Borregaard Asa · OSL:BRG
Borregaard Asa — Q1 2017 Earnings Presentation
28 slides from Borregaard Asa's earnings presentation, May 3, 2017
Slide 1: 1st Quarter 2017
1 ST Q U A R T E R 2 0 1 7 Oslo, 3 May 2017
Slide 2: Agenda
Agenda • Per A Sørlie, President & CEO • Highlights • Business areas • Sarpsborg biorefinery investments • Outlook • Per Bjarne Lyngstad, CFO • Financial performance 2
Slide 3: Highlights – 1st quarter 2017
Highlights – 1st quarter 2017 • All-time high 1st quarter EBITA adj.1 for the Group • Increased sales of specialities in Performance Chemicals • Higher prices and better product mix in Speciality Cellulose • Weaker results in Ingredients and Fine Chemicals • Slightly negative currency effects • Spec
Slide 4: Performance Chemicals markets – Q1
Performance Chemicals markets – Q1 2016 NOK per mtds Gross average sales price1 ‘000 mtds Sales volume1 2017 6 500 150 122 6 000 125 107 106 108 106 5 669 5 598 100 5 500 5 272 5 191 5 196 75 5 000 50 4 500 25 4 000 0 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q1 Q2 Q3 Q4 • Higher average price in sales currency
Slide 5: Speciality Cellulose markets – Q1
Speciality Cellulose markets – Q1 2016 NOK per mt Gross average sales price1 ‘000 mt Sales volume 2017 11 500 50 40,6 11 000 37,4 38,3 10 555 40 36,0 36,6 10 500 10 150 10 068 30 9 912 9 830 10 000 20 9 500 9 000 10 8 500 0 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q1 Q2 Q3 Q4 • Higher prices and improved produ
Slide 6: Ingredients and Fine Chemicals markets – Q1
Ingredients and Fine Chemicals markets – Q1 2016 2016 mNOK Ingredients - sales revenues 2017 mNOK Fine Chemicals - sales revenues 2017 84 100 80 89 86 88 87 68 80 71 60 54 49 47 60 40 40 20 20 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 • Ingredients • Fine Chemicals • Positive market development for key products •
Slide 7: Ice Bear capacity expansion
Sarpsborg biorefinery investments Ice Bear capacity expansion • Main initiative to drive further specialisation • Targeting «niches within the niches» • Solidifying existing positions • Project benefits second step • Will double the capacity to 60,000 tonnes • More optimal production of Ice Bear gra
Slide 8: Upgrade and increased specialisation of lignin operation
Sarpsborg biorefinery investments Upgrade and increased specialisation of lignin operation • Comprehensive investment programme • New drying capacity • Tanks for storage of liquid materials • Improved solutions for logistics, infrastructure and energy • Several benefits • Further specialisation on t
Slide 9: Outlook
Outlook • Performance Chemicals • Market conditions negatively affected by continued weak business climate in important regions for construction products • Reallocation efforts and flexibility in raw material supply will contribute to market optimisation and stable inventory levels • 2017 sales volu
Slide 10: Financial Performance Q1-17
FINANCIAL PERFORMANCE Q1-17
Slide 11: Borregaard key figures – Q1
Borregaard key figures – Q1 2016 mNOK Operating revenues 2016 mNOK EBITA adj.1 2016 % EBITA adj. margin1 2017 2017 2017 25 1 400 250 20 17,6 225 15 19,6 1 200 17,1 216 200 15,4 14,4 1 167 10 1 136 200 200 1 113 1 110 1 102 1 000 175 5 171 150 160 800 0 NOK Earnings per share 125 7 Q1 Q2 Q3 Q4 Cumula
Slide 12: Performance Chemicals key figures – Q1
Performance Chemicals key figures – Q1 mNOK 2016 Operating revenues 600 2017 584 500 550 550 • Revenues and volume in line with Q1-16 515 512 400 300 • Increased sales for Specialities, 200 100 but decline for Construction 0 Q1 Q2 Q3 Q4 mNOK 2016 150 2017 125 140 138 EBITA adj.1 • Favourable product
Slide 13: Speciality Cellulose key figures – Q1
Speciality Cellulose key figures – Q1 mNOK 2016 Operating revenues 2017 400 416 412 406 • 8% revenue growth vs Q1-16 385 383 300 200 • Higher prices, improved mix and increased 100 sales volume 0 Q1 Q2 Q3 Q4 mNOK 2016 80 2017 89 82 • Higher sales prices EBITA adj. 1 60 68 • Improved product mix 53 4
