Upload
others
View
2
Download
0
Embed Size (px)
Citation preview
Norske SkogDeutsche Bank Credit Conference June 10 2010
Odd‐Geir Lyngstad, Treasurer and deputy CFO
Contents• Company specifics• Markets• Financials• Initiatives• Summary• Q&A
2
Company specifics
A leading manufacturer of publication paper
• 14 mills in 11 countries
• Revenues (2009)
NOK 20.4 bn (USD 3.2 bn)
• 5 400 employees
• Listed on the Oslo Stock Exchange
• No controlling shareholder
4
5
Global presence ‐ strong European footprint
Saugbrugs (Norway)Follum (Norway)Skogn (Norway)
Bruck(Austria)
Walsum (Germany)Parenco (The Netherlands)Golbey (France)
Singburi (Thailand)
MNI (Malaysia – 34%)
Boyer (Australia)Tasman (New Zealand)
Albury (Australia)Bio Bio (Chile)
Pisa (Brazil)
Europe and Australasia are key markets
Total capacity 4.5 mill. tonnes• Newsprint etc. 3.1 mill. tonnes• Magazine 1.4 mill. tonnes
6
Major player in a fragmented industryTop global publication paper companies
0 1000 2000 3000 4000 5000 6000 7000 8000
UPM (FIN)
AbitibiBowater (US)Stora Enso (FIN)
Norske Skog (NOR)
Nippon Paper (JAP)Myllykoski (FIN)
NewPage (US)WhiteBirch (US)Holmen (SWE)
Oji Paper (JAP)SCA (SWE)
Kruger (CAN)Catalyst (CAN)
M‐real (FIN)
Burgo (ITA)
Newsprint Uncoated magazine paper Coated magazine paper
7
Source: RISI Dec 08, PPPC Oct 09
Million tonnes
Top 5 share of capacity
Grade North America
Europe
Newsprint 80% 60%
Uncoated Mag 80% 80%
Coated Mag 85% 70%
Markets
9
Overcapacity in developed markets
0
2
4
6
8
10
12
14
Capacity Demand
0
2
4
6
8
10
12
14
0
2
4
6
8
10
12
14
0
2
4
6
8
10
12
14
0
2
4
6
8
10
12
14
0
2
4
6
8
10
12
14
Consolidated
Lessconsolidated
Fragmented
Source: PPPC Dec 09
Million tonnes
10
Demand Decline leveling off in developing markets, increases elsewhere
Region/segmentYTD Mar/Apr
(09‐10)Comments
Worldstandard newsprint 5.4 % Upturn, but still far below 2007 and 2008
levels
North Americastandard newsprint ‐1.1 % Decline has leveled off. Growth in both
March and April
Europe standard newsprint ‐0.2 % Decline has leveled off, lower imports from
Canada
Europe – magazine
(incl. improved news etc)4.1 % Strong growth for Coated Mechanical +8.6%
while SC is down ‐4.4%
Non‐Japan Far East standard newsprint 18.3 % Growth in most markets; increased imports
from Europe
Australasia standard newsprint 15.4 % Growth in economy, improved advertising
market
Latin Americastandard newsprint 10.5 % Improved advertising market
Source: RISI/CEPIPRINT
11
Sharp decline in prices in Europe
400
450
500
550
600
650
700
750
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10
EUR/tonne Newsprint SC 56 g LWC 60 g
Source: RISI
• Prices up in 2009 due to good market balance
Significant capacity closures in 2008
• Sharp decline in prices in beginning of 2010
Significant drop in demand in 2009
• 35€ price hike announced for magazine paper
Positive volume developmentCompensation for cost increases
12
US prices increase
300
350
400
450
500
550
600
650
700
Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10
EUR/tonne Newsprint Germany US East
Source: RISI
‐ Reduced European import from N.America
Financials
14
Key financials Q1 2010Key figures (NOK mill.) Q1 2010 Q4 2009 Q1 2009
Operating revenue 4 455 4 909 5 259
EBITDA 275 472 504
EBITDA‐margin (%) 6.2 9.6 9.6
EBIT before special items ‐252 ‐27 ‐149
Value changes energy portfolio ‐954 1 368 96
Other special items 40 ‐40 ‐1 321
Impairments ‐198 ‐226 0
Operating earnings ‐ IFRS ‐ 1 364 1 075 ‐ 1 374
Net cash flow from operations 101 537 723
15
Low prices hit European operationsNOK mill.
