37 slides from Svenska Cellulosa Ab Sca Class A's earnings presentation, Jan 30, 2020
Slide 1: Q4 2019 results, January 30, 2020
January 30, 2020
Slide 2: Ulf Larsson, CEO
sson, CEO Ulf Lar
Slide 3: Full-year 2019 highlights: sales growth, EBITDA, operating cash flow
Sales growth of 4% vs 2018 EBITDA (SEKm) and EBITDA margin • Price/mix -8%, volume 11%, currency 3%, acq/div -2% +44% +1% EBITDA up 1% vs 2018 5,252 5,319 - Lower selling prices + Higher pulp volumes + Positive currency effects 3,781 3,648 Operating cash flow up 6% vs 2018 3,300 3,385 28% 27% 23% Ra
Slide 4: Key figures: EBITDA, ROCE, dividend, net debt/EBITDA, EPS
EBITDA (SEKm) Industrial ROCE 1) Proposed dividend (SEK) 5,319 12% 2.00 (5,252) (20%) (1.75) EBITDA margin Net debt/EBITDA EPS (SEK) 27% 1.6x 4.05 (28%) (1.3x) (5.21) Note: Excluding effects from changed accounting method for valuation of forest assets. 4 Figures in “(#)” refer to 2018. 1) ROCE for
Slide 5: Q4 2019: sales down 12%, EBITDA down 29%
Sales growth of -12% vs Q4 2018 • Price/mix -12%, volume 1%, currency 1%, acq/div -2% Weaker market with lower prices • However, increasing demand and declining inventories Q4 vs Q3 EBITDA down 29% vs Q4 2018 - Lower selling prices - Higher costs for planned maintenance stops - Unplanned stops + Pos
Slide 6: EBITDA and EBITDA margin by quarter
EBITDA (SEKm) EBITDA (SEKm) and EBITDA margin 1,055 1,549 1,494 1,560 -29% 1,340 1,364 1,175 1,078 1,055 1,034 33% 30% 31% EBITDA margin 27% 27% 25% 26% 24% 24% 22% Q4 '17 Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Note: Excluding effects from changed accounting method for valuation of
Slide 7: Forest: sales up 10%, EBITDA up 42%
Net sales (SEKm) EBITDA (SEKm) EBITDA margin 10% 42% Prices stable during the quarter 607 35.8% 1,540 1,694 • Prices on new contracts are lower 27.7% 427 Sales up 10% + Increased volumes to the expanded pulp mill, partly offset by maintenance stops + Higher prices Q4 2018 Q4 2019 Q4 2018 Q4 2019 Q4
Slide 8: Wood: sales down 12%, oversupply in continental Europe
Net sales (SEKm) EBITDA (SEKm) EBITDA margin -12% -45% Over supply in continental Europe, 14.5% 226 leading to declining prices 1,558 1,376 9.1% Sales down 12% 125 - Lower prices - Deconsolidation in Wood France following merger with Groupe ISB Q4 2018 Q4 2019 Q4 2018 Q4 2019 Q4 2018 Q4 2019 EBITDA
Slide 9: Average daily NBSK production
Average daily NBSK production (tonnes) Full 2,500 Planned maintenance stop capacity • Economizer replaced 2,000 Unplanned maintenance stop Actual 1,500 • Downtime for repeated repair work on faulty conveyor belt 1,000 Focus on maximizing availability 500 0 Jan/18 Jan/19 Jan/20 Jun/18 Jun/19 Nov/18 N
Slide 10: Increasing pulp demand
Softwood pulp price (USD/t) vs deliveries (Mt) Uptick in Hardwood pulp inventories (days of supply) demand Decreasing 1,400 24.4 80 inventories 1,200 70 24.0 1,000 Time lag 60 800 23.6 Average 50 600 23.2 40 400 NBSK PIX Price Europe (LHS) 22.8 30 200 Global Softwood Kraft deliveries (RHS) 0 22.4 20
Slide 11: Pulp: sales down 14%, EBITDA down 95%
Net sales (SEKm) EBITDA (SEKm) EBITDA margin -14% -95% Sales down 14% 370 35.3% + Increased volumes 1,049 900 - Lower prices - Planned maintenance stop - Unplanned stops 20 2.2% EBITDA down 95% Q4 2018 Q4 2019 Q4 2018 Q4 2019 Q4 2018 Q4 2019 - Lower prices and higher costs for wood raw material - Pl
Slide 12: Increasing kraftliner demand
