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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)
Bottom of price range Top of price range
800
850
900
950
1000
1050
1100
1150
Virgin Board Italy (FBB – GCII)
Bottom of price range Top of price range
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)
Bottom of price range Top of price range
Agenda
12
1 Overview
2 RDM Features and Strategic Guidelines
3 Delivering on Strategy
4 RDM Shares and Final Remarks
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
2 RDM Features and Strategic Guidelines
3 Delivering on Strategy
4 RDM Shares and Final Remarks
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
2 RDM Features and Strategic Guidelines
3 Delivering on Strategy
4 RDM Shares and Final Remarks
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
€€€