Financial Results Q2 2012
CEO Jouko Karvinen
20 July 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 Q2 2012 20 July 2012 2
Cash flow and liquidity improved
• Operational EBIT EUR 141 million
• Cash flow from operations EUR 246 million
• Strong liquidity at EUR 1 240 million
Financial results Q2 2012 20 July 2012 3
Operational EBIT on the similar level as Q1 2012 as
anticipated
Financial results Q2 2012 20 July 2012 4
Strategic investments to transform the Group
20 July 2012 Financial results Q2 2012 5
35% personnel increase in growth markets 2007 –H1 2012
20 July 2012 Financial results Q2 2012 6
Montes del Plata Pulp Mill
• Montes del Plata pulp mill 1.3
million tonnes annually
• Approximately 60% of the
construction work completed
• Mill expected to start-up
approximately mid-year 2013
20 July 2012 Financial results Q2 2012 7
Timing of Strategic Projects
20 July 2012 Financial results Q2 2012
Skoghall,
Sweden
Investment
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
Guangxi,
China
Pulp and Board
mill, start-up
Q4 2014
8
Summary financials Q2 2012
EUR million Q2/2012 Q1/2012 Q2/2011 Change %
Q2 12/Q2 11
Change %
Q2 12/Q1 12
Sales 2 720.4 2 673.3 2 817.1 -3.4 1.8
Operational EBITDA 248.1 262.1 357.6 -30.6 -5.3
Operational EBIT 141.2 147.4 239.1 -40.9 -4.2
Profit before tax. excl. NRI 31.8 101.0 177.6 -82.1 -68.5
Profit before tax 85.9 89.9 145.9 -41.1 -4.4
EPS excl. NRI (EUR) 0.02 0.10 0.21 -90.5 -80.0
EPS (basic). EUR 0.09 0.09 0.17 -47.1 -
Operational ROCE. % 6.5 6.8 10.9 -40.4 -4.4
Cash flow from operations 245.6 223.7 207.2 18.5 9.8
Cash flow after investing
activities 74.5 111.4 110.8 -32.8 -33.1
Debt/equity 0.54 0.46 0.41 31.7 17.4
Financial results Q2 2012 20 July 2012 9
Net Financial Items
EUR million Q2/2012 Q1/2012 Q2/2011 Change %
Q212/Q211
Change %
Q212/Q112
Net interest expense -42.0 -37.7 -28.3 -48.4 -11.4
Foreign exchange gains and losses -18.2 8.0 -0.7 n/m n/m
Other financial items. of which -6.6 -4.3 -5.6 -17.9 -53.5
PIK notes 2.5 2.0 1.9
Fair valuation of interest rate derivatives* -14.3 -3.3 -3.3
Fair valuation of long-term debt -0.3 -0.5 0.4
NewPage lease provision 9.5 13.6 -
Other items -4.0 -16.1 -4.6
Total net financial items -66.8 -34.0 -34.6 -93.1 -96.5
*Not hedge accounted interest rate derivatives.
Financial results Q2 2012 20 July 2012 10
Operational EBIT by segments
EUR million Q2/2012 Q1/2012 Q2/2011 Change %
Q212/Q211
Change %
Q212/Q112
Printing and Reading 41.7 67.3 72.2 -42.2 -38.0
% of sales 3.5 5.5 5.8 -39.7 -36.4
Biomaterials 14.7 7.2 31.2 -52.9 104.2
% of sales 6.0 3.0 11.6 -48.3 100.0
Building and Living 11.5 9.8 35.2 -67.3 17.3
% of sales 2.6 2.6 7.6 -65.8 0.0
Renewable Packaging 72.5 61.7 93.9 -22.8 17.5
% of sales 8.8 7.9 11.3 -22.1 11.4
Other 0.8 1.4 6.6 -87.9 -42.9
% of sales 0.1 0.2 0.9 -88.9 -50.0
Financial results Q2 2012 20 July 2012 11
Western European paper* demand 2006 – 2012/May Seasonally adjusted
20 July 2012
* Paper: News, UMO, UMI, SC, CM, WFC & WFU
Source: EuroGraph & PPPC
Financial results Q2 2012 12
Corrugated packaging growth - Eastern Europe and
Asia
20 July 2012 Financial results Q2 2012
2010-2020
Million tonnes
Asia
CAGR
4.4%
Eastern
Europe
CAGR
4.1%
Western
Europe
CAGR
1.0%
Middle East &
Africa
CAGR
4.3%
South
America
CAGR
2,7 %
North
America
CAGR
0.5%
Source: Pöyry and Stora Enso
13
Liquid dairy products significant driver for Consumer
