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1
INTERIM REPORT JANUARY-JUNE 2011
Per Lindberg, President and CEOBertil Carlsén, CFO21 July, 2011
2
INVESTMENT IN PACCESS PACKAGING
• Investment corresponding to 30% in PACCESS Packaging» ~60 employees and sales of MUSD ~27
• Core expertise in developing packaging for production and delivery in Asia » Customers primarily multinational brand
owners
• Create a strong platform for future growth in Asia» Access to customer and supplier base
3
AGENDA
• Highlights
• Development by Business Area
• Financials
• Outlook
4
HIGHLIGHTS IN Q2 2011
• Strong Q2 result» EBIT of MSEK 275, margin 12%» The lower EBIT vs. Q1 mainly corresponds
to the periodic maintenance shutdown in Skärblacka (MSEK 56)
• Strong underlying earnings for packaging paper» Order situation remained good, although at
a lower and more normal level
» Over 3% increase in local prices (Q2 vs. Q1)
• Price increases compensated for higher costs and a stronger SEK
0
50
100
150
200
250
300
Actual Actual Adjusted*
Jan-Mar Apr-Jun 2011
EB
IT, M
SEK
0%
2%
4%
6%
8%
10%
12%
14%
EB
IT m
argi
n, %
0
50
100
150
200
250
300
350
Actual Actual Adjusted*
Jan-Mar Apr-Jun 2011
EBIT
, MSE
K
0%
2%
4%
6%
8%
10%
12%
14%
EBIT
mar
gin,
%
CONTINUED STRONG RESULTS
Billerud Group Packaging Paper
*Excluding cost for the periodic maintenance shutdown at Skärblacka.5
EBIT margin
EBIT
6
PACKAGING & SPECIALITY PAPERKraft & Sack Paper
PACKAGING BOARDSS/C Fluting, Liner, Liquid Board
MARKET PULPNordic Bleached Softwood Kraft Pulp
BUSINESS AREAS & SEGMENTS
Note: Graph shows sales breakdown per business area for January-June 2011.
7
PACKAGING & SPECIALITY PAPER Market situation in Q2 2011
• Order situation for sack and kraft paper returned to a more normal level
• Stock levels were reduced after being built up in Q1
• Increased price level in local currency for all products vs. Q1
Building & construction
Food
Consumer
8
PACKAGING & SPECIALITY PAPER Financials – Q2 2011 vs. Q1 2011
• Operating profit down by MSEK 38
• Increased fixed costs and lower sales volumes due to maintenance shutdown
» Carries ~70% of a Skärblacka shutdown cost
• Improved prices
Q2 2011 Q1 2011 Q2 2010 FY 2010
Net sales, MSEK 1,079 1,217 1,009 4,166
Operating profit, MSEK 102 140 84 417
Operating margin, % 9 12 8 10
0
20
40
60
80
100
120
140
160
Q2 Q3 Q4 Q1 Q2
EB
IT, M
SE
K
20112010
9
PACKAGING BOARDS Market situation in Q2 2011
• Order situation remained good but with some seasonal decline
• Increased price level in local currency for all products vs. Q1
10
PACKAGING BOARDS Financials – Q2 2011 vs. Q1 2011
• Operating profit down by MSEK 3• Improved prices • Higher fixed costs and lower sales
volumes, partly due to maintenance shutdown
• Q2 is generally seasonally weaker than Q1
Q2 2011 Q1 2011 Q2 2010 FY 2010
Net sales, MSEK 704 728 518 2,428
Operating profit, MSEK 94 97 -14 271
Operating margin, % 13 13 -3 11
-20
0
20
40
60
80
100
120
140
Q2 Q3 Q4 Q1 Q2
EB
IT, M
SE
K
20112010
11
MARKET PULP Market situation in Q2 2011
• Demand for NBSK remained good
• ~45 USD/tonne price increase in Europe
• Two price increase were announced for Europe
» 1,010 USD/tonne for April
» 1,040 USD/tonne for June
• The June price increase was not fully implemented but stayed at ~1,025 USD/tonne
12
MARKET PULP Financials – Q2 2011 vs. Q1 2011
• Operating profit down by MSEK 18
• Improved prices in local currency compensated for lower USD rate
• Lower sales and product volumes as well as higher fixed costs, partly due to maintenance shutdown
Q2 2011 Q1 2011 Q2 2010 FY 2010
Net sales, MSEK 435 436 445 1,731
Operating profit, MSEK 20 38 100 276
Operating margin, % 5 9 22 16
-40
-20
0
20
40
60
80
100
120
Q2 Q3 Q4 Q1 Q2
EB
IT, M
SE
K
20112010
13
Q2 IN SUM
• Strong Q2 result given maintenance shutdown
» EBIT margin of 12%
» Return on equity of 19%
• Strong underlying earnings for packaging paper
14
FINANCIALS
15
QUARTERLY KEY FIGURES
Q2 2011 Q1 2011 Q2 2010
Sales volume (ktonnes) 335 369 309
Net sales, MSEK 2,383 2,547 2,108
Operating profit, MSEK 275 332 201
Operating margin 12% 13% 10%
Profit/share, SEK 1.88 2.28 1.30
Net debt/equity ratio 0.06 0.05 0.21
16
EBIT BRIDGE Q2 2011 vs. Q1 2011
* Includes product mix.
