Stora Enso Investor PresentationJyrki Tammivuori SVP, Group TreasurerLondon 14 June 2012
It should be noted that certain statements herein which are not historical facts. including. withoutlimitation those regar...
Stora Enso’s businessWhat we do                        Printing and Reading             Biomaterials                    Bu...
Q1 2012 Earnings remained moderate as expected Operational EBIT EUR 147 million Strong cash flow EUR 224 million Liquidity...
Summary financials  Q1 2012                                                                                   Change %    ...
Operational EBIT in line with previous quarter                     Stora Enso presentation   14 June 2012   6
Flexibility improvements continuedFixed Cost/Sales                   Stora Enso presentation   14 June 2012   7
Printing and Reading and Renewable Packagingcreated the cash flow in Q1 2012                  Stora Enso presentation   14...
Rethink strategy     Growth markets     Renewable      packaging     Biomaterials   Competitive paper                 ...
Strongest growth in demand of virgin fibre-basedconsumer board will be in Asia         CAGR                               ...
Focusing on high quality segments in China                                                             Chinese platform   ...
Accelerate what works        Every third         beverage       carton in the          world is      produced from        ...
Stora Enso’s engines  Cash engines                                    Growth engines  Printing and Reading                ...
GrowthOperating Capital                2011                                                  20XX              6%      24 ...
New investments will contribute well to cash generation            Capex                                                 r...
Maturity profile31 March 2012€m                            Bonds                     Other loans / liabilities   Commercia...
Funding sources Q1 2012                          Bonds                            •   Cash position +1251                 ...
Credit rating situation   Rating agency      Long/short-term rating                          Valid from  Standard & Poors ...
Sales and operational EBIT forecast for Q2 2012    Compared with Q1 2012•   Group sales slightly higher and    operational...
Summary•   Quarterly performance as    expected•   Cost position and operational    performance improvement need    to con...
Stora Enso presentation   14 June 2012   21
Debt increase due to large investments for the future      Net Debt/Equity                                                ...
Cash in & out       Capex       restructuring            Inv for future            Net cash from operations12%8%4%0%-4%-8%...
Business improved q-on-q, other lower   Operational EBIT by segments                                                      ...
Business improved q-on-q, other lower  Operational EBIT by segment                                                        ...
Working capital decreased year-on-yearQ1 2010 – Q1 2012                      *Operative working capital = trade receivable...
Transaction risk and hedgesas at 31 March 2012 EUR million                                                                ...
Net Financial Items                                                                                                       ...
Softwood pulp pricesStora Enso’s market pulp is softwood                                                          Source: ...
Pulp wood and saw log pricesWood prices in Finland                                                                  Source...
Wood prices in Sweden                                                           Pulpwood includes pine. spruce and birch. ...
RCP prices                                                             German RCP price development. free delivered       ...
Energy balance* Q1 2012     Total energy self      sufficiency 59% Self sufficiency 47%                Self sufficiency 63...
Full year 2011 operational EBIT improved by 9%•   Operational EBIT EUR 867 million•   Operational ROCE 10.0%•   Strong cas...
Solid year and satisfactory quarter                    Operational EBIT*                                                  ...
Breakdown by segment 2011   Sales, EUR 10 965 million                                            Operational EBIT, EUR 867...
Ownership distribution – by voting power31 Dec 2011                       13 %         1%                                 ...
Curtailments increased to reduce inventories                % of capacity                                           Paper ...
Flexibility improvements continueFixed cost/sales                    0,30 Fixed Cost/Sales                    0,28        ...
Productivity continued to increase55% per person since 2005                    400 000                    350 000   Sales/...
Over 80% of investments to high-return growth              EUR million              1000                                  ...
Feb/Mar 2012 New Issue and Liability Management•   On 29 February 2012 Stora Enso issued successfully a new 7yr €500m fixe...
Upcoming SlideShare
Loading in …5
×

Deutsche Bank 16th Annual European Leveraged Finance Conference in London. Presentation by Group Treasurer Jyrki Tammivuori.

