Klöckner Pentaplast. FY 2017 Q2 update call. June 2017

Transcription

1 Klöckner Pentaplast FY 2017 Q2 update call June 2017

2 Disclaimer Unless otherwise indicated, this presentation and the information contained herein has been prepared and provided by Kleopatra Holdings 2 SCA and its subsidiaries (the kp group or we ). This presentation and other information provided herein contain and forward-looking statements within the meaning of the securities laws of certain applicable jurisdictions. These forward looking statements include, but are not limited to, all statements other than statements of historical facts contained in this presentation, including, without limitation: those regarding our intentions, beliefs or current expectations concerning, among other things, our future financial conditions and performance, results of operations and liquidity; our strategy, plans, objectives, prospects, growth, goals and targets; future developments in the markets in which we participate or are seeking to participate; and anticipated regulatory changes in the industry in which we operate. Forward looking statements include the words aim, anticipate, assume, believe, can have, continue, could, estimate, expect, forecast, intend, may, plan, risk, should, suggest, will, would and similar expressions or the negatives of these expressions. These forward looking statements generally relate to plans and objectives for future operations and are based upon management s reasonable estimates as of the date of this presentation (unless expressly stated or qualified as of a different date). By their nature, forward looking statements involve known and unknown risks, uncertainties and other factors because they relate to events and depend on circumstances that may or may not occur in the future. Although we believe that the plans and objectives reflected in or suggested by such forward looking statements are reasonable, such plans or objectives may not be achieved. In addition, even if our financial condition, results of operations and cash flows, and the development of the industry in which we operate, are consistent with the forward looking statements contained in this presentation, those results or developments may not be indicative of results or developments in subsequent periods. Actual results may differ from projected results due to unforeseen developments. All forward-looking statements apply only as of the date hereof and we undertake no obligation to update this information. The information contained in this document is provided as at the date of this document only. In this presentation, we present certain financial measures and ratios that are not defined under, or presented in accordance with, International Financial Reporting Standards ("IFRS") or any other generally accepted accounting principles including, among others, EBITDA, Adjusted EBITDA, Adjusted Free Cash Flow (collectively, the Non IFRS Measures ). These Non IFRS Measures are not audited. We present these Non IFRS Measures because we believe that they and similar measures are widely used in our industry as a means of evaluating operating performance and liquidity. These measures may not be comparable to other similarly titled measures of other companies and are not measurements under IFRS or other generally accepted accounting principles, and you should not consider such items as alternatives to net income (loss), operating income (loss), net income (loss) from continuing operations, cash flow from operating, investing or financing activities or any other performance measures derived in accordance with IFRS. Our management believes this information, along with comparable IFRS measures, is useful to investors because it provides a basis for measuring the operating performance and liquidity in the periods presented. These measures are used in the internal management of our business, along with the most directly comparable IFRS financial measures, in evaluating the operating performance. The information contained in the presentation has not been independently verified and no representation or warranty, express or implied, is or will be made as to the fairness, accuracy, completeness or correctness of the information or opinions contained in this presentation. Neither the kp group nor any of its affiliates is under any obligation to keep current the information contained in this presentation and the information set out herein may be updated, supplemented, completed, revised and amended, and such information may change materially and without notice. This presentation does not constitute or form part of, and should not be construed as, an offer or invitation to subscribe for, underwrite or otherwise acquire, any securities of the kp group or any of its affiliates nor should it or any part of it form the basis of, or be relied on in connection with, any contract to purchase or subscribe for any securities of the kp group nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever. 2

3 Today s Presenter R. Brent Jones Chief Financial Officer (CFO) 3

4 kp update

5 Adj. EBITDA Gross profit Net sales kp current trading 6M YTD Mar-17 performance vs. last year Comments ( in millions) + 42m / + 6.7% 623 Ex-FX: + 5.3% 664 The increase was supported by an increase in volumes and the acquisition of Farmamak in October (Food & Consumer Packaging segment) YTD Mar-16 YTD Mar % 22.5% ( 6m) / (3.9%) 155 Ex-FX: (5.8%) 149 YTD Mar-16 YTD Mar-17 Gross profit was negatively impacted by rising raw material prices during the period Manufacturing costs per kg have declined The decline in gross profit was driven by Labels (18%) and Specialties (11%), offset by increased in Pharma (+7%) and Food & Consumer Packaging (+1%) 17.5% 15.9% ( 4m) / (3.4%) 109 Ex-FX: (5.4%) 105 Adj. EBITDA performance largely follows Gross profit development SG&A costs were flat YTD Mar-16 YTD Mar-17 Cash flow % 79.7% Decreased cash flow conversion performance was ( 5m) / (5.5%) driven by decrease in adj. EBITDA coupled with a 89 modest increase in capex ( 21m vs. 21m) 84 YTD Mar-16 YTD Mar-17 X% Margin X% Cash flow conversion 2 1 Cash flow defined as Adj. EBITDA-Capex. 2 Cash flow conversion defined as (Adj. EBITDA-Capex) / Adj. EBITDA. 5

6 kp current trading Net sales Gross profit 1 Comments ( in millions) ( in millions) Net sales (15%) (1%) + 1% On an organic basis, net sales increased by 3.4%, supported by a strong volume growth of 2.5% Food & Consumer Packaging benefitted from acquisition of Farmamak (acquired in October 2016) Gross profit % + 5% (11%) (18%) + 1% + 7% Gross profit was negatively impacted by rising raw material prices during the period Pharma was strong with 7% growth, Food & Consumer Packaging up 1%, weaker Labels and Specialties drove the result, mainly due to impact of higher material prices YTD Mar-16 YTD Mar-17 YTD Mar-16 YTD Mar-17 Pharma Food & Consumer Packaging Labels Specialties Corporate / Other 1 Corporate / Other gross profit amounted to ( 10.4m) in YTD Mar-16 and ( 11.9m) in YTD Mar-17. 6

