Mondi Plc · LSE:MNDI
Mondi — Deutsche Conference 2008
31 slides from Mondi's conference presentation, Nov 12, 2008
Slide 1: Mondi Group Deutsche Conference 12 November 2008
MONDI GROUP DEUTSCHE CONFERENCE 12 NOVEMBER 2008
Slide 2: Agenda
AGENDA 1. Strategy 2. Current trading 3. Capital expenditure programme 4. Near term outlook 5. Appendices Plantation, South Africa Deutsche conference 12 November 2008 Page 2
Slide 3: Key value drivers along the value chain
KEY VALUE DRIVERS ALONG THE VALUE CHAIN Value Chain Step Products Key Value Drivers z Forestry/ z Low production costs Pulp Wood Primary z Access to low cost raw materials (ideally Production z Pulp located close to low cost forestry resources) z Cost efficiency z Paper (e.g. integration with pulp p
Slide 4: Key pillars of Mondi's strategy
KEY PILLARS OF MONDI’S STRATEGY Leading market Build on leading positions in packaging and Uncoated Fine positions Paper (UFP), particularly in emerging markets Maintain position as lowest-cost producer in our markets: High quality, low z Selectively investing in production capacity in lower-cost co
Slide 5: Emerging market focus
EMERGING MARKET FOCUS Revenue by destination Virgin based production 18% 51% 49% 82% Emerging markets Mature markets Operating assets Operating profit by origin 20% 35% 65% 80% Deutsche conference 12 November 2008 Page 5
Slide 6: Low cost wood and asset base
LOW COST WOOD AND ASSET BASE Average hardwood and soft wood costs (€/m3, Q2 2007) White-top Kraftliner Unbleached Kraftliner €/t €/t 47 42 39 37 33 100% of Mondi 30 30 100% of Mondi unbleached 25 25 26 White-top Kraftliner Kraftliner capacity capacity 19 0 0 0 3,000 0 1,400 Cumulative Capacity (Kt/a
Slide 7: Active cost management
ACTIVE COST MANAGEMENT 100 17% 6.5 6.7 6.5 6.4 6.4 90 16% 80 30.0 28.0 27.3 26.5 32.5 70 16% 60 15% 50 15% 40 63.3 65.5 66.3 67.0 30 61.0 14% 20 14% 10 - 13% 2004 2005 2006 2007 H1 2008 Variable costs Fixed costs Depreciation and amortisation Personnel costs as % of revenue SUBSTANTIAL REDUCTION IN
Slide 8: Restructuring activity
RESTRUCTURING ACTIVITY Closures and divestitures Hungary mill now closed (production ceased 20 March) Nyborg plant in Denmark closed, announced Holcombe recycled containerboard and 10 Zaragoza bag plant Sold 3 UK sheet feeder plants E&I UFP reorganisation 5 completed, benefits higher than 10 11 5 3
Slide 9: Mondi is focused on operational performance
MONDI IS FOCUSED ON OPERATIONAL PERFORMANCE Ongoing operational excellence and efficiency gains in 2007 Efficiency gains Productivity – bag converting 1,000 units % 9% per capita +8% 1,097 1,040 778 6% 4% 450 3% UFP Containerboard Corrugated Bag 1995 2000 2006 2007 packaging converting Source: Mondi
Slide 10: Agenda
AGENDA 1. Strategy 2. Current trading 3. Capital expenditure programme 4. Near term outlook 5. Appendices Ruzomberok, Slovakia Deutsche conference 12 November 2008 Page 10
Slide 11: Interim management statement October 2008
INTERIM MANAGEMENT STATEMENT 20 OCTOBER 20081 “The recent downturn in Europe & International Division trading as a result of weakening macro-economic conditions will mean that Group underlying operating profit for the year is likely to be 10% to 15% below last year. This is despite the improvement i
Slide 12: Europe & International Q3 highlights
EUROPE & INTERNATIONAL Q3 HIGHLIGHTS Bags & Specialities Main grades European PIX prices • Higher sack kraft paper and converted bag prices vs. 870 comparable period (+10%). • Volumes much softer than anticipated due to weaker 860 A4 B-copy demand, notably from the construction industry. 850 • Slowd
Slide 13: Q3 highlights (cont)
Q3 HIGHLIGHTS (CONT) • Improvement in results both from product mix changes and price increases. MSAD • Domestic price increases were implemented while export sales benefited from weaker rand. • Significant breakthrough achieved in the settlement of land claims in South Africa. • Underlying operatin
Slide 14: Debt facilities 30 September 2008
DEBT FACILITIES 30 SEPTEMBER 2008 As at the end of September 2008, net debt stood at circa €1.7bn. Despite capex on major expansion projects, debt has increased by only €70m from the 30 June 2008 position. This is partly due to a reduction in the working capital position. Mondi still has just under
Slide 15: Capital invested and financing
CAPITAL INVESTED AND FINANCING 30 June 31 Dec 31 Dec € millions 2008 2007 2006 Trading capital employed 4,922 4,818 4,737 Group ROCE (1) 11.1% 10.6% 8.1% Shareholders funds 2,885 2,963 2,966 Return on shareholders funds (post tax) (2) 8.6% 8.1% 4.8% Net debt 1,655 1,507 1,479 Gearing (Net debt/Equit
