Lanxess Ag · XETR:LXS
Lanxess — Q1 2010 Earnings Presentation
48 slides from Lanxess's earnings presentation, May 13, 2010
Slide 1: LANXESS – Q1 2010 Roadshow
LANXESS – Q1 2010 Roadshow Strong demand meets flexible and adjusted cost structure Matthias Zachert, CFO
Slide 2: Safe harbour statement
Safe harbour statement This presentation contains certain forward-looking statements, including assumptions, opinions and views of the company or cited from third party sources. Various known and unknown risks, uncertainties and other factors could cause the actual results, financial position, devel
Slide 3: Agenda
Agenda Strategy recap LANXESS – positioned to benefit from global growth trends - Mobility and labeling - CO2 reduction and clean water Business and financial review Q1 2010 Outlook Chart 3
Slide 4: LANXESS – A leading specialty chemicals company based on three powerful segments
LANXESS – A leading specialty chemicals company based on three powerful segments LANXESS – Energizing Chemistry Performance Polymers Advanced Intermediates Performance Chemicals Globally No. 1-3 Europe No. 1-2 No. 1-4 in niches Global technology leader in synthetic Leading suppliers of custom sy
Slide 5: Consistent delivery of our strategy
Consistent delivery of our strategy 2004 2005 2006 2007 2008 2009 2010 Acquisition EBITDA* margin target Acquisition of Gwalior/India – a strategic fit in a growing market Acquisition of Jiangsu Polyols Chem. Co/China Purchase of Petroflex/Brazil, strengthening worldwide presence in synthetic
Slide 6: Excluding acquisitions, headcount reduced by ~1,000 employees versus FY 2008
Excluding acquisitions, headcount reduced by ~1,000 employees versus FY 2008 Headcount development since 2003 Including ~800 HC LANXESS from Petroflex Headcount Including ~400 HC from Gwalior and Jiangsu Polyols 22000 20,423 20000 19,659 18,282 18000 16,481 16000 15,420 14,797 14,610 14,604 14,338 1
Slide 7: Portfolio management has continuously strengthened the company - €1.5 bn of sales divested
Portfolio management has continuously strengthened the company - €1.5 bn of sales divested Divested Date Leadership Cyclicality Profitability Acquired Position Expectation Fibers 2005 Weak High Low Paper 2005 Moderate Moderate Medium Textile Processing Chem. 2006 Weak Moderate Medium Lustran Polymer
Slide 8: LANXESS – Improvement trend of financials, based on strategy implementation
LANXESS – Improvement trend of financials, based on strategy implementation In € m 2003 2004 2005 2006 2007 2008 2009 * pr o EBITDA 311 447 581 675 719 722 465 form Net financial debt 1,429 1,135 680 511 460 864 794 * a da Net fin. debt / EBITDA 4.6x 2.5x 1.2x 0.8x 0.6x 1.2x 1.7x ta o Gearing 128% 1
Slide 9: Powershift to BRIC – business activity substantially improving
Powershift to BRIC – business activity substantially improving Q1 2010 Sales by region [%] Sales evolution by region [%] Germany EMEA (excl. Germany) North America Latin America Asia Germany Asia 23 19 40 20 Ø 2008 LatAm 12 -20 EMEA (without Germany) -40 North 30 America -60 Q4 2008 Q1 2009 Q2 2009
Slide 10: Agenda
Agenda Strategy recap LANXESS – positioned to benefit from global growth trends - Mobility and labeling - CO2 reduction and clean water Business and financial review Q1 2010 Outlook Chart 10
Slide 11: Mobility trend remains intact - global vehicle park continues to grow
Mobility trend remains intact - global vehicle park continues to grow Global light vehicle park shows sustained growth trend Increasing vehicle park: Global growth expected APAC around 3% Americas EMEA APAC with highest growth rates (approx. 5-7%) Americas and EMEA with lower 1 bn vehicles gro
Slide 12: Planned capacity expansions of selected tire producers - companies focus on BRIC markets
