SOURCE: S & B Industrial Minerals

S & B Industrial Minerals

November 10, 2009 15:32 ET

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

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
                                                      =========  =========

Contact Information

  • Contacts:

    S&B Industrial Minerals S.A.
    Haris Kotsokolos
    Investor Relations Manager
    Tel: +30 210 6296157
    Email: h.kotsokolos@sandb.com

    European financial media contact
    Financial Dynamics London
    Greg Quine
    Tel: +44 20 7269 7206
    Email: greg.quine@fd.com

    US financial media contact
    Capital Link New York
    Nicolas Bornozis
    Tel: +1 212 661 7566
    Email: sandb@capitallink.com