Mets Board Interim Report 19/2017 Presentation material January - - PowerPoint PPT Presentation

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Mets Board Interim Report 19/2017 Presentation material January - - PowerPoint PPT Presentation

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Mets Board Interim Report 19/2017 Presentation material January September 2017: Increasing sales and improved operating result Sales Comparable operating result EUR million EUR million and % 500 50 12% 10,5 % 10,2 % 9,2 % 10%

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SLIDE 1

Metsä Board

Interim Report 1−9/2017 Presentation material

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SLIDE 2

January–September 2017: Increasing sales and improved operating result

Sales

EUR million

436 423 440 422 445 474 479 100 200 300 400 500 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17

+8%

35 36 34 33 45 44 50

8,0 % 8,5 % 7,7 % 7,8 % 10,2 % 9,2 % 10,5 %

0% 2% 4% 6% 8% 10% 12% 10 20 30 40 50 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17

+33%

Interim Report 1-9/2017 2

Comparable operating result

EUR million and %

1–9 2016: EUR 1,299 million

EUR million EUR million

1–9 2017: EUR 1,397 million 1–9 2016: EUR 105 million 1–9 2017: EUR 139 million

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SLIDE 3

Strong growth in paperboard deliveries

204 213 224 224 227 250 266 245 265 304 299 130 141 137 131 142 148 148 143 163 173 170 100 200 300 400 500

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

White fresh fibre linerboard Folding boxboard 1,000 tonnes

3 Interim Report 1-9/2017

FY 2015: 1,404 tonnes FY 2016: 1,569 tonnes Q1-Q3 2017: 1,375 tonnes (Q1-Q3/16: 1,181)

+17%

Q1-Q3 2016 Q1-Q3 2017

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SLIDE 4

Interim Report 1-9/2017 4

Q3 2017 in summary

(vs. Q2 2017)

  • Higher production volumes
  • Increased average price of folding boxboard
  • Paperboard deliveries roughly at the level of Q2
  • Cash flow from operations strong due to improved

result and good working capital performance

  • Stable or rising market price levels in local

currencies

– Metsä Board announced price increases in Europe in folding boxboard and white linerboard

  • Metsä Fibre’s new bioproduct mill started as

planned in August

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SLIDE 5
  • FX rate changes including hedges had a small positive impact in Q3/17 vs. Q2/17
  • The positive impact from hedging will start to dilute towards the end of the year
  • Annual sensitivities have changed due to the changes in FX rates

FX exposure and sensitivities

58 % 34 % 6 %2 % USD SEK GBP Other currencies

Annual transaction exposure EUR 1.1 billion FX sensitivities excluding hedges

10% strengthening of foreign currency vs. EUR will have an impact on Metsä Board’s EBIT of Currency Next 12 months USD, $ EUR +64 million SEK EUR -38 million GBP, £ EUR +7 million

5 Interim Report 1-9/2017

Hedging policy: 100% of balance sheet position and 50% of annual net FX flows

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SLIDE 6

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17

Comparable ROCE, %

Interim Report 1-9/2017 6

Return on capital employed, %

Target >12%

Q3/17: 11.5%

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SLIDE 7
  • Capacity utilisation rate in July–September 2017 was 76%

– FY 2017 estimate is slightly below 75% – Target is to have capacity in full use by the end of 2018

  • Annual maintenance shutdown in October
  • Improved average price of folding boxboard
  • Production costs per tonne are still higher than at the Finnish mills
  • Metsä Board’s FBB/FSB deliveries to Americas in 1–9/2017 up by 65%

compared to 1–9/2016

  • Potential to improve profitability in Husum by EUR 100 million is intact

Interim Report 1-9/2017 7

Update on Husum’s folding boxboard

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SLIDE 8

Cash flows clearly positive

Strong cash flow in Q3 due to improved result and good working capital performance

33 56 93 66

  • 22
  • 22

67 55 26 37 68 9 8 45 8

  • 76
  • 72

49 17 7 25 59

250 214 256 247 193 115 89 78 126 185 186 188 119 118 70

  • 15
  • 95
  • 91
  • 82

1 98 108

  • 150
  • 100
  • 50

50 100 150 200 250 300 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Cash flow from operations, quarterly Free cash flow, quarterly Cash flow from operations, rolling 12 months Free cash flow, rolling 12 months EUR million

8 Interim Report 1-9/2017 Free cash flow = Net cash flow from operating activities + Investments in intangible and tangible assets + Acquisition of associate company shares + Acquisition of other shares

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SLIDE 9

Stable balance sheet

333 464 488 464 458 495 437 1,2 2,0 2,1 2,0 1,9 2,0 1,7 0,0 1,0 2,0 3,0 200 400 600 2015 2016 9/16 12/16 3/17 6/17 9/17 Interest-bearing net debt, EUR million Interest-bearing net debt / EBITDA (rolling 12-month)

