Rohm and Haas Company. Jacques M. Croisetière Executive Vice President and CFO Morgan Stanley Basic Materials Conference

Transcription

1 Rohm and Haas Company Jacques M. Croisetière Executive Vice President and CFO Morgan Stanley Basic Materials Conference 1

2 Forward Looking Statement The presentation today may include forward-looking statements as that term is defined in securities law, including but not limited to anticipated plans, litigation and environmental matters, currency effects, profitability, and other commitments or goals. Such statements are subject to a number of risks and uncertainties, many of which are listed in Rohm and Haas 10-K filing with the Securities and Exchange Commission. Copies of all recent SEC filings, and additional information about Rohm and Haas, are available through our web site: 2

3 Regulation G The presentation today may include the display of some company data that do not directly conform to generally acceptable accounting principles, or GAAP. Management believes that the presentation of some non-gaap data provides investors with additional insight into the ongoing operations of the business. These measures should not be viewed as an alternative to GAAP measures of performance. Furthermore, these measures may not be consistent with similar measures provided by other companies. All non-gaap data in the presentation are indicated by a footnote. Tables showing the reconciliation between the GAAP and non-gaap measures are available, with today s presentation, on the investor section of our web site at 3

4 Why Should You Own ROH? Long history of strong performance and rewarding shareholders Clear strategic plan that raises the bar on financial performance Excellent culture, governance, and leadership talent Expectation of higher and more consistent future shareholder rewards 4

5 Rohm and Haas Today We are a Global Company 2006: Sales $8.23 B NORTH AMERICAN REGION EUROPEAN REGION $4,199 MM 51% $2,030 MM 25% EMERGING $184 $1,659 MM 20% EMERGING $1,202 $342 MM 4% EMERGING $342 LATIN AMERICAN REGION ASIA PACIFIC REGION 5

6 Rohm and Haas Today Organized for the Future 2006 Sales By Segment Distribution of Operating EBITDA (NG) Salt 10% Primary Materials* 11% 100% Performance Materials 14% Paint & Coatings Materials 25% 75% Electronic Materials 19% * External Sales Packaging & Building Materials 21% 50% Chemicals Elec. Mat. Salt (NG) Non GAAP financial measure 6

7 Solid Performance Key Metrics 2006 Chg v.s Net Sales $8.23 B 4% Gross Margin (1) 30.1% 10bp Earning from continuing operations $755 MM 23% A/T Profit Margin 9.2% 140bp EPS (2) $ % Cash from Operations $840 MM $(107) MM (1) As Reported, before reclassification adjustments (2) Diluted earnings per share (in dollars) from continuing operations 7

8 Exceeding Mid Term Targets Key Metrics Mid Term Targets (1) Actual Sales Demand 4 6% A/T Profit Margin 9-10% ROCE (2) (NG) >10% Dividends per Share ~10% (1)% 8% 11% 15% 3% 9% 13% 14% Payout per Share Ratio ~33% 41% 38% Debt To Capital Ratio 40% 36% 34% (1) As presented at 2003 Annual Shareholder Meeting (2) Return on Capital Employed (NG) Non GAAP financial measure 8

9 Strong Financial Performance Consistently Improving Returns Increasing Portion of Portfolio > WACC Rolling 4 Quarters Diluted EPS % 42% 52% 69% 74% 75% E 0.00 Q1 03 Q1 04 Q1 05 Q1 06 As Reported Before Restructuring & Asset Impairments (NG) (NG) Non GAAP financial measure 9

10 Strong Financial Performance Continued Robust Cash Generation Balanced Cash Deployment Cumulative Cash from Operations ($MM) 5,000 4,000 3,000 2,000 1,000 ($MM) 5,000 4,000 3,000 2,000 1,000 Reinvest in core businesses Invest in new platforms Bolt-on acquisitions Dividend growth Share repurchases Cumulative Cash From Operations Cumulative Cash Returned to Shareholders 0 10

11 Steady Productivity Improvement Earnings Per Employee Trend ($MM) Earnings Per Employee (1,NG) European Infrastructure Optimization Manufacturing Footprint Redesign and Capacity De-bottlenecking Shared Services Process Leverage State-of-the-Art Information Systems (1) Earnings from Continuing Operations (NG) Non GAAP Measure 11

12 Total Shareholder Return vs. S&P Year TSR Period Ending December 31, ROH 10.8% S&P % Q Q Q Q Q Q ROH S&P500 12

13 Vision 2010 Position Portfolio for Accelerated Growth Build Value Creating Business Models in Emerging Markets Innovate with Market/Customer Focus Operational Excellence/Continuous Improvement Deploy Right Talent in Right Places 13

14 The External Environment Observations Demand for chemistry-based, specialized materials will continue to grow Markets are becoming increasingly regional (and local) Competition is intensifying across all segments Customers demand innovative and customized products, services and solutions Connectivity is changing everything Technology, speed and talent are the true differentiating characteristics 14

