Slide 1: Full year results for the year ended 31 December 2013
Mondi Group Full year results for the year ended 31 December 2013 28 February 2014
Slide 2: Agenda
Agenda Highlights Financial overview Operational overview Delivering on our strategy Outlook Appendices 2
Slide 3: Highlights
Highlights Underlying operating profit Financial € million Record financial results on all key measures 15.0% 15.3% 18.0% ROCE of 15.3% 13.6% 16.0% 12.3% 14.0% Up 170 basis points Last 3 year average of 14.6%, well in excess of 12.0% 7.6% 10.0% 8.0% through-the-cycle hurdle rate of 13% Sig
Slide 4: Agenda
Agenda Highlights Financial overview Operational overview Delivering on our strategy Outlook Appendices 4
Slide 5: Operating financial highlights
Operating financial highlights % H2 H1 H2 € million 2012 2013 change 2012 2013 2013 Group Revenue 5,790 6,476 12% 2,971 3,342 3,134 Underlying EBITDA 927 1,068 15% 490 554 514 % Margin 16.0% 16.5% 16.5% 16.6% 16.4% Underlying operating profit 574 699 22% 302 366 333 % Margin 9.9% 10.8% 10.2% 11.0% 1
Slide 6: Underlying operating profit development
Underlying operating profit development € million 156 (78) 56 (23) 699 (18) 11 21 574 2012 Volume Price Variable Fixed Currency Acquisitions Fair value 2013 costs costs effects and gains on disposals forestry assets 6
Slide 7: Divisional underlying operating profit – half year splits
Divisional underlying operating profit – half year splits € million 160 148 150 140 123 120 104 102 100 100 91 80 70 60 54 47 48 45 49 44 39 40 40 35 29 20 10 9 0 Packaging Paper Fibre Packaging Consumer Packaging Uncoated Fine Paper South Africa Division H1 2012 H2 2012 H1 2013 H2 2013 7
Slide 8: Financial review
Financial review % H2 H1 H2 € million 2012 2013 change 2012 2013 2013 Underlying operating profit 574 699 22% 302 366 333 Net finance costs (110) (115) (5%) (55) (57) (58) Net (loss)/income from associates (5) 2 (4) 1 1 Underlying profit before tax 459 586 28% 243 310 276 Tax before special items (9
Slide 9: Finance costs
Finance costs % € million 2012 2013 change Closing net debt 1,872 1,621 13% Average net debt 1,278 1,792 (40%) Finance costs 95 104 (9%) Net interest on defined benefit arrangements 15 11 27% Net finance costs 110 115 (5%) Effective interest rate (before capitalised interest) 7.5% 5.9% Finance cos
Slide 10: Taxation and non-controlling interests
Taxation and non-controlling interests Taxation Benefiting from % Profit mix € million 2012 2013 change Investment incentives, notably Poland Underlying tax charge 90 98 (9%) Effective tax rate 20% 17% Non-controlling interests Lower charge due to % Acquisition of Świecie minorities in Apr
Slide 11: Special items
Special items Operating special items – €94 million loss, including Uncoated Fine Paper (€60 million loss) Restructuring activities and asset impairment in Neusiedler (Austria) and assets written off in Syktyvkar (Russia) South Africa Division (€18 million loss) Closure of one newsprint mach
Slide 12: Cash flow effects – movement in net debt
Cash flow effects – movement in net debt € million 1,872 (1,063) 138 (59) (50) 1,621 60 41 405 124 126 27 Net debt Cash Movement Income Financing Capex Investment Dividends Dividends Currency Other Net debt at 31 generated in working tax paid costs paid investment in forestry paid to paid to movemen
Slide 13: Working capital
Working capital¹ Working capital management Working capital cash flows € million € million 248 11.9% 11.0% 12% 10.0% 9.9% 10.0% 10% (68) (83) (27) (121) 527 557 575 764 711 2009 2010 2011 2012² 2013 2009 2010 2011 2012 2013 Working capital as a % of revenue Working capital within target range of 1
Slide 14: Capital expenditure
Capital expenditure¹ Capital expenditure Capital expenditure by business segment € million € million 149% 117% 113% 86% 78% 517 394 263 294 405 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Packaging Paper Fibre Packaging Consumer Packaging Uncoated Fine Paper Capital expenditure as a % of depre
Slide 15: Debt facilities
Debt facilities % € million 2012 2013 change Net debt 1,872 1,621 13% Committed facilities 2,606 2,487 Of which undrawn 762 792 4% Gearing (Net debt / Trading capital employed) 40% 36% Net debt / 12 month trailing EBITDA (times) 2.0 1.5 Currency split of net debt €1,621 million Strong de-leveragin
