Half-yearly results for the six months ended 30 June 2018
3 August 2018
2
Mondi: Forward-looking statements disclaimer
This document includes forward-looking statements. All statements other than statements of historical facts included herein, inc luding, without limitation, those regarding Mondi’s financial position, business strategy, market
growth and developments, expectations of growth and profitability and plans and objectives of management for future operations, are forward-looking statements. Forward-looking statements are sometimes identified by the use
of forward-looking terminology such as “believe”, “expects”, “may”, “will”, “could”, “should”, “shall”, “risk”, “intends”, “estimates”, “aims”, “plans”, “predicts”, “continues”, “assumes”, “positioned” or “anticipates” or the negative
thereof, other variations thereon or comparable terminology. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements
of Mondi, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements and other statements
contained in this document regarding matters that are not historical facts involve predictions and are based on numerous assumptions regarding Mondi’s present and future business strategies and the environment in which
Mondi will operate in the future. These forward-looking statements speak only as of the date on which they are made.
No assurance can be given that such future results will be achieved; various factors could cause actual future results, performance or events to differ materially from those described in these statements. Such factors include in
particular but without any limitation: (1) operating factors, such as continued success of manufacturing activities and the achievement of efficiencies therein, continued success of product development plans and targets, changes
in the degree of protection created by Mondi’s patents and other intellectual property rights and the availability of capital on acceptable terms; (2) industry conditions, such as strength of product demand, intensity of competition,
prevailing and future global market prices for Mondi’s products and raw materials and the pricing pressures thereto, financia l condition of the customers, suppliers and the competitors of Mondi and potential introduction of
competing products and technologies by competitors; and (3) general economic conditions, such as rates of economic growth in Mondi’s principal geographical markets or fluctuations of exchange rates and interest rates.
Mondi expressly disclaims
a) any warranty or liability as to accuracy or completeness of the information provided herein; and
b) any obligation or undertaking to review or confirm analysts’ expectations or estimates or to update any forward-looking statements to reflect any change in Mondi’s expectations or any events that occur or circumstances that
arise after the date of making any forward-looking statements,
unless required to do so by applicable law or any regulatory body applicable to Mondi, including the JSE Limited and the LSE.
3
Highlights
Financial overview
Market and operational review
Key strategic developments
Outlook
Appendices
4
730 752 852
18.5%19.3%
21.3%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
22.0%
H1 2017 H2 2017 H1 2018
ROCE (%)
● Strong financial performance
○ Underlying EBITDA of €852 million, up 17%, margin of 22.9%
○ Profit before tax of €490 million, up 6%
○ Basic underlying earnings of 89.2 euro cents per share, up 26%
○ Cash generated from operations up 18%
○ Return on capital employed 21.3%
● Excellent performance from Packaging Paper
● Good progress on major capital investment projects
● Integration of recent acquisitions on track, expanding the Group’s
containerboard portfolio and network of industrial bag plants in
high growth regions
● Interim dividend declared of 21.45 euro cents per share
71.0 77.9 89.2
H1 2017 H2 2017 H1 2018
Strong financial performance
Underlying EBITDA and ROCE€ million
Basic underlying earnings per shareeuro cents per share
+
Highlights
The Group early adopted the new 'Leases' accounting standard, IFRS 16. All 2017 comparative figures in this presentation have been restated where applicable.
