Results q1 2016 press slides
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Stora Enso reported financial results for the first quarter of 2016. Sales were slightly down at 2.445 billion euros due to structurally declining paper business, but increased by 2.4% excluding paper and divested mills. Operational EBIT increased 12.7% to 248 million euros and the margin reached a record high of 10.1%. Cash flow from operations improved to 289 million euros. The company continued strengthening its balance sheet through high investments while reducing net debt. Stora Enso also provided guidance for the second quarter of 2016, estimating sales to be slightly higher than Q1 levels and operational EBIT to be in line with or somewhat lower due to scheduled annual maintenance shutdowns.
Results q1 2016 press slides
- 1. Financial results for Q1 2016 CEO Karl-Henrik Sundström CFO Seppo Parvi 28 April 2016
- 2. • Sales at 2 445 MEUR slightly down, but increased excluding the structurally declining paper business and divested Barcelona Mill by 2.4% • Operational EBIT 248 MEUR increased by 12.7% and margin was record high at 10.1% • Cash flow from operations 289 (171) MEUR − Cash flow after investing activities 96 (29) MEUR • Continued strengthening of the balance sheet despite high investments − Net debt to operational EBITDA 2.3 (2.6) Stora Enso Q1 2016 Results 2 Another quarter of progress Q1 2016 year-on-year 28/4/2016
- 3. Operational EBIT increased by 28 MEUR in Q1 y-o-y 3 Stora Enso Q1 2016 Results Operational EBIT CAGR 21% Operational EBIT margin 28/4/2016
- 4. Continuous improvements Operational ROCE 11.3%, excluding Beihai Mill project 13.7% 4 ROCE target of 13% *Excluding Montes del Plata until end of 2014 and excluding Beihai Mill project in Guangxi 28/4/2016 Stora Enso Q1 2016 Results
- 5. Transformation proceeding Division Investment Investment value To be completed Consumer Board Beihai consumer board mill 800 MEUR May 2016 Wood Products Varkaus wooden building elements 43 MEUR June 2016 Biomaterials Xylose demonstration and market development plant 32 MEUR Early 2017 5 Stora Enso Q1 2016 Results 28/4/2016
- 6. • Full production expected in 18–24 months from the start up • New PE Coating line investment to meet increasing demand for food service board announced in March • BCTMP (mechanical) mill operational in Q4 2016 − 220 000 tonnes annual capacity • Deliveries of chemical pulp already started − 130 000 tonnes hardwood from Veracel − 90 000 tonnes softwood from the market Stora Enso Q1 2016 Results 6 Transformation – Beihai Mill expected to start up in May, ahead of the plan 28/4/2016
- 7. • Varkaus kraftliner ramping up and full production expected in early 2017 • Wooden building elements investment in Varkaus proceeding according to plan and production to start in June • The official inauguration of the next generation Varkaus Mill will take place on 29 April 2016 Stora Enso Q1 2016 Results 7 Transformation – to increase growth businesses of Packaging Solutions and Wood Products in the portfolio 28/4/2016
- 8. Transformation journey continues Growth businesses 65% of sales and 79% of operational EBIT In 2006, all pulp used internally Q1/2016 Operational EBIT 30% 2006 Sales 65% Q1/2016 Sales 8 2006 Operational EBIT 38% 79% Paper businesses, incl. Merchants Biomaterials Wood products business Packaging business Other and eliminations Paper Biomaterials Wood products business Consumer Board Packaging Solutions Other and eliminations 28/4/2016 Stora Enso Q1 2016 Results 2006 Q1/2016
- 9. Profitability and balance sheet continues to improve Summary financials Q1 2016 9 EUR million Q1/16 Q1/15 Change% Change % Q1/16 / Q1/15 Q4/15 Q1/16 / Q4/15 Sales 2 445 2 491 -1.8% 2 487 -1.7% Operational EBITDA 356 340 4.7% 341 4.4% Operational EBITDA margin 14.6% 13.6% 13.7% Operational EBIT 248 220 12.7% 242 2.5% Operational EBIT margin 10.1% 8.8% 9.7% Profit before tax excl. NRI 183 154 18.8% 610 -70.0% EPS excl. NRI, EUR 0.19 0.15 0.78 EPS (basic), EUR 0.15 0.16 0.53 Operational ROCE 11.3% 10.1% 11.3% Operational ROCE excl. Beihai project 13.7% 11.3% 13.3% Cash Flow from Operations 289 171 69.0% 412 -29.9% Net debt/last 12 months’ operational EBITDA 2.3 2.6 2.4 Stora Enso Q1 2016 Results 28/4/2016
