Slide 1: Elementis plc Preliminary Results
Elementis plc Preliminary Results Year ended 31 December 2011
Slide 2: Preliminary Results
Preliminary Results $ millions 2011 2010 % change Revenue 760.5 697.4 +9% Before exceptional items: Operating profit 137.1 102.3 +34% Operating margin 18.0% 14.7% Profit before tax 134.5 96.0 +40% EPS 20.8c 15.2c +37% Operating cash flow 126.3 112.9 +12% As reported: Full year dividend 7.0c 4.9c +42
Slide 3: Highlights
Highlights Significant improvement in all key 150 20% performance indicators 100 15% (revenue, profit, margins, EPS, cash flow) 10% 50 • Elementis Specialty Products 5% • Record year of financial performance 0 0% 2006 2007 2008 2009 2010 2011 • Capacity investment in North America and Europe op prof
Slide 4: Strategic Shift in Products and Markets
Strategic Shift in Products and Markets 2008 2011 Decorative Decorative Coatings Coatings 11% Industrial 14% Industrial Coatings Surfactants Coatings 24% Surfactants 13% 31% 12% Personal Care 4% Personal Care 5% Oil Field Chrome Oil Field Chrome 6% 42% 10% 28% Based on sales revenue More diversified
Slide 5: Transforming the Business
Transforming the Business Chromium stable earnings and cashflow • European restructuring • Flexible energy platform Specialty Products growth and resilience • Stronger team • Deuchem acquisition – strong position in Asia Pacific • Innovation model – improved product pipeline • Oil Field – rapid grow
Slide 6: Chromium
Chromium $ millions 2011 2010 % Change Sales 231.0 209.7 +10% Operating profit 56.1 35.8 +57% Operating margin 24% 17% ROCE* 67% 45% Strong financial performance Business running at high capacity utilisation Energy project delivered $5m in savings * Before tax and excluding goodwill 6
Slide 7: Strategic Diversity in Products and Markets
Strategic Diversity in Products and Markets 2011 Major Markets Major Uses Market Drivers Pigments • Roof tiles, asphalt shingles, • Construction floor tiles • OEM and military coatings Industrial Refractory • Redbrick flat glass and • Construction Coatings fiberglass kilns 31% Chrome metal • Super a
Slide 8: Flexing the Model
Flexing the Model Sales Mix Q1‐3 Q4 Markets Chrome Oxide 23% 17% colourants, coatings, alloys Chromite Ore Sodium Chromic Acid 37% 45% wood preservation, plating + Dichromate Soda Ash (DCS) Chrome Sulphate 8% 6% leather tanning Dichromate 32% 32% merchant market, catalyst Flexible energy Plant opera
Slide 9: Surfactants
Surfactants $ millions 2011 2010 Sales 94.3 88.1 Operating profit* 5.4 6.1 Volumes reduced by 16% in line with strategy Facility preferentially Profitability sustained through pricing discipline supporting Specialty Products business 2010 benefited from a one‐time legal settlement of $2.7m * Before
Slide 10: Specialty Products
Specialty Products $ millions 2011 2010 % Change Sales 449.9 410.8 +10% Operating profit* 89.7 71.8 +25% Operating margin* 20% 17% ROCE** 43% 36% Record earnings High quality customer offering Investing in capacity to support growth Continuing to benefit from geographic and market diversity * Before
Slide 11: Strategic Diversity in Products and Markets
Strategic Diversity in Products and Markets 2011 Automotive Refinish High value additives for a broad range of Marine Decorative high value markets Coatings Industrial 23% Maintenance Special Purpose Industrial Coatings 52% General Metal Oil Field 16% Coil Metal Can Other Transport Appliances Person
Slide 12: Strategic Diversity in Products and Markets
