MONDI PACKAGING PAPER WIECIE S.A. Investor and Analyst - - PowerPoint PPT Presentation

MONDI PACKAGING PAPER ŚWIECIE S.A. Investor and Analyst Presentation 27 November, 2007 Maciej Kunda

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AGENDA

Poland Company History Management team Mill overview Products Key financials Post acquisition highlights Competitive Advantages MPP Swiecie Site visit briefing

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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 Czech Republic Ukraine Belarus Lithuania

Świecie Bydgoszcz Poznań Cracow Warsaw

Mondi Packaging Paper Świecie S.A.

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MACROECONOMIC INDICATORS – POLAND

7,100 3.8 2.2 11.2 6.6 2007 6,700 3.9 1.3 13.8 6.1 2006 8,055 7,600 5,327 5,013 5,480 5,480 GDP/Capita (in EUR) 2.8 2.8 2.2 3.6 0.7 1.9 Inflation (avg in %) 4.4 19.6 3.9 2003 3.9 19.9 1.4 2002 5.2 5.3 3.6 5.3 Real GDP (change in %) 3.7 3.7 4.0 4.5 PLN/EUR (avg) 8.4 9.7 17.7 19.0 Unemployment rate (in %) 2009 2008 2005 2004 Direct foreign investment in EUR m 15,061 8,280 9,983 4,383 4,313 2007 2008 2010 2009 2011 0.0 5.0 10.0 15.0 20.0 25.0 2002 2003 2004 2005 2006 2007 2008 2009 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000

GDP/Capita in EUR Real GDP (change in %) Unemployment Rate in % Inflation (avg) in %

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40 YEAR HISTORY

1961 2007

62 63 64 65 66 67 68 69 1970 72 73 74 75 76 77 78 79 71 1980 81 82 83 84 85 86 87 88 89 1990 91 92 93 94 95 96 97 98 99 2000 01 02 03 04 05 06 07 61

1967 Dissolving Pulp Plant 1972 Kraft Pulp Plant 1976 NSCC Plant 1991 Transformation into Joined Stock Company 1992 Restruct- uring 1997 Privatisation Mondi 60%

1970 – 1976 Start-up of 5 PMs 1997 – 2003 New strategy implementation

ZCiP Celuloza

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Jan Żukowski Development and Investment Director (55 years of age) Tomasz Katewicz Production Director (42 years of age) Adam Mrzygłód Financial Director (34 years of age) Florian Stockert Sales Director (48 years of age)

OVERVIEW - MANAGEMENT TEAM

CEO (41 years of age) Maciej Kunda

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2xcontinuous digesters Kraft pulp 373.000 TO Semichemical pulp plant NSSC pulp 106.000 TO Recovered paper preparation plant OCC - 293.000 to; Mix - 45.000 to Power plant Evaporation plant Causticizing plant Recovery boiler Chemical recovery department Wood handling system Pine Birch

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

118.000 to 134.000 to 200.000 to 194.000 to 174.000 to 4.4 m Testliner 5.3 m Sackpaper Light weight Kraftliner 4.4 m Kraftliner 150 – 330 g/m2 5.3 m Light weight Kraftliner 90 – 140 g/m2 4.4 m Sc fluting PM 3 PM 1 PM 2 PM 5 PM 4

OVERVIEW - STRUCTURE OF THE MIL

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Higher gsm

• Fruits
• Vegetables
• Meat
• Flowers
• Heavy duty packaging
• Chemicals
• Cement
• Premixes
• Feed

P&G, Pizza Hut, Kimberly & Clark

• Merchant
• Chemicals
• Beverages
• Furnitures

IKEA, P&G, Kimberley & Clark Henkel, Pizza Hut, Nestle, Tesco, Carrefour Lafarge, Bayer Sack Paper 10% S.C. Fluting 21% Testliner 16% Kraftliner 53%

• Fruits, vegetables, meat
• Heavy duty packaging
• Chemicals
• Electronics

Lower gsm

• Cosmetics, medicines
• Internet sales

Pizza boxes

• Industrial
• Coating

MARKET SEGMENTATION BY END-USE APPLICATION

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FINANCIAL INDICATORS MPP SWIECIE

Sales (PLN B) / ROCE1

1.30 1.19 1.26 5 10 15 20 25 30 35

ROCE1 (%)

2004 2005 2006 0.63 2006 HY 0.69 2007 HY 0,0 0,5

Sales (PLN B)

Profitability (HY 2007)

