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Sig — SIG Combibloc Group — Investor Presentation (March 2021)
41 slides from Sig's investor presentation, March 2021
Slide 1: SIG Combibloc
SIG COMBIBLOC MARCH 2021
Slide 2: Disclaimer
DISCLAIMER The information contained in this presentation is not for use within any country or securities of SIG in any state or jurisdiction in which, or to any person to whom such EBITDA to adjusted EBITDA and the estimated tax impact of the foregoing jurisdiction or by any persons where such use
Slide 3: Business Overview
BUSINESS OVERVIEW
Slide 4: Leading Systems & Solutions Provider for Aseptic Packaging
LEADING SYSTEMS & SOLUTIONS PROVIDER FOR ASEPTIC PACKAGING #2 system Razor/razor- 1,266 fillers in the GLOBAL FOOTPRINT1 WITH INTEGRATED SUPPLY CHAINS provider globally blade business field in resilient, growing model with long- end-markets term customer relationships Core revenue Adj. EBITDA Track
Slide 5: Secular Trends Driving Robust Growth
SECULAR TRENDS DRIVING ROBUST GROWTH PROCESSED FOOD GROWING 2X RATE OF GLOBAL POPULATION Population with access to Global spend for Global population processed food processed food 7.6B people 7.3B people €2.4T GROWTH OF PROCESSED FOOD Size 2018 AND DEMANDING CONSUMERS +1.1B people by 2030 Growth +2.
Slide 6: Aseptic Carton Packaging Shows Highest Growth Rates
ASEPTIC CARTON PACKAGING SHOWS HIGHEST GROWTH RATES 579B 533B 229B 92B kg of packaged food Litres of beverages Litres of ambient packaging Litres of aseptic carton Additional categories1 3B Additional 579B KG OF geographies2 22B PACKAGED FOOD Packaged food Other substrates 137B 579B Other 220B Core
Slide 7: SIG Ideally Positioned to Meet Market and Consumer Trends
SIG IDEALLY POSITIONED TO MEET MARKET AND CONSUMER TRENDS SAFE AND AFFORDABLE PACKAGING DIFFERENTIATING PACKAGING AND FILLING SOLUTIONS SOLUTIONS FOR PREMIUM CATEGORIES ▪ Filling flexibility for customers to adjust to shifts in market ▪ Format/filling flexibility to cater for SKU proliferation deman
Slide 8: We Are at the Heart of Our Customers' Operations
WE ARE AT THE HEART OF OUR CUSTOMERS' OPERATIONS Raw Milk Raw Milk Raw Milk Milk Milk Tanks UHT Filling Line Sleeves & Outbound Consumer Reception Storage Pasteuriser Closures Logistics Raw Material Reception Processing Packaging Systems Distribution & Retail Filling and packaging operations Our ser
Slide 9: Building on Long-Term Customer Partnerships
BUILDING ON LONG-TERM CUSTOMER PARTNERSHIPS WITH GLOBAL AND REGIONAL LEADERS TOP 10 CUSTOMERS % OF 2020A LENGTH OF CUSTOMER SLEEVES RELATIONSHIP REVENUE 1 8% >20 YEARS 2 5% >15 YEARS 3 4% >35 YEARS 4 4% >40 YEARS 5 3% >35 YEARS 6 3% >40 YEARS 7 2% >40 YEARS 8 2% >10 YEARS 9 2% >20 YEARS 10 2% >40 YE
Slide 10: Sleeve & Filling Technology Platform Enables Broad Offering
SLEEVE & FILLING TECHNOLOGY SIG PLATFORM ENABLES A BROAD AND FLEXIBLE OFFERING Rapid switching to cater for changing needs while keeping asset utilisation high VOLUME AND ▪ Up to 16 product variants possible on one FORMAT filler FORMAT FLEXIBILITY FLEXIBILITY ▪ Range of fill volumes from 80ml to 2,0
Slide 11: Sustainable by Nature
