Post on 01-Aug-2020
Investor Relations
Q1 2018
1929 SCA founded
2
1975-2006 Acquisitions :
• Mölnlycke, Sweden
• PWA, tissue, Germany
• Georgia-Pacific, AfH tissue, USA
Divestments:
Packaging business
Two publication paper mills
2007-2016 Acquisitions:
• Vinda, tissue, China
• P&G, tissue, EU
• Georgia-P., tissue, EU
2017 split
Forest Products
1929
Forest Products
and Packaging 2006
Hygiene
Forest Products
Hygiene
2016
2017
Forest Products
Divestments:
• Packaging
• Two publication paper mills
3
EBITDA margin 1)
23% Industrial ROCE 2)
13%
Forestland
2.6m ha
Net growth
3.0m m3fo
Sales (SEKm)
16,664 EBITDA 1) (SEKm)
3,761
Forest Wood
Pulp Paper
Note: 1) Adjusted EBITDA and EBITDA margin. 2) Adjusted ROCE for the industrial segments; Wood, Pulp
and Paper adjusted for capex invested in the Östrand project.
4
Growing
demand for
virgin fiber
E-commerce
Increased
demand for
renewable
materials
Eco-awareness
More
packaged
goods
Kraftliner mill
Paper mill
Pellet production
Pulp mill
Saw mill
Saw mill, partly-owned
6% of Sweden
Productive forestland
2.0m ha
Forestland
2.6m ha
Standing volume
232m m3fo
Munksund
Obbola
Rundvik
Gällö
Bollstabruk
Östrand
Ortviken
Tunadal
Härnösand
Stugun
5
6
Growth Harvesting Land value
7 Note: (1) Corresponding to approximately 4.3m m3sub.
Gross growth of standing forest
Natural losses and pre-commercial thinning
Available growth of standing forest
Annual harvesting
Annual net increase of standing forest
9.5
-1.3
8.2
-5.2
3.0
Forest growth metrics (m m3fo)
(1)
Growth drivers: Plant genetics, Age distribution, Forest
management methods, Global climate change
Current cash flow
New harvesting plan every 8-10 years
Harvesting increase to >7m m3fo in 2116
Future cash flow
Real growth rate of 3.5% (8.2/232)
8
From 11 to 5 highly automated and efficient sawmills
Average capacity/
mill: (m3/year) 160k 430k
1.8m m3
2.2m m3
2007 2017
11
sawmills
5
sawmills
SEK ~2.0bn invested
since 2007
Rundvik
Munksund
Bollsta
Tunadal
Gällö
Jämtlamell
Rundvik
Munksund
Holmsund
Vilhelmina
Bollsta
Tunadal
Gällö
Tjärnvik
Boden
Graninge
2007 2017
9
Share of Wood’s net sales (2017)
Building Materials
Trade
Wood Industry
Wholesalers
(standard wood)
45%
Wood sales (SEKbn)
1.1
4.7
6.0
1997 2007 2017
Wholesalers Wood Industry Building Materials Trade
+9% p.a.
37%
18%
10
Meeting long-term growth in
tissue and white packaging
Increases value of the forest
World-class competitiveness
Cost efficient supply of raw materials
7.8 SEKbn
investment
Kraftliner – strategic growth area
Grow the share of value-added products: white-
top, heavy duty and wet strength
Increase production capacity and improve
efficiency
Publication paper – maximize
cash flow
Positive cash-flow through operational excellence
and optimized product and market mix
11
12
One of Europe’s largest supplier of forest
based biofuels with 9 TWh produced in 2017
301 wind turbines on SCA’s forest land with
an average annual production of 2.3 TWh
Future growth opportunities within
liquid biofuels and green chemicals
13
EBITDA margin
Nordic peer group
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
22%
24%
26%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
22%
24%
26%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
14
Pilot facility for biofuel production in operations since Q2 2017
Investment in increased production of White-top Kraftliner
The world's fastest saw line in full production in Tunadal
Environmental permit applications for a possible production increase at Obbola
Kraftliner mill and a bio refinery at Östrand initiated
Wind power target of 5 TWh 2020 will be achieved
Start-up of a 1 million tonnes pulp mill in June 2018
15
SCA’s growing forest binds ~4m tons CO2
annually and provide renewable materials
95% fossil free production
21% of the productive forest land is excluded
from harvesting to preserve biodiversity
Carbon dioxide emissions from fossil fuels
reduced by ~50% since 2010
Our forests will be as rich in timber,
biodiversity and nature experience
as today
16
Continuous
improvement
Strategic
competence
Health and
safety
Kraftliner
expansion
Renewable
energy
Pulp expansion
project
Strong market with higher prices
Sales growth of 11% vs Q1 2017
• Price/mix +13%, volumes -3%, currency 1%
EBITDA up 47% vs Q1 2017
• Higher prices
• Positive currency effects
• Harsh winter conditions
Östrand project progressing according to plan
• Planned start-up in June 2018
• SEK 6.1bn invested up to Q1, out of SEK 7.8bn in total
Stable wood supply despite harsh winter conditions
Improved product and market mix
18
797 724
1,049 1,078
1,175
20% 17%
25% 25% 27%
Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18
EBITDA development (SEKm)
Note: 1) ROCE for the industrial segments; Wood, Pulp and Paper (* Industrial ROCE adjusted for capex
invested in the Östrand project).
