Sappi Limited · JSE:SAP
Sappi — Q4 FY2010 Earnings Presentation
33 slides from Sappi's earnings presentation, Nov 8, 2010
Slide 1: Fourth quarter and year ended September 2010 results
Fourth quarter and year ended September 2010 results 8 November 2010
Slide 2: Forward looking statements; Regulation G disclosure
Forward looking statements 2 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, trend
Slide 3: Summary
3 Summary
Slide 4: 4Q 2010 Financial Summary
4Q 2010 Financial Summary 4 Operating profit US$129m (excluding special items ; Q4 09 $38m ) (excluding special items) EPS 16 US cents; Q4 2009 loss per share of 20 US cents EPS 9 US cents (excluding special items); Q4 2009 loss per share 2 US cents (excluding special items) Net cash generat
Slide 5: Group Financial Summary
Group Financial Summary 5 Q4 09 Q4 10 2009 2010 Key figures: (US$ million) Tons Sold ('000)* 1 888 2 095 6 707 7 894 Sales 1 553 1 774 5 369 6 572 EBITDA ex special items* 150 227 431 752 Operating Profit ex special items* 38 129 33 339 Basic EPS (US cents) (20) 16 (37) 13 Key ratios: (%) EBITDA ex
Slide 6: Operating Profit excluding special items
Operating Profit excluding special items * 6 2007: $313m 2008: $366m 2009: $33m 2010: $339m $USm 150 125 129 100 96 92 97 75 88 89 81 81 73 75 50 63 54 25 38 25 0 -13 -17 -25 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 * Refer to the supplementary information in t
Slide 7: Divisional Contribution Trend
Divisional Contribution Trend 7 EBITDA* $USm Fine Paper Forest & Paper Products Corporate 220 5 3 8 6 1 82 4 180 75 55 140 81 73 67 15 37 62 83 79 71 83 100 2 7 37 11 138 130 151 60 112 108 114 38 120 110 89 85 93 95 102 69 75 20 42 -2 -1 -1 -3 -1 -6 -20 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09
Slide 8: Cash Generated from Operations
Cash Generated from Operations 8 $USm $585 million $623 million $432 million $737 million 250 245 200 188 182 176 150 157 161 155 156 161 142 136 125 122 100 95 99 77 50 0 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10
Slide 9: Net Debt
Net Debt 9 Announced target to reduce gearing European Acquisition completed to approximately US$2B by 2012 Rights Offer to finance Refinancing Completed: European Acquisition Re-paid Vendor Loan Note 3,000 $USm 2,000 1,000 Q109* Q108 Q208 Q308 Q408 Q209 Q309 Q409 Q210 Q310 Q410 Q110 * Cash proceeds
Slide 10: Earnings Versus Prior Quarter
Earnings Versus Prior Quarter 10 Q310 Basic EPS 12 Less: Plantation Fair Value adj. (15) Q3 Add: BEE Charges 4 2010 Add: Other 1 Q310 Adjusted EPS 2 Q410 Basic EPS 16 Less: Plantation Fair value adj. (5) Less: (Profit) on Sale of Assets (1) Q4 2010 Less: Other (1) Q410 Adjusted EPS 9 -5 0 5 10 15 20
Slide 11: Divisional Operating Margins
Divisional Operating Margins * 11 25% 20% Q4 2010 Margins: 15% Southern Africa 13.0% North America 11.5% 10% 5% Europe 3.5% 0% -5% -10% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2007 2008 2009 2010 * The divisional operating margins exclude special items. Refer to page 17 in our Q4 2010 result
Slide 12: Debt maturity profile
Debt maturity profile 12 Strong liquidity Cash on hand: US$792 million RCF €209 million (US$282 million – undrawn As at September 2010 Maturity profile $m (September fiscal year end) USD million 1 000 875 856 900 792 800 700 600 500 447 400 352 282 300 224 200 99 153 100 7 0 FY 2011 FY 2012 FY 2013
Slide 13: Divisional Overview Europe
13 Divisional Overview Europe
Slide 14: W European Coated Paper Deliveries & Prices
W European Coated Paper Deliveries & Prices 14 CWF MCR CWF 100gsm sheets prices LWC 60gsm offset reels prices 1.20 1.10 1.00 Q1 2007 =100 0.90 0.80 0.70 0.60 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2007 2008 2009 2010 Calendar Quarters Western Europe Shipments Incl. Export – Source Cepifine, Ce
Slide 15: European Coated Paper Prices
European Coated Paper Prices 15 Germany (€/ton) 1 000 900 €840/ton 800 €730/ton 700 €650/ton 600 CWF 100gsm Sheets CWF 100gsm Reels LWC 60gsm offset reels 500 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Source: RISI
Slide 16: Sappi Fine Paper Europe
