Covestro AG · VIE:1COV
Covestro — Non-Deal Roadshow (December 2015)
32 slides from Covestro's roadshow presentation, Dec 10, 2015
Slide 1: Positive Momentum Continues – Roadshow Presentation
Positive Momentum Continues Roadshow Presentation covestro.com │ January & February 2016
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: Covestro Key Investment Highlights
Covestro Key Investment Highlights Global leader in high-tech material solutions Leading and defendable global industry positions 1 based on focused portfolio Favorable industry dynamics 2 with robust above GDP growth prospects in a diverse range of end-markets Positioned to deliver volume growth 3
Slide 4: Covestro at a Glance
Covestro at a Glance Inventor and leader in high-tech material solutions driven by global trends ● Leading global polymer producer in polyurethanes and Sales Split by Geography(b)(c) its derivatives as well as polycarbonates 2014A China 15% APAC ● Proven track record of process and product innovatio
Slide 5: Covestro Business Units
Covestro Business Units Three industry-leading, structurally attractive business units Business Units Polyurethanes Polycarbonates Coatings, Adhesives, (PUR) (PCS) Specialties (CAS) ● Global #1: ● Joint Global #1: ● Global #1: MDI: #2 (1,475kt) EMEA: #2 (540kt) Aliphatic isocyanate derivatives
Slide 6: Covestro's Industry Structure
Covestro‘s Industry Structure Covestro is a leader across its entire portfolio with distinct entry barriers limiting threat of new entrants Polyurethanes Polycarbonates Coatings, Adhesives, Specialties Aliphatic Polyether isocyanate Polyurethane MDI TDI polyols(b) PC derivatives dispersions #1 in PU
Slide 7: 9M 2015 – Sales by Segments
9M 2015 – Sales by Segments Significant proportion generated with resilient businesses Sales by Segments Highlights % of Group Sales Resilient businesses • CAS: proven low volatility Others 6% • Polyols: structurally low volatility MDI Above mid-cycle margins PCS • PCS: but still significantly below
Slide 8: CAS at a Glance
CAS at a Glance Focus on stable high margins in CAS business with defendable competitive advantages Global leading supplier of high performance materials to the coatings / adhesives / specialties industries 6+ 2,300+ 4,300+ Monomers Products Customers(c) #1 22.7% Producer of aliphatic €1.9bn Adj. EB
Slide 9: Polyols Industry Spreads
Polyols Industry Spreads Polyether polyols – an inherently stable margin business Historic global polyols price over propylene price Global average price (US$/t) 2005A – 2014A Spreads from c. 800US$/t to c. 950US$/t 2005A 2006A 2007A 2008A 2009A 2010A 2011A 2012A 2013A 2014A Global Polyols Price (a)
Slide 10: Industry historical development and outlook
Industry historical development and outlook Above GDP industry growth driving industry capacity utilization and supporting higher margins Demand Development(b) Supply Development Operating Rates and Margins (2014A – 2020E) (2014A – 2020E) Demand (kt) Supply (kt)(a) CAGR Industry spreads (US$/t)(c)(d
Slide 11: Covestro asset base
Covestro asset base Positioned for volume growth through well-invested assets c. €7bn total capex spent(a) in last 10 years Well-invested Asset Base Well-positioned for Volume Growth and Operational Leverage Total capex (€m)(a) Total capex / sales (%)(a) Capacity (kt) 8.5% 6.8% +360kt 5.7% 889 642 6
Slide 12: Cash Flow Delivery
Cash Flow Delivery Track record of positive free operating cash flows across the cycle Covestro Net Sales vs. FOCF (2005A – 9M 2015A) Net sales (€m) 11,610 11,761 11,357 10,832 10,161 10,435 10,154 9,446 9,738 9,284 673 7,520 592 571 415 313 277 345 265 210 181 110 2005A 2006A 2007A 2008A 2009A 2010
Slide 13: Covestro Strategy
Covestro Strategy Leverage industry leadership to capture growth in our markets and improve asset / cost base Capture market growth 1 over the next 5 years with existing world-scale assets Optimize asset footprint 2 within 3 years through site consolidation, restructuring and efficiency projects Imp
Slide 14: Financial Highlights Q3 2015
Financial Highlights Q3 2015 covestro.com │ January & February 2016
Slide 15: Key Highlights
Key Highlights Positive momentum continues Successful IPO in volatile markets Strong earnings development despite slowdown in global growth Polycarbonates benefits from structurally improved supply/demand balance Record free cash flow paves way for attractive dividend Solid investment grade rating e
Slide 16: 9M 2015 Sales & Earnings
9M 2015 Sales & Earnings Solid volume growth and significant earnings improvement Core Volumes Adj. EBITDA Adj. EBIT FOCF in kt in € million in € million in € million 1,385 3,369 3,286 951 883 571 510 138 9M 2014 9M 2015 9M 2014 9M 2015 9M 2014 9M 2015 9M 2014 9M 2015 +2.5% +46% +73% +314% Change vs
Slide 17: Q3 2015 Sales & Earnings
Q3 2015 Sales & Earnings Significant earnings improvement despite flat volumes Core Volumes Adj. EBITDA Adj. EBIT FOCF in kt in € million in € million in € million 471 1,137 1,129 326 305 251 223 177 Q3 2014 Q3 2015 Q3 2014 Q3 2015 Q3 2014 Q3 2015 Q3 2014 Q3 2015 -0.7% +45% +72% +13% Change vs. prio
