Slide 1: Elementis plc Preliminary Results
Elementis plc Preliminary Results Year ended 31 December 2014
Slide 2: Preliminary Results
Preliminary Results $ millions 2014 2013 % change Sales 790.4 776.8 +2% Operating profit* 150.1 146.6 +2% Operating margin* 19.0% 18.9% Profit before tax* 141.9 136.0 +4% Diluted EPS* 24.8c 23.0c +8% Net cash 64.2 54.1 +$10.1m Basic EPS 38.1c 23.3c * before exceptional items 2
Slide 3: Highlights
Highlights Specialty Products Net cash/(debt) • North America coatings up 7% $m 80 60 • Asia Pacific coatings up 5% 40 54.1 64.2 44.0 • Personal care up 8% 20 0 26.2 21.8 23.0 • Growth investments temporarily impacting margins -20 20.8 -40 -60 -79.3 Chromium -80 2010 2011 2012 2013 2014 • Optimising
Slide 4: Chromium – stable earnings and cash flow
Chromium – stable earnings and cash flow $ millions 2014 2013 Sales 216.5 214.8 Operating profit* 58.3 55.1 Operating margin* 26.9% 25.7% Resilient financial performance H2 benefited from very strong refractory market demand Excellent cash conversion – 117% of operating profit * before exceptional i
Slide 5: Product/Application Trends in 2015
Product/Application Trends in 2015 Products Major Applications 2015 Market Trends Chrome Oxide Refractory market improving – driven by coal gasification Kiln refractory projects and fibreglass insulation Chrome metal Chrome metal growing at ~3% due to aerospace demand Coatings, Colourant Coatings/Co
Slide 6: Chrome Oxide capacity
Chrome Oxide 14000 Oxide capacity 12000 MT/Year 10000 ~ 40% increase over 8000 5 years 6000 2010 2011 2012 2013 2014 2015 TARGET Year Increased oxide capacity is supporting high margin sales Chrome oxide is a higher margin, high value differentiated product Oxide capacity increased from ~8.2kMT/year
Slide 7: Surfactants – transitioning facility to Specialty Products
Surfactants – transitioning facility to Specialty Products $ millions 2014 2013 Sales 67.1 72.2 Operating profit* 4.9 5.6 Operating margin* 7.3% 7.8% Strategy provides significant capacity to support growth in Specialty Products Over half the Delden capacity is now utilised to support Specialty Prod
Slide 8: Specialty Products
Specialty Products $ millions 2014 2013 Sales 519.7 502.8 Operating profit* 98.5 99.1 Operating margin* 19.0% 19.7% North America coatings up 7% Asia Pacific coatings up 5% Personal care up 8% Strong performance in these sectors helped offset challenging European markets Continuing investment in gro
Slide 9: Growth through innovation
Growth through innovation Innovation model is based on New products as a % of sales understanding customer needs, 10% chemistry and application 9% 8% Majority of new products are 7% protected by intellectual property 6% 5% New products represent 9% 4% of total sales in 2014 3% 2% Based on accelerati
Slide 10: Oilfield – changing market dynamics
Oilfield – changing market dynamics Crude Oil Price (WTI) 2014 ended on a positive note dollars per barrel 140 • H2 sales up 9% 120 2015 market demand will be driven 100 by oil price environment 80 Oilfield represents 9% of Group sales 60 Historical spot price 40 STEO price forecast 20 NYMEX futures
Slide 11: Oilfield – positive long term trends and market position
Oilfield – positive long term trends and market position Global trends Strategic positioning North America oil and gas will • Leverage leadership position in organoclays continue to be a significant for drilling applications component of the global • Long term relationship with global majors energy
Slide 12: New Martinsville – investing for coatings growth
New Martinsville – investing for coatings growth New acrylic thickener facility • Fully commissioned in 2014 • IP protected acrylic thickener technology • Completes the global manufacturing platform for acrylic thickeners Progress update • Broad-based customer uptake • Two multinationals have made m
Slide 13: Personal Care
