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Presentation Cookson Powered By Docstoc
					            Dennis Millard
          Group Finance Director



Preliminary Results 2001
Group - Continuing Operations

                                         2001   Growth vs 2000
                                        Actual Reported  Organic


    Sales                                £2,012m         -17%          -24%



    Operating Profit*                     £56.5m         -76%          -77%



    Return on Sales*                          2.8%      2000 : 10.0%


*(Before goodwill amortisation and exceptional items)
Electronics
% of Continuing
  Group Sales
                   2001   Growth vs 2000
  43%             Actual Reported  Organic



   Sales          £856m    -35%      -38%
    Electronics
    Quarterly Sales*
£ million
    350

    300

    250

    200

    150

    100

             Q1      Q2          Q3   Q4   Q1   Q2          Q3   Q4
                          2000                       2001
     *(At constant exchange rates)
Electronics: Sales by Sector


                              2001     Growth vs 2000
                             Actual         Reported


 Sales                        £856m          -35%


 PWB Materials & Chemistry     £456m         -31%


 Assembly Materials            £273m         -21%


 Equipment                     £127m         -58%
Electronics


                                 2001   Growth vs 2000
                                Actual Reported  Organic


 Sales                            £856m           -35%         -38%



 Operating Loss*                 £14.3m         -111%         -110%



 Return on Sales*                (1.7)%        2000 : 10.3%

*(Before goodwill amortisation and exceptional items)
Ceramics
% of Continuing
  Group Sales

          36%      2001   Growth vs 2000
                  Actual Reported  Organic


  Sales            £731m      -1%       -4%
Ceramics: Sales by Sector


                   2001     Growth vs 2000
                  Actual         Reported


 Sales             £731m          -1%

 Iron and Steel     £478m          -6%


 Foundry and IP     £172m          7%


 Glass               £81m          18%
Ceramics


                                 2001   Growth vs 2000
                                Actual Reported  Organic


 Sales                            £731m            -1%        -4%



 Operating Profit*               £40.5m           -41%       -42%



 Return on Sales*                   5.5%       2000 : 9.3%

*(Before goodwill amortisation and exceptional items)
Precious Metals
% of Continuing
  Group Sales

                                   2001   Growth vs 2000
         21%                      Actual Reported  Organic


 Sales                             £425m            +17%   -13%




  *(Before goodwill amortisation and exceptional items)
Precious Metals: Sales by Sector


                      2001    Growth vs 2000
                     Actual        Reported


Sales                £425m          +17%


Jewellery Products    £346m         +30%




Precision Products     £79m         -18%
Precious Metals


                                 2001   Growth vs 2000
                                Actual Reported  Organic


Sales                            £425m            +17%        -13%



Operating Profit*               £30.3m            -18%        -26%



Return on Sales*                   7.1%        2000 : 10.2%

*(Before goodwill amortisation and exceptional items)
Geographic Sales Contributions (%)
                           2000      2001
          ROW              5%         6%
 Asia-Pacific              13%       14%

           UK              11%       11%

  Continental              20%       26%
       Europe



                           51%       43%
          USA




*(Continuing operations)
Geographic Analysis
                     Sales and Operating Profit*
                                    Sales            Operating Profit (£m)
                                vs 2000 (%)           £m       vs 2000
                                                                (£m)
USA                                  -28%            (9)         (125)
UK                                   -24%            (4)           (8)
Continental Europe                     +8%            22          (25)
Asia-Pacific                         -13%             37          (22)
ROW                                    +5%            11           (4)
Continuing operations                -17%             57         (184)



 *(Continuing operations; operating profit before goodwill)
 Group Operating Profit*
                                                       £ million
                                               2001                Inc/(Dec)
                                                                    vs 2000
CONTINUING OPERATIONS                          57                   (184)
  Electronics                                 (14)                  (149)
  Ceramics                                     41                    (28)
  Precious Metals                              30                     (7)

DISCONTINUED OPERATIONS
  2001 Mouldings, Premier Chemicals              2                    (4)
  2000 Telecommunication Products                -                    (6)


