Imerys-press-release-results-third-quarter-October-30-2023

PRESSRELEASE

PARIS, OCTOBER 30, 2023

Imerys reports its third quarter 2023 results and confirms its full year 2023 guidance

●       Third quarter revenue of €918 million and first nine months revenue^[1] of €2,9 billion reflecting challenging global macroeconomic conditions

●       Resilient third quarter current EBITDA margin at 16.4%, in line with first semester 2023 performance, benefitting from Imerys cost savings actions and downward trend in variable costs

●       Positive price/cost balance maintained, demonstrating the strength of the Group's business model during periods of significant uncertainty

●       Low end of current EBITDA guidance range^[2][3] confirmed for full year 2023 assuming stable market conditions

Alessandro Dazza, Chief Executive Officer, said:

“As anticipated in July, our key end markets and geographies did not show any significant recovery, which affected our sales volumes in the third quarter. As we navigate this low visibility environment, characterized by soft demand and heightened geopolitical tensions, we are deploying a number of cash and cost savings initiatives to protect our financial performance. Our confidence in the adaptability of Imerys' business model is intact as we pursue our strategic goals.”

Third quarter 2023 highlights

Acquisition of Carmeuse’s Ground Calcium Carbonate business in Georgia - USA

Imerys has reached an agreement with O-N Minerals Company, a subsidiary of Carmeuse Lime & Stone, for the acquisition of its North Georgia ground calcium carbonate business, effective September 1, 2023. We expect the business’ full-year revenue run rate to reach $15million post integration.

This acquisition will allow Imerys to expand its capacity for ground calcium carbonate (GCC) in North America and to foster its growth in sustainable construction. It also represents a great opportunity to develop new applications for Filtration & Life Sciences in agriculture.

Plan to divest Imerys’ bauxite activities in Greece

Imerys has entered into exclusive negotiations with the Mytilineos Group to divest its bauxite activities in Greece, with an agreement signed on September 4, 2023, for an enterprise value of €10 million.

Imerys Bauxites produces metallurgical-grade bauxite in its underground mines, of which approximately 75% is sold to the Mytilineos Group and a small part used internally by Imerys for the production of calcium aluminate cements in its plants in Fos and Dunkerque, France. As Imerys is diversifying its sourcing of bauxite, the contemplated divestiture will guarantee the long-term standing of this activity in a vertically-integrated Mytilineos Group, where this raw material is strategic for the future.

Imerys has also secured a medium-term bauxite supply agreement to allow a smooth transition to new sources.

The intended sale of Imerys’ assets serving the paper market to Syntagma Capital is highly unlikely to materialize

On September 30, Imerys announced that the completion of the proposed divestiture of its assets serving the paper market has become highly unlikely to materialize due to circumstances for which Imerys has formally reserved its rights towards Syntagma Capital.

At the end of 2022, Imerys signed a binding agreement with Syntagma Capital for the sale of most of its assets serving the paper market. These activities represented less than 10% of Imerys’ revenue in 2022.

Imerys’ focus on its core business of high-growth specialty minerals remains unchanged and the Group will explore alternative options for the divestment of this business. In the meantime, Imerys will continue to manage these assets in the best interest of the Group, its employees and its customers.

Imerys continues to expand in high growth markets in China and India

On October 31, 2023, Imerys will formally inaugurate its new, greenfield plant in Wuhu, China, producing high-quality talc used for lightweighting of polymers and typically addressing automotive applications, EVs in particular. The Group invested €43 million in this brand new, state-of-the-art unit to expand its presence in China, the largest car producing country in the world. Sales of its specialty mineral additives from the new plant are expected to reach €30 million per annum at maturity. This investment is an integral part of Imerys’ ‘Green Mobility’ strategy which aims to support the industry transition towards a low-carbon economy with mineral solutions.

In India, Imerys’ recently-built manufacturing plant in Vizag increased sales volumes by more than 50% compared to last year. The Vizag plant, which opened at the end of 2021, produces calcium aluminate binders for use in the refractory and construction industries. Sales at maturity are expected to exceed €25m per annum. This expansion is part of a larger effort by Imerys to increase production, innovation and sustainability in India.

Outlook

Our results for the first nine months continue to demonstrate the adaptability of Imerys’ business model during periods of significant uncertainty. We are confident in our ability to increase cash and cost savings through the initiatives that are being deployed throughout the Group. Assuming stable market conditions, we aim to achieve the low end of the current EBITDA guidance range of €630 million to €650 million that we set on July 27.

COMMENTARY ON THE THIRD QUARTER 2023 RESULTS

Revenue

Revenue for the third quarter of 2023 amounted €918 million, 14.2% below last year at constant change and perimeter.

Revenue was €2,900 million, down 8.5% year-on-year at constant scope and exchange rates in the first nine months of 2023. Group sales volumes were down 13.3%, reflecting weakness in all main end markets, continued destocking due to a lack of visibility on the timing of a rebound, and increasing competition in some geographies.

Imerys’ pricing effect was positive in the first nine months thanks to the carry-over effect of price increases implemented last year and specific actions carried out in 2023.

Revenue included a negative currency effect of €58 million (-1.8%), primarily as a result of the depreciation of the U.S. dollar against the euro. The scope effect was negative €30 million, primarily attributable to recent divestments.

