Billerud Ab · OMXSTO:BILL
Billerud Ab — Investor Presentation (October 2001)
27 slides from Billerud Ab's investor presentation, Oct 15, 2001
Slide 1: Company presentation
- Company presentation - October 15, 2001
Slide 2: Billerud at a glance
Billerud at a glance l Billerud was established in the beginning of 2001 through the merger of Stora Enso’s Gruvön and AssiDomän’s Karlsborg and Skärblacka mills l Billerud is a leading producer within certain niches of kraft paper and containerboard in Europe l Billerud had net sales of SEK 6.7 bil
Slide 3: Billerud – investment considerations
Billerud – investment considerations l Strong market position – Leading positions in attractive segments l Competitive production – Well invested mills – Economies of scale – Integrated production – Profit improvement from optimisation of production and past investments l Significant pay-out to shar
Slide 4: Billerud is a leading European packaging paper producer
Billerud is a leading European packaging paper producer 90 million tonnes 33 million tonnes Kraft Paper – 3 million tonnes White sack 28% of world market 34% of world market paper 8% Coated 100% MG/MF Kraft paper Brown sack 13% Newsprint paper 90% 37% Uncoated MF 80% 7% Printing 70% and Writing Unco
Slide 5: Examples of products
Examples of products Kraft paper Containerboard Sid 5
Slide 6: Market position
Market position l Half of Billerud’s sales are in product segments where the company has a no 1 or no 2 position in Europe l In Kraft papers, Billerud is the largest supplier of uncoated MG/MF paper and of white sack paper l In containerboard, Billerud has a strong position in certain niche segments
Slide 7: Competitive landscape - Kraft paper
Competitive landscape - Kraft paper Technical kraft paper Sack paper European capacity (1 000 tonnes) European capacity (1 000 tonnes) Billerud Billerud UPM-Kymmene Ahlström Korsnäs Cham-Tevero Cartiera Lucchese UPM-Kymmene Mondi Europe Papel Aralar Mondi/Frantschach Sappi Alfeld 0 100 200 300 400 5
Slide 8: Competitive landscape - Container board
Competitive landscape - Container board S/C fluting European capacity (1 000 tonnes) Billerud Stora Enso M-real La Rochette Venizel Kappa packaging 0 50 100 150 200 250 300 350 400 S/C fluting virgin fibre S/C fluting partly recycled fibre Source : Jaakko Pöyry Sid 8
Slide 9: Competitive production
Competitive production l Well invested mills – SEK 4 billion invested during 1996–2000 (3.5× depreciation) increasing capacity and quality l Economies of scale l Integrated pulp and paper production creates cost advantage l Profit improvement SEK 200 million (~3% of sales) from optimisation of produ
Slide 10: Production facilities
Production facilities Gruvön Skärblacka Karlsborg Total Containterboard 370 000 90 000 - 460 000 Capacity 490 000 Kraft paper 175 000 205 000 110 000 (tonnes) Market pulp 85 000 80 000 165 000 330 000 Number of employees 1 090 750 500 2 340 l Billerud has invested SEK 4 024 million in the production
Slide 11: Significant pay-out to shareholders
Significant pay-out to shareholders Strong profitability l Strong market positions l Competitive production Strong cash flow enables significant pay-out to shareholders Disciplined capital expenditure Sid 11
Slide 12: Financial objectives
Financial objectives l Financial targets – Average return on capital employed over a business cycle ≥15 percent (based on average historical exchange rates and trend prices) – Debt/equity ratio over a business cycle: 0.6–0.9 – Investments in line with depreciation l Pay-out ratio – 50 percent over a
Slide 13: Strategy
Strategy Products Financial targets Customers Productivity Sid 13
Slide 14: Segment positioning for product portfolio
Segment positioning for product portfolio l All product segments where Billerud is a supplier have been judged regarding market attractiveness and Billerud’s position in the segment l As a conclusion, the segments are divided into three groups (see next page), each with a different strategy l The st
