Mondi Plc · LSE:MNDI
Mondi — Corporate Update (October 2008)
54 slides from Mondi's corporate update, Oct 8, 2008
Slide 1: Investor Site Visit - 07/08 October 2008
Investor Site Visit - 07/08 October 2008 David Hathorn Ron Traill Riaan Swart
Slide 2: Agenda
AGENDA 1. The Mondi Group David Hathorn 2. Overview of the South Africa Division Ron Traill 3. Overview of the Richards Bay operation Riaan Swart Page 2
Slide 3: Mondi at a Glance
MONDI AT A GLANCE Bags & Newsprint and UCF Corrugated South Africa MPSA Specialities merchant €1.7B €2.0B €1.6B €0.6B €0.4B €0.6B Sales 2007 (1) EBIT % 5.9% 7.7% 8.2% 13.2% 8.4% 6.8% Products Europe South Africa Europe/SA z No. 1 Office z No. 1 Kraft z No. 1 kraftliner z No. 1 z No. 1 Newsprint Posi
Slide 4: Strategic Summary
STRATEGIC SUMMARY 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 z Selectively investing in production capacity in lower-cost regions cost ass
Slide 5: Key Value Drivers Along the Value Chain
KEY VALUE DRIVERS ALONG THE VALUE CHAIN Value Chain Step Products Key Value Drivers z Forestry/ z Low production costs Pulp Wood Primary z Access to low cost raw materials (ideally Production z Pulp located close to low cost forestry resources) z Cost efficiency z Paper (e.g. integration with pulp p
Slide 6: Integrated Value Chain
INTEGRATED VALUE CHAIN Forestry Pulp Paper Mondi’s own 8.0mm3 3.8Mt 5.9Mt availability Kraftliner: 1.0Mt Testliner: 1.5Mt Mondi’s own demand 15.6mm3 3.9Mt 1.8Mt(1) Self sufficiency 51% 97% 183%(1) (1) Refers to Mondi’s demand and self-sufficiency of packaging paper (including E&I and MPSA). Paper is
Slide 7: Active Cost Management
ACTIVE COST MANAGEMENT SUBSTANTIAL REDUCTION IN PROPORTION OF FIXED COST BASE Page 7
Slide 8: And a High Quality Low Cost Asset Base
AND A HIGH QUALITY LOW COST ASSET BASE White-top Kraftliner Unbleached Kraftliner €/t €/t 100% of Mondi 100% of Mondi Unbleached White-top Kraftliner Kraftliner capacity capacity 0 0 0 0 3,000 Cumulative capacity (Kt/a) 1,400 Cumulative capacity (Kt/a) Universal Office Paper €/t 100% of Mondi Univer
Slide 9: Agenda
AGENDA 1. The Mondi Group David Hathorn 2. Overview of the South Africa Division Ron Traill 3. Overview of the Richards Bay operation Riaan Swart Page 9
Slide 10: Mondi SA Business
MONDI SA BUSINESS South Africa South Africa Division Packaging 55% 50% Page 10
Slide 11: South Africa Division
SOUTH AFRICA DIVISION South Africa Division Forests Richards Bay Merebank Tonnes 3,000,000 Tonnes 780,000 Tonnes 524,000 Employees 250 Employees 660 Employees 900 Contractors 12 000 Contractors 890 Contractors 1 600 Page 11
Slide 12: Our Advantage: SA Divisions' Forests
OUR ADVANTAGE: SA DIVISIONS’ FORESTS 100% Self- Title Deed sufficient 300 000 ha Harvested Plantable Area 3 million tonnes 198 000 ha Page 12
Slide 13: Our Advantage: Fast Wood Forestry
OUR ADVANTAGE: FAST WOOD FORESTRY South Africa,75,000 , Southern Sweden 800,000 , British Columbia 1,600,000 Forest area (ha) required to sustainably supply 500,000 tpa pulp mill Page 13
Slide 14: Cost Competitiveness
COST COMPETITIVENESS Average Hardwood and Softwood Costs ( €/m3, Q2 2007) 47 42 39 37 33 30 30 25 25 26 South Brazil Russia Chile Australia Poland Portugal Sweden Finland France Africa Page 14
