Vesuvius Plc · LSE:VSVS
Vesuvius — Investor Day (June 2015)
159 slides from Vesuvius's investor day presentation, Jun 18, 2015
Slide 1: Capital Markets Day
A GLOBAL LEADER IN METAL FLOW ENGINEERING Capital Markets Day Delivering on our Commitments Düsseldorf, Germany | 18 – 19 June 2015 1
Slide 2: Disclaimer
Disclaimer This presentation, which has been prepared by Vesuvius plc (the “Company”), includes statements that are, or may be deemed to be, "forward looking statements". These forward looking statements can be identified by the use of forward looking terminology, including the terms "believes", "es
Slide 3: Markets perspectives and strategy
A GLOBAL LEADER IN METAL FLOW ENGINEERING Markets perspectives and strategy François Wanecq Chief Executive 3
Slide 4: An experienced international management team
An experienced international management team… 4
Slide 5: Supported by a strong Board
... supported by a strong Board John McDonough Douglas Hurt Jane Hinkley Christer Gardell Insert CBE Senior Independent Non Executive Non Executive Chairman Director and Director and Director Picture Audit Committee Remuneration Here Chair Committee Chair John joined Vesuvius as Chairman in Douglas
Slide 6: Agenda
Agenda Thursday, 18 June Friday 19, June • Introduction Virginia Skroski • Breakfast Main restaurant 1700 - 1705 Investor Relations Manager 0730 - 0815 • Overview François Wanecq • Overview of day Virginia Skroski 1705 - 1745 Chief Executive 0825 - 0830 Investor Relations Manager • Advanced Refracto
Slide 7: Organised into 4 business segments
Organised into 4 business segments Steel Foundry Steel Flow Control Advanced Refractories Technical Services Foundry & Fused Silica Revenue1 (% of £536m (36%) £436m (29%) £47m (3%) £463m (31%) group) Provides products, Provides installation Provides equipment and Improves casting quality and foundry
Slide 8: Since demerger
Since demerger • Improved trading performance Headline trading profit(1), up 25% on an underlying(2) basis vs 2012 Headline return on sales(1) improved by 179 basis point on an underlying(2) basis vs 2012 • Restructured the portfolio Sold Precious Metals Division Divested lower margin non-co
Slide 9: Investment Case
Investment Case • Global market leader • Differentiated customer proposition strong brands underpins value pricing long history of innovation customer intimacy and high service • Attractive position in the value chain levels given "factory floor presence" at customer sites consumable product
Slide 10: Underlying markets will grow about 5% (CAGR) in the mid term
Underlying markets will grow about 5% (CAGR) in the mid term • Key growth support factors India steel production growth episode anticipated soon China transformation to flat steel is underway Competition between steel and aluminium will serve our markets Foundry should replicate steel growth
Slide 11: In Foundry we overperformed the market in most areas
In Foundry we overperformed the market in most areas 170 180 Sales and Casting Tonnes Rebased to 100 Sales and Casting Tonnes Rebased to 100 160 170 NAFTA CAGR: 9.6% CAGR: 8% 160 150 150 140 140 CAGR: 9.5% 130 130 120 120 110 CAGR: 4.5% 110 100 100 90 90 80 80 Vesuvius 2009 2010 2011 2012 2013 2014
Slide 12: Long term growth in Foundry will come from innovation and marketing
Long term growth in Foundry will come from innovation and marketing Foundry sales £/T of total market casting (2013) Significant upside potential through continuing market x 20 penetration as emerging markets move towards higher quality foundry castings Ductile Iron Northern Europe South America Jap
Slide 13: Evidenced in steel where we overperformed the market
Evidenced as well in steel where we overperformed the market CAGR: 4.5% Sales and Steel Production Rebased to 100 Sales and Steel Production Rebased to 100 180 180 160 NAFTA CAGR: 3.3% 160 140 140 120 120 CAGR: 0.6% CAGR: -0.2% 100 100 80 80 Vesuvius Sales Value 60 60 2002 2003 2004 2005 2006 2007 2
Slide 14: Steel and Foundry industries trends to remain similar
Steel and Foundry industries trends to remain similar 150,000 16,000 450000 30000 140,000 NAFTA 15,000 Steel Production (tonnes) Casting Production (tonnes) 14,000 400000 25000 130,000 13,000 120,000 12,000 350000 20000 110,000 11,000 100,000 10,000 300000 15000 90,000 9,000 80,000 8,000 250000 1000
Slide 15: Growth in steel markets
Growth in steel markets • The steel market should grow from 1.5 to 2 billion tonnes in the next decade based on growth in Indian steel production India should offer the potential for £200m additional Vesuvius sales over 10 years • Transformation of the Chinese industry from long to flat steel deli
Slide 16: Steel Production Volume Trend
Steel Production Volume Trend 80,000 70,000 60,000 Since 2008 Thousands of tonnes 50,000 • China has grown 60% 40,000 • Europe has shrunk 15% 30,000 • NAFTA has shrunk 20% 20,000 10,000 • Rest of World grew 15% 0 Apr 08 Apr 09 Apr 10 Apr 11 Apr 12 Apr 13 Apr 14 Apr-15 Oct 08 Jan 08 Jul 08 Jan 09 Jul
Slide 17: China Steel Production: Has the limit been reached?
