4Q12 presentation - Norske Skog...4Q12 presentation 7 February 2013 2 EBITDA 0 50 100 150 200 250...
Transcript of 4Q12 presentation - Norske Skog...4Q12 presentation 7 February 2013 2 EBITDA 0 50 100 150 200 250...
4Q12 presentation 7 February 2013
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EBITDA
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4Q11 1Q12 2Q12 3Q12 4Q12
NOK mill.
4Q12 in brief
• EBITDA NOK 327 mill. (NOK 365 mill. 3Q12)• Muted seasonal effect, NOK appreciation and
active capacity management
• Cash flow from operations NOK 382 mill. • Before net financial items of a negative NOK 135
mill.
• Net debt reduced to NOK 6 021 mill.• Down NOK 264 mill. in the quarter
• Total debt reduction in 2012 of NOK 1 842 mill.
• Impairment charge NOK 1 649 mill. in 4Q12• Total 2012 impairment charge NOK 2 086 mill.
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RevenueNOK 3 689 mill. ‐10%
EBITDANOK 327 mill. ‐10%
CF from operationsadjusted NOK 382 mill. ‐31%
Deliveries848’ tonnes ‐6%
Lower capacity and muted seasonal effect
QoQ YoY
‐26%
‐35%
‐35%
‐17%
4Q12
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Key developments in 4Q12
Market • Publication paper prices stable from 3Q12
• Weak demand in both Europe and Australasia• Resulting in high exports
• Stable input factor costs
Norske Skog
• Conversion of one machine at Norske Skog Boyer commenced• 135 thousand tonnes of newsprint being converted to 150 thousand tonnes of
coated magazine paper. Completion 1Q14
• One machine at Norske Skog Tasman closed on 9 January 2013• 160 thousand tonnes of capacity removed from the Asian export market
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EBITDA change from 3Q12 to 4Q12
NOK mill.
‐5 ‐ 38 +107 ‐102
365327
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500
3Q12
Volum
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Sales
mix
and p
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Costs
FX an
d oth
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4Q12
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Publication paper prices ended year flat
300
350
400
450
500
550
600
650
700
750
2006 2007 2008 2009 2010 2011 2012
EUR/tonne
Newsprint LWC SC
RISI, German and US East Coast prices
• European references unchanged• From 3Q to 4Q for both newsprint and
magazine paper prices
300
350
400
450
500
550
600
650
700
750
2006 2007 2008 2009 2010 2011 2012
EUR/tonne
Newsprint Germany US East Coast
• US newsprint prices flat in USD• Above European level in EUR
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Weak demand
PPPC, YTD November 2012
‐3 %
‐10 %
0 %
‐1 %
2 %
‐13 %
‐3 %
World WesternEurope
EasternEurope
NorthAmerica
Asia Oceania LatinAmerica
Newsprint
1 %
‐7 %
2 %
‐10 %
‐3 %
‐7 %
‐6 %
World WesternEurope
EasternEurope
NorthAmerica
Asia Oceania LatinAmerica
Magazine
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Newsprint demand declining
• US consumption reduced by close to two thirds last decade
• US consumption relatively stable since 2010
• Western Europe and Australia / NZ exhibiting significant decline in recent years
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
1995 2000 2005 2010 2012
Newsprint demand (tonnes '000)
WE US Australia / NZPPPC
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Newsprint demand converging• US consumption leveling out from high
usage per capita
• Western Europe consumption approaching US level from different starting point
• Australia / NZ consumption converging from high level
0
5
10
15
20
25
30
35
40
45
50
1995 2000 2005 2010 2012
Newsprint demand capita (kilos)
WE US Australia / NZPPPC, The World Bank
10
• Electricity prices around mid‐cycle• German price relatively stable – NSG spot exposure in continental Europe
• Norwegian price spike from summer trough – NSG only long term contracted volumes
Input costs ‐ Energy
Reuters
Power Germany (EUR/MWh) Power Norway (EUR/MWh)
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10
20
30
40
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60
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100
2005 2006 2007 2008 2009 2010 2011 2012 2013
EUR/MWh
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20
30
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60
70
80
90
2005 2006 2007 2008 2009 2010 2011 2012 2013
EUR/MWh
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Input costs ‐ Fibre
Recovered newspapers Europe (EUR/ton)Wood Norway (NOK/m3)
• Wood prices in Norway declining• Favourable S/D situation for NSG following capacity closures
• Recovered paper price flat into 2013• NSG with less exposure following divestment of Norske Skog Parenco
Company data, RISI
50
100
150
200
2009 2010 2011 2012 2013
EUR/tonne
50
100
150
2009 2010 2011 2012 2013
2009 = 100
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Fixed costs declining
• Fixed costs reach new level• Reduced capacity and cost initiatives• Quarterly level down from above NOK 1bn to NOK 850 mill. during last year
Quarterly fixed costs
800
850
900
950
1 000
1 050
1 100
1 150
1 200
4Q 1Q2011
2Q 3Q 4Q 1Q2012
2Q 3Q 4Q
NOK mill.