Board growth – Asia 7% (CAGR 2010-2020)
20 July 2012 Financial results Q2 2012
-5%
-2,8%
-0,3%
2%
3%
1%
-1%
-2%
-3%
-4%
9%
10%
8%
7%
6%
5%
4%
1,2%
-0,4%
1,5%
3,2% 2,8%
-0,1%
9,0%
2,1%
Total Global LDP
average
growth rate:
2.4%
57.4 33.7 25.9 22.6
CA
GR
201
0 -
2012
Volume
2012
Bil Litres
12.8 11 7.7 6.7 5.6 5.1
Source: Tetra Pak Dairy Index 2009
Consumption estimate for Liquid Dairy Products
14
Guidance for Q3 2012
• Sales in Q3 2012 roughly similar
level than Q2 2012
• Operational EBIT close to the
similar level or somewhat higher
than in Q2 2012
Financial results Q2 2012 20 July 2012 15
Summary
Financial results Q2 2012
• European paper and wood
products markets continue to
weaken
• Additional cost reductions and
temporary production curtailments
planned in H2 2012
• Strategic investments progressing
to transform the Group
20 July 2012 16
Financial results Q2 2012 20 July 2012 17
Operational EBIT by segments
EUR million Q2/2012 Q1/2012 Change %
Q212/Q112
Printing and Reading 41.7 67.3 -38.0
Biomaterials 14.7 7.2 104.2
Building and Living 11.5 9.8 17.3
Renewable Packaging 72.5 61.7 17.5
Other 0.8 1.4 -42.9
Group 141.2 147.4 -4.2
Financial results Q2 2012 20 July 2012 18
Printing and Reading and Renewable Packaging
created the cash flow in Q2 2012
Financial results Q2 2012 20 July 2012 19
Transforming the Company
Q1-Q2 2012
20 July 2012 Financial results Q2 2012 20
Curtailments increased year-on-year % of capacity
Financial results Q2 2012 20 July 2012 21
Working capital improved Q2 2010 – Q2 2012
*Operative working capital = trade receivables + inventories – trade payables
Financial results Q2 2012 20 July 2012 22
Transaction risk and hedges as at 30 June 2012
Operational EBIT: Currency strengthening of + 10% EUR million
USD 120
SEK -92
GBP 60
EUR million USD GBP SEK
Estimated annual net operating cash flow exposure 1 200 600 -920
Transaction hedges as at 30 June 2012 -600 -270 450
Hedging percentage as at 30 June 2012 for the next 12 months 50% 45% 49%
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 USD and GBP hedges for 13-16 months increase the hedging percentages by
4 % and 7 % respectively.
Financial results Q2 2012 20 July 2012 23
Softwood pulp prices Stora Enso’s market pulp is softwood
Source: FOEX
Financial results Q2 2012 20 July 2012 24
Pulp wood and saw log prices Wood prices in Finland
Source: METLA
Financial results Q2 2012 20 July 2012 25
RCP prices
German RCP price development. free delivered
Source: Verband Deutscher Papierfabriken/Stora Enso
Financial results Q2 2012 20 July 2012 26
Capital expenditure and depreciation Q1 2008 – Q2 2012
Financial results Q2 2012 20 July 2012 27
Debt/equity ratio 2009 – Q2 2012
Financial results Q2 2012 20 July 2012 28
Net Debt /Operational EBITDA
Financial results Q2 2012 20 July 2012 29
Energy balance* Q2 2012
Impact** on operating profit from
10% change in: EUR million p.a.
Electricity market price ~11
Fossil fuel price ~17
Self sufficiency 46% Self sufficiency 63%
Total energy self
sufficiency 59%
**) Remaining impact on non-hedged volume
20 July 2012 Financial results Q2 2012
*) Pulp. paper and board mills. Europe and overseas
31
Stora Enso Electricity procurement* Q2 2012
20 July 2012 Financial results Q2 2012
*) Pulp. paper and board mills. Europe and overseas
32
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