Clariant Ag · SIX:CLN
Clariant — H1 2004 Earnings Presentation
55 slides from Clariant's earnings presentation, Aug 5, 2004
Slide 1: Disclaimer
Half-year Results 2004 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, a
Slide 2: Clariant Half-year Results 2004: The way forward
Half-year Results 2004 Clariant Half-year Results 2004 The way forward Conference Call August 5, 2004 Slide 2
Slide 3: Agenda
Half-year Results 2004 Clariant Half-year Results 2004 The way forward Agenda Key factors Financial review Transformation Program update Summary & Outlook Slide 3
Slide 4: Roland Lösser, CEO
Half-year Results 2004 Clariant Half-year Results 2004 The way forward Roland Lösser, CEO Slide 4
Slide 5: Solid performance - strong financial base
Half-year Results 2004 Half-year 2004 Key Factors HY 2004 Solid performance - strong financial base Financial Review ■ Sales increased 7% in Swiss Franc terms, to CHF 4.419 bn Transformation Program update ■ Volume growth +9% Summary & Outlook ■ Net income rose sharply to CHF 126 mn, from a loss of
Slide 6: The way forward
Half-year Results 2004 The way forward Key Factors HY 2004 Financial Review ■ Asset sales Transformation Program update − Agreements to sell Electronic Materials & Lancaster Synthesis Summary & Outlook − Full comittment to sell other businesses to refocus portfolio ■ Performance measures progressing
Slide 7: François Note, CFO
Half-year Results 2004 Clariant Half-year Results 2004 The way forward François Note, CFO Slide 7
Slide 8: Key financial group figures Half-year 2004
Half-year Results 2004 Key financial group figures Half-year 2004 Key Factors HY 2004 Financial Review Half-year 2004 % of Sales 2003* % of Sales Change in % Transformation Program update in mn CHF like-for-like CHF LC Summary & Outlook Sales 4,419 4,118 +7 +6 Gross profit 1,459 33.0% 1,362 33.1% +7
Slide 9: Positive volume development in Half-year 2004
Half-year Results 2004 Positive volume development in Half-year 2004 Key Factors HY 2004 Financial Review Half-year 2004 versus Half-year 2003, continuing* Transformation Program update Summary & Outlook Volume Price Sales in LC Currency Sales in CHF -3% +8% +1% +6% +5% * Continuing Operations: On A
Slide 10: Cash flow significantly improved
Half-year Results 2004 Cash flow significantly improved Key Factors HY 2004 Financial Review in mn CHF HY 2004 HY 2003 Transformation Program update Net result 126 -49 Summary & Outlook Depreciation & amortization 184 300 Other 83 68 Operating cash flow before working capital 393 319 Change in worki
Slide 11: Divisional sales and margins
Half-year Results 2004 Divisional sales and margins Key Factors HY 2004 Half-year 2004 vs. 2003, continuing* Financial Review Half-year HY Change EBITDA Margin in %** Transformation Program update in mn CHF 2004 2004 vs 2003 Sales LC in % 2004 2003 Summary & Outlook Textile, Leather & Paper Chemical
Slide 12: Divisional sales overview
Half-year Results 2004 Divisional sales overview Key Factors HY 2004 Financial Review ■ Textile, Leather & Paper Chemicals Transformation − Healthy volume growth offset price pressure Program update − Strong textile chemical business offset ongoing Summary & Outlook commoditizing pressures in textil
Slide 13: Divisional sales overview
Half-year Results 2004 Divisional sales overview Key Factors HY 2004 Financial Review ■ Functional Chemicals Transformation − Strongest volume growth in the group across all business segments Program update − Improving economic conditions in the Americas Summary & Outlook − Margins increased due to
Slide 14: EBITDA analysis Half-year 2004
Half-year Results 2004 EBITDA analysis Half-year 2004 Key Factors HY 2004 Financial Review Half-year 2004 versus Half-year 2003 – continuing* Transformation Program update Summary & Outlook +48 -50 -20 +143 -38 452 -109 457 +31 EBITDA Pricing Raw Volume Measures Currency Re- Other EBITDA HY 2003 mat
Slide 15: Stable gross margin even at high oil prices
