Synthomer Plc · LSE:SYNT
Synthomer — H1 2020 Earnings Presentation
17 slides from Synthomer's earnings presentation, Aug 6, 2020
Slide 1: Synthomer Plc Interim Results – 6th August 2020
SYNTHOMER PLC INTERIM RESULTS – 6TH AUGUST 2020 H1 20 Results 6 August 2020 | 1
Slide 2: Diversity and Differentiation underpin robust H1
Diversity and Differentiation underpin robust H1 → Resilient performance through COVID-19 pandemic: – Global network of 38 sites operated safely and effectively during Q2 → H1 2020 EBITDA of £100.2m in line with 2019 (£99.7m): – Robust heritage Synthomer £92.3m (2019 £99.7m) with OMNOVA Q2 EBITDA £7
Slide 3: Impact of COVID-19
Impact of COVID-19 → Diversified end markets and increasing differentiation mitigate impact of COVID-19 60% of Synthomer’s Revenues fall in the ‘Most Resilient’ capability → Synthomer geographic, chemistry and end market diversification: – All 38 sites operated during Q2 Most Resilient – No overall
Slide 4: OMNOVA ahead of schedule on synergies and timing
OMNOVA ahead of schedule on synergies and timing → OMNOVA is an excellent strategic fit for Synthomer Synthomer + OMNOVA Revenue by End Market(1,2,3) → Integration ahead of schedule – Cut and carve complete Oil & Gas, 3% – De-listed Compounds, 2% – Management organisation complete Specialities, 19%
Slide 5: Strategic review of European SBR network
Strategic review of European SBR network → Positioning and footprint: – Synthomer is the No1 Producer of SBR in Europe – SBR is supplied into paper, carpet, foam, footwear and construction markets – Synthomer manufactures at 4 sites in Germany, Italy, Finland and Austria – Paper and carpet markets i
Slide 6: Financials
Financials
Slide 7: EBITDA resilient and in line with H1 2019
EBITDA resilient and in line with H1 2019 Group EBITDA Bridge CY vs PY (GBP m) → EBITDA: 110 99.7 - 1.7 - 2.4 - 2.8 - 2.3 + 1.8 92.3 + 7.9 100.2 – Heritage group and OMNOVA pre-COVID-19 Q1 up on comparative period 100 – Enlarged Group H1 at £100.2m in line with 90 H1 2019 at £99.7m – Heritage group
Slide 8: Functional Solutions
Functional Solutions → EBITDA: FUNCTIONAL SOLUTIONS EBITDA BRIDGE (in GBP m) CY vs PY – £46.4m ~ 19% ahead of H1 2019 – Heritage group resilient at £37.3m and OMNOVA Q2 contribution £9.1m 38.9 +17.4 +1.0 -11.0 +0.1 46.4 70.0 60.0 → Volumes: 50.0 – Volumes up 3% reflecting OMNOVA volumes as 40.0 offs
Slide 9: Performance Elastomers
Performance Elastomers → EBITDA: PERFORMANCE ELASTOMERS EBITDA BRIDGE (in GBP m) CY vs PY – £47.6m ~ 11% behind H1 2019 – Heritage group solid at £51.0m and OMNOVA Q2 SBR contribution -£3.4m 70.0 53.5 +8.1 -5.8 -8.1 -0.1 47.6 60.0 → Volumes: 50.0 – Record NBR latex volume (+16%) supported by 40.0 90
Slide 10: Industrial Specialities
Industrial Specialities → EBITDA: INDUSTRIAL SPECIALITIES EBITDA BRIDGE (in GBP m) CY vs PY – 14% ahead of H1 2019 – Heritage group pre-COVID-19 Q1 up on comparative period 35.0 12.8 +17.7 -1.0 -14.9 +0.0 14.6 – Heritage group H1 ~ £10m and OMNOVA Laminates 30.0 25.0 & Films and Coated Fabrics Q2 co
Slide 11: Strong free cash flow generation
Strong free cash flow generation → Q2 free cash flow £104.2m: – Lower raw material prices Q2 £m 2020 2019 – Lower activity levels April and May Underlying EBITDA 100.2 99.7 – Post acquisition OMNOVA working capital inflow JVs (0.7) (0.6) – Remains circa 10% of sales Underlying EBITDA (excluding join
Slide 12: Significant liquidity and covenant headroom
Significant liquidity and covenant headroom → €520m acquisition bridge financing facility refinanced 25 June 2020: Available Facilities Facilities Expiry – 5 year unsecured 3.875% high yield bond 2025 Multi currency – Strong support in volatile market €460m July 2024 revolving facilities – Eliminate
Slide 13: Technical Guidance
Technical Guidance → Pensions: – Pensions liability at 30 June 2020 mainly comprises funded closed defined benefit pension schemes in UK and US (OMNOVA) amounting to £62m and £77m respectively, and customary unfunded defined benefit pension scheme in Germany £81m – 2020 deficit recovery payments in
Slide 14: Technical Guidance
Technical Guidance → Intangible assets: – Intangible assets (customer lists) and goodwill of £330m and £170m respectively – overall total in line with guidance – Intangible assets will be amortised over periods from 9 to 15 years – Initial annual amortisation charge £30m per annum → FX translation e
Slide 15: Building Global Differentiation
Building Global Differentiation
Slide 16: Our investment case
Our investment case Global, Growing Strong organic Sustainable and differentiated proportion of Resilient Attractive and inorganic responsible chemical speciality demand financial metrics growth drivers operator company chemicals Urbanisation + Ageing Population Energy Green Population growth Increa
Slide 17: Summary and Outlook
Summary and Outlook → Resilient performance through COVID-19 pandemic: – Solid Q1 with sequential improvement in demand from May – H1 volume +2% as OMNOVA contribute from 1st April – H1 unit margins higher on improved mix and greater differentiation → Confident of making further progress in 2020: –