Press Conference - Paris, March 5th 2008 ... Press Conference - Paris, March 5th 2008. ... Transforming

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  • 2007 full year results and mid-term prospects

    Press Conference - Paris, March 5th 2008

  • 2 Press Conference / March 5th 2008

    Transforming the company Low starting point but strong potential

    A new face Foward looking, competitive, with sigificant further growth potential

    20102010

    20072007 First milestones cleared with success Ahead of targets and high density of projects launched

    An ambitious industrial project poised for the long term

    2007: already a very different company

    20052005

  • 2007 Key points

  • 4 Press Conference / March 5th 2008

    EBITDA: €518m EBITDA margin: 9.1%

    Net income: €122m

    Free cash flow: €128m

    4th quarter very significantly up in a rather more mixed environment

    Results far exceeding the objectives

    x2.7

    +26%

    +62%

    EBITDA Q4 2007 +41% compared to Q4 2006

  • 5 Press Conference / March 5th 2008

    Four master projects

    JV with Daikin in Asia for new generation of fluorogases

    First acquisition: Coatex (specialty acrylic polymers)

    Restructuring of European fluorochemical business

    New headquarters and streamlined support functions

  • 2005 - 2007 A rapid and radical transformation

  • 7 Press Conference / March 5th 2008

    Implementing a winning long term strategy

    3 strategic vectors:

    Large cost reduction

    Market-driven innovation

    Accelerating business development in Asia

    Portfolio management to speed up transformation

  • 8 Press Conference / March 5th 2008

    - 21%

    Large cost reduction

    12/31/2004 12/31/2007

    19,167

    15,194*

    France

    Asia and RoW

    North America Europe

    * incl. 600 related to change in business scope

    Cumulative savings of €230m over two years Employee headcount (2004 to 2007):

    Decrease of G&A expenses Energy savings in processes

  • 9 Press Conference / March 5th 2008

    2007: R&D projects are already bearing results

    R&D expenses around 3% of sales

    60% of budget allocated to development:

    PMMA Capstocks Transparent technical polymers High temperature polyamides Specialty molecular sieves (medical & petrochemical) Sulfur derivatives (refinery and animal nutrition) New generation of fluorogases

    19% of 2007 Performance Products sales generated by products < 5 years

    Product and process improvement

    New products

    Long term breakthrough

    15%

    12 %

    33%

    New processes

    40%

    12%

  • 10 Press Conference / March 5th 2008

    20%

    World-class sites

    Over €50m capex per year

    Building on Changshu platform (China)

    Accelerating business development in Asia

    % sales in Asia

    2007 2012 (e)

    80 kt H2O2 (Shanghai)

    F125 and fluorinated blends with Daikin (Changshu)

    Kynar® (Changshu)

    Debottleneck tin stabilizers (Beijing)

    Acrylic acid in India (MOU) Technical polymers

    Thiochemicals Hydrogen peroxide

    Polyamides (Changshu)

    Other projects:

    13%

    €7 47

    m

    20092008 20102007

  • 11 Press Conference / March 5th 2008

    From divestments to acquisitions

    ~ €180m sales

    ~ €380m sales

    Achieved

    €500m to €800m sales by end 2009

    €300m to €400m sales by mid-2008

    Objectives

    Coatex (Specialty acrylic polymers)

    PMMA Repsol

    Cerexagri (Agrochemicals)

    Urea formaldehyde resins Specialty amines (Thiochemicals)

    Product lines

    Acquisitions

    Divestments

    Recentered portfolio Still very strong financial balance sheet

  • 2007 Detailed Results Exceeding the stated objectives

  • 13 Press Conference / March 5th 2008

    Results significantly above guidance

    * Calculated as total cash flow excluding M&A and NR pre-spin off items

    79 128

    2006 2007

    Free cash flow* (€m)

    +62% 45

    122

    2006 2007

    Net income group share (€m)

    x 2,7115

    186

    +4% excl. exchange rate and scope effect

    +0.2% 2006 2007

    Sales (€m)

    411 518

    2006 2007

    EBITDA (€m) & EBITDA margin

    7.3%

    9.1%

    +26%

    Rec. net income

    Net income

  • 14 Press Conference / March 5th 2008

    EBITDA EBITDA margin

    355 6.2%

    411 7.3%

    518 9.1%

    + 26%

    2005** 2006

    Major improvement in profitability

    2007 Variation2006 / 2007 Sales 5,710 5,664 5,675 + 0.2%

    Operating income (recurring) 128 200 293 + 47% Other income and expenses (514) (92) (72)

