Slide 1: Half-yearly results for the six months ended 30 June 2015
Mondi Group Half-yearly results for the six months ended 30 June 2015 6 August 2015
Slide 2: Agenda
Agenda Highlights Financial overview Operational overview Capital allocation Outlook Appendices 2
Slide 3: Highlights
Highlights Underlying operating profit and ROCE ● Excellent financial performance € million 19.5% ○ Revenue up 10% - Supported by acquisitions, volume growth and price 19.0% 19.0% 18.5% 17.2% increases 18.0% 17.5% ○ Underlying operating profit up 30% 17.0% 16.0% 16.5% 16.0% ○ Underlying earnings per
Slide 4: Building on a track record of success
Building on a track record of success 19.0% 20.0% 17.2% 18.0% 16.0% 15.2% 15.0% 15.3% 16.0% 14.8% 13.3% 13.6% 14.0% 12.3% 12.0% 9.9% 10.0% 8.0% 6.0% 4.0% 2.0% 360 458 608 622 540 574 668 699 710 767 880 0.0% H1 2010 H2 2010 H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 H2 2013 H1 2014 H2 2014 H1 2015 12 m
Slide 5: Agenda
Agenda Highlights Financial overview Operational overview Capital allocation Outlook Appendices 5
Slide 6: Operating financial highlights
Operating financial highlights % % H1 H2 H1 change vs change vs € million 2014 2014 2015 H1 2014 H2 2014 Group Revenue 3,148 3,254 3,459 10% 6% Underlying EBITDA 553 573 671 21% 17% % Margin 17.6% 17.6% 19.4% Underlying operating profit 377 390 490 30% 26% % Margin 12.0% 12.0% 14.2% Group ROCE 16.0%
Slide 7: Underlying operating profit development
Underlying operating profit development € million 79 (49) 10 8 (1) (7) 490 44 29 377 H1 2014 Volume Price Variable Fixed Depreciation Currency Acquisitions Fair value H1 2015 costs costs effects and disposals gains and other 7
Slide 8: Divisional operating profit contribution
Divisional operating profit contribution H1 2015 EBIT contribution by segment¹ € million 11 (5) 490 33 Packaging Paper 10 20 Fibre Packaging 14% 44 Consumer Packaging Uncoated Fine Paper 377 41% South Africa Division 22% 10% 13% H1 2014 Packaging Fibre Consumer Uncoated Fine South Africa Corporate H
Slide 9: Financial review
Financial review % % H1 H2 H1 change vs change vs € million 2014 2014 2015 H1 2014 H2 2014 Underlying operating profit 377 390 490 30% 26% Net underlying finance costs (50) (47) (59) (18%) (26%) Net profit from associates 1 - - Underlying profit before tax 328 343 431 31% 26% Tax before special item
Slide 10: Finance costs and taxation
Finance costs and taxation ● Finance costs up 20% on prior year Finance costs H1 H2 H1 € million 2014 2014 2015 ○ Increase in interest rates in Russia Closing net debt 1,758 1,613 1,741 - Average 3 month RUB Mosprime rate up from 8.7% to 15.9% Average net debt 1,636 1,726 1,700 ○ Non-recurring items
Slide 11: Special items
Special items Operating special items – €36 million charge after tax ● Packaging Paper (€14 million charge) ○ Closure of Lohja speciality kraft paper mill in Finland ● Fibre Packaging (€10 million charge) ○ Further restructuring activities following the acquisition in mid-2014 of the bags business f
Slide 12: Cash flow effects - movement in net debt
Cash flow effects - movement in net debt € million 52 1,741 140 1,613 (538) 276 147 51 Net debt at Cash generated Currency effects Tax and Capex Dividends paid Other Net debt at 31 December from operations (including financing costs investment to Mondi Group 30 June 2015 2014 derivatives) paid share
Slide 13: Working capital
Working capital Working capital management ● Higher working capital levels due to: € million 14.1% ○ Industrial Bags acquisition in prior year 12.8% 12.3% ○ Higher working capital needs in Consumer Packaging ○ Seasonal and one-off effects 807 811 978 ● Expect structurally higher working capital due
Slide 14: Dividends
Dividends Dividends declared ● Growth in dividend achieved on the back of strong € cents per share earnings growth – CAGR +20% over past 5 years ● Interim dividend set at 14.38 euro cents per share, up 9% 45 2.8 2.6 2.6 2.6 2.5 on the prior year 40 2.6 35 2.4 30 2.2 2.0 28.77 25 2.0 26.45 20 1.8 19.
