Clariant Ag · SIX:CLN
Clariant — FY2005 Earnings Presentation
49 slides from Clariant's earnings presentation, Feb 28, 2006
Slide 1: Clariant – The Way Forward
Clariant – The Way Forward Full Year Results 2005 Analyst Conference – Zurich, February 28, 2006
Slide 2: Disclaimer
Disclaimer This presentation contains certain statements that are neither reported financial results nor other historical information. This presentation also includes forward-looking statements. Because these forward-looking statements are subject to risks and uncertainties, actual future results ma
Slide 3: Agenda
Agenda Key Factors – Full Year 2005 Financial Review Business Review Performance Improvements Outlook Full Year Results 2005 Slide 3
Slide 4: Key Factors Full Year 2005
Key Factors Full Year 2005 Roland Lösser, CEO Full Year Results 2005 Slide 4
Slide 5: Delivering as promised
Delivering as promised Key Factors Full Year 2005 9 Transformation Program fully on track Financial Review 9 Performance improvements fully on track Business Review – More than 2,000 jobs eliminated Performance Improvements – CHF 460 million cost base reduction achieved so far Outlook 9 Investment g
Slide 6: Positive results for Full Year 2005
Positive results for Full Year 2005 Key Factors Full Year 2005 Q Sales up 1% in local currency terms to CHF 8.181 billion Financial Review compared to a strong FY 2004*, prices 1% higher Business Review Q High raw material and energy costs reduced margins Performance Improvements Q Further restructu
Slide 7: Financial Review
Financial Review Patrick Jany, CFO Full Year Results 2005 Slide 7
Slide 8: Key financial group figures – Full Year 2005
Key financial group figures – Full Year 2005 Key Factors Full Year 2005 Full Year 2005 2005 % of Sales 2004* % of Sales Change in % in mn CHF like-for-like CHF LC Financial Review Sales 8,181 7,973 +3 +1 Business Review Performance Gross profit 2,416 29.5% 2,540 31.9% -5 -6 Improvements EBITDA 710 8
Slide 9: Key financial group figures – Fourth Quarter 2005
Key financial group figures – Fourth Quarter 2005 Key Factors Full Year 2005 4th Quarter 2005 2005 % of Sales 2004* % of Sales Change in % in mn CHF like-for-like CHF LC Financial Review Sales 2,087 1,934 +8 +2 Business Review Performance Gross profit 585 28.0% 581 30.0% +1 -4 Improvements EBITDA 15
Slide 10: Key factors in Fourth Quarter 2005
Key factors in Fourth Quarter 2005 Key Factors Full Year 2005 Q Raw materials rose by 6% year-on-year Financial Review Business Review Q Approximately CHF 25 million in one-time costs, including implementation of a new supply chain management system Performance Improvements Outlook Q Early debt reti
Slide 11: Solid growth in Fourth Quarter 2005
Solid growth in Fourth Quarter 2005 Key Factors Full Year 2005 4th Quarter 2005 versus 4th Quarter 2004, like-for-like* Financial Review Volume Price Sales in LC Currency Sales in CHF Business Review +6% +8% Performance Improvements Outlook +1% +2% +1% Full Year Results 2005 * The numbers for 2004 a
Slide 12: Growth pattern since 2002
Growth pattern since 2002 Key Factors Full Year 2005 7% Financial Review Business Review Performance Improvements 5% 4% 4% Outlook 3% 1% 1% 1% 2002 2003 2004 2005 Full Year Results 2005 Organic growth in local currency (y-o-y) 2-year average growth rate Slide 12
Slide 13: Transformation Program costs & benefits
Transformation Program costs & benefits Key Factors Full Year 2005 100 Financial Review 90 Business Review 70 Performance Improvements 50 Benefits Outlook Q1 Q2 Q3 Q4 2005 29 30 17 64 63 Costs 23 13 26 in mn CHF Full Year Results 2005 Performance improvement impact* Other Transformation Program cost
Slide 14: Key drivers of operating income before exceptionals in Full Year 2005
