Rexam Investor Seminar on European Beverage Cans, 27 ...

<strong>Investor</strong> <strong>Seminar</strong>
Beverage Cans in Europe
27 November 2007

Leslie Van de Walle
Chief Executive Officer

Leslie Van de Walle
Introduction
Bill Barker
Capex & Innovation
Tomas Sjölin
Beverage cans in Europe
Leslie Van de Walle
Concluding remarks
Q&A
Today's agenda
3

Strategic objectives
• Build a global, well positioned, beverage can and rigid plastics
business through organic growth and acquisitions
• Strengthen position in existing markets and increase presence in
emerging markets
• Develop best in class innovation and be the packaging solution
provider of choice for local and global brand owners
• Lead the industry in terms of execution and operational excellence
• Optimise capital structure to support ongoing operations, finance
growth opportunities and deliver dividend growth
Our vision: to be the leading global consumer packaging company
4

REXAM SALES
BEVERAGE
CANS
70%
PLASTIC
PACKAGING
30%
Balanced portfolio of products
GEOGRAPHY
North
America
Europe
Emerging
Markets
Healthcare
Closures
Personal Care
GROWTH
PROFILE
- 3% to +3%
+ 6% to +8%
+ 8% to +10%
+ 6% to +8%
+3% to +4%
+2% to +3%
A defensive growth business
TYPICAL REXAM
MARGINS
c. 12%
(excluding passthrough)
13%
to 15%
5

Bill Barker
Group Director Beverage Cans

• Better beverage
integrity
• Carbonation retention
• Long shelf-life
• Filling and distribution
economics
• 100% recyclable
Superior form of packaging
7

<strong>Rexam</strong>
Ball
24%
Source: Global Beverage can market volume 2006, <strong>Rexam</strong> estimates
The leader in beverage cans
<strong>Rexam</strong>
#1
Crown
Local players
<strong>Rexam</strong> #1
8

Europe 1
Market growth 2006 c.10%
45%
With leading positions in growing regions
<strong>Rexam</strong> #1
South America 2
Market growth 2006 c.10%
<strong>Rexam</strong> #1
63%
<strong>Rexam</strong> Ball Crown Others
North America 3
Market growth 2006 c.2%
<strong>Rexam</strong> #3
24%
1. Source: 2006 Global figures. Beverage Western can market and volume Eastern 2006, <strong>Rexam</strong> Europe estimates including Russia. Source: BCME and <strong>Rexam</strong> estimates 2. 2006 figures. Source:
Abralatas and <strong>Rexam</strong> estimates 3. 2006 figures. United States and Canada. Source: CMI and <strong>Rexam</strong> estimates
9

Performance
The evolution of beverage cans at <strong>Rexam</strong>
Mature base
New geographies
New beverage categories
Time
New products
10

A global market with healthy growth rates
Growth rates 2006
North America 2%
Europe 10%
Emerging Markets 10%
Global Growth 5%
1. 2006 figures. United States and Canada. Source: CMI and <strong>Rexam</strong> estimates 2. 2006 figures. Western and Eastern Europe
including Russia. Source: BCME and <strong>Rexam</strong> estimates 3. 2006 figures for South America. Source: Abralatas and <strong>Rexam</strong> estimates11

United States
Per capita
consumption pa:
365 cans
115bn
The global can market in 2006 c. 230bn
15bn
Brazil
Per capita
consumption pa:
60 cans
45bn
10bn
10bn
Western Europe
Per capita
consumption pa:
75 cans
25bn
10bn
Rest of World
Per capita
consumption pa:
15 cans
Source: CMI, BCME, Abralatas and <strong>Rexam</strong> estimates 12

<strong>Rexam</strong> Beverage Can and End plants
Joint ventures
Our plants are where customers need them
Manufacturing c.55+ billion cans p.a.
13

Our geographic footprint is a strategic advantage
• Lower shipping costs
• Use exports to build presence
before investment
• Optimise shipments during
peak demand
14

