Reno De Medici - RDMrdmgroup.com/wp-content/uploads/2018/07/Company... · 3/21/2018 · GC-FBB...

Reno De MediciCompany Presentation

March 21, 2018

Agenda

2

1 Overview

2 RDM Features and Strategic Guidelines

3 Delivering on Strategy

4 RDM Shares and Final Remarks

Some numbers…

2017 net

revenues of

€569 million

Annual capacity of

1,050,000 tonnes

6 mills

2 sheeting

centers

1,509

employees

Commercial

network in 70

Countries

Star Segment of Borsa

Italiana and Madrid

Stock Exchange

3

A PanEuropean asset base

4

ITA, Villa S.Lucia

220k tons

LINER WLC

ITA, S.Giustina

240k tons

WLC

GER, Arnsberg

220k tons

LINER/GD WLC

FRA, Blendecques

110k tons

WLC

ITA, Ovaro

95k tons

OG-GK

FRA, La Rochette

165k tons

GC-FBB

Three assets with capacity well above 200k tons/p.a.

Ovaro mill focused on high-margin specialties.

WLC –

White Lined Chipboard

FBB –

Folding Boxboard

RDM La Rochette

(FBB business)

included in the P&L

consolidation

perimeter of RDM

starting from H2 2016.

Our virtuous circle

Recycled paper collectors

Consumers

Carton board producers

Distributors

End users

Converters

5

With our cartonboard…

Our cartonboard is used toproduce a huge quantity ofproduct we use every day. Anyexamples?

6

Business drivers

Overall economic trend

Cartonboard

demandCare for planet

Plastic substitutions

Brand recognition

Changes in lifestyles

E-commerce

7

Chinese PFR import trends

8

China is the world’s biggestconsumer and is dependent on US (45.5%) and EU (29.4%) flows

Announced new Chinese regulationabout imports of unsorted waste paper (mostly mixed paper)

Finished productsexport opportunities

Drop of PFR import React to the new standard

Increase in virgin pulp

Fibers

9

Despite this downward pressure since Sept., the average priceper tonne in 2017 was higher

than of 2016

0

20

40

60

80

100

120

140

160

180

Brown Recycled fibers (€ per ton)

Mixed OCC

650

670

690

710

730

750

770

790

810

830

850

Bleached Softwood Pulp (€ per ton)

50

100

150

200

250

300

350

400

450

White Recycled Fibers (€ per ton)

Energy

10

15

17

19

21

23

25

27

29

Natural gas (€/MWh)

Gas Italy Gas France

70

80

90

100

110

120

130

140

Coal price in Germany (€/ton)

The trends are basically dependent to the

improved macroeconomic scenario

Selling prices

11

(€ per ton)

480

530

580

630

680

Recycled Board Italy (WLC – GDII)

Bottom of price range Top of price range

430

480

530

580

630

680

Recycled Board Italy (WLC – GDIII)


800

850

900

950

1000

1050

1100

1150

Virgin Board Italy (FBB – GCII)


800

850

900

950

1000

1050

1100

1150

1200

1250

Dec

-15

Jan

-16

Feb

-16

Mar

-16

Ap

r-1

6M

ay-1

6Ju

n-1

6Ju

l-1

6Se

p-1

6O

ct-1

6N

ov-

16

Dec

-16

Jan

-17

Feb

-17

Mar

-17

Ap

r-1

7M

ay-1

7Ju

n-1

7Ju

l-1

7A

ug-

17

Sep

-17

Oct

-17

No

v-1

7D

ec-1

7Ja

n-1

8Fe

b-1

8

Virgin Board France (FBB - GCII)


Agenda

12

1 Overview




Vision

13

Partner of Choice

Strategic priorities

14

Enhance SERVICE and PRODUCT QUALITY

High-performance output contributes to overall cost competitiveness

Promote the “ONE COMPANY” culture

The newly-introduced mindset targets continuous improvement inside RDM, with the aim of maximizing the satisfaction of all our stakeholders

Translate operational progress into HEALTHY FINANCIALS

IT investments allow for supply chain optimization and more effective execution of orders

Minimize the ENVIRONMENTAL IMPACT of cartonboard production

RDM is committed to reducing carbon emissions, recycling resources and increasing operational efficiency

Strategy at work

15

RDM leverages on clear strengths to deliver strategy:

PanEuropean asset base

and sales network

Cartonboard portfolio

based on recycled, virgin

fibres and specialties,

meeting the full range of

customer needs

Strong position on the

European market

making RDM the partner

of choice for key brands

and multinational

corporations

Presence in the packaging

business, sector in which

organic growth can be

healthy as returns on

investment prove to be high

MULTICOUNTRY BROAD OFFER

SIZE GROWING BUSINESS

2018 top priorities

16

ONE-COMPANY CULTURE

Spread the new culture across RDM

Benchmark internal/external activities

Foster best-practice sharing and

synergies

NEW ERP SYSTEM

Close prototype phase

Go-live in Italian mills

HEALTH & SAFETY

Target “Zero Accident” vision

Promote well-being mindset

Encourage improvements in working

environment

INTEGRATED SUPPLY CHAIN

Enhance service and product quality

Optimize volume allocation through

customer segmentation

Develop Integrated Business Planning

Agenda

17

1 Overview




FY 2017 achievements

18

Demand trend helped, but in-house levers put into play were crucial.

