Raute Corporation Annual General Meeting 2015

Raute Corporation
Annual General Meeting 2015
Sibelius Hall, Lahti, 24 March 2015
Tapani Kiiski, President and CEO
www.raute.com
Raute 2014:
Heading into 2015 with Strong Targets
Business environment 2014
Strategy
Financial statements 2014
Outlook
Raute as an investment
www.raute.com
Business Environment 2014
www.raute.com
Raute’s business today
Wood products industry
̵ Markets estimated at some
EUR 150 billion a year
̵
Plywood industry’s market
some 30 billion a year
̵
Investments in veneer, plywood
and LVL production technology
are some EUR 600-750 million
a year in “normal” market and
financial situation
Raute’s customers
Customers’ products
• Veneer industry
• Plywood industry
• LVL industry
Veneer, plywood and LVL are
mainly used in construction and
furniture and also in transport
vehicle and packaging
industries
Raute adds value to its
customers’ business by
supplying solutions for
manufacturing wood products in
a profitable and environmentally
sustainable way.
Plywood consumption by end-use category 2013
Total 85.1 million m3
Construction
Furniture
Flooring
Total
39%
26%
5%
70%
Packaging
Transport
Total
9%
7%
16%
______________________________________
Others
14%
Raute is a technology and services
company that serves the wood products
industry globally.
Project deliveries:
62%
of net sales
(2014)
4
Raute’s solutions
• Mill-scale projects, separate production lines,
machinery and equipment
• Automation, machine vision, measuring
technology
Technology services:
• Modernizations
• Maintenance and spare parts
• Business support services
38%
of net sales
(2014)
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Plywood
production and consumption
Plywood production and consumption
in 2000, 2005, 2010, 2011 and 2013 (million m3)
100,0
2000
2005
2010
2013
90,0
80,0
70,0
60,0
Production
58,4
73,3
81,5
86,3
Consumption
59,6
72,5
81,0
85,1
50,0
40,0
30,0
20,0
Plywood production by market area
2000, 2005, 2010, 2011 and 2013 (1,000 m3)
10,0
2000
2005
Production
2010
2013
Consumption
100 000
Plywood consumption by end-use category 2013
Total 85.1 million m3
90 000
80 000
2000
70 000
Others 14%
2005
2010
2013
60 000
50 000
Transport 7
%
Construction
39%
Packaging
9%
40 000
30 000
20 000
10 000
Flooring 5%
0
NAM
Source: Indufor
5
Furniture
26 %
EMEA
Russia
LAM
China
APAC
excl.
China
Total
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Raute as part of the
wood-processing value chain
Sustainable and
environmentally friendly,
wood is a significant
renewable raw material
which is constantly gaining
popularity in construction,
for example.
The value of the global wood products industry market
is approximately EUR 150 billion. Demand and
profitability are influenced by the general increase in
the standard of living, construction regulations,
availability and price of wood and economic cycles.
The industry is experiencing growth particularly in the
emerging markets.
The wood products industry is investing in
production technology in order to boost
production efficiency and improve end-product
quality. Investment activity is at its highest level
at the end of a business cycle. New production
capacity is being constructed especially in the
emerging markets and for LVL.
Customers use Raute’s solutions to produce
veneer, plywood and LVL (Laminated Veneer
Lumber), which are used maily in construction
and furniture and in the transport vehicle and
packaging industries. Demand for veneer-based
products is on the increase worldwide.
Raute’s solutions cover the entire production process
Log handling → Peeling → Drying → Veneer handling → Lay-up → Pressing → Panel / Billet handling → Plywood / LVL
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Raute’s solutions cover the entire
production process
Dry veneer processing
Green veneer
processing
Panel lay-up and pressing
Panel processing
Automation:
• Machine automation
• Machine vision
• Measuring and grading technology
• Production and quality control data management
Log handling → Peeling → Drying → Veneer handling → Lay-up → Pressing → Panel / Billet handling → Plywood / LVL
7
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Raute’s full-service concept
Raute’s full-service concept consists of project deliveries and technology
services. The technology offering covers complete mill-scale solutions,
production lines and individual machines and equipment. Technology
services include services ranging from spare parts deliveries to regular
maintenance and equipment modernizations.
