E result q3_2012_web
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Transcript of E result q3_2012_web
Financial Results Q3 2012 CEO Jouko Karvinen and CFO Karl-Henrik Sundström
23 October 2012
It should be noted that certain statements herein which are not historical facts. including. without
limitation those regarding expectations for market growth and developments; expectations for growth
and profitability; and statements preceded by “believes”. “expects”. “anticipates”. “foresees”. or similar
expressions. are forward-looking statements within the meaning of the United States Private Securities
Litigation Reform Act of 1995. Since these statements are based on current plans. estimates and
projections. they involve risks and uncertainties which may cause actual results to materially differ from
those 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 of
efficiencies therein. continued success of product development. acceptance of new products or services
by 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 protection
created by the Group’s patents and other intellectual property rights. the availability of capital on
acceptable 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 the
Group. 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
markets or fluctuations in exchange and interest rates.
Financial Results Q3 2012 23 October 2012 2
Stable Performance in weak Europe
• Q3 performance as promised and little more
– Operational EBIT EUR 175 million driven by
lower costs
• Robust cash flow and liquidity
– Cash flow from operations EUR 312 million
and liquidity EUR 1 700 million
• Continuing with new profitability improvement
plans
23 October 2012 Financial Results Q3 2012 3
Third quarter earnings as promised and little more -not enough
23 October 2012 Financial Results Q3 2012 4
• Capacity reductions (Ruovesi, PM1 Hylte) – Capacity 180 000 tonnes std
NewsPrint
• Specific cost reduction and efficiency improvements plans across all BA’s
• Impact:
– Annualised cost savings of EUR 36 million
– Fixed asset and working capital write-downs of EUR 14 million
– Provisions with cash impact EUR 28 million
– Employee reduction of 520 people
New profitability improvement plans Annualized cost savings EUR 36 million
23 October 2012 Financial Results Q3 2012 5
Examining the Possibility of selling Corbehem mill
• Examining the possibility of selling
Corbehem Paper Mill in France.
• The capacity 330 000 tonnes LWC
23 October 2012 Financial Results Q3 2012 6
Transforming to value creating growth
23 October 2012 Financial Results Q3 2012 7
Skoghall. Sweden, woodyard
logistics, start-up end Q4 2012 Ostroleka. Poland
Container board
machine start-up Q1
2013
Montes del Plata.
Uruguay
Pulp mill, start-up mid-
year 2013, over 70%
completed
Guangxi. China
Pulp and Board
mills, start-up Q4
2014
Bulleh Shah
Packaging Limited.
Pakistan
JV, Q1 2013
Montes del Plata
23 October 2012 Financial Results Q3 2012 8
Board and Pulp mills project in Guangxi, China
• Resource build up
• Detailed planning - preparing and mitigating
risk of implementation
• Final permits still pending
• Confirmed project time plan when permits
received
23 October 2012 Financial Results Q3 2012 9
Summary financials Q3 2012
EUR million Q3/12 Q2/12 Q3/11 Change %
Q3 12/Q3 11
Change %
Q3 12/Q2 12
Sales 2 694.1 2 720.4 2 739.3 -1.7 -1.0
Operational EBITDA 299.6 248.1 339.2 -11.7 20.8
Operational EBIT 174.7 141.2 224.4 -22.1 23.7
Profit before tax excl. NRI 102.2 31.8 113.4 -9.9 221.4
Profit/loss before tax 102.2 85.9 -14.8 n/m 19.0
EPS excl. NRI, EUR 0.10 0.02 0.10 0.0 n/m
EPS (basic), EUR 0.10 0.09 -0.06 266.7 11.1
Operational ROCE, % 8.0 6.5 10.3 -22.3 23.1
Cash flow from operations 312.4 245.6 361.9 -13.7 27.2
Cash flow after investing activities 120.4 74.5 219.8 -45.2 61.6
Net debt/operational EBITDA* 2.8 2.7 2.0 40.0 3.7
Liquidity 1 700 1 240 1 181 43.9 37.1
Financial Results Q3 2012 23 October 2012 10
*Last 12 months’ operational EBITDA
Cash flow enabling the transformation The average cash flow from operation is EUR 270 million
23 October 2012 Financial Results Q3 2012 11
Focusing on Balance Sheet Q1 2010 - Q3 2012
Financial Results Q3 2012 23 October 2012 12
*Last 12 months operational EBITDA
Renewable Packaging and Biomaterials in value creation
23 October 2012 Financial Results Q3 2012 13
Financing the Transformation Cash Flow 1-9/2012
23 October 2012 Financial Results Q3 2012 14
Cash Focus
Guidance for Q4 2012
• Sales roughly similar level than
Q3 2012
• Operational EBIT in line or
slightly lower than Q3 2012
• Mill maintenance will have a
negative impact on Renewable
Packaging and Biomaterials
during the quarter.
