Slide 1: Investor Presentation: Full Year 2016 Results
INVESTOR PRESENTATION Full Year 2016 Results 17 FEBRUARY 2017
Slide 2: Agenda
AGENDA 1. Introduction from the new Chief Executive - Paul Forman 2. Financial Review - 2016 - Stefan Schellinger 3. Initial reflections & considerations for 2017 - Paul Forman 4. Q&A © 2013 ESSENTRA PLC 2
Slide 3: Introduction
INTRODUCTION Paul Forman Chief Executive © 2013 ESSENTRA PLC
Slide 4: FY 2016: Summary
FY 2016: SUMMARY • Significant revenue, profit and EPS decrease, largely driven by continued deterioration in Health & Personal Care Packaging and short-term commercial issues in Filter Products – Total revenue decline of 9% on a like-for-like basis – Total adjusted operating profit down 29% (at con
Slide 5: Financial Review - 2016
FINANCIAL REVIEW - 2016 Stefan Schellinger Group Finance Director © 2013 ESSENTRA PLC
Slide 6: Income Statement - Summary
INCOME STATEMENT - SUMMARY FY 16 FY 15 Growth £m £m Actual Constant FX FX Revenue 1,103.7 1,098.1 +1% -8% Like-for-like1 1,088.0 1,196.8 -1% -9% Operating profit2 131.9 171.5 -23% -29% Operating margin 12.0% 15.6% -360bps -370bps Profit before tax2 119.4 161.2 -26% -32% Adjusted earnings2 94.8 123.6
Slide 7: Revenue by SBU
REVENUE BY SBU FY 16 FY growth £m Constant FX Health & Personal Care Packaging 430.2 -6% Like-for-like1 -9% Component Solutions 302.6 -3% Component Solutions ex-PPT 290.3 -1% Filtration Products 374.4 -14% Eliminations (3.5) Group 1,103.7 -8% Group – at actual FX +1% 1 At constant exchange rates, ad
Slide 8: Component Solutions
COMPONENT SOLUTIONS FY 2016 REVENUE: £303M, LFL -3% (-1% EX-PPT). OM -200BPS • Broad-based Components growth in Continental Europe and Asia – More stable H2 performance in the UK – US initiatives have arrested rate of decline vs H1 - remains a work-in-progress • Continued operational initiatives – G
Slide 9: Filtration Products
FILTRATION PRODUCTS FY 2016 REVENUE: £374M, LFL -14%. OM -240BPS • Underlying filter volumes < FY 2015 … – Sizeable European contract not offset by new business – De-stocking in China – Delay in transfer of business from the US to Asia – Slower ramp-up of new projects • … but continued recognition o
Slide 10: Health & Personal Care Packaging
HEALTH & PERSONAL CARE PACKAGING FY 2016 REVENUE: £430M, LFL -9%. OM -550BPS • Significant decline in H&PC revenue … – Integration challenges at certain acquired sites – Impact of “pruning” less profitable business • … but further innovation and commercialisation – “Freshness” labels in FMCG segment
Slide 11: Operating Profit by SBU
1 OPERATING PROFIT BY SBU FY 16 Growth Margin Margin £m Constant FY 16 FY 15 FX Health & Personal Care 34.5 -44% 8.0% 13.6% Packaging Component Solutions ex- 56.9 -7% 19.6% 21.2% PPT PPT (2.5) n/a -20.2% 5.7% Filtration Products 59.0 -25% 15.8% 18.3% Central Services (16.0) Group 131.9 Group – at ac
Slide 12: Income Statement – Continued
INCOME STATEMENT – CONTINUED FY 16 Growth £m Actual Constant FX FX Operating profit1 131.9 -23% -29% Net finance charge (12.5) -21% -19% Higher average net debt Profit before tax1 119.4 -26% -32% Taxation (23.9) Tax rate down - Underlying tax rate 20.0% 280bps Net income1 95.5 -23% -31% Adjusted ear
Slide 13: Exceptional Items
EXCEPTIONAL ITEMS £m Transaction costs from business acquisitions and disposals Disposal of Porous Technologies1 4.7 Acquisition of Kamsri 0.3 5.0 Acquisition integration and restructuring costs Healthcare Clondalkin integration 2.8 Components Asia 1.7 4.5 Other Impairment of HPC SBU assets (primari
Slide 14: Cash Flow
CASH FLOW1 £m 220.0 Operating Cash Conversion = 96% (FY 2015 = 57%) 200.0 180.0 2 31.4 1.7 (38.3) 160.0 140.0 131.9 126.7 (17.4) 120.0 (11.3) 0.8 98.8 100.0 80.0 60.0 40.0 20.0 0.0- Operating Non-cash Working Net capex Operating Tax Interest paid Pension Free cash profit1 items capital cash flow 1 c
Slide 15: Net Debt Reconciliation
NET DEBT RECONCILIATION £m As at 1 January 2016 373.9 FX 56.1 As at 31 December 2016 379.3 Change in net debt after FX (50.7) Of which: Free cash flow (98.8) Dividends 54.0 Exceptionals 10.6 Net cashflow from employee trust shares (2.3) Acquisitions 0.1 Other (14.3) (50.7) Net debt / EBITDA ratio of
