Maciej Kunda - Mondi€¦ · Maciej Kunda Investor and Analyst site visit, Syktyvkar and Świecie 2 – 4 November 2010. Investor and Analyst site visit, Syktyvkar and Świecie, 2

Mondi Świecie

Maciej Kunda

Investor and Analyst site visit, Syktyvkar and Świecie2 – 4 November 2010

PAGE 1Investor and Analyst site visit, Syktyvkar and Świecie, 2 – 4 November 2010

Agenda

Overview – Poland and Mondi Świecie SA

Strategic focus and performance

ECO 7 – success story

Mill tour & safety rules briefing


Poland

Area: 312 685 km2

Population: 38.5 million

Main industries: coal, textile, chemical, machinery, iron and steel sectors

Forest land: 28% Germany

Poland

Slovakia

CzechRepublic Ukraine

Belarus

Lithuania

Świecie

Bydgoszcz

Poznań

Cracow

Warsaw

Mondi Świecie S.A.


Macroeconomic indicators – Poland

0

5

10

15

20

25

2002 2003 2004 2005 2006 2007 2008 2009 20100

2000

4000

6000

8000

10000

12000

GDP/Capita in EUR Real GDP ( change in %)

Unemployment Rate in % Inflation ( avg) in %

2003 2004 2005 2006 2007 2008 2009 2010 FReal GDP (change in %) 3.9 5.3 3.6 6.2 6.7 4.8 1.7 2.6

Unemployment rate (in %) 20.0 19.0 17.6 14.8 11.2 9.5 11.8 11.6

Inflation (avg in %) 0.8 3.5 2.1 1.0 2.5 4.2 3.4 2.2

PLN/EUR (avg) 4.4 4.5 4.0 3.9 3.78 3.52 4,32 3.96

GDP/Capita (in EUR) 5 000 5 367 6 379 7 148 8 184 9 476 7 850 9 560

Direct foreign investment in EUR m

16674

10970

80009000

11000

2007 2008 2009 2010 2011

PolandThe only European country with a GDP (real) growth in 2009 = +1.7 %.


Mondi in Poland

PolandPowerhouse in Central Europe

Mondi Packaging Solec

Mondi ŚwiecieConsumer Bags & Films (1)

Corrugated Packaging (5)

Industrial Bags (2)

Containerboard (1)

Mondi Bags Mielec

Mondi Packaging Dorohusk

Mondi Packaging Bystrzyca

Mondi Packaging Szczecin

Mondi Packaging Warszawa

Operations (10)

Testliner: 600 000 tonnes

Containerboard capacity

2 350 employees

Employees

Kraft Paper (1)

Kraftliner, SC Fluting: 760 000 tonnes

Coatings Sales OfficeUncoated Fine Paper Sales Office


1967 Dissolving Pulp Plant

1970 – 1976 Start Up of 5 PMs

1972 Kraft Pulp Plant

1976 NSCC Plant

1991 Transformation into Joined Stock Company

1992 Restructuring

1997 Privatisation Mondi 60%

1997 – 2003 New strategy implementation

2008 – 2009 ECO7 Start Up 1 September 2009

1960

2010

Over 40 year history


2 x Continuous digesters

Kraft pulp340 kt

Semichemical pulp plant

NSSC pulp115 kt

Recovered paperpreparation plant PM 1-5

380 kt

Recovered paperpreparation plant PM 7

550 kt (design)

Evaporation plant Caustic plant

Recovery boiler

Chemical recovery department

Wood handling system

Pine Birch

Operation certified ISO 9001, ISO 14001, OHSAS 18001 and FSC

125 kt145 kt 210 kt 210 kt180 kt

4.4 mTestliner

WB FlutingKraftliner

5.3 mLight weight

KraftlinerSackpaper

4.4 mKraftliner

150 – 330 g/m2

5.3 mLight weight

Kraftliner90 – 140 g/m2

4.4 mSC fluting

PM 3PM 1 PM 2 PM 5PM 4

Overview – structure of the mill (2009*)

PM 7

470 kt(design)

7.8 mTestliner

WB Fluting75 – 140 g/m2

Power

plant

*Production figures, rounded to the closest full 5kt; PM7 figures are not production but design.


