Mondi Plc · LSE:MNDI
Mondi — H1 2009 Earnings Presentation
42 slides from Mondi's earnings presentation, Aug 5, 2009
Slide 1: Mondi Group Half-Yearly Results for the Six Months Ended 30 June 2009
MONDI GROUP HALF-YEARLY RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2009 5 August 2009
Slide 2: Agenda
AGENDA 1. Highlights 2. Financial overview 3. Operational review 4. Major projects 5. Outlook 6. Summary 7. Appendices Half-yearly results for the six months ended 30 June 2009 Page 2
Slide 3: Key Financial Highlights
KEY FINANCIAL HIGHLIGHTS Earnings down versus H1 2008 EBITDA1 down 32% at €308 million Underlying operating profit 2 down 48% at €138 million Underlying EPS3 down 67% at 8.3 euro cents Group ROCE 4 of 7.4% Substantial cash inflow from operations of €392 million, 26% above prior period Net debt at €1
Slide 4: Key Operational Highlights
KEY OPERATIONAL HIGHLIGHTS Delivered cost savings of €109 million, representing 3.9% of 2008 first half cost base Strong performance from the European uncoated fine paper business Restructuring initiatives enhancing the Group’s overall cost competitiveness ~470,000t downtime taken in last 12 months
Slide 5: Agenda
AGENDA 1. Highlights 2. Financial overview 3. Operational review 4. Major projects 5. Outlook 6. Summary 7. Appendices Half-yearly results for the six months ended 30 June 2009 Page 5
Slide 6: Operating Financial Highlights
OPERATING FINANCIAL HIGHLIGHTS € millions H1 H2 H1 % Change % Change 2008 2008 2009 (H1 09/H1 08) (H1 09/H2 08) Group revenue 3,263 3,082 2,614 - 20 - 15 EBITDA1 456 358 308 - 32 - 14 % margin 14.0% 11.6% 11.8% Underlying operating profit 2 263 178 138 - 48 - 22 % margin 8.1% 5.8% 5.3% Cash inflow f
Slide 7: Divisional Underlying Operating Profits
DIVISIONAL UNDERLYING OPERATING PROFITS1 120 109 100 H1 2008 H2 2008 80 71 69 66 H1 2009 57 60 50 € millions 45 37 36 40 28 20 12 14 14 11 10 8 Corporate & 1 (3) other - Uncoated Corrugated Bags & South Africa MPSA Merchant & Fine Paper Specialities Newsprint (20) (18) (21) (17) (40) 1 Underlying op
Slide 8: Costs and Cost Saving Initiatives
COSTS AND COST SAVING INITIATIVES COST STRUCTURE H1 2009 COST SAVINGS - €109 MILLION YTD Depreciation Other net and 3.9% 3.6% 3.1% 2.4% 3.9% operating amortisation expenses 6.9% 6.2% 175 Wood, pulp 179 180 180 and fibre 167 30.0% 150 Other variable 125 costs 128 17.9% € million 100 109 75 Maintenanc
Slide 9: Financial Review
FINANCIAL REVIEW € millions H1 H2 H1 % Change % Change 2008 2008 2009 (H1 09/H1 08) (H1 09/H2 08) Underlying operating profit1 263 178 138 - 48 - 22 Net finance costs (55) (104) (58) -5 + 44 Underlying profit before tax 2 210 74 81 - 61 +9 Taxation charge (61) (21) (27) + 56 - 29 Minority interests
Slide 10: Finance Charges and Net Debt
FINANCE CHARGES AND NET DEBT € millions H1 H2 H1 % Change (H1 % Change (H1 2008 2008 2009 09/H1 08) 09/H2 08) Net debt 1,655 1,690 1,661 - -2 Net debt finance charges and other financial income 53 70 52 -2 - 26 Foreign currency losses (1) 29 2 n/a n/a Net post retirement finance costs 3 5 4 + 33 - 2
Slide 11: Taxation
TAXATION € millions H1 H2 H1 % Change % Change 2008 2008 2009 (H1 09/H1 08) (H1 09/H2 08) Underlying tax charge (61) (21) (27) + 56 - 29 Tax on special items - 4 4 + 100 - Total tax charge (61) (17) (23) + 62 - 35 Underlying effective tax rate 29% 29% 34% Effective tax rate before special items of 3
Slide 12: Special Items
SPECIAL ITEMS Operating Non-operating € millions H1 2009 € millions H1 2009 Loss (3) Loss (79) Profit on disposals 5 Impairments & restructuring - By business: Held for sale impairments (8) Europe & International - Bags & Specialities (48) Cartonstrong (Recycled containerboard, Italy) Europe & Inter
Slide 13: Cash Flow
CASH FLOW € millions H1 H2 H1 % Change (H1 % Change (H1 2008 2008 2009 09/H1 08) 09/H2 08) EBITDA 1 456 358 308 - 32 - 14 Working capital movements (126) 153 99 + 179 - 35 Other operating cash flow items (20) (26) (15) + 25 + 42 Cash inflows from operations 310 485 392 + 26 - 19 Dividends from assoc
Slide 14: Working Capital Management
