Paris May 05, 2011 Q1 '11 Results Investors & Analysts Meeting
Forward looking statements This presentation contains elements that are not historical facts, including, without limitation, certain statements on future expectations and other forward-looking statements. Such statements are based on management s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those anticipated. Rhodia does not undertake to provide updates of these statements. Copies of all recent filings, and additional information about Rhodia, are available through our web site : http://www.rhodia.com The presentation today may include the display of some company data that do not directly conform to generally acceptable accounting principles, or GAAP. Management believes that the presentation of some non-gaap data provides investors with additional insight into the ongoing operations of the business. These measures should not be viewed as an alternative to GAAP measures of performance. Furthermore, these measures may not be consistent with similar measures provided by other companies. 2 Rhodia Q1 '11 Results Presentation
Paris May 05, 2011 Financial highlights Pascal Bouchiat Executive Vice President & CFO
Executing on its profitable growth strategy Excellent profitability Sound business dynamics Record EBITDA (1) 283m Volume (2) 9% Pricing power 51m (3) Record result Net Income Group Share 151m Good cash generation => Net Debt reduction Free Cash Flow 100m Net Debt 1,063m (1) Recurring EBITDA: before restructuring and other operating income and expenses (2) Organic growth: yoy change in net sales (3) Net positive price impact at EBITDA level 4 Rhodia Q1 '11 Results Presentation
Strong increase in Net Sales Net Sales In m 150 106 13% 1,503 48 23 9% Price 1,176 Scope Forex Volume & mix +28% Q1 '10 Net Sales Q1 '11 Net Sales Positive contribution from all levers 5 Rhodia Q1 '11 Results Presentation
Profitability growth driven by pricing and strong activity Rec. EBITDA (1) In m 150 (99) (32) 221 8 Scope 3 Forex 32 Volume & mix Price 51m Raw material & energy Fixed costs 283 EBITDA (1) margin 18.8% EBITDA (1) margin 18.8% +28% Q1 '10 Q1 '11 EBITDA (1) EBITDA (1) (1) Recurring EBITDA: before restructuring and other operating income and expenses 6 Rhodia Q1 '11 Results Presentation
Another quarter demonstrating strong pricing power YoY change In m Selling price / Raw Material & Energy (RM&E) cost changes* 2005 - Q1 2011 Q1 11 +271 +9 +42 +55 +23 +52. +51 Year after year demonstrating favorable selling price / raw material cost balance * Excluding Forex impacts 7 Rhodia Q1 '11 Results Presentation
Q1 11 performance by cluster In m Recurring EBITDA (1) and margins Consumer Chemicals Q1 10 Q1 11 92 63 15% 16% Strong growth across Global Business Units (GBUs), +16% yoy overall: - Novecare + 20% yoy organic growth, mostly driven by Oil & Gas and Agro markets, led by robust market demand and innovation - Coatis +13% yoy, namely from phenol and solvent businesses - Aroma Performance +5% yoy Feixiang delivering strong growth Integration progressing well on track Construction of new surfactant site at Zhuhai (50kt additional capacity) progressing. Operations to start in Q3 2011 (1) Recurring EBITDA: before restructuring and other operating income and expenses Note: Activity evolution yoy expressed in terms of organic volume growth 8 Rhodia Q1 '11 Results Presentation
Q1 11 performance by cluster In m Recurring EBITDA (1) and margins Q1 10 Q1 11 Advanced Materials 24 20% 53 29% Very robust business dynamics, +25% yoy volume expansion : - Silica, first important deliveries from new Qingdao plant - Rare Earth Systems, strong demand from all markets satisfied with efficient sourcing Polyamide Materials 56 68 14% 15% Demand remained solid in a tight supply environment Sound Engineering Plastics dynamics (+10% yoy) compensating shortfall at Polyamide & Intermediates (P&I) P&I s Force Majeure net EBITDA impact : (15)m in the quarter (further (5)m still to come in Q2 11) (1) Recurring EBITDA: before restructuring and other operating income and expenses Note: Activity evolution yoy expressed in terms of organic volume growth 9 Rhodia Q1 '11 Results Presentation
Q1 11 performance by cluster In m Recurring EBITDA (1) and margins Q1 10 Q1 11 Acetow & Eco Services 44 46 25% 22% Robust Acetow performance with satisfactory demand Eco Services negatively affected by one-off events at customers Energy Services 51 47 Good CER/ERU volumes Lower traditional energy services (Co-generation & Natural Gas supply) from demanding comparative base Investments ongoing in the renewable energy Climate Care business in Brazil Note: Activity evolution yoy expressed in terms of organic volume growth (1) Recurring EBITDA: before restructuring and other operating income and expenses 10 Rhodia Q1 '11 Results Presentation
Consumer Chemicals & Advanced Materials, powerful growth engines Rec. EBITDA (1) by Business Cluster 100% 100% 21% Energy Services 15% 19% Acetow & Eco-Services 15% 24% Polyamide Materials 22% 36% 10% 26% Advanced Materials Consumer Chemicals 18% 30% 48% Excluding Corporate and Others Q1 2010 Q1 2011 (1) Recurring EBITDA: before restructuring and other operating income and expenses 11 Rhodia Q1 '11 Results Presentation
Income Statement In m Net Sales Other Revenue Q1 '10 Q1 '11 1,176 131 1,503 110 Recurring EBITDA * Rec EBITDA margin on Net Sales 221 18.8% 283 18.8% Depreciation & amortization Other gains and losses Restructuring costs Operating Profit 140 243 (66) (7) (8) (69) 29 - Net financial charges Income tax (42) (28) (44) (45) Profit from continuing operations 70 154 Profit from discontinued operations (1) (1) Minority interest - (2) Net Profit Group Share 69 151 Earnings Per Share, basic (in ) 0.70 1.45 (*) Recurring EBITDA : before restructuring and other operating income and expenses 12 Rhodia Q1 '11 Results Presentation
