POLYNT S.p.A. Leading Integrated Specialty Chemical Player. Third Quarterly Report 2007 November 2007

Transcription

1 POLYNT S.p.A. Leading Integrated Specialty Chemical Player Third Quarterly Report 2007 November 2007

2 Agenda Overview Strategic Objectives Financials Appendix 1

3 OVERVIEW

4 Polynt at a glance 500 mn Revenues in ,089 Employees as at 30 September Business Units 7 Sites RESINS & COMPOUNDS MALEIC ANHYDRIDE, DERIVATIVES & CATALYSTS PHTHALIC ANHYDRIDE & GENERAL PURPOSE PLASTICISERS (GPP) TRIMELLITIC ANHYDRIDE & SPECIAL PURPOSE PLASTICISERS (SPP) 3

5 Leadership in Key Chemical Intermediates and Specialties Resins & Compounds Market Leader #1 in Southern Europe (1) Top Competitors % of 2006 Total Sales Specialties: DSM, Cray Valley, Menzolit, Ashland, Reichold 29% End User Applications Reinforced plastics Un-reinforced matrices Production Location Brembate, BG (Italy) San Giovanni Valdarno, AR (Italy) Mielhen (Germany) Niepolomice (Poland) (1) Company estimates 4

6 Leadership in Key Chemical Intermediates and Specialties Maleic Anhydride, Derivatives, Catalysts Market Leader #1 in Europe (1) Top Competitors Building Blocks: BASF, Huntsman Specialties: DSM, NJC, Fuso, Bartek % of 2006 Total Sales 28% End User Applications Unsaturated polyester resins, alkyd resins, lube oil additives, special anhydrides Powder coatings and alkyd resin, epoxy hardeners Production Location Scanzorosciate, BG (Italy) Ravenna (Italy) (1) Company estimates 5

7 Leadership in Key Chemical Intermediates and Specialties Pthalic Anhydride & GPP Trimellitic Anhydride & SPP Market Leader #2 in Europe for PA (1) #2 worldwide (1) Top Competitors Building Blocks: Arkema, BASF Specialties: Degussa, ExxonMobil, Lanxess Building Blocks: Flint Hill Resources Specialties: Lanxess, Cognis, Sasol % of 2006 Total Sales 28% 15% End User Applications Plasticizers for PVC Coating resins Unsaturated polyester resins PVC additives Specialty plasticizers, wire enamels and powder coatings PVC additives, lubricant oils and emulsions Production location Scanzorosciate, BG (Italy) San Giovanni Valdarno, AR (Italy) Scanzorosciate, BG (Italy) San Giovanni Valdarno, AR (Italy) Changzhou (China) (1) Company estimates 6

8 Strategic Objectives Product Innovation Integration New Markets Growth through exploiting market and technology leadership 7

9 Integration Specialties 61% 2006 Production Breakdown (1) Building Blocks 39% Value Added Chain Building Blocks Maleic Phthalic Trimellitic 1,000 2,500 Resins Plasticizers Maleic Derivatives 1,000 3,000 Virgin Naphtha Orthoxylene Benzene n-butane Mixed-xylenes Pseudocumene Styrene Glycols Oxo-alcohols (2) (2) Catalysts 25,000 75,000 (2) Compounds 1,500 4,500 (2) POSITIONING End Market (1) Company estimate (2) Average price (US$ / ton) Strong Portfolio of Specialty Derivatives 8

10 Improving Specialties Mix CAGR Specialties Volumes % Specialties 74% Building Blocks 26% EBIT Specialties 80% Building Blocks 20% 9

11 Product Innovation: developing end-market applications Transportation 24% Household Applications 8% Sporting Goods 6% Food & Feed 3% Broad range of products serving different industries Electronic & Electrical 32% Ability to satisfy client needs through tailor-made solutions Construction 27% 10

12 Product Innovation Examples of New Products Recent Innovations Anhydride MTHPA 500-K2 2-Ethyl Hexyl Fumarate Trimellitic anhydride Polimix 740/N SMC 8000 UPR 180 V6 UPR 181 CNG Future Innovations Coating for gas barrier New Powder Resins UPR UV/Chemical resistant Polymeric plasticizers suitable for food application Green SMC/BMC Epopreg SMC/BMC Tetrahydrophthalimide Platform for growth from new products already in place Rich pipeline of new products In 2006 the Company developed, produced and sold more than 100 different products 11

13 New Markets: European vs Global Leader 2006 Sales Breakdown (1) Rest of Europe 51% America 4% Asia 5% Other 1% Duplicate Business Model in fast growing markets: Eastern Europe Asia Italy 39% (1) Company estimate 12

14 Current Production Capacity Polynt has seven manufacturing facilities, of which four are located in Italy, one in Poland, one in Germany and one in China Production Facilities Polynt GmbH & Co KG Miehlen (Germany) 80 employees Polynt SpA San Giovanni Valdarno (Arezzo) (Italy) 246 employees Polynt Sp.zo.o Niepolomice (Poland) 44 employees Polynt SpA Scanzorosciate (Bergamo) (Italy) 448 employees Polynt SpA Ravenna (Italy) 68 employees Polynt SpA Brembate di Sopra (Bergamo) (Italy) 88 employees Polynt Chemical (Changzhou) Co. Ltd (China) 115 employees Employees as at September 30, 2007 Proximity to Customers 13

