Billerud Ab · OMXSTO:BILL
Billerud Ab — BillerudKorsnäs — Debt Investor Presentation (February 2017)
45 slides from Billerud Ab's debt investor presentation, Feb 13, 2017
Slide 1: We Packaging for a Sustainable Future
WE PACKAGING FOR A Investor presentation | 13 February 2017 Per Lindberg, CEO
Slide 2: Important Information
IMPORTANT INFORMATION This presentation has been prepared by BillerudKorsnäsAB (publ) (together with any subsidiary or affiliate, “BillerudKorsnäs”) solely for use at its presentation to selected recipients (each referred to hereafter as a “Recipient”). This presentation has been provided for inform
Slide 3: Pure Play Packaging Materials Company
PURE PLAY PACKAGING MATERIALS COMPANY High performance packaging Target customer segments requiring strong, light and/or pure packaging materials Stable product 74% of sales going to consumer sectors portfolio Sustainable alternatives through Innovation challenging other materials and solutions inno
Slide 4: Strong Financial Development After Merger
STRONG FINANCIAL DEVELOPMENT AFTER MERGER ADJUSTED EBITDA SEKm 5 000 20% Successful synergies extraction 17% 18% 16% 18% 4 000 14% 14% 16% Lower relative currency exposure 3 000 14% 2 000 12% Reduced pulp market exposure 10% 1 000 8% Broader product portfolio 0 6% 2012* 2013 2014 2015 2016 Adjusted
Slide 5: Capital Allocation Post Merger
CAPITAL ALLOCATION POST MERGER FOCUSING ON DEBT REPAYMENT AND DIVIDENDS CAPITAL ALLOCATION 2013 - 2016 SEKm 16 000 14 000 940 12 120 240 12 000 4 100 10 000 8 000 1 800 6 000 2 600 4 000 2 000 4 800 0 Cash flow Change in Divestment of Base capex Growth capex Distributed to Change in net generated wo
Slide 6: BillerudKorsnäs in Brief
BILLERUDKORSNÄS IN BRIEF NET SALES Europe 72% Asia 17% PACKAGING PAPER OTHER 21.7 Africa 4% South America 3% 8% Kraft paper Sack paper Market pulp SEKbn Middle East 2% 38% SHARE Other 2% 37% OF SALES EBITDA* CONSUMER BOARD 17% Liquid packaging board CORRUGATED SOLUTIONS 3.8 Cartonboard Fluting Liner
Slide 7: Three Business Areas with Strong Market Positions
THREE BUSINESS AREAS WITH STRONG MARKET POSITIONS PACKAGING PAPER CONSUMER BOARD CORRUGATED SOLUTIONS % of business area sales volume: % of business area sales volume: %of business area sales volume: Kraft paper 60% Liquid packaging board 85% Fluting 60% Sack paper 40% Cartonboard 15% Liner 40% LIQU
Slide 8: Aiming to Capture Growth from Global Megatrends
AIMING TO CAPTURE GROWTH FROM GLOBAL MEGATRENDS Demographic shifts and a changing world map Sustainability connecting several subtrends Consumers and supply chains are changing 8
Slide 9: Packaging Paper & Board Market Is Growing by 2.2%
PACKAGING PAPER & BOARD MARKET IS GROWING BY 2.2% Europe North-America 1.5% 0.3% Asia 3.3% 3.0% 2.8% Australasia 2.7% Middle East 0.4% Central & South America Africa Estimated demand CAGR 2013-2030, combined market for cartonboard, containerboard and sack paper. Source: Pöyry 2014 9
Slide 10: We Target Global Packaging Market Growing by 3.4%
WE TARGET GLOBAL PACKAGING MARKET GROWING BY 3.4% Europe North-America 1.8% 2.0% Asia 4.7% 5.1% 4.4% Australasia 3.7% Middle East 2.2% Central & South America Africa Estimated CAGR 2014-2024, for all packaging materials. Source: Smithers Pira 2014 10
Slide 11: We Have Established a Clear Growth Strategy
WE HAVE ESTABLISHED A CLEAR GROWTH STRATEGY 11
Slide 12: 2016 – Start of Two Major Restructuring Projects
