Embed Size (px)
Citation preview
Metsä BoardInvestor presentationJanuary–June 2020
This is Metsä Board ………………………… 3 H1 2020 results ……...…………………… 36
Upcoming investments …………………….. 14 Sustainability ………………………………. 50
Operating environment ………………….. 20 R&D ………………………………………… 56
Profit drivers and cost structure ................. 28 Owners, management, contacts ……….... 65
2
Contents
Metsä Board in brief
#1 Strong market position
in folding boxboard and white kraftliners in Europein coated white kraftliners globally
Our customers include brand owners, converters, manufacturers of corrugated products and merchants
Paperboard capacity
tonnes/year
Pulp surplus*
tonnes/year
Folding boxboard
57%
White kraftlainers
25%
Market pulp13%
Other5%
EMEA71%Americas
21%
APAC8%
Sales split by product
Sales split by region
600,0002,000,000
2019: EUR
1,932m
2019:EUR
1,932m
3
*) includes the 24.9% holding in Metsä Fibre
Long-term customerships
We focus on ecological and safe fresh fibre paperboardsEnd uses are mainly in consumer product packaging
Folding boxboard and food service board White kraftliners
Food and food service packaging
Other consumerproducts
(pharma, cosmeticsand electronics)
Graphic end uses
End uses of folding boxboard*
Shelf-ready solutions, point-of-sale displays, fresh fruit/vegetable boxes
Other consumer goods (e.g. electronics)
E-commerce
End uses of white kraftliners*
*) based on Metsä Board’s own estimates4
5
6
FOCUSWe are the leader in sustainability, focusing on premium fresh fibreproducts for consumer and retail packaging. The high performance of our products is based on technical excellence and tailor made high-quality Nordic pulps.
GROWTHWe grow globally together with our existing and new customers by offering sustainable, safe and high-performing products. Our growth is based on skilled people, industry leading products and new innovative packaging solutions.
PROFITABILITYOur profitability is based on the efficiency of our operations and prioritisation of businesses that benefit from the high performance of our products and services.
S T R A T E G Y
Packaging solutions that respect nature
M I S S I O NPreferred supplier of innovative and sustainable fibre-based packaging
solutions, creating value for customers globally
V I S I O N
Mission, vision and strategy
We aim for good profitability and a strong balance sheet
Comparable ROCE:Target at least 12%
11.214.4
10.4 10.7
2017 2018 2019 H1 2020
1.21.0 1.1 1.1
2017 2018 2019 H1 2020
Net debt/comparable EBITDA:Maximum level 2.5x
Target > 12%
Target< 2.5x
77
76
50 5159
2016 2017 2018 2019
Dividend policy: Payout ratio at least 50% of net result
Financial targets and dividend policy:
Wood products Paperboard
METSÄ TISSUE
METSÄ FOREST
Wood supply and forest services
METSÄ FIBRE
Pulp and sawn timber
METSÄ WOOD
METSÄ BOARD
Tissue and greaseproof papers
Group’s parent company, owned by 103,000 Finnish forest ownersMETSÄLIITTO COOPERATIVE
METSÄ GROUP
METSÄ BOARD OWNS 24.9%
Metsä Board is part of Metsä Group
8
100% 100% 100%50.1% 48%Metsäliitto’s ownership:
A unique group structure, with• high availability of Nordic fibres and pulps, that are• tailor made for Metsä Board’s paperboards.
• Metsä Fibre is a leading producer of NBSK globally • Annual capacity of chemical pulp is 3.2 million tonnes, of which
80% NBSK and 20% BHKP • Metsä Board consolidates 24.9% of Metsä Fibre’s net result into its
EBITDA. The annual dividend by Metsä Fibre is typically paid at theend of Q1
9
Metsä Board owns 24.9% of Metsä FibreOther owners Metsäliitto Cooperative 50.1% and Itotchu Corporation 25.0%
Calculation of Metsä Board’s annual net pulp balance million tonnes
Own pulp and BCTMP production +1.4
Own pulp and BCTMP consumption -1.6
24.9% share from Metsä Fibre’s pulp production +0.8
Metsä Board’s annual net pulp balance +0.6
Metsä Group internal
use
Market pulp,
Europe
Market pulp, Asia
Metsä Fibre’s split in pulp deliveries
Tissue paper
Printing paper
Paperboard
Speciality papers
Other
Metsä Fibre’s market pulp end-uses
NOTE! Figures are indicative and annual changes are possible
Our production is close to our main raw material
10
Husum, SWE400,000 t/a FBB250,000 t/a WKL730,000 t/a Pulp
Kemi425,000 t/a WKL610,000 t/a Pulp*
Kaskinen370,000 t/a BCTMP
Kyro190,000 t/a FBB
Äänekoski260,000 t/a FBB1.3 million t/a Pulp*
Simpele290,000 t/a FBB
Joutseno330,000 t/a BCTMP690,000 t/a Pulp*
Tako210,000 t/a FBB
Wood sourced from Finland, Sweden, Baltics and Russia.
