INVESTOR PRESENTATION Q3 2017 Lennart Eberleh 1 CONTENTS - - PowerPoint PPT Presentation

INVESTOR PRESENTATION Q3 2017

Lennart Eberleh

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CONTENTS

• Rottneros in brief: Sustainable growth in selected niches
• The market
• Q3 2017
• The way forward

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SUSTAINABLE GROWTH IN SELECTED NICHES

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GEOGRAPHICAL DISTRIBUTION OF TURNOVER

Sweden 21% Other Nordic countries 4% Italy 21% Germany 20 % Rest of Europe 18% USA 13% Asia 3%

THE GROUP’S PRODUCTS, DELIVERY VOLUME DISTRIBUTION

38% Bleached

sulphate pulp

21% Unbleached

sulphate pulp

23% CTMP 18% Groundwood pulp

BRIEF FACTS

• Customised market pulp
• Global market
• Production 2016: 374 100 tonnes

– Rottneros Mill: Mechanical pulp, CTMP & groundwood pulp – Vallvik Mill: long-fibre chemical sulphate pulp, bleached and unbleached – Rottneros Packaging: Fibre trays – Rottneros Baltic: Wood supply

• NASDAQ Stockholm since 1987
• Financially strong

Vallvik Mill, HQ for The Group Rottneros Mill Rottneros Packaging Rottneros Baltic SIA

THE ROTTNEROS GROUP

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SEKm SEKm

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ROTTNEROS’ CUSTOMER SEGMENTS – SHARE OF TOTAL DELIVERIES

THE ROTTNEROS GROUP

9 %

E-pulp

18 %

Filters

7 %

Specialty paper

4 %

Other

24 %

Printing and writing paper

25 %

Board and packaging

13 %

Tissue paper

THE NICHE AREAS ARE GROWING

THE ROTTNEROS GROUP

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END PRODUCTS FILTERS INSULATION APPLICATIONS TISSUE PAPER BOARD PRINTING AND WRITING PAPER

THE MARKET

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• Good demand for pulp globally but large geographic differences

– Asia drives demand, Europe declines slightly

• Producer inventories 36 days at the end of Q3

– Falling inventories of softwood (29 d) - now somewhat low – Rising inventories of hardwood(43 d) - now slightly high – Low customer inventories

• Strong price development since summer with higher prices for all

grades

• The impact on Rottneros somewhat dampened by the stronger SEK

FAVORABLE WINDS

MARKET

SLIGHTLY INCREASED PAPER PRODUCTION IN EUROPE - PACKAGING STRONG

MARKET

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EUROPEAN PAPER AND BOARD PRODUCTION Graphic Paper Tissue Packaging Other

0.1%

• 0.2%

0.1% 0.4% 0.1%

• 0.6%
• 0.4%
• 0.2%

0.0% 0.2% 0.4% 0.6%

Total Graphic paper Tissue Packaging Other

EUROPE, PRODUCTION OF PAPER AND BOARD, GROWTH JANUARY-AUGUST 2017

Source: CEPI Source: CEPI

CHEMICAL PULP: GOOD GROWTH GLOBALLY – ASIA A DRIVER, EUROPE DECLINES SLIGHTLY

MARKET

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0.4%

• 0.1%

0.7% 0.9% 0.4%

• 0.1%
• 0.3%
• 0.1%

0.1% 0.3% 0.5% 0.7% 0.9% 1.1%

Total Europe China Other Asia North AmericaLatin America

WORLD CHEMICAL MARKET PULP SHIPMENTS, GROWTH, JANUARY - SEPTEMBER 2017 WORLD CHEMICAL MARKET PULP SHIPMENTS JANUARY- SEPTEMBER 2017

Europe China Other Asia North America Latin America Other

Source: PPPC Source: PPPC

PULP INVENTORIES SOME 4.9 M TONS ( 36 DAYS) IN SEPTEMBER – SOFTWOOD BALANCED

MARKET

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200 400 600 800 1000 1200 1 000 2 000 3 000 4 000 5 000 6 000 05 06 07 08 09 10 11 12 13 14 15 16 17

USD/ton 1000 ton

PRODUCER INVENTORY AND PULP PRICE

Total World NBSK Price Western Europe

20 25 30 35 40 45 600 650 700 750 800 850 900 950 1000 12-­‑01 12-­‑05 12-­‑09 13-­‑01 13-­‑05 13-­‑09 14-­‑01 14-­‑05 14-­‑09 15-­‑01 15-­‑05 15-­‑09 16-­‑01 16-­‑05 16-­‑09 17-­‑01 17-­‑05 17-­‑09

PRODUCER ¡INVENTORY, ¡DAYS ¡& ¡PULP ¡PRICE Days NBSK ¡Price, ¡USD

Source: FOEX & PPPC Source: FOEX & PPPC

PRICE INCREASE IN Q3, BUT STRONGER SEK REDUCES IMPACT

MARKET

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200 400 600 800 1000 1200 05 06 07 08 09 10 11 12 13 14 15 16 17

USD/ton

PRICE DEVELOPMENT IN EUROPE

NBSK BHKP BCTMP-HW 500 600 700 800 900 1000 1100 4000 4500 5000 5500 6000 6500 7000 7500 8000 07 08 09 10 11 12 13 14 15 16 17

USD/ton SEK/ton

NBSK, WESTERN EUROPE: PRICE IN USD & SEK NBSK, SEK NBSK, USD

Source: FOEX, Rottneros Source: FOEX, Riksbanken

Q3 2017

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• Production volume increased by 12% to 102.5 thousand tonnes, quarterly

production record in Vallvik.

• Net sales for the third quarter increased by 6% to MSEK 472 (444).
• Profit after financial items for the third quarter was charged with unplanned items

and amounted to MSEK 41 (45). Increased cost focus ahead.

• Strong market situation, signs of price increases after the end of the quarter.
• The financing of Agenda 500 was completed with a 5-year bond loan of 400
• MSEK. Contributes to optimize the capital structure.
• Agenda 500 runs according to plan, good opportunities for continued growth in our

niches.

CONTINUED PRODUCTION INCREASES

Q3 2017

THE QUARTER IN NUMBERS

Q3 2017

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MORE EFFFICIENT BALANCE SHEET, BUT STILL SOLID

Q3 2017

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10 20 30 40 50 60 70 80 90

• 100
• 50

50 100 150 200 250 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2015 2016 2017

% MSEK

Cash flow from operating activities, SEKm Net cash, SEKm Equity /assets ratio, %

THE WAY FORWARD

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GROWTH IN SELECTED NICHES

• We increase capacity through successive investments.
• The goal is to expand capacity to more than 470,000 tons/year

around 2021.

• In 2015-2017, investment decisions totaling MSEK 620 have

been taken.

• Of these, SEK 370 million was completed 2015-16, the remaining

250m are carried out in 2017-2018.

• Rottneros Packaging, high-quality fiber trays, 90-95% fossil-free,

mainly for food, a new development area since in 2016.

• Rottneros most profitable among comparable pulp companies,

the return on capital employed was 15% in 2016.

THE WAY FORWARD

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CAPACITY EXPANSION

THE WAY FORWARD

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Q&A