China Steel Production: Has the limit been reached? Parallel with Japan End of high GDP growth period Japan – Steel production vs GDP growth China – Steel production vs GDP growth 140,000 20% 900,000 20% 800,000 120,000 15% 15% 700,000 Thousands of tonnes Thousands of tonnes 100,000 10% 600,000 10%
Slide 18: Steel profile of a maturing economy: the case of Japan
What is the steel profile of a maturing economy: the case of Japan Japan – Steel production vs GDP growth 140,000 20% • Steel production per 120,000 15% capita in Japan 870kg 100,000 • After the peak in 1973 Thousands of tonnes 10% steel production 80,000 declined a little and 5% recovered to about
Slide 19: The Indian steel production high growth sequence should start soon
The Indian steel production high growth sequence should start soon India – Steel production vs GDP growth 200,000 20% • Steel production per 180,000 capita in India 70kg 15% (vs 610kg in China) 160,000 140,000 10% • The long term steel 120,000 growth episode should start in the 100,000 5% coming thr
Slide 20: Conversion of China to a consumer driven economy opens growth potential
Mid term conversion of China to a consumer driven economy opens a considerable growth potential (up to £400m+ revenue) Proportion of flat vs long steel by region (2014) % • Chinese economy moves from 80 investment driven towards consumption 70 driven 60 • Investment consumes predominantly 50 long pr
Slide 21: Steel market growth scenario
Steel market growth scenario mT 2015 2020 2025 CAGR% Global Steel Production 4.9% 350 1300 1200 2015 14.1% 300 1100 2020 1000 1.8% 2025 250 900 800 -0.6% Millions of Tonnes 200 700 -1.5% 15% 2.3% 600 150 500 -0.9% 8.3% 400 100 300 200 50 100 0 0 NAFTA EU 27 S. America India Mid East & RoEurope Ro As
Slide 22: Conversion to flat steel is a growth opportunity
Conversion to flat steel is a growth opportunity mT 600 2015 • Progression of flat steel vs long steel 400 could generate growth in our accessible market of 30% in 2020 and 55% in 2025 200 • In the same period global steel 0 NAFTA EU 27 S. America China India Mid E & Af RoEurope Ro Asia production i
Slide 23: Conclusions
Conclusions • The steel market should re-start a growth episode during the next decade based on an Indian steel growth period, and reach 2 billion tonnes annually • Transformation of the Chinese industry from long to flat steel delivers a potential doubling of the accessible market for Vesuvius • In
Slide 24: Steel vs Aluminum: Parallel growth
Steel vs Aluminum: Parallel growth 000 Tonnes 000 Tonnes Aluminium production by region – 2014 1,800,000 60,000 ROW Estimated North America 1,600,000 Unreported Africa 9% 2% 3% 50,000 South America 3% 1,400,000 Steel production Asia (ex China) Steel production Aluminium production 1,200,000 40,000 4
Slide 25: Steel vs Aluminium: Growth of high-strength steel is an opportunity
Steel vs Aluminium: Growth of high-strength steel is an opportunity Material share as percent of vehicle kerb weight In vehicle production, conventional 45% steel is replaced by high-resistance steels as well as by Aluminium 40% 35% • High resistance steels require Share of Kerb Weight 30% more soph
Slide 26: Long term forecasts give major share to high strength steels
Steel vs Aluminum: Long term forecasts give the major share to high strength steels for light vehicles Material share as percent of vehicle body weight 2012 1% 2015 6% 18% 23% 71% 81% 2020 2025 17% Mild and High Strenth 26% Low Alloy 33% Advanced High Strength 52% Steel / Ultra High 31% Strength Ste
Slide 27: Conclusion
Conclusion • The shift to high strength steel should compensate Vesuvius for the penetration of Aluminum in the car industry. Vesuvius can expect a higher spending on refractory engineered solutions for these new demanding qualities 27
Slide 28: Delivering on the strategy
Delivering on the strategy • Maintain technology leadership • Increase penetration of value creating solutions • Capture growth in developing markets • Improve cost leadership • Build technical services offering 28
Slide 29: Manufacturing Excellence
Manufacturing Excellence • Since demerger we have reduced transformation Conversion Costs as a costs despite the continued increase in the % of sales complexity of pieces inherent in our business 38% 37.8% • Safety breakthrough, Quality breakthrough and Lean 37% manufacturing plans are well embedded
Slide 30: Shift of operations to lower cost countries
A continued shift of operations to align with customers drives us to lower cost countries NAFTA facilities and headcount EU 15 facilities and headcount Other EMEA facilities and headcount Employees Employees Employees 4,000 4,000 4,000 2222 3333 20 3,000 11 3,000 3,000 11 2,000 2,000 2,000 2,580 1,7
Slide 31: We increase our R&D effort to maintain technology leadership
We increase our R&D effort to maintain technology leadership Sustainable growth will come first from technology • R&D expenditure Quarterly R&D Expenditure has progressed £m steadily since 2008 Adv. Ref. Flow Control Foundry Enabling Technologies 8 7 • Decision to build in Pittsburgh (USA), 6 Ensche
Slide 32: R&D management
R&D management • A groupwide New Product Introduction procedure is being deployed to promote: More discipline in the selection of programmes A permanent review of the programme value A rigorous allocation of forces to a limited number of most rewarding programmes • Objective is to speed up the
Slide 33: Technical Services: Deliveries and potential
