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Imerys
Earnings Release • Feb 12, 2020
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Earnings Release
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PARIS, February 12, 2020
Imerys: 2019 results in line with forecast and dividend maintained
- Revenue down -3.8% at constant scope and exchange rates, in contracting industrial markets, especially in the second half of the year
- Current EBITDA margin at 17.6%1 and current operating margin at 10.1% : positive price mix (+2.2%) 1 and reduction in fixed costs and overheads
- Solid cash flow generation: net current free operating cash flow reached €348 million1
- Proposed dividend per share maintained level at €2.15, with an alternative payment option in the form of new shares
Patrick Kron, Chairman of the Board of Directors and interim Chief Executive Officer, said,
"Conditions in industrial markets have deteriorated, particularly in Europe, which has led to a significant drop in sales volumes, severely impacting the Group's performance, even if the positive price mix and cost reductions helped to mitigate this impact. Despite those difficult economic conditions, Imerys improved its strong cash flow. As we enter into 2020, in an uncertain market environment, we will continue to prioritize cost reduction and cash generation by tightly managing our capital expenditure and working capital requirement. The Board of Directors, who's confident in the Group's fundamentals and development prospects, has decided to propose to maintain the dividend to €2.15 per share. It has also decided to offer to shareholders to opt for a dividend payment in shares in order to increase the Group's room for maneuver to seize development opportunities while maintaining a solid financial structure. Alessandro Dazza, who will become Chief Executive Officer on February 17, 2020, will apply his leadership skills and his deep understanding of Imerys and its business to successfully complete the necessary transformation that has been undertaken and pursue this profitable growth strategy."
On February 12, 2019, Imerys' Board of Directors examined the definitive, audited financial statements for 2019. They will be submitted for approval by the Shareholders' General Meeting on May 4, 2020. The report certifying the consolidated financial statements will be published once the Management Report prepared by the Board of Directors has undergone its final review and the procedures required to file the Universal Registration Document have been completed. All 2018 financial data included in this press release are presented excluding the Roofing division.
| Consolidated results (€ millions) |
2018 | 2019 pre IFRS 16 |
Change (%) |
2019 post IFRS 16 |
Change (%) |
|---|---|---|---|---|---|
| Revenue | 4,590.0 | 4,354.5 | -5.1% | 4,354.5 | -5.1% |
| Organic growth | +3.4% | -3.8% | - | -3.8% | - |
| 2 Current EBITDA |
793.2 | 675.7 | -14.8% | 764.6 | -3.6% |
| Current EBITDA margin | 17.3% | 3 15.5% |
-180 bps | 17.6% | +30 bps |
| Current operating income | 562.1 | 433.6 | -22.9% | 438.8 | -21.9% |
| Current operating margin | 12.2% | 10.0% | -220 bps | 10.1% | -210 bps |
| Operating income | (89.4) | 229,9 | N/A | 228,5 | N/A |
| Net income from current operations, Group share |
356.8 | 278.3 | 4 -22.0% |
276.9 | -22.4% |
| Net income, Group share | 559.6 | 127.5 | -77.2% | 121.2 | -78.3% |
| Net current free operating cash flow | 285.8 | 315.3 | +10.3% | 347.9 | +21.7% |
| Net financial debt | 1,297.4 | 1,419.5 | +9.4% | 1,685.0 | +29.9% |
| 5 Net income from current operations per share |
€4.50 | €3.52 | -21.9% | €3.50 | -22.3% |
1 After taking into account IFRS 16.
3 Target to improve Current EBITDA margin by 200 basis points by 2022 compared with the 2018 margin of 17.3%, under normal market conditions, as announced at the Capital Markets Day held on June 13, 2019.
4 In line with the forecast issued by the Group on October 22, 2019, communicating an expected decline in net income from current operations, Group share, for the full year of approximately -20% vs. 2018, -7% due to the deconsolidation of the North American talc subsidiaries from the scope of consolidation and the closure of the Willsboro plant in the first half of the year.
2 "Current" income is defined in the glossary at the end of the present press release.
5Weighted average number of outstanding shares: 79,089,697 in 2019 compared with 79,238,417 in 2018.
A simplified, more efficient customer-focused organization
The new organization announced in December 2018 is now implemented throughout the entire Group. With fewer management layers, it is more market-oriented and helps to respond more effectively to customer needs. The new organization leverages the benefits of a broad portfolio of mineral specialties and expands opportunities to cross-sell several complementary mineral products. It is supplemented with an operational excellence program.
The simplified organization is made up of two segments, grouping five business areas built around the Group's core markets:
- The Performance Minerals segment brings together three geographic business areas Europe, Middle East and Africa (EMEA), Americas and Asia-Pacific (APAC) – serving the plastics, paints & coatings, filtration, ceramics, renewable energy and paper & board markets.
- The High Temperature Materials & Solutions segment regroups two business areas: High Temperature Solutions, and Refractory, Abrasives & Construction serving the refractory, foundry, iron & steel, abrasives and building chemistry markets.
In addition, product innovation was decentralized to each of these five business areas to ensure it is more effectively oriented toward customer needs in the markets supplied. Technical support teams were also expanded as a result. In order to maximize economies of scale, the Group has put in place specialized support departments, deploying shared service centers, in particular in finance and human resources. Furthermore, centralizing purchasing activities will enable the Group to improve its efficiency by significantly reducing the number of suppliers and negotiating payment terms.
The new organization will enable Imerys to achieve its full organic growth potential and further improve its competitive position to boost sustained value creation.
Alessandro Dazza, new Chief Executive Officer at Imerys from February 17, 2020
On October 21, 2019, the Imerys Board of Directors asked its Chairman, Patrick Kron, to take over the role of Chief Executive Officer on an interim basis. On December 17, 2019, based on the proposal of the Appointments Committee, the Board of Directors decided to:
- once again separate the offices of Chairman of the Board of Directors and Chief Executive Officer;
- appoint Alessandro Dazza to the position of Chief Executive Officer;
- ask Patrick Kron to continue his role as Chairman of the Board of Directors.
These decisions will come into effect on February 17, 2020, the date at which Alessandro Dazza joins Imerys.
