Victrex - Half Yearly Results 2013

30
Half-yearly Results Front cover to be provided by Design Portfolio

Transcript of Victrex - Half Yearly Results 2013

Page 1: Victrex - Half Yearly Results 2013

Half-yearly Results Front cover to be

provided by Design Portfolio

Page 2: Victrex - Half Yearly Results 2013

Introductions

2

Dave HummelChief Executive

Steve BarrowFinance Director

SIX MONTHS ENDED 31 MARCH 2013

Page 3: Victrex - Half Yearly Results 2013

Business Highlights

• Revenue and earnings per share ahead of last year

• Group gross margins maintained

• Continued investment in key growth programmes

• VICTREX PEEK capacity expansion on track

• Cash generation remains strong

• Interim dividend increased by 15%

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Resilience in challenging market conditions

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Group Income Statement

Six months ended 31 March 2013 2012 Change

£m £m %

Revenue 106.4 105.6 1%

Gross profit 71.5 70.6 1%

Gross margin % 67.2% 66.8% 0.4 % pts

Overheads (26.1) (24.7) 6%

Interest 0.3 0.3 -

Profit before tax 45.7 46.2 (1%)

Earnings per share 41.7p 41.6p -

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• Continued investment in resources and key growth programmes

• Reduction in effective tax rate from 24% to 23%

Page 5: Victrex - Half Yearly Results 2013

Business Unit Income Statements

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Six months ended 31 March 2013 2012 Change 2013 2012 Change

£m £m % £m £m %

Revenue 82.2 80.1 3% 24.2 25.5 (5%)

Gross profit 50.0 47.9 4% 21.5 22.6 (5%)

Gross margin 60.8% 59.8% 1.0% pts 88.8% 88.6% 0.2% pts

Overheads (16.8) (15.3) 10% (7.5) (7.6) (1%)

Operating profit 33.2 32.6 2% 14.0 15.0 (7%)

VPS Invibio

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Group Gross Margin

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• Strong ASP and GM%

- Favourable product mix

- Speciality products

• Full year GM% guidance in line with H2 2012 as expected

£ASP GM%

68.8%66.9% 66.8%

65.8%

67.2%

£75.2£75.7 £76.7

£74.8 £76.4

£30

£40

£50

£60

£70

£80

H1 2011 H2 2011 H1 2012 H2 2012 H1 201330%

40%

50%

60%

70%

80%£75.4 £75.7

Page 7: Victrex - Half Yearly Results 2013

Currency Update

Average exchange rates

2012H1

2012Year

2013H1

2013 Year *

Exchange rate sensitivity #

$/£ 1.59 1.59 1.57 1.57 £4.3m

€/£ 1.18 1.17 1.19 1.21 £3.6m

¥/£ 130 126 127 127 £0.7m

SIX MONTHS ENDED 31 MARCH 2013 7

* 2013 year estimates based on forecast sales volume, currency hedging already in place and spot exchange rates as at 30 April 2013

# Management estimate of impact on full year PBT from a 5% movement in full year average exchange rate

• The impact on 2012 profit before tax of applying these 2013 indicative exchange rates would be a reduction of £1m

Page 8: Victrex - Half Yearly Results 2013

Group Cash Flow Statement

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• Capital investment in PEEK and BDF capacity

• Indicative capital forecast:

2013: £40m 2014: £65m 2015: £40m

• 15% increase 2013 interim dividend (~ £9m)

Six months ended 31 March 2013 2012

£m £m

Operating profit 45.4 45.9

Increase in inventories (4.4) (6.3)

Increase in trade and other receivables (2.1) (3.8)

Decrease in trade and other payables (4.4) (8.6)

Depreciation 5.3 4.7

Other 1.3 (0.4)

Cash generated from operations 41.1 31.5

Tax paid (11.9) (13.7)

Capital expenditure (16.0) (12.1)

Dividends paid (23.9) (20.5)

Other financing activities 0.9 0.9

Net decrease in cash and cash equivalents (9.8) (13.9)

Page 9: Victrex - Half Yearly Results 2013

Group Balance Sheet

SIX MONTHS ENDED 31 MARCH 2013 9

• Planned inventory increase due to phasing of production campaigns

• RBO reflects increase in market expectation of long term inflation

31 March 30 September

2013 2012

£m £m

PPE and intangible assets 166.7 153.7

Inventories 53.7 48.6

Cash 74.3 83.9

Trade receivables and other assets 41.1 39.5

Retirement benefit obligations ('RBO') (9.7) (4.0)

Trade payables and other liabilities (52.1) (50.6)

