Celanese Corporation · NYSE:CE
Celanese — Investor Presentation (November 2009)
40 slides from Celanese's investor presentation, Nov 30, 2009
Slide 1: Celanese Corporation December 2009
Celanese Corporation December 2009
Slide 2: Forward-Looking Statements, Reconciliation and Use of Non-GAAP Measures
2 Forward Looking Statements, Reconciliation and Use of Non- GAAP Measures to U.S. GAAP Forward-Looking Statements This presentation may contain “forward-looking statements,” which include information concerning the company’s plans, objectives, goals, strategies, future revenues or performance, capi
Slide 3: Celanese diversified portfolio delivers shareholder value
3 Celanese ($ million) Consumer Specialties Advanced Engineered Materials Industrial Specialties Acetyl Intermediates 2008 Revenue: $6,823 2008 Operating EBITDA: $1,169 2009 3Q YTD Revenue: $3,694 2009 3Q YTD Op. EBITDA: $620 2008 Revenue: $1,155 2008 Operating EBITDA: $293 2009 3Q YTD Revenue: $817
Slide 4: Balanced portfolio creates a unique hybrid business model
4 Portfolio Characteristics Financial Impact Advanced Engineered Materials (Engineered Thermoplastics and Polymers) ► Industry-leading technology ► Strong product pipeline ► Higher growth ► Margin expansion Consumer Specialties (Acetate Flake and Tow, High Intensity Food Sweetener) ► Stable cash gen
Slide 5: Why Celanese? Why Celanese Now?
5 Celanese Advantages Celanese Levers of Value ► Balanced footprint in key regions ► Recovering conditions in key end-use industries ► Attractive balance sheet with strong cash generation Geographic Demand Capital Structure ► Sustainable fixed spending reductions ► Efficient and scalable capital ► G
Slide 6: Operating EBITDA strategic objectives
6 Operating EBITDA 2006 - - 2010 Strategic Objectives $350-400 million ~$1,100 million $1,600-1,800 million 2009 to “Recovery” Strategic Objectives $250-350 million $800-1,000 million Increased earnings power drives significant shareholder value
Slide 7: Earnings power improvement with new initiatives
7 2006 - - 2010 Strategic Objectives >$100 million 2009 to “Recovery” Strategic Objectives $70-90 million Earnings power improvement substantial with initiatives - innovation will play a key role $400-450 million $140-160 million New initiatives increase earnings
Slide 8: Providing valuable solutions to extreme requirements
8 Precise applications in complex environments Collaborative engineering right people - right place - right time Providing valuable solutions to extreme requirements
Slide 9: Value of technology and performance is differentiated
9 5% High-Performance Polymers (HPP) Engineering Thermoplastics (ETP) Price for Performance 95% Standard Polymers ABS, SAN, ASA = 3% PE = 28% PP = 19% PET = 7% PU = 6% PVC = 14% PS, EPS = 8% Range of Products $1/kg $100/kg $10/kg $3/kg PA = 5% PC = 5% Value of technology and performance is different
Slide 10: Product portfolio unmatched in the industry
10 Key Products Ticona DuPont DSM Sabic Solvay BASF Major End Uses Hostaform ® Polyacetal Copolymer (POM) +++ +++ -- -- -- ++ Vectra ® Liquid Crystal Polymer (LCP) +++ ++ -- -- ++ -- GUR ® Ultra-high molecular weight polyethylene (UHMW-PE) ++++ -- ++ + -- -- Fortron ® Polyphenylensulfide (PPS) ++++
Slide 11: Specification position demonstrates strength of the franchise
11 Value of Specification AEM Average Specification by Material Type Value Delivered LANXESS DuPont SABIC/PC BASF DSM Solvay DOW SABIC/Core Specification drives sustainable value for high performance polymers Source: Celanese internal estimates Specification position demonstrates strength of the fra
Slide 12: Broad range of end-use applications
12 2008 Revenue ~ $1.1 billion Alternate Fabrication 7% Transportation 44% Electrical & Electronics 10% Consumer & Appliance 12% Industrial 17% Medical 8% Other 2% ► Fuel systems ► Safety systems ► Mechanical components ► Consumer electronics ► LED lighting ► Connectors ► Water purification ► Durabl
Slide 13: Project Pipeline Development
