Earnings Release • Apr 30, 2015
Earnings Release
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The results for the 1st quarter ending March 31, 2015, will be discussed in the conference call to be held today at 18:30 CET. It will be webcast live at www.imerys.com.
| Consolidated results Non-audited - € millions |
st quarter 1 2015 |
st quarter 1 2014 |
% current change |
|---|---|---|---|
| Revenue | 973.6 | 904.1 | + 7.7% |
| Current operating income (1) | 123.2 | 117.3 | + 5.0% |
| Operating margin | 12.7% | 13.0% | - 0.3 point |
| Net income from current operations, Group's share (2) | 78.2 | 73.7 | + 6.1% |
| Net income, Group's share | 68.5 | 77.6 | n.a. |
| Net income, Group's share, per share (3) | €1.01 | €0.97 | + 4.1% |
Chairman & CEO Gilles Michel commented, "During the first quarter, Imerys' results improved overall. This performance is the result of our external growth strategy, our geographic positioning and of a better operational performance, despite an unusually slow start of the year and a high comparison basis. In the coming months, we will benefit from S&B integration and its expected synergies, but also from our new products and our investments while maintaining continued emphasis on costs control and cash generation."
1 Throughout this press release, "Current operating income" means operating income before other operating revenue and expenses. At comparable Group structure and exchange rates, revenue decreased - 4.5% and current operating income - 9.0%.
2 Group's share of net income before other operating revenue and expenses, net.
3 The weighted average number of outstanding shares was 77 278 568 in the 1st quarter of 2014, compared with 76,222,621 in the 1st quarter of 2014.
In North America, activity remained buoyant overall, with the exception of steel and unconventional oil production.
In Europe, industrial output, which had stopped declining at the end of last year, has not yet shown any clear sign of recovery. In France, new housing starts continued to slide.
In emerging markets, contrasts between countries remain sharp with further growth achieved in India and Southeast Asia and a marked slowdown in Brazil and China.
On February 26, 2015, Imerys completed the acquisition of S&B (4) which has been consolidated from March 1, 2015. A global player and European leader in bentonite (binders for foundry, sealing solutions, additives for drilling and for consumer products), S&B is the world leader in continuous casting fluxes for the steel industry as well as in wollastonite (functional additives for polymers and paints). S&B also provides perlite-based solutions used in building materials and horticulture.
In Europe, the first signs of an upturn that appeared at the end of the first quarter of 2015 have yet to be confirmed. In the United States, the growth momentum is expected to continue on most markets, except for proppants and steelmaking.
In this context, the Group will continue to implement its strategy. It will benefit from the synergies that are expected from the integration of S&B, both in terms of development and costs. It will maintain a strong focus on cash management, while preserving flexibility in its industrial footprint.
4 See press releases of November 5, 2014 and February 27, 2015.
Revenue for the 1st quarter of totaled €973.6 million, a + 7.7% increase from the same period in 2014. This increase results from:
At comparable Group structure and exchange rates, 1st quarter 2015 revenue decreased by - 4.5% compared with the same period in 2014. The - 5.9% decrease (- €53.2 million) in volumes compared with the 1st quarter of 2014 is mainly due to the fall in demand for proppants in the United States and a slower start of the activity compared to the same period last year, in Roofing and Fused Minerals in particular). Comparable growth totaled + 5.0% in the 1st quarter of 2014, compared to the same period in 2013.
The price/mix component was positive in every business group and grew + 1.3% for the Group as a whole (+ €12.6 million).
| (€ millions) | Q1 2015 revenue | % change Q115 vs. Q114 |
% of consolidated revenue Q115 |
% of consolidated revenue Q114 |
|---|---|---|---|---|
| Western Europe | 429.2 | + 1.8% | 44% | 47% |
| of which France | 120.6 | - 6.9% | 12% | 14% |
| USA / Canada | 237.0 | + 17.3% | 24% | 22% |
| Emerging countries | 258.2 | + 10.6% | 27% | 26% |
| Other (Japan/ Australia) | 49.3 | + 4.4% | 5% | 5% |
| Total | 973.6 | + 7.7% | 100% | 100% |
Sales are improving in all geographic zones except for France, which was driven by a comparatively good first quarter 2014 in Roofing. They benefitted from the euro's depreciation against a large number of currencies, as well as from the integration of S&B's activities.