Personal Care Business positioned to deliver ~ 10% annual growth rate going forward Strong demand for our products from premium cosmetics market Good progress in geographic expansion • Watercryl investment providing valuable local presence in Latin America • Increasing resources and focus in Asia Pa
Slide 14: Preliminary Results
Preliminary Results $ millions 2014 2013 % change Sales 790.4 776.8 +2% Operating profit* 150.1 146.6 +2% Operating margin* 19.0% 18.9% Profit before tax* 141.9 136.0 +4% Diluted EPS* 24.8c 23.0c +8% Net cash 64.2 54.1 +$10.1m Basic EPS 38.1c 23.3c * before exceptional items 14
Slide 15: Exceptional items
Exceptional items Credit/(charge) $ millions Pensions Provisions Other Total Specialty Products 1.6 - - 1.6 Surfactants 3.3 - - 3.3 Chromium - (1.5) - (1.5) Central costs - (0.4) 3.3 2.9 Total before tax 4.9 (1.9) 3.3 6.3 Tax charge (0.8) UK tax credit 54.3 Total exceptional Items 59.8 Pension items
Slide 16: Currency will impact Sales in 2015 – but not Profit
Currency will impact Sales in 2015 – but not Profit Sales mix by currency Current exchange rates against US$ vs. 2014 average Other 6% Euro 15% Lower Rmb 13% GBP 7% Lower Rmb 2% Lower USD 55% Euro 26% Impact on 2015 Sales -5% 16
Slide 17: Currency impact on Profit
Currency impact on Profit Excluding hedging With hedging 102 100 102 100 16 7 7 -9 -25 GBP USD Euro Other Group PBT * GBP USD Euro Other Group PBT * Currency impact in 2015 - less than 1% of PBT * Indexed and rebased to 100 17
Slide 18: Capital Spending
Capital Spending $ millions 2014 2013 US acrylic thickener facility 8.0 9.3 Other growth projects 3.2 3.3 Total Specialty Products growth capital 11.2 12.6 Group maintenance and productivity 23.7 21.8 Other - 0.6 Total Group capital spending 34.9 35.0 Depreciation 25.2 23.9 Estimated 2015 spending •
Slide 19: Cash Flow
Cash Flow $ millions 2014 2013 Net cash/(debt) $m EBITDA 175.3 170.5 80 60 Working capital 4.3 6.5 64.2 54.1 40 Capital expenditure (34.9) (35.0) 44.0 20 26.2 Acquisitions (4.1) (32.8) 0 Pensions (49.5) (26.8) 2010 2011 2012 2013 2014 -20 Dividends (64.7) (58.3) -40 Interest, tax, other (16.3) (14.0
Slide 20: Challenging year for UK pension plans
Challenging year for UK pension plans 15 year AA corporate bond prices Global and UK Equity returns 135 135 FTSE All World Ex UK Total Return Index 130 130 FTSE All Share Total Return Index 125 125 120 120 115 115 110 110 105 105 100 100 95 95 90 90 Jan-14 Apr-14 Jul-14 Nov-14 Feb-14 Mar-14 Sep-14 A
Slide 21: Retirement Plans – deficit improving
Retirement Plans – deficit improving $ millions UK US Other Total 2013 Deficit (66.1) (23.1) (10.1) (99.3) Asset return 102.3 7.7 22.1 132.1 Liability increase (106.0) (23.5) (18.6) (148.1) Net change (3.7) (15.8) 3.5 (16.0) Group contributions 41.4 7.8 0.3 49.5 2014 Deficit (28.4) (31.1) (6.3) (65.
Slide 22: Tax Charge
Tax Charge $ millions 2014 2013 Underlying tax charge 26.3 29.4 Tax rate 19% 22% Exceptional tax credit (53.5) (1.8) Reported tax (credit)/charge (27.2) 27.6 Underlying rate reduced to 19%, due to geographic mix and overseas allowances Exceptional tax credit relates mostly to recognition of legacy A
Slide 23: Dividends
Dividends Per share 2014 2013 % change Interim paid 2.70c 2.57c +5% Proposed final 5.75c 5.50c +5% Special dividend 6.95c 5.86c +19% Total dividends 15.40c 13.93c +11% Progressive dividend policy • Interim + Final – approx. one third of EPS* • Special dividend – up to 50% of year end net cash balanc
Slide 24: Summary
Summary Important trends • Currency: impacting sales but not profit • Oilfield: positive long term trends in a dynamic environment • Specialty Products: good growth opportunities in coatings and personal care • Chromium: positioned to continue delivering stable earnings and cash flow Strong Group ca
Slide 25: Thank you
ELEMENTIS A global specialty chemicals company Thank you to