Current EBITDA

Current EBITDA was resilient in the third quarter and benefited from tight costs management and the Group’s agility to adapt production and fixed costs to changing demand patterns.

For the first nine months of 2023, Imerys maintained a current EBITDA margin close to 17%, benefiting from lower variable costs, in particular energy and freight, decreasing fixed costs despite inflation, and dividend contribution of joint ventures and associates.

Current net income from continuing operations, Group share

In the third quarter, the current net income from continuing operations, Group share reached €53 million, vs. €72 million last year.

In the first nine months of 2023, current net income from continuing operations, Group share totaled €192 million down 13.1% vs. last year. Net financial result was a negative €33 million. The income tax expense of €72 million corresponds to an effective tax rate of 27.0%. Current net income from continuing operations per share reached €2.27.

Net income

Net income, Group share, totaled €38 million in the third quarter of 2023. Net income from continuing operations, Group share reached €39 million. It includes €15 million of charges, after taxes, mainly in relation to acquisition, divestiture as well as restructuring costs.

At the end of September, the net income, Group share totaled €184 million, a decrease of 4.9% vs. last year.

COMMENTARY BY SEGMENT

Performance Minerals (68% of consolidated revenue)

Revenue generated by the Performance Minerals segment was down 13.9% like-for-like in the third quarter of 2023, impacted by continued destocking in all regions and soft demand in certain end markets such as residential construction. On a reported basis, revenue was down 17.7% and includes a negative currency effect of €32 million (-4.2%).

Revenue in the Americas was down 17.5% at constant scope and exchange rates in the third quarter of 2023. The paper and plastics businesses drove this decline, partially offset by a better oriented filtration business and positive pricing.

Revenue in Europe, Middle East and Africa decreased by 18.3% at constant scope and exchange rates in the third quarter of 2023. Volumes were impacted by lower demand in ceramics with high comparison basis vs last year, and paper and board. Activity in the consumer segment remained more sustained despite persistent inflation.

Revenue in Asia-Pacific was down 8% at constant scope and exchange rates for the third quarter of the year. Volumes were impacted by softer demand in lithium-ion batteries and a weak paper business.

High Temperature Materials & Solutions (32% of consolidated revenue)

Revenue like-for-like in the third quarter of 2023 for the Refractory, Abrasives & Construction business area was down 13.5%, reflecting continued destocking, low iron & steel production in Europe, and increased competition from Asian players benefiting from lower energy and logistics costs. The building and infrastructure business continued to perform well thanks to the increased market penetration of products helping to decarbonize the industry.

On a reported basis, third quarter 2023 revenue decreased by 17.9%, including an unfavorable currency effect of €18 million (-5.1%).

Third quarter 2023 results webcast

The press release is available on the Group’s website www.imerys.com. The Group will hold a live webcast to discuss the third quarter 2023 results at 18.30 (CET) on October 30, 2023, which can be accessed on the Group’s website www.imerys.com.

Financial Calendar

These dates are subject to change and may be updated on the Group’s website https://www.Imerys.com/finance.

The world’s leading supplier of mineral-based specialty solutions for industry with €4.3 billion in revenue and 14,000 employees in 2022. Imerys delivers high value-added, functional solutions to a great number of sectors, from processing industries to consumer goods. The Group draws on its understanding of applications, technological knowledge and expertise in material science to deliver solutions by beneficiating its mineral resources, synthetic minerals and formulations. Imerys’ solutions contribute essential properties to customers’ products and their performance, including heat resistance, hardness, conductivity, opacity, durability, purity, lightness, filtration, absorption and water repellency. Imerys is determined to develop responsibly, in particular by fostering the emergence of environmentally-friendly products and processes.

More comprehensive information  about  Imerys  may  be  obtained  from  its website (www.imerys.com) in the

Regulated              Information          section,  particularly           in             its            Registration          Document             filed        with the          French   financial markets authority (Autorité des marchés financiers, AMF) on March 22, 2023 under number D.23-0127 (also available from the AMF website, www.amf-france.org). Imerys draws investors’ attention to chapter 2 “Risk Factors and Internal Control” of its Registration Document.

Disclaimer: This document contains projections and other forward-looking statements. Investors should be aware that such projections and forward-looking statements are subject to various risks and uncertainties (many of which are difficult to predict and generally beyond the control of Imerys) that could cause actual results and developments

to differ materially from those expressed or implied.

Analyst/Investor Relations:

Cyrille Arhanchiague : +33 (0)1 49 55 64 84 finance@imerys.com

Press contacts:

Claire Garnier : +33 (0)1 49 55 64 27

Mathieu Gratiot : +33 (0)7 87 53 46 60

Hugues Schmitt (Primatice) : + 33 (0)6 71 99 74 58 Olivier Labesse (Primatice) : + 33 (0)6 79 11 49 71

APPENDIX

Revenue by Segment

Key income statement indicators

GLOSSARY

Imerys uses “current” indicators to measure the recurrent performance of its operations, excluding significant items that, because of their nature and their relatively infrequent occurrence, cannot be considered as inherent to the recurring performance of the Group (see section 5.5 Definitions and reconciliation of alternative performance measures to IFRS indicators in the 2021 Universal Registration Document).