full-year 2011 results

Full-Year 2011 ResultsFull Year 2011 Results

9 March 2012

Contents

1. Introduction

2. FY 2011 financial statements

3. Review of Antalis and Arjowiggins

4. Outlook

5. Q&A

Appendix: Key financial data by business

22 Full-Year 2011 Results

Sommaire

1. Introduction

2 Résultat et Bilan ConsolidésPrésentation P P i t1. Introduction2. Résultat et Bilan Consolidés

3. Activité des Filiales

PowerPoint1. Introduction

4. Stratégie et PerspectivesPascal Lebard – Chief Executive Officer

Full-Year 2011 Results

Tough market conditions

Volumes were hit by weak demand for printing and writing papers in Europe and the US

Antalis: down 8%Arjowiggins: down 7%

Th d t i ti i i li t lt d i k th t dThe deterioration in economic climate resulted in weaker-than-expected demand after the summer…

which prevented market players from implementing the price increases…which prevented market players from implementing the price increases announced in June and July and scheduled for H2

Raw material costs reached levels higher than in 2010a ate a costs eac ed e e s g e t a 0 0Record highs for most raw material prices (pulp, waste paper, cotton, latex, starch) in 2011Negative impact of €62 million on Arjowiggins’ income (in 2010, they had ( ya negative impact of €110 million)


Solid operating advances

Antalis Growth in line with the objectives of the RACE 2012 plan and majorGrowth in line with the objectives of the RACE 2012 plan and major contribution to Antalis’ resilient performanceRefocus on core business, with the sale of the Office Supplies activities in Spain and Portugalin Spain and Portugal20% jump in sales in high-growth sectors (Packaging and Visual Communication)

ArjowigginsParticipation in paper industry consolidation with the sale of the Decor

d Ab i b i d th M li d R l t (Fi A t )and Abrasives businesses and the Moulin du Roy plant (Fine Arts)Stronger positions in niche markets thanks to an ongoing innovation strategySolid performance from Specialty businesses, especially the Security segment (banknotes, security solutions) which reported strong growth in 2011


Operating results down by one third, year-on-year

Sales held up well, at €3,944 million (down 1.8%) Positive impact on first-half 2011 of price increases implemented in 2010Positive impact on first half 2011 of price increases implemented in 2010, offsetting much of the negative volume impact

Decline in operating performance, in line with our forecasts in late O t bOctober

EBITDA down 34.5% to €135 millionRecurring operating income down 33 9% to €89 million including €25Recurring operating income down 33.9% to €89 million, including €25 million arising on changes to pension plans

Net loss of €77 millionIncluding €108 million net non-recurring expenses, of which €61 million related to impairment of Arjowiggins assets and €38 million to restructuring costs

At the AGM, the Board will recommend not paying any dividend for 2011


Group financial structure secured through June 2014

Agreement in principle concerning Group financing

Term sheets signed with banks on 24 February to renew the Group’s existing credit facilities (“amend and extend”) through June 30, 2014

Banking documentation to be signed in AprilBanking documentation to be signed in April

Net debt totalled €609 million versus €674 million at 31 December 2010

Net debt reduced by €65 million

Favourable impact of €96 million from the sale of Arjowiggins Decor andFavourable impact of €96 million from the sale of Arjowiggins Decor and Abrasive and Antalis Office Supplies businesses


Sommaire

1. Introduction

2 Résultat et Bilan ConsolidésPrésentation P P i t2. FY 2011 Financial Statements2. Résultat et Bilan Consolidés


PowerPoint2. FY 2011 Financial Statements

4. Stratégie et PerspectivesXavier Roy-Contancin – Chief Financial Officer


Consolidated income statement

€ millions2011

2010IFRS

pro forma**

2010management

pro forma*

2010reported

Sales 3,944 4,016 4,117 4,333% change*** - 1.8%

EBITDA 135 206 209 224

p

EBITDA margin (%)*** 3.4% 5.1% 5.1% 5.2%

Recurring operating income 89 135 137 148Operating margin (%)*** 2.3% 3.4% 3.3% 3.4%

