Evonik. Power to create.

Transcription

1 Evonik. Power to create. Company presentation Commerzbank German Corporate Day Ute Wolf, Group Finance Director Tim Lange, Head of Investor Relations London, June 20 th, 203

2 Table of contents Evonik - A leading global specialty chemicals company 2 Evonik 206 Growth. Efficiency. Values. 3 Finance Strategy 4 Financial performance Q 203 Page 2

3 Ownership structure Stock exchange listing Trading of the Evonik stock commenced on April 25, 203 in the Prime Standard of Frankfurt Stock Exchange and in Luxembourg 4.2% of shares were successfully placed in advance of the listing Free Float RAG-Stiftung Obligation to finance the perpetual liabilities arising as from 209 from the cessation of hard-coal mining Intention to retain a strategic shareholding in Evonik of at least 25. percent in the long term ~4.2% CVC ~7.9% ~67.9% RAG-Stiftung Shares held by Gabriel Acquisitions GmbH, an indirect subsidiary of funds advised by CVC Page 3

4 Corporate structure Three specialty chemicals segments focused on global megatrends Segments Business Units Specialty Chemicals Consumer, Health and Nutrition Sales: 4,204 m Adj. EBITDA margin: 25.% Resource Efficiency Sales: 3,3 m Adj. EBITDA margin: 2.2% Specialty Materials Sales: 4,843 m Adj. EBITDA margin: 7.6% Figures relate to full year 202 Consumer Specialties Sales: 2,056 m Health & Nutrition Sales: 2,48 m Inorganic Materials Sales:,473 m Coatings & Additives Sales:,658 m Performance Polymers Sales:,774 m Advanced Intermediates Sales: 3,069 m Efficient support functions Services (e.g. Site Services, Evonik Business Services) Corporate Center Non-core assets Real Estate Energy 00% stake in Vivawest GmbH 50% stake in THS GmbH 49% stake in Steag GmbH Deconsolidation expected in 203 Put-call arrangement in place for full divestment latest 207 Figures relate to full year 202; restated for IAS 9 Page 4

5 Real estate divestment Current Structure Targeted Structure September 30, 203 VTG VTG Evonik CTA (pension funding) 00% 50% 30% ~27% ~25% ~0% ~8% 50% Combined entity of Vivawest & THS Note: Transaction dependent on completion of due diligence, approval of purchasers statutory bodies and merger control Page 0

6 Investment highlights A leading global specialty chemicals company Well-balanced portfolio in respect to products, end markets and regions 2 Favourable megatrends and leading market positions support growth across all segments 3 High barriers to entry: close and long-term customer relationships, market-oriented innovation and integrated technology platforms 4 Proven track record of value creation and active portfolio management Page 6

7 A well-balanced specialty chemicals portfolio across activities, end markets and regions Sales by Business Units End market split 2 Sales by region 3 Advanced Intermediates Performance Polymers 4% 25% 4% Coatings & Additives Consumer Specialties 7% 2% 8% Inorganic Materials Health & Nutrition Metals, mining, oil & gas 3% Electronics & telecom. Coatings, paints & printing Construction 4% 7% % Plastics & rubber Other 0% 2% 6% 8% Automotive, transportation & machinery Home, lifestyle & personal care 4% 5% Feed, food & beverages Pharma & healthcare Central and South America Asia- Pacific North America 8% 8% Middle East, Africa 2% 6% 3% 25% Other European Countries Germany 202; not including Services, Real Estate and Corporate/Other 2 Based on Specialty Chemicals segments 202 sales to end markets as per Evonik s internal management system 3 Consolidated Group sales 202 (incl. Real Estate) Page 7

8 2 Leading market positions across all segments Consumer, Health & Nutrition Resource Efficiency Specialty Materials Key megatrends Growing emerging market wealth Aging population Renewable energies Environmentally friendly solutions Mobility and urbanization Substitution of conventional materials Sales from leading market positions (202) ~80% ~95% ~70% Examples of products with leading market positions Superabsorbents (#-2) DL-Methionine (#) Pharma polymers (#2) Silicas (#) Isophorone chemicals (#) Oil additives (#) Polyamide-2 (#) PEEK (#2) H 2 O 2 (#2) Sales with top -3 market position by sales, production volume or capacity (depending on available data) Source: Company estimate, based on multiple research reports Page 8

9 2 Attractive growth opportunities across all segments Consumer, Health & Nutrition Resource Efficiency Specialty Materials Key examples End user applications Baby diapers / incontinence systems Compound animal feed Green tires Viscosity modifiers in oils & fluids Gas & offshore pipelines Biodiesel Evonik product position #-2 in suberabsorbents # in DL- Methionine # in precipitated silica # in oil additives # in Polyamide 2 # in biodiesel catalysts End market growth 2 5% (China) 5-6% (global) 0% (China) 4% (global) 9% 7% (China) 3% (global) 4-5% 5% Company estimate, based on multiple research reports E; as per Frost & Sullivan (203) Page 9

