Celanese Corporation February 2010

Transcription

1 Celanese Corporation February 2010

2 Forward Looking Statements Reconciliation and Use of Non-GAAP Measures to U.S. GAAP Forward-Looking Statements This presentation may contain forward-looking statements, which include information concerning the company s plans, objectives, goals, strategies, future revenues or performance, capital expenditures, financing needs and other information that is not historical information. When used in this presentation, the words outlook, forecast, estimates, expects, anticipates, projects, plans, intends, believes, and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements are based upon current expectations and beliefs and various assumptions. There can be no assurance that the company will realize these expectations or that these beliefs will prove correct. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements contained in this presentation. Numerous factors, many of which are beyond the company s control, could cause actual results to differ materially from those expressed as forward-looking statements. Certain of these risk factors are discussed in the company s filings with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which it is made, and the company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. Reconciliation of Non-U.S. GAAP Measures to U.S. GAAP This presentation reflects five performance measures, operating EBITDA, affiliate EBITDA, adjusted earnings per share, net debt and adjusted free cash flow, as non-u.s. GAAP measures. These measurements are not recognized in accordance with U.S. GAAP and should not be viewed as an alternative to U.S. GAAP measures of performance. The most directly comparable financial measure presented in accordance with U.S. GAAP in our consolidated financial statements for operating EBITDA is operating profit; for affiliate EBITDA is equity in net earnings of affiliates; for adjusted earnings per share is earnings per common share-diluted; for net debt is total debt; and for adjusted free cash flow is cash flow from operations. Use of Non-U.S. GAAP Financial Information Operating EBITDA, a measure used by management to measure performance, is defined by the company as operating profit from continuing operations, plus equity in net earnings from affiliates, other income and depreciation and amortization, and further adjusted for other charges and adjustments. We may provide guidance on operating EBITDA and are unable to reconcile forecasted operating EBITDA to a U.S. GAAP financial measure because a forecast of Other Charges and Adjustments is not practical. Our management believes operating EBITDA is useful to investors because it is one of the primary measures our management uses for its planning and budgeting processes and to monitor and evaluate financial and operating results. Affiliate EBITDA, a measure used by management to measure performance of its equity investments, is defined by the company as the proportional operating profit plus the proportional depreciation and amortization of its equity investments. The company has determined that it does not have sufficient ownership for operating control of these investments to consider their results on a consolidated basis. The company believes that investors should consider affiliate EBITDA when determining the equity investments overall value in the company. Adjusted earnings per share is a measure used by management to measure performance. It is defined by the company as net earnings (loss) available to common shareholders plus preferred dividends, adjusted for other charges and adjustments, and divided by the number of basic common shares, diluted preferred shares, and options valued using the treasury method. We may provide guidance on an adjusted earnings per share basis and are unable to reconcile forecasted adjusted earnings per share to a U.S. GAAP financial measure without unreasonable effort because a forecast of Other Items is not practical. We believe that the presentation of this non-u.s. GAAP measure provides useful information to management and investors regarding various financial and business trends relating to our financial condition and results of operations, and that when U.S. GAAP information is viewed in conjunction with non-u.s. GAAP information, investors are provided with a more meaningful understanding of our ongoing operating performance. Note: The tax rate used for adjusted earnings per share approximates the midpoint in a range of forecasted tax rates for the year, excluding changes in uncertain tax positions, discrete items and other material items adjusted out of our U.S. GAAP earnings for adjusted earnings per share purposes, and changes in management s assessments regarding the ability to realize deferred tax assets. We analyze this rate quarterly and adjust if there is a material change in the range of forecasted tax rates; an updated forecast would not necessarily result in a change to our tax rate used for adjusted earnings per share. The adjusted tax rate is an estimate and may differ significantly from the tax rate used for U.S. GAAP reporting in any given reporting period. It is not practical to reconcile our prospective adjusted tax rate to the actual U.S. GAAP tax rate in any future period. Net debt is defined by the company as total debt less cash and cash equivalents. We believe that the presentation of this non-u.s. GAAP measure provides useful information to management and investors regarding changes to the company s capital structure. Our management and credit analysts use net debt to evaluate the company's capital structure and assess credit quality. Adjusted free cash flow is defined by the company as cash flow from operations less capital expenditures, other productive asset purchases, operating cash from discontinued operations and certain other charges and adjustments. We believe that the presentation of this non-u.s. GAAP measure provides useful information to management and investors regarding changes to the company s cash flow. Our management and credit analysts use adjusted free cash flow to evaluate the company s liquidity and assess credit quality. Results Unaudited The results presented in this presentation, together with the adjustments made to present the results on a comparable basis, have not been audited and are based on internal financial data furnished to management. Quarterly results should not be taken as an indication of the results of operations to be reported for any subsequent period or for the full fiscal year. 2

