OUR GROUP

After the sharp downturn recorded since November 2008, the second half of 2009 showed a slight improvement in the Group’s markets. The inventory reduction trend, which had intensified the slump in industrial output in mature countries, eased off in the second half, with some subsidiaries rebuilding their inventories towards the end of the year. Business remained firm in emerging countries, which represent 24% of the Group’s outlets.
From 2008, Imerys made free cash flow generation a priority and started action plans to cope with the swift deterioration in the global economic climate. These efforts were stepped up in 2009, with results that exceeded the targets set by the Group.

This section presents Imerys' 2009 key figures and comments changes compared with the previous year.

• Sales
• Current Operating Income
• Net Income from Current Operations (Group share)
• Current Operating Cash Flow and Capital Expenditure
• Shareholders' Equity and Net Debt

The fall in sales is entirely due to the collapse in volumes (- 23.8%), which was heightened by further inventory reduction in the many industries that use the Group’s products. The price effect and product mix improved in all business groups (+ 3.9% for the Group as a whole).


Current Operating Income⁽¹⁾
In that deteriorated context, Imerys achieved en operating margin of 9.0% in 2009 (9.9% in the 2^nd half), thanks to efforts by all teams.
Current operating income totaled €248.9 million in 2009 (- 40.0%). It takes into account a positive exchange rate effect (+ €5.7 million) and a limited Group structure effect (- €1.6 million).
At comparable Group structure and exchange rates, the - €169.8 decrease from 2008 corresponds to the loss of de volumes (- €372.1 million). The Group’s profitability was restored by adjusting industrial assets to demand; fixed production costs and overheads decreased €157.8 million. The improvement in the product price and mix amounted to €129.2 million: it easily offset the limited rise in variable costs.

⁽¹⁾ Operating income before other operating revenue and expenses.


Net Income from Current Operations (Group's share)⁽²⁾
In line with the decrease in current operating income, net current income totaled €119.3 million. It takes into account higher financial expense at - €83.4 million (vs. - €47.1 million as on December 31, 2008), and a - €46.2 million tax charge.
Net current income per share was €1.66, with 71,894,105 the average weighted number of outstanding shares in 2009.
After factoring in other operating income and expenses in relation to the restructuring programs carried out all year long to adapt structures to new market conditions, the Group’s share of net income was €41.3 million.

⁽²⁾ Net income before other operating revenue and expenses, net.

Current Operating Cash Flow⁽³⁾ and Capital Expenditure
In accordance with its priorities, Imerys posted exceptionally high current free operating cash flow of €450.3 million (compared with €257.8 million in 2008).
- inventory was cut by €171 million and working capital was reduced to 24.9% of sales,
- booked capital expenditure decreased 50% to €118.7 million; it primarily concerned maintenance operations.

⁽³⁾ EBITDA minus taxes on current operating income


Shareholders' Equity and Net Debt
High cash flow generation led to substantial organic debt reduction. As on December 31, 2009, net financial debt was below one billion euros at €964.3 million, compared with €1,566.1 million on the same date in 2008. This one-third decrease also results from the deconsolidating factoring program begun in the third quarter of 2009 (€83 million in receivables transferred as on December 31, 2009) and the €251 million rights issue successfully carried out in June.

Towards the end of the year, net financial debt represented only 52% of net worth and 2.3x EBITDA. Imerys has proved the soundness of its economic model, based on double-digit profitability, substantial cash flow generation and a stronger balance sheet. On this basis, the Group will be able to benefit fully from the resumption of growth.

2007 and 2008 results were restated following two presentation changes applied as from January 1, 2009.