Slide 1: Investor Presentation: Half Year 2017 Results
INVESTOR PRESENTATION Half Year 2017 Results 28 JULY 2017
Slide 2: Agenda
AGENDA 1. HY 2017 Overview - Paul Forman 2. Financial Review – HY 2017 - Stefan Schellinger 3. Summary & FY 2017 Outlook - Paul Forman 4. Q&A © 2013 ESSENTRA PLC 2
Slide 3: HY 2017 Overview
HY 2017 OVERVIEW Paul Forman Chief Executive © 2013 ESSENTRA PLC
Slide 4: HY 2017: Summary
HY 2017: SUMMARY • Revenue, adjusted profit and EPS decline reflect continuation of trends communicated in 20 April 2017 Trading Update – A good performance in Component Solutions … – … offset by ongoing operational challenges in Health & Personal Care Packaging … – …and the pricing impact of raw ma
Slide 5: We Are Stabilising: Building Essentra Together
WE ARE STABILISING … “BUILDING ESSENTRA TOGETHER” Our aim is to make Essentra the best company it can be. To achieve this, we all need to bring our six principles to life in our work and to follow the three steps to long-term success. 5
Slide 6: We Are Stabilising: Our Revenue Trends
WE ARE STABILISING … OUR REVENUE1 TRENDS Group2 Component Solutions HY16 H216 HY17 10% 0% 8% -2% 6% -4% 4% -6% 2% -8% 0% -10% -2% -4% -12% HY16 H216 HY17 Filter Products H&PC Packaging HY16 H216 HY17 HY16 H216 HY17 0% 0% -2% -5% -4% -10% -6% -15% -8% -10% -20% -12% -25% -14% 1 Revenue trends are sho
Slide 7: Our Key Performance Indicators
WE ARE STABILISING … OUR KEY PERFORMANCE INDICATORS Group – Order Book1 Components - External Dispatched OTIF 120,000 105% 92% 104% 104% 91% 100,000 103% 102% 90% 99% 102% 80,000 89% 101% 88% £'000 60,000 100% 87% 99% 40,000 86% 98% 97% 85% 20,000 84% 96% - 95% 83% HY 2016 H2 2016 HY 2017 Closing Ex
Slide 8: Our Key Performance Indicators: Complaints
WE ARE STABILISING … OUR KEY PERFORMANCE INDICATORS Filter Products – Complaints per billion rods H&PCP – Indexed Complaint Rate – 2016 = 100) 12.0 120 100 100 10.0 100 8.0 80 73.3 65.2 6.0 60 4.0 40 2.0 20 0.0 0 Europe North America 2016 2017 YTD 8
Slide 9: Commercial & Operational Initiatives - CS
WE ARE STABILISING … OUR COMMERCIAL & OPERATIONAL INITIATIVES - CS • Benefit to UK and US Components from renewed Commercial focus with larger customers – US MRO segment also boosted by greater product segmentation and dedicated team • Increase in access hardware, supported by new product introducti
Slide 10: Commercial & Operational Initiatives - Filters
WE ARE STABILISING … OUR COMMERCIAL & OPERATIONAL INITIATIVES - FILTERS • Significant investment in capsule capacity, to meet consumer demand in a growing segment – Asia, Middle East and Europe • Improvement in base rod capacity, due to better utilisation of equipment across the footprint • Continue
Slide 11: Commercial & Operational Initiatives - H&PCP
WE ARE STABILISING … OUR COMMERCIAL & OPERATIONAL INITIATIVES – H&PCP • Focus and remedial action has stabilised key performance and service metrics in the US integration sites … • … BUT significant challenges in the UK • HOWEVER: – We are still seen as a strategic supplier by our customers – We are
Slide 12: Newport: Consultation on Proposal to Close Cartons Site