Slide 16: Disposal of Porous - Update
DISPOSAL OF POROUS - UPDATE Key metrics (2016A) 2016 Group external revenue exc. Porous • Purchase price*: £220m (£998.5m) • Revenue: £105.2m £301.8m 269.1m • Operating profit: £23.2m • Employees: c.521 • Key sites divested**: 3x US, 1x Germany £427.6m Financial impact • Pro forma FY 2016 net debt t
Slide 17: Dividend
DIVIDEND 24.0 20.7 20.7 20.0 18.3 16.0 15.4 Pence 12.5 12.0 8.0 4.0 0.0 FY12 FY13 FY14 FY15 FY16 Unchanged dividend versus FY 2015 17
Slide 18: Initial Reflections & Considerations for 2017
INITIAL REFLECTIONS & CONSIDERATIONS FOR 2017 Paul Forman Chief Executive © 2013 ESSENTRA PLC
Slide 19: On the Plus Side …
ON THE PLUS SIDE … • Strong position in niche markets – Only global independent filter manufacturer – #2 in the healthcare secondary packaging market – Leading global manufacturer and distributor of industrial components • International footprint – Not global – strength in Europe and North America …
Slide 20: … & What Needs to Be Addressed
… & WHAT NEEDS TO BE ADDRESSED • Lack of coherent corporate strategy – Absence of alignment behind a common vision and purpose – Inherent risk in capex / opex and commercial strategies • Absence of common processes – Or, to the extent that they exist, they are not resulting in optimal outcomes / suf
Slide 21: Root Causes of Issues to Be Addressed
ROOT CAUSES OF ISSUES TO BE ADDRESSED … • Sub-optimal site integration – Additional sales loss and cost overruns – Poor service levels • Quality • OTIF (On Time in Full deliveries) • Lead times – Limited best-practice sharing => missed opportunities and repletion of mistakes • Loss of people – Part
Slide 22: Summary of Findings & What We're Already Doing
SUMMARY OF FINDINGS & WHAT WE’RE ALREADY DOING • Strategic strengths are definitely there – Across all 3 SBUs • Issues are predominantly self-inflicted and not market-related – Therefore, capable of reversal • Strategy development programme already underway – will be shared in July • No further foot
Slide 23: 2017 Considerations / Outlook
2017 CONSIDERATIONS / OUTLOOK • Lower 2016 jump-off point • Modest growth anticipated in CS: modest decline in Filters owing to tow pricing • Further deterioration in H&PCP in the last couple of months of 2016 and into 2017 – Weaker exit run rate – Need to stabilise challenged sites – A significant
Slide 24: Q&A
Q&A © 2013 ESSENTRA PLC
Slide 25: Appendices
APPENDICES © 2013 ESSENTRA PLC
Slide 26: Income Statement – Reported Basis
INCOME STATEMENT – REPORTED BASIS FY 16 £m Adjusted operating profit 131.9 Intangible amortisation (32.9) Exceptional operating items (133.7) Reported operating loss (34.7) Net finance charge (12.5) Loss before tax (47.2) Taxation 7.6 - Underlying tax rate 20.0% Net income (39.6) EPS (15.4)p EPS - d
Slide 27: Discontinued Operations Reconciliation
DISCONTINUED OPERATIONS RECONCILIATION Continuing ops. Discontinuing ops Total Group £m £m £m External revenue 998.5 105.2 1,103.7 Adjusted operating profit 108.7 23.2 131.9 Intangible amortisation (30.2) (2.7) (32.9) Exceptional operating items (128.5) (5.2) (133.7) Reported operating (loss) / prof
Slide 28: Revenue Growth – by Region
REVENUE GROWTH – BY REGION 1 FY16 FY growth FY growth £m Constant LFL2 FX Europe 522.7 -11% -12% Americas 387.3 -7% -9% Americas ex-PPT 375.4 -6% -8% Asia 193.7 -1% -1% Group 1,103.7 -8% -9% Group – at actual FX +1% 1 Revenue by destination 2 At constant exchange rates, adjusted for the acquisitions
Slide 29: Exchange Rates
EXCHANGE RATES Year ended 31 December 2016 Average Closing US $/£ 1.36 1.24 Euro €/£ 1.23 1.17 Impact of a one cent change Op. Profit (£m) US $/£ 0.4 Euro €/£ 0.3 Year ended 31 December 2015 Average Closing US $/£ 1.53 1.47 Euro €/£ 1.37 1.36 29
Slide 30: 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 31: Investor Presentation: Full Year 2016 Results
INVESTOR PRESENTATION Full Year 2016 Results 17 FEBRUARY 2017