Stora Enso Oyj Class A · OMXHEX:STEAV
Stora Enso Oyj Class A — Goldman Sachs presentation 2013
37 slides from Stora Enso Oyj Class A's conference presentation, May 21, 2013
Slide 1: Stora Enso transformation
Stora Enso transformation Ulla Paajanen-Sainio, SVP, Head of Investor Relations 21 May 2013
Slide 2: and profitability; and statements preceded by “believes”, “expects”, “anticipates”, “foresees”, or similar by the
It should be noted that certain statements herein which are not historical facts, including, without limitation those regarding expectations for market growth and developments; expectations for growth and profitability; and statements preceded by “believes”, “expects”, “anticipates”, “foresees”, or
Slide 3: Products
Products Stora Enso presentation 21 May 2013 3
Slide 4: Stora Enso portfolio
Stora Enso portfolio Q1 2013 Group Sales, EUR 2 667 million Operational EBIT, EUR 118 million Printing and Reading Biomaterials Building and Living Renewable Packaging Other 1% 2% 19% 19% 31% 42% 6% 17% 10% 58% Stora Enso presentation 21 May 2013 4
Slide 5: Stora Enso's strategy
Stora Enso’s strategy Stora Enso presentation 21 May 2013 5
Slide 6: Strategy
Strategy Transformation from a European pulp and paper company to a value creating, growth markets renewable materials company Stora Enso presentation 21 May 2013 6
Slide 7: Stora Enso's engines
Stora Enso’s engines Cash engines Growth engines Printing and Reading Renewable Packaging Nordic market pulp Plantation based pulp Low cost base saw milling Building and living Stora Enso presentation 21 May 2013 7
Slide 8: Ensuring cash generation
Ensuring cash generation Stora Enso presentation 21 May 2013 8
Slide 9: European paper demand 2007–2013/Mar
European paper* demand 2007–2013/Mar 2007/Jan = 100% 105% 5% European paper demand growth y-o-y [%] European paper demand [Jan-2007 = 100%] 100% 0% 95% -5% 90% -10% 85% -15% 80% SA European paper demand y-o-y -20% SA European paper demand 75% -25% Jul-10 Jul-11 Jul-12 Jul-07 Jul-08 Jul-09 Jan-07 Jan
Slide 10: European paper capacity utilization rates after capacity closures
European Paper Capacity utilization rates after capacity closures 31 March 2013 Capacity utilization Theoretical capacity utilization with closures 110% 100% Capacity utilization rate, % 90% 80% 70% 60% 50% NEWS SC CMR WFC Office* Paper * Potential restart of Alizay mill not taken into account (Jun-
Slide 11: Time to rethink structures
Time to rethink structures Focus, simplification and clarity • Plan to create a platform for transformation – Divisions with clear accountability focusing on growth and cost competitiveness – Simplified corporate structures • Driving towards a value creating growth markets renewable materials compan
Slide 12: Rethink organisation
Rethink organisation • Building and Living with Printing and Reading to one Division planned – Led by Karl-Henrik Sundström, currently Chief Financial Officer • The leadership of Renewable Packaging and Biomaterials remains unchanged • Divisions and corporate functions planned to go through organisa
Slide 13: Timeline for the restructuring announcements in 2013
Timeline for the restructuring announcements in 2013 February 2013 Announcement of Hylte PM 2 and Kvarnsveden PM 11 closures EUR 24 million ► Impact starts ► Full impact Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 February 2013 Building & Living EUR 30 million ► Impact starts ► Full impact Q1/13 Q2/13 Q3/13
