Mondi Plc · LSE:MNDI
Mondi — Debt Investor Presentation (September 2012)
44 slides from Mondi's debt investor presentation, September 2012
Slide 1: Mondi Group Fixed Income Investor Presentation
MONDI GROUP FIXED INCOME INVESTOR PRESENTATION September 2012
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by Mondi plc (the “Company”) Company ) for information purposes only. It is not be used for any other purpose. This presentation and its contents are confidential and are being provided to you solely for your information and may not be retransmitted, fu
Slide 3: Agenda
Agenda Group overview and strategy Industry y Fundamentals June 2012 financial results Nordenia acquisition Capital structure and financial policies Summary Appendices Presenters Andrew King CFO James Paterson Group Treasurer 3
Slide 4: Group overview
Group overview Mondi is an integrated paper and packaging group, with production operations across 28 countries and revenues of €5.7bn in 2011 The Group’s key operations are located in central Europe, Russia and South Africa and employees as at the end of 2011 of 23,400 people Leading market p
Slide 5: Mondi at a glance
Mondi at a glance Packaging Fibre Consumer Paper Packaging Packaging3 UFP South Africa Newsprint €960m €946m €590m €749m €287m €83m 2% 8% 27% H1 2012 21% R Revenue 1 26% 16% H1 2012 10.8% 5.0% 7.9% 13.4% 10.1% (3.6%) EBIT %2 Products 1 Segment revenues, including inter-segment revenues. 2 EBIT % is
Slide 6: Key financials
Key financials 2012 H1 EBITDA HISTORIC OPERATING CASH FLOWS € million 55 436 € million 750 HY1 HY2 154 601 509 513 485 475 500 428 15 392 403 230 80 343 356 353 310 150 269 208 229 250 (18) -20 - Corp/ Packaging Fibre Consumer UFP SA Total 2005 2006 2007 2008 2009 2010 2011 2012 Other paper packagin
Slide 7: Key pillars of our strategy
Key pillars of our strategy Leading market Maintain and/or develop leading positions in Packaging (corrugated, industrial bags, consumer packaging positions and coatings) and UFP, particularly in high-growth markets Maintain our low-cost, high-quality asset base by selectively investing in produ
Slide 8: Focus on Packaging and UFP in emerging markets
Focus on Packaging and UFP in emerging markets1 Revenue Revenue Net Revenue by by destination by origin operating assets product 15% 14% Emerging 26% markets 29% 40% 48% 40% 43% 52% 57% 62% Mature 52% 57% 24% 3% 71% markets 85% 3% 8% PIIGS Packaging Uncoated fine paper Other 1 Mondi June 2012 data 8
Slide 9: Market positions
Market positions Packaging Fibre Consumer Paper Packaging Packaging UFP South Africa Newsprint Leading market positions No. 1 Recycled No. 1 Corrugated Mondi and No. 1 in Office No. 1 in Office No. 1 in containerboard in Packaging in Nordenia will Paper and UFP Paper in SA1 Newsprint in
Slide 10: High quality low cost asset base
High quality low cost asset base High-quality, Percentage of Mondi's capacity in overall cost curve at Q1 2012 low-cost asset base Quartile Delivered cost¹ 1st 2nd 3rd 4th Emerging Unbleached Sack Kraft Paper 24% 15% 43% 18% market asset base leads to NSSC Fluting 100% - - - low cost positions acr
Slide 11: Integrated across the value chain
Integrated across the value chain1 Pulp Kraft Paper High-quality, Millions Millions low-cost of tonnes Europe & International of tonnes Europe & International asset base 2.5 SA Division 0.6 2.0 0.1 0.5 0.4 1.5 0.4 1.0 0.3 Upstream p 05 0.5 02 0.2 0.3 15 1.5 17 1.7 03 0.3 production 0.0 0.1 0.5 0.2
Slide 12: Customer focused development
Customer focused development Customer Develop markets and products aligned to our customer needs by: focused Focused, Focused customer lead product development development e.g. novel and innovative pet food packaging product development Increased exposure to more value added, innovative, tec
Slide 13: Focus on performance
Focus on performance Fixed costs composition Focus on € million performance 30% 2 000 2,000 28% 30% 26% 25% 26% 25% 23% 22% 25% 1,500 20% 1,000 15% 10% 500 5% - 0% 2004 2005 2006 2007 2008 2009 2010 2011 Personnel Depreciation and amortisation Maintenance and other indirect costs Other net operating
Slide 14: Free cash flow priorities
Free cash flow priorities Maintain investment grade credit metrics Ratings reaffirmed during period Selective capital investment opportunities, Good progress on energy projects mainly around cost optimisation Syktyvkar pulp dryer on hold Support dividends Interim dividend increase of 8% Świecie non-
