Reno De Medici S p A : H1 2020 Results Investor call

H1 2020 Results - Investor call

Milan, 31 July 2020

AGENDA

1. Operating scenario and strategy at work
2. Half-year2020 financial results
3. Final Remarks

Michele Bianchi - CEO

2

PROXIMITY TO CUSTOMERS IS KING IN THESE DAYS

A MULTI-COUNTRY PLATFORM

Total production capacity 1.26 M tons/y Four assets with capacity over 200 k tons/y

BLE -WLC (GD/GT) 110k tons

ARN - WLC (Liner) 220k tons

OVA - WLC (Specialties) 95k tons

LRO - FBB (GC)

165k tons

SGS - WLC (GD/GT/Liner) 250k tons

VSL - WLC (Liner) 220k tons

Barcelona Carton - WLC & FBB (GT/GD, Liner; GC) 200k tons - acquired at the end of October 2018

Santa Giustina plant

WLC

White Lined Chipboard

Based on recycled fibers

No. of mills: 6

Production capacity: 1.1 mn tons/p.a. equal to 87%

FBB

Folding Boxboard

Based on virgin fibers

No. of mills: 1

Production capacity: 0.165 mn tons/p.a. equal to 13%

Headquarters in Milan

Mill

3

Resilient end-use exposure proven

during Covid-19 outbreak, due to the essentiality features of both Food and Pharma (68% weight).

As counterevidence, weakening demand of specialties affected the production of Ovaro mill.

RDM END-USES

Source: RDM internal analysis on 2020 data.

Graphical

Applications

5%

Non Food

27%

Pharmaceuticals

• Cleanings 9%

Food

59%

Value of fiber-based packaging recognized by governments, retailers and consumers during Covid-19 emergency.

4

LEADING PRODUCERS IN EUROPE

KappaStar Holding

- Umka

RDM's mill
MM's mill	5
	Source: Company data

				TRANSFORMING THE COMPANY
Business combination	RDM Group		RDM Group
establishment
of Reno de Medici and
(merging RDM, Cascades		capitalizing on
	Cascades assets in
	La Rochette and Careo)		achievements
			Europe
			and rebranding

2008

2017

2021

Becoming a stronger and larger player

• Rationalization of capacity
• Focused capex plan in strategic assets
• Internationalization
• Deleveraging

Becoming more resilient through higher integration and efficiency

2018- 2021 TRANSFORMATION PLAN

• Integrating the Pan-European asset base and

recent acquisitions

La Rochette - 2016

PAC Service - 2017

Barcelona Cartonboard - 2018

through a portfolio of value-added initiatives to achieve goals as a One Company.

• Strategically transforming the cost structure

6

OPERATING UNDER THE 'MULTI-MILL' CONCEPT

Higher interchangeability

Specific types of RDM cartonboard can be produced in multiple mills

'Multi-Mill' concept

'One Company'

culture

• Balancing the availability of finished products at the individual plant
• Minimizing risks
• Ensuring greater proximity to customers and Security of Supply

Benefits

Flexibility in operations

Timeliness in delivery

Multi-Country'

asset base

IT tools

Mitigating market volatility that may arise from changes in:

• demand across markets
• tons produced across assets

7

BENEFITS FROM TRANSFORMATION

OUTCOME FROM THE THREE-YEAR PLAN

FROM 2021 ONWARDS, MOVING TOWARD CONTINUOUS IMPROVEMENT APPROACH

RESILIENCE

SPEED

in operational performance

in consolidated EBITDA margin

in capturing signals and promptly turning them into:

1. Better solutions for the client
2. Higher margins for the Company

Capitalizing on

A maintained portfolio of focused initiatives

An established network of teams and committees A plan-ahead attitude gained

An evolved management of operations

A more sophisticated demand/supply integration and optimization

COVID-19 OUTBREAK, AFTER THREE YEARS OF WORK…

A system of	Acceleration in	Clear tasks
rules in place	decision-making

…PROVED THE RESILIENCE and SUCCESS

ACHIEVED

To improve further

Optimization of sourcing and procurement Management of operations, unlocking growth and reducing costs per ton

Exploitation of new recipes and energy efficiency solutions

Optimization of price-mix

Completion of Barcelona Cartonboard integration Accelerate Innovation of sustainable products and digitalization of manufacturing and service processes

8

NURTURING AND LEVERAGING

CLIENT LOYALTY

1,400+ CLIENTS

Converters and Distributors

CLIENT TOP PRIORITY

Security of supply

RDM GROUP PERCEIVED AS a reliable partner, being a European

large WLC producer

RDM GROUP APPRECIATED FOR ITS

Quality

Customer service

Diversified portfolio

Responsiveness

Deliveries / Lead times

Fifth customer survey conducted over the 7 March - 2 April 2020 period, in 43 EMEA markets.

