Borregaard Asa · OSL:BRG
Borregaard Asa — Q2 2016 Earnings Presentation
26 slides from Borregaard Asa's earnings presentation, Jul 18, 2016
Slide 1: 2nd Quarter 2016
2 ND Q UA R T E R 2 0 1 6 Oslo, 18 July 2016
Slide 2: Agenda
Agenda • Per A Sørlie, President & CEO • Highlights • Business areas • Outlook • Per Bjarne Lyngstad, CFO • Financial performance 2
Slide 3: Highlights – 2nd quarter 2016
Highlights – 2nd quarter 2016 • All-time high EBITA adj.1) for the Group • Positive currency effects in all business areas • High sales volumes and good results for Performance Chemicals and Fine Chemicals • Improved product mix and result in Specialty Cellulose • Energy conservation measures contri
Slide 4: Performance Chemicals markets – Q2
Performance Chemicals markets – Q2 2015 NOK per mtds Gross average sales price1) ‘000 mtds Sales volume1) 2016 6 500 150 122 6 000 125 5 744 107 108 5 669 99 100 103 5 393 5 424 5 459 100 5 500 5 191 75 5 000 50 4 500 25 4 000 0 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q1 Q2 Q3 Q4 • Weaker product mix an
Slide 5: New lignin volumes
New lignin volumes • Capacity increase in South Africa • 20,000 mtds expansion on track • Commissioning mid-year 2017 • Florida project in two phases • Phase one: 110 mUSD, 100,000 mtds lignin capacity • Phase two: 25 mUSD, 50,000 mtds lignin capacity addition • Investment decision anticipated in H2
Slide 6: Specialty Cellulose markets – Q2
Specialty Cellulose markets – Q2 2015 NOK per mt Gross average sales price1) ‘000 mt Sales volume 2016 11 000 50 41,7 10 500 39,6 10 176 10 150 40 37,8 37,4 36,0 34,5 9 881 9 912 10 000 30 9 500 9 337 8 894 20 9 000 8 500 10 8 000 0 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q1 Q2 Q3 Q4 • Improved product
Slide 7: Ingredients and Fine Chemicals markets – Q2
Ingredients and Fine Chemicals markets – Q2 2015 2015 mNOK Ingredients - sales revenues 2016 mNOK Fine Chemicals - sales revenues 2016 100 92 94 80 89 88 83 82 68 80 60 60 54 55 56 60 46 40 40 20 20 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 • Ingredients • Fine Chemicals • Continued challenging market conditions
Slide 8: Outlook
Outlook • Performance Chemicals • Continued weak business climate and strong price competition in important markets • Efforts to reallocate volume to other applications and regions will continue • Sales volume in 2016 expected to increase by slightly more than the full-year impact of the Flambeau vo
Slide 9: Financial Performance Q2-16
FINANCIAL PERFORMANCE Q2-16
Slide 10: Borregaard key figures – Q2
Borregaard key figures – Q2 2015 mNOK Operating revenues 2015 mNOK EBITA adj.1) 2015 % EBITA adj. margin1) % 2016 2016 2016 20 17,1 1 400 225 15,4 15 1 200 200 15,0 200 10 12,4 1 167 175 10,4 9,8 1 113 1 000 5 1 069 171 1 054 1 034 150 1 007 160 800 0 125 Q1 Earnings Q2 per share NOK 131 Q3 Q4 100 C
Slide 11: Performance Chemicals key figures – Q2
Performance Chemicals key figures – Q2 mNOK 2015 Operating revenues 600 2016 • 13% revenue growth vs Q2-15 584 500 550 515 503 502 488 400 300 • Favourable FX impact 200 • 13% sales volume growth, mainly from the 100 acquired Flambeau business 0 Q1 Q2 Q3 Q4 mNOK 2015 150 2016 • All-time high EBITA a
Slide 12: Specialty Cellulose key figures – Q2
Specialty Cellulose key figures – Q2 mNOK 2015 Operating revenues 2016 400 389 385 383 365 300 346 • 5% revenue growth vs Q2-15 200 336 • Favourable FX impact 100 0 Q1 Q2 Q3 Q4 mNOK 2015 80 2016 • Strong improvement in EBITA adj. • Positive FX impact and improved product mix EBITA adj. 60 68 56 53 4
Slide 13: Other Businesses key figures – Q2
Other Businesses key figures – Q2 mNOK 2015 2016 200 206 Operating revenues 199 197 190 183 150 176 • Revenues 13% above Q2-15 100 • High sales in Fine Chemicals 50 • Positive FX impact 0 Q1 Q2 Q3 Q4 mNOK 2015 10 2016 • Ingredients: Improved EBITA adj. vs Q2-15, mainly 0 due to favourable FX effects