13 Project Pipeline Development ► Continued increases in new project opportunities with focus on: • High-growth end-segments • Regional penetration ► Pipeline drivers continue to be: • Regulatory trends • Consumer preferences • Geographic shift to adopt Western standards • Productivity emphasis Inno
Slide 14: Polyacetal (POM) key engineered polymer
14 Methanol Unique Properties : • Inherent lubricity • Chemical resistance • Long-term fatigue strength Primary Applications: • Automotive fuel systems • Consumer appliances • Medical delivery devices • Fluid handling Estimated global POM market size is ~$2 Billion* * At 90% industrial utilization r
Slide 15: Over 48 years of Hostaform POM innovation
15 2005 years of innovative development 1961 1968 1976 1982 1993 1997 1999 2001 2005 Over 48 years of Hostaform® POM production - innovation through product and application development Technology breakthrough drives further innovation…
Slide 16: Significant innovation in POM chemistry
16 Significant innovation in POM chemistry Breakthrough in reactive end group formation Methanol ► Filed more than 100 patents for intellectual property protection Reactive end groups R OCH 3 CH 2 O CH 2 Standard POM Chain Non-reactive end group R CH 2 O CH 2 R IM POM Chain Monomer Formation Polymer
Slide 17: Innovative technology drives improved impact performance
17 Visible weld line No weld line ► Improved impact strength by 75% ► Best in class weldline performance by 300% ► Higher stiffness (modulus) - Up to 25% ► Reduce cooling times for molded parts by 30% ► Elevated heat deflection temperature Conventional Impact Modified POM NEW Impact Modified POM Sig
Slide 18: New POM product family offers design freedoms
18 NEW POM IM Nylon Stiffness (Mpa) Elongation @ Break (%) Impact Performance @ Cold Temperature Versatility and reliability to meet all the requirements New POM product family offers design freedoms and access to new growth opportunities
Slide 19: Growing application space through innovation
19 Improvement in POM Technical Performance New Ticona POM Space Incremental $500 Million Application Opportunity Existing POM Space Increase weldline strain @ break % Technology enables additional estimated $500 million application space opportunity Automotive Applications ► Chemical resistance ► S
Slide 20: Changing automotive environment favors high performance plastics
20 Global Automotive Trends Regulatory Consumer Manufacturing Emissions Fuel Efficiency Adoption of Western Standards “Green” Initiatives Global Platforms Productivity North America ü ü ü ü ü Europe ü ü ü ü ü Asia ü ü ü ü Indifferent to producer, model or manufacturing location… AEM delivers solutio
Slide 21: Ticona well-positioned to capitalize on growth opportunities
21 Efficient engines Hybrid- engine systems Alternative fuels Metal replacement ü Ticona high temperature polymers for turbo-charged engines Ticona polymers in hybrid vehicle systems New Hostaform ® POM products meet more aggressive conditions in fuel delivery systems Ticona portfolio for components
Slide 22: Progress in Asia
22 Asia Sales for Ticona Global Portfolio Ticona Key Products - Asia Trajectory Asia segment size (est.) CE share (est.) Source: Form 10-K, Celanese internal estimates We are making progress in Asia… and the platform is in place to capture growth
Slide 23: AEM automotive opportunity
23 Automotive Opportunity ► Current “best-in-class” translation to all models yields translation opportunity ► Westernization of current China production drives China opportunity ► Successful commercialization of application R&D creates pipeline opportunity 3.0 Total AEM Today Total Competitors Toda
Slide 24: Acetate tow demand in China will drive worldwide growth
24 Worldwide Tow Demand Tow Demand Growth kT kT Source: Celanese internal estimates Well-positioned for growth in China with the right partner China ROW Chinese Imports Chinese Domestic Production Acetate Tow demand in China will drive worldwide growth
Slide 25: 2010 Earnings Improvement
25 Productivity Driven Tax Rate Volume Driven $80 - - $100 At least $100 Low 20% range vs. 29% Represents approximately $1.00 per share in 2010 earnings improvement 2010 Earnings Improvement ► AEM: Destocking complete ► CS: Sustain performance ► AI: Technology, 2009 FIFO effect ► IS: Asia growth foc
