BANK OF AMERICA MERILL LYNCH PAN EUROPEAN PAPER & PACKAGING - PowerPoint PPT Presentation

BANK OF AMERICA MERILL LYNCH PAN EUROPEAN PAPER & PACKAGING FORUM 17 September 2013

Agenda Mondi overview Operational overview Capital allocation Summary Appendices 2

Our journey since Mondi’s demerger and listing Highlights Share price development (index) and annual underlying EPS (cent/share) Index (2 July 2007 =100) Cent/share  Compound annual EPS growth of 20% 250% 80  Cash dividends paid of €0.6 69.2 68.1 70 billion 200%  In specie dividend distribution of 60 €0.2 billion 1  €2.8 billion capital expenditure 47.0 50 150%  Disposed of non-core assets for 40 a value of approximately €0.3 33.9 billion 100% 30  Approximately €1.6 billion spent on acquisitions 18.7 20  Investment grade credit ratings 50% (BBB-, Baa3) since October 10 2011 0% 0 Mondi Plc FTSE100 Underlying EPS (RHS) (1) Distributed upon demerger of Mpact. 3

Repositioned business delivering strongly EBITDA (€ million) and ROCE 1 (%) 13.6% 18.0% 9.2% 15.0% 14.8% 16.0% Hurdle 13.6% rate 14.0% 13% 12.0% 12.3% 10.0% 10.6% 9.5% 8.0% 7.6% 6.0% 4.0% 2.0% 870 814 645 798 964 923 554 0.0% 2007 2008 2009 2010 2011 2012 H1 2013 EBITDA ROCE % Key milestones:  Mondi  Corrugated packaging  Europapier sold  Mpact  Swiecie minorities demerger & restructured & demerged acquired  Hadera (25.1%) listing repositioned  Nordenia acquired sold  Swiecie RCB machine  Syktyvkar  Duropack plants commissioned modernisation acquired completed  Aylesford sold (1) Average 3 year ROCE is arithmetic average. 4

Mondi today – a focused packaging and paper Group Europe & International South Africa Fibre Consumer UFP Packaging Packaging Packaging Paper €1,167m €1,896m €1,860m €1,466m €702m 10% 9% 9% 27% 2012 21% 30% 23% Revenue 1 8% 17% 26% 29% LTM 10.1% 3 20.1% 12.0% 17.4% 12.8% ROCE% 2 Products (1) Pro-forma segment revenues, before elimination of inter-segment revenues, including Nordenia’s full year 2012 revenues. (2) LTM as at 30 June 2013. (3) ROCE% has been adjusted for the Nordenia one-off costs and includes Nordenia from date of acquisition. 5

Our strategic pillars Achieve leading Maintain and/or develop leading market positions in our core packaging and market positions uncoated fine paper markets, with specific focus on higher-growth emerging markets Maintain a high-quality, Maintain our low-cost, high-quality asset base by selectively investing in production low-cost capacity enjoying sustainable cost advantages asset base Grow through Develop markets and products aligned to our customer needs by developing customer products according to their requirements, increasing our exposure to more value added, innovative, technologically advanced products and by following our focused customers into high growth emerging consumer markets development Continuous Focus on performance through continuous productivity improvement and cost focus on reduction, delivered through business excellence programmes and rigorous asset performance management We aim to exceed our hurdle rate of return on capital employed through the cycle of 13% 6

Our free cash flow priorities Maintain investment grade credit metrics Selective capital investment opportunities (optimisation of asset base) Free cash flow priorities Support dividends M&A and/or increased shareholder distributions  Future growth focused on faster growing packaging segments As appropriate  Continue to assess opportunities that are value enhancing to the Group 7

Grow th priorities Group 2012 pro forma revenues (%) 1 Other 12% Consumer UFP 21% exposed 48% packaging  Growth will be in packaging 19% Industrial  Within packaging, bias towards packaging Packaging consumer exposed packaging  A geographic preference for emerging Group 2012 sales by destination (%) markets Mature markets 50% 50% Emerging markets (1) “Consumer exposed packaging” includes containerboard, corrugated packaging, coatings and consumer packaging external revenues. “Industrial packaging” includes kraft paper and industrial bags external revenues. “Others” includes pulp, newsprint, energy, other external revenues. Includes Nordenia for the full year 2012. 8

