Mets Board Interim report Q3/2015 Solid performance in Q3/2015 - - PowerPoint PPT Presentation

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Mets Board Interim report Q3/2015 Solid performance in Q3/2015 - - PowerPoint PPT Presentation

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Mets Board Interim report Q3/2015 Solid performance in Q3/2015 Profitability improved from the previous quarter 14 ROCE, % (excl. non-recurring items) Paperboard delivery volumes grew and price levels remained target is >12% from

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SLIDE 1

Metsä Board Interim report Q3/2015

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SLIDE 2
  • Profitability improved from the previous quarter
  • Paperboard delivery volumes grew and price levels remained

stable

  • Production of coated paper ended at Husum mill

Q3/2015 2

Solid performance in Q3/2015

After the review period:

  • Metsä Board announced price increase in FBB in Europe
  • Installation of new FBB machine in Husum began
  • Investment decision in extrusion coating

ROCE, % (excl. non-recurring items)

target is >12% from 2017

3.4 4.8 6.4 9.1 12.1

2 4 6 8 10 12 14 2011 2012 2013 2014 Q1–Q3/15

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SLIDE 3

Steady sales and improving margins

Q3/2015 3

19 29 36 28 35 37 43 47 55 0% 5% 10% 15% 10 20 30 40 50 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15

Operating result*

EUR million and % of sales 9 18 21 20 27 32 32 40 48 0% 5% 10% 15% 10 20 30 40 50 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15

Pre-tax result*

EUR million and % of sales 502 479 501 494 514 499 526 522 498 200 300 400 500 600 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15

Sales

EUR million

*) excluding non-recurring items

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SLIDE 4

Paperboard delivery volumes Lower FX hedging costs Negative profit impact from Gohrsmühle mill* was eliminated Strike in Finland Maintenance shutdown in Kemi Paper delivery volumes (planned)

Q3/2015 4

Main operating result drivers in Q3/2015 vs. Q2/2015

*) Divested in May 2015

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SLIDE 5

Paperboard deliveries continued to grow in Q3/2015

Annual average growth rate (CAGR) in 2013–2015E: 12%

Q3/2015 5

189 192 197 185 191 197 210 203 204 213 224 94 93 95 91 112 110 120 111 130 141 137 60 120 180 240 300 360

Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15

Folding boxboard Fresh forest fibre linerboard

1,000 tonnes

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SLIDE 6

Most important growth area is Americas

50 100 150 200 250 300 2011 2012 2013 2014 2015E 2018 target

Folding boxboard Fresh forest fibre linerboard

6

Actual and targeted deliveries to Americas

1,000 tonnes

300 250

Q3/2015

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SLIDE 7

Paperboard segment in Q3/2015:

Sales increased and profitability improved

Q3/2015 7

Operating result, excl. non-recurring items Sales

EUR million EUR million

44 51 61 60 65

12% 14% 16% 15% 16%

  • 2%

1% 4% 7% 10% 13% 16% 20 40 60 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15

100 200 300 400

Q3/14 Q4/14 Q1/15 Q2/15 Q3/15

Q3/2015 highlights

  • FBB deliveries increased compared to Q2/2015
  • Price level remained stable
  • Result was weakened by the strike in Finland and maintenance shutdown in Kemi

Operating result, M€ Operating result, M€ EBIT-%

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SLIDE 8

Non-core operations segment in Q3/2015:

Sales decreased as expected

Q3/2015 8

Operating result, excl. non-recurring items Sales

EUR million EUR million

50 100 150

Q3/14 Q4/14 Q1/15 Q2/15 Q3/15

  • 2.9
  • 1.8
  • 3.2
  • 3.4
  • 1.3
  • 2%
  • 1%
  • 3%
  • 3%
  • 2%
  • 4%
  • 2%

0% 2%

  • 4
  • 2

2 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15

Q3/2015 highlights

  • Paper deliveries decreased as planned and prices declined slightly compared to Q2 2015
  • Negative profit impact from Gohrsmühle was eliminated (divested in May 2015)
  • Coated paper production discontinued in Husum

Operating result, M€ Operating result, M€ EBIT-%

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SLIDE 9

Q3/2015 9

Exchange rate changes during the last 12 months have been favourable

  • Only minor positive impact on operating result after hedges in

Q3 2015 compared to previous quarter

  • Duration of Metsä Board’s hedges of the main foreign currency

flows has been 4–6 months during the last 12 months

  • Annual unhedged operating profit sensitivity of 10% change vs.