7 kp H1 operations update Raw Material Inflation Raw material market inflation of c. 23m YoY c.80% related to PVC and related additives, which have increased 16% and 40% YoY, respectively Procurement Initiatives c. 10m impact YTD Offset 42% of market inflation Manufacturing Cost / kg YTD volume growth of 2.5% YoY, which is higher than historic volume growth Cost per kg 2% lower than prior period (3% FX adjusted) Key cost control drivers: Production labor Fixed overhead Freight costs The company has been successful controlling operations costs in the face of significant raw material headwinds 7

8 Linpac overview and acquisition rationale

9 Linpac business overview Business overview Global footprint Linpac supplies many of the leading European customers in the food retail, catering and fast foodservice industries Multi-product offers accompanying rpet, EPS and PP trays and stretch and barrier films Operates across three business units Trays (67% of sales): plastic food trays and films, primarily for protein Flexibles (15% of sales): plastic films for food packaging / wrapping INFIA (18% of sales): punnets and plastic packaging for fruit Featherstone St. Helens Ritterhude Orsha Operates 13 manufacturing sites: eleven in Europe, one in Australia and one in China, with 2,500+ employees A market leader in target geographies of UK, France, Italy, Spain, Portugal, Netherlands and Poland, strong positions elsewhere in Europe A leading innovator focused on sustainable packaging for the protein and berry supply chain Beeskow Pontivy Pravia Verona Forli Valencia Bukowice Net Sales By geography (FY 2016) Eastern Europe 16% North America 1% Asia Pacific 4% South America 1% Others 4% Western Europe 74% Australia Trays manufacturing Melbourne China INFIA manufacturing Changzhou Flexibles manufacturing Note: EPS = Expanded polystyrene, PP = Polypropylene, rpet = Recylced polyethylene terephthalate. 9

10 Acquisition rationale Complementary products / food packaging one-stop-shop Acceleration of global expansion + + Creating an innovation leader Enhanced scale and reach 4 PF LTM Mar-17 Net sales of 1.86bn with 14.5% adj. EBITDA margin (pre synergies) 1 SG&A synergies of c. 13m, Procurement & operations of c. 11m and footprint optimization of c. 6m Increased exposure to resilient end-markets Balanced polymer mix with increased exposure to faster growing PET 1 LTM Mar-17 adjusted EBITDA excludes 3m for Farmamak, 30m of run-rate synergies for Linpac, and 1m of synergies for Farmamak. 10

11 1 Acquisition rationale Complementary products / food packaging one-stop-shop Components necessary to create Form Filled Seal Packaging Solutions kp Film Linpac Tray Linpac Top Film 3 separate and distinct selling strategies 1 ~360 person food commercial team 2 3 Converter Looking for film only Cross sell Shared customer buying different products End packer Looking for a complete solution & & & 11

12 2 Acquisition rationale Acceleration of global expansion Country with sales > $5m Expansion areas for kp Expansion areas for Linpac Expansion areas for both Both companies can accelerate their expansion into key areas by leveraging each other s existing presences 12

13 3 Acquisition rationale Creating an innovation leader # of innovations kp: ~65 # of innovations Linpac: ~50 Innovation Leader # of people in R&D: ~110 # of innovation hubs: 11 Strong financial commitment to R&D 13

14 4 Acquisition rationale Enhanced scale and reach kp Linpac 1 kp + Linpac Commentary Net sales by endmarket (LTM Mar-17) 1 Labels 14% Specialties 21% Pharma 26% Others 1% Food & consumer 38% Food & consumer 100% Labels 9% Specialties 15% Pharma 18% Others 1% Food & consumer 57% Increased exposure to resilient, non-discretionary food and consumer market Net sales by Geography (LTM Mar-17) 1 Asia Pacific 5% South America 8% North America 41% Others 4% Europe 42% South America 1% Others 4% North America 1% Asia Pacific 4% Eastern Europe 16% Western Europe 74% Asia Pacific 5% South America 5% North America 29% Others 4% Europe 57% Increased European presence (50%+) Access to new opportunities and customers Expanded access to international bolt-on opportunities Net Sales (LTM Mar-17) 1,296m 568m 1,861m 2 Significant increase in scale Adj. EBITDA (LTM Mar-17) 213m 57m 270m 3 1 Linpac 2016A end-market and geographic split applied to LTM Mar-17 net sales of 568m. 2 Figure post related party transactions. 3 LTM Mar-17 adjusted EBITDA excludes 3m for Farmamak, 30m of run-rate synergies for Linpac, and 1m of synergies for Farmamak. 14

15 Acquisition rationale Production value chain vertical integration Value chain / manufacturing process Processing Raw materials Primary Secondary End-markets PVC Calendering Coating Embossing Food & Consumer Packaging PET Laminating Orienting Thermoforming Pharma Extrusion Sheeting PP / PS / PE / others Slitting Specialties Additives and other ingredients Stretching Surface treatment Labels Selected players along the value chain kp Linpac kp & Linpac Note: PE = Polyethylene, PET = Polyethylene terephthalate, PP = Polypropylene, PS = Polystyrene, PVC = Polyvinyl chloride. 15

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