- 10. Divisional performance Q1 y-o-y Consumer Board: Operational ROOC excl. Beihai 34% Q1 y-o-y • Sales +4.6% excluding the divested Barcelona Mill • Operational EBIT decreased to 73 MEUR (Beihai -11 MEUR) • Operational ROOC 14.3% (17.3%), excl. Beihai 34.2% (30.0%) • Beihai Mill operational in May Packaging Solutions: Sales +11% Q1 y-o-y • Sales +11%: Varkaus ramp up, higher sales at Ostrołęka • Operational EBIT decreased by 19 MEUR due to Varkaus start-up and Inpac China • Varkaus kraftliner ramping-up: full production expected early 2017 • Maintenance shutdown at Ostrołęka containerboard mill during Q2 28/4/2016 Stora Enso Q1 2016 Results 10
- 11. Divisional performance Q1 y-o-y Biomaterials: Operational EBIT +15.1% Q1 y-o-y • Sales decreased slightly: − Lower softwood pulp sales prices in local currencies partly offset by higher volumes mainly from Montes del Plata • Operational EBIT up by 11 MEUR − Lower wood costs and higher sales volumes from Montes del Plata • Maintenance shutdown at Montes del Plata pulp mill during Q2 Wood Products: Operational EBIT +6.7% Q1 y-o-y • Sales -2.6% − Lower prices in local currencies and lower sales volumes in traditional sawn goods • Operational EBIT slightly up, mainly due to higher volumes in building systems and components • Wooden building elements investment in Varkaus proceeding according to plan: raw material supply for production started, production to start in June 28/4/2016 Stora Enso Q1 2016 Results 11
- 12. Divisional performance Q1 y-o-y Paper: Operational EBIT improved by 33 MEUR to 51 MEUR Q1 y-o-y • Sales -6.6%: Uetersen disposal, Varkaus conversion − Sales excluding structural impacts remained stable • Operational EBITDA increased 36% due to lower costs and good operational performance • Cash flow stabilized after a strong improvement earlier • Maintenance shutdown at Langerbrugge paper mill during Q2 28/4/2016 Stora Enso Q1 2016 Results 12
- 13. Forecast for capex in 2016 MEUR Forecast 2016 Capital expenditure 680–720 Depreciation 510–530 13 The capital expenditure forecast includes approximately 100 MEUR for the group’s biological assets and approximately 160 MEUR for the Beihai Mill in China 28/4/2016 Stora Enso Q1 2016 Results
- 14. Divisional targets Q1 15 Q1 16 Status Consumer Board Operational ROOC > 20% 17.3% 14.3% Consumer Board excl. Beihai 30.0% 34.2% Packaging Solutions Operational ROOC > 20% 12.9% 3.2% Biomaterials Operational ROOC > 15% 11.4% 13.1% Wood Products Operational ROOC > 18% 11.7% 12.3% Paper Cash flow after investing activities to sales > 7% 5.9% 5.3% Strategic targets ambitious, but reachable Group targets Q1 15 Q1 16 Status Dividend To distribute 50% of net income over the cycle Growth* To grow faster than the relevant market 0.3% (YoY) 2.4% (YoY) Net debt to operational EBITDA <3.0x 2.6 2.3 Fixed costs to sales <20% 23.9% 24.4% Debt to equity <80% 65% 58% Operational ROCE >13% 10.1% 11.3% Operational ROCE excl. Beihai 11.3% 13.7% * Excluding Paper and Barcelona Mill 14 28/4/2016 Stora Enso Q1 2016 Results
- 15. • Sales are estimated to be slightly higher than the amount of EUR 2 445 million recorded in Q1/2016 • Operational EBIT is expected to be in line with or somewhat lower than the EUR 248 million recorded in Q1/2016 • These estimates include the negative impact of the scheduled annual maintenance shutdowns at Montes del Plata pulp mill, Ostrołęka containerboard mill and Langerbrugge paper mill − Maintenance impact is expected to be approximately 25 MEUR higher than in Q1/2016 15 Guidance for Q2 2016 Compared to Q1 2016 28/4/2016 Stora Enso Q1 2016 Results
- 16. Summary • Sales excluding paper and divested Barcelona mill continued to increase • Operational EBIT grew by 12.7% • Record Operational EBIT margin of 10.1% • Cash flow from operations 289 (171) MEUR • Balance sheet strengthened − Net debt to EBITDA 2.3 (2.6) • Operational ROCE 11.3 (10.1) % − Excluding Beihai Mill project 13.7 (11.3) % • Continued progress in transforming into renewable materials growth company 28/4/2016 Stora Enso Q1 2016 Results 16
- 17. Thank you!