Imerys Sa · EURONEXT:NK
Imerys Sa — FY2016 Earnings Presentation
52 slides from Imerys Sa's earnings presentation, Feb 16, 2017
Slide 1: 2016 Results
2016 Results Presentation of 2016 full year results February 16, 2017 Gilles MICHEL - Chairman & CEO Olivier PIROTTE - CFO
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.16-0153 on March 17, 2016 with Autorité des marchés financiers. Imerys draws the attention of investors to the “R
Slide 3: 2016 Results
2016 Results Highlights 4 Results 16 Outlook 25 Appendix 27
Slide 4: Highlights
Highlights IMERYS TRANSFORM TO PERFORM
Slide 5: 2016 Highlights
2016 Highlights Solid results On a full-year basis: current(1) EBITDA up + 9.9% and current operating income up + 8.2%; operating margin at 14.0% In Q4 2016: relative improvement in economic environment with + 1.4% organic growth(2) in revenue Firm free operating cash flow generation: €395 m Achieve
Slide 6: Higher results in 2016
Higher results in 2016 Revenue (€m) Current EBITDA (€m) + 1.9% 4,165 + 9.9% 4,087 819 3,688 745 674 2014 2015 2016 2014 2015 2016 Current Operating Income (€m) Net Income from current operations (€m) + 8.2% 582 538 + 6.0% 362 495 342 316 13.4% 13.2% 14.0% €4.60 €4.15 €4.31 2014 2015 2016 2014 2015 2
Slide 7: Market environment
Market environment Revenue* Sustained growth of new single-family and multi-family Construction 19% housing starts in the US (+ 4.9% 2016 (1) vs 2015) + 1.4% quarterly organic growth in Q4 and renovation Moderate and contrasted growth in Europe 2016 Current Relative improvement in some markets and F
Slide 8: Energy Solutions and Specialties (30% of 2016 revenue)
Energy Solutions and Specialties (30% of 2016 revenue) Revenue (€m) and operating margin (%) 1,279 1,253 1,251 2016 revenue: stable on current basis, - 3.0% LFL 11.7% 9.6% 10.4% Carbonates: market dynamism in the US and Southeast Asia; integration of specialty activities of Solvay 2014 2015 2016 Rev
Slide 9: Filtration & Performance Additives (27% of 2016 revenue)
Filtration & Performance Additives (27% of 2016 revenue) Revenue (€m) et and operating margin (%) 1,082 1,145 2016 revenue: + 5.8% on current basis, 17.2% + 1.4% LFL 658 18.8% 16.5% S&B: 3-year synergies target met in 2016 2014 2015 2016 Dynamism of Performance Additives and Filtration divisions, su
Slide 10: Ceramic Materials (29% of 2016 revenue)
Ceramic Materials (29% of 2016 revenue) Revenue (€m) and operating margin (%) 1,157 1,172 1,222 2016 revenue up + 4.2% on current basis, - 1.4% LFL 18.2% 17.9% 18.3% Roofing: solid performance in a declining clay roof tiles market 2014 2015 2016 Good dynamics of the Kaolin division Revenue by divisi
Slide 11: High Resistance Minerals (14% of 2016 revenue)
High Resistance Minerals (14% of 2016 revenue) Revenue (€m) and operating margin (%) 642 629 598 2016 revenue: - 5.0% on current basis, - 3.1 % LFL 13.0% 13.0% 11.3% Fused Minerals: demand improvement in Q4 Volume growth of the Bahrein fused alumina plant 2014 2015 2016 First sales of ultrafine alum
Slide 12: Innovation: high level of new products
Innovation: high level of new products Revenue from new products (€m) Examples Plastics & polymers Energy Revenue from new products 523 490 New products as a % of revenue 449 Filtration Paints & Coatings 333 12.2% 12.5% 250 12.0% 200 9.0% Abrasives Health & Beauty 6.4% 5.4% Refractories & foundry Ot
Slide 13: Sustained development capex
Sustained development capex Development capex (€m) Main projects to increase capacity launched in 2016 102 82 78 Talc production capacity New carbon black processing increase for polymers for the unit for mobile energy automotive industry (Willebroek, Belgium) (Timmins, Canada) 2014 2015 2016 First
Slide 14: External growth, a contributor to Imerys growth
External growth, a contributor to Imerys growth CALCIUM ALUMINATE CEMENT: KERNEOS (*) Worldwide BENTONITE: leader of S&B aluminate based World class CERAMIC performance positions in PROPPANTS: binders bentonite and PYRAMAX wollastonite Damolin Entry into based solutions Alteo minerals for non NG Joh
Slide 15: Kerneos, a major step in external growth strategy
Kerneos, a major step in external growth strategy Kerneos: global leader in aluminate-based performance binders Revenue of €415 m, EBITDA of €99 m (1) Worldwide #1 in aluminate-based performance 9 industrial facilities, 2 red bauxite mines binders for construction: Additives for adhesives and mortar
Slide 16: Results
Results IMERYS TRANSFORM TO PERFORM
Slide 17: Revenue growth of + 1.9% to €4,165 m
Revenue growth of + 1.9% to €4,165 m (€m) (4) (57) + 1.9% 140 (0.1%) (1.4%) + 3.4% Quarterly organic growth Rolling 12 months growth +3.2% Quarterly organic growth +1.4% +0.9% +0.1% 4,165 4,087 Q4-14 Q1-15 Q2-15 Q3-15 (0.9%) Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 (1.4%) (2.6%) (2.5%) (1.8%) (2.9%) (3.3%) (3.
