Synthomer Plc · LSE:SYNT
Synthomer — H1 2018 Earnings Presentation
23 slides from Synthomer's earnings presentation, Aug 6, 2018
Slide 1: Interim Results Presentation
Interim Results Presentation 6 August 2018 INTERIM RESULTS 6 August 2018
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 Headlines Financials Underpinning Sustainable Growth Summary and Outlook Q&A INTERIM RESULTS 6 August 2018 3
Slide 4: Geographic and product diversity supports sustainable growth
Geographic and product diversity supports sustainable growth Underlying PBT up 6.4% to £76.2m – Europe & North America reports good volume growth, overcoming softer margins from US$ headwind – Asia & Rest of World shows strong volume and unit margin growth – Pischelsdorf latex acquisition complete
Slide 5: Financials
Financials INTERIM RESULTS 6 August 2018 5
Slide 6: Underlying profit before tax up 6.4%
Underlying profit before tax up 6.4% % Change Group PBT Bridge CY vs PY (GBP m) H1 2018 H1 2017 % Change CC 71.6 + 1.9 + 1.5 + 1.2 76.2 Volumes (Ktes) 796.6 730.2 9.1 9.1 80 Revenue (£m) 833.8 770.3 8.2 6.4 EBITDA (£m) 97.9 94.1 4.0 2.0 EBIT (£m) 79.4 76.5 3.8 1.8 60 PBT (£m) 76.2 71.6 6.4 4.3 EPS 1
Slide 7: Robust performance across Group
Robust performance across Group H1 2018 H1 2017 % Change % Change CC ENA EBIT Bridge CY vs PY (GBP m) ENA 80 64.3 - 2.2 + 1.3 + 1.0 64.4 Volumes (Ktes) 594.0 550.7 7.9 7.9 Sales (£m) 646.0 593.2 8.9 7.0 60 EBITDA (£m) 76.1 75.2 1.2 (0.4) Includes £5m fx 40 EBIT (£m) 64.4 64.3 0.2 (1.4) transaction c
Slide 8: ENA: Solid performance in challenging market
ENA: Solid performance in challenging market ENA BRIDGE CY vs PY (in GBP m) 100.0 Volumes: 64.3 +4.4 -4.4 -2.2 62.1 +1.0 63.1 +1.3 64.4 – Volume growth in carpets, foam, construction, 90.0 Includes £5m fx coatings 80.0 transaction cost Unit margins: 70.0 – Adversely impacted by transactional US$
Slide 9: ARW: Strong performance in volume and unit margin
ARW: Strong performance in volume and unit margin ARW BRIDGE CY vs PY (in GBP m) 30.0 18.1 +5.4 +1.1 -2.6 22.0 +0.5 22.5 Volumes 25.0 – 12.9% higher 20.0 – Nitrile volumes higher vs softer comparative, 15.0 market continues to expand 10.0 Unit Margins: 5.0 – Strengthening with improvement in Nit
Slide 10: Robust EBITDA performance underpins cashflows
Robust EBITDA performance underpins cashflows Maintenance capex circa £25m pa £m H1 2018 H1 2017 Rise in capex reflects growth capex including Dispersions expansion in Germany (£7m) and Underlying EBIT (excluding joint ventures) 79.1 75.8 Roebuck, USA (£1m), and SBR expansion in Depreciation 18.
