Billerud Ab · OMXSTO:BILL
Billerud Ab — BillerudKorsnäs — Q3 2017 Earnings Presentation
28 slides from Billerud Ab's earnings presentation, Oct 17, 2017
Slide 1: Q3 Interim Report January – September 2017
Q3 January – September 2017 INTERIM REPORT JANUARY – SEPTEMBER 2017 2017-10-17 Per Lindberg, CEO and President, and Susanne Lithander, CFO 1
Slide 2: BillerudKorsnäs – Five Year Anniversary
BILLERUDKORSNÄS – FIVE YEAR ANNIVERSARY NET SALES SEKm 26 000 CAGR1 3% 22 000 Stable underlying earnings 18 000 Average TSR of 23% per year 14 000 for past 5 years 10 000 2013 2014 2015 2016 R12M Sep Proven track record of 2017 accretive M&A SEKm QUARTERLY EBITDA2 Recognised as a leader in 1 200 sus
Slide 3: Production Development
PRODUCTION DEVELOPMENT kton/a (12 months rolling)* 2900 2850 2800 CAGR 3.3% 2750 2700 2650 2600 2550 2500 2450 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2013 2014 2015 2016 2017 *Excluding Tervasaari 3
Slide 4: Safety, Stability & Product Quality in Focus to Support Long Term Growth
SAFETY, STABILITY & PRODUCT QUALITY IN FOCUS TO SUPPORT LONG TERM GROWTH OF THE COMPANY THREE LARGE CHANGE INITIATIVES UNDER IMPLEMENTATION Occupational Heath and Safety A culture based upon health and safety is the foundation for stability Behaviour based safety programme under implementation Produ
Slide 5: Q3 2017 Results at a Glance
Q3 2017 RESULTS AT A GLANCE NET SALES 3% OTHER PACKAGING PAPER Kraft paper 5 544 GROWTH 8% Sack paper Market pulp SEK million 38% SHARE 36% OF SALES EBITDA CONSUMER BOARD 18% 19% Liquid packaging board CORRUGATED SOLUTIONS 1 051 MARGIN Cartonboard Fluting Liner SEK million Managed Packaging 5
Slide 6: Q3 2017 Key Highlights
Q3 2017 KEY HIGHLIGHTS Very strong market and continued high demand across all business areas EBITDA affected by SEK 35 million for production shutdown in Karlsborg New organisation to work with availability and quality in production units Stable earnings in all business areas Favourable outlook on
Slide 7: Financial Development
BILLERUDKORSNAS FINANCIAL DEVELOPMENT
Slide 8: Net Sales
NET SALES SEK MILLION 6000 +3% 5800 5600 5636 5600 5544 5478 5468 5400 5439 5393 5357 5200 5213 5000 4800 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2015 2016 2017 8
Slide 9: EBITDA
EBITDA SEK MILLION 1600 1% 1400 1200 1000 1041* 1037 1051 1017 923 800 859 863 671 693 600 400 200 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2015 2016 2017 *Q3 2015 shows adjusted EBITDA 9
Slide 10: Operating Cash Flow
OPERATING CASH FLOW SEK MILLION 1000 696 631 619 500 541 360 314 155 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 -202 -294 -500 2015 2016 2017 10
Slide 11: Return on Capital Employed
RETURN ON CAPITAL EMPLOYED ADJUSTED, ROLLING 12 MONTHS (%) 16 Target: >13% 14 14 13 13 13 13 13 13 13 12 8 4 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2015 2016 2017 11
Slide 12: Leverage
LEVERAGE NET DEBT/EBITDA (X) 3,00 2,50 Target: <2.5x 2,00 1,50 1,41 1,30 1,32 1,35 1,24 1,24 1,27 1,19 1,00 1,08 0,50 0,00 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2015 2016 2017 12
Slide 13: Business Areas
BILLERUDKORSNAS BUSINESS AREAS
Slide 14: Packaging Paper Business Area
PACKAGING PAPER BUSINESS AREA KRAFT AND SACK PAPER FOR CUSTOMERS WITH TOUGH DEMANDS Packaging for flour, sugar, carrier bags, medical KRAFT PAPER SACK PAPER packaging, building materials, chemicals and more #1 #2 Growth driven by population growth in emerging GLOBALLY GLOBALLY markets, ageing popula
Slide 15: Packaging Paper Business Area – Q3 Development