Net financial expense (41) (50) (50) (49)Income tax (19) (34) (34) (38)Associates and non-controlling interests - - - -

Recurring net income 30 51 54 61N t i (%)*** 0 8% 1 3% 1 3% 1 4%

Non-recurring items (108) (59) (59) (29)Net earnings from discontinued operations - 40 39

Net margin (%)*** 0.8% 1.3% 1.3% 1.4%

Net income (loss) attributable to owners (77) 32 32 32

(*) Earnings in 2010 have been restated without Arjowiggins Decor and Abrasives and Antalis Office Supplies, activities sold in 2011.(**) In 2010, the Decor and Abrasives business was reclassified to net earnings from discontinued operations, in accordance with IFRS 5.(***) Percentage and margin changes are based on figures rounded out to one decimal place.


Breakdown by business

€ millions 2011Change

2011/2010 t f

2010management

f

2010IFRS

f€ millions

Sales - ArjowigginsSales - AntalisEliminations & holding company

1,4652,759(280)

-1.6%-1.4%

-

mgmt pro forma

1,4892,900(272)

1,4892,799(272)

pro forma pro forma

g y ( )

Consolidated net sales 3,944 -1.8%

EBITDA - Arjowiggins 50 -55.8%

4,117

112

4,016

112EBITDA - AntalisEBITDA - holding company & other

101(16)

-8.2%

Consolidated EBITDA 135 -34.5%

113(16)

209

110(16)

206

Recurring operating income - ArjowigginsRecurring operating income - AntalisRecurring operating loss - holding co & other

2283

(16)

-66.0%-3.4%

-

6688

(17)

6685

(16)Recurring operating loss holding co. & other (16)

Résultat op. courant consolidé 137Consolidated recurring operating income 89 -33.9%

(17)

128137

(16)

135


Breakdown of non-recurring items

2011€ millions, year ended 31 December Antalis: €(24m)Arjowiggins: €(14m)

(38)

(61)

17

Restructuring costs

Impairment of Arjowiggins assets and of goodwill

Net gains on disposals (Office Supplies)

MainlyArjowiggins Graphic and Appleton Coated

(108)Non-recurring items

(26)

g p ( pp )

Other non-recurring items

pp

o/wnon-recurring deferred income tax expense

€16m€16m


Consolidated statement of financial position

31 Dec 31 Dec€ millions

31 Dec. 2011

GoodwillProperty, plant & equipment and intangible assets

625467

31 Dec. 2010

643591 Impact of disposal of

Decor & Abrasi es

Impairment of Graphic goodwill

p y, p q p gOther fixed assets

Operating WCROther current assets (liabilities)

140

385(156)

105

487(173)

Decor & Abrasives

IAS 19 impact (pensions)

Assets (liabilities) held for saleTotal assets

Shareholders’ equity

-

669

1,4618

814

1,661

Non-controlling interestsProvisionsNet debt

T t l it d li biliti

1182609

1 461

1172674

1 661Total equity and liabilities 1,461 1,661


Breakdown of provisions

2011 2010€ millions, at 31 December 2011

Pension provisionsRestructuring provisions

12723

2010

11122

IAS 19 impact (pensions)

Other risk and contingency provisions 32

Total 182

39

172


Change in net debt

€ millions, at 31 December 2011

Consolidated net debt at 31 December 2010 (674)Consolidated net debt at 31 December 2010 (674)

EBITDAChange in WCRCAPEX

13547

(70) Antalis: €11mArjowiggins: €32m

Net finance costsIncome tax expense

Restructuring costs

(36)(21)

(48)

Arjowiggins: €32m

Antalis €25mg

Refinancing costs

Disposals/acquisitions

Cash flow from discontinued operations

( )

(3)

26

70

Arjowiggins: €23m

Office Supplies business

Cash flow from discontinued operations

Dividends

Currency impact

70

(20)

(6)

Decor and Abrasivesbusiness

Other items (9)

Consolidated net debt at 31 December 2011 (609)


Consolidated net debt

Net debt totalled €609 million versus €674 million at 31 December 2010Antalis: €226 million Arjowiggins: €313 million