*Metsä Fibre mill
Our net balance in pulp in 2019, including the 24.9% ownership in Metsä Fibre, is 600,000 t/a
Total paperboard capacity:Folding boxboard (FBB): 1,350,000 t/a
White kraftliner (WKL): 675,000 t/a
11
Annual paperboard delivery volumes have remained stable during the recent years
763 801 865 988 1144 1215 1207
373 444539
580658 615 584
0
500
1 000
1 500
2 000
0
500
1 000
1 500
2 000
2013 2014 2015 2016 2017 2018 2019
White kraftliner deliveries Folding boxboard deliveries Total paperboard capacity
Metsä Board’s annual paperboard deliveries and current capacity, 1,000 tonnes
* During 2013–2017 the demand growth for FBB and WKL was ~3%/year
1,00
0 to
nnes
Total paperboard capacity 2 million tonnes
12
Paperboard demand and supply in Metsä Board’s market areas
AMERICAS24%
432,000 tonnes
EMEA70%
1,245,000 tonnes
APAC6%
114,000 tonnes
Focus on high-quality segment in APAC
• Growth of the middle class and rising purchasing power support demand for packaging material
• Plenty of local paperboard supply
Strong market position in Europe
• Environmental awarness and tightened regulatory requirementents support demand for lightweight and recyclable packaging materials
• Stable demand situation for folding boxboard and white kraftliner
• Conversion of paper production to lower grade liner production continues. Good availability of raw material has increased supply of recycled liner
Share of Metsä Board’s total paperboard deliveries in 2019:
Growth potential in North-America
• Limited availability of lightweight folding boxboard and coated white kraftliner
• Increasing demand for food service packaging
• Changing delivery volumes of paperboard imported from China
35% 28%
Folding boxboard in Europe
Total capacity 3.9m tonnes
White kraftlinerin Europe
Total capacity 2.3m tonnes
Metsä Board
#1
#2#3
#4
#5
Others MetsäBoard
#1
#2#3
#4
#5
Others
Metsä Board has a leading position in Europe in folding boxboard and white kraftliners
Upcoming investments
Main investments in growth and development 2014–2020E:
2020E Husum pulp mill renewal, finishing area modernization at Kyro mill
2019 Husum pulp mill renewal, new sheeting line in Äänekoski
2018 New baling line in Kaskinen BCTMP mill: 30,000 new BCTMP capacity
2017 New extrusion coating line in Husum: 100,000 t/a PE coating capacity
2015–16 New folding boxboard production line in Husum: 400,000 t/a of FBB and kraftliner production line conversion: 250,000 t/a of WKL
15
Total capex in H1 2020 was EUR 73 millionFY 2020 estimate EUR 200 million
0
50
100
150
200
250
2014 2015 2016 2017 2018 2019 2020E
Capex in growth and developmentMaintenance capexDepreciation
Capital expenditure and depreciation
EUR
milli
on
NOTE! Estimated investments in 2020 are provisional and dependent on the environmental permit process related to the Husum pulp mill renewal
Metsä Board: Husum, SWERenewal of the pulp millEUR 320 million (first phase)
Final investment decision expected to be made in Q3 2020, at the earliest
Metsä Fibre: Kemi, FINNew bioproduct millEUR ~1.5 billion
Final investment decision expected to be made in H2 2020
Metsä Fibre: Rauma, FINNew pine sawmill lineEUR ~200 million
Final investment decision made in March 2020
Metsä Board and Metsä Fibre are planning three major investments with total value of EUR 2 billionThe aim is to further improve the competitiveness of pulp and energy production and move towards fossil-free mills
Metsä Board owns 24.9% of Metsä Fibre
Update on Husum pulp mill renewal
2019 2020 2021 2022
Company expects to make the final investment decision
New recovery boiler and turbine expected to be in operation
Pre-engineering
phase launched
17
Second phase: New fibre line. To be implemented during the 2020s after the first phase is fully completed
First phase: New recovery boiler and turbine
First investments made
Foundation work for new recovery boiler started
• Foundation work for the recovery boiler started in March 2020• The processing of the environmental permit has progressed slightly slower than expected• Metsä Board estimates that the new recovery boiler will start up in H1 2022 at the earliest• Investment value for the first phase EUR 320 million
