2015 Full Year Results - Vesuvius · 2015 Full Year Results. 2 Disclaimer This presentation, which has been prepared by Vesuvius plc (the “Company”),includes statements that are,

1

A GLOBAL LEADER IN METAL FLOW ENGINEERING

3 March 2016

François Wanecq

Chief Executive

2015 Full Year Results

2

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", "estimates", "plans", "projects", "anticipates",

"expects", "intends", "may", "will", or "should" or, in each case, their negative or other variations or comparable

terminology. These forward looking statements include matters that are not historical facts and include statements

regarding the Company’s intentions, beliefs or current expectations. By their nature, forward looking statements

involve risk and uncertainty because they relate to future events and circumstances. A number of factors could

cause actual results and developments to differ materially from those expressed or implied by the forward looking

statements. Any forward looking statements in this presentation reflect the Company’s view with respect to future

events as at the date of this presentation and are subject to risks relating to future events and other risks,

uncertainties and assumptions relating to the Company’s operations, results of operations, growth strategy and

liquidity. The Company undertakes no obligation publicly to release the results of any revisions or updates to any

forward looking statements in this presentation that may occur due to any change in its expectations or to reflect

events or circumstances after the date of this presentation.

This presentation comprises information which is already in the public domain, and includes extracts from the

Announcement of the Half Year Results for the year ended 31 December 2015 (3 March 2016). You should read

the whole of this Announcement. No reliance may be placed for any purposes whatsoever on the information

contained in this document or on its completeness. None of the Company, its advisers, or any other party is under

any duty to update or inform you of any changes to the information contained in this presentation.

3

• 2015 full year Group results – François Wanecq

• Financial Review – Guy Young

• Strategy and outlook – François Wanecq

Agenda

4

• Lower performance in line with previous guidance, reflecting the ongoing deterioration in global steel and foundry markets

• Continued outperformance in India, China & Brazil, identified areas for strategic growth

• Restructuring plan initiated in Q2, delivering earlier with cost savings of £8.8m for costs of £14.6m

• Cash conversion ratio of 100.3%

• Strong balance sheet, with long-term bank facilities in place to 2020

• Maintained the final dividend at 11.125p per share; increasing the total dividend by 0.9% to 16.275p per share

Summary

5

2015 Underlying(1) Trading Performance

1,3531,404

1,296

0

200

400

600

800

1,000

1,200

1,400

1,600

2013 2014 2015

Revenue

126.8

141.8

122.0

0

20

40

60

80

100

120

140

160

2013 2014 2015

Trading Profit

9.4%10.1%

9.4%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2013 2014 2015

Return on Sales%£m £m

-7.7% -14.0% -70bps

(1) Underlying basis is at constant currency and excludes separately reported items and the impact of acquisitions and disposals

2013 Excludes disposed VGT, Canada and Andreco-Hurll

2014 Excludes ECIL Met Tec and Process Metrix results (Revenue £3.2m, trading profit £0.5m)

2015 Excludes ECIL Met Tec, Process Metrix and Sidermes results (Revenue £26.5m, trading profit £2.1m)

6

China

-2.3%

Russia

+0.8%

The world steel markets show substantial decline…

• World steel production down 2.8%

China (49.5% of global production) down 2.3%

• 18.9 million tonnes reduction

Rest of world ex China down 3.4%

• 28.5 million tonnes reduction

• USA down 10.5%

• 14 of the top 15 producers reported drops Represent 88.8% of global production

• India now 3rd largest producer in the world behind China and Japan, confirming our strategy at CMD

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

Rate of Growth in Steel Production2015 Top steel producers

Italy

-7.1%

Germany

-0.6% Brazil

-1.9%

Turkey

-7.4%

Ukraine

-15.6%

(1) Size of bubble refers to relative amount of steel produced

(2) India includes Kazakhstan

USA

-10.5%

Japan

-5.0%

Russia

-0.5%

India (2)

+2.4%

UK

-10.4%

South

Korea

-2.6%

7

-17.0%

-12.0%

-7.0%

-2.0%

3.0%

-35.0% -25.0% -15.0% -5.0% 5.0% 15.0%

Pro

du

ctio

n g

row

th (

2015

vs

2014

)

Sales growth (2015 vs 2014)

Rate of Growth in Steel Production & Revenues FY 2015 vs FY 2014Top Steel Producers

