Sappi Limited · JSE:SAP
Sappi — Q2 2005 Earnings Presentation
17 slides from Sappi's earnings presentation, Apr 29, 2005
Slide 1: Results for the 2nd quarter ended March 2005
Results for the 2nd quarter ended March 2005 29 April 2005 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 predictions of or
Slide 2: Sappi Group Overview
Sappi Group Overview Sappi is the global leader in coated fine paper, chemical cellulose, and has a range of leading regional businesses Sales By Product Group1 (US$) Sales By Source1 (US$) Coated fine paper 64% Uncoated fine paper 4% Europe 46% 9% Coated specialities 28% North America 12% Pulp 9% 2
Slide 3: Second Quarter Highlights
Second Quarter Highlights • Headline EPS 12 US cents • Stable market demand • Continued currency pressure • Raw material cost increases slowing • Price increases in April 5 Earnings Summary Quarterly Sales (US$ million) 1300 1253 1200 1235 1225 1185 1188 1100 1123 1120 1095 1052 1062 1000 1019 974 9
Slide 4: Earnings Summary: Headline EPS
Earnings Summary Quarterly Headline EPS (US cents per share) 40 30 32 29 26 25 26 20 22 18 10 14 11 11 12 10 6 0 -11 -10 -20 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 7 Earnings Summary Headline EPS Development Versus Prior Quarter (US cents per share) Q1 05 Headline EPS
Slide 5: Cash Flow Summary
Cash Flow Summary Cash Generated by Operations (US$ million) 250 226 200 205 195 183 178 184 150 168 154 157 149 130 137 122 100 106 50 0 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 Q105 Q205 9 Markets Global Advertising Spend vs Coated Fine Paper Consumption 500 35 Forecast 450 Ad S
Slide 6: Markets: Coated Fine Paper Capacity Additions and Supply/Demand
Markets Global Coated Fine Paper Capacity Additions 6% Forecast 5% 4% Avg: 3.2% 3% Avg: 2.3% 2% 1% 0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: EMGE ‘World Grapics Papers Report’ 1999-2005 11 Markets Global CWF Supply and Demand (million metric tons) 40 110% Demand Forecast Capa
Slide 7: Divisional Detail: Fine Paper Europe and North America
Divisional Detail Sappi Fine Paper Europe Q2 04 Q1 05 Q2 05 Sales (US$ million) 556 571 566 Price / Ton (US$) 910 935 951 Price / Ton (EUR) 728 727 726 Cost / Ton* (EUR) 693 692 699 Op. Income (US$ million) 27 28 21 • Prices (in EUR) largely unchanged • Cost pressure: raw material cost** +US$10m vs
Slide 8: Divisional Detail: Fine Paper South Africa and Forest Products
Divisional Detail Sappi Fine Paper South Africa Q2 04 Q1 05 Q2 05 Sales (US$ million) 72 83 72 Price / Ton (US$) 973 1,064 1,043 Price / Ton (ZAR) 6,621 6,454 6,217 Cost / Ton* (ZAR) 6,346 6,220 6,303 Op. Income (US$ million) 3 3 (1) * Sales less operating income divided by tons sold. 15 Divisional
Slide 9: Pulp Price Development and Outlook
Markets Pulp Price Development vs Industrial Commodities 1100 180 1000 160 Commodities Index 900 140 800 $/Metric Ton 700 120 600 100 500 80 400 NBSK (lhs) 60 300 Economist Industrial Commodities Index (rhs) 200 40 Oct-82 Apr-84 Oct-85 Apr-87 Oct-88 Apr-90 Oct-91 Apr-93 Oct-94 Apr-96 Oct-97 Apr-99 O
Slide 10: Q&A Supplementary Information
Q&A 19 Supplementary Information 20
Slide 11: Operating Profit to Sales Per Division; Cash Flow Summary
Earnings Summary Operating Profit to Sales Per Division 40% 30% 20% Forest Products* 10% Fine Paper Europe 0% Fine Paper South Africa Fine Paper North America -10% -20% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2001 2002 2003 2004 2005 * Q1 2005 Forest Products data excludes US$41m Usutu
Slide 12: Balance Sheet Summary
Balance Sheet Summary Net Debt to Total Capitalisation Net Debt (US$ million) - left hand scale Net Debt to Total Capitalisation (%) - right hand scale 2000 45% 1750 40% 1500 35% 1250 30% 1000 25% 750 20% 500 15% 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 23 Divisional Det
Slide 13: Forest Products Operating Income; Western European Consumption
Divisional Detail Sappi Forest Products Operating Income (US$ million) 70 Fair Value Adjustment Net of Fellings Charge 60 50 40 30 20 10 0 -10 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 2Q05 1Q05* * Q1 2005 data excludes US$41m Usutu impairment charge 25 Markets Western European Coated Fine Paper Appar
Slide 14: Germany Coated Fine Paper Price Development
Markets Germany Coated Fine Paper Price Development (€/ton) 1,100 1,000 900 800 700 600 Germany 100gsm Sheets (€/ton) 500 Germany 100gsm Reels (€/ton) 400 Mar-94 Mar-95 Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Source: RISI, Pulp & Paper This Week 27 Markets Europe Coated
Slide 15: US Coated Fine Paper Consumption and Net Imports
Markets US Coated Fine Paper Apparent Consumption (yoy % change) 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% Jun-01 Sep-01 Jun-02 Sep-02 Jun-03 Sep-03 Jun-04 Sep-04 Dec-01 Dec-02 Dec-03 Dec-04 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Source: AF & PA 29 Markets US Coated Fine Paper Net Imports (‘000 metri
Slide 16: US Coated Fine Paper Imports and Prices
Markets US Coated Fine Paper Imports From Asia (‘000 metric tons) 50 South Korea China Japan Others 45 40 35 30 25 20 15 10 5 0 Oct-01 Oct-02 Oct-03 Oct-04 Jan-01 Apr-01 Jul-01 Jan-02 Apr-02 Jul-02 Jan-03 Apr-03 Jul-03 Jan-04 Apr-04 Jul-04 Jan-05 Source: AF & PA 31 Markets US Coated Fine Paper Price
Slide 17: Europe NBSK Pulp Price Development
Markets Europe NBSK Pulp Price Development (US$/ton) 1,000 900 800 700 600 500 400 300 Apr-94 Apr-95 Apr-96 Apr-97 Apr-98 Apr-99 Apr-00 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Source: RISI, Pulp & Paper This Week, FOEX 33