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MATERIS AT THE LEADING EDGE OF INNOVATION
MATERIS IN BRIEF
Materis is one of the world leaders in specialty chemicals and materials for construction, with leadership positions in aluminates, admixtures, mortars and paints. Materis enjoys high barriers to entry resulting from innovative and high-value-added products, outstanding quality of service, recognized brands and close relationships with its clients. Materis also benefits from a
portfolio of very well-known brands and controlled distribution networks enabling it to consolidate and develop the group’s market share (for example, it has nearly 400 sales outlets in Europe for paints and 800 in China for mortars). It has leadership positions in high-growth regions, where 40 to 50% of its sales (excluding paints) are generated, with margins comparable to those in mature markets. The group demonstrated its resilience during the crisis, which it gains from a well-balanced business and geographic mix, a strong exposure of over 50% to renovation markets (90% for paints) and a skilled management team.
Materis is a company that thrives on innovation; it continuously develops new formulations so as to offer the most appropriate solutions to its clients’ needs. For example, in energy savings, Materis offers external insulation solutions for painters, facade workers and restorers working on new construction or renovating old buildings.
Highlights of 2011
Despite a turbulent financial environment, Materis achieved strong organic growth in 2011, driven principally by emerging market countries, as well as by mature markets. Over the past few years, Materis’s strategy of targeted acquisitions and its emphasis on sales and marketing have enabled the company’s various divisions to figure among the best performers in their respective sectors.
In 2011, Materis’s net sales grew by 9% to €2,027 million. The group posted organic growth of 8%, acquired four companies (mortars business in Thailand, Uruguay and the US; independent paints distributors in Europe) and continued its successful integration of a.b.e. in South Africa.
All Materis divisions took advantage of continued high growth in emerging economies (17% organic growth) and the improvement in mature economies (6% organic growth), resulting from renewed growth in underlying markets and better weather than in the previous year.
• Kerneos (aluminates) advanced significantly (up 6% overall and 7% organically) buoyed by three factors: i) the building industry chemicals sector in France, Germany and Scandinavia, ii) robust growth in the refractories segment (strong growth in Asia, now one of Kerneos’ largest markets, in the US and in Europe), and iii) price increases;
• strong growth at Chryso (admixtures) (up 17% overall and 12% organically) was due to i) favorable conditions in end markets in France and emerging markets (India, Turkey, Eastern Europe), ii) effective sales efforts in the United States, iii) continued improvement in the product mix and in prices and iv) the impact of consolidating a.b.e. over a full year;
• Parex Group (mortars) (up 12% overall and 12% organically) also benefited from favorable conditions in the industry in France, the UK and emerging markets, where it was buoyed by i) growth in end-markets, ii) mix and price improvements, iii) market share gains that more than offset a significant decline in Spain and iv) a very slight decline in the US;
• Materis Paints also experienced significant growth (up 7% overall and 4% organic growth), driven essentially by i) price increases, ii) increased activity in French, Argentinian and Moroccan markets, and iii) targeted acquisitions which offset end-market declines in Portugal, Spain and Italy. Confronted with a 75% rise in the cost of titanium dioxide during the course of 2011 and with an economic slow-down in Southern Europe, the paints business vigorously adjusted its prices (price effect up 6%) and initiated a performance improvement program to restore margins (impact of nearly €30 million, including €14 million forecast in 2012).
In 2011, the Aluminates, Admixtures and Mortars businesses continued to generate record industry profitability. Materis’s EBITDA totaled €259 million (12.8% of sales) and its adjusted operating income was €194 million (9.6% of sales), up 4% and 2%, respectively. The net financial debt of Materis was €1,839 million.
Rescheduling of Materis’s debt has begun
More than 18 months in advance of its first repayment dates, Materis launched negotiations with its 200 lenders aimed essentially at postponing 2013-15 maturities and increasing the group’s sources of liquidity. In early 2012, nearly 84% of all lenders had agreed to the various requests, and more than 71% had agreed to postpone repayment dates. Discussions are continuing, with the aim of maximizing the lender participation in postponing maturity dates.
Appointments and Compensation Committee
Bernard Gautier (Chairman)
Jean-Michel Ropert (Chairman)