Covestro AG · VIE:1COV
Covestro — FY2016 Earnings Presentation
23 slides from Covestro's earnings presentation, Feb 20, 2017
Slide 1: Delivering on promises: Financial Highlights Q4 & FY 2016
Delivering on promises Financial Highlights Q4 & FY 2016 covestro.com │ February 20, 2017│ Q4/FY 2016 Investor Conference Call
Slide 2: Forward-looking statements
Forward-looking statements This presentation may contain forward-looking statements based on current assumptions and forecasts made by Covestro AG. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situati
Slide 3: FY 2016 Key Highlights
FY 2016 Key Highlights Delivering on promises Continued dynamic core volume growth (7.5% Y/Y) Strong adj. EBITDA increase (23% Y/Y) to €2,014m Record FOCF of €1,367m (42% Y/Y) Full delivery on FY 2016 guidance Dividend proposal of €1.35 3 │ February 20, 2017 │ Q4/FY 2016 Investor Conference Call
Slide 4: Q4 2016 and FY 2016 – Sales per Region
Q4 2016 and FY 2016 – Sales per Region Strong rebound in China, significant growth in the US Growth above GDP in Q4 2016 Strong growth in FY 2016 in € million / Core volume growth Y/Y in € million / Core volume growth Y/Y China China 665 2,163 Vol. +21% Vol. +18% APAC APAC 1,036 EMLA 3,609 Vol. +11%
Slide 5: 2016 Guidance fully achieved
2016 Guidance fully achieved Initial guidance New guidance FY 2016 Achievement FY 2016 FY 2016* Mid-single-digit Mid- to high-single-digit Core Volume Growth +7.5% increase Y/Y increase Y/Y At a high level, above the Above last year’s level FOCF €1,367m average of recent years (€964m) Premium on the
Slide 6: FY 2016 – Sales Bridge
FY 2016 – Sales Bridge Dynamic volume growth Sales Bridge Highlights in € million Dynamic volume development +603 -624 • Core volume growth (in kt) of 7.5% Y/Y • Sales volumes (in €) expansion of 5.0% Y/Y • Core volume growth above sales volume 12,082 -157 expansion due to declining non-core volumes
Slide 7: FY 2016 – Adj. EBITDA Bridge
FY 2016 – Adj. EBITDA Bridge Increase equally driven by volume leverage and pricing delta Adj. EBITDA Bridge Highlights in € million Positive volume leverage Volume Pricing Delta +267 +265 • Driven by all segments +894 -142 2,014 +267 -629 Other Improved cash margin items 1,641 -17 • Positive pricin
Slide 8: Q4 & FY 2016 – Group Results
Q4 & FY 2016 – Group Results Continued margin expansion Net Sales and Core Volume Growth Highlights in € million / changes Y/Y 7,000 6.7% 8.5% 7.7% 9.1% 4.8% 10.0% • In 2016, continued strong core volume growth 3.0% 6,000 1.7% -0.6% 5.0% (in kt) of 7.5% 5,000 0.0% 4,000 -5.0% • In Q4, solid core vol
Slide 9: Q4 & FY 2016 – Results of PUR Segment
Q4 & FY 2016 – Results of PUR Segment Polyurethanes – Solid development Net Sales and Core Volume Growth Highlights FY 2016 in € million / changes Y/Y 4,000 20.0% • Strong core volume growth of 7.7% Y/Y, driven 10.4% 3,500 5.8% 4.6% 9.0% 9.0% 15.0% 10.0% by all segments, notably MDI 3,000 2.5% -0.4%
Slide 10: Q4 & FY 2016 – Results of PCS Segment
Q4 & FY 2016 – Results of PCS Segment Polycarbonates – Steady high margin business Net Sales and Core Volume Growth Highlights FY 2016 in € million / changes Y/Y 2,500 12.8% 20.0% • Core volumes increased double-digit by 10.3% 11.6% 9.1% 8.5% 8.5% 15.0% 2,000 5.4% 5.4% 10.0% • Global industry growth
Slide 11: Q4 & FY 2016 – Results of CAS Segment
Q4 & FY 2016 – Results of CAS Segment Coatings, Adhesives, Specialties – Solid results Net Sales and Core Volume Growth Highlights FY 2016 in € million / changes Y/Y 1,200 6.3% 6.5% 10.0% • Slightly declined core volumes of -0.3% Y/Y 3.5% 1,000 -0.2% -1.8% 0.0% 5.0% due to phase out of a trading pro
Slide 12: Income Statement FY 2016
