Slide 1: UBS Basic Materials Conference
UBS Basic Materials Conference Andrew King 12 June 2008
Slide 2: Contents
Contents 1. Mondi overview 2. Mondi’s key value drivers 3. What is next? How do we continue to create value for our shareholders? 4. Interim Management Statement 5. Summary PAGE 2
Slide 3: Mondi overview
Mondi overview
Slide 4: Mondi at a glance
Mondi at a glance Bags & Newsprint and Corrugated Specialities UCF South Africa MPSA merchant €1.6B €2.0B €1.7B €0.6B €0.4B €0.6B Sales 2007 (1) EBIT % 8.2% 7.7% 5.9% 13.2% 8.4% 6.8% Products Europe South Africa Europe/SA Positions z No. 2 Kraftliner(2) z No. 1 Kraft Paper(2) z No. 1 Office z No. 1
Slide 5: Mondi's financial highlights
Mondi’s financial highlights In € millions, except for per share measures and ROCE 31.12.07 31.12.06 %Change Group revenue 6,269 5,751 +9 EBITDA 1 870 726 + 20 Underlying operating profit 2 502 377 + 33 Underlying profit before tax 3 405 305 + 33 Reported profit before tax 382 223 + 71 Underlying ea
Slide 6: Mondi's core product and geographical mix
Mondi’s core product and geographical mix Product mix1 Geographical mix2 Mature markets Packaging 40% 46% 54% 60% Graphic paper Emerging markets (1) Based on segment revenues, including inter-segment revenues. (2) Revenue by origin PAGE 6
Slide 7: Mondi's key value drivers
Mondi’s key value drivers
Slide 8: 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 9: Mondi has access to low cost wood resources
Mondi has access to low cost wood resources… Average hardwood and soft wood costs (€/m3, Q2 2007)1 47 42 39 37 33 30 30 25 25 26 South Brazil Russia Chile Australia Poland Portugal Sweden Finland France Africa Forests in Russia and South Africa make Mondi fully self-sufficient in two of the world’s
Slide 10: And a high quality low cost asset base
And a high quality low cost asset base White -top Kraftliner Unbleached Kraftliner €/t €/t 100% of Mondi 100% of Mondi Unbleached White-top Kraftliner Kraftliner capacity capacity 0 0 0 0 3,000 Cumulative capacity (Kt/a) 1,400 Cumulative capacity (Kt/a) Universal Office Paper €/t 100% of Mondi Unive
Slide 11: 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 converting 1995 2000 2006 2007 packaging Source: Mondi
Slide 12: Through rigorous asset management and supply side discipline
Through rigorous asset management and supply side discipline No. closures/divestitures Reduced testliner capacity by 11% in 2004 (~ 110Kt) Closed 11% of corrugated packaging capacity (~280M m2) since 2004 Closed paper machine South Africa 10 (~110Kt) Closed 35 converting plants and two testliner mil
Slide 13: As well as cost saving initiatives
As well as cost saving initiatives 2007 Cost structure (%) Cost savings Depreciation and amortisation 3.9% 3.6% 3.1% Other net operating expenses Wood, pulp and fibre 6.4% 6.6% EUR millions 179 180 167 34.1% Other variable costs 15.9% 5.0% Maintenance 6.6% Energy 15.7% 9.7% Variable selling expenses
Slide 14: Emerging markets are a Group focus
Emerging markets are a Group focus Revenues1 Net operating assets 35% 65% 46% 54% Virgin based production 18% Mature markets Emerging markets 82% (1) Revenues by origin PAGE 14
Slide 15: What is next? How do we continue to create value for our shareholders?
What is next? How do we continue to create value for our shareholders?
Slide 16: Emerging markets enjoy cost advantages
Emerging markets enjoy cost advantages Emerging market cost position (Q3/2007 EUR/t) BSKP BHKP Capacity distribution Capacity distribution EM 18% RoW 36% 18% 64% 82% EM RoW Avg. cost per ton Avg. cost per ton -32% -37% 354 315 333 241 242 198 Emerging RoW Average Emerging RoW Average markets markets
Slide 17: And have higher growth prospects
And have higher growth prospects UCWF 2006 - 2011 demand growth (in %)1 Corrugated 2005 - 2010 demand growth (in %)2 9.8% 8.2% 6.6% 1.8% 1.3% WE EE CIS WE EE (1) Sources: EMGE Woodfree Forecast Report; October 2007 for Eastern and Western Europe. World Paper markets 2020, Pöyry 2005 Edition for CIS.
Slide 18: Fibre rich, Low cost, High growth
Mondi geography priorities are: Fibre rich Low cost High growth regions PAGE 18
Slide 19: However, mature markets are still very important
However, mature markets are still very important Corrugated 1.4% 5.8% 23,967 8,329 20,472 +3,495 +3,853 4,476 2004 2015 2004 2015 Western Europe Eastern Europe + CIS Scale Technology and know-how leadership Consolidation opportunities Source: Pöyry PAGE 19
Slide 20: Mondi has major growth projects in emerging markets
Mondi has major growth projects in emerging markets Syktyvkar, Russia Swiecie, Poland • €525m investment • €350m lightweight • Modernisation and expansion • Brownfield site • Reduced costs, increased energy • 470,000t lightweight recycled output, increased pulp and paper containerboard machine and p
Slide 21: Interim Management Statement
Interim Management Statement
Slide 22: Interim Management Statement – May 2008
Interim Management Statement – 7 May 20081 “Whilst there is some uncertainty over pricing and demand developments, Mondi’s product mix, emerging market focus, continued push to drive down costs and willingness to respond quickly to changing market conditions, gives us confidence that we will make fu
Slide 23: Summary
Summary
Slide 24: Summary: Mondi's strategy
Summary 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 cost asse