Stora Enso Oyj Class A · OMXHEX:STEAV
Stora Enso Oyj Class A — Q1 2020 Earnings Presentation
36 slides from Stora Enso Oyj Class A's earnings presentation, Apr 22, 2020
Slide 1: Financial results for Q1 2020
Financial results for Q1 2020 Strengthening our resilience for the headwinds Investor presentation 22 April 2020
Slide 2: Disclaimer
Disclaimer It should be noted that Stora Enso and its business are exposed to various risks and uncertainties and certain statements herein which are not historical facts, including, without limitation those regarding expectations for market growth and developments; expectations for growth and profi
Slide 3: Better than expected quarter, supported by Packaging Materials and Forest
Better than expected quarter, supported by Packaging Materials and Forest Q1 2020 year-on-year • Sales decreased by 16% to 2 207 (2 635) MEUR • Operational EBIT decreased to 180 (335) MEUR • The profit protection programme savings target has been increased to 350 MEUR (275 MEUR) by end of 2021 • Cas
Slide 4: Fighting Covid-19 by strengthening our resilience
Fighting Covid-19 by strengthening our resilience • Health and safety of our employees is a key priority • Early proactive measures − Minimised impact on running our operations − Secured our ability to serve our customers − Active management of cash, cost and working capital − CAPEX forecast reduced
Slide 5: Increased profit protection programme to 350 MEUR continuous and 85 MEUR one-time savings
Increased profit protection programme to 350 MEUR continuous and 85 MEUR one-time savings 30 MEUR continuous and 10 MEUR one-time savings in Q1 MEUR Group continuous annual savings Continuous savings per division 160 30% 140 25% 120 100 20% 80 15% 60 10% 40 5% 20 0 0% 2019 2020 2021 Packaging Packag
Slide 6: Strong liquidity and good access to funding sources
Strong liquidity and good access to funding sources • Actions to secure liquidity: − 756 MEUR cash and cash equivalents at the end of Q1 2020 − 600 MEUR committed revolving credit facility fully undrawn − 400 MEUR additional funding facilities through bilateral arrangements agreed and signed early A
Slide 7: Capex raised temporarily above depreciation
Capex raised temporarily above depreciation Biological capex Strategic capex Maintenance capex Capex estimate for 2020 Oulu Mill kraftliner conversion Depreciation and operational decrease in the value of biological assets Capex for 2019 and estimate for 2020 include the capitalised leasing contract
Slide 8: Annual General Meeting on 4 June 2020
Annual General Meeting on 4 June 2020 • New dividend proposal EUR 0.15 per share • The Board of Directors (BOD) proposes to 0.35** the AGM that the BOD be authorised to decide, at its discretion, on a dividend payment of a maximum of up to EUR 0.35 per share, to be distributed in one or several inst
Slide 9: Focusing on margin and cash flow
Focusing on margin and cash flow Summary financials Q1 2020 Change% Change% Q1/20- Q1/20- MEUR Q1/20 Q1/19 Q1/19 Q4/19 Q4/19 Sales 2 207 2 635 -16.2% 2 411 -8.5% Operational EBITDA 335 484 -30.8% 277 20.8% Operational EBITDA margin 15.2% 18.4% 11.5% Operational EBIT 180 335 -46.3% 124 45.0% Operatio
Slide 10: Development of strategic financial targets
Development of strategic financial targets Group strategic financial targets Q1 19 Q1 20 Dividend* To distribute 50% of EPS over the cycle 0.50 0.15**/0.35*** Growth**** To grow faster than the relevant market 3.6% (YoY) -13.8% (YoY) Net debt to operational EBITDA <2.0x 1.6 2.3 Fixed costs to sales
Slide 11: Guidance and outlook is discontinued due to exceptional uncertainty
Guidance and outlook is discontinued due to exceptional uncertainty Stora Enso is discontinuing its quarterly guidance and annual outlook until further notice, due to exceptional uncertainty in the global economy. The current situation has accelerated the structural demand decline for paper and the
Slide 12: Strengthening our resilience for the headwinds
