Q1 FY20 financial results · 2020-02-05 · Forward-looking statements and Regulation G. 2...
Transcript of Q1 FY20 financial results · 2020-02-05 · Forward-looking statements and Regulation G. 2...
5 Feb 2020
Chief Executive Officer
Steve Binnie
Sappi Limited
Q1 FY20 financial results delivering on
strategy
2020
Vision2020
intentionalevolution
next phase
growth
1
Forward-looking statements and Regulation G
2
Forward-looking statementsCertain statements in this release that are neither reported financial results nor other historical information, are forward-looking statements, including but not limited to statements that are predictions ofor indicate future earnings, savings, synergies, events, trends, plans or objectives. The words “believe”, “anticipate”, “expect”, “intend”, “estimate”, “plan”, “assume”, “positioned”, “will”, “may”, “should”,“risk” and other similar expressions, which are predictions of or indicate future events and future trends and which do not relate to historical matters, identify forward-looking statements. In addition, thisdocument includes forward-looking statements relating to our potential exposure to various types of market risks, such as interest rate risk, foreign exchange rate risk and commodity price risk. Youshould not rely on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which are in some cases beyond our control and may cause our actualresults, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements (and from past results,performance or achievements). Certain factors that may cause such differences include but are not limited to:
The highly cyclical nature of the pulp and paper industry (and the factors that contribute to such cyclicality, such as levels of demand, production capacity, production, input costs including rawmaterial, energy and employee costs, and pricing)
The impact on our business of adverse changes in global economic conditions Unanticipated production disruptions (including as a result of planned or unexpected power outages) Changes in environmental, tax and other laws and regulations Adverse changes in the markets for our products The emergence of new technologies and changes in consumer trends including increased preferences for digital media Consequences of our leverage, including as a result of adverse changes in credit markets that affect our ability to raise capital when needed Adverse changes in the political situation and economy in the countries in which we operate or the effect of governmental efforts to address present or future economic or social problems The impact of restructurings, investments, acquisitions, dispositions and other strategic initiatives (including related financing), any delays, unexpected costs or other problems experienced in
connection with dispositions or with integrating acquisitions or implementing restructurings or other strategic initiatives, and achieving expected savings and synergies, and Currency fluctuations.
We undertake no obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information or future events or circumstances or otherwise.
Regulation G disclosureCertain non-GAAP financial information is contained in this presentation that management believe may be useful in comparing the company’s operating results from period to period. Reconciliation's ofcertain of the non-GAAP measures to the corresponding GAAP measures can be found in the quarterly results booklet for the relevant period. These booklets are available on our website:https://www.sappi.com/quarterly-reports.
Highlights – Q1 FY20
3
EBITDA* $139m
Profit for the periodUS$24 million
EPS* 6 US cents
o Historically low DWP prices significantly impacting profitability
o Packaging and speciality segment margins higher as pricing and mix improve – SA containerboard experiencing depressed demand
o Market share gains in coated paper grades
o Matane integration on track
* Refer to the supplementary information in this presentation for a reconciliation of EBITDA to reported operating profit and page XX in our Q1 FY20 financial results booklet (available on www.sappi.com) for a definition of special items.
Excluding special items*
60
80
100
120
140
160
180
200
197 (6) (82) 44 (7) (6) (1) - 139
Q1 FY19 EBITDA Sales volume Price & mix Variable & deliverycosts
Fixed costs Inventory movement Other Exchange rate Q1 FY20 EBITDA
EBITDA* reconciliation
4
Q1 FY20 to Q1 FY19
US$
milli
on
Notes:
1. All variances were calculated excluding Sappi Forestry.
2. “Currency conversion” reflects translation and transactional effect on consolidation.
