Reno De Medici Company Presentation March 21, 2018 Agenda - - PowerPoint PPT Presentation

Reno De Medici

Company Presentation March 21, 2018

Agenda

2

1 Overview 2 RDM Features and Strategic Guidelines 3 Delivering on Strategy 4 RDM Shares and Final Remarks

Some numbers…

2017 net revenues of €569 million Annual capacity of 1,050,000 tonnes 6 mills 2 sheeting centers 1,509 employees Commercial network in 70 Countries Star Segment of Borsa Italiana and Madrid Stock Exchange

3

A PanEuropean asset base

4

ITA, Villa S.Lucia 220k tons LINER WLC ITA, S.Giustina 240k tons WLC GER, Arnsberg 220k tons LINER/GD WLC FRA, Blendecques 110k tons WLC ITA, Ovaro 95k tons OG-GK FRA, La Rochette 165k tons GC-FBB

Three assets with capacity well above 200k tons/p.a. Ovaro mill focused on high-margin specialties.

WLC – White Lined Chipboard FBB – Folding Boxboard RDM La Rochette (FBB business) included in the P&L consolidation perimeter of RDM starting from H2 2016.

Our virtuous circle

Recycled paper collectors Consumers Carton board producers Distributors End users

Converters

5

With our cartonboard…

Our cartonboard is used to produce a huge quantity

• f

product we use every day. Any examples?

6

Business drivers

Overall economic trend Cartonboard

demand

Care for planet Plastic substitutions Brand recognition Changes in lifestyles E-commerce 7

Chinese PFR import trends

8

China is the world’s biggest consumer and is dependent on US (45.5%) and EU (29.4%) flows Announced new Chinese regulation about imports of unsorted waste paper (mostly mixed paper) Finished products export opportunities Drop of PFR import React to the new standard Increase in virgin pulp

Fibers

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Despite this downward pressure since Sept., the average price per tonne in 2017 was higher than of 2016

20 40 60 80 100 120 140 160 180

Brown Recycled fibers (€ per ton)

Mixed OCC 650 670 690 710 730 750 770 790 810 830 850

Bleached Softwood Pulp (€ per ton)

50 100 150 200 250 300 350 400 450

White Recycled Fibers (€ per ton)

Energy

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15 17 19 21 23 25 27 29

Natural gas (€/MWh)

Gas Italy Gas France 70 80 90 100 110 120 130 140

Coal price in Germany (€/ton)

The trends are basically dependent to the improved macroeconomic scenario

Selling prices

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(€ per ton) 480 530 580 630 680

Recycled Board Italy (WLC – GDII)

Bottom of price range Top of price range 430 480 530 580 630 680

Recycled Board Italy (WLC – GDIII)

Bottom of price range Top of price range 800 850 900 950 1000 1050 1100 1150

Virgin Board Italy (FBB – GCII)

Bottom of price range Top of price range 800 850 900 950 1000 1050 1100 1150 1200 1250 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18

Virgin Board France (FBB - GCII)

Bottom of price range Top of price range

Agenda

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1 Overview 2 RDM Features and Strategic Guidelines 3 Delivering on Strategy 4 RDM Shares and Final Remarks

Vision

13

Partner of Choice

Strategic priorities

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Enhance SERVICE and PRODUCT QUALITY

High-performance output contributes to overall cost competitiveness

Promote the “ONE COMPANY” culture

The newly-introduced mindset targets continuous improvement inside RDM, with the aim of maximizing the satisfaction of all our stakeholders

Translate operational progress into HEALTHY FINANCIALS

IT investments allow for supply chain optimization and more effective execution of orders

Minimize the ENVIRONMENTAL IMPACT of cartonboard production

RDM is committed to reducing carbon emissions, recycling resources and increasing operational efficiency

Strategy at work

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RDM leverages on clear strengths to deliver strategy:

PanEuropean asset base and sales network Cartonboard portfolio based on recycled, virgin fibres and specialties, meeting the full range of customer needs Strong position on the European market making RDM the partner

• f choice for key brands

and multinational corporations Presence in the packaging business, sector in which

• rganic growth can be

healthy as returns on investment prove to be high

MULTICOUNTRY BROAD OFFER SIZE GROWING BUSINESS

2018 top priorities

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ONE-COMPANY CULTURE

Spread the new culture across RDM Benchmark internal/external activities Foster best-practice sharing and synergies

NEW ERP SYSTEM

Close prototype phase Go-live in Italian mills

HEALTH & SAFETY

Target “Zero Accident” vision Promote well-being mindset Encourage improvements in working environment

INTEGRATED SUPPLY CHAIN

Enhance service and product quality Optimize volume allocation through customer segmentation Develop Integrated Business Planning

Agenda

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1 Overview 2 RDM Features and Strategic Guidelines 3 Delivering on Strategy 4 RDM Shares and Final Remarks

FY 2017 achievements

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Demand trend helped, but in-house levers put into play were crucial.