Technical Services: Deliveries and potential • Acquisitions bring us greater technological inroads and market intimacy in data capture Temperature and gas content with ECIL Met Tec and Sidermes Laser technology with Process Metrix Integration is underway (new logo) • New business model is unde
Slide 34: Going forward
Going forward • Since 2012 we have delivered on our commitments streamlining the business improving our margins delivering shareholder value positioning the company for growth • We see significant growth potential for our markets in the mid term India steel high growth sequence China’s t
Slide 35: Steel Division: Advanced Refractories
A GLOBAL LEADER IN METAL FLOW ENGINEERING Steel Division: Advanced Refractories Tanmay Ganguly President, Advanced Refractories 35
Slide 36: Steel Advanced Refractories
Steel Advanced Refractories • Main products and applications • Facilities and headcount • Key financials • Strategy implementation • Growth opportunities in Advanced Refractories 36
Slide 37: Steel Advanced Refractories
Steel Advanced Refractories • Key Points Market for our products and technologies How we add value to our customers How do we drive profitable growth? 37
Slide 38: Advanced Refractories – Products and Applications
Advanced Refractories – Products and Applications Refractory Market ₤/T of Steel = 5 – 6 Blast Furnace – Ironmaking 38
Slide 39: Steel Refractory Consumption (£/t)
Advanced Refractory – Steel Refractory Consumption (£/t) Blast Furnace BOF Vessel EAF Furnace Steel Ladle Tundish Reheat Furnace Other Refractory Market ₤/T of Steel = 5 – 6 £0.95 AR products represent 80% £1.25 £0.70 £0.50 £0.70 £0.50 £1.10 39
Slide 40: Products and applications: Blast Furnace
Advanced Refractories – Products and applications Blast Furnace Refractory Market ₤/t of Hot Metal = 0.95 Turn-key Projects • Complete Furnace Relines • Stack Repair • Taphole Clays Casthouse • Trough • Iron & Slag Runners Tilters • Torpedo Ladle • Iron Transfer Ladle 40
Slide 41: Products and applications: Steel Ladle
Advanced Refractories – Products and applications Steel Ladle Refractory Market ₤/t of Hot Metal = 1.10 Slag Line Safety Linings Fired Magnesia Bricks Fired Alumina Bricks Alumina Monolithics Working Linings Slag Line Normally Magnesia Carbon Bricks Dolomite Barrel Magnesia Carbon Bricks Barrel Dolo
Slide 42: ELBY Technology – Ladle simulation
ELBY™ Technology – Ladle simulation ELBY™ ladle bottom significantly improves yield while decreasing ladle slag carry-over Flat Ladle Bottom with Impact Pad Ladle Bottom with ELBY™ 42
Slide 43: Products and applications: Tundish
Advanced Refractories – Products and applications Tundish Refractory Market ₤/T of Hot Metal = 0.5 Insulating Tundish Cover Working Lining MgO based wet spray MgO based Dry Vibratable Permanent Lining Baffle Bauxite or Mullite based Low Cement Castables Cast-in-Situ Insulating Layer Insulating Brick
Slide 44: STEP Technology – Tundish simulation
STEP Technology – Tundish simulation STEP Technology improves flow through to casting nozzle, whilst reducing steel left in tundish after cast 44
Slide 45: Non-Steel products and applications
Advanced Refractories – Non-Steel products and applications Industries Served • Metals Producers Aluminium Non-Ferrous Ferro-Alloys • Foundry • Minerals Processing Industries Cement Lime • Power Generation • Incineration • Hydrocarbon Processing Industries 45
Slide 46: Manufacturing locations / regional headcount
Advanced Refractories: Manufacturing locations/ regional headcount Borken NAFTA Chesterfield Skawina 776 Welland Chicago Heights Europe China Suzhou Wurtland Bayuquan North Monterrey MENA 388 Asia 1076 Visakhapatnam Ras al Kaimah 1 India 150 Kuala Lumpur South Asia South 169 America 70 Sao Paulo Oli
Slide 47: Revenue by product line and geography
Advanced Refractories – Revenue by product line and geography Distribution of Revenue by PLN in 2014 Distribution of Revenue by market in 2014 AlSi Mono Precast 5% 2% China 2% 6% Taphole Clay 3% Europe 2% 2% 2% India Basic Mono AlSI Bricks NAFTA 31% Adv. Ref. General North Asia 19% Constr. & Inst. S
Slide 48: Sales with top 10 customers have grown 51% since 2008
Sales with top 10 customers have grown 51% since 2008 Vesuvius top 10 customers Percentage of 2014 global steel production 17% Percentage of 2014 Advanced Refractory revenue 42% 48
Slide 49: Advanced Refractories – Delivering on the strategy
Advanced Refractories – Delivering on the strategy New stage gate system to improve innovation process • Maintain technology leadership Centre of Excellence in Vizag, India R&D restructured under one global director Lavagard BF trough systems for Europe and Nafta ELBY in Nafta and Europe • Increase
Slide 50: Maintain technology leadership
Maintain technology leadership • Progress in 2014 Launched rigorous Stage-Gate® process for managing New Product Innovation Restructured R&D under one global director to enhance collaboration across our business Completed design plans, for new R&D Centre of Excellence in Vizag, India to be bui
Slide 51: Increase penetration of value creating solutions
Increase penetration of value creating solutions Developing markets Development of the Blast Furnace Trough business in India – New entrant to Market Leader in 5 years. Product, Design, Installation & Monitoring to drive value for customer. Progress in 2014 Value creation in a mature market Continue
Slide 52: Build Technical Services offering
Build Technical Services offering • Installation of the first fully automated high speed ladle laser refractory monitoring system in a complete Total Refractory Management Solution contract • ACCESS Model (Advanced Control for Cost and Energy Savings by Simulation) developed tool to monitor the ther
