Mondi plc · LSE:MNDI
Mondi — Nedbank Capital 2010 Investment Conference
27 slides from Mondi's conference presentation, Sep 22, 2010
Slide 1: Nedbank Capital – 2010 Investment Conference
Nedbank Capital – 2010 Investment Conference 22 September 2010
Slide 2: Agenda
Agenda Mondi at a glance Group strategy Segment review Summary Presenter David Hathorn Chief Executive Officer Mondi – Nedbank Capital – 2010 Investment Conference – 22 September 2010 │ Page 2
Slide 3: Mondi at a glance
Mondi at a glance UFP Bags & Coatings Corrugated South Africa MPSA Newsprint €1.4B €1.8B €1.0B €0.5B €0.5B €0.5B 2009 9% 9% Sales 24% (1) 8% 32% 18% 2009 EBIT % 10.8% 4.5% 2.3% 6.7% 7.2% 2.1% Products Europe South Africa Europe/SA No. 1 in Office No. 1 in Kraft Paper No. 1 Containerboard No.
Slide 4: First-half financial highlights
First-half financial highlights Earnings significantly up versus a difficult first-half 2009 EBITDA1 up 31% at €405 million Underlying operating profit 2 up 61% at €222 million Underlying EPS3 up 145% at 20.3 euro cents Group ROCE 4 of 9.5% Cash inflow from operations of €269 million Strong EBITDA g
Slide 5: First-half operational highlights
First-half operational highlights 2010 reflecting further improvement in European trading with strong order inflows Sustained improvement in order inflows, volumes and prices across all key paper grades Strong production performance Corrugated restructuring successfully completed Ongoing cost saving
Slide 6: Strong liquidity position
Strong liquidity position H1 H2 H1 € Millions 2009 2009 2010 Net debt 1,661 1,517 1,632 Committed facilities 2,838 2,541 2,948 of which undrawn 1,073 990 1,358 Gearing (Net debt / Trading capital employed) 38% 35% 37% Net debt / 12 month trailing EBITDA (times) 2.5 2.4 2.2 Long term corporate credit
Slide 7: Agenda
Agenda Mondi at a glance Group strategy Segment review Summary Mondi – Nedbank Capital – 2010 Investment Conference – 22 September 2010 │ Page 7
Slide 8: Three key pillars to our strategy
Three key pillars to our strategy 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 Selectively investing in production capacity in lower-cost
Slide 9: Focus on Packaging and UFP in emerging markets
Focus on Packaging and UFP in emerging markets1 Leading market Revenue by destination Revenue by origin Net operating assets positions High exposure to good growth geographies Emerging markets Emerging markets Emerging markets Mature markets Mature markets Mature markets Virgin-based production Re
Slide 10: Emerging market asset base leads to low cost positions across main grades
Emerging market asset base leads to low cost positions across the group’s main grades… Leading market Percentage of Mondi's capacity in overall cost curve at Feb 2010 1 positions st nd rd th Grade 1 Quartile 2 Quartile 3 Quartile 4 Quartile + Unbleached Sack Paper 24% 4% 53% 19% High quality, low NS
Slide 11: Integrated value chain
Integrated value chain Leading market Pulp Virgin Containerboard positions 4.0 1.2 3.5 1 0.2 0.4 0.3 0.7 + 3.0 2.5 0.8 0.3 Millions 2.0 Millions 0.6 High quality, low of tonnes 1.5 1.0 2.7 3.1 of tonnes 0.4 0.9 0.7 cost asset base 0.5 0.0 0.3 0.2 (0.4) (0.5) Production Consumption Net long/(short) 0
Slide 12: Superior access to low cost wood
Superior access to low cost wood Leading market Average Hardwood and Softwood costs (€/m3, Q4 2009) positions Russian wood regenerates + naturally; South African wood is High quality, low farmed, maturing in ±8 years cost asset base Russian and South African costs low cost asset are largely under
Slide 13: Profitability improvements
Profitability improvements Leading market Cost savings, Cost structure H1 2010 Cost and % ofsavings - €75 comparative million cash cost base positions 3.1% 2.4% 5.4% 2.9% 275 + 250 6% Wood, pulp and fibre 5% Other Energy 225 High quality, low 200 Maintenance 34% Other variable costs 16% Variable sel
Slide 14: Strong working capital management