Interest-bearing net debt / comparable EBITDA

333 464 488 464 458 495 437 32% 44% 49% 44% 44% 45% 39%

0,1 0,2 0,3 0,4 0,5 0,6

200 400 600 2015 2016 9/16 12/16 3/17 6/17 9/17 Interest-bearing net debt, EUR million Net gearing, %

Net gearing, %

9 Interim Report 1-9/2017

Financial target: <2.5x

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SLIDE 10

50 100 150 200 250 2017 2018 2019 2020 2021-26 2027 Bonds Loans from financial institutions Pension loans Other loans

Interim Report 1-9/2017 10

Debt maturity lengthened due to new 10-year bond

Interest-bearing debt maturity profile 30.9.2017 EUR million

  • Total interest-bearing debt on 30 September was EUR 651

million

  • In September, Metsä Board issued new 10-year EUR 250 million

bond with 2.75% annual coupon. At the same time, the company made a tender offer for the old EUR 225 million bond due in 2019 (EUR 158m tendered)

  • In August, Moody‘s upgraded Metsä Board‘s credit rating from

Ba2 to Ba1

Rating agency Rating and

  • utlook

Last update Standard & Poor‘s BB+ (positive) 02/2017 Moody‘s Ba1 (stable) 08/2017 Upgrade from Ba2 Metsä Board‘s credit ratings

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SLIDE 11

Metsä Board’s growth clearly exceeds average market growth

11

200 400 600 800 1 000 1 200 1 400 1 600 1 800 2 000

2012 2013 2014 2015 2016 LTM* 2018 target Fresh fibre linerboard Folding boxboard

Metsä Board’s annual paperboard deliveries

1,000 tonnes

Interim Report 1-9/2017

*last twelve months

Annual global demand growth for folding boxboard and white kraftliners is estimated to be 3–4%

Source: RISI, CEPI, Pöyry and trade statistics among

  • thers
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SLIDE 12
  • Postitions on the CDP

Climate A and Water A Lists

  • Leadership status in CDP

Forest programme

Interim Report 1-9/2017 12

Metsä Board was again rated among the world’s best performing companies by CDP

CDP is a non-profit

  • rganization providing a

global system to measure, disclose, manage and share vital environmental information.

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SLIDE 13

Metsä Fibre’s new bioproduct mill in Äänekoski has started

Start-up as scheduled, costs in budget and production above the ramp-up curve

Total investment

EUR 1.2 billion

Annual pulp capacity

1.3 million tonnes

Metsä Board invested

EUR 24.9 million

Metsä Board’s annual pulp balance grows by

200,000 tonnes*

* According to Metsä Board’s 24.9% ownership of Metsä Fibre

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SLIDE 14

Interim Report 1-9/2017 14

Near-term outlook

  • Metsä Board’s Q4 paperboard delivery volumes are

expected to decline due to seasonality

  • Pulp market is expected to remain in balance. Metsä

Fibre’s new bioproduct mill is expected to have positive impact on Metsä Board’s Q4 result

  • Annual maintenance shutdown in Husum mill will have

negative impact on profitability

  • Positive hedging impact from USD will dilute towards

the year-end

  • Impacts from price increases expected to be visible

mainly from Q1 2018 onwards

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SLIDE 15

Mainly due to the maintenance shutdown at the Husum integrated mill, Metsä Board’s comparable

  • perating result in the fourth quarter
  • f 2017 is expected to weaken slightly

from the third quarter of 2017.

Interim Report 1-9/2017 15

Profit guidance

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SLIDE 16
  • Solid performance in Q3
  • Good demand for high-quality

paperboards, with stable or rising price levels

  • Near-term focus on improving average

price of Husum’s folding boxboard and increasing sales to Americas

  • Metsä Board expects to have its

current paperboard capacity in full use by the end of 2018

Interim Report 1-9/2017 16

Summary

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SLIDE 17

Appendix

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SLIDE 18

Interim Report 1-9/2017 18

Key financials

Q3/17 Q2/17

Change Q3/17

  • vs. Q2/17

1-9/17 1-9/16

Change 1-9/17

  • vs. 1-9/16

2016 Sales

EUR, m

479 474

+1%

1,397 1,299

+8%

1,720 EBITDA*

EUR, m

75 68

+10%

211 178

+19%

231 Operating result*

EUR, m

50 44

+14%

139 105

+32%

138 % of sales

%

10.5 9.2 10.0 8.1 8.0 Result before taxes*

EUR, m

34 37

  • 8%

110 84

+31%

107 Earnings per share

EUR

0.11 0.09

+22%

0.30 0.18

+67%

0.25 ROCE*

%

11.5 10.3 10.6 8.3 8.1 Capex

EUR, m

7 12

  • 42%

39 119

  • 67%

162 Cash flow from operations

EUR, m

68 37

+84%

130 23

  • ver 100%

77 IB Net debt, at end of period

EUR, m

437 495

  • 12%

437 488

  • 10%

464

*comparable

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SLIDE 19

43.5 50.4

10 20 30 40 50 60

Q2 2017 Q3 2017

Q3 2017 vs. Q2 2017

Interim Report 1-9/2017 19

Comparable operating result

Q3/17 vs Q2/17: +16% and 1-9/17 vs. 1-9/16: +33%

104.7 139.1

20 40 60 80 100 120 140

1-9 2016 1-9 2017

1-9 2017 vs. 1-9 2016

+

Inreased average price of FBB, higher production volumes in paperboard and pulp, lower maintenance costs, impact from FX rates including hedges

