Arctic Paper S.a. · GPW:ATC
Arctic Paper — Q3 2023 Earnings Presentation
44 slides from Arctic Paper's earnings presentation, 2023
Slide 1: Financial Results Q3 2023
FINANCIAL RESULTS Q3 2023
Slide 2: Disclaimer
DISCLAIMER Please read the information below carefully This presentation (the ‘Presentation’) the regulated market, in particular the appearance of unexpected facts or is no certainty that the estimates, was prepared by Arctic Paper SA (the regulated market operated by the W arsaw circumstances whic
Slide 3: Agenda
PRESENTERS: AGENDA Michał Jarczyński / CEO Arctic Paper Katarzyna Wojtkowiak / CFO Arctic Paper Summary Q3 2023 Paper Packaging Financials Pulp Power Focus & Strategy Review 3 Q3 2023 arcticpaper.com arcticpapergroup.com
Slide 4: Summary Q3 2023
SUMMARY Q3 2023 Arctic Paper Group Q3 2023 vs. Q3 2022 Net sales EBITDA Operating CF ROCE* (PLN mn) (PLN mn) (PLN mn) 854.8 1 402.1 124.5 298.2 200.4 245.1 19.2% 29.3% (Q3 2023) (Q3 2022) (Q3 2023) (Q3 2022) (Q3 2023) (Q3 2022) (Q3 2023) (Q3 2022) Paper/Pulp EBITDA Net debt/EBITDA* Paper sales Pulp
Slide 5: Summary Q1-3 2023
SUMMARY Q1-3 2023 Arctic Paper Group Q1-3 2023 vs. Q1-3 2022 Net sales EBITDA Operating CF ROCE* (PLN mn) (PLN mn) (PLN mn) 2 723.3 3 809.2 379.0 834.0 345.1 481.4 19.2% 29.3% (Q1-3 2023) (1-3Q 2022) (Q1-3 2023) (Q1-3 2022) (Q1-3 2023) (Q1-3 2022) (Q1-3 2023) (Q1-3 2022) Paper/Pulp EBITDA Net debt/E
Slide 6: Paper
PAPER 6 Q3 2023 arcticpaper.com arcticpapergroup.com
Slide 7: Market Data: Fine paper prices
GRAPHIC FINE PAPER PRICES – GERMAN MARKET MARKET DATA Fine paper average market prices 1400 1300 1200 SEP 2023 COMPARED TO JUN 2023 1100 UWF average price change - 4,9% 1000 CWF average price change - 5,2% 900 800 700 SEP 2023 COMPARED TO SEP 2022 600 UWF average price change - 9,7% CWF average pric
Slide 8: Operating Data
OPERATING DATA Average Q3 2023 use of production capacity: 66% PRODUCTION CAPACITY FOR ARCTIC PAPER MILLS 11% HIGHER THAN IN Q2 2023 30% LESS THAN IN Q3 2022 94% 99% 99% 96% 71% 66% Q3 2023 total sales volume: 108k tons 11% HIGHER THAN IN Q2 2023 36% LESS THAN IN Q3 2022 8 Q3 2023 arcticpaper.com ar
Slide 9: Operating Data: Paper sales revenue
PAPER SALES REVENUE (PLN mn) OPERATING DATA 1 042 1 042 820 722 645 547 590 590 492 Total revenue Q3 2023 (PLN 590mn) DECREASED BY 44% COMPARED TO Q3 2022 Average price Q3 2023 (PLN 5.46k) PAPER SALES REVENUE PER TONNE (PLN k)* DECREASED BY 12% COMPARED TO AVERAGE IN Q3 2022 6,19 6,39 5,46 4,93 3,44
Slide 10: Pulp
PULP 10 Q3 2023 arcticpaper.com arcticpapergroup.com
Slide 11: Market Data: Pulp prices Europe
PULP PIX INDEXES EUROPE MARKET DATA 1 498 Pulp – European pulp prices 1 430 1 429 1 300 1 340 1 342 1 370 1 260 1 380 1 380 1 240 1 308 1 280 1 147 1 030 1 177 AVERAGE PRICE Q3 2023 COMPARED TO Q3 2022 1 1401 140 1 099 879 840 NBSK (long fiber): 21% lower 958 BHKP (short fiber): 39% lower 865 809 68
Slide 12: Operating Data: Pulp production and deliveries
PULP PRODUCTION (1,000 TONNE) OPERATING DATA Pulp production & deliveries 109 111 103 103 95 92 91 96 90 93 96 87 89 89 Q3 2023 total production: 89k tons 5% LOWER THAN IN Q2 2023 7% LOWER THAN IN Q3 2022 PULP DELIVERIES (1,000 TONNE) Q3 2023 total deliveries: 102k tons 107 112 106 103 100 102 102 9
Slide 13: Operating Data: Pulp revenue and prices
PULP SALES REVENUE (SEK mn) OPERATING DATA Revenue and prices 806 744 693 806 660 693 542 570 Total revenue Q3 2023 (SEK 693mn) DECREASED BY 14% COMPARED TO Q3 2022 PULP SALES REVENUE PER TONNE (SEK) Average price in Q3 2023 (SEK 6.8k per tonne) 8 405 8 532 DECREASED BY 19% COMPARED TO Q3 2022 6 162
Slide 14: Pulp – Replacement Material for Plastic
PULP – REPLACEMENT MATERIAL FOR PLASTIC Pulp Sales (Rottneros) by application 2022 Fiber Other Tissue cement 3% paper 2% 4% Printing and writing Board paper and packaging 10% 32% Special applications 14% Electrotechnical Filters applications 20% 15% 14 Q3 2023 arcticpaper.com arcticpapergroup.com
