Stora Enso Oyj Class A · OMXHEX:STEAV
Stora Enso Oyj Class A — Q1 2007 Earnings Presentation
40 slides from Stora Enso Oyj Class A's earnings presentation, Apr 26, 2007
Slide 1: Financial Results January–March 2007
Financial Results January–March 2007 Jouko Karvinen, CEO Hannu Ryöppönen, Deputy CEO 26 April 2007
Slide 2: Forward-looking statements
It should be noted that certain statements herein which are not historical facts, including, without limitation those regarding expectations for market growth and developments; expectations for growth and profitability; and statements preceded by “believes”, “expects”, “anticipates”, “foresees”, or
Slide 3: Contents
Contents • Highlights and Challenges – Jouko Karvinen • Financial Results – Hannu Ryöppönen • Market Outlook – Jouko Karvinen • Priorities – Jouko Karvinen • Summary – Jouko Karvinen 3 26 April 2007 Financial Results January-March 2007
Slide 4: Highlights Q1 2007
Highlights Q1 2007 • Group earnings strongly improved – Strong performance in Fine Paper and Wood Products – Packaging Boards also performed well – Publication Paper results limited by market conditions – Tight wood supply managed well • Year-on-Year – Revenues up 6.9% – Operating profit up (ex. NRI
Slide 5: Challenges
Challenges • Planned stoppages in some Finnish pulp mills in Q2, to manage wood supply – Combined with maintenance and holiday stoppages • Weak trend in magazine paper prices worldwide • Uncertain trend in demand for printing and writing papers in North America 5 26 April 2007 Financial Results Janu
Slide 6: Financial Results
STORAENSO Financial Results
Slide 7: Financial Results Q1 2007
Financial Results Q1 2007 % Change % Change IV/06 I/06 I/07 Q107/Q106 Q107/Q406 Sales (EUR million) 3 731.8 3 607.7 3 855.4 6.9 3.3 Operating profit* (EUR million) 187.6 247.0 307.3 24.4 63.8 Operating profit (EUR million) 247.6 223.8 339.3 51.6 37.0 EPS (EUR) 0.33 0.29 0.28 -3.4 -15.2 EPS* (EUR) 0.
Slide 8: Change in EPS
Change in EPS Q1/06 – Q1/07 EUR 0,30 0.04 -0.02 0.01 -0.02 0,28 -0.01 0.01 0.01 0.26 -0.01 0.01 0.04 0,26 0,24 0.20 0,22 0,20 0,18 0,16 0,14 0,12 0,10 GROUP Sales Sales Variable Energy Fixed IFRS 2 TRS Assoc. Financing Other GROUP TOTAL prices volume costs costs TOTAL Q1/06 and mix Q1/07 Excluding n
Slide 9: ROCE by Quarter
ROCE by Quarter 2005 – Q1/07 % 12 11 10 9 8 7 6 5 4 3 2 1 0 I/05 II/05 III/05 IV/05 I/06 II/06 III/06 IV/06 I/07 Target > 13% over the cycle (current WACC 8.7%) excluding non-recurring items 9 26 April 2007 Financial Results January-March 2007
Slide 10: Debt/Equity
Debt/Equity 2005 – Q1/07 0,85 0,80 0,75 0,70 0,65 0,60 0,55 0,50 0,45 0,40 0,35 0,30 0,25 0,20 I/05 II/05 III/05 IV/05 I/06 II/06 III/06 IV/06 I/07 Objective < 0.8 10 26 April 2007 Financial Results January-March 2007
Slide 11: Capital Expenditure and Depreciation
Capital Expenditure and Depreciation Capital expenditure EUR million Depreciation Capital expenditure as % of sales 300 12 250 10 200 8 150 6 62.3% 39.9% 48.1% 63.1% 41.6% 100 4 50 2 0 0 Q106 Q206 Q306 Q406 Q107 11 26 April 2007 Financial Results January-March 2007
Slide 12: Market Outlook
STORAENSO Market Outlook
Slide 13: Near-term Market Outlook
Near-term Market Outlook Europe Demand Development Price Development Prices for newsprint are stable; some Positive economic outlook expected to Publication Paper support demand. pressure remains for non-contractual magazine paper. Outlook remains healthy for both Prices are forecast to rise for bot
Slide 14: Priorities
STORAENSO Priorities
Slide 15: Priorities
Priorities • The Group priority is ROCE improvement • Value creation - not market share or size – Value creation starts at ROCE above cost of capital • 13 % Group target reaffirmed – Individual improvement targets by business 15 26 April 2007 Financial Results January-March 2007