Investment value• Investment value of first phase is EUR 320 million, divided over 2019–
2022
Estimated impacts of the first phase • Self-sufficiency in electricity increases from 40% to over 80%*• Reduced amount of purchased oil• Lower maintenance capex and costs
– Reduced duration and extended intervals between planned shutdowns → Increased pulp and paperboard production
• Annual cash flow improvement EUR 35 million, of which EUR 30 millionEBITDA improvement and EUR 5 million lower capex
• Financing costs to increase by EUR 2 million per year
18
Husum pulp mill renewal in figures
*) Annual increase in electricity production about 330 GWh, resulting in cost savings at 2019 electricity prices of approximately EUR 12 million
New bioproduct mill* in Kemi, Finland• Size of the investment EUR 1.5 billion• Annual capacity 1.5 million tonnes of chemical pulp and
several other bioproducts• Final investment decision expected in H2 2020
New sawmill line in Rauma, Finland• Size of the investment EUR 200 million • Annual capacity 750,000 cubic meters• Will be the most modern and efficient sawmill line in the
world• Final investment decision made in March 2020
19
Metsä Fibre’s investments
*) would replace the existing pulp mill in Kemi, with annual capacity of 630,000 tonnes of chemical pulp
Operating environment forfresh fibre paperboards
Replacing fossil-based materials, i.e. plasticsThe solution: renewable and biodegradable wood fibre
Increased waste generation due to urbanisationThe solution: Paperboard is recyclable – and widely recycled
Reducing carbon footprintThe solution: renewable energy, efficient energy and water usage in production
Ensuring food safetyThe solution: pure and safe fresh fibres in food packaging
Fresh fibre paperboards offer solutions to global challenges
Fresh fibre paperboard is an alternative to plasticsConsumers regard paperboard as a more responsible choice than plastic packaging
The size of total packaging market is USD 920 billioncalculated from the value of finished packaging article
22
Most suitable replacement options are in rigid plastics and food packaging
Paperboard33%
Other fibre-based12 %
Plastic36%
Metal13%
Glass6%
Why do we package? The most important function of packaging is to ensure product
safety to the consumer and reduce wastage in the value chain
The carbon footprint of packaging is usually minimal compared to the packaged product
Source: Smithers
• Besides regulation, several brand owners, retailers, organisations and governments have own commitments to move to recyclable, compostable or reusable packaging
• Paperboard is among the preferred packaging materials
• Metsä Board has developed a new plastic-free barrier board for even more demanding end-uses:
• Suitable for food and food service purposes • Medium barrier for grease and moisture• Can be recycled in paper or paperboard
streams
23
Potential from increased regulation
The target of the EU Plastics Strategy is to create a circular economy for plastics
The aim of the EU SUP Directive is to promote circular approaches and reduce waste generated. It includes the initiatives to ban or significantly
reduce the use of single-use plastic products, e.g. plastic plates, cups and take-away food containers
Fresh fibre keeps the recycling loop goingPAPERBOARD IS HIGHLY RECYCLED BUT 100% RECOVERY IS NOT POSSIBLE
RECOVERED FIBRE from communities
THE QUALITY OF COLLECTED PAPER CONSTANTLY DECLINESLess office and graphic papers
CIRCULATION3.5 times on average / year
RENEWABLE FRESH FIBRE from sustainablymanaged forests
Source: CEPI
24
Not all paper and board are recyclable e.g. toilet paper, stained packaging
Sorting based on quality results in rejecting part of material
FIBRE QUALITY deteriorates in recycling
Fibre loss in de-inking process
Fresh fibresare needed to
ensure strength and purity, and to
keep the recycling loop
ongoing
25
We operate in a growing market
0
10000
20000
30000
40000
50000
60000
70000
80000
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
1000
met
ric to
nnes
Asia 2.4%/a
Containerboard growth forecastCartonboard growth forecast
Source: RISI Paper Packaging Forecasts
