Sappi Limited · JSE:SAP
Sappi — Q2 2013 Earnings Presentation
31 slides from Sappi's earnings presentation, May 9, 2013
Slide 1: 2nd Quarter 2013 Financial Results Presentation
2nd Quarter 2013 Financial Results Presentation 9 May 2013
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 | Q2 2013 Results | 9 May 2013
Slide 4: Q2 2013 Summary
4 Q2 2013 Summary • European business impacted by lower prices and higher pulp costs • Specialised Cellulose projects on track and major shuts completed • Profit for the period US$7m (Q2 2012 US$58m) • EPS 1 US cent (Q2 2012 11 US cents) • Operating profit excluding special items US$40m (Q2 2012 US$
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 Q2 2013 Results booklet (available on www.sappi.com) for a definition of special items. ** Q1 2011 included an
Slide 6: Divisional Overviews
Divisional Overviews | Q2 2013 Results | 9 May 2013
Slide 7: Divisional Operating Margins
7 Divisional Operating Margins* 20.0% 15.0% Q2 ‘13 Margins: 10.0% S‐Africa 6.3% 5.0% N‐America 6.2% 0.0% Europe ‐0.2% ‐5.0% ‐10.0% Q1 Q2 Q3 Q4 Q1** Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2010 2011 2012 2013 *The divisional operating margins exclude special items. Refer to page 16 in our Q2 2013 Results announce
Slide 8: Sappi Fine Paper Europe
8 Sappi Fine Paper Europe • Very weak market conditions; despite cost reductions implemented over the past year, performance was substantially weaker • Volumes and prices down year on year, prices were 2 to 3% lower than last quarter • Variable costs increased – particularly pulp, energy and deliver
Slide 9: Sappi Fine Paper North America
9 Sappi Fine Paper North America • Strong coated paper volumes; up 6% year on year, up 2% from last quarter; however, coated paper prices declined in the quarter • Speciality paper business performance improved throughout the quarter as demand increased, particularly from China • Market pulp sales f
Slide 10: Sappi Southern Africa
10 Sappi Southern Africa • Continued strong performance from Specialized Cellulose business – 34% EBITDA margin on similar volumes year on year, favorable Rand/Dollar exchange rates • Increased exports only partially offset the weaker domestic market conditions for paper packaging • Variable costs w
Slide 11: Strategic Focus
Strategic Focus | Q2 2013 Results | 9 May 2013
Slide 12: Strategic Focus
12 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 13: Focus Areas
13 Focus Areas Focused, low cost paper businesses • North American paper business continues good performance More • Europe – challenging market, disappointing performance to be • South Africa – weak market, margins too low done Growth in Specialised Cellulose and higher margin business • Demand for
Slide 14: Cloquet Conversion – nearly there
White liquor surge tank & digesters Pulp bale conveyers | Q2 2013 Results |9 May 2013 Gentle feed conveyer installation NMLA tank installation Cloquet Conversion – nearly there 14
Slide 15: Ngodwana Conversion – on track
15 Ngodwana Conversion – on track Fiberline #3 (RHS) Old and new pulp dryers | Q2 2013 Results |9 May 2013
Slide 16: Net Debt Development
16 Net Debt Development USD million 3,000 Major Refinancings Completed 2,500 2,000 1,500 1,000 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 Q2 | Q2 2013 Results |9 May 2013
Slide 17: Debt Maturity Profile as at March 2013
17 Debt Maturity Profile as at March 2013 2019 $300m 2021 Bond $350m Includes Bond 2017 Includes 2018 $400m €250m Bond Bond 2032 $221m Bond * ZAR450 million ($53 million) drawing under the new evergreen ZAR1 billion South African Revolving Credit Facility. In addition, the €350m International Revolv