Half-year Results 2004 Stable gross margin even at high oil prices Key Factors HY 2004 Financial Review 40 Transformation Program update 35 Summary & Outlook 30 25 20 15 10 5 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 99 00 01 02 03 04 Crude Oil Brent USD / bbl Gross margin
Slide 16: Raw material dependency reduced
Half-year Results 2004 Raw material dependency reduced Key Factors HY 2004 Financial Review Percent of top 10 raw materials of total costs Transformation Program update 34% 23% Summary & Outlook 2001 2004 Percent of VAM1 of raw materials of total costs 1% 12% ■ Sale of PVA/PVB business unit ■ Sale o
Slide 17: Roland Lösser, CEO
Half-year Results 2004 Clariant Half-year Results 2004 The way forward Roland Lösser, CEO Slide 17
Slide 18: The way forward
Half-year Results 2004 The way forward Key Factors HY 2004 Transformation Program Financial Review wide-reaching series of actions Transformation "New" Clariant Program update Summary & Outlook ■ Reduced complexity ■ Solid financial base ■ Efficient and profitable A leading specialty chemical compan
Slide 19: The way forward
Half-year Results 2004 The way forward Key Factors HY 2004 Financial Review Restoring profitability solid financial base Transformation Program update Summary & Outlook Development and implementation of new strategy Asset sales Short-term Mid and long-term performance improvements Increasing financi
Slide 20: Strong financial base re-established
Half-year Results 2004 Strong financial base re-established Key Factors HY 2004 Financial Review in mn CHF Transformation Program update June 30, 2003 June 30, 2004 Summary & Outlook 3,686 2,128 1,840 1,061 Net debt Equity Net debt Equity 326 % Gearing 82 % 12.1 % Equity ratio 24.6 % Slide 20
Slide 21: Performance improvements proceeding well
Half-year Results 2004 Performance improvements proceeding well Key Factors HY 2004 Financial Review ■ CPIP on track with respect to timing and results Transformation Program update Summary & Outlook ■ All projects progressing against targets: − purchasing: over 35% of total spend covered − logistic
Slide 22: Significant reduction in net working capital
Half-year Results 2004 Significant reduction in net working capital Key Factors HY 2004 Financial Review in mn CHF HY 2004 HY 2003 Transformation Program update Summary & Outlook Operating cash flow before working capital 393 319 Changes in inventory -23 -123 Changes in trade receivables -94 -51 Cha
Slide 23: Performance improvement measures over time
Half-year Results 2004 Performance improvement measures over time Key Factors HY 2004 Financial Review EBIT impact of measures* 700-900 Transformation Program update in mm CHF Summary & Outlook 600-700 350-450 100-120 2004 2005 2006 2007 100 200 300 Slide 23 performance improvement costs operational
Slide 24: Two-thirds of asset sales program accomplished
Half-year Results 2004 Two-thirds of asset sales program Key Factors HY 2004 accomplished Financial Review Units that: Transformation Program update Summary & Outlook ... do not focus on service, and/or ... require high investments, and/or ... cannot achieve leading market positions ■ Cellulose Ethe
Slide 25: The way forward - refocussing portfolio
Half-year Results 2004 The way forward - refocussing portfolio Key Factors HY 2004 Financial Review Clariant % of Market Competitive Clariant portfolio attractiveness position Examples strategy Transformation Sales* Program update Summary & Outlook Masterbatches Service- Performance and Process driv
Slide 26: Outlook
Half-year Results 2004 Outlook Key Factors HY 2004 Financial Review ■ Cautiously positive outlook for 2004 Transformation Program update ■ Improved operating margin, ex performance improvement costs Summary & Outlook ■ Clariant targets confirmed − Net debt below CHF 1.5 bn by end 2004 − 4,000 job cu
Slide 27: Q&A
Half-year Results 2004 Clariant Q&A The way forward Slide 27
Slide 28: Calendar of upcoming corporate events
