ceo's review at agm 2015 eng (id 170704) governance… · +21% 700 / 33% post-measures sca...

Metsä Board

CEO’s Review

AGM 2015

Mika Joukio

Metsä GroupMetsä Board2

Content

1. Metsä Board in brief

2. Final steps in transformation

3. Results in 2014 and outlook

4. Summary

Metsä GroupMetsä Board

Metsä Board in brief

‒ The leading European fresh forest fibre paperboard company

‒ Main customers are consumer goods companies, corrugated packaging manufacturers, printers and merchants

‒ Valuable holdings in Metsä Fibre (24.9%) and Pohjolan Voima (2.6%)

‒ Global sales to over 100 countries and nine production units in Finland, Sweden and Germany

‒ Sales of EUR 2.0 billion and EBIT (excl. non-recurring items) of EUR 137 million in 2014

2 008 2 019 2 108

2012 2013 2014

EBIT margin (%) 1)Sales (EURm)

1) EBIT margin excl. non-recurring items

3

5,2%6,8%

3,6%


Global packaging materials market size is about EUR 600bn and it is growing

Wood fibre based

materials36 %

Others64 %

‒ Growing population

‒ Urbanization

‒ Environmental awareness

‒ Safety

Global underlying demand growth for Metsä Board’smain grades folding boxboard and white fresh forestfibre linerboard is estimated to be 3-4 % per annum

Source: Smithers Pira

4

Highest growth inpaperboard packaging, accounting

for the largest share of the total


5

White top kraftliners

Folding Boxboard

Fully bleached

linerboards

Metsä Board offers a wide range of high-quality fresh forest fibre paperboards


Metsä Board’s paperboards are results of successful product development

Recycled fibre based cartonboard

Average FBB

SBB (Solid Bleached Board)

Metsä Board FBB

6

‒ Pure and safe

‒ Superior printing surface

‒ Consistently high quality

‒ Even over 30 % lighter in weight than other paperboards

Metsä Board’s paperboards offer an excellent way for consumer goods companies to improve quality of their packages and sustainability of their operations


Metsä Board’s paperboard deliveries increased by 10 % in 2014

7

+ 7 %

169 176 185 185 189 192 197 185 191 197 210 203

8085

93 8594 93 95

91110 108

118109

0

60

120

180

240

300

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14

Fresh forest fibre linerboardFolding boxboard

+ 10 %1000 tonnes


Metsä Board grows the fastest in North America where its volumes increased over 40% in 2014

8

Fresh forest fibre linerboard deliveries to North America, 1,000 tonnes

0

30

60

90

120

150

180

2009 2010 2011 2012 2013 2014

FBB deliveries to North America, 1,000 tonnes

0

5

10

15

20

25

30

2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14

FBB volume target in North America is over 300 000 t/a in mid-term

Linerboard volume target in North America is over 250 000 t/a in mid-term


300

600

900

1 200

1 500

1 800

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

tonn

es/a

nnum

/em

ploy

eeProductivity has been improved significantly since 2005

9

Production capacity per employee per annum at Metsä Board’s current mills


Profitability of Metsä Board’s paperboard business the bestin its field in Europe

Operating result, excl. non-recurring items, % of salesOperating result excluding non recurring items % of sales


Content




4. Summary


Metsä Board grows its paperboard business and plans to fully exit paper production

‒ Major growth step in the folding boxboard business thanks to the EUR 170 million investment in a new production line and related infra at Husum mill

‒ Linerboard volumes from Husum to be tripled from 2014 level to close to 300 000 tonnes fully from 2018

‒ Planned discontinuation of Husum mill’s paper production mostly by the end of 2015 and fully by the end of 2017

‒ Measures to eliminate losses of Gohrsmühle mill in Germany in process

‒ These final steps of the transformation are expected to be financed by current liquidity, credit facilities, operating cash flow and a share offering

12


Share offering was completed successfully

‒ Share offering was oversubscribed: preliminary result 140 %

‒ Size was approximately EUR 100 million

‒ Total amount of Metsä Board’s shares increases to 355.512.746 of which‒ A-shares: 35.895.651‒ B-shares: 319.617.095

‒ Final results of the offering will be published on 30 March (estimated timing)

‒ Trading with the new shares commences on 1 April (estimated timing)

13


New measures finalize Metsä Board’s successful transformation

ROCE %

Marketgrowth

‒ 2005: New strategy‒ 2007-2013: Numerous

divestments, closures and restructuring measures

‒ 2015: Completion of the transformation

The leading fresh forest fibre paperboard

company in EuropeEuropean

paper

Fresh Forest Fibre Paperboard

14


Investment in Husum the most cost-competitive alternative to increase capacity

‒ Metsä Board’s biggest mill integrate

‒ Skilled personnel

‒ Large two line pulp mill

‒ State of art coating technology

‒ Efficient power plant

‒ Own harbour

‒ Good existing other infrastructure

‒ Proximity to large forest areas

15


Husum mill will have two production lines and it becomes a leading fresh forest fibre paperboard unit in Europe

‒ New folding boxboard machine, BM1‒ EUR 170 million investment ‒ Production capacity approximately 400,000 t/a ‒ Start up in early 2016‒ Full production capacity reached by end 2016

‒ Current PM8 to be converted to a linerboard machine, BM2‒ Only minor investment needed‒ Production capacity approximately 300,000 t/a ‒ Start up in spring 2015‒ Husum’s linerboard sales run rate over 100,000 t/a at the moment

‒ Current state of art off-line coating machine serving both paperboard machines

‒ All in all, Husum’s fresh forest fibre paperboard capacity will be approximately 700,000 t/a

