Lanxess Ag · XETR:LXS
Lanxess — Investor Presentation (November 2004)
31 slides from Lanxess's investor presentation, Nov 26, 2004
Slide 1: Key Financial Information
Key Financial Information All figures in this presentation are based on Combined Financial Statements (“CFS”). 4hfm0057
Slide 2: Disclaimer – Analyst Presentation
Disclaimer – Analyst Presentation This document does not constitute an offer or invitation to purchase or reliance should be placed on, the fairness, accuracy or completeness of subscribe for any securities, and neither this document nor anything the information contained herein and, accordingly, no
Slide 3: Agenda
Agenda Introduction on Financials Profit and Loss Statement: Group & Segment Reporting Balance Sheet Cash Flow Key Performance Indicators and Targets Additional Information 4hfm0057 Analyst Conference LANXESS 2004-11-26 Chart-No. 3
Slide 4: Nature of “Combined Financial Statements” (CFS)
Nature of “Combined Financial Statements” (CFS) – CFS reflect LANXESS’ historical financial performance as if spin-off had occurred on January 1, 2002 whereas discontinuing operations (“DO”) figures present LANXESS as integral part of the Bayer Group – CFS also differ from “pro forma financials”, as
Slide 5: Differences between Discontinued Operations “DO” and Combined Financial Statements “CFS”
Differences between Discontinued Operations “DO” and Combined Financial Statements “CFS” 547 -41 Sales „DO“ to „CFS“ 5,047 4,541 "DO" Sales Internal / Others "CFS" Sales 9M 2004 External sales 9M 2004 -18 3 EBIT „DO“ to „CFS“ 91 76 "DO" EBIT 9M Corporate Others "CFS" EBIT 2004 Center cost 9M 2004 al
Slide 6: Agenda
Agenda Introduction on Financials Profit and Loss Statement: Group & Segment Reporting Balance Sheet Cash Flow Key Performance Indicators and Targets Additional Information 4hfm0057 Analyst Conference LANXESS 2004-11-26 Chart-No. 6
Slide 7: 9M 2004 Months Already Show an Improvement (CFS)
9 Months Already Show an Improvement (CFS) (€ m) 9M 2003 9M 2004 Abs. chg. Chg. in % Sales 4,828 5,047 219 ~5% Cost of goods sold -3,919 -3,937 -18 0% SG&A -845 -834 11 -1% R&D -118 -95 23 -19% Other op. Result -23 -105 -82 >100% EBIT -77 76 153 n.m. Net Income -113 -8 105 93% EBITDA* 300 325 25 8%
Slide 8: EBIT Improvement Based on Strong Sales
EBIT Improvement Based on Strong Sales 9M 04 vs. 9M 03 Comment Sales – Strong volume growth and price increases of combined ~7% slightly offset by unfavourable currency effects of ~3% (~5%) – Largest contributors to this improvement were the segments Engineering Plastics and Chemical Intermediates –
Slide 9: Impairments and Exceptional Charges Taken
Impairments and Exceptional Charges Taken (€ m) 9M 2003 9M 2004 Depreciat. & Amortisation 377 249 – RCH (Performance Chemicals) Depreciation 274 182 thereof exceptional 4 1* Amortization 103 67 – €40 m environmental provision “Merebank” thereof exceptional 13 20 (Perf. Chemicals), €20 m “Rubber” Lit
Slide 10: Performance Rubber: EBIT Improvement Despite Exceptionals
Performance Rubber: EBIT Improvement Despite Exceptionals (€ m) 9M 2003 9M 2004 Sales 1,038 1,046 – Unfavourable currency effects on sales were offset by price EBIT -51 42 and volume increases. Rise in TRP volume over- EBIT Margin -4.9% 4.0% compensated decreased Depr. / Amort. -88 -55 volume in PBR
Slide 11: Engineering Plastics: Volume Growth and EBIT Improvement
