Slide 1: H1 2017 Results
H1 2017 Results H1 2017 Highlights 1
Slide 2: Cautionary statement
Cautionary statement AUGUST 2017 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 b
Slide 3: Interim results agenda
Interim results agenda H1 2017 HIGHLIGHTS Paul Waterman H1 2017 FINANCIALS Ralph Hewins STRATEGIC PROGRESS Paul Waterman SUMMITREHEIS INTEGRATION Paul Waterman QUESTIONS Paul Waterman & Ralph Hewins H1 2017 Results H1 2017 Highlights 3
Slide 4: H1 2017 Highlights
H1 2017 Highlights Paul Wat erman | C EO H1 2017 Highlights 4
Slide 5: H1 2017 safety performance
H1 2017 safety performance RECORDABLE INCIDENT RATE HIGHLIGHTS 3 • Focus on causes of recordable incidents - No incidents over 3 days US Chemicals Sector - Chromium: zero lost time accidents 2 • SummitReheis acquisition Incident Rate - Initial assessment – no major concerns 1 - Integrating Elementis
Slide 6: H1 2017 results
H1 2017 results $m H1 2016 H1 2017 % H1 – on – H1 Change Sales 334 415 24% Operating profit* 54 68 26% Operating margin* 16% 16% - Profit before tax* 51 61 20% Net cash / (debt) 38 (313) - Diluted EPS* 8.8c 10.4c 18% Dividends per share 2.70c 2.70c - *After adjusting items H1 2017 Results H1 2017 Hi
Slide 7: H1 2017 accomplishments
H1 2017 accomplishments CHROMIUM C O AT I N G S ENERGY PERSONAL CARE Captured demand Growth in Asia Rebound in US drilling Existing Personal Care improvement and Americas and customer wins sales growth 25% D I S A D VA N TA G E D SUMMITREHEIS ASSETS S U R FA C TA N T S ACQUISITION S U S TA I N A B I
Slide 8: Specialty Products
ELEMENTIS Specialty Products
Slide 9: Specialty Products
Specialty Products H1 % H1-on-H1 Change Strong performance in Energy and Personal Care Constant $m 2016 2017 Reported Currency SummitReheis operating profit contribution of $6m Sales 239 295 23% 26% Raw material cost inflation Operating profit* 44 52 18% 18% – pricing responses activated Continued i
Slide 10: Specialty Products
Specialty Products SALES GROWTH IN ALL THREE SECTORS H1 % H1-on-H1 Change $m 2016 2017 Reported Constant Currency Coatings 190 188 (1)% 1% Personal Care 32 77 144% 147% Existing Personal Care 32 39 24% 25% SummitReheis - 38 - - Energy 17 29 74% 78% Total 239 295 23% 26% *After adjusting items H1 201
Slide 11: Coatings
Coatings
Slide 12: Coatings steady growth
Coatings steady growth COATINGS SALES $m NEW PRODUCTS AS % OF SALES 400 350 13% 300 12% 12% +2% at constant currency, 250 adjusting for US colourants disposal 348.03 372.07 388.14 354.00 9% 200 7% 150 100 5% 5% 190 188 50 0 2012 2013 2014 2015 2016 H1 2017 2012 2013 2014 2015 2016 LTM 2017 Reported
Slide 13: Global Coatings
Global Coatings STRONG INDUSTRIAL COATINGS GROWTH SECTOR SPLIT BY MARKET REGIONAL GROWTH KEY ACCOUNT MANAGEMENT Sales Growth, Constant Currency* Sales Growth, Constant Currency* PROCESS • Increase in resources allocated to KAM -2% • Pilot trials with key global +4% accounts launched Deco • Globally
Slide 14: Personal Care
Personal Care
Slide 15: Personal Care
Personal Care STRONG UNDERLYING GROWTH AND ADDITION OF SUMMITREHEIS PERSONAL CARE SALES $m STRONG GROWTH Existing Personal Care business – sales up 25%* 80 70 Strong performance in Asia – sales up 67% 60 77 SR: $38m 50 SummitReheis integration on track 40 30 20 Existing: $39m 32 10 0 2012 2013 2014
Slide 16: A unique value chain
A unique value chain
Slide 17: The only high quality rheology grade Hectorite mine in the world
The only high quality rheology grade Hectorite mine in the world Combined with our global manufacturing base and technical expertise C O AT I N G S PERSONAL ENERGY Enables our customers CARE to create innovative, high performance products H1 2017 Results H1 2017 Highlights 17
Slide 18: Energy
Energy
Slide 19: Energy
Energy STRONGER DEMAND AND MARKET SHARE GAINS ENERGY SALES $m HIGHLIGHTS 2017 RIG ACTIVITY INCREASING 80 3,500 Strong H1 demand 70 due to US shale market 3,000 +78% at constant currency and growing non US sales 60 2,500 50 International Customer wins 2,000 40 Increased technical 1,500 30 collaborati
