Svenska Cellulosa : 2020 Q4 Presentation En Download

January 29, 2021

A year of transformation

• Exit publication paper
• CTMP investment in Ortviken SEK 1.45bn
• Obbola expansion on time and budget
• Increased growth and harvesting level

COVID-19 impacted sales and earnings - limited impact on production and distribution

Sales declined 6% vs 2019

• Price/mix -8%, volume 2%, currency 1%, divestments -1%

EBITDA1 declined 17% vs 2019

• Lower selling prices
• Lower publication paper volumes + Stronger earnings in forest

1 Excluding effect of one-off items related to discontinuation of publication paper in 2020 and effects from changed accounting method for valuation of forest assets in 2019.

EBITDA1 (SEKm) and EBITDA margin

						-17%
				5,252	5,319
					4,440
	3,781		3,648
		3,385	28%	27%
3,300
21%	23%	22%	22%				24%

2014

2015

2016

2017

2018

2019

2020

3

EBITDA (SEKm)	Industrial ROCE 1)	Proposed dividend (SEK)
4,440	5%	2.00
(5,319)	(12%)	(0.00)

EBITDA margin	Net debt/EBITDA	EPS (SEK)
24%	1.7x	3.19
(27%)	(1.6x)	(4.05)

Note: Excluding effect of one-off items related to discontinuation of publication paper in 2020

4

and effects from changed accounting method for valuation of forest assets in 2019. Figures in "(#)" refer to 2019. 1) ROCE for the industrial segments; Wood, Pulp and Paper.

More balanced market

Sales increased 7% vs Q4 2019

• Volume 13%, price/mix -3%, currency -2%,divestments -1%

EBITDA1 up 31% vs Q4 2019

• Lower raw material costs, higher revaluation
• Lower costs including maintenance stop

• Lower selling prices on publication paper and kraftliner
• Lower publication paper volumes

Acquisition completed of forest in Latvia - 20,000 ha land

Divestment of Wood Supply UK

1 Excluding effect of one-off items related to discontinuation of publication paper in 2020 and

5

effects from changed accounting method for valuation of forest assets in 2019.

EBITDA (SEKm)

1,377

EBITDA margin

30%

EBITDA development (SEKm)

				+31%
1,494	1,560
	1,340	1,364			1,377
		1,055	1,030	1,001	1,032
30%	31%
27%				30%
	26%
	24%			24%
			21%	21%

Q4 '18	Q1 '19	Q2 '19	Q3 '19	Q4 '19	Q1 '20	Q2 '20	Q3 '20	Q4 '20
Note: Excluding effect of one-off items related to discontinuation of publication paper in 2020 and effects from								6

changed accounting method for valuation of forest assets in 2019.

Net sales (SEKm)	EBITDA (SEKm)	EBITDA margin
		-2%			+23%		45.0%
1,694	1,659		747
				607		35.8%

Q4 2019

Q4 2020

Q4 2019

Q4 2020

Q4 2019

Q4 2020

Price development - Pulpwood and Sawlogs

120

110

100

90

80

Q4 '18

Q1 '19

Q2 '19

Q3 '19

Q4 '19

Q1 '20

Q2 '20

Q3 '20

Q4 '20

Pulpwood Sawlogs

Stable wood supply to industries

Sales down 2%

• Lower volumes to Ortviken
• Lower pulpwood price

EBITDA up 23%

• Higher harvesting from SCA-owned forest
• Higher earnings from revaluation of biological assets - Lower pulpwood price

7

Net sales (SEKm)	EBITDA (SEKm)	EBITDA margin
		+9%				+82%		15.2%
		1,498			227
1,376
								9.1%
				125

Q4 2019

Q4 2020

Q4 2019

Q4 2020

Q4 2019

Q4 2020

Price development - Solid Wood Products

110

100

90

80

70

Q4 '18

Q1 '19

Q2 '19

Q3 '19

Q4 '19

Q1 '20

Q2 '20

Q3 '20

Q4 '20

Price index SEK

Continued high demand in all markets

Wood Supply UK divested on December 1, SCA retains sales to industrial customers in the UK

