16
SOME OF OUR REFERENCES
We have had >600 mills/plants in our projects
BillerudKorsnäs
Domtar
Georgia Pacific
Graphic Packaging
International Paper
Klabin
MondiSappiSCA/EssitySonocoStora EnsoWestRock
What really creates a short payback?
Cash Flow
Time
Today
Mill X
Cash Flow
Time
Today
Capex
All data assumptions are “correct.”
Capexes
Cash Flow
Time
Today
Capex
1 2 3 ........................................................
10
20
15
40
5
15
25
35
10
2015
200
CapexProject
NPV (delta)
1
2
3
4
5
6
7
8
9
10
Total
All data assumptions are “correct.”
Now, what is interesting about this ‘correctly calculated’ number?
The 200 is not in any way connected to the value of the mill.
1 2 3 ........................................................
10
1 2 3 ........................................................
10
Cash Flow
Time
Today
B 200
A 200
1 3 ........................................................
10C
Mill B
CapexProject
NPV (delta)
1 20
2 15
3 40
4 5
5 15
6 25
7 35
8 10
9 20
10 15
Total 200
Mill C
CapexProject
NPV (delta)
1 20
2 15
3 40
4 5
5 15
6 25
7 35
8 10
9 20
10 15
Total 200200
2
In reality, these three mills will not havethe same capex plan NPV of 200.
............................................
........91 3 ................................................
........1 2 3
100
200
1 2 3 ........................................................
10
Cash Flow
Time
Today
B 200
A 200
1 2C
1b 2b 10b
Mill B
CapexProject
NPV (delta)
1 20
2 15
3 40
4 5
5 15
6 25
7 35
8 10
9 20
10 15
Total 200
Mill C
CapexProject
NPV (delta)
1 20
2 15
3 40
4 5
5 15
6 25
7 35
8 10
9 20
10 15
Total 200400
10
3 ........................................................3b 10
COMPANIES TYPICALLY SPEND ~75% OF THEIR RESOURCES IN B-MILLS.
POOR ECONOMY,SHRINKING CAPEX BUDGET
WHERE ARE FASTER PAYBACKS FOUND?
POOR ECONOMY,SHRINKING CAPEX BUDGET
WHERE ARE FASTER PAYBACKS FOUND?
“The creativedestruction” funnel
Today40 yrs ago1994
Real price fall
Increasing costs, relative price
Today40 yrs ago1994
Real price fall
Increasing costs, relative price
Today40 yrs ago
Today40 yrs ago
75%
75%
Today40 yrs ago
Today Future40 yrs ago
Base
Debottle-neck 1
…
Close mill B
…
Capabil. line 12
Capabil. line 14
…
New line in mill D
…
Close mill A
Debottle-neck 2
Strategic Alternative n
…
Strategic Alternative 1
Strategic Alternative 2
Strategic Alternative 3
Strategic Alternative 4
Strategic Alternative 5
Strategic Alternative 6
Strategic Alternative 7
Strategic Alternative 8
Strategic Alternative 9
CF Maximizingalternative
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