Slide 1: Presentation of 2018 Annual Results
Presentation of 2018 Annual Results February 14, 2019 Conrad Keijzer - Chief Executive Officer Olivier Pirotte - Chief Financial Officer
Slide 2: Disclaimer
Disclaimer More comprehensive information about Imerys may be obtained on its website (www.imerys.com), under Regulated Information, including its Registration Document filed under No. D.18-0150 March 20, 2018 with Autorité des Marchés Financiers. Imerys draws the attention of investors to the “Risk
Slide 3: 2018 Fiscal Year Results
2018 Fiscal Year Results 1 Highlights 4 2 Financial Review 11 3 Outlook & Conclusion 24 3 14 February 2019 Presentation of 2018 Annual Results
Slide 4: Highlights
Highlights Conrad Keijzer - Chief Executive Officer
Slide 5: Financial performance in 2018
Financial performance in 2018 +6.8% +6.5% €286m 1.6x Revenue growth Growth in net income from Net current free operating Net debt/ current2 operations cash flow4 current EBITDA ● Acquisition of Kerneos €357m €333m €949m ● Organic growth1 : In line with guidance3 Capex to support the reduction in net
Slide 6: More challenging economic environment in Q4 2018
More challenging economic environment in Q4 2018 Organic growth and volumes (y-o-y, proforma) Organic growth: +3.4% in 2018 6,3% 6,0% 4,7% 4,2% 3,1% 3,1% 1,5% 1,7% 3,2% 1,4% 3,1% 3,4% 0,3% 0,2% -0,9% -2,9% Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Organic growth o/w Volumes 6 14 February 2019
Slide 7: Positive price-mix effect maintained in an increasing inflationary environment
Positive price-mix effect maintained in an increasing inflationary environment Price - mix and variable cost balance (€m) +€35m of price-mix vs variable cost balance in 2018 40 41 37 34 31 30 25 20 20 11 9 6 3 1 1 -2 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Variable costs Price-mix 7 14 Febru
Slide 8: Business portfolio reshaped and more efficient organization for improved growth profile
Business portfolio reshaped and more efficient organization for improved growth profile Successful ■ Exposure to growing building chemistry markets improving Imerys growth integration profile of Kerneos ■ Integration as per plan, 2018 synergies as expected (In the scope since ■ Profitability impacte
Slide 9: Decisive actions to address market changes in some of our operations
Decisive actions to address market changes in some of our operations ■ Drop in ceramic proppants market due to Withdrawal from fundamental technological shift ceramic proppants ■ - €5m negative contribution to FY 2018 COI1 market ■ Impairment and restructuring costs of €148m at FY 2018 end Improving
Slide 10: Major step to seek permanent resolution of US talc-related liabilities
Major step to seek permanent resolution of US talc-related liabilities ■ Chapter 11 protection allows our North American talc subsidiaries to continue to operate as usual ◆ Employees will see no changes to their roles, wages, or benefits ◆ Customers will continue to receive the same high-quality pro
Slide 11: Financial Review
Financial Review Olivier Pirotte - Chief Financial Officer
Slide 12: Proforma key figures
Proforma key figures Revenue Current Operating Net income Net operating margin from current income income operations FY 2018 change +6.8% +2.0% -60bp +6.5% +52% FY2018 €4,590m €562m 12.2% €357m €560m Q4 2018 change (0.5%) (3.4%) -40bp (0.2%) NA 12 14 February 2019 Presentation of 2018 Annual Results
Slide 13: 2018 proforma revenue up +6.8%
2018 proforma revenue up +6.8% €m +6.8% (3.4%) +3.4% + 6.8% 299 (147) 148 Roofing 290 H1 18 H2 18 Volumes: (10) (19) of which ceramic Kerneos: 250 proppants:(30) 4 590 Other: 40 4 299 Price-mix: 158 (128) 2017 proforma of Roofing Perimeter FX Organic 2018 Reported Q4 1,132 (3) (7) 4 1,126 + Roofing:
Slide 14: 2018 proforma current operating income up +2.0%
2018 proforma current operating income up +2.0% €m (112) 141 Roofing (22) (45) 97 16 33 H1 18 H2 18 (1) Volumes: (5) Price-mix: 146 551 562 (21) 12.8% Operating margin 12.2% 2017 Perimeter FX Organic Variable costs Fixed costs and Inventories and 2018 Proforma of overheads others Roofing Q4 142 1 1
