Sappi Limited · JSE:SAP

Sappi — Q4 2009 Earnings Presentation

36 slides from Sappi's earnings presentation, Nov 9, 2009

  1. Slide 1: Fourth quarter and year ended September 2009 results

    Fourth quarter and year ended September 2009 results 9 November 2009

  2. 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

  3. Slide 3: Summary

    Summary sappi

  4. Slide 4: 4Q 2009 Financial Summary

    4Q 2009 Financial Summary 4  Net cash generated US$225 million  Refinancing completed; improved liquidity and extended maturities  Saiccor Mill ramp up near full capacity at quarter-end  Stronger Rand impacted SA business unfavourably  Return to operating profit excluding special items  Basic

  5. Slide 5: Group Financial Summary

    Group Financial Summary 5 Q4 08 Q4 09 2008 2009 Key figures: (US$ million) Tons Sold ('000)* 1,758 1,888 6,851 6,707 Sales 1,519 1,553 5,863 5,369 EBITDA ex special items* 180 150 740 431 Operating Profit ex special items* 89 38 366 33 Basic EPS (US cents) (9) (20) 28 (37) Key ratios: (%) EBITDA ex

  6. Slide 6: Operating Profit excluding special items

    Operating Profit excluding special items * 6 2006: $91m 2007: $313m 2008: $366m 2009: $33m 100 96 97 92 80 88 89 81 $US Million 73 60 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 * Refer to the supplementary information in th

  7. Slide 7: Divisional Contribution Trend

    Divisional Contribution Trend 7 EBITDA * (US$ million) Fine Paper Forest Products Corporate 220 6 5 3 1 180 6 67 63 79 77 68 13 140 76 66 78 73 100 32 7 43 32 2 34 12 32 140 60 106 120 113 118 94 90 100 102 87 83 68 63 74 74 48 20 -2 -4 -2 -1 -1 -3 -20 Q106 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q

  8. Slide 8: Cash Generated from Operations

    Cash Generated from Operations 8 2006: $396m* 2007: $585m 2008: $623m 2009: $432m 200 175 176 150 157 161 155 161 156 US$ million 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 * 2006 Cash generated from operatio

  9. Slide 9: Divisional Operating Margins

    Divisional Operating Margins * 9 25% 20% Forest Products 15% Q409 Margins: 10% North America 10.0% 5% Europe 1.8% 0% South Africa -1.1% Forest Products -3.6% -5% -10% -15% -20% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2004 2005 2006 2007 2008 2009 * The divisional oper

  10. Slide 10: Earnings Versus Prior Quarter

    Earnings Versus Prior Quarter 10 US cents per share (12) Add: 4 Less: (7) Q3 Add: 1 2009 Add: 4 (10) (20) Add: 16 Add: 14 Less: (10) Q4 Add: 5 2009 Add: 1 Less: (8) (2)

  11. Slide 11: Net Debt

    Net Debt 11 Net Debt (US$ million) Preferred debt level 3000 2735 2770 2661 2667 2500 2576 2495 2497 2405 2278 2313 2222 2236 2257 2172 2113 2000 2072 1500 1Q09 * 2Q09** 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 3Q09 4Q09 *excludes US$532 million net proceeds from the rights offer,

  12. Slide 12: Debt maturity profile

    Debt maturity profile 12 Extended maturities, strong liquidity Refinancing: Replaced RCF €209 million – undrawn Refinanced OeKB €400 million (5 year amortising) Repaid VLN €220 million at 13.5% discount 2014 Bonds $800 million ($300 million and €350 million) Substantial increase in finance costs As

  13. Slide 13: Divisional Overview

    8 Divisional Overview sappi

  14. Slide 14: Europe

    14 Europe

  15. Slide 15: European Coated Paper Prices

    European Coated Paper Prices 15 Germany (€/ton) 1,000 900 800 €775/ton 700 €680/ton €660/ton 600 CWF 100gsm Sheets CWF 100gsm Reels LWC 60gsm offset reels 500 Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Source: RISI

  16. Slide 16: Sappi Fine Paper Europe

    Sappi Fine Paper Europe 16 Q4 08 Q4 09 2008 2009 Tons Sold ('000) 628 895 2,546 2,956 Sales ($'m) 680 868 2,720 2,895 Price / Ton ($) 1,083 970 1,068 979 Price / Ton (€) 711 677 709 717 Cost / Ton* (€) 699 665 695 714 Operating profit ex items** ($'m) 12 16 55 12  CWF shipments down 19% YOY, up 10%

  17. Slide 17: Synergy Targets and Achievement

    Synergy Targets and Achievement 17 € million Sep-09 Synergies YTD Procurement 30 (Excl. market effects) Asset Optimization 23 SG&A Reduction 22 Other Incl. Recipe & 11 Manufacturing Once-off costs -13 Total 73 • 9 month target – €60 million • 3rd year run rate - €120 million

  18. Slide 18: North America

    Po North America sappi

  19. Slide 19: US Coated Paper Prices

    US Coated Paper Prices 19 (US$/ton) 1,100 CWF #3 60lb Rolls CGW #4 50lb Rolls 1,000 CGW #5 40lb Rolls $920/ton 900 $865/ton 800 $770/ton 700 600 Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Source: RISI