Equity shareholders' funds 274.0 271.1

Page 10: Victrex - Half Yearly Results 2013

Victrex Polymer Solutions

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Page 11: Victrex - Half Yearly Results 2013

VPS Highlights

• Revenue growth

• Progress in speciality products

• Average selling price and gross margins strong

• Continued investment

11

Resilience in difficult global economic conditions

SIX MONTHS ENDED 31 MARCH 2013

Page 12: Victrex - Half Yearly Results 2013

552 t 40%

362 t 26%

310 t 23%

153 t 11%

710 t 52%

404 t 29%

263 t 19%

524 t 38%

380 t 27%

312 t 22%

176 t 13%

767 t 55%388 t

28%

237 t 17%

Group End Markets

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H1 2013: 1,392 tonnes

+1%

H1 2012: 1,377 tonnes

By Region

EMEA+8%

EMEA

Asia-Pacific-10%

Asia-Pacific

Americas

Americas-4%

By IndustryMedical+15%

Electronics+1%

Transport+5%

Industrial-5%

Medical

Electronics

Transport

Industrial

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H1552

H1524

H2569

2012 2013

Sales Volume (tonnes)

VPS Market Highlights - Industrial

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• Volume down 5% on H1 2012

• Oil and Gas:

– Reduced rig count towards end 2012

– Megatrends play to our products strengths

• Industrial machinery and equipment:

– Stable demand

1,121

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Ind

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try s

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Development Pipeline

Industrial (25%)• Deeper, hotter, higher pressure, more aggressive

• High oil price > $60-80/bbl drives exploration

• VICTREX PEEK proven track record

• Magma progress

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H1362

H1380

H2382

2012 2013

Sales Volume (tonnes)

VPS Market Highlights - Transport

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744

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Auto• Hotter, higher pressure operating environments • Car production CAGR 4-5%, China premium market slowing• Displace incumbent materials to meet regulatory

performanceAero• Jet fuel cost increasing• Aircraft OEMs running huge order backlogs• VICTREX PEEK certified by all major OEMs and regulators • Up to 80% lighter than traditional aerospace materialsG

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Development Pipeline

Auto (36%)

Aero (15%)

• Volume up 5% on H1 2012

• Automotive: global demand maintained

• Aerospace: expanding global opportunities

• New application development

• Market penetration

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H1310

H1312

H2404

2012 2013

Sales Volume (tonnes)

VPS Market Highlights - Electronics

15

714

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Development Pipeline

Electronics (21%)

• Volume in line with H1 2012

• Consumer electronics growth:

– Cyclicality of new applications

– Opportunities for APTIV films

• Semiconductor manufacturing:

– Lower capital investment in Asia

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• Thinner, smaller, smarter devices

• Energy and thermal management challenges

• APTIV® films create design opportunities resulting from inherent durability

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163146

244

439

119

268 271

329

221

125

0

50

100

150

200

250

300

350

400

450

500

H1 2011 H2 2011 H1 2012 H2 2012 H1 2013

Mature annualised volume 'MAV' (tonnes)

New applications commercialised (number)

VPS - Development Pipeline

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March 2013: 2,242 tonnes

Sept 2012: 2,212 tonnes

Electronics21%

Medical3%

Industrial25%

Transport51%

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• Strong and diversified pipeline

• Focus on impactful targets

• Strategic marketing to target increased market penetration

• Progress on key growth programmes

Automotive36%

Aerospace15%

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

2010 2011 2012 2013 (H1)

ton

nes

Pipeline average target size

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Speciality Products

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• Investment in downstream product forms to accelerate adoption and drive growth

• Strong H1 performance driven by APTIV film

• Targeting specific markets

• Developing process capability and new product solutions

• Future investment opportunities

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Regional view Global market view

Asia-Pacific OptimisticAerospace

Consumer electronics

EMEAAmericas

NeutralAutomotiveOil and gas

Japan Cautious SemiconductorIndustrial machinery

VPS - Outlook

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Growth potential Optimistic Growth potential

Growth potentialConsumer confidence

NeutralGrowth potential

Consumer confidence

Growth challenge Cautious Investment confidence

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Invibio® Biomaterial Solutions

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Invibio Highlights

• Renewal of major US Spine contracts

• Growth in developing markets

• Further regulatory approvals in Asia

• Innovative new products launched in spine and dental

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Progress despite challenging growth environment

