Borregaard Asa · OSL:BRG
Borregaard Asa — Q4 2015 Earnings Presentation
31 slides from Borregaard Asa's earnings presentation, Feb 3, 2016
Slide 1: 4th Quarter 2015
4TH QUARTER 2015 Oslo, 3 February 2016
Slide 2: Agenda
Agenda • Per A Sørlie, President & CEO • Highlights • Proposed dividend • Business areas • Strategic update • Outlook • Per Bjarne Lyngstad, CFO • Financial performance 2
Slide 3: Highlights – 4th quarter 2015
Highlights – 4th quarter 2015 • Strong result in Performance Chemicals • Progress on strategic initiatives to expand the lignin business in North America • Positive development in Fine Chemicals and Ingredients • Favourable FX effects in all business areas • Strong cash flow from operations 3
Slide 4: Highlights – full year 2015
Highlights – full year 2015 • Fifth consecutive year above ROCE target • ROCE 15.6% (16.5%) • EBITA 497 mNOK (486 mNOK) • Good progress on strategic priorities • All time high result in Performance Chemicals • Weaker result for Specialty Cellulose • Improvement in Fine Chemicals and Ingredients • Po
Slide 5: Dividend proposal for 2015
Dividend proposal for 2015 • Borregaard’s dividend policy • To pay regular and progressive dividends reflecting the expected long-term earnings and cash flow of the Group • Annual dividend is targeted between 30% and 50% of net profit • A dividend of NOK 1.50 per share is proposed by the Board of Di
Slide 6: Performance Chemicals markets - Q4
Performance Chemicals markets - Q4 2014 NOK per mtds Gross average sales price1) ‘000 mtds Sales volume1) 2015 6 500 150 125 117 113 6 000 5 744 109 108 107 103 99 100 5 393 5 424 5 459 100 5 500 75 5 000 4 740 50 4 522 4 528 4 385 4 500 25 4 000 0 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1
Slide 7: Performance Chemicals markets - full year
Performance Chemicals markets - full year Volume NOK per mtds Gross average sales price1) ‘000 mtds Sales volume1) High-value % 6 000 Medium-value % 5 500 600 5 500 71% 80% 70% 70% 70% 70% 500 5 000 501 4 539 472 462 60% 400 446 4 500 410 3 953 4 000 300 40% 3 435 3 500 3 258 200 18% 18% 17% 14% 14%
Slide 8: Specialty Cellulose markets - Q4
Specialty Cellulose markets - Q4 2014 NOK per mt Gross average sales price1) ‘000 mtds Sales volume 2015 11 000 50 41,7 10 500 10 176 40 39,1 37,8 37,6 38,4 39,6 34,3 34,5 9 881 10 000 9 660 30 9 500 9 337 9 187 9 065 8 894 20 9 000 8 711 8 500 10 8 000 0 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4
Slide 9: Specialty Cellulose markets - full year
Specialty Cellulose markets - full year Volume NOK per mt Gross average sales price1) ‘000 mtds Sales volume Highly specialised 12 000 300 100% 85% 11 000 250 73% 80% 10 279 67% 63% 9 949 200 57% 10 000 9 546 60% 9 343 9 144 150 149,6 158,0 149,4 153,6 9 000 143,9 40% 100 8 000 20% 50 7 000 0 0% 201
Slide 10: Ingredients and Fine Chemicals markets - Q4
Ingredients and Fine Chemicals markets - Q4 2014 2014 mNOK Ingredients - sales revenues 2015 mNOK Fine Chemicals - sales revenues 2015 100 92 94 80 83 84 82 81 84 79 80 60 60 56 55 56 46 47 60 42 40 40 40 20 20 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 • Ingredients • Fine Chemicals • Challenging market condition
Slide 11: Borregaard portfolio - strategic priorities
Borregaard portfolio - strategic priorities • Growth and specialisation within Performance Chemicals • Increased sales of high-value lignin products • Establish new lignin raw material sources • Develop BALI as a strategic lignin raw material option • Develop the unique biorefinery assets in Sarpsbo
Slide 12: Update on strategic priorities
Update on strategic priorities Growth within Performance Chemicals • Acquisition of the lignin book of business from Flambeau River Papers and entry into raw material supply agreement (40,000 mtds) • Capacity expansion in Borregaard/Sappi JV in South Africa (20,000 mtds in 2017) • Borregaard (55%) a
Slide 13: Outlook
Outlook • Market conditions • The weak business climate in some important markets expected to continue • Strong competition within certain product groups • Currency, including hedging impact, is expected to contribute positively in 2016 • Performance Chemicals • Sales volume in 2016 expected to incr
Slide 14: Financial Performance Q4-15
FINANCIAL PERFORMANCE Q4-15
Slide 15: Borregaard key figures - Q4
Borregaard key figures - Q4 2014 mNOK Operating revenues 2014 mNOK EBITA 2014 % EBITA margin % 2015 2015 2015 20 16,5 1 200 175 13,1 15 165 10,0 9,7 150 160 15,0 1 000 1 069 1 054 10 1 034 12,4 1 007 1 003 993 992 10,4 9,8 951 125 5 131 130 800 100 0 Q1 Earnings Q2 per share NOK 105 101 Q3 Q4 99 600