5 Throughout this press release, "comparable" means "at comparable Group structure and exchange rates".
| (non-audited - € millions) | Q1 2015 | Q1 2014 | Current change % |
Structure effect % |
Ex change rate effect % |
Compar able change % |
|---|---|---|---|---|---|---|
| Revenue of which: | 973.6 | 904.1 | + 7.7% | + 4.3% | + 8.0% | - 4.5% |
| Energy Solutions & Specialties | 312.5 | 303.2 | + 3.1% | + 0.3% | + 7.4% | - 4.7% |
| Filtration & Performance Additives | 218.9 | 159.0 | + 37.3% | + 24.0% | + 10.5% | + 2.8% |
| Ceramic Materials | 291.0 | 289.5 | + 0.6% | - 0.6% | + 7.5% | - 6.3% |
| High Resistance Minerals | 165.3 | 163.3 | + 1.2% | + 0.2% | + 8.4% | - 7.4% |
| Holding & Eliminations | (14.0) | (10.9) | n.s. | n.s. | n.s. | n.s. |
(32% of consolidated revenue)
The Energy Solutions & Specialties business group's revenue totaled €312.5 million in the first quarter of 2015, a - 4.7% decrease at comparable structure and exchange rates compared with the same period in 2014. This trend is mainly due to a slump on the proppant market in the United States resulting from the drop in oil prices.
On a reported basis, the + 3.1% year-on-year increase in the business group's revenue, can be primarily attributed to a positive exchange rate impact of + €22.4 million.
The Carbonates activity, which mainly serves the consumer goods, construction, board & packaging and paper markets, benefited from favorable trends in the US and in Asia.
The Monolithic Refractories activity, which serves high-temperature industries (steel, metallurgy, power generation, incineration, foundry, cement, petrochemicals, etc.), performed well with healthy activity in Asia-Pacific and India.
In the Graphite & Carbon activity, sales for mobile energy and polymers continued to grow with the ramp-up of the second carbon black production line in Belgium.
The Oilfield Solutions activity had a negative impact on the Group's current operating income of approximately - 5 million euros in the 1st quarter. Imerys took necessary adjustment measures in light of lower demand for ceramic proppants in the US and with a view to preserve the integrity of its sales, industrial and technical assets, in anticipation of a potential recovery of this market.
Revenue for the Filtration & Performance Additives business group, which serves the agri-food industry and a large number of intermediate industries (plastics, paint, rubber, catalysts, paper, pharma, personal care & beauty, etc.), totaled €218.9 million in the 1st quarter of 2015, a + 2.8% increase at comparable structure and exchange rates. Benefitting from well oriented markets in the US and Europe, the business group's expansion is also fuelled by the development of new applications (e.g. talc for automotive polymers) and the extension of its offering into new segments (cosmetics, pharmaceutical specialties, recycled polymers).
On a reported basis, the + 37.3% year-on-year increase reflects one month of consolidation of S&B and a positive exchange rate impact of + €16.8 million.
(30% of consolidated revenue)
The Ceramic Materials business group's revenue totaled €291.0 million in the 1st quarter of 2015. On a reported basis, the + 0.6% year-on-year increase takes into account + €21.7 million in exchange rate effects.