0
25
50
75
100
125
150
175
200
225
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Milli
on m
etric
tonn
es
26
Annual demand in paperboards by region Good opportunities in premium paperboards
Cartonboard White linerboardCartonboard White linerboard Cartonboard White linerboard
Total annual demand:
10 million tonnes
3 million tonnes
10 million tonnes
5.5 million tonnes
22 million tonnes
3 million tonnes
Americas EMEA APAC
FSB
FBB
Otherfresh fibre
grades
Recycledgrades
CWKLWKL
White testliner
FSB
FBB
Otherfresh fibre
grades
Recycledgrades
CWKLWKL
White testliner
FSB
FBB
Otherfresh fibre
grades
Recycledgrades
WKLWhite
testliner
FSB = food service board, FBB = folding boxboard, SBS & CUK = other fresh fibre grades, WLC = recycled gradesWKL = uncoated white kraftliner, CWKL=coated white kraftliner
28%
86%
41%
33%
36%
Source: Metsä Board research based on several sources, e.g. CEPI Cartonboard and Containerboard, RISI
Total containerboard market 170Mt
Linerboards 100Mt
White linerboard 11.5Mt
White fresh fibre 4.5 Mt
Coated white fresh
fibre 1Mt
Uncoated white fresh
fibre 3.5 Mt
White recycled
7Mt
Brown linerboard 88.5 Mt
Brown kraftliner
28Mt
Brown testliner61.5Mt
Fluting 70Mt
Fresh fibre fluting 8Mt
Recycled fluting 62Mt
Metsä Board’s linerboards are at the top of the quality pyramid – in a very niche market
Global annual demand in containerboards
Source: Metsä Board’s own estimate based on several sources27
Profit drivers and cost structure
Component Unit Change Impact on EBIT
Folding boxboard Price / tonne +/- 10% > EUR 100 million
White kraftliners Price / tonne +/- 10% ~ EUR 50 million
FX USD/EUR +/- 10% EUR 61 million
SEK/EUR +/- 10% EUR 37 million
Pulp PIX price of SW/HWper tonne
+/- 10% EUR 30 million
Wood Cost, delivered to Finnish mills
+/-10% EUR 30 million*
Cost, delivered to Husum
+/-10% EUR 20 million
29
Main profit drivers and sensitivities
USD57%SEK
34%
GBP7%
Others2%
Annual FX transaction exposuretotal EUR 1.1 billion
* Includes the wood used in the pulp purchased from Metsä Fibre
Metsä Board’s cost split
Total costs in 2019 were EUR 1.70 billion (2018: EUR 1.69 billion)
Recent development:• Declined production costs for pulp and for
paperboard in particular. – in Sweden, the price of imported wood
have decreased – energy costs have declined due to
lower market prices of oil products – raw material prices have declined
during the coronavirus pandemic
Wood28%
Logistics16%
Chemicals16%
Energy14%
Personnel12%
Other fixed14%
30
Metsä Board’s cost split in 2019
• Wood represents 28% out of total costs (EUR 1.7bn in 2019)
• Sourcing function is centralized in Metsä Forest • Majority of wood sourced in Finland
comes from the members of MetsäliittoCooperative
• In 2019 Metsä Board sourced 8.2 million m3
wood– This includes the wood bought to Metsä
Board pulp/BCTMP mills (5.4Mm3) and the wood used in pulp that Metsä Board buys from Metsä Fibre (2.8Mm3)
– 50% from Finland, 26% from Sweden, 13% Baltics, Germany, Poland and 11% Russia
31
Wood is Metsä Board’s main raw material
Finland50%
Sweden26%
Baltics, Germany,
Poland13%
Russia11%
Metsä Board’s wood sourcing areas
500
600
700
800
900
1000
1100
1200
500
600
700
800
900
1000
1100
1200
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Folding boxboard
White-top kraftliner
32
Price development of folding boxboard and white kraftliner in Europe
EUR/ tonne
Sources: Fastmarkets RISI & Fastmarkets FOEX
EUR/ tonne
350400450500550600650700750800850900950100010501100115012001250
350400450500550600650700750800850900950
100010501100115012001250
'10 '11 '12 '13 '14 '15 '16 '17 '18 '19 20
Source: Fast Markets Foex
USD or EUR USD or EUR
33
Price development of pulp in Europe (PIX)Long-fibre (SW) and short-fibre (HW) pulp
Long-fibre, USD
Long-fibre, EUR
Short-fibre, EUR
Short-fibre, USD
Price development of roadside pulpwood in Finland and Sweden
Pulpwood roadside prices in Finland, EUR/m3 Pulpwood roadside prices in Sweden*, SEK/m3
Sources: Luke (Natural Resources Institute Finland) and Skogsstyrelsen (The Swedish Forest Agency)
150170190210230250270290310330350370390
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Spruce Birch Pine
34