Slide 15: Company History: Richards Bay
COMPANY HISTORY: RICHARDS BAY 2006 New biological waste water treatment plant 2005 RB720 increased capacity from 450 000 To 720 000 tons in 2005 2004 Investment of R2.58 billion 1997 SilvaCel wood chip mill was acquired 1982 Pulp mill was built at an investment of R1 billion 198O 1982 1984 1986 1988
Slide 16: Richards Bay Investment
RICHARDS BAY INVESTMENT RB720 Pulp Mill upgrade Start-up Feb 2005 Capacity 720,000 tpa Additional Capacity 145,000 tpa Investment €258m Environmental benefits include improvements in emissions, water consumption and waste water quality Page 16
Slide 17: Richards Bay Production
RICHARDS BAY PRODUCTION Richards Bay (PM41 & 42) Total Paper & Pulp Production in tons 688000 588000 488000 388000 288000 2000 2001 2002 2003 2004 2005 2006 2007 Page 17
Slide 18: Merebank: Company History
MEREBANK: COMPANY HISTORY 2005 PM31 2002-2003 upgrade of rebuild 1991-1995 various improvement PM2 and new sheeting projects including a recycle fibre facilities installed 1971 – 1981 PM1 - PM5 plant and sheeting facility commissioned 1969 Construction of the mill commenced 1968 1970 1972 1974 1976
Slide 19: Merebank Core Production
MEREBANK CORE PRODUCTION Paper Machines - 2007 Actual Name Tonnage PM31 215,000 PM32 115,000 PM33 144,000 Total 469,783 Finishing - 2007 Amount Cut Size Actual Tonnage 5 Cut Size 330,097 2 Folio 23,196 Page 19
Slide 20: Merebank: Core Products - Domestic
MEREBANK: CORE PRODUCTS - DOMESTIC The leading brand in South Africa Key market South Africa Long standing reputation for all-round performance The paper for everyday use with high whiteness Ideally suited for use in inkjet and laser printers, copiers and fax machines Pioneer in FSC (Forest Stewards
Slide 21: Merebank Improvement Projects
MEREBANK IMPROVEMENT PROJECTS PM31 Rebuilt in 2005 Capital cost of €153m Modelled on PM18 in Ruzomberok 270,000 tonnes per annum Major reductions in energy and water consumption Page 21
Slide 22: Merebank Paper Production
MEREBANK PAPER PRODUCTION Merebank(PM31, 32 & 33) Total Paper Production in tons 500000 450000 400000 350000 300000 250000 200000 150000 100000 50000 0 2000 2001 2002 2003 2004 2005 2006 2007 Page 22
Slide 23: SA Cost Position
SA COST POSITION Universal Office Paper1 White-Top Kraftliner1 EUR/tons EUR/tons 1,400 700 1,200 600 1,000 500 800 400 600 300 400 200 Richards Bay PM42 200 Merebank PM31 100 0 0 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 0 200 400 600 800 1,000 1,200 1,400 1,600 Cumulative capacity (K tons/a)
Slide 24: Average Cost per Employee
AVERAGE COST PER EMPLOYEE € 70,000 € 60,000 € 50,000 € 40,000 € 30,000 € 20,000 € 10,000 €0 Neusiedler Kemmaten Hadera MSA Total Ruzomberok Syktyvkar Page 24
Slide 25: 2008 Electricity Costs
2008 ELECTRICITY COSTS € 120 € 100 € 80 Euro/MWh € 60 € 40 € 20 €0 Germany Slovakia Austria Poland Durban Richards Bay Operations Page 25
Slide 26: South African Power Issues
