Slide 1: 2021 results
2021 results Enhanced Performance Through Applied Innovation Enhanced Performance Through Applied Innovation
Slide 2: Cautionary statement
Cautionary statement 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 businesses of
Slide 3: Results agenda
Results agenda INTRODUCTION Paul Waterman HIGHLIGHTS & SEGMENT PERFORMANCE Paul Waterman GROUP FINANCIALS Ralph Hewins OUTLOOK & PRIORITIES Paul Waterman QUESTIONS Paul Waterman & Ralph Hewins Enhanced Performance Through Applied Innovation 3
Slide 4: Highlights
HIGHLIGHTS PAUL WATERMAN, CEO Paul Waterman Ralph Hewins Enhanced Performance Through Applied Innovation Enhanced Performance Through Applied Innovation
Slide 5: Key messages
Key messages 1 2 3 4 5 Steady demand Resilient supply Pricing actions Encouraging Leverage down recovery chain fully mitigate strategic from 3.2x to performance accelerating progress 2.6x inflation Paul Waterman Ralph Hewins Enhanced Performance Through Applied Innovation 5
Slide 6: Continued focus on safety
Continued focus on safety SAFETY PERFORMANCE HIGHLIGHTS Recordable Elementis US Chemical Injuries Injuries TRIR Sector TRIR TRIR Performance ▪ Zero major incidents 18 2.5 16 ▪ 74% of plants with zero employee injuries 14 ▪ India plant 1,000,000 hours injury free 12 1.5 10 8 Safety Initiatives 6 0.5
Slide 7: Strong performance improvement
Strong performance improvement 2021 FINANCIAL OVERVIEW $m 2020 2021 % Change Sales 751 880 + 17% Operating profit* 82 107 + 31% Operating margin* 10.9% 12.1% + 120bps Profit before tax* 53 77 + 46% Diluted EPS* 6.5c 10.6c +63% Net debt 408 401 -2% Net debt / EBITDA 3.2x 2.6x - * After adjusting item
Slide 8: Proactive supply chain actions
Proactive supply chain actions CONTINUED OPERATIONAL RESILIENCE CHALLENGES & ACTIONS Sharp demand recovery Increased production | Prioritised SKUs | Order flexibility Raw material shortages & cost increases Price increases | Alternative suppliers qualified Logistics congestion & freight increases Su
Slide 9: Strategy implementation on track
Strategy implementation on track ACHIEVEMENTS INNOVATION GROWTH EFFICIENCY Record $50m of $10m savings 21 new product launches new business won delivered in 2021 New products 14% of North America Coatings 17% Coatings revenue growth* sales vs 10% in 2017 plant consolidation complete Open innovation
Slide 10: Positive ESG momentum
Positive ESG momentum 2021 HIGHLIGHTS Environmental Social Governance ✓ First Global Sustainability Director ✓ Employee engagement up from 55% to 63% ✓ New Global Compliance Officer ✓ On track for 2030 environmental targets ✓ DE&I training & inaugural women in leadership forum ✓ New Ethics & Complia
Slide 11: Sustainability integrated in all we do
Sustainability integrated in all we do Personal Care Coatings Talc Chromium Replacing synthetics with natural Enabling waterborne Driving vehicle light Extending industrial equipment ingredients technologies & lower VOCs weighting & lower emissions life cycles Underpinned By Innovation & Efficiency
Slide 12: Segment performance
SEGMENT PERFORMANCE Enhanced Performance Through Applied Innovation
Slide 13: Personal Care performance
Personal Care performance VOLUME GROWTH RETURNS 2021 vs 2020 % Change Steadily improving market conditions $m 2020 2021 Constant Currency1 Sales 161 175 +6% H2 volume growth in Cosmetics & AP Actives Operating profit* 34 37 +6% Operating margin* 20.9% 21.0% Margins resilient – improved volumes/mix o
Slide 14: Personal Care performance: demand recovery continues
Personal Care performance DEMAND RECOVERY CONTINUES 2021 MARKET DEMAND BELOW 2019 LEVELS… …BUT POSITIVE SIGNS OF RECOVERY European Retail Volumes Growth (y-o-y) 110 -5%European -3% European 100 Cosmetics Retail Deodorants Retail 90 Sales Sales 2021 vs 2019 2021 vs 2019 80 70 Deodorants Cosmetics 60
Slide 15: Personal Care performance: strategic progress