824 views
698 views

Published on

Deutsche Bank 16th Annual European Leveraged Finance Conference in London. Presentation by Group Treasurer Jyrki Tammivuori. 14 June 2012.

Published in: Economy & Finance, Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
824
On SlideShare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
5
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Deutsche Bank 16th Annual European Leveraged Finance Conference in London. Presentation by Group Treasurer Jyrki Tammivuori.

  1. 1. Stora Enso Investor PresentationJyrki Tammivuori SVP, Group TreasurerLondon 14 June 2012
  2. 2. It should be noted that certain statements herein which are not historical facts. including. withoutlimitation 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 Reform Act of 1995. Since these statements are based on current plans. estimates andprojections. 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 therein. continued success of product development. acceptance of new products or servicesby 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) 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 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 geographicmarkets or fluctuations in exchange and interest rates. Stora Enso presentation 14 June 2012 2
  3. 3. Stora Enso’s businessWhat we do Printing and Reading Biomaterials Building and Living Renewable Packaging Group Sales*, EUR 2 673 million Operational EBIT, 147 EUR million 46% 46% 42% 29% 26% 14% 9% 5% 6% 1% Printing and Biomaterials Building and Renewable Other Printing and Biomaterials Building and Renewable Other Reading Living Packaging Reading Living Packaging *Including inter-segment sales elimination Stora Enso presentation 14 June 2012 3
  4. 4. Q1 2012 Earnings remained moderate as expected Operational EBIT EUR 147 million Strong cash flow EUR 224 million Liquidity EUR 1 251 million Stora Enso presentation 14 June 2012 4
  5. 5. Summary financials Q1 2012 Change % Change %EUR million I/2012 IV/2011 I/2011 Q1 12/Q1 11 Q1 12/Q4 11Sales 2 673.3 2 681.6 2 726.9 -2.0 % -0.3 %Operational EBITDA 262.1 242.9 368.3 -28.8 % 7.9 %Operational EBIT 147.4 144.9 258.3 -42.9 % 1.7 %Profit before tax. excl. NRI 101.0 141.4 206.7 -51.1 % -28.6 %Profit before tax 89.9 110.3 179.5 -49.9 % -18.5 %EPS excl. NRI (EUR) 0.10 0.10 0.22 -54.5 % 0.0 %Operational ROCE. % 6.8 6.7 11.9 -42.9 % 1.5 %Cash flow from operations 223.7 302.3 162.9 37.3 % -26.0 %Cash flow after investingactivities 111.4 73.8 91.7 21.5 % 50.9 %Debt/equity 0.46 0.47 0.38 21.1 % -2.1 % Stora Enso presentation 14 June 2012 5
  6. 6. Operational EBIT in line with previous quarter Stora Enso presentation 14 June 2012 6
  7. 7. Flexibility improvements continuedFixed Cost/Sales Stora Enso presentation 14 June 2012 7
  8. 8. Printing and Reading and Renewable Packagingcreated the cash flow in Q1 2012 Stora Enso presentation 14 June 2012 8
  9. 9. Rethink strategy  Growth markets  Renewable packaging  Biomaterials  Competitive paper Stora Enso presentation 14 June 2012 9
  10. 10. Strongest growth in demand of virgin fibre-basedconsumer board will be in Asia CAGR CAGR CAGR 0,2 % 1,4 % 4,6 % CAGR 6,9 % Eastern Europe Western CAGR Europe 3,3 % North America Middle East & Africa Fibre-based consumer Asia board consumption CAGR2010-2020 CAGR 3,5 %Million tonnes China 9% Pakistan 9% South India 6% America Middle East 4% Stora Enso presentation 14 June 2012 Source: Pöyry and Stora Enso 10
