Sappi Limited · JSE:SAP
Sappi — Q2 2010 Earnings Presentation
33 slides from Sappi's earnings presentation, May 7, 2010
Slide 1: Sappi 2nd quarter ended March 2010 results
Sappi 2nd quarter ended March 2010 results 7 May 2010
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, 2 including but not limited to statements that are predictions of or indicate future earnings, savings, synergies, events, trend
Slide 3: Summary
Summary sappi
Slide 4: 2Q 2010 Summary
2Q 2010 Summary 4 • Operating Profit excluding special items increased year on year to US$54 million (Q2 2009: US$17 million loss) • Demand trends improving • Net cash generated US$109 million • Basic loss per share of 6 US cents (unfavorably impacted by 3 US cents special item)
Slide 5: Group Financial Summary
Group Financial Summary 5 Q2 09 Q2 10 YoY 1H 09 1H 10 YoY Key figures: (US$ million) Sales 1,313 1,576 2,500 3,196 EBITDA ex special items* 82 156 188 349 Operating Profit ex special items* (17) 54 8 135 Basic (Loss) EPS (US cents) (7) (6) (3) (16) Key ratios: (% ) EBITDA ex special items* to sales
Slide 6: Operating Profit excluding special items
Operating Profit excluding special items * 6 2007: $313m 2008: $366m 2009: $33m $USm 100 96 97 92 80 88 89 81 81 73 60 63 54 40 38 20 25 0 -17 -13 -20 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 * Refer to the supplementary information in this presentation for a reconciliat
Slide 7: Divisional Contribution Trend
Divisional Contribution Trend 7 EBITDA* $USm Fine Paper Forest & Paper Products Corporate 220 6 5 3 8 1 180 75 55 81 73 67 15 140 83 79 37 71 83 100 2 7 37 11 138 130 60 102 112 108 114 38 120 89 85 93 95 69 75 20 42 -20 -2 -1 -1 -3 -1 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10
Slide 8: Cash Generated from Operations
Cash Generated from Operations 8 $USm $585 million $623 million $432 million 250 245 200 176 150 157 161 155 156 161 142 136 125 122 100 95 99 77 50 0 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
Slide 9: Net Debt
Net Debt 9 Announced target to reduce gearing European Acquisition completed to approximately US$2B by 2012 Rights Offer to finance Refinancing Completed: European Acquisition Re-paid Vendor Loan Note 3,000 $USm 2,000 1,000 Q109* Q108 Q208 Q308 Q408 Q209 Q309 Q409 Q110 Q210 * Cash proceeds of US$536
Slide 10: Earnings Versus Prior Quarter
Earnings Versus Prior Quarter 10 Q110 Basic EPS (10) Add: Plantation Revluation Loss 14 Less: Asset Impairment (2) Q1 Less: Alt. Fuel Tax Credit (9) 2010 Add: Restruct. & other net items 8 Q110 Adjusted EPS 1 Q210 Basic EPS (6) Add: Plantation fair value adj. 2 Add: Fire, flood, related events 3 Q2
Slide 11: Divisional Operating Margins
Divisional Operating Margins * 11 25% 20% 15% Q2 2010 Margins: North America 11.4% 10% 5% F&P Products 3.3% Europe 0.5% 0% -5% -10% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2007 2008 2009 2010 * The divisional operating margins exclude special items. Refer to page 17 in our Q2 2010 results announce
Slide 12: Divisional Overview Europe
12 Divisional Overview Europe
Slide 13: W European Coated Fine Paper Apparent Consumption
W European Coated Fine Paper Apparent Consumption* 13 ‘000 metric tons 2007 2008 2009 2010 650 600 550 500 450 400 350 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Cepifine *Apparent consumption = shipments from domestic manufacturers plus imports less exports
Slide 14: European Coated Paper Prices
European Coated Paper Prices 14 Germany (€/ton) 1,000 900 800 €785/ton 700 €685/ton 600 CWF 100gsm Sheets €620/ton CWF 100gsm Reels LWC 60gsm offset reels 500 Apr-00 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Source: RISI
Slide 15: Synergy Targets and Achievement
Synergy Targets and Achievement 15 € million Mar-10 Synergies LTM Procurement 35 (Excl. market effects) Asset Optimization 32 SG&A Reduction 29 Other Incl. Recipe & 27 Manufacturing Once-off costs (7) Total 116 Target 3rd year run rate - €120 million
Slide 16: Sappi Fine Paper Europe
Sappi Fine Paper Europe 16 Q2 09 Q2 10 YoY 1H 09 1H 10 YoY Tons Sold ('000) 759 919 1,315 1,863 Sales ($'m) 737 866 1,298 1,802 Price / Ton ($) 971 942 987 967 Price / Ton (€) 730 678 743 676 Cost / Ton* (€) 751 675 747 665 Op. profit ex items** ($'m) (21) 4 (8) 29 • Industry shipments of CWF and CM
