Stora Enso Oyj Class A · OMXHEX:STEAV
Stora Enso Oyj Class A — Q3 2021 Earnings Presentation
43 slides from Stora Enso Oyj Class A's earnings presentation, Oct 20, 2021
Slide 1: Financial results for Q3 2021
Financial results for Q3 2021 Another quarter with robust growth and profitability President and CEO Annica Bresky CFO Seppo Parvi 20 October 2021
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: Another quarter with robust growth and profitability
Another quarter with • The strategic transformation programme is creating a focused and powerful foundation for growth robust growth and • Solid underlying demand and top line growth in key focus profitability areas: Packaging Materials, Wood Products and Biomaterials. Forest assets yielding well •
Slide 4: Operational EBIT trending up
Operational EBIT trending up MEUR Sales MEUR Operational EBIT Operational ROCE 2 700 2 592 2 577 450 410 excl. Forest 400 25 2 500 364 350 328 2 276 20 2 300 2 154 300 2 079 15 2 100 250 200 175 10 1 900 150 118 1 700 5 100 1 500 50 0 Q320 Q420 Q121 Q221 Q321 Q320 Q420 Q121 Q221 Q321 Q320 Q420 Q121
Slide 5: Higher prices offsetting higher costs
Higher prices offsetting higher costs 5 20 October 2021 Stora Enso Q3 2021 results
Slide 6: Strategy execution moving ahead
Strategy execution moving ahead • We are taking action to grow our packaging position following a strong demand for sustainable packaging • Pilot production of Lignode, wood-based carbon for batteries, is ramping up according to plan, evaluation of partners is in progress • Exposure in paper will mo
Slide 7: Taking action to grow in sustainable packaging
Taking action to grow in sustainable packaging • Skoghall site in Sweden is a key strategic asset that is highly competitive and a quality leader • The 97 MEUR investment at Skoghall will accelerate our growth in strategic packaging • Building on our global leading position in liquid packaging board
Slide 8: Decentralised operating model to strengthen execution of strategy and customer intimacy
Decentralised operating model to strengthen execution of strategy and customer intimacy CEO Empowered divisions Performance culture Focused functions Divisions Group functions Performance culture Business specific processes Customers
Slide 9: Stora Enso sets ambitious goal to offer 100% regenerative solutions by 2050
Stora Enso sets ambitious goal to offer 100% regenerative solutions by 2050 • Stora Enso fully supports the European Commission’s climate goals - EU’s Green Deal is an opportunity to transition to a low- carbon society • Sustainably managed forests and renewable, circular products are part of the so
Slide 10: Stora Enso is taking the lead with new 2030 sustainability targets
Stora Enso is taking the lead with new 2030 sustainability targets CO2 Circular Biodiversity Upgraded Science Based Target Products and value chains Expanding scope and actions • Aligned with a 1.5-degrees • Circular Design Guidelines by • Detailed action plan towards scenario 2025 2030 • Scope 1, 2
Slide 11: Financial highlights
Financial highlights OpEBIT EPS (basic) Sales +24% to 2 577 +134% to 410 0.38 EUR MEUR MEUR OpROCE excluding Cash flow from Net debt to Forest 20% operations OpEBITDA 1.4 485 MEUR 11 20 October 2021 Stora Enso Q3 2021 results
Slide 12: Packaging Materials
Packaging Materials Excellent quarter with continued stability • Sales +28% YoY, all-time high • OpEBIT +37% YoY, all-time high • Driven by higher deliveries, mainly from the ramp-up • Very strong containerboard performance of production at Oulu, and higher prices • Higher sales partly offset by hig
Slide 13: Packaging Solutions
Packaging Solutions Strong growth continues, driven by price increases, innovation and service • Sales +24% YoY • OpEBIT on the same level YoY • Driven by prices and increased sales in innovation • Improved margins in corrugated business and services • Offset by increased investments in new business
