upm the biofore companyassets.upm.com/investors/documents/2014/upm abgs… · · 2015-06-30upm in...

Mika Mikkola

VP, Investor Relations

UPM – THE BIOFORE COMPANYABGSC Spotlight On Nordic Opportunities 2014

| © UPM

Contents

• UPM in transformation

• Financial performance

• Sustainable competitiveness

• Summary

2

| © UPM3 | © UPM

UPM IN TRANSFORMATION

| © UPM

UPM in transformation – revenues

4

0 %

20 %

40 %

60 %

80 %

100 %

2013

Paper ENA

Plywood

Energy

Paper Asia

Raflatac

Biorefining

0 %

20 %

40 %

60 %

80 %

100 %

2003

Sold units

Paper

Plywood

Raflatac

Sawmilling

2003:

integrated

paper company

2008:

towards market-

driven businesses

2013:

six separate

businesses

Sales

EBIT(*

EBIT margin(*

Personnel

EUR 9.9bn

EUR 429m

4.4%

34,500

EUR 9.5bn

EUR 513m

5.4%

25,000

EUR 10.1bn

EUR 683m

6.8%

21,000

Business

portfolio,

Sales

*) excluding special items

0 %

20 %

40 %

60 %

80 %

100 %

2008

Sold units

Paper

Plywood

Raflatac

Sawmilling

| © UPM

UPM in transformation – capital

5

0 %

20 %

40 %

60 %

80 %

100 %

2013

Paper ENA

Plywood

Energy

Paper Asia

Raflatac

Biorefining

Other

0 %

20 %

40 %

60 %

80 %

100 %

2003

Sold units

Paper

Plywood

Raflatac

Sawmilling

Other

2003:

integrated

paper company

2008:

towards market-

driven businesses

2013:

six separate

businesses

Capital empl.

ROCE (*

Net debt

Market cap

EUR 12.8bn

4.7%

EUR 4.9bn

EUR 7.9bn

EUR 11.2bn

4.6%

EUR 4.3bn

EUR 4.7bn

EUR 11.6bn

6.0%

EUR 3.0bn

EUR 6.5bn

Business

portfolio,

Capital

employed

0 %

20 %

40 %

60 %

80 %

100 %

2008

Sold units

Paper

Plywood

Raflatac

Sawmilling

Other


| © UPM

UPM’s businesses

6

• Pulp• Biofuels• Sawmills

• Fine papers in China• Labelling materials

globally

• Label materials for product and information labelling

• Hydro, nuclear and condensing power generation

• Electricity trading in physical and derivatives markets

• Plywood and veneer products

• Magazine papers in Europe and in North America

• Newsprint and Fine papers in Europe

Financials

2013

Sales

EUR

EBITDA

%

ROCE

%

UPM

Biorefining1,988m 22 11

UPM

Energy466m 43 7

UPM

Raflatac1,213m 9 14

UPM

Paper Asia1,108m 15 9

UPM

Paper ENA5,560m 4 0

UPM

Plywood429m 10 7

UPM total 10,054m 11 6

UPM Biorefining

UPM Paper Asia

UPM Raflatac

UPM Energy

UPM Paper ENA

UPM Plywood

| © UPM

Profit

improvement

programme

EUR 200m

Shifting gear in UPM transformation

7

UPM

Biorefining

UPM

Paper

Asia

UPM

Raflatac

UPM

Energy

UPM

Paper

ENA

UPM

Plywood

EBITDA target for

growth initiatives

EUR 200m

Biofuels:

Lappeenranta

biorefinery

Pulp: 10%

capacity increase

Labelling materials:

Changshu expansion

Self-adhesive labels:

