Citi s European Credit Conference London, Thursday 29 November

Transcription

1 Citi s European Credit Conference 2012 London, Thursday 29 November

2 Norske Skog in brief Publication paper producer Newsprint capacity 2.3 mill. tonnes Magazine capacity 1.3 mill. tonnes Significant footprint Europe capacity 2.6 mill. tonnes Australasia 0.7 mill. tonnes 2011 revenues NOK 19 bn., EBITDA NOK 1.5 bn employees Listed in Norway Market capitalization NOK 0.7 bn. Net debt NOK 6.3 bn.

3 Norske Skog in global context Top global publication paper companies UPM (FIN) AbitibiBowater (US) Stora Enso (FIN) Norske Skog (NOR) Nippon Paper (JAP) WhiteBirch (US) Oji Paper (JAP) Holmen (SWE) NewPage (US) SCA (SWE) Sappi (SA) Catalyst (CAN) Burgo (ITA) Mill. tonnes Top 5 share of capacity Grade North America Europe Newsprint 80% 60% Uncoated Mag 80% 80% Coated Mag 85% 70% Newsprint Uncoated magazine paper Coated magazine paper RISI 2011, Norske Skog 3

4 Two business systems Europe and Australasia Skogn (Norway) Saugbrugs (Norway) Golbey (France) Walsum (Germany) Bruck (Austria) Singburi (Thailand) MNI (Malaysia 34 %) Pisa (Brazil) Albury (Australia) Tasman (New Zealand) Boyer (Australia) 4

5 Revenue and EBITDA contribution by segment Revenue EBITDA Magazine 40% Newsprint Europe 27% Magazine 21% Newsprint Europe 22% Newsprint outside Europe 33% Newsprint outside Europe 57% 3Q12 5

6 Development in EBITDA NOK mill. 600 Relatively stable through the year Despite weak markets Decline from second half last year Euro crisis and muted seasonal effect Q10 3Q10 1Q11 3Q11 1Q12 3Q12 Adjusted for income related to pensions and reversal of liability in

7 Development in cash flow Improvement through the year Group operating on cash flow basis Active working capital management NOK mill Q10 3Q10 1Q11 3Q11 1Q12 3Q12 CF from operations before net financial items 7

8 Capex modest despite development projects NOK mill. Capex 2012 below NOK 500 mill. Level since 2010 Capex 2013 NOK 600 mill. Boyer conversion Saugbrugs energy efficiency project Mature industry Capex remaining well below depreciation E 8

9 Publication paper prices stable European reference prices Newsprint and Magazine prices flat into October US newsprint prices Flat in USD, above European level in EUR EUR/tonne Newsprint, Germany 45g LWC, Germany 60g SC, Germany 56g EUR/tonne Newsprint Germany US East Coast RISI, German and US East Coast prices 9

10 Weak demand development Newsprint Magazine 0 % 2 % 2 % 1 % 1 % 2 % 3 % 3 % 6 % 9 % 7 % 9 % 12 % 11 % World Western Europe Eastern North Europe America Asia Oceania Latin America World Western Europe Eastern Europe North America Asia Oceania Latin America EURO GRAPH (YTD Oct 2012), PPPC (YTD Sep 2012) 10

11 Group cost categories and relative size ¾variable costs, ¼fixed costs Variable costs predominantly energy and fibre ⅔ of energy costs contracted, ⅓ spot exposure Fibre sourced mainly through wood and recovered paper ⅔ virgin fibre, ⅓ recycled Labour 17% Other fixed 9% Energy 22% Distribution 10% Wood 13% Other direct 4% Chemicals, fillers, etc. 10% Pulp 4% Recovered paper 12% 11

12 Fixed costs coming down SG&A expenses at lower level Remaining just above NOK 120 per tonne Despite lower production Fixed costs noticeably reduced Cost initiatives and less capacity Quarterly level down by NOK 200 mill. last two years NOK/ton 160 SG&A expenses per tonne NOK mill Quarterly fixed costs Q 4Q 1Q Q 3Q 4Q 1Q Q 3Q Q 4Q 1Q Q 3Q 4Q 1Q Q 3Q Adjusted for provisions 12

13 Trough cycle margins % Norske Skog development in EBITDA and margin NOK mill Average EBITDA EBITDA margin

14 Trough cycle operating environment Cyclical decline crisis related Amplifying underlying structural decline Magazine (1 2%), Newsprint (3 4%) Industry adapting with capacity cuts Securing stable prices 2006 = Development in European S/D for publication paper Financial crisis Euro crisis E Demand Supply

15 2016E 2017E 2015E 2014E Newsprint demand strongly cyclical Western Europe Mill. tonnes E 2013E Newsprint demand Real GDP growth Change in Newsprint demand IMF, PPPC, Norske Skog %

16 Debt coming down, approaching target levels Net debt reduced by NOK 598 mill. YTD reduction NOK 1.6 bn. to NOK 6.3 bn. Significantly down in two year period from NOK 9 bn. Leverage ratio lower Approaching target levels below 4 NOK bn Net interest bearing debt Ratio 7 6 Leverage ratio Covenant level Q 4Q 1Q Q 3Q 4Q 1Q Q 3Q 3 3Q 4Q 1Q Q 3Q 4Q 1Q Q 3Q Net interest bearing debt / EBITDA 16

17 Maturity profile NOK bn. Cash RCF Bank Bonds As of Sep

18 Management tasks Improve margins Active capacity management Temporary adaptations and permanent closures/conversions Continued cost reductions Fixed cost and energy efficiency measures Further identification and sale of unrelated assets Reduction of net debt Cash flow from operations Sale proceeds and bond buy backs 18

19 EBITDA stabilized in adverse macro environment NOK mill Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Trailing twelve month (TTM) reported EBITDA 19

20 Net debt significantly reduced Q12 3Q12 1Q12 4Q11 NOK bn. 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 Net debt Market capitalization

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