May 2020
Developing the best technologies for the industries of the future
Mersen: Our Mission, Technological Progress We are developing the best technologies for the industries of the future
2
2020 Group Overview
We provide industrial companies worldwide with innovative solutions enhancing the performance of their products and services
Advanced Materials: High value-added made-to-measure solutions relying on a unique materials expertise ANTICORROSION EQUIPMENT
Engineering systems
Columns, reactors and pressure vessels
Heat exchangers
3
2020 Group Overview
GRAPHITE SPECIALTIES
Laser galvo scanning mirrors in Sintered SiC
Ultra pure graphite electrodes for polysilicon production
Wafers carrier in ultra pure graphite for Semicon
Carbon insulation for high temperature furnaces
POWER TRANSFER TECHNOLOGIES
Brushes and brush holders
Total Monitoring & DustCollector
Slip-rings
Lubricating sticks & applicators for wheel/rail contact
Advanced Materials: A comprehensive offering in materials expertise
4
ISOSTATIC
EXTRUDED
RIGID/FLEXIBLE
SINTERED
CARBON - CARBON
GRAPHITE
GRAPHITE
INSULATION
SILICON CARBIDE
COMPOSITES
2020 Group Overview
Electrical Power: A unique portfolio serving two key applications ELECTRICAL PROTECTION
Coverage of all standards worldwide: UL, IEC, DIN, etc. Surge protection devices
Fuses and fuse holders
POWER CONVERSION
Fuses for semiconductors
5
2020 Group Overview
Only customized offering of bundled passive components on the market Busbars
Cooling devices
Capacitors
Recent acquisitions to speed up growth
COLUMBIA AGM ITALY
SHAPE THE FUTURE
by acquiring production capacity
6
2020 Group Overview
MERSEN GALAXY CIRPROTEC MERSEN HATAN
ACCELERATE EXPANSION in sustainable development markets
FTCAP IDEALEC CALY TECHNOLOGIES
LGI GAB NEUMANN
STRENGTHEN
DEVELOP
EXPERTISE
A SERVICES BUSINESS
and accelerate innovation
for the chemicals industry
A global footprint
North America
35%*
Employees 2,030
Europe
Industrial plants 14
34%*
Employees 2,400 Industrial plants 23
Asia Pacific South America - Africa
2019 Sales
€950m * % of 2019 sales 7
2020 Group Overview
3%*
Employees 570 Industrial plants 5
28%*
Employees 1,800 Industrial plants 13
Strong growth in our sustainable development markets SALES IN €M 1000 900 800
EV
Rail
700
Electronics
600
Wind Solar Water treatment Energy efficiency
Sustainable development markets
500 400
Chemicals Aeronautics
300
200
Process industries and other
100 0 2016
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2020 Group Overview
2017
2018
2019
Fundamentals of Mersen’s CSR policy
Like-for-like growth in sales versus 2018
Developing innovative and sustainable products
Like-for-like growth Optimizing human capital in sales versus 2018 development thanks to a collaboration-oriented organization and a strong health and safety culture
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2020 Group Overview
Promoting environmentallysound practices at all facilities
Like-for-like growth in sales versus 2018 and its Protecting the Group
reputation and share ethical behavior with all its employees
Developing human capital DEVELOPING HUMAN CAPITAL IN ALL ITS DIVERSITY Employees 8000
19%
% of women managers and executives
A STRONG HEALTH AND SAFETY CULTURE
Frequency rate of accidents
23%
6000
Severity rate of accidents
1,6
90
1,4
80
1,2
70 60
1 4000
50
0,8
40
0,6 2000
0,4
30
4,200 safety inspections in 2019
0,2
10
0
0 2016
2017
2018
0 2016
2019
2017
2018
2019
Mersen employees
35% women 90% of site managers employed locally
89% of employees stated thatLike-for-like they weregrowth proud to be part of the Group in 2018 in sales versus 2018
10
2020 Group Overview
20
BPI - CDC 15% INDIVIDUALS & EMPLOYEES 13 %
SHAREHOLDER STRUCTURE AT DEC 31, 2019 OTHER INVESTORS 40%
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2020 Group Overview
FRENCH INVESTORS 31 %
CORPORATE GOVERNANCE STRUCTURE
Shareholding structure as of Dec. 2019
Abides by the AFEP-MEDEF’s code of corporate governance
2 specialized committees (Audit & Accounts, Governance & Remuneration) y
Dual structure (Chairman of the Board, CEO)
