Imerys: A further Improvement in 1st Half 2011 Results - Closing of Luzenac Group Acquisition Expected on August 1, 2011
PARIS, July 29, 2011 /PRNewswire/ --
- Imerys Announces a Significant Improvement in its 1[st]half 2011 Results
- Sales up +12% on comparable basis*, supported by firm Group's markets growth
- Operating margin up + 1.1point to 14%
- Net income from current operations up +27% to 157 M€
- Closing of the acquisition of Luzenac Group, the world leader in talc processing, expected on August 1, 2011
On Thursday, July 28, 2011, the Board of Directors of Imerys examined the Group's first-half financial accounts, for the period ending June 30, 2011.
% Consolidated results 1st half 1st half current (EUR millions) 2011 2010 change Sales 1,807.3 1,623.0 + 11.4% Current operating income 252.9 209.3 + 20.8% Operating margin 14.0% 12.9% Net income from current operations, Group share 157.0 123.4 + 27.2% Net income, Group share 154.9 120.5 + 28.5% Financing Paid capital expenditure 99.2 56.5 + 75.8% Current free operating cash flow 112.6 126.9 - 11.3% Net financial debt 873.8 990.1 - 11.7% Data per share Net income from current operations, Group share, per share [2,4] EUR2.08 EUR1.64 + 27.3%
- Operating income before other operating revenue and expenses, but including the share of joint operations.
- Group's share of net income before other operating revenue and expenses, net
- Current free operating cash flow: EBITDA after deduction of notional tax, changes in working capital requirement
and paid capital expenditure.
- The average weighted number of outstanding shares decreased to 75,375,300, compared with 75,449,904 in the 1st half of 2010.
- 1st half 2010 results have been restated following the change in accounting method related to the recognition
of employee benefits, applied on January 1, 2011 and detailed in the appendix of the present press release.
Gilles Michel, Chairman & Chief Executive Officer, stated, "The improvement in Imerys' markets continued in the 1st half of 2011 and the Group raised its operating margin to 14%. In that context, we are confident that the growth in net income from current operations will exceed +20%, for the full year 2011. The acquisition of Luzenac Group, the closing of which is anticipated on August 1, will help to improve our commercial and technological performance and to create value for our shareholders."
(*) At comparable Group structure and exchange rates
In the first half of 2011, Imerys' end markets recorded strong growth compared with the first half of 2010, which benefited from an inventory rebuilding movement.
The improvement of manufacturing indexes and steel production, compared with the same period in 2010, reflects the upturn in industrial capital expenditure (machine tools, aircraft manufacturing, etc.) as well as a healthy level of activity in consumer durables (automotive, household appliances, etc.).
Global growth continues to support demand for fast-moving consumer goods (food, health, electronics, etc.) and packaging, whereas production for printing and writing paper, which is stable overall, benefits from dynamic emerging markets.
The French single-family housing sector improved with an increase in housings starts since the end of 2010. The trend is contrasted in Europe, whereas in the United States, activity shows no significant signs of recovery and remains slack.
The period was also marked by great volatility in foreign exchange rates. Pressure on raw materials and energy led to higher external costs.
- The "Quartz Corp. SAS" joint venture formed
In order to meet growing demand for high-purity quartz for the semiconductor and photovoltaic market segments, Imerys (Minerals for Ceramics) has entered into a partnership with the Norwegian family company, Norsk Mineral, through the 50/50-held joint venture "The Quartz Corp SAS", incorporated at the end of March 2011. The combination of their geological, industrial and technological skills will enable them to broaden the product range for this fast-growing, technically demanding market.
Appointed Director and Deputy Chief Executive Officer by the Board of Directors on November 3, 2010,
Gilles Michel was appointed as Chairman & Chief Executive Officer of Imerys by the Board of Directors at its meeting of April 28, following the General Meeting's approval of his term of office as Director. Following the renewal of his term of office as Director, Aimery Langlois-Meurinne was also appointed Vice-Chairman of the Board of Directors and Lead Director.
EVENTS SINCE JUNE 30, 2011
Luzenac Group acquired by Imerys
Subsequent to satisfying the primary conditions precedent, the closing of the acquisition of 100% of the Luzenac Group by Imerys from Rio Tinto is anticipated on August 1. With annual production of one million tons, Luzenac Group is the world leader in talc processing with total market share of approximately 15%. This mineral is used in many technical applications and in a wide range of industrial markets:
- Thanks to its lightness and strength in Plastics & Polymers (35% of 2010 sales), talc can be used to reduce vehicle weight, for example;
- Incorporated as a filler, it improves the quality of Paints (24% of 2010 sales) through its matting, anti-corrosion, anti-cracking and anti-mold properties;
- Used in the Paper-making process (19% of 2010 sales), it makes recycled paper whiter, in particular;
- Talc's also contributes to other applications (22% of 2010 sales). Its thermal resistance and mechanical strength allows Ceramics manufacturers to lower their firing temperatures and limits thermal distortion. Talc also improves quality of Health and Beauty Products.