2016 – START OF TWO MAJOR RESTRUCTURING PROJECTS IMPROVING EFFICIENCY AND SECURING GROWTH 1 Moving unintegrated MG paper machine from Tervasaari, Finland to Skärblacka, Karlsborg Sweden and making it integrated to the pulp production. SEK 1,2 billion investment. 2 Building new board machine at the p
Slide 13: To Improve Underlying Profitability and Secure Organic Growth
TO IMPROVE UNDERLYING PROFITABILITY AND SECURE ORGANIC GROWTH PACKAGING PAPER CONSUMER BOARD CORRUGATED SOLUTIONS SELECTIVE GROWTH VOLUME GROWTH VALUE GROWTH Focusing on growth Increasing volumes on Expanding solution based segments growing by growing Liquid Packaging sales to brand owners 2-4% per
Slide 14: M&A May Boost Long-Term Growth
M&A MAY BOOST LONG-TERM GROWTH We have the financial capacity to add M&A growth to organic growth We have proven experience in merging businesses and quickly extracting synergies Bolt-on acquisitions with synergy potentials are currently the most interesting candidates 14
Slide 15: Investing to Move Up the Value Chain Towards Brand Owners
WE ARE INVESTING TO MOVE FURTHER UP THE VALUE CHAIN TOWARDS BRAND OWNERS Packaging Packaging material material 50-85 % of 2-5% of the cost the cost Price Brand image Payment terms Package solution Runability Sustainability Delivery terms Shelf appearance 15
Slide 16: We Are Expanding the Reach of Our Offering
WE ARE EXPANDING THE REACH OF OUR OFFERING OUR PRESENCE 2013 AND NEW SALES HUBS 2015 Sweden Finland Germany UK France Spain Indonesia Italy UAE China Singapore Thailand US India Turkey South Africa 16
Slide 17: Innovation Will Further Boost Top Line and Margins
INNOVATION WILL FURTHER BOOST TOP LINE AND MARGINS 2015 2016 2020 Target Proportion of sales accounted 17% 13% 20% for by new products 17
Slide 18: Sustainability as a Business Opportunity
SUSTAINABILITY AS A BUSINESS OPPORTUNITY MAXIMIZING POSITIVE IMPACT SUSTAINABLE INCREASED AND BIO-BASED CUSTOMER VALUE SOCIETY RESPONSIBLE VALUE CHAIN MINIMIZING NEGATIVE IMPACT 18
Slide 19: We Provide Sustainable Solutions
WE PROVIDE SUSTAINABLE SOLUTIONS Towards fossil-free production Paper bag* Best choice for the climate *BillerudKorsnäs paper bag from primary fibre, produced in Sweden Innovation for sustainability Co-operation for learning 1 Life cycle assessment, Comparative study of virgin fibre based packaging
Slide 20: Credentials – We Walk the Talk
CREDENTIALS – WE WALK THE TALK ADVANCED LEVEL 20
Slide 21: 2016 Highlights
2016 HIGHLIGHTS ktonnes SALES VOLUMES 2 800 2 750 2 772 Record high production and sales 2 700 2 734 2 699 volumes 2 650 2 600 All-time high cash flow and EBITDA 2 591 2 550 Several investments to accelerate 2 500 2013 2014 2015 2016 growth in solutions sales Numerous recognitions for SEKm OPERATING
Slide 22: Financial Targets and Target Fulfillment
FINANCIAL TARGETS AND TARGET FULFILLMENT FULL YEAR 2016 ORGANIC GROWTH 3-4 % EBITDA > 17% PER YEAR 0.3% 1 ✔ 18% 2 ROCE > 13% Net Debt / EBITDA < 2.5 ✔ ✔ 2 14% 1.08 DIVIDEND POLICY: 50% OF NET PROFIT 59% (proposal to the AGM 2017) 1. For comparable units (excluding divested and acquired operations) 2
Slide 23: Debt Maturity and Structure
DEBT MATURITY AND STRUCTURE DEBT MATURITY PROFILE DEBT STRUCTURE SEKm 7 000 Loans from financial institutions 6 000 5 000 4 000 1 500 1 800 SEKm 3 000 2 000 1 000 MTN 529 0 2017 2018 2019 2022 2023 2024 2025> Project financing Interest bearing debt Unused Credit Facility FINANCING CONSIDERATIONS Fin
