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Elementis PLC
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Hello,
everyone,
and
welcome
to
the
Elementis
2021
Full
Year
Results
Call.
My
name
is
Daisy,
and
I'll
be
coordinating
today's
call.
You
will
have
the
opportunity
to
ask
a
question
at
the
end
of
the
presentation.
[Operator Instructions]
I
will
now
hand
over to
your
host,
James
Curran,
IR-Elementis
to
begin.
So,
James,
please
go
ahead.
Good
morning.
Welcome
to
the
Elementis
2021
full
year
results
presentation.
I'm
James
Curran,
Director
of
Investor
Relations,
and
thank
you for
joining
us
today.
The
slides
of
this
presentation
can
be found
on
our
website.
And
as
usual,
please
make
notes
of
the
cautionary
statement
on
slide
2.
I'll
now
hand
over to
Paul
Waterman,
CEO
of
Elementis.
Good
morning.
Thank
you for
taking
the
time to
join
us
today.
In
terms
of
the
agenda,
I'll
start
with
the
highlights
and
business
segment
performance,
Ralph
will
review
the
group financials,
and
then
I'll
take
you
through
our
outlook
and
priorities.
Following
this,
we'll
take
your
questions.
On
slide 5
are
the
key
messages.
Our
financial
performance
was
much
improved,
driven
by
demand
recovery
across
many
of
our
end
markets
and
record
new
business
success.
The
speed
of
recovery
in
the
first
half
demanded
a
resilient
supply
chain
performance.
Raw
material
shortages
emerged
due
to
weather
events
and
supplier
outages.
Logistics
issues
appeared
in
the
shipping
container
imbalances
and
ongoing
port
congestion.
Our
global
supply
chain
team
responded
well
throughout
the
year
to
manage
this.
Overall,
timely
pricing
actions
mitigated
inflation
that
accelerated
as
the
year
progressed.
Raw
materials,
logistics,
and
energy
costs
increased
faster
than
at
any
time
over
the
last
20 years.
We
made
significant
progress
in
implementing
our
innovation,
growth,
and
efficiency
strategy
to
ensure
we're
well-positioned
to
deliver
on
our
medium-term
performance
ambitions.
Our
performance
delivery
in
the
face
of
these
challenges
allowed
a
significant
reduction
in
financial
leverage
from
3.2
to
2.6
times
net-debt-to-EBITDA,
and
we're
focused
on
making
further
progress.
Concerning
safety
on
slide
6,
at
Elementis,
we're
absolutely
focused
on
putting
the
health
and
safety
of
our
employees
first.
This
year,
we
reached
some
notable
milestones.
Three
quarters
of
our
sites
worked
safely
with
no recordable
injuries.
Our
new
plant
in
India
was
built
with
zero
recordable
injuries.
This
is
over
1
million
worker
hours
of
injury-free
construction.
A
great
achievement.
While
our
recordable
injury
rate
as
compared
to
the
US
chemical
industry
was
favorable,
we
experienced
12
injuries
in
2021;
and
that's
a
disappointing
result.
The
only
acceptable
number
of
injuries is
zero.
To
drive
improvement,
we'll
continue
to
invest
in
training
our
people
and
maintaining
our
assets.
We'll
also
invest
in
programs
that
help
our
employees
stay
focused
on
staying
safe.
In
2021,
we
held
our
first ever
global
safety
week
involving
all
Elementis
staff
focused
on
promoting
safety
awareness
to
strengthen
our
safety
culture
and
support
our path
to zero injuries.
Turning
to
our
headline
financial
performance,
in
2021,
we
saw
a
strong
performance
recovery.
Sales
rose
17%
to $880
million
driven
by
new
business
success,
targeted
pricing
actions,
and
demand
recovery
across
many
end
markets.
Coatings
had
a
very
strong
year
with
great
new
business
momentum
and
efficiency
gains
from
the
recent
consolidation
of
our organoclay
plants
in
the
US.
Operating
profit
rose
31%
to
$107
million,
with
underlying
revenue
growth
more
than
offsetting
cost
inflation
and driving
a
margin
improvement
from
10.9%
to
12.1%.
Earnings
per
share increased
63%.
And
leverage
reduced
from
3.2
to
2.6
times,
driven
primarily
by
higher
earnings.
Turning
to
the
supply
side
on
slide
8.
Disruptions
have
been
ever-present
since
the
onset
of
COVID-19,
but
they've
been
asynchronous,
impacting
different
countries
and
regions
at
different
times
and
often
for
different
reasons.
There
were
huge
challenges
in
2021.
First,
the
sharp
demand
recovery
required
fast
action
to
increase
production
at
a
number
of
our
most
important
sites.
In
response,
we
hired
extra
workers,
increased
staff
sizes,
and
extended
production
runs;
in
turn,
setting
production
records
at
several
of
our
sites.
It's
worth
noting
our
ability
to
produce
products
in
more
than
one
location
globally
was
incredibly
helpful.
Second,
we
experienced
raw
material
shortages
and
cost
increases.
For
example,
molten
polyethylene
glycol
was
in
short
supply
in
the
US
due
to
several
production
shortages.
In
one
month,
we
modified
production
systems
to
switch
from
liquid
to
solid
polyethylene
glycol,
thereby
lowering
costs,
reducing
Scope
3
emissions,
and
ensuring
continuity
of
supply
to
our
customers.
We
also
materially
increased
supply
resiliency
by
qualifying
multiple
sources
for
many
key
raw
materials.
Third,
due
to
limited
container
availability,
congestion at
sea
ports,
and
driver
shortages,
freight
rates
increased
almost
fivefold.
We
responded
by
using
air
and
overland
transportation
where
possible,
booking
shipping
far
in
advance,
and
implementing
surcharges.
And
finally,
rapidly
accelerating
energy
inflation
was
a
key
challenge
in
the
second
half
of
the
year,
particularly
within
our
European-based
Talc
business.
Lowering
our
energy
intensity,
executing
price
increases,
and
implementing
surcharges
helped
to
reduce
the
effect,
albeit
with
a
lag
impact.
Overall,
our
global
supply
chain
responded
well.
However,
these
challenges
have
continued
into
2022,
and
we
will
stay
focused
on
overcoming
them.
Turning
to
slide
9,
we've
continued
to implement
our
innovation,
growth,
and
efficiency
strategy.
On
innovation,
we
launched
21
new
products
in
areas
such as
skin
care,
AP
Actives,
and
industrial
and
decorative
coatings.
New
products
accounted
for
14%
of
sales
in
2021,
compared
to
10% in
2017,
but
we're
on
track
to
reach
our
17%
target
by
2025.
We
launched
new
products
with
our
open
innovation
partners
Aqdot
and
NXTLEVVEL.
And
to
support
future
growth
and
innovation,
we
open
two
new
personal
care
labs
in
China
and
Brazil.
In
terms
of
growth,
we
closed $50
million
of
new
business.
This
was
a
record
performance
and
was $20
million
ahead
of
last
year,
driven
by
wins
across
Coatings,
Talc,
and
Personal
Care.
