Pulp and forest Presentation on Altri 2010 Disclaimer All data - - PowerPoint PPT Presentation

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Pulp and forest Presentation on Altri 2010 Disclaimer All data contained in this presentation may contain confidential and/or privileged information, and it is exclusively intended for its addressees. Unauthorized copy, reproduction or

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Pulp and forest

Presentation on Altri

2010

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Disclaimer

All data contained in this presentation may contain confidential and/or privileged information, and it is exclusively intended for its addressees. Unauthorized copy, reproduction or distribution is strictly prohibited. This presentation is provided “as is” without any express or implied warranty. The information here in is provided for general purposes only and do not constitute professional advice. This presentation may contain forward-looking information and statements that could, ultimately, prove inaccurate, due to unexpected risks and uncertainties. All data referred in this document must be reported to the document’s date. Although every reasonable effort is made to present current and accurate information, Altri makes no guarantees of any

  • kind. The company declines any responsibility to update, revise or correct any
  • f the information hereby contained.
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Altri’s overview Business development Growth strategy Appendix

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  • Pulp and forest Portuguese listed company

– Export 95% of production

  • One of the most efficient pulp producers worldwide

– 2Q10: 35.6% EBITDA margin

  • Expansion program to produce around 900K tones/year in 2010

– 3 hardwood mills in Portugal

  • 82K ha of forest under management in Portugal

– Full FSC and PEFC Certification – 30% self sufficiency rate in 2010

  • Forest based renewable energy

– Power production through the cogen process – #1 biomass player in Portugal: over 120MW under concession

Company profile

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Altri’s overview Business development Growth strategy Appendix

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Strategic approach: forest integration

Wood fibres

Cooked and bleached for pulp

Lignin

Burned to produce electrical energy from cogeneration

Bark, leafs & forest residues

Burned to produce electrical power

Pulp production process Biomass power production

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Forest management

82K ha under management in Portugal

– 30% self sufficiency rate in 2010 – Mainly focused on eucalyptus globulus

Strategic location

– High yield locations – 10/12 years growing age – 10 m3 per ha per year

Focus on R&D

– Over 40 years of experience – Genetic improvements obtained through traditional breeding – Specif consuption below 3m3 wood/ton of pulp

Forest certifications for the whole area under management

– FSC – PEFC

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3 pulp mills in Portugal

Celbi

– Bleached Eucalyptus Kaft Pulp – Learning curve concluded – 600K tones/year operational in YE10

Caima

– Bleached Eucalyptus Sulphite Pulp – 120K tones/year of market pulp – TCF pulp suitable for tissue production

Celtejo

– Bleached Eucalyptus Kaft Pulp – 150K tone/year of market pulp in 2010 – Concluded the learning curve of bleached eucalyptus kraft pulp process

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World economy exposure

– 91% of total production exported – Strategic focus on the European market – Small exposure to the Chinese market

Main end uses

– Tissue – Printing and writing – Specialties

Increasing exposure to tissue

– Fastest growing paper market – Extra demand in Portugal (new tissue mills in operation in 2010)

Pulp sales: main markets

Breakdown 2009

Main markets

Europe 86% Portugal 3% Other 6% Asia 6% Other 12% Tissue 36% Packaging 5% Specialties 12% Printing and writing 36%

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Cogen in the pulp mills

Pulp mills are self sufficient in power Cogen involves burning the black liquor at the recovery boiler, generating electrical power

– Sold to the grid in their entirely at a “green” tariff

Energy needs

– all the power needed is acquired from the public grid at the regular tariff

Economics

– 465 GW expected to be sold in 2010 – 420 GW expected to be acquired in 2010 – Increasing net gains in 2010 and 2011

Cogen scheme

Digester

Wood Pulp Black liquor

Recovery boiler

Water Superheated steam Green liquor

Turbine & generator

Electrical power Steam

Mill uses Public grid

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Biomass power production

50% joint venture with EDP

– Over 120 MW under concession – #1 biomass player in Portugal – Equity accounting

Tariff

– 106€/MWh updated yearly on recorded inflation – Feed in tariff granted for 25 years

