Stora Enso Oyj Class A · OMXHEX:STEAV
Stora Enso Oyj Class A — FY2005 Earnings Presentation
49 slides from Stora Enso Oyj Class A's earnings presentation, Feb 2, 2006
Slide 1: Financial Results 2005
Financial Results 2005 Jukka Härmälä, CEO Hannu Ryöppönen, CFO 2 February 2006
Slide 2: Forward-looking statements
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: Contents
Contents • Fourth Quarter 2005 Results • Year 2005 Review • Shareholder Information • Market Outlook • Summary 3 2 February 2006 Stora Enso full year results 2005
Slide 4: Fourth Quarter 2005 Results
STORAENSG 2 Performance Fourth Quarter 2005 Results
Slide 5: Highlights Q4 2005
Highlights Q4 2005 IV/04 I/05 II/05 III/05 IV/05 Sales, EUR million 3 241.9 3 144.9 3 187.3 3 219.2 3 636.1 Operating profit*, EUR million 66.9 ** 112.7 17.7 106.2 120.9 Operating profit, EUR million 246.8 ** 112.7 5.7 106.2 -318.5 EPS, EUR 0.18 0.07 -0.01 0.08 -0.31 EPS*, EUR 0.03 0.07 0.00 0.08 0.
Slide 6: Performance during the Fourth Quarter
Performance during the Fourth Quarter • Operating profit improved due to higher sales volumes, partly offset by increased transportation, energy and maintenance-related costs. • Profit: – Increased in Publication and Fine papers – Decreased in all other segments • Non-recurring items related to Prof
Slide 7: Operating Profit by Quarter
Operating Profit by Quarter EUR million 180 160 140 120 100 80 60 40 20 0 IV/03 I/04 II/04 III/04 IV/04 I/05 II/05 III/05 IV/05 Comparatives excluding amortisation excluding non-recurring items 7 2 February 2006 Stora Enso full year results 2005
Slide 8: Change in EPS from Q3 to Q4 in 2005
Change in EPS from Q3 to Q4 in 2005 EUR 0,16 0.05 -0.01 0,14 -0.01 0.04 0.13 -0.04 0,12 0,10 0.01 0.01 -0.02 0.02 0.08 0,08 0,06 0,04 0,02 0,00 GROUP Sales Sales Variable Energy Fixed Associates Financing Other Tax items GROUP TOTAL prices and Volume costs Costs TOTAL Q3/05 mix Q4/05 excluding non-r
Slide 9: Main Events in Q4 2005
Main Events in Q4 2005 • Purchase of 34 000 hectares of timber and land use rights in Guangxi, China • Decision to upgrade and modernise board machine 2 at Fors Mill, Sweden – EUR 35 million investment to start-up 2006 and completion 2007 • Continued to obtain access to land in Brazil and Uruguay •
Slide 10: Year 2005 Review
STORAENSG 2 Performance Year 2005 Review
Slide 11: Key Annual Figures
Key Annual Figures 2003 2004 2005 Sales (1 000 tonnes) 13 551 14 410 14 150 Sales (EUR million) 12 172 12 396 13 188 EBITDA* (EUR million) 1 711 1 508 1 487 Operating profit* (EUR million) 642 ** 427 ** 358 Operating profit (EUR million) 587 ** 796 ** -94 Earnings per share*, EUR 0.24 0.25 0.28 Earn
Slide 12: North American Operations - 2005
North American Operations - 2005 • North American Profit Enhancement Programme largely concluded; the profit improvement target was achieved • EBITDA USD 276 or EUR 222 million (USD 136 or EUR 110 million) for full year 2005 • Operating loss during first half of 2005 was offset by operating profit i
Slide 13: Change in EPS from 2004 to 2005
Change in EPS from 2004 to 2005 EUR 0,70 0.33 -0.15 0,60 0,50 -0.27 0,40 0.11 0.28 0,30 0.25 0.03 -0.05 0.16 -0.03 0,20 -0.10 0,10 0,00 GROUP Sales prices Sales Variable Energy Fixed costs Associates Financing Other Goodwill GROUP TOTAL 2004 and mix volume costs amortisation TOTAL 2005 excluding non
