Akzo Nobel N.v. · EURONEXT:AKZA
Akzo Nobel — Q2 2015 Earnings Presentation
85 slides from Akzo Nobel's earnings presentation, Jul 21, 2015
Slide 1: Investor Update Q2 2015 results
Investor Update Q2 2015 results Ton Büchner & Maëlys Castella July 21, 2015
Slide 2: Agenda
Agenda Highlights Operational review Financial review Conclusion Questions Investor Update Q2 2015 results 2
Slide 3: Strategic progress in Q2 2015
Strategic progress in Q2 2015 • Strong performance improvement in all businesses – Continued lowering of the cost base – Changed operating model for each business and the functions • Paper Chemicals divestment completed, generating €30 million profit • Conclusion of the ICI Pension Fund triennial re
Slide 4: Q2 2015 continued to show improved performance
Q2 2015 continued to show improved performance Revenue Operating income Return on Sales % Return on Investment % € million € million +6% +38% 3,949 486 12.3 11.7 10.1 353 9.5 3,710 Q2 2014 Q2 2015 Q2 2014 Q2 2015 Q2 2014 Q2 2015 Q2 2014 Q2 2015 • Continued improvement driven by significant actions t
Slide 5: Revenue exposure by end-market
~42% of revenues ~16% of revenues New Build Projects Automotive OEM, Parts and Assembly Maintenance, Renovation & Repair Automotive Repair Building Products & Components Marine and Air Transport ~17% of revenues ~25% of revenues Consumer Durables Natural Resource and Energy Industries Consumer Packa
Slide 6: Some mature markets continue to expand, while Brazil, Russia and China contract
Some mature markets continue to expand, while Brazil, Russia and China contract Purchase Managers’ Index (PMI)* June 2015 60 Netherlands US Germany India France Manufacturing PMI Sweden 50 UK Taiwan Russia China Brazil Australia 40 *Bubble size=manufacturing output, 2015e (US$bn: 2010 prices) Source
Slide 7: Consumer confidence remains low, although trends differ per country
Consumer confidence remains low, although trends differ per country Consumer confidence, Q1 2015 Figures below 100 indicate some degree of pessimism 140 Recent trends compared 120 to Q4 2014 100 80 60 130 123 112 107 106 100 97 89 88 87 86 40 79 73 72 60 20 0 Source: Nielsen Investor Update Q2 2015
Slide 8: Operational review
Operational review Investor Update Q2 2015 results 8
Slide 9: Another consecutive quarter of operating margin improvement
Another consecutive quarter of operating margin improvement € million Q2 2014 Q2 2015 Δ% Revenue 3,710 3,949 6 Operating income 353 486 38 Ratio, % Q2 2014 Q2 2015 Return on sales 9.5 12.3 Return on sales (excluding restructuring costs) 10.7 12.9 Return on sales (excluding incidentals and restructur
Slide 10: Markets remain challenging and continued to impact all Business Areas
Markets remain challenging and continued to impact all Business Areas Quarterly volume development in % year-on-year 2014 2015 6 2 -1% -3% 0% -2% -2 -6 Decorative Paints Performance Coatings Specialty Chemicals AkzoNobel Quarterly price/mix development in % year-on-year 5 2 0% -1% 0% 0% -1 -4 Decora
Slide 11: Decorative Paints Q2 2015 highlights
Decorative Paints Q2 2015 highlights = • Revenues up due to favorable € million Q2 2014 Q2 2015 Δ% currency effects. Volumes up in Revenue 1,074 1,134 6 Asia; down in Europe and Latin America Operating income 102 128 25 • Price/mix flat, with positive developments in Europe and Latin America offset
Slide 12: Performance Coatings Q2 2015 highlights
Performance Coatings Q2 2015 highlights • Revenue up as favorable € million Q2 2014 Q2 2015 Δ% currencies offset lower volumes Revenue 1,434 1,550 8 • Volumes declined in the quarter Operating income 178 220 24 mainly due to lower capital and maintenance spending in the global oil and gas industry;
Slide 13: Specialty Chemicals Q2 2015 highlights
Specialty Chemicals Q2 2015 highlights • Revenue up mainly due to € million Q2 2014 Q2 2015 Δ% favorable currency effects Revenue 1,228 1,290 5 • Volumes flat: growth in some segments compensated for Operating income 124 192 55 lower demand in oil and gas drilling Ratio, % Q2 2014 Q2 2015 • Operatin
