Morgan Advanced Materials Plc · LSE:MGAM
Morgan Advanced Materials — H1 2013 Earnings Presentation
32 slides from Morgan Advanced Materials's earnings presentation, Jul 24, 2013
Slide 1: 2013 Half Year Financial Results
2013 Half Year Financial Results 24th July 2013 www.morganadvancedmaterials.com
Slide 2: Agenda
Agenda Introduction and Summary Mark Robertshaw 2013 Half Year Group results Kevin Dangerfield Operational results and “One Mark Robertshaw Morgan” update Outlook Mark Robertshaw 2
Slide 3: Summary
Summary • Revenue in H1 2013 is broadly in line with H2 2012 at constant currency – consistent with the guidance given over recent months • EBITA margins improved to 12.0% in H1 2013 compared with 11.0% in H2 2012 driven by self help initiatives in a market environment that continues to be challengi
Slide 4: 2013 Half Year Group Results
2013 Half Year Group Results Kevin Dangerfield 4
Slide 5: Revenue in H1 broadly in line with H2 2012; EBITA margin up to 12.0%
Revenue in H1 broadly in line with H2 2012; EBITA margin up to 12.0%; interim dividend up by 5.6% 2012 comparatives have been restated to reflect the impact of IAS 19 (revised) Employee Benefits – details of the adjustments made are provided in the Appendix 5
Slide 6: Restructuring costs, net financing costs, tax
Restructuring costs, net financing costs, tax • Restructuring costs mainly from implementation of “One Morgan” organisational streamlining • Net financing costs include IAS19 (revised) charge of £3.3 million • Effective tax rate of 28.5% (H1 2012: 29.8%) 2012 comparatives have been restated to refle
Slide 7: Cash generation in line with H1 2012
Cash generation in line with H1 2012 • 3WC/Sales % of 23.4%, marginally higher than the 22.7% at H1 2012 • Capex at 0.9x depreciation in H1; expect c.£40 million for full year • Dividend reflects the acceleration of the 2012 Year Dividend • Large exchange movement due mainly to strengthening of US$
Slide 8: Summary
Summary • Improving margins to 12.0% • Good cash flow generation in H1 • Dividend increased 5.6% 8
Slide 9: Operational results and "One Morgan" update
Operational results and “One Morgan” update Mark Robertshaw 9
Slide 10: Group margins up in H1 2013 versus H2 2012
Group margins up in H1 2013 versus H2 2012, driven by improving performance in European businesses 10
Slide 11: Different end-market mix across regions drives differences in strategic and operational emphasis
Different end-market mix across regions drives differences in strategic and operational emphasis 11
Slide 12: Europe – good sales growth and a 320bps increase in margin
Europe – good sales growth and a 320bps increase in margin • At constant currency, sales increased by 5.6% compared with H2 2012 with encouraging growth in electrical, seals and bearings, ceramic cores for aerospace and IGT and an improvement in Composites and Defence Systems (formerly NPA) • EBITA
Slide 13: North America – stable revenue and mid-teen margins maintained
North America – stable revenue and mid-teen margins maintained • At constant currency, revenue in line with H2 2012. Increases in sales to medical and an improvement in the general industrial market been offset by delays in larger CPI projects and a reduction in semicon and HDD sales • EBITA margins
Slide 14: Asia/Rest of World – no recovery in industrial markets
Asia/Rest of World – no recovery in industrial markets; focus on operational effectiveness and positioning for future • At constant currency, sales were 6.4% below H2 2012. Delays to large petrochemical projects and the continued softness in the wider Chinese and Indian industrial markets have impac
Slide 15: Self help initiatives – significant focus in 2013
Self help initiatives – significant focus in 2013, driving increased profits and margins • Site rationalisation • Closure of Netherlands facility completed in Q2 and manufacturing relocated to Hungary • Closure of fibre operations in Australia, now sourcing from lower cost Asian plants • Operating c
Slide 16: "One Morgan": Driving profitable growth
“One Morgan”: Driving profitable growth • Maximise full breadth and depth of advanced materials capabilities for our customers • Fully leverage our geographic and end-market positions • Accelerate positive mix change across the regions into our target markets 16
Slide 17: Delivery of "One Morgan" firmly on track
Delivery of “One Morgan” firmly on track • New organisational structure and unified management teams in place • Flatter structure and leaner organisation facilitating better communication, quicker decision making and actions • First order cost benefits of management delayering delivering benefits no
Slide 18: Continuing to invest for long-term profitable growth
Continuing to invest for long-term profitable growth • Superwool® roll out progressing well – latest phase of fibre line conversions in USA, China, Korea, India and Brazil • 2 new greenfield sites under development: Kizad, UAE (fibre) and Dalian, China (high-temperature insulating castables) • Conti
Slide 19: Unifying characteristics of an integrated One Morgan
Unifying characteristics of an integrated One Morgan • Leading edge material science • Sophisticated application engineering • Solving complex challenges in technically demanding applications • Providing real value-add to our customers, enabling their products and processes to perform more efficient
Slide 20: Outlook
Outlook Mark Robertshaw 20
Slide 21: Outlook
Outlook • Market environment expected to be broadly similar to H1 • Book-to-bill ratio 2013 year to date marginally positive • Focus remains on self-help actions with “One Morgan” benefits coming through progressively as the year goes on • £10 million of profit improvement initiatives in full year (
Slide 22: 2013 Half Year Financial Results
2013 Half Year Financial Results 24th July 2013 www.morganadvancedmaterials.com
Slide 23: Appendix
Appendix 23
Slide 24: Group margin improved versus H2 2012, driven by AM&T and Composite and Defence Systems
Group margin improved versus H2 2012, driven by AM&T and Composite and Defence Systems 24
Slide 25: EBITA margins before restructuring and one-off items
EBITA margins before restructuring and one-off items 25
Slide 26: EBITA margins after restructuring and one-off items
EBITA margins after restructuring and one-off items 26
Slide 27: Market positioning and differentiation enables continued positive pricing
Market positioning and differentiation enables continued positive pricing 27
Slide 28: Pensions IAS19 Revised – Restatement of 2012 comparatives
Pensions IAS19 Revised – Restatement of 2012 comparatives 28
Slide 29: Reduced Operating ROCE due mainly to LTM EBITA
Reduced Operating ROCE due mainly to LTM EBITA All £ million 2013 2012 2012 At reported rates Half Year Year End Half Year Restated Restated LTM EBITA 92.0 107.7 136.3 Change -v- 2012 Year End -14.5% Operating Capital Land & Building - NBV 105.4 98.9 98.7 Plant & Equipment - NBV 146.7 146.6 153.4 Th
Slide 30: Net financing costs
H1 2013 H2 2012 H1 2012 £m £m £m Restated Restated Bank interest charge 9.2 8.8 9.7 Bank interest income (0.6) (0.5) (1.1) Interest expense on unwinding of discount on 0.0 01 01 deferred consideration : : : IAS19 Revised charge 3.3 2.5 3.1 11.9 10.9 11.8 pMeren
Slide 31: Underlying EPS
Underlying EPS Basic earnings from continuing operations Amortisation Underlying earnings Weighted average number of shares in the period Underlying earnings per share MMorgan Advanced Materials H1 2013 H2 2012 H1 2012 Restated Restated £m £m £m 24.0 18.0 33.8 4.0 4.2 4.1 28.0 22.2 37.9 281.0m 280.0
Slide 32: 2013 Half Year Financial Results
2013 Half Year Financial Results 24th July 2013 www.morganadvancedmaterials.com
Morgan Advanced Materials — H1 2013 Earnings Presentation on 6ix