Slide 1: 2021 interim results
2021 interim results Enhanced Performance Through Applied Innovation Enhanced Performance Through Applied Innovation
Slide 2: Cautionary statement
Cautionary statement This presentation, the presentation materials and discussion may contain certain forecasts, projections and forward looking statements – that is, statements related to future, not past events – in relation to, or in respect of the financial condition, operations or businesses of
Slide 3: Results agenda
Results agenda INTRODUCTION Paul Waterman HIGHLIGHTS & SEGMENT PERFORMANCE Paul Waterman GROUP FINANCIALS Ralph Hewins OUTLOOK & PRIORITIES Paul Waterman QUESTIONS Paul Waterman & Ralph Hewins Enhanced Performance Through Applied Innovation 3
Slide 4: Highlights
HIGHLIGHTS PAUL WATERMAN, CEO Paul Waterman Ralph Hewins Enhanced Performance Through Applied Innovation Enhanced Performance Through Applied Innovation
Slide 5: Key messages
Key messages 1 2 3 4 5 Continued COVID-19 impact Managing material Encouraging On track for full industrial demand lingers, expect supply chain & strategic year leverage recovery multi-year cost inflation progress reduction recovery challenges Paul Waterman Ralph Hewins Enhanced Performance Through
Slide 6: Safety first
Safety first SAFETY PERFORMANCE HIGHLIGHTS Injuries Recordable Injuries TRIR* TRIR Performance 18 2 ▪ Five recordable injuries 16 14 ▪ India plant 800,000 hours injury free 12 10 1 8 6 Safety Initiatives 4 2 ▪ First safety week campaign 0 0 2016 2017 2018 2019 2020 H1 21 ▪ Site leader HSE certificat
Slide 7: Strong performance improvement
Strong performance improvement H1 2021 FINANCIAL OVERVIEW $m H1 20 H1 21 % Change Sales 387 452 + 17% Operating profit* 42 54 + 29% Operating margin* 10.9% 12.0% + 110bps Profit before tax* 28 40 + 41% Diluted EPS* 3.5c 5.5c + 57% Net debt 453 415 -8% * After adjusting items Paul Waterman Ralph Hewi
Slide 8: Proactive supply chain actions
Proactive supply chain actions CONTINUED OPERATIONAL RESILIENCE DEMAND RAW MATERIALS LOGISTICS CHALLENGE Fast recovery Shortages & cost Congestion & increased increases freight rates Increased production Alternative suppliers Air freight qualified ACTIONS Prioritised SKUs Pre-booked shipping Additio
Slide 9: Strategy implementation on track
Strategy implementation on track H1 ACHIEVEMENTS INNOVATION GROWTH EFFICIENCY Charleston/St Louis 12 new product launches $25m of new business closed consolidation complete New products up from 11% to 15% Coatings revenue growth* India plant Q3 start up on track 13% of sales Open innovation – AQDOT
Slide 10: Segment performance
SEGMENT PERFORMANCE Enhanced Performance Through Applied Innovation
Slide 11: Personal Care performance
Personal Care performance MARGINS RESILIENT DESPITE WEAK MARKET CONDITIONS H1 21 vs H1 20 % Change Weak end market conditions $m H1 20 H1 21 Constant Currency1 Sales 90 89 -5% Cosmetics & AP Actives volumes down Operating profit* 20 19 -8% Operating margin* 22.4% 21.6% Margins resilient – cost savin
Slide 12: Personal Care performance: demand recovery begins
Personal Care performance DEMAND RECOVERY BEGINS MARKET DEMAND REMAINS BELOW 2019 LEVELS… …BUT EARLY SIGNS OF RECOVERY European Retail Sales Growth (y-o-y) 110 -14% 100 European Cosmetics Retail Sales H1 21 vs H1 19 90 80 -9% 70 60 European Deodorants Retail Sales Deodorants Cosmetics H1 21 vs H1 19
Slide 13: Personal Care performance: strategic progress
Personal Care performance STRATEGIC PROGRESS SKIN CARE AP ACTIVES ASIA 13% revenue growth Q3 India start up on track 15% revenue growth 2 new product launches Creates resilient & lowest cost New Shanghai lab opened in global supply chain January $11m NBO pipeline 6 new AP product launches Additional
Slide 14: Coatings performance
Coatings performance DEMAND RECOVERY & MARGIN IMPROVEMENT H1 21 vs H1 20 % Change Strong demand recovery $m H1 20** H1 21 Constant currency1 Sales 162 197 + 15% $10m of new business Operating profit* 21 33 + 48% Operating margin* 12.7% 16.7% Accelerating raw material inflation After adjusting items