Slide 14: Stora Enso's transformation
Stora Enso’s transformation Stora Enso presentation 21 May 2013 14
Slide 15: Stora Enso transformation
Stora Enso transformation Skoghall, Sweden Ostroleka, Poland Guangxi, China Montes del Plata Uruguay Inpac acquisition: India and China Bulleh Shah Packaging Limited, Pakistan Stora Enso presentation 21 May 2013 15
Slide 16: Q1 2013 performance as expected
Q1 2013 performance as expected Stora Enso presentation 21 May 2013 16
Slide 17: Q1 performance as expected in a structurally declining European paper market
Q1 Performance as expected in a structurally declining European paper market • Operational EBIT EUR 118 million • Cash flow from Operations EUR 101 million • Liquidity EUR 1.7 billion • Operational ROCE % 5.4 Stora Enso presentation 21 May 2013 17
Slide 18: Low operational EBIT due to Printing & Reading performance
Low operational EBIT due to Printing & Reading performance Cash Flow from Operations Operational EBIT* Cash flow from operations, 4Q rolling Operational EBIT margin %, 4Q rolling 350 10% 9% 300 8% 250 7% EUR million 200 6% 5% 150 4% 100 3% 2% 50 1% 0 0% 11Q1 11Q2 11Q3 11Q4 12Q1 12Q2 12Q3 12Q4 13Q1 *
Slide 19: Business Area ROOC, %
Business Area ROOC, % Excl. and incl. strategic projects Montes del Plata, Ostroleka and Guangxi Renewable Packaging Biomaterials Operational ROOC, % Operational ROOC, % Operational ROOC, % excl. transformation Operational ROOC, % excl. transformation investments investments 25 25 20 20 15 15 % % 10
Slide 20: Summary financials
Summary financials Q1 2013 Change % Change % EUR million Q1/13 Q4/12 Q1/12 Q1 13 / Q1 12 Q1 13 / Q4 12 Sales 2 667 2 727 2 673 -0.2 -2.2 Operational EBITDA 240 276 265 -9.4 -13.0 Operational EBITDA, % 9.0 10.1 9.9 -9.1 -10.9 Operational EBIT 118 158 150 -21.3 -25.3 Operational EBIT margin, % 4.4 5.8
Slide 21: Guidance for Q2 2013
Guidance for Q2 2013 • Compared to Q1 2013: – Sales slightly higher – Operational EBIT in line with or slightly higher than Q1 2013 Stora Enso presentation 21 May 2013 21
Slide 22: Strategic projects financial impact
Strategic projects financial impact • Ostroleka PM5 – Immaterial impact to Group Sales, mainly used as internal raw material – EBITDA margin at approximately 20% from H2 2013 • Montes del Plata – Group Sales impact 2013 limited and slightly negative Operational EBIT impact – Group Sales impact 2014
Slide 23: Summary
Summary • Transformation continues • Short term focus: – Plan to create a platform for transformation • Divisions with clear accountability focusing on growth and cost competitiveness • Simplified corporate structures • EUR 200 million cost savings planned – Montes del Plata has initiated the commis
Slide 24: Stora Enso presentation 21 May 2013
Stora Enso presentation 21 May 2013 24
Slide 25: Earlier announced cost savings programmes
Earlier announced cost savings programmes Cash Employee Impairments Annual cost Saving fully visible in Announced cost reduction Meur savings Meur P&L starting Meur plan Kopparfors closure Q1 2011 20 9 104 10 Q1 2012 Kabel restructuring Q1 2011 4 - 42 3 Q4 2011 Fine Paper restructuring Q2 2011 16 -
Slide 26: Permanent pulp, paper and board capacity reductions