SOUTH AFRICAN POWER ISSUES Working constructively with Eskom and local authorities to mitigate impact of load shedding and punitive cost tariffs To date no significant impact to our businesses (South African Division) Mondi is relatively self sufficient Richards Bay fully self sufficient following i
Slide 27: Market Position
MARKET POSITION UFP Export 30% Market of 330,00 tonnes per annum Domestic 40% N° 1 in South Africa Sappi only other producer Imports 4% of SA Market Sales Mix – cut size 75% of total Africa 30% WHITETOP LINERBOARD Total Sales: 260,000 tonnes per annum Only producer in South Africa 78% exported PULP
Slide 28: Sustainability
SUSTAINABILITY Safety Environmental protection Transformation Sustainable forestry – Land claims Page 28
Slide 29: Safety – Lost Time Injuries
SAFETY – LOST TIME INJURIES 160 1 140 120 100 103 80 3 60 46 3 ZERO FATALITY 40 0 10 0 20 36 14 23 13 20 12 9 0 2003 2004 2005 2006 2007 Mills Forest Fatalities LTI – occurs when a person is injured in the execution of his/her duties and as a result of this incident is unable to perform his/her regu
Slide 30: Environmental Focus Areas
ENVIRONMENTAL FOCUS AREAS Waste to landfill Water consumption 300,000 250 50,000 45 45,000 40 250,000 40,000 200 35 35,000 '000 m 3/year 200,000 30 30,000 tons/year 150 m3/ton 25 kg/ton 150,000 25,000 20 100 20,000 100,000 15,000 15 50 10,000 10 50,000 5,000 5 0 0 0 0 2003 2004 2005 2006 2007 2003 2
Slide 31: BBBEE & Transformation
BBBEE & TRANSFORMATION BBBEE Rating Mondi independently assessed as a level 5 BBBEE contributor (80% recognition) Significantly above the Level 8 national average for large businesses (Presidential Working Group, 2007) Official verification to be done in 2008 Target for 2010: Level 4 Achievements to
Slide 32: Mondi Land Claims Progress to Date
MONDI LAND CLAIMS PROGRESS TO DATE Mondi currently has 101 claims covering nearly 140 000ha Of these 44 are pre-gazette, 23 gazetted and 8 land claims with Section 42D awaiting finalisation Mondi is convinced that the land claim process is necessary and is engaging with government and the communitie
Slide 33: Agenda
AGENDA 1. The Mondi Group David Hathorn 2. Overview of the South Africa Division Ron Traill 3. Overview of the Richards Bay operation Riaan Swart Page 33
Slide 34: Richards Bay Operation at a Glance
RICHARDS BAY OPERATION AT A GLANCE Operations Richards Bay & SilvaCel Number of Employees 638 Pulp Production 2007 465 000 tons Board Production 2007 252 000 tons Woodchip Production 2007 1 100 000 GMT Page 34
Slide 35: Successful Improvement Projects
SUCCESSFUL IMPROVEMENT PROJECTS RB720 Pulp Mill upgrade Start-up Feb 2005 Capacity 720 000 tpa Additional Capacity 145 000 tpa Investment EUR 258 Million* Increased bleached eucalyptus market pulp output by 40% 145 000 t/yr increase Environmental benefits include improvements in emissions, water con
Slide 36: RB720 Motivation
RB720 MOTIVATION Ensures long term sustainability of mill Improves operational efficiencies Optimises the capacity of the Recovery Boilers Improves environmental performance through use of best available technology ENVIRONMENTAL IMPROVE MENTS Avg of previous 5 years Current % Improvement Water Consu
Slide 37: Successful Improvement Projects
