metsä board's cmd 2015 - holm
TRANSCRIPT
Strong financial performance
Markus Holm, CFO
Capital Markets Day 19 November 2015
Disclaimer
This presentation includes forward-looking statements. The words “believe,” “expect,” “anticipate,” “intend,” “may,” “plan,” “estimate,” “will,” “should,” “could,” “aim,” “target,” “might,” or, in each case, their negative, or any similar expressionsidentify certain of these forward-looking statements. Others can be identified from the context in which the statements are made. By their nature forward-looking statements are subject to assumptions, risks and uncertainties. Although we believe that the expectations reflected in these forward-looking statements are reasonable, actual results may differ even materially from those expressed or implied by these forward-looking statements. We urge presentation participants not to place undue reliance on such statements.
The information and views contained in this presentation are provided as at the date of this presentation and are subject to changes without notice. Metsä Board does not undertake any obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally require
Viewers should understand that this presentation does not constitute, and should not be construed as, an offer to buy or subscribe for Metsä Board’s securities anywhere in the world or an inducement to enter into any investment activity relating to the same. No part of this presentation should solely form the basis of, or be relied on in connection with, any contract or commitment or decision to invest in Metsä Board securities whatsoever. Potential investors are instructed to acquaint themselves with Metsä Board’s annual accounts, interim reports and stock exchange releases as well as other information published by Metsä Board to form a comprehensive picture of the company and its securities.
2015 CMD2
3
• Financial performance
• Cost structure and capital expenditure
• Funding and debt
• Metsä Board’s share and outlook
• Q&A
Contents
2015 CMD
Steady sales and improving margins
2015 CMD4
19 29 36 28 35 37 43 47 550%
5%
10%
15%
0
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 40 480%
5%
10%
15%
0
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 498200
300
400
500
600
Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15
SalesEUR million
*) excluding non-recurring items
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)
2015 CMD5
Main operating result drivers
in Q3 2015 vs. Q2 2015
*) Divested in May 2015
Paperboard deliveries has continued to growAnnual average growth rate in 2013–2015E: 12%
2015 CMD6
189 192 197 185 191 197 210 203 204 213 224
94 93 9591
112 110120
111130
141137
0
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
Strong cash flow from operations
33
-19
92 51 74 33 56 9110
-24
78 46 56 9 8 45
82
19
114
157
198
250
214
254
22
-37
57110
155
188
119 118
-100
-50
0
50
100
150
200
250
300
Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15
Cash flow from operations, quarterly Free cash flow, quarterly
Cash flow from operations, rolling 12 months Free cash flow, rolling 12 months
2015 CMD7
€ million
• Operating net working capital hasdecreased 76 M€ or 22% year-on-year
• ONWC/sales has decreased from17% to 13% year-on-year
• Changes mainly due to improvements in accountspayable and inventories as well as Gohrsmuhle divestment
2015 CMD8
0
4
8
12
16
20
24
-300
-150
0
150
300
450
600
Operating working
capital M€
Accounts payable M€
Accounts receivable M€
Inventories M€
ONWC/sales, %
Steady improvement in operating working capital
%M€
Strong balance sheet
Equity ratio, %
27%
33%
41%39%
46%
0%
10%
20%
30%
40%
50%
2011 2010 2013 2014 Q3/2015
106%
73% 70%
51%
34%
0%
20%
40%
60%
80%
100%
120%
2011 2012 2013 2014 Q3/2015
2015 CMD9
Net gearing, %
783625 597
427344
4,4
3,4
2,9
1,8
1,2
0
1
2
3
4
5
0
200
400
600
800
1000
2011 2012 2013 2014 Q3/2015