Income Statement FY 2016 Profit and loss statement 2016/2015 Share Highlights Key P&L items 2014 2015 2016 Y/Y 2016 In € milion 11,761 12,082 11,904 -1.5% 100% No special items in 2016 Net Sales Cost of goods sold (9,609) (9,438) (8,611) -8.8% 72.3% • Y/Y comparison is difficult due to extraordinary
Slide 13: High EBITDA to FOCF conversion rate
High EBITDA to FOCF conversion rate Record FOCF Free operating cash flow development 2013-2016 Highlights in € million • The FOCF to EBITDA conversion rate FOCF 415 -25% 313 +208% 964 +42% 1,367 increased to 68% compared to 59% in 2015 165 due to the absence of cash-out for special 133 25 items 115
Slide 14: 2016 – Total Net Debt
2016 – Total Net Debt Total net debt reduced by almost €1bn Total net debt – end of 2016 Highlights in € million Net debt target achieved 3,673 -1,367 • Total net debt (net financial debt plus pension provision) to EBITDA ratio of 1.3x end of 2016 vs. 2.2x end of 2015 197* 2,708 2,211 38 143 24 • Ta
Slide 15: Balance sheet FY 2016
Balance sheet FY 2016 Strong balance sheet and solid equity ratio Statement of financial position Highlights in € million • Working capital stable Y/Y at €1,859m with 10,531 10,234 10,531 10,234 WC/Sales ratio of 15.6% vs. 15.4% in 2015 • Total financial liabilities reduced to €1.9bn 3,612 4,216 vs.
Slide 16: Guidance 2017
Guidance 2017 Continue to deliver FY 2016 Guidance FY 2017* Core Volume Growth +7.5% Low- to mid-single-digit percentage increase Y/Y FOCF €1,367m Slightly above the average of the last three years ROCE 14.2% Slightly above the 2016 level Additional financial expectations FY 2016 Guidance FY 2017 EB
Slide 17: 2016 – Summary
2016 – Summary Covestro fully on track Strong volume growth in a focused portfolio despite a challenging market environment Solid earnings and cash flow generation supported by an improving supply/demand balance and a focus on profitability Robust financial profile with an investment grade rating (B
Slide 18: Appendix
Appendix Financial Highlights Q4 & FY 2016 covestro.com │ February 20, 2017│ Q4/FY 2016 Investor Conference Call
Slide 19: FY 2016 Sales & Earnings
FY 2016 Sales & Earnings Strong volume growth with significant earnings and FOCF leverage Core Volumes* Adj. EBITDA Net Income FOCF in kt in € million in € million in € million 4,794 4,458 2,014 1,641 1,367 964 795 343 FY 2015 FY 2016 FY 2015 FY 2016 FY 2015 FY 2016 FY 2015 FY 2016 +7.5% +23% +132%
Slide 20: Q4 2016 Sales & Earnings
Q4 2016 Sales & Earnings Solid volume growth and FOCF generation despite force majeure Core Volumes* Adj. EBITDA Net Income FOCF in kt in € million in € million in € million 1,136 1,084 390 393 407 256 124 -84 Q4 2015 Q4 2016 Q4 2015 Q4 2016 Q4 2015 Q4 2016 Q4 2015 Q4 2016 +4.8% +52% n.m. +4% Change
Slide 21: Q4 2016 – Sales Bridge
Q4 2016 – Sales Bridge Dynamic volume & back to inflation Sales Bridge Highlights in € million Dynamic volume development +129 -16 3,017 2,798 +106 FX • Core volume growth (in kt) of 4.8% Y/Y Price Volume • Sales volumes (in €) expansion of 3.8% Y/Y • Core volume growth above sales volume expansion
Slide 22: Q4 2016 – Adj. EBITDA Bridge
Q4 2016 – Adj. EBITDA Bridge Limited volume leverage, but strong pricing delta Adj. EBITDA Bridge Highlights in € million Positive volume leverage Pricing Delta +€185m +61 • Mainly driven by PCS & CAS -110 • PUR negatively impacted by force majeure +124 Raw 390 Material Improving cash margin Costs O
Slide 23: Upcoming IR Events
Upcoming IR Events Find more information on investor.covestro.com Reporting dates • April 25, 2017 Q1 2017 Interim Report • July 25, 2017 Q2 2017 Interim Report • October 24, 2017 Q3 2017 Interim Report Annual General Meeting • May 3, 2017 Annual Stockholders' Meeting, Bonn Broker conferences • Marc