Slide 1: Well positioned, Resilient, Delivering: Half-year results 2020
Well positioned Resilient Delivering Half-year results for the six months ended 30 June 2020 6 August 2020
Slide 2: 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 3: Agenda
Introduction Financial review Operational review Delivering on our strategy Outlook and summary Q&A Appendices 3
Slide 4: Introduction
Slide 5: Well positioned, resilient, delivering
Well positioned, resilient, delivering Fast and effective response to COVID-19, Resilient business, Well positioned for prioritising the health and providing essential recovery – leveraging safety of our people products and solutions global industry trends 5
Slide 6: Mondi's decisive and effective COVID-19 response
Mondi’s decisive and effective COVID-19 response Implemented best in Uninterrupted supply Well-managed Cost control Delivery of essential class safety protocols Providing products for supply chain Slowed down capex infrastructure services Protecting jobs essential businesses Limited operational Secu
Slide 7: Financial review
7
Slide 8: Robust financial performance
Robust financial performance Underlying EBITDA and ROCE € million and % 23.2% 25.0% ● Robust financial performance in a challenging 19.8% 17.1% 20.0% environment 15.0% 10.0% o Industry leading margins and returns 5.0% 894 764 738 0.0% o Strong cash generation and balance sheet H1 2019 H2 2019 H1 202
Slide 9: Resilient business model
Resilient business model Underlying EBITDA development € million 46 (338) 894 170 14 (33) (15) 738 H1 2019 Sales Sales Variable Currency Forestry Other H1 2020 volumes prices and cash effects fair value fixed costs gain Good volume growth in packaging businesses and strong cost control mitigating pr
Slide 10: Strong cash generation
Strong cash generation Movement in net debt € million (602) 156 (80) 336 22 2,207 2,039 Net debt at Cash generated Capital Investment Tax and Other Net debt at 31 December from operations expenditure in forestry interest paid 30 June 2020 2019 assets …supporting ongoing investment in the business 10
Slide 11: Strong financial position providing strategic flexibility
Strong financial position providing strategic flexibility Net debt € million (net debt) and ratio (net debt to 12-month trailing underlying EBITDA) ● Strong balance sheet 1.4x o 1.4x net debt to trailing 12-month underlying 1.3x 1.3x EBITDA, well below our single bank debt 1.1x covenant of 3.5x 1.0x
Slide 12: Resuming dividend payments in line with our policy
Resuming dividend payments in line with our policy Dividends euro cents per share ● The Board is pleased to resume payment of dividends 76 o 29.75 euro cents per share dividend relating to 2019 financial year declared. Full year dividend: 62 57 57.03 ‒ representing a dividend cover of 3x 52 ‒ in lin
Slide 13: Operational review
=i =z = =) OPERATi
Slide 14: Corrugated Packaging: Strong volume growth and cost control
Strong volume growth and cost control Corrugated Packaging Underlying EBITDA and margin € million and % ● Containerboard sales volumes up 28.4% 29.5% 27.6% ● Corrugated Solutions volumes up 4% o strong growth in core CEE markets o underpinned by innovative product portfolio and 297 286 267 customer
Slide 15: Flexible Packaging: Scale and integration benefits
Scale and integration benefits Flexible Packaging Underlying EBITDA and margin € million and % ● Higher sales volumes across all segments 21.8% 20.3% 18.2% ● Resilient European and North American kraft paper and paper bag demand, softer in other markets o supported by product development initiatives
Slide 16: Engineered Materials: Effectively navigating headwinds
Effectively navigating headwinds Engineered Materials Underlying EBITDA and margin € million and % ● Good demand in consumer end-uses 14.3% o increased at home consumption and demand for cleaning and hygiene products 10.8% 10.6% ● Softer industrial and specialised end-uses – impacting release liner
Slide 17: Uncoated Fine Paper: Resilient performance despite market challenges
Resilient performance despite market challenges Uncoated Fine Paper Underlying EBITDA and margin € million and % 27.8% ● Lower uncoated fine paper, and significantly lower 22.5% pulp prices 21.2% ● Lower uncoated fine paper volumes – stable Q1 with rapid deterioration in Q2 254 190 164 o reduced pro
Slide 18: Underpinned by distinct competitive advantages
Underpinned by distinct competitive advantages Uncoated Fine Paper Uncoated fine paper production capacity (1.7mtpa) (excluding pulp, newsprint and packaging paper production) Partly integrated Integrated ~ 1/3 dedicated UFP mills mixed use mills (Neusiedler & Merebank) ~ 2/3 (Syktyvkar & Ružomberok
Slide 19: Delivering on our strategy
DELIVERING ON OUR STRATEGY
Slide 20: Strategic framework driving an industry leading performance
Strategic framework driving an industry leading performance continues to be at the centre of our strategy 20
Slide 21: Well positioned to leverage global industry trends
Well positioned to leverage global industry trends 21
Slide 22: Delivering sustainable packaging solutions to our customers
