Morgan Advanced Materials Plc · LSE:MGAM
Morgan Advanced Materials — H1 2020 Earnings Presentation
33 slides from Morgan Advanced Materials's earnings presentation, Jul 30, 2020
Slide 1: Morgan Advanced Materials 2020 Interim Results Presentation
Morgan Advanced Materials Advancing Materials Science 2020 Interim Results Presentation 30 July 2020
Slide 2: Agenda
Agenda • Introduction and summary – Pete Raby • 2020 Interim results – Peter Turner • Operational and strategic update – Pete Raby © Morgan Advanced Materials 2
Slide 3: Our Covid-19 response: clear priorities
Our Covid-19 response: clear priorities The safety of our people is our priority. In all of our manufacturing sites, we have changed our way of working to keep our people safe by introducing social distancing and hygiene Keeping our people measures as well as additional PPE where appropriate. We hav
Slide 4: Summary
Summary • Trading has been resilient with revenue decline of 8.8% on an organic constant-currency basis demonstrating the benefits of our diverse end-market segments. • Growth in healthcare and defence segments offset by declines in other end-market segments. • Group headline operating profit margin
Slide 5: 2020 Interim results
2020 Interim results Peter Turner © Morgan Advanced Materials 5
Slide 6: Group performance
Group performance % change from 1H 2019 £m 1H 2020 1H 2019 At organic constant- As reported currency Revenue 477.8 525.8 (9.1%) (8.8%) Group headline operating profit1 52.9 67.4 (21.5%) (19.8%) Group headline operating profit margin % 1 11.1% 12.8% ROIC (excluding IFRS 16 Leases) % 16.5% 18.1% ROIC
Slide 7: Group headline operating profit bridge
Group headline operating profit bridge £m 70.0 • Volume decline 60.0 significantly impacted margin performance 50.0 • Continuous improvement 40.0 target for the first half 30.0 achieved despite disruption and lower 20.0 activity levels 10.0 • Significant reductions in - 1 discretionary spend 1H 2019
Slide 8: Emerging stronger: Group restructuring and efficiency programme
Emerging stronger: Group restructuring and efficiency programme The Group restructuring and efficiency programme accelerates our existing plans to further simplify our structure, drive efficiency in our operations and align our capacity with the anticipated lower demand levels across the business: •
Slide 9: Group performance: specific adjusting items
Group performance: specific adjusting items • Specific adjusting items were £68.9m (1H 2019: £nil) • Redundancies and other initial costs of our restructuring programme were £m 1H 2020 £5.5m Restructuring costs (5.5) • Impairment losses of £63.4m were Impairment of assets (63.4) recognised in relati
Slide 10: Cash flow summary
Cash flow summary £m 1H 2020 1H 2019 EBITDA 75.3 88.0 • Improvement in working Change in working capital (4.4) (20.2) Change in provisions and other (11.9) (6.7) capital efficiency, Cash generated from continuing operations 59.0 61.1 especially debtors Net capital expenditure (15.8) (27.9) Net inter
Slide 11: Significant liquidity and robust maturity profile
Significant liquidity and robust maturity profile Facilities maturity profile £m 1H 2020 Borrowings 271.0 Cash (122.7) Net debt excluding lease liabilities 148.3 Headroom on our banking covenants • Net debt to EBITDA excluding lease liabilities 1.0x (FY2019: 1.0x) compared to a covenant not to excee
Slide 12: Pensions update
Pensions update Deficit movement since 31 December 2019 (£m) Deficit at 31 December 2019 (157) Return on assets 46 Contributions (net of service/finance costs) 7 Actuarial loss on liabilities (58) Currency adjustment (3) Deficit at 30 June 2020 (165) £m 30 June 2020 31 December 2019 31 December 2018
Slide 13: FY20 financial framework
FY20 financial framework Headline tax rate 27% Net finance charge: Interest charge (c. £7.0m) IAS 19 pensions net interest charge (c. £3.0m) c. £13.5m IFRS 16 lease interest (c. £3.5m) Funded pension scheme contributions c. £21.0m Foreign currency impacts see slide 31 Portfolio impacts Capital expen
Slide 14: Operational and strategic update
Operational and strategic update Pete Raby © Morgan Advanced Materials 14
Slide 15: Growth in healthcare and chemical segments offset decline in traditional end-markets
Growth in healthcare and chemical and petrochemical segments offset by decline in more traditional end-market segments Organic % change at constant-currency % of Group Segment 1H20 vs 1H19 2Q20 vs 2Q19 revenue • Volumes down across all regions with largest decline in North Industrial (18%) (22%) 41%
Slide 16: Thermal Ceramics performance summary
Thermal Ceramics performance summary % change from 1H 2019 £m 1H 2020 1H 2019 At organic constant- As reported currency Revenue 175.3 207.8 (15.6%) (13.9%) Headline operating profit 13.5 25.7 (47.5%) (43.8%) Headline operating profit margin % 7.7% 12.4% Performance commentary • Revenue declined in t
Slide 17: Molten Metal Systems performance summary
