Evonik Industries AG · XETR:EVK
Evonik Industries — Investor Day (September 2013)
25 slides from Evonik Industries's investor day presentation, Sep 3, 2013
Slide 1: Capital Markets Day 2013 Financial Strategy
Capital Markets Day 2013 Financial Strategy Dr. Wolfgang Colberg, CFO Ute Wolf, Group Finance Director Essen, 3 September, 2013
Slide 2: Consistent value creation at Evonik
Consistent value creation at Evonik Strategic focus on Specialty Chemicals ✔ Strategic focus ✔ Sale of energy ✔ Divestment of ✔ Divestment of ✔ Exit from on Specialty business Carbon Black Colorants Real Estate Chemicals majority stake business business business initiated ✔ Selected bolt- executed o
Slide 3: Strong track record of value creation
Strong track record of value creation Adj. EBITDA (€m) and margin1 (%) Adj. net income (€m) 13.6% 16.1% 18.3% 19.4% 19.0% CAGR 44% CAGR1 14% 2,768 1,256 2,589 1,155 2,365 974 1,648 1,607 2,410 1,056 360 271 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 EVA2 (€m) and ROCE (%) Net Financial Debt (
Slide 4: H1 2013 affected by challenging market environment and lower prices
H1 2013 affected by challenging market environment and lower prices Sales (in € m) Adj. EBITDA (in € m) / margin • Sales organically slightly below prior year (-3%) Organic 18.9% 16.5% -3% growth -16% • >60% of portfolio with growing -5% volumes, but lower prices mainly in 1,289 6,835 6,526 1,079 Me
Slide 5: Outlook 2013 adjusted to reflect economic environment
Outlook 2013 adjusted to reflect economic environment Outlook for Evonik in 2013 (continuing operations1) • Global economic conditions to remain challenging • Growth expectations revised downwards, especially for EU and China Economic • H1 weaker than expected, global economic improvement predicted
Slide 6: Evonik: Positioned for strong financial performance
Evonik: Positioned for strong financial performance ~ €18 bn Sales 1 Ambitious long-term financial targets by FY 2018 > €3 bn Adj. EBITDA (excl. M&A) Strengthened focus on 2 ~ €500 m On Track 2.0 savings efficiency gains and cost savings Investment program targeting > €700 m incremental 3 high-growt
Slide 7: Growth investments and efficiency gains drive adj. EBITDA to > €3 bn by 2018
1 Growth investments and efficiency gains drive adj. EBITDA to > €3 bn by 2018 Underlying Growth > €3 bn • Focus on pricing power (value-based pricing, differentiation etc.) • Product innovation driven by close > €0.7 bn customer relationships • Improved product and customer mix • Operating leverage
Slide 8: Efficiency and cost saving programs well advanced
2 Efficiency and cost saving programs well advanced On Track 2.0: Expected savings (in € m) Other • Continued successful execution of Business Services On Track 2.0 for continuous efficiency Site Services ~500 improvement Procurement • ~€140 m achieved in 2012 Operational Excellence • In H1 2013 ano
Slide 9: Investment program with significant contribution to financial targets 2018
3 Investment program with significant contribution to financial targets 2018 Components of €6 bn capex program > €700 m incremental ~€4 bn adj. EBITDA by FY 2018 “Basis investments” ~€6 bn • Total of ~€2 bn, i.e. ~€400 m p.a. • Maintenance capex: ~€0.5 bn maintenance and regulatory compliance invest
Slide 10: Investment program: Pipeline of attractive growth projects
3 Investment program Pipeline of attractive growth projects Selected approved projects Start of construction & exp. start-up Segment Product area Location Capex 2012 2013 2014 2015 Consumer, Feed amino acids: H2 Health & Singapore >€500 m 2014 Nutrition DL-methionine Consumer, China & 2013 Personal
Slide 11: Disciplined and flexible investment process
3 Disciplined and flexible investment process Status of growth investments Disciplined and flexible investment process (as of June 30th, 2013) • Structured planning and approval process: Spent Approved Planned • Strategic assessment considering competitive position, market attractiveness, regional f
Slide 12: Capex peak in 2014/15; return to sustainable level thereafter
3 Capex peak in 2014/15; return to sustainable level thereafter Capex Planning and Adjusted D&A (in € m)1 Capex • Investment program resulting in capex peak in Adjusted D&A 2014/15, leveling off ~1.500 Max. capex level thereafter Flexibility • Flexibility in timing and ~1.200 execution, e.g.: 1.018