Slide 16: Dividends
Dividends Dividends declared € cents per share 40 3.0 2.6 2.6 35 2.5 2.5 30 2.0 2.0 2.0 25 26.45 20 1.5 17.75 19.10 15 1.0 10 16.50 7.00 0.5 5 8.25 8.90 9.55 0 2.50 3.50 - 2009 2010 2011 2012 2013 Interim dividend Final dividend Dividend cover Full year dividend of 36 euro cents per share Increa
Slide 17: Agenda
Agenda Highlights Financial overview Operational overview Delivering on our strategy Outlook Appendices Packaging Paper | Fibre Packaging | Consumer Packaging | Uncoated Fine Paper | South Africa Division 17
Slide 18: Packaging Paper
Packaging Paper Underlying operating profit, margin and ROCE Strong performance with ROCE of 21.9% € million 24.4% Pricing mixed 21.9% 17.0% 17.9% Strong recovery in recycled 14.7% 14.9% 10.2% 12.0% containerboard 3.0% 2.1% 178 295 227 298 Virgin containerboard up in H1, before 25 2009 2010
Slide 19: Packaging Paper | industry fundamentals
Packaging Paper | industry fundamentals Selling prices Virgin containerboard Price indexed to 2009 Downward pressure on Kraftliner prices in H2 1.60 2013 and early 2014 on product substitution 1.40 and increased supply from grade conversion 1.20 Year end benchmark prices 2% lower than 1.00 0.80
Slide 20: Packaging Paper | industry fundamentals
Packaging Paper | industry fundamentals Selling prices Kraft paper Price indexed to 2009 1.40 Price erosion in late 2013/early 2014 from 1.30 increased competition in key export 1.20 markets and seasonal demand weakness 1.10 in Europe 1.00 0.90 Closing price 7% down on 2013 average 0.80 0.70 O
Slide 21: Fibre Packaging
Fibre Packaging Underlying operating profit, margin and ROCE Corrugated packaging € million 12.5% Price increases achieved but paper input 11.0% 10.8% price increases put pressure on margins 8.5% 7.5% 5.4% Benefited from 2012 acquisitions and 4.7% 4.0% 3.0% 4.6% volume growth in key markets 63 5
Slide 22: Consumer Packaging
Consumer Packaging Underlying operating profit, margin and ROCE Like-for-like underlying operating profit in € million line with prior year 15.0% 13.5% Net synergy gains of €16 million 10.2% 10.8% Offset by 9.1% One-off synergy implementation costs of €5 million 6.3% 6.7% 6.6% 6.4% 5.4% Ch
Slide 23: Uncoated Fine Paper
Uncoated Fine Paper Underlying operating profit, margin and ROCE Strong operating performance with ROCE € million of 16.2% 16.9% 16.7% 16.7% 14.5% 16.2% Sales volumes down 1.5%, reflecting 14.3% mainly effects of Neusiedler restructuring 13.0% 10.8% 11.8% 12.4% Average selling prices weaker in
Slide 24: Uncoated Fine Paper | industry fundamentals
Uncoated Fine Paper | industry fundamentals Pulp and A4 B-copy prices Demand Price indexed to 2009 Structural decline continuing in western 1.80 Europe – down approximately 3% in 2013 1.60 Structural demand growth still expected in Russia, albeit impacted by current cyclical 1.40 weakness 1.20 S
Slide 25: South Africa Division
South Africa Division Underlying operating profit, margin and ROCE Strong performance, with ROCE of 16.0% € million 16.0% Domestic sales volumes increased 10.8% 14.9% Pricing 9.8% 9.8% 7.0% 9.6% Domestic price increases achieved 8.4% 8.7% 38 71 63 69 93 4.6% Higher average export pulp and
Slide 26: Agenda
Agenda Highlights Financial overview Operational overview Delivering on our strategy Outlook Appendices 26
Slide 27: Performance drivers
Performance drivers Product mix 2013 Focused on markets enjoying growth Geographic exposure – around 50% of 10% sales into higher growth emerging 20% markets 50% Product mix – over two-thirds of sales in 20% packaging, typically enjoying structural Consumer related packaging Industrial packagi
Slide 28: Actively growing packaging business
Actively growing packaging business Cumulative 2011-2013 capital expenditure¹ Clear strategy to grow packaging business Cumulative capital expenditure in 9% packaging business during 2011-2013 22% represents 69% of total Group expenditure over period 69% Additional €1.2 billion spent on packag
Slide 29: Capital expenditure timeline