Slide 15: Coatings performance: strong performance across sectors
Coatings performance STRONG PERFORMANCE ACROSS SECTORS, GEOGRAPHIES AND KEY ACCOUNTS GLOBAL SYNERGY EXPANSION SECTOR GROWTH* DELIVERY REGIONAL GROWTH* +6% +15% +18% +13% +29% GLOBAL KEY ACCOUNTS* INDUSTRIAL DECO +18% * Constant currency sales growth Note: Analysis excludes Energy related sales (whic
Slide 16: Coatings performance: strategic progress
Coatings performance STRATEGIC PROGRESS ACCELERATED INNOVATION 3 new products launched in H1; over 10 for 2021 Water based industrial & Thixatrol ® expansion PREMIUM WATERBORNE DECO INDUSTRIAL NEW BUSINESS OPPORTUNITIES ADDITIVES Growth platforms revenue +34% y-o-y $10m delivered in H1; $15m plus fo
Slide 17: Talc performance
Talc performance DEMAND RECOVERY & GEOGRAPHIC EXPANSION DRIVE VOLUME GROWTH H1 21 vs H1 20 % Change Significant auto related demand $m H1 20 H1 21 Constant Currency1 recovery Sales 61 77 +14% New business wins & geographic Operating profit* 6 8 +18% expansion Operating margin* 10.2% 10.3% H2 margin
Slide 18: Talc performance: industrial talc growth
Talc performance DEMAND RECOVERY & NBO SUCCESS DRIVES INDUSTRIAL TALC GROWTH Industrial Talc (over 85% of segment revenue): +22% y-o-y* Plastics Plastics Coatings Other Diversified Auto demand strength & $3m of NBOs and Americas Strong technical ceramics - COMMENTARY $2m of NBOs share gains Asia sha
Slide 19: Talc performance: strategic progress
Talc performance STRATEGIC PROGRESS GLOBAL GROWTH SYNERGY EXPANSION PLATFORMS DELIVERY $6m of new business Plastics – geographic expansion On track for $20-25m by 2023 19% Asia growth Coatings – GKAM growth Pre-dispersed talc 60% Americas growth Technical ceramics – market share Bacteria free talc g
Slide 20: Chromium performance
Chromium performance ROBUST VOLUME RECOVERY H1 21 vs H1 20 % Change Improved industrial demand $m H1 20 H1 21 Constant currency1 Sales 78 90 +16% Strong automotive and construction Operating profit* 3 5 +48% growth Operating margin* 4.0% 5.1% Margins impacted by lower y-o-y pricing * After adjusting
Slide 21: Chromium performance: improving utilisation
Chromium performance IMPROVING UTILISATION POINTS TO FUTURE PRICE RECOVERY NA MARGINS CONSISTENT VOLUME RECOVERY CONTINUES GLOBAL UTILISATION IMPROVING Elementis Contribution Margin % Indexed Elementis Chromium Volumes (Y-o-Y)* Chromium Industry Capacity Utilisation 120 120 90% North America 100 100
Slide 22: Group financials
GROUP FINANCIALS RALPH HEWINS, CFO Paul Waterman Ralph Hewins Enhanced Performance Through Applied Innovation Enhanced Performance Through Applied Innovation
Slide 23: Group revenue
Group revenue VOLUMES DRIVE 12% UNDERLYING REVENUE GROWTH REVENUE $m +11% +1% - 452 +5% 404 387 H1 20 FX VOLUME PRICE MIX H1 21 Paul Waterman Ralph Hewins Enhanced Performance Through Applied Innovation 23
Slide 24: Group operating profit
Group operating profit STRONG REVENUE GROWTH OFFSETS COST INCREASES ADJUSTED OPERATING PROFIT $m + 50% -29% 54 42 +7% 45 Cost & raw material inflation H1 20 FX UNDERLYING REVENUE COSTS H1 21 INCREASE Paul Waterman Ralph Hewins Enhanced Performance Through Applied Innovation 24
Slide 25: Cost inflation
Cost inflation CONFIDENT OF OFFSETTING ACCELERATING INFLATION BREAKDOWN OF SPEND & PRICE TREND ACTIONS TAKEN Packaging Plant & Over 10 alternative suppliers qualified vegetable oils for disrupted supply chains Freight & logistics Quaternary amines Doubled spend under strategic global Mid to high sin
Slide 26: Cost savings
Cost savings $10M OF COST SAVINGS UNDERPINNED IN 2021 CHARLESTON & ST LOUIS PROCUREMENT CONTINUOUS IMPROVEMENT Closed Charleston November 20 Increased strategic purchasing Global process excellence St Louis capacity consolidation Revised make vs buy strategy Over 50 projects in progress ~$10m capex;
Slide 27: Growth capex focus
