Synthomer Plc · LSE:SYNT
Synthomer — FY2017 Earnings Presentation
22 slides from Synthomer's earnings presentation, Mar 1, 2018
Slide 1: Preliminary Results
Preliminary Results 1 March 2018 FY17 PRELIMINARY RESULTS 1 March 2018
Slide 2: Cautionary Statement
Cautionary Statement This review is intended to focus on matters which are relevant to the interests of shareholders in the Company. The purpose of the review is to assist shareholders in assessing the strategies adopted and performance delivered by the Company and the potential for those strategies
Slide 3: Agenda
Agenda Headlines Financial Performance Building sustainable growth Summary and Outlook Q&A FY17 PRELIMINARY RESULTS 1 March 2018 3
Slide 4: Solid and Sustainable profits growth
Solid and Sustainable profits growth Solid profit growth with Underlying profit before tax up 6.4% to £130.0m; up 3.0% in constant currency – Good progress in Europe & North America with increased volumes and margins – Asia & Rest of World Nitrile latex margins stable and broadly in line with Q4 2
Slide 5: Financial performance
Financial performance FY17 PRELIMINARY RESULTS 1 March 2018 5
Slide 6: Solid and sustainable profits growth: Underlying PBT up 6.4%
Solid and sustainable profits growth Underlying PBT up 6.4% Higher revenue: % – Volumes higher: principally due to PAC (Dispersions) and FY 2017 FY 2016 % Change Constant FX Speciality Additives acquisitions Volumes (Ktes) 1,443.8 1,324.9 9.0 – Significant volatility and rising raw material prices
Slide 7: ENA proportionately larger on acquisitions and organic growth
ENA proportionately larger on acquisitions and organic growth % Constant FY 2017 FY 2016 % Change FX ENA Volumes (Ktes) 1,067.7 936.7 14.0 Revenue (£m) 1,134.9 746.1 52.1 47.6 EBITDA 140.9 111.2 26.7 22.5 EBIT (£m) 117.1 93.3 25.5 21.1 ARW Volumes (Ktes) 376.1 388.2 (3.1) Revenue (£m) 345.3 299.6 15
Slide 8: ENA: Growth driven by acquisitions, unit margins and FX
ENA: Growth driven by acquisitions, unit margins and FX Volumes: – Significant volume growth – largely due to 6 months of PAC (Dispersions) – Overall market volumes up with exception of Paper Unit margins: – Up across all markets with the exception of Dispersions, latter impacted by rising raw m
Slide 9: ARW: Nitrile latex margins in line with expectations
ARW: Nitrile latex margins in line with expectations Significant market growth continues NBR: – Volumes: flat – operating at capacity – Market growing at 8-10% pa (2017: 17%) – New 90ktes capacity well timed to capture market growth and share – Unit margins remained resilient and broadly in line w
Slide 10: Consistently strong operating cash flows, record investment in growth capex
Consistently strong operating cash flows Record investment in growth capex Record capex: £m 2017 2016 – Capex at £60.3m (2016: £45.6m) Underlying EBIT 139.0 130.2 – Sustenance £25m JVs (1.0) (2.0) – Growth £35m Underlying EBIT (before joint ventures) 138.0 128.2 Depreciation 37.2 29.9 Working ca
Slide 11: Flexibility to continue to invest in organic and inorganic growth
Flexibility to continue to invest in organic and inorganic growth Substantial available liquidity: £m 2017 2016 – £370m committed Revolving Credit Facility due July 2019 Cash and cash equivalents 89.6 117.4 – €55m committed bilateral Loan Facility due November Current Borrowings (73.1) (65.4) 2018
Slide 12: Technical Guidance
Technical Guidance Sensitivity to €, $ and MYR: – €0.01 movement = £0.8m, $0.01 movement = £0.3m, MYR0.01 movement = £0.1m Underlying effective tax rate: – Full year rate 19.0% (2016: 20%) – impact of prior year adjustments – Transfer pricing project to ensure compliance with Base Erosion and Pr
Slide 13: Building sustainable growth
Building sustainable growth FY17 PRELIMINARY RESULTS 1 March 2018 13
Slide 14: A year of strong strategic progress underpinning sustainable growth
A year of strong strategic progress underpinning sustainable growth Market leadership Delivering on integration Investment in growth No.1 player in European $2m added to $12m £60m capex aqueous polymers synergy target to enhance growth Innovation focus M&A Launch of Transformational and SyNovus® Bol
Slide 15: Market leadership
Market leadership No.1 player in European aqueous polymers Acquisition of Pischelsdorf makes us No.1 player in European aqueous polymers Increased capacity following investment at Worms (Germany) Optimised network - PAC (Dispersions) provides strategically located manufacturing network Well po
Slide 16: Delivering on integration
Delivering on integration PAC (Dispersions) On target to deliver run rate synergies of $12m by the end of 2018 and incremental $2m by end of 2019 Integration process well advanced: – Commercial and Technical Service teams – Sale of Leuna (Germany) – Rightsizing of Ribecourt site (France) – New m
Slide 17: Investment in growth
Investment in growth £45m Pasir Gudang commissioning underway: – Production expected to come on stream Q3 2018 £17m investment in Worms (Germany): – Made-to-order speciality acrylic lines – Commissioning targeting early 2019 £12m investment in Roebuck (USA): – New acrylic reactor line adding 9
Slide 18: Innovation focus
Innovation focus Sales of New Products 20% SyNovus®, new proprietary patented Nitrile latex, Chemical Industry Average 15% launched in September 2017: – Time from inception to commercialisation reduced 10% to just 18 months 5% – Higher throughput 0% – Lower costs 2012 2013 2014 2015 2016 2017 Sa
Slide 19: Mergers and acquisitions
Mergers and acquisitions Acquisitions remain a key component of growth strategy: – Bolt-on acquisitions with same chemistries/markets – Average of 1-2 per year – Transformational acquisitions – Adjacent chemistries – Speciality chemicals offering strong growth – Strong market positions, well inves
Slide 20: Summary and outlook
Summary and outlook Key Messages Outlook A year of solid progress Confident of solid progress in both segments in 2018 recognizing ongoing challenges in: GDP growth in ENA with increased volumes and margins – Nitrile latex – construction and coatings Dispersions ARW resilient with Nitrile la
Slide 21: Appendix
Appendix FY17 PRELIMINARY RESULTS 1 March 2018 21
Slide 22: Currency Sensitivities
Currency Sensitivities Average FX currency rates 2017 and 2016 2017 2016 € 1.14 1.22 $ 1.30 1.35 MYR 5.56 5.56 Constant currency 2017 rates basis for Constant Currency consensus Currency sensitivity Underlying profit impact: – €0.01 change = +/- £0.8m – $0.01 change = +/- £0.3m – MYR0.01 chang