DEUTSCHE BANK PAPER CONFERENCE
LONDON
14 NOVEMBER 2007 AGENDA
Strategic Overview
Growth
Markets
Financials
PAGE 1 AGENDA
Strategic Overview
Growth
Markets
Financials
PAGE 2 MONDI AT A GLANCE
merchant /newsprint South Africa
Sales H1 €1.7B €1.0B €0.2B €0.3B 2007 (1)
Products
z No. 1 Kraft Paper(2) z No. 1 Office Paper(2) z No. 1 Corrugated z No. 1 Newsprint in z No. 2 Kraftliner(2) z No. 2 UCWF(2) Packaging in SA(3) South Africa(2) Positions z No. 1 Bag Converting(3) z No. 1 Rigid Plastics in SA z Leading Positions in in Europe (5) z No. 3 Corrugated Emerging Europe Packaging(4) z No. 1 in Cartonboard in SA
- . . (1) Segment revenues, including inter-segment revenues, excluding associates. (2) Based on production capacity. (3) Based on sales. (4) Management estimate based on sales. Sources: RISI, Pöyry Forest Industry Consulting, Freedonia, BMI Foodpack, PAMSA, Mondi
PAGE 3 MONDI STRATEGIC DRIVERS
Mondi Group sales H1 2007 Mondi group net operating assets June 2007
{ Leading market position
— Leading market positions 45% 39% — High exposure to: 55% 61% – Attractive product segments – Attractive geographies Emerging markets Mature markets Emerging markets Mature markets { Strong asset base — Upstream production cost advantages – 100% of kraftliner and 91% of universal office paper in lowest cost quartile Indicative Position 2010 — Vertically integrated Mondi Group operating assets Mondi Group sales – Up to 51% self-sufficient low cost wood
30%
{ Focus on performance 40%
— Comprehensive Business Excellence 60% 70% Programmes Emerging markets Mature markets Emerging markets Mature markets — Continuous cost reduction and productivity improvement { Growth — Organic and through acquisition
PAGE 4 UCWF and Corrugated demand growth per region
Corrugated 2005 - 2010 demand growth (in UCWF 2006 - 2011 demand growth (in %)1 %)2
9,8 8,2
6,6
1,8 1,3
WE EE CIS WE EE
Demand growth in %. 1Sources: EMGE Woodfree Forecast Report; October 2007 for Eastern and Western Europe. World Paper markets 2020, Pöyry 2005 Edition for CIS. CIS market growth from 2004 – 2010. 2Source: ICCA.
PAGE 5 UPSTREAM PRODUCTION COST ADVANTAGES LOW- COST POSITIONS
White-top Kraftliner Unbleached Kraftliner €/t 800 €/t 500
100% of Mondi 100% of Mondi Unbleached White-top Kraftliner Kraftliner capacity capacity 0 0 0 3,000 0 1,400 Cumulative capacity (Kt/a) Cumulative capacity (Kt/a)
Universal Office Paper €/t 1,500
91% of Mondi Universal Office Paper Capacity 0 0 Cumulative capacity (Kt/a) 3,500 Mondi Paper Machines
Note: The graphs show delivered cost to Frankfurt, Germany European Producers Sources: Pöyry Forest Industry Consulting, Mondi
MAGENTA\ROADSHOW PRESENTATION\12 Magenta Roadshow Presentation.ppt 13/11/2007 15:48 PAGE 6 SUPERIOR ACCESS TO LOW-COST WOOD
Average Hardwood and Softwood Costs (€/m3, Q2 2007)
47 42 39 37 33 30 30 25 25 26
il a a le a d d e z c i i li n n c a i s a a a Ch tr l tugal eden l Br Afr us s r in R Po w F Fran th Po S u Au So
Source: Pöyry Forest Industry Consulting
MAGENTA\ROADSHOW PRESENTATION\12 Magenta Roadshow Presentation.ppt 13/11/2007 15:48 PAGE 7 BENEFITING FROM INTEGRATED VALUE CHAIN
Forestry Pulp Paper
Mondi’s own 5.8Mt 7.6mm3 3.5Mt availability Packaging: 3.3Mt
Mondi’s own (1) 14.8mm3 3.8Mt 2.1Mt demand
Potential self 51% 91% 154%(1) sufficiency
(1) Refers to Mondi’s demand and self-sufficiency of packaging paper (including MP and MPSA). Paper is the end product for non-packaging businesses. Notes: 2006 figures. Forestry figures are based on annual allowable cut (excluding firewood). Source: Mondi
MAGENTA\ROADSHOW PRESENTATION\12 Magenta Roadshow Presentation.ppt 13/11/2007 15:48 PAGE 8 AGENDA
Strategic Overview
Growth
Markets
Financials
PAGE 9 GROWTH
z At 30th June 2006 61% of asset base was deployed in emerging markets.
