Sappi Limited · JSE:SAP
Sappi — Investor Day (June 2015)
69 slides from Sappi's investor day presentation, June 2015
Slide 1: SA Investor Day June 2015
SA Investor Day June 2015 1 Roadbook June 2015
Slide 2: Forward-looking statements
Forward-looking statements Certain statements in this release that are neither reported financial results nor other historical information, are forward-looking statements, including but not limited to statements that are predictions of or indicate future earnings, savings, synergies, events, trends,
Slide 3: Agenda
Agenda Overview Strategy South Africa 3 Roadbook June 2015
Slide 4: Agenda
Agenda Overview Strategy South Africa 4 Roadbook June 2015
Slide 5: Sappi Limited: Overview
Sappi Limited: Overview #2 Global Producer of Coated Woodfree Paper - @ 60% of sales Forecast - capacity and demand down 1.5% through 2019* #1 Global Producer of Dissolving Wood Pulp - @ 15% of sales Forecast – demand up 6%, capacity up 3.3% through 2016 ** 5 Roadbook June 2015 *EMGE March 2015 **RI
Slide 6: Sappi at a Glance
Sappi at a Glance Sappi Ltd 2014 sales = $6B with 13,064 employees Sappi Trading Sappi EU Sappi NA Sappi SA 51% 2014 sales 25% 2014 sales 23% 2014 Sales Paper and Paper Graphic Paper Graphic Paper Packaging Specialised Specialised Speciality Paper Cellulose Cellulose Release Paper Forests 6 Roadbook
Slide 7: Sales Analysis
Sales Analysis Sales By Source1 (US$) Sales By Destination1 (US$) Europe North America Southern Africa Asia & other Sales By Product1 (US$) 1% 1% Coated Paper 17% Uncoated Paper Speciality Paper 6% Commodity Paper 9% 60% Dissolving Wood Pulp Paper Pulp 6% Other Note 1 – Data reflects results from fi
Slide 8: Agenda
Agenda Overview Strategy South Africa 8 Roadbook June 2015
Slide 9: Strategic Focus
Strategic Focus Achieve cost Rationalise Grow through advantages declining moderate businesses investments • Continuously improving • Continuously balance • Growing paper operational performance graphic paper supply packaging grades • Optimising energy and demand in all • Growing specialised usage i
Slide 10: Agenda
Agenda Overview Strategy South Africa 10 Roadbook June 2015
Slide 11: South Africa – Sappi's Profit Centre
South Africa – Sappi’s Profit Centre Sales Revenues Operating Profit ex-items 11 Roadbook June 2015
Slide 12: South Africa – Sappi's Profit Centre
South Africa – Sappi’s Profit Centre Regional Margins: EBITDA ex-items to sales 24.8% 9.1% 7.6% 12 Roadbook June 2015
Slide 13: Summary: South Africa
Summary: South Africa • Invested in Specialized Cellulose • Low cost producer • Fast growing market • Excellent customer relationships • Optimising our forestry assets • Improving paper business • Better use of timber • Improving cost position • Product optimisation Packaging • Profitable with gro
Slide 14: Thank You
Thank You 14 Roadbook June 2015
Slide 15: Forests
FORESTS
Slide 16: Our Role: Low Cost, Sustainable Fibre Supply
Our Role Provide a Low Cost, Sustainable or Increasing supply of Fit for Purpose fibre to our mills
Slide 17: National Forestry Land Ownership
National Forestry Land Ownership National Forestry Land Ownership 2014 DAFF & Municipalities, 5% Sappi (owned and Small company, 8% managed), 27% Small private growers, 23% Mondi, 15% Cape Pine (MTO), 4% York, 5% HM Group, 5% Komatiland, 9%
Slide 18: Sappi Forests
Sappi Forests • 390 000 ha own plantations in South Africa • 110 000 ha supply agreements with out-growers • 50% hardwoods, 50% softwoods • FSC certified • Supply 6 million tons pulpwood annually (70% self sufficient) Saiccor Tugela Mill Chemical Cellulose Kraft products Ngodwana mill Kraft products
Slide 19: Forestry value chain
Forestry value chain Seedlings Planting Land Holding R&D 252 000 plantable 40 million seedlings Maintenance 138 000 natural 18 000 ha/annum 390 000 Total Owned Mills 20 million trees/annum Harvesting 11 million km/annum 4.0 million tons/annum Delivery Extraction
Slide 20: Shaw Research Centre
Shaw Research Centre
Slide 21: Sappi Forests Current Research Focus Areas
Sappi Forests Current Research Focus Areas – Generation of improved germplasm Growth, wood properties, pest and disease resistance, tolerate weather extremes. – Multiplication and propagation of the improved germplasm Seed technology, vegetative propagation, tissue culture. – Generation of best
Slide 22: Delivering genetically improved planting stock
Delivering genetically improved planting stock Ngodwana Escarpment Seedling cutting nursery nursery Clan cutting nursery Richmond Seedling nursery Sappi Nurseries
Slide 23: Sappi Forests Sustainable Cut
Sappi Forests Sustainable Cut • Sustainable Cut: The “sustainable cut” is an indication of the amount of wood that grows in one year on land owned and leased by Sappi in South Africa and therefore also the amount of wood that is available to harvest each year without reducing the overall quantity of
