Mondi Plc · LSE:MNDI
Mondi — H1 2022 Earnings Presentation
45 slides from Mondi's earnings presentation, Aug 4, 2022
Slide 1: 2022 Half Year Results Presentation
2022 Half Year Results Presentation 4 August 2022
Slide 2: Performing strongly today - well positioned for growth
Performing strongly today - well positioned for growth 2
Slide 3: Business Unit Review
3
Slide 4: Prior structure: Group performance including discontinued Russian operations
Prior structure: Group performance including discontinued Russian operations Total EBITDA Total EPS ROCE Continuing and discontinued operations, € million Continuing and discontinued operations, € cents per share Continuing and discontinued operations, % +770 bps +65% +83% 709 1,170 70.7 129.3 14.8
Slide 5: Continuing operations delivering strongly
Continuing operations delivering strongly Underlying EBITDA Underlying EPS ROCE Continuing operations, € million Continuing operations, € cents per share Continuing operations, % +640 bps +66% +85% 566 942 53.4 98.7 12.8 19.2 H1 2021 H1 2022 H1 2021 H1 2022 H1 2021 H1 2022 Strong platform for growth
Slide 6: The moving parts
The moving parts ● Reported as discontinued operations held for sale ● 2021 income and cash flow statements restated to present Russian discontinued operations separately operations ● Balance sheet ○ Russian operations shown as assets held for sale and liabilities held for sale at 30 June 2022 ○ No
Slide 7: Reconciling from prior structure to new reporting segments
Reconciling from prior structure to new reporting segments H1 2022 EBITDA € million Group: Discontinued Corrugated Flexible Engineered Uncoated PCC1 Corporate continuing operations Packaging Packaging Materials Fine Paper (divested) operations (Russian operations) Underlying EBITDA per prior 451 380
Slide 8: Strong margin expansion, supported by solid operating performance in challenging conditions
Continuing operations Strong margin expansion, supported by solid operating performance in challenging conditions Underlying EBITDA development € million 1,179 (835) Mostly PCC and effect of floods in SA 15 26 (33) 24 942 566 H1 2021 Sales Costs Sales Currency Olmuksan Forestry H1 2022 prices volume
Slide 9: Good cash generation - Group retains strong financial position
Continuing operations Good cash generation - Group retains strong financial position Movement in net debt € million 1.5x 0.8x Net debt to Net debt to underlying underlying EBITDA 98 (646) EBITDA 222 (942) 149 247 403 1,689 1,220 Net debt at Underlying Working Capital Tax and Dividends Other Disposal
Slide 10: Good liquidity and no immediate refinancing required
Continuing operations Good liquidity and no immediate refinancing required Committed debt maturity profile € million ● Liquidity of around €1.6 billion o €757 million undrawn committed debt facilities o €870 million net cash ● Average maturity of debt facilities – 3.8 years ● Investment grade credit
Slide 11: Disciplined capital allocation
Disciplined capital allocation Growing in packaging through selective capital investment opportunities Free cash flow Supporting payment of ordinary dividends to our shareholders priorities Evaluating growth opportunities through M&A and/or increased shareholder distributions While maintaining our s
Slide 12: Business Unit Review
Slide 13: Corrugated Packaging: Integrated value chain outperforming
Corrugated Packaging % of Group Integrated value chain outperforming EBITDA Underlying EBITDA and ROCE Continuing operations, € million and % ● Containerboard and Corrugated Solutions volumes increased 28.9% 24.3% o Supported by innovative product portfolio, quality and service proposition 20.8% ● S
Slide 14: Flexible Packaging: Leveraging unique platform to drive growth
Flexible Packaging % of Group Leveraging unique platform to drive growth EBITDA Underlying EBITDA and ROCE Continuing operations, € million and % ● Volume growth 18.7% o Supported by innovative and sustainable packaging portfolio 14.8% 15.2% ● Significantly higher average selling prices across paper
Slide 15: Uncoated Fine Paper: Supplier of choice, good performance
Uncoated Fine Paper % of Group Supplier of choice, good performance EBITDA Underlying EBITDA and ROCE Continuing operations, € million and % ● Customers valuing Mondi as competitors leave the market ● Good price momentum in all markets ● Good operational performance following the successful commissi
