Morgan Advanced Materials Plc · LSE:MGAM
Morgan Advanced Materials — Morgan Crucible — Investor Day (March 2011)
120 slides from Morgan Advanced Materials's investor day presentation, Mar 31, 2011
Slide 1: Capital Markets Presentation – Performing At A New Level
CAPITAL MARKETS PRESENTATION 31 MARCH 2011, LONDON Performing At A New Level Mark Robertshaw
Slide 2: Agenda
Agenda • Introduction and Group financial goals Mark Robertshaw to 2013 • Ceramics: major profit drivers Andrew Hosty, Mark Moore, Jim McRickard, Ian Robb • Engineered Materials: major profit Don Klas, Tom Odle, drivers Mike Murray • ROCE and linkage to long-term Kevin Dangerfield incentive plans •
Slide 3: Morgan Crucible is a world leader in advanced materials
Morgan Crucible is a world leader in advanced materials ... • Differentiated and innovative products sold into technically demanding applications • A high proportion of the business designed in specifically for the individual customer • Leading global market positions in the majority of our business
Slide 4: Number one market position in the majority of our business
Morgan has the number one market position in the majority of our business Morgan Ceramics c£600m revenue: Morgan Engineered Materials c£400m main products revenue : main products Engineered IFB / Electrical Soldier Seals & Fibre Ceramics Castables Carbon Survivability Bearings £200m £120m £100m £130
Slide 5: Financial ambitions by 2013
Financial ambitions by 2013 • Double Group underlying PBT* from £75.7 million to c.£150 million • Mid-teen underlying operating profit margins • Improve Operating ROCE from c.25% in 2010 to c.35% by 2013 *Underlying PBT is defined as operating profit before amortisation, less net financing costs 5
Slide 6: Our ambition is to double underlying PBT
Our ambition is to double underlying PBT c.£150 million Selective use of value accretive M&A Growth in new markets/products eg. clean energy, HDD Recovery and organic growth in traditional businesses £75.7 million Cost benefits of low cost manufacturing and divisional Rapid growth streamlining poten
Slide 7: Recovery and organic growth potential in traditional businesses
Recovery and organic growth potential in traditional businesses • Western world revenue picked up somewhat in 2010 but with further recovery potential still to go • Strong growth in Emerging Markets with constant currency revenue up over 33% in 2010 vs 2009 All at 2010 actual rates Emerging Markets
Slide 8: Further later cycle recovery in Europe and North America
Further later cycle recovery to come through in Europe and North America • US and European demand continuing to recover with the US £m coming through slightly earlier; European pick-up led by Germany 688.5 589.2 • Body Armour revenues in the US in 2010 c.£25m lower than in 2008 reflecting lower mark
Slide 9: Opportunities for rapid growth in dynamic economies
Significant opportunities for further rapid growth in dynamic economies All at 2010 actual rates 9
Slide 10: Emerging Markets business aligned to key areas of economic growth
Our Emerging Markets business is very well aligned to the key areas of economic growth • >90% of Group revenues to Emerging Markets are to the Industrial, Petrochemical, Transportation and Energy sectors • Strong underlying growth trends in these markets driven by ongoing rapid industrialisation and
Slide 11: China 5 year plan plays to our capabilities
Looking to the future, the latest China 5 year plan plays well to our advanced materials capabilities Seven key areas 1 ■ New energy – Nuclear, wind and solar 2 ■ Energy conservation and environmental protection – Energy reduction targets 3 ■ Clean energy vehicles 4 ■ High-end equipment manufacturin
Slide 12: Emerging markets growth and low cost opportunities
Exciting domestic growth potential in emerging markets but also more opportunities for low cost • Total employment costs in low cost countries (LCCs) are up to 7 to 9 times lower per head than in the Western world • More opportunities to use LCCs to serve Western world demand e.g. • Mexico for the U
Slide 13: Adding headcount into lower cost countries
