Air Products And Chemicals, Inc. · NYSE:APD
Air Products And Chemicals — KeyBanc Capital Markets Basic Materials Conference 2011
30 slides from Air Products And Chemicals's conference presentation, September 2011
Slide 1: Strategy for Success
Strategy for Success Innovation, Integration and Improvement John Marsland Senior Vice President and General Manager Electronics, Performance Materials and Supply Chain KeyBanc Capital Markets Basic Materials Conference Boston, September 2011 1
Slide 2: Forward Looking Statement
Forward Looking Statement NOTE: This presentation contains "forward-looking statements" within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including earnings guidance, projections and targets. These forward-looking statements are based on management's reasonab
Slide 3: Air Products At a Glance
Air Products At a Glance • $9B in revenues across diverse markets and geographies • Positioned for continued long-term value creation Food Healthcare 4% Asia U.S. Energy 22% 7% 39% 23% Metals 9% Other 9% Electronics 15% Europe 32% Manufacturing 14% Canada/L.A. Chemicals 7% 19% 3
Slide 4: Air Products Supply Modes
Air Products Supply Modes Stability and Profitable Growth Onsite/Pipeline Package Gases & Specialty Materials 27% 40% 12% 21% 15-20 year Contracts Short-Term Contracts Limited Volume Risk Differentiated Positions Energy Pass through Equipment & Onsite/Pipeline Liquid/Bulk Services Packaged Gases & S
Slide 5: A Strategy for Success
A Strategy for Success Winning in energy, environmental and emerging Markets Executing on innovation, integration and improvement Actions Delivering on revenue, margin and return Goals Generating Shareholder Value 5
Slide 6: Winning in the Markets Accelerating Growth
Winning in the Markets Accelerating Growth Air Products Advantage Global Trends Customers Productivity Quality Industrial Gas Fundamentals Applications Environmental Needs Efficiency 6
Slide 7: Global Trends Drive Growth
Global Trends Drive Growth Increasing Environmental Emerging Digital Energy Demand Focus Markets Revolution • Refining • Refining • Metals • Semiconductor • Gasification • Glass • Chemicals • Display • Coatings & • Food Construction • Electronics 7
Slide 8: Global Industrial Gas Market Growth
Global Industrial Gas Market Growth Annual Growth 9% $96 Billion 35 Energy Electronics 6% 7% 10% 11% 30 Food 10% 8% 25 Chemicals Billions ($) 9% Healthcare 14% 20 12% 7% 15 12% 10 Metals 12% 5 8% Manufacturing 0 38% Sales Growth 2015 8
Slide 9: Air Products Market Exposure 2010
Air Products Market Exposure 2010 Market $63 Billion APD $9 Billion Energy Food Food 9% 9% Healthcare 4% Electronics Energy Healthcare 7% 10% 23% 8% Metals 9% Metals Chemicals 12% 13% Electronics 15% Manufacturing 23% Manufacturing Chemicals 39% 19% ~9% Growth ~10-11% Growth 9
Slide 10: Profitable Joint Ventures in High Growth Regions
Air Products Advantage: Profitable Joint Ventures in High Growth Regions Mexico Italy South Africa India Thailand $2.3B revenue on 100% basis 10
Slide 11: Accelerating Air Products Growth
Accelerating Air Products Growth % Growth Component Increase Market Growth 9% Air Products Market Position 1%-2% Consolidation / M&A 1%-2% Total 11-13% 11
Slide 12: Air Products Advantage: Hydrogen Leadership
Air Products Advantage: Hydrogen Leadership 12 Major Hydrogen Pipelines Onsite H2 Market 10 8 BSCFD 6 • US Gulf Coast 4 • Southern California • Edmonton, Alberta, Canada 2 • Sarnia, Ontario, Canada 0 • Rotterdam, Netherlands 2001 2010 2020 #1 market share for over two decades 12
Slide 13: Hydrogen Geographies Are Expanding over the Next Decade
Hydrogen Geographies Are Expanding over the Next Decade… Hydrogen Capacity (SOG plus Captive) 12 10 8 BSCFD 6 4 2 2020 = 32 BSCFD 2010 = 23 BSCFD 0 NAFTA LASA Europe Middle Asia Oppty = 10 BSCFD (new/replace/acquire) East 13
Slide 14: Integrated Gulf Coast Pipeline Drives Efficiency and Reliability
Integrated Gulf Coast Pipeline Drives Efficiency and Reliability • >1 billion SCFD of capacity • >20 operating plants • >600 miles of pipeline • On-stream 2012 Enhances leadership position in world’s largest refining market 14
Slide 15: Oxygen Growth driven by Asia over the Next Decade
