Metsä Board and... · FBB in Europe, Asia-Pacific and especially in North America ‒Threshold to...

Metsä Board

Metsä Board Profitable Growth of

Paperboard Business

Henri Sederholm, VP, Finance and ControlCiti, 4 December 2014

Metsä GroupMetsä Board

Content

1. Consistent Strategy

2. Profitable Growth of the Paperboard Business

3. Financial Performance and Financing

4. Conclusions

2


Consistent Strategy

3


Metsä Board Is the Leading European Fresh Forest FibrePaperboard Producer

‒ Annual sales about 2.0 b€

‒ Europe’s largest in folding boxboard. World’s largest in coated white-top fresh

forest fibre linerboard

‒ Major uncoated fine and printing paper as well as market pulp supplier

‒ Valuable holdings in Metsä Fibre and Pohjolan Voima

‒ Main customers are brand owners, printers, corrugated packaging

manufacturers, merchants and office products suppliers

‒ Global sales and customer service network in over 70 countries and nine

production units in Finland, Sweden and Germany

4


5

White Top Kraftliners

Folding Boxboard

Fully Bleached

Linerboards

Metsä Board Is Able to Offer a Wide Coverage of High-Quality Paperboards for Consumer Goods Companies and Converters


Consistent Strategy

6

‒ Paperboard is Metsä Board’s core business

‒ Focus on high-quality paperboards

‒ Smaller but healthier paper business

‒ Heavy re-engineering and successful divestments

‒ Extensive fibre know-how and pulp self-sufficiency

‒ Metsä Board’s role in Metsä Fibre’s planned new pulp

mill in Äänekoski to be clarified latest early next year

‒ Continuous development towards Super Productivity

Largest Folding Boxboard Producers in Europe

Source: Metsä Board, Pöyry Management Consulting Oy

Largest White Top Kraftliner and Fully Bleached

Kraftliner Producers in Europe

Holmen


300

600

900

1 200

1 500

1 800

2006 2007 2008 2009 2010 2011 2012 2013to

nn

es/a

/pers

on

Metsä Board is Heavily Focused on Paperboard. Productivity Clearly Improved in Recent Years

7

Sales distribution 3Q 2014Capacity per employee at Metsä Board’s paperboard,

paper and pulp mills improved by almost 70 %

Paperboard 61%

Paper 24%

Market pulp 15%

Metsä GroupMetsä Board8

Profitability of Metsä Board’s Core Business Is the Best in Its Field

Operating result, excl. non-recurring items, % of sales


Profitable Growth of the Paperboard Business

9


Packaging Materials Is about EUR 600 Billion Business Globally and It Is Growing Strong

Wood fibre

based

materials

36 %

Others

64 %

‒ Growing population

‒ Urbanization

‒ Environmental awareness

‒ Safety

Global demand growth in Metsä Board’s main

grades, folding boxboard and white top fresh forest

fibre linerboard, 3–4 % annuallySource: Smithers Pira

10

Highest growth in

paperboard packaging, accounting

for the largest share of the total


Metsä Board’s Light Weight Paperboards Help the World’s

Leading Consumer Goods Companies to Succeed

‒ Increasing sales

‒ Improving sustainability

‒ Securing product safety

‒ Decreasing costs

11

Lower quality recycled fibre paperboards

Metsä Board’s grades’ global

demand growth 3-4 %/a

Recycled and fresh forest

fibre based cartonboards

and linerboards

High-quality fresh forest fibre

cartonboards

and linerboards


Metsä Board’s Light Weight Folding Boxboard has Excellent Growth Potential Globally

‒ Share of modern, safe and light-weight folding boxboard

is still low globally

‒ Metsä Board focuses on increasing the share of modern

FBB in Europe, Asia-Pacific and especially in North America

‒ Threshold to enter the high quality paperboard market is high

‒ Limited availability of high quality fibre

‒ Customers not willing to change suppliers easily

‒ Skilled people and organizations a crucial success factor

Share of ecological FBB of total

cartonboard market

Europe 35%North America 5%

Asia 22%

12


Metsä Board’s FBB Has Proven Its Competitiveness Among

North American Consumer Goods Companies and Converters

13

‒ Missing piece to the North American cartonboard offering

enabling the enhancement of sustainability

‒ Even over 30 % lighter in weight than competing paperboards

‒ Long-term contracts signed with several leading North

American converters and merchants

‒ Target in 2014 was to double deliveries from the 35 000 tonnes

last year. This target will be clearly exceeded

0

5

10

15

20

25

30

3Q13 4Q13 1Q14 2Q14 3Q14

FBB deliveries to North America, 1,000 tonnes

+270 %


In Addition to Folding Boxboard Metsä Board Develops Strongly and Successfully Its Linerboard Business

‒ Successful transformation of Kemi mill to high end doublecoated segment

‒ Profitability to a totally new level

‒ Fully booked for several years

‒ Capacity increased to over 400 000 t/a

‒ Husum’s light weight fully bleached linerboards complete Metsä Board’s

offering enabling growth in totally new end uses

‒ Current run rate 100 000 t/a

‒ Steady decrease of unprofitable paper volumes in Husum

‒ 70 % growth in North America during the past 5 years

‒ USA today the biggest single market

‒ All leading corrugated box manufacturers as main customers

14

Metsä Board’s fresh forest fibre

linerboard deliveries in 2013

EMEA

62%

Americas

37%

Asia-Pacific 1%

Metsä Board’s fresh forest fibre linerboard

deliveries to North America, 1,000 tonnes

0

30

60

90

120

150

2009 2010 2011 2012 2013

+70%


New Innovative Light-Weight Paperboards Introduced in 1H 2014 to Broaden Offering and Accelerate Growth