  11. 11. Focusing on high quality segments in China Chinese platform Unique position for growth  A world leading position  Robust sustainability  Technologies and  Unique integrate specifications  Established footprint  Committed customers  Innovation Well prepared project to accelerete growth Stora Enso presentation 14 June 2012 11
  12. 12. Accelerate what works Every third beverage carton in the world is produced from Stora Enso materials! Stora Enso presentation 14 June 2012 12
  13. 13. Stora Enso’s engines Cash engines Growth engines Printing and Reading Renewable Packaging Nordic market pulp Plantation based pulp Low cost base saw milling Building and living Stora Enso presentation 14 June 2012 14 June 2012 13
  14. 14. GrowthOperating Capital 2011 20XX 6% 24 % 35 % 54 % 65 % 16 % Printing and Reading Cash Engine Biomaterials Growth Engine Renewable Packaging Building and Living Stora Enso presentation 14 June 2012 14
  15. 15. New investments will contribute well to cash generation Capex restructuring Inv for future Net cash from operations EBITDA from new projects 2000 1500 1000 500 0 Investment for -500 future and net cash from operations -1000 2011 -1500 2007 2008 2009 2010 2011 path 20XX Stora Enso presentation 14 June 2012 15
  16. 16. Maturity profile31 March 2012€m Bonds Other loans / liabilities Commercial paper SEK 500m 3.5% 2015 EUR 390m E+4.21% 2016 SEK 1.4 bn S+3.7% 2015 USD 507m 6.404% 2016 SEK 2.4 bn 5.75% 2015 EUR 413m 5.125% 2014 USD 300m 7.25% 2036 Revolving Credit Facility € 700 million matures in January 2015 and is fully undrawn Stora Enso presentation 14 June 2012 16
  17. 17. Funding sources Q1 2012 Bonds • Cash position +1251 MEUR CPs • Revolving Credit Facility (Jan 2015) +700 MEUR Loans (fully undrawn) • Other Credit Facilities Loans from +600 MEUR Multilaterals and ECAs Stora Enso presentation 14 June 2012 17
  18. 18. Credit rating situation Rating agency Long/short-term rating Valid from Standard & Poors BB (stable)/B 22 November 2011 Moodys Ba2 (stable)/NP 3 November 2011 Fitch BB (stable)/B 22 Jun 2010 (unsolicited) Stora Enso presentation 14 June 2012 18
  19. 19. Sales and operational EBIT forecast for Q2 2012 Compared with Q1 2012• Group sales slightly higher and operational EBIT approximately in the range of Q1 2012• Maintenance stoppages in several European mills with main impact in Biomaterials• Benefits of improving variable costs slowly apparent in the results Stora Enso presentation 14 June 2012 19
  20. 20. Summary• Quarterly performance as expected• Cost position and operational performance improvement need to continue• Transformation accelerating: Montes del Plata pulp mill, and Chinese pulp and packaging board mill• Strong liquidity, good access to funding and balanced maturity profile Stora Enso presentation 14 June 2012 20
  21. 21. Stora Enso presentation 14 June 2012 21
  22. 22. Debt increase due to large investments for the future Net Debt/Equity Net Debt/Operational EBITDA 2009 – Q4 2011 Net Debt Net Debt/Operational EBITDA0,7 3 000 4,00,6 3,5 0,51 3,2 3,00,5 0,47 EUR million 2 500 0,39 2,50,4 2,00,3 2,0 2,1 1,5 2 0000,2 1,00,1 0,5 0 1 500 0,0 2009 2010 2011 2009 2010 2011 Stora Enso presentation 14 June 2012 22
  23. 23. Cash in & out Capex restructuring Inv for future Net cash from operations12%8%4%0%-4%-8% Printing & Biomaterials Building & Renewable Group Reading Living Packaging 2007-2011% of sales Stora Enso presentation 14 June 2012 23
