Billerud Ab · OMXSTO:BILL
Billerud Ab — BillerudKorsnäs — Investor Presentation (September 2018)
41 slides from Billerud Ab's investor presentation, Sep 17, 2018
Slide 1: Capital Markets Webcast
Capital Markets Webcast WHAT IF oceans were full of plankton? WHAT IF packaging could push new boundaries? Not plastics. September 17, 2018 Petra Einarsson, President & CEO
Slide 2: Growing in numbers and reputation
Growing in numbers and reputation
Slide 3: Offerings for a sustainable future
Offerings for a sustainable future Packaging Packaging Packaging materials services solutions
Slide 4: Our four key market segments
Our four key market segments Food & Consumer & Medical & Industrial Beverages Luxury Hygiene 59% 24% of sales 10% 7% of sales of sales of sales
Slide 5: First-class materials from the forest
First-class materials from the forest Fluting Liners 3D Paper Cartonboard Kraft Paper (Specialty) Sack Paper Liquid Packaging Kraft Paper Kraft Paper Board (Bags) (Medical)
Slide 6: Global packaging market is growing 3%
Global packaging market is growing 3% Focus on expanding sales by challenging non-renewable materials 1.2% 1.8% Key to success capturing growth is sustainable 3.6% 4.4% products and new packaging solutions 4.1% 2.2% 0.4% PP & Board market: Estimated demand CAGR 2013-2030, combined market for cartonb
Slide 7: Unlocking the Potential
Unlocking the Potential SECURE IMPROVE ACCELERATE Successful ramp-up of KM7 A safe company is a well run company Innovate for growth Competitive wood supply Stabilise production Capture new solutions sales
Slide 8: We have invested for future growth…
We have invested for future growth… 2012 2013-2017 2018 2019 Jakobstad Tervasaari UPM acquisition: Production capacity increases: PM10 Skärblacka: KM7 Gruvön: Production capacity: ~300 ktonnes Frövi/Rockhammar: ~95 ktonnes Production capacity: ~90 ktonnes Production capacity: ~550,000 tonnes Skärbla
Slide 9: …and are securing a competitive wood supply
…and are securing a competitive wood supply Domestic purchases Private forest owners Import Baltic sea region Balance with volumes from remote areas Logistics system Balanced Sourcing, % 2017 2020 31 Own harvesting 31 32 45 Long contracts 24 37 Annual contracts
Slide 10: A safe company is a well run company
A safe company is a well run company Lost time injury frequency rate, LTIFR* 7.7 2017 <1.5 2023 Illustration -25% CAGR *Number of injuries per 1 000 000 worked hours
Slide 11: We are improving production stability
We are improving production stability Overall equipment efficiency , OEE 2018 2020 Δ +4% pts
Slide 12: We are accelerating innovation to double our NPR
We are accelerating innovation to double our NPR Product innovation – new materials Long history of award-winning packaging innovations Product development Application development Advanced material research Business innovation – new solutions Solutions in business areas Ventures 2013: Axello® ZAP 20
Slide 13: Innovative solutions
TITLE OF PRESENTATION 13 Innovative solutions Carton Solutions Corrugated Solutions Formable Solutions Bag Solutions Sterile Barrier Solutions Sack Solutions Managed Packaging Solutions
Slide 14: We see increased demand for packaging solutions…
We see increased demand for packaging solutions… Managed Packaging Global Corrugated demand 2018 THE COMPLETE PACKAGING DEVELOPMENT AND MANAGEMENT SERVICE ANNUAL GROWTH RATE (%) BY 2018-2023 Electrical goods Personal & Household care Processed foods Textiles & Footware Vehicle parts Tobacco Glasswar
Slide 15: …and are reorganising to capture this growth
…and are reorganising to capture this growth Solutions Division Packaging Managed solution packaging Organic top-line growth NEW SOLUTIONS 2017 2023 700 SEK million MANAGED PACKAGING 15-25% CAGR
Slide 16: Reorganising is a key enabler to unlock the potential
Reorganising is a key enabler to unlock the potential CEO Petra Einarsson Innovation CTO Magnus Wikström Ulf Eliasson CFO HR Susanne Lithander Paulina Ekvall Legal Communication Andreas Mattsson Christopher Casselblad Division Division Division Paper Board Solutions Vacant Mikael Andersson Vacant
Slide 17: Reiterating our long-term financial targets
Reiterating our long-term financial targets Target TOP-LINE GROWTH 3-4% EBITDA >17% ROCE >13% NET DEBT/EBITDA <2.5 DIVIDEND PAYOUT RATIO >50%
Slide 18: Unlocking the Potential
Unlocking the Potential SECURE IMPROVE ACCELERATE Successful ramp-up of KM7 A safe company is a well run company Innovate for growth Starting March-April 2019 LTIFR <1.5 2023 New product ratio 15% 2023 Competitive wood supply Stabilise production Capture new solutions sales Balanced sourcing 4%-pts
Slide 19: WHAT IF the world's largest board machine could help save the planet?
