Essentra Plc · LSE:ESNT
Essentra — H1 2015 Earnings Presentation
33 slides from Essentra's earnings presentation, Jul 31, 2015
Slide 1: Investor Presentation: Half Year 2015 Results
INVESTOR PRESENTATION Half Year 2015 Results 31 JULY 2015
Slide 2: Agenda
AGENDA 1. Operational Review - Colin Day 2. Financial Review - Matthew Gregory 3. 2015 Outlook - Colin Day © 2013 ESSENTRA PLC 2
Slide 3: Operational Review
OPERATIONAL REVIEW Colin Day Chief Executive © 2013 ESSENTRA PLC
Slide 4: HY 2015: Highlights
HY 2015: HIGHLIGHTS • Positive result, despite Oil & Gas challenge in Pipe Protection Technologies ‒ Total revenue +27% @ constant FX ‒ LFL revenue +6% ex-PPT, +2% total Group • Strong underlying margin expansion offset by short-term dilution from acquisitions and PPT • Rapid start to Clondalkin SPD
Slide 5: Strong Revenue & Profit Growth
STRONG REVENUE & PROFIT GROWTH Revenue (£m) Adjusted Operating Profit (£m) 85.0 Filter Products Distribution £154m £138m LFL: +6% LFL: +9% +18% 75.0 Group: £550m* +27% LFL: +2% Ex-PPT: +6% 65.0 Specialist Technologies H&PC £71m Packaging LFL: -14% £189m Ex-PPT: +6% LFL: +0% 55.0 HY14 HY15 Notes: Gro
Slide 6: Distribution
DISTRIBUTION • Growth supported by more encouraging market conditions – Continued improvement in Europe – Benefit from regional warehouse in Singapore – ... but more challenging in North America • Incremental revenue opportunities from focus on larger custom injection moulding projects • Launch of n
Slide 7: Health & Personal Care Packaging
HEALTH & PERSONAL CARE PACKAGING • Strong performance in underlying healthcare packaging … – Significant new business wins – Successful roll-out of KAM strategy to global customer base • … offset by weakness in tobacco tear tape – Continued pressure from challenging market conditions Investment in d
Slide 8: Filter Products
FILTER PRODUCTS • Underlying volumes > HY 2014 – Strong growth in special filters • Ongoing launches & development initiatives – Innovative filters allowing greater visualisation and brand differentiation – Further increase in joint development activity with multinational and independent customers –
Slide 9: Specialist Technologies
SPECIALIST TECHNOLOGIES • Result driven exclusively by impact of industry weakness on Pipe Protection Technologies – LFL ex-PPT +6% o/w: • Extrusion +14% • Porous Technologies +4% • Benefit of new contracts and commercialisation of recent wins in Porous Technologies – Continued momentum in specialit
Slide 10: PPT in Context
PPT IN CONTEXT PPT revenue (£m) 50 3,000 $120 50 2,500 $100 40 35 2,000 $80 1,500 $60 30 1,000 $40 20 20 500 $20 0 $0 10 0 FY14A Feb-15 View Jun-15 View Rig Counts Per Month Oil Price Uncertain outlook, but industry data seems to have plateaued … © 2013 ESSENTRA PLC © 2013 ESSENTRA PLC 10 © 2013 ESS
Slide 11: Europe
EUROPE HY 2015 REVENUE: £270.3M • Strong performance in Industrial, Health & Personal Care and Furniture segments – Supported by Food & Drink and Tobacco • Expansion of metal hardware in existing and export markets – Boosted by range expansion and roll-out of Abric Seals portfolio • Good growth in s
Slide 12: Americas
AMERICAS HY 2015 REVENUE: £186.4M • Growth in underlying Health & Personal Care sector – Success in medical foam – Portfolio expansion in speciality wipes • Household boosted by commercialisation of recent business wins in air care and writing instruments Expanded co-located site for Components and
Slide 13: Asia
ASIA HY 2015 REVENUE: £93.7M • Growth across all markets – Particularly good progress in India in the Industrial sector – Scope for improvement in China • Strong performance in Tobacco – Joint development activity with key multinational customers – Excellent performance in flavoured and special filt
Slide 14: Financial Review
FINANCIAL REVIEW Matthew Gregory Group Finance Director © 2013 ESSENTRA PLC
Slide 15: Income Statement - Summary
INCOME STATEMENT - SUMMARY HY 15 HY 14 Growth £m £m Actual Constant FX FX Revenue 550.4 431.1 +28% +27% Like-for-like1 +2% Like-for-like1 ex-PPT +6% Operating profit2 81.9 69.0 +19% +18% Operating margin 14.9% 16.0% -110bps -120bps Like-for-like1 16.3% 15.9% +40bps +20bps Like-for-like1 ex-PPT 16.5%
Slide 16: Revenue Growth – Volume / Mix / Price
REVENUE GROWTH – VOLUME / MIX / PRICE % Volume / mix +7 Price (1) LFL - ex-PPT +6 PPT (4) LFL – total +2 Acquisitions +25 Constant FX growth +27 Exchange +1 Reported growth +28 Volume remains the key driver of revenue growth 16
Slide 17: Revenue Growth – by SBU
