Celanese Corporation · NYSE:CE
Celanese — Investor Day (December 2005)
167 slides from Celanese's investor day presentation, Dec 14, 2005
Slide 1: Accelerating Celanese - Investor Day
Ac elerating Celanese Celanese Investor Day December 13, 2005 St. Regis Hotel, New York
Slide 2: Forward Looking Statements, Reconciliation and Use of Non-GAAP Measures
This release reflects three performance measures, net debt, adjusted EBITDA, and diluted adjusted earnings per share as non-U.S. GAAP measures. The most directly comparable financial measure presented in accordance with U.S. GAAP in our consolidated financial statements for net debt is total debt; f
Slide 3: Today's Agenda
Today’s Agenda 12:15pm Lunch 11:30am Dave Weidman Wrap up/Q&A 11:10am John Gallagher Building a Case for Value 10:55am Josh Cheng Focus on China 10:25am Lyndon Cole Performance Driven Solutions 10:10am Jim Alder Controlling the Controllables Q&A/Break 9:20am Doug Madden Positioning for the Future 9:
Slide 4: Accelerating Celanese
Accelerating Celanese David Weidman, President and CEO
Slide 5: Hybrid: Today
Hybrid Serving numerous markets with differing profit drivers Downstream Basic Today 2005 Projected Revenue ~50% ~50%
Slide 6: Hybrid: Tomorrow
50% 50% Hybrid Moving to higher value added segments Downstream Basic Tomorrow Projected Revenue
Slide 7: Integrated: Optionality drives value
Engineered Plastics Merchant sales Basic Products Downstream Products Formaldehyde Acetic Acid Anhydride and esters VAM Acetate Nutrinova Emulsions Building Block Integrated Methanol Optionality drives value
Slide 8: Integrated: Extending the value chain
Nutrinova Engineered Plastics Acetate Emulsions Merchant sales Basic Products Downstream Products Formaldehyde Anhydride and esters VAM Acetic Acid Building Block Areas for Potential Bolt- on Acquisitions Areas for Potential Bolt- on Acquisitions Integrated Extending the value chain for even greater
Slide 9: Global Today
Asia Europe North America Global Today Well positioned in key regions *Percentage of 2005 Celanese projected net sales and Celanese share of equity and cost investments. 20% * 40% * 40% *
Slide 10: Our Global Profile Tomorrow
33% of Sales in Asia Our Global Profile Tomorrow Continue with joint ventures Nanjing Complex New GUR plant Building our presence in growth regions KEPCO, Polyplastics subsidiary, Taiwan. Korea Engineering Plastics Zhuhai and Kunming Fibers Co. Polyplastics Polyplastics, Malaysia Celanese Chemicals,
Slide 11: Market Leader Today
Chemical Products Ticona Acetate Nutrinova Market Leader Today 2005 Sales 85% Leading with a customer focused culture Polyacetal UHMW PE* Liquid crystal polymers Sunett Acetic Acid Vinyl Acetate Acetic Anhydride VAE Emulsions PVOH Carboxylic Acids Products holding #1 or #2 positions: Acetate filter
Slide 12: Better Positioned Tomorrow
Chemical Products Ticona Acetate Nutrinova Better Positioned Tomorrow Future Total Sales - 95% Products holding #1 or #2 positions Continue to focus the portfolio
Slide 13: Best-in-Class Technology Today
Best-in-Class Technology Today Acetic Acid: Lowest Cost Producer $ per ton (full cash cost) 1,000 5,000 7,000 9,000 3,000 By-prod AO Plus TM /Leading Competition Conventional MeOH/CO LPO/Naphtha Acetaldehyde Ethanol Celanese
Slide 14: Nanjing - Lowest Cost Integrated Acetyls Complex
Acetic Acid Unit VAM Unit Admin & Control Room VAE Ware- house Waste Water Power Substation Nanjing – Lowest Cost Integrated Acetyls Complex Flare Integrated Low cost technology Advantaged feedstock Coal-based CO Expandable technology Methanol CO Finished Products $600 million+ in revenue from Nanji
Slide 15: Leadership: Execution Today
Leadership Execution Today Productivity improvement versus peer group Celanese has outperformed peers in productivity 0% 5% 10% 15% 20% 2000 First Half 2005 Celanese Peer Average
Slide 16: Culture of Continuous Improvement
Culture of Continuous Improvement Productivity improvement versus peer group Objective is to outperform peer group by 150 -200 bps per year 0% 5% 10% 15% 20% 2000 Future Celanese Peer Average First Half 2005
Slide 17: Cash Generative - Today
Cash Generative – Today Free Cash Flow *Operating cash flow minus capital expenditures **Excludes $474 million in excess pension contributions 2003 2004* mths 2005 Cash flow positive over operating cycle
Slide 18: Cash Generative - Tomorrow
Cash Generative – Tomorrow Free Cash Flow* *Operating cash flow minus capital expenditures **Excludes $474 million in excess pension contributions Range of Cash 2003 2004** mths 2005 Representative Cash Flow Strong free cash flow generation ’05 to ‘07
Slide 19: Defining areas for potential substitution
VAM / Veova Styrene Acrylate VAE Vinyl Acrylic Pure Acrylic Defining areas for potential substitution Basis of Competing Systems: VAM Acrylate Styrene Markets: Paint & Coatings Adhesives Paper Competing Emulsions Systems Paint & Coatings Systems
Slide 20: Celanese acetyls core based on methanol and ethylene
Ethylene & Methanol Propylene Benzene & Ethylene BASIS Methanol + CO Acetic Acid Acetic Acid + Ethylene + Oxygen Vinyl Acetate Propylene + Oxygen (Air) Acrylic Acid Acrylic Acid + Butanol Butyl Acrylate Benzene + Ethylene Ethylbenzene Ethylbenzene Styrene + H2 Celanese acetyls core based on methanol
Slide 21: Market Drivers: Shift to stranded gas methanol
Market Drivers: Shift to ‘stranded gas’, low cost methanol Celanese captured shift early with Southern Chemical contract * Based on CMAI Data, December 2005 Methanol Price Methanol Price History & Forecast* $0 $50 $100 $150 $200 $250 $300 $350 2003 2004 2005 2006 2007 2008 2009 T2 W Europe US Gulf