GROUP 59                                     (194)


* (Before goodwill amortisation & exceptional items)
 Group Profit Before Tax*

                                           £ million
                                         2001     Inc/(Dec)
                                                   vs 2000
   OPERATING PROFIT                      59            (194)
                                                               Lower rates
   Less   : Interest                    (52)              3
                                                               Current avg. c.6%
   PROFIT BEFORE TAX                      7            (191)




* (Before goodwill amortisation & exceptional items)
  Group Profit Before Tax*

£ million
     120
                                106
     100       92

      80

      60

      40                                               31
      20
                                                                   (24)
       0

     -20
               H1                H2                H1               H2
                      2000                                  2001

* (Before goodwill amortisation & exceptional items)
 Group Profit Before & After Tax*

                                           £ million
                                         2001     Inc/(Dec)
                                                   vs 2000
   OPERATING PROFIT                      59            (194)

   - Interest                           (52)              3

   PROFIT BEFORE TAX                      7            (191)
   - Taxation                             -              51
   - Minorities                          (2)              -

   PROFIT FOR PERIOD                      5            (140)



* (Before goodwill amortisation & exceptional items)
 Earnings and Dividends per Share


                                         2001          2000
 EARNINGS PER SHARE
      Headline*                            0.7p        20.1p
      Basic                            (14.9)p         10.5p


 DIVIDEND                                 4.5p         10.0p
      Interim                              4.5p         4.5p
      Final                                  -          5.5p


* (Before goodwill amortisation & exceptional items)
 Operating Exceptionals

                                      £ million                   £ million
                                     P & L Charge                Cash Outflow
                              2000      2001   2002 (E)   2000       2001   2002 (E)
CASH RELATED
 2001 Rationalisation &
 Redundancy Programme                    20         15                16        19
 Acquisition Integrations
 - Premier*                   24                          17          13         6
 - Enthone                    11                           4           3         4

                              35         20         15    21          32        29
 NON-CASH                      3         11

 TOTAL                        38         31         15


* (1999: £12m P & L charge)
 Non-Operating Exceptionals - 2001

                                                       £ million

 Loss on Business Disposals*                                 (59)

 - Profit before goodwill                                      4
 - Goodwill written back                                     (63)

 Net gain on disposal of fixed                                13
  assets
                                                             (46)



* (Mouldings; Premier Chemicals; prior period adjustments)
 Accounting Standards

                                    £ million
                                 Surplus/(Deficit
                                         )
 FRS 17
 - Pension                             (21)

 FRS 19
 - Deferred Tax                         50*


 Net increase in Shareholders’          29
 Funds


* (Current estimate)
 Operating Cash Flow

                                                       £ million
                                      Inflows/(Outflows Surplus/(Deficit)
                                              )              vs 2000
                                            2001
 EBITDA*                                        124                 (186)
 Capital Expenditure (net)                      (34)                    54
 - Capital Expenditure (gross)                  (68)                    23
 - Asset Disposals                               34                     31
 Rationalisation/Other                          (33)                   (4)
 Working Capital                                 69                     71
 OPERATING CASH FLOW                            126                    (65
                                                                   )
                                                   • Lower trading levels
                                                   • Significant
* (EBITDA from subcos and dividends from JVs)        inventory
                                                     reduction: £95m
Free Cash Flow

                                              £ million
                                 Inflows/(OutflowsSurplus/(Deficit)
                                         )             vs 2000
OPERATING CASH FLOW                    2001
                                        126              (65)
Interest                               (31)               20
- normal                               (59)               (8)
- swap proceeds                         28                28
Taxation                               (22)               12
FREE CASH FLOW - before dividend        73                (33)
Dividends (2000 Final and 2001         (72)                (2)
Interim)
                                         1                (35)
NET FREE CASH FLOW
Net Cash Flow - 2001

                                          £ million
                                             2001
FREE CASH FLOW – NET                          1
Disposals                                    60
-Mouldings                                   35
-Premier Chemicals / Others                  25

Acquisitions (incl. prior period costs)     (25)

