Slide 1: Full year results for the year ended 31 December 2014
Mondi Group Full year results for the year ended 31 December 2014 24 February 2015
Slide 2: Agenda
Agenda Highlights Financial overview Operational overview Delivering on our strategy Outlook Appendices 2
Slide 3: Highlights
Highlights Underlying operating profit and ROCE ● Excellent financial performance € million 17.2% 20.0% ○ Underlying operating profit up 10% 15.0% 15.3% ○ Underlying earnings up 13% 18.0% 13.6% 16.0% 12.3% 14.0% 12.0% 10.0% ○ ROCE of 17.2% ● Achieved despite lower average prices in key paper 8.0% 6.
Slide 4: Agenda
Agenda Highlights Financial overview Operational overview Delivering on our strategy Outlook Appendices 4
Slide 5: Operating financial highlights
Operating financial highlights % H2 H1 H2 € million 2013 2014 change 2013 2014 2014 Group Revenue 6,476 6,402 (1%) 3,134 3,148 3,254 Underlying EBITDA 1,068 1,126 5% 514 553 573 % Margin 16.5% 17.6% 16.4% 17.6% 17.6% Underlying operating profit 699 767 10% 333 377 390 % Margin 10.8% 12.0% 10.6% 12.0
Slide 6: Underlying operating profit development
Underlying operating profit development € million 17 9 (2) 767 10 37 699 2 (5) 2013 Volume Price Variable Fixed Currency Fair value Acquisitions 2014 costs costs effects gains on and disposals forestry assets 6
Slide 7: Divisional underlying operating profit – half year splits
Divisional underlying operating profit – half year splits € million 175 167 154 154 97 80 67 68 54 57 58 54 48 49 44 42 42 44 37 39 Packaging Paper Fibre Packaging Consumer Packaging Uncoated Fine Paper South Africa Division H1 2013 H2 2013 H1 2014 H2 2014 Comparative information has been restated a
Slide 8: Financial review
Financial review % H2 H1 H2 € million 2013 2014 change 2013 2014 2014 Underlying operating profit 699 767 10% 333 377 390 Net underlying finance costs (115) (97) 16% (58) (50) (47) Net profit from associates 2 1 1 1 - Underlying profit before tax 586 671 15% 276 328 343 Tax before special items (98)
Slide 9: Finance costs
Finance costs ● Finance costs down on lower average net debt and lower % effective interest rate € million 2013 2014 change Closing net debt 1,619 1,613 - ● Interest paid of €111 million before special items (2013: €124 million) Average net debt 1,792 1,675 7% Finance costs 104 86 17% ● Redemption o
Slide 10: Special items
Special items Operating special items – €39 million charge ● Packaging Paper (€6 million charge) ○ Closure of one of two speciality kraft paper machines in Finland ● Fibre Packaging (€16 million charge) ○ Gain in Corrugated Packaging relating to a legal settlement (€3 million) ○ Restructuring activi
Slide 11: Cash flow effects - movement in net debt
Cash flow effects - movement in net debt € million 1,619 (1,033) 104 (7) 1,613 193 562 231 (56) Net debt at 31 Cash generated Currency effects Tax and Capex Dividends paid Acquisitions Other Net debt at 31 December 2013 from operations (including financing costs investment to equity holders December
Slide 12: Working capital
Working capital Working capital management Working capital cash flows € million € million (27) 12.3% 11.9% 12% (68) 11.0% (83) (87) 9.9% 10.0% 10% (121) 557 575 764 711 811 2010 2011 2012¹ 2013 2014¹ 2010 2011 2012 2013 2014 Working capital as a % of revenue 1 Working capital as a % of revenue is ba
Slide 13: Capital expenditure
Capital expenditure Capital expenditure ● Increase in capital expenditure as major projects spend € million ramps up 159% 113% ● €420 million in major capital projects approved over past 117% 18 months 78% 86% ● Capital expenditure expected to average €550 - €560 394 263 294 405 562 million per annu
Slide 14: Debt facilities
Debt facilities ● Subsidiaries generally funded in their functional currencies % € million 2013 2014 change ● Public credit ratings Net debt 1,619 1,613 - ○ Moody’s Investor Services at Baa2 (neutral) – upgraded Committed facilities 2,487 2,134 (14%) ○ Standard & Poor’s at BBB- (positive outlook) –
Slide 15: Dividends
Dividends Dividends declared ● Full year dividend of 42 euro cents per share € cents per share 45 3.0 ● Increase of 17%, covered 2.6 times by earnings 2.6 2.6 2.6 40 2.5 2.5 35 2.0 30 2.0 28.77 25 26.45 1.5 20 19.10 17.75 15 1.0 10 16.50 0.5 13.23 5 8.25 8.90 9.55 0 3.50 - 2010 2011 2012 2013 2014 I
Slide 16: Agenda
Agenda Highlights Financial overview Operational overview Delivering on our strategy Outlook Appendices 16 Packaging Paper | Fibre Packaging | Consumer Packaging | Uncoated Fine Paper | South Africa Division
Slide 17: Packaging Paper
