Synthomer Plc · LSE:SYNT
Synthomer — H1 2015 Earnings Presentation
25 slides from Synthomer's earnings presentation, Aug 11, 2015
Slide 1: Interim Results Presentation
Interim Results Presentation 11th August 2015
Slide 2: Cautionary Statement
Cautionary Statement This review is intended to focus on matters which are relevant to the interests of shareholders in the Company. The purpose of the review is to assist shareholders in assessing the strategies adopted and performance delivered by the Company and the potential for those strategies
Slide 3: Agenda
Agenda Introduction and Headlines Financial Performance Business Review and H1 Progress Q&A 3
Slide 4: Strong Profit Growth; underlying EPS up 14.9%
Strong Profit Growth; underlying EPS up 14.9% Robust operating performance in Europe and North America (ENA): - H1 operating profit stable in constant currency - Good progress in Constructions & Coatings, Functional Polymers & Foam - Challenging Paper and Carpets markets Strong performance in As
Slide 5: Financial Performance
Financial Performance 5
Slide 6: Strong Earnings Growth: EPS up 14.9% at 11.6p
Strong Earnings Growth: EPS up 14.9% at 11.6p % Constant 2015 2014 % Change FX Volumes (Ktes) 649.6 608.5 6.8 Total Sales (£m) 468.7 510.1 (8.1) (1.9) EBIT (£m) 55.4 51.1 8.4 16.4 PBT (£m) 51.3 45.0 14.0 23.1 EPS 11.6p 10.1p 14.9 DPS 3.2p 3.0p 6.7 Group volumes up 6.8%: Europe up 4.7%, (exclude Sy
Slide 7: Segment Operating Profit: Different Market Dynamics
Segment Operating Profit: Different Market Dynamics % Constant 2015 2014 % Change currency ENA Volumes (Ktes) 432.9 413.4 4.7 Sales (£m) 307.0 362.7 (15.4) (6.9) EBIT (£m) 42.1 47.8 (11.9) (3.8) ARW Volumes (Ktes) 216.7 195.1 11.1 Sales (£m) 161.7 147.4 9.7 10.4 EBIT (£m) 18.9 7.3 158.9 161.6 ENA
Slide 8: ENA: Stable Operating Profit
ENA: Stable Operating Profit (post currency and performance bonuses) 60 OPERATING PROFIT in GBP m 50 2.5 0.1 4.4 3.9 40 30 47.8 46.0 20 42.1 10 0 H1 2014 VOL MARGIN COSTS H1 2015 @ FX H1 2015 CC TRANSLATION Volumes higher by 4.7%, (Synthomer Finland), underlying volumes down 1.6% Average unit ma
Slide 9: ARW: Strong Operating Profit, up 161.6% (constant currency)
ARW: Strong Operating Profit, up 161.6% (constant currency) 30 OPERATING PROFIT in GBP m 20 4.7 0.2 13.6 10 19.1 18.9 2.9 7.3 0 H1 2014 VOL MARGIN COSTS H1 2015 @ FX H1 2015 CC TRANSLATION Volumes higher across all regions and businesses by 11.1%, mainly Dispersions (Construction & Coatings) and N
Slide 10: Strong Cash Flow
Strong Cash Flow £m 2015 2014 Underlying EBIT inc JVs (£m) 55.4 51.1 JVs (2.4) (3.1) Underlying EBIT exc JVs (£m) 53.0 48.0 Depreciation (£m) 11.2 9.7 Movement in working capital (£m) (18.9) (19.1) Capital expenditure (£m) (7.8) (11.6) Tax, interest, pensions, JV dividends (£m) (10.9) (10.7) Busines
Slide 11: Conservative Balance Sheet and Good Liquidity
Conservative Balance Sheet and Good Liquidity 2015 2014 Net cash (£m) 44.1 78.1 Borrowings (£m) (121.3) (192.7) Net debt (£m) (77.2) (114.6) Undrawn revolver (£m) 100.0 60.0 Net debt: EBITDA (LTM) <1.0 <1.0 Conservative balance sheet – net debt: EBITDA <1.0 pre dividend payments Substantial avai
Slide 12: Closing Remarks
Closing Remarks Tax rate: - Currently stable, but awaiting outcome of Base Erosion and Profit Stripping (“BEPS”) Pensions: - Triennial valuation; awaiting outcome and discussion on funding plan Synthomer 2015 on track to deliver approximately €10 million annualised savings by end 2015 - H1 end
Slide 13: Business Review and H1 Progress
Business Review and H1 Progress 13
Slide 14: H1 Priorities
H1 Priorities SHE Developkey Identify key understanding Optimiseof the business priorities for organisational Acquisition SHE organic structure strategy Identify growth key priorities for future growth Optimise organisational structure Long term growth story 14