euro – EUR 45 million in USD – EUR 20 million in GBP – Reversed EUR 30 million SEK

  • Segment figures reflect exchange rate changes rapidly

but hedge accounting result in Other operations balance the impact

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SLIDE 10

Strong balance sheet

Equity ratio, %

27% 33% 41% 39% 46%

0% 10% 20% 30% 40% 50% 2011 2010 2013 2014 9/15

106% 73% 70% 51% 34%

0% 20% 40% 60% 80% 100% 120% 2011 2012 2013 2014 9/15

Q3/2015 10

Net gearing, %

783 625 597 427 344

4.4 3.4 2.9 1.8 1.2

1 2 3 4 5 200 400 600 800 1000 2011 2012 2013 2014 9/15 Net debt, EUR million Net debt/EBITDA

Net debt, EUR million and Net debt/EBITDA

Target 70%

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SLIDE 11

Financial costs are declining steadily

47 56 39 27 3.0 3.5 4.0 4.5 5.0 5.5 20 40 60 2012 2013 2014 Q1–Q3 2015 Net financial costs, EUR million Average interest rate, %

  • Net financial costs in January–

September totalled EUR 27 million (Q1–Q3/2014: EUR 34 million)

  • Declining costs due to the lower interest

rates, credit margins and IB debt

  • Average interest rate in IB debt in

Q1–Q3/2015 was 3.8%

Q3/2015 11

Net financial costs and average interest rate

EUR %

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SLIDE 12

Q3/2015 12

Investment programme in Husum continued as planned

  • Installation of new FBB machine started in October, production

start-up in January 2016

  • Paper machines PM6 and PM7 closed down in Q4
  • Husum will become a leading fresh forest fibre paperboard unit in

Europe

Folding boxboard production (BM1)

  • Capacity 400,000 t/a
  • Deliveries mainly to Americas and

Food service globally

  • Full production capacity reached

by the end of 2016

  • Expected delivery volumes in 2016

at least 200,000 tonnes

Linerboard production (BM2)

  • Capacity 300,000 t/a
  • Deliveries to Europe and Americas
  • Remaining uncoated paper*

production to linerboard production by end of 2017

*) current run-rate 150,000 tn/a

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SLIDE 13
  • Transformation process in Husum mill, Sweden

– Annual Operating result impact +EUR 50 million – Fully impact mostly in 2017 and fully in 2018 – Expected impact on 2016 is roughly one third of the total

  • Gohrsmühle divestment

– Annual Operating result impact +EUR 20 million – Roughly half materialises in 2015 – Reduces annual sales by EUR 90 million

  • Total paperboard capacity after the transformation
  • ver 2 million tonnes

Q3/2015 13

Completion of the transformation and expected impacts

All figures are based on company estimates and compared to FY2014 figures

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SLIDE 14

Q3/2015 14

Metsä Board expands its offering in food and food service paperboards by investing in extrusion coating

  • Investment value EUR 38 million
  • Will be implemented at Husum mill
  • Start-up in Q1/2017 with capacity of 100,000 t/a
  • In 2015–2016 Metsä Board’s paperboards are coated by

external converter

  • The company continues to develop other barrier

solutions including biobased materials

Food service packaging requires barrier features e.g. moisture and fat resistance

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SLIDE 15

2015 Pro Carton ECMA awards

  • Four carton packages using Metsä Board’s paperboard won

awards including the top honour of the sustainability award 2015 CDP

  • CDP recognised Metsӓ Board’s climate change transparency

with score of 100/100. The company was included on the Nordic Disclosure Leadership Index (CDLI)

  • Metsä Board was also recognized as a world leader for

sustainable use of water.

Q3/2015 15

Significant recognitions for product quality and sustainability

ECMA is the International Network of Folding Carton Organisations; carton businesses, national carton associations and suppliers to the carton industry. CDP is an international, not-for-profit organization providing the only global system for companies and cities to measure, disclose, manage and share vital environmental information. CDP works with market forces, including 767 institutional investors with assets of US$92 trillion, to motivate companies to disclose their impacts on the environment and natural resources and take action to reduce them.

