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Metsä Board Metsä Board Results 2014
27
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Page 1: Results 2014 of Metsä Board, presentation

Metsä Board

Metsä Board Results 2014

Page 2: Results 2014 of Metsä Board, presentation

Metsä Board

Highlights in 2014

2

‒ 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

Page 3: Results 2014 of Metsä Board, presentation

Metsä Board

0,17

0,27

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

6,4

9,1

0

3

6

9

12

2013 2014

2019 2008

0

1000

2000

3000

2013 2014

104

137

0

40

80

120

160

2013 2014

Sales Operating result, excl. non-

rec. items

Result before taxes, excl.

non-rec. items

m€ m€

m€

114117

0

40

80

120

160

2013 2014

Operating result

m€

Result before taxes

m€

ROCE, excl. non-

rec. items

%

Board of Directors is proposing to the AGM a dividend of EUR 0.12 per share for the financial year 2014

3

Earnigs per share, excl.

non-rec. items

€ per share

49

100

0

25

50

75

100

125

2013 2014

Page 4: Results 2014 of Metsä Board, presentation

Metsä Board

30

1929 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

545 522 532 509 535 503 514479502 501499494

0

200

400

600

800

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

-9

1710 9

1927

32

918

4

2021

-10

0

10

20

30

40

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

Sales Operating result excl. non-rec. items

Result before taxes excl. non-rec. items

Operating Result in 4Q 2014 Roughly at Previous Quarter Level

4

EUR million EUR million

EUR million

Page 5: Results 2014 of Metsä Board, presentation

Metsä Board

‒ Folding boxboard deliveries decreased seasonally slightly in 4Q 2014

‒ Market prices were stable but stronger USD improved average price

‒ Good progress in North America and in the food service segment continued

‒ Result was weakened by decreased speciality paper deliveries partly

due to political and economic uncertainties in Ukraine and Russia

‒ No material price changes in folding boxboard 2015 annual contracts

compared to previous year

5

EBIT, excl. non-recurring items

Sales

No Material Change in Cartonboard Business Area’s

Profitability in 4Q 2014

EUR million

EUR million

1820

1817

20

1215

10

0

6

12

18

24

30

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

224230219214208220218

222

0

50

100

150

200

250

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

Page 6: Results 2014 of Metsä Board, presentation

Metsä Board

Linerboard and Paper’s Result Improved Clearly in 4Q 2014

‒ Result was improved by higher fresh forest fibre linerboard average price due

to strengthened USD

‒ Linerboard deliveries decreased seasonally slightly in 4Q 2014

‒ Uncoated fine paper delivery volume increased and price level was

unchanged. Coated paper delivery volume and average price decreased

‒ Market pulp volumes were slightly lower but price increased due to USD

‒ Sales of CO2 rights had a positive result impact

‒ Linerboard deliveries are in 1Q 2015 expected to improve. No major price

changes in sight

‒ Paper deliveries are in 1Q forecast to increase but average price decrease

‒ No material market related changes foreseen in pulp business in 1Q

6

EBIT, excl non-recurring items

EUR million

EUR million

Sales

20

15

24

32

1516

7

20

0

6

12

18

24

30

36

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

271262

271 265288

269 267250

0

50

100

150

200

250

300

350

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

Page 7: Results 2014 of Metsä Board, presentation

Metsä Board

EUR -30 Million in Net Non-Recurring Items Booked in 4Q 2014

Main items:

‒ EUR 26 million impairment of fixed assets in the Cartonboard business area related to

the loss-making Gohrsmühle mill in Germany

‒ EUR 13 million cost provision in the Linerboard and Paper business

area related to planned discontinuation of paper production at Husum

‒ EUR 7 million sales gain related to Niemenranta property in Tampere, Finland

7

Total non-recurring items in 2014 EBIT were EUR -20 million

Page 8: Results 2014 of Metsä Board, presentation

Metsä Board

Net Debt Reduced to EUR 427 Million Thanks to Strong Cash Flow

‒ Cash flow from operations EUR 83 million in 4Q and

EUR 210 million in 2014 (EUR 127 million in 2013)

