STRICTLY CONFIDENTIAL SEIZING OPPORTUNITIES SIG CAPITAL MARKETS DAY
Estavayer-le-Lac, 12 November 2019 DISCLAIMER
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1 NOVEMBER 19 SIG COMBIBLOC - CMD OUR AGENDA AND PRESENTERS FOR TODAY
1. THE OPPORTUNITY Rolf Stangl Rolf Stangl Samuel Sigrist Chief Executive 2. SUSTAINABILITY Rolf Stangl Officer Chief Financial Officer EXTERNAL SPEAKER: MINTEL
3. INNOVATION Markus Boehm
Q&A Markus Ian Wood Boehm Chief Supply 4. REGIONAL CASE STUDIES Chief Market Chain Officer Officer A. EMEA M. Herrenbrück, A. Eladib
B. Americas Ricardo Rodriguez Martin Lawrence EXTERNAL SPEAKER: Alpura – leading Mexican dairy Herrenbrück Fok C. Asia Pacific Lawrence Fok President & President & General General Manager, Manager, Q&A Europe Asia Pacific COFFEE BREAK Ricardo Abdelghany 5. OPERATIONAL EXCELLENCE Ian Wood Rodriguez Eladib President & Chief 6. FINANCIAL PERFORMANCE Samuel Sigrist General Operating Manager, Officer, 7. WRAP-UP AND Q&A R. Stangl, S. Sigrist Americas JV MEA
2 NOVEMBER 19 SIG COMBIBLOC - CMD ROLF STANGL
CHIEF 15 years with SIG, CEO since 2008 Previous positions include EXECUTIVE Chief Market Officer SIG Beverage Chief Executive Officer OFFICER Head of Corporate Development and M&A UNIQUE SLEEVE-BASED FILLING TECHNOLOGY WE ARE A LEADING ▪ Unprecedented reliability, robustness and uptimes SUPPLIER OF ▪ Volume and format flexibility: up to 16 product variants on one filler ▪ Superior filling capabilities for particulate ASEPTIC CARTON and highly viscous content FILLING SOLUTIONS
Sustainability is at the ▪ With our global integrated footprint and supply chains we support customers core of our DNA with locally – unlike most other providers ▪ ~550 service engineers with deep technical carton being the most expertise and application know-how eco-friendly substrate
▪ Affordable and safe packaging solutions based on lightweight carton structures (e.g., Lite, cb12) ▪ With differentiating packaging and filling solutions (e.g. combidome, combismile, drinksplus, Heat&Go, broad sustainability portfolio) we serve premium beverage categories
4 NOVEMBER 19 SIG COMBIBLOC - CMD WE ARE AT THE HEART OF OUR CUSTOMERS' OPERATIONS
Raw Milk Raw Milk Raw Milk Milk Milk Tanks UHT Filling Line Sleeves & Outbound Consumer Reception Storage Pasteuriser Closures Logistics
Raw Material Reception Processing Packaging Systems Distribution & Retail
Filling and packaging operations Our service engineers are deeply Our packaging solutions are key to are at the heart of our customers’ integrated into our customers’ day our customers’ brand experience operations. The OEE and reliability of our to day operations. 550 service colleagues and help them to interact with machinery is crucial. With co-investments take care of approx. 1,180 filling lines1, consumers on- and off-line and long-term contracts we're in true partnerships ensuring efficiency and sterility
1. 2018 data
5 NOVEMBER 19 SIG COMBIBLOC - CMD BUILDING ON LONG-TERM CUSTOMER PARTNERSHIPS WITH GLOBAL AND REGIONAL LEADERS
TOP 10 CUSTOMERS
CUSTOMER LENGTH OF RELATIONSHIP
1 >15 YEARS 2 >10 YEARS 3 >35 YEARS 4 >40 YEARS 5 >30 YEARS 6 >30 YEARS 7 >35 YEARS 8 >35 YEARS 9 >5 YEARS 10 >10 YEARS
TOTAL >25 YEARS ON AVERAGE ANNUAL CUSTOMER RETENTION RATE OF ~99%
2018 data
6 NOVEMBER 19 SIG COMBIBLOC - CMD On-the-go breakfast Target new consumers milk with healthy cereals with rich protein drinks
Premiumise Deliver nutritious soups juices through real fruit inclusions with food particulates
New consumption Add perceptible value: occasions with drinkable snacks Tomato passata with real tomato chunks
CONSUMER LED INNOVATION: WE THINK CONSUMERS
Innovation process starts with Testing and prototyping in two Co-development of beverage Test trials with consumers observation of consumer behaviour, established test centres in Europe products with customers in our in supermarkets pain points and needs and China test filling centres
7 NOVEMBER 19 SIG COMBIBLOC - CMD LEADING SYSTEMS AND SOLUTIONS PROVIDER FOR ASEPTIC PACKAGING
GLOBAL FOOTPRINT1 WITH INTEGRATED SUPPLY CHAINS #2 globally in Razor/razor- Around 1,180 resilient and blade business fillers in the field growing end- model with long- markets term customer relationships
Core revenue Adj. EBITDA Track record of €1.64bn margin 27.5% growth and margin Post-tax ROCE expansion 20.6%
End-markets2 Aseptic carton share3 2% (volume) Food 6% Liquid dairy 18% 45% 37% 25% 21 Other
Americas EMEA Asia Pacific Non- Tetra Pak carbonated- 14 soft drinks 65 SIG 1. Core revenues 2. Estimated volume split (B liters) 2018; Other: wine, syrups, water, etc.3. Share of global aseptic liquid dairy, non-carbonated soft drinks & 67% aseptic/retort liquid food carton supply in core geographies excl. Japan, India, Peru, Argentina, Chile in 2018 Other Note: Financials and other statistics as of December 31, 2018 unless noted otherwise Source: Company information (FY 2018) and SIG Market Study
8 NOVEMBER 19 SIG COMBIBLOC - CMD 01 THE OPPORTUNITY
02 1.1 Key trends fuelling our business 03 1.2 Growth outlook: From total addressable to the aseptic carton market 04
05
06
07
9 NOVEMBER 19 SIG COMBIBLOC - CMD THE OPPORTUNITY Key trends FOUR MAJOR TRENDS AND THEIR IMPACT ON THE ASEPTIC CARTON INDUSTRY
GROWING DEMAND DEMANDING CONSUMERS FOR PROCESSED FOOD Innovative packaging and filling solutions Safe and affordable packaging solutions required to meet demand for “on the go”, required to serve the growing middle class in differentiation and convenience developing markets
EFFICIENT AND SAFE SUPPLY CHAIN SUSTAINABILITY & GOING GREEN Food safety and cost pressure drive Impact of packaging on the environment is packaging and machinery suppliers to monitored by regulators, NGOs, brand 04 increase efficiency and transparency owners and consumers
10 NOVEMBER 19 SIG COMBIBLOC - CMD THE OPPORTUNITY Key trends PROCESSED FOOD GROWING 2X RATE OF GLOBAL POPULATION