SUSTAINABLE BY NATURE SIG ASEPTIC CARTON PACKAGING FULLY RECYCLABLE RENEWABLE In 2019, 51%1 of beverage cartons Beverage cartons are made in the EU were recycled. Notable examples: on average with 75% RESPONSIBLE paperboard, a renewable Germany: 76%2 100% of the paperboard used to material. France:
Slide 12: Lowest Carbon Footprint: Cartons Win Every Time
LOWEST CARBON FOOTPRINT: CARTONS WIN EVERY TIME LIQUID DAIRY NON-CARBONATED FOOD kg CO2 equivalent per packaging required for 1,000L UHT milk SOFT DRINKS kg CO2 equivalent per packaging required for 1,000L food kg CO2 equivalent per packaging required for 1,000L non-carbonated soft drinks -45% -70%
Slide 13: Financial Performance
FINANCIAL PERFORMANCE
Slide 14: Generate Growth and Increase Profitability Through the Cycle
GENERATE GROWTH AND INCREASE PROFITABILITY THROUGH THE CYCLE 2008-20 2008-20 ROCE: REVENUE CAGR: ADJ. EBITDA CAGR: 4% 5% 29.5%3 CONSTANT CURRENCY % CORE REVENUE1 GROWTH % TOTAL REVENUE (€M) 1.767 1.796 1.568 1.563 1.590 1.644 1.483 1.546 1.494 1.294 1.355 CORE REVENUE1 (€M) 1.163 1.167 409 417 436 4
Slide 15: Increasing Focus on Growth Regions
INCREASING FOCUS ON GROWTH REGIONS 2008 2014 2020 Core revenue by region Core revenue by region Core revenue by region AMERICAS Non-EMEA 6% Non-EMEA Non-EMEA 23% 46% 55% AMERICAS AMERICAS ASIA PACIFIC 17% 18% 17% EMEA 45% EMEA ASIA PACIFIC 54% 29% ASIA PACIFIC 37% EMEA 77% Core revenue: €1,163m Core
Slide 16: Acquisition of MEA Joint Venture Enhanced Global Geographic Reach
ACQUISITION OF MEA JOINT VENTURE ENHANCED GLOBAL GEOGRAPHIC REACH SIG pro forma Core Revenue SIG standalone Core Revenue More diversified geographic with MEA JV mix MEA as a new separate segment representing 15% of total revenue 18% 15% Consolidates SIG’s leading position in the Middle East and Afri
Slide 17: 2020 Overview Key Points
2020 OVERVIEW RESILIENT KEY POINTS BUSINESS PROFILE SIG BUSINESS PROVED ITS COVID-19: A HEADWIND GEOGRAPHIC DIVERSIFICATION RESILIENCE OVERALL UNDERPINS REVENUE GROWTH ONGOING DEMAND FOR FOOD LOWER THAN EXPECTED GROWTH GAINS IN EUROPE AND AMERICAS AND BEVERAGES IN APAC, NEGATIVE CURRENCY OFFSET APAC
Slide 18: 2020 Financial Highlights
2020 FINANCIAL PERFORMANCE HIGHLIGHTS IN LINE WITH GUIDANCE CORE REVENUE ADJUSTED FREE CASH ADJUSTED NET ROCE2 € 1.80 BILLION EBITDA FLOW INCOME +5.5% € 498 € 233 € 232 29.5% AT CONSTANT MILLION MILLION MILLION (2019: 22.8%) CURRENCY (2019: € 485m) (2019: € 267m) (2019: € 217m) CORE REVENUE ADJUSTED
Slide 19: Full Year Sales Evolution
FULL YEAR GROWTH IN SALES EVOLUTION ALL REGIONS € MILLION Core revenue growth at constant currency +5.5%; reported +1.7% Positive contribution from 41 2 consolidation of Visy Cartons -17 20 -64 42 8 Core revenue growth at constant currency ex Visy 2.9% CONSTANT CURRENCY 1’784 1’767 GROWTH RATE 1’796
Slide 20: Regional Summary: EMEA
REGIONAL SUMMARY: EMEA FY CORE REVENUE AT CONSTANT CURRENCY: +5.6% CONSTANT CURRENCY Large part of business is litre packs, YOY GROWTH suitable for at-home consumption €MILLION 3.1% 12.2% 2.5% 4.5% European factories achieved record production levels in April 217 206 194 181 Expanding in new categor
Slide 21: Regional Summary: APAC
