Upload
others
View
3
Download
0
Embed Size (px)
Citation preview
1
A GLOBAL LEADER IN METAL FLOW ENGINEERING
Investor Pack
July – August 2015
2
A GLOBAL LEADER IN METAL FLOW ENGINEERING
31 July 2015François WanecqChief Executive
2015 Half Year Results
3
Disclaimer
This presentation, which has been prepared by Vesuvius plc (the “Company”), includes statements that are, ormay be deemed to be, "forward looking statements". These forward looking statements can be identified by theuse 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 comparableterminology. These forward looking statements include matters that are not historical facts and include statementsregarding the Company’s intentions, beliefs or current expectations. By their nature, forward looking statementsinvolve risk and uncertainty because they relate to future events and circumstances. A number of factors couldcause actual results and developments to differ materially from those expressed or implied by the forward lookingstatements. Any forward looking statements in this presentation reflect the Company’s view with respect to futureevents 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 andliquidity. The Company undertakes no obligation publicly to release the results of any revisions or updates to anyforward looking statements in this presentation that may occur due to any change in its expectations or to reflectevents or circumstances after the date of this presentation.
This presentation comprises information which is already in the public domain, and includes extracts from theAnnouncement of the Half Year Results for the six months ended 30 June 2015 (31 July 2015). You should readthe whole of this Announcement. No reliance may be placed for any purposes whatsoever on the informationcontained in this document or on its completeness. None of the Company, its advisers, or any other party is underany duty to update or inform you of any changes to the information contained in this presentation.
4
• Lower performance reflects decline in global steel production volumes, with US hardest hit – our largest market
• Revenues up in all Asia-Pacific businesses
• Outperformance in China & India – both key to the future
• Return on sales increased to 10%, driven by proactive approach to self-help
• Encouraging progress on all five Strategic Priorities
• Restructuring programme being implemented to address structural changes in end markets
• Expectations for the full year remain unchanged
• Interim Dividend of 5.15 pence per share recommended, an increase of 3.0%
H1 2015 overview
5
H1 Trading performance as reported; lower sales, higher RoS
%
£m
£m
729.8702.6
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
H1 2014 H1 2015
Revenue
9.8% 10.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
H1 2014 H1 2015
RoS+26 bps
-3.7% 71.2 70.4
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
H1 2014 H1 2015
Trading Profit-1.1%
• 26 basis point improvement delivered on a reported basis
6
H1 Underlying(1) trading performance
• 9 basis points improvement delivered on an underlying basis
%£m £m
721.0690.2
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
H1 2014 H1 2015
Revenue-4.3%
9.8% 9.9%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
H1 2014 H1 2015
RoS+9 bps
71.068.6
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
H1 2014 H1 2015
Trading Profit-3.4%
(1) Underlying basis is at constant currency and excludes separately reported items and the impact of acquisitions and disposals
7
China-1.3%
Russia+0.8%
The world steel markets show substantial decline….
• World steel production down 2% China (50.4% of global production) down
1.3%• 5.4 million tonnes reduction
Rest of world down 2.8%• USA down 8.6%• 11.4 million tonnes reduction
• 30 out of 65 WSA countries reported a drop 7 of the top 10 producers reported drops
• Represent 84% of global production
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
Rate of Growth in Steel ProductionH1 2015 Top 10 steel producers
Germany-1.5%
Brazil+2.0%
Turkey-5.7%
Italy-10.6%
(1) Size of bubble refers to relative amount of steel produced
USA-8.6%
Japan-4.7%
Korea-4.9%
India+4.2%
8
USARevenue: -14%
Steel: -8.6%
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
-20% -15% -10% -5% 0% 5% 10% 15% 20%
Grow
th in
Ste
el Pr
oduc
tion
Rate of Growth in Vesuvius Revenues
Rate of Growth in Steel Production & Revenues H1 2015Top 10 steel producers
…whilst revenue grows in our main markets outside of the USA
(1) Size of bubble refers to relative size of Flow Control and Advanced Refractories 2015 1H Revenue in each country
ChinaRevenue: +8%
Steel: -1.3%
5
1
10
Scale of Bubbles(on both slides)
Future Growth Drivers
ItalyRevenue: +3%Steel: -10.6%
RussiaRevenue: +0%Steel: +0.8%
JapanRevenue: -1%Steel: -4.7%
BrazilRevenue: +15%
Steel: +2%
TurkeyRev: +14%
Steel: -5.7%
GermanyRevenue: +3%
Steel: -1.5%
KoreaRevenue:+1%Steel: -4.9%
IndiaRevenue: +7%
Steel +4.2%
9
• Final steel consumption remains solid• Strong US Dollar favours imports from
lower cost countries: Canada Brazil Korea
• Inventories have started to decline but remain high
• Prices have declined considerably and imports have started reducing
NAFTA steel markets
Steel production – NAFTAmt
Source : World Steel Assoc.
