Slide 1: Investor Presentation August 1999
INVESTOR PRESENTATION August 1999
Slide 2: Investor Presentation
INVESTOR PRESENTATION ◆ Review of 1998/99 results ◆ Review by business ◆ Financial analysis ◆ Group outlook ◆ General discussion
Slide 3: 1998/99 Objectives
1998/99 OBJECTIVES ◆ Improve Return on Funds Employed – Targets • 15% Packaging • 12% Paper ◆ Complete the rationalisation program ◆ Create a strong platform for longer- term growth
Slide 4: Results
RESULTS 1998 1999 % Change PBIT $m 511 560 +9.6 PAT $m 252 290 +15.1 PBIT/FE % 10.0 12.4
Slide 5: Additional Highlights
ADDITIONAL HIGHLIGHTS ◆ Divestments of $564 million ◆ Significant cost savings across the group ◆ Excellent start up of M5 ◆ Outstanding performance in Asia ◆ Solid improvement in fibre box business ◆ Growth in tobacco in Europe ◆ Volume growth in PET in Canada ◆ Success with key account management
Slide 6: Amcor Printing Papers Group
MD: Ian Wightwick AMCOR PRINTING PAPERS GROUP
Slide 7: APPG
APPG $m 160 18 % 140 16 14 120 12 100 10 PBIT 80 8 RoFE 60 6 40 4 20 2 0 0 96/97 97/98 98/99 Sales $m 1,431 1,403 1487 PBIT $m 126 116 144 F.E. $m 1,350 1,501 1,579 PBIT/FE % 9.3 7.7 9.1 Employees 3,647 3,467 2,660
Slide 8: Improving Merchant Returns
IMPROVING MERCHANT RETURNS $m % ROFE PBIT ROFE PBIT 96/97 97/98 98/99
Slide 9: Factors Affecting 1998/99 Result
FACTORS AFFECTING 1998/99 RESULT ◆ Excellent start-up by M5 ◆ Strong volume growth of Australian paper sales ◆ Recovery of copy paper market share ◆ Major turnaround of results from merchants ◆ Paper price increases recover amounts lost 1997/98 ◆ Benefits from cost reductions ◆ Closure of Burnie Pul
Slide 10: A4 Office Paper - Market Consumption
A4 OFFICE PAPER - MARKET CONSUMPTION 250 200 ‘000 150 Imports tonnes A.P. 100 50 0 95/96 96/97 97/98 98/99 6.5% compound growth in the market consumption
Slide 11: Reflex Brand Development
REFLEX BRAND DEVELOPMENT 90 th 1 2% G r o w p ou nd C o m 60 Ô000 tonnes 30 0 94/95 95/96 96/97 97/98 98/99 Market share increased from 30% to over 40%
Slide 12: Imported White A4 Office Paper
IMPORTED WHITE A4 OFFICE PAPER 25000 $1,600 $1,500 20000 Tonnes/ $1,400 $/tonnes Quarter 15000 FIS $1,300 10000 $1,200 5000 $1,100 0 $1,000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 1996/97 1997/98 1998/99 Tonnes Ave FIS Price
Slide 13: Outlook
OUTLOOK ◆ Operational – Grow capacity on M5 – Continue to reduce the cost base ◆ Strategic – Develop further office papers • SO/HO thrust • Maintain Reflex as the prime brand in copy paper – Restructure and refocus sales and marketing – Streamline supply chain management
Slide 14: Containers Packaging Australasia
R CONTAINERS PACKAGING AUSTRALASIA
Slide 15: ACPA
ACPA $m 100 18 % 16 80 14 12 10 PBIT 60 8 RoFE 6 40 4 2 20 0 96/97 97/98 98/99 Sales $m 1,209 1,135 1,010 PBIT $m 93 98 78 F.E. $m 773 710 657 PBIT/FE % 12.0 13.8 11.9 Employees 4,967 4,239 3,612
Slide 16: Factors Affecting 1998/99 Result
FACTORS AFFECTING 1998/99 RESULT ◆ Loss of the Lion Nathan contract ◆ Asset sales – Rigid Plastics/Industrial Products/ Thermoforming ◆ Restructuring of operations – Rationalised the number of plants ◆ Centralised Flexibles under one management group ◆ Established 2 new PET factories ◆ Food Can rest
Slide 17: Outlook
OUTLOOK Operational ◆ Achieve benefits of the restructuring and capital expenditure program ◆ Improve performance in Food Cans ◆ Combine PET and Closures ◆ Grow sales
