Mondi Plc · LSE:MNDI
Mondi — Corporate Update (November 2010)
18 slides from Mondi's corporate update, Nov 4, 2010
Slide 1: Mondi Group: Sector fundamentals
MONDI GROUP: Sector fundamentals David Hathorn Investor and Analyst site visit, Syktyvkar and Świecie 2 – 4 November 2010
Slide 2: Mondi's product exposure
Mondi’s product exposure Mondi Group segment/product mix 1 Packaging Uncoated Fine Paper (UFP) Good fundamental demand dynamics Demand growth robust in the emerging Aside from sack kraft, no major markets substitution threats Structural demand decline in western Demand growth robust in emerging Euro
Slide 3: Industry fundamentals
Industry fundamentals Europe (ex. Russia) is short of timber Timber No new virgin based capacity planned in Europe constraints Mondi is potentially ~50% self-sufficient globally Aside from corrugated and Coatings, western markets maturing or in structural decline While emerging markets experiencing
Slide 4: Corrugated – Market fundamentals
Corrugated – Market fundamentals Europe (West and East) back to pre-crisis levels Demand Western European demand growth likely to flatten in the short-term CEE & Russia – growth of >5% expected European Virgin Containerboard “VCB” Net capacity contraction during the crisis of -1-2% Reduced imports i
Slide 5: Corrugated – Commodity cycle and Mondi returns
Corrugated – Commodity cycle and Mondi returns 10 year price cycle (in EUR) Mondi’s ROCE (%), kraftliner price and RB fluting – OCC price differential (EUR/tonne) 700 Kraftliner H1 H2 H1 H2 H1 H2 H1 H2 H1 RB Fluting-OCC % ROCE 600 differential 2010 2009 2009 2008 2008 2007 2007 2006 2006 600 18.0% 5
Slide 6: Bags and Coatings – Market fundamentals
Bags and Coatings – Market fundamentals Europe sack kraft demand back to pre-crisis levels Element of re-stocking – bag demand remains below pre-crisis Demand Overseas sack kraft demand remains robust Sack kraft demand growth expected to flatten in the short-term Coatings demand growth is positive i
Slide 7: Bags & Coatings – Commodity cycle and Mondi returns
Bags & Coatings – Commodity cycle and Mondi returns 10 year price cycle (in EUR) Mondi’s ROCE (%), sack kraft and indexed bags price (EUR/tonne) Unbleached sack Kraft (€/tonne) 800.0 16.0% 15.3% 750.0 14.0% 11.9% 12.0% 10.9% 700.0 10.0% 10.2% 10.0% 8.3% 650.0 8.0% 7.3% 7.0% 6.7% 2001 2002 2003 2004
Slide 8: Uncoated Fine Paper – Market fundamentals
Uncoated Fine Paper – Market fundamentals Europe demand recovering – still below pre-crisis levels Expect demand growth to flatten in the short term – ongoing increases Demand in central Eastern Europe, offset by no growth/modest declines in Western Europe Net industry capacity reduction of -5% from
Slide 9: Uncoated Fine Paper – Commodity cycle and Mondi returns
Uncoated Fine Paper – Commodity cycle and Mondi returns 10 year price cycle (in EUR) Mondi’s ROCE (%), Uncoated fine paper price (EUR/tonne) 1,100 A4 B-copy H1 H2 H1 H2 H1 H2 H1 H2 H1 1,050 % ROCE 2010 2009 2009 2008 2008 2007 2007 2006 2006 1,000 900 25.0% 950 Improving returns 880 despite declinin
Slide 10: Currency concerns
Currency concerns Strong emerging market currencies Recent US Dollar weakness a concern undermining cost competitiveness for European pricing Average exchange % change vs US Dollar : Euro 1 rates vs EUR 1 Q1 1.45 Q1 Q2 Sep Q2 Sep 1.40 2010 2010 2010 2010 2010 1.35 Czech Koruna 25.89 25.59 24.65 +1%
Slide 11: Market Summary
Market Summary Prices back at attractive levels Demand recovered well – expect demand growth to remain positive but at lower growth rates in the short term Currency concerns Continued strength of emerging market currencies erodes Mondi’s relative cost competitiveness Recent dollar weakness – may und
Slide 12: Investor and Analyst site visit, Syktyvkar and Świecie
Investor and Analyst site visit, Syktyvkar and Świecie, 2 – 4 November 2010 PAGE 12
Slide 13: Mondi's strategic positioning
Mondi’s strategic positioning David Hathorn Investor and Analyst site visit, Syktyvkar and Świecie, 2 – 4 November 2010 PAGE 13
Slide 14: Three key pillars to our strategy
Three key pillars to our strategy Leading market Build on leading positions in packaging and Uncoated Fine Paper positions (UFP), particularly in emerging markets Maintain position as lowest-cost producer in our markets: High quality, low Selectively investing in production capacity in lower-cost
Slide 15: Recent Mondi actions
Recent Mondi actions During the crisis, eliminated remaining high-cost capacity Major re-structuring to reduce exposure to western Europe and increase emerging market exposure Successfully concluded major projects – leading cost positions in high-growth emerging markets Corrugating is a good example
Slide 16: Świecie's new machine performing well
Świecie’s new machine performing well ECO7 More than 400,000 tonnes production expected for 2010 full year >84% of full design capacity well ahead of business plan ~197,000 tonnes produced in first-half Maintenance shut in second-half RCB cost curve1 400 Manufacturing costs Current performance indic
Slide 17: Syktyvkar mill modernisation
Syktyvkar mill modernisation Project returns Wood / Pulp production Sales growth New recovery boiler ~30% woodyard capacity ~60,000 tonnes Uncoated Fine ~100% increased heat supply increase, ~10% efficiency gain Paper (~5% of domestic market) ~571 Mwh additional energy ~170,000 tonnes pulp ~65,000 t
Slide 18: Summary
Summary Industry dynamics have changed – Mondi well-positioned to benefit Limited exposure to grades experiencing secular decline Strategic portfolio weighted towards higher-growth economies Recent industry capacity adjustments, provide generally stronger fundamentals Secure access and proximity to