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Carnegie Small & Mid Cap Seminar | September 2014

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Presentation on theme: "Carnegie Small & Mid Cap Seminar | September 2014"— Presentation transcript:

1 Carnegie Small & Mid Cap Seminar | September 2014
Per Lindberg, CEO and President, and Susanne Lithander, CFO

2 We challenge conventional packaging for a
Sustainable future

NET SALES (2013) BUSINESS AREAS 8 PRODUCTION UNITS (packaging paper, consumer board, containerboard and pulp) 20 37% Billion SEK PACKAGING PAPER Share of net sales (2013) A STRONGER PLATFORM FOR GROWTH AND PROFITABILITY WITH A FOCUS ON CUSTOMER VALUE, INNOVATION AND SUSTAINABILITY CREATING NETWORKS WITH AN OPEN MIND Beetham Frövi/Rockhammar Gruvön Gävle Karlsborg Pietarsaari Skärblacka Tervasaari OPERATING PROFIT (2013) 36% 1.1 CONSUMER BOARD Share of net sales (2013) Billion SEK The right packaging is key in an expanding global market expected to grow by over 3% per year. Prosperity is increasing around the world and our ambition is to grow along with it, meeting demand in our existing markets and the growth markets of the Asia Pacific and South American regions. 4 300 16% NUMBER OF EMPLOYEES CONTAINERBOARD Share of net sales (2013)

Europe 74%* Asia 14%* Middle East 3%* Africa 5%* BillerudKorsnäs operates in the global packaging market providing 1500 customers globally with products and services. The company has customer service centres worldwide. Others 2%* South America 2%* * Of the Group’s net sales 2013


6 A strong platform with increased stability
The two Acquisitions in 2012 resulted in significantly reduced market pulp exposure and lower relative currency exposure EBITDA margin Show the 2 acquisitions impact on more narrow EBITDA % range and higher EBTDA margin Pulp Currency exposure Currency exposure Currency & pulp exposure

High performance packaging materials Target customer segments requiring strong, light and/or pure packaging Smarter solutions Focus on value added to customers rather than price 75% of sales going to consumer sectors Food & Beverages is largest market segment with ~60% of sales Sustainable innovation is key Consumers prefer paper over plastics* *IPSOS, 2007.

8 Our markets are growing faster than the average packaging market
BILLERUDKORSNÄS MARKETS GLOBAL MARKET CAGR 5% Liquid packaging board CAGR 5% Cartonboard CAGR 4% Brown sack paper (premium grade) Containerboard CAGR 3% Packaging CAGR 3% Paper and Board CAGR 3% Source: PIRA, The Future of Global Packaging - Market forecasts to 2016, Market value in USD, CAGR , LPB: Zetith & Warrick – Global aseptic packaging 2012 CTB: Nomura, ICCA, Cartonboard: Pira – The future of Folding cartons , Brown sack paper: BillerudKorsnäs’ estimates.

grow in line with the market Building a strong platform for growth Using innovation to drive competitiveness 15-20% organic growth by 2018 3 core messages OUR ROAD MAP TO SUSTAINABLE PROFITABLE GROWTH But before I go into details let me put BillerudKorsnäs in a context, what we do, and why we are successful Accelerating growth through strategic investments

BA market CAGR CONTAINERBOARD Value growth Increase margins on existing portfolio 2-4% CAGR PACKAGING PAPER Selective growth Target growth in selected segments, balancing additional capacity 0-4% CAGR CONSUMER BOARD Volume growth Increase volume in key markets 4-5% CAGR 10


PACKAGING PAPER 45*/55 CONSUMER BOARD 100* CONTAINERBOARD 94*/6 Kraft paper Liquid Packaging Board Fluting #1 EUROPE LIQUID PACK. BOARD - ASEPTIC #1 EUROPE and GLOBALLY LIQUID PACK. BOARD – ALL TYPES #2 EUROPE and GLOBALLY NSSC FLUTING and PURE WHITE LINER #1 EUROPE Sack paper Cartonboard Liner #2 EUROPE and GLOBALLY** COATED WHITE TOP LINER #2 EUROPE 12 * Share to Consumer segment ** For High-Porosity Sack Paper

13 SOLUTION SERVICES Comprehensive knowledge of the whole value chain
Strong technical knowledge of packaging design Expert assistance in the areas of packaging optimisation, print support and conversion support 13

