Billerud Ab · OMXSTO:BILL
Billerud Ab — BillerudKorsnäs — Exane BNP Paribas, Basic Material Conference 2019
37 slides from Billerud Ab's conference presentation, Mar 26, 2019
Slide 1: WHAT IF packaging could make a difference?
WHAT IF packaging could make a difference? March 26, 2019 Exane BNP Paribas, Basic Material Conference KM7 Gruvön, January 2019
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 Skärblac
Slide 9: On schedule towards start-up March-April
On schedule towards start-up March-April Stock on wire Civil EBITDA Machine Machine run Apr – Second grade Construction May – Liner Neutral 2021 Assembled with water Finalised* Oct - Certification material Oct - Inauguration 240 ktonnes 390 ktonnes Ramp-up Dec Feb Mar Apr Dec Dec 2023 2018 2019 2019
Slide 10: Strategically important agreement
Strategically important agreement Finding suitable investors continuing as planned The strongly competitive situation continues Wood costs expected to flatten out Sufficient inventory levels after a challenging year Ongoing activities to strengthen the supply base – both domestic and through import
Slide 11: A paradigm shift in safety
A paradigm shift in safety All accidents are preventable Lost time injuries frequency rate, LTIFR* Focus on structure, engagement and predictability 7,7 7,2 Cultural changes – never walk by A safe company is a well run company -25% CAGR Next generation program LTIFR* ~ 5 1,5 2017 2018 Target 2023 *N
Slide 12: Production stability is a key focus
Production stability is a key focus Production levels in line with expectations ktonnes ~2 900 2 830 2 834 2 835 2 720 ~50 2 687 2 604 2013 2014 2015 2016 2017 2018 2019 Lost volumes from wood shortage
Slide 13: Innovation to support growth
Innovation to support growth FibreForm® Cap, made New product ratio, NPR from formable 3D paper, 15 replaces traditional aluminium laminates for sparkling wine 7 6,3 2017 2018 Target 2023
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 2018 2023 ~850 SEK million MANAGED PACKAGING 15-25% CAGR
Slide 16: New organisation and management team in place
New organisation and management team in place CEO Petra Einarsson Innovation CTO Magnus Wikström Ulf Eliasson CFO HR Ivar Vatne Paulina Ekvall Legal Communication Andreas Mattsson Christopher Casselblad Division Division Division Paper Board Solutions Helene Biström Mikael Andersson Anders Lundin
Slide 17: 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 18: Next Generation investment programme
Next Generation investment programme
Slide 19: 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 5 100 KM7: ~7 600 SEK million 5 000 Civil and construction completed Start-up March-April 4 000 3 000 2 900 2 000 1 000 0 2015 2016 2017 2018 2019 2020 2021 2022 Base
Slide 20: Next generation supported by strong market demand
Next generation 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-
Slide 21: 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 22: 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 23: 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 24: Year-End Report January - December 2018
YEAR-END REPORT January - December 2018
Slide 25: Key highlights
Key highlights Production levels in line with expectations 5% Continued headwind from higher raw material costs NET SALES GROWTH Y/Y Renewed long-term contracts within Liquid Packaging Board KM7 progressing according to plan, start-up in March/April 2019 14% EBITDA MARGIN* Bergvik Öst; process of fi
Slide 26: Record full year results
Record full year results PACKAGING PAPER Q4 DEVELOPMENT Net sales + 5% vs Q4-17 Increased sales prices Positive currency effects 2,264 NET SALES SEK MILLION EBITDA + 2% vs Q4-17 Better product mix 411 EBITDA SEK MILLION Market expected to remain good Kraft and sack paper to remain good in next quart
Slide 27: Renewed agreements
Renewed agreements CONSUMER BOARD Q4 DEVELOPMENT EBITDA -20% vs Q4-17 Increased raw material costs Unchanged prices 2,012 NET SALES SEK MILLION The long-term agreements with our largest customers within liquid packaging board have been renewed, which will have 290 EBITDA SEK MILLION positive effects
Slide 28: Strong result
Strong result CORRUGATED SOLUTIONS Q4 DEVELOPMENT Net sales +15% vs Q4-17 Increased sales prices Positive currency effects 1,161 NET SALES SEK MILLION Slightly increased volumes EBITDA +31% vs Q4-17 Increased sales prices and higher result for 278 EBITDA SEK MILLION Managed Packaging Market expected
Slide 29: Solid underlying top-line growth
Solid underlying top-line growth Net sales +5% compared with Q4 2017 Net sales, SEKm 5 843 Increased sales price within Packaging 5 565 Paper and Corrugated Solutions Positive currency effects Negative effect in Q4 from lower sales volumes due to seasonal fluctuations and inventory build-up Q4 Q1 Q2
Slide 30: Continued headwinds from higher raw material costs
Continued headwinds from higher raw material costs *Transport, energy and fixed costs
Slide 31: Wood cost increase expected to flatten out
Wood cost increase expected to flatten out Costs for pulpwood continued to increase in Q4 Wood Cost Index (VKI) ~ +25% 2018 160 150 Caustic soda flattening out on high levels 140 130 ~ +20% 2018 120 110 2015 2016 2017 2018 Caustic soda (€/dmt) 800 700 600 500 400 2015 2016 2017 2018
Slide 32: Next Generation program close to completion
Next Generation program close to completion Net debt expected to peak in Q2 2019 Net debt / EBITDA Clear focus on fast deleveraging after 3 2,7 completion of investment programmes 2,4 2,5 Target: <2.5x 2,2 Net debt MSEK 9 333 (5 737) 2 1,5 1,6 Finding suitable investors for Bergvik Öst 1,5 1,4 1,4 1
Slide 33: Long-term financial targets
Long-term financial targets Area FY target Full year 2018 Net sales growth 3-4% 6% EBITDA-margin* >17% 15% ROCE* >13% 9% Net debt/EBITDA* <2.5 2.68 Dividend policy* 50% 59%** *Adjusted for items affecting comparability ** Board’s proposal
Slide 34: Outlook 2019
Outlook 2019 Focus on safeguarding price levels achieved during 2018 Wood cost increase expected to flatten out
Slide 35: Summary
Summary Production levels in line with expectations Continued headwind from higher raw material costs Renewed long-term contracts within Liquid Packaging Board KM7 progressing according to plan, start up in March/April 2019 Bergvik Öst; process of finding suitable investors continues as planned Pro
Slide 36: WHAT IF more packaging cared about the planet
WHAT IF more packaging cared about the planet
Slide 37: 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
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