StepChange Consulting Selected Financial · PDF fileB3NCH –Financial Benchmarking of Forest Products Peers Overview & selected financial benchmarking. ... and FMCG companies. Design

March 2018

B3NCH

B3NCH – Financial Benchmarking of Forest Products PeersOverview & selected financial benchmarking

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This document contains information that is confidential and proprietary to StepChange Consulting and is distributed only to the designated recipients. This information is provided with the explicit understanding of the recipient that it will be held confidential and will not be disclosed, duplicated or used, in whole or in part, for any purpose other than evaluation of this document. Distribution, quotations and duplications –even in the form of extracts – for third parties is only permitted upon prior written consent of StepChange Consulting.

This document is for informational purposes only and is based solely on publicly available data from various sources. The performance and results presented are historical and past performance is not an indicator of future results. Data has been verified under plausibility aspects. However, StepChange Consulting will not warrant or guarantee that the information is accurate and there might be errors or omissions in the material. Nothing in this document shall be perceived as a recommendation, to acquire or dispose of any investment, to provide advisory services or to engage in any other transaction. StepChange Consulting accepts no liability for any decisions made, any financial losses incurred, or any direct or indirect damage which may result from an investment, an action or any other decision taken based on the information published in this document.


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Following financial results are available for six peer groups KPIs

Financial KPIs available in the Benchmarking document

Name of the KPI Availability

Peer group comparison1): EBIT % Full version only

Peer group comparison1): EBITDA % ✓

Peer group comparison1): Working capital % Full version only

Peer group comparison1): Net profit % Full version only

Peer group comparison1): ROCE % Full version only

Peer group summary ✓

Financial performance comparison table Full version only

EBITDA % average vs. Revenue growth % ✓

Company-wide EBITDA as % of turnover ✓

Company-wide EBIT as % of turnover Full version only

EBIT % by region2) Full version only

Segment EBIT % ✓

Segment EBIT % avg. vs. Revenue growth % Full version only

Net profit as % of turnover Full version onlyFull version pricing & subscriptions see next page

1) Comparison slides containing all peer groups2) Not available for Tissue, Flexibles and Merchants peer groups

Name of the KPI Availability

Working capital as % of turnover Full version only

Working capital % development by region2) Full version only

Cash conversion cycle (CCC) Full version only

DIO, DPO & DSO Full version only

ROCE % applying EBIT Full version only

OCF % vs. FCF (excl. M&A) % Full version only

Operating cash flow as % of turnover Full version only

Net investment ratio % of non-current assets3) Full version only

Debt ratio (total liabilities / total assets) Full version only

Net debt to EBITDA ratio3) Full version only

Enterprise value / EBITDA Full version only

Turnover vs. Turnover / employee3) Full version only

3) Not available yet for Merchants peer groups



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Contents

Industry Financials

Peer group comparison

Graphic Paper peer group

Packaging Paper peer group

Tissue peer group

Pulp peer group

Flexible Packaging peer group

Merchants peer group


Methodology

Peer groups:

Peer groups are clusters of companies operating in the same industry segment according to the company’s portfolio of products to show whichcompanies are competing in a certain segment. In case a specific segment plays a substantial role in the company’s portfolio, the company isallocated to the peer group with its consolidated financial results which may be including results from other segments as well in case thecompany operates in multiple segments as segment-only information is only available for some metrics. All company information shown isbased on publicly available information.

Company segments:

Companies are sometimes active in multiple segments. In order to make a distinction between the results of the different operations,StepChange analyses the data for every segment. As an example for a company in the Packaging peer group, StepChange analyses the fullcompany results and also financial results of the Packaging segment only. For segment reporting, Revenue and EBIT are considered as othermetrics are not uniformly available based on public data.

Companies shown grayed out:

Grayed out numbers are used to display companies who are active in a segment because they are relevant competitors but whose results arehighly impacted by other operating segments.