Oxygen Growth driven by Asia over the Next Decade… Oxygen Capacity (SOG plus captive) 1,200 1,000 Thousand Tons per Day 800 600 400 200 2020 = 1.8 M TPD 2010 = 1.2 M TPD 0 Oppty = 0.9 M TPD NAFTA LASA Europe Middle Asia (new/replace/acquire) East 15
Slide 16: Strong global bid and project activity
Strong global bid and project activity: O2 : LaPorte, TX H2 : O2: Xingtai Steel Middletown, OH Detroit, MI Hebei, China Granite City, IL O2: PCEC H2: PetroChina Shaanxi, China Sichuan, China H2: ExxonMobil N2: Rotterdam, Korea N2: Samsung The Netherlands Taiwan Austin, TX O2: Arcelor Mittal Liquefie
Slide 17: Air Products Advantage: Asia Merchant Leadership
Air Products Advantage: Asia Merchant Leadership Asia 2011 Manufacturing Output #1 China #1 Korea #1 India #1 Taiwan 70% Countries #2 Thailand where #2 Air Products has #1 or #2 Malaysia positions #1 positions in high growth markets 17
Slide 18: Driving Profits through Innovation
Driving Profits through Innovation Responding to Market Needs Low cost start-up Safer, more convenient Improved yield, lower emission food freezing solutions welding & cutting aluminum production Advanced Low Freshline® QS Freezer Integra® Cylinder Emission Aluminum Melting 18
Slide 19: Electronics reported Revenue > $1 Billion
Electronics reported Revenue > $1Billion plus $0.3B in Merchant FY10 Overall Specialty Gases Enabling Equipment Revenue & Chemicals 47% 8% 23% 22% Onsite Gas Services Onsite Gas Supply Liquid/Bulk Supply Specialty Gases & Chemicals Enabling Equipment Liquid / Bulk 19
Slide 20: Air Products Advantage: Electronics Leadership
Air Products Advantage: Electronics Leadership #1 in Taiwan ROW #1 #1 in U.S. in Korea 300mm Fab Capacity Key customer and geographic positions 20
Slide 21: Performance Materials
Performance Materials Growth through Differentiation • ~$0.9 Billion in FY’10 sales • 4 major product lines - Polyurethane additives - Epoxy curing agents - Specialty surfactants - Functional additives • Focused on bringing differentiated performance to our customers’ products • Low competitive inte
Slide 22: A Culture of Improvement Delivers Results
A Culture of Improvement Delivers Results • Investment in people, process and tools • Leadership accountability and individual responsibility • Data-driven Growth Productivity Pricing • New offerings • Product cost reduction • Pricing tools and • Capacity expansions • Distribution efficiency skills
Slide 23: Revenue Growth, Operating Margin, Return on Capital Targets
Revenue Operating Return on Growth Margin Capital 11%-13% per year 20% 15% From $9B From 16.5% From 12.5% in 2010 in 2010 in 2010 to to to $15B+ in 2015 20% in 2015 15% in 2015 23
Slide 24: Roadmap to 20% Margin
Roadmap to 20% Margin 22 20% 20 1% Productivity Operating Margin (%) 2% Growth 18 16 14 17% 17% 12 10 2011 2015 24
Slide 25: Driving Returns Higher
Driving Returns Higher 16 15% 15 .5% Capital Turnover 14 1% Margin Improvement ROCE (%) 13 12 13.5% 13.5% 11 10 2011 2015 25
Slide 26: Driving Capital Cost Lower
Driving Capital Cost Lower Large ASU Electronics Nitrogen 120 120 Capital Cost Index Capital Cost Index 100 >50% 100 >30% Savings Savings 80 80 60 60 40 40 20 20 2009 2010 2012 2015 2009 2010 2012 2015 26
Slide 27: Strong Growth Opportunities Drive Disciplined Investment
Strong Growth Opportunities Drive Disciplined Investment Maintenance 15% Acquisition 15% Growth 70% $13-14B Capital Spending - 2011 to 2015 27
Slide 28: Cash Priorities Remain Consistent
Cash Priorities Remain Consistent • Invest in the best $2.00 return projects 29 years of dividend increase • Maintain A bond rating $1.50 • Dividend increase each year $1.00 • Share repurchase with excess cash $0.50 $0.00 28
Slide 29: Outlook
Outlook FQ4 2011 EPS $1.48-$1.53 • Higher Merchant and Tonnage volumes • Lower Tonnage maintenance costs • Higher tax rate FY 2011 EPS $5.70-$5.75* • CapEx forecast ~$1.6B-$1.7B • Tax rate guidance unchanged, ~25%-26% *Non-GAAP, excludes $0.14 of acquisition costs 29
Slide 30: $15+ Billion in Sales by 2015
2015 2015 by $15+ Billion in Sales 20% Operating Margin 15% Return on Capital Employed 30
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