Mondi Plc · LSE:MNDI
Mondi — FY2020 Earnings Presentation
55 slides from Mondi's earnings presentation, Feb 25, 2021
Slide 1: Strong delivery, sustainable growth
Strong delivery, sustainable growth Full year results for the year ended 31 December 2020 25 February 2021
Slide 2: 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 3: Agenda
Introduction and 2020 highlights Financial review Operational review Delivering on our strategy Summary and Q&A Appendices 3
Slide 4: Introduction and 2020 highlights
INTRODUCTION AND 2020 WiGHLicHTS
Slide 5: Strong delivery, sustainable growth
Strong delivery, sustainable growth • Enabling delivery of essentials • Leveraging key long-term • Leader in sustainability – • Excellent cash generation trends – leading innovation purpose, strategy, culture • Strong operational • Investing through-the-cycle • Prioritising safety and health perform
Slide 6: Delivering in an unprecedented year
Delivering in an unprecedented year Underlying EBITDA and margin € million and % 23.6% ● Robust financial performance with excellent cash 22.8% 20.5% 20.9% 24.0% generation 20.3% 22.0% 20.0% 18.0% 16.0% ● Decisive and effective COVID-19 response 14.0% 1,366 1,482 1,764 1,658 1,353 12.0% 2016 2017 20
Slide 7: Financial review
7
Slide 8: Robust financial performance
Robust financial performance € million 2020 2019 % change Group revenue 6,663 7,268 (8%) Underlying EBITDA 1,353 1,658 (18%) % margin 20.3% 22.8% Underlying operating profit 925 1,223 (24%) % margin 13.9% 16.8% Group ROCE 15.2% 19.8% …testament to our strong business model 8
Slide 9: Volume growth and strong cost control mitigating pricing pressure
Volume growth and strong cost control mitigating pricing pressure Underlying EBITDA development € million 61 (515) 1,658 253 (37) (44) (23) 1,353 2019 Sales Sales Variable Currency Forestry Other 2020 volumes prices and cash effects fair value fixed costs gain 9
Slide 10: Excellent cash generation
Excellent cash generation Movement in net debt € million (1,353) 237 (55) 250 630 2,207 (125) 1,791 Net debt at Underlying Working Capital Tax and Dividends paid Other Net debt at 31 December EBITDA capital expenditure interest paid 31 December 2019 2020 …supporting through-the-cycle investment and
Slide 11: Strong financial position providing strategic flexibility
Strong financial position providing strategic flexibility Net debt € million (net debt) and ratio (net debt to underlying EBITDA) ● 1.3x net debt to underlying EBITDA 1.3x 1.3x 1.3x ● Investment grade credit ratings reconfirmed (BBB+ / Baa1) 1.0x 1.0x ● Group’s maturity profile extended ● Strong liq
Slide 12: Our cash flow priorities remain unchanged
Our cash flow priorities remain unchanged Maintain our strong and stable financial position and investment grade credit metrics Grow through selective capital investment opportunities Free cash flow priorities Support payment of dividends to our shareholders Evaluate growth opportunities through M&A
Slide 13: Technical guidance
Technical guidance 2021 Guidance Incremental underlying EBITDA contribution from major capital investments ~ €50 million Capital expenditure €600 – 700 million Depreciation and amortisation €400 – 450 million Estimated impact of planned mill maintenance shuts ~ €140 million Working capital as a % of
Slide 14: Operational review
Slide 15: Industry leading margins and returns – Corrugated Packaging
Industry leading margins and returns Corrugated Packaging Underlying EBITDA and margin € million and % ● Sales volumes up strongly 33.4% o Containerboard supported by broad product portfolio and global distribution network 28.9% 26.5% 27.6% o Corrugated Solutions benefiting from 26.0% ongoing invest
Slide 16: Leading in strongly growing markets – Corrugated Packaging
Leading in strongly growing markets Corrugated Packaging Mondi sales volume growth Indexed to 2019 ● Structurally growing market supported by Containerboard Corrugated solutions e-commerce and sustainability +3% +7% ● Leading market positions o European leader in virgin containerboard o Leading corr
Slide 17: Resilient demand, strong delivery – Flexible Packaging
Resilient demand, strong delivery Flexible Packaging Underlying EBITDA and margin € million and % ● Resilient demand with strong end to year 20.1% 19.5% o Kraft paper sales volumes up with improved mix 17.0% o Higher paper bag volumes 16.8% 15.2% ● Lower pricing across the paper value chain in 2020
Slide 18: Unique platform delivering strong growth – Flexible Packaging
Unique platform delivering strong growth Flexible Packaging Mondi sales volume growth Indexed to 2019 ● Growth underpinned by demand for more sustainable Kraft paper Paper bags packaging +6% +5% o Consumer, retail, e-commerce and other markets o Leveraging unique portfolio – paper where possible, pl
Slide 19: Proactively realigning product portfolio – Engineered Materials
