Arctic Paper Group
Results for Q1 2017
Per Skoglund, CEO Arctic Paper
Małgorzata Majewska, CFO Arctic Paper
Arctic Paper
Page 2
Disclaimer
Please read the information below carefully
This presentation (the ‘Presentation’) was prepared by Arctic Paper S.A. (the ‘Company’) for information purposes only for use by investors, banks and the Company’s
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or conduct transactions regarding securities, an inducement to make purchase offers or a recommendation to conclude any transactions, in particular transactions regarding the
Company's securities.
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reliability or completeness, except for the information on the Company and its Group. The Company shall not be held liable for the consequences of decisions made on the basis
of or in reliance on the information contained in this Presentation. The information contained in the Presentation has not been independently verified and may be subject to
change at any time. The publication of the data contained in the Presentation by the Company does not constitute a breach of the provisions of the law which apply to
companies whose shares are listed on the regulated market, in particular the regulated market operated by the Warsaw Stock Exchange in Poland and NASDAQ OMX Stockholm
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This Presentation contains information on the paper industry. With the exception of information indicated as originating from a specified source, the market information referred
to above has been prepared on the basis of data received from third parties who are named in this Presentation and contains estimates, assessments, corrections and opinions
based on the Company's experience and knowledge of the sector in which it conducts business. Because the market information referred to above may have been partially
prepared with the use of estimates, assessments, corrections and opinions and has not been verified by independent entities, to a certain extent, this information is of a
subjective nature, with the exception of the information which has been indicated as information originating from third parties from a specified source. It is presumed that
estimates, assessments, corrections and opinions are based on reasonable grounds and that the market information which has been prepared duly reflects the situation of the
industry on the markets on which the Company conducts business. However, there is no certainty that the estimates, assessments, corrections and opinions are the most
appropriate basis for drawing conclusions on the market information or that market information taken from other sources may not differ significantly from the market
information contained in this Presentation.
The Company would like to point out to the readers of this Presentation that the only reliable source of data on Arctic Paper's financial results, forecasts and events, as well as
the Company’s indicators, is the current and periodic reports submitted by the Company in compliance with reporting requirements under Polish and Swedish law.
This Presentation should be read together with the 2017 consolidated and standalone report and report for the 2016.
Arctic Paper
Page 3
Agenda
Market environment
Operations and financial results
Summary for the Q1 2017
Arctic Paper
Page 4
Market environment
Arctic Paper
Page 5
Deliveries of fine paper
Monthly deliveries of fine paper in Europe
1 200
Q1 2017 vs. Q1 2016 -1,7%
978
943
 Uncoated woodfree up +0,2%
thousand metric tons
950
 Coated woodfree down -3,8%
 Arctic Paper volume up +1,8%
Q1 2017 vs. Q4 2016 +4,0%
880
812
700
536
534
485
444
450
409
368
 Uncoated woodfree up 8,8%
442
395
200
 Coated woodfree down -1,5%
Fine papers
Coated woodfree
Source: Arctic Paper based on EuroGraph data
 Arctic Paper volume up +11,3%
Quarterly deliveries of fine paper in Europe
Arctic Paper YTD Q1 2017 volume structure
5 000
thousand metric tons
4 000
UWF
68%
Volume
175,6 t
TONS
Uncoated woodfree
CWF
2 847
2 800
(-1,7)
2 847
3 000
2 692
2 800
(+4,0)
Q4 16
Q1 17
2 000
1 000
32%
0
2016
2017
Current period
Q1 16
Compared period
Source: Arctic Paper based on EuroGraph data
Arctic Paper
Page 6
Fine paper prices
Graphic fine paper prices - German market
1000
Mar 2017 vs. Dec 2016
 UWF segment average price change +1,6%
measured in PLN)
 CWF segment average price change +0,8%
(Arctic Paper: -1,0%,
measured in PLN)
EUR / ton
(Arctic Paper: +1,9%,
900
800
700
Mar 2017 vs. Mar 2016
 UWF segment average price change -1,4%
(Arctic Paper: -3,7%,
600
measured in PLN)
UWF 80g Sheets
UWF 80g Reels
CWF 90g Sheets
 CWF segment average price change -3,2%
CWF 90g Reels
Source: Arctic Paper based on RISI data.
(Arctic Paper: -4,9%, measured in PLN)
Change in price for graphic paper in EUR - Western Europe
03 17 vs . 12 16
03 17 vs . 03 16
Minimum
price
Average
price
Maximum
price
Minimum
price
Average
price
Maximum
price
UWF
0,9%
1,6%
2,5%
-2,1%
-1,4%
-0,3%
CWF
0,7%
0,8%
1,0%
-3,4%
-3,2%
-2,4%
Source: Arctic Paper based on RISI data.
