Sappi Limited · JSE:SAP
Sappi — Q4 2013 Earnings Presentation
30 slides from Sappi's earnings presentation, Nov 7, 2013
Slide 1: 4th Quarter and Full-Year 2013 Financial Results Presentation
4th Quarter and Full‐Year 2013 Financial Results Presentation 7 November 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 | Q4 2013 Results | 7 November 2013
Slide 4: Q4 2013 Summary
4 Q4 2013 Summary • Dissolving wood pulp and speciality paper conversions commissioned and running well • Operating profit excluding special items US$70m (Q4 2012 US$118m) • Net cash generated US$111 million (Q4 2012 US$203m) • Special items charges US$177 million of which US$94 million non-cash • E
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 17 in our Q4 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 3,000 2,500 USD million 2,000 1,500 1,000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 2013 ‐ Targeted Maximum Net Debt Level | Q4 2013 Results | 7 November 2013
Slide 7: Maturity Profile (Fiscal) – Sept 2013
7 Maturity Profile (Fiscal) – Sept 2013 Includes 2019 2017 $300m $400m Bond Bond Includes 2018 2032 $221m €250m Bond Bond 2021 $350m Bond | Q4 2013 Results | 7 November 2013
Slide 8: Divisional Overviews
Divisional Overviews | Q4 2013 Results | 7 November 2013
Slide 9: Divisional Operating Margins
9 Divisional Operating Margins* Q4 ‘13 Margins: S. Africa 14.6% N‐America 8.2% Europe ‐1.5% *The divisional EBITDA and operating margins exclude special items. Refer to page 17 in our Q4 2013 Results announcement booklet for a definition of special items. ** Q1 2011 Included an extra accounting week
Slide 10: Sappi Fine Paper Europe
10 Sappi Fine Paper Europe • Demand and pricing environment remained weak. • Commencement of consultation process with employees regarding the transfer of production from Nijmegen Mill to other Sappi mills • Further fixed cost saving initiatives in process • Alfeld Mill conversion complete – from 15
Slide 11: Sappi Fine Paper North America
11 Sappi Fine Paper North America • Improvement in operating profit over the prior quarter – paper markets competitive with lower pricing but volumes remain good. • Cloquet DWP mill ramp up proceeded well, currently operating close to full capacity, and of good quality • Release business continues t
Slide 12: Sappi Southern Africa
12 Sappi Southern Africa • Specialized Cellulose business, inclusive of Cloquet, had higher shipments, production efficiencies, higher NBSK prices and favorable exchange rates which all contributed to a 39% EBITDA margin, well above the normalized margins for this business • Domestic graphic paper m
Slide 13: Strategic Focus
Strategic Focus | Q4 2013 Results | 7 November 2013
Slide 14: Strategic Focus themes
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: Focused, low cost paper businesses
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 with lower cost - More to be relevant investments announced today done • Increa
Slide 16: Focus Areas: Specialised Cellulose and Healthy Balance Sheet
16 Focus Areas Growth in Specialised Cellulose and higher margin businesses • Demand for commodity DWP remains very strong • Saiccor performing well, Ngodwana and Cloquet ramping up On track • Alfeld conversion completed Healthy Balance Sheet • Net debt level evolved as expected in this transitional
Slide 17: Looking forward
17 Looking forward Within 2 years we expect that Sappi will be a well balanced and robust business, generating good returns and will have 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 hig
Slide 18: Outlook
Outlook | Q4 2013 Results | 7 November 2013
Slide 19: Outlook
19 Outlook • Strategy for growth remains on track – Two dissolving wood pulp conversions are up and running, Alfeld conversion started up in October. • Profitability will improve in 2014 – contribution from conversions, improvement plans implemented in European and South African paper businesses • D
Slide 20: Q&A
Q&A | Q4 2013 Results | 7 November 2013
Slide 21: Supplementary Information
Supplementary Information | Q4 2013 Results | 7 November 2013
Slide 22: Earnings/Loss per share detail
22 Earnings/Loss per share detail Refer to page XX in our Q4 2013 Results announcement booklet for a definition of special items. | Q4 2013 Results | 7 November 2013
Slide 23: W. Europe Coated Paper Deliveries & Prices
23 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 Q3 2008 2009 2010 2011 2012 2013 CWF MCR CWF 100gsm sheets prices LWC 60gsm offset reels prices Western Europe Shipments Incl. Export – Source Cepif
Slide 24: Sappi Fine Paper Europe
24 Sappi Fine Paper Europe Q4 12 Q4 13 F 2012 F 2013 Tons Sold ('000) 896 840 3,507 3,367 Sales ($'m) 826 783 3,350 3,155 Price / Ton ($) 922 932 955 937 Price / Ton (€) 737 704 735 714 Cost / Ton* (€) 697 714 706 716 Operating profit ex items** ($'m) 45 (12) 133 (9) * Sales less operating profit ex
Slide 25: US Coated Paper Prices and Shipments
25 US Coated Paper Prices and Shipments 1.2 1.1 1.0 0.9 Q1 2008 = 1 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 Q3 2008 2009 shipments Domestic CFS 2010Total US CFS consumption 2011 2012 CFS #3 60lb Rolls2013 prices US Industry Shipments and total US consumption
Slide 26: Sappi Fine Paper North America
26 Sappi Fine Paper North America Q4 12 Q4 13 F 2012 F 2013 Tons Sold ('000) 369 335 1,400 1,298 Sales ($'m) 377 366 1,438 1,377 Price / Ton ($) 1,022 1,093 1,027 1,061 Cost / Ton* ($) 908 1,003 960 1,006 Operating Profit ex items** ($'m) 42 30 94 71 * Sales less operating profit excluding special i
Slide 27: Pulp Prices
27 Pulp Prices* US$/ton 1,100 NBSK (US$/ton) BHKP (US$/ton) 1,000 900 $880/ton 800 $770/ton 700 600 500 400 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Oct-11 Oct-12 Oct-13 * Source: Average monthly FOEX delivered European prices | Q4 2013 Results | 7 November 2013
Slide 28: Sappi Southern Africa
28 Sappi Southern Africa Q4 12 Q4 13 F 2012 F 2013 Tons Sold ('000) 423 447 1,676 1,619 Sales ($'m) 361 363 1,475 1,316 Price / Ton ($) 853 812 880 813 Price / Ton (ZAR) 7,046 8,115 7,087 7,542 Cost / Ton* (ZAR) 6,402 6,930 6,232 6,837 Operating Profit ex items** ($'m) 33 53 178 123 * Sales less ope
Slide 29: Cash Flow
29 Cash Flow Q4 12 Q4 13 F 2012 F 2013 Cash generated from operations 182 121 728 447 - Movement in working capital 115 108 (102) (20) - Net finance costs paid (38) (20) (195) (164) - Taxation paid (8) (2) (20) (17) Cash generated from operating activities 251 207 411 246 Cash utilised in investing
Slide 30: Thank You
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