REVENUE GROWTH – BY SBU HY 15 HY growth HY growth £m Constant LFL1 FX Distribution 138.0 +12% +9% Health & Personal Care Packaging 189.1 +127% - Filter Products 153.9 +6% +6% Specialist Technologies ex-PPT 61.8 +6% +6% PPT 8.7 -63% -63% Eliminations (1.1) Group 550.4 +27% +2% Group – at actual FX +2
Slide 18: Revenue Growth – by Region
REVENUE GROWTH – BY REGION 1 HY 15 HY growth HY growth £m Constant LFL2 FX Europe 270.3 +27 +4 Americas 186.4 +33 -8 Americas ex-PPT 178.3 +53 +3 Asia 93.7 +16 +13 Group 550.4 +27% +2% Group – at actual FX +28% 1 Revenue by destination 2 At constant exchange rates, adjusted for the acquisitions of C
Slide 19: Operating Profit – Key Movements
OPERATING PROFIT – KEY MOVEMENTS 1 10.0 88.3 6.4 10.2 1.6 4.6 81.9 £m 0.8 4.5 69.0 HY 2014 Filters Currency Acquisitions Raw material Net pricing Volume, mix HY 2015 Impact of HY 2015 Closure & other input impact & Excluding PPT volume (2014) costs efficiencies PPT decrease 1Adjusted to exclude inta
Slide 20: Operating Profit by SBU
1 OPERATING PROFIT BY SBU Adjusted1 operating profit HY 15 Growth Margin £m Constant FX Distribution 32.4 +5% 23.5% Health & Personal Care Packaging 22.4 +48% 11.8% Filter Products 23.8 +32% 15.5% Specialist Technologies ex-PPT 11.9 +37% 19.3% PPT 0.2 -98% 1.7% Central Services (8.8) Group 81.9 +18%
Slide 21: Income Statement – Continued
INCOME STATEMENT – CONTINUED HY 15 Growth £m Actual Constant FX FX Operating profit1 81.9 +19% +18% Net finance charge (5.3) Lower pension interest income Profit before tax1 76.6 +19% +18% Taxation (17.6) Tax rate down - Underlying tax rate 23.0% 240bps Net income1 59.0 +23% +22% Adjusted earnings1
Slide 22: Exceptional Operating Items
EXCEPTIONAL OPERATING ITEMS HY 15 £m Acquisition fees 0.1 Acquisition integration & restructuring costs 18.2 Other (2.0) Total exceptional operating items 16.3 22
Slide 23: Cash Flow
CASH FLOW1 £m 120.0 12.7% working cap./revenue ratio 20.5 (HY 2014: 13.7% constant FX) (33.0) 100.0 51% operating cash conversion (HY 2015: 50%) 81.9 80.0 (27.9) 60.0 41.5 (6.3) 40.0 (4.6) (3.1) 27.5 20.0 0.0- Operating Non-cash Working Capex Operating Tax Interest paid Pension Free cash Profit1 ite
Slide 24: Net Debt Reconciliation
NET DEBT RECONCILIATION £m As at 1 January 2015 62 FX (14) As at 30 June 2015 360 Change in net debt after FX 312 Of which: Free cash flow (28) Acquisitions 304 Dividends 33 Exceptionals 6 Net cashflow from employee trust shares (4) Other 1 312 Net debt / EBITDA ratio of 1.9x: pro forma 1.7x NOTE: 2
Slide 25: Dividend
DIVIDEND 7.0 +11% 6.3 6.0 5.7 5.0 4.8 Pence 4.0 3.9 3.3 3.0 2.0 1.0 0.0 HY11 HY12 HY13 HY14 HY15 Progressive dividend 25
Slide 26: 2015 Outlook
2015 OUTLOOK Colin Day Chief Executive © 2013 ESSENTRA PLC
Slide 27: How We're Doing
HOW WE’RE DOING What’s gone well … … and what we need to improve Distribution • Components - Continental Europe and much • Components - North America, UK of Asia Pacific and China • Speciality Tapes - US • Speciality Tapes – UK • Abric and Specialty Plastics integration • Leverage eCommerce platform
Slide 28: 2015: Summary
2015: SUMMARY H2 slightly better than H1 • Improvement in North American Components • Better management of commercial success in core H&PC Packaging • Additional 1 month benefit from Clondalkin SPD acquisition • Continued leverage of new business wins and revenue synergy delivery • Maintain rapid pa
Slide 29: Appendices
APPENDICES © 2013 ESSENTRA PLC
Slide 30: Income Statement – Reported Basis
INCOME STATEMENT – REPORTED BASIS HY 15 Growth Actual Constant £m FX FX Adjusted operating profit 81.9 +19% +18% Intangible amortisation (15.2) Exceptional operating items (16.3) Reported operating profit 50.4 -7% -8% Net finance charge (5.3) Profit before tax 45.1 -8% -10% Taxation (9.5) - Underlyi
Slide 31: Exchange Rates
EXCHANGE RATES Six months ending 30 June 2015 Average Closing US $/£ 1.53 1.57 Euro €/£ 1.36 1.41 Impact of a one cent change per annum Op. Profit (£m) US $/£ 0.2 Euro €/£ 0.1 Six months ending 30 June 2014 Average Closing US $/£ 1.67 1.71 Euro €/£ 1.22 1.25 31
Slide 32: Disclaimer
DISCLAIMER IMPORTANT LEGAL NOTICE THIS DOCUMENT IS STRICTLY CONFIDENTIAL TO THE RECIPIENT AND HAS BEEN SUBMITTED TO YOU SOLELY FOR YOUR INFORMATION. THE RECIPIENT MAY NOT REPRODUCE OR REDISTRIBUTE ANY PART OF THIS DOCUMENT TO ANY PERSON IN ANY FORM. THIS DOCUMENT AND THE PRESENTATION TO WHICH IT REL
Slide 33: Investor Presentation: Half Year 2015 Results
INVESTOR PRESENTATION Half Year 2015 Results 31 JULY 2015