Slide 14: Operating income up 39% during H1 2015
Operating income up 39% during H1 2015 Operating Income bridge H1 2014 – H1 2015 Increase € million Decrease 800 34 700 112 758 792 54 69 (53) 7 600 569 500 0 H1 2014 OPI Currency / Volume Price/Mix Reduction Other H1 2015 EBIT Incidentals H1 2015 OPI Acq / Div restructuring costs Investor Update Q2
Slide 15: Continued progress towards financial targets
Continued progress towards financial targets Return on sales – 2015 target 9.0% Return on investment – 2015 target 14.0% * (Operating income / revenue) (Operating income / average 12 months invested capital) % % 12 10.5 16 8.0 11.7 7.4 12 10.1 8 5.9 8.9 7.7 8 4 4 0 0 FY2012 H1 2013 H1 2014 H1 2015 F
Slide 16: Commercial Excellence and continuous improvement basis for future benefits
Commercial Excellence and continuous improvement basis for future benefits Delivering quality products and innovations to our Commercial Excellence customers at a lower cost to serve, on-time, in-full: driving: • Improve customer satisfaction • Growth • Drive organic growth • Salesforce efficiency •
Slide 17: Some business highlights from Q2 2015
Some business highlights from Q2 2015 Decorative Paints Performance Coatings Specialty Chemicals Embracing urban heritage Delivering leading Driving innovation performance We transformed a historic We provided our coatings As one of the founders of street in Antakya, Turkey technology to Gode Wind t
Slide 18: Financial review
Financial review Investor Update Q2 2015 results 18
Slide 19: Strong financial performance in Q2 2015
Strong financial performance in Q2 2015 Operational Cash discipline Shareholder returns improvement • ROS 12.3%; +280bp • CapEx €137 million • Net income attributable to (3.5% Revenue) shareholders €331 million; • ROS 11.4%; +190bp +61% (excluding incidentals) • OWC 12.8% Revenue • Adjusted EPS €1.3
Slide 20: Net income up 61% due to lower costs, divestments and favorable currencies
Net income up 61% due to lower costs, divestments and favorable currencies € million Q2 2014 Q2 2015 Δ% EBITDA 509 610 +20% Depreciation and amortization (156) (158) Operating income before incidentals 353 452 +28% Incidentals - 34 Operating income 353 486 +38% Net financing expenses (40) (27) Minor
Slide 21: Higher profits drive increased net cash from operating activities
Higher profits drive increased net cash from operating activities € million Q2 2014 Q2 2015 Δ% Profit for the period from continuing operations 230 359 Amortization and depreciation 156 158 Change working capital (2) (40) Change provisions (60) (85) Other changes 69 15 Net cash from operating activi
Slide 22: IAS19 pension deficit increases to €1.1 billion due to additional buy-ins
IAS19 pension deficit increases to €1.1 billion due to additional buy-ins Key pension assumptions metrics Q2 2015 Q1 2015 Discount rate 3.5% 3.1% Inflation rate 3.1% 2.8% Pension deficit development during Q2 2015 Increase € million Decrease (413) 1,117 (790) (831) (1,099) 9 (211) 20-(20) Deficit en
Slide 23: Triennial review of ICI Pension Fund now concluded
Triennial review of ICI Pension Fund now concluded Agreement reached with Trustees • Funding deficit lower at £850 million (£1.0 billion in 2011) • Extensive de-risking of liabilities and low interest rate environment • Top-up payments reduced by £28.5 million in 2016 and 2017 to £150 million per ye
Slide 24: Conclusion
Conclusion Investor Update Q2 2015 results 24
Slide 25: Human Cities in action
Human Cities in action AkzoNobel partnered with Monocle magazine on its Quality of Life Survey 2015. The survey includes both data-driven elements (e.g., crime figures and business climate) as well as ‘soft’ factors (e.g., commitment to culture and proximity to open spaces). Our partnership with Mon
Slide 26: Conclusion