Slide 15: Agenda
Agenda Highlights Financial overview Operational overview Capital allocation Outlook Appendices 15 Packaging Paper | Fibre Packaging | Consumer Packaging | Uncoated Fine Paper | South Africa Division
Slide 16: Packaging Paper
Packaging Paper Underlying operating profit, margin and ROCE ● Building on strong base, underlying profit up 26% on prior € million year 26.6% ● Sales volumes up on prior year 22.5% 23.7% ○ Supported by good market growth 17.1% 18.8% ● Mixed pricing 16.3% ○ Higher average virgin containerboard and k
Slide 17: Packaging Paper | industry fundamentals
Packaging Paper | industry fundamentals Selling prices Virgin containerboard €/tonne ● European selling price increase achieved in H1 on good 800 demand and euro weakness (+3% year-on-year) 700 ● Price increases in Russia 600 ● Robust demand growth 500 ● Capacity additions ○ Varkaus conversion, 2016
Slide 18: Packaging Paper | industry fundamentals
Packaging Paper | industry fundamentals Selling prices Kraft paper Price indexed to 2010 ● Higher average pricing +3% 1.50 ● Sack kraft demand stable in Europe and continues to show 1.40 positive growth in overseas markets 1.30 ● No industry sack kraft capacity additions 1.20 ● Speciality grades sho
Slide 19: Fibre Packaging
Fibre Packaging Underlying operating profit, margin and ROCE ● Underlying operating profit up 42% on prior year € million Corrugated Packaging 15.2% 13.4% ● Continued good volume growth (+2.4%) and improved 12.3% product mix ● Lower variable costs 6.5% Industrial Bags 5.5% 5.5% ● Higher average sell
Slide 20: Consumer Packaging
Consumer Packaging Underlying operating profit, margin and ROCE ● Underlying operating profit up 26% on prior year € million ● Benefited from 10.9% 10.4% ○ Focus on innovation and customer service 8.3% ○ Optimisation and specialisation of production facilities 8.2% ○ Sales and application engineerin
Slide 21: Uncoated Fine Paper
Uncoated Fine Paper Underlying operating profit, margin and ROCE ● Underlying operating profit up 41% € million ● Higher average selling prices in Russia ● Uncoated fine paper volumes marginally up despite market 19.4% contraction 15.6% 16.1% 18.1% ● Benefits of completed major projects ○ Increased
Slide 22: Uncoated Fine Paper | industry fundamentals
Uncoated Fine Paper | industry fundamentals Pulp and A4 B-copy prices Demand €/tonne ● Ongoing modest market demand contraction in European 900 and Russian markets 850 800 Supply 750 ● Net capacity reduction expected with conversion of 700 Varkaus (285 ktpa – Q4 2015) and Husum (350 ktpa – 650 2016)
Slide 23: South Africa Division
South Africa Division Underlying operating profit, margin and ROCE ● Strong performance, with underlying operating profit up € million 19% on prior year 22.9% 60 20.5% 21.9% ● Benefited from 20.4% 22.0% ○ Higher average selling prices 50 17.3% ○ Currency support for exports 40 ○ Fair value gain on f
Slide 24: Agenda
Agenda Highlights Financial overview Operational overview Capital allocation Outlook Appendices 24
Slide 25: Growing in line with our strategy
Growing in line with our strategy Maintain our strong and stable financial position and investment grade credit metrics Grow through selective capital Free Cash investment opportunities Flow priorities Support payment of dividends to our shareholders Evaluate growth opportunities through M&A and/or
Slide 26: Growth options | M&A
Growth options | M&A ● Focused around the Group’s core packaging activities ● Around €160 million of bolt-on acquisitions delivered in past 18 months ○ Graphic US Bags business (Industrial Bags, Kraft Paper) ○ Printpack Polish plant (Consumer Packaging) ○ Intercell Bags plant Serbia (Industrial Bags
Slide 27: Growth options | Organic capital investments
Growth options | Organic capital investments Capital expenditure ● €770 million committed to major projects over 2013 – 2016 € million ○ Already contributing meaningfully 159% - Delivering incremental operating profit of €105 million in 180% 154% 2014/2015 160% ○ Ongoing projects on time and on budg
Slide 28: Agenda
Agenda Highlights Financial overview Operational overview Capital allocation Outlook Appendices 28
Slide 29: Outlook
Outlook As in prior years, the second half will be impacted by the seasonal downturn in our Uncoated Fine Paper business and planned annual maintenance shuts at a number of our mills. Price increases in certain paper grades should provide some positive momentum, offset in part by increases in variou
Slide 30: Q&A
Q&A 30
Slide 31: Agenda