Strong working capital management Leading market positions Working capital management + 1,200 20% 2010 increased trading and price 18% High quality, low 1,100 15.5% increases driving working capital 14.6% 12.9% 16% cost asset base 1,000 14% 11.9% 900 10.7% 12% growth € Millions 10.0% + 800 10% As a
Slide 15: Rigorous asset management
Rigorous asset management Leading market Closures and Divestitures1 positions ~1,080,000 tonnes annual capacity of high cost paper removed over the + + sale of European past 3 years 5 High quality, low paper Europe & International merchant, cost asset base 6 Europapier ~840,000 tonnes 5 South Africa
Slide 16: Corrugated restructuring complete
Corrugated restructuring complete European Recycled Fluting Supply Delivered costs to Frankfurt Corrugated Business EU footprint 500 EUR/t Before: After: (CEE focus) 450 400 350 New Mondi PM7 300 Weighted av. cost Pre restructuring 250 and investment in CEE Light Weighted av. cost 200 Post restructu
Slide 17: Major mills' modernisation programme
Major mills’ modernisation programme Leading market Expansionary capital spend 2004 to 2009 Coming to the end of 10 year asset modernisation programme positions South Africa Almost €3 billion spent on 7% expansionary projects + 29% Emerging Europe, incl Russia Most large operations now High quality,
Slide 18: Świecie's new machine performing well
Świecie’s new machine performing well €285 million capital cost ~€20 million below budget Start-up Q3 2009 – ahead of schedule More than 400,000 tonnes production expected for 2010 full year >84% of full design capacity RCB cost curve1 well ahead of business plan 400 Manufacturing costs ~197,000 ton
Slide 19: Syktyvkar mill modernisation
Syktyvkar mill modernisation Project returns Wood / Pulp production Sales growth New recovery boiler ~30% woodyard capacity ~50,000 tonnes Uncoated Fine ~100% increased heat supply increase, ~10% efficiency gain Paper (~5% of domestic market) ~571 Mwh additional energy ~170,000 tonnes pulp ~63,000 t
Slide 20: Agenda
Agenda Mondi at a glance Group strategy Segment review Summary Mondi – Nedbank Capital – 2010 Investment Conference – 22 September 2010 │ Page 20
Slide 21: Segment financial performance
Segment financial performance 4,000 Segment Revenues 300 8.1% Segment underlying profits 9.0% 3,500 8.0% 250 7.3% 3,000 7.0% 200 5.7% 5.9% € millions € millions 2,500 6.0% 5.3% 150 5.0% 2,000 1,500 100 4.0% 1,000 3.0% 50 500 2.0% 1.0% H1 2008 H2 2008 H1 2009 H2 2009 H1 2010 H1 2008 H2 2008 H1 2009 H
Slide 22: Uncoated Fine Paper – Commodity cycle and returns
Uncoated Fine Paper – Commodity cycle and returns 1,100 A4 B-copy 1,050 1,000 950 900 €/tonne 850 800 750 700 650 600 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 H1 H2 H1 H2 H1 H2 H1 H2 H1 2010 2009 2009 2008 2008 2007 2007 2006 2006 900 25.0% 880 Improving returns despite declining 19.7%
Slide 23: Bags and Coatings – Commodity cycle and returns
Bags and Coatings – Commodity cycle and returns Unbleached sack Kraft (€/tonne) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 800.0 16.0% 15.3% 750.0 14.0% 11.9% 12.0% 10.9% 700.0 10.0% 9.9% 10.2% 10.0% 8.3% 650.0 8.0% 7.0% 6.7% 6.0% 600.0 4.0% 550.0 2.0% 0.0% 500.0 2006 2006 2007 2007 2008 2008
Slide 24: Corrugated – Commodity cycle and returns
Corrugated – Commodity cycle and returns 600 Kraftliner 550 RB Fluting-OCC differential 500 450 400 €/tonne 350 300 250 200 150 100 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 H1 H2 H1 H2 H1 H2 H1 H2 H1 2010 2009 2009 2008 2008 2007 2007 2006 2006 600 18.0% 550 17.1% 16.0% 500 14.0% 12.9%
Slide 25: Agenda
Agenda Mondi at a glance Group strategy Segment review Summary Mondi – Nedbank Capital – 2010 Investment Conference – 22 September 2010 │ Page 25
Slide 26: Summary
Summary Mondi has been following a consistent strategy for more than a decade: To build on leading positions in packaging and Uncoated Fine Paper (UFP), particularly in emerging markets To maintain position as lowest-cost producer in our markets: Selectively investing in production capacity in lower
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