LANXESS Energizing Chemistry Business Profile 2018

Transcription

1 LANXESS Energizing Chemistry Business Profile 218 Investor Relations, March 218

2 Safe harbor statement The information included in this presentation is being provided for informational purposes only and does not constitute an offer to sell, or a solicitation of an offer to purchase, securities of LANXESS AG. No public market exists for the securities of LANXESS AG in the United States. This presentation contains certain forward-looking statements, including assumptions, opinions, expectations and views of the company or cited from third party sources. Various known and unknown risks, uncertainties and other factors could cause the actual results, financial position, development or performance of LANXESS AG to differ materially from the estimations expressed or implied herein. LANXESS AG does not guarantee that the assumptions underlying such forward-looking statements are free from errors nor does it accept any responsibility for the future accuracy of the opinions expressed in this presentation or the actual occurrence of the forecast developments. No representation or warranty (expressed or implied) is made as to, and no reliance should be placed on, any information, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and accordingly, no representative of LANXESS AG or any of its affiliated companies or any of such person's officers, directors or employees accept any liability whatsoever arising directly or indirectly from the use of this document. 2

3 A rapidly changing world Our answer: Energizing chemistry! New LANXESS Segments What it takes to be successful in a changing environment Agility Courage & team spirit Mindset Balance Markets Industries Lean structures Entrepreneurial organization Speed Leadership Markets Technology & innovation A strong team and corporate culture make the difference 3

4 Our journey: Shaping New LANXESS a story in three chapters New LANXESS Segments ACCELERATE Leveraging our strengths IMPROVE Strengthening our platform REPAIR Realigning our business ~221 4

5 Restructuring and change of strategy yields first positive results New LANXESS Segments Chapter 1 Repair Chapter 2 Chapter 3 LANXESS transformation starts to become visible EBITDA CAGR LPT SGO MPP HPM LEA ROCE 216 IPG ADD AII Substantial room for improvement left Key 216 points Phase 1 & 2 cost improvements become visible All BUs with improved organic return profile Growth is picking up 5

6 Chemtura integration: 1 m of synergies by 22 New LANXESS Segments Chapter 1 1 m synergy breakdown: Corporate / country costs ~ 3 m Chapter 2 Improve Chapter 3 Organizational streamlining Leveraging new regional strengths Marketing and sales ~ 2 m Production and procurement set-up ~ 5 m Topline synergies provide additional comfort 6

7 Organic investments will improve company ROCE New LANXESS Segments Chapter 1 Chapter 2 Improve 1 m 6 m 6 m Debottleneckings, BU AII Debottleneckings, BU SGO, custom manufacturing Greenfield, BU IPG 5-1 m Debottleneckings, BU HPM, global compounding hubs 5 m Debottleneckings in remaining BUs in Performance Chemicals 5-1 m Investments in Specialty Additives % ROCE Chapter 3 ~ 4 m capex until 22 at ROCE of ~2% Q1 217 Target: Increase ROCE to former levels 7

8 Chapter 2 proceeds with visible measures Restructuring of chrome chemicals activities (BU LEA) Divestiture of noncore chlorine dioxide business (BU MPP) New LANXESS Segments Chapter 2 started Focused execution ongoing Consolidation of global lubricant precursors production (BU ADD) Acquisition of Solvay s U.S. phosphorus additives business (BU ADD) 8

9 LANXESS Value Drivers: Working towards our 221 targets New LANXESS Segments Advanced Intermediates Specialty Additives Growth capex: 1 m BU AI / 6 m Saltigo Agro bounce back New Saltigo Products in 219 Improvement of Organometallics performance Organic growth Chemtura integration & synergies Chemtura integration and realization of 1 m synergies Lubricant additive price adjustment & optimizing production set-up Confirmation of 2% EBITDA margin target Portfolio & mix improvements: Chemours integration / Chlorine Dioxide divestment Leather chemicals restructuring Portfolio improvement Strategy & value chain BU HPM: Balanced capacity model with all polyamide 6 used in compounds by 22 Expansion of Urethane Systems business in Europe BU IPG capacity expansion Performance Chemicals Engineering Materials 9

10 Chapter 3: More balanced and stronger platform along three key dimensions New LANXESS Segments Regional platform Industrial platform Market positions Chapter 1 Chapter 2 Chapter 3 Accelerate Regionally balanced platform with no pronounced dependencies Diversified industrial platform mitigates impact from any individual industry s volatility Market positions in every business at least among leading players to keep or improve profitability level Solid growth Balancing the ground for further growth Chapter 3 will establish an even stronger platform 1

