Creating value in the bioeconomy - SVP, Investor Relations Ulla Paajanen 5 December 2018 - Stora Enso
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Creating value in the bioeconomy SVP, Investor Relations Ulla Paajanen 5 December 2018
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 profitability; and statements preceded by “believes”, “expects”, “anticipates”, “foresees”, or similar expressions, are forward-looking statements. Since these statements are based on current plans, estimates and projections, they involve risks and uncertainties which may cause actual results to materially differ from those expressed in such forward-looking statements. Such factors include, but are not limited to: (1) operating factors such as continued success of manufacturing activities and the achievement of efficiencies therein, continued success of product development, acceptance of new products or services by the group’s targeted customers, success of the existing and future collaboration arrangements, changes in business strategy or development plans or targets, changes in the degree of protection created by the group’s patents and other intellectual property rights, the availability of capital on acceptable terms; (2) industry conditions, such as strength of product demand, intensity of competition, prevailing and future global market prices for the group’s products and the pricing pressures thereto, price fluctuations in raw materials, financial condition of the customers and the competitors of the group, the potential introduction of competing products and technologies by competitors; and (3) general economic conditions, such as rates of economic growth in the group’s principal geographic markets or fluctuations in exchange and interest rates. All statements are based on management’s best assumptions and beliefs in light of the information currently available to it and Stora Enso assumes no obligation to publicly update or revise any forward-looking statement except to the extent legally required. 2 5 December 2018 Stora Enso
We are perfectly positioned to benefit from the
megatrends…
Global warming
Growing middle class
Increasing demand
Eco awareness for raw material
that is renewable,
Changing lifestyles reusable and
fossil free
Urbanisation
Growing population
Digitalisation
3 5 December 2018
Stora Enso
…as The renewable materials company
Everything that’s
made with fossil-
based materials
today can be
made from a tree
tomorrow
4 5 December 2018
Stora Enso
Our transformation strategy continues… …delivering sustainable profitable growth
Customer insight Strategic growth
Developing offerings investments
according to Capex at or below
customers’ depreciation and
requirements to create depletion*
value and growth, with over the business cycle
sales excellence.
Innovation Structured
Focus on bio- processes Dividend Sustainable
based materials Clear roles and To distribute profitable
and chemicals, Sustainable responsibilities, 50% of EPS over Cash flow growth
digitalisation, profitable standardised and the cycle. from Business and
intelligent growth harmonised working 2015–2017 operations CAPEX driven by
packaging and new methods, CAGR 11% ROCE
packaging operational
solutions. excellence.
Motivated employees
Focus on inspiring Strong balance sheet
leadership, Net debt to operational
good communication, EBITDA target reduced
performance from 3x to
We are well-positioned for profitable growth
– strength of our portfolio
Sales 2017 Market growth Position
EUR and % of group’s sales
2016–2030 for virgin board:
Consumer
Board
+ 2.5 BEUR 25% Europe 1.8%, North America 1.2%,
Latin America 3.3%, China 4.3%, Rest
of Asia 3.4%, Africa 2.5%
#1 in LPB, FSB and CUK in Europe or
the world
+
12% High quality SC fluting 1-3%;
Packaging
Solutions
1.3 BEUR Kraftliner 2–3% excl. North Am; #6 in containerboard in Europe
Testliner 3–4% Eastern Europe
+
15% Market pulp 2.3%; Fastest growth in Widest pulp grades portfolio
Biomaterials 1.5 BEUR
tissue (3.2%) #1 in Europe in fluff
#1 in Europe and
Wood
Products
+ 1.7 BEUR
17% Global sawn softwood 2–3%,
European new construction 3.5% #4 in the world in supplying wooden
construction material
Paper
- 2.9 BEUR
29%
Declining 3–5% annually #2 in Europe
6 5 December 2018
Stora Enso
We are investing more in innovation and R&D…
Peers:
Borregaard
IP
Metsä Board
Mondi
SCA
Smurfit Kappa
UPM
Source: Stora Enso, annual reports 2017