Slide 16: Borregaard key figures - full year
Borregaard key figures - full year mNOK Operating revenues mNOK EBITA % % ROCE and earning per share NOK 4 500 700 16 25 10 14,0 14,0 4 000 20,5 12,6 4 164 600 12,3 11,9 19,5 3 939 20 8 3 886 3 838 3 500 3 763 12 16,9 16,5 500 539 15,6 528 3 000 497 489 486 400 15 6 2 500 8 2 000 300 10 4 1 500 3,86
Slide 17: Performance Chemicals key figures - Q4
Performance Chemicals key figures - Q4 2014 Operating revenues mNOK Operating revenues 2015 500 515 503 502 488 400 472 467 • Top line growth 14% vs Q4-14 442 441 300 200 • Positive FX impact 100 0 Q1 Q2 Q3 Q4 mNOK 2014 EBITA 2015 125 • Weaker demand in construction and oil sectors 127 100 117 • 4%
Slide 18: Specialty Cellulose key figures - Q4
Specialty Cellulose key figures - Q4 2014 Operating revenues mNOK Operating revenues 2015 400 • Top line growth 2% vs Q4-14 389 384 379 365 300 358 346 338 336 200 • Reduced sales prices and weaker product mix 100 • Positive FX impact 0 Q1 Q2 Q3 Q4 mNOK 2014 EBITA 2015 80 • Reduced sales prices and
Slide 19: Other Businesses key figures - Q4
Other Businesses key figures - Q4 mNOK Operating revenues 2014 2015 Operating revenues 200 199 • Top line 11% above Q4-14 197 183 178 176 175 171 150 158 • Increased sales and improved product mix in 100 Fine Chemicals 50 • Positive FX contribution 0 Q1 Q2 Q3 Q4 mNOK EBITA 2014 • Ingredients: Improv
Slide 20: Currency impact
Currency impact 2014 mNOK Hedging effects on EBITA2) 2015 Borregaard’s currency basket1) 20 130 127,4 2 123,2 125 0 120 116,9 116,0 -3 -20 115 -17 110 107,0 -40 -33 105 99,2 100 -60 -54 -55 -62 95 97,6 96,1 -80 -70 90 Q1 Q2 Q3 Q4 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 • Net FX EBITA impact
Slide 21: Cash flow, capex and NIBD
Cash flow, capex and NIBD mNOK Cash flow operations 1) mNOK Capex NIBD change Increase mNOK 350 Decrease 200 300 334 200 700 250 151 650 5 263 168 14 150 110 21 200 26 600 6 188 199 106 150 550 100 716 100 37 71 500 53 200 624 125 15 158 50 50 450 22 90 0 69 56 400 31 -50 -25 0 350 Q4'14 Q1'15 Q2'15
Slide 22: Q&A
Q&A • Per A Sørlie, President & CEO • Per Bjarne Lyngstad, CFO 22
Slide 23: Appendix
APPENDIX VA Borregaard The Sustainable Biorefinery
Slide 24: Borregaard – Key figures
Borregaard – Key figures Amounts in NOK million Q4-2015 Q4-2014 Change YTD-2015 YTD-2014 Change Operating revenues 1 034 951 9% 4 164 3 939 6% EBITDA (adjusted) 1) 168 157 7% 758 730 4% EBITA (adjusted) 2) 101 92 10 % 497 486 2% Amortisation intangibles -1 0 -1 0 Other income and expenses 37 -30 37
Slide 25: Operating revenues and EBITA per segment
Operating revenues and EBITA per segment Amounts in NOK million Amounts in NOK million Operating revenues Q4-2015 Q4-2014 Change Operating profit - EBITA Q4-2015 Q4-2014 Change Borregaard 1034 951 9% Borregaard 101 92 10 % Performance Chemicals 502 441 14 % Performance Chemicals 98 83 18 % Specialty
Slide 26: Cash flow
Cash flow Amounts in NOK million Q4-2015 Q4-2014 YTD-2015 YTD-2014 Amounts in NOK million Profit before taxes 130 59 506 430 Amortisation, depreciation and impairment charges 75 65 269 244 Change in net working capital, etc 122 136 -106 59 Dividend (share of profit) from JV -12 -2 -14 6 Taxes paid -
Slide 27: Balance sheet
Balance sheet Amounts in NOK million 31.12.2015 30.09.2015 31.12.2014 Assets: Intangible assets 137 89 77 Property, plant and equipment 2 122 2 039 2 004 Other assets 121 80 76 Investments in joint venture 106 103 106 Non-current assets 2 486 2 311 2 263 Inventories 676 600 610 Receivables 838 866 7
Slide 28: Net financial items & net interest-bearing debt
Net financial items & net interest-bearing debt Amounts in NOK million Net financial items Q4-2015 Q4-2014 YTD-2015 YTD-2014 Net interest expenses -5 -6 -22 -28 Currency gain/loss -1 3 -2 4 Other financial items, net -1 0 -3 -2 Net financial items -7 -3 -27 -26 Amounts in NOK million Net interest-be
Slide 29: Currency hedging strategy
Currency hedging strategy Purpose is to delay effects of currency fluctuations and secure competitiveness • Hedging based on expected EBITA 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 abov
Slide 30: Debt, credit facilities and solidity
Debt, credit facilities and solidity Debt and undrawn facilities • Debt and overdraft facilities 31.12.2015 2 750 • Long-term credit facilities 2 500 • 1,500 mNOK revolving 2 250 credit facilities, maturity 2020 2 000 • 400 mNOK 5-year bond issue, 1 750 maturity 2019 1 916 1 500 • 40 mEUR 10-year lo
Slide 31: 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