Conclusion • Strong performance improvement in all businesses • Divestment of Paper Chemicals business completed • Conclusion of ICI Pension Fund triennial review, including further de-risking • Exchange rate movements, positive market trends in North America and no improvement for Europe overall, a
Slide 27: Questions
Questions Investor Update Q2 2015 results 27
Slide 28: Safe Harbor Statement
Safe Harbor Statement This presentation contains statements which address such key issues as AkzoNobel’s growth strategy, future financial results, market positions, product development, products in the pipeline, and product approvals. Such statements should be carefully considered, and it should be
Slide 29: Appendices
Appendices Investor Update Q2 2015 results 29
Slide 30: ICI Pension Fund top-up schedule
ICI Pension Fund top-up schedule Deficit Previous top-up schedule 2011 • Extensive de-risking of £ million liabilities through buy-ins £1.0 (£5.4 billion); cash impact billion reflected in new valuation 178.5 178.5 178.5 178.5 135 135 125 • Low interest rate environment and significant decrease of 2
Slide 31: Proactively managing or removing pension liabilities
Proactively managing or removing pension liabilities • Active management of interest rate and inflation Interest rate / exposure, with around 70% of overall defined benefit Inflation hedging obligation (DBO) risks hedged Retain and • Courtaulds (CPS) longevity swap with Swiss Re in 2012 Manage Risk
Slide 32: All Business Areas making progress
All Business Areas making progress FY2012 H1 2014 Return on sales (Operating income / revenue) H1 2013 H1 2015 % 16 13.1 13.7 10.5 11.0 10.6 12 8.8 9.5 9.0 8.8 6.9 6.1 8 4 2.2 0 Decorative Paints Performance Coatings Specialty Chemicals Return on investment (Operating income / average 12 months inve
Slide 33: Restructuring charges by quarter
Restructuring charges by quarter € million Q1 2014 Q2 2014 Q3 2014 Q4 2014 FY 2014 Q1 2015 Q2 2015 Decorative Paints 22 23 1 34 80 5 11 Performance Coatings 15 17 41 75 148 6 10 Specialty Chemicals 7 2 6 2 17 0 3 Other 0 3 7 -2 8 0 0 Total 44 45 55 109 253 11 24 Total restructuring charges in the se
Slide 34: Revenue for Performance Coatings
Revenue for Performance Coatings – Updated following change in business structure € million Q1 2014 Q2 2014 Q3 2014 Q4 2014 FY 2014 Marine & Protective Coatings 323 362 360 369 1,414 Automotive & Specialty Coatings 343 365 357 375 1,440 Industrial & Powder Coatings 660 715 714 680 2,769 Other/intrag
Slide 35: Revenue for Specialty Chemicals
Revenue for Specialty Chemicals – Financial reporting aligned with chemical platforms € million Q1 2014 Q2 2014 Q3 2014 Q4 2014 FY 2014 Functional Chemicals 440 447 446 423 1,756 Industrial Chemicals 322 305 308 295 1,230 Surface Chemistry 250 256 257 247 1,010 Pulp and Performance Chemicals 243 250
Slide 36: Q2 2015 Operating income – Cash bridge
Q2 2015 Operating income – Cash bridge € million Q2 2014 Q2 2015 Operating Income 353 486 Incidentals - (34) Depreciation & amortization 156 158 EBITDA before incidentals 509 610 Other 15 3 Change working capital (2) (40) Change provisions (60) (85) Interest paid (17) (18) Income tax paid (52) (63)
Slide 37: Innovation Pipeline Q2 2015 Decorative Paints – Trim products
Innovation Pipeline Q2 2015 Decorative Paints – Trim products Key Features Customer Benefits Growth Potential • New formulations of Alba • Similar application and finish • Improved recipe and more efficient Standard solvent borne as the original formulations production process enamels, implementing
Slide 38: Innovation Pipeline Q2 2015 Protective Coatings – Chartek 8E
Innovation Pipeline Q2 2015 Protective Coatings – Chartek 8E Epoxy Passive Fire Protection Key Features Customer Benefits Growth Potential • Continuous temperature • Allows application in areas • Low weight solutions offering resistance to 120°C and short exposed to high temperatures wider use on pr
