Billerud Ab · OMXSTO:BILL
Billerud Ab — BillerudKorsnäs — Non-Deal Roadshow (November 2016)
38 slides from Billerud Ab's roadshow presentation, November 2016
Slide 1: Packaging for a Sustainable Future – Investor presentation November 2016
WE PACKAGING FOR A Investor presentation | November 2016 Susanne Lithander, CFO and Karin Slättborn, IR Manager
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 74% of sales going to consumer sectors portfolio Sustainable alternatives through Innovation challenging other materials and solutions inno
Slide 3: BillerudKorsnäs in brief
BILLERUDKORSNÄS IN BRIEF NET SALES* Europe 73% Asia 17% PACKAGING PAPER OTHER 21.8 Africa 4% South America 3% 9% Kraft paper Sack paper Market pulp SEKbn Middle East 2% 39% SHARE Other 1% 37% OF SALES OPERATING PROFIT* CONSUMER BOARD 15% Liquid packaging board CORRUGATED SOLUTIONS 2.2 Cartonboard Fl
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: Invested to increase capacity and quality lead
WE HAVE INVESTED SEK 2 BILLION SINCE 2012 TO INCREASE CAPACITY AND QUALITY LEAD PACKAGING PAPER CONSUMER BOARD CORRUGATED SOLUTIONS 260 SEKm 1600 SEKm 180 SEKm Brown sack paper Liquid Packaging Board S/C fluting - Improved paper quality Cartonboard - Improved quality restoring leadership - Improved
Slide 11: Planning to invest more than SEK 5 billion
WE ARE PLANNING TO INVEST MORE THAN SEK 5 BILLION… Moving unintegrated MG paper machine from Tervasaari, Finland to Skärblacka, Sweden and making it integrated to the pulp production. Building new board machine at the production unit in Gruvön with capacity of approx. 500 000 t/a of liquid packaging
Slide 12: To improve underlying profitability and secure organic growth
…TO IMPROVE UNDERLYING PROFITABILITY AND SECURE ORGANIC GROWTH PACKAGING PAPER CONSUMER BOARD CORRUGATED SOLUTIONS 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
Slide 13: 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 13
Slide 14: Innovation will further boost top line and margins
INNOVATION WILL FURTHER BOOST TOP LINE AND MARGINS 2014 2015 2020 Target Proportion of sales accounted 14% 17% 20% for by new products 14
Slide 15: Sustainability as a business opportunity
SUSTAINABILITY AS A BUSINESS OPPORTUNITY MAXIMIZING POSITIVE IMPACT SUSTAINABLE INCREASED AND BIO-BASED CUSTOMER VALUE SOCIETY RESPONSIBLE VALUE CHAIN MINIMIZING NEGATIVE IMPACT 15
Slide 16: We provide sustainable solutions
WE PROVIDE SUSTAINABLE SOLUTIONS Towards fossil-free production Environmental impact paper vs plastic1 50-70 % lower CO2 Innovation for sustainability Co-operation for learning 1 Life cycle assessment, Comparative study of virgin fibre based packaging products with competing plastic materials. IVL,
Slide 17: Credentials – we walk the talk
CREDENTIALS – WE WALK THE TALK ADVANCED LEVEL 17
Slide 18: Three business areas
THREE BUSINESS AREAS PACKAGING PAPER CONSUMER BOARD CORRUGATED SOLUTIONS % of business area sales volume: % of business area sales volume: %of business area sales volume: Kraft paper 60% Liquid packaging board 85% Fluting 60% Sack paper 40% Cartonboard 15% Liner 40% LIQUID PURE WHITE KRAFT PAPER NSS
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 8 552 EBIT Expansion to growing markets 38% SEKm 971 MAIN GROWTH DRIVERS SALES VOLUME 43% Population growth in emerging markets drives demand f
Slide 20: Consumer Board
CONSUMER BOARD VOLUME GROWTH % of Group Attractive market providing growth opportunities NET SALES 37% SEKm 4-5% CAGR Investments for volume growth 8 006 EBIT Innovation with customers and brand owners 37% SEKm 954 MAIN GROWTH DRIVERS SALES VOLUME 39% High urbanization rate, primarily in Asia, drive
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 3 329 EBIT Increasing sales to brand owners 21% SEKm 551 MAIN GROWTH DRIVERS SALES VOLUME 19% Increasing e-commerce and fresh food consumption kTO
Slide 22: Financial targets and target fulfillment
FINANCIAL TARGETS AND TARGET FULFILLMENT AFTER THIRD QUARTER 2016 ORGANIC GROWTH 3-4 % EBITDA > 17% PER YEAR 19% ✔ ROCE > 13% Net Debt / EBITDA < 2.5 12% 1.27 DIVIDEND POLICY: 50% OF NET PROFIT 49% FOR 2015 22
