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INTERIM REPORT JANUARY – SEPTEMBER 20172017-10-17 Per Lindberg, CEO and President, and Susanne Lithander, CFO
Q3January – September 2017
BILLERUDKORSNÄS – FIVE YEAR ANNIVERSARY
Stable underlying earnings
Average TSR of 23% per year
for past 5 years
Proven track record of
accretive M&A
Recognised as a leader in
sustainability
0
200
400
600
800
1 000
1 200
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2013 2014 2015 2016 2017
QUARTERLY EBITDA2
1 Growth for comparable units
2 Adjusted fo non-recurring items
10 000
14 000
18 000
22 000
26 000
2013 2014 2015 2016 R12M Sep2017
NET SALESSEKm
SEKm
CAGR1 3%
PRODUCTION DEVELOPMENT
3
2013 2016 20172014 2015
kton/a (12 months rolling)*
2450
2500
2550
2600
2650
2700
2750
2800
2850
2900
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
CAGR 3.3%
*Excluding Tervasaari
SAFETY, STABILITY & PRODUCT QUALITY IN FOCUS TO SUPPORT LONG TERM GROWTH OF THE COMPANYTHREE LARGE CHANGE INITIATIVES UNDER IMPLEMENTATION
Occupational Heath and Safety
Secure Product Quality
Production Stability
A culture based upon health and safety is the foundation for stability Behaviour based safety programme under implementation
A systematic, customer centric, quality programme under implementation TPM based approach to eradicate losses permanently, while keeping customer involved
Increase stability in core processes; pulp, paper/board and maintenance Company specialists to support and increase focus in our cross-mills team
Q3 2017 RESULTS AT A GLANCE
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NET SALES
5 544SEK million
EBITDA
1 051SEK million
38%
18%
36%
8%
SHARE OF SALES
PACKAGING PAPER
Kraft paper
Sack paper
Market pulp
CORRUGATED SOLUTIONS
Fluting
Liner
Managed Packaging
CONSUMER BOARD
Liquid packaging board
Cartonboard
OTHER
19%
MARGIN
3%
GROWTH
Q3 2017 KEY HIGHLIGHTS
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Very strong market and continued high demand across all business areas
EBITDA affected by SEK 35 million for production shutdown in Karlsborg
New organisation to work with availability and quality in production units
Stable earnings in all business areas
Favourable outlook on both short and long term
FINANCIAL DEVELOPMENT
7
NET SALESSEK MILLION
8
5478
5213
5357
54395393
5468
56365600
5544
4800
5000
5200
5400
5600
5800
6000
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2016 20172015
+3%
EBITDASEK MILLION
9
1041*
671
1017
859
1037
693
923863
1051
0
200
400
600
800
1000
1200
1400
1600
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2016 20172015
1%
*Q3 2015 shows adjusted EBITDA
OPERATING CASH FLOWSEK MILLION
10
541
360
155
631
696
619
-294
314
-202
-500
0
500
1000
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2016 20172015
RETURN ON CAPITAL EMPLOYEDADJUSTED, ROLLING 12 MONTHS (%)
11
14
13 13 13 13
14
1313 13
0
4
8
12
16
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2016 20172015
Target: >13%
LEVERAGENET DEBT/EBITDA (X)
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1,301,24 1,24
1,321,27
1,081,19
1,351,41
0,00
0,50
1,00
1,50
2,00
2,50
3,00
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2016 20172015
Target: <2.5x
BUSINESS AREAS
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PACKAGING PAPER BUSINESS AREAKRAFT AND SACK PAPER FOR CUSTOMERS WITH TOUGH DEMANDS
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KRAFT PAPER
#1GLOBALLY
SACK PAPER
#2GLOBALLY
SELECTIVE GROWTH
Asset transformation for increased profitability
Development of new business models
Expansion to growing markets
2-4%
CAGR
Packaging for flour, sugar, carrier bags, medical
packaging, building materials, chemicals and more
Growth driven by population growth in emerging
markets, ageing population, increasing
environmental awareness and more
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2 090NET SALES SEK MILLION
394EBITDA SEK MILLION
19%EBITDA MARGIN
Net sales unchanged vs Q3-16Increased prices in local currency but lower production
volumes
EBITDA -11% vs Q3-16Lower production volumes and cost impact from Karlsborg,
but increased paper prices
Improved market for all kraft and sack papers
Kraft and sack paper markets expected to remain solid
with potential to increase prices in local currency
PACKAGING PAPER BUSINESS AREAQ3 DEVELOPMENT
CONSUMER BOARD BUSINESS AREALIQUID PACKAGING BOARD AND CARTONBOARD WITH UNIQUE PROPERTIES
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Packaging for milk, juice, preserved foods, beauty
and healthcare products, confectionary and more
Growth driven by high urbanization rate, change in
consumer behavior and more
VOLUME GROWTH
