Air Products And Chemicals, Inc. · NYSE:APD
Air Products And Chemicals — Bank of America Merrill Lynch Industrials Conference 2011
30 slides from Air Products And Chemicals's conference presentation, Dec 7, 2011
Slide 1: Strategy for Success
Strategy for Success Innovation, Integration and Improvement Paul Huck Senior Vice President & Chief Financial Officer Bank of America Merrill Lynch Industrials Conference December 7, 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 • $10B in revenues across diverse markets and geographies • Positioned for continued long-term value creation Food Healthcare 4% U.S. Europe Energy 7% 38% 31% 22% Metals 10% Other 9% Electronics 16% Manufacturing 13% Canada/L.A. Asia Chemicals 7% 24% 19% 3
Slide 4: FY 2011 Summary
FY 2011 Summary Key Wins in High Growth Markets Hydrogen – Valero, Shell, Motiva, Marathon, GC Pipeline Oxygen – Wison - Nanjing, China Nitrogen – Samsung – Korea; UMC – Taiwan; US customer Merchant Capacity – China, US, India, Helium Equity Affiliates – AHG in Saudi Arabia Consistent
Slide 5: Air Products Supply Modes
Air Products Supply Modes Stability and Profitable Growth FY11 Onsite/Pipeline Package Gases & Specialty Materials 41% 27% 11% 21% 15-20 year Contracts Short-Term Contracts Limited Volume Risk Differentiated Positions Energy Pass through Equipment & Onsite/Pipeline Liquid/Bulk Services Packaged Gase
Slide 6: 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 6
Slide 7: Air Products Market Exposure
Air Products Market Exposure 2010 IG Market $63B 2010 APD $9B Energy Food Food 9% 9% Healthcare 4% Electronics Energy Healthcare 7% 10% 23% 8% Metals 9% Metals 12% Chemicals 35 6% 13% 7% Electronics 30 15% 10% 25 Billions ($) 9% Manufacturing Manufacturing 23% 39% 20 12% Chemicals 19% 2010-2015 Mark
Slide 8: Profitable Joint Ventures with Leadership Positions
Air Products Advantage: Profitable Joint Ventures with Leadership Positions Mexico Italy South Africa India Thailand Sales (100%) $0.7B $0.6B $0.2B $0.2B $0.1B AP Ownership 40% 49% 50% 50% 49% FY 2011 Air Products Equity Affiliates1 Combined2 (as reported) (100% basis) (AP +100% EA) Sales ($MM) $10,
Slide 9: Accelerating Air Products Growth
Accelerating Air Products Growth 2010-2015 % Growth Component Increase Market Growth 9% Air Products Market Position 1%-2% Consolidation / M&A 1%-2% Total 11-13% 9
Slide 10: 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 East (new/replace/acquire) 10
Slide 11: 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 11
Slide 12: 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 12
Slide 13: 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 NAFTA LASA Europe Middle Asia Oppty = 0.9 M TPD (new/replace/acquire) East 13
Slide 14: Tonnage Gases
Tonnage Gases Significant New Markets for Oxygen • Gasification Oxygen Opportunity - China’s abundance of coal New/Replace/Acquire - Growing Demand - Coal to Natural Gas: • “Substitute Natural Gas” (SNG) 13% - Feedstock independence - Chemicals, Energy, Refining 45% • Steel - Asian infrastructure gr
Slide 15: Major Projects
Major Projects Plant Location Capacity Timing H2 Rotterdam, Netherlands World Scale Q1FY12 ASU/Liquid Laporte, TX World Scale Q1FY12 Helium Wyoming 200 MMSCFY Q1FY12 H2 Luling, LA 120 MMSCFD H2 Q2FY12 H2 Pipeline Gulf Coast, US 180 miles Q4FY12 ASU/Liquid Petrochina, Chengdu, China World Scale H2FY1
Slide 16: 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 16
Slide 17: 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 recycling Advanced Low Freshline® QS Freezer Integra® Cylinder Emission Aluminum Melting 17
Slide 18: Electronics reported Revenue $1.3Billion
Electronics reported Revenue $1.3Billion plus $0.35B in Merchant FY11 Overall Specialty Gases Enabling Equipment Revenue & Chemicals 42% 12% 21% 25% Onsite Gas Services Onsite Gas Supply Liquid/Bulk Supply Specialty Gases & Chemicals Enabling Equipment Liquid / Bulk 18
Slide 19: 2015 Targets: Revenue Growth, Operating Margin, Return on Capital
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 19
Slide 20: Roadmap to 20% Margin
Roadmap to 20% Margin 22 20% 20 1.4% Productivity Operating Margin (%) 18 Growth 2% 16 14 16.6% 16.6% 12 10 2011 2015 20
Slide 21: Variable Cost Leverage
Variable Cost Leverage 1.00 Hydrogen Efficiency 0.96 Operating Service Center 0.92 0.88 1993 1999 2005 2011 2015 Argon Recovery $100MM/year improvement 21
Slide 22: Fixed Cost Leverage
Fixed Cost Leverage Operating Service Center SG&A as a % of Sales 14% 13% 12% 11% 10% 9% 2004 2011 $50MM/year improvement 22
Slide 23: Driving Returns Higher
Driving Returns Higher 16 15% 15 0.5% Capital Turnover 14 1.2% Margin Improvement ROCE (%) 13 12 13.3% 13.3% 11 10 2011 2015 23
Slide 24: 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 24
Slide 25: 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 25
Slide 26: Capital Spending Outlook
Capital Spending Outlook FY12 Forecast $1.9B-$2.2B +20-40% from FY11 FY12 Growth CapEx FY12 Growth CapEx by Segment by Region Europe/ME Merchant Tonnage Americas 11% 15% 62% 47% Energy & 7% 42% Asia Equip 16% Electronics & PM 26
Slide 27: FY'12 Full Year Outlook
FY’12 Full Year Outlook ● FY’12 overall… more FY’11 Adjusted Diluted EPS $5.73 uncertainty, wider range – Tonnage new projects/loading ● WW manufacturing growth – Merchant and E&PM loading – Global 2% - 5% – Lower E&E results – US 1% - 5% – Pension Expense – Asia 4% - 9% – Tax rate about 26% – EU
Slide 28: $15+ Billion in Sales by 2015
2015 2015 by $15+ Billion in Sales 20% Operating Margin 15% Return on Capital Employed 28
Slide 29: Appendix: Q4 and Full Year FY11 Results and Guidance
Appendix: Q4 and Full Year FY11 Results and Guidance ($ Millions, except per share data) GAAP Measure Non GAAP Adjustments Non GAAP Measure $ % $ % Q411 vs. Q410 - Total Co. Cont. Ops Q411 Q410 Change Change Q410 (1) Q411 Q410 Change Change Sales 2,611.2 2,351.2 260.0 11% 2,611.2 2,351.2 260.0 11% O
Slide 30: Thank you... tell me more
Thank you... tell me more AIR PRODUCTS ZZ
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