As our business grows, we are disproportionately adding headcount into lower cost countries • Group revenues grew over 7% in 2010 with headcount increasing only 4.7% • Headcount increase of 10.7% in Emerging Markets…. • …and only 2.1% in the Developed World through continued migration of our labour
Slide 14: Margin improvement potential across all regions
Margin improvement potential across all our regions – Europe in particular 2010 Site Underlying Operating Profit Margin* 25.0% • Technical resource is predominantly in 20.0% the developed world along with 15.0% many of the major materials plants 22.5% 10.0% • There is scope to 16.1% improve margins
Slide 15: Labour cost differential of low cost countries growing
Even with higher inflation; absolute labour cost differential of LCCs growing not shrinking • If total employment costs grow at 3% in the Western world and 10% in China, the relative differential cost per head actually increases rather than narrows • Still attractive to migrate labour from Western E
Slide 16: Continued focus on positive price pass through
Continued focus on positive price pass through • Differentiated advanced materials solutions sold into technically demanding applications • Global #1 and #2 market positions in the vast majority of our businesses • Positive price pass through achieved year-in year-out over the last several years eve
Slide 17: Our ambition is to double underlying PBT
Our ambition is to double underlying PBT c.£150 million Selective use of value accretive M&A Growth in new markets/products eg. clean energy, HDD Recovery and organic growth in traditional businesses £75.7 million Cost benefits of low cost manufacturing and divisional Rapid growth streamlining poten
Slide 18: Morgan Ceramics
CAPITAL MARKETS PRESENTATION 31 MARCH 2011, LONDON Morgan Ceramics Andrew Hosty
Slide 19: Agenda
Agenda • Overview of Morgan Ceramics • 2010 results • Project Concord – Mark Moore • Superwool Strategy – Mark Moore • Growth plans – Jim McRickard & Ian Robb • Summary & closing remarks 19
Slide 20: Morgan Ceramics brings together Technical & Thermal Ceramics
Morgan Ceramics brings together the best of the Technical & Thermal Ceramics businesses • Morgan Ceramics uses competences in material science and applications engineering to manufacture custom products for demanding environments • We supply customer-specific, applications-engineered industrial prod
Slide 21: Unparalleled global reach
Unparalleled global reach with significant operational presence in the major markets of the world 21
Slide 22: Why Ceramics?
Why Ceramics…? The material of choice in demanding applications, that clearly outperforms alternatives, offering (for example): • Resistance to extremes of temperature • Stability in harsh environments • High stiffness to weight ratio • High voltage insulation • Chemical resistance • Vacuum integrit
Slide 23: Broad product portfolio made to customer requirements
A broad product portfolio with the majority made to customer specific requirements Engineered ceramics Fibre Products IFB & Monolithics Metallised ceramics Diamond coating Braze alloys Assemblies 23
Slide 24: Supplying growth markets where we differentiate
Supplying growth markets where we differentiate our product offering • Electronics • Energy • Healthcare • Industrial • Petrochemical • Security & Defence • Transportation 24
Slide 25: Involved in everyday technology
Involved in everyday technology 25
Slide 26: Involved in everyday technology
Involved in everyday technology 26
Slide 27: Working closely with customers to provide optimised solutions
Working closely with our customers in order to provide optimised solutions • Extensive range of materials • Applications Engineers work with customers to establish operating conditions and design constraints • Materials knowledge and extensive understanding of our manufacturing capabilities combined
Slide 28: Division managed by a global Executive Team
The Division is managed by a global Executive Team Andrew Hosty Chief Executive Jim McRickard Arnaldo Camargo Charlie Cobb Ian Robb Simon Halliday President President President President Finance Director North America South America Europe Asia Peter Morten Mark Moore Mike Thomas Ron Wainwright Keith