Slide 22: Ethylene to Propylene Ratio Declining
Ethylene to Propylene Ratio Declining Market Drivers: Low cost technology produces ethylene & propylene as co- products Propylene demand growth higher than ethylene Dedicated propylene production technology – higher cost technology * Based on CMAI Propylene and Ethylene Data, December 2005 Potential
Slide 23: Opportunities for Substitution
Opportunities for Substitution * CG propylene price based near parity to ethylene price Feed and utility costs of downstream products, $/ton VAM with MeOH at alternate fuel value Butyl acrylate Styrene butadiene (55% styrene) Potential for customer shift creating additional growth Higher crude oil d
Slide 24: Attractive Value Proposition
Attractive Value Proposition Improving leadership in attractive businesses Strong, profitable presence in Asia – and increasingly so Vast majority of sales from leading products – moving higher in the future Best-in-class technology – and increasing the advantage Tremendous cash flow generation Hist
Slide 25: Acetyls: Building on Competitive Advantage
Acetyls Building on Competitive Advantage John O’Dwyer, President, Acetyls
Slide 26: Integrated value chain: Acetyls
Engineered Plastics Acetate Emulsions Merchant sales Basic Products Downstream Products Formaldehyde VAM Acetic Acid Anhydride and esters Nutrinova Building Block Acetic Acid Acetate Anhydride and esters Integrated Methanol
Slide 27: Acetyls
Acetyls We like this business Recent announcements Supply/Demand Fundamentals
Slide 28: Celanese is the Market Leader
Acetic Acid Producers Total capacity 10,000 kt Total capacity 5,500 kt VAM Producers Source: Tecnon, Celanese (2005 estimates) Celanese is the Market Leader Celanese 27% BP 23% Others 32% Jilin 2% Eastman 3% Daicel 3% Lyondell 5% Showa 1% SOPO 4% Celanese 29% Dow 9% Lyondell 7% Dairen 6% BP 6% Nippo
Slide 29: Strong global presence in key regions
ASIA EUROPE AMERICAS Singapore Acid = 600 VAM = VAM 1,200 1,490 Acetic Acid Frankfurt VAM = Tarragona VAM = 200 Bay City VAM = Clear Lake Acid = 1,200 VAM = 310 Cangrejera VAM = Anhydride = 90 Strong global presence in key regions France Acid = VAM = 150 Anhydride = 30 Under consideration Nanjing Ac
Slide 30: Technology Differentiates the Competition
Technology Differentiates the Competition * Source: Celanese Q4 estimates, 2005 AO Plus™ provides capital efficiency and unmatched operating cost advantage Cost Curve based on Effective Capacity* kt 2,000 6,000 8,000 10,000 4,000 By-prod AO Plus™/Leading Competition Conventional MeOH /CO LPO/Naphtha
Slide 31: Continued Focus on Process Technology
10 20 30 40 50 60 * Unique patents only Continued Focus on Process Technology Protecting our competitive advantage Total Number of Methanol Carbonylation Issued Patents* Dow & Eastman Daicel Celanese & BP
Slide 32: VAntage Technology Delivers Competitive Advantage
2005 VAM Capacity Added, kt/yr. 2004 2003 Plant VAntage ™ Technology Delivers Competitive Advantage via Low Cost Growth Tarragona Total Singapore Frankfurt Clear Lake Cangrejera Bay City New Production Capacity Records Established VAntage Plus ™ technology to widen the gap in 2006 Note: VAntage™ use
Slide 33: Raw Material Cost Advantages
Raw Material Cost Advantages Drive Further Differentiation Methanol Favorable contracts in North America and Europe Large-buyer leverage in Asia Cost investment in Ibn Sina (Saudi Arabia) Carbon Monoxide Dual supply sources in US Gulf Coast Coal-based co-product economics in China Ethylene Cost base
Slide 34: Why we like Acetyls
Why we like Acetyls Clear Market Leader Strong Global Presence Leading Technology Advantaged Feedstocks
Slide 35: Recent Celanese Announcements
Recent Celanese Announcements 1. Construction of VAM plant adjacent to acetic acid plant in Nanjing, China 2. Temporarily suspend the Saudi acetyl project 3. Pursuing strategic alternatives for butane-based production in Pampa 4. Implementation of VAntage™ capacities and introduction of VAntage Plus
Slide 36: Nanjing - Lowest Cost Integrated Acetyls Complex
Acetic Acid Unit VAM Unit Admin & Control Room Power Substation VAE Ware- house Waste Water Nanjing – Lowest Cost Integrated Acetyls Complex Flare Integrated Low Cost Technology Advantaged Feedstock Expandable technology platform $600 million+ in revenue from Nanjing products Methanol CO Finished Pr
Slide 37: Public Data Sources Have Raised Concerns about Capacity Additions
Public Data Sources Have Raised Concerns about Capacity Additions Celanese does not support this view Nameplate: 82% 80% 80% 76% 76% Effective: 91% 89% 89% 84% 84% Source: Available Public Data Acetic Acid
Slide 38: Many New Acetic Acid Projects Announced
Commentary Startup Date Capacity Company Many New Acetic Acid Projects Have Been Announced Now commercializing June 2005 200KT Lunan Rumored to have started commissioning Start 2005 150KT Fanavaran Construction not yet started Early 2007 500KT BP/Sinopec Target start up Q1 2007 Late ’06/Early ‘07 60
Slide 39: Stronger Supply/Demand Balance Expected
Celanese Expects a Stronger Supply/Demand Balance Celanese View 1 : 91% 93% 92% 92% 91% Public Data View 2 : 91% 89% 89% 84% 84% High effective capacity utilization through 2008 1 Based on effective capacity at 90% of nameplate (Celanese estimate) 2 Source: Available Public Data
Slide 40: Vinyl Acetate Supply/Demand Outlook
Dairen 350 kta Celanese Nanjing 300 kta Vinyl Acetate Supply/Demand Outlook Offers Attractive Scenario *Based on effective capacity at 94% of nameplate Capacity Utilization*: 97% 98% 94% 97% 95% Only incremental additions and Celanese Nanjing expected in this timeframe.
