st Quarter 2011 Results Presentation · 2016-09-08 · 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10...
Transcript of st Quarter 2011 Results Presentation · 2016-09-08 · 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10...
1st Quarter 2011Results Presentation
9 February 2011
| Analyst Presentation | 09 February 2011
Forward looking statements
Certain non-GAAP financial information is contained in this presentation that management believe may be useful in comparing thecompany’s operating results from period to period. Reconciliation's of certain of the non-GAAP measures to the corresponding GAAPmeasures can be found in the quarterly results booklet for the relevant period. These booklets are located in the ‘Investor Info’section of www.sappi.com.
Regulation G disclosure
Certain 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 of or 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, which do not relate to historical matters, identify forward-looking statements. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results and company plans and objectives to differ materially from those expressed or implied in the forward-looking statements (or from past results). Such risks, uncertainties and factors include, but are not limited to:•the impact of the global economic downturn, •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 raw material, energy and employee costs, and pricing), •adverse changes in the markets for the group’s products, •consequences of substantial leverage, including as a result of adverse changes in credit markets that affect our ability to raise capital when needed, •changing regulatory requirements, possible early termination of alternative fuel tax credits, unanticipated production disruptions (including as a result of planned or unexpected power outages), economic and political conditions in international markets, the impact of investments, acquisitions and dispositions (including related financing), any delays, unexpected costs or other problems experienced with integrating acquisitions and achieving expected savings and synergies and currency fluctuations. Weundertake no obligation to publicly update or revise any of these forward-looking statements, whether to reflect new informationor future events or circumstances or otherwise.
| Analyst Presentation | 09 February 2011
Summary
| 1Q 2011 Results | 09 February 2011
1st Quarter* 2011 Summary
• EPS 7 US cents; Q1 2010 loss per share 10 US cents
• Operating Profit US$137 million (ex special items);
Q1 2010: US$81 million (ex special items)
• Improved demand and pricing for the majority of our products
*14 week quarter
4
| 1Q 2011 Results | 09 February 2011
Group Financial Summary
Q1 10 Q4 10 Q1 11 YoYKey figures: (US$ million)Tons Sold ('000) 1 884 2 095 2 022 Sales 1 620 1 774 1 873 EBITDA ex special items* 193 227 246 Operating Profit ex special items 81 129 137Basic (Loss) EPS (US cents) (10) 16 7 Key ratios: (%)
Operating profit ex-items to sales 5.0 7.3 7.3Operating profit ex-items to capital employed 7.5 12.6 12.8Net Debt to total capitalisation 60.0 53.9 54.7
*Refer to the supplementary information in this presentation for a reconciliation of operating profit excluding special items to reported operatingprofit and page 16 in our Q1 2011 results booklet (available on www.sappi.com) for a definition and list of special items.
5
| 1Q 2011 Results | 09 February 2011
Operating Profit excluding special items *
92 97 88 89
25
-17 -13
38
81
54
75
129 137
-250
255075
100125150
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2008: $366m 2009: $33m 2010: $339m
*Refer to the supplementary information in this presentation for a reconciliation to reported operating profit and page 16 in our Q1 2011
results booklet for a definition of special items.
Two consecutive quarters of record operating profit
6
| 1Q 2011 Results | 09 February 2011
Divisional Contribution Trend
102 112 108 11469 42 75
138 130 120 110 151 137
81 75 73 67
3738 11
15 55 37 6282 1085 3
-1
2
-3 -1
4
-6-252575
125175225275
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
Fine Paper Sappi Southern Africa Corporate
1 8
7
1
EBITDA*
*EBITDA as shown above excludes special items. Refer to page 16 in our Q1 2011 results announcement bookletfor a definition of special items.