Proactively realigning product portfolio Engineered Materials Underlying EBITDA and margin € million and % ● Good demand in consumer end-uses ● Industrial and specialised end-use demand negatively impacted by pandemic 13.2% 12.5% 12.4% 11.4% ● Lower personal care components volumes – key 10.0% produ
Slide 20: Strategically advantaged in a challenging market – Uncoated Fine Paper
Strategically advantaged in a challenging market Uncoated Fine Paper Underlying EBITDA and margin € million and % 28.0% 27.5% ● Lower uncoated fine paper volumes as lockdown 25.3% 25.3% measures heavily impacted demand 17.9% o Improvement in order books in H2 ● Strong market share gains across key m
Slide 21: Delivering on our strategy
DELIVERING ON QUE STRATEGY
Slide 22: Delivering on our strategy
Delivering on our strategy Driving value accretive growth ● Delivering on our 2020 sustainability targets ● Setting our commitments to 2030 Sustainability Leveraging key E-commerce long-term trends Enhancing customer brand value Investing through-the-cycle organic cost environmental growth advantage
Slide 23: Delivering on our 2020 sustainability commitments
Delivering on our 2020 sustainability commitments Some key examples: TRCR (per 200,000 hours worked) tonne per tonne of saleable production kg per tonne of saleable production reduction vs 2015 reduction vs 2014 reduction vs 2015 reduction vs 2005 reduction vs 2004 reduction vs 2005 2004/2005 were t
Slide 24: Sustainability targets to 2030
Sustainability targets to 2030 24
Slide 25: Mondi recognised as a leader in sustainability
Mondi recognised as a leader in sustainability A few external benchmark examples: One of only 10 Top quartile Top 1% companies globally with a in the Paper & Forest in our sector for 5 CDP Triple A rating Products industry consecutive years Making a real contribution to the UN SDGs 25
Slide 26: Unique platform to deliver sustainable packaging solutions
Unique platform to deliver sustainable packaging solutions Mondi’s customer-centric approach to sustainable packaging 26
Slide 27: Replacing plastic with paper e-commerce and shopping bags
Replacing plastic with paper e-commerce and shopping bags Machine conversion at Štětí ● Strong customer demand for paper-based solutions supported by legislation to eliminate plastic waste ● Sole European supplier offering full portfolio of paper for shopping bags ● Up to 130ktpa1 integrated capacit
Slide 28: AegisPaper – unique offering unlocking opportunities
AegisPaper – unique offering unlocking opportunities Recyclable functional barrier paper solutions Barrier coating Paper Base papers Barrier coatings Printing and converting (speciality kraft paper) (functional paper and films1) (paper bags and consumer flexibles) Leveraging paper, coating and conve
Slide 29: Innovation supporting customers’ sustainability goals
Innovation supporting customers’ sustainability goals PerFORMing – alternative to plastic trays Growing our customer reach 14 customers at start of 2021 with an additional 18 trials ongoing Launched removable film solution and extended offering to cold meats - 12 customers 1st customer supplied for
Slide 30: Offering full range of sustainable e-commerce solutions
Offering full range of sustainable e-commerce solutions European market e-commerce packaging growth € billion Corrugated and flexible paper-based solutions +8% CAGR 10 +20% 9 in 2020 8 7 6 5 4 3 2 1 0 2019 2020 2023E Source: Statista 30
Slide 31: Enhancing customer brand value and shelf-appeal
Enhancing customer brand value and shelf-appeal Ružomberok kraft top white machine White virgin top layer ● Excellent printability ● Fantastic strength Brown recycled layer ● Cost advantages Project details Excellent for shelf-ready packaging, ● 300,000 tonne integrated kraft top white machine POS d
Slide 32: Investing for growth through-the-cycle
Investing for growth through-the-cycle ● €1.4 billion spent on commissioned major projects since 2014 o >20% average return1 Strong o >600ktpa of cost-advantaged capacity added track ● Key benefits: record o Enhanced customer offering o Better cost / operational efficiency o Improved environmental f
Slide 33: Slide 33
Slide 34: Strong delivery, sustainable growth
Strong delivery, sustainable growth • Enabling delivery of essentials • Leveraging key long-term • Leader in sustainability – • Excellent cash generation trends – leading innovation purpose, strategy, culture • Strong operational • Investing through-the-cycle • Prioritising safety and health perform
Slide 35: Appendices
Slide 36: Mondi at a glance (2020)
Mondi at a glance (2020) Corrugated Packaging Flexible Packaging Engineered Materials Uncoated Fine Paper Segment €1,879m €2,667m €801m €1,485m revenue1 (27%) (39%) (12%) (22%) Underlying €518 million €519 million €80 million €266 million EBITDA ROCE 22.5% 14.5% 7.5% 11.3% Products End uses Consumer
Slide 37: Leading market positions
