Mets Board Interim report January September 2019 31 October 2019 - - PowerPoint PPT Presentation

▶
mets board interim report
SMART_READER_LITE
LIVE PREVIEW

Mets Board Interim report January September 2019 31 October 2019 - - PowerPoint PPT Presentation

Nov 09, 2023 155 likes •523 views

Mets Board Interim report January September 2019 31 October 2019 Q3 in summary Favourable development in paperboard business Higher paperboard volumes, stable price levels and lower costs compared to Q2 2019 Market pulp

slide-1
SLIDE 1

Metsä Board Interim report

January–September 2019

31 October 2019

slide-2
SLIDE 2
  • Favourable development in paperboard business

– Higher paperboard volumes, stable price levels and lower costs compared to Q2 2019

  • Market pulp prices continued to decline with a

negative impact on the result

  • Planned maintenance shutdowns in Kemi and

Husum integrates Planned renewal of Metsä Board’s Husum pulp mill

  • proceeds. Metsä Board to make financial

commitments prior to the final investment decision

Interim Report Jan-Sep 2019 2

Q3 in summary

Announced after the review period on 30 October:

slide-3
SLIDE 3

Highlights of the new targets:

  • Fossil-free mills by 2030 with zero fossil

CO2 emissions, from both

–

  • ur own energy production (scope 1)

– all purchased energy (scope 2)

  • Fossil-free raw materials
  • 30% reduction in process water use per

product tonne and at least 10% improvement in energy efficiency

Interim Report Jan-Sep 2019 3

Ambitious sustainability targets for 2030

More information and all targets at www.metsaboard.com/sustainability

slide-4
SLIDE 4

Metsä Board has developed a new plastic-free eco-barrier paperboard for food and food service purposes Medium barrier for grease and moisture Can be recycled in paper or paperboard streams

END-USES: Food service, fresh, dry and frozen food and

  • ther packaging end-uses that require barrier properties

4 Interim Report Jan-Sep 2019

New plastic-free barrier board for even more demanding end-uses

slide-5
SLIDE 5

Higher kraftliner volumes pushed total paperboard deliveries up in Q3

265 304 299 276 297 328 297 293 302 299 305 163 173 170 152 171 161 149 134 138 146 161

100 200 300 400 500

Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019

White kraftliner Folding boxboard

447 1,000 tonnes

5 Interim Report Jan-Sep 2019

1,000 tonnes Q1-Q3 2018 total: 1,405k tonnes Q1-Q3 2019 total: 1,352k tonnes 445 466

  • 4%

+4% +5%

slide-6
SLIDE 6

Year-to-date paperboard deliveries by grade

Biggest deviations in WKL in EMEA and FBB in APAC

Folding boxboard (FBB) deliveries in tonnes January–September 2019 (1–9/2018)

EMEA 645,000 (637k) Americas 185,000 (192k) APAC 77,000 (92k) EMEA 290,000 (344k) Americas 147,000 (134k) APAC 7,000 (3k)

6

White kraftliner (WKL) deliveries in tonnes January–September 2019 (1–9/2018) 71% 20% 9% 65% 33%

Total FBB deliveries 1–9/2019: 907,000 tonnes (1–9/2018: 922,000) Total WKL deliveries 1–9/2019: 445,000 tonnes (1–9/2018: 481,000)

Interim Report Jan-Sep 2019

2%

slide-7
SLIDE 7

69 62 59 41 64 43 8.0% 10.5% 13.0% 12.9% 10.0% 0,0 3,0 6,0 9,0 12,0 15,0 60 120 180 240 300 2016 2017 2018 Q1–Q3 2018 Q1–Q3 2019

January–September 2019 (1-9/2018)

Sales were roughly at the same level but operating result weakened

Sales

EUR million 492 487 519 477 475 489 400 800 1200 1600 2000 2016 2017 2018 Q1–Q3 2018 Q1–Q3 2019

7

Comparable operating result

EUR million and % of sales

EUR million EUR million

Interim Report Jan-Sep 2019

Operating result, % of sales: Q3/19: 8.7% Q2/19: 8.6% Q1/19: 12.7%

Q3 Q2 Q1 Q3 Q2 Q1 1,486 1,453 192 145

slide-8
SLIDE 8

Interim Report Jan-Sep 2019 8

Year-to-date result was supported by higher paperboard prices and FX, negative from pulp and production costs