Personal Care performance STRATEGIC PROGRESS SKIN CARE AP ACTIVES ASIA 41% revenue growth Q3 21 India facility start up 44% revenue growth 3 new product launches Creates resilient & lowest cost New Shanghai lab global supply chain opened in January $14m NBO pipeline – up 75% 7 new AP product launche
Slide 16: Coatings performance
Coatings performance STRONG GROWTH & EFFICIENCY DRIVE MARGIN IMPROVEMENT 2021 vs 2020 % Change Strong volume growth & new business $m 2020** 2021 Constant currency1 success Sales 319 384 +17% Pricing recovers raw material inflation Operating profit* 41 62 +46% Operating margin* 13.0% 16.1% Charlesto
Slide 17: Coatings performance: growth across sectors and regions
Coatings performance STRONG PERFORMANCE ACROSS SECTORS, GEOGRAPHIES AND KEY ACCOUNTS GLOBAL SYNERGY EXPANSION SECTOR GROWTH* DELIVERY REGIONAL GROWTH* AMERICAS EUROPE ASIA +24% +[25]% +13% +17% +27% +9% GLOBAL KEY ACCOUNTS* DECO INDUSTRIAL +28% * Constant currency sales growth Note: Analysis exclude
Slide 18: Coatings performance: strategic progress
Coatings performance STRATEGIC PROGRESS COATINGS PERFORMANCE ACCELERATED INNOVATION 7 new products launched in 2021 Waterborne industrial & Thixatrol ® expansion 70 20% 62 60 52 18% NEW BUSINESS MOMENTUM 50 Record $23m delivered in 2021 41 Growth platforms revenue +37% y-o-y 40 16% 16% 30 14% SE ASI
Slide 19: Coatings performance: growth platforms
Coatings performance GROWTH PLATFORMS 35% OF REVENUE TODAY ELEMENTIS ADDRESSABLE MARKET ELEMENTIS VS ADVANTAGES MARKET GROWTH* MARKET One coat hide & enhanced stain resistance PREMIUM Full technology “systems approach” $500m ~4% ++ DECO Powdered & preservative free versions Increased adhesion and “s
Slide 20: Talc performance
Talc performance ACCELERATING INFLATION MORE THAN OFFSETS STRATEGIC PROGRESS 2021 vs 2020 % Change Auto & paper weakness $m 2020 2021 Constant Currency1 Sales 133 150 +9% New business wins & geographic expansion drive Operating profit* 17 14 -19% sales growth Operating margin* 12.5% 9.3% Fast accele
Slide 21: Talc performance: pandemic headwinds
Talc performance PANDEMIC HEADWINDS OVERWHELM 2021 ACHIEVEMENTS INFLATION / DEMAND CHALLENGES… ….UNDERLYING STRATEGIC PROGRESS Netherlands Electricity* 365% Energy 196% Continued global expansion 188% inflation 66% $13m of new business Q1 21 Q2 21 Q3 21 Q4 21 24% Asia growth, 62% Americas growth Glo
Slide 22: Healthy fundamentals
Healthy fundamentals WELL POSITIONED TO RESUME LONG TERM GROWTH STRONG BUSINESS FUNDAMENTALS… …WITH CLEAR OPPORTUNITIES FOR GROWTH Price actions implemented Market Mix Pricing Share Gains Improvement Power ✓ 10-15% in Q4 2021 ✓ 5-10% surcharges Q1 2022 +7% CAGR Strategy implementation ✓ Asia & Ameri
Slide 23: Chromium performance
Chromium performance ROBUST VOLUME RECOVERY OFFSETS EMERGING INFLATION 2021 vs 2020 % Change Strong industrial demand $m 2020 2021 Constant currency1 Sales 147 171 +16% Improving utilisation points to further price Operating profit* 6 14 +152% recovery Operating margin* 3.8% 8.3% Margin improvement
Slide 24: Chromium performance: demand recovery, cost headwinds
Chromium performance DEMAND RECOVERY, COST HEADWINDS VOLUME RECOVERY CONTINUES GLOBAL UTILISATION IMPROVING COST INFLATION ACCELERATING Elementis Chromium Volumes (Y-o-Y)* Chromium Industry Capacity Utilisation Raw material index 160 110 +50% 90% 150 85% 140 100 80% 130 90 75% 120 80 70% 110 65% 100
Slide 25: Group financials
GROUP FINANCIALS RALPH HEWINS, CFO Paul Waterman Ralph Hewins Enhanced Performance Through Applied Innovation Enhanced Performance Through Applied Innovation
Slide 26: Group revenue
Group revenue VOLUMES DRIVE 14% UNDERLYING REVENUE GROWTH REVENUE $m +2% 880 +4% +8% +3% 770 751 2020 FX VOLUME PRICE MIX 2021 Paul Waterman Ralph Hewins Enhanced Performance Through Applied Innovation 26
Slide 27: Group operating profit
Group operating profit PRICING ACTIONS MORE THAN OFFSET VARIABLE COST INFLATION ADJUSTED OPERATING PROFIT $m +23% 107 -33% +38% 82 +2% 83 2020 FX VARIABLE COST PRICE UNDERLYING 2021 INFLATION ACTIONS GROWTH* * Excluding price impact Paul Waterman Ralph Hewins Enhanced Performance Through Applied Inn
