Imperial Global Opportunities September 2012

Transcription

1 Imperial Global Opportunities September 2012

2 Forward looking statements Certain statements in this release that are neither reported financial results nor other historical information, are forward-looking statements, including but not limited to statements that are predictions of or indicate future earnings, savings, synergies, events, trends, plans or objectives. The words believe, anticipate, expect, intend, estimate, plan, assume, positioned, will, may, should, risk and other similar expressions, which are predictions of or indicate future events and future trends, which do not relate to historical matters, identify forwardlooking statements. You should not rely on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which are in some cases beyond our control and may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements (and from past results, performance or achievements). Certain factors that may cause such differences include but are not limited to: the highly cyclical nature of the pulp and paper industry (and the factors that contribute to such cyclicality, such as levels of demand, production capacity, production, input costs including raw material, energy and employee costs, and pricing); the impact on our business of the global economic downturn; unanticipated production disruptions (including as a result of planned or unexpected power outages); changes in environmental, tax and other laws and regulations; adverse changes in the markets for our products; consequences of our leverage, including as a result of adverse changes in credit markets that affect our ability to raise capital when needed; adverse changes in the political situation and economy in the countries in which we operate or the effect of governmental efforts to address present or future economic or social problems; the impact of restructurings, cost-reduction programmes, investments, acquisitions and dispositions (including related financing), any delays, unexpected costs or other problems experienced in connection with dispositions or with integrating acquisitions and achieving expected savings and synergies; and currency fluctuations. We undertake no obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information or future events or circumstances or otherwise. Regulation G disclosure Certain non-gaap financial information is contained in this presentation that management believe may be useful in comparing the company s operating results from period to period. Reconciliation's of certain of the non-gaap measures to the corresponding GAAP measures can be found in the quarterly results booklet for the relevant period. These booklets are located in the Investor Info section of Imperial Global Opportunities September 2012

3 Group Overview & Strategy Main Products & Projects Coated Paper Chemical Cellulose Conclusion Imperial Global Opportunities September 2012

4 Who We Are Global presence enables Sappi to take advantage of opportunities where markets are strong 8 Paper Mills 3 Paper Mills 1 Fine Paper Mill (JV) 13 Sales offices on 6 continents 5 Paper Mills 1 Chemical Cellulose Mill 567,000ha Forests Coated fine paper Uncoated fine paper Coated specialties Pulp Sales By Source 1 (US$) Source: Company information ¹ For the period ending September 2011 Sales By Destination 1 (US$) Commodity paper Other Imperial Global Opportunities September 2012

5 Our Business 5 Strong market position in developed markets with approximately 45% of sales in growing sectors/geographic markets Invest in Established Growth Businesses #1 Global market share in chemical cellulose Maintain the Established Core #1 Global capacity share in coated paper #1 Global capacity share in CWF Imperial Global Opportunities September 2012

6 Our Business Resource Base 6 555k hectares of land/plantations in South Africa Imperial Global Opportunities September 2012 R&D Growth Patented Ultracast process for casting release paper business; textured surfaces & engineered surfaces Good market positions in Europe for flexible packaging and speciality label paper Patents and recipes

7 Strategy Imperial Global Opportunities September 2012

8 Strategy Four key elements Improving Europe and South Africa, starting to see results Maintain performance in NA and Chemical Cellulose, focus on production Invest in high growth & margin businesses with leading positions Chemical cellulose focus on contracting volumes and spread of customers Forests self sufficiency and cost Reduce Debt Day-to-day focus on maximisation of profitability and cash generation Imperial Global Opportunities September 2012

9 Strategy Refined strategy with emphasis on value creation for shareholders results dropping through to bottom line Focus Debt reduction and cost of debt shareholder value Increasing importance of growth Internal actions to improve EU and SA Benefits in Europe are clear Benefits in South Africa to start in 2H 2012 Imperial Global Opportunities September 2012

10 2012 summary to date Good start to 2012 European performance commendable in tough environment Excellent SA Chemical Cellulose performance Continued underperformance of SA paper operations restructuring benefits 2H 2012 North America recovering from operational issues and lower pulp price Chemical cellulose conversions on track and on budget Imperial Global Opportunities September 2012

11 Divisional Operating Margins* % 15.0% 10.0% 5.0% 0.0% Q3 12 Margins: S-Africa 8.1% N-America 5.0% Europe 1.3% -5.0% -10.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1** Q2 Q3 Q4 Q1 Q2 Q *The divisional operating margins exclude special items. Refer to page 18 in our Q results booklet for a definition of special items. Imperial Global Opportunities September 2012

12 Group Overview & Strategy Main Products & Projects Coated Paper Chemical Cellulose Conclusion Imperial Global Opportunities September 2012

13 Business Overview - Coated Coated Fine/ Coated Woodfree Coated Mechanical/ Coated Groundwood 68% Commercial Print Books 9% 3% 20% Magazine Other Commercial print: Catalogues 10% Brochures 20% Direct Mail 25% Inserts 17% Posters & Banners 20% Other 8% 50% 46% 4% Commercial Print Magazine Other 13