Q3 2019: EUR 43 million (EUR 41 million) Positive: + favourable development in paperboard business + lower costs + lower depreciation Negative:

  • weakened market pulp prices
  • Metsä Fibre’s result share
  • more maintenance

Q1–Q3 2018: EUR 145 million (EUR 192 million) Positive: + higher prices in FBB and WKL + FX Negative:

  • weakened market pulp prices and volumes
  • Metsä Fibre’s result share
  • higher production costs in paperboard and pulp

Comparable operating result

Q3 2019 vs. Q2 2019

Comparable operating result

Jan-Sep 2019 vs. Jan–Sep 2018

slide-9
SLIDE 9

Market pulp prices in China and Europe have declined throughout the year

9

Pulp price (PIX) development in Europe and China

  • The PIX price of NBSK has declined by

roughly 30% in Europe and by 40% in China from their highest levels in 2018

  • Net prices in China and Europe are

approaching each other

  • Seasonally higher demand at year end
  • Some producers have announced price

increases in China

  • Producers’ inventory levels have

decreased but are are still high

Interim Report Jan-Sep 2019

Long-fibre pulp, Europe Long-fibre pulp, China (net)

Source: Fastmarkets Foex Note! The specifications of PIX China Net index were renewed in the beginning of 2017. Earlier data not comparable with new USD/tonne USD/tonne

200 400 600 800 1 000 1 200 1 400 200 400 600 800 1 000 1 200 1 400 2013 2014 2015 2016 2017 2018 2019

slide-10
SLIDE 10

68 106 30 36 54 30 36 31 44 59 79 20 23 43

  • 3

29 13 26

  • 50

50 100 150 200 250

  • 50

50 100 150 200 250 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Cash flow from operations, quarterly Free cash flow, quarterly Cash flow from operations, rolling 12 months Free cash flow, rolling 12 months

EUR million

10

Free cash flow = cash flow from operations − investments

Year-to-date cash flow from operations EUR 111 million

(1–9/2018: EUR 121 million)

EUR million

Interim Report Jan-Sep 2019

slide-11
SLIDE 11

437 358 335 388 344 335 297 380 352 1.7 1.2 1.1 1.2 1.0 1.0 0.9 1.2 1.2

0,0 0,5 1,0 1,5 2,0 2,5 3,0 100 200 300 400 500

600

9/2017 12/2017 3/2018 6/2018 9/2018 12/2018 3/2019 6/2019 9/2019

Net debt, EUR million Net debt to comparable EBITDA (last 12 months)

11

Net debt at EUR 352 million, leverage 1.2x

Net debt / EBITDA target level: <2.5 EUR million

Interim Report Jan-Sep 2019

On 30 September, Metsä Board signed a financing facility with sustainability targets consisting of EUR 150 million term loan and EUR 200 million RCF to replace existing loan (EUR 50 million) and RCF (EUR 150 million)

slide-12
SLIDE 12

Planned renewal of Husum pulp mill

slide-13
SLIDE 13

Metsä Board is planning to renew its pulp mill in Husum integrate in Sweden

2019 2020 2021 2022

Final investment decision expected to be made in Q2 2020, at the earliest New recovery boiler and turbine expected to be in

  • peration, at the earliest

Prefeasibility study on the renewal concluded Company to apply for an environmental permit

Interim Report Jan-Sep 2019 13

The renewal of the pulp mill would:

➢ Create a solid foundation to increase paperboard capacity in the integrate in the future ➢ Secure cost efficient pulp and energy production ➢ Enable the company to reach its ambitious target of fossil-free mills by 2030

* The second phase of the investment would include the replacement the old fibre lines with one new line and take place during the 2020s after the first phase is fully completed

The first phase* of the investment Investment value is EUR 320 million, divided over 2019–2022

slide-14
SLIDE 14
  • Background: On 27 August, Länsstyrelsen

decided that the planned new recovery boiler will require an amendment to the environmental permit

  • Metsä Board aims to minimize the delay

caused by the permit process and will make financial commitments up to EUR 100 million* before the final investment decision

