Billerud Ab · OMXSTO:BILL
Billerud Ab — BillerudKorsnäs — SEB Nordic Seminar 2016
36 slides from Billerud Ab's conference presentation, Jan 8, 2016
Slide 1: Packaging for a better world - SEB Nordic Seminar
WE PACKAGING FOR A SEB Nordic Seminar | January 2016 Susanne Lithander, CFO
Slide 2: Pure play packaging materials company
PURE PLAY PACKAGING MATERIALS COMPANY High performance packaging Target customer segments requiring strong, light and/or pure packaging materials Stable product 75% of sales going to consumer sectors portfolio Sustainable alternatives through Focus on value adding solutions to our customers innovati
Slide 3: BillerudKorsnäs in brief
BILLERUDKORSNÄS IN BRIEF NET SALES* Europe 73% Asia 16% PACKAGING PAPER OTHER 21.7 Africa 5% Middle East 3% 10% Kraft paper Sack paper Market pulp SEKbn South America 2% 39% SHARE Other 1% OF SALES 36% OPERATING PROFIT* CONSUMER BOARD 15% Liquid packaging board CORRUGATED SOLUTIONS 2.4 Cartonboard F
Slide 4: Aiming to capture growth from global megatrends
AIMING TO CAPTURE GROWTH FROM GLOBAL MEGATRENDS DEMOGRAPHIC SHIFTS AND A CHANGING WORLD MAP SUSTAINABILITY CONNECTING SEVERAL SUBTRENDS CONSUMERS AND SUPPLY CHAINS ARE CHANGING 4
Slide 5: Packaging paper & board market is growing by 2.2%
PACKAGING PAPER & BOARD MARKET IS GROWING BY 2.2% Europe North-America 1.5% 0.3% Asia 3.3% 3.0% 2.8% Australasia 2.7% Middle East 0.4% Central & South America Africa Estimated demand CAGR 2013-2030, combined market for cartonboard, containerboard and sack paper. Source: Pöyry 2014 5
Slide 6: We target global packaging market growing by 3.4%
WE TARGET GLOBAL PACKAGING MARKET GROWING BY 3.4% Europe North-America 1.8% 2.0% Asia 4.7% 5.1% 4.4% Australasia 3.7% Middle East 2.2% Central & South America Africa Estimated CAGR 2014-2024, for all packaging materials. Source: Smithers Pira 2014 6
Slide 7: We have established a clear growth strategy
WE HAVE ESTABLISHED A CLEAR GROWTH STRATEGY 7
Slide 8: Investing to move further up the value chain towards brand owners
WE ARE INVESTING TO MOVE FURTHER UP THE VALUE CHAIN TOWARDS BRAND OWNERS Packaging Packaging material material 50-85 % of 2-5% of the cost the cost Price Brand image Payment terms Package solution Runability Sustainability Delivery terms Shelf appearance 8
Slide 9: We are expanding the reach of our offering
WE ARE EXPANDING THE REACH OF OUR OFFERING OUR PRESENCE 2013 AND NEW SALES HUBS 2015 Sweden Finland Germany UK France Spain Italy UAE China Singapore Thailand US India Turkey South Africa 9
Slide 10: We have invested SEK 2 billion since 2012
WE HAVE INVESTED SEK 2 BILLION SINCE 2012 TO INCREASE CAPACITY AND QUALITY LEAD PACKAGING PAPER CONSUMER BOARD CONTAINERBOARD 260 SEKm 1600 SEKm 180 SEKm Brown sack paper Liquid Packaging Board S/C fluting - Improved paper quality Cartonboard - Improved quality restoring leadership - Improved qualit
Slide 11: Planning to invest more than SEK 5 billion
WE ARE PLANNING TO INVEST MORE THAN SEK 5 BILLION… Karlsborg 1 Moving unintegrated Tervasaari MG paper machine to Skärblacka and making it integrated to the pulp production. 5 5 Pietarsaari 2 Investing in value adding surface treatment capacity at existing MG paper production in Skärblacka. 3 a) Bui
Slide 12: ...During next three years...