Luzenac Group, which has achieved sales of approximately USD395 million in 2010, has around 1,000 employees and operates 24 mines and industrial plants. It has mineral reserves and resources in Europe, North America and Asia, providing more than 20 years' production. It also benefits from geological, industrial, marketing and research know-how, similar to Imerys activities.
With this operation, Imerys strengthens its leadership by broadening its functional offering. The Group therefore continues to implement its development strategy in a specialty business with strong technological components and real growth potential:
- Imerys strengthens its positions in the Plastics & Polymers, Paints, Paper, Technical Ceramics, Beauty and Health Products markets;
- Through this transaction, Luzenac Group will gain access to many development opportunities in emerging countries by leveraging Imerys' worldwide network, notably;
- The combination of Research & Development know-how will allow the Group to enhance its innovation potential in order to broaden its specialty products offering.
This acquisition, for an enterprise value of USD340 million (€232 million), should be paid in cash. Luzenac Group would be part of the Performance & Filtration Minerals business group and should be fully consolidated as of August 1, 2011. Current market conditions prevailing, this transaction is expected to create value by achieving a return on capital employed above the Group's weighted average cost of capital from 2013 onwards.
In the second half of 2011, the business outlook remains healthy for the Group. In that context, Imerys is confident that the growth in its net income from current operations will exceed + 20 % for the full year 2011.
DETAILED COMMENTARY ON THE GROUP'S RESULTS
H1 2011 H1 2010 Change sales sales in sales Comparable of (% change which (EUR (EUR previous (% previous Volume of which millions) millions) year) year) effect Price/Mix 1st quarter 882.7 751.6 + 17.4% + 13.7% + 10.2% + 3.5% 2nd quarter 924.7 871.4 + 6.1% + 10.8% + 5.2% + 5.7% 1st half 1,807.3 1,623.0 + 11.4% + 12.2% + 7.5% + 4.7%
- Further growth in volumes despite the base effect related to inventory rebuilding in 2nd quarter 2010
- Improvement in product prices and mix
Sales for the first half of 2011 totaled €1,807.3 million (+ 11.4% compared to 1st half 2010). This rise takes into account:
- An adverse foreign exchange effect of - €27.5 million. Foreign exchange effect became negative in the second quarter (i.e. - €46.0 million), due to the euro's appreciation against other currencies, in particular;
- A Group structure effect of + €14.5 million, representing the net amount of, on the one hand, the consolidation of Pará Pigmentos S.A. (PPSA) in Brazil (Pigments for Paper & Packaging business group), and, on the other hand, the deconsolidation of North American high-purity quartz activities (Minerals for Ceramics), which were contributed to the joint venture The Quartz Corp. SAS as on January 1, 2011 (see Highlights).
At comparable Group structure and exchange rates, sales rose + 12.2% compared with the first half of 2010. As a reminder, the 1st quarter of 2011 benefited from a favorable basis of comparison (harsh weather conditions in early 2010). In the 2nd quarter, growth continued despite a less favorable basis of comparison, related to inventory rebuilding at customers' level in 2010. For the 1st half of 2011 as a whole, market growth led to higher volumes and a positive price/mix effect.
Sales by geographic zone of destination
% change % H1 2011 % H1 2010 H1 2011 consolidated consolidated (EUR millions) H1 2011 sales vs. H1 2010 sales sales Western Europe 869.2 + 11.1% 48% 48% United States / Canada 345.3 + 1.6% 19% 21% Emerging countries 498.0 + 17.9% 28% 26% Others (Japan / Australia) 94.8 + 21.6% 5% 5% Total 1,807.3 + 11.4% 100% 100%
In the first half of 2011, the Group benefited from the dynamism of emerging countries and the developments made in those areas (acquisition of PPSA, new capacity openings, commercial presence), with turnover increasing significantly in Brazil, China, Russia and India. In Europe, sales growth particularly reflects the upturn in Building Materials activity. In North America, the recovery is slow and the negative exchange rates impact limits the increase in sales.