Attractive market providing growth opportunities
Investments for volume growth
Innovation with customers and brand owners
4-5%
CAGR
LIQUID
PACKAGING BOARD
– AMBIENT PACKAGES
#1GLOBALLY
LIQUID
PACKAGING BOARD
– ALL PACKAGE TYPES
#2GLOBALLY
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2 019NET SALES SEK MILLION
466EBITDA SEK MILLION
23%EBITDA MARGIN
Continued high demand
Net sales +2% vs Q3-16
EBITDA +10% vs Q3-16Increased sales volumes and lower variable costs
Overall volume growth somewhat lower due to
production disturbancesHighest sales volumes of cartonboard since merger of
Billerud and Korsnäs
Expected continued stable order situation with normal
season variations
CONSUMER BOARD BUSINESS AREAQ3 DEVELOPMENT
Strong product portfolio setting market standard
Integrating new business model
Increasing sales to brand owners
2-4%
CAGR
VALUE GROWTH
CORRUGATED SOLUTIONS BUSINESS AREAFLUTING AND LINER ADD VALUE
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Packaging for fruit and vegetables, white goods
and electronics, exclusive drinks and more
Supply chain solutions and packaging
optimisations for brand owners
Growth driven by increasing e-commerce and
fresh food consumption, package differentiation
and changing supply chains
NSSC FLUTING
#1EUROPE
PURE WHITE
LINER
#2EUROPE
COATED WHITE
TOP LINER
#2EUROPE
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1 012NET SALES SEK MILLION
269EBITDA SEK MILLION
27%EBITDA MARGIN
Net sales +11% vs Q3-16Higher sales volumes and improved prices in local
currency
EBITDA +12% vs Q3-16Increased sales supported by increased prices in local
currency and favourable product mix
Strong order books and increased prices in Europe
Managed Packaging ~50% sales growth
Expected continued strong demand for fluting and linerExpansion to new regions
CORRUGATED SOLUTIONS BUSINESS AREAQ3 DEVELOPMENT
OUTLOOK
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SHORT-TERM OUTLOOK
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Demand and order situation are expected to be strong in the fourth quarter
with normal seasonal variances for all business areas.
The Packaging Paper and Corrugated Solutions business areas see
opportunities for local price increases in the next quarter.
Wood costs for Q4 are expected to be unchanged.
Costs for planned maintenance shutdowns in the fourth quarter are
estimated at SEK 120 million.
Additional non-recurring costs at Gruvön of around SEK 30 million for
training and temporary staff are expected to impact the fourth quarter.
2018 OUTLOOKINCLUDING IMPACT FROM TRANSFORMATION PROJECTS
2018
Paper prices in local currency
Raw material cost Impact from increased demand
Pulp pricing
Production capacity overall + ~1% compared to 2017
Capacity PM10 Skärblacka 40 ktonnes
Stock buildup Gruvön - 20 ktonnes
One-off project costs - 150 SEKm
Net exposure market pulp 125 ktonnes
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SKÄRBLACKA AND GRUVÖN PROGRESS AS PLANNEDIMPROVING EFFICIENCY AND SECURING GROWTH
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Investing in MG integrated to pulp
production in Skärblacka, Sweden;
SEK 1.3 billion investment.
New board machine in Gruvön, Sweden
with capacity of approx. 550 000 t/a;
SEK 5.7 billion investment.
Beetham
Karlsborg
Pietarsaari
Tervasaari
Gävle
Frövi
Rockhammar
Skärblacka
Gruvön
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2
1
2
Production start on
MG machine in
Skärblacka
Production start on
board machine in
Gruvön
Q1
2019 2023
Machine in
Gruvön fully
utilised
Q4
2016
Q2
2016
Q1
2018
1
2
CAPEX 2015-2019IN LINE WITH PREVIOUS GUIDANCE
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CAPEX
1 3001 420
4 300
4 700
1 500
0
1 000
2 000
3 000
4 000
5 000
2015 2016 2017 2018 2019
SEKm
CONTINUED INVESTMENTS IN SOLUTIONS
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Packaging SolutionsReady-to-use packaging
solutions
BillerudKorsnäs sells
ready-made packaging
May use BillerudKorsnäs
material
Examples:
Managed Packaging
Sack Sales
Systems SolutionsProduct solutions including both
materials and machine (and
machine service)
Products using
BillerudKorsnäs material
Examples:
Axello ZAP
Formable Solutions
VenturingMoving further down the packaging
value chain
Three focus areas:
Paper based bottles
Cold chain solutions
Internet of packaging
MANAGED PACKAGING LEADING THE WAYLONG-TERM TARGET OF 25% GROWTH AND EBIT MARGIN OF 5-10%
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Sales
0
100
200
300
400
500
600
700
2014 2015 2016 2017 (12m rolling)
CAGR 29%
SEKm
WE CHALLENGE CONVENTIONAL PACKAGING
FOR A SUSTAINABLE FUTURE
Q&A
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