…DURING NEXT THREE YEARS… Possible production Possible production start on board start on MG machine machine in Gruvön* in Skärblacka* Decision on new board machine in Gruvön Feasibility studies Decision on moving started Tervasaari machine Q3 Q2 Q4 2018 2019 2015 2016 2016 *Subject to feasibility s
Slide 13: ...To improve underlying profitability and secure organic growth
…TO IMPROVE UNDERLYING PROFITABILITY AND SECURE ORGANIC GROWTH PACKAGING PAPER CONSUMER BOARD CONTAINERBOARD Focusing on growth Increasing volumes on Expanding solution based segments growing by growing Liquid Packaging sales to brand owners 2-4% per year Board and Cartonboard markets Exiting oversu
Slide 14: M&A may boost long-term growth
M&A MAY BOOST LONG-TERM GROWTH We have the financial capacity to add M&A growth to organic growth We have proven experience in merging businesses and quickly extracting synergies Bolt-on acquisitions with synergy potentials are currently the most interesting candidates 14
Slide 15: Innovation will further boost top line and margins
INNOVATION WILL FURTHER BOOST TOP LINE AND MARGINS 2014 2015 Q3 2020 Target Proportion of sales accounted 14% 19% 20% for by new products +2% average margin improvement on new products 15
Slide 16: Investing in innovation on three levels
INVESTING IN INNOVATION – ON THREE LEVELS 2015 2015 vs 2013: 2x # employees Challenger products 5x # projects 180 % increased spend Innovation agenda 2013 R&D and product R&D and product development development 16
Slide 17: Innovation provides world leading sustainable alternatives
INNOVATION PROVIDES WORLD LEADING SUSTAINABLE ALTERNATIVES Through our products… … and through our actions Environmental impact paper vs plastic1 50-70 % lower CO2 ADVANCED LEVEL 1 Life cycle assessment, Comparative study of virgin fibre based packaging products with competing plastic materials. IVL
Slide 18: Three business areas
THREE BUSINESS AREAS PACKAGING PAPER CONSUMER BOARD CONTAINERBOARD % of business area sales volume: % of business area sales volume: %of business area sales volume: Kraft paper & pulp 60% Liquid packaging board 85% Fluting 60% Sack paper 40% Cartonboard 15% Liner 40% LIQUID PURE WHITE KRAFT PAPER NS
Slide 19: Packaging Paper
PACKAGING PAPER SELECTIVE GROWTH % of Group Asset transformation for increased profitability NET SALES 39% SEKm 0-4% CAGR Development of new business models 8 491 EBIT Expansion to growing markets 38% SEKm 1 023 MAIN GROWTH DRIVERS SALES VOLUME 43% Population growth in emerging markets drives demand
Slide 20: Consumer Board
CONSUMER BOARD VOLUME GROWTH % of Group Attractive market providing growth opportunities NET SALES 36% SEKm 4-5% CAGR Investments for volume growth 7 841 EBIT Innovation with customers and brand owners 37% SEKm 1 020 MAIN GROWTH DRIVERS SALES VOLUME 39% High urbanization rate, primarily in Asia, dri
Slide 21: Corrugated Solutions
CORRUGATED SOLUTIONS VALUE GROWTH % of Group Strong product portfolio setting market standard NET SALES 15% SEKm 2-4% CAGR Integrating new business model 3 265 EBIT Increasing sales to brand owners 19% SEKm 511 MAIN GROWTH DRIVERS SALES VOLUME 19% Increasing e-commerce and fresh food consumption kTO
Slide 22: New financial targets to support our growth strategy
NEW FINANCIAL TARGETS TO SUPPORT OUR GROWTH STRATEGY TARGET FULFILMENT ROLLING 12M SEPTEMBER 2015 Organic growth 3-4% per year EBITDA > 17% 4%* 17%* ROCE > 13% Net Debt / EBITDA < 2.5 14%** 1.3 Dividend policy – distribute 50% of net profit as dividend 51% of FY 2014 net profit * Excluding divested
