Slide 1: Mondi Group Investor presentation October 2009
MONDI GROUP Investor presentation October 2009
Slide 2: Agenda
Agenda Delivering on Group strategy Market update Current trading Major projects Summary Page 2
Slide 3: Mondi at a glance
Mondi at a glance Bags & Newsprint and UCF Corrugated Specialities South Africa MPSA merchant €1.6B €1.6B €2.1B €0.6B €0.5B €0.6B 2008 Sales (1) 2008 EBIT % 8.1% 3.2% 7.4% 18.9% 5.9% 1.2% Products Europe South Africa Europe/SA Positions z No. 1 Office z No. 1 Containerboard z No. 1 Kraft z No. 1 Kra
Slide 4: Three key pillars to our strategy
Three key pillars to our strategy Leading market Build on leading positions in packaging and Uncoated Fine Paper positions (UFP), particularly in emerging markets Maintain position as lowest-cost producer in our markets: High quality, low z Selectively investing in production capacity in lower-cost
Slide 5: Focus on packaging and UFP in emerging markets
Focus on packaging and UFP in emerging markets1 Product mix2 Revenue by destination Revenue by origin 9% 30% 49% 51% 46% 61% 54% 54% Packaging Emerging markets Emerging markets UFP Mature markets Mature markets Other Virgin based production Operating Assets 19% 34% 81% 66% Emerging markets Emerging
Slide 6: Emerging market asset base leads to low cost positions
Emerging market asset base leads to low cost positions across the Group’s main grades… Percentage of Mondi Capacity1 in overall cost curve2 Grade 1st 2nd 3rd 4th Quartile Quartile Quartile Quartile - White top Kraftliner 3 100% - - - - Unbleached Kraftliner 100% - Testliner 4 71% 9% 13% 7% Unbleache
Slide 7: Established track-record of rigorous asset management
Established track-record of rigorous asset management… ~760,000 tonne high cost paper exited 2008/9 Closures and Divestitures1 Europe & International ~640,000 tonne South Africa ~120,000 tonne UFP 10 capacity mothballed 5 5 12% reduction of Group capacity 10 6 5 11 10 5 7 7 ~470,000t downtime taken
Slide 8: …and delivering cost savings
…and delivering cost savings COST SAVINGS - €109 MILLION YTD Cost structure first-half COST STRUCTURE H1 20092009 3.9% 3.6% 3.1% 2.4% 3.9% Depreciation Other net and operating amortisation 175 expenses 6.9% 179 180 Material inputs 180 6.2% Wood, pulp 167 Energy 150 Personnel and fibre Maintenance 30
Slide 9: A sharp focus on working capital has resulted in significant cash benefits
A sharp focus on working capital has resulted in significant cash benefits Working capital management 2009 relative (%) levels impacted mainly by 1,200 24% SA operations due to closing euro weakness 1,100 22% versus SA rand 1,000 20% 900 € Millions 17.2% 18% 800 16.3% 15.5% Final-quarter 2008 and fi
Slide 10: Limiting capital expenditure approvals to 40% of depreciation
Limiting capital expenditure approvals to 40% of depreciation, without compromising on performance Capital expenditure trends Mondi is well invested 400 On completion of the Syktyvkar capex programme, all our major mills have seen substantial investment 300 189 New approvals below 40% of 13 135 depr
Slide 11: Delivering strong returns across the cycle
Delivering strong returns across the cycle Group average 19% 9% 11% 7.4%* ROCE1: Leading market 1,050 Kraftliner 175 g positions Unbleached sack kraft 950 UFP (A4 cut-size B-grade) 850 High quality, low 750 cost asset base 650 €/tonne 550 450 Focus on performance 350 2001 2002 2003 2004 2005 2006 20
Slide 12: Agenda
Agenda Delivering on Group strategy Market update Current trading Major projects Summary Page 12
Slide 13: Industry fundamentals – Uncoated Fine Paper
Industry fundamentals – Uncoated Fine Paper UFP cumulative cut-size order inflow 2009 vs. 2008 (% growth)1 Marginally lower pricing in third-quarter 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 0% 1,200 UFP (4%) 1,100 1,000 €/tonne 900 (25%) Cut-size Other All UFP (4%) (15%) (10%) 800 7
Slide 14: Industry fundamentals – Uncoated Fine Paper capacity
Industry fundamentals – Uncoated Fine Paper UFP capacity developments1 Capacity developments ~766kt (~7%) additional capacity1, mainly from Portucel Limited impact to date, although too 000 tonnes 173 766 (716) soon to conclude on full impact (511) 50 ~12% capacity closures in 2008 / 2009 (210) 4% n