Slide 41: VAM Fundamentals Going Forward are Favorable
VAM Fundamentals Going Forward are Favorable Acrylate overbuild from early 2000’s now fully absorbed and prices are up significantly Ethylene: Propylene price ratio is moving toward 1:1 making VAM more competitive VAM capital costs are a fraction of the capital costs for an acrylic acid unit Polymer
Slide 42: Acetyls - Building on Success
Acetyls - Building on Success Strong market position, advantaged technology, and favorable cost position Committed to maintaining #1 position Favorable industry fundamentals through 2008 Creating a strong base for integrated chain
Slide 43: Value of a Hybrid Chemical Business
Value of a Hybrid Chemical Business Bill Massa Vice President/General Manager
Slide 44: Integrated Downstream value
Acetic Acid Emulsions Engineered Plastics Basic Products Downstream Products Formaldehyde Anhydride and esters VAM Acetate Nutrinova Merchant sales Building Block Integrated Downstream value Methanol
Slide 45: Value of a Hybrid Chemical Company
Value of a Hybrid Chemical Company Vinyl Acetate Ethylene (VAE) margin is countercyclical to VAM market price 2000 2001 2002 2003 2004 2005 VAM Cost Component VAE Margin Index Q1 2000 = 100 Source: ICIS Europe and Celanese Estimates
Slide 46: Adding Value Through Downstream Acquisitions
24% of Net Sales $1 Billion downstream business built through strong acquisitions Growth beyond organic Bought well Profitable growth opportunities Making acquisitions work Adding Value Through Downstream Acquisitions 1999 Basic Chemicals Basic Growth to 2005 * Source: 2005 Celanese Chemicals Sales
Slide 47: Strong Global Presence - Only Integrated Supplier
China - Announced July, 2005 - Production 2007 China plant Enoree, SC Meredosia, IL Bridgewater, NJ Boucherville/Can Warrington/UK Geleen/NL Vinamul Perstorp / Sweden Frankfurt / Germany Koper / Slovenia Clariant Tarragona / Spain Pasadena, TX Calvert City, KY Air Products Strong Global Presence – O
Slide 48: Vinyl Emulsion Leadership
Others Total (bn lbs.) BASF Air Products Dow Rohm & Haas Celanese 13.2 37% 9% 10% 9% 21% 14% Total (% ) Source: Kline and Company 2004 / Internal Data SBR and Minor Latexes omitted Celanese #1 in advantaged vinyl systems - = no sales *= not in top 4 n.a.=not applicable Pan Atlantic Emulsions Vinyl E
Slide 49: Celanese Products In Our Daily Lives
Paints & Coatings Adhesives Low-VOC paint Wooden Frame Engineered Fabrics Other Fire-retardant wallpaper Glass Fiber Tempered glass Ceiling tiles Wood table Emerging 2% 3% 4% 7% 12% Paper & Textile Flipchart Carpet backing Clothing Celanese Products In Our Daily Lives 43% 29% Source: Internal Data
Slide 50: Leading European Architectural Coatings Market with VAE
VAM Copolymer All Acrylics Styrene Acrylics Leading the European Architectural Coatings Market with VAE Technology Celanese Advantage Strong sales & technical services network R&D and manufacturing excellence Pressure to reduce VOCs Celanese has 80% market share in solvent-free paints 11% Growth in
Slide 51: Translating Paint Success to North America
VAE VAM Copolymer All Acrylics Source: Kline and Company / BTA / Company Data Favorable substitution fuels growth Translating Paint Success to North America Advantage of VAE over Vinyl Acrylic Better value proposition for paint producers Durability / Performance Lower VOC Levels Why Low VOC? Increas
Slide 52: Consumer Wipes: Engineered Fabrics Market
Consumer Wipes Engineered Fabrics Market Global market - $3 billion CAGR: 8.5% Solid intellectual property position Highest new product segment 2 nd highest margin segment U.S. Market $1.2 billion CAGR 19% CAGR 8% CAGR-1% Celanese is market leader in growing segment Source: US & European Industry As
Slide 53: Composite Reinforcement Glass Fiber
Composite Reinforcement Glass Fiber Global market– $200 million CAGR: 3-5% Step out new product technology Global availability and consistency CE targeting new sub-segments Highest margin segment in portfolio China fastest growing region Source: Celanese estimates
Slide 54: Strong Growth Position in China
Strong Growth Position in China Source: Kline and Company, Chinese Government & Industry Associations 0% 5% 10% 15% 20% 25% 30% Adhesives Coatings Glass Fiber Eng. Fabrics Annual Growth Rate * Only fully integrated acetyls business in the region China emulsions market - $1.9 billion in 2007 Highest
Slide 55: Research & Development: Optimizing Global Network
5 1 3 2 1 1 6 1 4 1 1 1 1 3 Research & Development Optimizing Global Network Today: 7 Global Centers of Excellence Acquisition: 24 Labs Adhesives Engineered Fabrics Paints & Coatings Glass Fiber Paper Textiles Emerging Markets
Slide 56: Innovation Pipeline
Innovation Pipeline Investing in the Future Today Scale-Up At Acquisition Scoping Business Case Lab Development Commercialization Initial Idea Development Commercialization Pipeline revitalization well underway
Slide 57: Innovation Impact
Target: 20 + % Innovation Impact Sales Percentage of New Products, Applications & Translations created in last 5 years Higher Margins Stronger Growth Sustainable Competitive Advantage Growth through strong pipeline
Slide 58: Increasing Sales and Increasing Margins
Target Increasing Sales and Increasing Margins 2001 2002 2003 2004 2005 2006 2007 CAGR 4-6% Clariant Vinamul & Acetex Air Products 2008 2009 China Plant
Slide 59: Sustainable Competitive Advantage
Sustainable Competitive Advantage Fully integrated acetyl chain – unlike competitors Market driven innovation – growing size and share of pie Capture value in strong markets – increasing leadership Well positioned in growing markets – China A hybrid chemical business… Accelerating into the future
Slide 60: Positioning for the Future - Celanese Acetate
Doug Madden President, Celanese Acetate Positioning for the Future
Slide 61: Integrated value chain: Acetate