Slide 14: Biomaterials
Biomaterials Record third quarter sales despite global logistics challenges • Sales +40% YoY, record high Q3 • OpEBIT +111 MEUR YoY, 2nd highest Q3 • Clearly higher prices • Clearly higher sales prices • Partly offset by slightly lower deliveries due to global • Partly offset by higher maintenance c
Slide 15: Wood Products
Wood Products An all-time high result • Sales +48% YoY, all-time high • OpEBIT +228% YoY, all-time high • Record high prices • Extraordinary high profitability due to record prices • Slightly lower classic sawn deliveries • Partly offset by higher raw material and production costs • OpROOC 76.5%, si
Slide 16: Forest
Forest Good and stable financial performance continues • Sales +19% YoY, record high Q3 • OpEBIT +21% YoY, record high Q3 • Driven by higher deliveries, especially in Sweden • Higher margin in own forest assets and Finland, as well as increased wood prices • 7.4 BEUR total value of the Group’s fores
Slide 17: Paper
Paper Result still impacted by restructuring and high input costs, remaining business is turning around • Sales -6% YoY • OpEBIT –91% YoY to -31 MEUR • Due to structural changes in Oulu and Veitsiluoto • Driven by clearly higher input costs (energy, fiber and paper mills logistics) and lower prices
Slide 18: Development of long-term financial targets
Development of long-term financial targets Group long-term financial targets Q3 20 Q3 21 Dividend* To distribute 50% of EPS excluding fair valuation 0.30 0.30 over the cycle Growth** YoY > 5% -6.0% 32.5% Net debt to operational EBITDA < 2.0x 2.4 1.4 Net debt to equity < 60% 42% 27% Operational ROCE
Slide 19: Annual outlook for FY 2021 remains unchanged
Annual outlook for FY 2021 remains unchanged Operational EBIT in FY 2021 expected to be higher than in FY 2020 • Global economic activity is continuing at a healthy level • Resilient demand for our products in key segments 19 20 October 2021 Stora Enso Q3 2021 results
Slide 20: Another quarter with robust growth and profitability
• The strategic transformation programme is creating a Another quarter with focused and powerful foundation for growth robust growth and • Solid underlying demand and top line growth in key focus profitability areas: Packaging Materials, Wood Products and Biomaterials. Forest assets yielding well •
Slide 21: 20 October 2021 Stora Enso Q3 2021 results
21 20 October 2021 Stora Enso Q3 2021 results
Slide 22: Growth businesses 84% of sales and 100% of operational EBIT
Growth businesses 84% of sales and 100% of operational EBIT Packaging Materials Packaging Solutions1 Biomaterials Wood Products Forest Paper2 Other & eliminations3 1 In 2006 included in Packaging Materials 2 In 2006 includes merchants 3 In 2006 includes Forest 22 20 October 2021 Stora Enso Q3 2021 r
Slide 23: Operational EBIT by segments
Operational EBIT by segments Change % Change % MEUR Q321 Q320 Q321-Q320 Q221 Q321-Q221 Packaging Materials 153 111 37.0% 144 6.1% % of sales 15.4% 14.4% 14.6% Packaging Solutions 8 8 -0.8% 2 262.8% % of sales 4.3% 5.4% 1.3% Biomaterials 118 7 n/m 145 -18.5% % of sales 27.7% 2.2% 32.1% Wood Products
Slide 24: Development of operational ROCE excluding Forest
Development of operational ROCE excluding Forest 24 20 October 2021 Stora Enso Q3 2021 results
Slide 25: Year-on-year net debt/EBITDA
Year-on-year net debt/EBITDA 25 20 October 2021 Stora Enso Q3 2021 results
Slide 26: Cash flow development
Cash flow development 26 20 October 2021 Stora Enso Q3 2021 results
Slide 27: Cash flow by divisions in Q3
Cash flow by divisions in Q3 27 20 October 2021 Stora Enso Q3 2021 results
Slide 28: Continued focus on strong liquidity