Economics

– Capex per MW around 2.5 M€ – Load factors above 80% – Biomass per MW around 1.6x – EBITDA margins around 45%

Celbi 27.9 MW

In operation

Caima 12.8 MW

In operation

Celtejo 12.8 MW

In operation

Mortágua 1 8.6 MW

In operation

Gondomar 27.9 MW

Jul 2011E

Cabeceiras 12.8 MW

Jul 2011E

Mortágua 2 27.9 MW

Jul 2011E* * Under negotiations to replace Mortágua 1

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Altri’s overview Business development Growth strategy Appendix

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Increasing cash flow generation

Global pulp market

– BEKP list price at high levels (870 USD/ton in Europe)

Altri Increased its pulp production capacity

– Around 900K tones per year in 2010 – Top 10 BEKP worldwide in 2010

Altri is Increasing operating efficiency

– Reduce cash cost per ton with the undergoing expansion plans

Altri main focus is the European market

– Largest BEKP market – Logistics advantage: lower freight costs

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BEKP list price in Europe (€)

Source: www.foex.fi Price (Euros)

200,00 300,00 400,00 500,00 600,00 700,00 800,00

Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-1 Jul-1

Aug 10

685€/ton

Jun 09

352€/ton

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15 500.000 1 .000.000 1 .500.000 2.000.000 2004 2005 2006 2007 2008 Jan- 09 Fev- 09 M ar- 09 A br- 09 M ai- 09 Jun- 09 Jul- 09 A go - 09 Set- 09 Out- 09 N o v- 09 D ez- 09 Jan- 1 Fev- 1 M ar- 1 A br- 1 M ai- 1 Jun- 1 Jul- 1

Inventories in European ports

Inventories sistematically below 700K tons vs historical avg of 1.3 million tons

– Maximum reached in Feb 2009: 1.76 million tones – Average 2004/09: 1.334 million tones of inventories – November 2009: 0.651 million tones – historical min – July 2010: 0.686 million tones

Source: www.europulp.net

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Doubling capacity in Celbi

– Doubling capacity to 600K ton of BEKP – Total investment of 350M€ – Start operation in 2H09 – Reduce cash cast per ton with the undergoing expansion plans – New cogen turbine with 75MW – Fixed cost dilution

Increasing capacity in Celtejo

– 150K ton in 2010 – 190 K ton in 2011 – TCF market pulp – Ability to produce either BEKP or NBSK

Increasing pulp production capacity

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Increasing pulp production capacity

Evolution of nominal pulp production capacity in Altri

Thousand tones

Caima mill Celtejo mill Celbi mill

115

115

2005

255

115 140

3ºT05

560

115 140 315

2007

870

120 150 600

2010

930

120 620

2011

190

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Increasing pulp production efficiency

Variable costs Fixed costs

Cash costs CIF per ton 2009 (Hawkins Wright April 2010)

Euro per ton of pulp (EUR/USD exchange rate of 1.33) Altri 2010E

The most efficient European player

50 100 150 200 250 300 350 400 450 500 Brazil Chile Indonesia World weighted average Iberia & Norway China Sweden Finland USA France / Belgium Japan Canada

Freight & marketing costs

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Conclusion

Pulp market in a very tight situation

– Inventories at very low levels in Europe – Significant new demand from China

  • 2009/11 will be open 6 million tones of new paper mills

– Material new capacity only foreseeable from 2013/2014

Altri is fully prepared to take the full advantage

– Expansion projects concluded and learning curve finalized – Expansion CAPEX finalized – One of the most efficient players worldwide – Location in Portugal but strong exposure to global economy

Strategic focus on cash flow generation and net debt reduction

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Altri’s overview Business development Growth strategy Appendix

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Business structure and shareholders

* Joint venture with EDP

Celbi Pulp mill EDP Bioeléctrica Biomass

50%* 99.58% 100%

Celtejo Pulp mill

100%

Caima Pulp mill

Major shareholders

102.566 million shares Management 42% Free-Float 58%

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Global pulp industry overview