Slide 16: Select the Battles to Win
Select the Battles to Win Path Forward • Portfolio review • Find solutions for businesses – Not creating value – With limited strategic fit • Create efficient organisation; cost and speed • Invest (to win) in value creators • Get & stay on earnings improvement path 16 26 April 2007 Financial Results
Slide 17: Improvement Path
Improvement Path Group ROCE Q4/2003-Q1/2007 16,0 % 14,0 13 % ROCE over the cycle 12,0 10,0 8,0 6,0 4,0 2,0 0,0 04 03 04 04 04 05 05 05 05 06 06 06 06 07 4- 1- 2- 3- 4- 1- 2- 3- 4- 1- 2- 3- 4- 1- Q Q Q Q Q Q Q Q Q Q Q Q Q Q Quarterly 4-Q moving average Based on EBIT excluding non-recurring items (and
Slide 18: Summary
STORAENSO Summary
Slide 19: Summary
Summary • Great start for 2007 - proud of the team • Short term challenges – Continue to manage wood supply • Portfolio review progressing well – Decisions & actions to be communicated when made • Committed to Group ROCE 13% over the cycle – Improvement is the metric of success • Maintain positive m
Slide 20: Visit www.storaenso.com for more information
Visit www.storaenso.com for more information
Slide 21: Appendix
STORAENSO Appendix
Slide 22: First Quarter Events
First Quarter Events • Loan agreement with European Investment Bank for a EUR 140 million loan facility for financing research and development in Finland and Sweden. • Expansion of corrugated packaging business in Eastern Europe and Russia by constructing new plants at Balabanovo in Russia and Komar
Slide 23: Summary Financials
Summary Financials % Change % Change EUR million 2006 IV/06 I/06 I/07 Q107/Q106 Q107/Q406 Sales (EUR million) 14 594 3 732 3 608 3 855 6.9 3.3 EBITDA* (EUR million) 1 873 472 516 569 10.2 20.4 Operating profit* (EUR million) 782 188 247 307 24.4 63.8 Operating profit (EUR million) 648 248 224 339 51
Slide 24: Net Financial Items
Net Financial Items % Change % Change EUR million Q4/2006 Q1/2006 Q1/2007 Q107/Q106 Q107/Q406 Interest income, deposits 6.5 4.8 6.4 33.3 -1.5 Interest expenses, borrowings -69.8 -66.5 -68.0 -2.3 2.6 Interest rate swaps 4.9 8.9 0.9 -89.9 -81.6 Net Interest Expense -58.4 -52.8 -60.7 -15.0 -3.9 Foreign
Slide 25: Non-recurring Items Effect During Q1 2007
Non-recurring Items Effect During Q1 2007 Excluding Non-recurring non-recurring items IFRS items EBITDA (EUR million) 568.9 43.8 612.7 EBIT (EUR million) 307.3 32.0 339.3 Profit after financial items 274.8 32.0 306.8 (EUR million) Tax effect -67.6 -16.7 -84.3 Net profit (EUR million) 207.2 15.3 222.
Slide 26: Debt/Equity 2002 – Q1/07
Debt/Equity 2002 – Q1/07 Objective < 0.8 0,85 0,80 0,75 0,70 0,65 0,60 0,55 0,50 0,45 0,40 0,35 0,30 0,25 0,20 2002 2003 2004 2005 2006 Q107 26 26 April 2007 Financial Results January-March 2007
Slide 27: Capital Expenditure and Depreciation
Capital Expenditure and Depreciation 2002 – 2006 Capital expenditure EUR million Depreciation Capital expenditure as % of sales 1 600 12 1 400 10 1 200 8 1 000 800 6 80.1% 115.1% 90.6% 101.4% 600 4 53.5% 400 2 200 0 0 2002 2003 2004 2005 2006 27 26 April 2007 Financial Results January-March 2007
Slide 28: Non Operational Items – Reclassification
Non Operational Items – Reclassification EUR million Originally Reported Q1-06 Q2-06 Q3-06 Q4-06 Y2006 • As previously reported, the Operational EBIT 211.7 164.6 199.5 193.7 769.5 Non-Operational Items -17.6 17.6 -4.3 -7.7 -12.0 operating profit has included EBIT excl NRIs 194.1 182.2 195.2 186.0 75
Slide 29: Non Operational Items