  20. Slide 20: Sappi Fine Paper North America

    Sappi Fine Paper North America 20 Q4 08 Q4 09 2008 2009 Tons Sold ('000) 389 355 1,553 1,274 Sales ($'m) 433 340 1,664 1,295 Price / Ton ($) 1,113 958 1,071 1,016 Cost / Ton* ($) 1,033 862 1,010 1,018 Operating Profit ex items**($'m) 31 34 95 (2)  SFPNA volumes down 9% YOY, up 18% sequentially due

  21. Slide 21: Southern Africa

    Bf Southern Africa sappi

  22. Slide 22: Sappi Fine Paper South Africa

    Sappi Fine Paper South Africa 22 Q4 08 Q4 09 2008 2009 Tons Sold ('000) 93 83 339 305 Sales ($'m) 109 92 380 318 Price / Ton ($) 1,172 1,108 1,121 1,043 Price / Ton (ZAR) 9,160 8,554 8,328 9,398 Cost / Ton* (ZAR) 9,075 8,647 8,196 9,427 Operating Profit ex items** ($'m) 1 (1) 6 (1)  Weak domestic d

  23. Slide 23: NBSK Pulp Price

    NBSK Pulp Price* 23 1,000 NBSK (US$/ton) NBSK (EUR/ton) 900 800 700 $706/ton 600 500 €486/ton 400 300 Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 * Source: Average monthly FOEX delivered European prices

  24. Slide 24: Sappi Forest Products

    Sappi Forest Products 24 Q4 08 Q4 09 2008 2009 Tons Sold - Pulp & Paper ('000) 380 387 1,419 1,355 Sales - Pulp & Paper ($'m) 276 239 1,023 806 Price / Ton - Pulp & Paper ($) 726 618 721 595 Price / Ton - Pulp & Paper (ZAR) 5,676 4,766 5,356 5,362 Cost / Ton* - Pulp & Paper (ZAR) 4,730 4,946 4,293 5

  25. Slide 25: Outlook

    Outlook 25  Q1 expect operating profit excl. special items  Seasonally weaker  Maintenance shuts in US  Actions taken to improve performance  Saiccor startup complete – maximised output  Improved understanding of customer needs  Product development to match new economics and demand  Mill clo

  26. Slide 26: Outlook Cont.

    Outlook Cont. 26  Gradual demand recovery expected in 2010  US and EU demand expected to recover around 10% year-on-year  Supply/demand balance still weak in Europe  Liquidity and maturities taken care of  Intend to reduce debt  Finance costs expected to increase to US$250 million in 2010

  27. Slide 27: Conclusion

    Conclusion 27  While market conditions appear to be improving, the recovery is likely to be moderate  More rationalisation needed in Europe  We will remain a decisive management team  We will take full advantage of leading market positions and efficient asset base when conditions improve  We re

  28. Slide 28: Q&A

    28 Q&A

  29. Slide 29: Supplementary Information

    29 Supplementary Information

  30. Slide 30: Cash Flow

    Cash Flow 30 US$ million Q4 08 Q4 09 2008 2009 Cash generated from operations 136 161 623 432 - Movement in working capital (135) (127) (1) (152) - Net finance costs paid (24) 27 126 81 - Taxation paid 14 - 70 5 - Dividends paid - - 73 37 - Cash utilised in investing activities* 143 36 494 172 Cash

  31. Slide 31: Operating Profit - Sappi Group

    Operating Profit - Sappi Group 31 Reconciliation of reported operating profit to operating profit excluding special items * US$ million Q4 08 Q4 09 2008 2009 Operating profit as reported 25 (129) 314 (73) Plantation price fair value adjustment (108) 111 (120) 67 Restructuring Charge 44 25 41 35 Sale

  32. Slide 32: Operating Profit - Fine Paper Europe

    Operating Profit - Fine Paper Europe 32 Reconciliation of reported operating profit to operating profit excluding special items * US$ million Q4 08 Q4 09 2008 2009 Operating profit as reported (111) (59) (64) (67) Sale of fixed assets - - (1) - Restructuring charge 44 - 41 1 Impairment Cost 78 74 78

  33. Slide 33: Operating Profit - Fine Paper North America

    Operating Profit - Fine Paper North America 33 Reconciliation of reported operating profit to operating profit excluding special items * US$ million Q4 08 Q4 09 2008 2009 Operating profit as reported 30 60 92 53 Restructuring charge - 23 - 31 Maintenance Capex - Muskegon - 1 - 1 Sale of fixed assets

  34. Slide 34: Operating Profit - Fine Paper South Africa

    Operating Profit - Fine Paper South Africa 34 Reconciliation of reported operating profit to operating profit excluding special items * US$ million Q4 08 Q4 09 2008 2009 Operating profit as reported 1 (2) 6 (3) Restructuring charge - - - 1 SFPSA - Carabello provision - 1 - 1 Operating profit excludi

  35. Slide 35: Operating Profit - Forest Products

    Operating Profit - Forest Products 35 Reconciliation of reported operating profit to operating profit excluding special items * US$ million Q4 08 Q4 09 2008 2009 Operating profit as reported 106 (123) 273 (52) Plantation price fair value adjustment (108) 111 (120) 67 Profit on the sale of assets - (

  36. Slide 36: End

    End

Sappi — Q4 2009 Earnings Presentation on 6ix