Centocinquanta Investor Presentation

Transcription

1 Centocinquanta Investor Presentation Giovanni Maggiora, C.F.O. CA CIB Global High Yield Conference London, 20 March 2014 Italcementi Group

2 Agenda Opening Remarks Centocinquanta Project 2013 Results 2014 Outlook and Actions Closing Remarks Italcementi Group CA CIB Global High Yield Conference 20 March

3 After closing a 2013 with clear signs of tangible results from our restructuring efforts In a still adverse volume environment (Europe, EENAME) -6% cement & clinker volumes % chg revenues are supported by positive pricing -2.2% like for like conso. revenues % chg while reinforced restructuring actions 140M cost savings +30M vs. original target drive underlying EBITDA improvement +55M rec. EBITDA chg ex CO2 & FX Cash control delivers positive results +59M chg in NFP vs maintaining leverage stable vs. prior year 3.1x net debt / rec. EBITDA Italcementi Group CA CIB Global High Yield Conference 20 March

4 we are now turning the page and addressing our capital structure to obtain even stronger base for the future Streamline holding structure From 2 listed holding companies to 1 Simplified governance Concentrate equity base Provide attractive options to other equity holders Preserve financial flexibility From 3 classes of traded shares to 1 Greater liquidity Conversion at premium for Savings Shares holders Cash exit at premium for Ciments Français shareholders Equity increase to fund cash out No overall impact on net debt Italcementi Group CA CIB Global High Yield Conference 20 March

5 Agenda Opening Remarks Centocinquanta Project 2013 Results 2014 Outlook and Actions Closing Remarks Italcementi Group CA CIB Global High Yield Conference 20 March

6 The three transactions in detail Savings Shares Mandatory Conversion 0.65 Ordinary Shares per each Savings Share 19% premium on implied ratio as per March 5 closing prices, 21% and 20% on the 3- and 12-months averages Subject to special savings shareholders meeting (approval threshold: 20% of holders) and <30 M withdrawal right If no mandatory conversion, Italcementi plans to propose voluntary conversion Capital Increase Rights Issue for up to 450 million proceeds earmarked to Offered to all Italcementi SpA shareholders. Final terms to be defined Italmobiliare intends to subscribe on pro-rata basis Remainder of transaction guaranteed by bank consortium led by Mediobanca / UniCredit Ciments Français Minorities Buy-Out Voluntary Tender Offer at 78 per share cum-dividend payable in May ( 1.50) 19% premium on March 5 closing price, 31% and 57% on the 3- and 12-months averages Squeeze-out and delisting foreseen upon reaching 95% ownership threshold Italcementi Group CA CIB Golbal High Yield Conference 20 March

7 Greater clarity and single-issue, larger float basis Current Structure Target Structure Italmobiliare Italmobiliare Ord.: 61.7% (1) Sav.: 2.9% (2) Ord.: 45.0% Italcementi Mkt.Cap. Ord. (1) 1,481 M Mkt. Cap. Sav. (2) 489 M 38.4% (1) 97.1% (2) Ordinary Shares Float 568 M Savings Shares Float 475 M Italcementi Mkt.Cap M* 55.0% Float 1331 M 2.8% (3) 84.0% (3) 65 M Ciments Français Market cap: 2,327 M 13.3% (3) Float 310 M 100% Ciments Français (1) As per March 5 closing price. Net of treasury shares (n. 3,793,029) (*) based on current market cap + capital increase (2) As per March 5 closing price. Net of treasury shares (n. 105,500) (3) As per March 5 closing price. Net of treasury shares (n. 350,187) (4) Pro forma figures after transaction assume (i) no withdrawal right by ITC savings shareholders, (ii) CF delisting achieved and (iii) full subscription of ITC shareholders in the Capital Increase. Reported shareholdings are net of 3.8m ITC Ord treasury shares, assuming a conversion ratio of 0.65x Italcementi Group CA CIB Golbal High Yield Conference 20 March

8 Transaction rationale: deliver value to all stakeholders Industrial Rationale Final step in longstanding ITC/CF integration process Significantly reduce governance complexity Reduce associated overhead costs Further increase equity exposure to international operations Create stronger potential currency for future growth initiatives Equity Holders Benefits Focus equity structure, one share / one vote Streamline equity story and value analysis re-rating opportunity Materially increase liquidity of traded shares Gain greater weight on SE indexes Provide exit/conversion premium for CF and ITC Savings holders of illiquid stocks Debt Holders Benefits Ensure net debt levels unchanged after cash offer for CF minorities Eliminate cash flow leakage to CF minorities improves credit ratios analysis Align equity structure with centralized debt issuance strategy initiated in 2010 Enhance flexibility of cash pooling management Italcementi Group CA CIB Global High Yield Conference 20 March

