IMERYS (EPA:NK) - Imerys announces increase in first quarter 2018 earnings

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27/04/2018 17:35

PRESS RELEASE

PARIS, APRIL 27, 2018

Imerys announces increase in first quarter 2018 earnings

* + 4.2% organic growth (1)
  o Revenue growth of + 8.5% to EUR1.2 billion euros, supported by external
    growth (Kerneos in particular)

* + 4.8% increase in current operating income to EUR154 million
  o + 15.1% rise, excluding exchange rate impact
  o Robust price-mix
  o Continued investments to ensure Group's growth and strengthen
    competitiveness

* + 11.8% increase in net income from current operations to EUR95 million

Chairman & CEO Gilles Michel commented:

"During the first quarter, Imerys continued to benefit from improving markets,
like in the second half of 2017, its development strategy and innovation
policy. Our results grew despite unfavorable currencies and adverse weather
conditions. In the coming quarters, the Group will further invest in its
growth, strengthen its competitiveness and will benefit from the contribution
of recent acquisitions, notably Kerneos. 2018 should therefore be another year
of progress in net income from current operations at current market
conditions."

Unaudited consolidated results
(EUR millions)                         1er quarter 1er quarter  Change
                                        2017        2018
Revenue                               1,113.2      1,207.6    + 8.5%
Current operating income (2)            147.2        154.2    + 4.8%
Operating margin                        13.2%        12.8%   - 0.4 pt
Net income from current operations,
Group's share (2)                        85.3         95.4   + 11.8%
Net income, Group's share                78,8         91.7   + 16.3%
Net income from current operations,
Group's share, per share (EUR) (2)(3)      1.08         1.21   + 11.5%

(1) Organic growth: growth at comparable scope and exchange rates, or
"like-for-like"
(2) Throughout this press release, "current" means "before other operating
revenue and expenses", as defined in the notes to the financial statements
relating to the consolidated income statement
(3) The weighted average number of shares was 79,047,023 in the 1st quarter of
2018 vs. 78,849,404 in the 1st quarter 2017

FIRST QUARTER 2018 FINANCIAL REVIEW

+8.5% REVENUE GROWTH

Unaudited quarterly data
(EUR millions)         2017     2018    Reported  Like-for-   of which  of
which
                   Revenue  Revenue   change  like change   volumes
price-mix
First quarter      1,113.2  1,207.6   + 8.5%     + 4.2%      + 1.2%   + 3.0%

Revenue for the first quarter ended 31 March 2018 amounts to EUR1,207.6
million, up + 8.5% compared to the same period of 2017. This increase reflects
the organic growth of + 4.2%, thanks in particular to a robust price-mix effect
in all business groups, up + 3.0%. In markets that continue to be positive,
volumes rose by + 1.2%. The activity has been impacted by adverse weather
conditions in Europe and the United States.

Revenue also includes a positive perimeter effect of + EUR129,0 million (+
11.6%), of which EUR108.0 million from Kerneos in particular, as well as the
impact of significant adverse exchange rates for - EUR80.9 million euros (-
7.3%).

+4.8 % INCREASE IN CURRENT OPERATING INCOME

First quarter 2018 current operating income totaled EUR154.2 million, up + 4.8%
compared to the first quarter of 2017. Excluding the impact of exchange rate
fluctuations (- EUR13.2 million), it is up + 15.1% thanks, in particular, to a
positive price-mix effect of + EUR31.3 million, which is offsetting the
increase in variable costs (+ EUR19.3 million, notably raw materials and
energy) which remain under control, and a gradual improvement in the
contribution from recent acquisitions (+ EUR14.1 million), Kerneos, notably.
Sales volumes contribute more than EUR6.7 million.

Moreover, the + EUR16.8 million increase in fixed costs and overheads includes
further investments in new production capacity, innovation, human resources and
programmes designed to strengthen the Group's competitiveness and support its
growth.

Thus, the Group's operating margin remains firm at 12.8% for the first quarter
of 2018, despite a - 0.2 point unfavorable exchange rate impact and taking into
account a different business mix in the first quarter.

NET INCOME FROM CURRENT OPERATIONS UP + 11.8%

Net income from current operations rose + 11.8% to EUR95.4 million (Q1 2017:
EUR85.3 million). It includes a financial result that goes from - EUR25.8
million in the first quarter 2017 to - EUR19.6 million in the first quarter
2018, due to the decrease of - EUR6.2 million in financial costs. The tax
charge of - EUR39.0 million (Q1 2017: - EUR 35.8 million) reflects an effective
tax rate of 29.0 % (Q1 2017: 29.5%).

Net income from current operations, Group share, per share is up + 11.5% to
EUR1.21.

+16.3 % RISE IN NET INCOME

First quarter 2018 net income, Group share, increased by + 16.3% to EUR91.7
million after taking into account other income and operating expenses, net of
taxes of - EUR3.7 million in the first quarter of 2018, lower than in the first
quarter of 2017.