Slide 39: Innovation Pipeline Q2 2015 Chelates & Micronutrients – Bolikel XP
Innovation Pipeline Q2 2015 Chelates & Micronutrients – Bolikel® XP Key Features Customer Benefits Growth Potential • Crop nutrition • High longevity = cost effective • Market launch in 2015 • Next generation iron-chelate to • Very good uptake by plants: • Global volume potential avoid iron-deficien
Slide 40: Reference
Reference Investor Update Q2 2015 results 40
Slide 41: AkzoNobel today
AkzoNobel today • Revenue €14.3 billion • 47,210 employees • 44% of revenue from high growth markets • Major producer of Paints, Coatings and Specialty Chemicals • Leadership positions in many markets Revenue by Operating income Invested capital by Business Area by Business Area Business Area Perfor
Slide 42: High growth markets are 44% of revenue and their importance will increase
High growth markets are 44% of revenue and their importance will increase % of 2014 revenue 37% Mature Europe 15% 8% North America Emerging Europe 26% Asia Pacific 10% 4% Latin America Other regions Share of revenues from high growth markets will increase over time Investor Update Q2 2015 results 42
Slide 43: Our proposition: Leading market positions delivering leading performance
Our proposition: Leading market positions delivering leading performance AkzoNobel has gone through a significant amount of strategic change over the past five years Today, the company has • Excellent portfolio of businesses • Good long term growth potential on the basis of end-user segment growth •
Slide 44: 2015 financial targets focused on quality of earnings and value creation
2015 financial targets focused on quality of earnings and value creation Return on sales Return on investment Net debt/EBITDA (Operating income/revenue) (Operating income/average x % 12 months invested capital) % 12 16 14.0 3 9.0 10.0 6.9 12 < 2.0 8 5.9 * 6.6 8.9 * 9.6 2 1.4 8 1.0 1.0 4 1 4 0 0 0 20
Slide 45: Realistic expected 2015 outcomes
Realistic expected 2015 outcomes Expected Outcomes 2012 2015 16 Return on 12.0 12.0 sales 12 9.5 9.0 7.5 8 4 2.2 0 % Decorative Paints Performance Coatings Specialty Chemicals Return on 32 25.0 investment 24 21.7 13.6 15.0 16 12.0 8 3.0 0 % Decorative Paints Performance Coatings Specialty Chemicals
Slide 46: Progress made to date
Progress made to date FY2012 FY2013 FY2014 16 12 9.5 9.5 9.4 9.8 9.0 10.4 Return on 6.3 8 6.0 sales 2.2 4 0 Decorative Paints Performance Coatings Specialty Chemicals % 32 21.7 21.3 22.0 24 13.7 13.6 14.8 Return on 16 8.8 8.2 investment 8 3.0 * 0 Decorative Paints Performance Coatings Specialty Chem
Slide 47: AkzoNobel strategy introduced in 2013
AkzoNobel strategy introduced in 2013 • Organic growth • Operational excellence Investor Update Q2 2015 results 47
Slide 48: The global paints and coatings market is around €100 billion
The global paints and coatings market is around €100 billion By market sector By end-user segment 2014, 100% = ~ €100 billion 2014, 100% = ~ €100 billion Yacht Industrial Others Aerospace Consumer Buildings and Decorative Packaging Paints Goods Infrastructure Marine (43%) Spec. finishes Coil Powder
Slide 49: AkzoNobel has many leading market positions
AkzoNobel has many leading market positions No.1 Position Other key players Multiple regions outside North PPG, regional players Decorative America North America* Sherwin-Williams PPG, regional players Protective Sherwin-Williams, Jotun Powder Axalta, Jotun, regional players Auto refinish Axalta PPG
Slide 50: In aggregate variable costs represent 53% of revenue
In aggregate variable costs represent 53% of revenue Profit and loss breakdown* % of total • AkzoNobel is well positioned for economic recovery 100% • Variable costs represent 53% of revenue • Decorative Paints is more driven by personnel costs in the distribution network, while Specialty Chemicals
Slide 51: We are actively addressing all components of operating expenses