Half year 2013 highlights Financial Underlying operating profit and ROCE € million 14.8%  Record results:  Underlying operating profit up 35% 13.6% 13.4%  Underlying earnings per share up 60% 272 302 366  Cash generated from operations of H1 2012 H2 2012 H1 2013 €431 million, up 21% ROCE %  ROCE of 14.8%, well in excess of through-the-cycle hurdle rate of 13% Earnings per share Operational € cents per share  Integration of acquisitions and related synergies on track  Major capital projects on time and within budget 30.9 38.3 49.4 H1 2012 H2 2012 H1 2013 9

Performance drivers  Focused on markets enjoying growth:  Geographic exposure – 50% of sales into higher growing emerging markets A clear and  Product mix – two-thirds of sales in packaging, consistent strategy, typically enjoying structural growth delivering a ROCE  Well invested asset base in regions enjoying low of 14.8% operating cost structures: (last 12 months)  83% of upstream pulp and paper asset base in low-cost emerging markets  Decentralised operating model with relentless focus on performance 10

The Mondi Way To create solutions for our customers’ success, delivering exceptional value for stakeholders in a sustainable way Purpose  Leading market positions  High-quality, low-cost asset base Strategy  Customer focused development  Focus on performance  Operational Excellence  Cutting Edge Products  People Development Mondi Diamond  Customer  Sustainable Development Focus and Safety  Dynamic  Entrepreneurial  Respectful  Empowered Culture  Responsible  Transparent  Passion for performance  Caring Values  Acting with integrity 11

Agenda Mondi overview Operational overview Capital allocation Summary Appendices Packaging Paper | Fibre Packaging | Consumer Packaging | Uncoated Fine Paper | South Africa Division 12

Packaging Paper  Strong performance with ROCE of 20.1% Underlying operating profit and ROCE € million  Price increases in all containerboard grades 20.1% 18.5% 17.9%  Good production, particularly in Syktyvkar 14.2% 13.1%  Benefited from lower input costs, 10.8% particularly recovered fibre  Logistics synergies realised from Corrugated plants acquisition 104 123 148  No major maintenance shuts in the period H1 2012 H2 2012 H1 2013 – all scheduled for H2 2013 ROCE % Underlying operating profit margin Packaging Paper | Fibre Packaging | Consumer Packaging | Uncoated Fine Paper | South Africa Division 13

Packaging Paper | industry fundamentals Virgin containerboard Selling prices Price indexed vs 2007 opening levels  Supply side contraction and lower imports 1.60  Average benchmark prices up 12% on 1.40 H1 2012 and 4% on H2 2012 Recycled containerboard 1.20  Improving pricing environment, but industry 1.00 profitability still poor 0.80  Average benchmark prices up 3% on H2 0.60 2012 0.40  €50/t price increase announced to take 2007 2008 2009 2010 2011 2012 2013 effect from August 2013 Kraftliner White-top Kraftliner RCB/Recovered paper differential  Competitor activity  Little impact from new Polish capacity as yet  Closures announced in the UK Packaging Paper | Fibre Packaging | Consumer Packaging | Uncoated Fine Paper | South Africa Division 14

Packaging Paper | industry fundamentals Kraft paper Selling prices Price indexed vs 2008 opening levels  Pricing is stable 1.10  Demand in Europe remains under 1.00 pressure, offset by continued good export 0.90 markets 0.80  No significant supply side changes 0.70 0.60 0.50 2008 2009 2010 2011 2012 2013 Sack kraft Packaging Paper | Fibre Packaging | Consumer Packaging | Uncoated Fine Paper | South Africa Division 15

Fibre Packaging Corrugated packaging Underlying operating profit and ROCE  Stable pricing and volumes € million 12.5% 12.0%  Paper input price increases putting pressure 10.9% on margins 5.9%  Benefited from 2012 acquisitions 5.0% 4.8% 47 54 48 Industrial bags H1 2012 H2 2012 H1 2013  Growth in key overseas markets offsetting ROCE % Underlying operating profit margin continued weakness in Europe  Benefited from restructuring in southern Europe Production volumes  One-off gain of €3 million in H2 2012 million 2.0 0.9 Coatings 1.8 0.8  Higher resin input costs 1.6 0.7  Weaker volumes, mainly in automotive and building applications 1.4 0.6 H2 2011 H1 2012 H2 2012 H1 2013  Volumes under pressure from new competitor Industrial bags (000 units) - (LHS) Coatings (m²) - (LHS) capacity Corrugated packaging (m2) - (RHS) Packaging Paper | Fibre Packaging | Consumer Packaging | Uncoated Fine Paper | South Africa Division 16