Slide 11: Group refinancing completed H1 2018
Group refinancing completed H1 2018 Refinancing 12 months from expiry of current RCF, in line with normal practice New €440m RCF agreed July 2018 – 4 years Expanded bank group Reduced ratchet margin by 30bps, retained no Euribor floor, eliminated interest covenant Fixed interest rate on €2
Slide 12: Group well positioned for both organic and inorganic growth
Group well positioned for both organic and inorganic growth Pischelsdorf acquisition £25.8m £m H1 2018 H1 2017 completed on 31 January 2018 Cash 98.4 147.9 Borrowings (292.5) (372.2) Substantial available liquidity Net debt (194.1) (224.3) Low net debt: EBITDA Cash headroom 225.0 145.7 Scope
Slide 13: Technical Guidance
Technical Guidance Seasonality – H1/H2 split continues to be circa 55%/45% FX rates H1 2017 H2 2017 H1 2018 30 June 2018 Ave Ave Ave € 1.16 1.14 1.14 1.13 $ 1.27 1.30 1.37 1.32 MYR 5.55 5.56 5.40 5.33 Tax rate: – Full year rate ETR estimated at 18% (2017: 19%), broadly aligned with cash tax ra
Slide 14: Strategy driving sustainable growth
Strategy driving sustainable growth Strong track record of anticipating market trends and customer requirements to deliver Research and development and technical improved and differentiated products 1 expertise to exploit new markets R&D delivering sustainable growth; new products represent 20%
Slide 15: SHE and Manufacturing Excellence
SHE and Manufacturing Excellence Our Manufacturing Excellence Programme is improving performance by implementation of best in class practices Safety, Health and Environmental Manufacturing Excellence Investment in Strategic Sites Pasir Gudang, MY Largest manufacturer Recordable Injury Case Rates HSS
Slide 16: Market Leading Positions
Market Leading Positions Styrene Butadiene Rubber (“SBR”) Nitrile Butadiene Rubber (“NBR”) ▪ Market leading position: #1 producer in Europe ▪ No.2 producer globally: Leading position in the disposable nitrile gloves market ▪ FY 2017 Revenue: £459m (31% of Group) ▪ FY 2017 Revenue: £236m (16% of Grou
Slide 17: Blue chip customer base with long term established relationships and high barriers to entry
Blue chip customer base with long term established relationships and high barriers to entry Synthomer benefits from a blue chip customer base 4,000+ 1.9% 18.6% 15 customers of Sales = Largest of Sales = Top20 average length of relationship Styrene Butadiene Rubber (SBR) Nitrile Butadiene Rubber (NBR
Slide 18: R&D delivering impressive track record and pipeline
R&D delivering impressive track record and pipeline Always Developing New products (% of sales) FY17A 20% £18m 15 20 of R&D Product Patent fillings(2) FY16A 20% Investment(1) launches(1) FY15A 18% Always Innovating FY14A 16% 186 4 13 20% of sales generated from products R&D employees Technical centr
Slide 19: Cash conversion underpinned by low capex
Cash conversion underpinned by low capex Strong cash flow generation and profitability Cash flow generation pre and Resilient EBITDA and low maintenance capex post growth capex(1) EBITDA (£m) 200 176 64% 65% 160 63% 150 125 57% 58% 118 100 51% 48% 50 39% 0 FY14A FY15A FY16A FY17A Capex (£m) 60 60 46
Slide 20: Conservative capital policy well established including disciplined approach to acquisitions
Conservative capital policy well established including disciplined approach to acquisitions Capital management strategy; Balance sheet, Dividend and Capital Management policy Building Growth Momentum Balance Sheet Investment Opportunities Shareholder Returns • Not to move structurally below • Drive
Slide 21: Summary and outlook
Summary and outlook Key messages FY Outlook Growth a combination of organic and from ENA resilient in the face of currency and raw recent acquisition material headwinds Robust performance underpinned by ARW market primed for capacity growth geographic and product diversity Continue to mana
Slide 22: Appendix
Appendix INTERIM RESULTS 6 August 2018
Slide 23: Currency sensitivities
Currency sensitivities H1 2017 H2 2017 H1 2018 30 June 2018 Ave Ave Ave € 1.16 1.14 1.14 1.13 $ 1.27 1.30 1.37 1.32 MYR 5.55 5.56 5.40 5.33 Devaluation of USD between in H1 2017 and H1 2018 had significant impact on earnings, in particular in ENA. Constant currency 2017 rates basis for Constant