Slide 1: 2018 Results Presentation
2018 Results Presentation 26th February 2019 www.morganadvancedmaterials.com
Slide 2: Agenda
Agenda • Introduction and key highlights – Pete Raby • 2018 results – Peter Turner • Operational and strategic update – Pete Raby 2
Slide 3: Key highlights
Key highlights • Strategy implementation progressing, well accelerating growth • Revenue growth of 7.4% and headline operating profit growth of 9.4% on an organic constant-currency basis • Group headline operating profit margin 12.1% • Headline EPS growth of 17.1% reflecting improvement in operating
Slide 4: 2018 Results
2018 Results Peter Turner 4
Slide 5: Group performance summary
Group performance summary Organic % 1/2 1/2 % change FY 2018 FY 2017 change from from FY 2017 FY 2017 At constant £m £m As reported currency Revenue 1,033.9 1,001.4 3.2% 7.4% Group headline operating profit3 124.8 120.7 3.4% 9.4% Group headline operating profit margin % 3 12.1% 12.1% Cash flow from
Slide 6: Group performance – specific adjusting items
Group performance – specific adjusting items 2018 specific adjusting items 2019 P&L £'m Cash Non-cash Total Benefits Brazil (2.6) (3.6 ) (6.2 ) 2.6 China - (1.4 ) (1.4 ) 0.4 Venezuela - (7.6 ) (7.6 ) - Business Exits (2.6 ) (12.6 ) (15.2 ) 3.0 Net pensions past service credit 5.7 - 5.7 Total Continu
Slide 7: Revenue & margin progression
Revenue & margin progression Underlying organic growth FY 2018 Group headline operating profit progression 9.4% organic constant-currency growth 7
Slide 8: Cash flow summary
Cash flow summary FY 2018 FY 2017 £m £m • Working capital outflow in line EBITDA 156.1 150.7 with business growth Change in working capital (9.7) (0.9) Change in provisions & other (15.1) (22.2) • Capex driven by investments Additional US pension payment - (28.0) for growth and efficiency Cash flow
Slide 9: Refinancing completed – strengthens balance sheet
Refinancing completed – strengthens balance sheet • Revolving Credit Facility refinanced ahead of 2019 maturity on terms substantially equivalent to the existing facility • New private placements completed December 2018 as pre-financing ahead of 2019 maturities extending the maturity profile of debt
Slide 10: Pensions update – funding position continues to improve
Pensions update – funding position continues to improve Deficit movement since 31 Dec 2017 (£'m) Deficit at 31 December 2017 (218) Return on assets (32) Contributions (net of service/finance costs) 15 Actuarial gains on liabilities 46 Currency Adjustment (1) Deficit at 31 December 2018 (190) £m 31 D
Slide 11: Impact of new accounting standards
Impact of new accounting standards IFRS 16 Leases will have the following impact on transition (1 January 2019) Current lease After Net impact accounting application of IFRS 16 £m £m £m Revenue - - - Depreciation - (9) (9) Other operating costs (12) - 12 Income statement Headline operating profit(1)
Slide 12: FY19 guidance – financial items
FY19 guidance – financial items Headline tax rate 28% Interest charge (at current FX rates) c. £8m IAS19 pensions finance charge c. £4.5m c. £16m IFRS 16 lease interest c. £3m Funded pension scheme contributions c. £17m 12
Slide 13: Operational and Strategic Update
Operational and Strategic Update Pete Raby 13
Slide 14: Broad based growth across most major market segments
Broad based growth across most major market segments Organic % change from FY 2017 at constant-currency % Group revenue1 48% • Growth across all regions, particularly in Asia • Aerospace and rail growth partially offset by 21% decline in automotive • Thermal project activity and Seals and 9% Bearing
Slide 15: Thermal Ceramics: performance summary
Thermal Ceramics: performance summary % change from Organic % change £m FY 2018 FY 2017 FY 2017 from FY 2017 As reported At constant-currency Revenue 433.6 427.3 1.5% 5.3% EBITA 52.9 56.9 (7.0%) (3.3%) EBITA margin % 12.2% 13.3% Performance commentary Strategic focus • Strong project growth in Asia,
Slide 16: Molten Metal Systems: performance summary
Molten Metal Systems: performance summary % change from Organic % change £m FY 2018 FY 2017 FY 2017 from FY 2017 As reported At constant-currency Revenue 48.6 47.1 3.2% 7.3% EBITA 6.6 7.0 (5.7%) (1.5%) EBITA margin % 13.6% 14.9% Performance commentary Strategic focus • Growth driven by a strong • Sa
Slide 17: Electrical Carbon: performance summary