Potential for growth
Competitors’
machines
Kilpailijoiden
koneet
New
service
Uudet
concepts
palvelukokonaisuudet
Increasing
local
Paikallisen
service
palvelun
lisääminen
Time
Growing
demand for
Palvelujen
services
kysyntä
kasvussa
Linking of
services to
Palvelujen
deliveries
liittäminen
toimituksiin
Outsourcing
of
Kunnossamaintenance
pidon
ulkoistukset
Life-cycle cooperation
Raute also supports customers throughout the life-cycle of
their investment through a wide range of technology and
services. Raute sees growth potential particularly in
technology services
8
Modernisoinnit
Varaosat
Huoltopalvelut
www.raute.com
Focus on emerging markets
%
Plywood production by market area in 2013.
EMEA (Europe and Africa)
Market area’s share of Raute’s order intake in 2012-2014
Raute’s position ►Growth potential
Europe is a developed market with a
generally high level of production
technology.
The biggest operator. The objective is
to maintain the leading position and to
deepen cooperation with customers in
order to boost their production processes
in the long term.
►Production efficiency and quality
improvements.
13%
CIS (Russia)
Large raw material reserves and
developing economy in the long term
Plywood import and domestic demand
in the increase.
The market leader
► Extensive forest resources and
developing economy. Technology
services.
4%
6%
6%
NAM (North America)
53%
The world’s largest LVL producing
area and the world's second largest
plywood manufacturing area. Economy
recovering.
Investments focus on modernization
projects to boost efficiency and
replacement investments.
18%
To strengthen its position through
automation expertise
► Comprehensive strategic investments
of customer industries and technology
services.
CHINA
5%
The world’s largest producer of
plywood
LAM (South America)
Production mostly based on manual
One of the biggest growth areas in plywood labor, simple technology and local
manufacturers.
production.
Strong position in Chile and deliveries to
Brazil.
► Structure of local forest industry, abundant
plantation wood resources and investments in
products with a high value added
9
To become a significant operator.
► Higher quality requirements.
APAC (REST OF THE
ASIA-PACIFIC AREA)
Strong shift from natural forests to
plantations.
The strength: Processing of raw
material from small-diameter plantation
trees.
► New growth of plywood production
enabled by plantation forests.
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Changes as opportunities
Europe
• Developing current
capacity
Africa
• Local further processing of
wood
Russia
• Upgrading production
technology
• Exploiting forest resources
• Export products
Trends
• Renewable wood as raw
material on rise
• Environmental awareness to
increase and regulations to
tighten
• More cost-efficient manufacturing
methods necessary to face
tightening competition
• Energy prices up
• Emerging markets to play a
greater role
Asia-Pacific area
• Plantation forest resources
• In China, increased quality
requirements and
“industrialization”
South America
• Plantation forest resources
• Modernization
North America
• Replacement investments,
when economy recovers
From Raute’s perspective
• Increasing use of wood boosts demand for wood products technology
• Emerging markets to play a greater role
• Raute must identify individual customer needs and be able to offer, in addition to state-of-theart technology, solutions where automation is not a decisive factor in creating a competitive
edge. Technology services to increase their share, especially in traditional markets
10
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Local presence globally
Finland: Nastola, Kajaani, Jyväskylä
394
persons
(67%)
Latvia, Riika
2
persons
North America:
Vancouver,
Memphis
Russia: Moscow, St. Petersburg
9
persons
105
67
persons
(18%)
persons
China, Shanghai
(11%)
Singapore
6
persons
Chile, Santiago
Raute
Australia, Myrtleford
4
persons
Agent
Number of personnel as of 31 December 2014
www.raute.com
Strategy
12
www.raute.com
Profitable solutions for all
customer needs
CLIMATE
CHANGE
GLOBAL
ECONOMIC
DEVELOPMENT
AVAILABILITY
OF ENERGY
TECHNOLOGICAL
DEVELOPMENT
MEGATRENDS
Increasing use of wood as a building material
•
Increasing popularity of renewable raw
materials and products
•
Increasing use of further-processed wood
products
Continuous improvement of cost effectiveness
•
More efficient use of raw materials
•
Increasing willingness to invest in more efficient
production processes
•
Production facilities become larger
RAUTE’S
STRATEGY
Raute
generates added
value for its customers’
businesses by supplying
solutions to facilitate
profitable and environmentally sustainable
production of wood
products.