5
Highlights
Financial overview
Market and operational review
Key strategic developments
Outlook
Appendices
6
Operating financial highlights
€ million
H1
2017
H2
2017
H1
2018
% change
vs H1 2017
% change
vs H2 2017
Group revenue 3,582 3,514 3,727 4% 6%
Underlying EBITDA 730 752 852 17% 13%
% Margin 20.4% 21.4% 22.9%
Underlying operating profit 503 526 630 25% 20%
% Margin 14.0% 15.0% 16.9%
Group ROCE 18.5% 19.3% 21.3%
Strong performance on all key metrics
7
Underlying EBITDA development
Higher average selling prices more than offsetting higher costs and negative currency effects
H1 2017 Sales
volumes
Variable
costs
Cash fixed
costs
Fair value
gain on forestry
assets
H1 2018
730
338 (123)
(28)(50)
(8) 852
Currency
effects
(7)
Underlying EBITDA development€ million
Other
0
Sales
prices
8
730
852
1 Breakdown excludes corporate costs
Business unit contribution
50%
12%
12%
26%
Packaging Paper
Fibre Packaging
Consumer Packaging
Uncoated Fine Paper
H1 2017 Packaging
Paper
Fibre
Packaging
Consumer
Packaging
Uncoated
Fine Paper
Corporate H1 2018
4 (6)
(28)
(10)129
Business unit underlying EBITDA development€ million
H1 2018 underlying EBITDA contribution by business unit¹%
+
5
Fibre packaging value chain – main contributor to EBITDA growth
Fibre packaging
value chain
9
Financial review
€ million
H1
2017
H2
2017
H1
2018
% change
vs H1 2017
% change
vs H2 2017
Underlying EBITDA 730 752 852 17% 13%
Depreciation, amortisation and impairments (227) (226) (222) 2% 2%
Underlying operating profit 503 526 630 25% 20%
Net finance costs (47) (38) (40) 15% (5%)
Net profit from equity accounted investees – 1 –
Underlying profit before tax 456 489 590 29% 21%
Underlying tax charge (87) (94) (132) (52%) (40%)
Non-controlling interests (25) (18) (26) (4%) (44%)
Underlying earnings 344 377 432 26% 15%
Special items (after tax and non-controlling interests) 5 (58) (81)
Profit after tax and non-controlling interests 349 319 351 1% 10%
Basic earnings per share (euro cents) 72.1 65.8 72.5 1% 10%
Basic underlying earnings per share (euro cents) 71.0 77.9 89.2 26% 15%
10
● Net debt was up due to:
○ payment of the 2017 special dividend
(€484 million)
○ completion of acquisitions (€415 million1)
● Lower finance costs driven by a lower
effective interest rate
● In April 2018, issued a 1.625% €600 million
Eurobond with an 8-year tenor extending
the Group’s maturity profile and maintaining
our strong liquidity
● Public credit ratings
○ Standard & Poor’s upgraded to BBB+
(stable outlook)
○ Moody’s Investors Service maintained at
Baa1 (stable outlook)
Net debt and interest
€ millionH1
2017
H2
2017
H1
2018
Net debt 1,679 1,532 2,450
Average net debt 1,564 1,596 1,708
Net interest expense2
(before capitalised interest) 43 32 37
Effective interest rate 5.5% 4.0% 4.3%
Committed facilities 2,005 1,987 2,532
Of which undrawn 667 791 429
Net debt/12-month trailing underlying EBITDA (times) 1.2 1.0 1.5
+
1 On a debt and cash-free basis2 Interest expense on bank overdrafts, loans and lease liabilities net of investment income
Maintaining a robust financial position
11
Cash flow effects – movement in net debt
Investment in the business and distribution to shareholders
Net debt at
31 December
2017
Cash generated
from operations
(excluding
working capital)
Ordinary
dividends
paid1
Tax and
interest paid
and other
Movement
in working
capital
Capital
expenditure
and investment
in forestry
assets
Acquisitions2
1,532 (870) 224
375143
2,450
Net debt at
30 June
2018
148
Movement in net debt€ million
414
1 To shareholders and non-controlling interests 2 Excludes €1 million of deferred acquisition consideration
484
1,552
Special
dividend
paid
Net debt before
acquisitions and
special dividend
21.4519.10
20142013 2015 2016 2017¹ 2018
12
Continued growth in shareholder returns
Total ordinary dividend
CAGR: 15%
Dividends declaredeuro cents per share
Interim dividend Final dividend
36
42
52
57
62
Interim dividend of 21.45 euro cents per share declared
1 Excludes 2017 special dividend of 100 euro cents per share which was distributed in addition to the ordinary dividend
13
Reorganisation of business units
● Effective from 1 August 2018, the Group reorganised its business units to achieve improved strategic alignment and
operational coordination across the fibre based packaging value chain
● The changes to the Group’s business units, and consequently to the Group’s segmental reporting, are as follows:
○ Packaging Paper and Fibre Packaging were replaced by a single business unit called Fibre Packaging