9 Agenda Opening Remarks Centocinquanta Project 2013 Results 2014 Outlook and Actions Closing Remarks Italcementi Group CA CIB Global High Yield Conference 20 March

10 YTD 2013 key results Volume decline, but positive pricing. Back to positive EBIT after strong negative impact from impairments in Net results still affected by non recurring items. Small decrease in cash flow due to lower reduction in WC, but NFP improves Cement and clinker volumes (mt) % -6.0% M Revenue 4, % -2.2% Recurring Ebitda M +16M FY 2013 Chg vs. 12 Recurring Ebitda margin on revenues 14.9% +0.5p.p Chg vs. 12 LFL EBIT M Of which Profit (loss) for the period M -61M Profit (loss) to owners of the parent M non recurring DPS Ordinary DPS Savings M ex. CO 2 and FX effects Cash Flow from operating activities M M Chg vs. Dec. '12 Net Financial Position -1, M Like-for-like: both scope and FX effects excluded Italcementi Group CA CIB Global High Yield Conference 20 March

11 Sales volumes by business FY cement volumes affected by strong decline in Egypt (mainly due to fuel shortage) and Italy. Asia positive (especially Thailand); NA slightly better with a weak Q4 Cement and Clinker (mt) by quarter (*) % (*) 43.1 Trading Cement and Clinker (mt) by Area 45.9 (*) % 43.1 (*) Asia EENAME NA Aggregates (mt) % Q % 10.5 Asia % CWE -4.3% Q3 Q % -4.9% EENAME NA % +1.5% Asia EENAME NA FY 2012 FY 2013 Ready-mix (mm3) % +37.2% Q1-9.6% CWE % 14.5 CWE % 8.0 FY 2012 FY 2013 FY 2012 FY 2013 FY 2012 FY 2013 (*) Including eliminations for 2.3mt in 2013 and 3.0mt in 2012 Italcementi Group CA CIB Global High Yield Conference 20 March

12 Revenues LfL growth in all areas except CWE, with positive price environment in all key countries (particularly in Egypt) except India. FX translation effect mostly due to EGP and INR. FY 2013 vs. FY 2012 M Breakdown by Area M (after eliminations) 4, % +3.5% -3.2% n/s -5.4% 4,235 Others Trading Asia 4, % -2.2% +2.1% +9.2% 4, % EENAME % +5.2% 913 NA % +0.8% 428 CWE 2, % -7.5% 2,156 FY 2012 Volume Price Forex Perimeter FY 2013 FY 2012 FY 2013 Like-for-like Italcementi Group CA CIB Global High Yield Conference 20 March

13 2013 Cost Reduction results 2013 Cost Savings Variable Costs 140 Overall lower savings on lower production volumes Other Fixed Costs 28% % Variable Costs France Belgium 19M savings from fuel optimization (including Couvrot new coal grinding system, started in Q4 2012) Maintenance Labor Cost 72% 67% Fixed Costs Thailand WHRs delayed start-up in July: 4M savings India, North America and Morocco FY13 Results FY13 Revised Target Clinker production and logistic efficiencies and raw materials optimization 2013 Savings: Breakdown by country Egypt Spain France/Belgium Others, net Headquarters Italy Operational Group-wide FTE variation vs. FY 2012 is -891 (-4.7%) with a 5.6% positive impact on labour cost Fixed Costs Overall ahead of targets thanks to incremental actions Italy Operational Additional shut down of cement plants Rationalization of RMC network Headquarters Further reduction in headquarters staff, focused on managerial positions Egypt From ~40M to ~70M steady-state (2015 savings) Strong savings in maintenance, expected to partially reverse in 2014 Italcementi Group CA CIB Global High Yield Conference 20 March

