Mondi Plc · LSE:MNDI
Mondi — Debt Investor Presentation (March 2010)
39 slides from Mondi's debt investor presentation, March 2010
Slide 1: Mondi Group Fixed Income Investor Presentation
MONDI GROUP Fixed Income Investor Presentation March 2010
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by Mondi plc (the “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, further dist
Slide 3: Agenda and presenters
Group overview and strategy Industry fundamentals 2009 Financial results Capital structure and financial policies Ratings Summary Appendices Presenters Andrew King Chief Financial Officer James Paterson Group Treasurer All Acronyms listed in the appendix Page 3
Slide 4: Overview
Overview Mondi is an integrated packaging and paper company, employing 31,000 people across 31 countries worldwide with key operations and interests in Western and emerging Europe, Russia and South Africa Leading market positions, well invested low cost asset base and a consistent focus on operating
Slide 5: Mondi at a glance
Mondi at a glance Bags & Newsprint and UFP Specialities Corrugated South Africa MPSA merchant €1.4B €1.8B €1.0B €0.5B €0.5B €0.5B 9% 2009 9% Sales 24% (1) 8% 32% 18% 2009 EBIT % 10.8% 4.5% 2.3% 6.7% 7.2% 2.1% Products Europe South Africa Europe/SA Positions No. 1 in Office No. 1 in Kraft Paper No. 1
Slide 6: Mondi's operating sites
Mondi’s operating sites 1) Mondi employs 31,000 people with production facilities in 31 countries 1 ) Excluding Stambolijski , the mothballed bag plant in Bulgaria Page 6
Slide 7: Mondi Group Key Financials
Mondi Group Key Financials EBITDA 2009 Historical operating cash flow (€m) (€m) 138 27 645 SA & Newsprint/ 88 MPSA Merchant 188 Corrugated Bags & Total 239 Specialities Mondi Corporate /Other UFP (35) Diversity of Operations ROCE Revenue by origin Revenue by destination Mondi 18% 21% 17% 12% 9% 8% 1
Slide 8: Three key pillars to our strategy
Three key pillars to our strategy Leading market Build on leading positions in packaging and uncoated fine paper positions (UFP), particularly in emerging markets + Maintain position as lowest cost producer in our markets: High quality, low Selectively investing in production capacity in lower cost
Slide 9: Significant exposure to good growth emerging markets supported by strong asset base
Significant exposure to good growth emerging markets supported by strong asset base Leading market Revenue by destination Revenue by origin positions Leading market 47% 42% 53% 58% positions High exposure to good growth geographies Emerging markets Mature markets Virgin based production Net operatin
Slide 10: Emerging market asset base leads to low cost positions across the group's main grades
Emerging market asset base leads to low cost positions across the group’s main grades… Leading market Percentage of Mondi's capacity in overall cost curve at Feb 2010 1 positions st nd rd th Grade 1 Quartile 2 Quartile 3 Quartile 4 Quartile + Unbleached Sack Paper 27% 4% 60% 9% High quality, low NSS
Slide 11: Superior access to low cost wood
Superior access to low cost wood Leading market Average Hardwood and Softwood costs (€/m3, Q4 2009) positions Russian wood regenerates + naturally; South African wood is High quality, low farmed, maturing in 8 years cost asset base Russian and South African costs low cost asset are largely under our
Slide 12: Profitability improvements
Profitability improvements Leading market Cost savings COSTand % of -prior SAVINGS year cash €251 MILLION YTD cost base Cost structure 2009 positions Depreciation 275 3.1% 2.4% 5.4% Other net and amortisation operating + 250 225 251 expenses 6% 7% Wood, pulp Other and fibre 200 High quality, low Mai
Slide 13: Sharp focus on working capital