We are actively addressing all components of operating expenses Operating expenses Research, Operating expense General & Selling Expenses Development & components Administrative Innovation Global Business Addressed by Commercial Excellence Initiatives Services Drives organic growth * All costs in €
Slide 52: Sustainability is business; business is sustainability
Sustainability is business; business is sustainability of revenue by 2020 from products that are more sustainable for our customers than the products of our competitors more efficient resource and energy use across the entire value chain by 2020 (measured by carbon footprint reduction) (Resource Eff
Slide 53: Human Cities
Human Cities • By 2050, more than 75 percent of the world’s population will live in cities. 60 percent of our products are in the Buildings & Infrastructure and Transportation • In June 2014, we launched our Human Cities initiative, which is designed to engage with the challenges and opportunities o
Slide 54: AkzoNobel values drive cultural change
AkzoNobel values drive cultural change Investor Update Q2 2015 results 54
Slide 55: Leading performance; gaining momentum
Leading performance; gaining momentum Historical Vision 2015 Targets Culture issues & Strategy & Incentives & Values • ROS below peers • Organic growth • ROS 9% • Customer Focused • Not earning our cost • Operational • ROI 14% • Deliver on of capital excellence • Operating income - Commitments • Ina
Slide 56: Decorative Paints business at a glance
Decorative Paints business at a glance Revenue by end-user Revenue by geographic spread sub-segment 4% 8% Mature Europe 25% Maintenance, renovation and repair 14% Asia Pacific 46% Latin America New build projects Emerging Europe 75% Other regions 28% Decorative Paints key figures Key messages € mill
Slide 57: We have very strong brands linked by a global approach to branding
We have very strong brands linked by a global approach to branding • Our well-known brands are one of our key competitive advantages Consumer • We have a number of powerful, relevant brands occupying a number of positions across different markets (consumer, professional, and other such as woodcare)
Slide 58: Fix Europe
Fix Europe Objectives: • Improve performance by driving organic growth and operational excellence and changing the operating model in Europe Actions: • Implement a central operating model and simplify our organizational structure • Consolidate our manufacturing and distribution footprint • Develop a
Slide 59: Changing our operating model in Europe
Changing our operating model in Europe Action 2012 2013 2014 2015 Integrate relevant European activities and management Rationalize product portfolio and raw materials Rationalize manufacturing footprint Fully implement sales excellence Outsource certain finance businesses Implement central operatin
Slide 60: Grow profitably in high-growth markets
Grow profitably in high-growth markets Objectives: • Outgrow the market • Ensure that we leverage our (global) scale to ensure that we improve relative profitability while we grow Actions: • Develop profitable mid-market business model(s) • Build and implement a robust distribution strategy framewor
Slide 61: Performance Coatings business at a glance
Performance Coatings business at a glance Revenue by end-user segment Revenue by geographic spread 14% Buildings and 3% Mature Europe 21% Infrastructure 11% 27% North America Transportation 8% Asia Pacific 28% Consumer Latin America Goods Emerging Europe 37% 31% 20% Industrial Other regions Performa
Slide 62: We cover a uniquely broad set of markets with leading global brands
We cover a uniquely broad set of markets with leading global brands 2014 revenue by Reporting Unit • Protective Marine & • Marine Marine & Protective Protective Coatings 25% Coatings 49% • Vehicle Refinishes Automotive & Specialty Coatings Automotive & • Specialty Finishes Specialty Coatings • Aeros
