Sonae Indústria S.G.P.S — Sonae Indústria — Investor Presentation (July 2015)
43 slides from Sonae Indústria S.G.P.S's investor presentation, July 2015
Slide 1: Investor Presentation July 2015
SONAE INDÚSTRIA Investor Presentation July 2015 1
Slide 2: Contents
SONAE INDÚSTRIA Contents 1. Overview 2. Performance 3. Capital Increase 4. Strategy execution 5. Conclusion Appendices 2
Slide 3: Overview
SONAE INDUSTRIA Overview Dasa 3
Slide 4: Highlights: We are delivering...
SONAE INDÚSTRIA OVERVIEW Highlights Significantly improved capital structure (capital increase + refinancing) Completed the planned re-dimensioning of industrial footprint Delivered 5 consecutive quarters of improved LTM Recurrent EBITDA Completion of strategic investments in the amount of 2
Slide 5: With a diversified industrial footprint
SONAE INDÚSTRIA OVERVIEW (as of July 2015) … with a diversified industrial footprint Sonae Indústria Installed Production Capacity: 5.085 million m3 # 18 sites (of which 11 are board plants) 5
Slide 6: A top player in each of our markets
SONAE INDÚSTRIA OVERVIEW (as of July 2015) … a top player in each of our markets • Estimated wood based panels production capacity per region ‘000 m3 ‘000 m3 0 500 1,000 1,500 2,000 2,500 3,000 3,500 Iberian Peninsula North America Arauco & Flakeboard (2) Roseburg (2) SI capacity per product Georgia
Slide 7: And one of the top 10 world players
SONAE INDÚSTRIA OVERVIEW (as of July 2015) … and one of the top 10 world players TOP 15 world wood based panels players, in terms of production capacity ‘000 m3 • After capacity closures and asset sales of circa 4 million m3,since 2008, Sonae Indústria is still a top 10 player globally SOURCES: (1)
Slide 8: With world class assets
SONAE INDÚSTRIA OVERVIEW … with world class assets Nettgau Oliv. do Hospital Linares In Germany In Portugal In Spain PB: 650 k m3 PB: 450 k m3 PB: 430 k m3 OSB: 460 k m3 MFC: 20.1 M m2 MFC: 11.1 M m2 MFC: 17.5 M m2 Paper Impregnation Paper Impregnation Year: 2001 Year: 2000* Year: 2001 Lac-Megantic
Slide 9: And a full range of wood based products
SONAE INDÚSTRIA OVERVIEW … and a full range of wood based products PARTICLEBOARD (PB) Strong range of high value added products • Very versatile • Mainly melamine products, veneer faced, laminates • Suitable for all general uses in furniture and and flooring for decorative solutions construction MED
Slide 10: Generating a diversified revenue mix
SONAE INDÚSTRIA OVERVIEW … generating a diversified revenue mix (2014 sales) • Diversified market base and value added product portfolio • Higher value added products represent circa 50% of sales • Circa 70% of sales generated in Europe Turnover by market Sales by product Other European countries Ot
Slide 11: Performance
Performance Performance ® a Dasa
Slide 12: Sustaining turnover through a challenging phase of the market cycle
SONAE INDÚSTRIA PERFORMANCE Sustaining turnover through a challenging phase of the market cycle Turnover and Recurrent EBITDA margin GDP(1) (constant prices, annual percent change) 2,500 16.0% 14.6% 14.0% 2,000 12.0% 10.0% 1,500 9.4% 7.9% 7.5% 8.0% 1,000 6.5% 6.0% 5.7% 5.5% 4.0% 500 3.6% 2.0% 0 0.0%
Slide 13: Improved outlook for the construction and furniture sectors
SONAE INDÚSTRIA PERFORMANCE Improved outlook for the construction and furniture sectors 105.0 Western Europe (EC-15) • Decline in construction output Construction (1) 100.0 95.0 reached a trough last year 90.0 • Sector expected to grow by 85.0 1.8% per annum in 2014-2016 80.0 2009 2010 2011 2012 201
Slide 14: Beginning to translate into improved operational performance (LTM Recurrent EBITDA)
SONAE INDÚSTRIA PERFORMANCE ... beginning to translate into improved operational performance (LTM Recurrent EBITDA) • Positive EBITDA despite overcapacity, the economic crisis and pressure on wood prices and other variable costs • Operational leverage makes the business well positioned to benefit fr
Slide 15: Positive recurrent EBITDA margin trends post inflection point