15

Carta Dedica Light weight cup stock and food service board

Carta Allura Luxury packaging board

Modo Northern Light CoatedHigh quality liner for corrugated and microflute packaging


Good Track Record in Growing Paperboard Businesses

‒ Metsä Board’s paperboard deliveries increased in 1-3Q 2014

by 10 % from last year

‒ Main growth is seen in North America

‒ Outlook in the food service segment is very promising for

Metsä Board offering good growth opportunities in the future

‒ Alternatives to increase folding boxboard capacity are under

investigation

16

169 176185 185 189 192 197

185 191 197210

8085

93 8594 93

95

91

109108

118

0

50

100

150

200

250

300

350

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

Fresh forest fibre linerboard

Folding boxboard

Paperboard deliveries1 000 tonnes

Metsä BoardMetsä Board

Financial Performance and Financing


Highlights in 3Q 2014

18

‒ Profitability improved from previous quarter

‒ Paperboard delivery volume continued to increase and price levels were stable

‒ Paper deliveries and average prices were at previous quarter level

‒ Market pulp deliveries reduced but average price increased slightly

‒ Good production including planned maintenance shutdown in Kemi

‒ Net debt reduced clearly to EUR 491 million due to strong cash flow

‒ Mika Joukio started as the new CEO on 1 October 2014

‒ Metsä Board was awarded by a position in the CDP’s Climate Disclosure Leadership Index in October


30

1929 28

6

2520

24 2636 35

0

10

20

30

40

50

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14

545 522 532 509 535 503 514479502 501 494

0

200

400

600

800

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14

-9

1710 9

1927

918

4

2021

-10

0

10

20

30

40

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14

Sales Operating result excl. non-rec. items

Result before taxes excl. non-rec. items

Operating Result in 3Q 2014 Improved as Expected

19

EPS excl, nris has

more than doubled to

EUR 0.17 in 2014

EUR million EUR million

EUR million

Metsä Board’s operating result,

excluding non-recurring items, is

in the fourth quarter of 2014

expected to be roughly the same

as in the third quarter of 2014


EBIT % of sales excl. non-recuring items ROCE %, excl. non-recurring items

6,6

-6,2

6,6

2,4

3,6

5,2

-8

-6

-4

-2

0

2

4

6

8

10

2009 2010 2011 2012 2013 1-3Q14

6,4

4,8

3,4

7,6

-5,6

8,9

-6

-4

-2

0

2

4

6

8

10

12

2009 2010 2011 2012 2013 1-3Q14

Target min. 10 %

Metsä Board’s Profitabillity Has Improved Steadily


EBITDA Development

21

EBITDA excl. non-recurring items

176

208

186179

305

44

0

60

120

180

240

300

2009 2010 2011 2012 2013 1-3Q 2014

EUR million


Balance Sheet Ratios

22

777

827

783

625597

491

17,7

2,7

4,4

3,42,9

2,1

0

100

200

300

400

500

600

700

800

900

2009 2010 2011 2012 2013 3Q 14

0

2

4

6

8

10

12

14

16

18

20

Net Debt and Net Debt/EBITDA* Net Gearing

57

84 83

106

7270

0

20

40

60

80

100

120

2009 2010 2011 2012 2013 3Q14

Net debt,

EUR millionNet debt/EBITDA

*Excluding non-recurring items

%


40

6766

95

7372

0

20

40

60

80

100

2009 2010 2011 2012 2013 2014

m€

Capex Reducing to about EUR 40-45 million in 2014

Indicative level for 201423


‒ Annual EBIT sensitivity of 10 % change vs. euro

‒ EUR 45 million in USD

‒ EUR 20 million in GBP

‒ Reversed EUR 30 million SEK

‒ Hedging of the main foreign currency flows is 5-7 months. Thus,

the recent exchange rate changes are visible in 2015

‒ Business area numbers reflect exchange rate changes rapidly but

hedge accounting result in Other operations balance the impact

Recent Changes in Exchange Rates Are Favoring Metsä Board


Diversified Funding Sources

25

Long-Term Interest Bearing Liabilities 30.9. 2014

31 %

8 %

4 %

29 %

28 %

Bonds

Pension premium loans

Loans from financial institutions

Finance leases

Other interest bearing liabilities

Total EUR 701 million

Liquidity over

EUR 400 million


Well Balanced Maturity Schedule

13

100

34

83

181

254

24

4

100

14

0

50

100

150

200

250

300

2014 2015 2016 2017 2018 2019 2020 >2 020

Long-term interest bearing liabilities

Committed undrawn credit facilities

EUR million

26

Long-term Interest Bearing Liabilities and Committed Undrawn Credit Facilities 30.9.2014


Conclusions

28


Key Priorities in 2015

‒ Grow profitably the paperboard businesses globally

‒ Secure good price levels

‒ Further improve best in class product quality and supply chain

‒ Develop new products for existing and new end uses

‒ Reduce underperforming paper businesses

‒ Continue productivity improvements and cost savings

29

6,4

4,8

3,4

7,6

-5,6

8,9

-6

-4

-2

0

2

4

6

8

10

12

2009 2010 2011 2012 2013 1-3Q14

Target min. 10 %

ROCE, excl. non-recurring items

%


30

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