Carefully manage capacity to demand
15

• Capex Objectives
Investing for profitable growth
• Capture growth in existing and emerging markets
• Help customers expand globally
• Develop new product lines
• Lower costs
• High return on invested capital
•Focus on Execution
• Skilled pool of experienced professionals executing projects
globally
• Able to leverage equipment suppliers to ensure timely delivery
of equipment
• Minimise start-up costs
16

New
specialty can
line
Whitehouse New Cap Can
New end
plant
Manaus
Already running
Running by end 2007
Running 2008
Running 2009
New line
La Selva
Capex in beverage cans around the globe
line
Elk Grove
New can
plant
Fredericia
New plant
Cuiabá
Jacarei
re-opened
New line
Moscow
2nd line
Egypt
New
plant Austria
New can
plant
Chelyabinsk
New can
plant
India JV
Additional capex to support increased growth opportunities
3 rd Line
17

£m
New Plants
- Austria
-Russia
-Denmark
New Lines
-Russia
- Spain
- Egypt
End capacity
Current major
projects
<strong>Rexam</strong> capacity in Europe to increase by 5.8bn by 2009
2006
6
-
-
6
-
0
3
15
2007
40
30
0
10
15
10
8
113
2008
20
5
38
0
15
12
20
110
Outer
years
-
-
40
-
-
-
-
40
Total
Project
cost
66
35
78
16
30
22
31
278
New
capacity
(units)
2,000m
800m
1,600m
200m
600m
600m
n.a.
5,800m
18

Cans (billions of units)
60
50
40
30
20
10
0
Market dynamics carefully monitored
Europe Beverage Can Market (excl Russia and Egypt)
Utilisation
Market Demand
2007 2008 2009 2010
Existing Capacity
Source 2006 BCME, <strong>Rexam</strong> estimates and company announcements
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
New <strong>Rexam</strong> Capacity Competitors New Capacity
0%
Capacity Utilisation
19

Product Development
Driving profitable growth

Value
of
Packaging
Evolution of beverage packaging
Returnable Glass
Market Development
Specialty Cans*
One way glass
Cans
Specialty Cans* are non standard sizes. In Europe standard sizes are 330cl, 440cl 500cl and in North America the standard size is12oz 21
PET

• New means different
• Better prices and margins
• Close relationship with
sales/marketing, as well as
procurement
• Source of organic growth and
competitive advantage
The need for innovation
...while focusing on efficiencies and operational excellence
22

We are already benefiting from new products
• New <strong>Rexam</strong> SLEEK™ line
launched
• <strong>Rexam</strong> Cap Can™
launched
• <strong>Rexam</strong> King Can ™
• Growth in specialty sizes
• Commercialising further
re-sealability options
• Differentiated ends
23

Consumer Trends
• On-the-go consumption
•Convenience
• Health/Diet/Nutrition
focused
• “Identity” related snack
purchase
• Need for excitement
• Diverse, flavor varieties
(no longer loyal to 1 brand)
• Minority growth fuels diversity
Consumer insights driving developments
Beverage Pack Requirements
• Fast, convenient
• Re-sealable
• Easy to consume
• Easy to hold
• Good looking
• Ready mixed
• Portionability
• Innovation, new
products
• Able to build brands
and categories
24

•Energy drinks
• Ice Teas and Juices
• Flavoured waters
• Sports drinks
• Health drinks
Fast growing areas
25

Features/ Value Add
Standard Cans
Innovation to drive profitable growth
Slim
New
Formats
Straight-walled
Bottles
New end formats
Past Present
Future
Custom Bottles
and Products
26

• Investing for profitable
growth
• Alignment with
customer/consumer needs
• Innovative products
• Robust pricing
Strengthening our #1 position
Underpinned by a relentless focus on operational excellence
27

Tomas Sjölin
Sector Director Beverage Cans
Europe & Asia

Margins/pricing
Customer relationships
Growth capex
Innovation
Operational excellence
Strategic objective
Profitable Growth
29

100%
80%
60%
40%
20%
0%
2006 2007 2008
Contract structure in Europe
Pass
Through
Minimal exposure to metal price volatility
Metal exposure
covered by existing
hedges
Majority of contracts
already signed and
metal exposure
hedged back to back
30