Permanent pulp, paper and board capacity reductions since 2006 Mill Date Grade Capacity reduction, t Corbehem PM 3 and PM 4 Jun 2006 LWC 250 000 Varkaus PM 1 End 2006 WFC 95 000 Berghuizer Mill Oct 2007 WFU 235 000 Reisholz Mill End 2007 SC 215 000 Summa Mill Jan 2008 Newsprint, uncoated mag, book p
Slide 27: Permanent sawn wood capacity reductions
Permanent sawn wood capacity reductions since 2006 Mill Date Capacity reduction, m3 Veitsiluoto Sawmill 2006 100 000 Honkalahti Sawmill 2006 90 000 Sauga Sawmill Jun 2007 130 000 Sollenau Sawmill 2007 110 000 Näpi Sawmill 2007-2008 100 000 Kotka Sawmill 2007-2008 70 000 Paikuse Sawmill End 2008 220
Slide 28: Operational EBIT by segments
Operational EBIT by segments Change % Change % EUR million Q1/13 Q4/12 Q1/12 Q1 13 / Q1 12 Q1 13 / Q4 12 Printing and Reading 2 59 68 -97.1 -96.6 % of sales 0.2 4.9 5.5 -96.4 -95.9 Biomaterials 22 28 7 214.3 -21.4 % of sales 8.6 10.9 2.9 196.6 -21.1 Building and Living 4 7 10 -60.0 -42.9 % of sales
Slide 29: Net Financial Items
Net Financial Items Change % Change % EUR million Q1/2013 Q4/2012 Q1/2012 Q113/Q112 Q113/Q412 Net interest expense -50 -47 -38 -32 -6 Foreign exchange gains and losses -5 -1 8 n/m n/m Other financial items. of which -1 -2 -7 86 50 PIK notes 3 3 2 Fair valuation of interest rate derivatives* 2 -9 -3
Slide 30: Transaction risk and hedges
Transaction risk and hedges as at 31 March 2013 EUR million USD SEK GBP Estimated annual net operating cash flow exposure 1 110 -910 540 Transaction hedges as at 31 Mar 2013 -550 420 -280 Hedging percentage as at 31 Mar 2013 for the next 12 months 50 46 52 Additional GBP hedges for 13-15 months incr
Slide 31: Capital expenditure and depreciation
Capital expenditure and depreciation Q1 2008 – Q1 2013 250 10% 200 8% 150 6% EUR million 100 4% 50 2% 0 0% Capex Depreciation and impairment excl NRI Capex % of sales Stora Enso presentation 21 May 2013 31
Slide 32: Softwood pulp prices
Softwood pulp prices Stora Enso’s market pulp is softwood 1 050 950 Bleached softwood kraft 850 pulp USD/tonne 750 650 Bleached hardwood kraft pulp 550 450 07Q1 07Q2 07Q3 07Q4 08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q3 09Q4 10Q1 10Q2 10Q3 10Q4 11Q1 11Q2 11Q3 11Q4 12Q1 12Q2 12Q3 12Q4 13Q1 Source: FOEX Stora
Slide 33: Wood prices in Sweden
Wood prices in Sweden Pulpwood Sawlogs 600 500 400 SEK/m3 300 200 100 0 06Q1 06Q2 06Q3 06Q4 07Q1 07Q2 07Q3 07Q4 08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q3 09Q4 10Q1 10Q2 10Q3 10Q4 11Q1 11Q2 11Q3 11Q4 12Q1 12Q2 12Q3 12Q4 13Q1 Pulpwood includes pine. spruce and birch. Sawlogs include pine and spruce. Source:
Slide 34: Paper for Recycling prices
Paper for Recycling prices Mixed OCC De-inking 200 160 EUR/tonne 120 80 40 0 08Q2 07Q1 07Q2 07Q3 07Q4 08Q1 08Q3 08Q4 09Q1 09Q2 09Q3 09Q4 10Q1 10Q2 10Q3 10Q4 11Q1 11Q2 11Q3 11Q4 12Q1 12Q2 12Q3 12Q4 13Q1 German RCP price development. free delivered Source: Verband Deutscher Papierfabriken/Stora Enso S
Slide 35: Maturity profile Q1 2013
Maturity profile Q1 2013 Stora Enso presentation 21 May 2013 35
Slide 36: Energy balance Q1 2013
Energy balance* Q1 2013 Impact** on operating profit from EUR million p.a. 10 change in: Electricity market price ~7 Fossil fuel price ~13 *) Pulp. paper and board mills. Europe and overseas **) Remaining impact on non-hedged volume Stora Enso presentation 21 May 2013 36
Slide 37: Stora Enso Electricity procurement Q1 2013
Stora Enso Electricity procurement* Q1 2013 *) Pulp. paper and board mills. Europe and overseas Stora Enso presentation 21 May 2013 37