A leaner and renewed Board of Directors
At its meeting on February 12, 2020, Imerys' Board of Directors also agreed the draft resolutions that will be submitted for approval by the Shareholders' General Meeting on May 4, 2020. These draft resolutions include, in particular, the nomination of two new Board Directors, Mrs Annette Messemer and Véronique Saubot, following the departure of Mrs Odile Desforges, and the non renewal of the terms of offices of Mrs. Marion Guillou and Martina Merz. The Board of Directors would consequently be reduced to 10 members (plus two directors representing the employees).
Continued discussion as part of the U.S. talc litigation
The North American talc subsidiaries, which were deconsolidated on February 13, 2019 (with a negative impact on revenue and current operating income in 2019 of €126.1 million and €19.1 million, respectively), are now working to permanently resolve all talc-related litigation in the region under the legal protection of Chapter 11. They have entered into negotiation with the representatives of existing and future claimants over the business continuity plan, the approval of which by the competent jurisdiction will settle past talc-related liabilities in the U.S.
Dividend per share maintained at €2.15, with an alternative payment option of part or all in form of new shares
The Board of Directors will propose the Shareholders' General Meeting of May 4, 2020 to approve the payment of a €2.15 dividend per share, which is level on the dividend paid in 2019 and represents 61% of net income from current operations, Group share.
Subject to approval by the Shareholders' General Meeting, the Board of Directors has decided to offer Imerys shareholders the choice between receiving part or all of the dividend payment (i) in cash and/or (ii) in new shares of the Company. The price of new ordinary shares issued as payment for the dividend will be set, in accordance with the provisions of article L. 232-19 of the French Commercial Code (Code de commerce), at 95% of the average Imerys share price on the Euronext Paris market over the 20 trading days prior to the Shareholders' General Meeting, minus the amount of the dividend per share.
Groupe Bruxelles Lambert (GBL), the Group's majority shareholder owning a 53.9% interest, has indicated its intention to opt for a dividend in shares for the totality of its holdings.
COMMENTARY ON THE 2019 ANNUAL RESULTS
Revenue
| Unaudited quarterly data (€ millions) |
2018 | 2019 | Change | Organic growth |
Volumes | Price mix |
|---|---|---|---|---|---|---|
| First quarter | 1,129.6 | 1,124.0 | -0.5% | -0.9% | -3.6% | +2.7% |
| Second quarter | 1,180.9 | 1,139.4 | -3.5% | -2.0% | -4.8% | +2.7% |
| Third quarter | 1,153.9 | 1,081.4 | -6.3% | -5.1% | -6.9% | +1.7% |
| Fourth quarter | 1,125.6 | 1,009.7 | -10.3% | -7.3% | -9.0% | +1.7% |
| Total | 4,590.0 | 4,354.5 | -5.1% | -3.8% | -6.1% | +2.2% |
In 2019, revenue fell 3.8% year on year at constant scope and exchange rates. Market conditions, especially in the automotive, industrial equipment and steel markets in Europe, as well as the paper industry in the U.S. in particular, considerably deteriorated throughout the year, causing Group sales volumes to decrease -6.1% (€277.8 million). In this context, Imerys maintained a positive +2.2% price mix (+€102.7 million).
Revenue also included a positive currency effect of +€96.9 million, primarily as a result of the rise of the U.S. dollar to euro exchange rate. The scope effect was negative in 2019, representing -€157.3 million (-3.4%), the majority of which (-€126.1 million) was due to the deconsolidation of the North American talc subsidiaries after they filed for the protection of the "U.S. Chapter 11" legal procedure on February 13, 2019. The balance (-€31.2 million) corresponds to the disposal of non-core assets.
| Unaudited quarterly data (€ millions) |
2018 2019 post IFRS 16 |
Change | ||
|---|---|---|---|---|
| First quarter | 129.6 | 109.6 | -15.4% | |
| Operating margin | 11.5% | 9.8% | -170 bps | |
| Second quarter | 154.2 | 135.5 | -12.1% | |
| Operating margin | 13.1% | 11.9% | -120 bps | |
| Third quarter | 140.9 | 113.0 | -19.8% | |
| Operating margin | 12.2% | 10.5% | -170 bps | |
| Fourth quarter | 137.5 | 80.6 | -41.4% | |
| Operating margin | 12.2% | 8.0% | -420 bps | |
| Full year | 562.1 | 438.8 | -21.9% | |
| Operating margin | 12.2% | 10.1% | -210 bps |
Current operating income
The year-on-year fall in current operating income recognized in 2019 was due to the impact of reduced volumes (-€144.5 million), which the positive price mix and savings achieved only partially offset. The positive price mix, which corresponded to +€100.3 million, continued to easily cover the -€77.8 million rise the Group absorbed in variable costs, almost half of which in raw materials, and to a lesser extent, energy and transportation costs.
The +€31.3 million saving in fixed costs and overheads, net of inflation, came from the following areas:
● +€28.0 million in savings translating the initial gains of implementing the Group's transformation plan (streamlined workforce and optimized purchasing processes), in line with the €100 million target by 2022 announced on the Capital Markets Day held on June 13, 2019.
- +€28.5 million in cost reductions generated by industrial measures intended to adapt the Group's cost structure to the challenging market conditions currently prevailing.
- +€11.9 million in savings resulting from the positive impact of decisions taken last year in ceramic proppants and operations in Namibia.
The savings more than compensate the -€27.0 million increase in fixed costs and overheads due to an estimated inflation and the rise in depreciation and amortization (a -€10.2 million outflow after taking into account the +€5.2 million improvement recognized in relation to IFRS 16).
The drop in current operating income also includes the effect of the deconsolidation of the North American talc subsidiaries (-€19.1 million) and the closure of the wollastonite plant in Willsboro, U.S., in the first half of the year (-€13.7 million). The currency effect was positive at +€21.3 million. IFRS 16 also had a positive impact of +€5.2 million on current operating income in 2019.
In a context of considerably reduced sales volumes, current operating margin slipped to 10.1% for 2019 as a whole, compared with 12.2% in 2018.
