Slide 1: 2012 Half Year Financial Results
2012 Half Year Financial Results 24th July 2012 www.morgancrucible.com
Slide 2: Agenda
Agenda Introduction Tim Stevenson 2012 Half Year Group and Kevin Dangerfield Divisional results Group progress and goals Mark Robertshaw Summary and outlook Mark Robertshaw 2
Slide 3: 2012 Half Year Group and Divisional results
2012 Half Year Group and Divisional results Kevin Dangerfield 3
Slide 4: Margins maintained on lower revenue, dividend increased c.10%
Margins maintained on lower revenue, dividend increased c.10% HY12 HY11 % Change from HY11 As reported At constant currency Revenue £533.0m £560.0m -4.8% -4.9% EBITA before restructuring and one-off items £69.0m £71.7m -3.8% -4.0% EBITA margin % before restructuring and one-off items 12.9% 12.8% EBI
Slide 5: Income statement – key highlights
Income statement – key highlights HY12 HY11 • Net restructuring, FY £m £m guidance c.£5m Revenue 533.0 560.0 EBITA before restructuring and one-off items * 69.0 71.7 • Net interest payable of Net restructuring and one-off items* (1.3) (0.2) £8.6m ( HY11 £11.0m) EBITA after restructuring and one-off
Slide 6: Good cash generation in line with H1 2011
Good cash generation in line with H1 2011 HY12 HY11 £m £m • 3WC/Sales of 22.7% for Cash from trading 84.6 87.4 Group expected to Change in working capital (30.8) (39.8) improve to c.20% by Change in provisions (3.9) (2.7) year end Cash flow from operations 49.9 44.9 • Gross cap ex of £14.3 Net capit
Slide 7: Profit and margin improved in Ceramics and MMS; AM&T and NPA impacted
Profit and margin improved in Ceramics and MMS; AM&T and NPA impacted by specific revenue declines £m Revenue EBITA Profit Margins % HY12 HY11 HY12 HY11 HY12 HY11 Technical Ceramics 145.4 145.0 23.5 21.4 16.2% 14.8% Thermal Ceramics 198.9 198.7 27.5 23.3 13.8% 11.7% Ceramics 344.3 343.7 51.0 44.7 14
Slide 8: Group revenue £27.0 million lower than H1 2011
Group revenue £27.0 million lower than H1 2011 – NPA £20.6 million and AM&T £7.2 million All at reported rates 8
Slide 9: Ceramics’ revenue flat year-on-year against tougher economic climate
Ceramics’ revenue flat year-on-year against back drop of tougher economic climate Technical Ceramics revenue flat at constant currency • Aerospace remains robust, especially in USA, with IGT also up year-on-year • HDD started year strongly but softened in Q2 • Decline in solar market affecting sales
Slide 10: Ceramics’ EBITA increased 14.1% against H1 2011
Ceramics’ EBITA increased 14.1% against H1 2011 Technical Ceramics EBITA up 9.8% with margin improving 140 basis points to 16.2% • Positive margin improvement across all regions • Positive mix shift continues, supported by positive pricing and new product introductions • Benefit from site rationalis
Slide 11: Engineered Materials’ revenue down £27.6 million
Engineered Materials’ revenue down £27.6 million – NPA £20.6 million, AM&T £7.2 million AM&T revenue down 4.8% at constant currency • Growth in Seals & Bearings and Semicon more than offset by lower revenue from renewables and US defence business • Chinese revenue lower year-on-year, although H2 exp
Slide 12: Engineered Materials’ EBITA reduced due to revenue reductions
Engineered Materials’ EBITA reduced due to revenue reductions AM&T has seen significant revenue declines in some of its highest margin areas, body armour and renewable energy, leading to a reduction in EBITA £ and % NPA revenue reductions impacted profit and margin; headcount reductions implemented
Slide 13: Summary of results
Summary of results • Resilient Group results in more challenging economic times • Group margins maintained – good profit and margin progression in Ceramics; Engineered Materials impacted by specific revenue declines, but further excellent performance from MMS • Good free cash flow generation in line
Slide 14: Group progress and goals
Group progress and goals Mark Robertshaw 14
Slide 15: Financial ambitions by 2013
Financial ambitions by 2013 • Double Group underlying PBT from £75.7 million to c.£150 million • Mid-teen underlying operating profit margins • Improve Operating ROCE from c.25% in 2010 to 35% by 2013 15
Slide 16: Building blocks for our doubling of underlying PBT goal
Building blocks for our doubling of underlying PBT goal POSITIVE MIX SHIFT c.£150 million Selective use of Growth in new value accretive M&A markets/products Recovery and eg. clean energy, HDD organic growth in traditional Western world £75.7 million businesses Cost benefits of low cost manufacturin
Slide 17: H1 2012 continued growth in Superwool fibre and HDD but slow down in renewables