2000 35.5bn
2006 45.5 bn
2000 - 06 +4.7% CAGR
Excl Germany +7.5% CAGR
Source: BCME and <strong>Rexam</strong> estimates
European can market growth
2007F 49.2bn
2006 – 07F +8.1% CAGR
Excl Germany +8.1% CAGR
Future growth
+ 6% to 8%
31

CSD
Category
Energy
Drinks
Sources of European growth in 2006
Alcohol
Category/
Beer
32

CEE
CIS*
Iberia
W Europe
(Excl. Germany, Iberia & UK/Ire)
Germany
UK & IRE
European can market: sources of growth
Growth Rate 2006
5%
4%
9%
8%
15%
29%
0% 20% 40%
Total growth in 2006 +10%
2.9
8.1
Volume 2006
18.2
45.5bn units
Source: BCME *includes Russia 33
4.9
4.4
7

7%
9%
11%
17%
-20% -15% -10% -5% 0% 5% 10% 15% 20%
Source: BCME and <strong>Rexam</strong> estimates
Beer/FABs – Growth throughout the region (2006)
UK & IRE
Iberia
Germany
Rest of W Europe
CIS
CEE
14%
25%
Europe +12.9%
+375
+252
+250
+467
+515
+811
34

CSDs – Eastern Europe driving growth (2006)
UK & IRE
Iberia
Germany
-2%
-20% -15% -10% -5% 0% 5% 10% 15% 20%
Source: BCME and <strong>Rexam</strong> estimates
Rest of W Europe
CIS
CEE
-11%
8%
10%
9%
+55%
Europe +7.6%
-65
+353
-110
+1,033
+79
+285
35

• Beer and CSD growth in Eastern Europe
• Strong growth of functional drinks (incl.
energy drinks)
• Increased at-home beer consumption in
West Europe
• Flattening CSD consumption in West Europe
• All customers looking to differentiate their
product (concept, ingredients & packaging)
Sources: Datamonitor, Zenith International, GNPD and The Henley Centre
Major market trends
36

illions of units
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
Growth in specialty can sales
2001 2002 2003 2004 2005 2006
Specialty Cans* are non standard sizes. In Europe standard sizes are 330cl, 440cl 500cl and in North America the standard size is12oz 37

Specialty cans, more than just energy drinks
Case study: Russia - Baltika 1L cans
• Beer in PET has been successful in Russia
• <strong>Rexam</strong> developed a new 1L can to meet
consumer needs
• Successfully introduced in Q2 2007
• New packaging has improved brand image,
quality and shelf life
• Demand now out-performing capacity
38

<strong>Rexam</strong>’s existing plants
New <strong>Rexam</strong> Line or Plant
Crown
Can-Pack
Ball
Rostar
Beverage can manufacturing landscape in Europe
<strong>Rexam</strong> has
45% market
share in
Europe
39

Markets
Different growth drivers around the region
Key growth drivers
Nordics Easing regulatory environment & pack mix
Spain Favourable customer & consumer dynamics
Rest of W. Europe Increased at home consumption & energy drinks
Central E. Europe Economic growth & changing pack mix
Russia Economic growth & changing pack mix
Egypt Economic growth
Sustainable broad based growth
40

Key facts
Can market c. 2bn cans
2001 – 2006 CAGR 8%
Mainly a beer market
Aluminium market with deposit
system
<strong>Rexam</strong> #1
Exciting growth in Nordics
Source 2006 BCME 41

Sweden
Changes driving growth in Nordics
• Increase in volume allowance effect (border trade)
• Well functioning deposit return system
• High consumer acceptance leads retailers and fillers to
support cans
• Denmark, Norway and Finland
• Reduction of alcohol tax drives can volume growth
• Well functioning deposit return system
• Increased consumer acceptance of cans
42

Annual bevcan consumption per capita (units)
250
200
150
100
S Korea
Can consumption is catching up
Spain
Canada
Australia
Belgium
UK
Sweden
Poland
Greece
Netherlands
Mexico
50
Brazil
Russia
Venezuela
Hungary
Chile
Portugal
France
Italy
Finland
Denmark
Norway
China Romania Czech Republic
Egypt
0
Argentina
Colombia
Germany
India Ukraine
0 10,000 20,000 30,000 40,000 50,000 60,000 70,000
Japan
Source: <strong>Rexam</strong> estimates and Datamonitor. USA included in analysis but excluded from graph
Ireland
GDP per capita (current US$)
43