10 3 High barriers to entry Close and longterm customer relationships Market-oriented innovation & value-added services Superabsorbents Excellence Award from P&G in 2008, 2009, 200, 20, 202 Capability of bringing next-generation superabsorbents to the market (e.g. fluffless diaper) Methionine Broad range of value-added services, incl. feed analysis, formulation support and dosage systems New applications and new product developments, e.g. Methionine for aquaculture Integrated technology platforms Mission critical solutions Performance Intermediates (C4 chain) >20 years experience with leading technology platform (process excellence & cost leadership) Logistical advantages of handling liquefied and gaseous product streams Silica (green tire) ~7.5% less fuel consumption and 8m shorter stopping distance with category A (green) tire Silica-organosilane reinforcing system make up only a few euros of total costs of the tire Page 0

11 4 Proven track record of value creation and active portfolio management Value creation focus implemented throughout entire organization Company managed on basis of consistent system of value-oriented indicators; EVA as central KPI Short- and long-term incentive plans based on equity value and EVA Internal growth projects and external acquisitions based on strict value-oriented investment criteria Consistent execution Efficiency program On Track completed year ahead of schedule Exit from energy activities completed Divestment of Carbon Black business First bolt-on acquisitions Efficiency program On Track 2.0 started Divestment of Colorants business Launch of 6bn capex program Route to exit from Real Estate business agreed and in execution Page

12 4 Strong balance sheet ; value-generating use of funds Internal growth: 6 bn investment program Expansion of capacities in high-growth and margin areas Clearly defined strategic & value criteria (e.g. IRR pre tax >6%) Accelerating growth in Emerging Regions (~50% of capex volume) External growth: Selective acquisitions Strengthening of high-growth platforms and broadening of existing competencies and capabilities Key criteria: clear strategic fit and value creation Sound financial profile Targeted reduction of pension provisions by ~.4 bn until 205 Significant reduction of interest expense over the next 3 years Target: solid investment grade rating (total leverage: < 2.5x) Dividend: Attractive shareholder returns Dividend target ratio: ~40% of Adjusted net income Total leverage defined as (Net Financial Debt + Funded Status of pensions) / Adjusted EBITDA LTM Page 2

13 Table of contents Evonik - A leading global specialty chemicals company 2 Evonik 206 Growth. Efficiency. Values. 3 Finance Strategy 4 Financial performance Q 203 Page 3

14 Program Evonik 206 Focus on growth, efficiency and values Growth Efficiency Organic sales growth considerably above GDP Focus on Asia & other emerging markets Ambitious investment program ( 6 bn ) External growth through selective acquisitions Innovation initiatives addressing future markets Efficiency program On Track 2.0 launched Continued shift to high margin applications Cost leadership and proprietary production technologies Launch of program PROVE: Process and Value Excellence Efficiency. Values. Growth. Values Mindset for growth Performance culture and diversity Customer focus Value based management and incentivization Page 4

15 Evonik 206: Growth Ambitious investment program Intended ~ 6 bn investment program ( ) ~ 6 bn Key (approved) projects Segment Product area Location Capex Expected start up Consumer, Health & Nutrition Amino acids: DL-methionine Singapore > 500 m H2 204 Growth projects ~ 4 bn Consumer, Health & Nutrition Personal & home care ingredients China and Brazil > 00 m 203 / 204 Consumer, Health & Nutrition Amino acids: L-lysine Brazil and Russia > 00 m 204 / 205 Small investments 2 ~ 0.5 bn Resource Efficiency Silica Globally ~ 00m until end of 204 Maintenance capex 3 ~.5 bn Resource Efficiency Isophorone and isophorone diamine China > 00 m Q 204 Capex Specialty Materials C 4 chain Germany and Belgium > 250 m 205 Growth investments defined as investments above 2.5 m into growth projects 2 Small investments defined as investments below 2.5 m focused on growth or efficiency improvements 3 Includes maintenance and regulatory compliance investments Specialty Materials H 2 O 2 for HPPO China > 30 m end 203 or 204 Page 5

16 Evonik 206: Efficiency On Track 2.0 initiated Expected savings (in million) Other Business Services Site Services Procurement OPEX ~500 Successful launch of On Track 2.0 as a program for continuous efficiency improvement Target: sustained annual savings of about 500 million from year-end 206 Cost savings of approximately 40 million achieved in 202 Specific measures already defined for about 50 percent of target savings volume ~40 202A 203E 204E 205E 206E Total Page 6

17 Table of contents Evonik - A leading global specialty chemicals company 2 Evonik 206 Growth. Efficiency. Values. 3 Finance Strategy 4 Financial performance Q 203 Page 7

18 Financial policy Financial Policy Intend to keep Total leverage ratio below 2.5x Envisage robust funding level of DBO 2 Strive to maintain solid investment grade rating Evonik aims to remain a reliable partner for both its bond investors and banks Total leverage defined as (Net Financial Debt + Funded Status) / Adjusted EBITDA 2 Defined benefit obligations Page 8