advancing in growth

markets and in higher

value added products

Business portfolio

development and

value creation

BIOCHEMICALS

BIOCOMPOSITES

BIOFUELS

New businesses

| © UPM

Profit improvement programme

progressing fast

0

50

100

150

200

250

Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115

8

EURm

Full impact of the programme is expected by the end

of 2014 as compared with the Q2/13 results

78%

achieved

in Q1/14

EUR 200m

annualised

fixed and

variable

cost

savings

| © UPM

Growth projects targeting EUR 200m of

additional EBITDA

Decisions in 2014

• Changshu labelling materials, 360,000t, start-up by the end of 2015

• Kymi pulp mill expansion, 170,000t, start-up by the end of 2015

• 50% increase in self-adhesive labelstock coating capacity in APAC,

increase filmic labelstock capacity in Europe, start-ups by early 2015

Continued implementation

• Lappeenranta renewable diesel, 100,000t start-up summer 2014

• Pietarsaari pulp mill expansion, 70,000t, start-up summer 2014

Further debottlenecking potential at Fray Bentos and Kaukas pulp mills

Targeted additional EBITDA EUR 200m when all projects in full

operation, total capex estimate EUR 680m over three years

9

| © UPM

Business portfolio development and

value creation

• Performance: targeting top performance

in each business

• Grow: focused high-return growth

investments and synergistic M&A

• Simplify: best value realisation for UPM

• Consolidation in European paper

market, without increasing capital

10 | © UPM

| © UPM| © UPM

• Biofuels renewable drop-in

diesel suitable for all diesel

engines

• Biochemicals renewable

drop-in alternatives for oil-

based chemicals

• Biocomposites for injection

moulding to replace oil-based

raw materials

0

50

100

150

200

250

300

350

2009 2010 2011 2012 2013

Annual patent filings 2009–2013

11

New businesses based on UPM’s

development work

FINANCIAL PERFORMANCE

12 | © UPM

| © UPM

0

2

4

6

8

10

12

2008 2009 2010 2011 2012 2013 Q1/14

-6,0

-4,0

-2,0

0,0

2,0

4,0

6,0

8,0

10,0

2008 2009 2010 2011 2012 2013 2014E

Operating profit excl. special items

Profitability over two economic slowdowns

Europe has underperformed

the other major economic zones

Real GDP y-o-y growth % % of sales

EU

US

Emerging markets

13

Real GDP y-o-y growth %

5.4

3.5

8.2

6.8

5.3

6.8

Source: IHS Global Insight

7.3

LTM

| © UPM

Operating profit *) by business area

14

0

2

4

6

8

10

0

10

20

30

40

50

Q312

Q412

Q113

Q213

Q313

Q413

Q114

0

4

8

12

16

20

0

20

40

60

80

100

Q312

Q412

Q113

Q213

Q313

Q413

Q114

0

10

20

30

40

50

0

20

40

60

80

100

Q312

Q412

Q113

Q213

Q313

Q413

Q114

0

2

4

6

8

10

0

10

20

30

40

50

Q312

Q412

Q113

Q213

Q313

Q413

Q114

-4

-2

0

2

4

6

-40

-20

0

20

40

60

Q312

Q412

Q113

Q213

Q313

Q413

Q114

-3

0

3

6

9

12

-5

0

5

10

15

20

Q312

Q412

Q113

Q213

Q313

Q413

Q114

EURm % of salesUPM Paper Asia EURm % of salesUPM Paper ENA EURm % of salesUPM Plywood

EURm % of salesUPM RaflatacEURm % of salesUPM EnergyEURm % of salesUPM Biorefining


| © UPM

0

200

400

600

800

1 000

1 200

1 400

2008 2009 2010 2011 2012 2013 Q1/14

Strong cash flow

15

Operating cash flow

Cash flow

after investing

activities

Cash flowEUR million

LTM

| © UPM

0,00

0,10

0,20

0,30

0,40

0,50

0,60

0,70

0,80

2008 2009 2010 2011 2012 2013

Cash flow based dividend

EUR per

share

0.40

0.45

0.55

16

Dividend policy

• at least 1/3 of net cash flow from

operating activities less

operational capital expenditure

• net cash flow calculated as an

average over three years

Minimum dividend by the

policy

• EUR 0.45 per share

Dividend for 2013

• EUR 0.60 per share

0.60 0.60 0.60

Dividend

| © UPM

Low investment needs in existing assets allow

growth projects with modest total capex

17

0

200

400

600

800

1 000

1 200

2008 2009 2010 2011 2012 2013 2014e

EUR million

Operational investments

329

Capital expenditure

Strategic investments

Depreciation

Uruguay

acquisition

Myllykoski

acquisition

450

Estimate

| © UPM

Strengthening balance sheet

18

2 000

2 500

3 000

3 500

4 000

4 500

5 000

5 500

2008

2009

2010

2011

2012

2013

2014

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

Net debt, EUR millionNet debt / EBITDA(trailing 12 months)

Net debt

Net debt / EBITDA

2.4

2 000

2 500

3 000

3 500

4 000

4 500

5 000

5 500

2008

2009

2010

2011

2012

2013

2014

20

30

40

50

60

70

80

90

Net debt, EUR million Gearing %

Net debt

Gearing

37

Liquidity was EUR 2.0bn at the end of Q1 2014

Repayments total EUR 0.5bn in 2014

SUSTAINABLE COMPETITIVENESS

19 | © UPM

| © UPM20

Biofore in the shape of a car

UPM Formi UPM Grada

Interior panels

Dash board

Display panel cover

Door panels

Centre console

Door panels

Side skirtsPassenger compartment floor

Front mask

UPM BioVerno

Wood-based renewable diesel

Emissions reduction up to 80%

UPM Raflatac

Upholstery detailing

Exterior/Interior

Spare parts labeling

| © UPM

The Biofore Concept Car presented in

Geneva 2014

• Majority of oil-based plastic parts are replaced

by parts from biobased renewable

composite materials which can

be recycled and reused.

