Slide 1: Elementis plc Preliminary Results
Elementis plc Preliminary Results Year ended 31 December 2013
Slide 2: Highlights
Highlights Specialty Products Cents • 10% growth in sales and operating profit* 25 Dividends Diluted earnings per share* • Stable operating margin 23.0 • Double digit sales growth in Personal Care and 20 20.8 21.8 Oilfield • New NA facility and acquisitions performing well 15 15.2 Chromium 13.93 12.
Slide 3: Chromium
Chromium H1 H2 FY $ millions 2013 2012 2013 2012 2013 2012 Sales 103.4 125.8 111.4 114.3 214.8 240.1 Op profit* 25.3 33.4 29.8 29.4 55.1 62.8 Op margin* 24% 27% 27% 26% 26% 26% Another year of stable operating margins Average selling price 6% lower, in line with lower raw material costs H1 sales vol
Slide 4: Strategic diversity in products and markets
Strategic diversity in products and markets 2013 Major Markets Major Uses Market Drivers Pigments • Roof tiles, asphalt shingles, • Construction floor tiles • OEM and military coatings Industrial Refractory • Redbrick flat glass and • Construction Coatings fibreglass kilns 34% Chrome metal • Super a
Slide 5: Chromium – Well positioned for 2014
Chromium – Well positioned for 2014 Raw material costs and energy fixed High plant capacity utilisation General market trends • Good demand for refractory grade oxide • Anticipate robust sales into timber treatment • NA markets generally strong with exception of leather tanning Long term competitive
Slide 6: Surfactants
Surfactants $ millions 2013 2012 Sales 72.2 72.5 Operating profit 5.6* 4.8 Operating margin 8%* 7% 55 Delden facility continues to transition to higher 50 value additives 45 Product mix optimisation is driving operating 40 margin improvement 35 Strategy provides significant capacity to support 30 20
Slide 7: Specialty Products
Specialty Products $ millions 2013 2012 % change Sales 502.8 458.7 +10% Operating profit 99.1* 90.1 +10% Operating margin 20%* 20% Sales and operating profit* up 10% Asia Pacific coatings sales up 8% Personal Care sales up 26% Oilfield sales up 14% Continuing investment in growth * before exceptiona
Slide 8: Oilfield – 14% growth in sales
Oilfield – 14% growth in sales Innovative systems approach Newly developed pad drilling techniques are driving growth improving drilling efficiency and reducing environmental footprint Leveraging unique capabilities • Hectorite and polymer architecture Participating in early stages of shale activity
Slide 9: Personal Care – 26% growth in sales
Personal Care – 26% growth in sales Organic growth from existing portfolio Strong demand for our products in premium cosmetics market Geographic growth • Leveraging Watercryl investment to provide local presence • Increased commercial focus in Asia • Adding resources and strengthening team Cross-fer
Slide 10: Personal Care – Growth through innovation
Personal Care – Growth through innovation Hectorite-based rheology additive for skin care products • Natural, organic oils formulated with hectorite • Rheology control with enhanced skin softening • Broad applications – shampoo, skin cream, conditioners, body wash • Unique to Elementis 10
Slide 11: New Martinsville – Investing for coatings growth
New Martinsville – Investing for coatings growth New acrylic thickener facility • Phase 1 commissioned in January 2013 • IP protected acrylic thickener technology • Phase 2 to be completed by H2 2014 • Key part of global manufacturing platform for acrylic thickeners Progress update • On time and in
Slide 12: Acquisitions Update
Acquisitions Update Watercryl Hi-Mar • Sales volume increased by 27% in 2013 • Integration completed in 2013 • New products/new customers represent • Good traction with existing NA 20% of sales growth multi-national customers • Penetrating markets beyond Brazil • Leveraging synergies from global sal
Slide 13: Specialty Products – Positioned to benefit from global trends
Specialty Products – Positioned to benefit from global trends 2013 Sales Core markets North America energy dynamics • Participation in drilling and pipeline activities • Infrastructure build benefiting industrial coatings Oilfield Higher growth economies 15% • Benefiting from inherently higher growt
Slide 14: Preliminary Results
Preliminary Results $ millions 2013 2012** % change Revenue 776.8 757.0 +3% Operating profit 146.6* 143.9 +2% Operating margin 19%* 19% Profit before tax 136.0* 133.4 +2% Diluted EPS 23.0c 21.8c +6% Net cash 54.1 44.0 +23% Basic EPS 23.3c 22.2c * before exceptional items ** restated for revised IAS
Slide 15: Capital Spending
Capital Spending $ millions 2013 2012 US acrylic thickener facility 9.3 5.6 Delden systems upgrade 1.8 0.7 Other growth 1.5 12.2 Total Specialty Products growth capital 12.6 18.5 Acquisition capex 0.6 - Group maintenance and productivity 21.8 18.9 Total Group capital spending 35.0 37.4 Depreciation
Slide 16: Working Capital
Working Capital Average 2013 2012 Debtor days 52 51 Creditor days 62 62 Inventory days 96 89 Working capital to sales 20% 19% Creditor/Debtor days stable Inventory days higher due to strategic chrome ore stocks 16
Slide 17: Cash Flow
Cash Flow $ millions 2013 2012 Net cash/(debt) $m EBITDA 170.5 165.2 80 Working capital 6.5 (12.9) 60 54.1 Capital expenditure (35.0) (37.4) 40 44.0 Acquisitions (32.8) (24.0) 20 26.2 Pensions (26.8) (27.9) 0 2009 2010 2011 2012 2013 Dividends (58.3) (32.2) -20 Interest, tax, other (14.0) (13.0) -40
Slide 18: Retirement Plans
Retirement Plans $ millions UK US Other Total 2012 Deficit* (72.9) (51.3) (13.2) (137.4) Asset return 46.2 19.9 (1.2) 64.9 Liability cost (30.6) (5.1) (2.3) (38.0) Group contributions 21.4 2.4 2.0 25.8 Other (30.2) 11.0 4.6 (14.6) 2013 Deficit (66.1) (23.1) (10.1) (99.3) 2014 “normal” contributions
Slide 19: Tax Charge
Tax Charge $ millions 2013 2012* Underlying tax charge 29.4 33.1 Tax rate 22% 25% Exceptional tax credit (1.8) - Reported tax charge 27.6 33.1 Rate reduced to 22%, due to structural changes in Group financing Continues to be influenced by geographic mix of profits Expect 2014 tax rate to be stable *
Slide 20: Dividends
Dividends Per share 2013 2012 % change Interim paid 2.57c 2.45c +5% Proposed final 5.50c 5.32c +3% Special dividend 5.86c 4.79c +22% Total dividends 13.93c 12.56 +11% Dividends paid as per current policy • Interim + Final – approx. one third of EPS* • Special dividend – up to 50% of year end net cas
Slide 21: Summary Outlook
Summary Specialty Products – multiple growth opportunities with attractive margins Chromium – positioned to deliver stable earnings and cash flow Strong Group cash flow • Platform to invest in growth • Benefiting shareholders via special dividend Outlook Solid start to 2014 Confident in our ability
Slide 22: Thank you
ELEMENTIS A global specialty chemicals company Thank you to