19 Leverage in 202 impacted by lower discount rate of DBO ( m) 7,254 6,636-25% Net Financial Debt 3,349 2,367 5,598 5,46,677 4,585,63 DBO - Plan Assets 3,905 4,269 3, ,742 4,298 thereof,300 4,298 Increase of DBO due to decrease of discount rate from 4.76% to 3.78% Total Leverage 3.4x 4.x 2.4x.7x 2.x Page 9

20 DBO increase partially offset by CTA Pension overview 202 ( m) Comments unfunded Other Plan Assets funded 53% Increase of DBO to 9.bn (+7%) due to decrease of discount rate from 4.76% to 3.78% CTA contribution of 400m in November 202 Further stepwise funding allocations planned for ( 600m in total) Contribution of 25%-stake in the real estate business to CTA in Defined benefit obligations 9,088 7,787 Plan assets (4,790) (4,045) Funding gap 4,298 3,742 Page 20

21 Substantial Improvement of Debt Maturity Profile Debt maturity profile as of March 3, 203 (in million)* (continued operations),200, Other debt instruments Bonds New 500m bond with a tenor of 7 years and a coupon of.875% issued on April, 8 7 year tenor leads to improvement of the average life of financial debt Proceeds will help to refinance,093m Evonik Degussa GmbH bond which will be due in December Remaining funds will come from strong liquidity position of about.bn Undrawn RCF of.5bn * but including new 500m 7-year bond issued on April, 8 th, 203 Page 2

22 Rating positioned in upper range of BBB A- A3 Rating Rating upgrade by Moody s to Baa2 with positive outlook in March 203 BBB+ Baa BBB Baa2 Investment grade BBB+ /stable Baa2 /positive S&P s rating BBB+ with stable outlook since May 202 Impressive rating dynamic thanks to focus on specialty chemicals BBB- Baa3 and clear financial policy Maintaining a solid investment BB+ Ba Speculative grade grade rating is an integral part of our financial policy May-0 Nov-0 May- Nov- May-2 Nov-2 May-3 S&P Moody's Page 22

23 Building Blocks of our Financing Strategy Centralised Financing Concept Debt raised at parent level (Evonik Industries AG and Evonik Finance BV) Cashpool for efficient liquidity management within the Group L/T Funding through Capital Markets 3bn Debt Issuance Programme Public benchmark bonds & private placements.5bn Syndicated RCF as Liquidity Reserve Currently completely undrawn No financial covenants Strong Banking Relationships Banks are partners; frequent dialogue Banking Group structured to sufficiently cover all products in all regions Page 23

24 Table of contents Evonik - A leading global specialty chemicals company 2 Evonik 206 Growth. Efficiency. Values. 3 Finance Strategy 4 Financial performance Q 203 Page 24

25 Financials highlights Q 203 Moderate start into the year, outlook confirmed In a still challenging economic environment, sales of 3,263 m organically only slightly below strong prior-year quarter (-2%) Volumes stable at Group level; prices also stable across majority of businesses, while declining for some important products Adjusted EBITDA of 589 m (-0.2%) and Adjusted EPS of 0.63 (-7.3%) below strong prior year level with partly very high price levels Adjusted EBITDA margin of 8.% still on attractive level Net financial debt of. bn remains moderate Outlook for FY 203 confirmed Prior year figures restated for IAS 9 and Real Estate (disc. op.) Page 25

26 Q 203 performance Sales organically only slightly below prior year in million Q 202 Q 203 in % Sales 3,407 3, Adj. EBITDA Adj. EBITDA margin 9.3% 8.% -.2pp Net interest expenses Adj. income tax Adj. net income Capex Real Estate as discontinued operations as of Q 203 (prior year also adjusted) Sales -4.2%, thereof: Volumes: 0%; Prices: -2% FX: 0%; Other (incl. M&A): -2% Net interest expense: Decrease driven by lower interest rates for pensions and higher income as a result of the transfers made to the CTA Adjusted tax rate: Low adj. tax rate of 23.2% due to taxes relating to other periods Capex expected to increase progressively during 203 to.5 bn for full year Continuing operations Prior year figures restated for IAS 9 and Real Estate (disc. op.) Page 26

27 Net financial debt Effect from Dividend payment offset by discontinued Real Estate net financial debt Development of net financial debt (in million) +26 Total leverage 2 2.x Total leverage 2 2.3x ,37 Net financial debt Dec. 3, 202 CF from operating activities Cash outflow for investing activities Dividend NFD discontinued operations Other Net financial debt March 3, Cash outflow for investment in intangible assets, property, plant and equipment and shareholdings 2 Total leverage defined as (Net Financial Debt + Funded Status) / Adjusted EBITDA LTM 3 Excluding Real Estate (as discontinued operations as of March, 203) Page 27