Nordic beer market
Taxation of beer (50 cl, 5.0 %) Border Trade
€1.05
€0.4
€0.17
€0.17
€0.05
€0.5
Total border trade:
2003/4: ~600m cans (30% of the
total Nordic can market)
2006: 900 – 1000m cans
400m
700-800m
700 800m
50m
60m 60m
150m
150m 150m
44

• New £78m plant in Fredericia
announced in October 2007
• Initial demand was met via imports
• <strong>Rexam</strong> imports exceeded 600m
cans in 2006
• Location chosen to minimise freight
costs
• Key long term customers secured
• Focussed on Return on Invested
Capital
Denmark investment
New
Plant Location
Royal Unibrew
125 m
Carlsberg
(Fredericia)
320 m
Carlsberg
195 m
Harboe
170m
Royal Unibrew
373 m
45

Key facts
Can market c. 7bn cans
2001 – 2006 CAGR 5%
Beer and CSD market
Steel market
<strong>Rexam</strong> #1
46
Iberia
Source 2006 BCME 46

• Demand exceeding supply by about 30%
• Indicators are favourable for continued can
growth
– High customer and consumer acceptance of cans
– Large number of enterpreneurial fillers and brewers
– Cans chill rapidly and are preferable in hot climates
– Increased at home consumption of beer fuels can
growth
– Retailers favour multipacks promotions which
benefit cans
Why Iberia is an attractive market
47

Key facts
Can market c. 27bn cans
2001 – 2006 CAGR (0.8)%
(despite Germany)
2006 growth 8%
Energy drinks, beer and CSD market
Mixed metals
<strong>Rexam</strong> #1
Rest of Western Europe
Source 2006 BCME 48
48

Mn L
30,000
25,000
20,000
15,000
10,000
5,000
0
2002
2003
Changing consumer behaviour fuelling growth
Beer consumption
on-trade vs off-trade
57% 58% 59% 60% 60% 61%
2004
2005
Off trade On trade
• Increasing Can volume, despite flat consumption
• Can share stable at around 30% in Off-trade
• Can volume driven by Off-trade growth
Source: Plato Logic, Canadean & <strong>Rexam</strong> radar
2006
2007F
Mn L
30,000
25,000
20,000
15,000
10,000
5,000
0
2002
Soft Drink consumption
and pack split
47% 47% 48% 49% 51% 52%
17% 15% 15% 15% 15% 15%
2003
2004
Cans Ref Glass N-Ref Glass Ref PET N-Ref PET Others
2005
2006
• Consumption flattening out
• Stable can share
• Non refillable PET gaining share
2007F
49

• Domestic can consumption less than
10% of 2001peak but growing
• Deposit system has been introduced
• Large discount retailers have not relisted
cans for beer or CSD
• Primary beverage can use is for
export market
• Industry would currently be unable to
meet demand if it were to return to
2001 levels of c. 7bn cans
German market rebased
3
2
1
0
Export
Domestic
Export
Domestic
2006 2007F
Source 2006 BCME 50
billions of units
German Beverage Can Fillings

Key facts
Can market c. 5.4bn cans
2001 – 2006 CAGR 13%
Mainly a beer market
Mainly aluminium
<strong>Rexam</strong> #3
Eastern Europe
Source 2006 BCME 51

Mn L
30,000
25,000
20,000
15,000
10,000
5,000
0
15%
14%
54%
Beer consumption &
pack mix
14%
18%
50%
13%
23%
47%
13%
25%
44%
2002 2003 2004 2005 2006 2007F 2008F
Source: Plato Logic, Canadean & <strong>Rexam</strong> radar
12%
27%
41%
12%
28%
39%
12%
29%
38%
Trends in Eastern Europe
Mn L
20,000
15,000
10,000
5,000
0
Soft drinks consumption &
pack mix
15% 15% 15% 15% 17% 18% 19%
3% 3% 4% 5% 5% 5% 5%
86%
86%
87%
87%
2002 2003 2004 2005 2006 2007F 2008F
Cans Ref Glass N-Ref Glass Ref PET N-ref PET Others
87%
87%
88%
52

