PR Newswire/Les Echos/ Press release Mersen: 2012 full-year results Paris, March 20, 2013 - Mersen (Euronext FR0000039620 - MRN), a global expert in materials and equipment for extreme environments and for the safety and reliability of electrical equipment, has today reported its full-year results for 2012. Mersen's Supervisory Board met on March 19, 2013 and reviewed the audited 2012 financial statements. The Management Board met on the same day to approve them. 2012 key figures Reported sales (EUR811 million) in line with the 2011 level (down 8.8% on a like-for-like basis) EBITDA(1) of EUR116 million, representing 14.3% of sales Operating income before non-recurring items of EUR76.3 million or 9.4% of sales in line with expectations Net income attributable to Mersen's shareholders (EUR5.6 million) impacted by impairment losses arising from the plan to dispose of non-core businesses Dividend of EUR0.45 per share proposed, representing a payout ratio (excluding impairment losses arising from the disposal plan) in line with the 2011 level (35%) High level of cash flow from operating activities(2) (EUR109 million, up EUR41 million compared with 2011) Net debt of EUR241 million, representing a solid net debt to EBITDA ratio of 2.1x(3). Highlights of 2012 Integration of Eldre bolstering the Group's position in power electronics Execution of adaptation plans in response the economic conditions Decision to dispose of unprofitable non-core businesses Refinancing of the syndicated loan strengthening the Group's finances (1) Operating income before non-recurring items + depreciation and amortization (2) Continuing operations before capital expenditures (3) Ratio calculated using the covenant method for the USD350 million syndicated loan Luc Themelin, the Chairman of the Management Board, commented: "2012 was marked by a complex and very mixed environment. While the Group achieved commercial success in the chemicals, aerospace and process industries, Europe's economy was particularly sluggish, and the solar energy market contracted. Against this backdrop, Mersen took measures to adjust its production and its organization. During 2013, we will continue this drive to strengthen the Group's competitiveness. I am confident in our ability to seize any opportunities arising and strengthen our leadership positions in our business segments." Sales and operating margin before non-recurring items The Group's consolidated sales totaled EUR810.7 million. They declined 8.8% on a like-for-like basis compared with the pro forma 2011 figure*. On a reported basis, the decline came to just 0.7%, owing to the contribution made by Eldre, which was consolidated from the beginning of the year, and positive currency effects. EBITDA(4) totaled EUR116.0 million, representing 14.3% of sales, compared with 17.6% in 2011 on a pro forma basis*. The Group's operating income before non-recurring items(5) came to EUR76.3 million in 2012, representing an operating margin of 9.4% of sales, down 3.7 points compared with the pro forma 2011 figure*. Sales in the Advanced Materials and Technologies (AMT) segment posted an organic contraction of 11.3% during the year owing to the slowdown in the solar energy market. Excluding solar energy, the Group posted organic growth of 7.2% thanks to billings on major chemicals contracts and healthy performance in process industries and aerospace transportation. The AMT segment's EBITDA totaled EUR62.5 million. This represented 18.0% of the segment's sales, down 6 points compared with 2011. This decline was primarily attributable to the business contraction. Another contributing factor was the unfavorable product mix, with strong sales of lower-margin chemicals and, to a lesser extent, price cuts towards the end of the year. These factors were partially offset by savings measures launched in 2012. Operating income before non-recurring items totaled EUR35.2 million, representing an operating margin of 10.1% of sales. Sales recorded by the Electrical Components and Technologies (ECT) segment came to EUR464 million in 2012, up 3.2% compared with 2011 thanks to the contribution made by Eldre, which was acquired in early 2012. On a like-for-like basis, the segment's sales contracted by 6.7%. The decline was felt across all markets and electronics in particular. The ECT segment generated