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
3 BILLERUDKORSNÄS in FACTS & FIGURES NET SALES (2013)BUSINESS AREAS8PRODUCTION UNITS(packaging paper, consumer board, containerboard and pulp)2037%Billion SEKPACKAGING PAPERShare of net sales (2013)A STRONGER PLATFORMFOR GROWTH ANDPROFITABILITYWITH A FOCUS ONCUSTOMER VALUE,INNOVATION ANDSUSTAINABILITYCREATING NETWORKSWITH AN OPEN MINDBeethamFrövi/RockhammarGruvönGävleKarlsborgPietarsaariSkärblackaTervasaariOPERATING PROFIT(2013)36%1.1CONSUMER BOARDShare of net sales (2013)Billion SEKThe 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 30016%NUMBER OF EMPLOYEESCONTAINERBOARDShare of net sales (2013)
4 BILLERUDKORSNÄS IN FACTS & FIGURES Europe74%*Asia14%*Middle East3%*Africa5%*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 America2%** 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 exposureEBITDA marginShow the 2 acquisitions impact on more narrow EBITDA % range and higher EBTDA marginPulpCurrency exposureCurrency exposureCurrency & pulp exposure
7 FOCUSING ON PRIMARY FIBRE-BASED PACKAGING MATERIALS High performance packaging materialsTarget customer segments requiring strong, light and/or pure packagingSmarter solutionsFocus on value added to customers rather than price75% of sales going to consumer sectorsFood & Beverages is largest market segment with ~60% of salesSustainable innovation is keyConsumers prefer paper over plastics**IPSOS, 2007.
8 Our markets are growing faster than the average packaging market BILLERUDKORSNÄS MARKETSGLOBAL MARKETCAGR 5%Liquid packaging boardCAGR 5%CartonboardCAGR 4%Brown sack paper (premium grade)ContainerboardCAGR 3%PackagingCAGR 3%Paper and BoardCAGR 3%Source: PIRA, The Future of Global Packaging - Market forecasts to 2016, Market value in USD, CAGR , LPB: Zetith & Warrick – Global aseptic packaging 2012CTB: Nomura, ICCA, Cartonboard: Pira – The future of Folding cartons , Brown sack paper: BillerudKorsnäs’ estimates.
9 OUR ROAD MAP TO SUSTAINABLE PROFITABLE GROWTH grow in line with the marketBuilding a strong platform for growthUsing innovation to drive competitiveness15-20% organic growth by 20183 core messages OUR ROAD MAP TO SUSTAINABLE PROFITABLE GROWTHBut before I go into details let me put BillerudKorsnäs in a context, what we do, and why we are successfulAccelerating growth through strategic investments
10 ACHIEVING 15-20% ORGANIC GROWTH BY 2018 BA market CAGRCONTAINERBOARDValue growthIncrease margins on existing portfolio2-4% CAGRPACKAGING PAPERSelective growthTarget growth in selected segments, balancing additional capacity0-4% CAGRCONSUMER BOARDVolume growthIncrease volume in key markets4-5% CAGR10
11 BUSINESS MODELA HOLISTIC APPROACH TO CUSTOMER NEEDS11
12 WORLD-CLASS PACKAGING MATERIALS LEADING POSITIONS PACKAGING PAPER45*/55CONSUMER BOARD100*CONTAINERBOARD94*/6Kraft paperLiquid Packaging BoardFluting#1EUROPELIQUID PACK. BOARD - ASEPTIC#1EUROPE and GLOBALLYLIQUID PACK. BOARD – ALL TYPES#2EUROPE and GLOBALLYNSSC FLUTING and PURE WHITE LINER#1EUROPESack paperCartonboardLiner#2EUROPE and GLOBALLY**COATED WHITE TOP LINER#2EUROPE12* Share to Consumer segment** For High-Porosity Sack Paper
13 SOLUTION SERVICES Comprehensive knowledge of the whole value chain Strong technical knowledge of packaging designExpert assistance in the areas of packaging optimisation, print support and conversion support13
14 GLOBAL NETWORK Packaging manufacturers Machine manufacturers Research institutesMore than customers and packaging partners in more than 100 countries14
15 Moving closer to the end-customer Brand ownersConsumersPackaging material2–5% of the costChanging sales channels and sales pitch (value addes – smarter packaging), understand brand owners’ business modelNeed to understand end-buyer i.e. consumersPackaging manufacturersPackaging material 50–85% of the cost
16 Key Highlights Q2 2014 INTERIM REPORT Net sales SEK million. Adjusted operating profit sek 467 million3%- 5%2%Net SalesCompared 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 profitCompared 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 msekCompared 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 0.79Operating cash flowA 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 yearROCEQ2 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/equityIncrease on the ratio from Q due to dividend pay-out of 465 MSEKNet 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 portfolio1. renegotiated RCF of 5500 msek to better terms and 5 yr duration2. Cancelled RCF of 800 msek and replaced with 400 msek term loans maturing 2019 & 2020 plus 400 msek shortterm SEK termloan3. Transferred 2 termloans 1200 msek to parent company from KorsnäsAll 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 2014Target*Synergies and savings realised in the quarter, compared to if the synergy and savings programme had not been initiated.
19 FOUR FINANCIAL TARGETS Operating margin > 10%*Return on Capital Employed > 13%*Net debt/Equity ratio< 0.9Dividend policy:50% of net profit*Konstatera vilka våra finansiella mål är…19* Over a business cycle.
20 Our commitment to long-term shareholder value FulfilmentFocus areasShort-termRestore marginsPay down debtMid-termAchieve profitable growthStated dividend policy…för att sedan berätta hur vi ser på när de ska uppnåsLong-termAchieve ROCE >13%
21 outlookDemand and order situation is expected to remain stable during the third quarter 2014 for all business areasAverage 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 ContainerboardWood prices are expected to stay on current level for the second half of 2014The 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