Slide 14: Capital Expenditure and Depreciation
Capital Expenditure and Depreciation Capital expenditure Goodwill amortisation EUR million Depreciation Capital expenditure as % of sales 1 600 12 1 400 10 1 200 8 1 000 800 6 600 4 400 2 200 0 0 2001 2002 2003 2004 2005 14 2 February 2006 Stora Enso full year results 2005
Slide 15: Market Outlook
¢ STORAENSO™ Performance Market Outlook
Slide 16: Near-term Market Outlook: Western Europe
Near-term Market Outlook Western Europe Demand Price Comments Magazine Papers SC Good demand; price increases sought CMR Good demand; price increases sought Newsprint Good demand; price increases sought Fine Papers Demand improving seasonally; price WFC increases being sought Demand improving season
Slide 17: Near-term Market Outlook: North America
Near-term Market Outlook North America Demand Price Comments Magazine Papers Modest demand increase expected; prices SC expected to be firm Modest demand increase expected; prices CMR expected to be firm Newsprint Weak demand; price increases announced for February Fine Papers Modest demand increase
Slide 18: Summary
STORAENSG 2 Performance Summary
Slide 19: Summary
Summary • In Europe: – Paper demand is expected to be stimulated by advertising and direct marketing – Publication and fine paper price increases are being sought • In North America: – Modest demand growth is anticipated in magazine and coated fine paper and prices are expected to remain firm – News
Slide 20: Appendix
¢ STORAENSO™ Performance Appendix
Slide 21: Summary Financials
Summary Financials EUR million 2004 2005 I/05 II/05 III/05 IV/05 Sales 12 396 13 188 3 145 3 187 3 219 3 636 EBITDA* 1 508 1 487 389 298 389 412 Operating profit* 427 ** 358 113 18 106 121 Operating profit 796 ** -94 113 6 106 -319 Profit before tax* 360 ** 273 84 0 93 96 Net profit 838 ** -126 60 -
Slide 22: Net Financial Items
Net Financial Items EUR million I/05 II/05 III/05 IV/05 Net interest -27.6 -40.2 -43.8 -53.4 Foreign exchange profit/loss 5.7 11.2 -3.7 1.2 Valuation of financial instruments -19.2 -12.8 27.6 -4.8 Other financial items -2.0 7.2 -5.1 8.1 Total -43.1 -34.6 -25.0 -48.9 • Increased net interest cost in
Slide 23: Non-Recurring Items Effect
Non-Recurring Items Effect Q4/05 Excl APR Mills Under Q4/05 EUR million Non-recs P2007 Actions Scrutiny Other Total IFRS EBITDA* 412 -62 -62 -29 - -154 258 EBIT 121 -69 -298 -29 -44 -439 -319 PTP 96 -69 -298 -29 -44 -439 -343 EPS, EUR 0.13 -0.06 -0.31 -0.03 -0.04 -0.44 -0.31 *Including EUR -18.7 mil
Slide 24: Change in Group Operating Profit from Q3 to Q4 in 2005
Change in Group Operating Profit from Q3 to Q4 in 2005 EUR million 200 58.2 -15.4 180 -13.8 160 -39.7 140 10.4 15.0 120.9 120 106.2 100 80 60 40 20 0 GROUP TOTAL Sales prices Volumes Variable costs Energy Fixed costs Other GROUP TOTAL Q3 and mix Q4 excluding non-recurring items and goodwill amortisa
Slide 25: EPS by Quarter
EPS by Quarter EUR 0,14 0,12 0,10 0,08 0,06 0,04 0,02 0.00 0.00 0,00 IV/03 I/04 II/04 III/04 IV/04 I/05 II/05 III/05 IV/05 excluding non-recurring items 25 2 February 2006 Stora Enso full year results 2005
Slide 26: ROCE by Quarter
ROCE by Quarter % 8 7 6 5 4 3 2 1 0 IV/03 I/04 II/04 III/04 IV/04 I/05 II/05 III/05 IV/05 Target > 13% over the cycle (current WACC 8.7 %) excluding non-recurring items 26 2 February 2006 Stora Enso full year results 2005
Slide 27: Debt/Equity