• The Biofore Concept Car weighs

150 kg less than similar-sized cars

leading to lower

fuel consumption

• Wood-based renewable

diesel enables emissions

reduction up to 80%

• Street-legal

in Finland

21Driven by Biofore

| © UPM

UPM creates new business in

wood-based renewable diesel

• World’s first biorefinery producing wood-

based renewable diesel

• Lappeenranta 100,000t refinery start-up

in summer 2014

• UPM technology

• Attractive EUR 150m investment, part of

the EUR 200m EBITDA growth target

• Potential to become a large new business

2222 | © UPM

| © UPM

Renewable diesel suitable for all diesel engines

• Engine tests done in independent research centres

- Finnish VTT

- German research centre FEV

• Fleet tests done with VW and VTT

• Renewable drop-in diesel suitable for all diesel engines

• Functions like any regular diesel

RENEWABLE RAW MATERIAL

100%

CO2 EMISSIONS(VS. FOSSIL FUEL)

–80%

HYDROCARBON FUEL, COMPATIBLE WITH DIESEL STANDARD EN590

100%

23 | © UPM

| © UPM

0

200

400

600

800

1000

1200

1400

DE

ID

rax

RW

ES

co

ttis

h &

S.

ED

PE

.ON

Va

tte

nfa

llE

nel

Ed

ipow

er

Unio

n F

enosa

CE

ZE

nB

WG

DF

Su

ez E

.D

ong

Iberd

rola

+S

PU

PM

Fort

um

ED

FV

erb

un

dS

tats

kra

ft

2nd largest energy business in Finland, with

competitive low-emission energy sources

78%

67%

24

Source:

PWC 2013, UPM

kgCO2/MWh Specific CO2 emissions

OF ALL FUEL USED BY

UPM BASED ON

RENEWABLE BIOMASS

OF UPM’S POWER

GENERATION CO2

NEUTRAL

BIOMASS-BASED

ELECTRICITY

+83%HYDROPOWER

+16%NUCLEAR

+10%in 10 years

| © UPM

Resource efficiency,

case Changshu paper mill in China

25

WATER

-65%Per tonne of paper

ELECTRICITY

-20%Per tonne of paper

WASTE TO

LANDFILL

-60% Per tonne of paper

CERTIFIED FIBRE

75%From 0% in 2002

Continuous improvement process

over the past 10 years

| © UPM

Waste is today’s new material

26

UPM’s new construction product Cineritmade of fly ash from the thermal recovery of biogenic waste materials

UPM ProFi composite products made from the paper and plastic left over from the production of self-adhesive label materials

Renewable diesel UPM BioVernoproduced from crude tall oil, a residue of pulp production

UPM is the world’s largest user of recycled paper for the production of graphic papers

36%of all fibre used in UPM’s

paper production is

recycled fibre

90%of all production

waste is reused

| © UPM

Productivity development in 10 years

0,20

0,25

0,30

0,35

0,40

0,45

0,50

27

EURm

IN FIVE YEARS

+27%

IN TEN YEARS

+69%

Sales per employee

| © UPM

Targeting world-class safety results

in three years

ACCIDENT FREQUENCYIN TWO YEARS

–60%

SUBCONTRACTOR ACCIDENTS IN ONE YEAR

–15%

ABSENTEEISM DUE TO ACCIDENTS AT WORK

–40%

UPM

Step Change in SafetyTarget end 2014

LTAF =Number of LTA / 1 million hours of work

28

| © UPM

Taking care of the entire lifecycle

Responsible sourcing

64% of supplier spend

qualified against UPM Supplier Code

Continuous supplier auditing

80% of wood from

certified forests

100% of wood sourcing

covered by chain of custody system

6000+ chemicals on

UPM Restricted Chemical Substance List

Responsible operations

Certified production, forestry (environmental, quality, OHS)

Transparent and verified reporting

85% of UPM employees

have completed Code of Conduct training

29

Growing eco-labelled sales

75% of UPM’s sales

are eco-labelled

| © UPM

Value creation with stakeholders

Dialogue, feedback

and engagement

New business opportunities

with ecodesign

Biofuels

Biochemicals

Biocomposites

Creating competitive advantage

and long-term value

High performing people

Resource efficiency

Ecolabels and certification

Customers

3

Anticipating and managing risks

Code of Conduct

Environmental performance

Responsible sourcing and forestry

2

1

4

MORE WITH BIOFORE

Responsibility is a source of

competitive advantage

32 | © UPM

| © UPM

Profit

improvement

programme

EUR 200m

Shifting gear in UPM transformation

33

UPM

Biorefining

UPM

Paper

Asia

UPM

Raflatac

UPM

Energy

UPM

Paper

ENA

UPM

Plywood

EBITDA target for

growth initiatives

EUR 200m

Biofuels:

Lappeenranta

biorefinery

Pulp: 10%

capacity increase

Labelling materials

Changshu expansion

Self-adhesive labels:

advancing in growth

markets and in higher

value added products

Business portfolio

development and

value creation

BIOCHEMICALS

BIOCOMPOSITES

BIOFUELS

New businesses

upm the biofore companyassets.upm.com/investors/documents/2014/upm abgs… · · 2015-06-30upm in...

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