CONTENTS
01_ PROFILE 02_ IMERYS, MINERAL SOLUTIONS FOR A CHANGING WORLD 02_ Innovating to meet energy demand 04_ Supporting populations’ growing needs 06_ Developing employees in line with changing societies 08_ Imerys is enhancing its growth profile,
by Gilles Michel, Chairman & CEO
10_ Presence in a great number of markets 12_ Our business: turning minerals
into innovative specialties
14_ FOR A CHANGING WORLD IMERYS, A GROWTH-FOCUSED MODEL 1 6 _ Innovating to develop new applications 20_ Expanding the Group’s geographic footprint 22_ Broadening the business portfolio 24_ Banking on operating excellence and disciplined financial management 26_ Developing talents 28_ We are Imerys
30_ FOR A CHANGING WORLD IMERYS IS DEVELOPING SUSTAINABLY
IMERYS, MINERAL SOLUTIONS FOR A CHANGING WORLD _ ANNUAL REPORT 2013
32_ Sustainable Development, a global strategic orientation 34_ Keeping everyone healthy and safe 36_ Limiting the environmental impacts of the Group’s activity 38_ Playing a full part in society
40_ SHAREHOLDER’S NOTEBOOK 42_ Executive Committee 43_ Message from Vice-Chairman of the Board of Directors 44_ Governance 46_ Imerys at its shareholders’ service 48_ Activities and Results 50_ Results by business group 52_ Sustainable Development indicators 54_ Simplified financial statements
A PRESENCE ON FIVE CONTINENTS
Energy Solutions & Specialties
Filtration & Performance Additives
Ceramic Materials
Carbonates
Graphite & Carbon
Performance & Filtration Minerals
Building Materials
Monolithic Refractories
Oilfield Solutions
Kaolin
Minerals for Ceramics
High Resistance Minerals Kiln Furniture
Refractory Minerals
Fused Minerals
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2020
In USA expected to become world’s leading oil producer by operating non-conventional resources. Source: International Energy Agency
_
56%
expected rise in global energy consumption by 2040. Source: Energy Information Administration (EIA)
20%
target share of renewable energies in the European Union’s final energy consumption by 2020. Source: Official European Union target
IMERYS, MINERAL SOLUTIONS FOR A CHANGING WORLD
INNOVATING TO MEET ENERGY DEMAND With the ramp-up of renewable energies, the revolution in non-conventional fossil fuels, smart grids for sharing energy, thermal renovation of housing and the growth in electric vehicles, the energy transition is under way. Imerys is seizing this opportunity and investing heavily in innovations targeting these new markets.
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2025
In the combined GDP of India and China will total more than that of the seven biggest OECD economies (G7). Source: OECD Economics Department
x 4
GDP per capita in the economies that are currently poorest will increase more than fourfold by 2060. Source: OECD Economics Department
4.2
billion: the number of people in the middle classes in 2025, 1.8 billion more than in 2010. Source: United Nations Development Programme
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IMERYS, MINERAL SOLUTIONS FOR A CHANGING WORLD
SUPPORTING POPULATIONS’ GROWING NEEDS Despite a recent slowdown coming after 15 years of fast growth, the big emerging countries will continue to drive the global economy and adjust their models to reach the living standards of mature countries. Imerys is adapting to this new global configuration and expanding its geographic footprint into the most promising growth zones.
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More than
222,000 10,800 hours of training given in 2013
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employees trained in 2013
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310
internal mobilities in 2013
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IMERYS, MINERAL SOLUTIONS FOR A CHANGING WORLD
DEVELOPING EMPLOYEES IN LINE WITH CHANGING SOCIETIES To be in phase with a fast-changing environment, Imerys has centered its Human Resources policy on developing professional, behavioral and managerial skills of its employees. In an open world, the Group also aims to foster diversity as a fundamental performance lever.
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IMERYS IS ENHANCING ITS GROWTH PROFILE _
The Group is showing its dynamism in a contrasting economic environment. Its positioning on high value-added specialties and its sectorial and geographic diversification are continuing to prove effective, as is its tight cost control. _
GILLES MICHEL CHAIRMAN & CEO
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2013 – A GROWTH-FOCUSED YEAR
SOUND 2013 RESULTS
In 2013 Imerys completed several operations to increase its exposure to promising markets and expand its geographic footprint. More specifically, we strengthened our industrial assets in Oilfield Solutions in Wrens (Georgia, USA) through the takeover of PyraMax Ceramics LLC and made two acquisitions in monolithic refractories in Indonesia and Japan. The capital projects begun in 2012 also continued with the start-up of three new plants, in Belgium (doubling carbon black production capacity), Brazil (lime) and Bahrain (fused alumina), that will ramp up throughout 2014. A new operating and managerial organization was also set up in 2013, centered on four business groups with renewed scopes to draw full benefit from development opportunities: Energy Solutions & Specialties, Filtration & Performance Additives, Ceramic Materials and High Resistance Minerals. This configuration makes new momentums possible in technical or industrial fields, mining resource management, business logic or geographic development.
Our environment remains marked by sharp disparities, with vibrant demand in North America (construction and consumer durables), more moderate growth rates in emerging countries and gradual stabilization in Europe. Against this contrasting backdrop, Imerys achieved its goal and slightly increased its net income from current operations by 1.2% while improving its operating margin from 12.6 to 12.9%. Our revenue, heavily penalized by a high negative currency translation effect, dropped 4.8%. It was virtually stable at comparable Group structure and exchange rates. As regards workplace safety, our efforts continue to bear fruit. The aggregate frequency rate for lost-time accidents was reduced to 1.31 in 2013, down 13% from 2012 and more than 57% compared with 2009.
3 AMBITIOUS OUTLOOK FOR 2014 We’re continuing our selective acquisition policy, which has enabled Imerys to become the sector’s world leader in a dozen years and broaden its activity portfolio to create value. The Group has completed almost 80 external growth operations since 2000 for a total amount of over €2 billion. The Group has the sound financial situation needed to implement its development plan. The maturity of our
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2012-2016 ORIENTATIONS The strategic orientations the Group set for 2012-2016 are designed to speed up its growth by boosting internal and external developments.
INCREASING R&D EFFORTS
The resources allocated to R&D have been increased with tangible results. Several disruptive innovations have been marketed (ceramic proppants for the oil and gas industry, carbon for lithium-ion batteries, etc.). This trend continued in 2013, leading to the launch of more than 65 new products. Products launched in the past five years generated €333 million in revenue in 2013 (+ 33% vs. 2012) and now account for 9% of the Group’s consolidated sales.
TARGETED EXPANSION IN EMERGING COUNTRIES Imerys is continuing to develop in emerging countries. The share of revenue achieved on these markets has grown from 6% in 2001 to 26%, or almost a billion euros, in 2013. The countries where Imerys already has a critical size (Brazil, India, South Africa and China) are driving this geographic expansion strategy, combining organic growth, acquisitions and partnerships. The Group is also developing its presence on other targeted countries to build regional platforms.
financial resources was extended further with the €300 million bond issue that we carried out on November 19, 2013 and which was oversubscribed five times over. I therefore view the implementation of our 2012-2016 strategic plan with confidence. Under this plan, the Group will boost its organic growth by developing new applications for growing end markets and by geographic diversification. Recent projects, as well as our new proppant plant in the USA, will contribute to revenue from 2014. In addition, the Group will undertake new, growth-focused capital expenditure in accordance with its usual profitability criteria. And R&D and innovation programs will continue to grow. In early 2014 we initiated a major external growth operation with which we finally decided not to go ahead. An acquisition, no matter how attractive in industrial terms, also has to enable us to meet the value creation goals that are one of the keys to our profitable growth strategy. Throughout the preparations for the operation, Imerys’ teams were able to demonstrate their ability to rally round and fully commit to a large-scale project, proving that our Group is in motion and knows how to be daring.
PRIORITY GIVEN TO MARKETS WITH HIGH GROWTH POTENTIAL
To enhance its growth profile, the Group has identified a number of attractive end markets including automotive, packaging, energy, electronics, semi-conductors, the environment, health/beauty/care, agriculture and aerospace. Imerys now achieves more than a quarter of its revenue in these sectors, and its exposure to them has more than doubled in the past eight years. The Group will continue to allocate greater resources to these markets through innovation and possible acquisitions.
BROADENING THE GROUP THROUGH A SELECTIVE ACQUISITION STRATEGY
Imerys intends to continue expanding its activity portfolio through selective acquisitions that are consistent with its core business, a policy that has enabled it to become the sector’s world leader in a dozen years.
KEEPING STRICT FINANCIAL CRITERIA FOR DEVELOPMENT
The Group maintains strict profitability criteria by targeting an internal rate of return over 15% for its internal and external development projects in order to keep its financial structure sound. In addition, Imerys intends to achieve return on capital employed that is higher than the average cost of its capital, guaranteeing value creation for its shareholders.
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PRESENCE IN A GREAT NUMBER OF MARKETS
CONSTRUCTION Roof tiles, cement making, window profiles…
DECORATIVE MATERIALS AND FITTINGS Sanitaryware, tableware, flooring, paint, floor tiles…
STEELMAKING AND METALLURGY Refractory linings for furnaces…
ELECTRONICS Device structure, processors, semi-conductors…
ENERGY Batteries, photovoltaic cells and panels, oil and gas drilling…
AGRI-FOOD Filtration of beer, wine, drinking water and fruit juice…
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Imerys serves a wide range of industries, guaranteeing balanced exposure to different economic cycles. The Group’s sales are spread across 20 or so markets, including these examples. _
PAPER Catalogues, advertising materials, brochures, magazines, specialty papers…
AUTOMOTIVE, INDUSTRIAL PACKAGING EQUIPMENT AND CONSUMER Board, plastic film… DURABLES Plastics, batteries, paint, bodywork, tooling…
HEALTH, BEAUTY & CARE Deodorant, skin creams, toothpaste, hygiene products…
HORTICULTURE, PROTECTION OF FLORA Hydroponics, UV production, repellents…
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OUR BUSINESS: TURNING MINERALS INTO INNOVATIVE SPECIALTIES
KNOW-HOW IN BENEFICIATION AND PROCESSING
HIGH-QUALITY MINERALS The Group mines a range of around 30 minerals on 115 sites, where it holds on average 20 years’ high-quality mineral reserves. Thanks to teams who are dedicated to mining these reserves and exploring additional resources, Imerys guarantees its customers a lasting supply. The Group also converts a number of minerals (e.g. bauxite, alumina, zirconium, magnesia) that it purchases from external suppliers.
To obtain the required properties and so add value, minerals are processed using various technologies, many of which are specific to Imerys, e.g. grinding, grading, drying, calcination, sintering, melting, bleaching, surface chemistry, magnetic purification and flotation, but also shaping processes such as pressing, extrusion, granulation and casting.