28 Appendix

29 Specialty Chemicals segments Overview Segments Consumer, Health & Nutrition Sales: 4,204 m Adj. EBITDA:,054 m Resource Efficiency Sales: 3,3 m Adj. EBITDA: 663 m Specialty Materials Sales: 4,843 m Adj. EBITDA: 853 m Business Units Consumer Specialties Sales: 2,056 m Health & Nutrition Sales: 2,48 m Inorganic Materials Sales:,473m Coatings & Additives Sales:,658 m Performance Polymers Sales:,774 m Advanced Intermediates Sales: 3,069 m Personal Care (20%) Health Care (~20%) Silica (~65%) Crosslinkers (~30%) Acrylic Monomers (~35%) Performance Intermediates (~70%) Household Care (5%) Methionine (~60%) Advanced Silanes (~0%) Coating Additives (~0%) Acrylic Polymers (~40%) Active Oxygens (~0%) Business Lines Comfort & Insulation (5%) CyPlus Technologies (~5%) Functional Silanes (~5%) Coating & Adhesive Resins (~30%) High Performance Polymers (~25%) Functional Solutions (~0%) Interface & Performance (~0%) Bioproducts (~5%) Catalysts (~0%) Oil Additives (~30%) Agrochemicals & Polymer Additives (~0%) Baby Care (~40%) Data as of Fiscal Year End 202 Adjusted for IAS 9 restatement Page 29

30 Consumer, Health & Nutrition Segment overview Key financials ( m) Sales Adj. EBITDA and margin (%) 4,08 4, ,677 3,022 3, ,049,055 Health & Consumer 807 Nutrition Specialties 602 5% 49% Sales split by Evonik s end markets (202) Sales split by region (202) Others Pharma & Healthcare 2% 0% 40% Home, Lifestyle & Personal Care Middle East, Africa Central & South America 4% 3% Asia-Pacific 8% 0% Germany 29% Other European Countries Feed, food & beverages 38% Company estimates on the basis of information on Evonik s customers and the further use of Evonik s products by its customers Adjusted EBITDA 202 restated for IAS 9 effects 26% North America Page 30

31 Consumer, Health & Nutrition BU Consumer Specialties Personal Care Household Care Comfort & Insulation Interface & Perform. Baby Care Applications Personal care Occupational skin care Laundry care Home care Car care Furniture / appliances Construction Automotive Packaging / tapes Agrochemicals Plastic additives Baby care Female care Adult care Key products Actives, emulsifiers, conditioners Skin cleansers Fabric conditioners Specialty surfactants Foam stabilizers Catalysts Release agents Release coatings Super spreading additives Superabsorbents Sales split 202 ~20% ~5% ~5% ~0% ~40% Market position # 2-3 in prof. skin protection # in fabric softeners # in polyurethane foam additives # 2 in release coatings # 2 in superabsorbents % of sales from leading positions 2 42% 82% 90% 43% 86% Main competitors Croda BASF / Cognis Ashland / ISP AkzoNobel BASF / Cognis Solvay / Rhodia Stepan Air Products Dymatic Momentive Clariant Dow Corning Momentive Wacker BASF Nippon Shokubai Company estimates for relevant markets based on multiple research reports 2 Defined as Top -3 positions; as per Company estimates, based on multiple research reports Page 3

32 Consumer, Health & Nutrition BU Health & Nutrition Methionine Bioproducts Health Care Cyplus Technologies Applications Animal nutrition, mainly poultry and swine Animal nutrition, poultry and swine Active pharmaceutical ingredients and functional pharmaceutical excipients: drug delivery systems functional drug coatings Fine chemicals Precious metals mining Key products Methionine Lysine Threonine Tryptophan Active pharma ingredients Pharma grad amino acids Pharmaceutical coatings Sodium cyanide Potassium cyanide Sales split 202 ~60% ~5% ~20% ~5% Market position # in DL-Methionine # 3 in L-Threonine and L- Tryptophan # 2 in drug-delivery systems n.a. % of sales from leading positions 2 00% 27% 00% n.a. Main competitors Chem China / Adisseo Novus Sumitomo Chemicals Company estimates for relevant markets based on multiple research reports 2 Defined as Top -3 positions; as per Company estimates, based on multiple research reports Ajinomoto Archer Daniels Midland Cheil Jedang Global BioChem Colorcon Dow Cellulosics DSM Kyowa Hakko Lonza AGR DuPont Orica Page 32

33 Feed additives Evonik product portfolio for efficient animal nutrition System solution provider: Evonik is the only producer of the first four limiting essential amino acids: methionine, lysine, threonine and tryptophan Cross selling: >90% of bio amino acid (e.g. lysine) customers also buy Methionine from Evonik Direct sales to customers: >90% of sales are made directly to customers via Evonik s global sales and service network. Customers range from pre-mixers and feed producers to fully integrated meat and food producers New applications: Constant broadening of product base by new applications, e.g. in aquaculture Page 33