Slide 15: Pulp: Geographical split of sales
PULP Geographical split of sales The Nordics Asia Germany Italy North Rest of Europe 32% 22% 15% 13% America 9% 8% 15 Q3 2023 arcticpaper.com arcticpapergroup.com
Slide 16: Packaging
PACKAGING 16 Q3 2023 arcticpaper.com arcticpapergroup.com
Slide 17: Packaging paper sales development
PACKAGING PAPER SALES DEVELOPMENT (t) DEVELOPMENT 20 000 PACKAGING PAPERS: 16 000 Munken Kraft Uncoated packaging paper 12 000 G-Flexmatt 8 000 Coated packaging paper 4 000 0 2018 2019 2020 2021 2022 last 12 months 17 Q3 2023 arcticpaper.com arcticpapergroup.com
Slide 18: Power
POWER 18 Q3 2023 arcticpaper.com arcticpapergroup.com
Slide 19: Arctic Paper Group Power Segment
ARCTIC PAPER GROUP POWER SEGMENT KOSTRZYN • Contract for building solar park 17 MW in Kostrzyn has been signed, installation will be in operation end of Q2 2024 • Solar installation of 1,2 MW will be installed on the roof in Kostrzyn. Installation will be in operation end of Q1 2024 GRYCKSBO • Expan
Slide 20: Financials
FINANCIALS 20 Q3 2023 arcticpaper.com arcticpapergroup.com
Slide 21: EBITDA Evolution 2016 – 2023
EBITDA EVOLUTION 2016 – 2023 (PLN mn) Effective hedging of both segments – to stabilize financial results 1 000 900 Q3 2023 EBITDA PLN 124.5mn 800 PLN 56mn HIGHER THAN Q2 2023 700 PLN 174mn LOWER THAN Q3 2022 600 500 400 300 200 100 0 2016 2017 2018 2019 2020 2021 2022 2023* Paper Segment Pulp Segme
Slide 22: Quarterly EBITDA Evolution 2013 – 2023
QUARTERLY EBITDA EVOLUTION 2013 – 2023 (PLN mn) 350 300 250 200 150 100 50 0 EBITDA PULP & PAPER SEGMENT 22 Q3 2023 arcticpaper.com arcticpapergroup.com
Slide 23: Net Debt/EBITDA 2019 – 2023
NET DEBT/EBITDA 2019 – 2023 0,82 0,83 0,70 0,70 0,66 0,57 0,57 0,48 0,49 0,36 0,33 -0,02 -0,22 -0,19 -0,28 -0,27 -0,59 23 Q3 2023 arcticpaper.com arcticpapergroup.com
Slide 24: Net Profit per Share
NET PROFIT PER SHARE 9,11 3,92 1,84 1,60 1,19 0,18 * rolling 12 months net profit for the paper segment plus 51% of the net profit for Rottneros divided by the number of shares. 24 Q3 2023 arcticpaper.com arcticpapergroup.com
Slide 25: Focus
FOCUS 25 Q3 2023 arcticpaper.com arcticpapergroup.com
Slide 26: Early signs of recovery in demand; continued focus on margins
• Some early signs of recovery in demand have been seen. • Continued focus on margins. • Grow within sustainable energy solution. • Decision was made to invest SEK 285 million in an upgrade of the biofuel boiler and steam turbine in Grycksbo. • The joint venture investment in a new production facili
Slide 27: Diversification continues in line with proven '4P Strategy'
Diversification continues in line with proven ‘4P Strategy’ November 2023
Slide 28: 4P for Future Arctic
4P FOR FUTURE ARCTIC Paper Packaging Pulp Power 28 4P Strategy arcticpaper.com arcticpapergroup.com
Slide 29: 4P Strategy: Background
4P STRATEGY Background The ‘Arctic Paper 4P Strategy’ was initiated in 2021. The 4P Strategy involves: • Continuing organic growth in the segments – paper and cellulose fibre (pulp). • New market opportunities are opening up in the packaging sector and energy generation (power). Maintaining a leadin
Slide 30: 4P Strategy: Background
4P STRATEGY Background The implementation of the 4P Strategy was planned for the years 2021-2030. The Group has now completed the first three years of its implementation, and it is time to assess the results and update it. 30 4P Strategy arcticpaper.com arcticpapergroup.com
Slide 31: 4P Strategy: Outcome
4P STRATEGY Outcome Very good results achieved by the Arctic Paper Group in the years 2021-2023 indicates that we made a correct judgement of the market situation and trends. Established the right directions for investment. Our mature business model, stable financial results and as well as investmen
Slide 32: 4P Strategy: Outcome