Half-year Results 2004 Calendar of upcoming corporate events November 9, 2004 9 Months 2004 Results March 8, 2005 Full-year 2004 Results April 7, 2005 Annual General Meeting April 12, 2005 Ex Dividend Date May 10, 2005 1st Quarter 2005 Results August 4, 2005 Half-year 2005 Results Slide 28
Slide 29: Your Investor Relations contacts
Half-year Results 2004 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 30: Backup Information
Half-year Results 2004 Clariant Backup Information The way forward Group & Strategy Clariant Performance Improvement Program Business Slide 30
Slide 31: Current business structure
Half-year Results 2004 Current business structure Textile, Pigments & Masterbatches Functional Life Science & Leather & Paper Additives Chemicals Electronic Chemicals Dominik von Nico Gontha* Uwe Nickel* Siegfried Fischer* Siegfried Fischer* Bertrab* Electronic Textile Dyes Coating Industries Europe
Slide 32: Strengthened management team
Half-year Results 2004 Strengthened management team Roland Lösser* Chief Executive Officer François Note* Peter Brandenberg* Human Resources Chief Financial Officer Regions Hartmut Wiezer* Technology and Innovation Nico Gontha* Uwe Nickel* Dominik von Siegfried Siegfried Bertrab* Fischer* Fischer* T
Slide 33: Strategic focus
Half-year Results 2004 The way forward Strategic focus ■ Recognized as a service-driven specialty chemicals Group − World-class customer service skills − Superior innovation and applications capabilities − Leading-edge technologies in synthesis, color and surface effects ■ Defend and further improve
Slide 34: Backup Information
Half-year Results 2004 Clariant Backup Information The way forward Group & Strategy Clariant Performance Improvement Program Business Slide 34
Slide 35: Implementation of CPIP
Half-year Results 2004 Implementation of CPIP ■ Program overseen directly by CEO ■ Managed by dedicated senior executive with relevant experience ■ Teams of “internal champions” and external consultants with one senior project sponsor (Executive Board Member) directly responsible ■ Program controlli
Slide 36: Performance improvement program
Half-year Results 2004 Performance improvement program CEO Leadership Executive Board Sponsorship Board Members Program Performance Management Improvement Program Program Controlling Corporate Logistics Purchasing Marketing Manu- Net Legal Production Supply F&A Network facturing Working Design Site
Slide 37: CPIP Progress to date
Half-year Results 2004 CPIP Progress to date ■ Detailed Group-wide plan established Operational ■ 1st phase of projects completed, expected improvements Projects confirmed ■ 2nd phase of projects underway ■ Detailed human resource map Structural ■ Design phase completed, targets confirmed Projects ■
Slide 38: Break-down of CPIP costs
Half-year Results 2004 Break-down of CPIP costs in mn CHF Expected timing ~ 130 ■ ~ CHF 200 mn 500-600 in 2004 ~ 60 ■ ~ CHF 300 mn in 2005 ~ 350 ■ Rest in 2006 Personnel IT costs Other one- Total related costs time costs restructuring costs Slide 38
Slide 39: Breakdown of performance improvement measures
Half-year Results 2004 Breakdown of performance improvement measures EBIT impact of measures* Projects in mn CHF Purchasing 200 - 250 -4 to 5% of total purchasing costs Marketing 120 - 170 +1.5 to 2% of sales Logistics 40 - 60 -4 to 6% of logistics costs Manufacturing 170 - 220 -4 to 5% of manufactu
Slide 40: Substantial job cuts to sharply reduce costs
Half-year Results 2004 Substantial job cuts to sharply reduce costs General Overhead -22% Manufacturing -14% 800 1,500 1,250 Infrastructure/Services 450 -18% Supply Chain -14% Total job cuts: 4,000 by the end of 2005 Slide 40
Slide 41: Backup Information
Half-year Results 2004 Clariant Backup Information The way forward Group & Strategy Clariant Performance Improvement Program Business Slide 41
Slide 42: Key financial group figures 2nd Quarter 2004
Half-year Results 2004 Key financial group figures 2nd Quarter 2004 2nd Quarter 2004 % of Sales 2003* % of Sales Change in % in mn CHF like-for-like CHF LC Sales 2,213 2,083 +6 +7 Gross profit 729 32.9% 671 32.2% +9 +9 EBITDA 238 10.8% 284 13.6% -16 -16 EBITDA 265 12.0% 320 15.4% -17 -17 before exce