Continued focus on strong liquidity • Liquidity at the end of Q3 2021: − 1 256 MEUR cash and cash equivalents − 600 MEUR committed revolving credit facility fully undrawn − 150 MEUR undrawn committed credit arrangement − 950 MEUR statutory pension premium loans available • No financial covenants on
Slide 29: Selective capex to support growth
Selective capex to support growth Biological capex Strategic capex Maintenance capex Capex estimate for 2021 Depreciation and depletion of capitalised silviculture costs Capex for 2019-2020 and estimate for 2021 include the capitalised leasing contracts according to IFRS 16 Leases standard 29 20 Oct
Slide 30: Net Financial Items
Net Financial Items Change Change Q3 Q3 MEUR Q2 MEUR EUR million 2021 2020 Q321/ 2021 Q321/ Q320 Q221 Net interest expense -31 -33 2 -32 1 Average interest rate* 3.0% 3.1% 2.9% 0.1 Foreign exchange gains and losses -2 4 -6 3 -5 Other financial items, of which -4 -2 -2 -2 -3 Pension costs (IAS 19R) -
Slide 31: Net FX by division
Net FX by division 31 20 October 2021 Stora Enso Q3 2021 results
Slide 32: Maturity profile Q3 2021
Maturity profile Q3 2021 Bonds Joint Venture financing Forest owner deposits Commercial Papers Loans from Financial Institutions Other loans / liabilities Committed credit facilities Committed credit facilities are fully undrawn and mature in 2023 (600 MEUR) and 2027 (150 MEUR) 32 20 October 2021 St
Slide 33: Transaction risk and hedges Q3 2021
Transaction risk and hedges Q3 2021 EUR Million USD EUR GBP SEK Estimated annual operative transaction risk exposure from cash flows for the 1 780 964 332 -188 next 12 months* Cash flow hedges for the next 12 months as at 30 September 2021 -793 -524 -73 93 Hedge ratio for the next 12 months as at 30
Slide 34: Stora Enso energy balance Q3 2021
Stora Enso energy balance Q3 2021 Pulp, paper and board mills in Europe and overseas TWh/a Impact on non-hedged volume on operating profit EUR million p.a. from 10% change in: Electricity market price ~11.6 Fossil fuel price ~9.9 External hedged volumes are secured from energy price risk exposure 34
Slide 35: Stora Enso electricity procurement Q3 2021
Stora Enso electricity procurement Q3 2021 Pulp, paper and board mills in Europe and overseas 35 20 October 2021 Stora Enso Q3 2021 results
Slide 36: Permanent pulp, paper and board capacity reductions since 2006
Permanent pulp, paper and board capacity reductions since 2006 Mill Date Grade Capacity reduction, t Mill Date Grade Capacity reduction, t Corbehem PM 3 and PM 4 Jun 2006 LWC 250 000 Hylte PM1 Dec 2012 Newsprint 180 000 Varkaus PM 1 End 2006 WFC 95 000 Ostroleka PM2 Jan 2013 Containerboard 85 000 Be
Slide 37: 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 2007 130 000 Sollenau Sawmill 2007 110 000 Näpi Sawmill 2007-2008 100 000 Kotka Sawmill 2007-2008 70 000 Paikuse Sawmill 2008 220 000 Zdir
Slide 38: Kraftliner and testliner prices
Kraftliner and testliner prices Source: FOEX 38 20 October 2021 Stora Enso Q3 2021 results
Slide 39: Pulp price development
Pulp price development Source: FOEX 39 20 October 2021 Stora Enso Q3 2021 results
Slide 40: Pulp wood and saw log prices
Pulp wood and saw log prices Wood prices in Finland Source: Luonnonvarakeskus 40 20 October 2021 Stora Enso Q3 2021 results
Slide 41: Paper for recycling prices
Paper for recycling prices German RCP price development. free delivered Source: Verband Deutscher Papierfabriken/Stora Enso 41 20 October 2021 Stora Enso Q3 2021 results
Slide 42: Market transaction based forest prices in Sweden
Market transaction based forest prices in Sweden Market transaction Southern Sweden based forest prices Central Sweden inSweden Northen Sweden Sweden 900 800 700 600 SEK/m3fo 500 400 300 200 100 0 1995 2000 2005 2010 2015 2020 Source: Ludvig & Co, latest data H1/2021
Slide 43: The Renewable Materials Company
THE RENEWABLE MATERIALS COMPANY