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Metsä Board CorporationFY 2017 ResultsPresentation material
8 February 2018
FY 2017 Results2
Q4 2017 in summary(vs. Q3 2017)
• Paperboard delivery volumes were lower,mainly due to seasonality
• Increased average prices in folding boxboard and white kraftliners
• Strong pulp market supported profitability• Negative impact from maintenance
shutdown in Husum• Strong cash flow from operations
Dividend proposal for 2017 is EUR 0.21
January–December 2017: Increasing sales and improved operating result
SalesEUR million
436 423 440 422 445 474 479 4510
100
200
300
400
500
Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17
+7%
35 36 34 33 45 44 50 54
8,0 % 8,5 %7,7 % 7,8 %
10,2 %9,2 %
10,5 %
12,0 %
0%
2%
4%
6%
8%
10%
12%
14%
-5
5
15
25
35
45
55
Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17
+41%
FY 2017 Results3
Comparable operating resultEUR million and % of sales
FY 2016:EUR 1,720 million
EU
R m
illio
n
EU
R m
illio
n
FY 2017:EUR 1,849 million
FY 2016:EUR 138 million
FY 2017:EUR 194 million
Strong growth continued in Metsä Board’s paperboard deliveries
204 213 224 224 227 250 266 245 265 304 299 276
130 141 137 131 142148 148
143163
173 170152
0
100
200
300
400
500
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017
White kraftliner Folding boxboard
1,00
0 to
nnes
4 FY 2017 Results
FY 2015:1,404 tonnes
FY 2016:1,568 tonnes
FY 2017:1,802 tonnes+12% +15%
Annual global demand growth for folding boxboard
and white kraftlinersis estimated to be
3–4%
Source: RISI, CEPI, Pöyry and trade statistics among others
Europe is the main market area for Metsä BoardAmericas is growing: FBB deliveries up by 54% in 2017 vs. 2016
Folding boxboard (FBB) deliveries in 2017 (2016)1,000 tonnes
EMEA796 (725)
Americas232 (151)
APAC116 (110)
EMEA457 (382)
Americas187 (191)
APAC14 (7)
FY 2017 Results5
White kraftliner (WKL) deliveries in 2017 (2016)1,000 tonnes
70%20%
10%
69%29%
2%
Total FBB deliveries grew by 16% in 2017 vs. 2016
Total WKL deliveries grew by 13% in 2017 vs. 2016
• Impacts of FX rate changes including hedges:– Q4 2017 vs. Q3 2017: EUR 4 million negative
– FY 2017 vs. FY 2016: EUR 13 million positive
• Hedging policy: 50% of annual transaction exposure and 100% of balance sheet position
Weakening USD causing headwind
57 %35 %
6 %2 %USD
SEK
GBP
Othercurrencies
Annual transaction exposureEUR 1.14 billion
FX sensitivities excluding hedges
10% strengthening of foreign currency vs. EUR will have an impact on Metsä Board’s EBIT of
Currency Next 12 months
USD, $ EUR +65 million
SEK EUR -39 million
GBP, £ EUR +7 million
6 FY 2017 Results
0%
2%
4%
6%
8%
10%
12%
14%
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 Q2/17 Q3/17 Q4/17
Comparable Return on Capital Employed, %, QuarterlyFY 2017 Results7
ROCE is approaching its targeted levelFY 2017 Comparable ROCE was 11.2%
Target >12%Q4/17:12.4%
• Investments in 2017 were EUR 65 million (2016: EUR 162 million)
• Estimated capex in 2018 is roughly EUR 70 million
Clearly lower capex in 2017
0
30
60
90
120
150
180
2010 2011 2012 2013 2014 2015 2016 2017 2018E
Maintenance capex Growth capex Depreciation
EUR million
8 FY 2017 Results
Main growth in capex in 2015−2016: Husum investment programme, extrusion coating line and equity investment in Metsä Fibre’s bioproduct mill
Cash flows clearly positive
3356
9366
-22 -22
67 55 2637
68
106
9 8 45 8
-76 -72
49 17 7 2559
79
247
78
236
70
-82
170
-100
-50
0
50
100
150
200
250
Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/14