Overall,
our
Coatings
business
grew 17%,
outpacing
the
market.
Against
our
targeted
high-margin
growth
platforms,
we
grew
37%
versus
prior
year.
Industrial Talc
revenue
rose
15%
as
geographic
expansion
and
revenue
synergy
delivery
helped
to offset
declining
European
automotive
production.
And
Personal
Care
delivered
strong
growth
in
both
skin
care
and
Asia,
two
key
areas
of
strategic
focus
where
we're
underdeveloped
and
there
remains
significant
growth
opportunity.
On
efficiency,
we
continue
to
make
progress.
In
2021,
we
delivered
$10
million
of
cost
savings
supported
by
the
closure
of
our
Charleston
plant
and
capacity
consolidation
to
our
St.
Louis
plant.
Our
new
AP Actives
plant
in
India
started
up
in
the
third quarter
and
is
now
undertaking
a
12-month
production
ramp-up.
We're
now
focused
on
delivering
an
additional
$10
million
of
cost
savings
by
2023.
Continuous
improvement,
procurement,
and
productivity
projects
planned
for
2022
and
2023
will
underpin
achievement
of
this
target.
On ESG
on
slide
10,
our
efforts
are
accelerating.
This
year,
we
appointed
our
first
ever
Global
Sustainability
Director.
This
is
a
key
role
that
leads
our
Environmental
Sustainability
Council,
ensures
regulatory
compliance
and
leads development
of
multiyear
performance
improvement
plans.
We
made
good
progress
against
our 2030
environmental
targets,
materially
reducing
GHG
emissions,
energy,
and
water
usage
per
tonne
of
production
versus
2020. We
were
awarded
the
Responsible
Chromium
Award
by
the
International
Chromium
Development
Association
in
partnership
with
EcoVadis.
As
the
only
chromium
producer
in
the
world
to
achieve
this,
it's
an
important
recognition
of
our
safety,
operational,
and
sustainability
credentials.
In
addition,
our
progress
was
recognized
by
various
rating
agencies
with
upgrades
at
MSCI
and
EcoVadis
when we
were
raised
to
Gold
at
CDP
and
Sustainalytics.
Against
the
social
pillar,
we're
making
good
progress.
Quarterly
systematic
measurement
of
employee
engagement
throughout
COVID-19
improved
leadership
focus
and
interventions.
In
2021,
employee
engagement
improved
materially,
up
8
points
to
63%.
Female
representation
in
senior
management
has
continued
to
steadily
improve.
It
was
31%
in
2021
versus
24%
in
2018.
In
addition,
the
Global
DE&I
Council
coordinates
activities
to
support
improved
recruitment,
training,
and
retention
required
to
create
a
more
diverse
and
inclusive
workforce.
We've
also
taken
steps
to
ensure
that
our
high
standards
of
governance
are
maintained.
We
recently
employed
– appointed
a
dedicated
Global
Compliance
Officer
to
support
continuous
improvement
of
the
global
compliance
program
and
to
lead
the
compliance
champions
network.
We
launched
an
Ethics
&
Compliance
Council
to
raise
awareness
and
focus
across
Elementis.
And last,
we
launched
a
global
cybersecurity
campaign
and
implemented
mandatory
employee
training
to
address this
material
risk.
Overall,
we're
making
good
progress,
but
there's
more
to
do.
Before
moving
on,
on
slide
11, there's
an
important
point
to
make
about
sustainability.
At
Elementis,
our
intent
is
to
integrate
sustainability
into
all
that we
do,
across
our
business,
our
products,
make
a
positive
contribution
to
our
customers,
wider
society,
and
the
environment.
In
Personal
Care,
our
natural
ingredients
replace
petrochemically
derived
alternatives.
In
Coatings,
our
additives
enable
the
transition
from
solvent
to
waterborne
products.
And
in
Talc,
our
products
decreased
the
weight
of
vehicles,
and
thus
reduce
emissions.
In
Chromium,
our
products
extend
the
life
of
critical
industrial
equipment
such
as
turbines
and
jet
engines
by
three
to
four
times.
This
product
focus
is
underpinned
by
our
global
innovation
and
supply
chain
approach.
Sustainability
is
at
the
center
of
our
innovation
efforts.
Today,
53%
of
our
revenue
is
from
naturally
derived
products
such
as
castor
wax-based
thixotropes,
and
hectorite
clay-based
skin
care
ingredients.
In
addition,
every
innovation
project
is
assessed
with
sustainability
improvement
via
the
Elementis
sustainability
scorecard
to
ensure
continuous
improvement
as
our
portfolio
evolves.
With
over
60
active
innovation
projects
in
the
pipeline, we
are
well-positioned
to
make
further
progress.
We
also
recognize
that
reducing
the
environmental
impact
of
our
production
processes
will
have a
positive
impact
on
society
as
well
and
support
progress
towards
our
2030
goals.
In
2021,
we
switched
three
production
sites
to
100%
green
energy.
We
reduced
the
energy
requirement
to
our
Newberry
Springs
clay
processing
plant
by
10%,
and
we
significantly
increased
water
recycling
across
the
group.
Going
forward,
there
are
65
live
projects
across
our
supply
chain
that
will
deliver
additional
efficiency
and
sustainability
budgets.
Now,
let's
turn
to
our
segment
performance.
Starting
with
Personal
Care
on
slide
13,
revenue
rose
6%
on
a
constant
currency
basis
to
$175
million,
as
demand
in
the
second
half
started to
recover
from
COVID-19-related
social
distancing
measures.
Adjusted
operating
profit
rose
6%
to
$37
million,
with
improved
volumes
and
mix
more
than
offsetting
incremental
costs
related
to
our
new
India
plant
and
investments
made
to
support
future
growth
in
Asia.
Looking
at
Personal
Care
demand
in
more
detail
on
slide
14,
today,
we
are
a
business
of
scale
positioned
to
grow
by
leveraging
favorable
long-term
trends
such
as
the
move
to
natural
ingredients,
product
premiumization,
and
increasing
consumer
demand
in
Asia.
However,
in
the
short
term,
demand
was
negatively
impacted
by
COVID-19.
More
people
worked
from
home,
traveled
less,
and
have
more
limited
social
interactions.
In
Europe,
retail
sales
of
cosmetics
and
antiperspirant
deodorants
remained
approximately
5%
and
3%
below
pre-COVID-19
levels.
However,
as
restrictions
eased
in
2021,
demand
suddenly
improves
and
this
recovery
is
continuing
in
2022.
Turning
to
slide
15, in
2021,
we
continue
to
make
strategic
progress
to
ensure
we
are
well-positioned
for
the
full
post-COVID
demand
recovery.
In
skin care,
our
aim
is
to
deliver
$10 million
of
incremental
sales over
the
medium
term.
In
2021,
sales
grew
41%,
driven
by
three
new
skin care
product
launches
including
BENTONE
HYDROCLAY
2100.
As
customers
increasingly
look
for
natural
products,
our
skin care
offer
continues
to
build
momentum.