30
35
40
45
50
55
60
65
70
75
80
H1 07 H1 08 H1 09 H1 10 H1 11 H1 12 H1 13 H1 14 H1 15
-6.9%
• H1 15 down 6.9% on H1 14• NAFTA produced 55.2mt in H1 2015 (H1 2014: 59.4mt)• Canada seeing slight growth, Mexico seeing moderate decline
10
US steel volumes stable ~10% below last year
1,400
1,450
1,500
1,550
1,600
1,650
1,700
1,750
1,800
1,850
1,900
1,950
Wk1 Wk2 Wk3 Wk4 Wk5 Wk6 Wk7 Wk8 Wk9 Wk10Wk11Wk12Wk13Wk14Wk15Wk16Wk17Wk18Wk19Wk20Wk21Wk22Wk23Wk24Wk25Wk26Wk27Wk28Wk29
Thou
sand
s of T
onne
s
US Weekly Steel Production
2014 2015
11
EMEA steel markets
Steel production – EMEA mt
Source : World Steel Assoc.
100
120
140
160
180
200
220
H1 07 H1 08 H1 09 H1 10 H1 11 H1 12 H1 13 H1 14 H1 15
-2.9%
• European Union steel production resistsdue to the regained competitivenesswith lower Euro
• Ukraine more affected• Production in Turkey is lower due to a
decline in Black Sea markets• South Africa is equally lower due to
economic conditions
• H1 15 down 2.9% versus H1 14• EMEA produced 177.4.1mt in H1 2015 (H1 2014: 181.8mt)• EU seeing slight growth, Africa and rest of Europe seeing
moderate decline
12
Emerging steel markets
Steel production – India mt
Steel production – Brazilmt
Source : World Steel Assoc. Source : World Steel Assoc.
20
25
30
35
40
45
50
H1 07 H1 08 H1 09 H1 10 H1 11 H1 12 H1 13 H1 14 H1 15
+4.2%
• H1 15 up 4.2% versus H1 148
10
12
14
16
18
20
H1 07 H1 08 H1 09 H1 10 H1 11 H1 12 H1 13 H1 14 H1 15
+2.0%
• H1 15 up 2.0% on H1 14
• Recent growth in key developing markets: India produced 45.0mt in H1 2015 (H1 2014: 43.1mt) Brazil produced 17.1mt in H1 2015 (H1 2014: 16.7mt)
Now the 3rd
largest steel producer in the world
13
Asian steel markets
Steel production – China mt
Steel production – South Koreamt
Source : World Steel Assoc. Source : World Steel Assoc.