Population with access to Global spend for Global population processed food processed food
7.6B people 7.3B people
€2.4T GROWTH OF PROCESSED FOOD Size 2018 AND DEMANDING CONSUMERS
+1.1B people by 2030 Growth +2.4% (CAGR +1.1% +1.2% '18-'30)
Source: United Nations, Euromonitor, Company information
11 NOVEMBER 19 SIG COMBIBLOC - CMD THE OPPORTUNITY Key trends Growing demand ASEPTIC CARTON CATERS TO NEEDS OF CONSUMERS ACROSS CLASSES AND REGIONS
ESTABLISHED/UPPER POOR POOR & UPCOMING ASPIRANT EMERGING CLASS
Still fruit drinks and plain milk Flavoured milk Milk alternatives Avg. yearly household spend (single serve) Food & non-alcoholic Beverages ($)
Sweetened milk Plain white milk Ambient drinking yogurt Pouch 12,500
10,000
Loose milk & beverages 7,500 Sales via un-organized market
5,000
Household income groups 2,500 in PPP-$
0 <5.000 5.000-15.000 15.000-45.000 45.000-100.000 >100.000
India MEA AM-S AP-N AP-S EU AM-N Source: Euromonitor, Company information
12 NOVEMBER 19 SIG COMBIBLOC - CMD THE OPPORTUNITY Growth outlook ASEPTIC CARTON PACKAGING SHOWS HIGHEST GROWTH RATES
579B 533B 229B 92B kg of packaged food Litres of beverages Litres of ambient packaging Litres of aseptic carton
Additional categories1 3B
Additional 579B KG OF geographies2 22B Other substrates PACKAGED FOOD Packaged food 137B 579B
Other 220B Core geographies and categories 67B 533B LITRES OF Fresh packaging 85B Aseptic carton BEVERAGES 92B Ambient packaging 229B
Packaging for food and beverages Ambient packaging of liquid food and Aseptic carton packaging of liquid food beverages and beverages
2017-2022 CAGRS +2.6% +2.8% +3.6%
1. Additional categories include alcoholic beverages, water, nutritional, medical and sports drinks (carton only) 2. Includes 47 countries outside SIG’s current core geographies Company information
13 NOVEMBER 19 SIG COMBIBLOC - CMD THE OPPORTUNITY Growth outlook SHAPING THE FUTURE OF ASEPTIC CARTON ACROSS REGIONS
AMERICAS EUROPE
3.4% 0.1%
33 33 33 25 26 21
2017 2022 2023 2017 2022 2023
MEA APAC
5.7% 6.5% 35 38 25 17 18 13
2017 2022 2023 2017 2022 2023
CAGR '17-'22
Source: Company information
14 NOVEMBER 19 SIG COMBIBLOC - CMD THE OPPORTUNITY SIG's strengths SIG IDEALLY POSITIONED TO MEET MARKET AND CONSUMER TRENDS
SAFE AND AFFORDABLE PACKAGING DIFFERENTIATING PACKAGING AND FILLING SOLUTIONS SOLUTIONS FOR PREMIUM CATEGORIES ▪ Filling flexibility for customers to adjust to shifts in market ▪ Format/filling flexibility to cater for SKU proliferation demand and run multiple products on one filler ▪ Low waste rates to minimise losses of premium ingredients ▪ Safe and affordable packaging formats (Lite, cb12) for ▪ Particulate filling capabilities to meet transition from pouch and/or powder milk on-the-go/snacking trend
EFFICIENT PACKAGING OPERATIONS PIONEERING IN SUSTAINABLE AND SAFE SUPPLY CHAINS PACKAGING SOLUTIONS ▪ SIG's integrated global supply chain ▪ Our cartons with lowest CO2 footprint compared - we support our customers locally to other packaging alternatives ▪ In partnership with our customers we constantly ▪ Our SIGNATURE PACK is the world’s first aseptic improve line efficiency pack 100% linked to plant-based renewable material with aluminium-free design ▪ Connected pack enables transparency along supply chain
15 NOVEMBER 19 SIG COMBIBLOC - CMD THE OPPORTUNITY Growth Agenda CLEAR GROWTH AGENDA TO UNLOCK MARKET OPPORTUNITIES
ACCELERATE STRONG CONTINUED EXPLOIT EXPANSION RESILIENT FILLER BASE IN FAST END-MARKETS AND RECENT CONSUMER-LED WHITE SPACE GROWING INVESTMENTS INNOVATION OPPORTUNITIES NICHE SEGMENTS
16 NOVEMBER 19 SIG COMBIBLOC - CMD 01
02 SUSTAINABILITY 2.1 Our responsibility ambition 03 2.2 Aseptic carton advantages over alternative substrates 04
05
06
07
17 NOVEMBER 19 SIG COMBIBLOC - CMD SUSTAINABILITY Our responsibility ambition COMBATTING CLIMATE CHANGE AND INCREASING RECYCLING
RESPONSIBLE COMPANY RESPONSIBLE SOURCING RESPONSIBLE PRODUCTS Pursuing a net positive corporate Striving for certified sustainable supply of Innovating and delivering smarter footprint in the long run all materials, products and services solutions with proven sustainability across the entire life-cycle TOP 1% 100% of over 30,000 businesses in 2017, of sleeves shipped covered by FSCTM PROMOTING RECYCLING Ecovadis Gold rated responsibility COC1 certification2 infrastructure and awareness
1 OF 100 companies globally with ASI certification ALL ASEPTIC CARTONS fully science-based CO2 reduction target in Responsible aluminium sourcing recyclable place 70-80% average renewable content of all cartons
2030 GOAL 2030 GOAL 2030 GOAL Halve value chain environmental impacts All raw materials from certified Offer customers the most sustainable and double societal benefits while responsible sources and 50% of total food packaging solutions on the market meeting business growth targets sourcing spend on net positive suppliers
SIG’s ULTIMATE GOAL IS TO CONTRIBUTE MORE TO SOCIETY AND THE ENVIRONMENT THAN WE TAKE OUT ACROSS OUR VALUE CHAIN
1. Forest Stewardship Council TM Chain of Custody 2. 98% of products labelled with FSCTM
18 NOVEMBER 19 SIG COMBIBLOC - CMD SUSTAINABILITY Responsible company Responsible sourcing Responsible products SIG ASEPTIC CARTON PACKAGING Affordable & sustainable SUSTAINABLE BY NATURE packaging
RENEWABLE RESPONSIBLE RESOURCE RECYCLABLE LOWEST CARBON EFFICIENT FOOTPRINT OUR BEVERAGE 100% OF THE ALL THE MATERIALS CARTONS ARE ON PAPERBOARD USED THE BEVERAGE USED IN BEVERAGE OUR CARTONS AVERAGE MADE OF TO MANUFACTURE CARTON INDUSTRY CARTONS ARE PERFORM BEST 75% PAPERBOARD, A OUR CARTONS NOW PRODUCES RECYCLABLE. COMPARED TO RENEWABLE COMES FROM PAPER 40% MORE CARTONS OTHER PACKAGING MATERIAL. MILLS THAT HAVE AN WITH THE SAME ALTERNATIVES FSCTM CERTIFIED AMOUNT OF WOOD PROVEN BY LIFE CHAIN-OF-CUSTODY. FIBRES AS 20 YEARS CYCLE AGO. ASSESSMENTS.
