Good afternoon, everyone. Welcome to Elementis Capital Markets Day 2023. My name is Eva Hatfield. I'm the Head of Investor Relations. Thank you all for coming here and everybody who is dialing in through the webcast. I will now invite Paul Waterman, CEO of Elementis, who will start the formal presentation.
Good afternoon, everyone, and welcome. It's good to see all of you here today. I'm joined by the Elementis leadership team, some of whom will be presenting later on. We're excited to talk to you about a simplified, focused Elementis, and how our innovation, growth, and efficiency strategy will evolve going forward. Over the next three hours, you'll hear why we're excited about the future of Elementis, and we'll set out updated performance targets to measure our progress. Let me briefly cover the order for the afternoon. I'll start with an overview of the business and an update on our strategy. Then Luc van Ravenstein and Stijn Dejonckheere will review our Performance Specialties and Personal Care business segments, with a specific focus on our innovation and growth platforms.
We'll then have two breakout sessions, one focused on Performance Specialties and the other on Personal Care, so you can see practical examples of how our innovative new products work. After a short break, Phil Blakeman, our Head of Sustainability, will provide an overview of our sustainability strategy, the progress we've made, and our go-forward plans. Then Ralph Hewins, our Chief Financial Officer, will cover the financial framework and provide detail on how continued focus on growth and efficiency will deliver our 2026 targets. I'll then conclude the main presentation, and then we'll take your questions. Following the formal session, we hope you'll join us for drinks and take the opportunity for a more informal chat with the Elementis leadership team.
Before I begin, I'd like to share a short video that provides an overview of where Elementis has come from and who we are today.
Over the last 200 years, we have transformed to become a leader in specialty chemicals. Today, we're a global company at the cutting edge of rheology and formulation, and as the world continues to change, so do we, allowing us to better serve our customers and care for our people and our planet. Our passion for innovation is built on the expertise of our people and our focus on teamwork. We work hand in hand with our customers with an eye on the latest market trends. We use our world-class formulation skills to create superior additives derived from natural materials like Hectorite, resulting in products which make skin cream smoother, lipstick color more vibrant, long-life plastic stronger and lighter, coatings apply more evenly, Antiperspirants last longer, and adhesives and sealants work at their best. We do this in ways that support the world we live in.
We have an ambition to reach Net Zero by 2050, with initiatives that increase energy efficiency and reduce carbon emissions in our own operations and across our wider value chain. As we look to the future, we'll continue to act safely and responsibly in everything we do, giving everyone a chance to grow and make an impact that matters as we take our customers with us into tomorrow. Unique chemistry, sustainable solutions. This is our purpose. This is Elementis.
Hope you enjoyed that. First thing I'd like to do is review our key messages for today. Following the sale of Chromium earlier this year, Elementis today is a high quality, less cyclical specialty chemicals business. At our last CMD in November 2019, we set medium-term objectives for margin performance, cash conversion, and debt reduction. While they have not yet been achieved, we're making good progress implementing our strategy. We have two focused businesses that are well positioned for growth. Personal Care, which is now around 45% of group profits, is a high-margin business operating in attractive growth markets. Performance Specialties, which comprises our Coatings and Talc businesses, is well positioned to focus on growth opportunities across multiple channels. We'll cover those in more detail later. The growth and efficiency opportunity going forward is material.
We believe we can deliver $90 million of above-market revenue growth by 2026. In addition, we've identified $30 million of costs that can be eliminated by the end of 2025. Now, this delivery is within our control. It's driven by self-help, and it does not rely on a more favorable demand environment. Elementis is a highly cash-generative business. The combination of improved performance and ongoing leverage reduction will support sustainable shareholder returns over the long term. This will enable Elementis to generate an operating margin of 19%+ by 2026. In addition, we expect the cash conversion above 90% and return on capital employed to exceed 20%. Now, I'd like to take a step back and provide some context about Elementis. We are purpose-led, focused on providing unique chemistry and sustainable solutions to our customers.
You'll hear today about our innovation focus and expertise, which makes a real difference to our customers while delivering positive impact to our environment. In addition, our values are critically important because they serve as the foundation for our culture. So I'll highlight safety here. We've created intense focus by ongoing safety leadership training and plant investments over the years. We're making good progress towards our goal of becoming a zero accident business. But it's all of our values combined that define how we deliver on our purpose, and represent the standards that we uphold every day as we work together. We assess every Elementis employee's performance through this lens. Elementis has transformed significantly over the last decade. It's now a higher quality, less cyclical specialty chemicals business. Over this time, we sold or discontinued low margin, commodity-oriented products.
An example of this was the sale of our Netherlands-based surfactants business in 2017. In addition, back in 2015, the Chromium business earned almost $50 million annually, benefiting from the commodity super cycle. From 2016 onward, earnings declined, ending at $16 million in 2022. The sale earlier this year eliminated this more cyclical, carbon-intensive, and commodity-oriented business. The addition of our specialty antiperspirant additives business in 2017, which works symbiotically with our hectorite clay resource, created a Personal Care business of scale. And while our Talc business, added in late 2018, has faced some unforeseen challenges, it follows a specialty additive logic from mine to market that we know very well with hectorite. Elementis now generates 90% of earnings from specialty chemicals products and is far less cyclical than in the past.
We're focused on markets with structural growth opportunities, and the majority of our products are classified as natural. Now, let me talk about what makes Elementis special. First, we're expert at formulation solutions. This is the process of optimizing formulation ingredients to achieve the desired functionality and performance of the end product. Our additives represent a small percentage of a formulation's cost, but are critical to delivering end product performance. This gives us a unique vantage point to holistically optimize the formulation. We have significant technical expertise, a global technology resource base, and strong relationships with our customers, making us the trusted partner to solve their toughest formulation challenges. Second, we have deep expertise in the science of rheology. I do get asked what rheology is.
You know, in simplest terms, rheology is the science of flow, and it's essential to the performance of a formulation because it's what makes the ingredients work together. We're a top three player in what is quite a fragmented market here. We have expertise across multiple technologies, and with our global asset footprint, we can cater to large global clients as well as smaller but faster-growing regional players. Third, our Hectorite mine in California, our Hectorite clay mine, it's the largest high-quality Hectorite mine in the world, with substantial reserves of white-colored Hectorite. Now, the Hectorite is a very special product. It's a natural mineral that delivers excellent rheology in both water and oil-based systems, making it an attractive alternative to synthetic materials. It can be processed at lower temperatures, leading to lower costs and improved sustainability.
It also delivers important attributes, such as excellent texture and color for Personal Care and long-term stability for Performance Specialties applications. Often, we're able to combine all three of these special elements, something no other company can do. Going forward, we see further opportunities to expand joint development projects with key customers, deepening our penetration and leading to higher margins. Now, the differentiators I've described are very important to our success, but I'd say the quality of our people is our greatest advantage. We have an experienced and dedicated leadership team, most of whom have been working together for many years and collectively have 75 years of tenure. Our organization is structured along global, commercial, and functional lines, and this enables quicker decisions, standardized processes, and the development of global capability.
So over the past four years, we've focused on building capabilities that are key to delivering our strategy. Commercial leadership has seen significant investment, with externally recruited talent leading marketing and product management. In supply chain, we're continuing to embed our safety culture. We've strengthened plant leadership through internal moves and external hiring. We've built continuous improvement as a way of working and implemented very disciplined capital management processes. In R&D, we innovate through a global laboratory infrastructure with the continued development of external partnerships. To make all of this happen in the most effective, efficient way, we continue to build and strengthen our core capabilities. Specific competence in sustainability, we've transformed our legal and compliance function and strengthened both our financial insight and HR capability. Going forward, we'll continue to invest in our people and capabilities to support our long-term growth.
Our last Capital Markets Day was in November 2019, and back then, we put forward objectives that would serve as the measure of our progress over the next 3-4 years. As you can see, we have not yet achieved these objectives. We set out to improve our operating margin from 14%-17%. Now, while it improved from the 12% bottom in 2020, and it's continuing to improve, as of today, we fall short of this goal. Operating cash conversion of above 90% was delivered or near delivered in 2020 through 2022. However, we'll likely fall short on the 2023 measure, given the pressure on working capital over the past two years. Start-stop demand and fast-rising input costs worked against us. But as Ralph will show you, we're now moving in the right direction.
Deleveraging, net debt to EBITDA of below 1.5x won't be delivered by the end of this year, but we're very close to achieving this target. A slower pace of deleveraging than we wanted, but we fixed our balance sheet as we intended. So while I'm frustrated that we haven't managed to achieve these targets fully, I remain very, very confident about Elementis' future. A little later, I'll talk about our objectives going forward and the actions that will support their delivery. Over the last four years, all companies have faced an unprecedented economic environment, and Elementis was no exception. The challenge over this timeframe was to make strategic progress and optimize financial performance in spite of these challenges. That is what we focused on at Elementis, and I'd like to share with you the progress we made.
So over this timeframe, revenues were quite stable and profitability steadily recovered. Operating margins also recovered, and we expect to deliver 2023 performance in line with 2019. While overall demand was weaker over this period, disciplined pricing actions and tight cost management delivered a resilient performance. Our focus on innovation has resulted in a strong pipeline of new products. Over this timeframe, we've launched 15-20 new products per year, and revenue from new products now represents over 14% of total Elementis revenue. As a result, we continue to generate an increasing amount of new business, now over $50 million annually, as we grow our global key account management, grow in Skin Care, and make progress in new geographies. In a weaker demand environment, the incremental impact is difficult to see, but the momentum is building.
In addition, our pipeline of new business opportunities has materially increased and now stands at a record $362 million. Going forward, we'll continue to focus on leveraging innovative new products to drive organic growth in the growth platforms that we'll discuss today. We've taken a number of actions to improve efficiency. First, we continued to improve our digital capabilities, eliminating administrative expense and enabling location flexibility in how and where work gets done. The launch of Microsoft Teams, Salesforce for sales management, a Workday for HR administration, and the Infor LN system for capital management are just a few examples of global platforms that simplify work and lower costs. Secondly, we delivered $25 million of organization and procurement savings over the last four years by streamlining both commercial resources and rationalizing our global manufacturing footprint.