3. EBITDA* = EBITDA excluding special items
2020 2019Exchange rates:Average rate for the Quarter: US$1 = ZAR 14.7241 14.3127Average rate for the Quarter: €1 = US$ 1.1066 1.1409
Dec
Sales revenue
Product contribution split – LTM
5
* Refer to the supplementary information in this presentation for a reconciliation of EBITDA to reported operating profit and page 22 in our Q1 FY20 financial results booklet (available on www.sappi.com) for a definition of special items. Data above excludes treasury operations and insurance captive.
39%
21%
40%
Dissolving WoodPulpPackaging &Speciality PapersGraphic Papers
54%
17%
29%
EBITDA excluding special items Operating profit excluding special items
6
Segment volume & EBITDA* margin
0%2%4%6%8%10%12%
600700800900
1,0001,1001,200
Graphics volume Graphics margin
0%
5%
10%
15%
20%
100
150
200
250
300
350
Pack/Spec volume Pack/Spec margin
0%10%20%30%40%50%
100150200250300350400
Q1
17
Q2
17
Q3
17
Q4
17
Q1
18
Q2
18
Q3
18
Q4
18
Q1
19
Q2
19
Q3
19
Q4
19
Q1
20
DWP volume EBITDA marginEBITDA* = EBITDA excluding special items
Maturity profile*Fiscal years
7
270
6523 43 46
437
113
26
503
78
221
364
82 107
0
100
200
300
400
500
600
2020 2021 2022 2023 2024 2025 2026 2027 2032
US$
milli
on
Cash Short-term SPH term debt Securitisation SSA
EUR450m bondEUR350m bond
US$221m bond
*Graph excludes US$92.4 million in IFRS16 leases – Average maturity of 4 years
Capex
8
0
100
200
300
400
500
600
2013 2014 2015 2016 2017 2018 2019 2020E
US$
milli
on
Maintenance Efficiency and expansion
9
Market and Segmental overview
Sappi Europe
10
Sales Tons -2%year-on-year
Sales -4%year-on-year
EBITDA* +5%year-on-year
* Refer to the supplementary information in this presentation for a reconciliation of EBITDA to reported operating profit and page 22 in our Q1 FY20 financial results booklet (available on www.sappi.com) for a definition of special items.
o Market share gains in CWF offsetting weak market demand
o 28kt CM downtime required, US$6.5m impact – ramp up of Lanaken on CWF will assist going forward
o Packaging and specialities volumes growing in all major product categories
o Variable costs declining as pulp, chemicals and energy prices move downward.
Sappi North America
11
Sales Tons +17%*year-on-year
Sales +5%year-on-year
EBITDA** -14%year-on-year
* Matane volumes included for 2 months – volumes up 7% excl. Matane** Refer to the supplementary information in this presentation for a reconciliation of EBITDA to reported operating profit and page 22 in our Q1 FY20 financial results booklet (available on www.sappi.com) for a definition of special items.
o Good growth in packaging volumes, with improved product mix aids pricing and machine efficiency
o Profits impacted by weak DWP pricing
o Graphics demand down 16%, 20kt downtime taken US$6m EBITDA impact. Realised prices were flat y-o-y.
o Paper pulp, energy and chemicals costs lower, supporting margins.
Sappi South Africa
12
Sales Tons -15%year-on-year
Sales -25%year-on-year
EBITDA* -57%year-on-year
* Refer to the supplementary information in this presentation for a reconciliation of EBITDA to reported operating profit and page 22 in our Q1 FY20 financial results booklet (available on www.sappi.com) for a definition of special items.
o Historically low DWP prices have significant impact on profitability - US$272/t lower y-o-y.