8 members 2 representatives of BPI 1 employees representative 71% INDEPENDENT 57% FEMALE
02 Beginning of 2020
Q1 2020: decline in sales linked to the unprecedent context of Covid-19 and a very high comparison base vs Q1 2019
North America
34.5%*
Europe
-10%
-11%
35.5%*
Asia Pacific
Sales Q1 2020
€225m -9% Organic trend * % of Q1 2020 sales 13
2020 Group Overview
South America - Africa
3%*
27%*
-15%
-5%
Evolving operational situation Impact of the Covid crisis from January to April: Starting with China and other Far East countries (Japan, South Korea) In Europe and India, impact on operations began mid-March And in North America, at the end of March
In April, approximately 85% of Group plants were operational (wholly or partly) May: end of the lockdown in a lot of countries A vaste majority of Group plants are operational Workload depends on customers, end markets, and countries
14
2020 Group Overview
Keep strong financial structure and adapt to current environment Dividend cancelled Strong leverage at December 2019: 1.5 Greater flexibility negotiated for the financial covenants at end of June Liquidity as the end of April €132 million in undrawn credit lines €100 million in cash* Cost control measures Limit operational costs strengthen monitoring of the Group’s WCR, (trade receivables and inventories) Reduce Capex Furlough implemented when possible and relevant *including €30 million covering the maturities on the NEUCP commercial paper program 15
2020 Group Overview
03 2019 Financial performance (excluding IFRS 16)
2019 sales: Growth in all key regions
North America
35%*
Europe
+7%
34%*
vs 2018
South America - Africa
3%*
€950m +4.1% * % of 2019 sales Like-for-like growth (as a %) 17
2020 Group Overview
+4% vs 2018
-4% vs 2018
Asia Pacific
28%*
+2% vs 2018
Increase in profitability Operating income before non-recurring items (€m)
10.6% As a %
10.4%
2018 operating margin before non-recurring items
101 92
Volume/mix effects
+0.6
Price effect
+1.0
Commodity risk and customs tariffs
-0.6
Productivity gains
+1.7
Cost inflation
-1.8
Impact from exchange rates, scope and others
-0.7
2019 operating margin before non-recurring items 2018
18
2019 before IFRS 16
2020 Group Overview
10.4%
10.6%
Productivity gains Purchasing and productivity workshop Cost inflation primarily payroll costs
Advanced Materials: Increase in profitability supported by volumes 82
Strong leverage from volumes Operating income before non-recurring items (€m)
69 15.0%
Significant price increases Efficient productivity
Operating margin before non-recurring items (%)
14.1%
2019 EBITDA: €112m 20.6% of sales 2019 ROCE: 13.9%
2018
19
2020 Group Overview
2019 before IFRS 16
Electrical Power: Positive price effects, but a less favorable product mix 39
37
Price increases Less favorable product mix
Operating income before non-recurring items (€m) Operating margin before non-recurring items (%)
Dilutive effect of acquisitions on margin
10.0% 9.2%
2019 EBITDA: €48m 11.8% of sales 2019 ROCE: 13.6%
2018
20
2020 Group Overview
2019 before IFRS 16
Increase in net income
In €m Operating income before non-recurring items
2018
2019
91.6
100.6
Non-recurring income and expenses
(3.8)
(11.2)
Net financial income/(costs)
(10.3)
(10.3)
Income tax
(18.3)
(18.2)
59.2
60.9
56.5
58.4
Net income Net income, Group share
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2020 Group Overview
Non-recurring expenses
before IFRS 16
- Impairment of hybrid protection development costs (€5.3m) - Acquisition costs - Litigation and other costs
Effective tax rate 23% (32% in 2017)
+3%
Sharp rise in free cash flow FCF in €m
Free operating cash flow after capital expenditure
Cash-Flow conversion* : 77% 48
Funding for investments 33
Limited rise in WCR
2018
22
2020 Group Overview
2019 before IFRS 16
* Operating cash-flow/EBITDA
Stable net debt despite significant investments in 2019 (capex and acquisitions) In €m
216
110
22
8
218
19 63
Net debt/EBITDA Net debt/Equity
Dec. 2018
23
2020 Group Overview
Operating cash flow
Capex
Acquisitions
Dividends
Interest and other
Dec. 2019
1.5x 37%