Morgan Advanced Materials Plc · LSE:MGAM
Morgan Advanced Materials — H1 2018 Earnings Presentation
29 slides from Morgan Advanced Materials's earnings presentation, Jul 26, 2018
Slide 1: 2018 Interim Presentation
2018 Interim Presentation 26th July 2018 www.morganadvancedmaterials.com
Slide 2: Agenda
Agenda • Introduction and key highlights – Pete Raby • 2018 interim results – Peter Turner • Operational and strategic update – Pete Raby 2
Slide 3: Key highlights
Key highlights • Strategy implementation remains firmly on track, with the strategy contributing to growth in the first half: ‒ Further incremental investment of £7 million in research and development, sales effectiveness, and wider business infrastructure funded through £7 million of operational ef
Slide 4: 2018 interim results
2018 interim results Peter Turner 4
Slide 5: Group performance summary
Group performance summary Organic % 1 1 % change 1H 2018 1H 2017 change from from 1H 2017 1H 2017 At constant £m £m As reported currency Revenue 521.8 518.8 0.6% 7.8% Group headline operating profit2 61.5 61.2 0.5% 12.4% Group headline operating profit margin % 2 11.8% 11.8% Cash flow from operation
Slide 6: Revenue & margin progression
Revenue & margin progression Underlying organic growth 1H 2018 Group headline operating profit progression 1H 2018 12.4% organic constant currency growth 6
Slide 7: Divisional performance
Divisional performance Revenue (£m) Divisional EBITA (£m) Margin (%) 1H 2018 1H 2017 1H 2018 1H 2017 1H 2018 1H 2017 Thermal Ceramics 217.3 213.4 26.1 28.2 12.0% 13.2% Molten Metal Systems 24.5 23.9 3.6 3.6 14.7% 15.1% Thermal Products 241.8 237.3 29.7 31.8 12.3% 13.4% Electrical Carbon 82.9 80.9 10
Slide 8: Cash flow summary
Cash flow summary 1H 2018 1H 2017 • Capex:depreciation at 1.5x, £m £m supporting growth and EBITDA 77.2 76.9 efficiency Change in working capital (16.7) (18.0) Change in provisions & other (7.0) (7.3) • Lower interest charge Cash flow from operations 53.5 51.6 reflecting revised debt Capital expendi
Slide 9: Pensions update – funding position continues to improve
Pensions update – funding position continues to improve Deficit movement since 31 Dec 2017 (£m) Deficit at 31 December 2017 (218) Return on assets (15) Contributions (net of service and finance costs) 4 Actuarial gains on liabilities 38 Deficit at 30 June 2018 (191) £m 30 June 2018 31 December 2017
Slide 10: FY18 Guidance – financial items
FY18 Guidance – financial items Headline tax rate c. 28% Interest charge (at current FX rates) c. £8m c. £13m IAS19 pensions finance charge c. £5m Funded pension scheme contributions c. £16m 10
Slide 11: Operational and strategic update
Operational and strategic update Pete Raby 11
Slide 12: Broad based growth across most major market segments
Broad based growth across most major market segments Industrial 7.0% • Robust industrial activity in major economies Transportation 5.8% • Aerospace, rail and automotive growth Petrochemical • Thermal project activity and Seals and 11.6% Bearings and Chemical • Decline in industrial gas turbines par
Slide 13: Thermal Ceramics: performance summary
Thermal Ceramics: performance summary % change from Organic % change £m 1H 2018 1H 2017 1H 2017 from 1H 2017 As reported At constant-currency Revenue 217.3 213.4 1.8% 7.4% EBITA 26.1 28.2 (7.4)% 0.8% EBITA margin % 12.0% 13.2% Performance commentary Strategic focus • Strong project growth in Asia an
Slide 14: Molten Metal Systems: performance summary
Molten Metal Systems: performance summary % change from Organic % change £m 1H 2018 1H 2017 1H 2017 from 1H 2017 As reported At constant-currency Revenue 24.5 23.9 2.5% 7.5% EBITA 3.6 3.6 0.0% 5.9% EBITA margin % 14.7% 15.1% Performance commentary Strategic focus • Growth driven by a strong • Sales
Slide 15: Electrical Carbon: performance summary
Electrical Carbon: performance summary % change from Organic % change £m 1H 2018 1H 2017 1H 2017 from 1H 2017 As reported At constant-currency Revenue 82.9 80.9 2.5% 13.3% EBITA 10.3 8.6 19.8% 47.1% EBITA margin % 12.4% 10.6% Performance commentary Strategic focus • Growth in all regions, with parti
Slide 16: Seals and Bearings: performance summary