Delivering sustainable packaging solutions to our customers Mondi’s customer-centric approach to sustainable packaging Advantage MF EcoComp PerFORMing BARRIERPACK Recyclable for Svenco for REWE for Reckitt Benckiser
Slide 23: Broad portfolio to serve our e-commerce customers
Broad portfolio to serve our e-commerce customers E-commerce packaging growth in Europe € billion Shift to online purchasing during COVID-19 supports continued strong growth in e-commerce 8 6 4 2 0 2019 2022E 23 Source: Statista
Slide 24: Investing through the cycle in our world class assets
Investing through the cycle in our world class assets Capital expenditure € million ● Strong contribution from recently completed projects: o €75 million in the past 3 years 187% 174% 173% o €40 million expected in 2020 168% 147% ● Progressing with major capital expenditure 132% programme to secure
Slide 25: Our cash flow priorities remain unchanged
Our cash flow priorities remain unchanged Maintain our strong and stable financial position and investment grade credit metrics Grow through selective capital investment opportunities Free cash flow priorities Support payment of dividends to our shareholders Evaluate growth opportunities through M&A
Slide 26: Outlook and summary
Slide 27: Outlook
Outlook Going into the second half of 2020, heightened macro-economic uncertainties remain. Pricing across our key pulp and paper grades is below or in line with the average of the first half. Demand for packaging daily essentials remains robust while we continue to see weakness in certain industria
Slide 28: Well positioned, resilient, delivering
Well positioned, resilient, delivering Fast and effective response to COVID-19, Resilient business, Well positioned for prioritising the health and providing essential recovery – leveraging safety of our people products and solutions global industry trends 28
Slide 29: Appendices
Slide 30: Mondi at a glance (2019)
Mondi at a glance (2019) Corrugated Packaging Flexible Packaging Engineered Materials Uncoated Fine Paper Segment €2,014m €2,708m €979m €1,758m revenue1 (27%) (36%) (13%) (24%) Underlying €583 million €543 million €122 million €444 million EBITDA ROCE 24.9% 15.7% 13.8% 25.1% Products End uses Consum
Slide 31: Leading market positions
Leading market positions virgin containerboard kraft paper producer commercial release liner uncoated fine paper supplier producer in Europe globally producer in Europe in Europe (including Russia) containerboard producer paper bag producer in extrusion solutions uncoated fine paper in emerging Euro
Slide 32: Strong global presence
Strong global presence Revenue by location H1 2020 (%) Revenue from customers in South America represented 2% in H1 2020 32
Slide 33: Our Growing Responsibly model
Our Growing Responsibly model: An integrated approach to sustainable development 16 public commitments to be achieved by the end of 2020 10. Solutions that create value for our customers 1 1. Employee and contractor safety and health ● Encourage sustainable responsibly procured products ● Avoid work
Slide 34: 2019 sustainable development highlights
2019 sustainable development highlights 34
Slide 35: Mondi recognised as a leader in sustainability
Mondi recognised as a leader in sustainability Making a real contribution External recognition to the UN SDGs Advanced Reporter A- score for Climate Change ESG Rating AAA Joined The CEO Water and Sustainable Forestry Mandate in 2015 A score for Water Security Low risk rating Sustainability Yearbook
Slide 36: Increased community support, beyond our ongoing initiatives
Increased community support, beyond our ongoing initiatives Donations directly targeted at Community relief Continued infrastructure and tackling the pandemic local business support ● Personal protective equipment (PPE) ● Food donations and fresh water access ● Continued power supply, wastewater don
Slide 37: A unique platform to deliver
A unique platform to deliver High Renewable Low High Recyclable Low Low Barrier functionality High Moisture Grease Mineral Oil Gas Added Barrier Aluminium Paper barriers Material films foil 37
Slide 38: Replacing plastic with paper based solutions
– Replacing plastic with paper based solutions Replacing plastic bags with Paper based packaging for Formable paper-based food sustainable and efficient paper pasta, with the option for a tray that reduces CO2 alternatives large paper window emissions and is recyclable in certain paper streams 38
Slide 39: Reducing plastic with paper based solutions
– Reducing plastic with paper based solutions A fully corrugated alternative to 100% renewable, recyclable and highly Corrugated alternative to expanded plastic fruit punnets and plastic foil protective alternatives to LDPE or paper polystyrene (EPS) protective wrapping mailers that use bubble foil
Slide 40: Solutions that are recyclable by design
– Solutions that are recyclable by design A sustainable alternative for flexible A fully-recyclable thermoforming Replaces aluminium with a high- laminate packaging that is fully mono-material high barrier film which barrier mono-material that offers food recyclable has a significantly lower carbon
Slide 41: Integrated value chain (2019)