3 Celanese diversified portfolio delivers shareholder value through leading franchises Celanese ($ million) 2009 Revenue: $5, Operating EBITDA: $847 Advanced Engineered Materials Consumer Specialties Industrial Specialties Acetyl Intermediates 2009 Revenue: $ Operating EBITDA: $ Revenue: $1, Operating EBITDA: $ Revenue: $ Operating EBITDA: $ Revenue: $2, Operating EBITDA: $357 Strong financial performance in a challenging year 3

4 Portfolio well-positioned to deliver and execute Acetyl Intermediates (Acetic Acid, Vinyl Acetate Monomer, Acetyl Derivatives) Advanced Engineered Materials (Engineered Thermoplastics and Polymers) Industrial Specialties (Vinyl Emulsions and Polymers) Consumer Specialties (Acetate Flake and Tow, High Intensity Food Sweetener) Portfolio Characteristics A global leader Advantaged technology Superior cost position Industry-leading technology Strong product pipeline Upstream integration Emerging economy opportunities Growth through innovation Stable cash generation Industry-leading partnerships in Asia Financial Impact Capital efficient More stable EBITDA Higher growth Margin expansion Asia growth Increased demand for low VOC Cash flow Stable Balanced portfolio creates a unique hybrid business model 4

5 Celanese s strategic DNA remains consistent FOCUS Participate in businesses where we have a sustainable competitive advantage REDEPLOYMENT Divest non-core assets and revitalize underperforming businesses Celanese Strategic Pillars INVESTMENT Leverage and build on advantaged positions that optimize our portfolio GROWTH Aggressively align with our customers and their markets to capture growth 5

6 Why Celanese? Why Celanese Now? Celanese Advantages Celanese Levers of Value Earnings Power Expansion Sustainable fixed spending reductions Efficient and scalable capital Global macro trends driving customer growth Operating Innovation Economic Recovery Balanced footprint in key regions Recovering conditions in key end-use industries Attractive balance sheet with strong cash generation Geographic Demand Capital Structure Increasing the earnings power of the business through multiple levers 6

7 Increased earnings power drives significant shareholder value Operating EBITDA $1,600-1,800 million $847 million $ million Previous Trough 2009 Economic Recovery Operating Lever Innovation Lever Recovery Second half 2009 performance provides platform for future growth 7

8 Levers build significant earnings power of the portfolio Economic Recovery Expanded Earnings Power Operating EBITDA Group Advanced Engineered Materials Consumer Specialties Acetyl Intermediates Industrial Specialties Capital Structure Lever Demand Lever Geographic Lever Operating Lever Innovation Lever 2009 to Recovery EBITDA Growth* $ MM $10-60MM $ MM $75-100MM Earnings power of portfolio expected to double from today s level 8 * 2009 to Recovery EBITDA Growth based on 2009 EBITDA and management s previous Recovery range of $ billion.