4Q12 financials
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Key financials 4Q12
Key figures (NOK mill.) 4Q11 3Q12 4Q12
Operating revenue 4 970 4 115 3 689
EBITDA 503 365 327
Depreciation ‐365 ‐231 ‐223
Other gains and losses ‐532 ‐65 ‐228
Financials ‐358 86 ‐49
CF before net financial items 591 550 382
• Revenues lower• Reduced capacity• Weak markets
• Costs reduced• Variable: Lower input factor costs• Fixed: Noticeably lower through cost
initiatives and capacity reductions
• Other gains and losses• Reduced value of energy assets
• Financials• Accrued interest and currency gain
• Impairment charge of NOK 1 649 mill.
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Revenue and EBITDA contribution by segment
Revenue
Magazine36%
Newsprint Europe31%
Newsprintoutside Europe
33%
Magazine15% Newsprint Europe
18%
Newsprintoutside Europe
67%
EBITDA
4Q12
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Newsprint Europe
• 3 mills in 3 countries• Norway (Skogn), France (Golbey) and
Austria (Bruck)
• 1.3 mill. tonnes of capacity
Key figures (NOK mill.) 4Q11 1Q12 2Q12 3Q12 4Q12
Operating revenue 1 368 1 115 1 205 1 072 1 136
EBITDA 141 104 107 86 64
EBITDA margin (%) 10.3 9.4 8.9 8.1 5.7
Deliveries (‘000 tonnes) 333 279 308 290 310
Operating rate (%) 87 83 89 90 91
• Revenues higher• Seasonally higher volumes
• Costs stable• Variable: Lower YoY, higher QoQ
• Fixed: Lower YoY with reduced capacity, higher QoQ
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• 5 mills in 4 countries• Australia (Albury, Boyer), New
Zealand (Tasman), Brazil (Pisa), Thailand (Singburi)
• 1.0 mill. tonnes of capacity
Key figures (NOK mill.) 4Q11 1Q12 2Q12 3Q12 4Q12
Operating revenue 1 423 1 359 1 399 1 317 1 187
EBITDA 236 196 218 223 242
EBITDA margin (%) 16.6 14.4 15.6 16.9 20.4
Deliveries (‘000 tonnes) 294 276 290 272 255
Operating rate (%) 86 86 92 92 84
Newsprint outside Europe
• Revenues lower• Lower volumes in weak market
• Appreciating NOK
• Costs reduced• Variable: Decline helped by one‐off
• Fixed: Lower YoY, stable QoQ
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Magazine
• 3 mills in 3 countries• Norway (Saugbrugs), Germany
(Walsum), Austria (Bruck)
• 1.3 mill. tonnes of capacity
Key figures (NOK mill.) 4Q11 1Q12 2Q12 3Q12 4Q12
Operating revenue 1 966 1 762 1 602 1 580 1 311
EBITDA 139 104 90 84 52
EBITDA margin (%) 7.1 5.9 5.6 5.3 4.0
Deliveries (‘000 tonnes) 392 356 330 338 283
Operating rate (%) 88 83 90 89 86
• Revenues lower• Reduced capacity
• Costs reduced• Variable: Lower YoY, stable QoQ
• Fixed: Lower with reduced capacity
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Leverage ratio
3
4
5
6
7
4Q 1Q2011
2Q 3Q 4Q 1Q2012
2Q 3Q 4Q
Ratio
Net debt reduced by NOK 264 mill.• To NOK 6.0bn by year‐end
• Total debt reduction in 2012 of NOK 1.8bn
Debt further reduced, remains a focus area
Net interest‐bearing debt
5
6
7
8
9
10
4Q 1Q2011
2Q 3Q 4Q 1Q2012
2Q 3Q 4Q
NOK bn.
Leverage ratio higher• Last 12 month running EBITDA declining
more than reduction in net debt
Net interest‐bearing debt / EBITDA
Covenant level
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Maturity profile
‐0.9 ‐0.9 ‐1.0 ‐1.1
1.2
‐2.9
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033
NOK bn. Cash RCF Bank Bonds
1.1
31 December 2012
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Financial items
• Net interest somewhat lower• At just below NOK 150 mill.
quarter
• Currency gain• 1/3 cash flow hedge• 2/3 non‐hedge accounted debt
‐400
‐300
‐200
‐100
0
100
200
300
4Q11 1Q12 2Q12 3Q12 4Q12
NOK mill.
Currency
Other
Net interest
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Cash released from working capital
• Working capital released in 4Q12• Operating WC reduced by NOK 212 mill.
• Mainly reflecting reduction in AR and inventories
NOK mill.
182
48
168
130
212
‐50
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4Q11 1Q12 2Q12 3Q12 4Q12
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NOK mill.
