Sappi Limited · JSE:SAP
Sappi — Q4 2012 Earnings Presentation
34 slides from Sappi's earnings presentation, Nov 8, 2012
Slide 1: Q4 2012 Results Presentation
Q4 2012 Results Presentation 8 November 2012
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, including but not limited to statements that are predictions of or indicate future earnings, savings, synergies, events, trends,
Slide 3: Summary
Summary | Q4 2012 Results | 8 November 2012
Slide 4: Q4 2012 Summary
4 Q4 2012 Summary • Net profit US$ 107m (Q4 11 loss US$ 127m) • Earnings per share of 21 US cents (Q4 11 loss 24 US cents) • Operating profit excluding special items US$ 118m (Q4 11 US$ 80m) • Net cash generated US$ 203m (Q4 11 US$ 279m) • Targeted net debt level reached a year early – US$ 1,979m |
Slide 5: FY2012 Summary
5 FY2012 Summary • Return to net profitability – US$104 million • Positive EPS – 20 US cents • Net debt reduced despite increased capital expenditure • Refinance of 2014 bonds – reduced interest costs going forward • Conversion projects well under way • Significant cost reduction in Europe and SA |
Slide 6: Group Financial Summary
6 Group Financial Summary Q4 11 Q4 12 FY 11 FY 12 Key figures: (US$ million) Sales volume ('000) 1,978 1,980 7,898 7,705 Sales 1,787 1,585 7,286 6,347 EBITDA ex special items 183 211 821 772 Operating Profit ex special items* 80 118 404 403 Net Profit (Loss) (127) 107 (232) 104 Basic EPS (US cents)
Slide 7: Operating Profit excluding special items
7 Operating Profit excluding special items* 160 2009: $33m 2010: $339m 2011: $404m 2012: $403m 140 120 100 80 137 129 127 125 60 118 100 40 81 75 80 54 60 60 20 38 25 0 ‐17 ‐13 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1** Q2 Q3 Q4 Q1 Q2 Q3 Q4 ‐20 2009 2010 2011 2012 *Refer to the supplementary information in this p
Slide 8: EBITDA Trend
8 EBITDA* Trend 300 2009: $431m 2010: $752m 2011: $821m 2012: $772m 250 200 150 246 227 228 217 211 100 193 194 176 183 156 164 150 150 50 106 93 82 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1** Q2 Q3 Q4 Q1 Q2 Q3 Q4 2009 2010 2011 2012 *EBITDA as shown above excludes special items. Refer to page 18 in our Q4 2012
Slide 9: Divisional Overviews
Divisional Overviews | Q4 2012 Results | 8 November 2012
Slide 10: Divisional Operating Margins
10 Divisional Operating Margins* 20.0% 15.0% Q4 ‘12 Margins: N‐America 11.1% 10.0% S‐Africa 8.8% 5.0% Europe 5.3% 0.0% ‐5.0% ‐10.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1** Q2 Q3 Q4 Q1 Q2 Q3 Q4 2009 2010 2011 2012 *The divisional operating margins exclude special items. Refer to page 18 in our Q4 2012 results a
Slide 11: Sappi Fine Paper Europe
11 Sappi Fine Paper Europe • Volumes as expected: down 5% year-on-year, up 6% sequentially on seasonal strength. • For the full year, sales volumes down 9% due primarily to Biberist, yet all profitability metrics improved • Fixed costs down 7% year-on-year, input costs were lower, notably pulp – tot
Slide 12: Sappi Fine Paper North America
12 Sappi Fine Paper North America • Industry conditions worsened, but our coated paper sales volumes were similar to those from last year reflecting strong customer commitments – margins have improved • Pulp business continues to be impacted by lower market prices – Cloquet conversion continues on s
Slide 13: Cloquet Conversion
13 Cloquet Conversion | Q4 2012 Results | 8 November 2012
Slide 14: Sappi Southern Africa
14 Sappi Southern Africa • Specialised Cellulose • Rescheduled annual Q3 shut to Q4 • Lower average NBSK prices, offset by weaker Rand • R413m EBITDA ex-items = 30% EBITDA margin • Demand strong • Ngodwana conversion continues on schedule • Paper and packaging • Fixed costs down 20% year-on-year on
Slide 15: Ngodwana Conversion
15 Ngodwana Conversion | Q4 2012 Results | 8 November 2012
Slide 16: Strategic Focus
Strategic Focus | Q4 2012 Results | 8 November 2012
Slide 17: Focus Areas
17 Focus Areas Specialised Cellulose • Maintain excellent Saiccor production rates and customer service – record production volumes in 2012 • Significant portion of new capacity contracted – realistic prices ensure competitiveness • Both CC projects remain on schedule (FQ3 2013) Europe • Further imp
Slide 18: Focus Areas