9 Well defined path forward delivering today Advanced Engineered Materials Launch of innovative impact modified POM Acquired LFT business of FACT GmbH 2010+: $500 million application opportunity growth Build on leading position Consumer Specialties MOU announced for Acetate expansion project with current China partner 2011+: Increased earnings through JV dividends Acetyl Intermediates Nanjing successfully expanded to 1.2 kt/a acid capacity Ceased production at Pardies site Jiangxi Jiangwei VAM sourcing agreement 2010+: $40-50 million operating margin improvement Strengthen derivatives position Industrial Specialties Nanjing VAE / Emulsion capacity expansion 2011+: Volume expansion supporting growth in China 9 Recent strategic actions build earnings power of portfolio

10 AEM: Application development creates current and future opportunities Automotive Opportunity 3.0 Total Revenue ($ billion) Opportunity Current best-in-class translation to all models yields translation opportunity Westernization of current China production drives China opportunity Successful commercialization of application R&D creates pipeline opportunity Total AEM Today Total Competitors Today Translation China Pipeline Total Opportunity Significant opportunities exist in ~$3 billion industry space 10

11 Ticona: Growing application space through innovation Incremental $500 Million Application Opportunity Improvement in POM Technical Performance Automotive Applications Chemical resistance Superior impact & weldline strength Improved impact strength Existing POM Space New Ticona POM Space Elevated heat deflection temperature Industrial Applications Higher stiffness (Modulus) Improved slip & wear performance Less mold deposit Increase weldline break % Consumer Applications Design freedom Superior impact and weldline strength 11 Technology enables additional $500 million application space opportunity

12 2006 Base Productiv ity Growth Operatin g and Innovatio n Levers Recovery CS: Acetate Tow demand in China will drive worldwide growth Operating EBITDA Tow Demand Growth $ million kt 600 Chinese Imports CAGR ~1% Chinese Domestic Production Additional Demand Growth $230 million 300 CAGR ~4% Base Productivity Growth Operating & Recovery Innovation Strategic Objectives >$50 million 2009 to Recovery Strategic Objectives $20-30 million E E China ROW MOU announced for expansion project with current China partner 12 Source: Celanese internal estimates

13 AI: A growing franchise in an attractive industry A Growing Franchise Proven execution and leadership capability Significant value from downstream derivatives Build upon advantages to optimize returns over the long-term An Advantaged Business in an Attractive Industry Long-term growth rates in excess of GDP Favorable position on a steep industry cost curve Advantaged raw material and conversion position Flexible manufacturing and low-cost capacity Technology leadership at the heart of Acetyl competitive position 13

14 AI: New capacity not expected to impact Celanese s advantaged position on the cost curve 2009/2011E Acetic Acid Cost Curve (kt) $ per ton Pricing for CE to earn >15% EBITDA Avg Other Leading Technology Avg Non-China MeOH Carbonylation Lower Cost China MeOH Ethylene Ethanol Highest Cost China MeOH Manufacturing realignment and Nanjing expansion further improving cost position Majority of planned capacity additions and expansions may be disadvantaged By Prod Average Celanese Effective Industry Utilization Rates 2009/2011E Demand Reinvestment economics challenged for non-leading technologies 14 Source: Celanese internal estimates

15 IS: Global leader in emulsions systems for environmentally-friendly paints and coatings VAE Share of Interior Paint Market 50% 0% European VAE Growth Celanese Others E US interior paint market changing Consumer perception favoring greener building products Regulation shifting to low-voc content Celanese building off of a European leadership position Celanese EcoVAE Progress 14 new customers utilizing EcoVAE Projects with six major paint producers Launching new EcoVAE products Low-VOC exterior paint Acrylic replacement in Non-Flats Expanding EcoVAE products to Asia 15 Global opportunity of $ million Nanjing expansion announced to meet growing China demand

16 2010 Earnings Improvement Adjusted EPS Operating EBITDA Volume Driven Productivity Driven Tax Rate Depreciation & Amortization AEM: Destocking complete AI: Technology, 2009 FIFO effect IS: Asia growth focus CS: Sustain performance Pardies & Cangrejera closures Other manufacturing realignment SG&A realignment Sustained lower tax rate Benefits of manufacturing and administrative restructuring Cash tax rate expected to be similar Lower D&A resulting from manufacturing realignment $80 - $100 million At least $100 million Low 20% range ~$30 million 16