US$m
All areas contributing to improved performance
7
| 1Q 2011 Results | 09 February 2011
Cash Generated from Operations
155176
156136
95 9977
161
245
122
188 182
245
0
50
100
150
200
250
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
$623 million
$432 million $737 million
Good cash generation ability- Net cash negatively impacted by seasonal and technical effects
$USm
8
| 1Q 2011 Results | 09 February 2011
Net Debt
* Cash proceeds of US$536m for European Acquisition from rights offer not offset against debt
0
1 000
2 000
3 000
Q10
8
Q20
8
Q30
8
Q40
8
Q10
9*
Q20
9
Q30
9
Q40
9
Q11
0
Q21
0
Q31
0
Q41
0
Q11
1
Rights Offer to finance European Acquisition
European Acquisition completed Announced target to reduce net debt to approximately US$2B by 2012
Refinancing Completed: Re-paid Vendor Loan Note
US
$mDebt reduction remains a focus
9
| 1Q 2011 Results | 09 February 2011
2
7
(1)
(1)
(5)
10
9
16
-5 0 5 10 15 20
Q1 '11 Adjusted EPSOther
Plantation Fair value adj.Q1 '11 Basic EPS
Q4 '10 Adjusted EPSOther
BEE ChargesPlantation Fair Value adj.
Q4 '10 Basic EPS
1
Earnings Versus Prior Quarter
Q4 2010
Q1 2011
Less:
Add:
Less:
Add:
Less:
10
| 1Q 2011 Results | 09 February 2011
-10%
-5%
0%
5%
10%
15%
20%
25%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Divisional Operating Margins *
*The divisional operating margins exclude special items. Refer to page 16 in our Q1 2011 results announcement booklet for a definition of special items.
** Excludes the investment shut and the impact of the extra week in the quarter
Q1 2011 Margins:
Europe 3.3%
North America 6.0%
Southern Africa 17.0%
2008 2009 2010
NA excluding shut**
11
| Analyst Presentation | 09 February 2011
Divisional Overview
Europe
| 1Q 2011 Results | 09 February 2011
W. Europe Coated Paper Deliveries & Prices
0.60
0.70
0.80
0.90
1.00
1.10
1.20
Q1 2007
Q2 Q3 Q4 Q1 2008
Q2 Q3 Q4 Q1 2009
Q2 Q3 Q4 Q1 2010
Q2 Q3 Q4
CWF MCR CWF 100gsm sheets prices LWC 60gsm offset reels prices
Western Europe Shipments Incl. Export – Source Cepifine, Cepiprint and RISI
13
| 1Q 2011 Results | 09 February 2011
European Coated Paper Prices
500
600
700
800
900
1 000
CWF 100gsm Sheets CWF 100gsm Reels LWC 60gsm offset reels
Source: RISI
Germany (€/ton)
14
| 1Q 2011 Results | 09 February 2011
Sappi Fine Paper Europe
Q1 10 Q4 10 Q1 11 YoYTons Sold ('000) 944 994 1,012 Sales ($'m) 936 963 1,027 Price / Ton ($) 992 969 1,015
Price / Ton (€) 673 753 751 Cost / Ton* (€) 655 726 726
Operating profit ex items** ($'m) 25 34 34
• Significant improvement in volumes and average prices realized
• Input cost pressure from pulp and chemicals continues to drag on earnings
• Export markets were competitive
• Healthy demand for both coated grades, price realization should continue
* Sales less operating profit excluding special items divided by tons sold.** Operating profit excluding special items. Refer to the supplementary information in this presentation for a reconciliation to reported operating profit and page 16 in our Q1 2011 results booklet (available on www.sappi.com) for a definition of special items.
15
| Analyst Presentation | 09 February 2011
Divisional Overview
North America
| 1Q 2011 Results | 09 February 2011
US Coated Paper Prices and Shipments
US Industry Shipments and total US consumption – Source AF&PA and RISI
0.40
0.50
0.60
0.70
0.80
0.90
1.00
1.10
1.20
1.30
Q1 2007
Q2 Q3 Q4 Q1 2008
Q2 Q3 Q4 Q1 2009
Q2 Q3 Q4 Q1 2010
Q2 Q3 Q4
Q1
2007
= 1
00
Domestic CFS shipments Total US CFS consumption CFS #3 60lb Rolls prices
Continued recovery in demand
17
| 1Q 2011 Results | 09 February 2011
US Coated Paper Prices
600
700
800
900
1 000
1 100
1 200
Jan-
01
Jan-
02
Jan-
03
Jan-
04
Jan-
05
Jan-
06
Jan-
07
Jan-
08
Jan-
09
Jan-
10
Jan-
11
CFS #3 60lb Rolls CGW #4 50lb Rolls CGW #5 40lb Rolls
(US$/ton)
Coated paper prices are slowly rising
Source: RISI
18
| 1Q 2011 Results | 09 February 2011
Sappi Fine Paper North America
Q1 10 Q4 10 Q1 11 YoYTons Sold ('000) 322 352 364 Sales ($'m) 320 364 382 Price / Ton ($) 994 1,034 1,049 Cost / Ton* ($) 935 915 986Operating Profit ex items** ($'m) 19 42 23
• Operating profit ex-items up 21% from Q1 2010
• Higher price realization from coated paper sales & specialty business
• Strong underlying performance, Somerset fully operational, delivering lower
energy costs and increased pulp production.
