Financial Results Full Year and Q4 2011CEO Jouko Karvinen and CFO Markus Rauramo8 February 2012
Full year 2011 operational EBIT improved by 9%Operational EBIT EUR 867 millionOperational ROCE 10.0%Strong cash flow EUR 1...
Solid year and satisfactory quarter                    Operational EBIT*                                                  ...
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/...
Full year solid – rethinking continues  Operational EBIT by segments                                                      ...
Plan to increase competitiveness in Coated    Magazine•   Restructuring at Corbehem, Veitsiluoto and Kabel    Mills•   Cos...
Swedish maintenance streamlining plan•   To increase further efficiency and flexibility by    restructuring and changing p...
Maintenance costs down in Finnish millsDecrease in unplanned shutdowns by 27% since 2008Basic Maintenance Cost            ...
Summary financialsQ4 2011 and Full year 2011                                                                              ...
Increased dividend                                                                              EPS, excl NRI (EUR)• Divid...
Over 80% of investments to high-return growth              EUR million              1000                                  ...
Guidance• Q1 2012 sales and  operational EBIT  approximately in line with Q4  2011• Combined improvement of  Business Area...
Renewable EcosystemsCapital Markets Day, Langerbrugge Mill, Belgium                           Thursday 22 March 2012      ...
Recap• Strong operational cash flow• Full year improved• Increased dividend• Strategic investments proceeding• Q4 showed r...
Financial results Q4 2011   8 February 2012   17
Net Financial Items                                                                                                       ...
Softwood pulp pricesStora Enso’s market pulp is softwood            1 050             950             850USD/tonne        ...
Pulp wood and saw log prices decreased from Q3 2011 Wood prices in Finland          80          70          60          50...
Wood prices in Sweden          600          500          400                                                              ...
RCP prices            200            160                                                                                  ...
Debt/equity2009 – Q4 20110,80,70,6       0,510,5                                                                       0,4...
Transaction risk and hedgesas at 31 December 2011 EUR million                                                             ...
Maturity profile31 December 2011€m                                 Bonds                   Other loans / liabilities      ...
It should be noted that certain statements herein which are not historical facts. including. withoutlimitation those regar...
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Stora Enso Fourth Quarter and Full Year Results 2011

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Stora Enso Fourth Quarter and Full Year Results 2011 - Presentation by CEO Jouko Karvinen and CFO Markus Rauramo

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Stora Enso Fourth Quarter and Full Year Results 2011

  1. 1. Financial Results Full Year and Q4 2011CEO Jouko Karvinen and CFO Markus Rauramo8 February 2012
  2. 2. Full year 2011 operational EBIT improved by 9%Operational EBIT EUR 867 millionOperational ROCE 10.0%Strong cash flow EUR 1 034 millionDividend increased to EUR 0.3 Full year 2011 Financial results Q4 2011 8 February 2012 2
  3. 3. Solid year and satisfactory quarter Operational EBIT* Operational EBIT* Operational EBIT margin % Operational EBIT margin %, 4 Q avg 900 8,0 % 300 10,0 % 9,0 % 250 7,9 % 8,0 %EUR million EUR million 850 200 7,8 % 7,0 % 150 6,0 % 7,7 % 5,0 % 800 100 4,0 % 7,6 % 50 3,0 % 750 7,5 % 0 2,0 % 2010 2011 10Q1 10Q2 10Q3 10Q4 11Q1 11Q2 11Q3 11Q4 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. Financial results Q4 2011 8 February 2012 3