-4.9%
• Steel Production down year-on-year in key Asia-Pacific markets: China produced 410.0mt in H1 2015 (H1 2014: 415.4mt) South Korea produced 34.5mt in H1 2015 (H1 2014: 36.3mt)
0
50
100
150
200
250
300
350
400
450
H107
H108
H109
H110
H111
H112
H113
H114
H115
-1.3%
• H1 15 down 1.3% versus H1 140
5
10
15
20
25
30
35
40
H1 07 H1 08 H1 09 H1 10 H1 11 H1 12 H1 13 H1 14 H1 15
• H1 15 down 4.9% versus H1 14
14
Trading review: Steel division revenue
0
25
50
75
100
125
Americas EMEA Asia-Pacific
H1 2014 H1 2015
-7.4%
-7.9%
+7.1%
Revenue* by region
Americas:• Reduction in crude steel production, reflecting decline in
pipe demand and increased imports driven by strength of US Dollar
EMEA:• Declining crude steel production in Turkey and Africa,
significant reduction in Ukraine
Asia-Pacific:• Strong revenue growth in China, supported by continuing
shift from long to flat steel production• Strong sales in Korea and India, outperforming underlying
steel production in region
Steel Flow Control
0
25
50
75
100
125
Americas EMEA Asia-Pacific
H1 2014 H1 2015
-16.2%
-2.9%
+4.0%
Revenue* by regionAdvanced Refractories
Americas:• Lower activity in North America, driven by reduction in crude
steel production• Increased imports in the region
EMEA:• Decline broadly in line with the decline in market
Asia-Pacific:• Strong 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
15
0
100
200
300
400
500
600
700
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150
50
100
150
200
250
300
350
400
450
500
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
0
20
40
60
80
100
120
140
160
180
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150
20
40
60
80
100
120
140
160
180
200
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Steel markets
Source: WSA for steel production volumes, Vesuvius internal data for Vesuvius sales at constant currency. Note 2002 figures are rebased to 100
Vesuvius Sales Value
Steel Production Volumes
Sales
and
Stee
l Pro
duct
ion
Reba
sed t
o 10
0Sa
les an
d St
eel P
rodu
ctio
n Re
base
d to
100
Sales
and
Stee
l Pro
duct
ion
Reba
sed t
o 10
0Sa
les an
d St
eel P
rodu
ctio
n Re
base
d to
100
NAFTAH1 15 vs H1 14: -13.7%
H1 15 vs H1 14: -6.9% H1 15 vs H1 14: -2.9%
H1 15 vs H1 14: +4.2%
H1 15 vs H1 14: -1.3%H1 15 vs H1 14: +7.3%
H1 15 vs H1 14: +8.0%
H1 15 vs H1 14: -4.9%
16
Trading review: Steel division margins
£m H1 2015 H1 2014 Y-o-Ychange
Underlying change
Revenue
Steel Flow Control 260.4 273.9 -4.9% -4.3%
Advanced Refractories 203.5 215.6 -5.6% -7.4%
Technical Services 12.4 - - -
Total Revenue 476.3 489.5 -2.7% -5.4%
Total Trading Profit 44.5 47.2 -5.9% -11.9%
Trading Margin % 9.3% 9.7% -31bps -68bps
Underlying margin
• Underlying trading profit down 11.9% 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
9.9%
9.3%
7.0%
7.5%
8.0%
8.5%
9.0%
9.5%
10.0%
H1 2014 H1 2015
17
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
-
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
H12008
H22008
H12009
H22009
H12010
H22010
H12011
H22011
H12012
H22012
H12013
H22013
H12014
H22014
H12015
NAFTA Europe
• NAFTA up 2.6% versus H1 2014• Europe up 3.2% versus H1 2014
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
H12008
H22008
H12009
H22009
H12010
H22010
H12011
H22011
H12012
H22012
H12013
H22013
H12014
H22014
H12015
NAFTA Europe
• NAFTA up 12.5% versus H1 2014• Europe down 1.3% versus H1 2014
18
Trading review: Foundry revenue
0
20
40
60
80
100
120
Americas EMEA Asia-Pacific
H1 2014 H1 2015Revenue* by region
£m
*On an underlying basis: at constant currency and excluding the impact of acquisitions and disposals
-7.3%
-0.3%