  • Final investment decision will be made after

receiving the environmental permit, estimated in Q2 2020, at the earliest

Interim Report Jan-Sep 2019 14

Update on planned renewal

Announced after the review period on 31 October

*) Included in the total investment value of EUR 320 million

slide-15
SLIDE 15
  • Self-sufficiency in electricity to increase from the current

40% to over 80%*

  • Reduced amount of purchased oil
  • Lower maintenance capex and costs

– Extended intervals between planned shutdowns – Reduced duration of the planned shutdowns → Increased pulp and paperboard production

  • Annual cash flow improvement EUR 35 million, of which EUR

30 million EBITDA improvement and EUR 5 million lower capex

  • Financing costs to increase EUR 2 million per year

Interim Report Jan-Sep 2019 15

Estimated impacts on the first phase of the investment

*) Annual increase in electricity production about 330 GWh, resulting in cost

savings at current electricity prices of approximately EUR 12 million

slide-16
SLIDE 16

16

Near-term outlook

  • Paperboard delivery volumes in Q4 are

expected to decline from Q3 levels due to seasonally slower December

  • Stable price levels for FBB and WKL
  • Pulp prices remain low globally
  • Less planned maintenance shutdowns
  • Stable production costs and FX impacts

in Q4 compared to Q3

Interim Report Jan-Sep 2019

slide-17
SLIDE 17

Metsä Board’s comparable operating result for the fourth quarter of 2019 is expected to remain roughly at the same level as in the third quarter of 2019

Interim Report Jan-Sep 2019 17

Result guidance for October–December 2019

slide-18
SLIDE 18
  • Q3 slightly better than expected
  • Market outlook:

– Stable market situation for paperboard – Pulp prices remain low

  • Metsä Board develops packaging

materials to replace plastics: New eco-barrier paperboard launched

  • Financial commitments to be made

in Husum pulp mill renewal

Interim Report Jan-Sep 2019 18

Summary

slide-19
SLIDE 19

Appendix

slide-20
SLIDE 20

Interim Report Jan-Sep 2019 20

Key financials

Q3/19 Q3/18 Change Q3/19 vs. Q3/18 Q1-Q3 2019 Q1-Q3 2018 Change Q1–3/19 vs. Q1–3/18 FY 2018 Sales

EUR, m

489 475 3% 1,453 1,486

  • 2%

1,944 EBITDA*

EUR, m

62 84

  • 26%

220 263

  • 16%

344 Operating result*

EUR, m

43 64

  • 33%

145 192

  • 24%

252 % of sales*

%

8.7 13.4 10.0 12.9 13.0 Metsä Fibre’s share of

  • perating result*

EUR, m

6 34

  • 83%

44 92

  • 52%

124 Earnings per share

EUR

0.09 0.16

  • 44%

0.36 0.43

  • 16%

0.57 ROCE*

%

9.7 15.0 11.0 14.7 14.4 Capex

EUR, m

18 11 67% 42 36 16% 70 Cash flow from operations

EUR, m

44 54

  • 19%

111 121

  • 8%

151 IB Net debt, at end of period

EUR, m

352 344 2% 352 344 2% 335

*comparable

slide-21
SLIDE 21

Impact including hedges, actual

– Q3 2019 vs Q2 2019: EUR +2 million – Q3 2019 vs Q3 2018: EUR +16 million – Q1-Q3 2019 vs Q1-Q3 2018: EUR +38 million

Expected impacts including hedges

– Q4 2019 vs Q3 2019: neutral – Q4 2019 vs Q4 2018: positive

Impacts from FX changes

USD 57% SEK 34% GBP 7% Other currencies 2%

Annual transaction exposure total EUR 1.1 billion FX sensitivities excluding hedges

10% strengthening of foreign currency vs. EUR would have an impact on Metsä Board’s EBIT of Currency Next 12 months USD, $ EUR +65 million SEK, kr EUR -40 million GBP, £ EUR +8 million

21 Interim Report Jan-Sep 2019

slide-22
SLIDE 22

Cost inflation accelerated in 2018 and costs have remained at a high level

Q3 2019 vs. Q2 2019

– Declined wood costs especially for wood imported from Baltic countries, lower overall paperboard production costs

