Vesuvius Plc · LSE:VSVS
Vesuvius — H1 2021 Earnings Presentation
31 slides from Vesuvius's earnings presentation, Jul 29, 2021
Slide 1: Half year 2021 Results
Half year 2021 Results 29 July 2021 LEADING THE WORLD OF MOLTEN METAL FLOW ENGINEERING
Slide 2: Disclaimer
Disclaimer This presentation (which includes this document, the oral presentation of this document, any question-and-answer session that follows that oral presentation and any other materials distributed at, or in connection with, such presentation), which has been prepared by Vesuvius plc (the “Com
Slide 3: Contents
Contents • Performance update • Financial review • Outlook • Appendix
Slide 4: Performance update
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Slide 5: Summary financials
Summary financials Revenue Trading profit Return on sales £808.1m £73.3m 9.1% +12% +43% +200 bps Reported change Reported change Reported change +18% +54% +220 bps Underlying change Underlying change Underlying change Headline EPS Net debt / EBITDA Cash conversion 17.9p 1.1x 52% +54% Dec 2020: 1.2x
Slide 6: Successful implementation of our growth strategy
Successful implementation of our growth strategy ▪ Strong commercial performance in Flow Control and Foundry, outperforming underlying markets • Priority given to profitability over volumes in Advanced Refractories ▪ Strategic capacity expansion in Flow Control to support growth and market share gai
Slide 7: Further progress on our ESG agenda in H1 2021
Further progress on our ESG agenda in H1 2021 ▪ Four manufacturing sites converted to renewable electricity in H1 Progressive switch to ▪ These sites represent c.19% of our Scope 2 emissions, and c.5% of renewable electricity our total Scope 1 and 2 emissions Systematic use of ▪ We have integrated c
Slide 8: World steel production – recovery across all regions
World steel production – recovery across all regions Crude Steel Production H1 2021 / H1 2021 / Growth H1 2020 H1 2019 World 14.4% 7.8% China 11.8% 14.0% World ex China & Iran 18.3% 0.3% India 31.3% 1.8% Vietnam 67.7% 23.4% NAFTA 16.3% -3.7% South America 28.2% 3.7% EU 27 + UK 18.0% -2.9% EEMEA ex I
Slide 9: Steel Flow Control strongly outperformed steel production growth
Steel Flow Control strongly outperformed steel production growth Size of bubbles represent relative revenue of Steel Flow Control in H1 2021 Sales volume growth exceeding market growth Sales volume growth below market growth page 9
Slide 10: Steel remains a structurally growing market
Steel remains a structurally growing market Source: World Steel Association. page 10
Slide 11: Expansion of Steel Flow Control capacity to support organic growth and market share gains
Expansion of Steel Flow Control capacity to support organic growth and market share gains ▪ Strategically important £28m programme of capacity expansions planned in Steel Flow Control ▪ New capacity will be operational from late 2022 ▪ Investments support ongoing and future organic growth and market
Slide 12: Divisional performance: Steel
Divisional performance: Steel H1 2021 performance Key Financials Reported Underlying H1 H1 change Change ▪ 21% growth in underlying Steel Flow Control 2021 2020 sales, which outperformed steel production Flow Control 315.5 274.4 15% 21% growth both in China and in the world Adv Refractories 238.6 22
Slide 13: Foundry end-market volumes: Recovery across all end-markets and regions
Foundry end-market volumes: Recovery across all end- markets and regions Note: 1: The remainder of Foundry sales are generated from other end-markets. page 13 Market data sources: IHS data for vehicles, Oxford Economics for all other markets.