○ No changes to the Consumer Packaging or Uncoated Fine Paper business units
● The reorganisation has no impact on the overall Group result
● The Group’s restated segmental reporting is disclosed in the half-yearly results announcement
14
Highlights
Financial overview
Market and operational review
Key strategic developments
Outlook
Appendices
15
301 338 430
22.8%
25.6%
31.3%26.4%
29.4%
32.8%
H1 2017 H2 2017 H1 2018
ROCE Underlying EBITDA margin
● Strong performance – underlying EBITDA up 43%
● Driven by:
○ higher selling prices
○ higher sales volumes
○ mix improvements
○ cost reduction programmes
● Partly offset by:
○ higher costs, with the exception of paper for recycling
○ negative currency effects
● Decision taken to stop production of in-line silicone coated
products at Štětí – production of speciality kraft paper to
continue, with off-line coating at our release liner operations
● Completed sale of flat sack kraft paper mill in Pine Bluff,
Arkansas (130ktpa capacity)
● Powerflute acquisition completed
Packaging Paper
Underlying EBITDA, margin and ROCE€ million
+
Packaging Paper Fibre Packaging Consumer Packaging Uncoated Fine Paper
300
400
500
600
700
800
900
06/2013 06/2014 06/2015 06/2016 06/2017 06/2018
16
Source: FOEX Indexes Ltd
Containerboard
● Markets remain robust: good demand and limited
capacity additions continue to support pricing
● Higher average selling prices following increases
implemented during 2017 and Q1 2018
● Further price increases of €40/tonne announced for
selected virgin containerboard grades in Europe from
September 2018
Packaging Paper | industry fundamentals
White top kraftlinerUnbleached kraftliner
Selling prices€/tonne
+
Packaging Paper Fibre Packaging Consumer Packaging Uncoated Fine Paper
Recycled containerboard
17
0.80
0.85
0.90
0.95
1.00
1.05
1.10
06/2013 06/2014 06/2015 06/2016 06/2017 06/2018
Source: Mondi
Sack kraft paper
● Implemented sack kraft paper price increases (8% to 9%
on 2017 average) from January 2018
● Markets remain very tight
○ good demand, particularly in our export markets
○ constrained supply
● Further price increases of 5% to 7% implemented in
Europe by the end of Q2 (most volumes integrated)
Speciality kraft paper
● Good demand
● Higher average selling prices on H1 and H2 2017
● Drive to replace plastic carrier bags with paper based
alternatives
Packaging Paper | industry fundamentals
Unbleached sack kraft paper - Europe
Selling pricesPrices indexed to June 2013
+
Packaging Paper Fibre Packaging Consumer Packaging Uncoated Fine Paper
101 93 105
13.0%
11.2% 11.2%
9.8%
9.1%
9.8%
H1 2017 H2 2017 H1 2018
ROCE Underlying EBITDA margin
18
Corrugated Packaging
● Implemented price increases to compensate:
o higher paper input costs
o negative currency effects
● Continues to benefit from growing e-commerce activity
● Stable sales volumes on strong comparable prior year
● Focus on continuous improvement to reduce conversion costs
and further enhance product offering, quality and service
Industrial Bags
● Volume growth of 3.6% compared to H1 2017
● 2018 annual contracts – price increases largely reflect the full
cost impact of paper price increases
● Good cost management and benefit from restructuring measures
● Acquired Egyptian industrial bags plant in June 20181 and agreed
to acquire a control position in another plant near Cairo
● Working closely with Consumer Packaging to develop paper
based packaging solutions
Fibre Packaging
+
Underlying EBITDA, margin and ROCE€ million
Packaging Paper Fibre Packaging Consumer Packaging Uncoated Fine Paper
1 For EGP510 million (€25 million) on a debt and cash-free basis
19
● Steady underlying performance offset by negative currency
and one-off effects
● Benefiting from:
○ good growth in selected value-added segments in
technical films and consumer goods packaging
○ programme launched in the second half of 2017 to
restructure the cost base
● Short-term performance held back by declining volumes in
personal care components and certain weaker plants in the
portfolio
● Progressing with restructuring our UK operations, including
the closure of our plant in Scunthorpe
● New business opportunities for flexible packaging – typically
uses 70% less plastic than rigid based alternatives
Consumer Packaging
+
109 113 103
9.8%10.4% 10.4%
13.0%
14.0%
12.5%
H1 2017 H2 2017 H1 2018
ROCE Underlying EBITDA margin
Underlying EBITDA, margin and ROCE€ million