NEWPORT: CONSULTATION ON PROPOSAL TO CLOSE CARTONS SITE (“IP5”) • On 27 July, Essentra announced the proposal to cease the production of folding cartons for the consumer goods industry at Newport and, as a consequence, to close its cartons facility • Structurally challenged from a financial and oper
Slide 13: Our People
WE ARE STABILISING … OUR PEOPLE In our latest “pulse” employee engagement survey, 2016 2017 overall we improved in each area compared to 2016. DAY-TO-DAY WORKING LIFE 65% 67% WE NEED TO LEARNING AND DEVELOPMENT 65% 72% DO BETTER COMMUNICATION 59% 65% -1% MANAGEMENT 66% 68% COMMUNICATION BETWEEN AREA
Slide 14: Our HSE Performance
… ALTHOUGH THERE IS MUCH STILL TO DO OUR HSE PERFORMANCE Lost Time Accident Incidence Rate (MAT) (No. lost time accidents per 100 employees) 1.15 1.10 1.05 1.00 0.95 0.90 0.85 0.80 0.75 Jul-14 Jan-14 Feb-14 Jan-16 Nov-16 Mar-14 Apr-14 Sep-14 Nov-14 Jan-15 Feb-15 Mar-15 Apr-15 Jul-15 Sep-15 Nov-15 Fe
Slide 15: Key Areas to Address in the Short to Medium Term
KEY AREAS TO ADDRESS IN THE SHORT TO MEDIUM TERM • Operational performance in a few H&PC Packaging sites is not stable • Customer perception and repurchasing decisions, as expected, lagging operational trends • Lack of many basic processes as standard - see later Strategy presentation • Given broad
Slide 16: Financial Review – HY 2017
FINANCIAL REVIEW – HY 2017 Stefan Schellinger Group Finance Director © 2013 ESSENTRA PLC
Slide 17: Income Statement – Summary
INCOME STATEMENT – SUMMARY1 HY 17 HY 16 Growth £m £m Actual Constant FX FX CS +8% H&PCP -9% Revenue 522.6 494.7 +5.6% -4.0% Filter Products Operating profit2 42.8 59.8 -28.4% -35.1% -9% Operating margin 8.2% 12.1% -390bps -400bps H&PCP Filter Products Profit before tax2 37.3 52.8 -29.4% -36.7% Adjus
Slide 18: Revenue by Division
REVENUE BY DIVISION HY 17 HY growth £m Constant FX Health & Personal Care Packaging 213.4 -9.2% Challenged H&PCP sites and tobacco tear tape Like-for-like1 -9.2% Component Solutions 173.9 +8.5% Significant recovery in PPT Broad-based Components growth Component Solutions ex-PPT 158.5 +2.8% – recover
Slide 19: Operating Profit by Division
1 OPERATING PROFIT BY DIVISION HY 17 Growth Margin Margin £m Constant HY 17 HY 16 FX Volume, challenged Health & Personal Care 4.7 -80.4% 2.2% 10.3% H&PCP sites and Packaging tobacco tear tape Component Solutions ex- 27.8 -7.2% 17.5% 19.4% Continued investment, PPT Extrusion PPT 2.0 n/m 13.0% -33.1%
Slide 20: Income Statement – Continued
INCOME STATEMENT – CONTINUED HY 17 Growth £m Actual Constant FX FX Operating profit1 42.8 -28.4% -35.1% Net finance charge (5.5) Lower average net debt Profit before tax1 37.3 -29.4% -36.7% Taxation (7.5) Tax rate - Underlying tax rate 20.0% maintained Net income1 29.8 -29.7% -37.2% Adjusted earning
Slide 21: Exceptional Items
EXCEPTIONAL ITEMS £m (Gains) / losses and transaction costs from business (133.5) acquisitions and disposals1 Acquisition integration and restructuring costs - Other2 5.2 Total Group (128.3) 1 These are made up of (£134.7m) net gain on disposal of Porous Technologies and £1.2m net loss on disposal o