Engineering Plastics: Volume Growth and EBIT Improvement - However Operationally Still Unsatisfactory (€ m) 9M 2003 9M 2004 Sales 1,060 1,281 – Overall increased volumes and prices drive sales growth EBIT -57 16 – Sales increases in STY as well EBIT Margin -5.4% 1.2% as positive volume- and price- d
Slide 12: Chemical Intermediates: EBIT Improvement Driven by Higher Market Demand
Chemical Intermediates: EBIT Improvement Driven by Higher Market Demand (€ m) 9M 2003 9M 2004 Sales 1,080 1,102 – Strong sales in BAC offset decrease in sales in other EBIT 33 46 business units – especially FCH which had to cope with ongoing EBIT Margin 3.1% 4.2% difficult market conditions Depr. /
Slide 13: Performance Chemicals: Strong Performance by Majority of BUs Offset by Exceptionals
Performance Chemicals: Strong Performance by Majority of BUs Offset by Exceptionals and RUC (€ m) 9M 2003 9M 2004 Sales 1,501 1,459 – Sales decrease mainly on unfavourable currency effects in EBIT 51 -8 all business units EBIT Margin 3.4% -0.5% – EBIT hit by exceptionals of €68 million: Depr. / Amor
Slide 14: “Corporate Segment”
“Corporate Segment” (€ m) EBITDA 9M 2003 9M 2004 chg in% Performance Rubber 37 97 >100 Engineering Plastics 32 38 19% Chemical Intermediates 139 132 -5% Performance Chemicals 131 68 -48% Reconciliation -39 -10 74% Total LANXESS 300 325 8% – Reconciliation reflects items not allocable to operating se
Slide 15: Agenda
Agenda Introduction on Financials Profit and Loss Statement: Group & Segment Reporting Balance Sheet Cash Flow Key Performance Indicators and Targets Additional Information 4hfm0057 Analyst Conference LANXESS 2004-11-26 Chart-No. 15
Slide 16: Condensed Consolidated Balance Sheet
Condensed Consolidated Balance Sheet Dec 31, Sep 30, Dec 31, Sep 30, (€ m) 2003 2004 (€ m) 2003 2004 Non-current Assets Shareholders’ equity 1,358 1,366 Intangible assets 99 69 Minority stockholders’ interest 43 34 Property, plant & equ. 1,551 1,510 Investments 40 96 Provisions Pension & post empl.
Slide 17: Basis: Solid Financing Structure
Basis: Solid Financing Structure – Standard & Poor’s has rated LANXESS “Investment Grade” BBB- with stable outlook – Ongoing: Selection of banks to establish long-term financing structure by 2004 – syndicated bank loan of approx. €1.5 bn – up to €200 million asset-backed commercial paper program – €
Slide 18: Target for Year-end 2004: Net Financial Debt of €1.1 bn
Target for Year-end 2004: Net Financial Debt* of €1.1 bn in € m 1700 1500 1,429 1,315 1300 ~1.1 bn 1100 900 700 1,442 1,395 500 300 100 -100 -13 -80 12/31/2003 09/30/2004 12/31/2004 E Financial obligations Thereof €200 m convertible Cash & cash equiv. Operational reduction of Working Capital and adj
Slide 19: Agenda
Agenda Introduction on Financials Profit and Loss Statement: Group & Segment Reporting Balance Sheet Cash Flow Key Performance Indicators and Targets Additional Information 4hfm0057 Analyst Conference LANXESS 2004-11-26 Chart-No. 19
Slide 20: Essential for Future: Strong Cash Flow Generation
Essential for Future: Strong Cash Flow Generation (€ m) 9M 2003 9M 2004 EBIT -77 76 – Higher taxation due to Taxes Paid 5 -52 higher taxable income and certain amounts of non- Depreciation & Amortization 377 249 deductible tax items Change in Pension Accrual 9 -27 – Working Capital increases Gain/ L
Slide 21: Working Capital Status is Unsatisfactory
