Sappi Limited · JSE:SAP
Sappi — Q1 2010 Earnings Presentation
32 slides from Sappi's earnings presentation, Jan 28, 2010
Slide 1: First quarter ended December 2009 results
First quarter ended December 2009 results 28 January 2010
Slide 2: Forward looking statements
Forward looking statements 2 Certain statements in this release that are neither reported financial results nor other historical information, are forward-looking statements, 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: 1Q 2010 Summary
1Q 2010 Summary 4 • Operating Profit excluding special items increased to US$81 million (Q1 09: US$25 million) • General improvement in demand for fine paper and pulp • Increased pulp prices; favourable for SA and NA business, unfavourable for Europe • Basic loss per share 10 US cents (unfavourably
Slide 5: Group Financial Summary
Group Financial Summary 5 Q1 09 Q4 09 Q1 10 YoY Key figures: (US$ million) Sales 1,187 1,553 1,620 EBITDA ex special items 106 150 193 Operating Profit (Loss) 57 (129) 1 Operating Profit ex special items 25 38 81 Net Finance costs 21 14* 73 Basic (Loss) EPS (US cents) 6 (20) (10) Key ratio: (% ) Net
Slide 6: Operating Profit excluding special items
Operating Profit excluding special items * 6 2006: $91m 2007: $313m 2008: $366m 2009: $33m $US Million 100 92 97 80 96 88 89 81 81 60 73 62 63 40 38 20 25 12 16 1 0 -17 -13 -20 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 * Refer to the supplementary informati
Slide 7: Divisional Contribution Trend
Divisional Contribution Trend 7 EBITDA * (US$ million) Fine Paper Forest & Paper Products Corporate 220 6 5 3 1 8 180 6 67 55 77 68 63 13 140 76 79 66 78 73 32 7 100 2 43 32 34 12 32 140 130 60 106 120 113 118 94 90 100 102 87 83 68 63 74 74 20 48 -2 -4 -2 -1 -1 -3 -20 Q106 2Q06 3Q06 4Q06 1Q07 2Q07
Slide 8: Cash Generated from Operations
Cash Generated from Operations 8 250 $396 million* $585 million $623 million $432 million 225 245 200 175 176 150 161 155 161 US$ million 157 156 125 137 142 136 125 100 116 101 95 99 75 77 50 25 42 0 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 * 2006 Cash ge
Slide 9: Net Debt
Net Debt 9 3000 Net Debt (US$ million) Desired debt level 2750 2735 2770 2661 2667 2500 2576 2581 2495 2497 2405 2250 2278 2313 2222 2236 2257 2172 2113 2000 2072 1750 1500 1Q09 * 2Q09** 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 3Q09 4Q09 1Q10 *excludes US$532 million net proceeds
Slide 10: Earnings Versus Prior Quarter
Earnings Versus Prior Quarter 10 Q409 Basic EPS (20) Add: Plantation Revaluation Loss 16 Add: Asset Impairment 14 Less: Fuel Tax Credit (10) Q4 Add: Restructuring Provision 5 2009 Add: Fire, Flood, Storm & related 1 Less: VLN Discount (8) Q409 Adjusted EPS (2) Q110 Basic EPS (10) Add: Plantation Rev
Slide 11: Divisional Operating Margins
Divisional Operating Margins * 11 25% 20% 15% Q1 2010 Margins: 10% F&P Products 8.0% 5% North America 5.9% Europe 2.7% 0% -5% -10% -15% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2006 2007 2008 2009 2010 * The divisional operating margins exclude special items. Refer to page 17 in our Q1 201
Slide 12: Divisional Overview Europe
12 Divisional Overview Europe
Slide 13: W European Coated Fine Paper Apparent Consumption
W European Coated Fine Paper Apparent Consumption* 13 ‘000 metric tons 2006 2007 2008 2009 650 600 550 500 450 400 350 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec • Improving trend for coated woodfree into calendar 2010 • No improvement in coated mechanical Source: Cepifine *Apparent consumption
Slide 14: European Coated Paper Prices
European Coated Paper Prices 14 Germany (€/ton) 1,000 900 800 €755/ton 700 €670/ton €650/ton 600 CWF 100gsm Sheets CWF 100gsm Reels LWC 60gsm offset reels 500 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Source: RISI
Slide 15: Synergy Targets and Achievement
Synergy Targets and Achievement 15 € million Dec-09 Synergies LTM Procurement 41 (Excl. market effects) Asset Optimization 24 SG&A Reduction 29 Other Incl. Recipe & 21 Manufacturing Once-off costs -13 Total 102 Target 3rd year run rate - €120 million