Slide 23: Q3 2016 net sales: volumes and sales below expectations
Q3 2016 VOLUMES AND SALES BELOW EXPECTATIONS SALES NET SALES NET SALES* kton VOLUMES SEKm SEKm comparable units 2 100 18 000 2 064 2 083 16 000 16 601 16 189 16 000 1 800 16 125 16 018 14 000 14 000 1 500 12 000 12 000 1 200 10 000 10 000 8 000 900 8 000 6 000 6 000 600 695 693 5 478 5 393 5 478 5 2
Slide 24: Q3 2016 EBITDA: profitability improved
Q3 2016 PROFITABILITY IMPROVED, ACCORDING TO EXPECTATION EBITDA Adjusted EBITDA* SEKm SEKm comparable units 3 600 3 200 +2%* 3 200 3 332 2 800 2 941 2 890 2 800 2 913 2 400 2 400 2 000 2 000 1 600 1 600 1 200 1 200 1 384 1 041 1 038 1 037 800 800 400 400 0 0 Q3 15 Q3 16 Jan-Sep Jan-Sep Q3 15 Q3 16 J
Slide 25: Q3 2016 operating cash flow, ROCE, net debt/EBITDA
Q3 2016 FINANCIAL TARGETS OP. CASH FLOW ROCE NET DEBT/EBITDA SEKm % multiple 20 2,50 1 500 1 597 1 482 16 2,00 1 200 15 12 1,50 900 12 1,30 1,32 1,27 696 8 1,00 600 541 300 4 0,50 0 0 0,00 Q3 15 Q3 16 Jan-Sep Jan-Sep Jan-Sep Jan-Sep Q3 15 Q2 16 Q3 16 15 16 15 16 ROCE based on rolling 12 months 25
Slide 26: 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 27: BillerudKorsnäs
BILLERUDKORSNAS
Slide 28: Appendix
BILLERUDKORSNAS APPENDIX 28
Slide 29: 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 30: Global packaging market
GLOBAL PACKAGING MARKET GLOBAL PACKAGING MARKET, GLOBAL PACKAGING MARKET, BY REGION1 BY MATERIAL1 Asia, 38% Paper and board, 36% Europe, 27% Hard plastics, 22% North America, 22% Flexible materials excl. Paper, 16% South and Central America, 5% Metals, 14% Middle East, 3% Africa, 2% Glass, 7% Pacifi
Slide 31: Sales per region
SALES PER REGION PACKAGING PAPER CONSUMER BOARD CORRUGATED SOLUTIONS SALES PER REGION SALES PER REGION SALES PER REGION • Europe 70% • Europe 69% • Europe 72% • Asia 14% • Asia 22% • Asia 19% • Africa 7% • Middle East 5% • Africa 5% • South America 4% • Africa 2% • South America 2% • Middle East 2%
Slide 32: Cost structure
COST STRUCTURE Fibre (wood and external pulp), 37% No significant forest assets Employee benefits expense, 16% Purchases made from handful of major Chemicals, 10% suppliers Bergvik Skog, Holmen, Mellanskog, Stora Delivery expenses, 9% Enso and Sveaskog Large amount of private land owners in Deprecia
Slide 33: Sensitivity analysis
SENSITIVITY ANALYSIS IMPACT ON PROFIT/LOSS BEFORE TAX Variable Change SEKm Sales volume +/- 10% +/-900 Exchange rate, SEK1 +/- 10% -/+640 Fibre prices +/- 10% -/+700 Price of electricity2 +/- 10% -/+30 Interest rate on loans3 +/- 1 percentage point -/+43 1 Excluding effects of currency hedging. 2 Ex
Slide 34: Production units
PRODUCTION UNITS SWEDEN Total production capacity Gävle, 725 ktonnes Gruvön, 685 ktonnes Frövi/Rockhammar, 470 ktonnes Skärblacka, 420 ktonnes Karlsborg, 300 ktonnes 2 945 FINLAND Thousand Pietarsaari, 200 ktonnes tonnes Tervasaari, 100 ktonnes UNITED KINGDOM Beetham, 45 ktonnes 34 All figures relat
Slide 35: Production restructuring to improve profitability and secure growth
PRODUCTION RESTRUCTURING TO IMPROVE PROFITABILITY AND SECURE GROWTH ✔ Karlsborg 1 Moving unintegrated Tervasaari MG paper machine to Skärblacka and making it integrated to the pulp production. 5 2 Investing in value adding surface treatment capacity at existing MG paper production in Skärblacka. ✔ 5
Slide 36: BillerudKorsnäs share
BILLERUDKORSNÄS SHARE Symbol: BILL Trading platform: Nasdaq Stockholm IPO: November 20, 2001 Share performance 2016 Share performance 2005-2015 170 180 160 160 150 140 140 120 130 100 120 80 110 60 100 40 90 20 80 0 BILL OMX Stockholm PI OMX Stockholm Forestry & Paper PI BILL OMX Stockholm PI OMX St
Slide 37: Ownership structure
OWNERSHIP STRUCTURE Shareholder Number of shares Percent of votes FRAPAG Beteiligungsholding AG 31 300 000 15.1 AMF Insurance & Funds 17 920 420 8.7 Swedbank Robur Funds 9 146 852 4.4 Fourth Swedish National Pension Fund 6 819 766 3.3 Handelsbanken Funds 6 057 945 2.9 Alecta 5 248 000 2.5 Lannebo Fu
Slide 38: BillerudKorsnäs
BILLERUDKORSNAS