4P STRATEGY Outcome Our activities in the packaging segment provide a solid basis for implementing further steps in the coming years. The new joint venture with Rottneros in molded pulp trays is an important first, with the aim of being operational 2024. The significant dynamics of changes in the en
Slide 33: Paper & Pulp Segment
PAPER & PULP SEGMENT We aim to replicate the successes we achieve in the paper and cellulose fiber segment. Investments in this area are focused on: • continuously improving our competitive advantage • enhancing efficiency, digitalization and automation • and implementing new technologies into the p
Slide 34: Packaging Segment
PACKAGING SEGMENT The global trend of replacing plastic packaging with products made from natural resources presents a significant opportunity. As a cellulose producer, we have expertise in manufacturing packaging from cellulose fiber and will be pursuing further investments in this segment. We aim
Slide 35: Packaging Segment
PACKAGING SEGMENT We aspire to develop the packaging segment both independently and through joint venture partnerships. The molded fibre tray production unit in Kostrzyn Poland will be the first step in 2024. We do not rule out growth through acquisitions. 35 4P Strategy arcticpaper.com arcticpaperg
Slide 36: Power Segment
POWER SEGMENT High profitability in the energy market. We aim to continue focusing on renewable energy. Investments in the industrial energy segment are being pursued in two directions: • Increasing energy generation for our internal production processes (energy self-sufficiency) to achieve 100% by
Slide 37: Power Segment
POWER SEGMENT Shift our focus towards photovoltaic farms and biomass. By 2026, the capacity of our renewable energy sources will reach 25 MW, and by 2030, it will be 80 MW. We aim to develop energy projects through acquisitions, which will lead to a significant increase in installed capacity to 140
Slide 38: Power Segment
POWER SEGMENT In Sweden, we have gained expertise in providing system services for the power grid. The nature of our operations presents significant opportunities for this development both in Sweden and Poland. In 2025, we are opening a new area of activity for the group – producing wood pellets for
Slide 39: Corporate Social Responsibility
CORPORATE SOCIAL RESPONSIBILITY We are part of the bio based circular economy, based on cellulose fiber. We continue our development towards a sustainable and emissions-neutral economy. By 2035, we aim to achieve neutral fossil CO2 emissions according to Scope 1 and Scope 2. We will do our utmost to
Slide 40: Corporate Social Responsibility
CORPORATE SOCIAL RESPONSIBILITY We will focus on securing, maintaining and developing a diverse, inclusive and engaged workforce. Arctic Paper is committed to the principles of the Universal Declaration of Human Rights by United Nations and the United Nations Global Compact principles. 40 4P Strateg
Slide 41: Arctic Paper Group: Financial Perspective
ARCTIC PAPER GROUP Financial Perspective We target to maintain a strong financial position for the group. The planned investments in the four segments by 2030 will amount to approximately 1,325 million PLN. The investments will be – according to the 2021 published strategy – financed in a ratio of 4
Slide 42: Investment Directions 2024-2030 and EBITDA 2030 by Segments
ARCTIC PAPER GROUP Financial Perspective Investment Directions 2024-2030 EBITDA 2030 by Segments 17% 31% 34% 40% 10% 14% 21% 33% Paper Pulp Packaging Power Paper Pulp Packaging Power 42 4P Strategy arcticpaper.com arcticpapergroup.com
Slide 43: Arctic Paper Group: Financial Perspective
ARCTIC PAPER GROUP Financial Perspective We aim to be perceived by shareholders as a mature, stable company with solid foundations, effectively managing risks. We maintain our dividend policy and planning to allocate 20 to 40% of profits for dividends. 43 4P Strategy arcticpaper.com arcticpapergroup
Slide 44: 4P for Future Arctic
4P FOR FUTURE ARCTIC Paper Packaging Pulp Power 44 4P Strategy arcticpaper.com arcticpapergroup.com