Sharp focus on working capital Leading market positions Working capital management + €248 million working capital cash 1,200 20% High quality, low 1,100 15.5% 18% inflow in 2009 cost asset base 1,000 14.6% 12.9% 16% Lower working capital levels 14% 11.9% + 900 12% despite Euro weakness versus € M il
Slide 14: Major mills' modernisation programme
Major mills’ modernisation programme Leading market Expansionary capital spend 2004 to 2009 Coming to the end of 10 year programme of modernising its asset positions South Africa base 7% Almost €3 billion spent on + 29% Emerging Europe, incl Russia expansionary projects Rest of world (mainly Western
Slide 15: Rigorous asset management
Rigorous asset management Leading market Closures and Divestitures1 positions ~930,000 tonnes annual capacity of high cost paper removed in just over + 5 two years High quality, low Europe & International 6 cost asset base 5 ~810,000 tonnes South Africa ~120,000 tonnes + 7 14% reduction of Group Foc
Slide 16: Agenda
Group overview and strategy Industry fundamentals 2009 Financial results Capital structure and financial policies Ratings Summary Appendices Page 16
Slide 17: Industry fundamentals – Uncoated Fine Paper
Industry fundamentals – Uncoated Fine Paper UFP cumulative cut-size order inflow 2009 vs. 2008 (% growth)1 UFP capacity developments2 150 499 6% net capacity 000 tonnes reduction expected 2008-2010 300 (511) Cut-size Other All UFP 0% (11%) (6%) (210) (851) Capacity Rational- Capacity Rational- Capac
Slide 18: Industry fundamentals – Kraft Paper
Industry fundamentals – Kraft Paper Cumulative sack kraft paper order inflow 2009 vs. 2008 (% growth)1 Sack Kraft Paper capacity developments2 40 10 000 tonnes 5% net capacity reduction 2008-2009 (160) Capacity Rational- Capacity Rational- Capacity Rational- additions isations additions isations add
Slide 19: Industry fundamentals – Corrugated
Industry fundamentals – Corrugated Cumulative corrugated order inflow 2009 vs. 2008 (% growth)1 RCB2 capacity developments4 3% net capacity increase May Aug Sep Nov Dec Feb Mar Jan Jun Oct Apr 1,133 Jul expected 2008-2010 000 tonnes 1,137 0% Need for 351 further (6%) closures?? (5%) (400) (10%) (1,4
Slide 20: Agenda
Group overview and strategy Industry fundamentals 2009 Financial results Capital structure and financial policies Ratings Summary Appendices Page 20
Slide 21: Key financial highlights
Key financial highlights Group Revenue €6,345m Substantial cash inflow from operations of €867 million, 9% €5,257m above prior period H2 €3,082m H2 €2,643m Earnings down versus 2008 EBITDA1 down 21% at €645 million H1 H1 Underlying operating profit 2 down 33% at €294 million €3,263m €2,614m Underlyi
Slide 22: Key operational highlights
Key operational highlights Clear pick up in European trading conditions in the final quarter Significant volumes recovery - only ~10,000 tonnes downtime in second half ; ~173,000 tonnes for the year Positive price developments in packaging paper grades Strong performance from the European uncoated f
Slide 23: Operating financial highlights
Operating financial highlights % H2 H1 H2 € Millions 2008 2009 Change 2008 2009 2009 Group Revenue 6,345 5,257 (17%) 3,082 2,614 2,643 EBITDA 1 814 645 (21%) 358 308 337 % Margin 12.8% 12.3% 11.6% 11.8% 12.8% Underlying operating profit 2 441 294 (33%) 178 138 156 % Margin 7.0% 5.6% 5.8% 5.3% 5.9% C
Slide 24: Agenda
Group overview and strategy Industry fundamentals 2009 Financial results Capital structure and financial policies Ratings Summary Appendices Page 24
Slide 25: Capital Structure & Financial Policies
Capital Structure & Financial Policies Conservative approach to leverage Capital structure at demerger established on basis of investment grade credit ratios Scale of the global recession has clearly softened the key metrics Current bank debt covenant of 3.5x Net Debt/EBITDA Would not want to exceed
Slide 26: Capital Structure & Financial Policies (continued)
