Sappi Limited · JSE:SAP
Sappi — Q1 2014 Earnings Presentation
30 slides from Sappi's earnings presentation, Feb 5, 2014
Slide 1: 1st Quarter 2014 Financial Results Presentation
1st Quarter 2014 Financial Results Presentation 5 February 2014
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 | Q1 2014 Results | 5 February 2014
Slide 4: Q1 2014 Summary
4 Q1 2014 Summary • Profit for the period US$18m (Q1 2013 US$12m) • EPS excluding special items 2 US cents (Q1 2013 3 US cents) • EBITDA excluding special items US$147m (Q1 2013 US$159m) • Net debt US$2,348m (Q1 2013 US$2,095m) | Q1 2014 Results |5 February 2014
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 Q1 2014 Results booklet (available on www.sappi.com) for a definition of special items. **2013 figures restate
Slide 6: Q1 Product Contribution Split
6 Q1 Product Contribution Split EBITDA excluding special items Other 2% Paper Specialised Operating profit excluding special items Other 48% cellulose Paper 5% 50% 3% Specialised cellulose 92% | Q1 2014 Results |5 February 2014
Slide 7: Net Debt Development
7 Net Debt Development $510m Specialised Cellulose capex USD million ‐ Targeted Net Debt Level | Q1 2014 Results |5 February 2014
Slide 8: Maturity profile – Fiscal years
8 Maturity profile – Fiscal years Includes 2017 $400m 2019 Bond $300m Includes 2018 Bond 2032 €250m Bond $221m Bond 2021 $350m Bond | Q1 2014 Results |5 February 2014
Slide 9: Divisional Overviews
Divisional Overviews | Q1 2014 Results | 5 February 2014
Slide 10: Sappi Fine Paper Europe
10 Sappi Fine Paper Europe • The strategic actions to reduce costs and improve our profitability enabled the business to return to an operating profit this quarter. The paper market remains tough, with demand continuing to decline and pricing under pressure, particularly in a strong Euro/Dollar exch
Slide 11: Sappi Fine Paper North America
11 Sappi Fine Paper North America • Challenging quarter – coated paper demand and benchmark coated paper prices fell 5% and 6% respectively, from last year. Higher cost purchased fiber also impacted paper costs compared to the prior year. • Cloquet pulp mill running close to full capacity with excel
Slide 12: Sappi Southern Africa
12 Sappi Southern Africa • Weaker Rand/Dollar exchange rate positively impacting results • Results include DWP sales from Ngodwana for first time. Prices flat sequentially, but higher than last year due to higher NBSK benchmark. • Due to weak viscose pricing there is now a growing pressure on prices
Slide 13: Strategic Focus
Strategic Focus | Q1 2014 Results | 5 February 2014
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 • Continue gradual improvement More to be • Significantly reduce graphic paper exposure with lower cost – done investments at
Slide 16: Focus Areas
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 has peaked, target US$2bn net debt for y
Slide 17: Looking forward
17 Looking forward Within 2 years we expect that Sappi will be a well balanced and robust business, generating good returns and will have a strong balance sheet. We will achieve this by: • Maintaining and growing our world leadership position as a low cost dissolving wood pulp producer • Growing hig
Slide 18: Outlook
Outlook | Q1 2014 Results | 5 February 2014
Slide 19: Outlook
19 Outlook • Our strategy is working – our investments in growth businesses are producing good returns. • These returns and cash generated by the paper business will allow us to reduce debt • Both European and SA Paper businesses returned to profitability. We expect this improvement to continue. • W
Slide 20: Q&A
Q&A | Q1 2014 Results | 5 February 2014
Slide 21: Supplementary Information
Supplementary Information | Q1 2014 Results | 5 February 2014
Slide 22: W. Europe Coated Paper Deliveries & Prices
22 W. Europe Coated Paper Deliveries & Prices 1.2 1.1 1.0 0.9 Q1 2008 = 1 0.8 0.7 0.6 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2008 2009 2010 2011 2012 2013 CWF MCR CWF 100gsm sheets prices LWC 60gsm offset reels prices Western Europe Shipments Incl. Export – Source Ce
Slide 23: Sappi Fine Paper Europe
23 Sappi Fine Paper Europe Q1 14 Q4 13 Q1 13 Tons Sold ('000) 836 840 849 Sales ($'m) 790 783 799 Price / Ton ($) 945 932 941 Price / Ton (€) 695 704 726 Cost / Ton* (€) 691 714 707 Operating profit ex items** ($'m) 4 (12) 21 * Sales less operating profit excluding special items divided by tons sold
Slide 24: US Coated Paper Prices and Shipments
24 US Coated Paper Prices and Shipments Domestic CFS shipments Total US CFS consumption CFS #3 60lb Rolls prices 1.2 1.1 1.0 Q1 2008 = 1 0.9 0.8 0.7 0.6 0.5 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4 Q113 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 Q2 US Industry Shipments and total US consumption – Sourc
Slide 25: Sappi Fine Paper North America
25 Sappi Fine Paper North America Q1 14 Q4 13 Q1 13 Tons Sold ('000) 348 335 334 Sales ($'m) 365 366 346 Price / Ton ($) 1,049 1,093 1,036 Cost / Ton* ($) 1,057 1,012 994 Operating Profit ex items** ($'m) (3) 27 14 * Sales less operating profit excluding special items divided by tons sold. ** Operat
Slide 26: Pulp Prices
26 Pulp Prices* US$/ton $910/ton $769/ton * Source: Average monthly FOEX delivered European prices | Q1 2014 Results |5 February 2014
Slide 27: Sappi Southern Africa (ex-forestry)
27 Sappi Southern Africa (ex-forestry) Q1 14 Q4 13 Q1 13 Tons Sold ('000) 403 447 380 Sales ($'m) 327 363 310 Price / Ton ($) 811 812 816 Price / Ton (ZAR) 8,228 8,049 7,095 Cost / Ton* (ZAR) 6,819 6,911 6,363 Operating Profit ex items** ($'m) 56 53 32 * Sales less operating profit excluding special
Slide 28: Cash Flow
28 Cash Flow Q1 14 Q4 13 Q1 13 Cash generated from operations 136 121 150 - Movement in working capital (149) 108 (130) - Net finance costs paid (56) (20) (59) - Taxation paid (1) (2) (10) Cash generated from operating activities (70) 207 (49) Cash utilised in investing activities (63) (96) (53) - C
Slide 29: EBITDA recon to reported operating profit
29 EBITDA recon to reported operating profit* Q1 14 Q4 13 Q1 13 EBITDA (ex-items) 147 155 159 Depreciation and Amortisation 87 88 89 Op. Profit (ex-items) 60 67 70 Special Items - gains (losses) 10 (177) (3) Plantation FV Adj. 8 (6) 8 Net Restructuring Provisions (1) (81) (7) Profit on disposal of P
Slide 30: Thank You
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