YTD 2019 vs. YTD 2018

– Clearly higher wood costs and overall paperboard production costs

Wood 28% Logistics 16% Chemicals 15% Energy 14% Personnel 13% Other fixed 14%

Interim Report Jan-Sep 2019 22

Metsä Board’s cost split in 2018

  • incl. 24.9% share of Metsä Fibre’s costs

Metsä Board’s total costs in 2018: EUR 1.7 billion (2017: EUR 1.6 billion)

slide-23
SLIDE 23

4% 6% 8% 10% 12% 14% 16% Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19

Comparable return on capital employed, % Quarterly Rolling 12m Target

23

Comparable ROCE at 11.8%

Rolling 12 months

Target level > 12%

Interim Report Jan-Sep 2019

R12m 11.8% Q3/19: 9.7%

slide-24
SLIDE 24

Our long-term financial targets aim for profitability and a strong balance sheet

Comparable ROCE: At least 12%

11.3 8.1 11.2 14.4 11.8 2015 2016 2017 2018 LTM 1.2 2.0 1.2 1.0 1.2 2015 2016 2017 2018 LTM

Net debt/comparable EBITDA: Maximum level 2.5x

> 12% < 2.5x

24 24 Interim Report Jan-Sep 2019

44 76 50 51 2015 2016 2017 2018

Dividend policy: Payout ratio at least 50% of net result

> 50% LTM = last twelve months

slide-25
SLIDE 25

Investments in growth 2011–2018:

2019 New sheeting line in Äänekoski 2018 New baling line in Kaskinen BCTMP mill: 30,000 new BCTMP capacity 2017 New extrusion coating line in Husum: 100,000 t/a PE coating capacity 2015–16 New folding boxboard production line in Husum: 400,000 t/a of FBB and linerboard production line conversion: 250,000 t/a of WKL 2011–12 Debottlenecking in Simpele, Äänekoski and Kyro mills: total 150,000 t/a of FBB

25

YTD Capex was EUR 42 million

30 60 90 120 150 180 2011 2012 2013 2014 2015 2016 2017 2018 2019E Maintenance capex Growth capex Depreciation

Capital expenditure and depreciation

EUR million

Interim Report Jan-Sep 2019

Note! Estimated 2019 capex includes the first instalments related to Husum pulp mill renewal

slide-26
SLIDE 26

50 100 150 200 250 2019 2020 2022–26 2027

Bonds Loans from financial institutions Pension loans Other loans

Interim Report Jan-Sep 2019 26

Debt and its maturity

Long-term interest-bearing debt maturity profile as per 30 September 2019

EUR million

  • On 30 September, Metsä Board agreed on a new bank financing

facility consisting of five-year term loan of EUR 150 million* and five-year RCF of EUR 200 million to replace the drawn loan of EUR 50 million and undrawn RCF of EUR 150 million

  • Interest-bearing debt on 30 September was EUR 461 million

(30.9.2018: EUR 469 million)

Rating agency Rating and

  • utlook

Last update S&P Global BBB- stable 02/2018 Upgrade from BB+ Moody‘s Investor Services Baa3 stable 01/2019 Upgrade from Ba1 Metsä Board’s both credit ratings are investment grade In addition, Metsä Board has unraised pension loans of EUR 166 million

*) drawn and booked after the review period

slide-27
SLIDE 27

Interim Report Jan-Sep 2019 27

Net financial costs January–September 2019

32 31 36 22 12

3.8 3.3 3.3 3.3 2.5 2,0 2,5 3,0 3,5 4,0 4,5 5,0 10 20 30 40 2015 2016 2017 2018 Q1-Q3 2019 Net financial costs, EUR million Average interest rate at the end of period, % EUR million %

  • Net financial costs, including foreign

exchange differences, in Jan-Sep/2019 were EUR 12.3 million (1–9/2018: 18.0)

  • Average interest rate on loans at the end of

review period was 2.5% and the average maturity of long-term loans was 5.9 years

  • No major differences in annual interest

payments after the new financial arrangements on 30 September 2019

slide-28
SLIDE 28

Debt structure and liquidity on 30 September 2019

248 50 46 95 21

Bonds Loans from financial institutions Pension loans Loans from Metsä Group Treasury Finance leases and other loans

106 200 166

Cash and cash equivalents RCF, unraised Pension loans, unraised

Interest-bearing debt

EUR 461 million

Available liquidity

EUR 472 million Average maturity of long-term loans on 30 September 2019 was 5.9 years.