Slide 15: Product strategy
Product strategy – Uncoated MG Market leader with – Uncoated MF profitable growth – Coated MG/MF – White liner High profitability by strong market – White sack paper position in niche – S/C fluting, virgin fibre segments – S/C fluting, partly recycled fibre – Brown sack paper Retain asset quality. –
Slide 16: Distribution of sales
Distribution of sales Proforma sales per product area, Proforma EBIT per product area, Jan–Jun, 2001 Jan–Jun, 2001 Market Market pulp pulp 22% 23% Kraft Kraft paper paper 50% 50% Container- Container- board board 28% 27% Sid 16
Slide 17: Key P&L figures
Key P&L figures 7 000 30% 6 000 25% 5 000 20% 4 000 MSEK 15% Net turnover 3 000 EBITDA margin 10% EBIT margin 2 000 1 000 5% 0 0% 1996 1997 1998 1999 2000 2000 6m 2001 6m Return on capital employed 5% 12% 9% 7% 30% 22% 34% Sid 17
Slide 18: Key balance sheet figures June, 2001
Key balance sheet figures 30 June, 2001 7 000 6 000 Fixed assets Equity 5 000 4 000 MSEK 3 000 Interest-bearing liabilities 2 000 Inventory 1 000 Other current Non-interest-bearing assets liabilities 0 Assets Equity and liabilities Debt/equity ratio, times 0.8 Equity/Asset ratio, % 41 Sid 18
Slide 19: Profit & loss accounts
Profit & loss accounts Proforma Actual (MSEK) 1996 1997 1998 1999 2000 2001 6m Net turnover 5 210 5 363 5 462 5 387 6 666 3 582 EBITDA 278 584 559 569 1 686 961 margin 5% 11% 10% 11% 25% 27% EBIT 131 386 317 309 1 384 788 margin 3% 7% 6% 6% 21% 22% Net profit - - - - 903 525 Sid 19
Slide 20: Balance sheets
Balance sheets Proforma Actual (MSEK) Jan 1, 2001 Jun 30, 2001 Fixed assets 4 257 4 282 Inventories 633 676 Account receivables 1 064 1 209 Other current assets 176 139 Cash, bank balances and short term investments 729 331 Total assets 6 859 6 637 Shareholders´equity 2 224 2 749 Interest-bearing pr
Slide 21: Key figures
Key figures Proforma Actual (MSEK) 1996 1997 1998 1999 2000 2000 6m Margins Gross margin, % 5 11 10 11 25 27 EBIT marginal, % 3 7 6 6 21 22 Return Return on capital employed, % 5 12 9 7 30 34 Return on equity, % - - - - 41 42 Capital structure Capital employed 2 908 3 473 3 960 4 452 4 828 4 853 Cap
Slide 22: Currency rates
Currency rates Jan-Sep Jan-Sep Oct 5 1998 1999 2000 2000 2001 2001 Trend SEK/USD 7.95 8.26 9.17 8.92 10.25 10.63 7.95 SEK/EUR 8.93 8.80 8.44 8.39 9.17 9.74 8.67 SEK/GBP 13.17 13.37 13.86 13.72 14.75 15.71 - EUR/USD 1.12 1.07 0.92 0.95 0.90 0.92 1.09 Billerud weighted index 100 100 101 100 111 117 98
Slide 23: Currency exposure
Currency exposure l Approximately 80% of costs in SEK l Approximately 75% of sales in foreign currencies l Limited translation exposure Currency Share of sales, 2000 Euro 40% SEK 25% USD 20% GBP 5% Other 10% Total 100% Sid 23
Slide 24: Write downs
Write downs l During 1998-2000, Billerud have made write downs of SEK 1.4 billion l Gruvön – SEK 400 million during 1998 – SEK 600 million during 2000 l Skärblacka – SEK 394 million during 1999 Sid 24
Slide 25: Organisation
Organisation CEO and President Finance and IR Technology Personnel and Information Market Paper Market Pulp Gruvön mill Kraft paper Containerboard Karlsborg mill Sales subsidiaries and offices Skärblacka mill Sid 25
Slide 26: Sales organisation
Sales organisation Paper mills Proforma sales per market, 2000 Produtkionsanlägging Försäljningsbolag Sales offices Produtkionsanlägging Försäljningsbolag 13% 16% 7% Sweden Other EU countries Rest of Europe Rest of the world 64% Sid 26
Slide 27: Executive summary
Executive summary Strong market position Leading positions in key attractive segments • Uncoated MG • Uncoated MF • White sack paper • S/C fluting • White liner Competitive production Significant pay-out to shareholders Attractive cost position through Strong cash flow through • Well invested mills