Strengthening our resilience for the headwinds • Better than expected quarter, supported by Packaging Materials and Forest • The Covid-19 pandemic creates exceptional uncertainty − Mixed demand for our different products − Only minor disturbances on our operations so far • Strengthening our resilien
Slide 13: Everything that's made from fossil-based materials today can be made from a tree tomorrow
Everything that’s made from fossil-based materials today can be made from a tree tomorrow. 13 22 April 2020 Stora Enso
Slide 14: Substituting materials from finite resources is our key competitive advantage
Substituting materials from finite resources is our key competitive advantage Our total climate benefit: Our products substitute 12 fossil-based products, saving Mt CO2 20 Mt CO2 Resource efficient value chain, Our forests are carbon emissions: neutral and absorb 11 Mt CO2 3 Mt CO2 14 22 April 2020
Slide 15: The new divisional structure strengthens our strategy execution
The new divisional structure strengthens our strategy execution Growth Cash Packaging Materials Packaging Solutions Biomaterials Paper Consumer board and Corrugated packaging No changes No changes containerboard business together with recently created formed fiber unit Wood Products Forest No change
Slide 16: We continue building on our strengths and making choices in our innovation portfolio
We continue building on our strengths and making choices in our innovation portfolio Our portfolio gives us Customer centricity and Innovations for growth pole position to make choices ecosystem of partners support offer climate positive alternatives for future growth growth and innovation for fossi
Slide 17: Accelerating renewable growth with new products and services
Accelerating renewable growth with new products and services Lignin batteries Next generation Future bio-based liquid and food chemicals packaging R&D expenditure in 2019 EUR 141 million High-quality Bio barriers containerboards In 2019 7% of our sales came from new products Value added and services
Slide 18: Examples of new products already in commercial use
Examples of new products already in commercial use Trayforma Biodegradable straw Paperboard for trays with Sulapac for food packaging To combat the global 64% lower carbon footprint problem of plastic waste than plastic trays Cupforma Natura Solo™ DuraSense Renewable paperboard Biocomposites for pap
Slide 19: 25% of plastics in packaging can be replaced today
25% of plastics in packaging can be replaced today Plastics packaging substitution potential Mt plastic packaging, net potential Source: Material Economics 2018 19 22 April 2020 Stora Enso
Slide 20: Accelerating the replacement of fossil-based materials
Accelerating the replacement of fossil-based materials • 10 MEUR investment to build a pilot facility for producing bio-based carbon materials based on lignin • Wood-based carbon utilised as a crucial component in batteries • Applications: consumer electronics, the automotive industry and large- sca
Slide 21: The transformation will show in the company structure
The transformation will show in the company structure 38% 22% from cash from cash business business Net sales split Net sales split after Oulu Mill in 2014 conversion* 62% 78% from growth from growth businesses businesses *Estimated net sales after fully ramped up production in Oulu Mill 21 22 April
Slide 22: Oulu paper mill is converting to packaging board as planned
Oulu paper mill is converting to packaging board as planned Reducing our paper capacity by 20% Kraftliner global demand (mt) • 450 000 t/a high-quality virgin-fibre-based kraftliner 45 +8 080kt 40 Global CAGR 2% • 530 000 t/a unbleached softwood pulp 35 • Expected to meet Packaging Material’s operat
Slide 23: We are one of the largest private forest owners in the world
We are one of the largest private forest owners in the world Total biological asset value in balance sheet ~ 4.3 BEUR Swedish forests Tornator 1 408 000 ha of forest land Stora Enso’s share 255 000 ha in Finland, 27 000 Fair value: 3.1 BEUR (31 Mar 2020) ha in Estonia and 5 000 ha in Romania Fair va