Slide 24: Upcoming Capex Needs and Financing Strategy
UPCOMING CAPEX NEEDS AND FINANCING STRATEGY CAPEX 2017-2019 Capex financing through a mix of: SEKm Cash flow 5 000 Export credit facility Long-term debt 4 000 Short-term funding sources 3 000 3 400 3 000 Maintaining financial flexibility 2 000 200 throughout investment period 1 000 1 300 1 300 1 300
Slide 25: Summary
SUMMARY Focused product portfolio with leading global and regional positions in growing markets Global trends imply major growth opportunities Sustainability, demographic shifts, digitalization and changed consumer behavior We invest in all of our four strategic pillars: Position expansion, Innovati
Slide 26: We Challenge Conventional Packaging for a Sustainable Future
BILLERUDKORSNAS WE CHALLENGE CONVENTIONAL PACKAGING FORA SUSTAINABLE FUTURE 26
Slide 27: Appendix
BILLERUDKORSNAS APPENDIX 27
Slide 28: Successful Integration Has Enabled a Strong Platform for Growth
SUCCESSFUL INTEGRATION HAS ENABLED A STRONG PLATFORM FOR GROWTH 2006 2009 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Packaging focused materials and solutions Annual synergies of approximately SEK 530 provider million Broader product portfolio Sharply reduced pulp market exposure Higher
Slide 29: Q4 2016 Sales Volumes
Q4 2016 SALES VOLUMES REACHED ALL-TIME HIGH. NET SALES ON THE SAME LEVEL SALES NET SALES NET SALES* kton VOLUMES SEKm SEKm comparable units +1.4% N/A +0.3% 2 700 2 772 21 000 21 814 21 657 21 000 2 734 21 338 21 393 2 400 18 000 18 000 2 100 15 000 15 000 1 800 1 500 12 000 12 000 1 200 9 000 9 000
Slide 30: Q4 2016 - Improved Profitability
Q4 2016 - IMPROVED PROFITABILITY ONE-OFF COSTS IN Q4 AND LATGRAN DIVESTITURE PREVIOUS YEAR EBITDA Adjusted EBITDA* SEKm SEKm 4 000 -10% 4 000 +5% 4 003 3 836 3 500 3 606 3 500 3 661 3 000 3 000 2 500 2 500 2 000 2 000 1 500 1 500 +34% 1 000 +3% 1 000 898 500 671 693 500 672 0 0 Q4 15 Q4 16 Jan-Dec J
Slide 31: Q4 2016 - Financial Targets
Q4 2016 - FINANCIAL TARGETS OP. CASH FLOW Adjusted ROCE NET DEBT/EBITDA SEKm % multiple 2,50 2 100 15 2 101 1 800 1 957 14 2,00 13 1 500 10 1,50 1 200 1,24 1,27 900 1,00 1,08 5 600 619 0,50 300 360 0 0 0,00 Q4 15 Q4 16 Jan-Dec Jan-Dec Jan-Dec Jan-Dec Q4 15 Q3 16 Q4 16 15 16 15 16 ROCE based on rolli
Slide 32: Outlook
OUTLOOK Demand and order situation for the first quarter is expected to be stable with normal seasonal variances for all business areas Average prices in local currency in the first quarter are anticipated to be unchanged in all segments except for the impact of previously announced price increases
Slide 33: Packaging Paper
PACKAGING PAPER SELECTIVE GROWTH % of Group Asset transformation for increased profitability NET SALES 38% SEKm 2-4% CAGR Development of new business models 8 339 EBITDA Expansion to growing markets 41% SEKm 1 486 MAIN GROWTH DRIVERS SALES VOLUME 42% Population growth in emerging markets drives dema
Slide 34: Consumer Board
CONSUMER BOARD VOLUME GROWTH % of Group Attractive market providing growth opportunities NET SALES 37% SEKm 4-5% CAGR Investments for volume growth 8 015 EBITDA Innovation with customers and brand owners 48% SEKm 1 723 MAIN GROWTH DRIVERS SALES VOLUME 38% High urbanization rate, primarily in Asia, d
Slide 35: Corrugated Solutions