2022242628303234363840
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Spruce Birch Pine
FX rates development: EUR/USD and EUR/SEKEUR/USD
35
EUR/SEK
1,05
1,07
1,09
1,11
1,13
1,15
1,17
1,19
10
10,2
10,4
10,6
10,8
11
11,2
11,4
H1 2020 results
37
Key financialsQ2/20 Q2/19
ChangeQ2/20
vs. Q2/19H1/20 H1/19
ChangeH1/20
vs. H1/19FY 2019
Sales EUR, m 473 477 - 0.8% 945 964 - 2.0% 1,932
EBITDA* EUR, m 87 68 + 27% 146 157 - 7% 279
Operating result* EUR, m 60 41 + 48% 94 103 - 8% 184
% of sales* % 12.8 8.6 10.0 10.7 9.5
Metsä Fibre’s share of operating result* EUR, m 1.6 15.6 - 90% -2.6 36 - 107% 43
Earnings per share EUR 0.15 0.10 + 43% 0.21 0.27 - 23% 0.41
ROCE* % 13.9 9.7 10.7 11.7 10.4
Total investments EUR, m 43 18 + 142% 73 24 + 201% 99
Cash flow from operations EUR, m 72 31 + 135% 152 67 + 127% 201
IB Net debt, at end of period EUR, m 306 380 - 20% 306 380 - 20% 308
*comparable
38
Q2 2020 in summary COMPARABLE
OPERATING RESULT
60EUR million
OPERATING CASH FLOW
72EUR million
PAPERBOARD DELIVERIES
458,000tonnes
TOTAL INVESTMENTS
43EUR million
• Paperboard demand was at a good level, and prices remained fairly stable
• All-time high production volume in paperboards
• Strong cash flow generation continued• Slower than expected environmental
permit process for the new recovery boiler at Husum pulp mill
• Excellence Centre in Äänekoski was completed
• Impacts on paperboard demand– Increased demand in food, beverage and
pharmaceutical packaging– Decreased demand in graphic end uses and luxury
products packaging • Substantial precautionary measures in place ensuring
the safety of employees and business continuity• No impacts on production. Some of the planned
maintenance works in Q2 have been postponed to H2• Weakening of global economy hinders visibility and
may negatively impact Metsä Board’s profitability39
Covid-19 impacts on Metsä Board’s operations
Total paperboard delivery volumes increased
297 328 297 293 302 299 305 300 298 310
171161
149 134 138 146 161 140 152 148
0
100
200
300
400
500
Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020
White kraftliner Folding boxboard
1,00
0 to
nnes
40
1,00
0 to
nnes
FY 2018: 1,830,000 tonnes
FY 2019: 1,791,000 tonnes
Q2 2020 vs. Q2 2019: +3%H1 2020 vs. H1 2019: +3%
Sales development by market area in H1 2020
41
EMEA434k
(432k)
Americas132k
(120k)
APAC42k
(50k)
FBB deliveries in H1 2020 (H1 2019)total 608k tonnes (601k)
71%
EMEA195k
(183k)Americas 101k (97k)
APAC5k (4k)
WKL deliveries in H1 2020 (H1 2019)total 300k tonnes (284k)
EMEA• Strong demand for food and pharma packaging• Increased total delivery volumes• FBB prices stable, WKL prices slightly down from H1 2019AMERICAS• Strong demand for food, beverage and pharma packaging;
growing e-Commerce boosting demand for WKL• Increased total delivery volumes• Higher FBB and WKL euro prices compared to H1 2019APAC• Lower delivery volumes in FBB
22%
7%
65%
33%
FBB = Folding boxboardWKL = White kraftliners
2%
69 62 34
5941
60
6443
60
39
0
50
100
150
200
250
2018 2019 2020
Sales, quarterly EUR million
492 487 472
519 477 473
475 489
458 478
0
500
1000
1500
2000
2018 2019 2020
42
Comparable operating result, quarterlyEUR million and % of sales
EUR
milli
on
EUR
milli
on
FY 2018EUR 252 million margin: 13.0%
FY 2019EUR 184 million
margin: 9.5%
FY 2018EUR 1,944
million
FY 2019EUR 1,932
million Operating result:H1 2020: EUR 94mH1 2019: EUR 103m
Operating margin:H1 2020: 10.0%H1 2019: 10.7%
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Sales:H1 2020: EUR 945mH1 2019: EUR 964m
FX and lower production costs improved profitability
• Pulp prices (PIX) in H1 2020 vs H1 2019– European NBSK (USD) decreased by 24%*
– Chinese NBSK (USD) decreased by 17%*
• Pulp demand supported by increased demand in tissue and hygiene products, with reduced availability of recycled paper but weakened by a sharp decline in printing & writing paper consumption
• In H2, the pulp supply will decrease due to production curtailments announced by certain producers and several annual maintenance shutdowns
43
Market pulpPulp price (PIX) development in Europe and China
Long-fibre pulp, Europe Long-fibre pulp, China (net)