Slide 29: Market dynamics vary by geography
Market dynamics vary by geography The West: • We are focussed on advanced technologies in higher margin markets where we are differentiated and see better than GDP growth Emerging Markets: • High-tech opportunities exist for our leading technologies • Our growing business provides the foundation for
Slide 30: Global addressed market of circa £3.9bn
We estimate our global addressed market to be circa £3.9bn £3.9bn RoW Morgan Ceramics is a circa £600m business Asia operating within an addressed market which is > 400 Competitors growing faster than GDP Europe With a 16% overall market share there is significant room for growth North America Our m
Slide 31: Agenda
Agenda • Overview of Morgan Ceramics • 2010 results • Project Concord – Mark Moore • Superwool Strategy – Mark Moore • Growth plans – Jim McRickard & Ian Robb • Summary & closing remarks 31
Slide 32: Strong progress in revenue, profit and margins
Strong progress in revenue, profit and margins • Ceramics Division revenue increased c.17% with strong year-on-year growth from both Technical and Thermal Ceramics • EBITA increased c.33% driving operating margin to 11.3% All at reported rates 32
Slide 33: Ceramics: key value drivers in 2011 & beyond
Ceramics: key value drivers in 2011 & beyond 2010 Position Future prospects Organic growth from targeting markets Successful market with > GDP growth drivers positioning in Technical allowed strong growth ++ Strong Thermal base in Asia , Emerging markets growth strategy and LatAm offers leverage for
Slide 34: Agenda
Agenda • Overview of Morgan Ceramics • 2010 results • Project Concord – Mark Moore • Superwool Strategy – Mark Moore • Growth plans – Jim McRickard & Ian Robb • Summary & closing remarks 34
Slide 35: Project Concord
Morgan Ceramics Project Concord Mark Moore Director of Strategy Implementation 35
Slide 36: Integration of Technical and Thermal delivering benefits
Integration of the Technical and Thermal businesses is delivering real benefits MTC Growth Overhead reduction Opportunities for Technical A programme of work is products in Asia and Latin underway to rationalise and America are benefitting simplify the organisation from the resources of the combined
Slide 37: Concord structure based on best-practice model
Concord structure is based on best-practice model The Carpenter acquisition gave us a good model and toolset Regular disciplines drive progress: Steering Group • Steering Group reviews • Workstream reviews Programme • Tracking process Office • Specific planning events – Edinburgh Workstream Leaders
Slide 38: 17 workstreams and 72 projects
17 workstreams and 72 projects 38
Slide 39: Workstream approach is delivering results
This workstream approach is delivering results Concord achieves two principal outcomes: • Better results and clearer divisional strategy • Key workstream topics include: • Organisational design - Structure, people, values • Growth – use of best practice business development tools • Strategy developm
Slide 40: Superwool Strategy
Morgan Ceramics Superwool Strategy 40
Slide 41: Using material science to develop Superwool fibre
Using material science to develop Superwool® fibre and satisfy demanding market requirements Our latest generation of fibre products meet both performance and environmental requirements Function: Diesel particulate filter Environment: Our bio-soluble fibres cleaning exhaust gases at high lead the ma
Slide 42: Using the Superwool strategy to drive value
Using the Superwool® strategy to drive value • Completing the range of Superwool® fibre products will enable Morgan Ceramics to convert Refractory Ceramic Fibre (RCF) products into a higher margin business • Third party fibre product sales in 2010 were circa £200m with one third from Superwool® fibr
Slide 43: Cable tray fire protection
Cable tray fire protection A growing market: maintain control in the event of a fire Firemaster: Encapsulated Superwool blanket 43
Slide 44: Agenda
