Mpact Limited Annual Results. 31 December 2013

Transcription

1 Mpact Limited Annual Results 31 December 2013

2 2013 in context and financial highlights Operating review Financial review Strategy and outlook Appendices 2

3 2013 in context Muted GDP and consumer spending growth Good growth in the fruit sector translated to growth in packaging and bulk bins Market share gains in certain categories Industrial action across many sectors no material effect on Mpact Benefit of weaker rand in Paper business partially offset in Plastics business Raw material costs, particularly polymers, chemicals and pulp, escalated well above inflation Neelin Naidoo appointed MD of Plastics November 2013 Price recovery in last quarter in both Paper and Plastics 3

4 R millions R millions Financial highlights Group revenue HY1 HY2 Group underlying operating profit % 8.2% 8.5% % HY1 HY2 margin Revenue up 12.9% to R7.7bn Volume growth of 4.0% Selling price increase and product mix of 8.9% Underlying operating profit up 12.0% to R655m Fixed costs well controlled Margin down to 8.5% from 8.6% Under-recovery of polymer cost increases Underlying earnings per share up 22.2% to cents ROCE up to 17.3% (2012: 16.0%) Final dividend of 58cps, up 16.0% Gearing down to 28.1% (2012: 28.6%) Note: Revenue and underlying operating profit excludes Paperlink for the 2010 and 2011 financial years. 4

5 2013 in context and financial highlights Operating review Financial review Strategy and outlook Appendices 5

6 R millions R millions Paper business External revenue HY1 HY2 Underlying operating profit % % 11.2% % Revenue up 10.5% to R5.6bn Volumes up 3.2% (organic 3.0%, acquisition 0.2%) Average prices up 7.5% for the year Underlying operating profit up 13.0% to R635m Stringent cost control Partially offset by exchange rate driven raw material cost increases Good progress on projects and acquisition of controlling interest in Detpak South Africa Revenue Operating profit HY1 HY2 margin Paper 72% Paper 86% 1. For comparative purposes, full year 2010 and 2011 underlying operating profit has been restated to reflect corporate costs of R50 million directly attributable, but previously not charged to the Paper business. 6

7 R millions R millions Plastics business Revenue HY1 HY2 Underlying operating profit 1 Revenue up 19.4% to R2.1bn Volumes up 10.7% (trays, bins and crates, and beverages) Average prices up 8.7% Underlying operating profit down 9.3% to R106m Under-recovery of average polymer prices which were up 21% Margin down to 5.0% FMCG sector still under pressure % % 5.9% % HY1 HY2 margin Acquired remaining minority interest in Versapak Revenue Plastics 28% Operating profit Plastics 14% 1. For comparative purposes, full year 2010 and 2011 underlying operating profit has been restated to reflect corporate costs of R14 million directly attributable, but previously not charged to the Plastics business. 7

8 2013 in context and financial highlights Operating review Financial review Strategy and outlook Appendices 8

9 Financial summary Revenue 12.9% R7.7 billion Underlying operating profit 12.0% R655 million Underlying EPS 22.2% cents per share Final dividend 16.0% 58 cents per share ROCE % Gearing % % 1. Return on capital employed (ROCE) is an annualised measure based on underlying operating profit plus share of equity accounted investees net earnings divided by average capital employed before impairments. 9

10 Index(ZAR) (Dec 2011 = 100) R millions Index(ZAR) (Dec 2011 = 100) Variable costs +16.3% Paper business raw materials 2 Plastic raw material Other Energy Selling & distribution costs Plastic raw material cost up 31.5% (per tonne up 20.8%) 7.9% 11.8% 31.5% 9.3% 14.9% Source: RISI PPI Asia, Old Corrugated Containers, CNF China US$, converted to ZAR Dec-11 Dec-12 Dec Benchmark recovered paper prices Old Corrugated Containers Benchmark polymers prices 60 Dec-11 Dec-12 Dec-13 Styrene PET HDPE Source: Mpact Notes: 1. Paper business raw material include purchased paper, wood, pulp, bagasse and recovered paper. 2. Plastic raw materials include styrene, PET, HDPE, PVC and polypropylene 3. Other variable costs include chemicals, packaging costs. 10

11 R millions Fixed costs +6.5% % Total fixed costs up 6.5% (cost per tonne 2.5%) % Includes acquired business costs % Continued focus on cost management Depreciation and amortisation Maintenance and net operating expenses Personnel costs 11

12 Financial review R millions Change H H H H Underlying operating profit % Net finance cost (128) (114) 10.6% (64) (64) (60) (54) Share of profit from equity accounted investees Underlying operating profit before tax % Tax before special items (140) (151) (8.2%) (50) (90) (51) (100) Total non-controlling interests (13) (17) (37.8%) (6) (7) (3) (14) Underlying earnings % Special items, net of tax (4) (2) 60.5% (4) 0 0 (2) Reported earnings for the year % Underlying earnings per share (cents) % Underlying operating profit includes operating profit of subsidiaries before special items. 12

