Full-Year / Fourth Quarter 2010 Results

Transcription

1 Full-Year / Fourth Quarter 2010 Results 16 February 2011

2 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, actual future results may differ materially from those expressed in or implied by the statements. Many of these risks and uncertainties relate to factors that are beyond Clariant s ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behavior of other market participants, the actions of governmental regulators and other risk factors such as: the timing and strength of new product offerings; pricing strategies of competitors; the Company's ability to continue to receive adequate products from its vendors on acceptable terms, or at all, and to continue to obtain sufficient financing to meet its liquidity needs; and changes in the political, social and regulatory framework in which the Company operates or in economic or technological trends or conditions, including currency fluctuations, inflation and consumer confidence, on a global, regional or national basis. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document. Clariant does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of these materials. FY 2010 / Q4 2010, Analysts Conference, 16 February 2011 (Copyright Clariant. All rights reserved.) Slide 2 / 31

3 Highlights full-year 2010 Improved performance reflects decisive implementation of initiatives to generate cash, decrease costs and reduce complexity Profitability increased to multi-year highs Cash flow generation remained strong Net debt reduced to record low levels Optimization of global asset network (program GANO) finalized GANO fully on track, some projects ahead of schedule; to be completed by end of 2012 Projected savings of at least CHF 100 million annually by 2013 Focus on project execution in continuous improvement initiative Clariant Excellence resulted in substantial efficiency gains Benefits of > CHF 50 million in marked a milestone in Clariant s history FY 2010 / Q4 2010, Analysts Conference, 16 February 2011 (Copyright Clariant. All rights reserved.) Highlights and key figures full-year Slide 3 / 31

4 Key figures full-year 2010 All 2010 targets were overachieved Local currency sales grew 13% year-on-year EBIT before exceptionals rose 158% to CHF 696 million from CHF 270 million in 2009 Return on invested capital of 18.1%, up from 5.7% in 2009 Clariant returned to net profit after exceptionals Net income of CHF 191 million compared to net loss of CHF 194 million Excellent cash flow generation led to strong financial position Cash flow from operations: CHF 642 million compared to CHF 757 million Net debt CHF 126 million (2009: CHF 545 million); gearing at 7% (2009: 29%) FY 2010 / Q4 2010, Analysts Conference, 16 February 2011 (Copyright Clariant. All rights reserved.) Highlights and key figures full-year Slide 4 / 31

5 Key figures fourth quarter Sales in CHF mn Gross margin* 26.0% 25.0% EBIT before exceptionals in CHF mn 28.7% % 107 EBIT margin before exceptionals 7.1% 6.3% Net income in CHF mn Operating cash flow in CHF mn Q4/10 Q4/09 in CHF in LC * restated gross margin includes freight costs as of 1 January 2010 / reported gross margin in Q was 29.6% -1% +8% FY 2010 / Q4 2010, Analysts Conference, 16 February 2011 (Copyright Clariant. All rights reserved.) Financial results fourth quarter Slide 5 / 31

6 Good sales growth in local currencies despite a more challenging base Sales growth in local currencies Sales mix: Volume +4% Price +4% Acq./div. 0% Currency 9% Differentiated growth patterns: higher sales growth in Europe/NorthAm due to lower comparable basis yoy lower growth rates in Asia/Pacific, Latam, as regions recovered faster in 2009 Significant unfavorable currency impact on top-line growth due to Swiss franc appreciation Q4/10 +8% Total sales Q4 2010: CHF mn incl. China 103 / +5% +3% +4% incl. Brazil 133 / -1% Sales growth in local currencies Q4/09 +2% incl. Germany 258 / +26% Asia/ Pacific 378 Europe, Middle Latin America 279 North America % East & Africa % Middle East & Africa 126 / +5% FY 2010 / Q4 2010, Analysts Conference, 16 February 2011 (Copyright Clariant. All rights reserved.) Financial results fourth quarter Slide 6 / 31