REGIONAL SUMMARY: APAC FY CORE REVENUE AT CONSTANT CURRENCY: +1.2% CONSTANT CURRENCY Sales broadly flat in China in H1 YOY GROWTH Recovery starting in September €MILLION Lockdowns lasted longer in South East Asia 6.2% 7.7% -2.0% -4.4% Reduction in on-the-go consumption Tourism and school milk progra
Slide 22: Regional Summary: Americas
REGIONAL SUMMARY: AMERICAS FY CORE REVENUE AT CONSTANT CURRENCY: +14.7% CONSTANT CURRENCY Q1: low base of comparison YOY GROWTH €MILLION COVID-19 positive in Brazil and Mexico – higher at-home milk and food consumption 34.2% 5.0% 24.1% 5.3% Increased welfare payments in Brazil Catering to basic and
Slide 23: Full Year Adjusted EBITDA Bridge
FULL YEAR SUSTAINING HIGH PROFITABILITY ADJUSTED EBITDA BRIDGE IN A CHALLENGING YEAR ADJUSTED EBITDA € MILLION ADJUSTED -4 EBITDA 5 2 -4 -42 35 21 MARGIN 485 443 498 27.4% (2019: 27.2%) 2019 FX NET OF FX TOP-LINE RAW MATERIAL PRODUCTION JV DIVIDENDS SGA MISC. 2020 IMPACT COSTS EFFICIENCIES ▪ Adjuste
Slide 24: Currency Impact
CURRENCY IMPACT EXCEPTIONAL VOLATILITY IN FIRST QUARTER FY EBITDA EUR/BRL EUR/THB CURRENCY IMPACT EXCHANGE RATE EXCHANGE RATE € MILLIONS FY 2020 FY 2020 38,00 7,00 9 37,00 6,50 21 36,00 6,00 35,00 12 5,50 5,00 34,00 Brazilan Real Thai Baht 4,50 33,00 other 4,00 32,00 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 24 MARCH
Slide 25: Free Cash Flow
FREE STRONG CASH CASH FLOW FLOW GENERATION €m 2020 2019 NET CASH FROM OPERATING ACTIVITIES 426 438 Dividends received from joint ventures 23 21 Acquisition of property, plant and equipment and intangible assets (199) (182) Payment of lease liabilities (16) (10) FREE CASH FLOW 233 267 CASH CONVERSION
Slide 26: Capital Expenditure
CAPITAL STRONG PLATFORM EXPENDITURE FOR FUTURE GROWTH €m 2020 2019 PROPERTY, PLANT & EQUIPMENT 77 58 GROSS FILLER CAPEX 122 124 UPFRONT CASH (54) (72) NET FILLER CAPEX 68 52 TOTAL NET CAPEX 145 110 TOTAL NET CAPEX AS % REVENUE 8.0% 6.2% NO. OF FILLERS IN THE FIELD1 1,266 1,233 Additions 59 75 Withdr
Slide 27: Leverage
LEVERAGE LEVERAGE GUIDANCE TOWARDS 2x MID-TERM €m 2020 2019 CASH1 355 261 TERM LOAN 550 1’561 NOTES ISSUES 1’000 - LEASE LIABILITIES 147 54 NET TOTAL DEBT 1’342 1’353 TOTAL NET LEVERAGE RATIO 2.7x 2.8x ▪ Increase in lease liabilities due to new APAC plant ▪ Debt refinancing in June 2020: shift to un
Slide 28: New APAC Plant Production Commenced
NEW APAC PLANT CONTINUED CONFIDENCE PRODUCTION COMMENCED IN APAC GROWTH OUTLOOK NEW PLANT 8 BILLION PACKS CONSTRUCTED PRODUCTION CAPACITY AT SUZHOU = ~70% INCREASE IN INDUSTRIAL PARK IN CHINA CAPACITY CHINA = ~35% INCREASE IN APAC OPERATIONAL AND CAPACITY OVERHEAD SYNERGIES WITH EXISTING PLANT PRODU
Slide 29: Acquisition of Remaining 50% of Middle East & Africa Joint Venture
ACQUISITION OF REMAINING 50% TRANSACTION OF MIDDLE EAST & AFRICA JOINT VENTURE COMPLETED OPERATING PERFORMANCE TRANSACTION REPORTING IN 2020 RATIONALE IMPACT ▪ Consolidation of revenue after elimination of ▪ FY sales €266m (-3% at constant currency) ▪ Enhanced access to high growth region: SIG sales
Slide 30: Financial Guidance
FINANCIAL CONTINUING COVID-19 GUIDANCE UNCERTAINTY FY 2021E CORE REVENUE GROWTH 4 - 6% (CONSTANT CURRENCY) Lower half of range ADJ. EBITDA MARGIN 27 – 28% EFFECTIVE TAX RATE 27 - 28%1 NET CAPEX (% REVENUE) 8 - 10% DIVIDEND PAYOUT 50 - 60% OF ADJUSTED NET INCOME2 Mid-term CORE REVENUE GROWTH 4 - 6% (
Slide 31: Conclusion