* Sales less operating profit excluding special items divided by tons sold.** Operating profit excluding special items. Refer to the supplementary information in this presentation for a reconciliation to reported operating profit and page 16 in our Q1 2011 results booklet (available on www.sappi.com) for a definition of special items.
19
| Analyst Presentation | 09 February 2011
Divisional Overview
Southern Africa
| 1Q 2011 Results | 09 February 2011
NBSK Pulp Price*
300
400
500
600
700
800
900
1 000Ja
n-0
1
Jan
-02
Jan
-03
Jan
-04
Jan
-05
Jan
-06
Jan
-07
Jan
-08
Jan
-09
Jan
-10
Jan
-11
NBSK (US$/ton) NBSK (EUR/ton)
* Source: Average monthly FOEX delivered European prices
$949/ton
€714/ton
Pulp prices remain high
21
| 1Q 2011 Results | 09 February 2011
Sappi Southern Africa
Q1 10 Q4 10 Q1 11 YoYTons Sold - Pulp & Paper ('000) 450 460 452 Sales - Pulp & Paper ($'m) 350 426 447 Price / Ton - Pulp & Paper ($) 778 926 989 Price / Ton - Pulp & Paper (ZAR) 5,834 6,808 6,870 Cost / Ton* - Pulp & Paper (ZAR) 5,351 5,881 5,655 Operating Profit ex items** ($'m) 29 58 79
• Performance improved further during the quarter
• Higher sales volumes and prices for our chemical cellulose business –
demand remains strong for viscose fibers, especially in Asia
• Strong demand for packaging grades, weaker demand for fine papers.
• Low-priced imports squeezed margins in some business segments.
* Sales less operating profit excluding special items divided by tons sold.** Operating profit excluding special items. Refer to the supplementary information in this presentation for a reconciliation to reported operating profit and page 16 in our Q1 2011 results booklet (available on www.sappi.com) for a definition of special items.
22
| 1Q 2011 Results | 09 February 2011
Outlook
• We’re more confident in the sustainable profitability trend of the business.
• Chemical cellulose business continues to outperform our other business
lines – we intend to accelerate our plans to invest in more capacity
• Cost pressures as commodity prices rise
• We intend to reduce net debt this year
• We aim to reduce finance costs by applying cash toward debt
o Today announce tender offer of $150m of June 2012 bonds
• Second quarter operating profit ex special items to continue improving
trend relative to prior year, but to be below that of the 1st financial quarter
23
| Analyst Presentation | 09 February 2011
Q&A
| Analyst Presentation | 09 February 2011
Supplementary Information
| Analyst Presentation | 09 February 2011
Cash Flow
Q1 10 Q4 10 Q1 11245 182 245
- Movement in working capital (170) 181 (335) - Net finance costs paid (64) (66) (63) - Taxation paid (4) (1) (2) - Dividends paid - - - - Cash utilised in investing activities (37) (58) (41)
Cash flow after investing activities (30) 238 (196)
Cash generated from operations
US$ million
| Analyst Presentation | 09 February 2011
Q1 10 Q4 10 Q1 11Operating profit as reported 1 158 121 Plantation price fair value (gain) loss 95 (29) 11 Profit on the sale of assets 1 (6) - Restructuring provision released 38 - 3 Asset impairment (reversal) (8) 2 - Alternative fuel tax credit (49) - - Assets written off 1 1 - BEE Charge - - 1 Fire, flood and related events 2 3 1 Operating profit excluding special items 81 129 137
Operating Profit - Sappi Group
US$ million
Reconciliation of reported operating profit to operating profit excluding special items *
* Refer to page 16 in our Q1 2011 results booklet (available on www.sappi.com) for a definition of special items.
28