Sales up 3%

• Higher volumes

• Divestment of Wood Supply UK
• Negative currency effects

EBITDA up 82%

8

Net sales (SEKm)	EBITDA (SEKm)	EBITDA margin
		+30%				+445%	9.3%
		1,166			109
900

		20		2.2%
Q4 2019	Q4 2020		Q4 2019	Q4 2020		Q4 2019	Q4 2020

Price development - NBSK Pulp

110

100

90

80

70

60

50

Q4 '18

Q1 '19

Q2 '19

Q3 '19

Q4 '19

Q1 '20

Q2 '20

Q3 '20

Q4 '20

Price index SEK

Planned maintenance stop

Stable production

Sales up 30%

• Increased volumes

EBITDA up 445%

• Higher volumes
• Lower costs for wood raw material
• Better yield

• Negative currency effects

9

NBSK pulp price (USD/t) vs deliveries (Mt)

Hardwood pulp inventories (days of supply)

1,300
1,200
1,100
1,000
900
800	NBSK PIX Price Europe
700	NBSK deliveries (RHS)
600

15.0	80
14.5	70
14.0	60
13.5	50	Average
13.0	40
12.5	30
12.0	20

Softwood pulp inventories (days of supply)

50
45
40
Average
35
30
25
20

Source: PIX, PPPC.

Limited supply due to maintenance downtime

• Reduced pulp inventories
  Positive price signals
• Price rally in China, Shanghai futures
• Indications on further price increases in Europe
• … weak USD

10

Net sales (SEKm)	EBITDA (SEKm)	EBITDA margin
		-6%				-10%	18.1%
2,108	1,981	382	17.3%
		342

Q4 2019 Q4 2020 Q4 2019 Q4 2020 Q4 2019 Q4 2020

Price development -	Price development -
Kraftliner	Publication paper (LWC)
	120

100

100

80

60

80

Q4

Q4

Q4

Q4

Q4

Q4

'18

'19

'20

'18

'19

'20

Price index SEK

Decision taken to exit publication paper in September

Temporarily improved capacity utilization in Q4 (ahead of exit in Q1)

Sales down 6%

• Lower kraftliner and publication paper prices
• Lower publication paper volumes

EBITDA down 10%

• Lower kraftliner and publication paper prices + Lower costs for wood raw material
  + Increased kraftliner volumes

11

Price (EUR/t) vs Kraftliner deliveries (Mt)

850		6.5
800		6.0
750
700		5.5
650
600	Unbleached kraftliner price Euwid (LHS)	5.0
550
Kraftliner deliveries from Europe (RHS)
500	4.5

European Box demand (index)

114
112
110
108
106
104
102
100
98

Kraftliner inventories (days of supply)

40
35
30	Average
25
20

Source: Euwid, Numera.

Strong demand and prices on the rise

• Long term growth of European deliveries
• Inventory days declined in Q4
• Prices increases announced
• Strong box demand in Q4

12

Higher transaction prices for forest assets in Northern Sweden

291 SEK/m3fo at Dec 31 2020

• Average three year transaction price in SCAs region

5m3fo higher standing volume compared to 2019

• Including 3.2 m3fo net growth

SCAs forest assets valued SEK ~75bn

Market price	Standing volume	Forest asset
(SEK/m3fo)	(m m3fo)			(SEK bn)
	+15			+5				+5
291	252		257	74.9
276						69.7

2019

2020

2019

2020

2019

2020

14

Effects of one-off items related to exit publication paper in 2020

Reported in segment Other

Impact on EBITDA of SEK -1,047m

• SEK 73m in Q4

Impact on EBIT of SEK -1,694m

• SEK 97m in Q4

	Quarter
SEKm	Q4 2020		Q4 20201)
Net sales	4,592		4,592
EBITDA	1,451		1,377
EBIT	1,084		986
Profit for the period	783		821
Earnings per share,	1.11		1.17
SEK

1) Excluding effect of one-off items related to discontinuation of publication paper.