FINANCIAL STRUCTURE

The Group's net financial debt was EUR2.3 billion as at 31 March 2018, and did
not significantly change compared to 31 December 2017. The long-term credit
ratings of Imerys attributed by rating agency Moody's ("BAA-2" with a stable
outlook) and by Standard & Poors ("BBB", also with a stable outlook) have been
confirmed during the quarter.

BUSINESS GROUPS' ACTIVITY IN FIRST QUARTER 2018

Energy Solutions & Specialties

(27% of consolidated revenue)

Unaudited quarterly data
(EUR millions)          1er quarter 1er quarter Reported  Like-for-
                          2017        2018    change   like change
Revenue                  321.6       319.7    - 0.6%     + 4.9%

The Energy Solutions & Specialties business group's revenue totaled EUR319.7
million in the 1st quarter of 2018 (stable on a reported basis). This change
takes into account a significant - EUR23.8 million exchange rate effect (-
7.4%) and a perimeter effect of + EUR6.2 million (+ 1.9%) due in particular to
the acquisitions completed in the Carbonates division (Micronita in Brazil, in
November 2017, and Vimal Microns in India, in February 2018) and the Monolithic
Refractories division (Set Linings end of March 2017). On a like-for-like
basis, revenue increased + 4.9% from the same period in 2017.

The Carbonates division recorded a good level of activity in Asia, while its
operating conditions were affected by weather conditions in the United States.
The Monolithic Refractories division's demand has been sustained in most of the
European and Asian industrial markets. The Graphite & Carbon division's sales
growth was driven by the mobile energy markets. In the Oilfield Solutions
division, the ceramic proppant market remained at a low level.

Filtration & Performance Additives

(26% of consolidated revenue)

(EUR millions)    1er quarter 1er quarter Reported  Like-for-
                    2017        2018    change   like change
Revenue            312.4       322.6   + 3.3%      + 5.8%

The Filtration & Performance Additives business group's revenue totaled
EUR322.6 million in the 1st quarter of 2018, a + 3.3% year-on-year increase. It
includes a strong - 23.4 million exchange rate impact (- 7.5%) and a + EUR15.7
perimeter effect (+ 5.0%) relating to the acquisition of Regain Polymers
(September 2017). On a like-for-like basis, the business group's revenue was up
+ 5.8%.

In markets which continued to be supportive, the Performance Additives division
business was impacted by weather conditions in the United States, the
Filtration division continued its diversification developments (healthcare,
cosmetics, agriculture ...) and the Metallurgy division revenue has been
supported by dynamic industrial markets.

Ceramic Materials

(23% of consolidated revenue)

Unaudited quarterly data

(EUR millions)          1er quarter 1er quarter Reported  Like-for-
                          2017        2018    change   like change
Revenue                   310.9       286.6   - 7.8%     - 1.2%

The Ceramic Materials business group's revenue totaled EUR286.6 million in the
1st quarter of 2018. The - 7.8% year-on-year reported change factors in a
significant - EUR20.7 million negative exchange rate effect (- 6.7%). Revenue
is down - 1.2% on a like-for-like basis in a still challenging market for
paper.

The Kaolin division recorded negative volumes despite the development in
specialty applications (paint, rubber, plastics, inks, etc.). It also suffered
from an unfavorable impact of the evolution of the Brazilian real. The activity
of the Roofing division was contrasted because of weather conditions in France,
in a market that shows signs of recovery. The Ceramics division demand was
robust, particularly in emerging countries.

High Resistance Minerals

(24% of consolidated revenue)

Unaudited quarterly data

(EUR millions)          1er quarter 1er quarter Reported  Like-for-
                          2017        2018    change   like change
Revenue                  184.2       304.2   + 65.1%     + 10.3%

The High Resistance Minerals business group's revenue totaled EUR304.2 million
in the 1st quarter of 2018. The + 65.1% year-on-year reported change in revenue
factors in a + EUR114.4 million significant perimeter effect (+ 62.1%) relating
to the integration of Kerneos in the Aluminates division, and to a lesser
extent to Zhejiang in China in the Fused Minerals division and a strong -
EUR13.6 million exchange rate impact (- 7.4%). On a like-for-like basis,
revenue increased + 10.3%, supported by buoyant markets.

The Aluminates division, which includes Kerneos, continued to grow in the
sectors of the construction and civil engineering (building chemistry) and
benefited from a firm level of activity in refractories. The revenue of the
Fused Minerals division were sustained in all geographies and markets,
industrial production in particular. The two divisions faced strong pressure on
certain raw materials.

Financial agenda 2018

May 4 (11.00 am)                  Shareholders' General Meeting
July 27 (after market close)      1st half 2018 results
October 30 (after market close)   3rd quarter 2018 results

These dates are tentative and may be updated on the Group's website at
www.imerys.com, in the Investors & Analysts / Financial Agenda section.

Conference call

The press release is available on the Group's website www.imerys.com from the
homepage in the News section. The 1st quarter 2018 results will be discussed in
a conference call today at 18:00 pm (Paris time). The conference call will be
streamed live on the Group's website www.imerys.com.