Capital expenditure timeline Total 2013 2014 2015 2016 Capex Project start-up €m H1 H2 H1 H2 H1 H2 H1 Syktyvkar bark boiler Frantschach recovery boiler 120 Stambolijski steam turbine and economiser Richards bay steam turbine Štĕti bleached kraft (155,000 tonnes) 70 Syktyvkar pulp dryer (100,000 tonn
Slide 30: Agenda
Agenda Highlights Financial overview Operational overview Delivering on our strategy Outlook Appendices 30
Slide 31: Outlook
Outlook We start the year with pricing in most paper grades below 2013 average levels Much depends on extent of European macroeconomic recovery Encouraging development in order books in early part of year Price increase discussions in certain virgin packaging grades Recent emerging market
Slide 32: Agenda
Agenda Highlights Financial overview Operational overview Delivering on our strategy Outlook Appendices 32
Slide 33: Our strategic pillars
Our strategic pillars We develop and maintain leading positions in our core packaging and uncoated fine paper Achieve leading markets. This brings us cost benefits and allows us to better serve our customers. Our focus market positions on higher-growth emerging markets contributes to our sustained p
Slide 34: Delivering against free cash flow priorities
Delivering against free cash flow priorities Maintain investment grade credit metrics Net debt/EBITDA is 1.5 times, down from 2.0 times at end 2012 Investment grade credit ratings reaffirmed Selective capital investment opportunities Free Cash Strategic capital investment projects completed and bala
Slide 35: Input costs
Input costs Variable costs € million 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2009 2010 2011 2012 2013 Pulp Paper Wood Paper for recycling Energy Chemicals Plastics Other variable costs Comparatives for 2009, 2010 and 2011 have not been restated to include 100% of Mondi Shanduka Newsprint in
Slide 36: Fixed costs
Fixed costs Fixed costs composition € million 2,000 1,800 1,600 1,400 26.1% 1,200 1,000 23.4% 23.1% 22.7% 800 22.1% 600 400 200 0 2009 2010 2011 2012 2013 Maintenance and other indirect costs Personnel costs Other net operating expenses Depreciation and amortisation Fixed costs excl. depreciation as
Slide 37: Percentage of Mondi's capacity in overall cost curve in Q3 2013
Percentage of Mondi's capacity in overall cost curve in Q3 2013 Emerging market asset base leads to low cost positions across the Group’s main grades Cost quartile¹ Q4 12% 37% 14% Q3 25% 13% Q2 24% 17% 24% 38% 100% Q1 100% 76% 100% 83% 14% 35% 100% White top Unbleached NSSC fluting Recycled fluting
Slide 38: Integrated value chain 2013
Integrated value chain 2013 Pulp Kraft Paper Millions Millions of tonnes of tonnes 0.7 0.4 3.1 3.3 1.0 0.3 0.6 0.4 (0.2) Production Consumption Net long/(short) Production Consumption Net long position position E&I MSAD E&I Virgin Containerboard¹ Recycled Containerboard¹ Millions Millions of tonnes
Slide 39: Cash flow
Cash flow % € million 2012 2013 change Underlying EBITDA 927 1,068 15% Working capital movements (83) (27) 67% Other operating cash flow items 5 (5) Cash generated from operations 849 1,036 22% Dividends from financial investments and associates 2 1 Taxes paid (109) (126) (16%) Net cash inflow from
Slide 40: Statement of financial position
Statement of financial position € million 2012 2013 Intangible assets 695 675 Property, plant and equipment 3,709 3,428 Forestry assets 311 233 Other non-current assets 42 38 Total non-current assets 4,757 4,374 Inventories 783 746 Trade and other receivables 1,010 954 Other current assets 73 166 To
Slide 41: Production volumes
Production volumes % 2012 2013 change Europe & International Containerboard Tonnes 2,079,005 2,138,714 3% Kraft paper Tonnes 980,637 1,010,885 3% Total softwood pulp Tonnes 1,978,583 2,007,959 1% Corrugated board and boxes M m2 1,213 1,344 11% Industrial bags M units 3,829 3,997 4% Coatings and rele
Slide 42: Exchange rates
Exchange rates % 2012 2013 change Closing rates against the euro South African rand 11.17 14.57 (30%) Czech koruna 25.15 27.43 (9%) Polish zloty 4.07 4.15 (2%) Pounds sterling 0.82 0.83 (1%) Russian rouble 40.33 45.32 (12%) Turkish lira 2.36 2.96 (25%) US dollar 1.32 1.38 (5%) Average rates for the
Slide 43: mondi
mondi