Slide 16: Sappi Fine Paper Europe
Sappi Fine Paper Europe 16 Q1 09 Q4 09 Q1 10 YoY Tons Sold ('000) 556 895 944 Sales ($'m) 561 868 936 Price / Ton ($) 1,009 970 992 Price / Ton (€) 749 677 673 Cost / Ton* (€) 732 665 655 Operating profit ex items** ($'m) 13 16 25 • Sequential CWF demand growth, but down 7% YoY. • Variable costs dow
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 2006 2007 2008 2009 480 440 400 360 320 280 240 200 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec • Improving trend since May 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 1,100 CGW #5 40lb Rolls 1,000 $920/ton 900 $855/ton 800 $765/ton 700 600 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 • Coated freesheet prices have stabilised Source: RISI CWF = Coated Wood
Slide 20: Sappi Fine Paper North America
Sappi Fine Paper North America 20 Q1 09 Q4 09 Q1 10 YoY Tons Sold ('000) 330 355 322 Sales ($'m) 363 340 320 Price / Ton ($) 1,100 958 994 Cost / Ton* ($) 1,121 862 935 Operating Profit ex items** ($'m) (7) 34 19 • Continued strong performance, negatively impacted by scheduled pulp mill shut at Some
Slide 21: Divisional Overview Southern Africa Forest & Paper Products
21 Divisional Overview Southern Africa Forest & Paper Products
Slide 22: NBSK Pulp Price
NBSK Pulp Price* 22 1,000 900 NBSK (US$/ton) NBSK (EUR/ton) 800 $796/ton 700 600 €542/ton 500 400 300 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 * Source: Average monthly FOEX delivered European prices
Slide 23: Sappi Forest & Paper Products
Sappi Forest & Paper Products 23 Q1 09 Q4 09 Q1 10 YoY Tons Sold - Pulp & Paper ('000) 356 470 450 Sales - Pulp & Paper ($'m) 248 331 350 Price / Ton - Pulp & Paper ($) 697 704 778 Price / Ton - Pulp & Paper (ZAR) 6,868 5,435 5,834 Cost / Ton* - Pulp & Paper (ZAR) 6,341 5,566 5,351 Operating Profit
Slide 24: Outlook
Outlook 24 • Conditions in our markets expected to improve gradually in 2010 • Recovery for CWF forecast to be stronger than CM • Continue to manage output to match demand • Rising costs from raw materials expected – chemical cellulose and market pulp prices expected to rise further • Focus remains
Slide 25: Q&A
25 Q&A
Slide 26: Supplementary Information
26 Supplementary Information
Slide 27: Operating Profit - Sappi Group
Operating Profit - Sappi Group 27 Reconciliation of reported operating profit to operating profit excluding special items * US$ million Q1 09 Q4 09 Q1 10 Operating profit as reported 57 (129) 1 Plantation price fair value (gain) loss (34) 111 95 Profit on the sale of assets (1) - 1 Restructuring pro
Slide 28: Operating Profit - Fine Paper Europe
Operating Profit - Fine Paper Europe 28 Reconciliation of reported operating profit to operating profit excluding special items * US$ million Q1 09 Q4 09 Q1 10 Operating profit as reported 13 (59) 12 Profit on the sale of assets - - 1 Asset impairment (reversal) - 74 (8) Restructuring charge - - 17
Slide 29: Operating Profit - Fine Paper North America
Operating Profit - Fine Paper North America 29 Reconciliation of reported operating profit to operating profit excluding special items * US$ million Q1 09 Q4 09 Q1 10 Operating profit as reported (7) 60 67 Restructuring Charge - 23 1 Asset impairment - 1 - Alternative fuel tax credit - (50) (49) Ope
Slide 30: Operating Profit - Forest & Paper Products
Operating Profit - Forest & Paper Products 30 Reconciliation of reported operating profit to operating profit excluding special items * US$ million Q1 09 Q4 09 Q1 10 Operating profit as reported 51 (125) (86) Plantation price fair value (gain) loss (34) 111 95 Profit on the sale of assets (1) - - As
Slide 31: Cash Flow
Cash Flow 31 US$ million Q1 09 Q4 09 Q1 10 Cash generated from operations 95 161 245 - Movement in working capital (96) 127 (170) - Net finance costs paid (44) (27) (64) - Taxation paid 1 - (4) - Dividends paid (37) - - - Cash utilised in investing activities (40) (36) (37) Cash flow after investing
Slide 32: End
End