Our
NBO
pipeline
is
at
$14
million
now,
up
75%
from
$8
million
at
the
end
of
2020.
In
India,
despite
COVID-19
outbreaks,
our
new
AP Actives
plant
started
up
as
planned
in the
third
quarter
and
is
undergoing
a
12-month
production
ramp-up
process.
Once
complete,
this
will
create
the
most
advantaged
and
resilient
AP Actives
supply
chain
in
the
world
while
providing
better
access
to
faster-growing
Asian
markets
and
built
to
recycle
all
water
used
in
the
manufacturing
process.
It
is
a
very
environmentally
friendly
plan.
On
innovation,
we launched
seven
new
AP
products
including
AqFresh
Pure
in
collaboration
with
Aqdot.
We've
also
strengthened
our
presence
in
Asia.
We
opened
a
new
lab
in
Shanghai,
China
and
invested
in
incremental
sales,
marketing,
and
technical
expertise;
doubling
our
head
count
in
the
region.
Asia
revenues
grew
44%.
And
with
our
business
still
underdeveloped,
there's
opportunity
for
future
growth.
Turning
to
Coatings
on
slide
16,
sales
increased
17%
on
a
constant
currency
basis
to
$384
million,
driven
by
$23
million
of
new
business
success,
targeted
pricing
actions,
and
a
recovery
in
industrial
end
markets.
Coatings'
adjusted
operating
profit
rose
46%
to
$62
million.
It
increased
volumes,
improved
price/mix
and
cost
savings
from
the
Charleston/St.
Louis
consolidation,
more
than
offsetting
accelerated
raw
material
inflation.
On
slide
17,
Coatings'
top
line
performance
was
strong
across
the
board.
Industrial
coatings
increased
13%,
benefiting
from
the
recovery
in
areas
such as
marine
and
protective
applications,
and
good
demand
for
our
waterborne
industrial
additives.
Sales
from
the
decorative
market
rose
24%
due
to
new
business
success
and
continued
share
gains
for
our
premium
[ph]
non-sag (00:16:23)
technology.
By
region,
Americas
increased
17%,
supported
by
construction
activity
and
new
business
gains,
particularly
in
decorative
coatings.
Europe
grew
27%
with
good
momentum
for
our
castor
wax-based thixotrope
products
using
the
hybrid
adhesives
and
sealants
segment.
And
in
Asia,
we
grew
9%
with
robust
waterborne
industrial
coatings
demand,
somewhat
offset
by
slowing
activity
in
our
main
market of
China.
And
across our global
key accounts,
which
represent
the
biggest
coatings
companies
in
the
world,
we
grew
28%
with
double-digit
growth
across
all
relationships.
We're
continuing
to
make
strategic
progress
in
four
key
areas.
First,
we're
accelerating
our
innovation
and
improving
our
product
quality.
In
2021,
we
launched
seven
new
products.
New
business
momentum
continues
to
build.
We
generated
a
record
$23
million
of
new
business,
up
53%
over
2020.
In
addition,
our
high-margin
growth
platforms
grew
37%.
We
invested
in
Southeast
Asia
local
sales
and
technology
resources,
adding
eight people.
This
year,
we
grew
revenue
30%
in
the
region
and
expect
to make
a
lot
more
progress
going
forward.
Finally,
our
global
key
account
management
program
enables
us
to
drive
innovation
and
strengthen
relationships
at
our
most
important
customers.
Today,
we
have 10
joint
development
projects
running,
more
than
double
three
years
ago.
We're
now
a
global
technology
partner
to
several
of
the
largest
global
coatings
players.
So
good
strategic
progress
in
2021
and
more
to
come.
Before
I
move
on
on slide
19,
I
want
to
say
a
few words
about
our
high-margin
growth
platforms
in
Coatings.
These
areas
represent
advanced
technologies
that
target
markets
with
attractive
structural
growth.
Together,
they
currently
represent
approximately
35%
of
Coatings
revenue.
We
have
clear
competitive
advantages
in
premium
decorative
where
we're gaining
market
share
via
our
products
to
deliver
enhanced
one-coat
hide,
better
stain
resistance,
and
improved
sustainability
credentials.
High-grade adhesives and sealants,
our
growth
market,
where
customers
want
high
performance
solutions
to
replace
mechanical
fastening.
Our
thixotrope
products
play
nicely
into
this
trend.
They
offer
customers
up
to
30%
energy
savings,
deliver
enhanced
sag
resistance;
and,
being
75%
bio-based,
offer
clear
sustainability
benefits.
In
waterborne
industrial,
our
additives
deliver
both
performance
and
sustainability
benefits.
And
in
performance
hectorite,
our
products
generate
superior
performance
in
construction
applications.
We
expect
that
these
high-margin
growth
platforms
will
continue
to
grow
and
represent
approximately
45%
of
total
Coatings
revenue
by
2026
as
we
continue
to
launch
new
products
and
win
new
business
in
these
market
segments.
Moving
on
to
Talc
on
slide
20.
Sales
rose
9%
on
a
constant
currency
basis
to
$150 million,
with
new business
wins
across
coatings with
new
business
wins
across
coatings
and
technical
ceramics,
more
than
offsetting
automotive
and
paper
demand
weakness.
Operating
profit
declined
by
$3
million
caused
by
weak European
auto
production
and
fast-accelerating
cost
inflation,
particularly
in
the
second
half.
On
slide
21,
looking
at Talc
performance
in
more
detail,
there
were
significant
cost
inflation
and
demand
challenges
in
2021.
Starting
with
energy,
Talc
is
a
European-based
business
with
processing
facilities
in
Finland
and
the
Netherlands
that
use
electricity.
Unfortunately,
electricity
price
increases
accelerated
as the
year
progressed.
In
the
fourth
quarter,
electricity
costs
went
through
the
roof,
rising
365%
versus
prior
year.
On
logistics,
we
transport
a
lot
of
material
around
the
world
from
our
logistics
hub
in
Amsterdam
via
container
cargo
shipments.
Mainly
to
port
congestion,
container
imbalances,
and
trucker
shortages,
costs
rose
significantly,
particularly
in
the
second
half.
And
finally,
2021
remained
challenging
for
auto
production.
This
was
particularly
true
for
European
auto,
which
declined
for
the
fourth
year
in
a
row.
This
negatively
impacted
our
high-margin,
long-life
plastics
segment,
which
represents
approximately
25%
of
Talc
revenue.
Unfortunately,
these
external
challenges
more
than
offset
underlying
strategic
progress.
Approximately
80%
of
the
Talc
business is in
Europe
and
there's
significant
opportunity
to
grow
and
expand
globally.
Driven
by
$13
million
of
new
business,
we
grew
24%
in
Asia
and
62%
in
the
Americas.
Our
high-value
industrial
growth
platforms
also
showed
good
momentum.
In
technical
ceramics,
we
gained
significant
market
share
with
existing
customers
and
gained
new
business in China.
Sales
to coatings customers
in
China.
Sales
to
Coatings
customers
grew
8%,
leveraging
our
global
scope
and
scale
in the
Coatings
market.