‒ Gross debt EUR 684 million and net debt EUR 427 million at end 2014

( EUR 597 million at end 2013)

‒ Net gearing 51 % (70 %), equity ratio 39 % (41 %) and average

interest rate 4,0 % (4,8 %) at the end of 2014

‒ Net debt to EBITDA dropped to below 2

‒ Strong liquidity position

‒ Moody’s raised Metsä Board’s credit rating to B1 in 4Q 2014

8

Net Debt / EBITDA

Net Debt

427

827

0

250

500

750

1000

2010 2011 2012 2013 2014

1,8

2,7

0

1

2

3

4

5

2010 2011 2012 2013 2014

EUR million

Page 9: Results 2014 of Metsä Board, presentation

Metsä Board

Short-Term Profitability Outlook

9

‒ Metsä Board’s operating result excluding non-

recurring items is in the first quarter of 2015

expected to improve slightly compared to the last

quarter of 2014

Page 10: Results 2014 of Metsä Board, presentation

Metsä Board

Metsä Board’s Paperboard Deliveries Increased by 10 % in 2014

10

+ 7 %

169 176 185 185 189 192 197185 191 197

210 203

8085

93 8594 93

95

91

110108

118109

0

60

120

180

240

300

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

Fresh forest fibre linerboard

Folding boxboard

+ 10 % 1000 tonnes

Page 11: Results 2014 of Metsä Board, presentation

Metsä Board

11

‒ USD and SEK vs. Euro has 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 net EBIT impact after hedges in 2014 was EUR 15 million vs. 2013

‒ Incremental positive impact expected in 2015

‒ Annual unhedged EBIT sensitivity of 10 % change vs. euro

‒ EUR 45 million in USD

‒ EUR 20 million in GBP

‒ Reversed EUR 30 million SEK

‒ Segment numbers reflect exchange rate changes rapidly

but hedge accounting result in Other operations balance the impact

Exchange Rates Changes Favourable for Metsä Board

Page 12: Results 2014 of Metsä Board, presentation

Metsä Board

Metsä Board Grows Its Paperboard Business, Plans to Fully Exit Paper Production and Considers a Rights Issue

‒ Major growth step in the folding boxboard business thanks to EUR 170 million

investment in a new production line and related infra at Husum mill in Sweden

‒ 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 transformation expected to be financed by current liquidity,

operating cash flow and potentially also by a rights issue in 1Q 2015

12

Page 13: Results 2014 of Metsä Board, presentation

Metsä Board

New Volumes to be Sold Mainly to North America, Where Metsä

Board’s Paperboard Volumes Increased Over 40% in 2014

13

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

Page 14: Results 2014 of Metsä Board, presentation

Metsä Board

New Function Based Organization in Place As of 1 January 2015

‒ Reporting segments are from 1Q 2015 onwards the following:

‒ Paperboard

‒ Non-core operations

‒ Paperboard segment includes folding boxboard, fresh forest fibre linerboard, wallpaper base and

market pulp businesses. Metsä Fibre result share will be allocated to Paperboard

‒ Non-core operations include Husum and Gohrsmühle mills’ paper businesses

‒ The restated historical figures will be released during February 2015

14

Page 15: Results 2014 of Metsä Board, presentation

Metsä Board

Significant Financial Improvements Thanks to Finalization of the Transformation

‒ Based on growth of paperboard business and discontinuation of Husum’s paper

production, Metsä Board’s annual sales is expected to remain rather stable

‒ Operating result excluding non-recurring items expected to improve by

approximately EUR 50 million compared to 2014

‒ Mostly in 2017 and fully in 2018

‒ Investment shutdown and accelerated depreciations in Husum is forecast to

impact operating result negatively roughly by EUR 20 million in 2015

‒ Additionally, elimination of Gohrsmühle mill’s losses would lead to:

‒ Annual sales reduction of approximately EUR 90 million

‒ Operating result improvement of approximately EUR 20 million

15

Page 16: Results 2014 of Metsä Board, presentation

Metsä Board

Metsä Board Updates Its Long-Term Financial Targets

New targets:

