Norske Skog Asa · OSL:NSKOG
Norske Skog Asa — Q2 2022 Earnings Presentation
21 slides from Norske Skog Asa's earnings presentation, Jul 15, 2022
Slide 1: Q2 2022 presentation
Q2 2022 presentation 15 July 2022 Website LinkedIn Quartr
Slide 2: Sustainable and innovative industry
Sustainable and innovative industry 2
Slide 3: Second quarter in brief
Second quarter in brief Good profitability despite turbulent markets EBITDA of NOK 905m, impact from waste-to-energy facility and price increases offsetting energy and raw material costs Profit of 935m in the quarter, including positive non-cash impact of NOK 419m from valuation of energy contracts
Slide 4: New waste-to-energy facility improving EBITDA
New waste-to-energy facility improving EBITDA Revenue EBITDA EBITDA bridge Q1 2022 to Q2 2022 NOKm (and deliveries volume) NOKm (and margin) NOKm LTM1 EBITDA of NOK ~2.0bn 905 3 937 48 -79 27 3 590 -145 3 092 387 610 2 642 Long USD and 2 346 57 GBP, short NOK 422 905 610 111 17 Q2'21 Q3'21 Q4'21 Q1'
Slide 5: Positive development in both operating segments
Positive development in both operating segments EBITDA Europe EBITDA Australasia Segment financials NOKm NOKm NOKm Europe Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 910 Operating rate, % 85% 96% 96% 94% 90% Deliveries, thousand tonnes 403 433 427 407 407 Total operating income 1,714 2,183 2,648 2,968 3,469 EBITD
Slide 6: Solid balance sheet and liquidity
Solid balance sheet and liquidity Cash and cash equivalents Cash earnings1 NOKm NOKm Net debt of NOK 1 012m LTM cash earnings of NOK 708m Net debt / LTM reported EBITDA of 0.5x 425 1 728 Repurchased EUR 4.4m of EUR 150m bond 1 676 1 489 1 324 233 Total available liquidity of EUR ~460m 1 163 173 Cash
Slide 7: Optimising publication paper cash flows and operations
Optimising publication paper cash flows and operations Publication paper capacity Four sites in Europe, one in Australia In total, 10 publication paper machines 1 225k tonnes newsprint Bruck PM3 (125kt) now closed for conversion Golbey PM1 (235kt) closing for conversion Q2 2023 400k tonnes LWC magaz
Slide 8: Energy and raw material markets expected to become more challenging in H2 2022
Energy and raw material markets expected to become more challenging in H2 2022 Energy prices Germany Recovered paper prices Germany Spruce pulpwood prices Norway EUR per MWh EUR per tonne NOK per solid cubic metre 300 240 400 350 250 200 300 200 160 250 150 120 200 150 100 80 100 50 40 50 0 0 0 2017
Slide 9: Nordic operations favourably positioned versus a volatile and uncertain European operating environment
Nordic operations favourably positioned versus a volatile and uncertain European operating environment Western European publication paper industry capacity Norske Skog Europe publication paper capacity Percentages exclude Bruck PM3 France Switzerland Bruck PM3 Finland Golbey PM1 125k tonnes Skogn UK
Slide 10: Tough operating conditions and announced closures expected to keep the publication paper market tight
Tough operating conditions and announced closures expected to keep the publication paper market tight Publication paper industry capacity closures in Western Europe Publication paper stock volumes Western Europe Thousand tonnes Number of delivery days covered by inventories Completed closures Announ
Slide 11: Publication paper price increases necessary to address unprecedented raw material and energy prices
Publication paper price increases necessary to address unprecedented raw material and energy prices Newsprint and magazine paper prices Germany Western European publication paper operating rate and demand EUR per tonne Million tonnes (and Norske Skog operating rate) 1 200 20 93% 95% 94% 89% 89% 1 00
Slide 12: Entering the growing market for recycled containerboard
Entering the growing market for recycled containerboard Packaging paper capacity 760k tonnes recycled containerboard In the market from Q1 2023 Targets Operating rate of ~95% from 2025-26 EBITDA margin of +20% PCompetitive steam supply PCentrally located with low transport costs PEstablished raw mat
Slide 13: Green Valley Energie CHP plant will support Golbey cost competitiveness
Green Valley Energie CHP plant will support Golbey cost competitiveness Biomass energy Biomass energy JV2 between Pearl (80%), Veolia (10%) and Norske Skog (10%) The JV will sell electricity to the French Green Valley Energie grid and steam to Norske Skog until 2043 CHP1 biomass boiler 700 GWh of co
Slide 14: Waste-to-energy facility reducing Bruck gas consumption
Waste-to-energy facility reducing Bruck gas consumption Bruck waste-to-energy facility Bruck external energy exposure Gas and electricity, MWh / tonne 4.0 3.5 3.0 Waste-to-energy Under commissioning with Valmet and 2.5 nearing 100% utilisation Reduction of ~34%, 2.0 further reduction as Reduces gas
Slide 15: Conversions look attractive across the board
Conversions look attractive across the board Higher capacity Better margins Growing market Thousand tonnes EBITDA margin Industry CAGR (2019-2021) +2x +2x +20% 5% 760 Value accretive projects Production capacity doubles by switching from newsprint to containerboard Price per tonne for newsprint and
Slide 16: Containerboard market remains tight driven by e-commerce and sustainability focus
Containerboard market remains tight driven by e-commerce and sustainability focus Recycled containerboard prices Germany Western European recycled containerboard operating rate and demand EUR per tonne Million tonnes (and industry operating rate) 1 000 30 96% 95% 95% 95% 93% 93% 25 800 20 600 15 400
Slide 17: Milestone progress across all bio products
Milestone progress across all bio products Large scale CEBINA application Partnership to commercialise CEBICO Circa and Valmet industrial partnership Applied in spray filler for Salmon Evolution farming tanks Partnership between Norske Skog, BEWI and BE Form Provides technology expertise and scale-u
Slide 18: Green energy production and energy efficient operations enable annual surplus of CO2 allowances
Green energy production and energy efficient operations enable annual surplus of CO2 allowances Continue to reduce fossil CO2 emissions from production European Union Allowance (EUA) price development Kg fossil CO2 direct and indirect (scope 1 EUR / allowance and 2) emissions per tonne produced Targ
Slide 19: Enabling the circular economy
Enabling the circular economy End-products recycled Waste utilised Green energy focused 71% 99% of water 98% 84% intake returned recycled1 after treatment utilised green Developing climate solutions Participating in Borg CO2 industry cluster to develop CCUS2 technologies with ambition to capture ~63
Slide 20: Outlook
Outlook Publication paper market expected to remain tight due to industry capacity closures Volatile energy and raw material markets expected to continue causing operational challenges Converting two machines from newsprint production to recycled containerboard production Waste-to-energy facility to
Slide 21: Norske Skog ASA contact and disclaimer
Norske Skog ASA Postal address: P.O. Box 294 Skøyen, 0213 Oslo, Norway Visitors: Sjølyst Plass 2, 0278 Oslo, Norway Phone: +47 22 51 20 20 Email: info@norskeskog.com Email: ir@norskeskog.com This presentation contains statements regarding the future in connection with Norske Skog’s growth initiative