Mondi Group UBS emerging markets conference. 13 May 2013

Transcription

1 Mondi Group UBS emerging markets conference 13 May 2013

2 Agenda Highlights Strategy Industry fundamentals Summary Appendices 2

3 Highlights Strategy Industry fundamentals Summary Appendices 3

4 Financial Highlights million 9.5% 7.6% 12.3% 15.0% 13.7% cents per share 12.7 Underlying operating profit and ROCE H1 H2 ROCE% Earnings and dividend per share Earnings per share Dividend per share 2012 Strong profitability in 2012 despite challenging start to the year with improved volumes and pricing after Q1, supported by excellent operating performance and cost management ROCE of 13.7%, in excess of the Group s through-the-cycle target of 13% Strong cash generation from operations of 845 million Total dividend for the year of 28.0 euro cents per share, up 8% Interim management statement Q Underlying operating profit of 162 million in line with expectations despite one-off write-down of energy credits of 11 million Improved market conditions in Packaging Paper and South African businesses as well as benefits from acquisitions 4

5 Highlights Strategy Industry fundamentals Summary Appendices 5

6 Mondi at a glance Europe & International South Africa 2012 Revenue 1 Packaging Paper 1,896m 27% 30% Fibre Packaging 8% 29% 26% 17% Consumer Packaging 23% 21% UFP 1,860m 1,167m 1 1,466m 653m 10% 9% 9% 2012 ROCE% 17.9% 12.5% 10.8% % 9.9% Products 1 Pro-forma segment revenues, before elimination of inter-segment revenues, including Nordenia s full year 2012 revenues. 2 ROCE% has been adjusted for the Nordenia one-off costs. 6

7 2012 Strategic highlights Net operating assets development (% group total) Significant progress with strategic initiatives 43% 57% 33% 67% 1.2 billion spent on acquisitions increasing exposure to higher growth packaging segments Net operating assets (Upstream businesses) Packaging Turnover by destination (% group total) Disposal of interest in non-core Aylesford Newsprint Capital employed in packaging businesses now 67% of Group total 17% 83% Emerging markets Mature markets 50% 50% Emerging markets Mature markets Integration of acquisitions on track Cost synergies now estimated at 30 million per annum, up 33% Investment grade credit ratings maintained 7

8 Today Mondi is a high-quality and focused business Uncoated Fine Paper Uncoated Fine Paper Syktyvkar modernisation completed Sold controlling interest in Hadera Packaging Paper E&I Corrugated Bags & Coatings Mondi South Africa Division E&I Corrugated Bags & Coatings 470,000t RCB machine in Świecie Focus on central & eastern Europe Bought out Świecie minorities, acquired Saturn & Duropack plants Kraft Paper & Industrial Bags: focus on export, expansion in MENA Coatings & Consumer Packaging: Nordenia acquisition E&I Fibre Packaging Consumer Packaging Uncoated Fine Paper Mondi Shanduka Newsprint Mondi South Africa Division/MSN Refocus on domestic market Greater pulp exposure Leveraging strong market position Mondi South Africa Division Aylesford Aylesford Sold Mondi Packaging South Africa Mondi Packaging South Africa Demerged Europapier Europapier Sold 8

9 Our strategic pillars 1 Achieve leading market positions Maintain and/or develop leading market positions in our core packaging and uncoated fine paper markets, with specific focus on higher-growth emerging markets 2 Maintain a highquality, low-cost asset base Maintain our low-cost, high-quality asset base by selectively investing in production capacity enjoying sustainable cost advantages 3 Grow through customer focused development Develop markets and products aligned to our customer needs by developing products according to their requirements, increasing our exposure to more value added, innovative, technologically advanced products and by following our customers into high growth emerging consumer markets 4 Continuous focus on performance Focus on performance through continuous productivity improvement and cost reduction, delivered through business excellence programmes and rigorous asset management Our required rate of return on capital employed through the cycle is 13% 9