Engineered Plastics Acetate Emulsions Merchant sales Basic Products Downstream Products Formaldehyde VAM Acetic Acid Anhydride and esters Nutrinova Building Block Acetic Acid Acetate Anhydride and esters Integrated Methanol
Slide 62: Acetate Industry Value Chain
Film 2-4% growth Filament 5% decline Plastics Flat growth Tow 2-3% growth Di-Acetate Flake Wood Pulp Acid & Anhydride Acetate Industry Value Chain Raw Materials Intermediates Derivatives Cigarette filters Pen filters Various consumer & industrial end-uses Clothing Home furnishings Window cartons “In
Slide 63: Product Overview and Global Reach
Product Overview and Global Reach Produce Acetate flake and tow used principally in the manufacture of textiles and cigarette filters Tow – 90% of sales Flake – 10% of sales #1 worldwide producer of Acetate flake and tow, with joint ventures in China Acetate Tow Acetate Flake
Slide 64: Case for Revitalization
Challenges – pre 2004 Opportunities – 2007 forward Efficient network of 3 sites: Narrows, USA; Mexico; Belgium Complex and costly manufacturing footprint in N. America and Europe Case for Revitalization Improve performance and cash generation Cash generation: EBITDA + JV dividends ~$85mm-95mm Cash g
Slide 65: Acetate Restructuring
China JV’s Belgium Narrows, US Mexico Acetate Restructuring Focus on strategic tow business following restructuring End-state Configuration Closed na. na. Rock Hill, US expand na. Close ‘07 Flake na. na. Closed Closed na. Filament expand Closed Tow Canada Optimizing Geographic Footprint and Exit Fil
Slide 66: Acetate Revitalization Path
Acetate Revitalization Path Timeframe 2002 2003 2004 2005 2006 2007 A Solid Foundation Restructuring/Repositioning Joint venture tow expansions Filament exit / site optimization Beyond 2007 Maximize cash generation Selective & sustainable growth Joint venture flake expansion Historical Modest cash g
Slide 67: JVs Positioned in Growth Region
Company Asia Tow Capacity (%) JVs Positioned in Growth Region Tow expansions complete Flake expansion on-track 2007 Chinese demand outpacing domestic capacity *includes JV capacity Projected Chinese Tow Demand ** 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Forecast Demand Actual Demand **
Slide 68: Renewal and Selective Growth
Objectives Focus Area Renewal and Selective Growth Acetate resources will be focused on four main project areas Capital efficient and profitable growth Alternative asset deployment Maximum participation in future filter design and material components Application Development Accelerate tow product at
Slide 69: Acetate Earnings Profile
Acetate Earnings Profile $130 mm – $160 mm * EBITDA excluding special charges. ** JV dividends from cost investments
Slide 70: Acetate Summary
Acetate Summary Celanese Acetate is well positioned globally Stable contributor over the cycle Significant restructuring effort on track Step change improvement in performance of cash generation expected Renewal and selective growth efforts: Improve mix and cost position Selective growth expanding f
Slide 71: Celanese
Celanese
Slide 72: Controlling the Controllables
“Controlling the Controllables” Celanese Specific Opportunities Jim Alder, VP – Operations and Technical
Slide 73: Strong Execution Track Record
Strong Execution Track Record EBITDA Margin vs. Peers Excluding Special Charges; Celanese restated 2000-2003 Peer group: Dow, DSM, Eastman, ICI, Lyondell, Methanex, Millennium, Rhodia, Solutia Source: PWC Benchmark data from publicly available data for 2000-2004. Sustained progress versus peers 1,00
Slide 74: Excellence in Manufacturing
Excellence in Manufacturing Forecast “Controlling the controllables” and delivering bottom-line results 35% reduction vs. 2000 20% usage reduction vs. 2001* best-in-class Near best-in-class* best-in-class best-in-class* * Data for Chemicals and Ticona Divisions
Slide 75: Productivity and Performance Culture
Productivity and Performance Culture No longer just projects or initiatives 2001 2002 2003 2004 2005 Shared Services Redesigns Purchasing & Pricing Division SG&A Redesigns Mfg. Work Practices One SAP Energy Excellence Forward Restructuring Maintenance Excellence Six Sigma
Slide 76: Over $400 million opportunity by 2007
> $400 million opportunity by 2007 Extending excellence beyond manufacturing Upside Celanese Specific Opportunities SG&A $125 million opportunity Purchasing $100 million opportunity Acquisitions and synergies Vinamul and Acetex $120 million opportunity plus synergies Synergies upside confirmed Metha
Slide 77: Celanese Specific Opportunities: SG&A
Celanese Specific Opportunities SG&A 2005 progress in many areas Business redesigns Shared services optimization Tighter cost control (i.e. travel) Significant opportunity remains Key enablers defined Headquarter consolidation Financial close process and systems standardization Sarbanes Oxley compli
Slide 78: Celanese Specific Opportunities: Purchasing
Celanese Specific Opportunities Purchasing Initial success in pallets and packaging New and expanded tools Low cost country sourcing E-bidding Rapidly expanding project pipeline On track to achieve $100 million savings E-bidding savings ($ millions) Total Purchasing Savings ($ millions)
Slide 79: Vinamul and Acetex Acquisitions
EPS* $ million Celanese Specific Opportunities Vinamul and Acetex Acquisitions Building capabilities to acquire businesses and increase value Synergies in multiple areas Excellence in manufacturing $0.80 - 0.88 With synergies 2004 Sales $0.56 Base contribution Acquisitions price SG&A Other Manufactu
Slide 80: Celanese: Controlling the Controllables
Celanese: “Controlling the Controllables” Excellence in manufacturing Strong execution track record and productivity culture Clear path for further improvement Capturing Celanese Specific Opportunities, with upside > $400 million opportunity 40% in 2005, balance by 2007 Building acquisition capabili
