Sonae Indústria S.G.P.S — Sonae Indústria — Investor Presentation (March 2010)
58 slides from Sonae Indústria S.G.P.S's investor presentation, March 2010
Slide 1: Sonae Indústria Investor Presentation March 2010
SONAE INDÚSTRIA INVESTOR PRESENTATION March 2010 1
Slide 2: Overview
OVERVIEW MG SONAE i INDUSTRIA
Slide 3: Shareholder Structure
OVERVIEW SONAE INDÚSTRIA SHAREHOLDER STRUCTURE SHAREHOLDER STRUCTURE AT 31st DECEMBER 2009 EFANOR FREE FLOAT 51.356% 48.644% Sonae Indústria SGPS 3
Slide 4: One of the largest wood panel producers in the world
OVERVIEW SONAE INDÚSTRIA WE ARE ONE OF THE LARGEST WOOD PANEL PRODUCERS IN THE WORLD. WORLD. WITH 29 PLANTS LOCATED IN 8 COUNTRIES AND SPREAD ACROSS 3 CONTINENTS. CONTINENTS. OUR BUSINESS IS EXCLUSIVELY FOCUSED ON THE PRODUCTION OF WOOD BASED PANELS. PANELS. 4
Slide 5: Our Operations
OVERVIEW SONAE INDÚSTRIA OUR OPERATIONS * As of February 2010 5
Slide 6: Our Products: PB, MDF, OSB
OVERVIEW SONAE INDÚSTRIA OUR PRODUCTS OVER 90% OF OUR RAWBOARD CAPACITY IS TO MANUFACTURE PB & MDF. PB MDF OSB Very versatile Excellent substitute for Suitable for structural and solid wood non-structural applications Suitable for all general in the construction uses in furniture and Ideal for furni
Slide 7: Our Products
OVERVIEW SONAE INDÚSTRIA OUR PRODUCTS WITH VARIOUS APPLICATIONS KITCHEN / OFFICE / HOME FURNITURE CONSTRUCTION FLOORING DECORATION PACKAGING 7
Slide 8: Sales
OVERVIEW SONAE INDÚSTRIA SALES IN 2009*, APPROXIMATELY 82% OF OUR SALES WERE GENERATED IN EUROPE WE TRANSFORM MORE THAN 50% INTO VALUE ADDED PRODUCTS SALES BY MARKET SALES BY PRODUCT FLOORING PB S.AFRICA 1% 20% 8% IBERIAN P. OTHERS CANADA 25% T&G 11% 10% 5% UK CTS 6% 9% MDF 17% FRANCE 14% HB 1% MF O
Slide 9: Our History
OVERVIEW SONAE INDÚSTRIA OUR HISTORY Acquisition and SONAE (Sociedade modernization of Nacional de AGLOMA – the largest Estratificados, SARL) domestic Particleboard was established to Starting the producer in Portugal international manufacture decorative High expansion with the Pressure laminates ac
Slide 10: Our History
OVERVIEW SONAE INDÚSTRIA OUR HISTORY SINCE 1993 SONAE INDÚSTRIA’S INSTALLED CAPACITY GREW THROUGH BOTH ACQUISITIONS AND ORGANIC GROWTH. 2005: JV with 2008 and 1997: Investment period in Tarkett 2009: 1999- 1999-2004: 2004: (Germany) Restructuring Greenfield plants in Brazil, Restructure of Glunz Pha
Slide 11: Wood Based Panel Players
OVERVIEW SONAE INDÚSTRIA WOOD BASED PANEL PLAYERS WE ARE ONE OF THE LARGEST GLOBAL MANUFACTURERS OF WOOD BASED PANELS IN EUROPE AND WORLDWIDE EUROPE Thousands of m 3 WORLDWIDE Thousands of m 3 M&P Kaindl (Kronospan) 13.800 M&P Kaindl (Kronospan) 13.200 Sonae Indústria 7.985 Sonae Indústria 6.570 Pfl
Slide 12: Capacity Production
OVERVIEW SONAE INDÚSTRIA CAPACITY PRODUCTION TOTAL CAPACITY (RAWBOARD) IS 8 MILLION M3, APPROXIMATELY 82% OF WHICH IS LOCATED IN EUROPE. SONAE INDÚSTRIA RAWBOARD CAPACITY BY REGION SONAE INDÚSTRIA RAWBOARD CAPACITY BY PRODUCT Thousands of m 3 Thousands of m 3 6.000 5.685 6.000 5.000 1.345 4.780 5.00
Slide 13: Overview Figures
