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Smurfit Kappa Group
Imperial Capital Conference, October 2011, New York
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Disclaimer
The presentation contains forward-looking statements, including statements about theCompany's intentions, beliefs and expectations. These statements are based on theCompany's current plans, estimates and projections, as well as the Company'sexpectations of external conditions and events.
Forward-looking statements involve inherent risks and uncertainties and speak only as ofthe date they are made. The Company undertakes no duty to and will not necessarilyupdate any such statements in light of new information or future events, except to theextent required by any applicable law or regulation.
Recipients of this presentation are therefore cautioned that a number of important factorscould cause actual results or outcomes to differ materially from those expressed in anyforward-looking statements.
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Eastern Europe
2%Latin America
17%
Western Europe
81%
Other7%
Resources1%
Specialties11%
Containerboard8%
Corrugated boxes73%
Sales by product type (2010) Sales by market (2010)
Source: Company data
SKG | Packaging leader in Europe and Latin America
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Focus on maximising returns
Market leader in a growth industry
Low earnings volatility
Resilient customer base with c. 60% FMCG
Geographic & product diversity
Integrated supply chain
Continuing focus on operating efficiency
Proven ability to deliver in tough market conditions
Significantly enhanced capital structure
SKG’s ROCE evolution
11.3%10.3%
6.6%
9.9%
11.9%
FY'07 FY'08 FY'09 FY'10 H1'11(LTM)
Source: company reports
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SKG recent successes (sample)
Kraft Foods Significant additional pan-European business gain
Nestle Supplier of the year award(#1 out of 118 suppliers)
Coca-Cola Enterprises
Award best Corporate Responsibility & Sustainability
Unilever Award “Winning through sustainability”
A packaging company
Corrugated | The packaging of choice
Marketing medium
Merchandising aid
Recyclable & Renewable
SKG’s “One-stop-shop”
A response to every customer need
Unique innovation & technical abilities
Continuous investments to enhance offering
Added-value increasingly recognised by our customers
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Diversified & resilient customer base
19 countries involved
>100 Smurfit Kappa plants
70% in contracts > 2 years
=> 17.5% growth from 2006 to 2010
Customers’ split
Source: SKG, 2010 3rd party corrugated shipments (million sqm)
0
1,000
2,000
3,000
4,000
Pan EuropeanSales
Multi National NationalCustomers
LocalCustomers
Volu
me
in m
sqm
18% 52%14%16%
Pan-European Customers overview
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Indexed, 35%
Fixed, 9%
Negotiated, 56%
Diversified & resilient customer base
Top 5 European box customers < 10% total
Majority of volume in resilient sectors
Source: SKG, corrugated 3rd party sales
0
20
40
60
80
100
120
140
160
180
200
Customer 1 Customer 2 Customer 3 Customer 4 Customer 5
Corrugated Volume 2010 (msqm)
2,4% 2,1% 2,1% 1,7% 1,1%
% of SKG Volume
Pricing structure
Fast Moving
Consumer Goods,
57%
Industrials, 35%
Others, 8%
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1,080
1,268
1,4011,462 1,485
2006 2007 2008 2009 2010
Attractive exposure to Latin American markets
Portfolio of countries minimising risk
Continued volume & pricing progress
Capital investments to follow growth
Represented 22% of Group’s EBITDA in H1
Strong revenue growth (US$m)
+8.3% CAGR
Superior EBITDA margin of 18.3% in H1
Source: company
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Resilient business model delivering strong performance
15.2%
19.2%
14.6%13.9%
17.7%
13.3%11.9%
18.5%
12.2%
13.9%
17.8%
13.5%14.0%
18.3%
13.8%
Packaging Europe Latin America SKG Group
FY'07 FY'08 FY'09 FY'10 H1'11
EBITDA margins evolution
Focus on debt paydown
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2011 H1 Highlights | Delivering on net debt reduction
14% revenue growth and 25% EBITDA growth
Net debt reduction of €107m in H1. €288m in LTM
Net debt/EBITDA ratio reduced to below 3.0x
Cash generation to accelerate in H2
Year-end 2011 net debt target €2.85bn
Continued net debt reduction
3,291
3,123 3,1103,061
3,003
2,850
'Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Dec-11target
Source: company, net debt in €m
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-37
77
18
-69
78
223204
154 151
2007 2008 2009 2010 2011