Packaging Paper Fibre Packaging Consumer Packaging Uncoated Fine Paper
20
● Strong performance
○ Underlying EBITDA of €230 million
○ ROCE of 26.5%
● Higher average selling prices offset by:
○ higher costs
○ extended shut at Richards Bay
○ lower fair value gain on forestry assets
○ negative currency effects
● Ceasing production at one of our uncoated fine paper
machines at Merebank during H2 2018 (70ktpa capacity)
● Acquired around 11,000 hectares of well-located forest
plantations in KwaZulu-Natal (South Africa)1
Uncoated Fine Paper
+
240 224 230
27.1% 26.6% 26.5%
25.3% 25.3% 24.4%
H1 2017 H2 2017 H1 2018
ROCE Underlying EBITDA margin
Underlying EBITDA, margin and ROCE€ million
Packaging Paper Fibre Packaging Consumer Packaging Uncoated Fine Paper
1 For ZAR408 million (€27 million) on a debt and cash-free basis
21
500
550
600
650
700
750
800
850
900
06/2013 06/2014 06/2015 06/2016 06/2017 06/2018
A4 B-copy Pulp (BHKP)
Source: FOEX Indexes Ltd
Uncoated Fine Paper
● Higher European prices following the implementation of
price increases during 2017 and at the end of March 2018
● Mondi’s uncoated fine paper sales volumes higher in
H1 2018 on prior year despite ongoing structural demand
decline in mature markets – continue to benefit from:
○ superior cost positioning
○ emerging market exposure
● Implemented further price increases in July of 2% to 6% for
our range of uncoated fine papers in Europe with a further
price increase of up to 6% announced for
implementation in September
Uncoated Fine Paper | industry fundamentals
Pulp and A4 B-copy prices€/tonne
+
Packaging Paper Fibre Packaging Consumer Packaging Uncoated Fine Paper
22
Highlights
Financial overview
Market and operational review
Key strategic developments
Outlook
Appendices
23
Key strategic developments
1 On a debt and cash-free basis
Leveraging key industry trends – sustainability, e-commerce and convenience
Acquisitions totalling €415 million1 completed in H1 2018:
o Powerflute (Finland): €363 million
o NPP (Egypt): €25 million
o Forest plantations (South Africa): €27 million
Štětí kraft paper mill modernisation project on track to start-up towards the end of
the year
Ružomberok kraft top white machine (300 ktpa) expected start-up in 2020
(subject to permitting), pulp mill upgrade ongoing
Seeking opportunities to leverage customer relationships and product know-how –
uniquely positioned as a leading producer of both plastics and paper based solutions
Joined the Ellen MacArthur Foundation New Plastics Economy Initiative – actively
working with stakeholders to find innovative solutions that improve the sustainability
of packaging
Growing through acquisitions
Progress made on major capital expenditure
projects
Sustainable packaging
Finding solutions with our customers
24
BarrierPack recyclable
● Fully recyclable new plastic laminate, recipient of the ‘Best Technology Innovation in Plastics Recycling’ award1
● Sustainable packaging solution, with quality and functionality performance properties equivalent to conventional materials
● Supports circular economy principles
shoppingworld by Mondi
● Leading European speciality kraft paper producer offering a broad range of paper grades for bags and shoppers – 1st
European shopping bag summit organised by Mondi in April 2018
● White or brown, for food or fashion, entirely virgin-based or with recycled fibres, highly functional or strikingly attractive
● Outstanding quality paper grades to enhance brand awareness and positive consumer shopping experience
Point-of-sale: Baca Stand
● Awarded with a World Star award● An easy forming, tape-free corrugated
display solution consisting of modular trays with a mid-support structure
● Enabling simple and fast filling during production as well as easy access for end-consumers
● Scores in terms of efficiency as it uses 46% less material and requires 20% less handling time per pallet compared to conventional stack boxes1 2018 Plastics Recycling Europe Awards
25
Highlights
Financial overview
Market and operational review
Key strategic developments
Outlook
Appendices
26
Outlook
The trading environment remains positive going into the second half of the year, with pricing in key fibre based product
segments remaining supportive. The second half of the year will be impacted by the usual seasonal downturn in Uncoated
Fine Paper. We also expect continued pressure on the cost base across the Group, mitigated by our ongoing proactive and
comprehensive cost reduction programmes.