Agenda • Overview of Morgan Ceramics • 2010 results • Project Concord – Mark Moore • Superwool Strategy – Mark Moore • Growth plans – Jim McRickard & Ian Robb • Summary & closing remarks 44
Slide 45: Growth plans
Morgan Ceramics Growth plans Jim McRickard President – North America
Slide 46: Projecting significant growth from Aerospace
Projecting significant growth from Aerospace • ~ 26,000 new aircraft will be needed globally between 2011 and 2029 • Our products are used in instrumentation, control systems, engine monitoring, guidance systems and satellite positioning • Significant growth forecast from a range of products, includ
Slide 47: Projecting significant growth from Medical
Projecting significant growth from Medical • Healthy pipeline of new products into Western markets • World leader in the design and manufacture of ceramic implants and assemblies • Significant growth forecast driven by: • $30bn global market for cardiovascular, neuromodulation & surgical devices • I
Slide 48: Collaboration with MIT and BMES
Innovation example: Collaboration with MIT and BMES High density feedthroughs for Ocular implants • Next generation device • Improved telemetry coils and hermetic case • BMES Development • Argus I - 16 electrodes in 25mm took 15 years • Argus II 60 electrodes in 5mm took 5 years 48
Slide 49: Growth from Semiconductor Processing & Electronic Data Processing
Projecting significant growth from Semiconductor Processing & Electronic Data Processing • Creativity in the application of technologies will drive growth by improving efficiency and reducing the cost of information • Significant growth forecast supported by: • Strong new product offerings – CMP Pho
Slide 50: Patented CMP Pad Conditioner – Phoenix Edge
Patented CMP Pad Conditioner – Phoenix® Edge next generation conditioner Stainless Steel RB-SiC Ceramic RB-SiC Ceramic Conventional Diamonex - Phoenix® Diamonex - Phoenix® Edge • Reaction Bonded Silicon Carbide (RB-SiC) disc produced by Morgan AM&T • Chemical Vapour Deposition (CVD) Diamond coated f
Slide 51: Patented Sharkskin Surface Texturing
Patented Sharkskin™ Surface Texturing for semiconductor PVD & CVD processes • A well-controlled, high-roughness surface texturing integral to the alumina base material • Improves process residue adhesion and reduces overall particulate defects • Greater holding power to residue build-up, extends tim
Slide 52: Piezoelectric ceramic components in data storage
Positioned for a huge market opportunity with tiny piezoelectric ceramic components in data storage Ceramics is working with computer disk drive manufacturers to incorporate piezoelectric components on the next generation of drives These components allow for improved control of the read-write head,
Slide 53: Growth Plans – Asia
Morgan Ceramics Growth Plans Ian W Robb President Asia
Slide 54: Strategic intent: capitalize on positive market dynamics
Strategic intent: To capitalize on positive market dynamics • Main investments in China, India & Middle East • Focus on selected markets with megatrend drivers • Drive operational excellence for cost efficiency and quality • Localise manufacturing content in Asia • Drive Superwool® Fibre strategy fo
Slide 55: Sales in rapidly growing and demanding applications
We are well placed with sales in rapidly growing and demanding applications Morgan Ceramics sales by market into Asia region 2010 55
Slide 56: Asian market dynamics and megatrend drivers
Asian market dynamics and megatrend drivers create differentiated product opportunities • Asia has >60% of world population (6.9bn est. 2010) China and India together hold 40% • People need power, fertilizers (chemicals), infrastructure (steel, glass, aluminium, ceramics) and general manufacturing e
Slide 57: China energy demand to increase by 75%
China energy demand to increase by 75% over 25 years • China overtook America to become the world’s largest energy user • Global demand for energy will increase by 36% to 2035 • Emerging economies will account for 93% increase • Fossil fuels remains the dominant source of energy in 2035 • Renewable
Slide 58: Asia leads global steel production and demand