7 Gross margin management successful Q4/10 Q4/09* Gross margin 26.0% 25.0% Improved gross margin year-on-year despite higher idle facility costs and positive effects from restocking in the year-ago period Return to normal seasonality reflected in lower gross margin sequentially Sales price increases of 1% fully offset rising raw material costs sequentially sales price increases* RM cost increases (sales-weighted)* * 3 month rolling figures * restated gross margin includes freight costs as of 1 January 2010 / reported gross margin in Q was 29.6% FY 2010 / Q4 2010, Analysts Conference, 16 February 2011 (Copyright Clariant. All rights reserved.) Financial results fourth quarter Slide 7 / 31

8 Operating margin before exceptionals rises Q4/10 Q4/09 EBIT before exceptionals in CHF mn EBIT margin before exceptionals 7.1% 6.3% Compared to previous year s period operating income before exceptionals items increased 12% from an already high basis in the previous year SG&A in percent of sales slightly up to 17.3% in Q from 17.0% mainly due to one-time project costs Marginal impact of high FX volatility on operating result FY 2010 / Q4 2010, Analysts Conference, 16 February 2011 (Copyright Clariant. All rights reserved.) Financial results fourth quarter Slide 8 / 31

9 Good cash flow generation driven by higher profitability and NWC improvement Operating cash flow in CHF mn Q4/ Q4/ NWC in % of sales down to 15.9% as of end Q from 21.1% as of Q Restructuring and impairment costs of CHF 89 million, cash-out CHF 49 million Capex increased to CHF 106 million in Q vs. CHF 39 million in the prior year period, driven by investments in China and relocation of production within the context of GANO FY 2010 / Q4 2010, Analysts Conference, 16 February 2011 (Copyright Clariant. All rights reserved.) Financial results fourth quarter Slide 9 / 31

10 Business unit sales, EBITDA and EBIT margins Fourth quarter 2010 Sales Change EBITDA** margin EBIT** margin Business Unit / Reporting Segment: CHF mn % CHF % LC % % BU Industrial & Consumer Specialties BU Masterbatches BU Pigments BU Textile Chemicals BU Oil & Mining Services BU Leather Services Performance Chemicals* Group total * includes the four business units Additives, Detergents & Intermediates, Emulsions, Paper Specialties ** before exceptional items FY 2010 / Q4 2010, Analysts Conference, 16 February 2011 (Copyright Clariant. All rights reserved.) Business review Slide 10 / 31

11 Portfolio focus Cost focus Clariant roadmap sustainable, profitable growth on a solid base Restructuring Cash generation Cost cutting Complexity reduction Result: Establish a solid base for profitable growth Implementation of restructuring Continuous improvement Establish program Clariant Excellence program Operational Excellence Commercial Excellence People Excellence Innovation Excellence Continue program/ Sustain achievements Result: Sustainable productivity improvement Profitable growth Improve profitability of existing portfolio R&D and Innovation Growth in emerging markets Strengthen portfolio by selective acquisitions Result: Growth of profitable business portfolio FY 2010 / Q4 2010, Analysts Conference, 16 February 2011 (Copyright Clariant. All rights reserved.) Strategy review Slide 11 / 31

12 Accelerating Profitable Growth Planned Acquisition of Süd-Chemie FY 2010 / Q4 2010, Analysts Conference, 16 February 2011 (Copyright Clariant. All rights reserved.)

13 A compelling strategic Rationale Süd-Chemie is a catalyst for accelerated profitable growth adds two attractive, high margin businesses Süd-Chemie provides future technologies with high long-term growth potential expands Clariant s exposure to global megatrends strengthens technology, R&D and innovation capabilities contributes high quality of earnings Slide 13

14 Contents Transaction Highlights Süd-Chemie Facts & Figures Acquisition Rationale & Combination Benefits Financing & Transaction Timeline Slide 14