Seals and Bearings: performance summary % change from Organic % change £m 1H 2018 1H 2017 1H 2017 from 1H 2017 As reported At constant-currency Revenue 65.6 55.9 17.4% 21.9% EBITA 12.1 9.1 33.0% 40.7% EBITA margin % 18.4% 16.3% Performance commentary Strategic focus • Organic growth driven by the wa
Slide 17: Technical Ceramics: performance summary
Technical Ceramics: performance summary % change from Organic % change £m 1H 2018 1H 2017 1H 2017 from 1H 2017 As reported At constant-currency Revenue 124.1 133.2 (6.8)% 3.0% EBITA 13.2 15.0 (12.0)% 1.5% EBITA margin % 10.6% 11.3% Performance commentary Strategic focus • Aerospace, defence, semicon
Slide 18: Composites and Defence Systems: performance summary
Composites and Defence Systems: performance summary % change from Organic % change £m 1H 2018 1H 2017 1H 2017 from 1H 2017 As reported At constant-currency Revenue 7.4 11.5 (35.7)% (35.7)% EBITA (0.9) (0.4) EBITA margin % (12.2)% (3.5)% Performance commentary Strategic focus • Lower sales to defence
Slide 19: Reliable problem solving
Our vision is to be renowned for world-class material science, application engineering and customer focus • Scalable global Material businesses science • In growing markets Reliable • Where technical problem differentiation is valued solving Ethically and safely Application engineering Customer focu
Slide 20: Six execution priorities
Six execution priorities 1. Move to a global structure 2. Extend our technology leadership 3. Improve operational execution 4. Drive sales effectiveness and market focus 5. Increase investment in people management and development 6. Simplify the business Execution priorities highlighted in blue will
Slide 21: 2. Technology investment on track
2. Technology investment on track Research and development as a percentage of sales 2014 – 1H 2018 4.0% • Investment in research and 3.5% development increased by £2m 3.0% on a continuing basis 2.5% • We expect to be spending an 2.0% 3.4% 3.4% incremental £10m per year in 1.5% 3.0% 2018 compared to
Slide 22: 4. Long-term process and capability development in sales teams
4. We are focused on long-term process and capability development in our sales teams • Pricing deployment underway in Electrical Carbon North America and Europe using the tools developed in the Thermal Europe pilot Process and • Sales teams restructured in Thermal and Electrical Carbon in North Amer
Slide 23: Summary
Summary • Strategy implementation remains firmly on track, with the strategy contributing to growth in the first half. • Revenue growth of 7.8% and Group headline operating profit growth of 12.4% on an organic constant currency basis. • Headline EPS growth of 13.9% reflected improvement in operating
Slide 24: Appendix
Appendix MMorgan i< Advanced Materials
Slide 25: End market mix (as a % of revenue)
End market mix (as a % of revenue) Main markets by GBU Thermal Ceramics: Industrial, Chemical & Petrochemical, Industrial Metals, Automotive 5% MMS: 6% Transportation Aluminium (automotive), Copper 6% (construction), Precious metals Petrochemical and Chemical 6% Electrical Carbon: Rail, Industrial E
Slide 26: Reported statutory figures
Reported statutory figures Results before specific Specific adjusting items Total adjusting items 1H 2018 (£m) 1H 2018 (£m) 1H 2018 (£m) Revenue 521.8 - 521.8 Operating costs before restructuring costs and other items and (460.3) - (460.3) amortisation of intangible assets Profit from operations bef
Slide 27: Key exchange rates
Key exchange rates 1H 2018 1H 2017 GBP to: Closing Average Closing Average rate rate rate rate USD 1.32 1.38 1.30 1.26 EUR 1.13 1.14 1.14 1.16 CNY 8.75 8.76 8.83 8.66 Key exchange rate sensitivities on interim results Revenue Profit Increase in half year revenue / Group headline operating £m £m prof
Slide 28: Headline EPS
Headline EPS 1H 2018 1H 2017 £m £m Profit for the period attributable to ordinary shareholders 25.9 76.5 Amortisation 3.8 3.6 Total specific adjusting items post-income tax 7.6 (47.4) Headline earnings 37.3 32.7 Weighted average number of shares in the period 285.3m 284.9m Headline earnings per shar
Slide 29: 2018 Interim Presentation
2018 Interim Presentation 26th July 2018 www.morganadvancedmaterials.com
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