15 New Markets Polynt s strategy focuses on the geographic expansion of its activities to meet customer needs Eastern Europe and China expected to grow faster and are attracting Western investment in manufacturing Relocation of some customers production to Eastern Europe / Asia, e.g. electrical and transportation applications Polynt is investing in Poland and China with the aim of duplicating the business model in new markets Ideal time to enter the Chinese market Increasing demand for Specialties 14

16 Implementation: Poland Eastern Europe market growth 7 8% per year The Project: Production of Resins & Compounds in Poland to serve the growing Eastern European market and support the business growth in Northern Europe Completed in October 2006, the Compounds Plant successfully started production in November 2006 Completion of the Resins plant expected at the end of 2007 and integrated production scheduled to start in

17 Implementation: China Chinese market growing at 10 15% per year The project: Acquired a business and a plant of TMA (Trimellitic Anhydride) in China for 17 ml ; In the existing site, build-up new specialties plants to serve the growing local market needs currently not met by local production. 16

18 FINANCIALS

19 Trend of raw materials and selling prices ( /MT) MARKET PRICE OF SOME RAW MATERIALS (1) Jan 04 March 04 May 04 July 04 Sep 04 Nov 04 Jan 05 March 05 May 05 July 05 Sep 05 Nov 05 Jan 06 March 06 May 06 July 06 Sep 06 Nov 06 Jan 07 March 07 May 07 July 07 Sep 07 MARKET PRICE OF SOME FINISHED PRODUCTS (2) (1) Source: Platts, ICIS, ARGUS Jan 04 March 04 May 04 July 04 Sep 04 Nov 04 Jan 05 March 05 May 05 July 05 Sep 05 Nov 05 Jan 06 March 06 May 06 July 06 Sep 06 Nov 06 Jan 07 March 07 May 07 July 07 Sep OX 2-EH N-BUTANE MPG STYRENE BENZENE (2) Source: Tecnon DOP PA MA

20 Unit Margin Trend 1,70 1,50 1,30 1,10 0,90 0,70 1,19 0,75 1,21 0,81 1,35 0,94 1,47 1,06 1,57 1,10 0,50 0,44 0,40 0,41 0,41 0,47 0, YTD Sept 2007 Avg selling price ( /kg) Avg material cost (*) ( /kg) Avg margin ( /kg) (*) Includes: raw materials, consumables, supplies; variation in work-in-progress, semi-finished and finished products; energy costs. 19

21 Strong Top Line Momentum ( m) CAGR % 393,0 358,1 324,1 425,1 315, % ,8 Growth driven by: Increasing volume in specialties 375, % 433,6 276,5 301,9 Improved pricing 1,19 1,21 1,35 1,47 Ability to pass on increase in price of raw materials to final customers 257,3 1,46 1,57 Volume (Ktons) YTD Sept 2006 YTD Sept 2007 Revenues Volume (Ktons) Price ( /kg) CAGR 2003/ /2005 Specialties % 8.0% Building Blocks (*) n.m. 8.6% (*) includes PA, MA, TMA 20

22 Resilient EBITDA across the Cycle ( m) +31,8% 47,3 45, CAGR % +11.3% EBITDA growing despite high raw material costs supported by: 35,9 44,4 45,9 Improved product mix (focus on specialty chemicals) 43,3 Volume growth Operating efficiencies EBITDA YTD Sept 2006 YTD Sept 2007 reported normalised (*) EBITDA Margin % 12.4% 11.0% 10.8% 10.2% EBITDA Margin % 9,6% 10.9% 10,5% (1) CAGR (*) excluding 1.6ml non recurring profit in cost of labour 21

23 Income Statement 3Q months Ending 30 September ( m) IFRS 2006A 2007A % Revenues % EBITDA % EBITDA Margin 7.9% 9.2% EBIT % EBIT Margin 4.2% 5.4% 22

24 Income Statement FY Ending 31 December 9 months Ending 30 September ( m) IFRS 2003A 2004A 2005A 2006A 2006/ A 2007A % Revenues % % EBITDA % % EBITDA Margin 12.4% 11.0% 10.8% 10.2% 9.6% 10.9% EBIT % % EBIT Margin 7.4% 6.4% 6.5% 6.4% 5.7% 7.1% PBT % % PBT Margin 6.8% 5.8% 6.1% 5.8% 5.2% 6.4% Tax Rate 39.7% 46.8% 45.2% 46.1% 49.6% 42.7% Net Income % % Net Income Margin 4.1% 3.1% 3.3% 3.1% 2.6% 3.7% EBITDA normalised(*) EBITDA Margin normalised(*) % % 12.4% 11.0% 10.8% 10.2% 9.6% 10.5% (*) excluding 1.6ml non recurring profit in cost of labour 23