15 Transaction Highlights Clariant has entered into agreements with One Equity Partners ( OEP ) and a group of Süd-Chemie shareholders ( family shareholders ) to acquire approx. 95% of Süd-Chemie shares, valuing Süd-Chemie at an enterprise value of EUR 1.9 billion/ CHF 2.5 billion (EV/EBITDA of 10.2x), through a share consideration of 8.84 Clariant shares for each Süd-Chemie share for the majority of the family shareholders (approx. 41.1% of total shares) a cash consideration of EUR 121 per Süd-Chemie share for OEP (50.4% of total shares) and some family shareholders (approx. 3.5% of total shares) A solid financing structure protects Clariant s strong balance sheet ~ CHF 700 million share exchange with Süd-Chemie family shareholders ~ CHF 400 million from Clariant rights issue ~ CHF 900 million debt financing ~ CHF 500 million existing cash from Clariant balance sheet The issue of new equity will be subject to Clariant shareholders approving the capital increase at the Annual General Meeting on March 31, 2011 (creation of authorized capital for the share exchange and the rights issue) Closing expected in the first half of 2011 Slide 15

16 Contents Transaction Highlights Süd-Chemie Facts & Figures Acquisition Rationale & Combination Benefits Financing & Transaction Timeline Slide 16

17 Süd-Chemie Facts & Key Figures Süd-Chemie is a technology-driven specialty chemicals company two focus areas process catalysts and adsorbents, technology-driven new businesses, global footprint, fast growing, highly profitable Sales by Business Unit... and by Region % Performance Packaging Foundry Products/ Specialty Resins Adsorbents 59% 17 Water Treatment Adsorbents/ Additives 5 Catalytic Technologies 36 Catalysts 41% Energy/ Environment % Americas 20 Africa 8 32 Asia-Pacific/ Middle East 40 Europe Süd-Chemie 1 : Sales 2010: EUR 1,225 mn EBITDA 2010: EUR 191 mn EBITDA Margin 2010: 15.6% Operations in 40 countries Approx. 6,500 employees Headquartered in Munich Listed at Frankfurt Stock Exchange (1) All Süd-Chemie figures based on preliminary 2010 results Slide 17

18 Portfolio of Value adds Products with Leading Positions and Upside from New Businesses Catalysts Adsorbents New Businesses Production of process catalysts (e.g. for manufacture of hydro carbon based chemicals and high-grade plastics) and emission catalysts (e.g. purifying diesel emissions) Development of innovative catalytic solutions (e.g. for petrochemicals industry, hydrogen production, ethylene production) Strong and consistent performance with high and sustainable EBITDA margin Refined bentonite is used for food and feed additives (e.g. for use in the edible oil industry), plastic additives and waterbased suspensions Additional fields include foundry products, specialty resins, water treatment and performance packaging Stable EBITDA margins throughout recent economic crisis with strong cash generation Substantial additional growth potential from proprietary future technologies, e.g. Battery materials Second generation bioethanol Battery materials (production of highperformance storage materials for lithium ion batteries) most developed and closest to marketability with close customer collaborations Sales CAGR E: 6.5% EBITDA Margin 2010E: 18.2% Sales CAGR E: 7.1% EBITDA Margin 2010E: 13.5% Süd-Chemie contributes two highly attractive business units as well as a portfolio of leading future technologies with substantial growth potential Slide 18

19 serving important global Megatrends Catalysts Adsorbents New Businesses Raw Material Scarcity Purification Energy Storage Megatrends Energy Efficiency Cleantech Cleantech Food Demand Renewable Energy Estimated LT 1 Growth 7-9% 5-7% High (1) Management estimate FY 2010 / Q4 2010, Analysts Conference, 16 February 2011 (Copyright Clariant. All rights reserved.) February 16, 2011 Slide 19

20 Contents Transaction Highlights Süd-Chemie Facts & Figures Acquisition Rationale & Combination Benefits Financing & Transaction Timeline Slide 20

21 Süd-Chemie meets Clariant s Acquisition Criteria Clariant s Acquisition Criteria Excellent market position held or near-term achievable Süd-Chemie adds two attractive businesses and a set of high-growth future technologies to the current portfolio Innovation leader in relevant segments is well positioned to exploit global megatrends with future technologies Earnings accretive latest in year 3 after acquisition provides superior quality of earnings Potential to strengthen Clariant s existing R&D organization Expansion of current portfolio to close existing technological and/or regional gaps adds leading R&D and technology capabilities bolsters the regional footprint in emerging markets and foster access to Middle East Slide 21