Details shown in footnotes:

Footnotes are designed to explain the reporting period per companies shown, weighted average calculations, exclusions, abbreviations andnon-recurring items and events affecting results. Footnotes are numbered and can be found at the end of each peer group. StepChange isusing a common definition for metrics across all companies in order to make them comparable for all companies, therefore StepChangeadjusted figures may deviate from official company publications.

Financial benchmarking of six peer groups

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-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

2012 2013 2014 2015 2016 2017 2018 2019

-2%

0%

2%

4%

6%

8%

10%

2012 2013 2014 2015 2016 2017 2018 2019

-4%

-2%

0%

2%

4%

6%

8%

2012 2013 2014 2015 2016 2017 2018 2019

Most macro economic indicators show a positive economic trend.

Interest rates seem to have bottomed.

ChinaEuropean Union Brazil Japan United States

Gross domestic product (% change) Inflation – average consumer prices (% change)

Volume of exports of goods (% change) Short-term interest rates

Source: IMF Source: IMF

Source: IMF Source: OECD

United StatesChinaBrazil JapanEuropean Union

JapanChina United StatesBrazilEuro Area

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

2012 2013 2014 2015 2016 2017 2018 2019

United StatesBrazil China JapanEuro Area


Historical development of StepChange B3nch Index (SBI) vs. S&P 500 (10/2012 – 2/2018)

The StepChange B3nch Pulp, Paper & Packaging Index (SBI)

outperformed the S&P. On par due to recent adjustments.

Source: StepChange analysis based on historical data for 64 companies from Google Finance, Morningstar

The B3nch Index includes the market capitalization of 64 stock listed pulp, paper & packaging

companies. The SBI outperformed the S&P 500 and doubled in value since October 2012.

90

100

110

120

130

140

150

160

170

180

190

200

01/1507/1304/1301/13 07/1504/14 04/1510/1407/1401/1410/13 10/1607/1604/1601/1610/1510/12 01/1810/1707/1704/1701/17

SBI

%

S&P 500

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Market capitalization development of stock listed pulp, paper and packaging companies

in € and % (10/2012 – 2/2018)

Industry market capitalization shows a significant growth over five

years. Pulp outperforms. Graphics and packaging with ROI growth.

Source: StepChange analysis based on historical data for 64 companies from Google Finance, Morningstar

Average growth of market capitalization is driven by packaging (CAGR of 14%), flexibles (CAGR

of 15%) and pulp (20%) since October 2012

200

150

300

100

50

0

01/18

250

01/1701/1601/1401/13 01/15

Bn €

CAGR 16%CAGR 13%

TissueStepChange B3nch Index (SBI) FlexiblesPulpPackaging MerchantsGraphics

07/13 07/1607/14 07/1501/14 01/15 01/1801/1701/16

100

200

225

175

150

125

50

250

75

07/1701/13

%

5 years 4 monthsCAGR

15%

20%

17%

14%

12%

9%

-11%

274

5 years 4 months 1 year

SBI

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Development of market capitalization (in €) Development of market capitalization (in %)


Pulp peer group with biggest increase compared to 2016.

Graphic paper, packaging and merchant peer groups declining.

EBITDA % by peer group 2016-20171) Peer Overview

Pulp and tissue peer groups leading in terms of EBITDA with

further improved results in 2017

1,6%

12,8%

18,2%17,1%

15,1%13,5%

0,5%

13,4%

20,0%

17,7%

15,0%13,3%

Graphic Paper PulpTissuePackaging MerchantsFlexible Packaging

2016 2017

1) 2017 results are based on FY-2017 data or H1-2017 extrapolations, for more details, please see detailed peer group results

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Additional peer group comparisons available in the full version: Peer groups

EBIT% by peer group

EBITDA% by peer group

ROCE% by peer group

Working capital% by peer group

Net profit% by peer group

Investment ratio% by peer group

Net debt% by peer group

Overview of additional information available





Contents

Industry Financials




Tissue peer group

Pulp peer group




Summary

Declining revenues for most companies

Low net profit results for graphics (4,4%), despite improvements vs. 2017. Most companies with net profit decline, 8 companies with multi-year negative growth

Negative EBIT of North American peers

Despite unchanged average EBITDA of graphics segment in 2017, no above average results from North American peers, two above average in Asia

Overall working capital unchanged on high level. Working capital levels of North American peers 6,0pp above their European competitors – both regions significantly below Asian working capital levels.