Planned capacity expansions of selected tire producers- companies focus on BRIC markets Bridgestone Increase capacity in Thailand ~€75 m investment/ ~2.0 m tires/year Increase capacity in China ~€67 m investment/ ~1.3 m tires/year New plants in China and India ~€1.300 m investment New plant
Slide 13: New EU tire legislation will increase transparency of tire performance
New EU tire legislation will increase transparency of tire performance and thus reinforce high performance tire trend Labeling regulations Tire producers preparing for new requirements EU: as of November 2012, new tires will be labeled for - fuel efficiency Rolling resistance - wet grip Fuel effic
Slide 14: Strengthening our global butyl rubber business with a world scale production facility in Singapore
Strengthening our global butyl rubber business with a world scale production facility in Singapore Facts & Figures Distribution of cash outflows Location: Singapore, Jurong Island Most competitive BTR site [€ m] Ideal infrastructure/ raw material supply secured 160 ~200 employees Start of
Slide 15: Optimization of PBR’s world production network
Optimization of PBR’s world production network LANXESS to expand global capacities of Nd-PBR Debottlenecking of ~50 kt Nd-PBR in Cabo, Dormagen and Orange LANXESS flexible production set up in Pt. Jérôme enables a Dormagen +15 kt possible increase of SSBR Pt. Jérôme NBR Nd-PBR Upgrade to LANXE
Slide 16: Strengthening our TRP rubber business with a brand new production facility in China
Strengthening our TRP rubber business with a brand new production facility in China Facts and figures Main applications Location: Nantong, China Partnership: 50:50 joint venture with TSRC Hoses Highly cost-efficient plant, start of production H1 2012 Seals ~100 employees Belts Capaci
Slide 17: BU SCP’s new technology reduces weight and improves performance of modern cars
BU SCP’s new technology reduces weight and improves performance of modern cars Durethan offers new design opportunities combined with reduced fuel consumption New components used in Durethan Citroen Picasso based on structural inserts Durethan with exceptional structural performance in tandem with
Slide 18: Investing in mega trend “clean water” ensures long-term growth for ION
Investing in mega trend “clean water” ensures long-term growth for ION Growing demand trend for clean water Population growth in Asia Purification of available water is Increasing urbanization mandatory to satisfy future demand Rising energy consumption New plant in Germany New plant in India
Slide 19: Agenda
Agenda Strategy recap LANXESS – positioned to benefit from global growth trends - Mobility and labeling - CO2 reduction and clean water Business and financial review Q1 2010 Outlook Chart 19
Slide 20: Strong pick up in business activity
Strong pick up in business activity Q1 yoy sales variances Price Volume Currency Portf. Total Performance Polymers 17% 74% -7% 0% 85% Strong pick up in volumes in tandem with prices Advanced Intermediates 0% 20% -2% 7% 24% Prices increase in line with increasing input costs Performance Chemicals
Slide 21: Strong demand meets a flexible and adjusted cost structure
Strong demand meets a flexible and adjusted cost structure [€ m] Q1 2009 Q1 2010 yoy in % Sales 1,054 (100%) 1,613 (100%) 53% Significant sales increase as Cost of sales -857 (81%) -1,219 (76%) 42% positive volume (+50%), price (+6%) and portfolio (+2%) Selling -114 (11%) -142 (9%) 25% effects are
Slide 22: Q1 2010 – Performance Polymers strong driver for sales and EBITDA increase
Q1 2010 – Performance Polymers strong driver for sales and EBITDA increase Sales Q1 2009 Higher sales in all segments [€ m] Q1 2010 with Performance Polymers 1000 828 leading the improvement 800 600 448 455 Sales in Performance 320 338 400 258 Polymers are fueled by strong 200 0 demand from Asia
Slide 23: Performance Polymers: substantial business rebound