Slide 18: Outlook: Strategy
OUTLOOK Strategy ◆ Focus on higher growth food and beverage markets ◆ Offer value across the breadth of products including boxes and cartons ◆ Focus on key product groups for these markets ◆ Be an efficient producer with competitive advantages
Slide 19: Outlook: Key Account Management
OUTLOOK Strategy ◆ Key Account Management – Partnership relationships the future • ‘win-win’ environment – Prices to worlds best practice – Managing the supply chain – Target the main customers – Become integrated into their process
Slide 20: Amcor Fibre Packaging
COR FIBRE PACKAGING
Slide 21: AFPA
AFPA $m 160 18 % 140 16 14 120 12 100 10 PBIT 80 8 RoFE 6 60 4 40 2 20 0 96/97 97/98 98/99 Sales $m 1,245 1,173 1,141 PBIT $m 134 121 131 F.E. $m 1,216 990 975 PBIT/FE % 11.0 12.2 13.4 Employees 5,406 4,945 4,765
Slide 22: Factors Affecting 1998/99 Result
FACTORS AFFECTING 1998/99 RESULT ◆ Strong performance in all Australian businesses – Increased volumes • New contracts won • Boxes up 3% • Cartons up 8% – Improved cost structure • Benefits of integration • Improved operating efficiency • Focused regional structure
Slide 23: Factors Affecting 1998/99 Result
FACTORS AFFECTING 1998/99 RESULT ◆ Difficult conditions remain in New Zealand – Corrective action • Changed management structure • Move cost base to Australian level
Slide 24: Outlook
OUTLOOK ◆ Operational – Queensland • New corrugator • Xitex facility – New South Wales • New corrugator • Rationalisation of operations • New short run facility – Victoria • New corrugator • Heavy duty centre of excellence
Slide 25: Outlook
OUTLOOK ◆ Operational – Cartons • New microflute facility • Continued benefits from integration – Paper • Rationalise paper grades
Slide 26: Outlook
OUTLOOK ◆ Strategic – Low cost producer • Box plants re-investment • Remain competitive in paper making – Product differentiation • Kraft capacity • Xitex • Functional Coatings
Slide 27: Outlook
OUTLOOK ◆ Strategic – Leverage the Amcor position • Broad product offering • Key account management • Customer solution software – Customer focused • New senior management • New organisational structure • Fully integrated business
Slide 28: Amcor Europe
AMCOR EUROPE
Slide 29: Amcor Europe
AMCOR EUROPE $m 70 18 % 16 60 14 50 12 10 PBIT 40 8 RoFE 30 6 4 20 2 10 0 96/97 97/98 98/99 Sales $m 1,197 1,132 1,048 PBIT $m 53 59 61 F.E. $m 674 722 292 PBIT/FE % 7.9 8.2 13.3 Employees 4,803 4,100 2,596
Slide 30: Factors Affecting 1998/99 Result
FACTORS AFFECTING 1998/99 RESULT ◆ Amcor Rentsch profit improvement – Good volume growth – Eastern Europe demand especially strong – Development of high quality cartons ◆ Amcor Flexibles Europe profit improvement – Offset price erosion / Higher volumes – Excellent result in Belgium & Spain – Netherl
Slide 31: Amcor Rentsch Outlook
AMCOR RENTSCH OUTLOOK ◆ Operational – Successful start-up in Russia – Continue to increase capacity in Western Europe ◆ Strategic – Benefit from industry rationalisation • Managing the business globally • Globalise the Amcor Rentsch brand • Broaden our geographic coverage
Slide 32: Flexibles Outlook (Including Mediflex)
FLEXIBLES OUTLOOK (INCLUDING MEDIFLEX) ◆ Operational – Start-up in Poland – New facility in Spain – Integration of Leaderpack & Albertazzi ◆ Strategic – Develop Eastern Europe – Lead global flexibles • Geographic expansion • Global technical abilities • Marketing and purchasing – Grow Mediflex via a