P&G, Pizza Hut,Kimberly-Clark● Fruits ● Vegetables ● Meat ● Flowers ● Heavy duty

packaging ● Chemicals

Lafarge, Bayer● Cement ● Premixes ● Feed

IKEA, P&G, Kimberly-Clark● Merchant ● Chemicals ● Beverages ● Furnitures

Henkel, Pizza Hut, Nestle, Tesco, Carrefour

S.C. Fluting

Higher gsm● Fruits, vegetables,

meat ● Heavy duty

packaging ● Chemicals● Electronics

Lower gsm● Cosmetics,

medicines● Internet sales

Pizza boxes● Industrial● Coating

Sack Kraft paper

Market segmentation by end-use application

KLB

Testliner

WB Fluting

KrafTop

http://images.google.pl/imgres?imgurl=http://client.apptomix.com/websites/FoodService/John_Parks_4255/images/20469pizza-box.gif&imgrefurl=http://www.mvpargyle.com/&h=383&w=300&sz=39&hl=pl&start=7&tbnid=HGcGMHmrVWo1lM:&tbnh=123&tbnw=96&prev=/images?q=pizza+box&gbv=2&svnum=10&hl=pl&sa=G�


Strategic focus and performance


Transformation of the company

CelulozaŚwiecie

MPPŚwiecie

CapacityUtilization

Value CreationHigh Performance

Performance

Time

Goal

Past

Goal

Now

Process Change

Operational, Financial, HR, Sales,Quality, Environmental,

Safety


Operational Excellence● Continuous improvement approach● High assets utilization rate (efficiency)● Knowledge Management● Waste reduction● Low working capital● High productivity, low overheads

Cutting Edge Products● Building brand awareness● Incremental product

development● Highest quality and

functionality

Mondi Diamond

Sustainable Development● Health and safety● Protection of

environment● Sustainable forestry● Social responsibility

People Development● Individual development &

Training plans● Talent management &

succession planning● Leadership Model● Employer brand

Customer Focus● Flawless service● Delivery accuracy● Market and customer intelligence● CRM


Sustainable development – safety

Number of Lost Time Injuries 1997-2010(including Contractors)

* Excluding contractors

43*

1997

37*

1998

31*

1999

18*

2000

21*

2001

9

2002 2003 2004 2005 2006

ZerO Tolerance Target ZerOO T T O

35

21 1 12

2007 2008 2009

1

2010


H2O

Continuous reduction of CO2

emissions

Reduction of water and energy consumption

Mondi Świecie uses over 40% of all recycled fibre collected in Poland

FSC certification for both recycled and virgin fibre based products

Sustainable development – environment

Mondi’s paper products mean minimum environmental impact –

All papers produced in Świecie have FSC certification

FSC Recycled


Sustainable development – recognition

PREMIUM BRAND/ Warsaw Stock Exchange by Forbes /

October 2009, Mondi Świecie S.A. was granted the title of the Highest Reputation Company listed on Warsaw Stock Exchange.

RESPECT INDEX/ Warsaw Stock Exchange by Deloitte /

November 2009, Mondi Świecie S.A. was included “Respect Index”, reflecting the highest standard of Corporate Social Responsibility between companies listed on Warsaw Stock Exchange (only best 16 companies included in the index).


Proactive investment strategy –major capital projects 2000 - 2009

Market Development Focus

Promises kept - delivered more

ProactiveInvestmentStrategy

Early action against foreseen trends, developments and changes in business environment (markets, customer needs, changes in operational environment).

2001 Paper Machine #5 Rebuild € 45 m



Project Targets / Achievements

Focus: Increase of production of lightweight kraftliner grades

Effective production of high quality LW KLB Production increase +50 000 t / +90 000 t

Focus: Ability to produce 2-layer medium and lightweight recycled containerboard quality

Effective production of 2 layer TL and WBFL Quality targets 100% met

Focus: Increase of production of lightweight kraftliner grades

Effective production of high quality 2 layer LW KLB

Capacity increase from 130 000 to 180 000 t


Early Action against foreseen changes in operational environment

Promises kept - delivered more

ProactiveInvestmentStrategy

Early action against foreseen trends, developments and changes in business environment (markets, customer needs, changes in operational environment).

