RISI International Containerboard Conference 2018

Transcription

1 RISI International Containerboard Conference 2018 The European Containerboard Market Florian Stockert November 2018

2 The image part with relationship ID rid10 was not found in the file. The image part with relationship ID rid13 was not found in the file. Mondi is a global leader in packaging and paper 26,000 employees Over 100 operations across more than 30 countries More than 100,000 solutions for our customers 2.4M hectares of forest managed Group offices in Johannesburg, London and Vienna Primary listing on the JSE Limited for Mondi Limited Premium listing on the London Stock Exchange for Mondi plc FTSE4Good Index Series JSE s Socially Responsible Investment Index 1

3 Mondi at a glance Fibre Packaging 2 Consumer Packaging Uncoated Fine Paper 3,735m 1,646m 1,832m 2017 revenue 1 & underlying EBITDA margin 3 25% 52% 23% 22.3% 13.5% 25.3% Products 1 Segment revenues, before elimination of inter-segment revenues 2 Packaging Paper and Fibre Packaging were replaced by a single business unit called Fibre Packaging effective from 1 August The Group early adopted the new 'Leases' accounting standard, IFRS 16. All 2017 comparative figures in this presentation have been restated where applicable. 2

4 2017 production statistics Total market pulp and paper = 5,976 k tonnes Containerboard 2,297 k tonnes Kraft paper 1,206 k tonnes Uncoated fine paper 1,644 k tonnes Market pulp 552 k tonnes Corrugated board and boxes 1,650 million m 2 Industrial bags 4,952 million units Extrusion coatings 1,281 million m 2 Consumer packaging 7,437 million m 2 Newsprint 277 k tonnes 3

5 Leading market positions Kraft paper Global Virgin containerboard Europe Emerging Europe South Africa Uncoated fine paper Containerboard Uncoated fine paper #1 Industrial bags Commercial release liner Consumer flexible packaging Corrugated packaging #3 Please see sources and definitions at the end of this document 4

6 Some issues have not changed since 2010 Agenda (from 2010) Economic crisis Decreased paper consumption Recovered fibre tight supply Exchange rate Sustainability Climate Change and Environmental Impact Demographics Short Term Medium Term Long Term Substitution Substance reduction Wide deckle trend Recovered fibre avialability Shift of capacity Increasing marketing role of packaging (WT) How these trends have been developing in Europe? What possibly comes next? Source: Mondi 5

7 Drivers for containerboard growth Containerboard market overview Recycled containerboard Kraft Top Liner Kraftliner White liners Semi-chemical Fluting 6

8 Strong fundamentals driving containerboard consumption in Europe 15% EU containerboard demand and its drivers 10% 9.9% 5% 4.3% 2.5% 3.2% 1.4% 2.4% 0% Demand Real GDP Manufacturing Consumer Spending Retail Sales E-commerce Source: Numera Analytics 7

9 E-commerce growth is pulling corrugated 200 EU e-commerce retail sales 90% Global e-commerce packaging by type (2017) 81% % Index, 2010 = % 45% 30% 15% 0% 15% Corrugated Flexibles Protective packaging 4% 1% Protective mailers 80% of packaging in e-commerce is corrugated e-commerce growth needs corrugated to grow with it This one exceptionally strong increase is partly due to change in reporting standards of Amazon in 2016 Source: Eurostat, Numera Analytics, Mondi corrugated e-commerce study 8

10 Central / Eastern Europe with further growth potential Containerboard consumption per capita Average consumption in Western Europe 60 Annual kg / capita Germany Austria Poland Italy Cz. Republic France Croatia UK Turkey Bulgaria Hungary Romania Russia Western European Avg Source: Containerboard consumption according to RISI, population from public sources 9

11 Drivers for containerboard growth Containerboard market overview Recycled containerboard Kraft Top Liner Kraftliner White liners Semi-chemical Fluting 10

