Sappi Limited · JSE:SAP
Sappi — Q2 2012 Earnings Presentation
32 slides from Sappi's earnings presentation, May 10, 2012
Slide 1: Q2 2012 Results Presentation
Q2 2012 Results Presentation 10 May 2012
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: Summary
Summary | Q2 2012 Results | 10 May 2012
Slide 4: Q2 2012 Summary
4 Q2 2012 Summary • Profit for the period US$58 million (Q2 2011 loss US$74 million) • EPS 11 US cents (Q2 2011 loss per share 14 US cents) • Net cash generated US$91 million (Q2 2011 US$100 million) • Net debt US$2,133 million, down US$42 million from Q2 2012 • Cost savings led to improved performa
Slide 5: Group Financial Summary
5 Group Financial Summary *Refer to the supplementary information in this presentation for a reconciliation of operating profit excluding special items to reported operating profit and page 17 in our Q2 2012 results booklet (available on www.sappi.com) for a definition and list of special items. | Q
Slide 6: Operating Profit excluding special items
6 Operating Profit excluding special items* 2009: $33m 2010: $339m 2011: $404m *Refer to the supplementary information in this presentation for a reconciliation to reported operating profit and page 17 in our Q2 2012 results booklet for a definition of special items. **Q1 2011 included an extra week
Slide 7: EBITDA Trend
7 EBITDA* Trend 2009: $431m 2010: $752m 2011: $821m *EBITDA as shown above excludes special items. Refer to page 17 in our Q2 2012 results announcement booklet for a definition of special items. **Q1 2011 included extra week | Q2 2012 Results | 10 May 2012
Slide 8: Earnings Versus Prior Quarter
8 Earnings Versus Prior Quarter Q1 12 Basic EPS 9 Less: Q1 Fair Value Pricing (1) 2012 Less: (Profit)/Loss on Sale of Assets 7 (1)) Q1 12 Adjusted EPS 7 Q2 12 Basic EPS 11 Q2 Add: Fair Value Pricing 2 2012 Less: (Profit)/Loss on Sale of Assets (1) Q2 12 Adjusted EPS 12 0 5 10 15 20 | Q2 2012 Results
Slide 9: Divisional Overviews
Divisional Overviews | Q2 2012 Results | 10 May 2012
Slide 10: Divisional Operating Margins
10 Divisional Operating Margins* Q2 ‘12 Margins: S‐Africa 13.9% N‐America 6.8% Europe 5.5% *The divisional operating margins exclude special items. Refer to page 17 in our Q2 2012 results announcement booklet for a definition of special items. | Q2 2012 Results | 10 May 2012
Slide 11: Sappi Fine Paper Europe
11 Sappi Fine Paper Europe • Operating profit up QoQ and YoY • Much improved cost base • Overall quality of business improved • Market conditions remain challenging • Prices generally lower, despite this, margins are up • Continued strong cash flow – significant proportion of group net cash | Q2 201
Slide 12: Sappi Fine Paper North America
12 Sappi Fine Paper North America • Improved operating performance, not yet at last year’s level • Margins improving, some way to go • Production efficiencies and reliability improved through the quarter • Pulp prices low, pressuring margins • Casting release – improved prices and volumes during qua
Slide 13: Sappi Southern Africa
13 Sappi Southern Africa • CC continued strong performance: 30% EBITDA margin • Good volumes, prices down on NBSK and strengthening Rand • Good production efficiencies • Paper and packaging still underperforming • Competitive environment: price, costs, volumes • Restructuring proceeding well, benefi
Slide 14: Focus Areas
Focus Areas | Q2 2012 Results | 10 May 2012
Slide 15: Focus Areas
15 Focus Areas Chemical Cellulose • Maintain excellent Saiccor production rates and customer service • Both CC projects on schedule (1H 2013) and on budget • Good customer support Europe • Further improvement in European cost base, improved competitiveness | Q2 2012 Results | 10 May 2012
Slide 16: Focus Areas
16 Focus Areas North America • Restoration of margins and production efficiencies South Africa paper and packaging • Squeezing out benefits of South African restructure and restore profitability Debt • Debt reduction and cost of finance remain focus • Possible refinance of 2014 bonds | Q2 2012 Resul