Slide 14: Currency impact
Currency impact 2015 mNOK Hedging effects1) on EBITA adj. 2016 Borregaard’s currency basket2) 20 110 107,2 105,3 0 105 103,2 101,9 -20 -24 100 -40 -43 95 96,8 -60 -54 96,0 -55 -62 -80 -70 90 Q1 Q2 Q3 Q4 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 • Net FX EBITA adj. impact approx. 75 mNOK vs Q2-15 • Include
Slide 15: Cash flow, investments and NIBD
Cash flow, investments and NIBD mNOK Cash flow from operations1) mNOK Investments NIBD change Increase mNOK Decrease 500 200 800 485 200 400 700 142 14 300 150 110 269 334 600 106 47 149 200 500 7 100 763 188 199 37 71 71 36 100 400 204 610 15 50 37 142 90 95 0 69 300 56 -7 34 -100 0 200 Q2'15 Q3'15
Slide 16: Q&A – Save the date: Capital Markets Day
Q&A • Per A Sørlie, President & CEO • Per Bjarne Lyngstad, CFO Save the date: Borregaard Capital Markets Day Tuesday 20 September 2016 in Sarpsborg, Norway • Presentations including update on operations and strategic projects, markets, finance and sustainability • Site visit and demonstration of Bor
Slide 17: Appendix
APPENDIX VA Borregaard The Sustainable Biorefinery
Slide 18: Borregaard - key figures
Borregaard - key figures Amounts in N OK million Q2-2016 Q2-2015 Change YTD-2016 YTD-2015 Change Operating revenues 1 167 1 054 11 % 2 280 2 061 11 % EBITDA adj. 1 ) 269 196 37 % 505 365 38 % EBITA adj. 1 ) 200 131 53 % 371 236 57 % Amortisation intangibles -1 0 -2 0 1) Other income and expenses 13
Slide 19: Operating revenues and EBITA adj. per segment
Operating revenues and EBITA adj. per segment Amounts in NOK million Amounts in NOK million Operating revenues Q2-2016 Q2-20 15 Change EBITA adj. Q2-2016 Q2 -2 015 Change Borregaard 1 167 1 05 4 11 % Borregaard 200 131 53 % Performance Chemicals 584 515 13 % Performance Chemicals 140 127 10 % Specia
Slide 20: Cash flow
Cash flow Amounts in NOK million Q2-201 6 Q2 -2015 YTD- 2016 YTD- 2015 FY-201 5 Amounts in NOK million Profit before taxes 207 125 368 225 506 Amortisation, depreciation and impairment charges 69 65 135 129 269 Change in net working capital, etc 204 -8 -39 -202 -106 Dividend (share of profit) from J
Slide 21: Balance sheet
Balance sheet Amounts in N OK million 30.06.2016 31.03.2016 31.12.2015 Assets: Intangible assets 127 131 137 Property, plant and equipment 2 200 2 121 2 122 Other assets 121 165 121 Investments in joint venture 145 128 106 Non-current assets 2 593 2 545 2 486 Inventories 671 684 676 Receivables 981
Slide 22: Net financial items & net interest-bearing debt
Net financial items & net interest-bearing debt Amounts in NOK million Net financial items Q2-2016 Q2-2015 YTD-2016 YTD-2015 Net interest expenses -6 -6 -11 -13 Currency gain/loss 1 1 -2 3 Other financial items, net 0 -1 -1 -1 Net financial items -5 -6 -14 -11 Amounts in NOK million Net interest-bea
Slide 23: Currency hedging strategy
Currency hedging strategy Purpose is to delay effects of currency fluctuations and secure competitiveness • Hedging based on expected EBITA adj. 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
Slide 24: Debt, credit facilities and solidity
Debt, credit facilities and solidity Debt and undrawn facilities • Debt and overdraft facilities 30.6.2016 • 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 1 500 1 900 • 40 mEUR 10-year loan, 1 2
Slide 25: Non-GAAP measures
Non-GAAP measures In the discussion of the reported operating results, financial position and cash flows, Borregaard refers to certain measures which are not defined by generally accepted accounting principles (GAAP) such as IFRS. Borregaard management makes regular use of these non-GAAP measures an
Slide 26: 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