-0.4%
Americas:• Growth in NAFTA light vehicle and truck production offset
by:• Reduced foundry activity in Brazil• Weak demand in mining, construction and
agriculture foundriesEMEA:
• 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)
19
Trading review: Foundry division margins
£m H1 2015
H1 2014
Y-o-Y change
Underlying change
Revenue 226.3 240.3 -5.8% -1.9%
Trading Profit 25.9 24.0 +8.2% +14.6%
Trading Margin % 11.5% 10.0% +148bps +165bps
• Despite the global foundry market remaining mixed:• Underlying profit increased significantly by 14.6%• Underlying margin improvement of 165bps as a result of self-help measures
9.8%11.5%
0.0%2.0%4.0%6.0%8.0%
10.0%12.0%14.0%
2014 2015
Underlying ROS improvement
20
Restructuring programme initiated
• This will programme will Address structural changes in geographic trends in markets Deliver efficiencies Improve decision making quality and speed Resize the cost structure with a particular emphasis on overheads
• Expected to generate annual cost savings in excess of £10m by 2017 Expected to result in total exceptional restructuring cost of c. £20 million in 2015 & 2016
• £3.1 million incurred in first half
• Foundry and corporate cost reductions started in late 2014 / early 2015 Benefits already coming through
• Steel division included to address structural changes in markets
21
• Challenging markets overall, but with some brighter spots
• Further margin improvement Margin recovery in line with our plan: 189 bps delivered since 2012
• Ahead of continuing self-help measures, implementation of a structural cost reduction plan to substantially improve our cost base
H1 2015 Trading summary
22
A GLOBAL LEADER IN METAL FLOW ENGINEERING
Financial Review
Chris O’SheaChief Financial Officer
23
Income statement
H1 2015 H1 2014 Year on Year Change
£m £m As reported Underlying(1)
Revenue 702.6 729.8 -3.7% -4.3%Trading Profit 70.4 71.2 -1.1% -3.4%Trading margin % 10.0% 9.8% +26bps +9bpsNet finance costs (8.0) (9.2)Share of JV (0.5) 0.8Profit before Tax 61.9 62.8Effective tax rate % 25.5% 26.5%Tax (15.9) (16.4)Non-controlling Interest (2.7) (2.1)Headline Earnings 43.3 44.3 -2.2% -5.5%
Headline Earnings per share (p) 16.0 16.4 -2.1% -5.4%
(1) Underlying basis is at constant currency and excludes separately reported items and the impact of acquisitions and disposals
24
The translational FX position has neutralised somewhat in the first half
2015 YTDAverage
Rates
2014 FYAverage
Rates
2015 Average Rates v
2014 Average Rates
2015 June Period End
Rates
2015 June Period End
Rates v 2015 YTD Average
Rates
USD 1.523 1.649 7.63% 1.571 (3.14%)
EUR 1.365 1.241 (9.99%) 1.410 (3.36%)
BRL 4.515 3.869 (16.72%) 4.872 (7.89%)
INR 95.608 100.495 4.86% 99.874 (4.46%)
JPY 183.035 174.087 (5.14%) 192.371 (5.10%)
RMB 9.470 10.157 6.76% 9.737 (2.82%)
ZAR 18.128 17.834 (1.65%) 19.105 (5.39%)
But the combination of the strong USD and RMB and the weak EUR, JPY and BRL are causing more transactional FX issues
And Sterling has strengthened!
FX outlook for the second half of 2015 is negative: – transactional FX hitting the European, Brazilian and Japanese businesses; and
– translational FX reducing reported H2 results
25
…but the cumulative effect of translational FX has been significant
781.5 783.3
712.6 702.6
0
100
200
300
400
500
600
700
800
2012 FX 2013 FX 2014 FX 2015 FX
£m
2015 H1 Revenue10.0%
78.1 78.1
70.4 70.4
0
10
20
30
40
50
60
70
80
90
2012 FX 2013 FX 2014 FX 2015 FX
£m
2015 H1 Trading Profit & RoS10.0%
9.9%
2015 H1 Revenue, Trading Profits, and RoS at various historic FX rates
10.0%
26
Underlying revenue fell by 4.3%...