Asia leads global steel production and demand Annual Crude Steel Production • World steel production 1,414 million metric tons (mmt) • Asia’s Annual production share 63.5% • China 44.3% of world production • India’s potential for steel is huge; their per capita steel consumption is only 35 kg compar
Slide 59: Petrochemicals growth in India, China and SE Asia
India, China and SE Asia showing robust growth and attracting strong investment in petrochemicals FDI Net (USD Bn) in India • Asia’s petrochemical opportunity estimated to be 50% of the global chemical volume growth • Ethylene growth led by China the world’s biggest producer (25%) and consumer (30%)
Slide 60: Growing Aerospace industry in Asia
Bringing proven technology and processes to the growing Aerospace industry in Asia • Singapore developing major engineering and repair facility • Completed by 2018, creating 10,000 jobs, doubling sector output from S$6.3bn • Key players include Rolls-Royce and Eurocopter SEA • By 2015 Chinese and In
Slide 61: Population growth creating opportunities in medical
Population growth and increased life expectancy creating exciting new opportunities in medical Change in Aging Rate in Asia • Life expectancy increasing through medical advancement and public health measures • China’s five year plan stimulates foreign investment in the medical device sector • Medica
Slide 62: Experiencing real megatrend growth
In this exciting, diverse market we are experiencing real megatrend growth • Optimise our Superwool® Fibre growth plan and increasing output of converted products are driving our margins higher, by adding valued solutions • Technically differentiated engineering solutions, driving opportunities in A
Slide 63: Agenda
Agenda • Overview of Morgan Ceramics • 2010 results • Project Concord – Mark Moore • Superwool Strategy – Mark Moore • Growth plans – Jim McRickard & Ian Robb • Summary & closing remarks 63
Slide 64: Summary & closing remarks
Morgan Ceramics Summary & closing remarks Andrew Hosty CEO
Slide 65: Division's plans support aim of doubling PBT
The Division’s plans fully support Morgan’s aim of doubling PBT Organic growth from targeting markets with > GDP growth Full recovery of IGT and medical markets Growth in new markets and products Selective use of value accretive M&A Divisional integration benefits Read-write head and operational imp
Slide 66: Any questions?
M MorganCrucible The Advanced Materials Group Any questions?
Slide 67: Engineered Materials Division
CAPITAL MARKETS PRESENTATION 31 MARCH 2011, LONDON Engineered Materials Division Don Klas
Slide 68: Agenda
Agenda • Reflect on our journey • 2010 review • Overview of our businesses • 2011 and beyond 68
Slide 69: Looking back
Looking back • Success in US ceramic body armour led to our acquisition of NP Aerospace • We demonstrated resilience through the worst economic downturn of our lifetime • Established globally aligned teams that leverage our global reach 69
Slide 70: Commitment to investing in technology
Our commitment to investing in technology ... is yielding breakout technically differentiated solutions for solar and LED …has led to our entry into the lithium ion space …and to a burgeoning pipeline of new materials technologies and engineered solutions 70
Slide 71: 3 strong brands serving our markets
Today we have 3 strong brands serving our markets Engineered Materials Division 71
Slide 72: Locations in 25 countries providing global scale
…delivered through locations in 25 countries providing global scale and reach c.4,000 employees 35% in low cost countries Materials Materials and Finishing Finishing R&D Distribution 72
Slide 73: Reshaped our cost base
…and through the economic crisis we have reshaped our cost base • Significantly trimmed AM&T overheads in the West with more opportunities looking forward • Moved direct labour to low cost countries while building capability and scope to continue • More than doubled our resources in China and we are
Slide 74: Engineered Materials: profits up year-on-year