Net income from current operations
Net income from current operations, Group share, totaled €276.9 million, down -22.4% on 2018 (down -22.0% before taking into account IFRS 16), but in line with the forecast communicated by the Group in October 2019. Net financial income rose to -€43.7 million in 2019, up +€16.5 million year on year, after the €56 million private placement denominated in Japanese yen that was due to mature in 2033 was fully repaid in March 2019. The income tax expense of -€113.8 million corresponds to an effective tax rate of 28.8%, compared with 28.9% in 2018.
Net income from current operations, Group share, per share shrunk -22.3% to €3.50.
Net income
Other income and expenses, after tax, came out as an overall expense of -€155.7 million in 2019, including:
- -€84.4 million in costs to implement the transformation program;
- -€46.3 million in depreciation and amortization of non-core assets;
- -€25.0 million in restructuring costs and other exceptional items. These include in particular -€7.4 million due to the deconsolidation of the North American talc subsidiaries and -€6.4 million for the temporary closure of the plant in Willsboro, U.S.
Consequently, net income, Group share totaled €121.2 million in 2019. As a reminder, net income, Group share, of €559.6 million in 2018 was due to the impact of the capital gain coming from the disposal of the Roofing activity.
Net current free operating cash flow
| (€ millions) | 2018 | 2019 pre IFRS 16 |
2019 post IFRS 16 |
|---|---|---|---|
| Current EBITDA | 793.2 | 675.7 | 764.6 |
| Change in operating working capital requirement (WCR) | (25.3) | 48.4 | 52.1 |
| Notional tax on current operating income | (162.6) | (125.3) | (126.4) |
| Other | 13.5 | 8.3 | 8.3 |
| Net current operating cash flow (before capital expenditure) | 618.8 | 607.0 | 698.6 |
| Capital expenditure | (333.0) | (291.7) | (291.7) |
| Right-of-use assets | - | - | (59.0) |
| Net current free operating cash flow | 285.8 | 315.3 | 347.9 |
After taking into account IFRS 16, Imerys generated solid net current free operating cash flow of +€347.9 million in 2019, up +21.7%, through careful management in a context of limited growth. This figure included:
- €291.7 million in industrial capital expenditure (representing 6.7% of revenue), down -€41.3 million year on year;
- significant improvement in the operating working capital requirement (up +€52.1 million) compared to last year, in particular through better inventory management.
Furthermore, the decrease in net financial debt compared with 2018 (-€109.4 million post IFRS 16) takes into account the following main expenses:
- -€203.8 million in dividends paid in May 2019 and shares bought back;
- -€75.4 million in other non-recurring income and expenses;
- -€68.3 million in acquisitions and disposals, of which:
- -€43.1 million in acquisitions;
- -€25.8 million from the deconsolidation of the cash of the North American talc subsidiaries.
| (€ millions) | 2018 | 2019 pre IFRS 16 |
2019 post IFRS 16 |
|---|---|---|---|
| Net current free operating cash flow | 285.8 | 315.3 | 347.9 |
| Acquisitions and disposals | 873.1 | (70.9) | (68.3) |
| Dividend | (167.8) | (172.7) | (172.7) |
| Change in equity | 2.4 | (31.1) | (31.1) |
| 6 Change in non-operating working capital requirement (WCR) |
47.6 | (78.1) | (77.1) |
| Other non-recurring income and expenses | (72.8) | (75.4) | (75.4) |
| Debt servicing costs | (32.0) | (17.5) | (24.5) |
| Exchange rates and other | 12.7 | 8.4 | (8.2) |
| Change in net financial debt | 949.0 | (122.1) | (109.4) |
6 Change in income taxes liabilities and receivables
Financial structure
| (€ millions) | 2018 | 2019 pre IFRS 16 |
2019 post IFRS 16 |
|---|---|---|---|
| Net financial debt at January 1 | 2,246.4 | 1,297.4 | 1,575.5 |
| Net financial debt at December 31 | 1,297.4 | 1,419.5 | 1,685.0 |
| Equity at December 31 | 3,253.5 | 3,177.8 | 3,162.0 |
| Current EBITDA | 793.2 | 675.7 | 764.6 |
| Gearing | 39.9% | 44.7% | 53.3% |
| Net financial debt/current EBITDA | 1.6x | 2.1x | 2.2x |
At December 31, 2019, net financial debt totaled €1,419.5 million before taking into account IFRS 16, which corresponds to a ratio between net financial debt and current EBITDA of 2.1x. Lease liabilities that come within IFRS 16 (right-of-use assets) equaled €265.4 million at December 31, 2019, resulting in net financial debt of €1.685.0 million after taking into account IFRS 16, which corresponds to a ratio between net financial debt and current EBITDA of 2.2x.
The Group's solid financial structure is rated Baa2, outlook negative, by Moody's (since January 23, 2020) and BBB, under negative credit watch, by Standard and Poor's (since November 5, 2019).
At December 31, 2019, Imerys' bond financing amounted to €1,924 million with an average maturity of 5.2 years. The Group also benefits from €1,260 million in bilateral credit lines. As a result, the Group's financial resources total €3,184 million with an average maturity of 4 years.
COMMENTARY BY SEGMENT
Performance Minerals (54% of consolidated revenue)
| Q4 2019 (€ millions) |
7 LFL change (%) on Q4 2018 |
Reported change on Q4 2018 |
Unaudited quarterly data | 2019 (€ millions) |
6 change LFL (%) on 2018 |
Reported change on 2018 |
|---|---|---|---|---|---|---|
| 257.4 | -4.1% | -16.9% | Revenue Americas | 1,085.0 | -3.8% | 8 -11.5% |
| 230.2 | -3.8% | -6.4% | Revenue Europe, Middle East and Africa (EMEA) |
983.9 | -2.8% | -3.4% |
| 116.5 | -2.3% | +9.5% | Revenue Asia-Pacific (APAC) | 463.0 | +0.2% | +8.2% |
| (29.2) | - | - | Eliminations | (116.6) | - | - |
| 575.0 | -3.9% | -9.5% | Total revenue | 2,415.2 | -3.1% | -5.6%7 |
| - | - | - | Current operating income | 279.2 | - | -20.9% |
| - | - | - | Current operating margin | 11.6% | - | -220 bps |
8Performance Minerals, Americas: -1.4% and Performance Minerals: -0.7% stripping out the impact of removing the North American talc subsidiaries from the scope of consolidation since February 13, 2019.