• Revenue down £27 million on a reported basis
• Revenue down £31 million on an underlying basis
• Acquisitions added £12.4 million of revenue Ecil Met Tec, Process Metrix, Sidermes
• Underlying revenue growth in developing markets more than offset by decline in mature markets Asia +3.3% +£5.8m EMEA -3.8% -£11.9m Americas -10.5% -£24.7m
729.8721.0
702.6
8.8
30.8
12.4
600
625
650
675
700
725
750
2014Reported
FX 2014Underlying
Acquisitions Underlying 2015Reported
£m Revenue
27
…whilst underlying trading profit fell 3.4%
• Trading profit down £0.8 million on a reported basis
• Trading profit down £2.4 million on an underlying basis
• Return on Sales improved by 26 bps on a reported basis
• Return on Sales improved by 9 bps on an underlying basis
• Acquisitions added £1.8 million of trading profit Ecil Met Tec, Process Metrix, Sidermes Trading profit down £2.4 million on an underlying
basis
71.2 71.070.4
0.22.4
1.8
60
65
70
75
2014Reported
FX 2014Underlying
Acquisitions Underlying 2015Reported
£m Trading Profit
28
Underlying Steel division profitability declined by 68 bps
489.5 490.3
476.3
26.4
0.8 12.4
400
425
450
475
500
525
2014Reported
FX 2014Underlying
Acquisitions Underlying 2015Reported
£m Revenue
47.2
48.4
44.5
5.7
1.2
1.8
40
42
44
46
48
50
52
2014Reported
FX 2014Underlying
Acquisitions Underlying 2015Reported
£m Trading Profit
29
Underlying Foundry division profitability increased by 165 bps
240.3
230.7
226.3
9.6
4.4
200
210
220
230
240
250
2014Reported
FX 2014Underlying
Underlying 2015Reported
£m Revenue
24.0
22.6
25.9
1.4
3.3
20
22
24
26
2014Reported
FX 2014Underlying
Underlying 2015Reported
£m Trading Profit
30
The cash conversion rate is in line with expectations…
• Year to date cash conversion of 84% Some seasonality seen (Q2 stronger than Q4)
• Working capital outflow reflecting normal seasonality This excludes £9.5m of trade working capital
acquired as part of Sidermes Reduction in inventories and payables Receivables up in line with normal seasonality Annual cash incentives paid in full in the first half
• Capital expenditure phasing more even than previous years Projects more evenly weighted throughout year
70.4
59.2
17.5
13.8
20.1
0
10
20
30
40
50
60
70
80
90
100
TradingProfit
Depreciation Net capex Workingcapital
Cash Flow
£m Operating cash flow
31
…whilst the increase in net debt reflects M&A activity
268.3296.0
35.1
5.930.124.5 8.9 5.2
0
50
100
150
200
250
300
350
1.1.15 FCF Dividends M&A Cookson /Restruct
TreasuryShares
FX &Other
30.6.15
£m Net Debt
59.2
35.1
7.0
16.2 0.9
0
10
20
30
40
50
60
70
OperatingCash Flow
Interest Tax JVs &Minorities
FCF -ContinuingOperations
£m Free cash flow
c.70% of dividends paid in H1
At June FX rates
32
Defined benefit employee benefit schemes
• UK, USA and Germany comprise over 90% of Group’s gross pension liabilities
• Decrease in net deficit due to reduction in discount rates
UK 3.75% (up 0.25%) USA 4.10% (up 0.40%) Germany 2.50% (up 0.3%)
£ million30 Jun
201531 Dec
2014Net Pension Deficits
Germany 35.0 39.9USA 33.5 35.6Rest of World 17.6 19.0
86.1 94.5Net Pension Surpluses
UK (47.7) (48.8)Net Pension Deficit 38.4 45.7
Net Deficit on Other Post Retirement Benefit Schemes 4.7 5.4
Net deficit on Employee Benefit Schemes 43.1 51.1
33
Cash conversion ratio of 84%
Financial strategy remains consistent…
• Efficient working capital management
• Improve returns
• Cost control
• Focus on cash generation
• Conservative balance sheet stewardship
• Financial flexibility essential Committed unutilised facilities of £171m
