Vesuvius Plc · LSE:VSVS
Vesuvius — H1 2013 Earnings Presentation
32 slides from Vesuvius's earnings presentation, Aug 2, 2013
Slide 1: 2013 Half Year Results
pro A global leader in metal flow engineering 2013 Half Year Results 2 August 2013 François Wanecq, Chief Executive
Slide 2: Disclaimer
Disclaimer This presentation, which has been prepared by Vesuvius plc (the “Company”), includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward- looking terminology, including the terms "believes", "e
Slide 3: Solid progress in implementation of Strategy
Solid progress in implementation of Strategy • Portfolio rationalisation – Sold Precious Metals Processing – Disposed of VGT Dyko and Canadian installation business • Self-help actions to drive margin improvement – Closed loss-making Solar Crucibles operations in China – Improved flexibility of cost
Slide 4: Solid H1 trading performance
Solid H1 trading performance £m Revenue £m Trading Profit % Trading Margin 900 90 12 819 80 773 80 800 729 9.7% 71 10 9.2% 700 70 600 60 8 7.1% 51 500 50 6 400 40 300 30 4 200 20 2 100 10 0 0 0 H1 2012 H2 2012 H1 2013 H1 2012 H2 2012 H1 2013 H1 2012 H2 2012 H1 2013 • Revenue and Trading Profit still
Slide 5: Steel markets: some improvement in our major markets vs. H2 2012
Steel markets: some improvement in our major markets vs. H2 2012 Steel production - EMEA Steel production – NAFTA mt mt 250 90 H1 2013 up 3.5% vs. H2 2012 80 H1 2013 up 0.4% vs. H2 2012 200 70 60 150 50 40 100 30 20 50 10 0 0 H1 07 H1 08 H1 09 H1 10 H1 11 H1 12 H1 13 H1 07 H1 08 H1 09 H1 10 H1 11 H1
Slide 6: H1 Trading Review: Steel Flow Control Revenue
H1 Trading Review : Steel Flow Control Revenue Revenue by region Revenue performance better than end-markets £m H1 2012 H2 2012 H1 2013 EMEA: 140 • Impact of Metallurgica acquisition • Increased market penetration 120 Americas: 100 • Improved product mix in South America • Fall in revenue from tempo
Slide 7: H1 Trading Review: Advanced Refractories Revenue
H1 Trading Review : Advanced Refractories Revenue Revenue by region £m Revenues reflect restructuring initiative to exit 120 H1 2012 H2 2012 H1 2013 low-margin business 100 EMEA: • Disposal of VGT-Dyko 80 Americas: • Winding-down of Canadian installation business 60 prior to disposal 40 Asia: • Disp
Slide 8: H1 Trading Review: Steel Margins
H1 Trading Review : Steel Margins £m (as reported) H1 2012 H2 2012 H1 2013 Margin progression % Revenue 12 10 9.6% Steel Flow Control 278 264 279 8.3% 8 6.5% Advanced Refractories 252 224 235 6 Total Revenue 530 488 514 4 Total Trading Profit 51 32 43 2 Trading Margin % 9.6% 6.5% 8.3% 0 H1 2012 H2 2
Slide 9: Foundry markets: improvement from H2 2012 but still lower than H1 2012
Foundry markets : improvement from H2 2012 but still lower than H1 2012 Light vehicle production Truck production 14,000,000 450,000 Nafta Europe Nafta Europe 400,000 12,000,000 350,000 10,000,000 300,000 8,000,000 250,000 6,000,000 200,000 150,000 4,000,000 100,000 2,000,000 50,000 - - H1 H2 H1 H2
Slide 10: H1 Trading Review: Foundry revenue
H1 Trading Review : Foundry revenue Revenue by region £m H1 2012 H2 2012 H1 2013 Revenues recovered from H2 2012 140 EMEA: 120 • Light vehicle production up 7.1% • Heavy truck production down 8.5% 100 Americas: 80 • NAFTA light vehicle production up 9.4% vs. H2 2012 • Heavy truck production in NAFTA
Slide 11: H1 Trading Review: Foundry margin
H1 Trading Review : Foundry margin H1 H2 H1 % Margin progression (excl. Solar Crucibles) £m (as reported) 2012 2012 2013 14 12.2% Revenue 12 10.9% 10.3% 10 Foundry (excl. Solar Crucibles) 283 237 256 8 Solar Crucibles 6 4 3 6 Total Revenue 289 241 259 4 Total Trading Profit 29 19 28 2 0 Trading Marg
Slide 12: H1 Trading Summary
H1 Trading Summary • Market conditions generally stable, no further deterioration seen following the downturn in H2 2012 • Good performance delivered across the Group; revenue and trading profit robust against reduced y-o-y end-market demand • Initial improvement in trading margin coming through fro
Slide 13: Chris O'Shea, CFO
A global leader in metal flow engineering A global leader in metal flow engineering Chris O’Shea, CFO
Slide 14: Income Statement
Income Statement (Headline, pro-forma) H1 2013 H1 2012 Change H2 2012 Change (vs. H1 (vs. H1 £m £m 2013) £m 2013) Revenue 773 819 -6% 729 +6% Trading Profit 71 80 -11% 51 +37% Trading margin % 9.2% 9.7% 7.1% Net finance costs (8) (8) (6) Share of JV 1 (1) 1 Profit before Tax 64 71 -10% 46 +38% Effec
Slide 15: Revenue progression year-on-year
Revenue progression year-on-year £m 840 • Revenue down 5.7% on H1 2012 819 820 • Underlying(1) revenue 5.2% lower 5 -7 -3 • Disposals in line with strategy to exit 800 low-margin businesses 780 773 • Successful integration of -41 760 Metallurgica acquisition • Solar reflects closure of loss-making 7
Slide 16: Trading profit progression year-on-year
