july 21, 2020 · 7/21/2020 · nbsk pix price europe (lhs) global softwood kraft deliveries (rhs)...
TRANSCRIPT
July 21, 2020
Sales declined 10% vs Q2 2019
• Price/mix -9%, volume -4%, currency 3%
EBITDA down 25% vs Q2 2019
- Lower selling prices
- Lower publication paper volumes
+ Lower raw material costs
Higher forest growth enables increased annual harvesting
• Gradual increase from 4.3m m3sub / year 2020 to 5.4m m3sub /year 2025
• Increasing cash flow, full effect SEK 300-400m per year from 2025
Coronavirus pandemic
• Steep decline in demand for publication paper
• Significant uncertainty going forward
3
1,034
1,5491,494
1,560
1,340 1,364
1,055 1,030 1,001
22%
33%30% 31%
26%27%
24%
21% 21%
Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Q2 '20
EBITDA development (SEKm)
Note: 1) ROCE for the industrial segments; Wood, Pulp and Paper. ROCE calculated as LTM.
EBITDA margin
21%
Industrial ROCE 1)
6%
Net debt/EBITDA
2.1x
EBITDA (SEKm)
1,001 -25%
4
5
1,746
1,494
Q2 2019 Q2 2020
414
499
Q2 2019 Q2 2020
23.7%
33.4%
Q2 2019 Q2 2020
-14% 21%
Net sales (SEKm) EBITDA (SEKm) EBITDA margin
Stable wood supply to industries
Sales down 14%
- Lower volumes
- Lower prices
EBITDA up 21%
+ Higher forest growth increasing earnings from revaluation
of biological assets
Price development – Pulpwood and Sawlogs
90
100
110
120
130
140
Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Q2 '20
Pulpwood Sawlogs
6
1,727 1,770
Q2 2019 Q2 2020
Net sales (SEKm) EBITDA (SEKm) EBITDA margin
188
143
Q2 2019 Q2 2020
10.9%
8.1%
Q2 2019 Q2 2020
Price development – Solid Wood Products
2% High demand, slightly higher prices
Sales up 2%
+ Higher volumes
- Lower prices
EBITDA down 24%
- Lower prices
+ Lower raw material costs
-24%
80
90
100
110
120
Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Q2 '20
Price index SEK
7
1,2141,091
Q2 2019 Q2 2020
344
182
Q2 2019 Q2 2020
28.4%
16.7%
Q2 2019 Q2 2020
Net sales (SEKm) EBITDA (SEKm) EBITDA margin
Price development – NBSK Pulp
Sales down 10%- Lower prices
+ Positive currency effects
EBITDA down 47%- Lower prices
+ Positive currency effects
Unplanned production stop in July
- Approx. 50k tonnes volume loss
-10% -47%
70
80
90
100
110
120
130
Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Q2 '20
Price index SEK
8
2,375
1,876
Q2 2019 Q2 2020
489
229
Q2 2019 Q2 2020
20.6%
12.2%
Q2 2019 Q2 2020
Price development –
Kraftliner
Price development –
Publication paper (LWC)
-21% -53%
Net sales (SEKm) EBITDA (SEKm) EBITDA margin
Publication paper demand significantly impacted by
the corona pandemic, low capacity utilization
Sales down 21%
- Lower publication paper volumes
- Lower kraftliner and publication paper prices
EBITDA down 53%
- Lower publication paper volumes
- Lower kraftliner and publication paper prices
+ Lower raw material costs and positive currency effects
70
90
110
130
Q2'18
Q2'19
Q2'20
Price index SEK
70
90
110
130
Q2'18
Q2'19
Q2'20
9
New forest survey conducted in 2019
Annual growth 1m m3fo higher than expected
• Gross growth of 10.5 (9.5) m m3fo per year
• Net growth of 4.0 (3.0) m m3fo per year
New harvesting plan confirmed based on the new survey
• Gradual increase from 4.3m m3sub / year 2020 to 5.4m m3sub / year 2025
• Ramp-up expected to be linear over 5 years
• Increasing long-term cash flow, full effect SEK 300-400m per year from 2025
Gross forest growth Sweden
(m m3fo / year)
+1
Harvesting plan
(m m3sub / year)
+1.1
4.3
5.4
Harvestingplan 2020
Harvestingplan 2025
9.5
10.5
Forest survey2012-2013
Forest survey2019
Limited effects on operations
• Health and safety highest priority
• No disruptions in production or distribution
Shifting demand patterns
• 30-40 percent lower demand for publication paper
• Temporary market related stoppages at Ortviken
Significant uncertainty remains
10
12
Quarter
SEKm Q2 2020 Q2 2019 Change
Net sales 4,687 5,228 -10%
EBITDA 1,001 1,340 -25%
EBITDA margin 21.3% 25.6% -4.3 p.p.
