Welcome at Sappi Alfeld Mill · Global Packaging market to Speciality Paper market ... Tissue 8% Printings ... Source: Packaging 2020 – Innventia Global Outlook

| Mill Presentation Alfeld | 16th September 20141

Visit Bank of America

Merrill Lynch

Welcome at Sappi Alfeld Mill

16th September 2014


Agenda

9.00 o‘clock: Welcome Dr. Stefan Karrer &Rosemarie Asquino

9.10 o‘clock: Alfeld Mill Presentation Dr. Stefan Karrer &Rosemarie Asquino

10.10 o‘clock: Start of the Mill tour(including the wood yard)ends approx. at 12.00 o‘clock


Table of content

• Short overview of SFPE• History of Alfeld Mill• Plant ground with picture & facilities• Safety• Certifications• Overview of Productivity• Paper machines & Co.• Project Leopard• Overview Specialities Market of Europe• Vision for Sappi Alfeld 2018


Sappi at a glance

• 75% sales• Paper capacity 4.8m

tons• Pulp capacity 2.1m

tons

Sappi Fine Paper

• 21% 2013 sales• 3 mills

Sappi Fine PaperNorth America


Sappi Fine PaperEurope

• 25% sales• Paper capacity 1m tons• Pulp capacity 2.0m tons

Sappi Southern Africa


Sappi Paper and PaperPackaging


Sappi Chemical Cellulose

• 1% 2013 sales• 567,000ha owned and managed• Plantations (pulpwood and sawlogs)• 1 sawmill

Sappi Forests

• 11 Sales offices on 6 continents

Sappi Trading

2013 salesUS$ 5.9 billion

Employees13 500


Fine paper mills in Europe

5

Kirkniemi Mill Finland730,000 tons coated fine

paper and 330,000 tons pulp

Alfeld Mill Germany300,000 tons coated and

uncoated speciality paper and 120,000 tons pulp

Ehingen Mill Germany250,000 tons coated fine


Gratkorn Mill Austria950,000 tons coated fine


Total fine paper capacityin EU 3,300,000 tons/year

Maastricht Mill The Netherlands

280,000 tons coated fine paper

Lanaken Mill Belgium500,000 tons coated mechanical


Stockstadt Mill Germany430,000 tons coated and

uncoated fine paper and 150,000 tons pulp


Sappi Alfeld MillKey Facts


History of the Alfeld Mill

• 1706 Year of foundation

• 1851 First paper machine

• 1882 Start-up of pulp production in Alfeld

• 1992 Integration into Sappi Group

• 2004 Renaming into Sappi Alfeld GmbH

• 2006 300th anniversary

• 2013 Project Leopard: 100% Specialities Production


Sappi Alfeld MillOverview

1414

Water purification

Wood yard

Debarking plant & chipper

Warehouse

Dispatch

Sheet Finishing

Quality Control

Digester House, PHC-Bleaching

Mechanical Workshop

Paper mill

EDA (evaporation plant)

Administration

Power station

Sales Speciality papers

1313

1212

1111

1010

99

88

77

66

55

44

33

22

1111

22

33 44

55

66

77

8899

1010

1111

1212

13131414


Sappi Alfeld MillPulp Production and Papermaking Machines


Safety of our people

Zero injuries culture

• Safety is a core value at Sappi and zero injuries is the simple and clear goal across all our businesses.

• This is the underlying concept of Project Zero (Project O) introduced throughout Sappi in February 2005, which carries the strong and clear message: “no one should get injured working for Sappi!”

• The programme focuses on changing unsafe behaviour through structured behaviour-based safety interventions, including peer observations.


Safety at Sappi Alfeld MillDevelopment of LTIFR


Confirmation of quality and sustainability

• International health & safety, environmental and quality standards: OHSAS 18001, ISO 9001, ISO 14001, ISO 50001 and EMAS

• A pioneer with its Chain-of-Custody Certification for its entire European operations:

Forest Stewardship Council (FSC®) and the Program for the Endorsement of Forest Certification

(PEFC™) schemes

• Hygiene management in the production of packaging for foodstuffs: DIN EN 15593

• Harmlessness declarations (basis: external investigation done by ISEGA in compliance with regulations):

European Directive 1935/2004 EC 2023/2006 European Regulation on good manufacturing

practice for materials intended to come into contact with food BfR 36 and FDA compliance certifications for direct food contact European Directive 94/62/EC on packaging and waste DIN EN 71-3 safety of toys Suitable for direct contact with dry and fatty food

• Archiving: Requirements of permanence DIN ISO 9706:1995


PM 2

• Date of contruction: 1967

• Last rebuild: 1988/2001/2013

• Manufacturer: Voith / Valmet

• Width (mm): 4.600

• Speed (M/min): 1.200

• Capacity (t/year): 135.000

• Grammage (g/m²): 40-180

• Grades: Coated one side and uncoated flexpack, silicone basepaper, label paper, topliner


Finishing

• Reel finishing

4 slitter winders Width range: 1,240 - 4,800 mm 1 reel wrapping machine Total capacity: 1,200 tons per day