15 Position Portfolio for Accelerated Growth Leverage Specialty Materials integrated acrylic monomer and polymer chain Accelerate investment in Electronic Materials Develop a strong portfolio of growth specialties Fix or divest underperforming or non-strategic assets Supplement organic growth with bolt-on acquisitions, where justified 15

16 Specialty Materials A Unique Global Franchise Leveraging the Monomer / Polymer Chain Problem-solving capability in a broad range of end markets World s largest and most diverse Acrylic polymer business Integrated supply chain: monomers polymers Technology leader Manufacturing excellence Global acrylate / methacrylate sourcing Global polymers network World-class cost and quality Significant merchant business 16

17 Electronic Materials Leading Global Supplier of Enabling Materials Invest Heavily in R&D Drives advanced technology and a healthy pipeline R&D investment 8% of sales; 12 R&D/Tech. Centers worldwide Leverage our Integration Capability Application and Integration Labs throughout Asia and U.S. Key to delivering right products/processes that meet specific customer needs Capitalize on our Global Manufacturing Footprint Global sourcing from manufacturing facilities in the U.S., China, Hong Kong, Taiwan, Korea, Japan, and Europe Continue Strong Focus on Asia Continue developing infrastructure, market positions, technology, and local talent 17

18 Performance Materials Two-Pronged Growth Mission Build on Today s Core (Ion Exchange Resins, Biocides) Leverage leading market positions and unique solutions for bio-processing, water treatment, antimicrobial, and food markets Key Factors: Technology development Broader product portfolio Varied business models Global reach Develop New Platforms (Agrofresh, Others) Focus on fast-growing market segments and geographies requiring new technologies (e.g. healthcare, water, energy, food) Key Factors: Technology driven Higher risk, return New-to-the-company areas Critical mass consolidate efforts 18

19 Build Value Creating Business Models in Emerging Markets Local technology delivery; product customization Streamlined organizational structure; closer to customers Invest in local talent development Optimized capital and operating costs in each region Regional monomer sourcing 19

20 Build Value Creating Business Models in Emerging Markets Sales CAGR E CAGR (1) Asia Pacific (ex Japan, ANZ) $1.2 B 17% 22% Latin America $0.3 B 14% 15% CEET $0.2 B 38% 19% TOTAL EMERGING $1.7 B 18% 21% % of Global Sales 21% 35% (2) (1) Organic growth and Acquisitions (2) % of Global Sales is 2010 Year End Estimate 20

21 Innovation With a Market / Customer Focus Accelerate Development Of Locally-Tailored Products Target areas where customers desire technology-driven solutions and are willing to pay Electronics, Coatings, other Specialties Balance Product and Process efforts Breakthrough / Step Change rather than Incremental Globalization Closer to markets and talent pools Broader reach, internally and externally Eco-friendly focus Leverage external partnerships 21

22 Operational Excellence / Continuous Improvement Focus on asset productivity Flat conversion costs for 3 years Capital efficient emerging market plants Global footprint optimization Optimize global sourcing of raw materials and services 2007 Target double purchases from low cost countries ~10% of total purchases Regional monomer sourcing Responsive and efficient business services Administrative costs currently 6.7% of sales Target 5.5% Regional services model Focus on lowering effective tax rate Targeting 28% sustainable tax rate 22

23 Vision 2010 Targets Growth EBIDTA% (NG) ROCE (NG) Specialty Materials Primary Materials Paint & Coatings Materials Packaging & Building Materials Electronic Materials Circuit Board Technologies Packaging and Finishing Technologies Semiconductor Technologies Performance Materials Salt (NG) Non GAAP financial measure Sales Demand Growth > Market = Market < Market EBITDA% > 20% < 20% < 17% Return ROCE > 9% ROCE = 9% ROCE < 9% 23

24 Performance and Targets Raising the Bar Key Metrics Average Performance Targets Sales Demand Growth 3% EPS Growth 42% EBITDA % (NG) 19% 5-7% 10-14% > 20% ROCE (NG) 11% > 13 % (NG) Non GAAP financial measure 24

25 Thank you. 25

26 Glossary of Terms A/T Profit Margin Net Earnings from Continuing Operations before cumulative effect of accounting changes/ Net Sales CAGR Debt To Capital Ratio EBITDA EBITDA Net Interest Coverage Emerging Markets APR Emerging Markets LAR Emerging Markets - CEET EPS Before Restructuring. & Asset Impairment Payout Ratio ROCE Sales Demand Growth TSR WACC Compounded Annual Growth Rate Total Debt/ (Total Debt + Shareholder s Equity) Earnings Before Interest, Taxes, Depreciation, Amortization and Asset Impairments EBITDA / Interest Expense Sales into countries in ROH defined Asia Pacific Region excluding Japan, Australia and New Zealand Sales into countries in ROH defined Latin America Region Sales into countries in ROH defined Central, Eastern Europe (including Russia and other former Soviet Republics) & Turkey Diluted EPS, excluding the impacts of restructuring and asset impairment charges Dividend Per Share/ Diluted EPS from continuing operations Return On Capital Employed Sales growth excluding the impact of pricing and currency Total Shareholder Return (capital appreciation + dividends) Weighted Average Cost of Capital 26