19 NOVEMBER 19 SIG COMBIBLOC - CMD SUSTAINABILITY Responsible products LOWEST CARBON FOOTPRINT: Affordable & sustainable CARTONS WIN EVERY TIME packaging
LIQUID DAIRY NON-CARBONATED FOOD
kg CO2 equivalent per packaging required kg CO2 equivalent per packaging required for 1,000L UHT milk SOFT DRINKS for 1,000L food
kg CO2 equivalent per packaging required for 1,000L non-carbonated soft drinks -45% -70% -63% -61% -58% -34% GO BEYOND (25-75% LESS) WITH SIG : -40% EcoPlus alu-free structure -39% and/or -28% SIGNATURE PACK Plant-based plastics
-20-75% 85 129 155 88 121 145 295 224 378 540 580 609
Beverage HDPE bottle PET bottle Beverage Monolayer Multilayer Disposable Aseptic Pouch Pot Can Glass carton carton PET bottle PET bottle glass bottle carton
*1 50% PCR *2 50% PCR *3 Includes *4 Includes *5 Includes scenario scenario 59% recycled 5,8% post- 59% recycled would reduce would reduce glass consumer glass the impact to the impact to recycled 106 g 132 g material
European average (EU27)/IFEU Institute Heidelberg using ISO 14040 international standard
20 NOVEMBER 19 SIG COMBIBLOC - CMD SUSTAINABILITY Our responsibility ambition CONTRIBUTING TO A CIRCULAR ECONOMY Affordable & sustainable WITH FOCUS ON SOURCING, INNOVATION AND packaging COLLECTION & RECYCLING
SOURCING SIG BEVERAGE FROM CARTON PRODUCTION CONSUMPTION RE-USE RESPONSIBLY & INNOVATION
MANAGED FORESTS RECYCLING COLLECTION
SIG pioneering and 1 TRACEABLE 20 EU GRACE 75% driving with FSC sourced beverage carton SIG is member of global wood fibre recycling plants WORLDWIDE AND paperboard recycling alliance for TM beverage cartons VERIFIED FSC PALUREC & MORE 1st in plant-based plastics beverage carton SOMA CHAIN 21% and recycled plastics recycling innovation polymers SIG encourage collections OF CUSTODY 49%1 systems worldwide, e.g. Brazil beverage cartons CERTIFICATION First with ASI certified recycled 2018 in EU, 4% aluminium / unique offer increasing tendency aluminium of aluminium-free
INCENTIVISING USE OF RENEWABLE ENSURING THAT ALL RECYCLABLE DRIVE RESPONSIBLE SOURCING MATERIALS AND/OR BIO-BASED PACKAGING IS RECYCLED For all primary materials Unique packaging innovation Efficient collection is base for effective recycling
1. The Alliance for Beverage Cartons and the Environment
21 NOVEMBER 19 SIG COMBIBLOC - CMD 01
02 3.1 A holistic approach: Consumer-led innovation made by SIG 03 INNOVATION 3.2 Technology solutions as main R&D focus area 04
05
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07
22 NOVEMBER 19 SIG COMBIBLOC - CMD MARKUS BOEHM
15 years with SIG and CHIEF Chief Market Officer since 2009 PREVIOUS POSITIONS INCLUDE MARKET Chief Executive Officer, China Chief Financial Officer, China OFFICER Prior leadership positions at Hilti and P&G INNOVATION SIG promise & solutions
INCREASING REVENUE OPPORTUNITIES EXCELLENCE – ENGINEERED. WITH CUSTOMERS BEYOND PACKAGING SOLUTIONS SOLUTIONS – DELIVERED
Addressing multiple customer and consumer needs
OUR PROMISE 8 Excellence – Engineered. Solutions – Delivered. Digital 1 marketing Growing with combiblocXSlim solutions (co-development with Friesland) Small Product packages with volume flexibility down to 80 solutions ml for various categories to increase 7 convenience Traceability solutions 2 Packaging 6 solutions Supply chain solutions One-Click Tracking Unique QR code empowering 3 5 consumers to track food to SIGNIA SIGNATURE PACK production origin for environmentally aware End-to-end design 4 Service consumers solutions solutions Filling line solutions
Transforming & drinksplus (co-development Modernising Plants 360 Asset Management Mengniu) Allowing customers to Greenfields, brownfields and Digitalised asset management access new consumer groups E2E solutions for customer enabling condition-based and consumption occasions plants maintenance
24 NOVEMBER 19 SIG COMBIBLOC - CMD INNOVATION Modular SIG platform SLEEVE & FILLING TECHNOLOGY: THE SIG PLATFORM ENABLING A BROAD Innovation AND FLEXIBLE OFFERING
Rapid switching to cater for changing needs VOLUME AND while keeping asset utilisation high ▪ Up to 16 product variants possible on one FORMAT filler FORMAT FLEXIBILITY FLEXIBILITY ▪ Range of fill volumes from 80ml to 2,000ml (format change across portfolio <10 min) VOLUME FLEXIBILITY (volume change <5 min)
MODULAR Different filler and SIGNATURE SPOUT & STRAW OPTIONS TO DRINKSPLUS FOOD OPTION HEAT & GO product features can be PACK APPLICATIONS UPGRADE added with distinct INSTALLED advantages ▪ High viscosity ▪ Filling of soups ▪ Microwaveable for ▪ Plant-based ▪ Paper straws filling and sauces hot drinks renewable ▪ Convenience for BASE ▪ Particulates ▪ Particulates ▪ Aluminium-free material consumers ▪ Aluminium-free
25 NOVEMBER 19 SIG COMBIBLOC - CMD INNOVATION Consumer-led innovation CONSUMER-LED INNOVATION Innovation
CONSUMER RESEARCH OBSERVE DOMAIN PROTOTYPE TEST ETHNOGRAPHIC GAIN A DEEP CONDENSE THESE WORK WITH LEADING FUNCTIONAL TEST WITH RESEARCH CAPTURES UNDERSTANDING BY CONSUMER INSIGHTS EXPERTS AND AGENCIES ACTUAL CONSUMERS MULTITUDE OF OBSERVING INTO ACTIONABLE TO DEVELOP THROUGHOUT THE CONSUMER ARTICULATED AND “GROUP NEED” AREAS IN COMPREHENSIVE ENTIRE CONSUMPTION PREFERENCES UNARTICULATED ORDER TO GENERATE CONCEPTS/MOCK-UPS JOURNEY (E.G., CHOOSE, CONSUMER PROBLEMS STRUCTURED IDEAS (E.G. AND SOLUTIONS TRANSPORT, USE, AND NEEDS (E.G., NO ON-THE-GO) (E.G., DIFFERENTLY DISPOSE) CONTENT LEAKAGE SHAPED SMALL-SIZE BETWEEN SIPS) PACKAGES WITH SINGLE- ACTION CLOSURE)
26 NOVEMBER 19 SIG COMBIBLOC - CMD INNOVATION Technology solutions COMBISMILE: Differentiation for premium END-TO-END SOLUTION INCLUDING categories DRINKSPLUS INNOVATIVE PRODUCT SOLUTIONS
COMBISMILE VARIANTS combismileSmall combismileSmall combismileBig combismileBig with straw with combiGo with straw with combiGo
AMBIENT FLAVOURED DAIRY ADDRESSED WHITE MILK YOGURT + MILK + ALTERNATIVES TRENDS PARTICULATES PARTICULATES
Premiumisation Premiumisation On-the-go On-the-go
Convenience Convenience Convenience Premiumisation
COMBISMILE AS PLATFORM CATERING TO KEY GROWING CATEGORIES
27 NOVEMBER 19 SIG COMBIBLOC - CMD INNOVATION Technology solutions HEAT&GO Differentiation for premium INNOVATIVE PACKAGING SOLUTIONS categories
HOT DRINKS SHOW A GROWING POTENTIAL FOR EXPANSION INTO READY-TO-DRINK VARIANTS. COFFEE AND TEA: ONE OF THE MOST IMPORTANT “EVERYDAY CONSUMPTION” BEVERAGES FOR A LARGE AND GROWING SEGMENT OF THE WORLD’S POPULATION. NEW GROWTH OPPORTUNITIES FOR BRANDS TO SERVE A RANGE OF NEW PRODUCTS FOR NEW CONSUMPTION OCCASIONS.