  4. 4. 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 Financial results Q4 2011 8 February 2012 4
  5. 5. Flexibility improvements continueFixed cost/sales 0,30 Fixed Cost/Sales 0,28 0,26 0,24 FY2007 FY2008 FY2009 FY2010 FY2011 Financial results Q4 2011 8 February 2012 5
  6. 6. 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 Financial results Q4 2011 8 February 2012 6
  7. 7. Full year solid – rethinking continues Operational EBIT by segments Change% Change%EUR million IV/2011 2011 IV/2010 2010 IV11/IV10 2011/2010Consumer Board 28 272 52 277 -46.8 -1.7 % of sales 4.8 10.9 8.5 12.0 -43.5 -9.2Industrial Packaging 14 73 22 66 -37.7 11.0 % of sales 5.3 7.3 9.1 6.9 -41.8 5.8Newsprint and BookPaper 29 116 -3 -11 n/m n/m % of sales 8.4 8.8 -0.8 -0.9 n/m n/mMagazine Paper 18 128 20 91 -9.2 40.9 % of sales 3.3 6.1 3.6 4.4 -8.3 38.6Fine Paper 25 192 68 259 -62.4 -26.1 % of sales 4.8 8.9 12.7 12.2 -62.2 -27.0Wood Products 6 63 10 71 -41.2 -11.4 % of sales 1.6 3.8 2.5 4.5 -36.0 -15.6 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. Financial results Q4 2011 8 February 2012 7
  8. 8. Plan to increase competitiveness in Coated Magazine• Restructuring at Corbehem, Veitsiluoto and Kabel Mills• Cost efficiency and productivity improvements – Reduction of costs by EUR 48 million /a – Full impact Q3 2013 onwards – Q1 cash provision about EUR 5 million – Q1 fixed asset write-down about EUR 1 million• Investments EUR 18 million to quality, productivity and energy savings• Planned employee reduction 110 people• Actions completed by end 2012 Financial results Q4 2011 8 February 2012 8
  9. 9. Swedish maintenance streamlining plan• To increase further efficiency and flexibility by restructuring and changing processes• Impacting Renewable Packaging and Printing and Reading• Reduction of costs by EUR 21 million /a – Starting gradually from late 2012 onwards• Cash provisions for Q1 – Renewable packaging EUR 6 million – Printing and reading EUR 4 million• Planned employee reduction 130 people Financial results Q4 2011 8 February 2012 9
  10. 10. Maintenance costs down in Finnish millsDecrease in unplanned shutdowns by 27% since 2008Basic Maintenance Cost Unplanned shutdowns 130 % 130 % 120 % 120 % 110 % 110 % 100 % 100 %INDEX INDEX 90 % 90 % 80 % 80 % 70 % 70 % 60 % 60 % 50 % 50 % 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Index = 2007 Index = 2007 Financial results Q4 2011 8 February 2012 10
  11. 11. Summary financialsQ4 2011 and Full year 2011 Change% Change%EUR million IV/2011 2011 IV/2010 2010 IV11/IV10 2011/2010Sales 2 682 10 965 2 685 10 297 -0.1 % 6.5 %Operational EBITDA 243 1 308 289 1 217 -15.9 % 7.5 %Operational EBIT 145 867 177 797 -18.2 % 8.7 %Profit before tax. excl. NRI 141 639 162 705 -12.7 % -9.4 %Profit before tax 110 421 364 885 -69.7 % -52.5 %EPS excl. NRI (EUR) 0.10 0.63 0.19 0.79 -47.4 % -20.3 %Operational ROCE 6.7 10.0 8.4 9.7 -20.2 % 3.1 %Cash flow from operations 302 1 034 265 992 14.3 % 4.3 %Cash flow after investing activities 115 625 126 592 -8.3 % 5.6 %Debt/equity 0.47 0.47 0.39 0.39 20.5 % 20.5 % NRI = Non-recurring items. These are exceptional transactions that are not related to normal business operations. The most common non- recurring items are capital gains, additional write-downs or reversals of write-downs, provisions for planned restructuring and penalties. Non- recurring items are normally specified individually if they exceed one cent per share. Financial results Q4 2011 8 February 2012 11
  12. 12. Increased dividend EPS, excl NRI (EUR)• Dividend proposal increased to EUR 0.30 Dividend and distribution (EUR) 1,00• EPS excluding NRI EUR 0.63 0,80 0,60 EUR 0,40 0,20 0,00 2006 2007 2008 2009 2010 2011 Financial results Q4 2011 8 February 2012 12
  13. 13. 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 Financial results Q4 2011 8 February 2012 13
