Slide 1: Mondi Group results for the year ended 31 December 2007
MONDI GROUP RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007 28 February 2008
Slide 2: Agenda
AGENDA 1. Highlights 2. Financial overview 3. Operational review 4. Strategy update 5. Outlook 6. Appendices Steti, Czech Republic Year end results 2007 Page 2
Slide 3: Highlights
HIGHLIGHTS Mondi demerged from Anglo American plc and separately listed on 3 July on both the JSE and LSE Experienced significant improvement in earnings versus 2006 EBITDA1 up 20% at €870 million Underlying operating profit 2 up 33% at €502 million Underlying EPS up 74% at 46.9 euro cents Cash infl
Slide 4: Highlights (continued)
HIGHLIGHTS (continued) Good performance due to: Low cost asset base Exposure to emerging markets Flexibility and responsiveness Responsiveness demonstrated by Hungarian closure, UFP restructuring and organisational streamlining Delivered a further €167 million in cost savings Major growth projects i
Slide 5: Agenda
AGENDA 1. Highlights 2. Financial overview 3. Operational review 4. Strategy update 5. Outlook 6. Appendices Merebank, South Africa Year end results 2007 Page 5
Slide 6: Financial highlights
FINANCIAL HIGHLIGHTS € millions, except for per share measures and ROCE 2007 2006 %Change Group revenue 6,269 5,751 +9 1 EBITDA 870 726 + 20 2 Underlying operating profit 502 377 + 33 3 Underlying profit before tax 405 305 + 33 Reported profit before tax 382 223 + 71 4 Underlying earnings per share
Slide 7: Divisional results
DIVISIONAL RESULTS Group revenue EBITDA 1 Underlying operating profit 2 € millions 2007 2006 Change 2007 2006 Change 2007 2006 Change PACKAGING Corrugated Business 1,644 1,497 147 242 206 36 158 120 38 Bag Business 1,265 1,162 103 207 174 33 127 97 30 Flexibles Business 786 607 179 54 32 22 27 9 18
Slide 8: Divisional returns
DIVISIONAL RETURNS ROCE (%) 1 EBITDA return(%) 2 Return on Sales (%) 3 2007 2006 2007 2006 2007 2006 PACKAGING 13.2 10.2 14.0 13.0 8.7 7.1 BUSINESS PAPER 8.0 5.3 15.2 12.5 8.0 5.5 MPSA 13.8 17.4 12.6 12.8 8.4 9.7 MERCHANT & NEWSPRINT 17.3 12.5 10.2 8.9 6.8 5.4 MONDI GROUP (ROCE) 10.6 8.1 13.9 12.6 8
Slide 9: Costs and cost saving initiatives
COSTS AND COST SAVING INITIATIVES COST STRUCTURE 2007 COST SAVINGS - €167 MILLION 190 Depreciation and 3.9% 3.6% 3.1% amortisation 180 6.4% 179 180 170 Other net operating expenses 167 Wood, pulp and 160 6.6% € million fibre 150 Other variable 34.1% costs 140 15.9% 130 120 Maintenance 5.0% 110 Energ
Slide 10: Finance charges and net debt
FINANCE CHARGES AND NET DEBT € millions 2007 2006 (1) Change Net debt 1,507 1,479 28 Net debt finance charges and other financial income 93 65 28 Net post retirement finance costs 6 12 (6) Net finance costs (1) 99 77 22 (1) Net debt and finance charges under old capital structure for 2006 and before
Slide 11: Special items
SPECIAL ITEMS Operating Net profit on disposals € millions 2007 2006 € millions 2007 2006 Total cost 77 78 Profit/(loss) 83 (4) Impairments €61m Disposals: European UFP closures 5.34% in Swiecie €57m (Hungary) B + K (associate) €19m Carbonless plant Corrugated (UK & Ireland) €8m Retention arrangemen
Slide 12: Taxation and dividends
TAXATION AND DIVIDENDS Taxation Dividends € millions 2007 2006 Change Final proposed dividend of 15.7 euro Underlying tax charge (117) (115) (2) cents per share Tax on special items 15 21 (6) Total tax charge (102) (94) (8) Record date 25 April 2008 Payment date 21 May 2008 Effective tax rate before
Slide 13: Cash flow
CASH FLOW € millions 2007 2006 Change EBITDA 870 726 144 Working capital movements 97 (82) 179 Other operating cash flow adjustments (10) 13 (23) Cash inflows from operations 957 657 300 Dividends from associates and financial investments 1 2 (1) Tax paid (93) (71) (22) Net cash inflow from operatin
Slide 14: Capital invested and financing