2001 New Woodyard € 26 m

Project Targets / Achievements

Focus: Improvement of wood pulp quality; reduction of wood losses

Wood losses reduction by 70% High quality of chips and pulp produced

2004 CFB Biofuel Boiler € 45 mFocus: Energy cost savings / green energy generation / CO2 emission reduction

Effective green energy production (€ 9.5 m profit/y) Reduction of coal usage by 190 000 tpa

together with substantial reduction of emissions (400 000 tpa CO2 emission reduced)

Proactive investment strategy –major capital projects 2000 - 2009

2009 Coal boiler rebuilt to Biofuel Boiler € 30 mFocus: Energy cost savings / green energy generation / CO2 emission reduction

Effective green energy production (6 € m profit/y) Reduction of coal usage by 100 000 tpa

together with substantial reduction of emissions (220 000 tpa CO2 emission reduced)


3381

136171223251259

307299282333

295318346362379384380386391341318346

381416428435446

488538

603631690

737760797824842845

977

1 284

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

01-0

9.20

10 x

4/3

Since Mondi became the majority shareholder, Świecie’s production has almost tripled

1997Mondi becomes majority shareholder

Operational excellence – production increase


-23

3813

4121

49 4122

3830 20 3

1326

2169

95

28

79

24 48 63 5018 1

-104

3,124

2,703

1,986

1,473 1,3791,176 1,131

1,054 969 913895 894

1.004

132191

273

409459

587652

722

823

902 941 946 973

-100

100

300

500

700

900

1100

0

500

1000

1500

2000

2500

3000

3500

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Increase due to bigger production

Increase due to headcount reduction

Employees, average

Total productivity

Employees, average Total productivity in tonnes

Operational excellence – productivity increase

Year 2008 - average employment (excl. PM7)

Since Mondi became the majority shareholder, Świecie’s productivity increased by more than 7 times


Raw materials – woodpulp market Poland

Forests covers 9.3 m ha in Poland = 29.1 % of a country area

81.8 % of forests are state owned and public; State Forest Enterprise (SFE) manage 77.8 % of all forests

32.7 m m3 of wood is harvested in Poland annually in 2009, 95.4 % of it is harvested by SFE (31.2 m m3)

In 2009 Mondi Swiecie consumed ca 2.0 m m3 of wood; 16 % of total volume was imported

Sustainable forestry: harvesting is ca. 55 % of annual growth

The challenge for the future: competitive woodpulp market

Forest area [ % ]


0

50

100

150

200

250

300

350

400

450

500

2006

2007

2008

2009

2010

F

reco

vere

d pa

per n

et e

xpor

t - p

acka

ging

gra

des

['000

tons

]

Source: Association of Polish Paper-Makers

Poland is a net exporter of recovered paper

Raw materials – recovered paper market


Optimisation of Order Lead Time via Standardisation and Make to Stock implementation

Professional technical assistance for customers in corrugated board production leveraged by superior expertise offered by highly qualified and experienced technical staff

Consulting and advisory services resulting in higher value obtained by customers (box design, optimum paper selection, assistance during converting, etc.)

Regular training seminars for customers7,0°C

45,7°C

10

20

30

40

LI01

SP01 SP02

AR01

LI02LI03

Świecie is Technical Service Competence Centre of Mondi Containerboard

Customer focus – exceptional customer and technical service


PROVANTAGE FRESCO FLUTINGWorld class quality of S/C Fluting for fruits and vegetables Strength and Runnability

PROVANTAGE EXTRA LITE KRAFTLINERLower weight = higher strength = lower costBetter Printability

PROVANTAGE AQUA LINERKraftliner grade with sufficient resistance to water penetration to replace today’s wax coated board on the corrugators

PROVANTAGE AQUA FLUTINGS/C Fluting - partly sized with sufficient resistance to moisture penetration to replace today’s wax coated fluting on the corrugators

Cutting edge products – strength through innovation


BUILD ANATMOSPHERE

OF TRUST

PROVIDECLEAR

EXPECTATIONS

BUILDOWNERSHIP

BUILD COMPETENCES

MEASURE PERFORMANCE

PROVIDE EFFECTIVEFEEDBACK

PROVIDE CONSEQUENCES

Coaching for performance

People development – fundamental activity

Mondi Leadership Model

Target – Team – Individual

Management by Objectives linked to bonus system (all employees)

