AMCOR TOBACCO PACKAGING
Analyst Presentation
Zürich – October 11, 2010
ATP Organisation
Peter Konieczny
President
Dwight Kennedy
Jerzy Czubak
Marco Hilty
Julie Sauvé
Sauvé
Monica Rottman
Roelof Vogel
VP & GM
Americas
Global COO &
VP European
Operations
VP Sales,
Marketing &
Strategy
VP Finance & IT
VP HR
VP & GM Asia
Americas
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© Amcor 2010 |
Europe
Global functional responsibilities
Asia
Agenda
• Integration of Alcan Global Tobacco
• Industry structure and dynamics
• ATP growth opportunities
• Value creation opportunities in operations
• Conclusion
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© Amcor 2010 | October 12, 2010
Locations
1
Number of Plants
Ex-Amcor Rentsch
and Asia
Ex-Alcan
AMVIG
1
1
1
Canada
2
Germany
1
3
USA
2
UK
Russia
Netherlands
1
France
1
Poland
1
Ukraine
1
Kazakhstan
Switzerland
1
1
Portugal
Turkey
10
China (AMVIG)
1
1
Malaysia
1
Plants
Sales (€ mill)
Headcount
3
Asia
Europe
Americas
4
185
500
Note: One legacy Alcan plant closed in Rawang, Malaysia
© Amcor 2010 |
Plants
Sales (€ mill)
Headcount
13
550
2,000
Philippines
Singapore
(excl. AMVIG)
Plants
3
Sales (€ mill)
45
Headcount
350
Status of Integration
• Safety, customer and market focus, low cost, capital discipline, talent – The Amcor Way
introduced
• Customer response positive
• Organisation aligned, cultures of ex-Amcor Rentsch and ex-Alcan Global Tobacco very similar
• Synergies on track
• SG&A streamlined: head office established in Zurich, Bristol closed
• Footprint: Rawang, Malaysia plant closed
• Best practice sharing in operations: Brabant, St. Petersburg, CI projects
• Leverage scale
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© Amcor 2010 | October 12, 2010
Customer market share per region
Market Size 2009 – Bn sticks
764
600
Other
8%
11%
JTI
16%
352
944
240
9%
100%
22%
10%
32%
ITG
BAT
45%
18%
Opportunities for ATP
54%
9%
22%
25%
20%
2. Develop position in Asia and
Latin America
14%
3. Grow non-tobacco products in
North America
21%
PMI
43%
36%
27%
Western
Europe
Eastern
Europe
36%
20%
North
America
Main ATP markets
Asia
Latin
America
Develop position
in emerging markets
Notes: Market Size based on retail sales volumes. Asia excludes China and North Korea.
Asia Other of 45% is comprised of a number of regional/local players with single-digit shares.
China market size in 2009 is approx. 2,212 Bn Sticks, with CNTC holding 97.4% share
Source: Euromonitor, ATP analysis
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© Amcor 2010 | October 12, 2010
1. Propose unique value
proposition to current customers
in main ATP markets
Lorrillard
RJR
PM USA
Relevant industry dynamics / characteristics
ATP strengths
Accelerating legislative/
regulatory initiatives
• Excise tax increases
• Smoking bans / display bans
• (Graphical) Health Warning introductions
• Plain packaging (proposal AUS – 2012)
High concentration
• ATP Customers
• ATP Suppliers
• Direct relationship customers/
suppliers
• Multi-year contracts
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© Amcor 2010 | October 12, 2010
- Volume decline
+ Focus on innovation, brand awareness, market
share
+ Increasing product complexity (global brands)
+ Unique value proposition important
• Global contingency
• Innovation
Increasing product complexity offsets volume declines
Market size by volume is declining…
Nth America
Billion Sticks
1,600
1,400
400
1,410
1,364
384
1,340
352
-2.5%
341
-5.8%*
200
Europe
CAGR
’08-’10
0
Nth America
600
USD Million
Europe
…market size by value remains relatively stable
500
200
479.2
473.2
186.5
CAGR
’08-’10
473.1
184.3
-0.6%
182.4
-1.1%
100
0
2008
2009
2010
2008
2009
2010
…driven by increasing complexity
• Graphical Health Warnings
• UV Varnish
• Hot Foil Stamping
• Inserts
• Round-corner and bevelled-edge packs
• Increasing share of hinge-lid packs vs. soft labels
Note:
North American volume decline of 8.4% in 2009 was exceptional, driven by significant increases in Federal and State Excise
taxes in USA. For comparison, the average rate of decline in North America was 3.0% p.a. between 2005 and 2008
Market size by value represents primary packaging only and covers only selected countries