11 LANXESS target 221 Leading, balanced and strongly cash generative New LANXESS Segments Strategic and financial goals Stable specialty chemical company with sound cash generation and balanced portfolio Increased footprint in growing regions (North America and Asia) Leading positions in core and attractive midsized markets Low dependency on individual markets, thus less cyclical Solid investment grade rating and significantly reduced net financial debt EBITDA pre margin (group, Ø through the cycle) 14-18% Cash conversion >6% EBITDA margin volatility Underlying growth: Sustainable >GDP growth targeted LOW 2-3%pts Cash conversion: (EBITDA pre capex) / EBITDA pre 11

12 New LANXESS - A better end market exposure New LANXESS Segments LANXESS in 215 New LANXESS ~218 End market split by sales End market split by sales excl. ARLANXEO Other* Automotive** E&E Chemicals Construction Consumer Agro chemicals More diversified and resilient * Including General Industry, Pharma, Tire; ** Including relevant parts of lubricants 12

13 Progressing very focused with clear priorities regarding capital allocation New LANXESS Segments Until 218 Priorities Integration (Chemtura) Deleveraging Priorities Portfolio management Organic growth (brown fields) thereafter Degree of specialization (driven by technology and service) New LANXESS in the future Organic growth (brown fields) Dividend Portfolio management Dividend Deleveraging LANXESS in 214 bulk, commodity New LANXESS in 217 mid-sized Market size niches Integration & deleveraging Focused organic and external growth 13

14 LANXESS Energizing Chemistry New LANXESS Segments and ARLANXEO New LANXESS a well diversified portfolio* ARLANXEO** Advanced Intermediates Specialty Additives Performance Chemicals Engineering Materials ARLANXEO** joint venture Market position Europe No. 1-2 Top 3 position No. 1-4 in niches Leading position Globally No. 1-3 Building a global and resilient intermediates player Creating a major global additives business Building a specialty division Building an integrated engineering plastics player Leading position in production and marketing of synthetic rubber * Reporting structure since closing of Chemtura acquisition on 21 April 217; ** ARLANXEO to be reported as discontinued operations from 1 April 218 (with a restatement of 217 and 218 YTD figures) and reported as associate using the equity method from 1 April 219

15 FY 217: LANXESS delivers New LANXESS Segments and ARLANXEO Sales [ m] [ m] [ m] 1, 13.4% 12.9% 13.1% 13.3% 1,4 12.9% 14% 6 8, 1,2 11.2% 11.% 1, 8.9%1.1% 12% 45 6, 8 9.2% 1% 4, 6 3 2, EBITDA (margin) % 6% CAPEX Sales by Region 217 Sales by Segment 217 EBITDA by Segment 217 Asia 28% Germany 15% ARLANXEO Advanced Intermediates ARLANXEO Advanced Intermediates Specialty LatAm Additives 9% Europe w/o North America Engineering 19% Germany Performance Engineering Materials 28% Chemicals Materials Performance Chemicals Specialty Additives All references to EBITDA are pre exceptionals; 1 Net of capitalized borrowing cost, projects financed by customers and finance lease 15

16 LANXESS successful transformation and profitable growth New LANXESS Segments and ARLANXEO EBITDA [ million] ,146 1, , Transformation Crisis Growth Repair Improve All references to EBITDA are pre exceptionals; 212 restated due to IAS 19 (revised) 16

17 FY 217: Strong operational development in all regions in addition to portfolio effect of Chemtura acquisition New LANXESS Segments and ARLANXEO FY 217 sales by region [%] Regional development of sales [ million] 9,664 Operational development* Asia/Pacific 28 Germany 16 Asia/Pacific LatAm North America 7,699 2, , % +14% +4% 2, , % +11% +8% LatAm 9 North America 19 EMEA (excl. Germany) 28 EMEA (excl. Germany) Germany 2, % 2,72 1, % 1,489 FY 216 FY % +11% * Currency and portfolio adjusted 17

18 KPIs are improving again New LANXESS Segments and ARLANXEO In m EBITDA ,146 1, ,29 Net financial debt 1, ,515 1,483 1,731 1,336 1, ,252 Net fin. debt / EBITDA 1 2.5x 1.x 1.3x 1.2x 2.4x 1.7x 1.4x.3x 1.8x Gearing 11% 52% 73% 64% 91% 62% 52% 7% 66% EPS pre [in ] Pre exceptionals; 2 Net of exceptional charges and income, amortization of intangible assets and attributable tax effects as well as non-recurring earnings effects of the U.S. tax reform