Non Operational Items EUR million As earlier reported: Non-Operational Items Q1-06 Q2-06 Q3-06 Q4-06 Y2006 Q1-07 IFRS 2 option valuation (non-cash) -17.6 17.6 -12.0 -4.9 -16.9 -12.0 CO2 emission rights (non-cash) 0.0 0.0 7.7 -2.8 4.9 -3.7 Total (Operating Profit) -17.6 17.6 -4.3 -7.7 -12.0 -15.7 TRS
Slide 30: Operating Profit by Division
Operating Profit by Division % Change % Change EUR million II/06 III/06 IV/06 I/06 I/07 Q107/Q106 Q107/Q406 Publication Paper 55.3 57.0 69.0 70.3 63.5 -9.7 -8.0 % of sales 4.8 4.6 5.6 6.0 5.1 -15.0 -8.9 Fine Paper 46.3 32.4 34.6 52.7 61.5 16.7 77.7 % of sales 6.3 4.5 4.8 6.8 8.3 22.1 72.9 Packaging
Slide 31: Publication Paper
Publication Paper % Change % Change EUR million IV/06 I/06 I/07 Q107/Q106 Q107/Q406 Sales 1 230.5 1 171.0 1 240.5 5.9 0.8 Operating profit* 69.0 70.3 63.5 -9.7 -8.0 % of sales 5.6 6.0 5.1 -15.0 -8.9 ROOC, %** 7.0 6.8 6.5 -4.4 -7.1 Deliveries, 1 000 t 1 860 1 666 1 824 9.5 -1.9 Production, 1 000 t 1
Slide 32: Fine Paper
Fine Paper % Change % Change EUR million IV/06 I/06 I/07 Q107/Q106 Q107/Q406 Sales 718.3 776.3 738.6 -4.9 2.8 Operating profit* 34.6 52.7 61.5 16.7 77.7 % of sales 4.8 6.8 8.3 22.1 72.9 ROOC, %** 6.4 8.2 11.4 39.0 78.1 Deliveries, 1 000 t 946 994 966 -2.8 2.1 Production, 1 000 t 947 1 029 951 -7.6 0
Slide 33: Packaging Boards
Packaging Boards % Change % Change EUR million IV/06 I/06 I/07 Q107/Q106 Q107/Q406 Sales 871.7 869.0 919.8 5.8 5.5 Operating profit* 59.4 99.5 106.5 7.0 79.3 % of sales 6.8 11.4 11.6 1.8 70.6 ROOC, %** 8.6 13.9 15.4 10.8 79.1 Deliveries, 1 000 t 929 959 1 000 4.3 7.6 Production, 1 000 t 950 1 005 1
Slide 34: Wood Products
Wood Products % Change % Change EUR million IV/06 I/06 I/07 Q107/Q106 Q107/Q406 Sales 443.0 377.1 479.8 27.2 8.3 Operating profit* 19.0 3.8 53.7 n/m 182.6 % of sales 4.3 1.0 11.2 n/m 160.5 ROOC, %** 11.6 2.3 32.9 n/m 183.6 Deliveries, 1 000 m3 1 670 1 563 1 666 6.6 -0.2 *) excluding non-recurring it
Slide 35: Operating Cash Flow
Operating Cash Flow EUR million 700 600 500 400 300 200 100 0 -100 -200 -300 Q103 Q203 Q303 Q403 Q104 Q204 Q304 Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107 Cash flow from operations Cash flow after investing activities 35 26 April 2007 Financial Results January-March 2007
Slide 36: Change in Operating Profit Q4/06 – Q1/07
Change in Operating Profit Q4/06 – Q1/07 EUR million 350 29.8 -1.9 307.3 37.8 -7.1 300 21.7 4.1 -15.3 250 50.6 187.6 200 150 100 50 0 GROUP Sales prices Sales Variable Energy Fixed costs IFRS 2 TRS Other GROUP TOTAL and mix volume costs TOTAL Q4/06 Q1/07 excluding non-recurring items 36 26 April 200
Slide 37: Change in Operating Profit Q1/06 – Q1/07
Change in Operating Profit Q1/06 – Q1/07 EUR million 400 350 47.9 -18.5 -7.9 5.9 5.6 -21.5 6.8 307.3 42.0 300 247.0 250 200 150 100 50 0 GROUP Sales prices Sales Variable Energy Fixed costs IFRS 2 TRS Other GROUP TOTAL and mix volume costs TOTAL Q1/06 Q1/07 excluding non-recurring items 37 26 April
Slide 38: Change in EPS Q4/06 – Q1/07
Change in EPS Q4/06 – Q1/07 EUR 0,30 0.02 0.26 0,25 0.03 0.04 -0.01 0.02 -0.02 0,20 0.05 0,15 0.13 0,10 0,05 0,00 GROUP Sales prices Sales volume Energy Fixed costs IFRS 2 TRS Financing GROUP TOTAL Q4/06 and mix TOTAL Q1/07 Excluding non-recurring items 38 26 April 2007 Financial Results January-Mar
Slide 39: EPS by Quarter
EPS by Quarter EUR 0,30 0,28 0,26 0,24 0,22 0,20 0,18 0,16 0,14 0,12 0,10 0,08 0,06 0,04 0,02 0.00 0,00 I/05 II/05 III/05 IV/05 I/06 II/06 III/06 IV/06 I/07 excluding non-recurring items 39 26 April 2007 Financial Results January-March 2007
Slide 40: Operating Profit by Quarter
Operating Profit by Quarter 2005 – Q1/07 EUR million 350 300 250 200 150 100 50 0 I/05 II/05 III/05 IV/05 I/06 II/06 III/06 IV/06 I/07 excluding non-recurring items and goodwill amortisation 40 26 April 2007 Financial Results January-March 2007