EBITDA of companies in the graphics segment remained stable compared to 2016 results

Asian graphics companies with stronger EBIT than other regions. Top 3 segment companies located in Asia and Europe with above average results for 2017:

APP: Indah Kiat (16%) – above average results since 2013

Chenming (20%) – improving results in the past 5 years

Navigator (24%) – stable results vs. 2016

Debt ratio in the peer group stable compared to 2016. European peers managing debt ratio: Arctic Paper, Sappi, Stora Enso, UPM and Holmen steadily decreasing debt ratio since 2013

Graphic paper highlights Graphic paper lowlights

Summary: Graphic paper peer group

European companies with stronger results than rest of peer group. Asian peers with mixed

results. North American peers with unimproved results.

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2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

22%

24%

-16% 22%12% 20%-4% 6%-6%-8% 10%2% 18%4%-2%-18% 0% 8%

4 year EBITDA average [%]

Daio PaperBallarpur

Burgo

Glatfelter

Sappi

Mitsubishi Paper

Hokuetsu Paper

Chenming

International Paper

Norske Skogindustrier

APP: Tjiwi Kimia

Catalyst Paper

APP: Indah Kiat

UPM

Resolute Forest Products

The Navigator Company

Domtar

Stora Enso

Mondi Group

Lecta

Holmen

Verso Paper

4 year Revenue CAGR [%]

Arctic Paper

Oji Paper

Nippon Paper

Navigator with strongest EBITDA development closely followed by Chenming, APP Indah Kiat

and Mondi Group. Verso with high revenue growth due to acquisition of Newpage.

EBITDA average [%] vs. Revenue CAGR [%] 2013-20171) 7) Graphic Paper

Results of companies active in graphics vary. Majority of companies

with positive developments. Results depend on business focus.

21)

Note: Results of International Paper, Mondi Group and Oji Paper highly influenced by segments other than graphic paper

Data as of February 16th, 2018: Full Year 2017 results available for Holmen, Sappi, Stora Enso, UPM, Domtar, Glatfelter, International Paper, Resolute Forest Products. All other data based on extrapolated H1-2017 results.

The size of the bubble refers to turnover

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-10%

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30%

2013 2014 2015 2016 2017 2016 weighted average 2017 weighted average

Navigator is leading the peer group for Europe, despite slightly declining results. International

Paper leads in North America and Chenming in Asia.

Company-wide EBITDA (incl. special items) as % of turnover 2013-20171) Graphic Paper

Companies in graphic paper remained on a similar level in 2017

compared to 2016. Europe with the strongest results.

W. Avg. 2016: 13,7%W. Avg. 2017: 13,5%1)

3) 3)

Europe North America Asia

11) 12) 13)16) 18)3) 3) 3)

Note: Results of International Paper, Mondi Group and Oji Paper highly influenced by segments other than graphic paper

23)22)

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15)


-15%

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10%

15%

20%

25%


Segment trends vary across companies and are similar to the results on a company level:

Mondi, Navigator leading peer group in Europe, Chenming, APP: Indah Kiat in Asia.

Segment-only EBIT % of graphic paper segments (incl. special items)1) 2) Segment only

Graphic Papers only: High differences in segment EBIT.