Arctic Paper
Page 7
Pulp prices
Pulp PIX Indexes Europe
Average price Q1 2017 compared to Q1 2016
700
1 100
 NBSK (long fibre): 3,2% higher
 BHKP (short fibre): 10,8% lower
 Arctic Paper costs 12,6% lower (measured in PLN)
USD / ton
922
926
931
600
932
880
900
853
839
803
797
700
765
742
725
810
806
810
826 500
809
400
789
759
743
789
737
722
682
Average price Q1 2017 compared to Q4 2016
662
300
653
200
 NBSK (long fibre): 0,9% higher
500
100
 BHKP (short fibre): 3,9% higher
 Arctic Paper costs 0,7% higher (measured in PLN)
300
0
NBSK vs. BHKP
NBSK PIX USD
BHKP PIX USD
Arctic Paper YTD Q1 2017 Structure of pulp consumption
+0,9
+3,2
+3,9
809
BHKP
816
791
-10,8
816
73%
762
655
680
Average
Q4 16
Average
Q1 17
680
CONSUMPTION
114,6 t
TONS
NBSK
19%
Average
Q4 16
Average
Q1 17
Average
Q1 16
Average
Q1 17
Average
Q1 16
Average
Q1 17
Source: Arctic Paper based on Foex data.
CTMP
8%
Arctic Paper
Page 8
Currency exposure
EUR/PLN changes
Average exch. rate Q1 2017 compared to Q4 2016
4,8
4,6
 EUR/PLN -1,3%
4,3
 EUR/SEK -2,5%
4,1
 EUR/USD -1,3%
3,8
2013
31/03
4.22
Average exch. rate Q1 2017 compared to Q1 2016
2014
2015
2016
2017
EUR/SEK changes
10,3
 EUR/PLN -1,0%
9,8
 EUR/SEK +1,9%
9,3
8,8
 EUR/USD -3,4%
31/03
8,3
9.55
Arctic Paper YTD Q1 2017 Revenue and costs structure
7,8
2013
2014
2015
2016
2017
USD
EUR
PLN
61%
38%
EUR/USD changes
13%
1,5
REVENUE
SEK
COSTS
0,582 mln
22%
0,541 mln
PLN
PLN
GBP
8%
SEK
7%
1,4
1,3
1,2
1,1
EUR
21%
31/03
1,0
PLN
17%
0,9
2013
1.07
2014
2015
2016
2017
Arctic Paper
Page 9
Operations
Arctic Paper
Page 10
Budget production capacity and sales volume*
Production and use of production capacity for all paper mills*
 5,1% higher than Q4 2016
Production in thousand tons
98%
450
120%
95%
96%
98%
97%
100%
99%
89%
93%
95%
98%
94%
95%
95%
100%
300
80%
166
162
177
168
174
151
169
166
169
158
167
161
167
150
60%
0
40%
* AP Mochenwangen excluded from production and capacity
Paper sales volume*
Total Q1 2017 total production volume : 166,7k ton
240
 3,8% higher than Q4 2016
Thousand tons
* AP Mochenwangen excluded from both production capacity and production volume.
180
166 162
176
164
172 167
181
159 167 157
172
120
60
0
* AP Mochenwangen excluded from sales volume.
160
176
171
158
% of nominal capacity
Average Q1 2017 use of budget production capacity :
600
172 176
Arctic Paper
Page 11
Paper sales revenue and revenue per ton*
Paper sales revenue*
800
600
2016
 Q1 2017 up 10,5% compared to Q4 2016
milion PLN
 Q1 2017 (PLN 575m) down 2,5% compared to Q1
541 522 555
535 524
504
590
579
498
542 525
540
590 575
575
569
520
400
200
0
* AP Mochenwangen excluded from sales revenue
Paper sales revenue per ton*
4,0
to Q1 2016
 Q1 2017 decrease by 0,7% compared to Q4 2016
Thousand PLN
 Q1 2017 (PLN 3,27k) decrease by 4,3% compared
3,5
3,25
3,21
3,16
3,08
3,10
3,13
3,21
3,24
3,35
3,13
3,0
2,5
* AP Mochenwangen excluded from both sales revenue and revenue per ton.
2,0
* AP Mochenwangen excluded from revenue per ton.