Slide 53: Steel Production and Advanced Refractories Sales (2014)
Steel Production and Advanced Refractories Sales (2014) China 0.01 £/T Asia 0.19 £/T NAFTA India 1.34 £/T 0.37 £/T EMEA 0.54 £/T South America 0.19 £/T GLOBAL AVERAGE: 0.27 £/T Source: 53
Slide 54: Steel Advanced Refractories growth
Steel Advanced Refractories • Drive growth in select markets and product categories Markets: India / China / MENA / South America Products: Tundish / ladle / iron making / aluminium Services: Technical Services / Modelling NPI to be more robust and targeted Segment and differentiate 54
Slide 55: Steel Division: Flow Control
A GLOBAL LEADER IN METAL FLOW ENGINEERING Steel Division: Flow Control Chris Abbott President, Flow Control 55
Slide 56: Steel Flow Control
Steel Flow Control • Main products and markets • Strategy and growth opportunities in Flow Control • The Flow Control business model • Technical Services within Flow Control 56
Slide 57: Steel Flow Control: Main products and markets
Steel Flow Control: Main products and markets Consumable Steel Flow Control products used in the enclosed continuous casting process 57 57
Slide 58: Steel Flow Control: Main products and markets
Steel Flow Control: Main products and markets • A world leader in the supply of consumable Steel Flow Flow Control division revenue by operating location Control products used in the enclosed continuous casting process Asia Pacific Americas 21% 36% EMEA 43% Source Vesuvius breakdown of 2014 Reported
Slide 59: Sales with top 10 customers have grown 25% since 2008
Sales with top 10 customers have grown 25% since 2008 Vesuvius Flow Control top 10 customers Percentage of 2014 global steel production 15% Percentage of 2014 Flow Control revenue 44% 59
Slide 60: Sales/tonne have grown 32% since 2009
Steel Flow Control: Sales/tonne have grown 32% since 2009 Flow Control sales continue to outperform the underlying Market Steel Production vs Flow Control Sales - WW (excluding China) 250 0.70 Steel Production 0.60 Flow Control Sales 200 0.50 Sales per tonne GBP/Tonne 150 0.40 Million 0.30 100 0.20
Slide 61: Steel Flow Control: Delivering on the strategy
Steel Flow Control: Delivering on the strategy New location selected in Pittsburgh for R&D Centre • Maintain technology leadership New Product Introduction process improved Enhanced Mechatronic capability in Ghlin Success of robotics handling operations Patented new generation tube changer • Increas
Slide 62: Steel Flow Control: Growth opportunities
Steel Flow Control: Growth opportunities New steel capacity Technology developments • Greenfield plants in S America, • Safety, Quality and Cost India, SE Asia, Mexico, USA, requirements will increasingly Vietnam influence automation & robotics • Increases in Korea & Brazil and the need for improved
Slide 63: Substantial opportunity for penetration
Substantial opportunity for penetration exits China 0.07 £/T Asia 0.18 £/T NAFTA India 1.28 £/T 0.34 £/T EMEA 0.62 £/T South America 0.93 £/T GLOBAL AVERAGE: 0.32 £/T 63
Slide 64: Solutions through Technology approach
VESUVIUS “Solutions through Technology” approach SERVICE FC Systems Instruments Data capture Value added Solutions Materials Modelling & Design Handling 64
Slide 65: Steel Flow Control: Robotic Casting Technology
Steel Flow Control : Robotic Casting Technology 65
Slide 66: Steel Flow Control: Robotic Casting Technology
Steel Flow Control : Robotic Casting Technology 66
Slide 67: Technical Services in Flow Control
A GLOBAL LEADER IN METAL FLOW ENGINEERING Technical Services in Flow Control Chris Abbott President 67
Slide 68: Technical Services in Flow Control helps improve Customer Business
Technical Services in Flow Control helps improve our Customer Business • Combining consumables and equipment enables real time capture of process data allowing our customers to make informed decisions to: Adjust process parameters Improve consistency Improve quality Improve yield Save ener
Slide 69: Smart Mould Flux Feeder
Steel Flow Control: Smart Mould Flux Feeder Innovative equipment allows us to sell not only consumable material but replaces dangerous manual flux addition and provides a reliable real time process monitoring and facilitates a new pricing model Closed loop / Automatic mode Same image but offsetting
Slide 70: Smart Refractory
Steel Flow Control: Smart Refractory Smart Refractory allows us to combine refractory, instruments and equipment to provide a complete monitoring solution RFID Temperature tag sensor Level sensor DASCO DATA LOGGING 70 70
Slide 71: Steel Flow Control in Summary
Steel Flow Control in Summary • Flow Control still has significant opportunities to grow • The Flow Control business model of ‘Solutions through Technology’ will enable us to take advantage of these opportunities, allowing us to continue to grow ahead of the underlying market • Combining consumables
Slide 72: Foundry Division
A GLOBAL LEADER IN METAL FLOW ENGINEERING Foundry Division Glenn Cowie President, Foundry 72
Slide 73: Foundry
Foundry • What is a Foundry? • Who are our customers? • What they produce • Markets we serve • Who are we? • Case Studies • Competitive advantage • Growth Potential 73
Slide 74: Customer base
Customer base y a ~dana D metso BRADKEN WE Komatsu =F GG & CATERPILLAR’ & ~@Or vowe ep (W) HONDA ED @® TOYOTA ESCITROEN VESUVIUS etc
Slide 75: Video
Video 75
Slide 76: What do our customers do?