EBITDA of EUR66.1 million, representing 14.2% of sales compared with 15.4% in 2011. In spite of the top-line contraction, this healthy resilience was largely attributable to the savings plans introduced. Operating income before non-recurring items totaled EUR54.0 million, representing an operating margin before non-recurring items of 11.6% of sales. (4) Operating income before non-recurring items + depreciation and amortization (5) Based on the definition laid down in CNC regulation 2009.R.03. * Restatement of the 2011 financial statements to exclude the businesses to be sold or discontinued Net income from continuing operations Net income from continuing operations totaled EUR34.0 million during the fiscal year, compared with EUR62.4 million in 2011. Non-recurring income and expense showed a loss of EUR11.3 million owing chiefly to the recognition of restructuring costs linked to the adaptation plans. Net financial expense totaled EUR13.0 million in 2012, up EUR3 million compared with 2011, owing to the EUR20 million increase in average debt during the year and the rise in the Group's average borrowing rates with the significant extension in the maturity of its debt. Lastly, income tax expense totaled EUR17.1 million over the year. This represented an effective tax rate of 33%, which is similar to the 2011 rate. Assets held for sale and discontinued operations The net loss from assets held for sale and discontinued operations came to EUR27.7 million, compared with EUR2.7 million in 2011. This mainly reflected the EUR25.4 million charge linked to the plan to withdraw from metal boilermaking equipment for the nuclear power market, metal plate heat exchangers, and stirrers and mixers, and discontinuation of activities for the nuclear power market at Xianda's facility in China. This charge comprised a EUR20 million impairment loss, plus the EUR5.4 million net loss (excluding disposals) posted by the business activities in 2012. Net income Accordingly, net income came to EUR6.3 million. Net income attributable to Mersen's shareholders came to EUR5.6 million, down from EUR56.9 million in 2011. Cash and debt Cash flow generated by operating activities before tax and the change in the WCR came to EUR103.8 million in 2012, compared with EUR135.4 million in 2011. The working capital requirement was reduced by EUR28 million owing to the business contraction and continued implementation of action plans to reduce inventories. Capital expenditures totaled EUR42.2 million, with the bulk devoted to finalization of the plan to roll out new graphite production capacity launched in 2011 and implementation of dedicated new equipment for SiC coatings for electronics applications. Accordingly, net cash flow from operating activities generated by continuing operations posted a significant increase to EUR108.9 million from EUR68.0 million in 2011. Net debt at year-end 2012 came to EUR241 million, stable compared with the 2011 level of EUR239 million. This change reflects the impact of the Eldre acquisition and payment of the majority of the 2011 dividend in cash. Financial structure The Group's finances remained solid. Its net debt to EBITDA ratio stood at 2.07x(6) compared with 1.61x(6) at year-end 2011. The net debt to equity ratio came to 45%(6), the same level as its year-end 2011 level (44%). Dividend At the forthcoming AGM on May 16, the Supervisory Board is set to propose payment of a dividend of EUR0.45 per share. This would represent a payout ratio of 35% of the Group's net income before the impact of impairment losses linked to the disposal plan. Shareholders will be given the option of electing for payment of the dividend in shares. Outlook As in 2012, the Group will face a mixed economic environment in 2013. Mersen aims to generate 2013 sales comparable with 2012 level on a like-for-like basis. The Group anticipates a tough start to the year, in line with the second half of 2012, with a top-line recovery during the second half of 2013. As previously announced, Mersen will continue to roll out its adaptation plan during the year to reduce its cost base by some EUR10 million, but it will have to contend with pricing pressures and an unfavorable product mix in the AMT segment. Accordingly, Mersen aims to achieve an EBITDA margin of around 14% of sales and an operating margin before non-recurring