19 The Advanced Intermediates segment comprises our businesses in intermediates and fine chemicals Advanced Intermediates Specialty Additives Performance Chemicals Engineering Materials Advanced Industrial Intermediates Saltigo One of the world s leading manufacturers of highquality industrial intermediates such as benzeneand toluene-derivatives, amines, polyols, and inorganics Competitiveness through an integrated production network with resilient businesses in the agro and chemical industries A leading supplier in the custom synthesis market, providing state of the art technologies and services to the agrochemicals and specialty chemicals industries Growth driven by strong foothold in agrochemical industry 19

20 Advanced Intermediates Intermediates form a very cost efficient production platform Advanced Intermediates Specialty Additives Performance Chemicals Engineering Materials Sales [ m] [ m] [ m] 2, % 18.6%18.7% 17.% 175 1,5 16.6% 16.7% % 15.2% 18% % 16% 2 1, % 13% EBITDA (margin) % 8% Capex Sales by BU 217 SGO AII Characteristics Leading market positions and process technologies Efficient and strong production platform Highly diversified end markets Attractive cash generation through technology leadership and efficient business set-up Growth slightly above GDP 2 All references to EBITDA are pre exceptionals; 1 Operating segments; pro forma restatements with new BU structure as of Jan 1 st 216; 2 Net of capitalized borrowing cost, projects financed by customers and finance lease

21 Specialty Additives: World class player in several highly attractive additives niches Advanced Intermediates Specialty Additives Performance Chemicals Engineering Materials Additives Rhein Chemie The additives business unit comprises a broad portfolio of: phosphorus and brominated flame retardants lubricant products plastisizers and bromine performance products The portfolio of Rhein Chemie consists of: customized active ingredient compounds processing aids for the rubber, plastics and colorants industries specialty chemicals 21

22 Specialty Additives offers a higher than average profitability Advanced Intermediates Specialty Additives Performance Chemicals Engineering Materials Sales EBITDA (margin) Capex [ m] [ m] [ m] 2, % 16.6% 175 1,5 3 18% % 2 1, % % % Sales by BU 217 RCH ADD Characteristics Leading market positions and backward integrated bromine chain Knowledge and technical service intensive products Tailor-made, high value added solutions for highly diversified customer base Global production footprint and sales platform Growth above GDP 22 All references to EBITDA are pre exceptionals as of 21 April 217 Chemtura s additives business was consolidated; 1 Operating segments; pro forma restatements with new BU structure as of Jan 1 st 216; 2 Net of capitalized borrowing cost, projects financed by customers and finance lease

23 Performance Chemicals: Production of application-focused chemicals for a wide range of industries Advanced Intermediates Specialty Additives Performance Chemicals Engineering Materials Inorganic Pigments Leather Material Protection Prod. Liquid Purification Technol. A leading global supplier of inorganic pigments for the coloring of construction materials, coatings, plastics and for technical applications Supplier with a complete range of products for leather processing (tanning agents, preservatives, finishing auxiliaries, dye products) Wide range of microbial control products for construction and paints, beverages, industrial use and wood protection One of the leading global producers of ion exchange resins, adsorbers, functional polymers and reverse osmosis membranes for the treatment and purification of water and other liquids 23

24 Performance Chemicals Solution and service provider adding functionality, color or processability to products Advanced Intermediates Specialty Additives Performance Chemicals Engineering Materials Sales EBITDA (margin) Capex [ m] [ m] [ m] 2,5 17.5% 17.1% 4 18% %14.3% 14.1% 15.6% , 13.3% 13.5% 16% % 12.2% 1 1, % , 15 12% % 5 2 8% Sales by BU 217 Characteristics ADD LEA IPG MPP Strong position in respective niche markets Low importance of raw materials Acting as solution provider Considerable cash generation based on good mix of solution focused businesses Growth roughly in line with GDP All references to EBITDA are pre exceptionals; 1 Operating segments; pro forma restatements with new BU structure as of Jan 1 st Net of capitalized borrowing cost, projects financed by customers and finance lease

25 Engineering Materials: Innovative plastic solutions for challenging industrial and automotive applications Advanced Intermediates Specialty Additives Performance Chemicals Engineering Materials High Performance Materials Urethane Systems One of the leading providers of a wide range of engineering plastic compounds for the automotive, electrical & electronic and other industries, benefiting from the trend of replacing metal in structural automotive parts Globally market and technology leading position for cast elastomer systems. Products are highly customer specific offering abrasion resistance with various degrees of hardness 25