Business growth coupled with sustained financial discipline Operating Working Capital* % of Total Sales In m Capital Expenditures Forecast ~350 12.4% 12.3% 270 9.6% 9.2% 9.5% FY 2007 FY 2008 FY 2009 FY 2010 Q1 2011 Q1 44 Q1 62 * Average quarterly operating working capital for FY ratios 2010 2011 Best-in-class Operating Working Capital Growth investments focused on highly dynamic markets 13 Rhodia Q1 '11 Results Presentation
Solid Free Cash Flow generation and continued Net Debt reduction In m 100m FCF in Q1 '11 (1,194) 200 Operating cash flow (36) Change in working capital (2) Restructuring cash costs (62) Capex 31 Others (1,063) 131m Net Debt December 31, 2010 Net Debt March 31, 2011 14 Rhodia Q1 '11 Results Presentation
Outlook
Looking ahead into Q2 11 Business dynamics to remain strong Consumer Chemicals Good performance to continue Advanced Materials Activity to remain robust Polyamide Materials Sustained demand level in Q2 Adipic Acid contracts with cost-indexation* clauses fully effective Acetow & Eco Services Stable business dynamics for Acetow Start of driving season for Eco-Services Energy Services CER activity stable sequentially Low seasonality for Energy Services traditional activities (*) Indexation to predetermined underlying raw material costs 16 Rhodia Q1 '11 Results Presentation
Upward 2011 guidance Economic Environment Economic environment Strong global economic growth driven by fast-growing countries High raw materials & energy costs Portfolio benefiting from eco-megatrends Strong exposure to fast growing countries Enjoying satisfactory pricing power 2011 Rec. EBITDA > 1 bn On track towards our 2013/15 profitable growth ambition* (*) Pre-CER Recurring EBITDA, to exceed 1bn by 2013/15 17 Rhodia Q1 '11 Results Presentation
Combination of Rhodia & Solvay: creation of a leader in the Chemicals industry Solvay's offer is still subject to approval by the AMF. Solvay's final offer document and Rhodia's final circular in response to the offer will, once approved by the AMF, be published on the AMF's website (www.amf-france.org) and on the websites of Solvay and Rhodia (www.rhodia.com). Shareholders and other investors are invited to read carefully all documents relating to the Offer prior to making any decision with respect to the Offer. The distribution of documents relating to the Offer may be subject to restrictions in certain juridictions. The Offer is not made to persons subject directly or indirectly to these restrictions and no acceptation of the Offer may be made from any juridictions where the Offer is subject to restrictions.
Strategic Rationale of the combination New growth and enlarged portfolio Increased scale with global leadership, 90% revenues made in segments with #1, 2 or 3 positions Geared towards high growth markets and emerging regions Better balanced end markets and basis for development Business and cultural fit Performance driven cultures with decentralized structures Product complementarities and core capabilities sharing Innovation and sustainable development focus Value Creation Value Creation Enhanced financial profile EBITDA x 2 Synergies of 250m over 3 years Earnings enhancing effect on EPS from year 1 19 Rhodia Q1 '11 Results Presentation
Offer Highlights Rhodia s board unanimously supports the offer Cash Offer of 31.6 per share of Rhodia 1-50% premium to pre-announcement closing price - 44% premium to last 3 months average price Offer for equity-linked OCEANE bonds Enterprise Value: 6.6 bn - Represents EV / EBITDA 2010 multiple of 7.3x incl. CERs (8.5x excl. CERs) Indicative timetable Acquisition offer announced & filing Initial offer period Closing & settlement/ Offer Re-opening 2011 April May June July August September Regulators approvals 1. Ex-dividend of 0.5 per share 20 Rhodia Q1 '11 Results Presentation
Joining Forces to Create a Global Leader in the chemical industry Growth & Scale Leadership Sustainable Development 21 Rhodia Q1 '11 Results Presentation
Appendices
Q1 '11 Net Finance Costs In m Q1 '10 Q1 '11 Net financial charges & other financial charges (25) (27) Interest cost on environmental & pension liabilities (17) (17) Other 0 0 Total net financial expenses (42) (44) 23 Rhodia Q1 '11 Results Presentation
Raw material market prices NATURAL GAS BENZENE BUTADIENE 17* 47% 25* 741* 29% 958* 52% 1,445* 16* (25)% 12* 950* Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Daily European Nat gas 1Yr forward Zeebrugge (Eur/MWh) Daily US Nat gas 1Yr forward Henry Hub (Eur/MWh) Monthly Benzene contract price NorthWest Europe ( /T) Quarterly Western Europe contract market delivered ( /T) 89* SULPHUR 104% 182* 512* NAPHTHA 29% 661* 290* AMMONIA 33% 386* Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Quarterly average data from Tempa Sulfur (US$/T) Monthly trend of Naphta Northwest Europe Cargoes CIF NWE / Basis ARA ( /T) Monthly average CFR NW Europe ( /T) * Average market prices over the reference period Above indicated percentage designate Q1 11 YoY variation 24 Rhodia Q1 '11 Results Presentation
Upcoming IR events 2011 Annual General Meeting: Pavillon Armenonville/Paris May 18 th, 2011 (15h) Q2 2011 Earnings July 28 th, 2011 25 Rhodia Q1 '11 Results Presentation
Paris May 05, 2011 Q1 '11 Results Investors & Analysts Meeting