Slide 24: Measures of Sustainability
Measures of Sustainability • 4 Measures – Do not fell more than is growing The •amount available Sustainable annual cutfor harvest (area in thetrees currently under future x is a weighbridge function of whatMAI)we do in the present. – Do not fell before MAI has culminated The •amount Minimum availab
Slide 25: 20037 *8/
20037 *8/
Slide 26: Fire Management
Fire Management •Awareness – FPA’s, Communities, schools etc •Fuel loads – Reduction and EML strategies •Detection – Cameras (3 min cycle) and towers •Planning – X-drives, Google Earth, Control Centre •Readiness – People and equipment •Capacity – Aerial, ground attack •Reaction time – Initial attack
Slide 27: Fire fighting resources
Fire fighting resources
Slide 28: Sappi Forests fire history
Sappi Forests fire history Sappi Forest Fire History 10000 900 9000 800 8000 700 7000 600 Number of Fires 6000 Hectares 500 5000 400 4000 300 3000 2000 200 1000 100 0 0 2008 2009 2010 2011 2012 2013 2014 Area Burned 9311 900 1295 450 1032 2708 3567 Plantation Area Lost 8510 283 292 219 274 2099 2571
Slide 29: Management of unplanted areas
Management of unplanted areas (112 500 ha) Sappi Forests has committed itself to: •promoting habitat for indigenous wildlife by providing corridors of natural vegetation •managing natural areas for water, soil conservation and biological diversity. •Restoration of riverine areas and wetlands
Slide 30: Stewardship sites
Stewardship sites Clairmont Mountain Nature Reserve 945ha site on Clairmont Plantation in Bulwer District of KZN • Consolidates Ingelabantwan Forest Reserve and Marwaqa Nature Reserve into large protected area • Conserves high value (irreplaceable) species and habitats • At least 10 red data species
Slide 31: Project Grow – salient facts
Project Grow – salient facts • Tree farming for subsistence farmers • Focused at individual growers • Started in 1983 with 3 growers on 8 hectares • Currently 4 138 growers managing 14 015 • Technical advice and extension services • Sappi sponsored seedlings • Guaranteed market • Annual advances for
Slide 32: Project Grow's impact life-to-date
Project Grow’s impact life-to-date Total : R811 922 150 Total : 2 108 994 tons
Slide 33: Sappi in the Eastern Cape
Sappi in the Eastern Cape • Strategic goal is to support the establishment and management of 30 000 ha of commercial tree plantations by 2020 • Project ownership - community on whose land it is established • Sappi is the “Implementation Partner” - providing technical, managerial and administrative s
Slide 34: Sappi focus areas in E-Cape
EASTERN CAPE EXPANSIO ~~ sisonke ~Umzimkhulu/ a oe bs a ae fr Nyandeni ee 100 Ktomatens N SCALE -1:1 150 000 A |
Slide 35: Land Claims
Land Claims Background • Sappi’s approach: - the validity of the claim is researched, the nature of the right lost and the extent of the area representing the right lost determined; - only the extent representing the right lost should be restituted. • The following settlement models were agreed with
Slide 36: Thank You
Thank You
Slide 37: SA Paper and Paper Packaging
SA Paper and Paper Packaging Investor Presentation June 2015 37
Slide 38: Agenda
Agenda • Actions taken • The Business today • Why have we done this? • Have the actions worked? • Next Steps • Ultraflute Development 38
Slide 39: Actions Taken
Actions Taken Ultrafiute by Sappi
Slide 40: Paper and Paper Packaging – Actions Taken
Paper and Paper Packaging – Actions Taken • Closed Usutu Pulp mill • Closed Adamas Mill • Closed Tugela KCD, PM 1, PM 3 and PM 4 • Closed coater at Stanger • Closed Enstra pulp mill and PM 3 at Enstra • Commissioned Project Go-Cell at Ngodwana
Slide 41: Paper and Paper Packaging – Actions Taken
Paper and Paper Packaging – Actions Taken • Rationalised the paper portfolio and exited non profitable grades • Rationalised the containerboard portfolio and exited grades (WTL, Stackraft, Hi Yield and Superflute) • The Kraft and Fine Paper businesses have been merged to reduce management staff and
Slide 42: Packaging Projects – Carousel Schematic
Packaging Projects – Carousel Schematic 2015 Carousel Export fluting Tugela Tugela Liner Ngodwana (SC flute) (Virgin liner) Recycled Grades Local 100 gsm recycled Enstra (Waste Based) *Filled with office in the short term Typek Office Stanger Coated Grades SFPE (Tissue and Uncoated) (Coated) Equipme
Slide 43: The business today
The business today Ultrafiute by Sappi [Sappi Southern Africa/ Paper & Paper Packaging]
Slide 44: Packaging
