INTERIM REPORTJANUARY-JUNE 2011Per Lindberg, President and CEOBertil Carlsén, CFO21 July, 2011                     1
INVESTMENT IN PACCESS PACKAGING• Investment corresponding to 30% in  PACCESS Packaging  » ~60 employees and sales of MUSD ...
AGENDA• Highlights• Development by Business Area• Financials• Outlook                           3
HIGHLIGHTS IN Q2 2011• Strong Q2 result  » EBIT of MSEK 275, margin 12%  » The lower EBIT vs. Q1 mainly corresponds    to ...
CONTINUED STRONG RESULTS                            Billerud Group                                                        ...
BUSINESS AREAS & SEGMENTSPACKAGING &                                 PACKAGING BOARDSSPECIALITY PAPER                     ...
PACKAGING & SPECIALITY PAPERMarket situation in Q2 2011• Order situation for sack and kraft  paper returned to a more norm...
PACKAGING & SPECIALITY PAPERFinancials – Q2 2011 vs. Q1 2011                                                       160• Op...
PACKAGING BOARDSMarket situation in Q2 2011• Order situation remained good but  with some seasonal decline• Increased pric...
PACKAGING BOARDSFinancials – Q2 2011 vs. Q1 2011                                                      140• Operating profi...
MARKET PULPMarket situation in Q2 2011• Demand for NBSK remained good• ~45 USD/tonne price increase in  Europe• Two price ...
MARKET PULPFinancials – Q2 2011 vs. Q1 2011                                                       120                     ...
Q2 IN SUM• Strong Q2 result given maintenance  shutdown   » EBIT margin of 12%   » Return on equity of 19%• Strong underly...
FINANCIALS             14
QUARTERLY KEY FIGURES                         Q2 2011   Q1 2011   Q2 2010Sales volume (ktonnes)    335       369       309...
EBIT BRIDGE Q2 2011 vs. Q1 2011       350                332                          +81                                 ...
JANUARY-JUNE KEY FIGURES                         Jan-Jun 2011   Jan-Jun 2010   vs. 2010Sales volume (ktonnes)       704   ...
SEASONALITY RELATED TO PERIODIC SHUTDOWNS                             Estimated            Estimated breakdown of      Pla...
FINANCIAL TARGETS MET 4 CONSECUTIVE QUARTERS                                     14%                                     1...
INCREASED PRODUCTIVITY                                         1.4                                         1.2Quarterly ne...
DSO days     09       0                                        0                                              10          ...
CASH FLOW     MSEK                                                 Q2 2011   Jan-Jun 2011   Jan-Jun 2010     Operating sur...
MARKET PRICES AFFECTING RESULT         Electricity index (Sweden*)                                         Wood price inde...
EASENED SEK STRENGTH       Average rate   Average rate    Spot rate     Q2 2011 vs.   18 July 2011         Q2 2011        ...
CURRENCY SITUATION• Profit effect of net flow hedging Jul-Sep Oct-Dec Jan-Mar Apr-Jun Total 12  MSEK 52 for Q2 2011 (29) a...
OUTLOOK          26
OUTLOOK FY 2011• The order situation at the start of  the third quarter remains good and  at normal levels• Additional pri...
Q&A      28
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Billerud Interim Report Q2 2011 presentation

  1. 1. INTERIM REPORTJANUARY-JUNE 2011Per Lindberg, President and CEOBertil Carlsén, CFO21 July, 2011 1
  2. 2. INVESTMENT IN PACCESS PACKAGING• Investment corresponding to 30% in PACCESS Packaging » ~60 employees and sales of MUSD ~27• Core expertise in developing packaging for production and delivery in Asia » Customers primarily multinational brand owners• Create a strong platform for future growth in Asia » Access to customer and supplier base 2
  3. 3. AGENDA• Highlights• Development by Business Area• Financials• Outlook 3
  4. 4. HIGHLIGHTS IN Q2 2011• Strong Q2 result » EBIT of MSEK 275, margin 12% » The lower EBIT vs. Q1 mainly corresponds to the periodic maintenance shutdown in Skärblacka (MSEK 56)• Strong underlying earnings for packaging paper » Order situation remained good, although at a lower and more normal level » Over 3% increase in local prices (Q2 vs. Q1)• Price increases compensated for higher costs and a stronger SEK 4
  5. 5. CONTINUED STRONG RESULTS Billerud Group Packaging Paper 350 14% 300 14% 300 12% 12% 250 250 10% 10% 200 EBIT margin, % EBIT margin, % EBIT, MSEK EBIT, MSEK 200 8% 8% 150 150 6% 6% 100 100 4% 4% 50 50 2% 2% EBIT margin 0 0% 0 0% Actual Actual Adjusted* EBIT Actual Actual Adjusted* Jan-Mar Apr-Jun 2011 Jan-Mar Apr-Jun 2011 5*Excluding cost for the periodic maintenance shutdown at Skärblacka.