  • Start-up of Metsä Fibre’s new bioproduct mill

+

Positive development in linerboard and market pulp

  • perations, discontinued paper business, impact from

FX rates including hedges

  • Increased latex price

EBIT-% 8.1 EBIT-% 10.0 EBIT-% 9.2 EBIT-% 10.5

WTKL = white-top kraftliner FBB = folding boxboard

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SLIDE 20
  • Investments in January–

September were EUR 39 million (1–9/16: EUR 119 million)

  • Estimated capex in 2017

is EUR 65–70 million

Clearly lower capex in 2017

30 60 90 120 150 180 2010 2011 2012 2013 2014 2015 2016 2017E Maintenance capex Growth capex Depreciation EUR million

20 Interim Report 1-9/2017

Main growth in capex in 2015−2016: Husum investment programme, extrusion coating line and equity investment in Metsä Fibre’s bioproduct mill

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SLIDE 21

Financial targets and actuals

Comparable ROCE, %

6,4 9,1 11,3 8,1 10,6 2013 2014 2015 2016 1-9/17 2,9 1,8 1,2 2,0 1,7 2013 2014 2015 2016 1-9/17

Net debt / Comparable EBITDA, %

7% 10% 13% 12% 17% 2013 2014 2015 2016 1-9/17

Annual growth in total paperboard deliveries, %

Target is to exceed relevant market growth*

Dividend policy: Metsä Board aims to distribute at least 50% of its result for the financial period in annual dividends to its shareholders

Target: >12% Target: <2.5× Global fresh fibre paperboard demand growth 3-4%/a Interim Report 1-9/2017 21

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Debt structure and liquidity

30 September 2017 315 149 111 22 53

Bonds Loans from financial institutions Pension loans Finance leases and

  • ther loans

Other short-term loans

210 100 102

Cash and cash equivalents Revolving credit facility Unraised pension loans

Interest-bearing debt, total EUR 651 million Available liquidity, total EUR 412 million

Average maturity of long-term loans on 30 September 2017 was 5.4 years.

22 Interim Report 1-9/2017

*) Of which EUR 248 million due in 2027

and EUR 67 million due in 2019

*)

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SLIDE 23

Interim Report 1-9/2017 23

Increased financial costs due to the financing arrangements in September

56 39 32 31 29

4,6 4,2 3,8 3,3 3,2

3,0 3,5 4,0 4,5 5,0 10 20 30 40 50 60 2013 2014 2015 2016 1-9/2017

Net financial costs, EUR million Average interest rate at the end of period, % EUR million %

  • Net financials in 1-9/2017

were EUR -29 million (1-9/16: EUR -21 million)

  • In September, Metsä Board

issued new 10-year EUR 250 million bond due 2027

  • Q3 financial expenses

include EUR 11 million of costs related to the early repurchase of the bond maturing in 2019

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SLIDE 24

Market cap and foreign owners

30 September 2017

Ownership distribution

30 September 2017

Market cap and ownership distribution

Metsä Board shares (METSB, METSA) are listed on Nasdaq Helsinki

4 8 12 16 20 24 500 1 000 1 500 2 000 2 500

2012 2013 2014 2015 2016 1-9/2017

Market cap, EUR million Share of foreign owners, %

42 % 22 % 18 % 18 %

Metsäliitto Cooperative Domestic institutional investors Domestic private investors Foreign owners

EUR million * Metsäliitto Cooperative has 61% of voting rights *

24

%

Interim Report 1-9/2017

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SLIDE 25

500 600 700 800 900 1000 1100 1200 2009 2010 2011 2012 2013 2014 2015 2016 2017 Folding boxboard White-top kraftliner

Interim Report 1-9/2017 25

Market price development in folding boxboard and white-top kraftliner in Europe

EUR/tn

Sources: RISI, Inc. & FOEX Indexes Ltd

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SLIDE 26

350 400 450 500 550 600 650 700 750 800 850 900 950 1000 1050

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

350 400 450 500 550 600 650 700 750 800 850 900 950 1000 1050

Source: Foex Indexes Ltd

Softwood, USD Softwood, EUR Hardwood, EUR Hardwood, USD

USD EUR

Pulp price development (PIX)

26 Interim Report 1-9/2017

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SLIDE 27