12 In the last five years, RCB growth in Europe has exceeded new capacity RCB demand growth in Europe 1 (CEPI) Europe growth according to CEPI / RISI: 2017 RCB consumption: mt 30,000 10% Average market growth for : Market demand (kt) 25,000 20,000 15,000 10,000 5, % 4.4% 3.9% 3.9% 2.3% 1.6% Aug YTD Growth rate RCB Europe 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% % per annum - ~4.5mt (~900ktpa) New RCB capacity in Europe absorbed due to strong domestic demand, especially in 2017 Over the last 5 years ( ), demand has outstripped new capacity by 1.1mt: Million tonnes Demand Capacity Source: RISI (2013), CEPI ( ) based on extrapolated H growth. Based on current available information. 1. Europe excluding Russia 11

13 Strong increase in average containerboard prices since January Kraftliner PIX 600 TL3 PIX 500 EUR /t /1/2010 7/1/2010 1/1/2011 7/1/2011 1/1/2012 7/1/2012 1/1/2013 7/1/2013 1/1/2014 7/1/2014 1/1/2015 7/1/2015 1/1/2016 7/1/2016 1/1/2017 7/1/2017 1/1/2018 7/1/2018 Source: FOEX PIX 12

14 Looking ahead We expect European recycled containerboard to grow at ~3% per annum in the medium term We expect demand to be in line supply over the next couple of years Post 2020, variables: European demand growth and structural drivers (e-commerce, exports) Execution of new capacity. Projects may be further delayed or cancelled China OCC ban will affect global tradeflows - underpin for net exports from Europe Million tonnes Million tonnes Range of possible outcomes depending on timing capacities materialise 0.0 Base -1% Base Base +1% Capacity 0.0 Base -1% Base Base +1% Capacity Demand Demand 13

15 Drivers for containerboard growth Containerboard market overview Recycled containerboard Kraft Top Liner Kraftliner White liners Semi-chemical Fluting 14

16 Strong substitutional shift towards Kraft Top Liner 1400 Kraft Top Liner production in Europe Produced Volume Definition Kraft Top Liner: Recycled fibre based paper with a top layer predominantly made from virgin fibre * Source: Cepi Containerboard until H H based on historic growth 15

17 Strength, printability, appearance: Kraft Top White 16

18 Drivers for containerboard growth Containerboard market overview Recycled containerboard Kraft Top Liner Kraftliner White liners Semi-chemical Fluting 17

19 Kraftliner historic demand growth in Europe and new capacity Kraftliner 1 deliveries to Europe 2 (CEPI) 5,000 10% 8% Europe growth according to CEPI / RISI: 2017 kraftliner consumption: 5.2mt Average market growth for : Market demand (kt) 4,000 3,000 2,000 1, % 2.5% 4.7% Stora Varkaus startup 4.0% 1.6% -2.3% Aug YTD Growth rate KL Europe Supply limitations 6% 4% 2% 0% -2% -4% % per annum kt (~120ktpa) There is no new significant capacity expected in Europe over the next 2-3 years with 3 potential new machines that could come on stream from 2021 on: SCA Obbola (400kt) Stora Enso Oulu (400kt) Ilim Ust Ilimsk (400kt) mostly destined for Chinese market Source: CEPI ( ) and RISI ( ) based on extrapolated H growth. Based on current available information. 1. Kraftliner includes all kraftliner including white but excludes kraft top liner 2. Europe excludes Russia 18

20 Europe is a importer of unbleached kraftliner, predominantly from the US Historical development of US unbleached KL exports to Europe 1, '000 TONNES 1,200 1, , % (34 kt) EUR/USD 1% of European demand Aug YTD 2017 US imports were lower than 2016, but in the range of recent years 0 Source: US Census, FX rates publicly available 19

21 Drivers for containerboard growth Containerboard market overview Recycled containerboard Kraft Top Liner Kraftliner White liners Semi-chemical Fluting 20

22 White liners continue to grow in Europe European production per containerboard grade European white liners growth Semi-chemical fluting 4% White top kraftliner 5% White Recycled Liners 11% +5.1% +5.3% +4.5% +5.1% Brown kraftliner 9% +2.5% +1.9% Recycled containerboard 72% White Rec. Liners WT Kraftliners Total Brown Grades Coated grades represent 10% of white top testliners and 23% of white top kraftliners. Source: CEPI Containerboard 21

23 Drivers for containerboard growth Containerboard market overview Recycled containerboard Kraft Top Liner Kraftliner White liners Semi-chemical Fluting 22