Slide 81: Performance Driven Solutions: Ticona
Performance Driven Solutions Ticona and the Engineering Polymer Industry Lyndon Cole President, Ticona
Slide 82: Integrated value chain: Ticona
Downstream value Integrated Building Block Basic Products Downstream Products Formaldehyde Engineered Plastics Merchant sales Emulsions VAM Acetate Nutrinova Anhydride and esters Acetic Acid Methanol
Slide 83: Focus on Profitable Growth
Focus on Profitable Growth Volume Development 2001 to 2005, kt 2001 to 2004 volume growth each year 2004 to 2005 essentially flat volume Automotive demand Focus on pricing Long-term sales growth 2x IPI expected Continuous bottom line improvements despite increased raw material costs
Slide 84: The Plastics Landscape
96 % Standard Polymers Global Plastics Consumption Estimate 2004: ~190 MM tons (Growth vs. 2003 = 5.7 %) The Plastics Landscape – Engineering Polymers, a Valuable Piece of the Market Comprising: PA 6 & PA 66, PA 11 and PA 12, PC, POM, PBT, COPE, PET technical, PPE, COC & COP, UHMW-PE, PPS, LCP, High
Slide 85: Engineering Polymers will grow most in Asia and Eastern Europe
Engineering Polymers will grow most in Asia and Eastern Europe CAGR 2005 / 2010 in percent Europe: 5 – 6 % North America: 5 – 6 % Latin America: 9 % Japan: 3 – 4 % Asia without Japan: 9 – 10 % Africa/Middle East: 9 % 2005: 7,985 kt 2010: 11,000 kt CAGR: 6.7 % Source: Global Insight, World Economic O
Slide 86: Strong Global Presence
Strong Global Presence 2004 Sales by Region Strong Network of Affiliates in Asia Europe 28 % America 21 % ROW 2 % Asia/Pacific 49 % Note: Regional split refers to Ticona sales + Polyplastics Sales Suzano / Brazil Kelsterbach, Germany Oberhausen, Germany Seoul / Korea (KEP) Kaoshiung / Taiwan (Polypl
Slide 87: Global Product Position: Polyacetal
Ticona: Global Presence with Strong Leadership Position Our global product position 2,5 2,0 1,5 1,0 0,5 0 #1 2,0 POM Sources: SRI, Tecnon and industry sources Automotive Electronics Consumer Medical Polyacetal (Hostaform®, Celcon®)
Slide 88: Global Product Position: UHMW-PE
Ticona: Global Presence with Strong Leadership Position Our global product position 2,5 2,0 1,5 1,0 0,5 0 #1 2,0 POM #1 0,6 UHMW- PE Sources: SRI, Tecnon and industry sources Battery Separators Industrial Specialties Filtration Medical Ultra-high molecular weight PE (GUR®)
Slide 89: Global Product Position: PPS
Ticona: Global Presence with Strong Leadership Position Our global product position 2,5 2,0 1,5 1,0 0,5 0 #1 2,0 POM #1 0,6 UHMW- PE #2 0,4 PPS Sources: SRI, Tecnon and industry sources Automotive Transportation Fuel Cell Electronics Polyphenylene sulfide (Fortron®)
Slide 90: Global Product Position: Liquid Crystal Polymers
Ticona: Global Presence with Strong Leadership Position Our global product position 2,5 2,0 1,5 1,0 0,5 0 #1 2,0 POM #1 0,3 LCP #1 0,6 UHMW- PE #2 0,4 PPS Sources: SRI, Tecnon and industry sources Electronics Electrical Automotive Medical Liquid Crystal Polymers (Vectra®)
Slide 91: Products distributed across many industries
Ticona’s products are widely distributed across many Industries Note: Bubble size indicates end use segment percentage within product group Data Source: Engineering Thermoplastics Compounds In W-Europe, Applied Market Information (AMI) Ltd., Bristol, UK, 06/03 PA PC PC/ABS Auto – Interior Auto – Und
Slide 92: Ticona's End Use Markets
Volumes by end use market 2004 Sales: $ 863 million Ticona’s End Use Markets Automotive 49 % Electrical & Electronics 6 % Medical 3 % Industrial 10%
Slide 93: Automotive Opportunities: Electrical Systems
Growth and Innovation Opportunities in Automotive Electrical Systems Connectors Power distribution housing Ignition devices Switches Lighting Relays
Slide 94: Automotive Opportunities: Exterior
Exterior Roof Systems Wiper Systems Washing Systems Front-End Growth and Innovation Opportunities in Automotive
Slide 95: Automotive Opportunities: Under the Hood
Under the Hood Air control valves Oil blast circuit breakers Water distribution systems Growth and Innovation Opportunities in Automotive
Slide 96: Automotive Opportunities: Interior
Interior Safety Systems Switching Systems Instrument Panels Seating Systems Pedals Door-Modules Growth and Innovation Opportunities in Automotive
Slide 97: Automotive Opportunities: Fuel Systems
Fuel Systems Conveyor Systems Knock off / knock on nuts Electrical Shielding (ESD) Capless System Pumps Growth and Innovation Opportunities in Automotive
Slide 98: 2006 Chevy Trail Blazer
Eliminated $300,000 + tool change Class ‘A’ appearance out of the mold 7% weight reduction Eliminated paint – Saved $4 per vehicle Celcon ® Low gloss interior door handle surround Growth and Innovation Opportunities – 2006 Chevy Trail Blazer
Slide 99: C6 Corvette
Growth and Innovation Opportunities – C6 Corvette Replaces metal with cost effective Celstran ® composites Molded-in color enhances interior harmony Maximizes cockpit air flow HVAC System
Slide 100: Ticona and Industry Gaining from Innovation
Source: Kunststoffe, 3/2005 - Automobilwoche Ticona and Industry Gaining from Innovation Growth of plastic in percent of car volume – from 6 % in 1970 to 18 % in 2008
Slide 101: Accelerating Growth in Automotive
Assumptions, market data, industrial sources Accelerating Growth in Automotive Innovation Fuels Growth Substitution of metal, glass and other materials Improved existing application fields Development of new application fields Ticona type of resins in lbs per car New Ticona Applications Electrical M
Slide 102: Approach to Global Growth
Ticona – Our Approach to Global Growth: Anticipating Future Customer Needs
Slide 103: Megatrends: Anticipating Future Customer Needs
Individualism Convenience, Comfort Aging Society Environmental Health Care Safety Globalization Mobility Megatrends Anticipating Future Customer Needs
Slide 104: Growth Opportunities in Hybrid Engines