CAPITAL INVESTED AND FINANCING € millions 2007 2006 Trading capital employed 4,818 4,737 (1) Group ROCE 10.6% 8.1% Shareholders funds 2,963 2,966 (2) Return on shareholders funds (post tax) 8.1% 4.8% Net debt 1,507 1,479 Gearing (Net debt/Equity) 45.2% 44.9% EBITDA interest cover (times) 9.6 9.3 (1)
Slide 15: Group reporting
GROUP REPORTING Following Group wide organisation review announced 18 October 2007 we will be revising our segmental reporting with effect from 1 January 2008 2007 REPORTING FUTURE REPORTING MONDI PACKAGING EUROPE & INTERNATIONAL DIVISION Corrugated Business Corrugated Business Bag Business Bags and
Slide 16: Financial summary
FINANCIAL SUMMARY Results show we are delivering improvements in: Profits Cash flows Returns on capital employed Obsession with cost savings Strong financial position Year end results 2007 Page 16
Slide 17: Agenda
AGENDA 1. Highlights 2. Financial overview 3. Operational review 4. Strategy update 5. Outlook 6. Appendices Ruzomberok, Slovakia Year end results 2007 Page 17
Slide 18: Packaging
PACKAGING € millions 2007 2006 Change Segment revenue 3,590 3,167 423 Underlying operating profit 312 226 86 Average pricing Kraftliner prices up 10% Kraft paper prices up 12% Box prices up 10% Production and volumes Productivity records at 10 out of 14 paper mills Containerboard volumes up 3% Kraft
Slide 19: Corrugated packaging fundamentals
Corrugated packaging fundamentals Mondi is +/-1.0 million tonnes long in 850 kraftliner and are balanced in test liner 750 Kraftliner 175 g Circa 26 million tonne market growing at: Testliner 2 Western Europe 1.8% 1 White top Kraftliner 650 Eastern Europe 8.2% 1 Good demand growth, particularly in €
Slide 20: Kraft paper fundamentals
Kraft paper fundamentals Total European market size 3.1 Unbleached sack kraft mtpa Mondi produce 900 ktpa, - are 400 ktpa long Export sales redenominated in euros No major new capacity announcements 2001 2002 2003 2004 2005 2006 2007 UPM closure announced in 2007 of 115 ktpa Year end results 2007 Pa
Slide 21: Business Paper
BUSINESS PAPER € millions 2007 2006 Change Segment revenue 1,898 1,889 9 Underlying operating profit 152 104 48 Pricing Prices up 7% on average year on year Volumes UCWF volumes up 2.1%1 Total pulp production up 4%, record production in 4th quarter at Richards Bay 4% improvement in productivity Good
Slide 22: Uncoated fine paper fundamentals
Uncoated fine paper fundamentals Circa 12 million tonne market, growing at: 1,100 UFP Western Europe 1.3% 1 1,050 Eastern Europe 6.6% 1 European capacity closures in 2006/2007 1,000 of 720 ktpa and 410 ktpa announced in 950 2008 €/tonne Following these closures, capacity 900 utilisation should impro
Slide 23: Divisional performance (cont)
DIVISIONAL PERFORMANCE (Cont) Mondi Packaging South Africa Merchant and Newsprint € millions 2007 2006 Change € millions 2007 2006 Change Segment revenue 419 360 59 Segment revenue 591 539 52 Underlying operating profit 35 35 - Underlying operating profit 40 29 11 Result up 8% in local currency, fla
Slide 24: South African power issues
SOUTH AFRICAN POWER ISSUES Working constructively with Eskom and local authorities to mitigate impact of load shedding To date no significant impact to our businesses Mondi is relatively self sufficient Richards Bay fully self sufficient following installation of 27MW gas turbine in 2006 PM31 more e
Slide 25: Agenda
AGENDA 1. Highlights 2. Financial overview 3. Operational review 4. Strategy update 5. Outlook 6. Appendices Syktyvkar, Russia Year end results 2007 Page 25
Slide 26: Mondi strategic drivers
MONDI STRATEGIC DRIVERS Leading market positions Virgin based production Particularly in emerging 18% markets High quality low cost asset base Focus on performance 82% Growth Net operating assets 2007 35% EMERGING MARKETS BENEFIT 65% FROM BOTH GROWTH AND LOW COST Emerging markets Mature markets Year
Slide 27: High quality low cost asset base
High quality low cost asset base White -top Kraftliner Unbleached Kraftliner €/t €/t 100% of Mondi 100% of Mondi Unbleached White-top Kraftliner Kraftliner capacity capacity 0 0 0 0 3,000 Cumulative capacity (Kt/a) 1,400 Cumulative capacity (Kt/a) Universal Office Paper €/t 100% of Mondi Universal O