We successfully adapted response to spread challenges, while increasing mkt

share in core countries.

INTEGRATION AND CAPEX

BENEFITS

Increasing margins in a tough input-cost scenario

RAW MATERIALS

PRICES HIKESDEMAND

GROWTH

SPREADS

RDM ACTION

Better mgmt of controllable costs

Efficient operational performance

Higher-margin product mix (FBB)

Improved Sales and Operational planning

Selling price increase

Focus on core geographies

Higher customers selectivity

Better product positioning

12-month 2017 highlights

19

569.1 € mn

Net Revenues

from Sales

+19.1%

45.8 € mn

EBITDA

+50.5%

23.5 € mn

EBIT

+168.2%

14.6 € mn

Net Profit

4.3x

0.21

Gearing*

0.22x @ 2016YE

9.9%

ROCE**

3.7% @ 2016YE

(% changes: FY 2017 vs. FY 2016)

*Gearing: Debt/(Debt+Equity)

**ROCE: Last 12-month EBIT/Capital Employed Adjusted (for Equity Investments & LT Liabilities)

Revenues from Sales

20

The topline growth was driven by the

positive impact of the RDM La

Rochette consolidation.

WLC revenues increased by 7.8%, at a

higher pace than WLC volumes.

+13.7%

+19.1%

The increase in volumes reflects:

▪ the consolidation of the RDM

La Rochette (FBB business) for

12 months in 2017 (while in

2016 it contributed just in Q3

and Q4).

▪ The 5.7% increase in WLC

volumes (+47k tons).

1,012890

477.8569.1

Revenue growth outpaced

volume increase

Revenues by geography

21

Strong position in core European countries

FY 2016477.8 € mn

FY 2017569.1 € mn

FFB (La Rochette) products were not part of the RDM portfolio in H1 2016.

EBITDA and EBIT

22

The WLC EBITDA change (+49.6%)

reflects the following drivers:

WLC Revenues increase (+7.8%) led by

volume growth (+5.7%) and selling price

increase;

Increase in input costs;

Production increase (+12.5%).

In FY 2017 the contribution from the FBB

business to consolidated EBITDA was

positive (+1.8 € mn) due to the different

consolidation period.

FY 2017 EBITDA also reflects an

extraordinary item: 1.2 € mn

restructuring costs for the reorganization

of the sales team.

EBIT increase (+168.2%) resulted in

being even stronger than EBITDA

increase (+50.5%), due to limited D&A

growth (+3.0%, up to 22.30 € mn from

21.7 € mn in 9M 2016).

+50.5%

30.4

45.8+

+

_

+168.2%

EBITDA leap in Q2 and Q4 2017

2014 2015 2016 2017

14.0

11.8

8.1

7.3

10.7

12.4

11.0

7.8

9.3

8.1

6.0

7.1

9.1

14.2

9.7

12,8

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

11.0%

12.0%

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17

% o

f sa

les

EBIT

DA

M€

23

Investing to improve efficiency

24

Typically, over the last ten years,

RDM investments have been

mainly concentrated in upgrading

one plant at a time.

In 2016, Capex was mainly

focused on the Arnsberg mill

rebuild.

Cumulated capex of 179.3 million euro over the 2008-

2017 period, i.e. 17.9 million euro on average per year.

In FY 2017 the three main capex

projects were:

▪ the rebuild of the press

section at Blendecques

(Jan.)

▪ the replacement of the power

plant at La Rochette (Aug.)

▪ Steam turbine at Santa

Giustina (Dec.)

19.7

13.0

18.320.7

0

5

10

15

20

25

FY 2014 FY 2015 FY 2016 FY 2017

Capex (€ mn)

Low gearing ratio

25

Operational net cash-flow positive by

17.3 mn € and absorbed by a number

of specific outflows (17.0 mn €):

▪ Acquisition of 66.67% of PAC Service

S.p.A. (10.4 mn €)

▪ 2016 dividends paid and shares

buyback (1.3 mn €)

▪ Equity investment in Paper

Interconnector 1.7 € mn

▪ Restructuring costs 1.0 € mn

▪ RDM Arnsberg GmbH deposit on the

‘logo fee’ tax case (2.6 € mn).