What do our customers do? • Iron Grey or Ductile • Steel • Non ferrous Aluminium Copper Based Zinc 76
Slide 77: Global casting end-user
Global casting end-user Railroad Aerospace Power 4% 1% Generation 6% Automotive Mining 23% 6% Construction 10% Truck General 11% Engineering 21% Other 18% 77
Slide 78: What they do – Grey Iron, Ductile Iron, Steel
What they do – Grey Iron, Ductile Iron, Steel Iron Steel 78
Slide 79: What they do – Very small components, all alloys
What they do – Very small components, all alloys 79
Slide 80: What they do – Non Ferrous
What they do – Non Ferrous Gravity Die casting Low Pressure automotive rim 80
Slide 81: What they do – Iron
What they do - Iron VESUVIUS etc
Slide 82: What they do – Steel
What they do - Steel VESUVIUS etc
Slide 83: Foundry: Manufacturing locations, regional headcount and turnover
Foundry: Manufacturing locations, regional headcount and turnover NAFTA 429 heads North Asia Hengelo 282 heads £6.0/T Tamworth Borken China Gliwice £5.0/T Grossalmerode 484 heads Conneaut Feignies Cleveland Muelheim £0.8/T Charleston EUROPE Izurza Istanbul Kyongki-do MENA Toyokawa Dillon Xiangfan 1,
Slide 84: Make our customers' business more profitable
What we do – Make our customers’ business more profitable • Segmentation • Market Creation Typical defects we can help eliminate for our customers: • Technical Services • Simulation • Reduce Customers’ Costs Machining Scrap Moulding efficiency Energy consumption Safety Yield 84
Slide 85: Aluminium transfer ladle
Aluminium transfer ladle Refractory ladle: Before Refractory ladle: After Insural ATL 600 85
Slide 86: INSURAL ATL vs Castable Lining: Heat loss
INSURAL ATL vs Castable Lining: Heat loss Thermal Imaging Non-Insural [refractory] ladle Insural ATL 600 ladle 86
Slide 87: Running and Filtering large Iron casting
Running and Filtering large Iron casting – Cleanliness and yield Mould Binders Mould Coatings Technical Advice Runners Hollotex Stelex 87
Slide 88: Finished casting
Finished casting Less waste due to significantly lighter gating system • Energy saving 72.3 kWh per casting • Weight reduction 38.4 kg per casting 88
Slide 89: Front Hub Disc Casting – NISSAN Foundry Spain
Front Hub Disc Casting – NISSAN Foundry Spain 89
Slide 90: Growth potential and what we will do differently
Growth potential and what are we going to do differently • Geography China: global support, considerable growth through market creation India: aggressive share gain, market creation Western world: hold position share gain and market creation, reduce costs • Products Vigorous new product R&D
Slide 91: China
A GLOBAL LEADER IN METAL FLOW ENGINEERING China Roel van der Sluis President, Vesuvius North Asia 91
Slide 92: China
China • Market development steel and foundry • Vesuvius in China • Market penetration and potential 92
Slide 93: Chinese crude steel output and growth rate 2001 – 2014
Chinese crude steel output and growth rate 2001 – 2014 Unit: 000,000 Tonnes 900 815 822 35% 800 717 30% 683 700 627 25% 600 542 489 500 500 419 20% 400 353 15% 272 300 220 181 10% 200 149 100 5% 0 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Crude Steel Output Growth Rate
Slide 94: Apparent consumption of crude steel 2009 – 2015
Apparent consumption of crude steel 2009 – 2015 Apparent Consumption of Crude Steel 2009 – 2015 (Million Tonnes) 763 738 720 700 649 600 533 2009 2010 2011 2012 2013 2014 2015 (Est.) 94 Source: CISA 94
Slide 95: China casting output and growth rate 2000 – 2014
China casting output and growth rate 2000 – 2014 Unit: 000,000 Tonnes 50,000 25.00% 46 45 45,000 42 43 40 40,000 20.00% 35 35,000 34 31 30,000 28 15.00% 24 25,000 22 20 20,000 10.00% 16 15 15,000 10,000 5.00% 5,000 0 0.00% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Casting
Slide 96: Measures to combat overcapacity
Measures to combat overcapacity • The expansion of steel production capacities went out of control during the past decade • More than 700 million tonnes of steel capacities built after 2005, only less than 100 million tonnes of which were approved by the government • The Ministry of Information and
Slide 97: Vesuvius in China
A GLOBAL LEADER IN METAL FLOW ENGINEERING Vesuvius in China 97
Slide 98: China Manufacturing Footprint
China Manufacturing Footprint Beijing Anshan (JV) Bayuquan Changshu Suzhou Wuhan (JV) Location Manufacturing Site Headcount Suzhou VISO + Mix, SGR, 621 AR Anshan Sunway VISO, AVR 136 (AR & PP) 625 Wuhan SGR 287 VISO 94 Changshu Foundry 75 98
Slide 99: Full product offering to drive penetration in China
Full product offering to drive penetration in China Steel Division Foundry Division • Slide Gate Raw & • Filter – SEDEX Assembled Plate • FMT • Slide gate mechanism • Crucible • VISO Mix and VISO • Fused Silica Roller • Bricks – MgO – C, • FD Feeding – Sleeve Alumina – C • Coating ( Solvent and • Pr
Slide 100: Our growth plan in China
A GLOBAL LEADER IN METAL FLOW ENGINEERING Our growth plan in China 100
Slide 101: Q1 output of steel and ratio of flat and long steel
Q1 output of steel and ratio development between flat and long steel Flat vs Long 100% Jan – Mar Jan – Mar Growth Growth Type of products 2014 2013 2015 2014 rate % Rate % Total finished 195,000 190,125 2.5 1036 1035 0.1% steels 50% Flat products 89,661 84,437 6.2 477 450 6.0% Long products 102,617
