Sappi Limited · JSE:SAP
Sappi — Corporate Update (June 2002)
23 slides from Sappi's corporate update, Jun 27, 2002
Slide 1: Welcome to Somerset
SOMERSET MILL Welcome to Somerset June 27, 2002 sappi Page 1
Slide 2: Heart of the Maine Paper Industry
SOMERSET MILL Great Northern Fraser Georgia Pacific Heart of the Maine Madison Paper Industry Mead/Westvaco IP Wausau-Mosinee Sappi Sappi sappi IP Domtar Page 2
Slide 3: Agenda
SOMERSET MILL Agenda • Lunch • Market Served • Somerset History/Performance Review • Mill Tour • Exit sappi Page 3
Slide 4: Somerset's End-Use Products
SOMERSET MILL Somerset’s End-Use Products • #1 PM - Automotive Annual Reports, Cruise Line Brochures, Dept. Store Catologues • #2 PM - Magazines & School Textbooks & Pet Food Bags • #3 PM - High-end Retail Catalogues, Computer Brochures sappi Page 4
Slide 5: Somerset Business
SOMERSET MILL Somerset Business sappi Page 5
Slide 6: What Makes Somerset Unique
SOMERSET MILL What Makes Somerset Unique • State-of-the-art technologies • Product flexibility across all 3 machines • Fully integrated pulp supply • Self-sufficient power generation • Great product runnability One Site - Multiple Source Supplier sappi Page 6
Slide 7: Product History
SOMERSET MILL Product History • In 1982 patented technology for light-weight coated sheet. • Took substantial business from coated groundwood market. • Patents expired, competition closing the gap. • Sappi still possesses significant image advantage. Quality Bellwether of all Coated Papers sappi Pag
Slide 8: Major Competitors
SOMERSET MILL Major Competitors • Champion/International Paper • Consolidated/Stora • Boise/Mead/Westvaco • Simpson • Appleton • E.B. Eddy/Domtar • Potlatch/Sappi • Repap/UPM • Metsa • Korean & Asian Producers Competing in Consolidating Industry sappi Page 8
Slide 9: Brief History
SOMERSET MILL Brief History • 1976 Pulp Mill built on 2400 acre site. • 1982 #1 PM installed. • 1986 #2 PM installed. • 1990 #3 PM / #2 HFB / #2 TG installed. One Site - Multiple Source Supplier sappi Page 9
Slide 10: Sappi Identifies Somerset's Phantom Paper Machine #4
SOMERSET MILL Sappi Identifies Somerset’s Phantom Paper Machine #4 Increased Production by 300 TPD - A Diamond in the Rough sappi Page 10
Slide 11: Somerset Has Delivered
SOMERSET MILL Accomplishments • Paper Production up 51% • Pulp Production up 39% • Cost of Sales down 5% • Maintenance Cost down 25% • Headcount down 9% • Introduced Pulp Sales 300+ tpd Somerset Has Delivered sappi Page 11
Slide 12: Steady Growth in Production
SOMERSET MILL Total 1st Quality Paper Tons Steady Growth in Production Annual Short Tons Curtailment YTD 800,000 700,000 600,000 500,000 400,000 '94 '95 '96 '97 '98 '99 '00 '01 '02 sappi Page 12
Slide 13: Total Headcount
SOMERSET MILL Total Headcount 1025 975 925 875 825 94' 95' 96' 97' 98' 99' 00' 01' 02' sappi Page 13
Slide 14: Union Representation
SOMERSET MILL Union Representation • Paper Allied Industrial Chemical Energy Workers International Union • International Association of Machinist and Aerospace Workers • International Brotherhood of Electrical Workers • Security Police Fire Professionals of America sappi Page 14
Slide 15: Improved Employee Productivity
SOMERSET MILL Paper Tons per Employee Improved Employee Productivity 900 800 700 600 500 400 '93 '94 '95 '96 '97 '98 '99 '00 '01 sappi Page 15
Slide 16: Pulp Sales Tons
SOMERSET MILL Pulp Sales Tons 150,000 Market Pulp Mill 125,000 100,000 Co-Pulp 75,000 50,000 25,000 0 '95 '96 '97 '98 '99 '00 01 02B 02F sappi Page 16
Slide 17: Total Pulp Tons
SOMERSET MILL Total Pulp Tons HISTORICAL DIGESTER PRODUCTIVITY 550 525 531 500 * 503 TONS ( M / Yr ) Co-Pulp 475 450 Conversion * Digester production w as 425 to ECF curtailed 24,600 tons due to m arket conditions 400 375 Pulp Mill Rebuild 350 325 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Ac
Slide 18: How was it done?
SOMERSET MILL How was it done? • Created team effectiveness and accountability • Reinvented our productivity culture • Judicious capital spending • Implemented a modern labor contract • Improved supplier/vendor deliverables • Introduced Co-Pulping and pulp sales • Equipment Reliability • Cost of Qua
Slide 19: Cumulative Cost of Quality
Cumulative Cost of Quality SOMERSET MILL Improvements •Substantial Cost Savings $180 •Substantial TEAM Driven Improvements $160 $140 $120 $ Million $100 $80 $60 $40 $20 $0 1997 1998 1999 2000 2001 sappi Page 19
Slide 20: Certifications and Awards
SOMERSET MILL Certifications and Awards • ECF Pulp Mill July ‘97 • ISO 9002 Certification Oct. ‘97 • Level I Maine State Quality Award Dec. ‘98 • Pulp & Paper’s Most Improved Safety Performance July ‘99 • Level II Maine State Quality Award Dec. ‘99 • Maine’s Outstanding Achievement through Volunteer
Slide 21: Environmental
SOMERSET MILL Environmental • Invested over $45 million last 10 years • Since 1994 – Reduced hazardous waste by 96% – Reduced mercury discharge by 70% • Meet Maine’s laws, which in many cases are more stringent than U. S. Government’s • On-site landfill and waste treatment sappi Page 21
Slide 22: Somerset's Community Action
SOMERSET MILL Somerset’s Community Action • Waterville Boys & • Maine Children’s Girls Club Home for Little Wanderers • The Salvation Army • Skowhegan Fire • United Way Department • Families First • Various school and • Local Playgrounds sports programs Somerset’s a GoodByNeighbor Organizations Impa
Slide 23: Where To From Here?
SOMERSET MILL Where To From Here? • Profitable Growth • Re-establish Product Differentiation • Move Customer Relations to Next Level • Improve Supply Chain Management • Maintain Cost Reduction Intensity • Fixed Cost Reduction Intensity • Variable Cost Reduction Programs sappi Page 23