Stora Enso Oyj Class A · OMXHEX:STEAV
Stora Enso Oyj Class A — Q4 2010 Earnings Presentation
32 slides from Stora Enso Oyj Class A's earnings presentation, Feb 8, 2011
Slide 1: Financial results Q4 2010
Financial results Q4 2010 8 February 2011
Slide 2: Forward-looking statements
It should be noted that certain statements herein which are not historical facts, facts including, including without limitation those regarding expectations for market growth and developments; expectations for growth and profitability; and statements preceded by “believes”, “expects”, “anticipates”,
Slide 3: Sales up 12%, EBITDA up 27%, EBIT up 21%
Sales up 12% EBITDA* up 27% EBIT* up 21% EPS** up 111% Net debt down 7% Q4 2010 compared to Q4 2009 *excluding non-recurring items and fair valuations ** excluding non-recurring items Financial results Q4 2010 8 February 2011 3
Slide 4: Earnings improving, still to go to pre-crisis level
Earnings improving improving, still to go to the pre-crises pre crises level Best fourth quarter since 2006 EBIT excl NRI and fair valuation EBIT margin*, % 4 Q avg 300 10 % 250 8% 200 EUR million 6% 150 4% 100 2% 50 0 0% *excluding NRI and fair valuations Financial results Q4 2010 8 February 2011 4
Slide 5: Nearly 50% productivity increase per person
Nearly 50% productivity increase per person Sales per employee 400 000 300 000 EUR 200 000 100 000 2005 2006 2007 2008 2009 2010 Continuing operations Financial results Q4 2010 8 February 2011 5
Slide 6: Financial results Q4 2010
Financial results Q4 2010
Slide 7: Summary financials
Summary financials Q4 and Full Year 2010 % Change g % Change g EUR million IV/10 2010 IV/09 2009 Q410/Q409 2010/2009 Sales 2 685 10 297 2 399 8 945 11.9 15.1 EBITDA,, excl. NRI and FV 289 1 217 227 808 27.3 50.6 Operating profit, excl. NRI and FV 167 754 138 321 21.0 134.9 Profit before tax, excl. N
Slide 8: Net debt down nearly 50% in three years
Net debt down nearly 50% in three years – flexibility to invest Net Debt Net Debt/EBITDA excl NRI and fair valuations 5 000 6,0 4 500 5,0 4 000 4,0 on EUR millio 3 500 3,0 3 000 20 2,0 2 500 1,0 2 000 0,0 EBITDA: Continuing operations Net debt: Total operations Financial results Q4 2010 8 February 2
Slide 9: Working Capital to sales 17%
Working Capital to sales 17% Q1 2007 – Q4 2010 EUR million Continuing operations 2 800 28,0 % 2 600 26,0 % 2 400 24,0 % 2 200 22,0 % 2 000 20 0 % 20,0 1 800 18,0 % 1 600 16,0 , % 1 400 14,0 % 1 200 12,0 % 1 000 10,0 % 08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q3 09Q4 10Q1 10Q2 10Q3 10Q4 Operative Working Capi
Slide 10: EPS and Dividend
EPS and Dividend • EPS excluding l di NRI EUR 0 0.79 79 EPS, excl NRI (EUR) – Up EUR 0.60 year-on-year Dividend and distribution (EUR) – Driven mainly by improved product Dividend y yield, R share (%) ( ) mix, i prices i and d volumes l 1,00 5% • Strong quarterly cash flow from 0,80 4% operations EU
Slide 11: Financial strength to invest in our future
Financial strength to invest in our future • Strong St quarterly t l cash h flflow • Continuous focus on working capital • Good liquidity – Cash EUR 1 111 million • Strong balance sheet – Net N t debt d bt EUR 2 410 million illi Financial results Q4 2010 8 February 2011 11
Slide 12: Markets
Markets Financial results Q4 2010
Slide 13: Four out of five paper grades under pre-crisis level
Four out of five paper grades under pre-crises pre crises level 2007 Q avg = 100 2007 08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q3 09Q4 10Q1 10Q2 10Q3 10Q4 120 100 INDEX 80 60 Std Newsprint Uncoated magazine Coated magazine Uncoated fine paper Coated fine paper European demand Source: CEPIPRINT, PPPC, CEPIFIN
Slide 14: Board demand continues stable
Board demand continues stable 2007 Q avg = 100 2007 08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q3 09Q4 10Q1 10Q2 10Q3 10Q4 120 100 INDEX 80 60 Folding boxboard White lined chipboard European demand Source: CEPI Cartonboard, PPPC Financial results Q4 2010 8 February 2011 14
Slide 15: Q1 2011 earnings expected to increase Q-o-Q
Q1 2011 earnings expected to increase Q-o-Q QoQ Segment g Demand Price • Operating profit excluding NRI and development, development, fair valuations anticipated to be Q1/11 vs Q1/10 Q1/11 vs Q4/10 higher due to improved cost position Newsprint and and prices Book Paper Magazine • Most sales prices
Slide 16: Proof points of action
Proof points of action
Slide 17: Stora Enso's direction
Stora Enso Enso’s s direction • Growth G th markets k t • Plantation-based pulp – Proof point: Investment to Montes del Plata pulp mill • Fibre Fibre-based based packaging – Maintain and develop global leadership position – Proof points: • Inpac I acquisition i iti • Ostroleka containerboard investm
Slide 18: Summary
Summary Financial results Q4 2010
Slide 19: Journey continues
Journey continues • Fighting Fi hti iinflation fl ti • Continuous development of businesses – Constant focus on costs – Productivity – Serving customers • New markets markets, new products • Question and renew! Financial results Q4 2010 8 February 2011 19
Slide 20: Financial results Q4 2010 8 February 2011
Financial results Q4 2010 8 February 2011 20
Slide 21: Operating profit by segments
Operating profit by segments % Change % Change EUR million 2010 2009 2008 2010/2009 2010/2008 Newsprint -11 129 141 -108.5 -107.8 % of sales -0.9 09 97 9.7 88 8.8 -109.3 109 3 -110.2 110 2 Magazine Paper 91 40 89 127.5 2.2 % of sales 4.4 2.4 4.1 83.3 7.3 Fine Paper 259 33 80 n/m 223.8 % of sales 12.