    EPS (7.05) 0.75 2.02 x 2.7

    Net debt (12/31/07) 567 324 459

    Capital employed (12/31/07) 3,068 3,024 3,263

    ROCE* 4.2% 6.6% 9.3%

    Headcount (12/31/07) 18,377 17,044 15,194

    In €m

    * Calculated as recurring operating income divided by average capital employed ** Proforma financial statements including Cerexagri

  • 15 Press Conference / March 5th 2008

    + 4% organic growth

    €5,664m

    (2.6)%

    2006 sales 2007 sales

    Prices Conversion effect

    Scope

    Volume

    +1.7%

    €5,675m

    +4% organic growth

    +2.3% (1.2)%

    * Excluding negative impact on volumes from the closure of the urea-resin site in Villers-Saint-Paul (France) in 2006

    Evolution by segment

    Vinyl Products

    Industrial Chemicals

    Performance Products*

    +2.9%

    +5.7%

    +4.2%

    Prices Organic growth

    Volumes

  • 16 Press Conference / March 5th 2008

    Major contribution from internal projects

    €411m

    EBITDA 2006

    EBITDA 2007

    Internal projects

    Other Environment

    €518m+ €17m + €83m

    + €7m + €83m coming from internal projects

    +26%

    Increasing raw material and energy costs offset by rises in sales prices

    Savings

    + 110

    - 11

    - 42

    + 26

    + 83

    Volume loss from

    restructuring

    Inflation on fixed

    costs

    New businesses

    Internal projetcs

    In €m

  • 17 Press Conference / March 5th 2008

    Vinyl Products: good demand & cost savings

    Fos/Lavera

    Headquarters Soveplast

    Dorlyl

    Novellara

    2005 2006 2007 Var.*

    Sales 1,387 1,379 1,418 +2.8%

    EBITDA 20 38 90 x 2.4

    EBITDA margin 1.4% 2.8% 6.3% -

    Rec. op. income 8 21 65 x 3.1

    2007 performance

    EBITDA growth: 40% internal projects, 60% external factors

    2007 initiatives

    Main projects

    Good demand for PVC in Europe Price increases compensate for higher raw material costs

    Benefits from restructuring initiatives Large maintenance turnaround in Fos (F) Strong performance of QVC**

    Implementation of chlorochemical consolidation plan

    €44m capex + €30m cumulative EBITDA impact

    Further reorganization in downstream PVC - 104 positions full impact in 2009

    Transfer of teams based in Paris near production sites Focus on higher added value products

    In €m

    * 2007 vs 2006 ** Included in "equity income of affiliates"

  • 18 Press Conference / March 5th 2008

    Industrial Chemicals: strong resistance of results

    2005 2006 2007 Var.*

    Sales 2,406 2,494 2,529 +1.4%

    EBITDA 316 267 289 +8%

    EBITDA margin 13.1% 10.7% 11.4% -

    Rec. op. income 204 160 178 +11%

    Key partnerships in Asia JV with DAIKIN in fluorinated gases

    3 new restructuring plans - 302 positions (Carling, Pierre-Bénite, Lacq)

    Downstream acquisitions Acrylic polymers PMMAContrasted environment

    Good demand in MMA, H2O2 Low acrylic margins & pressure on HFC -134a prices

    Impact of € / $ exchange rate

    Savings from European plans PMMA, Thiochemicals, Fluorochemicals

    Benefits from growth projects Successful start-ups (Calvert City, Carling, Becancour)

    Robust set of results

    Successful transformation of fluorochemicals

    Restructuring of Pierre-Bénite

    New generation of products (HFC-32) - Calvert City

    2007 performance 2007 initiatives

    In €m

  • 19 Press Conference / March 5th 2008

    Performance Products: double-digit EBITDA margin

    2005* 2006 2007 Var.**

    Sales 1,907 1,784 1,723 (3.4)%

    EBITDA 109 156 184 +18%

    EBITDA margin 5.7% 8.7% 10.7% -

    Rec. op. income 19 71 97 +37%

    Significant contribution from restructuring

    19% of sales from new products < 5 years

    Negative impact of € / $ parity

    Price increases in functional additives to offset increases in tin price

    Impact from divestments on revenue

    Bonn (Germany) closure: - 83p.

    2Q’07

    Changshu (China) Rilsan ® polyamide capacity x2

    Marseille St Menet (France) - 48p. / +10% monomer capacity

    3Q’07 4Q’07

    Mont (France) +40% Orgasol® capacity

    1Q’07

    Strengthening of polyamide business

    Serquigny (France) *** - 49p. / €13m capex

    Strong recovery

    5 new restructuri