Svenska Cellulosa Ab Sca Class A · OMXSTO:SCA_A
Svenska Cellulosa Ab Sca Class A — SCA — Investor Presentation (July 2024)
61 slides from Svenska Cellulosa Ab Sca Class A's investor presentation, Jul 26, 2024
Slide 1: Investor Relations July, 2024
Investor Relations July, 2024
Slide 2: A strong and integrated value chain
A strong and integrated value chain Sales (SEKbn) EBITDA (SEKbn) 18.1 6.8 EBITDA margin Industrial ROCE 1 38% 7% Climate benefit Net growth in forest 12.8 m t CO2 3.2 m m3fo Note: Logistics are reported as a part of relevant segments. 2 1. ROCE for the industrial segments; Wood, Pulp, Containerboard
Slide 3: Europe's largest private forest owner
Europe’s largest private forest owner Sawmill Forestland Pulp mill Kraftliner mill 6% 2.7 m ha of Sweden Pellet production SCA’s forest Productive forestland Munksund 2.1 m ha Obbola Rundvik Stugun Bollstabruk Standing volume 1 Gällö Härnösand Östrand 271 m m3fo Tunadal Ortviken 1. Including forest
Slide 4: Strategy communicated in 2017
Strategy communicated in 2017 Invest in integrated value chain: Increased • Grow Pulp value from • Grow Kraftliner each tree • Develop Renewable energy • Reduce exposure to Publication Paper Growing Increase forest holdings: renewable • Increase growth and harvesting level forest asset • Acquire
Slide 5: Project portfolio delivered
Project portfolio delivered Value ~70% completed Acquire forest land →2023 Bio fuel and green chemicals 9 TWh wind power on SCA land →2022 Own Restructuring Sundsvall wind power Target 100k ha →2022 Kraftliner expansion forest land in the Baltic states, →2021 Grow CTMP pulp 201
Slide 6: SCA has an integrated value chain with high degree of self sufficiency
SCA has an integrated value chain with high degree of self sufficiency ~55% ~95% >100% ~45% ~45% Wood sourcing Electricity usage Solid biofuels SCA Logistics 1) Transportation fuel 10 M m3 2 TWh 11 TWh 2.7 SEKbn 100 kt External exposure District heating External Sold externally suppliers Wind lease
Slide 7: SCA contributes to a fossil free society
SCA contributes to a fossil free society Replaces 7.2 Stores 0.7 Mt CO2 Mt CO2 Binds net 2 3 5.7 SCA’s renewable products Carbon is stored in renewable Mt CO2 replace non-renewable products during the lifecycle products 1 Operations Growing forests bind CO2 – active forest management Bioenergy incre
Slide 8: Strategy for profitable growth
Strategy for profitable growth Maintain a high degree of self sufficiency: High degree • High and balanced degree of self sufficiency in wood raw material, energy and logistics of self sufficiency Increased Invest in integrated value chain: value from • Grow pulp, containerboard and wood each tr
Slide 9: Project portfolio – prioritized opportunities
Project portfolio – prioritized opportunities Value 2 Decided and ongoing projects 3 Organic growth Growing forest assets Renewable fuels Further potential Containerboard & Pulp Grow Wood Wind power Increased forest Acquire ownership in Baltics forest land Bio refinery and Nordic C
Slide 10: Shifting the portfolio to growing product areas
Shifting the portfolio to growing product areas Growing Forest asset Wood Publication paper Kraftliner Pulp Renewable energy Wind power capacity on SCA Harvesting own forest (k m3) 1 Capacity (k m3) Capacity (kt) Capacity (kt) Capacity (kt) land (TWh) +1,100k m3 +400k m3 -1,810kt +340kt +680kt +11TW
Slide 11: Forest
Forest @®SCA
Slide 12: Europe's largest private forest owner
Europe’s largest private forest owner Sales (SEKm) Forest holdings located close to SCA’s industry Sawmill 6% 7,748 Pulp mill Kraftliner mill of Sweden • 2.7m ha forestland Pellet production SCA’s forest • 2.1m ha productive forestland EBITDA (SEKm) • 271m m3fo standing volume 1 Munksund 3,511 ~50%
