Sappi Limited · JSE:SAP
Sappi — Q1 2011 Earnings Presentation
28 slides from Sappi's earnings presentation, Feb 9, 2011
Slide 1: 1st Quarter 2011 Results Presentation
1st Quarter 2011 Results Presentation 9 February 2011
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 | Analyst Presentation | 09 February 2011
Slide 4: 1st Quarter 2011 Summary
4 1st Quarter* 2011 Summary • EPS 7 US cents; Q1 2010 loss per share 10 US cents • Operating Profit US$137 million (ex special items); Q1 2010: US$81 million (ex special items) • Improved demand and pricing for the majority of our products *14 week quarter | 1Q 2011 Results | 09 February 2011
Slide 5: Group Financial Summary
5 Group Financial Summary Q1 10 Q4 10 Q1 11 YoY Key figures: (US$ million) Tons Sold ('000) 1 884 2 095 2 022 Sales 1 620 1 774 1 873 EBITDA ex special items* 193 227 246 Operating Profit ex special items 81 129 137 Basic (Loss) EPS (US cents) (10) 16 7 Key ratios: (% ) Operating profit ex-items to
Slide 6: Operating Profit excluding special items
6 Operating Profit excluding special items * Two consecutive quarters of record operating profit 2008: $366m 2009: $33m 2010: $339m 150 125 129 137 100 92 97 75 88 89 81 75 50 54 25 38 25 0 -25 -17 -13 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 *Refer to the supplementary infor
Slide 7: Divisional Contribution Trend
7 Divisional Contribution Trend All areas contributing to improved performance EBITDA* US$m Fine Paper Sappi Southern Africa Corporate 275 1 225 5 3 1 8 4 82 108 175 55 81 75 73 67 15 37 62 125 37 2 7 75 11 138 151 137 102 112 108 114 38 130 120 110 25 69 75 42 -25 -1 -3 -1 -6 1Q08 2Q08 3Q08 4Q08 1Q
Slide 8: Cash Generated from Operations
8 Cash Generated from Operations Good cash generation ability - Net cash negatively impacted by seasonal and technical effects $USm $623 $432 million $737 million 250 million 245 245 200 188 182 150 176 155 156 161 136 100 122 95 99 77 50 0 1Q11 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10
Slide 9: Net Debt
9 Net Debt Debt reduction remains a focus European Acquisition completed Announced target to reduce net debt to approximately US$2B by 2012 Rights Offer to finance European Acquisition Refinancing Completed: Re-paid Vendor Loan Note 3 000 US$m 2 000 1 000 0 Q111 Q109* Q108 Q208 Q308 Q408 Q209 Q309 Q
Slide 10: Earnings Versus Prior Quarter
10 Earnings Versus Prior Quarter Q4 '10 Basic EPS 16 Less: Plantation Fair Value adj. (5) Q4 Less: BEE Charges (1) 2010 Less: Other (1) Q4 '10 Adjusted EPS 9 Q1 '11 Basic EPS 7 Add: Plantation Fair value adj. 2 Q1 Add: Other 1 2011 Q1 '11 Adjusted EPS 10 -5 0 5 10 15 20 | 1Q 2011 Results | 09 Februa
Slide 11: Divisional Operating Margins
11 Divisional Operating Margins * 25% Q1 2011 Margins: 20% Southern Africa 17.0% 15% NA excluding shut** 10% North America 6.0% 5% Europe 3.3% 0% -5% -10% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2008 2009 2010 *The divisional operating margins exclude special items. Refer to page 16 in our Q1 2011 re
Slide 12: Divisional Overview Europe
Divisional Overview Europe | Analyst Presentation | 09 February 2011
Slide 13: W. Europe Coated Paper Deliveries & Prices
13 W. Europe Coated Paper Deliveries & Prices 1.20 1.10 1.00 0.90 0.80 0.70 0.60 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2007 2008 2009 2010 CWF MCR CWF 100gsm sheets prices LWC 60gsm offset reels prices Western Europe Shipments Incl. Export – Source Cepifine, Cepiprint and RISI | 1Q 2011 Re
Slide 14: European Coated Paper Prices
