Slide 1: Half yearly results for the six months ended 30 June 2011
HALF-YEARLY HALF YEARLY RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2011 28 July 2011
Slide 2: Agenda
Agenda Hi hli ht Highlights Financial overview Operational review Summary y Appendices Page 2
Slide 3: Highlights
Highlights 1 Underlying operating profit EBIT margin i % 12.0% Earnings significantly up versus 2010 on all measures 8.9% 7.4% Group ROCE2 of 15.2% €354m €204m €254m Cash generated from operations of €403 million H1 2010 H2 2010 H1 2011 Interim dividend of 8.25 euro cents per ordinary share Underlyi
Slide 4: Agenda
Agenda Highlights Financial overview Operational review Summary Appendices Page 4
Slide 5: Basis of preparation
Basis of preparation Income statement Comparative figures restated to reflect continuing operations Mpact reflected as a discontinued operation Statement of financial position Mpact has been classified as held for sale Statement of cash flows Reflects total operations Page 5
Slide 6: Operating financial highlights
Operating financial highlights H1 H2 H1 % Change % Change € Millions 2010 2010 2011 ( H1 2010) (vs (vs ( H2 2010) Group Revenue +7% +3% 2 752 2 858 2 942 EBITDA1 +42% +23% 371 427 526 % Margin 13.5% 14.9% 17.9% +4% +3% 2 Underlying operating profit +74% +39% 204 254 354 % Margin 7.4% 8.9% 12.0% +5%
Slide 7: Divisional underlying operating profits
Divisional underlying operating profits1 140 128 118 120 105 98 H1 2010 100 H2 2010 81 H1 2011 78 80 71 € millions 60 55 48 46 40 27 18 20 1 0 (5) (5) Uncoated Fine Paper Corrugated Bags & Coatings South Africa division Newsprint (20) All major European businesses contributing meaningfully 1 Underly
Slide 8: Input costs
I Input t costs t 180 2 000 Variable costs Recovered paper 2 160 1 800 140 1 600 120 100 1 400 € / tonne 80 1 200 60 € million n 1 000 40 800 20 0 600 2007 2008 2009 2010 2011 400 650 Chemical prices3 600 200 550 500 HY1 HY2 HY1 450 2010 2010 2011 € / tonne 400 Wood Recovered paper 1 350 Energy Othe
Slide 9: Fixed costs
Fixed costs 900.0 Fixed costs Fixed costs as % of Revenue 800.0 25.0% 700.0 600.0 20.0% € million 500.0 400.0 15.0% 300.0 23.6% 23.2% 21.5% 200.0 10 0% 10.0% 100.0 5.0% 0.0 HY1 HY2 HY1 2010 2010 2011 - Personnel costs Maintenance and H1 2010 H2 2010 H1 2011 other indirect costs Fixed costs excl. dep
Slide 10: Financial review
Financial review H1 H2 H1 % Change % Change € Millions 2010 2010 2011 (vs H1 2010) (vs H2 2010) 1 Underlying operating profit +74% +39% 204 254 354 N t Finance Net Fi Costs C t -43% 43% +6% (42) (64) (60) Associate net earnings 2 - 2 2 Underlying profit before tax +79% +55% 164 190 296 Tax before sp
Slide 11: Finance charges and net debt
Finance charges and net debt H1 H2 H1 % Change % Change € Millions 2010 2010 2011 (vs H1 2010) (vs H2 2010) +26% +12% Net debt (1 632) (1 364) (1 200) +2% +3% Interest expense, net of investment income 60 61 59 Less: interest capitalised (7) (1) (1) -9% +3% Net debt finance charges and other financi
Slide 12: Taxation and non-controlling interests
Taxation and non-controlling interests Taxation Non-controlling Non controlling interests H1 H2 H1 H1 H2 H1 € Millions € Millions 2010 2010 2011 2010 2010 2011 Underlying tax charge 46 42 59 Non-controlling share before 27 35 42 special items Tax on special items (4) (2) - Non-controlling share of (
Slide 13: Cash flow
Cash flow H1 H2 H1 % Change % Change € Millions 2010 2010 2011 (vs H1 2010) (vs H2 2010) +39% +18% EBITDA1 405 477 562 Working capital movements (141) 20 (143) Other operating cash flow items 5 12 (16) +50% -21% Cash generated from Operations 269 509 403 Dividends from financial investments and asso
Slide 14: Working capital
Working capital Working capital management1 Working capital cash flows2 800.0 11.9% 700.0 12% €149m 10.7% 10.2% 9.9% 600.0 10% 8.6% €99m 500.0 400.0 €19m 300 0 300.0 HY1 2009 HY2 2009 HY1 2010 HY2 2010 HY1 2011 200.0 100.0 - 2008 2009 HY1 2010 HY1 2010 2011 Total Working Capital - Continuing operati
Slide 15: Capital expenditure
Capital expenditure Capital expenditure 400 200% Cash spend, p excluding g major j 350 projects and Mpact was 53% of 300 189 150% depreciation (H1 2010: 47%; 250 13 135 H2 2010: 74%) € millions s 200 179 100% 121 68 Approximately €32 million still to 150 27 256 92 18 spend on major projects 100 194