14 GLOBAL NETWORK Packaging manufacturers Machine manufacturers
Research institutes More than customers and packaging partners in more than 100 countries 14

15 Moving closer to the end-customer
Brand owners Consumers Packaging material 2–5% of the cost Changing sales channels and sales pitch (value addes – smarter packaging), understand brand owners’ business model Need to understand end-buyer i.e. consumers Packaging manufacturers Packaging material 50–85% of the cost

16 Key Highlights Q2 2014 INTERIM REPORT
Net sales SEK million. Adjusted operating profit sek 467 million 3% - 5% 2% Net Sales Compared to Q net sales has increased 2%. Improvements were due to - improved product mix (more paper than pulp) - 2% volume increase (PP+20 kton of which Gävle is 15kton, CSB +7kton pulp, CTB -14kton) - more favourable exchange rates (+MSEK 134) Compared to previous quarter net sales decreased 5% due to periodic maintenance shutdowns. Compared to Jan-Jun 2013 net sales +3% due to - mix (more paper than pulp) - volume (+4% = 56kton of which Gävle pulp is ~27kton) - currency exchange rate (+225 msek) Adj op profit Compared to Q profit level has increased by 44% mainly due to - realised synergies primarily within purchasing and logistics (76 msek) - higher volumes (2% (PP+20 kton of which Gävle is 15kton, CSB +7kton pulp, CTB -14kton) - exchange rate (134msek) - prices -39 msek Compared to previous quarter profit level has decreased 16% due to - periodic maintenance shutdowns (143msek) - additional extra production cost 25msek (offset by synergies and result decent in spite of problems) - (positive SEK effect +55msek). Compared to Jan-Jun MSEK 260 (34%)due to - Mix & volume = +110msek - synergies (+154 msek) - pris (-85 msek) All 2013 comparable numbers include Bomhus Energi AB.

17 Key Highlights Q2 2014 INTERIM REPORT
Cash flow SEK 433 million. ROCE 8%, Net debt/equity 0.79 Operating cash flow A strong operating cash flow for the first half of the year thanks to improved operating profit and reduced working capital. Also the level of investment are lower than previous year ROCE Q2 acc ( )*2-480 = / = ~8,4% Q2 iso 470*4-480= /18000 = ~7,8% Q1 iso 550*4-480= /18000 = ~10% (9,6%) Current level is 8% and indicates an improvement over the year thanks to improved margins. Net debt/equity Increase on the ratio from Q due to dividend pay-out of 465 MSEK Net debt = MSEK 8 022, increase with 13 msek (due to lower cash +90msek & have lowered loans with -75 msek) from Q1 due to lower cash. Equity MSEK 193 lower compared to previous quarter, from MSEK to MSEK due to dividend. (Bomhus is included in 2013 comparisons) Restructuring of the debt portfolio 1. renegotiated RCF of 5500 msek to better terms and 5 yr duration 2. Cancelled RCF of 800 msek and replaced with 400 msek term loans maturing 2019 & 2020 plus 400 msek shortterm SEK termloan 3. Transferred 2 termloans 1200 msek to parent company from Korsnäs All 2013 comparable numbers include Bomhus Energi AB.

18 On track to reach synergy targets ahead of plan
Annual pace of MSEK ~490 AS PER END OF Q2 2014 Target *Synergies and savings realised in the quarter, compared to if the synergy and savings programme had not been initiated.

Operating margin > 10%* Return on Capital Employed > 13%* Net debt/Equity ratio < 0.9 Dividend policy: 50% of net profit* Konstatera vilka våra finansiella mål är… 19 * Over a business cycle.

20 Our commitment to long-term shareholder value
Fulfilment Focus areas Short-term Restore margins Pay down debt Mid-term Achieve profitable growth Stated dividend policy …för att sedan berätta hur vi ser på när de ska uppnås Long-term Achieve ROCE >13%

21 outlook Demand and order situation is expected to remain stable during the third quarter 2014 for all business areas Average prices in local currency are anticipated to stay on current level for the third quarter 2014 for Packaging Paper and Consumer Board. Pressure on primary fibre based prices within business area Containerboard Wood prices are expected to stay on current level for the second half of 2014 The target of approximately SEK 530 million in annual synergies and savings is unchanged, and is expected to be reached during Estimated non-recurring costs for realising the synergies increased to approximately SEK 225 million

22 Q&A


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