Slide 13: Forest assets create value in several ways
Forest assets create value in several ways Harvesting Net growth Land value Positive climate effect 13
Slide 14: Profitable growth since 1950
Profitable growth since 1950 Standing volume SCA Growing Harvest plan own forest Increasing Increasing Land value Sweden 1 Increasing million m3fo asset base million m3sub cash cashflow flow SEK/m3fo (real value) land value +80% +140% +400% 263 557 4.8 146 2.0 111 1950 2023 1950 2023 1950 2023 1. Av
Slide 15: Forest Total Return
Forest Total Return CAGR of 10% since 1956 Forest Total Return index Sweden (1956-2023) 1 Increasing cash flow 60,000 CAGR • Harvesting provides raw materials to the industries and generates cash flow 10% − Cash flow: ~3% CAGR CAGR 2004-2022 50,000 8% 2 Growing asset base • Forest growth exceeds har
Slide 16: Significant real growth
Significant real growth Forest growth metrics (m m3fo) Gross growth of standing forest 10.5 Natural losses and pre-commercial thinning -1.4 Available growth of standing forest 9.1 1 Current cash flow Annual harvesting -5.9 New harvesting plan every 8-10 years Annual net increase of standing forest 3
Slide 17: Increase in both standing volume and harvesting level
Based on Increase in both standing volume current technology and harvesting level Harvesting from own forest (m m3sub) Standing timber volume (m m3fo) +200% 350 +100% 6 300 5 250 4 200 3 150 2 100 Increasing cash flow Growing asset base 1 50 0 0 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Slide 18: Forest land acquisitions in the Baltics
Forest land acquisitions in the Baltics – strengthen the fiber base for future projects 1 2 3 Strengthen our High growth SCA’s competence integrated value chain and resources • Strengthen the raw material supply • High growth – 2.5x northern Sweden • Harvesting volume and standing and maintain self-
Slide 19: Long term demand larger than supply – Forest a strategic resource
Long term demand larger than supply – Forest a strategic resource for the future Estimated change in harvesting potential 2021-2030e (softwood sawlogs) Demand of wood products limited by supply CAGR 2021-2030e • Russian invasion of Ukraine +1.7% +15m m3 • Insect damage in Europe -1 m m3 -7m m3 • Har
Slide 20: Forest – strategic direction
Forest – strategic direction 1 Increase growth and harvesting. 2 Strengthen competitiveness through increased productivity and efficiency. 3 Acquire forest in the Nordic and Baltic regions. 4 Increase the precision and quality of biodiversity conservation measures. 20
Slide 21: Wood
\Nlood @®SCA
Slide 22: Leading European wood producer
Leading European wood producer Sales (SEKm) 5,158 5 modern and well invested sawmills 2 painting and 5 planing facilities 2.2m m capacity 3 EBITDA (SEKm) Own distribution network 400k Munksund 550 Focus on value added products • Adapted wood to the further processing industry 320k • Distribution of
Slide 23: Long-term structural drivers sustain softwood demand growth
Long-term structural drivers sustain softwood demand growth Underlying economic drivers Strong global softwood demand Economic growth: Continued increased living standard in m m3 several fast growing markets drives consumption of softwood ~2% 3.1% CAGR CAGR Other Building activities: Recovery for bo
Slide 24: The Global Wood value chain
The Global Wood value chain Segment Value chain, integration and product group Consuming sector Sawn wood products Finished wood product End consumer (examples) channel ~20% Furniture ~12% ”Furniture-retail” Interior Decoration Living with Wood Solid Wooden Flooring Interior Cladding ~40% ~65% RMI (
Slide 25: SCA's position in the global wood value chain