In 2020, we closed our Charleston, West Virginia, organoclay plant, consolidating this production to our larger St. Louis plant, which reduced costs by $6 million annually. Going forward, there's more opportunity on efficiency, and I'll come to this, but the progress we've made, particularly with our digital capabilities, gives us confidence to move forward aggressively. Sustainability is another important area where we've made good progress. The sale of Chromium earlier this year contributed materially to carbon emissions reduction, as it accounted for 55% of total Elementis emissions. That said, Elementis, excluding Chromium, reduced emissions by 58% over the last three years. Today, Elementis is significantly less carbon intensive, but also a greener and a cleaner business. But it's not just the total emissions that were reduced; we've materially reduced our emissions intensity.
In addition, in the first half of 2023, we generated 72% of revenues from natural products, compared to 50% in 2019. We also reduced our water usage and increased the percent of renewable or low carbon energy that we use from 0% - 84%. As a result, our ESG ratings have improved. Earlier this year, we obtained a gold rating under the EcoVadis program for the third year in a row and further improved our score from the prior year. While we're encouraged by our progress, there's more to do. Over the last few years, we've built strong internal capability and the commitment to sustainability at Elementis. Our Head of Sustainability, Phil Blakeman, will cover our strategy. You'll hear how sustainability improvement is core to our strategy going forward.
We continue to develop new products that are better, more efficient, and greener for our customers, and ultimately, end users, who are themselves becoming more sustainability conscious. In 2022, we made a commitment to reach Net Zero by 2050, and Phil will cover the process we'll follow to achieve this goal. Following the portfolio transformation and strategic progress over the past few years, Elementis today comprises two focused businesses: Personal Care and Performance Specialties. We have around 1,300 employees working in 23 locations across three key regions. While we are not a large company, we have a global reach that allows us to be near our customers in their local markets, as well as to serve large clients in multiple locations. In addition, having manufacturing and lab facilities across three regions provides attractive opportunities for further growth without the need for significant capital investment.
Despite the continued difficult conditions across the chemical sector, we currently generate a group margin of over 14%. As I've mentioned, our ambition is to grow group margins to over 19% by 2026, and we'll cover the growth and efficiency actions that will underpin this delivery. But first, I'd like to take a closer look at our Personal Care and our Performance Specialties businesses. Starting with Personal Care, which generates approximately 45% of the group's earnings. We operate across three attractive, fast-growing markets. Antiperspirants, where we hold the leading market position in antiperspirant actives. Color cosmetics, where we established a leading position and developed longstanding relationships with our clients. And Skin Care, a relatively new segment that we've successfully expanded into. We have a strong competitive advantage in Personal Care.
As I mentioned earlier, we own the largest, highest quality Hectorite mine in the world, and Hectorite is a fantastic rheological modifier. Our R&D team have a track record of developing new products that are highly valued and desired by our customers. The majority of our products are made out of natural ingredients, which is a real benefit given the strong market demand from our customers and ultimately consumers for more sustainable solutions. Finally, we have a global reach, which positions us well to grow in the future. Our Personal Care business was badly hit by the social restrictions imposed throughout the global pandemic. However, we've seen a good recovery, and we believe there's more to come. We're focused on developing innovative products and further penetrating new markets, for example, in Southeast Asia, where we've seen significant volume growth this year.
In addition, we're now ramping up production at our AP actives plant in India, which will support future growth and lower manufacturing costs. Stijn will discuss the most exciting opportunities that we see and how we'll go after them. Moving on to Performance Specialties business, which includes our Coatings and Talc businesses and represents about two-thirds of Elementis revenues. Consolidating the two businesses under a simplified management structure that leverages our sales resources and creates one global integrated distributor network, is already working to lower costs and increase cross-selling efforts. For example, we've already generated $25 million of revenue synergies since 2019, and we believe there's more opportunity here. Let me just briefly cover Coatings and Talc recent performance and the opportunities we see for these businesses without stealing too much of Luc's thunder.
Coatings is currently in the most challenging demand environment since the global financial crisis. A period of aggressive destocking started in mid-2022, and has continued through 2023. As an environment of higher interest rates, weak housing markets across the globe, and more subdued industrial production has held back demand. In addition, while China continues to grow, the trend is much weaker than in years past. However, against this difficult backdrop, the team is working to position our Coatings business for recovery. We have a strong global management team. We have a much improved product portfolio, driven by 25 new products launched since 2020, and there's more innovation to come as 20 more new products will launch over the next three years.
We've leveraged our global key account management approach to significantly increase the number of joint development projects to 21, and this lays the ground, this lays the groundwork for future growth at our most important customers. In fact, our new business pipeline of $240 million has never been higher. So I'll leave it to Luc to talk through the specific growth platforms and how we'll make the most of these opportunities. The Talc business has come through a difficult time over the past few years. Approximately 80% of the business is European-based, and that has created some unique challenges. The pandemic materially reduced European auto production, and while it's recovering, it's still materially below where it was in 2019.
In addition, the pandemic accelerated graphic paper decline, as information consumption shifted to digital platforms and catalogs and menus, brochures were eliminated. The Russia-Ukraine war eliminated around $4 million of business annually in sanctioned countries, and in 2022, we experienced skyrocketing energy costs and fast falling demand, driven by the fear of an energy shortage in Europe. I'm happy to say that today, the business is recovering, is recovering well. Margins are improving. We successfully actioned a series of price increases in 2022, and throughout this period, our customers have remained loyal. We continue to focus on manufacturing optimization via continuous improvement productivity projects and a focus on further improving Talc recovery from our mines. In addition, the integration of Talc into Performance Specialties is delivering both improved sales effectiveness and efficiency.
We believe the Talc business has key advantages that will support further financial recovery and future growth. Talc follows a specialty additive logic. It is value-priced based on end-use applications. The flotation process that we use enables production of Talc that is consistently over 95% pure and then customized for color, size, and shape. This joint development process with our customers takes 18 months, and we maintain close, loyal customer relationships. Our logistics hub in Amsterdam facilitates global product distribution. Last, we follow a vertically integrated operating model with approximately 90 years of high quality Talc reserves. Now going forward, while some volumes won't come back, we still will see very good growth potential in high value applications such as vehicle lightweighting, coatings, technical ceramics, as well as emerging barrier applications. Again, Luc will speak to the opportunity that we see going forward.
But that's where we are today. So now let's focus on how we'll create value going forward. The growth and efficiency opportunity for us is material. Elementis is now in a position to build on the strategic progress to date, supported by deeper and broader capabilities and a very talented team. We can leverage our innovation and growth focus to access broader and more valuable growth platforms as the means to drive future organic growth. Building on our momentum, we'll launch over 50 new products and generate $90 million of above-market revenue growth by 2026. Today, we'll discuss seven growth platforms, which are closely linked to emerging industry trends, and I'll cover those on the next slide. We've also spent significant energy this year developing two large efficiency programs that will deliver $30 million of annual savings by 2025.
Now, let me briefly talk about the industry trends that are driving change, and then I'll cover the growth and efficiency programs in more detail. These key industry trends are providing significant tailwinds for Elementis. Sustainability is critically important to future success. On the product side, we see growing demand from our customers for natural ingredients, supported by regulatory requirements and end consumers becoming more sustainability focused. Talc and Hectorite address some of these megatrends. On the operations side, our focus on continuously improving sustainability performance is key for Elementis to be the partner of choice to our customers. From a technology standpoint, the process of developing customized solutions has become both virtual and digital as joint development teams work across geographies.
At Elementis, we're testing AI and developing digital data management capability to scale new products faster across the globe, and this will only accelerate as these tools further improve. In addition, automation capability continues to improve, enhancing both the productivity and safety in our plants. Demographic shifts continue to create change and opportunity. In the West, older consumers, wealthy and increasingly interested in services and experience. In the East, a younger growing population, along with an expanding middle class that's increasingly urbanized and interested in high-quality products. Elementis' global manufacturing and R&D footprint, as well as our global sales and distribution resource base, is well positioned to capitalize on these demographic trends. You can see that our seven growth platforms align with these industry trends and utilize our innovative technologies. Three are in Personal Care: Skin Care, Color Cosmetics, and Antiperspirants.
Four are in Performance Specialties: Architectural Coatings, Adhesive Sealants & Construction Additives, Industrial Coatings, and Talc. While these are exciting opportunities, we are equally excited about our efficiency platforms. We'll deliver $30 million of recurring savings by 2025. Now, Ralph is going to cover the program in detail, but I want to make a few points to set up this, this conversation. There are two significant areas of opportunity. In January of this year, we began a project called Fit for the Future to create a simpler, streamlined Elementis that would support implementation of our strategy. We wanted to leverage our digital infrastructure to sharpen our execution, strengthen our processes, and lower our costs. It involves reducing headcount, moving roles to lower-cost locations, and outsourcing back-office transactional roles. We will create a new global support and R&D base in Porto, Portugal.
Implementation began in early September, and the project will complete before the end of 2024, and it will deliver $20 million of annual cost savings. In addition, we have great opportunity to build on our momentum, further improving global supply chain and procurement efficiency. Key actions in both areas will deliver a further $10 million of annual cost savings by 2025. We see the combination of growth platforms together with these material efficiency programs, delivering much improved financial performance by 2026. And for this reason, we've set 2026 targets that reflect our ambition. We expect our operating margin to improve from over 14% in 2023 to over 19% in 2026. This target assumes the delivery is 100% self-help and that the demand environment remains unchanged.
