Borregaard Asa · OSL:BRG
Borregaard Asa — Q2 2019 Earnings Presentation
30 slides from Borregaard Asa's earnings presentation, Jul 16, 2019
Slide 1: 2nd Quarter 2019
2 ND Q UA R T E R 2 0 1 9 Oslo, 16 July 2019
Slide 2: Agenda
Agenda • Per A Sørlie, President & CEO • Highlights • Business areas • Projects update • Outlook • Per Bjarne Lyngstad, CFO • Financial performance 2
Slide 3: Highlights – 2nd quarter 2019
Highlights – 2nd quarter 2019 • EBITA adj.1 179 mNOK (164 mNOK) • Favourable product mix for Performance Chemicals • Higher wood costs affecting Speciality Cellulose • Continued strong improvement in Ingredients • Positive net currency impact 1 Alternative performance measure, see Appendix for defin
Slide 4: Performance Chemicals markets – Q2
Performance Chemicals markets – Q2 2018 NOK per mtds Average gross sales price1 ‘000 mtds Sales volume1 2019 6 500 150 122 125 122 125 114 116 6 000 107 5 608 5 444 100 5 500 5 227 5 125 5 022 75 4 943 5 000 50 4 500 25 4 000 0 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q1 Q2 Q3 Q4 • Favourable product mix
Slide 5: Speciality Cellulose markets – Q2
Speciality Cellulose markets – Q2 2018 NOK per mt Average gross sales price1 ‘000 mt Sales volume 2019 11 500 50 42,4 40,0 39,1 11 000 40 37,7 10 645 34,5 33,2 10 473 10 485 10 439 10 500 30 10 105 10 179 10 000 20 9 500 10 9 000 0 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q1 Q2 Q3 Q4 • Slightly lower pri
Slide 6: Ingredients & Fine Chemicals markets – Q2
Ingredients & Fine Chemicals markets – Q2 2018 2018 mNOK Ingredients - sales revenues 2019 mNOK Fine Chemicals - sales revenues 2019 146 150 139 138 100 125 116 113 80 104 73 75 65 100 54 55 50 75 50 50 25 25 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 • Ingredients • Fine Chemicals • High sales prices for wood bas
Slide 7: Capacity increase for wood based vanillin
Capacity increase for wood based vanillin • Capacity increase at least 250 tonnes • Part of the increase will be realised before end 2019 • Construction to start H2-19, completion H1-21 • Debottlenecking of existing facility • Capex 130 mNOK 7
Slide 8: Increased utilisation of residuals as bioenergy
Increased utilisation of residuals as bioenergy • Residuals from production processes at the Sarpsborg site are used as bioenergy • Removal of water and salts before burning will increase efficiency and capacity • Investment cost 131 mNOK, support from Enova mNOK 46,2 (net capex mNOK 85) • Completio
Slide 9: Norway lignin upgrade/logistics projects
Norway lignin upgrade/logistics projects Sarpsborg upgrade/specialisation • Additional dryer with packaging capacity • Improved solution for logistics of liquid materials • Capex ≈10% below 500 mNOK budget • Annual cost savings > 40 mNOK, gradual realisation from 2020 • Several further benefits • In
Slide 10: Restructuring of German lignin operation
Restructuring of German lignin operation • Drying capacity utilised for balancing liquid volumes from Norway and other European sources Sales Office Düsseldorf • Increased drying capacity in Norway reduces the need for drying in Germany • Operation will be aligned with future needs Plant • Reduced l
Slide 11: Outlook
Outlook • Performance Chemicals • 2019 sales volume forecast to increase by ≈5% • Continued strong competition and price pressure for lignin products to concrete admixtures expected to be compensated by diversification and specialisation • Fixed costs and depreciation for the Florida plant expected
Slide 12: Financial Performance Q2-19
FINANCIAL PERFORMANCE Q2-19
Slide 13: Borregaard key figures – Q2
Borregaard key figures – Q2 2018 mNOK Operating revenues 2018 mNOK EBITA adj.1 2018 % EBITA adj. margin1 2019 2019 2019 20 14,5 1 500 200 13,7 12,6 15 1 250 10 13,4 7,7 179 1 340 177 12,6 1 250 164 150 1 219 1 217 1 199 157 5 1 150 1 000 145 0 750 100 NOK Q1 Earnings Q2 per share Q3 Q4 6 Cumulative
Slide 14: Performance Chemicals key figures – Q2
Performance Chemicals key figures – Q2 mNOK 2018 Operating revenues 600 2019 618 500 600 571 • Revenues 8% above Q2-18 559 555 552 400 300 • 2% higher sales volume 200 100 • Positive net FX impact 0 Q1 Q2 Q3 Q4 mNOK 2018 125 2019 • Favourable product mix 100 • Higher fixed costs and depreciation for
Slide 15: Speciality Cellulose key figures – Q2
Speciality Cellulose key figures – Q2 mNOK 2018 Operating revenues 500 2019 482 400 • Revenues 13% above Q2-18 434 427 427 392 381 300 200 • High sales volume 100 • Positive FX effects 0 Q1 Q2 Q3 Q4 mNOK 2018 80 76 2019 • Increased wood costs • High sales volume EBITA adj.1 60 67 64 • Improved, but