Mondi is uniquely positioned to develop sustainable fibre and plastic based packaging solutions. With our robust business
model, focus on leveraging key industry trends of sustainability, e-commerce and convenience, and culture of driving
performance, we remain confident of sustaining our track record of delivering value accretive growth.
Summary
Q&A
29
Highlights
Financial overview
Market and operational review
Key strategic developments
Outlook
Appendices
30
Mondi at a glance
2017
revenue1
&
underlying
EBITDA
margin
Products
22.3% 13.5% 25.3%
€3,735m €1,646m €1,832m
52%
1 Segment revenues, before elimination of inter-segment revenues2 Packaging Paper and Fibre Packaging were replaced by a single business unit called Fibre Packaging effective from 1 August 2018
Consumer Packaging Uncoated Fine Paper Fibre Packaging2
23%
25%
31
Leading market positions
Consumer flexible
packaging
Kraft paper
Industrial
bags
#3
Corrugated
packaging
Virgin
containerboard
Containerboard
Commercial
release liner
Global
Uncoated
fine paper
Please see sources and definitions at the end of this document
Europe Emerging Europe South Africa
Uncoated
fine paper
#1
32
Strong global presence
Revenue by location of customer%
Revenue by location of production%
+
23%
39%
9%
6%
10%
13%
Emerging Europe Western Europe Russia South Africa North America Other
35%
36%
13%
8%
7%1%
Group revenue: €3,727 million Group revenue: €3,727 million
33
Technical guidance
2018 guidance
Capital expenditure range in 2018 and 2019 (per annum) €700 – 800 million
Depreciation and amortisation €440 – 470 million
Estimated impact of maintenance shuts ± €115 million
Working capital as a % of turnover 12 – 14%
Effective tax rate ±22%
34
Our cash flow priorities remain unchanged
Free cash flow
priorities
As appropriate
Maintain our strong and stable financial position
and investment grade credit metrics
Support payment of dividends to our shareholders
Evaluate growth opportunities through M&A and/or
increased shareholder distributions
Grow through selective capital
investment opportunities
35
Creating sustainable value through our strategic framework
36
Our cost advantaged operations
1 Includes unbleached kraftliner, white top kraftliner, nordic and semi chemical fluting, testliner, recycled fluting, unbleached sack kraft paper, bleached sack kraft paper, uncoated fine paper(including value added grades) and BHKP
2 Based on delivered cost to Frankfurt except BHKP (delivered to Rotterdam), uncoated fine paper – Merebank (delivered to South Africa) and recycled containerboard – Tire (delivered to Turkey)3 European capacity except white top kraftliner, bleached & unbleached sack kraft paper and BHKP (global capacity) and uncoated fine paper – Merebank (South Africa only) Source: RISI and Mondi estimates, Q1 2018. BHKP ZAR/EUR FX rate adjusted to closing rate (at 30 June 2018) of 16.05
Mondi capacity by quartile of relevant industry cost curve1, 2, 3
%
1st quartile:
53%2nd quartile:
26%
Around 80% in the 1st or 2nd cost quartile
37
Acquisitions completed during H1 2018
Powerflute
● Acquired for a total consideration of €363 million on a debt and cash-free basis
(completed June 2018)
● Integrated pulp and paper mill in Kuopio (Finland) with an annual production capacity of
285,000 tonnes of high-performance semi-chemical fluting
● Production sold to a diverse range of customers, primarily for packaging fresh fruit and
vegetables, but also other end-uses such as electronics, chemicals and pharmaceuticals
● Around half of the company’s production is sold in Europe, while the remainder is exported
globally
Egyptian industrial bags plants
● Acquired NPP in June 2018, an industrial bags producer, operating one plant in Giza
near Cairo (Egypt) for a total consideration of €25 million (EGP510 million) on a debt and
cash-free basis
● Acquisition further expands our production network in the fast growing Middle East region
