Imerys Sa · EURONEXT:NK
Imerys Sa — H1 2017 Earnings Presentation
42 slides from Imerys Sa's earnings presentation, Jul 27, 2017
Slide 1: First Half 2017 Results
First Half 2017 Results July 27, 2017 Conference call Gilles MICHEL – Chairman & Chief Executive Officer Olivier PIROTTE – Chief Financial Officer
Slide 2: Disclaimer
Disclaimer More comprehensive information about Imerys may be obtained on its website (www.imerys.com) under Regulated Information, including its Registration Document filed under No. D.17-0190 on March 21, 2017 with Autorité des marchés financiers. Imerys draws the attention of investors to the “Ri
Slide 3: First Half 2017 Results
First Half 2017 Results Highlights 4 Results 13 Outlook 19 Appendices 21
Slide 4: Highlights
Highlights TRANSFORM TO PERFORM
Slide 5: Key Figures for the First Half 2017
Key Figures for the First Half 2017 Revenue (€m) Quarterly organic growth + 5.9% Quarterly organic growth H1 2017: + 1.8% 2,220 Rolling 12 months organic growth 2,057 2,097 + 2.4% + 1.4% + 1.2% + 0.6% Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 - 0.4% - 1.8% - 2.5% - 1.4% - 2.6% - 2.9% H1 2015 H1 2016 H1 20
Slide 6: Closing of acquisition of Kerneos
Closing of acquisition of Kerneos Integration from July 18 within the High Resistance Minerals business group Value-creating acquisition with expected synergies of €23m in third year of full consolidation Geographic coverage (India, China) Innovation potential Cost optimization (procurement, industr
Slide 7: Globally improving market environment
Globally improving market environment % of Group revenue* Construction Further increase in housing starts in the US (+ 3.9 % H1 2017 (1) vs H1 2016) ~20% and renovation European construction firm overall Current ~15% Firm current consumption (ex. food and beverage, consumer electronics, heath & beau
Slide 8: Energy Solutions & Specialties (29% of Group revenue)
Energy Solutions & Specialties (29% of Group revenue) Revenue (€m) COI (€m) and operating margin Carbonates: sustained business in the + 5.9 % 654 + 2.6% construction and packaging, weakness 67 69 617 of the paper market 10.9% 10.5% Monolithic Refractories: stabilization of the H1 2016 H1 2017 activ
Slide 9: Filtration & Performance Additives (28% of Group revenue)
Filtration & Performance Additives (28% of Group revenue) Revenue (€m) COI (€m) and operating margin + 10.4% 629 + 19.0% 125 Performance Additives: globally dynamic 570 105 markets, in polymers for the automobile 18.4% 19.9% in particular Filtration: improvement in food & beverage H1 2016 H1 2017 H1
Slide 10: Ceramic Materials (27% of Group revenue)
Ceramic Materials (27% of Group revenue) Revenue (€m) COI (€m) and operating margin - 3.6% - 5.9% Roofing: decrease in clay tiles market in H1 635 114 2017 (- 2.0%**) 612 107 17.9% 17.5% Lackluster renovation market… LFL: - 3.8% …but improvement in Q2, sustained by positive dynamics in new construct
Slide 11: High Resistance Minerals (16% of Group revenue)
High Resistance Minerals (16% of Group revenue) Revenue (€m) COI (€m) and operating margin + 18.6% 357 + 18.8% 47 Buoyant sales in Fused Minerals and 300 40 Refractory Minerals 13.3% 13.4% Significant impact of restocking effect in Q1 (+ 14.6% LFL ) H1 S1 2016 2016 H1 S1 2017 2017 H1 2016 S1 2016 H1
Slide 12: Increase in development capex
Increase in development capex Paid Capital Expenditure (€m) Main development capex programs Graphite for mobile energy 145 (Switzerland / Namibia / U.S.A.) 122 117 Carbonates for plastic film packaging (China) Talc for polymers in automotive industry (France / U.S.A.) H1 2015 H1 2016 H1 2017 12 July
Slide 13: Results
Results TRANSFORM TO PERFORM
Slide 14: Revenue up + 5.9%
Revenue up + 5.9% H1 2017 Year-on-Year Revenue Evolution (€m) + 1.8% + 5.9% + 1.6% 38 + 2.5% 34 52 2,220 2,097 H1 2016 Scope Currencies Volumes & price/mix H1 2017 Organic growth at + 1.8% in H1 2017 fueled by volumes (+ 1.4%), with positive price-mix effect (+ 0.5%) Contribution from bolt-on acquis
Slide 15: Current operating income up + 6.7%