Slide 28: Proactive margin management
Proactive margin management PRICING ACTIONS FULLY MITIGATE COST INFLATION BREAKDOWN OF SPEND & TREND ACTIONS TAKEN ELEMENTIS REALISED PRICING 9% Energy Packaging Plant & vegetable oils 6% 4% Quaternary amines Freight & logistics ~10% Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 cost inflation in
Slide 29: Ongoing cost savings
Ongoing cost savings 2021 - $10M OF SAVINGS 2023 - ADDITIONAL $10M OF SAVINGS Closed Charleston & St Louis capacity consolidation New India AP Actives plant – savings driver & growth enabler Procurement savings – revised make vs buy strategy Procurement savings – logistics optimisation, increased gl
Slide 30: Disciplined capex spend
Disciplined capex spend $50-55M SPEND IN 2022, ~6% OF SALES KEY 2022 PROJECTS Palmital, Brazil Livingston, Scotland Hsinchu, Taiwan Capex ($m) % of sales HASE expansion NiSAT expansion Organic thixotrope expansion 60 20.00% 50- 55 53 51 18.00% 50 47 16.00% 40 14.00% 40 12.00% 30 10.00% 8.00% 20 6.00
Slide 31: Cash flow
Cash flow SIGNIFICANT DELEVERAGING PROGRESS $m 2020 2021 EBITDA 133 159 Change in working capital 19 (32) Capital expenditure (40) (53) Operating Cash Flow 112 74 Working capital outflow to support revenue growth Pensions - - Interest (24) (23) Tax related payments (15) (44) $33m one off tax related
Slide 32: Disciplined capital allocation
Disciplined capital allocation CAPITAL • ~6% of sales INVEST FOR INVESTMENTS • Typical returns 20%+ IRR GROWTH on growth & productivity capex STRONG DEBT • Medium term ambition below 1.5x CASH FLOW REDUCTION SHAREHOLDER • Reinstate once further progress made RETURNS on reducing financial leverage Pa
Slide 33: Outlook & priorities
OUTLOOK & PRIORITIES PAUL WATERMAN, CEO Paul Waterman Ralph Hewins Enhanced Performance Through Applied Innovation Enhanced Performance Through Applied Innovation
Slide 34: Strong business fundamentals
Strong business fundamentals STRUCTURAL ELEMENTIS ADJUSTED OPERATING GROWTH DRIVERS OPPORTUNITIES PROFIT MARGINS 30.00% Natural ingredients Skin care 20.00% Product premiumisation Asia cosmetics 10.00% Emerging middle classes AP actives growth 0.00% 30.00% Decorative premiumisation 20.00% Premium de
Slide 35: Medium term Group performance objectives
Medium term Group performance objectives 2019 TODAY** OBJECTIVE MARGIN IMPROVEMENT ADJUSTED OPERATING PROFIT MARGIN 15.2%* 12.1% 17% CASH CONVERSION OPERATING CASH CONVERSION*** 83%^ 111% ^ 90% plus DE-LEVERAGING NET DEBT / EBITDA 2.8x* 2.6x Under 1.5 x * Last six months to 30 June 2019 ** Last twel
Slide 36: 2022 Outlook & Priorities
2022 Outlook & Priorities FURTHER PERFORMANCE IMPROVEMENT & DELEVERAGING OUTLOOK INNOVATION GROWTH EFFICIENCY 20 new product Secure $50m Complete India AP launches of NBOs actives ramp up Focus on strategy implementation 1 & continued self help actions Manufacturing Accelerated GKAM Coatings capacit
Slide 37: Q&A
Q&A Paul Waterman Ralph Hewins Enhanced Performance Through Applied Innovation Enhanced Performance Through Applied Innovation
Slide 38: Tax charge
Tax charge $m 2020 2021 FY 22 tax guidance 22-23% Underlying tax charge 14 15 Medium term P&L effective tax rate Tax charge: adjusting items (16) (11) guidance remains 22-23% until 2023, and 25-26% thereafter due to anticipated increase in UK corporation tax rates from April 2023 Reported tax charge
Slide 39: Adjusting items
Adjusting items $m Expense/(Income) 2020 2021 Amortisation of intangibles arising on acquisition 15 16 $16m amortisation of acquired intangibles Environmental provisions 7 8 Business transformation & restructuring 24 5 $8m environmental provision increase due to Eaglescliffe Impairment of goodwill 6
Slide 40: FY22 Technical Guidance
FY 22 Technical Guidance P&L CASH ▪ Depreciation – c.$50m ▪ Net interest ~$20m (of which c.$5m is IFRS 16 related) ▪ Capex $50-55m ▪ Amortisation – c.$15m (of which majority is amortisation of acquired intangibles) ▪ Tax – Effective rate 22-23% Enhanced Performance Through Applied Innovation 40