Working Capital* Status is Unsatisfactory in € m 36.3% of 35.1% of 9M Sales 9M Sales 3000 1,769 – Inventory: Planned 2500 1,752 maintenance shutdowns in 1,512 9M 2004 and price 2000 1,217 increases impact inventory 1,049 1500 990 – Receivables: Higher sales 1000 especially in Q3 2004 result in incre
Slide 22: Disciplined Approach for Capital Expenditures
Disciplined Approach for Capital Expenditures in € m 600 487 500 400 312 300 7.2% 193 200 4.9% 158 4.0% 3.1% 100 0 2002 2003 9M 2003 9M 2004 Target: Reduce annual Capex to ~4% of sales Percentages: Capex in % of sales 4hfm0057 Analyst Conference LANXESS 2004-11-26 Chart-No. 22
Slide 23: Agenda
Agenda Introduction on Financials Profit and Loss Statement: Group & Segment Reporting Balance Sheet Cash Flow Key Performance Indicators and Targets Additional Information 4hfm0057 Analyst Conference LANXESS 2004-11-26 Chart-No. 23
Slide 24: We Start with Realistic Targets
We Start with Realistic Targets Indicator Target Time Frame EBITDA margin* 9%-10% 2006 Working Capital reduce ongoing Debt pay down ongoing Capex reduce to ~4% of sales 1-2 years Dividends** moderate strived for fiscal year 2006 2004 EBITDA excluding exceptionals expected around €450 million *exclud
Slide 25: Agenda
Agenda Introduction on Financials Profit and Loss Statement: Group & Segment Reporting Balance Sheet Cash Flow Key Performance Indicators and Targets Additional Information 4hfm0057 Analyst Conference LANXESS 2004-11-26 Chart-No. 25
Slide 26: Nature of “Combined Financial Statements” (CFS)
Nature of “Combined Financial Statements” (CFS) – CFS reflect LANXESS’ historical financial performance as if spin-off had occurred on January 1, 2002 whereas discontinuing operations (“DO”) figures present LANXESS as integral part of the Bayer Group – CFS also differ from “pro forma financials”, as
Slide 27: Tax Items
Tax Items (€m) For the following years a slightly higher adjusted tax rate is expected, as a consequence of diverging valuation of assets for statutory accounting and for tax purposes in the course of the spin-off. Income taxes arising prior to the economic effective date will be borne by Bayer AG o
Slide 28: Raw Materials and Currency Exposure are Managed
Raw Materials and Currency Exposure are Managed Raw materials Currency exposure Our operating business is Top 10 petrochemical raw materials 2003 in million € performed in the following major 1,3-Butadiene foreign currencies: US-dollar, Yen, Styrene Pound, Canadian and Hongkong Acrylonitrile dollar
Slide 29: Contingent Liabilities: Arrangement between Bayer and LANXESS
Contingent Liabilities: Arrangement between Bayer and LANXESS Environmental Liabilities – LANXESS is liable for real estate listed in annex of the master agreement – Liability up to €350 million for liabilities caused prior to spin-off date – Generally, the liability cap relates to remedial action o
Slide 30: Contact Details
Contact Details Michael Pontzen (Head of IR) Oliver Stratmann Tel.: +49-214 30 43804 +49-214 30 49611 Fax.: +49-214 30 96 43804 +49-214 30 96 49611 Mobile: +49-175 30 43804 +49-175 30 49611 Tanja Satzer Dr. Gerd Zelesny Tel.: +49-214 30 43801 +49-214 30 71416 Fax.: +49-214 30 96 43801 +49-214 30 96
Slide 31: Abbreviations
Abbreviations Performance Rubber Rubber Performance ChemicalChemical Intermediates Intermediates BTR Butyl Rubber BAC Basic Chemicals PBR Polybutadiene Rubber FCH Fine Chemicals TRP Technical Rubber Products IPG Inorganic Pigments Engineering Plastics Plastics Engineering Performance ChemicalsChemic