OVERVIEW SONAE INDÚSTRIA OVERVIEW FIGURES FY 09 CONSOLIDATED TURNOVER OF 1.3 BILLION EUROS RECURRENT EBITDA OF 46 MILLION EUROS; MARGIN OF 4% TOTAL EBITDA OF 104 MILLION EUROS, WHICH INCLUDES THE CAPITAL GAIN OF TAFISA BRASIL OF 84 MILLION EUROS AND APPROX. 31 MILLION EUROS OF RESTRUCTURING COSTS; T
Slide 14: Geographical Regions
OVERVIEW SONAE INDÚSTRIA GEOGRAPHICAL REGIONS 800 TURNOVER & RECURRENT EBITDA IBERIA WITH VARYING LEVELS OF 700 € Mn PROFITABILITY BETWEEN OUR 3 600 533 MAIN GEOGRAPHICAL REGIONS: 500 459 453 400 341 18% 300 15% 200 10% 10% € RoW Turnover & Recurrent EBITDA Margin 100 0 347 346 362 FY06 FY07 FY08 FY
Slide 15: Highlights of FY09 Results
HIGHLIGHTS OF FY09 RESULTS 15
Slide 16: Consolidated Operational Review
HIGHLIGHTS OF FY09 RESULTS SONAE INDÚSTRIA CONSOLIDATED OPERATIONAL REVIEW Strengthening our Balance Sheet On August 26, we sold Tafisa Brasil, SA to a company owned by Celulosa Arauco Y Constitución, SA of Chile. This decision was in line with our strategy of strengthening our balance sheet and was
Slide 17: Consolidated Operational Review
HIGHLIGHTS OF FY09 RESULTS SONAE INDÚSTRIA CONSOLIDATED OPERATIONAL REVIEW Restructuring process underway: Measures to reduce fixed costs resulted in savings of 51 million Euros in FY09, when compared to FY08 (including 5 million Euros regarding Brazil operations). We expect further cost reductions
Slide 18: Consolidated Operational Review
HIGHLIGHTS OF FY09 RESULTS SONAE INDÚSTRIA CONSOLIDATED OPERATIONAL REVIEW During 2009, 4Q09 was the strongest quarter in terms of Sales volumes Capacity utilization is increasing led by higher sales volumes and less capacity installed CONSOLIDATED VOLUME SALES WITHOUT BRAZIL Millions of m3 Capacity
Slide 19: Price and Cost Evolution
HIGHLIGHTS OF FY09 RESULTS SONAE INDÚSTRIA PRICE AND COST EVOLUTION CONSOLIDATED QUARTERLY AVERAGE COSTS * (eur/m3) BASE 100:1Q07 Chemical costs have been 1,4 flat; wood costs increased 1,2 during 4Q09, led by seasonal 1,0 price increases and 0,8 macroeconomic recovery 0,6 0,4 1Q07 2Q07 3Q07 4Q07 1Q
Slide 20: Chemicals: Urea and Methanol
HIGHLIGHTS OF FY09 RESULTS SONAE INDÚSTRIA CHEMICALS: UREA AND METHANOL CHEMICAL COSTS HAVE A SIGNIFICANT IMPACT IN OUR COST STRUCTURE (AROUND 30% VARIABLE COSTS) UREA AND METHANOL ARE THE MAIN CHEMICALS USED TO PRODUCE RESINS USED IN OUR PRODUCTION NWE ICIS Methanol Prices - Out. 2003_2009 480 Euro
Slide 21: Consolidated Operational Review
HIGHLIGHTS OF FY09 RESULTS SONAE INDÚSTRIA CONSOLIDATED OPERATIONAL REVIEW Consolidated operational figures, excluding Brazil: Consolidated Turnover in 4Q09, when compared to 3Q09, increased by 8% to 312 million Euros; Recurrent EBITDA increased from 3.7% to 5.1%, from 11 to 16 million Euros In 4Q09
Slide 22: Geographic Review of Operations: Iberia
HIGHLIGHTS OF FY09 RESULTS SONAE INDÚSTRIA GEOGRAPHIC REVIEW OF OPERATIONS IBERIA Iberia continue to suffer from tough TURNOVER & RECURRENT EBITDA IBERIA market conditions. Nevertheless, we Millions of Euros increased our sales volumes during 140 30,0% this 4Q09, achieving the highest 120 quarterly
Slide 23: Geographic Review: Central Europe
HIGHLIGHTS OF FY09 RESULTS SONAE INDÚSTRIA GEOGRAPHIC REVIEW OF OPERATIONS CENTRAL EUROPE (Germany, France and the UK) In Central Europe, we achieved TURNOVER & RECURRENT EBITDA CENTRAL EUROPE break-even during 4Q09. Millions of Euros 200 0,0% In Germany we were able to 192 193 195 -1,0% implement p