Financial ratios (covenants) at 31 December 2011

Antalis: N t d bt/EBITDA 2 24 (≤ 3 5)Net debt/EBITDA = 2.24 (≤ 3.5)Gearing (net debt/equity) = 0.66 (< 1.1)Recur. op. inc./finance costs = 5.11 (≥ 3.0)

Arjowiggins: net debt/EBITDA = 6.90 (≤ 3.5)

Agreement in principle (term sheets) signed for the renewal of financing lines through June 2014


Group refinancing

Renewal of the Group’s existing credit facilities

In the form of “amend and extend” arrangementsIn the form of amend and extend arrangementsAntalis (€560m), Arjowiggins (€400m), Sequana (€41m)Maturing on 30 June 2014Banking documentation to be signed in Aprilg g p

Impact of refinancing

Based on refinancing in April 2012, increase of around €21 million in finance costs in 2012 before the tax effect (i.e., €27 million on an annual basis)Refinancing costs and fees totalling approximately €10 million


Sommaire

1. Introduction

2 Résultat et Bilan ConsolidésPrésentation P P i t3. Review of Antalis and Arjowiggins2. Résultat et Bilan Consolidés


PowerPoint3. Review of Antalis and Arjowiggins

4. Stratégie et Perspectives


Business review

Hervé Poncin – Chief Operating Officer of Antalis


Resilient results despite tough market conditionsconditions

Contrasting market conditions in different segments and regionsWeak demand for printing and writing papers in Europe (down 6%)p g g p p p ( )Markets outside Europe more upbeatRobust growth in Packaging and Visual Communications market

Slight decrease in sales (-1.4%) despite the 8% drop in volumesSlight decrease in sales ( 1.4%) despite the 8% drop in volumesFavourable impact of selling price increases in 2010 and first-half 2011Drop in volumes accentuated by rigorous customer risk management and gross margin protection policyG th i P k i d Vi l C i ti ti itiGrowth in Packaging and Visual Communications activities

Operating performance held up wellEBITDA: €101 million versus €110 million in 2010Recurring operating income: €83 million (down 3.4%), including gains of €8 million arising on pension plans; operating margin remained stable at 3.0%

Sale price increasesProduct mix improvement and tighter control over customer riskProduct mix improvement and tighter control over customer riskTight rein on overheads


2011 highlights

Refocus on core business with the sale of retail and wholesale OfficeSupplies activities in Spain and PortugalSupplies activities in Spain and Portugal

Sold for an enterprise value of €26 million

RACE 2012 l i li i h bj iRACE 2012: plan in line with objectivesMaking a real contribution to sales and profitability

More effective customer portfolio management, more targetedcustomer prospectingcustomer prospectingEnhanced sales model, boosted by the deployment of the Sales Academy and CRM tools

Increase in online sales penetration; the number of countries equipped with the p q ppe-commerce platform has doubled

1 million online orders, 6.5% of Antalis’ salesDevelopment of high-potential markets

S l i P k i d Vi l C i ti b 20%Sales in Packaging and Visual Communications up by 20%


2011 highlights

Development of Packaging and Visual Communicationsmarketsmarkets

Vigorous organic growthEnhanced product range and development of cross-sellingStronger Visual Communications sales organisation and presence in new Packaging markets (Italy, Spain, Poland)

Increasing contribution to Antalis’ gross margin19% of margin in 2011, versus 15% in 2010

Stronger presence in the market for Packaging products andsolutions at the beginning of 2012

Acquisition of Ambassador in the UK and Pack 2000 in GermanyFor a total enterprise value of €25 million……representing additional sales of €50 millionRanked no. 2 in the UK


2011 highlights

Stronger European market leadershipi f i dl d ti…in eco-friendly and creative papers:

Continued deployment of Arjowiggins Graphic’s eco-friendly offering; launch of new ranges of creative papers

i th di it l i ti k t…in the digital printing market:Launch of the new Digigreen range,100% eco-friendly and 100%-digital certified HPInnovative “d2b” marketing approach aimedInnovative d2b marketing approach aimed at digital sector players

…in services:Launch of specific catalogues in most European countriesLaunch of specific catalogues in most European countriesNew growth opportunities in logistics services (Switzerland)