Ticona Materials Enhance Options for Combustion Engines Growth Opportunities in Hybrid Engines Optimized combustion engine Alternative fuels Fuel cell drive Hybrid drive Lightweight construction Replacement of metal Integrated Starter Automated Damper (ISAD) Higher temperatures, pressures, flow rate
Slide 105: Hybrid Car Sales Are Growing
Hybrid Car Sales Are Growing Source: Mercer / Automobilwoche Nov. 2005 Global Drive Concepts Market Share in Cars 2011 Alternate Combustion 7 % Gasoline 70 % Diesel 23 % Global Alternate Combustion Market Share in Cars 2011 Hybrid 24 % Autogas 74 % Fuel Cells 1 % H 2 1 %
Slide 106: Global Growth of Hybrid Cars
Global Growth of Hybrid Cars WMRC, July 2005 2004 2005 2006 2007 2008 2009 2010 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0
Slide 107: Lightweight Construction - Other Sectors
Lightweight Construction – Other Sectors
Slide 108: Growing Significance of Composites in Aircraft
Innovation in Aircraft Construction: Growing Significance of Composites 1980 A 300/310 Share of composites: 8 % 2000 A 340 500/600 Share of composites: 15 % 2004 A 380 Share of composites: 20 % 2010 Passenger aircraft next generation Share of composites : 40 %
Slide 109: Fortron PPS - Success in the aviation industry
Safe, efficient, environmentally friendly Modern design Licensed for aircraft construction New applications from Fortron ® PPS Fortron PPS – Success in the aviation industry Example: Leading edge for the Airbus A 380
Slide 110: Fortron PPS - Keelbeam
Fortron PPS – Keelbeam
Slide 111: Replacing Metal with Composites - Heavy Truck
181 pounds of Celstran per truck Celstran® composite “skeleton” 30 % lighter than metal Saves fuel Increases customer payload/revenue Lightweight construction: Replacing Metal with Composites – Heavy Truck – Body Panel Structural Framework Integrated front-end module
Slide 112: Medical Markets - Growing Opportunities
Medical Markets – Growing Opportunities for Engineering Polymers
Slide 113: Implants for Better Quality of Life
Implants for Better Quality of Life The biocompatibility and flexibility of the part design have led to GUR‘s successful use in orthopedic implants for over 40 years Knee implant Low stereate grades of GUR are now the most frequenty used materials for bearing surfaces in orthopedic surgical implant
Slide 114: Drug delivery systems with Ticona plastics
Drug delivery systems with Ticona plastics Inhalers PENs Generally not treatable with tablets! Population Market growth Low growth High growth Cardio- vascular diseases Asthma Diabetes Chronic respiratory tract diseases Osteo- porosis Arthritis Hyper- tension Sharp increase in chronic diseases – new
Slide 115: Drug Delivery Systems - Growth by Region
Drug Delivery Systems – Growth by Region Medical customers expect continuity, commitment and control 2001 2006 35 30 25 20 15 10 5 2001 2006 North America Value in billion dollars Europe Value in billion dollars Average annual growth rates: 20 % Average annual growth rates: 18 % 12 27 14 35 35 30 25
Slide 116: Innovation Through Translation
Innovation Through Translation
Slide 117: Medical Grades MT Translation
Medical Grades MT Translation: From One Region to Another Medical dosage systems Strong development in Europe High entrance barriers Increasing US market More therapeutic areas International standards Drivers Patient Safety Aging Society
Slide 118: Hybrid Cars Translation
Hybrid Cars Translation: From One Region to Another Introduced by Toyota in 1997 Large market in Asia Polyplastics well positioned Future growth in US 500,000 cars by 2010 Ticona materials will gain Drivers Fuel Price Legislation Green Image
Slide 119: Polyester XFR Translation
Polyester XFR Translation: From One Market to Another Electronics Flame retardant Halogen free Cycle times Appliances & Housing Tracking resistance UV Stability Processability Drivers WEEE Regulation Environmental
Slide 120: GUR Translation: New Product Development
GUR Translation: New Product Development Industrial applications Wear resistance Impact strength Porous materials Micro powders Additives and filtration Drivers Density Molecular weight Morphology
Slide 121: Over years of Hostaform POM production
1961 Over 40 years of Hostaform ® POM production – 1968 1976 1982 1993 1997 1999 2001 2005 New Hostaform ® MT ® production line comes on stream 1961 1968 1976 1982 1993 1997 1999 2001 2005
Slide 122: Growing Through Performance Driven Solutions
Growing Through Performance Driven Solutions Technical Polymers are an attractive franchise yesterday – today - tomorrow Ticona – is a leading supplier of engineering polymers Global reach and positioning Customer focused Solution oriented Continuity, commitment and control are imperatives to Enable
Slide 123: Asia Strategy: Focus on China
Josh Cheng President, Celanese China Asia Strategy: Focus on China
Slide 124: Recent Economic Performance
2005f 2004a US$ Bn Recent Economic Performance (Q3,05) GDP grew at 9.4% YoY during Q3 2005 Fixed Asset Investment grew to US$601 billion by Sept. - up by 27.7% YoY Retail Sales increased by 13% YoY to USD$557 billion by Sept. Exports continued to grow strongly while demand for Imports subdued CPI in
Slide 125: Thorny Issues with US: Trade and RMB
Thorny Issues with US: Trade and RMB Highlights on Trade China’s trade surplus by Q3 2005 stood at $68 billion versus $32 billion in 2004 The future growth rate is seen to slow down … but slightly… This year’s trade surplus will triple to $90-100 billion Consequences Intensifying Trade Disputes Chin
Slide 126: Celanese Asia Strategy: Focus on China
Celanese Approach Celanese Asia Strategy: Focus on China World-scale integrated acetyl complex in Nanjing beginning in 2007 World-scale GUR ® facility 2008 Direct Establish leading Chemicals position in Singapore 2000 Establish Polyplastics Co. Ltd. 1964 Establish Korea Engineering Plastics Co. Ltd.