Key drivers of operating income before exceptionals in Full Year 2005 Key Factors Full Year 2005 Financial Review Price* Volume Divestments FX Raw CPIP Other Business Review +1% & mix* -2% +1% Material measures -1% 0% -8% +230 Performance Improvements Outlook 594 516 EBIT EBIT FY 04 FY 05 continuing
Slide 15: Financial result helped by FX
Financial result helped by FX Key Factors Full Year 2005 in mn CHF Full Year 2005 Full Year 2004 Financial Review Financial Income 50 27 Business Review Interest Expenses -132 -154 Performance Improvements Other -71 -31 Outlook Financial expenses -203 -185 Currency result, net 55 -75 Total -98 -233
Slide 16: 2005 Cash flow evolution as expected
2005 Cash flow evolution as expected Key Factors Full Year 2005 in mn CHF Full Year 2005 Full Year 2004* Financial Review Net result 192 159 Business Review Depreciation & amortization 342 385 Performance Improvements Other -261 -75 Outlook Operating cash flow before working capital 273 469 Change i
Slide 17: Scope to reduce financing costs
Scope to reduce financing costs Key Factors Full Year 2005 Liquidity Maturities of financial debt 1200 as per December 31, 2005 Financial Review Business Review 696 1000 Performance Improvements Outlook 800 439 600 Committed 400 open lines 311 9 384 200 2 Cash & 228 Equivalents* 159 175 0 2006 2007
Slide 18: Business Review
Business Review Roland Lösser, CEO Full Year Results 2005 Slide 18
Slide 19: Divisional sales and margins – Full Year 2005
Divisional sales and margins – Full Year 2005 (continuing operations*) Key Factors Full Year 2005 Full Year 2005 2005 Change EBITDA Margin in %** Financial Review in mn CHF 2005 vs 2004 Sales LC in % 2005 2004 Business Review Textile, Leather & Paper Chemicals 2,192 -2 11.1 10.6 Performance Improvem
Slide 20: Textile, Leather & Paper Chemicals
Textile, Leather & Paper Chemicals Key Factors Full Year 2005 Q Improving business environment towards year end Financial Review Q Pressure from higher raw material costs easing Business Review Q Wide-ranging restructuring measures showing good results Performance Q Active shrinking and portfolio fo
Slide 21: Pigments & Additives
Pigments & Additives Key Factors Full Year 2005 Q Solid growth across most of the businesses Financial Review Q Stable prices in challenging market conditions Business Review Q Continued pressure from higher raw material costs Performance Q Weaker demand for colorants but strong demand for additives
Slide 22: Functional Chemicals
Functional Chemicals Key Factors Full Year 2005 Q Higher prices but continued pressure from higher raw material costs Financial Review Q Increased demand for personal care and construction chemicals Business Review Q Business for crop protection remained at a high level Performance Q Strong demand f
Slide 23: Life Science Chemicals
Life Science Chemicals Key Factors Full Year 2005 Q Solid demand for products in Speciality Fine Chemicals, e.g. glyoxal and agrochemicals Financial Review Q Pharma continued lower volumes, but new products successfully launched Business Review Q Charge of CHF 55 million impairment taken in Pharma b
Slide 24: Masterbatches
Masterbatches Key Factors Full Year 2005 Q Price increases achieved in challenging market conditions Financial Review Q Continued pressure from higher raw material costs Business Review Q Good growth in Europe and North America Performance Q Recovery in Asia and Latin America Improvements Q Plastics
Slide 25: Meeting customer needs with innovation strength
Meeting customer needs with innovation strength Key Factors Full Year 2005 Q Textile, Leather & Paper Chemicals Financial Review – New environmentally friendly polymer dispersions for paper and Business Review textiles Performance Q Pigments & Additives Improvements – Blue Laser Recording – function