Slide 43: Divisional sales and margins 2nd Quarter 2004
Half-year Results 2004 Divisional sales and margins 2nd Quarter 2004 vs. 2003, continuing* 2nd Quarter Change EBITDA Margin in %** in mn CHF 2004 2004 vs 2003 Sales LC in % 2004 2003 Textile, Leather & Paper Chemicals 570 +3 10.7 13.5 Pigments & Additives 482 +7 17.2 17.1 Masterbatches 284 +9 12.7 1
Slide 44: EBITDA analysis 2nd Quarter 2004
Half-year Results 2004 EBITDA analysis 2nd Quarter 2004 2nd Quarter 2004 versus 2nd Quarter 2003 – continuing* +22 -38 +89 -28 -72 -44 +19 266 214 EBITDA Pricing Raw Volume Measures Currency Re- Other EBITDA Q2 2003 material structuring Q2 2004 & Impairment in mn CHF * Continuing Operations: On Augu
Slide 45: Top products in percentage of total raw material costs
Half-year Results 2004 Top 5 products in percentage of total raw material costs Ranking Product 1 Ethylene 2 Acetic Acid Group Total ~18% 3 Acrylates 4 Acetic Anhydride 5 Vinylacetate Slide 45
Slide 46: Top products - Petrochemical flow chart
Half-year Results 2004 Top 5 products - Petrochemical flow chart Methane C1 Methanol Acetic Acid Vinylacetate Natural Gas Ethane C2 Ethylene Ethylenoxide div Acetylene MMA C3 Propylene Acrylic Acid Acetone Acrylates Oxo-Alk. Naphta C4 Fraction Butyraldehyde Styrene Crude Oil Benzene div VEOVA C5-9 P
Slide 47: Textile, Leather & Paper Chemicals
Half-year Results 2004 Textile, Leather & Paper Chemicals (continuing operations) ■ 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 1,123 ■ Strong customer services through global tailor-made solutions Half-year 2004 % of
Slide 48: Pigments & Additives
Half-year Results 2004 Pigments & Additives (continuing operations) ■ 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 956 ■ Leading edge surface technology Half-year 2004 % of Sales 2003 % of
Slide 49: Masterbatches
Half-year Results 2004 Masterbatches (continuing operations) ■ No. 1 global supplier of color masterbatches ■ Well-positioned key player in markets for additive FUN preparations MB LSE 570 ■ Strong customer services combined with leading color technology P&A TLP Half-year 2004 % of Sales 2003 % of S
Slide 50: Functional Chemicals
Half-year Results 2004 Functional Chemicals (continuing operations) ■ No. 2 for innovative detergent ingredients worldwide FUN 988 ■ Leading partner with specialty chemicals for MB LSE oil and gas production and the refining industry, personal care, de-icing, crop TLP P&A protection and biocide appl
Slide 51: Life Science & Electronic Chemicals
Half-year Results 2004 Life Science & Electronic Chemicals (continuing operations) ■ Among top 5 pharma suppliers ■ No. 1 in Agro business (Custom Synthesis) FUN LSE 528 ■ No. 1 in specific Specialty Fine Chemicals areas MB P&A TLP Half-year 2004 % of Sales 2003 % of Sales Change in % in mn CHF CHF
Slide 52: Divisional sales Full-year 2003 in end-user markets
Half-year Results 2004 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 52 *continuing operations
Slide 53: Sales and cost structure Half-year 2004
Half-year Results 2004 Sales and cost structure Half-year 2004 Global sales distribution in % Global cost distribution in % JPY JPY Emerging 5 Emerging 5 markets markets 19 16 CHF2 USD CHF 7 USD 28 22 5 GBP 41 45 EUR 5 EUR GBP Slide 53
Slide 54: Group sales Half-year 2004 by region, continuing
Half-year Results 2004 Group sales Half-year 2004 by region, continuing Americas 1,097 26% Europe 2,172 52% 22% Asia / Australia / Africa 896 Sales Half-year 2004 in mn CHF: 4,165 Slide 54
Slide 55: Income statement - Comparable figures
Half-year Results 2004 Income statement - Comparable figures Asset sales 2003: Asset sales announced: Cellulose Ethers Electronic Materials Reported Like-for-like Continuing Operations ■ According to the requirements of the International Financial Reporting Standards (IFRS), an enterprise that has a