7 5 December 2018
Stora Enso
…and that is accelerating our profitable growth
In 2017
7% Value added
of our sales came services in Bio barriers
from new products corrugated
packaging
and services
High-quality Building
Intelligent
container- components
packaging
boards and systems
Long-term
target
15%
of our sales is expected
to come from new
products and services
Next
generation Future
Biocomposites liquid bio-based
and food chemicals
packaging
8 5 December 2018
Stora Enso
We see many new opportunities to replace fossil-based
materials…
Lignin-based products Biocomposites Liquid packaging MFC
• LineoTM by Stora Enso • DuraSenseTM by Stora Enso • Source reduction
• Carbon fibre for wood-based biocomposites
• Carbon for energy storage • Less fossil-based materials MFC films
with higher share of fibre • Functional barriers for paper
and board packaging
• Market size 1.2 BEUR • Market size 7 BEUR • Market size 1.5 BEUR
• Growth ~20%/a • Growth ~15%/a • Growth ~5%/a
• EBITDA 30–50% • EBITDA 20–30% • EBITDA >20%
9 5 December 2018
Stora Enso
…Iceland Foods chooses our Trayforma to
replace plastics
• Iceland Foods, the UK’s leading specialist retailer
in the frozen food category, launched the first
plastic-free pledge for its own brand products for a
UK supermarket
− Target is to be plastic-free by 2023 through an
overhaul of their entire product range
• Ready meals packed in paperboard trays
• TrayformaTM by Stora Enso food-safe and suitable
for cooking at high temperatures in ovens and
microwaves food trays
10 5 December 2018
Stora EnsoDigitalisation gives us a competitive advantage
Gain competitive advantage by making full use of digitalisation, optimising
GOAL current business and enabling new business models
Customer Industrial Smart • Recently awarded as Finland’s most
Engagement Digitalisation Backoffice startup-friendly company
• Screened ~300 digital startups via two
Digital Customer Robotic Process structured engagement programs
Smart Operations
Experience Automation (Accelerator and Combient Foundry) and
established deeper collaboration with 9
New Business Models
Transparent
Intelligent Processes
• Targeting 33 robotic process automation
Supply Chain (RPA) processes end of 2018
11 5 December 2018
Stora EnsoWe control ~30% of our wood raw material
– a critical advantage in the bioeconomy
Stora Enso’s forest assets*
Pulpwood plantation availability and wood cost
(49)
(30)
(36)
(40) (56)
(71)
million Standing Annual (30)
m3sub stock procurement
(51)
(48)
(54) (48)
Sweden 78.5 9.4
Finland 20.8 13.5
Potential for wood supply expansion
Brazil 3.4 2.0
Wood supply restrictions for expansion
Uruguay 7.6 2.3
China 5.1 0.3 ( ) Wood cost (USD/m3/sob) at mill - hardwood
Consumption, million m3 sub (solid under bark) Long-term supply contracts, % Sold externally of annual harvesting, %
Supply from own sources based on ownership, % Purchased, %
12 5 December 2018 * Sweden includes Stora Enso’s share of Bergvik Skog and Finland Stora Enso’s share of Tornator.
Stora Enso Brazil and Uruguay with 50% share.Direct ownership of the forests in Sweden
Stora Enso’s 49% holding Stora Enso’s Swedish
Unit
of Bergvik Skog in Sweden forests after transaction Financial impacts estimate for
Stora Enso
Ha (gross land) Ha (‘000) 1 133 1 388
• Bergvik Väst consolidated as a
Ha (productive forest) Ha (‘000) 926 1 149 subsidiary
Forest cubic meters (m3fo) m3fo (million) 126 144 • Cash out effect of 200 MEUR
• Debt would increase by 800
Forest cubic meters / ha m3fo/ha 136 125 MEUR
(productive f)
• Net debt to operational EBITDA
IFRS value* (Bio Assets + Land) MEUR 2 284 2 755 ratio would increase by 0.5x
IFRS value*/ha (productive forest) EUR/ha 2 465 2 397 • Capital employed would increase
by 1 BEUR resulting a decrease
IFRS value*/m3fo EUR/m3fo 18.1 19.1
in ROCE of 1%-point
Values calculated with LRF Stora Enso’s 49% holding Stora Enso’s Swedish
Unit
Konsult’s statistics** of Bergvik Skog in Sweden forests after transaction
Value/m3fo EUR/m3fo 45.2 45.2
Value of the timber (m3fo) MEUR 5 703 6 505
* IFRS Value based on 31 Dec 2017 valuation.
**LRF Konsult’s market statistics for forest property prices. These reference prices are applicable for small-size lands. Calculation for Stora Enso is referential and based on LRF’s price for Mellersta (445 SEK/m3fo) and applied for all properties.
FX rate of 9.8438 (European central bank, 31 Dec 2017) applied to all SEK currencies.
