Slide 1: Mondi Group Interim Results to 30 June 2007
MONDI GROUP INTERIM RESULTS TO 30 JUNE 2007 1 AUGUST 2007 This presentation is being made only to and is directed only at (a) persons who have professional experience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion)
Slide 2: Agenda
AGENDA 1. Mondi at a glance 2. Highlights 3. Financial overview 4. Operational review 5. Appendices Interim results 2007 Page 2
Slide 3: Mondi at a Glance
MONDI AT A GLANCE merchant /newsprint South Africa Sales H1 €1.7B €1.0B €0.2B €0.3B 2007 (1) Products z No. 1 Kraft Paper(2) z No. 1 Office Paper(2) z No. 1 Corrugated z No. 1 Newsprint in z No. 2 Kraftliner(2) z No. 2 UCWF(2) Packaging in SA(3) South Africa(2) Positions z No. 1 Bag Converting(3) z
Slide 4: Mondi Strategic Drivers
MONDI STRATEGIC DRIVERS Mondi Group sales H1 2007 Mondi group net operating assets June 2007 Leading market position Leading market positions 39% 45% High exposure to: 55% Attractive product segments 61% Attractive geographies Strong asset base Emerging markets Mature markets Emerging markets Mature
Slide 5: Management Team
MANAGEMENT TEAM David Hathorn Paul (CEO) Mervyn Walker Hollingworth 45 years old (HR/Legal) (CFO) 48 years old 47 years old Relevant experience Relevant experience Relevant experience z CEO Mondi Europe z CFO BPB plc z Chairman Pensions z Financial Director Mondi Group Trustees AMEC plc z CFO De La
Slide 6: Highlights
HIGHLIGHTS Mondi demerged from Anglo American plc Separately listed as a public company on 3 July on both JSE and LSE Experienced significant recovery in earnings versus H1 2006 Cyclical upturn and improved operating performance EBITDA1 up 23% at €421 million Underlying operating profit2 up 46% at €
Slide 7: Financial Overview
FINANCIAL OVERVIEW
Slide 8: Financial Highlights
FINANCIAL HIGHLIGHTS € millions, except for percentages H1 2007 H1 2006 %Change Group revenue 3,052 2,857 +7 1 EBITDA 421 343 + 23 2 Underlying operating profit 243 166 + 46 3 Underlying profit before tax 203 125 + 62 Reported profit before tax 250 64 4 Underlying pro forma earnings per share (€ cen
Slide 9: Divisional Results
DIVISIONAL RESULTS 1 2 Group revenue EBITDA Underlying operating profit € millions H1 2007 H1 2006 Change H1 2007 H1 2006 Change H1 2007 H1 2006 Change MONDI PACKAGING Corrugated Business 768 731 37 106 83 23 66 39 27 Bag Business 634 561 73 103 86 17 64 49 15 Flexibles Business 384 304 80 28 22 6 1
Slide 10: Divisional Returns
DIVISIONAL RETURNS RONA (%) 1 EBITDA (%) 2 Return on Sales (%) 3 H1 2007 H1 2006 H1 2007 H1 2006 H1 2007 H1 2006 MONDI PACKAGING 11.0 9.0 13.7 12.4 8.4 6.3 MONDI BUSINESS PAPER 6.4 5.0 15.4 11.9 8.3 4.7 MPSA 17.1 19.1 12.3 11.3 8.9 8.1 MERCHANT & NEWSPRINT 12.3 7.7 9.3 8.6 5.7 4.8 MONDI GROUP (ROCE)
Slide 11: Costs and Cost Saving Initiatives
COSTS AND COST SAVING INITIATIVES COST STRUCTURE FIRST HALF 2007 COST SAVINGS - €73 MILLION 200 Depreciation and 2.8% 3.9% 3.6% 2.9% amortisation 180 6.3% 180 179 Other net 160 operating 140 expenses Wood, pulp and 7.0% fibre 120 € million 127 33.7% Other variable costs 100 15.2% 80 60 73 Maintenanc
Slide 12: Finance Charges and Net Debt
FINANCE CHARGES AND NET DEBT € millions H1 2007 H1 2006 Change Net debt (1) 1,335 1,418 (83) Net debt finance charges and other financial income 39 41 (2) Net post retirement finance costs 3 4 (1) Net finance costs (1) 42 45 (3) Total committed facilities of €2.6 billion, of which €1.2 billion drawn
Slide 13: Taxation and Dividends
TAXATION AND DIVIDENDS Taxation Dividends Effective tax rate before special Maiden interim dividend of 7.3 euro items of 30% cents per share 4% lower than 2006 due to decrease Converted into rand and pound in prior year items sterling where relevant at Ongoing rate adversely impacted by appropriate
Slide 14: Special Items
SPECIAL ITEMS Operating Net profit on disposals € millions H1 2007 H1 2006 € millions H1 2007 H1 2006 Total cost 8 57 Profit/(loss) 84 (4) Impairment €4m Disposals: 5.34% in Swiecie €57m Retention arrangements €5m B + K (associate) €19m (based on total charge of €24m Corrugated (UK & Ireland) €8m th
Slide 15: Cash Flow
CASH FLOW € millions H1 2007 H1 2006 Change EBITDA 421 343 78 Working capital movements (59) (99) 40 Other operating cash flow adjustments (6) (15) 9 Cash inflows from operations 356 229 127 Dividends from associates 1 1 - Tax paid (40) (34) (6) Net cash inflow from operating activities 317 196 121
Slide 16: Financial Summary
FINANCIAL SUMMARY Significant turnaround in financial performance Strong balance sheet Banking facilities in place to grow Interim results 2007 Page 16
