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E result q3_2012_web

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  • 1. Financial Results Q3 2012CEO Jouko Karvinen and CFO Karl-Henrik Sundström23 October 2012
  • 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. Financial Results Q3 2012 23 October 2012 2
  • 3. Stable Performance in weak Europe• Q3 performance as promised and little more – Operational EBIT EUR 175 million driven by lower costs• Robust cash flow and liquidity – Cash flow from operations EUR 312 million and liquidity EUR 1 700 million• Continuing with new profitability improvement plans Financial Results Q3 2012 23 October 2012 3
  • 4. Third quarter earnings as promised and little more-not enough Financial Results Q3 2012 23 October 2012 4
  • 5. New profitability improvement plansAnnualized cost savings EUR 36 million• Capacity reductions (Ruovesi, PM1 Hylte) – Capacity 180 000 tonnes std NewsPrint• Specific cost reduction and efficiency improvements plans across all BA’s• Impact: – Annualised cost savings of EUR 36 million – Fixed asset and working capital write-downs of EUR 14 million – Provisions with cash impact EUR 28 million – Employee reduction of 520 people Financial Results Q3 2012 23 October 2012 5
  • 6. Examining the Possibility of selling Corbehem mill• Examining the possibility of selling Corbehem Paper Mill in France.• The capacity 330 000 tonnes LWC Financial Results Q3 2012 23 October 2012 6
  • 7. Transforming to value creating growth Skoghall. Sweden, woodyard logistics, start-up end Q4 2012 Ostroleka. Poland Container board machine start-up Q1 2013 Guangxi. China Pulp and Board mills, start-up Q4 2014Montes del Plata.Uruguay Bulleh ShahPulp mill, start-up mid- Packaging Limited.year 2013, over 70% Pakistancompleted JV, Q1 2013 Financial Results Q3 2012 23 October 2012 7
  • 8. Montes del Plata Financial Results Q3 2012 23 October 2012 8
  • 9. Board and Pulp mills project in Guangxi, China• Resource build up• Detailed planning - preparing and mitigating risk of implementation• Final permits still pending• Confirmed project time plan when permits received Financial Results Q3 2012 23 October 2012 9
  • 10. Summary financials Q3 2012 Change % Change %EUR million Q3/12 Q2/12 Q3/11 Q3 12/Q3 11 Q3 12/Q2 12Sales 2 694.1 2 720.4 2 739.3 -1.7 -1.0Operational EBITDA 299.6 248.1 339.2 -11.7 20.8Operational EBIT 174.7 141.2 224.4 -22.1 23.7Profit before tax excl. NRI 102.2 31.8 113.4 -9.9 221.4Profit/loss before tax 102.2 85.9 -14.8 n/m 19.0EPS excl. NRI, EUR 0.10 0.02 0.10 0.0 n/mEPS (basic), EUR 0.10 0.09 -0.06 266.7 11.1Operational ROCE, % 8.0 6.5 10.3 -22.3 23.1Cash flow from operations 312.4 245.6 361.9 -13.7 27.2Cash flow after investing activities 120.4 74.5 219.8 -45.2 61.6Net debt/operational EBITDA* 2.8 2.7 2.0 40.0 3.7Liquidity 1 700 1 240 1 181 43.9 37.1 *Last 12 months’ operational EBITDA Financial Results Q3 2012 23 October 2012 10
  • 11. Cash flow enabling the transformationThe average cash flow from operation is EUR 270 million Financial Results Q3 2012 23 October 2012 11
  • 12. Focusing on Balance SheetQ1 2010 - Q3 2012 *Last 12 months operational EBITDA Financial Results Q3 2012 23 October 2012 12
  • 13. Renewable Packaging and Biomaterials in value creation Financial Results Q3 2012 23 October 2012 13
  • 14. Financing the TransformationCash Flow 1-9/2012 Cash Focus Financial Results Q3 2012 23 October 2012 14
  • 15. Guidance for Q4 2012• Sales roughly similar level than Q3 2012• Operational EBIT in line or slightly lower than Q3 2012• Mill maintenance will have a negative impact on Renewable Packaging and Biomaterials during the quarter. Financial Results Q3 2012 23 October 2012 15
  • 16. Transforming to value-creating growth• Q3 performance as promised and little more• Robust liquidity – prepared for the future• We are the masters of our destiny - new profitability improvements planned• Transforming to value creating growth- proof points: – Three projects soon finalized – JV in Pakistan Q1 2013 – Guangxi, China proceeding Financial Results Q3 2012 23 October 2012 16
  • 17. Financial Results Q3 2012 23 October 2012 17
  • 18. New profitability action plans (2) Annual cost savings from the plans EUR 36 million Annual cost Annual Fixed asset Provisions with Employee savings fromSegment sales write-downs in cash impact in reduction Q4 2013 reduction Q4/2012 Q4/2012 plan onwardsPrinting and Reading No impact EUR 16 million EUR 10 million EUR 17 million 140Biomaterials No impact EUR 6 million - EUR 6 million 60Building and Living No impact EUR 1 million - - 25Renewable Packaging No impact EUR 13 million EUR 4 million EUR 5 million 295Total No impact EUR 36 million EUR 14 million EUR 28 million 520 18