Slide 16: Delivering on our Strategy
Slide 17: Introduction
Introduction ● Innovating with customers to drive growth ● Disciplined investment approach, strong track record of delivery Accelerating growth ● Investing in platform to capture future opportunity in sustainable packaging ● Executing ambitious expansionary capex programme – current pipeline include
Slide 18: Investing to grow in structurally attractive packaging markets
Continuing operations Investing to grow in structurally attractive packaging markets Corrugated Flexible Uncoated Packaging Packaging Fine Paper % underlying EBITDA H1 20221 1Continuing operations excluding corporate costs 18
Slide 19: Recognised leader in sustainability, taking action for the future
Recognised leader in sustainability, taking action for the future Mondi Action Plan Our sustainability framework for the next decade 1 #1 of only 14 in the companies globally with paper & forestry a CDP Triple A rating industry Sustainalytics Top AAA score MSCI 1% paper & forest products in our sect
Slide 20: Corrugated packaging's great potential – eliminating polystyrene
Corrugated packaging’s great potential – eliminating polystyrene ● 100% corrugated, recyclable solution ● Developed in cooperation with a leading global TV and home appliances producer ● Flat-pack packaging delivered to customer improves space utilisation by around 80% ● Replacing around 2 tonnes of
Slide 21: Cooperating to deliver sustainable packaging solutions in strategic end uses
Cooperating to deliver sustainable packaging solutions in strategic end uses ● Cooperation with OEM1 Beck Packautomaten ● Cooperation with OEM Krones for PET bottle packaging ● 95% paper-based, fully recyclable, ‘four-side’ sealable ● 100% paper-based Mondi solution solution for automated packaging
Slide 22: Solutions for the circular economy
Solutions for the circular economy ● Mono-material, PE-based recyclable packaging ● Mono-material, PP-based recyclable retort pouch ● Developed with Essity and Dow ○ Replacing multi-layer / aluminium-based ● Including around 40% post-consumer recycled content unrecyclable packaging and 50% bio-based
Slide 23: Executing ambitious capital investment programme to capture growth
Executing ambitious capital investment programme to capture growth Driving organic growth Enhancing product offering Strengthening cost competitiveness Improving environmental footprint Expected to deliver mid-teen returns when in full operation 23
Slide 24: Investing to better serve our Corrugated Packaging customers
Investing to better serve our Corrugated Packaging customers €95 million debottlenecking at Świecie, Poland 55 ktpa additional capacity €125 million upgrading at • Rebuilding PM2 and PM5 Kuopio, Finland • Debottlenecking pulp mill, upgrading 55 ktpa additional capacity recycled fibre line, energy re
Slide 25: And expanding our leading Flexible Packaging offering
And expanding our leading Flexible Packaging offering €65 million investment in pet food ~ €350 million, 200 ktpa • Expanding capacity in Austria kraft paper machine at and Germany Štětí, Czech Republic • Delivering sustainable, • Strengthening leading kraft recyclable mono-material paper position s
Slide 26: Performing strongly today - well positioned for growth
Performing strongly today - well positioned for growth 26
Slide 27: Operational review
Operational review divider 27
Slide 28: Mondi at a glance (H1 2022)
Continuing operations Mondi at a glance (H1 2022) Products Segment Underlying ROCE End uses revenue1 EBITDA Corrugated €1,564m Consumer €375m 28.9% and retail2 Packaging (35%) Flexible €2,082m €416m 18.7% Consumer and retail2 Packaging (47%) Uncoated Fine €793m Paper for €171m 9.8% printing Paper (1
Slide 29: Leading market positions
Continuing operations Leading market positions Corrugated Flexible Uncoated Packaging Packaging Fine Paper virgin containerboard Uncoated fine paper producer in Europe Kraft paper producer globally producer in Europe containerboard producer Paper bag producer in Europe Uncoated fine paper in emergin
Slide 30: Integrated value chain (2021 pro-forma)