Slide 17: Net Debt Development
17 Net Debt Development Rights Offer to finance Repaid $140m European Acquisition European Acquisition South African debt completed US$ m 3,000 Major Refinancing completed 2,500 2,000 1,500 1,000 Q110 Q111 Q211 Q311 Q411 Q112 Q109* Q209 Q309 Q409 Q210 Q310 Q410 Q212 * Cash proceeds of US$536m for Eu
Slide 18: Debt Maturity Profile
18 Debt Maturity Profile | Q2 2012 Results | 10 May 2012
Slide 19: Outlook
Outlook | Q2 2012 Results | 10 May 2012
Slide 20: Outlook
20 Outlook • Demand is expected to remain challenging, but input costs developments are expected to be favorable • European and South African businesses will benefit from our strategic interventions • Chemical cellulose business is expected to remain strong, both conversions on track for start up in
Slide 21: Outlook
21 Outlook • For the full year, we expect operating profit excluding special items will be at a similar level to that of the previous year, and for our EPS to remain positive • We anticipate positive net cash generation leading to a further reduction in net debt • We will consider refinancing our hi
Slide 22: Q&A
Q&A | Q2 2012 Results | 10 May 2012
Slide 23: Supplementary Information
Supplementary Information | Q2 2012 Results | 10 May 2012
Slide 24: W. Europe Coated Paper Deliveries & Prices
24 W. Europe Coated Paper Deliveries & Prices 1.2 1.1 1.0 0.9 Q2 2007 = 100 0.8 0.7 0.6 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2007 2008 2009 2010 2011 2012 CWF MCR CWF 100gsm sheets prices LWC 60gsm offset reels prices Western Europe Shipments Incl. Export – Source Cepifine,
Slide 25: Sappi Fine Paper Europe
25 Sappi Fine Paper Europe Q2 11 Q2 12 1H 11 1H 12 Tons Sold ('000) 982 919 1,994 1,768 Sales ($'m) 1,017 883 2,044 1,729 Price / Ton ($) 1,036 961 1,025 978 Price / Ton (€) 756 733 751 735 Cost / Ton* (€) 733 692 727 702 Operating profit ex items** ($'m) 31 49 65 78 * Sales less operating profit ex
Slide 26: US Coated Paper Prices and Shipments
26 US Coated Paper Prices and Shipments 1.3 1.2 1.1 1.0 0.9 Q2 2007= 1 0.8 0.7 0.6 0.5 0.4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2007 2008 2009 2010 2011 2012 Domestic CFS shipments Total US CFS consumption CFS #3 60lb Rolls prices US Industry Shipments and total US consumpt
Slide 27: Sappi Fine Paper North America
27 Sappi Fine Paper North America Q2 11 Q2 12 1H 11 1H 12 Tons Sold ('000) 349 341 713 680 Sales ($'m) 372 349 754 701 Price / Ton ($) 1,066 1,023 1,058 1,031 Cost / Ton* ($) 951 953 969 981 Operating Profit ex items** ($'m) 40 24 63 34 * Sales less operating profit excluding special items divided b
Slide 28: NBSK Pulp Price
28 NBSK Pulp Price* 1,100 NBSK (US$/ton) NBSK (EUR/ton) 1,000 900 $849/ton 800 700 €643/ton 600 500 400 300 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-12 Apr-11 • Pulp prices have turned upward * Source: Average monthly FOEX delivered European prices | Q2 2012 Results | 10 May 2012
Slide 29: Sappi Southern Africa
29 Sappi Southern Africa Q2 11 Q2 12 1H 11 1H 12 Tons Sold ('000) 414 418 866 818 Sales ($'m) 414 379 861 747 Price / Ton ($) 1,000 907 994 913 Price / Ton (ZAR) 6,996 7,028 6,907 7,236 Cost / Ton* (ZAR) 6,101 6,045 5,848 6,132 Operating Profit ex items** ($'m) 53 53 132 114 * Sales less operating p
Slide 30: Cash Flow
30 Cash Flow Q1 11 Q2 12 1H 11 1H 12 Cash generated from operations 222 214 467 409 - Movement in working capital 17 (24) (318) (190) - Net finance costs paid (91) (37) (154) (101) - Taxation paid (12) (5) (14) (10) - Cash utilised in investing activities (36) (57) (77) (128) Net cash generated (uti
Slide 31: Reconciliation of EBITDA excluding special items to profit (loss) for the period
31 Reconciliation of EBITDA excluding special items to profit (loss) for the period* Q2 11 Q2 12 1H11 1H 12 EBITDA ex-items 228 217 474 411 Depreciation and amortization (101) (92) (210) (186) Op. Profit excluding speical items 127 125 264 225 Special items - (losses) gains (128) (5) (144) 2 Plantat
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