Packaging Paper Underlying operating profit, margin and ROCE ● Building on strong base, ROCE of 23.7% € million 24.5% ● Sales volumes up on prior year 23.7% 21.7% 17.4% 17.8% 16.7% ○ 155,000 tonne per annum bleached kraft machine 14.6% 12.0% 14.9% boosts speciality kraft volumes and lowers pulp sale
Slide 18: Packaging Paper | industry fundamentals
Packaging Paper | industry fundamentals Selling prices Virgin containerboard €/tonne ● USD strength and expected reductions in imports 800 beneficial 700 ● Price increase of €40/tonne announced in Southern 600 Europe 500 ● Price increases in Russia ● Capacity additions 400 ○ Varkaus conversion, end
Slide 19: Packaging Paper | industry fundamentals
Packaging Paper | industry fundamentals Selling prices Kraft paper Price indexed to 2010 ● 2014 demand in Europe up 4% 1.60 1.50 ● Overseas markets continue to show solid demand 1.40 ● No industry capacity expansion 1.30 1.20 ● Price erosion in early 2015 from seasonal demand 1.10 weakness in Europe
Slide 20: Fibre Packaging
Fibre Packaging Underlying operating profit, margin and ROCE Corrugated Packaging € million 13.9% 13.4% ● Higher average selling prices 11.3% 11.8% ● Good cost control 6.0% 4.6% 5.9% 5.1% 5.5% ● Negative impact of weaker Turkish lira 2.4% 36 74 93 86 102 Industrial Bags 2010 2011 2012 2013 2014 ● Li
Slide 21: Consumer Packaging
Consumer Packaging Underlying operating profit, margin and ROCE ● Underlying operating profit up 22% on prior year € million ● European trading conditions significantly improved in H2 14.2% ● Benefited from 11.6% 10.4% ○ Improved customer focus and margin management 9.0% 8.7% ○ Optimisation and spec
Slide 22: Uncoated Fine Paper
Uncoated Fine Paper Underlying operating profit, margin and ROCE ● Operating profit impacted by € million 16.9% 16.7% 16.7% 16.0% 16.1% ○ Lower average selling prices ○ Significantly weaker rouble 14.3% 11.7% 13.1% 12.3% 11.9% ● Offset by ○ Productivity gains 178 205 186 164 148 ○ Good cost manageme
Slide 23: Uncoated Fine Paper | industry fundamentals
Uncoated Fine Paper | industry fundamentals Pulp and A4 B-copy prices Demand €/tonne ● Up approximately 1% in 2014 in Europe 900 850 ● Decline in Russia of approximately 3%, impacted by 800 macro-economic factors 750 Supply 700 650 ● Net capacity reduction expected with conversion of 600 Varkaus (28
Slide 24: South Africa Division
South Africa Division Underlying operating profit, margin and ROCE ● Strong performance, with ROCE of 21.9% € million 21.9% ● Benefited from 16.0% 18.8% ○ Higher average domestic selling prices 10.8% 9.8% 9.8% 14.9% ○ Export gains from weaker rand 8.4% 8.7% 9.6% ○ Higher fair value gains on forestry
Slide 25: Agenda
Agenda Highlights Financial overview Operational overview Delivering on our strategy Outlook Appendices 25
Slide 26: Growing in line with our strategy
Growing in line with our strategy Maintain our strong and stable financial position and investment grade credit metrics Grow through selective capital investment Free Cash opportunities Flow priorities Support payment of dividends to our shareholders Evaluate growth opportunities through M&A and/or
Slide 27: 2010 – 2014 investment in asset base
2010 – 2014 investment in asset base €1.9 billion Capital spend by segment ● Focus on growth in packaging 1% 10% Packaging Paper ● UFP spend primarily around cost optimisation and pulp Fibre Packaging production 35% Consumer Packaging 25% Uncoated Fine Paper ● Ramp up in spend over past two years So
Slide 28: Major project pipeline delivering strongly…
Major project pipeline delivering strongly… 2013 2014 2015 2016 • €60m Frantschach • €70m Štĕti bleached kraft • €166m Świecie recovery • €94m Świecie phase II recovery boiler boiler, turbine and • €128m Ružomberok biomass boiler • €30m South Africa • €16m Syktyvkar bark recovery boiler Division woo
Slide 29: … with limited market risk
… with limited market risk Project Description Project Value Key benefits Market risk Świecie recovery boiler, turbine and €166 million • Energy efficiencies Low biomass boiler • Green energy sales • Cost optimisation Packaging Paper – various projects €106 million • Improved product mix Low • Cost
Slide 30: Agenda
Agenda Highlights Financial overview Operational overview Delivering on our strategy Outlook Appendices 30
Slide 31: Outlook
Outlook Economic growth is expected to remain below historical averages in the regions in which we operate. We expect this slow economic growth to continue to impact on demand for our products in the short term, although underlying industry fundamentals remain generally sound, with supply/demand bal