34 Feed additives Ecological benefit from efficient animal nutrition Reduced feed costs The use of DL-Methionine means -25% less conventional feed resources are needed Without amino acids With amino acids increasing efficiency and economic return of livestock reducing land for growing of soybean meal Reduced energy consumption The use of 00,000 t DL- Methionine saves (methionine) (lysine) The calculation is based on the Ökobilanz Methionin 2003 Without amino acids With amino acids 2.3m tons of CO 2 emissions 700,000 tons less nitrates into ground water 2.6m tons ammonia less into the air Page 34

35 Feed additives Methionine Methionine market growths stronger than meat consumption Demand growth for feed additives ~4% ~4% Growth driven by megatrends: Population growth Rising middle class CAGR CAGR E Increasing wealth in emerging markets Industrialization of agricultural production and strive for food safety Demand growth for Methionine 2 ~6% CAGR ~6% CAGR E Methionine delivers superior performance in animal nutrition: Animals grow healthier Increased efficiency and economic return of livestock Reduced overall resources necessary for food protein production reduced (land, raw materials) As per Frost & Sullivan (203) 2 Company estimate Page 35

36 Feed additives Methionine Projected capacity-demand-balance suggests ongoing high capacity utilization rates Supply-demand if capacities come on stream as announced kt p.a. methionine equivalents 3 Several new plants announced for period between 202 and Evonik realizes largest capacity addition with Me5 in Singapore (50 kt) Start-up and ramp-up of new plants in the past frequently delayed due to highly complex plant set up (backward integrated platform) Similar challenges to be expected for entrants with new technologies Additional capacities have entered market over a period of time in the past As per Feedinfo and company estimate 2 Estimated 6% CAGR from Methionine hydroxy analogue (MHA) calculated as 80% of DL-Methionine Markets should absorb new capacities fairly quickly Page 36

37 Feed additives Methionine Backwards integrated production Evonik with clear competitive advantages Cost efficient backwards integrated process Raw materials Methionine specific intermediates Methionine Others Competitor I Competitor II Competitor III Evonik Propene Methanol Sulfur Acrolein Methyl mercaptane MMP MetAMINO Backwards integration World scale production Methane Ammonia Hydrocyanic acid Evonik production set up Hazardous compounds not available from chemical commodity markets Source: Company estimate Process technology Global market / customer access Value added services Nutritional knowhow Examples of Evonik s value-added services A software that calculates the optimal formulation of poultry feed given specific breeding conditions Consulting, hardware and software enabling micro ingredient handling and dosing in feed mills Page 37

38 Feed additives Methionine New application in aquaculture Evonik has developed new products for aquaculture: DL-Methionine for aquaculture and AQUAVI Lys for fish; Evonik is also developing a methionine source for crustaceans: AQUAVI Met-Met Key advantages: Highly efficient substitution for traditional protein sources Scientifically proven performance for many aquatic species Appropriate particle size distribution and low water solubility Evonik is a leading player in the aquaculture market (in %) Sparing potential for alternative feed resources by kg of DL-Methionine Market potential Market volume Evonik sales % 20 can in the mix of animal feed be +20% meal replaced by kg fish kg DL-Methionin According to Met+Cys levels reported in AMINODat 4.0 Page 38

39 Resource Efficiency Segment overview Key financials ( m) Sales Adj. EBITDA and margin (%) Carbon Black 3,828 3,8 4,95 4,045 3,3 Carbon Black Health & Consumer Nutrition Specialties 463 5% 49% Sales split by Evonik s end markets (202) Sales split by region (202) Others Environment & Utilities 0% Pharma & Healthcare 4% Home, Lifestyle 4% & Personal Care 6% 34% Automotive, Transportation & Machinery Asia-Pacific 27% Central & South America Middle East, Africa 3% Germany 2% 20% Electronics & Telecommunication 6% Plastics & Rubber 9% Construction 0% 7% Coatings, Paints and Printing North America 7% 3% Other European Countries Company estimates on the basis of information on Evonik s customers and the further use of Evonik s products by its customers Adjusted EBITDA 202 restated for IAS 9 effects Page 39

40 Resource Efficiency BU Inorganic Materials Silica Advanced Silanes Functional Silanes Catalysts Applications Silicone rubber Green tires & rubber Paints & coatings Adhesives & sealants Optical fibres Semi conductors / electronics Fumed silica Adhesive & sealents Green tires Wire & cable Building protection Catalysts for fine chemicals and polyolefins Enabler for process innovation Key products Matting agents Precipitated silica Fumed silica Chlorosilanes Monosilanes Organofunctional silanes Rubber silanes Precious metal catalysts Sales split 202 ~65% ~0% ~5% ~0% Market position # in precipitated silica # in chlorosilanes # in organosilanes n.a. % of sales from leading positions 2 00% 99% 00% n.a. Main competitors Cabot JM Huber Solvay / Rhodia WR Grace OCI REC Dow Corning Momentive Shin Etsu Engelhard Clariant / Süd-Chemie Johnson Matthey WR Grace Company estimates for relevant markets based on multiple research reports 2 Defined as Top -3 positions; as per Company estimates, based on multiple research reports Page 40