3,42
3,38
3,33
3,30
3,27
Arctic Paper
Page 12
Financial results
Arctic Paper
Page 13
Key consolidated figures
(PLN thousands)
Paper sales volume (000' tonnes)
Pulp sales volume (000' tonnes)
Revenues
Gross profit on sales
% margin
EBITDA
% margin
EBIT
% margin
Net result
% margin
Net result from c ontinuing operations
% margin
Net result from disc ontinued operations
% margin
Net operating c ash flow
Capital expenditures
Cash and equivalents
Total assets
Capital employed
Total equity
Net debt
Eearnings per share (PLN)
Equity / assets ratio (%)
Net debt / equity ratio (%)
Net debt / EBITDA (times)
Q1 2017 total revenues down -0,6%
Q1
2017
Q4
2016
Q1
2016
176
101
773 902
121 165
15,7
75 498
9,8
44 121
5,7
32 934
4,3
35 082
4,5
-2 148
-0,3
158
69
707 166
77 072
10,9
38 384
5,4
1 924
0,3
-950
-0,1
-10 361
-1,5
9 411
1,3
172
93
778 560
118 034
15,2
70 669
9,1
41 376
5,3
19 628
2,5
24 707
3,2
-5 079
-0,7
21 935
30 872
101 595
87 089
58 655
130 157
245
25 670
168 237
908
538
370
464
1 770 081
1 027 179
742 902
257 442
1 793 672
1 100 006
693 665
274 962
0,48
43
36
1,05x
-0,01
42
35
1,03x
0,28
39
40
1,30x
1 706
968
738
267
compared to Q1 2016
(-2,5% paper segment, +5,4% pulp segment
revenue)
Q1 2017 EBITDA up by PLN 4,8m
compared to Q1 2016
(39,0m PLN paper segment: +8,3 PLN,
36,4m PLN pulp segment: -3,4m PLN)
Net result from continuing operations: + PLN 10,4m
compared to Q1 2016
(17,0m PLN paper segment: +15,5 PLN,
18,0m PLN pulp segment: -5,1m PLN)
CAPEX on the level of 30,9m PLN
(11,8m PLN paper segment: +0,8m PLN,
19,1m PLN pulp segment: +4,4m PLN)
Cash on the level of 101,6m PLN
(94,0m PLN paper segment: -15,9m PLN,
7,5m PLN pulp segment: -50,7m PLN)
Net debt on the level of 267,4 PLN vs 274,9 PLN in
MAR 2016
Arctic Paper
Page 14
Q1 2017 Operating result and EBITDA (excluding Rottneros)
Q1 Operating result bridge
Operating result for the Q1 2017 18,8m PLN
 +7,9m PLN higher than Q1 2016
Million PLN
 +1,4m PLN higher than Q4 2016
EBITDA evolution
Q1 2017 EBITDA 39,0m PLN
 +0,2m PLN higher than Q4 2016
Million PLN
 +8,3m PLN higher than Q1 2016
39
49
31
39
25
31
29
16
29
39
Arctic Paper
Page 15
Q1 2017 Consolidated operating result and EBITDA (including Rottneros)
Q1 Operating result bridge
 +42,2mPLN higher than Q4 2016
 +2,7m PLN higher than Q1 2016
Million PLN
Operating result for the Q1 2017 44,1m PLN
EBITDA evolution
 +37,1m PLN higher than Q4 2016
 +4,8m PLN higher than Q1 2016
Million PLN
Q1 2017 EBITDA 75,5m PLN
78
71
70
39
75
77
64
71
38
25
75
Arctic Paper
Page 16
Summary of Q1 2017
Arctic Paper
Q1 2017 in brief
Page 17
Market environment:
Still favourable pulp prices market in Q1 for paper segment, BHKP, short fibre average Q1 2017 -10,8% and NBSK, long
fibre average Q1 2017 + 3,2% if compared to Q1 2016, but in the end of Q1 2017 growth trends were observed and
market showes clear signals of pulp prices significant increases in next comming months;
The market for fine graphical papers developed in two directions: while the uncoated market remained on a stable level
(increasing by 0.2%), the coated market continued to decline by 3,8% (compared to Q1 2016, according to EuroGraph
data). During the same period Arctic Paper increased its sales volume by 1.8%;
The USD to the Euro remaining at low unfavourable for paper segment level;
Arctic Paper Group:
EBITDA for Q1 2017 without Rottneros on level of 39,0m PLN vs. 31,0m PLN in Q1 2016;
EBITDA for Q1 2017 of Arctic Paper Group with Rottneros was 75,5m PLN vs. 71,0m PLN in Q1 2016 (paper segment up
by 8,3m PLN, pulp segment down by -3,4m PLN);
Sales revenues in the paper segment in the Q1 2017 were over 575m PLN, down 2.5% compared to the same period of
2016, sales revenues (incl. Rottneros) were on the level of 774m PLN, down 0,6% compared to Q1 2016;
Thank you!
Per Skoglund, CEO Arctic Paper
Małgorzata Majewska, CFO Arctic Paper