Slide 15: Improving operating margin despite higher inflation
Improving operating margin despite higher inflation yoy quarterly inflation of variable costs (1) Quarterly operating margin Raw High inflation of input materials costs 13.6% Energy 13.1% 13.2% Freight 12.6% 12.2% 12.2% 11.9% +6.7% 11.5% +5.1% +5.5% +4.0% Q1-18 Q2-18 Q3-18 Q4-18 Q1 Q2 Q3 Q4
Slide 16: Evolution by business group
Evolution by business group Revenue COI COI margin ■ Withdrawal from ceramic proppants and mothballing of natural graphite assets Energy in Namibia FY2018 €1,295m €123m 9.5% Solutions & ■ Market slowdown in some European and yoy change Specialties (2.4%) (12.7%) (110bp) Chinese markets (automotive,
Slide 17: Evolution by business group
Evolution by business group Revenue COI COI margin ■ Good momentum in emerging markets and Ceramic FY2018 €854m €103m 12.0% specialty applications Materials yoy change (3.3%) (11.2%) (110bp) ■ Operating margin impacted by weak paper markets Organic 1 +2.6% Revenue COI COI margin ■ Positive momentum
Slide 18: Net income from current operations
Net income from current operations (€m) 2017 proforma 2018 Proforma change ■ Current operating income 551 562 +2.0% ■ Current financial expense (78) (60) - ■ Current income tax (137) (145) - ◆ Current tax rate 28.9% 28.9% - ■ Minority interests (1) (0) - Net income from current operations, Group’s s
Slide 19: Net income, Group's share
Net income, Group’s share Net income, Group’s share in 2018 (€m) (€m) Total Net income from discontinued activities 788 Net income from discontinued ■ Capital gain from disposal of the Roofing division, activities 740 net of disposal costs ■ Contribution of discontinued activities (Roofing) 48 (585)
Slide 20: 2018 proforma solid cash flow generation at €286m
2018 proforma solid cash flow generation at €286m (€m) 2017 2018 Change ■ Current EBITDA 777 793 +16 ■ Change in operating WCR (13) (25) (12) ■ Paid capital expenditure (319) (333) (14) ■ Other 9 14 5 Current free operating cash flow (before tax) 453 448 (5) Cash flow conversion (as a % of EBITDA) 5
Slide 21: Stronger balance sheet after Roofing disposal
Stronger balance sheet after Roofing disposal Change in net financial debt (€m) Financial ratios as of December 31 Roofing 3 200,00% 2.5x activity disposal 180,00% 2,5 2.0x 160,00% 2 1.7x 1.6x 140,00% 120,00% 78% Net current 1,5 100,00% 55% 47% 80,00% (823) free cash flow 1 40% 60,00% 40,00% 0,5 20,
Slide 22: Financial flexibility
Financial flexibility (€m) Dec.31, 2017 Dec. 31, 2018 Maturities and coupons as of December 31, 2018 (€m) ■ Bonds 2,003 1,982 €1,982m Coupon 2.5% 0.9% 2.0% 1.5% 1.9% 3.4% ■ Other indebtedness 631 161 1.8% ■ Gross indebtedness 2,634 2,143 interest rate 600 500 ■ Cash 388 846 224 300 300 56 Net debt 2
Slide 23: Proposed dividend increase of + 3.6%
Proposed dividend increase of + 3.6% Dividend per share in € and pay-out 2500 60,00% 2.150 2.075 1.870 55,00% 2000 1.750 1.600 1.650 48% 50,00% 1500 45,00% 41% 41% 41% 1000 40% 40% 40,00% 500 35,00% 0 30,00% 2013 2014 2015 2016 2017 2018 Dividend in € Payout as a % of net income from current operati
Slide 24: Outlook & Conclusion
Outlook & Conclusion Conrad Keijzer - Chief Executive Officer
Slide 25: Cost management and cash generation, a priority in 2019
Cost management and cash generation, a priority in 2019 ■ More challenging market environment ■ Demanding basis of comparison in the first half of the year ■ Imerys is entering 2019 with: ◆ A new management team to run a simpler, market focused, more customer-centric and efficient organization ◆ Act
Slide 26: Appendix
Appendix
Slide 27: New segment reporting
New segment reporting HIGH TEMPERATURE MATERIALS PERFORMANCE MINERALS & SOLUTIONS Refractory Industry Abrasives Refractory, Abrasives & Performance Plastics & Rubber Building & Civil Construction Minerals EMEA (~ €1.1 bn) Paints & Coatings Engineering (~ €1.2 bn) Filtration & Life Scienc
