2011 Registration Document - Imerys

1 The
PRESENTATION OF THE GROUP
Group’s strategy and general structure
Making high growth potential markets the priority
To improve its growth profile, Imerys has identified a certain number
of attractive end markets, including the automotive sector, packaging,
energy, electronics, semiconductors, the environment, health &
beauty, agriculture and aerospace. Imerys now achieves more than
one quarter of its sales in those markets and the Group’s exposure
has more than doubled in the past five years. The Group will allocate
greater resources to those markets through innovation and possibly
acquisitions.
❚ TARGETED CAPITAL EXPENDITURE POLICY
In addition to the capital expenditure needed to keep its production
assets in optimal working order, the Group improves the industrial
efficiency of its processes, increases its capacities to meet demand,
develops its outlets in new countries and launches innovative
products.
From 2000 to 2008, Imerys invested significant resources to ensure
industrial facilities meet world-class technological standards, improve
their efficiency (optimization of production assets for kaolin for paper,
new facilities in the main Minerals for Filtration unit, production
optimization in clay Building Materials) and selectively develop
capacity. Consequently, industrial asset maintenance now represents
approximately 50-60% of the annual depreciation expense.
After the financial crisis of 2008 and 2009, capital expenditure
resumed gradually in 2010 (€169.1 million). In 2011, capital
expenditure rose significantly: while maintenance remained stable,
new development projects were completed, such as construction
of a proppant plant in the United States and a new line dedicated to
Performance Minerals for polymers in Asia . Fo r more information,
see Chapter 2, section 2.1 of the Registration Document . At
€229.2 million, booked capital expenditure in 2011 regained its
historical “normative” level and represented almost one year’s
depreciation expense.
❚ SELECTIVE ACQUISITION POLICY
Over the past 10 years, Imerys has implemented a very active
acquisition policy, the largest source of expansion for its portfolio
of activities: in Abrasives applications and in fusion with Treibacher
(2000-2002), in a new market related to fast-moving consumer goods
through edible liquid filtration (World Minerals, acquired in 2005),
in Monolithic Refractories through the integration of a preexisting
activity (Plibrico) with Lafarge Réfractaires (acquired in 2005) then
ACE Refractories (2007). More than 71 external growth operations
have been completed since 2000 for a total amount close to
€1.8 billion including the acquisition of the Luzenac Group, the world
leader in talc which was closed on August 1, 2011. Through this
recent operation, Imerys continues to implement its development
strategy by broadening its functional offering in a specialty business
with real growth potential:
(1) ROCE: Current operating income divided by average invested capital.
(2) “Senior unsecured debt rating”.
6 2011 REGISTRATION DOCUMENT IMERYS
p expansion in the plastic, polymer and paint markets, particularly
for the automotive, paper, technical ceramics and health & beauty
sectors, where the Luzenac Group has leading positions;
p many development opportunities for the Talc activity in emerging
countries, particularly through the support of Imerys’ global
network;
p increase in the Group’s innovation potential with the combination
of R&D know-how to extend its specialty product offering.
Imerys will continue to widen its model through a selective acquisition
policy in phase with its core business.
❚ GREATER RESILIENCE, STRONGER FINANCIAL
STRUCTURE
Innovation, geographic expansion and selective acquisition policy
help to increase the Group’s operating resilience, thanks to greater
geographic and product diversity. In this way, Imerys intends to
deliver a return on capital employed (1) that is higher than the average
weighted cost of its capital, in order to create maximum value for
its shareholders.
To do so, similar profitability criteria enable the Group to select
internal and external growth projects: the Group targets an internal
rate of return in excess of 15%, ensuring high cash flow generation
and a robust financial structure. In a context of economic uncertainty,
the criteria were made more selective still by taking into account the
payback time and the impact on financing.
Under its cautious financial policy, the Group secured almost
€1 billion in bilateral bank credit lines through to 2015-2016 to
increase and diversify its financial resources. As of December 31,
2011, Imerys’ total financial resources therefore totaled €2.8 billion
(of which €1.3 billion in available financial resources, excluding cash),
with an average maturity of 3.8 years.
During the first half of 2011, the rating agency Moody’s raised Imerys’
long-term credit rating (2) from Baa3 to Baa2 with a stable outlook.
The short-term rating was improved accordingly from P-3 to P-2,
also with a stable outlook (for more information, see C hapter 5,
Consolidated financial statements, Note 25.5 of the Registration
Document).
With a Group Net Financial Debt/EBITDA ratio of 1.5 and a Net
Financial Debt/shareholders’ equity ratio of 46.6% as of December 31,
2011, Imerys benefits from a sound financial structure to implement
its development strategy and create value for its shareholders.
At the Shareholders’ General Meeting on April 26, 2012, the Board of
Directors will propose increasing the dividend to €1.50 per share for
a total amount of approximately €112.7 million. This represents 37.2%
of the 2011 Group’s share of net income from current operations,
in accordance with the Group’s historical average payout. Payout
would take place from May 9, 2012.