14 FY Rec. EBITDA variance analysis by driver and by area Industrial profitability (ex CO 2 and FX translation) improved by 55M, supported by price and restructuring actions which more than compensate 97M negative volume effect. Progress in all geographical areas, except flat Asia FY 2013 vs. FY 2012 M 643 (40) of which : Egypt: (97) of which : Egypt: (63) 156 (47) Efficiency actions (6) +55 M +9.1% 658 (27) 631 Industrial Rec. EBITDA by area * Δ y/y M / % +4.6% +16.9% (1) % 8-0.8% n/a +55 M +9.1% % margin 13.5% margin 14.9% margin FY 2012 CO2 FY 2012 ex CO2 Volume Price Variable Costs Fixed Costs Other FY 2013 ex FX FX FY 2013 FY 2012 ex CO2 CWE NA EENAME Asia Other FY 2013 ex FX Italcementi Group CA CIB Global High Yield Conference 20 March

15 2013 Cash Flow Net Debt well contained below 2B with 59M improvement vs. Dec M FY 2013 N.F.P Cash Flow WC Change (*) CapEx Equity Invest. Industrial & Equity Divestm. Dividends Others N.F.P Continuing strong control on WC: 40M June seasonal securitization peak reabsorbed (1,998) (336) (4) Of which: ITC S.p.A. (17) CF S.A. (17) Egypt (23) Morocco (20) 38 (84) 15 (1,939) +59 Ongoing attention on CapEx, contained well below Cash Flow from Operations Approx 40M shift to 2014 Dividend payment reduced vs. previous year: FY 2012 Of which: CO ITC SpA: -24M Egypt :-14M (2,093) (370) (14) 129 (121) (26) (1,998) N.F.P N.F.P (*) Including change in receivables and payables of 79M as of December 13 and -22M as of December 12 Italcementi Group CA CIB Global High Yield Conference 20 March

16 Financial Ratios Net Debt / Recurring EBITDA (LTM) x % GCF and RCF / Net Debt (LTM) 18.5% 14.5%14.1% 16.9% 20.4% 20.4% 19.2% 19.0% 17.9% 16.9% 16.1% 16.7% 12.1% 11.4% 13.2% 12.5% 14.9% Leverage remains well clear of covenant trigger, positive Q4 seasonality confirmed Cash flow / net debt ratios continue their improvement trend vs. PY (+1.2pts and 2.9pts for GCF and RCF respectively) Dec-11Mar-12Jun-12Sep-12Dec-12Mar-13Jun-13Sep-13Dec-13 GCF / ND RCF / ND From December 2012 on, all ratios are calculated according to IAS 19 revised LT Rating Outlook Last Action Moody s Ba3 Ratings under review 12/03/14 (Possible Upgrade) S&P s BB+ Negative 28/10/13 (Affirmed) Italcementi Group CA CIB Global High Yield Conference 20 March

17 Net Debt maturity profile Following 500M bond issue in H1, capital market weight at 74%, and debt average maturity at 4.2 years Gross Debt Composition Total 2,423M as of December 31, 2013 Gross Debt* Maturities by Instrument Total 2,423M as of December 31, % 8% 14% 1,200 1, Average maturity: 4.2 years % Uncommitted Bank Lines Utilized Committed RCFs Other Bank Loans and Fin. Debt Commercial Paper (BdT) Bonds 2% Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 >Dec-19 Italcementi Group CA CIB Global High Yield Conference 20 March Uncommitted Bank Lines Other Bank Loans and Fin. Debt Bonds (*) Face value of financial debt instruments, excluding accrued interests, fair value adjustments and MTM of derivatives as of December 2013 Gross debt as per balance sheet equal to 2,580M in December 13 vs. 2,778M in Dec 12 Utilized Committed RCFs Commercial Paper (BdT) 750

18 Optimizing Liquidity Headroom after bond issue Limited cash refinancing needs in , well inside 2-year liquidity headroom policy even after capex and seasonal working capital cash needs in Pre-refinancing of backstop 920M syndicated RCF due in 2015 in progress, with significant size reduction Gross Debt Maturities by Instrument Total 2,423M as of December 31, ,200 Committed RCF Maturities Total 2,160M as of 31/12/13 of which 1,956M available 1,200 1, due within 2y Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 >Dec-19 Uncommitted Bank Lines Other Bank Loans and Fin. Debt Bonds Utilized Committed RCFs Commercial Paper (BdT) Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 >Dec-19 Italcementi Group CA CIB Global High Yield Conference 20 March , Available Committed RCFs 625 already available >2y Utilized Committed RCFs

19 Agenda Opening Remarks Centocinquanta Project 2013 Results 2014 Outlook and Actions Closing Remarks Italcementi Group CA CIB Global High Yield Conference 20 March