EBIT 600 943 -36%
EBIT margin 12.8% 18.0% -5.2 p.p.
Financial items -31 -45
Profit before tax 569 898 -37%
Tax -110 -194
Profit for the period 459 704 -35%
Earnings per share, SEK 0.65 1.00
13
Paper
Net sales (SEKm)
PulpForest Wood
292
427
331414 388
607
452499
20%
28%
20%24%
21%
36%
25%
33%
Q3'18
Q4'18
Q1'19
Q2'19
Q3'19
Q4'19
Q1'20
Q2'20
1,4
55
1,5
40
1,6
51
1,7
46
1,8
65
1,6
94
1,8
33
1,4
94
Q3'18
Q4'18
Q1'19
Q2'19
Q3'19
Q4'19
Q1'20
Q2'20
2,4
13
2,4
21
2,3
66
2,3
75
2,3
80
2,1
08
2,2
42
1,8
76
Q3'18
Q4'18
Q1'19
Q2'19
Q3'19
Q4'19
Q1'20
Q2'20
1,7
12
1,5
58
1,6
78
1,7
27
1,5
45
1,3
76
1,4
36
1,7
70
Q3'18
Q4'18
Q1'19
Q2'19
Q3'19
Q4'19
Q1'20
Q2'20
743 1
,049
1,1
34
1,2
14
1,1
29
900 1
,188
1,0
91
Q3'18
Q4'18
Q1'19
Q2'19
Q3'19
Q4'19
Q1'20
Q2'20
276226
297
188 180125 95
14316%
15%18%
11% 12%9% 7% 8%
Q3'18
Q4'18
Q1'19
Q2'19
Q3'19
Q4'19
Q1'20
Q2'20
273
370 351 344268
20
186 18237%
35%31% 28%
24% 2%
16%17%
Q3'18
Q4'18
Q1'19
Q2'19
Q3'19
Q4'19
Q1'20
Q2'20
728
536
616
489
577
382 379
22930%
22%26%
21%24%
18% 17%12%
Q3'18
Q4'18
Q1'19
Q2'19
Q3'19
Q4'19
Q1'20
Q2'20
EBITDA (SEKm) and EBITDA margin
14
SEK 5,228m -9%
-4%3% 0%
SEK 4,687m
Net salesQ2 2019
Price/Mix Volume Currency Acquisitions/divestments
Net salesQ2 2020
- 10%
Negative for all segments
Lower Publication Papervolumes
15
SEK 1,340m -550
-67
+223 -35 +67 +23SEK
1,001m
EBITDAQ2 2019
Price/Mix Volume Raw material Energy Currency Other EBITDAQ2 2020
- 25%
Lower prices for all segments
EBITDA margin
25.6%EBITDA margin
21.3%
Lower costs for wood raw materials
Lower Publication Paper volumes
16
Quarter
SEKm Q2 2020 Q2 2019
EBITDA 1,001 1,340
Revaluation of biological assets and other non cash flow items -233 -56
Operating cash surplus 768 1,284
Change in working capital -151 -298
Current capital expenditures -338 -348
Other operating cash flow -6 -19
Operating cash flow 273 619
Strategic capital expenditures -655 -156
Jan-jun
2020 2019
2,031 2,900
-573 -302
1,458 2,598
-297 -651
-513 -516
-34 -186
614 1,245
-844 -299
17
SEKm9,150
9,735
8,1698,597
9,087 9,396
Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020
Unutilized credit facilities of SEK
7.7bn as of June 30, 2020
Strategic investments of
• FY 2019: -1.3bn
• Jan-Jun 2020: -0.8bn
-0.3bn
18
SEKm Jun 30, 2020 Dec 31, 2019
Forest assets 70,867 69,682
Working capital 3,969 3,748
Working capital/Net sales 1) 21% 20%
Deferred tax relating to forest assets -14,401 -13,977
Other capital employed 18,346 17,654
Total capital employed 78,781 77,107
Net debt 9,396 8,597
Net debt/EBITDA 2) 2.1x 1.6x
Equity 69,385 68,510
Net debt/Equity 14% 13%
Market price forest assets (SEK/m3fo) 281 3) 276
Note: 1) Average working capital for 13 months as a percentage of 12-month rolling net sales.