Capital Markets Webcast WHAT IF the world’s largest board machine could help save the planet? September 17, 2018 Mikael Andersson, SVP Division Board Next Generation
Slide 20: Unlocking the Potential
Unlocking the Potential SECURE IMPROVE ACCELERATE Successful ramp-up of KM7 A safe company is a well run company Innovate for growth Competitive wood supply Stabilise production Capture new solutions sales
Slide 21: Securing our future growth…
Securing our future growth… Gruvön Greenfield KM7 ~550 ktonnes board machine Brownfield Pulp washing CTMP pulp dissolving Rebuilt recovery Fresh water and water effluent treatment Skärblacka PM10 Skärblacka PM10 Skärblacka Greenfield PM10 ~90 ktonnes MG-machine Brownfield Upgrading pap
Slide 22: …supported by strong market demand
…supported by strong market demand Product area Global capacity Demand CAGR Liquid packaging board ~4.2 Mtonnes 1-2 % Well-balanced market – limited new capacity coming Carton ~15.5 Mtonnes 4% Large market – limited effect from new KM7 capacity White surface Kraftliner ~4.3 Mtonnes 1-2 % Balanced ma
Slide 23: The majority of our investment program is completed
The majority of our investment program is completed PM10: ~1 300 SEK million Capex, SEK million Started and undergoing ramp-up 6,000 5 300 KM7: ~7 600 SEK million 5,000 Increased cost for civil and negative currency effects Civil and construction 90% completed 4,000 3,000 2 750 2,000 1,000 0 2015 20
Slide 24: Skärblacka PM10 production started on time
Skärblacka PM10 production started on time New paper machine in Skärblacka, PM10 Integrated pulp supply reduces costs Adding value by increased quality grades Upgraded paper machine PM7 New film press surface coater Target new quality benchmark for medical and food packaging paper Enhanced capabilit
Slide 25: Gruvön KM7 project is on schedule
Gruvön KM7 project is on schedule Machine ready Gruvön KM7 September Mill ready Product ready Business ready Contruction Groundwork Assembly Software Start-up EBITDA positive starts finalised starts installed FY 2021 Fully ramped Project start ~240 ktonnes up 2023 ~550 ktonnes Q4 Q2 Q4 Q2 Q3 March-A
Slide 26: We are committed to a stable ramp-up of KM7
We are committed to a stable ramp-up of KM7 Liner will be the major product during the Ramp-up base case KM7, ktonnes start-up phase 600 EBITDA positive FY Increasing LBP production in pace with 2021 market growth 500 Flexibility to produce premium products to 400 meet change in product demand 300 2
Slide 27: Increased production volumes
STATUS Increased production volumes Three machines closing down in Production, ktonnes Gruvön 2019 3500 PM1, PM2 and PM5 3000 Capacity increases in Gävle and Frövi adding LPB and Liner 2020 2500 2000 KM7 expected to produce ~390 ktonnes in 2020 1500 PM4 in Gruvön not yet closed 1000 When fully rampe
Slide 28: Clear agenda for growth
Clear agenda for growth PAPER DIVISION BOARD DIVISION SOLUTIONS DIVISION Kraft and sack paper for LPB* and cartonboard with unique properties Smart packaging solutions for brand owners customers with tough demands and fluting and liner that add value who want to challenge conventional solutions SELE
Slide 29: WHAT IF innovation makes the difference?
