Carnegie Forest Seminar
17 September 2020
www.norskeskog.com
Introduction to Norske Skog
- The publication paper industry during COVID-19
- 3 Norske Skog strategy
Norske Skog today
- Major producer of newsprint and magazine paper
- ~2,300 employees across five countries
- HQ in Oslo (Norway) and listed on the Oslo Stock Exchange
- Four paper mills in Europe (~1.9m tonnes capacity)
- Two paper mills in Australasia (~0.4m tonnes capacity)
- One pellets facility in Australasia (~85k tonnes capacity)
- Net debt of NOK 329m as of Q2 2020
High-quality industrial assets and infrastructure
Introduction to Norske Skog
- The publication paper industry during COVID-19
- 3 Norske Skog strategy
Demand has improved from the levels seen in May
- Western European publication paper demand amounted to ~11.4m tonnes in 2019
- The demand decline seen in July 2020 vs July 2019 implies a demand loss of ~2.5m tonnes on an annual basis
- So far in Q3 there has been announced ~2m tonnes of capacity closures in Western Europe
Industry impacted during price negotiations for H2 2020
- COVID-19 impacted the industry during semi-annual price negotiations
- Publication paper prices down 5-6% for second half 2020
- Capacity closures announced after price agreements for the second half of 2020 were in place
- Price negotiations for the first half of 2021 to be carried out towards the end of 2020
Weak Q2 2020 for Norske Skog
Revenue
NOKm |
EBITDA
NOKm (and margin in %) |
Underlying EBITDA
NOKm (and margin in %) |
Net interest-bearing
debt
NOKm |
344
6
31
87
3,
3,
3,1
771
2,
67
2,1 |
560
505
444
379
%
%
7
6
1
%
1
%
4
3
1
1
38
1
%
7 |
376
339
4
7
32
31
%
%
%
%
2
2
11
1
1
0
1
52
%
2 |
941
9
91
852
329
269 |
Q2'19
Q3'19
Q4'19
Q1'20
Q2'20 |
Q2'19
Q3'19
Q4'19
Q1'20
Q2'20 |
Q2'19
Q3'19
Q4'19
Q1'20
Q2'20 |
Q2'19
Q3'19
Q4'19
Q1'20
Q2'20 |
8
Introduction to Norske Skog
The publication paper industry during COVID-19
3 Norske Skog strategy
Company strategy
Illustrative over-the-cycle EBITDA
Diversify and innovate within fibre and energy
Become a leading producer of renewable packaging
Improve and optimise publication paper cash flows
Entering the containerboard market with first-quartile capacity
11 Source: External industry consultant (third-party), cost data as of Q3 2019 1) Europe excluding Russia
Containerboard projects in France and Austria
Norske Skog Golbey – France
Norske Skog Bruck – Austria
- PM1 to become a producer of 555,000 tonnes of recycled containerboard1
- Total capex estimate of EUR 250m
- Boiler to be constructed securing competitive steam supply
- Limited equity investment, partnership with Véolia
- PM3 to become a producer of 210,000 tonnes of recycled containerboard2
- Total capex estimate of EUR 90m
- Boiler under construction to generate revenue and savings of EUR ~19m
- Local debt funding of EUR 54m, project capex of EUR 72m
- 12 1) Current PM1 capacity of 235,000 tonnes newsprint; 2) Current PM3 capacity of 125,000 tonnes newsprint
Strong process and project competence locally at the mills Leading competence on pulp & paper highly relevant in packaging In-house personnel with experience from previous and similar projects
- Working with multiple experienced and best-in-class suppliers
- ‒ Specialised and competitive suppliers with strong reputations
- ‒ Targeting the best solutions from the most experienced suppliers
- Support from experienced technical consultants
- ‒ Engineering and design services also covering delivery interfaces
Bruck boiler progressing according to plan
- Finalising the deep foundation for the boiler
- On track for start-up in first half of 2022
- Expect positive EBITDA impact of EUR ~19m on an annual basis
Norske Skog aims to be a containerboard producer in 2023
Exciting portfolio of fibre and energy projects
and process industry, combined with high quality industrial assets and infrastructure
1
CEBINA – Sustainable alternative to existing additives Capacity of 500 tonnes, testing with potential customers
Pellets – Green and profitable energy production Annual capacity of 85,000 tonnes, EBITDA of NZD ~5m
FibreMatrix – Light and insulating boards for green buildings Exploring opportunity for commercial scale fibre board facility
Bio composites – Replace plastic additives with fibre Decision on Saugbrugs pilot facility during Q4 2020
Cyrene – The only non-toxic polar aprotic solvent Circa Group1 reviewing possibility for industrial facility in Europe Long heritage and significant experience within fibre 5
Outlook
Clear priorities in the short term
- Secure the health and safety of our employees
- Actively adapt to market changes
- Maintain a robust balance sheet
Execute on strategy in the long term
- Become a leading producer of renewable packaging
- Remain a producer of all publication paper grades
- Develop the downstream forest industry in Norway
www.norskeskog.com
Improve and reposition Australasian operations
Norske Skog ASA Postal address: P.O. Box 294 Skøyen, 0213 Oslo, Norway Visitors: Sjølyst Plass 2, 0278 Oslo, Norway
Phone: +47 22 51 20 20 Email: [email protected] Email: [email protected]
This presentation contains statements regarding the future in connection with Norske Skog's growth initiatives, profit figures, outlook, strategies and objectives. All statements regarding the future are subject to inherent risks and uncertainties, and many factors can lead to actual profits and developments deviating substantially from what has been expressed or implied in such statements.