10 1 Achieving leading market positions Delivering on our strategy Acquisition of Nordenia represents a significant step in the development of a leading consumer packaging business Acquisition of two corrugated packaging plants in Germany and the Czech Republic reinforces Mondi s strong central European footprint in corrugated packaging Market share in Europe* 30% 20% 10% 0% Packaging Paper Fibre Packaging Uncoated Fine Paper No. 2 No. 1 12% 24% Virgin containerboard Kraft paper No. 1 No. 3 22% 7% 14% Industrial bags No. 2 Extrusion coatings Release liner No. 1 No. 1 15% 20% Uncoated fine paper Office paper Market share in South Africa* Mondi holds the number one position in South Africa in the following markets: 30% Regional share in Emerging Europe* Packaging Paper and Fibre Packaging Uncoated Fine Paper Newsprint 20% 10% No. 1 No. 1 White Top Kraftliner 0% 16% 9% Recycled containerboard Corrugated packaging * Sources and region definitions are disclosed in the appendix. 10

11 2 Maintain a high-quality, low-cost asset base Delivering on our strategy Acquisition of the remaining non-controlling interest in Mondi Świecie Acquisition of heat and energy plant at Mondi Świecie 300 million committed to energy related and debottlenecking projects 83% of upstream paper assets located in emerging markets offering clear and sustainable cost advantages Group revenue by destination Group revenue by origin Net operating assets Net operating assets 17% 50% 50% 43% 57% 36% 64% 83% Upstream paper mills Emerging markets Mature markets 11

12 2 Our emerging market focus underpins our lowcost position across the Group s main grades Quartile¹ Percentage of Mondi's capacity in overall cost curve in Q Q4 18% 7% Q3 46% 20% Q2 25% 11% 38% 100% Q1 100% 100% 100% 75% 25% 35% White Top Kraftliner Unbleached Kraftliner NSSC Fluting Recycled fluting Unbleached Sack Kraft Paper UFP² BHKP (Pulp)³ 1 Delivered to Frankfurt except where noted 2 Includes specialties 3 Delivered to Rotterdam Source: RISI and Mondi estimates 12

13 2 Integrated value chain 1 Millions of tonnes (1.0) Pulp E&I E&I 0.3 (0.2) SAD Production Consumption Net long/(short) position MSAD Millions of tonnes Kraft Paper E&I Production Consumption Net long position Virgin Containerboard Recycled Containerboard Millions of tonnes E&I MSAD E&I SAD Production Consumption Net long position Millions of tonnes E&I Production Consumption Net long position 1 Based on full year 2012 production volumes 13

14 3 Grow through customer focused development Delivering on our strategy Acquisition of Nordenia contributes significantly due to its innovation driven culture 70m planned investment in a 155,000 tonne per annum bleached kraft paper machine in Štěti, Czech Republic in order to meet growing demand New consumer packaging plant in Taicang, China under construction to support an existing global customer R&D centres 14

15 4 Continuous focus on performance Delivering on our strategy Production and efficiency records in numerous operations Sale of our 50% interest in Aylesford Newsprint Cost base reduced in absolute terms for past four years adjusted for acquisitions and disposals Underlying operating profit ( m) and ROCE (%) million 12.3% 15.0% 13.7% 9.5% 7.6% ROCE % 15

16 Mondi has clear free cash flow priorities Maintain investment grade credit metrics Ratings reaffirmed Successful launch of 3.375% 8-year 500 million Eurobond Free Cash Flow priorities Selective capital investment opportunities (optimisation of asset base) Energy projects ( 140 million) on track to deliver from end 2013 New projects started - Ružomberok ( 128 million) - Štěti ( 70 million) Support dividends Full year dividend increase of 8% Compound annual growth from 2008 of 22% As appropriate M&A and/or increased shareholder distributions Świecie non-controlling interests Saturn energy power plant Nordenia Corrugated box plants in Germany and Czech Republic 16

17 Recently approved major capital investments Ružomberok Štěti Description Recovery boiler and improvements in chemical recovery and green energy 155,000 tonne capacity bleached kraft paper machine Cost 128 million 70 million IRR ±40% ±20% Benefits Increase pulp production Reduce the mill s environmental footprint Improve overall cost position Improvements in chemical recovery and green energy and heat production during pulp production process Integrate remaining open market pulp production on site Additional volumes of bleached kraft paper Growth for the kraft business Approved Energy projects of 140 million are on track for completion by end