Slide 18: Current operating income up + 8.2%
Current operating income up + 8.2% (€m) 34 + 8.2% (16) 39 (35) 21 (15) 16 582 538 Operating margin 13.2 % 14.0 % + 80 basis points 2015 Scope FX Volumes Price-mix Variable Fixed Costs & Change in 2016 Costs Overheads inventories and other Rise of synergies from acquisitions, completed a year ahead o
Slide 19: 80 bps improvement in operating margin to 14.0%
80 bps improvement in operating margin to 14.0% Current operating income (€m) and operating margin by division (%) Energy Solutions & Specialties (*) Filtration & Performance Additives Group 18.8% 16.5% 10.4% 9.6% 130 215 582 120 178 538 2015 2016 2015 2016 Ceramic Materials High Resistance Minerals
Slide 20: Net income from current operations up + 6.0%
Net income from current operations up + 6.0% (€m) 2015 2016 Variation Current operating income 538.1 582.1 + 8.2 % Current financial expense (55.5) (63.9) 15.1% of which: Interest expense, net (49.1) (52.7) + 7.3 % Average net financial debt for the period 1,466.9 1,516.5 + 3.4 % Average cost of deb
Slide 21: Robust cash flow generation to €395 m
Robust cash flow generation to €395 m (€ millions) 2015 2016 Current EBITDA 745.4 818.9 Change in operating working capital requirement (WCR) 21.8 14.4 Paid capital expenditure (271.6) (278.5) Notional tax (156.7) (173.1) Autres 3.6 13.0 Current free operating cash flow 342.5 394.6 Current EBITDA (€
Slide 22: Sound financial structure
Sound financial structure Evolution of net financial debt (€m) Long term debt rating Moody’s: Baa2, stable outlook Others 15 Acquisitions, net (1) 60 Share repurchase 66 S&P: BBB, stable outlook 395 Current free operating Dividends 139 cash flow Financial ratios as of December 31 - €114 m decrease 2
Slide 23: Financial flexibility
Financial flexibility (€m) 12/31/2016 Bonds maturity and coupons (1) (€m) Bonds 2,088 Average maturity of 6.5 years (2) Other debts 86 Gross debt 2,174 Cash 808 600 Net debt 1,367 500 500 400 300 300 Financial resources as of Dec. 31, 2016 Total: €3.9 bn (maturity: 4.9 years) Available resources exc
Slide 24: Proposed dividend per share up + 6.9%
Proposed dividend per share up + 6.9% Dividend per share in euro and pay-out ratio + 6,9% 1.87 1.75 1.60 1.65 1.50 1.55 39.7% 39.8% 40.6% 40.7% 38.8% 37.2% 2011 2012 2013 2014 2015 2016 Dividend per share Payout ratio 24 February 16, 2017 2016 Results
Slide 25: Outlook
Outlook IMERYS TRANSFORM TO PERFORM
Slide 26: 2017 Outlook
2017 Outlook Relative improvement in economic environment in Q4, yet to be confirmed for 2017, in light of geopolitical uncertainties Maintaining programs focusing on operational performance (innovation, industrial excellence, costs and cash flow management) Integration of acquisitions, and notably
Slide 27: Appendix
Appendix 2016 Results 28 Kerneos 40
Slide 28: Market indicators for construction, printing & writing paper
Market indicators for construction, printing & writing paper 2015 revenue Renovation New housing 13% 13% Steel 12% Automotive 10% Printing & writing paper (in millions of tons) 7% Commercial printing 25,0 5% 2% Publishing 20,0 6% Business paper 15,0 6% Energy 5% 10,0 Industrial equipment 4% 4% 5,0 1
Slide 29: Indicators for steel production and passenger car registrations
Indicators for steel production and passenger car registrations 2015 revenue Renovation New housing 13% 13% Steel 12% Automotive 10% 7% Commercial printing 5% 2% Publishing 6% Business paper 6% Energy 5% Industrial equipment 4% 4% 13% Consumer goods Packaging Food & Beverages Others 29 February 16,
Slide 30: Industrial production indicator: industrial equipment
Industrial production indicator: industrial equipment 2015 revenue - EU Renovation New housing 13% 13% Steel 12% Automotive 10% 7% Commercial printing 5% 2% Publishing 6% Business paper 6% Energy 5% Industrial equipment 4% 4% 13% Consumer goods Packaging Food & Beverages Others 30 February 16, 2017
Slide 31: Breakdown of revenue by geography in 2016
Breakdown of revenue by geography in 2016 31 February 16, 2017 2016 Results
Slide 32: Contribution of price-mix and variable costs to current operating income
Contribution of price-mix and variable costs to current operating income (€m) Price/mix effect on revenue (%) + 0.7% + 1.3% + 1.5% + 1.2% + 3.3% + 4.4% 32 February 16, 2017 2016 Results
Slide 33: Revenue and Current Operating Income by quarter