As
a
result,
we
continue
to
make
good
progress
towards
our
revenue
synergy
target
with $16
million
captured
to-date.
Taking
a
step
back
on
slide
22,
the
fundamentals
of
the
Talc
business
remained
strong.
We're
the
number
two
player
in
the
global
niche
market
with
only
three
players
in
scale.
We
have
a
fully
integrated
value
chain
with
global
reach.
Starting
with
long-life
Talc
deposits
in
Finland,
through
the
unique
processing
and
formulation
capabilities,
supported
by
quality
and
technical
service
is
highly
valued
by
our
customers.
And
Talc
follows a
performance
additive
logic
that
represents
a
small
percentage
of
formulation
costs,
but
[ph]
adds
critical
performance
attributes
in its (00:22:28)
value
price.
Looking
forward,
there
are
clear
drivers
of
performance
recovery
and
growth.
First,
in
response
to
fast-rising
variable
cost
inflation,
we
implemented
10%
to
15%
price
increases
in
the
fourth
quarter
and
5%
to
10%
surcharges
in
January
of
2022.
These
pricing
actions
did
not
materially
impact
2021
performance
due
to
timing
lag,
but
they
will
support
performance
recovery
in
2022.
Second,
our
growth
opportunities
are
unchanged.
There
remains
significant
opportunity
to
grow
in
both
Asia
and
the
Americas,
which
represent
under
20%
of
revenue.
We
also
expect
to
continue
to
grow
market
share
in
high-value
industrial
applications
such
as
coatings,
long-life
plastics,
technical
ceramics,
and
the
emerging
barrier
coatings
segment
for
recyclable
paper
packaging.
And
we're
on
track
for
delivery
of
$20 million
to
$25
million
of
revenue
synergies
by
2023.
Finally,
while
the
Talc
business
is
very
well-invested,
there
are
opportunities
to
improve
efficiency.
In
2022,
we
will
launch
several
continuous
improvement
initiatives
to
lower
energy
costs
and
further
reduce
water
usage
at
our
plants.
And
moving
on
to
Chromium
on
slide
23,
revenue
rose
16%
to
$171
million,
driven
by
strong
volume
recovery.
The massive
areas
such
as
construction,
metal
plating,
and
leather
tanning
showed
strong
recovery
from
the
COVID-19
impact
of
prior
year.
Average
pricing
was
modestly
down,
but
we
saw
sequential
improvement
in
the
second
half
of
the
year.
Operating
margins
rose
from
4%
to
8%
with
improved
volumes
offsetting
increased
raw
material
and
logistics
costs.
Before
moving on,
it's
worth
expanding
a
bit
on
the
business
dynamics.
First,
the
volume
recovery
which
began
in
late
2020
has
continued
in
2021,
and
there
remains
room
for
further
improvement.
High-margin
aerospace
and
refractory
applications
remain
weak
versus
pre-COVID
levels.
And
all
the recovery
is
currently
being
held
back
by
semiconductor
shortages.
Higher
volumes,
combined
with
supply
chain
challenges
at
a
number
of
our
competitors,
pushed
global
utilization
levels
up
from
75%
in
2020 to
around
85%
on
average
in
2021.
As
a
result,
market
prices have
started
to
sequentially
increase.
We
saw this
in
the
second
half
of
the
year,
and
it
will
benefit
our
performance
in 2022.
While
encouraging,
a word
of
caution
on
cost
inflation.
Key
raw
materials
such
as
chrome
ore
and
sulfuric
acid
rose
materially
in
price
during
2021
and,
along
with
energy,
look
set
to
rise
further
in
2022.
While
we
are
pricing
accordingly,
this
is
a
dynamic
situation,
and
Chromium
has
more
contractually
based
businesses
elsewhere
in
our
portfolio,
which
will
make
cost
recovery
slower
than
we'd
like.
And
now
I'll
hand
over
to Ralph
to
cover
the
financials.
Thanks
so
much, Paul.
Hello,
everyone.
Turning
to
group
revenue
on
slide
26.
Revenue rose
17%
on
a
reported
basis.
3%
was
from
currency
tailwinds,
as
we
benefited
from
relative
weakness
of
the
dollar
against
the
euro
and
renminbi.
Underlying
growth was
14%
with
volume
growth
driven
by
new
business
success
and
demand
recovery
across
many
end
markets.
Pricing
was
up
4%
as
actions
taken
in
the
second
half
started
to
impact
performance.
Looking
at group
adjusted
operating
profit
on
slide
27,
this
rose
by
31%
on
a
reported
basis
and
28%
on
an
underlying
basis
with
strong
revenue
growth
partially
offset
by
cost
increases.
Variable
cost
inflation
of
33%,
mainly
linked
to
raw
materials,
was
more
than offset
by
price
actions
primarily
within
Coatings.
Let's
take
a
look at
the
cost
and
pricing
in
a
bit
more
detail.
In
2021,
prices
moved
up
across
every
major
input
cost
from
packaging
to
energy
and
raw
materials.
As
a
result,
we
saw
approximately 10%
inflation
around
circa
$300
million
in raw
material
and
energy
basket.
To
manage
this,
we took
several
steps.
First,
we
increased
prices,
and
this
ramped
up
as
the
year
progressed.
While
taking
such
significant
price
increases
is
never
pleasant,
it's
been
crucial
for
our
performance.
And
importantly,
they
have
been
accepted
without
any
material
business
losses.
Moving
into
2022, we
see
even
higher
levels
of
inflation
based
on
current
spot
rates
and
have
been
taking
further
price
actions
at
the
start of this
year.
Across disrupted
supply
chains,
we've
rapidly
qualified
alternative
suppliers.
Given
our products
are
specialty
in
nature,
you
can't
switch
raw
materials
at
the
drop
of
a
hat.
It
takes
time
in
both
ourselves
and
our
customers
need
to
become comfortable.
However,
where
it's
deemed
possible,
we've
acted
with
speed.
And
finally,
we
also
increased
the
amount
of
our
spend
on the
global
procurement,
thus
ensuring
we
leverage
our
buying
scale
across
multiple
sites.
Although
we're seeing
some
deep
pockets
of
inflation,
we
delivered $10
million
of savings
in
2021.
Closure
of
our
Charleston
site
and
the
consolidation
of capacity
at
St. Louis
lowered
our
fixed
cost
base
and
made
our
North
American
organoclay
operations
more
efficient,
generating
around
$5
million
of
savings.
In
procurement,
we
increased
our
strategic
purchasing,
better
leveraging
our
scope
and
scale,
and
revisited
pockets
of
spend
where
it's
cheaper
to
make
than
buy.
This
has
delivered
around
$3
million
in
savings
in
2021.
And
finally,
our
global
process
engineers
are
allowing both
our
environmental
impact
and
cost
of
[ph]
service
(00:28:42) and
delivered
around
$3
million
of
savings
in
2021.
Looking
forward,
we
[indiscernible]
(00:28:48) we see
a
further $10
million
of
efficiency
by
2023.
