26 slides from Svenska Cellulosa Ab Sca Class A's earnings presentation, Jul 21, 2020
Slide 1: Q2 2020 Presentation
-Presenta tion oe mt ma , % he wee a
Slide 2: Ulf Larsson, CEO
Ulf Larsson, CEO
Slide 3: Sales declined 10% vs Q2 2019, EBITDA down 25%
Sales declined 10% vs Q2 2019 • Price/mix -9%, volume -4%, currency 3% EBITDA down 25% vs Q2 2019 - Lower selling prices - Lower publication paper volumes + Lower raw material costs Higher forest growth enables increased annual harvesting • Gradual increase from 4.3m m3sub / year 2020 to 5.4m m3sub
Slide 4: EBITDA, Industrial ROCE and EBITDA development
EBITDA (SEKm) Industrial ROCE 1) EBITDA development (SEKm) 1,001 6% 1,549 1,494 1,560 -25% 1,340 1,364 1,034 1,055 1,030 33% 1,001 30% 31% EBITDA margin Net debt/EBITDA 27% 26% 24% 21% 2.1x 22% 21% 21% Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Q2 '20 Note: 1) ROCE for the industrial se
Slide 5: Forest: stable wood supply to industries
Net sales (SEKm) EBITDA (SEKm) EBITDA margin -14% 21% Stable wood supply to industries 33.4% 1,746 499 1,494 Sales down 14% 414 23.7% - Lower volumes - Lower prices EBITDA up 21% Q2 2019 Q2 2020 Q2 2019 Q2 2020 Q2 2019 Q2 2020 + Higher forest growth increasing earnings from revaluation of biological
Slide 6: Wood: high demand, slightly higher prices
Net sales (SEKm) EBITDA (SEKm) EBITDA margin 2% -24% High demand, slightly higher prices 188 10.9% 1,727 1,770 8.1% Sales up 2% 143 + Higher volumes - Lower prices EBITDA down 24% Q2 2019 Q2 2020 Q2 2019 Q2 2020 Q2 2019 Q2 2020 - Lower prices + Lower raw material costs Price development – Solid Wood
Slide 7: Pulp: sales down 10%, EBITDA down 47%
Net sales (SEKm) EBITDA (SEKm) EBITDA margin -10% -47% Sales down 10% 28.4% 1,214 - Lower prices 1,091 344 + Positive currency effects 16.7% 182 EBITDA down 47% - Lower prices + Positive currency effects Q2 2019 Q2 2020 Q2 2019 Q2 2020 Q2 2019 Q2 2020 Price development – NBSK Pulp Unplanned producti
Slide 8: Paper: demand impacted by the corona pandemic
Net sales (SEKm) EBITDA (SEKm) EBITDA margin -21% -53% Publication paper demand significantly impacted by 2,375 the corona pandemic, low capacity utilization 20.6% 489 1,876 Sales down 21% 12.2% 229 - Lower publication paper volumes - Lower kraftliner and publication paper prices EBITDA down 53% Q2
Slide 9: New forest survey conducted in 2019
Gross forest growth Sweden Harvesting plan (m m3fo / year) (m m3sub / year) New forest survey conducted in 2019 +1 +1.1 5.4 Annual growth 1m m3fo higher than expected 10.5 9.5 • Gross growth of 10.5 (9.5) m m3fo per year 4.3 • Net growth of 4.0 (3.0) m m3fo per year New harvesting plan confirmed bas
Slide 10: Coronavirus: limited effects on operations, shifting demand
Limited effects on operations • Health and safety highest priority • No disruptions in production or distribution Shifting demand patterns • 30-40 percent lower demand for publication paper • Temporary market related stoppages at Ortviken Significant uncertainty remains 10
Slide 11: Toby Lawton, CFO
Slide 12: Quarter income statement
Quarter SEKm Q2 2020 Q2 2019 Change Net sales 4,687 5,228 -10% EBITDA 1,001 1,340 -25% EBITDA margin 21.3% 25.6% -4.3 p.p. EBIT 600 943 -36% EBIT margin 12.8% 18.0% -5.2 p.p. Financial items -31 -45 Profit before tax 569 898 -37% Tax -110 -194 Profit for the period 459 704 -35% Earnings per share, S
Slide 13: Net sales and EBITDA by segment