01 02 03 04 MICROWAVE DRINKS UNIQUE INNOVATION FROM SIMILAR BARRIER FUNCTION USES EXISTING FILLERS: WITHOUT COMPROMISING SIG, NEW PACK SOLUTIONS & SHELF-LIFE AS STANDARD FAST TIME TO MARKET PROTECTION AND FOR HOT DRINKS STRUCTURE PRODUCT QUALITY
28 NOVEMBER 19 SIG COMBIBLOC - CMD INNOVATION Technology solutions DIGITAL SERVICE – Efficiency and PARTNERSHIP WITH GE DIGITAL safety
GE Digital – SIG DIGITAL SERVICE PARTNERSHIP GE Digital - SIG
• Improve asset efficiency and • Frontrunner in Industrial IoT productivity • Track record in asset monitoring and predictive • Increase service levels maintenance (oil & gas, wind turbines, jet engines etc.) • Reduce capex and opex (labour cost) • System business • Improve quality within • ~1,180 fillers customers’ operations
• Connected filling lines providing “live” data for >20yrs • Avoid out-of-stock situations and reduce inventory costs • Deep understanding of our customers’ operations Partnership to establish a first-in-industry integrated digital solution for asset • Improve customer monitoring and service delivery based on predictive analytics satisfaction
Enhanced customer service and TCO1
1. Total cost of ownership
29 NOVEMBER 19 SIG COMBIBLOC - CMD INNOVATION Technology solutions Innovation
THREE-FACETED WE TEST OUR CUSTOMERS WE LET TESTING ENHANCED CAN TEST CONSUMERS TEST
BY NEW REGIONAL Innovative structures, new Upstream, downstream, product Consumer trials TECH CENTRE IN shapes, product formulations formulations CHINA
Linnich
China
Centres Centres Two Tech Tech Two
RAMP-UP OF EXISTING AND NEW TECHNOLOGIES
• COMBISMILE EXPANSION INTO NEW AND GROWING CATEGORIES, E.G. AMBIENT YOGURT, DAIRY ALTERNATIVES, VEGETABLE PROTEIN DRINK, YOGURT DRINKS, AMBIENT FLAVOURED MILK • TOTAL SOLUTIONS OFFERING – UPSTREAM, DOWNSTREAM AND FORMULATIONS • PRODUCT CONTENT AND PACKAGING DIFFERENTIATION • CLOSER TO OUR CUSTOMERS AND PARTNERING IN INNOVATION NEW REGIONAL TECH • CATERING FASTER TO INNOVATION CYCLES, ESPECIALLY IN APAC CENTRE IN CHINA
30 NOVEMBER 19 SIG COMBIBLOC - CMD 01
02 4.1 EMEA 03 4.2 Americas 04 REGIONAL CASE STUDIES 4.3 Asia Pacific 05
06
07
31 NOVEMBER 19 SIG COMBIBLOC - CMD MARTIN HERRENBRÜCK 13 years with SIG and President & General Manager, PRESIDENT & Europe since 2017 PREVIOUS POSITIONS INCLUDE GENERAL Head of Cluster Asia - Pacific South Head of Global Marketing MANAGER, Corporate Development Roles EUROPE 50/50 EMEA MEA: JOINT VENTURE WITH OBEIKAN INVESTMENT GROUP KEY FIGURES FOUNDED IN 2001
ASEPTIC CARTON SHARE (2018) Europe Middle East Africa 24% 16% 5% SIG 58% 25% 71% Other Tetra Pak
33.5% €733m ADJ. EBITDA MARGIN1 CORE REVENUE1 (2018) (2018)
1 Consolidated EMEA reporting segment
33 NOVEMBER 19 REGIONAL CASE STORIES Europe EUROPE SIG'S AT A GLANCE GO-TO-MARKET STRATEGY
DAIRY AND JUICE FLAT OR SLIGHTLY TWO STRATEGIC ENABLED BY SIG’S PROCESSING MARKETS DECLINING VOLUMES IN THRUSTS ON GO-TO- CORE STRENGTHS IN HIGHLY CONSOLIDATED, CERTAIN CATEGORIES (E.G. WHITE MILK) MARKET PLAYERS WITH HIGH OPERATIONAL LEVEL OF TECHNICAL DEFEND AND EXCELLENCE EXPERTISE AND FOCUS SELECTIVELY GROW ON EFFICIENCY AND WITH EXISTING INNOVATIVE AND COST CUSTOMERS SUSTAINABLE PACKAGING SOLUTIONS WIN NEW CUSTOMERS ADVANCED AFTER-SALES GROWTH FROM PROLIFERATION OF SKUS AND CATEGORIES WHILE EMERGING CATEGORIES AND FLEXIBILISATION OF BROADENING THE SERVICES SUCH AS PLANT-BASED THE VALUE CHAIN E.G. EUROPEAN REACH DAIRY ALTERNATIVES, VIA CO-PACKERS UPGRADED SOLUTION FOOD OR WATER AS NEW SELLING APPROACH CATEGORIES FOR CARTON
34 NOVEMBER 19 SIG COMBIBLOC - CMD REGIONAL SUCCESS STORIES Europe GO-TO-MARKET TO DEFEND AND GROW
Advanced solutions offerings Sales approach and tools to deliver customised solutions to strengthen sales effectiveness and efficiency
Development of innovative and Upgrade of sales tools and processes sustainable packaging solutions (e.g., CRM system, sales cycle, holistic pricing)
Extension of after-sales service offerings Solution-based selling model
DEFEND AND SELECTIVELY GROW WITH EXISTING CUSTOMERS
WIN NEW CUSTOMERS AND BROADENING THE REACH (Spain, 2016) (Portugal, 2017) (Austria, 2016) (Ireland, 2017) (Germany, 2019) (Poland, 2018) (UK, 2019) (Finland, 2019) (BA, 2018) (France, 2017) (UK, 2019) (Germany, 2017)
35 NOVEMBER 19 SIG COMBIBLOC - CMD REGIONAL SUCCESS STORIES Europe GAINING VOLUME SHARE THROUGH NEW CUSTOMERS AND WINNING REPLACEMENT PROJECTS # New / Contracted Key Reasons for Region Fillers Timeline of New Projects: Significant wins 2016/H2-2020/H1 Wins 2016/H2 2017 2018 2019 2020/H1 Central 2 Q4/18 Q4/19 Format and Central 2 Aug-16 Q1/19 Volume South 6 Oct-16 Q3/19 Q4/19 Flexibility Central 1 Q1/17 East 1 Q4/17 West 4 Apr-17 Q4/18 Q219 Q4/19 East 1 May-17 East 1 Jun-17 Q2/18 South 1 Jun-17 TCO South 2 Jun-17 Q1/19 Advantage North 2 Jun-17 Q4/18 Central 2 Aug-17 Q1/18 Central 2 Aug-17 Q4/18 East 1 Q4/17 South 3 Q2/18 Q3/18 Q4/18 Innovation – Central 1 Q3/18 Product Design South 1 Q1/19 and Concepts Central 1 Q2/19 East 3 Q4/18 Q1/19 Q3/19 North 6 Q4/18 Q1/19 Q2/19 Central 2 Q3/19 Q4/19 Holistic Service North 1 Q3/19 Solutions – South 3 Q3/19 Wins in Green North 1 Dec-19 and Brownfield East 1 Q1/19
First Filler Additional fillers Volume Placed placed ramp-up New Customer Existing Customer
36 NOVEMBER 19 SIG COMBIBLOC - CMD REGIONAL SUCCESS STORIES Europe INCREASING SHARE OF WALLET: Differentiation for premium HELPING MASPEX TO INNOVATE categories
OPPORTUNITY: SOLUTION: OUTCOME:
MASPEX NEEDED TO REFRESH CONSUMER APPEAL SIG OFFERED DIFFERENTIATION AND A NEW LEVEL INSTALLATION OF 3 FILLING LINES AND FOR ITS NATURAL FRUIT JUICE RANGE AND TO OF CONVENIENCE WITH COMBIDOME PACKAGING SUCCESSFUL MARKET LAUNCH OF TYMBARK REJUVENATE AND STRENGTHEN TYMBARK BRAND SOLUTION. CONCEPT DEVELOPMENT OF NEW PRODUCT RANGE. SKUS TO LEVERAGE SIG’S VOLUME FLEXIBILITY UNLOCKING NEW CONSUMPTION OCCASION AND AND TO ATTRACT NEW CONSUMER GROUPS ▪ MASPEX IS MARKET LEADER TARGET GROUPS BY INTRODUCING 500ML ON- IN NCSD WITH NO. 1 JUICE BRAND TYMBARK IN THE-GO “VEGETABLE JUICE” SKUS POLAND ▪ SUCCESSFUL PARTNERSHIP WITH SIG SINCE 2001 ▪ 10 SIG LINES RUNNING IN 3 PLANTS
37 NOVEMBER 19 SIG COMBIBLOC - CMD REGIONAL SUCCESS STORIES Europe NEW CUSTOMER WINS: Efficiency and HELPING COVAP TO ELEVATE OPERATIONAL EXCELLENCE safety
OPPORTUNITY: SOLUTION: OUTCOME:
COVAP NEEDED TO UPGRADE AND INCREASE SIG PROVIDING HIGHEST SYSTEM QUALITY LEVEL, PASSING 24-MONTHS SYSTEM AND PERFORMANCE CAPACITY WHILE IMPROVING TOTAL QUALITY ADDED VALUE SERVICE AND REDUCING TOTAL TEST AND THEREBY QUALIFYING AS STRATEGIC AND PRODUCTION EFFICIENCY FILLING COST THROUGH SUPERIOR LINE PARTNER OF COVAP EFFICIENCY SUCCESSFULLY CONCLUDING ON PHASE 1 OF COVAP IS A LARGE DAIRY COOPERATIVE IN SPAIN TECHNOLOGY UPGRADE PROGRAM AND FIRST FILLING LINES PLACED FOR COMMERCIAL RELYING EXCLUSIVELY ON COMPETITOR'S SYSTEM IN PRODUCTION THREE PLANTS
A LONG-TERM PARTNER AND A LEADING SUPPLIER OF RETAILER
38 NOVEMBER 19 SIG COMBIBLOC - CMD REGIONAL SUCCESS STORIES Europe
EVERYONE LOVES OUR PACKS
39 NOVEMBER 19 SIG COMBIBLOC - CMD ABDELGHANY ELADIB Joined SIG Combibloc Obeikan in 2017 as Chief Operating Officer CHIEF PREVIOUS EXPERIENCE INCLUDES OPERATING 26 years of Food & Beverage industry experience in various leadership positions OFFICER, MEA including P&G, Cadbury, Bel Foods, and Mars REGIONAL CASE STORIES Middle East Africa
2018 sales €275m
joint venture with Obeikan 50/50 Investment Group founded SLEEVE PLANT in 2001
REGIONAL HEADQUARTERS
41 NOVEMBER 19 SIG COMBIBLOC - CMD REGIONAL CASE STORIES Middle East Africa MIDDLE EAST AFRICA SIG'S AT A GLANCE GO-TO-MARKET STRATEGY
POSITIVE LONG-TERM RISING DEMAND FOR FOCUS ON TECHNICAL DEVELOPMENT OF SMART TRENDS CONVENIENT ON-THE-GO ROBUSTNESS AND FACTORY SOLUTIONS PACKAGED PRODUCTS DRIVEN BY GROWTH IN FLEXIBILITY OF OUR OFFER E.G. ALMARAI PLANT 360 MIDDLE-INCOME DUE TO CHANGING ASSET MANAGEMENT HOUSEHOLD EXPENDITURE CONSUMPTION AND IN POPULATION BEHAVIOURS, E.G. AT WORK
MARKETS RECOVERING PARTNERING WITH NEW INNOVATION AND FROM CHALLENGING CUSTOMERS TO DRIVE RELIABILITY CENTRE IN CONDITIONS IN 2018 DIFFERENTIATION AND DUBAI INNOVATION
FOCUS ON AFFORDABILITY WHEN NEEDED
42 NOVEMBER 19 SIG COMBIBLOC - CMD REGIONAL SUCCESS STORIES Middle East Africa ENABLING EXPANSION IN DAIRY NIGERIA: Differentiation for premium NEW PRODUCT DESIGN FOR HOLLANDIA categories
OPPORTUNITY: SOLUTION: OUTCOME:
Hollandia is a leading dairy brand SIG’s 125ml combiblocMini Hollandia evaporated milk sales in Nigeria pack: perfect filling quantity and increased to 6 million packs per shelf perception at an affordable month 6 months after launch To provide a convenient, affordable price single use evaporated milk product 125 ml carton has better shelf appearance than 160 gr can Consumers judge quantity by height
43 NOVEMBER 19 SIG COMBIBLOC - CMD REGIONAL SUCCESS STORIES Middle East Africa PRODUCT DIFFERENTIATION Differentiation for premium AND ASSET EFFICIENCY categories
OPPORTUNITY: SOLUTION: OUTCOME:
Almarai aiming to increase margins SIG’s filling line size flexibility enabled Following Almarai the entire Saudi and market share in single serve switch from 6x200ml multipacks for flavoured milk market shifted to flavoured milk category 6SAR to 6x150ml for 5SAR with 150ml. Almarai became market improved margins and without leader in this segment further investment
Digitalisation SIG installed the first global pilot of Targeting higher line availability and Plant 360 AM at Almarai factory: improved asset health for Almarai change to condition-based Controlled costs for SIG maintenance
Almarai is the leading food and beverage company in the Middle East
44 NOVEMBER 19 SIG COMBIBLOC - CMD RICARDO RODRIGUEZ
16 years with SIG and PRESIDENT & President & General Manager, Americas, since 2015
GENERAL PREVIOUS POSITIONS INCLUDE Director & General Manager, South America MANAGER, Technical Service Director, South America AMERICAS REGIONAL CASE STORIES Americas AMERICAS – KEY FIGURES
ASEPTIC CARTON SHARE (2018)
1% 16% €297m
CORE REVENUE (2018)
83% Tetra Pak SIG Other 27.2%
ADJ. EBITDA MARGIN (2018)
46 NOVEMBER 19 SIG COMBIBLOC - CMD REGIONAL CASE STORIES Americas AMERICAS SIG'S AT A GLANCE GO-TO-MARKET STRATEGY
MEXICO BRAZIL MEXICO BRAZIL
6th largest aseptic Second-largest aseptic Serving key players in highly Filling solutions improve carton market globally market globally concentrated liquid dairy and customer efficiency and enable juice markets affordable products Strong growth in white milk Consolidation of dairy players consumption driven by growing Extending share with affordable New digital solutions ensure share of recombined milk Key trends are affordability, filling and packaging solution, e.g. traceability naturalness, premiumisation Alpura with white and recombined milk
USA / CANADA USA / CANADA
Predominantly a fresh milk Developing strong relationships market but strong growth in with US/Canadian co- plant-based milks in aseptic manufacturers, e.g. Steuben carton Delivering formats and designs Rise of small brands using co- for new categories manufacturing models
47 NOVEMBER 19 SIG COMBIBLOC - CMD REGIONAL SUCCESS STORIES Americas BRAZIL Differentiation for premium MEETING MARKET TRENDS – AFFORDABILITY categories
OPPORTUNITY: SOLUTION: OUTCOME:
Quata worked with competitor’s fillers SIG proposed a solution Lower production footprint for milk. for switching two lines to one filler. New line can fill three different product Higher output Chose SIG for TCO in milk and to enter categories on the same filler. new categories of sweetened Lower energy and water consumption condensed milk and liquid cream/ Reduced manpower flavoured milk. Reduced waste and higher technical efficiency
Quata – One of Brazil’s largest milk producers
48 NOVEMBER 19 SIG COMBIBLOC - CMD REGIONAL SUCCESS STORIES Americas BRAZIL Differentiation for premium MEETING MARKET TRENDS – TRACEABILITY categories
OPPORTUNITY: SOLUTION: OUTCOME:
Languiru needed to recover consumer "One Click Tracking" for better QR code became Languiru’s quality trust and deliver profitable growth by traceability to assure quality stamp. One-to-one consumer leveraging consumer interaction with and food safety communication and engagement led to the brand increased sales End-to-end supply chain control through fully automated data collection
Languiru – One of Brazil’s largest producers of meat, poultry and dairy products
49 NOVEMBER 19 SIG COMBIBLOC - CMD REGIONAL CASE STORIES Americas US/CANADA: Differentiation for premium categories LEVERAGING CO-MANUFACTURERS Efficiency and safety TO GROW IN HOT NEW SEGMENTS
CO-MANUFACTURING MODEL ENABLES EXAMPLE: STEUBEN BROAD ACCESS AND PENETRATION IN FRAGMENTED MARKET Leading US co-packer for multiple low acid products with access to leading brands Focused on value added product application and packaging innovations Patented processing and ingredient technology Strategic partner with 8 installed fillers
50 NOVEMBER 19 SIG COMBIBLOC - CMD REGIONAL CASE STORIES Americas
WHITE MILK MEXICO: DRIVING EXPANSION GROWTH IN LIQUID DAIRY WITH THE LEADING PLAYER
5 key players represent ~80% of carton volume Partnership with alpura