Slide 102: China casting output by metal type
China casting output by metal type Aluminium Copper alloy Other 12% 2% 1% Steel 12% Grey Iron 46% Malleable cast Iron 1% Ductile Iron 26% 102 CFA Source: 102
Slide 103: China casting output by metal type
China casting output by metal type 100% 90% 80% 70% 60% Percentage 50% Grey Iron Ductile Iron 40% Aluminum 30% 20% 10% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Year Source: • Historically output (2000 – 2014) shows a trend of an increase in ductile iron and alumi
Slide 104: Quality is the first requirement
Quality is the first requirement • At the center of our action plan to grow the business • An essential part of our brand equity • Will support our price premium • Allows us to resist competition successfully under pricing and grow our market share • Recent progress in quality has restored our value
Slide 105: Sales penetration offers a huge potential
Sales penetration offers a huge potential Steel Foundry • Output – 822M Tonnes • Output – 47.2 M Tonnes China • Sales penetration – China • Sales penetration – £0.084/T £0.72/T • Output – 120M Tonnes • Output – 14.6M Tonnes NAFTA • Sales penetration – NAFTA • Sales penetration – £2.75/T £5.71/T • Ou
Slide 106: Sales penetration offers a huge potential
Sales penetration offers a huge potential In 2014 China Steel China Foundry Direct Sales – Direct Sales – £69 million £34 million Penetration Penetration £0.084/T £0.72/T China steel China casting output – 822M output – Tonnes 47.17M Tonnes Region Penetration Region Penetration (£/MT) (£/MT) NAFTA 2
Slide 107: Research & Development
A GLOBAL LEADER IN METAL FLOW ENGINEERING Research & Development Alan Charnock President, R&D and Chief Technology Officer 107
Slide 108: Research & Development
Research & Development • Major changes in our customers’ processes have been the main driver for the development of our products • Leading provider of “Solutions through Technology” for the markets we serve • Robust R&D processes in place to ensure that we maintain this leadership position • Focused
Slide 109: Vesuvius – Born as a refractory company
Vesuvius – Born as a refractory company What is a refractory? • ASTM C71 defines refractories as "non-metallic materials having those chemical and physical properties that make them applicable for structures, or as components of systems, that are exposed to environments above 538 ⁰C ” • Refractories
Slide 110: Why do we produce refractory?
Why do we produce refractory? Our products are used in contact with liquid metal/slag and melted or softening glass Application Melting Temperature Steel 1430 – 1540⁰C Cast Iron 1150 – 1400⁰C Aluminium 660⁰C Copper 1084⁰C Silicon 1411⁰C Glass 1100 – 1500⁰C Refractory Material Melting Points Alumina
Slide 111: Development drive from the market
Development drive from the market 111 111
Slide 112: Casting technology roadmap
Development drive from the market – Casting technology roadmap GREEN ENVIRONMENTALLY FRIENDLY SAFETY ROBOT READY OPERATION / REMOTE CONTROL QUALITY CLEAN STEEL/ TIGHNTESS/ MOLD FLOW OPT PERFORMANCE MULTI-HEATS/LONG SEQUENCES/ FLEXIBILITY vs GRADE CHANGE ERGONOMICS OPERATOR FRIENDLINESS CONCERNS RELI
Slide 113: Evolving to be a metal flow engineering company
Vesuvius – Evolving to be a metal flow engineering company 113 113
Slide 114: Evolving to be a metal flow engineering company
Vesuvius – Evolving to be a metal flow engineering company 114 114
Slide 115: What our products help to make
What our products help to make Ferrrous and Nonferrous castings 115
Slide 116: What our products help to make
What our products help to make Pipes, sheet, sections – to create cans, cars, trains, buildings and bridges 116
Slide 117: Our mission and objectives
Our mission and objectives 5 Yr Goals and Objectives Technology and Increase sales from new products innovation leadership to > 20% of total sales Maintain a robust pipeline R&D/Sales > 2% Market penetration R&D Mission: To be an Create a balanced portfolio of sustaining and engine for growth and br
Slide 118: Robust business processes for innovation
Robust business processes for innovation Business and Group Strategic Planning Project Portfolio Management Prioritize, Select and Resource Innovation Investments Ideation Idea-to-Launch Process Ideation, Collaboration, Review Execute on the Development of New Products Resource Planning Applying the
Slide 119: R&D KPIs
R&D KPI’s % Sales from Products < 5yrs R&D Spend vs Total Revenue (M GBP) 1,550.0 30.0 8.5% 1.83% 1.83% 1,500.0 1.51% 1.67% 25.0 8.0% 1.55% 1,450.0 20.0 7.5% 1,400.0 15.0 7.0% 1,350.0 10.0 6.5% 1,300.0 5.0 6.0% 1,250.0 2010 2011 2012 2013 2014 0.0 2011 2012 2013 2014 2015 Direct Sales R&D Spend Tota
Slide 120: Global R&D and local development labs
Global R&D and local development labs Global Research & Development Local Development labs “Investment in future growth” “Run & maintain current business” • Step changes • Product development & modifications • Breakthrough • Incremental (customer specific) • Fundamental understanding changes • Techn
