25 slides from Svenska Cellulosa Ab Sca Class A's earnings presentation, Jul 26, 2019
Slide 1: Toby Lawton, CFO
July 26, 2019
Slide 2: Q&A
Peak it. .
Slide 3: SCA Frontier
Weaker market conditions Sales growth of 12% vs Q2 2018 • Price/mix -5%, volume 17%, currency 2%, acq/div -2% EBITDA up 30% vs Q2 2018 + Higher pulp volumes and positive currency effects + Expansion stop impacted Q2 2018 - Lower selling prices and higher costs for wood raw material Pulp volumes from
Slide 4: EBITDA (SEKm) Industrial ROCE 1) EBITDA development (SEKm)
EBITDA (SEKm) Industrial ROCE 1) EBITDA development (SEKm) 1,340 18% 1,549 30% 1,494 1,560 1,340 1,034 33% 30% 31% EBITDA margin Net debt/EBITDA 26% 26% 1.6x 22% Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Note: 1) ROCE for the industrial segments; Wood, Pulp and Paper. ROCE calculated as LTM. 4
Slide 5: Higher prices Increased wood sourcing to meet higher pulpwood demand
Net sales (SEKm) EBITDA (SEKm) EBITDA margin 50% 12% Higher prices 1,746 414 31.9% 371 Increased wood sourcing to meet higher 23.7% 1,162 pulpwood demand Sales up 50% + Increased volumes to the expanded pulp mill + Higher prices Q2 2018 Q2 2019 Q2 2018 Q2 2019 Q2 2018 Q2 2019 Price development – Pul
Slide 6: Stable consumption, but declining prices Stable SCA inventory level Sales down 6%
Net sales (SEKm) EBITDA (SEKm) EBITDA margin -6% -18% Stable consumption, but declining prices 1,846 12.5% 1,727 230 10.9% Stable SCA inventory level 188 Sales down 6% - Lower volumes - Deconsolidation in Wood France following merger with Groupe ISB Q2 2018 Q2 2019 Q2 2018 Q2 2019 Q2 2018 Q2 2019 EB
Slide 7: Dec/19 Nov/19 Oct/19
Average daily NBSK production (tonnes) Full capacity Full NBSK capacity of 900kt/year 2,500 12 months ramp-up 18 months ramp-up Ramp-up period of 12-18 months 2,000 • 2020 first full year with full Actual 1,500 capacity Production/deliveries on track 1) 1,000 • Q3 ’18 - 147kt / 105kt • Q4 ‘18 - 160k
Slide 8: Increased volumes to overseas markets
Increased volumes to overseas markets Quarterly pulp production (kt) 22% increase in production vs Q1 ’19 +22% 210 Larger share of overseas volumes • Production increase primarily sold to Asia and other +8% +9% overseas markets during Q2 ‘19 172 160 Long-term strategy to focus on Europe and 147 Nort
Slide 9: Cautious market with lower prices Increasing volumes due to the ramp-up of the expanded
Net sales (SEKm) EBITDA (SEKm) EBITDA margin 150% Cautious market with lower prices 1,214 344 28.4% Increasing volumes due to the ramp-up of the expanded pulp-mill 485 Sales up 150% + Increased volumes -112 -23.1% + Expansion stop in Q2 2018 Q2 2018 Q2 2019 Q2 2018 Q2 2019 Q2 2018 Q2 2019 EBITDA inc
Slide 10: Sales down 2% EBITDA down 21% Lower prices for kraftliner, however index prices
Net sales (SEKm) EBITDA (SEKm) EBITDA margin -2% -21% Lower prices for kraftliner, however index prices 2,426 2,375 618 25.5% have stabilized with signs of an improving market 489 20.6% Sales down 2% - Lower kraftliner prices + Higher prices for publication paper and positive currency effects Q2 201
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Slide 12: Quarter SEKm Q2 2019
Quarter SEKm Q2 2019 Q2 2018 Change Net sales 5,228 4,670 12% EBITDA 1,340 1,034 30% EBITDA margin 25.6% 22.1% 3.5 p.p. EBIT 943 744 27% EBIT margin 18.0% 15.9% 2.1 p.p. Financial items -45 -4 Profit before tax 898 740 21% Tax -194 369 Profit for the period 704 1,109 -37% Earnings per share, SEK 1.0
