Deutsche Bank 15th Annual European Leveraged Finance Conference in London

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Deutsche Bank 15th Annual European Leveraged Finance Conference in London. Presentation by CFO Markus Rauramo. (9 June 2011)

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Deutsche Bank 15th Annual European Leveraged Finance Conference in London

  1. 1. rethink. Stora EnsoQ1 2011 Strong – Earnings more than doubledCFO Markus Rauramo
  2. 2. It should b noted th t certain statements h i which are not hi t i l f t i l di h ld be t d that t i t t t herein hi h t historical facts, including, without ith tlimitation those regarding expectations for market growth and developments; expectations for growthand profitability; and statements preceded by “believes”, “expects”, “anticipates”, “foresees”, or similarexpressions, are forward-looking statements within the meaning of the United States Private SecuritiesLitigation R fLiti ti Reform A t of 1995 Si Act f 1995. Since th these statements are b t t t based on current plans, estimates and d t l ti t dprojections, they involve risks and uncertainties which may cause actual results to materially differ fromthose 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 ofefficiencies th i continued success of product d ffi i i therein, ti d f d t development, acceptance of new products or services l t t f d t iby 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 protectioncreated by the Group’s patents and other intellectual property rights, the availability of capital onacceptable terms (2) ind str conditions s ch as strength of prod ct demand intensit of competition terms; industry conditions, such product demand, intensity 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 theGroup, 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 conditions,markets or fluctuations in exchange and interest rates. rethink. Stora Enso 9 June 2011 2
  3. 3. Stora Enso – sustainable competitive differentiation sustainable, 9 June 2011 3
  4. 4. rethink businessrethink innovationrethink customer servicerethink our attituderethink productsrethink processesrethink materials thi k t i lrethink the future 4
  5. 5. World needs a new approach to materials rethink. Stora Enso 9 June 2011 Source: www.cartonawards.com 5
  6. 6. rethink. Stora Enso 9 June 2011 6
  7. 7. Q1 2011 Strong – Earnings more than doubledSales up 19%EBIT excl NRI and fair valuations up 108%EPS excl NRI up 47%Q1 2011 compared to Q1 2010 rethink. Stora Enso 9 June 2011 7
  8. 8. Earnings improving g p gHigher prices and continued productivity improvement EBIT excl NRI and fair valuation EBIT margin*, % 4 Q avg ROCE* , % 4 Q avg 300 12 % 250 10 % 200 8% onEUR millio 150 6% 100 4% 50 2% 0 0% *excluding NRI and fair valuation rethink. Stora Enso 9 June 2011 8
  9. 9. Almost a billion cash from working capital g pQ1 2011 increase – preparing for Q2 2 800 28,0 % 2 600 26,0 % 2 400 24,0 24 0 % 2 200 22,0 % illion 2 000 20,0 %EUR mi 1 800 18,0 % 1 600 16,0 % 1 400 14,0 % 1 200 12,0 % 1 000 10,0 10 0 % 08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q3 09Q4 10Q1 10Q2 10Q3 10Q4 11Q1 Operative Working Capital at the end of Q Working Capital per Sales ratio Operative W/Cap = inventories + trade receivables – trade payables rethink. Stora Enso 9 June 2011 9
  10. 10. Capital expenditure following the p p p g policy yBelow depreciation over the business cycle 250 Forecast FY 2011: 10 % Capex approximately EUR 550 million. 200 The equity injection 8% approximately EUR 120 million. illion 150 6%EUR mi 100 4% 50 2% 0 0% Capex Depreciation and impairment excl NRI Capex % of sales Total operations rethink. Stora Enso 9 June 2011 10
  11. 11. Net debt down 15% y-o-y t d bt d Net Debt Net Debt/EBITDA excl NRI and fair valuations 5 000 6,0 4 500 5,0 4 000 4,0 ionEUR milli 3 500 3,0 3 000 2,0 2 500 1,0 2 000 0,0 00 SENA divestment closed in Q4 2007 EBITDA: Continuing operations g p Merchants divestment closed in Q2 2008 Net debt: Total operations rethink. Stora Enso 9 June 2011 11