Gearing of 1.6
WC to sales ratio 27.3% in 2012 down to 25.5% in 2015
RONA up from 18.7% in 2012 to 24.5% in 2015
ROS improved by 189 basis points from 2012
34
A GLOBAL LEADER IN METAL FLOW ENGINEERING
Strategy and Outlook
François WanecqChief Executive
35
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 centers;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
Foundry margin improved by 165 basis points;Commenced a restructuring programme
Acquisition of Sidermes
36
Sustainable growth will come first from technology
We increase our R&D effort to maintain technology leadership
• R&D expenditure has progressed steadily since 2008• Decision to build in Pittsburgh (USA), Enschede (NL), Vizag (India)• Necessity to improve our ideas generation and time to market
Quarterly R&D Expenditure
0
1
2
3
4
5
6
7
8
Q108
Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
Q111
Q211
Q311
Q411
Q112
Q212
Q312
Q412
Q113
Q213
Q313
Q413
Q114
Q214
Q314
Q414
Q115
Q215
Advanced Refractories Steel Flow Control Technical Services Foundry Enabling Technologies
37
• 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 Integration is underway
• The new business model is under development for new products Accuoptix X Mat
• Further acquisitions are under consideration
Technical Services: Deliveries and potential
38
• Underlying trading environment to remain broadly similar to the first half Growth in steel production not expected before 2017
• Foreign exchange expected to negatively impact reported results Both translation and transaction effects
• Self help programme will continue to drive operational improvements Delivered 189 basis points of improvement to date with more to come
• Restructuring programme to gather pace Annualised benefits in excess of £10 million delivered in full by 2017
• Continued focus on building Technical Services business Both organically and through acquisition
Outlook
39
A GLOBAL LEADER IN METAL FLOW ENGINEERING
Q&A
40
A GLOBAL LEADER IN METAL FLOW ENGINEERING
Appendix
41
£m 2011 2012 2013 2014 2015Revenue 748.0 740.6 696.8 721.0 702.6
Steel 481.9 488.7 470.5 490.3 476.3Foundry 266.1 251.9 226.3 230.7 226.3
Trading Profit 78.6 69.5 62.2 71.0 70.4Steel 45.9 46.4 39.4 48.7 44.5Foundry 32.7 23.1 22.8 22.3 25.9
Margins 10.5% 9.4% 8.9% 9.9% 10.0%Steel 9.5% 9.5% 8.4% 9.9% 9.3%Foundry 12.3% 9.2% 10.1% 9.7% 11.5%
5 year history at constant currency(1)
(1)All numbers shown at June 2015 average exchange rates
42
Currency – Ready Reckoner
• Rule of thumb for impact of a movement in currency against sterling Amounts shown are
movements for each currency
Works both for strengthening and weakening of currencies
Currencies ChangeApproximate
change in profits
US Dollar 1 cent £0.2 million
Euro 1 cent £0.1 million
Chinese Renminbi 1 jiao(10 cents) £0.2 million
Indian Rupee 1 rupee £0.1 million
Brazilian Real 10 cents £0.1 million
43
The new bank facility removes refinancing risk
• £300 million multi currency facility Replaces £425 million facility
expiring 2016• 5 + 1 + 1 term 2 x 1 year options at lender’s
discretion• £200 million accordion Can be exercised before end of
2016• Margin cut almost in half• ND:EBITDA covenant of 3.25
0
50
100
150
200
250
300
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Existing Debt Facilities
RCF(1) USPP
(1) The Revolving Credit Facility has a term of 5 years from 2015 to 2020, with 2 x 1 year options exercisable (at the lenders’ discretion) at the end of year 1 and year 2. We currently expect those options to be exercised