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SLIDE 16

Q3/2015 16

Near-term outlook for Q4/2015

  • Paperboard delivery volumes are expected to decrease slightly due

to the seasonally weaker December. Average price level is expected to remain stable

  • Metsä Board announced price increase in FBB in Europe, effective

from 1 December

  • Paper delivery volumes will decrease clearly as planned
  • Long fibre pulp supply and demand is expected to be in balance
  • The earlier announced investment shutdown in Husum will have a

negative impact on operating result of approximately EUR 15 million

  • Average production costs are not expected to change materially in

Q4/2015

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SLIDE 17

Metsä Board’s operating result excluding non-recurring items in Q4/2015 is expected to decline compared to Q3/2015 The result is weakened primarily due to the shutdown of the integrated mill related to Husum's investment programme

Q3/2015 17

Profit guidance for Q4/2015

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SLIDE 18
  • Operating result in January–September 2015 already exceeded

the full year operating result in 2014

  • Paperboard delivery volumes continued to grow, a slight

decline is expected in Q4/2015

  • Metsä Board continues its extensive product development work

and expands the product offering

  • Transformation process to pure paperboard company is near to

its’ completion

Q3/2015 18

Summary

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SLIDE 19
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SLIDE 20

Appendix

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SLIDE 21

ROCE-% and EBIT, %

3.4 4.8 6.4 9.1 12.1

2 4 6 8 10 12 14 2011 2012 2013 2014 9/2015 %

2.4 3.6 5.2 6.8 9.4

2 4 6 8 10 12 14 2011 2012 2013 2014 9/2015 %

Q3/2015 21

ROCE-%, excl. non-recurring items EBIT-%, excl. non-recurring items

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SLIDE 22

EBITDA development

180 185 208 236 224

50 100 150 200 250 2011 2012 2013 2014 Q1–Q3/2015 EUR million

Q3/2015 22

EBITDA, excl. non-recurring items

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SLIDE 23

Other operations segment result

Q3/2015 23

  • 2
  • 6
  • 6
  • 12
  • 14
  • 9
  • 9
  • 15
  • 12
  • 9
  • 6
  • 3

Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15

Other operations segment: Operating result, excl. non-recurring items

EUR million

  • Other operations segment include costs which

are not allocated to units, e.g. head office costs

  • Cost base of these is roughly EUR 4–5 million

per quarter

  • Result fluctuation is caused by hedge

accounting result, which has had a negative impact of EUR 3–8 million per quarter during the past year

  • In Q3/2015, the hedge accounting impact was

EUR -5 million (H1/2015: EUR -16 million).

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SLIDE 24

Diversified funding sources, strong liquidity

33 % 30 % 26 % 3% 7 % Bonds Loans from financial institutions Pension loans Finance leases Other loans

Q3/2015 24

Debt structure

Total EUR 670 million 30 September 2015

69 % 21 % 10 % Liquid assets and investments Revolving credit facility Undrawn pension loan

Available liquidity

Total EUR 467 million 30 September 2015 Average interest rate of IB at the end of Q3/2015 was 3.8%.

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SLIDE 25

Market price development in Europe

Folding boxboard and white-top kraftliner

Q3 2015 25

500 600 700 800 900 1000 1100 2009 2010 2011 2012 2013 2014 2015

Taivekartonki Valkopintainen kraftlaineri

Folding boxboard White-top kraftliner Folding boxboard 1/2009–9/2015 White-top kraftliner 1/2009–9/2015 EUR/tonne

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SLIDE 26

Paper and Pulp Market Prices in Europe

2000–Q3/2015

Q3/2015 26

0.8 0.9 1 1.1 1.2 1.3 1.4 1.5 1.6 1.7 400 500 600 700 800 900 1000 1100 NBSK, EUR LWC 60g Offset CWF 100g Reels A4 B-Copy 80g sheet EUR/USD

EUR/tonnes EUR/USD

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SLIDE 27

Shares, % (total no. of shares 355,512,746)

27

Votes, % (total no. of votes 1,037,530,115)

17.1 2.2 18.5 40.2 4.4 6.1 11.5

Households Non-profit

  • rganisations

Foreigners* Metsäliitto Cooperative Other companies Finance and insurance companies Public sector

  • rganisations

10.1 4.1 6.6 60.9 1.8 2.1 14.5

Households Non-profit

  • rganisations

Foreigners* Metsäliitto Cooperative Other companies Finance and insurance companies Public sector

  • rganisations

Ownership structure on 30 September 2015

* incl. nominee registered Source: Euroland

5 November 2015