Slide 13: Strict financial policy
4 Strict financial policy Financial Policy Strive to Intend to keep Envisage maintain Total leverage robust solid ratio funding level investment below 2.5x1 of DBO2 grade rating 1 Total leverage defined as (Net Financial Debt + Funded Status) / Adjusted EBITDA 2 Defined benefit obligations 3 Septemb
Slide 14: Further significant deleveraging through Real Estate transaction
4 Further significant deleveraging through Real Estate transaction (€m) 7,254 -25% 6,636 Net 5,598 5,461 3,349 2,367 Financial Debt 1,677 4,585 1,163 Increase of 843 thereof DBO due to 1,300 decrease of discount rate 4,298 DBO - 4,269 4,298 3,905 3,921 3,742 Plan Assets Discount rate 6.02 5.54 5.03
Slide 15: Pension obligations well financed
4 Pension obligations well financed Pension overview 2012 Pension strategy (incl. Real Estate contribution/deconsolidation in July 2013) • Pension obligations perceived as “patient” long-term debt, no immediate redemption in one go unfunded • More than 50% of DBO are so called “Direktzusagen” (mostl
Slide 16: Value-generating use of funds
Value-generating use of funds • Targeting high-growth end markets Internal growth: • Focus on Growth Regions (~60% of growth capex) €6 bn investment program • Disciplined and flexible investment process • Strengthening of high-growth platforms and broadening of existing External growth: competencies
Slide 17: Evonik: Positioned for strong financial performance
Evonik: Positioned for strong financial performance ~ €18 bn Sales 1 Ambitious long-term financial targets by FY 2018 > €3 bn Adj. EBITDA (excl. M&A) Strengthened focus on 2 ~ €500 m On Track 2.0 savings efficiency gains and cost savings Investment program targeting > €700 m incremental 3 high-growt
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Slide 19: Underlying assumptions 2014-2018 Economic environment
Underlying assumptions 2014-2018 Economic environment Assumption global GDP growth (in %) 6% 3,9 3,9 4% 3,0 3,3 3,6 3,4 3,4 3,4 2% 1,5 2,6 2,8 0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 -2% -2,2 Actual -4% Assumption Evonik • Eurozone with continued structural challenges, but lea
Slide 20: Management compensation (as of 2014)
Management compensation (as of 2014) Value creation focus anchored in management incentivization system at Board level Fixed salary • To be paid in cash for each financial year on a monthly basis (c.30%) • To be paid out in cash annually • Payout calculated on the basis of the achievement of certain
Slide 21: Real Estate divestment (1/2)
Real Estate divestment (1/2) Step plan executed with closing on July 17th, effective in financial statements in Q3 Three major divestment steps Impact and timing • Q2: Evonik received first installment of Adjust- Special dividend special dividend from Vivawest (€100 m); ment of 1 capital €650 m Evon
Slide 22: Rating: Strongly positioned in upper range of BBB
Rating Strongly positioned in upper range of BBB Rating • Rating upgrade by Moody’s to Baa2 with positive outlook in March 2013 A- A3 • S&P’s rating BBB+ with stable outlook since May 2012 BBB+ /stable BBB+ • Impressive rating dynamic thanks to Baa1 Investment Baa2 /positive focus on specialty chemi
Slide 23: Pension Obligations
Pension Obligations Reduction in 2013 driven by Real Estate transaction 2013 2012 2011 (prelim.) Defined benefit obligations (DBO) 9,088 9,088 7,787 Plan assets (4,790) (4,790) (4,045) Real Estate contribution to CTA (July 2013) (758) Real Estate DBO (disc. operations as of Q1 2013) (106) Funding ga
Slide 24: Refinancing of upcoming maturities at attractive conditions
Refinancing of upcoming maturities at attractive conditions Debt maturity profile as of June 30, 2013 (in €m) (continued operations) Financing Strategy 1.400 • Centralized financing concept with Other debt Bonds intragroup Cash Pool instruments 1.200 • Long-term funding through Capital Markets; €3 b
Slide 25: Real Estate divestment (2/2)
Real Estate divestment (2/2) Reduction of indebtedness by ~€3.1 bn Q1 Q2 Q3 2014 / 2013 2013 2013 2015 Re-classification of Reduction of pension €491 m of Real Estate reduction Net debt liabilities by €758 m as a NFD and €106 m DBO result of CTA contribution of to discontinued 25% of combined Vivawe