Source: Fastmarkets Foex
USD/tonne
*) calculated from the difference between quarterly average prices
0
200
400
600
800
1 000
1 200
1 400
0
200
400
600
800
1 000
1 200
1 400
2014
2015
2016
2017
2018
2019
2020
USD/tonne
4%
6%
8%
10%
12%
14%
16%
Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20
Comparable return on capital employed, %
Quarterly Rolling 12m Target44
H1 2020 comparable ROCE at 10.7%
Target level > 12%
R12m10.2%
Q2/20:13.9%
30 3654
30 36 3144
9080 72
20 2343
-3
2913
26 3750
34
-50
0
50
100
150
200
250
300
-50
0
50
100
150
200
250
300
Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20
Cash flow from operations, quarterly Free cash flow, quarterlyCash flow from operations, rolling 12 months Free cash flow, rolling 12 months
EUR
milli
on
45 Free cash flow = cash flow from operations − total investments
Strong development in operating cash flow continued
EUR
milli
on
358 335 388 344 335 297 380 352 308 306
1.2 1.1 1.21.0 1.0 0.9
1.2 1.2 1.1 1.1
0,0
0,5
1,0
1,5
2,0
2,5
3,0
0
100
200
300
400
500
600
12/2017 3/2018 6/2018 9/2018 12/2018 3/2019 6/2019 9/2019 12/2019 6/2020
Net debt, EUR million Net debt to comparable EBITDA (last 12 months)
46
Strong balance sheet at the year endNet debt at EUR 306 million, leverage 1.1x
Net debt / EBITDA target level: <2.5
EUR
milli
on
0
50
100
150
200
250
2020 2021-2024 2025 2027
Bonds Loans from financial institutionsPension loans Finance lease liabilities
47
Debt and liquidity Maturity of interest-bearing debtTotal EUR 462 million
EUR
milli
on30 June 2020 • Total interest-bearing net debt was
EUR 306 million • Liquidity was EUR 353 million and
complementary items EUR 340 million• Liquid funds and investments of
EUR 153 million• Undrawn revolving credit facility
EUR 200 million, maturing on 2025• Metsä Group’s internal undrawn credit
facility of EUR 150 million and pension premium funds of EUR 190 million
Rating agency Rating and outlook Last update
S&P Global BBB- / stable 02/2018
Moody‘s Investor Services
Baa3 / stable 01/2019
Metsä Board’s credit ratings are investment grade
• Capital allocation for 2020– EUR 85 million dividend, paid in June
– CAPEX: Estimated EUR 200 million, including EUR 60 million annual maintenance capex and EUR 140 million capex to Husum pulp mill renewal (dependent on the timing of environmental permit granted by Swedish authorities)
• Husum pulp mill renewal and estimated impacts on capital allocation going forward
– Phase 1: Total investment value EUR 320 million, divided over 4 years in 2019–2022
– Financing mainly through incremental debt – cost estimated at ~1% p.a. or EUR 2 million/year
– Dividend policy unchanged
-40
-20
0
20
40
60
80
-100
-50
0
50
100
150
200
2016 2017 2018 2019 LTM
FCF, EUR million FCF/EBITDA,%
48
Capital allocation
EUR million %
Free cash flow in EUR million and % of EBITDA
Comparable EBITDA R12, EUR 267 million
FCF=Cash flow from operations after investments
49
Near-term outlookJuly–September 2020
• Paperboard delivery volumes in Q3 are estimated to decline from Q2. Price levels are expected to remain stable.
• Profitability will be weakened by major planned maintenance shutdowns, e.g. at the Kemi and Husum* integrate mills. Some smaller maintenance works have also been postponed from Q2 to Q3.
• Metsä Board’s market pulp deliveries in Q3 are expected to decline from Q2
• Production costs are not expected to decline further• Metsä Board’s comparable operating result for the
third quarter of 2020 is expected to weaken compared to the second quarter of 2020.
*shutdown in Husum in September-October
Sustainability
Certified wood fibre• Share of certified fibre >90%• In 2019: 76%
At Metsä Group level:
Increasing the amount of carbon stored in forests and products• Area of regeneration and
management of young stands• Amount of carbon stored in
products (t)
Safeguarding biodiversity• Increasing the amount of
decayed wood
Fossil free mills• Share of fossil free energy
100%, 0 tCO2 (Scope 1)• In 2019: 82%
Fossil-free purchased energy• Share of fossil free energy
100%, 0 tCO2 (Scope 2)• In 2019: 85%
Resource efficient production• Utilisation of side streams
100%• In 2019: 99%• Process water use per prod.
