26 slides from Svenska Cellulosa Ab Sca Class A's earnings presentation, Jul 25, 2018
Slide 1: July 25, 2018
July 25, 2018
Slide 2: Ulf Larsson, CEO
Ulf Larsson, CEO
Slide 3: Continued strong market
Continued strong market Sales growth of 11% vs Q2 2017 • Price/mix +13%, volumes -7%, currency 5% EBITDA up 43% vs Q2 2017 • Higher prices • Expansion stop at Östrand St1 and SCA form partnership to produce renewable biofuel • SEK ~0.5bn investment by JV • Annual production of ~100k tonnes HVO Expan
Slide 4: Östrand production began in June
Production began in June • ~1,000 days after starting the project on August 28, 2015 • On time and on budget First pulp delivered Ramp-up progressing well • Focus on calibrating the plant to quickly achieve full production and high product 7.8 SEKbn investment quality 4
Slide 5: EBITDA, industrial ROCE and EBITDA development
EBITDA (SEKm) Industrial ROCE 1) EBITDA development (SEKm) 1,034 13% / 19%* 43% 1,175 1,049 1,078 1,034 724 EBITDA margin Net debt/EBITDA 27% 25% 22% 22.1% 1.7x 17% 25% Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Excluding Pulp Note: 1) ROCE for the industrial segments; Wood, Pulp and Paper (* Industrial ROC
Slide 6: Forest segment results
Net sales (SEKm) EBITDA (SEKm) EBITDA margin -4% 2% Stable wood supply to industries 31.9% 30.1% 1,210 1,162 364 371 Continued price increases, especially for imported wood Inventory build-up to meet Östrand’s increasing pulpwood demand Q2 2017 Q2 2018 Q2 2017 Q2 2018 Q2 2017 Q2 2018 Sales down 4% •
Slide 7: Wood segment results
Net sales (SEKm) EBITDA (SEKm) EBITDA margin 13% 49% Continued strong demand with increasing prices 1,846 230 12.5% 1,637 Low inventory levels 9.4% 154 Sales up 13% • Higher prices EBITDA up 49% Q2 2017 Q2 2018 Q2 2017 Q2 2018 Q2 2017 Q2 2018 • Higher prices Price development – Solid Wood Products •
Slide 8: Pulp segment: Östrand pulp mill in operation
Net sales (SEKm) EBITDA (SEKm) EBITDA margin -17% Expanded Östrand pulp mill in operation 585 71 12.1% • Expansion stop to complete the final 485 stage of the sequential start-up • Limited production in the quarter • Production began in June 2018 according to plan • SEK 6.6bn invested up to Q2, out
Slide 9: Paper segment results
Net sales (SEKm) EBITDA (SEKm) EBITDA margin 17% 112% Continued strong Kraftliner market 2,426 618 25.5% 2,072 Improved market for Publication paper 14.1% Sales up 17% 291 • Higher Kraftliner prices EBITDA up 112% Q2 2017 Q2 2018 Q2 2017 Q2 2018 Q2 2017 Q2 2018 • Higher Kraftliner and Publication pa
Slide 10: Fast product renewal and SCA Frontier launch
Clear focus on premium priced high quality products Fast product renewal – 35% of current Price products did not exist 5 years ago Expanding high- quality offering Launch of SCA Frontier – competing with wood free products • New paper category – Fine wood containing paper Wood free products • Compet
Slide 11: Toby Lawton, CFO
Toby Lawton, CFO
Slide 12: Quarterly income statement summary
Quarter SEKm Q2 2018 Q2 2017 Change Net sales 4,670 4,222 11% EBITDA 1,034 724 43% EBITDA margin 22.1% 17.1% 5.0 p.p. EBIT 744 451 65% EBIT margin 15.9% 10.7% 5.2 p.p. Financial items -4 -39 Profit before tax 740 412 80% Tax 369 -124 Profit for the period 1,109 288 285% Earnings per share, SEK 1.58