W. Avg. 2016: 6,4% W. Avg. 2017: 6,4%

Graphic Paper segment: International Paper: Printing paper (2013-2015) & Printing Paper & Global Cellulose Fibers (2016-2017); Domtar: Pulp & Paper; Holmen: Holmen Paper; Mondi: Uncoated Fine Paper; Norske: Newsprint & MagazinePaper (2013) & Publication Paper Europe & Publication Paper Australasia (2014-2017); UPM: UPM Paper Asia & UPM Paper ENA (2013-2014) & UPM Specialty Papers & UPM Paper ENA (2015-2017); Stora Enso: Printing & Reading(2013-2014) & Paper (2015-2017); Resolute Forest Products: Newsprint & Specialty Paper; Glatfelter: Specialty Papers; Hokuetsu Paper: Paper and Pulp Business; Lecta: CWF & Specialties; Oji Paper: Printing & Communications Media

1)

4) 4)

12) 13) 14)23)22)26) 24)


-33%


15)

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Additional content in the full version: Graphic Paper

Peer group financial performance comparison table

Company-wide EBIT as % of turnover

EBIT % by region

Segment EBIT % avg. vs. Revenue growth %

Net profit as % of turnover

Working capital as % of turnover

Working capital % development by region

Cash conversion cycle (CCC)

DIO, DPO & DSO

ROCE % applying EBIT incl. non-recurring items

OCF average % vs. FCF (excl. M&A) average %

Operating cash flow as % of turnover

Net investment ratio % of non-current assets


Debt ratio (total liabilities / total assets)

Net debt to EBITDA ratio

Enterprise value / EBITDA

Turnover vs. Turnover / employee





Contents

Industry Financials




Tissue peer group

Pulp peer group




Summary

Overall cash flows down, operating cash flows of North American peers down by 15%, EBIT ~ 1/3 lower than of European companies

North American companies with weaker results:

EBIT: Cascades (4%), IP (7%), KapStone (6%) and WestRock (6%)

IP with highest debt ratio among peers at 81%

WestRock and Cascades with lowest ROCE and ROA at 4% and 3% both

Asian and African companies with below average results

Segment EBIT: Oji (4%), Rengo (2%), Mpact (5%)

ROCE: Oji (3%), Rengo (2%), Nampak (5%)

ROA: Oji (3%), Rengo (2%), Mpact & Nampak (4% both)

Average packaging segment EBIT increased in 2017 by 9% (0,8pp) in the peer group but the majority of companies with declining results

Working capital levels in packaging stable in 2017 at 10,9% but with high variations: DS Smith and Europac with negative WC, APP above 60% WC

Outperforming companies are:

Asia: Lee & Man with EBITDA of 31%, EBIT of 27%, and ROCE of 21%

Latin America: Klabin with EBITDA of 32%, EBIT of 18%, OCF of 21% and FCF of 11%

North American peers PCA outperforms in 2017 with a segment EBIT of 18%, a company EBITDA of 21% and a net profit at 10%

Long-term EBITDA growth by Mondi, PCA, Nine Dragons

Packaging highlights Packaging lowlights

Summary: Packaging peer group

Overall strong EBIT and EBITDA performances, with exceptions. Europe outperforms.

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Klabin with highest average EBITDA over four years. KapStone and WestRock lead in terms of

revenue growth due to M&A activity. Metsä and Stora declining due to structural changes.

EBITDA average [%] vs. Revenue CAGR [%] 2013-20171) 7) Packaging

Over the last four years, company-wide EBITDA has been above 8%

for all packaging peers. Almost all companies show growth.

23%2% 3% 5% 11% 13%6% 7% 19%

18%

34%

22%

32%

20%

16%

14%

9%

10%

8%

4% 21%1% 10% 22%20%14%12%8%

12%

-2%-4% -1%-3% 0%

DS Smith

BillerudKorsnäsMondi Group

Stora Enso

Smurfit Kappa

Europac SCG Packaging WestRock

International PaperKapStone

Graphic Packaging

FajarPaper

4 years Revenue growth [CAGR]

4 years EBITDA average [%]

Metsä Board

APP: Indah Kiat

Klabin

Mpact

Sonoco

Lee & Man

Pack. Corp. of America

Nine Dragons Paper

Oji Paper

Cascades

Nampak

Celulose Irani

Mayr-Melnhof

Rengo

Data as of February 16th, 2018: Full Year 2017 results available for BillerudKorsnäs, Metsä Board, SCA, Smurfit Kappa, Stora Enso, Graphic Packaging, International Paper, KapStone, Pack. Corp. of America, Sonoco, WestRock, Klabin, Nine Dragons Paper, Nampak. All other data based on extrapolated H1-2017 results.