Slide 121: Vesuvius R&D and Simulation Centers
Vesuvius R&D and Simulation Centers Europe COE: BB / EN / FE / GH Dev Center: BK / TM / SR / LY / ST / HO Sim Site: BK NAFTA COE: PI / BV Dev Center: CP / CD / PL Sim Site: PW / CD South America Dev Center: SP / PD Sim Site: RJ India Dev Center: PU / VS Sim Site: CL N. Asia Dev Center: SZ / TP Sim S
Slide 122: Method simulations: Magma
Method simulations: Magma 122 122
Slide 123: Method simulations: CFD and Physical Modelling
Method simulations: CFD and Physical Modelling 123 123
Slide 124: Enabling Technologies – support to innovation
Enabling Technologies – support to innovation • ~ 10% of the R&D spend • US & EU based • University and other external Partnerships • Emerging Technologies / Technology Watch Clogging phenomena Carbon pickup Filtration efficiency Composite materials Nano technology 3D Printing Side dams
Slide 125: Now a Technical Services company – real time data capture
And now a Technical Services company – real time data capture 125
Slide 126: R&D Conclusions
R&D Conclusions • Targeted ideation • Robust new product pipeline • Strategic acquisitions • Complete symphony of products and technology • Solutions through technology • Monitor R&D KPI’s 126
Slide 127: Technical Services
A GLOBAL LEADER IN METAL FLOW ENGINEERING Technical Services Luis Reyes President, Technical Services 127
Slide 128: Technical Services
Technical Services • Vesuvius has accumulated substantial know how and built a strong reputation for quality and expertise • R&D has always been an important part of the DNA of the Company allowing it not only to participate in new markets but in many cases create new ones • The proximity with its c
Slide 129: Technical Services: Business description
Technical Services: Business description • Technical Services is a new business segment for the group to complement existing product lines and develop new products and markets • Focus on data capture of key process parameters complementing this with Vesuvius’ strong presence and expertise in metal c
Slide 130: Technical Services: Main business drivers
Technical Services: Main business drivers • Safety: Operational standards and regulations have become tighter and pose a bigger challenge to metal producers • Quality: Market forces are placing bigger constraints on metal producing processes requiring deeper and tighter process control • Cost: To in
Slide 131: Framework
Framework ANSI/ISA-95, or ISA-95 is an international standard from the International Society of Automation for developing an automated interface between enterprise and control systems. This standard has been developed for global manufacturers. It was developed to be applied in all industries, and in
Slide 132: Technical Services: Development and growth
Technical Services: Development and growth Process Metrix Q414 Ecil Met Tec Q414 Sidermes group Q215 Integrated process expert systems Avemis Q411 Accuoptix Q414 132
Slide 133: Existing market segments and portfolio
Technical Services: Existing market segments and portfolio • The initial applications are segmented in three main areas looking for immediate synergies with other business units: Furnace data acquisition: Chemistry sensors and laser scanner services Ladle data acquisition: Laser scanner services
Slide 134: Temperature and Chemistry Sensors
Furnace data acquisition Temperature and Chemistry Sensors 134
Slide 135: Ecil Met Tec + Sidermes sensor technology
Technical Services: Ecil Met Tec + Sidermes sensor technology Thermocouples Oxygen Probes Ecil Met Tec + Sidermes - Full Hydrogen Sensors Wireless and System Manufacturing, vertically integrated, Instruments Facility (all products heads, Hardware, Instruments, Paper Tubes and Tubing & Packaging) Imm
Slide 136: Ecil Met Tec + Sidermes sensor technology
Technical Services: Ecil Met Tec + Sidermes sensor technology Typical Disposable probe designs 136 136
Slide 137: Process Metrix – vessel laser scanning
Technical Services: Process Metrix – vessel laser scanning • Purpose-built hardware and software for the steel mill environment • Patented Laser Tracking System Auto- location • Wireless transmission of vessel tilt • Single mouse-click measurement control • Fast data analysis (1 – 3s) • Fast scan ti
Slide 138: Laser scanner
Furnace and ladle data acquisition Laser scanner 138
Slide 139: Process Metrix laser scanning
Technical Services: Process Metrix laser scanning Worldwide installed base of 100+ Units = ~40% market share – annual sales basis 139
Slide 140: Process Metrix laser scanning
Technical Services: Process Metrix laser scanning • Safety – Targeted analysis of areas of concern • Cost – Provides detailed analysis of lining residual thickness to allow accurate wear out analysis in order to extend refractory lining life safely • Cost – Increase shop productivity by better Sched
Slide 141: Continuous temperature and slag prevention systems
Tundish data acquisition Continuous temperature and slag prevention systems 141
Slide 142: Avemis Accuoptix Continuous Temperature Measurement