WORKING CAPITAL MANAGEMENT 1,200 24% 1,100 22% 1,000 20% € Millions 900 17.2% 18% 16.3% 15.5% 800 14.6% 12.9% 16% 700 14% 600 11.9% 500 12% 400 10% 2005 2006 2007 H1 2008 2008 H1 2009 Working capital % revenue Further reduction in absolute levels Relative levels impacted mainly by SA operations due
Slide 15: Capital Expenditure
CAPITAL EXPENDITURE 400 300 Major projects 189 135 € millions 200 179 Other, including 27 purchase of 13 intanglibles 100 182 194 141 Depreciation & 130 116 amortisation 0 H1 H2 H1 H2 H1 2007 2007 2008 2008 2009 Major Polish (mid-late 2009) and Russian (2010) projects, on track and budget. Approxima
Slide 16: Dividends
DIVIDENDS Interim dividend of 2.5 euro cents per share Record date 28 August 2009 Payment date 15 September 2009 PAYOUT RATIO MAINTAINED Half-yearly results for the six months ended 30 June 2009 Page 16
Slide 17: Debt Facilities
DEBT FACILITIES € millions H1 H2 H1 % Change (H1 % Change (H1 2008 2008 2009 09/H1 08) 09/H2 08) Net debt 1,655 1,690 1,661 - -2 Committed facilities 2,746 2,752 2,838 +3 +3 Of which undrawn 1,088 1,062 1,073 -1 +1 Gearing (Net debt / Trading capital employed) 33.6% 38.7% 37.9% + 13 -2 Net Debt / tr
Slide 18: Agenda
AGENDA 1. Highlights 2. Financial overview 3. Operational review 4. Major projects 5. Outlook 6. Summary 7. Appendices Half-yearly results for the six months ended 30 June 2009 Page 18
Slide 19: Europe & International
EUROPE & INTERNATIONAL Revenue (€'m) Results up from very weak 2008 fourth quarter ~163,000t of market-related downtime taken, ~8% of available 140 capacity 120 2,742 100 2,417 000 tonnes 2,063 80 Uncoated Fine Paper 60 Virgin Containerboard Recycled Containerboard 40 Kraft paper 20 H1 H2 H1 - 2008
Slide 20: Uncoated Fine Paper
UNCOATED FINE PAPER Revenue (€'m) Strong results in the current climate Low-cost asset base Cost reductions Favourable market positioning 846 719 680 ~36,000t market-related downtime taken (~5% of capacity) H1 H2 H1 2008 2008 2009 Pricing under pressure Underlying operating profit 1,200 (€'m) and ma
Slide 21: Uncoated Fine Paper Industry Fundamentals
UNCOATED FINE PAPER Industry fundamentals 700 1 UFP - capacity closures 600 UFP cumulative cut-size order inflow 2009 vs. 2008 (% growth)2 500 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 000 tonnes 0% 400 (6%) 300 12% removed 200 100 0 2008 2009 (25%) Mondi closure * 140 Cut-size Other All UFP Indust
Slide 22: Corrugated
CORRUGATED Revenue (€'m) Trading environment remains challenging 750 Kraftliner 175 g 700 Testliner 2 White top Kraftliner 650 600 830 725 550 €/tonne 527 500 450 H1 H2 H1 400 2008 2008 2009 350 300 Underlying operating profit 250 (€'m) and margin (%) 2001 2002 2003 2004 2005 2006 2007 2008 2009 40
Slide 23: Corrugated Industry Fundamentals
CORRUGATED Industry fundamentals 1,600 RCB - capacity closures 1 * 1,400 1,200 000 tonnes 1,000 cumulative corrugated order inflow 2009 vs. 2008 (% growth)2 800 8% 0% 600 removed March YTD June YTD 400 (5%) 200 (10%) 0 2008 2009 (10%) Mondi closure * 135 Industry closures 315 1,382 (15%) % of capaci
Slide 24: Bags and Specialities
BAGS AND SPECIALITIES Revenue (€'m) Unbleached sack kraft €/tonne 1,121 1,017 893 H1 H2 H1 2008 2008 2009 2001 2002 2003 2004 2005 2006 2007 2008 2009 Underlying operating profit Source: Mondi 120 (€'m) and margin (%) 12.0% Volumes up on a very weak 2008 fourth quarter 100 9.7% 10.0% 120 Mondi dow n
Slide 25: Bags and Specialities Industry Fundamentals
BAGS AND SPECIALITIES Industry fundamentals 300 1* Kraft paper - capacity closures 250 cumulative sack kraft paper order inflow 2009 vs. 2008 (% growth)2 000 tonnes 200 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 0% 150 12% sack kraft removed (15%) 100 50 (25%) 0 2008 2009 Industry closures - 113 Mondi
Slide 26: South Africa Division
SOUTH AFRICA DIVISION Revenue (€'m) Lower export proceeds from pulp, uncoated fine paper and woodchips lower prices and a stronger Rand 313 274 249 volumes reduced Pulp prices 30% lower than last year – now increasing Domestic uncoated fine paper prices firm – signs of H1 H2 H1 2008 2008 2009 soften