The
new
AP
Actives
plant
in
India
will
be
a
key
pillar
of
these
savings,
helping
to
create
a
lower
fixed
cost
base
and
avoid
tariffs
on
key
raw
materials.
But
we have
further
opportunities
across
procurement
and
manufacturing
to
drive
further
savings
across
the
organization.
Turning
now
to
CapEx,
our
spend
in
2022 will
be
similar
to
2021
at
$50 million
to
$55
million
or roughly 6%
of
sales.
In
2022,
just
over
50%
of
our
spend
will
be
directed
to
maintenance
and
safety
projects.
These
investments
are
important.
They
ensure
we
continue
to
run
our funds
both
efficiently
and
safely.
The
rest
of
our
spend will
be
directed
towards
growth
and
productivity.
Key
projects
are
focused
on
Coatings'
capacity
expansions.
So,
in
Brazil,
we're
expanding
our
HASE
polymer
capacity
using debt
repayments. In
Scotland,
we continue
to
create
new
business success for
our
premium
decorative
technology
by
expanding
production
of NiSAT rheology
modifiers.
And
finally,
in
Taiwan,
we're
making
productivity
investments
to
ensure
we
can
make
more
organic
thixotropes
for
high-performance
adhesives.
Turning
now
to
cash
flow.
There
are
a
few
points
to
highlight.
This
year,
$33
million
of
one-off
tax-related
payments
obscured
a
fairly
healthy
underlying
cash
flow.
As
previously
disclosed,
we
had
a
$20
million
tax
outflow
in
the
first half
in
relation
to
EU
state
aid.
Whilst
we're
confident
of
ultimately
being
successful
on
appeal
and
having
the
cash
returned,
this
will
not
happen
until
mid-2022
at
the
earliest.
In
addition,
in
late
2021,
we
had
a $13 million
cash
out
in
relation
to
a
historical
tax
case,
which
would
enable
us
to
reduce
future
cash
tax
payments.
Our
working
capital,
as
experienced, we
saw
an
outflow
that
was
reflected
on
the
– reflected
for
the
need
to
support
strong
top
line
growth.
Despite
these impacts,
we
ended
the
year
at
2.6
times
net-debt-to-EBITDA,
a
significant
reduction
versus
the
prior
position
of
3.2
times,
and
we have good momentum
to
deliver
a
further
reduction.
And
finally, a
word
to
reaffirm
our
capital
allocation
priorities.
First,
we
will
invest
organically
to
grow
our
business.
Capital
expenditure
will
be
approximately
6%
of
sales
and
we're
focused
on
growth
and
productivity
opportunities.
Second,
debt
reduction
continues
to
be a
major
priority.
We
see
a
clear path
to
get
to under
1.5
times
leverage
while
simultaneously
investing
in
growth. And
further,
on
shareholder
returns,
we
suspended
dividend
payments
during
2020.
Whilst
regretful, this
was
clearly
the
right
thing
to
do
given
the
COVID-related
demand
uncertainties.
We
recognize
the
value
of
dividends
to
our
shareholders
and
intend
to
reinstate
payments
when
further
progress
has
been
made
on
reducing
financial
leverage
from
its
current position.
I'll
now
hand back
to
Paul
to
wrap
up.
Thanks,
Ralph.
Starting
with
a
few
words
on
the
fundamentals
of
our
growth
segments
on
slide
34.
Each
business
was
well-placed
to
benefit
from
a
combination of
structural
trends
and
Elementis-specific
opportunities.
In
Personal
Care,
the
move
towards
premium
products
based
on
natural
ingredients,
along
with
strong
growth
opportunities
in
skin
care
and
Asia,
represent
a
clear
pathway
to
grow,
and
our
strategic
priorities
are
closely
aligned
to
this.
In
Coatings,
our
distinctive
technology
offerings
focused
on
high-margin
growth
platforms
such
as
premium
decorative,
industrial
waterborne
additives,
and
adhesives
and
sealants
result
in
a
distinctive
higher-value
and
faster-growing
product
portfolio.
And
in
Talc,
despite
the
short-term
headwinds,
vehicle
lightweighting,
tightening
emission
regulations,
and
the
shift
to
recyclable
food
packaging
mean
we
are
well-placed
to
expand
our
global
footprint,
grow
market
share
in
high-value
industrial
applications,
and
deliver
on
revenue
synergies.
These
opportunities,
combined
with
our
focus
on
innovation
and
efficiency,
mean
each
business
is
well-placed
to
materially
improve
its
margin
profile.
We're
confident
that
these
strong
business
fundamentals,
combined
with
our
strategic
initiatives
on
innovation,
growth,
and
efficiency,
will
underpin
delivery
of
our
medium-term
performance
objectives.
First,
we
expect
operating
margins
to
recover
and
improve
to
17%.
Second,
we
anticipate
our
already
strong
levels
of
operating
cash
conversion
to
remain
over
90%.
And
finally,
we
expect
our
cash
generation
profile
to
reduce
our
net-debt-to-EBITDA
to
under
1.5
times.
And
to
finish,
on
slide
36,
a
few
comments
on
our
2022
outlook.
First,
as
you
can
see
on
the
slide,
there's
tremendous
self-help
that
comes
with
delivering
on
our
innovation,
growth,
and
efficiency
strategy.
We
will
continue
to
remain
laser-focused
on
execution,
controlling
what
we
can
control.
Second,
the
global
supply
chain
will
remain
challenging
and
inflation
will
likely
continue
throughout
the
year.
Therefore,
we'll
continue
to be
focused
on
cost
management
and
timely
pricing
actions
to
defend
and
improve
our
margins.
And
finally,
we're
confident
that
with
further
steady
demand
improvement,
our
self-help
agenda
will
help
to
deliver
an
improved
financial
performance
and
a
reduction
in
leverage.
As
we
are
seeing
in
Russia
and
Ukraine,
the
macro
environment
can
change
quickly.
But
we've
made
a
good
start
to
the
year
and
look
forward
to
making
further
progress
in
2022.
And
with
that
said,
Ralph and
I would
be
happy
to
take
your
questions.
[ph]
Thank
you (00:34:47)
very
much.
[Operator Instructions]
Our
first
question
is
from
Kevin
Fogarty
from
Numis.
Kevin,
your
line
is
open.
Please
go
ahead.
Good
morning,
Kevin.
Morning,
how
are
you
guys
doing?
Good.
Good.
Just
had
two,
if
I
could,
to
start
off
with.
I
guess
countries
that
has
been
very –
a
stellar
performance
in
Coatings.
You've
clearly
kind
of
taken
market
share
there.
I
guess
going
into
the
current
year,
you
clearly
faced
kind of
tougher
comps
in
that
business.
And
I
just
wondered
sort
of
confidence,
I
guess,
of
kind
of
continuing
to
outperform
those
end
markets
going
into
the
current
year
and
how
important
will
be
sort
of capacity
expansion
for
you
to
do
that.