Slide 127: Our Asian Joint Ventures
Our Asian Joint Ventures – Successful Partnerships Strategic and operational investments for CE Profitable, with long track record of success Leverage investments for key markets Nantong Cellulose Fibers Co. Nantong, China Kunming Fibers Co. Kunming, China Korea Engineering Plastics Seoul, Korea Pol
Slide 128: Well Positioned for Future Growth
Xinjiang Tibet (Xizang) Qinghai Gansu Ningxia Inner Mongolia Shaanxi Shanxi Hebel Beijing Liaoning Jilin Heilongjiang Hebel Henan Anhui Jiangsu Shanghai Zhejiang Hubei Jiangxi Fujian Hunan Taiwan Guangdong Guangxi Guizhou Sichuan Yunnan Hainan Hong Kong Manufacturing Sites Marketing and Sales Office
Slide 129: Celanese Presence in Nanjing
Celanese Presence in Nanjing Celanese Nanjing Chemical Complex Coal-based feedstock technology for CO Acetic Acid – 600 kt Vinyl Acetate Emulsions Possible Acetic Anhydride Acetic Acid Project On schedule Commercial sales in early 2007
Slide 130: China Acetic Acid Consumption
China Acetic Acid Consumption Commercialization of the Nanjing facility in early 2007 will support high Chinese domestic growth Growth 13% 22% 15% 16% 10% 10% 10%
Slide 131: Nanjing Acetic Acid Project Operation Strategy
Nanjing Acetic Acid Project Operation Strategy Celanese Nanjing Chemical Company (CNCC) and Celanese Singapore to be managed and supported as a pair Experienced support from Mandarin speakers in same time zone Consistent performance expectations Growth and development opportunities for Singapore emp
Slide 132: Celanese Nanjing Project
Celanese Nanjing Project
Slide 133: Nanjing Acetic Acid Project Update
Nanjing Acetic Acid Project Update (as of mid-November 2005) Warehouse
Slide 134: Admin / Control Building
Admin / Control Building 2005/08 2005/11
Slide 135: Process Pipe Rack
Process Pipe Rack 2005/08/11 2005/11/24
Slide 136: Main Process Area
Main Process Area 2005/07/01 2005/11/11 2005/09/30 2005/11/11
Slide 137: Underground Services
2005/11/04 2005/11/24 2005/11/11 Underground Services
Slide 138: Substation
2005/09 2005/10 2005/11/24 Substation
Slide 139: Fire Water Tanks
Fire Water Tanks 2005/11/24 2005/08 2005/09
Slide 140: Tank Farm/Cooling Towers
2005/09 2005/09 2005/11/24 Tank Farm/Cooling Towers 2005/11/24
Slide 141: Building a Case for Value
John J. Gallagher III, Chief Financial Officer Building a Case for Value
Slide 142: Focused on Creating Value
Control the Controllable Accelerating Growth & Innovation Demonstrating Global Leadership Advantaged raw materials Southern Methanol Coal-based CO On track for $125 million SG&A savings Identified $100 million purchasing savings Acetate restructuring underway Acetex and Vinamul synergies of 6-8% of
Slide 143: Strong Underlying Business Results
9 months ended 9/30/05 3 rd Qtr 2005 (in $ millions) $384 Free Cash Flow $870 up 42% $253 up 16% Adjusted EBITDA $114 up 73% $47 up 50% Equity/Cost Investments Dividends $1.64 $0.49 Adjusted Diluted EPS $410 up 302% $92 up 268% Operating Profit $4,562 up 22% $1,536 up 21% Sales Strong Underlying Bus
Slide 144: Full Year 2005 Outlook
Full Year 2005 Outlook Diluted adjusted EPS increased to $2.10 to $2.20 from previous guidance of $1.95 to $2.05 Lower tax rate Reduced to 19% to 21% from 24% Lower personnel costs Strength of IBN Sina, Saudi cost affiliate Adjusted EBITDA increased to between $1,070 to $1,100 million from a previou
Slide 145: 2006 Business Outlook
Performance Products Acetate Products Ticona Chemical Products 2006 Diluted EPS Guidance $2.50 to $2.90 2006 Business Outlook Planned margin compression continues Moving toward specialty-chemical performance Improving earnings with progress on restructuring Resumption of dividends from JV’s On path
Slide 146: Investment Thesis
Investment Thesis Favorable industry fundamentals through 2008 Strong free cash flow Hidden value in the Affiliates Attractive portfolio
Slide 147: Favorable Industry Fundamentals through 2008
2007 2008 2006 2005 2004 Favorable Industry Fundamentals through 2008 VAM Supply & Demand 1 Based on Celanese Estimates as of Nov 30, 2005. Acid effective capacity based on 90% of nameplate and VAM based on 94% of nameplate. Acetic Acid Supply & Demand 1 Acetic Acid and VAM Effective Capacity Utiliz
Slide 148: Celanese Cash Flow Overview
Representative Cash Flow (in $ millions) Celanese Cash Flow Overview Strong free cash flow - 595 Free Cash Flow** (200 - 250) Capital Expenditures - 795 Cash Flow from Operations - Other Cash Items - Excess Pension Contributions - Change in Working Capital (60-100) Taxes (230 - 250) Net Cash Interes
