Stora Enso Q2 2011 Results
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Stora Enso Q2 2011 Results

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Stora Enso Q2 2011 Results Stora Enso Q2 2011 Results Presentation Transcript

  • Financial results Q2 201121 July 2011
  • 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. Financial results Q2 2011 21 July 2011 2
  • Continued solid performance year on year year-on-year• EUR 228 million quarterly illi t l operating profit excl. NRI and FV• Up by 7% year-on-year – significantly higher sales prices – offset by cost inflation and y unfavourable exchange rates• Balance sheet (debt/equity 0.41) and liquidity (EUR 996 million) remained strong Financial results Q2 2011 21 July 2011 3 View slide
  • Good quarter in increasingly uncertain environment EBIT excl NRI and fair valuation EBIT margin*, % 4 Q avg 300 10 % 240 8%EUR million 180 6% 120 4% 60 2% 0 0% *excluding NRI and fair valuation g Financial results Q2 2011 21 July 2011 4 View slide
  • Demand of the Group’s products was mixed Group s Folding boxboard Std Newsprint Uncoated magazine Coated fine paper 115 2007 Q avg = 100 100INDEX X 85 70 European demand Source: CEPI PPPC, CEPIFINE CEPI, PPPC Financial results Q2 2011 21 July 2011 5
  • Prices continued stable Newsprint (std 45 gsm) SC (roto 56 gsm) WFC (sheets 100 gsm) FBB 115 2007 Q avg = 100 110 105 100INDEX 95 90 85 80 75 Market price – Germany, monthly avg Source: PPI Europe Price Watch Financial results Q2 2011 21 July 2011 6
  • Outlook – Uncertainty in European markets increasing• Cost inflation C t i fl ti unchanged at h d t Demand Price approximately 4% development development Q3/11 vs Q3/11 vs Q3/10 Q2/11• Actions continue to mitigate cost Consumer Board inflation Industrial• FX rates to have a negative Packaging impact on the Q3 results Newsprint and Book Paper Coated• Geographic mix changes Magazine Paper Uncoated Magazine P M i Paper• EBIT excl. NRI and FV in Q3 forecasted to be approximately in Fine Paper the same range as Q2 2011 Wood Products Financial results Q2 2011 21 July 2011 7
  • Productivity increased yPricing over volumes 120 000 oyee, EUR 100 000Sales per emplo 80 000 s 60 000 40 000 07Q2 08Q2 09Q2 10Q2 11Q2 Financial results Q2 2011 21 July 2011 8
  • Flexibility increased yFixed costs developing to the right direction 0,30 0,28 ts/Sales Fixed Cost 0,26 0,24 0,22 FY2007 FY2008 FY2009 FY2010 H12011 Financial results Q2 2011 21 July 2011 9
  • Net Debt to EBITDA improved strongly year on year year-on-year Net Debt Net Debt/EBITDA excl NRI and fair valuations 5 000 6,0 4 500 5,0 4 000 4,0 lionEUR mill 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 Financial results Q2 2011 21 July 2011 10
  • Variable cost development Realised R li d Realised R li d Q2/11 vs Q2/11 vs Q2/10 Q1/11Pulp woodSawlogsRCPPulpChemicalsEnergy Financial results Q2 2011 21 July 2011 11
  • Softwood pulp p p p prices record high gStora Enso’s market pulp is softwood 1 100 1 000 900 nne 800 Bleached softwoodUSD/ton kraft pulp 700 Bleached hardwood 600 kraft l k ft pulp 500 400 07Q1 07Q2 07Q3 07Q4 08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q3 09Q4 10Q1 10Q2 10Q3 10Q4 11Q1 Source: FOEX 11Q2 Financial results Q2 2011 21 July 2011 12
  • Rethink – create and renew Progress Earlier announced strategic investments Montes del Plata Pulp Mill Ostroleka Light Weight Containerboard Machine As planned Ybbs, Wood Based Construction Elements Skoghall, Liquid Packaging Board Competitiveness I C titi Improvementt A significant step forward in renewable materials Q1 2012 A pre-commercial plant at I t in Finland t i l l t t Imatra i Fi l d to produce microfibrillated cellulose (MFC) Renewable energy Investment to Zdírec Sawmill in the Czech Q1 2013 Republic to optimise energy production and usage 13
  • Productivity and flexibility• Continued solid performance i Q2 C ti d lid f in• Multiple cost and p p productivity y improvements to compensate inflation• Fixed costs continued to decrease excluding maintenance impact• Strategic investments proceeding according to plan• Productivity and flexibility decisive in uncertain environment Financial results Q2 2011 21 July 2011 14
  • Rethinking continues!