Slide 17: Divisional Overview North America
17 Divisional Overview North America
Slide 18: US Coated Fine Paper Shipments
US Coated Fine Paper Shipments* 18 ‘000 short tons 2007 2008 2009 2010 480 440 400 360 320 280 240 200 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: AF&PA * Shipments from domestic manufacturers
Slide 19: US Coated Paper Prices
US Coated Paper Prices 19 (US$/ton) 1,200 CFS #3 60lb Rolls CGW #4 50lb Rolls CGW #5 40lb Rolls 1,100 1,000 900 $900/ton $845/ton 800 $745/ton 700 600 Apr-00 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Source: RISI CWF = Coated Woodfree; CGW = Coated Groundwood
Slide 20: US Coated Paper Trade Flows
US Coated Paper Trade Flows 20 ‘000 short tons 150 150 Other Asia Europe China - CWF+CM NA Exports 125 125 100 100 75 75 50 50 25 25 0 0 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Source: AF&PA; * CM = Coated mechanical paper
Slide 21: Sappi Fine Paper North America
Sappi Fine Paper North America 21 Q2 09 Q2 10 YoY 1H 09 1H 10 YoY Tons Sold ('000) 289 345 619 667 Sales ($'m) 301 342 664 662 Price / Ton ($) 1,042 991 1,073 993 Cost / Ton* ($) 1,097 878 1,110 906 Op Profit ex items** ($'m) (16) 39 (23) 58 • US industry shipments of CWF up 16% year on year • Conti
Slide 22: Divisional Overview Southern Africa Forest & Paper Products
22 Divisional Overview Southern Africa Forest & Paper Products
Slide 23: NBSK Pulp Price
NBSK Pulp Price* 23 1,000 900 NBSK (US$/ton) $918/ton NBSK (EUR/ton) 800 700 €684/ton 600 500 400 300 Apr-00 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 * Source: Average monthly FOEX delivered European prices
Slide 24: Sappi Forest & Paper Products
Sappi Forest & Paper Products 24 Q2 09 Q2 10 YoY 1H 09 1H 10 YoY Tons Sold - Pulp & Paper ('000) 409 425 765 875 Sales - Pulp & Paper ($'m) 263 351 511 701 Price / Ton - Pulp & Paper ($) 643 826 668 801 Price / Ton - Pulp & Paper (ZAR) 6,365 6,243 6,614 6,033 Cost / Ton* - Pulp & Paper (ZAR) 5,905 6
Slide 25: Outlook
Outlook 25 • We expect conditions in our major markets to improve gradually this year • Higher pulp prices forecast, strong order inflow for CWF paper in Europe: corresponding price increases announced for June • Expect continued strong demand for chemical cellulose. Our Forest and Paper Products bu
Slide 26: Q&A
26 Q&A
Slide 27: Supplementary Information
27 Supplementary Information
Slide 28: Cash Flow
Cash Flow 28 US$ million Q2 09 Q2 10 1H 09 1H 10 Cash generated from operations 99 122 194 367 - Movement in working capital 28 68 (68) (102) - Net finance costs paid (10) (29) (54) (93) - Taxation paid (3) - (2) (4) - Dividends paid - - (37) - - Cash utilised in investing activities (39) (52) (79)
Slide 29: Operating Profit - Sappi Group
Operating Profit - Sappi Group 29 Reconciliation of reported operating profit to operating profit excluding special items * US$ million Q2 09 Q2 10 1H 09 1H 10 Operating profit as reported 6 28 63 29 Plantation price fair value (gain) loss (35) 11 (69) 106 Restructuring provision raised 8 3 8 41 Pro
Slide 30: Operating Profit - Fine Paper Europe
Operating Profit - Fine Paper Europe 30 Reconciliation of reported operating profit to operating profit excluding special items * US$ million Q2 09 Q2 10 1H 09 1H 10 Operating profit as reported (21) 9 (8) 21 Impairment cost (reversal) - (6) - (14) Restructuring charge (release) - 1 - 18 Profit (Los
Slide 31: Operating Profit - Fine Paper North America
Operating Profit - Fine Paper North America 31 Reconciliation of reported operating profit to operating profit excluding special items * US$ million Q2 09 Q2 10 1H 09 1H 10 Operating profit as reported (24) 41 (31) 108 Restructuring charge (release) 8 - 8 1 Alternative fuel tax credit - (2) - (51) O
Slide 32: Operating Profit - Forest and Paper Products
Operating Profit - Forest and Paper Products 32 Reconciliation of reported operating profit to operating profit excluding special items * US$ million Q2 09 Q2 10 1H 09 1H 10 Operating profit as reported 50 (4) 101 (90) Plantation price fair value (gain) loss (35) 11 (69) 106 Profit (Loss) on the sal
Slide 33: End
End