Stora Enso Oyj Class A · OMXHEX:STEAV
Stora Enso Oyj Class A — Q2 2003 Earnings Presentation
35 slides from Stora Enso Oyj Class A's earnings presentation, Jul 24, 2003
Slide 1: April-June 2003 Results
April- June 2003 Results 24 July 2003
Slide 2: Forward-looking statements
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: Highlights
Highlights I/2003 II/2003 Sales, EUR million 3 099 3 057 Operating Profit, EUR million 211.1 106.7 EPS, EUR 0.10 There were no non-recurring items in the periods under review 0.07 •Cash Profits EPS, negatively EUR impacted by: 0.43 – Geopolitical factors and subdued0.41 economic activity across glob
Slide 4: Main Events
Main Events • Veracel – Decision was taken by associated company Veracel to construct a 900 000 tonnes p.a.pulp mill in Bahia, Brazil, based on own eucalyptus – Stora Enso is entitled to 50 % of the output, to be used as ’captive’ pulp – Production start up: mid 2005 • Langerbrugge – Successful star
Slide 5: Financial figures
STORAENSO 2 Responsibility & Performance Financial figures
Slide 6: Summary Financials
Summary Financials EUR million 2002II/02 H1/02 H1/03 I/03 II/03 Sales 12 7833 233 6 4626 1563 099 3057 EBITDA 1) 2 172518 1 121900 501400 Operating profit 1) 926 190464 318211 107 Profit before tax -343 206395 216129 87 Net profit -222 138299 14285 56 EPS, EUR 1) 0.57 0.150.30 0.160.10 0.07 EPS, bas
Slide 7: Currency Hedging
Currency Hedging • Group’s hedging policy: 25-75 % of net cash flow (benchmark: 50 %) hedged 12 months forward • Operational cash flow hedges had a positive impact of EUR 34.8 million in Q2/2003 • Major net cash flows (2002): USD +800 GBP +800 (EUR million equivalent) 7 24 July 2003
Slide 8: Indirect Impact of Euro Strength
Indirect Impact of Euro Strength • Imports increasing somewhat to Europe • Packaging Boards experiencing increased competition versus US dollar based suppliers in its overseas sales • US dollar price increases in magazine grades are supported by stronger Euro, but mitigated by increased imports from
Slide 9: Net Financial Items
Net Financial Items EUR million II/02III/02IV/02 I/03 II/03 Net interest -54.8-53.0-49.3-34.6-51.5 Foreign exchange profit/loss 10.913.2 0.42.9 7.9 Valuation of financial instruments (non cash) -16.1-20.0-11.0-44.130.0 Other financing items 16.03.6 -0.9-5.5 2.3 Total -44.0-56.2-60.8-81.3-11.3 9 24 J
Slide 10: Change in EPS I/2003 vs II/2003
Change in EPS I/2003 vs II/2003 EUR 0,12 0.10 -0.05 0,10 0,08 0.01 0.07 0.01 -0.05 0.05 0,06 0,04 0,02 0,00 GROUP TOTAL Sales prices Sales volume Fixed Costs Financing cost Other GROUP TOTAL I/03 and mix II/03 10 24 July 2003
Slide 11: EPS by Quarter
EPS by Quarter EUR 0,25 0,20 0,15 0,10 0,05 0,00 II/01 III/01 IV/01 I/02 II/02 III/02 IV/02 I/03 II/03 11 24 July 2003 excluding non-recurring items
Slide 12: Change in EPS 1-6/2003 vs 1-6/2002
Change in EPS 1-6/2003 vs 1-6/2002 EUR 0.30 -0.22 0,30 0,25 0,20 0.09 -0.01 0.04 0.16 -0.01 -0.03 0,15 0,10 0,05 0,00 GROUP TOTAL Sales prices Sales volume Energy Fixed Costs Financing cost Other GROUP TOTAL 1-6/02 1-6/03 12 24 July 2003 excluding non-recurring items
Slide 13: ROCE
ROCE % 20 18 16 14 ROCE target 12 13% 10 WACC 9.5% before tax 8 6 4 2 0 1998 1999 2000 2001 2002 II/2003 Target > 13% over the cycle 13 24 July 2003 excluding non-recurring items
Slide 14: Debt/Equity
Debt/Equity 0,65 0,60 0,55 0,50 0,45 0,40 0,35 0,30 0,25 0,20 II/01 III/01 IV/01 I/02 II/02 III/02 IV/02 I/03 II/03 Target < 0.8 14 24 July 2003
Slide 15: Share Buy-Back Programme
Share Buy-Back Programme Current programme approved by 2003 AGM to continue through 19 March 2004. Allows repurchase up to: A shares 9 100 000 R shares 34 000 000 Status through 30 June 2003: Number of Average % of Shares shares purchased: purchase price: authorisation A shares 3 300 EUR 9.14 0.04 R
Slide 16: Capital Expenditure and Depreciation
Capital Expenditure and Depreciation Capital expenditure Goodwill amortisation EUR million Depreciation Capital expenditure as % of sales 1 600 10 % 9% 1 400 8% 1 200 7% 1 000 6% 800 5% 4% 600 3% 400 2% 200 1% 0 0% 1998 1999 2000 2001 2002 H1/2003 16 24 July 2003
Slide 17: Deliveries and Production
Deliveries and Production 1 000 tonnes/m3 Deliveries 2002 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Publication Papers 6 807 1 638 1 636 1 703 1 830 1 654 1 678 Fine Papers 3 432 874 866 859 833 885 895 Packaging Boards 2 909 711 749 734 715 756 781 Paper and Board Total 13 148 3 223 3 251 3 296 3 378 3 2
Slide 18: Curtailments