ton (m3/t) -30% vs. 2018• In 2019: -11%• Energy efficiency
improvement>10% vs. 2018
• In 2019: -0.5%
Metsä Board’s 2030 sustainability targets and actuals in 2019CLIMATE AND ENVIRONMENT
SUSTAINABLE CHOICES WELL-BEINGFOREST
Responsible corporate culture• Ethics barometer 100%• In 2019: new ethics
barometer to be developed, coverage of Code of Conduct e-training 97%
Accident-free work environment• Accident frequency LTA1 0• In 2019: LTA1 5.5
Fossil free raw materials• Share of fossil free raw
materials 100%• In 2019: 99%
Sustainable supply chain• Sustainable suppliers 100% • In 2019: commitment to
Supplier Code of Conduct: 95%, compliance analysis conducted 82%, coverage of sustainability questionnaire 58%
• Traceability of raw materials 100%
• In 2019: 93%
51
52
Roadmap to fossil free mills 2020–2030Planned key investments subject to the final investment decisions presented timelines are indicative Target is to
have all mills fossil free
by 2030
Own generation20%
Purchased through PVO shareholding32%
Purchased electricity
48%
Electricity sourced in 2019 (total 2.4 TWh)
53
83% of our total energy used is fossil free Renewable, mainly wood-based side …Nuclear
power34%
Fossil-based
17%
Primary energy used in 2019(total 11.7 TWh)
Used energy • Target of 100% fossil free mills by 2030 (scope 1 and 2)
• Husum pulp mill renewal will be a big contributor
• Improving energy efficiency: 12% improvement in 2009–2019, target of 10% improvement 2018–2030
• Replacing peat with biomass and natural gas with biogas/fossil free electricity in our Finnish mills
Sourced electricity• Metsä Board’s self-sufficiency in electricity is 66%
• Self-sufficiency includes own generation and electricity purchased through PVO holding or from Metsä Fibre
• After OL31) starts up, Metsä Board is nearly self-sufficient in electricity in Finland
• Self-sufficiency in Husum integrate increases from 40% to 80% after the first phase of renewal
1) Olkiluoto Nuclear Power Plant
2) Metsä Board’s shareholding in PVO (a non-listed public limited liability company, supplying electricity and heat for its shareholders at cost price) is 3.2%
3) Out of 48% share of purchased energy, 14% is from Metsä Fibre and 34% includes other purchased energy
3)
2)
External recognition and commitments to Metsä Board on its actions in sustainability
A ‘Prime’ status In ISS ESG Corporate Rating .
‘Platinum’ in EcoVadis’ CSR ranking. Included in the top 1% of companies assessed in the manufacture of corrugated paper and paperboard and of containers of paper and paperboard industry.
Metsä Board has been on the CDP Climate A List every year since 2016. Metsä Board has A-in the CDP Water and Forest Programmes and in the Supplier Engagement Rating.
Metsä Board as a part of Metsä Group is committed to the UN Global Compact corporate responsibility initiative and its principles in the areas of human rights, labour, environment and anti-corruption. Metsä Board also supports the UN’s Sustainable Development Goals, the SDGs.
Metsä Board’s GHG emission reduction targets are approved by the Science Based Targets initiative.
AAA in the MSCI ESG Ratings assessment (on a scale of AAA–CCC)
An overall ESG Risk Rating score of 17.6 and at low risk of experiencing material financial impacts from ESG factors.
Link to MSCI Terms and Conditions
“Advanced” in Vigeo Eiris ESG assessment.
54
55
Metsä Board’s emissions reduction targets meet the most ambitious goals of the Paris Agreement• Approved by the Science Based Targets initiative – our
targets are in line with reductions required to limit global warming to 1.5°C
• Metsä Board’s commitments: – Scope 1 and Scope 2: to reduce absolute GHG emissions by
100% by 2030– Scope 3: 70% of Metsä Board’s non-fibre suppliers and
downstream transportation suppliers by spend will set science based targets by 2024
The Science Based Targets initiative (SBTi) is a collaboration between CDP, the United Nations Global Compact, World Resources Institute (WRI) and the World Wide Fund for Nature (WWF).
Research and Development
Our key product development focus areasUnique opportunities for sustainability and yield gains through raw material efficiency
Further lightweighting of paperboards
57
Developing new barrier boards• Improved BCTMP• Microfibrillated cellulose (MFC)• Strength additives
• Dispersion barriers
• Bio-based raw materials
• Combines packaging design and R&D excellence under the same roof
• Enables collaboration throughout the value chain
• Helps to exploit the potential of lightweight fresh fibre paperboards now and in the future
• Completed in June 2020
58
New Excellence Centre Boosting the development of new paperboard and packaging solutions
PRO
MO
TIO
NB
right
ness
PROTECTIONStiffness
Folding boxboard (FBB)
White lined chipboard(WLC)
Metsä Board’s folding boxboard
Coated unbleached kraft(CUK)
The role of packaging is to promote the brand and protect the product – in a cost-effective way
Solid bleached board(SBB)
59
60
High-yield pulp makes the difference between folding boxboard and other grades …