H1 2012 seen continued growth in Superwool® fibre and HDD but slow down in renewables £66.6m £69.2m £62.8m £52.7m £42.0m 17
Slide 18: Sales to dynamic growth countries similar to 2011 levels
Sales to dynamic growth countries similar to 2011 levels • China impacted by reduced renewables business but seeing £130.6m £131.6m £128.5m some increase in petrochem and £117.6m industrial sales • Good growth in Middle East and £95.2m Turkey, particularly in respect of CPI projects • Medium to long
Slide 19: Revenue to Western world markets also in line with last year
Revenue to Western world markets also in line with last year • Revenue maintained at 2011 levels despite the more challenging macro conditions in a number of markets • Positive mix shift remains a key driver of our profit and margin goals - continued focus on and investment in more differentiated, h
Slide 20: Positive year-on-year pricing achieved once more
Positive year-on-year pricing achieved once more 20
Slide 21: Headcount predominantly in low cost and/or flexible labour locations
Headcount predominantly in low cost and/or flexible labour locations • Over 30% of permanent headcount now in low-cost locations - further moves underway in 2012 eg. USA to Mexico in both Divisions • c.44% in US and UK combined with good operational flexibility • 13% of worldwide workforce are temps
Slide 22: Group margins broadly maintained despite more challenging macro environment
Group margins broadly maintained despite more challenging macro environment 22
Slide 23: Summary and outlook
Summary and outlook Mark Robertshaw 23
Slide 24: Summary and outlook
Summary and outlook • Resilient profit and margin performance in a more difficult macro environment driven by the key building blocks of our strategy • Despite the challenging environment that we expect to continue into the second half, we remain committed to delivering on our three year goals 24
Slide 25: 2012 Half Year Financial Results
2012 Half Year Financial Results 24th July 2012 www.morgancrucible.com
Slide 26: Appendix
Appendix 26
Slide 27: Technical Ceramics
Technical Ceramics All at 2012 half year rates Dynamic growth markets includes China, India, South America, South East Asia, Middle East, Russia and Turkey 27
Slide 28: Thermal Ceramics
Thermal Ceramics All at 2012 half year rates Dynamic growth markets includes China, India, South America, South East Asia, Middle East, Russia and Turkey 28
Slide 29: AM&T
AM&T All at 2012 half year rates Dynamic growth markets includes China, India, South America, South East Asia, Middle East, Russia and Turkey 29
Slide 30: MMS
MMS All at 2012 half year rates Dynamic growth markets includes China, India, South America, South East Asia, Middle East, Russia and Turkey 30
Slide 31: 2012 H1 Sales by end market
2012 H1 Sales by end market Total mEnergy Transportation m Security & Defence Healthcare Electronics, Telecomms and Consumer m Petrochemical m Industrial Western World Dynamic Growth Energy Transportation m Security & Defence Healthcare Electronics, Telecomms and Consumer Petrochemical Industrial M
Slide 32: Total employment costs as % of sales
Total employment costs as % of sales 32
Slide 33: Margin remains very close to recent highs
Margin remains very close to recent highs 33
Slide 34: Operating ROCE reduced compared with 2011 Year End, but ahead of H1 2011
Operating ROCE reduced compared with 2011 Year End, but ahead of H1 2011 All £ million 2012 2011 2011 2010 At reported rates Half Year Year End Half Year Year End LTM EBITA 137.3 141.5 125.0 101.5 Change -v- prior period -3.0% 13.2% 23.2% Operating Capital Land & Building - NBV 98.7 102.4 106.1 108.
Slide 35: Net Finance Charge
Net Finance Charge HY12 HY11 £m £m Bank interest charge 9.7 11.3 Bank interest income (1.1) (0.3) Interest expense on unwinding of discount on deferred 0.1 0.2 consideration IAS19 - Interest cost on liability 13.2 13.6 - Expected return on assets (12.0) (13.0) 9.9 11.8 35
Slide 36: Underlying EPS
Underlying EPS HY12 HY11 £m £m Basic earnings from continuing operations 35.9 35.6 Amortisation 4.1 4.1 Underlying earnings 40.0 39.7 Weighted average number of shares in the period 275.5m 272.0m Underlying earnings per share 14.5p 14.6p 36
Slide 37: Pensions – IAS 19 Income Statement charge
Pensions – IAS 19 Income Statement charge HY12 HY11 Actual Actual £m £m Service Charge (within Operating costs) 2.0 1.7 Net Finance Charge 1.2 0.6 3.2 2.3 37
Slide 38: 2012 Half Year Financial Results
2012 Half Year Financial Results 24th July 2012 www.morgancrucible.com