Slide 33: Amcor Sunclipse and Twinpak
Slide 34: Amcor North America
AMCOR NORTH AMERICA $m 90 18 % 80 16 70 14 12 60 10 PBIT 50 8 RoFE 40 6 30 4 20 2 10 0 96/97 97/98 98/99 Sales $m 1,018 1,238 1,411 PBIT $m 82 82 99 F.E. $m 528 676 579 PBIT/FE % 15.5 12.1 16.1 Employees 3,500 3,485 3,590
Slide 35: Factors Affecting 1998/99 Result: Amcor Sunclipse
FACTORS AFFECTING 1998/99 RESULT Amcor Sunclipse ◆ Another record sales year ◆ Good corrugator volumes ◆ Growth of recent distribution start ups ◆ Distribution impacted by “Asian crisis”
Slide 36: Factors Affecting 1998/99 Result: Amcor Twinpak
FACTORS AFFECTING 1998/99 RESULT Amcor Twinpak ◆ Higher volumes in PET – Single serve – water growth ◆ Excellent turnaround in Cello Bag and Coating and Laminating ◆ Speciality Plastic Packaging continued growth – Bericap JV – Rigid Plastics
Slide 37: Amcor Sunclipse Outlook
AMCOR SUNCLIPSE OUTLOOK ◆ Operational – Recover paper price increases – Benefit from software upgrades – Develop critical mass in start-ups ◆ Strategic – Build on current formula – Follow customers into new markets – Develop a corridor in the mid west
Slide 38: Amcor Twinpak Outlook
AMCOR TWINPAK OUTLOOK ◆ Operational – Manage capacity expansions • Growth in water market • Mix shift to single serve – Continue improvement in Cello Bag ◆ Strategic – Maintain Canadian market dominance – Develop PET non-commodity • Hot fill • Beer – Develop speciality plastic packaging • Closures /
Slide 39: Amcor Asia
Slide 40: Amcor Asia
AMCOR ASIA $m 30 18 % 16 25 14 20 12 10 PBIT 15 8 RoFE 10 6 4 5 2 0 0 96/97 97/98 98/99 Sales $m 213 230 225 PBIT $m 18 24 29 F.E. $m 287 255 253 PBIT/FE % 6.3 9.6 11.4 Employees 2,400 2,202 2,232
Slide 41: Factors Affecting 1998/99 Result
FACTORS AFFECTING 1998/99 RESULT ◆ No improvement in economic conditions – Thailand, Malaysia, Singapore – Punitive interest rates in Indonesia ◆ Tobacco volumes up ◆ Start up of new corrugated plant in Malaysia ◆ Turnaround in Flexibles Beijing ◆ New management structure working well
Slide 42: Amcor Asia Outlook
AMCOR ASIA OUTLOOK ◆ Operational – Increase production on the new Malaysian corrugated box plant – Increase capacity utilisation of the tobacco plants in China ◆ Strategic – Continue to develop corrugated and tobacco businesses – Examine opportunities to develop our other businesses in flexibles and
Slide 43: Kimberly-Clark Australia
€3 Kimberly-Clark Australia
Slide 44: Kimberly-Clark Australia Sales Growth
KIMBERLY-CLARK AUSTRALIA SALES GROWTH $m 800 697 726 700 604 641 560 600 500 400 300 200 100 0 94/95 95/96 96/97 97/98 98/99
Slide 45: Kimberly-Clark Australia 98/99 Sales $726m
KIMBERLY-CLARK AUSTRALIA 98/99 SALES $726m Personal Care Household (Nappies etc) Tissue 41% 32% Other Industrial 14% Tissue 13%
Slide 46: Kimberly-Clark Australia
KIMBERLY-CLARK AUSTRALIA ◆ Key Issues – Continued growth in profit and sales – Continued product innovations – Strong market shares
Slide 47: Group Financials
oe GROUP FINANCIALS
Slide 48: Key Results for 1998/99
KEY RESULTS FOR 1998/99 $ million 97/98 98/99 % Change Sales 6,056.1 6,048.8 - PBIT 510.7 559.8 + 9.6 PBT 398.3 449.9 + 13.0 PAT - before abs 252.0 290.1 + 15.1 PAT - after abs 50.5 283.9 -
Slide 49: Key Results for 1998/99
