Reno De Medici Company Presentation March 21, 2018
Agenda Overview 1 RDM Features and Strategic Guidelines 2 Delivering on Strategy 3 4 RDM Shares and Final Remarks 2
Some numbers… Star Segment of Borsa 2017 net Italiana and Madrid revenues of €569 million Stock Exchange 1,509 Annual capacity of employees 1,050,000 tonnes 6 mills Commercial 2 sheeting network in 70 centers Countries 3
A PanEuropean asset base Three assets with capacity well above 200k tons/p.a . Ovaro mill focused on high-margin specialties . WLC – White Lined Chipboard FBB – Folding Boxboard GER, Arnsberg 220k tons LINER/GD WLC FRA, Blendecques ITA, S.Giustina 110k tons 240k tons WLC WLC ITA, Ovaro 95k tons OG-GK RDM La Rochette (FBB business) FRA, La Rochette ITA, Villa S.Lucia 165k tons included in the P&L 220k tons GC-FBB consolidation LINER WLC perimeter of RDM starting from H2 2016. 4
Our virtuous circle Consumers Recycled paper collectors Carton board producers Distributors Converters End users 5
With our cartonboard… Our cartonboard is used to produce a huge quantity of product we use every day. Any examples? 6
Business drivers Overall economic trend Brand E-commerce recognition Plastic Cartonboard substitutions demand Care for planet Changes in lifestyles 7
Chinese PFR import trends China is the world’s biggest consumer and is dependent on US (45.5%) and EU (29.4%) flows Announced new Chinese regulation about imports of unsorted waste paper (mostly mixed paper) React to the new standard Drop of PFR import Finished products Increase in virgin pulp export opportunities 8
Fibers Brown Recycled fibers (€ per ton) White Recycled Fibers (€ per ton) 180 450 160 400 140 350 120 300 100 250 80 60 200 40 150 20 100 0 50 Mixed OCC Bleached Softwood Pulp (€ per ton) 850 830 810 790 Despite this downward pressure 770 since Sept., the average price 750 730 per tonne in 2017 was higher 710 690 than of 2016 670 650 9
Energy Natural gas (€/MWh) 29 27 25 23 21 19 17 15 Gas Italy Gas France Coal price in Germany (€/ton) 140 130 The trends are basically 120 dependent to the 110 improved macroeconomic 100 90 scenario 80 70 10
Selling prices (€ per ton) Recycled Board Italy (WLC – GDII) Recycled Board Italy (WLC – GDIII) 680 680 630 630 580 580 530 530 480 480 430 Bottom of price range Top of price range Bottom of price range Top of price range Virgin Board Italy (FBB – GCII) Virgin Board France (FBB - GCII) 1250 1200 1150 1150 1100 1100 1050 1050 1000 1000 950 950 900 900 850 850 800 800 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Bottom of price range Top of price range Bottom of price range Top of price range 11
Agenda Overview 1 RDM Features and Strategic Guidelines 2 Delivering on Strategy 3 4 RDM Shares and Final Remarks 12
Vision Partner of Choice 13
Strategic priorities Enhance SERVICE and PRODUCT QUALITY High-performance output contributes to overall cost competitiveness Promote the “ONE COMPANY” culture The newly-introduced mindset targets continuous improvement inside RDM, with the aim of maximizing the satisfaction of all our stakeholders Translate operational progress into HEALTHY FINANCIALS IT investments allow for supply chain optimization and more effective execution of orders Minimize the ENVIRONMENTAL IMPACT of cartonboard production RDM is committed to reducing carbon emissions, recycling resources and increasing operational efficiency 14
Strategy at work RDM leverages on clear strengths to deliver strategy: BROAD OFFER MULTICOUNTRY Cartonboard portfolio PanEuropean asset base based on recycled, virgin and sales network fibres and specialties, meeting the full range of customer needs SIZE GROWING BUSINESS Strong position on the Presence in the packaging European market business, sector in which making RDM the partner organic growth can be of choice for key brands healthy as returns on and multinational investment prove to be high corporations 15
2018 top priorities INTEGRATED SUPPLY CHAIN ONE-COMPANY CULTURE Spread the new culture across RDM Enhance service and product quality Optimize volume allocation through Benchmark internal/external activities Foster best-practice sharing and customer segmentation synergies Develop Integrated Business Planning NEW ERP SYSTEM HEALTH & SAFETY Close prototype phase Target “Zero Accident” vision Go-live in Italian mills Promote well-being mindset Encourage improvements in working environment 16