CORRUGATED SOLUTIONS VALUE GROWTH % of Group Strong product portfolio setting market standard NET SALES 17% SEKm 2-4% CAGR Integrating new business model 3 620 EBITDA Increasing sales to brand owners 23% SEKm 829 MAIN GROWTH DRIVERS SALES VOLUME 20% Increasing e-commerce and fresh food consumption k
Slide 36: We Have Invested SEK Billion Since 2012 to Increase Capacity and Quality Lead
WE HAVE INVESTED SEK 2 BILLION SINCE 2012 TO INCREASE CAPACITY AND QUALITY LEAD PACKAGING PAPER CONSUMER BOARD CORRUGATED SOLUTIONS 260 SEKm 1600 SEKm 180 SEKm Brown sack paper Liquid Packaging Board S/C fluting - Improved paper quality Cartonboard - Improved quality restoring leadership - Improved
Slide 37: Global Packaging Market
GLOBAL PACKAGING MARKET GLOBAL PACKAGING MARKET, GLOBAL PACKAGING MARKET, BY REGION1 BY MATERIAL1 Asia, 38% Paper and board, 36% Europe, 27% Hard plastics, 22% North America, 22% Flexible materials excl. Paper, 16% South and Central America, 5% Metals, 14% Middle East, 3% Africa, 2% Glass, 7% Pacifi
Slide 38: Sales per Region
SALES PER REGION PACKAGING PAPER CONSUMER BOARD CORRUGATED SOLUTIONS SALES PER REGION SALES PER REGION SALES PER REGION • Europe 70% • Europe 69% • Europe 72% • Asia 14% • Asia 22% • Asia 19% • Africa 7% • Middle East 5% • Africa 5% • South America 4% • Africa 2% • South America 2% • Middle East 2%
Slide 39: Production Units
PRODUCTION UNITS SWEDEN Total production capacity Gävle, 725 ktonnes Gruvön, 710 ktonnes Frövi/Rockhammar, 470 ktonnes Skärblacka, 420 ktonnes Karlsborg, 300 ktonnes 2 970 FINLAND Thousand Pietarsaari, 200 ktonnes tonnes Tervasaari, 100 ktonnes (mill closed as of end of Q3 2016) UNITED KINGDOM Beeth
Slide 40: Sensitivity Analysis
SENSITIVITY ANALYSIS IMPACT ON PROFIT/LOSS BEFORE TAX Variable Change SEKm Sales volume +/- 10% +/-900 Exchange rate, SEK1 +/- 10% -/+640 Fibre prices +/- 10% -/+700 Price of electricity2 +/- 10% -/+30 Interest rate on loans3 +/- 1 percentage point -/+43 1 Excluding effects of currency hedging. 2 Ex
Slide 41: Cost Structure
COST STRUCTURE Fibre (wood and external pulp), 37% No significant forest assets Employee benefits expense, 16% Purchases made from handful of major Chemicals, 10% suppliers Bergvik Skog, Holmen, Mellanskog, Stora Delivery expenses, 9% Enso and Sveaskog Large amount of private land owners in Deprecia
Slide 42: FX Risk
FX RISK Total net currency exposure of SEK 6.4 billion BillerudKorsnäs uses Swedish Riksbank’s FIXING rate (Month End) During month Sales, AP, AR etc: End of month rate previous GBP 10% month AP and AR: revalued to at end of month using End of month rate. Revaluation of AR booked in ”Currency hedg
Slide 43: Ownership Structure
OWNERSHIP STRUCTURE Shareholder Number of shares Percent of votes FRAPAG Beteiligungsholding AG 31 300 000 15.1 AMF Insurance & Funds 20 583 373 9.9 Swedbank Robur Funds 9 384 808 4.5 Fourth Swedish National Pension Fund 6 578 034 3.2 Alecta 5 448 000 2.6 Handelsbanken Funds 4 656 994 2.2 DFA Funds
Slide 44: BillerudKorsnäs Share
BILLERUDKORSNÄS SHARE Symbol: BILL Trading platform: Nasdaq Stockholm IPO: November 20, 2001 Share performance 2017 Share performance 2006-2016 170 170 160 150 150 130 140 110 130 90 120 70 110 50 100 30 90 10 80 -10 BILL OMX Stockholm PI OMX Stockholm Forestry & Paper PI BILL OMX Stockholm PI OMX S
Slide 45: BillerudKorsnäs
BILLERUDKORSNAS
BillerudKorsnäs — Debt Investor Presentation (February 2017) on 6ix