In the event that there is a moderate improvement in demand, we believe the operating margins will exceed this. A combination of both growth and material efficiency opportunity gives us confidence in our ability to deliver this margin improvement. We reiterate our ambition of operating cash conversion of over 90%. We add a new target: return on capital employed of over 20%, which will be driven predominantly by our earnings growth on a fairly stable asset base. Ralph will go into more detail on these targets later this afternoon, and I'm now going to invite Luc to talk to you about why we're passionate about Performance Specialties.
Thank you, Paul. Good afternoon, everyone, and it's good to see you all. I'm Luc van Ravenstein, and I've been with Elementis since 2012. Some of you might remember me from the Capital Markets Day in 2019, when I presented a session on coatings, or the one before, when I was in charge of the Personal Care business. Today, I'm very excited to talk about Performance Specialties and present our agenda for future growth. Performance Specialties represents around two-thirds of the group's revenues. What makes this business special? You've heard that Elementis is a leader in rheology. That is recognized in the markets we serve. As Paul mentioned, we own two unique mineral assets: Hectorite and High-Purity Talc. We have a truly global reach. We produce in every region, and we have sales and technical teams close to our customers.
That has helped us to increase our share of direct accounts over distributors by more than 10 points the last three years. This enables us to build stronger customer relationships. These capabilities are the basis for our growth platforms, areas where we bring distinctive value to solve our customers' toughest formulation challenges. But let me first talk about the actions we've taken to create more resilient businesses. I'll start with coatings. When I joined this business in 2018, we initiated the Coatings Transformation Program. With this agenda, we upgraded the product portfolio and exited non-core businesses. I created one global coatings team with a streamlined structure, implemented global key account management, and put in place a new leadership team. I'm proud of the impact they have every day.
As a result of the transformation, Coatings is now a high-quality business, with operating margins growing to 18% last year. This year, despite the unprecedented destocking and weak demand in the industry, the business is showing resilience, with margins at around 14%. Now, let me turn to Talc. Paul spoke about the circumstances that impacted demand, so I won't dwell on that. Instead, I want to focus on the actions we've taken since the beginning of this year when it became part of Performance Specialties. First of all, we now have one single management structure. The team is focused and decisive, and we're protecting margins and volumes, as well as reducing costs. For growth, we focus our efforts in high-value segments. We'll cover these later on.
Now, demand from the market is still weak, but we've made important steps to turn Talc around, and I'm confident we can deliver 12% operating profit margins this year and go beyond. Now, let me tell you how we win in Performance Specialties. First, we own mines that give us access to high-quality raw materials like Hectorite. But even more so, we have the ability to customize them for our chemistry to fit our customers' needs, and that means we're very well positioned to serve continuously changing and demanding industry. Secondly, we have a team of formulation experts in our labs around the world, and many of those have joined us after careers with our customers, so they know exactly how to make a paint. And they're experts in rheology. As you've heard before, this is the science of flow. It is essential for all formulations.
No one understands it as well as we do. Lastly, how we go to market. We bring strong supply reliability, thanks to our sites in the three regions, and our teams are responsive, creative, and agile. And when I visit our clients, I often hear that that is exactly what they value in our partnerships. Our global key account program has delivered $100 million of sales in 2022. How we win is all about bringing this together. It's extremely valuable to our coatings business, and it is transferable to other markets. We are putting efforts into creating high, new high-value spaces for growth, also outside of our traditional markets. We've opened up $1 billion of new opportunities. So how do we create that new space for growth?
Markets around us are continuously changing because of trends, emerging technologies, or regulations, often resulting in new challenges for formulated products like paints. These changes mean new opportunities for Elementis. Our approach is to create solutions through our technologies, and with that, new space for us to grow. I want to show you three examples of that. Take Architectural Coatings. We see consumers in China increasingly looking for more sustainable and high-quality paints. We have the right technologies for high-performance coatings, and they've been driving our growth in the U.S. and Europe. Also, these Chinese paint manufacturers are increasingly asking for local supply. They faced severe disruptions during COVID, but also this is driven by geopolitical concerns and costs. Now, we have a manufacturing site near Shanghai that we are now using to produce architectural additives. We've actually made our first batches over the summer.
So we have the right technologies and local supply to grow into this attractive market, with almost $300 million potential. For Industrial Coatings, options for sustainable technologies here now go beyond trying to substitute solvents with water. Powder coatings gain traction as a sustainable choice because they don't need solvents, and now they can be cured at lower temperatures, and that makes them suitable for heat-sensitive materials like wood. That's a fast-growing segment. Our hectorite-based rheology additives have shown to be a great fit in this area. They're now used by leading powder coatings manufacturers to get smoother finishes, and this opens up an additional $200 million space for us. Finally, we have adjacent areas to coatings. Over the last four years, we've made good progress in a niche selling THIXATROLS into hybrid sealants.
But recently, we've expanded our product portfolio, allowing us to sell into water-based adhesives, clear sealants, as well as construction additives. And by doing so, we have tripled our addressable market in adjacent areas. Adding this all up, we're going to double our target market space by 2026. Our growth platforms. So these are the areas where our technologies bring superior benefits to key market needs. And through these platforms, we've developed a pipeline of over 35 new products that we're going to launch over the next three years, and we have a large amount of new business opportunities, $290 million, which is over 4 times what it was 5 years ago. And many of these opportunities are generated through joint development projects with our customers. Now, let me move into the individual growth platforms in detail. Starting with Architectural Coatings.
This is an important market for us. In our target premium segment, we currently have around 13% share, and our ambition is to grow at twice the market. We've had a lot of success with our RHEOLATE one-coat hide concept that Chitra will talk about later, and this enables paint to hide anything by just applying one coat. We will continue to grow in this segment with the following three important actions. Firstly, we will continue to expand our share in the U.S. and Europe. This will be driven by our superior product offering and by leveraging our key account program. Secondly, we are using our Shanghai site to produce additives for local demand, including our RHEOLATES, and we'll be the only supplier producing these kinds of premium additives on three continents. Finally, consumers are demanding more and more sustainable paints.
And let me show you an example of how we help them achieve that. Synthetic rheology modifiers, like RHEOLATE, are supplied as liquids. Typically, they contain 80% water. We have developed a RHEOLATE in powder format that can be added easily into a paint, and it requires much less storage space. And because it's a dry product, it doesn't need biocides for preservation, which makes it much easier and much more environmentally friendly. So for our customers, removing water means around 80% reduction from transportation, 80% CO2 reduction from transportation. It's a lot. So that is really significant, and it is generating a lot of interest. All right, moving on to Industrial Coatings. Here we have an addressable market of about $800 million and a sizable 20% share, mainly in the high-performance segments, such as marine and protective coatings.
Here as well, there's a need for more sustainable products. This is driven by our customer targets, but also by regulations. We see this with major brands. For example, a large Swedish furniture manufacturer, which has 30% bio-based targets for paints on their products. We have the ingredients that make customer formulations more sustainable, but without sacrificing their performance. Our THIXATROL, which reduce sagging in coatings, are more than 75% bio-based. Now, let me give you an example of what our products do in automotive coatings. Trends in automotive interior design are shifting towards more premium matte looks, and to achieve that, matting agents are added to clear coatings. The most common one being silica. It brings the matte effect, but it reduces the clarity of the paint, which is a problem. Users are also sensitive to potential health concerns of handling silica.
Our HYPERMER matting agents resolve these issues. They bring the premium look through matting, but with crystal clarity, and they're safe to handle. A leading EV brand now uses our technology for their interior coating, so we've seen nice growth, and we have many other major car manufacturers testing it. Our third growth platform is Adhesive Sealants & Construction Additives. This is a relatively new application for us. Our target market is worth about $700 million, growing at 5% per year, driven by trends like lightweighting. And we are scaling this business and aim to double our share in four years. So how will we do this? We've been gaining share from silica fast. Our THIXATROL have superior rheology performance and are much easier to handle. You'll really appreciate that during the breakout session with Joe.
There, you'll see our new patent-pending RHEOX Clear that is opening doors to a $100 million opportunity for clear sealants, for example, for window seals. Another adjacent area where we are solving an industry challenge is construction additives. In construction, large format tiles have become more and more popular in the recent years. They weigh more, so it's more difficult to hold them in place when installing. And tile sagging means a waste of material, mortar, and time, as it takes longer to install them. But to solve this problem, we have launched BENAQUA 5000, based on Hectorite, which brings excellent sag resistance. We estimate up to 50% improvement versus existing rheology agents. So this will reduce both waste as well as installation time. Moving on to our fourth platform, Talc.
Here, we have selected high-value applications in which we expect to deliver $15 million of growth above the market. First, lightweighting. Electric vehicles are built with lighter materials, like reinforced plastics, to help lower carbon emissions. And here we've launched the FINNTALC K line, which boosts the strength of plastic by up to 20%, and this product helps us to gain share in this high-growth market. Secondly, Talc is a key raw material for ceramics used in gas particulate filters, and this is a very challenging technical application. And we have a highly engineered Talc that enhances the ceramic's thermal stability. We're in the process of scaling this attractive business. At Talc for coatings, we've been benefiting from synergies. We have one global sales team, a sole distribution network, and a stronger position with joint key accounts.
And with that, we have delivered over $25 million of revenue synergies since the acquisition. For marine and protective coatings, the FINNTALC LV series acts as a physical barrier to protect ships from corrosion, and this product is now being used in combination with our new NALZIN 180, which is a corrosion inhibitor that avoids rusting of the metal surface during the drying of these water-based paints. We're launching it tomorrow at CHINACOAT , which is the biggest coatings event in China. Exciting stuff. So you have seen how we use our distinctive capabilities to solve the toughest industry challenges out there, and that is how we create our own growth opportunities, not dependent on whether markets are soft or strong. This is about self-help. The key points that I would like to leave you with today, as you've seen-...
