Slide 1: Elementis plc Preliminary Results
Elementis plc Preliminary Results Year ended 31 December 2012
Slide 2: Preliminary Results
Preliminary Results $ millions 2012 2011 % change Revenue 757.0 760.5 - Operating profit 143.9 137.1* +5% Operating margin 19.0% 18.0%* Profit before tax 141.2 134.5* +5% Diluted EPS 23.3c 20.8c* +12% Net cash 44.0 26.2 Basic EPS 23.7c 27.8c** * before exceptional items ** includes one-time gain fro
Slide 3: Highlights
Highlights Specialty Products Earnings per share (cents)* • Resilience in uncertain economic climate 25 • Investing in growth 23.3 • Watercryl, Brazilian acquisition 20 20.8 • Newly commissioned US acrylic thickener facility • Hi-Mar, defoamer acquisition 15 • New N America technical centre and pilo
Slide 4: Chromium
Chromium $ millions 2012 2011 % change Sales 240.1 231.0 +4% Operating profit 62.8 56.1 +12% Operating margin 26.2% 24.3% ROCE* 65% 67% Solid financial performance Operating profit and margin improved due to 2011 natural gas conversion Input costs hedged * before tax and excluding goodwill 4
Slide 5: Chromium 2012 Sales
Chromium 2012 Sales Markets Leather Geography ROW Other 10% 8% 13% Refrac. Asia Timber 6% Pacific Treatment 18% 15% Pigments/ Ceramics N America 16% 58% Europe Metal 16% Metal Alloys Finishing 7% 33% Diverse end markets Unique infrastructure to serve N American customers Business benefits from flexi
Slide 6: Strategic Diversity
Strategic Diversity Markets Applications Drivers • Construction Pigments Roof tiles, asphalt shingles, floor tiles • OEM and military coatings Refractory Redbrick flat glass and fibreglass kilns • Construction Chrome metal Super alloys • Aircraft engines, wind, gas turbines • Automotive Functional p
Slide 7: Surfactants
Surfactants $ millions 2012 2011 Sales 72.5 94.3 Operating profit 4.8 5.4* Operating margin 6.6% 5.7%* Surfactants sales reduced as Delden facility continues to transition to higher value additives Product mix optimisation is driving operating margin improvement Strategy provides significant capacit
Slide 8: Specialty Products
Specialty Products $ millions 2012 2011 % change*** Sales 458.7 449.9 +4% Operating profit 90.1 89.7* +4% Operating margin 19.6% 19.9%* ROCE** 40% 43% Solid growth in N America coatings (7%), Asia Pacific (7%) and personal care (13%)*** Offset by H2 inventory adjustments in oilfield drilling • (H1 +
Slide 9: High Value Additives
High Value Additives High Rheology modifiers Thickeners/NiSats Defoamers Dispersants Margin Resins Levelling agents Solvents Wetting agents Pigments/TiO2 Adhesion promoters Fillers Binders Silica Low Differentiation High Attributes of high value additives • Small part of overall cost but essential t
Slide 10: Specialty Products – Growth Strategy
Specialty Products – Growth Strategy 2012 Sales Growth Drivers Core Markets • Geographic expansion • Brazilian acquisition Oilfield • Mumbai technical service lab 14% Personal Care • Innovation 9% • N America technical centre and Industrial Coatings pilot plant 55% • US acrylic thickener facility De
Slide 11: Innovation: New Acrylic Thickener Facility
Innovation New Acrylic Thickener Facility • Planned investment $15-20m • IP protected acrylic thickener technology • Production started in Jan 2013 • Key part of global manufacturing platform for acrylic thickeners Growth Opportunities • Exploiting regulatory trend of low VOCs in decorative coatings
Slide 12: Geographic Expansion: Watercryl Acquisition