Slide 24: Geographic Review: Rest of the World
HIGHLIGHTS OF FY09 RESULTS SONAE INDÚSTRIA GEOGRAPHIC REVIEW OF OPERATIONS REST OF THE WORLD (Canada and South Africa) In Canada, demand is still weak but we € Mn RoWTurnover & Recurrent EBITDA Margin were able to increase turnover, driven by higher volumes sold in 4Q09 compared to 3Q09. 83 79 71 In
Slide 25: Consolidated Financial Review
HIGHLIGHTS OF FY09 RESULTS SONAE INDÚSTRIA CONSOLIDATED FINANCIAL REVIEW In 2009, additions to Fixed Assets totalled 28 million Euros, mostly related to essential investments in maintenance, Health & Safety and Environmental improvements Working Capital decreased by 101 million Euros during 2009. We
Slide 26: Scheduled Loan Repayments
HIGHLIGHTS OF FY09 RESULTS SONAE INDÚSTRIA SCHEDULED LOAN REPAYMENTS SCHEDULED LOAN REPAYMENTS * (as of 31st December 2009) 250 240 230 220 210 200 190 180 170 160 150 140 130 120 110 100 209 90 80 70 60 115 50 67 93 113 40 30 20 43 37 10 0 1H10 2H10 2011 2012 2013 2014 >2014 In 2009, we have raised
Slide 27: Profit & Loss Account
HIGHLIGHTS OF FY09 RESULTS SONAE INDÚSTRIA PROFIT & LOSS ACCOUNT (euro millions) 2008 1Q'09 1H09 9M'09 FY09 Turnover 1.769 346 671 971 1.283 Other Operational Income 114 11 25 103 162 EBITDA 139 4 13 78 104 Recurrent EBITDA 100 6 19 30 46 Recurrent EBITDA Margin % 5,7% 1,7% 2,8% 3,1% 3,6% Depreciati
Slide 28: Balance Sheet
HIGHLIGHTS OF FY09 RESULTS SONAE INDÚSTRIA BALANCE SHEET (euro millions) 2008 1Q'09 1H09 9M'09 FY09 Non Current Assets 1.386 1.384 1.413 1.250 1.233 Tangible Assets 1.203 1.198 1.224 1.098 1.083 Goodwill 104 104 107 92 92 Deferred Tax 54 55 57 36 33 Other Non Current Assets 26 26 25 24 24 Current As
Slide 29: Looking Forward
LOOKING FORWARD 29
Slide 30: Looking Forward
HIGHLIGHTS OF FY09 RESULTS SONAE INDÚSTRIA LOOKING FORWARD We expect a continuing recovery in the wood based panels industry over the coming quarters both in terms of sales volumes and sales prices; Increased activity is expected to create pressure on raw material prices; Fixed costs should continue
Slide 31: Our Strategy
OUR STRATEGY 31
Slide 32: Our Focus
OUR STRATEGY SONAE INDÚSTRIA OUR FOCUS Our PORTFOLIO STRATEGY: Protect market share and profitability in Iberia Increase Profitability and improve competitiveness in Central Europe Grow in our most profitable markets But… our SHORT TERM STRATEGY during the crisis has been focused on: Balance Sheet:
Slide 33: Managing for Cash
OUR SHORT TERM STRATEGY – FOCUS ON BALANCE SHEET SONAE INDÚSTRIA MANAGING FOR CASH WORKING CAPITAL HAS BEEN REDUCED INVESTMENTS HAVE BEEN MINIMIZED Additional Fixed Assets Million Euros 210 202 WORKING CAPITAL: 2007 - 2009 180 58 € Mn 150 500 120 53 110 400 90 31 23 300 25 60 200 16 68 28 30 4 100 3
Slide 34: Strengthening Our Balance Sheet: Reasons to Sell Tafisa Brasil
OUR SHORT TERM STRATEGY – FOCUS ON BALANCE SHEET SONAE INDÚSTRIA STRENGTHENING OUR BALANCE SHEET REASONS TO SELL TAFISA BRASIL BRAZIL RAWBOARD CAPACITY PLANS (PB+MDF) Thousands m 3 2,500 we wanted to strengthen our balance 2,040 1,750 sheet 8. million m3 2,000 (2012) 1,474 800 400 Capacity has been