  6. 6. BUSINESS AREAS & SEGMENTSPACKAGING & PACKAGING BOARDSSPECIALITY PAPER S/C Fluting, Liner, Liquid BoardKraft & Sack Paper MARKET PULP Nordic Bleached Softwood Kraft PulpNote: Graph shows sales breakdown perbusiness area for January-June 2011. 6
  7. 7. PACKAGING & SPECIALITY PAPERMarket situation in Q2 2011• Order situation for sack and kraft paper returned to a more normal level Consumer• Stock levels were reduced after Building & construction being built up in Q1• Increased price level in local Food currency for all products vs. Q1 7
  8. 8. PACKAGING & SPECIALITY PAPERFinancials – Q2 2011 vs. Q1 2011 160• Operating profit down by MSEK 38 140 120• Increased fixed costs and lower EBIT, MSEK 100 sales volumes due to maintenance 80 shutdown 60 40 » Carries ~70% of a Skärblacka 20 shutdown cost 0 Q2 Q3 Q4 Q1 Q2• Improved prices 2010 2011 Q2 2011 Q1 2011 Q2 2010 FY 2010 Net sales, MSEK 1,079 1,217 1,009 4,166 Operating profit, MSEK 102 140 84 417 Operating margin, % 9 12 8 10 8
  9. 9. PACKAGING BOARDSMarket situation in Q2 2011• Order situation remained good but with some seasonal decline• Increased price level in local currency for all products vs. Q1 9
  10. 10. PACKAGING BOARDSFinancials – Q2 2011 vs. Q1 2011 140• Operating profit down by MSEK 3 120 100 EBIT, MSEK• Improved prices 80 60• Higher fixed costs and lower sales 40 volumes, partly due to maintenance 20 0 shutdown -20• Q2 is generally seasonally weaker Q2 Q3 Q4 Q1 Q2 2010 2011 than Q1 Q2 2011 Q1 2011 Q2 2010 FY 2010 Net sales, MSEK 704 728 518 2,428 Operating profit, MSEK 94 97 -14 271 Operating margin, % 13 13 -3 11 10
  11. 11. MARKET PULPMarket situation in Q2 2011• Demand for NBSK remained good• ~45 USD/tonne price increase in Europe• Two price increase were announced for Europe » 1,010 USD/tonne for April » 1,040 USD/tonne for June• The June price increase was not fully implemented but stayed at ~1,025 USD/tonne 11
  12. 12. MARKET PULPFinancials – Q2 2011 vs. Q1 2011 120 100• Operating profit down by MSEK 18 80 EBIT, MSEK 60• Improved prices in local currency 40 compensated for lower USD rate 20 0• Lower sales and product volumes -20 as well as higher fixed costs, partly -40 Q2 Q3 Q4 Q1 Q2 due to maintenance shutdown 2010 2011 Q2 2011 Q1 2011 Q2 2010 FY 2010 Net sales, MSEK 435 436 445 1,731 Operating profit, MSEK 20 38 100 276 Operating margin, % 5 9 22 16 12
  13. 13. Q2 IN SUM• Strong Q2 result given maintenance shutdown » EBIT margin of 12% » Return on equity of 19%• Strong underlying earnings for packaging paper 13
  14. 14. FINANCIALS 14
  15. 15. QUARTERLY KEY FIGURES Q2 2011 Q1 2011 Q2 2010Sales volume (ktonnes) 335 369 309Net sales, MSEK 2,383 2,547 2,108Operating profit, MSEK 275 332 201Operating margin 12% 13% 10%Profit/share, SEK 1.88 2.28 1.30Net debt/equity ratio 0.06 0.05 0.21 15
  16. 16. EBIT BRIDGE Q2 2011 vs. Q1 2011 350 332 +81 -1 -5 300 +2 275 -51 250 -83 200MSEK 150 100 50 0 EBIT Sales & Selling prices Effects of Change in Change in Change in EBIT Q1 2011 production (in respective exchange rate variable costs fixed costs depreciation Q2 2011 volumes* sales fluctuations, currency) incl. hedging * Includes product mix. 16
  17. 17. JANUARY-JUNE KEY FIGURES Jan-Jun 2011 Jan-Jun 2010 vs. 2010Sales volume (ktonnes) 704 652 +8%Net sales, MSEK 4,930 4,298 +15%Operating profit, MSEK 607 435 +40%Operating margin 12% 10% +2 p.p.Profit/share, SEK 4.16 2.82 +48%Net debt/equity ratio 0.06 0.21 +0.15 17
  18. 18. SEASONALITY RELATED TO PERIODIC SHUTDOWNS Estimated Estimated breakdown of Planned date shutdown cost shutdown cost by business area of shutdown Mill MSEK PSP PB MP 2011 Gruvön ~100 ~30% ~60% ~10% Q4 Karlsborg ~40 ~50% 0% ~50% Q3 Skärblacka ~60 ~70% ~15% ~15% Q21) Minus equals increase in net debt 18