Slide 13: Net sales and EBITDA by segment
Forest Wood Pulp Paper 2,383 2,426 2,220 Net sales (SEKm) 2,096 2,072 2,046 1,998 1,859 1,846 1,637 1,567 1,503 1,426 1,364 1,361 1,320 1,312 1,298 1,296 1,287 1,261 1,261 1,210 1,162 672 668 668 644 641 589 585 485 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 Q1 Q2
Slide 14: Net sales development vs Q2 2017
Positive for all segments Expansion stop at Östrand SEK 13% -7% 4,670m SEK 5% 4,222m EUR positive, USD flat + 11% Net sales Price/Mix Volume Currency Net sales Q2 2017 Q2 2018 14
Slide 15: EBITDA development vs Q2 2017
Higher prices Higher costs for wood raw for all segments material and chemicals EUR positive, USD flat SEK SEK SEK +487m -39m SEK SEK -134m SEK +80m -100m SEK +16m 1,034m Expansion stop at Östrand SEK Higher direct costs Higher electricity price. Expansion stop related to the Increased price for at
Slide 16: Cash flow
Quarter Jan-jun SEKm Q2 2018 Q2 2017 2018 2017 EBITDA 1,034 724 2,209 1,521 Revaluation of biological assets and other non cash flow items 1) -93 2 -346 -221 Operating cash surplus 941 726 1,863 1,300 Change in working capital -186 395 -345 41 Current capital expenditures -200 -163 -276 -289 Other o
Slide 17: Östrand ramp-up and competitiveness
Production began in June according to plan Ramp-up period of 12-18 months • 2018 – volumes in-line with 2017 • 2020 – first full year at full capacity World-class competitiveness • Doubled NBSK capacity • Fixed cost reduction of SEK 350 per tonnes compared to pre project level 7.8 SEKbn • Improved e
Slide 18: Project related costs and ramp-up effects
One-off costs related to the finalization of the Pulp expansion project Project related costs (indirect) • Project related costs of SEK 60m (150), of which SEK 10m (50) depreciation EBITDA impact Q1 2018 Q2 2018 2018e 2017 • Primarily during the first 9 months of 2018 Project related 16 15 50 100 co
Slide 19: Capital employed and net debt
SEKm Jun 30, 2018 Dec 31, 2017 Forest assets according to IAS 41 1) 31,693 31,386 Deferred tax relating to Forest assets -6,529 -6,905 Forest assets, net of deferred tax 25,164 24,481 Working capital 3,150 2,861 Working capital/Net sales 2) 17% 18% Other capital employed 16,200 15,377 Total capital
Slide 20: Continued strong market (summary)
Continued strong market Sales growth of 11% vs Q2 2017 EBITDA up 43% vs Q2 2017 St1 and SCA form partnership to produce renewable biofuel Expanded Östrand pulp mill in operation 20
Slide 21: Q&A
Slide 22: Appendix
Appendix WSCA
Slide 23: Net sales and EBITDA 2014-LTM
Net sales (SEKm) EBITDA (SEKm) and EBITDA margin 18,000 5,000 17,543 16,000 4,500 16,664 16,152 15,412 15,373 4,336 4,000 14,000 3,500 3,781 3,648 12,000 3,300 3,385 3,000 10,000 25% 2,500 23% 21% 22% 22% 8,000 2,000 6,000 1,500 4,000 1,000 2,000 500 0 0 2014 2015 2016 2017 LTM 2014 2015 2016 2017 L
Slide 24: Segment net sales and EBITDA 2014-LTM
Forest Wood Pulp Paper Net sales (SEKm) 9,125 8,226 8,548 8,434 7,744 5,994 6,342 5,187 5,108 4,978 5,070 5,008 5,114 5,315 5,441 2,518 2,760 2,492 2,542 2,390 2014 2015 2016 2017 LTM 2014 2015 2016 2017 LTM 2014 2015 2016 2017 LTM 2014 2015 2016 2017 LTM EBITDA (SEKm) and EBITDA margin 1) 2,124 35%
Slide 25: SCA Frontier
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