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IMERYS, largest decline in the SBF 120 at the close on Tuesday, October 22, 2019

(AOF) – IMERYS (-13.01% to 32.64 euros)

The group of mineral specialties for the industry announced Tuesday the downward revision of its financial outlook for 2019 as well as the resignation of its managing director Conrad Keijzer. As a result, the group now anticipates a net current result which should be down about 20% compared to 2018, of which – 7% attributable to the deconsolidation of the North American talc subsidiaries and the temporary closure of the plant. Willsboro in the first half.

AOF – LEARN MORE

Imerys – Things to remember

– World leader in industrial minerals, created more than 100 years ago;

– Positioning on 4 business lines: energy and specialty solutions for 28% of sales of € 4.6 billion at the end of 2018, filtration and performance additives (28%), high-strength minerals (26%) and ceramics (18%);

– Balanced diversification between geographical areas: 40% of sales in Western Europe, 31% in emerging countries, 24% in North America and the rest in Japan-Australia;

– Historical control of supplies, with 2/3 of turnover achieved “from the mine to the market”, the group with reserves of rare minerals and very good quality;

– Growth, exceptional in 2018 (+ 54%), driven by innovation, R & D and an active acquisition policy;

– Control of governance, structured since May 2018 between President and Chief Executive Officer and reorganization of the operational management, aligned with the markets, focused on the client and simplified by a reduction of the hierarchical levels;

– Solid financial structure, rated “investment grade” and reinforced by the sale of the roof division, and regular increase of the dividend, to more than 40% of the profit (€ 2.15 per share for 2018).

Imerys – Things to watch out for

– Exposure to certain cyclical markets – steel, construction and gas & oil sector;

– Deterioration since the end of 2018 of the macroeconomic environment;

– Diversity in inter-divisional operating margins, with energy and high-resistance solutions lagging behind;

– Recurrent accusations by US courts of the harmfulness of talc and proppants;

– Contraction of sales volumes over 3 consecutive quarters – from July 2018 to March 2019;

– Negative impact of currencies on the result;

– Valuation linked to the evolution of exchange rates, the price of energy, and more particularly to that of gas;

– Stock market sensitivity to Glencore or Anglo American ads;

– Integration of recent acquisitions: S & B (industrial minerals), PCC activity acquired from Solvay and Kerneos, or Brazilian Micron-ITA;

– Rehabilitation of the Willsboro US plant, the closure of which will have a negative impact of € 25 million on the 2019 result;

– Floating and limited liquidity, Belgian Securities, holding of the Desmarais and Frère families, holding 53.9% of the shares (67.67% of the voting rights) and Blue Crest 4.86% (6.02% of the voting rights) ;

Chinese cement companies are upsetting the codes of the global sector. They benefit from low production costs and excellent performance, proof of international expansion. Until now, China consumed nearly 60% of the world's cement and overcapacity was pulling its prices down. But the Chinese government, seeking to reduce pollution, has closed some cement plants, causing an increase in prices. As a result some analysts consider that China is one of the most profitable markets. In 2018, prices rose by 22%. Three groups dominate the market: the giant Anhui Conch, Huaxin and CRC. To consolidate their power, they are conducting acquisitions, notably with LafargeHolcim and HeidelbergCement.

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