Cost breakdown
Energy 20 %
Wood 11 %
Recovered paper 8 %
Other direct 8 %
Distribution 9 %
Labour 14 %
Other fixed 8 %
Depreciation 11 %
Market pulp 3 %
Chemicals, fillers, etc. 9 %
Energy and raw materials – 50 % of total costs
16
2009 figures, calculated to 90% operating rate
Current cost pictureEnergy• 2/3 electricity of which most is bought
under long term contracts • Higher el‐prices in Q1Wood• 11% of total costs• S.America & Australasia:
• Long term contracts at favourable prices
• Continental Europe• Market exposure
• Norway• Long term volume contracts
Recovered paper• 8% of total costs• Reduced exposure after disposals in
China and idling PM2 in Parenco• Significant cost pressure
17
Energy
Wood
Recovered paper
Current cost picture – contd.
Market pulp• Significant price increase for
market pulp• NSI has limited exposure
• ~200kt in magazine production
Chemicals, fillers, etc.• 9% of total costs• Increased prices end of 2009• Still upward pressure
18
MarketpulpChemicals,
fillers, etc.
Q1 cash flow*
‐400
‐200
0
200
400
600
800
Q1 2009 Q2 Q3 Q4 Q1 2010
NOK mill.
• Weak EBITDA• Low interest payments in
Q1 10, higher interest payments due in Q2 10
* Cash flow from operations, after financial items and taxes
19
Balance sheet Q1‐2010
20
• Total assets are down ~NOK 1.6 bn. • Equity by end Q1 was ~NOK 11 bn., down from
~NOK 12 bn. by end 2009• Net interest bearing debt is reduced by ~NOK 100
mill. to NOK 9.5 bn.• Gearing: 0.86 (0.80 in Q4 09)
‐5
‐4
‐3
‐2
‐1
0
1
2
3
4
5
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 ‐‐‐> 2033
Cash Bank debt Bond debtNOK bn.
4.2
‐0.4
‐1.9 ‐3.2
‐0.7
‐0.9 ‐1.0
‐4.0
‐0.1‐1.2
‐0.1
Debt repayment schedule
21
Initiatives
Actively closing own newsprint capacityYear Mill Capacity reduction
2006: Union (Norway) 265,000 tonnes
2008: Follum PM2 (Norway)Steti (Czech Republic)
130,000 tonnes130,000 tonnes
2009: Parenco PM2 (Netherlands) 225,000 tonnes
Total Europe 750,000 tonnes
30% of own European newsprint capacity in 2005 before closures
2008: New Zealand and S. Korea 310,000 tonnes
23
Ambitious cost and capex reduction programmes
• Profit improvement program ended 2008 • Close to target of NOK 3 billion• Main elements; energy, efficiency improvement and de‐manning
• Initiated in summer of 2009:• Permanent idling of Parenco PM2• Reduced manning by 600 persons (9%)• Reduced maintenance costs• Headquarter cost reduction (20%)
Annual cost reduction of NOK 600‐700 mill from 2010
24
Going forward:• Additional program of NOK 150‐200 million• Continuous improvement programme at all business units• Investment level reduction
• CAPEX in 2010 ~NOK 500 million
Debt reduction through asset salesSouth Korea• Sold in 2008• Reduced NIBD of ~NOK 4 billion
China• Sold in 2009• Reduced NIBD of ~ NOK 1 billion
Norway and others• Various properties sold in 2008 and
2009• Reduced NIBD of ~ NOK 800 mill.
25
Going forward:• Energy contracts: Could be partly monetized • Additional divestment of properties and non‐core assets
NOK bn
0
5
10
15
20
25
30
35
40
45
50
2007 2008 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
Liabilities Equity
Summary
27
Outlook• Demand
• Newsprint levelling off in Europe, increasing in Asia, Australasia, and South America
• Gradual recovery for magazine paper
• Prices• Newsprint to remain low in Europe, expected increases elsewhere
• Increase in magazine paper prices, but moderate effect until second half of 2010
• Costs• Input factor price to remain high in Q2, but cost pressure
expected to ease in second half of 2010
28
Focus going forward• Further cost reductions
• New initiatives within logistics and procurement• Rigorous follow‐up of local cost targets and improvements ‐
current programmes on track
• Improve financial position• Divestments of non‐core assets• Improve debt maturity profile• Keep capex at low level
• Contribute to industry restructuring
Q & A