Current operating income up + 6.7% H1 2017 Year-on-Year C.O.I Evolution (€m) 9 1 + 6.7% (21) 19 3 - 9 313 293 14.0% Operating margin 14.1% H1 2016 Scope Currencies Volumes Price-Mix Variable Fixed costs & Change in H1 2017 Costs overheads inventory & misc. + 10 bp improvement in operating margin to
Slide 16: Net income from current operations up + 3.2%
Net income from current operations up + 3.2% €m H1 2016 H1 2017 Change Current operating income 293.0 312.6 + 6.7% Current financial expense (29.1) (42.2) Average cost of net financial debt 2.3% 2.2% - 10 bp Current income tax (78.1) (79.8) Current tax rate 29.6% 29.5% Minority Interests (1.9) (0.9)
Slide 17: Robust cash flow generation in H1 2017
Robust cash flow generation in H1 2017 €m H1 2016 H1 2017 Change (€m) Current EBITDA 416.9 428.3 + 11.4 Change in operating WCR (48.3) (44.4) WCR as a % of revenue 23.4 % 22.5 % - 90 bp Paid capital expenditure (116.7) (144.8) + 28.1 Current notional tax (86.8) (92.2) Other 11.6 3.7 Current free ope
Slide 18: Financial structure
Financial structure Evolution of net financial debt (€m) Long-term debt rating 2,360 Moody’s: Baa2. stable outlook S&P: BBB. stable outlook Average maturity of bond debt: 7.5 years Others 10 Acquisitions (1) 134 151 Dividends 149 Current free 1,509 Bonds maturity profile as of 06/30/2017 operating c
Slide 19: Outlook
Outlook TRANSFORM TO PERFORM
Slide 20: Outlook for 2017
Outlook for 2017 Gradual increase in the contribution from synergies with recently completed acquisitions, in particular with Kerneos since July 18 Continuation of development strategy Increase in net income from current operations above + 7% in 2017, assuming constant market and exchange rates cond
Slide 21: Appendices
Appendices TRANSFORM TO PERFORM
Slide 22: Revenue and current operating income by quarter
Revenue and current operating income by quarter Revenue (€m) Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Energy Solutions & Specialties 312.5 323.5 314.1 303.0 300.8 316.2 319.6 314.0 321.6 332.0 Filtration & Performance Additives 218.9 306.2 284.5 271.9 278.2 292
Slide 23: Current operating income and operating margin by semester
Current operating income and operating margin by semester Current Operating Income (€m) H1 2012 H2 2012 H1 2013 H2 2013 H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 Energy Solutions & Specialties 77.5 65.7 67.9 60.2 72.1 77.5 64.4 55.3 67.0 62.9 68.8 Filtration & Performance Additives 45.
Slide 24: Current financial expense
Current financial expense €m H1 2016 H1 2017 Interest expense, net (24.9) (27.4) Unwinding of long-term provisions (1.9) (2.1) and change in other provisions Net interest expense on pensions (4.4) (3.6) Currency translation, other financial income 2.0 (9.1) and expense and financial instruments Curr
Slide 25: Breakdown of revenue by geography in H1 2017
Breakdown of revenue by geography in H1 2017 5% 27% 43% Western Europe U.S.A. / Canada Emerging markets Other (Japan / Australia) 25% 25 July 27. 2017 First Half 2017 Results
Slide 26: Energy Solutions & Specialties
Energy Solutions & Specialties Carbonates H1 2017 revenue by geography Natural (GCC) and Precipitated (PCC) Calcium Carbonates used as filling or coating pigment for paper production and functional additives for paints, plastics etc.. Monolithic Refractories 8% Unshaped refractory materials used to
Slide 27: Filtration & Performance Additives
Filtration & Performance Additives Performance Minerals H1 2017 revenue by geography Additives for paints, plastics, polymers, rubbers, adhesives, sealants, pharma & personal care (mainly talc, mica and wollastonite, etc.) 3% 25% 38% Filtration Filtration minerals providing filter aid for edible liq
Slide 28: Ceramic Materials
Ceramic Materials Roofing H1 2017 revenue by geography Clay roof tiles in France Ceramics Raw materials and bodies for tableware, sanitary and 3% floor tiles, quartz, technical ceramics 21% Kaolin 17% 59% Kaolin for applications in the paper, paints, plastics, ceramics and refractories markets, etc.