Performance Specialties is a resilient, high-quality business supported by our Coatings transformation and the Talc turnaround. We have innovative solutions that address key challenges in our markets. With that, we are doubling our addressable markets to $2 billion. By being the partner of choice for our customers, we have built a pipeline of $290 million of new business opportunities. I'm really confident about the bright future for Performance Specialties. We have set ourselves up to deliver significant growth in the coming years. Thank you for your attention, and I will now invite Stijn to tell you about Personal Care.
Thank you, Luc, and happy to see that the sun is coming through. Good afternoon, everybody. My name is Stijn Dejonckheere. For many of you, I will be a new face, as I took over the leadership of the Personal Care business in 2020. So it's the first time for me to present at our Capital Markets Day. I'm very excited to be here today and tell you more about the beauty of this business, in which I have been actively involved for almost 15 years now. In this period, we managed to grow the business from a small side business of about $20 million in 2007 to a strategic segment of the group. More importantly, in the last few years, we managed to create a great momentum in this business. This has been driven by innovation, geographical expansion, and the dedication of an excellent team.
As a result, we are now better than ever positioned to drive material growth over the coming years, even in a challenging environment. I will go into the detail as to what gives me this confidence, but firstly, let me briefly explain what a Personal Care business looks like today. The Elementis Personal Care business is a high-quality, high-margin business. As Paul mentioned earlier, while we are active in all the segments of Personal Care, we excel in three core markets. The first one is Antiperspirants, where we are the leader for the actives. The second one is Color Cosmetics, where we have a leading position in rheology. And finally, Skin Care. This is the newer segment for us, but one where we have been particularly successful with our range of natural alternatives to synthetic thickeners.
As I will demonstrate later, we have built a global setup, and we now serve customers all over the world. The biggest markets remain Americas and EMEA, driven by the larger demand of Antiperspirants in those regions. Asia, while currently the smallest region, is where we've seen the fastest growth over the last few years. This has been driven by a growing demand for our rheology modifiers for Color Cosmetics and Skin Care, and more recently, also the antiperspirant actives. Thanks to our global reach, we service 70% of our customers, of our sales on a direct basis. This is about 100 customers, and it's significantly higher than three years ago. We find that these direct relationships are helping us to drive new projects and opportunities, and also supports the high-quality returns for the business.
The rest is done via distributors that have been carefully selected and for whom we are typically one of their top three suppliers. Personal Care is not only a high-quality, high-margin business, but also one with a track record of profitable growth. Not surprisingly, the social restriction caused by the COVID-19 pandemic had a significant impact on the overall beauty and Personal Care industry, including on our business. For the following two years, we have seen a strong recovery, with the revenue growth outpacing the market recovery and profits increasing more than 15% per year on average in that same period. Let me give you a little bit more detail what was driving this above-market growth. Firstly, we launched 25 new products since 2020 and increased the sales of innovation products to over $15 million per year.
Those products offer sustainability benefits to our customers, either because of a higher efficacy or because they are replacing synthetic products. Secondly, we enjoyed a tailwind driven by the market trends. Our natural and sustainable solutions gained a lot of traction in this period and now represent more than 80% of our total Personal Care sales. And finally, we invested in our capabilities, which I will cover in more detail later. Yet, what I mainly want to highlight today is that we have created a momentum in this business that has much more runway for incremental growth. Since 2019, we tripled the opportunity pipeline to $70 million, and this will be driving a material amount of new business in the next years.
So, as mentioned earlier, geographical expansion has been an important contributor to our recent growth, and we will continue to focus on growing our reach further. What has changed since the last Capital Markets Day? We added a new laboratory in Shanghai and expanded the one in Brazil, allowing us to make more local formulations and to do the additional claim substantiation that is requested by local customers. It also allowed us to develop new products or make changes to existing products to comply with local regulations. We expanded our marketing capabilities, which allows us to create and run dedicated social media campaigns on platforms like WeChat in China, and where we have seen a very good traction and activity level from our customers. We also significantly expanded our sales capabilities in Asia.
This provided a better access and penetration into new and existing Asian regions, either direct or via a specialized distributor. We have seen an immediate impact of this in Indonesia, for example, where we now have a very good direct relationship with the local giants, and where the business grew by $3 million since 2019. Finally, our manufacturing capabilities. We have a new manufacturing antiperspirant actives plant in India, which allowed us to gain new business, thanks to an improved supply, resilience, and cost position. All these expansions have been leading to a very good momentum that we have in Asia. As mentioned in our interim results, the sales were growing double digits compared to last year, and this despite the post-COVID challenges in China.
As the total sales are still much smaller than in the other regions, we have a lot of runway for growth in the next years. Going forward, we will continue to invest in our capabilities as required. The next steps will be the new R&D facility, with expanded capabilities in Porto and an expansion of the sales team in Japan and India. This will further increase our addressable markets and drive future sales growth. As I mentioned earlier, we serve as the full Personal Care area, but our key growth platforms are Skin Care, Color Cosmetics, and Antiperspirant Deodorants. For each of those, we have unique technologies that offer sustainable solutions to our customers. Hectorite is key for all of them, and it's therefore one of the big winning differentiators for our Personal Care business.
What makes it especially valuable for Personal Care is that it is offering a combination of benefits, and that all of them are critical. It's 100% natural, it gives a luxurious touch and feel, and it enables formulation stability and flexibility. Besides Hectorite, the other important product ranges are, of course, the AP Actives and the natural oils that we offer. Innovation will remain a key engine of our growth in the next years. We have a robust product pipeline in place that enables us to launch more than 20 new products over the next three years, facilitated by the new R&D facility that we will have in Porto. We currently have nine joint customer developments ongoing, and we get new requests coming in very regularly.
You will get a good understanding of the exciting products that we are working on as I move on to the growth platforms shortly. But before that, I want to talk to you about what is behind our innovation ambition and what it does to the addressable market for our Personal Care business. Our continued focus on innovation and geographical expansion will allow us to double our serviceable market from approximately $500 million in 2022 to $1 billion in 2026. Natural rheology modifiers are growing twice as fast as synthetic ones. This is therefore one of the fastest growing segments in the Personal Care ingredients. In this field, we will continue to leverage our leading rheology position and high-quality Hectorite resource to launch new natural rheology modifiers. Our initial products were positioned to replace other natural rheology modifiers.
The newest generation, however, is going to be more sophisticated and can now also be used as a replacement for synthetic products. This means that the target market for our natural products is increasing significantly. For antiperspirant actives, we see growth that is mainly driven by the trend for longer-lasting efficiency, and therefore higher valued products. But in our case, it is also fueled by the improved manufacturing capability, geographical coverage, and supplier resilience that we can offer to our customers. So in addition to the functionalities where we play already, we will also expand into new areas with products that are based on biodegradable technologies. In 2025, we plan to launch alternative AP actives for deodorants. Those will complement our antiperspirant actives range and will offer sweat reduction benefits for deodorants.
Another very interesting development is that in 2024, we plan to launch our first natural film formers for sun care and Color Cosmetics. We received highly positive initial feedback from key customers who participated in an early evaluation of our products and who are looking for a natural film former to replace the synthetic ones that they are currently using. We will talk more about that when we discuss the growth platforms. So by bringing our innovation capabilities, we further enhance our serviceable market, allowing us to continue our growth. I will now move on to the three main Personal Care growth platforms that Paul introduced earlier and talk about the specific innovation for each platform in more detail... The first one is Skin Care. The trend that we see in Skin Care is all about natural. Customers need natural solutions to replace synthetic ingredients.
An important driver for this trend is the need to eliminate microplastics. We only started to focus on Skin Care in 2018, and today I'm proud to say that we delivered on the commitment that we made during the Capital Markets Day in 2019, to grow the segment with $10 million incremental revenue. We did this by promoting our natural Hectorite products as rheology modifiers for water-based systems. Going forward, we will continue the penetration and innovation for natural rheology with more sophisticated products. In addition, we will add new functionalities. I already mentioned the water-resistant film formers for sun care. We will also offer products for skin conditioning and moisturization, and we will launch products that will allow ultralight and very liquid Skin Care products, which is a big market trend in Asia.
And finally, we will leverage the unique chemical properties of Hectorite as a natural active for Skin Care as well. Our strategy in this area is working. We not only grew the business by $10 million since 2019, but also grew the opportunity pipeline from $9 million - $23 million in that same period. This will enable us to deliver substantial growth at 2x-3 x the market pace in the next three years. Let me share with you an example of a product that uses our Hectorite. Firstly, due to its rheology modification properties, but in addition to that, it highlights Hectorite as an active ingredient for oil absorption in a face care product. This is a very nice example of one of the main players in the Personal Care industry, L'Oréal, who acknowledges the multiple benefits of Hectorite beyond the well-known rheology.
It's also a good illustration of the work that was done by the team to promote Hectorite as a natural active. This is one of the first products showing this, but we are convinced that there is a significant runway for growth in this space in the next years, as it will create resonance with consumers and other players in this application. We have samples here of this product that we will hand out to you. I would be very happy if you go and share that with your friends and family. Moving on to Color Cosmetics. We have a well-established position in this market segment with our Hectorite rheology modifiers. The reason for that is that most of these formulations are oil-based systems, and the Hectorite derivatives, like the bentonite gels, are broadly recognized as the best technology for the dispersion of pigments in these types of systems.
Today, we see this industry changing, and it's increasingly about the so-called skinification, individualization, and speed to market. Now, the term skinification reflects on Skin Care benefits that are added to Color Cosmetics. Individualization is related to the wide range of colors and shades that brands are offering nowadays. This was triggered by the indie brands that started this trend some time ago. They also typically outsource the development and the production of new launches, which enables the faster speed to market. Today, the big brands are following this trend in order to remain competitive. How can we win in this environment? Our innovation and setup are fully focused on offering solutions for these challenges. Let me talk about innovation first. The latest products are a combination of Hectorite with either emulsifiers or actives.