  24. 24. Business improved q-on-q, other lower Operational EBIT by segments Change % Change %EUR million I/2012 IV/2011 I/2011 Q112/Q111 Q112/Q411Printing and Reading 67.3 55.6 85.2 -21.0 % 21.0% % of sales 5.5 4.3 7.0 -21.4 % 27.9 %Biomaterials 7.2 27.2 53.5 -86.5 % -73.5 % % of sales 3.0 10.6 18.3 -83.6 % -71.7 %Building and Living 9.8 6.0 11.8 -16.9 % 63.3 % % of sales 2.6 1.6 2.9 -10.3 % 62.5 %Renewable Packaging 61.7 32.8 101.0 -38.9 % 88.1 % % of sales 7.9 4.3 12.5 -36.8 % 83.7 %Other 1.4 23.3 6.8 -79.4 % -94.0 % % of sales 0.2 3.6 0.9 -77.8 % -94.4 % Stora Enso presentation 14 June 2012 24
  25. 25. Business improved q-on-q, other lower Operational EBIT by segment ChangeEUR million I/2012 IV/2011 Q1 12/Q4 11Printing and Reading 67.3 55.6 11.7Biomaterials 7.2 27.2 -20.0Building and Living 9.8 6.0 3.8Renewable Packaging 61.7 32.8 28.9Other 1.4 23.3 -21.9Group 147.4 144.9 2.5 Stora Enso presentation 14 June 2012 25
  26. 26. Working capital decreased year-on-yearQ1 2010 – Q1 2012 *Operative working capital = trade receivables + inventories – trade payables Stora Enso presentation 14 June 2012 26
  27. 27. Transaction risk and hedgesas at 31 March 2012 EUR million USD GBP SEK Estimated annual net operating cash flow exposure 1 160 620 -900 Transaction hedges as at 31 March 2012 -580 -280 390 Hedging percentage as at 31 March 2012 for the next 12 months 50% 45% 43% USD and GBP have additional hedges for 13-14 months which will increase the hedging percentage by 2% and 4% respectively. Operational EBIT: Currency strengthening of + 10% EUR million USD 116 SEK -90 GBP 62 The sensitivity is based on estimated next 12 months net operating cash flow. The calculation does not take into account currency hedges, and assumes no changes occurs other than a single currency exchange rate movement. Weakening would have the opposite impact. Stora Enso presentation 14 June 2012 27
  28. 28. Net Financial Items Change % Change %EUR million I/2012 IV/2011 I/2011 Q112/Q111 Q112/Q411Net interest expense -37.7 -35.1 -23.0 -63.9 -7.4Foreign exchange gains and losses 8.0 -3.0 -11.9 n/m n/mOther financial items. of which -4.3 -21.1 -16.3 73.6 79.6 PIK notes 2.0 2.0 1.5 Fair valuation of interest rate derivates* -3.3 -4.4 13.9 Fair valuation of long-term debt -0.5 -0.4 -0.5 NewPage lease provision 13.6 - - Arktos writeoff - -10.2 - Other items -16.1 -8.1 -31.2Total net financial items -34.0 -59.2 -51.2 33.6 42.6 *Not hedge accounted interest rate derivatives. Stora Enso presentation 14 June 2012 28
  29. 29. Softwood pulp pricesStora Enso’s market pulp is softwood Source: FOEX Stora Enso presentation 14 June 2012 29
  30. 30. Pulp wood and saw log pricesWood prices in Finland Source: METLA Stora Enso presentation 14 June 2012 30
  31. 31. Wood prices in Sweden Pulpwood includes pine. spruce and birch. Sawlogs include pine and spruce. Source: SDC. Skogsstyrelsen Stora Enso presentation 14 June 2012 31
  32. 32. RCP prices German RCP price development. free delivered Source: Verband Deutscher Papierfabriken/Stora Enso Stora Enso presentation 14 June 2012 32
  33. 33. Energy balance* Q1 2012 Total energy self sufficiency 59% Self sufficiency 47% Self sufficiency 63% Impact** on operating profit from EUR million p.a. 10% change in: Electricity market price ~9 Fossil fuel price ~17 *) Pulp. paper and board mills. Europe and overseas **) Remaining impact on non-hedged volume Stora Enso presentation 14 June 2012 33
  34. 34. Full year 2011 operational EBIT improved by 9%• Operational EBIT EUR 867 million• Operational ROCE 10.0%• Strong cash flow EUR 1 034 million,• Good cash liquidity EUR 1 134 million• Net debt EUR 2 746 million• Purpose of Bond Issue is maturity extension• Excellent access to funding – MdP, EIB Stora Enso presentation 14 June 2012 34