Strategic opportunities in Eastern Europe
• Continued growth dynamics
– Beer consumption increasing as consumers move away from spirits
– Off-premise sales considered to be main driver
– Returnable glass continues to lose share
• <strong>Rexam</strong> geographically under represented in region
• Key account customers expect strategic suppliers to be
located close to their plants
Use exports to increase presence and build scale before investing
53

Key facts
Can market c. 4bn cans
2001 – 2006 CAGR 25%
Beer market
Aluminium market
<strong>Rexam</strong> #2 (ex Rostar)
Russia
Source 2006 BCME 54

Billions of units
30
25
20
15
10
5
0
2001
2002
2003
Russia
Beverage Packaging Market
Market and mix shift driving can growth
2004
2005
2006
100%
80%
60%
40%
20%
Cans Refilable Glass Non-refilable Glass PET Cartons Other
0%
2001
2002
2003
Russia
Beverage Packaging Mix
2004
2005
2006
55

Investment in Russia key to capture growth
• Chelyabinsk plant
– Capture growth geographically
– Customers also investing in brewing
capacity in Siberia
• New line in Moscow
– Continue to promote innovation
– Capture growth in 1L speciality cans
– Introduced Slim into Russia
• Proposed Rostar acquisition
– Establish leadership in region
56

• Growing consumption and changing
pack mix driving growth
• Increased can demand in Egypt and
throughout the region
• Mainly a CSD market
• Cans chill rapidly and are
preferable in hot climates
• <strong>Rexam</strong> doubling capacity to meet
demand
• Foothold to develop markets in
Northern Africa and the Middle East
Egypt
57

• Strong focus on cost
performance and
execution
• Sharing best practice
globally
• Weight reduction
• Reduce spoilage
• Energy savings
Operational excellence in Europe
58

Summary
• New contract structure minimises exposure to metal
cost volatility and secures cash margins
• Growth in specialty cans will improve mix
• Operational excellence will continue to deliver
efficiencies
Europe is an exciting market with profitable growth opportunities
59

Leslie Van de Walle
Chief Executive Officer

Conclusion
Investing to deliver profitable growth
61

Q & A

Forward Looking Statements
This presentation contains forward looking statements, which are based on the Board's current expectations and
assumptions and involve known and unknown risks and uncertainties that could cause actual results,
performance or events to differ materially from those expressed or implied in such statements. The forward
looking statements contained in this presentation are based on past trends or activities and should not be taken
as a representation that such trends or activities will continue in the future. It is believed that the expectations
reflected in these statements are reasonable, but they may be affected by a number of variables which could
cause actual results or trends to differ materially, including, but not limited to: conditions in the market, market
position of the companies comprising the <strong>Rexam</strong> Group, earnings, financial position, cash flows, return on
capital and operating margins, anticipated investments and economic conditions; the Group's ability to obtain
capital/additional finance; a reduction in demand by customers; an increase in competition; an unexpected
decline in revenue or profitability; legislative, fiscal and regulatory developments, including, but not limited to,
changes in environmental and health and safety regulations; exchange rate fluctuations; retention of senior
management; the maintenance of labour relations; fluctuations in the cost of raw material and other input costs;
accounting for defined benefit or other pension schemes; and operating and financial restrictions as a result of
financing arrangements.
No statement in this presentation is intended to constitute a profit forecast, nor should any statements be
interpreted to mean that earnings or earnings per Ordinary Share will necessarily be greater or lesser than those
for the relevant preceding financial periods for the Company. Rather, these statements should be construed as
references to potential enhancements to the earnings that might otherwise have been earned during the relevant
financial period. Each forward-looking statement relates only as of the date of the particular statement. Except as
required by the Listing Rules, the Disclosure and Transparency Rules, the Prospectus Rules, the London Stock
Exchange or otherwise by law, the Company expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to any forward looking statements contained herein to reflect any change in the
Company's expectations with regard thereto or any change in events, conditions or circumstances on which any
such statement is based.