You will see a demonstration of this during the breakout sessions, where my colleagues Kim and Kate will introduce our BENTONE LUXE XO and the BENTONE PLUS GLOW products. The BENTONE PLUS GLOW is including Skin Care actives, so it is allowing our customers to make Skin Care claims for makeup products, meeting the skinification trend. By simply changing the pigments, they can also create a full range of products catering to individualization, and they will be able to bring it to market much faster. I'm very proud to say that last week, we won the Bronze Award in the category of functional ingredients at in-cosmetics Asia for this BENTONE PLUS GLOW product. This is another demonstration of the fact that our products are offering the right solution to the changing needs of our customers.
Staying with the innovation team, we have other new exciting products that we will launch in 2024. This includes a range of patent-pending BENTONE ULTIMATE products with a higher load of Hectorite clay and a completely new activation mechanism. And finally, similar to the earlier mentioned innovation for sun care, we plan to launch a natural film former that will enhance the wear resistance of Color Cosmetics, for example, in lipsticks. This demonstrates the point that I made earlier. While we already have a well-established position in natural rheology, our new products will help us to strengthen this leading position and significantly increase our addressable market. It makes us feel really confident that we can grow this business in the short term to at least GBP 10 million revenue above market growth....
We talked about how we can win in this new environment for Color Cosmetics, and we covered the innovation part. Let's now move on to the second part of our answer, which is the setup. Given our expertise in rheology and formulation solutions and our global reach, we can now offer the right support to customers in emerging markets, to the indie brands, and to the global key accounts. In the emerging markets, we see a shift to higher valued and more sophisticated products, and this can be facilitated by our Bentone gels. This has been driving a lot of the growth in Brazil and Indonesia, for example. We've talked about the indie brands before. So bloggers and digital trendsetters influence consumers' behavior, and we've seen a large increase in these sales.
Our expanded reach and capabilities enable us to work with the local consultants or contract manufacturers who develop these products, and our multifunctional and natural ingredients are well appreciated as the workhorse in their formulations. And finally, the global key accounts. With most of them, we have partnerships where we either develop customized solutions or where they get involved in early testing of our new innovations. So this setup, and the fact that we can reach out to basically all customers worldwide, is enabling us to maximize the sales potential in this industry. The third and last growth platform in Personal Care is in the field of Antiperspirants & Deodorants.
As mentioned before, our new manufacturing plant in India is enabling us to grow this business, on one hand, with global customers because of our supplier resilience, and on the other hand, with customers and plants in, located in Asia. In this market, we see two main trends. The first one is for high-efficacy actives, allowing longer-lasting claims. Today, up to 96 hours of sweat protection is not unusual anymore. The second one is to work with natural actives. We are well recognized for being the leaders in innovation in this field. With our customers, we continuously work on solutions for high-efficacy products. Since our last CMD in 2019, we developed five new products in this field. For the naturality, we are focusing on different solutions. One includes a range of high-quality products based on recycled aluminum, allowing a reduction in CO2 emission for both our customers and ourselves.
The other one includes work on an alternative natural active that will allow sweat reduction. Now, officially, this is not going to be classified as an antiperspirant active, but it will enable us to offer sweat reduction benefits for deodorants, which is something that the market has been looking for for a long time. As we discussed before, Hectorite is a key ingredient for all our core markets, and this is including the antiperspirant market. According to Mintel, around 70% of the launches of antiperspirant aerosols that happened in 2023 contain a Hectorite-derived product. In these aerosol applications, Hectorite is used to disperse the antiperspirant active. This is important, as our customers need to be sure that the right amount of actives get filled in every aerosol packaging, and consumers need to get an even protection when they are using the product.
I think this is a nice example of a big market where our two main technologies are used together. It strengthens our reputation as a leading supplier in this area, and in addition, it enables us to grow with those same customers in other applications like Skin Care or sun care. This brings me to the end of my presentation. I hope that you now understand why I mentioned at the beginning of this session that this is a beautiful business. We have a great product portfolio that is strengthening our reputation as a leading supplier in rheology and antiperspirant actives. More than 80% of our sales are generated from natural products, so we are well positioned to meet the market trend. We have now the right capabilities, allowing us to partner up with our customers.
We have admired and award-winning new products and an innovation pipeline that will deliver exciting new technologies in the near future. So in short, we have created great momentum to capture the material growth opportunities and to further enhance our returns. And all of this is fueled by the team that is passionate about growing this amazing business. Thank you for your attention. We now want to invite you to join the breakout sessions, where you will see exciting demonstrations with some of our newest and award-winning products. I will briefly hand over to Eva, who will guide you to the breakout areas.
Thanks, Stijn. We will now pause the webcast until after the breakout session, and we will resume after 4:00 P.M.
Welcome back, everyone, to the second part of the presentation. I would like to invite Dr. Phil Blakeman to cover Elementis' sustainability strategy.
Good. Welcome back, everyone. I hope you enjoyed those extremely interesting breakouts and demonstrations. So good afternoon, and thank you again for your time today. I'm Phil Blakeman, and for a little over two years, I've been the sustainability director here at Elementis. I've had a varied career in the chemicals industry, leading a Pan Asia regional business, driving commercial and technical organizations. I have a PhD in chemistry and a master's in sustainability. I believe that my business experience, combined with technical knowledge, is especially helpful to deliver an impactful sustainability program. Today, I'm excited to share with you our successes and our strategy. First, I want to start off with a reminder of our purpose that Paul introduced earlier: unique chemistry, sustainable solutions. We are, of course, committed to a future that is a healthy planet, thriving people, and sustainable development.
Driving towards our purpose is how we at Elementis can best contribute to that future. But how exactly can we play our part? How do we create value for both the company and wider stakeholders while pushing towards our purpose? I'm going to tell you why we believe we have the right focus areas for sustainable growth, what we've done so far, and how that shapes Elementis' future. Specialty chemicals is an industry in transition. When we assess the global markets that we operate in, we see our customers responding to the demands of increasingly aware consumers. There's also an expanding regulatory landscape. These lead to the set of market drivers that shape our own sustainability focus. I'd like to take a moment to walk you through these drivers and our responses. Climate change is impacting us all.
Here, our focus is on lowering emissions throughout the value chain as we drive to net zero. We also work to ensure that we have a business that is resilient to the various risks climate change brings. We are in a materials-oriented sector, and so the circular economy is important. For us, this particularly means using renewable materials, such as bio-based chemicals, and generally helping resources be used efficiently along the value chain. As we've seen, much of our revenue is reliant on natural ecosystem services. Therefore, we focus on minimizing the stress we put on nature by reducing pollution from our operations and our products and sourcing responsibly. And as you heard from Joe in the break, we help our customers develop safer chemical products, lowering risks to human health.
I'll focus more on these environmental aspects of sustainability today, but of course, to do any of this well, we are reliant on our greatest asset, our people. We have a dynamic social dimension to our sustainability strategy, with a particularly strong focus on safety, employee engagement, and ensuring a diverse, inclusive culture. We are a responsible business, conducting ourselves with integrity, giving transparency to stakeholders, and engaging our supply chains to help us have a bigger impact on the issues that matter to us and our customers. To bring these drivers to life, I thought I would return to an example that Luc mentioned: bio-based paints. We see examples from Europe, Asia, North America, big brands and smaller brands, all marketing paint with high bio-based content, emphasizing the naturalness and the ecological credentials that such a product brings. Our own bio-based additives help our customers create these products.
Taken across all our business, our future is certainly to deliver customer solutions that are more natural, net zero, and safer. So let me tell you about the progress we've made. Firstly, I want to take you back to the beginning of the year, to when Elementis owned a Chromium business. This was quite a different business to the specialty chemicals area we are focused on for future growth, and after strategic review, we sold it. The Chromium business had a substantial environmental footprint when compared to the rest of the group. For example, the divestment removed 75% of our greenhouse gas emissions from our operational footprint and substantially lowered our water withdrawals. The divestment meant that our business strategy and sustainability focus became fully aligned.
This means we can set challenging and purposeful sustainability targets for the business, such as for greenhouse gas emissions, and we can better address the expectations of our most important customers, employees, and indeed, our investors. With this newly focused business portfolio, are we making progress towards our purpose? Well, I'm pleased to say that our continuing operations have some pretty exciting results. Here, numbers are re-baselined from 2019 to exclude Chromium. We have lowered our absolute greenhouse gas emissions by 58%. That's well ahead of a Net Zero pathway. We've done this by making improvements in energy efficiency and, as Paul mentioned, increasing the proportion of low-carbon electricity we use. In addition, our factories are using resources more efficiently. In 2022, we already met three of our four 2030 targets through smart, targeted capital investments and operational improvements.
We will review these targets next year to ensure we keep moving forward with purpose and impact. We've seen a steady increase in our ESG ratings. EcoVadis and CDP, shown here, are particularly important as indicators of the ESG risk level we bring to our customers. Good scores are increasingly important to be a favored supplier. Reflecting the market drivers we talked about, our customers do want more sustainable products. Our revenues from natural and naturally derived products have increased by $59 million. In part, this is due to our Personal Care business, and it's perhaps what we might expect from that segment. There is also growth for naturally derived products within Performance Specialties, which is more exposed to industrial and consumer DIY markets, bio-based paints, for example. Our business strategy responds to these drivers in various ways....
In our innovation pillar, we focus our capabilities on finding unique solutions to sustainability trends and emerging applications, such as our natural ingredients for Skin Care and cosmetics that Stijn introduced. Our growth pillar is where our ingredients are well established in products that support improved sustainability outcomes, such as additives for paints with low volatile organic compounds. Our efficiency pillar is where we help customers do more with less, such as additives that help paints cover in one layer, saving end users materials, time, and money. Efficiency also reflects our own efforts to have better sustainability outcomes in our operations and our supply chains. Let's look at some examples that I think are particularly impactful. You heard Stijn mention recycled aluminum for use in our antiperspirant actives, and that is a great example of our sustainable innovation. Here, we take factory aluminum waste straight into our chemical process.
