Slide 1: Elementis plc Interim Results Six months ended 30 June 2009
Elementis plc Interim Results Six months ended 30 June 2009
Slide 2: Key Messages
Key Messages Specialty Products and Chromium profitable in weak markets Strong balance sheet, financing in place until July 2011 Dividend maintained at 1.5p Strengthened Asia Pacific infrastructure will support growth in Specialty Products Restructured Chromium will reduce cyclicality Actions taken
Slide 3: Interim Results
Interim Results £ millions 2009 2008 Revenue 172.2 186.9 Before exceptional items: Operating profit 5.6 28.3 Profit before tax 2.2 26.8 EPS 0.4p 5.2p Reported (loss)/profit before tax (30.2) 26.8 Reported EPS (6.9p) 5.2p 3 Elementis PLC Interims June 30 2009
Slide 4: Interim Results: Operating Performance
Interim Results: Operating Performance £ millions Sales Operating Profit 2009 2008 2009 2008 Specialty Products 94.6 81.5 6.0 16.6 Chromium 52.9 79.8 2.9 * 13.9 Surfactants 24.7 25.6 - 0.5 172.2 186.9 8.9 * 31.0 Central costs - - (3.3)* (2.7) 172.2 186.9 5.6 * 28.3 * Before exceptional items 4 Eleme
Slide 5: Sales Volume Analysis
Sales Volume Analysis Specialty £ millions Surfactants Chromium Total Products H1 2008 Sales 81.5 25.6 79.8 186.9 Currency effect 21.1 4.6 25.0 50.7 Adjusted H1 2008 Sales 102.6 30.2 104.8 237.6 H1 2009 Sales 94.6 24.7 52.9 172.2 Acquisitions 23.4 - - 23.4 Adjusted H1 2009 Sales 71.2 24.7 52.9 148.8
Slide 6: Exceptional Items
Exceptional Items £ millions P&L charge Cash flow 2009 2009 2010 Chromium Eaglescliffe site closure costs 27.7 11.3 9.8 Release of site working capital - (7.0) - Total 27.7 4.3 9.8 Central costs H1 over-hedging costs 4.7 4.7 - Total exceptional items 32.4 9.0 9.8 6 Elementis PLC Interims June 30 200
Slide 7: Interim Results: Cash Flow
Interim Results: Cash Flow £ millions 2009 2008 EBITDA* 12.4 33.8 Working capital (17.7) (21.1) Capital expenditure (5.2) (4.4) Pensions (1.9) (3.7) Dividend (6.2) (6.2) Interest, tax, other (3.1) (0.5) Currency translation 14.7 0.5 Exceptional items (5.5) - Change in net debt (12.5) (1.6) * Before
Slide 8: Interim Results: Net Debt
Interim Results: Net Debt £ millions 2009 2008 2008 June 30 Dec 31 June 30 Net debt 76.4 63.9 17.8 Debt ratios Net debt: EBITDA 1.8 1.0 0.3 Interest cover 12.2 20.0 13.7 Debt will reduce in second half of 2009 Operating well within banking covenants Acquisitions increased debt by £46 million since J
Slide 9: Currency Hedging
Currency Hedging Up to 80% of currency exposures hedged each year, usually during third quarter Sharp decline in demand during Q4 of 2008 and closure of UK Chrome plant led to an excess of hedging contracts Excess contracts cancelled in Q1 2009, treated as one time exceptional costs Excluding these,
Slide 10: Interim Results: Tax Charge
Interim Results: Tax Charge £ millions 2009 2008 Tax charge on operating profit* 0.4 3.7 Tax credit on exceptional items (0.1) - Net tax charge 0.3 3.7 Estimated tax rate for full year 2009 is 30% Rate very sensitive to mix of profits due to UK tax rate of zero * Before exceptional items 10 Elementi
Slide 11: Interim Results: Retirement Plans
Interim Results: Retirement Plans £ millions 30 June 2009 31 Dec 2008 Net deficit 71.2 49.3 Deficit increased in first half due to fall in bond yields and increase in inflation expectations Contributions consistent with previous year Funding discussions in progress for UK plan 11 Elementis PLC Inter
Slide 12: Interim Results: Dividend
Interim Results: Dividend 2009 2008 Per share 1.5p 1.5p Interim dividend maintained Supported by balance sheet and strategy 12 Elementis PLC Interims June 30 2009
Slide 13: Improving the Cost Base
Improving the Cost Base Cost base addressed in response Benefit by business: to global economic downturn • Specialty Products: £9 million Management action has reduced • Chromium: £5 million annualised costs by £16 million • Surfactants/Central: £2 million Timing: Achieved through combination of: •
Slide 14: Chromium
Chromium Eliminated high cost non-differentiated capacity • Volatility created by oversupply and vulnerability to low cost competition Closure program is progressing well • Kiln ceased operation in June • No surprises Restructured Chrome model • Proven incremental capacity • Only US based producer •
Slide 15: Specialty Products
Specialty Products Serving fundamental, global and increasingly complex needs Market share and contribution Relatively modest volume recovery margins maintained will improve profit margins Platform for growth Margin progression • Strong global team Volume compared to 2008 -30% -20% • Aligned with ma
Slide 16: Specialty Products: Asia Pacific
Specialty Products: Asia Pacific World’s largest region for coatings consumption • China is largest consumer of coatings additives in Asia Pacific • Rmb 4 trillion Chinese government stimulus package Step change in Asia Pacific infrastructure • 6 facilities/60 people to 19 facilities/600 people Deuc
Slide 17: Elementis / Deuchem Product Synergy
17 % of sales Elementis PLC Asia Pacific 0 20 40 60 80 100 market share: Interims June 30 2009 Organoclay Organoclay 25% Adhesion Adhesion promoters promoters 15% Slip Levelling Slip&&Levelling 5% Dispersing Wetting Dispersing&&Wetting 6% Anti-settling Anti-settling 10% Defoamer Defoamer 6% Organic
Slide 18: Summary
Summary Challenging global environment Strict cost management culture in place Strong balance sheet, banking facilities in place until July 2011 Dividend maintained Strategic issues addressed in Chromium Specialty Products: • Contribution margins and market share maintained • Anticipate volume drive
Slide 19: Outlook
Outlook Uncertain economic environment Emerging signs of stabilisation Trading in line with our expectations Confident in our ability to make progress in the medium term 19 Elementis PLC Interims June 30 2009
Slide 20: Thank you
ELEMENTIS Thank you A GLOBAL SPECIALTY CHEMICALS COMPANY