Mondi plc · LSE:MNDI
Mondi — Merrill Lynch Pan European Paper & Packaging Forum 2011
25 slides from Mondi's conference presentation, Sep 20, 2011
Slide 1: Merrill Lynch Pan European Paper & Packaging Forum 2011
MONDI GROUP Merrill Lynch Pan European Paper & Packaging Forum 2011 20 September 2011 London
Slide 2: Mondi's strategic positioning
Mondi’s strategic positioning Sector fundamentals Cash flow prioritisation Appendices Mondi – September 2011│ Page 2
Slide 3: Mondi's product exposure
Mondi’s product exposure Mondi Group segment/product1 mix Other 3% Corrugated 25% Uncoated Fine Paper 28% Coatings & Kraft Paper / Consumer Bags2 Packaging 17% 27% Packaging Uncoated Fine Paper (UFP) Good fundamental demand dynamics Structural decline in western Europe Aside from sack kraft, no majo
Slide 4: Delivering on the key pillars to our strategy
Delivering on the 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 low-cost producer in our markets: High quality, low Selectively investing in production capacity in l
Slide 5: Attractiveness of emerging markets
Attractiveness of emerging markets Europe (ex. Russia) is short of timber Timber No new virgin based capacity planned in Europe constraints Mondi is potentially ~56% self-sufficient globally Aside from Corrugated and Coatings, western markets maturing or in structural decline Emerging markets experi
Slide 6: Delivering through the cycle
Delivering through the cycle EBITDA ROCE €m % 1 000 16.0 900 14.0 800 12.0 700 10.0 600 500 8.0 400 6.0 300 4.0 200 2.0 100 - - 2008 2009 2010 H12011 Mondi EBITDA Mondi ROCE Competitors ROCE 1 High quality, low cost, well invested asset base delivering superior returns 1 Simple average of UPM, Stora
Slide 7: Supported by Balance Sheet Strength
… Supported by Balance Sheet Strength H1 H2 H1 € Millions 2010 2010 2011 Net debt (1 632) (1 364) (1 200) Committed facilities 2 948 2 889 1 897 Of which undrawn 1 358 1 481 781 Gearing (Net debt / Trading capital employed) 35% 30% 27% Net debt / 12 month trailing EBITDA (times) 2.2 1.5 1.3 Good liq
Slide 8: Mondi's strategic positioning
Mondi’s strategic positioning Sector fundamentals Cash flow prioritisation Appendices Mondi – September 2011│ Page 8
Slide 9: Mondi – September 2011│ Page 9
Mondi – September 2011│ Page 9
Slide 10: Corrugated – Market fundamentals
Corrugated – Market fundamentals Structural demand growth1 Western Europe 1% p.a. Demand Eastern Europe 4% p.a. Average in Europe is around 2% p.a. Kraftliner No new capacity Recycled Containerboard Supply New capacity announced of around 1.6 million tonnes (6.5% of market) to be introduced over the
Slide 11: Corrugated – Commodity cycle and Mondi returns
Corrugated – Commodity cycle and Mondi returns Mondi’s ROCE (%), kraftliner price and RB fluting – 10 year price cycle (in EUR) OCC price differential (EUR/tonne) 700 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 Kraftliner % ROCE RB Fluting-OCC 2011 2010 2010 2009 2009 2008 2008 2007 2007 2006 2006 600 differen
Slide 12: Bags and Coatings – Market fundamentals
Bags and Coatings – Market fundamentals Structural demand decline for sack kraft in mature European markets Demand Export sack kraft demand strong and structurally improved Coatings demand growth is positive in both west and east Europe Net sack kraft industry capacity reduction of ±1% 1 Supply No n
Slide 13: Bags & Coatings – Commodity cycle and Mondi returns
Bags & Coatings – Commodity cycle and Mondi returns Mondi’s ROCE (%), sack kraft and indexed bags 10 year price cycle (in EUR) price (EUR/tonne) Unbleached sack Kraft (€/tonne) 900.0 21.4% 850.0 20.0% 800.0 15.3% 15.0% 750.0 10.2% 13.3% 11.9% 10.9% 700.0 2001 2002 2003 2004 2005 2006 2007 2008 2009
Slide 14: Uncoated Fine Paper – Market fundamentals
Uncoated Fine Paper – Market fundamentals Structural decline in western Europe Demand Continued growth in eastern Europe Industry rationalisation continuing Expected future capacity increases In Europe – no new machines planned or likely Supply Additional ~150 000 tons expected in Russia in 2013/4 –
Slide 15: Uncoated Fine Paper – Commodity cycle and Mondi returns
Uncoated Fine Paper – Commodity cycle and Mondi returns Mondi’s ROCE (%), Uncoated fine paper price 10 year price cycle (in EUR) (EUR/tonne) 1100 A4 B-copy 1050 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 1000 % ROCE 2011 2010 2010 2009 2009 2008 2008 2007 2007 2006 2006 950 900 25.0% 900 18.9% 880 €/tonne 850
Slide 16: Mondi's strategic positioning
Mondi’s strategic positioning Sector fundamentals Cash flow prioritisation Appendices Mondi – September 2011│ Page 16
Slide 17: Mondi – September 2011│ Page 17
Mondi – September 2011│ Page 17
Slide 18: Strong free cash flow generation through the cycle
Strong free cash flow generation through the cycle € Millions 2008 2009 2010 H1 2011 Net cash inflow from operating activities 726 837 734 358 Capex, excluding major projects (376) (222) (238) (109) % o f depreciatio n 103% 65% 66% 60% Investment in forestry (43) (40) (46) (23) 307 575 450 226 Major
Slide 19: Free Cash Flow Priorities
Free Cash Flow Priorities • Support dividends • Achieve/maintain investment grade credit metrics 1 • Selective capital expenditure opportunities, mainly around cost optimisation • M&A, if appropriate 2 • Increased shareholder distributions Continued disciplined cash flow allocation Mondi – September
Slide 20: Summary
Summary Industry dynamics Supply-side fundamentals generally remain strong in the Group's key paper grades Macro-economic uncertainties a concern for demand in near-term Mondi’s consistent strategy leaves it well-positioned to benefit Favourable product and geographic exposures, Integrated low cost
Slide 21: Mondi's strategic positioning
Mondi’s strategic positioning Sector fundamentals Cash flow prioritisation Appendices Mondi – September 2011│ Page 21
Slide 22: H1 2011 - Highlights
H1 2011 - Highlights 1 Earnings significantly up versus 2010 on all measures Group ROCE2 of 15.2% Cash generated from operations of €403 million Interim dividend of 8.25 euro cents per ordinary share 1 Refinancing of revolving credit facility completed Completion of Mpact demerger and related Mondi
Slide 23: Delivering on major projects
Delivering on major projects Świecie's RCB machine Syktyvkar mill modernisation 410,580 tonnes production in 2010 Largest capital project in Mondi history, Full design capacity ~470,000 tonnes delivering well ahead of business plan Reduced environmental footprint further >10% increase in output in 2
Slide 24: Effects of Mpact demerger and related share consolidation
Effects of Mpact demerger and related share consolidation 6 months 12 month trailing 1 Excluding Mpact Excluding Mpact Including Mpact and after share Including Mpact and after share consolidation consolidation Underlying operating profit (€ million) 373 354 660 608 2 Underlying net profit (€ millio
Slide 25: Mondi – September 2011│ Page 25
Mondi – September 2011│ Page 25
Mondi Group — Merrill Lynch Pan European Paper & Packaging Forum 2011 on 6ix