Slide 26: Levers of Value, Shareholder Value
26 Levers of Value Shareholder Value Why Celanese? Why Celanese Now? Significant value upside over current share price Geographic Demand Capital Structure Operating Innovation Track record of execution High return opportunities ► $1.6-1.8 billion recovery earnings ► Rapid earnings growth of the curr
Slide 27: Celanese Corporation December 2009
Celanese Corporation December 2009
Slide 28: Celanese Global Manufacturing Locations
28 Celanese Global Manufacturing Locations All values shown in kT per year Singapore Acid = VAM = Esters = Frankfurt, Germany VAM = Esters = Tarragona, Spain VAM = Bay City, TX VAM = Clear Lake, TX Acid = 1,200 VAM = 310 Cangrejera, Mexico Anhydride = 90 Esters = VAM = Pardies, France (announced clo
Slide 29: Capacity expansions and project delays
29 Company Capacity 2007 2008 2009 2010 2011 BP / Sinopec 550 kt Sipchem 430 kt Sopo (expansion) 600 kt Wujing (expansion) 500 kt Yangkuang Cathay 350 kt Henan Shunda 200 kt HC Tianjin Bohei 200 kt HC Hualu Hensheng 200 kt HC Henan Yima 200 kt Yunan Yunwei 200 kt Kingboard 400 kt X X X X X X X X X X
Slide 30: Acetic acid cost curve
30 2009/2011E Acetic Acid Cost Curve (kT) Pricing for CE to earn >15% EBITDA ► Majority of planned capacity additions and expansions may be disadvantaged By Prod Avg Other Leading Technology Effective Industry Utilization Rates Ethylene Highest Cost China MeOH Ethanol Average Celanese Lower Cost Chi
Slide 31: Return on Invested Capital vs. Acetic Acid Margin
31 Return on Invested Capital vs. Acetic Acid Margin 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Return on Invested Capital Source: Celanese internal estimates; available public data AI: Celanese is able to achieve >15% ROIC when others are not able to profitably reinvest Recent Peak Pricing $600-700
Slide 32: Announced capacity additions challenged in today's pricing
32 Majority of announced capacity additions challenged in today’s pricing environment 1 Source: Celanese internal estimates, Tecnon 2008. Based on nameplate capacity Disadvantaged technology Significant differentiation in technology of announced expansions
Slide 33: Available Cash
33 Available Cash Cash (as of 9/30/2009) $1,293 Kelsterbach Spending ~($300) Operating Cash ~($300) Cash Available for Strategic Purposes ~$700 $ million ► Ticona Kelsterbach relocation cash flow neutral through end of 2010 ► Expect to continue to generate positive free cash flow Significant cash av
Slide 34: Capital Spending by Category
34 Other Growth Nanjing Productivity Capital Spending by Category Balance for “high return” productivity and capital efficient growth Note: Not including Kelsterbach plant relocation Maintain Plant Efficient use of cash
Slide 35: 2009E Cash Flow Guidance
35 Normalized Trough 18 - - 20% 8 - - 10% 22 - - 25% 18 - - 20% 21 - - 23% 10 - - 12% 13 - - 15% 20 - - 22% 2009E Cash Flow Guidance $ in millions 2009E 2 Cash Taxes $40 - $50 Capital Expenditures $165 - $175 Reserve/Other $80 - $90 Net Interest $200 - $210 Pension $40 - $50 Adjusted Free Cash Outfl
Slide 36: Segment Operating EBITDA Recovery
36 Acetyl Intermediates Industrial Specialties Advanced Engineered Materials Consumer Specialties JVs Dividends PVOH Divesture 3Q 2009 Segment Operating EBITDA Recovery
Slide 37: Celanese capital structure
37 Cost Stability Flexibility Structure Characteristics Primary Components Term Loan - $2.8 billion Other Debt Obligations - $775 million Cash - - $1.3 billion Net Debt - $2.3 billion Revolver - - $600 million Solid liquidity position and covenant-lite term loan create advantaged capital structure C
Slide 38: Reg G: Reconciliation of Operating EBITDA
Celanese Reg G: Reconciliation of Operating EBITDA gla RA Bis eg acig as
Slide 39: Reg G: Reconciliation of Consumer Specialties Operating EBITDA
39 Reg G: Reconciliation of Consumer Specialties Operating EBITDA: 2000-2008
Slide 40: Reg G: Reconciliation of Celanese Operating EBITDA
40 Reg G: Reconciliation of Celanese Operating EBITDA: 2001