• Sheet finishing

5 cross cutters Width range: 1,400 - 2,000 mm Total capacity: 600 tons per day


Warehousing and Dispatch

• Work-in-progress storage area: 6,660 m²

• Warehouse storage area: 16,200 m²

• 6 dispatch loading bays

• Daily dispatch: 1,000 tons

• Dispatch

• 90 % by train*

• 10 % by road*

* business year 2013


Project Leopard

Re-build of papermaking machine 2:

New MG Yankee cylinder with a weight of 135 t and a diameter of 6.5 m

Improved quality and increased capacity Long term commitment to the speciality paper mark


Business Purpose and ProposalWorld’s largest and most integrated machine for C1S Speciality market


Sappi Alfeld PM2 Before and After Rebuild

After rebuild

Before rebuild

New headbox

Press section conceptmodification

New MG cylinder 1st Blade coater 2nd Blade coater

Predryer section concept modification

Precalender Film Coater Calender

Air dryers


Overview Specialities Market in Europe

by Rosemarie Asquino


Agenda

• Paper is around us everyday

• Central European Paper Capacity + demand

• C1S Speciality Paper Market

• Trends + influencing factors

• Competitors landscape

• Sappi – The way forward


Paper is around us everyday


Reading & Writing

• Books• Newspaper• Magazines• Writing papers• Brochures• Flyer• Reports• Printed advertisement• Folder• Catalogues• Office papers• ….


Building & Utility

• Acoustic Ceilings• Building Panels• Caulkin and adhesives• Decorative panels• Door infills• Double side adhesive tapes• Electrical insulation• Filtration• Floorings• Furniture laminates• Roofing materials• Sand papers• Self-adhesive insulation• Wallcovers• Pre-pregs• …


Transportation

• Automotive interior components• Double sided adhesive tapes• Masking tapes• Reflective road signs• Automotive filtration• Sand papers• Pre-pregs• Self-adhesive decorative films


Medical & Healthcare

• Laboratory and diagnostic filtration• Medical pouches and reels (bacterial barrier papers, sterilized papers)• Plasters, bandages, tapes• Sterilization wraps• Surgical drapes• Surgical gloves and gown wraps• Pharmaceutical Labels and Packaging


Household & Consumers

• Baby diapers• Hygiene products• Self-adhesive tapes• Textiles• Furniture laminates• Household filtration• Labelling of consumer and durable goods• Table cloths and napkins• Tissues• Wallpaper• Water Filtration• Baking papers• Gift wrapping• Painting and creative crafts papers


Retail & Consumer Packaging

• Transport packaging• Shelf ready packaging• Displays• Flexible Packaging• Rigid Packaging• Product Labels• Retail & Pricing Labels• Food and Beverage Filtration


Representing Value

• Paper money• Cheques• Security papers & documents• Voucher and ticket


Global Packaging market to Speciality Paper market



• The production of packaging materials is a significant business with worldwide annual sales over 640 billion USD.

• The global packaging market returned to growth in 2010 after recession in 2008/2009.• Packaging has been less hit hard by economic crisis compared to graphic paper business.• Forecasted growth during the period 2009 to 2015: average of 3.2% annually - to reach

$763 billion.

Global Packaging Market

Source: AWA Future of Packaging

Region: sales in US$ 2009 2015f CAGR (%) 2009 ‐ 2015Western Europe 191 203 1,1

Eastern Europe 34 45 4,8

Middle East 22 32 6,1

Africa 18 24 5,4

North America 165 176 1,1

South& Central America 32 44 5,5

Asia 162 228 5,9

Australasia 10 11 2,1

World 634 763 3,2

Note: f= forecast; CAGR: Compound annual growth rate



• The largest share of global packaging is accounted for paper and board packaging with sales of $165 billion in 2003, equating to 39% of the market.

• Paper and board will remain the single largest element of the market, growing at an annual rate of around 4% in real terms.

• Food and beverage products are the major end use sectors for packaging papers. Other important markets are tobacco, pharmaceuticals, medical, cosmetics and toiletries.

Paper based packaging



• Speciality papers & boards represent 7% of world wide paper and paperboard consumption of 360 miotons. (= 25,2 mio tons)

• Packaging and label papers represent the biggest share (38%) within Speciality Papers. (= 9,6 mio tons)• Within these packaging and label papers, coated one side papers (C1S) feature in all world wide paper

and board markets, with around 3.6 million tons. They are particularly important in certain key markets and in certain geographical regions.

Split of world wide paper & paper board demands

Packaging boards48%

Tissue8%

Printings & Writings27%

Newsprint 10%

Other speciality papers4%

other papers for packaging & labelling

1.7%

C1S papers for packaging&labels

1.0%Speciality Papers7%

Speciality paper's share of world wide paper & board demand in %

= 25 mTons

15,4 m tons

6 mTons

3,6 mTons

Alfeld’s activity area of PM2, PM3 and PM4



Source AWA

Out of more than 400 million tons paper production only 5-7% can be called specialties.


