Imerys posts a solid performance and exceeds full year 2022 guidance¹ on current EBITDA
- Full year revenue at €4,282 million (+16.8%), with organic growth at 12.5% vs. last year
- Current EBITDA up 11.0% vs 2021 at €720 million, with current EBITDA margin at 16.8%
- Current net income from continuing operations of €284 million, up 22.3% vs 2021
- Divestiture of the High Temperature Solutions business (HTS) completed on January 31, 2023
- Proposal of a cash dividend of €3.85 per share (vs. €1.55 paid in 2022), representing a total distribution of €327 million, including €200 million from the proceeds of the HTS disposal
- New GHG emissions reduction objective aligned with the 1.5°C trajectory
Alessandro Dazza, Chief Executive Officer, said:
Imerys reports an 11% increase in current EBITDA compared to 2021, beating its guidance for the full year 2022. This is a remarkable performance considering the macroeconomic environment and high inflationary levels in which it was achieved, thanks to the strong positioning of our specialty products in our markets. In the fourth quarter, we faced significant destocking by customers in several markets, especially in Europe. We are confident that demand will gradually recover in 2023 as we expect inflation and energy prices to normalize. As a result of our portfolio management, the Group is better positioned to generate organic growth of 3-5% annually on average between 2023 and 2025 while delivering higher current EBITDA margins. Imerys will continue to actively pursue growth opportunities through investments in fast growing markets and acquisitions. With the successful completion of our first 3-year ESG plan, we are now launching an even more ambitious plan which includes a new greenhouse gas emissions reduction objective aligned with the 1.5°C trajectory. With this we aim to reaffirm that ESG is and will remain a key criterion in our development strategy.
The audit procedures on the consolidated accounts are finalized. The audit report will be issued after the finalization of the procedures for the verification of the management report, and the presentation of the accounts to be included in the Universal Registration Document, in the format provided for in the ESEF Regulation.
1Guidance announced on November 2, 2022: FY 2022 current EBITDA between €690 million and €710 million.
2Results for 2021 and 2022 have been restated to reflect the results from continuing operations excluding the High Temperature Solutions business area (HTS) whose contemplated disposal was announced on July 28, 2022. According to IFRS 5, HTS is accounted for as a discontinued operation and reported under ‘Net income from discontinued activities’ (its revenue, expenses and pre-tax profits are not presented in the consolidated income statement). The assets serving the paper markets whose contemplated disposal was announced on September 9, 2022, are accounted for as non current assets held for sale and therefore included in the consolidated income statement (continuing operations).
Update on portfolio management
Completion of the disposal of the High Temperature Solution business area (HTS)
On January 31, 2023, Imerys completed the disposal of HTS to Platinum Equity, a global investment firm operating companies in a broad range of markets, for an enterprise value of €930 million and cash impact of approximately €710 million. Under IFRS 5, the HTS business area is accounted for as a discontinued operation in 2022, and is therefore reported under ‘Net income from discontinued activities’. Its revenue, expenses and pre-tax profits are not presented in the consolidated income statement.
Ongoing disposal process for assets serving the paper market
Imerys expects to close the sale of most of its assets serving the paper market, for an enterprise value of €390 million, by the end of the first half of 20233. Proceeds will be paid through staged payments including an earn-out based on the future performance of the business. In total, these activities represented approximately €425 million in revenue in 2022. These assets are included in the consolidated income statement and accounted for as non current assets held for sale under IFRS 5.
As a reminder, the contemplated divestiture led to the recognition of a goodwill impairment loss on the divested assets of €108 million in the Group’s 2022 income statement4. At closing, the translation reserve associated with the business disposed of (mainly relating to the devaluation of the Brazilian Real) shall be recycled to the profit and loss statement in accordance with applicable IFRS standards. The Group’s shareholders equity will not be affected by this non-cash loss currently estimated at circa. €220 million5 as of December 31, 2022.
At the Shareholders’ General Meeting of May 10, 2023, the Board of Directors will propose a cash dividend of €3.85 per share (vs. €1.55 paid in 2022), which represents a distribution of €327 million, including €200 million from the proceeds of the HTS disposal6. This proposal reflects the Board’s continued confidence in the Group’s fundamentals and strategy and represents an attractive return to shareholders.
3The closing of the transaction remains subject to the fulfillment of customary conditions for this type of transaction, including the information and consultation of works councils and other regulatory approval.
4 Accounted in “Other income and expenses, after tax” (see ‘Net income’ section of the press release)
5 Based on audited data as of December 31, 2022 and a EUR/BRL foreign exchange rate of 5.5652. The final impact shall be revised based upon the conditions prevailing at the date control will be lost.