  • 19. Earlier announced cost savings programmes Saving fully Cash cost Impairments Employee Annual cost Announced visible in P&L Meur Meur reduction plan savings Meur startingKopparfors closure Q1 2011 20 9 104 10 Q1 2012Kabel restructuring Q1 2011 4 - 42 3 Q4 2011Fine Paper restructuring Q2 2011 16 - 270 20 Q2 2012Logistics restructuring Q2 2011 9 - - 16 Q1 2011Packaging restructuring Q4 2011 4 - 140 6 Q3 2012Building and Living Q4 2011 3 1 39 3 Q3 2012Coated Magazine Q1 2012 5 1 110 48 Q3 2013 gradually fromSwedish maintenance Q1 2012 10 - 130 21 late 2012 onwards gradually fromPackaging restructuring Q1 2012 7 2 155 7 Q4 2012 onwardsPrinting and Reading Q2 2012 8 - 140 6 Q1 2013Total 86 13 1130 140
  • 20. Operational EBIT by segments Change % Change %EUR million Q3/12 Q2/12 Q3/11 Q3 12/ Q3 11 Q3 12/ Q2 12Printing and Reading 51.1 41.7 72.3 -29.3 22.5 % of sales 4.2 3.5 5.6 -25.0 20.0Biomaterials 32.5 14.7 57.3 -43.3 121.1 % of sales 12.1 6.0 20.7 -41.5 101.7Building and Living 0.7 11.5 9.8 -92.9 -93.9 % of sales 0.2 2.6 2.4 -91.7 -92.3Renewable Packaging 82.9 72.5 73.6 12.6 14.3 % of sales 10.2 8.8 9.2 10.9 15.9Other 7.5 0.8 11.4 -34.2 n/m % of sales 1.2 0.1 1.8 -33.3 n/m Financial Results Q3 2012 23 October 2012 20
  • 21. Operational EBIT by segments Change %EUR million Q3/ 12 Q2/ 12 Q3 12/ Q2 12Printing and Reading 51.1 41.7 22.5Biomaterials 32.5 14.7 121.1Building and Living 0.7 11.5 -93.9Renewable Packaging 82.9 72.5 14.3Other 7.5 0.8 n/mGroup 174.7 141.2 23.7 Financial Results Q3 2012 23 October 2012 21
  • 22. Transforming the CompanyQ1-Q3 2012 Financial Results Q3 2012 23 October 2012 22
  • 23. Curtailments% of capacity Financial Results Q3 2012 23 October 2012 23
  • 24. Working capitalQ2 2010 – Q3 2012 *Operative working capital = trade receivables + inventories – trade payables Financial Results Q3 2012 23 October 2012 24
  • 25. Net Financial Items Change % Change %EUR million Q3/2012 Q2/2012 Q3/2011 Q312/Q311 Q312/Q212Net interest expense -44.0 -42.0 -35.9 -22.6 -4.7Foreign exchange gains and losses -0.4 -18.2 -11.4 96.5 97.8Other financial items. of which -14.7 -6.6 -146.1 89.9 -122.7 PIK notes 2.7 2.5 2.1 Fair valuation of interest rate derivatives* -16.4 -14.3 -16.4 Fair valuation of long-term debt -0.2 -0.3 -1.1 NewPage lease provision - 9.5 -128.2 Other items -0.8 -4.0 -2.5Total net financial items -59.1 -66.8 -193.4 69.4 11.5 *Not hedge accounted interest rate derivatives. Financial Results Q3 2012 23 October 2012 25
  • 26. Transaction risk and hedgesas at 30 September 2012 EUR million USD GBP SEK Estimated annual net operating cash flow exposure 1 150 620 -950 Transaction hedges as at 30 Sep 2012 -580 -280 380 Hedging percentage as at 30 June 2012 for the next 12 months 50% 45% 40% Additional GBP hedges for 13-16 months increase the hedging percentages by 6 %. Operational EBIT: Currency strengthening of + 10% EUR million USD 115 SEK -95 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 occur other than a single currency exchange rate movement. Weakening would have the opposite impact. Financial Results Q3 2012 23 October 2012 26
  • 27. Softwood pulp pricesStora Enso’s market pulp is softwood Source: FOEX Financial Results Q3 2012 23 October 2012 27
  • 28. Pulp wood and saw log pricesWood prices in Finland Source: METLA Financial Results Q3 2012 23 October 2012 28
  • 29. Wood prices in Sweden Pulpwood includes pine. spruce and birch. Sawlogs include pine and spruce. Source: SDC. Skogsstyrelsen Financial Results Q3 2012 23 October 2012 29
  • 30. RCP prices German RCP price development. free delivered Source: Verband Deutscher Papierfabriken/Stora Enso Financial Results Q3 2012 23 October 2012 30
  • 31. Capital expenditure and depreciationQ1 2008 – Q3 2012 Financial Results Q3 2012 23 October 2012 31
  • 32. Debt/equity ratio2009 – Q3 2012 Financial Results Q3 2012 23 October 2012 32
  • 33. Energy balance* Q3 2012 Total energy self sufficiency 59% Self sufficiency 46% Self sufficiency 63% Impact** on operating profit from EUR million p.a. 10% change in: Electricity market price ~4 Fossil fuel price ~17 *) Pulp. paper and board mills. Europe and overseas **) Remaining impact on non-hedged volume Financial Results Q3 2012 23 October 2012 34
  • 34. Stora Enso Electricity procurement* Q3 2012 *) Pulp. paper and board mills. Europe and overseas Financial Results Q3 2012 23 October 2012 35