…whilst revenue grows ahead of market in our strategic targeted areas

(1) Size of bubble refers to relative size of Flow Control and Advanced Refractories FY 2015 Revenue in each country

(2) India includes Kazakhstan

Russia

Revenue: -10.4%

Steel: -0.5%

USA

Revenue: -24.5%

Steel: -10.5%

India (2)

Revenue: +6.9%

Steel: +2.4%

Brazil

Rev: +12.3%

Steel: -1.9%

South Korea

Revenue: +5.4%

Steel: -2.6%

Japan

Rev: -7.1%

Steel: -5.0%

Ukraine

Rev: -32.2%

Steel: -15.6%

Future

growth

driversUK

Revenue: -5.9%

Steel: -10.4%

Italy

Rev: +1.3%

Steel: -7.1%

Turkey

Rev: +1.9%

Steel: -7.4%

Germany

Rev: -1.6%

Steel: -0.6%

China

Revenue: -0.7%

Steel: -2.3%

8

Vesuvius sales in Europe and USA declined more than market

Source World Steel Assoc., Company

2015 Sales per Tonne• The biggest steel production decline

happened in countries where we have

the highest penetration:

UK down 10.4%

USA down 10.5%

Italy down 7.1%

0

20

40

60

80

100

120

FC AR

All figures indexed to the UK

9

Potential for growth

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

SouthKorea

China Russia Turkey EU28 USA Brazil Mexico India

T / Capita

2015 Production per Capita• Three heavily populated countries

constitute considerable potential for

growth

• All have low steel production tonnes per

capita vs peers, indicating expected

growth in infrastructure and construction

development

India

Brazil

Mexico

Source World Steel Assoc., Company

10

Trading review: Steel division revenue

0

50

100

150

200

250

Americas EMEA Asia-Pacific

2014 2015-10.7%

-11.4%

+4.3%

Revenue* by region

Americas:

• Reduction in crude steel production, reflecting decline in pipe

demand and increased imports

EMEA:

• Significant decline in steel production in the UK and Italy where

we have high penetration

Asia-Pacific:

• Sales in China supported by continuing shift from long to flat

steel production and the progressive acceptance of our value

creating solutions

• Strong sales in Korea and India, outperforming underlying steel

production in region

Steel Flow Control

0

50

100

150

200


2014 2015-22.8%

-9.7%

+1.0%

Revenue* by region

Advanced Refractories

Americas:

• Lower activity in North America, driven by reduction in crude steel

production and resistance to major decreases in prices

• Increased imports in the region

EMEA:

• Lower revenues due to decline in UK steel production

Asia-Pacific:

• Revenue growth through market penetration

• Recommencement of customer facilities

£m £m

*On an underlying basis: at constant currency and excluding the impact of acquisitions and disposals

11

Amplified decline in mature markets

Source: WSA for steel production volumes, Vesuvius internal data for Vesuvius sales at constant currency. Note 2007 figures are rebased to 100.

Vesuvius

Sales

Value

Steel

Production

VolumesSal

es a

nd

Ste

el P

rod

uct

ion

Reb

ased

to 1

00

Sal

es a

nd

Ste

el P

rod

uct

ion

Reb

ased

to 1

00

2015 vs 2014: -20.2%

2015 vs 2014: -8.6%

2015 vs 2014: -7.3%

2015 vs 2014: -3.1%

• Our sales in NAFTA and EMEA declined more than underlying market due to: Reduction in inventories

Retrenchment onto lower qualities when demand is low

Slowdown in high-end market

50

60

70

80

90

100

110

120

2007 2008 2009 2010 2011 2012 2013 2014 2015

60

70

80

90

100

110

120

130

140

150

2007 2008 2009 2010 2011 2012 2013 2014 2015

12

Continued overperformance in emerging steel markets

Source: WSA for steel production volumes, Vesuvius internal data for Vesuvius sales at constant currency. Note 2007 figures are rebased to 100.