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0%

5%

10%

15%

20%

25%


Lat. America

Klabin and Lee & Man outperform in 2017. Varying overall picture in the packaging peer group:

some companies with significant improvements, while others struggling to increase EBITDA.

Company-wide EBITDA (incl. special items) as % of turnover 2013-20171) Packaging

Company-wide EBITDA remained stable in 2017. Mondi is leading in

Europe, PCA in N. America, Lee & Man in Asia, Klabin in L. America.

W. Avg. 2016: 15,1%W. Avg. 2017: 15,0%

33%34% 32%

1)Europe North America Asia

34%32%

31%

Africa

3) 3)

16)18)21) 22) 23) 24) 25) 26)27)

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31)


-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%


Asia

Increased peer group average mainly driven by PCA & Nine Dragons

Segment-only EBIT % of packaging segments (incl. special items)1) 2) Segment only

Majority of peers with decreasing segment EBIT in 2017. SCA, PCA,

Lee & Man & Nine Dragons with improved results.

W. Avg. 2016: 9,8% W. Avg. 2017: 10,7%

Packaging segment: Cascades: Packaging Products; Celulose Irani: Corrugated Cardboard Packaging & Packaging Paper; Greif Packaging: Paper Packaging & Services; International Paper: Industrial Packaging; KapStone: Paper andPackaging; Lee & Man: All except Tissue; Metsä Board: Paperboard; Mondi: All except Uncoated Fine Paper, South Africa and formerly Newsprint; Mpact: Paper; Nampak: Paper; Oji Paper: Household and Industrial Materials; Pack.Corp. of America: Packaging; Rengo: All except Flexibles; Reynolds Group: Evergreen; Sonoco: Paper and Industrial Converted Products; Stora Enso: Packaging Solutions & Consumer Board

Lat. AmericaEurope North America

Africa AUS

1)24%

24%34%26%24%

4) 4)

10) 11)25) 17)22) 24)


15) 20)31)

-4% -5%

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Additional content in the full version: Packaging





EBIT % by region






DIO, DPO & DSO








Contents

Industry Financials




Tissue peer group

Pulp peer group




Summary

Working capital levels of the tissue peer group increased by 20% but tissue still remains the peer group with the lowest WC levels. Many companies with above peer group average working capital i.e.:

Hengan (WC 22%)

CMPC (WC 24%)

Orchids (WC 11%)

Average debt ratio slightly declined in 2017 compared to 2016. The debt ratio of the tissue peer group is overall higher than for packaging and graphics.

Orchids Paper EBITDA decreased from average to well below average (EBITDA of 5%) in 2017

Net profits of the peer group improved by 36% (from avg. 7,6% in 2016 to 10,3% in 2017) driven by:

Cascades (Net profit of 23%)

Unicharm (Net profit of 9%)

Essity (Net profit of 8%)

2017 EBITDA of tissue companies similar to 2016:

Hengan International continues leading the peer group for five years in a row (EBITDA of 31%)

Kimberly-Clark with a strong position (EBITDA 22%)

P&G Hygiene is leading the North American peer group in segment EBIT with continued results of >20%

Tissue highlights Tissue lowlights

Summary: Tissue peer group

Overall, tissue peer group shows revenue growth and solid profitability. Debt levels remain

high.

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Orchids Paper with highest revenue growth followed by Essity. Hengan International with the

strongest EBITDA development.

