Elementis Plc · LSE:ELM
Elementis — FY2015 Earnings Presentation
24 slides from Elementis's earnings presentation, February 2016
Slide 1: Elementis plc Preliminary Results
Elementis plc Preliminary Results Year ended 31 December 2015
Slide 2: Highlights
Highlights Specialty Products EPS* & Dividend (cents) • Results impacted by oilfield and strong dollar 30 EPS Dividend • Contribution margins and market share improved 25 23.0 24.8 20.8 21.8 20.8 • Continuing to invest in new, innovative products 20 15.2 • New decorative plant progressing well 15 16
Slide 3: Chromium
Chromium $ millions 2015 2014 Sales 182.7 216.5 Operating profit* 48.9 58.3 Operating margin* 27% 27% Market landscape impacted by stronger dollar Volumes lower due to completion of 2014 customer refractory projects Operating margin stable * before non-recurring items 3
Slide 4: Resilient North American Position
Resilient North American Position North American manufacturing base and Chromium locations in the US delivery systems • Better margins • Greater stability • Key element of strategy Approximately 40% of sales made Sales outside of North America • More competitive market ROW 42% • Focus is on more dif
Slide 5: Resilient North American Position
Resilient North American Position Custom built delivery vessels Satellite solutioning facilities Significant investments in sophisticated, highly valued product delivery systems • Eliminates need for expensive solutioning systems • Addresses Personal Exposure Limit requirements – no dusting • Just I
Slide 6: Surfactants
Surfactants $ millions 2015 2014 Sales 53.8 67.1 Operating profit* 4.5 4.9 Operating margin* 8% 7% Currency reduced sales by $11 million Delden facility provides significant capacity to support growth in Specialty Products • Over half the capacity is utilised to support Specialty Products Delden bec
Slide 7: Specialty Products
Specialty Products $ millions 2015 2014 Sales 453.2 519.7 Operating profit* 80.0 98.5 Operating margin* 18% 19% Results impacted by: Contribution margin • Reduction in oil & gas drilling 46% • Currency 44.6% 45.2% 42% 43.7% Positives: 38% • North American decorative coatings** up 15% • European coat
Slide 8: Global Coatings Market
Global Coatings Market Global market growth rates 2015 Industry growth rates (volume) impacted in 2015 by: • Slowdown in Chinese economy Elementis • Changing dynamics due to strong US dollar Elementis Company • 2% volume growth in 2015 • 3% growth in Europe* • 15% growth in N American decorative coa
Slide 9: Coatings – North America
Coatings – North America New Martinsville, WV, decorative additives facility CM USD Fixed Cost USD Sales USD H1 14 H2 14 H1 15 H2 15 • Delivering positive operating profit in 2015 • Customer orders significantly ahead of schedule • Innovative technology adopted by global majors • Expansion likely by
Slide 10: Coatings – Europe and Asia Pacific
Coatings – Europe and Asia Pacific Europe • 3% growth* in 2015 • Good growth in industrial applications • Some signs that weaker euro is stimulating exports Asia Pacific • Market leader in China with growing market share • Sales down 4 per cent* in 2015 due to economic slowdown • Recent investment i
Slide 11: Oilfield – Changing Market Dynamics
Oilfield – Changing Market Dynamics Demand declined during first half of 2015 Sales $m 25 Relatively stable since then at approximately $10 million per quarter 20 20.8 20.9 Current sales going into more challenging 17.1 15 16.2 drilling applications where hectorite 14.7 technology is unique 10 10.8
Slide 12: Oilfield – Positive Long Term Trends and Market Position