Debt/Equity 0,70 0,65 0,60 0,55 0,50 0,45 0,40 0,35 0,30 0,25 0,20 IV/03 I/04 II/04 III/04 IV/04 I/05 II/05 III/05 IV/05 Target < 0.8 27 2 February 2006 Stora Enso full year results 2005
Slide 28: Events after the Period
Events after the Period • The Company decided to withdraw from a consumer board production JV in China previously announced in August 2005 • At Port Hawkesbury Mill in Canada a lock-out was declared on 26 January 2006 – The mill has been at a stand-still since 24 December 2005 due to labour negotiat
Slide 29: Financial Performance - 2005
Financial Performance - 2005 • Schneidersöhne acquisition increased sales • Operating profit decreased due to: – Lower sales volumes – Higher variable costs – Transportation, wood and energy – Labour dispute in Finland – By approximately EUR 190 million, assuming full production • Non-recurring item
Slide 30: Composition of Costs in 2005, Excluding Non-Recurring Items
Composition of Costs in 2005, Excluding Non-Recurring Items Costs % of costs Variable costs 67 Fibre 19 Chemicals and Fillers 9 Other Materials 2 Energy 8 Production Service 12 Logistics & Commisions 12 Other Variable 6 Fixed costs 24 Personnel 17 Other 7 Depreciation and impairment 9 Total costs 10
Slide 31: Operating Profit
Operating Profit EUR million 1 600 1 400 1 200 1 000 800 600 400 200 0 2001 2002 2003 2004 2005 Comparatives excluding amortisation excluding non-recurring items 31 2 February 2006 Stora Enso full year results 2005
Slide 32: Change in Group Operating Profit from 2004 to 2005
Change in Group Operating Profit from 2004 to 2005 EUR million 800 304.6 -138.1 700 -253.3 600 500 426.7 152.4 -38.6 400 -96.2 357.5 300 200 100 0 GROUP TOTAL Sales prices Volumes Variable costs Energy Fixed costs Other GROUP TOTAL 04 and mix 05 excluding non-recurring items and goodwill amortisatio
Slide 33: Earnings per Share (EPS)
Earnings per Share (EPS) EUR 1,00 0,90 0,80 0,70 0,60 0,50 0,40 0,30 0,20 0,10 0,00 2001 2002 2003 2004 2005 excluding non-recurring items 33 2 February 2006 Stora Enso full year results 2005
Slide 34: Non-recurring Items Effect
Non-recurring Items Effect EUR 2005 excl Mills under 2005 P2007 APR actions Other Total million non-recs Scrutiny IFRS EBITDA * 1 487 -62 -62 -29 - -154 1 334 EBIT 358 -69 -310 -29 -44 -451 -94 PTP 273 -69 -310 -29 -44 -451 -178 EPS, EUR 0.28 -0.06 -0.31 -0.03 -0.04 -0.44 -0.16 *Including EUR -18.7
Slide 35: ROCE
ROCE % 13 12 11 10 9 8 7 6 5 4 3 2 1 0 2001 2002 2003 2004 2005 Target > 13% over the cycle (current WACC 8.7 %) excluding non-recurring items 35 2 February 2006 Stora Enso full year results 2005
Slide 36: Debt/Equity
Debt/Equity 0,70 0,65 0,60 0,55 0,50 0,45 0,40 0,35 0,30 0,25 0,20 2001 2002 2003 2004 2005 Target < 0.8 excluding non-recurring items 36 2 February 2006 Stora Enso full year results 2005
Slide 37: Transaction Risk and Hedges in 2005
Transaction Risk and Hedges in 2005 EUR million EUR USD GBP SEK CAD JPY Other Total Sales 2005 6 500 3 400 800 1 200 100 200 1 000 13 200 Costs 2005 - 6 500 -1 900 -200 -2 100 -200 0 -800 -11 700 Net operating cash flow 0 1 500 600 -900 -100 200 200 1 500 Transaction hedges 601 147 -553 0 68 as at 3
Slide 38: Operating Profit by Division
Operating Profit by Division EUR million IV/04 I/05 II/05 III/05 IV/05 Publication Paper 38.5 21.6 31.5 67.9 72.3 % of sales 3.0 2.0 2.8 5.8 5.6 Fine Paper 13.9 48.1 -13.6 -1.2 28.9 % of sales 2.0 6.8 -2.2 -0.2 3.9 Packaging Boards 39.6 72.0 11.9 73.5 62.6 % of sales 5.2 9.1 1.5 9.3 7.5 Wood Product