25 Cash Flow Statement. FY Ending 31 December 9 months Ending 30 September ( mn) IFRS 2003A 2004A 2005A 2006A 2006A 2007A Net Income Depreciation and Amortisation Net Taxes Paid (12.1) (9.5) (4.2) (9.4) (5.3) (5.7) Other changes in NWC and others (5.1) 1.0 Total Operating Cash Flow Total Net Capex (13.1) (12.8) (27.0) (21.3)(*) (12.0) (45.5) (*) This figure includes 4 mn for divestments of assets and ( 0.9 mn) of net financial investment. Net of these items, Capex is ( 24.4 mn). 24

26 Balance Sheet ( mn) - IFRS 2004A 2005A 2006A 2007A Current Assets Fixed Assets Total Assets Current Liabilities Non-Current Liabilities Total Liabilities Shareholders' Equity Minorities ,0 0.0 Total Equity and Liabilities Net Debt , Key Leverage and Return Statistics ROCE 10.0% 12.1% 14.0% 15.8% (1) ROE 5.9% 6.6% 7.7% 10.4% (1) Net Debt/EBITDA 1.1x 0.3x 0.5x 0.9x (1) Equity/Net Debt 4.4x 15.0x 7.6x 3.8x (1) Based on LTM Results 31 December 30 September 25

27 Solid Capital Structure ( mn) ,4 46, , ,4 54,2 Significant opportunities for investment and expansion in growing markets whilst 204,7 204,6 213,1 200,3 206,4 maintaining a high and stable dividend ' YTD Sept 2007 Net debt/ Equity 23.7% 22.7% 6.7% 13.2% 26.3% Equity Net Debt 26

28 Efficient Working Capital ( mn) , YTD Sept 2007 As % of Net Sales Net Working Capital 27.2% 26.7% 18.1% 15.7% 14.6% (1) (1) Calculation based on LTM Net Sales as of June 30,

29 Improving ROCE(1) 14,0% 15,8% 12,1% 10,5% 10,0% ROCE YTD Sept 2007 ROE 7.2% 5.9% 6.6% 7.7% 10.4% (1) ROCE calculated as EBIT / (Net Debt + Shareholders Equity) (2) Calculation based on LTM EBIT as of June 30,

30 APPENDIX

31 Board and Management Board of Directors -Stefano Meloni (Chairman) Toralf Haag Rosario Valido Angelo Maria Triulzi Christian Dudeck CEO Rosario Valido CEO and Management Team Assistant Simona Grilli Internal Audit Salvatore Di Pasquale Chief Operating Officer Mario Novelli Chief Corporate Services Officer Sergio Moreno Chief Financial Officer & Investor Relations Paolo Carugati Members of the Managing Board 30

32 Long Term Incentive Plan 10 Top Managers 1st Tranche Payable in nd Tranche Payable in rd Tranche Payable in 2009 Number of phantom shares Target EPS 2006 TSR* vs Peers TSR* vs Peers *TSR = Total Shareholder Return 31

33 Main Shareholders Other Investors 35,029% Lonza Europe 31,00% BG SGR SpA 4,916% Fidelity International Ltd 2,684% Kairos Partner SGR SpA 2,747% Marble Bar As set Management 6,278% JP Morgan Asset Management UK Limited 9,310% Healthcor Management LP 8,036% Based on latest information received (15 October 2007) 32

34 Integration as a Key Competitive Advantage Visibility on Market Dynamics React more quickly to changes in end-market demand or supply changes Secure price leadership Certainty of Supply to Customers Core, reliable supplier Access to critical intermediate materials (e.g. maleic anhydride, special anhydrides, trimellitic anhydride) Product Development Launch of new products faster than competitors (e.g. compounds) Improved Profitability Upstream businesses provide base load and therefore high capacity utilisation for downstream businesses Higher and more stable margins on specialty products Reduced Cyclicality Lower volatility of EBITDA Smoothing ( portfolio ) effect of downstream and upstream combination 33

35 Distinctive R&D Capabilities Performance Products Heterogeneous Catalysts Proven experience in the development of performance products (UPR, epoxy hardeners, special plasticizers) which are fine-tuned according to customer needs Broad experience in the development and manufacture of high performance catalysts for gas phase partial selective oxidation and ammoxidation Time to market reduction for new products Production cost optimisation Chemical Reaction Thermoset Compounding Gas and liquid phase partial selective oxidation Gas and liquid phase selective hydrogenation Esterification / polyesterification / imidation Double bond reactions: Additions, Isomerisation, Diels- Alder reaction, Ene reactions Compounds new and tailor-made formulations Cost efficiency increase Proprietary information protection 34

36 Outstanding Environmental Track Record Measures aimed at reducing environmental risks connected to operations by: Obtaining the necessary environmental certifications for the PP&E Constantly monitoring production facility processes and cycles Environmental Management System ( EMS ) to identify, evaluate and compare the main environmental problems in a systematic manner Including also ISO System, a widely adopted voluntary program to improve the quality of environmental management 35