LD NCSD ▪ Largest dairy cooperative in Mexico ▪ 2nd largest aseptic milk producer in Mexico
<25% <30%
1.4 bn 1.9 bn litres litres ▪ Began in 2015 with installation of first filler for >70% >75% evaporated milk as an alternative to the can ▪ Recent launches include Forti Leche brand for recombined milk, the fastest and largest growing white milk category in Mexico – based on affordable filling Others Others and packaging solution SIG Mexico’s 2nd largest customer 2019 with 7 installed fillers alpura – Largest dairy cooperative in Mexico
51 NOVEMBER 19 SIG COMBIBLOC - CMD LAWRENCE FOK
7 years with SIG and President & General Manager, PRESIDENT Asia Pacific since 2012
AND GENERAL PREVIOUS EXPERIENCE INCLUDES Management positions at Norgen, Alcan Global MANAGER, Pharmaceutical and SCA Packaging APAC REGIONAL CASE STORIES Asia Pacific ASIA PACIFIC – KEY FIGURES
ASEPTIC CARTON SHARE (2018)
23% €598m
CORE REVENUE (2018) 58% 19%
Tetra Pak SIG Other 30.3%
ADJ. EBITDA MARGIN (2018)
53 NOVEMBER 19 SIG COMBIBLOC - CMD REGIONAL CASE STORIES Asia Pacific ASIA PACIFIC SIG'S AT A GLANCE GO-TO-MARKET STRATEGY
MARKETS DRIVEN BY CHINA DEMAND FOR STRONG RELATIONSHIPS NEW PRODUCTS DEMOGRAPHICS AND FORMATS premium milk growing with China’s leading dairies rising disposable income, by 7% p.a. Yili and Mengniu and with to expand into new urbanisation Friesland Campina, DPO & categories Lactasoy in South East Asia
AFFORDABILITY INNOVATION in partnership with still a primary consideration for many customers customers: launch of combismile, Heat&Go, new INCREASING FOCUSED NEW regional tech centre DEMAND FOR CUSTOMER DEVELOPMENT STRATEGY convenience, health & wellness, premium and RAPID INNOVATION building upon SIG's quality, REGIONAL EXPANSION sustainable products CYCLES flexibility, reliability and competitive TCO through acquisition of Visy Cartons and new factory in China
54 NOVEMBER 19 SIG COMBIBLOC - CMD REGIONAL CASE STORIES Asia Pacific CHINA BUILDING OUR RELATIONSHIP WITH YILI AND MENGNIU Mengniu Yili #10 dairy globally1 #8 dairy globally1
PREMIUMISING TRUE ON-THE-GO EXPLORING SHUHUA MILK NEW CATEGORY CONSUMPTION NEW CATEGORIES IN NEW PACKAGE
Entering new “ambient yogurt” Fibre shake milk with cereals as GuoguoXi is an added-value No. 1 functional milk in China category meal replacement, yogurt smoothie with rich fruit with 37% market share in sales juice and fruit pieces value Higher viscosity – more texture Packaged in combismileBig for more taste 250ml with combiGo Big Packaged in combismileSmall New Shuhua SKU in new 220ml with combiGo Small Packaged in combismileSmall New selling channel/platform on packaging and size – premium 200ml WeChat Launched with the famous whole fat functional milk Chinese actress Zhou Dongyu’s Only high quality ingredients testimonial Packaged in combismileSmall 220ml
Patented LHT lactose hydrolysis technology
1. MARKETING92
55 NOVEMBER 19 SIG COMBIBLOC - CMD REGIONAL CASE STORIES Asia Pacific DPO Efficiency and safety Sustainable THE DAIRY FARMING PROMOTION packaging ORGANIZATION OF THAILAND
DPO's volume share Thai-Denmark: in mainstream milk market One of Thailand's most chosen & admired brands 2015 2018 Share of total Share of total volume volume
44% 56% 51% 49%
Iconic Thai Denmark UHT milk in SIG Cb1 aseptic packaging Others DPO Others DPO
Source: Nielsen Retail Index, DPO
56 NOVEMBER 19 SIG COMBIBLOC - CMD REGIONAL CASE STORIES Asia Pacific EXPANSION Efficiency and safety Sustainable OF SIG’S PARTNERSHIP WITH DPO packaging
Evolution of SIG share at Locations of DPO’s dairy plants 4 DPO aseptic plants
Chiang Mai - Pasteurized B sleeves (packaging units) ~1.30 ~1.33 ~1.25 Sukhotai - UHT 100% SIG fillers ~1.13 Competition Khonkaen - UHT
Muaklek - Flagship - UHT 100% SIG fillers
Prachuapkhirikhan - UHT ~75% ~50% ~25% ~20% SIG offer: ▪ Line efficiency: 24k packs/hour 2015 2016 2017 2018 ▪ Volume flexibility SIG attributed SIG attributed ▪ Lowest waste rate Muaklek Phase 1 Muaklek Phase 2
Source: Company information, DPO
57 NOVEMBER 19 SIG COMBIBLOC - CMD REGIONAL CASE STORIES Asia Pacific ENTERING INTO NEW MARKETS: AUSTRALIA AND NEW ZEALAND ACQUISITION OF VISY CARTONS
HIGHLIGHTS OPPORTUNITIES FOR GROWTH LICENSEE WITH LEADING POSITION IN AUSTRALIA ANZ MARKET GROWING AT 3% CAGR OVER NEXT 5 YEARS2 23 ACTIVE FILLERS DAIRIES INVESTING TO EXPORT MILK TO CHINA SIGNIFICANT SCOPE FOR SYNERGIES AND OTHER ASIAN COUNTRIES • SUPPLY CHAIN OPTIMISATION • INTRODUCTION OF LATEST TECHNOLOGY AND EXPANSION OF VISY BUSINESS SOLUTIONS IN NEW ZEALAND REVENUE FY JUNE 19: €52M1
1 At current exchange rates 2 Source: Euromonitor, company information
58 NOVEMBER 19 SIG COMBIBLOC - CMD REGIONAL CASE STORIES Asia Pacific ENTERING INTO NEW MARKETS INDIA SIG OPPORTUNITY Build a strong #2 position
KEY UNDERLYING TRENDS INDIA MARKET PROJECTIONS Launch new value-added products with particulates Rising Indian urban middle class drives growth in demand for aseptic products +10.0% – largest loose milk market in the world 1,968 CUSTOMER CAGR Demand for more convenience and LD 1,111 SUCCESS STORIES new/differentiated products ASEPTIC 1,870 (P.A.) 1,000 +11% New customer Amul this year – largest Regulation in favour of carton vs. plastic 2017 2023 dairy player with 63% share of white in selected states milk market +17.8% Second contract this year with Dabur – 8,015 largest juice and nectar player with 58% NCSD CAGR (P.A.) market share ASEPTIC 3,000 4,031 +20% 1,350 Ladhani Group 2017 2023 Customers value volume flexibility and ability to fill particulates enabling them Carton Others to launch value-added “premium economy” products
Source: Company information
59 NOVEMBER 19 SIG COMBIBLOC - CMD 01
02 5.1 Taking manufacturing to the next level from a strong base 03 5.2 Proven raw material strategy 04
5.3 Disciplined CAPEX approach 05 OPERATIONAL EXCELLENCE providing support for tangible growth
06
07
60 NOVEMBER 19 SIG COMBIBLOC - CMD IAN WOOD Joined SIG in 2018 as Chief Supply Chain Officer
CHIEF PREVIOUS EXPERIENCE INCLUDES 15 years at Honeywell as VP & General Manager of SUPPLY various business units as well in the Supply Chain CHAIN function initially OFFICER OPERATIONAL EXCELLENCE Next level manufacturing REGIONALLY INTEGRATED GLOBAL FOOTPRINT
Wittenberg Saalfelden
Linnich Suzhou ADVANTAGES OF LOCALISED PRODUCTION
LPB ▪ Lower lead time Neuhausen¹ Whakatane ▪ Lower transportation Australia cost and duties ▪ Natural hedging for production cost Curitiba Riyadh Rayong Melbourne ▪ Lower NWC due to reduced safety stock