EBITDA average [%] vs. Revenue CAGR [%] 2013-20171) 6) Tissue

All companies in the tissue peer group with multi-year positive

revenue growth and positive EBITDA averages.

8%

10%

12%

14%

16%

18%

20%

22%

24%

26%

28%

30%

2,0% 4,5% 12,0%11,5%5,5%4,0%2,5% 3,0% 6,0%5,0%0,5%0,0% 1,0% 1,5% 3,5%

CMPC


Orchids Paper

Kruger Products

Hengan International

Cascades

Kimberly-Clark

Sofidel

Unicharm

Clearwater Paper


EssityMetsä Group

Note: Results of Metsä Group highly influenced by segments other than tissue

Data as of February 16th, 2018: Full Year 2017 results available for Essity, Metsä Group, Clearwater Paper, Kimberly-Clark. All other data based on extrapolated H1-2017 results.


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0%

5%

10%

15%

20%

25%

30%


Hengan International with significant improvements, and Kimberly-Clark continues to lead the

peer group. Essity with best EBITDA over five year period.

Company-wide EBITDA (incl. special items) as % of turnover 2013-20171) Tissue

EBITDA of companies in the tissue segment improved slightly by

0,5pp (3%) compared to the previous year

W. Avg. 2016: 17,4%W. Avg. 2017: 17,9%1)

3) 3)

Asia

14)10) 3) 13)20)

Europe North America AsiaLat.

America

21) 22)

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Note: Results of Metsä Group highly influenced by segments other than tissue



-5%

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30%


P&G Hygiene continues to lead the North American peers in terms of segment EBIT with results

of over 20%. Hengan improved further. Essity strongest in Europe with EBIT > 10%.

Segment-only EBIT % of tissue segments (incl. special items)1) 2) Segment only

EBIT of the tissue segment only: Slight improvement in 2017 vs.

2016. Hengan and P&G Hygiene outperform.

W. Avg. 2016: 15,6% W. Avg. 2017: 16,3%

Tissue segment: Metsä Group: Tissue and Cooking Papers; Cascades: Tissue Papers; Clearwater Paper: Consumer products; CMPC: Tissue; P&G Hygiene: Baby, Feminine & Family care

4) 4)

1)

14) 13)

Europe North America AsiaLat.

America

17)21) 22)


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Additional content in the full version: Tissue









DIO, DPO & DSO










Contents

Industry Financials




Tissue peer group

Pulp peer group




Summary

Net profit down by 10% in 2017

ROCE peer group average on a low level despite improvements in 2017

All North American peers are below peer group average in terms of EBITDA

In Europe all players are below the group average of 18,5%, except Altri and Ence

On average, working capital levels decreased by 5% in 2017 compared to the previous year, however:

Highest working capital levels compared to the other peer groups

Latin American peers with highest WC levels, despite slight improvements vs. 2016

Overall peer group EBIT up by 21% and EBITDA up by 10% in comparison to 2016

Latin American peers outperform. Highest multi-year revenue growth and strong EBITDA

Fibria (41%)

Suzano (42%)

Average ROCE increased by 25% in 2017. Regional leaders:

Europe: Altri (14%)

North America: Canfor Pulp (17%)

Latin America: Suzano (13%)

All peers with positive operating cash flows

Net debt to EBITDA ratio decreasing

Pulp highlights Pulp lowlights

Summary: Pulp peer group

Significant differences between companies exist. Return on capital employed improved but still

on a low level compared to other peer groups.

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Latin American peers with positive revenue growth. Tembec, Stora, UPM and Ence with

negative revenue growth. Fibria growth impacted by sales agreement with Klabin.

EBITDA average [%] vs. Revenue CAGR [%] 2013-20171) 6) Pulp

Company-wide EBITDA of companies active in pulp sector with

varying results. Fibria with highest EBITDA, Eldorado outperforms.

