UPM THE BIOFORE COMPANY. Jussi Pesonen President and CEO May 2016

Transcription

1 UPM THE BIOFORE COMPANY Jussi Pesonen President and CEO May 216

2 Contents UPM in transformation UPM strategic focus areas 1. Performance 2. Growth 3. Portfolio 4. Innovation 216 results Summary 2 UPM

3 UPM in transformation Business portfolio, sales 23: integrated paper company 28: towards marketdriven businesses 2: six separate businesses 1 % 1 % 1 % 8 % 8 % 8 % Paper ENA 6 % 4 % 2 % % Sold units Paper Plywood Raflatac Sawmilling 6 % 4 % 2 % % Sold units Paper Plywood Raflatac Sawmilling 6 % 4 % 2 % % Plywood Energy Paper Asia Raflatac Biorefining Other operations Sales EBIT ( * Net debt Market cap Personnel 3 UPM EUR 9.8bn EUR 429m EUR 4.9bn EUR 7.9bn 34,5 EUR 9.5bn EUR 513m EUR 4.3bn EUR 4.7bn 25, * ) comparable EBIT for 2, operating profit excluding special items for earlier years EUR 1.1bn EUR 916m EUR 2.1bn EUR 9.2bn 19,6

4 UPM business portfolio today ( * UPM PLYWOOD Plywood, veneer #1 in Europe UPM PAPER ENA Graphic papers Leading in Europe Growth drivers: Private consumption Sustainability Population growth Urbanisation Retail, e-commerce Construction and transportation UPM PAPER ASIA Labelling materials, fine papers Label papers: #1 globally High-end office papers: #1 in China 4 UPM UPM RAFLATAC Self-adhesive label materials #2 globally UPM ENERGY Electricity #2 in Finland UPM BIOREFINING Pulp Biofuels Timber # 6 globally * ) by EBITDA

5 UPM STRATEGIC FOCUS AREAS

6 UPM strategic focus areas 1 Performance 2 Growth 3 Portfolio 4 Innovation Continuous improvement in performance Focused growth projects Business portfolio development and value creation New business and product development Cost efficiency measures EBITDA target for growth projects EUR 2m Net debt reduction EUR 546m Biofuels commercial ramp-up 6 UPM

7 1. PERFORMANCE Continuous improvement in financial, social and environmental performance

8 Group profitability and targets % of sales EBIT ( * % ROE ( * EURm Gearing % Min target 3 Gearing Net Debt ( * comparable figures for 2 and 2, excluding special items for earlier years 8 UPM

9 LTM LTM LTM LTM LTM LTM Business area returns and long-term targets UPM Energy ROCE % ( * ROCE % ROCE % CF/CE % ROCE % ROCE % UPM Biorefining UPM Paper Asia UPM Paper ENA UPM Plywood UPM Raflatac ( * shareholdings in UPM Energy valued at fair value Long-term return target 9 UPM

10 Growing with Biofore engaged high-performing people Per million hours Safety Lost-time accident frequency Index Employee engagement Manager effectiveness Employee engagement EUR million,6,55,5,45,4,35,3,25 Productivity Sales per employee 3,2 1 UPM 5-year change: -77% 5-year change: year CAGR: +5%

11 More with Biofore creating more with less Achievements in % Process wastewater per tonne of paper -65% Solid waste to landfills -17% Electricity consumption per tonne of paper Less waste Waste and sidestream utilisation Efficient technologies +5% Usage of Recovered paper Less energy Systematic energy management Energy efficient processes and technologies Less air emissions Less water usage Water management optimisation Advanced technologies Less effluent More recycling Efficient processes Product lifetime optimisation End-of-life systems 11 UPM

12 2. GROWTH Focused high-return growth projects

13 Growth projects ramping up and contributing to earnings in 216 and beyond Pietarsaari pulp mill expansion 7,t Fray Bentos pulp mill expansion 1,t Lappeenranta biorefinery 12m litres of renewable diesel Kymi pulp mill expansion 17,t Kaukas pulp mill efficiency improvement, paper and pulp decoupling completed Capex so far EUR 68m Remaining EUR 9m Q2 2 2 Q4 2 2 Q2 2 2 Q Q Q UPM UPM Raflatac 5% expansion in APAC, growth in filmic labelstock in Poland UPM Paper Asia Changshu new speciality paper machine 36,t UPM Plywood Otepää mill expansion to 9,m 3

14 Low investment needs in existing assets allow growth projects with modest total capex EURm 1 2 Capital expenditure Estimate 1 Myllykoski acquisition 8 6 Uruguay acquisition Depreciation 4 Strategic investments Operational investments UPM e

15 3. PORTFOLIO Enhancing value, long-term profitability and growth outlook

16 Strengths of UPM s model Attractive dividend Focused investments Strong cash flow Top performance Industry-leading balance sheet 16 UPM

17 4. INNOVATION Developing new businesses and improving the competitiveness of current businesses

18 Innovations in new and existing businesses 18 UPM

19 19 UPM 216 RESULTS

20 13 Q Q413 Q2 Q4 Q2 Q growth projects and cost efficiency measures deliver improved earnings EBITDA increased by 24% + Cost efficiency measures resulted in significantly lower variable, fixed costs + Growth projects contributed to earnings + Realised currency hedges neutral + Operational efficiency on a good level Comparable EBIT increased by 34% to EUR 281m (21m) Strong operating cash flow at EUR 341m (18m) Net debt decreased to EUR 1,873m (2,419m) EURm Comparable EBITDA UPM

21 Comparable EBITDA in 216 vs. 2 EURm UPM benefited from cost efficiency measures in a deflationary business environment % Deliveries Variable costs Currency, net impact % Cost efficiency improved in all businesses. Biorefining, Raflatac and Paper Asia EURm showed growth in deliveries % Biorefining Energy Raflatac Paper Asia Paper ENA Plywood Other operations and eliminations % 25 Prices Fixed costs EBITDA / EBITDA /16 EBITDA / EBITDA /16 21 UPM

22 Comparable EBIT by business area EURm UPM Biorefining % of sales 25 EURm 8 UPM Energy % of sales 6 EURm 5 UPM Raflatac % of sales EURm 5 UPM Paper Asia EURm UPM Paper ENA % of sales EURm UPM Plywood % of sales % of sales 12, , ,5 5, , UPM 16,

23 UPM is well positioned for 216 UPM actions continue: Ramp-up at UPM Changshu PM3 and the Lappeenranta biorefinery Full potential of the pulp mills UPM Kaukas and UPM Otepää investments Cost efficiency measures Closure of Madison Paper Industries, sale of UPM Schwedt paper mill assets Scheduled maintenance stops: Pulp (, Q4) and paper mills (Q2, Q4), Lappeenranta biorefinery (Q2) and Olkiluoto nuclear power plant units (Q2) 23 UPM

24 Outlook for 216 is unchanged UPM s profitability improved in 2 and the improvement is expected to continue in 216. UPM s growth projects are expected to contribute positively to the company s earnings in 216, compared with 2. UPM continues its measures to reduce variable and fixed costs also in 216. Currencies are expected to contribute positively as hedges roll over, assuming relevant currencies stay at about the same level as at the end of UPM

25 SUMMARY

26 UPM s enterprise value and shareholder value have increased EUR million 12 Enterprise value 1 % Distribution of the enterprise value % 8 % 7 % 6 % Market capitalisation 6 Market capitalisation 5 % 4 % 4 3 % 2 Net debt 2 % 1 % Net debt 26 UPM %

27 Strengths of UPM s model Attractive dividend Focused investments Strong cash flow Top performance Industry-leading balance sheet 27 UPM

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