16


New paperboard volumes expected to be sold mainly outside Europe

‒ Husum’s new folding boxboard volumes planned to be sold mainly to North America and to the food service segment globally

‒ New linerboard volumes expected to be sold both in Europe and North America, increasingly also to new applications e.g. in food packaging

‒ If the demand supply situation so requires in the coming years, Metsä Board has possibilities to adjust its production accordingly

17


Gohrsmühle mill’s losses targeted to be eliminated

‒ Main products cast coated and label papers

‒ Approximately 480 employees

‒ Annual sales about EUR 90 million and operating loss excl. non-recurring items EUR 20 million in 2014

‒ Main target is to divest the mill during the first half of 2015

‒ If the divestment will not materialize in the set time frame, other measures to eliminate the losses will be introduced, which may even include a partial or complete shutdown of the mill

18


Significant financial improvements thanks to finalization of the transformation

‒ Expected positive impact on annual operating result excluding non-recurring items approximately EUR 50 million compared to 2014

‒ Mostly in 2017 and fully in 2018‒ No material change in Metsä Board’s total annual sales due to measures in Husum

‒ Additionally, elimination of Gohrsmühle mill’s losses would lead to annual sales reduction of approximately EUR 90 million and annual operating result (excl. non-recurring items) improvement of approximately EUR 20 million

19


Metsä Board strengthens its market leadership

20

Note: Share of production capacity currently shown in parenthesisSources: Metsä Board, Pöyry Management Consulting Oy

Largest White Fresh Forest Fibre Linerboard Producers in Europe

Largest Folding Boxboard Producers in Europe

400

4002000 800 1,2001,000 1,400600

Capacity: 1000 tons/a

1335 / 43%

+43%

Current Post-measures

Holmen (7%)

IP (8%)

Mayr-Melnhof (13%)

Stora Enso (25%)

935(35%)

120

2001000 700300 600500400

Smurfit Kappa

(15%)

(13%)

Mondi

580(29%)

(25%)

(12%)

Current

+21%

700 / 33%

Post-measures

SCA

BillerudKorsnäs

Capacity: 1000 tons/a


Content




4. Summary


‒ Profitability improved from previous year

‒ Cash flow was strong and net debt reduced clearly to EUR 427 million

‒ Paperboard delivery volume increased significantly and price levels were stable

‒ Metsä Board’s folding boxboard was successfully launched to North America and to the global food service segment

‒ Production volumes and efficiencies improved

‒ Final steps in transformation to a paperboard company were introduced

‒ Mika Joukio started as the new CEO in October and the organization was renewed as of 1 Jan 2015

Highlights in 2014

22


0,170,27

0

0,1

0,2

0,3

0,4

2013 2014

Metsä Board’s profitability improved in 2014

5878

0

25

50

75

100

2013 2014

6,49,1

0

3

6

9

12

2013 2014

2019 2008

0

1000

2000

3000

2013 2014

104137

0

40

80

120

160

2013 2014

SalesOperating result, excl. non-rec. items

Result before taxes, excl. non-rec. items

m€ m€

m€

114 117

0

40

80

120

160

2013 2014

Operating result

m€

Result before taxes

m€

ROCE, excl. non-rec. items

%

Earnings per share, excl. non-rec. items

€ per share

49

100

0

25

50

75

100

125

2013 2014

23


Balance sheet strenghtened in 2014

24

Net debt, EUR million

2,7

4,4

3,4

2,9

1,8

0

1

2

3

4

5

2010 2011 2012 2013 2014

Net debt / EBITDA, excluding non recurring items

427

597

625

783827

0

200

400

600

800

1000

2010 2011 2012 2013 2014


‒ USD and SEK vs. Euro have moved to favourable direction from Metsä Board’s viewpoint in 2H 2014

and in early 2015‒ Hedging of the main foreign currency flows is 5-7 months

‒ Positive result impact from exchange rate changes in 2014

was about EUR 15 million compared to 2013‒ Positive impact in 2015 expected to be bigger

‒ Annual unhedged EBIT sensitivity of 10 % change vs. euro‒ EUR 45 million in USD

‒ EUR 20 million in GBP

‒ Reversed EUR 30 million SEK

Exchange rate changes favourable for Metsä Board

25


‒ Metsä Board’s operating result excluding non-recurring items is expected to

improve slightly in 1Q 2015 compared to 4Q 2014

Near- term profitability outlook

Operating result excluding non-recurring itemsEUR million

3019

29 28

6

2520

24 2636 35 37

0

10

20

30

40

50

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14

Result before taxes excluding non-recurring itemsEUR million

-9

1710 9

1927 32

918

42021

-10

0

10

20

30

40

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14


Content




4. Summary


Key priorities in 2015

‒ Grow profitably the paperboard businesses globally

‒ Successful implementation of the investment project in Husum

‒ Secure good price levels

‒ Further improve excellent product quality and supply chain

‒ Develop new products for existing and new end uses

‒ Elimination of the losses from Gohrsmühle mill

‒ Continue productivity improvements and cost savings

‒ Further competence development, especially related to Husum’s new products

6,4

4,8

3,4

7,6

-5,6

9,1

-6

-3

0

3

6

9

12

15

2009 2010 2011 2012 2013 2014

Target min. 12 % from 2017 onwards

ROCE, excl. non-recurring items%

28


Make the most of Metsä Board

Thank You!

29

ceo's review at agm 2015 eng (id 170704) governance… · +21% 700 / 33% post-measures sca...

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