Mondi plc · LSE:MNDI
Mondi — UBS Paper Conference – New York 2008
36 slides from Mondi's conference presentation, Sep 17, 2008
Slide 1: UBS Paper Conference – New York
UBS Paper Conference – New York MONDI GROUP 17 September 2008
Slide 2: Agenda
AGENDA 1. Mondi at a glance 2. Strategy 3. Key value drivers 4. Interim results 5. Market update 6. Major growth projects Plantation, South Africa 7. Conclusion Page 2
Slide 3: Mondi at a Glance
MONDI AT A GLANCE Bags & Newsprint and UCF Corrugated South Africa MPSA Specialities merchant €1.7B €2.0B €1.6B €0.6B €0.4B €0..6B Sales 2007 (1) EBIT % 5.9% 7.7% 8.2% 13.2% 8.4% 6.8% Products Europe South Africa Europe/SA z No. 1 Office z No. 1 Kraft z No. 1 kraftliner z No. 1 z No. 1 Newsprint Pos
Slide 4: Agenda
AGENDA 1. Mondi at a glance 2. Strategy 3. Key value drivers 4. Interim results 5. Market update 6. Major growth projects Ruzomberok, Slovakia 7. Conclusion Page 4
Slide 5: Strategic Summary
STRATEGIC SUMMARY Leading market Build on leading positions in packaging and Uncoated Fine Paper positions (UFP), particularly in emerging markets Maintain position as lowest-cost producer in our markets: High quality, low z Selectively investing in production capacity in lower-cost regions cost ass
Slide 6: Agenda
AGENDA 1. Mondi at a glance 2. Strategy 3. Key value drivers 4. Interim results 5. Market update 6. Major growth projects 7. Conclusion Steti, Czech Republic Page 6
Slide 7: Emerging Market Focus
EMERGING MARKET FOCUS Revenue by destination Virgin based production 18% 51% 49% 82% Emerging markets Mature markets Operating assets Operating profit by origin 20% 35% 65% 80% Page 7
Slide 8: Higher Growth Prospects
HIGHER GROWTH PROSPECTS UCWF 2006 - 2011 demand growth (in %)1 Corrugated 2005 - 2010 demand growth (in %)2 9.8% 8.2% 6.6% 1.8% 1.3% WE EE CIS WE EE (1) Sources: EMGE Woodfree Forecast Report; October 2007 for Eastern and Western Europe. World Paper markets 2020, Pöyry 2005 Edition for CIS. CIS mark
Slide 9: Integrated Value Chain
INTEGRATED VALUE CHAIN Forestry Pulp Paper Mondi’s own 8.0mm3 3.8Mt 5.9Mt availability Kraftliner: 1.0Mt Testliner: 1.5Mt Mondi’s own demand 15.6mm3 3.9Mt 1.8Mt(1) Self sufficiency 51% 97% 183%(1) (1) Refers to Mondi’s demand and self-sufficiency of packaging paper (including E&I and MPSA). Paper is
Slide 10: Access to Low Cost Wood Resources
Access to Low Cost Wood Resources Average hardwood and soft wood costs (€/m3, Q2 2007)1 47 42 39 37 33 30 30 25 25 26 South Brazil Russia Chile Australia Poland Portugal Sweden Finland France Africa Forests in Russia and South Africa make Mondi fully self-sufficient in two of the world’s lowest-cost
Slide 11: High Quality Low Cost Asset Base
High Quality Low Cost Asset Base White-top Kraftliner UnbleachedKraftliner €/t €/t 100% of Mondi 100% of Mondi Unbleached White-top Kraftliner Kraftlinercapacity capacity 0 0 0 0 3,000 Cumulative capacity (Kt/a) 1,400 Cumulative capacity (Kt/a) Universal Office Paper €/t 100% of Mondi Universal Offi
Slide 12: Active Cost Management
ACTIVE COST MANAGEMENT SUBSTANTIAL REDUCTION IN PROPORTION OF FIXED COST BASE Page 12
Slide 13: Restructuring Activity
RESTRUCTURING ACTIVITY Closures and divestitures Reduced testliner capacity by 11% in 2004 (~ 110Kt) Closed 11% of corrugated packaging capacity (~280M m²) since 2004 10 Closed 42 converting plants and two testliner mills, divested 33 converting plants 5 Closed UFP machine in Hungary in 10 5 10 11 2
