Billerud Ab · OMXSTO:BILL
Billerud Ab — BillerudKorsnäs — Q2 2019 Earnings Presentation
20 slides from Billerud Ab's earnings presentation, Jul 16, 2019
Slide 1: Interim Report April – June 2019
Interim Report April – June 2019 Q2 Solid underlying result 2019 16 July 2019 Petra Einarsson, CEO, Ivar Vatne, CFO WHAT IF paper packaging is the solution? 1
Slide 2: Key highlights
Key highlights Strong sales performance Continued high fibre costs 7% NET SALES GROWTH Y/Y Results impacted by start-up effects for KM7 of approx. SEK 190 million Ramp-up of KM7 proceeding according to plan 9% EBITDA MARGIN* Divestment of a majority share of Bergvik Skog Öst, to be completed on 30 A
Slide 3: Long-term competitive wood supply
Long-term competitive wood supply Acquisition of Bergvik Skog Öst on 31 May, negative cash effect SEK 5.4 bn Agreement to divest 89.9% of Bergvik Skog Öst to AMF for approx. SEK 11 bn 15-year wood supply agreement Right to repurchase unless offered extension of supply agreement to current conditions
Slide 4: Ramp-up is proceeding according to plan
Ramp-up is proceeding according to plan Test-runs – February/March KM7 Gruvön Stock on wire – 17 April Paper on pope – 9 June Coating – August Certification material – October 4
Slide 5: Production stability is the key focus
Production stability is the key focus Production availability has been satisfactory Lost production volumes have affected us during the first half of the year Production Excellence Programme (PEX) target to improve OEE* with 4 percentage points by 2020 Programme drives improvements across all mills
Slide 6: A paradigm shift in safety
A paradigm shift in safety All accidents can be prevented Lost time injury frequency rate*, LTIFR Leaders must show the way Internal safety survey has been conducted as part of the furthering of the safety program Focus on structure, engagement and predictability A safe company is a well-run company
Slide 7: Innovations through partnerships for a sustainable future
Innovations through partnerships for a sustainable future 7
Slide 8: Q3 Outlook
Q3 Outlook Market conditions expected to remain good for liquid packaging board and cartonboard Increased uncertainty in the global containerboard market Weaker market conditions in some segments, particularly for brown sack paper Increased price pressure is expected Total cost of fibre expected to
Slide 9: WHAT IF paper packaging is the solution?
TITLE OF PRESENTATION 9 WHAT IF paper packaging is the solution?
Slide 10: Q2 Key financial figures
Q2 Key financial figures Q2 Q2 SEKm 2019 2018 Change Net sales 6 293 5 898 7% EBITDA 579 203 185% Adjusted EBITDA 539 671 -20% Adjusted EBITDA, % 9% 11% Operating profit 194 -174 N/A Adjusted operating profit 154 309 -50% Adjusted operating profit margin, % 2% 5% 10
Slide 11: Continued sales growth – 11th quarter in a row
Continued sales growth – 11th quarter in a row Net sales up 7% Net sales growth, % Sales growth drivers relatively evenly split 10% Currency 9% Sales volume Pricing 7% 5% 5% 5% 5% 5% CAGR = 5% 3% 3% Long-term target = 3-4% 2% Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 Q119 Q219 -2% 11
Slide 12: Continued headwind from raw material costs
Continued headwind from raw material costs Total cost of fibre continued to increase in Q2 Wood Cost Index (WCI*), rolling 12 months Expected to flatten out on current high level 170 Caustic soda prices decreased 160 Back at the same level as in Q4 2017 150 300 MSEK of increased raw material cost vs
Slide 13: Underlying EBITDA growth when taking into account KM7 start-up effects
Underlying EBITDA growth when taking into account KM7 start-up effects KM7 start-up Adj 11% 12% 9% 13 EBITDA%
Slide 14: Division Board
TITLE OF PRESENTATION 14 Division Board Net sales +12% Higher sales volume the key driver EBITDA fell due to higher fibre costs, production disturbances in Gävle and KM7 effects * Comparable figures for 2018 have been restated according to the new division structure 14
Slide 15: Division Paper
Division Paper Net sales flat Pricing and FX offset by negative sales volumes EBITDA fell due to higher cost for fibre and lower volumes with a more unfavorable product mix *Comparable figures for 2018 have been restated according to the new division structure 15
Slide 16: Division Solutions
Division Solutions Net sales -4% Revaluation of customer segment mix Improved results due to higher prices in Packaging Solutions, positive currency effects and good cost control * Comparable figures for 2018 have been restated according to the new division structure 16
Slide 17: Temporarily higher debt ratio than target
Temporarily higher debt ratio than target Net debt SEK 12,7 billion at the end of June Net debt / EBITDA** 3,9 Acquisition of Bergvik Skog Öst increased the net debt by approx. SEK 5.4 billion 2,9 2,7 Dividend payment of approx. SEK 445 million 2,4 Target: <2.5x 2,2 At completion of the sale of Berg
Slide 18: Long-term financial targets
Long-term financial targets Area FY target Q2 2019 Net sales growth 3-4% 7% EBITDA margin* >17% 9% ROCE* >13% 8% Net debt/EBITDA* <2.5 3.9 Dividend policy* 50% 59%** *Adjusted for items affecting comparability ** Dividend for 2018 18
Slide 19: 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 19
Slide 20: 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