LETTER TO SHAREHOLDERS - Imerys, Transform to perform

November 2015
LETTER TO
SHAREHOLDERS

67
MESSAGE
Gilles MICHEL
Chairman and Chief Executive Officer
RESULTS
• Imerys announces
improved results in first
nine months of 2015
PAGE 2
NEWS
• Acquisition of Solvay’s
PCC division
• Acquisition of BASF’s
PHK activity in the USA
• Imerys wins 2015
Shareholder Relations
award for its digital
strategy
PAGE 3
SHAREHOLDER’S NOTEBOOK
• Share price evolution
Dear Shareholders,
The 3rd quarter was marked by sharper contrasts between sectors and regions.
While the economy remained vibrant in North America, India and Southeast Asia and
more generally in the automotive and consumer goods sectors, the slowdown in
China and the recession in Brazil were confirmed.
In that environment, Imerys recorded + 10.9% growth in its revenue to €3,084
million for the first nine months of 2015, driven by S&B and the positive impact of
exchange rates. The Group’s operating income grew comparably, by + 9.1% to €409
million, despite lower sales volumes. Operating margin was 13.3%, thanks to a firm
price/mix component and good costs control. Consequently, net income from
current operations rose + 8.7% compared with the first nine months of the previous
year, totaling €260 million.
For the rest of the year, several of Imerys’ markets should remain weak overall,
particularly construction in France, paper and steelmaking. Ceramic proppants will
continue to be affected by the fall in non-conventional oil exploitation in the United
States.
In this context, Imerys will benefit from its business model, which gives it all the
resources needed in terms of both profitability and cash, and continue unwaveringly
to implement its development strategy, which combines organic growth to improve
the Group’s profile with targeted acquisitions to broaden and deepen its business
portfolio.
The acquisition of Solvay’s Precipitated Calcium Carbonate Division and the takeover
of BASF’s paper hydrous kaolin activity in the United States are clear recent
examples of this, coming just a few months after the Group acquired S&B. Imerys
therefore confirms its objective of achieving firm growth in net income from current
operations in 2015.
Dear Shareholders, thank you again on behalf of all of Imerys’ employees for your trust.
• Shareholder structure
• Contacts
PAGE 4
Gilles Michel
RESULTS TO SEPTEMBER 30, 2015
Imerys announces improved results
in first nine months of 2015
In an economic environment marked by sharper geographic and sectorial contrasts, Imerys’ results continue
to improve, supported by the integration of S&B, the positive impact of exchange rates and costs control.
GROWTH IN GROUP’S
SHARE OF NET INCOME
FROM CURRENT
OPERATIONS AND NET
INCOME
+ 10.9% GROWTH IN
REVENUE (- 4.4% AT
COMPARABLE GROUP
STRUCTURE AND
EXCHANGE RATES)
Over the first 9 months of 2015, the
Group posted €3,084 million in
revenue. This growth results from a
structure effect (+ €238 million,
+ 8.6%), mainly comprised of the
integration of S&B, and the positive
impact of exchange rates (+ €188
million, + 6.8%) due to the euro’s
depreciation against the US dollar in
particular.
At comparable Group structure and
exchange rates, revenue for the first
9 months of 2015 was - 4.4% lower
than in the same period in 2014. The
decrease was - 5.6% in the 3rd
quarter, reflecting the downturn in
several markets and regions as well
as an unfavorable basis of
comparison in ceramic proppants in
the 3rd quarter, given the gradual
ramp-up of production in the previous
year. In this difficult environment, the
price/mix effect remained positive,
totaling + 1.3% over the first 9
months of 2015 (+ €36 million).
FIRM OPERATING MARGIN
AT 13.3%
At €409 million (+ 9.1% vs. first 9
months of 2014), current operating
income includes a positive structure
impact of + 34 M€, which comprises
in particular S&B’s contribution and a
favorable exchange rate effect for
+ €33 million.
Current operating income was
impacted by the drop in sales volumes
(- €83 million), which was partly offset
by a favorable trend in the business
mix and the positive contribution of
management measures, i.e. evolution
of the product price/mix (+ €26 million),
improvement in variable costs (+ €17
million) and reduction in production
costs and general expenses (positive
impact of + €6 million). Consequently,
the Group’s operating margin totaled
13.3% over the first 9 months of 2015,
which is stable compared to its level
in the 1st half.
