Sonae Indústria S.G.P.S — Sonae Indústria — Investor Presentation (December 2014)
27 slides from Sonae Indústria S.G.P.S's investor presentation, December 2014
Slide 1: Investor Presentation
Sonae Indústria Investor Presentation Together, creatingTogether, creating the future the future December 2014
Slide 2: Overview
INVESTOR PRESENTATION | SONAE INDÚSTRIA Overview 2
Slide 3: A major player in the wood-based panel sector
INVESTOR PRESENTATION | SONAE INDÚSTRIA OVERVIEW A major player in the wood-based panel sector • Full range of wood based panel products: o Particleboard o Oriented Strand Board (OSB) o Medium Density Fibreboard (MDF) o Melamine Faced Boards • Presence in major markets: Germany, Iberia, France, Nort
Slide 4: … with a diversified industrial footprint
INVESTOR PRESENTATION | SONAE INDÚSTRIA OVERVIEW … with a diversified industrial footprint (as of November 2014) Sonae Indústria Installed Production Capacity: 5.8 million m3 # 21 sites (of which 14 are board plants) 4
Slide 5: … a top player in each of our markets
INVESTOR PRESENTATION | SONAE INDÚSTRIA OVERVIEW | COMPETITION … a top player in each of our markets (as of November 2014) • Estimated wood based panels production capacity per region ‘000 m3 0 500 1,000 1,500 2,000 2,500 3,000 ‘000 m3 0 500 1,000 1,500 2,000 2,500 3,000 3,500 Iberian Peninsula Nort
Slide 6: … and one of the top 5 world players
INVESTOR PRESENTATION | SONAE INDÚSTRIA OVERVIEW | COMPETITION … and one of the top 5 world players (as of November 2014) TOP 15 world wood based panels players, in terms of production capacity ‘000 m3 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 Kronospan M&P Kaindl (1) Egger
Slide 7: … with world class assets
INVESTOR PRESENTATION | SONAE INDÚSTRIA OVERVIEW … with world class assets Nettgau Oliv. do Hospital Linares In Germany In Portugal In Spain PB: 650 k m3 PB: 450 k m3 PB: 430 k m3 OSB: 460 k m3 MFC: 20.1 M m2 MFC: 11.1 M m2 MFC: 17.5 M m2 Paper Impregnation Paper Impregnation Year: 2001 Year: 2000*
Slide 8: … and a full range of wood based products
INVESTOR PRESENTATION | SONAE INDÚSTRIA OVERVIEW … and a full range of wood based products PARTICLEBOARD (PB) Strong range of high value added products • Very versatile • Mainly melamine products, veneer faced, laminates • Suitable for all general uses in furniture and and flooring for decorative so
Slide 9: … generating a diversified revenue mix
INVESTOR PRESENTATION | SONAE INDÚSTRIA OVERVIEW … generating a diversified revenue mix (2013 sales) • Diversified market base and value added product portfolio • Higher value added products represent circa 50% of sales • Circa 70% of sales generated in Europe By market(1) By product(1) Iberian Othe
Slide 10: Performance
INVESTOR PRESENTATION | SONAE INDÚSTRIA Performance 10
Slide 11: Sustaining turnover through a challenging phase of the market cycle
INVESTOR PRESENTATION | SONAE INDÚSTRIA PERFORMANCE Sustaining turnover through a challenging phase of the market cycle Turnover and 2,500 Recurrent EBITDA margin 30.0% GDP(1) (constant prices, annual percent change) 2,066 6% 25.0% 2,000 1,769 4% 20.0% 2% 1,283 1,293 1,352 1,321 1,232 1,500 15.0% 14
Slide 12: Improved outlook for the construction and furniture sectors
INVESTOR PRESENTATION | SONAE INDÚSTRIA PERFORMANCE | MARKET Improved outlook for the construction and furniture sectors 105.0 Western Europe (EC-15) • Decline in construction output Construction (1) 100.0 95.0 reached a trough last year 90.0 • Sector expected to grow by 85.0 1.8% per annum in 2014-
Slide 13: Improved operational performance (LTM Recurrent EBITDA)
INVESTOR PRESENTATION | SONAE INDÚSTRIA PERFORMANCE ... beginning to translate into improved operational performance (LTM Recurrent EBITDA) • Positive EBITDA despite overcapacity, the economic crisis and pressure on wood prices and other variable costs • Operational leverage makes the business well
Slide 14: Positive recurrent EBITDA margin trends post inflection point
INVESTOR PRESENTATION | SONAE INDÚSTRIA PERFORMANCE … and positive recurrent EBITDA margin trends post inflection point 10.0% 9.1% 9.1% 9.0% 9.0% 8.2% 8.0% 7.6% 7.5% 7.3% 7.3% 6.9% 7.0% 6.9% 6.7% 7.0% 6.4% 6.5% 7.1% 7.3% 6.3% 6.8% 6.9% 6.0% 6.5% 5.8% 5.0% 5.2% 4.0% LTM Recurrent EBITDA Margin Quarte