Capital Structure & Financial Policies (continued) Dividend payout Mondi targets a dividend cover range of two to three times on average over the cycle Payout ratio in each year will vary in accordance with the business cycle Demonstrated a willingness to cut the dividend significantly to maintain t
Slide 27: Key Features of the DLC Structure
Key Features of the DLC Structure Equalisation Ratio 1:1 Single Corporate Group MPLC Ordinary MLTD Ordinary Shareholders Shareholders MPLC and MLTD separate legal entities with separate stock exchange listings Sharing Unified boards and management Agreement MPLC MLTD Head office located in South Cro
Slide 28: Adequate debt facilities available in medium term
Adequate debt facilities available in medium term H2 H1 H2 € Millions 2008 2009 2009 Net debt 1,690 1,661 1,517 Committed facilities 2,752 2,838 2,542 Of which undrawn 1,062 1,073 990 Gearing (Net debt / Trading capital employed) 39% 38% 35% Trading capital employed 4,368 4,384 4,356 Net Debt / 12 m
Slide 29: Agenda
Agenda Company overview and strategy Industry fundamentals 2009 Financial results Capital structure and financial policies Ratings Summary Appendices Page 29
Slide 30: Ratings
Ratings Moody’s S&P Issuer Rating: Baa3 Long-Term Corporate Credit Rating: BB+ Outlook Stable Outlook Stable “Mondi's Baa3 rating reflects the well “The rating on Mondi reflects its favourable diversified business profile by cost position with a well invested asset base, products and regions underpi
Slide 31: Agenda
Agenda Company overview and strategy Industry fundamentals 2009 Financial results Capital structure and financial policies Ratings Summary Appendices Page 31
Slide 32: Summary
Summary Strong liquidity position Conservative management committed to investment grade credit metrics Proven and clear strategy and consistent focus Leader in our chosen markets Considerable exposure to high growth geographies Geographic diversity High quality, low cost asset base low cost asset ba
Slide 33: Agenda
Agenda Company overview and strategy Industry fundamentals 2009 Financial results Capital structure and financial policies Rating Summary Appendices Page 33
Slide 34: Abridged income statement
1 Abridged income statement % H2 H1 H2 € Millions 2008 2009 Change 2008 2009 2009 Group Revenue 6,345 5,257 (17%) 3,082 2,614 2,643 Materials, energy and consumables used (3,384) (2,768) 18% (1,655) (1,387) (1,381) Variable selling expenses (542) (472) 13% (261) (225) (247) Gross margin 2,419 2,017
Slide 35: Abridged Cash flow
Abridged Cash flow % H2 H1 H2 € Millions 2008 2009 Change 2008 2009 2009 EBITDA 1 814 645 (21%) 358 308 337 Working capital movements 27 248 819% 153 99 149 Other operating cash flow items (46) (26) 43% (26) (15) (11) Cash generated from operations 795 867 9% 485 392 475 Dividends from financial inv
Slide 36: Abridged Balance Sheet
Abridged Balance Sheet 2007 2008 2009 € Millions Actual Actual Actual Non-Current Assets 4,549 4,208 4,476 Cash and Cash Equivalents 180 155 123 Other Current Assets 2,133 1,893 1,573 Assets Held for Sale - 5 36 Total Assets 6,862 6,261 6,208 Short Term Borrowings (453) (378) (219) Other Current Lia
Slide 37: Segmental financials
Segmental financials €m Segmental revenue €m Segmental EBIT EBIT % 4,000 300 9.0% 3,500 8.0% 250 3,000 7.0% 200 2,500 6.0% 2,000 150 5.0% 1,500 4.0% 100 1,000 3.0% 50 500 2.0% 1.0% HY1 2008 HY2 2008 HY1 2009 HY2 2009 HY1 2008 HY2 2008 HY1 2009 HY2 2009 (50) 0.0% Uncoated Fine Paper Corrugated Uncoat
Slide 38: Acronyms
Acronyms DLC Dual listed structure MPSA Mondi Packaging South Africa UFP Uncoated fine paper NSSC Neutral sulphite semi-chemical BHKP Bleached hardwood kraft pulp RCB Recycled containerboard VCB Virgin containerboard Page 38
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