7Organic growth: growth at comparable scope and exchange rates, or "like-for-like" (LFL).
Revenue generated by the Performance Minerals segment fell -5.6% in 2019 on a reported basis. This takes into account a significant negative scope effect of -€131.9 million (5.2%), mainly due to the deconsolidation of the North American talc subsidiaries. As part of its strategy to strengthen its portfolio of specialty minerals, Imerys also acquired EDK (November 2019), a calcium carbonate supplier that generated €15 million in revenue in 2018 in the paints and coating market in Brazil. A positive currency effect of +€66.2 million (+2.6%) went some way to offsetting the scope effect. At constant scope and exchange rates, annual revenue dropped -3.1% in a generally depressed market.
Revenue in the Americas fell -3.8% at constant scope and exchange rates over the year, or -2.3% after stripping out the impact of the closure of the Willsboro plant (U.S.) in the first half of the year. Although the construction, 9 paints and coating markets resisted well, sales nevertheless suffered from the slowdown in the paper and food and beverage filtration markets in the U.S.
Revenue in Europe, Middle-East and Africa slid back -2.8% at constant scope and exchange rates in 2019. The slowdown in traditional ceramic (sanitaryware and floor and wall tiles) and paper markets was not offset by the growth in sales in plastics and rubber.
Revenue in Asia-Pacific was stable at constant scope and exchange rates. The market context was contrasted across most applications, while trends were positive in the graphite market for lithium ion batteries.
Current operating income for the segment totaled €279.2 million in 2019, down -20.9%, with operating margin falling to 11.6% (from 13.8% in 2018). Excluding the removal of the North American talc subsidiaries from the scope of consolidation and the temporary closure of the Willsboro plant, current operating income shrunk by -13.0% and current operating margin came out at 12.1%.
| Q4 2019 (€ millions) |
10 LFL change (%) on Q4 2018 |
Reported change on Q4 2018 |
Unaudited quarterly data | 2019 (€ millions) |
LFLchange (%) on 2018 |
Reported change on 2018 |
|---|---|---|---|---|---|---|
| 180.7 | -12.6% | -11.6% | Revenue High Temperature Solutions |
794.5 | -5.8% | -5.9% |
| 269.5 | -10.8% | -10.7% | Revenue Refractory, Abrasives & Construction |
1,222.5 | -4.9% | -3.8% |
| (6.8) | - | - | Eliminations | (41.0) | - | - |
| 443.5 | -12.0% | -11.3% | Total revenue | 1,976.0 | -5.3% | -4.6% |
| - | - | - | Current operating income | 150.7 | - | -31.9% |
| - | - | - | Current operating margin | 7.6% | - | -310 bps |
High Temperature Materials & Solutions (46% of consolidated revenue)
Revenue generated by the High Temperature Materials and Solutions segment fell -4.6% in 2019 on a reported basis. This included a positive currency effect of +€35.8 million (+1.7%) and a negative scope effect of -€22.7 million (-1.1%), primarily due to the disposal of the cat litter business (October 1, 2018) and the non-strategic fused magnesia plant in the UK (March 1, 2019). At constant scope and exchange rates, revenue decreased by -5.3% across the year, after a tough fourth quarter as expected (down -12.0%).
Over the same period, revenue from High Temperature Solutions slipped back -5.8% at constant scope and exchange rates due to especially challenging market conditions throughout the second half of the year. While manufacturing in the automotive industry continues to weigh on the European foundry market, the downward trend in the iron and steel sector was exacerbated as a direct result of falling production capacities among steel
10Organic growth: growth at comparable scope and exchange rates, or "like-for-like" (LFL).
9 The plant closure caused a -€16.2 million decrease in net annual income.
manufacturers. Furthermore, several kiln renovation projects in the petrochemical, boiler and incinerator industries were postponed in the fourth quarter of the year. On January 17, 2020, Imerys finalized an agreement to acquire India's leading producer of calcium silicate for thermal insulation panels in the cement, metalcasting, refinery, petrochemical and power plant industries. The business generated revenue of €5 million in 2019.
Revenue in Refractory, Abrasives & Construction decreased -4.9% at constant scope and exchange rates. Sales slowed throughout the year, in particular in the second half, in the refractory and abrasives markets due to lower production levels and the impact of running down stocks in the steel and automotive industries. The slowdown was partially compensated by refractories in the industrial (cement and aluminum) and building chemistry markets (specialty cements). On December 24, 2019, Imerys completed the acquisition of a 65% stake in Shandong Luxin Mount Tai Co., a major Chinese producer of fused minerals for abrasives (€12 million in revenue in 2018).
Current operating income for the segment totaled €150.7 million, for an operating margin of 7.6% in 2019 (compared with 10.7% in 2018), due to the considerable drop in volumes despite a resilient price mix, relaxed raw materials prices (alumina, zirconia, etc.) and lower fixed costs and overheads.
Financial Calendar
| April 29, 2020 | Q1 2020 Results | ||
|---|---|---|---|
| May 4, 2020 | Shareholders' General Meeting | ||
| July 27, 2020 | H1 2020 Results | ||
| November 2, 2020 | Q3 2020 Results |
These dates are subject to change and may be updated on the Group's website https://www.Imerys.com/finance.
Annual results presentation
The press release is available on the Group's website www.imerys.com. The 2019 annual results will be presented at a meeting held on Thursday, February 13, 2020 at 11am (CET). The meeting will be broadcast live on the Group's website www.imerys.com.
The world's leading supplier of mineral-based specialty solutions for industry with €4.4 billion in revenue and 16,300 employees in 2019. Imerys delivers high value-added, functional solutions to a great number of sectors, from processing industries to consumer goods. The Group draws on its understanding of applications, technological knowledge and expertise in material science to deliver solutions by beneficiating its mineral resources, synthetic minerals and formulations. Imerys' solutions contribute essential properties to customers' products and their performance, including heat resistance, hardness, conductivity, opacity, durability, purity, lightness, filtration, absorption and water repellency. Imerys is determined to develop responsibly, in particular by fostering the emergence of environmentally-friendly products and processes.
