Arctic Paper S.A. Financial results Q3 2019 › Global › IR Documents › Presentations … · This presentation (the ‘Presentation’) was prepared by Arctic Paper S.A. (the

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Arct ic Paper S.A. Financial results Q3 2019

Michał Jarczyński – CEO Arct ic Paper

Göran Eklund – CFO Arct ic Paper

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This presentation (the ‘Presentation’) was prepared by Arctic Paper S.A. (the ‘Company’) for information purposes only for use by investors, banks and the Company’s customers as well as market analysts and under no circumstances may it be treated as a part of an invitation or offer to purchase securit ies, an invitation to make investments or conduct transactions regarding securit ies, an inducement to make purchase offers or a recommendation to conclude any transactions, in particular transactions regarding the Company's securit ies.

The information contained in the Presentation was taken from publicly available sources which the Company believes to be reliable. However, the Company cannot guarantee its reliability or completeness, except for the information on the Company and its Group. The Company shall not be held liable for the consequences of decisions made on the basis of or in reliance on the information contained in this Presentation. The information contained in the Presentation has not been independently verif ied and may be subject to change at any time. The publication of the data contained in the Presentation by the Company does not constitute a breach of the provisions of the law which apply to companies whose shares are listed on the regulated market, in particular the regulated market operated by the Warsaw Stock Exchange in Poland and NASDAQ OMX Stockholm in Sweden. The information contained herein has been published by the Company in its current and periodic reports, or constitutes a supplement thereto which is not required to be published by the Company in order to comply with the Company’s reporting requirements as a listed company.

Under no circumstances should information contained in this Presentation be construed as the explicit or implicit submission of a representation or warranty of any type by the Company or by persons acting on its behalf. Furthermore, neither the Company nor any person acting on its behalf shall be held liable in any respect for any damage which may arise as a result of negligence or for any other cause as a result of the use of this Presentation or any information contained in it, or for damage which may otherwise arise in connection with information constituting a part of this Presentation.

DisclaimerPlease read the information below carefully

The Company is not obliged to publish updates and amendments to the information, data and representations contained in this Presentation as a result of a change of the Company’s strategy or intentions or the appearance of unexpected facts or circumstances which affect such strategy or intentions of the Company, unless such an obligation arises from the provisions of law.

This Presentation contains information on the paper industry. With the exception of information indicated as originating from a specified source, the market information referred to above has been prepared on the basis of data received from third parties who are named in this Presentation and contains estimates, assessments, corrections and opinions based on the Company's experience and knowledge of the sector in which it conducts business. Because the market information referred to above may have been partially prepared with the use of estimates, assessments, corrections and opinions and has not been verif ied by independent entit ies, to a certain extent, this information is of a subjective nature, with the exception of the information which has been indicated as information originating from third parties from a specified source. It is presumed that estimates, assessments, corrections and opinions are based on reasonable grounds and that the market information which has been prepared duly reflects the situation of the industry on the markets on which the Company conducts business. However, there is no certainty that the estimates, assessments, corrections and opinions are the most appropriate basis for drawing conclusions on the market information or that market information taken from other sources may not differ significantly from the market information contained in this Presentation.

The Company would like to point out to the readers of this Presentation that the only reliable source of data on Arctic Paper's f inancial results, forecasts and events, as well as the Company’s indicators, is the current and periodic reports submitted by the Company in compliance with reporting requirements under Polish and Swedish law.

This Presentation should be read together with the Q3 2019 consolidated and standalone report.

Content

1. Q3 2019 in brief

2. Market environment & operations

3. Financial results

4. Summary

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Summary of Q3 2019

Q3 2019 presentation

Q3 2019 presentation5 arcticpaper.com

Financial Summary Q3 2019Arctic Paper Group Q3 2019 vs. Q3 2018

* R o l l i n g 1 2 m o n t h s

Net sales EBIT Operating Cash Flow ROCE*

PLN

794,4(816,5 mn)

50,6 10,8%119,4PLN PLN PLN

(59,0 mn) (67,7 mn)mn mnmn

(10,6%)

Q3 2019 presentation6 arcticpaper.com

Financial Summary YTDSEP 2019Arctic Paper Group YTDSEP 2019 vs. YTDSEP 2018

* R o l l i n g 1 2 m o n t h s

Net sales EBIT Operating Cash Flow ROCE*

PLN

2 377,5(2 389,6 mn)

178,3 10,8%224,9PLN PLN PLN

(150,2 mn) (68,1 mn)mn mnmn

(10,6%)


Market Environment & Operation

Q3 2019 presentation7

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600

700

800

900

UWF 80g Sheets UWF 80g Reels CWF 90g Sheets CWF 90g Reels

Minimumprice

Averageprice

Maximumprice

Minimumprice

Averageprice

Maximumprice

UWF -2,2% -2,2% -2,6% 0,1% -0,2% -0,5%

CWF -6,1% -4,1% -5,1% -4,7% -3,8% -4,0%

09 19 vs. 09 1809 19 vs. 06 19

Paper segment - fine paper prices

SEP 2019 compared to JUN 2019

• UWF segment average price change -2.2%

• CWF segment average price change -4.1%

SEP 2019 compared to SEP 2018

• UWF segment average price change -0.2%

• CWF segment average price change -3.8%

Change in price for graphic paper in EUR – Western Europe

Source: Arctic Paper based on RISI data.

