Slide 1: Elementis plc 2023 Interim Results
Unique chemistry, sustainable solutions Elementis plc 2023 Interim Results 1
Slide 2: Cautionary statement
Cautionary statement This presentation, the presentation materials and discussion may contain certain forecasts, projections and forward looking statements – that is, statements related to future, not past events – in relation to, or in respect of the financial condition, operations or businesses of
Slide 3: Results agenda
Results agenda Introduction Paul Waterman Highlights & segmental performance Paul Waterman Group financials Ralph Hewins Outlook & priorities Paul Waterman Unique chemistry, sustainable solutions Questions Paul Waterman & Ralph Hewins Unique chemistry, sustainable solutions 3
Slide 4: Highlights
Unique chemistry, sustainable solutions Unique chemistry, sustainable solutions Highlights Paul Waterman, CEO Unique chemistry, sustainable solutions 4
Slide 5: Key messages
Key messages Elementis, post Chromium, is a less cyclical, higher margin and lower carbon intensity business 01 02 03 04 05 Expectations Pricing discipline & Strong Personal Care Coatings volumes Talc financial unchanged - full year cost management help performance, now 44% materially impacted by tu
Slide 6: Continued focus on safety
Continued focus on safety Safety performance Highlights Recordable injuries Elementis TRIR Performance 9 2 8 Improved first half performance 7 72% of plants with zero employee 1,5 injuries for > 1 year 6 Injuries TRIR 5 1 4 Safety initiatives 3 Global safety week campaign 2 0,5 New Global HSE Direct
Slide 7: Resilient performance: H1 2023 financial overview
Resilient performance H1 2023 financial overview H1 22 H1 22 H1 23 % Change $m (reported) (continuing) (continuing) (continuing) Sales 478 387 364 -6% Operating profit* 66 58 53 -10% Operating margin* 13.7% 15.0% 14.4% -60bps Profit before tax* 53 46 45 -3% Diluted EPS* 7.1c 6.1c 5.6c -8% Net debt 3
Slide 8: Self help actions underpin delivery
Self help actions underpin delivery Improved portfolio quality & proactive cost management in action Weak market demand & destocking…. …partially offset by self help actions Average volume growth of selected chemicals companies Global weighted industrial production 25% Proactive cost management 20%
Slide 9: Continued focus & strategy implementation
Continued focus & strategy implementation H1 2023 highlights Innovation Growth Efficiency $25m new $10m of savings by 8 new products launched business won 2023 underpinned Chromium stranded costs Innovation sales – 14% of total 16% colour cosmetics growth elimination on track 27 joint development pr
Slide 10: Segmental performance
Unique chemistry, sustainable solutions Unique chemistry, sustainable solutions Segmental performance Unique chemistry, sustainable solutions 10
Slide 11: Personal Care performance
Personal Care performance Strong revenue and earnings growth H1 23 vs H1 22 % change Double digits cosmetics growth $m H1 22 H1 23 Constant currency1 Sales 106 112 +7% Resilient AP Actives performance Operating profit* 24 27 +16% Sales growth & cost management Operating margin* 22.7% 24.5% drive mar
Slide 12: Personal Care performance: Demand recovery continues
Personal Care performance Demand recovery continues Key categories continue to recover… …and market volumes now back around 2019 levels European Retail Volumes Growth (y-o-y) 120 110 100 90 80 +12% +4% 70 60 Deodorants Cosmetics European cosmetics European deodorants retail volumes retail volumes 50
Slide 13: Personal Care performance: Strategic progress
Personal Care performance Strategic progress Skin care Colour cosmetics 7% revenue growth 16% revenue growth $22m NBO pipeline, New product momentum – Bentone® up 47% on prior year Plus Glow launch New product momentum National Lipstick Day – 29 July - Bentone HydroclayTM 700 AP Actives Asia India r
Slide 14: Performance Specialties performance
Performance Specialties performance Coatings destocking, NBOs, Talc performance recovery H1 23 vs H1 22 % change Improved price/mix partially offsets $m H1 22 H1 23 Constant currency1 double digit volume decline in Coatings Sales 282 252 -9% Talc performance recovery on track Operating Profit* 45 34
Slide 15: Coatings performance
Coatings performance Resilient margin performance in a challenging demand environment H1 23 vs H1 22 % change Weak demand environment & material customer destocking $m H1 22 H1 23 Constant currency1 Sales 209 181 -12% Resilient pricing and mix Operating Profit* 42 25 -38% Similar demand and Operatin
Slide 16: Coatings performance: Weak demand and destocking
Coatings performance Weak demand and destocking across all markets and regions Sector Growth* Regional Growth* AMERICAS* EUROPE* ASIA* 0% -18% -15% -13% -5% -10% -12% -15% -20% -21% -25% DECO INDUSTRIAL Global key accounts* -11% Note: * Constant currency sales growth, excluding energy Unique chemist
Slide 17: Coatings performance: Self help actions drive quality improvement
Coatings performance Self help actions drive quality improvement Adjusted operating profit margin (%) Trough volumes Portfolio Optimisation Charleston & St Louis consolidation Commodity resin exit in 2019/20 18% High margin, product capacity expansion 16% 14% 15% Accelerated Innovation 13% 24 new pr
Slide 18: Talc performance
Talc performance Financial recovery driven by self-help Sequential volume stabilisation … H1 23 vs H1 22 % 80.000 change 70.000 60.000 $m H1 22 H1 23 Constant currency1 50.000 40.000 30.000 Sales 73 71 - Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Operating Profit* 3 9 +246% …and self-help actions drive per