Slide 26: Performance Improvements
Performance Improvements Roland Lösser, CEO Full Year Results 2005 Slide 26
Slide 27: Clariant – Delivering as promised
Clariant – Delivering as promised Key Factors Full Year 2005 9 Implementation of new strategy in place Financial Review – Focus on service and innovation Business Review – Group targets defined by Return On Invested Capital Performance Improvements 9 Financial turnaround accomplished Outlook – Succe
Slide 28: Performance improvements to deliver strongly in 2006
Performance improvements to deliver strongly in 2006 Key Factors EBIT impact of measures* Full Year 2005 +250 Financial Review 800-900 Business Review +310 710 Performance Improvements Outlook 460 150 2004 2005 2006 2007 150 200 265 in mn CHF Full Year Results 2005 performance improvement costs, res
Slide 29: Steady reduction in personnel
Steady reduction in personnel 27,008 Key Factors Full Year 2005 Financial Review 24,769 324 Business Review Performance 409 Improvements Outlook 136 308 209 23,383 Dec 31, 2003 Dec 31, 2004 Q1 Q2 Q3 Q4 Dec 31, 2005 Number of employees, reported Reduction Disposals Full Year Results 2005 More than 1,
Slide 30: Strong financial base re-established
Strong financial base re-established Key Factors Full Year 2005 June 30, 2003 Dec 31, 2005 Financial Review Business Review 3,686 Performance Improvements 2,591 Outlook 1,508 1,061 Net debt Equity Net debt Equity 326 % Gearing 58 % 12.1 % Equity ratio 35.5 % Full Year Results 2005 Slide 30 in mn CHF
Slide 31: Strong financial base re-established
Strong financial base re-established Key Factors Full Year 2005 Financial Review Business Review Performance Improvements Outlook Q Independent confirmation of Clariant’s solid finances Q "BBB" and "Baa2" investment grade ratings by Standard & Poor’s and Moody’s Investors Service with stable outlook
Slide 32: The Way Forward
The Way Forward Jan Secher, CEO-designate Full Year Results 2005 Slide 32
Slide 33: Clariant - The Way Forward
Clariant - The Way Forward Key Factors Full Year 2005 Q Strong commitment at all levels to the Transformation Program Financial Review Q Culturally Clariant is clearly becoming one Business Review Q Portfolio and product mix is well-positioned for growth Performance Improvements Q We’re half-way thr
Slide 34: Clariant - The Way Forward
Clariant - The Way Forward Key Factors Full Year 2005 Q Very optimistic about long-term potential Financial Review Q Strategy is right, people are excellent, priority on execution Business Review Q Further scope to reduce organizational complexity Performance Improvements Q Sharpen focus on key chan
Slide 35: Clariant's financial targets
Clariant’s financial targets Key Factors Full Year 2005 Q Group targets defined by Return on Invested Capital Financial Review Q Every business must earn at least cost of capital Business Review Q Target of at least 20% above cost of capital for the Group Performance Improvements Q Targets to be ach
Slide 36: Outlook
Outlook Roland Lösser, CEO Full Year Results 2005 Slide 36
Slide 37: Outlook for 2006
Outlook for 2006 Key Factors Full Year 2005 Q Good sales growth in local currency terms above last year* Financial Review Q No further negative effects from raw material costs expected Business Review Q Total cost base reduction of approx. CHF 250 million expected Performance Improvements Q EBIT bef
Slide 38: Calendar of upcoming corporate events
Calendar of upcoming corporate events April 7, 2006 Annual General Meeting May 9, 2006 First Quarter 2006 Results August 2, 2006 First Half 2006 Results November 7, 2006 Nine Month 2006 Results February 20, 2007 Full Year 2006 Results Full Year Results 2005 Slide 38
Slide 39: Your Investor Relations contacts