We successfully adapted response to spread challenges, while increasing mkt share in core countries.

INTEGRATION AND CAPEX BENEFITS

Increasing margins in a tough input-cost scenario

RAW MATERIALS PRICES HIKES DEMAND GROWTH SPREADS

RDM ACTION

Better mgmt of controllable costs Efficient operational performance Higher-margin product mix (FBB) Improved Sales and Operational planning Selling price increase Focus on core geographies Higher customers selectivity Better product positioning

12-month 2017 highlights

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569.1 € mn

Net Revenues from Sales +19.1%

45.8 € mn

EBITDA +50.5%

23.5 € mn

EBIT +168.2%

14.6 € mn

Net Profit 4.3x

0.21

Gearing*

0.22x @ 2016YE

9.9%

ROCE**

3.7% @ 2016YE

(% changes: FY 2017 vs. FY 2016)

*Gearing: Debt/(Debt+Equity) **ROCE: Last 12-month EBIT/Capital Employed Adjusted (for Equity Investments & LT Liabilities)

Revenues from Sales

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The topline growth was driven by the positive impact of the RDM La Rochette consolidation. WLC revenues increased by 7.8%, at a higher pace than WLC volumes.

+13.7% +19.1%

The increase in volumes reflects: ▪ the consolidation of the RDM La Rochette (FBB business) for 12 months in 2017 (while in 2016 it contributed just in Q3 and Q4). ▪ The 5.7% increase in WLC volumes (+47k tons).

1,012 890 477.8 569.1

Revenue growth outpaced volume increase

Revenues by geography

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Strong position in core European countries

FY 2016

477.8 € mn

FY 2017

569.1 € mn

FFB (La Rochette) products were not part of the RDM portfolio in H1 2016.

EBITDA and EBIT

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The WLC EBITDA change (+49.6%) reflects the following drivers: WLC Revenues increase (+7.8%) led by volume growth (+5.7%) and selling price increase; Increase in input costs; Production increase (+12.5%). In FY 2017 the contribution from the FBB business to consolidated EBITDA was positive (+1.8 € mn) due to the different consolidation period. FY 2017 EBITDA also reflects an extraordinary item: 1.2 € mn restructuring costs for the reorganization

• f the sales team.

EBIT increase (+168.2%) resulted in being even stronger than EBITDA increase (+50.5%), due to limited D&A growth (+3.0%, up to 22.30 € mn from 21.7 € mn in 9M 2016).

+50.5%

30.4 45.8

+ + _

+168.2%

EBITDA leap in Q2 and Q4 2017

2014 2015 2016 2017

14.0 11.8 8.1 7.3 10.7 12.4 11.0 7.8 9.3 8.1 6.0 7.1 9.1 14.2 9.7 12,8 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 % of sales EBITDA M€

23

Investing to improve efficiency

24

Typically, over the last ten years, RDM investments have been mainly concentrated in upgrading

• ne plant at a time.

In 2016, Capex was mainly focused on the Arnsberg mill rebuild. Cumulated capex of 179.3 million euro over the 2008- 2017 period, i.e. 17.9 million euro on average per year. In FY 2017 the three main capex projects were: ▪ the rebuild of the press section at Blendecques (Jan.) ▪ the replacement of the power plant at La Rochette (Aug.) ▪ Steam turbine at Santa Giustina (Dec.)

19.7 13.0 18.3 20.7

5 10 15 20 25 FY 2014 FY 2015 FY 2016 FY 2017

Capex (€ mn)

Low gearing ratio

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Operational net cash-flow positive by 17.3 mn € and absorbed by a number

• f specific outflows (17.0 mn €):

▪ Acquisition of 66.67% of PAC Service S.p.A. (10.4 mn €) ▪ 2016 dividends paid and shares buyback (1.3 mn €) ▪ Equity investment in Paper Interconnector 1.7 € mn ▪ Restructuring costs 1.0 € mn ▪ RDM Arnsberg GmbH deposit on the ‘logo fee’ tax case (2.6 € mn).