Global pulp demand 1997/2009 Global pulp demand by region 1997/2009

Source: Hawkins Wright

Bleached softwood Bleached hardwood

BEKP

Other hardwood Sulphite TOTAL WHITE PULP 18 472 15 808

7 001

8 807 1 260 35 540 1999 2006 21 540 21 840

10 300

11 540 795 44 165 2007

  • 9%

+ 3%

+ 17%

  • 14%
  • 7%

+ 0.3% Var % 08/09 21 985 22 873

11 945

10 928 780 45 638 2008 21 225 23 625

13 195

10 430 780 45 630 20 240 24 435

15 480

8 955 725 45 920 2009 North America Nordic West Europe East Europe LatAm Oceania Japan China Asia/Africa TOTAL 1999 7 879 1 269 14 293 339 1 877 270 2 660 n/a 6 953 35 540 2006 8 465 1 625 15 435 1 125 2 145 300 2 495 6 130 6 455 44 175 2007 8 688 1 705 15 718 1 204 2 354 360 2 330 6 595 6 689 45 643 2008 7 970 1 765 15 225 1 210 2 435 320 2 240 7 990 6 475 45 630 2009 7 080 1 610 13 555 1 260 2 795 285 1 875 11 180 6 115 45 755 Va% 08/09

  • 11%
  • 9%
  • 11%

+ 4% + 15%

  • 11%
  • 16%

+ 40%

  • 6%

+ 0.3%

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Global pulp industry overview

Global pulp supply 2009

Bleached softwood Bleached hardwood

BEKP

Other hardwood Sulphite TOTAL WHITE PULP 1 855 2 860

2 410

450 425 5 140 6 010 1 320

  • 1 320
  • 7 330

6 505 2 180

  • 2 180

25 8 610 4 970 965

175

790 50 5 985 Canada USA Nordic West Europe 1 025 820

  • 820

400 2 245 2 515 12 925

12 925

  • 15 440

East Europe LatAm 395 50

50

  • 445

150 620

  • 620

10 780 Oceania Japan 235 6 430

7415

5 685

  • 6 665

23 560 28 170

16 305

11 865 910 52 640 Asia/Africa TOTAL Source: Hawkins Wright

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2Q10 main indicators

2Q 10 2Q 09 1Q 10

2Q10/1Q10 Var % 2Q10/2Q09 Var%

Operating income 135.549 78.744 108.666 24.7% 72.1% Cost of sales 41.400 34.839 37.655 9.9% 18.8% External supplies and services 31.391 29.419 29.686 5.7% 6.7% Payroll expenses 8.109 8.999 7.125 13.8%

  • 9.9%

Provisions and impairment losses 0.000 1.050 0.100

  • Other expenses

6.428 0.248 3.040 111.4% s.s. Total expenses (a) 87.328 74.555 77.606 12.5% 17.1% EBITDA (b) 48.221 4.189 31.060 55.3% 1051.2% Margin 35.6% 5.3% 28.6% +7,0 pp +30,3 pp Amortisation and depreciation 12.969 5.899 12.970 0.0% 119.9% EBIT (c) 35.252

  • 1.710

18.090 94.9% 1961.5% Margin 26.0%

  • 2.2%

16.6% +9,4 pp +28,2 pp Gains and losses in associated companies 0.410 0.077

  • 0.232
  • 430.7%

Gains and losses in other investments 0.000 0.058 0.000

  • Financial expenses
  • 9.477
  • 7.028
  • 7.906
  • 19.9%
  • 34.8%

Financial income

  • 0.003

0.011 1.225

  • 100.2%
  • 124.2%

Financial profit

  • 9.069
  • 6.882
  • 6.913

31.2%

  • 31.8%

Profit before income tax 26.182

  • 8.592

11.177 134.3% s.s. Income tax

  • 8.710

0.760

  • 2.029

Minority interests 0.003

  • 0.003
  • 0.002

Profit after income tax 17.470

  • 7.829

9.150 90.9% Profit for the period from discontinued operations 0.123 1.617

  • 0.050
  • Consolidated net profit

17.593

  • 6.212

9.100

93.3%

(amounts in thousand Euros) (a) Operating costs excluding amortization, Financial profit and Income tax (b) EBITDA = Earnings before Interest, Taxes, Depreciation and Amortization (c) EBIT = Earnings before Interest and Taxes