metsä board january-march 2017 results presentation
TRANSCRIPT
Metsä BoardInterim report 1−3/2017Presentation material
• Good demand for high-quality paperboards continued
• Stable or rising market price levels• Metsä Board’s paperboard and market pulp
deliveries grew from the previous quarter• All Finnish mills performed well, good
momentum in linerboard business• No major maintenance shutdowns• Husum still had a negative impact on profitability
Q1 2017 Interim report2
Q1 2017 in summary
Total paperboard deliveries grewAll-time high monthly level in March 2017
210 203 204 213 224 224 227 250 266 245 265
120 111 130 141 137 131 142148 148
143163
0
60
120
180
240
300
360
420
Q32014
Q42014
Q12015
Q22015
Q32015
Q42015
Q12016
Q22016
Q32016
Q42016
Q12017
Folding boxboard White fresh fibre linerboard
1,00
0 to
nnes
Growth in totalpaperboard deliveries:
+10% Q1/17 vs. Q4/16
+16% Q1/17 vs. Q1/16
+12% FY16 vs. FY15
3 Q1 2017 Interim reportFY 2015:
1.4 mill. tonnesFY 2016:
1.6 mill. tonnes
Sales increased and profitability improved
Sales, EUR million
526 522 498 462 436 423 440 422 4450
100
200
300
400
500
600
Q115
Q215
Q315
Q415
Q116
Q216
Q316
Q416
Q117
43 47 55 35 35 36 34 33 45
8,2 %9,0 %
11,0 %
7,6 % 8,0 %8,5 %
7,7 % 7,8 %
10,1 %
0%
2%
4%
6%
8%
10%
12%
0
10
20
30
40
50
60
Q115
Q215
Q315
Q415
Q116
Q216
Q316
Q416
Q117
Q1 2017 Interim report4
Comparable operating result, EUR million and %
FY 2015:EUR 2,008 million
FY 2016:EUR 1,720 million
FY 2015:EUR 180 million
FY 2016:EUR 137 million
EU
R m
illio
n
EU
R m
illio
n
3345
01020304050
Q4 2016 Q1 2017
Operating result, EUR millionQ4 2016 vs. Q1 2017
Q1 2017 Interim report5
Impact on Q1 2017 operating resultvs. Q4 2016 and Q1 2016
3545
01020304050
Q1 2016 Q1 2017
Operating result, EUR millionQ1 2016 vs. Q1 2017
+ Growing delivery volumes in paperboardand market pulp, no major maintenanceshutdowns, increased price levels in coatedWTKL in the US and in market pulp
- Geographic sales mix in Husum’s FBB and product mix in Husum’s white linerboards, increased latex price
+ Positive development at Finnish mills, discontinued paper operations, positive impactfrom FX rates after hedges
- Increased latex price
EBIT-%8.0
EBIT-%10.2EBIT-%
7.8
EBIT-%10.2
WTKL = white-top kraftlinerFBB = folding boxboard
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17
Comparable ROCE, %
Q1 2017 Interim report6
Higher operating result improved ROCE-%
Target >12% from 2017 onwards
• Investments in January–March were EUR 19 million (Q1/16: EUR 54 million)
• Estimated capex in 2017 is EUR 65–70 million
Clearly lower capex in 2017
0
30
60
90
120
150
180
2010 2011 2012 2013 2014 2015 2016 2017E
Maintenance capex Growth capex Depreciation
EUR million
7 Q1 2017 Interim report
Main growth in capexes in 2015−2016: Husum investment programme, extrusion coating line and equity investment in Metsä Fibre’s bioproduct mill
Cash flows clearly positiveQ1 2017 cash flow from operations impacted by changes in working capital, advancepayments of employment pension contributions, and dividend from Metsä Fibre
33 5693
66
-22 -22
67 55 269 8 45 8
-76-50
49 17 7
250214
256 247
193
11589 78
126
188
119 118
70
-15
-73
-69
-60
23
-100
-50
0
50
100
150
200
250
300
Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17