items of around 9% over the full year. In addition, Mersen will continue to implement its plans to improve the logistics chain and its cash management and anticipates a significant decrease in capital expenditures compared with 2012. In the medium term, the Group will continue to leverage the strengths of its teams, its expertise and the relationships it has built with its customers to strengthen its positions and step up the pace of its development. (6) Ratio calculated using the covenant method for the USD350 million syndicated loan Simplified consolidated income statement In EUR million Dec. 31, 2012 Dec. 31, 2011 Dec. 31, 2011 Pro-forma Sales 810.7 816.2 829.6 Gross income 242.1 263.1 264.4 Selling costs & other (79.3) (77.1) (80.5) Administrative & research costs (86.5) (79.5) (80.4) Operating income before non recurring items 76.3 106.5 103.5 in % of sales 9.4% 13.1% 12.5% Non-recurring income and expense (11.3) (3.5) (4.2) Amortization of revalued intangible assets (0.9) (0.9) (0.9) Operating income 64.1 102.1 98.4 Financial costs (13.0) (10.2) (10.2) Current and deferred income tax (17.1) (29.5) (29.5) Net income from continuing operations 34.0 62.4 58.7 Net income from assets held for sale (27.7) (2.7) 1.0 NET INCOME FROM THE YEAR 6.3 59.7 59.7 EBITDA 116.0 143.5 140.7 in % of sales 14.3% 17.6% 17.0% Segmental analysis excluding corporate expenses Advanced Materials & Technologies Electrical Components & Technologies In EUR million Dec. 31, 2012 Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2011 Pro-forma Pro-forma Sales 346.3 366.2 464.4 450.0 EBITDA 62.5 87.9 66.1 69.5 in % of sales 18.0% 24.0% 14.2% 15.4% Operating income before non recurring items 35.2 63.2 54.0 57.3 in % of sales 10.1% 17.3% 11.6% 12.7% Simplified balance-sheet In EUR million Dec. 31, 2012 Dec. 31, 2011 Non-current assets 664.6 651.5 Inventories 173.6 188.7 Trade and other receivables 126.7 148.7 Other assets 14.9 5.1 TOTAL 979.8 994.0 In EUR million Dec. 31, 2012 Dec. 31, 2011 Liabilities and equity 527.6 542.9 Provisions 3.3 5.5 Employee benefits 36.2 35.6 Trade and other payables 119.2 131.8 Other liabilities 52.0 38.7 Net debt 241.5 239.5 TOTAL 979.8 994.0 Simplified statement of cash-flow In EUR million Dec. 31, 2012 Dec. 31, 2011 Dec. 31, 2011 Pro-forma Operating cash-flow before change in WCR 103.8 135.4 131.5 Change in WCR 27.7 (35.6) (36.8) Income tax paid (22.6) (31.8) (31.8) Net cash generated by continuing operating activities 108.9 68.0 62.9 Cash generated by discontinued operations (7.1) (5.5) (0.4) Operating cash-flow 101.8 62.5 62.5 Capital expenditure (42.2) (52.7) (53.3) Operating cash-flow after capex 59.6 9.8 9.2 Change in scope (acquisitions) (30.0) (9.5) (9.5) Property disposal and others 1.5 7.9 7.9 Cash generated/(used) by investing activities from discontinued activities (0.6) (0.6) Cash-flow used by investing activities (71.3) (54.9) (54.9) Cash generated by operating and investing activities 30.5 7.6 7.6 The reference document is available for download from the Mersen website Financial calendar 2013 Q1 sales: April, 29 2013 (after market) About Mersen A Global expert in materials and solutions for extreme environments as well as in the safety and reliability of electrical equipment, Mersen designs innovative solutions to address its clients' specific needs to enable them to optimize their manufacturing process in sectors such as energy, transportation, electronics, chemical, pharmaceutical and process industries. With around 7,000 employees in over 40 countries, Mersen achieved consolidated sales of c.EUR830 million in 2012. The Group is listed on NYSE Euronext Paris - Compartment B Visit our website www.mersen.com Analyst and Investor Contact Press Contact Véronique Boca Nicolas Jehly / Guillaume Granier VP Financial Communication FTI Consulting Strategic Communications Mersen Tel: +33 (0)1 47 03 68 10 Tel: + 33 (0)1 46 91 54 40 Email: firstname.lastname@example.org / Email: email@example.com firstname.lastname@example.org www.mersen.com The content and accuracy of news releases published on this site and/or distributed by PR Newswire or its partners are the sole responsibility of the originating company or organisation. 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Mersen : 2012 full-year results
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