NET CASH INFLOW                              36
Borrowings and Ratios

                         31 December   31 December
                             2001          2000

NET DEBT                  £750m          £794m
- Gross borrowings         773            834
- Cash                     (23)           (40)

RATIOS
EBITDA: Interest         2.3 times     5.7 times
Net Borrowings: EBITDA   6.1 times     2.5 times
Leverage                    47%           46%
 Gross Borrowings & Facilities
                     31 December 2001
                  £969m
     Other &                                       £196m
 uncommitted                                       Unutilised
                                        £773m

   Syndicated
bank facility


  Convertibl
           e


        USPP
       notes

                Facilities      Gross Borrowings
  Committed Borrowing Facilities
                    31 December 2001

£ million
     600

     500       Average:
               5.0 years
     400                        380             373

     300

     200               150

     100
             Nil                        17
       0
            0 - 1     1 - 2    2 - 3   3 - 5     >5
            Year      Years    Years   Years   Years
 Free Cash Flow - 7 Year History

£ million
  1,000       927         347


                                     580         431




                                                             149


      0
               Net       Tax and     Free      Dividends    Net Free
            Operating   Interest   Cash Flow               Cash Flow
            Cash Flow               before                   after
                                   Dividends               Dividends
Free Cash Flow - 7 Year History
       £ million
 120

 100
                                                          Avg. £83m
  80

  60

  40

  20

   0
        1995       1996   1997   1998       1999   2000    2001

       Before Dividend     After Dividend
Summary
Group sales & profits fall sharply
  - Electronics: all sectors
  - Ceramics: Iron & Steel
  - US activities
Strong cash flow
  -   Despite sharp fall in profits
  -   Significant working capital inflows
  -   Positive net free cash flow for 7th year in succession
  -   Free cash flow before dividends of £73m
Dividend
  - Final 2001 passed
  - No current intention to pay 2002 interim
Borrowing facilities in place
            Stephen Howard
           Group Chief Executive



Preliminary Results 2001
Agenda


Summary of 2001, and Cookson's response

Recent investment - what it has delivered

Cookson today

2002 outlook & current trading

2002 priorities
Summary of 2001
                Unique confluence of negative
                factors
   Unprecedented downturn in global Electronics market


   Harsh conditions in steel industry, in US and
    UK in particular


   Precious Metals trading challenging; key Christmas
    period impacted by after-effects of 11 September


   Stark short term impact on profitability
Cookson's Response
                  Managing in a downturn

   Swift & decisive action to reduce costs and lower
    break-even points

   Intense focus on conserving and generating cash:
    - Capex minimised
    - Tight working capital management
    - Business, asset and property disposals

   Opportunities seized to strengthen businesses

   Bank facilities renegotiated
Cookson’s Response
               Reducing costs and lowering break-even
               points

   Total reduction of 3,700 people

   Represents 18% of workforce

   20 plants closed / mothballed

   Total annualised cost reduction: £90m

   Benefit in 2001: circa £40m

   One-time cash cost in 2001: £35m
Cookson’s Response
                  Opportunities seized to strengthen
                  businesses

   Continued focus on future growth engines:
    - Increased Electronics capacity in Asia-Pacific
    - Increased capacity in emerging steel markets
    - Building our capabilities in semiconductor packaging
    - Investment in early stage technologies in all three divisions

   R & D spend maintained in 2001

   Retaining focus on customer service and on
    increasing share of customer's business

   Leverage market and technology leadership positions
Agenda


Summary of 2001, and Cookson's response

Recent investment - what it has delivered

Cookson today

2002 outlook & current trading

2002 priorities
Recent Investment
                 What it has delivered

                 Geog. profile   Product / service   Cost efficiencies
                  enhanced        line extension        achieved
Enthone OMI

Premier

ACHEM

Plaskon

Engelhard CLAL

Ongoing capex
Enthone Benefits

   PWB Assembly:                 PWB Fabrication:
        Alpha                        Polyclad
       Enthone                        Enthone
      Speedline