PACKAGING PAPER BUSINESS AREA Q3 DEVELOPMENT Net sales unchanged vs Q3-16 Increased prices in local currency but lower production volumes 2 090 NET SALES SEK MILLION EBITDA -11% vs Q3-16 Lower production volumes and cost impact from Karlsborg, but increased paper prices 394 EBITDA SEK MILLION Improv
Slide 16: Consumer Board Business Area
CONSUMER BOARD BUSINESS AREA LIQUID PACKAGING BOARD AND CARTONBOARD WITH UNIQUE PROPERTIES LIQUID LIQUID Packaging for milk, juice, preserved foods, beauty PACKAGING BOARD – AMBIENT PACKAGES PACKAGING BOARD – ALL PACKAGE TYPES and healthcare products, confectionary and more #1 #2 Growth driven by hi
Slide 17: Consumer Board Business Area – Q3 Development
CONSUMER BOARD BUSINESS AREA Q3 DEVELOPMENT Continued high demand Net sales +2% vs Q3-16 2 019 NET SALES SEK MILLION EBITDA +10% vs Q3-16 Increased sales volumes and lower variable costs Overall volume growth somewhat lower due to 466 EBITDA SEK MILLION production disturbances Highest sales volumes
Slide 18: Corrugated Solutions Business Area
CORRUGATED SOLUTIONS BUSINESS AREA FLUTING AND LINER ADD VALUE Packaging for fruit and vegetables, white goods and electronics, exclusive drinks and more COATED WHITE PURE WHITE NSSC FLUTING TOP LINER LINER Supply chain solutions and packaging #1 #2 #2 optimisations for brand owners EUROPE EUROPE EU
Slide 19: Corrugated Solutions Business Area – Q3 Development
CORRUGATED SOLUTIONS BUSINESS AREA Q3 DEVELOPMENT Net sales +11% vs Q3-16 Higher sales volumes and improved prices in local currency 1 012 NET SALES SEK MILLION EBITDA +12% vs Q3-16 Increased sales supported by increased prices in local currency and favourable product mix 269 EBITDA SEK MILLION Stro
Slide 20: Outlook
BILLERUDKORSNAS OUTLOOK 20
Slide 21: Short-Term Outlook
SHORT-TERM OUTLOOK Demand and order situation are expected to be strong in the fourth quarter with normal seasonal variances for all business areas. The Packaging Paper and Corrugated Solutions business areas see opportunities for local price increases in the next quarter. Wood costs for Q4 are expe
Slide 22: 2018 Outlook
2018 OUTLOOK INCLUDING IMPACT FROM TRANSFORMATION PROJECTS 2018 Paper prices in local currency Raw material cost Impact from increased demand Pulp pricing Production capacity overall + ~1% compared to 2017 Capacity PM10 Skärblacka 40 ktonnes Stock buildup Gruvön - 20 ktonnes One-off project costs -
Slide 23: Skärblacka and Gruvön Progress as Planned
SKÄRBLACKA AND GRUVÖN PROGRESS AS PLANNED IMPROVING EFFICIENCY AND SECURING GROWTH Karlsborg 1 Investing in MG integrated to pulp production in Skärblacka, Sweden; Pietarsaari SEK 1.3 billion investment. Tervasaari 2 New board machine in Gruvön, Sweden Gävle with capacity of approx. 550 000 t/a; 2 F
Slide 24: Capex 2015-2019
CAPEX 2015-2019 IN LINE WITH PREVIOUS GUIDANCE CAPEX SEKm 5 000 4 700 4 000 4 300 3 000 2 000 1 420 1 500 1 000 1 300 0 2015 2016 2017 2018 2019 24
Slide 25: Continued Investments in Solutions
CONTINUED INVESTMENTS IN SOLUTIONS Packaging Solutions Systems Solutions Venturing Ready-to-use packaging Product solutions including both Moving further down the packaging solutions materials and machine (and value chain BillerudKorsnäs sells machine service) Three focus areas: ready-made packaging
Slide 26: Managed Packaging Leading the Way
MANAGED PACKAGING LEADING THE WAY LONG-TERM TARGET OF 25% GROWTH AND EBIT MARGIN OF 5-10% Sales SEKm 700 600 CAGR 29% 500 400 300 200 100 0 2014 2015 2016 2017 (12m rolling) 26
Slide 27: Q&A – For a Sustainable Future
Q&A WE CHALLENGE CONVENTIONAL PACKAGING FOR A SUSTAINABLE FUTURE
Slide 28: BillerudKorsnäs
BILLERUDKORSNAS