17 Solid cash generation Adjusted Free Cash Flow $ in millions Net cash provided by operating activities Adjustments to operating cash for discontinued operations Net cash provided by operating activities from continuing operations Less: Capital expenditures Add: Other charges and adjustments 1 Adjusted Free Cash Flow FY2009 $596 $2 $598 $176 ($12) $410 FY2008 $586 ($3) $583 $274 $76 $385 Factors contributing to cash generation during 2009: Continued strong free cash generation Lower cash taxes, interest expense and capital expenditures helped offset lower operating EBITDA 17 1 Amounts primarily associated with certain other charges and adjustments and the cash outflows for purchases of other productive assets that are classified as investing activities for U.S. GAAP purposes.

18 Strong cash generation continues throughout economic cycle Available Cash $ in million 2010E Cash Flow Expectation off EBITDA Base $ in million Cash (as of 12/31/2009) $1,254 Cash Taxes $90 $110 Kelsterbach Project ~($150) Capital Expenditures Reserve/Other $255 $275 $110 $130 Operating Cash ~($300) Net Interest Pension $200 $210 $40 $50 Cash Available for Strategic Purposes ~$800 Adjusted Free Cash Outflows* $695 $775 Dividends/Debt Service $75 - $100 Expect to continue to generate positive free cash flow Ticona Kelsterbach relocation: Approximately $300 million expected outflow in 2010 Requires approximately $150 million incremental cash in 2010 (above cash included in ending cash balance on 12/31/09) Final project reimbursement of 110 million expected in

19 Celanese capital structure Primary Components Structure Characteristics Current Sources of Liquidity Cash - $1.3 billion Credit Linked Facility - $140 million Revolver - $600 million Cost Stability Current Debt Obligations Term Loan - $2.8 billion Other Debt Obligations - $700 million Net Debt - $2.2 billion Flexibility Solid liquidity position and covenant-lite term loan create advantaged capital structure 19

20 Why Celanese? Why Celanese Now? Levers of Value Shareholder Value Earnings Power Expansion Operating Innovation Track record of execution $ billion recovery earnings Rapid earnings growth of the current base - $1.00/share growth in 2010 Economic Recovery Geographic Demand Capital Structure High return opportunities Over $2 billion of cash generation through 2014 Returns continue to exceed weighted average cost of capital More stable earnings profile Significant value upside over current share price 20

21 Celanese Corporation February 2010

22 Leading global footprint positioned to meet customer demand Bay City, T VAM = 300 Cangrejera, Mexico Anhydride = 90 Esters = 105 Celanese Global Manufacturing Locations Roussillon, France Anhydride = 30 Tarragona, Spain VAM = 200 Clear Lake, T Acid = 1,200 VAM = 310 Frankfurt, Germany VAM = 285 Esters = 40 Nanjing, China Acid = 1,200 VAM = 300 Anhydride = 100 Singapore Acid = 600 VAM = 210 Esters = 130 Utilization of all global Celanese acetic acid and downstream sites to meet global customer needs Ensure all Celanese sites have a leading cost structure Strategy to remove high cost facilities Celanese well-positioned globally to meet changing demand landscape 22 All values shown in kt per year

23 Delays in project startups likely to continue Forecast Capacity Expansions 1 Company Capacity BP / Sinopec 550 kt A Sipchem 430 kt A Sopo (expansion) 600 kt A? Timing in question Wujing (expansion) 500 kt A? Timing in question Yangkuang Cathay 350 kt A SU Henan Shunda 200 kt A SU HC Tianjin Bohei 200 kt A HC Hualu Hensheng 200 kt A SU HC Henan Yima 200 kt A HC Yunan Yunwei 200 kt A HC Kingboard 400 kt A A Company Announced Startup CE 2005 Update CE 2006 Update CE 2007 Update Current Update SU = Actual plant startup HC = Highest Cost Viability of many higher cost projects is in question 23 1 Celanese internal analysis and opinion as of May 2009