Slide 35: Impacts from Selling Tafisa Brasil
OUR SHORT TERM STRATEGY – FOCUS ON BALANCE SHEET SONAE INDÚSTRIA STRENGTHENING OUR BALANCE SHEET IMPACTS FROM SELLING TAFISA BRASIL Total Value of the transaction: 121 million Euros Net Debt + contingencies: 38 million Euros Enterprise Value: 159 million Euros Multiple of 7.8x (adding 60 million Eur
Slide 36: Increasing Profitability
OUR SHORT TERM STRATEGY – FOCUS ON P&L SONAE INDÚSTRIA INCREASING PROFITABILITY WE HAVE BEEN ADAPTING OUR CAPACITY TO THE MARKET DEMAND, BY CLOSING OUR LESS EFFICIENT PLANTS AND/OR LINES IN ORDER TO INCREASE PROFITABILITY 29* • As of January 2010 • Coleraine continues to have a MF line • Kaisersesch
Slide 37: Increasing Profitability: Capacity Closed
OUR SHORT TERM STRATEGY – FOCUS ON P&L SONAE INDÚSTRIA INCREASING PROFITABILITY IN TOTAL, WE HAVE CLOSED 1.455.000 m3 CAPACITY. 2008 2009 We closed 5 plants: We stopped two lines: Coleraine in the UK – 100.000 m3 PB MDF Line 1 in Meppen – Topan I – 110.000 m3 George in S.A.- 60.000 m3 PB PB Line in
Slide 38: Geographic Review of Operations
GEOGRAPHIC REVIEW OF OPERATIONS 38
Slide 39: Iberia
GEOGRAPHIC REVIEW OF OPERATIONS SONAE INDÚSTRIA IBERIA Sonae Indústria Iberian Capacity Thousands m 3 IBERIA COMPETITIVE LANDSCAPE MDF 500 PB 1.220 HB 70 PARTICLEBOARD MDF FLOORING HARDBOARD HPL CHEMICALS OTHERS (FURNITURE, COMPONENTS, WOOD VENEER) Source: Sonae Indústria (Feb. 2010) 39
Slide 40: Iberia: Competitive Landscape
GEOGRAPHIC REVIEW OF OPERATIONS SONAE INDÚSTRIA IBERIA IBERIA COMPETITIVE LANDSCAPE INSTALLED RAWBOARD CAPACITY IN IBERIA - TOP PLAYERS Millions m3 PLANTS 12 Finsa/Utisa 3,15 CAPACITY Sonae Indústria 1,79 1,79 Million m3 CAPACITY UTILIZATION FY09 FY09 Interbon 0,97 63% Losan 0,38 Tablicia 0,37 Sourc
Slide 41: Central Europe
GEOGRAPHIC REVIEW OF OPERATIONS SONAE INDÚSTRIA CENTRAL EUROPE CENTRAL EUROPE Sonae Indústria Central Europe Capacity Thousands m 3 COMPETITIVE LANDSCAPE MDF 1.200 PB 3.120 OSB 460 UK GERMANY FRANCE PARTICLEBOARD MDF HPL CPL Source: Sonae Indústria (Feb. 2010) 41
Slide 42: Central Europe: Competitive Landscape
GEOGRAPHIC REVIEW OF OPERATIONS SONAE INDÚSTRIA CENTRAL EUROPE CENTRAL EUROPE COMPETITIVE LANDSCAPE PLANTS Millions m3 INSTALLED RAWBOARD CAPACITY IN CENTRAL EUROPE - TOP PLAYERS 13 CAPACITY 4.78 Million m3 CAPACITY UTILIZATION FY09 FY09 Sonae Indústria 4,78 67% Egger 3,62 Kronospan M&P Kaindl 3,40
Slide 43: Rest of the World: North America
GEOGRAPHIC REVIEW OF OPERATIONS SONAE INDÚSTRIA NORTH AMERICA PLANTS REST OF THE WORLD 1 NORTH AMERICA CAPACITY COMPETITIVE LANDSCAPE 0.9 Million m3 CAPACITY UTILIZATION FY09 FY09 66% INSTALLED RAWBOARD CAPACITY IN NORTH AMERICA (PB+MDF) - TOP PLAYERS M Flakeboard 2,74 Roseburg 2,44 Pfleiderer 1,90
Slide 44: Rest of the World: South Africa
GEOGRAPHIC REVIEW OF OPERATIONS SONAE INDÚSTRIA SOUTH AFRICA REST OF THE WORLD Sonae Indústria S.A. Capacity Thousands m 3 SOUTH AFRICA COMPETITIVE LANDSCAPE PB 445 MDF 70 SOUTH AFRICA PARTICLEBOARD MDF Source: Sonae Indústria (Feb. 2010) 44
Slide 45: South Africa: Competitive Landscape
