Slide 1: Elementis plc Interim Results
Elementis plc Interim Results Six months ended 30 June 2016
Slide 2: Reflections after 6 months
Reflections after 6 months Good safety culture High quality, dedicated staff Strong market and geographical positioning Margin stability in core business Consistent cash generation Significant opportunities for organic growth 2
Slide 3: New Organisational Structure
New Organisational Structure CEO Chromium Business Development & IT Supply Chain & Manufacturing Coatings Health, Safety & Environmental Personal Care Research & Development Energy Human Resources Finance Surfactants Marketing Legal 3
Slide 4: Interim Results
Interim Results $ millions H1 2016 H1 2015 Revenue 334.0 360.4 Adjusted results: Operating profit 50.7 68.6 Profit before tax 48.3 65.3 Diluted EPS 8.4c 11.2c Unadjusted results: Operating cash flow 38.2 34.3 Net cash 37.5 16.1 Interim dividend 2.70c 2.70c Basic EPS 7.9c 11.3c 4
Slide 5: Highlights – Results in line with Recent Trading Update
Highlights – Results in line with Recent Trading Update Specialty Products Chromium • Operating margin stable at 18%* Sales lower by 11 per cent • New North American additives facility • Stable North American business progressing well • Export sales impacted by strong dollar • North American decorat
Slide 6: Chromium
Chromium $ millions H1 2016 H1 2015 Sales 82.2 91.9 Operating profit 14.5 27.0 Operating margin 18% 29% Operating cash flow 16.9 14.8 North America sales and operating margin relatively stable Export sales impacted by strong US dollar • But still made a positive contribution to operating profit Stro
Slide 7: Chromium - Resilient North American Position
Chromium - Resilient North American Position North American manufacturing base Contribution margin (indexed) and proprietary delivery systems 110 • Better margins 100 North America • Greater stability 90 80 ROW 70 60 Approximately 35% of sales go 2012 2013 2014 2015 H1 2016 outside of North America
Slide 8: Surfactants
Surfactants $ millions H1 2016 H1 2015 Sales 21.8 29.7 Operating (loss)/profit (0.2) 2.4 Operating cash flow (0.9) (0.5) Sales declined in line with strategy to utilise more of the Delden facility for Specialty Products Exacerbated by weaker demand in textile, leather and oil production applications
Slide 9: Specialty Products
Specialty Products $ millions H1 2016 H1 2015 Sales 237.4 244.1 Operating profit* 41.8 44.8 Operating margin* 18% 18% Operating cash flow 31.9 27.8 Sales and operating profit lower largely due to lower oilfield sales Operating profit benefiting from cost savings implemented in H2 2015 Operating cash
Slide 10: Innovation
Innovation New products as % of sales Leveraging new assets 12% in North America and Asia 10% Majority of products protected by IP 8% To date, most new products 6% are in coatings Going forward personal care 4% will be more of a focus 2% 0% 2012 2013 2014 2015 2016 YTD 10
Slide 11: Specialty Products – Platform for Growth
Specialty Products – Platform for Growth H1 2016 sales Markets Geography Oilfield ROW 7% 7% Personal North Care America 14% 29% Asia Pacific Industrial 34% Coatings 54% Decorative Coatings 25% Europe 30% 11
Slide 12: Coatings – Global Account Growth Opportunity
Coatings – Global Account Growth Opportunity $250m $86Bn 100% Other Other 52% 26% Top 30 accounts Top 30 accounts 0% Elementis Coatings* Global Coatings Market** Implementing key account management to accelerate growth * 2015 Sales NA, Europe & China ** KNG, 2013 data 12
Slide 13: Gaining Market Share in NA Decorative Coatings