Revenue and Current Operating Income by quarter Revenue (€m) Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Energy Solutions & Specialties 303.2 321.1 338.9 315.5 312.5 323.5 314.1 303.0 300.8 316.2 319.6 314.0 Filtration & Performance Additives 159.0
Slide 34: Revenue and Current Operating Income by semester
Revenue and Current Operating Income 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 Solutions pour l'Energie & Spécialités 77.5 65.7 67.9 60.2 72.1 77.5 64.4 55.3 67.0 62.9 Filtration & Additifs de Performance 45.4 44.9 51.3
Slide 35: Current financial expense
Current financial expense (€m) 2015 2016 Interest expense, net (49.1) (52.7) Unwinding of long-term provisions and change in other provisions (3.9) (3.7) Net interest expense on pensions (11.0) (6.9) Currency translation, other financial income and expense and 8.5 (0.5) financial instruments Current
Slide 36: Energy Solutions & Specialties
Energy Solutions & Specialties Carbonates 2016 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 Unshaped refractory materials used to protec
Slide 37: Filtration & Performance Additives
Filtration & Performance Additives Performance Minerals 2016 revenue by geography Additives for paints, plastics, polymers, rubbers, adhesives, sealants, pharma & personal care (mainly talc, mica and wollastonite, etc.) Perlite based solutions used in building materials and horticulture Minerals for
Slide 38: Ceramic Materials
Ceramic Materials Roofing 2016 Revenue by geography Clay roof tiles in France Ceramics Raw materials and bodies for tableware, sanitary and floor tiles, quartz, technical ceramics Kaolin Kaolin for applications in the paper, paints, plastics, ceramics and refractories markets, etc. 38
Slide 39: High resistance minerals
High resistance minerals Fused Minerals 2016 revenue by geography Fused alumina and bauxite for abrasives (cutting, grinding and polishing mills, sandpapers), zirconium for refractories, oxygen sensor Refractory Minerals Production of acidic refractory minerals including andalusite, chamottes 39 Feb
Slide 40: 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 41: 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: 415 Proven track-record of growth and 368 CAGR: + 3.3% + 8.0% 99 resilient profitability at high level 137 157 74 Revenue: + 3.3% CAGR 2012-2016(1), 2
Slide 42: 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 43: … 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 44: 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 45: Innovation leadership supported by strong R&D capabilities
Innovation leadership supported by strong R&D capabilities New products sales evolution over last 10 years High quality R&D strengthening Imerys’ €m and % of Net Sales innovation capabilities 8,2% 2 R&D centers dedicated to Construction technologies (France) and Refractories (China) 6,6% 5 applicati
Slide 46: €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 47: 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 LTM EBITDA1 and 7.2x post run-rate annual synergies Financed from Imerys’ available resources 7.2x 2016 EBITDA Available cash a
Slide 48: 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 49: Calcium Aluminates: specialty minerals with multiple key properties
Calcium Aluminates: specialty minerals with multiple key properties Calcium aluminates are synthetic minerals obtained by reacting lime and alumina at high temperature Lime generally coming from limestone 2 Alumina contained in natural minerals such as bauxite The product of this reaction after cool
Slide 50: Overview of Kerneos refractory technologies applications
Overview of Kerneos refractory technologies applications Kerneos Refractory applications focuses on advanced CAC ingredients for products used in the insulation of furnaces and ladles (for instance in industries such as metal refining, cement and glass production, petrochemicals and incinerators) Ut
Slide 51: Overview of Kerneos construction technologies applications
Overview of Kerneos construction technologies applications Kerneos addresses the 4 main applications, with ~60% of sales generated by flooring Applications Segmentation – Utilization & Benefits of CAC Flooring Tiling Technical Mortars Façades (~60% of sales¹) (~10%) (~20%) (<10%) Utilization Utiliza
Slide 52: Contacts
Contacts Imerys Analysts / Investors 154 rue de l’Université Vincent Gouley 75007 PARIS + 33 (0) 1 49 55 64 69 + 33 (0) 1 49 55 63 00 vincent.gouley@imerys.com www.imerys.com