Slide 16: Other Businesses key figures – Q2
Other Businesses key figures – Q2 mNOK 2018 300 274 2019 250 Operating revenues 256 253 239 223 200 212 150 • Revenues 21% above Q2-18 100 • Higher sales in Ingredients 50 0 Q1 Q2 Q3 Q4 mNOK 2018 40 2019 • Ingredients: Ingredients Strong result from higher sales prices for wood based vanillin and a
Slide 17: Currency impact
Currency impact 2018 mNOK Hedging effects2 on EBITA adj.1 2019 Borregaard’s currency basket3 10 106 104,4 104,7 5 3 104 102,8 0 102 -1 100,8 -5 -6 100 -10 -7 98,8 -8 97,6 98 -15 -13 -20 96 Q1 Q2 Q3 Q4 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 • Net FX EBITA adj.1 impact +30 mNOK vs Q2-18 • Includes change
Slide 18: Cash flow, investments and NIBD
Cash flow, investments and NIBD Increase mNOK Cash flow from operations1 mNOK Investments mNOK NIBD1 change Decrease 300 250 1 700 213 27 43 1 600 250 272 187 185 200 24 246 1 500 200 146 224 150 1 400 123 150 176 111 1 300 1 627 136 146 100 47 92 283 127 189 1 200 1 379 100 91 1 100 50 81 50 74 76
Slide 19: Q&A
Q&A • Per A Sørlie, President & CEO • Per Bjarne Lyngstad, CFO 19
Slide 20: Appendix
APPENDIX Borregaard The Sustainable Biorefinery
Slide 21: Borregaard – key figures
Borregaard – key figures Amounts in NOK million Q2-2019 Q2-2018 Change YTD-2019 YTD-2018 Change Operating revenues 1 340 1 199 12 % 2 590 2 416 7% EBITDA adj. 1 283 239 18 % 538 491 10 % EBITA adj. 1 179 164 9% 336 341 -1 % Amortisation intangible assets -1 -1 -2 -2 1 Other income and expenses -16 0
Slide 22: Effects of IFRS 16 Leases – 1st half of 2019
Effects of IFRS 16 Leases – 1st half of 2019 INCOME STATEMENT (mNOK) OTHER KEY FIGURES AND RATIOS IAS 17 IFRS 16 Change IAS 17 IFRS 16 Change 1 1 EBITDA adj. 506 538 32 EBITDA adj. margin 19,6 % 20,8 % 1,2%-p 1 Depreciation -173 -202 -29 EBITA adj. margin 12,9 % 13,0 % 0,1%-p 1 EBITA adj. 333 336 3
Slide 23: Operating revenues and EBITA adj. per segment
Operating revenues and EBITA adj.1 per segment Amounts in NOK million Amounts in NOK million 1 Operating rev enues Q2-2019 Q2-2018 Change EBITA adj. Q2-2019 Q2-2018 Change Borregaard 1 340 1 19 9 12 % Borregaard 179 164 9% Performance Chemicals 618 571 8% Performance Chemicals 107 102 5% Speciality
Slide 24: Cash flow
Cash flow Amounts in NOK million Q2-2 01 9 Q2- 20 18 YTD- 20 19 YTD-2 018 FY-2 01 8 Amounts in NOK million Profit before taxes 140 159 281 328 562 Amortisation, depreciation and impairment charges 105 76 204 152 327 Change in net working capital, etc -91 7 -219 -135 -194 Dividend (share of profit) f
Slide 25: Balance sheet
Balance sheet Amounts in NOK million 30.6.2019 31.3.2019 31.12.2018 Assets: Intangible assets 92 95 100 Property, plant and equipment 4 102 3 875 3 623 Other assets 225 230 230 Investment in joint venture 100 98 100 Non-current assets 4 519 4 298 4 053 Inventories 907 908 856 Receivables 1 092 1 081
Slide 26: Net financial items & net interest-bearing debt
Net financial items & net interest-bearing debt1 Amounts in NOK million Net financial items Q2- 2019 Q2-2018 YTD- 2019 YTD-2018 Net interest expenses -18 -5 -31 -9 Currency gain/loss -3 2 -5 0 Other financial items, net -1 -1 -1 -2 Net financial items - 22 -4 - 37 -11 Amounts in NOK million 1 Net in
Slide 27: Currency hedging strategy
Currency hedging strategy Purpose is to delay effects of currency fluctuations and secure competitiveness • Hedging based on expected EBITA adj. impact1 • Base hedge: 75%/50% on a rolling basis for 6/9 months for major currencies • Extended hedge: 75%/50% of the next 24/36 months if USD and EUR are
Slide 28: Credit facilities, solidity and debt
Credit facilities, solidity and debt Debt and undrawn facilities • Long- Long-term credit facilities 30.6.2019 • 1,500 mNOK revolving credit facilities, maturity 2021 3 500 • 400 mNOK 5-year bond issue, maturity 2023 3 250 3 000 • 40 mEUR 10-year loan, maturity 2024 2 750 • 60 mUSD term loan for LT
Slide 29: Alternative performance measures
Alternative performance measures In the discussion of the reported operating results, financial position and cash flows, Borregaard refers to certain measures which are not defined by generally accepted accounting principles (GAAP) such as IFRS. Borregaard management makes regular use of these non-G
Slide 30: Important notice
Important notice This presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated (’relevant persons’). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. This presentation does n