Clariant Ag · SIX:CLN
Clariant — FY2003 Earnings Presentation
57 slides from Clariant's earnings presentation, Feb 24, 2004
Slide 1: 2003 Full-year Results - Analyst Conference
2003 Full-year Results Analyst Conference Clariant Zurich, February 24, 2004 The way forward Slide 1
Slide 2: Agenda
2003 Full-year Results Clariant Agenda The way forward ■ Key Factors 2003 ■ Financial Review ■ Transformation Program ■ Capital Increase ■ Summary Slide 2
Slide 3: Key Factors 2003 - Roland Lösser, CEO
2003 Full-year Results Clariant Roland Lösser, CEO The way forward ■ Key Factors 2003 Slide 3
Slide 4: Key factors 2003
2003 Full-year Results Clariant - Key factors 2003 Key Factors 2003 Financial Review ■ Resilient performance amid tough markets, sales growth +1% in LC Transformation Program ■ Operating margin stabilized Capital Increase ■ Net income CHF 161 m Summary ■ Cash Flow improved in 2nd half ■ Net debt red
Slide 5: The way forward
2003 Full-year Results Clariant - The way forward Key Factors 2003 Financial Review Transformation Strategic focus Program Capital Increase ■ Recognized as a service-driven specialty chemicals group Summary − World-class customer service skills − Superior innovation and applications capabilities − L
Slide 6: The way forward - Transformation Program
2003 Full-year Results Clariant - The way forward Key Factors 2003 Transformation Program Financial Review wide-reaching series of actions Transformation Program Performance Improvements (CPIP) Capital Increase ■ 9 Projects Summary − Operational measures − Structural measures Asset Sales Capital Inc
Slide 7: The way forward - progress on asset sales and CPIP
2003 Full-year Results Clariant - The way forward Key Factors 2003 Financial Review ■ Asset sales on track Transformation Program − Cellulose Ethers successfully sold to Shin-Etsu for CHF 375 m Capital Increase − Electronic Materials well advanced Summary − Two new projects now ready for disposal −
Slide 8: The way forward - capital increase
2003 Full-year Results Clariant - The way forward Key Factors 2003 Financial Review ■ Fully underwritten capital increase Transformation Program − Creates a solid financial basis for the Group Capital Increase − Facilitates the implementation of Performance Improvement Summary Program − Flexibility
Slide 9: Financial Review - François Note, CFO
2003 Full-year Results Clariant François Note, CFO The way forward ■ Financial Review Full-year 2003 Slide 9
Slide 10: Key financial group figures Full-year 2003
2003 Full-year Results Key financial group figures Key Factors 2003 Full-year 2003 Financial Review FY 2003 2002 2002 Change in % Transformation in m CHF 2003 reported/ Program reported like-for-like* 2002 like-for-like* CHF LC Capital Increase Summary Sales 8516 9330 8824 -4 +1 Gross profit 2729 30
Slide 11: Negative currency impact in Full-year 2003
2003 Full-year Results Negative currency impact Key Factors 2003 in Full-year 2003 Financial Review FY 2003* versus FY 2002, like-for-like** Transformation Program Capital Increase Summary Volume Price Sales in LC Currency Sales in CHF -2% +3% +1% -5% -4% * reported ** like-for-like (restatement: Em
Slide 12: Divisional sales and margins
2003 Full-year Results Divisional sales and margins Key Factors 2003 Full-year 2003 vs. 2002 like-for-like* Financial Review in m CHF FY Change EBITDA Margin in % Transformation Program 2003 03 vs 02** Sales LC in % 2003 2002 Capital Increase Textile, Leather & Paper Chemicals 2179 +1 11.2 13.0 Summ
Slide 13: Operating Margins
2003 Full-year Results Operating Margins Key Factors 2003 FY 2003 2002 2002 Financial Review in m CHF reported like-for-like* reported Transformation Program Sales 8516 8824 9330 Capital Increase Margins Summary EBITDA before restructuring and disposals 974 1044 1112 in % of sales 11.4 11.8 11.9 EBI
Slide 14: EBITDA analysis
2003 Full-year Results EBITDA analysis Key Factors 2003 Financial Review Full-year 2003 versus Full-year 2002 - like-for-like* Transformation Program 1125 -138 +34 Capital Increase -32 +55 +112 -100 1119 +158 -95 Summary EBITDA Pricing Raw Volume Measures Currency Re- Disposal Others EBITDA FY 2002
Slide 15: Key financial group figures 4th Quarter 2003
2003 Full-year Results Key financial group figures Key Factors 2003 4th Quarter 2003 Financial Review FY Q4 2003 Q4 2002 Q4 2002 Change in % Transformation in m CHF Q4 2003 reported/ Program reported like-for-like* Q4 2002 like-for-like* CHF Capital Increase Summary Sales 2114 2209 2097 +1 Gross pro