Leading market positions virgin containerboard kraft paper producer commercial release liner uncoated fine paper supplier producer in Europe globally producer in Europe in Europe (including Russia) containerboard producer paper bag producer in extrusion coatings uncoated fine paper in emerging Europ
Slide 38: Our growth focus – packaging
Our growth focus – packaging 38
Slide 39: Our strategic framework
Our strategic framework continues to be at the centre of our strategy 39
Slide 40: Keeping our people safe
Keeping our people safe 1 million masks supplied to employees worldwide 23% reduction in total recordable case rate since 2015 24-hour safety mindset focused on the social psychology of safety at work and at home 21,000 employees in 14 countries can now use the Employee Assistance Programme for coun
Slide 41: Mondi Action Plan 2030 commitments
Mondi Action Plan 2030 commitments 41 For more details please visit: www.mondigroup.com/MAP2030
Slide 42: A unique platform to deliver
A unique platform to deliver High Renewable Low High Recyclable Low Low Barrier functionality High Moisture Grease Mineral Oil Gas Added Barrier Aluminium Paper barriers Material films foil 42
Slide 43: A few examples
– a few examples: A fully corrugated alternative to plastic fruit A 100% renewable, recyclable and highly punnets and plastic foil wrapping protective alternative to plastic mailers that use bubble foil protective padding A 100% recyclable paper rice bag that replaces A fully recyclable, mono-materi
Slide 44: Integrated value chain (2020)
Integrated value chain (2020) Pulp3 0.5 mt Mondi managed forests Internally procured wood1 Pulp Annual allowable cut 4 million m3 4.5 mt Externally procured wood Containerboard3 9 million m3 14 million m3 1.6 mt Corrugated solutions 1.8 bn m2 Paper for Containerboard 2.5 mt Box plants recycling 1.3
Slide 45: Capturing opportunities in fast-growing markets
Capturing opportunities in fast-growing markets Olmuksan acquisition ● Agreed to acquire 90% of shares in Olmuksan o Consideration of €66 million (€88 million implied EV on a 100% basis) ● Exciting opportunity to strengthen our position in the fast-growing Turkish corrugated market o Expanding offer
Slide 46: Packaging businesses delivering strongly
Packaging businesses delivering strongly Business unit underlying EBITDA development 2020 underlying EBITDA by business unit¹ € million % (65) (24) (42) (178) 19% 4 37% 6% 1,658 1,353 38% 2019 Corrugated Flexible Engineered Uncoated Corporate 2020 Corrugated Packaging Flexible Packaging Packaging Pa
Slide 47: Dividends in line with our policy
Dividends in line with our policy Dividends declared and recommended euro cents per share 76 62 60 57 57 ● Given strong financial position and confidence in the future of the business: 3.0 o Recommended final dividend of 41.00 euro cents per share 2.4 2.4 2.5 ● Dividend policy unchanged: 2.2 o Targe
Slide 48: Key paper and pulp European selling prices
Key paper and pulp European selling prices Containerboard and OCC Sack kraft paper Pulp and UFP €/tonne Prices indexed to December 2015 €/tonne 950 1.25 900 900 160 1.20 850 800 1.15 800 120 1.10 700 750 Containerboard 1.05 OCC 700 600 80 1.00 650 500 0.95 40 600 0.90 400 0.85 550 300 0 0.80 500 Dec
Slide 49: Input costs
Input costs Variable costs € million 4,000 3,000 2,000 1,000 0 2016 2017 2018 2019 2020 Pulp Paper Wood Paper for recycling Energy Chemicals Plastics Other variable costs 49
Slide 50: Fixed costs
Fixed costs Fixed costs (excluding special items) € million 2,500 24.5% 23.2% 23.1% 22.1% 22.2% 2,000 1,500 1,000 500 0 2016 2017 2018 2019 2020 Depreciation, amortisation and impairments Other net operating expenses Personnel costs Maintenance and other indirect expenses Fixed costs excluding depre
Slide 51: Special items (2020)
Special items (2020) €57 million net charge (before tax) Flexible Packaging (€8 million) ● Closure of two consumer flexibles plants in the UK (recognised as a special item in the prior year) o €8 million restructuring and closure costs o €1 million reversal of impairment of assets ● Settlement of a
Slide 52: Production volumes
Production volumes 2020 2019 % change Containerboard '000 tonnes 2,525 2,524 – Kraft paper '000 tonnes 1,145 1,162 (1%) Uncoated fine paper '000 tonnes 1,422 1,526 (7%) Newsprint '000 tonnes 169 201 (16%) Pulp '000 tonnes 4,484 4,387 2% Internal consumption '000 tonnes 3,767 3,883 (3%) Market pulp '
Slide 53: Exchange rates
Exchange rates 2020 2019 % change1 Closing rates against the euro South African rand 18.02 15.78 (14%) Czech koruna 26.24 25.41 (3%) Polish zloty 4.56 4.26 (7%) Pound sterling 0.90 0.85 (6%) Russian rouble 91.47 69.96 (31%) Turkish lira 9.11 6.68 (36%) US dollar 1.23 1.12 (10%) Average rates against
Slide 54: Sources and definitions
Sources and definitions Mondi region definitions Europe – Europe including Russia and Turkey Emerging Europe – Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Georgia, Hungary, Latvia, Lithuania, Macedonia, Malta, Moldova, Montenegro
Slide 55: Emondi
Emondi