Mpact Investor and Analyst Site Visit. 25 May 2016

Transcription

1 Mpact Investor and Analyst Site Visit 25 May 2016

2 Welcome - Bruce Strong Mpact Plastics Wadeville - Neelin Naidoo Mpact Polymers - John Hunt

3 Mpact Plastics Wadeville Site Visit Neelin Naidoo 25 May 2016

4 Mpact plastics overview PET preforms, bottles, jars, and closures Jumbo bins, pallets, wheelie bins and crates. Key product categories PET preforms, bottles, jars and closures Jumbo bins, pallets, wheelie bins and crates Bottles, jars and tubs with in mould labelling capability Styrene and PET trays, fast food containers and clear plastic films rpet pellets FMCG bottles, jars and tubs with in mould labelling Styrene and PET trays, fast food containers and clear plastic films Key customers FMCG companies (carbonated soft drinks, personal care, pharmaceuticals, food producers) Quick service restaurants Agricultural producers Retail chains rpet pellets Leader in the manufacture of PET preforms, styrene trays, plastic jumbo bins and wheelie bins 4

5 R million R million Plastics business (31 December 2015) External revenue Underlying operating profit HY1 HY2 Revenue up 8.1% to R2.5bn Selling price and product mix lower by 4.0% Volume growth of 12.1% Underlying operating profit up 50.8% to R199m Margin up to 7.9% from 5.6% Favourable product mix Lower raw material prices % Benefit of FMCG restructure % % % HY1 HY2 margin Revenue 27% Operating profit 20% 5

6 Harare 1,419 EMPLOYEES Brits Wadeville Pinetown 10 SITES Atlantis Paarl FMCG BINS AND CRATES PET PREFORMS, BOTTLES, JARS, AND CLOSURES rpet TRAYS & FILMS

7 Mpact Wadeville Overview PET preforms, bottles and jars Product range Carbonated soft drink preforms and bottles Hot fill preforms and bottles Water bottles Edible oil bottles Wide mouth food jars Personal care bottles Key contracts ABI, Pioneer, Kingsley Major competitors Polyoak, Bowler Metcalf Nampak, Fontana Boxmore, QPET Certifications/Accreditations ISO 9001: 2008 FSSC : 2013 Production equipment Husky injection moulding machines Sidel and Sipa stretch blow moulders Nissei injection stretch blow moulders 2015 Production 1.4 billion units Raw materials PET Virgin and Recycled Staff numbers 242 employees 7

8 Mpact Wadeville: key milestones in the South African market First to market with PET Wide Mouth Jars First to market with Hot Fill preforms and bottles First to market with 144 cavitation preforms First to market with 1881 light-weight neck design for carbonated soft drinks First to market in Africa for rpet in The Coca-Cola Company brands PAGE 8 8

9 What is PET? Polyethylene terephthalate (PET) Derived from crude oil Uses Fibre (Polyester) Packaging Key properties in packaging Gas barrier Strength Clarity Lightweight Key suppliers Hosaf Mpact Polymers 9

10 PET market in South Africa Total consumption was approximately 210,000 tonnes in 2015* Bottles account for approximately 68%* Historic annual growth has been between 6-8% from 2004* Future growth is estimated at 8% per annum* Total consumption is sourced locally from Hosaf and rpet producers, supplemented by imports Import parity pricing based on global indices *Source: PETCO 10

11 PET bottle manufacturing process Injection moulding process Stretch blow moulding process PET pellets Heater Screw Barrel Mould Source: CYPET Technologies, Delta T Systems, Metal Casting Suppliers 11

12 In Summary Invested in state-of-the-art technology Economies of scale Capabilities benchmarked globally Expertise in processing of PET (including recycled PET) High growth market where opportunities exist to substitute other packaging substrates Competitively positioned 12 PAGE 12

13 Mpact Polymers Site Visit John Hunt 25 May 2016

14 Why bottle-to-bottle rpet (Savuka PET)? Approximately 68% (140,000 tonnes) of PET usage in SA is for beverages* Projected 8% growth rate in PET use* Recycling rate of PET beverage packaging in 2015 was 52%* To date rpet has been primarily used for polyester fibre production Further improvement in recycling rates requires bottle-to-bottle recycling Technology has progressed to produce rpet of suitable quality for beverage packaging Producer responsibility for recycling (helping to reduce bottlers carbon footprint) *Source: PETCO 14