Slide 14: Mondi is focused on operational performance
Mondi is focused on operational performance Ongoing operational excellence and efficiency gains in 2007 Efficiency gains Productivity – bag converting 1,000 units % 9% per capita +8% 1,097 1,040 778 6% 4% 450 3% UFP Containerboa Corrugated Bag 1995 2000 2006 2007 rd packaging converting Source: Mond
Slide 15: Agenda
AGENDA 1. Mondi at a glance 2. Strategy 3. Key value drivers 4. Interim results 5. Market update 6. Major growth projects Richards Bay, South Africa 7. Conclusion Page 15
Slide 16: Financial Highlights
FINANCIAL HIGHLIGHTS € millions, except for per share measures and ROCE H1 2008 H1 2007 % Change Group revenue 3,263 3,052 +7 1 EBITDA 456 421 +8 2 Underlying operating profit 263 243 +8 3 Underlying profit before tax 210 203 +3 4 Underlying earnings per share (€ cents per share) 24.8 22.6 + 10 Inte
Slide 17: Costs and Cost Saving Initiatives
COSTS AND COST SAVING INITIATIVES COST STRUCTURE H1 2008 COST SAVINGS H1 2008 - €58 MILLION Depreciation and 3.9% 3.6% 3.1% amortisation 180 6.4% 160 Other net operating expenses Wood, pulp and 140 6.1% fibre 101 99 120 88 33.2% Other variable € million costs 100 16.8% 80 81 2.1% 78 79 60 Maintenanc
Slide 18: Debt Facilities
DEBT FACILITIES € millions Opening facilities as at 1 January 2008 2,678 Repaid/expired (32) New facilities 182 Exchange translation (82) Closing facilities as at 30 June 2008 2,746 Average maturity of 3.8 years €1.1 billion undrawn committed facilities as at 30 June 2008 Main facility is €1.55 bill
Slide 19: Capital Expenditure
CAPITAL EXPENDITURE Mondi well invested Extensive programme of mill modernisation since 2001/02 On completion of the Syktyvkar capex programme (mid 2010), all our major mills would have seen substantial investment Post completion of the Polish and Russian projects, capex will reduce substantially Go
Slide 20: Capital Invested and Financing
CAPITAL INVESTED AND FINANCING 30 June 31 Dec 31 Dec € millions 2008 2007 2006 Trading capital employed 4,922 4,818 4,737 Group ROCE (1) 11.1% 10.6% 8.1% Shareholders funds 2,885 2,963 2,966 Return on shareholders funds (post tax) (2) 8.6% 8.1% 4.8% Net debt 1,655 1,507 1,479 Gearing (Net debt/Equit
Slide 21: Agenda
AGENDA 1. Mondi at a glance 2. Strategy 3. Key value drivers 4. Interim results 5. Market update 6. Major growth projects Merebank, South Africa 7. Conclusion Page 21
Slide 22: Containerboard fundamentals
Mondi corrugated integration levels 750 Circa 26 mtpa market growing 700 Kraftliner 175 g Testliner 2 at: 650 White top Kraftliner 600 Western Europe 1.8% 1 550 Eastern Europe 8.2% 1 €/tonne 500 Russia 8-10% 2 450 400 350 Containerboard capacity 300 utilisation: 250 2001 2002 2003 2004 2005 2006 200
Slide 23: Kraft Paper Fundamentals
KRAFT PAPER FUNDAMENTALS Total European market size 3.1 Unbleached sack kraft mtpa Export sales mainly denominated in euros No major new capacity announcements 2001 2002 2003 2004 2005 2006 2007 2008 Production Net Market Products Volume Exposure z Kraft paper z ~ 0.9Mt z ~ 0.2Mt z Bags z 3.8B Bags
Slide 24: Uncoated Fine Paper Fundamentals
