Fixed-Income Investors Presentation. Jean-Pierre Souchet CFO Stéphane Bisseuil Investor Relations

Transcription

1 Fixed-Income Investors Presentation Jean-Pierre Souchet CFO Stéphane Bisseuil Investor Relations

2 Disclaimer 2 This presentation may contain forward-looking statements. Such forwardlooking statements do not constitute forecasts regarding results or any other performance indicator, but rather trends or targets These statements are by their nature subject to risks and uncertainties as described in the Company s annual report available on its website ( These statements do not reflect the future performance of the Company, which may differ significantly. The Company does not undertake to provide updates of these statements Further information about Vicat is available from its website (

3 Agenda 3 Presentation of the Vicat Group and its strategy 2009 results Financial structure

4 Over 150 years of experience 4 Acquisition of Groupe Vigier (Pre-fabrication) Concrete / Aggregates Vicat achieves vertical integration with concrete and aggregates acquisitions Cement Louis VICAT invents artificial cement The Vicat company is established and builds its first cement plant Industry concentration in France: plants acquisitions and buildings First acquisition outside of France Increased international presence Increased industrial investment in order to boost capacity Reinforced external growth on emerging markets: greenfields in Kazakhstan and India Cement has been the basis of vertical integration and international growth * Other Products and Services

5 Over 150 years of experience / 2007 launch of the Performance 2010 Plan leading to a 50% increase in production capacity and the modernization of all the Group s plants over 4 years In June 2007 Vicat significantly increased its free-float following the sale of the HeidelbergCement stake in the Group s capital (from 5% to 35%) In 2007 / 2008 Vicat moved into Kazakhstan, India and Mauritania End of 2008 launch of the complementary cost reductions plan Performance Plus to adapt the Group s costs structure to the economic crisis 2009 finalization of the 2010 Performance Plan

6 Vicat, a solid cement group 6 A track record of operational excellence and profitable growth An integrated international Group with strong regional positions Innovative, first-class industrial facilities thanks to steady investment A solid long term growth outlook supported by significant investment Strong Cash flow generation allowing growth through the Group s own resources Family shareholders deeply involved in the Group s success

7 Facts and figures 7 3 activities: Cement: 52% of total operating sales, and 77% of total capital employed Ready Mix Concrete: 33% of total operating sales, and 17% of total capital employed Other Product and Services: 15% of total operating sales, and 6% of total capital employed employees in 2009, well spread over 11 countries Solid financial position EBITDA margin: 24.9% Free Cash Flow: 119 millions Gearing: 31,4% Leverage: 1.38x

8 An integrated international group with strong regional positions France Cement Concrete / Aggregates Paper / Transport Building Chemistry Sales (%) 44% EBITDA (%) 43% Italy Switzerland Cement Cement Concrete / Aggregates Prefabrication 16% 17% United States Cement Concrete 10% 3% Turkey Cement Concrete / Aggregates Egypt Cement Senegal Cement Aggregates Mali Cement 30% 37% Mauritania Cement Concrete Kazakhstan India Cement Cement Leading positions well balanced between mature and emerging markets

9 An international group 9 France Europe (excluding France) 2009 sales: 844 M 2,569 employees 5 cement plants 138 concrete batching quarries 48 aggregates quarries 2009 sales: 298 M 1,061 employees Switzerland 1 cement plant 18 concrete batching plants 19 aggregates plants Italy 1 cement grinder 2 terminals 2009 sales: 187 M 4 1,150 employees 2 cement plant 47 concrete batching plants United States 2009 sales: 156 M 906 employees Kazakhstan 1 cement plant under construction (2010) 2009 sales: 411 M 1,026 employees Senegal Egypt 1 cement plant Turkey India 1 cement plant under construction (2012) 1 cement plant 2 aggregates quarries Mauritania 1 cement grinder 1 concrete batching plant Mali 1 train terminal 1 bagging station 2 cement plants 37 concrete batching plants 6 aggregate quarries Turkey, Kazakhstan & India Africa and the Middle East

10 Group s shareholders 10 Breakdown of share capital (%) Continuity of the strategy and strong Group identity: Shareholding stability Guy Sidos represent the 7th generation of the Merceron-Vicat Family managing the Company Long term vision Data at September 2009

11 An experienced management team 11 J. Merceron-Vicat Chairman Industrial Division E. Bourdon Investment and Performance Manager D. Renié Technical Manager Guy Sidos CEO Operational Divisions PO. Boyer DHR P. Chiorra General Counsel R. Michallat Research Director G. Natta Director of Development JP. Souchet CFO E. Holard Deputy Managing Director (Africa, Middle East and India) R. de Parisot Deputy Managing Director (Cement in France and Switzerland) B. Titz Deputy Managing Director (Concrete & Aggregate in France) JM. Allard Deputy Managing Director (Italy and Kazakhstan)