KEY RESULTS FOR 1998/99 97/98 98/99 EPS ¢ 39.3 45.4 % change on last year 15.5 Dividend ¢ 38.0 39.0 RoFE % 10.0 12.4 RoSF % 8.5 10.4
Slide 50: Profit Before Interest & Tax
PROFIT BEFORE INTEREST & TAX $ million 97/98 98/99 AFP - Australasia 120.6 131.0 ACP - Australasia 98.0 78.1 Amcor Europe 58.6 61.2 Amcor Nth America 81.9 99.0 Amcor Asia 24.5 28.7 Total Packaging 383.6 398.0 APPG 115.5 144.1 Amcor Group 510.7 559.8
Slide 51: Regional PBIT
REGIONAL PBIT $m 500 400 300 Australasia Offshore 200 100 0 96/97 97/98 98/99
Slide 52: Cash Flow Analysis 1998/99
CASH FLOW ANALYSIS 1998/99 $ million 97/98 98/99 Internal Funds 353 403 Net Capex & Acq (365) 95 (Incr)/Decr in Work Cap (13) 8 Abnormals/Other (55) (123) Net Borrowings (80) 383
Slide 53: Internal Funds
INTERNAL FUNDS $ million 97/98 98/99 Profit before interest & tax 511 560 Net interest paid (139) (140) Depreciation & amort 256 252 Tax (43) (40) Other 9 19 Cash from Operations 594 651 Dividends Paid (241) (248) Internal Funds 353 403
Slide 54: Capital Expenditure Summary
CAPITAL EXPENDITURE SUMMARY $ million 97/98 98/99 Capital Expenditure 428 451 Acquisitions 157 18 Gross Expenditure 585 469 Disposals (220) (564) Net Capital Expenditure 365 (95)
Slide 55: Capital Expenditure on Major Projects
CAPITAL EXPENDITURE ON MAJOR PROJECTS $ million 98/99 ACP - Australasia 77 – Flexibles NZ - Co-extruder – PET Beer project – Food Can line AFP - Australasia 92 – Corrugator upgrade - Qld Amcor Europe 70 – Gravure Press - Helio Folien – Rentsch Heidelberg Press-Rickenbach – Mediflex Acquisitions Nort
Slide 56: Gross Capex & Disposals
GROSS CAPEX & DISPOSALS $m 900 750 600 Gross Capex 450 Disposals 300 150 0 95/96 96/97 97/98 98/99
Slide 57: Interest Covers
INTEREST COVERS times 97/98 98/99 Aim Interest paid cover 3.4 3.6 - Net Interest cover 4.5 5.1 >5
Slide 58: Net Debt & Shareholders' Equity
NET DEBT & SHAREHOLDERS’ EQUITY $ million 97/98 98/99 Total debt 2,075 1,583 Cash & short-term deposits (285) (220) Net Debt 1,790 1,363 Shareholders’Equity 3,316 3,150 (incl. Perpetual convertibles)
Slide 59: Balance Sheet Ratios
BALANCE SHEET RATIOS % 97/98 98/99 Aim Net debt as a % of debt & shareholders equity 35 30 <40 (inc perpetual convertibles) Liabilities */assets 54 50 <50 * exc perpetual convertibles
Slide 60: Group PBIT/FE
GROUP PBIT/FE % 1998 1999 Packaging 11.5 14.4 Paper 7.7 9.1 Amcor Group 10.0 12.4
Slide 61: Return on Funds Employed
RETURN ON FUNDS EMPLOYED 18 % 16 14 Packaging 12 Paper Group 10 8 6 96/97 97/98 98/99
Slide 62: Finance Summary
FINANCE SUMMARY Figures Highlight ◆ Continuing profit growth ◆ Improving financial ratios ◆ Sound balance sheet ◆ PBIT/FE heading towards target
Slide 63: The Way Forward
oe THE WAY FORWARD
Slide 64: Phase 1 Complete
PHASE 1 COMPLETE ◆ Year one into a three year plan ◆ Established a base from which to grow ◆ Have a strong balance sheet ◆ Delivered what we set out to do Ready to move to the next stage
Slide 65: Strategy
STRATEGY PROFIT ORGANIC GROWTH ACQUISITIONS GROWTH • Across ALL businesses • Packaging Focus units • Tobacco • Low cost, efficient • Flexibles producers • Speciality packaging
Slide 66: Conclusion
CONCLUSION ◆ We have a clear picture of how to proceed ◆ We have sound operating businesses that will continue to grow ◆ We have financial strength
Slide 67: August 1999
INVESTOR PRESENTATION August 1999