24 European semi-chemical fluting and Nordic semi-chemical fluting sales 800 European shipments kt 659 kt 600 Volume in kt kt 312 kt 438 kt 323 kt Western Europe Eastern Europe Exports The European market is mature all growth coming from export markets Source: CEPI Containerboard, Annual Production Statistics 23

25 Wrap Up Trends and Demand Drivers Recycled Kraftliner Strong economy Strong growth in Eastern Europe E-commerce China Plastic ban and demand for paper based solutions Strong demand growth Capacity in line with demand in med. term Smaller growth, no significant capacity in mid-term Some meaningful projects under investigation White Top liners Semi-chemical Fluting Growing market for white liners in Europe Stable market for semi-chemical fluting in Europe Continuous potential for exports globally based on high quality 24

26 Market position sources and definitions Mondi region definitions Europe Europe including Russia and Turkey Emerging Europe Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Georgia, Hungary, Latvia, Lithuania, Macedonia, Malta, Moldova, Montenegro, Poland, Romania, Serbia, Slovakia, Slovenia, Turkey, Ukraine North America Canada, Mexico, USA Sources for market position estimates Virgin containerboard (Europe) and Containerboard (emerging Europe) based on capacity (including kraft top liner) Source: RISI European Paper Packaging Capacity Report and Mondi estimates Kraft paper (Global) based on capacity Source: RISI European Paper Packaging Capacity Report, RISI Mill Asset Database, Pöyry Smart Terminal Service and Mondi estimates Corrugated packaging (emerging Europe) based on production Source: Henry Poole Consulting and Mondi estimates Industrial bags (Global) based on sales volume Source: Eurosac, Freedonia World Industrial Bags 2016 study and Mondi estimates Consumer flexible packaging (Europe) based on sales Source: PCI Wood Mackenzie Flexible Packaging, European Supply/Demand report, 2017 Commercial release liner (Europe) based on sales volumes Source: AWA European Release Liner Market Study and Mondi estimates Uncoated Fine Paper (Europe) based on sales volumes (Ilim JV considered separate from IP) Source: Euro-Graph delivery statistics, EMGE Woodfree Forecast, EMGE World Graphic Papers, RISI Mill Asset Database, Eastconsult and Mondi estimates Uncoated Fine Paper (South Africa) based on Mondi estimates 25

27 Forward-looking statements disclaimer This document includes forward-looking statements. All statements other than statements of historical facts included herein, including, without limitation, those regarding Mondi s financial position, business strategy, market growth and developments, expectations of growth and profitability and plans and objectives of management for future operations, are forward-looking statements. Forward-looking statements are sometimes identified by the use of forwardlooking terminology such as believe, expects, may, will, could, should, shall, risk, intends, estimates, aims, plans, predicts, continues, assumes, positioned or anticipates or the negative thereof, other variations thereon or comparable terminology. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Mondi, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements and other statements contained in this document regarding matters that are not historical facts involve predictions and are based on numerous assumptions regarding Mondi s present and future business strategies and the environment in which Mondi will operate in the future. These forward-looking statements speak only as of the date on which they are made. No assurance can be given that such future results will be achieved; various factors could cause actual future results, performance or events to differ materially from those described in these statements. Such factors include in particular but without any limitation: (1) operating factors, such as continued success of manufacturing activities and the achievement of efficiencies therein, continued success of product development plans and targets, changes in the degree of protection created by Mondi s patents and other intellectual property rights and the availability of capital on acceptable terms; (2) industry conditions, such as strength of product demand, intensity of competition, prevailing and future global market prices for Mondi s products and raw materials and the pricing pressures thereto, financial condition of the customers, suppliers and the competitors of Mondi and potential introduction of competing products and technologies by competitors; and (3) general economic conditions, such as rates of economic growth in Mondi s principal geographical markets or fluctuations of exchange rates and interest rates. Mondi expressly disclaims a) any warranty or liability as to accuracy or completeness of the information provided herein; and b) any obligation or undertaking to review or confirm analysts expectations or estimates or to update any forward-looking statements to reflect any change in Mondi s expectations or any events that occur or circumstances that arise after the date of making any forward-looking statements, unless required to do so by applicable law or any regulatory body applicable to Mondi, including the JSE Limited and the LSE. 26