  35. 35. Solid year and satisfactory quarter Operational EBIT* Operational EBIT* Operational EBIT margin % Operational EBIT margin %, 4 Q avg 900 9,0 % 300 10,0 % 800 8,0 % 9,0 % 250 700 7,0 % 8,0 %EUR million EUR million 600 6,0 % 200 7,0 % 500 5,0 % 150 6,0 % 400 4,0 % 5,0 % 300 3,0 % 100 4,0 % 200 2,0 % 50 100 1,0 % 3,0 % 0 0,0 % 0 2,0 % 10Q1 10Q2 10Q3 10Q4 11Q1 11Q2 11Q3 11Q4 2010 2011 *Operational EBIT comprises the operating profit excluding NRI and fair valuations of the segments and Stora Enso’s share of the operating profit excluding NRI and fair valuations of its equity accounted investments (EAI). Fair valuations include equity incentive schemes, synthetic options net of realised and open hedges, CO2 emission rights and valuations of biological assets related to forest assets in EAI. Stora Enso presentation 14 June 2012 35
  36. 36. Breakdown by segment 2011 Sales, EUR 10 965 million Operational EBIT, EUR 867 million* (Share of Group’s operational EBIT) 23% 31% 19% 20% 22% 15% 12% 15% 13% 9% 8% 7% Newsprint and Book Paper Magazine Paper Fine Paper Consumer Board Industrial Packaging Wood Products *excluding non-recurring items Stora Enso presentation 14 June 2012 36
  37. 37. Ownership distribution – by voting power31 Dec 2011 13 % 1% 22 % TOP 10 Shareholders 3% 1 Foundation Asset Management 2 Solidium Oy 3 Social Insurance Institution of Finland 4 Varma Mutual Pension Insurance Company 5 Ilmarinen Mutual Pension Insurance Company 27 % 6 MP-Bolagen i Vetlanda AB (Werner von Seydlitz) 7 Erik Johan Ljungberg’s Education Foundation 8 Nordea Investment Funds 25 % 9 Bergslaget’s Healthcare Foundation 10 The State Pension Fund, Finland 6% 3% Finnish Institutions Solidium Oy *) Finnish private shareholders Swedish institutions Foundation Asset Management Swedish private shareholders ADRs Under nominee names (non-Finnish/ non-Swedish shareholders) *) Entirely owned by the Finnish State Stora Enso presentation 14 June 2012 37
  38. 38. Curtailments increased to reduce inventories % of capacity Paper and Board Wood Products 30 25 20% of capacity 15 10 5 0 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Stora Enso presentation 14 June 2012 38
  39. 39. Flexibility improvements continueFixed cost/sales 0,30 Fixed Cost/Sales 0,28 0,26 0,24 FY2007 FY2008 FY2009 FY2010 FY2011 Stora Enso presentation 14 June 2012 39
  40. 40. Productivity continued to increase55% per person since 2005 400 000 350 000 Sales/employee 300 000 250 000 200 000 2005 2006 2007 2008 2009 2010 2011 Continuing operations Stora Enso presentation 14 June 2012 40
  41. 41. Over 80% of investments to high-return growth EUR million 1000 Dividend 197 800 92EUR million Investments to other 600 951 447 400 Investments to high-return growth 200 254 0 Net financial items and net Cash flow generated Cash outflow income tax paid by operations Stora Enso presentation 14 June 2012 41
  42. 42. Feb/Mar 2012 New Issue and Liability Management• On 29 February 2012 Stora Enso issued successfully a new 7yr €500m fixed-rated EUR bond, coupon being 5.50% and yield 5.531%• Simultaneously, Stora Enso announced a tender offer on its €750m 5.125% June 2014 bond at E+130bp. The total amount tended was €340.2m at the price of 105.97.Rationale “We have a strong liquidity position and good access to various financing markets. We issued the bond and announced the tender offer for the Eurobond maturing in 2014 to take advantage of the good credit market conditions and extend our maturity profile” 1 200 1 000 800 600 400 200 0 2012 2013 2014 2015 2016 2017 2018 2019-2035 2036 Bonds Other loans / liabilities Commercial paper Stora Enso presentation 14 June 2012 42

×