12 Founding principles of the group strategy 12 Preferential development of historic businesses Priority to the Cement business, the Group's core activity Strong regional positions Reinforced vertical integration strategy Ambitious and reasonable, tightly managed growth model Organic growth supported by industrial investment and new products Selective acquisition policy implemented as opportunities arise Targeting markets with high organic growth potential in the short term

13 Organic growth strategy 13 Take advantage of the expansion of markets on which the Group is present Main leverage for improvements: Business growth, especially in emerging countries Optimization of energy costs/ "multi-fuel" production facilities Reduction of maintenance levels of the new facilities Elimination of external procurement and internal transportation of clinker and cement

14 Capacity trend, (millions of tonnes) MT 20.8 MT 59% 44% 56% 41% More than 90% of new capacity under the "Performance 2010" plan built in emerging countries Since 2006, the respective weights of mature countries and emerging countries have been inverted The trend is set to continue with the greenfield projects, but will involve much smaller investments than in previous years With Kazakhstan, emerging markets will represent 61% of the Group s total capacities

15 External growth strategy 15 Targets compatible with the Group's size and own financial resources Cement first Fulfilling the Group acquisition criteria: Targeting strong regional markets position Important and secured raw material reserves Majority control of the target Valuation of targets in keeping with the Group's ROCE targets: The Group expects a positive contribution of acquisition in the first year, or at the latest in specific situation in the third year Offering a leverage effect through: Ability to improve the target's operating performance thanks to the Group's business line expertise (e.g. Egypt) Existence of short and medium-term organic growth potential

16 Greenfield projects: Kazakhstan and India 16 The Kazakhstan greenfield project is proceeding in line with our expectations: Ideal geographical location to capture growth from the largest markets (Almaty and Astana) Plant benefiting from latest technological developments: will be most modern in the country Capacity 1.1 million tonnes Commissioning expected in H2 2010, in line with initial plan The greenfield project in India is proceeding to schedule: A 5.5 million tonne project, in two phases 2.75 million tonnes operational in autumn 2012 Subsequent construction of second kiln depending on market demand Project financing in finalisation phase Land ownership issues settled for plant and phase 1, being negotiated for phase 2 Main industrial elements negotiated, and orders placed

17 Agenda 17 Presentation of the Vicat Group and its strategy 2009 results Financial structure

18 Solid results 18 Solid margins, with sharp improvement in the second half over the first half of 2009 Cost savings totalling 61 million euros, above the target of 50 million euros Financial strength confirmed: gearing at 31.4% and leverage ratio at 1.38x Strong cash flow and free cash flow generation of respectively 383 million euros and 119 million euros

19 Simplified net income statement 19 Millions of euros Change Change (at constant scope & exchange rates) Consolidated sales % - 9.1% EBITDA % % EBITDA margin (%) 24.9% 25.7 % EBIT % % EBIT margin (%) 17.0% 19.1 % Consolidated net income % -15.3% Cons. net income margin (%) 12.3% 13.3 % Net income % -22.2% Cash flow % -4.5%

20 Operational sales by activity 20 Contribution by activity: 2009 Contribution by activity: % Cement 15% 33% 52% Concrete & Aggregates Other Products & Services 37% 48% Increased contribution from Cement Markedly lower contribution from Concrete & Aggregates Stable share for Other Products & Services

21 Consolidated sales by region France 22% 8% 10% 16% 44% Europe United-States Turkey Africa & Middle East 15% 9% 13% 14% 49% Sharp fall in contribution from France and ongoing decline in US contribution Slight increase by Europe Strong increase by Africa & Middle East, which represents half of France s contribution in 2009

22 Cement volume trends in Cement Q1 Q2 Q3 Q4 Year France -24% -17% -11% -6% -15% Switzerland -22% -1% +19% +24% +6% Italy -26% +8% -7% -12% -10% USA -29% -33% -29% -18% -28% Turkey -14% -7% - +12% -2% West Africa +20% +24% +3% +14% +15% Egypt +82% +70% +35% +19% +47% Total cement +0.1% +2.4% -0.1% +6.0% +2% Improving volume trend during the year, except in the United States, which remains depressed Very strong volume growth in Egypt thanks to new capacity (Performance 2010 Plan), but less strong in H2 because of less favourable base effect (start-up of line 2, mid 2008) Q3 volume trend affected by Ramadan (West Africa)

23 EBITDA by region 23 Contribution by region: 2009 Contribution by region: 2008 France Europe 22% 32% 43% United-States 7% 49% 5% 3% 17% Turkey Africa & Middle East 9% 13% Strong increase in contribution from Africa & Middle East Increased contribution from Europe and Turkey Sharp fall in contribution from United States and decline in France