CURRENT OPERATING INCOME,
% Comparable (EUR millions) H1 2011 H1 2010 % Change change 1st quarter 116.4 84.8 + 37.3% + 35.5% Operating margin 13.2% 11.3% 2nd quarter 136.4 124.5 + 9.6% + 13.1% Operating margin 14.8% 14.3% 1st half 252.9 209.3 + 20.8% + 22.2% Operating margin 14.0% 12.9%
- High contribution of volumes
- Rise in variable costs covered by price/mix component
Current operating income rose + €43.6 million compared with the first half of 2010 and factors:
- A - €13.2 million negative impact of foreign exchange (of which - €10.9 million in the 2nd quarter, mainly due to the depreciation of the US dollar);
- A + €10.3 million Group structure effect (see Sales).
At comparable Group structure and exchange rates, current operating income rose + €46.5 million compared with the first half of 2010. The product price/mix component improved (+ €71.2 million). The overall rise in variable costs
(- €33.7 million) is mainly due to inflation in raw materials, intermediary products and energy. The rise in fixed production costs (personnel, maintenance) and overheads is linked to the strong volumes increase, which has generated a contribution of + €55.4 million.
The Group's operating margin gained 1.1 point compared with the first half of 2010 to total 14.0%.
NET INCOME FROM CURRENT OPERATIONS
Up + 27.2% to €157.0 million, net income from current operations reflects:
- The increase in current operating income;
- Financial expense of - €30.3 million (vs. - €32.2 million in the first half of 2010), including a foreign exchange effect of - €2.3 million;
- A tax charge of -€63.9 million (- €51.5 million in 1st half 2010), reflecting an effective tax rate of 28.7% (29.1% in first half 2010).
The €34.4 million increase in net income, Group share to €154.9 million takes into account other revenue and expenses, net of tax (- €2.1 million).
(EUR millions) H1 2011 H1 2010 EBITDA 352.0 319.2 Current operating cash flow 279.4 258.3 Changes in operating working capital requirement (69.9) (77.1) Paid capital expenditure (99.2) (56.5) Current free operating cash flow* 112.6 126.9 Financial cash flow (net of tax) (20.8) (18.8) Other working capital requirement items (5.2) (1.1) Current free cash flow 86.6 107.0
* including subsidies, value of divested assets and misc. 2.3 2.2
- Strict management of operating working capital requirement maintained
- Good level of current free operating cash flow
Operating working capital requirement takes into account the increase in activity and represents 20.5% of annualized sales of the last quarter (this ratio takes factoring into accountfor €84 million as on June 30, 2011).
Booked capital expenditures (€84.9 million) increased as expected and represent 83% of depreciation expense (compared with 47% in the first half of 2010). This includes industrial asset maintenance, overburden operations and the building of new capacities to supply the growth in demand and the development into new markets.
SOUND FINANCIAL STRUCTURE
December 31, (EUR millions) June 30, 2011 2010 June 30, 2010 Paid dividends (91.1) (76.3) (76.0) Net debt 873.8 872.8 990.1 Shareholders' equity 2,118.6 2,131.8 2,023.9 EBITDA 352.0 621.0 319.2 Net debt /shareholders' equity 41.2% 40.9% 48.9% Net debt /EBITDA 1.3x 1.4x 1.9x
Consolidated net financial debt and ratios are stable compared with December 31, 2010. Current free cash flow generation funded the payout of €90.6 million in dividends on May 11, 2011, in addition to the €0.5 million in dividends paid to minority shareholders of subsidiaries. As on June 30, 2011, Imerys' financial resources total approximately €2.2 billion, with no significant repayment due before the end of 2012.
The rating agency Moody's raised its long-term credit rating for Imerys from "Baa3" to "Baa2" with a stable outlook. In correlation, the short-term rating has been improved from "P-3" to "P-2", also with a stable outlook.
COMMENTARY BY BUSINESS GROUP
Minerals for Ceramics, Refractories, Abrasives & Foundry
(32% of consolidated sales)
1st half 1st half Current Comparable (EUR millions) 2011 2010 change change Sales 601.1 536.6 + 12.0% + 18.1% Current operating income  86.2 67.8 + 27.1% + 33.5% Operating margin 14.3% 12.6% Booked capital expenditure 32.9 20.4 + 61.3% as % of depreciation expense 110% 63%
- Very firm conditions on most of the business group's markets
- Significant growth in current operating income
Demand from industries served by Minerals for Refractories, Fused Minerals and Graphite & Carbon (steelmaking, foundry, aluminum, cement, glass, mobile energy, etc.) was boosted by the upturn in capital expenditure, major equipment and some consumer durables (machine tools, aerospace, automotive, electronics, etc.), which has been observed since 2010. It also benefited from the dynamism in Asia. Minerals for Ceramics markets improved slowly.