Slide 15: Safety, Health and Environmental (SHE) Performance Review
Safety, Health and Environmental (SHE) Performance Review Line of Fire Training programme on all 1.2 sites >3 day loss time injury rate 0.99 1.0 continues to improve 0.8 Leading Indicators showing improvement — Critical Equipment Inspections — Positive safety indicators 0.6 — Process Safety impr
Slide 16: SBR Latex: Locations and Assets – mainly Europe
SBR Latex: Locations and Assets – mainly Europe Styrene Butadiene Rubber (SBR) X 3 assets No 1 in Europe in SBR Carpets & Foam SBR Latex and compounds for carpets, pillows and mattresses No 1 in Europe in Compounds No 1 Worldwide in HS-SBR Construction & Textiles SBR Latex for cement additives
Slide 17: Dispersions: Locations and Assets
Dispersions: Locations and Assets Dispersions No 1 in UK, Middle East, S Africa and ASEAN Paint Decorative, speciality and industrial No 4 in Europe No 1 in UK, Middle East Pressure sensitive labels and tapes, packaging and wood Adhesives No 1 ASEAN in Paper & wood glues No 3 in Europe N
Slide 18: NBR Latex: Locations and Assets – mainly Asia
NBR Latex: Locations and Assets – mainly Asia Nitrile Butadiene Rubber (NBR) Dipped Goods Nitrile Latex for thin wall protective gloves and industrial gloves No 1 Worldwide 17
Slide 19: Specialities: Locations and Assets – Europe
Specialities: Locations and Assets – Europe Specialities X 4 sites X 2 sites Speciality Polyvinyl Alcohol for use as a suspension agent in PVC Alcotex No 1 Worldwide polymerisation Liquid Polybutadiene for automotive sealants, electronic encapsulants, Lithene No 2 in Europe and USA printing plat
Slide 20: A Robust Business in Europe & North America
A Robust Business in Europe & North America SBR Latex: 48.2% of volumes (Paper: 33.1% , Carpet: 10.4% & Foam: 4.7% ) End Market Market Outlook Objectives Paper Volumes Maintain market share Margin Margin stability Priorities Carpet Volumes Maintain volumes Drive operational Margin Margin stability
Slide 21: Strong Growth Momentum in Asia and Rest of World
Strong Growth Momentum in Asia and Rest of World Asia NBR Latex: 66.2% of volumes End Market Outlook Objectives Gloves Volumes Margin stability Priorities Margin Maintain volumes Expansion opportunities in Dispersions: 21.4% of volumes PG (NBR) and Kluang End Market Outlook Objectives (Dispersions
Slide 22: Continued Focus on Innovation
Continued Focus on Innovation Coatings & Health & Performance Construction Protection Polymers New range of SBR latex for Continued sales growth of Lithene® Ultra technology polymer-modified mortar 6328 (launched 2013) as delivering sales in new Growing sales from the new further gloves line
Slide 23: Group Organisational Structure
Group Organisational Structure Executive team restructured to 7 people - More focus and increased accountability - European team to be based in London; office opens in September 2015 Senior appointments: - Chief Financial Officer - Operations Director - HR Director - EMEA Latex Business Director
Slide 24: Long Term Growth Story
Long Term Growth Story Will continue to drive organic growth from the existing business - Confident of being able to deliver circa 3– 4% EBITDA growth p.a. through the cycle, focusing on high margin, high value businesses - Further supported by strong cash generation - Investment in Asia assets an
Slide 25: Summary and Outlook
Summary and Outlook Key Messages Accelerate growth for the long term – organically and through acquisition Allocate capital to deliver enhanced shareholder value Cost savings to deliver annual benefits of circa €10 million by end of 2015 Innovation continuing at record levels Continued inv