Slide 16: Cash flow improved in Full-year 2003
2003 Full-year Results Cash flow improved Key Factors 2003 in Full-year 2003 Financial Review Transformation in m CHF 1stHY 2ndHY FY 2003 FY 2002 Program Net result -49 210 161 -648 Capital Increase Depreciation & amortization 300 260 560 1395 Summary Other 68 -372 -304 68 Operating cash flow before
Slide 17: Net debt reduced to CHF 2.9 bn
2003 Full-year Results Net debt reduced to CHF 2.9 bn Key Factors 2003 Financial Review in m CHF Transformation Program Capital Increase 3686 Summary 3476 2905 12/02 06/03 12/03 gearing 380% 347% 247% net debt/EBITDA 2.9 3.4* 2.6 interest coverage 3.6 2.5* 3.3 (EBITA) Slide 17 *on a 12 months rollin
Slide 18: Financial Result 2003
2003 Full-year Results Financial Result 2003 Key Factors 2003 Financial Review in m CHF FY 2003 FY 2002 Transformation Program Financial Income 26 43 Capital Increase Interest Expenses -164 -193 Summary Other -42 -36 Financial expenses -206 -229 Currency result, net -95 -62 Total -275 -248 Slide 18
Slide 19: Debt maturity profile on December 31, 2003
2003 Full-year Results Debt maturity profile on December 31, 2003 Key Factors 2003 Financial Review Additional flexibility Financial debt ■ Financing on a Transformation long-term basis Program 2000 ■ Not utilized but Capital Increase available commited 1800 Summary open credit lines of 1600 more th
Slide 20: Change in equity
2003 Full-year Results Change in equity Key Factors 2003 Financial Review in m CHF Transformation Program Capital Increase Summary 1176 1061 914 at Dec. 31, 02 at Jun. 30, 03 at Dec. 31, 03 Slide 20
Slide 21: Transformation Program - Roland Lösser, CEO
2003 Full-year Results Clariant Roland Lösser, CEO The way forward ■ Transformation Program ■ Capital Increase ■ Summary Slide 21
Slide 22: The way forward - Transformation Program
2003 Full-year Results Clariant - The way forward Key Factors 2003 Transformation Program Financial Review wide-reaching series of actions Transformation Program Performance Improvements (CPIP) Capital Increase ■ 9 Projects Summary − Operational measures − Structural measures Asset Sales Capital Inc
Slide 23: Asset sales well underway
2003 Full-year Results Asset sales well underway Key Factors 2003 Financial Review Sale of units that: Transformation Program Capital Increase ... do not focus on service, and/or Summary ... require high investments, and/or ... cannot achieve leading market positions ■ Priority on maximizing value f
Slide 24: Asset sales well underway
2003 Full-year Results Asset sales well underway Key Factors 2003 Financial Review Transformation Cellulose Ethers ■ Sold to Shin-Etsu for CHF 375 m Program Capital Increase Summary Electronic ■ Well advanced Materials ■ Both ready for sale in 2004 Project 3 & Project 4 ■ Total turnover of approx. C
Slide 25: Financial objectives of Performance improvements
2003 Full-year Results Financial objectives of Key Factors 2003 Performance improvements Financial Review Transformation Program ■ Implement measures with EBIT impact of Capital Increase CHF 700-900 m EBIT ■ After accounting for business risks and price erosion Summary Improvement committed to a sus
Slide 26: Breakdown of performance improvement measures
2003 Full-year Results Breakdown of performance Key Factors 2003 improvement measures Financial Review EBIT impact of measures* Transformation Projects in m CHF Program Purchasing 200 - 250 -4 to 5% of total purchasing costs Capital Increase Summary Marketing 120 - 170 +1.5 to 2% of sales Logistics
Slide 27: Performance improvement measures over time
2003 Full-year Results Performance improvement Key Factors 2003 measures over time Financial Review Transformation Program EBIT impact of measures* 700-900 Capital Increase in m CHF Summary 600-700 350-450 100-120 50% 55% 65% 75% 2004 2005 2006 2007 structural measures operational measures Slide 27
Slide 28: Substantial job cuts to sharply reduce costs
2003 Full-year Results Substantial job cuts to sharply reduce costs Key Factors 2003 Financial Review Transformation Program General Overhead Capital Increase -22% Manufacturing -14% Summary 800 1500 1250 Infrastructure/Services 450 -18% Supply Chain -14% Total job cuts: 4000 by the end of 2005 Slid
Slide 29: Break-down of restructuring costs
2003 Full-year Results Break-down of restructuring costs Key Factors 2003 Financial Review in m CHF Expected timing Transformation Program ~ 130 ■ ~ CHF 200 m Capital Increase 500-600 in 2004 Summary ~ 60 ■ ~ CHF 300 m in 2005 ~ 350 ■ Rest in 2006 Personnel IT costs Other one- Total related costs ti