The sales of the business group, now under Gilles Michel's supervision, totaled €601.1 million for the first half of 2011, up + 12.0% from the first half of 2010. Analysis of this evolution shows:
- A foreign exchange impact of - €17.4 million (- €23.1 million negative effect of foreign exchange in the second quarter of 2011) ;
- A Group structure effect of - €15.5 million: North American activities (reserves and industrial facilities) for feldspar, mica and high-purity quartz (Minerals for Ceramics) were deconsolidated with retroactive effect as from January 1, 2011 following their contribution to The Quartz Corp. SAS joint venture. This JV, henceforth accounted for under the equity method, would have achieved sales of USD50 million in 2010.
At comparable Group structure and exchange rates, sales increased + 18.1%. The significant rise in volumes, driven by market growth, came with a positive price/mix effect against a backdrop of tension on prices for zircon-based products. Minerals for Ceramics benefited from a broader offering as well as geographic development in emerging countries.
Benefiting from the increase in sales, current operating income is up + €18.4 million including a - €5.3 million foreign exchange impact and a + €1.0 million Group structure effect.
At comparable Group structure and exchange rates, the improvement in product prices and mix reflects in particular the rise in variable costs, mainly raw materials (zircon, etc.). Increase in fixed costs and overheads is related to the rise in demand.
Performance & Filtration Minerals
(17% of consolidated sales)
1st half 1st half Current Comparable (EUR millions) 2011 2010 change change Sales 302.8 300.4 + 0.8% + 4.9% Current operating income  39.1 34.9 + 12.0% + 20.7% Operating margin 12.9% 11.6% Booked capital expenditure 14.9 7.2 + 106.9% as % of depreciation expense 75% 34%
- Positive price/mix effect
- Improvement in operating performance despite a negative foreign exchange impact
The business group's end markets, particularly fast-moving consumer goods (food, health, etc.) and intermediate industries (plastics, rubber, filtration, catalysis, etc.), were firm. Construction market is still contrasted in Europe and remains at historically low levels in the United States.
Sales totaled €302.8 million in the first half of 2011 (+ 0.8%). This increase takes into account an unfavorable foreign exchange impact of - €9.4 million (of which - €12.0 million in the 2nd quarter). Changes in Group structure is limited (- €2.8 million).
At comparable Group structure and exchange rates, sales growth (+ 4.9%) reflects the improvement in the product price/mix, which came with higher volumes and takes into account a negative base effect (strong inventory rebuilding in the first half of 2010).
Current operating income at €39.1 million increased + €4.2 million. This factors in an unfavorable foreign exchange impact of - €2.8 million. At comparable Group structure and exchange rates, the increase was + 20.7%.
Pigments for Paper & Packaging
(22% of consolidated sales)
1st half 1er half Current Comparable (EUR millions) 2011 2010 change change Sales 405.6 356.3 + 13.9% + 5.7% Current operating income  41.0 37.1 + 10.5% - 0.8% Operating margin 10.1% 10.4% Booked capital expenditure 29.3 18.9 + 55.0% as % of depreciation expense 84% 55%
- Stability of global paper production
- Successful integration of PPSA
In the first half of 2011, global production of printing and writing paper was comparable with the first half of 2010,
a period that was however marked by an inventory rebuilding trend. Emerging countries are dynamic (+ 5%).
In that context, sales, at €405.6 million for the first half of 2011, rose + 13.9% compared with the first half of 2010. That change takes into account:
- a Group structure effect of + €31.9 million, corresponding to the acquisition of PPSA, which was consolidated as from August 1, 2010 and has been successfully integrated;
- a foreign exchange impact of - €3.0 million (- €9.2 million in the 2nd quarter).
On a slowly growing market (global production of printing and writing paper up + 1.2%), the business group posted a + 5.7% increase in sales at comparable Group structure and exchange rates. Its geographic development allows it to benefit from the dynamism of emerging countries. The price/mix effect is positive, particularly thanks to the development of the product offering.
Current operating income totaled €41.0 million in the first half of 2011 (+ €3.9 million), taking into account a foreign exchange effect of - €5.1 million. At comparable structure and exchange rates, the business group's operating income was stable.