Jan-Dec
2020	20201)
18,410	18,410
3,393	4,440
1,145	2,839
767	2,239
1.09	3.19

15

Quarter

Full year

SEKm 1)	Q4 2020		Q4 2019	Change
Net sales	4,592		4,312	7%
EBITDA	1,377	1,055	31%
EBITDA margin	30.0%	24.5%		5.5 p.p.
EBIT	986	637	55%
EBIT margin	21.5%	14.8%		6.7 p.p.
Financial items	-34	-25
Profit before tax	952	612	56%
Tax	-131	-134
Profit for the period	821	478	72%
Earnings per share, SEK	1.17	0.68

2020
18,410
4,440
24.1%
2,839
15.4%
-117
2,722
-483
2,239
3.19

2019		Change
19,591		-6%
5,319		-17%
27.2%		-3.1 p.p.
3,703		-23%
18.9%		-3.5 p.p.
-126
3,577		-24%
-730
2,847		-21%
4.05

1 Excluding effect of one-off items related to discontinuation of publication paper in 2020 and

16

effects from changed accounting method for valuation of forest assets in 2019.

				Positive for wood, pulp,		Divestment of Wood Supply
				kraftliner, negative for		UK in 2020 and
	Lower prices in all segments	publication paper		deconsolidation in Wood
							France 2019
SEK									SEK
19,591m	-8%		+2%		-1%
				+1%		18,410m

- 6%

Net sales	Price/Mix	Volume	Currency	Acquisitions/	Net sales
2019				divestments	2020

17

SEK

Lower costs for wood raw

Lower prices in all segmentsmaterial, higher earnings in forest

Lower utilization on

publication paper machines,

divestments in 2019

5,319m-1,785

+1,119-126

+40

Higher energy

prices

- 17%

+195-322SEK

4,440m

EBITDA margin

EBITDA margin

27.2%

24.1%

EBITDA

Price/Mix

Volume

Raw material

Energy

Currency

Other

EBITDA

2019

2020

Excluding effect of one-off items related to discontinuation of publication paper in 2020 and

18

effects from changed accounting method for valuation of forest assets in 2019.

Forest						Wood						Pulp						Paper
Net sales (SEKm)																			8,548		8,434	9,643 9,229
																					8,226	7,744			7,916
					6,956 6,486
5,187 5,108 4,978 5,070 5,455	5,114 5,315 5,441 5,994	6,618	6,325	6,296
										4,377 4,431
														2,518 2,760 2,492 2,542 2,866
2014	2015	2016	2017	2018	2019	2020	2014	2015	2016	2017	2018	2019	2020	2014	2015	2016	2017	2018	2019	2020	2014	2015	2016	2017	2018	2019	2020

EBITDA (SEKm) and EBITDA margin 1)

						2,213
					1,740
1,232	1,213 1,238	1,363	1,394			34%
24%	24%	25%	27%	26%	25%								670	904	789	657
					603
									531
										478
										12%	11%	14%	12%
											10%
										9%	10%
2014	2015	2016	2017	2018	2019	2020			2014	2015	2016	2017	2018	2019	2020

														2,468
															2,064
	35%
31%													1,479
		21%		25%	23%				1,243 1,295 1,245	26%	22%	1,190
	970		19%		983	14%	15%	15%	16%	18%
768		709				15%
				614
		530
		482
2014	2015	2016	2017	2018	2019	2020	2014	2015	2016	2017	2018	2019	2020

Note: 2014 and 2015 EBITDA refer to adjusted figures. 2016 and forward refer to unadjusted	19
figures. For details please see the quarterly report.

	Lower kraftliner and
	publication paper	Higher pulp and			Divestment Wood
		prices
		kraftliner volumes
				Supply UK
SEK				+13%		-2%		-1%		SEK
						4,592m
4,312m	-3%

+ 7%

Net sales	Price/Mix	Volume	Currency	Acquisitions/	Net sales
Q4 2019				divestments	Q4 2020

20

Lower costs for wood raw material, higher earnings in forest

	Lower kraftliner and	Higher pulp and					SEK
	publication paper	kraftliner volumes	+445	+10	-54	+55	1,377m
SEK	prices
1,055m	-171
				+37

+ 31%

EBITDA margin

EBITDA margin

24.5%

30.0%

EBITDA

Price/Mix

Volume

Raw material

Energy

Currency

Other

EBITDA

Q4 2019

Q4 2020

Excluding effect of one-off items related to discontinuation of publication paper in Q4 2020