More comprehensive information about Imerys may be obtained from its website (www.imerys.com) in the Regulated Information section, particularly in its Registration Document filed with the French financial markets authority (Autorité des marchés financiers, AMF) on March 20, 2019 under number D.19-0175 (also available from the AMF website, www.amf-france.org). Imerys draws investors' attention to chapter 4 "Risk Factors and Internal Control" of its Registration Document.
Disclaimer: This document contains projections and other forward-looking statements. Investors should be aware 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.
The present document is a translation of the French language version provided solely for the convenience of English-speaking users. In all matters of interpretation, views or opinions expressed in the original language version of the document in French take precedence over the translation. Only the French language version is binding.
Analyst/Investor Relations:
Vincent Gouley: +33 (0)1 49 55 64 69 [email protected]
Press contacts:
Claire Garnier: +33 (0)1 49 55 64 27 Hugues Schmitt (DGM Conseil): +33 (0)1 40 70 11 89
APPENDICES
Performance Minerals
| Unaudited quarterly data Revenue (€ millions) |
Q1 2018 | Q2 2018 | Q3 2018 | Q4 2018 | 2018 | Reported change |
|---|---|---|---|---|---|---|
| Americas | 295.3 | 307.1 | 314.4 | 309.9 | 1,226.6 | -3.4% |
| Europe, Middle East and Africa (EMEA) | 260.3 | 263.7 | 248.4 | 245.6 | 1,018.3 | -0.0% |
| Asia-Pacific (APAC) | 106.9 | 106.7 | 107.9 | 106.4 | 427.9 | +0.4% |
| Eliminations | (30.2) | (27.4) | (29.6) | (26.7) | (113.9) | - |
| Total | 632.2 | 650.1 | 641.1 | 635.5 | 2,559.0 | -1.7% |
| Unaudited quarterly data Revenue (€ millions) and LFL growth (%) |
Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | 2019 | Reported change |
|---|---|---|---|---|---|---|
| Americas | 282.0 (-2.8%) |
273.5 (-3.4%) |
272.2 (-4.6%) |
257.4 (-4.1%) |
1,085.0 (-3.8%) |
-11.5% |
| Europe, Middle East and Africa (EMEA) | 258.8 (-0.2%) |
256.6 (-3.2%) |
238.2 (-4.3%) |
230.2 (-3.8%) |
983.9 (-2.8%) |
-3.4% |
| Asia-Pacific (APAC) | 114.7 (+2.8%) |
114.5 (3.7%) |
117.3 (-3.2%) |
116.5 (-2.3%) |
463.0 (+0.2%) |
+8.2% |
| Eliminations | (32.4) | (24.1) | (31.0) | (29.2) | (116.6) | - |
| Total | 623.1 (-1.7%) |
620.5 (-1.8%) |
596.7 (-4.8%) |
575.0 (-3.9%) |
2,415.2 (-3.1%) |
-5.6% |
High Temperature Materials & Solutions
| Unaudited quarterly data Revenue (€ millions) |
Q1 2018 | Q2 2018 | Q3 2018 | Q4 2018 | 2018 | Reported change |
|---|---|---|---|---|---|---|
| High Temperature Solutions | 206.1 | 217.6 | 215.9 | 204.4 | 844.0 | +2.7% |
| Refractory, Abrasives & Construction | 312.1 | 338.5 | 318.6 | 302.0 | 1,271.2 | +39.0% |
| Eliminations | (12.8) | (12.1) | (11.7) | (6.3) | (42.9) | - |
| Total | 505.4 | 544.0 | 522.9 | 500.1 | 2,072.3 | +21.7% |
| Unaudited quarterly data Revenue (€ millions) and LFL growth (%) |
Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | 2019 | Reported change |
|---|---|---|---|---|---|---|
| High Temperature Solutions | 201.4 (-1.8%) |
208.6 (-3.4%) |
203.8 (-5.5%) |
180.7 (-12.6%) |
794.5 (-5.8%) |
-5.9% |
| Refractory, Abrasives & Construction | 319.3 (-0.2%) |
330.1 (-3.0%) |
303.5 (-5.7%) |
269.5 (-10.8%) |
1,222.5 (-4.9%) |
-3.8% |
| Eliminations | (11.1) | (11.3) | (11.8) | (6.8) | (41.0) | - |
| Total | 509.6 (-0.5%) |
527.4 (-3.2%) |
495.6 (-5.8%) |
443.5 (-12.0%) |
1,976.0 (-5.3%) |
-4.6% |
Revenue breakdown by region
| Revenue by geographical area (€ millions) |
2019 Revenue | 2019 (%) |
2018 (%) |
Change |
|---|---|---|---|---|
| Europe, Middle East and Africa (EMEA) | 2,108.5 | 48% | 49% | -5.4% |
| Americas | 1,265.3 | 29% | 30% | -8.3% |
| Asia-Pacific (APAC) | 980.7 | 23% | 21% | +0.1% |
| Total | 4,354.5 | 100.0% | 100.0% | -5.1% |
Condensed income statement before and after IFRS 16
| Unaudited consolidated results (€ millions) | Pre IFRS 16 | Post IFRS 16 | |||
|---|---|---|---|---|---|
| Q4 2019 | 2019 | Q4 2019 | 2019 | ||
| Revenue | 1,009.7 | 4,354.5 | 1,009.7 | 4,354.5 | |
| Current EBITDA | 149.4 | 675.7 | 178.8 | 764.6 | |
| Current operating income | 80.6 | 433.6 | 80.6 | 438.8 | |
| Current financial income (expense) | (9.9) | (36.7) | (10.6) | (43.7) | |
| Current tax | (20.2) | (114.1) | (20.0) | (113.8) | |
| Minority interests | (0.7) | (4.4) | (0.7) | (4.4) | |
| Net income from current operations, Group share |
49.8 | 278.3 | 49.3 | 276.9 | |
| Other net income and expenses | (82.6) | (150.9) | (87.6) | (155.7) | |
| Net income, Group share | (32.8) | 127.5 | (38.4) | 121.2 |
Consolidated Income Statement
| (€ millions) | 2019 | 2018 |
|---|---|---|
| Revenue | 4,354.5 | 4,590.0 |
| Raw materials and consumables used | (1,488.0) | (1,503.2) |
| External expenses | (1,126.5) | (1,267.8) |
| Staff expenses | (947.3) | (997.7) |
| Taxes and duties | (42.0) | (41.2) |
| Amortization, depreciation and impairment | (353.6) | (265.9) |
| Intangible assets, mining assets and property, plant and equipment | (269.9) | (265.9) |
| (1) Right-of-use assets |
(83.8) | - |
| Other current income and expenses | 41.7 | 47.9 |