o SA containerboard sales impacted by elevated converter inventory and drought impact. 18kt downtime - US$5m impact
o Weak domestic economy affected newsprint, tissue and office paper sales
o Higher energy and fibre costs further impact margin
Global graphic paper market trends
13
Supply and demand Demand declines continue to exceed trend Capacity reductions positively impacting operating rates over next 12 months
Selling prices and input costs Small declines in paper prices Paper pulp, chemicals and energy prices lower, supporting margins
Strategy Focus on costs, both fixed and variable, to maintain margins Manage operating rates through downtime, market share and flexibility of machines Reduce or convert capacity as markets develop/change Increase pulp integration over time
Global packaging and speciality paper market trends
14
Supply and demand Brand owners pushing for paper-based packaging solutions, demand remains firm Need for innovation in paper packaging – barrier technology key
Selling prices and input costs Stable selling prices Paper pulp, chemicals and energy prices lower, supporting margins
Strategy Ramp-up volumes from conversions, improving efficiencies and grow into new markets Innovation and sustainability key differentiators Increased pulp integration – Matane acquisition
o Looking forward we see the following opportunities in this segment
o On the back of the investments at Maastricht and Somerset we plan to further ramp-up paperboard
in the US and EU
o Complete small containerboard expansions in South Africa and investigate larger expansion
o Identify target / niche sectors, while maintaining dominant position in selected areas
o Review potential acquisitions aligned with mega-trends and strong ROIs and pay-back periods
o Invest in further R&D in order to develop capacity organically (e.g. conversions)
o Accelerate barrier coating expansion (5 000 to 25 000 tons per annum), while investigating options in
“plastics to paper” trend
15 ROIs = Return on investments
Focus on packaging & specialities
Global DWP market trends
16
Supply and demand Demand trend continues to be strong, growing by ~6% per annum Coronavirus impacting demand in China currently VSF remains oversupplied in a weak pricing environment Some swing producers switching to paper pulp as outlook started to improve
Selling prices and input costs Both DWP and VSF prices historically low Wood chip prices likely to decline in 2020 due to decline in paper pulp prices during 2019
Strategy Grow with the market, 110kt expansion at Saiccor 55% complete Evaluate longer term opportunities for more substantial increase in volumes Commitment to sustainability key – wood certification gives Sappi a competitive advantage
Maintaina healthybalancesheet
Rationalisedeclining
businesses
Accelerate growth in
higher margin growth
segments
Achievecost
advantages
Improveoperational
and machineefficiencies
Maximiseprocurement
benefits Optimisebusiness
processes
Continuouslybalance
paper supplyand demandin all regions
Wherepossible
convert papermachines tohigher marginbusinesses
Optimiseworkingcapital
Strongcash
generationSmart
financing
Expandpaper
packaginggrades
Enhancespecialised celluloseportfolio
Extractvalue from our
biorefinerystream
Our group strategy
17
At Sappi we do business with integrity and courage; making smart decisions which we execute with speed.Our values are underpinned by an unrelenting focus on and commitment to safety.
Achievecost
advantages
Improveoperational
and machine efficiencies
Maximiseprocurement
benefitsOptimisebusiness
processes
Our group strategy
18
We work to lower fixed and variable costs, increase cost efficiencies and invest for cost advantages. Group efficiency and procurement initiatives US$64m
target in 2020 Ongoing continuous improvement across all mills. Investigate pulp integration opportunities in US and
EU – Matane acquisition, small debottlenecking project in EU in 2020
Saiccor expansion will lead to lower variable costs
Rationalisedeclining
businesses
Continuouslybalance
paper supplyand demand in all regions
Wherepossible
convert paper machines tohigher margin
businesses
Our group strategy
19
Recognising the decreasing demand for graphic paper, we manage our capacity to strengthen our leadership position in these markets, realising their strategic importance to the group and maximising their significant cash flow generation. Downtime taken at mills to lower inventories Progressive transition of Lanaken Mill out of LWC Reduced coated paper exposure via conversion Evaluating graphic paper capacity
Maintaina healthybalancesheet
Optimiseworkingcapital
Strongcash
generationSmart
financing
Our group strategy
20
Targeted max sustained leverage - 2x Net debt:EBITDA
No new major capex commitments
Capex in 2021: US$250 - $350m depending on DWP
market development in 2020
Leverage covenant adjusted for next two years
Tight working capital management
8-year term loan raised to fund Matane acquisition
Accelerategrowth in
higher margingrowth
segments
Extractvalue from our
biorefinerystream
Enhancespecialisedcelluloseportfolio
Expandpaper
packaginggrades
Our group strategy
21
We will make investments in existing and adjacent areas with strong potential growth. Debottlenecking of Saiccor, Ngodwana and Cloquet
DWP complete Expansion of Saiccor by 110kt/annum 55% complete Additional packaging at Ngodwana and Tugela Mills Securing additional HW and SW timber supply Biomaterials, bio-chemicals – lignins, sugars Ramp-up of board grades at Maastricht and Somerset Extend barrier coating opportunity
DWP prices remain under pressure – low VSF prices make recovery unlikely in short term –
market fundamentals still support strategy
Machine efficiency, product mix and price realization improving as Somerset PM1 and Maastricht
conversions ramp up.