Slide 30: Implementation of CPIP
2003 Full-year Results Implementation of CPIP Key Factors 2003 Financial Review ■ Program overseen directly by CEO Transformation Program ■ Managed by dedicated senior executive with relevant experience Capital Increase ■ Teams of “internal champions” and external consultants with one Summary senior
Slide 31: CPIP Progress to date
2003 Full-year Results CPIP Progress to date Key Factors 2003 Financial Review ■ Detailed group-wide plan established Transformation Program Operational ■ 1st phase of projects completed, expected improvements Capital Increase confirmed Projects Summary ■ 2nd phase of projects underway ■ Detailed hu
Slide 32: Measures entered into the CPIP controlling system
2003 Full-year Results Measures entered into the CPIP Key Factors 2003 controlling system Financial Review EBIT impact* of measures in m CHF, recurring, status Transformation February 18, 2004 Program Capital Increase Manufacturing 17 Summary Marketing 9 Purchasing 27 Logistics Network 24 Net Workin
Slide 33: Capital Increase Transaction Summary
2003 Full-year Results Capital Increase Transaction Summary Key Factors 2003 Financial Review ■ Capital Increase with subscription rights Transformation Program Offering for new registered shares Capital Increase ■ Final terms announced and rights issue to be approved by AGM April 2, 2004 Summary No
Slide 34: Rationale for Capital Increase
2003 Full-year Results Rationale for Capital Increase Key Factors 2003 Financial Review ■ Creates a solid financial basis for the Group Transformation Program ■ Facilitates the implementation of Performance Improvement Program Capital Increase ■ Flexibility to maximize proceeds Summary ■ Management
Slide 35: Application of proceeds
2003 Full-year Results Application of proceeds Key Factors 2003 Financial Review SOURCES USES Transformation Program Capital Increase ■ Rights issue proceeds ■ Financing of CPIP costs ■ Disposal proceeds ■ Repayment of expensive debt Summary ■ Free cashflow from operations ■ Debt reduction / Balance
Slide 36: Financial profile Pre- and Post Capital Increase
2003 Full-year Results Financial profile Pre- and Post Capital Inrease Key Factors 2003 Financial Review Transformation Program 31.12.2003 pro forma Capital Increase Summary 2905 920 1985 2096 1176 Net debt Equity Capital Net debt Equity Increase Balanced risk distribution Slide 36
Slide 37: Timetable
2003 Full-year Results Timetable Key Factors 2003 Financial Review Key Event Timing Transformation Program Capital Increase AGM notice sent to shareholders 8th March, 2004 Summary Final terms announced and 2nd April, 2004 Rights Issue for approval by AGM Subscription period 13th April – 21st April,
Slide 38: The way forward - Restoring profitability
2003 Full-year Results Clariant - The way forward Key Factors 2003 Financial Review Restoring profitability Transformation Program Capital Increase Development and implementation of new strategy Summary Asset sales Short-term Mid and long-term performance improvements Increasing financial strength 2
Slide 39: Outlook
2003 Full-year Results Outlook Key Factors 2003 Financial Review ■ Somewhat more optimistic outlook for 2004 Transformation Program ■ Clariant confirms Capital Increase − Net debt reduction beyond capital increase Summary − Cost base reduction of CHF 100 m for 2004 − Net working capital reduction of
Slide 40: Calendar of upcoming corporate events
2003 Full-year Results Calendar of upcoming corporate events April 2, 2004 Annual General Meeting Kongresszentrum Basel May 4, 2004 First Quarter 2004 Results August 5, 2004 Second Quarter 2004 Results November 9, 2004 Third Quarter 2004 Results Slide 40
Slide 41: Your Investor Relations contacts
2003 Full-year Results Your Investor Relations contacts Holger Schimanke holger.schimanke@clariant.com Head Investor Phone +41 61 469 67 45 Relations Mobile +41 79 343 59 83 Daniel Leuthardt daniel.leuthardt@clariant.com Phone +41 61 469 67 49 Mobile +41 79 763 93 80 To be added to the mailing list
Slide 42: Disclaimer
2003 Full-year Results Disclaimer THE INFORMATION CONTAINED HEREIN IS NOT FOR PUBLICATION OR DISTRIBUTION INTO THE UNITED STATES. THE MATERIAL SET FORTH HEREIN IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT INTENDED, AND SHOULD NOT BE CONSTRUED, AS AN OFFER OF SECURITIES FOR SALE INTO THE UNITED STAT