13 5 December 2018
Stora EnsoOulu Mill conversion opportunity for packaging
Potential reduction of Stora Enso paper capacity by 20%
Feasibility study to convert Oulu Mill
700 MEUR investment
Brown-based cartonboard line (450 kt/a)
Kraftliner line (400 kt/a)
Integrated kraft pulp (500 kt/a)
Integrated new CTMP plant (350 kt/a)
Production of the potential new lines would start 2020
The other option is to continue the current fine paper
production
14 5 December 2018
Stora EnsoOur formula for success continues…
Sustainable profitable growth 4–6%*
Strong cash flow generation
Capex ~3 BEUR**
Dividend ~50% of EPS
Net debt to operational EBITDA…sustaining dividend growth…
CAGR: 9.4% • Dividends linked to the long-
term performance
• 50% of EPS over the cycle
Dividend of EUR 0.41 per share for 2017 totaling EUR 323 million was paid in April 2018
* Distribution of capital
16 5 December 2018
Stora Enso…and investing selectively in M&A to sustain
profitable growth
Acquisitions to be considered in the following areas
#1 #2 #3
To strengthen To strengthen New products
Examples
relative market existing synergies and technologies
share in focused supporting our
#2 Bergvik Skog
areas strategies #3 Virdia and Cellutech
Supporting sustainable profitable growth
17 5 December 2018
Stora EnsoWe have several attractive profitable growth options 18 5 December 2018 Stora Enso
Performance clearly improving
Summary financials Q3 2018
Change% Change%
Q3/18- Q3/18-
EUR million Q3/18 Q3/17 Q3/17 Q2/18 Q2/18
Sales 2 585 2 509 3.0% 2 664 -3.0%
Operational EBITDA 502 432 16.3% 466 7.8%
Operational EBITDA margin 19.4% 17.2% 17.5%
Operational EBIT 358 290 23.4% 327 9.4%
Operational EBIT margin 13.8% 11.6% 12.3%
Profit before tax excl. IAC 305 244 25.0% 285 7.0%
EPS excl. IAC, EUR 0.31 0.27 13.3% 0.31 -2.2%
EPS (basic), EUR 0.27 0.24 12.9% 0.28 -2.5%
Operational ROCE 16.7% 13.9% 20.1% 15.5% 7.7%
Cash Flow from Operations 457 430 6.2% 357 28.1%
Net debt/last 12 months’ operational EBITDA 1.1 1.6 1.3
19 5 December 2018
Stora EnsoStrategic targets in good progress – still more potential Group strategic targets Q3 17 Q3 18 Dividend To distribute 50% of EPS over the cycle Growth* To grow faster than the relevant market 11.1% (YoY) 3.6% (YoY)** Net debt to operational EBITDA 20% 22.4% 30.4% Biomaterials Operational ROOC > 15% 14.8% 20.9% Wood Products Operational ROOC > 20% 21.3% 31.6% Paper Cash flow after investing activities to sales > 7% 0.8% 8.3% * Excluding Paper ** Excluding Paper and Puumerkki 20 5 December 2018 Stora Enso
Outlook for Q4 2018
Compared to Q3 2018
• Sales are estimated to be slightly higher than the amount
of 2 585 MEUR recorded in Q3/2018
• Operational EBIT is expected to be in line with or
somewhat lower than the 358 MEUR recorded in Q3/2018
• A negative 10 MEUR impact on operational EBIT is
expected due to production restrictions at uncoated fine
paper mill in Nymölla, Sweden. This is because water at a
near by lake, which supplies water for the mill operations,
is at too low level. The impact of annual maintenance
shutdowns is expected to be similar to Q3/2018. These
impacts are included in the above outlook.
Annual maintenance Q4 2018 Q3 2018
Consumer Board Skoghall and Fors mills Imatra and Ingerois mills
Packaging Solutions - Ostrołęka Mill
Biomaterials Montes del Plata and Sunila Mill
Skutskär mills
Paper - Veitsiluoto Mill
21 5 December 2018
Stora EnsoAnother quarter of profitable growth Visible strength of the portfolio • Seventh consecutive quarter of sales growth • Fifth consecutive quarter of double digit operational EBIT margin. Q3 YoY operational EBIT margin improved 2.2 percentage points. • Fifth consecutive quarter of operational ROCE well above the strategic target of 13% • Balance sheet continues to strengthen • Operational EBIT expected to be clearly higher in 2018 compared to 2017 • Moving from asset transformation to innovation and sales transformation continues successfully 22 5 December 2018 Stora Enso
POWER OF A
TREE
Creating value in the bioeconomy
23 5 December 2018
Stora EnsoYou can also read