Three-layer structure of Folding BoxboardLight weight→ better yield and sustainabilityHigh strength and bending stiffness→ secure protectionHigh brightness and smoothness→ excellent printabilityConsistent quality→ improved production efficiency
SBS(100% chemical pulp)
Metsä Board FBB(up to 70% BCTMP, 30% chemical pulp )
… and leave more trees standing
5 m3 of wood per tonne of pulp
3.4 m3 of wood per tonne of pulp
=
=
Lighter-weight paperboards: Better with Less
Metsä Boardlightweight paperboard
Average FBB –Folding boxboard
SBB –Solid bleached board
WLC –White lined chipboard
62
The weights equal to a print job of 30,000 sheets on a standard size printing press
HIGHWVTR < 15 g/m²/d
PE barrier boards
MEDIUM15 ≤ WVTR < 100
MetsäBoardPrime FBB EB
MODERATE100 ≤ WVTR < 250
NONEWVTR > 250 g/m²/d
Paperboards without barrier
MetsäBoardPrime FBB EB1
NONE< 10 min
MODERATE10 min ≤ OGR < 6 h
MEDIUM6 h ≤ OGR < 72 h
HIGHOGR > 72 h
63
The new plastic-free eco-barrier was a step aheadin Metsä Board’s barrier board development
Oil and grease resistance (flat sample)
Moi
stur
e re
sist
ance
64
Getting familiar with terminology: Barrier boards types
NO
N-B
IOB
ASED
BIODEGRADABLE
BIO
BAS
ED
NON-BIODEGRADABLE
PLA (polylactide): often based on corn starch
PVA (polyvinyl alcohol)PBS (polybutylene succinate)
Green PE: made from biomaterials
PE: made from fossil raw materials, used in extrusion coating
Examples of materials used in coating
Note!Biobased material
=Renewable material
≠Compostable
≈Biodegradable
Owners, management and contact information
Market cap and foreign owners30 June 2020
Ownership distribution30 June 2020
Market cap and ownership distributionMetsä Board’s A- and B-shares are listed on Nasdaq Helsinki
0
5
10
15
20
25
0
500
1 000
1 500
2 000
2 500
3 000
12/2015 12/2016 12/2017 12/2018 12/2019 6/2020
Market cap, EUR millionShare of foreign owners, %
Metsäliitto Cooperative
48%
Domestic institutional investors
19%
Domestic private
investors19%
Foreign owners
14%
EUR million
66
%
Dividend and Enterprise value
Enterprise value, EUR million
0
500
1000
1500
2000
2500
3000
2013 2014 2015 2016 2017 2018 2019 6/2020
Net debt Market capitalization
Dividend, EUR and payout ratio, %
0%
25%
50%
75%
100%
0,00
0,05
0,10
0,15
0,20
0,25
0,30
2012 2013 2014 2015 2016 2017 2018 2019
Dividend, EUR Dividend/EPS, %
67
68
Metsä Board Corporate Management Team
Mika JoukioCEO
Chairman of CMT since 2014MG employee since 1990Share ownership: 354,025
Jussi NoponenCFO
Member of CMT since 2016MG employee since 2000Share ownership: 65,000
Sari Pajari-SederholmSVP, Marketing and Sales
Member of CMT since 2011MG employee since 2007Share ownership: 87,041
Ari KivirantaSVP, Development
Member of CMT since 2014MG employee since 1993Share ownership: 45,000
Harri PihlajaniemiSVP, Production
Member of CMT since 2017MG employee in 2001–2004 and since 2017Share ownership: 17,523
Camilla WikströmSVP, HR
Member of CMT since 2019MG employee since 2001Share ownership: 35,184
Share ownerships are B shares.MG = Metsä Group
Katri SundströmVice President, Investor relationsTel +358 10 462 [email protected]
Metsä Board CorporationP.O. Box 2002020 Metsä, Finlandwww.metsaboard.com
69
Contact information
This presentation includes forward-looking statements. The words “believe,” “expect,” “anticipate,” “intend,” “may,” “plan,” “estimate,” “will,” “should,” “could,” “aim,” “target,” “might,” or, in each case, their negative, or any similar expressionsidentify certain of these forward-looking statements. Others can be identified from the context in which the statements are made. By their nature, forward-looking statements are subject to assumptions, risks and uncertainties. Although we believe that the expectations reflected in these forward-looking statements are reasonable, actual results may differ, even materially, from those expressed or implied by these forward-looking statements. We urge presentation participants not to place undue reliance on such statements.
The information and views contained in this presentation are provided as at the date of this presentation and are subject to change without notice. Metsä Board does not undertake any obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.
Viewers should understand that this presentation does not constitute, and should not be construed as, an offer to buy or subscribe for Metsä Board’s securities anywhere in the world or an inducement to enter into any investment activity relating to the same. No part of this presentation should form the basis of, or be relied on in connection with, any contractor commitment or decision to invest in Metsä Board securities whatsoever. Potential investors are instructed to acquaint themselves with Metsä Board’s annual accounts, interim reports and stock exchange releases as well as other information published by Metsä Board to form a comprehensive picture of the company and its securities.
Metsä Board publishes inside information according to Market Abuse Regulation (MAR) and rules of the Nasdaq Helsinki.
70
Disclaimer
