Imerys Sees Revenue Bump in First Nine Months of 2016
Imerys recently announced its results for the nine months that ended September 30, 2016.
Imerys recently announced its results for the nine months that ended September 30, 2016. Revenue for the first nine months of 2016 rose 1.4% over the same period last year to €3.1 billion (approximately $3.5 billion). There was a positive group structure effect of €136 million (~ $151.4 million) or 4.4%, which included the consolidation of external growth operations completed in 2015. A negative exchange rate affected sales by -0.7% or €22.6 million (~ $25.2 million), mainly from the euro’s appreciation against several currencies. At comparable group structure and exchange rates, revenue decreased 2.3% compared with the first nine months of 2015. This was due to a poor demand on certain markets, including steelmaking and paper, which was partly offset by a positive price-mix effect of 0.7%, supported by new products.
Current operating income totaled €441.5 million (~ $491.6 million), an 8% rise from the same period in 2015. This includes a group structure effect of €14.2 million (~ $15.8 million) relating to S&B and the other acquisitions completed in late 2015. It also includes a favorable exchange rate impact of €29.8 million (~ $33.2 million), resulting from the devaluation of the Brazilian real in particular. This aspect should be seen in the context of the €13.4 million (~ $14.9 million) negative impact on costs due to high inflation in Brazil.
“Current operating income grew 8% during the first nine months of the year, in a market environment that was still contrasted,” said Gilles Michel, chairman and CEO. “This good performance results from the enhancement of our specialty product offering, the ramp-up of synergies from acquisitions and our effective cost measures. On the basis of the results for the first nine months, Imerys therefore confirms that it is targeting growth in full year net income from current operations to be comparable to that of the first half, assuming unchanged market conditions and environment.”
Current operating income improved due to the enhanced specialty product offering, the ramp-up of synergies from acquisitions, and the improvement in fixed and variable costs, driven by operating excellence programs and procurement efficiencies. In this context, the group’s operating margin, which also benefited from a favorable trend in the activity mix, improved to 13.3% as of September 30, 2015.
Net income from current operations rose 5.6% to €259.9 million (~ $289.4 million) as of September 30, 2015. This factors in the negative €47.5 million (~ $52.9 million) of financial expenses. This figure is higher compared to that of the first nine months of 2015 due to a lower contribution from foreign exchange and financial instruments. However, interest expense decreased slightly to €37.8 million (~ $42.1 million), compared with €38.9 million (~ $43.3 million) for the first nine months of 2015. Net income from current operations per share, which benefited from share buybacks, improved 6.2% to €3.48 (~ $3.88).
The group’s share of net income was €219 million (~ $243.9 million), compared to €218.5 million (~ $243.3 million) in the same period last year, after taking other operating income and expenses and net of tax into account. Other operating income and expenses, net of tax, amounted to -€55.5 million (~ $61.8 million) compared with -€41.4 million (~ $46.1 million) in the same period last year. This concerns several restructuring projects, mainly in Monolithic Refractories and Refractory Minerals.
The Energy Solutions & Specialties business group’s revenue totaled €936.6 million (~ $1 billion) in the first nine months of 2016, a drop of 1.4% on a reported basis. This decrease factors in a positive structure effect of €40.6 million (~ $45.2 million) relating to the acquisition of Solvay’s European precipitated calcium carbonate activities, the integration of which is on track, and an unfavorable exchange rate effect of -€13.4 million (~ $ 14.9 million). At comparable structure and exchange rates, revenue decreased 4.3% compared with the same period in 2015, mainly due to the decline in the refractories market.
The Carbonates division’s sales benefited from vibrant North American and Asia-Pacific markets and from the development of specialty products, while the paper market continued to decline. Also in the first half of 2016, Imerys set up FiberLean™ Technologies, a technological joint venture held 50/50 with Omya, to promote research and development on microfibrillated cellulose (MFC) across multiple applications and sectors.
In the Monolithic Refractories division, Europe was penalized by low numbers of industrial maintenance projects, unlike India and Southeast Asia, which remained buoyant. In this context, on September 1, the group enhanced its geographic positioning by acquiring SPAR, a North American producer of monolithic refractories that mainly serves the petrochemicals, power generation, cement and incineration markets. Also, as of October 3, the company developed its service offering by integrating Fagersta Eldfasta, a Swedish company specializing in refractory products.
The increase in the Graphite and Carbon division’s sales was driven by high market growth in lithium-ion batteries for mobile energy. To meet robust demand, the group launched a multi-year investment program to enhance research and development, expand geographic coverage, and increase industrial capacities and mining resources, particularly through the joint venture with Gecko in Namibia.
The Ceramic Materials business group’s revenue totaled €928.4 million (~ $1 billion). The 5.7% increase reported change from the first nine months of 2015 takes into account a positive €54.9 million (~ $61.1 million) structure impact, mainly relating to the acquisition of BASF’s hydrous kaolin activity in the U.S. and that of Matisco’s roofing accessories in the Roofing division in November 2015. It also takes into account a positive €0.2 million (~ $0.2 million) exchange rate effect. At comparable structure and exchange rates, revenue decreased slightly compared with the first nine months of 2015.
In the Roofing division, the upturn in the French roof tile market didn’t materialize for the first nine months of 2016. New single-family housing starts increased very slightly, and the renovation market remained lackluster over the period.
The Kaolin division’s sales continued to be impacted by the erosion of the paper market, which was partly offset by developments in specialty applications (rubber, plastics, paints, sealants and adhesives, etc.). The Ceramics division’s activity was healthy, due to further geographic repositioning toward faster-growth regions. During the third quarter, the group sold two Spanish plants to Samca, a Spanish industrial group, and with which it also signed exclusive distribution agreements in Spain and abroad.
The High Resistance Minerals business group’s revenue totaled €446.4 million (~ $497.1 million). On a reported basis, it decreased 8.2% compared with the first nine months of 2015 and includes a -€12.7 million (~ $ 14.1 million) structure effect relating mostly to the divestment of a minerals trading activity in the U.S. at the end of June 2015. At comparable structure and exchange rates, the 5.4% sales decrease can be primarily attributed to the refractories market. In this context, the group continued to restructure its industrial asset base in Refractory Minerals, particularly in China.
In the Fused Minerals division, specialty zirconia and fused alumina products held out well, and the ramp-up of the Bahrain plant enabled the group to extend its geographic coverage. Imerys should receive the European Commission’s agreement for the acquisition of specialty alumina production activities from the Alteo group, providing Imerys commits to disposing of the activities of the La Bâthie plant in France. The operations that would be ultimately retained by Imerys achieve annual revenue of approximately €50 million (~ $55.7 million) with a workforce of 150.
For more information, visit www.imerys.com.