Exane BNP Paribas 13th European Seminar in Paris. Presentation by CFO Markus Rauramo.


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Exane BNP Paribas 13th European Seminar in Paris. Presentation by CFO Markus Rauramo. (10 June 2011)

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Exane BNP Paribas 13th European Seminar in Paris. Presentation by CFO Markus Rauramo.

  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 10 June 2011 2
  3. 3. Stora Enso – sustainable competitive differentiation sustainable, 10 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 10 June 2011 Source: www.cartonawards.com 5
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  7. 7. Stora Enso s business Enso’sWhat we do Publication paper Fine paper Packaging Wood products Sales, EUR 2 727 million Operating profit, EUR 248 million* 24 % 39 % 21 % 32 % 18 % 15 % 12 % 9% 10 % 11 % 8% 5% Consumer Industrial Newsprint Magazine Fine Paper Wood Consumer Industrial Newsprint Magazine Fine Paper Wood Board Packaging and Book Paper Products Board Packaging and Book Paper Products Paper P Paper *excluding non-recurring items and fair valuations rethink. Stora Enso 10 June 2011 7
  8. 8. Production plants Production plants Pulp in bales rethink. Stora Enso 10 June 2011 8
  9. 9. rethink. Stora Enso 10 June 2011 9
  10. 10. 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 10 June 2011 10
  11. 11. 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 10 June 2011 11
  12. 12. RCP continued to drive inflation 200 160 tonne 120 Mixed EUR/t OCC 80 De-inking 40 0 German RCP price development, free delivered Source: Verband D t h P i f b ik /St S V b d Deutscher Papierfabriken/Stora EEnso rethink. Stora Enso 10 June 2011 12
  13. 13. Higher p p p g pulp prices p positiveDue to 1 million tonnes net market pulp position 1 200 1 000 800 tonne 600 Bleached softwood kraft pulp USD/t Bleached hardwood kraft pulp 400 200 0 Source: FOEX rethink. Stora Enso 10 June 2011 13
  14. 14. 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 10 June 2011 14
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  16. 16. Stora Enso leading industry restructuring g y gCapacity closures since 2006 Paper Pulp Board Wood 18% 9% 8% Products 20% rethink. Stora Enso 10 June 2011 16
  17. 17. 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 10 June 2011 17
  18. 18. 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 10 June 2011 18
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  20. 20. Mobile ecosystems – accelerating impact ? And iPod with iTunes ”killed” the music industry ? rethink. Stora Enso 10 June 2011 20
  21. 21. This is not about reading newspapers on tablets but how the consumers spend their time ? Social media adopted faster than • F Facebook b k any other device / media – 3rd largest population after China vice and India chnology/serv – Half of UK mobile web traffic – Fastest growing segment 55-65 year old f ld females l tion using tec – 1 out of 8 US couples married met on it% of U.S. populat • Let’s ask the people driving this change! – 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 10 June 2011 21
  22. 22. 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 10 June 2011 22
  23. 23. 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 23
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  25. 25. 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 10 June 2011 25
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  27. 27. 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 10 June 2011 27
  28. 28. Rethinking continues!