Sleeve production Assembly Spouts production
LOCALISED SLEEVE AND SPOUT MANUFACTURING
1. Represents approx. 30% of spout production Source: Company information
62 NOVEMBER 19 SIG COMBIBLOC - CMD OPERATIONAL EXCELLENCE Next level manufacturing SIG EXCELLENCE SYSTEM
SIG EXCELLENCE
SAFETY, QUALITY, DISTRIBUTION, COST
Quality Focused Autonomous Planned Training & Innovation & Lean Safety Lean Flow Maintenance Improvement Maintenance Maintenance Education Early Involvement Administration
Daily Management Improvement Leadership & Cultural Change CIS Organisation
STRATEGY & KPI DEPLOYMENT
SIG Excellence SES with lean The SES journey is Balance between Basis for System delivers principles deeply tracked by annual performance and improvement world-class embedded into maturity practice roadmaps, manufacturing plant operations assessments standardisation model and best practice sharing
63 NOVEMBER 19 SIG COMBIBLOC - CMD OPERATIONAL EXCELLENCE Next level manufacturing PROVEN RAW MATERIALS STRATEGY WITH CYCLICAL RESILIENCE
KEY MATERIALS KEY THIRD PARTY SUPPLIERS SUPPLY DETAILS
LPB • Largest raw material cost • Historically experienced relatively stable pricing (~49% of raw Whakatane material spend) (internal) • Long-term strategic partnerships with key suppliers
• Pricing follows an index based pricing formula Polymers • Variation in price based on balance of polymer (~27% of raw production capacity and demand material spend) • Hedging strategy in place
• The two main cost components are aluminium-metal Aluminium and aluminium-conversion costs (50:50 split) (~15% of raw • Globally traded commodity with prices material spend) subject to global market factors • Hedging strategy in place
Source: 2018 data
64 NOVEMBER 19 SIG COMBIBLOC - CMD OPERATIONAL EXCELLENCE Next level manufacturing DESIGNING FOR VALUE
Incumbent SX Robust Structure Structure (RS) REDUCED MATERIAL CONTENT LDPE LDPE Sealing Board Board INCREASED ROBUSTNESS due to SX RS change of internal LDPE layers Security buffer LDPE Robust layer Security buffer Adhesive Operational Operational window window Adhesive Temperature Security buffer Al foil Security buffer Al foil Adhesive Adhesive Robust layer IMPROVED ENVIRONMENTAL PERFORMANCE with improved CO LDPE 2 LDPE footprint of up to 6% mPE mPE KEEPING PROVEN PROPERTIES for LDPE layers of current structure barrier, stiffness, printability, opening,
RS structure adaption recyclability
No changes of structure REDUCING MATERIAL INPUT WHILE IMPROVING QUALITY AND CUSTOMER VALUE
Source: Company information
65 NOVEMBER 19 SIG COMBIBLOC - CMD OPERATIONAL EXCELLENCE Disciplined CAPEX approach CAPITAL EXPENDITURE WELL CONTROLLED
PPE CAPEX (€M)
4.1% 4.2% 3.6% 3.4% 70 73 60 57 TOTAL PPE CAPEX AS % REVENUE
2015 2016 2017 2018
SELECTED MAJOR PROJECTS
Plant automation and digital manufacturing ▪ ▪ Capacity expansion – Brazil, Asia, spouts European plants transformation ▪ ▪ Proprietary quality assurance systems Robust sleeve structure ▪ ▪ SIG Tech Centre in China
CONTINUED INVESTMENT TO SUPPORT GROWTH AND COST EFFICIENCY
66 NOVEMBER 19 SIG COMBIBLOC - CMD Operational excellence Disciplined CAPEX approach EXPANSION OF PLANT NETWORK IN ASIA PACIFIC TO SUSTAIN FURTHER GROWTH IN THE REGION
ROBUST DEMAND FOR LOCATED CLOSE TO LIQUID DAIRY IN CHINA NEW SIG TECH CENTRE: AND SOUTH EAST ASIA COMPREHENSIVE ABILITY LEADING TO HIGH TO SERVE CUSTOMERS CAPACITY UTILISATION AT CHINESE AND TOTAL INVESTMENT THAI PLANTS €180M OVER SEVERAL YEARS NEW PLANT TO BE CONSTRUCTED FINANCED WITHIN AT SUZHOU EXISTING CAPEX INDUSTRIAL PARK GUIDANCE OPERATIONAL AND GOVERNMENT SUBSIDIES OVERHEAD SYNERGIES ONSTREAM EARLY 2021 WITH EXISTING PLANT OPPORTUNITY TO ACCELERATE PAYBACK WITH VISY ACQUISITION
67 NOVEMBER 19 SIG COMBIBLOC - CMD 01
02 6.1 Financial resilience 03 6.2 Financial outlook 04
05
06 FINANCIAL PERFORMANCE
07
68 NOVEMBER 19 SIG COMBIBLOC - CMD SAMUEL SIGRIST 14 years with SIG, CFO and Chairman of Middle East JV since 2017
CHIEF PREVIOUS POSITIONS INCLUDE President & General Manager Europe (2013-2017) FINANCIAL Director of Group Controlling & Reporting Head of Finance / CFO Europe OFFICER Head of Group Projects FINANCIAL PERFORMANCE Financial resilience SEIZING OPPORTUNITIES AND DRIVING GROWTH REVENUE GROWTH TARGET 4%-6%1
Well positioned Track record of Strong presence Consumer-led State-of-the art Sustainability in aseptic carton share gain in growth innovation production and leader : market which is through regions with meeting and filler flexibility a pioneer in outperforming differentiated favourable anticipating enable SKU sourcing and other substrates technology and demographics rapidly evolving proliferation innovating for excellence in and socio- trends greener customer economic products service trends
1. Core revenue growth at constant currency
70 NOVEMBER 19 SIG COMBIBLOC - CMD FINANCIAL PERFORMANCE Financial resilience KEY ROLE IN FOOD & BEVERAGE VALUE CHAIN
Proprietary differentiated technology
Essential role in preserving food quality and safety
Long term customer relationships
Serving non-discretionary food and beverage categories
Complete solutions offering enabling customers to maximise efficiency and productivity
71 NOVEMBER 19 SIG COMBIBLOC - CMD FINANCIAL PERFORMANCE Financial resilience RAZOR / RAZORBLADE BUSINESS MODEL GENERATING STABLE CASH FLOWS
FILLERS 6% SLEEVES & CLOSURES 88% SERVICE 6% (OF TOTAL REVENUE2) (OF TOTAL REVENUE2) (OF TOTAL REVENUE2) Key criteria for investment decisions
Attractive IRR FILLER INSTALLED GROSS PROFIT DYNAMIC PAYBACK IRR BEFORE
DEPRECIATION 1 Key filler placement models
SALE AND LEASE SALE LEASE
ARRANGEMENTS CUM.CASHFLOW
Accounting treatment
Year 0 Year 2 Year 4 Year 6 Year 8 + Year 10 Cost capitalised as fixed assets Upfront cash recognised as 2-3 Year breakeven on new filler placements and depreciated over 10 years deferred revenue
HIGH CUSTOMER RETENTION AND RECURRING SALES
1. Illustrative chart based on consistent gross margin throughout customer relationship 2. Revenue split based on revenue generated through sale of system components and sleeves & closures for 2018
72 NOVEMBER 19 SIG COMBIBLOC - CMD FINANCIAL PERFORMANCE Financial resilience ABILITY TO GENERATE GROWTH AND INCREASE PROFITABILITY THROUGH THE CYCLE
2008-18 2008-18 2008-18 ROCE: REVENUE CAGR: ADJ. EBITDA CAGR: ADJ. EBITDA MARGIN EXPANSION: 4% 5% ~400BPS >20%3
CONSTANT CURRENCY %
CORE REVENUE1 GROWTH %
1.644 1.563 1.590 1.546 1.568 1.483 TOTAL REVENUE (€M) 1.294 1.355 1.163 1.167 1,546 1,483 1,494 1,568 1,563 1,590 1,644 1,294 1,355 CORE REVENUE1 (€M) 1,163 1,167