Curtailments 1000 tonnes 2002 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Publication Papers 874 249 250 188 187 123 143 Fine Papers 274 49 58 73 94 64 32 Packaging Boards 109 37 18 10 44 15 25 Paper and Board Total 1 257 335 326 271 325 202 200 Europe 1 037 249 218 248 322 195 158 USA 220 86 108 23 3 7 42
Slide 19: North America H1
STORAENSO 2 Responsibility & Performance North America H1 2003
Slide 20: Financial Results in North America
Financial Results in North America USD million 2002 H1/02 H2/02 H1/03 Sales 1 871 884 987 933 EBITDA 1) 153 50 103 39 EBITA 1) -155 -105 -50 -98 Cash flow after Capex 2) 138 25 113 -71 Deliveries (1 000 tonnes) 2 655 1 229 1 426 1 345 Market-related downtime (1 000 tonnes) 233 194 39 49 1) excluding
Slide 21: Prices have failed to improve materially since peaking in 2000
Prices have failed to improved materially since peaking in 2000 Source: RISI Monthly Average Transaction Prices 1000 950 900 875 850 800 750 US $ per short ton 705 700 710 625 695 665 600 500 495 440 400 Newsprint 30-lb East* SC-A 35-lb CWF No. 3 60-lb, rolls CMR No. 5 40-lbs 300 J'98 A J O J'99 A J
Slide 22: Profit Enhancement Programme in North America
Profit Enhancement Programme in North America • Profit Enhancement Programme is proceeding according to plan – Kimberly Mill PM 96 and Biron Mill 26 rebuilds were successfully completed during Q2 2003 • Workforce reduced by 20 % since year 2000 • Permanent closure of Wisconsin Rapids 12; Biron 24 to
Slide 23: Further Cost Cutting Measures in North America
Further Cost Cutting Measures in North America • Fixed costs in North America continue to be too high further cost-cutting steps will be taken • These measures will be announced before the end of the third quarter 2003 23 24 July 2003
Slide 24: Outlook
STORAENSO 2 Responsibility & Performance Outlook
Slide 25: Outlook
Outlook • Global economic activity remains muted • In Europe advertising spending is still not increasing • North American advertising spending is beginning to recover from the Iraq War-impacted levels • Increasing imports affecting the supply/demand balance in the USA • Consumer confidence in Asia
Slide 26: Outlook (cont.)
Outlook (cont.) • Overcapacity in Europe continues to negatively impact pricing in coated printing papers • Uncoated fine paper and recovered fibre-based board prices under pressure in Europe • Additional cost cutting measures within the company will be effected • The Group’s capital expenditure pla
Slide 27: Near-term Market Outlook
Near-term Market Outlook Western Europe Price Demand Comments Magazine Paper SC is expected to be stable SC Demand slowly improving; D/S ratio CMR imbalance puts pressure on prices No strong sign of improvement in Newsprint demand Fine Papers Price pressure; producer stock remain high WFC Demand wil
Slide 28: Near-term Market Outlook
Near-term Market Outlook North America Price Demand Comments A modest recovery forecasted; Magazine Paper some further price increases expected in H2 SC A modest recovery forecasted; some CMR further price increases expected in H2 Some signs of improvement in Newsprint Demand; $50 price increase par
Slide 29: Appendix
STORAENSO 2 Responsibility & Performance Appendix
Slide 30: Operating Profit of Main Business Areas
Operating Profit of Main Business Areas EUR million II/02III/02IV/02 I/03II/03 Publication Paper 6384 6836 -5 % sales 67 63 -1 Fine Paper 7370 5680 41 % sales 99 811 5 Packaging Boards 71116 7892 67 % sales 915 1112 9 Timber Products 1410 127 15 % sales 43 42 4 30 24 July 2003 excluding non-recurrin
Slide 31: Operating Profit by Quarter
Operating Profit by Quarter EUR million 600 500 400 300 200 100 0 II/00 III/00 IV/00 I/01 II/01 III/01 IV/01 I/02 II/02 III/02 IV/02 I/03 II/03 31 24 July 2003 excluding non-recurring items
Slide 32: Change in Group Operating Profit from 1-6/2002 to 1-6/2003
Change in Group Operating Profit from 1-6/2002 to 1-6/2003 EUR million 500 464.2 -281.4 400 55.3 317.8 108.5 -15.4 300 -13.4 200 100 0 GROUP TOTAL Sales prices Sales volumes Energy Fixed costs Other GROUP TOTAL 1-6/02 and mix 1-6/03 32 24 July 2003 excluding non-recurring items
Slide 33: Profit Before Tax and Minority Interests by Quarter
Profit Before Tax and Minority Interests by Quarter EUR million 600 500 400 300 200 100 0 II/00 III/00 IV/00 I/01 II/01 III/01 IV/01 I/02 II/02 III/02 IV/02 I/03 II/03 33 24 July 2003 excluding non-recurring items
Slide 34: ROCE by Quarter
ROCE by Quarter % 25 20 15 10 WACC 9.5% before tax 5 0 II/00 III/00 IV/00 I/01 II/01 III/01 IV/01 I/02 II/02 III/02 IV/02 I/03 II/03 Target > 13% over the cycle 34 24 July 2003 excluding non-recurring items
Slide 35: Visit www.storaenso.com for more information
Visit www.storaenso.com for more information.