Revenue decreased by - 6.3% at comparable structure and exchange rates compared with the same period in 2014, mainly as a result of a high basis of comparison in France: the seasonal sales pattern of the Roofing activity was unusual in this year's first quarter, whereas the weather had been particularly mild in the beginning of 2014. New housing starts in France continued to decrease in the 1st quarter of 2015 and sales of clay roof tiles for the trade as a whole recorded a - 14.8% decrease from the same period in 2014(6) .
Kaolin specialty activities grew in particular in North America in the first quarter of 2015; the printing & writing paper market is structurally declining.
The Minerals for Ceramics activity held out well thanks to a strategy of geographic deployment (South America, Middle-East, Asia) and diversification.
(16% of consolidated revenue)
Revenue for the High Resistance Minerals business group, which mainly serves the high-temperature (steel, foundry, glass, aluminum, etc.) and abrasives industries, totaled €165.3 million in the first quarter of 2015, a - 7.4% decrease at comparable structure and exchange rates compared with 2014, particularly because of a high basis of comparison. On a reported basis, the + 1.2% rise in revenue from 2014 notably includes a positive exchange rate effect of + €13.8 million.
The Refractory Minerals activity's sales held out well in Europe and Asia. Demand however slowed down in North America mainly as a result of the decrease in steel production.
The Fused Minerals activity suffered from a high basis of comparison as the 1st quarter of 2014 benefited from an upturn in industrial equipment. The fused zirconium activity is progressing in Europe and in the US, as well as in China on high value-added products.
Current operating income was €123.2 million in the 1st quarter of 2015.
On a reported basis, current operating income rose + 5.0% in the first quarter of 2015. It includes a favorable exchange rate effect for + €10.6 million, mostly resulting from the appreciation of the US dollar versus a number of currencies. The + €5.8 million structure effect includes a pro forma contribution from S&B which is estimated at 5.1 million euros.
6 FFTB (French roof tiles & bricks federation): March 2015 newsflash
At comparable structure and exchange rates, the - 9.0% year-on-year change takes the following into account:
The Group's operating margin amounted to 12.7%, down - 0.3 percentage points versus the first quarter of 2014, as a result of the change in the relative weight of the Group's various activities in the first quarter of 2015.
Net income from current operations grew + 6.1% to €78.2 million (€73.7 million in the 1 st quarter of 2014). It takes the following items into account:
Other income and expense before tax totaled - €12.8 million in the 1st quarter of 2015. Their net of tax amount (- €9.7 million in 1st quarter 2015) is comprised of the following items:
After taking other operating income and expense, net of tax, into account, the Group's share of net income totaled €68.5 million in 1st quarter 2015 (€77.6 million in 1st quarter 2014).
Net financial debt, which totaled €870 million on December 31, 2014, amounts to approximately €1.5 billion as of March 31, 2015, due to the integration of S&B from March 1, 2015. Imerys' long-term credit rating (unsecured senior debt, rated in 2011) is rated by Moody's "Baa-2" with a stable outlook and its short-term debt "P-2" also with a stable outlook.
| April 30 | Shareholders' General Meeting |
|---|---|
| July 29 (after market close) | 1st half 2015 results |
| October 29 (after market close) |
rd quarter 2015 results 3 |
All above dates are tentative and may change. Updates are available on the Group's website at www.imerys.com, in the Investors & Analysts/Financial Agenda section.
_______________________________________________________________________________________________________________________________________
The press release is available from the Group's website www.imerys.com with access via the homepage in the "News" section. The 1st quarter 2015 results will be discussed in a conference call today at 6:30pm (Paris time). This conference will be webcast live on the Group's website www.imerys.com.
_______________________________________________________________________________________________________________________________________
The world leader in mineral-based specialty solutions for industry, with €3.7 billion revenue and 14,900 employees in 2014, Imerys transforms a unique range of minerals to deliver essential functions (heat resistance, mechanical strength, conductivity, coverage, barrier effect, etc.) that are essential to its customers' products and manufacturing processes.