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_
A set of industrial and technological skills
The mining profession By selecting relevant techniques for the characteristics of every deposit, Imerys can extract minerals with an economically efficient yet environmentally friendly approach. Sites at the end of their lives are restored in
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the best possible conditions. Restoration plans are studied from the outset of mine opening projects, under a Groupwide responsible management process.
Minerals are processed to optimize their intrinsic properties in order to obtain the required characteristics and specifications, for example strength, conductivity, coverage or barrier effect. To do so, the Group calls substantial resources into
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play to innovate in line with its customers’ needs: 300 scientists, eight Research & Development centers, 20 market-focused regional laboratories and collaborations with renowned institutes.
_
Transforming minerals to obtain the required properties after analyzing the customer’s needs is Imerys’ core business. For that purpose, the Group’s technological skill set enables it to optimize processes and add the value that makes Imerys a preferred partner for manufacturers aiming for high performance. _
SPECIALTIES FOR WIDE-RANGING APPLICATIONS _
Imerys’ mineral-based specialties can be used in four different ways in the industrial chain:
Product examples • Graphite is converted to meet the specifications of mobile energy and precision engineering industries (lithium-ion batteries, brake pads).
• mineral components; • functional additives; • manufacturing process enablers; • finished products.
• Monolithic refractories are used as linings in high-temperature industries (steelmaking, foundry, etc.).
Impermeability, whiteness, strength, energy efficiency, conductivity, purity and longevity are some of the key functions delivered by the Group’s mineral solutions.
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• Diatomite and perlite are filtration agents for edible beverages. • Electrofused magnesia is commonly used in domestic appliances (dishwashers, cookers, etc.) to guarantee high electrical resistance and low heat conductivity.
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FOR A CHANGING WORLD
IMERYS, A GROWTHFOCUSED MODEL In a fast-changing world, Imerys stays on course with the support of the three pillars in its profitable development strategy: speeding up innovation, expanding its geographic footprint and diversifying its activities into high-growth markets.
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INNOVATING TO DEVELOP NEW APPLICATIONS _
Imerys dedicates 1.6% of its revenue to Research & Development, a very significative share for the industrial minerals industry. This effort reflects the Group’s determination to make innovation the driver of its internal growth. _
65 More than
new products launched in 2013
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In response to the growing number of ideas and projects, the Group decided to increase its research and innovation spending to almost €60 million in 2013, an increase of + 7% on 2012. The programs being namely rolled out are intended to find new applications in growing markets like for example energy, food or the environment.
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IMPROVING OUR CUSTOMERS’ PERFORMANCES The Group’s Innovation approach starts with understanding customers’ businesses and solving their technical problems, in addition to meeting their expectations and anticipating their needs. The minerals used by Imerys deliver essential features for its customers’ products, such as mechanical, thermal, optical and chemical qualities, as well as absorption/adsorption and filtration functions. They also enable customers to improve their manufacturing processes and reduce their production costs. By generating
RESEARCH CENTERS CLOSE TO CUSTOMERS Imerys’ 28 research centers are comprised of eight main centers specializing in certain minerals and 20 regional laboratories close to their customers, which identify new expectations that give rise to new solution ideas. The main centers are the following:
1 Bodio (Switzerland): dedicated to graphites and carbons.
2 Villach (Austria): focusing on
refractories and abrasives, also very active in technical ceramics.
3 Limoges (France): dedicated to research in minerals for ceramics and located in the heart of the city’s European ceramics cluster.
4 Toulouse (France):
a center specializing in high-performance polymer applications.
5 6
5 Saint-Quentin-Fallavier (France):
development of new monolithic refractories.
1 3 4
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6 Par Moor (UK): research on
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kaolins and carbonates for paper and on performance minerals.
8 7
7 Sandersville (Georgia, USA):
process development and new kaolins for paper.
8 San José (California, USA): benchmark laboratory for performance and filtration minerals.
new products and processes, the Group helps its customers to meet new challenges. In the non-conventional hydrocarbon market, for example, ceramic proppants improve the conductivity of the fracture made in the parent rock, leading to higher production rates.
SUPPORTING GROWTH In addition to innovations of continuity stemming from improvements to existing ranges, disruptive innovations are based on the development of new concepts. A growing percentage of research expenditure concerns innovations in new markets, such as ceramic proppants for oilfields, lithium-ion batteries for cellphones and talc for cosmetics. Together, these two kinds of innovation enable the Group to broaden its product offering and increase its competiveness. This offensive strategy serves an ambitious goal: contributing €700 million in additional revenue by 2016.
place in 2013. Subsidies were granted to five new projects, in addition to the eight selected in 2012. Finally, in 2013 Imerys organized three new technical days, two with potential customers (namely Arkema) and the third one with Georgia Tech university. It was an opportunity to generate and appraise new cooperation ideas. A series of joint projects was also identified and their progress is monitored regularly.
PROTECTING INNOVATION CAPITAL Innovation is a highly valuable asset for Imerys and is protected by relevant intellectual property. The Group owns approximately 3,500 trademarks, either registered or in the registration process, more than 1,000 patents and patent applications and over 220 industrial and utility models. This portfolio is regularly rationalized to optimize its cost. To ensure effective protection for its name, the Group has filed the “Imerys” trademark in 90 countries.
60 M€ Almost
allocated to innovation in 2013
333 M€
in revenue achieved from products created in the past five years,
+ 33%
MANAGING INNOVATION The portfolio of projects and the individual likelihood of their success are reviewed quarterly. These programs were checked for consistency with the Group's strategic goals and that sufficient resources are assigned to them in an annual innovation meeting held with the Executive Committee. The second session of innovation support funds took
increase on 2012 i.e.
9%
of Group’s consolidated revenue
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FOCUS ON
Some 2013 innovations
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FIBERLINK™ 201S A new generation of ground calcium carbonates for fibers and non-woven applications, FiberLinkTM 201S reduces Imerys customers’ carbon footprint by replacing oil-based resins used in wipes or personal care products. This mineral additive enables customers to save manufacturing costs and improve their products’ performance. MISTRON HAR® REDUCES THE TIRE INDUSTRY’S ENVIRONMENTAL FOOTPRINT Rubber compound manufacturers are on the lookout for efficient, environmentally-friendly ingredients for their products. Mistron HAR®, a cutting-edge talc with a high shape factor, significantly improves tires’ waterproofness, which guarantees road-holding, and durability without impairing mechanical performance or the fluidity of the rubber blend. As tires are less permeable, their rolling resistance is lower, leading to fuel savings and reduced CO2 emissions.
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KERAVIVATM, A CONCRETE ALLY Patented by Imerys Ceramics, KeravivaTM involves hot-spraying a thin layer of colored ceramic onto concrete. This protects the material without affecting its mechanical properties. KeravivaTM resists frost, ultraviolet rays, chemicals and fire. It makes graffiti and lichens easier to clean off without impairing the original color. The many applications range from street furniture and building facades to direction signage.
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IMERPLASTTM FOSTERS PLASTIC RECYCLING Only 6 of the 25 million tons of plastic waste produced in Europe are currently recycled. Because of the incompatibility between polyethylene and polypropylene, producing miscible blends of the two materials used to be difficult. Thanks to a research program started in 2010, Imerys has developed and marketed ImerPlastTM, a mineral solution that makes polyethylene/ polypropylene blends compatible using an active mineral agent. The combination of mechanical properties and lower raw material cost of ImerPlastTM will enable our customers to save 40% against virgin polyethylene or 10% against recycled resins. This innovation opens up new possibilities in applications for recycled plastics (pipes, cable sheaths, sewerage systems, geomembranes, insulation, etc.).
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IMERCARETM, AN EXPANDING RANGE The ImerCareTM range, comprising several of the Group’s minerals, including perlite, kaolin, mica and diatomaceous earth, was broadened in 2013 with ImerCare 04K and ImerCare 07K. Based on hydrated aluminum silicates, the two solutions are differentiated by particle size. Used in the cosmetics sector for their ability to absorb sebum and impurities, they deliver an opacifying effect and a soft feel to the skin. Guaranteed 100% natural and ECOCERT certified, the ImerCareTM range is an efficient alternative that respects both the environment and consumers’ wellbeing. Launched at the In-Cosmetics trade fair in April 2014, these two new products in the range replace plastic-based peeling particles in shampoos and shower gels.
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1
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EXPANDING THE GROUP’S GEOGRAPHIC FOOTPRINT _
Imerys constantly invests to extend its geographic presence and so increase its exposure to high-growth markets and zones, in both mature economies and emerging countries. _
1 and 2 Doresópolis lime plant (Brazil - Minas Geiras, Carbonates activity) .
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26%
of revenue is achieved in emerging countries
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2013 was marked by a gradual stabilization in the European economic environment. Nevertheless, the construction and industrial equipment sectors remained weak. In North America, buoyant demand was particularly seen in the construction and consumer durables sectors. The pace of growth was more moderate in emerging countries. More than ever, geographic diversification is essential for the Group to maintain its operating profitability and seize internal and external growth opportunities.
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INCREASING PRODUCTION CAPACITIES Organic growth entails increasing global production capacities, among other factors. Several new plants started up in 2013. In Brazil, the Doresópolis lime plant will enable Imerys to beneficiate its local calcium carbonate reserves and gain footholds in sectors that are growing in the country, including steelmaking, chemicals, the environment, agriculture, construction and paper. In Bahrain, the new fused alumina plant, the Group’s first facility in the region, came on stream in early 2014. Following the
MONOLITHIC REFRACTORIES: TWO ACQUISITIONS IN ASIA Imerys’ joint venture with Indoporlen, the Indonesian leader in monolithic refractories with revenue of ¤15 million in 2012, follows an operational partnership built up over many years. This business combination allows the Group to expand its industrial network into Indonesia and benefit from a robust platform to develop and offer comprehensive solutions to customers, from design through to fitting. Indoporlen has strong positions in the steel and metal processing segments. It will be able to draw on Calderys’ know-how and offering to diversify its presence on new, high-growth sectors (petrochemicals, nickel, etc.).
ramp-up phase planned this year, the unit will have an annual capacity of 45,000 tons. This capital project is designed to serve global customers efficiently.
Fused alumina plant in Bahrain (Fused Minerals activity).
INCREASING PRESENCE ON PROMISING MARKETS Imerys’ international expansion also relies on a targeted external growth policy. In April 2013, the Group acquired PyraMax Ceramics LLC in the USA. This ceramic proppant production complex will enhance Imerys’ industrial network in Oilfield Solutions, a sector that is enjoying unprecedented growth in the country. Proppants are used to keep rock fractures open in “non-conventional” oil and gas field operations. In Asia, Imerys completed two acquisitions in monolithic refractories: Tokai Ceramics in Japan and a 70% interest in Indoporlen, Indonesia. Both operations expand and consolidate the international network of Calderys (a Monolithic Refractories brand).