Slide 18: Outlook
Outlook | Q2 2013 Results | 9 May 2013
Slide 19: Outlook
19 Outlook • Market conditions in Europe and SA weaker than previously envisaged. Demand/prices remain under pressure, input costs are likely to remain high • Recent performance necessitates further action – evaluating options that could result in capacity and cost reductions in our European busines
Slide 20: Q&A
Q&A | Q2 2013 Results | 9 May 2013
Slide 21: Supplementary Information
Supplementary Information | Q2 2013 Results | 9 May 2013
Slide 22: W. Europe Coated Paper Deliveries & Prices
22 W. Europe Coated Paper Deliveries & Prices 1.2 1.1 1.0 0.9 Q1 2008 = 1 0.8 0.7 0.6 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2008 2009 2010 2011 2012 2013 CWF MCR CWF 100gsm sheets prices LWC 60gsm offset reels prices Western Europe Shipments Incl. Export – Source Cepifine, C
Slide 23: Sappi Fine Paper Europe
23 Sappi Fine Paper Europe Q2 12 Q2 13 1H 12 1H 13 Tons Sold ('000) 919 882 1,768 1,731 Sales ($'m) 883 824 1,729 1,623 Price / Ton ($) 961 934 978 938 Price / Ton (€) 733 707 735 716 Cost / Ton* (€) 692 709 702 708 Operating profit ex items** ($'m) 49 (2) 78 19 * Sales less operating profit excludi
Slide 24: US Coated Paper Prices and Shipments
24 US Coated Paper Prices and Shipments 1.2 1.1 1.0 Q1 2008 = 1 0.9 0.8 0.7 0.6 0.5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2008 2009 2010 2011 2012 2013 Domestic CFS shipments Total US CFS consumption CFS #3 60lb Rolls prices US Industry Shipments and total US consumption – S
Slide 25: Sappi Fine Paper North America
25 Sappi Fine Paper North America Q2 12 Q2 13 1H 12 1H 13 Tons Sold ('000) 341 332 680 666 Sales ($'m) 349 341 701 687 Price / Ton ($) 1,023 1,027 1,031 1,032 Cost / Ton* ($) 953 964 981 973 Operating Profit ex items** ($'m) 24 21 34 39 * Sales less operating profit excluding special items divided b
Slide 26: Pulp Prices
26 Pulp Prices* US$/ton 1,100 NBSK (US$/ton) BHKP (US$/ton) 1,000 900 $842/ton 800 $806/ton 700 600 500 400 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-12 Apr-13 Apr-11 * Source: Average monthly FOEX delivered European prices | Q2 2013 Results |9 May 2013
Slide 27: Sappi Southern Africa
27 Sappi Southern Africa Q2 12 Q2 13 1H 12 1H 13 Tons Sold ('000) 418 387 818 767 Sales ($'m) 379 319 747 629 Price / Ton ($) 907 824 913 820 Price / Ton (ZAR) 7,028 7,365 7,236 7,231 Cost / Ton* (ZAR) 6,045 6,903 6,132 6,645 Operating Profit ex items** ($'m) 53 20 114 51 * Sales less operating prof
Slide 28: Cash Flow
28 Cash Flow Q2 12 Q2 13 1H 12 1H 13 Cash generated from operations 214 115 409 265 - Movement in working capital (24) (6) (190) (136) - Net finance costs paid (37) (28) (101) (87) - Taxation paid (5) (3) (10) (13) Cash generated from operating activities 148 78 108 29 Cash utilised in investing act
Slide 29: Special Items
29 Special Items Results were impacted by a gain in special items amounting to US$38m comprising the following main items: • US$96m credit related to the revaluation of a portion of the softwood forest, offset by; • US$47m asset impairment charge, primarily Tugela and Stanger assets In addition, def
Slide 30: Reconciliation of EBITDA excluding special items to profit for the period
30 Reconciliation of EBITDA excluding special items* to profit for the period Q2 12 Q2 13 1H 12 1H 13 EBITDA ex. special items 217 128 411 290 Depreciation and amortization (92) (88) (186) (177) Operating profit ex. special items 125 40 225 113 Special Items (5) 38 2 35 Plantation price fair value a
Slide 31: Thank You
| / i | Thank You