April 24, 2020 - publicationpapers.sca.com€¦ · Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19...
Transcript of April 24, 2020 - publicationpapers.sca.com€¦ · Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19...
April 24, 2020
Coronavirus pandemic
• Health and safety highest priority
• Limited effect in Q1, significant uncertainty going forward
• Higher demand for pulp to tissue and hygiene products, and for
packaging paper to e-commerce and essential products
• Lower demand for solid wood products and publication paper
Sales declined 6% vs Q1 2019
• Price/mix -16%, volume 11%, currency 2%, acq/div -3%
EBITDA down 34% vs Q1 2019
- Lower selling prices
+ Higher pulp and kraftliner volumes
+ Lower raw material costs
Higher forest growth enables increased annual harvesting
• Gradual increase from 4.3m m3sub / year 2020 to 5.4m m3sub /year 2025
3
1,175
1,034
1,5491,494
1,560
1,340 1,364
1,055 1,030
27%
22%
33%30% 31%
26%27%
24%
21%
Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20
EBITDA development (SEKm)
Note: 1) ROCE for the industrial segments; Wood, Pulp and Paper. ROCE calculated as LTM.
EBITDA margin
21%
Industrial ROCE 1)
9%
Net debt/EBITDA
1.9x
EBITDA (SEKm)
1,030 -34%
4
5
1,6511,833
Q1 2019 Q1 2020
331
452
Q1 2019 Q1 2020
20.0%
24.6%
Q1 2019 Q1 2020
11% 37%
Net sales (SEKm) EBITDA (SEKm) EBITDA margin
Declining prices
Stable wood supply to industries
Sales up 11%
+ Increased pulp and kraftliner volumes
- Lower prices
EBITDA up 37%
+ Higher forest growth increasing earnings from revaluation
of biological assets
- Lower prices
90
100
110
120
130
140
Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20
Pulpwood Sawlogs
Price development – Pulpwood and Sawlogs
6
80
90
100
110
120
Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20
Price index SEK
1,678
1,436
Q1 2019 Q1 2020
Net sales (SEKm) EBITDA (SEKm) EBITDA margin
297
95
Q1 2019 Q1 2020
17.7%
6.6%
Q1 2019 Q1 2020
Price development – Solid Wood Products
-14% Stable consumption, but low prices due to over
supply in continental Europe
Sales down 14%
- Lower prices
- Deconsolidation in Wood France following
merger with Groupe ISB
EBITDA down 68%
- Lower prices
- Restructuring SCA Wood France 0 (+90) SEKm
-68%
21.8
22.2
22.6
23.0
23.4
23.8
24.2
24.6
0
200
400
600
800
1,000
1,200
1,400
NBSK PIX Price Europe (LHS)
Global Softwood Kraft deliveries (RHS)
20
25
30
35
40
45
20
30
40
50
60
70
80
Higher pulp demand
• Increased global pulp deliveries
• Decreased softwood and hardwood inventories
• However, prices lagging behind
• European NBSK PIX price up from 820 to 840
USD/t in March
• Further price increase announced
7
Softwood pulp inventories (days of supply)
Softwood pulp price (USD/t) vs deliveries (Mt) Increased
demandHardwood pulp inventories (days of supply)
Source: PIX, PPPC.
Normalized
inventories
Average
Normalized
inventories
Average
8
1,134 1,188
Q1 2019 Q1 2020
351
186
Q1 2019 Q1 2020
31.0%
15.6%
Q1 2019 Q1 2020
Net sales (SEKm) EBITDA (SEKm) EBITDA margin
Price development – NBSK Pulp
Sales up 5%+ Increased volumes to expanded pulp mill
- Lower prices
EBITDA down 47%- Lower prices
+ Increased volumes to expanded pulp mill
+ Positive currency effects
80
90
100
110
120
130
Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20
Price index SEK
5% -47%
20
25
30
35
40
5.1
5.2
5.3
5.4
5.5
500
550
600
650
700
750
800
850
Unbleached kraftliner price Euwid (LHS)
Kraftliner deliveries Europe (RHS)
9
Kraftliner inventories (days of supply)
Price (EUR/t) vs Kraftliner deliveries (Mt)Strong annual
run rate
Improved demand
and lower production
Stable increase in
end demand
European box demand (index)
Source: Euwid, Numera.