Slide 24: Forest fair valuation
Forest fair valuation Productive Price per Value land (ha) ha (EUR) (BEUR)* Forest holdings in Sweden 1 140 000 3 020 3.4 Forest holdings in Finland 262 000 2 960 0.8 Forest holdings in plantations 220 000 3 230 0.7 Total forest holdings 1 622 000 3 040 4.9 Productive Price per ha Value land (ha) (E
Slide 25: Despite of short-term challenges, demand for pulp is expected to grow 2% on long term
Despite of short-term challenges, demand for pulp is expected to grow 2% on long term Textiles, nonwovens Hygiene Pulp consumption increase (Mt) 107 Mt market, growing 3%/y 590 billions of converted unit, growing 3.5%/y 6.8 Mt market pulp (dissolving) 6.2 Mt market pulp (fluff) 8 6 Carton board Pape
Slide 26: First steps of moving towards a more specialised pulp mix visible
First steps of moving towards a more specialised pulp mix visible Market pulp forecast for rolling 12 months Pulp sensitivity analysis (Q2/20-Q1/21) 10% change in prices, impact on operational EBIT 10% increase in Positive impact* 48% 45% Hardwood pulp** prices 50 MEUR Softwood pulp prices 30 MEUR F
Slide 27: Strengthening our resilience for the headwinds
Strengthening our resilience for the headwinds • Better than expected quarter, supported by Packaging Materials and Forest • The Covid-19 pandemic creates exceptional uncertainty − Mixed demand for our different products − Only minor disturbances on our operations so far • Strengthening our resilien
Slide 28: Power of a tree
POWER OF A TREE Creating value in the bioeconomy 28 22 April 2020 Stora Enso
Slide 29: The renewable materials company
THE RENEWABLE MATERIALS COMPANY
Slide 30: Focusing on margin and cash flow
Focusing on margin and cash flow Summary financials Q1 2020 Change% Change% Q1/20- Q1/20- MEUR Q1/20 Q1/19 Q1/19 Q4/19 Q4/19 Sales 2 207 2 635 -16.2% 2 411 -8.5% Operational EBITDA 335 484 -30.8% 277 20.8% Operational EBITDA margin 15.2% 18.4% 11.5% Operational EBIT 180 335 -46.3% 124 45.0% Operatio
Slide 31: Packaging Materials
Packaging Materials Strong demand continues in liquid, food and pharma Q1 y-o-y • Sales decreased by 8% to 764 MEUR − Lower containerboard prices − Lower board deliveries in Europe due to the Finnish paper union strike • Operational EBIT decreased by 3 MEUR to 95 MEUR − Top line impact only partly o
Slide 32: Packaging Solutions
Packaging Solutions Stable demand for e-commerce and food Q1 y-o-y • Sales decreased by 17% to 149 MEUR from last year’s record high Q1 level • Covid-19 impact on China Packaging but back in full operation since March − Lower box prices in Europe due to decreased raw material prices • Operational EB
Slide 33: Biomaterials
Biomaterials Mixed demand for different pulp end uses Q1 y-o-y • Sales decreased by 28% to 286 MEUR from last year’s record high level • Significantly lower pulp prices − Lower volumes due to the Finnish paper union strike − Weak demand for graphical paper end uses − Strong demand for tissue, hygien
Slide 34: Wood Products
Wood Products Satisfactory performance during a challenging quarter Q1 y-o-y • Sales decreased by 16% to 338 MEUR − Lower classic sawn prices − Lower deliveries due to the Finnish union strike and lower demand • Operational EBIT decreased by 11 MEUR from last year’s record high Q1 level to 18 MEUR −
Slide 35: Forest
Forest Managing a challenging business environment Q1 y-o-y • Sales decreased -16% to 542 MEUR − Difficult harvesting conditions due to mild winter − Clearly lower deliveries due to the Finnish paper union strike • Operational EBIT increased by 11 MEUR to 44 MEUR − Improved profitability from own fo
Slide 36: Paper
Paper Accelerating structural decline in demand Q1 y-o-y • Sales decreased by 22% to 591 MEUR mainly due to Finnish strike − Oversupplied paper market impacted deliveries and prices negatively − Dawang paper mill divestment impact -12 MEUR • Operational EBIT decreased by 48 MEUR to 21 MEUR − Top lin