Materials & Monolithics
(29% of consolidated sales)
1er half 1er half Current Comparable (EUR millions) 2011 2010 change change Sales 525.2 451.4 + 16.4% + 15.9% Current operating income 112.6 92.4 + 21.9% + 21.5% Operating margin 21.4% 20.5% Booked capital expenditure 7.0 3.3 + 112.1% as % of depreciation expense 42% 18%
- Dynamic markets of the business group
- Improvement in operating performance
The single-family housing construction sector grew in France, driven by the improvement in building permits. Housing starts in the first half reflected that upturn with a + 11.5% rise compared with the previous year. The demand was also healthy in renovation (+ 8%). As a matter of fact, after adverse weather conditions that affected the end of 2010, the trade benefited from a catch-up effect towards the start of the period. In that favorable environment, clay roofing products showed a + 17% increase and clay bricks rose + 34% compared with the first half of 2010.
The demand from the steel industry was firm, boosting the Monolithic Refractories activity; in other segments (cement, incineration, petrochemicals, etc.), the trend was also positive. These markets also benefited from a catch-up effect in facility maintenance after a crisis period and from the launch of new plant construction projects.
At €525.2 million, the business group's sales (+ 16.4% from 1st half 2010) take into account a positive exchange rate effect of + €1.2 million and Group structure effect is limited (+ €0.8 million). At comparable Group structure and exchange rates, the rise in turnover (+ 15.9%) reflects vibrant markets and an improved price/mix component.
It should be remembered that the first quarter of 2010 was slack (adverse weather).
Current operating income of the Building Materials & Monolithic Refractories business group is €112.6 million, (+ €20.2 million compared with the first half of 2010). Group structure and foreign exchange effects are negligible (+ €0.3 million). At comparable Group structure and exchange rates, the price/mix effect covers the rise in variable costs (mainly inflation in refractory raw materials), while the rise in fixed production costs was in line with the upturn in volumes.
Availability of information
This press release is available from the Group's website http://www.imerys.com, with access via the homepage in the "Press releases" section.
Imerys is holding a conference call today at 11:00 am (Paris time), during which the first half of 2011 results will be commented on. The conference call will be webcast live on the Group's website http://www.imerys.com.
Financial communication agenda
- 3rd quarter 2011 results: November 3.
This date is given for guidance only and may be updated on the Group's website at http://www.imerys.com in the section Investors & Analysts / Financial Agenda.
The world leader in adding value to minerals, Imerys is active in 47 countries through more than 240 industrial and commercial sites.
The Group achieved more than €3.3billion in sales in 2010. Imerys develops solutions that improve its customers' product performance and manufacturing efficiency, thanks to minerals it mines and processes from reserves with rare qualities. The Group's products have a great many applications in everyday life, including construction, personal care, paper, paint, plastic, ceramics, telecommunications, beverage,filtration, etc.
More comprehensive information about Imerys may be obtained from its Internet website (http://www.imerys.com) under Regulated Information, particularly in its Registration Document filed with Autorité des marchés financiers on March 31, 2011 under number D.11-0205 (also available from the Autorité des marchés financiers website, http://www.amf-france.org). Imerys draws the attention of investors to chapter 4, "Risk Factors", of its Registration Document.
Warning on projections and forward-looking statements: This document contains projections and other forward-looking statements. Investors are cautioned 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.
1. At comparable Group structure and exchange rates.
2. Non-audited quarterly data.
3.Operating income before other revenue and expenses.
4. Non-audited quarterly data.
5. At comparable Group structure and exchange rates.
6. Group share of net income before other operating revenue and expenses, net.
7. Factoring contract signed on July 23, 2009, under which the transferred receivables were deconsolidated in this way, with the related risks and benefits transferred to the factoring bank. €71 million in receivables was factored as on December 31, 2010.
8. EBITDA on 12 rolling months
9. "Senior unsecured debt".
10. At comparable structure and exchange rates.
11. Operating income before other operating revenue and expenses
12. At comparable structure and exchange rates.
13. Operating income before other operating revenue and expenses
14. Divestment in late 2010 of the Gouverneur (Pennsylvania, USA) site, specialized in gardening products, and Performance Minerals in Argentina.
15. At comparable structure and exchange rates.
16. Operating income before other operating revenue and expenses
17. Source: French Ministry of Ecology, Sustainable Development, Transports and Housing, New single-family housing starts.