Your Investor Relations contacts Dr. Holger Schimanke Head Investor Relations Phone +41 (0) 61 469 67 45 Mobile +41 (0) 79 343 59 83 email holger.schimanke@clariant.com Fabian Hildbrand, CIIA Investor Relations Officer Phone +41 (0) 61 469 67 49 Mobile +41 (0) 79 763 93 80 email fabian.hildbrand@cla
Slide 40: History of Clariant
History of Clariant Backup Information Group & Strategy 1995 1997 2000 today Business + + Q IPO in the summer of 1995 out of the Sandoz Chemicals Division Q Integration of the Hoechst specialty chemicals business in the summer of 1997 Q Acquisition of BTP plc in summer of 2000 to expand the Life Sci
Slide 41: Clariant organization
Clariant organization Backup Information Chief Executive Officer Group & Strategy Business Human Resources Finance / CFO Group Communications Services* Group Legal Technology** Corporate Development Textile, Leather & Pigments & Functional Life Science Masterbatches Paper Chemicals Additives Chemica
Slide 42: The Way Forward – our transformation continues
The Way Forward – our transformation continues Transformation Program Backup Information wide-reaching series of actions Group & Strategy Business "New" Clariant Reduced complexity Solid financial base Efficient and profitable A leading specialty chemical company Performance Improvements - Operation
Slide 43: The Way Forward – refocusing portfolio
The Way Forward – refocusing portfolio Backup Information Clariant % of Market Competitive Clariant Group & Strategy portfolio Sales attractiveness position strategy Business Service- driven 70% High Strong Expand businesses Technology Strong in -driven / High but Selectively 10% certain niche volat
Slide 44: Divisional sales and margins – Fourth Quarter 2005
Divisional sales and margins – Fourth Quarter 2005 (continuing operations*) Backup Information 4th Quarter 2005 2005 Change EBITDA Margin in %** Group & Strategy in mn CHF 2005 vs 2004 Business Sales LC in % 2005 2004 Textile, Leather & Paper Chemicals 571 0 11.4 9.0 Pigments & Additives 456 +3 9.4
Slide 45: Growth with flat volume and higher prices
Growth with flat volume and higher prices Backup Information Full Year 2005 versus Full Year 2004, like-for-like* Group & Strategy Business Volume Price Sales in LC Currency Sales in CHF +2% +3% +1% +1% 0% Full Year Results 2005 * The numbers for 2004 are like-for-like to account for the disposals o
Slide 46: Regional sales in Full Year 2005
Regional sales in Full Year 2005 Backup Information 4th Quarter 2005 Full Year 2005 Group & Strategy Business Asia/Australia/Africa Asia/Australia/Africa 461 1,801 Europe Europe 1,011 4,111 -1% 0% -1% -1% +1% -2% Americas Americas 615 2,269 Sales: 2,087 Sales: 8,181 Sales in CHF mn, continuing opera
Slide 47: Top 5 products in percentage of total raw material costs
Top 5 products in percentage of total raw material costs Backup Information Group & Strategy Business Ranking Product 1 Ethylene & -Oxide Group 2 Vinylacetate Total ~17% 3 Polyethylene 4 Titanium Dioxide 5 Acrylates Full Year Results 2005 Slide 47
Slide 48: Sales and cost structure – Full Year 2005
Sales and cost structure – Full Year 2005 Backup Information Global sales distribution in % Global cost distribution in % Group & Strategy Business CHF Emerging CHF Emerging markets markets 2 8 20 JPY 3 16 JPY 2 EUR EUR USD 42 46 23 USD 29 5 4 GBP GBP Full Year Results 2005 in mn CHF Slide 48 These
Slide 49: Divisional sales Full Year 2005 in end-user markets
Divisional sales Full Year 2005 in end-user markets* Backup Information Healthcare Agro Group & Strategy Automotive Construction Business Electronics 4% 4% 6% 1% 10% Paper 5% 15% Non-durables Packaging 10% 5% Durables 20% Textiles 19% Other Full Year Results 2005 * Continuing Operations: On Septembe