  12. 12. Maturity p y profile 31 March 2011 1 000 SEK 500m 3.5% 2015 SEK 1.4 bn S+3.7% 2015 900 SEK 2.4 bn 5.75% 2015 800 EUR 750m 5.125% 2014 700EUR million 600 EUR 390m E+4.21% 2016 USD 507m 6.404% 2016 m 500 Other loans/liabilities 400 USD 300m 7.25% 2036 Bonds 300 Commercial paper 200 100 0 Revolving Credit Facility € 700 million matures in January 2014 and is fully undrawn. rethink. Stora Enso 9 June 2011 12
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  14. 14. Stora Enso leading industry restructuring g y gCapacity closures since 2006 Paper Pulp Board Wood 18% 9% 8% Products 20% rethink. Stora Enso 9 June 2011 14
  15. 15. Productivity increased yPricing over volumes, managing assets 120 000 100 000EUR 80 000 Sales per employee 60 000 40 000 07Q1 08Q1 09Q1 10Q1 11Q1 rethink. Stora Enso 9 June 2011 15
  16. 16. Latest action: Fine Paper re-evaluating its working methods p g gBuilding a new business model to increase cost competitiveness• The l is to Th plan i t restructure operations at: t t ti t – Nymölla Mill, Sweden – Uetersen Mill, Germany – Oulu Mill, Finland – Sheeting plants in Belgium and UK• Reduce annual costs by approximately EUR 20 million – Starting during 2011 and being completed by the end of Q2 2012• The proposed measures would affect up to 285 employees• Cash C h provision of approximately EUR 16 million to b recorded as NRI i Q2 i i f i l illi be d d in 2011 operating profit rethink. Stora Enso 9 June 2011 16
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  18. 18. This is not about reading newspapers on tablets but how the consumers spend their time ? Social S i l media adopted faster than di d t d f t th • F Facebook b k any other device / media – 3rd largest population after China and India ce% of U.S. populatio using technology/servic – Half of UK mobile web traffic – Fastest growing segment 55-65 year old f ld females l – 1 out of 8 US couples married met on it on • Let’s ask the people driving this change! U – N the ones who are afraid of i Not h h f id f it (and tell us what we want to hear) rethink. Stora Enso 9 June 2011 18
  19. 19. Proof points of action pOur direction• Growth markets G th k t • Growth markets Proof points: • Inpac acquisition • •Plantation based pulp Plantation-based d iinvestment Ostroleka O t l k containerboard t i b t t • Investment to Montes del Plata• • Plantation-based pulp Fibre-based packaging Proof point: P f i t • Investment to Montes del Plata • Selected paper grades• Fibre-based packaging Maintain and develop global leadership position Proof points: • Inpac acquisition • Ostroleka containerboard investment• Selected paper grades 9 June 2011 19
  20. 20. Implementing strategy p g gyHigh return growth businesses Project oject O ta get Ot e p og ess On target Other progress Montes del Plata Machinery and port pulp mill, Uruguay suppliers selected and contracted for MdP Ostroleka Proceeding as planned containerboard machine, Poland CLT All permits received, main investment, Ybbs, Austria machine supplier selected Skoghall Support wood handling in investment Sweden and further develop Skoghall mill Inpac Integration planning strong packaging company in China and India 20
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  22. 22. Outlook - increasing concerns on cost inflation• Inflation d I fl ti and maintenance li it Q2 i t limit Demand Price earnings improvement y-o-y development development Q2/11 vs Q2/11 vs Q2/10 Q1/11• Inflation estimate increased to Consumer Board ~4% for the full year 2011 compared to 2010 Industrial Packaging• Actions to fight inflation continue Newsprint and Book Paper to be even more important p Coated Magazine Paper Uncoated Magazine P M i Paper Fine Paper Wood Products W dP d t rethink. Stora Enso 9 June 2011 22
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  24. 24. Summary• Strong quarter St t• Inflation pressure p• 80% of CAPEX for strategic high return growth areas in 2011• Investments in strategic high- return growth areas – Montes del Plata – Ostroleka – Ybbs Ybb – Skoghall rethink. Stora Enso 9 June 2011 24
  25. 25. Rethinking continues!

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