Low & Bonar PLC. Low & Bonar PLC. Final Results for Year Ended 30 November Steve Good, Group CEO Kevin Higginson, Group FD.

Transcription

1 Low & Bonar PLC Final Results for Year Ended 30 November 2009 Low & Bonar PLC Steve Good, Group CEO Kevin Higginson, Group FD February

2 Key messages Resilient performance Strengthened financial position Resumed dividend Profitable, cash generative, organic growth agenda Clear targets set to deliver shareholder value 2

3 Income statement summary 'm 'm Revenue Operating profit* % % Net financing costs* (6.3) (10.7) Normalised profit* Normalised EPS* 4.35p 7.37p Tax rate* 32% 29% * Before amortisation and non-recurring items 3

4 Sales analysis Performance Technical Textiles Technical Coated Fabrics Total 'm 'm 'm MTX additional month Foreign exchange impact like-for-like basis Underlying sales (49.5) (34.5) (84.0) Like-for-like decline at CER (18.9)% (27.2)% (21.6)% 4

5 Underlying sales by half Performance Technical Textiles Technical Coated Fabrics Total H1 (27.9)% (31.5)% (29.2)% H2 (9.8)% (22.4)% (13.8)% Full Year (18.9)% (27.2)% (21.6)% Marked H2 volume improvement in both Divisions Technical Coated Fabrics remains worst affected, especially in flexible trailer sides Civil Engineering is strongest sector 5

6 Resilient margins - sales price management and cost actions Strong product propositions and leading market positions Successfully managed our material margins despite raw material price changes 10m p.a. + costs out of the business Shifts changed at Arnhem Weaving partially relocated to Czech Republic Good use of short time working 6

7 Operating profit* - benefit from foreign exchange rates Performance Technical Textiles Technical Coated Fabrics Centre Total 'm 'm 'm 'm (5.4) 26.7 MTX additional month Foreign exchange impact like-for-like basis (5.4) 31.3 Underlying business (5.6) (6.0) 2.4 (9.2) (3.0) 22.1 * Before amortisation and non-recurring items 7

8 Performance Technical Textiles H1 H2 FY H1 H2 FY 'm 'm 'm 'm 'm 'm Revenue Operating profit* Margin* 8.1% 8.0% 8.1% 8.2% 9.0% 8.6% * Before amortisation and non-recurring items 8

9 Performance Technical Textiles Relatively stronger second half Civil Engineering remains most resilient sector Automotive sales recovered from a poor Q1; showing market share gains Decisive cost actions: Workforce reductions (12% across the Group) Short time working Shift changes etc Further 50 redundancies announced at Dundee in November Good margin performance despite increased losses in Yarns Abu Dhabi facility progressing 9

10 Technical Coated Fabrics H1 H2 FY H1 H2 FY 'm 'm 'm m 'm 'm Revenue Operating profit* Margin* 6.4% 10.8% 8.6% 9.4% 13.7% 11.7% * Before amortisation and non-recurring items 10

11 Technical Coated Fabrics Integration continues well: New finance and commercial directors appointed 2 new plant managers Significant headcount reduction from 660 to 540 Weaving part-relocated to Czech Republic from Germany Working capital reduced by 9.5m, further opportunities identified Marked sales declines particularly in transport sector down 40% Sales improvement in H2 in all sectors Margin improvement in H2 as anticipated lower raw material costs feeding through inventories Extensive use made of short time working ( Kurzarbeit ) 11

12 Non-recurring items 2009 'm Performance Technical Textiles 3.7 Technical Coated Fabrics 1.2 Central 0.7 Operating non-recurring items 5.6 Loan break fees 2.2 Operating non-recurring items are principally redundancy costs and asset impairments Principal H2 costs are a further 50 redundancies at Dundee grass yarn facility Cash costs of c. 1m will be paid in the year to November

13 Financing costs * 'm 'm Pension interest Other net financing costs Net financing costs included almost a full year of finance costs for Floors Division Placing proceeds of c. 30m Bank margins rose to 150 bps following Floors disposal * Before non-recurring items 13

