Metsä Board Corporation Investor presentation January – December 2018
Contents This is Metsä Board 3 Main contributors in Metsä Board’s profitability 15 Operating environment and demand drivers 21 Results for Q4 and FY 2018 26 Sustainability and product safety 38 Research and Development 52 Owners and management 62 Contact information 65 Investor presentation 2 1 – 12/2018
Investment highlights of Metsä Board Sales split Sales split by product by market area • We are pure-play paperboard company focused on premium fresh fibre APAC Market Folding paperboards 8 % pulp boxboard 18 % 56 % • Global trends, e.g. sustainability and urbanization drive the demand for Americas FY 2018: FY 2018: EMEA 19 % ecological and lightweight packaging 74 % EUR 1,944m EUR 1,944m • We have a strong market position … White kraftlainer • … and good control of wood raw 26 % material and self-sufficiency in pulp Our total paperboard capacity is 2m tonnes/year of which 1/3 are white kraftliners and Investor presentation 2/3 folding boxboard 3 1 – 12/2018
Our light, pure and safe paperboards have various end- uses… Folding boxboards Food service boards White kraftliners Packaging solutions for Retail-ready tray and Solutions for food service consumer goods point-of-sale solutions
… and we have a broad customer base BRAND OWNERS CONVERTERS CORRUGATED BOX MANUFACTURERS MERCHANTS FOLDING BOXBOARD WHITE KRAFTLINERS Investor presentation 5 1 – 12/2018
Global trends driving the demand for fresh fibre paperboards Globalisation & Sustainability Food safety E-commerce urbanisation We use only We have good Our paperboards We offer renewable fresh control of raw offer a strong recyclable fibres from materials, which promotion and products that are sustainably guarantees purity branding ideal for the managed and safety in food experience circular economy northern forests contact uses
We have a leading position in Europe in our main products White kraftliner Folding boxboard • Regional sales split of in Europe in Europe paperboard deliveries: Total capacity 2.1m tonnes Total capacity 3.8m tonnes • 70% EMEA • 23% Americas Metsä Others Metsä Others • 7% APAC Board Board #5 #1 #1 • In APAC we focus on high- 32 % 35 % quality FBB segment #5 #4 We are the largest European • #4 importer of FBB to US #3 • We are #1 in coated white #3 #2 #2 kraftliners globally Investor presentation 7 1 – 12/2018
We have good control of wood raw materials, from forests to pulp and board production • High availability of northern wood • Consistent quality of fibres that are tailor-made for the end products METSÄ GROUP METSÄLIITTO COOPERATIVE Group’s parent company, owned by 104,000 Finnish forest owners METSÄ METSÄ METSÄ METSÄ METSÄ FOREST FIBRE WOOD BOARD TISSUE Wood supply and Pulp and sawn Wood products Paperboard Tissue and forest services timber cooking papers METSÄ BOARD OWNS 24.9% Through Metsä Fibre’s ownership Metsä Board’s annual net pulp balance is Investor presentation 600,000 tonnes long in 2019 8 1 – 12/2018
Our production is close to our main raw material Our net balance in pulp in 2019, Total paperboard capacity : including the 24.9% ownership in Folding boxboard (FBB): 1,345,000 t/a Metsä Fibre, is 600,000 t/a White kraftliner (WKL): 675,000 t/a Wood sourced from Finland, Sweden, Kemi Äänekoski Baltics and Russia. 425,000 t/a WKL 255,000 t/a FBB 610,000 t/a Pulp * 1.3 million t/a Pulp* Husum, SWE Simpele 400,000 t/a FBB 290,000 t/a FBB 250,000 t/a WKL 730,000 t/a Pulp Joutseno Kaskinen 330,000 t/a BCTMP 370,000 t/a BCTMP 690,000 t/a Pulp Kyro Tako 190,000 t/a FBB 210,000 t/a FBB * Metsä Fibre mill Investor presentation 9 1 – 12/2018
We have been growing well above average market growth rate during past years … Metsä Board’s annual paperboard deliveries, CAGR 2013– 2017: 12% 2 000 1 500 Annual global 1,000 tonnes demand growth for 1 000 folding boxboard and white kraftliner is estimated to be 3% 500 0 2013 2014 2015 2016 2017 2018 White kraftliner Folding boxboard Source: Metsä Board´s own research Investor presentation 1 – 12/2018
