Global Market outlook Tallin June 13:th Olle Berg, Senior Vice President Stora Enso Building and Living

Transcription

1 Global Market outlook Tallin June 13:th 2012 Olle Berg, Senior Vice President Stora Enso Building and Living

2 Stora Enso Building and Living In brief Sales bn Employees # of units Production in 11 countries Global sales network Sawing capacity, Mm 3 Further processing, Mm Nordic BU Central Europe BU Baltic & Components BU Building Solutions BU 2

3 Recap 2011

4 Especially challenging 2011 Euro crisis MENA civil unrest Japan tsunami Australian flooding 4

5 Development of housing starts by region, Index 2003 = 100 With continuously tough going in housing markets recovery has remained slow Housing starts trailing 30-70% behind the levels of early 2000s Japan USA Europe % -40% -70% Source: Euroconstruct, Concensus Forecast 5

6 Swedish export prices for sawnwood, Index: 2000 = 100 Scaring the investors... well, some like the volatility Great bull run, globally Crash landing Supply was boosted up, confidence & demand was not 130 and here we go again Redwood export Whitewood export Source: Skogsindustrierna / Statistics Sweden Latest data: February 2012 Stora Enso Building and Living May

7 Market outlook

8 Housing starts by region, index 2003 = 100 Demand recovery how slow could it be? Forecast Crystal ball area Japan USA Europe Source for data: Euroconstruct, Concensus Forecast 8

9 European construction markets have bottomed out 1000 housing completions Eastern Europe & Baltics Southern Europe Western Europe Nordic countries German speaking area

10 Change to previous year European sawnwood demand slowly picking up 15 % 10 % 2010 M3 5 % UK % Germany % Italy % France % -20 % % Western Europe Change to Prev year, m Total volume, m Source: Softwood Conference October

11 Interregional imports to major importing countries, Mm3 Demand growth in overseas markets have been crucial for global market balance ,4 10,7 10,0 6,4 6,1 5,4 14,9 6,3 9, MENA Japan China 11

12 European exports, 1000 m3 From European perspective, export dynamics have differed greatly by region % % -95% +400% Japan USA M-East/N-Africa* Other Asia, Oceania * Exports to Middle-East, North Africa and Other Asia/Oceania including Finland, Sweden, Austria and Germany Note: US import statistics converted from board feet to cubic meters on nominal basis (2,36) 12

13 Middle-East and North Africa demographics bring both opportunities and risks Egypt Morocco Algeria Saudi-Arabia Iraq? 50 years 50% Average age, years Jobless rate <25 years, % 300 million people Stora Enso Building and Living May

14 Housing starts, 1000 units Reconstruction after tsunami has helped to keep housing starts up in Japan Non-wood Wooden Forecast? Source: Ministry of Land, Infrastructure, Transportation; forecast Consensus Forecast Stora Enso Building and Living May

15 Japan: share of timber frame houses continues to grow 65% 60% 55% 50% 45% Timber frame share from 40% up to 60% in 5 years 40%

16 Million m3 China - Strong growth in softwood sawn timber consumption reaching 42 million m3 by Chinese Softwood Sawn Timber Supply & Demand e 2012e 2013e 2014e 2015e 2016e Consumption Production China is increasingly dependent upon imports for both softwood sawn timber and the logs used by the domestic industry Stora Enso Building and Living May

17 Million Units China - The tremendous scale of the Chinese housing market is a huge opportunity for wood frame construction to grow as an affordable, safe and green housing solution 30 Chinese Housing Starts Stora Enso Building and Living May

18 European industry

19 Softwood sawnwood production in key countries, % change to previous year Production boosted up from low levels - only marginal push up in Austria Finland Russia Germany Sweden vs vs vs vs Sources: Softwood Conference / ECE Timber Committee 19

20 Softwood sawnwood inventories in Sweden and Finland, 1000 m3 Output demand... not been matching for a while Redwood Whitewood Source: Finnish Forest Industries, Swedish Wood Latest data: February

21 Raw material challenges in most regions cost & availability Tight log markets, import sources dried up, cost pressure Finland Capacity expanded, log export tax brought down harvesting North- West Russia Capacity expanded, heavy competition South Sweden Baltic South Germany Czech Austria Poland, Belarus, Ukraine, Romania Mobilizing new areas? Stora Enso Building and Living May

22 Operating margins of selected major wood products companies, % as is also clearly visible in industry results Finland Sweden North America Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Note: Weighted average margin for a selection of large publically traded companies. Excluding non-recurring items. 22

23 What are our take aways from this? 2012 demand outlook sluggish No quick recovery in any major European market Current supply-demand balance fragile Market remain supply driven with everybody waiting for the US recovery... Some positive signs: Japan, China, MENA... Raw material costs remain a challenge 23

24 Thank you!