SUCCESSFUL IMPROVEMENT PROJECTS Gas Turbine Project Start-up August 2006 Capacity 29MW Investment EUR 17,7 Million Gas turbine installed to improve the mills own power generation capacity; supplementing on- site electricity and steam production Combined heat and gas turn the turbines producing power
Slide 38: Operational Areas
OPERATIONAL AREAS Drying & Board Fibrelin e Recovery & Chemicals Chipping Page 38
Slide 39: Process Flow
PROCESS FLOW Chemical Plant Bleaching Chemicals White Liquor Fibreline PM 41 Bleach Hardwood Woodyard Fibreline PM 42 Softwood Energy Black Liquor Evaporators Recovery Burnt Lime Lime Kiln Causticising Lime Page 39
Slide 40: Chipping Operation
CHIPPING OPERATION Page 40
Slide 41: Process Flow
PROCESS FLOW Chemical Plant Bleaching Chemicals White Liquor Fibreline Bleach Hardwood Woodyard Fibreline Softwood Black Liquor Page 41
Slide 42: Fibreline
FIBRELINE mondi Page 42
Slide 43: Process Flow
PROCESS FLOW Chemical Plant Bleaching Chemicals White Liquor Fibreline PM 41 Bleach Hardwood Woodyard Fibreline PM 42 Softwood Black Liquor Page 43
Slide 44: Drying & Board
DRYING & BOARD Paper Machine 42 (Linerboard, ProVantage Baywhite – Hardwood & Softwood) Forming Pressing Drying Reeling Winding Warehousing Page 44
Slide 45: Process Flow
PROCESS FLOW Chemical Plant Bleaching Chemicals White Liquor Fibreline PM 41 Bleach Hardwood Woodyard Fibreline PM 42 Softwood Energy Black Liquor Evaporators Recovery Causticising Page 45
Slide 46: Recovery & Chemicals
RECOVERY & CHEMICALS Chemical Plant Recovery Plant Page 46
Slide 47: Recovery & Chemicals
RECOVERY & CHEMICALS Recovery Spent cooking liquor recovery Evaporators Recovery Boilers Page 47
Slide 48: Our Safety Beliefs
OUR SAFETY BELIEFS ¢monei All accidents are preventable Zero is our target Page 48
Slide 49: Appendices
APPENDICES
Slide 50: Divisional Results
DIVISIONAL RESULTS Group revenue 1 EBITDA 2 Underlying operating profit 3 € millions H1 2008 H1 2007 Change H1 2008 H1 2007 Change H1 2008 H1 2007 Change EUROPE & INTERNATIONAL Bags & Specialities 1,121 994 127 164 132 32 109 80 29 Uncoated Fine Paper 846 837 9 122 100 22 69 48 21 Corrugated Busines
Slide 51: Divisional Returns
DIVISIONAL RETURNS ROCE (%) 1 EBITDA return(%) 2 Return on Sales (%) 3 H1 2008 H1 2007 H1 2008 H1 2007 H1 2008 H1 2007 EUROPE & INTERNATIONAL 12.0 9.8 13.3 12.6 7.8 7.2 SOUTH AFRICA 10.6 9.9 24.5 22.0 16.4 14.9 MPSA 11.1 18.8 12.1 12.1 16.4 14.9 MERCHANT & NEWSPRINT 15.0 14.1 6.1 9.4 3.4 5.6 MONDI G
Slide 52: Production Volumes
PRODUCTION VOLUMES H1 2008 H1 2007 % Change Europe and International Division Containerboard tonnes 965,319 916,815 +5 Corrugated board and boxes m m² 1,143 985 + 16 Kraft paper tonnes 461,754 444,625 +4 Bag converting m units 1,902 1,910 +0 Coating and release liners m m² 1,414 1,549 -9 Uncoated fi
Slide 53: Forward-Looking Statements
FORWARD - LOOKING STATEMENTS It should be noted that certain statements herein which are not historical facts, including, without limitation those regarding expectations of market growth and developments; expectations of growth and profitability; and statements preceded by “believes”, “expects”, “an
Slide 54: Slide 54