SIX MONTHS ENDED 31 MARCH 2013

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£16.7m65%

£7.1m28%

£1.7m7%

£19.8m77%

£3.0m12%

£2.7m11%

£18.2m75%

£3.1m13%

£2.9m12%

£15.3m63%

£7.1m29%

£1.8m8%

Invibio - Key Markets

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H1 2013: £24.2m

-5%

H1 2012: £25.5m

MarketGeographical

Asia-Pacific+6%

EMEA0%

Americas-8%

Asia-Pacific

EMEA

Americas

Spine-8%

Arthroscopy+4%

Target Markets+7%

Spine

Arthroscopy

Target Markets

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H119.8

H118.2

H218.4

2012 2013

Revenue (£m)

Invibio Market Highlights - Spine

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• PEEK-OPTIMA HA Enhanced – customer

evaluations and prototyping

• Growth opportunities in non-interbody (spinal rods)

• Regulatory progress in China, marketing initiatives

commenced

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38.2

• US procedures increasing but market value flat

• Fusion focus for spinal treatment

• Innovation to differentiate in fusion

• Growth rates of 25-35% projected for China and Brazil

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Early bone

apposition with

PEEK-OPTIMA® HA

Enhanced

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Invibio – Regulatory Progress

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Country Regulatory challenge

PO Approvals Domestic customers

USA Medium 526 +300

China High 87 7

Brazil Medium 85 7

Japan Very High 15 2

• Global regulatory expertise

• Approvals in key developing

markets

• Approvals by Chinese

domestic customers

• CE marked devices for

European market

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H15.7

H16.0

H26.6

2012 2013

Revenue (£m)

Invibio Market Highlights - Developing Markets

24SIX MONTHS ENDED 31 MARCH 2013

• Arthroscopy:

– 4% growth over prior year via strong share in shoulder market

• Dental:

– JUVORA™ regulatory approval and launch

– First clinical use and sales

• Trauma and Orthopaedics:

– Evaluation programmes underway with major customers

12.3

• Arthroscopy – Growing active ageing population

• Dentures – The Edentulous population is growing to almost 300 million

• Ortho/Trauma – Ageing population and obese population. Explosive growth expected in BIC

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Invibio - Market Focus

Application area and market focus

Wide market acceptance

Emerging acceptance

Market seeding

Indicative time to wide market acceptance (years)

Nonfusion

CMF

Arthro

Spine fusion lumbar

Pro

bab

ilit

y o

f w

idesp

read

ad

op

tio

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TraumaRecondental

SF cervical

0 5 10

Hip, knee and

extremities

Focus on metal replacement in knees for cost and performance benefits. Proof of concept testing

Steady increase in devices using PEEK. Entered into joint development agreements with major industry players

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Market focus on fusion

Introduction of JUVORA brand in for high value removable dentures

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Invibio Component Solutions

26SIX MONTHS ENDED 31 MARCH 2013

• Component based solutions to accelerate adoption and drive growth

• Focus on high incidence surgeries in which PEEK-OPTIMA offers clear benefits

• Provides opportunity to simplify spine supply chain

• Initial regulatory approval and revenues achieved for JUVORA and Trauma

• Focused on adoption through proven clinical benefits and patient preference

• Future investment opportunities

Page 27: Victrex - Half Yearly Results 2013

Regional view Global market view

Asia-Pacific OptimisticSpine (new)

Dentures

EMEA Neutral Arthroscopy

Americas Cautious Spine (core)

Invibio - Outlook

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Growth potential Optimistic Growth potential

Growth challenge NeutralGrowth potential

New product introductions

Growth challengeInventory management

Cautious Growth challenge

Page 28: Victrex - Half Yearly Results 2013

Revenue Group Growth Story

28SIX MONTHS ENDED 31 MARCH 2013

2000 2009 2013 Future Vision

Victrex

VPS

Invibio

VPS

Invibio

VPS Speciality Products

VPS

VPS Speciality Products

Invibio

Invibio Component Solutions

Note: Chart not to scale

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Growth

Focus

29SIX MONTHS ENDED 31 MARCH 2013

• Driving volume growth

• Expanding product offerings

• Maintaining key metrics

• Making choices

• Investing for growth

Page 30: Victrex - Half Yearly Results 2013

Disclaimer

Victrex's business and share price may be affected by a

number of risks, trends, factors and uncertainties, not all of

which are in our control.

Accordingly, actual results may differ materially from

anticipated results because of a variety of risk factors,

including: changes in exchange rates; changes in global,

political, economic, business, competitive and market forces;

changes in raw material pricing and availability; changes to

legislation and tax rates; future business combinations or

disposals; relations with customers and customer credit risk;

events affecting international security, including global health

issues and terrorism; changes in regulatory environment and

the outcome of litigation.

30SIX MONTHS ENDED 31 MARCH 2013