Strategic Diversity in Products and Markets 2011 Balanced range High Pressure / High Temperature of oil field drilling Drilling Decorative applications Deep Water Coatings 23% Industrial Conventional Coatings Drilling 52% Oil Field 16% Shale – Personal Fracturing and Care Drilling 9% Based on sales
Slide 13: Eagle Ford Shale / South Texas
Eagle Ford Shale / South Texas Market dynamics drive allocation of drilling rigs to different fuel sources – all using Elementis products Oil Wet Gas Dry Gas Source: US Energy Information Administration, Eagle Ford Shale Play, Western Gulf Basin South Texas, Updated 6/1/2011 13
Slide 14: Innovation and Investment
Innovation and Investment Traction and momentum from innovation and new product development model 12% $15 million initial investment to support growth of aqueous based Rheology for decorative coatings Geographic expansion will continue to be a priority New technology centre will be commissioned in A
Slide 15: Preliminary Results
Preliminary Results $ millions 2011 2010 % change Revenue 760.5 697.4 +9% Before exceptional items: Operating profit 137.1 102.3 +34% Operating margin 18.0% 14.7% Profit before tax 134.5 96.0 +40% EPS 20.8c 15.2c +37% Operating cash flow 126.3 112.9 +12% As reported: Full year dividend 7.0c 4.9c +42
Slide 16: Capital Spending – Investing in Growth
Capital Spending – Investing in Growth $ millions 2011 2010 Plant expansions 5.7 1.6 Maintenance & productivity 5.0 5.7 Total Specialty Products 10.7 7.3 Energy project 2.0 1.7 Maintenance & productivity 5.8 4.3 Total Chromium 7.8 6.0 Other 2.3 0.7 Group total 20.8 14.0 Depreciation 19.9 21.4 16
Slide 17: Working Capital
Working Capital Sustainable improvements Sales WC AWC:Sales ratio in working capital $m 800 24% 760.5 Average working capital to sales 700 22% 697.4 ratio reduced to 17.2% 600 (2010: 18.0%) 20% 500 563.7 18% Some increase likely in 2012 400 due to strategic inventory levels 16% 300 14% 200 100 12% 1
Slide 18: Retirement Plans
Retirement Plans $ millions 2011 2010 Net deficit on all schemes 94.8 67.4 Contributions UK 15.6 10.2 US 5.7 7.7 Other 0.7 0.5 Total 22.0 18.4 Increase in net deficit is mainly a result of falling bond yields UK Plan • Under current funding plan, deficit contributions can only increase further if re
Slide 19: Cash Flow
Cash Flow $ millions 2011 2010 EBITDA 157.0 123.7 Working capital (9.3) 1.9 Capital expenditure (20.8) (14.0) Pensions (22.0) (18.4) Dividend (21.9) (20.0) Interest, tax, other (10.2) (7.4) Currency translation 0.9 1.9 Exceptional items 31.8 (40.7) Change in net debt 105.5 27.0 Net cash/(debt) 26.2
Slide 20: Tax Charge
Tax Charge $ millions 2011 2010 Net tax charge (39.7) (27.7) Tax rate 30% 29% Exceptional tax credit 1.8 5.8 Reported tax charge (37.9) (21.9) Rate is sensitive to geographic mix of profits Exceptional tax credit $1.8m in 2011 linked to change in pension deficit Cash tax rate still low at 6%, but wi
Slide 21: Dividend
Dividend 2011 2010 2009 Per share 7.0c 4.9c 4.5c Full year dividend increased by 42%, consistent with strong earnings and cash flow Covered 3 times, excluding exceptional items Capital structure under review 21
Slide 22: Summary
Summary Reporting record results • Revenue up 9% | EPS up 37% | Dividend up 42% • Businesses are benefiting from greater diversity in end markets and geography • Financial flexibility due to strong balance sheet with net cash position • Investor day on 15 May 2012 Outlook • Solid start to 2012 tradi
Slide 23: Thank you
ELEMENTIS A global specialty chemicals company Thank you