Slide 28: Wood costs
Wood costs Average hardwood and soft wood costs (€/m3, Q2 2007) 47 37 39 42 Mondi is circa 50% self 30 30 33 sufficient in wood supply 25 25 26 22 100% self sufficient in Russia and South Africa l a nd ce a en l )* d le lia i ga Polish and Slovakian az i an ric i ed ss an Ch la ra ed rtu Br Af nl Ru
Slide 29: Focus on performance
Focus on performance EUROPEAN UFP CLOSURE + RESTRUCTURING Approximately 75,000 tonnes production downtime taken in 2007 to manage inventory levels Planning to reduce operating capacity by 6% through the planned closure of Szolnok mill in Hungary (140,000 tonnes) in Q2 2008 Reduction in divisional ov
Slide 30: Rigorous asset management
Rigorous asset management No. closures/divestitures Reduced testliner capacity by 11% in 2004 (~ 110Kt) Closed 11% of corrugated packaging capacity (~280M m2) since 2004 10 Closed paper machine South Africa (~110Kt) 5 10 Closed 35 converting plants and two 5 11 7 10 testliner mills, divested 30 conv
Slide 31: Operational performance
Operational performance Ongoing operational excellence and efficiency gains in 2007 Productivity - Bag Converting 9% +8% CAGR 1,097 1,000 units per capita 1,040 6% 778 4% 3% 450 UFP Containerboard Corrugated Bag Converting 1995 2000 2006 2007 Packaging Year end results 2007 Page 31
Slide 32: Major growth projects in emerging markets
Major growth projects in emerging markets Syktyvkar mill expansion - €525m Containerboard & box plant - €350m Modernisation and expansion Located at Swiecie mill in Poland Completion expected mid 2010 470,000t lightweight recycled containerboard Exposed to strong demand growth for UFP machine and co
Slide 33: Agenda
AGENDA 1. Highlights 2. Financial overview 3. Operational review 4. Strategy update 5. Outlook 6. Appendices Plantation, South Africa Year end results 2007 Page 33
Slide 34: Outlook trading
OUTLOOK TRADING “We believe that Mondi’s leading positions in the emerging markets provide both cost and growth advantages. Furthermore our focused strategy, obsession with driving down costs and willingness to react quickly to market conditions leaves us very well placed to respond to changing econ
Slide 35: Appendices
APPENDICES
Slide 36: Mondi at a glance
MONDI AT A GLANCE merchant /newsprint South Africa Sales 2007 (1) €3.6B €1.9B €0.4B €0.6B EBITDA margin 14.0% 15.2% 12.6% 10.2% Products z No. 1 Kraft Paper(2) z No. 1 Office Paper(2) z No. 1 Corrugated z No. 1 Newsprint in z No. 2 Kraftliner(2) z No. 2 UFP(2) Packaging in SA(3) South Africa(2) Posi
Slide 37: Abridged income statement
1 ABRIDGED INCOME STATEMENT € millions 2007 2006 Change Group revenue 6,269 5,751 518 Materials, energy and consumables used (3,265) (2,960) (305) Variable selling expenses (558) (558) - Gross margin 2,446 2,233 213 Maintenance and other indirect expenses (289) (287) (2) Personnel costs (906) (874)
Slide 38: Export dependency
EXPORT DEPENDENCY Overview of Export dependence European Paper Business (Imports, Exports and Net Trade in % of Production) Exports in % of Production Imports in % of Production 34,4 Net Exports in % of Production 29,0 27,1 27,0 23,5 23,8 24,4 22,9 21,5 21,2 21,7 21,6 14,1 8,6 9,0 6,6 4,9 4,4 4,0 4,
Slide 39: Production volumes
PRODUCTION VOLUMES 2007 2006 % Change Mondi Packaging Containerboard (tonnes) 2,101,363 2,044,391 +3 Kraft paper (tonnes) 891,385 850,271 +5 2 Corrugated board and boxes (m m ) 2,088 2,103 -1 Industrial bags (m units) 3,642 3,606 +1 2 Coating and release liners (m m ) 2,971 2,360 + 26 Pulp – externa
Slide 40: Exchange rates
EXCHANGE RATES 2007 2006 Change Closing rates against the euro South African rand 10.03 9.22 -8.8% Pounds sterling 0.73 0.67 -9.0% Polish zloty 3.59 3.84 6.5% Russian rouble 35.99 34.68 -3.8% Slovakian koruna 33.58 34.56 2.8% US dollar 1.47 1.32 -11.4% Czech koruna 26.63 27.50 3.2% Average rates for
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