Strong innovative position, particularly in barrier technology, helping to drive growth in packaging
and speciality segment as consumers and brand owners desire more sustainable solutions.
Graphic paper markets remain difficult – market share gains and industry capacity closures to
aid operating rates
Given current DWP pricing and uncertain impact of coronavirus, EBITDA in Q2 to follow first
quarter trend.
22
Outlook
Thank you
23
24
Supplementary information
Excluding special items*
25
EBITDA and operating profit
* Refer to the supplementary information in this presentation for a reconciliation of EBITDA to reported operating profit and page 22 in our Q1 FY20 financial results booklet (available on www.sappi.com) for a definition of special items.
201 20
8
155
221
172
211
155
224
197
187
118
185
139
136 14
5
93
152
105
142
85
148
128
117
48
109
62
0
50
100
150
200
250
US$
milli
on
EBITDA Operating profit ex special items
26
Net debt/EBITDA development
* EBITDA is excluding special items.** The covenant Net debt/LTM EBITDA calculation has adjustments and therefore differs from that shown above.
2,38
0
2,24
8
2,28
6
1,94
6 2,04
0
1,91
6
1,91
7
1,77
1
1,73
4
1,65
2
1583
1408
1338
1329
1318
1322 1349
1632
1603
1568
1557
1680 17
28
1501
1916
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,600
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 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20
US$
milli
on
Net debt Net debt/LTM EBITDA**
3.0
4.6
Global packaging and speciality production sitesSappi Somerset (USA)Sappi Alfeld (Germany) Sappi Tugela (South Africa)Sappi Stockstadt (Germany) Sappi Condino (Italy)
Label Papers, Paperboard, Flexible Packaging
Flexible Packaging, Label, Paperboard, Containerboard , Silicone Base Papers,
Functional Papers
ContainerboardLabel Papers, Flexible Packaging, Containerboard
Flexible Packaging, Silicone Base Papers, Dye Sublimation Paper
Sappi Cloquet (USA)Sappi Maastricht (Netherlands) Sappi Ngodwana (South Africa)Sappi Lanaken (Belgium) Rockwell Dundee (Scotland)
Label Papers ContainerboardPaperboard Functional Papers Functional Papers andFlexible Packaging
Sappi Ehingen (Germany)
Containerboard Flexible Packaging, Label Papers, Inkjet Papers, Dye Sublimation Papers
Sappi Carmignano (Italy)
27
Accelerategrowth in
higher margingrowth
segments
Extractvalue from our
biorefinerystream
Enhancespecialisedcelluloseportfolio
Expandpaper
packaginggrades
Packaging and Speciality papers expansion plans
28
Europe Maastricht: complete, ramp-up by 2021
-160k CWF, +150k specialities (FBB) Ehingen: complete
-75k CWF, +60k specialities (WTL) Alfeld: Post 2020
+10k specialities (Various) Lanaken: enable CWF on PM8, as market develops
North America Somerset: construction done, 3 year ramp up
-150k CWF, +350k specialities (SBS)
29
Product Groups and ProductsEU Packaging
and Specialities
Sappi North America packaging offering
30
C1S PaperPaperboard (SBS)
Label Paper Bag PaperFolding Carton
LithoLamination
Food service Board
Proto C1S, Spectro C1S