14 14 Business Overview - Coated

15 Business Overview - Coated While consumption will slowly decline with widespread adoption of e- devices, CFS less impacted than other grades due to flight to quality CFS will remain a vibrant part of the media mix due to its unique value in establishing brand recall and trust 95% US CFS Operating Rate 94% 93% 92% 91% 90% 89% 88% 87% 86%

16 Group Overview & Strategy Main Products & Projects Coated Paper Chemical Cellulose Conclusion Imperial Global Opportunities September 2012

17 Global Chemical Cellulose Demand Total = 5m tons in 2011 Cellophane 1% Ethers/CMC 9% Others 14% VSF 58% Acetate 13% MCC 2% Lyocell 3% Sappi = 800ktpa = 15% 17 Imperial Global Opportunities September 2012

18 Viscose Staple Fiber Used for making clothes, home-furnishings, nonwovens (wipes, feminine hygiene products ) 18 Imperial Global Opportunities September 2012

19 Key Demand-Drivers for Textiles Population growth Increasing requirement for more clothing Rising urbanization and standard of living in the Greater Asian Region Middle class in Asia is rapidly increasing in size and purchasing power Asian middle class to grow to 2.7 billion by 2030 from the current 1.9 billion people Forecast 19 Imperial Global Opportunities September 2012

20 Share of Historical & Future Fibre Production Production of cotton is forecast to remain stagnant or shrink Growth in total fibre consumption will be covered by man-made fibres However certain moisture management properties of cellulose fibres cannot be substituted by oil based synthetic fibres, enhancing opportunity for cellulosics Forecast Cellulose Gap Source : Lenzing Imperial Global Opportunities September 2012

21 Capacity additions +- 3 Million tons of Capacity Announcements for 2012/4 21 Imperial Global Opportunities September 2012

22 Chemical Cellulose Global Supply Cost Curve World Competitor CC Cash Costs into VSF includes 80% of supply volumes + 25% Below Average Cost Sappi = 27% Others = 28% Above Average Cost 45% Average Cash Cost - 30% While significant capacity expansion announcements have been made, all three of Sappi s Source: mills will RISI/Sappi be at the low end of the cost curve 22

23 Latest Projects Imperial Global Opportunities September 2012

24 Debt Refinancing US$700m 2014 Bonds refinanced US$300m at 12% and 319m at 11.75% repurchased Once-off charge US$89m US$44m non-cash accelerated amortisation of costs US$45m cash cost early redemption Unwinding of currency swaps expected to yield US$36m cash New Bonds Issued US$400m 2017 at 7.75% and US$300m 2019 at 8.375% Interest charge reduction US$45m/annum Cash interest reduction US$30m/annum 24 Imperial Global Opportunities September 2012

25 Debt Maturity Profile Pro Forma June Imperial Global Opportunities September 2012

26 Ngodwana Chemical Cellulose Project Planned CC capacity of 215,000 tpa from 2013 at budgeted $330m cost to convert Falls within the bottom quartile of the competitor cost curve Cost of growing fibre / growth Proximity of forests to Ngodwana Good logistics to main markets Project time line All major contracts concluded Equipment delivery completed: Nov-2012 Tie into existing plant: May 2012 / Mar-2013 Chemical cellulose production: Apr-2013 FSC (Forest Stewardship Council) Chain of Custody Certified Integrated ISO Management Systems 26 Imperial Global Opportunities September 2012

27 Cloquet Chemical Cellulose Project Cloquet is NA s newest and most modern pulp mill 1999 Produces 450,000 tons per year of paper pulp to 330ktpa CC Budget of $170m cost to convert Estimated start up: 1 June 2013 Only super batch system in NA Excellent safety and quality performance Certification OHSAS certified in 2010 FSC(Forest Stewardship Council) SFI (Sustainable Forestry Initiative) PEFC (Programme for the Endorsement of Forest Certification) 27 Imperial Global Opportunities September 2012

28 Group Overview & Strategy Main Products & Projects Coated Paper Chemical Cellulose Conclusion Imperial Global Opportunities September 2012

29 Strategic Overview Absolutely focused on shareholder wealth creation Growth plans progressing well realistic expectations and confidence in our track record. No other major projects in the next few years Fixing our EU and SA businesses an on-going process, minimise cash expenditure and take out costs Optimisation of NA and Chemical Cellulose businesses on-going pulp price turning for now Debt remains important focus refinancing has lowered cost, maturities still good but intend to bring levels down to below $2bn post CC projects and reduce gearing (e.g. Net Debt : EBITDA) to a different order of magnitude. Imperial Global Opportunities September 2012

30 Conclusion We have a sound strategy We believe in what we are doing Traction on actions to date World is uncertain Totally committed to achieving more wins and accelerating value creation for shareholders through improved profit, strategic positioning, and further debt reduction Imperial Global Opportunities September 2012

31 Imperial Global Opportunities September 2012 Inspired by life