Sappi Limited · JSE:SAP
Sappi — Q3 2004 Earnings Presentation
14 slides from Sappi's earnings presentation, Jul 29, 2004
Slide 1: Results for the 3rd quarter and nine months ended June 2004
Results for the 3rd quarter and nine months ended June 2004 29 July 2004 1 Forward looking statements Certain statements in this report that are neither reported financial results nor other historical information, are forward-looking statements, including, but not limited to statements that are pred
Slide 2: Third Quarter Highlights
Third Quarter Highlights • EPS 18 US cents • Results enhanced by plantation fair value and taxation credits • Cash flow improves • Southern African businesses’ margins squeezed by Rand strength • Global demand for coated paper recovering 3 Earnings Summary Quarterly Headline EPS (US cents per share)
Slide 3: Earnings Summary: Volume, Price, Sales and Cost
Earnings Summary Sales Volume (‘000 tons) 2000 6000 1831 5290 5000 1500 1761 4906 1596 4000 1000 3000 2000 500 1000 0 0 Q3 03 Q2 04 Q3 04 YTD 03 YTD 04 Average Price (US$/ton) 800 800 600 665 673 649 647 660 600 400 400 200 200 0 0 Q3 03 Q2 04 Q3 04 YTD 03 YTD 04 5 Earnings Summary Sales (US$ millio
Slide 4: Earnings Summary: Operating and Net Profit
Earnings Summary Operating Profit (US$ million) 90 300 255 200 60 60 100 56 116 52 30 0 Q3 03 Q2 04 Q3 04 YTD 03 YTD 04 Net Profit (US$ million) 60 200 30 40 134 100 25 23 42 0 0 -30 -100 Q3 03 Q2 04 Q3 04 YTD 03 YTD 04 7 Earnings Summary Operating Profit to Sales Per Division 40% 30% Forest Product
Slide 5: Cash Flow Summary
Cash Flow Summary Cash Generated by Operations* (US$ million) 250 200 154 150 100 50 0 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 * 2003 data re-stated to include impact of implementation of AC137 9 Cash Flow Summary Q3 03 Q2 04 Q3 04 YTD 03 YTD 04 Cash Generated by 122 184 154
Slide 6: Capital Expenditure and Balance Sheet Summary
Cash Flow Summary Capital Expenditure* (US$ million) Other Capital Expenditure Investment to Maintain Operations Capex as % of Depreciation 300 120% 250 100% 200 80% 150 60% 100 40% 50 20% 0 0% 1999 2000 2001 2002 2003 2004 YTD 11 Balance Sheet Summary Net Debt to Total Capitalisation 40% 33% 30% 20
Slide 7: Balance Sheet Summary and Divisional Detail
Balance Sheet Summary • Net debt = US$1.65bn • Average duration 9.2 years • Net debt split per currency: US$ 43% EUR 39% ZAR 18% • Gross debt 58% floating / 42% fixed 13 Divisional Detail Sappi Fine Paper Q3 03 Q2 04 Q3 04 YTD 03 YTD 04 Sales (US$ million) 874 967 957 2,640 2,829 Tons Sold ('000) 92
Slide 8: Divisional Detail: Fine Paper Europe and North America
Divisional Detail Sappi Fine Paper Europe Q3 03 Q2 04 Q3 04 YTD 03 YTD 04 Sales (US$ million) 481 556 512 1,418 1,586 Tons Sold ('000) 546 611 580 1,663 1,779 Price / Ton (US$) 881 910 883 853 892 Price / Ton (EUR) 784 728 733 800 736 Cost / Ton* (EUR) 761 693 707 747 708 EBITDA (US$ million) 58 77
Slide 9: Divisional Detail: Fine Paper South Africa and Forest Products
Divisional Detail Sappi Fine Paper South Africa Q3 03 Q2 04 Q3 04 YTD 03 YTD 04 Sales (US$ million) 74 72 82 196 225 Tons Sold ('000) 78 74 85 221 231 Price / Ton (US$) 949 973 965 887 974 Price / Ton (ZAR) 7,239 6,621 6,363 7,642 6,590 Cost / Ton* (ZAR) 6,261 6,346 6,130 6,512 6,268 EBITDA (US$ mil
Slide 10: Impact of AC/IAS 41 and Markets
Divisional Detail Impact of application of AC 137 / IAS 41* (US$ million) Impact on Q3 2004 Inc (Dec) Cost of Sales (30) SG&A (6) Net Finance Costs 4 Tax 11 Net Profit 21 * Difference of applying AC 137 versus applying previous accounting standard 19 Markets Western Europe + US Industry Coated Fine
Slide 11: Western European Coated Fine Paper Markets
Markets Western European Coated Fine Paper Apparent Consumption1 (yoy % change) 15% 10% 5% 0% -5% -10% -15% -20% Jun-01 Sep-01 Jun-02 Sep-02 Jun-03 Sep-03 Jun-04 Dec-01 Dec-02 Dec-03 Mar-01 Mar-02 Mar-03 Mar-04 Source: Cepifine 1. Total shipments by European manufacturers into Western Europe 21 Mark
Slide 12: Germany and US Coated Fine Paper Markets
Markets Germany Coated Fine Paper Price Development (€/ton) 1,100 1,000 900 800 700 600 Germany 100gsm Sheets (€/ton) 500 Germany 100gsm Reels (€/ton) 400 Jun-93 Jun-94 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Source: RISI, Pulp & Paper This Week 23 Markets US Coated Fin
Slide 13: US and Hong Kong Coated Fine Paper Prices
Markets US Coated Fine Paper Price Development (#3 60lb rolls, US$/short ton) 1,300 1,200 1,100 1,000 900 800 700 600 Jun-93 Jun-94 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Source: RISI, Pulp & Paper Week 25 Markets Hong Kong Coated Fine Paper Price Development (85-90 gs
Slide 14: Europe NBSK Pulp Price and Outlook
Markets Europe NBSK Pulp Price Development 1,000 NBSK (€/ton) NBSK ($US/ton) 900 800 700 600 500 400 300 Jul-93 Jul-94 Jul-95 Jul-96 Jul-97 Jul-98 Jul-99 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Source: RISI, Pulp & Paper This Week, FOEX 27 Outlook • Continued demand improvement • Pricing key to improved