18 Focus Areas North America • Paper pulp sales before conversion • Production efficiencies – improve cost and sales volumes South Africa paper and packaging • Generating acceptable returns – Tugela is the focus • Variable cost reduction • Cash generation • Forestry land optimisation and growth Debt
Slide 19: Net Debt Development
19 Net Debt Development Net Debt falls below targeted $2Bn level 3,000 2,500 2,000 1,500 1,000 Q1 2009 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 | Q4 2012 Results | 8 November 2012
Slide 20: Debt Maturity Profile – End FY 2012
20 Debt Maturity Profile – End FY 2012 Ample Liquidity ‐ No major maturities until 2017 | Q4 2012 Results | 8 November 2012
Slide 21: Outlook
Outlook | Q4 2012 Results | 8 November 2012
Slide 22: Outlook
22 Outlook • Market conditions are expected to remain challenging for the next fiscal year on the back of a generally weak economic outlook • Demand expected to continue to grow for dissolving wood pulp in our Specialised Cellulose operations • For the 1st quarter, operating profit is expected to be
Slide 23: Outlook
23 Outlook • Additional downtime, variable costs, and market pulp purchases during the start-up phases at Ngodwana and Cloquet are expected to have an unfavorable impact of approximately US$ 40m in FY 2013 • Provided there is no further deterioration in global markets, we expect continued profit gro
Slide 24: Q&A
Q&A | Q4 2012 Results | 8 November 2012
Slide 25: Supplementary Information
Supplementary Information | Q4 2012 Results | 8 November 2012
Slide 26: Earnings Versus Prior Quarter
26 Earnings Versus Prior Quarter Q3 12 Basic EPS -20 Add: Fair Value Pricing 3 Q3 Add: Flood Damage 1 2012 Add: Once-off Finance charges 17 Q3 12 Adjusted EPS 1 Q4 12 Basic EPS 21 Less: Profit on Sale of Assets (11) Less: Fair Value Pricing (1) Add: Fire/Flood Damage Q4 9 1 2012 Add: Asset impairmen
Slide 27: W. Europe Coated Paper Deliveries & Prices
27 W. Europe Coated Paper Deliveries & Prices 1.2 1.1 1.0 0.9 Q2 2007 = 100 0.8 0.7 0.6 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2007 2008 2009 2010 2011 2012 CWF MCR CWF 100gsm sheets prices LWC 60gsm offset reels prices Western Europe Shipments Incl. Export – Source Cep
Slide 28: Sappi Fine Paper Europe
28 Sappi Fine Paper Europe Q4 11 Q4 12 FY 11 FY 12 Tons Sold ('000) 942 896 3,845 3,507 Sales ($'m) 942 826 3,965 3,350 Price / Ton ($) 1,000 922 1,031 955 Price / Ton (€) 708 737 739 735 Cost / Ton* (€) 704 697 727 706 Operating profit ex items** ($'m) 5 45 68 133 * Sales less operating profit excl
Slide 29: US Coated Paper Prices and Shipments
29 US Coated Paper Prices and Shipments 1.3 1.2 1.1 1.0 0.9 Q2 2007= 1 0.8 0.7 0.6 0.5 0.4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2007 2008 2009 2010 2011 2012 Domestic CFS shipments Total US CFS consumption CFS #3 60lb Rolls prices US Industry Shipments and total US co
Slide 30: Sappi Fine Paper North America
30 Sappi Fine Paper North America Q4 11 Q4 12 FY 11 FY 12 Tons Sold ('000) 379 369 1,436 1,400 Sales ($'m) 395 377 1,520 1,438 Price / Ton ($) 1,042 1,022 1,058 1,027 Cost / Ton* ($) 953 908 969 960 Operating Profit ex items** ($'m) 34 42 129 94 * Sales less operating profit excluding special items
Slide 31: NBSK Pulp Price
31 NBSK Pulp Price* 1,100 NBSK (US$/ton) NBSK (EUR/ton) 1,000 900 800 $775/ton 700 600 €597/ton 500 400 300 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Oct-12 Oct-11 • Pulp prices down, increases have been announced * Source: Average monthly FOEX delivered European prices | Q4 2012 Resul
Slide 32: Sappi Southern Africa
32 Sappi Southern Africa Q4 11 Q4 12 FY 11 FY 12 Tons Sold ('000) 428 423 1,700 1,676 Sales ($'m) 430 361 1,721 1,475 Price / Ton ($) 1,005 853 1,012 880 Price / Ton (ZAR) 7,138 7,046 7,044 7,087 Cost / Ton* (ZAR) 6,458 6,402 6,229 6,232 Operating Profit ex items** ($'m) 41 33 199 178 * Sales less o
Slide 33: Cash Flow
33 Cash Flow Q4 11 Q4 12 FY 11 FY 12 Cash generated from operations 183 182 798 728 - Movement in working capital 266 115 (98) (102) - Net finance costs paid (62) (38) (256) (195) - Taxation paid (7) (8) (38) (20) - Cash utilised in investing activities (101) (48) (243) (284) Net cash generated (uti
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