Source: Euromonitor, PIRA International, ATP analysis
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© Amcor 2010 | October 12, 2010
ATP’s unique value proposition delivers quantifiable
benefits to customers
ILLUSTRATIVE
ATP value
proposition
Define rules:
Service level
agreement
Product Innovation
Operational Productivity
Value Creation
Shape the
operating
model
Structure of
benefits
Savings
on
ATP spend
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© Amcor 2010 | October 12, 2010
Savings
outside of
ATP spend
Value
Creation
Net Benefits
Developing our position in Asia and Latin America
Production (Bn sticks)
1,078
279
281
100%
100%
100%
53%
56%
58%
47%
44%
42%
Asia
Africa & Middle East
Latin America
Tobacco packaging producers
In-House conversion
Note:
Share of Volume is based on estimated volumes sticks packed in primary packs only (HL/SL)
Source: TMA 2009 Production Data, ATP estimates
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© Amcor 2010 | October 12, 2010
ATP experience in emerging markets
Novgorod, Russia
Construction started by Amcor Rentsch in September 1999
First press installed and running by July 2000
Second press installed and running by June 2001
Current output: 8.9 billion Hinge Lids (5 rotary presses)
Introduction of Hot Foil stamping process – 2006
Management, systems and process shared with St. Petersburg –
2010
Izmir, Turkey
Established in March 1994 as a Joint Venture
Alcan Global Tobacco acquired full ownership in 2001
First Hinge Lid produced in June 1995
Year 1 output: 0.9 billion Hinge Lids and 1.3 billion Soft Labels
Current output: 7.1 billion Hinge Lids and 2.4 billion Soft Labels
Introduction of Hot Foil stamping process – 2009
GHW transition: 2008-2010
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© Amcor 2010 | October 12, 2010
Growing non-tobacco products in North America
• Gravure technology
• High similarity to cigarette packs
• Small packs
• High volumes
• High quality and complexity
– UV varnish
– Embossing
– Special inks
– …
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© Amcor 2010 | October 12, 2010
• Started producing Wrigley’s in 2004:
5 SKU’s, 10 Million units p.a.
• Today ATP Americas are producing
50 different SKU’s, 1.6 billion units p.a.
• Worked with Wrigley’s to develop ‘React’
chewing gum pack, which changes
colours upon consumer’s touch
• Wrigley is now 3rd largest customer of
ATP Americas
• Contract signed with Cadbury in 2010
Value creation opportunities in operations
Value creation opportunity through the
Sustainable competitive advantage
acquisition of Alcan Global Tobacco
1. Share best practices
1. Innovation
2. Technology
– Setup time
– Output
Brabant
– Waste
2. Leverage scale
– Manufacturing
– Procurement
– SG&A
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© Amcor 2010 | October 12, 2010
Ungersheim
Rickenbach
–
Modern equipment
–
Range of technology
–
Long and short runs
–
Rotary and flatbed
–
Complexity (offline)
3. Skill base
Increased focus on procurement
ILLUSTRATIVE
INDICATIVE DIRECT MATERIAL CONSUMPTION BY COMPANY
EUROPE AND NORTH AMERICA
ATP
Customer 1
Customer 2
• Harmonisation of prices and
terms realised for major
categories
Customer 3
…
• Tender process started in
several categories across
Business Groups
• Other opportunities under
review
Other Europe
Other North America
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© Amcor 2010 | October 12, 2010
Conclusions
1. While operating in a declining market, ATP is well positioned to grow
•
Complexity offsets market decline
•
#1 player in all operating regions
•
Unmatched global footprint
•
Well capitalised
2. Growth is driven by 4 key areas
•
Unique value propositions
•
New product development and innovation
•
Emerging Markets (Asia, Latin America)
•
New product segments in North America
3. In addition, ATP is leveraging its scale and best in class operations to increase efficiency
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•
Manufacturing efficiencies
•
Procurement opportunities
•
SG&A
© Amcor 2010 | October 12, 2010
Thank you
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© Amcor 2010 | October 12, 2010