z Estimated emerging market share of asset base will grow to 70% by close of 2010
z Major investments targeted at emerging markets: - Containerboard and box plant – Eastern Europe - Syktyvkar modernisation expansion – Russia - Tire Kutsan acquisition - Turkey
PAGE 10 CONTAINERBOARD EXPANSION PROJECT
z New 470,000 tons lightweight recycled containerboard machine plus a new corrugated box plant with capacity of approximately 250M m2/year corrugated board production
z Clear cost leader in Europe
z Investment cost of circa €350M
z Order for main machinery was placed in September 2007
z Start-up expected in mid 2009
z Investigating option of investing in own recovered paper collection operation
Source: Mondi
PAGE 11 CONTAINERBOARD EXPANSION PROJECT – PROJECT RATIONALE
z Target high-growth lightweight recycled containerboard market z Supported by growing manufacturing base in CEE region which has resulted in a recycled containerboard supply deficit (0.7M tons in 2006) z Efficient supply to state-of-the-art corrugators with 2.8m width z Lower capital expenditure due to brownfield investment
Recycled Fluting Cost Curve
€/t 350
300
250
200
150 PM CEE Light 100 0 2,000 4,000 6,000 8,000 10,000
Cumulative capacity (1 000 t/a)
z Leverage Mondi Packaging paper sales network in Europe z Expand leading market position in strongly growing Polish corrugated packaging market by adding a state-of-the-art box plant with favourable logistic costs due to location next to the RCB mill Note: The graph shows manufacturing cost.Source: Mondi/Pöyry Forest Industry Consulting
PAGE 12 SYKTYVKAR MILL - PROJECT SCOPE
z New and expanded z Benefits include
{ Wood handling facilities { Lower operating costs
{ Recovery boiler and { Improved efficiencies turbine { Expanded electricity { Evaporation of Black generating capacity Liquor { 190,000 tpa increase in { Limekiln pulp production capacity
{ Pulp dryer { 52,000 tpa increase in UCWF production capacity z Upgraded/Rebuilt { 46,000 tpa increase in { Two chemical pulp lines containerboard { PM14 UCWF machine { Reduced environmental { PM21 containerboard footprint machine
PAGE 13 SYKTYVKAR PROJECT - MARKET FORECAST
z This Project will enable Mondi to benefit from the strong growth in demand for UCWF and containerboard in the domestic Russian market
UCWF / Cut size Paper Demand Forecast White-top liner Demand Forecast
CEE incl. Russia 350 Russia (mt) (kt) 4 (1) 300 CAGR CIS Cutsize (C+ Grade)
5,7% CAGR (mt) 250 9,1%275 3 3.1 1.0 8,7% 200 2.6 0.8 0.8 0.7 195 2 0.6 0.7 150 0.6 1.7 0.4 100 115 1 0.2 50 0.0 ‘07 ‘08 ‘09 ‘10 0 0
2015 2004 2010 2015 2005 2010
(1) Based on Mondi Research Source: Pöyry (White-top Kraftliner and White-top Testliner Source: Pöyry (World Paper Markets up to 2020); Mondi Analysis cost competitiveness and Market Outlook); February 2007
PAGE 14 SYKTYVKAR OPERATIONAL ACHIVEMENTS
z The Russian operation Syktyvkar has been a success story for Mondi, outperforming in the areas of safety, productivity, costs and environmental management
180 Syktyvkar (Russia)(²)
160 ) .( ¹ p.a 13% z Management 140 % control acquired in Volume per 120 2002 capita
100 z Integrated 2002 2003 2004 2005 2006 operations