Slide 16: Agenda
AGENDA 1. Strategy 2. Current trading 3. Capital expenditure programme 4. Near term outlook 5. Appendices Steti, Czech Republic Deutsche conference 12 November 2008 Page 16
Slide 17: Capital expenditure
CAPITAL EXPENDITURE Mondi well invested Extensive programme of mill modernisation since 2001/02 On completion of the Syktyvkar capex programme (mid 2010), all our major mills would have seen substantial investment Post completion of the Polish and Russian projects, capex will reduce substantially Go
Slide 18: Major growth projects
Major growth projects Both projects on time and within Syktyvkar mill expansion - €525m budgeted capital cost All main equipment orders placed and work commenced Swiecie box plant (€45m) now proceeding Swiecie expansion - €350m Targeted completion dates: Swiecie – mid to late 2009 Syktyvkar – mid 20
Slide 19: Mondi's cost positioning in European recycled supply
Mondi’s cost positioning in European recycled supply 400 Brown field Cost of 350 highest expansion gives: 300 25% of ~€70m capital cost capacity 250 Mondi weighted benefit average without 200 Mondi weighted average with new PM ~€30-€40/tonne new PM 150 Mondi new operating cost 100 PM benefit 0 1,000
Slide 20: Syktyvkar mill modernisation
SYKTYVKAR MILL MODERNISATION Wood/pulp production Sales growth Wood yard 33% capacity increase 55ktpa UFP production (circa 5% of and 10% efficiency improvement. Russian demand) Additional 180ktpa pulp – 150ktpa 65ktpa Containerboard (circa 3% of integrated and 30ktpa external sales Russian demand)
Slide 21: Agenda
AGENDA 1. Strategy 2. Current trading 3. Capital expenditure programme 4. Near term outlook 5. Appendices Richards Bay, South Africa Deutsche conference 12 November 2008 Page 21
Slide 22: Near term outlook
NEAR TERM OUTLOOK RISKS OPPORTUNITIES Economic downturn impacting Industry rationalisation 2008 demand IP Inverurie 250,000t (UFP) Volumes M-Real UK 230,000t (UFP) Pricing Mondi Holcombe 105,000t (recycled containerboard) Other recycled containerboard Capacity increases in UFP and 300,000t (Spain, U
Slide 23: Appendices
APPENDICES
Slide 24: Mondi at a glance
MONDI AT A GLANCE Bags & Newsprint and Corrugated Specialities UCF South Africa MPSA merchant €0.8B €1.1B €0.8B €0.3B €0.2B €0.3B Sales H1 2008 (1) EBIT % 4.5% 9.7% 8.2% 16.4% 6.4% 3.3% Products Europe South Africa Europe/SA Positions z No. 2 Kraftliner(2) z No. 1 Kraft Paper(2) z No. 1 Office z No.
Slide 25: Financial highlights
FINANCIAL HIGHLIGHTS € millions, except for per share measures and ROCE H1 2008 H1 2007 % Change Group revenue 3,263 3,052 +7 1 EBITDA 456 421 +8 2 Underlying operating profit 263 243 +8 3 Underlying profit before tax 210 203 +3 4 Underlying earnings per share (€ cents per share) 24.8 22.6 + 10 Inte
Slide 26: Divisional results
DIVISIONAL RESULTS Group revenue 1 EBITDA 2 Underlying operating profit 3 € millions H1 2008 H1 2007 Change H1 2008 H1 2007 Change H1 2008 H1 2007 Change EUROPE & INTERNATIONAL Bags & Specialities 1,121 994 127 164 132 32 109 80 29 Uncoated Fine Paper 846 837 9 122 100 22 69 48 21 Corrugated Busines
Slide 27: Divisional returns
DIVISIONAL RETURNS 1 2 3 ROCE (%) EBITDA return(%) Return on Sales (%) H1 2008 H1 2007 H1 2008 H1 2007 H1 2008 H1 2007 EUROPE & INTERNATIONAL 12.0 9.8 13.3 12.6 7.8 7.2 SOUTH AFRICA 10.6 9.9 24.5 22.0 16.4 14.9 MPSA 11.1 18.8 12.1 12.1 16.4 14.9 MERCHANT & NEWSPRINT 15.0 14.1 6.1 9.4 3.4 5.6 MONDI G
Slide 28: Abridged income statement
1 ABRIDGED INCOME STATEMENT € millions H1 2008 H1 2007 Change Group revenue 3,263 3,052 211 Materials, energy and consumables used (1,729) (1,577) (152) Variable selling expenses (281) (280) (1) Gross margin 1,253 1,195 58 Maintenance and other indirect expenses (143) (130) (13) Personnel costs (470
Slide 29: Cash flow
CASH FLOW € millions H1 2008 H1 2007 Change EBITDA 456 421 35 Working capital movements (126) (59) (67) Other operating cash flow adjustments (20) (6) (14) Cash inflows from operations 310 356 (46) Dividends from associates and financial investments - 1 (1) Tax paid (27) (40) 13 Net cash inflow from
Slide 30: Production volumes
PRODUCTION VOLUMES H1 2008 H1 2007 % Change Europe and International Division Containerboard tonnes 965,319 916,815 +5 Corrugated board and boxes m m² 1,143 985 + 16 Kraft paper tonnes 461,754 444,625 +4 Bag converting m units 1,902 1,910 +0 Coating and release liners m m² 1,414 1,549 -9 Uncoated fi
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