Slide 18: Q3 2015 – Sales Bridge
Q3 2015 – Sales Bridge Flat volumes in a challenging environment Sales Bridge Highlights in € million Solid volume development • In Q3 2015, slight decline mainly in the -17 segment PUR 3,062 -227 +202 3,020 • In 9M 2015, growth of 3.0% Y/Y (€260m) with all three segments contributing Positive FX ef
Slide 19: Q3 2015 – Adj. EBITDA Bridge
Q3 2015 – Adj. EBITDA Bridge Strong growth driven by tight supply Adj. EBITDA Bridge Highlights in € million Stronger pricing power Pricing Power €108m • Tight supply in polycarbonates -37 +335 471 • Polyols helped by tight styrene markets Others • Limited pricing power in MDI +75 -1 -227 • Price re
Slide 20: 2015 – Sales per Region
2015 – Sales per Region China still on track and growth in mature markets accelerated Solid Growth in 9M 2015 De-stocking in Q3 2015 in € million / Core Volumes Y/Y in € million / Core Volumes Y/Y China China 1,434 453 Vol. +5% Vol. -7% APAC APAC 2,573 816 Vol. +2% EMLA Vol. -9% EMLA 4,140 1,352 Vol
Slide 21: Group Results
Group Results Defending higher margin level Net Sales and Growth Q3 2015 Highlights in € million / changes Y/Y +11.0% +8.1% -1.4% • Core volumes (kt) down 0.7% Y/Y • Sales effects Y/Y: volumes -0.6%, prices -7.4%, FX +6.6% • EBITDA margin stable Q/Q despite lower 2,826 2,893 3,062 2,980 3,054 3,210
Slide 22: Results of PUR Segment
Results of PUR Segment Polyurethanes – Volatile development Net Sales and Growth Q3 2015 Highlights in € million / changes Y/Y • Core volumes (kt) down 2.8% Y/Y +7.0% • Sales effects Y/Y: volumes -2.2%, prices +3.1% -8.5% -12.1%, FX +5.8% MDI: • Volumes flat despite weak development in 1,507 1,530 1
Slide 23: Results of PCS Segment
Results of PCS Segment Polycarbonates – Positive momentum continues Net Sales and Growth Q3 2015 Highlights in € million / changes Y/Y • Core volumes (kt) up 5.5% Y/Y +19.3% +13.0% +15.9% • Sales effects Y/Y: volumes +4.1%, prices -0.8%, FX +9.7% • Strong volume growth in Europe and US, 660 695 725
Slide 24: Results of CAS Segment
Results of CAS Segment Coatings, Adhesives, Specialties – Record margin Net Sales and Growth Q3 2015 Highlights in € million / changes Y/Y +15.4% +13.6% +2.6% • Core volumes (kt) down 2.3% Y/Y • Sales effects Y/Y: volumes -2.5%, prices -1.4%, FX +6.5% • Volume decline mainly driven by de- 471 487 50
Slide 25: 9M 2015 – Free Operating Cash Flow
9M 2015 – Free Operating Cash Flow On track for a record FOCF Free Operating Cash Flow 9M 2015 Highlights in € million Strong performance in 9M 2015 • Driven by strong EBITDA • Working capital increased mainly due to planned maintenance shut down in China 571 • Capex of €352m significantly below D&A
Slide 26: 9M 2015 – Net Financial Debt
9M 2015 – Net Financial Debt Baa2 rating (Moody’s) with stable outlook Net Financial Debt Development in € million Q3 2015 FOCF €251m +556 +112 4,995 -1,000 4,578 -455 +113 -61 +24 +128 Others -1,485 Change Other Financial EBITDA Income taxes Capex in WC operating CF transaction paid or with Bayer a
Slide 27: Guidance for FY 2015
Guidance for FY 2015 On track to deliver FY 2014 Guidance FY 2015 vs. FY 2014 9M 2015 Core Volume Growth* Group* 4.8% Low-single-digit increase Y/Y 2.5% PUR* 3.9% Slight increase Y/Y 0.8% PCS* 9.0% Mid-single-digit increase Y/Y 6.7% CAS* 1.3% Low-single-digit increase Y/Y 3.5% Adj. EBITDA Group FY 2
Slide 28: Q3 2015 - Summary
Q3 2015 - Summary Covestro fully on track Solid organic growth in a focused portfolio despite a challenging market environment Strong earnings and cash flow generation driven by a favorable demand/supply balance and supported by focus on profitability Robust financial profile with an investment grad
Slide 29: Competitive Landscape
Competitive Landscape Covestro is a leader across its entire portfolio Polyurethanes Polycarbonates Coatings, Adhesives, Specialties Aliphatic Polyether isocyanate Polyurethane MDI TDI polyols(b) PC derivatives dispersions #1 in PUR Joint #1 in PC(c) #1 in CAS Others; Others, Others Others; Others;
Slide 30: Industry Supply Development
Industry Supply Development Favourable industry supply outlook Supply Development (2010A – 2020E) Supply (kt)(a) CAGR CAGR 4.3% 360 8,530 5.6% 450 1,080 6,640 5,350 + Sadara + Wanhua + Karoon MDI + Huntsman + BASF – Covestro(b) + SLIC (c) – MCNS(d) 2010A 2014A NAFTA APAC EMLA 2020E CAGR CAGR 4.1% 6.
Slide 31: Structured Profitability Program
Structured Profitability Program Targeted gross savings of c. €420m well above expected inflation Key Measures ● Rolling out fixed asset management cost Inflation of existing Fixed assets initiatives management cost ● More efficient turnaround execution Targeted cost base improvements gross savings
Slide 32: Upcoming IR Events
Upcoming IR Events Find more information on investor.covestro.com Reporting Dates • February 23, 2016*: Q4/FY 2015 Annual Report • April 25, 2016*: Q1 2016 Interim Report *Dates preliminary Annual Dates • May 3, 2016: Annual Stockholders' Meeting • May 4, 2016: Planned Dividend Payment Day Broker Co