Sappi Fine Paper Europe 16 Q4 09 Q4 10 F 2009 F 2010 Tons Sold ('000) 895 994 2 956 3 796 Sales ($'m) 868 963 2 895 3 638 Price / Ton ($) 970 969 979 958 Price / Ton (€) 677 753 717 702 Cost / Ton* (€) 665 726 714 687 Operating profit ex items** ($'m) 16 34 12 76 Significant improvement in perform
Slide 17: North America
ee North America sappi
Slide 18: NA Coated Paper Shipments & Prices
NA Coated Paper Shipments & Prices 18 Domestic CFS shipments Total US CFS consumption CFS #3 60lb Rolls prices 1.30 1.20 1.10 1.00 Q1 2007 = 100 0.90 0.80 0.70 0.60 0.50 0.40 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2007 2008 2009 2010 Calendar Quarters US Industry Shipments and total US consump
Slide 19: US Coated Paper Prices
US Coated Paper Prices 19 (US$/ton) 1 200 CFS #3 60lb Rolls CGW #4 50lb Rolls CGW #5 40lb Rolls 1 100 1 000 $965/ton $925/ton 900 $835/ton 800 700 600 O c t-0 0 O c t-0 1 O c t-0 2 O c t-0 3 O c t-0 4 O c t-0 5 O c t-0 6 O c t-0 7 O c t-0 8 O c t-0 9 O c t-1 0 Source: RISI CWF = Coated Woodfree; CGW
Slide 20: US Coated Paper Trade Flows
US Coated Paper Trade Flows 20 ‘000 short tons 150 150 Other Asia Europe China - CWF+CM NA Exports 125 125 100 100 75 75 50 50 25 25 0 0 Aug-07 Aug-08 Aug-09 Aug-10 Feb-08 Feb-09 Feb-10 Source: AF&PA; * CM = Coated mechanical paper
Slide 21: Sappi Fine Paper North America
Sappi Fine Paper North America 21 Q4 09 Q4 10 F 2009 F 2010 Tons Sold ('000) 355 352 1,274 1,354 Sales ($'m) 340 364 1,295 1,373 Price / Ton ($) 958 1,034 1,016 1,014 Cost / Ton* ($) 862 915 1,018 922 Operating Profit ex items**($'m) 34 42 (2) 124 Business performed well benefitting from market po
Slide 22: Southern Africa
Southern Africa sappi
Slide 23: NBSK Pulp Price
NBSK Pulp Price* 23 Days Price/t 1 000 N B S K ( U S $ / t on) N B S K ( EU R / t o n ) D a y s of S uppl y 55 900 50 800 45 700 40 600 35 500 30 400 25 300 20 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 • Days of supply represents producer inventory levels * Source:
Slide 24: Sappi Southern Africa
Sappi Southern Africa 24 Q4 09 Q4 10 F 2009 F 2010 Tons Sold - Pulp & Paper ('000) 470 460 1 660 1 751 Sales - Pulp & Paper ($'m) 331 426 1 124 1 488 Price / Ton - ($) 704 926 677 850 Price / Ton - (ZAR) 5 435 6 808 6 103 6 366 Cost / Ton* - (ZAR) 5 599 5 881 6 011 5 793 Operating Profit ex items**
Slide 25: Outlook
Outlook 25 We expect continued gradual improvement in global economic conditions during the year ahead, but remain cautious as a result of factors such as the volatility of exchange rates which could dampen growth We expect demand for coated paper in our major markets to recover further during t
Slide 26: Q&A
26 Q&A
Slide 27: Supplementary Information
27 Supplementary Information
Slide 28: Cash Flow
Cash Flow 28 US$ million Q4 09 Q4 10 2009 2010 Cash generated from operations 161 182 432 737 - Movement in working capital (127) (181) (152) 5 - Net finance costs paid 27 66 81 194 - Taxation paid - 1 5 9 - Dividends paid - - 37 - - Cash utilised in investing activities* 36 58 172 188 Cash flow aft
Slide 29: Operating Profit - Sappi Group
Operating Profit - Sappi Group 29 Reconciliation of reported operating profit to operating profit excluding special items * US$ million Q4 09 Q4 10 2009 2010 Operating profit as reported (129) 158 (73) 341 Plantation price fair value adjustment 111 (29) 67 (31) Restructuring provision raised 24 - 34
Slide 30: W European Coated Fine Paper Deliveries
W European Coated Fine Paper Deliveries 30 2007 2008 2009 2010 650 600 ‘000 metric tons 550 500 450 400 350 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Sep QTD: +2% vs 2009 -15% vs 2008 Source: Cepifine
Slide 31: W European Coated Mechanical Reel Deliveries
W European Coated Mechanical Reel Deliveries 31 ‘000 metric tons 2007 2008 2009 2010 750 700 650 600 550 500 450 400 350 300 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Sep QTD: +6% vs 2009 -10% vs 2008 Source: Cepiprint
Slide 32: US Coated Fine Paper Shipments
US Coated Fine Paper Shipments* 32 ‘000 short tons 2007 2008 2009 2010 480 440 400 360 320 280 240 200 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Sep QTD: +11.5% vs 2009 -6.7% vs 2008 Source: AF&PA * Shipments from domestic manufacturers
Slide 33: End
End