Slide 17: Operational Review
OPERATIONAL REVIEW
Slide 18: Overview
OVERVIEW Substantial recovery in underlying operating profit, 46% up on H1 2006 Price and demand growth tempered by input cost pressures Acquisitions announced: Ultrapack and Tire Kutsan in the Corrugated Business Unterland in the Flexibles Business Lenco in Mondi Packaging South Africa Disposals: B
Slide 19: Industry Fundamentals: European Containerboard and Corrugated Packaging
INDUSTRY FUNDAMENTALS: EUROPEAN CONTAINERBOARD AND CORRUGATED PACKAGING 700 Circa 26 million tonne market growing at Kraftliner 175 g 2.7% 1 pa 650 Testliner 2 White top Kraftliner Western Europe 1.4% 1 600 550 Eastern Europe 11.0% 1 500 Good demand growth, particularly in €/tonne Germany and Emergi
Slide 20: Mondi Packaging
MONDI PACKAGING € millions H1 2007 H1 2006 Change Group revenue 1,736 1,550 186 Underlying operating profit 146 98 48 Pricing Testliner 2 prices up 17% Kraft liner prices up 15% (brown) and 4% (white top) Kraft paper prices up 9% Box prices up 10% Bag prices up 5% Production and volumes Production r
Slide 21: Mondi Packaging (cont)
MONDI PACKAGING (cont) Ongoing operational excellence and efficiency gains Productivity improvements 10% 7% 6% Containerboard Corrugated Packaging Bag Converting Profit improvements and cost savings of €33 million 2006 acquisitions performing to plan Acquisition of Tire Kutsan and Unterland announce
Slide 22: Industry Fundamentals: European Uncoated Woodfree Paper
INDUSTRY FUNDAMENTALS: EUROPEAN UNCOATED WOODFREE PAPER 1200 Circa 12 million tonne market, growing at 3% 1 UCWF pa 1100 Western Europe 2% 2 Eastern Europe 7% 2 1000 European capacity closures in 2006/2007 of €/tonne 720,000 tpa 900 Following these closures, capacity utilisation 800 anticipated to b
Slide 23: Mondi Business Paper
MONDI BUSINESS PAPER € millions H1 2007 H1 2006 Change Group revenue 966 958 8 Underlying operating profit 80 46 34 Pricing Price increases going through (up 5-6% since beginning of the year), but further increases necessary to see adequate returns Volumes UCWF volumes up 7.2%1 Total pulp production
Slide 24: Divisional Performance (Cont)
DIVISIONAL PERFORMANCE (Cont) Mondi Packaging South Africa Merchant and Newsprint € millions H1 2007 H1 2006 Change € millions H1 2007 H1 2006 Change Group revenue 173 185 (12) Group revenue 286 260 26 Underlying operating profit 15 15 - Underlying operating profit 16 12 4 Result up 25% in local cur
Slide 25: Major Projects
MAJOR PROJECTS Syktyvkar mill expansion Containerboard and box plant Modernisation and expansion 470,000t lightweight recycled containerboard Investment cost of €525m over 3-4 years machine and corrugated box plant Completion expected mid 2010 Capacity of circa 250M m2/year Exposed to strong growth
Slide 26: Acquisitions and Disposals
ACQUISITIONS AND DISPOSALS Acquisitions Lenco (Rigid plastics) Tire Kutsan (Corrugated) Number 1 position in rigid plastics Exposure to high growth Turkish market in South Africa corrugated market Run as part of Mondi Packaging Makes Mondi Packaging market South Africa leader in Emerging Europe 100%
Slide 27: Current Trading
CURRENT TRADING “In the second half we expect to see continued pressure from rising input costs and weakness of the US dollar. However the positive trends in Mondi’s key business segments are expected to continue and the Board is confident of achieving good progress for the year as a whole.” Interim
Slide 28: Appendices
APPENDICES
Slide 29: Abridged Income Statement
1 ABRIDGED INCOME STATEMENT € millions H1 2007 H1 2006 Change Group revenue 3,052 2,857 195 Materials, energy and consumables used (1,577) (1,458) (119) Variable selling expenses (280) (278) (2) Gross margin 1,195 1,121 74 Maintenance and other indirect expenses (130) (134) 4 Personnel costs (446) (
Slide 30: Exchange Rates
EXCHANGE RATES Year ended Six months ended 30 June 31 December 2007 2006 2006 Closing rates against the euro South African rand 9.53 9.13 9.22 Pounds sterling 0.67 0.69 0.67 Polish zloty 3.77 4.08 3.84 Russian rouble 34.83 34.32 34.68 Slovakian koruna 33.61 38.43 34.56 US dollar 1.35 1.28 1.32 Czech
Slide 31: Volumes
VOLUMES H1 2007 H1 2006 % Change Mondi Packaging Containerboard (tonnes) 1,035,932 1,009,005 +3 Kraft paper (tonnes) 444,625 400,941 + 11 2 Corrugated board and boxes (m m ) 985 1,071 -8 Industrial bags (m units) 1,910 1,799 +6 2 Coating and release liners (m m ) 1,549 1,186 + 31 Pulp – external (to
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