Key income statement items

€ millions, year ended 31 December

S l 2 7992 759

S1 2010pro forma de gestion

S1 2010pro forma

IFRS2011

2010mgmt

pro forma

2010reported

down 1.6% at constant exchange

rates

Sales% change

2,799 2,900

EBITDAEBITDA margin (%)

1103 9%

1133 9%

2 ,759- 1.4%

1013 6% ratesEBITDA margin (%) 3.9% 3.9%

Recurring operating incomeOperating margin (%)

853.0%

883.0%

3.6%

833.0%

Capital employedROCE

--

63513.8%

60413.7%

Operating margin proves resilient, at 3.0% of sales, despite lower volumes

2323 Full-Year 2011 Results2323

EBITDA trends

H1: (6)H2 (17)

2010 EBITDA Variable costs Inflation Reduction in overheads

Bad debts 2011 EBITDAMargins/MixVolumes


Key cash flow items

€ millions, year ended 31 December 2011 2010 mgmt pro forma

EBITDA 101

Change in WCRCAPEX

11

(25)

110

7

(19)

p

CAPEX

Sale of fixed assets

(25)

2

Operating cash flow 89

(19)

1

99

Net debt 226 262

€36 million reduction in net debt to €226 million thanks to effective management of WCR and asset disposals (net proceeds of €26 million)


Breakdown of sales and EBITDA

2011 sales by region 2011 EBITDA by region 2011 sales by business

Eastern Europe16%France

Western Europe (excl. France & UK) Print

Office

VisualCommunications

5%

14% 42%

UK

Print70%

Rest of the Office17%

UK20%

world17%

Packaging8%

Western Europe

67%

Eastern Europe

14%Rest of the

world10% 67%


Business review

Pascal Lebard – Chief Executive Officer


High raw material costs significantly impacted earningsimpacted earnings

Sales slipped 1.6% to €1,465 millionSharp drop in volumes for printing and writing papers in Europe and the USAs a result the selling price increases planned for the second-half of the year couldAs a result, the selling price increases planned for the second-half of the year could not be implementedSpecialty businesses performed well, particularly Security (banknotes, security solutions), driven by robust demand

EBITDA fell to €50 million, down from €112 million in 2010, reflecting:The adverse impact of declining volumes, partially offset by the positive effect of price increases implemented in 2010 (first half) and an improved product mixincreases implemented in 2010 (first half) and an improved product mixHigher input costs than in 2010 (€62 million, including €24 million relating to cotton)

Even though raw material prices (cotton, pulp, waste paper, chemical products) fell in the second-half of the year As most purchases were made before raw material prices fell, this impact will only be felt in 2012

Recurring operating income down to €22 million from €66 million in 2010Recurring operating income down to €22 million from €66 million in 2010 Including a €17 million gain arising on pension funds


2011 highlights

Participation in paper sector consolidation in line with strategySale of activities based at the Arches (France) and Dettingen (Germany) plants toSale of activities based at the Arches (France) and Dettingen (Germany) plants to Munksjö in March 2011 for an enterprise value of €95 million, and sale of the Moulin du Roy (Fine Arts) mill to Hamelin at the end of June

Overheads and production capacity have been adjusted to reflect lower demandShut-down of the Rives (France) plant and two paper machines, one at Dalum (Denmark) and the other at Witcel (Argentina)(Denmark) and the other at Witcel (Argentina) Capacity adjustments in line with market conditions (short-time working, reduction in shifts ) and ongoing cost-cutting measures


Key income statement items

down 0.3% at

2011

constant exchange rates

2010reported

2010 mgmt

€ millions, year ended 31 December 2011

Sales% change

1,465- 1.6%

reported

1,711

mgmtpro forma

1,489

EBITDA 50 112 128EBITDA margin (%) 3.4% 7.5% 7.5%

Recurring operating income (*) 22 66 76Recurring operating income ( ) 22 66 76Operating margin (%) 1.5% 4.4% 4.4%

Capital employed 472 - 561ROCE 4.8% - 13.6%ROCE 4.8% 13.6%

(*) Includes a gain of €17 million arising on a pension plan in 2011


EBITDA trends

112120 H1: 38_

26100

H2: (12)