PLN 220 M 31.9 % Capital Employed PLN 1 032 M 33.0% 184 M 29.6% 956 M 27.5% 19.6 7.7 7.9 20.1 2007 2006 ROCE1 EBITDA EBITDA Margin % change 26.5 20.5 33.2 27.5 33.0

1 Half year ROCE is calculated as underlying profit H1 2007 times 2 divided by average capital employed as of June 30 and December 31

POST ACQUISITION HIGHLIGHTS

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POST ACQUISITION HIGHLIGHTS - TRANSFORMATION OF THE COMPANY

Celuloza Świecie MPP Świecie Capacity Utilization Value Creation High Performance

Performance Time

Goal Past Goal Now Process Change

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

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POST ACQUISITION HIGHLIGHTS – MAJOR CAPITAL PROJECTS 1998-2006

Market Development Focus Promises kept - delivered more Proactive Investment Strategy Early action against foreseen trends, developments and changes in business environment (markets, customer needs, changes in operational environment). 2001 Paper Machine #5 Rebuild 2003 Paper Machine #3 Rebuild 2007 Paper Machine #1 Rebuild 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

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POST ACQUISITION HIGHLIGHTS – MAJOR CAPITAL PROJECTS 1998-2006

Early Action against foreseen changes in operational environment Promises kept - delivered more Proactive Investment Strategy Early action against foreseen trends, developments and changes in business environment (markets, customer needs, changes in operational environment). 2001 New Woodyard 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 Focus: Energy cost savings / green energy generation

• Effective green energy production based on biofuel
• Reduction of coal usage by 130,000 tpa

together with substantial reduction of emission

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POST ACQUISITION HIGHLIGHTS – TOTAL PM PRODUCTION 1970 – 2007

824 797 760 737 690 631 603 538 488 446 435 428 416 381 316 318 341 391 386 380 384 379 362 346 318 295 333 282 299 307 259 251 223 171 136 81 33

1971 1972 1973 1974 1975 1976 1977 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1970 1978 1979 1980 1981

+85%

1983 1984 1985 1986 1982

Mondi start to be majority shareholder

Production nearly doubled during last 10 years: 1.000 tons

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POST ACQUISITION HIGHLIGHTS – PRODUCTIVITY INCREASE

38 41 49 41 38 21

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13 22 30 50 63 48 79 95 69 6 28 24 21 1,986 1,473 1,379 1,176 1,131 1,054 969 913 2,703 3,124 132 652 459 191 409 587 722 823 902 273 500 1000 1500 2000 2500 3000 3500 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

• 30

70 170 270 370 470 570 670 770 870 970

Productivity increase by 770 tons per capita, compared to 1997

Increase due to bigger production Increase due to headcount reduction Employees, average Total productivity

Employees, average Total productivity in tons

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POST ACQUISITION HIGHLIGHTS – PROGRESS IN SAFETY

Number of Accidents 1997-2006 (including sub contractors) Development of Lost Time Injury Frequency Rate (LTIFR) 1997 - 2006

* Excluding contractors

1 1 2 3 43*

1997

37*

1998

31*

1999

18*

2000

21*

2001

9*

2002 2003 2004 2005 2006

1,50 1,50 1,82 1,35 1,43 0,57 0,20 0,14 0,07 0,07

0,0 0,5 1,0 1,5 2,0 2,5 3,0 2004 2000 1999 1998 1997 2006 2005 LTIFR 2001 2002 2003

2006 Mondi Safety Award for Best in Class Large Unit

ZerO Tolerance Target ZerO

O T T O O T T O

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COMPETITIVE ADVANTAGE OF MPPŚWIECIE

Competitive Advantage of MPP Świecie driven by

• Clear cost advantage in energy and labor cost
• Cost advantage in transportation to European markets
• Capability of most effective fibre mix (wood and recovered fibre)
• Swiecie is a world class mill in terms of productivity
• Swiecie has an excellent track record with all big capex: they were

flawlessly executed within time and within budget increasing Company Value

• Organization culture managed by objectives, employees creativity
• Excellent Technical service
• Innovative products

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COST COMPETITIVNESS OF UNBLEACHED KRAFTLINER

50 100 150 200 250 300 350 400 450 500 500 1.000 1.500 2.000 2.500 3.000 3.500 Delivered costs to Frankfurt

Swiecie PM5

1 Including European supply and imports 2 Depreciations + ROCE 10% Source: Pöyry Forest Industry Consulting

Cumulative capacity, k tons p.a. €/tons Cost level 2006/III

Swiecie PM2 Swiecie PM1

SITE VISIT BRIEFING

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SITE VISIT BRIEFING