| Current operating income | 438.8 | 562.1 |
| Gain (loss) from changes in control | (23.0) | 3.9 |
| Other non-recurring items | (187.2) | (655.5) |
| Operating income | 228.5 | (89.4) |
| Net financial debt expense | (50.3) | (42.0) |
| Income from securities | 5.9 | 5.0 |
| Gross financial debt expense | (56.2) | (46.9) |
| Interest expense on borrowings and financial debt | (49.8) | (46.9) |
| (1) Interest expense on lease liabilities |
(6.4) | - |
| Other financial income (expense) | 6.6 | (18.2) |
| Other financial income | 334.4 | 285.3 |
| Other financial expenses | (327.9) | (303.6) |
| Financial income (loss) | (43.7) | (60.2) |
| Income tax | (65.5) | (89.0) |
| (2) Net income from discontinued operations |
- | 788.0 |
| Net income | 119.4 | 549.4 |
| (3) Net income, Group share |
121.2 | 559.6 |
| Net income attributable to non-controlling interests | (1.9) | (10.2) |
| (1) Change in accounting policy IFRS 16, Leases as of January 1, 2019. | ||
| (2) Roofing division | ||
| (3) Net income per share |
| (€ millions) | 2019 | 2018 |
|---|---|---|
| Non-current assets | 5,129.0 | 4,908.3 |
| Goodwill | 2,153.1 | 2,143.3 |
| Intangible assets | 281.8 | 277.6 |
| (1) Right-of-use assets |
245.2 | - |
| Mining assets | 502.9 | 503.6 |
| Property, plant and equipment | 1,632.2 | 1,662.1 |
| Joint ventures and associates | 105.3 | 112.8 |
| Other financial assets | 45.8 | 42.0 |
| Other receivables | 37.8 | 35.1 |
| Derivative financial assets | 4.5 | 19.3 |
| Deferred tax assets | 120.6 | 112.3 |
| Current assets | 2,345.7 | 2,685.6 |
| Inventories | 812.6 | 867.0 |
| Trade receivables | 623.9 | 656.6 |
| Other receivables | 231.5 | 296.9 |
| Derivative financial assets | 6.1 | 7.3 |
| (2) Other financial assets |
11.2 | 8.9 |
| (2) Cash and cash equivalents |
660.4 | 848.9 |
| Consolidated assets | 7,474.7 | 7,593.9 |
| Equity, Group share | 3,113.7 | 3,217.2 |
| Share capital | 159.0 | 159.0 |
| Premiums | 520.9 | 520.4 |
| Treasury shares | (23.8) | (16.8) |
| Reserves | 2,336.3 | 1,995.0 |
| Net income, Group share | 121.3 | 559.6 |
| Equity attributable to non-controlling interests | 48.3 | 36.4 |
| Equity | 3,162.0 | 3,253.5 |
| Non-current liabilities | 2,834.9 | 3,095.4 |
| Provisions for employee benefits | 375.7 | 290.0 |
| (3) Other provisions |
446.0 | 666.1 |
| (2) Borrowings and financial debt |
1,689.0 | 1,995.9 |
| (1) & (2) Lease liabilities |
194.6 | - |
| Other debts | 22.0 | 17.7 |
| Derivative financial liabilities | 0.7 | 0.4 |
| Deferred tax liabilities | 106.9 | 125.3 |
| Current liabilities | 1,477.8 | 1,244.9 |
| Other provisions | 21.0 | 23.7 |
| Trade payables | 542.6 | 557.3 |
| (3) Income tax payable |
83.2 | 115.2 |
| Other debts | 343.5 | 359.0 |
|---|---|---|
| Derivative financial liabilities | 11.9 | 9.7 |
| (2) Borrowings and financial debt |
397.5 | 168.5 |
| (1) & (2) Lease liabilities |
70.9 | - |
| (2) Bank overdrafts |
7.3 | 11.6 |
| Consolidated equity and liabilities | 7,474.7 | 7,593.9 |
| (1) Change in accounting policy IFRS 16, Leases as of January 1, 2019. | ||
| (2) Included in the calculation of net financial debt. | 1,685.0 | 1,297.4 |
| (3) Change in accounting policy IFRIC 23, Uncertainty over Income Tax Treatments as of January 1, 2019. |
Current free operating cash flow
| 2019 | 2018 | ||
|---|---|---|---|
| (€ millions) | Historical | Post IFRS 16 | Past |
| Consolidated Income Statement | |||
| Revenue | 4,354.5 | 4,354.5 | 4,590.0 |
| Raw materials and consumables used | (1,488.0) | (1,488.0) | (1,503.2) |
| External expenses | (1,126.5) | (1,126.5) | (1,267.8) |
| Integration of lease expenses | (88.8) | - | - |
| Staff expenses | (947.3) | (947.3) | (997.7) |
| Taxes and duties | (42.0) | (42.0) | (41.2) |
| Other current income and expenses | 41.7 | 41.7 | 47.9 |
| Ajustements | |||
| Change in provisions for employee benefits | (16.0) | (16.0) | (19.3) |
| Change in write-downs and current operating provisions | (13.5) | (13.5) | (19.4) |
| Cash flow hedges – ineffective portion | - | - | - |
| Income from joint ventures and associates | (4.5) | (4.5) | (1.7) |
| Dividends received from associates | 6.2 | 6.2 | 5.6 |
| Current EBITDA | 675.7 | 764.6 | 793.2 |
| Income tax | |||
| Notional tax on current operating income | (125.3) | (126.4) | (162.6) |
| Adjustments | |||
| Change in operational working capital requirement | 48.4 | 52.1 | (25.3) |
| Carrying amount of intangible assets and property, plant and equipment sold |
8.3 | 8.3 | 13.5 |
| Current operating cash flow | 607.0 | 698.6 | 618.8 |
| Investing activities | |||
| Acquisitions of intangible assets and property, plant and equipment | (291.7) | (291.7) | (333.0) |
| Increase in rights of use | - | (59.0) | - |
| Current free operating cash flow | 315.3 | 347.9 | 285.8 |
The following table presents the cash flow from non-recurring operations, i.e. non-recurring operating transactions, changes in the scope of consolidation, financing transactions and transactions with shareholders. These cash flows, added to the current free operating cash flow from the previous table, give the total change in net financial debt.