C1S Speciality Paper MarketCoated One Side (C1S) Speciality Paper Market

Source: AWA *The bold highlighted markets are the current segments of activity (Alfeld Mill)

Labels are filler volumes in PM2 scenario


Trends + influencing factors


Trends in Packaging


End Use Market Trends

Prevent food-waste: foodwaste became one of the major issues of the food industry. Foodlosses within supply chain, retail and post consumer food wasteaccount of app. 1/3 of all food produced globally.

Main reasons are:– Breakage, – spoilage,waste– hygiene– best-before-date – through away mentality – demopgraphics (single house-holds vs. pack sizes)

“...the optimisation and efficient use of food packaging can play an important role in preventing food waste by reducing a product’s overall environmental impact” The European Parlament 2011



Food safety– Increasing consumer sensitivity towards health risk exposure, leads

to a situation, where packaging is getting in focus.

Source: Packaging 2020 – Innventia Global Outlook

Requires new barrier materials against migration of heathordossubstances and high senstivity towards compounding of packagingmaterials


Food safety

Increasing sensitivity towards health risk exposure, leads to a situation, where packaging getting in focus. Increasing concerns on migration of hazardous substances into food -the product has to be protected against migration of (potential) hazardous materials, like

o Mineral Oil residues, o Paraffines, o Traces of heavy metals, o OBAs,…

• We see request for OBA free grades growing / mainly linked to demands in Asia (international brand owners want harmonized packaging / global sourcing)

• A number of requests for papers that could replace waxed papers or supportswitch from wax lamination to glue lamination (e.g. high deadfold) arrived fromconverters (Constantia) as well as from brand owners (Mondelez, Wrigleys)




Sustainability• Consumers and governments are putting enormous pressure on

producers of packaged goods to create more environmental friendly packaging.

• European packaging and waste directive: eliminate/reduce landfill by 2020

• Producers aim to comply with the packaging waste directive by focusing on prevention, recycling and compostingShare of respondents who rather or very often refrain from buying products because the

product's packaging is perceived to be bad for the environment

Source: Packaging 2020 – Innventia Global Outlook



Emerging Market Growth:

Some 70% of world economic growth will come from emerging markets over the next decade - what does that mean for packaging?

→Packaging will likely need to be tailored to many different markets based on customer/consumer preferences

→and also be faced with new requirements, such as perhaps delivery over poor, bumpy roads using questionable vehicles.

Opportunity for new developments / innovations


Trends and Outlook for Speciality Papers

New applications for speciality papers for packaging will develop

The packaging industry has now started intensive research efforts in order to develop improved and new functional properties for paper based substrates.

– Functional barriers and nanotechnologies -> increase usage of paper for primary packaging of food products (freshness, longer shelf life, reduce use of plastic films).

– Development of chemicals and fibres -> allow new packaging design with paper (e.g. moulded packs, thermo formed packs,…)

– Active and intelligent packaging -> incorporation of active substances like oxygen scavengors, antimicrobial systems, time temperature indicators, freshness indicators,..

Evolving market requirement:

Packaging papers and boards will move from

print carrier + and mechanical protection (multi-) functional materials

Trends and Outlook

fulfil food packaging requirements and enable to replace mineral oil based packaging materials


Competitors landscape


Sappi – The way forward


Highlights 2014

We launched our new speciality branding

Label Papers

Liner Applications

Rigid Packaging

Release Liner

Flexible Packaging

Technical Papers


Highlights 2014

9 new product developments, in addition to PM2 start up

Algro Vitess

Parade Prima G

Algro Vitess CD

Algro Thermo

Algro Guard

Leine Guard

Algro Sol SNC

Algro Sol SC

Algro DNN


Highlights 2014

Launch of Algro Guard and Leine Guard


Sappi MOB Papers

• Finalize development by end CY 2014(stable run on PL4)

• Next challenge: development of lower substances on PL2


Specialities Journey

time

past today future


Typical homologation process

6 months to 2 years!

Idea

Construction

Mock-upsFinished sample

Test phase

BusinessAverage order

size/job (specification) < 5 t

printing/converting, varnishing, embossing, hot- & cold foiling, cutting, slitting, grooving/scoring,creasing, erecting, feeding, filling, closing/glueing, lasering, marking, stacking, storing, transport,organoleptic/sensoric, ageing, etc.


Solution provider - different go to market model

BRAND OWNER

TODAY


Solution provider - different go to market model

TOMORROW

BRAND OWNER


The market is there…

Lindt & Sprüngli, CH „We want to eliminate aluminium and substitute our cartonboards used for chocolate tablets which is why the combination of paper and hot sealability is intriguing to us.“

„With barrier papers we could avoid PET in general and its odour which reduces the quality of powder sugar; for our jelly sugar we could substitute our 3-layers laminate (due to ascorbic acid) with one. This is more sustainable.“


Thank you for your attention!

Welcome at Sappi Alfeld Mill · Global Packaging market to Speciality Paper market ... Tissue 8% Printings ... Source: Packaging 2020 – Innventia Global Outlook

Documents