Cash flow from operations, quarterly Free cash flow, quarterlyCash flow from operations, rolling 12 months Free cash flow, rolling 12 months
EUR
milli
on
9 FY 2017 Results Free cash flow = Cash flow from operations - investments
333 412 541 488 464 458 495 437 358
1,21,5
2,1 2,1 2 1,9 21,7
1,2
0,0
0,5
1,0
1,5
2,0
2,5
3,0
0
100
200
300
400
500
600
12/2015 3/2016 6/2016 9/2016 12/2016 3/2017 6/2017 9/2017 12/2017
Net debt, EUR million Net debt to comparable EBITDAFY 2017 Results10
Strong financial positionNet debt reduced nearly EUR 80 million in the Q4, leverage at 1.2x
Net debt/EBITDA target level <2.5
EU
R m
illio
n
• Capacity utilisation rate in 2017 was 71%– Target is to have capacity in full use by the end of 2018
• Improved sales mix towards the end of the year 2017• Average sales price still below target• Potential to improve operating profit in Husum by
EUR 100 million from 2016 to 2019
11
Update on Husum’s folding boxboard
FY 2017 Results
• Metsä Board’s raw material, fresh fibres, is 100% traceable to sustainably managed forests
• Production of strong but lightweight paperboards requires less energy and water
• Metsä Board received several recognitions for sustainability in 2017:• CDP: A Lists in Climate and Water,
Leadership status in Forest programme• Gold rating from EcoVadis
FY 2017 Results12
Sustainability is at the core of Metsä Board’s operations
• Biobased, fully recyclable and biodegradable paperboard
• Developed especially for food service use with short food contact time and when light grease resistance is sufficient
• Metsä Board continues to develop other barrier solutions, and is investigating the utilization of dispersion and biobased coatings, and their commercial potential
FY 2017 Results13
Metsä Board launched an innovative eco-barrier paperboard
FY 2017 Results14
Near-term outlook
• Total paperboard delivery volumes are expected to increase in Q1 2018 compared to Q4 2017
• Market prices in fresh fibre paperboards are expected to rise
• Negative impact from weakened USD• Production costs estimated to rise in 2018• Target is to continue to improve the average
price of FBB from Husum and increase sales to Americas
Metsä Board’s comparable operating result in the first quarter of 2018 is expected to improve slightly compared to the fourth quarter of 2017.
FY 2017 Results15
Result guidance for January–March 2018
• First year as a pure-play paperboard company: strong growth and improved profitability in 2017
• Dividend proposal EUR 0.21• Good overall market situation for 2018…• …but negative impact from weakened
USD
FY 2017 Results16
Summary
Appendix
FY 2017 Results18
Key financials
Q4/17 Q3/17ChangeQ4/17
vs. Q3/172017 2016
Change2017
vs. 2016
Sales EUR, m 451 479 -6% 1,849 1,720 7%
EBITDA* EUR, m 78 75 4% 289 231 25%
Operating result* EUR, m 54 50 8% 194 138 41%
% of sales % 12.0 10.5 10.5 8.0
Result before taxes* EUR, m 47 34 40% 157 107 47%
Earnings per share EUR 0.12 0.11 9% 0.42 0.25 68%
ROCE* % 12.4 11.5 11.2 8.1
Capex EUR, m 27 7 264% 65 162 -60%
Cash flow from operations EUR, m 106 68 57% 236 77 207%
IB Net debt, at end of period EUR, m 358 437 -18% 358 464 -23%
*comparable
Financial targets and actuals
Comparable ROCE, %
6,4
9,1
11,3
8,1
11,2
2013 2014 2015 2016 2017
2,9
1,8
1,2
2,0
1,2
2013 2014 2015 2016 2017
Net debt / Comparable EBITDA, %
7%
10%
13% 12%15%
2013 2014 2015 2016 2017
Annual growth in total paperboard deliveries, %
Target is to exceed relevant market growth*
Dividend policy: Metsä Board aims to distribute at least 50% of its result for the financial period in annual dividends to its shareholders