| 2019 | 2018 | ||
|---|---|---|---|
| (€ millions) | Historical | Post IFRS 16 | Past |
| Current operating cash flow | 607.0 | 698.6 | 618.8 |
| Investing activities | |||
| Acquisitions of intangible assets and property, plant and equipment | (291.7) | (291.7) | (333.0) |
| Increase in rights of use | - | (59.0) | - |
| Current free operating cash flow | 315.3 | 347.9 | 285.8 |
| Income tax | |||
| Notional tax paid on financial income | 12.6 | 12.6 | 17.4 |
| Change in current operating and financial deferred tax | 0.8 | 0.8 | 17.9 |
| Change in income tax liabilities and receivables | (38.2) | (38.2) | 15.9 |
| Notional tax paid on non-recurring income and expenses | 28.4 | 28.4 | 29.6 |
| Consolidated Income Statement | |||
| Financial income (loss) | (43.7) | (43.7) | (60.2) |
| Non-recurring income and expenses | (210.2) | (210.2) | (651.5) |
| Adjustments | |||
| Change in non-operational working capital requirement | (49.3) | (49.3) | (9.2) |
| Change in financial write-downs and provisions | 6.7 | 6.6 | 10.9 |
| Interest expense on lease liabilities | 7.0 | - | - |
| Change in the fair value of operational hedge instruments | - | - | (0.7) |
| Non-recurring impairment losses | (0.4) | (0.4) | - |
| Non-recurring right-of-use assets impairment losses | 6.6 | - | - |
| Change in non-recurring write-downs and provisions | 80.4 | 87.0 | 577.0 |
| Income from joint ventures and associates | 10.0 | 10.0 | 7.7 |
| Gains (losses) on disposals of businesses | 14.0 | 14.0 | (10.2) |
| Gains (losses) on disposals of intangible assets and property, plant and equipment |
(4.2) | (4.2) | (5.4) |
| Investing activities | |||
| Acquisitions of businesses | (43.1) | (43.1) | (22.9) |
| Disposals of businesses | (25.7) | (23.1) | 42.2 |
| Disposals of intangible assets and property, plant and equipment | 5.5 | 5.5 | 9.7 |
| Loans and advances in cash received from (granted to) third parties | (7.7) | (7.7) | (7.1) |
| Acquisitions and disposals of investments in equity instruments | - | - | (0.3) |
| Equity | |||
| Capital increase (decrease) | 0.5 | 0.5 | (6.9) |
| Disposals (acquisitions) of treasury shares | (31.7) | (31.7) | 9.4 |
| Share-based payments | 9.6 | 9.6 | 14.9 |
| Dividends | (172.7) | (172.7) | (104.8) |
| Change in cash flow of assets held for sale | - | - | 822.6 |
| Change in net financial debt excluding impact of currency fluctuations | (130.5) | (101.2) | 981.7 |
Change in net financial debt
| 2019 | 2018 | ||
|---|---|---|---|
| (€ millions) | Historical | Post IFRS 16 | Past |
| Net financial debt at January 1 | (1,297.4) | (1,297.4) | (2,246.4) |
| Cancellation of IAS 17 finance lease liabilities | - | 13.4 | - |
| Recognition of IFRS 16 lease liabilities | - | (291.5) | - |
| Net financial debt at January 1 after change in accounting policy | (1,297.4) | (1,575.5) | (2,246.4) |
| Change in net financial debt excluding impact of currency fluctuations | (130.5) | (101.2) | 981.7 |
| Cancellation of IAS 17 finance lease liabilities | 13.4 | - | - |
| Impact of currency fluctuations | (5.0) | (8.2) | (32.7) |
| Change in net financial debt | (122.1) | (109.4) | 949.0 |
| Net financial debt at December 31 | (1,419.5) | (1,685.0) | (1,297.4) |
Consolidated Statement of Cash Flows
| (€ millions) | 2019 | 2018 |
|---|---|---|
| Net income | 119.4 | 549.4 |
| Adjustments | ||
| Adjustments for amortization expense | 391.8 | 495.0 |
| Adjustments for impairment loss recognized in profit or loss, goodwill | (0.4) | - |
| Adjustments for impairment loss (reversal of impairment loss) recognized in profit or loss, trade and other receivables |
(1.5) | 10.5 |
| Adjustments for impairment loss (reversal of impairment loss) recognized in profit or loss, inventories |
16.7 | 20.9 |
| Adjustments for provisions | 14.4 | 294.2 |
| Adjustments for share-based payments | 9.6 | 14.9 |
| Adjustments for losses (gains) on disposal of non-current assets | 3.0 | (774.6) |
| Adjustments for undistributed profits of investments accounted for using equity method |
5.5 | 5.9 |
| Adjustments for net interest income and expense | 47.1 | 38.7 |
| Adjustments for unrealized foreign exchange losses (gains) | - | - |
| Adjustments for fair value losses (gains) | 1.0 | (1.5) |
| Other adjustments for non-cash items | - | - |
| Other adjustments for which cash effects are investing or financing cash flow | 9.4 | 22.9 |
| Change in working capital requirement | 2.9 | (28.6) |
| Adjustments for decrease (increase) in inventories | 35.4 | (99.5) |
| Adjustments for decrease (increase) in trade receivables | 30.1 | 15.1 |
| Adjustments for decrease (increase) in suppliers | (13.4) | 59.0 |
| Adjustments for other receivables and debts | (49.3) | (3.3) |
| Income tax adjustments | 65.5 | 115.4 |
| Net cash flow from (required for) operations | 684.3 | 763.1 |
| Interest paid | (52.2) | (46.0) |
| Income tax paid or reimbursed | (122.7) | (107.1) |
| Adjustments for dividend income | - | 0.1 |
| Adjustments for dividend income from joint ventures and investments accounted for using equity method |
6.2 | 5.6 |
|---|---|---|
| Net cash flow from (required for) operating activities | 515.5 | 615.6 |
| Of which cash flow from discontinued operations | - | 59.7 |
| (€ millions) | 2019 | 2018 |
| Acquisitions of intangible assets | (24.9) | (28.7) |
| Acquisitions of property, plant and equipment | (287.6) | (313.3) |
| Change in payables on acquisitions of intangible assets and property, plant and equipment |
20.8 | (0.8) |
| Cash flow from gaining control of subsidiaries and other activities | (55.0) | (46.6) |
| Other cash payments related to the acquisition of equity and debt instruments of other entities |
- | (0.1) |