6 Ex-dividend and payment dates would be May 15, 2023 and May 17, 2023 respectively
Update on strategic capital expenditures
Imerys is pursuing its development in the fast-growing Lithium-ion battery market. The third production line of carbon black in Willebroek (Belgium) should be operational in the coming weeks, while the construction of the fourth one is well underway. The capacity expansion of synthetic graphite production in Bodio (Switzerland) is progressing as per plan and commissioning is expected before the end of the year. In addition, the construction of a greenfield plant of specialty minerals for polymer lightweighting for automotive in China is in its final phase. First deliveries to customers are expected in the second quarter of 2023.
In France, the Emili project has been selected by the government, within the “France 2030” program, and will receive financial support for the research and pilot phases of its lithium exploitation at the Beauvoir site. Imerys is currently carrying out scoping and feasibility studies. According to initial assessments, the Emili project would reach a production target of 34,000 tonnes of lithium hydroxide per year from 2028, for at least 25 years.
Sustainability: new SBTi objectives aligned with the global warming of 1.5°C
The Group has successfully completed its first 3-year ESG sustainability plan and it is now launching an even more ambitious plan for 2025 around three main pillars: empowering our people, growing with our customers and caring for our planet. In this respect, Imerys has submitted for validation to the Science Based Target initiative (SBTi) its commitment to a reduction of its greenhouse gas emissions of 42% by 2030 from a 2021 base year7. Several decarbonation levers have been identified and activated, such as fuel switching and biomass utilization, electrification, power purchase agreements, energy efficiency and process innovation. In 2022, Imerys has reduced its CO2 emission by 10% compared to 2021 in absolute terms.
Non-financial indicators have been restated to reflect the results from continuing operations, therefore excluding the HTS business area.
7 Scopes 1 & 2 – Greenhouse gas emissions expressed in tons of CO2e equivalent.
8 Includes all accidents without lost time whenever a healthcare professional is involved in the treatment, even if only for first aid.
9 The definition of Senior Manager was updated in 2020 to exclude Executive Committee members. Proportion of women on the Executive Committee is reported as a separate indicator in chapter 3 of the Universal Registration Document.
10 By expenditure.
After a significant destocking impact on volumes in the fourth quarter of 2022, Imerys expects a gradual recovery in 2023 and a progressive normalization of inflation and energy prices which will positively impact business activity, with varying trends across regions and sectors. Demand levels for our specialty solutions are expected to stay more robust in the USA than in Europe, while Asian markets are poised to recover as China reopens. Demand in construction and industrial markets should remain soft, but improve in automotive markets while demonstrating continued resilience in consumer goods. Imerys confirms its mid term organic growth and current EBITDA margin ambitions presented at its Capital Markets Day on November 7, 2022.
COMMENTARY ON THE FOURTH QUARTER AND 2022 ANNUAL RESULTS
Revenue was €4,282 million, up 12.5% year-on-year at constant scope and exchange rates in 2022. Group sales volumes were down 5.8%, reflecting the impact of the Ukrainian crisis and the international economic sanctions against Russia, local lockdowns in China and the weakness of industrial and construction markets towards the end of the year. Volumes declined further in the fourth quarter as several markets were affected by customers destocking.
In a context of high inflation, Imerys’ pricing actions continued in the fourth quarter (+18.7% of price effect), averaging +18.3% for the full year 2022.
Revenue included a significantly positive currency effect of €211 million (+5.8%), primarily as a result of the appreciation of the U.S. dollar against the euro. The scope effect was -€72 million, related to recent divestitures (in particular the hydrous kaolin business in North America).
Current EBITDA was above the high end of the guidance range in 2022 and reached €720 million (i.e. €859 million including HTS), a 11.0% increase vs. 2021.
The price effect in 2022 compensated for substantial input cost inflation, including variable, fixed and overhead costs. The currency effect was positive at €56 million.
Current operating income reached €439 million for 2022, a 22.4% increase compared to last year.
Current net income from continuing operations
Current net income from continuing operations, Group share, totaled €284 million, up 22.3% vs. 2021. Net financial result was negative at €50 million. The income tax expense of €105 million corresponds to an effective tax rate of 26.9%. Net income, per share, from current operations, Group share, was up 22.3% to €3.28.
Net income, Group share, totaled €237 million in 2022. Net income from continuing operations reached €177 million after other income and expenses, of -€107 million in 2022, mostly related to goodwill impairment on the assets for the paper market whose divestment process is currently underway. The net income also includes €77 million of net income from discontinued activities and -€17 million of minority interests.
Net current free operating cash flow
Imerys generated net current free operating cash flow of €20 million in 2022 (including €14 million from discontinued operations). This figure includes €406 million of capital expenditure, up €70 million year-on-year, reflecting increased spending on strategic projects aimed at increasing production capacity primarily in green mobility (€85 million, up from €45 million). Operating working capital was up €233 million in 2022, principally due to inflation.
