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.


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


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

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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


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


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


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


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


-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


Divisional Overview

Europe


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


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


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



Divisional Overview

North America


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


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


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.


19



Divisional Overview

Southern Africa


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


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.


22



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


Q&A


Supplementary Information


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


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.


st quarter 2011 results presentation · 2016-09-08 · 1q08 2q08 3q08 4q08 1q09 2q09 3q09 4q09 1q10...

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