Sappi Limited · JSE:SAP
Sappi — Q3 2013 Earnings Presentation
33 slides from Sappi's earnings presentation, Aug 2, 2013
Slide 1: 3rd Quarter 2013 Financial Results Presentation
3rd Quarter 2013 Financial Results Presentation 2 August 2013
Slide 2: Forward looking statements
Forward looking statements Certain statements in this release that are neither reported financial results nor other historical information, are forward-looking statements, including but not limited to statements that are predictions of or indicate future earnings, savings, synergies, events, trends,
Slide 3: Summary
Summary | Q3 2013 Results | 2 August 2013
Slide 4: Q3 2013 Summary
4 Q3 2013 Summary • Successful start-up of both dissolving wood pulp projects • Operating profit excluding special items US$8m (Q3 2012 US$60m) • Loss for the period US$42m (Q3 2012 loss of US$106m) • Loss per share 8 US cents (Q3 2012 loss of 20 US cents) • Net finance costs of US$42m (Q3 2012 US$1
Slide 5: EBITDA & Operating Profit ex-items
5 EBITDA & Operating Profit ex-items* USD million *Refer to the supplementary information in this presentation for a reconciliation of EBITDA to reported Operating Profit and page 16 in our Q3 2013 Results booklet (available on www.sappi.com) for a definition of special items. ** Q1 2011 included an
Slide 6: Net Debt Development
6 Net Debt Development USD million 3,000 Major Refinancings Completed conversion projects underway 2,000 1,000 Q210 Q310 Q410 Q212 Q312 Q412 Q213 Q313 Q110 Q211 Q311 Q411 Q112 Q113 Q111 ‐‐‐‐‐‐‐ Targeted Net Debt Level | Q3 2013 Results |2 August 2013
Slide 7: Debt Maturity Profile (fiscal years) as at June 2013
7 Debt Maturity Profile (fiscal years) as at June 2013 2021 Includes $350m 2017 Includes 2018 Bond $400m €250m Bond Bond 2019 $300m 2032 $221m Bond Bond | Q3 2013 Results |2 August 2013
Slide 8: Divisional Overviews
Divisional Overviews | Q3 2013 Results | 2 August 2013
Slide 9: Divisional Operating Margins
9 Divisional Operating Margins* 20.0% 15.0% 10.0% Q3 ‘13 Margins: S‐Africa 5.6% 5.0% N‐America 0.6% 0.0% Europe ‐2.3% ‐5.0% Q1** Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2011 2012 2013 *The divisional operating margins exclude special items. Refer to page 16 in our Q3 2013 Results announcement booklet for a de
Slide 10: Sappi Fine Paper Europe
10 Sappi Fine Paper Europe • Seasonally slower quarter, though worse than expected. Industry deliveries down 8% year-on-year, SFPE down 6% with firm demand for speciality paper products. • Higher average prices realised than last quarter as a result of some price increases in the quarter. Year-on-ye
Slide 11: Sappi Fine Paper North America
11 Sappi Fine Paper North America • Successfully completed Specialty Cellulose conversion. 1st customer deliveries shipped during the quarter with good quality levels achieved. $12m adverse once-off operating profit impact due to conversion. • Coated paper sales volumes flat year-on-year and prices
Slide 12: Sappi Southern Africa
12 Sappi Southern Africa • Another good quarter from the Specialized Cellulose business – 30% EBITDA margin despite volumes that were 8% lower than last year due to timing of shipments. • Higher NBSK pulp prices and a weaker Rand/Dollar exchange rate contributed to higher price realization. Spot mar
Slide 13: Strategic Focus
Strategic Focus | Q3 2013 Results | 2 August 2013
Slide 14: Strategic Focus
14 Strategic Focus 3 themes: • Focused, low cost paper businesses with reasonable margins and strong cash flows • Growth in profitable specialised cellulose based solutions and other high margin businesses • Healthy balance sheet Accelerate our drive toward increased profitability, earnings growth,
Slide 15: Focus Areas
15 Focus Areas Focused, low cost paper businesses • North America – paper business maintains firm market share • Europe – industry dynamics won’t improve without intervention • Significantly reduce graphic paper exposure More • Increased speciality paper business to be • Similar business to US done
Slide 16: Cloquet Conversion – text-book start-up
16 Cloquet Conversion – text-book start-up First Break bulk vessel loading – Star Gran | Q3 2013 Results |2 August 2013
