Tariffs,Taxes,Sanctions and Opportunities · Saudi Arabia June 2017 UAE October 2017 •50% tax on all soft drinks •Regardless of sugar content •Industry had little time to react

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Tariffs,Taxes,Sanctionsand Opportunities

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Tariffs: US targets metals

• Aluminium +10%, steel +25% all countries (few exceptions)

• Immediate consequence: domestic metal price increases

• Republican senators ‘shocked’: what were they expecting?

• US steel industry does not supply special needs of can-makers, especially wide coil DWI steel

• Higher US Dollar reduces impact on exporters

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US targets China

• July $34 billion• August $16 billion

• September $200 billion

• Threatened $267 billion

• July $34 billion• August $16 billion

• September $60 billion

Equipment & machineryFood & Drink filling linesMost metal packaging equipment

Consumer goods Glass bottles Metal cans and ends

Equivalent to 100% of all Chinese imports

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SLAC has production and assembly in the USA

• We will continue to provide equipment, spare parts and service from our US units OKL and SLAC Americas

• At the same great value

SLAC Americas, Dayton

OKL Engineering, Cincinnati

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Iran hit by US sanctions19400

1800

GDP $ bn Population millions

• Sanctions introduced in 1998 then lifted by international treaty in 2012

• 2018: US re-introduces sanctions against Iran on all business transactions

• ‘If you do business with Iran, you don’t do business with the US’

• Young population, growing aspirations• High potential market for metal packaging

www.slac.com.cnwww.slac.com.cn

‘Sin Taxes’

• Politicians always looking for new taxes, especially for a ‘worthy cause’

• Alcohol and cigarettes already heavily taxed

• Wave of taxes on sugary beverages since 2014

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2014 2017 2018

Mexico Mexico Mexico

Chile Chile Chile

France France France

USA Berkeley, California Portugal Portugal

Saudi Arabia Saudi Arabia

UAE UAE

Sri Lanka Sri Lanka

Thailand Thailand

Philippines Philippines

USA Berkeley, California USA Berkeley, California

USA San Francisco USA San Francisco

USA Philadelphia USA Philadelphia

USA Oakland, Boulder, Albany, Navajo USA Oakland, Boulder, Albany, Navajo

USA Cook County, Illinois USA Cook County, Illinois WITHDRAWN

UK & Ireland

USA Seattle

South Africa

Taxes on sugary drinks 2014-2018

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Saudi Arabia June 2017UAE October 2017

• 50% tax on all soft drinks

• Regardless of sugar content

• Industry had little time to react

• Strong short-term impact on volumes

Tax impact on consumer price

Sales impact short term (first 12 months)

Long term sales trend (9 years to 2016)

Saudi Arabia +50% -18% +2%

United Arab Emirates +50% -4% +4%

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France 2012• Tax only on sugar levels

• Moderate impact on consumer pricing

• No change to long-term trend, major shift to no/low sugar

• Tax only on sugar levels, no tax below threshold of 5g of sugar per 100ml

• Moderate impact on pricing

• Industry given time to reduce sugar below threshold and launch new products

• Little impact on overall soft drinks consumption, major shift to no/low sugar

Soft drinks in cans Tax impact on consumer price



France 9 to 25% -1% +3%

UK 2018




UK 9 to 12% -1% +4%

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Britvic UK: extract from annual report

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Thailand 2017• Tax only on beverages above threshold of 6% of sugar. Tax reduction on sugar free.

• Gradual introduction, tax steepens over 6 years to allow industry to adapt recipes

• No impact so far on overall soft drinks consumption

• Tax only on beverages above threshold of 5g of sugar per 100ml. Double rate for high fructose corn syrup

• High pricing impact on cheaper beverages

• Short-term impact on volumes, high for energy drinks and colas.




Thailand 10 to 34% +5% +3%

Philippines 2017




Philippines 8 to 28% -8 to -17% +4%

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The changing perception of plastic

• For many years plastics have enjoyed high growth and a favourable consumer image. Favourite material for Marketing:

• Modern

• Lightweight

• Interesting shapes

• Soft touch

• Bright colours

Then came the David Attenborough documentary for BBC TV…



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Public perception of plastic has reversed• 8 million tonnes of plastic waste finds its way to the ocean every year

• Top three items: cigarette ends, plastic bottles, plastic bottle caps

• Plastic recycling is limited: Europe 30%, US 9%, China 25%

• Recycling only recovers 5% of its value

• Today’s plastic waste will last 10 million years and be intact in the fossil record (Professor Dan Watson)

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PET Bottles: 460 billion worldwide, and still growing. Asia Pacific: 190 billion, the largest PET market worldwide, nearly half of worldwide consumption

Billion units Beverages 2017

World Average Growth last 5 years

Asia Pacific Average Growth last 5 years

PET Bottles 459 +4.4% 194 +6.8%

Metal cans 262 +1.6% 81 +2.7%

Glass bottles 237 -0.7% 86 0%

Flexibles 67 +2.3% 31 +7.6%

Liquid cartons 54 +1.3% 24 +2.9%

Total Packaging 1143 +2.2% 452 +4.2%

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2018 Signals• China bans imports of plastic waste

• Tesco lists Can-0 water in 700 UK stores

• 92% of the UK population are concerned about the impact plastic pollution in the oceans will have on future generations*

• More than three quarters (78%) wanted to reduce their use of single-use plastics*

• Dutch retail chain Ekoplaza creates plastic-free zone in 74 supermarkets

• The British Queen bans plastic bottles on all royal properties

• 40 countries worldwide have banned or taxed plastic bags at check-outs

• UK Government considering plastic tax : plastic as the new ‘sin’?*YouGuv research in the UK, 2000 respondents, August 2018

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Huge opportunity for metal

• Metal and glass are the only materials of value in the waste stream

• Nearly all metal is recycled and recycling pays for itself

• Plastic is lower cost, but does not pay for the cost of its disposal. Real cost will narrow the gap.