Individual development plans for all employees

Succession planning

Innovation system active – 131 ideas realised in 2009 = € 2.2 m

June 2009 Mondi Świecie SA was ranked among laureates of the prestigious ”Leader in Human Resources Management” competition organized by the Institute of Labor and Social Studies

ECO 7 – success story


Strategic Target: Strengthening of Mondi’s position in Central European market, especially in fast growing segment of lightweight recycled grades while utilizing competitive advantage given by integration with Mondi’s 5 Corrugating Plants in Poland and large scale paper machine.

Proactive investment strategy –CEE light Mondi’s strategic project 2009

CEE Light (budget € 350 m ; forecast € 330 m):PM (€ 285 m forecast) Corrugating Plant (€ 45 m forecast)

Main PM 7 data:Grade: testliner and fluting 75 – 140 gsmAnnual capacity: 470 000 tSaleable trim: 7.8 mOperational speed: up to 1 600 mpm State-of-the art technology


Mondi strategic project

Strategically located – Central Eastern Europe

Setting new standards – Quality and Performance

Less is more – Less weight – Less waste – Less cost

Ready to go – Automated Warehouse: standard reels delivered within 24 hours in Poland

State-of-the-art technology – Hi-Speed, Double Layer Headbox, Gap Former

High performance – Perfect Runnability, Optimum Printability and Excellent Strength Parameters

Powerful packaging solutions – High quality solutions across containerboard and corrugated products and applications

Cost competitiveness – Competitive advantage of large scale paper machine


Project rationale – why in Świecie ?Market

Growing demand for recycled containerboard in Central and Eastern Europe

Rising trade deficit in recycled containerboard in the Region

Strong electronic and household goods industries in Poland

Integration with Mondi’s 5 Corrugating Plants in Poland

Cost competitiveness

Low cost asset base

Cost advantage in transportation to CE markets

Know-How

Strategic focus on containerboard products

Excellent track record with all large Capex projects: executed on time and within budget

Experienced staff in paper production & world class mill in terms of productivity

Employees creativity and engagement

Excellent technical service


Project scope & site layout

Source for picture : Pre-Engineering Report Poyry

+ anaerobic treatment plant

+ infrastructure and media connections

+ all required modifications to the existing equipment

New wastepaperstorage area

New RCF plant

New paper machine

Inclusion to the public road

New automatic warehouse with automated reel transport


Construction in numbers

ECO7 Facts

SHE 7 000 trained people2.4 m manhours1 LTI occurred

Buildings Volume/Length 355 500 m³ / 320 m

Reinforced Concrete 65 000 m³

Construction Steel 8 500 t

Optic, MCS, Industrument installation cables 285 km

Electric Cables 530 km

Piping 60 km

Peak Manpower on Site 1 500

Number of contractors 50


Operational highlights ECO7

1200 trucks carried the equipment to the mill. The heaviest press rolls had to be shipped.

One of the largest available cranes was used to install the precast elements of the building. The crane, with lifting capacity of 450 t, arrived at the site in 36 trucks.

The winter period was not ideal for machine construction. A tent was built to maintain the required temperature conditions for the baseplates grouting.


Successful PM 7 erection• Safety: only one LTI during constructing ( 7 000 contractors trained)• Construction completed within 17 months from earth works to the paper on the reel, ranks

the project among the shortest ever achieved for new paper making lines• Capex expected € 285 m (budget € 305 m)

ECO7 project success summary

Successful start up• First paper on reel 1 September 2009 – 21 h after

stock on the wire • First saleable production achieved already on 3

September (benchmark: 1-2 weeks)• Size press and “A” quality introduced already on 4

September (benchmark: 2-4 weeks)• Actual production was ahead of start up curve

assumed in the projectPM 7 start up was amongst one of the 3 best Metsoever had, can be a benchmark for competitors

Documents

Maciej Kunda - Mondi€¦ · Maciej Kunda Investor and Analyst site visit, Syktyvkar and Świecie 2 – 4 November 2010. Investor and Analyst site visit, Syktyvkar and Świecie, 2