Slide 15: Agenda
Agenda Group overview and strategy Industry y Fundamentals June 2012 financial results Nordenia acquisition Capital structure and financial policies Summary Appendices Presenters Andrew King CFO James Paterson Group Treasurer 15
Slide 16: Corrugated | industry fundamentals
Corrugated | industry fundamentals Selling prices - indexed Demand Price indexed vs 2007 opening levels Sluggish short-term growth due to macro- 1.50 Kraftliner - indexed economic slowdown 1.40 White-top Kraftliner - indexed 1.30 RCB / Recovered paper differential - indexed Structural growth dri
Slide 17: Kraft Paper | industry fundamentals
Kraft Paper | industry fundamentals Unbleached sack kraft prices Commercial downtime ended in Q1 with full €/tonne production in Q2 Lower L average selling lli prices i th than H1 and d H2 2011, although price increases announced to take effect in H2 2012 Lower L wood d and d pulp l iinputt co
Slide 18: Uncoated Fine Paper | industry fundamentals
Uncoated Fine Paper | industry fundamentals Pulp and A4 B-copy prices Demand €/tonne €/tonne Western Europe p impacted p by y both short- 900 800 term cyclical pressures and ongoing 700 850 structural decline 600 800 Emerging Europe and Russia softer in light 500 750 of macroeconomic downturn, s
Slide 19: Agenda
Agenda Group overview and strategy Industry y Fundamentals June 2012 financial results Nordenia acquisition Capital structure and financial policies Summary Appendices Presenters Andrew King CFO James Paterson Group Treasurer 19
Slide 20: Highlights
Highlights Underlying operating profit Good operating performance after a € million challenging start to the year 12.0% 9.6% 9.5% Return on Capital Employed of 13.3%, above through-the-cycle target of 13% Strong g cash g generation of €353 million 354 268 269 Significant strategic acquisitio
Slide 21: Operating financial highlights
Operating financial highlights % change % change H1 H2 H1 vs vs € million 2011 2011 2012 H1 2011 H2 2011 Group Revenue 2,942 2,797 2,840 -3% +2% 1 Underlying EBITDA 526 438 436 -17% - % Margin 17.9% 15.7% 15.4% 2 Underlying operating profit 354 268 269 -24% - % Margin 12.0% 9.6% 9.5% Working capital
Slide 22: Agenda
Agenda Group overview and strategy Industry y Fundamentals June 2012 financial results Nordenia acquisition Capital structure and financial policies Summary Appendices Presenters Andrew King CFO James Paterson Group Treasurer 22
Slide 23: Nordenia acquisition | highlights
Nordenia acquisition | highlights Acquisition of 93.9% of Nordenia for implied enterprise value of €655m Combination C bi ti creates t a lleading di consumer packaging k i b business i Cost and revenue synergy opportunities of €15 million p.a. pre-tax by 2014 By 2014, double digit underlying
Slide 24: An innovative consumer packaging solutions provider
An innovative consumer packaging solutions provider Production facilities Nordenia is an international supplier of innovative consumer packaging solutions and hygiene Nordenia plant components Competitive advantage through proprietary technology and customer-focused innovation International pr
Slide 25: A complementary product portfolio
A complementary product portfolio Consumer packaging Hygiene components Re-closable bags and Feminine hygiene Advanced films Lamination Diaper components stand-up pouches release liner Nordenia • Advanced Ad d films fil ffor llabels, b l • Pre-made, P d re-closable l bl • Printed P i t d llaminates
Slide 26: Acquisition and financing structure
Acquisition and financing structure Acquisition EV of €655m (100% basis), including assumption of €280m bond and €118m other debt and debt-like liabilities¹ €242m cash funding requirement for acquisition of 93.9% shareholding financed by a new two year €250m committed facility. Minorities squeez
Slide 27: Agenda
Agenda Group overview and strategy Industry y Fundamentals June 2012 financial results Nordenia acquisition Capital structure and financial policies Summary Appendices Presenters Andrew King CFO James Paterson Group Treasurer 27
Slide 28: Capital structure & financial policies
Capital structure & financial policies Conservative approach to leverage Capital structure to maintain investment grade ratings Articulated as a keyy strategic g objective j Bank facility covenant 3.5x Net Debt/EBITDA Significant headroom on current ratio Net debt/EBITDA of 1.3x as at Ju
Slide 29: Debt facilities and net debt