Slide 16: Debt facilities
Debt facilities H1 H2 H1 € Millions 2010 2010 2011 Net debt (1 632) (1 364) (1 200) Committed facilities 2 948 2 889 1 897 Of which undrawn 1 358 1 481 781 Gearing (Net debt / Trading capital employed) 35% 30% 27% Net debt / 12 month trailing EBITDA (times) 2.2 1.5 1.3 New €750 million 5 year syndic
Slide 17: Dividends
Dividends Interim dividend of 8.25 euro cents p per share declared ((3.5 euro cents for interim 2010)) Record date 19 August 2011 Payment date 13 September 2011 25.0 Dividends paid and proposed 20.0 20.0 Eur cents per share e 15.0 12.7 16.5 10.0 5.0 9.5 8.25 7.7 7.0 5.0 2.5 35 3.5 ‐ 2008 2009 2010 2
Slide 18: Effects of Mpact demerger and related share consolidation
Effects of Mpact demerger and related share consolidation 6 months 12 month trailing1 Excluding Mpact Excluding Mpact Including Mpact and after share Including Mpact and after share consolidation consolidation Underlying operating profit (€ million) 373 354 660 608 2 Underlying net profit (€ million
Slide 19: Agenda
Agenda Highlights Financial overview Operational review Summary Appendices Page 19
Slide 20: Uncoated Fine Paper
Uncoated Fine Paper Underlying operating profit Continued excellent performance m 1 EBIT margin % 16.1% 1 Reflects positive trading environment m 1 Strong operational performance m 12.9% 10 7% 10.7% 1 I Increasedd contribution t ib ti ffrom Syktyvkar S kt k mill ill m 1 modernisation investment foll
Slide 21: Uncoated Fine Paper – Commodity cycle and Mondi returns
Uncoated Fine Paper – Commodity cycle and Mondi returns Mondi’s ROCE (%), Uncoated fine paper price 10 y year price cycle y ((in EUR)) (EUR/tonne) 1100 A4 B-copy 1050 1000 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 950 % ROCE 2011 2010 2010 2009 2009 2008 2008 2007 2007 2006 2006 900 900 25.0% €/tonne 850 880
Slide 22: Corrugated
Corrugated Underlying operating profit Significant improvement in product prices and m 14.9% EBIT margin % volumes m Partly offset by input cost pressures – recovered 11 4% 11.4% m paper, wood and chemicals m 7.9% €105m m €71m B Benefiting fiti ffrom recentt major j investments i t t m €48m New Świe
Slide 23: Corrugated – market fundamentals
Corrugated – market fundamentals 1.5 1.4 Demand opening levels 1.3 Structural demand growth2 1.2 Western Europe - 1% p.a. 11 1.1 Eastern Europe - 4% p.a. exed vs 2006 o 1 Average in Europe is around 2% p.a. 0.9 1 0.8 Kraftliner - indexed Price inde 0.7 White-top Kraftliner - indexed 1 Supply 1 0.6 R
Slide 24: Corrugated – Commodity cycle and Mondi returns
Corrugated – Commodity cycle and Mondi returns Mondi’s ROCE (%), kraftliner price and RB fluting – 10 y year price cycle y ((in EUR)) OCC price differential (EUR/tonne) 700 Kraftliner RB Fluting-OCC H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 600 differential % ROCE 2011 2010 2010 2009 2009 2008 2008 2007 2007
Slide 25: Bags and Coatings
Bags and Coatings Underlying operating profit Kraft Paper selling price increases achieved on good m 1 EBIT margin % demand growth, particularly in export markets, and m 9.7% 1 m reduced industry capacity 8 m 6.7% Partiallyy offset byy continued rise in input p costs,, 5.2% €128m 6 mainly wood and c
Slide 26: Bags & Coatings – Commodity cycle and Mondi returns
Bags & Coatings – Commodity cycle and Mondi returns Mondi’s ROCE (%), sack kraft and indexed bags 10 y year price cycle y ((in EUR)) price (EUR/tonne) Unbleached sack Kraft (€/tonne) 900.0 21.4% 850.0 20.0% 800 0 800.0 15.3% 15.0% 750.0 10.2% 13.3% 11.9% 10.9% 700.0 2001 2002 2003 2004 2005 2006 200
Slide 27: South Africa Division
South Africa Division Underlying operating profit EBIT margin % 15.2% 15 2% 1 Solid performance impacted by planned Richard’s Richard s 1 Bay maintenance shut 1 10.0% Higher average selling prices for containerboard 1 8 Improved I d efficiencies ffi i i 6.5% €46m 6 Positive impact of closure of 120,
Slide 28: Newsprint
