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S&B Industrial Minerals: S&B Industrial Minerals S.A. Financial Results for the Nine Months of 2009 (IFRS)

^{Published on 2009-11-10 12:37:09 - Market Wire}
 

ATHENS, GREECE--(Marketwire - November 10, 2009) - S&B Industrial Minerals S.A. (ATHEX: [ ARBA ]) announces its consolidated financial results for the nine months of 2009.

NINE MONTH 2009 HIGHLIGHTS FOR CONTINUING OPERATIONS

 -- Sales of approximately EUR 242 million, 32% lower than the prior year highest historical sales period, supported by an 8% sequential improvement from the second quarter. -- Significant improvement in cash flow from operations, up by EUR 43.6 million to EUR 63.5 million -- Net operating expenses reduction of 15% or EUR 7.2 million versus the respective 2008 period -- Net debt down by 36% or EUR 73.4 million since the beginning of the year from EUR 203.1 to EUR 129.8 million reflecting organic cash flow improvement and the successful rights issue of approximately EUR 41 million -- EBITDA and Operating profit below prior year by 46% and 67% respectively, with margin improvements in the third quarter partly driven by efficiency initiatives 

 9 9 Continuing Operations Months Months % % (EUR 000s) 2009 2008 change Q3 2009 Q3 2008 change Net Sales 242,112 355,806 -32.0% 84,491 118,664 -28.8% EBITDA 29,597 54,654 -45.8% 11,449 19,363 -40.9% Operating profit 11,264 34,432 -67.3% 5,025 12,437 -59.6% Profit before tax 5,594 22,994 -75.7% 3,107 8,312 -62.6% Net profit (after tax & minorities) 3,711 15,789 -76.5% 1,859 5,562 -66.6% EPS (after tax & minorities in EUR) 0.1135 0.4868 -76.7% 0.0557 0.1715 -67.5% 

Efthimios Vidalis, CEO of S&B, commented:

"The third quarter provided indications that the downturn for our business has bottomed out, with the month of September being the highest month in terms of sales this year contributing to sales improving 8% quarter on quarter. The end-use metallurgical and construction sectors started to show signs of strengthening demand through some capacity mobilization and an attempt to replenish inventory levels. However, the stability and sustainability of these observations remains uncertain, mainly due to weak primary demand and concerns of growing unemployment. We have continued to focus on our cost and debt reduction goals and this is reflected in our financial performance. Operating expenses were further reduced during the third quarter and our financial structure was significantly improved, thanks to persistent working capital management and the successful completion of the share capital increase on September 25. We thank our shareholders for their support of the capital raising.

"The commitments we have made in terms of cost reduction initiatives are ongoing and we expect the rate of savings achieved in operating expenses in the nine months, to be sustained for the full year. Our Group's adjustment to the prevailing tough business environment and our new positioning will enable us to leverage our competitiveness and recover part of our margins for the long term. With an improved financial structure, stable market positions and discipline in terms of pricing, we believe we are well placed for the upturn."

Note: All references and financial statements in this release are made with regards to S&B's continuing operations which entail only Industrial Minerals activities. Full disclosure on Discontinued Operations of 2008 is included in the complete financial statements under IFRS which can be found on our company's website at [ www.sandb.com ]

Operational highlights

Continuing Operations, which are the basis for the like-for-like comparison between the nine months of 2009 and 2008 and which reflect the Group's focus on industrial minerals, recorded consolidated sales of EUR 242.1 million for the nine months of 2009, lower by 32.0% in comparison to the record sales of EUR 355.8 million of the prior year period. Despite the easing in the average prices of oil and sea freights, EBITDA decreased by 45.8%, to EUR 29.6 million from EUR 54.7 million in 2008, reflecting sharp volume declines across all product divisions. Operating profits were lower by 67.3% at EUR 11.3 million from EUR 34.4 million and net profits amounted to EUR 4.2 million, down by 74.0% from the corresponding EUR 15.9 million of 2008.

There was a relative improvement in the third quarter's performance compared to the first two quarters of 2009, with indications of increased activity especially towards the end of the period for all product divisions. Volume and revenues are still behind last year's record performance both for the nine months and the third quarter. However, restocking of our customers' supply chain has followed the recent upward trends in steel production and construction related activities in an attempt to service moderately increasing needs and this had a positive effect for our business in the third quarter.

Oil prices and sea freight rates, have been lower on average for the nine months by 48% and 70%, respectively, compared to the nine months of 2008, reflecting slight increases during the third quarter. In addition to enhanced volumes, stable pricing and other cost improvements in the third quarter have contributed positively to Gross profit and EBITDA margin expansion, compared to the first and second quarters. The commitments we have made to cost reduction initiatives are ongoing and for the nine months resulted in net operating expenses decreasing by EUR 7.2 million or approximately 15%. In the third quarter, we continued with our efforts to manage production related costs and to implement cost restructuring initiatives in the area of operating expenses.