Proto Litho LusterFSBLusterPlate
Bristols
LusterCote LusterPrintSpectro (C1S & C2S)
Packaging & specialities volume growth 2015 to 2020
672 733
786
947
1,110
-
200
400
600
800
1,000
1,200
1,400
2015 2016 2017 2018 2019 2020
Tons
'000
Flexpack Label Paperboard Self Adhesives Digital Imaging Functional papers Casting Containerboard Tissue
31
F
32
EU consumer and brand owner sustainability focusDesired outcome
Prevent or reduce the impact of packaging waste on the environment by avoiding and recycling packaging waste; preference for Monomaterials
Consequences Product design requires a “designed for recycling” approach
Recycling systems to be established and/or heavily expanded
Rewards easy to recycle packaging
Replacement for paper laminates and aluminum
Huge potential for Barrier papers and board
Low Carbon footprint is a competitive advantage
4EverGreen initiative just started with more than 60 participants
NA paperboard segments
33
PremiumSpectro (commercial print,
premium folding carton)
PerformanceProto and Proto Litho –folding carton and litho lamination applications
Food serviceLusterFSB and LusterCup – plates, trays & cup stock
Sources: RISI, Poyry, & Chartic; Premium volume includes a range of premium folding carton from Sappi estimations.
Performance (88 Brightness)
1.89M tons (47%)
Premium (92 brightness)400K tons (10%)
Food service & cup stock
(88 brightness)1.75M tons (43%)
Price
Quality
SA total containerboard market – local market share
34
966
992
967
1,00
0 1,01
2
44%
36% 37% 37% 37%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
940
950
960
970
980
990
1,000
1,010
1,020
FY15 FY16 FY17 FY18 FY19
Market Size (kton) Sappi Market share
Sappi
MondiMpact
Corruseal
New Era
NeopakOther+Import
Market Split Includes Cape Kraft and Enstra
The above market size includes virgin and recycled containerboard
Market size – paper board (SBB) EuropeSappi is No. 3 in SBB market in Europe with 12% market share
35
700 71
2 722 73
5 748
6%
8% 8%
8%
10%
0%
2%
4%
6%
8%
10%
12%
670
680
690
700
710
720
730
740
750
760
FY15 FY16 FY17 FY18 FY19
Market Size (kton) Sappi Market share
Sappi
Iggesund
Stora
Fedrigoni
BurgoOthers
Market share
Source: Smithers Pira / Risi / Own estimation
Market size – flexible packaging EuropeSappi is the market leader in flexible packaging in Europe
36
1,45
5 1,48
3 1,51
2 1,53
4 1,55
7
8%9% 9%
12%13%
0%
2%
4%
6%
8%
10%
12%
14%
1,400
1,420
1,440
1,460
1,480
1,500
1,520
1,540
1,560
1,580
FY15 FY16 FY17 FY18 FY19
Market Size (kton) Sappi Market share
Sappi
Billerud
Mondi
Ahlstrom
Others
Market share
Source: Smithers Pira / Risi / Own estimation
Capacity Limit reached
Market size – labels EuropeSappi is focusing on niches within labels (e.g. metallisation)
37
703 70
7 711 71
5 719 2%
2%
3%
5%
6%
0%
1%
2%
3%
4%
5%
6%
7%
695
700
705
710
715
720
725
FY15 FY16 FY17 FY18 FY19
Market Size (kton) Sappi Market share
UPM
Brigl
SappiFeldmühle
Others
Market Split
Source: Smithers Pira / Risi / Own estimation
Market size – self-adhesive EuropeSappi is No. 3 in Europe after UPM and Ahlstrom
