Covestro AG · VIE:1COV
Covestro — FY2016 Earnings Presentation
24 slides from Covestro's earnings presentation, Feb 20, 2017
Slide 1: Promised. Delivered. Annual press conference
Promised. Delivered. Annual press conference Cologne, February 20, 2017 covestro.com
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: Highlights 2016
Highlights 2016 A record year for Covestro: innovative, sustainable and successful All financial targets Increased adjusted reached or exceeded EBITDA by 23% Production Net income more capacities and than doubled utilization optimized Developed CO2 as Share price +94%: raw material to top of MDAX ma
Slide 4: Key financials 2016
Key financials 2016 All targets reached or exceeded Initial guidance New guidance FY 2016 Achievement FY 2016 FY 2016* Mid-single-digit Mid- to high-single-digit Core Volume Growth +7.5% increase Y/Y increase Y/Y At a high level, above the Above last year’s level FOCF €1,367m average of recent years
Slide 5: Strategy pays off
Strategy pays off Above GDP industry growth supported by global trends Trends… …and needs… …lead to demand for Covestro products Climate • Zero-emission concepts change • Lower energy buildings Covestro core volume growth 2016 Mobility • Energy efficient mobility • Lightweight transportation +7.5% G
Slide 6: Capacities optimized and increased to meet growing demand
Capacities optimized and increased to meet growing demand All regions with positive core volume growth in 2016 China 2,163 Vol. +18% APAC 3,609 EMLA Vol. +12% 5,126 Vol. +3% NAFTA 3,169 Vol. +6% Germany US 1,547 2,611 Vol. 0% Vol. +7% Sales in € million / core volume growth Y/Y
Slide 7: Pushing boundaries
Pushing boundaries Making the world a brighter place 5
Slide 8: Alternative raw materials
Alternative raw materials cardyon™ - rethinking carbon dioxide Groundbreaking new production facility Opened in Dormagen in June 2016 Introducing alternative feedstock Using less crude oil and saving energy in the production process Improving carbon productivity Closing loops by reusing waste gas
Slide 9: Alternative raw materials
Alternative raw materials CO2 now a marketable raw material Global oil consumption Carbon dioxide can be a substitute (in million barrels per day) 95 86 72 CO2 1995 2005 2015 80% Crude oil 20% CO2 Precursor for Mattress soft foam Source: BP Statistical Review of World Energy 2016
Slide 10: Clean energy
Clean energy Covestro‘s role in wind power generation Rotor blades Polyurethane resins for increased stability and durability Masts Polyurethane materials for anti-corrosion coatings Undersea cables Elastomers for underwater protection systems
Slide 11: Clean energy
Clean energy Wind power as a key driver for renewables Global energy mix 2040 Globally installed wind energy capacity (Compared to 2012) (in megawatts) 30% Oil (33%) 400,000 26% Gas (23%) 300,000 22% Coal (28%) 200,000 16% Renewables (12%) 100,000 6% Nuclear (4%) 2000 2005 2010 2015 Sources: U.S. En
Slide 12: Efficient mobility
Efficient mobility Concept car @ K 2016 Holographic lighting Rear lighting with 3D effects All-around glazing Panoramic view with no blind spots Seamless surfaces Uniform surfaces reduce drag creation
Slide 13: Efficient mobility
Efficient mobility Covestro‘s role in E-mobility Share of Covestro materials Global annual production of E-cars in vehicles 262,000 2014 332,000 2015 430,000 2016 Conventional cars 4-5 kg 584,000 2017 863,000 2018 1,171,000 2019 1,371,000 2020 E-cars 20-25 kg Source: LMC Automotive
Slide 14: Convincing results
Convincing results 12
Slide 15: Q4 & FY 2016 – Group Results
Q4 & FY 2016 – Group Results Continued margin expansion Net Sales and Core Volume Growth Adjusted EBITDA and Margin Highlights in € million / changes Y/Y in € million / margin in percent • In 2016, continued strong core volume growth FULL YEAR (in kt) of 7.5% 3.500 30,0% 7.5% • In 2016, adj. EBITDA
Slide 16: Q4 & FY 2016 – Results of PUR Segment
Q4 & FY 2016 – Results of PUR Segment Polyurethanes – Solid development Net Sales and Core Volume Growth Adjusted EBITDA and Margin Highlights FY 2016 in € million / changes Y/Y in € million / margin in percent • Strong core volume growth of 7.7% Y/Y, driven FULL YEAR by all segments, notably MDI 2.
Slide 17: Q4 & FY 2016 – Results of PCS Segment
Q4 & FY 2016 – Results of PCS Segment Polycarbonates – Steady high margin business Net Sales and Core Volume Growth Adjusted EBITDA and Margin Highlights FY 2016 in € million / changes Y/Y in € million / margin in percent • Core volumes increased double-digit by 10.3% FULL YEAR 30,0% 1.200 5.000 10.
Slide 18: Q4 & FY 2016 – Results of CAS Segment
Q4 & FY 2016 – Results of CAS Segment Coatings, Adhesives, Specialties – Solid results Net Sales and Core Volume Growth Adjusted EBITDA and Margin Highlights FY 2016 in € million / changes Y/Y in € million / margin in percent • Slightly declining core volumes of -0.3% Y/Y FULL YEAR due to phase out
Slide 19: Income Statement FY 2016
Income Statement FY 2016 Profit and loss statement 2016/2015 Share Highlights Key P&L items 2014 2015 2016 Y/Y 2016 In € million 11,761 12,082 11,904 -1.5% 100% No special items in 2016 Net Sales Cost of goods sold (9,609) (9,438) (8,611) -8.8% 72.3% • Y/Y comparison is difficult due to extraordinar
Slide 20: FOCF
FOCF Record FOCF Free operating cash flow development Highlights in € million • Strong FOCF development provides financial +42% freedom for future investments 1,367 • FOCF in line with EBITDA development +208% 964 • High profitability in Q4 2016 leads to FOCF increase +4% 393 407 313 2014 2015 2016
Slide 21: 2016 – Total Net Debt
2016 – Total Net Debt Total net debt reduced by almost €1bn Total net debt – end of 2016 Highlights in € million Net debt target achieved 3,673 -1,367 • Total net debt (net financial debt plus pensions provision) to EBITDA ratio of 1.3x end of 2016 vs. 2.2x end of 2015 197* 2,708 143 24 2,211 38 • T
Slide 22: Share price and dividend
Share price and dividend Outperforming indices and peers, attractive dividend proposal 200 In 2016, Covestro showed the +94% 175 strongest performance in the MDAX 150 and the second best performance of all German shares 125 100 75 Proposed 50 dividend per share: 25 1.35 Euro 0 30.12.2015 Jan30.01.20
Slide 23: Market outlook 2017
Market outlook 2017 Solid growth in relevant end markets expected Cut in tax incentives Emerging markets and AUTOMOTIVE in China to slow ELECTRONICS Asia as driver for rapid + 2.0% demand + 4.0% development GDP +2.8% Industry benefits from CONSTRUCTION Strong markets in FURNITURE increase in demand,
Slide 24: Guidance 2017
Guidance 2017 Continue positive development FY 2016 Guidance FY 2017 Core Volume Growth +7.5% Low- to mid-single-digit percentage increase Y/Y FOCF €1,367m Slightly above the average of the last three years ROCE 14.2% Slightly above the 2016 level