Vesuvius

Sales

Value

Steel

Production

Volumes

Sal

es a

nd

Ste

el P

rod

uct

ion

Reb

ased

to 1

00S

ales

an

d S

teel

Pro

du

ctio

n R

ebas

ed t

o 1

00

Sal

es a

nd

Ste

el P

rod

uct

ion

Reb

ased

to 1

00S

ales

an

d S

teel

Pro

du

ctio

n R

ebas

ed to

100

2015 vs 2014: -0.7%

2015 vs 2014: -2.3%

2015 vs 2014: +12.3%

2015 vs 2014: -1.9%

2015 vs 2014: +5.4%

2015 vs 2014: -2.6%

2015 vs 2014: +6.9%

2015 vs 2014: +2.4%

60

70

80

90

100

110

120

130

140

150

160

2007 2008 2009 2010 2011 2012 2013 2014 2015

60

80

100

120

140

160

180

200

220

240

260

2007 2008 2009 2010 2011 2012 2013 2014 2015

0

100

200

300

400

500

600

700

800

900

2007 2008 2009 2010 2011 2012 2013 2014 2015

80

90

100

110

120

130

140

150

160

170

180

2007 2008 2009 2010 2011 2012 2013 2014 2015

13

Trading review: Steel division margins

£m 2015 2014Y-o-Y

change

Underlying

change

Total Revenue 897.6 981.4 -8.5% -9.7%

Total Trading Profit 79.5 96.4 -17.5% -21.3%

Trading Margin % 8.9% 9.8% -100bps -130bps

Underlying margin

• Underlying trading profit down 21.3% reflecting:

Lower activity in key regions of NAFTA and EMEA, together accounting for 67% of

revenue

Revenue decline driven by inventory reductions in supply chain

Margins lowered by our materials purchased in US Dollar and inventory reduction action

9.1%

10.2%

8.9%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2013 2014 2015

14

Foundry market

Light vehicle production Truck production

Source : LMC Automotive Source : LMC Automotive

• Truck and Light Vehicle markets represent approximately 40% of Foundry product line sales

• Growth in light vehicle output counteracted by low demand in mining, construction and agriculture

• Steel foundries in US moving to China

-

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

2008 2009 2010 2011 2012 2013 2014 2015

NAFTA Europe

0

100000

200000

300000

400000

500000

600000

700000

800000

2008 2009 2010 2011 2012 2013 2014 2015

NAFTA Europe

2015 vs 2014: +4.7%

2015 vs 2014: +3.3%

2015 vs 2014: +7.8%

2015 vs 2014: +8.2%

15

70

80

90

100

110

120

130

140

150

160

2007 2008 2009 2010 2011 2012 2013 2014 2015

70

90

110

130

150

170

190

210

2007 2008 2009 2010 2011 2012 2013 2014 2015

60

70

80

90

100

110

120

130

140

2007 2008 2009 2010 2011 2012 2013 2014 2015

50

60

70

80

90

100

110

120

2007 2008 2009 2010 2011 2012 2013 2014 2015

Foundry underlying markets

Vesuvius

Sales

Value

Casting

Tonnes

Sal

es a

nd

Cas

tin

g T

on

nes

Reb

ased

to 1

00

Sal

es a

nd

Cas

tin

g T

on

nes

Reb

ased

to 1

00

Sal

es a

nd

Cas

tin

g T

on

nes

Reb

ased

to 1

00

Sal

es a

nd

Cas

tin

g T

on

nes

Reb

ased

to 1

00

Source Modern Casting and Vesuvius estimates for 2015 casting tonnes, Vesuvius internal data for Vesuvius sales at constant currency. Note 2007 figures are rebased to 100.

2015 vs 2014: -8.6%

2015 vs 2014: -1.0%

2015 vs 2014: +15.3%

2015 vs 2014: +1.5%

2015 vs 2014: -1.0%

2015 vs 2014: -0.2%

2015 vs 2014: -7.0%

2015 vs 2014: -13.3%

16

Trading review: Foundry revenue

0

50

100

150

200

250


2014 2015Revenue* by region

£m

*On an underlying basis: at constant currency and excluding the impact of acquisitions and disposals

-10.1%

-0.3%

-2.7%

Americas:

• Growth in NAFTA light vehicle and truck production offset

by:

• Reduced foundry activity in Brazil

• Weak demand in mining, construction and

agriculture foundries

EMEA:

• Decrease driven by lower truck production in the Central

Europe and Middle East region

Asia-Pacific:

• Growth in Chinese light vehicle output offset by:

• Severe downturn in auto sector in Thailand

• Reduction in automotive production in North Asia

(excluding China)

• Truck production down in China

17

Trading review: Foundry division margins

£m 2015 2014Y-o-Y

change

Underlying

change

Revenue 424.4 463.0 -8.4% -3.3%

Trading Profit 44.5 46.4 -4.2% +2.7%

Trading Margin % 10.5% 10.0% +50bps +60bps

• Despite the global foundry market remaining mixed:

