Essentra Plc · LSE:ESNT
Essentra — H1 2013 Earnings Presentation
36 slides from Essentra's earnings presentation, Jul 31, 2013
Slide 1: Investor Presentation: Half Year 2013 Results
INVESTOR PRESENTATION Half Year 2013 Results 31 JULY 2013
Slide 2: Agenda
AGENDA 1. Operational Review - Colin Day 2. Financial Review - Matthew Gregory 3. Vision 2015 Update & 2013 Outlook - Colin Day © 2013 ESSENTRA PLC 2
Slide 3: Operational Review
OPERATIONAL REVIEW Colin Day Chief Executive © 2013 ESSENTRA PLC
Slide 4: HY 2013: Summary
HY 2013: SUMMARY • Strong revenue growth across all principal operating divisions • Operational initiatives & synergy savings → operating margin uplift • Continued improvement in tax rate • Half year dividend per share increased by 23% to 4.8p • Successful completion of two value-adding acquisitions
Slide 5: Revenue Growth Across Principal Divisions
REVENUE GROWTH ACROSS PRINCIPAL DIVISIONS Component & Protection Porous Technologies Revenue 3% Revenue 25% Op Margin 210bps Op Margin 70bps Op Profit 13% Op Profit 22% GROUP Revenue 17% Op Margin 40bps Op Profit 19% Packaging & Securing Filter Products Revenue 36% Revenue 18% Op Margin 300bps Op Ma
Slide 6: Revenue Growth – Q1 versus Q2
REVENUE GROWTH – Q1 VERSUS Q2 1 22% 16 Q1 12 % 8 4 0 Q1 Q2 -4 C&PS PT P&SS FP Other Group More even balance of growth across divisions in Q2 1 At constant exchange rates, and adjusted to exclude the impact of the acquisitions of Contego Healthcare Limited, © 2013 ESSENTRA PLC Lymtech Scientific and
Slide 7: Component & Protection Solutions
COMPONENT & PROTECTION SOLUTIONS £m • Improved revenue growth in Q2 vs Q1 120 30% – Components up mid single-digit % – Pipe Protection Technologies flat 100 25% • Further range development and improved marketing effectiveness 80 20% – Additional 2,000 products introduced – First integrated Moss & Ri
Slide 8: Porous Technologies
POROUS TECHNOLOGIES • Growth led by writing instruments £m – Stronger and earlier back-to-school 60 30% season £m – New sales of nibs to global customers 50 25% • Supported by printer systems & H&PC 40 20% – Further growth with a large global OEM – Business wins with multinational customers in air c
Slide 9: Packaging & Securing Solutions
PACKAGING & SECURING SOLUTIONS • Broad-based result across the £m 80 25% division – Packaging led by tobacco, supported by promotional 20% solutions in wrapped food 60 category – Further sales from Blue Badge contract, boosted by ID products 15% & security cards 40 – Growth at all Speciality Tapes l
Slide 10: Filter Products
FILTER PRODUCTS £m 140 16% • Underlying volumes > HY 2012 14% – Strong growth esp. in Asia (63% 120 HY13 volumes) 12% • Successful launches & 100 development initiatives 10% 80 – Distinctive shaped and reduced tow filter variants (eg, Corinthian, 8% BiTech™) 60 – Further increase in joint 6% develop
Slide 11: Key Operational Developments
KEY OPERATIONAL DEVELOPMENTS Component & Protection Solutions Packaging & Securing Solutions New sites opened in Memphis and Investment in new die stations for Greensboro, US complex label production Porous Technologies Filter Products Investment in automated testing Further investment in flexible,
Slide 12: Key Commercial Developments