And
just
in
terms
of
Personal
Care,
I
guess
sort of,
is
there anything
you
can
say
about
sort
of
current
demand
trends
following
sort
of COVID
restrictions
gradually
kind of
lifting.
It'd
just
be
useful
to
get
any
insight
you
can
give
there.
Sure,
Kevin.
So,
I'll
start.
Ralph,
you
can
chime
in.
I
think
on
Coatings,
yeah,
I
understand
the
point
about
tougher
comps,
but
I
think
that
we
have
really,
really
good
growth
momentum,
particularly
on
decorative
coatings,
our
NiSATs
are
premium.
NiSATs
are
making
big
inroads in
terms
of
shared
growth,
particularly
in
the
United States.
Our
organic
thixotropes
are
kind
of
moving
towards
the
adhesives
and
the
sealants
segment
well.
We
make
very
good
headway
in
Europe.
And
so
we
see
that
as
continuing.
A
number
of
areas,
our
waterborne
industrial
additives,
again,
have
really
good
growth
momentum.
This
is
about
more
brand
penetration
and
more
volume.
Geographic
expansion,
I
think
I
talked
in
the
presentation
about
Southeast
Asia.
We
see
that
as
a
multiyear
opportunity.
I
think
though
I
wouldn't
– we
wouldn't expect
another
year
of
17%
growth.
That
was
clearly
a
snapback
from 2020.
And
then
obviously,
the
macro,
we
definitely
see
that
China,
which
is
30%
of
our
business,
that
economy
is
not
as
robust
as
it
was,
and
then
clearly
with
what's
going
on.
The
cost
or
steady
inflation
implications
of
whatever
happens
in
Russia/Ukraine is
something
we
have
to have
our
eye
on.
So,
if
it's
about
self-help
and
new
business,
and
we're
targeting
$25
million
and
do
business
in
Coatings,
we
feel
pretty
confident
as
well
as
all
the
new
products
that
continue
to
come
to
support
these
growth
platforms.
Pretty
robust
position,
I
think,
for
us
to
be
in
Coatings,
and
that's why
the
margins
are
growing
and
improving
as
fast
as
they
are.
On
Personal
Care,
we
definitely
benefit
from
restrictions
being
lifted,
masks
coming
off.
And
so
we
saw
a
volume
growth
in
the
second
half,
and
that
momentum
has
continued
into
2022.
I
think
on
the
AP Actives
business,
we're
benefiting
from
new
product
penetration.
That's
helping
us
a
really
good
deal.
And
obviously,
the
words
I
spoke
about,
our
global
supply
chain
positions
will
help
us
quite
a
bit.
We're
gaining
market
share
at key
customers,
but
the
category
still
needs
to
sort
of
come
back,
and
so
we're
kind
of
really
watching
that
pretty
closely.
I
think
that
the...
Sure.
Our
Personal
Care
recovery
is
between
the
top
cosmetics,
efficiency,
and
penetration
on
AP Actives.
It
helps
our
margins
really
quite
considerably
over
the
next
year
or
two.
21%...
Sure.
...is
good,
but
we
feel
confident
that
we
can
perform
materially
better
than
that.
Sure.
Okay.
No. That's
helpful.
And
I
guess sort
of
if
you
think
about
the
second
half
kind
of margin
in
that,
is
there
a
bit
of
sort
of catch-up
in
terms
of
kind
of
price
increases
to
come
through?
I
think
you
kind
of
alluded
to
that.
But
just
to
clarify
that,
is
it...
Yeah.
I
think
that –
I
did –
I
kind
of
ignored
pricing, but
we
are
very
actively
managing
margins
via
pricing.
And
so
we've
been
quite
aggressive
on
Coatings
because
we
needed
to
be,
as
well
as
on
Personal
Care.
And
all
of
those
are
implemented.
So,
it
does
make
one
feel
more
positive
about
how
margins
could
improve
in
the
second
half.
However,
the
caveat
is,
we
continue
to
monitor
the
inflationary
– the
inflation
situation
really,
really
closely.
If
it
starts
to
fall
away,
that's
a
great
tailwind,
but
there's
no
guarantee
that
it
will.
So,
we're
going to
have
to
sort
of
see
how
2022
plays
out
on
the
cost
side.
Sure.
No.
Understood.
Okay.
That's
helpful.
Thank
you.
Cheers.
Thank
you.
Our
next
question
is
from
Sebastian
Bray
from
Berenberg.
Sebastian,
your
line
is
open.
Please
go
ahead.
Good
morning,
Sebastian.
Hello.
Good
morning
and –
good
morning,
everybody.
Good
morning,
Paul.
Thank
you
for
taking
my
questions.
Could
I
start
with
a
conceptual
one?
Leverage
is
coming
down.
It
looks
like
it
might
dip
below
2
times
in
the
present
by
the
end
of
the
year.
And
you –
when
rejecting
the
minerals
tax
bid,
Elementis
put
out
a
pathway
to
getting
over
$2
a
share.
If
it
turns
out
the
market
needs
a
bit
of
encouragement
to
share
the
same
view,
are
you
prepared
to
buy
back
stock
as
well
as
reintroduce
the
dividend,
or
can
we
think
about
priorities
there
given
the
valuation
is
still
low
relative
to
history?
I
have
two
smaller
questions
which
are
more
technical
follow-ups
on
nickel
and
cobalt
and
chromium
pricing,
but
I'll
pause
there just for
the
first one.
So,
I'll
take
that,
Paul.
I
mean
– hi,
Sebastian.
Yeah.
I
mean, interesting
conceptual
question.
I
think
our
priority
really
for
now
is,
with
our
net
debt
at
the
end
of
the
year
at
2.6
times,
is
to
continue
our
deleveraging.
We
set
out
a
medium term
target
of
getting
down
to
1.5
times.
So,
I
think
we
really
should
consider
that
special
returns
would
be
a
consideration
after
we've
resumed the
dividend
for
a
start.
So,
that's –
we're
very
keen
to
resume
the
dividend.
We
will
do
that
when
we
make
further
progress
on
deleveraging,
which
we
do
expect
to
do.
But
I
think
getting
the
sort
of
the
regular
dividend
resumed
first
would
be
the
priority
before
looking
at
additional
ways
of
making
returns.
But,
you're
right,
in
terms
of
conceptual,
the
business
does
throw
off
a
good
amount
of
cash.
The
net
debt
dollar
million number
didn't
come
down
significantly
in
2021
because
of
the
$33
million
of
sort
of
one-off
tax-related
items.
So,
as
you
saw,
the
sort
of
the
net
debt
to EBITDA
come
down
from
3.2
to
2.6,
it
sort
of
slightly
obscured
the
amount
of sort
of
deleveraging
momentum
in
the
business.
So,
I
think
you're
right
to
point
to
the
fact
that
we
do
expect
to
see
fairly
good
progress
in
that
this
year.
Thank
you.
The
more
technical
questions
I
was
referring
to
are,
firstly,
on
pricing
through
the
business.