Price (EUR/t) vs Kraftliner deliveries (Mt) Box demand (index) Uptick in Stable increase in 850 5.5 108 demand end demand 800 106 750 5.4 700 104 5.3 650 102 600 Unbleached kraftliner price Euwid (LHS) 5.2 100 550 Kraftliner deliveries Europe (RHS) 500 5.1 98 Kraftliner inventories (days of supply)
Slide 13: Paper: sales down 13%, EBITDA down 29%
Net sales (SEKm) EBITDA (SEKm) EBITDA margin -13% -29% Sales down 13% 2,421 536 22.2% - Lower kraftliner prices and lower volumes 2,108 18.1% + Positive currency effects 382 EBITDA down 29% - Lower kraftliner prices and lower volumes - Fire at Ortviken paper mill Q4 2018 Q4 2019 Q4 2018 Q4 2019 Q4 2
Slide 14: SCA's standing volume in Sweden increased
New forest survey conducted in 2019 Standing volume at Dec 31, 2019 Gross forest growth Sweden (m m3fo) (m m3fo) SCA’s standing volume in Sweden increased +11 +1 11m m3fo to 249m m3fo at Dec 31, 2019 252 10.5 • Previous survey from 2012-2013 indicated a 241 Baltics 9.5 standing volume of 238m m3fo a
Slide 15: Slide 15
Slide 16: Forest Revaluation
Forest Revaluation @®SCA
Slide 17: SCA's forestland, productive forestland and standing volume
Sawmill Forestland Pulp mill Kraftliner mill 6% 2.6 m ha of Sweden Publication Paper mill Pellet production SCA’s forest Productive forestland Munksund 2.0 m ha Obbola Rundvik Stugun Bollstabruk Standing volume 1) Gällö Härnösand Östrand 252 m m3fo Tunadal Ortviken Note: 1) Including forest holdings
Slide 18: Value of forest land: transactions vs old book value
Value of forest land (2019, SEK/m3fo) Recent larger forest transactions show a Transaction price large discrepancy between the market used to calculate new 334 value of forest land and the old book value book value • Bergvik Öst / AMF – 333 SEK/m3fo 264 276 − vs SCA estimated benchmark price ~370 SE
Slide 19: Changed accounting method for valuing the forest asset
Forest book value (SEKbn) Changed accounting method for valuing the forest 70 asset as of Dec 31, ‘19 • Market value on the basis of transactions in SCA’s area Land value Market value of SEK 70bn • Increased standing volume from new taxation included Value split between Biological assets Land value
Slide 20: Effects of the changed accounting method
Quarter Full year SEKm Q4 2019 Q4 20191) 2019 20191) The change in accounting method resulted in: Net sales 4,312 4,312 19,591 19,591 • A positive one-off effect of EBITDA 17,098 1,055 21,361 5,319 SEK ~16bn on EBITDA • Provision of for deferred tax EBITDA margin 396.5% 24.5% 109.0% 27.2% of SEK ~3b
Slide 21: Financials
Financials @®SCA
Slide 22: Income statement, quarter and full year
Quarter Full year SEKm 1) Q4 2019 Q4 2018 Change 2019 2018 Change Net sales 4,312 4,926 -12% 19,591 18,755 4% EBITDA 1,055 1,494 -29% 5,319 5,252 1% EBITDA margin 24.5% 30.3% -5.8 p.p. 27.2% 28.0% -0.8 p.p. EBIT 637 1,143 -44% 3,703 4,002 -7% EBIT margin 14.8% 23.2% -8.4 p.p. 18.9% 21.3% -2.4 p.p. F
Slide 23: Proposed dividend, pay-out ratio and EPS
+0.25 Proposed dividend (SEK) Adjusted pay-out ratio 1) 2) +0.25 2.00 2.00 52% 1.50 1.75 (1.75) (39%) EPS (SEK) 1) Pay-out ratio 1) 4.05 49% (5.21) (34%) 2017 2018 2019 Note: 1) Excluding effects from changed accounting method for valuation of forest assets. 23 2) Pay-out ratio using EPS excluding t
Slide 24: Net sales and EBITDA by segment 2014-2019