  14. 14. Guidance• Q1 2012 sales and operational EBIT approximately in line with Q4 2011• Combined improvement of Business Area results offset by lower results in forest companies (EAI) Financial results Q4 2011 8 February 2012 14
  15. 15. Renewable EcosystemsCapital Markets Day, Langerbrugge Mill, Belgium Thursday 22 March 2012 Financial results Q4 2011 8 February 2012 15
  16. 16. Recap• Strong operational cash flow• Full year improved• Increased dividend• Strategic investments proceeding• Q4 showed rethink must continue Financial results Q4 2011 8 February 2012 16
  17. 17. Financial results Q4 2011 8 February 2012 17
  18. 18. Net Financial Items Change % Change %EUR million IV/2011 III/2011 IV/2010 Q411/Q410 Q411/Q311Net interest expense -35.1 -35.9 -25.6 -37.1 2.2Foreign exchange gains and losses -3.0 -11.4 1.8 -266.7 73.7Other financial items. of which -21.1 -146.1 2.1 n/m 85.6 PIK notes 2.0 2.1 1.6 Fair valuation of interest rate derivates* -4.4 -16.4 4.4 Fair valuation of long-term debt -0.4 -1.1 0.1 NewPage lease provision - -128.2 - Arktos writeoff -10.2 - - Other items -8.1 -2.5 -4.0Total net financial items -59.2 -193.4 -21.7 -172.8 69.4 *Not hedge accounted interest rate derivatives. Financial results Q4 2011 8 February 2012 18
  19. 19. Softwood pulp pricesStora Enso’s market pulp is softwood 1 050 950 850USD/tonne Bleached softwood kraft 750 pulp 650 Bleached hardwood kraft pulp 550 450 07Q1 07Q2 07Q3 07Q4 08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q3 09Q4 10Q1 10Q2 10Q3 10Q4 11Q1 11Q2 11Q3 11Q4 Source: FOEX Financial results Q4 2011 8 February 2012 19
  20. 20. Pulp wood and saw log prices decreased from Q3 2011 Wood prices in Finland 80 70 60 50EUR/m 3 Pulpwood, Pine 40 Sawlogs, Pine 30 20 10 0 06Q1 06Q4 07Q1 07Q4 08Q1 09Q1 10Q1 10Q2 11Q1 11Q2 06Q2 06Q3 07Q2 07Q3 08Q2 08Q3 08Q4 09Q2 09Q3 09Q4 10Q3 10Q4 11Q3 11Q4 Source: METLA Financial results Q4 2011 8 February 2012 20
  21. 21. Wood prices in Sweden 600 500 400 PulpwoodSEK/m 3 300 Sawlogs 200 100 0 06Q2 07Q2 08Q2 09Q1 09Q2 10Q1 10Q2 11Q1 11Q2 06Q1 06Q3 06Q4 07Q1 07Q3 07Q4 08Q1 08Q3 08Q4 09Q3 09Q4 10Q3 10Q4 11Q3 11Q4 Pulpwood includes pine. spruce and birch. Sawlogs include pine and spruce. Source: SDC. Skogsstyrelsen Financial results Q4 2011 8 February 2012 21
  22. 22. RCP prices 200 160 MixedEUR/tonne 120 OCC 80 De-inking 40 0 07Q1 07Q2 07Q3 07Q4 08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q3 09Q4 10Q1 10Q2 10Q3 10Q4 11Q1 11Q2 11Q3 11Q4 German RCP price development. free delivered Source: Verband Deutscher Papierfabriken/Stora Enso Financial results Q4 2011 8 February 2012 22
  23. 23. Debt/equity2009 – Q4 20110,80,70,6 0,510,5 0,45 0,47 0,41 0,39 0,380,40,30,20,1 0 2009 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Total operations Financial results Q4 2011 8 February 2012 23
  24. 24. Transaction risk and hedgesas at 31 December 2011 EUR million USD GBP SEK Estimated annual net operating cash flow exposure 1 200 600 -870 Transaction hedges as at 31 December 2011 -540 -270 380 Hedging percentage as at 31 December 2011 for the next 12 months 45% 45% 44% Additional USD and GBP hedges for 13-16 months increase the hedging percentages by 7% and 4% respectively. Operational EBIT: Currency strengthening of + 10% EUR million USD 120 SEK -87 GBP 60 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 Q4 2011 8 February 2012 24
  25. 25. Maturity profile31 December 2011€m Bonds Other loans / liabilities Commercial paper 1 200 SEK 500m 3.5 2015 SEK 1.4 bn S+3.7 2015 EUR 750m 5.125 2014 SEK 2.4 bn 5.75 2015 1 000 EUR 390m E+4.21 2016 800 USD 507m 6.404 2016 600 USD 300m 7.25 2036 400 200 0 2012 2013 2014 2015 2016 2017 2018 2019-2035 2036 Revolving Credit Facility € 700 million matures in January 2015 and is fully undrawn Financial results Q4 2011 8 February 2012 25
  26. 26. 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 Q4 2011 8 February 2012 26

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