Technical Services: Avemis Accuoptix Continuous Temperature Measurement (CTM) CMD Advantages Manual version • Safety – Removes need for operator taking Mounting in tundish prep temperature samples at casting platform area • Quality – Makes casting near optimum temperature more achievable • Cost – Re
Slide 143: Technical Services: Avemis
Technical Services: Avemis Thermocouple CTM (Accucone / Accumetrix) • Legacy & Mature Technology in NAFTA • Expand to other geographies Optical CTM (Accuoptix ) – Beta Phase • Alpha Trial in 2014, BES converted • ~ 5 – 10 projects expected for 2015 143 143
Slide 144: Avemis RADAR T2
Technical Services: Avemis RADAR T2 • Radar is a detector of slag in the ladle taphole to help closing the gate before slag goes to the tundish Camera • Vibration Slag detection system (continuously online during one month ~ 460 Heats) Power Network x 2 Sensors Remote computer to check realtime/ sav
Slide 145: Mould level sensor and mould audit unit
Mould data acquisition Mould level sensor and mould audit unit 145
Slide 146: Avemis mould technology
Technical Services: Avemis mould technology XLEV – S Suspended Mould Level Sensor • Launch: 2007 XLEV – L Ledge Mould Level Sensor • Launch: 2010 XMAT – Mould Audit Unit • New 146 146
Slide 147: Avemis mould audit technology
Technical Services: Avemis mould audit technology Benefits • Mould «black box» understanding • SEN/ SES design performance evaluation • Flow simulation model validation • Surface quality improvement Alpha Trial at an European customer Dec 2014 First Results Good matching simulation vs actual velocit
Slide 148: Avemis mould audit technology
Technical Services: Avemis mould audit technology X-Mat is a combination of data collections that allows manufacturers to follow the flow of metal in the mould to ensure the best quality of the metal solidification surface Benefits Sensor • Mould «black box» understanding • SEN design performance ev
Slide 149: Technical Services: Conclusions
Technical Services: Conclusions • Vesuvius has recognised that valuable process information exists at the metal / machine interface • Through the acquisition and development of a suite of sensor technologies, Vesuvius is now well positioned to be able to extract this process data at critical areas o
Slide 150: Financial Strategy
A GLOBAL LEADER IN METAL FLOW ENGINEERING Financial Strategy Chris O’Shea Chief Financial Officer 150
Slide 151: Financial strategy remains consistent
Financial strategy remains consistent… • Financial flexibility essential Committed unutilised facilities of £344.0m • Conservative balance sheet stewardship Gearing of 1.48 • Focus on cash generation 2012 – 2014 cash conversion of 93.0% • Cost control ROS improved by 179 basis points from 2012 • Eff
Slide 152: Combined cash flow sources and application 2013-14
…as evidenced over past 2 years £m 400 2013-14 Combined Cash Flow Disposals £33.2 million Share Repurchase 350 Returns to Equity Holders Dividends £114.3 million 300 250 Debt Repayment Debt service and reduction Interest £59.6 million 200 Operational Cash Acquisitions Flow £349.6 million 150 Investi
Slide 153: Strong balance sheet management will continue
Strong balance sheet management will continue… Target Capital Structure 3.00 2.50 Too Much Debt • Governed by 3 times ND:EBITDA ratio • Internally imposed maximum is 2 2.00 Retain one turn to guard against short Net Debt : EBITDA Conserve Cash downturns 1.50 Target Range • Below 1 would trigger co
Slide 154: Newly placed bank facility
…supported by newly placed bank facility • £300 million multi currency Existing Debt Facilities facility 300 Replaces £425 million facility 250 expiring 2016 • 5 + 1 + 1 term 200 2 x 1 year options at lender’s discretion 150 • £200 million accordion 100 Can be exercised before end of 2016 50 •
Slide 155: The organic capital requirements are relatively low
The organic capital requirements are relatively low… • Low capital intensity Pretax return on Net Assets 30% Annual Revenue = c6 x Property, Plant and Equipment 25% 25.5% 24.2% • More working capital 20% 18.7% reductions to come 15% Inventory reduction programme continues 10% Receivables movin
Slide 156: M&A strategy focussed and aligned with strategy
…and the M&A strategy is focussed & aligned with strategy Core Competence & Strategy M&A Priorities • Clear core competence • Technical Services We are a global leader in heat SERT / Avemis (2012) containment technology ECIL Met Tec (2014) Process Metrix (2014) • Clear business focus Sider
Slide 157: We anticipate generating substantial free cash flow
We anticipate generating substantial free cash flow Support Organic Support M&A Deliver Capex requirements Strategy Superior Returns to Shareholders Integrated investment framework New facilities in growth Bolt-on technical Dividend growth in line markets (Russia, China, services with underlying ear
Slide 158: Going forward
Going forward • Since 2012 we have delivered on our commitments, streamlining the business improving our margins delivering shareholder value and positioning the company for growth • We see a significant growth potential for our markets in the mid term • We are taking the appropriate steps t
Slide 159: Q&A
A GLOBAL LEADER IN METAL FLOW ENGINEERING Q&A 159