38
491 50
2 512 52
2 533
10%11%
13%
18%
20%
0%
5%
10%
15%
20%
25%
470
480
490
500
510
520
530
540
FY15 FY16 FY17 FY18 FY19
Market Size (kton) Sappi Market share
UPM
Ahlstrom
Sappi
Delfort
Others
Market split
Source: Smithers Pira / Risi / Own estimation
Capacity Limit reached
Market size – digital solutions EuropeSappi is market leader in dye sublimation in Europe
39
35 40
45 50
58
17%
25%
0
0.05
0.1
0.15
0.2
0.25
0.3
-
10
20
30
40
50
60
70
FY15 FY16 FY17 FY18 FY19
Market Size (kton) Sappi Market share
Sappi
Neenah
F. Schoeller
Beaver
Hansol
Others
Market split
Source: Smithers Pira / Pöyry / Risi / Own estimation
40
Sappi Europe
* Sales less operating profit excluding special items divided by tons sold.** Refer to the supplementary information in this presentation for a reconciliation of EBITDA to reported operating profit and page 22 in our Q1 FY20 financial results booklet (available on www.sappi.com) for a definition of special items.
Q1 FY20 Q4 FY19 Q1 FY19
Tons sold (‘000) 795 801 809
Sales (EURm) 619 633 642
Price/Ton (EUR) 779 790 794
Cost/Ton* (EUR) 737 764 756
Operating profit excluding special items** (EURm) 33 21 30
Western Europe
41
Coated paper deliveries and prices
0.4
0.5
0.6
0.7
0.8
0.9
1
1.1
1.2
Q1
08
Q1
09
Q1
10
Q1
11
Q1
12
Q1
13
Q1
14
Q1
15
Q1
16
Q1
17
Q1
18
Q1
19
CWF Demand MCR Demand CWF 100gsm Sheets LWC 60gsm offset reels
Western Europe shipments including export.Source: Cepifine, Cepiprint and RISI indexed to calendar 1Q 2008.
42
Sappi North America
* Sales less operating profit excluding special items divided by tons sold.** Refer to the supplementary information in this presentation for a reconciliation of EBITDA to reported operating profit and page 22 in our Q1 FY20 financial results booklet (available on www.sappi.com) for a definition of special items.
Q1 FY20 Q4 FY19 Q1 FY19
Tons sold (‘000) 377 388 321
Sales (USDm) 370 394 351
Price/Ton (USD) 981 1,015 1,093
Cost/Ton* (USD) 979 972 1,065
Operating profit excluding special items** (USDm) 1 17 9
United States of America
43
Coated paper deliveries and prices
0.5
0.6
0.7
0.8
0.9
1
1.1
1.2
Q1
08
Q1
09
Q1
10
Q1
11
Q1
12
Q1
13
Q1
14
Q1
15
Q1
16
Q1
17
Q1
18
Q1
19
Domestic CWF shipments Domestic CWF purchases RISI price CFS #3 60lb rolls
US industry purchases defined as industry shipments, plus imports, less exports.Source: AF&PA and RISI indexed to calendar Q1 FY08.
44
Sappi South Africa
* Sales less operating profit excluding special items divided by tons sold.** Refer to the supplementary information in this presentation for a reconciliation of EBITDA to reported operating profit and page 22 in our Q1 FY20 financial results booklet (available on www.sappi.com) for a definition of special items.
Q1 FY20 Q4 FY19 Q1 FY19
Tons sold (‘000) 338 450 396
Sales (ZARm) 3,549 5,145 4,709
Price/Ton (ZAR) 10,500 11,433 11,891
Cost/Ton* (ZAR) 9,541 9,216 8,818
Operating profit excluding special items** (ZARm) 324 998 1,217
45
Paper pulp prices*
* Source: FOEX, CCF group.