Growth capex focus SPEND FOCUSED ON GROWTH & PRODUCTIVITY INVESTMENTS $45-50M SPEND IN 2021, FOCUSED ON GROWTH TWO PLANT PROJECTS DRIVE 2021 SPEND Charleston/St Louis consolidation c. $10m capex, savings driver Mumbai, India AP Actives plant c. $10m capex, savings driver & growth enabler Paul Waterm
Slide 28: Cash flow
Cash flow EARNINGS GROWTH OFFSETS $20M EU TAX CASH OUT $m H1 20 H1 21 EBITDA 67 80 Change in working capital (24) (27) Capital expenditure (16) (24) Operating Cash Flow 28 30 Tax - $20m EU state aid Pension deficit payments - 1 Interest (12) (12) payment Tax & Other (7) (27) Free Cash Flow 10 (9) Di
Slide 29: Financial leverage
Financial leverage IMPROVED CASHFLOW & EARNINGS TO DRIVE H2 LEVERAGE REDUCTION STRONG OPERATING CASH FLOW TRACK RECORD H2 LEVERAGE RATIO REDUCTION DRIVERS USD, m 200 160% Improved LTM* EBITDA Op Cash Flow Cash Conversion 140% 150 120% 100% Working capital improvement 100 80% 60% 50 40% 20% 0 0% 2016
Slide 30: Disciplined capital allocation
Disciplined capital allocation CAPITAL • ~5% of sales INVEST FOR INVESTMENTS • Typical returns 20%+ IRR GROWTH on growth & productivity capex STRONG DEBT • Medium term ambition below 1.5x CASH FLOW REDUCTION SHAREHOLDER • Reinstate once significant progress RETURNS made on reducing financial leverag
Slide 31: Outlook & priorities
OUTLOOK & PRIORITIES PAUL WATERMAN, CEO Paul Waterman Ralph Hewins Enhanced Performance Through Applied Innovation Enhanced Performance Through Applied Innovation
Slide 32: 2021 Outlook & Priorities
2021 Outlook & Priorities ON TRACK FOR IMPROVED FULL YEAR FINANCIAL PERFORMANCE & DELEVERAGING OUTLOOK INNOVATION GROWTH EFFICIENCY Maintain focus on strategy 20 + new Secure $35m + Deliver $10m 1 implementation & continued self product launches of NBOS of savings help actions Complete Charleston Le
Slide 33: Value creation pathway
Value creation pathway PATH TO MEDIUM TERM OPERATING MARGIN % INNOVATION & GROWTH A Increasing proportion of revenue from new products with performance & sustainability benefits 17.0% Revenue growth opportunities of over $100m 16.1% C B Skin Care Premium decorative Global expansion 14.1% Asia Cosmet
Slide 34: Q&A
Q&A Paul Waterman Ralph Hewins Enhanced Performance Through Applied Innovation Enhanced Performance Through Applied Innovation
Slide 35: Appendix
Appendix Enhanced Performance Through Applied Innovation Enhanced Performance Through Applied Innovation
Slide 36: Medium term Group performance objectives
Medium term Group performance objectives MARGIN IMPROVEMENT ADJUSTED OPERATING PROFIT MARGIN 12.0%* 17% CASH CONVERSION OPERATING CASH CONVERSION*** 110%** 90% plus DE-LEVERAGING NET DEBT / EBITDA 3.0x Under 1.5 x * Last six months to 30 June 2021 ** Last three year average *** Calculated as (adjust
Slide 37: Accelerating sustainability implementation
Accelerating sustainability implementation 2030 TARGETS GHG EMISSIONS ENERGY WATER WASTE 25% Reduction in GHG emissions 20% Increase in energy efficiency 10% Reduction in water usage 10% Reduction of waste Ultimate goal = carbon neutrality Note: Targets are volume based metrics (e.g. joules/tonne of
Slide 38: Tax charge
Tax charge $m H1 20 H1 21 FY 21 tax guidance 22-23% Underlying tax charge 8.0 7.5 Medium term P&L effective tax rate Tax charge: adjusting items (10.5) (0.6) guidance remains 22-23% until 2023, and 25-26% thereafter due to anticipated increase in UK corporation tax rates from April 2023 Reported tax
Slide 39: Adjusting items
Adjusting items $m Expense/(Income) H1 20 H1 21 Amortisation of intangibles arising on acquisition 10 8 Environmental provisions 4 (2) $8m amortisation of acquired intangibles Business transformation & restructuring 2 3 Impairment of goodwill 60 - M&A and disposal costs 1 - $2m environmental provisi
Slide 40: FY21 Technical Guidance
FY 21 Technical Guidance P&L CASH ▪ Depreciation – c.$50m ▪ Net interest c.$25m (of which c.$5m is IFRS 16 related) ▪ Capex $45 - 50m ▪ Amortisation – c.$15m (of which majority is amortisation of acquired intangibles) ▪ One off $20m tax payment in respect EU state aid ▪ Tax – Effective rate 22-23% E