24 Significant differentiation in technology of announced expansions Acetic Acid Announced Capacity Additions Other Leading MeOH 20% Celanese 12% Facilities under construction anticipated to be completed and started up ~70% of announced capacity additions will have difficulty covering variable cost Higher Cost China MeOH 20% Lower Cost China MeOH 48% Pressure will be on uncompetitive projects that have not made significant progress Disadvantaged technology Majority of announced capacity additions challenged in today s pricing environment 24 1 Source: Celanese internal estimates, Tecnon Based on nameplate capacity

25 4Q 2009 Other Charges and Other Adjustments by Segment in millions AEM CS IS AI Other Total Employee termination benefits Plant/office closures (3) - (3) Ticona Kelsterbach plant relocation Clear Lake insurance recoveries Plumbing actions (7) (7) Asset impairments Other (10) Total other charges (1) 3 (9) Business optimization Ticona Kelsterbach plant relocation (3) (3) Plant closures Gain on sale of PVOH business Other (6) - (6) Total other adjustments (2) Total other charges and other adjustments (3) 4 (8)

26 FY 2009 Other Charges and Other Adjustments by Segment in millions AEM CS IS AI Other Total Employee termination benefits Plant/office closures Ticona Kelsterbach plant relocation Clear Lake insurance recoveries (6) - (6) Plumbing actions (10) (10) Asset impairments Other (10) Total other charges 18 9 (4) Business optimization Ticona Kelsterbach plant relocation Plant closures Gain on sale of PVOH business - - (31) (3) - (34) Other (19) - 7 (9) 4 (17) Total other adjustments (18) 1 (22) 12 8 (19) Total other charges and other adjustments - 10 (26)

27 Reg G: Reconciliation of Adjusted EPS Adjusted Earnings (Loss) Per Share - Reconciliation of a Non-U.S. GAAP Measure (in $ millions, except per share data) Three Months Ended December 31, 2009 per share Earnings (loss) from continuing operations 1 (0.01) (140) (0.99) Deduct Income tax (provision) benefit (85) (63) Earnings (loss) from continuing operations before tax 86 (183) Other charges and other adjustments Adjusted earnings (loss) from continuing operations before tax 103 (78) Income tax (provision) benefit on adjusted earnings 2 (24) 20 (90) (157) Less: Noncontrolling interests (1) Adjusted earnings (loss) from continuing operations (58) (0.40) per share Year Ended December 31, per share per share Diluted shares (in millions) 3 Weighted average shares outstanding Assumed conversion of preferred stock Dilutive restricted stock units Dilutive stock options Total diluted shares See Table 7 for details. 2 The adjusted effective tax rate for the six months ended December 31, 2009 is 23%. The adjusted effective tax rate for the six months ended June 30, 2009 is 29%. 3 Potentially dilutive shares are included in the adjusted earnings per share calculation when adjusted earnings are positive. 27

28 Reg G: Reconciliation of Net Debt Net Debt - Reconciliation of a Non-U.S. GAAP Measure December 31, December 31, (in $ millions) Short-term borrowings and current installments of long-term debt - third party and affiliates Long-term debt 3,259 3,300 Total debt 3,501 3,533 Less: Cash and cash equivalents 1, Net Debt 2,247 2,857 28

29 Reg G: Other Charges and Other Adjustments Reconciliation of Other Charges and Other Adjustments Three Months Ended Year Ended December 31, December 31, (in $ millions) Employee termination benefits Plant/office closures (3) Ticona Kelsterbach plant relocation Clear Lake insurance recoveries - (15) (6) (38) Plumbing actions (7) - (10) - Sorbates settlement (8) Asset impairments Other - (1) - (1) Total Other Adjustments: 1 Three Months Ended Year Ended December 31, Income Statement December 31, (in $ millions) Classification Ethylene pipeline exit costs (2) Other (income) expense, net Business optimization SG&A Ticona Kelsterbach plant relocation (3) 2 - (4) Cost of sales Plant closures Cost of sales Gain on sale of PVOH business - - (34) - (Gain) loss on disposition Other 2 (6) 4 (17) 13 Various Total 4 21 (19) 63 Total other charges and other adjustments These items are included in net earnings but not included in other charges. 2 The year ended December 31, 2009 includes a one-time adjustment to Equity in net earnings (loss) of affiliates of $19 million. 29

