Fit For the Future. Akzo Nobel s Coatings & Chemicals Analysts and Investors Day London, October 19, 2006

Transcription

1 Fit For the Future Akzo Nobel s Coatings & Chemicals Analysts and Investors Day London, October 19, 2006

2 Safe harbor statement* Safe Harbor Statement* This report contains statements which address such key issues as Akzo Nobel s growth strategy, future financial results, market positions, product development, pharmaceutical products in the pipeline, and product approvals. Such statements should be carefully considered, and it should be understood that many factors could cause forecasted and actual results to differ from these statements. These factors include, but are not limited to, price fluctuations, currency fluctuations, progress of drug development, clinical testing and regulatory approval, developments in raw material and personnel costs, pensions, physical and environmental risks, legal issues, and legislative, fiscal, and other regulatory measures. Stated competitive positions are based on management estimates supported by information provided by specialized external agencies. For a more comprehensive discussion of the risk factors affecting our business please see our Annual Report on Form 20-F filed with the United States Securities and Exchange Commission, a copy of which can be found on the company s corporate website The 2005 Annual Report on Form 20-F will be available in the second quarter of * Pursuant to the U.S. Private Securities Litigation Reform Act 1995.

3 Disclaimer Disclaimer Before starting this meeting one introductory remark. Akzo Nobel currently is in the process of separating its Pharma Group and consequently we are subject to certain Dutch and US regulations that restrict our communications on this subject. For us transparent disclosure of this analyst meeting on Coatings and Chemicals has a high priority and the aim is to make this call accessible to the broadest possible range of participants. As a consequence, today the company will not be presenting information on the Pharma group and will refrain from answering any question on the business of our Pharma Group or its separation. Another consequence is that we can't answer any question related to the future balance sheets of Akzo Nobel nor of the to be separated Pharma Group. 3

4 Fit For the Future Hans Wijers

5 Focus on New Akzo Nobel Akzo Nobel Organon Biosciences Chemicals 40% Coatings 60% Intervet 30% Organon 70% 9.5 billion in 2005 revenues 42,000 employees #1 global position in Coatings Chemicals focused on 5 growth platforms 3.5 billion in 2005 revenues 19,400 employees Promising pipeline of innovative products Strong Biotech platform Global leader in Animal Health 5

6 Well positioned for accelerated growth Major turn-around almost completed Highly focused, strong portfolio Accelerating Profitable Growth Targets for

7 Major transformation Divested 15 businesses with turnover close to 2.0 bln Embarked on major restructuring programs involving 8,500 employees and more than 400 mln costsavings Significantly rejuvenated and internationalized the leadership team (40 nationalities in top 150) And continued to strengthen our positions, in 2005 and 2006 acquired 8 companies with total revenues of more than 350 mln 7

8 Significant performance improvement Employees Down by 8,500 (20%) Up by 4,000 (10%) [acquisitions & emerging markets] Number of Sites 30 restructured 30 divested 15 greenfield 20 acquired EBITDA/employee 15% up Capital turnover Sales/invested capital 10% up And maintaining growth for core businesses: Coatings 7.7% per annum Chemicals 3.1% per annum 8

9 Highly focused, strong portfolio Leadership positions Focused player Strong entrepreneurial customer focused culture 9

10 Strong positions across portfolio 65% of turnover in no.1 positions, 25% in no.2/3 positions 80% of turnover at or above target profitability level All but one performing above the costs of capital 10

11 # of segments Focused player in the Chemical industry Akzo Nobel Source: Analyst reports Chemical Sales 2005, US $ bln 11

12 Strong entrepreneurial, customer focused culture Our Values Entrepreneurial spirit Customer focus Personal integrity Social responsibility The The pride of of our our people: 3 of of 5 top top scoring scoring questions in in global global employee survey survey :: We We work work to to understand our our customers (88%) (88%) We We know know who who our our most most important customers are are (87%) (87%) We We act act on on customer complaints (87%) (87%) Customers quotes : Outstanding service, continuously go the extra mile, Extremely reliable, very responsive, 1st class service, Meet All needs, blown away by your knowledge, Very few vendors go over the top - YOU DO 12

13 Delivering in CSR % no ranking % top 10 % % 2nd place Being a member of the FTSE4Good Index Series sends a powerful message to investors and other stakeholders about Akzo Nobel s commitment to responsible business practice Jayn Harding (Head of CSR, FTSE Group) 13

14 Accelerating profitable growth Top-line growth EVA Creating value Capital efficiency Operational efficiency 14

15 Improve operational efficiency Restructuring focuses on maturing markets: Cost savings of 100 mln by 2009 With a restructuring charge of 80 mln Combine shared services for functional areas Reducing fragmentation in ICT infrastructure ( 20 Mln) HR, purchasing, finance 15

16 Deco restructuring Restructuring project accelerated in Q2 Two businesses integrated into one BU announced in February New BU Manager Rinus Roosenboom (Car Refinishes) New organization announced in October Further plans to follow H1,

17 Continued discipline in capital efficiency Investments Underperforming units have 3 year road-maps All plans critically evaluated against EVA targets EVA performance is a major element in bonuses OWC - improvement Bring businesses closer to internal best in class (Industrial Finishes, Base Chemicals) In Coatings catch up with peer performance In Chemicals stay ahead 17

18 Strong growth drivers Mature Per Capita Share of market Emerging Per Capita Paint liters 75% 25% < 2 liters Chemicals $ % 20% < $ 200 Plastics kg 80% 20% < 20 kg Paper 2-300kg 75% 25% < kg kg 18

19 Greenfield investments, particularly in emerging markets Expanding capital base Ningbo (Chemicals) Guangdong (Industrial Finishes) Moscow (Powder) Brazil (Pulp & Paper) Tiaxing (Functional) Delfzijl (Base,Functional) Investment level to 20% above depreciation Employees end 2005 : 40,600 India 400 Italy Turkey 1200 Brazil 1500 France UK Germany Sweden China 3800 US NL 19

20 Continue to invest in innovation R&D at 2,5% - 3% of sales; 80 patents per year 20

21 We will be an active consolidator All businesses performing well are in principle entitled to acquisition capital Strategic rationales : Growth platforms (Toide) Technology platform (TCI) Achieve leading position in segment (SICO, Flood, Balakom) We have checks/balances and tools to critically evaluate plans on EVA contribution In 2005 and 2006 acquired 8 companies with total revenues of more than 350 mln 21

22 Ambitions for 2009 Outpace our markets growth Operational ROI above 20% Maintain A- rating 22

23 Fit For the Future 23