Engineered Materials: profits up year-on-year with non-NP Aerospace revenue increasing c.22% EBITA pre‐restructuring £m Revenue Profit Margins % and one‐off items FY10 FY09 FY10 FY09 FY10 FY09 AM&T (formerly Carbon) 246.8 205.2 22.1 11.6 8.9% 5.7% NP Aerospace 120.9 186.2 17.1 28.9 14.2% 15.5% Molte
Slide 75: Engineered Materials – revenue sources
Engineered Materials – revenue sources • 80% of the Division’s turnover is in Europe and America, however, China grew more than 40% in 2010 with prospects for continued strong growth in 2011 • 60% of turnover is in our traditional businesses where aggressive growth strategies are targeting GDP growt
Slide 76: Key value drivers for 2011 and beyond
Key value drivers for 2011 and beyond Future 2010 Position Prospects Extracting GDP or better growth from Ongoing recovery from our base industrial businesses the 2009 downturn ++ Good progress made in Growth in the clean energy sector Wind and Solar. Lithium Ion acquisition +++ >40% growth seen in
Slide 77: Engineered Materials Division Businesses Overview
CAPITAL MARKETS PRESENTATION 31 MARCH 2011, LONDON Engineered Materials Division Businesses Overview
Slide 78: 6 Key Businesses
6 Key Businesses Other Lithium Ion Hi Tem p Electrical Soldier Survivability MMS - Crucibles Seal & Bearing 78
Slide 79: Electrical Business
Electrical Business Applications Products 79
Slide 80: Electrical Business
Electrical Business • Built upon Morgan’s long standing global industrial & traction carbon brush business • Continues to deliver healthy gross margins - materials technology - application engineering - service • Together with our Seal & Bearing business delivers the global platform that provides us
Slide 81: Electrical Business
Electrical Business Operating efficiency and uptime for critical applications in Industry Drivers industry, mining, power gen, and rail transport < GDP due to conversion to brushless offsetting growing Growth Trends demand from rail traction and wind Megatrends that Rail transport growth in Emerging
Slide 82: Seal & Bearing Business
Seal & Bearing Business Applications Products 82
Slide 83: Seal & Bearing Business
Seal & Bearing Business • Delivering solid and improving gross margins - highly engineered products - materials technology - global network of application engineers • Positive growth prospects • Recognized as the only true “Global Supplier” • In early 2000’s the technologies and capabilities of this
Slide 84: Seal & Bearing Business
Seal & Bearing Business Operating efficiency, uptime and performance in critical Industry Drivers applications for chemical processing, oil & gas, aerospace and water GDP + with high growth in China and in oil & gas Growth Trends Increased investment when oil price is high Megatrends that Industrial
Slide 85: Molten Metal Systems
Molten Metal Systems Applications Products 85
Slide 86: Molten Metal Systems
Molten Metal Systems • Morgan’s original business - founded in 1856 • Continues to deliver healthy gross margins due to exceptional - materials technology - application engineering - extensive global distribution network • 2010 first full year of operation for new India and China plants 86
Slide 87: Molten Metal Systems
Molten Metal Systems Demand for high quality metal castings used across a broad Industry Drivers range of end user markets and increasing demands for higher purity metals Growth Trends Growth at GDP+ in Emerging Markets Megatrends that Rapid industrialisation and population growth drive usage impact
Slide 88: Soldier Survivability Business
Soldier Survivability Business Applications Products 88
Slide 89: Weight has become the pervasive issue
Weight has become the pervasive issue Military Vehicles are significantly overweight. The tension between survivability and mobility is driving the need for new, advanced lightweight solutions. Soldiers today are over burdened with armour, batteries, communications, etc. causing severe strain. Their
Slide 90: Weight is the opportunity our technology targets
So weight is the opportunity that our investment in technology targets Coventry, UK Integration / Ballistics Kingston, CN Swansea, UK Integration / Ceramics Ballistics Western UK MoD Systems / Pennsylvania, Ceramics US Ceramics Leading US Composite Universities Supply Chain Composites / ceramics Maj