15 Tonnes PET market growth PET Recycled PET used in bottles Total PET consumption Source: PETCO 15

16 Mpact Plastics integration 16

17 Project Rationale Exceeds Mpact s minimum investment criteria over the period Leverage Mpact s recycling network and converting capabilities Improved environmental performance for Mpact, its customers and the community Job creation in the recycling industry Qualifies for S12i tax incentive 17

18 Other project benefits Environmental benefits 29,000 tonnes of used bottles will be diverted from landfill Estimated saving of 186,000 cubic metres of landfill space CO 2 emissions reduction of approximately 53,000 tonnes per annum Production of rpet requires less energy than the process of creating virgin PET Low energy and water consumption Socio-economic benefits Approximately 1,000 indirect jobs will be created through the collection of bottles 85 direct jobs created Benefits Coca-Cola Southern Africa and its bottling partners (ABI & others) and other users of PET; as they are increasingly interested in recycling the materials they use to package their products Greenfield investments in manufacturing capability in South Africa Innovation Public-private partnerships 18

19 About Mpact Polymers Financial information Capex cost: R350 million Shareholding: Mpact: 79%, IDC: 21% Products rpet (Savuka PET) and other recyclable polymers Major Customers ABI Mpact Plastics Competitor Extrupet Staff numbers 85 employees Certifications and approvals The Coca-Cola Company EU Food and Safety Authority (recycling process) Facility Krones Metapure Technology Size: 20,000m 2 (9,000 m 2 under cover) Capacity tonnes of bottles processed per annum tonnes rpet produced per annum Raw materials Used PET bottles The project is a result of close collaboration over several years between Mpact, The Coca-Cola Company, ABI, SABMiller, IDC, DTI, PETCO, Krones and the City of Ekurhuleni 19

20 rpet Technology review Considerations for technology selection Coca-Cola approved technology (four approved equipment suppliers) Final product characteristics Capital cost and operating cost per kg Economies of scale Proven technology supplier capability Key learnings from international benchmarking Mpact visited numerous rpet facilities, recyclers and convertors in 8 countries (Germany, France, Austria, Bangladesh, Mexico, Italy, USA and Peru) Require secure raw material supply Require convertor and brand owner commitment Krones Metapure technology is proven 20

21 Technology - Krones Metapure Krones is a major filling line supplier to SABMiller and The Coca-Cola Company globally revenue in 2015: EUR 3.2 billion Krones Metapure technology has: Integrated design and technology developed for rpet Bottle washing plant experience: low water and chemicals consumption combined with wash quality Energy efficiency kwhr/kg of rpet Limited thermal processing improved polymer characteristics 21

22 Progress to date Commissioned on time and within budget Proven capability in meeting exacting specifications Well entrenched quality control protocols The Coca-Cola Company approval in place Market acceptance of Savuka PET 10% rpet in 500ml bottles in Gauteng Successful unveiling on 10 May, with strong support from Government, IDC, ABI, TCCC, SABMiller, and others Healthy raw material supply Mpact Recycling, Remade Ongoing Krones support 22

23 Market approvals The Coca-Cola Company (TCCC) approvals Technology Krones Metapure technology (prior to order) Chemical analysis of rpet product (November 2015) Sensory evaluation of Coke in an rpet containing bottle - 10 weeks (November 2015) Facilities audit includes mandatory testing equipment (February 2016) Supplier Guiding Principles (February 2016) Savuka PET has been approved in the packaging of TCCC products at 25% Product converting and bottling trials Physical trials of product run at the converter or the bottlers premises Runability, final product quality Completed for 500ml Coke bottle (March 2016), 2L Coke bottle trial underway Completed at other key food packaging customers 23

24 Key challenges to date Plant availability Power interruptions and allocation (partly resolved) Staff confidence and training (in progress) Intermittent stoppages (being resolved) Maintenance higher than planned Quality Colour (resolved) Throughput Equipment bottlenecks (resolution in progress) Yield - process stability, purge rates (improving) Raw material feedstock quality (in progress) Profitability 24

25 Current focus Incoming raw material standards Plant availability Root cause analysis Additional training Service and maintenance protocols Throughput optimisation Yield De-bottlenecking Further convertor and bottler approvals Profitability 25

26 Mpact Polymers official opening 26