Agenda Overview 1 2 RDM Features and Strategic Guidelines Delivering on Strategy 3 4 RDM Shares and Final Remarks 17
FY 2017 achievements Increasing margins in a tough input-cost scenario RAW MATERIALS DEMAND PRICES HIKES GROWTH INTEGRATION AND CAPEX BENEFITS Better mgmt of controllable costs Efficient operational performance SPREADS Higher-margin product mix (FBB) Improved Sales and Operational planning RDM ACTION Selling price increase Focus on core geographies Higher customers selectivity Better product positioning Demand trend helped, but in-house levers put into play were crucial. We successfully adapted response to spread challenges, while increasing mkt share in core countries. 18
12-month 2017 highlights (% changes: FY 2017 vs. FY 2016) 45.8 € mn 23.5 € mn 569.1 € mn Net Revenues EBIT EBITDA from Sales +50.5% +168.2% +19.1% 14.6 € mn 0.21 9.9% Net Profit Gearing* ROCE** 3.7% @ 2016YE 4.3x 0.22x @ 2016YE *Gearing : Debt/(Debt+Equity) **ROCE: Last 12-month EBIT/Capital Employed Adjusted (for Equity Investments & LT Liabilities) 19
Revenues from Sales 1,012 The increase in volumes reflects: +13.7% ▪ the consolidation of the RDM 890 La Rochette (FBB business) for 12 months in 2017 (while in 2016 it contributed just in Q3 and Q4) . ▪ The 5.7% increase in WLC volumes (+47k tons) . Revenue growth outpaced volume increase 569.1 The topline growth was driven by the 477.8 +19.1% positive impact of the RDM La Rochette consolidation . WLC revenues increased by 7.8%, at a higher pace than WLC volumes. 20
Revenues by geography FY 2016 FY 2017 477.8 € mn 569.1 € mn FFB (La Rochette) products were not part of the RDM portfolio in H1 2016. Strong position in core European countries 21
EBITDA and EBIT The WLC EBITDA change (+49.6%) reflects the following drivers: 45.8 + WLC Revenues increase (+7.8%) led by +50.5% volume growth (+5.7%) and selling price 30.4 increase; _ Increase in input costs; + Production increase (+12.5%). In FY 2017 the contribution from the FBB business to consolidated EBITDA was positive (+1.8 € mn) due to the different consolidation period. FY 2017 EBITDA also reflects an extraordinary item : 1.2 € mn restructuring costs for the reorganization of the sales team. +168.2% EBIT increase (+168.2%) resulted in being even stronger than EBITDA increase (+50.5%), due to limited D&A growth (+3.0%, up to 22.30 € mn from 21.7 € mn in 9M 2016). 22
EBITDA leap in Q2 and Q4 2017 16.0 12.0% 14.2 14.0 11.0% 14.0 12,8 12.4 10.0% 11.8 12.0 11.0 10.7 9.0% 9.7 10.0 9.3 9.1 8.0% EBITDA M€ % of sales 8.1 8.1 7.8 8.0 7.0% 7.3 7.1 6.0 6.0% 6.0 5.0% 4.0 4.0% 2.0 3.0% 0.0 2.0% Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 2014 2015 2016 2017 23
Investing to improve efficiency Capex (€ mn) 25 20.7 19.7 18.3 20 Typically, over the last ten years, RDM investments have been 15 13.0 mainly concentrated in upgrading one plant at a time. 10 In 2016, Capex was mainly 5 focused on the Arnsberg mill 0 rebuild. FY 2014 FY 2015 FY 2016 FY 2017 Cumulated capex of 179.3 million euro over the 2008- 2017 period, i.e. 17.9 million euro on average per year . In FY 2017 the three main capex projects were: ▪ the rebuild of the press section at Blendecques (Jan.) ▪ the replacement of the power plant at La Rochette (Aug.) ▪ Steam turbine at Santa Giustina (Dec.) 24
Low gearing ratio Operational net cash-flow positive by 17.3 mn € and absorbed by a number of specific outflows (17.0 mn €): ▪ Acquisition of 66.67% of PAC Service S.p.A. (10.4 mn €) ▪ 2016 dividends paid and shares buyback (1.3 mn €) ▪ Equity investment in Paper Interconnector 1.7 € mn ▪ Restructuring costs 1.0 € mn ▪ RDM Arnsberg GmbH deposit on the ‘logo fee’ tax case (2.6 € mn). 25
Investment pipeline Blendecques shoepress section La Rochette power plant Ovaro converting machine Santa Giustina steam turbine 36-hours stop planned New ERP Health & Safety projects Aug Dec Jan 2018 : sheeter at PAC Service, winder machine in Villa Santa Lucia and pope reel in Santa Giustina 26
Agenda Overview 1 RDM Features and Strategic Guidelines 2 Delivering on Strategy 3 4 RDM Shares and Final Remarks 27
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