41 Resource Efficiency BU Coatings & Additives Crosslinkers Oil Additives Coating Additives Coating & Adhesive Resins Applications Composites Coatings & paints Flooring Automotive interior Auto & industrials Hydraulic systems Refinery processing Biofuels Eco-friendly coatings (low VOC, water based) High solid industrial coatings Hot melt Pre coated metal Protective coatings Road marking Key products Crosslinkers for composites, elastomers and non-solvent coatings Lubricant additives (viscosity modifiers) Fuel additives Additives for eco-friendly and highly solid industrial coatings Functional resins Adhesive hot melts Heat sealents Polybutadiene Sales split 202 ~30% ~30% ~0% ~30% Market position # in isophorone chemicals # oil additives # in organically modified silicones # in polyester resins % of sales from leading positions 2 85% 00% 98% 80% Main competitors Arkema BASF Bayer Infineum Lubrizol NewMarket Oronite Air Products Altana Dow Corning Dow DSM Mitsubishi Chemical Company estimates for relevant markets based on multiple research reports 2 Defined as Top -3 positions; as per Company estimates, based on multiple research reports Page 4

42 Silica Efficient integrated production platform for silica and silanes Key advantages Particle design competence, deep understanding of effects (reinforcement, matting, abrasion etc.) Superior integrated process technology making optimal use of resources Global set-up and world scale plants Evonik integrated production set up Base raw materials Intermediate raw materials Marketed products Applications Waterglass Precipitation process Precipitated silica Quartz Fumed silica Silicon = purchased raw materials (Organo-, Rubber- & Chloro-) Silanes Page 42

43 Silica Market leading positions both in precipitated and in fumed silica Precipitated silica Fumed silica Close customer relationships, esp. with tire manufacturers Ongoing global expansion program Broad range of end markets Strong established brands Strong process technology Superior particle design competence Growing range of applications Strong established brands Evonik with globally market leading positions in precipitated as well as in fumed silica Evonik # Main competitors Solvay (Rhodia) JM Huber PPG Evonik # Main competitors Cabot Wacker OSC / Tokujama OSC / Tokujama As per company estimate, based on multiple research reports Page 43

44 Silica Broad range of quickly growing end markets End market growth for precipitated silica End market growth for fumed silica End market Expected end market growth (CAGR E) End market Expected end market growth (CAGR E) Automotive Green tires Batteries Lead acid batteries Paints & coatings Matting of glossy surfaces White pigment extender 9% >5% 3 5% Semiconductors Chemical mechanical planarization (CMP) Personal care, consumer goods and convenience food Suspension agents Thickener 6% 2 6% Food & beverages Free flow of dry powders Anti foaming 4% Pharmaceuticals Free flow of powders Silicone rubber and elastomers Transport fillers 5% >5% 3 As per Frost and Sullivan (203) 2 As per Gartner (20) 3 As per company estimate, based on multiple research reports Page 44

45 Silica Precipitated silica A green tire growth story Green tire uses more silica Strong demand trend Major components of green tires are rubber, carbon black and the silica-silane reinforcing system Green tires use up to twice the amount of silica compared to traditional tires, ongoing trend to substitution of Carbon Black Silica make up only a small portion of each tire minor cost position for tire manufacturers (only a few euros per tire) while delivering high value added Demand driven also by tire labeling requirements in many countries (new car sales and tire replacements) Tires labeled A (green) have a reduced rolling resistance of up to 20-25% (compared to tires labeled with a red G), that translates into ~7.5% less fuel consumption Company estimate 2 As per Frost and Sullivan (203) 3 As per Frost and Sullican (203) and company estimates Tire sales (m units sold) 2 Share of green tire 2 4.5% CAGR,224 20A, E Total silica volume used in tire industry 3 20A >5% 25% 206E Other silica volume Green tire related silica volume 7% 20A 7% 206E Share of silica in the tire industry for green tires 5% 20A 2.5x 34% 206E Page 45

46 Silica Precipitated silica Close customer relationships and global reach Close customer relationships Global production setup Close customer relationships especially with the major tire manufacturers Key innovation partner based on silica and silanes offering Participation in development projects at an early stage Improved time-to-market for new solutions High share of wallet with long-term partners Evonik precipitated silica plants Global production and distribution network supports high customer intimacy Capacity expansion plans Capacity in kt p.a. 400 ~30% 520 Generally low capacity intensity in production Intention to increase global capacity by ~30% by 204 across all major regions 200A 204E Page 46

47 Specialty Materials Segment overview Key financials ( m) Sales Adj. EBITDA and margin (%) 4,229 3,25 4,7 4,880 4, Health & Nutrition 626 5% Consumer Specialties 49% Sales split by Evonik s end markets (202) Sales split by region (202) Others Electronics & Telecommunication 7% Pulp, Paper and Packaging 5% Home, Lifestyle & Personal Care 4% 6% 8% Automotive, Transportation & Machinery Central & South America Middle East, Africa 4% Germany Asia-Pacific/Asia 2% 6% 22% Metals, Mining, Oil, Gas 6% 7% Coatings, Paints and Printing 8% Construction North America 6% % General Industry 7% Plastics & Rubber 40% Other European Countries Company estimates on the basis of information on Evonik s customers and the further use of Evonik s products by its customers Adjusted EBITDA 202 restated for IAS 9 effects Page 47