z In the process Mondi has developed highly valued relationships with the local government and stakeholders, which in conjunction with the above, positions Mondi uniquely to fully optimise this attractive value creating opportunity
(1) CAGR. (2) Forestry workers included. Note: Tons per capita based on employees year average Source: Mondi
PAGE 15 SYKTYVKAR - MILESTONES
z Milestones of the Project:
¾ Main equipment vendors chosen July/August 2007
¾ Start construction April 2008
¾ Project completion mid-2010
PAGE 16 ACQUISITION TIRE KUTSAN, TURKEY
z On September 3, 2007 Mondi Packaging acquired 54% of Tire Kutsan, the leading Turkish corrugated packaging company
z The company has one paper mill producing 120,000 tons of recycled containerboard plus 5 corrugated box plants in Turkey with a board production capacity of approximately 450M m2/year
z The company was acquired from the Ülker Group, a leading Turkish family owned group with sales of USD 7B mainly in the food business. The Ülker Group will keep 10% in Tire Kustan for 3 years and Mondi Packaging and the Ülker Group have signed a business cooperation agreement
z The acquisition price for 54% was USD 106M equivalent to a cash and debt free enterprise value for 100% of c. €190M
z The remaining shares are traded on Istanbul Stock Exchange and Mondi Packaging is currently in the process of making a mandatory tender offer
Source: Mondi
PAGE 17 ACQUISITION TIRE KUTSAN PROJECT RATIONALE
z Turkey is forecasted to have the highest growth rates in corrugated packaging in Europe with 12% per annum or additional 1.6 M m2 between 2005 and 2010 Production in M m2 Growth 00-05 Growth 05-10Pop Prod. / capita 2000 2005 2010 CAGR M m2 CAGR M m2 05 2005 2010E Poland 1.129 2.054 2.986 12,7% 925 7,8% 932 39 53 77 Russia 1.124 2.351 3.464 15,9% 1.227 8,1% 1.113 143 16 25 Turkey 1.400 2.111 3.701 8,6% 711 11,9% 1.590 73 29 47 Other EE 2.048 3.168 4.198 9,1% 1.120 5,8% 1.030 110 29 36 Total EE 5.701 9.684 14.349 11,2% 3.983 8,2% 4.665 375 26 38 Total WE 33.790 35.574 38.962 1,0% 1.784 1,8% 3.388 394 90 97 EUROPE 39.491 45.258 53.311 2,8% 5.767 3,3% 8.053 769 59 69 Source: ICCA
z Acquisition makes Mondi Packaging the market leader in Turkey and Emerging Europe in corrugated z Reinforces Mondi’s strategy of high emerging market exposure z Strengthens Mondi Packaging’s position in the European corrugated market by expanding its European footprint
Source: Mondi
PAGE 18 AGENDA
Strategic Overview
Growth
Markets
Financials
PAGE 19 INDUSTRY FUNDAMENTALS: EUROPEAN UNCOATED FINE PAPER
{ Circa 12 million tonne market, growing at 1200 3% 1 pa 1100 — Western Europe 2% 2 2 — Eastern Europe 7% 1000 { European capacity closures in 2006/2007 900
of 720,000 tpa €/tonne { Following these closures, capacity 800 utilisation anticipated to be attractive
{ Favourable demand supply balance 700 forecast for foreseeable future
600 { Only confirmed major expansion in 2001 2004 2007 Europe is a new 500Ktpa machine at
Portucel’s Setubal mill, planned for (1) Volume growth based on 2000 to 2006 demand estimates by Pöyry Forest Industry Consulting. commissioning in Q3 2009 (2) 2005 - 2006 (3) Demand estimates by Pöyry Forest Industry Consulting. (4) Q4 2001 – Q3 2007.