In Japan, the acquisition of Tokai Ceramics, a renowned producer of monolithic refractories (2012 revenue approx. ¤7 million) enabled Calderys to open its first production facility in the country, where it has been active for more than 30 years. As well as strengthening its customer portfolio in aluminum and ferrous metal casting, this operation opens up fine growth prospects on the small steelworks and reheating furnace market.
The Group targets the most attractive countries, i.e. those where it already has mining, industrial or commercial presence (Brazil, India, South Africa and China), which represent significant outlets for its mineral specialties and offer the possibility o f b u i l d i n g e f fe c t i ve co m m e rc i a l partnerships (Indonesia, Malaysia, Thailand, Russia, Turkey, etc.).
INVESTING IN EMERGING ZONES Emerging countries are a major growth vector for Imerys’ activities. The Group continues to develop in these zones and has expanded its presence substantially in the past 12 years. The share of revenue achieved in emerging countries rose from 6% in 2001 to 26% in 2013 and is set to grow further.
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BROADENING THE BUSINESS PORTFOLIO _
Imerys’ mineral specialties have value-added applications in a great many markets, from industry to fast-moving consumer goods. Nevertheless, the Group aims to widen its activities with a focus on the end markets with the greatest growth potential. _
1 and 2
Willebroek (Belgium) carbon black plant (Graphite & Carbon activity).
1
Imerys is buiding-up its positions in highgrowth sectors from mobile energy,
GROWING IN NON-CONVENTIONAL OIL AND GAS FIELDS MARKET
packaging and the environment, to nonconventional oil and gas fields, automotive and aerospace. This is one of the main lines
Several years ago, Imerys decided to aim for positions on the booming non-conventional oil and gas field market in the USA through ceramic proppants. With a highly promising market outlook, Imerys undertook research, filed patents and built a plant in Georgia in 2012. To reach critical size in the sector without delay, the Group acquired a second plant in 2013 (see box page 23).
of the Group’s 2012-2016 strategic plan, a key strength of its business model and a factor that guides its capital expenditure and acquisition decisions.
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STRATEGIC ACQUISITION OF PYRAMAX In April 2013, Imerys completed the acquisition of PyraMax Ceramics LLC, which provided it with a production unit for proppants (ceramic balls injected into rock to keep fractures open). The operation strengthens the Group’s industrial assets in Oilfield Solutions in the USA. Located in Wrens (Georgia), this industrial complex with capacity of 225,000 tons is composed of two production lines that will be ramped up throughout 2014. This will enable the Group to increase its production
capacity from 100,000 to 325,000 tons and ramp up more quickly to serve the booming US market for non-conventional hydrocarbons. Imerys is aiming for 150 million in revenue in the nonconventional oil and gas fields market by 2016.
BANKING ON MOBILE ENERGY Other promising segments, such as mobile energy for electronic devices and electric vehicles, are the focus of targeted capital projects. This is boosting the Graphite & Carbon activity’s development. A new carbon black production line was set up in Willebroek, Belgium, doubling the site’s production capacity to meet fast-growing needs in lithium-ion battery segments.
Photovoltaic roof tiles.
CONTRIBUTING TO THE DEVELOPMENT OF RENEWABLES Renewable energies are another example of the Group’s will to broaden the applications of its mineral specialties. Graphite, kaolin, high-purity quartz and limestone are used to make photovoltaic cells and wind turbines. In 2011, Imerys joined forces with Norwegian Crystallites AS through the joint venture The Quartz Corporation, to support growing demand for high-purity quartz, particularly for photovoltaic industry segments. Imerys is also innovating in favor of sustainable housing with ready-to-fit photovoltaic roof tiles for new housing or renovation work.
MAKING DECISIONS The focus on profitable sectors also entails rationalizing less dynamic activities. Under that rationale, the Group completed the sale of Imerys Structure, its activity specializing in wall bricks, partition bricks and chimney blocks, to BouyerLeroux. Imerys also divested four calcium carbonate production sites serving the paper market and located in Europe and the United States.
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BANKING ON OPERATING EXCELLENCE AND DISCIPLINED FINANCIAL MANAGEMENT _
Imerys constantly optimizes its industrial assets to adapt them to market trends, control costs and increase their flexibility and competitiveness. _
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industrial performance indicators
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The Group is decentralized but in 2012 it set up an Industrial Department with the role of disseminating best practices and techniques, whether specific to Imerys’ business or tried and tested in the industrial world (Six Sigma, Lean Manufacturing, Total Productive Maintenance, etc.) among all of its business units. This approach goes far beyond cost reduction. It is part of a wider continuous improvement process with the aim of combining efficiency with effectiveness.
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CREATING AN INTERNAL FRAMEWORK This operating excellence process is based in particular on the monitoring of key performance indicators. 14 KPI have been rolled out in all production sites since the end of the first half of 2013. They concern, among other factors, customer complaints per ton of product and machine utilization. The indicators are calculated using a common, Group-wide method, monitored site by site and consolidated by activity, business group and Group. They form a reference base and benchmark in terms of
DISCIPLINED CASH MANAGEMENT Strict financial management is another pillar of Imerys’ strategy. It helps the Group to safeguard its long-term future and adapt to the changes facing it. In a difficult economic context, optimizing working capital requirement (WCR) and cash flow control fosters cash generation and strengthens Imerys’ ability to finance its internal and external growth. The entire company has rallied round this goal through a great number of initiatives. The overhaul of the dedicated WCR intranet is a recent example. The simpler, more attractive, intuitive service lets teams know about best practices and optimization levers in
productivity and improvement potential for the Group’s mines and plants. Since they were set up, positive results have been recorded on energy consumption in Europe and North America and on the supply and production process in South America.
INSTILLING A MINDSET To enable all business units to share a common culture and practices, a dedicated training program, “Imerys Operational Excellence”, is being rolled out to management and to teams on the ground. It combines theoretical input with real-life situations. The aim is to center processes on employees by engaging them in a continuous improvement dynamic, because the long-term future of Imerys’ operational excellence process depends on everyone’s commitment. Three pilot sessions took place on European sites in 2013 and will be continued in 2014 with around ten new sessions, expanding the process into the Americas.
performance of the Group’s mines and plants over the long term. Around 10 reference units will be named to set up the operational excellence tools that make sense at the various stages in their production process. A cross-functional team made up of these units’ Operational Excellence managers will also be formed to speed up dissemination of best practices.
just a few clicks. In parallel, bespoke training structured in short, easily grasped modules is available to subsidiaries. Finally, specific on-site assignments identify improvement areas and offer individualized support in rolling out action plans.
80% 2014 target for training the population in operating excellence
Sainte-Foy-l’Argentière plant (Building Materials activity).
ROLLING OUT HIGH PERFORMANCE Over the years, Imerys has built its success on ownership of its assets and their industrial, commercial and financial performance by all employees. Launched in early 2014, the Imerys Industrial Improvement Program (I3 or I-cube) will enhance this ownership and the grasp of industrial processes to improve the
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DEVELOPING TALENT _
Imerys would be unable to develop and adapt to the many changes facing it without the quality and commitment of its employees. Its teams, made up of men and women from every profession and every background, are united by their spirit of enterprise. _
More than
11,000
hours of training given by Imerys Learning Center in 2013
In 2013, the Group continued to develop its organization, making many career developments possible. Training efforts and the rollout of certain sustainable development goals were stepped up. Finally, the Group made its compensation and benefits policy more efficient.
FOSTERING CAREER DEVELOPMENT
stepped up recruitment in every function. Thus, many managers, some of whom are highly experienced, joined its top management teams. To implement and support these changes, the Group bolstered its network of Human Resources specialists in some countries (USA, Brazil) and activities including Fused Minerals and Graphite & Carbon.
To support changes in its organization, Imerys continued its internal mobility effort. More than 40 career developments and promotions were completed among the Group’s 220-240 top managers. To prepare for the future, Imerys also
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CONTINUING TRAINING EFFORTS Training actions were stepped up in 2013. Imerys Learning Center launched two new programs: •“Sales Excellence program”, designed to
A COMMITMENT TO DIVERSITY One of Imerys’ strengths lies in the diversity of its employees: men and women from many nationalities and cultures who work together and share common goals. The Group’s Diversity Charter signed in 2011 sets down Imerys’ commitment in this area. The Charter is the basis of Imerys’ action on several fronts, including recruitment, promotion, career development plans and training programs. Diversity programs were set up in five countries in 2013.
improve teams’ sales & marketing performance (18 sessions organized); •“Operational Excellence,” with the aim of promoting this key improvement area on a lasting basis and giving managers tools to improve the performance of industrial facilities in particular. In addition, the “Senior Leadership Program” created with INSEAD in 2012 brought together 20 of the Group’s current or future executives in two sessions. The aim was to increase their openness to global economic issues and improve their management and leadership skills. In 2013, Imerys Learning Center gave more than 11,000 hours of training.
SHARING CORPORATE CULTURE Cohesive relations between employees and the strength of their connection to the Group are important aspects of Human Resources policy. Many initiatives were rolled out internally for that purpose: cross-Group seminars by profession to share best practices; magazine published in four languages; Galaxy, a social network hosting various professional communities; multi-media tools for sharing information (e-newsletters, Imerys Replay YouTube channel, etc.).
The place of women in the enterprise is a diversity issue. A “Women’s Mentoring Program” was launched in late 2013 to provide a tangible reference base for the objective of having more women in operating positions.
HARMONIZING COMPENSATION SYSTEMS The business units in the various countries where the Group is active are gradually aligning their compensation and benefits practices to the highest international standards that Imerys uses as benchmarks. In Brazil, for example, across-the-board salary increases, usually granted for all personnel categories, will now be limited to an annual compensation ceiling. Beyond that ceiling, compensation increases will be mainly related to market positioning and the employee’s individual contribution. In Indonesia, Indoporlen, a company acquired in 2013, also improved its complementary benefits system with the introduction of life insurance coverage for all employees and better healthcare coverage for management personnel.
31%
share of women employees (salaried employees)
STRENGTHENING IDENTITY In 2013 the Group continued to develop and strengthen its identity. Activities such as Fused Minerals and Refractory Minerals are now consistently presented under the Imerys name.
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ANNUAL REPORT | IMERYS 2013
WE ARE IMERYS CHRISTELLE PLANQUE PROCESS & PROJECT ENGINEER
Refractory Minerals
_
Being Imerys” means belonging to a Group that processes minerals for many markets and applications, and which adapts to its customers’ needs by helping them develop innovative products. It also means sharing knowledge, technologies and know-how between units, while combining the advantages of a major group and a small business as every activity is autonomous. My biggest challenge? Working with natural products and having to constantly adapt our processing methods to evolving deposits!