Enstra Mill Packaging 70,000 tons recycled containerboard 12,000 tons Kraft papers Ngodwana 230,000 tons Kraft linerboard (Virgin) 210,000 tons UBSW pulp Tugela Cape Kraft 190,000 tons virgin / recycled containerboard 60,000 tons recycled 130,000 tons pulp containerboard Containerboard 550,000 Conta
Slide 45: Paper
Bag Paper Enstra Mill Ngodwana Mil 60,000 tons 110,000 tons newsprint uncoated fine paper, 80,000 tons pulp specialities and securities Stanger Mill 70,000 tons uncoated fine paper, kraft papers, specialities 30,000 tons tissue 50,000 tons Bagasse pulp Total paper and tissue capacity in SA: 270,000
Slide 46: Product Mix 2015
Product Mix 2015 46 Paper and Paper Packaging Presentation April 2012
Slide 47: Mill products
Mill products • Ngodwana Mill – Kraft Liner board used as inner and outer layers in corrugated applications Kraftpride Tobacco Liner – Newsprint Presspride – Pulp for Enstra – Specialised Cellulose • Tugela Mill – Fluting Ultraflute – Linerboard Testliner 47 Paper and Paper Packaging Prese
Slide 48: Mill products
Mill products • Cape Kraft Mill (100% recycled) – Cape Fluting – Cape Liner – Plasterboard – Coated products 48 Paper and Paper Packaging Presentation April 2012
Slide 49: Mill products
Mill products • Stanger Mill – Tissue Wadding – Scholastics – Typek – Kraft Papers - Primepak bleached • Enstra Mill Printers Boards – Tokai, Milano, Custodian Business Forms – Laser Security grades – Sentinel, Uvidul Envelopes – Ecomail, Valet Scholastics – Prefect Wove Stationery – El
Slide 50: Why have we done this?
Why have we done this? 50 [Sappi Southern Africa/ Paper & Paper Packaging]
Slide 51: Paper and paperboard demand
Paper and paperboard demand 5 1 51
Slide 52: Long-term demand growth for containerboards
Long-term demand growth for containerboards 5 2 52
Slide 53: RISI – Global Containerboard Capacities Growth by Fibre
RISI – Global Containerboard Capacities Growth by Fibre 53 Paper and Paper Packaging Presentation April 2012
Slide 54: World Wide Capacity Trends-Risi
World Wide Capacity Trends‐Risi ‘000 tons 5% Growth all in Recycled volume 54
Slide 55: Local corrugated Market
Local corrugated Market 55 Paper and Paper Packaging Presentation April 2012
Slide 56: Have the actions worked?
Have the actions worked? Ultratlute by Sappi [Sappi Southern Africa/ Paper & Paper Packaging]
Slide 57: EBITDA excl. Special Items SA Paper Division
EBITDA excl. Special Items SA Paper Division Ebitda % SA Paper ,12 ,10 ,8 ,6 ,4 ,2 - 2013 2014 2015E 57 [Sappi Southern Africa/ Paper & Paper Packaging ]
Slide 58: Next Steps
Next Steps Ultratflute by Sappi [Sappi Southern Africa/ Paper & Paper Packaging]
Slide 59: Ultraflute development: A success story
Ultraflute development: A success story
Slide 60: Average weight of corrugated board
Average weight of corrugated board 60
Slide 61: Corrugated board and fluting
Corrugated board and fluting Flute direction – width of sheet Top liner – Outside of material Bottom liner – Inside of material Chop – Length of the sheet Recycled fluting Semi-chemical fluting • Produced • Produced using semi- predominantly using chemical fibre (eg OCC as fibre source NSSC) • Used
Slide 62: Drivers of Ultraflute development
Drivers of Ultraflute development Simplify product mix Export Increase market NSSC opps usage Why Ultraflute ? Local Free up comp waste Import Light- threat weighting Collaborative development – Mill, marketing, customer, STC 28
Slide 63: How we stack up against the market leaders
How we stack up against the market leaders 63
Slide 64: Product testing and market acceptance
Product testing and market acceptance CRI Trials 64
Slide 65: Converter trials
Converter trials Reduced basis weights Case 1 Case 2 Grape cartons Open display cartons Reduced fluting from 175 Superflute Reduced fluting from 175 Superflute to 125 Ultraflute (28%) to 165 Ultraflute (5.7%) Other components kept constant Further reduced outer and mid-liner BCT improv
Slide 66: Summary of Ultraflute product benefits
Summary of Ultraflute product benefits Strength Competes with leading fluting grades in the global market Lightweighting Allows customers to lightweight materials providing yield benefits High humidity performance Excellent cold-chain performance Convertibility Reduced propensity for crackin
Slide 67: Conclusion
Conclusion Ultratflute by Sappi [Sappi Southern Africa/ Paper & Paper Packaging]
Slide 68: What makes us a successful business?
What makes us a successful business? • Strategy must be revised regularly • Make the brave decisions to adapt • Listen to customers • Invest in Growing markets • Match machines to markets • Don’t underestimate simplification! • Lowest cost quartile • First to market with product development • Goal a
Slide 69: Onward and Upward! Thank you
Onward and Upward! Thank you 69 | [Sappi Q2 staff results presentation] | [Sappi Limited] |