21

Forest

Wood

Pulp

Paper

Net sales (SEKm)

2,366

2,375

2,380

2,108

2,242

1,876

1,981

1,651

1,746

1,865

1,694

1,833

1,494

1,500

1,659

1,678

1,727

1,545

1,376

1,436

1,770

1,592

1,498

1,134

1,214

1,129

900

1,188

1,091

986

1,166

1,817

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

'19

'19

'19

'19

'20

'20

'20

'20

'19

'19

'19

'19

'20

'20

'20

'20

'19

'19

'19

'19

'20

'20

'20

'20

'19

'19

'19

'19

'20

'20

'20

'20

EBITDA (SEKm) and EBITDA margin

							747
			607																					616		577
					515
				452	499																			489
	414	388				45%																				382
331													351	344										379			342
		36%		33%	34%		297								268
																									240
												227				186									229
	24%	21%		25%					188	180			143	192	31%	28%	24%		182	137	109	26%	21%	24%
20%					18%			125	95		15%		2%				18% 17%			17%
													17%
															16%						13%
									11% 12%	9%	7%	8%	12%					20	14%	9%						12%
Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
'19	'19	'19	'19	'20	'20	'20	'20	'19	'19	'19	'19	'20	'20	'20	'20	'19	'19	'19	'19	'20	'20	'20	'20	'19	'19	'19	'19	'20	'20	'20	'20
																															22

	Quarter			Full year
SEKm	Q4 2020			Q4 2019	2020			2019
EBITDA	1,451			17,098		3,393			21,361
Revaluation of biological assets and other non cash flow items	-510			-16,367		-601			-16,979
Operating cash surplus	941			731	2,792			4,382
Change in working capital	275			140	1,131			-186
Current capital expenditures	-298			-370	-1,224			-1,132
Other operating cash flow	39			81	-11			-148
Operating cash flow	957			582	2,688			2,916
Strategic capital expenditures						-1,414			-1,256

23

			Kraftliner expansion
		SEK				SEK	SEK	SEK	SEK
	SEK 8,294m	-957m		SEK	SEK
		+462m	-63m	-51m	-271m
Lease	792			+257m					7,671m
										751	Lease

Strong focus on	Forest land Batics
cost control

	Net debt / EBITDA1							Net debt / EBITDA1
	2.0x							1.7x
	Net debt	Operating	Strategic capex	Acquisitions	Divestments	Paid tax	Other	Net debt
	Q3 2020	cash flow						Q4 2020
Note: 1) Excluding effect of one-off items related to discontinuation of publication paper in Q3 and Q4 2020.				24

SEKm	Dec 31, 2020
Forest assets	74,900
Working capital	2,759
Working capital/Net sales 1	18%
Deferred tax relating to forest assets	-14,977
Other capital employed	17,152
Total capital employed	79,834
Net debt	7,671
Net debt/EBITDA 2	1.7x
Equity	72,163
Net debt/Equity	11%
Market price forest assets (SEK/m3fo)	291

Dec 31, 2019

69,682

3,748

20%

-13,977

17,654

77,107

8,597

1.6x

68,510

13%

276

Note: 1) Average working capital for 13 months as a percentage of 12-month rolling net sales.	25
2) Excluding the effect of one-off items related to discontinuation publication paper operations
in 2020 and the effect of changed accounting method for valuation of forest assets in 2019

A year of transformation

• Exit publication paper
• CTMP investment in Ortviken SEK 1.45bn
• Obbola expansion on time and budget
• Increased growth and harvesting level

COVID-19 impacted sales and earnings - limited impact on production and distribution

Sales declined 6% vs 2019

• Price/mix -8%, volume 2%, currency 1%, divestments -1%

EBITDA1 declined 17% vs 2019

• Lower selling prices
• Lower publication paper volumes + Stronger earnings in forest

1 Excluding effect of one-off items related to discontinuation of publication paper in 2020 and

27

effects from changed accounting method for valuation of forest assets in 2019.

This presentation may contain forward-looking statements. Such statements are based on our current expectations and are subject to certain risks and uncertainties that could negatively affect our business. Please read SCA's most recent annual report for a better understanding of these risks and uncertainties.