SCA’s position in the global wood value chain Optimizing value and integration level Segment Sawn wood products Finished wood product End consumer SCA volume channel ~27% ~10% Furniture ”Furniture-retail” Living with Wood Solid Wooden Flooring Interior Cladding ~70% ~65% Boards Exterior Cladding ”DI
Slide 26: Wood – strategic direction
Wood – strategic direction 1 Continued profitable growth kept in balance with supply of raw materials. 2 Well-invested plants with world-class efficiency and competitiveness. 3 Maximize the value of SCA´s high-quality sawlogs through a high raw material yield and customized products. 26
Slide 27: Pulp
Pulp @®SCA
Slide 28: High quality pulp producer
High quality pulp producer Sales (SEKm) High quality bleached softwood kraft pulp (NBSK) 6,893 • Focus on high strength properties • Capacity: 900 kt/year 1.2Mt capacity • The pulp is used in tissue, packaging, publication paper EBITDA (SEKm) and filters 1,213 Chemical thermomechanical pulp (CTMP) •
Slide 29: SCA pulp portfolio
SCA pulp portfolio NBSK CTMP Produced by cooking wood chips in white liquor Produced by grinding wood chips in a refiner Gives pulp with long, strong fibers Gives shorter, stiffer fibers that provide absorption capacity, bulk and stiffness Provides high strength and brightness Lower consumption of w
Slide 30: Global pulp market
Global pulp market 70 Mt of which 20 Mt adressable for SCA Global demand Virgin pulp Market pulp Adressable market SCA NBSK 415Mt 200Mt 68Mt 15Mt Other Softwood Europe 5 Mt China SBSK NA 2,5 Mt Core NBSK 15 Mt markets Integrated Market pulp Recycled Virgin pulp CTMP BHK CTMP 4.1Mt TMP Unbleached Oth
Slide 31: Softwood grows with 1.0-2.0% per year, limited new capacity
Softwood grows with 1.0-2.0% per year, limited new capacity New pulp capacity (k tonnes) 3,000 2022 2023 2024-2028 Softwood 2,500 Uncertain softwood Hardwood 2,000 Uncertain hardwood High-Yield (CTMP) 1,500 Uncertain High-Yield Dissolving 1,000 Unbleached +200 kt at 500 Ortviken 0 -500 Source: Brian
Slide 32: Northern Swedish fiber for premium pulp products
Northern Swedish fiber for premium pulp products 1 Premium strength 2 Wet strength 3 Filter application 4 Custom-made grades 32
Slide 33: CTMP improves customer product properties at lower cost
CTMP improves customer product properties at lower cost Cost-cutting for customer Product properties Replaces more expensive pulp 1 High bulk and bending rigidity Lower weight at a given strength Board Good smell and taste properties provides a lower production cost 2 Increased absorption per kg Tis
Slide 34: Increased CTMP production
Increased CTMP prodution Capacity CTMP, kt New CTMP line at Ortviken started up year-end 2022 +200kt • Top quartile in cost position 300 • Capacity of 300kt CTMP improves customer product properties at lower cost • Cost-cutting for customer, replaces more expensive pulp • High share of growth with e
Slide 35: Pulp – strategic direction
Pulp – strategic direction 1 Continue to strengthen competitiveness through increased productivity. 2 Realize the full potential of the new CTMP mill in Ortviken. 3 Maximize the value of by-products such as electricity, crude tall oil and district heating. 35
Slide 36: Containerboard
Containerboard @®SCA
Slide 37: Leading kraftliner supplier
Leading kraftliner supplier Sales (SEKm) No.1 independent producer of Kraftliner in Europe 5,850 • Strong Nordic fresh fiber for high quality packaging • Capacity: 1,140 kt/year (year 2026) • Products: brown and white-top kraftliner for consumer and EBITDA (SEKm) transport packaging, including speci
Slide 38: Discontinuities in economy affect containerboard demand short-term
Discontinuities in economy effects containerboard demand short-term but long-term trend resilient Global containerboard demand (Mt) 250,000 CAGR ~3% +80 Mt Resilient demand during 200,000 corona pandemic Financial crisis 150,000 100,000 50,000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Slide 39: Long-term structural trends drive growth