Slide 22: Capital expenditure and depreciation
Capital expenditure and depreciation Q1 2008 – Q4 2010 EUR million % 250 10 Forecast: 9 Capex FY 2011 200 approximately 8 EUR 550 m 7 150 6 5 100 4 3 50 2 1 0 0 Capex Depreciation and impairment excl NRI Capex % of sales Total operations Financial results Q4 2010 8 February 2011 22
Slide 23: Debt/Equity
Debt/Equity 2005 – Q4 2010 0,9 Objective < 0.8 0,8 0,70 0,7 0,6 0,56 0,54 0,54 0,51 0,49 0,5 0,43 0,39 0,39 0,4 0,3 0,2 0,1 0 2005 2006 2007 2008 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Total operations Financial results Q4 2010 8 February 2011 23
Slide 24: Change in operating profit excl. NRI & FV
Change in operating profit excl. excl NRI & FV Q4 2009 – Q4 2010 EUR million +44 300 +117 250 200 -113 +9 +167 -12 150 +138 -16 100 50 0 Q409 Sales Price Sales Volume Fixed and FX net Equity acc Other Q410 & Sales Mix Variable Costs* investments Group total including closed units *Mainly related to
Slide 25: Net Financial Items
Net Financial Items % Change % Change EUR million IV/10 III/10 IV/09 Q410/Q409 Q410/Q310 Net interest expense -25.6 -23.9 -21.2 -20.8 -7.1 Foreign exchange gains and losses 1.8 -18.1 1.3 38.5 109.9 Other financial items, of which 2.1 -9.1 -4.8 143.8 123.1 PIK notes 1.6 1.5 1.4 Fair valuation of inte
Slide 26: Taking high cost capacity out to improve earnings
Taking high cost capacity out to improve earnings ‘000 tonnes Deliveries Production 3 200 3 000 2 800 2 600 2 400 2 200 2 000 08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q3 09Q4 10Q1 10Q2 10Q3 10Q4 Stora Enso Paper and Board Financial results Q4 2010 8 February 2011 26
Slide 27: Transaction risk and hedges
Transaction risk and hedges as at 31 December 2010 EUR million USD GBP SEK Estimated ann annual al net operating cash flo flow e exposure pos re 1 100 600 -1 1 100 Transaction hedges as at 31 December 2010 -600 -290 550 Hedging percentage as at 31 December 2010 for the next 12 months 55% 48% 50% Ope
Slide 28: Maturity profile
Maturity profile December 2010 Bonds Other loans / liabilities Commercial paper EUR million 900 SEK 500m 33.5% 5% 2015 800 SEK 1.4 bn S+3.7% 2015 SEK 2.4 bn 5.75% 2015 700 EUR 750m 5.125% 2014 600 500 EUR 390m E+4.21% 2016 USD 507m 6.404% 2016 USD 300m 7.25% 2036 400 300 200 100 0 2011 2012 2013 201
Slide 29: Energy balance Q4 2010
Energy balance Q4 2010 TWh/a Self sufficiency 62% 50 Total energy self 40 sufficiency 59% Impact* on operating 30 profit from 10% change EUR million p.a. Self sufficiency 52% i in: 20 10 Electricity market price 5-6 0 Fossil fuel price 8-9 8 9 ‐10 Electricity Fuels Internal External (hedged) Externa
Slide 30: Stora Enso Electricity procurement
Stora Enso Electricity procurement Sales to market Open position Local tariff GWh/a Physical contracts with floating price 20000 Financial contracts Physical contracts 18000 PVO production Own production 16000 14000 12000 10000 8000 6000 4000 2000 0 -2000 2009 2010 2011 2012 Financial results Q4 201
Slide 31: Permanent pulp, paper and board capacity reductions since 2006
Permanent pulp pulp, paper and board capacity reductions since 2006 Mill Date Grade Capacity p y 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 m
Slide 32: Permanent sawn wood capacity reductions since 2006
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