Slide 1: Elementis plc Interim Results
Elementis plc Interim Results Six months ended 30 June 2014
Slide 2: Interim Results
Interim Results $ millions H1 2014 H1 2013 change Revenue 400.0 388.2 +3% Operating profit 76.8 72.8 +5% Operating margin 19% 19% Profit before tax 72.4 67.5 +7% Diluted EPS 12.7c 11.3c +12% Net cash/(debt) 5.0 (8.5) Interim dividend 2.70c 2.57c +5% Basic EPS 12.8c 11.5c +11% 2
Slide 3: Highlights
Highlights Specialty Products – sales up 4% • North America coatings up 5% • Asia Pacific coatings up 6% • Personal Care up 21% • Operating margin stable at 20% Chromium • Optimising product mix to produce stable earnings and cash flow Net balance sheet cash position Interim dividend increased by 5%
Slide 4: Chromium
Chromium $ millions H1 2014 H1 2013 Sales 103.2 103.4 Operating profit 27.7 25.3 Operating margin 27% 24% Resilient financial performance • Margins improved by enhanced product mix • Q1 volumes impacted by US weather 4
Slide 5: Chromium – Flexing the Model
Chromium – Flexing the Model Sales Volumes Markets 3 YR Qtrly Average Leather 5% Other 18% Timber Treatment 18% Refractory 11% 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Catalysts 5% Metal Finishing • First half volumes consistent with previous year Pigments/ 26%
Slide 6: Surfactants
Surfactants $ millions H1 2014 H1 2013 Sales 34.2 33.8 Operating profit 3.2 2.9 Operating margin 9% 9% Surfactants volumes reduced and Sales volume Margin margins improved as product mix 25 10% is optimised 20 9% 8% Successfully transitioning Delden facility 15 7% to higher value coatings additives
Slide 7: Specialty Products
Specialty Products $ millions H1 2014 H1 2013 Sales 268.5 257.7 Operating profit 52.6 51.6 Operating margin 20% 20% Broad based growth platform reduced the impact of Q1 US weather issues Sales up 4% • Personal Care up 21% • Asia Pacific coatings up 6% • North America coatings up 5% 7
Slide 8: Specialty Products – Investment Update
Specialty Products – Investment Update NA Acrylic thickener facility • Phase 1 (CVS/NiSats) completed and customer sales progressing well • Phase 2 (acrylics and dispersants) to be completed by end of this year • Completed facility will support ~ $30m of high value, IP protected additives sales Wate
Slide 9: Oilfield Drilling – Positive Dynamics
Oilfield Drilling – Positive Dynamics New oilfield headquarters and additional resources located in Houston, Texas Slow start to the year but underlying trends still very positive: • US energy cost advantage will continue to drive demand • Canadian energy sector has received $40bn of investments fro
Slide 10: Specialty Products – Personal Care Growth Drivers
Specialty Products – Personal Care Growth Drivers Geographic expansion • Additional resources in Asia Pacific and Latin America driving sales Brazil +58% | Argentina +151% | China +36% | India +107% | South Korea +21% Customer alignment – uniquely positioned • Multi-nationals • Strong existing relat
Slide 11: Specialty Products – Innovation Driven Growth
Specialty Products – Innovation Driven Growth Bentone Gel® OLV-V • Natural oil based hectorite gel for babycare products Hair care products • Uni-Embase range - vegetable based wax successfully introduced into the Brazilian market • Meadowquat® conditioning product for India Rheoluxe® range • Polyme
Slide 12: Interim Results
Interim Results $ millions H1 2014 H1 2013 change Revenue 400.0 388.2 +3% Operating profit 76.8 72.8 +5% Operating margin 19% 19% Profit before tax 72.4 67.5 +7% Diluted EPS 12.7c 11.3c +12% Net cash/(debt) 5.0 (8.5) Interim dividend 2.70c 2.57c +5% Basic EPS 12.8c 11.5c +11% 12
Slide 13: Tax Charge
Tax Charge $ millions H1 2014 H1 2013 Tax charge 13.5 15.3 Tax rate 18.7% 22.7% Cash tax rate 10% 12% Tax rate lower due to one-time items in 2013 and geographic mix Estimated tax rate for full year 2014 is approximately 19% Cash tax rate remaining low but likely to increase going forward 13
Slide 14: Capital Spending
Capital Spending $ millions H1 2014 H1 2013 New plants 5.5 5.8 Maintenance & productivity 4.6 2.9 Total Specialty Products 10.1 8.7 Maintenance & productivity 6.1 4.7 Total Chromium 6.1 4.7 Other 1.5 3.3 Group total 17.7 16.7 Depreciation 12.5 11.5 New plant spending in Specialty Products – mostly N
Slide 15: Operating Cash Flow
Operating Cash Flow $ millions H1 2014 H1 2013 EBITDA 89.3 84.3 Working capital (25.9) (20.2) Capital expenditure (17.7) (16.7) Other (0.7) (0.7) Operating cash flow 45.0 46.7 Working capital outflows are consistent with seasonal trading patterns and higher sales 15
Slide 16: Retirement Plans
Retirement Plans $ millions H1 2014 H1 2013 FY 14 Est. Future contributions Net deficit 78.0 93.5 Deficit contributions 48 UK plan - one time 15.3 - 15.3 - annual 12.7 9.2 26.4 30 23 US/other 2.6 1.8 6.7 30.6 11.0 48.4 2014 2015 2016 IAS 19 deficits continue to come down 2014 contributions include a
Slide 17: Cash Flow
Cash Flow $ millions H1 2014 H1 2013 Operating cash flow 45.0 46.7 Pensions (30.6) (11.0) Interest, tax, other (6.8) (7.5) Dividend - Final (25.3) (24.3) - Special (27.1) (22.0) Acquisitions (4.1) (32.8) Currency (0.2) (1.6) Net cash flow (49.1) (52.5) Net balance sheet cash/(debt) 5.0 (8.5) Net cas
Slide 18: Dividend
Dividend 2014 Interim 2013 Interim Per share 2.70c 2.57c Interim dividend increased by 5% Dividend policy remains unchanged • Full year ordinary dividend of approximately one third of 2014 EPS • Special dividend payment based on 50% of net cash position at end of 2014 18
Slide 19: Summary
Summary Chromium Sustainable, predictable earnings and cash flow Specialty Products Significant growth opportunities, attractive margins Cash Generative Business Model Anticipate year end net cash position 19
Slide 20: Thank you
ELEMENTIS A global specialty chemicals company Thank you to