This cuts out the aluminum recycling loop and lowers our use of virgin metal. Ultimately, we have less resource use, less CO₂ emissions, and we support our customers with their product eco-labeling. Luc talked about the many uses of Talc, and one area we see continued growth is as a filler ingredient to enhance strength and durability of automotive plastics. Strong plastic components can replace metal ones in both conventional and electric vehicles. Since they are lighter than metal, their use increases the energy efficiency of the vehicle. Coming from our own mines in Finland, our Talc also has a relatively low environmental footprint. And on efficiency, I want to reiterate another example Luc talked about: our powder rheology additives for coatings. As these are dry products, we avoid shipping water, saving money and packaging, and have up to 80% less CO₂ emission from transportation.
Also, we do not need to use toxic biocides as preservatives, helping the environment. Finally, these products also have higher performance in customer applications. What I find powerful in these examples is that making one sustainability improvement unlocks many other co-benefits. Understanding all our impacts is how we will maximize our opportunities. That is why we've worked hard to understand our full carbon footprint. We've confirmed that the bulk of our emissions are associated with purchased raw materials and logistics. With this knowledge, last year, we committed to set a science-based target for greenhouse gas emission reduction. We believe this will help us reach our ambition of Net Zero by 2050. We are currently working on the exact form of our target, following the process set by the Science Based Targets initiative. We aim to publish our validated target in 2025.
While the details still need to be finalized, we expect this means roughly 40% reduction in our footprint versus a baseline year, reached sometime in the early 2030s. As you can see here, we have several levers across our operations, product portfolio, and supply chains that will help us deliver a science-based target and Net Zero. I've already mentioned some of the product changes which will lower our emission footprint. As an example from our operations, a particularly impactful process improvement was taken by the team at our California site. We adjusted our operating parameters for Hectorite clay processing, achieving a 25% drop in natural gas use per ton of clay produced, all for 0 capital investment. Our skilled teams have identified many other opportunities. I'm looking forward to helping these ideas become reality. And so we continue to push towards our purpose.
Our future is to be Net Zero, more natural, with safer chemistry and products, delivering a stronger business. We have the track record and strategic focus to deliver against market growth drivers with a variety of product innovations and efficiency improvements. I mentioned earlier that our opportunities are maximized when we understand all our impacts. To get that understanding, we utilize a five-point framework in our sustainability program. It helps us look at and challenge the business from different perspectives while supporting credible communications with stakeholders. Within this framework, we are building our capabilities and tools further. For example, life cycle analysis of our products shows their environmental impacts and the improvements we make. This is something customers increasingly request as they seek to understand the impacts of what they buy. We are also working to systemically understand sustainability risks and opportunities across our product portfolio and supply chains.
In this way, we will unlock greater value, better outcomes, and make progress on fulfilling our purpose. In summary, I hope I've demonstrated how sustainability trends are creating exciting opportunities for Elementis. Today, Elementis is a much lower footprint business with a competitive sustainability profile. We have an attractive, naturally derived product portfolio that is generating an increasing share of our revenue.... We are already well positioned to address the sustainability drivers in our markets and are working hard to embed our responses ever further into our strategic delivery, supported by our five-point framework and improving capabilities. Finally, early in 2025, we will publish our science-based emission reduction targets alongside other refreshed sustainability targets. I'm confident these will help us unlock the exciting opportunities we have for further value generation. Thank you for listening.
I will be available for any questions after the formal presentation, but now I'll hand you over to Ralph, who will cover the financial framework.
Thanks very much, Phil, and good afternoon, everyone. It's good to see so many of you here today. What I'd like to do now is to focus on our targets and how we see delivery of them combining to improve our financial outlook. Now, to recap, Paul set out three 2026 targets for Elementis: operating margin to improve from our current level of 14% to 19%+, depending on market conditions, our operating cash conversion to exceed 90%, and for our return on capital employed to exceed 20%. That's equivalent to over 12%, including goodwill. Now, let me now address how we plan to accomplish each of those components in turn. First, the operating margin target.
Now, just to reinforce the context on this target, we see the path to getting to 19% entirely through self-help, without any improvement from the current soft market conditions. Should there be a modest recovery in market demand, that should, other things being equal, enable us to improve our margin performance beyond the 19%. Now, while the future is unknowable, our confidence in this target is underpinned by the quality of our existing business and the growth and efficiency platforms that we're setting out today. Now, you've heard Luc and Stijn set out the details of our seven growth platforms, balanced across Personal Care and Performance Specialties. These are supported by industry trends that Paul talked about and deploy our innovative technologies.
Now, there's no one platform that we're overly dependent on, and we're targeting the overall progress to be around $90 million in above-market revenue growth by 2026. Now, as I indicated, revenues and operating margins will be further enhanced by the extent of any market recovery. I'll cover the efficiency platforms in more detail shortly, but in summary, these amount to $30 million annually to be delivered in 2024 and 2025, with a phasing approximately $12 million next year and the balance in 2025. Now, as indicated here, the efficiency platforms contribute to a large part of our margin improvement and are very much in our control. So let me now take you through the efficiency platforms in more detail. First, as Paul mentioned, Fit for the Future, which is targeted to deliver $20 million in annual savings.
Now, the large majority of these come from staff cost savings in three areas. First, an optimized structure. As you know, post-Chromium, we're a smaller company, and we need to rightsize our staffing. This step will see us eliminate around 80 roles. We're restructuring into a simpler and more efficient organization, focused on our existing three regions in a more standardized way. These steps will also see us close our Cologne office. The second step is the creation of a new R&D and support center in Porto, Portugal. Now, this location is a proven global business services location, with centers for companies such as GKN, Adidas, and Kantar already established there, and it's got the twin advantages of being a source of great R&D talent, as well as being a lower-cost location.
Now, we're consolidating over 90 roles from higher-cost sites into Porto, including setting up a new showcase lab. The third element is outsourcing of our over 20 transactional finance roles, AP, AR, and general accounting, to India. Not only will this see a significant cost reduction, it would also give us access to stronger processes, digital tools, automation opportunities that we would not be able to deploy quickly ourselves. Now, in addition to the staff cost savings, we're also taking steps to reduce our non-staff overhead costs in areas such as audit fees to reflect our smaller company size, insurance, and other discretionary spend areas. To be clear, we are not reducing any of our R&D spend. Now, I should emphasize this program was in preparation since we announced the Chromium sale, and therefore, we are now quite advanced in its execution.
Now, this next slide shows you the moving parts of Fit for the Future. Our manufacturing plants are unaffected. Now, beyond the plants, the changes we're talking about here impact 25% of our roles, mainly in the higher-cost U.S. and European locations. We expect some 190 redundancies, and alongside associated costs, we expect one-off P&L charges of around $30 million. The benefits anticipated are $20 million per annum from 2025, with about a third coming through in 2024. We expect this will contribute to a reduction of about one-third of our reported central costs, while the balance of the cost benefits will show up in the segments. So that's our $20 million efficiency platform.
Beyond that, we are targeting an additional $10 million to come from supply chain optimization and procurement savings, and the delivery of these will be phased about half in 2024 and half in 2025. In our supply chain, we have built capability and continuous improvement. One example of this is a recent success in increasing the percentage of solids we process at our Newberry Springs spray dryer. That's near our Hectorite plant. In effect, meaning more output for the same energy cost. We will drive better overall equipment effectiveness through more automated processes, debottlenecked production lines, and more efficient energy use. In addition to running the plants better, we see scope to optimize our manufacturing footprint, both where products are made and the footprint itself, and we'll have more to say on this in 2024. Turning now to the procurement savings.
Under the leadership of Eric Waldman, who's here today, we will get these benefits from better use of vendor management, digital tools, including e-sourcing, cutting back the number of raw materials that are single-sourced, and standardizing our procurement processes. So the growth and efficiency platforms we're pursuing underpin the margin expansion we've set out. Moving on now to our second target, cash conversion, which we're targeting at over 90%. A key source of cash delivery is working capital. Now, our working capital level stood at $142 million at the end of 2022. This was a high point in recent years, primarily driven by inventory increases, with stock values reaching $182 million at the year-end. This was driven by the price effect, alongside a falloff in demand in the latter half of 2022.
Now, the main drivers for working capital improvement overall will be, first, working with our outsourced service provider to standardize our AR processes. Second, on inventories, better integrated forecasting and demand planning to manage our stock levels, alongside minimizing inventories of slow-moving goods. We're on track to reduce our inventories this year by some $30 million, principally in the second half, and we see that in 2024 and 2025, we've got scope for further reduction. And third, we will have to look at stronger procurement execution to reduce our payables. Turning now to capital allocation, and supporting our working capital improvement will be discipline on CapEx, where we expect spend to be around $40 million annually, broadly in line with our depreciation. Now, our CapEx priorities are on safe, reliable operations and then on growth and productivity projects, where we typically look for a 2-3-year payback.
Our progression in profitability, working capital, and our discipline in CapEx will drive our cash generation. For the avoidance of doubt, we do not expect to deploy cash in any material M&A. Our capital allocation priorities remain: first, to support organic growth. Second, to restart the dividend, which we are very keen to do. When we restart the dividend, we will look for it to be both sustainable and progressive. Third, and with that context, we see scope for future additional returns of surplus capital via appropriate mechanisms. Now, dividends and additional returns clearly require us to continue the path of leverage reduction. This chart shows the improvement in our net debt to EBITDA ratio, and it's worth mentioning, at the end of 2020, our net debt stood at over $400 million on a ratio of 3.2x.
Consensus is our year-end net debt at around $230 million on a 1.6x ratio at the end of this year, with further deleveraging to come. Turning now to our third target, which is return on capital employed. Let me first take you through what is in our operating capital employed, which is around $1.2 billion in total. Our fixed assets, net of some modest operating provisions, amount to just over $550 million. Now, as our future CapEx requirements are broadly in line with depreciation, we do not expect this to move materially. Our net working capital balance, as I mentioned, was just over $140 million at the end of 2022, and as I've discussed, we see good potential to optimize our working capital intensity, particularly with inventories.