Source: Arctic Paper based on RISI data.

Graphic fine paper prices – German market


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810 809 826890 906

1 0001 092

1 200 1 230 1 2001 104

1 000

851

662 653722

832890

9791 030 1 050 1 050 1 024

973902

751

0

200

400

600

800

1 000

1 200

1 400

300

500

700

900

1 100

1 300

Pulp segment - pulp prices

Average price Q3 2019 compared to Q3 2018

• NBSK (long fibre): 23.5% lower

• BHKP (short fibre): 21.8% lower

Average price Q3 2019 compared to Q2 2019

• NBSK (long fibre): 12.6% lower

• BHKP (short fibre): 11.7% lower

Pulp PIX Indexes Europe

Arctic Paper YTD SEP 2019 Structure of pulp consumption

BHKP72%

NBSK20%

CTMP8%

Consumption311.297

tons


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162156171

158

176

160 164 164169

160 162

145154

147156

100

150

200

167 167 164 166 161 149 154

95% 98% 98% 99%95% 92%

96%

40%

60%

80%

100%

0

150

300

450

Output from paper mills


Average Q3 2019 use of production capacity: 96%

• 4.0% higher than in Q2 2019

Q3 2019 total production volume: 154k tonne

• 4.9% higher than in Q2 2019

Production and use of production capacity for all paper mills

Paper sales volume

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3,33 3,27 3,323,39

3,663,73

3,62

3,0

3,5

4,0

592

564569 575

542

574592

573 564

450

500

550

600

Paper sales revenue per tonne

Paper segment - revenue and revenue per tonne

Total Q3 2019 (PLN 564mn) down 4.7% compared to Q3 2018

Average Q3 2019 (PLN 3.62k) decreasedby 1.0% compared to average in Q3 2018


Paper sales revenue


Financial results


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Arctic Paper Group –EBIT evolution 2014-2019 (PLN mn)

020406080

100120140

2014 2015 2016 2017 2018 q1-q32019

Pulp segment

-20-10

0102030405060708090

2014 2015 2016 2017 2018 q1-q32019

Paper segment

0

20

40

60

80

100

120

140

160

180

200

2014 2015 2016 2017 2018 q1-q32019

Pulp & paper

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5,00

5,50

6,00

6,50

7,00

7,50

8,00

8,50

9,00

9,50

SEK

ARP.ST

Arctic Paper Group – share price evolution 2019


2,00

2,20

2,40

2,60

2,80

3,00

3,20

3,40

3,60

3,80

PLN

ATC.WAWarsaw Stock Exchange OMX Nordic Exchange Stockholm AB

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Arctic Paper Group – book value per share and share price evolution (PLN/share) 2016-2019


0,00

2,00

4,00

6,00

8,00

10,00

12,00

14,00

book value per share Share price @ end of quarter

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Key consolidated figures


• YTD SEP 2019 total revenues down -0.5% compared to SEP 2018 (-2.9% paper segment, +5.6% pulp segment revenue);

• YTD SEP 2019 EBITDA up by PLN 24,7mn compared to YTD SEP 2018 (PLN 94,8mnpaper segment: PLN +16,5mn; PLN 148,3mn pulp segment: PLN +8,2mn);

• YTD SEP 2019 Net result: PLN +28,0mn compared to YTD SEP 2018 (PLN 44,7mn paper segment: PLN +35,4mn, PLN 74,5mn pulp segment: PLN -7,4mn);

• CAPEX on the level of PLN 91,4mn (PLN 67,9mn paper segment: PLN +21,0mn; PLN 23,5mn pulp segment: PLN -34,7mn);

• Cash on the level of PLN 254,6mn (PLN 94,0mn paper segment: PLN +19,8mn; PLN 160,6mn pulp segment: PLN +54,0mn);

• Net debt on the level of PLN 199,6mn vs PLN 307,5mn in SEP 2018;

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0

10

20

30

40

50

60

70

80

90

+59 -19,8

-8,2

+48 0 -3

+51

+2 -26,9

5951

39

-6

47 4559

-21

5870

51

Q3 2019 EBIT PLN 50,6mn

• PLN 19,3mn lower than Q2 2019

• PLN 8,4mn lower than Q3 2018

Q3 2019 EBIT Arctic Paper Group – total


EBIT evolution

Q32019 EBIT Bridge


Summing-up


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• Arctic Paper Group, EBITDA on the level of PLN 71,5 mn (PLN 82,0 mn in Q3 2018).

• Paper segment, EBITDA on the level of PLN 43,2 mn (PLN 27,5 mn in Q3 2018).

• High capacity utilization and profit improvements for the paper segment.

• NCRD-grant of PLN 16,4 million for co-financing an innovation project aiming at developing new types of papers at Kostrzyn mill.

• The modernized PM1 in Kostrzyn provides greater flexibility, dedicated sales resource to grow our packaging business.

• Focus on packaging products (pulp & paper) development.

• Focus on energy generation development (biomass, hydro and solar) – to secure internal usage and external supply.

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Arctic Paper Group summing-up Q3 2019

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Turning ideas into experiences.

Arctic Paper Vision:

2017 – Full year presentation