Sources: Mondi, Pöyry Forest Industry Consulting, CEPIFINE, RISI, PIX (FOEX Indexes Oy Ltd)
PAGE 20 EUROPEAN DEMAND AND OPERATING RATES EXPECTED TO REMAIN STRONG FOR UNCOATED FINE PAPER
W. Europe 16 Demand (kt) Operating Rate (%) Europe 30 10.000 1,3% 100 7.880 Demand (kt) Operating Rate (%) 8.000 7.405 7.495 7.645 7.555 7.705 80 12.000 110 6.000 60 11.000 1,9% 100 10.000 90 4.000 40 8.815 9.070 9.000 8.410 8.640 8.590 8.270 80 2.000 20 8.000 70 7.000 0 0 60 6.000 2006 2007 2008 2009 2010 2011 50 5.000 40 E. Europe 14 4.000 Demand (kt) Operating Rate (%) 30 3.000 6,6% 2.500 100 2.000 20 1.000 10 2.000 80 0 0 1.500 60 2006 2007 2008 2009 2010 2011 1.190 995 1.035 1.110 1.000 865 915 40 Operating Rates Capacity closures of 180kt Demand in 2006 and 540kt in 2007 500 20 (Source: CEPIFINE-March 2007) 0 0 2006 2007 2008 2009 2010 2011 Source: EMGE Woodfree Forecast Report; October 2007 PAGE 21 INDUSTRY FUNDAMENTALS: EUROPEAN750
CONTAINERBOARD AND CORRUGATED700 PACKAGING
650 { Circa 26 million tonne market growing at Kraftliner 175 g Testliner 2 1 600 2.7% pa White top Kraftliner — Western Europe 1.4% 1 550 — Eastern Europe 11.0% 1 500
{ Good demand growth, particularly in 450 €/tonne
Germany and Emerging Europe 400 { Capacity closures in recycled grades of 350 2.4 mtpa in 2005/2006 300 { Now operating at attractive capacity utilisation levels 250 2001 2004 2007 { Aside from Modern Karton in Turkey
(400 ktpa), no new paper machine (1) Growth on tonnage basis 2000 to 2006 based on 2006 forecasts. capacity scheduled until mid to late 2009 (2) Q4 2001 – Q3 2007. Sources: ICCA, RISI, Pöyry Forest Industry Consulting and PIX (FOEX Indexes Oy Ltd)
PAGE 22 While current USD makes Europe attractive for imports and pressures exports, overall threat limited
z The impact on Mondi should be limited for the following reasons: o UCWF: – 8% of volume exposed to exports (about 4% for cut size) – Relative high entry barriers (distribution channels, Customer own labels, environmental standing of overseas suppliers) o Corrugated: – Overall limited exposure to exchange rates as corrugated is largely traded on a regional level
z Coated and graphic grades (which Mondi not exposed to) see much higher trade flows – circa 20% export dependency.
PAGE 23 Nevertheless with the exception of the export heavy Kraft paper, the impact on Mondi’s grades is limited
Overview of Export dependence European Paper Business (Imports, Exports and Net Trade in % of Production)
Exports in % of Production
Imports in % of Production 34,4 Net Exports in % of Production 29,0 27,1 27,0 24,4 23,5 22,9 23,8 21,5 21,2 21,7 21,6
14,1
8,6 9,0 6,6 4,9 4,4 4,0 4,6
-0,4 -0,6 -3,2 -2,6 -2,8 -4,1 -4,4 -7,2 -7,4 -9,3
Newsprint Uncoated Coated Uncoated Coated Sanitary and Container- Carton Kraftpaper Wrappings Mechanical Mechanical Woodfree Woodfree Household board Boards
Note: CEPI covers Austria, Belgium, Czech Republic, Finland, France, Germany, Hungary, Italy, the Netherlands, Norway, Poland, Portugal, Slovak Republic, Spain, Sweden, Switzerland, United Kingdom Source: CEPI European Pulp and Paper Industry Trade Statistics and Annual Statistics 2006; Cepifime for Uncoated Woodfree, Eurokraft/ Mondi Estimates for Kraftpaper)
PAGE 24 AGENDA
Strategic Overview
Growth
Markets
Financials
PAGE 25 INTERIM FINANCIAL HIGHLIGHTS
€ millions, except for percentages H1 2007 H1 2006 %Change
Group revenue 3,052 2,857 + 7 1 EBITDA 421 343 + 23 2 Underlying operating profit 243 166 + 46 3 Underlying profit before tax 203 125 + 62 Reported profit before tax 250 64 4 Underlying pro forma earnings per share (€ cents per share) 22.6 11.9 + 90 Interim dividend per share (€ cents per share) 7.3 n/a n/a Cash inflow from operations 356 229 + 55 5 Group ROCE 10.0% 8.2% + 22
1 EBITDA is operating profit of subsidiaries and joint ventures before special items, depreciation and amortisation. 2 Underlying operating profit is operating profit of subsidiaries and joint ventures before special3 items.Underlying profit before tax is reported profit before tax before special items. 4 Underlying earnings per share is before special items and based on shares issued on admission.5 Group ROCE is an annualised measure based on underlying operating profit including share of associates' net earnings divided by average trading capital employed.