Average
Higher kraftliner demand
• European deliveries continued to be strong
• Inventories continued to decrease
• Good order in-flow
• Stable box demand
• Price increase announced
98
100
102
104
106
108
10
80
100
120
140
Q1'18
Q1'19
Q1'20
Price index SEK
2,3662,242
Q1 2019 Q1 2020
616
379
Q1 2019 Q1 2020
26.0%
16.9%
Q1 2019 Q1 2020
80
100
120
140
Q1'18
Q1'19
Q1'20
Price development –
Kraftliner
Price development –
Publication paper (LWC)
-5% -38%
Net sales (SEKm) EBITDA (SEKm) EBITDA margin
Sales down 5%
- Lower kraftliner and publication paper prices
+ Higher kraftliner volumes
EBITDA down 38%
- Lower kraftliner and publication paper prices
+ Higher kraftliner volumes
+ Lower raw material costs and positive currency effects
11
New forest survey conducted in 2019
Annual growth 1m m3fo higher than expected
• Gross growth of 10.5 (9.5) m m3fo per year
• Net growth of 4.0 (3.0) m m3fo per year
New harvesting plan calculated based on the new survey
• Gradual increase from 4.3m m3sub / year 2020 to 5.4m m3sub / year 2025
• Ramp-up expected to be linear over 5 years
Gross forest growth Sweden
(m m3fo / year)
+1
Harvesting plan
(m m3sub / year)
9.5
10.5
Forest survey2012-2013
Forest survey2019
4.3
5.4
Harvestingplan 2020
Harvestingplan 2025
+1.1
No disruptions in production or distribution in Q1
• Forest – no effect in Q1
• Wood – limited effect in Q1, significant uncertainty going forward
• Pulp – increased demand in Q1
• Paper – higher demand for kraftliner, significantly lower for publication paper
Actions to mitigate impact
• Protect risk groups and reduce the spread of the virus
• Strict procedures in place to minimize impact on production
• Secure supply chain and key raw materials
• SCA Logistics with own ships and controlled harbors
• Cost control, inventory levels and capex
• High liquidity reserve and forest asset backing
SCA supplies raw
material to tissue and
hygiene products
12
14
Quarter
SEKm Q1 2020 Q1 2019 Change
Net sales 4,793 5,076 -6%
EBITDA 1,030 1,560 -34%
EBITDA margin 21.5% 30.7% -9.2 p.p.
EBIT 628 1,168 -46%
EBIT margin 13.1% 23.0% -9.9 p.p.
Financial items -24 -30
Profit before tax 604 1,138 -47%
Tax -121 -230
Profit for the period 483 908 -47%
Earnings per share, SEK 0.69 1.29
15
Paper
Net sales (SEKm)
PulpForest Wood
371
292
427
331
414 388
607
452
32%
20%
28%
20%24%
21%
36%
25%
Q2'18
Q3'18
Q4'18
Q1'19
Q2'19
Q3'19
Q4'19
Q1'20
1,1
62
1,4
55
1,5
40
1,6
51
1,7
46
1,8
65
1,6
94
1,8
33
Q2'18
Q3'18
Q4'18
Q1'19
Q2'19
Q3'19
Q4'19
Q1'20
2,4
26
2,4
13
2,4
21
2,3
66
2,3
75
2,3
80
2,1
08
2,2
42
Q2'18
Q3'18
Q4'18
Q1'19
Q2'19
Q3'19
Q4'19
Q1'20
1,8
46
1,7
12
1,5
58
1,6
78
1,7
27
1,5
45
1,3
76
1,4
36
Q2'18
Q3'18
Q4'18
Q1'19
Q2'19
Q3'19
Q4'19
Q1'20
48
5 74
3 1,0
49
1,1
34
1,2
14
1,1
29
90
0 1,1
88
Q2'18
Q3'18
Q4'18
Q1'19
Q2'19
Q3'19
Q4'19
Q1'20
230276
226297
188 180125 95
13%16% 15%
18%
11% 12%9% 7%
Q2'18
Q3'18
Q4'18
Q1'19
Q2'19
Q3'19
Q4'19
Q1'20
-112
273
370 351 344268
20
18637%
35% 31%28%
24%2%
16%
Q2'18
Q3'18
Q4'18
Q1'19
Q2'19
Q3'19
Q4'19
Q1'20
618
728
536
616
489
577
382 379
26%30%
22%26%
21%24%
18% 17%
Q2'18
Q3'18
Q4'18
Q1'19
Q2'19
Q3'19
Q4'19
Q1'20
EBITDA (SEKm) and EBITDA margin
16
SEK 5,076m -16%
11% 2% -3%SEK
4,793m
Net salesQ1 2019
Price/Mix Volume Currency Acquisitions/divestments
Net salesQ1 2020
- 6%
Negative for all segments