Forest Wood Pulp Paper 2,413 2,421 2,366 2,375 2,380 2,242 Net sales (SEKm) 2,108 1,876 1,865 1,833 1,770 1,746 1,727 1,712 1,694 1,678 1,651 1,558 1,545 1,540 1,494 1,455 1,436 1,376 1,214 1,188 1,134 1,129 1,091 1,049 900 743 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Slide 14: Net sales bridge Q2 2019 to Q2 2020
Negative for all Lower Publication Paper segments volumes SEK 5,228m -9% SEK -4% 0% 4,687m 3% - 10% Net sales Price/Mix Volume Currency Acquisitions/ Net sales Q2 2019 divestments Q2 2020 14
Slide 15: EBITDA bridge Q2 2019 to Q2 2020
Lower prices for all segments SEK 1,340m -550 Lower costs for wood raw materials Lower Publication Paper volumes SEK +67 +23 1,001m +223 -35 -67 - 25% EBITDA margin EBITDA margin 25.6% 21.3% EBITDA Price/Mix Volume Raw material Energy Currency Other EBITDA Q2 2019 Q2 2020 15
Slide 16: Cash flow
Quarter Jan-jun SEKm Q2 2020 Q2 2019 2020 2019 EBITDA 1,001 1,340 2,031 2,900 Revaluation of biological assets and other non cash flow items -233 -56 -573 -302 Operating cash surplus 768 1,284 1,458 2,598 Change in working capital -151 -298 -297 -651 Current capital expenditures -338 -348 -513 -516
Slide 17: Net debt development
Unutilized credit facilities of SEK -0.3bn 7.7bn as of June 30, 2020 SEKm 9,735 9,396 9,150 9,087 8,597 8,169 Strategic investments of • FY 2019: -1.3bn • Jan-Jun 2020: -0.8bn Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 17
Slide 18: Capital employed and key ratios
SEKm Jun 30, 2020 Dec 31, 2019 Forest assets 70,867 69,682 Working capital 3,969 3,748 Working capital/Net sales 1) 21% 20% Deferred tax relating to forest assets -14,401 -13,977 Other capital employed 18,346 17,654 Total capital employed 78,781 77,107 Net debt 9,396 8,597 Net debt/EBITDA 2) 2.1x 1.
Slide 19: Summary
Summary Ulf Larsson, CEO WSCA
Slide 20: Summary: sales declined 10%, EBITDA down 25%
Sales declined 10% vs Q2 2019 • Price/mix -9%, volume -4%, currency 3% EBITDA down 25% vs Q2 2019 - Lower selling prices - Lower publication paper volumes + Lower raw material costs Higher forest growth enables increased annual harvesting • Gradual increase from 4.3m m3sub / year 2020 to 5.4m m3sub
Slide 21: Q&A
Slide 22: Appendix
Appendix SSCA
Slide 23: Softwood pulp price and hardwood inventories
Softwood pulp price (USD/t) vs deliveries (Mt) Hardwood pulp inventories (days of supply) 1,400 25.2 80 1,200 24.8 70 1,000 24.4 60 800 24.0 Average 600 23.6 50 400 23.2 40 NBSK PIX Price Europe (LHS) 200 22.8 30 Global Softwood Kraft deliveries (RHS) 0 22.4 20 Softwood pulp inventories (days of sup
Slide 24: Kraftliner price and European box demand
Price (EUR/t) vs Kraftliner deliveries (Mt) Eurpean Box demand (index) 850 5.5 108 800 106 5.4 104 750 102 700 100 5.3 650 98 600 96 Unbleached kraftliner price Euwid (LHS) 5.2 94 550 Kraftliner deliveries Europe (RHS) 92 500 5.1 90 Kraftliner inventories (days of supply) 40 35 30 Average 25 20 Sour
Slide 25: Net sales and EBITDA by segment, 2014-LTM
Forest Wood Pulp Paper Net sales (SEKm) 9,643 9,229 8,226 8,548 8,434 8,606 7,744 6,956 6,886 6,618 6,325 5,994 6,127 5,187 5,108 4,978 5,070 5,455 5,114 5,315 5,441 4,377 4,308 2,518 2,760 2,492 2,542 2,866 2014 2015 2016 2017 2018 2019 LTM 2014 2015 2016 2017 2018 2019 LTM 2014 2015 2016 2017 2018
Slide 26: Forward-looking statements
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 understanding of these risks and unce