Long-term structural trends drive growth Kraftliner demand growth Economic drivers 3 4 5 1• Industrial production Favorable trends 2• Consumer spending Kraftliner 1 2 Structural growth 3• E-commerce Underlying growth 4• Changes in retail 5• Sustainable packaging 2005 2019 39
Slide 40: SCA focuses on the European kraftliner market
SCA focuses on the European kraftliner market Containerboard global demand Kraftliner global demand Kraftliner European demand 160Mt 35Mt 5Mt SCA’s core markets SemiChem CIS & China Asia Turkey Africa Australia White-Top Kraftliner Latin Europe Kraftliner America Testliner 5 Mt 35 Mt Unbleached Kraf
Slide 41: Kraftliner for packaging that requires strength
Kraftliner for packaging that requires strength SCA’s strong fiber suitable for kraftliner applications Applications Containerboard Applications Kraftliner 1 Climate variations in 25% industrial supply chain and fresh food Other Industrial 2 Other Long distance transport Consumer products Fresh food
Slide 42: Increased kraftliner production
Increased kraftliner production Production kraftliner in Obbola, kt New paper machine in Obbola started up year-end +275kt 2022 725 • Capacity of 725kt per year • Of which 275kt increased capacity • 2026 first full year with full capacity 450 Current 2023 2026e 42
Slide 43: Containerboard – strategic direction
Containerboard – strategic direction 1 Realize the full potential of the new paper machine in Obbola. 2 Continue to offer the market’s best service and product range. 3 Continue to evaluate an expansion of the Munksund paper mill with a focus on speciality products, such as white-top and wet-strengt
Slide 44: Renewable energy
Renewable energy @®SCA
Slide 45: Leading producer of renewable energy
Leading producer of renewable energy Pellet production Sales (SEKm) Wind farm SCA is a leading producer of renewable energy 1,879 • • 20% of Sweden’s wind power capacity installed at SCA’s land Leading European producer of bioenergy • of which 9 TWh used internally EBITDA (SEKm) • Produces ~1% of Sw
Slide 46: Net Zero policy will shape demand for renewables
Net Zero policy will shape demand for renewables SCA has competitive Global CO2 emissions pathways to Net Zero Global energy supply towards Net Zero advantages in… <2.0° 1 Wind Net zero by 2060 scenario 1.5° Net zero by 2050 scenario 2 Biofuels Predictions in line with IPCC 2021 special report on gl
Slide 47: Renewable demand is growing significantly
Renewable demand is growing significantly 1 2 3 Renewable hydrogen and E-fuels Global consumption, Mt , Wind CAGR (+11%) E-fuels Total CAGR (+8%) Drivers of growth Drivers of growth Drivers of growth LV transportation, Aviation, maritime & Industrial feedstock, maritime, industry processe & heating
Slide 48: SCA uniquely positioned to capitalize on transformation towards renewables
SCA uniquely positioned to capitalize on transformation towards renewables Wind power Biofuels E-fuels Ownership of land with Access to sustainable Access to low-cost good wind conditions biomass feedstock renewable energy SCA Current land lease agreements Existing infrastructure Access to biogenic
Slide 49: SCA's wind strategy for profitable growth
SCAs wind strategy for profitable growth Working with three different business models to create maximum value Wind electricity producer Project development Land lease • Own project development • SCA leases out land areas Value • High degree of self on SCA land well-suited for electricity creation su
Slide 50: SCA grows in wind power