Slide 32: Q&A
Q&A 32
Slide 33: Agenda
Agenda Highlights Financial overview Operational overview Delivering on our strategy Outlook Appendices 33
Slide 34: Mondi at a glance
Mondi at a glance Europe & International South Africa Packaging Paper Fibre Packaging Consumer Packaging Uncoated Fine Paper €2,043m €1,852m €1,379m €1,240m 596m 10% 2014 8% 30% 29% 23% 18% Revenue1 26% 8%19% 29% ROCE 23.7% 13.4% 10.4% 16.1% 21.9% Products 1 Segment revenues, before elimination of i
Slide 35: Our strategic value drivers
Our strategic value drivers We are focused on growing our packaging interests We focus on markets that offer us growth opportunities. We develop and maintain leading positions in markets that offer us Achieve leading market positions growth opportunities so we can deliver ongoing value to our custom
Slide 36: Global presence
Global presence Sales by location of customer €6,402 million Sales by location of production €6,402 million Emerging Europe 8% 7% Emerging Europe Russia 21% Russia South Africa 32% Emerging Emerging Markets Markets South Africa Asia & Australia 9% 40% Other 42% Other 7% 11% Western Europe Western Eu
Slide 37: Input costs
Input costs Variable costs € million 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2010 2011 2012 2013 2014 Pulp Paper Wood Paper for recycling Energy Chemicals Plastics Other variable costs Comparatives for 2010 and 2011 have not been restated to include 100% of Mondi Shanduka Newsprint in South
Slide 38: Fixed costs
Fixed costs Fixed costs composition € million 2,000 25.0% 1,800 24.0% 1,600 23.4% 23.1% 22.7% 22.8% 1,400 23.0% 22.1% 1,200 22.0% 1,000 21.0% 800 600 20.0% 400 19.0% 200 0 18.0% 2010 2011 2012 2013 2014 Depreciation, amortisation and impairments Other net operating expenses Personnel costs Maintenan
Slide 39: Our integrated low-cost operations
Our integrated low-cost operations Emerging market asset base leads to low cost positions Integrated value chain – total production across the Group’s main grades Cost quartile¹ Million tonnes Q4 12% 35% 14% 4.0 0.1 Q3 3% 18% 26% 13% 3.0 Q2 18% 52% 27% 14% 100% 2.0 3.9 Q1 100% 79% 48% 82% 12% 59% 10
Slide 40: Taxation and non-controlling interests
Taxation and non-controlling interests Taxation ● Full utilisation of incentives from previous capital % investments during the year € million 2013 2014 change ● Reflects underlying profit mix of Group Underlying tax charge 98 126 (29%) Effective tax rate 17% 19% Non-controlling interests ● Continue
Slide 41: Cash flow
Cash flow % € million 2013 2014 change Underlying EBITDA 1,068 1,126 5% Working capital movements (27) (87) >100% Other operating cash flow items (5) (6) Cash generated from operations 1,036 1,033 - Dividends from financial investments and associates 1 2 Taxes paid (126) (106) 16% Net cash inflow fr
Slide 42: Statement of financial position
Statement of financial position € million 2013 2014 Property, plant and equipment 3,428 3,432 Forestry assets 233 235 Other non-current assets 713 700 Total non-current assets 4,374 4,367 Total current assets 1,866 1,981 Total assets 6,240 6,348 Total current liabilities (1,296) (1,323) Medium and l
Slide 43: Production volumes
Production volumes % 2013 2014 change Europe & International Containerboard Tonnes 2,138,714 2,160,485 1% Kraft paper Tonnes 1,010,885 1,130,220 12% Softwood pulp Tonnes 2,007,959 2,085,191 4% Corrugated board and boxes M m2 1,344 1,343 - Industrial bags M units 4,032 4,446 10% Extrusion coatings M
Slide 44: Exchange rates
Exchange rates % 2013 2014 change Closing rates against the euro South African rand 14.57 14.04 4% Czech koruna 27.43 27.74 (1%) Polish zloty 4.15 4.27 (3%) Pounds sterling 0.83 0.78 6% Russian rouble 45.32 72.34 (60%) Turkish lira 2.96 2.83 4% US dollar 1.38 1.21 12% Average rates for the year agai
Slide 45: Exchange rate development vs EUR
Exchange rate development vs EUR Mature markets Emerging markets 0.86 1.40 5.00 28.00 0.84 1.35 4.50 27.50 0.82 1.30 4.00 27.00 0.80 26.50 1.25 3.50 0.78 26.00 0.76 1.20 3.00 25.50 0.74 1.15 2.50 25.00 0.72 1.10 2.00 24.50 Aug 2013 Dec 2013 Apr 2014 Aug 2014 Dec 2014 Aug 2013 Dec 2013 Apr 2014 Aug 2
Slide 46: Mondi: Forward-looking statements disclaimer
Mondi: Forward-looking statements disclaimer This document includes forward-looking statements. All statements other than statements of historical facts included herein, including, without limitation, those regarding Mondi’s financial position, business strategy, market growth and developments, expe
Slide 47: Mondi
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