EBITDA margin
26.7%
Industrial ROCE 1)
12% / 17%*
Net debt/EBITDA
1.8x
EBITDA (SEKm)
1,175 47%
19
20
Pilot facility for biofuel production in operations since Q2 2017
Investment in increased production of White-top Kraftliner
The world's fastest saw line in full production in Tunadal
Environmental permit applications for a possible production increase at Obbola
Kraftliner mill and a bio refinery at Östrand initiated
Wind power target of 5 TWh 2020 will be achieved
Start-up of a 1 million tonnes pulp mill in June 2018
Jerry Larsson, President Wood
April 1, 2018
Kristina Enander, President Pulp
November 1, 2018
Jonas Mårtensson, President Forest
April 1, 2018
22
1,312 1,298
Q1 2017 Q1 2018
325 304
Q1 2017 Q1 2018
24.8% 23.4%
Q1 2017 Q1 2018
-1% -6%
Net sales (SEKm) EBITDA (SEKm) EBITDA margin
Stable wood supply despite harsh winter conditions
Slight increase in prices, especially higher prices
for imported wood
Sales down 1%
• Lower volumes
• Minor price increases
EBITDA down 6%
• Harsh winter conditions affecting transportation and
harvesting costs
80
90
100
110
120
Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18
Pulpwood Sawlogs
Price development – Pulpwood and Sawlogs
23
95
100
105
110
115
120
Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18
Price index SEK
1,364 1,503
Q1 2017 Q1 2018
Net sales (SEKm) EBITDA (SEKm) EBITDA margin
145
172
Q1 2017 Q1 2018
10.6% 11.4%
Q1 2017 Q1 2018
Price development – Solid Wood Products
10% Strong market with continued price increases
Low inventory levels
Sales up 10%
• Higher prices
EBITDA up 19%
• Higher prices
• Increased raw material costs
• Extra costs related to the harsh winter conditions
19%
24
641 589
Q1 2017 Q1 2018
104
178
Q1 2017 Q1 2018
16.2%
30.2%
Q1 2017 Q1 2018
Net sales (SEKm) EBITDA (SEKm) EBITDA margin
Price development – NBSK Pulp
Strong pulp market with increased prices
Östrand project on plan • Planned start-up in June 2018
• SEK 6.1bn invested up to Q1, out of SEK 7.8bn in total
Sales down 8% • Higher prices
• Lower deliveries due to inventory build up ahead
of the Q2 stop
EBITDA up 71% • Higher prices
• Lower deliveries
• Direct costs affected by project
• Negative currency effects – mainly USD
95
100
105
110
115
120
125
Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18
Price index SEK
-8% 71%
25
Start-up in June according to plan
7.8 SEKbn
investment
Extended stop initiated in April
• Extension of recovery boiler
• Fiber line
Sequential start-up mitigates risk
• Wood handling unit – Q3 2017
• Control center – Q3 2017
• Evaporation plant – Q4 2017
• Water treatment – Q4 2017
• Drying and packaging – Q1 2018
26
27
Availability
• December: 89.3%
• January: 99.2%
• February: 99.9%
• March: 100%
28
29
30
31
80
90
100
110
120
130
140
Q1'16
Q1'17
Q1'18
Price index SEK
2,049
2,383
Q1 2017 Q1 2018
268
586
Q1 2017 Q1 2018
13.1%
24.6%
Q1 2017 Q1 2018
80
90
100
110
120
130
140
Q1'16
Q1'17
Q1'18
Price development –
Kraftliner
Price development –
Publication paper
16% 119%
Net sales (SEKm) EBITDA (SEKm) EBITDA margin
Strong Kraftliner market with higher prices
Improved market for publication paper
Sales up 16%
• Higher Kraftliner prices
EBITDA up 119%
• Higher Kraftliner prices
• Positive currency effects
• Improved product and market mix
• Stable cost development
32
Quarter
SEKm Q1 2018 Q1 2017 Change
Net sales 4,400 3,972 11%
EBITDA 1,175 797 47%
EBITDA margin 26.7% 20.1% 6.6 p.p.