UNCOATED FINE PAPER FUNDAMENTALS Eastern Europe and Russia continue to 1200 UFP grow 1100 Circa 10 million tonne market, growing at: Western Europe flat 1000 Eastern Europe 5% 1 Russia ~9% cut size 2 €/tonne 900 European capacity closures in 2008 to date of 140ktpa – current capacity utilisation of
Slide 25: Agenda
AGENDA 1. Mondi at a glance 2. Strategy 3. Key value drivers 4. Interim results 5. Market update 6. Major growth projects Syktyvkar, Russia 7. Conclusion Page 25
Slide 26: Major Growth Projects
MAJOR GROWTH PROJECTS Both projects on time and within Syktyvkar mill expansion - €525m budgeted capital cost All main equipment orders placed and work commenced Swiecie box plant (€45m) postponed pending agreement on subsidies Swiecie containerboard mill - €305m Targeted completion dates: Swiecie –
Slide 27: Syktyvkar Mill Modernisation
SYKTYVKAR MILL MODERNISATION Wood/pulp production Sales growth Wood yard 33% capacity increase and 55ktpa UFP production (circa 5% of 10% efficiency improvement. Russian demand) Additional 180ktpa pulp – 150ktpa 65ktpa Containerboard (circa 3% of integrated and 30ktpa external sales Russian demand)
Slide 28: Mondi's cost positioning in European recycled supply
Mondi’s cost positioning in European recycled supply 400 Brown field Cost of 350 highest expansion gives: 25% of capacity 300 ~€70m capital cost benefit €/ tonne 250 Mondi weighted average without Mondi new PM ~€30-€40/tonne 200 weighted average with operating cost 150 Mondi new new PM benefit PM 10
Slide 29: Agenda
AGENDA 1. Mondi at a glance 2. Strategy 3. Key value drivers 4. Interim results 5. Market update 6. Major growth projects Plantation, South Africa 7. Conclusion Page 29
Slide 30: Appendices
© mondi APPENDICES
Slide 31: Divisional Results
DIVISIONAL RESULTS Group revenue 1 EBITDA 2 Underlying operating profit 3 € millions H1 2008 H1 2007 Change H1 2008 H1 2007 Change H1 2008 H1 2007 Change EUROPE & INTERNATIONAL Bags & Specialities 1,121 994 127 164 132 32 109 80 29 Uncoated Fine Paper 846 837 9 122 100 22 69 48 21 Corrugated Busines
Slide 32: Divisional Returns
DIVISIONAL RETURNS ROCE (%) 1 EBITDA return(%) 2 Return on Sales (%) 3 H1 2008 H1 2007 H1 2008 H1 2007 H1 2008 H1 2007 EUROPE & INTERNATIONAL 12.0 9.8 13.3 12.6 7.8 7.2 SOUTH AFRICA 10.6 9.9 24.5 22.0 16.4 14.9 MPSA 11.1 18.8 12.1 12.1 16.4 14.9 MERCHANT & NEWSPRINT 15.0 14.1 6.1 9.4 3.4 5.6 MONDI G
Slide 33: Cash Flow
CASH FLOW € millions H1 2008 H1 2007 Change EBITDA 456 421 35 Working capital movements (126) (59) (67) Other operating cash flow adjustments (20) (6) (14) Cash inflows from operations 310 356 (46) Dividends from associates and financial investments - 1 (1) Tax paid (27) (40) 13 Net cash inflow from
Slide 34: Export Dependency
EXPORT DEPENDENCY Overview of Export dependence European Paper Business 2007 (Imports, Exports and Net Trade in % of Production) Exports in % of Production Imports in % of Production 31,8 Net Exports in % of Production 30,5 26,8 25,4 22,2 22,7 22,9 22,9 20,5 20,5 20,2 19,4 17,3 11,5 7,3 8,2 6,7 5,2
Slide 35: Production Volumes
PRODUCTION VOLUMES H1 2008 H1 2007 % Change Europe and International Division Containerboard tonnes 965,319 916,815 +5 Corrugated board and boxes m m² 1,143 985 + 16 Kraft paper tonnes 461,754 444,625 +4 Bag converting m units 1,902 1,910 +0 Coating and release liners m m² 1,414 1,549 -9 Uncoated fi
Slide 36: © mondi
© mondi