Slide 23: Capital allocation focus on growth
CAPITAL ALLOCATION FOCUS ON GROWTH Maintain a capital structure and liquidity position that secure 1 execution of dividend policy 2 Investing in organic 4 growth based on the 3 Excess capital return to M&A to support strategy strategy shareholders 23
Slide 24: Summary
SUMMARY Global trends imply major growth opportunities Sustainability, demographic shifts, digitalization and changed consumer behavior We invest in all of our four strategic pillars: Position expansion, Innovation, Sustainability and Efficiency We have set out plans to increase profitability and se
Slide 25: thy
thy BILLERUDKORSNAS
Slide 26: Appendix
BILLERUDKORSNAS APPENDIX 26
Slide 27: Successful integration has enabled a strong platform for growth
SUCCESSFUL INTEGRATION HAS ENABLED A STRONG PLATFORM FOR GROWTH 2006 2009 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Packaging focused materials and solutions Annual synergies of approximately SEK 530 provider million Broader product portfolio Sharply reduced pulp market exposure Higher
Slide 28: Global packaging market
GLOBAL PACKAGING MARKET GLOBAL PACKAGING MARKET, BY REGION1 Asia, 38% Europe, 27% GLOBAL PACKAGING MARKET, North America, 22% BY MATERIAL1 South and Central America, 5% Middle East, 3% Paper and board, 36% Africa, 2% Hard plastics, 22% Pacific Region, 2% Flexible materials excl. Paper, 16% Metals, 1
Slide 29: Sales per region
SALES PER REGION PACKAGING PAPER CONSUMER BOARD CONTAINERBOARD SALES PER REGION SALES PER REGION SALES PER REGION • Europe 71% • Europe 67% • Europe 76% • Asia 13% • Asia 24% • Asia 12% • Africa 8% • Middle East 5% • Africa 6% • South America 4% • Africa 2% • South America 1% • Middle East 2% • Sout
Slide 30: Cost structure
COST STRUCTURE No significant forest assets Fibre (wood and external pulp), 37% Purchases made from handful of major Employee benefits expense, 16% suppliers Chemicals, 10% Bergvik Skog, Holmen, Mellanskog, Stora Enso and Sveaskog Customer delivery expenses, 9% Large amount of private land owners in
Slide 31: Sensitivity analysis
SENSITIVITY ANALYSIS IMPACT ON PROFIT/LOSS BEFORE TAX Variable Change SEKm Sales volume +/- 10% +/-850 Exchange rate, SEK1 +/- 10% +/-640 Fibre prices +/- 10% -/+700 Price of electricity2 +/- 10% -/+40 Interest rate on loans3 +/- 1 percentage point -/+43 1 Excluding effects of currency hedging. 2 Ex
Slide 32: Debt maturity
DEBT MATURITY DEBT MATURITY PROFILE 6 000 5 000 4 000 Commited facilities SEKm Bank Debt 3 000 Market Debt 2 000 1 000 0 2015 2016 2017 2018 2019 2020 2021- 32
Slide 33: Production units
PRODUCTION UNITS SWEDEN Total production Gävle, 725 ktonnes Gruvön, 685 ktonnes capacity Frövi/Rockhammar, 450 ktonnes Skärblacka, 400 ktonnes Karlsborg, 300 ktonnes 2 905 FINLAND Thousand Pietarsaari, 200 ktonnes tonnes Tervasaari, 100 ktonnes UNITED KINGDOM Beetham, 45 ktonnes 33 All figures relat
Slide 34: BillerudKorsnäs share
BILLERUDKORSNÄS SHARE Symbol: BILL Trading platform: Nasdaq Stockholm IPO: November 20, 2001 Share performance 2015 Share performance 2004-2014 170 160 160 140 150 120 140 100 130 80 120 60 110 100 40 90 20 80 0 BILL OMX Stockholm PI OMX Stockholm Forestry & Paper PI BILL OMX Stockholm PI OMX Stockh
Slide 35: Ownership structure
OWNERSHIP STRUCTURE Shareholder Number of shares Percent of votes FRAPAG Beteiligungsholding AG 31 300 000 15.1 AMF Insurance & Funds 16 538 412 8.0 Swedbank Robur Funds 9 261 961 4.5 Fourth Swedish National Pension Fund 6 585 129 3.2 Lannebo Funds 5 835 129 2.8 Norges Bank Investment Management 4 6
Slide 36: thy
thy BILLERUDKORSNAS