| Proceeds from disposals of intangible assets and property, plant and equipment | 20.5 | 26.8 |
| Cash flow from losing control of subsidiaries and other activities | (7.2) | 743.2 |
| Other cash payments related to the disposal of equity and debt instruments of other entities |
- | - |
| Cash advances and loans granted to third parties | (3.7) | (2.6) |
| Repayment of cash advances and loans granted to third parties | (3.2) | (4.6) |
| Cash outflows for forwards, options and swaps | - | - |
| Cash inflows for forwards, options and swaps | - | - |
| Other cash inflows (outflows) | - | - |
| Interest income | 6.3 | 5.2 |
| Cash flow from investing activities | (334.0) | 378.5 |
| Of which cash flow from discontinued operations | - | 676.1 |
| Cash from share issues | 0.5 | (6.9) |
| Acquisitions and buybacks of treasury shares | (31.7) | 9.4 |
| Dividends paid | (172.6) | (167.8) |
| Cash from changes in stakes held in subsidiaries without a loss of control | - | - |
| Payments from changes in stakes held in subsidiaries without a loss of control | - | - |
| Loans issued | 6.2 | 5.6 |
| Repayments of borrowings | (57.7) | (32.7) |
| Payments for lease liabilities | (85.6) | - |
| Other cash inflows (outflows) | (27.0) | (336.8) |
| Cash flow from financing activities | (367.9) | (529.2) |
| Of which cash flow from discontinued operations | - | (29.9) |
| Change in cash and cash equivalents | (186.4) | 464.9 |
| (€ millions) | 2019 | 2018 |
|---|---|---|
| Cash and cash equivalents at January 1 | 837.3 | 379.0 |
| Change in cash and cash equivalents | (186.4) | 464.9 |
| Reclassification of discontinued operations | - | - |
| Impact of currency fluctuations | 2.3 | (6.7) |
| (1) Cash and cash equivalents at December 31 |
653.2 | 837.3 |
|---|---|---|
| Cash | 370.4 | 509.1 |
| Cash equivalents | 290.0 | 339.8 |
| Bank overdrafts | (7.3) | (11.6) |
(1) At December 31, 2019, "Cash and cash equivalents at December 31" included a restricted balance of €5.8 million (€7.1 million at December 31, 2018) not available for Imerys S.A. and its subsidiaries, of which €4.9 million (€5.6 million at December 31, 2018) due to legal restrictions or foreign exchange controls and €0.9 million (€1.5 million at December 31, 2018) due to statutory requirements.
GLOSSARY
Imerys uses "current" indicators to measure the recurrent performance of its operations, excluding significant items that, because of their nature and their relatively infrequent occurrence, cannot be considered as inherent to the recurring performance of the Group (see paragraph 2.1.5 Definitions and reconciliation of alternative performance measures to IFRS indicators in the 2018 Registration Document on pages 48 and 49).
| Alternative Performance Indicators |
Definitions and reconciliation to IFRS indicators |
|---|---|
| Growth at constant scope and exchange rates (also called life-for-like growth, LFL, organic growth or internal growth) |
Calculated by stripping out the impact of currency fluctuations as well as acquisitions and disposals (scope effect). Restatement of the currency effect consists of calculating aggregates for the current year at the exchange rate of the prior year. The impact of exchange rate instruments qualifying as hedging instruments is taken into account in current data. Restatement of Group structure to take into account newly consolidated entities consists of: subtracting the contribution of the acquisition from the aggregates of the current year, for entities entering the consolidation scope in the current year; subtracting the contribution of the acquisition from January 1 of the current year, until the last day of the month of the current year when the acquisition was made the prior year, for entities entering the consolidation scope in the prior year. Restatement of entities leaving the consolidation scope consists of: subtracting the departing entity's contribution from the aggregates of the prior year as from the first day of the month of divestment, for entities leaving the consolidation scope in the current year; subtracting the departing entity's contribution from the aggregates of the prior year, for entities leaving the consolidation scope in the prior year. |
| Volume effect | The sum of the change in sales volumes of each business area between the current and prior year, valued at the average sales price of the prior year. |
| Price mix effect | The sum of the change in average prices by product family of each business area between the current and prior year, applied to volumes of the current year. |
| Current operating income | The operating income before other operating income and expenses (income from changes in control and other non-recurring items). |
| Net income from current operations |
The Group's share of income before other operating income and expenses, net (income from changes in control and other non-recurring items, net of tax) and income from discontinued operations. |
| Current EBITDA | Calculated from current operating income by restating operating amortization, depreciation and impairment, net change in operating provisions, share in net income and dividends received from joint ventures and associates. |
| Net current operating cash flow | Net current free operating cash flow before capital expenditure and right-of-use assets (to reflect the IFRS 16 calculation). |
| Net current free operating cash flow |
The Group's current EBITDA after deducting notional tax, changes in working capital requirement and paid capital expenditure and including subsidies, value of divested assets and miscellaneous. |
| Net financial debt | The difference between borrowings and financial debt and cash and cash equivalents. |