409 417 436 467 455 462 ADJ. EBITDA (€M) 281 341 389 342 389
2008A 2009A 2010A 2011A 2012A 2013A 2014A 2015A 2016A 2017A 2018A
ADJ. EBITDA MARGIN 24% 29% 28% 23% 24% 24% 26% 25% 27% 27% 28%
ADJ. EBITDA – CAPEX2 MARGIN 16% 23% 19% 14% 16% 15% 18% 18% 18% 17% 19%
1. Core revenue represents the revenue to external customers and excludes (i) sales of laminated board (LB) to the Middle East Joint Venture and (ii) sales of folding box board (FBB) to third parties 2. Capex represents Net Capex calculated as Gross Capex less Upfront Cash 3. Post-tax ROCE presented above is calculated by adjusting pre-tax ROCE by applying a 30% REFERENCE TAX RATE to the pre-tax ROCE
73 NOVEMBER 19 SIG COMBIBLOC - CMD 5% 3 Financial performance Financial resilience INCREASING FOCUS ON GROWTH REGIONS
2008 2014 2018
Core revenue: €1,163m Core revenue: €1,494m Core revenue: €1,644m
AMERICAS Non-EMEA 6% Non-EMEA Non-EMEA 23% 46% 55% AMERICAS AMERICAS ASIA PACIFIC 17% 18% 17% EMEA 45% EMEA ASIA PACIFIC 54% 29% ASIA PACIFIC 37% EMEA 77%
Adj. EBITDA: €281m Adj. EBITDA: €417m Adj. EBITDA: €462m
74 NOVEMBER 19 SIG COMBIBLOC - CMD Financial performance Financial resilience CURRENCY AND RAW MATERIALS HEDGING TO MANAGE VOLATILITY
Further mitigation Systematic hedging Multi-year contracts 12 month rolling of transaction risk of key currencies vs for liquid paper hedges for in EBITDA, on top EUR: CNY, THB, board aluminium and of natural hedging BRL, USD polymers covering ~80% of purchases 6-12 month rolling layered approach
75 NOVEMBER 19 SIG COMBIBLOC - CMD Financial performance Financial resilience LOW BETA REFLECTS RESILIENCE OF BUSINESS
Packaging peers1 Industrial peers2 Beta as per 01/11/2019 0.43 0.56 1.04
Low beta in line with Robust business model Best-in-class defensiveness attractive financial profile against a backdrop of stable evidenced during the 2008- (top line growth, industry- end markets 09 financial crisis leading margins)
SIG beta reflects strong non-cyclical resilience
1. Packaging peers include Ball, Amcor, Crown, Sealed Air, Berry Global, Huhtamaki, Silgan, BillerudKorsnas, Aptar and Vidrala 2. Industrial peers include: Atlas Copco, Kone, Schindler, Assa Abloy, Legrand, Geberit, Halma, Alfa Laval, Spirax-Sarco, GEA, VAT Group, Georg Fischer, Renishaw, Sulzer, Rotork, Belimo, SFS Group, IMA, Landis + Gyr, Burckhardt, Bobst, Nordson and ITW
76 NOVEMBER 19 SIG COMBIBLOC - CMD Financial performance Financial resilience KEY FINANCIAL METRICS FOCUSED ON PROFITABLE GROWTH AND RETURN ON CAPITAL
€1.6bn 27.5% 2018 data Core Target Adjusted Target 4-6% growth p.a. 27-28% in 2019 revenue EBITDA Adjusted at constant currency ~29% mid-term €213m margin net income1
€114m (6.8% of revenue) €143m (8.5% of revenue) Adjusted Target 1 €0.66 Net CAPEX Target Net working EPS 5-7% of revenue 8-10% of revenue capital mid-term Free cash €212m flow1
3.2x Post tax 20.6% - ROCE Leverage Target Pre-tax: 29.4% Cash Towards 2.0x mid-term 69% conversion
1. Pro forma
77 NOVEMBER 19 SIG COMBIBLOC - CMD FINANCIAL PERFORMANCE Financial resilience LOW WORKING CAPITAL BASE FURTHER SUPPORTS CASH FLOW
€m 2018 2017 2016
Inventory 144 122 126
Trade receivables 135 173 153
Trade payables (166) (153) (165)
NET WORKING CAPITAL 114 143 113
% REVENUE 6.8% 8.6% 6.6%
OTHER RECEIVABLES / PAYABLES1 (179) (133) (74)
OPERATING NWC (66) 10 39
% REVENUE (3.9%) 0.6 % 2.3%
1. Including accruals for volume bonuses to customers settled in following year Differences due to rounding
78 NOVEMBER 19 SIG COMBIBLOC - CMD FINANCIAL PERFORMANCE Financial resilience CAPITAL EXPENDITURE REMAINING WITHIN TARGET RANGE - CLEAR HURDLE RATES
164.2 159.4 Outlook CAPEX 143.2 2015-18: Accelerated filler investment in 124.7 Asia Pacific and Americas
86.3 104.1 86.2 2019-24: PPE investment in new China 54.6 CAPEX filler (net) plant (front-loaded)
Net capex to remain within 8-10% of 70.1 73.1 revenue range CAPEX PPE 60.1 57.0
2015 2016 2017 2018
Total CAPEX 7.2% 9.2% 9.9% 8.5% (net) % of rev.
79 NOVEMBER 19 SIG COMBIBLOC - CMD FINANCIAL PERFORMANCE Financial resilience ROCE AS REFERENCE POINT FOR INVESTMENT HURDLE RATES
In 2018, pre-tax ROCE Outlook
(in €M or %) 2018 Net PP&E will increase with investment in new plant Adjusted EBITDA 461.5 Dividends received from joint ventures (23.7) Reduction in net working capital targeted Depreciation of PP&E (172.3) (in line with target of 5-7% of revenue) ROCE EBITA 265.5 Current assets (excluding cash and cash equivalents) 407.3 Ongoing investment in fillers with rapid payback criterion maintained – cash flow Current liabilities (excluding interest-bearing liabilities) (574.3) break-even in 2-3 years PP&E 1,068.8 Business growth expected to more than Capital employed 901.8 compensate for growth in capital Pre-tax ROCE 29.4% employed ROCE tax rate of 30% 30.0% Post tax ROCE1 20.6%
1. Post-tax ROCE is calculated by adjusting pre-tax ROCE by applying a 30% tax rate, which management has determined reflects a reference tax rate to provide comparability between years
80 NOVEMBER 19 SIG COMBIBLOC - CMD FINANCIAL PERFORMANCE Leverage
MID TERM LEVERAGE LEVERAGE TARGET TOWARDS 2X
Senior secured TOTAL NET Cash Lease liabilities1 Net total debt €M term loans LEVERAGE RATIO
2019H1 79 1,577 45 1,543 3.3X
2018A 157 1,592 26 1,462 3.2X
MOODY’S UPGRADE IN STRONG CASH FLOW TARGETING INVESTMENT S&P RATING BB+ OCTOBER 2019: FROM GENERATION GRADE RATING BA3 TO BA2
1. Lease liabilities include €14m related to the adoption of IFRS 16 Differences due to rounding
81 NOVEMBER 19 SIG COMBIBLOC - CMD FINANCIAL PERFORMANCE Use of funds CLEAR PRIORITIES FOR USE OF FUNDS
Invest in the business Dividend payout Deleveraging
State of the art production facilities to €99M (CHF 0.35 per share) End-2018 net leverage ratio 3.2x: end- meet demand paid in 2019 2019 expected to be slightly lower New filler placements
Net capex to remain within 8– Target payout ratio: Mid-term target 10% of revenue range 50–60% of adjusted net towards 2× income
82 NOVEMBER 19 SIG COMBIBLOC - CMD WRAP-UP Key investment highlights KEY INVESTMENT HIGHLIGHTS
ATTRACTIVE INDUSTRY WINNING BUSINESS MODEL STRONG FINANCIAL CHARACTERISTICS ENABLING GROWTH PROFILE
Proprietary technology and engineering Best-in-class margins and Global leadership – strong #2 globally A C know-how G strong cash flow generation
End to end solutions with value-adding Resilient growing end markets Multi-faceted growth strategy B D support and service H
E Longstanding customer partnership model
F Consumer-led innovation
83 NOVEMBER 19 SIG COMBIBLOC - CMD THANK YOU
NOVEMBER 19