Molten Metal Systems performance summary % change from 1H 2019 £m 1H 2020 1H 2019 At organic constant- As reported currency Revenue 20.4 24.7 (17.4%) (15.7%) Headline operating profit 1.7 2.7 (37.0%) (34.6%) Headline operating profit margin % 8.3% 10.9% Performance commentary • Revenue decline resul
Slide 18: Electrical Carbon performance summary
Electrical Carbon performance summary % change from 1H 2019 £m 1H 2020 1H 2019 At organic constant- As reported currency Revenue 77.7 85.4 (9.0%) (8.4%) Headline operating profit 12.5 11.1 12.6% 15.7% Headline operating profit margin % 16.1% 13.0% Performance commentary • Revenues declined sharply i
Slide 19: Seals and Bearings performance summary
Seals and Bearings performance summary % change from 1H 2019 £m 1H 2020 1H 2019 At organic constant- As reported currency Revenue 77.6 71.1 9.1% 7.6% Headline operating profit 15.5 13.4 15.7% 13.1% Headline operating profit margin % 20.0% 18.8% Performance commentary • Growth in armour and healthcar
Slide 20: Technical Ceramics performance summary
Technical Ceramics performance summary % change from 1H 2019 £m 1H 2020 1H 2019 At organic constant- As reported currency Revenue 126.8 136.8 (7.3%) (8.9%) Headline operating profit 12.2 17.5 (30.3%) (31.8%) Headline operating profit margin % 9.6% 12.8% Performance commentary • Significant downturn
Slide 21: Our purpose
Our purpose Our purpose is to use advanced materials to help make more efficient use of the world’s resources and to improve the quality of life UN sustainable development goals • We help to keep people safe • We improve quality of life through medical applications • We enable greener electricity ge
Slide 22: Improving our performance and reducing our impact
Improving our performance and reducing our impact Lost-time accident frequency rate CO2 intensity LTAs/100k hours worked Tonnes CO2 equivalent/£m revenue 0.6 370 360 0.5 350 0.4 340 0.3 330 320 0.2 310 0.1 300 0 290 2014 2015 2016 2017 2018 2019 1H20 2014 2015 2015 2016 2016 2017 2017 2018 2018 2019
Slide 23: Our strategy for growth
Our strategy for growth We have a strategy to ensure we are the leaders in our field, with the customer and materials insight to apply our capabilities quickly and effectively We apply these skills to a portfolio of businesses where: • Our technical expertise and differentiation is valued • We can o
Slide 24: Execution priorities
Execution priorities Embedding changes we have made over the last three years across the organisation, including Drive sales effectiveness and refining our pricing tools; completing the remaining training and deploying upgrades to our market focus customer relationship management system. Extend our
Slide 25: Outlook
Outlook • Markets in North America and Europe were depressed through Q2, with Asia recovering • Order intake in April and May was volatile and around 30% down on the prior year • In June and July this improved slightly with orders still volatile and down around 20% on the prior year • Given these tr
Slide 26: Summary
Summary • The safety of our people is our priority and we have measures in place in all our facilities to ensure social distancing and appropriate hygiene and disinfection during the pandemic. • Trading has been resilient with revenue decline of 8.8% on an organic constant-currency basis demonstrati
Slide 27: Appendix
Appendix © Morgan Advanced Materials 27
Slide 28: End-market mix (as a % of revenue)
End-market mix (as a % of revenue) Main markets by GBU 6% 5% Thermal Ceramics: 7% Industrial, Chemical and petrochemical, Metals, Automotive 17% MMS: 11% Aluminium (automotive), Copper (construction), Precious metals 41% 12% Electrical Carbon: Rail, Industrial equipment, Power generation, 12% Electr
Slide 29: Divisional performance
Divisional performance Revenue Headline operating profit1 Headline operating profit1 margin £m £m % 1H 2020 1H 2019 1H 2020 1H 2019 1H 2020 1H 2019 Thermal Ceramics 175.3 207.8 13.5 25.7 7.7% 12.4% Molten Metal Systems 20.4 24.7 1.7 2.7 8.3% 10.9% Thermal Products division 195.7 232.5 15.2 28.4 7.8%
Slide 30: Reported statutory figures
Reported statutory figures Six months ended 30 June 2020 Six months ended 30 June 2019 Results before Results before £m Specific adjusting Specific adjusting specific adjusting Total specific adjusting Total items items items items Revenue 477.8 - 477.8 525.8 - 525.8 Operating costs before amortisat
Slide 31: Foreign currency impacts
Foreign currency impacts The principal exchange rates used in the translation of the results of overseas subsidiaries were as follows: 1H 2020 1H 2019 GBP to: Closing rate Average rate Closing rate Average rate USD 1.24 1.26 1.27 1.29 EUR 1.10 1.14 1.12 1.15 For illustrative purposes, the table belo
Slide 32: Headline earnings per share
Headline earnings per share £m 1H 2020 1H 2019 Profit/(loss) for the period attributable to shareholders of the Company (27.4) 35.3 (Profit)/loss from discontinued operations (0.8) - Profit/(loss) from continuing operations (28.2) 35.3 Specific adjusting items 68.9 - Amortisation of intangible asset
Slide 33: Morgan Advanced Materials
Morgan Advanced Materials Advancing Materials Science
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