14 Balance sheet Nov-09 Nov-08 'm 'm Goodwill and intangibles Fixed assets Pension deficit (27.2) (11.9) Net derivative liabilities (36.2) (13.2) Other net assets Net debt (67.4) (104.5) Net assets Pensions deficit increased due to lower discount rate, increasing present value of liabilities beyond asset increases. Cash cost to scheme remains at 3m pa Derivative liability increased due to fx rates 14

15 Cash flow m m Net debt - Nov 08 (104.5) Operating profit before amortisation 22.1 Depreciation 13.1 EBITDA 35.2 Working capital movements 15.5 Net capital expenditure (inc intangibles) (8.2) Net interest paid (5.7) Tax paid (5.4) Additional pension payments (3.5) Other 0.4 (14.2) Operating cash flow 28.3 Non-recurring items cashflow (7.6) Proceeds from share issues 30.2 Acquisitions/disposals (3.4) Fx including net cashflow hedges (10.4) Net debt - Nov 09 (67.4)

16 Cash generation Placing raised c 30m Self-help measures: Cost reduction improved cashflow Capital expenditure c. 5m below depreciation for the year Working capital reduction of 16m ( 20m in H2) Slower spend on Abu Dhabi yarns facility Long term capital structure targets being set 1.5x 2.0x net debt / EBITDA 16

17 Capital expenditure major projects Property, plant and equipment 'm 'm BETY - Abu Dhabi Performance Technical Textiles - other Technical Coated Fabrics Centre Continuing operations Approximately 2m of Abu Dhabi capital expenditure deferred into 2010 Total 2010 capital expenditure expected to be 85% of depreciation, including deferred Abu Dhabi capex 17

18 Bank covenants Net Debt / EBITDA 1.9 x Compared to covenant of less than 3.25 x Covenant reduced to less than 3.0 x from May 2010 onwards Interest cover 4.6 x Compared to covenant of greater than 3.0 x Facilities in place until December 2011 Renegotiations will occur at some point towards end of

19 Dividends Dividend of 0.8p to be paid on 31 March to shareholders on register on 12 March Intend to maintain ratio of final to interim dividend at 2:1 Progressive dividend policy 19

20 New leadership team, revised focus New leadership team Support for existing business strategies With a revised focus Know the strategy Operational focus and engagement Resilient performance Performance materials for the technical textiles industry Attractive industrial segments Leading player To excel at B2B understanding Innovation and service Efficiency improvement Generate higher returns and growth rates for shareholders Profitable cash generative organic growth Fix Technical Yarns Deliver higher returns Clear financial targets set Profitable, cash generative, organic growth 20

21 Performance materials engineered to help build your business is what we do Raw materials Yarn & fibre production Low & Bonar focus Fabric production Coating & composite production Customers PE/ PP/ PET resin Monofilament yarns Needlepunched nonwovens Artificial grass producers Growers & installers Other materials: (Nylon, PVC, PA6, PU) Tapes Fibrillated yarns Spunbonded nonwovens Woven fabrics PVC/ PU coated woven PET fabrics Truck tarpaulin manufacturers Carpet tile manufacturers Construction companies Additives for specific performance & colour Bi-component yarns Thermal bonded 3D profiles & grids Composites formed from non-wovens, 3D profiles and grids Outdoor screen printers Architects and builders Fibres 21

22 A carefully built portfolio Attractive markets Growth dynamic Double digit margins High entry barriers Leadership positions Road tested in the downturn Scope for market share gains 22

23 Our end markets Civil engineering Building products Carpet manufacture Transport Leisure 12% 13% 15% 25% 16% A leading European supplier of geotextile, geosynthetic, and construction fibre products Attractive niche positions in commercial and residential buildings with non-wovens, polymeric mats, and coated fabrics for architectural awnings A leading European and US non-woven carpet tile backings supplier A leading Chinese woven primary backing supplier A leading position in coated fabrics for truck sides and non-wovens backings for automotive moulded carpets A leading global supplier of artificial grass yarns and technical coated fabrics including for boat, pool, and sunshading Industrial & others 19% Leading positions in a number of niche markets including print media, greenhouse screens, composites, and storage Resilience in an uncertain economy 23