• Underlying profit increased by 2.7%

• Underlying margin improvement of 60bps as a result of self-help measures

Underlying ROS improvement

10.0% 9.9%10.5%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2013 2014 2015

18

• Variety of programmes delivered across business lines and central

functions in 2015, aimed at flexing the cost base

Raw materials substitution and sourcing changes

Reduction of shifts and consolidation of management positions

Consolidation of customer services

Closure of sales offices and warehouses

Reduction in central and admin functions

• £8.8m of yearly savings implemented in 2015 for £14.6m of costs, well

ahead of expectations

• Headcount reduction of 1,001 year on year

What has been delivered by Restructuring at end Dec 2015

19

• Weak markets overall, but continued outperformance in strategic growth areas of

India, China and Brazil

• Margin improvement in Foundry

• Initiated group-wide restructuring programme

• Launch of new products in Technical Services

• Strong balance sheet, with long-term bank facilities in place to 2020

• Maintained the final dividend at 11.125p per share; increasing the total dividend

by 0.9% to 16.275p per share

2015 Trading summary

20


Financial Review

Guy Young

Chief Financial Officer

21

Income statement

2015 2014 Year on Year Change

£m £m As reported Underlying(1)

Revenue 1,322.0 1,444.4 -8.5% -7.7%

Trading Profit 124.0 142.8 -13.1% -14.0%

Trading margin % 9.4% 9.9% -50bps -70bps

Net finance costs (15.4) (16.4)

Share of JV – 1.4

Profit before Tax 108.6 127.8

Effective tax rate % 25.5% 26.0%

Tax (27.7) (32.9)

Non-controlling Interest (5.2) (4.6)

Headline Earnings 75.7 90.3 -16.2% -18.1%

Headline Earnings per share (p) 28.1 33.4 -16.0% -17.9%

(1) Underlying basis is at constant currency and excludes separately reported items and the impact of acquisitions and disposals

22

Dec '15 constant rates

£m / (%)2014/H1 2014/H2 2015/H1 2015/H2 H1’15 v H1’14 H2’15 v H2’14

Direct Sales 707.4 700.1 688.8 633.3 -2.6% -9.5%

Gross Margin 197.1 189.5 186.4 166.7 -5.4% -12.0%

Trading Profit 69.3 73.0 69.0 55.0 -0.4% -24.6%

Gross Margin % 27.9% 27.1% 27.1% 26.3% -80 bps -70 bps

Trading Profit % 9.8% 10.4% 10.0% 8.7% -20 bps -170 bps

2015: Tale of two halves

• Sales and trading margin decline in H2 2015 much more severe than H1 2015

Indicative of potential trend through H1 2016

• Restructuring gathered pace in H2 2015 and partially mitigated the decline

23

Underlying revenue fell by 7.7%...

• Revenue down £122.4 million on a reported basis (-8.5%)

• Revenue down £108.6 million on an underlying basis (-7.7%)

• Acquisitions added £26.5 million of revenue Ecil Met Tec, Process Metrix, Reliacheck and

Sidermes

• Underlying revenue growth in developing markets more than offset by decline in mature markets Asia +0.7% +£2.5m

EMEA -7.2% -£42.7m

Americas -15.0% -£68.5m

1,444.4

1,404.2

1,295.61,322.0

37.0 3.2

108.6

26.5

1000

1100

1200

1300

1400

1500

1600

£mRevenue

24

…whilst underlying trading profit fell 14%

• Trading profit down £18.8 million on a reported basis (13.1%)

• Trading profit down £19.8 million on an underlying basis (14.0%)

• Return on Sales down 50 bps on a reported basis

• Return on Sales down 70 bps on an underlying basis

• Acquisitions added £2.1 million of trading profit Ecil Met Tec, Process Metrix, Reliacheck and

Sidermes

142.8141.8

122.0124.0

0.5

0.5

19.8

2.1

100

105

110

115

120

125

130

135

140

145

150

£mTrading Profit

25

Currencies(Impact of FX

translation on GBP

reporting currency)