Slide 63: AkzoNobel is the global market leader in Performance Coatings, excluding Automotive
AkzoNobel is the global market leader in Performance Coatings, excluding Automotive Performance Coatings revenue € billion, 2013 unless noted 6 5 4 3 2 1 0 Non-Automotive Automotive * 2012 data Source: Annual Reports; AkzoNobel analysis Investor Update Q2 2015 results 63
Slide 64: AkzoNobel has many leading market sector positions in Performance Coatings
AkzoNobel has many leading market sector positions in Performance Coatings Performance Coatings market sectors AkzoNobel market share x € billion, 2013 position (by value) 2013 1 7 3 1 6 5 1 4 1/2 1 3 1 2 2 1 1/2 1 0 Protective Vehicle Powder Wood Marine Specialty Coil Packaging Aerospace Yacht Refi
Slide 65: Pursue differentiated growth strategies
Pursue differentiated growth strategies Outgrow the market organically Expected outcomes • Marine • Improved market share • Protective • Costs don’t grow as fast as revenue • Powder • Improved return on sales • Specialty Finishes in percentage terms Improve performance by Expected outcomes driving o
Slide 66: Business at a glance
Business at a glance Revenue by end user segment Revenue by geographic spread 5% Buildings and Mature Europe 18% 2% infrastructure 10% North America Transportation 6% 43% Asia Pacific 18% Latin America 57% Consumer 19% goods Emerging Europe Industrial 22% Other regions Specialty Chemicals key figure
Slide 67: The chemical industry is large and growing
The chemical industry is large and growing Chemicals industry over time, by geography $ trillion • $3.5 trillion market Other China 6.3 Asia Pacific • Solution provider for society North America – manufacturing Western Europe – food production – climate change 3.4 • Continuous growth 1.3 0.9 • Stron
Slide 68: Five well positioned platforms in their industries
Five well positioned platforms in their industries Our Business Units Our Platforms Bleaching Chemicals Pulp & Performance chemicals 60% of Pulp & Performance chemicals Salt-chlorine chain Industrial Chemicals 100% of Industrial Chemicals Polymer Catalysts 40% of Functional Chemicals Functional Chem
Slide 69: Platforms operate world scale plants based on advanced technologies
Platforms operate world scale plants based on advanced technologies Our main chemical platforms Key products • Sodium chlorate Bleaching chemicals • Hydrogen peroxide • Energy/Salt • Monochloroacetic acid Salt-chlorine chain • Chlorine • Chloromethanes • Organic peroxides Polymer catalysts • Metal a
Slide 70: We have invested in the recent past and are well-prepared for future growth
We have invested in the recent past and are well-prepared for future growth BA Specialty Chemicals capital expenditure € million 500 400 300 200 100 0 2010 2011 2012 2013 2014 Capital Expenditure Depreciation and Amortization Major projects and timing of spend Investment project 2010 2011 2012 2013
Slide 71: Four operational improvement initiatives
Four operational improvement initiatives Improve Strengthen Reduce Enhance product productivity of commercial organizational and process supply chain and excellence costs innovation operations • Asset optimization • Customer value • Restructuring • New applications • Production system creation and p
Slide 72: Differentiated strategies per platform
Differentiated strategies per platform Outgrow the market organically Actions ~ 50% of portfolio • Capitalize on investments Main platforms • Grow by successfully • Bleaching chemicals • Surfactants commercializing products for attractive applications Improve performance by driving Actions operation
Slide 73: Salt-Chlorine chain: Right at the heart of the customer base
Salt-Chlorine chain: Right at the heart of the customer base Steam cracker Refinery Olefin consumer Refinery & olefin producer Pipelines* * Pipelines transporting crude oil (RAPL), nafta (PALL), industrial gasses, ethylene and propylene Investor Update Q2 2015 results 73