Investment pipeline

26

Jan Aug Dec

Blendecques

shoepress section

La Rochette

power plant

Santa Giustina

steam turbine

Ovaro

converting machine

New ERP

Health & Safety projects

2018: sheeter at PAC Service, winder machine in Villa Santa Lucia and pope reel in Santa Giustina

36-hours

stop planned

Agenda

27

1 Overview




RDM and the Stock Exchange

28

Source: RDM shareholder register

Listing markets

Milan Stock Exchange – MTA (STAR segment)

Madrid Stock Exchange

CodesBloomberg: RM IM; Reuters: RDM.MI

ISIN: IT0001178299

Mkt cap: 311.7 € mn

Free float mkt cap: 102.5 € mn

(@0.825 € p.s. as of 16 March 2018)

Share Capital: 140,000,000.00 €

Outstanding shares: 377,800,994, o/w

377,537,497 ordinary shares

263,497 convertible savings shares

Conversion period: in February and

September, each year

Main shareholders

CASCADES INC.57.6%

CAISSE DE DEPOT ET

PLACEMENT DU QUEBEC

9.1%

TREASURY SHARES

0.4%

FREE FLOAT32.9%

FY2017 proposed dividend

ORDINARY SHARE:

Dividend of 3.1 € cents

(FY2016 dividend was 2.65 € cents)

Payment date: 16 May 2017

Dividend yield: 0.6% (YE2017 price of 0.5055 €)

Share performance

29

RDM vs FTSE Italy All-share Index

+169.9%

+20.1%

Q1 2017: 512,773

Q2 2017: 362,208

Q3 2017: 1,270,890

Q4 2017: 621,645

2 Jan.18-16 Mar.18: 1,142,925

Average daily traded volumes

(Last update: 16 March 2018)

(base: 2 Jan. 2017= 100)

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

RDM traded volumes

50.00

100.00

150.00

200.00

250.00

300.00

Jan

-17

Feb

-17

Mar

-17

Ap

r-1

7

May

-17

Jun

-17

Jul-

17

Au

g-1

7

Sep

-17

Oct

-17

No

v-1

7

De

c-1

7

Jan

-18

Feb

-18

Mar

-18

RDM FTSE Italy All-share

0.27

0.37

0.47

0.57

0.67

0.77

0.87

0.97

RDM share price

Board of Directors

30

Board appointed on 28 April 2017. Term of office: 3 financial years.

The CEO is the only executive member of the Board.

Eric Laflamme, ChairmanEntrepreneur (packaging business)

since 2013. COO of Cascades

Group in Montreal (2002-2008).

Previously at Cascades SA Europe.

Chemical engineer, with more

than 19 years of experience in

the European packaging

industry.

Giulio Antonello,

Independent Director

Laura Guazzoni,

Independent Director

Allan Hogg,

Director

In the past, investment banker

and CEO of a listed Company.

Presently, strategic advisor in

the asset management field.

Chartered accountant

and business

consultant. Bocconi

University professor.

Michele Bianchi, CEO

CFO of Cascades Group

since 2010 – Bachelor’s

Business Administration in

Accounting.

Gloria F. Marino,

Independent

DirectorChartered

accountant and

statutory auditor.

Lawyer at the Jones

Day Milan office.

Expert in M&A and

corporate compliance

Sara Rizzon,

Director

Stakeholder map

31

SHAREHOLDERS

+357%: EpS increase in FY2017 vs. FY2016

2017 proposed dividend: 3.1 €c, i.e. (2.65 €c FY16)

+65.4%: price increase in 2017

+63.2%: price increase in 2018 YTD

96 investors met in 2017

17 investors met in 2018 YTD

SUPPLIERS

CUSTOMERS

Tailored solutions in response to specific needs

Improved quality and service of products

Differentiation through converting and finishing services

Satisfaction survey in Nov. 2017

EMPLOYEES

Cultivation of the “One-Company” culture

Promotion of a digitalized mindset

New MBO system also based on Co.’s EBIT

New incentivizing remuneration policy

Satisfaction survey (entire staff) in 2018

Listening, engaging and creating value for stakeholders

Procurement integrated on a single platform

Smarter planning

Final remarks

32

1 Thorough evaluation and management of capex. Priorities: higher EBIT margin, ROCE expansion and sustainability improvements.

We will continue to deploy our plan to pursue organic growth and improve profitability

2 Optimization of the way we produce and sell, through further integration and by leveraging on digitalization.

We are selectively exploring M&A opportunities

to strengthen profitability and to improve resilience to cyclicality

Increase Company’s returns in

a reasonable time span

Contribute to smooth volatility

over the cycle

Even through vertical integration

€€€

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