International Paper Company · NYSE:IP
International Paper — International Paper Co /New/ — Smith Barney Citigroup Global Paper, Forest Products & Packaging Conference 2003
34 slides from International Paper's conference presentation, Dec 4, 2003
Slide 1: Smith Barney Citigroup Global Paper, Forest Products & Packaging Conference
Smith Barney Citigroup Global Paper, Forest Products & Packaging Conference December 4, 2003 John V. Faraci Chairman & CEO
Slide 2: Agenda
International Paper Today Key Responsibilities Global Position Competitive Strengths International Paper Tomorrow Targets and Priorities 2 Agenda
Slide 3: Forward Looking Statement
A ny statements made during this presentation or in the slides accompanying the presentation that are not historical facts are forward- looking statements and are subject to risks and uncertainties that could cause actual results to differ materially. Factors which could cause actual results to diff
Slide 4: Statements Relating to the Use of Non-GAAP Financial Measures
D uring the course of this presentation, certain non- U.S. GAAP financial information will be presented. Reconciliations of those numbers to U.S. GAAP financial measures is available on the company’s website at under Investor Information 4 Statements Relating to the Use of Non-GAAP Financial Measure
Slide 5: International Paper Today
5 International Paper Today
Slide 6: International Paper Today
6 International Paper Today
Slide 7: International Paper Today
7 International Paper Today
Slide 8: International Paper Today
8 International Paper Today
Slide 9: Senior Management Key Responsibilities
Packaging, xpedx, CHH Paper, Forest Products Supply Chain, Information Technology Manufacturing Excellence, Technology 9 Senior Management Key Responsibilities Robert Amen President John Faraci CEO Marianne Parrs EVP Newland Lesko EVP
Slide 10: Senior Management Key Responsibilities
Paper LH Puckett Paul Herbert Thomas Kadien Odair Garcia Packaging Thomas Gestrich Wayne Brafford Forest Products George O’Brien Financial Christopher Liddell Legal Maura Smith Coated & SC Papers P&C Papers European Papers Brazil Consumer Pkging Industrial Pkging Forest Resources & Wood Products Fin
Slide 11: Global Position
Europe - 2.1 MM tons New Zealand - 1.3 MM tons North America - 15.5 MM tons Brazil - 0.7 MM tons 11 Global Position Producing 19 million tons of paper, pulp & packaging board in 8 countries
Slide 12: Global Position: North America
780 Specialty Papers 1,200 Coated Groundwood 1,700 Bleached Board 1,990 Market Pulp 4,450 Containerboard 100 Uncoated Groundwood 15,520 Total 700 Coated Free Sheet 800 Bristols 3,800 Uncoated Free Sheet 12 Global Position North America (in thousands of short tons)
Slide 13: Global Position: Latin America
680 Total 20 Market Pulp 220 Coated Groundwood 440 Uncoated Free Sheet 13 Global Position Latin America (in thousands of short tons)
Slide 14: Global Position: Europe
115 Newsprint 200 Containerboard 290 Market Pulp 2,105 Total 150 Folding Boxboard 70 Coated One-Side 1,280 Uncoated Free Sheet 14 Global Position Europe (in thousands of short tons)
Slide 15: Global Position: Pacific Rim
420 Containerboard 100 Bleached Board 1,310 Total 190 Tissue 600 Market Pulp 15 Global Position Pacific Rim (in thousands of short tons)
Slide 16: Leading Position in Key Grades
Uncoated Papers (Global) Coated Papers (N. America) Bleached Board (Global) Land Ownership (Private-U.S.) Softwood Lumber (N. America) Containerboard (Global) #1 #1 #1 #1 #2 #3 16 Leading Position in Key Grades Rank
Slide 17: Diversified Exposure to Various Grades
Enterprise Selling Market Knowledge & Market Access Wide Range of Products 17 Diversified Exposure to Various Grades
Slide 18: Economies of Scale & Operating Efficiencies
Global Supply Best Practices Global Purchasing Machine Specialization 18 Economies of Scale & Operating Efficiencies
Slide 19: Low Cost & Competitive Assets
Based on Jaakko Poyry 2003 CostTrac with 2nd Quarter, 2003, Prices & Exchange Rates. 1998 2003 25% 70% 19 Low Cost & Competitive Assets IP UCFS capacity within 1st & 2nd quartile
Slide 20: Spending based on Return & Growth
Total IP 100 20 Spending based on Return & Growth Brazil Europe Forest Prods. Wood Prods. Ind. Pkg. Printing Paper Cons. Pkg. Coated Paper 2002 Capex as % Depreciation
Slide 21: International Paper Today Summary
Competitive assets in key grades and regions Well-positioned for upturn in demand Major rationalizations complete, but always alert to additional optimization Established presence and scale in Eastern Europe and Latin America Capital allocation aimed at growing business outside of North America 21 I
Slide 22: Targets & Priorities
Targets & Priorities 22 International Paper Tomorrow
Slide 23: Goal: ROI Among Best Industrials
23 $1.5 B non-price improvement $0.8 B trendline pricing improvement Goal: ROI Among Best Industrials Increase ROI by 500 basis points to 9% at trend line prices IP Goal $1.12 EPS 4% ROI $1.8 B EBIT 2002 $3.3 B EBITDA 2005 9% ROI $4.00 EPS $4 B EBIT $5.5-6.0 B EBITDA
Slide 24: 2005 Improvement Target
$3.3 $5.6 $ billion $0.8 24 2005 Improvement Target 40% 20% 10% 30% $1.5 billion non-price ($0.8)
Slide 25: Company Priorities
People Operational Excellence Customer Focus 25 Company Priorities
Slide 26: Company Priorities: People
Leadership Engagement Diversity Organization Compensation People 26 Company Priorities
Slide 27: People
People 27 Leadership Engagement Diversity Organization Compensation Fewer layers New responsibilities & reporting relationships Equity awards pegged more closely to performance New peer group for relative return ranking IP stock holding requirement for officers Company Priorities
Slide 28: Company Priorities: Operational Excellence
Manufacturing Excellence Supply Chain Initiative Lower Overhead Operational Excellence 28 Leadership Engagement Diversity Organization Compensation People Company Priorities
Slide 29: Operational Excellence: Manufacturing Excellence
Operational Excellence 29 Manufacturing Excellence Supply Chain Initiative Lower Overhead Improving reliability Productivity Maintenance costs Reducing direct costs Fiber, chemicals, energy and labor Company Priorities
Slide 30: Operational Excellence: Supply Chain Initiative
Operational Excellence 30 Manufacturing Excellence Supply Chain Initiative Lower Overhead Enterprise-wide initiative to standardize processes and information Improve customer service Reduce costs Decrease complexity Company Priorities
Slide 31: Operational Excellence: Lower Overhead
Operational Excellence 31 Manufacturing Excellence Supply Chain Initiative Lower Overhead Corporate initiative Reduce overhead costs Eliminate 3,000 salaried positions Company Priorities
Slide 32: Company Priorities: Customer Focus
Customer Focus Improve Mix Target Segments Grow Volumes 32 Leadership Engagement Diversity Organization Compensation People Manufacturing Excellence Supply Chain Initiative Lower Overhead Operational Excellence Company Priorities
Slide 33: Reaching New Heights
33 Reaching New Heights Stronger, More Focused Businesses Well Positioned for Market Recovery Maximize Shareholder Returns Goal: ROI Among Best Industrials
Slide 34: wsrenwarionat @)rarER
wsrenwarionat @)rarER INTERNATIONAL (A) PAPER