Investment pipeline

26

Jan Aug Dec

Blendecques shoepress section La Rochette power plant Santa Giustina steam turbine Ovaro converting machine New ERP Health & Safety projects 2018: sheeter at PAC Service, winder machine in Villa Santa Lucia and pope reel in Santa Giustina

36-hours stop planned

Agenda

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1 Overview 2 RDM Features and Strategic Guidelines 3 Delivering on Strategy 4 RDM Shares and Final Remarks

RDM and the Stock Exchange

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Source: RDM shareholder register

Listing markets Milan Stock Exchange – MTA (STAR segment) Madrid Stock Exchange Codes

Bloomberg: RM IM; Reuters: RDM.MI ISIN: IT0001178299

Mkt cap: 311.7 € mn Free float mkt cap: 102.5 € mn

(@0.825 € p.s. as of 16 March 2018)

Share Capital: 140,000,000.00 € Outstanding shares: 377,800,994, o/w 377,537,497 ordinary shares 263,497 convertible savings shares Conversion period: in February and September, each year

Main shareholders

CASCADES INC. 57.6% CAISSE DE DEPOT ET PLACEMENT DU QUEBEC 9.1% TREASURY SHARES 0.4% FREE FLOAT 32.9%

FY2017 proposed dividend

ORDINARY SHARE: Dividend of 3.1 € cents (FY2016 dividend was 2.65 € cents) Payment date: 16 May 2017 Dividend yield: 0.6% (YE2017 price of 0.5055 €)

Share performance

29 RDM vs FTSE Italy All-share Index

+169.9% +20.1%

Q1 2017: 512,773 Q2 2017: 362,208 Q3 2017: 1,270,890 Q4 2017: 621,645 2 Jan.18-16 Mar.18: 1,142,925 Average daily traded volumes

(Last update: 16 March 2018)

(base: 2 Jan. 2017= 100)

1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000

RDM traded volumes

50.00 100.00 150.00 200.00 250.00 300.00 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 RDM FTSE Italy All-share

0.27 0.37 0.47 0.57 0.67 0.77 0.87 0.97

RDM share price

Board of Directors

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Board appointed on 28 April 2017. Term of office: 3 financial years. The CEO is the only executive member of the Board. Eric Laflamme, Chairman

Entrepreneur (packaging business) since 2013. COO of Cascades Group in Montreal (2002-2008). Previously at Cascades SA Europe. Chemical engineer, with more than 19 years of experience in the European packaging industry.

Giulio Antonello, Independent Director Laura Guazzoni, Independent Director Allan Hogg, Director

In the past, investment banker and CEO of a listed Company. Presently, strategic advisor in the asset management field. Chartered accountant and business

• consultant. Bocconi

University professor.

Michele Bianchi, CEO

CFO of Cascades Group since 2010 – Bachelor’s Business Administration in Accounting.

Gloria F. Marino, Independent Director

Chartered accountant and statutory auditor. Lawyer at the Jones Day Milan office. Expert in M&A and corporate compliance

Sara Rizzon, Director

Stakeholder map

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SHAREHOLDERS

+357%: EpS increase in FY2017 vs. FY2016 2017 proposed dividend: 3.1 €c, i.e. (2.65 €c FY16) +65.4%: price increase in 2017 +63.2%: price increase in 2018 YTD 96 investors met in 2017 17 investors met in 2018 YTD

SUPPLIERS CUSTOMERS

Tailored solutions in response to specific needs Improved quality and service of products Differentiation through converting and finishing services Satisfaction survey in Nov. 2017

EMPLOYEES

Cultivation of the “One-Company” culture Promotion of a digitalized mindset New MBO system also based on Co.’s EBIT New incentivizing remuneration policy Satisfaction survey (entire staff) in 2018

Listening, engaging and creating value for stakeholders

Procurement integrated on a single platform Smarter planning

Final remarks

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1

Thorough evaluation and management of capex. Priorities: higher EBIT margin, ROCE expansion and sustainability improvements.

We will continue to deploy our plan to pursue organic growth and improve profitability

2

Optimization of the way we produce and sell, through further integration and by leveraging on digitalization.

We are selectively exploring M&A opportunities to strengthen profitability and to improve resilience to cyclicality

Increase Company’s returns in a reasonable time span Contribute to smooth volatility

• ver the cycle

Even through vertical integration

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