275
332
-83
+81-1 -5
-51+2
0
50
100
150
200
250
300
350
EBIT Q1 2011
Sales &productionvolumes*
Selling prices(in respective
salescurrency)
Effects ofexchange ratefluctuations,incl. hedging
Change invariable costs
Change infixed costs
Change indepreciation
EBIT Q2 2011
MS
EK
17
JANUARY-JUNE KEY FIGURES
Jan-Jun 2011 Jan-Jun 2010 vs. 2010
Sales volume (ktonnes) 704 652 +8%
Net sales, MSEK 4,930 4,298 +15%
Operating profit, MSEK 607 435 +40%
Operating margin 12% 10% +2 p.p.
Profit/share, SEK 4.16 2.82 +48%
Net debt/equity ratio 0.06 0.21 +0.15
18
1) Minus equals increase in net debt
SEASONALITY RELATED TO PERIODIC SHUTDOWNS
Estimated shutdown cost
Estimated breakdown of shutdown cost by business area
Planned date of shutdown
Mill MSEK PSP PB MP 2011Gruvön ~100 ~30% ~60% ~10% Q4Karlsborg ~40 ~50% 0% ~50% Q3Skärblacka ~60 ~70% ~15% ~15% Q2
-2%
0%
2%
4%
6%
8%
10%
12%
14%
FY 06 FY 07 FY 08 FY 09 FY 10
EB
IT m
argi
n, ro
lling
12 m
onth
s (%
)
19
FINANCIAL TARGETS MET 4 CONSECUTIVE QUARTERS
Financial target
INCREASED PRODUCTIVITYFo
cus
Process efficiency
Customer-focused development
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
Q1 05 Q1 06 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11
Qua
rterly
net
sal
es p
er e
mpl
oyee
, MS
EK
21
WORKING CAPITAL KEY RATIOSDSO Overdue WC as % of quarterly sales
0
10
20
30
40
50
60
70
0901
3109
0430
0907
3109
1031
1001
3110
0430
1007
3110
1031
1101
3111
0430
DS
O d
ays
0,0
1,0
2,0
3,0
4,0
5,0
6,0
0901
3109
0531
0909
3010
0131
1005
3110
0930
1101
3111
0531
% o
f tot
al re
ceiv
able
s
0%
10%
20%
30%
40%
50%
60%
70%
0903
0906
0909
0912
1003
1006
1009
1012
1103
1106
Wor
king
cap
ital (
excl
. IAS
)/qua
rtely
net
turn
over
22
1) Minus equals increase in net debt
CASH FLOW
MSEK Q2 2011 Jan-Jun 2011 Jan-Jun 2010Operating surplus, etc 421 902 625
Change in working capital, etc. 57 -244 -99
Net financial items, taxes, etc. -10 -191 -58
Cash flow from operating activities 468 467 468Current net investments -129 -211 -137
Operating cash flow 339 256 331Dividend -361 -361 -52
Other items, not affecting cash flow -1 -7 -4
Change in net debt 1) -23 -112 275
23
8090
100110120130140150160
2004 Q32005
Q22006
Q12007
Q42007
Q32008
Q22009
Q12010
Q42010
MARKET PRICES AFFECTING RESULT
550600650700750800850900950
1,0001,050
2004 Q32005
Q22006
Q12007
Q42007
Q32008
Q22009
Q12010
Q42010
9497
100103106109112115118
2004 Q3 2005
Q22006
Q12007
Q42007
Q32008
Q22009
Q12010
Q42010
80
120
160
200
240
280
2004 Q32005
Q22006
Q12007
Q42007
Q32008
Q22009
Q12010
Q42010
Electricity index (Sweden*) Wood price index
Market Pulp (USD/t) TCW index*Source: Nordpool. *Price area Sweden
Source: Riksbanken *Total Competitiveness Weights Index
Source: Billerud
Note: Average price for the quarter
24
EASENED SEK STRENGTH
Average rate Q2 2011
Average rate Q1 2011
Spot rate 18 July 2011
Q2 2011 vs. Q1 2011
18 July 2011 vs. Q2 2011
EUR 9.02 8.87 9.25 +2% +3%
USD 6.26 6.48 6.59 -3% +5%
GBP 10.22 10.39 10.62 -2% +4%
25
CURRENCY SITUATION
Jul-Sep 2011
Oct-Dec 2011
Jan-Mar 2012
Apr-Jun 2012
Total 12 months
Average hedged currency
rates (hedged net
flows)
Average hedged currency
rates (hedged net
flows)
Average hedged currency
rates (hedged net
flows)
Average hedged currency
rates (hedged net
flows)
Average hedged currency
rates (hedged net
flows)
9.12 9.33 9.43 9.21 9.25
(86%) (61%) (46%) (11%) (51%)
7.06 6.66 6.57 6.51 6.85
(82%) (57%) (22%) (10%) (43%)
10.65 10.64 10.64 10.51 10.64
(83%) (56%) (20%) (10%) (42%)
• Profit effect of net flow hedging MSEK 52 for Q2 2011 (29) and MSEK 151 for Jan-Jun 2011 (146)
• Market value of outstanding contracts not relating to accounts receivables was MSEK 49 (as of 30/6-11)
• Hedge level 12 months forward:
Note: Data in table and graph are as of 30 June 2011.
42%
43%
51%
GBP
USD
EUR
26
OUTLOOK
27
OUTLOOK FY 2011
• The order situation at the start of the third quarter remains good and at normal levels
• Additional price increases have not been announced
• Continued stable development expected in the third quarter
• Unease in the financial market and its effect on the business cycle make development in the subsequent period somewhat more uncertain
28
Q&A