Newsprint Underlying operating profit Aylesford EBIT margin % Significant price increases of 20% have been 1.0 0.4% realised 0.0 €1 €1m Not sufficient to return the business to profitability -1. H1 2010 H2 2010 H1 2011 -2. -2.3% -3. Mondi Shanduka Newsprint (“MSN”) -4. Severely S l iimpacted t dbby
Slide 29: Agenda
Agenda Highlights Financial overview Operational review Summary Appendices Page 29
Slide 30: Summary
Summary Very strong performance – delivering ROCE above 15% Strong operational performance supported by investment through the cycle Refinancing f off existing €1.55 €1 billion revolving ffacility with a €750 € 0 million 5 year syndicated revolving credit facility S Successful f l demerger d off Mpa
Slide 31: Agenda
Agenda Highlights Financial overview Operational review Summary Appendices Page 31
Slide 32: Key pillars to our strategy
Key pillars to our strategy Leading market Build on leading positions in packaging and Uncoated Fine Paper positions (UFP), particularly in emerging markets Maintain position as low-cost producer in our markets: High quality, low Selectively investing in production capacity in lower-cost regions c
Slide 33: Mondi at a glance
Mondi at a glance UFP Corrugated Bags & Coatings South Africa Newsprint €0.7B €0.7B €1.3B €0.3B €0.1B 2% 9% 2011 H1 24% Sales 1 23% 42% 2011 EBIT % 16.1% 14.9% 9.7% 10.0% (6.6)% Products Europe South Africa Europe/SA No. 1 in Office No. 2 Virgin No. 1 in Kraft Paper in No. 1 in Office Paper
Slide 34: Focus on Packaging and UFP in emerging markets
Focus on Packaging and UFP in emerging markets1 Revenue by destination Revenue by origin Net operating assets 30% 45% 52% 48% 55% 70% Emerging markets Emerging markets Emerging markets Mature markets Mature markets Mature markets Virgin-based production Revenue by product 13% Corrugated products 17%
Slide 35: Emerging market asset base leads to low cost positions
Emerging market asset base leads to low cost positions across the group’s main grades… Leading market 1 Percentage of Mondi's capacity in overall cost curve at June 2011 positions st nd rd th Grade 1 Quartile 2 Quartile 3 Quartile 4 Quartile + High quality, low Unbleached Sack Paper 36% - 33% 31% co
Slide 36: Integrated value chain (first half 2011)
Integrated value chain (first half 2011) Leading market Pulp Virgin Containerboard positions 2.5 0.7 0.6 2.0 + 1.5 0.3 0.1 0.5 0.1 01 0.1 0.1 Millions Millions 0.4 High quality, low of tonnes 1.0 1.5 1.7 of tonnes 0.3 0.5 cost asset base 0.5 0.2 0.4 0.2 0 2 01 0.1 0.0 (0.2) 0 Production Consumption
Slide 37: Abridged income statement
Abridged income statement 1 H1 H2 H1 % Change g % Change g € Milli Millions 2010 2010 2011 (vs H1 2010) (vs H2 2010) +7% +3% Group Revenue 2 752 2 858 2 942 -3% -0% Materials, energy and consumables used (1 480) (1 526) (1 528) -2% -6% Variable selling expenses (252) (242) (257) +13% +6% Gross margi
Slide 38: Illustrative finance effects of Mpact demerger
Illustrative finance effects of Mpact demerger As reported Adjusted earnings Six Six Year Six Six Year ended € million months months ended 31 months months 31 ended ended 30 December ended ended 30 December June 2010 June 2010 30 June 30 June 2010 2010 2011 2011 Continuing operations Underlying oper
Slide 39: Illustrative finance effects of Mpact demerger
Illustrative finance effects of Mpact demerger Six months ended 30 June 2011 Before recapitalisation, After recapitalisation, demerger and share demerger and share € million consolidation Movement consolidation Revenue 3 239 297 2 942 EBITDA 562 36 526 Underlying operating profit 373 19 354 Net fina
Slide 40: Exchange rates
Exchange rates H1 H2 H1 2010 2010 2011 Closing rates against the euro South African rand 9.38 8.86 9.86 Pounds sterling 0.82 0.86 0.90 Polish zloty 4.15 3.97 3.99 Russian rouble 38.28 40.82 40.40 US dollar 1.23 1.34 1.45 Czech koruna 25.69 25.06 24.34 Average rates for the period against the euro So
Slide 41: Production volumes
Production volumes H1 H2 H1 € Millions 2010 2010 2011 Europe & International Uncoated fine ppaper p Tonnes 790 748 733 477 712 886 Containerboard Tonnes 1 008 305 931 630 991 970 Kraft paper Tonnes 466 156 518 451 535 238 Corrugated board and boxes m m² 713 595 609 Industrial bags m units 1 858 1 99
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