2. Capital Markets Day, London, 28 May 2015
Financials and targets
The renewable materials company
Seppo Parvi, CFO
3. It should be noted that certain statements herein which are not
historical facts, including, without limitation those regarding
expectations for market growth and developments; expectations
for growth and profitability; and statements preceded by
“believes”, “expects”, “anticipates”, “foresees”, or similar
expressions, are forward-looking statements within the meaning
of the United States Private Securities Litigation Reform Act of
1995. Since these statements are based on current plans.
estimates and projections, they involve risks and uncertainties
which may cause actual results to materially differ from those
expressed in such forward-looking statements. Such factors
include, but are not limited to: (1) operating factors such as
continued success of manufacturing activities and the
achievement of efficiencies therein, continued success of product
development, acceptance of new products or services by the
Group’s targeted customers, success of the existing and future
collaboration arrangements, changes in business strategy or
development plans or targets, changes in the degree of protection
created by the Group’s patents and other intellectual property
rights, the availability of capital on acceptable terms; (2) industry
conditions, such as strength of product demand, intensity of
competition, prevailing and future global market prices for the
Group’s products and the pricing pressures thereto. price
fluctuations in raw materials, financial condition of the customers
and the competitors of the Group, the potential introduction of
competing products and technologies by competitors; and (3)
general economic conditions, such as rates of economic growth in
the Group’s principal geographic markets or fluctuations in
exchange and interest rates.
The renewable materials company
Disclaimer
4. 0
2 000
4 000
6 000
8 000
10 000
12 000
2010 2011 2012 2013 2014 2014/Q1 2015/Q1
The renewable materials company
Stora Enso Sales
2010–2015/Q1
The renewable materials company
Years 2010–2011 have not been restated in accordance with IFRS11 (line-by-line consolidation of joint ventures).
6%
-1%
-3% -3%
-3%
MEUR
5. MEUR
The renewable materials company
Stora Enso growth business sales
Q1/2015 sales excluding paper and divested businesses increase of 3% y-o-y
The renewable materials company
* Q1/2015 sales excluding paper and and divested businesses increased by 3% y-o-y.
Years 2010–2011 have not been restated in accordance with IFRS11 (line-by-line consolidation of joint ventures).
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
2010 2011 2012 2013 2014 2014/Q1 2015/Q1
9%
1% 4% 1%
1*%
6. 0
100
200
300
400
500
600
700
800
900
1 000
2010 2011 2012 2013 2014 2014/Q1 2015/Q1
MEUR
The renewable materials company
Stora Enso Operational EBIT
2010–2015/Q1
The renewable materials company
21%
9% -27%
-8%
40%
7. 0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
2010 2011 2012 2013 2014
MEUR
26%
10% -4% 3%
The renewable materials company
Stora Enso Net debt
2010–2014
The renewable materials company
Years 2010–2011 have not been restated in accordance with IFRS11 (line-by-line consolidation of joint ventures).
8. The renewable materials company
> New financial targets
Capex
OWC
Cash flow
Sensitivities
Today’s agenda
15. The renewable materials company
Stora Enso dividend policy
Earnings and distribution per share
Dividend of EUR 0.30 per share for 2014 totaling EUR 237 million was paid on 13 May 2015.