Slide 13: Paper Pulp Wood
Forest Wood Pulp Paper 2,383 2,426 2,413 2,421 2,366 2,375 2,220 Net sales (SEKm) 2,096 1,846 1,746 1,727 1,712 1,678 1,651 1,567 1,558 1,540 1,503 1,455 1,426 1,298 1,287 1,261 1,214 1,162 1,134 1,049 743 672 644 589 485 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Slide 14: SEK 4,670m SEK
Deconsolidation in Wood Expanded pulp mill France following merger Negative for Pulp and with Groupe ISB Kraftliner, positive for Publication Paper SEK 17% 2% -2% 5,228m SEK 4,670m -5% Positive EUR and USD + 12% Net sales Price/Mix Volume Currency Acquisitions/ Net sales Q2 2018 divestments Q2 2019
Slide 15: Östrand in Q2 ‘18 SEK 1,034m
Expansion stop in Östrand in Q2 ‘18 Higher costs for wood raw Higher pulp material, offset by EUR and USD positive SEK Lower prices for Pulp volumes improved yield +18% 1,340m and Kraftliner SEK +10% 1,034m -25% +24% -0% +3% + 30% EBITDA margin EBITDA margin 22.1% 25.6% EBITDA Price/Mix Volume Raw m
Slide 16: Quarter Jan-jun SEKm
Quarter Jan-jun SEKm Q2 2019 Q2 2018 2019 2018 EBITDA 1,340 1,034 2,900 2,209 Revaluation of biological assets and other non cash flow items 1) -56 -93 -302 -346 Operating cash surplus 1,284 941 2,598 1,863 Change in working capital -298 -186 -651 -345 Current capital expenditures -348 -200 -516 -27
Slide 17: SEK 9,150m SEK
SEK SEK SEK SEK SEK SEK +307m +52m 9,735m 9,150m -619m SEK +689m +156m 1,190 Lease Lease 1,203 20 000 ha forest land in the Baltics Net debt / EBITDA Net debt / EBITDA 1.6x 1.6x Net debt Operating Strategic capex Acquisitions Paid tax Other Net debt Q1 2019 cash flow Q2 2019 17
Slide 18: SEKm Jun 30, 2019 Dec 31, 2018
SEKm Jun 30, 2019 Dec 31, 2018 Forest assets according to IAS 41 1) 33,016 32,065 Deferred tax relating to Forest assets -6,664 -6,605 Forest assets, net of deferred tax 26,352 25,460 Working capital 4,246 3,735 Working capital/Net sales 2) 19% 18% Other capital employed 18,457 16,887 Total capital
Slide 19: Långvind / Holmen – 407 SEK/m 3 fo
Value of forest land (2018, SEK/m3fo) SCA has initiated a review of it’s forest valuation method used in the balance sheet • To be conducted during H2 2019 286 268 269 Recent larger forest transaction show a large discrepancy between the market value of forest land and the book value • Bergvik Öst /
Slide 20: Weaker market conditions Sales growth of 12% vs Q2 2018 EBITDA up 30% vs
Weaker market conditions Sales growth of 12% vs Q2 2018 EBITDA up 30% vs Q2 2018 Pulp volumes from Östrand increased 22% vs Q1 2019 Increased production of White-top kraftliner at Munksund Acquisition of 30,000 ha forest land in the Baltics Sale of Rotterdam terminal (closing in Q3) 20
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Slide 22: Appendix
Appendix WSCA
Slide 23: Forest Wood Pulp
Forest Wood Pulp Paper Net sales (SEKm) 9,643 9,575 8,226 8,548 8,434 7,744 6,392 6,618 6,675 5,994 5,187 5,108 4,978 5,070 5,455 5,114 5,315 5,441 4,140 2,518 2,760 2,492 2,542 2,866 2014 2015 2016 2017 2018 LTM 2014 2015 2016 2017 2018 LTM 2014 2015 2016 2017 2018 LTM 2014 2015 2016 2017 2018 LTM
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Slide 25: are subject to certain risks and uncertainties that could negatively affect our business. Please
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