Slide 22: Cash Flow - Continuing Operations
CASH FLOW - CONTINUING OPERATIONS £m 70.0 Operating Cash Conversion = 71% 2 (11.3) (HY 2016 = 59%) 16.5 60.0 (17.4) 50.0 42.8 40.0 30.6 (8.7) 30.0 (5.5) 20.0 - 16.4 10.0 - Operating Non-cash Working Net capex Operating Tax Interest paid Pension Free cash flow 1 profit 1 items capital cash flow 1 con
Slide 23: Net Debt Reconciliation
NET DEBT RECONCILIATION £m As at 1 January 2017 379.3 FX 0.1 As at 30 June 2017 207.2 Change in net debt after FX 172.2 Of which: Free cash flow (9.0) Gross proceeds Acquisitions (211.9) from Porous Technologies Dividends 37.7 divestment Transaction Exceptionals 14.9 costs for Porous sale + one-off
Slide 24: Dividend
DIVIDEND 8.0 6.3 6.3 6.3 6.0 5.7 4.8 Pence 4.0 2.0 0.0 HY13 HY14 HY15 HY16 HY17 Interim dividend held unchanged 24
Slide 25: Summary & FY 2017 Outlook
SUMMARY & FY 2017 OUTLOOK Paul Forman Chief Executive © 2013 ESSENTRA PLC
Slide 26: Stability: Summary
STABILITY: SUMMARY In HY 2017, we have: • Increasingly stabilised our revenue trends – In all three global divisions • Stabilised a number of our Key Performance Indicators • Stabilised our finances – Significant reduction in net debt to EBITDA ratio to 1.6x from 2.3x post-Porous Technologies divest
Slide 27: Strategy
STRATEGY To be covered now! 27
Slide 28: Growth
GROWTH We have a number of skills gaps across the organisation which we will address: • Operational gap analysis – Esp. Sales & Operations Planning • IT systems • Commercial gap analysis • PMI • Governance framework and risk management • RACI (“Responsible, Accountable, Consulted, Informed”) framewo
Slide 29: 2017 Considerations / Outlook
2017 CONSIDERATIONS / OUTLOOK • Continued growth in Component Solutions in H2 – Further broad-based growth in Components – Solid order intake in PPT in July • Ongoing stabilisation efforts in Heath & Personal Care Packaging – Continued focus on improving underlying performance and service metrics –
Slide 30: Q&A
Q&A © 2013 ESSENTRA PLC
Slide 31: Appendices
APPENDICES © 2013 ESSENTRA PLC
Slide 32: Income Statement – Reported Basis
INCOME STATEMENT – REPORTED BASIS1 HY 17 Growth Actual Constant £m FX FX Adjusted operating profit 42.8 -28.4% -35.1% Intangible amortisation (11.5) Exceptional operating items (6.4) Reported operating profit 24.9 -39.3% -44.9% Net finance charge (5.5) Profit before tax 19.4 -42.9% -49.2% Taxation (
Slide 33: Exchange Rates
EXCHANGE RATES Six months ended 30 June 2017 Average Closing US $/£ 1.27 1.30 Euro €/£ 1.16 1.14 Impact of a one cent change Op. Profit (£m) US $/£ 0.1 Euro €/£ 0.2 Six months ended 30 June 2016 Average Closing US $/£ 1.43 1.33 Euro €/£ 1.28 1.20 33
Slide 34: Disclaimer
DISCLAIMER IMPORTANT LEGAL NOTICE THIS DOCUMENT IS STRICTLY CONFIDENTIAL TO THE RECIPIENT AND HAS BEEN SUBMITTED TO YOU SOLELY FOR YOUR INFORMATION. THE RECIPIENT MAY NOT REPRODUCE OR REDISTRIBUTE ANY PART OF THIS DOCUMENT TO ANY PERSON IN ANY FORM. THIS DOCUMENT AND THE PRESENTATION TO WHICH IT REL
Slide 35: Investor Presentation: Half Year 2017 Results
INVESTOR PRESENTATION Half Year 2017 Results 28 JULY 2017