Slide 17: Ngodwana Conversion – DWP production
17 Ngodwana Conversion – DWP production Fiberline #3 ‐ DWP Dissolving wood pulp bales | Q3 2013 Results |2 August 2013
Slide 18: Alfeld Conversion – Speciality packaging paper
18 Alfeld Conversion – Speciality packaging paper Yankee cylinder being transported to the mill Construction of crane foundation ‐ required for installation | Q3 2013 Results |2 August 2013
Slide 19: Looking forward
19 Looking forward Within 3 years Sappi will be a well balanced and robust business, generating good returns and with a strong balance sheet. We will achieve this by: • Maintaining and growing our world leadership position as a low cost dissolving wood pulp producer • Growing high margin speciality
Slide 20: Outlook
Outlook | Q3 2013 Results | 2 August 2013
Slide 21: Outlook
21 Outlook • European Restructuring – plans are being finalised to improve operating margins, will result in capacity closure and lower costs. • South African paper business expects to see growth in containerboard volumes, although demand continues to be weak in other grades. Cost pressures and weak
Slide 22: Q&A
Q&A | Q3 2013 Results | 2 August 2013
Slide 23: Supplementary Information
Supplementary Information | Q3 2013 Results | 2 August 2013
Slide 24: Earnings/Loss per share detail
24 Earnings/Loss per share detail Refer to page 16 in our Q3 2013 Results announcement booklet for a definition of special items. | Q3 2013 Results |2 August 2013
Slide 25: W. Europe Coated Paper Deliveries & Prices
25 W. Europe Coated Paper Deliveries & Prices 1.2 1.1 1.0 0.9 Q1 2008 = 1 0.8 0.7 0.6 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2008 2009 2010 2011 2012 2013 CWF MCR CWF 100gsm sheets prices LWC 60gsm offset reels prices Western Europe Shipments Incl. Export – Source Cepifine
Slide 26: Sappi Fine Paper Europe
26 Sappi Fine Paper Europe Q3 12 Q3 13 YTD 12 YTD 13 Tons Sold ('000) 843 796 2,611 2,527 Sales ($'m) 795 749 2,524 2,372 Price / Ton ($) 943 941 967 939 Price / Ton (€) 735 721 735 718 Cost / Ton* (€) 726 737 710 717 Operating profit ex items** ($'m) 10 (16) 88 3 * Sales less operating profit exclu
Slide 27: US Coated Paper Prices and Shipments
27 US Coated Paper Prices and Shipments 1.2 1.1 1.0 Q1 2008 = 1 0.9 0.8 0.7 0.6 0.5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2008 2009 2010 2011 2012 2013 Domestic CFS shipments Total US CFS consumption CFS #3 60lb Rolls prices US Industry Shipments and total US consumption
Slide 28: Sappi Fine Paper North America
28 Sappi Fine Paper North America Q3 12 Q3 13 YTD 12 YTD 13 Tons Sold ('000) 351 297 1,031 963 Sales ($'m) 360 324 1,061 1,011 Price / Ton ($) 1,026 1,091 1,029 1,050 Cost / Ton* ($) 974 1,084 979 1,007 Operating Profit ex items** ($'m) 18 2 52 41 * Sales less operating profit excluding special item
Slide 29: Pulp Prices
29 Pulp Prices* US$/ton 1,100 NBSK (US$/ton) BHKP (US$/ton) 1,000 900 $858/ton 800 $819/ton 700 600 500 400 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 * Source: Average monthly FOEX delivered European prices | Q3 2013 Results |2 August 2013
Slide 30: Sappi Southern Africa
30 Sappi Southern Africa Q3 12 Q3 13 YTD 12 YTD 13 Tons Sold ('000) 435 405 1,253 1,172 Sales ($'m) 367 324 1,114 953 Price / Ton ($) 844 800 889 813 Price / Ton (ZAR) 6,853 7,580 7,102 7,348 Cost / Ton* (ZAR) 6,274 7,136 6,178 6,808 Operating Profit ex items** ($'m) 31 19 145 70 * Sales less operat
Slide 31: Cash Flow
31 Cash Flow Q3 12 Q3 13 YTD 12 YTD 13 Cash generated from operations 137 61 546 326 - Movement in working capital (27) 8 (217) (128) - Net finance costs paid (56) (57) (157) (144) - Taxation paid (2) (2) (12) (15) Cash generated from operating activities 52 10 160 39 Cash utilised in investing acti
Slide 32: Reconciliation of EBITDA excluding special items to profit for the period
32 Reconciliation of EBITDA excluding special items* to profit for the period Q3 12 Q3 13 YTD 12 YTD 13 EBITDA ex. special items 150 91 561 381 Depreciation and amortization (90) (83) (276) (260) Operating profit ex. special items 60 8 285 121 Special Items (26) (19) (24) 16 Plantation price fair va
Slide 33: Thank You
r / | Thank You. | rx &' an NE