Stora Enso Oyj Class A · OMXHEX:STEAV
Stora Enso Oyj Class A — Q2 2013 Earnings Presentation
34 slides from Stora Enso Oyj Class A's earnings presentation, Jul 19, 2013
Slide 1: Financial Results Q2 2013
Financial Results Q2 2013 CEO Jouko Karvinen and EVP Karl-Henrik Sundström 19 July 2013
Slide 2: Forward-looking statements disclaimer
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
Slide 3: Q2 results as expected
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 Stora Enso Q2 2013 Financial Results 19 July 2013 3
Slide 4: Continued Solid Cash Flow from Operations
Continued Solid Cash Flow from Operations Reduced working capital Stora Enso Q2 2013 Financial Results 19 July 2013 4
Slide 5: All business areas contributed to cash flow generation in Q2 2013
All business areas contributed to cash flow generation in Q2 2013 Stora Enso Q2 2013 Financial Results 19 July 2013 5
Slide 6: European paper seasonally adjusted demand trend
European paper seasonally adjusted demand trend development and y-o-y change SA = seasonally adjusted Latest data point: Jun-2013 Source: Euro-Graph Stora Enso Q2 2013 Financial Results 19 July 2013 6
Slide 7: Progress report: Streamlining and structure simplification programme
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 Q2 2012 703 2 812 Q2 2013 677 2 708 Change -26 -104 Programme impact -7 -28 14% Other change -19 -7
Slide 8: Progress report: Montes del Plata
Progress report: Montes del Plata • Estimated to begin the start-up at the end of Q3 2013 • Slightly negative impact on operational EBIT in 2013 Stora Enso Q2 2013 Financial Results 19 July 2013 8
Slide 9: Progress report: Ostrołęka mill PM 5
Progress report: Ostrołęka mill PM 5 • Proceeding according to plan • EBITDA margin approximately 20% during the latter part of 2013 as targeted Stora Enso Q2 2013 Financial Results 19 July 2013 9
Slide 10: Accelerating transformation: Guangxi, China
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 exceed
Slide 11: Accelerating innovation: Biorefinery at Sunila
Accelerating innovation: Biorefinery at Sunila • EUR 32 million investment • Replacing fossil raw materials: – Insulation – Adhesive for construction materials • Scalable technology • Start-up Q1 2015 Stora Enso Q2 2013 Financial Results 19 July 2013 11
Slide 12: Stora Enso Q2 2013 Financial Results 19 July 2013
Stora Enso Q2 2013 Financial Results 19 July 2013 12
Slide 13: Printing and Reading Structural Paper Demand Decline
Printing and Reading Structural Paper Demand Decline Operational EBITDA Paper Market Q2 2012 vs Q2 2013 • Year-on-Year demand decline 6% • Structural decline continues Stora Enso Printing and Reading • Lower pricing mainly in News and SC • Sales volume decline 6% or [110 kt] despite 3 PM closures •
Slide 14: Summary financials
Summary financials Q2 2013 Change % Change % EUR million Q2/13 Q1/13 Q2/12 Q2 13 / Q2 12 Q2 13 / Q1 13 Sales 2 717 2 667 2 721 -0.1 1.9 Operational EBITDA 247 240 251 -1.6 2.9 Operational EBITDA, % 9.1 9.0 9.2 -1.1 1.1 Operational EBIT 124 118 144 -13.9 5.1 Operational EBIT margin, % 4.6 4.4 5.3 -13
Slide 15: Fairly stable despite challenging paper market
Fairly stable despite challenging paper market Group operational EBIT Q2 2012 vs Q2 2013 Q1 2013 vs Q2 2013 Stora Enso Q2 2013 Financial Results 19 July 2013 15
Slide 16: Guidance for Q3 2013
Guidance for Q3 2013 • Compared to Q2 2013: – Sales expected to be slightly lower – Operational EBIT in line with or slightly higher Stora Enso Q2 2013 Financial Results 19 July 2013 16
Slide 17: Summary
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 Stora Enso Q2 2013 Financial Results 19 July 2013 17
Slide 18: Stora Enso Q2 2013 Financial Results 19 July 2013
Stora Enso Q2 2013 Financial Results 19 July 2013 18
Slide 19: Projected Capex and Equity Injections for 2013
Projected Capex and Equity Injections for 2013 Including China investment Capital Expenditure, Equity Injections and Depreciation Forecast 2013 EUR million Forecast 2013 440-490 Capital expenditure* 100-120 Equity injections 540-610 Total 590-610 Depreciation *Capital expenditure includes approximat
Slide 20: Working capital reduced
Working capital reduced Q1 2011 – Q2 2013 *Operative working capital = trade receivables + inventories – trade payables Stora Enso Q2 2013 Financial Results 19 July 2013 20
Slide 21: Balance Sheet strength
Balance Sheet strength Q1 2010 – Q2 2013 *Last twelve months’ operational EBITDA Stora Enso Q2 2013 Financial Results 19 July 2013 21
Slide 22: Operational EBIT by segments
Operational EBIT by segments Change % Change % EUR million Q2/13 Q1/13 Q2/12 Q213/Q212 Q213/Q113 Printing and Reading -17 2 43 -139.5 n/m % of sales -1.5 0.2 3.6 -141.7 n/m Biomaterials 14 22 15 -6.7 -36.4 % of sales 5.4 8.6 6.1 -11.5 -37.2 Building and Living 28 4 11 154.5 n/m % of sales 5.6 0.9 2.