Cash flow from operations, quarterly Free cash flow, quarterlyCash flow from operations, rolling 12 months Free cash flow, rolling 12 months
EUR
milli
on
8 Q1 2017 Interim report
Balance sheet remained stable
333 464 412 541 488 464 458
1,2
2.0
1,5
2,1 2,1 2.0 1,9
0
1
2
3
0
200
400
600
2015 2016 3/16 6/16 9/16 12/16 3/17
Interest-bearing net debt, EUR millionInterest-bearing net debt / EBITDA (rolling 12-month)
Interest-bearing net debt / comparable EBITDA
333 464 412 541 488 464 458
32%
44% 42%
54%49%
44% 44%
0
0,1
0,2
0,3
0,4
0,5
0,6
0
200
400
600
2015 2016 3/16 6/16 9/16 12/16 3/17
Interest-bearing net debt, EUR millionNet gearing, %
Net gearing, %
9 Q1 2017 Interim report
Financial target in net gearing is a maximum of 70%
• Rising capacity utilisation rate in the FBB productionline (now 70%) will decrease production costs per tonne produced
• FBB production line fully utilised by the end of 2018• Total paperboard deliveries to Americas will increase• PE-coated paperboards generate sales in a new
customer segment• The volumes of coated linerboards will grow
Q1 2017 Interim report10
High potential to improveprofitability in Husum
Q1 2017 Interim report11
New state-of-the-art extrusion coating line started up at Husum
• EUR 38 million investment, capacity of 100,000 t/a• PE-coated*) paperboard is an alternative to plastics• Targeted mostly for food packaging and food service
applications• In 2016, Metsä Board introduced PE-coated
paperboards• Supports growth in a new customer segment• Metsä Board continues development work on other
innovative barrier solutions including the use of bio-based materials
*) PE=polyethylene, the most common barrier material used against moisture and grease
Q1 2017 Interim report12
Near-term outlook
• Good demand for fresh fibre paperboards, pulp market expected to remain healthy
• Price levels in FBB are expected to be stable, several linerboard producers have announced price increases
• Metsä Board’s paperboard delivery volumes are expected to increase
• Several maintenance shutdowns at the Finnish mills in Q2, rising latex price increasing production costs
Metsä Board's comparable operating result for the second quarter of 2017 is expected to remain roughly on the same level as in the first quarter of 2017.
Q1 2017 Interim report13
Profit guidance
• Good overall performance in the firstquarter of 2017
• High potential to improve profitability in Husum
• Extrusion coating line in Husum offers improved availability and competitive products, especially in the food and food service segments
• In 2017, focus is on sales of new paperboard capacity
Q1 2017 Interim report14
Summary
Metsä Board’s2017 Capital Markets Day
1 June 2017 in Helsinki
More info: www.metsaboard.com/investors
Metsä Board’s2017 Capital Markets Day
1 June 2017 in Helsinki
More info: www.metsaboard.com/investors
Metsä Board’s2017 Capital Markets Day
1 June 2017 in Helsinki
More info: www.metsaboard.com/investors
Appendix
Q1 2017 Interim report17
Key financialsQ1/17 Q4/16
ChangeQ1/17
vs. Q4/16Q1/16
ChangeQ1/17
vs. Q1/162016
Sales EUR million 445 422 +5% 436 +2% 1,720
EBITDA, comparable EUR million 69 53 +30% 58 +19% 231
Operating result, comparable EUR million 45 33 +36% 35 +29% 138
% of sales % 10.2 7.8 8.0 8.0
Result before taxes, comparable EUR million 40 23 +74% 30 +33% 107
Earnings per share EUR 0,10 0,05 +100% 0.07 +43% 0.26
ROCE, comparable % 10.6 7.7 8.3 8.1