Turning to goodwill, the two largest components of goodwill on the balance sheet, you can see here, are accounting for some 95% of the total of the Rheox business that was bought 25 years ago, which includes our Hectorite asset, followed by the SummitReheis business acquired in 2017. As we do not plan to deploy cash on material M&A, we don't expect goodwill to increase. Taken together, therefore, we're intending to be very disciplined on our capital employed. Our ROCE at the end of 2022 was 14%, excluding goodwill, or 9%, including goodwill. With the income and cash targets and parameters we've set out today, our aim is to take the ROCE above 20% by 2026.
Now, I've talked about the discipline we intend to exercise on capital employed, so the critical driver of the ROCE improvement will be operating profit growth. So that takes us through the contributors to the three targets we've set out today. First, the growth and efficiency platforms driving margin expansion without reliance on better market conditions to achieve the 19%. And I would emphasize, this margin improvement is not only a returns progression, but it's also about growth delivery, expanding the overall profitability of the company. Second, capital discipline and cash conversion create scope for material shareholder distributions, starting with the dividend. And third, a return on capital improving materially to exceed 20%. We're excited to be getting after these targets, and with that, I'll pass it back to Paul to conclude.
Thank you, Ralph. I hope we've demonstrated why we're excited about Elementis going forward. Let me conclude with the key messages from today. Following the sale of Chromium earlier this year, Elementis is a high quality, less cyclical specialty chemicals business. While we've not yet met the CMD targets we established in November 2019, we've made good progress implementing our strategy. We have two focused businesses that are well positioned for growth. Personal Care, which is now about 45% of group profits, is a high margin business operating in attractive growth markets. Performance Specialties, which comprises our Coatings and Talc businesses, and is well positioned to focus on growth opportunities across multiple channels. The growth and efficiency opportunity going forward is material. We believe we can deliver $90 million of above market revenue growth by 2026.
As Ralph explained in great detail, there's $30 million of costs that can be eliminated by the end of 2025. This delivery is within our control. It's driven by self-help. It does not rely on a more favorable demand environment. Elementis is a highly cash generative business. The combination of improved performance and ongoing leverage reduction will support sustainable shareholder returns over the long term. This will enable us to generate an operating margin of 90%+ by 2026, cash conversion to exceed 90%, and return on capital employed to exceed 20%. So, I'd like to thank you for your attention. There's lots here today to absorb, and I'd like to thank my team. This doesn't get done in a week.
This is the, I think, outcome of probably 12-18 months of work that kind of culminates in this program. So, with that said, I'd just invite the other speakers to-- and the other leadership team members to join me on stage, and, we'll be ready to take your questions.
Hi, Steve Raineri, Franklin Mutual. Thanks for the time, and I'd say certainly if anybody didn't know what Hectorite was before, they do so now. But in all seriousness, you know, with the share price depressed and below prior offers from years ago, can you help us understand how the net present value of the business, based on these revised targets, is greater than what the company could achieve in a sale? And how would we know that without conducting a formal process?
Yeah. So I'll take that. I mean-
Oh, God.
As you know, Steve, we're a public company. We're for sale every day. We look at the program that we have before us, and the amount of value that we think we can create in a pretty short... It's pretty time boxed, a pretty short amount of time, and, and a very, very clear outcome in terms of what we've said we can deliver, margin wise, which, you know, the analysts will model up in about 10 minutes. And we think that that is the fastest, best way to create value. And, you know, as a board, as you know, our responsibility is always to look at all the opportunities that create maximum value for our shareholders, and we've never-- we would always do that.
But we think that where we're at right now, particularly given the fact that the demand for our biggest products, coatings, is so bottom quartile, and with the program we've put in place, we can deliver significant shareholder value.
This is Chris Meeker from Franklin Mutual. Look, we, we appreciate the revised operating margin target, but we'd be remiss if we didn't ask an obvious question that, you know, after three divestitures, two large acquisitions, significant increase in debt on the balance sheet, shares outstanding, it's only returning the company to the operating margin that it operated at from 2011 - 2015. Help us understand how the operating costs have gotten so out of control, and why we should have faith that you guys can get the costs out of the business.
I think that, just taking costs for a second, I mean, you know, we shared the costs that we took out from 2019. Obviously, we shared what we're gonna take going forward. We look at the productivity, the revenue and profit productivity of Elementis, for example, per employee, and compare it to our other specialty chemicals competitors. And we are very much in the hunt. In other words, there's nothing dysfunctional about Elementis. I think if you go back to the period that you're referencing, Chris, you know, our Chromium business, we were making $50 million-$60 million a year. We were going great guns, and the company was generating 19%-20% returns in those days. The big changes, obviously, were since about 2016.
As I pointed out, Chromium really, really tailed away in a massive way. So, you know, that was a big change, I think, to the complexion of Elementis. I would say we didn't really have the kind of investment in organic growth. All of these new products and the pipeline and the annualized new business that we generate, none of that existed in 2016. So, the strategy that you see and the program that we're going forward with is really a function of a whole lot of momentum that we've created over the last three or four years. I will not deny that, you know, from a M&A standpoint, you know what I mean, we haven't covered ourselves in glory.
But when we think about how we've managed through the last three or four years, moved the ball strategically, precisely where we wanted it to go and have set ourselves up to do this program, I mean, we feel quite good about the future and about our ability to deliver on the promises we're making today.
Thanks. It's Matthew from Bank of America. Thank you for your time, everyone, today. Maybe the first one's for Ralph around the cost savings, the GBP 30 million. If I understand this correctly, you're assuming it all drops to the bottom line. So is there not any assumption about inflation offsetting some of this or general retention? Because my numbers might be off, but I think we talked about 25 million of cost savings since the end of 2018, and obviously we can't see that in the numbers. So maybe that was eaten by the volume declines or inflation. So why take the whole GBP 30 million and drop it down to the bottom line? The second question, I'm not sure if it's for Paul or Joe, it's more, I guess, around our operational risk.
That process of moving R&D talent from wherever it is in the world to Porto, is there any risk about losing people in that process?
Okay, maybe I'll take the-
Yeah
... the questions on the cost. So the answer is the $30 million of cost is a little bit different to the previous $25 million, in that a lot of the $25 million before that you referenced was some of it was in variable costs, sort of procurement costs and continuous improvement costs. We did deliver on those cost programs. I agree it's not always very visible in the various moving parts of the organization. I'll make two points there about the $30 million going forward, Matt. First of all, the large majority of that is cash-fixed costs. It is incredibly well-underpinned by the programs, the very detailed programs we've got underway. The $20 million is the largest part of that.
That is very much in action at the moment, so we are, we are highly confident of delivering that. What I would say is, inevitably, as, as the years progress, you get, you get some inflation in the system, and that may be where you're heading with your question of, Well, what happens with that? I think the way we associate that is with, with our revenue growth. We've, we've been incredibly successful at pricing over the past few years, and you, you'll, you'll be able to have seen that in the numbers. So if in the event there is inflation of any material kind, we would expect to cover that in our pricing activity. So that's why, you know, you could net off some inflation, modest inflation, off the net GBP 90 million.
We see the GBP 30 million in a sort of separate category, and we're very, very confident in delivering that.
Yeah, I would just say, you know, pricing management, we spend a lot of time on it, and it's one of the reasons why innovation, continued innovation is so important because it gives you that leverage. And yeah, we've, we have exercised it. We've had to exercise it. Inflation's not going back to 2% anytime soon, so it's a, it's an ongoing thing. You wanna take the Porto one?
Yeah, yeah. We'll talk a little bit about that. I mean, it's... You could imagine that's heavy on my mind. It's exactly the thing that we want to de-risk. And, you know, we've put a lot of effort and planning into this process. So we have a global organization that was mentioned many times. So our expertise resides not just in one place, so we've actually spread our expertise amongst the main regions that we have, and we have functional labs in each of these regions. So we have also built in a substantial amount of transition period. We are not closing a facility and then starting a facility and assume things will transfer. We have years of experience within our organization. We will be losing some of this experience, but we have a long transition period built in, with a considerable amount of overlap time and cross-training.
We're bringing in some third-party consultants to facilitate knowledge transfer, and we're actually starting to look into AI a little bit to say all of this data that we've generated over the last, you know, 80 years of Elementis or longer, that we have documented somewhere, how do we make this searchable and accessible? So while it's gonna be difficult and challenging, you know, we are thinking we're doing the right things right now, and especially leveraging this technology approach will actually make us more efficient globally. So while it is quite a challenge to do this, we will reach out to other regions to do the support. We will do the cross-training, and we anticipate we're gonna have a bit of a bump in the road, but we're not gonna slow down.
We're still gonna deliver on our 15-20 product launches per year and drive that innovation sales up as quickly as we can.
Hi, James Thorne from Columbia Threadneedle. Paul, thank you very much for those targets. It's incredibly helpful. Could I just clarify in terms of the base level that you're talking about, in terms of no improvement in the market, what, what are you taking that as? Is that H1 2023 as, as a base level, or is it the run rate to this, the end of this year, as, as the sort of the volume in the market that you're using? And, and in some of those markets, are you still seeing destocking? What are you assuming in terms of that destocking in terms of your targets for 2026 and no market improvement?
You'll get a better answer from Ralph than me probably on that base question. But I think on the destocking one, what I would say to you is, it feels like inventories are squeezed as much as they can possibly be squeezed. And then now we're in a position of awaiting, you know, whether or not consumer demand, industrial demand, is going to start to turn up, and you start to get the confidence to start to restock. And I, you know, I can't put a plan together assuming that's going to come at some particular date. It doesn't put enough pressure on the Elementis system because it may not happen that way, and something else might happen. I mean, the last three and a half years have been very instructive. As far as the base-
Yeah, I think, I think the simplest way we're thinking about the base is it's middle of November now. We've got good visibility for the rest of the year. We've given the consensus number, so I think it's simplest to take it off the full year 2023.