Agenda Highlights Financial overview Operational overview Capital allocation Outlook Appendices 31
Slide 32: Mondi at a glance
Mondi at a glance Europe & International South Africa Packaging Paper Fibre Packaging Consumer Packaging Uncoated Fine Paper €1,122m €1,046m €730m €626m €314m 10% H1 2015 8% 30% 29% 23% 16% Revenue1 28% 8%19% 29% ROCE 26.6% 15.2% 10.9% 19.4% 22.9% Products 1 Segment revenues, before elimination of i
Slide 33: Our strategic value drivers
Our strategic value drivers Our clear strategic focus is on growth in packaging We invest in our high-quality, low-cost assets keeping us competitive and giving us sustainable cost advantages We work with our customers to find innovative solutions Downstream growing our product range and Upstream ge
Slide 34: Major project pipeline delivering strongly…
Major project pipeline delivering strongly… 2013 2014 2015 2016 • €60m Frantschach • €70m Štĕti bleached kraft • €166m Świecie recovery • €94m Świecie phase II recovery boiler boiler, turbine and • €128m Ružomberok biomass boiler • €30m South Africa • €16m Syktyvkar bark recovery boiler Division woo
Slide 35: … with limited market risk
… with limited market risk Project Description Project Value Key benefits Market risk Świecie recovery boiler, turbine and €166 million • Energy efficiencies Low biomass boiler • Green energy sales • Cost optimisation Packaging Paper – various projects €106 million • Improved product mix Low • Cost
Slide 36: Input costs
Input costs € million 2,000 1,500 1,000 500 0 H1 2014 H2 2014 H1 2015 Pulp Paper Wood Paper for recycling Energy Chemicals Plastics Other variable costs 36
Slide 37: Fixed costs
Fixed costs € million 1,000 25.0% 900 23.8% 24.0% 800 23.0% 700 23.0% 600 21.9% 22.0% 500 21.0% 400 300 20.0% 200 19.0% 100 0 18.0% H1 2014 H2 2014 H1 2015 Depreciation, amortisation and impairments Other net operating expenses Personnel costs Maintenance and other indirect expenses Fixed costs excl
Slide 38: Our integrated low-cost operations
Our integrated low-cost operations Integrated value chain – total production H1 2015 Million tonnes 2.0 0.1 1.5 1.0 1.9 0.5 0.2 0.7 0.1 0.4 0.3 0.1 0.0 Pulp Virgin containerboard Recycled containerboard Kraft paper Consumed internally Sold externally 38
Slide 39: Non-controlling interests
Non-controlling interests Non-controlling interests ● Continued good profitability of Ružomberok operations H1 H2 H1 € million 2014 2014 2015 Profit attributable to non-controlling interests 15 11 21 • Ružomberok 12 11 17 • Other 3 - 4 % of net underlying profit 5.6% 3.9% 6.0% 39
Slide 40: Debt facilities
Debt facilities ● Subsidiaries generally funded in their functional currencies H1 H2 H1 € million 2014 2014 2015 ● Public credit ratings Net debt 1,758 1,613 1,741 ○ Moody’s Investor Services at Baa2 (outlook stable) Committed facilities 2,451 2,106 2,096 ○ Standard & Poor’s at BBB (outlook stable)
Slide 41: Cash flow
Cash flow % % H1 H2 H1 change vs change vs € million 2014 2014 2015 H1 2014 H2 2014 Underlying EBITDA 553 573 671 21% 17% Working capital movements (106) 19 (101) Other operating cash flow items (8) 2 (32) Cash generated from operations 439 594 538 23% (9%) Dividends from financial investments and a
Slide 42: Statement of financial position
Statement of financial position H1 H2 H1 € million 2014 2014 2015 Property, plant and equipment 3,505 3,432 3,615 Forestry assets 233 235 260 Other non-current assets 707 700 704 Total non-current assets 4,445 4,367 4,579 Total current assets 1,963 1,981 2,138 Total assets 6,408 6,348 6,717 ` Total
Slide 43: Production volumes
Production volumes % % H1 H2 H1 change vs change vs 2014 2014 2015 H1 2014 H2 2014 Europe & International Containerboard Tonnes 1,075,226 1,085,259 1,086,057 1% - Kraft paper Tonnes 531,040 599,180 605,741 14% 1% Softwood pulp Tonnes 1,025,692 1,059,499 1,082,595 6% 2% Corrugated board and boxes M m
Slide 44: Exchange rates
Exchange rates % % H1 H2 H1 change vs change vs 2014 2014 2015 H1 2014 H2 2014 Closing rates against the euro South African rand 14.46 14.04 13.64 6% 3% Czech koruna 27.45 27.74 27.25 1% 2% Polish zloty 4.16 4.27 4.19 (1%) 2% Pounds sterling 0.80 0.78 0.71 11% 9% Russian rouble 46.38 72.34 62.36 (34
Slide 45: Forward-looking statements disclaimer
Mondi: Forward-looking statements disclaimer This document includes forward-looking statements. All statements other than statements of historical facts included herein, including, without limitation, those regarding Mondi’s financial position, business strategy, market growth and developments, expe
Slide 46: mondi
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