  • Financial results Q2 2011 21 July 2011 16
  • Summary financials Q2 2011 Change % Change %EUR million II/2011 I/2011 II/2010 Q211/Q210 Q211/Q111Sales 2 817 2 727 2 692 4.6 3.3EBITDA,EBITDA excl. NRI and f i valuations l d fair l i 358 3 8 368 330 8.5 8 -2.7 2Operating profit, excl. NRI and fair valuations 228 248 213 7.0 -8.1Profit before tax, excl. NRI 182 213 202 -9.9 -14.6Earnings per share, excl. NRI (EUR) 0.21 0.22 0.22 -4.5 -4.5ROCE, excl. NRI and fair valuations (%) 10.4 11.4 10.5 -1.0 -8.8Cash flow from operations 207 163 305 -32.1 27.0Cash flow after investing activities 122 106 229 -46 7 46.7 15.1 15 1Debt/equity 0.41 0.38 0.49 -16.3 7.9 NRI = Non-recurring items Fair valuations include synthetic options net of realised and open hedges, y p p g CO2 emission rights, and valuations of biological assets related to forest assets in equity accounted investments Financial results Q2 2011 21 July 2011 17
  • Operating profit by segments Change % Change %EUR million II/2011 I/2011 II/2010 Q211/Q210 Q211/Q111Consumer Board 85 96 77 10.4 -11.5 % of sales 12.8 12 8 14.8 14 8 13.1 13 1 -2.3 23 -13.5 13 5Industrial Packaging 20 19 17 17.6 5.3 % of sales 8.1 8.0 6.6 22.7 1.3Newsprint and Book Paper 28 26 -7 n/m 7.7 % of sales 8.2 8.3 -2.0 n/m -1.2Magazine Paper 34 28 22 54.5 21.4 % of sales 6.6 5.9 4.1 61.0 11.9Fine Paper 49 80 79 -38.0 -38.8 % of sales 9.2 14.2 14.3 -35.7 35.7 -35.2 35.2Wood Products 35 12 30 16.7 191.7 % of sales 7.6 2.9 7.1 7.0 162.1 excluding non-recurring items Financial results Q2 2011 21 July 2011 18
  • Capital expenditure and depreciation p p pQ1 2008 – Q2 2011 250 10 % Forecast: Capex FY 2011 200 approximately 8% EUR 500 mEUR m illion 150 6% 100 4% 50 2% 0 0% Capex Depreciation and impairment excl NRI Capex % of sales Total operations Financial results Q2 2011 21 July 2011 19
  • Operative working capital p g p Q1 2008 – Q2 2011 2 800 28,0 28 0 % 2 600 26,0 % 2 400 24,0 % 2 200 22,0 %EUR million 2 000 20,0 % R 1 800 18,0 % 1 600 16,0 % 1 400 14,0 14 0 % 1 200 12,0 % 1 000 10,0 % 08Q108Q208Q308Q409Q109Q209Q309Q410Q110Q210Q310Q4 11Q1 11Q2 Operative Working Capital at the end of Q Working Capital per Sales ratio Operative W/Cap = inventories + trade receivables – trade payables p p p y Financial results Q2 2011 21 July 2011 20
  • Debt/equity q y2005 – Q2 2011 0,8 0,70 0,7 0,6 0,56 0,54 0,51 0,5 0,41 0,39 0,39 0,38 0,4 0,3 0,2 0,1 0 2005 2006 2007 2008 2009 2010 Q1 2011 Q2 2011 Total operations Financial results Q2 2011 21 July 2011 21
  • Net Financial Items Change % Ch Change % ChEUR million II/2011 I/2011 II/2010 Q211/Q210 Q211/Q111Net interest expense -28.3 -23.0 -24.3 -16.5 -23.0Foreign exchange gains and losses -0.7 -11.9 6.2 n/a 94.1Other financial items, of which -5.6 -16.3 -4.5 -24.4 65.6 PIK notes 1.9 1.5 1.5 Fair valuation of interest rate derivates* derivates -3.3 33 13.9 13 9 -4.0 40 Fair valuation of long-term debt 0.4 -0.5 0.9 Other items -4.6 -31.2 -2.9Total net financial items -34.6 -51.2 -22.6 -53.1 32.4 *Not hedge accounted interest rate derivatives. Financial results Q2 2011 21 July 2011 22