591
357
423
550
382
0
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200
300
400
500
600
700
4Q11 1Q12 2Q12 3Q12 4Q12
Cash flow from operations
(NOK mill.) 4Q12
EBITDA 327
Change in operating WC 212
CF from net financial items
‐135
Other ‐157
CF from operations 247
CF from operations before financial items
382
Capex ‐201
Divestments 128
Net investments ‐73
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Capex modest despite development projects
• Capex 2012 below NOK 500 mill. • Level since 2010
• Capex 2013 NOK 600 mill.• Boyer conversion
• Saugbrugs energy efficiency project
• Depreciation lower• Annual 2013 level below NOK 800 mill.
NOK mill.
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2006 2007 2008 2009 2010 2011 2012
Depreciation
Outlook and focus
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• Challenging operating environment• Weak demand in both Europe and Australasia
• Active capacity management will lead to low utilisation rates short term
• Further NOK appreciation remains an additional risk
• Relatively stable costs
• Industry‐wide capacity closures supportive
Outlook
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• Improve margins• Active capacity management
• Temporary adaptations and permanent closures/conversions
• Continued cost reductions
• Further identification and sale of unrelated assets
• Reduction of net debt
• Improvements in the regulatory framework
Management focus
Q&A
AppendixSensitivities and market
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Group cost categories• ¾ variable costs, ¼ fixed costs
• Variable costs predominantly energy and fibre
• ⅔ of energy costs contracted, ⅓ spot exposure
• Fibre sourced mainly through wood and recovered paper
• ⅔ virgin fibre, ⅓ recycled
Energy 22%
Labour17%
Chemicals, fillers, etc.10%
Distribution11%
Other fixed9%
Pulp4%
Other direct5%
Wood13%
Recovered paper 9%
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Group sensitivities• Variable costs Change EBITDA impact
• Wood +/‐ 5%
• Recovered paper +/‐ 5%
• Energy +/‐ 5%
• Pulp +/‐ 5%
• NOK Appreciating Impact
• EBITDA 1%
• Net debt 1%
‐/+ NOK 90m
‐/+ NOK 60m
‐/+ NOK 50m
‐/+ NOK 30m
‐ NOK 50m
‐ NOK 60m
Annual impact; assuming change in market prices and short term contract prices only, long term contract prices remaining fixed
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’11/10 = ‐1% YTD = ‐7% ???
Newsprint Europe
0 500 1 000 1 500 2 000 2 500 3 000
UPMStora Enso
Norske SkogHolmen
PalmSCA
Western Europe newsprint capacity by producers (EUR market)
0 500 1000 1500 2000 2500 3000
GemanyUK
ItalyFrance
Other Western EuropeEast Europe
‐10%‐7%
‐7%
‐23%‐12%
0%
Annual demand (YTD growth)
PPPC; annual 2011 and YTD November 2012
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’11/10 = ‐1% YTD = ‐7% ???
Newsprint outside Europe
0 500 1 000 1 500 2 000 2 500 3 000 3 500
Resolute Forest ProductsWhiteBirchShandong
Nippon PaperOji paper
Norske Skog
Outside Europe newsprint capacity by producers (USD market)
0 2000 4000 6000 8000 10000
ChinaOther Asia
North AmericaLatin America
AfricaOceania
‐2%‐1%
+10%
‐3%
+1%‐13%
Annual demand (YTD growth)
PPPC; annual 2011 and YTD November 2012
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Main trade flows – Standard newsprint
2011 870 (‐11%)
2012 YTD 767 (‐4%)2011 1 109 (+3%)
2012 YTD 693 (‐34%)
Tonnes 000’ (change %)
2011 287 (‐13%)
2012 YTD 183 (‐29%)2011 1 264 (‐5%)
2012 YTD 1 324 (+17%)
PPPC; annual 2011 and YTD November 2012
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’11/10 = ‐1% YTD = ‐7% ???
Magazine
0 1000 2000 3000 4000 5000 6000 7000
UPMStora Enso
Norske SkogSappiBurgoSCA
Western Europe magazine capacity by producers
0 500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 4 500
GermanyUK
ItalyFrance
Other West EuropeEast Europe
‐9%‐10%
‐7%
‐7%‐10%
‐3%
Annual demand (YTD growth)
PPPC; annual 2011 and YTD November 2012
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Main trade flows – Magazine paper
WE to: NA SA Asia AA
2011 821 (+2%) 472 (+11%) 1 251 (+14%) 471 (+32%)
2012 YTD 713 (‐8%) 416 (‐4%) 1 093 (‐4%%) 452 (+3%)
Tonnes ’000 (change %)
NA to: SA Asia
2011 206 (‐13%) 173 (‐7%)
2012 YTD 188 (‐4%) 128 (‐22%)
PPPC; annual 2011 and YTD November 2012