Performance Polymers: substantial business rebound [€ m] Q1 2009 Q4 2009 Q1 2010 Sales rebound yoy due to stronger volumes & prices in all BUs Sales 448 725 828 Improvement in all regions, ongoing strong demand for rubber EBIT -24 79 108 (replacement and restocking) Depr. / Amort. 32 38 35 BTR
Slide 24: Advanced Intermediates: segment provides stability
Advanced Intermediates: segment provides stability [€ m] Q1 2009 Q4 2009 Q1 2010 Volumes increase on normal seasonal demand pattern Sales 258 277 320 Softening in agro due to higher customer inventories EBIT 35 11 31 (BAC, SGO). Non-agro end industries overcompensate (BAC), albeit with lower mar
Slide 25: Performance Chemicals: strong specialty chemicals portfolio
Performance Chemicals: strong specialty chemicals portfolio [€ m] Q1 2009 Q4 2009 Q1 2010 Sales rebound in all BUs due to solid volume improvement Sales 338 382 455 RCH and RUC benefit from recovery of OEM markets EBIT 21 4 62 Lower selling prices offset by reduced input costs with Depr. / Amo
Slide 26: Agenda
Agenda Strategy recap LANXESS – positioned to benefit from global growth trends - Mobility and labeling - CO2 reduction and clean water Business and financial review Q1 2010 Outlook Chart 26
Slide 27: LANXESS is well positioned and confident for 2010
LANXESS is well positioned and confident for 2010 Current macro view Global markets have further stabilized, growth momentum in emerging markets (especially Asia) while other regions slowly improve Overall business momentum is anticipated to improve, however macroeconomic setbacks cannot be rule
Slide 28: LANXESS with confidence for 2010
LANXESS with confidence for 2010 LANXESS expects 2010 well ahead of 2009 EBITDA pre FY 2010 is expected to be between €650-700 m assuming a continued positive macroeconomic development Additional financial information for 2010 Capex : ~€400-430 m Hedging 2010 : ~40% at 1.35-1.40 USD / EUR 2011 :
Slide 29: LANXESS Energizing Chemistry
LANXESS nergizing Chemistry
Slide 30: Appendix
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Slide 31: Portfolio management allows for regrouping of LANXESS businesses along chemical segmentation
Portfolio management allows for regrouping of LANXESS businesses along chemical segmentation Performance Polymers Performance Polymers Advanced Intermediates Performance Chemicals Butyl Rubber Basic Chemicals Material Protection Products Performance Butadiene Rubbers Saltigo Inorganic Pigments Techn
Slide 32: LANXESS has a broad customer portfolio with varying demand patterns
LANXESS has a broad customer portfolio with varying demand patterns LANXESS sales distribution by industry, 2009 Others Agro Tire Construction Consumer Automotive Goods Chemicals Chart 32
Slide 33: Platform for future success
Platform for future success Q1 2010 Strong volume rebound in emerging markets Business Flexible and adjusted cost structure very supportive BTR, new world scale plant (Singapore) ION, new plant for membrane PBR, additional Nd capacity through technology (Germany) Investments debottlenecking (U
Slide 34: Q1 2010 financials: back to more normal profitability
Q1 2010 financials: back to more normal profitability [€ m] Q1 2009 Q4 2009 Q1 2010 yoy in % Strong increase in sales, driven Sales 1,054 1,392 1,613 53.0% by strong volumes in the context EBITDA pre except. 66 144 233 >100% of improving demand margin 6.3% 10.3% 14.4% EBITDA and margin: improved
Slide 35: Tidy balance sheet
Tidy balance sheet [€ m] Dec 31, 2009 Mar 31, 2010 Dec 31, 2009 Mar 31, 2010 Non-current Assets 2,382 2,436 Stockholders’ Equity 1,445 1,559 Intangible assets 196 202 thereof minority interest 13 14 Property, plant & equipment 1,809 1,850 Non-current Liabilities 2,504 2,526 Equity investments 26 30
Slide 36: No major refinancing needs until 2012
No major refinancing needs until 2012 Long term financing secured Liquidity and maturity profile Maturity profile extended 2010 2011 2012 2013 2014 2015 2016 No major refinancing needs 600 Bond Bond until 2012 400 Dependency on banks further Short-term Schuld- Bond 200 schein1 reduced faciliti
