Strategic progress in very challenging markets: 2015 interim results London, July 2015
Highlights
Strategic progress in very challenging markets Aligned to current and future customer demand Markets structurally strong but currently challenging Minerals aftermarket resilient but oil and gas declines impacting overall performance…
Financial review
Strong cash generation in very challenging markets 124% EBITDA to cash conversion ratio Results summary m H1 2015 H1 2014 As Constant Like for reported currency1 Like4 Order input1 1,039 1,267 n/a -18% -21% Revenue 1,000 1,144 -13%…
Minerals Resilience in challenging markets Price declines across key commodities; mining sector capex continued to fall Orders flat as Trio contribution offset LFL declines Input from oil and gas sector down 30%; LFL mining sector…
Oil & Gas Substantial reductions in activity levels North American upstream experiencing severe downturn Middle East resilient but mid and downstream markets impacted by project delays Upstream seeing virtually no OE demand AM also…
Power & Industrial Operational efficiencies improving margins OE input down: large one off hydro and steam turbine orders in 2014 not repeated AM input up: double-digit Valves increase Valves revenues down 11%; project inspection and…
Exceptional items Group-wide efficiency review (announced in November 2014) Total charge 8m; cash restructuring cost 6m and asset impairment 2m Final stages of Minerals reorganisation in Nth America and headcount reductions, primarily…
Cash flow statement Working capital improvements driving increase in free cash flow Excellent working capital performance; strong cash collections across the Group 124% EBITDA cash conversion (2014: 65%) Net capex in line with 2014:…
Working capital Improved working capital position m Working capital1 As % of sales 800 26.3 25.7 30 23.7 14% reduction in absolute working capital since year end 600 20 Working capital as % of sales improved from 25.7% to 23.7%…
Finance costs, net debt and acquisitions Movement in net debt m Net finance costs (excluding IAS19) of 19m (2014: 17m) Net debt at 2 January 2015 861 Increase due to higher levels of average net debt and US: FX rate Free cash inflow…
Business overview and outlook
Delivering our strategic objectives Building a stronger Group New product launches: cyclone, continuous duty frack pump Innovation Connected technology trials underway Expanding fundamental research partnerships Collaboration…
Mining markets Group exposure Capex down but ore production to continue growing Copper and iron ore prices at multi-year lows Copper and iron ore prices1 Copper down 9% in H11; marginal mines impacted Index = 100 Iron ore down 23%1;…
Oil and gas markets Group exposure US rig decline stabilising after steep fall US rig count declines1 Index = 100 100 North American upstream markets have declined substantially Oil down 60% since peak, gas down 33% and at 30-year low…
Oil & Gas Staying agile Quickly responding to changing conditions Flexible business model 15-20% insourcing to support manufacturing recoveries Shifts reduced to four days per week; two week-long furloughs in Pressure Pumping…
Enhancing Group-wide cost competitiveness Further efficiency measures across the Group 85m annualised run rate cost savings to be delivered by end of 2015 Oil & Gas: 55m savings Minerals: 15m savings 3 small facilities closed US…
Continuing to build a stronger Group 2015 divisional financial outlook Operational focus Minerals Minerals Deliver benefits of Good contribution from acquisitions expected in second half restructuring and integrate AM growth…
Key messages & Group outlook Attractive long-term markets Prioritising investment in areas central to strategic progress H2-15 and beyond to benefit from efficiency measures Meaningful sequential improvement in financial…
Appendix 2: Order input by end market and geography H1 H1 Power & Order input by end market Minerals Oil & Gas 2015 20141 Industrial Total Total Minerals 77% - 1% 41% 34% Oil & Gas 6% 98% 13% 36% 48% Power 2% 1% 55% 10% 9%…
Appendix 4: Foreign exchange by currency 2014 Revenue m 2014 Operating profit1 m Currency At 2014 At 2015 At 2014 At 2015 FX FX rates rates rates rates US dollar 527 50 577 124 11 135 Australian dollar 127 (8) 119 21 (1) 20…
Appendix 5: Foreign exchange by division 2014 Revenue m 2014 Operating profit1 m Currency At 2014 At 2015 At 2014 At 2015 FX FX % FX FX % rates rates rates rates Minerals 548 (10) -2% 538 104 (2) -2% 102 Oil & Gas 435 31 7% 466…
Appendix 6: Exchange rates H1 2014 H1 2014 H1 2015 H1 2015 Average Closing Average Closing US dollar 1.67 1.71 1.52 1.56 Australian dollar 1.82 1.83 1.95 2.04 Euro 1.22 1.26 1.37 1.41 Canadian dollar 1.83 1.82 1.88 1.96 United Arab…
Appendix 7: Restructuring costs Group-wide efficiency review Oil & Gas downturn Power & Oil & Power & H1 2014 Minerals Oil & Gas Minerals Industrial Gas Industrial 2015 Total Restructuring costs1 6 - - - 8 - 14 30 Impairment…
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