(38)

1860

80H1: 9H2: 9

50

(8)

(62)

40

60 H1: (20)H2: (18)

H1: (4)(62)

0

20 H1: (50)H2: (12)

H1: (4)H2: (4)

02010 EBITDA Volumes Price & Mix Pulp, raw

materials &energy

Overheads Inflation 2011 EBITDA


Key cash flow items

2011€ millions, year ended 31 December2010 mgmtpro forma

EBITDA

Change in WCR

C

32

(44)

11250

(27)

(45)

pro forma

CAPEX

Disposals

(44)

6

Operating cash flow 44

(45)

5

45

Net debt 313 353

Net debt reduced by €40 million to €313 million thanks to effective management of WCR and asset disposals (net proceeds of €70 million)


Breakdown of sales

US Coated%

Graphic

Rest of the world 18% North America

20%

2011 sales by region2011 sales by division EBITDA* by division

Graphic4 %Security

47%

Coated 32%

Green

40%

17%Graphic

40%20%

Asia11%

47%

Specialty 28%

Creative Papers18%

France15%

Security25%

UK10%

Europe (excl. France and UK)

26%

Creative Papers49%

* does not include €1 million in negative EBITDA for the US Coated division


Results by division

Graphic Sales down 6.0% to €581 millionEBITDA at €2 million, down from €38 million in 2010 (pro forma)

Market conditionsSharp drop in volumes for graphic coated papers, leading to a delay in implementingSharp drop in volumes for graphic coated papers, leading to a delay in implementing sale price increases announced for the second-half of 2011Slight fall in recycled paper volumesRobust demand in most specialty segments (one-side coated, tissue, transfer)Strong pressure on pulp prices and even greater pressure on waste paper prices

HighlightsGreen offering expanded with the launch of new ranges of papers for the publishingGreen offering expanded with the launch of new ranges of papers for the publishing and digital printing markets (Ecolight, RePrint Deluxe, Cocoon Jet) Innovative new digital printing de-inking technologies developed at the Greenfield plant in partnership with HP Ongoing cost-cutting measures and lean manufacturing initiatives


Results by division

US CoatedSales down 6.0% to €253 millionEBITDA almost at break-even: negative €1 million, versus negative €6 million in 2010

Market conditionsSharp downturn in commercial print volumes and difficult conditions in textbook publishingSmall selling price increases and improved product mixHigh cost of pulp

HighlightsStrengthening of positions in coated papers for digital web presses and launch of new ranges in partnership with HPImproved product and customer service quality thanks to new quality controlImproved product and customer service quality thanks to new quality control processesContinued cost cutting and improvement of industrial (logistics, energy) and commercial efficiency


Results by divisiony

Creative PapersSales down 3.7% to €269 millionEBITDA down to €25 million, from €32 million in 2010 (pro forma)

Market conditionsContrasting, with bullish sales in the first half but a slowdownContrasting, with bullish sales in the first half but a slowdown in demand in the six months to 31 DecemberHigher selling prices partially offset the downturn in volumes and high raw material costsN i i d d hi l i ( l ffNegative impact on product and geographical mix (replacement effect on mid-range papers)

HighlightsSustained innovation in eco-friendly premium papers (new Pop’Set and Keaykolour ranges) and specialty papersDynamic marketing policy supported by much talked-about off- and online campaigns (The Blank Sheet Project)campaigns (The Blank Sheet Project)Continued development of commercial synergies with AntalisProduction capacity adjusted to changes in demand and overhead reduction (closure of the Rives plant and sale of Moulin du Roy in France)


Results by division

SecuritySales up 12.8% to €362 millionEBITDA d t €24 illi €48 illi i 2010EBITDA down to €24 million, versus €48 million in 2010

Market conditionsSoaring cotton prices significantly impacted earnings despite the fall in pricesSoaring cotton prices significantly impacted earnings despite the fall in prices later in the year (€24 million)Buoyant demand for banknote paperStrong growth in sales for security solutions