Continuing operations Integrated value chain (2021 pro-forma1) Pulp3 0.1 mt Wood2 Pulp 13 million m3 3.4 mt Containerboard3 1.3 mt Corrugated solutions 2.1 bn m2 Paper for Containerboard 2.4 mt Box plants recycling 1.4 mt Kraft paper3 0.4 mt Kraft paper 1.3 mt Paper bags 5.9 bn bags Consumer flexibl
Slide 31: Mondi Action Plan 2030, consolidated performance in 2021
Mondi Action Plan 2030, consolidated performance in 2021 31
Slide 32: Cost-advantaged operations with focus on driving performance
Continuing operations Cost-advantaged operations with focus on driving performance Mondi capacity by quartile of relevant industry cost curve Relentless focus on driving performance (%) • Core organisation competence • Ongoing process to set profit improvement initiatives in four key areas: ‒ Commer
Slide 33: Customer-centric approach to sustainable solutions
to sustainable solutions Customer-centric approach We offer unique solutions ranging from renewable paper to recyclable plastic High Renewable Low High Recyclable Low Low Barrier functionality High Moisture Grease Mineral Oil Gas Added Barrier Aluminium Paper barriers Material films foil 33
Slide 34: A few examples
– a few examples ThermoFORMing A fully-recyclable mono-material EcoVantage high barrier film which has a Replacing plastic bags with significantly lower carbon sustainable and efficient paper footprint compared to existing alternatives solutions PerFORMing Monoloop MonoCorr Box Formable paper-based
Slide 35: Russia and Ukraine overview
Russia and Ukraine overview Russia • Around 12% of the Group’s revenue by location of production in 2021 • Around 20% of the Group’s underlying EBITDA over the last three years • 5,300 colleagues. Four production locations: o Syktyvkar (Komi Republic) – high-margin, cost-competitive, integrated pulp
Slide 36: Technical guidance update
Continuing operations Technical guidance update 2022 Incremental underlying EBITDA contribution from major capital investments ~ €60 million Capital expenditure €500 – 600 million Depreciation and amortisation ~ €400 million Estimated impact of planned mill maintenance shuts ~ €100 million Working c
Slide 37: Reconciling from prior structure to new reporting segments
Reconciling from prior structure to new reporting segments H1 2021 and FY 2021 EBITDA € million Group: Discontinued Corrugated Flexible Engineered Uncoated Fine PCC1 Corporate continuing operations (Russian Packaging Packaging Materials Paper (divested) operations operations) H1 2021 Underlying EBIT
Slide 38: Input costs
Continuing operations Input costs Variable costs € million 2,800 2,100 1,400 700 0 H1 2021 H2 2021 H1 2022 Pulp Paper Wood Paper for recycling Energy Chemicals Plastics Other variable costs 38
Slide 39: Fixed costs
Continuing operations Fixed costs Fixed costs (excluding special items) € million 1,200 23.2% 22.9% 18.4% 900 600 300 0 H1 2021 H2 2021 H1 2022 Depreciation, amortisation and impairments Other net operating expenses Personnel costs Maintenance and other indirect expenses Fixed costs excluding deprec
Slide 40: Production statistics
Continuing operations Production statistics % change % change H1 2021 H2 2021 H1 2022 vs H1 2021 vs H2 2021 Containerboard '000 tonnes 1,169 1,206 1,209 3% – Kraft paper '000 tonnes 627 626 669 7% 7% Uncoated fine paper '000 tonnes 550 518 487 (11%) (6%) Pulp '000 tonnes 1,798 1,600 1,816 1% 14% Int
Slide 41: Exchange rates
Exchange rates % change % change H1 2021 H2 2021 H1 2022 vs H1 20211 vs H2 20211 Closing rates against the euro South African rand 17.01 18.06 17.01 – 6% Czech koruna 25.49 24.86 24.74 3% – Polish zloty 4.52 4.60 4.69 (4%) (2%) Pound sterling 0.86 0.84 0.86 – (2%) Russian rouble 86.77 85.30 56.55 35
Slide 42: Key paper and pulp European selling prices
Key paper and pulp European selling prices Containerboard and OCC Sack kraft paper Pulp and UFP €/tonne Prices indexed to June 2017 €/tonne 1,300 1.60 1,200 1,000 240 1.50 1,100 900 200 1.40 1,000 800 160 1.30 Containerboard 900 700 OCC 1.20 120 600 800 1.10 80 500 700 1.00 400 40 600 0.90 300 0 0.8
Slide 43: Sources and definitions
Sources and definitions Mondi region definitions Europe – Europe including Turkey Emerging Europe – Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Georgia, Hungary, Latvia, Lithuania, Macedonia, Malta, Moldova, Montenegro, Poland, R
Slide 44: 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 45: Cmondi
Cmondi