring items was used. The adjusted operating profit margin excludes restructuring costs, impairment charges, capital gains or losses, and discontinued operations. This might case differ to the numbers In 2015 Operating profit excluding non-recurring items was reported 47,5 MEUR (Q1/2015:12MEUR) and in Q1 release the adjusted operating profit margin shows 41.6MERU (Q1/2015:10,3) annual report is used for the financial figures and 2013 annual report is used for the financial figures 4. On slide 7, we are comparing Alhstrom sales development to 2010 sales (not 2009) 2. Bergs Timber 1. Bergs Timber has fiscal financial year and reports from 1/9-31/8 3. BillerudKorsnäs 1. On Group level BillerudKorsnäs was excluded 2. On Product level from Korsnäs and Billerud sales figures is added to BillerudKorsnäs 3. BillerudKorsnäs adjusted result Holmen 1. Excluding changes in forest value for Holmen 5. Mellanskog 1. On group level revenues from affiliated companies are included 2. On group level other revenues are excluded 1

36 Public Notes 6. Metsä Group 1. On group level adjusted result in On group level other revenues excluded 3. On product level Metsä Tissue includes cooking paper 4. Finnish sawmills were transferred to Metsä Fibre on 1 Nov. 7. Moelven 8. Munksjö 1. On group level Munksjö was excluded 9. SCA 1. Forest swap is excluded 2. Adjusted result for SCA in 2012 and SCA is excluded in product level evaluation 4. SCA Group incl. total financial numbers 10. Setra 1. Other revenues excluded 2

37 Public Notes 11. Stora Enso 1. Adjusted result in 2012 (Operational EBIT) 2. On group level revenues from affiliated companies are included 3. Stora Enso (Packaging) is packaging solutions & consumer board 4. Between the paper product level for the Stora Enso result include news print paper + book paper + fine paper + magazine paper 5. Stora Enso packaging result includes industrial packaging and consumer board 6. On product level Stora Enso Packaging is consumer board + packaging solutions 7. Stora Enso reorganised its divisional and reporting structure as of 1 January The IFRS reporting segments are formed by the divisions and the segment Other. Henceforth, Stora Enso will report financial figures for the divisions Consumer Board, Packaging Solutions, Biomaterials, Wood Products and Paper and the segment Other. 12. Sveaskog 1. On group level revenues from affiliated companies are included 2. Excluding changes in forest value for Sveaskog 13. Södra 1. Other revenues included for Södra 2. Södra has a Tertial report Q2 (2015) May-Aug 14. Suominen 1. On group level 2. November 2011 Suominen acquired Ahlstrom s Home and Personal business operations. Net sales were more than doubled. 3

38 Public Notes 15. UPM 1. Group level revenues from affiliated companies are included 2. As of 1 October, UPM Paper Asia was renamed as UPM Specialty Papers. The change has no impact on reported figures Sales figure (EURm) Includes a fair value increase of biological assets in Finland totalling EUR 265 million, due to adjusted long-term wood price estimates and a change in the discount rate 4. Annual reports UPM Biorefining data includes: UPM Biorefining 2013-Q3/2015 financial data and Pulp division financial data before year UPM Paper division data includes: UPM Paper division financial data and after the division in 2012 financial data from UPM ENA and Asia divisions 3

39 Public Financial Reporting Frequency SCA Mellan Skog Södra Setra Metsä BK Holmen Munksjö Stora Enso Moelven Bergs Rörvik UPM Suominen Ahlström Yearly x x x x x x x x x x x x x x x Quarterly x x x x x x x x x x x Other Fourmonthly report 4

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