18. Source: French roof tiles & bricks federation - provisional data.
FIRST HALF 2011 RESULTS
- Consolidated sales breakdown
% % % Group Exchange % current structure rate comparable Change in consolidated sales change effect effect change Imerys Group + 11.4% + 0.9% - 1.7% + 12.2%
Quarterly change at comparable Group structure and exchange rates 2011 vs. 2010 Q1 2011 Q2 2011 + 13.7% +10.8% 2010 vs. 2009 (reminder) Q1 2010 Q2 2010 Q3 2010 Q4 2010 + 9.5% + 22.7% + 16.7% + 11.1%
1st 1st Current Group Exchange Comparable (non-audited, EUR quarter quarter change structure rate change millions) 2011 2010 % effect % effect % % Sales, of which: 882.7 751.6 + 17.4% + 1.3% + 2.4% + 13.7% Minerals for Ceramics, Refractories, Abrasives & Foundry 284.9 244.6 + 16.5% - 2.6% + 2.4% + 16.7% Performance & Filtration Minerals 148.6 137.6 + 8.0% - 0.9% + 1.9% + 7.0% Pigments for Paper & Packaging 203.5 167.4 + 21.5% + 9.8% + 3.7% + 8.0% Materials & Monolithics 258.0 212.1 + 21.7% + 0.3% + 1.9% + 19.5% Holding company & eliminations (12.3) (10.1) n.s. n.s. n.s. n.s.
2nd 2nd Current Group Exchange Comparable (non-audited, EUR quarter quarter change structure rate change millions) 2011 2010 % effect % effect % % Sales, of which: 924.7 871.4 + 6.1% + 0.6% - 5.3% + 10.8% Minerals for Ceramics, Refractories, Abrasives & Foundry 316.1 292.0 + 8.2% - 3.1% - 8.0% + 19.3% Performance & Filtration Minerals 154.2 162.8 - 5.3% - 1.0% - 7.3% + 3.0% Pigments for Paper & Packaging 202.1 188.9 + 7.1% + 8.2% - 4.9% + 3.8% Materials & Monolithics 267.2 239.3 + 11.7% + 0.1% - 1.1% + 12.7% Holding company & eliminations (14.9) (11.6) n.s. n.s. n.s. n.s.
Exchange 1st 1st Current Group rate Comparable (non-audited, EUR half half change structure effect change millions) 2011 2010 % effect % % % Sales, of which: 1,807.3 1,623.0 + 11.4% + 0.9% - 1.7% + 12.2% Minerals for Ceramics, Refractories, Abrasives & Foundry 601.1 536.6 + 12.0% - 2.9% - 3.2% + 18.1% Performance & Filtration Minerals 302.8 300.4 + 0.8% - 0.9% - 3.2% + 4.9% Pigments for Paper & Packaging 405.6 356.3 + 13.9% + 9.0% - 0.8% + 5.7% Materials & Monolithics 525.2 451.4 + 16.4% + 0.2% + 0.3% + 15.9% Holding company & eliminations (27.4) (21.7) n.s. n.s. n.s. n.s.
Sales by business group H1 2011 H1 2010 Minerals for Ceramics, Refractories, Abrasives & Foundry 32% 32% Performance & Filtration Minerals 17% 18% Pigments for Paper & Packaging 22% 22% Materials & Monolithics 29% 28% Total 100% 100%
(1) Change at comparable Group structure and exchange rates.
2. Key figures
In 2011, the Group performs a change in accounting method related to the recognition of employee benefits. From
January 1, 2011, Imerys applies the SoRIE method (Statement of Recognised Income and Expense) and from now on records in provision the entirety of the actuarial differences generated at each closing by the defined benefit obligations and their financing assets against the Group equity. 2010 comparative information has been restated.
This method improves the view over the Group's obligations and makes its accounting principles evolve consistently with the choices of the IASB and the majority of the significant issuers listed on NYSE Euronext Paris Stock Exchange.
2010 2010 (EUR millions) published Adjustment restated IMPACT ON CONSOLIDATED INCOME STATEMENT Revenue 3,346.7 3,346.7 Current operating income 419.0 2.5 421.5 Current financial expense (74.7) (74.7) Current income tax (99.5) (0.9) (100.4) Minorities (4.5) 0.1 (4.4) Net income from current operations 240.3 1.7 242.0 Other revenue & expenses, net 0.5 1.2 1.7 Net income 240.8 2.9 243.7 IMPACT ON CONSOLIDATED STATEMENT OF FINANCIAL POSITION Assets Other financial assets 33.7 (12.6) 21.1 Differed tax assets 45.5 23.2 68.7 Liabilities Equity (including net income) 2,196.4 (64.6) 2,131.8 Provisions for employee benefits 94.7 75.2 169.9
(non-audited, EUR Q2 2010 Q2 2010 millions) Q2 2011 (restated) Change (published) Sales 924.7 871.4 + 6.1% 871.4 Current operating income 136.4 124.5 + 9.6% 123.2 Current financial income (15.5) (12.3) (12.3) Current taxes (34.8) (33.3) (32.8) Minority interests (0.8) (1.0) (1.1) Net income from current operations 85.3 77.9 + 9.5% 77.0 Other operating revenue and expenses, net (1.4) (2.8) (2.8) Net income 83.8 75.1 + 11.6% 74.2
(1) Operating income before other operating revenue and expenses.