13 R millions ROCE % ROCE and net debt 18% 17% 16% 15% 14% 13% 12% 11% 10% Return on capital employed (ROCE) 17.3% 16.0% 13.8% 13.1% ROCE of 17.3% as a result of improvement in profitability Net debt Gearing at 28.1% (December 2012: 28.6%) Net debt up to R1.1bn July 2011 at listing Return on Capital Employed (ROCE) is an annualised measure based on underlying operating profit plus share of equity accounted investees net earnings divided by average capital employed before impairments. 13

14 R million Movements in net debt Net debt at December 2012 Cash generated from operation before working capital Working capital movements Income tax paid Capital expenditure Interest paid Dividend paid to equity holders Acquisitions Other items Net debt at December

15 Net finance costs and net debt R millions Change Net debt - close 1,056 1,116 (5.7%) Net debt - average 1,377 1, % Net finance costs % Gearing % 28.6% 28.1% 0.5 Interest cover (underlying EBIT) 4.6 times 5.7 times Net debt to EBITDA 1.2 times 1.1 times Net finance costs lower by 10.6% to R114m: Lower average net debt and interest rates over the period Improved cash management Facility of R2.0bn maturing in

16 Taxation R millions Change 1 Taxation charge (8.7%) Effective tax rate 30.0% 27.4% 2.6 Tax paid (>100%) Effective tax rate down to 27.4% due mainly to the repayment in 2012 of a loan on which the interest was not tax deductible Recognised tax losses of R260 million in subsidiaries 1. Includes tax on special items. 16

17 R millions Working capital Working capital % of revenue % 15.2% % 13.6% Increase in working capital % of revenue due to: Lower trade payables due to early payments to suppliers to take advantage of settlement discounts Working capital includes inventories, trade receivables and trade payables. 17

18 R million R million Capital expenditure analysis Capital expenditure by business Depreciation and amortisation Paper Plastics Paper Plastics 2 Capital expenditure to depreciation 104% 111% 109% 84% Excludes Corporate (2013: Capital expenditure of R2 million, depreciation and amortisation of R5 million). 2. Includes reallocated depreciation and amortisation charge from Corporate. 18

19 Cents per share Dividends Interim Final Dividend cover (times) Salient dates for final 2013 dividend: Last day to trade to receive a dividend Wednesday, 30 April 2014 Shares commence trading ex dividend Friday, 2 May 2014 Record date Friday, 9 May 2014 Payment date Monday, 12 May

20 2013 in context and financial highlights Operating review Financial review Strategy and outlook Appendices 20

21 Our strategy Leading market positions Customer focused operating structure Focus on performance Scale Decentralised structure Financial returns Capability Innovation and capability Skilled and motivated people Products and geographies Intimate understanding of the value chain Smart simplicity 21

22 Felixton Paper Mill upgrade Phase 1 Phase 2 Total project Capex budget R155 million R610 million R765 million Commissioned 1H2015 2H2017 Additional capacity 20,000 tonnes 40,000 tonnes 60,000 tonnes Rationale Enhance product offering and quality Increase cost competitiveness Improvement in environmental footprint and efficiencies Increase capacity from tonnes p.a. to tonnes p.a. Move towards fully recycled fibre usage Funding Debt facilities Cash flow from operations Enhance earnings, whilst exceeding through-the-cycle ROCE target of 15% 22

23 Outlook Subdued demand growth is expected to remain a challenge in 2014 compounded by raw material cost inflation driven by the exchange rate Focus on growth projects, profitability, cash generation and ROCE Group is well positioned in the sectors in which it operates 23

24 Thank you 24

25 Mpact projects 25

26 CSI projects 26 20

27 Mpact business overview Mpact Paper Plastics Primary product categories Recovered paper collection Packaging and industrial papers such as cartonboard and containerboard Corrugated packaging Detpak Quick Service Restaurant (QSR) packaging Primary product categories PET bottles and preforms, hot fill bottles, PET jars and closures Large injection moulded containers PET and styrene trays, fast food containers and clear plastic films Other plastic packaging No. 1 in corrugated packaging No. 1 in recycled based cartonboard and containerboard No. 1 in recovered paper collection No. 1 in PET preforms No. 1 in styrene trays No. 1 in plastic jumbo bins Sources: Mpact, BMI Report (2013), PAMSA and PRASA CENTRES OF EXCELLENCE Human Resources, Safety, Health, Environment SHARED SERVICES Finance, IS&T, Stellenbosch R&D Employing 3,998 people, 32 operating sites 27

28 Disclaimer This document including, without limitation, those statements concerning the demand outlook, expansion projects and its capital resources and expenditure, may be considered to be forward looking statements. By their nature, forward-looking statements involve risk and uncertainty and, although Mpact believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, among other factors, changes in economic and market conditions, success of business and operating initiatives, changes in the regulatory environment and other government action and business and operational risk management. While Mpact has taken reasonable care to ensure the accuracy of the information presented, Mpact accepts no responsibility for any consequential, indirect, special or incidental damages, whether foreseeable or unforeseeable, based on claims arising out of misrepresentation or negligence arising in connection with a forward-looking statement. This document is not intended to contain any profit forecasts or profit estimates. 28