Financial Results Q2 2012 - Stora Enso

storaenso

Financial Results Q2 2012 - Stora Enso

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

Financial results Q2 2012 20 July 2012

5


35% personnel increase in growth markets

2007 –H1 2012

Financial results Q2 2012 20 July 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

Financial results Q2 2012 20 July 2012

7


Timing of Strategic Projects

Skoghall,

Sweden

Investment

start-up end

Q4 2012

Montes del Plata,

Ostroleka, Uruguay

Poland Pulp mill, start-up

Container mid-year 2013

board

machine startup

Q1 2013

Financial results Q2 2012

20 July 2012

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

* Paper: News, UMO, UMI, SC, CM, WFC & WFU

Source: EuroGraph & PPPC

Financial results Q2 2012 20 July 2012

12


Corrugated packaging growth - Eastern Europe and

Asia

2010-2020

Million tonnes

CAGR

0.5%

North

America

CAGR

2,7 %

South

America

CAGR

1.0%

Financial results Q2 2012

Western

Europe

20 July 2012

CAGR

4.3%

CAGR

4.1%

Eastern

Europe

Middle East &

Africa

CAGR

4.4%

Asia

Source: Pöyry and Stora Enso

13


Liquid dairy products significant driver for Consumer

Board growth – Asia 7% (CAGR 2010-2020)

Consumption estimate for Liquid Dairy Products

CAGR 2010 - 2012

10%

9%

8%

7%

6%

5%

4%

3%

2%

1%

-1%

-2%

-3%

-4%

-5%

Volume

2012

Bil Litres

2,1%

9,0%

Financial results Q2 2012

20 July 2012

-0,1%

57.4 33.7 25.9 22.6

2,8%

3,2%

Total Global LDP

average

growth rate:

2.4%

1,5%

1,2%

-0,4% -0,3%

-2,8%

12.8 11 7.7 6.7 5.6 5.1

Source: Tetra Pak Dairy Index 2009

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

• 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

Financial results Q2 2012

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

Financial results Q2 2012 20 July 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

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%

Additional USD and GBP hedges for 13-16 months increase the hedging percentages by

4 % and 7 % respectively.

Operational EBIT: Currency strengthening of + 10% EUR million

USD 120

SEK -92

GBP 60

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.

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

Total energy self

sufficiency 59%

Self sufficiency 46% Self sufficiency 63%

*) Pulp. paper and board mills. Europe and overseas

Financial results Q2 2012

20 July 2012

Impact** on operating profit from

10% change in:

Electricity market price ~11

Fossil fuel price ~17

**) Remaining impact on non-hedged volume

EUR million p.a.

31


Stora Enso Electricity procurement * Q2 2012

*) Pulp. paper and board mills. Europe and overseas

Financial results Q2 2012

20 July 2012

32

More magazines by this user
Similar magazines