Slide 20: Chromium
Chromium
Slide 21: Chromium
Chromium VOLUME GROWTH IN ROW AND RESILIENCE IN NORTH AMERICA VOLUME RECOVERY IN ROW H1 % H1-on-H1 Change Constant Metric Ton Index $m 2016 2017 Reported (2011 = 100) Currency Sales 81 95 18% 18% 120 Operating profit* 15 16 3% 3% 110 100 Operating margin* 19% 17% - - 90 - Strong volumes - North Amer
Slide 22: Chromium
Chromium MARGINS ARE STRONG, NORTH AMERICA HIGHLY CONSISTENT Operating 30% Margin (%) 25% 20% 15% 10% 5% 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 LTM 2017 120 North America 100 Contribution Margin Index (2008 = 100) 80 60 40 ROW 20 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 LTM 2017 LTM 2
Slide 23: Surfactants
ELEMENTIS Surfactants
Slide 24: Surfactants
Surfactants SUCCESSFUL 2017 PRICE OPTIMISATION H1 % H1-on-H1 Change Constant $m 2016 2017 Reported Currency Sales 22 31 +44% +48% Operating profit* - 9 - - Favourable pricing conditions - will not sustain Pursuing potential sale Operating margin* (1)% 29% - - *After adjusting items H1 2017 Results H
Slide 25: H1 2017 Financials
H1 2017 Financials Ralph Hewins | CFO H1 2017 Highlights 25
Slide 26: H1 2017 group results
H1 2017 group results $m H1 2016 H1 2017 % H1-on-H1 Change Sales 334 415 24% Operating profit* 54 68 26% Operating margin* 16% 16% - Profit before tax* 51 61 20% Net cash / (debt) 38 (313) - Diluted EPS* 8.8c 10.4c 18% Dividends per share 2.70c 2.70c - *After adjusting items H1 2017 Results H1 2017
Slide 27: Revenue bridge
Revenue bridge STRONG GROWTH ACROSS SEGMENTS AND SUMMITREHEIS CONTRIBUTION REVENUE $m 38 (4) 415 15 10 22 334 H1 2016 SPECIALTY CHROMIUM SURFACTANTS SUMMITREHEIS FX / OTHER H1 2017 PRODUCTS H1 2017 Results H1 2017 Financials 27
Slide 28: Operating profit bridge
Operating profit bridge ADJUSTED OPERATING PROFIT $m 9 68 _ 6 54 54 (1) H1 2016 FX H1 2016 UNDERLYING SUMMITREHEIS SURFACTANTS H1 2017 @ 17FX PERFORMANCE H1 2017 Results H1 2017 Financials 28
Slide 29: Adjusting items
Adjusting items Charge/(credit) $m H1 2016 H1 2017 Costs associated with Acquisition costs - 6 SummitReheis acquisition Restructuring 2 1 Reclassification of amortisation of intangibles arising on acquisition Business review 2 1 (pre SummitReheis PPA*) Amortisation of intangibles arising on 1 3 acqu
Slide 30: Tax charge
Tax charge $m H1 2016 H1 2017 Tax rate higher due to US profit Tax charge 9 11 Estimated tax rate for full year Adjusting items 1 2 2017 of 21% to 23% Adjusted tax charge 10 13 Beyond 2017 tax rate low 20s, with cash tax convergence Tax rate* 20% 21% * On adjusted earnings H1 2017 Results H1 2017 Fi
Slide 31: Cash flow
Cash flow STRONG OPERATING CASH FLOW $m H1 2016 H1 2017 EBITDA 63 78 Change in working capital (11) (10) Capital expenditure (16) (15) Other (2) (1) Operating Cash Flow 34 52 Pension deficit payments (3) (7) Dividends (64) (65) Acquisitions and disposals - (361) Interest (1) (3) Tax and other (3) (7
Slide 32: Strategic progress
Strategic progress Paul Wat erman | C EO H1 2017 Highlights 32
Slide 33: How we will reignite growth
How we will reignite growth STRATEGIC PRIORITIES IN ACTION Pursue Pursue Innovate Create Best Growth Supply Chain for High Margins a Culture of Opportunities Transformation & Distinctiveness High Performance Address Sustain innovation 1 Global KAM 1 disadvantaged assets 1 leadership 1 Structure 2 Co
Slide 34: How we will reignite growth: pursue best growth opportunities
How we will reignite growth PURSUE BEST GROWTH OPPORTUNITIES Pursue Pursue Innovate Create Best Growth Supply Chain for High Margins a Culture of Opportunities Transformation & Distinctiveness High Performance GLOBAL KAM COATINGS ASIA PERSONAL CARE Global Coatings KAM process New MD to run India and
Slide 35: How we will reignite growth: supply chain transformation
How we will reignite growth PURSUE SUPPLY CHAIN TRANSFORMATION Pursue Pursue Innovate Create Best Growth Supply Chain for High Margins a Culture of Opportunities Transformation & Distinctiveness High Performance ADDRESS MANUFACTURING PURSUE DISADVANTAGED ASSETS PRODUCTIVITY PROCUREMENT SAVINGS Sale