Oilfield – Positive Long Term Trends and Market Position Long term trends positive Global energy demand • Global oil & gas consumption significant 20 Other Oil Gas 15 and growing 10 • Shale gas and unconventional oil are major 5 components of new energy sources 0 1990 1995 2000 2005 2010 2015 2020 2
Slide 13: Personal Care
Personal Care Strong performance in H2: 6% sales growth* Progress in Latin America due to increased local presence Rheoluxe® making good progress in global premium brands for hair and skin care applications Robust regional performance* • Europe +5% • Asia Pacific +5% * constant currency sales 13
Slide 14: Growth through Innovation
Growth through Innovation Innovation model is based on New products as a % of sales understanding customer needs, 14% chemistry and application 12% 12.0% Majority of new products are protected 10% by intellectual property 9.0% 8% Coatings 7.8% • Acrylic thickeners for decorative paints 6% 6.1% 6.5%
Slide 15: Preliminary Results
Preliminary Results $ millions 2015 2014 Sales 678.8 790.4 Operating profit* 122.5 150.1 Operating margin* 18% 19% Profit before tax* 116.2 141.9 Diluted EPS* 20.8c 24.8c Net cash 74.0 64.2 Basic EPS 20.6c 38.1c * before non-recurring items 15
Slide 16: Non-Recurring Items
Non-Recurring Items Credit/(charge) $ millions Land sale Restructuring Other Total Specialty Products - (2.1) (0.6) (2.7) Surfactants - (0.5) (0.7) (1.2) Chromium 17.0 (0.7) (4.3) 12.0 Central costs - (0.9) (1.6) (2.5) Total before tax 17.0 (4.2) (7.2) 5.6 2015 Cash flow 20.1 Land sale relates to Co
Slide 17: Capital Spending
Capital Spending $ millions 2015 2014 US acrylic thickener facility 2.5 8.0 Other 13.3 13.6 Specialty Products 15.8 21.6 Chromium 10.1 9.4 Other 5.4 3.9 Total Group capital spending 31.3 34.9 Depreciation 26.9 25.2 Lower spending in 2015 due to completion of New Martinsville facility Estimated 2016
Slide 18: Cash Flow
Cash Flow $ millions 2015 2014 Net cash/(debt) $m EBITDA 149.5 175.3 100 Working capital (12.9) 4.3 80 74.0 60 64.2 Capital expenditure (31.3) (34.9) 54.1 40 44.0 Non-recurring items 20.1 - 20 26.2 Pensions (22.8) (49.5) 0 2010 2011 2012 2013 2014 2015 Dividends (71.1) (64.7) -20 Interest, tax, othe
Slide 19: Retirement Plans – Deficits Continue to Improve
Retirement Plans – Deficits Continue to Improve Deficit ($m) Contributions ($m) 160 60 140 50 137.4 120 49.5 40 100 99.3 80 30 60 65.8 20 22.8 40 10 15.0 20 29.0 Max 0 0 2012 2013 2014 2015 2014 2015 2016 Asset returns impacted by weaker equity markets Liabilities benefited from higher corporate bon
Slide 20: Tax Charge
Tax Charge $ millions 2015 2014 Underlying tax charge 19.3 26.3 Tax rate 17% 19% Tax charge: non-recurring items 7.2 (53.5) Reported tax charge/(credit) 26.5 (27.2) Underlying rate reduced to 17%, mostly due to geographic mix Tax rate going forward 20% – 23% 20
Slide 21: Dividends
Dividends Per share 2015 2014 Interim paid 2.70c 2.70c Maintained Proposed final 5.75c 5.75c Maintained Special dividend 8.00c 6.95c +15% Total dividends 16.45c 15.40c +7% Final dividend maintained at 5.75 cents • Robust business model • Confident in future prospects Special dividend increased by 15
Slide 22: Summary
Summary Key themes • 2015 performance influenced by oil price and currency • Specialty Products: • Value offering to customers remains robust • Good growth opportunities in coatings and personal care • Chromium – resilient North America operating model Strong Group cash flow • Platform to invest in
Slide 23: 2016 Outlook
2016 Outlook In line with pre-close trading update announced on 17 December 2015 • Overall challenging environment • Chromium – cycling against one time income of $5 million in 2015 • Expect to make progress in Specialty Products • Strong market positions and investments in growth • Continued strong
Slide 24: Thank you
ELEMENTIS A global specialty chemicals company Thank you etn