22 Süd-Chemie adds ~20% of Sales and EBITDA Sales 2010 Composition 1,2 CHF bn % EBITDA 2010 Composition 1,2 CHF bn Clariant 0.90 Süd-Chemie 80% Combined proforma % 79% Süd-Chemie segments will be integrated in Clariant s decentralized organization structure as separate business units Incremental businesses (~ 20% of sales) will be managed via current Clariant s corporate platform/ infrastructure Clariant Süd-Chemie Combined proforma (1) All Süd-Chemie figures based on preliminary 2010 results (2) EUR/ CHF 1.30 Slide 22

23 New Businesses fit as two mid size Business Units in Clariant s Portfolio FY 2010E (Süd-Chemie) and FY 2010 (Clariant) sales in CHF MN [EUR/ CHF 1.30] Slide 23

24 Süd-Chemie provides superior Quality of Earnings Clariant EBITDA CHF mn +3% p.a Clariant EBITDA Margin % CAGR Süd-Chemie EBITDA 1 EUR mn Süd-Chemie EBITDA Margin 1 % % p.a CAGR Süd-Chemie: 15.6 Accretive in 2013 Superior EBITDA margins and growth Lower cyclicality and seasonality than Clariant Insignificant influence of raw material price swings, strong pricing power, focus on added values and customer services (1) All Süd-Chemie 2010 figures based on preliminary 2010 results Slide 24

25 Süd-Chemie appends leading R&D Capabilities and proprietary Technologies Track record of new product development and successful commercialization, providing strong growth and margin contribution Strong innovation and R&D culture Access to highly skilled and experienced R&D teams (~540 employees) 2009 R&D investment: ~5% of sales Centralized leading catalyst innovation center in Heufeld (Germany) Slide 25

26 Combination Results in significant Benefits and Value Creation Clariant has delivered in 2010 restructuring is completed, all business units are on target Clariant will continue to execute the remaining restructuring measures and its performance improvement projects Strong combined platform and increased scale accelerates commercialization of Süd-Chemie s new technologies and growth improved access to required resources Integration will focus on administrative functions Synergies from G&A functions of approx. EUR 25 mn annually estimated (expected cost savings) Functional excellence improvement potential estimated at ~EUR mn annually (Operational Excellence, Commercial Excellence and Innovation Excellence) Quick and seamless integration also supported in similar corporate cultures and geographical proximity Slide 26

27 Contents Transaction Highlights Süd-Chemie Facts & Figures Acquisition Rationale & Combination Benefits Financing & Transaction Timeline Slide 27

28 Conservative Financing Structure Solid financing structure ensured through: ~ CHF 700 million share exchange with Süd-Chemie family shareholders ~ CHF 400 million from Clariant rights issue ~ CHF 900 million debt financing ~ CHF 500 million existing cash from Clariant balance sheet Credit rating aspiration BBB can be maintained medium term due to all ratios clearly above relevant thresholds Clariant gearing pro-forma 2011 approx. 60% Clariant estimated debt-to-equity ratio of combined entity pro-forma x Slide 28

29 Closing of Transaction expected for April February 16 March 31 Announcement of acquisition plan Thereafter: Deal related investor roadshow Clariant Annual General Meeting approve capital increase April Registration of capital increase Share exchange with family shareholders Funding/ payment of purchase price with OEP Slide 29

30 Outlook 2011 Environment Global economic growth to continue but at a slower pace than in 2010 Growth will mainly come from the emerging markets in Asia/Pacific and Latin America Exchange rates of the most important currencies are expected to remain volatile Clariant predicts increase in raw material costs to be in the high single-digit range Clariant guidance 2011 Sales growth in local currencies in the low single-digit range EBITDA margin before exceptional items above 2010 level FY 2010 / Q4 2010, Analysts Conference, 16 February 2011 (Copyright Clariant. All rights reserved.) Outlook Slide 30 / 31

31 Questions & Answers FY 2010 / Q4 2010, Analysts Conference, 16 February 2011 (Copyright Clariant. All rights reserved.) Slide 31 / 31