(2) Group's share.
(3) A foreign exchange gain of + €10.2 million realized in the 1st half of 2010 as a consequence of a restructuring of financings of businesses in US Dollar presents a non-recurring and significant character. This foreign exchange gain has been classified in "Other net operating revenue and expenses, Group share" (that measures the recurring performance of the Group) so as to stress its non-recurring and significant character. The current financial income (loss) included in the "Net income from current operations, Group share" thus amounts
to - €32.2 million in the 1st half 2010.
H1 2010 H1 2010 (EUR millions) H1 2011 (restated) Change (published) Sales 1,807.3 1,623.0 + 11.4% 1,623.0 Current operating income 252.9 209.3 + 20.8% 207.3 Current financial income (30.3) (32.2) (32.2) Current taxes (63.9) (51.5) (50.8) Minority interests (1.7) (2.2) (2.3) Net income from current operations 157.0 123.4 + 27.2% 122.0 Other operating revenue and expenses, net (2.1) (2.9) (2.9) Net income 154.9 120.5 + 28.5% 119.1
(1) Operating income before other operating revenue and expenses.
(2) A foreign exchange gain of + €10.2 million realized in the 1st half of 2010 as a consequence of a restructuring of financings of businesses in US Dollar presents a non-recurring and significant character. This foreign exchange gain has been classified in "Other net operating revenue and expenses, Group share" (that measures the recurring performance of the Group) so as to stress its non-recurring and significant character. The current financial income (loss) included in the "Net income from current operations, Group share" thus amounts to - €32.2 million in the 1st half 2010.
(3) Group's share.
APPENDIX Imerys - Summary financial statements to June 30, 2011
CONSOLIDATED INCOME STATEMENT
(EUR millions) 06.30.2011 06.30.2010 2010 Revenue 1,807.3 1,623.0 3,346.7 Current revenue and expenses (1,554.4) (1,413.7) (2,925.2) Raw materials and consumables used (642.2) (571.5) (1,178.6) External expenses (451.5) (396.3) (849.5) Staff expenses (334.1) (310.7) (633.1) Taxes and duties (23.1) (21.7) (41.6) Amortization, depreciation and impairment losses (102.1) (107.3) (213.0) Other current revenue and expenses (5.1) (7.3) (15.1) Share in net income of associates 3.7 1.1 5.7 Current operating income 252.9 209.3 421.5 Other operating revenue and expenses (2.1) (12.7) (10.8) Gain or loss from obtaining or losing control 5.8 (1.1) 40.8 Other non-recurring items (7.9) (11.6) (51.6) Operating income 250.8 196.6 410.7 Net financial debt expense (28.9) (29.2) (57.3) Income from securities 1.2 1.2 2.7 Gross financial debt expense (30.1) (30.4) (60.0) Other financial revenue and expenses (1.4) 7.2 (7.2) Other financial revenue 98.5 82.2 212.1 Other financial expenses (99.9) (75.0) (219.3) Financial income (loss) (30.3) (22.0) (64.5) Income taxes (63.9) (51.9) (98.1) Net income 156.6 122.7 248.1 Net income, Group share[2 & 3] 154.9 120.5 243.7 Net income, share of non-controlling interests 1.7 2.2 4.4 (1) After voluntary change in accounting method on the recognition of actuarial differences of post-employment employee benefits (see appendix 2 of the present press release). (2) Net income per share Basic net income per share (in EUR) 2.06 1.60 3.23 Diluted net income per share (in EUR) 2.04 1.59 3.23 (3) Net income from current operations, Group share 157.0 123.4 242.0 Basic net income from current operations per share (in EUR) 2.08 1.64 3.21 Diluted net income from current operations per share (in EUR) 2.07 1.63 3.20 Other net operating revenue and expenses, Group share (2.1) (2.9) 1.7
Imerys - Summary financial statements to June 30, 2011