DAVID SACHS FINANCIAL CONTROLLER
Monolithic Refractories China & Asia-Pacific
_
I joined Imerys in 2000. Since then I’ve been posted in Germany, the UK, Taiwan and China. It’s a Group where change is part of the routine! The organization is flexible and responsive in order to adapt to a fast-changing environment. It also allows all employees to achieve their professional and personal goals. Important decisions are taken locally or by each activity, with corporate services setting the framework and providing the necessary support. I’d also say that at Imerys, diversity is considered a strength and a competitive edge in serving global markets.
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JIM KUYKENDALL SALES DIRECTOR
Minerals for Filtration North America
_
To me, “We are Imerys” means that we form a united team and that we are working towards the same goals: growing our businesses, developing our professional skills, taking action for sustainable development and contributing to innovation. The Group’s values focus on ethics and integrity. These correspond well to my highest personal values. Imerys is a company that offers real opportunities to individuals who demonstrate their abilities and show commitment. It’s possible to evolve in many directions with Imerys, and I’m a good example of this having moved from a legal position in Singapore to a sales position in the USA! SHUMIN WANG-OUI FINANCIAL CONTROLLER
Talc Europe
_
After working in Asia for five years, I joined the Talc Europe business unit in 2011 following the takeover of the Luzenac Group. To me, working at Imerys means being responsible for your own actions and commitments. It’s a rewarding, exciting job as it’s based on a dynamic scope of responsibilities and great cultural diversity: there are always new challenges to meet, new fields to grasp and new opportunities to seize. Imerys encourages every employee to take initiatives that contribute to the success of our projects. Ultimately, everyone can see that, thanks to efforts by the whole team, we end up delivering results that seemed out of reach at the start.
GERRIT POSTHUMUS DIRECTOR OF OPERATIONS
Refractory Minerals United States
VINCENT COUTY GENERAL MANAGER
Minerals for Ceramics South East Asia & West Asia
_
_
I see Imerys’ essential values as attention to employees’ health, vigilance over environmental issues, involvement in neighboring communities and disciplined governance. These values give us a framework for action and define our responsibilities, both internally and for stakeholders. In parallel, Imerys’ highly decentralized nature means there is plenty of leeway to make decisions locally. Empowerment of all employees is another of the Group’s key values and is fostered at every level of the organization.
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I joined the Group 11 years ago. I’ve already had four different professions at Imerys and lived in five countries. During my career I’ve always been able to rely on my managers when things get tough. That strengthens the feeling of belonging and loyalty. Managers also encourage initiative and are always proposing new challenges to evolve and not stay in your comfort zone. Working at Imerys means being part of a community of people from different backgrounds who share the same corporate culture and values, with the same expectation of adding value for both the company and for customers.
ANNUAL REPORT | IMERYS 2013
FOR A CHANGING WORLD
IMERYS IS DEVELOPING SUSTAINABLY Imerys’ international scope and nature of its activities give it special responsibilities towards its employees, host communities, shareholders and the environment. The Group’s performance on its sustainable development policy is therefore a core component of its results and a guarantee of future performance.
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SUSTAINABLE DEVELOPMENT, A GLOBAL STRATEGIC ORIENTATION _
Sustainable Development is an essential component of the Group’s long-term strategy to support growth while promoting environmental stewardship and social responsibility. _
100%
of the operations have implemented an EMS
Around
3,000
employees were trained in the Business Conduct and Ethics Code in 2013
In 2013, after analyzing the most significant Sustainable Development issues and the relevant stakeholders, Imerys decided to strengthen the alignment of its programs along three main aspects: social, environmental and governance.
SOCIAL ASPECTS, A CENTRAL PRIORITY With respect to the social aspect, there are four axes. The first is watching over the safety and health of both employees and contractors. The Group integrates contractor personnel into its unified safety reporting and key performance indicators. The second axis
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is the human resources policy (see pages 26 & 27). The third axis is human rights which includes regular reviews integrated into the internal auditing activities. Key suppliers in concerned countries are also asked to confirm their compliance with international conventions on child labor and forced labor. The fourth axis is community relations which are managed with local empowerment at each entity with guidance from a Group protocol. As of 2013, approximately one-third of the operations had drawn up a formal community relations plan. In addition, 40Â projects on this topic were entered for the in-house Sustainable Development challenge.
TEN AREAS OF COMMITMENT In line with its main issues for the future, the Group has made commitments in ten main areas. SAFETY AND HEALTH:
develop a proactive safety and health culture by implementing the three pillars of the Imerys Safety System: compliance, continuous improvement and communication.
HUMAN RESOURCES:
develop the professional and personal capabilities of our employees, provide them with appropriate benefits, promote workplace diversity and maintain industrial relations by fostering an environment of mutual respect.
COMMUNITIES:
build positive relationship with communities around our sites and contribute to local social and economic development.
HUMAN RIGHTS:
respect fundamental human rights by referring to core international conventions and the Universal Declaration of Human Rights, and take particular actions to avoid child labor and forced labor.
ENVIRONMENTAL MANAGEMENT SYSTEMS:
assess relevant environmental risks and continually improve control measures to reduce adverse environmental impacts.
THE FOUR ENVIRONMENTAL ORIENTATIONS With respect to the environmental aspect, there are also four axes. The first axis concerns the environmental management system (EMS). Having established EMS within 100% of the operations prior to 2013, the Group is now focusing on encouraging the robustness of these systems through quarterly reviews. The second axis concerns the efficient use of resources (both raw materials and natural resources). Specifi cally in 2013, the initiatives to improve energy efficiency we re co n t i n u o u s l y e n co u ra g e d throughout the operations and a water management plan was drawn up at each of the 17 operations located in areas of water scarcity. The third axis concerns conserving biodiversity. As of 2013, approximately 15% of the Group’s mining sites which are on or adjacent to areas of high biodiversity value have defined site-specific biodiversity management plans to manage pertinent issues and adopt industrial best practices during
RESOURCE EFFICIENCY:
apply advanced technologies and promote operational excellence to maximize the sustainable use of raw materials and other natural resources, such as land, energy and water.
BIODIVERSITY:
preserve and create biodiversity value by enhancing rehabilitation of mines during their life spans with the aim of harmonizing with local ecosystems.
GREEN INNOVATION:
factor environmental benefits into the research and development of products, processes and services to reduce our environmental footprint throughout the product life cycle.
CORPORATE GOVERNANCE:
respect and implement best corporate governance practices in a manner that is consistent with similar listed companies.
ETHICS AND BUSINESS CONDUCT:
promote and regulate ethical business behavior within the Group through the deployment of appropriate policies and protocols; and monitor their efficient and compliant implementation.
rehabilitation. The fourth axis concerns green innovation. For the third consecutive year, the Group launched five new environmentally-friendly products, bringing the total number of “green” products marketed since 2009 to 23.
PRIORITY GIVEN TO ETHICS AND GOVERNANCE With regard to governance, the cornerstone of the Sustainable Development process, the Group promotes ethical business conduct rules and deploys training programs and selfassessment systems to check that practices are proactively compliant. These efforts were continued in 2013, including an update of the anti-fraud and anti-corruption policy. Around 3,000 employees were trained in the Business Conduct and Ethics Code in 2013.
33
Interview with
PEARSON HE
IMERYS GLOBAL SUSTAINABLE DEVELOPMENT MANAGER
Why is Sustainable Development a strategic issue for Imerys?
Our growth strategy demands excellence on Sustainable Development for several reasons. First, it is important for our employees in terms of health & safety in the workplace, training, career development and equal opportunities. Furthermore, it is important to maintaining our shareholders’ trust in our ability to control our environmental impacts. Finally, it is important to gain the respect of our host communities. Sustainable Development is a logical choice for a leader like Imerys and it is essential to longterm value creation. It is also the best way to manage non-financial risks and seize opportunities arising from the economic and social trends in today’s world.
What are your main goals for 2014?
We achieved over 80% of our Sustainable Development objectives in 2013. We intend to keep up these efforts in 2014, the final year of our current three-year plan. Foremost among our priorities is the safety of employees and contractors which we will reinforce by making the “Take 5” best practice initiative (see page 35). At the same time, we will continue auditing our sites’ environmental management systems, improving our energy and water efficiency, controlling carbon emission and waste generation, and developing positive community relations with local economic and social development programs. Of course, we will also pool our ideas for the next 2015-2017 plan and define its contents.
ANNUAL REPORT | IMERYS 2013
KEEPING EVERYONE HEALTHY AND SAFE _
Preventing workplace health and safety risks is one of Imerys’ priorities. To keep improving in this area, initiatives are coordinated and made more efficient year after year. _
The Group’s social action is built on clearly defined lines: regular audits, a global training plan, a behavior-based safety program, an accident analysis p ro g ra m a n d a s e r i o u s a cc i d e n t prevention plan, as well as events designed to consolidate a safety culture on key sites.
THE IMERYS SAFETY SYSTEM, A FRAMEWORK FOR ACTION
1.31
lost-time accident frequency rate (contractors included) (- 57 % vs. 2009)
As of 2012, the various components of the safety program have been grouped together under an integrated approach, the Imerys Safety System. This approach sets out the safety rules and standards with which the Group expects all of its operating activities worldwide to comply. It also describes the main levers for continual safety improvement. Finally, it lists the training and communication tools for implementation. Each of these aspects is regularly updated under a management system.
STAYING VIGILANT These efforts are coming to fruition. The lost-time accident frequency rate (contractors included) was reduced to 1.31 in 2013. This is 13% lower than in 2012 and a more than 57% improvement from 2009. To stay on this track, the Group launched in January 2013, a Supervisor Focus program.
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34
All supervisors and foremen followed an e-learning module, and then had the opportunity to implement the contents of the training in a monthly safety tour. In addition, the self-diagnoses made by all sites every month to check the correct application of the “Serious Six” protocols (covering the activities with the highest risk of serious accidents) were kept up without fail.
MANAGING WORKPLACE HEALTH ISSUES Imerys also takes measures to improve the working environment of employees who are potentially exposed to chemicals and mineral dust. In 2013, a working group was set up to share best practices in dust management and industrial hygiene. It is also working on the issue of breathable crystalline silica and developing webbased training modules for rollout in 2014.
FOCUS ON
The “Take 5” initiative
Scheduled for rollout across all of the Group’s mining and industrial sites in 2014, the Take 5 initiative was introduced by Imerys Talc Europe as one of the industrial best safety practices. The aim is to foster greater safety vigilance and caution by each person.
Take 5 requires employees to follow a five-step pre-task risk assessment: • Think through the task. • Look for the exposure. • Assess the risk. • Take precautions. • Do the job safely.
This only takes a few minutes but makes a major contribution to everyone’s safety. All site managers have followed online training so they can cascade Take 5 on to their teams.