2) 12-months EBITDA, up to end of each period.
3) Applied to expected volume at 31 Dec 2020
Sales declined 10% vs Q2 2019
• Price/mix -9%, volume -4%, currency 3%
EBITDA down 25% vs Q2 2019
- Lower selling prices
- Lower publication paper volumes
+ Lower raw material costs
Higher forest growth enables increased annual harvesting
• Gradual increase from 4.3m m3sub / year 2020 to 5.4m m3sub /year 2025
• Increasing cash flow, full effect SEK 300-400m per year from 2025
Coronavirus pandemic
• Steep decline in demand for publication paper
• Significant uncertainty going forward
20
22.4
22.8
23.2
23.6
24.0
24.4
24.8
25.2
0
200
400
600
800
1,000
1,200
1,400
NBSK PIX Price Europe (LHS)
Global Softwood Kraft deliveries (RHS)
23
Softwood pulp inventories (days of supply)
Softwood pulp price (USD/t) vs deliveries (Mt) Hardwood pulp inventories (days of supply)
Source: PIX, PPPC.
Average
Average
20
25
30
35
40
45
20
30
40
50
60
70
80
20
25
30
35
40
5.1
5.2
5.3
5.4
5.5
500
550
600
650
700
750
800
850
Unbleached kraftliner price Euwid (LHS)
Kraftliner deliveries Europe (RHS)
24
Kraftliner inventories (days of supply)
Price (EUR/t) vs Kraftliner deliveries (Mt) Eurpean Box demand (index)
Source: Euwid, Numera.
Average
9092949698
100102104106108
25
Net sales (SEKm)
EBITDA (SEKm) and EBITDA margin 1)
603478 531
670904
789
543
12%9% 10% 11%
14% 12%9%
2014 2015 2016 2017 2018 2019 LTM
1,232 1,213 1,2381,363 1,394
1,7401,946
24% 24% 25%27% 26% 25%
28%
2014 2015 2016 2017 2018 2019 LTM
768970
530 482709
983
656
31%35%
21%19%
25%23%
15%
2014 2015 2016 2017 2018 2019 LTM
5,187 5,108 4,978 5,070 5,455
6,956 6,886
2014 2015 2016 2017 2018 2019 LTM
5,114 5,315 5,4415,994
6,618 6,325 6,127
2014 2015 2016 2017 2018 2019 LTM
2,518 2,760 2,492 2,542 2,866
4,377 4,308
2014 2015 2016 2017 2018 2019 LTM
8,226 8,5487,744
8,434
9,643 9,2298,606
2014 2015 2016 2017 2018 2019 LTM
PaperPulpForest Wood
1,243 1,295 1,2451,479
2,468
2,064
1,567
15% 15% 16%18%
26%22%
18%
2014 2015 2016 2017 2018 2019 LTM
Note: 2014 and 2015 EBITDA refer to adjusted figures. 2016 and forward refer to unadjusted
figures. For details please see the quarterly report.
This presentation may contain forward-looking statements. Such statements are based on our current expectations and
are subject to certain risks and uncertainties that could negatively affect our business. Please read SCA’s most recent
annual report for a better understanding of these risks and uncertainties.