24 EBITDA margin* trends Group France 20 Europe United States 10 Turkey Kazakhstan Africa & Middle East 0 H H H H H H EBITDA margins* improved in H vs H in all regions except the United States * EBITDA/operational sales

25 EBITDA margin trends EBITDA margin (%) H1 H2 Year H1 H2 Year Group Of which cement Strong improvement in EBITDA margin in H2 vs H1 2009, on the back of: The more favourable volume trend The full effect of the "Performance Plus" cost-cutting plan The gradual impact of additional production capacity in Switzerland and Senegal ("Performance 2010" plan)

26 Impact of complementary performance plus plan 26 3 objectives for the Plan launched end-2008: Improvement of production facilities industrial performance Adjustment of cost structure Postponement of all investment deemed non-strategic in current environment More than 61m of EBITDA savings, vs 50m expected Nearly two-thirds (62%) of savings generated were of a recurring nature, stemming from: structural gains generated by improvements to technical and industrial performances of the Group s production facilities, increased use of alternative fuels, operational management savings achieved in certain structures The remainder (38%) were cost savings that stemmed from decreases in activity

27 Income taxes 27 Millions of euros Change Current taxes % Deferred taxes n.a Total taxes % Taxes decreased by 43 % due to: 21% decrease in income before taxes, to 280m Larger contribution of geographical areas with the lowest tax rates, notably Senegal and Egypt where major investments were carried out 2009: tax rate of 17,0 % vs. 23,4 % in 2008

28 Financial income 28 Millions of euros Change (M ) Cost of net borrowings Other financial income or expense Net financial income Decrease of the cost of net borrowings amounting to 24m thanks to: Lower interest rates in 2009 Despite an increase in the average gross financial debt ( 829 m in 2009 / 696 m in 2008) Lower foreign exchange gain Strong improvement of the debt «all in» average cost: 2009: 3,73 % 2008: 5,30 %

29 Cash-flow Change Net cash flow (2) Capital expenditure net of disposals (380) (264) (116) Free cash flow Dividends (71) (88) (17) Net financial investments (102) (16) 86 Other Change in net debt/cash (163) "Performance 2010" plan completed on schedule and within budget Around 1 billion euros of investments made in four years Strong free cash flow generation in m reduction in debt vs an increase of 163m in 2008

30 Outlook 30 For the 2010 financial year, background information on the various markets is provided in the press release of 9 March 2010 Against this backdrop, Vicat is determined to move forward cautiously with its growth strategy, capitalising on : Its solid financial structure The full effects of the "Performance 2010" investment plan, with the benefit of the start up in 2009 of new capacities in Senegal and Switzerland Following on from the "Performance 2010" plan, the effects of the complementary "Performance Plus" plan which will be preserved; And the success of its expansion in India and Kazakhstan, with the latter due to see its plant become operational on schedule in autumn 2010

31 Agenda 31 Presentation of the Vicat Group and its strategy 2009 results Financial structure

32 Historically satisfactory financial ratios 32 Evolution of gearing, leverage and coverage ratios 100% 30 90% % 70% 60% 69.30% % 50% 40% 30% 20% 10% 0% 53.60% 54.60% 49.90% % 32.20% 30.00% % % 14.70% Gearing ratio Leverage ratio Coverage ratio

33 Comparison cash flow and investments 33 Evolution of net cash flow from operation, investments and net financial debt Net Cash Flow Industrial investments EUR m Financial investments Net indebtedness

34 Vicat debt profile 34 Debt supported by VICAT SA 75% of the gross indebtedness and 99% of the net indebtedness is held by the Mother Over 90% of the cash is at the subsidiaries level and is to be partly used to repay their gross indebtedness It may also be transferred at any time to the Mother s level No liens, no pledges given to secure the financial debt except for the financing project in Kazakhstan, after completion date Interest rate structure : 74% floating rate covered by cash surpluses or by hedging Net un-hedged residual positions are not significant ( 14m) 58% of financing is sourced through banks loans (syndicated or bilateral) 73% after repayment of the first tranche of the USPP in August 2010 ( 140m)

35 Vicat debt profile 35 92% of the net financial debt is in Euros Vicat complies very largely with all the financial ratios required by covenants in financing agreements Average maturity slightly more than 3 years Unutilised committed facilities of 445 million (2012 maturity) as of end December 2009 for Vicat SA Debt maturity profile Other USPP Bank loans EUR m * and + * Bilateral credit lines were renewed in the first quarter 2009 for 240m with a 5-year maturity in a challenging environment

36 Vicat financing policy 36 Maintain a balanced financial structure with: a controlled gearing a satisfactory liquidity characterised by cash surplus and available confirmed medium term credit lines Secure and strengthen the funding by a diversification of the sources Extend the average maturity of the debt