Slide 36: Addressing disadvantaged assets
Addressing disadvantaged assets PURSUE SUPPLY CHAIN TRANSFORMATION AMERICAS EMEA ASIA CASTLE HAYNE CHROMIUM CORPUS CHRISTI LEATHER TANNING Expansion underway PLANT x 3 NEWBERRY LIVINGSTON SONGJIANG MILWAUKEE HSINCHU NEW MARTINSVILLE S P E C I A LT Y CHARLESTON PRODUCTS & US organoclay optimisation S
Slide 37: How will we reignite growth: innovate
How will we reignite growth INNOVATE FOR HIGH MARGINS & DISTINCTIVENESS Pursue Pursue Innovate Create Best Growth Supply Chain for High Margins a Culture of Opportunities Transformation & Distinctiveness High Performance SUSTAIN INNOVATION LEADERSHIP DELIVER NEW PRODUCT PIPELINE SummitReheis acquisi
Slide 38: How will we reignite growth: culture of high performance
How will we reignite growth CREATE A CULTURE OF HIGH PERFORMANCE Pursue Pursue Innovate Create Best Growth Supply Chain for High Margins a Culture of Opportunities Transformation & Distinctiveness High Performance STRUCTURE PROCESS SYSTEMATIC PERFORMANCE MANAGEMENT New appointments to support New ca
Slide 39: SummitReheis integration
SummitReheis integration Paul Waterman | CEO
Slide 40: SummitReheis acquisition
SummitReheis acquisition SUMMITREHEIS ACQUISITION Attractive Growing end Complementary Strong financial business market combination rationale A PERSONAL CARE BUSINESS OF SCALE Acquired SR sites Elementis sites H1 2017 Results SummitReheis integration 40
Slide 41: SummitReheis acquisition update
SummitReheis acquisition update OPPORTUNITIES CONFIRMED AP ACTIVES PHARMA ACTIVES S P E C I A LT Y D E N T A L Market leading products Category growth opportunities Strategic review underway Price increase implemented, Shared raw materials with AP Actives to offset raw material inflation Opportuniti
Slide 42: SummitReheis progress made
SummitReheis progress made Whatwesaid Whatwe’vedone DEAL COMPLETION Completion Q2 17 Completion 24/3/17 Full integration by end 2017 Key account access I N T E G R AT I O N Global manufacturing process On track One Personal Care team VA L U E C R E AT I O N Up to $3 million cost savings per annum On
Slide 43: H2 2017 outlook
H2 2017 outlook FULL YEAR PERFORMANCE REMAINS ON TRACK CHROMIUM C O AT I N G S PERSONAL CARE Resilient demand Modest progression Fast growth SUMMITREHEIS ENERGY S U R FA C TA N T S ACQUISITION Continued momentum expected Pursuing sale option Integration complete by year end H1 2017 Results H2 2017 o
Slide 44: Questions
Questions Paul Waterman | CEO Ralph Hewins | CFO
Slide 45: Contact Information
Contact Information Paul Waterman Ralph Hewins James Curran Chief Executive Officer Chief Financial Officer Director of Investor Relations Paul.Waterman@elementis.com Ralph.Hewins@elementis.com James.Curran@elementis.com 020 7067 2999 020 7067 2999 020 7067 2999 H1 2017 Results Contact information 4
Slide 46: Appendix
Appendix
Slide 47: Financial Overview
Financial Overview SALES $m O P E R AT I N G P R O F I T * $ m O P E R AT I N G M A R G I N * % 320 60 20% S P E C I A LT Y PRODUCTS 0 0 0% H1 16 H2 16 H1 17 H1 16 H2 16 H1 17 H1 16 H2 16 H1 17 120 20 20% CHROMIUM 0 0 0% H1 16 H2 16 H1 17 H1 16 H2 16 H1 17 H1 16 H2 16 H1 17 35 9.5 35% S U R FA C TA
Slide 48: Capital spending
Capital spending $m H1 2016 H1 2017 Increased spending in 2017 Specialty Products 7 9 due to HSE compliance projects Chromium 7 5 Livingston gel expansion Other 2 1 Estimated 2017 capex of ~ $40 million following SummitReheis acquisition Total Group Capital Spending 16 15 H1 2017 Results Appendix 48
Slide 49: Retirement plans
Retirement plans NET DEFICIT $m DEFICIT CONTRIBUTIONS $m H1 2016 H1 2017 UK plan 3 7 US/other 1 0 Total 4 7 99 IAS 19 deficits continue to come down 66 UK plan assets include significant interest rate protection 29 30 25 Contributions declining in line with deficit reduction 24 Full year contributio