ALL KEY INDICATORS UP
PAGE 26 COSTS AND COST SAVING INITIATIVES
COST STRUCTURE FIRST HALF 2007 COST SAVINGS - €73 MILLION
200 Depreciation and amortisation 180 2.8% 3.9% 3.6% 2.9% 179 180 6.3% 160 Other net operating 140 expenses Wood, pulp and 120 7.0% fibre 127 33.7% Other variable 100 costs € million € 15.2% 80 60 73
Maintenance 40 4.6% 20 Energy 7.3% Personnel 0 Variable selling 15.9% 2004 FY 2005 FY 2006 FY 2007 HY expenses • External fibre10.0% cost inflation • €37 million material input cost savings • Mondi Packaging wood 27%, recycled paper 26% • Mondi Business Paper 25% • €18 million saving in energy costs • Some recent easing in prices • Costs savings represent 2.9% of prior • Mitigated by own wood resources which account for up to 50% of requirements year cash cost base • Fixed costs flat in euros period on period COST SAVINGS OF €73 MILLION HELPED TO OFFSET COST INFLATION
PAGE 27 INTERIM CASH FLOW
€ millions H1 2007 H1 2006 Change
EBITDA 421 343 78 Working capital movements (59) (99) 40 Other operating cash flow adjustments (6) (15) 9 Cash inflows from operations 356 229 127 Dividends from associates 1 1 - Tax paid (40) (34) (6) Net cash inflow from operating activities 317 196 121 Capital expenditure (139) (209) 70 Investment in forestry assets (19) (26) 7 Acquisitions (7) (69) 62 Disposals 157 29 128 Interest received 9 22 (13) Other and proceeds on sale of fixed assets 12 17 (5) Net cash flow after investing activities 330 (40) 370
GENERATED €127 MILLION MORE IN CASH INFLOWS FROM OPERATIONS
PAGE 28 INTERIM MANAGEMENT STATEMENT (14TH NOVEMBER)
Group Overall positive trends and trading momentum of first half have continued Weakness of US dollar is impacting trade flows External fibre cost inflation has eased Mondi Packaging Benefited from a favourable Packaging Paper trading environment Returns in downstream converting still at unsatisfactory levels €25m restructuring programme announced to close/downsize 6 converting operations with loss of 350 jobs Mondi Business Paper Secured further price increases of circa 3-4% Taken production downtime of circa 75,000 tonnes PM31 headbox successfully modified Summary Mondi is benefiting from favourable product mix, emerging market exposure and competitive cost position Despite booking €25m restructuring charge, expect earnings to be in line with management expectations
PAGE 29 120.0
110.0
Share Price Performance
100.0
Relative Share Prices of Principal Comparitor Group
90.0
80.0 3 July 2007 =100
70.0
60.0
Mondi DS Smith IP M-Real Norske Skog Sappi SCA Smurfit Stora Enso UPM 50.0 ct ct ct ct ct ov 3-Jul 2-O 9-O 6-N 10-Jul 17-Jul 24-Jul 31-Jul 7-Aug 4-Sep 16-O 23-O 30-O 14-Aug 21-Aug 28-Aug 11-Sep 18-Sep 25-Sep
MAGENTA\ROADSHOW PRESENTATION\12 Magenta Roadshow Presentation.ppt 13/11/2007 15:48 PAGE 30 Q & A