EBIT 889 498 79%
EBIT margin 20.2% 12.5% 7.7 p.p.
Financial items 1 -36
Profit before tax 890 462 93%
Tax -191 -99
Profit for the period 699 363 93%
Earnings per share, SEK 1.00 0.52
33
Paper
Net sales (SEKm)
Pulp Forest Wood
312 295 338
325 364
316 358
304
25% 23%
26% 25%
30%
25% 28%
23%
Q2'16
Q3'16
Q4'16
Q1'17
Q2'17
Q3'17
Q4'17
Q1'18
1,2
34
1,2
61
1,2
96
1,3
12
1,2
10
1,2
61
1,2
87
1,2
98
Q2'16
Q3'16
Q4'16
Q1'17
Q2'17
Q3'17
Q4'17
Q1'18
1,8
89
1,8
59
1,9
98
2,0
49
2,0
69
2,0
96
2,2
20
2,3
83
Q2'16
Q3'16
Q4'16
Q1'17
Q2'17
Q3'17
Q4'17
Q1'18
1,4
96
1,3
20
1,3
61
1,3
64
1,6
37
1,5
67
1,4
26
1,5
03
Q2'16
Q3'16
Q4'16
Q1'17
Q2'17
Q3'17
Q4'17
Q1'18
556
668
668
641
585
644
672
589
Q2'16
Q3'16
Q4'16
Q1'17
Q2'17
Q3'17
Q4'17
Q1'18
140 143 161 145
154 187 184 172
9% 11% 12% 11% 9% 12% 13% 11%
Q2'16
Q3'16
Q4'16
Q1'17
Q2'17
Q3'17
Q4'17
Q1'18
105 160
102 104 71
158 149 178
19%
24%
15% 16% 12%
25% 22%
30%
Q2'16
Q3'16
Q4'16
Q1'17
Q2'17
Q3'17
Q4'17
Q1'18
378
293 271 268 291
439 481
586
20% 16% 14% 13% 14%
21% 22% 25%
Q2'16
Q3'16
Q4'16
Q1'17
Q2'17
Q3'17
Q4'17
Q1'18
EBITDA (SEKm) and EBITDA margin
34
SEK 3,972m
13% -3% 1%
SEK 4,400m
Net salesQ1 2017
Price/Mix Volume Currency Net salesQ1 2018
+ 11%
Positive for all segments Negative for Pulp
and Kraftliner
EUR positive, USD negative
35
SEK 797m
SEK +482m
SEK -25m
SEK -65m SEK
+4m
SEK +45m
SEK -63m SEK
1,175m
EBITDAQ1 2017
Price/Mix Volume Raw material Energy Currency Other EBITDAQ1 2018
+ 47%
Higher prices for all segments. Focus on
improving mix
EBITDA margin
20.1% EBITDA margin
26.7%
Higher costs for wood raw material and chemicals
EUR positive, USD negative
36
SEKm Q1 2018 Q1 2017
EBITDA 1,175 797
Revaluation of biological assets and other non cash flow items -253 -223
Operating cash surplus 922 574
Change in working capital -159 -354
Current capital expenditures -76 -126
Other operating cash flow -96 -9
Operating cash flow 591 85
Strategic capital expenditures -634 -515
37
Start-up in June according to plan
7.8 SEKbn
investment
Ramp-up period of 12-18 months
• 2018 – volumes in-line with 2017
• 2020 – first full year at full capacity
World-class competitiveness
• Doubled NBSK capacity
• Fixed cost reduction of SEK 350 per tonnes compared to pre project level
• Improved energy balance – from a net consumer of 0.1 TWh to a net producer of 0.5 TWh
• Potentially higher wood costs as wood has to be sourced further away
Project related costs (indirect)
• Project related costs of SEK 60m (150), of which SEK 10m (50) depreciation
• Primarily during the first 9 months of 2018
Maintenance stops
• Start-up in June 2018, following an extended maintenance stop
• Expected EBITDA impact of maintenance stops (1)
Q1: SEK 0m (8)
Q2: SEK 220m (65)
Q3: SEK 0m (0)
Q4: SEK 20m (58)
Ramp-up effects (direct)