All-time highest response rate

Highest RDM Group score rating

Feedback revealing the best ratio of positive-to-negative comments ever recorded

Findings from the last

CUSTOMER SURVEY also prove

professional handling of an

unprecedented situation

9

H1 2020 AT A GLANCE

EBITDA margin improved in both business segments

EXTERNAL DRIVERS both in WLC and FBB

Higher demand

Higher organic volumes

Decrease in selling prices in H1 2020 compared to H1 2019

Low raw materials costs in Q1 for recycled

Decrease in pulp costs

Lower cost of energy

Solid RDM Group market position

resulting in volumes that outperformed

the pace of market growth

Efficiency and synergy plan

boost a favorable scenario both in demand and input

costs

EBITDA margin at 13.8%

(vs. 10.7% in H1 2019)

High increase in NET PROFIT +49.6%

(€24.9m vs. €16.7 in H1 2019)

Decrease in NFD

(from €52m at December 31, 2019

to €38.5m at June 30, 2020)

10

AGENDA

1. Operating scenario and strategy at work
2. Half-year2020 financial results
3. Final Remarks

Luca Rizzo - CFO

11

HIGHLIGHTS

+46.9%

+140%

+176.5%

*2019 ROCE included the write-down of the fixed assets of La

Rochette mill for €9.5m. Without this write-down, ROCE would have been 13% at December 31, 2019 and 15.31% at June 30, 2020.

*Net Debt as 31 December 2019 includes €12.5m liabilities due to the

adoption of the new IFRS 16 "Leases".

12

-2.7%

+24.5%

SALES AND EBITDA

The decrease in SALES (-2.7%) is due to :

+ Increase in tons sold, both in WLC (+1.7%) and FBB (8.3%);

_ Reductions in selling prices, mainly in WCL compared to H1 2019;

_ Temporary stoppage of production in Villa Santa Lucia plant following the

seizure of the municipal consortium's

wastewater treatment plant and in Ovaro plant due to lower demand for specialties products.

Higher EBITDA margin (13.8% in H1 2020 compared to 10.7% in H1 2019) reflects the

_ following drivers:

Slight decrease in SALES (-2.7%);

• Lower costs of fibers reflecting lower prices and greater efficiency in their use;
• Decline in energy costs compared with H1 2019.

13

SALES BY GEOGRAPHY

H1 2019	H1 2020
€362.2 m	€352.3 m
602k tons	614k tons

Stable mix in terms of volume and selling prices.

14

+34.6%

+49.6%

EBIT AND NET PROFIT

The strong increase in EBIT (+34.6%) mainly reflects the increase in EBITDA, partially offset by higher D&A costs than those of 2019 (€15.4 in H1 2020 vs €14.4m in H1 2019).

	High H1 2020 Net Profit increase
	(€8.2m vs. H1 2019) combines the
	impact of higher EBIT (€8.5m vs. H1
+	2019) with:
a €0.8m decrease in financial
_	expenses vs. H1 2019;
a €1m increase in taxes even if the
	tax rate is lower (25.2% vs. 21% in H1
	2019).

15

LOW GEARING RATIO

Decrease in NFD in H1 2020 (from €52m at December 31, 2019 to €38.5m at June 30, 2020).

In H1 2020 capital expenditure amounted to €5.2m compared with €9.8m in H1 2019.

44.1

Over the 2016-2018 period, RDM made three acquisitions for a total amount of €77 m.

Net Debt as at 31 December 2019 included €12.5m liabilities due to the adoption of the new IFRS 16 "Leases".

16

AGENDA

1. Operating scenario and strategy at work
2. Q1 2020 Financial Results
3. Final Remarks

Michele Bianchi - CEO

Andrea Bettinelli - Head of Strategy

17

2020 CAPEX OVERVIEW

2020 expected capital expenditure: 23-25 € mn

Of which maintenance + H&S investments are 11-13 € mn

ENERGY EFFICIENCY		COST SAVINGS & QUALITY
	€6m		€3m
Villa S. Lucia		Villa S. Lucia
Cogeneration Plant Revamping		Stock Preparation Revamping
S. Giustina		Barcelona
New Steam Boiler		Top and Back Layer Headbox
Others Mills		Barcelona
Power Plants extraordinary		Winder Rebuilt
maintenance		PAC Service
			New Wrapping Line

DIGITALIZATIONENVIRONMENT

€2m	€1m
All	La Rochette
New ERP System	Wastewater Treatment

18

LOOKING FORWARD IN A PANDEMIC SCENARIO

Positives

'Essentiality' of our cartonboard end-uses

Sustainable packaging LT drivers demand still in place

Multi-country and multi-millmodel as valid as ever

Cash liquidity and further financing capacity available

Risks/opportunities under stress scenarios assessed and well under control

Challenges

Scarce availability of fibers pushing up prices Opportunity to revert on final product prices

Converters destocking once panicking is over

New lockdowns and restrictions may weaken

consumer and luxury goods demand

More flexible operational models needed

Logistics complexity and cost

RDM Group remains focused on Long Term strategy execution

by relying on operational and financial strengths to address potential challenges

19

FINAL REMARKS

TOP ON OUR CURRENT AGENDA

• Interpreting the 'new normal' scenario
• Continue assessing the impacts of business scenarios to be prepared to react as needed
• Responsibly managing the costs
• Remaining a forward-looking Company

EMERGING EXTERNAL PATTERNS

• Greener UE agenda, supported by dedicated budget
• Digitalization challenge
• Growth of home delivery shopping and pickup in store

IMPACTS ON OUR BUSINESS

• Increased demand for packed products
• Enhanced hygiene product protection
• Light and recyclable packaging while preserving physical strenghts

Leverage on

Supporting mega-trendsand end-usersdemand

Continuous track record of metric improvements and sound financial performances

Proven resilience to external events

Continue to generate strong CASH FLOW to invest and grow the company

20

For any further information, please contact:
Chiara Borgini - IRO - [e-mail]	21