In 2014 the Group’s markets remained buoyant in North America, in particular in construction and durable goods. Activity in Northern Europe and Germany, which had shown some improvement since the end of 2013, slowed down in the second half, particularly in the industrial sector.
In this context, Imerys records further improvement in results in 2014, and achieves its target of growth in net income from current operations.
This section presents Imerys' 2014 key figures and comments changes compared with the previous year:
2012 data has been reprocessed following the application, as of January 1, 2013, of the revised IAS 19 standard (Note 3.1 to the 2012 Registration Document) for the sake of data comparability.
- Current Operating Income*
- Net Income from Current Operations (Group's share)**
- Current Free Operating Cash Flow and Capital Expenditure***
- Shareholders' equity and net debt
At comparable Group structure and exchange rates, revenue in 2014 totaled €3,688.2 million, a + 3.2% increase, i.e. + €118.6 million from 2013, almost two-thirds of which comes from new capacities. Growth, which was + 4.2% over the first nine months of 2014, was stable in the fourth quarter compared with the same period the previous year, particularly due to an unfavorable basis of comparison in most activities (4th quarter 2013 revenue was + 3.4% higher on comparable basis than 4th quarter 2012).
Current Operating Income*
Current operating income totaled €494.6 million. At comparable structure and exchange rates, it improved + 2.5% compared with 2013. Growth in volumes, which contributed + €27.1 million, partly explains the rise in fixed production costs and general expenses. More than half of their total increase relates to the launch of new capacities and higher R&D spending. In a low-inflation environment, the product price/mix effect (+ €45.0 million) covers the increase in variable costs (- €5.4 million). * Operating income before other operating revenue and expenses
Net Income from Current Operations (Group's share)**
Imerys achieved its target in 2014 by posting growth compared with the previous year in net income from current operations, which rose + 4.0% to €316.3 million (vs. €304.2 million in 2013). ** Net income before other operating revenue and expenses, net.
Current Free Operating Cash Flow and Capital Expenditure***
At 23.0% of annualized sales in the last quarter ( 2), the increase in operating working capital requirement remains under control compared with a healthy level in 2013 (21.8%) and results from the constitution of start-up inventory for new capacities (mainly in proppants in the United States and in fused alumina in Bahrain). Paid capital expenditure totaled €241.5 million in 2014. The booked amount (€240.0 million) represents 115% of depreciation expense (compared with 121% in 2013). Development capital expenditure continued selectively for €82.2 million (€106.3 million in 2013) to support the Group’s growth potential. Details of the main projects are given under each business group. Consequently, Imerys maintained sound current free operating cash flow at €244.1 million in 2013 (€306.4 million in 2013). (2) 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. €45.7 million in receivables was factored as at December 31, 2014. *** EBITDA minus taxes on current operating income
Shareholders' equity and net debt
Net financial debt totaled €869.9 million as of December 31, 2014, a €15.5 million decrease from December 31, 2013. It particularly includes the payment of €125.3 million in dividends, the payment of part of the additional contractual price for PyraMax Ceramics, LLC, the divestment of four Carbonates units and the termination fees received from AMCOL. Finally, on December 3, Imerys completed the placement of a €500 million bond maturing in December 2024 with an annual coupon of 2.0%, and of a €100 million tap on its November 2020 bond. The offers were oversubscribed 2.5 times in all. Benefiting from highly favorable market conditions, they enable the Group to anticipate the financing of the acquisition of S&B’s main activities and meet its general financing needs. Consequently, as of December 31, 2014, and before settlement of the acquisition of S&B, Imerys’ total financial resources amount to €2.8 billion. After deduction of gross financial debt, available non-cash resources total €1.3 billion with average maturity 5.2 years. Imerys’ unsecured senior debt is rated Baa-2 by Moody’s with a positive outlook, while the short-term outlook is P-2 with a stable outlook. Including S&B’s net financial debt, which totaled €225 million as of December 31, 2014, following the operation Imerys would maintain a sound financial structure with gearing below 60%.