0%

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45%

50%

-6% -5% -4% -3% -2% -1% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12%


Domtar

Canfor Pulp

Eldorado

Weyerhaeuser

UPM

Mercer International

CMPC

Stora Enso

Rottneros

Metsä GroupEnce

Oji Paper

APP: Indah Kiat

Altri

Fibria

Arauco

Tembec

Södra

Suzano


10)

Note: Results of Stora Enso, UPM and Oji Paper highly influenced by segments other than pulp

Data as of February 16th, 2018: Full Year 2017 results available for Metsä Group, Rottneros, Stora Enso, UPM, Domtar, Mercer International, Fibria, Suzano. All other data based on extrapolated H1-2017 results.


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-2%

8%

18%

28%

38%

48%


In Europe, Altri with strongest performance, and Ence with biggest improvements. In North

America, all peers are below average in 2017, except for Mercer.

Company-wide EBITDA (incl. special items) as % of turnover 2013-20171) Pulp

Continued strong EBITDA results in pulp segment driven by

outperformance of Latin American companies

W. Avg. 2016: 18,2%W. Avg. 2017: 20,0%1)

3) 3)


Asia

10)17)31)3)22)25) 3) 3)19) 20)24)28)26) 27) 30)32) 33)

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Note: Results of Stora Enso, UPM and Oji Paper highly influenced by segments other than pulp



-5%

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10%

15%

20%

25%

30%

35%

40%


European pulp peers with solid performance: Improvements for Ence, Metsä Group, Södra,

Stora Enso and UPM. Suzano best performer in pulp segment.

Segment-only EBIT % of pulp segments (incl. special items)1) 2) Segment only

EBIT of the pulp segment only: Results increased by 3,1pp (29%) vs.

the previous year. Varying results across companies.

W. Avg. 2016: 10,8% W. Avg. 2017: 13,9%

Pulp segment: Ence: Pulp and Forestry, Metsä Group: Pulp and Sawn Timber Industry, Södra: Södra Cell, Stora Enso: Biomaterials, UPM: Biorefining, Eldorado: Cellulose, Canfor Pulp: Pulp, Catalyst Paper: Pulp, Tembec: Paper Pulp + Specialty Cellulose Pulp, Weyerhaeuser: Cellulose fibers, Arauco: Pulp CMPC: Pulp, Suzano: Pulp, Oji Paper: Forest resources and environmental marketing

1)

4) 4)

44% 41%

-24% -11%

13)


Asia

18)19) 20)21)31)26) 27) 28) 29) 30)32) 33)

42%

-6%


37)

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Additional content in the full version: Pulp





EBIT % by region






DIO, DPO & DSO








Contents

Industry Financials




Tissue peer group

Pulp peer group




Flexibles

Net profit average for peer group 4,1%

Segment-only EBIT declined by13%. Outperformers Amcor and Sealed Air both at 13%

Working capital of flexibles peer group unchanged. However, steep working capital increase of:

Nampak (8% in 2016 to 11% in 2017)

Huhtamaki (12% in 2016 to 14% in 2017)

Coveris (9% in 2016 to 12% in 2017)

Operating cash flow declined by 26% compared to 2016, North American most significant declines

Debt ratios very high in the peer group with increasing results in 2017, three players above 90%: Amcor (90%), Coveris (97%) and Sealed Air (97%)

Stable development of company-wide EBIT for flexible packaging

Most companies achieved an average multi-year EBITDA above 10% and positive revenue growth

The average ROCE of flexibles peer group increased in 2017 by 8% compared to 2016

Company-wide EBIT improved - driven by other business areas

Flexible packaging highlights Flexible packaging lowlights

Summary: Flexible packaging peer group

Overall results of the flexible packaging peer group remain stable

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Mondi and Nampak lead the peer group in terms of multi-year EBITDA. Huhtamaki with highest

4 year revenue growth from 2013 to 2017. Sealed Air and Nampak with declining revenues.