GEOGRAPHIC REVIEW OF OPERATIONS SONAE INDÚSTRIA SOUTH AFRICA REST OF THE WORLD SOUTH AFRICA COMPETITIVE LANDSCAPE INSTALLED RAWBOARD CAPACITY IN SOUTH AFRICA - TOP PLAYERS Millions m3 PLANTS 2 PG Bison 0,71 CAPACITY 0,57 Million m3 CAPACITY UTILIZATION 9M09 Sonae Indústria 0,57 60% Source: Sonae Ind
Slide 46: Corporate Governance
CORPORATE GOVERNANCE 46
Slide 47: Board of Directors
CORPORATE GOVERNANCE SONAE INDÚSTRIA BOARD OF DIRECTORS Belmiro de Azevedo [Chairman] BOARD OF Álvaro Cuervo García Paulo Azevedo DIRECTORS Per Knuts Thomas Nystén Carlos Bianchi de Aguiar [CEO] Rui Correia [CFO] Christophe Chambonnet Carlos Bianchi de Aguiar [CEO] EXECUTIVE Rui Correia [CFO] Christ
Slide 48: Board Committees
CORPORATE GOVERNANCE SONAE INDÚSTRIA BOARD COMMITTEES 48
Slide 49: More on Sonae Indústria
MORE ON SONAE INDÚSTRIA 49
Slide 50: Human Resources
MORE ON SONAE INDÚSTRIA SONAE INDÚSTRIA HUMAN RESOURCES Approximately 6.5 thousand Employees at the end of 2008 Number of Employees & Productivity N. Employees 1) Productivity Turnover/Pax BASE 100: 2002 South Africa; The 450 Netherlands; 10,000 195.0 18 181.0 Brazil; 362 Iberia; 2,097 167.0 166.3 8
Slide 51: Sustainability Report of Sonae Indústria
MORE ON SONAE INDÚSTRIA SONAE INDÚSTRIA SUSTAINABILITY SUSTAINABILITY REPORT OF SONAE INDÚSTRIA Strategic formalisation to approach sustainability reporting and process in the coming years Vision, Mission, Values and Principles Code of Conduct Environmental Resources and Efficiency Communication Str
Slide 52: Our Values
MORE ON SONAE INDÚSTRIA SONAE INDÚSTRIA OUR VALUES 52
Slide 53: Code of Conduct
CORPORATE GOVERNANCE SONAE INDÚSTRIA CODE OF CONDUCT In 2008, Sonae Indústria implemented a renewed CODE OF CONDUCT, which contains a set of standards based on our shared values that govern the activities of the Sonae Indústria Group; applies to everyone employed by the Group sets out guidance on th
Slide 54: Sustainable Use of Wood and Recycling
MORE ON SONAE INDÚSTRIA SONAE INDÚSTRIA SUSTAINABLE USE OF WOOD AND RECYCLING Wood- Wood-based panels incorporate a high percentage of sawmill co- co-products and wood residues as raw materials: materials: forestry residues pallets old or used wood based panels old or used furniture 54
Slide 55: Sustainable Use of Wood and Recycling
MORE ON SONAE INDÚSTRIA SONAE INDÚSTRIA SUSTAINABLE USE OF WOOD AND RECYCLING Wood- Wood-based panels play a key role in the sustainable use of forestry resources as they: represent the natural alternative to solid wood, replacing it in an increasing number of applications allow significant dimensio
Slide 56: CO2 Emissions Mitigation
MORE ON SONAE INDÚSTRIA SONAE INDÚSTRIA CO2 EMISSIONS MITIGATION Wood- Wood-based panels help to mitigate climate change: forests are a recognised carbon sink (through photosynthesis) forestry products are CARBON STORES wood-based panels are actually long-term carbon stores if used in construction a
Slide 57: Cogeneration (CHP)
MORE ON SONAE INDÚSTRIA SONAE INDÚSTRIA COGENERATION (CHP) Energy is produced in Combined Heat and Power (CHP) plants non-recyclable waste wood (biomass) is used as fuel for thermal energy production to be used in industrial processes surplus heat is used to additional produce electricity to supply
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