KEY COMMERCIAL DEVELOPMENTS Component & Protection Solutions Packaging & Securing Solutions New catalogues with range expansion at Security solutions for product authenticity and Moss and Alliance Plastics on-pack tamper evidence Porous Technologies Filter Products Development of unique filtration m
Slide 13: Financial Review
FINANCIAL REVIEW Matthew Gregory Group Finance Director © 2013 ESSENTRA PLC
Slide 14: Income Statement - Summary
INCOME STATEMENT - SUMMARY HY 13 HY 12* Growth £m £m Actual Constant FX FX Revenue 384.6 324.8 +18% +17% Like-for-like1 +9% Gross margin 35.9% 36.9% -100bps -100bps Operating profit2 65.2 53.7 +21% +19% Operating margin 17.0% 16.5% +50bps +40bps Profit before tax2 60.3 48.1 +25% +22% Adjusted earnin
Slide 15: Revenue Growth – Volume / Mix / Price
REVENUE GROWTH – VOLUME / MIX / PRICE % Volume / mix +7 Price +2 Like-for-like +9 Acquisitions +8 Constant FX growth +17 Exchange 1 Reported growth +18 High quality revenue growth, driven by volume © 2013 ESSENTRA PLC 15
Slide 16: Revenue Growth – By Division
REVENUE GROWTH – BY DIVISION HY 13 Growth £m Constant FX Component & Protection Solutions 115.6 +3.2% LFL1 growth +2% Porous Technologies 51.9 +24.5% LFL1 growth +6% Packaging & Securing Solutions 76.5 +36.1% LFL1 growth +8% Filter Products 129.5 +18.3% LFL1 growth +18% Other2 12.2 +0.0% Elimination
Slide 17: Gross Margin
1 GROSS MARGIN Continued operational improvements +70bps 38 36.9% • Higher volume leading 36.4% to operational gearing 35.9% 36 35.5% • Further cost improvement / 34 efficiency initiatives % 32.0% • Productivity gains from 32 ongoing upgrade of machinery 30 BUT … 28 Mix impact from higher HY09 HY10
Slide 18: Operating Profit – Key Movements
OPERATING PROFIT – KEY MOVEMENTS 1 6.7 65.2 3.1 (6.2) 6.7 53.7 1.2 £m Pricing > higher raw material & other input costs 1Adjusted to exclude intangible amortisation and exceptional operating items © 2013 ESSENTRA PLC 18 *HY 2012 restated to reflect the adoption of IAS 19 (Revised 2011)
Slide 19: Operating Profit by Division
1 OPERATING PROFIT BY DIVISION Adjusted1 operating profit HY 13 Growth Margin £m Constant FX Component & Protection Solutions 28.5 +13% 24.7% Porous Technologies 13.0 +22% 25.0% Packaging & Securing Solutions 13.5 +16% 17.6% Filter Products 18.0 +36% 13.9% Other2 0.9 +0% 7.4% Central Services (8.7)
Slide 20: Income Statement – Continued
INCOME STATEMENT – CONTINUED HY 13 Growth £m Actual Constant FX FX Operating profit1 65.2 +21% +19% Net finance charge (4.9) (13)% (11)% Profit before tax1 60.3 +25% +22% Taxation (16.5) Tax rate down - Underlying tax rate 27.4% 200bps Net income1 43.8 +29% +26% Adjusted earnings1 43.3 EPS - adjuste
Slide 21: Exceptional Operating Items
EXCEPTIONAL OPERATING ITEMS HY 13 £m Acquisition fees in respect of Contego & Ulinco Components 2.8 Acquisition integration & restructuring costs 4.1 Other (rebranding) 2.4 Total exceptional operating items 9.3 © 2013 ESSENTRA PLC 21
Slide 22: Cash Flow
1 CASH FLOW 15.1 (24.6) 65.2 (25.8) £m 29.9 (10.7) (4.5) (2.9) 11.8 Continued strong cash generation © 2013 ESSENTRA PLC 22 1 Adjusted to exclude intangible amortisation and exceptional operating items
Slide 23: Working Capital