Slide 15: Industry fundamentals – Corrugated
Industry fundamentals – Corrugated cumulative corrugated order inflow 2009 vs. 2008 (% growth)1 Trading environment remains challenging 0% although notable positive price Mar Jun Jul Aug Sep developments in recent weeks across all (5%) (8%) grades (10%) 700 600 (15%) 500 €/tonne (20%) 400 Kraftliner
Slide 16: Industry fundamentals – Corrugated capacity
Industry fundamentals – Corrugated RCB1 capacity developments3 Capacity developments ~8% capacity closures in 2008 / 2009 000 tonnes 1,466 (1,482) ?? Substantial new Testliner capacity in 695 (445) construction 900 5% net capacity increase Pricing impact uncertain expected 2008-2010 New Rational- Ne
Slide 17: Industry fundamentals – Kraft Paper
Industry fundamentals – Kraft Paper cumulative sack kraft paper order inflow 2009 vs. 2008 (% growth)1 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 0% (8%) Unbleached sack kraft (25%) €/tonne (50%) (75%) 2001 2002 2003 2004 2005 2006 2007 2008 2009 Nominal prices Market stabilised follo
Slide 18: Industry fundamentals – Kraft Paper capacity
Industry fundamentals – Kraft Paper Sack Kraft Paper capacity Capacity developments1 developments ~10% (~235ktpa) of sack kraft paper capacity closures in 2009/2010, of which 10 40 (160) ~8% (~180ktpa) is Mondi capacity 000 tonnes No major new capacity announcements 8% net capacity reduction (75) ex
Slide 19: Agenda
Agenda Delivering on Group strategy Market update Current trading Major projects Summary Page 19
Slide 20: Half-year 2009 financial highlights
Half-year 2009 financial highlights Earnings down versus half-year 2008 EBITDA down 32% at €308 million Underlying operating profit down 48% at €138 million Underlying EPS down 67% at 8.3 euro cents Group ROCE of 7.4% Substantial cash inflow from operations of €392 million, 26% above prior period Ne
Slide 21: Adequate debt facilities available in medium-term
Adequate debt facilities available in medium-term € 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%
Slide 22: October 2009 trading highlights
October 2009 trading highlights Trading is in line with expectations Effect of lower average selling prices compared to first-half is evident Order inflows recovering from Q1 lows, despite traditional European summer weakness Europe & international continuing to perform well Downtime significantly r
Slide 23: October 2009 trading highlights
October 2009 trading highlights South Africa Division’s market fundamentals remain challenging Rand strength, exacerbating export weakness Further restructuring of cost base in progress Other businesses broadly in line MPSA benefitting from domestic prices and Rand strength Merchant weakness partial
Slide 24: Agenda
Agenda Delivering on Group strategy Market update Current trading Major projects Summary Page 24
Slide 25: Operational excellence evidenced in the start-up of Swiecie's PM7
Operational excellence evidenced in the start-up of Swiecie’s PM7 Brown field expansion – lowest operating Swiecie PM7 - €305m September average actual cost of its type : Average* production actual 805t / day production 805 t/ day 775 t/ day - target dec 2009 ~€70m capital cost benefit ~€30-€40 / to
Slide 26: The Syktyvkar mill modernisation will further enhance Mondi's low cost position
The Syktyvkar mill modernisation will further enhance Mondi’s low cost position Syktyvkar - €525m On track for mid-2010 completion Within capital cost target Limited market risk UFP (universal) cost curve Project returns 1,200 Wood/pulp 1,000 production Paper €/tonne sales 800 Syktyvkar PM14 600 400
Slide 27: Agenda
Agenda Delivering on Group strategy Market update Current trading Major projects Summary Page 27
Slide 28: Summary
Summary Resilient performance in challenging conditions / strong financial position Uncoated fine paper continues to perform Low-cost base supported continued profitability Substantial cash inflow from operations despite economic back-drop Debt under control despite major project spend – substantial
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