Is – why
exactly
is
it
in
–
if
I
just
try
and
unpack
the
tone
here,
it
effectively
sounds
like,
don't
worry
about
margins
in
Personal
Care
and
Coatings
too
much
because
we're
confident
of our
pricing
power
and
putting
through
the
increases.
Maybe
we're
a
bit
less
sure
near term
on
Talc
and
Chromium.
And
I'm
just
wondering,
is
there
anything
intrinsic
about
the
frequency
of
contractual
refresh?
I
guess
it's
less
frequent
for
Chromium.
Or
the
expectations
when
setting
prices
for
the
Talc
business
that
just
means
structurally
this
takes
longer
to
recover,
because
I
thought
Chromium
was
mainly
annual
and
Talc
was
– you
can
effectively
do
what
you
like,
but
it's
maybe
every
half
year.
Is
it
right
or...
Yeah.
Yeah.
I can
start
on
that
one.
I
think
on
Personal
Care
and
Coatings,
I
think
the
amount
of
new
products
and
the
competitive
position
that
we
have,
amount
of
innovation
enables
us
to
action
pricing
well
and
maintain
customer
loyalty.
I
think
it's
very
strong
on Talc
as
well.
The
situation
in
there that
was
slightly
different
in
terms
of
the
rate
of
cost
increase
into
the
third
and
fourth
quarter
was
kind
of
breathtaking.
And
so
we
took
very
massive
increase as
I've
said
in
the
presentation.
And,
again,
100%
customer
retention.
And
so
it's
a
temporary
effect.
It'll
dissipate
in
2022.
The
Chromium
business
is
a
different
business
in that
the
pricing
tends
to
be
set
by
quarter.
There's
a
bit of
it that's
annual;
some,
six
months.
So,
the
implementation
of
price
changes
is
staggered
in.
Although,
again,
if
–
and
it's
dependent
upon
obviously the
global
chromium
capacity
utilization,
which
is
starting
to
tighten
up.
So,
the
price
dynamics
on
that
business
are
slightly
different,
if
that
answers
the
question,
Sebastian.
No.
That
is
helpful.
Thank
you.
And
the
last
one
is – looks
like
a
technical
question.
For
the
metal,
the
nickel
and
the
cobalt
that
are
shipped
out
of
the
Talc
business,
I
cannot
remember.
I think you
usually
ship
to
a
Russian
port.
And
if
so,
does
this
need
to
be
[indiscernible]
(00:46:01)?
Does
this
need
to
be
changed
or
am
I
wrong
in
this
and
there was
no
impact at
all?
Fortunately,
Sebastian,
that's
not
right.
No.
They
go
to
an
OECD
market.
Yeah.
And
just
sort
of rightsize
the
nickel –
the
nickel
and
the
cobalt
are sort of
actually
together
as
part
of
a
concentrate
to
get
shipped. They're
not
shipped
as
separate
products.
It
is
– it
still
remains
a
small
part
of
our
business
around
about
10%.
So,
we
see
the
real
value
driver
is
the
industrial
talc
opportunities.
The
nickel
and
cobalt
really
is
effectively
a
small
byproduct,
but
it
is
good
to
see
the
pricing
on
those
mix
moving
up,
which
is
a
small
positive.
So,
they
don't
[indiscernible]
(00:46:52).
Thank
you
for taking
my
question.
Yeah.
Thank
you.
Thank
you.
Our
next
question
is
from
Chetan
Udeshi
from
JPMorgan.
Chetan, your
line
is
open.
Please
go
ahead.
Good
morning,
Chetan.
Yeah.
Hi.
Thanks.
Morning.
First
question
I
would
ask
is,
just
to
get
some
clarity
on
the
energy
exposure
of
Elementis,
both
in
Europe
and
US.
And
can
you
give
us
some
color
on
how
much
energy
cost
inflation
do
you
guys
see
in
full year
2021
and
especially
Q4?
And
how
are
you
thinking
about
2022
at
this
point?
In
a
related
topic,
how
do
you
hedge? Or do you –
is
there
any
hedging
mechanism
on
your
energy
exposure?
The
second
question
on
Coatings,
we've
already
seen
some
big
coating
companies
talk
about
a
normalization
in
the
decorative
paints
volumes
because
of
the
slowdown
in
the
DIY
market.
I
mean,
can
you
remind
us
how
big
is
the
deco
business
for
you
guys
outside
Asia?
And
have
you
seen
that
in
your
demand
patterns
from
the
Coatings
market?
Thank
you.
Yeah.
So,
on
the
energy
exposure,
Chetan,
the
US
is
natural
gas,
and
we're
well-hedged
for
that.
Europe
is
predominantly
electricity
in
the
Netherlands
and
in
Finland.
This
was
a
pretty
settled
market
actually
in
the
last
three
or
four
years
up
until
2021.
We've
hedged
our
electricity
need
for
2022.
I
think
it's
– 85%
of
the
energy
has
been
hedged.
So,
that's
kind
of
the –
[ph]
would you (00:49:04) add to that, Ralph?
Sure.
Well,
it's
[indiscernible]
(00:49:05) of
our
variable
cost,
it's
about
5% –
has
been
about
5%.
It's
taken
up
an
increase
in
shares.
The
unit
prices
go
up,
but
that's
around
the
cost.
It's
perhaps
a
little
bit
more
in
terms
of percentage
of
cost
in
the
Talc
business
as
they
are
– all
the
talc
sites
run
on
electricity.
The
talc
sites
are
in
Finland
and
Netherlands,
and
so
they
have
really
been
affected
by
the
4Q
spikes
in
electricity
there.
But
overall,
it's
around
about
5%
of
the
variable
cost.
Yeah.
And
the
question
around
deco
in
our
business,
overall,
it's
about
one-third
of
our
global
coatings
business.
We
don't
have
very
much
deco
exposure
in
Asia,
small
base,
although
it
does
appear
that
there's
some
really,
really
good
growth
opportunities
that
we'll
see
over
time.
And
it's
about
– if
you
look
at
Europe
and
the
US,
it's
about
50%
of
our
business.
I
think
we
expect
market
growth
in
2022
on
deco,
but
we
are
not
dependent
on
it.
I
mean,
the
story,
really
the
Elementis
story,
is
about
gaining
market
share
in NiSAT,
in HASE
at
more
customers
with
our
premium
technology.
We
saw
– we
made
good
progress
in
the
last
18
months,
but
the
fact
is
that
there's
more
to
come
in 2022
and
2023
and
beyond.
So,
we've
got
about
15%
of
that
market
segment,
and
we
feel
there's
really
good
runway
for
us
to
continue to
grow.
Thank
you.
Thank
you. Our
next
question
is
from
Andrew
Stott
from
UBS.
Andrew,
your
line
is
open.
Please
go
ahead.
Good morning,
Andrew.
Good
morning,
Paul.
Morning,
Ralph.
Thanks
for
taking
the
questions.
So, you –
it's
back
to
the
dividend,
I
think
the
earlier
question,
really,
but
I'll
ask
it
a
different
way.
Can
you
just
let
us
into
the
board's
discussions
around
the
dividend?