EUR
/ton
400
500
600
700
800
900
1,000
1,100
400
500
600
700
800
900
1,000
1,100
1,200
1,300
NBSK Europe (USD) BHKP Europe (USD) Net BHKP China (USD) NBSK Europe (EUR) BHKP Europe (EUR)
46
Dissolving pulp prices*
* Source: CCF group
600
650
700
750
800
850
900
950
1,000
1,050
1,100
Imp SW DWP Imp HW DWP China origin DWP
US$
/ton
47
Textile fibre prices*
* Source: CCF group
800
1,200
1,600
2,000
2,400
2,800
Cotton 328 Cotton "A" Index PSF 1.4 D VSF 1.2 D VSF 1.5 D
US$
/ton
Cash flow
48
US$m Q1 FY20 Q4 FY19 Q1 FY19Cash generated from operations 136 176 197Movement in working capital (76) 132 (87)
Net finance costs paid (35) (5) (8)
Finance income received 2 3 3
Taxation (paid) refund (32) - (3)
Cash generated from operating activities (5) 306 102Cash utilised in investing activities (273) (133) (109)Capital expenditure (112) (135) (106)
Proceeds on disposal of assets - 1 -
Acquisition of subsidiary (158) - -
Other non-current asset movements (3) 1 (3)
Net cash generated (utilised) (278) 173 (7)
Excluding special items* reconciliation to reported operating profit
49
EBITDA and operating profit
* Refer to page 22 in our Q1 FY20 results booklet (available on www.sappi.com) for a definition of special items.
US$m Q1 FY20 Q4 FY19 Q1 FY19
EBITDA excluding special items* 139 185 197Depreciation and amortisation (77) (76) (69)
Operating profit excluding special items* 62 109 128Special items* - gains (losses) (7) (12) (5)
Plantation price fair value adjustment 6 5 3
Acquisition cost (5) (2) -
Net restructuring provisions (1) - -
Profit on disposal and written off assets - (7) -
Asset impairments - (7) -
Fire, flood, storm and other events (7) (1) (8)
Operating profit 55 97 123
Fibre properties and applications
50
Cellulosic fibre properties helping drive that growth
Source: IHS Global, RISI, Hawkins Wright.
Key strength Qualifies Issue
ApparelHome textilesNonwovens/Technical textiles
Overall value proposition
Applications
Function and feel
Appearance
Sustainability
1762
21
6627
7
5220
28
Cellulosic fibres Cotton Polyester
• On a pure property basis, cellulosic fibres are superior to cotton and differentiated on sustainability.
• Polyester is differentiated on strength/durability versus cotton and cellulosic fibres.
• Natural and attractive, ‘greener’ alternative to cotton
• Natural, functional and well established
• Cheap, durable and versatile
Durability
Absorbency Breathability Softness
Drape Dyeability
Brightness/Lustre
Renewable and biodegradeable
Resource efficiency
51
There is still significant headroom to increase the level of cellulosic fibre blending in most sub-categories
Source: Expert interviews.
POLYESTER
Future Today Gap Today Future Gap Today Future Gap COTTON CELLULOSIC
Apparel
Home textile
Towels 5% 5% 0% 80% 75% -6% 15% 20% +33%
Bedding 45% 55% +22% 45% 40% -11% 1% 2% +100%
Denim 5% 5% 0 95% 95% 0% 0% 0% 0%
Shirts 35% 40% +14% 50% 40% -20% 15% 20% +33%
T-shirts 30% 50% +67% 70% 50% -29% 3% 5% 0%
Dresses 10% 10% 0% 35% 25% -29% 55% 65% +18%
Suits 35% 40% +14% 25% 20% -20% ~1% ~2% +100%
Sportswear 85% 85% 0% 0% 0% 0% 15% 15% 0%
Casual wear 45% 50% +11% 45% 35% -22% 10% 15% +50%
Thank you
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