Slide 15: Strategy Execution
INVESTOR PRESENTATION | SONAE INDÚSTRIA Strategy Execution 15
Slide 16: Majority of profitability improvement measures already under way
INVESTOR PRESENTATION | SONAE INDÚSTRIA STRATEGY EXECUTION Majority of profitability improvement measures already under way Industrial footprint • Fix, sell or close underperforming assets optimization Operating • Improved capacity utilization index levels and specific improvements consumptions Impr
Slide 17: Industrial footprint optimization and operating improvements
INVESTOR PRESENTATION | SONAE INDÚSTRIA STRATEGY EXECUTION Industrial footprint optimization and operating improvements • Closure/sale of non performing assets executed over last three years, with capacity Restructuring reduction in Germany and Iberian Peninsula and divestment in UK activities Dives
Slide 18: Improved product mix and fixed costs reduction
INVESTOR PRESENTATION | SONAE INDÚSTRIA STRATEGY EXECUTION Improved product mix and fixed costs reduction • Target higher value added products in sales mix (e.g. melamine through our Innovus® brand in Europe and Tafilam® in North America) 60% Improved Sonae Indústria 50% >45% 47% Leverage strategic
Slide 19: Investing in further efficiency continues…
INVESTOR PRESENTATION | SONAE INDÚSTRIA STRATEGY EXECUTION Investing in further efficiency continues… … targeting improved consumption levels of recycled wood and increased sales volumes of Melamine Faced Boards • New recycling equipment to increase recycled wood consumption CAPEX Recycling (Nettgau
Slide 20: Capital Increase
INVESTOR PRESENTATION| SONAE INDÚSTRIA Capital Increase 20
Slide 21: Significant capital increase despite challenging Portuguese capital markets backdrop
INVESTOR PRESENTATION | SONAE INDÚSTRIA CAPITAL INCREASE Significant capital increase despite challenging Portuguese capital markets backdrop Gross proceeds of c. 112 M€ to Sonae Indústria 11,210,757,417 shares subscribed (74.7% of total) Controlling shareholder (Efanor) stake increased from 5
Slide 22: Allowing for a much improved debt profile…
INVESTOR PRESENTATION | SONAE INDÚSTRIA CAPITAL INCREASE Allowing for a much improved debt profile… 319 M€ of debt refinanced with two main banks, providing significant improvements in terms of maturity profile: Extended maturities: 6 to 8 years Min. grace period: 3 years for principal repayments
Slide 23: … and a significant reduction in leverage and cost of debt
INVESTOR PRESENTATION | SONAE INDÚSTRIA CAPITAL INCREASE … and a significant reduction in leverage and cost of debt 3Q14 Net Debt adjusted by the Capital Increase down to 578 M€ (from 689 M€) LTM Recurrent EBITDA (at the end of 3Q14) to Net Debt (adjusted) ratio reduced to 6.9x (from 8.3x)... ..
Slide 24: With much lower FCF breakeven level
INVESTOR PRESENTATION | SONAE INDÚSTRIA CAPITAL INCREASE With much lower FCF “breakeven” level Net Debt reduction Lower cost of debt Lower interest costs going forward Completion during 2014 of strategic investments in efficiency Capex 2015 < 2014 Majority of the industrial footprint optimisatio
Slide 25: Conclusion - Investment Case
INVESTOR PRESENTATION | SONAE INDÚSTRIA CAPITAL INCREASE Conclusion - Investment Case Significantly improved capital structure Inflection point: cycle turning with high operational leverage Strong market player: geographical and product diversification with world class assets in our major mark
Slide 26: Safe Harbour / Investor contacts
INVESTOR PRESENTATION| SONAE INDÚSTRIA SAFE HARBOUR This document may contain forward-looking information and statements, based on management’s current expectations or beliefs. Forward-looking statements are statements that are not historical facts. These forward-looking statement are subject to a n
Slide 27: Glossary
INVESTOR PRESENTATION | SONAE INDÚSTRIA ANNEXES Glossary Capacity Utilization Index Finished-Available Production (m3) / Installed production capacity (m3); raw boards only CAPEX Investment in Tangible Fixed Assets Earnings Before Interests and Taxes + Depreciations and Amortizations + (Provisions a
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