Debt facilities and net debt H1 H2 H1 € million 2011 2011 2012 Net debt (1,200) (831) (1,273) Gearing (Net debt / Trading capital employed) 27% 22% 31% Net debt / 12 month trailing EBITDA (times) 1.3 0.8 1.5 1 Committed facilities 1,897 1,839 1,795 1 Of which undrawn 781 889 584 Net debt increased
Slide 30: Committed debt facilities
Committed debt facilities Maturity profile of committed facilities (€ million) 750 Drawn Headroom Acquisition facility 9 500 467 250 26 543 250 341 73 182 9 - 46 45 55 <1yr 1-2yrs 2-3yrs 3-4yrs 4-5yrs >5yrs Largest facility is €750m syndicated revolver maturing in April 2016, €460m undrawn at June
Slide 31: Credit Ratings
Credit Ratings Moody’s S&P Issuer Rating: Baa3 Long-Term Corporate Credit Rating: BBB- Outlook Stable Outlook Stable “The Baa3 issuer rating with a stable “Mondi will be able to sustain credit metrics outlook reflects Mondi’s well-diversified commensurate with our rating, despite business profile by
Slide 32: Dividends
Dividends Dividends declared (€ cents per share) 30 26.0 25 23.0 20.0 20 17.75 15 15.7 12.7 9.5 16.5 10 5.0 70 7.0 5 7.7 8.3 8.9 7.3 2.5 3.5 - 2007 2008 2009 2010 2011 2012 Interim Dividend Final Dividend Target dividend cover of 2 to 3 times on average through the cycle Payout ratio will vary e
Slide 33: Agenda
Agenda Group overview and strategy Industry y Fundamentals June 2012 financial results Nordenia acquisition Capital structure and financial policies Summary Appendices Presenters Andrew King CFO James Paterson Group Treasurer 33
Slide 34: Summary
Summary Strong liquidity position supported by significant cash generation Investment grade credit ratings reaffirmed following recent acquisitions Conservative management g committed to investment g grade credit metrics Robust business model with proven and clear strategy 34
Slide 35: Agenda
Agenda Group overview and strategy Industry y Fundamentals June 2012 financial results Nordenia acquisition Capital structure and financial policies Summary Appendices 35
Slide 36: Abridged income statement
Abridged income statement % change % change H1 H2 H1 vs vs € million 2011 2011 2012 H1 2011 H2 2011 Group Revenue 2,942 2,797 2,840 -3% +2% Materials, energy and consumables used (1,528) (1,470) (1,500) Variable selling expenses (257) (254) (264) G Gross margin i 1 157 1,157 1 073 1,073 1 076 1,076
Slide 37: Abridged cash flow
Abridged cash flow % change % change H1 H2 H1 vs vs € million 2011 2011 2012 H1 2011 H2 2011 Underlying EBITDA 526 438 436 -17% - Working capital movements (143) 75 (102) 1 Other operating p g cash flow items 20 1 19 Cash generated from operations 403 514 353 -12% -31% Dividends from financial inves
Slide 38: Abridged balance sheet
Abridged balance sheet June Dec June € million 2011 2011 2012 Non-current assets 4,231 3,971 4,068 Current assets 2,226 1,674 1,672 Total assets 6,457 , 5,645 , 5,740 , Current liabilities (1,607) (1,306) (1,323) Non-current liabilities ((1,584) , ) ((1,604) , ) ((1,602) , ) Total liabilities (3,191
Slide 39: Divisional underlying operating profit
Divisional underlying operating profit¹ € million H1 2011 140 128 118 H2 2011 120 105 100 96 100 100 H1 2012 87 80 73 65 60 35 40 27 9 29 20 0 (5) (3) -20 (13) -40 Corrugated Bags & Coatings Uncoated Fine South Africa Newsprint Paper division Capital employed2 1,087 1,347 1,270 840 66 1 Underlying o
Slide 40: Key features of the DLC structure
Key features of the DLC structure Equalisation Mondi plc ordinary Ratio 1:1 Mondi Ltd ordinary Single Corporate Group shareholders shareholders MPLC and d MLTD separate t legal entities with separate stock exchange listings Unified boards and sharing management agreement Mondi plc Mondi Ltd
Slide 41: Production sites in 28 countries
Production sites in 28 countries 41
Slide 42: New Europe & International management and reporting structure
New Europe & International management and reporting structure¹ Packaging Fibre Consumer Paper Packaging Packaging2 UFP Corrugated Former Bags & Coatings business Containerboard Consumer Bags UFP Packaging Former Corrugated g business Kraft paper Industrial Bags Nordenia Coatings g H2 H1 H2 H1 H2 H1
Slide 43: Acronyms
Acronyms DLC Dual listed company p y structure UFP Uncoated fine paper NSSC Neutral sulphite semi-chemical BHKP Bleached hardwood kraft pulp RCB Recycled containerboard VCB Virgin containerboard TRCR Total recordable case rate 43
Slide 44: Mondi
mondi
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