                     Cookson
                   Electronics
   Semiconductor                 Semi-wafer fab /
     packaging                        Copper
      Plaskon                         Enthone
       Alpha
      Enthone
Electronics:        Geographic shift to Asia Pacific



   Enthone & ACHEM have delivered excellent capacity
    platform in Asia-Pacific and China

   Shift is driven by customer demand
    - Viasystems closing US capacity and opening
      in China
    - AT&S, Flextronics / Multek, Sanmina, Ruwel all
      expanding capacity in Asia-Pacific

   Laminates already being shipped from ACHEM
    facilities to satisfy US demand
Premier Benefits


   Ability to offer complete packages and expanded
    technologies in all three areas: Steel, Glass and
    Foundry


   Economies of scale and synergistic savings


   Stronger position in USA, Continental Europe and UK
Ceramics:      Geographic Shift to Emerging Markets



   Capacity in place in Central & Eastern Europe,
    China, India and South America


   Shift to continuous cast in
    these regions far from complete:
    - Czech
    - Poland
    - China
    - India
    - Russia
Agenda


Summary of 2001, and Cookson's response

Recent investment - what it has delivered

Cookson today

2002 outlook & current trading

2002 priorities
Cookson Today: Electronics

   A horizontally integrated, global and
    technological leader

   Enthone has strengthened the business
    beyond Chemistry

   Competitive position strengthened during downturn;
    benefiting from instability amongst weaker players

   Structured to benefit from Asia-Pacific growth:
    "The Future“

   Electronics remains strong growth industry
The Alliance


   Alliance between Cookson Electronics Speedline
    and Assembléon (Philips)

   Merges Assembléon’s pick-and-place expertise
    with Cookson’s strength in equipment, systems
    and processes

   Launched at Productronica and Apex trade shows

   Delivers complete assembly line solutions,
    including proprietary software
Cookson Today: Ceramics

   Unique positioning: The stable long term
    refractories partner

   Benefiting from instability amongst weaker players

   Competitive positioning enhanced by Premier
    acquisition: both product / service offering and
    cost

   Capacity in place to exploit Steel industry’s shift
    to emerging market production

   Focused on the growth technologies of
    the present and future
Cookson Today: Precious Metals

   Strong profitable business in Jewellery Products


   Significant benefits of recent European
    restructuring


   Solid niche player in Precision Products


   Strong cash generative characteristic remains
Agenda


Summary of 2001, and Cookson's response

Recent investment - what it has delivered

Cookson today

2002 outlook & current trading

2002 priorities
Current Trading: Q1 2002
“Trading conditions in Cookson’s major markets
 generally appeared to stabilise in the fourth
 quarter”                           15th January 2002

   Recent weekly Electronics activity in line
    with 2001 Q4

   US steel production currently ahead of 2001 Q4

   Precious Metals in line with seasonal
    and industry trends
US Raw Steel Production
                           In thousands of short tons per week

2,000


1,800

1,600

1,400

1,200


    0
        Jan   Feb   Mar   Apr   May   June   Aug   Sept   Oct   Nov   Dec    Jan

         2001                                                               2002
Current Trading: Q1 2002
“Trading conditions in Cookson’s major markets
 generally appeared to stabilise in the fourth
 quarter”                           15th January 2002

   Recent weekly Electronics activity in line
    with 2001 Q4

   US steel production currently ahead of 2001 Q4

   Precious Metals in line with seasonal
    and industry trends
2002 Priorities


   Focus on generating returns from existing businesses


   Emphasis on increasing share of customer, through
    high service levels and technological leadership


   Leverage strategic benefit of recent investment,
    as markets pick up


   Cash generation; strengthen balance sheet
Summary
   Cookson has:
    - Market and technology leadership positions
    - Integrated, global product offerings
    - Focused, responsive management teams

   Current market conditions are cyclical, not structural

   Full benefits of recent investment ready to show through

   Significant permanent reduction in cost base

   Recent refinancing provides greater stability and
    flexibility

   Some evidence of stabilisation in our markets

   Better business than a year ago
Preliminary Results 2001
    26th February 2002

				
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