2015 FY Average

Rates

2014 FY Average

Rates

2015 Average

Rates v 2014

Average Rates

USD 1.53 1.65 7.3%

EUR 1.38 1.24 -11.0%

INR 98.00 100.49 2.5%

RMB 9.60 10.16 5.5%

JPY 185.07 174.09 -6.3%

BRL 5.09 3.87 -31.5%

ZAR 19.48 17.83 -9.2%

USD and RMB strength offset by weakness in EUR and BRL

The translational FX position has neutralised somewhat

26

The cash conversion rate held above 100%

• Full year cash conversion of 100.3%

• Working capital is flat in 2015

Trade working capital improved by £19.8m,

Offset by other working capital -£19.5m

outflow

• CAPEX in 2015 excluding customer

installation investment of £6.2m is below

depreciation

124.0 124.4

37.0

37.1

0.3

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

TradingProfit

Depreciation Net capex Otherworkingcapital

OperatingCash Flow

£mOperating cash flow

27

97%

64%

209%

105%

137%

81% 82%

0%

50%

100%

150%

200%

250%

Europe NAFTA China North Asia India South Asia South America

Debtor days as % of Group Average (2015)

China, Italy receivables drag & emerging market longer credit terms

28

124.4

70.6

59.1

13.6

31.8

2.26.2 11.5

0

20

40

60

80

100

120

OperatingCash Flow

Interest Paid Income TaxesPaid

Dividends toMinorities

Pre-demergerLegacy

Settlement

FCF beforerestructuring

costs

Restructuring Free CashFlow

£m Free cash flow

Free cash flow of £71m before restructuring is 57% of OCF

At December 2015 FX rates

29

…Net debt increase to £291.6m due to lower OCF & M&A

268.3

291.6

70.611.5

43.9

3.7

25.1

5.24.5

190

210

230

250

270

290

Net debt01.01.15

FCF Restruct. Divid-ends

Pension M&A Sharescheme

FX &Others

Net debt31.12.15

£mNet debt• Net debt increased £23.3m in the year

• Acquisition of Sidermes at £23.8m, and

£1.3m payments for prior year

acquisition

• FX impact was pronounced at year end,

USD denominated USPP loans revalued

higher by £4.5m in Dec 15 alone

• Net debt to EBITDA 1.8x well within

covenants

At December 2015 FX rates

30

• Focus on cost control and delivery of restructuring

• Improve working capital efficiency

• Maintain high levels of cash conversion

• Continue with the conservative approach to gearing

• Maintain financial flexibility

• Improve shareholder returns

Financial objectives remain consistent…

31


Strategy and Outlook

François Wanecq

Chief Executive

32

Delivering on the strategy

• Maintain technology leadership

• Increase penetration of value creating solutions

• Capture growth in developing markets

• Improve cost leadership

• Build technical services offering

Building our R&D centres;

Launching new products

Start up of the new SST caster at Hyundai;

Further success with INITEK

Growing ahead of underlying market in China, India

and Brazil;

Confirming our India strategy

Foundry margin improved by 60 basis points;

Commenced a restructuring programme

Acquisition of Sidermes

33

• Acquisitions bring us greater technological inroads and market intimacy in data capture

Temperature and gas content with ECIL Met Tec and Sidermes

Laser technology with Process Metrix

Sidermes integration is underway

• Identifying new opportunities in boosting our R&D capabilities in data capture

Roll-out Accuoptix

Roll-out X Mat

• Exploring synergies across our businesses

• Continue to pursue further acquisitions

Technical Services: Deliveries and potential

34

• Steel

Flow Control Europe efficiency and manufacturing optimisation

South American optimisation opportunities

• Foundry

Additional NAFTA plant optimisation

• Group wide

Raw materials efficiencies

Standardisation of business processes

• Series of new actions identified to deliver £10m additional savings

by end of 2017 for additional cost of £10m compared to previous

announcement

• In total, £20m of savings for £30m of costs since inception,

including what was delivered in 2015

Incremental restructuring plans

35

Savings Previously

Announced

Delivered in

2015

Incremental

Planned

Cumulative /

Annualized

Total 10.0 8.8 11.2 20.0

One-off Costs One off total

Total 20.0 -14.6 -15.4 -30.0

Recurring savings to increase to £20m with one off cost of £30m

• 2015 savings of £8.8m comprised of £7.7m overhead reduction and £1.1m

variable cost efficiency

36

• Underlying trading environment to remain broadly similar to the second half of 2015

Growth in steel production not expected before 2017

• Continued focus on medium-term strategy:

Building Technical Services business

Continued growth in India, China and Brazil as outlined at Capital Markets Day

• Restructuring programme to gather pace

Annualised benefits of £20 million delivered by end of 2017

• Maintain focus on cash, balance sheet strength and returns to shareholders

Outlook

37


Q&A

38


Appendix

39

2011 2012 2013 2014 2015

Revenue 1,449.7 1,390.4 1,366.0 1,407.4 1,322.0

Steel 946.8 932.8 935.4 968.5 897.6

Foundry 502.9 457.6 430.6 438.9 424.4

Trading Profit 150.1 112.2 127.8 142.3 124.0

Steel 91.7 76.0 84.9 99.0 79.5

Foundry 58.4 36.2 42.9 43.3 44.5

Margins 10.4% 8.1% 9.4% 10.1% 9.4%

Steel 9.7% 8.1% 9.1% 10.2% 8.9%

Foundry 11.6% 7.9% 10.0% 9.9% 10.5%

5 year history at constant currency(1)

(1)All numbers shown at December 2015 full year average exchange rates

40

Currency – Ready Reckoner

• Rule of thumb for impact of a

movement in currency against

sterling (1 unit change)

Amounts shown are movements

for each currency

Works both for strengthening and

weakening of currencies

CurrenciesApproximate

Change in profits

US Dollar £0.2 million

Euro £0.1 million

Chinese Renminbi £0.2 million

Japanese Yen

Indian Rupee

Brazilian Real

£0.3 million

41

Market leading positions across many of our products

Molten metal in steel industry Molten metal in foundries

A world leader in flow control systems (slide gates)

A world leader in isostatically pressed refractories

A world leader in flow control pre-cast solutions

A world leader in mould & tundish fluxes

A world leader in filters

A world leader in feeding systems

A world leader in coatings

Hamilton

Steel Flow Control Competitors Foundry Technologies Competitors

42

Main products and markets – Steel business segment

• World leader in the supply of consumable Steel Flow Control

products used in the enclosed continuous casting process and a

leading supplier of Advanced Refractories used as high temperature

linings

Steel business segment overview Steel business segment revenue by operating location

Vesuvius products

Advanced Refractories in blue text

Flow Control in red text

• Vesuvius is the only truly global player in Flow Control

• Asia Pacific major volume growth potential

• Europe and NAFTA as laboratories for innovation

Well balanced presence in all major areas

Source Vesuvius breakdown of 2015 Reported Revenues

Americas35%

EMEA40%

Asia Pacific25%

A global leader for steel flow control consumable ceramics

43

0

200

400

600

800

1000

1200

1400

China RoW

2015 2020 2025

-

50

100

150

200

250

300

350

NAFTA EU 28 S. America India Mid East &Africa

RoEurope Ro Asia

2015 2020 2025

Steel market growth scenario

• NAFTA and Europe should decrease slowly as their economic growth

model requires less steel

• China stabilises and starts declining at the end of the period

• India enters in a major steel growth episode

• South America, Middle East and at the end of the period, Africa, enjoy

sustained growth

0%

-1%

9%

13%

15% 1%

2%

CAGR%

-1%

13%

mT

Global forecast production

2016 – 1.6 billion tonnes



Global Steel Production

mT

44

Source Based on data from WSA & SBB, with Vesuvius assumptions used for China

0%

10%

20%

30%

40%

50%

60%

70%

80%

NAFTA EU28 South America Middle East China Africa

Pro

po

rtio

n o

f F

lat

Ste

el P

rod

uct

s (%

)

Proportion of Flat Steel by Region

Growth opportunities – Steel

Typical consumption of Flow Control products in flat steel is £1.5 /T of steel vs £0.5/T of steel in long

Vesuvius serves mainly the flat products market which will grow at a higher pace than global steel as developing markets evolve towards consumption driven economies

45

Main products and markets – Foundry business segment

Foundry casting process

• World leader in the supply of consumable products and technical

services used in the production of metal castings which themselves

have a wide variety of uses in engineered products

Note Red text denotes Vesuvius products

Ultimate end markets for castings

Foundry business segment revenue by operating location

Light Vehicles27%

Construction, Agriculture & Mining 18%

Medium & Heavy

Vehicles 12%

Other 10%

Valves & Pumps 7%

Power Generation 7%

Railroad 4%Pipes &

Fittings 2%

Source Management estimates

Source Vesuvius breakdown of 2015 Reported Revenues

Americas21%

EMEA45%

Asia-Pacific34%

A global leader in consumables for mould & methoding

General

engineering

13%

46

Foundry sales

£/T of total market casting (2014)