14 European Coated Paper Prices Germany (€/ton) 1 000 900 800 700 600 CWF 100gsm Sheets CWF 100gsm Reels LWC 60gsm offset reels 500 Source: RISI | 1Q 2011 Results | 09 February 2011
Slide 15: Sappi Fine Paper Europe
15 Sappi Fine Paper Europe Q1 10 Q4 10 Q1 11 YoY Tons Sold ('000) 944 994 1,012 Sales ($'m) 936 963 1,027 Price / Ton ($) 992 969 1,015 Price / Ton (€) 673 753 751 Cost / Ton* (€) 655 726 726 Operating profit ex items** ($'m) 25 34 34 • Significant improvement in volumes and average prices realized
Slide 16: Divisional Overview North America
Divisional Overview North America | Analyst Presentation | 09 February 2011
Slide 17: US Coated Paper Prices and Shipments
17 US Coated Paper Prices and Shipments Continued recovery in demand 1.30 1.20 1.10 1.00 Q1 2007 = 100 0.90 0.80 0.70 0.60 0.50 0.40 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2007 2008 2009 2010 Domestic CFS shipments Total US CFS consumption CFS #3 60lb Rolls prices US Industry Shipments and
Slide 18: US Coated Paper Prices
18 US Coated Paper Prices Coated paper prices are slowly rising (US$/ton) 1 200 CFS #3 60lb Rolls CGW #4 50lb Rolls CGW #5 40lb Rolls 1 100 1 000 900 800 700 600 Jan-11 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Source: RISI | 1Q 2011 Results | 09 February 2011
Slide 19: Sappi Fine Paper North America
19 Sappi Fine Paper North America Q1 10 Q4 10 Q1 11 YoY Tons Sold ('000) 322 352 364 Sales ($'m) 320 364 382 Price / Ton ($) 994 1,034 1,049 Cost / Ton* ($) 935 915 986 Operating Profit ex items** ($'m) 19 42 23 • Operating profit ex-items up 21% from Q1 2010 • Higher price realization from coated p
Slide 20: Divisional Overview Southern Africa
Divisional Overview Southern Africa | Analyst Presentation | 09 February 2011
Slide 21: NBSK Pulp Price
21 NBSK Pulp Price* Pulp prices remain high 1 000 NBSK (US$/ton) NBSK (EUR/ton) $949/ton 900 800 €714/ton 700 600 500 400 300 Jan-11 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 * Source: Average monthly FOEX delivered European prices | 1Q 2011 Results | 09 February 2011
Slide 22: Sappi Southern Africa
22 Sappi Southern Africa Q1 10 Q4 10 Q1 11 YoY Tons Sold - Pulp & Paper ('000) 450 460 452 Sales - Pulp & Paper ($'m) 350 426 447 Price / Ton - Pulp & Paper ($) 778 926 989 Price / Ton - Pulp & Paper (ZAR) 5,834 6,808 6,870 Cost / Ton* - Pulp & Paper (ZAR) 5,351 5,881 5,655 Operating Profit ex items
Slide 23: Outlook
23 Outlook • We’re more confident in the sustainable profitability trend of the business. • Chemical cellulose business continues to outperform our other business lines – we intend to accelerate our plans to invest in more capacity • Cost pressures as commodity prices rise • We intend to reduce net
Slide 24: Q&A
Q&A | Analyst Presentation | 09 February 2011
Slide 25: Supplementary Information
Supplementary Information | Analyst Presentation | 09 February 2011
Slide 26: Cash Flow
Cash Flow US$ million Q1 10 Q4 10 Q1 11 Cash generated from operations 245 182 245 - Movement in working capital (170) 181 (335) - Net finance costs paid (64) (66) (63) - Taxation paid (4) (1) (2) - Dividends paid - - - - Cash utilised in investing activities (37) (58) (41) Cash flow after investing
Slide 27: Operating Profit - Sappi Group
Operating Profit - Sappi Group Reconciliation of reported operating profit to operating profit excluding special items * US$ million Q1 10 Q4 10 Q1 11 Operating profit as reported 1 158 121 Plantation price fair value (gain) loss 95 (29) 11 Profit on the sale of assets 1 (6) - Restructuring provisio
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