EBITDA average [%] vs. Revenue CAGR [%] 2013-20171) 6) Flexibles

Majority of companies in the flexibles peer group with steady growth

and an average multi-year EBITDA above 10%

7%

8%

9%

10%

11%

12%

13%

14%

15%

16%

17%

18%

19%

-10% -9% -8% -7% -6% -5% -4% -3% -2% -1% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9%

Rengo

Nampak

Amcor

Coveris

Mondi Group

Sealed AirConstantia Flexibles

BemisHuhtamaki


4 year Revenue growth [CAGR]

15)

Note: Results of Mondi Group highly influenced by segments other than flexible packaging

Data as of February 16th, 2018: Full Year 2017 results available for Amcor, Huhtamaki, Sealed Air, Nampak. All other data based on extrapolated H1-2017 results.


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0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Amcor ConstantiaFlexibles

Huhtamaki Mondi Group Bemis Coveris Sealed Air Rengo Nampak


Company-wide EBITDA of Huhtamaki, Bemis, Coveris and Sealed Air declined after increasing

for 3 years. Amcor above peer group average again after low results in 2016.

Company-wide EBITDA (incl. special items) as % of turnover 2013-20171) Flexibles

The weighted EBITDA average across the flexibles peer group

increased slightly to 13,4% in 2017

W. Avg. 2016: 12,8%W. Avg. 2017: 13,4%1)

3) 3)


Africa

3)10) 11) 15)

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Note: Results of Mondi Group highly influenced by segments other than flexible packaging


18)


-2%

0%

2%

4%

6%

8%

10%

12%

14%

Amcor ConstantiaFlexibles

Huhtamaki Mondi Group Bemis Coveris Sealed Air Rengo Nampak


Most companies with declining segment EBIT. Amcor, Mondi Group and Coveris with steadily

increasing results over the last years.

Segment-only EBIT % of flexible packaging segments (incl. spec. items)1) 2) Segment only

The average segment-only EBIT of companies in flexible packaging

decreased by 1,2pp (13%). Amcor and Sealed Air outperform.

W. Avg. 2016: 9.2% W. Avg. 2017: 8.0%1)

Flexible packaging segment: Amcor: Flexibles, Coveris: Flexibles, Huhtamaki: Flexible Packaging, Mondi Group: Consumer Packaging


Africa

11)14)

-5%


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Additional content in the full version: Flexibles









DIO, DPO & DSO










Contents

Industry Financials




Tissue peer group

Pulp peer group




Summary

Weighted average EBITDA for the peer group dropped from 1,6% in 2016 to 0,5% in H1-2017 with Veritiv having a large impact

Veritiv with negative results in H1-2017

Net profit of merchant peer group turned negative in H1-2017 (-0,3%) due to Veritiv.

Spicers with highest working capital in the peer group

European merchants remain above average

Lecta leading the peer group for segment-only results

Antalis and Optigroup with lowest working capital

Inapa is leading the peer group for both OCF and FCF, all companies with positive OCF and FCF, except for Spicers

Average debt ratio stable compared to 2016 with Optigroup/Papyrus steadily decreasing debt ratio

Merchants highlights Merchants lowlights

Summary: Merchant peer group

Merchant peer group facing difficulties to turn net profit positive

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Spicers’s EBITDA and CAGR negative due to discontinued operations starting in 2014

EBITDA average [%] vs. Revenue CAGR [%] 2013-20171) 7) Merchants

All companies with multi-year positive EBITDA average, except

Spicers

-2%

-1%

0%

1%

2%

3%

4%

-0,5%-2,0%-3,5%-41,5% 0,0%-41,0% -1,0%-1,5%-2,5%-3,0%



Inapa

Spicers

Optigroup/Papyrus

Veritiv

11)

12)

Data as of February 16th, 2018: Full Year 2017 results available for Spicers. All other data based on extrapolated H1-2017 results.


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Additional content in the full version: Merchants









DIO, DPO & DSO









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StepChange Consulting Selected Financial · PDF fileB3NCH –Financial Benchmarking of Forest Products Peers Overview & selected financial benchmarking. ... and FMCG companies. Design