● Mondi signed an agreement to acquire a control position in another plant near Cairo in
December 2017, completion expected in Q3 2018
38
562 595 465 611 347
159% 164%
124%
138%
158%
-5%
15%
35%
55%
75%
95%
115%
135%
155%
175%
0
100
200
300
400
500
600
700
800
2014 2015 2016 2017 2018¹ 2019
Capex and investment in intangible assets as a % ofdepreciation, amortisation and impairments
Continued investment in our world class asset base
70
0 –
80
0
35
0 –
45
0
Capital expenditure€ million
€770 million
committed to major
capital projects
(2013 – 2016)
● Good contributions from recently completed
capital projects
● Ongoing progress made on our major capital
expenditure programme, totalling over
€750 million and securing future growth
● Key projects expected to increase the
Group’s current saleable pulp and paper
production by around 9% when in full
operation
+
‘ Over €750 million ’
approved major capital
expenditure projects
(2017+)
1 €347 million and 158% relate to H1 2018
39
Ongoing major capital investment projects
● Replacement of recovery boiler, rebuild of fibre lines and
debottlenecking of paper machines
● Benefits:
o increased saleable production – 90,000 tonnes per annum
market pulp and 55,000 tonnes per annum packaging paper
o reduced environmental footprint, increased electricity
self-sufficiency, lower production costs
● In progress, expected start-up in late 2018
● 300,000 tonne per annum kraft top white machine
● Debottlenecking pulp mill – increasing capacity by 100,000
tonnes per annum (to be mostly integrated into containerboard)
● Incentives received
● Pulp mill upgrade in progress, start-up expected in late 2019
● Paper mill expected start-up in 2020 (subject to permitting)
Ružomberok mill, Slovakia Štětí mill, Czech Republic
2014 2016
2012 2015 2017
Ṥwiecie minorities
(Containerboard)
Strong track record of acquisitions
40
Nordenia
(Consumer Packaging)
2 Duropack plants
(Corrugated)
Intercell
(Industrial Bags)
Graphic Packaging plants
(Industrial Bags)
Ascania
(Consumer Packaging)
KSP
(Consumer Packaging)
Uralplastic
(Consumer Packaging)
Kalenobel
(Consumer Packaging)
SIMET
(Corrugated)
Lebedyan
(Corrugated)
Excelsior Technologies
(Consumer Packaging)
€2.0 billion invested in acquisitions since 2012
2018Powerflute
(Containerboard)
NPP
(Industrial Bags)
● Fibre Packaging
● Consumer Packaging
Pulp and paper integrated value chain (pro-forma 2017)1
41
Net exposure 1.7 mt
Consumption3 0.3 mt
Net exposure balanced
Consumption3 0.6 mt
Net exposure 0.3 mt
Consumption3 0.8 mt
External sales 1.6 mt
Net exposure 0.2 mt
Mondi managed
forests
AAC: 8 million m3
Paper mill4
5.3 mt
Externally procured
wood
13 million m3
Internally procured
wood2
4 million m3
Paper for
recycling 1.3 mt
Pulp mill
4.5 mt
1 Adjusted for the acquisition of Powerflute (0.3mtpa of virgin containerboard) and the disposal of Pine Bluff (0.1mtpa of kraft paper)
2 Due to commercial, logistic and sustainability considerations, the actual wood procured from our managed forests was lower than the annual allowable cut (‘AAC’)
3 Total consumption (aggregate of internal and externally procured packaging paper)
4 In addition to the 1.6mt of uncoated fine paper, the Group also produced 0.3mt of newsprint in 2017
Virgin
containerboard
2.0 mt
Recycled
containerboard
0.6 mt
Kraft paper
1.1 mt
Uncoated fine
paper4
1.6 mt
42
With an integrated approach to sustainable development
Looking ahead to 2020: 16 commitments across 10 action areas
Our Growing
Responsibly
model
Employee and contractor safety
● Avoid work-related fatalities
● Prevent life-altering injuries
● Reduce TRCR by 5% against 2015
A skilled and committed workforce
● Engage with our people to create a better
workplace
Fairness and diversity in the workplace
● Promote fair working conditions in the
workplace
Sustainable fibre
● Maintain 100% FSC™ certification of our forests
and promote sustainable forest management