Slide 149: Strategic Uses of Cash
2005 Progress Strategic Uses of Cash Initiated common dividend Paying preferred dividend Return to shareholders via dividends Investing in Nanjing Restructuring Acetate Products Maintain industry-leading asset base Closed Acetex acquisition Closed Vinamul acquisition Strategic, Bolt-on Acquisitions
Slide 150: Equity and cost investments play key role in strategy
Equity and cost investments play key role in strategy Income Statement Cash Flow Significant Contribution from Equity and Cost Investments 130+
Slide 151: Hidden Value through Equity Affiliates
Cash from Equity Affiliates Not included in Adjusted EBITDA Total proportional EBITDA from Equity Affiliates Proportional EBITDA above Cash (Hidden Value) Included in Adjusted EBITDA Hidden Value through Equity Affiliates Cash and Proportional EBITDA of Equity Affiliates in $ millions Total proporti
Slide 152: Attractive Portfolio
Company Asian Presence Niche Market #2 Niche Market #1 Plastics Core Products Competitors Celanese Strong Nutrinova Acetate Tow Ticona Acetic Acid, VAM, Emulsions Attractive Portfolio Key Factors: Profitability Growth Expectations Technology Position Leadership Execution Industry Structure Celanese
Slide 153: Valuing Celanese into the Future
Stock Price based on 2006 EPS of $2.50 – $2.90 Valuing Celanese into the Future Favorable industry fundamentals through 2008 Strong free cash flow Hidden value in the Affiliates Attractive Portfolio P/E Multiple based on 2006e EPS* * Based on sell side research as of Nov. 22, 2005. $23 to 26 Underly
Slide 154: Appendix
Appendix
Slide 155: 2006 Guidance
2006 Guidance Diluted EPS: $2.50 to $2.90 Depreciation/Amortization $240 - $260 million Cash Interest Expense $230 - $250 million Effective Tax Rate 18% - 22% Capital Expenditures $200 - $250 million CE Equity 158.5 million shares common stock outstanding million stock option grants million shares c
Slide 156: Capitalization
Capitalization Cash Senior Credit Term Loan Senior Credit Revolver Floating Rate Term Loan Total Senior Debt Senior Sub Notes ($) Senior Sub Notes (€ * ) Other Debt Total Cash Pay Debt Discount Notes Series A Discount Notes Series B Total Debt Shareholders' Equity Total Capitalization Net Debt(Total
Slide 157: Debt Amortization and Maturity
Debt Amortization and Maturity $ in millions Senior Secured Term Loan - $1,632 Senior Subordinated Notes - $957 Senior Discount Notes - $554 As of June 30, 2005 * Includes $90 short-term borrowing from affiliated companies
Slide 158: Celanese Corp. - Net Debt
Celanese Corp. – Net Debt (1) ($ in millions) 9/30/05 LTM Adjusted EBITDA $1,057 (1) Debt excludes pension liabilities. (2) Total facility size of $600m. (3) Are above Celanese Holdings level. Source: Company filings and company information. Original transaction (Jan. 2005) Amount as of 9/30/05 Mult
Slide 159: Celanese Corp. - Cash Flow
Celanese Corp. - Cash Flow (in $millions) Full Year September 2004 2005 Adjusted EBITDA Net cash interest (154) (129) Special charges and restructuring in ops (153) (79) Taxes (39) (44) Change in trade working capital (48) (25) Excess pension contributions (474) (63) Other cash items (103) (14) Oper
Slide 160: Summary - equity investments
Surmmary-eauity investments USSMilion (unaduited) Net Ses Depraciation and Amortization Operating Profit (Loss) Net Exringe Dividends Reosived Other Distibutions Cash and Cash Equivalents Long and Short Term Debt Net Dott Copital Expencttures 9 Celanese Summary Total Dividends and Other Distbutions
Slide 161: Reg G Reconciliation
Reg G Reconciliation For future periods, Celanese is currently unable to estimate the impact of special charges or changes in accounting principles or policies on free cash flow, adjusted EBITDA or adjusted EPS. Celanese is therefore currently unable to reconcile the most directly comparable GAAP me
Slide 162: Reg G: Reconciliation of Diluted Adjusted EPS
Reg G: Reconciliation of Diluted Adjusted EPS
Slide 163: Reg G: Reconciliation of Net Debt
Reg G: Reconciliation of Net Debt
Slide 164: Reg G: Reconciliation of Adjusted EBITDA
Reg G: Reconciliation of Adjusted EBITDA
Slide 165: Accelerating Celanese - Investor Day
Ac elerating Celanese Celanese Investor Day December 13, 2005 St. Regis Hotel, New York
Slide 166: Celanese
Celanese
Slide 167: Accelerating Celanese - Investor Day
Ac elerating Celanese Celanese Investor Day December 13, 2005 St. Regis Hotel, New York