Free Cash Flow H1 (€m) Free Cash Flow H2
Free Cash Flow generation to accelerate in H2
Strong first half cash flow performance in 2011
Continued active working capital management
WC/Sales: Jun-09 = 9.8%
Jun-10 = 9.5%
Jun-11 = 9.3%
Disciplined capital allocation
Maximising free cash flow for debt paydown
Free cash flow | H1 vs H2
Target net debt reduction to €2.85bn by year-end 2011
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3.2
3.4
4.1
3.4
3.0
'Dec-07 Dec-08 Dec-09 Dec-10 Jun-11
Significantly enhanced capital structure
Net debt/EBITDA below 3.0x
Lowest leverage level since 2007
Strong liquidity position
78% interest fixed
Long-term debt maturity profile
Next material maturity in Dec-13
Source: Company reports
Trading & outlook
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2011 H1 | Favourable trading environment
H1’11 vs. H1’10
Recovered fibre 31%
Wood 16%
Other raw materials 31%
Distribution 3%
Energy 5%
Source: company, SKG Group
Higher input costs Healthy demand growth
Sharp increase in input costs
Cost take-out efforts support margin resilience
€39m CTO in H1, target €150m by 2012
Continued successful box price recovery
Corrugated box prices +4.5% through H1
Further box pricing required in H2
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Public market data
Jun-11 Sept-11
Global 3.4% 3.0%
US 2.5% 1.5%
Eurozone 1.9% 1.6%
Asia/Pacific 7.0% 6.8%
Latin America 4.6% 4.0%
Source: global insight, September 2011
2011 GDP forecasts evolution More challenging macro-environment
Commodity costs off peaks
OCC reduced c. €20/T
Recycled containerboard reduced c. €35/T
Kraftliner reduced c. €45/T
Some market-related downtime announced for September
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Outlook | H2 2011
In H2, SKG is maintaining its strong focus on
Delivering enhanced packaging solutions for its customers
Driving corrugated pricing recovery and cost efficiency
Maximising cash generation for debt paydown
Target net debt reduction to €2.85bn by year-end 2011
Appendix
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A clear strategy
Commercialstrategy
Packaging, not paperFocus on customer service & Innovation
Operationalstrategy
Driving cost reductionJudicious & disciplined capital expenditure
Financialstrategy
Cash flow generationProactive capital structure management
Corporatestrategy
Reduce net debt/EBITDA ratioAcquire & integrate well invested assets
Peoplestrategy
Decentralised business modelOwnership culture
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Competitive positioning from raw materials to packaging
WoodRecovered Paper
(OCC)
Fibre sourcing (commodities)
Grip on supplyProximity to sources
Containerboard Mills (Virgin/Recycled)
10 less efficient mills closed since 2005
Competitive cost position
Paper-basedPackaging
Service & innovation Proximity to customer
location
SKG competitive advantages
Adding value
Integrated supply chain reducing earnings volatility
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Europe Kraftliner 1.6 32% No 1
Recycled containerboard 3.0 16% No 1
Corrugated 4.5 20% No 1
Solid board / solid board packaging 1.0 / 0.4 - No 1
Sack paper 0.1 - No 3
Latin America Containerboard 0.7 Mex 10% - Ven 64% No 3
Corrugated 0.8 Mex 12% - Ven 70% No 1
World Containerboard 5.3 6% No 4
Corrugated 5.3 7% No 2
Region GradeCapacity
(m tonnes)% of relevant
marketEst. market
position
Source: Company estimates
80% of SKG business in containerboard and corrugated
SKG | Packaging leader in Europe & Latin America
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2011 H1 | Financial highlights
Source: Company data
€m H1 2011 H1 2010
Revenue 3,670 3,226
Pre-exceptional EBITDA 507 404
EBITDA Margin 13.8% 12.5%
Pre-exceptional EPS (€cts) 47.4 8.4
ROCE (LTM) 11.9% 7.2%
Free cash flow 78 (69)
Net debt 3,003 3,291
Net debt/EBITDA 3.0x 4.2x
14% revenue growth reflects good demand & continued pricing recovery
25% EBITDA growth despite sharply higher input costs
Pre-exceptional EPS €0.47
ROCE of 11.9% highest since 2007
9% reduction in net debt year-on-year
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2011 Q2 | Financial highlights
Source: Company data
€m Q2 2011 Q2 2010 Change Q1 2011 Change
Revenue 1,867 1,696 10% 1,803 4%
Pre-exceptional EBITDA 264 221 20% 243 9%
EBITDA Margin 14.2% 13.0% - 13.5% -
Pre-exceptional EPS (€cts) 31.4 9.0 248% 16.0 96%
Free cash flow 66 (12) - 12 450%
Net debt 3,003 3,291 (9%) 3,061 (2%)
Net debt/EBITDA 3.0x 4.2x - 3.2x -
Smurfit Kappa Investor RelationsBeech Hill, Clonskeagh,Dublin 4, +353 1 202 7000Ireland. ir@smurfitkappa.com
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