OBJECTIVES 2014 SAFETY & HEALTH _ LTA Rate: < 1.1 for contractors and employees
_ Launch “Take 5” program at each operation
35
_ Four web seminars to operations on ergonomics, hearing protection and respiratory protection
ANNUAL REPORT | IMERYS 2013
LIMITING THE ENVIRONMENTAL IMPACTS OF THE GROUP’S ACTIVITY _
Imerys’ activities involve natural resources, such as minerals, land, energy and water. The Group constantly strives to reduce its environmental footprint and use those resources efficiently through a common approach across all of its activities. _
+2.3%
carbon efficiency improvement compared to 2012,
+7.9%
improvement from base year 2009
Imerys’ objective is to have a robust Environmental Management System (EMS) for all of its activities so that they can address and control the related risks and issues. That goal has been achieved, as every site has established an EMS and 81 are ISO 14001 or EMAS certified. The EMS subject is fully integrated into the Group’s EHS* audits with 15 sites reviewed in 2013.
IMPROVING ENERGY AND CARBON EFFICIENCY
Approximately
15%
of Imerys’ sites are located in or near zones recognized for their interest in terms of biodiversity
Imerys works to reduce its greenhouse gas emissions by improving its industrial activities’ energy efficiency and using low-carbon energies on some sites. Energy consumption per ton of product is monitored monthly so measures can be taken swiftly. A dashboard shows all of the key projects that affect energy efficiency. In 2013, pilot operations were carried out on five mining operations consuming the most energy, and around 15 energy or carbon-related projects were entered for the in-house Sustainable Development challenge. Consequently the aggregate CO2 emissions were reduced by 7.9% on the baseline of 2009. Online training was also rolled out to help site managers use steering tools to analyze their energy performance.
*Environment, Health & Safety
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CONTROLLING WATER CONSUMPTION Whether by managing consumption, making recycling possible or controlling discharge qualities, Imerys pays special attention to water, which is crucial to its activity. In 2013, the 17 sites located in zones where water is a scarce resource, implemented optimization plans. In parallel, a study showed that 12 sites together accounted for more than 58% of the Group’s water usage. In 2014, all sites withdrew more than 2 million m3 of water will also establish a management plan for optimizing water efficiency.
RECYCLING WASTE The Group’s activities generated 264 kt of industrial waste in 2013, almost 99% of which was non-hazardous and more than 52% was recycled. Since the European directive on mining waste management came into force in 2011, the Group’s European sites which have had management plans for their inert waste.
FOCUS ON
Initiatives to limit withdrawals
CONSERVING BIODIVERSITY Both active and closed quarries offer many opportunities to enrich biodiversity through the revitalization of natural habitats and protection of endangered species. Imerys is committed to respecting the ecosystems and preserving biodiversity with enhanced rehabilitation throughout the life of a mine. A global biodiversity sensitivity analysis was undertaken and identified approximately 15% of the operations as “concerned sites” due to their proximity to areas of high biodiversity value. In 2012, the Group began encouraging the “concerned sites” to formalize their biodiversity management approaches. In 2013, the approaches have been enhanced and extended to 15% of concerned sites and should cover 20% of them in 2014.
Reusing water after filtration: an initiative by the Brazilian Carbonates business unit Imerys’ Limeira, located in Brazil, uses two filter presses for dewatering precipitated calcium carbonate in the manufacturing process. After implementing a recent recycling project, the operation now reuses the water from this process in the hydration phase of the same process. As a result, 15% less fresh water is consumed and 50% less waste water has to be processed.
Fewer trucks on the roads The Imerys Ceramics plant in Caudiès, France, has a main customer, Alteo. Deliveries of raw materials and finished products between Imerys, Alteo and Ateo’s customers (60,000 tons per year) used to be made solely by truck. Imerys Ceramics’ project, co-funded by Alteo and launched in April 2013, aims to give preference to rail transport to reduce truck shipments by 30,000 tons, which means 1,100 fewer trucks on the road. A loading/ unloading platform was set up for that purpose at Caudiès station in liaison with the rail operator.
OBJECTIVES 2014 ENVIRONMENT EMS
_ Conduct Environmental Management System (EMS) audits at 15 operations Resources Efficiency _ Energy efficiency and carbon emissions: track and monitor the key action plans (continuation)
37
_ Draw up an energy action plan for five additional sites from among the significant energyconsuming mining operations _ Water efficiency plans at the largest water withdrawal sites (> two million cubic meters in 2013)
Biodiversity _ Biodiversity management plans at 20% of sites identified in, or adjacent to areas of High Biodiversity Value Green Innovation _ Environmentally friendly products & processes: five per year _ Perform a life cycle assessment of one new product
ANNUAL REPORT | IMERYS 2013
PLAYING A FULL PART IN SOCIETY _
Addressing the expectations of the communities around the Group’s industrial and mining sites is essential to its business’s long-term future. Imerys’ decentralized management method supports this approach. _
31%
of sites have rolled out in 2013 the Community Relations process
35%
of sites covered in 2014
Wherever they are located, Imerys’ activities promote respect for neighbors’ rights, favor dialog and mutual understanding, and take a proactive approach in order to build firm roots. They are keen to contribute to the economic and social development of their host communities, increase positive fallout from their activities and reduce any negative aspects.
ENCOURAGE CONSTRUCTIVE DIALOG
40
76
of the projects entered for 2013 Sustainable Development Challenge concerned community relations
Under its “Community Relations” protocol, Imerys formally delegates responsibility for community relations to the most senior employee in charge of managing the facility. Available in seven languages, the protocol requires every site to map its stakeholders and draw up an action and continuous improvement plan. It also encourages constructive dialogue with stakeholders and requires a response to all credible complaints by stakeholders. A “Community Relations Toolbox” is available on the Group’s intranet to help sites to structure and enhance their actions in that respect.
SHARE BEST PRACTICES The Group’s sites develop many projects every year in a wide range of areas: organizing dialog, contributing to local economic development, education and
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38
training, and participating in community initiatives. This dynamism is reflected in the number and quality of projects on community relations submitted every year for the inhouse Sustainable Development Challenge. Best practices collected during the Sustainable Development Challenge are shared through a database that all employees can consult on the Group’s intranet.
FOCUS ON
Solidarity from Argentina to China
Conserving resources and creating jobs
Inspiring the younger generations in China
Imerys’ perlite plant near Tucuman, Argentina, is located in a region that is heavily affected by unemployment. Imerys responded to the situation by consulting neighboring communities, then creating workshops to make outdoor furniture from the wood pallets that the plant uses to deliver its products. This gives a new life to broken
For the second year running, around ten young volunteers from the Linjiang diatomite plant in China introduced 80 students at a local school to the environmental aspects of Sustainable Development. Imerys China provided the school with six computers to develop an e-library. In addition to raising environmental awareness
pallets that are no longer suitable for transport, and saves wood, a valuable natural resource. A cooperative was set up and plans to train around 20 jobseekers. The furniture will be sold to cafés and restaurants in Tucuman. The project could be expanded with production of biomass from the most badly damaged pallets.
in the region, the project enables Imerys to promote its employer branding and to spotlight and retain the site’s young talents who took part.
OBJECTIVES 2014 COMMUNITIES _ Community Relations Plan formalized at 35% of operations subject to sensitivity
_ 10 community programs implemented to contribute social or economic development in local context
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IMERYS 2012
SOUND RESULTS
SHAREHOLDER’S NOTEBOOK
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ANNUAL REPORT | IMERYS 2013
EXECUTIVE COMMITTEE _
Under the responsibility of the Chairman & Chief Executive Officer, the Executive Committee implements the strategy determined by the Board of Directors, draws up policies, sets improvement goals for the Group’s performance, determines the action plans to be set up by operating activities and monitors their progress. It is composed of the principal operations and support managers. _
_ GILLES MICHEL Chairman & CEO
Top to bottom, left to right:
_ CHRISTIAN SCHENCK Advisor to the CEO
_ OLIVIER HAUTIN Energy Solutions & Specialties
_ DANIEL MONCINO Filtration & Performance Additives
_ FRÉDÉRIC BEUCHER Ceramic Materials
_ ALESSANDRO DAZZA High Resistance Minerals
_ MICHEL DELVILLE Finance
_ DENIS MUSSON Legal and Secretary of the Board
_ THIERRY SALMONA Innovation, Research & Technology and Business Support
_ BERNARD VILAIN Human Resources
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BOARD OF DIRECTORS
The completion of growthfocused capital projects reflects confidence in the Group’s development potential .
_
AIMERY LANGLOIS-MEURINNE
VICE-CHAIRMAN OF THE BOARD OF DIRECTORS
Dear Shareholders, The solid Group’s results and financial structure in 2013, in an economic environment that was contrasting and, in some activities, difficult, gave the Board of Directors further proof of the relevance of Imerys’ strategy and the Company’s ability to implement it successfully. The Board welcomes the Group’s focus on the growth goals set under the strategic development plan it announced for 2012-2016. In 2013, they resulted in the acquisition of PyraMax Ceramics LLC, a ceramic proppants plant for oilfields in the United States, and the construction in Brazil, Belgium and Bahrain of three new industrial units for the production of lime, carbon black and fused alumina respectively. Imerys’ greater exposure to expanding markets and its geographic growth enable the Board to view the Group’s future development with confidence. The Board of Directors also continued to work on applying the best Corporate Governance principles, in accordance with the AFEP-MEDEF code(1) in particular. In that respect the proportion of women on the Board was increased to over 26% in 2013, with Marie-Françoise Walbaum joining as a new member. As part of the formal assessment they conducted early this year, the Directors confirmed their overall satisfaction with the composition, organisation and workings of the Board and its three Committees (Strategic, Appointments & Compensation, Audit). They particularly emphasized the quality of the work of the Board and Committees, and noted that the improvements suggested in the previous assessment had been implemented. I wish to take this opportunity to express the pride and happiness I have had in being on Imerys’ Board for almost 27 years, and in having been able to play a constructive role in the redeployment and growth strategy that has made it the world number one in industrial minerals. This would not have been possible without the constant, enthusiastic and demanding support of the Company’s controlling shareholders, or the loyal participation of all shareholders, for which I warmly thank them. This journey was led by executives of the highest quality, who instill a mindset of excellence and ambition, but also ethics and solidarity, in all of Imerys’ teams. Thus I can leave the Company with great confidence, wishing it every success for the future, especially for those who are steering it so outstandingly. (1) The Code, in its June 2013 revised version, is available at www.imerys.com, “The Group/Governance” section
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ANNUAL REPORT | IMERYS 2013
GOVERNANCE _
The Board of Directors, assisted by its specialized Committees, has permanent control over Executive Management’s running of the Company. It approves strategic orientations and authorizes major operations that are binding on the Group’s future. _
BOARD OF DIRECTORS Composition as of December 31, 2013 Gilles Michel, Chairman & CEO Aimery Langlois-Meurinne,(1) Vice-Chairman Gérard Buffière(2) Aldo Cardoso*(2) Ian Gallienne Marion Guillou*(2) Fatine Layt* Xavier Le Clef Jocelyn Lefebvre Arielle Malard de Rothschild* (2) Robert Peugeot* Olivier Pirotte Amaury de Seze Jacques Veyrat*(1) Marie-Françoise Walbaum* The appointment of Mr. Paul Desmarais III and Mr. Arnaud Laviolette as new Directors of the Company, in succession to Mr. Aimery Langlois-Meurinne and Mr. Jacques Veyrat, will be proposed at the General Meeting of April 29, 2014. At the same General Meeting, the Shareholders will be asked to rule on the proposed amendment to the by-laws in order to determine the arrangements for appointing employee representative directors, as required by the French employment security law of June 14, 2013. Their appointment should take place in the second half of 2014.