Slide 91: Soldier Survivability Business
Soldier Survivability Business Weight reduction & increased payload, escalating threats, Industry Drivers increasing mobility requirements Shrinking budgets but emphasis on soldier survivability and Growth Trends mobility increasing worldwide Megatrends that Escalating global conflicts and tensions
Slide 92: Hi-Temp Business
Hi-Temp Business Applications Products 92
Slide 93: Solar market growth driving demand for high temperature insulation
The solar market’s rapid growth is driving demand for high temperature insulation solutions 60 Bloomberg Conservative (Nov. '10) Bloomberg Optimistic (Nov. '10) 50 Installed GigaWatts / year Morgan Outlook Mar. '11 40 38 30 30 26 24 22.2 20 16.6 10 7.3 0 2009 2010 2011 2012 2013 2014 2015 93
Slide 94: Enabling technologies for solar cell production
…yields, cell efficiency, energy consumption and life cycle cost are rising in importance for solar cell production Morgan’s enabling technologies….. CZ Furnace DSS Furnace Polysilicon Converter Mono-crystalline Si Multi-crystalline Si Soft felt Rigid Rigid wrap or board or board or rigidized rigidi
Slide 95: Demand for sapphire based high brightness LEDs
Demand for sapphire based High Brightness LED’s has grown exponentially / driving demand for Morgan’s high quality felt CAGR = 30.6% 95
Slide 96: Sapphire crystal production in early stages
Sapphire crystal production is in early stages, but investment is exploding Soft felt wrap used in hot zone -Typical customer qualification takes 9 months - Morgan is providing the highest purity LED furnace consumables in the world 96
Slide 97: Picking the right solar and LED customers to partner with
In solar and LED picking the right customers to partner with is crucial • Morgan is selling to more than 40 customers (from a market of over 500) • Including major end-users in: » China » Taiwan » Korea » Europe » USA » Japan • And …10 OEMs in the US, Europe and China • Developing more than 140 cust
Slide 98: Hi-Temp Business
Hi-Temp Business Exploding demand for high efficiency silicon solar cells and Industry Drivers white LED’s demanding higher performance solutions > 20% CAGR from silicon solar sector and >31% from LED Growth Trends sector Megatrends that Renewable energy and energy efficiency impact Target Market £4
Slide 99: Lithium Ion Anode Business
Lithium Ion Anode Business Applications Products 99
Slide 100: The Lithium Ion Battery is the new engine
The Lithium Ion Battery is the ‘new engine’ Anode Active Material It plays a major role in energy generation and is dominated by carbon based technology Frost & Sullivan 2010 The performance of the electrodes will govern the performance of the car 100
Slide 101: Electric vehicle availability is beginning to grow
Electric vehicle availability is beginning to grow Available today Available late 2011-2012 G-WIZ – range 70 miles Tesla – range 211 miles Tata EV – range 110 miles Renault Kangoo – range 105 miles Mitsubishi i-MiEV– range 90 miles Peugeot iON - range 80 miles Smart ForTwo ED – range 85 miles Vauxha
Slide 102: Lithium Ion Anode Business
Lithium Ion Anode Business Lithium Ion battery anodes are made from highly engineered graphite powders… Utilities China has already invested $600M in LiB Energy Storage EV Consumer Annual growth rate ~15% since 1992 Source: Takeshita …advanced materials and technology will be enablers for these new
Slide 103: Lithium Ion Anode Business
Lithium Ion Anode Business Drive for higher and longer power output for portable power, Industry Drivers higher charge storage and cyclability for EV and ES Portable power growing at >15% per annum. EV predicted to Growth Trends grow 126% CAGR 2009-2016. Declining fossil fuel resource, need to meet
Slide 104: Clean energy business targeted to treble by 2013
Clean energy business targeted to treble from c.£20 – 60 million of revenue from 2010 to 2013 solar power generation wind power generation electric vehicles energy storage future graphene and other advanced materials development 104
Slide 105: Technology pipeline in renewable energy