Slide 28: Revenue and Current Operating Income by quarter
Revenue and Current Operating Income by quarter Historical Data Proforma of Roofing Data Revenue (€m) Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Energy Solutions & Specialties 321.6 332.0 338.7 334.3 319.7 321.6 332.0 338.7 334.3 319.7 327
Slide 29: Current Operating Income and margin by semester
Current Operating Income and margin by semester Historical Data Proforma of Roofing Data Current Operating Income (€m) H1 2017 H2 2017 H1 2017 H2 2017 H1 2018 H2 2018 Energy Solutions & Specialties 68,8 72.3 68,8 72.3 57.1 66.1 Filtration & Performance Additives 125.0 129.2 125.0 129.2 121.8 118.3 C
Slide 30: Revenue breakdown, proforma of Roofing division
Revenue breakdown, proforma of Roofing division Revenue by geography (2018) Revenue by end-market (2018) New building 5% 12% 13% Renovation Western Europe 6% Current consumption 11% 40% Iron & steel 31% USA/ Canada 7% Paper Emerging countries 14% Automotive 11% Other (Japan/ Australia) Industrial eq
Slide 31: Energy Solutions & Specialties (28% of revenue)
Energy Solutions & Specialties (28% of revenue) LFL (€m) 2017 2018 Change Change 1 ■ Revenue 9 months 992.3 975.3 -1.7% +2.0% ■ Withdrawal from ceramic ■ Revenue Q4 334.3 319.7 -4.4% -4.1% proppants and mothballing of natural graphite assets in Namibia ■ Revenue FY 1,326.6 1,295.0 -2.4% +0.5% ■ Mark
Slide 32: Energy Solutions & Specialties
Energy Solutions & Specialties 2018 Revenue by geography ■ Carbonates ◆ Natural (GCC) and Precipitated (PCC) Calcium Carbonates used as filling or coating pigment for paper production and functional additives for paints, plastics, etc.. 8% ■ Monolithic Refractories ◆ Unshaped refractory materials us
Slide 33: Filtration & Performance Additives (28% of revenue)
Filtration & Performance Additives (28% of revenue) LFL (€m) 2017 2018 Change Change 1 ■ Revenue 9 months 931.5 981.7 +5.4% +4.9% ■ Revenue Q4 305.5 316.5 +3.6% +0.4% ■ Supportive markets with however a slowdown in the second half ■ Revenue FY 1,237.0 1,298.1 +4.9% +3.8% ■ Operating margin impacted
Slide 34: Filtration & Performance Additives
Filtration & Performance Additives 2018 Revenue by geography ■ Performance Additives ◆ Additives for paints, plastics, polymers, rubbers, adhesives, sealants, pharma & personal care (mainly talc, mica and 2% 25% wollastonite, etc.) 41% ■ Filtration ◆ Filtration minerals providing filter aid for edib
Slide 35: Ceramic Materials (18% of revenue)
Ceramic Materials (18% of revenue) LFL (€m) 2017 2018 Change Change 1 ■ Revenue 9 months 671.5 637.8 -5.0% +2.1% ■ Revenue Q4 211.9 216.3 +2.1% +4.0% ■ Good momentum in emerging markets and specialty ■ Revenue FY 883.4 854.1 -3.3% +2.6% applications ■ Operating margin impacted ■ COI FY 115.8 102.9 -
Slide 36: Ceramic Materials
Ceramic Materials 2018 Revenue by geography 4% ■ Ceramics ◆ Raw materials and bodies for tableware, sanitary 30% and floor tiles, quartz, technical ceramics 44% ■ Kaolin ◆ Kaolin for applications in the paper, paints, plastics, 22% ceramics and refractories markets, etc. Western Europe USA/ Canada E
Slide 37: High Resistance Minerals (26% of revenue)
High Resistance Minerals (26% of revenue) LFL (€m) 2017 2018 Change Change 1 ■ Revenue 9 months 618.8 943.3 +52.5% +14.6% ■ Positive momentum ■ Revenue Q4 296.2 293.7 -0.8% +0.6% in North America and APAC compensated by weakness in EMEA markets in Q4 ■ Revenue FY 915.0 1,237.0 +35.2% +10.1% ■ Firm p
Slide 38: High Resistance Minerals
High Resistance Minerals 2018 Revenue by geography ■ Fused Minerals ◆ Fused alumina and bauxite for abrasives (cutting, grinding and 5% polishing mills, sandpapers), zirconium for refractories, oxygen sensor 31% 41% ■ Aluminates ◆ Binders and additives for soil preparation mortars, self-leveling scr
Slide 39: Imerys
Imerys 43 Quai de Grenelle Investor Relations 75015 PARIS Vincent GOULEY + 33 (0)1 49 55 63 00 + 33 (0)1 49 55 64 69 www.imerys.com vincent.gouley@imerys.com