Significant upside potential through continuing market

penetration as emerging markets move towards higher quality foundry

castings

Ductile Iron

Long term growth in Foundry will come from innovation and marketing

0

10

20

x 20

47

Mining capital expenditure has fallen significantly since 2012

Source: Bloomberg, JPMC Research

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

2011 2012 2013 2014 2015

$mill

ions

RoW Australia North America

48

000 T

Source: WSA and Vesuvius/Cookson data

£ m

0

200

400

600

800

1000

1200

1400

1600

1800

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

1800000

RoW China India Ceramic division sales - Vesuvius

World Steel Production – Long term trends by region

49

Steel exports from China are now falling as barriers to trade increase

50

-10%

-5%

0%

5%

10%

15%

20%

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1996 1999 2002 2005 2008 2011 2014

China – Steel production vs GDP growth

Steel Production GDP Growth

Steel production per capita in China 585kg

From 1996 to 2013 (18 years) steel production was multiplied 8x

Steel production per capita in Japan 831kg

From 1956 to 1973 (18 years) steel production was multiplied 10x

-5%

0%

5%

10%

15%

20%

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

1956 1959 1962 1965 1968 1971 1974

Japan – Steel production vs GDP growth

Steel Production GDP Growth %

End of high GDP

growth periodEnd of high GDP

growth period

China Steel Production: Has the limit been reached? Parallel with Japan

51

• Steel production per

capita in Japan 831kg

• After the peak in 1973

steel production

declined a little and

recovered to about 88%

of peak over 40 years

-10%

-5%

0%

5%

10%

15%

20%

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

Japan – Steel production vs GDP growth


What is the steel profile of a maturing economy: The case of Japan

52

-10%

-5%

0%

5%

10%

15%

20%

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

19

80

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

India – Steel production vs GDP growth


• Steel production per capita in

India 70kg (vs 585kg in China)

• The long term steel growth

episode should start in the

coming three years and last

longer than in Japan and China

• Official objective is 300 million

tonnes in 2025

Has India started its high growth sequence?

53

0

200

400

600

NAFTA EU 27 S. America China India Mid E & Af RoEurope Ro Asia

Conversion to flat steel is a growth opportunity

2015

0

200

400

600


2020

0

200

400

600


2025

0

200

400

600

800

1000

1200

2015 2020 2025

Flat LongmT

mT

mT

mT

• Progression of flat steel vs long steel

could generate growth in our accessible

market of 30% in 2020 and 55% in 2025

• In the same period global steel

production is expected to grow by only

10% and 28% respectively

54

Steel vs Aluminum: Parallel growth

000 Tonnes

Source: WSA and World Aluminium Organisation

Steel production

Ste

elp

rod

uct

ion

Alu

min

ium

pro

du

ction

000 Tonnes

Africa3%

North America8%

South America2%

Asia (ex China)5%

West Europe6%

East & Central Europe

7%

Oceania3%

GCC9%

China55%

ROW Estimated Unreported

2%

Aluminium production by region – 2015

0

10000

20000

30000

40000

50000

60000

70000

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

1800000

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Steel production Aluminium production

Aluminium production

55

5000

10000

15000

20000

25000

30000

200000

250000

300000

350000

400000

450000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

6,000

7,000

8,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000

16,000

60,000

70,000

80,000

90,000

100,000

110,000

120,000

130,000

140,000

150,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Steel and Foundry casting production tonnages move in parallel

Growth perspectives should be similar: Foundry should benefit from China and India

Source WSA for steel production volumes; Modern Casting and Vesuvius estimates for casting tonnes,

Casting

production

volumes

Steel

Production

Volumes

0

2000

4000

6000

8000

10000

12000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Ste

el P

rod

uct

ion

(to

nn

es)

Ste

el P

rod

uct

ion

(to

nn

es)

Cas

tin

g P

rod

uct

ion

(to

nn

es)

Cas

tin

g P

rod

uct

ion

(to

nn

es)

Documents

2015 Full Year Results - Vesuvius · 2015 Full Year Results. 2 Disclaimer This presentation, which has been prepared by Vesuvius plc (the “Company”),includes statements that are,