Slide 27: Mondi Packaging South Africa
Mondi Packaging South Africa Revenue (€'m) Benefitted from Q4 2008 price increases, but pricing pressure evident 251 223 227 Volumes soft – market-related downtime of ~33,000t taken H1 H2 H1 2008 2008 2009 Underlying operating profit Emphasis on cost control (€'m) and margin (%) 16 7.0% 6.3% 5.6% 14
Slide 28: Merchant & Newsprint
Merchant & Newsprint Revenue (€'m) Aylesford pricing up around 20% on contract business, although demand weakness and ongoing input cost pressures a concern 293 300 254 Shanduka Newsprint holding up well, although some evidence of softening domestic demand and pricing H1 H2 H1 pressure 2008 2008 200
Slide 29: Agenda
AGENDA 1. Highlights 2. Financial overview 3. Operational review 4. Major projects 5. Outlook Machine hall - 6. Strategy Swiecie, Poland 7. Appendices Half-yearly results for the six months ended 30 June 2009 Page 29
Slide 30: Major Projects
MAJOR PROJECTS Syktyvkar - €525m Both projects on time and within budgeted capital cost Targeted completion dates: Swiecie – September 2009 Syktyvkar – 2010 Market risk mitigation Swiecie – broadly 50% of output sold Swiecie PM7 - €305m into own converting network Syktyvkar – benefits split between
Slide 31: Agenda
AGENDA 1. Highlights 2. Financial overview 3. Operational review 4. Major projects 5. Outlook 6. Summary 7. Appendices Half-yearly results for the six months ended 30 June 2009 Page 31
Slide 32: Outlook Trading
OUTLOOK TRADING “The benefits of the actions taken to restructure the cost base are expected to continue to flow through in the second half. Order inflows in most of our key product areas have improved following a weak start to the year, albeit they remain well down on the prior year. However, the f
Slide 33: Agenda
AGENDA 1. Highlights 2. Financial overview 3. Operational review 4. Major projects 5. Outlook 6. Summary 7. Appendices Half-yearly results for the six months ended 30 June 2009 Page 33
Slide 34: Summary
SUMMARY Resilient performance in challenging conditions / strong financial position Strong performance from uncoated fine paper Low-cost base supported continued profitability Substantial cash inflow from operations despite economic back-drop Debt under control despite major project spend – substant
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Slide 36: Appendices
APPENDICES
Slide 37: Mondi at a glance
Mondi at a glance Bags & Newsprint and UCF Specialities Corrugated South Africa MPSA merchant €1.6B €2.1B €1.6B €0.6B €0.5B €0.6B Sales 2008 (1) EBIT % 8.1% 7.4% 3.2% 18.9% 5.9% 1.2% Products Europe South Africa Europe/SA Positions z No. 2 Office z No. 1 Kraft z No. 2 Kraftliner(2) z No. 1 Kraftline
Slide 38: Industry is responding, albeit slowly: more action needed
Industry is responding, albeit slowly: more action needed Net capacity changes (kt) Grade Net capacity changes (kt) 2008 Net capacity changes (kt) 2009 YTD 2009 H2 - 2010 RCB (testliner / fluting)1 New machines + rebuilds 720 260 1,520 Shutdowns -450 -1,382 ? Net capacity change 270 -1,122 1,520 % o
Slide 39: Production Volumes
PRODUCTION VOLUMES H1 H2 H1 % Change (H1 % Change (H1 2008 2008 2009 09/H1 08) 09/H2 08) Europe & International Containerboard Tonnes 965,319 961,509 836,456 - 13 - 13 Kraft paper Tonnes 461,754 352,433 383,373 - 17 +9 Corrugated board and boxes Mm² 1,143 961 924 - 19 -4 Bag converting m units 1,902
Slide 40: Abridged Income Statement
ABRIDGED INCOME STATEMENT 1 € millions H1 H2 H1 % Change % Change 2008 2008 2009 (H1 09/H1 08) (H1 09/H2 08) Group revenue 3,263 3,082 2,614 - 20 - 15 Materials, energy and consumables used (1,729) (1,655) (1,387) + 20 + 16 Variable selling expenses (281) (261) (225) + 20 + 14 Gross margin 1,253 1,1
Slide 41: Exchange Rates
EXCHANGE RATES H1 H2 H1 % Change (H1 % Change (H1 2008 2008 2009 09/H1 08) 09/H2 08) Closing rates against the euro South African rand 12.34 13.07 10.89 - 12 - 17 Pounds sterling 0.79 0.95 0.85 +8 - 11 Polish zloty 3.35 4.15 4.45 + 33 +7 Russian rouble 36.95 41.28 43.88 + 19 +6 US dollar 1.58 1.39 1
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