Trading profit progression year-on-year £m 100 • Trading profit reduced by 11% 6 90 2 • Underlying(1) profit down 19% 80 -1 80 71 – Reflects normal operational leverage 70 and one-off items -16 60 • Closure of Solar Crucibles operations 50 in China had positive impact on trading profit 40 30 20 10 0
Slide 17: Steel Performance year-on-year
Steel Performance year-on-year £m £m 535 Revenue 60 Trading profit 2 530 51 530 5 50 43 525 40 -10 -7 520 30 515 514 Includes c. £6m adverse one-off items -14 20 510 10 505 500 0 H1 2012 Acquisitions & Currency Underlying H1 2013 H1 2012 Acquisitions & Currency Underlying H1 2013 Disposals Disposals
Slide 18: Foundry Performance year-on-year
Foundry Performance year-on-year £m £m 300 Revenue 50 Trading profit 289 290 45 280 -3 40 6 270 35 259 29 -1 260 30 28 -27 250 25 -6 240 20 230 15 220 10 210 5 200 0 H1 2012 Solar Crucibles Currency Underlying H1 2013 H1 2012 Solar Crucibles Currency Underlying H1 2013 1 7 17
Slide 19: Sequential revenue & trading profit progression
Sequential revenue & trading profit progression £m £m 800 Revenue 80 Trading profit 780 27 773 13 71 70 760 22 2 60 5 740 729 51 720 50 -4 -1 700 40 680 Reflects.£6m reduction 30 in bad debt charges 660 20 640 620 10 600 0 H2 2012 Acquisitions Solar Currency Underlying H1 2013 H2 2012 Acquisitions S
Slide 20: Cash generated from continuing operations
Cash generated from continuing operations £m 100 • Cash generated represents 102% of 19 3 Trading Profit 90 80 • Improvement in working capital 71 72 performance 70 -21 • 25.8% of sales (12 month average) 60 50 • Inventory reduction programme making progress 40 • 78 days (12 month average) 30 • Capi
Slide 21: Free Cash Flow from continuing operations
Free Cash Flow from continuing operations £m 80 72 Recurring Free Cash Flow represents 110% of Headline Earnings 70 -6 60 One off items include: 48 1 • H1 Restructuring 50 38 • £3.0m charge – trailing costs related 40 -19 mainly to closure of Solar Crucibles -7 -3 • Total cash costs of £7.3m 30 • £1
Slide 22: Net Debt
Net Debt £m 350 Disposal of European Precious Metals Processing completed at end May 300 295 12 273 • Proceeds €56.8m – subject to usual 26 1 closing balance sheet adjustments 250 38 6 8 • Net profit on disposal of £19.6m 37 200 Share buy-back programme initiated • To return up to £30m of proceeds o
Slide 23: Pensions update
Pensions update • UK defined benefit Plan fully funded as at 31 December 2012 • Based on latest triennial valuation – recently approved by Trustee • Results from 10 years de-risking initiatives, including £320m pensioner buy-in in 2012, and Company contributions • Annual £4.7m cash contribution to P
Slide 24: Dividend Policy
Dividend Policy Dividend growth will be driven by long-term earnings growth Full-year 2012 base dividend of 14.25 pence per share • Vesuvius’ share of Cookson full-year dividend of 22.5 pence – Interim 7.5 pence – Final 15.0 pence • 9.5 pence Vesuvius • 5.5 pence Alent 2013 dividend • Interim di
Slide 25: Financial strategy
Financial strategy • Financial flexibility essential • Conservative balance sheet stewardship • Focus on cash generation • Cost control • Efficient working capital management • Improve returns 2 4 24
Slide 26: François Wanecq, Chief Executive
A global leader in metal flow engineering A global leader in metal flow engineering François Wanecq, Chief Executive
Slide 27: Strategy
Strategy • Maintain technology leadership Long-term revenue growth, ahead of our end markets • Increase penetration of value creating solutions Higher trading margins and returns on capital employed • Capture growth in developing markets Strong cash flow generation • Improve cost leadership
Slide 28: Strategy - continued
Strategy - continued • Maintain technology leadership Robotic tube changer in Korea New lining concepts for blast • Increase penetration of value creating solutions furnace troughs New management in China • Capture growth in developing markets improving quality & value selling • Improve cost leaders
Slide 29: Solid progress in implementation of Strategy
Solid progress in implementation of Strategy • Portfolio rationalisation – Sold Precious Metals Processing – Disposed of VGT Dyko and Canadian installation business • Self-help actions to drive margin improvement – Closed loss-making Solar Crucibles operations in China – Improved flexibility of cost
Slide 30: Outlook
Outlook FY 2013: • Self-help actions expected to consolidate trading margin recovery in second half • Visibility remains limited - activity levels after summer shut-downs will be key indicator of end-market conditions in the second half of the year Medium term: • Continued actions in 2013 will take
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Slide 32: Revenue and trading margins: 5-year summary
Revenue and trading margins : 5-year summary £m FY2008 FY2009 FY2010 FY2011 FY2012 Revenue 1,358 1,100 1,451 1,645 1,538 Steel 866 753 980 1,078 1,018 Foundry 492 347 471 567 520 EBIT 162 54 157 182 143 Steel 98 49 104 107 84 Foundry 64 5 53 75 59 EBIT margin 11.9% 4.9% 10.8% 11.1% 9.3% Steel 11.3%