Because
I
get
the
fact
that
there
wasn't
a
lot
of cash
generated
in
FY
2021
and
partly
because
of
the tax
cost.
But
is
there
a
forward-looking
element
to
that
dividend
absence?
So,
specifically,
I've
got
one
eye
on
your
payables
number.
Quite
a
big
inflow
on
payables
from
a
cash
flow
standpoint.
So,
does
that
unwind
in
2022?
And
could
it
be
feasible
that
we
don't
get
a
lot
of
free
cash
flow
in
2022? That's
the
first
question.
So,
I'll
stop there
and
let
you
take
that.
Sure.
You
want
to
take
the dividend?
Okay.
Andrew, good
morning. Dividend
obviously
is
a
matter
for
the
board.
I
think
the
way
we're
thinking
about
it
is
there's
a
sort
of –
if you
like,
a sort
of
a
book
end
of
where
you
ended
2020
up
sort
of
3.2
over
3, clearly
the
level
of
leverage
post-2020.
Demand
hit
was
too
high
to
even
consider
resuming
the
dividend
at
that
point.
So,
that's one
end
of
the
book end.
And
then
you've
got the
1.5
medium-term
goal
of
leverage,
which we
are
still
confident
of
being
able
to
achieve.
I
think
as
we
make
progress
from
that at
sort of
3.2
through
2.6
at
the
end
of
last
year
towards
the
1.5, there'll
be
a
moment
when
the
level
of
confidence
is
the
amount
of
deleveraging
and
the
environment
conditions
at
the
time
are
the
right
moment
to
resume
it.
So,
I
think
it's
within
sight.
But
at
the
moment, certainly
at
the end
of
2021,
we
should
still
make
progress
on
bringing
our
levels
of
debt
down.
On
your
point
on
working
capital,
I'm
not
– I
mean,
all
elements
of
working
capital
moved
fairly
considerably.
I
think
a
number
of
companies
have seen
this.
I
mean,
it's
a
sort
of
percentage
of
sales
that
actually
stayed
fairly
stable.
We
had
a
big
increase
in
revenues.
So,
receivables,
payables,
inventories,
all
actually
increased
in
2021.
So,
I
don't
think
– I
mean,
I
think
clearly
if
raw
materials
and
prices
go
up,
we'll all
be
seeing
absolute
levels
increase.
But
I
think
we've
got
the
capacity
to
deal
with
that,
given
the
sort
of
percentage
of
working
capital
to
sales
is
remaining
very
much
under
control.
So,
I
don't
think
that
would
be
a
big
determining
factor
on
dividend
considerations
nor
on
deleveraging.
We're
confident
we
can
still
deleverage
with
higher
absolute
levels
of
working
capital.
Okay.
Thank
you.
Can
I
just
follow up
with a
separate
question,
please?
Sure.
This
is
around –
Paul,
you
mentioned
a
couple
of
occasions
the $50
million
of
new
business
opportunities.
How
do
I
think
about
that
in
a spreadsheet
world?
How
much
of
that's
in
2021
and
how
much
of that's
still
to
come?
Oh, the
$50 million,
Andrew,
happened
in
2021.
So, it's
all
in
2021?
Okay. Perfect.
Yeah.
That's
right.
And
we've
set
obviously
similar
expectation
for
2022.
And
we
–
obviously
Coatings
has
a
great
deal
of
momentum,
so
it's
a
big
part
of
that $50
million.
But
frankly,
we're
continuing
to
make
very
good
inroads
on
Personal
Care
new
business;
in
skin
care,
which
is
a
big
strategic
initiative
for
us;
cosmetics;
as
well
as
AP
Actives.
And
then
on
Talc,
we
expect
$15
million
of
new
business
in
2022;
and
it's
quite
well
underpinned.
It's
long-life
plastics,
it's
technical
ceramics,
it's barrier
coatings. Quite
a
lot
of
emphasis
at
Elementis,
I
think,
to
high-grade
the
product
portfolio,
but
then
obviously
monetize
these
innovations
as
quickly
as
we
can.
Okay.
Thanks.
And
then
sort
of
final
question,
if
I
can.
On
Mondo –
or
Talc,
sorry.
I
mean,
old
language.
I
mean,
if
I
think
about
the
long
run
profitability,
you were
doing
$23
million
pre-purchase
on
EBIT,
you're
down
at
$14
million in
FY
2021
in
what
is a –
I
guess
a
semi-recovery
year.
I'm
trying
to
disentangle
the
electricity
cost
issue,
right?
So,
do
you
think
you
can
grow
EBIT
in
2022
for
Talc
despite
what's
happened
to
those
electricity
prices
in
the
Netherlands
and
Finland?
Yeah.
Andrew,
we
do.
I
mean,
the –
when
we
think
about
the
2021,
I
mean,
strategy
was
always
to
grow
industrial
talc,
which
has
grown
7%
a
year
for
the
past
12
years.
We
grew
15%.
Strategy
was
to
geographically
expand
the
business.
We
grew
Americas,
62%;
Asia,
24%.
We
close
$13
million
in
new
business.
So,
lots
of
good
strategic
progress.
I
think
the
two
big
challenges
that
we
had
that
are
temporary
and
pandemic-related
were
this
accelerating
cost
inflation.
Electricity,
massive
increases
in
the
fourth
quarter.
Had
a $3
million
in-year impact.
But
the
other
area
for
us
was
logistics,
specifically
container
logistics,
which
were
4
times
higher
than
2020.
That
also
had
a
$3
million
in-year
impact.
And
then
the
other
area
is,
obviously,
European
auto,
which
– that's
about
20%
of
our
long-life
plastic
sales.
Production
units
in
Europe
are
down
30%
over
the
past
three
years.
And
in
the
second
half,
our
long-life
plastics
was
down
about
20%.
So,
that
had
a
pretty
big
negative
mix
impact
relative
to
what
we
would've
expected,
and
that
was
a
few
million
dollars.
I
think
the
reason
why
we
feel
confident
about
the
performance
recovery
in
2022,
to
be
able
to
take
the
kind
of
pricing
that
we
took,
it's – I
mean,
I
don't
– it's
massive
actually.
And
to
not
lose
business,
absolutely
key
to
show
the
quality
of
our
Talc
business
and
the
runway.
And,
again,
we're
not
backing
off
on
the
NBOs.
That
$50
million
target
is
well-underpinned,
and
we
aren't
assuming
any
European
auto
recovery
as
we
think
about
2022.
So,
these
are
the
kind
of
moving
parts,
I
think,
that
give
us
confidence
as
we
built
the
program
for
2022 and
beyond.
We
can
get
back
to
the
$23 million,
and
then
grow
from
there.
Okay.
Thanks,
Paul.
Thanks,
Ralph.
Thanks,
Andrew.
I
think unfortunately
we're
out
of
time; but
thank
you
very
much
for
joining
us,
and
we'll
speak
soon.
Thank
you,
everyone,
for
joining
today's
call.
This
is
all
the
questions
we
have
time
for
today.
You
may
now
disconnect
your
lines,
and
have
a
lovely
day.