Slide 14: Divisional performance: Foundry
Divisional performance: Foundry H1 2021 performance Key Financials Reported Underlying change ▪ 22% growth in underlying Foundry sales, H1 2021 H1 2020 Change supported by strong rebound of all end markets Revenue 237.8 203.7 17% 22% from their pandemic lows Trading Profit ▪ Strong growth and market
Slide 15: Industry-leading R&D investment
Industry-leading R&D investment ▪ Industry-leading R&D investment reinforcing our technology leadership • £14.8m spent on R&D in H1 2021, up from £13.6m in H1 2020 ▪ Supports our market ▪ 12 new product launches in H1 2021, more share gain ambitions and than in the whole of 2020 margin improvement •
Slide 16: Steel Flow Control – Air-Shield Technology
Value-creating solutions: Steel Flow Control – Air-Shield Technology Vesuvius air-Shield is a technology that creates a better seal between the two plates of our slide gate mechanism, which controls the flow of molten steel ▪ Increases yield: Reduces frequency of tube changes by reducing clogging an
Slide 17: Advanced Refractories – Basilite QuickStart
Value-creating solutions: Advanced Refractories – Basilite QuickStart Energy-efficient tundish lining spray product, developed by Vesuvius to be used on “QuickStart” heating cycle ▪ The typical 2-2.5 hour drying cycle is not needed which delivers the following benefits: ▪ Increases productivity and
Slide 18: Foundry – SEMCO Formaldehyde-free coating
Value-creating solutions through improved sustainability: Foundry – SEMCO Formaldehyde-free coating Refractory coating for moulds and cores that delivers improved environmental performance for our customers ▪ Reduces casting scrap and rework ▪ Enables application consistency ▪ Removal of formaldehyd
Slide 19: Financial review
FSUVIUS ete Financial review
Slide 20: Strong recovery in sales
Strong recovery in sales Group revenues up 12.2% on a reported basis (+18.2% on an underlying basis). page 20
Slide 21: Trading profit up 54.4% on an underlying basis
Trading profit up 54.4% on an underlying basis Trading profit up 43.4% on a reported basis (+54.4% on an underlying basis). Return-on-sales increased by 200bps (+220bps on an underlying basis). page 21
Slide 22: Income statement
Income statement H1 2021 H1 2020 Change (%) (£m unless indicated) Actual Actual As reported Underlying1 Revenue 808.1 720.0 12.2% 18.2% Trading Profit 73.3 51.1 43.4% 54.4% Return on Sales (ROS %) 9.1% 7.1% 200 bps 220 bps Post tax Share of JV Results 0.6 0.7 Net Finance Costs -3.6 -5.9 Headline Pro
Slide 23: Cash conversion lower at 52% due to investment in trade working capital
Cash conversion lower at 52% due to investment in trade working capital Cash conversion in H1 2021 of 52%, naturally lower than 137% in H1 2020, due to growth in trade working capital resulting from recovery in business activity. Net capex is net of proceeds from sale of property, plant and equipmen
Slide 24: Working capital efficiency continues to improve
Working capital efficiency continues to improve Our continued strong focus on working capital has resulted in our average trade working capital / sales for the prior 12 months improving further to 20.7% at June 2021. Inventory days will increase as we build-up raw material and finished goods invento
Slide 25: £196.6m net debt and 1.1x net debt / LTM EBITDA
£196.6m net debt and 1.1x net debt1 / LTM EBITDA Net debt at 30 June 2021 increased to £196.6m, from £175.1m at the end of 2020. The £38.7m final dividend payment for 2020 was the key driver of this increase. Note 1: Net debt / EBITDA ratios are post IFRS-16. page 25
Slide 26: Outlook
Outlook page 26
Slide 27: Outlook
Outlook Vesuvius delivered a strong commercial performance in H1 2021, supported by the continued improvement in end markets and market share gains in Steel Flow Control and Foundry. While we continue to experience inflationary pressure in certain raw materials and freight, this will be offset in H2
Slide 28: Appendix
Appendix LEADING THE WORLD OF MOLTEN METAL FLOW ENGINEERING
Slide 29: Liquidity increased post RCF refinancing
Liquidity increased post RCF refinancing Available committed liquidity of £488.5m ▪ Our available committed liquidity would have been £488.5m at 30 June 2021, when adjusted to reflect the increase in size of our new RCF, compared to £437.3m at 31 December 2020 Successful refinancing of revolving cre
Slide 30: Currency ready reckoner
Currency ready reckoner Jun 2021 Rule of thumb for impact of a movement in currency against Approximate change Currency % Currency Unit in annual profit (£m) of total TP sterling (1 unit change) ▪ Amounts shown are movements USD 1 cent 0.25 24.1% for each currency EUR 1 cent 0.11 8.7% ▪ Works both f
Slide 31: For further information, please contact
For further information, please contact: Euan Drysdale Group Head of Corporate Finance euan.drysdale@vesuvius.com Pamela Antay Head of Investor Relations pamela.antay@vesuvius.com LEADING THE WORLD OF MOLTEN METAL FLOW ENGINEERING