48 Specialty Materials BU Performance Polymers High Performance Polymers Acrylic Monomers Acrylic Polymers Applications Medical Photovoltaic systems Automotive components Oil & gas pipes Coatings PMMA Specialty monomer applications (e.g. disposable contact lenses) LED/touch screens Photovoltaic Light-weight systems Automotive components Key products High performance polyamide (PA2) Polyetheretherketone (PEEK) Polyimide fibres and foams Methy methacrylate (MMA) and application monomers Methacrylic acid Molding compounds Acrylic sheets (Plexiglas / Acrylite) PMMA systems Sales split 202 ~25% ~35% ~ 40% Market position # in polyamide 2 # 2 in MMA # 2 in PMMA % of sales from leading positions 2 73% 96% 90% Main competitors Arkema DuPont EMS Victrex LG MMA Mitsubishi Chemicals Sumitomo Arkema Mitsubishi Chemicals Sumitomo Company estimates for relevant markets based on multiple research reports 2 Defined as Top -3 positions; as per Company estimates, based on multiple research reports Page 48

49 Specialty Materials BU Advanced Intermediates Performance Intermediates Active Oxygens Functional Solutions Agrochemicals & Polymer Additives Applications Plastics Styrene-butadiene-rubber High performance polymers Oxidising agent in chemical reactions Pulp & paper bleaching Catalysts for biodiesel production Polymer additives Optical brighteners Photovoltaic Agro chemicals Key products Butadiene Butene- Plasticisers Plasticiser alcohols Hydrogen peroxide Alcoxides (e.g. sodium methylate) Triacetonamine Crosslinkers Precursors of glyphosates Sales split 202 ~70% ~0% ~0% ~0% Market position # in -butene # 2 in hydrogen peroxide # in alcoholates # in cyanuric chloride % of sales from leading positions 2 52% 00% 95% 60% Main competitors BASF Exxon Mobil LyondellBasell TPC Arkema FMC Solvay BASF DuPont Lanxess Nalco Syngenta Company estimates for relevant markets based on multiple research reports 2 Defined as Top -3 positions; as per Company estimates, based on multiple research reports Page 49

50 Silica Precipitated silica Close customer relationships and global reach Close customer relationships Global production setup Close customer relationships especially with the major tire manufacturers Key innovation partner based on silica and silanes offering Participation in development projects at an early stage Improved time-to-market for new solutions High share of wallet with long-term partners Evonik precipitated silica plants Global production and distribution network supports high customer intimacy Capacity expansion plans Capacity in kt p.a. 400 ~30% 520 Generally low capacity intensity in production Intention to increase global capacity by ~30% by 204 across all major regions 200A 204E Page 50

51 Performance Intermediates (C4 chain) Leading position based on strong European platform Evonik is one of the largest buyers of C4 crack-streams in Europe Evonik s leadership position in the C4 market Evonik C4 site in Antwerp Major refinery supplying C4 crack-stream Evonik C4 site in Marl Location range of suppliers of relevant C4 crack stream Leading technology platform for C4 processing full use of all C4 fractions new technologies to capture additional C4 feedstocks Secured C4 supply based on strategic partnerships long-term contracts broad supplier portfolio Scale and market leading yields Long term customer relationship Cost pass-through of raw material prices Evonik purchases vast majority of available European CC4 ~90% ~90% Source: As per company estimate Market supply by means of transport Truck Train 43% Ship 0% 4% 43% Pipeline Investment strategy Globalization of INA and -butene businesses in Asia LOI for JV with Petronas signed Capture growth opportunities in Europe Additional capacities for European operations (i.e. Butadiene) from 205 planned C4-processing platform in Marl and Antwerp Focus on process excellence and cost leadership Page 5

52 Performance Intermediates (C4 chain) Future growth in structurally tight markets C4 crack-stream Main product Main application/ end market Evonik s customer relationship (avg.) Synthetic rubber precursors Butadiene Isobutene Rubber High perf. polymers MTBE Fuels Octane booster Comonomers Butene- Plastics (esp. Polyethylene) Oxo alcohols INA 2-PH Plasticisers Plasticisers DINP Plastics softening > 20 yrs > 5 yrs > 20 yrs > 5 yrs >5 yrs Evonik strategy Expand strong European base Expand strong European base Expand into Asia Expand into Asia Growth via new products Expected market growth 4% GDP 6% 6% 6% Key market dynamic Structurally very tight market High barriers to entry Solid growth in relevant end markets Continuous growth in a stable market No threat of substitution, MTBE leading octane enhancer Long term supply contracts Tight supply/demand dynamics Strong long-term growth Tight supply/demand High demand growth, particularly in Asia Structural substitution of other plasticisers Growth opportunities via new products (phtalat-free and biobased plasticisers) Until 2020; based on multiple research reports (i.e. Frost & Sullivan 203, IHS) and Evonik research Page 52