Hi, I'm Amy Leanne, Barclays. Thank you for taking my questions. I've got two, please. First one, could you talk a bit, please, about your margin targets by a segment level, so Personal Care, coatings, and Talc, in the context of your new group level target? And secondly, for your revenue growth target, can we think of any of that as already locked in with customer contracts and new business launches that are already going to be due in certain years? And maybe talk about the phasing about that as well, please, if possible. Thank you.
Stijn, you want to cover Personal Care?
Yes. Happy to do so. Thanks for the question. So as you have seen from the presentation, we currently are trending around 25% margins, and it's definitely our intention to bring that up. We've talked about the innovation, we've talked about the efficiency programs, so we are targeting a kind of a sweet spot that is going to be higher than where we are today. On the other hand, I mean, we have been successful through growth as well, so we actually want to find a sweet spot that is not only delivering higher margins, but also allowing us to continue our growth. So we will be somehow careful in the pricing, because we don't want to come in a position that this is gonna prevent us from growing further.
It's definitely higher than where we are today, so above the 25%.
Yeah. And, and Amy, perhaps for coatings to start off with, as I mentioned, last year, we, we had 18% operating margins. Actually, in the first half, slightly above 20%, which was in a very high demand environment. This year, we talked about the destocking, the demand destruction that we've seen, but we still protected our margins in coatings with 14%. And I talked about the transformation, and actually, if you look back before the transformation, when demand was in a very normal or high environment, we were hitting those kinds of 14%, 15% margins. So actually, with the transformation in coatings, we moved our band up to, you know, 14%-20% that we did first half last year.
So obviously, we don't know what demand is going to do, but with all of the projects we have in place, the new business opportunities that we discussed, we see that this business is going to grow, and with that also, we're going to get those margins back to where they were last year earlier. For Talc, I would say, again, demand has been very, very soft this year. Despite demand being so soft, we hit 12%, or we will expect 12% operating margins for the full year. That's self-help. Two things there. One, it's our focus on high-value segments. We talked about those ceramics applications, we talked about the applications in electric vehicle, lightweighting. Those are very high-value segments that we can generate margins that are above our average. And secondly, it's about self-help around cost.
I mean, we work around things, mass recovery in our mines. Take cost out in our, by operational efficiencies. So, you know, not so long ago, we did 17% margins in Talc, 2019. So we focus on helping ourselves, not expecting anything from the market coming back, and by that, just going back to those kinds of levels, right? So that's where our ambition is, that for, for coatings and, and Talc.
Maybe I could just add from a future standpoint. While I can't say we have locked-in figures, at least from an innovation standpoint, but in 2019, we probably had eight joint development product projects. Today, we're 26+. So our customers are coming to work with us, and when they do a joint development project, the expectation is we will solve a problem together, and we will have a long-term sustainable business together. You saw a few examples where we're working with key suppliers today in some different areas. So, you know, I can't give you a number on that, but it's going in a very, very positive direction for us.
Hi, David Farrell from Jefferies. I've got two questions. The first one, I think it's slide seven, you show the evolution of Elementis from 50/50 between commodity chemicals and specialty chemicals. Today, it's 90/10. Could you just explain what that 10% is, as you look into the future, whether or not Elementis could be a 100% specialty chemical company?
Yeah, great question, David. You know, the 10%, we've got—we do some resins business in China that, we've right-sized, and we, we actually, you know, we make pretty good money on it. And so we, we tend to not walk away from things that we make money on. And so we've kind of kept that. Some of the paper business that, that we, we do on the performance specialty side is, also not terribly, differentiated, pretty commodity-oriented, but we have an incredible, short supply chain that gives us a structural advantage, and so the margin, the margin structure is pretty good. We have some products that are kind of—they sell along, with stuff that we do in Personal Care, for example.
And so, you know, they're not—hand on heart, they're not that terribly distinctive, but as part of the recipe of how we go to market for various reasons, they remain 'cause they make financial sense. If something is, you know, just doesn't deliver the kind of returns that we're looking for, you know, we just cut it away.
Okay. Thanks. And then my second question, coming back to margins. Thank you for being honest and giving the targets with no volume recovery, but that's pretty pessimistic. Can you give us a handle on how we should think about the operational leverage in the business if, say, we recovered to 2019 volumes and what the upside scenario could be?
I'll let Ralph take that on.
Yeah. So I mean, it also relates to the cost point that was raised earlier. I think if you look at our gross margin in Elementis, they're, broadly speaking, around the 40% mark. And that's partly because of our investment in capability that we have. Very different to some of the other chemical comps that you'll follow. I think when you're looking at the drop-through from if there is any market recovery, and from the GBP 90 million, we should be looking at a better level of drop-through than that because the unit margins on these more differentiated areas should be stronger. I think if you're thinking about where does the 19% go?
You know, that's why we called it plus rather than a precise number. But, you know, if you went to low, low single digit improvement in revenues, in terms of the CAGR over the period on top of the GBP 90 million, you would get up a couple of percentage points in the margin.
Yeah.
Thank you. Hi, it's Kevin Fogarty from Numis here. Two for me, if I could. We've heard a lot today about innovation, and I just wondered if you could help us kinda make the link between innovation and profitability, i.e., kinda relative to the existing base. And I guess I'm sort of thinking about, you know, some of the opportunities in sort of deco China, adhesives, you know, growing into these areas. I guess you're sort of confident, the sort of margins that are achievable in these areas or at least in line or a premium. You know, they seem like new areas for the business or-
Yeah. Yeah.
At least. And, secondly, just in terms of the efficiency drives, is there any risk to this kind of revenue generation here, i.e., you know, are any of those kind of roles in customer-facing areas that may impact sort of future revenue generation? Or if you could put a bit more color on that, please.
Yeah. Yeah. I'll let Luc talk to the front part of the question.
Yeah.
Go for it.
Yeah, sure. Yeah, so I mean, in terms of innovation, everything we do is about adding value to our customers' formulations that we've seen. So even where there's China coating, decorative coatings, this is the premium segment. We're helping customers there formulate new paints that they have never made before. So, I mean, you've seen Chitra before. She's an encyclopedia about making any kinds of decorative paint. So these customers, these companies, really depend on Chitra and her team's help. I'm saying that because that allows us to generate certain margins that are actually above the average margin that we generate today. So everything we do, all of the projects we have in the pipeline, is actually accretive to what we do today. Typically, five percentage points or above. But we—I mean, you mentioned construction additives. We play in this niche tile mortars, for example.
We sell hectorite products that's even higher than that. And, so they're industrial applications, but they're highly specialized. It's about adding value through our specific knowledge and formulation, so we are able to generate margins that are above, so all of this will be accretive. Yeah, I'm not gonna do anything that's going to be dilutive to what we have today.
Hey, Chris, I'll just... Chris Sheppard, our Head of HR, just ask you to answer the second half of that question, since you've spent nine plus months worrying about this.
Yeah, so the way, the way we've approached the Fit for the Future piece is really around protecting, as best we can, the key commercial skills. So as you can imagine, in a change program such as that, a lot of the back office function, the way you, you look for your efficiency savings. So we approached it right from the start, being very, very targeted in terms of what we're gonna protect within this, optimize the organization, look at where the savings can come from, and take it from there. So I think the risk around commercial skills, both the skills and the, the geographic sort of expansion that we might want to make within the sales areas is, is protected.
Any questions? Go ahead.
Hi there. Alex Savvides, JO Hambro. Hi, Paul. Can you present a new business case for Talc? You haven't really talked about it in detail today. Just reflecting back on the 2019 presentation, some of the new markets that you wanted to get involved in, barrier coatings, for example. I think you mentioned technical ceramics back in 2019. How's that developed? You haven't talked about barrier coatings today. Is there a... You know, you invested $500 million in Talc, plus then costs on top, to restructure, et cetera. Is there an effective business case that gets you to a, an adequate return on capital for that business? Thank you.
Yeah, I think that where we're at right now is to continue to drive the recovery on Talc. And, you know, we see that we're, you know, 6%-7% return on capital employed. We, we can get, we can get past double digits. Getting back to the kind of margins and profits that we saw in 2019. Clearly, some of the demand interrupters, I guess is what I would call it, have been pretty substantial in the business. But the areas that Luc was talking about continue to be really, really great opportunities, and we think all other things being equal, the smartest thing to do is to continue to fully recover the profitability. So the barrier coatings is an interesting one-
Yeah.
that I know you can talk to.
Yeah, absolutely, and, and Alex, you're right. It hasn't gone as fast as we would have hoped to when we spoken in 2019. And it's a very technically challenging application, but I will say that this year we have finally launched, or I'd say landed a piece of business at a couple of large customers. So it's taken a few years, but we're getting there, and for me, when I look at how these kinds of technical specialty businesses work, that's when you scale. We were just talking about the one-coat hide, how we've scaled that. Well, same here. You land a first customer, proof- of- concept, and then we scale it. So yeah, we've invoiced this first customer, started, I think, earlier this year, and now from here onwards and upwards.
But it hasn't gone as fast as we would have hoped to. Ceramics, same there. Highly technical, we're there at the brink of scaling that business, or I should say, multiplying the successes we've already got. That's a business that's much, much more substantial than the barrier coatings, where we really started this year. But, you know, there is a handful of large customers, and we're at the brink of landing one of those, very imminently.
Other questions? Okay. Thanks very much for your attention. We appreciate your time, and I think... Am I supposed to hand this over to Eva? Yes.
There are no questions online.
Okay, fantastic. Then we can go have a drink, is that right?
Do you need one, Paul?
All right.
We conclude the webcast presentation. Thank you all attending online and in the room.
Mm-hmm.