Concurrent with the emphasis placed on reducing costs and operating expenses we continued to focus on improving our working capital. Trade working capital improved further in the third quarter by EUR 8.1 million reaching EUR 89.1 million at the end of September compared to EUR 123.1 million at the end of 2008, marking an improvement of EUR 34.1 million. Free cash flow from operations for the nine months improved significantly by EUR 43.6 million over the respective 2008 period and stood at EUR 63.5 million. Net capital expenditure was EUR 16.6 million, approximately 18% behind last year's comparable period and in line with our plans. On a pre-tax basis and after net capital expenditure, cash flow from operations stood at EUR 49.8 million, an improvement of EUR 39.8 million over the respective nine months of 2008. Including the effect of the very successful capital increase (EUR 40.8 million net of issuing costs) cash at the end of the nine month period stood at EUR 70.7 million. Total cash generation combined with debt reduction led to our Group's net debt position being significantly reduced by EUR 73.4 million since the beginning of the year, from EUR 203.1 million to EUR 129.8 million. It is reminded that part of the Group's debt has been refinanced and switched to a longer term maturity. More specifically, about EUR 50 million of short term maturity debt was successfully refinanced during the period with a 2-year term.

Divisional performance (amounts in EUR 000s)

 9 9 Months Months % % Bentonite 2009 2008 change Q3 2009 Q3 2008 change Net Sales 110,240 161,238 -31.6% 35,258 55,286 -36.2% EBITDA 23,136 37,965 -39.1% 7,295 13,645 -46.5% Profit before tax 16,797 30,240 -44.5% 5,277 10,625 -50.3% 

Sales in Bentonite were approximately 32% below last year at EUR 110 million. EBITDA stood at EUR 23 million and profit before tax was approximately EUR 17 million, declining 39% and 45%, respectively. Performance in the third quarter is negatively influenced by shipping delays from the Milos operations (that will positively impact the fourth quarter), but there are also positive indicators for the steel related industries in Germany and the US.

 9 9 Months Months % % Perlite 2009 2008 change Q3 2009 Q3 2008 change Net Sales 47,644 57,277 -16.8% 16,174 19,598 -17.5% EBITDA 8,186 7,233 13.2% 3,239 1,954 65.8% Profit before tax 5,534 4,627 19.6% 2,272 962 136.2% 

Perlite revenue was EUR 48 million, approximately 17% below last year. Sales performance was stable quarter on quarter. Construction sector related activity remains slow but it is offset by other applications such as horticulture and cryogenics which perform better. We recorded a third sequential margin improvement mainly due to currency and freight rate benefits.

 9 9 Months Months % % Bauxite 2009 2008 change Q3 2009 Q3 2008 change Net Sales 21,809 33,977 -35.8% 8,926 9,383 -4.9% EBITDA 5,592 8,400 -33.4% 3,078 2,116 45.5% Profit before tax -16 2,768 -100.6% 732 507 44.4% 

Bauxite revenue was approximately 36% below last year, supported by third quarter sales which were the highest to date and which were also substantially improved by 43% compared to the second quarter. Iron/steel related segments showing slight increases in demand.

 9 9 Months Months % % Continuous Casting Fluxes 2009 2008 change Q3 2009 Q3 2008 change Net Sales 44,403 71,752 -38.1% 18,037 24,731 -27.1% EBITDA 6,365 14,894 -57.3% 3,441 5,408 -36.4% Profit before tax 3,613 12,052 -70.0% 2,524 4,467 -43.5% 

Continuous casting fluxes reported revenue of EUR 44 million, approximately 38% lower than last year. The third quarter sales were the highest of the year improving by 34% over the second quarter. The division's performance reflects the positive developments in global steel production.

 9 9 Months Months % % Minerals Trading 2009 2008 change Q3 2009 Q3 2008 change Net Sales 17,944 30,775 -41.7% 6,334 9,167 -30.9% EBITDA 615 4,038 -84.8% 112 1,766 -93.7% Profit before tax 39 3,117 -98.7% -68 1,584 -104.3% 

Revenue for Minerals trading stood at approximately EUR 18 million, 42% lower than last year. Third quarter sales comprise the traditionally slow holiday period but also the highest sales month to date. Sales to both the Glass & Ceramics and Refractories segments showed positive indications.

Outlook

Consistent with our phased approach, the implementation of cost reduction initiatives continues in the second half of the year. In the current environment we continue to remain highly focused on cash conservation and seek to maintain our current net debt position. In parallel, as we prepare for the year ahead, we are also committed to maintaining pricing levels. Under our Market to Mine philosophy, we collaborate closely with our customers, providing them an integrated approach from technology through to service for the critical and customized function that our high quality products play, in their various production processes.