FUNCTIONING Since May 3, 2005, the Company has been organized as a French Limited Liability Company (Société Anonyme) with a Board of Directors (Conseil d’Administration) chaired since April 28, 2011, by Mr. Gilles Michel, Chairman and Chief Executive Officer.
The Board also appointed a ViceChairman from its members, tasked in particular with assisting the Chairman of the Board of Directors in managing and organizing the work of the Board and its Committees. In 2014 Mr. Amaury de Seze will be asked to take over in that capacity from Mr. Aimery Langlois-Meurinne, whose term of office will expire without the possibility of renewal for statutory reasons. Representatives of the Company’s Works Council attend all board meetings on an advisory basis. The Board of Directors met six times in 2013, with an 85.42% attendance rate. Nine meetings have been scheduled in 2014.
Distribution of capital As on December 31, 2013
43.79% 56.21%
Belgian Securities BV(3) Other shareholders
Distribution of voting rights (4) As on December 31, 2013
28.37% 71.63%
Belgian Securities BV(3) Other shareholders
* Independent director (1) Director whose term will end with the General Meeting of April 29, 2014 and will not be renewed. (2) Director whose term will end with the General Meeting of April 29, 2014 and its renewal put to shareholders at that Meeting. (3) Belgian Securities is a subsidiary of the Belgian company Groupe Bruxelles Lambert (GBL), of which the families of Baron Albert Frère (Belgium) and Mr. Paul Desmarais (Canada) indirectly hold joint equal control. (4) Based on a total number of 119,643,619 theoretical voting rights. ANNUAL REPORT | IMERYS 2013
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SPECIALIZED COMMITTEES Under the responsibility of the Board of Directors, the specialized Committees have an advisory role. They give the Board the benefit of their opinions and recommendations in preparing its decisions.
STRATEGIC COMMITTEE Aimery Langlois-Meurinne, Chairman(1) Gérard Buffière(2) Aldo Cardoso*(2) Ian Gallienne Jocelyn Lefebvre Robert Peugeot* Olivier Pirotte Amaury de Seze The Board intends to appoint as new members of the Strategic Committee Mr. Xavier Le Clef as well as Mr. Paul Desmarais III subject to his appointment as a new Director of the Company being adopted at the General Meeting of April 29, 2014. The Committee examines the Group’s industrial, commercial and financial strategic orientations and checks that the strategy set by the Board of Directors is implemented by Executive Management. It also examines the main risk factors for the Group and the related internal controls in the following fields: external environment (investor relations, market positions), internal processes (financial resources management, human resources potential, mineral reserves and re s o u rce s) a n d m a n a g e m e n t information (management control and financial reporting, capital projects). The Strategic Committee met seven times in 2013, with a 90% attendance rate. Eight meetings have been scheduled in 2014.
APPOINTMENTS AND COMPENSATION COMMITTEE Aimery Langlois-Meurinne, Chairman(1) Ian Gallienne Arielle Malard de Rothschild*(2) Robert Peugeot* Jacques Veyrat*(1) The Committee is mostly made up of independent members and therefore complies with the proportion recommended by the AFEP-MEDEF Code of Corporate Governance. Subject to the renewal of the term of office as Director of Mrs. Marion Guillou being adopted at the General Meeting of April 29, 2014, the Board intends to appoint her as a new member of the Appointments and Compensation Committee, in succession to Mr. Jacques Veyrat, as well as Mr. Amaury de Seze, in succession to Mr. Aimery Langlois-Meurinne. The Committee gives an opinion on the composition of the Board of Directors and its evolution with respect, in particular, to the shareholding of the Company, the diversity of its members and their independent status. It also studies Executive Management appointments, compensation and benefit proposals for corporate officers and the general compensation and retention policy for top managers (grants of stock subscription or purchase options, or performance shares in the Company). The Appointments and Compensation Committee met three times in 2013, with a 72.33% attendance rate. Three meetings have been scheduled in 2014.
AUDIT COMMITTEE Aldo Cardoso*, Chairman (1) Jocelyn Lefebvre Marie-Françoise Walbaum* The composition of this Committee complies with the 2/3 proportion of independent members recommended by the AFEP-MEDEF Code of Corporate Governance and with the recommendations of the AMF working group on Audit Committees. The Committee examines Imerys’ annual and half-yearly corporate and consolidated financial statements, makes sure the accounting methods used are relevant and consistent, and examines the Group’s debt position. It checks the process for producing and disseminating accounting and financial information, and supervises the related communication policy and p ro ce d u re s , a n d c h e c k s t h e consistency and relevance of published information. The Audit Committee selects and recommends candidates for Statutory Auditor positions. It examines the schedule and results of work by internal and external auditors and by internal control. It reviews the orientations and achievements of the Group’s Sustainable Development Strategy, the mapping of the Group’s main risks and, in depth, its financial or legal risks, as well as the related internal controls or policies on prevention and insurance. The Committee met five times in 2013, with an attendance rate of 93.33%, and five meetings are scheduled in 2014.
STATUTORY AUDITORS Acting: Ernst & Young et Autres Represented by Jean-Roch Varon Alternate: Auditex
71%
Acting: Deloitte & Associés Represented by Arnaud de Planta Alternate: Cabinet BEAS
of institutional shareholders are based outside France
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ANNUAL REPORT | IMERYS 2013
IMERYS AT ITS SHAREHOLDERS’ SERVICE _
In 2013, Imerys shares gained + 31%, while its reference index, the SBF 120, rose + 20%. The Group continued to develop its relations with shareholders and institutional investors. _
KEEPING YOU INFORMED Imerys pays special attention to its shareholders by keeping them up to date on its activities, strategy, capital expenditure, results and outlook. This goal is reflected in the various communication vehicles that involve shareholders in the Group’s life: • The website www.imerys.com gives real-time news of the Group’s developments and share prices, etc.; a specific section for individual shareholders gives access to the “Individual Shareholder’s Guide”; • A Letter to Shareholders published several times a year, presenting the Group’s news, results and outlook; • An annual business report; • A Registration Document – Annual Financial Report, and a first-half financial report; • A dedicated phone line and email address.
MAKING YOUR SHARE MANAGEMENT EASIER Imerys offers a special service for shareholders who opt to register their shares in their own name(1). In addition to exemption from all custody fees and some current management fees, the Group provides a secure online tool for managing share portfolios, www.nomi.olisnet.com. This website
gives access to the features and prices of the securities, the latest movements and availability of shares and attached voting rights (each share held for more than two years benefits from double voting rights). All the documentation concerning the Company’s annual General Meeting is available on the website, where shareholders can also vote online. Registered shareholders also receive notice of General Meetings and information about the Group. To register in their own name, shareholders should make a request to their financial intermediary who will contact CACEIS Corporate Trust, which will send shareholders any documents needed for registration.
ENRICHING CONTACTS WITH THE FINANCIAL COMMUNITY
IMERYS STOCK On the SBF 120 and DJ Eurostoxx 600 indexes, Imerys stock is part of the mining sector (“1775 General Mining Activities” under ICB classification) and comprised in more than 60 international indexes. The Group remains attentive to the ratings of non-financial analysis agencies, particularly EIRIS, Vigeo, EthiFinance, Oekom, Trucost and Sustainanalytics. Since September 2006, Imerys has been part of the FTSE4Good responsible investing index. It is also included in NYSE Euronext Vigeo Europe 120 and Eurozone 120 and of the Gaia index, made up of the 70 best small & mid capitalizations under socially responsible criteria. Imerys is listed on Ethibel’s “Excellence” investment register too.
Imerys keeps up ongoing, open and transparent relations with the entire financial, institutional and socially responsible community through individual meetings, sector conferences and conference calls. More than 400 meetings organized throughout 2013 enabled Executive Management and the Investor Relations team to dialog with financial analysts, institutional investors and international fund managers.
(1) Shares registered in the holder’s name are kept on Imerys’ books and administrated by CACEIS. This identification makes direct, personalized contact possible.
ANNUAL REPORT | IMERYS 2013
46
Data per share: net income from current operations, Group share and dividend 1.50
4.03
1.55
4.00
1.60 (1)
4.03
2013
2012
2011
Weighted average number of outstanding shares (thousands)
75,551
75,166
75,273
Outstanding shares on December 31 (thousands)
76,238
75,369
75,142
High
¤63.51
€48.70
€54.45
Low
¤45.76
€35.09
€32.76
Closing price
¤63.21
€48.19
€35.39
4,819
3,632
2,674
Data per share
Net income from current operations per share (¤) Dividend (¤)
Market capitalization as on December 31 (€ million) 2011
2012
(1) Proposed at the Shareholders’ General Meeting of April 29, 2014. The dividend would be paid out from May 13, 2014.
2013
Share price trends from 1/1/2013 to 2/28/2014 (source: Euronext) LISTING MARKET In ¤
Trading volumes (thousands of shares) Imerys: + 40% SBF 120: + 23%
70
6,000
60
5,000
50
4,000
40
3,000 2,000 01/13 02/13 03/13 04/13 05/13 06/13
Cours Imerys
SBF 120
07/13
08/13 09/13
10/13
11/13
12/13
01/14 02/14
Volumes Imerys
In 2013, financial markets remained highly volatile, in a European market that was marked by the economic slowdown and uncertainty over sovereign debts. In the second half, the emergence of a more favorable outlook drove growth in the main indexes. In this context, Imerys stock closed at ¤63.21 on December 31, 2013, a + 31.2% increase from December 31, 2012, (+ 19.5% for the SBF 120), its benchmark index, which it outperformed, particularly since the publication of 3rd quarter 2013 results.
Euronext Paris Eligible for SRD Eurolist Market Compartment A Nominal: ¤2
CODES:
ISIN FR0000120859, Mnemo NK, Reuters IMTP.PA, Bloomberg NK.FP
INDEXES:
Imerys stock is part of more than 60 international indexes, primarily the followings: SBF 120, CAC All tradable index, CAC Mid & Small, DJ Eurostoxx 600, STOXX Europe 600 Basic Resources, Euro STOXX Basic Resources, MSCI Standard Developed, MSCI Europe.
SRI INDEXES:
FTSE4Good, Vigeo Europe 120 and Eurozone 120, Ethibel Sustainability Index Excellence Europe, Gaia index.