Integrated value chain (2019) Pulp3 0.2 mt Mondi managed forests Internally procured wood1 Pulp Annual allowable cut 4 million m3 4.4 mt Externally procured wood Containerboard3 8 million m3 14 million m3 1.6 mt Corrugated solutions 1.7 bn m2 Paper for Containerboard 2.5 mt Box plant recycling 1.3 m
Slide 42: Cost advantaged operations combined with relentless focus on performance
Cost advantaged operations combined with our relentless focus on driving performance Cost advantaged asset base Focus on driving performance Mondi capacity by quartile of relevant industry cost curve (%) Ongoing processes ● Core organisation competence ● Ongoing process to set profit improvement ini
Slide 43: Strong major capital expenditure project pipeline
Strong major capital expenditure project pipeline – key projects Ružomberok mill Štětí machine conversion Syktyvkar mill ● New 300,000 tonne kraft top white ● Conversion of a containerboard ● Investing to debottleneck machine with expected start-up in machine at Štětí to produce up to production and
Slide 44: Business unit contribution
Business unit contribution Business unit underlying EBITDA development H1 2020 underlying EBITDA by business unit¹ € million % (30) (24) (11) (90) 22% 35% (1) 6% 894 738 37% H1 2019 Corrugated Flexible Engineered Uncoated Corporate H1 2020 Corrugated Packaging Flexible Packaging Packaging Packaging
Slide 45: Strong cash generation through the cycle
Strong cash generation through the cycle Cash flow generation € million 648 538 705 516 648 549 715 796 1,039 1,061 972 1,226 1,215 454 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 H1 2020 €11 billion generated since listing Cash flow generation based on net cash generated before
Slide 46: Investing in our business and distributions to shareholders
Investing in our business and distributions to shareholders Cash flow generation since listing € billion (2007 – H1 2020) Strong cash Investing in Taking Divesting Returning generation our cost advantage of non-core and capital to our through the advantaged opportunities underperforming shareholders
Slide 47: Technical guidance
Technical guidance 2020 Capital expenditure €600 – 650 million Depreciation and amortisation €410 – 440 million Estimated impact of planned mill maintenance shuts ± €100 million Working capital as a % of revenue 12 – 14% Effective tax rate ± 23% 47
Slide 48: 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 2015 €/tonne 950 1.25 900 900 160 1.20 850 800 1.15 800 120 1.10 700 750 Containerboard 1.05 OCC 700 600 80 1.00 650 500 0.95 40 600 0.90 400 0.85 550 300 0 0.80 500 June Ju
Slide 49: Input costs
Input costs Variable costs € million 2,000 1,500 1,000 500 0 H1 2019 H2 2019 H1 2020 Pulp Paper Wood Paper for recycling Energy Chemicals Plastics Other variable costs 49
Slide 50: Fixed costs
Fixed costs Fixed costs (excluding special items) € million 1,200 24.0% 23.1% 21.3% 1,000 800 600 400 200 0 H1 2019 H2 2019 H1 2020 Depreciation, amortisation and impairments Other net operating expenses Personnel costs Maintenance and other indirect expenses Fixed costs excluding depreciation, amor
Slide 51: Financial review
Financial review % change % change € million H1 2019 H2 2019 H1 2020 vs H1 2019 vs H2 2019 Underlying EBITDA 894 764 738 (17%) (3%) Depreciation, amortisation and impairments (215) (220) (214) – 3% Underlying operating profit 679 544 524 (23%) (4%) Underlying net finance costs (45) (59) (51) (13%) 1
Slide 52: Cash flow (reconciling to movement in net debt)
Cash flow (reconciling to movement in net debt) % change % change € million H1 2019 H2 2019 H1 2020 vs H1 2019 vs H2 2019 Underlying EBITDA 894 764 738 (17%) (3%) Working capital movements (104) 139 (133) Other operating cash flow items (53) (5) (3) Cash generated from operations 737 898 602 (18%) (
Slide 53: Statement of financial position
Statement of financial position 30 June 31 December 30 June € million 2019 2019 2020 Property, plant and equipment 4,520 4,800 4,614 Goodwill 946 948 931 Working capital 1,131 952 1,070 Other assets 598 620 527 Other liabilities (729) (728) (643) Net assets excluding net debt 6,466 6,592 6,499 Equit
Slide 54: Production volumes
Production volumes % change % change H1 2019 H2 2019 H1 2020 vs H1 2019 vs H2 2019 Containerboard '000 tonnes 1,234 1,290 1,304 6% 1% Kraft paper '000 tonnes 622 540 595 (4%) 10% Uncoated fine paper '000 tonnes 770 756 706 (8%) (7%) Newsprint '000 tonnes 104 97 86 (17%) (11%) Pulp '000 tonnes 2,182
Slide 55: Exchange rates
Exchange rates % change % change H1 2019 H2 2019 H1 2020 vs H1 2019 vs H2 2019 Closing rates against the euro South African rand 16.12 15.78 19.44 (21%) (23%) Czech koruna 25.45 25.41 26.74 (5%) (5%) Polish zloty 4.25 4.26 4.46 (5%) (5%) Pound sterling 0.90 0.85 0.91 (1%) (7%) Russian rouble 71.60 6
Slide 56: Sources and definitions
Sources and definitions Mondi region definitions Europe – Europe including Russia and Turkey Emerging Europe – Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Georgia, Hungary, Latvia, Lithuania, Macedonia, Malta, Moldova, Montenegro
Slide 57: Discover our approach to being Sustainable by Design
Discover our approach to being Sustainable by Design 57
Slide 58: Mondi
Emondi