● Procure a minimum of 70% of wood from FSC
or PEFC™ certified sources with the balance
meeting our company minimum wood standard
Climate change
● By 2030, reduce specific CO2e emissions by
15% against 2014¹
Solutions that create value for our customers
● Encourage sustainable, responsibly produced
products
Relationships with communities
● Enhance social value to our communities through
effective stakeholder engagement and meaningful
social investments
Supplier conduct and responsible procurement
● Encourage supply chain transparency and promote
fair working conditions together with our key suppliers
Biodiversity and ecosystems
● Promote ecosystem stewardship in the landscapes
where we operate through continued multi-
stakeholder collaboration
Constrained resources and environmental
impacts
● By 2020, reduce against 2015:
○ specific contact water consumption (5%)1
○ specific waste to landfill (7.5%)
○ specific NOx emissions (7.5%)1
○ specific effluent load (COD) (5%)
1 From our pulp and paper mills
43
0
500
1,000
1,500
2,000
H1 2017 H2 2017 H1 2018
Pulp Paper Wood Paper for recycling Energy Chemicals Plastics Other variable costs
Input costs
Variable costs€ million
44
23.3%22.9%
22.6%
14.0%
16.0%
18.0%
20.0%
22.0%
24.0%
0
200
400
600
800
1,000
1,200
H1 2017 H2 2017 H1 2018
Depreciation, amortisation and impairments Other net operating expenses
Personnel costs Maintenance and other indirect expenses
Fixed costs excluding depreciation, amortisation and impairments as a % of revenue
Fixed costs
Fixed costs composition (excluding special items)€ million
45
Net special item charge in H1 2018 – €100 million pre-tax
Packaging Paper (€55 million)
● Discontinuation of in-line silicone coating production at Štětí. Restructuring costs of €8 million and related impairment of
assets of €47 million were recognised
Consumer Packaging (€27 million)
● Restructuring of operations, primarily in the United Kingdom. Restructuring costs of €9 million and impairment of assets
of €15 million were recognised
● Following the discontinuation of in-line silicone coating production at Štětí, restructuring costs of €3 million and related
impairment of €2 million, offset by reversal of impairment of assets of €2 million, were recognised
Uncoated Fine Paper (€18 million)
● Closure of an uncoated fine paper machine at Merebank. Restructuring costs of €13 million and related impairment of
assets of €5 million were recognised
46
Taxation
● Effective tax rate of 22%, above the
comparable prior year period and in line with
our expectation
● Increase partly due to the full utilisation in 2017
of key tax incentives in Poland. In addition, in
the prior year we recognised deferred tax
assets related to previously unrecognised tax
losses
Working capital
● Net cash outflow of €148 million (H1 2017:
€141 million)
● Higher than December 2017 reflecting the
usual seasonal uptick in the first half of the year
compounded by increasing average selling
prices
Taxation and working capital
€ million
H1
2017
H2
2017
H1
2018
% change
vs H1
2017
% change
vs H2
2017
Underlying tax charge 87 94 132 (52%) (40%)
Income tax paid 73 78 110 (51%) (41%)
Effective tax rate 19% 19% 22%
960 899 1,065
13.4%12.7%
14.3%
H1 2017 H2 2017 H1 2018
Working capital Working capital as a % of revenue
Working capital management€ million
+
Taxation
47
Cash flow (reconciling to movement in net debt)
1 On a debt and cash-free basis2 H1 2018 excludes €1 million of deferred acquisition consideration
€ million
H1
2017
H2
2017
H1
2018
% change
vs H1 2017
% change
vs H2 2017
Underlying EBITDA 730 752 852 17% 13%
Working capital movements (141) 19 (148)
Other operating cash flow items 23 (20) 18
Cash generated from operations 612 751 722 18% (4%)
Income tax paid (73) (78) (110) (51%) (41%)
Dividends received from other investments – 1 –
Net cash generated from operating activities 539 674 612 14% (9%)