Slide 43: Questions & Answers
2003 Full-year Results Clariant Questions & Answers The way forward Slide 43
Slide 44: Backup information
2003 Full-year Results Backup information Slide 44
Slide 45: Business structure as of 1 January 2004
2003 Full-year Results Business structure as of 1 January 2004 Textile, Pigments & Masterbatches Functional Life Science & Leather & Paper Additives Chemicals Electronic Chemicals Dominik von Nico Gontha* Uwe Nickel* Siegfried Fischer* Joachim Mahler* Bertrab* Electronic Textile Dyes Coating Industr
Slide 46: Performance improvement program (CPIP) organization
2003 Full-year Results Performance improvement program (CPIP) organization CEO Leadership R. Lösser Executive Board Board Member J. Mahler N. Gontha D.v. Bertrab U. Nickel S. Fischer F. Note H. Wiezer J. Mahler P. Brandenberg Sponsorship Performance Program Improvement Program Management T. Wellauer
Slide 47: Clariant - the way forward
2003 Full-year Results Clariant - the way forward Clariant % of Market Competitive Clariant portfolio attractiveness position Examples strategy sales* Masterbatches Service- Performance and Process driven 60 - 70% High Strong Chemicals Expand businesses Textile Chem. Coatings Technology Strong in -d
Slide 48: Group sales Full-year 2003 by division
2003 Full-year Results Group sales Full-year 2003 by division* Functional Chemicals 23% Masterbatches 14% 13% Life Science & Electronic Materials Pigments & 22% 28% Additives Textile, Leather & Sales FY 2003: CHF 7793 m Paper Chemicals Slide 48 *continuing operations
Slide 49: Divisional sales Full-year 2003 in end-user markets
2003 Full-year Results Divisional sales Full-year 2003 in end-user markets* Durables Automotive Paper 6% 6% 6% Other Agro 14% 8% Electronics 2% Healthcare 4% 22% Textiles 10% Packaging 14% 8% Non-durables Construction Slide 49 *continuing operations
Slide 50: Sales and cost structure
2003 Full-year Results Sales and cost structure Global sales distribution in % Global cost distribution in % JPY JPY Emerging 5 Emerging 4 markets markets 18 15 CHF2 USD CHF 7 USD 28 23 5 GBP 42 46 EUR 5 EUR GBP Slide 50
Slide 51: Textile, Leather & Paper Chemicals
2003 Full-year Results Textile, Leather & Paper Chemicals ■ Clariant is worldwide – No. 1 in textile and leather chemicals FUN LSE – No. 2 in paper dyes MB – No. 3 in textile dyes TLP P&A 2179 ■ Strong customer services through global tailor-made solutions FY 2003 Change in % FY 2003 2003 2002* CHF
Slide 52: Pigments & Additives
2003 Full-year Results Pigments & Additives ■ Clariant is –Worldwide No.1 in organic pigments FUN LSE – No. 1 in coating pigments MB – No. 2 in printing industries P&A TLP – No. 3 in plastic industries 1745 ■ Leading edge surface technology FY 2003 Change in % FY 2003 2003 2002* CHF LC Sales in m CH
Slide 53: Masterbatches
2003 Full-year Results Masterbatches ■ No. 1 global supplier of color masterbatches ■ Well-positioned key player in markets for additive FUN preparations MB LSE 1041 ■ Strong customer services combined with leading color technology P&A TLP FY 2003 Change in % FY 2003 2003 2002* CHF LC Sales in m CHF
Slide 54: Functional Chemicals
2003 Full-year Results Functional Chemicals ■ No. 2 for innovative detergent ingredients worldwide FUN 1752 ■ Leading partner with specialty chemicals for MB LSE oil and gas production and the refining industry, personal care, de-icing, agro and TLP P&A biocide applications FY 2003 Change in % FY 20
Slide 55: Life Science & Electronic Chemicals
2003 Full-year Results Life Science & Electronic Chemicals ■ Among top 5 pharma suppliers ■ No. 1 in Agro business (Custom Synthesis) FUN LSE 1076 ■ No. 3 with Electronic Materials MB ■ No. 1 in specific Specialty Fine Chemicals areas TLP P&A FY 2003 Change in % FY 2003 2003 2002* CHF LC Sales in m
Slide 56: Accounting
2003 Full-year Results Accounting Disposals 2002: Disposals 2003: Emulsions Cellulose Ethers Hydrosulfite Electronic Materials (announced) Reported Like-for-like 2002 Continuing Operations 2002 2003 According to the requirements of the International Financial Reporting Standards (IFRS), an enterpris
Slide 57: Disclaimer
2003 Full-year Results Disclaimer THE INFORMATION CONTAINED HEREIN IS NOT FOR PUBLICATION OR DISTRIBUTION INTO THE UNITED STATES. THE MATERIAL SET FORTH HEREIN IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT INTENDED, AND SHOULD NOT BE CONSTRUED, AS AN OFFER OF SECURITIES FOR SALE INTO THE UNITED STAT