-1,2
-1,0
-0,8
-0,6
-0,4
-0,2
0,0
0,2
0,4
0,6
0,8
1,0
2007 2008* 2009* 2010 2011 2012 2013 2014
Earnings per share (basic) Dividend per share * Distribution of capital
• Strive to pay stable dividends linked to the long-term performance
• Half of the net income over the cycle
EUR
16. Consumer Board BiomaterialsPackaging Solutions Wood Products Paper
The renewable materials company
Divisional targets
ROOC Free cash flow
to sales
21. The renewable materials company
Divisional targets
Paper
Free cash flow to sales > 7.0%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15
Free cash flow to sales, Target
Free cash flow to sales, 4Q rolling
22. The renewable materials company
New financial targets
> Capex
OWC
Cash flow
Sensitivities
Today’s agenda
23. The renewable materials company
Capital Expenditure
Currently, other capex includes approximately 100 MEUR forestry capex annually
MEUR
0
200
400
600
800
1 000
1 200
2010 2011 2012 2013 2014 2015
Forecast
Ostroleka
MdP
Guangxi
Other capex
Depreciation
24. The renewable materials company
New financial targets
Capex
> OWC
Cash flow
Sensitivities
Today’s agenda
25. The renewable materials company
Operative working capital
OWC reduction
2012–2014: 540 MEUR
MEUR
26. The renewable materials company
New financial targets
Capex
OWC
> Cash flow
Sensitivities
Today’s agenda
27. The renewable materials company
Cash flow generation capability by division
- EBITDA
- Profitability
improvement
- Working capital
improvement
- Supply chain
lead times
- Capex control
- Non-core asset
disposal
Cash flow
tool box
0,0%
2,0%
4,0%
6,0%
8,0%
10,0%
12,0%
14,0%
16,0%
18,0%
20,0%
Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15
Cash flow from operations
r Board Packaging Solutions Biomaterials Wood Products Paper Other Cash flow to sales
-100
0
100
200
300
400
500
Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14
Cash flow from operations
Consumer Board Packaging Solutions Biomaterials Wood Products Paper
MEUR
-8%
-4%
0%
4%
8%
12%
16%
20%
-200
-100
0
100
200
300
400
500
Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15
Cash flow from operations
28. The renewable materials company
Cash flow generation capability by division
- EBITDA
- Profitability
improvement
- Working capital
improvement
- Supply chain
lead times
- Capex control
- Non-core asset
disposal
Cash flow
tool box
MEUR
-8%
-4%
0%
4%
8%
12%
16%
20%
-200
-100
0
100
200
300
400
500
Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15
Cash flow after capex
0,0%
2,0%
4,0%
6,0%
8,0%
10,0%
12,0%
14,0%
16,0%
18,0%
20,0%
Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15
Cash flow from operations
r Board Packaging Solutions Biomaterials Wood Products Paper Other Cash flow to sales
-100
0
100
200
300
400
500
Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14
Cash flow from operations
Consumer Board Packaging Solutions Biomaterials Wood Products Paper
29. The renewable materials company
New financial targets
Capex
OWC
Cash flow
> Sensitivities
Today’s agenda
30. The renewable materials company
Sensitivity analysis
10% increase in Impact*
Softwood pulp prices +45 MEUR
Hardwood pulp prices +45 MEUR
Fluff pulp prices +20 MEUR
Dissolving pulp prices +10 MEUR
Market pulp price, total +120 MEUR
10% decrease in Impact*
Energy prices + 8 MEUR
Wood prices +173 MEUR
Chemical and filler prices +66 MEUR
10% strengthening vs EUR in
the value of
Impact*
US dollar +116 MEUR
Swedish krona - 82 MEUR
British pound + 46 MEUR*Impact on operational EBIT for the next twelve months.
An increase of energy, wood or chemical and filler prices or
decrease of pulp prices, as well as weakening of the currencies
would have the opposite impact.
MEUR
Net FX Q1 2015 y-o-y
32. The renewable materials company
Loan portfolio currency and maturity structure
Currency breakdown
of non-current debt
in 2014, MEUR
EUR ~ 1 995
USD ~ 1 415
SEK ~ 695
Other currencies ~ 35
Total ~ 4 140
Prepayment of 2016 bond made in May 2015, USD 389 million
0
200
400
600
800
1 000
1 200
2015 2016 2017 2018 2019 2020 2021 2022-2035 2036
MEUR Bonds
Other loans /
liabilities Commercial paper
33. The renewable materials company
Targets supporting the next step in our transformation
• Strategic financial targets defined
– Challenging, but achievable
• Cash flow generation high
on agenda
– Capex to be reduced closer to
depreciation
– Operating working capital continues to
be in focus
• Continuous cost management
– Cost focus every day