Expanded pulp mill and higher Kraftliner volumes
Deconsolidation in Wood France following merger
with Groupe ISB
17
SEK 1,560m -912
+167
+174 -3
+140 -96 SEK 1,030m
EBITDAQ1 2019
Price/Mix Volume Raw material Energy Currency Other EBITDAQ1 2020
- 34%
Lower prices for all segments
EBITDA margin
30.7%EBITDA margin
21.5%
Lower costs for wood and other raw materials
EUR and USD positive
Expanded pulp mill and higher Kraftliner volumes
Restructuring SCA Wood France (positive one-off item
of SEK 90m in Q1 2019)
18
Quarter
SEKm Q1 2020 Q1 2019
EBITDA 1,030 1,560
Revaluation of biological assets and other non cash flow items -340 -246
Operating cash surplus 690 1,314
Change in working capital -146 -353
Current capital expenditures -175 -168
Other operating cash flow -28 -167
Operating cash flow 341 626
Acquisitions 0 -158
Strategic capital expenditures -189 -143
19
854
835
SEK 8,597m
SEK-341m
SEK+189m
SEK 0m
SEK+42m
SEK+600m
SEK 9,087m
Net debtQ4 2019
Operatingcash flow
Strategic capex Acquisitions Paid tax Other Net debtQ1 2020
Net debt / EBITDA
1.6xNet debt / EBITDA
1.9x
Lease
Lease
Kraftliner and pulp expansion
Revaluation of pension assets and Other
20
Maturity, yearsTotal
utilizedDebt (SEKbn) Limit 0-1 1-2 2-
Syndicated credit facilities (RCF) 5.0 -
Bond loans within MTN program 8.0 1.0 1.1 2.1
Commercial paper (CP) 5.0 2.9 2.9
Other loans1 4.0 4.0
Total Group 3.9 1.1 4.0 9.0
1 SEK, EIB and NIB
• New loan from Swedish Export Credit Agency (SEK 1bn) used to repay CP in April
• New additional syndicated RCF (SEK 1.6bn)
• Total liquidity reserve of SEK ~7.5bn (5.0bn RCF + 1.6bn new RCF + Cash)
Actions and measures after end of period:
Debt overview (Mar 31, 2020) Financing overview (Mar 31,2020)
2.9
2.1
5.0 5.0
8.0
4.0
0.9
Syndicatedcredit facilities
Commercialpaper
Bond loanswithin MTN
program
Other loans Cash
Utilized Not utilized Not utilized, secured
Note: Leasing excluded.
21
SEKm Mar 31, 2020 Dec 31, 2019
Forest assets 70,097 69,682
Working capital 3,470 3,748
Working capital/Net sales 1) 20% 20%
Deferred tax relating to forest assets -14,107 -13,977
Other capital employed 17,878 17,654
Total capital employed 77,338 77,107
Net debt 9,087 8,597
Net debt/EBITDA 2) 1.9x 1.6x
Equity 68,251 68,510
Net debt/Equity 13% 13%
Note: 1) Average working capital for 13 months as a percentage of 12-month rolling net sales.
2) 12-months EBITDA, up to end of each period.
Coronavirus pandemic
Sales declined 6% vs Q1 2019
EBITDA down 34% vs Q1 2019
Higher forest growth enables increased
annual harvesting
23
26
Net sales (SEKm)
EBITDA (SEKm) and EBITDA margin 1)
603478 531
670904
789588
12%9% 10% 11%
14% 12%10%
2014 2015 2016 2017 2018 2019 LTM
1,232 1,213 1,2381,363 1,394
1,7401,861
24% 24% 25%27% 26% 25% 26%
2014 2015 2016 2017 2018 2019 LTM
768970
530 482709
983 818
31%35%
21%19%
25%23%
18%
2014 2015 2016 2017 2018 2019 LTM
5,187 5,108 4,978 5,070 5,455
6,956 7,138
2014 2015 2016 2017 2018 2019 LTM
5,114 5,315 5,4415,994
6,618 6,325 6,084
2014 2015 2016 2017 2018 2019 LTM
2,518 2,760 2,492 2,542 2,866
4,377 4,431
2014 2015 2016 2017 2018 2019 LTM
8,226 8,5487,744
8,434
9,643 9,229 9,105
2014 2015 2016 2017 2018 2019 LTM
PaperPulpForest Wood
1,243 1,295 1,2451,479
2,468
2,0641,827
15% 15% 16% 18%
26%22%
20%
2014 2015 2016 2017 2018 2019 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.