2  LETTER TO SHAREHOLDERS I NOVEMBER 2015
The Group’s share of net income
from current operations rose + 8.7%
to €260 million, driven by an
improvement in current operating
income. Financial expense is on a
par with the first 9 months of 2014
(- €40 million), while the current tax
charge increased slightly, as expected,
to - €108 million (- €97 million for the
first 9 months of 2014). Other operating
income and expenses, net of tax,
totaling - €41 million (vs. - €33 million
a year earlier), mostly included
restructuring costs for the adjustment
of the Oilfield Solutions activity to the
fall of the ceramic proppants market
and costs related to the integration of
S&B.
SOUND FINANCIAL
STRUCTURE
As of September 30, 2015, the Group’s
financial debt totals €1.6 billion,
compared with €0.9 billion as of
December 31, 2014. The difference
results from the acquisition of S&B. It
also takes into account acquisitions of
treasury shares by the Company on the
market under its share buyback program
for the purposes of their cancellation.
These operations concerned 0.9% of
the Company’s capital during the first 9
months of the year.
The full press release and the presentation of the results to
September 30 are available from the Group’s website
www.imerys.com in the News & Media Center section.
NEWS
Acquisition of Solvay’s PCC division
On October 30, 2015, Imerys
completed the acquisition of the
Precipitated Calcium Carbonate (PCC)
division of Solvay, Europe’s leading
producer of fine and ultra-fine PCC,
which is used as a functional additive
in specialty applications.
With revenue of €59 million in 2014, it
operates 4 plants in Europe (Austria, France,
Germany, UK) and mainly serves the
automotive (polymers, etc.), construction
(paints, coatings, sealants) and consumer
goods (health & beauty, etc.) markets.
Acquisition
of BASF’s PHK
activity in
the USA
Imerys wins 2015
Shareholder Relations
award for its digital strategy
The acquisition by Imerys of BASF’s
Paper Hydrous Kaolin (PHK) activity
in the US was completed on
November 1, 2015.
This operation will enable Imerys to further
improve its service offering for the paper
industry through optimization of its
production assets and generate incremental
revenue of $60 million on a full-year basis.
The 5th “Prix de la Relation Actionnaires” award ceremony,
organized by Les Echos and Investir - Le Journal des Finances
in partnership with the auditing group Mazars, took place on
Wednesday, November 4, at the Elysée Biarritz in Paris.
Imerys’ financial department won the Digital award in
recognition of its online communication efforts with
shareholders and investors. The Jury pointed out the dedicated
website space for institutional investors and analysts, which
includes a financial glossary and a shareholder’s guide, an
online voting system for the Shareholders’ Meeting, which is
also streamed live on a media site, and the Imerys Replay
channel on YouTube which features a remarkable range of
content, from profession overviews to virtual plant tours and
presentations of the Group’s new products and projects.
NOVEMBER 2015 I LETTER TO SHAREHOLDERS  3
SHAREHOLDER’S NOTEBOOK
During the 3rd quarter, volatility remained high on stock markets, particularly because of growing uncertainties over the
European macroeconomic context and the confirmation of the Chinese economic slowdown. In this context, Imerys share
prices grew almost + 40% over the past two years, while the SBF 120 index recorded a comparable increase (+ 44%)
over the same period.
Shareholder structure
IMERYS ON THE STOCK MARKET
As of June 30, 2015, Imerys’ share capital
was made as follows:
ISIN: FR0000120859 - NK
Euronext Paris - Eurolist - Local Stocks
Compartiment A (Blue Chips)
(eligible for deferred settlement service)
Data as of October 30, 2015
• Number of shares: 80,550,660
• Nominal value: €2.0
• Closing price: €62.3
• Market capitalization: €5.0 billion
NEXT DATES
• February 12 (before trading) ..........2015 results
• April 28 (after trading) ....................1st quarter 2016 results
• May 4 at 11:00am............................Shareholders’ General Meeting
• July 27 (after trading) .....................1st half 2016 results
• October 28 (before trading) ...........3rd quarter 2016 results
CONTACTS
Financial Communication
154 rue de l’Université - 75007 Paris - France
Tel: +33 (0) 1 49 55 66 55 - Fax: +33 (0) 1 49 55 63 16
shareholders@imerys.com - Website: www.imerys.com
4  LETTER TO SHAREHOLDERS I NOVEMBER 2015
Conception: Bleu Cerise - Pictures credits: © Imerys & S&B Photolibraries, Reserved Rights - © © Rawpixel.com - Olivier Le Queinec - Ragma Images - Apichart Meesri - Andrey Armyagov - Lightwavemedia - Safakcakir - Anteromite - Jaromir Urbanek - lavko Sereda
Imerys share price performance
as of October 30, 2015