53 Performance Intermediates (C4 chain) Butadiene demand outgrowing supply Butadiene DEMAND (mt) Butadiene SUPPLY (mt) CAGR 4.0%.9 CAGR 2.5% Structural undersupply E 2020E 200 Demand growth driven by two factors Growing demand for current applications, esp. rubber Increasing substitution of natural rubber (short) by synthetic rubber Supply is growing mainly with increased ethylene production Changing feedstock compositions (switch to lighter feedstock) leads to decreasing coproduct (i.e. butadiene) ratio mt of additional synthetic rubber not included in IHS analysis Source: IHS world butadiene analysis 203; Evonik research Page 53

54 Cash Flow Statement Q 203 Evonik Group Page 54

55 Consumer, Health & Nutrition Demand for superabsorbents on high level Sales (in m) -2%,055,03,079,039,035 HN CS Q 2 Q2 2 Q3 2 Q4 2 Q 3 Volume +2% Price -4% FX +% Other +/-0% Adj. EBITDA (in m) / Adj. EBITDA margin (in %) 27.2% 25.% 25.9% 22.0% 26.5% -5% Strong sales performance of Consumer Specialties, driven by higher volumes and stable prices Baby Care with strong performance, benefitting from additional volume demand in the market; raw material price increases not yet fully passed on during Q 203 Good demand and growth perspective for oil field chemicals In Health & Nutrition selling prices of feed amino acids Lysine and Methionine lower in comparison to the exceptional levels of Q 202 Methionine volumes also impacted by current food quality crisis in China; market development in other regions remained robust Q 2 Q2 2 Q3 2 Q4 2 Q 3 Prior year figures restated for IAS 9 Page 55

56 Resource Efficiency Good demand for Silica and Oil Additives Sales (in m) -6% CA IM Q 2 Q2 2 Q3 2 Q4 2 Q 3 Volume -% Price +/-0% FX +/-0% Other -4% Adj. EBITDA (in m) / Adj. EBITDA margin (in %) 20.5% 2.2% 25.6% 6.9% 22.3% +2% Sales decrease mainly explained by divestment of Colorants business Inorganic Materials with good performance, increasing volumes and stable prices Silica with good demand on prior year level, esp. for fumed silica and precipitated silica in Asia Reduced fixed cost base after restructuring of photovoltaic Advanced Silanes business (PV industry) Coatings & Additives with stable prices, but slightly declining volumes, mainly in construction- and coating-related businesses Oil Additives with continued strong performance Q 2 Q2 2 Prior year figures restated for IAS 9 Q3 2 Q4 2 Q 3 Page 56

57 Specialty Materials Stable volumes, partly weaker prices Sales (in m) -5%,234,269,27,23,70 AI PP Q 2 Q2 2 Q3 2 Q4 2 Q 3 Volume +/-0% Price -3% FX +/-0% Other -2% Adj. EBITDA (in m) / Adj. EBITDA margin (in %) 7.4% 9.0% 8.2% 5.5% 5.6% -5% Specialty Materials sales impacted by a smaller divestment (cyanuric chloride business in China) and the ramp up of the CDT plant in Marl as well as lower pricing for some products CDT plant back in operation, product pipeline currently being filled MMA and PMMA facing softer demand, esp. in Asia and Southern Europe, and high raw material prices Volume growth in C4 products, good demand mainly for MTBE Lower prices for butadiene, remaining below the very high levels of Q 202 Q 2 Q2 2 Q3 2 Q4 2 Q 3 Prior year figures restated for IAS 9 Page 57

58 Outlook for 203 Outlook confirmed, but uncertainties about global economy persist Outlook for Evonik in 203 (continuing operations ) Global economic conditions to remain very challenging Economic environment Economy expected to pick up perceptibly in the second half of the year Still considerable uncertainty, especially in connection with the sovereign debt crisis in Europe and the economic development of China Economic upturn anticipated in the second half of the year Outlook Higher sales in 203 anticipated, while operating results should be in line with the very good level achieved in 202 New production capacities and higher selling prices in key product areas to have a positive impact Outlook based on continuing operations, i.e. excl. real estate activities in 202 and 203 Page 58

59 Evonik Investor Relations Team Contact Tim Lange Head of Investor Relations Petra Boden Team Assistant Hannelore Gantzer Investor Relations Manager Christoph Rump Investor Relations Manager Xin Ming Yu Junior IR Manager Page 59

60 Disclaimer In so far as forecasts or expectations are expressed in this presentation or where our statements concern the future, these forecasts, expectations or statements may involve known or unknown risks and uncertainties. Actual results or developments may vary, depending on changes in the operating environment. Neither Evonik Industries AG nor its group companies assume an obligation to update the forecasts, expectations or statements contained in this release. Page 60

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