SONAE INDÚSTRIA PERFORMANCE … and positive recurrent EBITDA margin trends post inflection point Recurrent EBITDA margin % Turnover • Recurrent EBITDA margin of 10.2% (1H15) 2013 R & 2014 R: Considering France operations, Betanzos and Pontecaldelas plants as “discontinued operations”. 15
Slide 16: Driven by improved results in all regions
SONAE INDÚSTRIA PERFORMANCE … driven by improved results in all regions, mainly Southern Europe and North America operations 45 LTM 40 Recurrent EBITDA 35 per 30 region (million euros) 25 20 15 10 FY13 1Q14 1H14 9M14 FY14 1Q15 1H15 Northern Europe Southern Europe Rest of the World Southern Europe: V
Slide 17: With better average capacity utilization index
SONAE INDÚSTRIA PERFORMANCE … with better average capacity utilization index % Average Capacity Utilization Index 17
Slide 18: Reduced fixed costs from streamlined support costs
SONAE INDÚSTRIA PERFORMANCE … and reduced fixed costs impacted by on-going streamline of support costs % Fixed Costs in % of turnover 22.0% 21.0% 20.0% 19.0% 18.0% 18.5% 17.0% 16.0% 15.0% 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 Total Fixed Costs (continued operations) Recurrent Fixed Costs (continued ope
Slide 19: Net debt reduction with lower cost of debt
SONAE INDÚSTRIA PERFORMANCE Net debt reduction with lower cost of debt Million euros -90M€ 750 9.0 x Net Debt 675 701 696 689 700 8.5 x and 650 8.4 x 606 8.0 x 597 Leverage 600 7.9 x 564 606 7.8 x 7.5 x 550 7.4 x 7.0 x 500 6.5 x 450 6.0 x 400 5.9x 5.9 x 5.9 x 5.9 x 5.5 x 350 300 5.0 x FY13 1Q14 1H14
Slide 20: Capital increase
SONAE INDÚSTRIA Capital increase 20
Slide 21: Significant capital increase despite challenging Portuguese capital markets backdrop
SONAE INDÚSTRIA CAPITAL INCREASE Significant capital increase despite challenging Portuguese capital markets backdrop • Gross proceeds of c. 112 M€ to Sonae Indústria • 11,210,757,417 shares subscribed (74.7% of total) • Share Capital • Controlling shareholder (Efanor) stake increased increase in an
Slide 22: Allowing for a much improved debt profile
SONAE INDÚSTRIA CAPITAL INCREASE Allowing for a much improved debt profile… 319 M€ of debt refinanced with two main banks, providing significant improvements in terms of maturity profile: Extended maturities: 6 to 8 years Min. grace period: 3 years for principal repayments Securitisation facilit
Slide 23: With a minimum 3 year grace period
SONAE INDÚSTRIA CAPITAL INCREASE … with a minimum 3 year grace period 180 160 Scheduled 160 140 loan 120 119 repayments* 100 Million € 80 61 55 60 50 45 40 20 9 11 12 2H16 1H17 2H17 1H18 2H18 2019 ≥ 2020 0 2H15 1H16 2H16 1H17 2H17 1H18 2H18 2019 ≥ 2020 31 December 2014 30 June 2015 Debt structure 26
Slide 24: And with much lower FCF breakeven level
SONAE INDÚSTRIA CAPITAL INCREASE … and with much lower FCF “breakeven” level Net Debt reduction Lower cost of debt Lower interest costs going forward Completion during 2014 of strategic investments in efficiency Capex 2015 < 2014 Non-recurrent, Majority of the industrial footprint optimisation n
Slide 25: Strategy execution
SONAE INDÚSTRIA Strategy execution 25
Slide 26: Strategy execution status
SONAE INDÚSTRIA STRATEGY EXECUTION Industrial footprint optimization • Fix, sell or close underperforming assets Operating • Improved capacity utilization index levels and improvements specific consumptions Improve product • Increase share of value added products, mix namely melamine • Strong reduct
Slide 27: Strategic Investment: Recycling
SONAE INDÚSTRIA STRATEGY EXECUTION | INVESTMENTS Strategic Investment: Recycling Nettgau • 12M€ investment in recycling facilities 27
Slide 28: Strategic Investment: Melamine
SONAE INDÚSTRIA STRATEGY EXECUTION | INVESTMENTS Strategic Investment: Melamine Nettgau • 11M€ investment in melamine Oliveira do Hospital surfacing facilities • New EiR® Example of a EiR product technology in OH 28
Slide 29: Restructuring
SONAE INDÚSTRIA STRATEGY EXECUTION | RESTRUCTURING 2014 • Sale of Auxerre and Le Creusot plants • Closure of Pontecaldelas 1H 2015 • Sale of Ussel plant and Betanzos business July 2015 • Sale of Darbo (Linxe plant) 29