Forest Wood Pulp Paper Net sales (SEKm) 9,643 9,229 8,226 8,548 8,434 7,744 6,956 6,618 6,325 5,994 5,187 5,108 4,978 5,070 5,455 5,114 5,315 5,441 4,377 2,518 2,760 2,492 2,542 2,866 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2
Slide 25: Net sales bridge 2018 to 2019
Deconsolidation in Wood Negative for Pulp, Kraftliner, France following merger Wood. Positive for Expanded pulp mill with Groupe ISB Publication Paper SEK SEK 3% -2% 19,591m 11% 18,755m -8% Positive EUR and USD + 4% Net sales Price/Mix Volume Currency Acquisitions/ Net sales 2018 divestments 2019 25
Slide 26: EBITDA bridge 2018 to 2019
Lower prices for Pulp, Kraftliner and Wood. Higher prices for Publication Paper. Higher costs for EUR and USD positive wood raw material SEK SEK 5,252m -1,495 +432 5,319m +476 +574 -108 +188 Lower cost for maintenance stop, IFRS 16 Lease, sale of Improved energy Rotterdam terminal Higher Pulp balanc
Slide 27: Quarterly net sales and EBITDA by segment
Forest Wood Pulp Paper 2,383 2,426 2,413 2,421 2,366 2,375 2,380 Net sales (SEKm) 2,108 1,865 1,846 1,746 1,727 1,712 1,694 1,678 1,651 1,558 1,545 1,540 1,503 1,455 1,376 1,298 1,214 1,162 1,134 1,129 1,049 900 743 589 485 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q
Slide 28: Net sales bridge Q4 2018 to Q4 2019
Negative for Pulp, Deconsolidation in Wood Kraftliner, Wood Expanded pulp mill offset France following merger by maintenance stops with Groupe ISB SEK 4,926m -12% SEK 1% 1% -2% 4,312m - 12% Net sales Price/Mix Volume Currency Acquisitions/ Net sales Q4 2018 divestments Q4 2019 28
Slide 29: EBITDA bridge Q4 2018 to Q4 2019
Lower prices for Pulp, Kraftliner and Wood Higher result from revaluation of SEK biological assets and positive 1,494m -686 one-off effects from forest transactions, offset by higher cost for maintenance stops Higher costs for wood raw EUR and Expanded pulp mill offset material offset by higher USD
Slide 30: Cash flow, quarter and full year
Quarter Full year SEKm Q4 2019 Q4 2018 2019 2018 EBITDA 1,055 1,494 5,319 5,252 Revaluation of biological assets and other non cash flow items -323 -183 -937 -749 Operating cash surplus 732 1,311 4,382 4,503 Change in working capital 140 -217 -186 -843 Current capital expenditures -370 -472 -1,132 -
Slide 31: Net debt development in Q4 2019
SEK SEK SEK SEK +188m -329m SEK SEK SEK +258m 8,597m +894m 8,169m -583m 854 Lease Lease 857 Forest land Baltics Increased value of pension assets Kraftliner and pulp expansion Net debt / EBITDA Net debt / EBITDA 1.4x 1.6x Net debt Operating Strategic capex Acquisitions Paid tax Other Net debt Q3 201
Slide 32: Capital employed, net debt and equity
SEKm Dec 31, 2019 Dec 31, 2018 Forest assets 69,682 33,065 Working capital 3,748 3,735 Working capital/Net sales 1) 20% 18% Deferred tax relating to forest assets -13,977 -6,605 Other capital employed 17,654 15,887 Total capital employed 77,107 46,082 Net debt 8,597 7,020 Net debt/EBITDA 2) 1.6x 1.3
Slide 33: Summary
Summary Ulf Larsson, CEO WSCA
Slide 34: Summary of 2019
Sales growth of 4% vs 2018 • Price/mix -8%, volume 11%, currency 3%, acq/div -2% EBITDA up 1% vs 2018 - Lower selling prices + Higher pulp volumes + Positive currency effects Operating cash flow up 6% vs 2018 Ramp-up of Östrand pulp mill • Investment financed by operating cash flow Acquisition of 30
Slide 35: Toby Lawton, CFO
Slide 36: Q&A
Slide 37: 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