• Increased direct costs for energy, chemicals and wood during ramp-up
• Higher share of B-grade pulp during ramp-up
• Expected earnings impact of SEK 100-250m, primarily in Q2 and Q3
Working capital
• Increase due to higher production volumes, particularly raw material inventory
38 Note: Figures in “(#)” refer to 2017.
(1) The estimated effect of maintenance stops on earnings in 2018, calculated as the total of the direct cost of the
maintenance and the effect from lower fixed cost coverage from the reduced production during the stop.
EBITDA impact Q1 2018 2018e 2017
Project related costs 16 50 100
Maintenance stops 0 240 131
Ramp-up effects 25 100-250 -
Total (SEKm) 41 390-540 231
One-off costs related to the finalization of the Pulp expansion project
39
SEKm Mar 31, 2018 Dec 31, 2017
Forest assets according to IAS 41 1) 31,593 31,386
Deferred tax relating to Forest assets -6,950 -6,905
Forest assets, net of deferred tax 24,643 24,481
Working capital 3,025 2,861
Working capital/Net sales 2) 17% 18%
Other capital employed 15,832 15,377
Total capital employed 43,500 42,719
Net debt 7,256 5,966
Net debt/EBITDA 3) 1.8x 1.6x
Equity 36,244 36,753
Net debt/Equity 20% 16%
Note: 1) Gross value before deferred taxes. 2) Calculated as an average of working capital for 13 months as
a percentage of 12-month rolling net sales. 3) 12-months EBITDA, up to end of each period.
Strong market with increased prices
Sales growth of 11% vs Q1 2017
EBITDA up 47% vs Q1 2017
Östrand project progressing according to plan
Stable wood supply despite harsh winter conditions
Improved product and market mix
40
42
3,300
3,781
3,385
3,648
4,026
21% 23%
22% 22% 24%
2014 2015 2016 2017 LTM
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
EBITDA (SEKm) and EBITDA margin
15,412 16,152
15,373
16,664 17,092
2014 2015 2016 2017 LTM
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
Net sales (SEKm)
43
Net sales (SEKm)
EBITDA (SEKm) and EBITDA margin 1)
603 478 531
670 697
12% 9% 10% 11% 11%
2014 2015 2016 2017 LTM
1,232 1,213 1,238 1,363 1,342
24% 24% 25% 27% 27%
2014 2015 2016 2017 LTM
768
970
530 482 556
31% 35%
21% 19%
22%
2014 2015 2016 2017 LTM
5,187 5,108 4,978 5,070 5,056
2014 2015 2016 2017 LTM
5,114 5,315 5,441 5,994 6,133
2014 2015 2016 2017 LTM
2,518 2,760 2,492 2,542 2,490
2014 2015 2016 2017 LTM
8,226 8,548 7,744
8,434 8,768
2014 2015 2016 2017 LTM
Paper Pulp Forest Wood
1,243 1,295 1,245
1,479
1,797
15% 15% 16% 18%
20%
2014 2015 2016 2017 LTM
Note: 2014 and 2015 EBITDA refer to adjusted figures. 2016 and forward refer to unadjusted
figures. For details please see the quarterly report.
This presentation may contain forward-looking statements. Such statements are based on our current expectations and
are subject to certain risks and uncertainties that could negatively affect our business. Please read SCA’s most recent
annual report for a better understanding of these risks and uncertainties.