…driven by capacity increases Capital expenditure and depreciation Investments in growth during 2011 – 2018: 2018 New baling line in Kaskinen BCTMP mill: 180 30,000 new BCTMP capacity 150 New sheeting line in Äänekoski (to be in production 9/2019) EUR million 120 2017 New extrusion coating line in Husum: 90 100,000 t/a PE coating capacity 60 2015 – 16 New folding boxboard production line in Husum: 400,000 t/a of FBB and linerboard 30 production line conversion: 250,000 t/a of 0 WKL 2011 2012 2013 2014 2015 2016 2017 2018 2019E 2011 – 12 Debottlenecking in Simpele, Äänekoski and Kyro mills: total 150,000 t/a of FBB Maintenance capex Growth capex Depreciation Investor presentation 11 1 – 12/2018
In medium term, we aim for moderate growth with a strong focus on profitability Financial targets: Annual growth in total Net debt / Comparable ROCE, % paperboard deliveries, % comparable EBITDA Target > 12% Target is to exceed the relevant market Target < 2.5x growth, 3% / year 15% 14,4 2,0 13% 1,8 12% 11,3 11,2 10% 9,1 1,2 8,1 1,2 1,0 2% 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Dividend policy We aim to distribute at least 50% of our result for the financial period in annual dividends Investor presentation 12 12 1 – 12/2018
We have created shareholder value with focused strategy CAGR in dividend +30% Dividend, EUR and payout ratio, % Enterprise value, EUR million in 2012 – 2018 0,30 100% 3500 0,25 3000 75% 0,20 2500 2000 0,15 50% 1500 0,10 25% 1000 0,05 500 0,00 0% 0 2012 2013 2014 2015 2016 2017 2018 2012 2013 2014 2015 2016 2017 2018 Dividend, EUR Dividend/EPS, % Market capitalization, EUR million Note! Year 2018 is a Board’s proposal to AGM to be held on 28 March. Net debt, EUR million Total distribution consists of a dividend of 0.10 and other distribution of equity of EUR 0.19 Investor presentation 13 1 – 12/2018
Our free cash flow weakened towards end of 2018 Free cash flow in EUR million and % of EBITDA • Free cash flow Comparable – Since 2016 improved FCF as a result of improved EUR million % EBITDA 2018 EUR 344 million profitability, decreased capex and good working 200 80 capital discipline 150 60 – FCF weakened towards end of the 2018 as a result of higher capex in Q4 and increased inventories 100 40 – Result share from Metsä Fibre is a non-cash item 50 20 • Our capital allocation in the near future – Dividend: supported by good performance 0 0 – Capital structure: deleveraging continues to levels -50 -20 below 1.0x CAPEX: return-based allocation (ROCE above 12%) – -100 -40 2013 2014 2015 2016 2017 2018 FCF, EUR million FCF/EBITDA,% FCF=Cash flow from operations after investments Investor presentation 14 1 – 12/2018
Main contributors in Metsä Board’s profitability
Favourable price development in paperboards Market price development in Europe Sources: Fastmarkets RISI & Fastmarkets FOEX • Strong demand and limited supply in fresh fibre paperboards have led to increased EUR / tonne price levels 1200 • Metsä Board’s announced price increases in 1100 2018 1000 – FBB: Europe EUR 80/tonne, effective mainly 900 from 2019. 800 – WKL: Twice in Europe and once in the Americas 700 600 500 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Folding Boxboard White-top kraftliner Investor presentation 16 1 – 12/2018
Strong pulp market supported profitability in 2018 Pulp price (PIX) development in Europe • Higher production and delivery volumes Source: FOEX Indexes Ltd from Metsä Fibre supported Metsä Board’s result in 2018 ------ NBSK PIX Softwood ----- BHKP PIX Hardwood USD USD • In the long-term, pulp demand is supported by • Limited new capacity in the coming years • Restrictions on recycled paper imports in China • Metsä Board’s annual net position in pulp is roughly 600,000 tonnes long in 2019 Investor presentation 17 1 – 12/2018
We see cost inflation slowing down Metsä Board’s cost split in 2018 incl. 24.9% share from Metsä Fibre’s costs Cost Near-term outlook component Other fixed Wood Prices in Finland and Sweden are expected to remain 14 % stable. In the Baltics, the price level will depend on the Wood demand in export markets 28 % Personnel Logistics In line with general cost inflation 13 % Chemicals In line with or below general cost inflation Energy Stabilisation following the oil and electricity price hikes in Energy 2018 14 % Logistics Personnel Approximately +2% y-on-y, mainly based on collective 16 % agreements Chemicals 15 % Other fixed In line with or below general cost inflation Total costs in 2018: EUR 1.7 billion (2017: EUR 1.6 billion) Investor presentation 18 1 – 12/2018
Recommend
More recommend