Slide 19: Talc performance: Focused plan to recover profitability
Talc performance Focused plan to recover profitability Actions to date Actions in progress 2023 Outlook Multiple pricing actions to recover margins Refocus on higher margin value added Continued profit recovery segments Stable volumes Simplified leadership structure Pursuing attractive market adjace
Slide 20: Group Financials
Unique chemistry, sustainable solutions Unique chemistry, sustainable solutions Group Financials Ralph Hewins, CFO Unique chemistry, sustainable solutions 20
Slide 21: Group revenue ($m)
Group revenue ($m) Volume headwinds partially offset by improved price/mix 387 -7 381 -56 14 364 25 Unique chemistry, sustainable solutions Note: Bridge shown on a continuing operations basis and may not cast due to rounding Unique chemistry, sustainable solutions 21
Slide 22: Group operating profit ($m)
Group operating profit ($m) Pricing resilience and cost actions optimise performance 58 -1 57 -26 8 53 14 Unique chemistry, sustainable solutions Note: Bridge shown on a continuing operations basis and may not cast due to rounding Unique chemistry, sustainable solutions 22
Slide 23: Proactive cost management optimises performance
Proactive cost management optimises performance Continued focus on efficiency $10m of cost savings in 2023 2024 and beyond Working capital outflow to secure critical inventories Near term cost response – limited T&E and hiring, optimised Full impact of India plant ramp up production plans etc. Uniqu
Slide 24: Cash flow
Cash flow Chromium disposal proceeds significantly reduces debt $m H1 22 H1 23 EBITDA 78 74 Change in working capital (51) (46) Capital expenditure (15) (14) Working capital outflow to secure Operating Cash Flow 12 14 critical inventories Pensions - (1) Working capital outflow linked Interest (11) (
Slide 25: Working capital
Working capital Focus on reducing inventories $10m inventory reduction in last 2 months Initiatives to further reduce inventory position Finished goods rebalancing Improved forecasting /scheduling Optimized plant production schedules Unique chemistry, sustainable solutions Note: All inventory data e
Slide 26: Financial leverage
Financial leverage Substantial debt reduction post chromium Net debt and leverage evolution $m1 FY18 FY19 FY20 FY21 FY22 H1 22 H1 23 Leverage reduction on track -255 $139m -367 Chromium proceeds -408 -401 -393 -454 -498 LEVERAGE 1.5x medium term leverage target Unique 2.5x 2.7x chemistry, 3.2x 2.6x
Slide 27: Disciplined capital allocation
Disciplined capital allocation c. $40m capex Invest for 1 organic Capital investments Typical returns 20%+ IRR on growth & productivity growth capex Strong Debt 2 reduction Ambition below 1.5x net debt / EBITDA cash flow Unique chemistry,3 sustainable Shareholder returns solutions Restart dividend a
Slide 28: Outlook & Priorities
Unique chemistry, sustainable solutions Unique chemistry, sustainable solutions Outlook & Priorities Paul Waterman, CEO Unique chemistry, sustainable solutions 28
Slide 29: Group: Medium-term objectives
Group: Medium-term objectives Continued financial progress - committed to achieving 17% margin 2021 2022 H1 23 Objective Margin improvement 12.4% 13.6% 14.4% 17% Adjusted operating profit margin 3 Cash conversion 112% 87% 73% > 90% Operating cash conversion1, 2 De-leveraging 2.6x 2.2x 2.0x < 1.5x Un
Slide 30: 2023 Outlook
2023 Outlook Guidance unchanged - on track for improved full year financial performance & deleveraging 01 02 03 Clear strategy focused Continued focus on Assumed stable macro Well positioned to make on attractive growth operational excellence environment in H2 continued financial opportunities and c
Slide 31: Capital markets day
Capital markets day Strategy update Tuesday, 14 November, 14.00 – 17.00 Sea Containers, London Paul Waterman President and CEO Ralph Hewins CFO Luc van Ravenstein Senior Vice President, Performance Specialties Stijn Dejonckheere Senior Vice President, Personal Care Unique chemistry, sustainable solu
Slide 32: Appendix
Unique chemistry, sustainable solutions Unique chemistry, sustainable solutions Appendix Unique chemistry, sustainable solutions 32
Slide 33: FY Technical Guidance
FY 23 Technical Guidance P&L Cash • Depreciation – $40-$45m (of which c. $5m is IFRS 16 • Net interest c. $20m related) • Capex c. $40m • Amortisation – c. $15m (of which majority is amortization of acquired intangibles) • Tax – adjusted effective rate c. 25-26% Unique chemistry, sustainable solutio
Slide 34: Adjusting items
Adjusting items $m Expense/(Income) H1 22 H1 23 Amortisation of intangibles arising on acquisition 8 7 Cash component of adjusting items is c. $1m Environmental provisions (1) - Business transformation/other 1 1 Environmental provisions increase offset by discount rates Impairment (Goodwill/PPE) 23
Slide 35: Tax charge
Tax charge FY 23 tax guidance 25-26% $m H1 22 H1 23 Adjusted tax charge 10 12 Tax charge: adjusting items (5) (3) Reported tax charge 5 9 Adjusted tax rate* 22% 26% Unique chemistry, sustainable solutions * Impact on continuing operating profit Unique chemistry, sustainable solutions 35
Slide 36: For more details please contact
For more details North America Europe Asia United Kingdom please contact: Elementis Elementis UK Ltd Deuchem (Shanghai) Elementis PLC 469 Old Trenton Road c/o Elementis GmbH Chemical Co, LTD. The Bindery 5th Floor elementis.com East Windsor Stolberger Strasse 370 99, Lianyang Road 51-53 Hatton Garde