Slide 23: Timeline for the restructuring announcements in 2013
Timeline for the restructuring announcements in 2013 February 2013 Announcement of Hylte PM 2 and Kvarnsveden PM 11 closures EUR 24 million Q2 2013 Q3 2013 Q1 2014 Hylte PM 2, Impact Q4 2013 Q2 2014 Kvarnsveden PM11 Full impact starts closed in May February 2013 Building & Living EUR 30 million Q2 2
Slide 24: Permanent pulp, paper and board capacity reductions
Permanent pulp, paper and board capacity reductions since 2006 Mill Date Grade Capacity reduction, t Corbehem PM 3 and PM 4 Jun 2006 LWC 250 000 Varkaus PM 1 End 2006 WFC 95 000 Berghuizer Mill Oct 2007 WFU 235 000 Reisholz Mill End 2007 SC 215 000 Summa Mill Jan 2008 Newsprint, uncoated mag, book p
Slide 25: Permanent sawn wood capacity reductions
Permanent sawn wood capacity reductions since 2006 Mill Date Capacity reduction, m3 Veitsiluoto Sawmill 2006 100 000 Honkalahti Sawmill 2006 90 000 Sauga Sawmill Jun 2007 130 000 Sollenau Sawmill 2007 110 000 Näpi Sawmill 2007-2008 100 000 Kotka Sawmill 2007-2008 70 000 Paikuse Sawmill End 2008 220
Slide 26: Net Financial Items
Net Financial Items Change % Change % EUR million Q2/2013 Q1/2013 Q2/2012 Q213/Q212 Q213/Q113 Net interest expense -51 -50 -42 -21 -2 Foreign exchange gains and losses -12 -5 -18 33 -140 Other financial items, of which 16 -1 -10 n/m n/m PIK notes 3 3 3 Fair valuation of interest rate derivatives* 7
Slide 27: Transaction risk and hedges
Transaction risk and hedges as at 30 June 2013 EUR million USD SEK GBP Estimated annual net operating cash flow exposure 1 040 -810 510 Transaction hedges as at 30 Jun 2013 -500 450 -250 Hedging percentage as at 30 Jun 2013 for the next 12 months 48% 56% 49% Additional USD and GBP hedges for 13-15 m
Slide 28: Curtailments of capacity
Curtailments of capacity Stora Enso Q2 2013 Financial Results 19 July 2013 28
Slide 29: Softwood pulp prices
Softwood pulp prices Stora Enso’s market pulp is softwood Source: FOEX Stora Enso Q2 2013 Financial Results 19 July 2013 29
Slide 30: Pulp wood and saw log prices
Pulp wood and saw log prices Wood prices in Finland Source: METLA Stora Enso Q2 2013 Financial Results 19 July 2013 30
Slide 31: Paper for Recycling prices
Paper for Recycling prices German RCP price development. free delivered Source: Verband Deutscher Papierfabriken/Stora Enso Stora Enso Q2 2013 Financial Results 19 July 2013 31
Slide 32: Maturity profile Q2 2013
Maturity profile Q2 2013 Stora Enso Q2 2013 Financial Results 19 July 2013 32
Slide 33: Energy balance Q2 2013
Energy balance* Q2 2013 Impact** on operating profit from EUR million p.a. 10% change in: Electricity market price ~2 Fossil fuel price ~13 *) Pulp, paper and board mills, Europe and overseas **) Remaining impact on non-hedged volume Stora Enso Q2 2013 Financial Results 19 July 2013 33
Slide 34: Stora Enso Electricity procurement Q2 2013
Stora Enso Electricity procurement* Q2 2013 *) Pulp, paper and board mills, Europe and overseas Stora Enso Q2 2013 Financial Results 19 July 2013 34