Net debt, M€
Net debt/EBITDA
Net debt, M€ and net debt/EBITDA
Target < 70%
2Q/2015 Results and OutlookCost structure and Capex
2015 CMD11
Cost structure
Estimated cost structure in 2015
Logistics
costs; 17%
Wood
usage; 17%
Chemicals;
15%Energy;
12%
Other
variable costs; 3%
Personnel;
17%
Other fixed
costs; 18%
20%
22%
24%
26%
28%
30%
Q32013
Q42013
Q12014
Q22014
Q32014
Q42014
Q12015
Q22015
Q32015
Fixed costs / Sales, % quarterly
Capital expenditure and depreciation
0
30
60
90
120
150
180
2010 2011 2012 2013 2014 2015E 2016E
Capex Growth capex Depreciation
• Annual capex excluding the growth capex
is €40-60 million
• Main growth capexes:
– Debottlenecking at Finnish mills in 2010–12
– Husum investment 170 M€ in 2015–16
– Extrusion line 38 M€ in 2016–17
– Metsä Fibre’s bioproduct mill 25 M€ in 2016
2015 CMD12
€ million
2Q/2015 Results and OutlookFunding and Debt InformationFunding and debt
Well diversified funding, strong liquidity
33 %
30 %
26 %
3%7 % Bonds
Loans from financialinstitutionsPension loans
Finance leases
Other loans
2015 CMD14
Debt structureTotal €670 million
30 September 2015
69 %
21 %
10 % Liquid assets
Undrawn RCF
Undrawn pensionloans
Available liquidityTotal €467 million
30 September 2015
Well-balanced maturity schedule
6446
96
182
254
250 1
100
45
0
50
100
150
200
250
300
2015 2016 2017 2018 2019 2020 2021 >2021
Long-term interest bearing liabilities and committed undrawn credit facilities at 30 September 2015
Long-term interest bearing liabilities Committed undrawn credit facilities
2015 CMD15
EUR million
FX exposure by currencyAnnual gross amount €1.1 bn
49 %
17 %
30 %
4 %
USD GBP SEK Other currencies
Currency Q3 2015 Estimated in
2017
USD, $ +45 M€ +70 M€
GBP, £ +20 M€ +10 M€
Swedish krona -30 M€ -30 M€
2015 CMD16
Annual FX sensitivities to Group EBIT
Foreign exchange exposure and sensitivites
10 % strengthening of foreign currency vs. EUR
will have an impact on EBIT:
Financial costs are declining steadily
3,0
3,5
4,0
4,5
5,0
5,5
0
10
20
30
40
50
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%
• Estimated level for 2015 is EUR 35 million
2015 CMD17
Net financial costs and average interest rateEUR %
Positive rating development
18
Moody’s
Standard & Poor’s
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
BB+ | Ba1
StableStableBB | Ba2
BB- | Ba3
B+ | B1
B | B2
B- | B3
CCC+ | Caa1
CCC | Caa2
2015 CMD
Metsä Board’s shareand outlook
Market cap and foreign owners
42 %
22 %
17 %
19 %
MetsäliittoCooperative
Domesticinstitutionalinvestors
Domestic privateinvestors
Foreign owners
2015 CMD20
Ownership distribution
Rising market cap with more foreign owners
0
4
8
12
16
20
0
500
1 000
1 500
2 000
2 500
2011 2012 2013 2014 2015
Market cap, M€
Share of foreign owners, %
*) 13 November 2015
*
Dividend payout target is at least 1/3 of EPS
0,06
0,09
0,12
0
0,02
0,04
0,06
0,08
0,1
0,12
0,14
2012 2013 2014
Dividend/share, EUR
2015 CMD21
Dividend pay-out 12%
Dividend pay-out excl. NRI 46%
Dividend pay-out 47%
Dividend pay-out excl. NRI 53%
Dividend pay-out 57%
Dividend pay-out excl. NRI 44%
2015 CMD22
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
Profit guidance (5 November 2015):
Metsä Board’s operating result excluding non-recurring items
in Q4/2015 is expected to decline compared to Q3/2015.
2015 CMD23
Assumptions for 2016
• Sales expected to increase gradually from Q1 2016 onwards as
declining paper volumes are offset by increasing paperboard volumes
• Husum startup grades expected to have an effect in H1 2016
• Expected positive impacts on operating profit:
• € 20 million from Gohrsmühle divestment (vs. €10 million in 2015)
• at least 1/3 of total €50 million from Husum transformation process
• Capex approximately €135 million*
• Net financials below €30 million
• Effective tax rate close to 20%
*) including the investment to Metsä Fibre bioproduct mill of €25m
Thank you!
Q&A