  • Transaction risk and hedges gas at 30 June 2011 EUR million USD GBP SEK Estimated annual net operating cash flow exposure 1 070 540 -820 Transaction hedges as at 30 June 2011 -500 -250 550 Hedging percentage as at 30 June 2011 for the next 12 months g gp g 47% 46% 67%Operating Profit: Currency strengthening of + 10%Based on estimated next 12 months net operating EUR millioncash flow exposure.USD 107SEK -82GBP 54The calculation does not take into account currency hedges, and assumes no changes occur otherthan a single currency exchange rate movement. Weakening would have the opposite impact. Financial results Q2 2011 21 July 2011 23
  • Maturity p y profile 30 June 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 700 EUR 390m E+4.21% 2016 USD 507m 6.404% 2016EUR million 600 m 500 400 USD 300m 7.25% 2036 300 200 100 0 Revolving Credit Facility EUR 700 million matures in January 2014 and is fully undrawn g y y y Financial results Q2 2011 21 July 2011 24
  • Energy balance Q2 2011TWh/a Total energy self Self sufficiency 62%50 Impact Impact* on operating sufficiency 60%40 profit from 10% change EUR million p.a.30 in: Self sufficiency 53%2010 Electricity market price ~11 11 0 Fossil fuel price ~15‐10 Electricity Fuels *) Remaining impact on non hedged volume non-hedged Internal External (hedged) External (non-hedged) Financial results Q2 2011 21 July 2011 25
  • Stora Enso electricity procurementGWh/a18 00016 000 Sales to market14 000 Open position12 000 Local tariff10 000 Financial contracts 8 000 Physical contracts 6 000 PVO production 4 000 Own production 2 000 0-2 000 2011 2012 2013 2014 Financial results Q2 2011 21 July 2011 26
  • Permanent pulp, p p and board capacity reductions p p, paper p ysince 2006Mill Date D t Grade G d Capacity reduction, t C it d tiCorbehem PM 3 and PM 4 Jun 2006 LWC 250 000Varkaus PM 1 End 2006 WFC 95 000Berghuizer Mill Oct 2007 WFU 235 000Reisholz Mill End 2007 SC 215 000Summa Mill Jan 2008 Newsprint, uncoated mag, book paper 415 000Anjala Mill PM1 Feb 2008 Coated magazine paper 155 000Baienfurt Mill End 2008 FBB 190 000Kabel Mill PM 3 End 2008 Coated magazine 140 000Kemijärvi Pulp Mill April 2008 Long-fibre (SW) pulp 250 000Norrsundet Pulp Mill Dec 2008 Long-fibre (SW), pulp f (S ) 300 000Varkaus Mill coreboard machine Dec 2008 Coreboard 100 000Imatra PM 8 Mar 2010 WFU 210 000Varkaus PM 2 and PM 4 Sep 2010 Newsprint, Newsprint directory paper 290 000Maxau PM 7 Nov 2010 Newsprint 195 000 Totals % of capacity as at end 2005 (adjusted for disposals) Paper and board P db d 2 490 000 t/a t/ 15% Pulp 550 000 t/a 9% Financial results Q2 2011 21 July 2011 27
  • Permanent sawn wood capacity reductions p ysince 2006Mill Date Capacity reduction, m3Veitsiluoto Sawmill 2006 100 000Honkalahti Sawmill 2006 90 000Sauga Sawmill Jun 2007 130 000Sollenau Sawmill 2007 110 000Näpi Sawmill 2007-2008 100 000Kotka Sawmill 2007-2008 70 000Paikuse Sawmill End 2008 220 000Zdirec Sawmill 2008 120 000Ybbs Sawmill 2008 & Jun 2009 200 000Kitee Sawmill 2008 & Jun 2009 130 000Varkaus Sawmill Jun 2009 60 000Tolkkinen Sawmill End 2009 260 000Total 1 590 000 Reductions equal 20% of capacity as at end 2005 (adjusted for disposals) Financial results Q2 2011 21 July 2011 28