Slide 1: Elementis plc Interim Results
Elementis plc Interim Results Six months ended 30 June 2011
Slide 2: Interim Results
Interim Results $ millions H1 2011 H1 2010 % change Revenue 396.0 358.0 +11% Operating profit 72.2 48.7 +48% Operating margin 18.2% 13.6% Profit before tax 70.6 46.2 +53% EPS 10.6c 7.2c +47% Operating cash flow 56.1 52.2 +7% Basic EPS 10.8c 7.3c +48% 2
Slide 3: Highlights
Highlights Financial and strategic progress Specialty Products • Record operating profit and margin • Investing in growth Chromium • Financial performance validating new business model • Sustainable competitive advantage Strong cash flow • Debt down 50% since June 2010 • Successful EU appeal – Euro
Slide 4: Specialty Products
Specialty Products $ millions H1 2011 H1 2010 % Change Sales 237.2 215.8 +10% Operating profit 49.4 37.3 +32% Operating margin 20.8% 17.3% ROCE* 48% 37% Improved margins in inflationary period • Pricing discipline • Enhancing product portfolio • Best in class procurement * Before tax and excluding g
Slide 5: Specialty Products
Specialty Products H1 2011 Sales Personal ROW Care 10% 9% Oilfield N America 13% 30% Asia Pac Industrial 29% Coatings 52% Decorative Coatings Europe 26% 31% Leveraging strategic diversity in markets, technology, customers and geography 5
Slide 6: Specialty Products
Specialty Products Growth momentum driven by: Operating profit trend $m • Formulation expertise in 60 • Coatings • Oilfield/Energy 50 • Personal care 40 • Robust product pipeline 30 • Balanced geographic presence • Extensive product portfolio 20 • Market share gains 10 • Financial flexibility 0 H1 0
Slide 7: Surfactants
Surfactants $ millions H1 2011 H1 2010 Sales 51.6 43.6 Operating profit 3.0 2.2 Volumes reduced by 10% in line with strategy Facility preferentially supporting Specialty Profitability sustained through pricing discipline Products business 7
Slide 8: Chromium
Chromium $ millions H1 2011 H1 2010 % Change Sales 115.1 104.5 +10% Operating profit 26.2 16.1 +63% Operating margin 22.8% 15.4% ROCE* 66% 35% Strong financial performance Business running at high capacity utilisation Volumes 5% lower due to planned kiln maint. and energy project Energy project comp
Slide 9: Chromium
Chromium H1 2011 Sales Markets Geography Other ROW Leather 8% 9% Refrac. 12% 9% Timber Asia Pacific Treatment 19% Pigments / 13% Ceramics N America 16% 56% Metal Europe Finishing 16% 37% Metal Alloys 5% Product portfolio serves diverse end markets Business benefited from greater proportion of sales
Slide 10: Chromium: Optimising business performance with reduced volatility
Chromium Optimising business performance with reduced volatility Enviable N American market position High return on capital Flexible, globally competitive operations Diverse end markets Positive market dynamics 10
Slide 11: Capital spending
Capital spending $ millions H1 2011 FY 2011 Est Depn FY 2011 Specialty Products Plant expansions 2.4 8.3 Maint. & productivity 2.2 3.7 Total 4.6 12.0 10.8 Chromium Energy project 1.7 1.7 Maint. & productivity 2.7 6.6 Total 4.4 8.3 6.4 Other 0.7 5.9 2.8 Group total 9.7 26.2 20.0 11
Slide 12: Working Capital
Working Capital Sustainable improvements in working capital $m Sales WC WC ratio 450 35% Average working capital to sales 400 ratio reduced to 17.1% 396 30% 350 358 Working capital in H1 2011 300 25% increased by $17m in line 250 with sales and currency 253 20% 200 150 163 15% 100 137 120 50 10% H1
Slide 13: Retirement Plans
Retirement Plans $ millions H1 2011 H1 2010 FY 2010 FY 11 Est. Net deficit 56.5 104.1 67.4 Deficit contributions UK plan 9.1 2.2 10.6 16.0 US/other 2.8 0.8 7.8 4.3 11.9 3.0 18.4 20.3 Deficit reduced by 40% Deficit has continued to decline • Total contributions for 2011 expected to be $20.3m • Growth
Slide 14: Cash Flow
Cash Flow $ millions H1 2011 H1 2010 EBITDA 82.0 59.4 Working capital (15.6) (2.6) Capital expenditure (9.7) (4.7) Pensions (11.9) (3.0) Dividend (11.5) (9.5) Interest, tax, other (5.7) (4.2) Currency translation (0.2) ‐ Exceptional items (2.5) (37.4) Change in net debt 24.9 (2.0) 14
Slide 15: Net Debt
Net Debt $ millions 2011 2010 2010 June 30 Dec 31 June 30 Net debt 54.4 79.3 108.3 Debt ratios Net debt: EBITDA 0.4 0.6 1.1 Interest cover 30.7 31.0 35.6 Net debt to Ebitda reduced to 0.4x Group is likely to be in a net cash position by the end of 2011 15
Slide 16: Tax Charge
Tax Charge $ millions H1 2011 H1 2010 Net tax charge 22.4 14.0 Tax rate 32% 30% Estimated tax rate for full year 2011 is 30% Higher rate in H1 due to deferred tax adjustment following reduction in UK tax rate to 26% 16
Slide 17: Dividend
Dividend 2011 Interim 2010 Interim Final 2010 Per share 2.34c 2.34c 2.6c Board maintained interim dividend at same level in order to reweight payout towards the final • Target is 1/3 : 2/3 2011 final dividend will reflect progress in full year earnings 17
Slide 18: Summary
Summary Revenue increased by 11% Operating profit increased by 48% Record performance in Specialty Products Operating margins improved in all areas of the business Strong cash flows led to 50% reduction in debt since June 2010 Successful EU appeal – Euro 23.4m repaid with interest on 1 August 2011 1
Slide 19: Outlook
Outlook Solid order book in Q3 Confident in our ability to maintain margins Financial flexibility to support growth Expect to make progress in H2 in line with expectations 19
Slide 20: Thank you
ELEMENTIS Thank you