30 30 Reg G: Reconciliation of Operating EBITDA Segment Data and Reconciliation of Operating Profit (Loss) to Operating EBITDA - a Non-U.S. GAAP Measure Three Months Ended Year Ended December 31, December 31, (in $ millions) Net Sales Advanced Engineered Materials ,061 Consumer Specialties ,084 1,155 Industrial Specialties ,406 Acetyl Intermediates ,603 3,875 Other Activities Intersegment eliminations (91) (129) (389) (676) Total 1,388 1,286 5,082 6,823 Operating Profit (Loss) Advanced Engineered Materials 33 (48) Consumer Specialties Industrial Specialties 16 (8) Acetyl Intermediates 73 (116) Other Activities 1 (60) (32) (160) (138) Total 109 (152) Equity Earnings, Cost - Dividend Income and Other Income (Expense) Advanced Engineered Materials Consumer Specialties 1 (2) Industrial Specialties Acetyl Intermediates Other Activities 1 6 (2) Total Other Charges and Other Adjustments 2 Advanced Engineered Materials (3) Consumer Specialties Industrial Specialties (8) 2 (26) 13 Acetyl Intermediates Other Activities Total Depreciation and Amortization Expense Advanced Engineered Materials Consumer Specialties Industrial Specialties Acetyl Intermediates Other Activities Total Operating EBITDA Advanced Engineered Materials 50 (3) Consumer Specialties Industrial Specialties Acetyl Intermediates Other Activities 1 (35) (28) (101) (92) Total ,164 1 Other Activities primarily includes corporate selling, general and administrative expenses and the results from captive insurance companies. 2 See Table 7 for details.

31 Reg G: Equity Affiliate Preliminary Results and Celanese Proportional Share - Unaudited Equity Affiliate Preliminary Results - Total - Unaudited Three Months Ended Year Ended (in $ millions) December 31, December 31, Net Sales Ticona Affiliates ,105 1,394 Infraserv Affiliates ,186 2,243 Total ,291 3,637 Operating Profit Ticona Affiliates Infraserv Affiliates Total Depreciation and Amortization Ticona Affiliates Infraserv Affiliates Total Affiliate EBITDA 3 Ticona Affiliates Infraserv Affiliates Total Net Income Ticona Affiliates Infraserv Affiliates Total Net Debt Ticona Affiliates Infraserv Affiliates Total Equity Affiliate Preliminary Results - Celanese Proportional Share - Unaudited 4 Three Months Ended Year Ended (in $ millions) December 31, December 31, Net Sales Ticona Affiliates Infraserv Affiliates Total ,217 1,364 Operating Profit Ticona Affiliates Infraserv Affiliates Total Depreciation and Amortization Ticona Affiliates Infraserv Affiliates Total Affiliate EBITDA 3 Ticona Affiliates Infraserv Affiliates Total Equity in net earnings of affiliates (as reported on the Income Statement) Ticona Affiliates Infraserv Affiliates Total Affiliate EBITDA in excess of Equity in net earnings of affiliates 6 Ticona Affiliates Infraserv Affiliates Total Net Debt Ticona Affiliates Infraserv Affiliates Total Ticona Affiliates accounted for using the equity method include Polyplastics (45% ownership), Korean Engineering Plastics (50%), Fortron Industries (50%) and Una SA (50%). 2 Infraserv Affiliates accounted for using the equity method include Infraserv Hoechst (32% ownership), Infraserv Gendorf (39%) and Infraserv Knapsack (27%). 3 Affiliate EBITDA, a non-u.s. GAAP measure, is the sum of Operating Profit and Depreciation and Amortization. 4 Calculated by multiplying each affiliate's total share amount by Celanese's respective ownership percentage, netted by reporting category The year ended December 31, 2009 excludes a one-time tax adjustment to Equity in net earnings of affiliates of $19 million. 6 Calculated as Celanese proportion of Affiliate EBITDA less Equity in net earnings of affiliates; not included in Celanese operating EBITDA.