CONCLUSION CONTINUING TRACK RECORD OF GROWTH AND CASH GENERATION TOP LINE BEST-IN-CLASS STRONG RETURN PERFORMANCE IN PROFITABILITY PROFILE: ROCE 29.5% 2020 DEMONSTRATES RESILIENCE OF BUSINESS INSTALLED FILLER FURTHER EXPANDING STRONG BUSINESS BASE IS A STRONG GEOGRAPHIC FUNDAMENTALS PLATFORM FOR FUT
Slide 32: Thank You
THANK YOU CEO SAMUEL SIGRIST CFO FRANK HERZOG MARCH 2021
Slide 33: Appendix
APPENDIX
Slide 34: Razor / Razorblade Business Model Generating Stable Cash Flows
RAZOR / RAZORBLADE BUSINESS MODEL GENERATING STABLE CASH FLOWS FILLERS 6% SLEEVES & CLOSURES 87% SERVICE 7% (OF TOTAL REVENUE2) (OF TOTAL REVENUE2) (OF TOTAL REVENUE2) Key criteria for investment decisions Attractive IRR FILLER INSTALLED GROSS PROFIT DYNAMIC PAYBACK IRR BEFORE DEPRECIATION CUM. CASH
Slide 35: Two Distinct Aseptic Technologies
TWO DISTINCT ASEPTIC TECHNOLOGIES Production Filling H2O2 sterilisation Paperboard H2O2 drying Polyethylene (PE) Filling nozzle 1 Coating Longitudinal sealing SIG Printing Shipment Filling nozzle 2 Steam injection PE “Sleeve System” Aluminium Sealing PE Cutting in sheets Polyethylene (PE) Coating Cu
Slide 36: EBITDA Reconciliation
EBITDA RECONCILIATION 2020 2019 EBITDA 450 480 Main adjustments in 2020: Adjustments to EBITDA: Replacement of share of profit of joint ventures with • Impairment losses (+) cash dividends received from joint ventures 5 5 • Gains on derivatives (-) Restructuring costs, net of reversals 6 2 Unrealise
Slide 37: Adjusted EBITDA Margin Development by Region
ADJUSTED EBITDA MARGIN DEVELOPMENT BY REGION EMEA APAC AMERICAS ▪ Lower sourcing costs ▪ High margin despite difficult ▪ Impact of Brazilian Real depreciation ▪ Production efficiencies operating environment ▪ Higher dividend from Middle East ▪ Currency headwind notably Thai joint venture compared wi
Slide 38: Adjusted Net Income
ADJUSTED NET INCOME €m 2020 2019 PROFIT FOR THE PERIOD 68 107 Non-cash FX impact of non-functional currency loans and realised exchange impact due to refinancing 25 (1) Amortisation of transaction costs 3 3 Net change in fair value of derivatives - 1 Net effect of early redemption of notes - - Net e
Slide 39: Working Capital
WORKING CAPITAL NET WORKING CAPITAL WELL CONTROLLED €m 2020 2019 INVENTORY 171 167 TRADE RECEIVABLES 102 162 TRADE PAYABLES (164) (180) NET WORKING CAPITAL 109 150 % REVENUE 6.0% 8.4% OTHER RECEIVABLES / PAYABLES1 (256) (226) OPERATING NET WORKING CAPITAL (1) Including accruals for volume bonuses to
Slide 40: Return on Capital Employed
RETURN ON CAPITAL EMPLOYED €m 2020 2019 • Increase in adjusted EBITDA INCOME STATEMENT ITEMS • Lower net working capital Adjusted EBITDA 498 485 • Whakatane asset impairments Depreciation of PP&E¹ (160) (177) (150bps benefit) Dividends received from joint ventures (23) (21) ROCE EBITA 315 288 ROCE a
Slide 41: Planned Closure of Whakatane Paper Mill in New Zealand
PLANNED CLOSURE OF WHAKATANE PAPER MILL IN NEW ZEALAND ACQUIRED IN 2010 REASONS FOR TIMING FINANCIAL IMPLICATIONS FROM THE RANK CLOSURE PRODUCTION • IMPAIRMENT CHARGE OF €38 GROUP • NON-CORE EXPECTED TO STOP MILLION INCLUDED IN 2020 CONVERTED TO BUSINESS IN Q2 2021 FINANCIAL STATEMENTS LIQUID PAPER
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