FINANCIAL COMMUNICATION AGENDA 2014 THURSDAY, FEBRUARY 13: 2013 results TUESDAY, APRIL 29: Shareholders’ General Meeting – 1st quarter 2014 results TUESDAY, MAY 13 (FROM): Dividend payment WEDNESDAY, JULY 30: 1st half 2014 results THURSDAY, OCTOBER 30: 3rd quarter 2014 results
REGISTRAR SERVICE
SHAREHOLDER CONTACTS
CACEIS CORPORATE TRUST
IMERYS FINANCIAL COMMUNICATIONS
14, rue Rouget-de-Lisle 92862 Issy-les-Moulineaux Cedex 9 France Tel.: + 33 (0) 1 57 78 34 44 Fax: + 33 (0) 1 49 08 05 80 e-mail: ct-contact@caceis.com
47
154, rue de l’Université 75007 Paris - France Tel.: + 33 (0) 1 49 55 66 55 Fax: + 33 (0) 1 49 55 63 16 e-mail: shareholders@imerys.com
ANNUAL REPORT | IMERYS 2013
ACTIVITIES AND RESULTS IN 2013 _
In 2013, Imerys achieved its goal by improving its net income from current operations in an economic environment that was still marked by great regional disparities. The Group maintained a sound financial structure while continuing its development. _
Revenue (€ millions) 2013
3,698
2012
3,885
2011
3,675
2010 **
3,347
2 774
Revenue for 2013 totaled €3,698 million. The - 4.8% decrease compared with 2012 includes the adverse effects of currency translation (- 3.0% i.e. - €116 million, reflecting the euro’s appreciation against the other currencies) and changes in Group structure (divestment of Imerys Structure: - €52 million; acquisitions: + €31 million). At constant Group structure and exchange rates, revenue decreased very slightly compared
with 2012 (- 1.3%). The downturn in sales volumes (- €95 million i.e. - 2.5% vs. 2012) stopped in the second half, in a more favorable economic environment in Europe. The price/mix effect rose + €45 million (+ 1.2%), sustained by innovation: products launched in the past five years generated revenue of €333 million (+ 33% vs. 2012) and now represent 9% of the Group’s consolidated sales.
Current operating income(1) (€ millions) and operating margin 477 (12.9%)
2013 2012*
488 (12.6%)
2011
487 (13.3%)
2010**
422 (12.6%)
(1) Operating income before other operating revenue and expenses.
Current operating income amounted to €477 million (- 2.3%) in 2013. It takes into account an unfavorable exchange rate effect of - 0.7% and a negative structure effect of - 0.3% (divestment of Imerys Structure). At comparable Group structure and
expenses. Industrial assets were rationalized (capacities grouped together, limited number of definitive unit closures, temporary production idling) to adapt to lower volumes (- €52 million). However, Imerys continued to implement its strategic
exchange rates, the limited decrease (- 1.2%) reflects the relative improvement in the economic environment in the 2nd half. The Group achieved + €28 million in net savings on fixed costs and general
development plan by stepping up R&D and innovation efforts and bolstering teams to support the launch of new capacities. At 12.9%, operating margin improved by + 0.3 point in 2013 (12.6% in 2012).
(*) 2012 information has been restated pursuant to the application, as of January 1, 2013, of the standard IAS 19 Revised, for the sake of data comparability. (**) 2010 results were restated following a change in accounting method for personnel benefits applied as of January 1, 2011, details of which are given in the press release on the 2011 Annual Results. ANNUAL REPORT | IMERYS 2013
48
Net income from current operations, Group’s share(2) (€ millions) & Net income from current operations per share (€) 2013
304 (4.03)
2012*
301 (4.00)
2011
303 (4.03)
With + 1.2% growth in net income from current operations to €304 million, the Group achieved the goal it had announced on July 30, 2013. The decrease in average net financial debt over the period and a lower financing rate enabled the Group to improve financial income by + €16 million. The tax charge was - €118 million, i.e. an effective tax rate of 27.8%. This was stable compared with 2012, with the impact of new French tax contributions offset by
242 (3.21)
2010 **
(2) Net income before other operating revenue and expenses, net.
trends in the geographic mix of activities. At €242 million, the Group’s share of net income includes other revenue and expense for - €62 million net of tax. This amount includes revenue from the sale of assets, (+ €5 million with respect to the sale of Imerys Structure) as well as restructuring expenses (- €47 million) and changes in provisions (- €32 million).
Current free operating cash flow(3) & capital expenditure (€ millions) 253 2013 306 257 2012* 289 227 2011 265 155 2010 ** 302 Paid capital expenditure
Current free operating cash flow
At 21.8% of annualized sales for the last quarter(4), operating working capital requirement improved and benefited from lower inventory at the end of the year. Paid capital ex p e n d i t u re a m o u n te d to €253 million in 2013. The booked amount (€250 million) remained high at 121% of depreciation expense (124% in 2012). Development capital expenditure, committed to support Imerys’ growth potential, continued selectively (€106 million vs. €116 million in 2012). Consequently, Imerys maintained a solid current
free operating cash flow at €306 million in 2013 (€289 million in 2012).
(3) EBITDA minus notional tax, change in working capital requirement and paid capital expenditure. (4) Continuation of factoring contract signed on July 23, 2009 under which transferred receivables are deconsolidated, with the risks and benefits related to receivables transferred to the factor bank. €46 million in receivables was factored as of December 31, 2013.
Shareholders’ equity, Net debt (€ millions) & Debt-to-equity ratio 2,272
39.0%
2013 885 2,261 2012*
38.7% 875 2,211
2011
46.6% 1,031 2,132
2010 ** 873 Shareholders’ equity
(5) Unsecured senior debt.
40.9% Net financial debt
After payment of dividends (€119 million), the purchase of PyraMax (€179 million), the acquisitions completed by Calderys and the divestment of Imerys Structure, net financial debt is stable as of December 31, 2013 (€885 million vs. €875 million in 2012). Imerys’ development was therefore self-funded. Financial debt ratios remain sound: net debt represents 39% of shareholders’ equity and 1.4x EBITDA. In November 2013, the Group issued a €300 million bond maturing in November 2020, with a 2.5% annual coupon. The offer was oversubscribed by more than five times.
49
This operation enabled Imerys to extend the average maturity of its debt and refinance its next bond repayment ahead of schedule (April 2014), while benefiting from highly favorable market terms. Moody’s confirmed the long-term credit rating(5) it assigned to Imerys in 2011, “Baa-2” with a stable outlook. As of December 31, 2013, available total financial resources (excluding cash) totaled €1.4 billion with average maturity 3.9 years. Consequently, Imerys has a sound financial situation for the continued implementation of its development plan.
ANNUAL REPORT | IMERYS 2013
RESULTS BY BUSINESS GROUP Energy Solutions & Specialties
Filtration & Performance Additives
3% 8%
49%
40%
€1,248 million revenue (34% of Group total)
Performance & Filtration Minerals Kaolin
Carbonates Monolithic Refractories Graphite & Carbon Oilfield Solutions
42%
75 industrial sites 28 countries 5,199 employees
58%
€1,132 million revenue (30% of Group total)
64 industrial sites 17 countries 4,243 employees
ECONOMIC ENVIRONMENT
ECONOMIC ENVIRONMENT
The markets for Monolithic Refractories and some Graphite & Carbon applications (steel, power generation, incineration, foundry, cement, petrochemicals, etc.) were affected in the 1st half of 2013 by the slump in European industrial production and the significant slowdown in new capital projects. This was followed by a relative improvement. Mobile energy applications (Graphite & Carbon) held out well and the development of unconventional oilfields continued in the United States driving demand for ceramic proppants. Robust demand for consumer goods and the upturn in construction in North America supported the Carbonates activity, which was also affected by the slump in global production of printing and writing paper (see Filtration & Performance Additives business group).
Trends were healthy on most of the business group’s markets, particularly global demand for consumer goods and the construction and automotive sectors in the USA. There was vibrant growth in talc in mature countries, driven by the development of applications in automotive polymers. The industrial and construction sectors were slack in Europe. Printing and writing paper production continued to rise in emerging countries -but at a slower pace (+ 1.2% -RISI and Imerys estimates)- and decreased in mature countries (- 3.3%). This sector held out better in North America than in Europe, where further capacity rationalizations were undertaken. The specialty paper and packaging application segments were healthy overall.
PERFORMANCE
At €1,132 million, revenue decreased - 1.2% because of high exchange rate impact (- 2.3%) moderated by a structure effect (+ 1.7%) that included the acquisition of Itatex in Brazil and of Goonvean’s kaolin activities (UK). At comparable structure and exchange rates, sales were stable for 2013 (- 0.6%), with the decrease in paper offset by firm demand in some of the business group’s other applications. Current operating income, at €159 million, increased + €23 million, of which + €14 million in exchange rate effect. At comparable structure and exchange rates, the rise was + 6.1%. The product price/mix effect was robust, thanks in particular to a more diversified offering. The operating margin grew + 2.2 points to 14.1%. Capital expenditure was allocated to the usual overburden operations and to efficiency improvements on industrial assets. In addition, the Group extended its capacities in response to the dynamism of certain markets.
PERFORMANCE Revenue totaled €1,248 million. This - 3.1% decrease resulted from an unfavorable exchange rate effect (– €59 million), mitigated by net changes in structure for + €12 million (Calderys’ geographic development in the Netherlands, Indonesia and Japan, activity shutdown in Venezuela). Excluding exchange rate and structure effects, sales increased slightly (+ 0.6%). Current operating income, at €129 million, was also hit by exchange rate effects (- €10.5 million). Operating margin, at 10.4%, was resilient thanks to firm activity in Carbonates and the effects of cost reduction plans. The business group bore the cost of launching the Oilfield Solutions activity, which bolstered its teams (new PyraMax proppant plant in Wrens, Georgia, USA). The increase in the product price/mix component offset the rise in variable costs. Capital expenditure continued with the completion of new units for carbon black in Belgium and lime in Brazil. Construction of the PyraMax plant was completed in late 2013 as planned. These three new units came on stream towards the end of the year and will gradually ramp up in 2014.
ANNUAL REPORT | IMERYS 2013
50
Ceramic Materials
High Resistance Minerals
4%
Building Materials Minerals for Ceramics Kiln Furniture 46%
50%
€703 million
revenue (19% of Group total)
Fused Minerals Refractory Minerals 32 % 41%
71 industrial sites 18 countries 2,854 employees
59%
€654 million
revenue (17% of Group total)
34 industrial sites 12 countries 3,210 employees
ECONOMIC ENVIRONMENT
ECONOMIC ENVIRONMENT
In Building Materials (clay roof tiles in France), a firm renovation segment (2/3 of sales) partly offset a further drop in new construction: single-family housing starts fell - 5.7%. Mild weather supported activity in the 4th quarter. Sales of roof tiles recorded a limited decrease of - 3% in 2013. Minerals for Ceramics benefited from the evolution of their geographic footprint, both industrially and commercially, in growth zones (South America, Middle East, Asia) and firm demand in Europe and the United States, where the activity continues to diversify its offering.