Primary demand for consumer products remains weak, driven by the deteriorating unemployment levels witnessed in major economies around the world, and this inevitably has an impact for the end-use applications that we serve. Despite the improved activity levels of the third quarter, uncertainty remains as to whether these enhancements are partly attributed to minimum inventory restocking, or indeed part of a more fundamental recovery. We anticipate a slight improvement in volumes for the medium term while the various operating and financial adjustments we have collectively achieved for our Group leave us well positioned for the eventual upturn.

Other Items

Completion of Share Capital Increase

The Board of Directors proposed to the Annual General Meeting of Shareholders (AGM) held on June 16th 2009, to raise funds up to the amount of EUR 40 million through a Share Capital Increase to be paid in cash, with a rights issue in favor of existing shareholders of 1 new share for every 3 existing shares held. The rights issue was approved at the said AGM, the issue price of the new shares was decided at EUR 4 per new share and the whole transaction was successfully completed on September 25, 2009 ahead of schedule. Funds raised amounted to EUR 40.8 million (net of transactions costs) and strengthened the Group's balance sheet by further reducing its net debt. The de-leveraging of our balance sheet resulted in a healthy capital structure that provides for increased financial flexibility in the future. The founding Kyriacopoulos family as the controlling shareholder and SCR-SIBELCO N.V as a major shareholder exercised their full participation.

About S&B Industrial Minerals

S&B Industrial Minerals is a multinational Group of companies, its purpose being to provide innovative industrial solutions by developing and transforming natural resources into value creating products. Utilizing the multiple properties of industrial minerals, S&B offers a portfolio of customized solutions for a broad range of applications (including foundry, steel-making, construction & building materials, metallurgy and horticulture), operating responsibly and adhering to the sustainable development principles of the triangle: economy - society - environment. It holds leading positions in its main sectors (bentonite, perlite, bauxite and casting fluxes). S&B was established in Greece in 1934, is listed on the Athens Stock Exchange (ticker: ARBA), is active in 21 countries across 5 continents, in 2008 it had a Group turnover of over Euro 450 million, and employs approximately 2,050 people worldwide. For more information, please visit S&B's website at [ www.sandb.com ]

Conference Call and Live Audio Webcast

S&B's Management will host a conference call for the investment community today, November 10, 2009, at 4 pm Athens Time, 2 pm London Time, 9 am New York Time.

In addition, there will be a live audio webcast of the conference call accessible through the S&B website at [ www.sandb.com ]. Participants should register on the website approximately 10 minutes prior to the start of the call. Following the conference call, the audio webcast will be archived on S&B's website.

Slide Presentation

A slide presentation on the Nine Month 2009 Results will also be available on S&B's corporate website in the Investor Relations section.

Note Regarding Forward-Looking Statements

This document may contain forward-looking statements about S&B, including statements reflecting management's current view relating to future market conditions, future events and expected operational and financial performance. Forward-looking statements may be found throughout this document. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that these expectations will materialize. Because forward-looking statements are based on assumptions and estimates, and are subject to risks and uncertainties, actual results could differ materially from those described or implied herein. S&B does not undertake any obligation to publicly update or revise any forward-looking statements included in this document, whether as a result of new information, future events or otherwise, except as required by applicable law or stock exchange regulation.

ATTACHMENTS

 1. Condensed consolidated income statement for the nine months ended September 30,2009 2. Condensed consolidated income statement for the three months ended September 30,2009 3. Condensed consolidated balance sheet as at September 30, 2009 4. Condensed consolidated cash flow statement for the nine months ended September 30,2009 

The attached basic and condensed financial statements should be read in conjunction with the relevant notes to the full financial statements for the period, which can be found on our company's website at [ www.sandb.com ]