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(EUR millions) 06.30.2011 06.30.2010 2010 01.01.2010 Non-current assets 2,815.6 2,973.0 2,947.5 2,752.9 Goodwill 916.6 977.6 950.4 897.5 Intangible assets 33.6 43.3 34.6 43.8 Mining assets 435.3 414.5 453.5 377.2 Property plant and equipment 1,204.0 1,287.0 1,287.6 1,224.1 Investments in associates 75.0 53.6 54.4 50.0 Available-for-sale financial assets 4.7 7.0 7.4 7.5 Other financial assets 19.1 16.3 21.1 16.1 Other receivables 49.6 49.5 45.0 43.7 Derivative financial assets 19.8 29.0 24.8 17.6 Deferred tax assets 57.9 95.2 68.7 75.4 Current assets 1,732.2 1,446.7 1,489.9 1,190.8 Inventories 556.2 516.1 545.1 440.5 Trade receivables 503.7 500.0 446.5 364.4 Other receivables 156.2 139.6 128.0 110.7 Derivative financial assets 12.0 5.0 12.2 5.0 Marketable securities and other financial assets 7.1 6.9 6.0 5.6 Cash and cash equivalents 497.0 279.1 352.1 264.6 Consolidated assets 4,547.8 4,419.7 4,437.4 3,943.7 Equity, Group share 2,092.8 1,998.4 2,105.0 1,784.0 Capital 151.3 151.1 151.0 150.8 Premiums 343.0 342.4 338.4 339.4 Reserves 1,443.6 1,384.4 1,371.9 1,252.5 Net income, Group share 154.9 120.5 243.7 41.3 Equity, share of non-controlling interests 25.8 25.5 26.8 18.8 Equity 2,118.6 2,023.9 2,131.8 1,802.8 Non-current liabilities 1,411.3 1,559.2 1,483.6 1,454.3 Provisions for employee benefits 127.5 252.8 169.9 169.3 Other provisions 187.1 183.2 189.6 157.7 Loans and financial debts 998.3 1,033.3 1,016.8 1,037.7 Other debts 8.3 10.2 10.2 9.5 Derivative financial liabilities 10.0 20.0 15.3 16.5 Deferred tax liabilities 80.1 59.7 81.8 63.6 Current liabilities 1,017.9 836.6 822.0 686.6 Other provisions 15.3 17.1 14.4 18.6 Trade payables 351.9 328.1 317.1 260.7 Income taxes payable 44.7 18.7 25.1 20.6 Other debts 216.6 219.0 239.8 185.7 Derivative financial liabilities 1.9 2.3 1.4 2.9 Loans and financial debts 381.0 246.1 219.5 186.0 Bank overdrafts 6.5 5.3 4.7 12.1 Consolidated equity and liabilities 4,547.8 4,419.7 4,437.4 3,943.7
(1) After voluntary change in accounting method on the recognition of actuarial differences of post-employment employee benefits(see appendix 2 of the present press release).
Imerys - Summary financial statements to June 30, 2010
CONSOLIDATED STATEMENT OF CASH FLOW
(EUR millions) 06.30.2011 06.30.2010 2010 Cash flow from operating activities 158.7 139.6 406.4 Cash flow generated by current operations 268.4 228.4 567.4 Interests paid (42.8) (48.5) (62.7) Income taxes on current operating income and financial income (loss) (58.2) (34.9) (82.6) Dividends received from available-for-sale financial assets 0.1 0.1 0.1 Cash flow generated by other operating revenue and expenses (8.8) (5.5) (15.8) Cash flow from investing activities (91.2) (50.5) (210.2) Acquisitions of intangible assets and property, plant and equipment (99.2) (56.4) (154.9) Acquisitions of investments in consolidated entities after deduction of cash acquired (22.2) 0.3 (69.2) Acquisitions of available-for-sale financial assets (1.2) - 0.4 Disposals of intangible assets and property, plant and equipment 4.1 3.1 8.6 Disposals of investments in consolidated entities after deduction of cash disposed of 25.5 0.8 1.8 Disposals of available-for-sale financial assets 0.9 - - Net change in financial assets 0.1 0.7 1.0 Paid-in interests 0.8 1.0 2.1 Cash flow from financing activities 85.0 (88.5) (118.0) Capital increases 4.9 4.8 8.5 Capital decreases - - (7.1) Disposals (acquisitions) of treasury shares (14.0) (5.1) (5.9) Dividends paid to shareholders (90.6) (75.5) (75.5) Dividends paid to non-controlling interests (0.5) (0.5) (0.8) Loan issues 96.9 77.2 67.0 Loan repayments (14.1) (18.2) (32.0) Net change in other debts 102.4 (71.2) (72.2) Change in cash and cash equivalents 152.5 0.6 78.2
Analyst/Investor Relations Press Contacts: Pascale Arnaud Pascale Arnaud +33(0)1-49-55-63-91 +33(0)1-49-55-63-91 firstname.lastname@example.org Matthieu Roquet-Montégon +33(0)616-92-80-65
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