The business group’s activity, positioned upstream of the industrial equipment chain, was penalized by the slowdown on most of its markets. In many mature markets, steel production decreased in the first three quarters, while the recessionary environment in Europe particularly weighed on the industrial and automotive sectors. Demand slowed in China. Nevertheless, the recent stabilization of the European economy was reflected in slightly firmer demand towards the end of the year, as seen in new vehicle registrations, which rose for the first time compared with 2012 in the 4th quarter of 2013.
PERFORMANCE Revenue totaled €703 million in 2013, a - 7.7% decrease resulting from a - 6.7% structure effect (divestment of Imerys Structure) and a - 1.0% exchange rate impact in Minerals for Ceramics. At comparable structure and exchange rates, revenue was stable. Firm volumes in Minerals for Ceramics offset the slump in Building Materials’ sales. Current operating income amounted to €160 million and included a - €2.7 million structure effect. Actions to reduce production and general expenses were taken throughout the business group. The product price/mix effect covered the trend in variable costs (energy, freight). Consequently, the operating margin totaled 22.8% in 2013 (+ 1.4 point). Capital expenditure was mainly focused on geographic development of the Minerals for Ceramics activity in the Middle East and Asia and improving the efficiency of industrial assets.
PERFORMANCE At €654 million, revenue (- 12.1%) takes into account an unfavorable exchange rate effect of - 3.3%. At comparable structure and exchange rates, the decrease in revenue (- 8.6%) reflects the slump in demand in both of the business group’s activities. The price/mix effect was positive. Current operating income was €70 million (including a + €1.5 million exchange rate effect). Production rationalization measures were taken to adapt to the sharp fall in demand. The refocusing of Chinese Fused Minerals activities led to the closure of two plants in the country. In Venezuela, the project to shut down the Fused Minerals activity was launched and Refractory Minerals were reorganized in South Africa. In the United States, Refractory Minerals production capacities were hampered by intensive maintenance operations. In that difficult environment, the operating margin worked out at 10.7% (- 2.1 points). Development capital expenditure was chiefly assigned to the construction of the fused alumina plant in Bahrain, which should ramp up throughout 2014 as planned.
51
ANNUAL REPORT | IMERYS 2013
SUSTAINABLE DEVELOPMENT INDICATORS _
Imerys is implementing its 2012-2014 three-year plan. Over 80% of objectives were achieved in 2013. Here are some examples. _
Safety (Frequency rate(1)) 2013
FURTHER PROGRESS MADE 2013 saw a further significant improvement in reduction of losttime accidents. Now at 1.31 the frequency rate decreased 13% compared with 2012 and 58% compared to 2009. Special
1.31
2012
1.51
2011
1.69
2010
2.46
2009
3.09
emphasis was placed on behaviorbased safety by implementing a dedicated program for supervisors on every site.
(1) Frequency rate (employees/other employees): (number of lost-time accidents x 1,000,000) / number of hours worked.
Sites with environmental management systems (EMS)(1) : 100% OF INDUSTRIAL SITES WITH AN EMS
81
229
2013 148 229 88
2012
142
230
Each mining and industrial operation has established a fundamental environmental management system and presents a high priority environmental scorecard quarterly to Executive Management. Since early
2012, special attention has been given to assessing the robustness of existing management systems. The operations are also closely monitored through in-depth EHS(4) auditing by a multidisciplinary internal team.
235 81 2011 139
220
ISO 14001 or EMAS(2) certified Sites required to establish an EMS(3)
Sites with Imerys 8-pillar EMS
68 2010 92
ANNUAL REPORT | IMERYS 2013
160
(1) Excluding sites under construction, commissioning or closing. (2) EMAS: Eco Management and Audit Scheme (European Standard). (3) The number of sites required for EMS reporting exclude those divested, closed, newly acquired or newly constructed during the reporting period. (4) Environment, health & safety
52
Carbon efficiency and emissions 100
97.5
95.5
94.3
92.1
2,238
2,959
2,909
2,868
2,773
2009
2010
2011
2012
2013
DECREASE IN GREENHOUSE GAS EMISSIONS Imerys’ reduction in direct CO2 emissions is mainly obtained through initiatives to optimize the energy sources and use renewable energy in some of the Group’s units. The overall carbon efficiency improved by 2.3% (2013 vs. 2012), which led the accumulative improvement to 7.9% from base year 2009.
Energy consumption by source in 2013 4.1%
7.9%
88%
Energy (excluding biomass) Processes
Total CO2 emission (in thousand tons)
Carbon intensity (base 100 in 2009)
Water withdrawals
(millions of liters) IMPROVING WATER MANAGEMENT The water the Group withdraws to keep quarries in good operating order and to convert minerals is stored in impound basins. This water is reused or released after settling and treatment. In 2012, 17 operations located in water stress zones (according to the Global Water Tool) established site-specific water management plans in
41,626
2013 2012
Biomass
48,538
2011
52,893
response to the Group’s requirement. These operations are mostly low water consumers, representing on aggregate less than 5.7% of the Group’s total withdrawals. The water management improvement initiative will be gradually deployed to other priority sites in 2014 and future years.
Production of waste 2013
2012
2011
264,270
287,827
297,228
920
2,217
900
1,919
1,112
671
Non-hazardous industrial waste
125,104
120,187
116,209
Recycled non-hazardous industrial waste
136,327
164,312
179,449
Total waste (tons) of which: Hazardous industrial waste Recycled hazardous industrial waste
RECYCLING INDUSTRIAL WASTE Imerys’ activities produce low quantities of industrial waste. The Group, nonetheless, continues to seek appropriate actions to recycle this waste. In 2013 the Group generated 264,000 tons of industrial waste, almost 99% of which was non-hazardous and more than 52% was recycled.
To find out all Sustainable Development objectives and performance www.imerys.com / Sustainable Development
53
ANNUAL REPORT | IMERYS 2013
SIMPLIFIED FINANCIAL STATEMENTS Consolidated income statement (€ millions) 2013
2012
2011
2010
3,697.6
3,884.8
3,674.8
3,346.7
650.4
662.5
686.0
621.0
Current operating income
477.0
488.1
487.0
421.5
Current financial income (expense)
(52.7)
(69.1)
(57.2)
(74.7)
Current tax
(118.0)
(116.6)
(123.3)
(100.4)
(2.1)
(1.7)
(3.5)
(4.4)
Net income from current operations, Group share
304.2
300.7
303.1
242.0
Other revenue and expenses net, Group share
(62.2)
(9.4)
(21.1)
1.7
Net income, Group share
242.0
291.3
282.0
243.7
2013
2012
2011
2010
Net non-current assets(4)
2,966.1
2,952.6
2,944.4
2,726.1
Current assets
1,282.6
1,367.2
1,388.4
1,164.6
202.5
202.7
205.7
193.3
421.7
299.1
417.9
353.4
4,872.9
4,821.6
4,956.4
4,437.4
2,271.7
2,261.0
2,210.9
2,131.8
484.7
579.5
515.7
373.9
Gross financial debts
1,307.1
1,174.0
1,449.0
1,226.2
Other liabilities
809.4
807.1
780.8
705.5
4,872.9
4,821.6
4,956.4
4,437.4
428.2 885.4
493.4 874.8
502.9 1,031.1
453.5 872.8
Revenue EBITDA(1) (2)
Minority interests (3)
(1) Current operating income plus depreciation expense and provisions, net of reversals. (2) Operating income before other operating revenue and expenses. (3) Net income before other operating revenue and expenses, net.
Consolidated balance sheet (€ millions)
Assets
Other assets Cash(5) Total Liabilities and shareholders’ equity Net worth (including minority interests) Provisions (5)
Total (4) Of which mining assets (5) i.e. net financial debt
ANNUAL REPORT | IMERYS 2013
54
€885 million
€428 million
€122 million
Net financial debt
Mining assets
Dividend payout proposed with respect to 2013
Cash flow statement and change in net financial debt (€ millions)
2013
2012
2011
2010
650.4
662.5
686.0
621.0
(132.7)
(135.7)
(139.6)
(122.0)
Current operating cash flow
517.7
526.8
546.4
499.0
Change in operating WCR(6)
32.0
15.3
(59.4)
(45.7)
(253.1)
(257.1)
(227.4)
(154.9)
Current free operating cash flow
306.4
289.4
264.9
302.1
Financial income (expense) net of tax
(38.0)
(49.9)
(37.3)
(46.6)
19.8
62.8
(1.0)
18.7
288.2
302.3
EBITDA Notional tax on current operating income and other depreciations
Paid capital expenditure (7)
Change in other WCR items, deferred tax and other Current free cash flow
226.6
274.2
(143.6)
17.5
(8)
(213.0)
(66.7)
Non-recurring cash flow
(54.5)
(54.7)
(17.4)
(15.8)
Dividends
(119.2)
(114.1)
(91.4)
(76.3)
30.9
(2.4)
(21.5)
(4.5)
Foreign exchange / Other movements
(12.4)
7.7
(41.6)
(19.4)
Decrease (increase) in net financial debt
(10.6)
156.3
(158.3)
91.5
External growth / Divestments
Capital transactions
(6) Working capital requirement. (7) Of which divestments and subsidies. (8) Including non-recurrent sales of fixed assets for €66 million in 2012.
To find out more: www.imerys.com/Registration Document 2013 – chapter 6
2012 data as restated pursuant to the standard IAS 19 Revised as of January 1, 2013 (Note 3.1 to the 2012 Registration Document) for the sake of data comparability.
55
ANNUAL REPORT | IMERYS 2013
Design and production: Photo credits: P. Abuliak/SIPA • Michel Bost • Christophe Boulze • Didier Goupy • C. Ingraham/SIPA • L. Lecarpentier/SIPA • Dominique Lecuivre • B. May/SIPA • R. Meigneux/SIPA • Claire Morel Fatio • Nicolas Richez • Everson Santos • P. Saurus/SIPA • Heiko Schnitzer • Howard Spiers • Crystelle Zhou • Imerys Talc Europe photo library: A. Baschenis / A. Bannister / J. Sierpinski / C. Tosoni • Dreamstime - Sheard & Hudson • Getty Images • Imerys Ceramics • iStock • Les 4 vents • Thinkstock • Imerys photo library, RR, X
LOGO FSC à venir
Print: TI Médian impressions. This report is printed on FSC certified paper containing Imerys pigments.
154, rue de l’Université – 75007 Paris – France Telephone: + 33 (0) 1 49 55 63 00 Fax: + 33 (0) 1 49 55 63 01 www.imerys.com Imerys - French limited liability company (Société Anonyme) Share capital €152,476,528 Trade register RCS Paris 562 008 151