A technology pipeline filling with exciting prospects for the future in renewable energy Solar Redox LiB Flow Batteries Energy (renewable/efficiency) Biological Graphene Energy Generation 105
Slide 106: Division contributes to ambition of doubling PBT
The Division is well placed to contribute to Morgan’s ambition of doubling PBT Selective use of value accretive M&A Growth in the Recovery & organic clean energy growth in sector traditional businesses – high drop through Driving cost‐efficiencies throughout the business Capitalising on Chinese grow
Slide 107: Key value drivers for 2011 and beyond
Key value drivers for 2011 and beyond Future 2010 Position Prospects Extracting GDP or better growth from Ongoing recovery from our base industrial businesses the 2009 downturn ++ Good progress made in Growth in the clean energy sector Wind and Solar. Lithium Ion acquisition +++ >40% growth seen in
Slide 108: Engineered Materials Division
CAPITAL MARKETS PRESENTATION 31 MARCH 2011, LONDON Engineered Materials Division Don Klas
Slide 109: Return On Capital Employed (ROCE) & 2011 LTIP
CAPITAL MARKETS PRESENTATION 31 MARCH 2011, LONDON Return On Capital Employed (ROCE) & 2011 Long Term Incentive Plan (LTIP) Kevin Dangerfield
Slide 110: Operating Return on Capital Employed (OROCE)
OPERATING RETURN ON CAPITAL EMPLOYED (OROCE) 110
Slide 111: Financial ambitions by 2013
Financial ambitions by 2013 • Double Group underlying PBT* from £75.7 million to c.£150 million • Mid-teen underlying operating profit margins • Improve Operating ROCE from c.25% in 2010 to c.35% by 2013 *Underlying PBT is defined as operating profit before amortisation, less net financing costs 111
Slide 112: Improving Operating Return on Capital in 2010
Improving Operating Return on Capital (Operating ROCE%)* in 2010 • Pre tax Operating ROCE % in 2010 at 25.4% • Strong improvement in Operating ROCE% in recent years • Focus on continued improvement going forward – key element of LTIP plans *Return on Operating Capital Employed is defined as Underlyi
Slide 113: Operating ROCE – managing working capital and tangible fixed assets
Operating ROCE – managing both working capital and tangible fixed assets 113
Slide 114: Pruning the tail
Managing low return/low value creation businesses and assets (“Pruning the tail”) • We want to free up capital and resources tied up in low return businesses and assets to redeploy into much higher return opportunities. Recent examples are: • Sale of small, non-core Metal Injection Moulding (MIM) bu
Slide 115: Value accretive M&A – what we are looking for
Value accretive M&A – what we are looking for • Value accretive within the first 12 months • Complementary and additive technologies with unique points of differentiation • Access to high growth end-markets and/or high growth end geographies • Opportunity to leverage Morgan’s global reach • Operatin
Slide 116: Strong cash generation – ability to invest in bolt-on acquisitions
Strong cash generation – ability to invest in bolt-on acquisitions Morgan is a +£50 million free cash flow business Third party working capital to sales ratio below 20% Significant acquisition payments ...but net debt still reduced £16.5 million year-on-year 116
Slide 117: 2011 Long Term Incentive Plan
2011 LONG TERM INCENTIVE PLAN (3 YEAR PLAN) (LTIP) 117
Slide 118: 2011 Divisional LTIPs – CAGR of OP & ROCE
2011 Divisional LTIP’s – major improvement from previous metrics to CAGR of OP & ROCE • c100 senior executives below Board level 50% weighting • Each division has tailored CAGR OP & ROCE targets that underpin Group goals CAGR Op % • CAGR OP/ROCE metrics - equal weighting to both • Better line of sig
Slide 119: Wrap up and Q&A
CAPITAL MARKETS PRESENTATION 31 MARCH 2011, LONDON Wrap up and Q&A Mark Robertshaw
Slide 120: Our ambition is to double underlying PBT
Our ambition is to double underlying PBT c.£150 million Selective use of value accretive M&A Growth in new markets/products eg. clean energy, HDD Recovery and organic growth in traditional businesses £75.7 million Cost benefits of low cost manufacturing and divisional Rapid growth streamlining poten