Slide 1: Kraftliner expansion
Kraftliner expansion Investor Relations September 2, 2019
Slide 2: Profitable growth strategy
Profitable growth strategy Ulf Larsson, CEO
Slide 3: Profitable growth strategy
Profitable growth strategy Invest in integrated value chain: Increased • Grow Pulp value from • Kraftliner expansion each tree • Renewable energy new segment • Reduce exposure to Publication Paper Increase forest holdings: Growing forest asset • Increase growth and harvesting level • Acquire for
Slide 4: Cash flow funded growth opportunities
Cash flow funded growth opportunities Value Biorefinery optionality Östrand – further capacity increase ROCE Biofuel production from CTO 2023 Research and development Kraftliner expansion Leverage 2020 Opportunity to Pilot plant 20192021/22 further increase 5.0 TWh wind capaci
Slide 5: Kraftliner expansion – investment highlights
Kraftliner expansion – investment highlights Favorable trends drive long-term growth • Renewable packaging, e-commerce, more packaged goods from a growing population and middle class Asset renewal secures long-term competitiveness • Strengthened market leading position • Improved cost position •
Slide 6: Financial summary
Financial summary Toby Lawton, CFO
Slide 7: Kraftliner expansion drives profitable growth
Kraftliner expansion drives profitable growth We invest to secure the first 450kt and to add 275kt Obbola investment ’19-’23 Obbola production (kt) EBITDA (SEKbn) Profitable growth +5bn +275kt +0.8-1.0 Most value creative alternative ~7.5 Capex of ~7.5 SEKbn 725 • Life extension: ~2.5bn non-optional
Slide 8: Kraftliner expansion
Kraftliner expansion Mats Nordlander, President Paper
Slide 9: Market
Market @SCA
Slide 10: Favorable long-term trends driving containerboard demand
Favorable long-term trends driving containerboard demand Favorable long-term trends… …driving containerboard demand with a stable growth of ~3% Containerboard a 160 Mt global market Population growth CAGR 3% 170 +55 Mt Others Containerboard CWC 160 Growing middle class UWC 150 News 160 140 E-commerc
Slide 11: SCA focuses on the European kraftliner market
SCA focuses on the European kraftliner market Containerboard global demand Kraftliner global demand Kraftliner European demand 160Mt 35Mt 5Mt SCA’s core markets SemiChem CIS & China Asia Turkey Africa Australia White-Top Kraftliner Latin Europe Kraftliner America Testliner 5 Mt 35 Mt Unbleached Kraf
Slide 12: Kraftliner for packaging that requires strength
Kraftliner for packaging that requires strength SCA’s strong fiber suitable for kraftliner applications Applications Containerboard Applications Kraftliner 1 Climate variations in 25% industrial supply chain and fresh food Other Industrial 2 Other Long distance transport Consumer products Fresh food
Slide 13: Long-term structural trends provide additional growth potential
Long-term structural trends provide additional growth potential Kraftliner demand growth Economic drivers 3 4 5 1• Industrial production Favorable trends 2• Consumer spending Kraftliner 1 2 Structural growth 3• Changes in retail Underlying growth 4• E-commerce 5• Sustainable packaging 2005 2018 13
Slide 14: Project overview
Project overview @SCA
Slide 15: Secure and improve current kraftliner business…
Secure and improve current kraftliner business… Kraftliner LTM EBITDA margin of 35% Kraftliner EBITDA margin LTM Q2 2019 of ~35% Kraftliner financials (SEKbn) Net sales EBITDA margin To maintain current operations at Obbola, a lifetime extension investment of SEK ~2.5bn over the next years is requir
Slide 16: …and increase capacity with 275 kt
…and increase capacity with 275 kt Obbola one of few brown field World’s most advanced kraftliner machine opportunities in Europe Access to fresh fiber supply Obbola capacity (ktpa) New 725 kt paper machine +275kt Technical competence 725 Expansion of existing pulp line • Virgin fiber Infrastr
Slide 17: Project overview
Project overview De-bottlenecking New OCC line New lime kiln Expanded waste water treatment New dispatch area New paper machine 17
Slide 18: Asset renewal secures long-term competitiveness
Asset renewal secures long-term competitiveness New Kraftliner PM’s since 2000 Obbola largest Strengthened market leading position Kraftliner PM 800 • Europe’s largest independent producer of kraftliner • Increased market share 700 • Improved product quality 600 PM capacity (kt) 500 Improved cos
Slide 19: Parallel start-up ensures EBITDA enhancement from start
Parallel start-up ensures EBITDA enhancement from start Parallel construction of the new paper machine ensures full production during the construction period • Fiber line switched to new machine post construction • Only a minor investment stop required Sequential start-up of pulp line minimizes
Slide 20: Start-up expected in Q1 2023
Start-up expected in Q1 2023 Profitable during first year of operation Obbola production (kt) Full capacity of 725kt/year 725 Start-up expected in Q1 2023 Ramp-up period of ~3 years • 2026 first full year with full 450 capacity Profitable during the first year of operation Current 2023e 2026e 20
Slide 21: Europe's largest private forest owner
Europe’s largest private forest owner 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