 CONDENSED CONSOLIDATED INCOME STATEMENT (in EUR '000s except for earnings per share) The Group ---------------------- 1/1 - 1/1 - 30/9/2009 30/9/2008 ---------- ---------- Continuing Continuing operations operations ---------- ---------- Sales 242,112 355,806 Cost of sales (189,060) (272,369) ---------- ---------- Gross Profit 53,052 83,437 Net operating expenses (41,788) (49,005) Operating profit 11,264 34,432 Net Finance costs (6,395) (11,982) Gain / (loss) from the disposal of associates and subsidiaries 708 (253) Share of (loss)/profit of associates 17 797 ---------- ---------- Profit before tax 5,594 22,994 Income tax expense (1,436) (7,007) ---------- ---------- Net profit 4,158 15,987 ========== ========== Net profit attributable to: Owners of the Company 3,711 15,789 Minority interests 447 198 ---------- ---------- 4,158 15,987 ========== ========== Earnings per share Basic 0.1135 0.4868 ========== ========== Diluted 0.1128 0.4839 ========== ========== Weighted average number of shares Basic 32,702,541 32,436,044 ========== ========== Diluted 32,898,630 32,627,933 ========== ========== CONDENSED CONSOLIDATED INCOME STATEMENT (in EUR '000s except for earnings per share) The Group ---------------------- 1/7 - 1/7 - 30/9/2009 30/9/2008 ---------- ---------- Continuing Continuing operations operations ---------- ---------- Sales 84,491 118,664 Cost of sales (64,095) (90,079) ---------- ---------- Gross Profit 20,396 28,585 Net operating expenses (15,371) (16,148) Operating profit 5,025 12,437 Net Finance costs (2,076) (4,351) Gain / (loss) from the disposal of associates and subsidiaries - 67 Share of (loss)/profit of associates 158 159 ---------- ---------- Profit before tax 3,107 8,312 Income tax expense (766) (2,685) ---------- ---------- Net profit 2,341 5,627 ========== ========== Net profit attributable to: Owners of the Company 1,859 5,562 Minority interests 482 65 ---------- ---------- 2,341 5,627 ========== ========== Earnings per share Basic 0.0557 0.1715 ========== ========== Diluted 0.0553 0.1703 ========== ========== Weighted average number of shares Basic 33,363,703 32,433,621 ========== ========== Diluted 33,631,232 32,647,067 ========== ========== CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (in EUR '000s) The Group --------------------- June December 30, 2009 31, 2008 ---------- ---------- ASSETS Non-current assets Property, plant and equipment 186,551 185,979 Intangible assets 106,716 107,607 Other non-current assets 38,375 36,694 ---------- ---------- 331,642 330,280 ---------- ---------- Current assets Inventories 74,417 92,159 Trade and other receivables 68,226 75,032 Cash and cash equivalents 70,744 13,434 ---------- ---------- 213,387 180,625 ---------- ---------- ---------- ---------- Total Assets 545,029 510,905 ========== ========== EQUITY AND LIABILITIES Equity attributable to owners of the Company 232,168 192,445 Minority interests 1,776 1,334 ---------- ---------- Total equity 233,944 193,779 ---------- ---------- Non-current liabilities Interest-bearing loans and borrowings 154,789 119,735 Other non-current liabilities 52,376 52,313 ---------- ---------- 207,165 172,048 ---------- ---------- Current liabilities Short-term borrowings 45,728 96,848 Other current liabilities 58,192 48,230 ---------- ---------- 103,920 145,078 ---------- ---------- ---------- ---------- Total equity and liabilities 545,029 510,905 ========== ========== CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (in EUR '000s) The Group -------------------- 1/1-30/9 1/1-30/9 --------- --------- 2009 2008 --------- --------- Cash flows from operating activities Profit before tax from continuing operations 5,594 22,994 Profit before tax from discontinued operations - 4,865 --------- --------- Profit before tax 5,594 27,859 --------- --------- Adjustments for: - Depreciation and amortization 18,315 19,607 - Net finance costs 6,395 12,199 - Provisions, net 1,564 2,151 - Share of loss/(profit) of associates (17) (797) - Gain of the disposal of associates and subsidiaries (708) (4,400) - Gain on disposal of property, plant and equipment (96) (1,258) --------- --------- 31,047 55,361 (Increase) / Decrease in: - Inventories 16,856 (19,382) - Trade and other receivables 6,446 (13,302) Increase / (Decrease) in: - Trade and other payables 14,617 8,947 Income tax paid (2,571) (8,884) Payments for staff leaving indemnities and environmental rehabilitation (2,938) (2,876) --------- --------- Net cash flows from operating activities 63,457 19,864 --------- --------- Cash flows from investing activities Capital expenditure (17,334) (23,526) - Capitalized depreciation 421 400 - Proceeds from disposal of property, plant and equipment 308 3,743 - Business combinations and investments in consolidated entities (2,694) (885) - Other investing activities 1,325 8,404 --------- --------- Net cash flows used in investing activities (17,974) (11,864) --------- --------- Cash flows used in financing activities: - Share capital increase, net of transaction costs 40,846 - - Treasury shares purchase (167) (996) - Net (decrease)/increase in borrowing (16,150) 14,805 - Dividends paid (4,535) (9,750) - Interest and other finance costs paid (6,897) (9,648) - Payments for the settlement of derivatives (1,668) - --------- --------- Net cash flows (used in) / from financing activities 11,429 (5,589) --------- --------- - Net foreign exchange difference on cash flows 716 572 Net increase in cash and cash equivalents 57,628 2,983 Cash and cash equivalents at the beginning of the period 13,434 15,310 - Net foreign exchange difference on cash and cash equivalents at the beginning of the period (318) 202 --------- --------- Cash and cash equivalents at period end 70,744 18,495 ========= =========