24 Clear opportunity to deliver profitable, cash generative organic growth Supportive drivers for organic sales growth Operating margins can be materially improved Asset efficiency can be substantially higher Strength of management to deliver throughout the organisation Deliver Shareholder Value 24

25 These are our medium term targets Organic sales growth x GDP % of sales from new products > 17% % > 17 % > 25.0 % of sales outside heartland > 25% Target New products Target Sales outside heartland Margin improvement Operating margin > 10% % > Target Asset efficiency improvement ROCE > 17% % > Target Clear improvement potential 25

26 Main growth drivers in key segments Segment Key structural growth drivers Key internal growth priorities Civil engineering 13% 15% 25% Building products Flooring Transport 16% Global infrastructure spend Regulation and substitution Green', cost down, and architectural trends Substitution of tiles for broadloom carpets European freight haulage Light vehicle production Geographic expansion in high growth regions Green products, new architectural membranes Sustainable, lighter-weight products and new applications Geographic expansion CEE Market share gain 12% Leisure Substitution of artificial grass in sports & landscaping Product range development Geographic expansion Industrial 19% Efficient agricultural production Outdoor advertising trends Specialities Filtration and composites Deliver organic sales growth 26

27 Civil Engineering growth Structural fibre replacing steel fibre and mesh in concrete reinforcement China ,000 km of high speed rail 120,000 km of highways. $70bn of railway projects planned in Middle East 27

28 Building and industrial products growth Colback support layer for hydraulic filtration Poznan stadium for 2012 European Football Championships 28

29 Carpet backing growth New application in cushion vinyl flooring segment Complete range of backings using 100% post consumer recycled polyester 29

30 Looking to higher growth regions Asia, 7.2% Eastern Europe, 6.0% UK, 5.5% North America, 15.7% Rest of the world, 1.1% Western Europe, 64.5% L&B L&B Revenue Revenue by destination by destination Asia, 9.8% Eastern Europe, 6.9% Rest of the world, 3.7% L&B Revenue by destination UK, 5.3% North America, 15.3% Western Europe, 59.0% Emerging CEE markets for all coated fabrics applications, civil engineering, and building products Middle East for civil engineering, artificial grass, and architectural fabrics China for carpet, artificial grass, and civil engineering Significant growth opportunities outside W Europe 30

31 Operating margins can be materially improved Fix underperforming Technical Yarns business New management team (Colbond) 2010 year of transition as new Abu Dhabi facility gears up Efficiency improvement opportunities in Europe will run in parallel Operational gearing effect of a recovery Improving operational efficiencies Have deferred investments which lower unit costs Structural costs removed at the beginning of the downturn Flatter and leaner central organisation Proven expertise in the management of raw material price fluctuations Deliver operating margin >10% 31

32 Asset efficiency can be substantially higher In the next two years fixed asset investment will be below depreciation Well invested asset base Spare capacity to support near term growth Rate and timing of sustained economic recovery and speed of organic growth success will be key factors Opportunities to structurally reduce working capital Inventory reduction opportunities in Technical Coated Fabrics and Yarns Target receivables in Technical Coated Fabrics and Yarns Deliver ROCE >17% 32

33 The Team to deliver the improvement Stefan Geyler, Steve Good, Jan van Boldrik, Norbert Verfaillie, Rob van der Valk, Orwig Speltdoorn, Kevin Higginson 33

34 Outlook Sufficient internal opportunities to deliver progress towards medium term targets in 2010 Organic sales growth initiatives Margin enhancement programme Asset efficiency improvement and debt reduction Improvement not dependent on a sustained economic recovery Rate and timing remains difficult to predict for early cycle segments Impact of 2009 global stimulus packages should benefit largest late cycle segment Balance of early versus late cycle activities leaves us well positioned to benefit when a sustained recovery comes Resilience from product and geographic diversity 34

35 APPENDIX 1 Principal Foreign Exchange rates Year End Average Euro US Dollar