Return on Capital Employed (ROCE) minimum 12 per cent from 2017 onwards

Net gearing maximum 70 per cent

‒ Old targets were ROCE minimum 10 per cent and net gearing maximum 100 per cent

‒ Dividend policy remains unchanged. The aim is to pay a dividend of at least 1/3 of the

EPS, taking into account the net gearing target

16

Page 17: Results 2014 of Metsä Board, presentation

Metsä Board

Key Priorities in 2015

‒ Grow profitably the paperboard businesses globally

‒ Successful implementation of the investment projects in Husum

‒ Secure good price levels

‒ Further improve best in class 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

17

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

%

Page 18: Results 2014 of Metsä Board, presentation

Metsä Board

Appendix

Page 19: Results 2014 of Metsä Board, presentation

Metsä Board

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

ROCE % and EBIT, % of Sales

19

EBIT % of sales excl. non-recuring items ROCE %, excl. non-recurring items

6,8

-6,2

6,6

2,4

3,6

5,2

-8

-6

-4

-2

0

2

4

6

8

10

2009 2010 2011 2012 2013 2014

Target min. 12 % from 2017 onwards

Page 20: Results 2014 of Metsä Board, presentation

Metsä Board

EBITDA Development

20

EBITDA excl. non-recurring items

236

208

186179

305

44

0

60

120

180

240

300

2009 2010 2011 2012 2013 2014

EUR million

Page 21: Results 2014 of Metsä Board, presentation

Metsä Board

Business Area Performance – Comparison to Previous Quarter

Sales

4Q 2014 3Q 2014

21

230

271

224

265

0

50

100

150

200

250

300

Cartonboard Linerboard andPaper

18

24

17

32

0

7

14

21

28

35

Cartonboard Linerboard andPaper

Operating result, excluding non-recurring items EUR million EUR million

Page 22: Results 2014 of Metsä Board, presentation

Metsä Board

Business Area Performance – Comparison to Previous Year

2014 2013

22

868

1075

887

1068

0

300

600

900

1200

Cartonboard Linerboard andPaper

57 54

72

90

0

25

50

75

100

Cartonboard Linerboard andPaper

Sales Operating result, excluding non-recurring items EUR million EUR million

Page 23: Results 2014 of Metsä Board, presentation

Metsä Board

Balance Sheet Ratios

23

777

827

783

625597

427

17,7

2,7

4,4

3,42,9

1,8

0

100

200

300

400

500

600

700

800

900

2009 2010 2011 2012 2013 2014

0

2

4

6

8

10

12

14

16

18

20

Net Debt and Net Debt/EBITDA* Net Gearing

51

84 83

106

7270

0

20

40

60

80

100

120

2009 2010 2011 2012 2013 2014

Net debt,

EUR million Net debt/EBITDA

*Excluding non-recurring items

%

Page 24: Results 2014 of Metsä Board, presentation

Metsä Board

EUR / tonne

Folding Boxboard Market Price in Europe

2004 – 2014

24

Source: Pöyry Management Consulting

800

900

1000

1100

2009 2010 2011 2012 2013 2014

Page 25: Results 2014 of Metsä Board, presentation

Metsä Board

500

600

700

800

900

2009 2010 2011 2012 2013 2014

25

Uncoated White-Top Kraftliner Market Price in Europe

2009 – 2014

Source: Foex

EUR / tonne

Page 26: Results 2014 of Metsä Board, presentation

Metsä Board

EUR / tonne

Paper and Pulp Market Price in Europe

1998 – 2014

Coated fine paper (100 g)

Uncoated fine paper (B-copy, 80 g)

Softwood pulp NBSK

Coated magazine paper LWC (60g)

Source: Foex, Reuters

EUR/USD

EUR/USD

400

500

600

700

800

900

1000

1100

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

0,8

0,9

1

1,1

1,2

1,3

1,4

1,5

1,6

1,7

26

Page 27: Results 2014 of Metsä Board, presentation

Metsä Board

Ownership Structure 31.12.2014

Shares Votes

Source: Euroland 27