Electrical Carbon: performance summary % change from Organic % change £m FY 2018 FY 2017 FY 2017 from FY 2017 As reported At constant-currency Revenue 166.8 156.9 6.3% 12.6% EBITA 19.4 16.7 16.2% 31.1% EBITA margin % 11.6% 10.6% Performance commentary Strategic focus • Growth in all regions, with pa
Slide 18: Seals and Bearings: performance summary
Seals and Bearings: performance summary % change from Organic % change £m FY 2018 FY 2017 FY 2017 from FY 2017 As reported At constant-currency Revenue 132.7 113.3 17.1% 18.9% EBITA 23.7 17.5 35.4% 37.8% EBITA margin % 17.9% 15.4% Performance commentary Strategic focus • Organic growth driven by the
Slide 19: Technical Ceramics: performance summary
Technical Ceramics: performance summary % change from Organic % change £m FY 2018 FY 2017 FY 2017 from FY 2017 As reported At constant-currency Revenue 252.2 256.8 (1.8%) 2.8% EBITA 28.1 28.3 (0.7%) 6.0% EBITA margin % 11.1% 11.0% Performance commentary Strategic focus • Growth in aerospace, renewab
Slide 20: Our strategy for growth
Our strategy for growth We have a strategy to ensure we are the leaders in our field, with the customer and materials insight to apply our capabilities quickly and effectively We apply these skills to a portfolio of businesses where: • Our technical expertise and differentiation is valued • We can o
Slide 21: Execution priorities - 2015 to 2018
Execution priorities - 2015 to 2018 Move to a global Completed in 2016, the simplified organisational structure delivers a co- structure ordinated approach to global customers and markets. Extend our technology We are investing £10m per year more in R&D than 2015, established two new leadership Cent
Slide 22: Group progress - 2015 to 2018
Group progress - 2015 to 2018 Energy consumption 1 Organic growth 2 Free cash flow -14% +6.8% -14.4% +62% Lost-time accident rate 3 ROIC EBITA % -51% +2.1% +0.5% 1 Energy consumed in MWh per £m of third party revenue 2 Excluding ceramic amour in 2018. 3 Lost-time accidents per 100,000 hours worked.
Slide 23: Execution priorities – 2019 and beyond
Execution priorities – 2019 and beyond Drive sales Continue the deployment of our tools, processes and training to improve our effectiveness and capabilities and market insight and drive sales growth. market focus Extend our technology Accelerating the development of new materials and manufacturing
Slide 24: Summary
Summary • Strategy implementation progressing, well accelerating growth • Revenue growth of 7.4% and headline operating profit growth of 9.4% on an organic constant-currency basis • Group headline operating profit margin 12.1% • Headline EPS growth of 17.1% reflecting improvement in operating profit
Slide 25: Appendix
Appendix MMorgan Advanced Materials
Slide 26: End Market Mix (as a % of revenue)
End Market Mix (as a % of revenue) Main markets by GBU Thermal Ceramics: Industrial, Chemical & Petrochemical, Metals, Automotive MMS: Aluminium (automotive), Copper (construction), Precious Metals Electrical Carbon: Rail, Industrial Equipment, Power Generation Seals and Bearings: Petrochemical, Pum
Slide 27: Reported Statutory Figures
Reported Statutory Figures Results before specific Specific adjusting items Total adjusting items FY 2018 (£m) FY 2018 (£m) FY 2018 (£m) Revenue 1,033.9 - 1,033.9 Operating costs before restructuring costs and other items and (909.1) - (909.1) amortisation of intangible assets Profit from operations
Slide 28: Key Exchange Rates
Key Exchange Rates FY 2018 FY 2017 GBP to: Closing Average Closing Average rate rate rate rate USD 1.28 1.33 1.35 1.29 EUR 1.11 1.13 1.13 1.14 Key exchange rate sensitivities on interim results Revenue Profit Increase in full year revenue / Group headline operating profit if: £m £m GBP weakens by 10
Slide 29: Headline EPS
Headline EPS FY 2018 FY 2017 £m £m Profit for the period attributable to Ordinary shareholders 46.3 107.6 Loss from discontinued operations 10.7 1.0 Profit from continuing operations 57.0 108.6 Amortisation 8.0 7.3 Total specific adjusting items post-income tax 11.2 (50.7) Headline earnings 76.2 65.
Slide 30: Divisional Performance
Divisional Performance Revenue (£m) Divisional EBITA (£m) Margin (%) FY 2018 FY 2017 FY 2018 FY 2017 FY 2018 FY 2017 Thermal Ceramics 433.6 427.3 52.9 56.9 12.2% 13.3% Molten Metal Systems 48.6 47.1 6.6 7.0 13.6% 14.9% Thermal Products 482.2 474.4 59.5 63.9 12.3% 13.5% Electrical Carbon 166.8 156.9
Slide 31: 2018 Results Presentation
2018 Results Presentation 26th February 2019 www.morganadvancedmaterials.com