At December 31, 2022, the net financial debt of €1,666 million does not take into account the cash impact of the sale of HTS (approximately €710 million). Adjusted for these proceeds, the net financial debt to current EBITDA ratio would be at 1.3 x.
Imerys "investment grade" ratings were confirmed by Standard and Poor's (November 29, 2022, BBB-, stable outlook) and Moody's (March 11, 2022, Baa3, stable outlook).
At December 31, 2022, Imerys’ bond financing amounted to €1.7 billion with an average maturity of 4.4 years. The Group also has €1,010 million available in bilateral credit lines.
Performance Minerals (67% of consolidated revenue)
Revenue generated by the Performance Minerals segment was up 13.6% like-for-like in 2022. On a reported basis, revenue was up 17.6% and includes a positive currency effect of €155 million (+6.4%).
Revenue in the Americas was up 12.3% at constant scope and exchange rates in 2022. Sales in the fourth quarter (+10.1%) was marked by a slowdown in demand for minerals for the construction industry in the US.
Revenue in Europe, Middle East and Africa increased by 17.3% at constant scope and exchange rates in 2022 and +21.8% in the fourth quarter, primarily driven by higher selling prices. Volumes in the fourth quarter were impacted by end-of-year destocking in several markets. Sales nevertheless benefited from a rebound in the automotive market and a good performance in ceramics and building products, while paper remained weak.
Covid lock-downs in China weighed on the performance in Asia-Pacific where revenue growth was limited to 12.4% at constant scope and exchange rates in 2022. Sales in the fourth quarter (+16.0% like-for-like) were driven by the mobile energy market. Specialty minerals volumes were resilient overall: filtration & life science solutions went up while paper & board was flat and ceramics remained soft due to the energy crisis and weak end markets demand.
Current EBITDA for the segment totaled €555 million in 2022, or 19.5% of revenue.
High Temperature Materials & Solutions (33% of consolidated revenue)
The Refractory, Abrasives & Construction business area revenue increased by 15.6% on a reported basis with a favorable currency effect of €66 million (+5.3%) and a negative scope effect of €3 million (-0.3%). Revenue was up 10.1% at constant scope and exchange rates in 2022, driven by the price increases necessary to pass through rising inflation, especially escalating energy costs. As anticipated, organic growth decelerated in the fourth quarter of 2022 (-3.6%) due to a drop in refractory and abrasives markets in Europe - amplified by significant destocking at customers - and in China, where the business has a strong presence. Building & infrastructure solutions maintained a good momentum in the fourth quarter.
Current EBITDA for the segment totaled €202 million, or 14.1% of revenue in 2022.
In accordance with IFRS 5, the High Temperature Solutions business area is accounted for as a discontinued operation in 2022 and 2021 and no longer included in the segment reporting.
2022 annual results webcast
The press release is available on the Group’s website www.imerys.com. The Group will hold a live webcast to discuss the 2022 annual results at 10.00 AM (CET) on February 17, 2023, which can be accessed on the Group’s website www.imerys.com.
May 2, 2023: First Quarter 2023 results
May 10, 2023: General Meeting of Shareholders
July 27, 2023: First half 2023 results
October 30, 2023: Third quarter 2023 results
These dates are subject to change and may be updated on the Group’s website https://www.Imerys.com/finance.
The world’s leading supplier of mineral-based specialty solutions for industry with €4.3 billion in revenue and 14,000 employees in 2022. Imerys delivers high value-added, functional solutions to a great number of sectors, from processing industries to consumer goods. The Group draws on its understanding of applications, technological knowledge and expertise in material science to deliver solutions by beneficiating its mineral resources, synthetic minerals and formulations. Imerys’ solutions contribute essential properties to customers’ products and their performance, including heat resistance, hardness, conductivity, opacity, durability, purity, lightness, filtration, absorption and water repellency. Imerys is determined to develop responsibly, in particular by fostering the emergence of environmentally-friendly products and processes.
More comprehensive information about Imerys may be obtained from its website (www.imerys.com) in the Regulated Information section, particularly in its Registration Document filed with the French financial markets authority (Autorité des marchés financiers, AMF) on March 22, 2022 under number D.22-0131 (also available from the AMF website, www.amf-france.org). Imerys draws investors’ attention to chapter 2 “Risk Factors and Internal Control” of its Registration Document.
Disclaimer: This document contains projections and other forward-looking statements. Investors should be aware that such projections and forward-looking statements are subject to various risks and uncertainties (many of which are difficult to predict and generally beyond the control of Imerys) that could cause actual results and developments to differ materially from those expressed or implied.
Appendix & Glossary are available in the PDF version of the press release.
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