44
0
50
100
150
200
250
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150
20
40
60
80
100
120
140
160
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Confirmed resilient profit and strong cash flow generation
EBITDA (1, 2, 4) £m Operating cash flow (1, 2, 3, 4) £m
Pre Foseco acquisition Post Foseco acquisition Pre Foseco acquisition Post Foseco acquisition
44
(1) Company data as reported, excluding Precious Metals Processing(2) 2012 results have been restated as a result of IAS 19 (Revised) Employee Benefits(3) Cash flow from operations before interest and tax and after capital expenditure(4) 2015 is the first half results annualised
45
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
46
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 productsAdvanced Refractories in blue textFlow 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 H1 2015 Reported Revenues
Americas36%
EMEA41%
Asia Pacific23%
A global leader for steel flow control consumable ceramics
47
Steel market growth scenario
• NAFTA and Europe should decrease slowly as their economic growthmodel 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
50
100
150
200
250
300
350
NAFTA EU 27 S. America India Mid East &Africa
RoEurope Ro Asia
2015 2020 2025
0100200300400500600700800900
1000110012001300
China Rest of World
Millio
ns of
Tonn
es
Global Steel Production
201520202025
-0.9%
-1.5%
8.3%
4.9%
15% 2.3%
1.8%
CAGR%
-0.6%
14.1%
mT
Global forecast production 2016 – 1.6 billion tonnes2020 – 1.8 billion tonnes2025 – 2.0 billion tonnes
48
Source Based on data from WSA & SBB, with Vesuvius assumptions used for China
0%
10%
20%
30%
40%
50%
60%
70%
80%
NAFTA EU27 South America Middle East China Africa
Prop
ortio
n of
Flat
Ste
el Pr
oduc
ts (%
)
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
49
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 H1 2015 Reported Revenues
Americas22%
EMEA46%
Asia-Pacific32%
A global leader in consumables for mould & methoding
General engineering
13%
50
Foundry sales £/T of total market casting (2013)
Significant upside potential through continuing market
penetration as emerging markets move towards higher quality foundry
castings
Northern Europe South America JapanIndia CEME China
NAFTA
Ductile Iron
x 20
Long term growth in Foundry will come from innovation and marketing
51
World truck market evolution
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
2011
Q1
2011
Q2
2011
Q3
2011
Q4
2012
Q1
2012
Q2
2012
Q3
2012
Q4
2013
Q1
2013
Q2
2013
Q3
2013
Q4
2014
Q1
2014
Q2
2014
Q3
2014
Q4
2015
Q1
2015
Q2
GLOBAL QUARTERLY TRUCK PRODUCTION TRENDS (GVW > 6 tonnes)(Source; LMC Automotive June 2015 Forecast Update)
52
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 2015E
$milli
ons
RoW Australia North America
53
659
2,909
392
1093
0
1,000
2,000
3,000
4,000
2002 2014
1,1751,943
0
1,000
2,000
3,000
4,000
2002 2014
3,086 2,811
0
1,000
2,000
3,000
4,000
2002 2014
A continued shift of operations to align with customers
Other EMEA facilities and headcountEU 15 facilities and headcount
10
7
JVs
Developed markets Developing markets
NAFTA facilities and headcount
South America facilities and headcount Asia Pacific facilities and headcount
33
Employees Employees Employees
Employees Employees
Note 2002 numbers do not include Foseco (acquired by Cookson in 2008) which had 27 sites and 3400 employees at acquisition
5
4761,186
0
1,000
2,000
3,000
4,000
2002 2014Facilities
3320
10
11
7
4
430826
2,580 1,725
0
1,000
2,000
3,000
4,000
2002 2014
222211
6
22