28 Interim Report Jan-Sep 2019

slide-29
SLIDE 29

Market cap and foreign owners

30 September 2019

Ownership distribution

30 September 2019

Market cap and ownership distribution

Metsä Board shares are listed on Nasdaq Helsinki

5 10 15 20 25 500 1 000 1 500 2 000 2 500 3 000

12/2014 12/2015 12/2016 12/2017 12/2018 9/2019

Market cap, EUR million Share of foreign owners, %

Metsäliitto Cooperative 45% Domestic institutional investors 21% Domestic private investors 21% Foreign

  • wners

13%

EUR million

29

%

Interim Report Jan-Sep 2019

slide-30
SLIDE 30

External recognition and commitments in sustainability

Metsä Board was awarded “Prime” status in ISS ESG corporate responsibility rating in May 2018. Metsä Board scored the highest recognition level “Gold” in EcoVadis’ CSR ranking in 2018, and is included in the top 1% of suppliers assessed across all categories. Metsä Board has been included on the CDP Water A List every year since 2015 and on the CDP Climate A List since 2016. In addition, Metsä Board has scored A- in the CDP Forest programme since 2015, and is included on the Supplier Engagement leader board in 2019 for its efforts to address climate change. Metsä Board as a part of Metsä Group is committed to the UN Global Compact corporate responsibility initiative and its principles in the areas of human rights, labour, environment and anti-corruption. Metsä Board also supports the UN’s Sustainable Development Goals, the SDGs. Metsä Board is committed to Science Based Targets initiative to reduce its GHG emissions in line with the goal of the Paris Agreement. In 2018, Metsä Board received a rating of AAA (on a scale of AAA-CCC) in the MSCI ESG Ratings assessment. Metsä Board has an overall ESG score of 86/100 and is considered a Leader in Sustainalytics’ assessment in May 2018.

SUSTAINALYTICS SCIENCE BASED TARGETS

Link to MSCI Terms and Conditions Interim Report Jan-Sep 2019 30

slide-31
SLIDE 31

500 600 700 800 900 1000 1100 1200 500 600 700 800 900 1000 1100 1200 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Folding boxboard White-top kraftliner

31

Price development of folding boxboard and white kraftliner in Europe

EUR/ tonne Sources: Fastmarkets RISI & Fastmarkets FOEX EUR/ tonne

Interim Report Jan-Sep 2019

slide-32
SLIDE 32

350 400 450 500 550 600 650 700 750 800 850 900 950 1000 1050 1100 1150 1200 1250

'10 '11 '12 '13 '14 '15 '16 '17 '18 '19

350 400 450 500 550 600 650 700 750 800 850 900 950 1000 1050 1100 1150 1200 1250 Source: Fast Markets Foex

USD or EUR USD or EUR

32

Price development of pulp in Europe (PIX)

Long-fibre (SW) and short-fibre (HW) pulp

Long-fibre, USD

Long-fibre, EUR

Short-fibre, EUR Short-fibre, USD

Interim Report Jan-Sep 2019

slide-33
SLIDE 33

Price development of roadside pulpwood in Finland and Sweden

Pulpwood roadside prices in Finland, EUR/m3 Pulpwood roadside prices in Sweden*, SEK/m3

Sources: Luke (Natural Resources Institute Finland) and Skogsstyrelsen (The Swedish Forest Agency)

20 22 24 26 28 30 32 34 36 38 40 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Spruce Birch Pine

Interim Report Jan-Sep 2019

150 170 190 210 230 250 270 290 310 330 350 370 390 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Spruce Birch Pine

33

slide-34
SLIDE 34

FX rates development: EUR/USD and EUR/SEK

EUR/USD

Interim Report Jan-Sep 2019 34

EUR/SEK

1,08 1,1 1,12 1,14 1,16 1,18 1,2 1,22 1,24 1,26 9,6 9,8 10 10,2 10,4 10,6 10,8 11

slide-35
SLIDE 35