Slide 14: Other Businesses key figures – Q1
Other Businesses key figures – Q1 mNOK 2016 2017 200 206 201 Operating revenues 190 183 179 150 • Revenues 4% below Q1-16 100 • Low deliveries in Fine Chemicals 50 • Slightly lower sales in Ingredients 0 Q1 Q2 Q3 Q4 mNOK 2016 10 2017 6 • Ingredients: Slightly lower sales, higher raw 2 0 material and
Slide 15: Currency impact
Currency impact 2016 mNOK Hedging effects2 on EBITA adj.1 2017 Borregaard’s currency basket3 20 104 103 0 102 102,7 -20 101 -22 -24 -24 -24 100 99,4 99,1 -40 99 -43 99,0 98,8 98 -60 97 -80 96 Q1 Q2 Q3 Q4 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 • Net FX EBITA adj.1 impact approx. -5 mNOK vs Q1-16 • Includes ch
Slide 16: Cash flow, investments and NIBD
Cash flow, investments and NIBD Cash flow from operations1) Investments NIBD1 change Increase mNOK mNOK mNOK 350 Decrease 500 294 485 300 400 18 9 34 400 394 250 300 332 130 300 200 159 159 200 142 150 115 200 384 100 47 81 300 274 118 100 71 50 164 100 156 0 50 37 95 -7 65 78 34 -100 0 0 Q1'16 Q2'1
Slide 17: Updated investment forecast 2017-2018
Updated investment forecast 2017-2018 • Replacement investments mNOK Replacement investments - forecast1 • Targeted at depreciation level 360-390 • Will be above depreciation in 2016-’18 due 400 358 320-360 to wood seasoning silos (insurance coverage) and lignin infrastructure investments in 300 Nor
Slide 18: Q&A
Q&A • Per A Sørlie, President & CEO • Per Bjarne Lyngstad, CFO 18
Slide 19: Appendix
APPENDIX VA Borregaard The Sustainable Biorefinery
Slide 20: Borregaard – key figures
Borregaard – key figures Amounts in NOK million Q1-2017 Q1- 2016 Change Operating revenues 1 136 1 113 2% EBITDA adj. 1 274 236 16 % EBITA adj. 1 200 171 17 % Amortisation intangible assets -1 -1 1 Other income and expenses 0 0 Operating profit 199 170 17 % Financial items, net -4 -9 Profit before t
Slide 21: Operating revenues and EBITA adj. per segment
Operating revenues and EBITA adj. 1 per segment Amounts in NOK million Amounts in NOK million 1 Operating revenues Q1-2017 Q1-2016 Change EBITA adj. Q1-2017 Q1-2016 Change Borregaard 1 136 1 113 2% Borregaard 200 171 17 % Performance Chemicals 550 550 0% Performance Chemicals 132 138 -4 % Speciality
Slide 22: Cash flow
Cash flow Amounts in NOK million Q1-2017 Q1-2016 FY-2016 Amounts in NOK million Profit before taxes 195 161 724 Amortisation, depreciation and impairment charges 75 66 278 Change in net working capital, etc -156 -243 170 Dividend (share of profit) from JV -2 -22 -1 Taxes paid -30 -31 -90 Cash flow f
Slide 23: Balance sheet
Balance sheet Amounts in NOK million 31.03.2017 31.12.2016 Assets: Intangible assets 121 125 Property, plant and equipment 2 559 2 471 Other assets 86 115 Investment in joint venture 127 121 Non-current assets 2 893 2 832 Inventories 687 626 Receivables 949 948 Cash and cash deposits 182 265 Current
Slide 24: Net financial items & net interest-bearing debt
Net financial items & net interest-bearing debt1 Amounts in NOK million Net financial items Q1-2017 Q1-2016 Net interest expenses -3 -6 Currency gain/loss -1 -3 Other financial items, net 0 0 Net financial items -4 -9 Amounts in NOK million 1 Net interest-bearing debt (NIBD) 31.03.2017 31.12.2016 No
Slide 25: 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 26: Debt, credit facilities and solidity
Debt, credit facilities and solidity Debt and undrawn facilities • Debt and overdraft facilities 31.03.2017 • Long-term credit facilities 2 500 • 1,500 mNOK revolving 2 250 credit facilities, maturity 2021 2 000 • 200 mNOK 5-year bond issue, 1 750 maturity 2019 1 500 • 40 mEUR 10-year loan, 1 908 1
Slide 27: 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 28: 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