Higher environmental awareness results in
tighter regulations
•
More efficient use of raw materials
•
Increasing use of renewable plantation
trees as a raw material
•
Standardization and quality requirements
for products increase
•
Environmentally sound processes gain
ground
•
Emissions decline
Energy prices go up
•
Energy-efficient solutions gain ground
•
More efficient utilization of process by-products
•
More efficient use of oil-based additives, and
especially glue and surface treatments
Growing importance of emerging countries
•
As the standard of living rises, investments in
construction and housing will increase
•
Automation increases also in emerging
markets
Raute offers
profitable solutions
for all customer needs.
VALUE CHAIN
13
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Profitable solutions for
all customer needs
The preferred solution provider with
attractive offerings to meet different
customer segment needs globally
Adaptation
The trusted local life cycle partner for
production process optimization
Growth
Among three leading suppliers in
selected emerging markets through
targeted product range
Profitable solutions
for all customer
needs
14
Profitability
Cost-efficient and agile processes
with good quality across the global
network
Preferred company for competent
people to achieve together
www.raute.com
Strategy implementation 2014
• Customer needs
-
First machines of the Raute Dragon veneer lathe family have been taken into production
use
Product development focused on the RautePro and RauteSelect product families
New products relating to automation and quality control in the production process have
been launched
• Technology services
-
Service business organization strengthened
First extensive maintenance contracts concluded in Russia
• Emerging markets
-
Raute Dragon veneer lathe family introduced
Investments continued in developing products aimed at emerging markets
Successful implementation of production investments in China’s new facilities
• Cost-efficiency and quality
-
Quality and schedule control improved by increasing the proportion of internal production
in the China production unit
Employee initiatives have improved the work-flow especially at the Nastola mill
Workflow improved at the North American mill
• Hunger of success and personnel
15
Development of personnel’s expertise focused on indentified special areas
The ”Great Place to Work” project focused on improving leadership
Internal communications enhanced throughout the organiszation.
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Personnel creates the prerequisites
for success
•
•
•
•
•
•
16
The focus of personnel development was on fostering
supervisor skills and a quality-oriented operational
culture that is based on taking responsibility.
Training was carried out in many areas according to
identified needs with a focus on improving supervisory
work, project work and customer work.
Local service resources were strengthened in Finland,
Russia and China.
In our largest foreign units we started a shift towards
implementing common corporate HR management
principles and focus areas. The division of labor between
local and corporate functions was also clarified.
The 360-degree assessment carried out at the end of the
year provides a framework for the development of
supervisory work in 2015.
The Särmä change project, which was started in 2012,
was completed in 2014, and the identified practices were
integrated into Raute’s working culture. Raute’s entire
personnel were involved in the project. .
Personnel 2010 - 2014
Age of personnel 2014
Personnel geographically 2014
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Financial statements
1 January – 31 December 2014
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2014 in brief
Business environment
2014
Uncertainty relating to global economy and financial
markets and political instability continued, construction
remained at a low level.
• Customers’ operation mainly profitable. However,
order books are short which meant the situation was
not conductive to proceeding significant investments.
• Large projects in planning phase, but proceed slowly.
• Demand for maintenance and spare parts continued
at a good level.
• Q4 order intake at a good level without any new
major individual orders.
• In 2014, order intake increased 77%
− More than two thirds of new orders came from Europe.
− In Q2, two new capacity-generating projects to Poland
(and an additional order for the other in Q3), total
MEUR 38.
− 2014 order intake in project deliveries increased
+154%. Project deliveries, excluding new capacitygenerating projects, increased 21%.
− Technology services up 12%, mostly from
modernizations and spare parts.
− Production volumes and utilization rates of customer
industries mainly remained at a good level.
MEUR
Net sales
Operating result
2014
2013
94.0
83.3
2.6
1.8
• Net sales up 13%.
̵
̵
Collected orders and timing of the order book.
Project deliveries +12%.
Technology services +14%.
̵
•
Operating profit improved 43 %.