Capex EUR million 19 43 -56% 54 -65% 162
Cash flow from operations EUR million 26 55 -53% -22 77
IB Net debt, at the end of period EUR million 458 464 -1% 412 +11% 464
Comparable EBITDA
52 62 61 70 73 8160 58 61 59 53
69
11%12% 12%
13%14%
16%
13% 13%14% 14%
13%
16%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
0
20
40
60
80
100
Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17
EBITDA, EUR million EBITDA, %
18 Q1 2017 Interim report
• Impact of FX rate changes after hedges in Q1 2017: flat in Q1/17 vs. Q4/16, EUR 5 million positive in Q1 2017 vs. Q1 2016
• Hedging policy from 1 January 2017 onwards– 100% of balance sheet position
– 50% of annual net FX flows
FX exposure and sensitivities
58 %34 %
6 %2 %USD
SEK
GBP
Othercurrencies
Annual transaction exposureEUR 1.2 billion
FX sensitivities before hedges
10% strengthening of foreign currency vs. EUR will have an impact on Metsä Board’s EBIT of
Currency Next 12 months
USD, $ EUR +70 million
Swedish krona EUR -40 million
GBP, £ EUR +7 million
19 Q1 2017 Interim report
Debt structure and liquidity31 March 2017
223
149128
23
137
Bonds
Loans fromfinancial institutions
Pension loans
Finance leases andother loans
Other short-termloans
199
100
102
Cash and cashequivalentsRevolving creditfacilityUnraised pensionloans
Interest-bearing debt, total EUR 660 million
Available liquidity, total EUR 401 million
Average maturity of long-term loans on 31 March 2017 was 2.2 years. 20 Q1 2017 Interim report
Long-term debt and financial costs
Net financial costs (EUR million) and average interest rate (%)
Maturity schedule in long-term IB debtEUR million
105
35
257
174
1 2
100 102
0
50
100
150
200
250
300
2017 2018 2019 2020 2021 >2022
Long-term interest bearing liabilities, EUR million
Committed undrawn credit facilities, EUR million
21 Q1 2017 Interim report
56 39 32 31 5
4,6
4,2
3,8
3,3 3,3
3,03,23,43,63,84,04,24,44,64,8
0
20
40
60
2013 2014 2015 2016 Q1/2017
Net financial costs, EUR million
Average interest rate at the end of period, %
500
600
700
800
900
1000
1100
2010 2011 2012 2013 2014 2015 2016 2017
Folding boxboard White‐top kraftliner
Market price development in folding boxboardand white-top kraftliner in Europe
Sources: Pöyry Management Consulting & FOEX Indexes Ltd
EUR/ tn
22 Q1 2017 Interim report
Source: Foex Indexes Ltd
Softwood, USD
Softwood, EUR
Hardwood, EUR
Hardwood, USD
USDEUR
Pulp price development (PIX)
23
350400450
500550600650
700750800850900
95010001050
'10 '11 '12 '13 '14 '15 '16 '17350400450
500550600650
700750800850900
95010001050
Q1 2017 Interim report
• Metsä Board’s dividend payout target is at least 1/3 of EPS
• Dividend for 2016:– EUR 0.19 per share– Totalling EUR 68 million– Corresponds to 76% of EPS
0
0,1
0,2
0,3
0,4
0,5
2012 2013 2014 2015 2016
Earnings per share Dividend per share
Q1 2017 Interim report24
Steadily growing dividends
EUR
Market cap and foreign owners31 March 2017
Ownership distribution31 March 2017
Market cap and ownership distribution
0
4
8
12
16
20
24
0
500
1 000
1 500
2 000
2 500
2012 2013 2014 2015 2016 3/2017
Market cap, EUR million
Share of foreign owners, %
42 %
25 %
18 %
15 % MetsäliittoCooperative
Domestic institutionalinvestors
Domestic privateinvestors
Foreign owners
EUR million
*) Metsäliitto Cooperative has 61% of voting rights
*)
25
%
Q1 2017 Interim report