Target: >12%
Target: <2.5
* Global fresh fibre paperboard demand growth 3-4%/a
FY 2017 Results1919
0
50
100
150
200
250
2018 2019 2020 2021 2022–26 2027
Bonds Loans from financial institutions Pension loans Other loansFY 2017 Results20
Debt maturity lengthened due to new 10-year bond
Interest-bearing debt maturity profile 31 December 2017
EUR
milli
on
• Total interest-bearing debt on 31 December was EUR 577 million (31 Dec 2016: EUR 688 million)
• In 2017, Metsä Board issued new 10-year EUR 250 million bond with 2.75% annual coupon
Rating agency Rating andoutlook
Last update
Standard & Poor‘s
BB+ (positive) 02/2017
Moody‘s Ba1 (stable) 08/2017Upgrade from Ba2
Metsä Board‘s credit ratings
Debt structure and liquidity31 December 2017
308163
95
92
Bonds
Loans fromfinancial institutions
Pension loans
Finance leases andother loans
Other short-termloans
215
100
134
Cash and cashequivalentsRevolving creditfacilityUnraised pensionloans
Interest-bearing debt, total EUR 577 million
Available liquidity, total EUR 449 million
Average maturity of long-term loans on 31 December 2017 was 5.4 years. 21
* Of which EUR 248 million due 2027 and EUR 60 million due 2019
*
FY 2017 Results
FY 2017 Results22
Increased financial costs due to the financing arrangements in September
56 39 32 31 36
4,6
4,2
3,8
3,3 3,3
3,0
3,5
4,0
4,5
5,0
0
10
20
30
40
50
60
2013 2014 2015 2016 2017
Net financial costs, EUR millionAverage interest rate at the end of period, %
EUR million %• Net financials in 1–12/2017
were EUR -36 million (1–12/16: EUR -31 million)
• Full-year financial expenses include EUR 11 million of costs related to the early repurchase of the bond maturing in 2019
Market cap and foreign owners31 December 2017
Ownership distribution31 December 2017
Market cap and ownership distributionMetsä Board shares (METSB, METSA) are listed on Nasdaq Helsinki
0
4
8
12
16
20
24
0
500
1 000
1 500
2 000
2 500
2012 2013 2014 2015 2016 2017
Market cap, EUR million
Share of foreign owners, %
42 %
20 %
18 %
20 % MetsäliittoCooperative
Domestic institutionalinvestors
Domestic privateinvestors
Foreign owners
EUR million
* Metsäliitto Cooperative has 61% of voting rights
*
23
%
FY 2017 Results
FY 2017 Results24
Market price development in folding boxboard and white-top kraftliner in Europe
EUR/t
Sources: RISI, Inc. & FOEX Indexes Ltd
500
600
700
800
900
1000
1100
1200
2009 2010 2011 2012 2013 2014 2015 2016 2017
Folding boxboard White-top kraftliner
350400
450500550
600650700
750800
850900950
10001050
'10 '11 '12 '13 '14 '15 '16 '17350400
450500550
600650700
750800
850900950
10001050
Source: Foex Indexes Ltd
Softwood, USD
Softwood, EUR
Hardwood, EUR
Hardwood, USD
USDEUR
Pulp price development (PIX)
25 FY 2017 Results
Metsä Board’s growth clearly exceeds averagemarket growth
26
0
500
1 000
1 500
2 000
2013 2014 2015 2016 2017 2018 target
Fresh fibre linerboard Folding boxboard
Metsä Board’s annual paperboard deliveries 1,000 tonnes
FY 2017 Results
Annual global demand growth for folding boxboard
and white kraftliners is
estimated to be 3–4%
Source: RISI, CEPI, Pöyryand trade statistics among
others
Metsä Fibre’s new bioproduct mill in Äänekoski started in AugustStart-up as scheduled, costs within budget and higher than expected production volumes
Total investmentEUR 1.2 billion
Annual pulp capacity1.3 million tonnes
Metsä Board investedEUR 24.9 million
Metsä Board’s annualpulp balance grows by
200,000 tonnes*
* According to Metsä Board’s 24.9% ownership of Metsä Fibre