̵
Order intake
- Project deliveries
73
29
- Technology services
39
34
Order book
44
28
18
̵
Large variations in workload made it difficult to use
resources efficiently and control costs.
Non-recurring, unforeseen additional costs incurred in
two projects, totalling MEUR 1.7.
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Three large projects completed, two in
progress
Europe
•
Two major capacity-generating projects were started up
in Poland: the construction of softwood plywood and LVL
mills..
Russia
•
Uncertainty resulting from the crisis in Ukraine obviously
caused investments decicions to be postponed.
North America
•
Demand focused smaller modernization projects and
other technology services.
South America
•
Raute’s customers focused on ramping up the capacity
of the large plywood mill investments they made a few
years ago, and no major new investments projects were
started up.
Asia
• The first Dragon peeling line was launched in the spring
2014 .
Altogether three major capacity-generaing projects were at
the installation and commissiong phase :
The expansion of a South American plywood mill, initiated in
2011, and the rebuilding of a mill destroyed in a fire in early
2012 were completed.
The order received in July 2012 for the dlivery of LVL mill
machinery to Germany lagged behind its initial schedule
due to the need for modifications on account of the
properties of the previously little-used materia. The
acceptance test for the last production line was carried out
in January 2015.
19
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Income statement, balance sheet
and key figures
Income statement, MEUR
2014
2013
Balance sheet, MEUR
Net sales
94.0
83.3
2.6
1.8
0.2
-0.2
Profit before tax
2.8
1.6
Income tax
-0.4
-0.4
2.4
1.2
Operating profit
Financial income and expenses
Profit for the period
31.12.2014
31.12.2013
Intangible assets
3.5
3.5
Property, plant and equipment
7.9
8.4
Other non-current assets
0.7
0.6
Inventories
7.9
5.0
28.3
18.5
4.4
12.7
Total assets
52.6
48.8
Equity
24.3
23.6
Non-current liabilities
1.8
3.4
Advance payments received
9.1
7.1
Accounts receivables and other
receivables
Cash and cash equivalants
Key figures
2014
2013
Earnings per share, EUR
0.59
0,30
Operating cash flow, MEUR
-1.9
3,7
Return on investment (ROI), %
10.9
7.3
Gearing, %
-6.9
-28,3
Return on equity, %
55.8
56.6
Current liabilities
17.4
14.7
Personnel, in books
587
534
Total equity and liabilities
52.6
48.8
20
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Order intake and Order book
Order intake 2014 – project deliveries
vs. technology services
Order intake2010 - 2014
MEUR
Q1
Q2
Q3
Q4
120
Project
deliveries
65 %
100
80
Technology
services
35 %
60
40
20
0
2010
2011
2012
2013
2014
Order intake 2014 by market area
Order book 2010 - 2014
Q1
MEUR
Q2
Q3
90
80
70
60
50
40
30
20
10
0
Q4
South
America
7%
North
America
10 %
Asia-Pacific 5 %
Europe
63 %
Russia
15 %
2010
21
2011
2012
2013
2014
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Net sales
Net sales 2010 - 2014
Q1
ME
UR
120
Net sales 2014 by market area
Q2
Q3
Q4
South
America
13 %
100
80
Asia-Pacific 3 %
Europe
52 %
North
America
14 %
60
40
20
Russia
18 %
0
2010
2011
2012
2013
2014
Net sales development
MEUR
Project deliveries/Industry
Plywood
LVL
Net sales 2010 - 2014 by market area
Technology services
MEUR
120
120
100
100
80
80
60
60
40
40
20
20
0
CIS
APAC
NAM
LAM
0
2010
22
EMEA
2011
2012
2013
2014
2010
2011
2012
2013
2014
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Operating result
1-3
MEUR
1-6
1-9
1-12
5,0
4,0
3,0
2,0
1,0
0,0
-1,0
-2,0
2010
23
2011
2012
2013
2014
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Investing in the future
Capital expenditure
Capital expenditure of net sales
R&D expenditure
R&D costs
R&D expenditure of net sales, %
MEUR
6,0
6%
5,0
5%
4,0
4%
3,0
3%
2,0
2%
1,0
1%
0,0
0%
2010
2011
2012
2013
2014
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Key figures
Return on investment (ROI)
Return on equity (ROE)
Equity ratio, %
Gearing, %
20%
60%
15%
40%
10%
20%
5%
0%
0%
-20%
-5%
-40%
-10%
-60%
2010
25
2011
2012
2013
2014
2010
2011
2012
2013
2014
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Outlook
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Outlook 2015
Business environment:
” We are heading into 2015 with strong expectations
and an initial order book that is stronger than a year
ago. Uncertainty seems to have established itself as
the status quo in the economy and the markets, and
we need to know how to operate in this type of an
environment.