Gaining Market Share in NA Decorative Coatings New Martinsville, WV, decorative additives facility Sales ($m) 16 14 12 10 8 6 4 2 0 2013 2014 2015 2016* Plant loading progressing well Positive response to product range from customers Innovative technology validated by global majors * annualised 13
Slide 14: Oilfield
Oilfield More stable following significant 1,500 80 market decline in H1 2015 Oil price* 60 1,000 40 Market share and contribution 500 20 margins maintained N America Rig count** 0 0 Jan-16 Apr-15 May-15 Apr-16 May-16 Mar-15 Dec-15 Jul-15 Aug-15 Jul-16 Jun-15 Oct-15 Mar-16 Jun-16 Nov-15 Sep-15 Feb-1
Slide 15: Personal Care
Personal Care Good margins Distinctive products 15 direct employees Opportunity for additional investment Sales $m 34 32 30 7% 28 growth* 26 24 22 20 H1 2015 H1 2016 * constant currency 15
Slide 16: Interim Results
Interim Results $ millions H1 2016 H1 2015 Revenue 334.0 360.4 Adjusted results: Operating profit 50.7 68.6 Profit before tax 48.3 65.3 Diluted EPS 8.4c 11.2c Unadjusted results: Operating cash flow 38.2 34.3 Net cash 37.5 16.1 Interim dividend 2.70c 2.70c Basic EPS 7.9c 11.3c 16
Slide 17: Adjusted Operating Profit
Adjusted Operating Profit $ millions H1 2016 H1 2015 FY 2015 Reported operating profit 47.1 68.6 128.1 Adjusting items: Land sale - - (17.0) Restructuring/Business review 3.6 - 4.2 Other - - 7.2 Net adjusting items 3.6 - (5.6) Adjusted operating profit 50.7 68.6 122.5 Adjusting items were previously
Slide 18: H1 Currency
H1 Currency Currency impact on: $ millions Sales % Operating profit % Specialty Products -4.8 -2% -0.6 -1% Chromium - - - - Surfactants -0.3 -1% - - Central costs -0.6 Group -5.1 -1% -1.2 -2% Earnings are primarily US dollar based Operating profit impact reduced by localised cost base and hedging ac
Slide 19: Tax Charge
Tax Charge $ millions H1 2016 H1 2015 Tax charge 8.3 13.2 Adjusting items 1.0 - Adjusted tax charge 9.3 13.2 Tax rate* 19.3% 20.2% Cash tax rate* 5.8% 13.5% Tax rate lower due to change in geographic mix of profits Estimated tax rate for full year 2016 is approximately 20% * on adjusted earnings 19
Slide 20: Capital Spending
Capital Spending $ millions H1 2016 H1 2015 Specialty Products 7.1 7.1 Chromium 7.2 6.2 Surfactants/Other 1.4 2.7 Group total 15.7 16.0 Depreciation 14.0 13.4 Capex spend in Specialty Products similar to previous year • Growth projects include product expansion in Asia, New Martinsville enhancements
Slide 21: Retirement Plans
Retirement Plans Net deficit ($m) $ millions H1 2016 H1 2015 Deficit contributions UK plan 2.9 12.2 99.3 US/other 0.2 0.2 65.8 3.1 12.4 29.0 24.6 Dec-13 Dec-14 Dec-15 Jun-16 IAS 19 deficits continue to come down UK plan assets include significant interest rate protection Contributions declining in l
Slide 22: Cash Flow
Cash Flow $ millions H1 2016 H1 2015 EBITDA 64.7 82.0 Working capital (10.6) (30.9) Capital expenditure (15.7) (16.0) Pensions (3.1) (12.4) Dividends (63.7) (58.7) Other (8.1) (12.1) Net cash flow (36.5) (48.1) Net balance sheet cash 37.5 16.1 Net cash flow improved by $11.6 million • Lower working
Slide 23: Dividend
Dividend 2016 Interim 2015 Interim Per share 2.70c 2.70c Interim dividend maintained at 2.70c Special dividend programme unchanged 23
Slide 24: Summary
Summary Specialty Products • High quality business • Organic growth opportunities exist in Coatings and Personal Care • Oilfield well positioned to benefit from eventual recovery Chromium • Greater focus on North America • Will continue to look for opportunities to reduce costs Surfactants • Strateg
Slide 25: Outlook
Outlook Management expectations for the full year unchanged Year end cash balance is expected to be higher than previous year Capital markets day planned for November 2016 25
Slide 26: Thank you
ELEMENTIS Thank you eto