  19. 19. FINANCIAL TARGETS MET 4 CONSECUTIVE QUARTERS 14% 12%EBIT margin, rolling 12 months (%) 10% Financial target 8% 6% 4% 2% 0% FY 06 FY 07 FY 08 FY 09 FY 10 -2% 19
  20. 20. INCREASED PRODUCTIVITY 1.4 1.2Quarterly net sales per employee, MSEK 1.0 0.8 0.6 0.4 0.2 0.0 Q1 05 Q1 06 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Focus Process efficiency Customer-focused development
  21. 21. DSO days 09 0 0 10 20 30 40 50 60 70 09 131 0 09 430 0 09 731 1 10 031 0 10 131 0 10 430 0 DSO 10 731 1 11 031 0 11 131 04 30 % of total receivables 09 01 0,0 1,0 2,0 3,0 4,0 5,0 6,0 3 09 1 05 3 09 1 09 3 10 0 01 3 10 121 05 3 10 1 09 Overdue 3 11 0 01 3 11 1 05 WORKING CAPITAL KEY RATIOS 31 Working capital (excl. IAS)/quartely net turnover 0% 10% 20% 30% 40% 50% 60% 70% 09 09 09 09 10 10 10 10 11 11 03 06 09 12 03 06 09 12 03 06 WC as % of quarterly sales
  22. 22. CASH FLOW MSEK Q2 2011 Jan-Jun 2011 Jan-Jun 2010 Operating surplus, etc 421 902 625 Change in working capital, etc. 57 -244 -99 Net financial items, taxes, etc. -10 -191 -58 Cash flow from operating activities 468 467 468 Current net investments -129 -211 -137 Operating cash flow 339 256 331 Dividend -361 -361 -52 Other items, not affecting cash flow -1 -7 -4 Change in net debt 1) -23 -112 2751) Minus equals increase in net debt 22
  23. 23. MARKET PRICES AFFECTING RESULT Electricity index (Sweden*) Wood price index 160 280 150 240 140 130 200 120 160 110 100 120 90 80 80 2004 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 2004 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 2005 2006 2007 2007 2008 2009 2010 2010 2005 2006 2007 2007 2008 2009 2010 2010 Source: Nordpool. *Price area Sweden Source: Billerud Market Pulp (USD/t) TCW index*1,050 1181,000 115 950 112 900 850 109 800 106 750 103 700 100 650 600 97 550 94 2004 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 2004 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 2005 2006 2007 2007 2008 2009 2010 2010 2005 2006 2007 2007 2008 2009 2010 2010 Note: Average price for the quarter Source: Riksbanken *Total Competitiveness Weights Index 23
  24. 24. EASENED SEK STRENGTH Average rate Average rate Spot rate Q2 2011 vs. 18 July 2011 Q2 2011 Q1 2011 18 July 2011 Q1 2011 vs. Q2 2011 EUR 9.02 8.87 9.25 +2% +3% USD 6.26 6.48 6.59 -3% +5% GBP 10.22 10.39 10.62 -2% +4% 24
  25. 25. CURRENCY SITUATION• Profit effect of net flow hedging Jul-Sep Oct-Dec Jan-Mar Apr-Jun Total 12 MSEK 52 for Q2 2011 (29) and 2011 2011 2012 2012 months MSEK 151 for Jan-Jun 2011 (146) Average Average Average Average Average• Market value of outstanding hedged hedged hedged hedged hedged currency currency currency currency currency contracts not relating to rates rates rates rates rates accounts receivables was (hedged net (hedged net (hedged net (hedged net (hedged net flows) flows) flows) flows) flows) MSEK 49 (as of 30/6-11)• Hedge level 12 months forward: 9.12 9.33 9.43 9.21 9.25EUR 51% (86%) (61%) (46%) (11%) (51%) 7.06 6.66 6.57 6.51 6.85USD 43% (82%) (57%) (22%) (10%) (43%)GBP 42% 10.65 10.64 10.64 10.51 10.64 (83%) (56%) (20%) (10%) (42%)Note: Data in table and graph are as of 30 June 2011. 25
  26. 26. OUTLOOK 26
  27. 27. OUTLOOK FY 2011• The order situation at the start of the third quarter remains good and at normal levels• Additional price increases have not been announced• Continued stable development expected in the third quarter• Unease in the financial market and its effect on the business cycle make development in the subsequent period somewhat more uncertain 27
  28. 28. Q&A 28
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