Slide 74: Ethylene oxide network: Capitalizing on China investments
Ethylene oxide network: Capitalizing on China investments Bio-treatment facility Chelates Surfactants Hydrogen Organic Cyanide Peroxides Ethylene Oxide Ethylene Amines Cellulosics Site plan Investor Update Q2 2015 results 74
Slide 75: Surfactants: Growing with attractive end markets
Surfactants: Growing with attractive end markets Oilfield Lubricants Mining Agriculture Investor Update Q2 2015 results 75
Slide 76: Our platforms build on value chains
Our platforms build on value chains Raw Base Chemical Performance/ materials chemicals inter-mediates functional ‘End’ products chemicals Bleaching chemicals Salt-chlorine chain Polymer catalysts Ethylene oxide network Surfactants Investor Update Q2 2015 results 76
Slide 77: Disciplined cash management
Disciplined cash management Operating Working Capital Capital Expenditures € million € million Operating Working Capital Specialty Chemicals Decorative Paints OWC as % of LQ revenue * 4 Performance Coatings Other 2.500 16% 5.4% 12.9% 14% 2.000 4.5% 4.6% 12% 10.7% 4.1% 9.9% 10.1% 3.7% € 826 10% 1.500
Slide 78: Operational cash inflow close to covering uses of cash
Operational cash inflow close to covering uses of cash Cash flow sources and uses • Restructuring and pension top-ups consume a significant 2012 2013 2014 proportion of cash • Performance improvement focus starts to address cash challenge • Remuneration metrics include cash generation • Positive cas
Slide 79: Continuously reducing costs of long term bonds
Continuously reducing costs of long term bonds Debt maturities € million Repaid 7.75% 4.00% € bonds £ bonds $ bonds 2.625% 7.25% 1.75% • Debt duration 4.8 years 825 8.00% 800 750 622 500 • Net interest expense down 320 by €74 million compared to 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Slide 80: 2015 target: net debt to EBITDA ratio of less than two
2015 target: net debt to EBITDA ratio of less than two Net debt/EBITDA x • We have a strong liquidity position to support business needs: net cash and cash equivalents 1,5 €1.7 billion* • Undrawn revolving credit facility of €1.8 billion 1,0 (2018) €1.5 and $3 billion commercial paper programs, back
Slide 81: Dividend policy unchanged – stable to rising dividend
Dividend policy unchanged – stable to rising dividend Dividends paid (€) • Our dividend policy is to pay a stable to rising dividend each year 1.08 1.12 1.12 1.12 1.12 1.05 • An interim and final dividend will be paid in cash unless shareholders elect to receive a stock dividend 0.30 0.32 0.33 0.33
Slide 82: Both short & long term incentives are aligned with our priorities
Both short & long term incentives are aligned with our priorities Executive short term incentive 2015 Executive long term incentive 2015 STI Metric LTI Metric Element Element 20% Return on investment 35% Return on investment 20% Operating income 35% Total Shareholder Return 30% Operating cash flow 3
Slide 83: Variable costs analysis
Variable costs analysis 2014 Packaging Energy & other variable costs* Solvents Raw materials 6% 7% 26% Chemicals and intermediates*** 17% 4% Other raw materials** 5% 10% Titanium Additives 6% dioxide 3% 16% Coatings’ Pigments specialties Resins * Other variable costs include variable selling costs (
Slide 84: The net impact of a sustained lower oil price can have a positive impact in 2015
The net impact of a sustained lower oil price can have a positive impact in 2015 Freight and logistics Freight and logistics Raw materials Production Sales GDP Inventories Investor Update Q2 2015 results 84
Slide 85: Downstream oil related products have clearly different dynamics
Downstream oil related products have clearly different dynamics Feedstocks Base Intermediates and more complex molecules (petro)chemicals Intermediates Monomers, More complex Precursors, etc. molecules Solvents Crude Oil Methanol Monomers & Latex (Shale) Gas Ethylene Coal Ethanol Bio based Propylene