Slide 37: Cash flow mirrors increased business activity
Cash flow mirrors increased business activity [€ m] Q1 2009 Q1 2010 Profit before Tax -21 144 Substantially improved profit Depreciation & amortization 63 66 before tax fuels cash flow Gain from sale of assets -7 0 Inventories increase due to raw Result from equity investments -2 -4 material pri
Slide 38: Resilience shown in recession scenario
Resilience shown in recession scenario Average operating segment margin* above 10 % Despite unprecedented EBITDA pre Q4 2008 Q1 2009 Q2 2009 Q3 2009 downturn, operating margins margin2 demonstrate resilience 20% Avg. 14.5%** Early implementation of cost Avg. 11.7%** saving measures lowered 15% B
Slide 39: Exceptional items incurred in Q1 2009 and Q1 2010
Exceptional items incurred in Q1 2009 and Q1 2010 [€ m] Q1 2009 Q1 2010 Exceptional thereof D&A Exceptional thereof D&A Performance Polymers 0 0 1 0 Advanced Intermediates 0 0 0 0 Performance Chemicals 1 0 0 0 Reconciliation 3 0 2 0 Total 4 0 3 0 Chart 39
Slide 40: Raw material prices continue their rise in Q1 2010
Raw material prices continue their rise in Q1 2010 Global raw materials index* In Q1 2009, raw materials decreased, lag-effect helped [%] keeping selling prices stable 170 Since Q3 2009, raw material 160 prices rose, LANXESS 150 sequentially increased selling 140 prices 130 120 Further raw mat
Slide 41: Serving global markets with world-wide rubber manufacturing network
Serving global markets with world-wide rubber manufacturing network Butyl Rubber Zwijndrecht, Belgium Sarnia, Canada Singapore (planned) Performance Butadiene Rubbers Port Jerome, France Dormagen, Germany Orange TX, USA Technical Rubber Products La Wantzenau, France Cabo, Brazil Dorm
Slide 42: Projected demand for Nd-PBR to exceed supply by 2014
Projected demand for Nd-PBR to exceed supply by 2014 Nd-PBR demand grows beyond available capacity levels Global growth for Nd-PBR is expected at ~10% annually Demand CAGR driven by: (2008 - 2014) - Global mobility trend by region: Capacity* - Focus on high performance China (~24%) LXS Debottlenec
Slide 43: Is LANXESS a swing producer?
Is LANXESS a swing producer? Tire manufacturers produce insufficient synthetic rubber for their captive use Rubber producing capabilities of selected tire manufacturers: Importance in LANXESS Michelin Goodyear Bridgestone Continental Pirelli Hankook portfoIlio major BTR none none none none none none
Slide 44: Does natural rubber cannibalize synthetic rubber?
Does natural rubber cannibalize synthetic rubber? Risk of substitution Low substitution risk High substitution risk BTR PBR1 S-SBR E-SBR NBR EPDM Overall, very limited substitution possibility 1 Nd-PBR Chart 44
Slide 45: Similar tire labelings are being proposed in several countries
Similar tire labelings are being proposed in several countries Proposed tire labels Europe U.S. Japan For fuel efficient tires For fuel efficient tires Chart 45
Slide 46: Abbreviations
Abbreviations Performance Polymers Advanced Intermediates BTR Butyl Rubber BAC Basic Chemicals PBR Performance Butadiene Rubbers SGO Saltigo TRP Technical Rubber Products SCP Semi-Crystalline Products Performance Chemicals MPP Material Protection Products IPG Inorganic Pigments FCC
Slide 47: Upcoming events 2010
Upcoming events 2010 Upcoming events Annual Stockholders’ Meeting May 28, 2010 Q2 Results 2010 August 06, 2010 Capital Markets Day September 15/16, 2010 Q3 Results 2010 November 10, 2010 Chart 47
Slide 48: Contact detail Investor Relations
Contact detail Investor Relations Oliver Stratmann Verena Simiot Head of Investor Relations Assistant Investor Relations Tel. : +49-214 30 49611 Tel. : +49-214 30 23851 Fax. : +49-214 30 959 49611 Fax. : +49-214 30 40944 Mobile : +49-175 30 49611 Mobile : +49-175 30 23851 Email : Oliver.Stratmann@la