20 2014 Business Outlook Update Market Volumes Further but lighter decrease in cement mature markets overall; growth confirmed in Emerging countries Domestic cement volumes outlook (2014 vs. 2013) Mature Markets Market Volumes (*) Emerging Markets Market Volumes (*) Italy -5 / -10% Egypt +1.5 / +5% France -1.5 / -5% Morocco -1.5 / -5% Belgium -5 / -10% Bulgaria +1 / +3% Spain (Group mkt Area) Greece North America (Group mkt Area) -5 / -10% flat +1 / +3% Thailand India (Group mkt Area) Kazakhstan +1.5 / +5% +1.5 / +5% +1.5 / +5% (*) Domestic market Italcementi Group CA CIB Global High Yield Conference 20 March

21 2014 Business Outlook Update Italcementi Prices Overall stable prices in Europe, improving in North America. Favorable price evolution in Emerging Countries but India. Egypt price increase to compensate expected high inflation on fuel and power Domestic cement prices outlook (2014 vs. 2013) Mature Markets ITC Prices (*) Emerging Markets ITC Prices (*) Italy flat Egypt +5 / +10% France flat Morocco flat Belgium flat Bulgaria flat Spain (Group mkt Area) Greece North America (Group mkt Area) -1.5 / -5% flat +1.5 / +5% Thailand India (Group mkt Area) Kazakhstan +1.5 / +5% -5 / -10% +5 / +10% (*) Local currency Italcementi Group CA CIB Global High Yield Conference 20 March

22 Developing our market-management initiatives i.nova, a key step in unifying and redefining the Group s global market image around innovation Launched in September 2013 worldwide Reorganization of all products inside 11 families of performance that represent the Group s Unique Selling proposition to cement, concrete, lime and mortar markets Capitalizing on the Brand Value: Recognizable code linking the product to the Company Common language linking all products A customer centric approach: Facilitating customers choice Enhancing Group image and Brand Value Italcementi Group CA CIB Global High Yield Conference 20 March

23 Efficiencies Target: 65M net effect, partially offsetting inflation on variable and fixed costs Further increase in alternative fuels utilization rate (in all countries): 12% 2014 target Carry-over positive effect on power costs from the new WHR system in Thailand Streamlining efficiency in clinker production and logistics France/Belgium Thailand North America ~35 M actions impact variable costs Labour Costs: positive impact from restructuring actions implemented in Italy in 2013 and from finalization of industrial network rightsizing in Further actions in HQs and Spain Other Fixed Costs: positive impact mainly from plants closure in Italy Italy HQs Spain ~ 45M actions impact on fixed costs...but higher maintenance costs in Egypt after 2013 compression, preparing for production increase thanks to alternative fuel sources Egypt ~15 M maintenance increase Italcementi Group CA CIB Global High Yield Conference 20 March

24 Mid term investment plan 2014 focused on efficiency projects (key revampings, coal grinding capacity) and light market coverage initiatives (cement grinding units, terminals). Greenfield expansion to restart in according to cash generation Jorf Lasfar Grinding ~15M Rezzato 1.3mt/y ~ 150M 2015 Devnya 1.5mt/y ~ 160M 2015 Shymkent 1.2mt/y ~ 45M Full Cycle Plant Revamping Greenfield Full Cycle Plant Light Investments T B D Morocco TBD Kattameya and Suez Coal Plants ~40M 2014 Solapur Grinding ~ 35M Cochin Terminal ~ 8M Efficiency Projects Gulbarga 3.0mt/y T B D Operational availability Expected 2014 Capex spending: ~460 M Italcementi Group CA CIB Global High Yield Conference 20 March

25 Agenda Opening Remarks Centocinquanta Project 2013 Results 2014 Outlook and Actions Closing Remarks Italcementi Group CA CIB Global High Yield Conference 20 March

26 Conclusions 2013: still adverse volume environment, but positive pricing and efficiency/restructuring actions deliver positive effects on EBITDA 2013 Net Debt reduced with stable leverage and improving cash flow on debt ratios After a long negative cycle, Groupwide sales volumes to stabilize in 2014 with revenues trend further supported by pricing actions and further Rec. EBITDA recovery in 2014 forecasted to keep leverage under control notwithstanding weight on NFP of Rezzato, Devnya and Shymkent revamping capex while equity base is strengthened and focused by the proposed transactions Italcementi Group CA CIB Global High Yield Conference 20 March

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