Whether mineral components, functional additives, process enablers or finished products, Imerys' solutions contribute to the quality of a great number of applications in consumer goods, industrial equipment or construction. Combining expertise, creativity and attentiveness to customers' needs, the Group's international teams constantly identify new applications and develop high value-added solutions under a determined approach to responsible development. These strengths enable Imerys to develop through a sound, profitable business model.
More comprehensive information about Imerys may be obtained from its website (www.imerys.com) under Regulated Information, particularly in its Registration Document filed with the Autorité des marchés financiers on March 19, 2015 under number D.15-0173 (also available from the Autorité des marchés financiers website, www.amf-france.org). Imerys draws the attention of investors to chapter 4, "Risk Factors", of its Registration Document.
Warning on projections and forward-looking statements: The declarations made in this document contain projections and forward-looking statements. Investors are cautioned that such projections and forward-looking statements are subject to various risks and uncertainties (many of which are difficult to predict and generally beyond the control of Imerys) that could cause actual results and developments to differ materially from those expressed or implied.
_______________________________________________________________________________________________________________________________________
| Analyst/Investor relations: | Press contacts: |
|---|---|
| Vincent Gouley: + 33 (0)1 4955 6469 | Vincent Gouley: + 33 (0)1 4955 6469 |
| [email protected] | Raphaël Leclerc: + 33 (0)6 7316 8806 |
| Comparable quarterly change 2015 vs. 2014 | Q1 2015 | |||
|---|---|---|---|---|
| - 4.5% | ||||
| Reminder 2014 vs. 2013 | Q1 2014 | Q2 2014 | Q3 2014 | Q4 2014 |
| + 5.0 % | + 3.7 % | + 3.9 % | + 0.1 % |
| Revenue by business group (€ millions) |
Q1 2015 | Q4 2014 | Q1 2014 |
|---|---|---|---|
| Energy Solutions & Specialties | 312.5 | 315.5 | 303,2 |
| Filtration & Performance Additives | 218.9 | 165,4 | 159,0 |
| Ceramic Materials | 291.0 | 279,7 | 289,5 |
| High Resistance Minerals | 165.3 | 158.6 | 163.3 |
| Holding Company & Eliminations | (14.1) | (12.7) | (10.9) |
| Total | 973.6 | 906.5 | 904.1 |
| Quarterly change (non-audited) |
Q1 2014 | Q1 2013 | Current change % |
Structure effect % |
Exchange rate effect % |
Comp. change % |
|---|---|---|---|---|---|---|
| Revenue of which: | 904.1 | 929.3 | - 2.7% | - 3.9 % | - 3.8 % | + 5.0 % |
| Energy Solutions & Specialties | 303.2 | 306.7 | - 1.2 % | - 3.9 % | - 5.5 % | + 8.3 % |
| Filtration & Performance Additives | 159.0 | 155.7 | + 2.1 % | - 0.1 % | - 3.7 % | + 5.9 % |
| Ceramic Materials | 289.5 | 315.4 | - 8.2 % | - 7.7 % | - 1.9 % | + 1.4 % |
| High Resistance Minerals | 163.3 | 162.5 | + 0.5 % | 0.0 % | - 3.9 % | + 4.4 % |
| Holding Company & Eliminations | (10.9) | (11.1) | n.s. | n.s. | n.s. | n.s. |
| (€ millions) | Q1 2015 | Q1 2014 | Change |
|---|---|---|---|
| Revenue | 973.6 | 904.1 | + 7.7 % |
| Current operating income | 123.2 | 117.3 | + 5.0 % |
| Financial expense | (11.0) | (14.7) | |
| Current taxes | (33.0) | (28.9) | |
| Minority interests | (1.0) | (0.0) | |
| Net income from current operations (1) | 78.2 | 73.7 | + 6.1 % |
| Other operating income and expenses, net | (9.7) | 3.9 | |
| Net income (1) | 68.5 | 77.6 | n.a. |
(1) Group's share.
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