WORKING CAPITAL Working capital / revenue1 (WCR) HY12 13.7% HY13 LFL 13.9% HY13 15.4% 13.0% 14.0% 15.0% 16.0% WCR ratio impacted by acquisition of Contego 1 Constant exchange rates, based on last 12 month revenue © 2013 ESSENTRA PLC 23
Slide 24: Net Debt Reconciliation
NET DEBT RECONCILIATION £m As at 1 January 2013 164 FX 8 As at 30 June 2013 212 Change in net debt after FX 40 Of which: Free cash flow (12) Acquisitions (net of share placement) 25 Dividends 20 Other 7 40 NOTE: Net debt / EBITDA ratio of 1.5x © 2013 ESSENTRA PLC 24 Negative numbers denote a cash in
Slide 25: Dividend
DIVIDEND +23% 5.0 4.8 4.0 3.9 3.3 3.0 3.0 2.7 Pence 2.0 1.0 0.0 HY09 HY10 HY11 HY12 HY13 Progressive dividend 1 Adjusted to exclude intangible amortisation and exceptional operating items © 2013 ESSENTRA PLC 25
Slide 26: Operational Review
OPERATIONAL REVIEW Colin Day Chief Executive © 2013 ESSENTRA PLC
Slide 27: Acquisition of Contego – Re-cap
ACQUISITION OF CONTEGO – RE-CAP About Contego Healthcare Limited Revenue by geography (2012) • A leading pan-European provider of 5% innovative print, packaging and support 5% services 12% UK • Product range includes folding cartons, Italy leaflets, self-adhesive labels and printed Germany foils use
Slide 28: Acquisition of Contego – Re-cap
ACQUISITION OF CONTEGO – RE-CAP Versus our … Contego delivers scorecard … PLACE: • Adds significant scale in western Europe to C&SP footprint • Opportunity to grow into new territories PRODUCT & • Complementary packaging solutions capabilities MARKETS: • Step changes presence in attractive growth en
Slide 29: Vision 2015 – How Are We Doing So Far?
VISION 2015 – HOW ARE WE DOING SO FAR? Progressive dividend - HY 2013: +23% ≥100% profit conversion to cash - HY 2013: 46% Volume leverage to drive GM expansion - HY 2013: -100bps c. 50% conversion to OM - HY 2013: +40bps1 LFL revenue growth: ≥ mid single-digit CAGR - HY 2013: +9% Delivering balance
Slide 30: 2013 Outlook
2013 OUTLOOK • Well positioned for continued balanced growth • Focus on successful integration of recent acquisitions • Continued strong cash flow − FY 2013 capex of c. £50m − Continued progress on net working capital • FY 2013 tax rate c. 200 bps < 2012 Further progress towards Vision 2015 objectiv
Slide 31: Appendices
APPENDICES © 2013 ESSENTRA PLC
Slide 32: Income Statement – Reported Basis
INCOME STATEMENT – REPORTED BASIS HY 13 Growth Actual Constant £m FX FX Adjusted operating profit 65.2 +21% +19% Intangible amortisation (5.6) Exceptional operating items (9.3) Reported operating profit 50.3 +11% +8% Net finance charge (4.9) Profit before tax 45.4 +14% +11% Taxation (13.8) - Underly
Slide 33: Exchange Rates
EXCHANGE RATES Six months ending 30 June 2013 Average Closing US $/£ 1.55 1.52 Euro €/£ 1.18 1.17 Impact of a one cent change per annum Op. Profit (£m) US $/£ 0.4 Euro €/£ 0.2 Six months ending 30 June 2012 Average Closing US $/£ 1.58 1.57 Euro €/£ 1.22 1.24 © 2013 ESSENTRA PLC 33
Slide 34: Revenue by Destination – HY 2013
REVENUE BY DESTINATION – HY 2013 27% 32% Europe UK North America Rest of World 11% 30% © 2013 ESSENTRA PLC 34
Slide 35: 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 36: Investor Presentation: Half Year 2013 Results
INVESTOR PRESENTATION Half Year 2013 Results 31 JULY 2013