• Uncertainty relating to the development of market
situation continues and reflects to Raute’s customers’
investment decisions
• Several big projects further under preparation
• Improvement investments in the plywood industry at a
reasonable level in the near future
Our order book is strong, and we are currently
conducting negotiations on some concrete projects of
a significant size. I believe that one or even several of
them will start up during the early part of the year.
Raute enjoys a strong competitive position in these
projects.
Raute:
Our technology services will continue to grow. Our
R&D will also provide us with new reinforcements to
support our growth along with the Dragon product
family.
Based on this setup, I am confident that our positive
development in terms of both net sales and profit will
continue and gain momentum during 2015.
Tapani Kiiski, President and CEO
Annual Report 2014
27
• Opening order book higher than in the previous year.
• New major orders forecasted for the year 2015.
• In 2015, Raute’s
̵ net sales are expected to grow and
̵ operating profit to improve
over the previous year 2014.
• The order (received in Marh) for the machinery and
equipment of a Laminated Veneer Lumber (LVL)
production line from Stora Enso Wood Products Oy
strengthens Raute's order book for 2015.
• The development of order book supports Raute’s profit
outlook, according to which Raute's
• net sales are expected to grow and
• operating profit is anticipated to improve
from the previous year 2014..
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Raute as an investment
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Higher shareholder value
• Clearly defined strategy and regular
evaluation and adjustment of it
according to changes in the business
environment
• Reaction and adaptation to changing
market conditions and trends of the
industry and the environing world
• Solid and long-term ownership
• Impeccable corporate governance
and communication
– Predictability
• Stock exchange quotation
• Long-term dividend policy
29
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Investor Relations
• Stock exchange releases in 2014
−
−
−
−
−
−
•
February 12, 2014: Long-term share-based incentive
plan for Raute’s upper management for the years
2014–2018
February 25, 2014: Share subscription with Raute
Corporation’s 2010 A stock options
March 31, 2014: Decisions by Raute’s Annual General
Meeting 2014
June 6, 2014: Raute received an order valued at more
than EUR 8 million from Poland
June 26, 2014: Raute received an order valued at
EUR 23 million from engineered wood products
company Steico
November 10, 2014: Share subscription with Raute
Corporation’s 2010 A stock options
Share price development (RUTAV) and
turnover in 2014
Share price development (RUTAV) and
turnover in 2015
Ten IR events (private investors, exhibitions, one-toone -meetings)
Raute material distribution some 6,500 pcs
Investor letters (6 pcs), distribution 420 pcs/letter
30 - 60 private investors participated in events
Number os shareholders 1,975 (as of March 12,
2015)
•
•
•
•
30
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Shareholders
Number of shareholders
Ownership at Dec. 31, 2014
2 100
Nominee-registered
3,1 %
Foreign
Institutions 0,1 %
8,7 %
2 000
Companies
3,7 %
1 900
Households
78,5 %
Management
5,8 %
1 800
1 700
1 600
1 500
2010
31
2011
2012
2013
31.12.2014
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Market cap
Share price, EUR
Market cap, MEUR
Closing price
12,0
Average price
45
40
10,0
38.8
9,70
9,00
36,0
35
8,0
29,3
30
27,8
6,95
7.30
2013
31.12.2014
6.20
24,8
25
6,0
20
4,0
15
10
2,0
5
0,0
0
2010
2011
2012
2013
31.12.2014
2010
2011
2012
Series K shares valued at the value of series A shares..
32
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Earnings per share
Earnings per share
Dividend
Repayment of equity
euros
1,00
0,50
0,00
*
-0,50
2010
2011
2012
2013
2014
*Board of Directors’ proposal to the AGM on March 24, 2015..
33
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Thank you for your interest!
35
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