Geographic Expansion Watercryl Acquisition • Brazilian based coatings additives supplier • Well invested facility with capacity for growth • Leading supplier of acrylic thickeners • Purchased Sept 2012, integration well underway • Excellent reputation for technical service Watercryl São Paulo site G
Slide 13: Product Range Extension: Hi-Mar Acquisition
Product Range Extension Hi-Mar Acquisition • Leading supplier of defoamers to the coatings, construction and oilfield drilling industries • Significantly expands our product offering and technology in the high value defoamer market • Complements existing manufacturing assets in Europe and Asia Growt
Slide 14: Preliminary Results
Preliminary Results $ millions 2012 2011 % change Revenue 757.0 760.5 - Operating profit 143.9 137.1* +5% Operating margin 19.0% 18.0%* Profit before tax 141.2 134.5* +5% Diluted EPS 23.3c 20.8c* +12% Net cash 44.0 26.2 Basic EPS 23.7c 27.8c** * before exceptional items ** includes one-time gain fro
Slide 15: Capital Spending – Specialty Products
Capital Spending – Specialty Products $ millions 2012 2011 US acrylic thickener facility 5.6 - N America technical facility and pilot plant 7.4 - Oilfield expansion 2.4 2.6 Other growth 2.4 3.1 Total growth capital 17.8 5.7 Maintenance and productivity 6.4 5.0 Total Specialty Products 24.2 10.7 15
Slide 16: Capital Spending – Group
Capital Spending – Group $ millions 2012 2011 2013 Est Total Specialty Products 24.2 10.7 20.0 Energy project 1.0 2.0 - Maintenance and productivity 6.7 5.8 6.0 Total Chromium 7.7 7.8 6.0 Other 5.5 2.3 4.0 Group total 37.4 20.8 Approx 30.0 Depreciation 21.3 19.9 25.0 16
Slide 17: Working Capital
Working Capital Average working capital to sales ratio 24% • Average working capital to sales ratio 22% 19%, comfortably within target range of 17 – 20% 20% • Ratio is higher in 2012 due to strategic 18% increase in chrome ore stocks 16% 14% 12% 2010 2011 2012 17
Slide 18: Cash Flow
Cash Flow $ millions 2012 2011 Net cash/(debt) $m EBITDA 165.2 157.0 60 Working capital (12.9) (9.3) 40 44.0 Capital expenditure (37.4) (20.8) 20 26.2 Acquisitions (24.0) - 0 2009 2010 2011 2012 Pensions (27.9) (22.0) -20 Dividends (32.2) (21.9) -40 Interest, tax, other (9.3) (9.3) -60 Exceptional i
Slide 19: Retirement Plans
Retirement Plans $ millions 2012 2011 2013 Est Net deficit 136.0 94.8 Deficit contributions: UK plan 20.3 15.6 23.0 US/other 7.6 6.4 4.0 Total 27.9 22.0 27.0 IAS 19 deficit increased due to lower corporate bond yields New UK funding plan agreed in 2012 to eliminate deficit by 2018 • Includes one-tim
Slide 20: Tax Charge
Tax Charge $ millions 2012 2011 Underlying tax charge 34.1 39.7 Tax rate 24% 30% Exceptional tax credit - 1.8 Reported tax charge 34.1 37.9 Overall rate reduced to 24%, largely as a result of structural changes in Group financing Will also benefit future years Estimated tax rate for 2013 is approxim
Slide 21: Dividends
Dividends Per share 2012 2011 % change Interim paid 2.45c 2.34c +5% Proposed final 5.32c 4.66c +14% Total ordinary dividend 7.77c 7.00c +11% Special dividend 4.79c - Total ordinary dividend increased by 11% – 1/3 of EPS* First payment under the special dividend programme • 50% of year end net cash *
Slide 22: Summary and Outlook
Summary Strong, resilient businesses with sustainable market advantage Specialty Products – continuing to capitalise on growth opportunities Strong cash flow generation and balance sheet • Flexibility to invest in growth • First payment under special dividend programme Outlook Positive trends in sev
Slide 23: Thank you
ELEMENTIS A global specialty chemicals company Thank you etn