Slide 30: Conclusion
SONAE INDÚSTRIA Conclusion 30
Slide 31: Conclusion
SONAE INDÚSTRIA CONCLUSION Conclusion Significantly improved capital structure Inflection point: cycle turning with high operational leverage Strong market player: geographical and product diversification with world class assets in our major markets Execution delivery: strategic plan with re
Slide 32: Appendices
SONAE INDÚSTRIA Appendices 32
Slide 33: Competitive Landscape: Iberian Peninsula
GEOGRAPHIC REVIEW OF OPERATIONS| SONAE INDÚSTRIA SOUTHERN EUROPE >> IBERIAN PENINSULA Competitive Landscape Plants 9 Capacity 1.38 Million m3 Sonae Indústria Capacity in Iberian Peninsula thousands m3 Installed Raw Board capacity in Iberian Peninsula | Top Players million m3 33
Slide 34: Competitive Landscape: Germany
GEOGRAPHIC REVIEW OF OPERATIONS| SONAE INDÚSTRIA NORTHERN EUROPE >> GERMANY Competitive Landscape Plants 6 Capacity 2.29 Million m3 Sonae Indústria Capacity in Germany thousands m3 Installed Raw Board capacity in Germany | Top Players million m3 34
Slide 35: Competitive Landscape: Canada
GEOGRAPHIC REVIEW OF OPERATIONS| SONAE INDÚSTRIA REST OF THE WORLD >> CANADA Competitive Landscape Plants 1 Capacity 0.9 Million m3 Sonae Indústria Capacity in Canada thousands m3 Installed Raw Board capacity in North America (PB + MDF) | Top million m3 Players 35
Slide 36: Competitive Landscape: South Africa
GEOGRAPHIC REVIEW OF OPERATIONS| SONAE INDÚSTRIA REST OF THE WORLD >> SOUTH AFRICA Competitive Landscape Plants 2 Capacity 0.52 Million m3 Sonae Indústria Capacity in South Africa thousands m3 Installed Raw Board capacity in South Africa | Top Players million m3 36
Slide 37: Sustainable use of wood and recycling
INVESTOR PRESENTATION | SONAE INDÚSTRIA MORE ON SONAE INDÚSTRIA Sustainable use of wood and recycling • Wood-based panels incorporate a high percentage of sawmill co-products and wood residues as raw materials*: – forestry residues, pallets, old or used wood based panels and old or used furniture •
Slide 38: CO2 emission mitigation
INVESTOR PRESENTATION | SONAE INDÚSTRIA MORE ON SONAE INDÚSTRIA CO2 emission mitigation • Wood-based panels help to mitigate climate change*: – Forests are a recognised carbon sink (through photosynthesis); – Forestry products are Carbon Stores; – wood-based panels are actually long-term carbon stor
Slide 39: History
SONAE INDÚSTRIA APPENDIX History • Founded in 1959, we have undergone, until 2007, an expansion process through a combination of organic growth and acquisitions • Over the last years we have been through a restructuring process, adapting to the low levels of demand since the 2008-2009 economic and f
Slide 40: Board of Directors
SONAE INDÚSTRIA APPENDIX Board of Directors • Experienced and committed management team Paulo Azevedo (Chairman) Carlos Moreira da Silva (Vice-Chairman) 5 Non Albrecht Ehlers Executive Javier Vega José Romão de Sousa Rui Correia (CEO) 3 Executive Chris Lawrie (CFO) Jan Bergmann (CITO) 40
Slide 41: Shareholding structure
SONAE INDÚSTRIA APPENDIX Shareholding structure • A stable shareholder structure, with a reference shareholder: Efanor, a Portuguese family holding company with other interests in food and non-food retail, shopping centres, telecoms, among other sectors Share capital FREE FLOAT OF Others ~812 millio
Slide 42: Glossary
SONAE INDÚSTRIA APPENDIX Glossary Capacity Utilization Index Finished-Available Production (m3) / Installed production capacity (m3); raw boards only CAPEX Investment in Tangible Fixed Assets Earnings Before Interests and Taxes + Depreciations and Amortizations + (Provisions and impairment losses -
Slide 43: Safe Harbour
SONAE INDÚSTRIA SAFE HARBOUR This document may contain forward-looking information and statements, based on management’s current expectations or beliefs. Forward-looking statements are statements that are not historical facts. These forward-looking statement are subject to a number of factors and un