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MATERIS DRIVES GROWTH THROUGH INNOVATION
MATERIS IN BRIEF
Materis is one of the world leaders in specialty materials for construction, with leadership positions in aluminates, admixtures, mortars and paints.
Materis enjoys high barriers to entry resulting from global coverage, innovative and high value-added products, outstanding quality of service, recognized brands, and close relationships with its clients. Materis has also built a portfolio of premium brands and an integrated distribution network of nearly 400 sales outlets in Europe (paints) and 1,000 in China (mortars). It has leadership positions in high-growth regions, where 30% of its sales are generated (30-50% for certain businesses, excluding paints), with margins comparable to those in mature markets.
Materis is a company that thrives on innovation; it continuously develops new formulations so as to offer the most appropriate solutions to its clients’ needs. For example, in energy savings, Materis offers external insulation solutions for painters, façade workers and restorers working on new construction or renovating old buildings.
Highlights of 2012
In a volatile economic environment, Materis’s businesses saw organic growth in emerging markets, which was virtually offset by the slowdown in mature regions.
In 2012, Materis’s net sales grew by 2.2% to €2,072 million. From an organic standpoint, sales were stable, declining 0.2%, and Materis made two strategic acquisitions: Suzuka in China (mortars) and Elmin in Greece (aluminates). All Materis divisions benefi ted from continued high growth in emerging economies (9.7% organic growth) which offset deterioration in mature economies (-3.5% organic growth), resulting from a decline in volumes, principally in the paints business.
In 2012, the Aluminates, Admixtures and Mortars businesses continued to generate record industry profi tability. Materis’ EBITDA totaled €258 million (12.5% of sales) and its adjusted operating income was €189 million (9.1% of sales). Highlights by division were as follows:
- ParexGroup (Mortars) posted sales of €713 million, up 12.4% overall and 7.3% organically, benefi ted from favorable industry conditions in emerging economies (up 18%) and the beginnings of a recovery in the United States, buoyed by growth in end-markets, price adjustments and market share gains that more than offset a significant decline in Spain and lesser decline in France. ParexGroup also benefi ted from the successful integration of Suzuka, leader in organic texture coatings in China, enabling it to build on its already significant presence in that country. In 2012, EBITDA was €99 million (13.9% of net sales), up 8%;
- Kerneos (Aluminates) posted net sales of €368 million (up 2.1% overall but down 3.0% organically). Growth at Kerneos was driven by signifi cant price adjustments, favorable currency effects and robust volumes in chemicals for the building industry in the United States, the United Kingdom, Russia, Germany and China. These factors offset lower volumes in refractories resulting from a slowdown in the production and storage of steel. EBITDA was €74 million (20.0% of net sales), up 1.8%. In 2012, Kerneos acquired Elmin, the leading exporter of monohydrate bauxite, which secures its long-term access to a key raw material;
- Chryso (Admixtures) posted net sales of €238 million (up 2.0% overall and up 2.9% organically). Favorable growth at Chryso was due to healthy business conditions in emerging market countries (India, South Africa, Morocco, Turkey, Eastern Europe), a relaunch of the business in the United States, price adjustments, which offset a contraction in Southern European markets, and a slightly unfavorable currency effect. EBITDA was €35 million (14.6% of net sales), stable compared with 2011;
- Materis Paints posted net sales of €773 million, down 5.2%. Sales at Materis Paints contracted signifi cantly as a result of the difficult economic climate in Southern Europe (Spain, Portugal, Italy) and a decline in France. These factors led to a sizable drop in volumes and to unfavorable mix effects (down 11%), partially offset by signifi cant price adjustments (up 6%) intended to pass on the sharp rise in titanium dioxide costs. EBITDA was €59 million (7.7% of net sales), down 14%. To restore its margins, Materis Paints, now headed by the new CEO Bertrand Dumazy, initiated a high-impact performance enhancement program. The gross amount of benefi ts is estimated at €36 million; €26 million were already achieved in 2012 and another €10 million are expected to be realized in 2013.
As of the end of 2012, Materis’ net fi nancial debt was €1,913 million. In May 2012, Materis successfully rescheduled its bank debt, capping negotiations with a pool of 199 lenders launched in September 2011, 18 months before the fi rst repayment dates. The agreement postponed the 2013-15 maturities to 2015-16 and increased the company’s sources of liquidity. 90% of senior loans, 99% of secondlien maturities and 100% of mezzanine debt were postponed under the agreement. Wendel and its co-shareholders injected €25 million in equity to fi nance Materis’ expansion (acquisitions and capital expenditures), and made an interest-bearing, €50 million credit facility available. In early 2013, optimization plans were launched in all divisions, and the one in the Paints division was intensified.
Olivier Legrain, Chairman
Richard Seguin, CEO of ParexGroup
Jean-Marc Bianchi, CEO of Kerneos
Thierry Bernard, CEO of Chryso
Bertrand Dumazy, CEO of Materis Paints
Appointments and Compensation Committee
Bernard Gautier (Chairman)
Jean-Michel Ropert (Chairman)