The Outlook for the Russian Containerboard Industry Alexei Maslikov - PowerPoint PPT Presentation

The Outlook for the Russian Containerboard Industry Alexei Maslikov Product manager «Containerboard» Strategy and Product Management Chicago, November 2016

Ilim Group is leading P&P company in Russia Ilim - the largest Russian P&P company in figures Ust-Ilimsk Branch >3 Mt Production Koryazhma BSKP Branch UKP Destination >75 countries BHKP Saint-Petersburg UKP Forest area Irkutsk KLB 100% FSC Fluting certified Bratsk UWF Branch CWF Beijing Russian market >75% Mills Pulp BSKP Offices BHKP Production by KLB Containerboard products, kt #1 Capacity UKP Board BHKP 396199 662 Containerboard 15% Market 475 Paper 1 347 2 BSKP

Private consumption is expected to be the main driver for Russian GDP growth until 2020 Russian GDP and FX dynamics Contribution to GDP growth, % Growth rate -1,5 0,1 1,3 1 1,3 3 Sources: EIU, IEA, Central bank of Russia, MED, own estimation *Actual FX rate, OECD statistics

Level of Containerboard per capita consumption in Russia has good potential to grow Consumption Peer group 1 Peer group 2 In Russia Major product groups 1 BRI С S 2 Western Europe and UK 4 Sources: RISI

Consumption of containerboard is growing in Russia, but virgin is losing market share to recycled grades 5 Sources: import&export data, statistics, Ilim estimation

Significant KLB capacity increase comes during 2018-2019, but OR will remain high at 91-93% Capacity and operating rate dynamics 6 Sources: import & export data, statistics, Ilim estimation

Export volumes decline in 2016 and afterwards Export volumes, kt 7 Sources: import & export data, statistics, Ilim estimation

Imports account for only a minor share of Russian containerboard consumption and are likely to drop in the future Main import volumes come from Ukraine TL and RF hold the main share in import 8 Sources: import & export data, statistics, Ilim estimation

OCC export volume declines being converted to domestic TL production Russian OCC export declines 9 Sources: import & export data, statistics, Ilim estimation

The Russian market is not consolidated—fragmentation at both the mill and corrugated box plant level Containerboard capacity Corrugated box capacity Market integration 10 Sources: import & export data, statistics, Ilim estimation

Ilim develop several strategic projects to increase Containerboard capacity and quality until 2020 Major projects Bratsk KLB debottlenecking Total 295kt capacity Koryazhma KLB and SCF quality improvement projects 11