Capital Markets Webcast WHAT IF innovation makes the difference? September 17, 2018 Ulf Eliasson, CTO Production Excellence
Slide 30: Unlocking the Potential
Unlocking the Potential SECURE IMPROVE ACCELERATE Successful ramp-up of KM7 A safe company is a well run company Innovate for growth Competitive wood supply Stabilise production Capture new solutions sales
Slide 31: 8 mills producing ~3 million tonnes of premium packaging material
8 mills producing ~3 million tonnes of premium packaging material
Slide 32: Production has grown steadily…
Production has grown steadily… Total production increase Total production, ktonnes 2013-2017 was 230 ktonnes (2% CAGR) Record annual production 2017 at: 2% CAGR Gävle Frövi Skärblacka 2013 2014 2015 2016 2017
Slide 33: …with record output in 2017 – and significant potential to improve EBITDA
…with record output in 2017 – and significant potential to improve EBITDA EBITDA-multiples Record production in 2017… 9.6 +1.5 9.1 9.4 -0.3 …despite losing 50,000 tonnes¹ through disruptions in production 8.1 Competitors have closed the valuation gap (our value in 2017 has decreased ~2 SEK Peer grou
Slide 34: Production excellence will drive improved EBITDA…
Production excellence will drive improved EBITDA… Overall Equipment Efficiency (OEE) Percentage Points Time X Speed X Material = OEE 1 pp = 100 SEK million EBITDA
Slide 35: ...and this is where we are focusing
...and this is where we are focusing Production stability Potential for 2 percentage points OEE improvement Product quality yearly Recognised as Environmental performance industry leader Driving the industry Occupational Health & Safety standard (“0-accidents”)
Slide 36: We are making improvements across all mills…
We are making improvements across all mills… Ambitious Stretched targets to push change targets Rigorous initiative tracking and follow-up across mills Mill Director accountable for the mill program Leadership Mill management responsible for the initiatives Best practice sharing between mills Teamwo
Slide 37: …to increase stability in production
…to increase stability in production 2020 2019 Continuous 2018 improvement phase All mills in full improvement mode Targets locked in Launch of key new initiatives
Slide 38: Market outlook
Market outlook Demand and order situation are expected to continue to be strong, with normal seasonal variations for all business areas Possibilities of selected sales price increases remain Demand-driven wood cost increases are expected to continue Financial impact on Q3 2018 from the wood shortage
Slide 39: Unlocking the Potential
Unlocking the Potential SECURE IMPROVE ACCELERATE Successful ramp-up of KM7 A safe company is a well run company Innovate for growth Competitive wood supply Stabilise production Capture new solutions sales
Slide 40: WHAT IF oceans were full of plankton? Not plastics
WHAT IF oceans were full of plankton? Not plastics In 2014, the global production of plastic packaging was 78 million tonnes. Only 2 percent of the plastic packages were recycled into new packages. 40 percent was used for land fill. 32 percent was leaked into the oceans and the land.
Slide 41: Disclaimer statement
Disclaimer statement This presentation may contain forward-looking statements. Such statements are based on our current expectations and BillerudKorsnäs does not give any assurances that such statements will materialise. Because these forward-looking statements involve both known and unknown risks a
BillerudKorsnäs — Investor Presentation (September 2018) on 6ix