Capital expenditure (254) (357) (347) (37%) 3%
Investment in forestry assets (25) (24) (28) (12%) (17%)
Acquisitions1,2
(43) (5) (414)
Interest paid (59) (38) (32) 46% 16%
Dividends paid to shareholders (180) (93) (691)
Dividends paid to non-controlling interests (21) (1) (17)
Other investing and financing activities (41) (9) (1)
Net (increase)/decrease in net debt (84) 147 (918)
48
Statement of financial position
€ million
30 June
2017
31 December
2017
30 June
2018
Property, plant and equipment 3,994 4,128 4,187
Goodwill 696 698 932
Working capital 960 899 1,065
Other assets 516 529 506
Other liabilities (693) (715) (724)
Net assets excluding net debt 5,473 5,539 5,966
Equity 3,490 3,683 3,188
Non-controlling interests in equity 304 324 328
Net debt 1,679 1,532 2,450
Capital employed 5,473 5,539 5,966
49
Production volumes
H1
2017
H2
2017
H1
2018
% change
vs H1 2017
% change
vs H2 2017
Packaging Paper
Containerboard '000 tonnes 1,119 1,178 1,189 6% 1%
Kraft paper '000 tonnes 606 600 605 – 1%
Softwood pulp '000 tonnes 1,005 1,005 1,028 2% 2%
Hardwood pulp '000 tonnes 250 297 292 17% (2%)
Fibre Packaging
Corrugated board and boxes million m2 820 830 814 (1%) (2%)
Industrial bags million units 2,513 2,439 2,600 3% 7%
Extrusion coatings million m2 667 614 665 – 8%
Consumer Packaging million m2 3,783 3,654 3,819 1% 5%
Uncoated Fine Paper
Uncoated fine paper '000 tonnes 818 826 840 3% 2%
Softwood pulp '000 tonnes 197 178 174 (12%) (2%)
Hardwood pulp '000 tonnes 675 670 587 (13%) (12%)
Newsprint '000 tonnes 159 118 102 (36%) (14%)
50
Exchange rates
H1
2017
H2
2017
H1
2018
% change1
vs H1
2017
% change1
vs H2
2017
Closing rates against the euro
South African rand 14.92 14.81 16.05 (8%) (8%)
Czech koruna 26.20 25.54 26.02 1% (2%)
Polish zloty 4.23 4.18 4.37 (3%) (5%)
Pounds sterling 0.88 0.89 0.89 (1%) –
Russian rouble 67.54 69.39 73.16 (8%) (5%)
Turkish lira 4.01 4.55 5.34 (33%) (17%)
US dollar 1.14 1.20 1.17 (3%) 3%
Average rates for the period against the euro
South African rand 14.31 15.78 14.89 (4%) 6%
Czech koruna 26.78 25.87 25.50 5% 1%
Polish zloty 4.27 4.24 4.22 1% –
Pounds sterling 0.86 0.89 0.88 (2%) 1%
Russian rouble 62.76 69.04 71.96 (15%) (4%)
Turkish lira 3.94 4.30 4.96 (26%) (15%)
US dollar 1.08 1.18 1.21 (12%) (3%)
1 (Weaker/devaluation of currency against euro) / Stronger currency against euro
51
Market position sources and definitions
Europe – Europe including Russia and Turkey
Emerging Europe – Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Georgia, Hungary,
Latvia, Lithuania, Macedonia, Malta, Moldova, Montenegro, Poland, Romania, Serbia, Slovakia, Slovenia, Turkey, Ukraine
North America – Canada, Mexico, USA
Virgin containerboard (Europe) and Containerboard (emerging Europe) based on capacity (including kraft top liner) – Source: RISI European Paper Packaging
Capacity Report and Mondi estimates
Kraft paper (Global) based on capacity – Source: RISI European Paper Packaging Capacity Report, RISI Mill Asset Database, Pöyry Smart Terminal Service and
Mondi estimates
Corrugated packaging (emerging Europe) based on production – Source: Henry Poole Consulting and Mondi estimates
Industrial bags (Global) based on sales volume – Source: Eurosac, Freedonia World Industrial Bags 2016 study and Mondi estimates
Consumer flexible packaging (Europe) based on sales – Source: PCI Wood Mackenzie – Flexible Packaging, European Supply/Demand report, 2017
Commercial release liner (Europe) based on sales volumes – Source: AWA European Release Liner Market Study and Mondi estimates
Uncoated Fine Paper (Europe) based on sales volumes (Ilim JV considered separate from IP) – Source: Euro-Graph delivery statistics, EMGE Woodfree
Forecast, EMGE World Graphic Papers, RISI Mill Asset Database, Eastconsult and Mondi estimates
Uncoated Fine Paper (South Africa) based on Mondi estimates
Mondi region definitions
Sources for market position estimates