HighlightsConsolidation of worldwide leadership in banknotes with the launch of Picture ThreadTM a world firstPicture Thread , a world firstSignificant growth in the security solutions business

Strong growth in ID solutions (e-passports)New contracts wins in the brand protection segmentNew contracts wins in the brand protection segmentInnovative technology for traceability solutions (SignopticTM)


Sommaire

1. Introduction

2 Résultat et Bilan ConsolidésPrésentation P P i t4. Outlook2. Résultat et Bilan Consolidés


PowerPoint4. Outlook

4. Stratégie et PerspectivesPascal Lebard – Chief Executive Officer


Market outlook for 2012

Uncertain economic environment with the threat of a recession in EuropeLack of visibility as regards companies’ marketing and communication spendingMarkets in Northern European and emerging countries should prove more resilient

Contrasting demand patternsDemand for printing and writing papers should continue to decline in Europe and the USand the USBetter visibility regarding trends in demand for recycled papersContinued quest for growth in Packaging and Visual CommunicationsUpbeat demand for specialty papers, especially in the Security and Medical/Hospital segments


Market outlook for H1 2012

Raw material costs should fall although the pricing environment will remain volatileremain volatile

Pulp prices should stabilise (although a slight rise is expected in March) as should waste paper pricesSharp fall in cotton priceSharp fall in cotton priceRising oil prices are expected to drive up the cost of energy and chemical products

Certain players have announced price increases in April in the printing and writing paper segment

A f t h i k tA fast-changing marketDistribution in Europe: several developments could lead to a consolidation in the market and/or reductions in capacityProduction: capacity adjustments for coated and recycled papers in Europe and the US (consolidation or site closures)


Priorities for Sequana in 2012

Improve operating performance

Implement sale price increases

Unlock further commercial synergies between Antalis and Arjowiggins

Continued cost-cutting and capacity adjustments

Continue to use our leadership positions to create valuep p

Press ahead with Antalis’ development in fast-growing non-paper sectors (Packaging, Visual Communications) and in emerging countries

St d t k ti d i l i ti t t thStep up product, marketing and commercial innovation to create new growth opportunities

In 2012, Sequana expects to deliver anoperating performance ahead of 2011


Sommaire

1. Introduction

2 Résultat et Bilan ConsolidésPrésentation P P i t5. Q&A2. Résultat et Bilan Consolidés


PowerPoint5. Q&A

4. Stratégie et PerspectivesPascal Lebard – Chief Executive Officer of Sequana

Xavier Roy-Contancin – Chief Financial OfficerXavier Roy-Contancin – Chief Financial Officer

Hervé Poncin – Chief Operating Officer of Antalis


Sommaire

1. Introduction

2 Résultat et Bilan ConsolidésPrésentation P P i t www.sequana.com2. Résultat et Bilan Consolidés


PowerPoint www.sequana.com

4. Stratégie et Perspectives+33 1 58 04 22 80

[email protected]@ q


Sommaire

1. Introduction

2 Résultat et Bilan ConsolidésPrésentation P P i tAppendix – Key financial data2. Résultat et Bilan Consolidés


PowerPointAppendix Key financial data

4. Stratégie et Perspectives


Antalis - Europe

2011 sales by region

Eastern Europe16%

UK22%

France15%Western Europe

(excl. France and UK)47%

EBITDA Recurring operating incomeSales

€ millions

2 517

6784

2,4712,517

92

69

201120112011 2010 management pro forma

2010 management pro forma


4545

p

Full-Year 2011 Results

p p

Antalis – Rest of the World

2011 sales by region

South AfricaSouth Africa43%

Asia25%

South America32%


€ millions

25%

161617 17

288281

201120112011 2010 management pro forma




Arjowiggins - Graphic


€ millions

581619

2

38

16

2011 2011

(20)

2011





Arjowiggins – US Coated


€ millions

253

270

(1)

(6)

2011

2010(5)

2011

2010(10)

2011 2010


Arjowiggins - Creative Papers


€ millions

269280

32 25

25

32

18

25

2011 2011 20112010 management pro forma




Arjowiggins - Security


€ millions

320

362

48

24

12

35

2011 2010 2011 2010 2011 2010


full-year 2011 results

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