SCA grows in wind power Invests in wind power project and secures high degree of self sufficiency 2,500 2,500 Wind lease Wind power investment of SEK 1.7 bn Series 1 2,000 2,000 Fasikan Series 2 100% degree of self sufficiency in electricity 1,637 1,582 Skogberget Series 3 • Production capacity of 0
Slide 51: SCA is a leading producer of solid biofuels
SCA is a leading producer of solid biofuels Yearly pellets production of 350k tonnes • ~20% market share in Sweden 2.0 TWh external deliveries of wood pellets and unrefined residual products • Customers mainly in Northern Sweden and Europe Maintained leading position in Northern Sweden enables futur
Slide 52: The market for renewable liquid fuels is expected to grow
The market for renewable liquid fuels is expected to grow EU potential ramp-up of sustainable aviation fuel 2020-2050 1 Greenhouse gas reduction quotas will Mt/year increase as Europe redirects 60 ~10% total EU jet fuel demand ~75% total EU jet fuel demand 50 2 Available biomass will not be sufficie
Slide 53: SCA and St1 creating two companies – from forest to fuel station
SCA and St1 creating two companies – from forest to fuel station Ownership structure maximizes value creation Leading Nordic supplier Access to market, Biorefinery Gothenburg biorefinery of liquid biofuel biorefinery and customers Tall oil, Europe’s largest Access to feed stock and biomass priva
Slide 54: Production of liquid biofuels
Production of liquid biofuels Biorefinery in Gothenburg commissioned year-end 2023 • Jointly owned with St1 • Yearly capacity of 200 kt (SCA share 50 kt) Flexible design allowing the use of a wide range of feedstocks Capable of meeting current and future specifications of renewable fuels • Includes
Slide 55: Renewable energy – strategic direction
Renewable energy – strategic direction 1 Wind power • Invest in SCA’s own wind power production to achieve a high degree of self-sufficiency in electricity. • Develop a project portfolio for divestment or investment. • Maximize wind power on SCA’s land and increase lease income. 2 Liquid biofuels •
Slide 56: Share information
Share information @®SCA
Slide 57: Constantly changing world – but the forest always creates value
Constantly changing world – but the forest always creates value SCA is ramping up the newly commissioned strategic investments in Wood, Pulp and SCA took the first step towards Containerboard, and entering becoming a consumer goods company renewable biofuel, creating value in with the acquisition of
Slide 58: SCA's total shareholder return
SCA’s total shareholder return Total shareholder return (TSR) since 2017 350 325 300 170% 275 165% 250 225 Index 200 91% 175 66% 150 40% 125 31% 100 -2% 75 50 jun-17 okt-17 feb-18 jun-18 okt-18 feb-19 jun-19 okt-19 feb-20 jun-20 okt-20 feb-21 jun-21 okt-21 feb-22 jun-22 okt-22 feb-23 jun-23 okt-23 f
Slide 59: Shareholder structure
Shareholder structure SCA’s largest shareholders as of June 30, 2024 # Shareholder Capital Votes Number of shareholders 1 Industrivärden 10,9% 29,5% 2 3 Norges Bank AMF Pension & Fonder 7,2% 9,1% 9,6% 6,8% ~110,000 4 Handelsbanken Pensionsstiftelse 1,4% 3,5% 5 Alecta Tjänstepension 4,8% 2,6% 6 Black
Slide 60: Capital allocation to secure long term profitable growth
Capital allocation to secure long term profitable growth 1 2 3 Profitable growth strategy Stable and increasing dividend Investment grade credit rating EBITDA (SEKbn) and EBITDA margin Dividend (SEK/share) Net debt (SEKbn) and leverage (ND/EBITDA) 3.50 1.00 3.00 2.75 2.50 10.8 10.2 2.50 10.0 2.25 9.
Slide 61: Forward-looking statements
This presentation may contain forward-looking statements. Such statements are based on our current expectations and are subject to certain risks and uncertainties that could negatively affect our business. Please read SCA’s most recent annual report for a better understanding of these risks and unce