S&B Industrial Minerals S.A. Annual Financial Report for the year ...

economic perspective, economic developments in our Greek domestic market were immensely
adverse, though with no material effect on our business, as less than 7% of Group revenues is
generated in Greece.
In terms of revenue by Division, Bentonite sales in 2011 increased by 9,7% to € 208,8 million
compared to € 190,4 million in 2010. Demand from the key foundry segment was strong in the key
European and particularly the North American regions, but also in the Middle East following our
recent investments in Turkey to extend our operational capabilities. As a result we achieved double
digit revenue growth in all metal casting regions we serve. The drilling and civil engineering
segments also performed very well, reflecting an upturn in oil and gas output and our entry into civil
engineering projects in North America, respectively. The performance from these two segments
helped us to offset declines in iron ore pelletizing and pet litter absorbents segments.
The Perlite Division achieved sales of € 67,7 million in 2011 versus € 66,2 million in the prior year,
an increase of 2,3%. In a stagnant North American construction market marginal improvement was
recorded aided by the exports of our local customers. In Europe, robust demand for building
materials from Central European countries helped to partially offset the severe adverse impact from
Southern European countries and especially Greece. The construction related performance in
China was particularly strong and contributed positively to profitability, offsetting a broadly stable
horticulture segment.
The performance of the Bauxite Division was a key highlight in 2011, as production returned
gradually through the year to satisfactory levels, recording a substantial increase of 58% compared
to 2010. This was a key enabler for efficiently serving strong demand in both the alumina and
cement segments and achieving revenue of € 36,7 million, an increase of 15,8% from € 31,7 million
in 2010. Of greater importance, the attainment of the required production output had a very
favorable impact on costs and profitability, both for the division and for our Group overall. It should
be noted that mention to the Bauxite Division refers to the total of Bauxite activity included in
Continuing and Discontinuing operations (see Notes 5 & 40).
In Continuous Casting Fluxes, the correlation between steel production and casting fluxes drove
revenue growth in full alignment to global steel production growth. Revenue of € 100,4 million
achieved in 2011, was 6,9% higher compared to € 93,9 million in 2010. The key geographic
regions contributing to this growth were Eastern Europe, South America and Southeast Asia,
offsetting a softer performance from Western Europe where steel production decelerated during the
second half of the year.
The Minerals Trading division achieved revenues of € 40,5 million, which represent an increase of
10,1% compared to 2010. In the glass & ceramics segments we realized solid revenue growth as a
result of high demand and the development of new business for new applications. On the contrary,
the refractories segment experienced a decline which was partially offset by the optimization of our
customer mix towards higher value applications.
Consolidated Group revenue amounted to € 455,7 million for the year, which represents an 8,5%
increase compared to € 420,1 million in 2010. The revenue increase was delivered through
marginally higher sales volumes versus 2010, a more favorable product mix and improved pricing.
In terms of costs, we faced inflationary headwinds for certain raw materials and for energy. Crude
oil prices were on average higher by approximately 40% during 2011 compared to 2010, adversely
impacting production costs and eliminating the benefits we would otherwise have realized from
lower ocean freight rates. The latter were on average lower by 36% in 2011 compared to 2010.
Part of the input cost and production cost pressure was mitigated through our pricing initiatives
while the increase we achieved in bauxite production output contributed significantly to the
containment of our cost of goods sold. In addition, in accordance with the provisions of the
International Financial Reporting Standards (IFRS 5), the depreciation related to our bauxite
operations in Greece ceased for approximately two months following our announcement on
November 8 th , 2011 for the gradual disposal of this activity. Gross profit increased by 19% in the
year to € 111,1 million and gross margin expanded by a substantial 220 basis points from 2010.
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