Slide 39: Publication Paper
Publication Paper Change% EUR million 2004 2005 I/05 II/05 III/05 IV/05 IV/III Sales 4 621.4 4 675.9 1 104.4 1 125.3 1 166.0 1 280.2 9.8 Operating profit 104.6 193.3 21.6 31.5 67.9 72.3 6.5 % of sales 2.3 4.1 2.0 2.8 5.8 5.6 ROOC, %* 2.4 4.4 2.0 2.8 5.9 6.4 Deliveries, 1000 t 7 315 7 008 1 685 1 708
Slide 40: Fine Paper
Fine Paper Change% EUR million 2004 2005 I/05 II/05 III/05 IV/05 III/IV Sales 2 668.8 2 690.3 708.7 618.3 625.4 737.9 18.0 Operating profit 54.5 62.2 48.1 -13.6 -1.2 28.9 n/a % of sales 2.0 2.3 6.8 -2.2 -0.2 3.9 ROOC, %* 1.9 2.2 6.8 -1.9 -0.2 4.2 Deliveries, 1000 t 3 596 3 521 960 808 811 942 16.2 P
Slide 41: Packaging Boards
Packaging Boards Change% EUR million 2004 2005 I/05 II/05 III/05 IV/05 IV/III Sales 3 053.4 3 190.2 794.5 768.2 788.7 838.8 6.4 Operating profit 271.3 220.0 72.0 11.9 73.5 62.6 -14.8 % of sales 8.9 6.9 9.1 1.5 9.3 7.5 ROOC, %* 9.0 7.3 9.3 1.5 9.6 8.3 Deliveries, 1000 t 3 499 3 621 929 873 890 929 4.
Slide 42: Wood Products
Wood Products Change% EUR million 2004 2005 I/05 II/05 III/05 IV/05 IV/III Sales 1 566.8 1 588.3 366.9 433.7 398.0 389.7 -2.1 Operating profit 34.7 -3.1 -4.0 9.9 -1.8 -7.2 n/m % of sales 2.2 -0.2 -1.1 2.3 -0.5 -1.8 ROOC, %* 5.2 -0.5 -2.3 5.5 -1.0 -4.2 Deliveries, 1000 t 6 664 6 741 1 541 1 855 1 639
Slide 43: Main Events in 2005
Main Events in 2005 First quarter: • Acquisition of the remaining 34% minority shareholding in former Sylvester • Acquisition of UPM’s 29% minority shareholding in Corenso Second quarter: • Closing of the acquisition of the French merchant Papeteries de France • Signing of memorandum of understandin
Slide 44: Main Events in 2005 (cont.)
Main Events in 2005 (cont.) Third quarter: • Closing of the acquisition of the German paper merchant Schneidersöhne Group • Land purchases in Brazil (37 000 hectares) and Uruguay (20 000 hectares) Fourth quarter: • The Company purchased 34 000 hectares of timber and land use rights in Guangxi, China
Slide 45: Shareholder Information
STORAENSG 2 Performance Shareholder Information
Slide 46: Earnings Per Share and Dividend
Earnings Per Share and Dividend EUR EPS, excluding non-recurring items Dividend Payout ratio % 1,00 200 % 0,90 180 % 0,80 160 % 0,70 140 % 0,60 120 % 0,50 100 % * 0,40 80 % 0,30 60 % 0,20 40 % 0,10 20 % 0,00 0% 2001 2002 2003 2004 2005 *) Board proposal 46 2 February 2006 Stora Enso full year result
Slide 47: Share Buy-Back Programme
Share Buy-Back Programme Current programme approved by AGM 2005 to end 21 March 2006. Allows repurchase up to: A shares 17 900 000 R shares 62 150 000 Status through 12 October 2005 (when last buy-backs occurred): Number of Average Percent of Shares shares purchased: purchase price: authorisation A
Slide 48: Dividend Proposal
Dividend Proposal • Dividend proposal: EUR 0.45 per share • Payout ratio: 161% excl. non-recurring items • Total dividend payment: about EUR 355 million (assuming 789 million shares outstanding) • Dividend yield: 4.0% (at a share price of EUR 11.25) • Record date: 24 March 2006 • Dividend payment da
Slide 49: To view Stora Enso's full year results for 2005, visit www.storaenso.com
To view Stora Enso’s full year results for 2005, visit www.storaenso.com