The world leader in mineral-based specialty solutions for industry, with EUR4.6
billion revenue and 18,000 employees, Imerys delivers high value-added,
functional solutions to a great number of sectors, from processing industries
to consumer goods. The Group draws on its knowledge of applications,
technological expertise and its material science know-how to deliver resources
based on beneficiation of its mineral resources, synthetic minerals and
formulations. These contribute essential properties to customers' products and
performance, including refractoriness, hardness, conductivity, opacity,
durability, purity, lightness, filtration, absorption and repellency. Imerys is
determined to develop responsibly, in particular by fostering the emergence of
environmentally-friendly products and processes.

More comprehensive information about Imerys may be obtained from its website
(www.imerys.com) under Regulated Information, particularly in its Registration
Document filed with Autorité des marchés financiers on March 20, 2018 under
number D.18-0150 (also available from the Autorité des marchés financiers
website, www.amf-france.org). Imerys draws the attention of investors to
chapter 4, "Risk Factors and Internal Control", of its Registration Document.

Disclaimer: This document contains projections and other forward-looking
statements. Investors are cautioned that such projections and forward-looking
statements are subject to various risks and uncertainties (many of which are
difficult to predict and generally beyond the control of Imerys) that could
cause actual results and developments to differ materially from those expressed
or implied.

Analyst / Investor Relations:
Vincent Gouley - +33 (0)1 4955 6469
finance@imerys.com

Press contacts:
Vincent Gouley - +33 (0)1 4955 6469
Philémon Tassel - +33 (0)6 3010 9611

APPENDIX: FIRST QUARTER 2018 RESULTS (UNAUDITED)

1. CONSOLIDATED REVENUE BREAKDOWN

Revenue by business
group (EUR millions)   Q1 2017  Q1 2018  Reported   Group    Exchange  Comp.
                                        change  structure  rates     change
Energy Solutions &
Specialties           321.6     319.7   - 0.6%    + 1.9%    - 7.4%  + 4.9%
Filtration &
Performance
Additives             312.4     322.6   + 3.3%    + 5.0%    - 7.5%  + 5.8%
Ceramic Materials     310.9     286.6   - 7.8%    + 0,1%    - 6.7%  - 1.2%
High Resistance
Minerals              184.9     304.2  + 65.1%   + 62.1%    - 7.4% + 10.3%
Holding &
Eliminations          (16.6)    (25.5)    n.s.      n.s.       n.s.   n.s.
Total               1,113.2   1,207.6   + 8.5%   + 11.6%    - 7.3%  + 4.2%

Revenue by geographic destination
(EUR millions)        Q1 2018   Change vs. Q1  % total Q1   % total Q1
                    revenue        2017     2017 revenue  2018 revenue
Western Europe       536.2       + 10.2 %        44 %         44 %
of which France      137.5        + 6.3 %        12 %         11 %
USA / Canada         269.9        - 3.3 %        25 %         22 %
Emerging countries   343.6       + 15.9 %        27 %         29 %
Japan / Australia     57.9       + 13.3 %         4 %          5 %
Total              1 207.6        + 8.5 %       100 %        100 %

2. KEY INCOME INDICATORS
(EUR millions)            1er quarter 2017 1er quarter 2018 Change

Revenue                     1,113.2         1,207.6       + 8.5%
Current operating income      147.2           154.2       + 4.8%
Current financial expense     (25.8)          (19.6)
Current taxes                 (35.8)          (39.0)
Minority interests             (0.2)           (0.3)
Net income from current
operations, Group's share      85.3            95.4      + 11.8%
Other operating income
and expenses, net              (6.5)           (3.7)
Net income, Group's share      78.8            91.7      + 16.3%

3. GLOSSARY

- The term "on a comparable basis" or "like for like" means: "at comparable
  Group structure and exchange rates";
- Restatement of the foreign exchange effect consists of calculating aggregates
  for the current year at the exchange rate of the previous year. The impact of
  exchange rate instruments qualifying as hedging instruments is taken into
  account in current data.
- Restatement of Group structure effect of newly consolidated entities consists
  of:
- for entities entering the consolidation scope in the current year,
  subtracting the contribution of the acquisition from the aggregates of the
  current year,
- for entities entering the consolidation scope in the previous year,
  subtracting the contribution of the acquisition from January 1 of the
  current year, until the last day of the month of the current year when the
  acquisition was made the previous year;
- Restatement of entities leaving the consolidation scope consists of:
- for entities leaving the consolidation scope in the current year,
  subtracting the departing entity's contributions from the aggregates of the
  previous year as from the first day of the month of divestment,
- for entities leaving the consolidation scope in the previous year,
  subtracting the departing entity's contributions from the aggregates of the
  revious year.
- the term " volume effect " corresponds to the sum of the change in sales
  volumes of each division between the current year and the previous one,
  valued
  at the average sales price of the previous year.
- the term " price-mix effect " corresponds to the sum of the change in average
  prices by product family of each division between the current year and the
  previous one, applied to volumes of the current year.
- the term "Current operating income" means operating income before other
  operating income and expenses;
- the term "Net income from current operations" means the Group's share of
  income before other operating revenue and expenses, net.

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