23 October 2012 Financial Results Q3 2012 15
• Q3 performance as promised and little more
• Robust liquidity – prepared for the future
• We are the masters of our destiny - new profitability
improvements planned
• Transforming to value creating growth- proof points:
– Three projects soon finalized
– JV in Pakistan Q1 2013
– Guangxi, China proceeding
Transforming to value-creating growth
23 October 2012 Financial Results Q3 2012 16
23 October 2012 Financial Results Q3 2012 17
Segment
Annual
sales
reduction
Annual cost
savings from
Q4 2013
onwards
Fixed asset
write-downs in
Q4/2012
Provisions with
cash impact in
Q4/2012
Employee
reduction
plan
Printing and Reading No impact EUR 16 million EUR 10 million EUR 17 million 140
Biomaterials No impact EUR 6 million - EUR 6 million 60
Building and Living No impact EUR 1 million - - 25
Renewable Packaging No impact EUR 13 million EUR 4 million EUR 5 million 295
Total No impact EUR 36 million EUR 14 million EUR 28 million 520
New profitability action plans (2) Annual cost savings from the plans EUR 36 million
18
Announced Cash cost
Meur
Impairments
Meur
Employee
reduction plan
Annual cost
savings Meur
Saving fully
visible in P&L
starting
Kopparfors closure Q1 2011 20 9 104 10 Q1 2012
Kabel restructuring Q1 2011 4 - 42 3 Q4 2011
Fine Paper restructuring Q2 2011 16 - 270 20 Q2 2012
Logistics restructuring Q2 2011 9 - - 16 Q1 2011
Packaging restructuring Q4 2011 4 - 140 6 Q3 2012
Building and Living Q4 2011 3 1 39 3 Q3 2012
Coated Magazine Q1 2012 5 1 110 48 Q3 2013
Swedish maintenance Q1 2012 10 - 130 21 gradually from
late 2012 onwards
Packaging restructuring Q1 2012 7 2 155 7 gradually from
Q4 2012 onwards
Printing and Reading Q2 2012 8 - 140 6 Q1 2013
Total 86 13 1130 140
Earlier announced cost savings programmes
Operational EBIT by segments
EUR million Q3/12 Q2/12 Q3/11 Change %
Q3 12/ Q3 11
Change %
Q3 12/ Q2 12
Printing and Reading 51.1 41.7 72.3 -29.3 22.5
% of sales 4.2 3.5 5.6 -25.0 20.0
Biomaterials 32.5 14.7 57.3 -43.3 121.1
% of sales 12.1 6.0 20.7 -41.5 101.7
Building and Living 0.7 11.5 9.8 -92.9 -93.9
% of sales 0.2 2.6 2.4 -91.7 -92.3
Renewable Packaging 82.9 72.5 73.6 12.6 14.3
% of sales 10.2 8.8 9.2 10.9 15.9
Other 7.5 0.8 11.4 -34.2 n/m
% of sales 1.2 0.1 1.8 -33.3 n/m
Financial Results Q3 2012 23 October 2012 20
Operational EBIT by segments
EUR million Q3/ 12 Q2/ 12
Change %
Q3 12/ Q2 12
Printing and Reading 51.1 41.7 22.5
Biomaterials 32.5 14.7 121.1
Building and Living 0.7 11.5 -93.9
Renewable Packaging 82.9 72.5 14.3
Other 7.5 0.8 n/m
Group 174.7 141.2 23.7
Financial Results Q3 2012 23 October 2012 21
Transforming the Company
Q1-Q3 2012
23 October 2012 Financial Results Q3 2012 22
Curtailments % of capacity
23 October 2012 Financial Results Q3 2012 23
Working capital Q2 2010 – Q3 2012
*Operative working capital = trade receivables + inventories – trade payables
Financial Results Q3 2012 23 October 2012 24
Net Financial Items
EUR million Q3/2012 Q2/2012 Q3/2011 Change %
Q312/Q311
Change %
Q312/Q212
Net interest expense -44.0 -42.0 -35.9 -22.6 -4.7
Foreign exchange gains and losses -0.4 -18.2 -11.4 96.5 97.8
Other financial items. of which -14.7 -6.6 -146.1 89.9 -122.7
PIK notes 2.7 2.5 2.1
Fair valuation of interest rate derivatives* -16.4 -14.3 -16.4
Fair valuation of long-term debt -0.2 -0.3 -1.1
NewPage lease provision - 9.5 -128.2
Other items -0.8 -4.0 -2.5
Total net financial items -59.1 -66.8 -193.4 69.4 11.5
*Not hedge accounted interest rate derivatives.
Financial Results Q3 2012 23 October 2012 25
Transaction risk and hedges as at 30 September 2012
Operational EBIT: Currency strengthening of + 10% EUR million
USD 115
SEK -95
GBP 62
EUR million USD GBP SEK
Estimated annual net operating cash flow exposure 1 150 620 -950
Transaction hedges as at 30 Sep 2012 -580 -280 380
Hedging percentage as at 30 June 2012 for the next 12 months 50% 45% 40%
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.
Additional GBP hedges for 13-16 months increase the hedging percentages by 6 %.
Financial Results Q3 2012 23 October 2012 26
Softwood pulp prices Stora Enso’s market pulp is softwood
Source: FOEX
Financial Results Q3 2012 23 October 2012 27
Pulp wood and saw log prices Wood prices in Finland
Source: METLA
Financial Results Q3 2012 23 October 2012 28
Wood prices in Sweden
Pulpwood includes pine. spruce and birch.
Sawlogs include pine and spruce.
Source: SDC. Skogsstyrelsen
Financial Results Q3 2012 29 23 October 2012
RCP prices
German RCP price development. free delivered
Source: Verband Deutscher Papierfabriken/Stora Enso
Financial Results Q3 2012 23 October 2012 30
Capital expenditure and depreciation Q1 2008 – Q3 2012
Financial Results Q3 2012 23 October 2012 31
Debt/equity ratio 2009 – Q3 2012
Financial Results Q3 2012 23 October 2012 32
Energy balance* Q3 2012
Impact** on operating profit from
10% change in: EUR million p.a.
Electricity market price ~4
Fossil fuel price ~17
Self sufficiency 46% Self sufficiency 63%
Total energy self
sufficiency 59%
**) Remaining impact on non-hedged volume
23 October 2012 Financial Results Q3 2012 34
*) Pulp. paper and board mills. Europe and overseas
35
Stora Enso Electricity procurement* Q3 2012
23 October 2012 Financial Results Q3 2012
*) Pulp. paper and board mills. Europe and overseas