• Metal can match many of the advantages of plastic: • Shapes• Lightweight• Soft touch• Bright colours• Re-sealable

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Where is the opportunity?• No sugar, low sugar

• ‘Water plus’

• New flavours

• New brands

• Authentic

• Pure

• Premium

Worldwide beverages

2017 billion units Growth last 5 years billion units

% annual growth

Still bottled water 228 70 +7.6%

Carbonated soft drinks

219 -0.9 -0.9%

‘New age’ soft drinks*

146 29 +4.5%

Asia Pacific 2017 billion units Growth last 5 years billion units

% annual growth

Still bottled water 110 41 +9.8%

Carbonated soft drinks

46 4 +2.1%

‘New age’ soft drinks*

93 19 +4.8%

*Carbonated, Flavoured, Functional Waters, Energy Drinks, Sports’ Drinks, Ready to Drink Tea, Asian Speciality Drinks

Shorter production

runs


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Why in Plastic?


Why in Plastic?

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ACCESS: MAKING IT EASIER TO JUMP IN

• Lower cost access to high volume equipment

• Lowering the DWI volume threshold: • Small, low Capex lines that are profitable

• Making short runs profitable

• Going to the next stage of line productivity

How can we help you seize the opportunity?


Lower cost access to high volume equipment• SLAC makes all the key

equipment for DWI can-making

• 70% of components are manufactured in-house

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Example: The Hexad 6-lane Conversion Press

• Fastest Easy Open End conversion press on the market

• Lowest ever Capex cost per end

• 6 lanes from a 4-lane Minster ECH 125 press footprint

• Proven high stability, commercial

• 4.5% metal reduction

1964 1974 2001 2016

EOE conversion speed epm 400 1000 2000 3000 4500

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Lowering the DWI volume threshold

• Mini-line concept: the cost advantages of DWI without the high volume constraint

• Combined with SLAC’s digital printer, brings a low-cost solution to short runs…

• …and photo quality images Opens up the market for:Craft beersNew age soft drinks Mineral waters plusPrinted food cans


Conventional high volume DWI beverage can lineIndustry model: ‘minimum’ 7 Bodymakers, 900m cans capacity p.a.

www.slac.com.cnwww.slac.com.cn14/03/2017

Option One: SLAC mini-line fed by front end of an existing beverage can lineCapacity 75m cans p.a.

www.slac.com.cnwww.slac.com.cn14/03/2017

Option Two: SLAC mini-line stand alone, using Protact® laminated steel from TataCapacity 75m cans p.a.

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The next stage of line productivity

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The SLAC Hive Initiative

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The Hive®

• Hexagonal cell shape is the most efficient structure

• Drone bees search and find pollen targets• Drones select most efficient paths• Drones communicate to other drones• Worker bees make honey in the Hive• Workers regulate temperature of wax• Drones versus workers: the Hive self-adjusts

Efficient

Communication

Self-adjusting

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Multiple parameters defineQuality

Lubricant viscosity, pH, film weight, stability of emulsion

Metal gauge across coilVisual defects

VibrationCoolant compositionOil pressure and temperatureTooling wear profileTooling temperatureTrim profileRam temperatureAlignmentsCan dimensions, run onWall gaugesSpeedEnergy

Oil pressure and temperatureCup dimensions and run onSpeedEnergySpray pressure per nozzle

Fallen and jammed cans Washer liquid compositionWater and energy usage

VibrationTooling wearFlange width and curlHeight and run out

Temperature and air flow throughout ovenDust monitorEnergy

Can position at sealPressure at sealLight intensity

Lacquer feed pressure and temperatureSpray pressure per nozzleNozzle wearVisual defects

Temperature and air flowEnergy

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Moving towards Industry 4.0• SLAC plans equipment that is ’Industry 4’ ready• Sensors will be added to monitor key parameters • Temperature, vibration, oil pressure, pH of liquids• Future SLAC machines will carry the Hive® logo• Starting with Bodymakers and Neckers• A move towards complete line monitoring

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Industry 4.0:Complete Line Monitoring

• Sensors continuouslymonitor performance

• Predictive maintenance alerts for tool replacement

• Alerts when out of specification

• Self adjusting mechanismwhere feasible

• Indication of root cause and recommended action whenrequired

• All information sent to a central data base

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Thank you!

The Future is Here

Documents

Tariffs,Taxes,Sanctions and Opportunities · Saudi Arabia June 2017 UAE October 2017 •50% tax on all soft drinks •Regardless of sugar content •Industry had little time to react