18 Highlights Strategy Industry fundamentals Summary Appendices 18

19 Packaging Paper Containerboard Indexed to million Selling prices/differential - indexed Kraftliner White-top Kraftliner RB fluting-occ differential Selling prices - indexed % Underlying operating profit and ROCE 17.0% 24.4% Selling prices - indexed 17.9% Virgin containerboard Supply side contraction and lower imports tightened markets in second half of 2012 Markets remain firm in early 2013, 40/t price increases announced for the second quarter of the year Recycled containerboard Surplus capacity weighed on pricing in 2012 Recent capacity closures and stable demand have firmed up the market New capacity in Poland little impact as yet 40/t of the 60/t price increase announced in January 2013 was realised towards the end of Q % H1 H2 ROCE % Packaging Paper Fibre Packaging Consumer Packaging Uncoated Fine Paper South Africa Division 19

20 Packaging Paper Kraft paper Indexed to 2007 Selling prices - indexed Sack Kraft Paper Kraft paper 2012 Q3 price increases implemented on strong demand in export markets Sack kraft paper demand remained stable with sales volumes in Q well above the previous quarter Sack kraft paper prices stable in Q million Underlying operating profit and ROCE 24.4% 13.6% 17.0% Selling prices - indexed 17.9% 3.5% H1 H2 ROCE % Packaging Paper Fibre Packaging Consumer Packaging Uncoated Fine Paper South Africa Division 20

21 Fibre Packaging million 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, million 5.0% Production volumes Corrugated Board & Boxes (m²)¹ Industrial Bags (units) Extrusion Coatings & Release liner (m²) Underlying operating profit and ROCE 8.5% 7.5% 11.0% 12.5% Corrugated packaging Demand stable in mature central Europe Pleasing growth in emerging Europe New corrugated plants in Germany & Czech Republic strengthening leading market positions Some margin erosion expected in Q due to increased paper prices Industrial bags Continued weak demand in western Europe Good growth in overseas markets Coatings Demand for industrial applications remains weak Stable demand in consumer applications Near term focus on optimisation of new US plant Q disappointing due to slower demand, margin pressure and operational issues H1 H2 ROCE % 1 Reduction in volumes in 2008 to 2010 reflects divestitures and focus on central and emerging European market Packaging Paper Fibre Packaging Consumer Packaging Uncoated Fine Paper South Africa Division 21

22 Consumer Packaging million 5.6% Underlying operating profit and ROCE 15.0% 13.5% 10.2% 10.8% Acquisition of 99.93% of Nordenia, effective 1 October 2012 Integration on track Synergies expected of 20 million per annum (up from initial 15 million estimate) ¹ H1 H2 ROCE % Strong product pipeline in development China plant to commence operations towards end 2013 Q Nordenia contribution after one-off items and other acquisition effects in line with expectations at 19 million EBIT Q stable 1 Underlying operating profit and ROCE% has been adjusted for the one-off costs Packaging Paper Fibre Packaging Consumer Packaging Uncoated Fine Paper South Africa Division 22

23 Uncoated Fine Paper / tonne 900 Pulp and A4 B-copy prices / tonne 800 Demand Structural decline in western Europe A4 B-copy /ton Pulp (BHKP) - EUR/tonne Growing demand in emerging Europe and CIS Supply New capacity in Russia and France, albeit effects not yet seen million Underlying operating profit and ROCE 19.1% 16.9% 16.7% 16.7% Russia entry into WTO Reduction in import duties from % H1 H2 ROCE % Packaging Paper Fibre Packaging Consumer Packaging Uncoated Fine Paper South Africa Division 23

24 South Africa Division Underlying operating profit and ROCE million 16.4% 8.9% 8.7% 9.9% 5.3% H1 H2 ROCE % Improved result, with ROCE of 9.9% in 2012 Continued positive domestic trading environment in uncoated fine paper Gains from weaker Rand Closure of woodchip export operations Q Closure of one of the two newsprint machines in Merebank as a result of ongoing decline in domestic newsprint demand and reorganisation within the publishing sector. One newsprint machine with 120,000 tonnes per annum to continue to operate Packaging Paper Fibre Packaging Consumer Packaging Uncoated Fine Paper South Africa Division 24