Slide 29: High Resistance Minerals
High Resistance Minerals Fused Minerals H1 2017 revenue by geography Fused alumina and bauxite for abrasives (cutting, grinding and polishing mills, sandpapers), zirconium for refractories, oxygen sensor 5% Refractory Minerals Production of acidic refractory minerals including 28% 42% andalusite, ch
Slide 30: Market indicators for construction, printing & writing paper
Market indicators for construction, printing & writing paper New housing starts (in thousands) 25,0 20,0 15,0 MT Printing & writing paper 10,0 (in millions of tons) 5,0 0,0 2008 2009 2010 2011 2012 2013 2014 2015 2016 Mature markets Emerging markets Source : RISI 30 July 27. 2017 First Half 2017 Res
Slide 31: Indicators for steel production and passenger car registrations
Indicators for steel production and passenger car registrations Steel production (in thousands of tons) Passenger car registrations (base 100 in Q4 2007) 31 July 27. 2017 First Half 2017 Results
Slide 32: Industrial production indicator: industrial equipment
Industrial production indicator: industrial equipment New orders index (machine and industrial equipment manufacturing in EU-28 (adjusted for seasonal effect and working days) New orders index (machine and industrial equipment manufactuing in the U.S.A. (adjusted for seasonal effect ) 32 July 27. 20
Slide 33: Kerneos: a new platform to grow Imerys’ minerals-based specialties
Kerneos: a new platform to grow Imerys’ minerals-based specialties Main strategic rationale for Imerys A world class technology platform Entering into a new and growing market segment Leveraging growing adoption rate of aluminate technologies in construction Enhancing Imerys financial performance wi
Slide 34: Kerneos: global leadership positions with proven track record of growth and profitability
Kerneos: global leadership positions with proven track record of growth and profitability Sustained revenue growth (€m) High profitability (€m) CAGR: Proven track-record of growth and 417 CAGR: 368 + 3.3% + 8.0% 99 resilient profitability at high level 137 74 Revenue: + 3.3% CAGR 2012-2016, 157 24%
Slide 35: With Kerneos, Imerys would complement its global footprint
With Kerneos, Imerys would complement its global footprint… Global presence: 1,500 employees in Sole CAC player with global footprint 9 industrial facilities and 17 sales offices Competitive industrial base located in key markets Secured access to required minerals Istanbul Stockholm (including owne
Slide 36: … and enhance its profile with 2/3 of Kerneos activities offering growth potential
… and enhance its profile with 2/3 of Kerneos activities offering growth potential Construction technologies and specialty Leveraging growing adoption rate of aluminate applications: long-term growth outperforming technologies in construction +4-5% p.a. construction markets Self leveling and quick d
Slide 37: Refractory technologies: high value offering
Refractory technologies: high value offering Serving primarily as binders for refractory products (monolithics) Performance binders are critical to the performance of client products Represents a small share of client input cost in refractories Benefiting from a resilient performance Selling almost
Slide 38: Leadership en innovation soutenu par un fort potentiel en R&D
Leadership en innovation soutenu par un fort potentiel en R&D Évolution des ventes de nouveaux produits ces dix R&D de grande qualité qui renforcera dernières années la capacité d'innovation d'Imerys En millions d'euros et pourcentage des ventes nettes 8,2% 2 centres de R&D dédiés aux technologies d
Slide 39: €23 m run-rate annual synergies identified
€23 m run-rate annual synergies identified Leveraging geographical coverage Kerneos stronger presence in some geographies Pre-tax synergies phasing (€m) 23 Enhancing innovation potential 18 New technologies/ applications Cross fertilization opportunities 9 Year 1 Year 2 Year 3 Cost optimization Proc
Slide 40: Imerys and Kerneos: a value creative transaction
Imerys and Kerneos: a value creative transaction Estimated enterprise value of c.€880 million €23m annual run rate synergies from third full year of consolidation 8.9x 2016 EBITDA and 7.2x post run-rate annual synergies Financed from Imerys’ available resources 7.2x 2016 EBITDA Available cash and se
Slide 41: Kerneos, a further step in Imerys’ development strategy
Kerneos, a further step in Imerys’ development strategy that matches all our value-creation criteria World class technology platform Entry into a new growing market segment Enhancement of Imerys growth and profitability profile Excellent fit with Imerys business model Strong innovation capabilities
Slide 42: Imerys
Imerys www.imerys.com 154 rue de l’Université Investor Relations 75007 PARIS Vincent GOULEY + 33 (0)1 49 55 63 00 + 33 (0)1 49 55 64 69 www.imerys.com vincent.gouley@imerys.com