25 Highlights Strategy Industry fundamentals Summary Appendices 25

26 Summary Mondi strategically well positioned. The Group continues to deliver on its four pillar strategic framework: Achieve leading market positions (favourable product and geographic exposure) Maintain a high-quality, low-cost asset base Grow through customer focused development Continuous focus on performance Industry dynamics and outlook: Macroeconomic environment, continued soft demand in European markets and expected capacity increases in recycled containerboard and uncoated fine paper remain a concern Recent price increases in the packaging paper grades provide support Good progress being achieved in integrating recent acquisitions 300 million committed to energy related and debottlenecking projects Management remains confident of continuing to make progress in line with expectations 26

27 Highlights Strategy Industry fundamentals Summary Appendices 27

28 Demonstrating our ability to act decisively and deliver results through the cycle Underlying operating profit ( m) and ROCE (%) million 12.3% 15.0% 13.7% 9.5% 7.6% ROCE % Closures/ divestitures Szolnok (UFP) Holcombe (RCB) Niedergösgen (RCB) UK sheetfeeders Converting plants restructuring Merebank PM32 (UFP) Corrugated operations France Monza (RCB) Converting plants restructuring Europapier Controlling interest in Hadera P&W Merebank PM33 (UFP) Corrugated UK Frohnleiten (RCB) Demerger Mpact Unterland Aylesford Sale of remaining stake in Hadera P&W (completed 1 Jan 2013) Ceske Budejovice (RCB) acquired Converting plants restructuring Commissioning/ Acquisitions Dunapack Certain Loparex business units Commissioning Świecie ECO7 Commissioning Syktyvkar STEP WE Bag plants SKG Two release liner plants in the US Bag plant in Poland Świecie minority interests Świecie energy plant Nordenia Two Duropack plants 28

29 Abridged income statement 1 % H2 H1 H2 million change Group Revenue 5,807 5,739 1% 2,967 2,840 2,797 Materials, energy and consumables used (3,049) (2,998) (2%) (1,549) (1,500) (1,470) Variable selling expenses (523) (511) (2%) (259) (264) (254) Gross margin 2,235 2,230-1,159 1,076 1,073 Maintenance and other indirect expenses (279) (272) (3%) (155) (124) (139) Personnel costs (840) (808) (4%) (427) (413) (391) Other net operating expenses (193) (186) (4%) (90) (103) (105) Underlying EBITDA (4%) Depreciation and amortisation (355) (342) (4%) (188) (167) (170) Underlying operating profit (9%) Net income from associates (1) Net finance costs (107) (111) 4% (54) (53) (51) Profit before tax (10%) Taxation charge (91) (102) 11% (48) (43) (43) Profit for the period from continuing operations (10%) Non-Controlling Interest (35) (70) 50% (10) (25) (28) Underlying earnings (1%) Excluding special items and Mpact discontinued operation in

30 Market shares sources and region definitions Region defitnitions: 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. Sources: Virgin containerboard and Recycled containerboard - Based on capacity. Source: RISI Top European Paper Packaging Producers in 2012 and management estimates. Kraft paper - Based on capacity. Source: Pöyry World of Paper Market up to 2025, RISI Mill Asset Database, Pöyry Smart Terminal Service and management estimates. Industrial bags - Based on sales volume. Source: Eurosac, Freedonia World Industrial Bags 2011 study, AMI 2012 study prepared for Mondi and management estimates. Extrusion coatings - Based on sales. Source: AWA Extrusion Coated Material European Market Study 2008, Dun & Bradstreet and management estimates. Release liner - Based on sales volume in the commercial market. Source: AWA Release Liner Markets Global Review 2012 & AWA Industry Survey, September 2012 report and management estimates. Uncoated fine paper and Office paper - Based on sales volume. Source: EMGE Woodfree Report, December 2011, Eurograph delivery statistics 2012, Pyrabelisk and management estimates. Corrugated packaging - Based on production. Source: Henry Poole Consulting 2012 and management estimates. South Africa Division Based on sales volumes. Source: management estimates. 30

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