26 High Performance Materials: Leading supplier of light-weight solutions with integrated engineering capability Advanced Intermediates Specialty Additives Performance Chemicals Engineering Materials Sales EBITDA (margin) Capex [ m] [ m] [ m] 8 1, % 16.% 18% % 6 1.2% 14% % % 2 5 8% 1 6% Sales by BU 217 HPM URE Characteristics Customer and market proximity; backward integrated into strategic raw materials Global production network Among leading providers of engineering plastics Focus on high-tech compounds to meet global trend in lightweight constructions Growth for engineering plastics in automotive applications² 26 All references to EBITDA are pre exceptionals; 1 Net of capitalized borrowing cost, projects financed by customers and finance lease; 2 Source: AMI Plastics, IHS Chemicals, LMC Automotive, PCI Nylon, Plastics Europe, LANXESS volume estimates / demand growth through substitution (from metal to plastics in cars)

27 ARLANXEO Advanced Intermediates Performance ARLANXEO Chemicals High Perf. Materials Tire & Specialty Rubbers High Performance Elastomers A leading manufacturer of high quality synthetic rubbers which are primarily used in inner liners, treads and sidewalls of modern, fuel-efficient tires as well as non-tire applications A leading global supplier of synthetic rubbers for a wide range of technical applications (e.g. seals, hoses, profiles, cable sheathing, special films and adhesives) 27

28 ARLANXEO: Newly formed joint venture for synthetic rubber between Saudi Aramco and LANXESS Advanced Intermediates Performance ARLANXEO Chemicals High Perf. Materials Sales EBITDA (margin) Capex [ m] [ m] [ m] 16 3, % 13.7% 13.8% 11.9% 14 3, 12 2,5 15% 3 1 2, 8 12% 1,5 6 1, 15 9% % Sales by BU 217 TSR HPE Characteristics Leading market positions with strong and diversified portfolio Global production network Broadest synthetic rubber platform with competitive advantage for future development Growth slightly above GDP 28 All references to EBITDA are pre exceptionals; 1 Net of capitalized borrowing cost, projects financed by customers and finance lease; As of Q2 216 the BUs TSR and HPE formed ARLANXEO; They were reported in the Performance Polymer segment before

29 Corporate Responsibility well integrated - achieving goals sustainably New LANXESS Segments and ARLANXEO Climate / Environmental goals Reduction of specific CO2 emission by 25% 1 until 225 Reduction of specific energy consumptions by 25% 1 until 225 Reduction of volatile organic compounds (NMVOC 3 ) emissions by 25% 1 until 225 Safety goals Xact: Global safety program to improve occupational, process and plant safety (since 211) Global management system for optimization of transportation of (dangerous) goods Procurement initiatives Supplier Code of Conduct for supplier selection and rating Together for Sustainability initiative 2 for higher transparency in the supply chain (implementation of a global auditing program) Social initiatives and goals Global board initiative Diversity & Inclusion : raising the proportion of women in management to 2% by 22 Leverage water know-how: support of AMREF2 4 Education initiatives with local and global commitment Rating Category: C+ 1 Base year: 215; for CO 2 : Scope 1 and Scope 2 emissions 2 Members: BASF, Bayer, Evonik, Henkel, LANXESS, Akzo Nobel, Solvay 3 29 Non methane volatile organic compounds; 4 African Medical and Research Foundation

30 Abbreviations Advanced Intermediates Engineering Materials AII Advanced Industrial Intermediates HPM High Performance Materials SGO Saltigo URE Urethane Systems Performance Chemicals IPG Inorganic Pigments LEA Leather MPP Material Protection Products ARLANXEO* LPT Liquid Purification Technologies TSR Tire & Specialty Rubbers Specialty Additives HPE High Performance Elastomers ADD Additives RCH Rhein Chemie * ARLANXEO will be accounted for as discontinued operations from April 1, 218 onwards 3

31 Contact details Investor Relations Visit the IR website Oliver Stratmann Head of Treasury & Investor Relations Katharina Forster Institutional Investors / Analysts / AGM Tel. : Fax. : Mobile : Oliver.Stratmann@lanxess.com Janna Günther Tel. : Mobile : Katharina.Forster@lanxess.com Private Investors / AGM Andre Simon Head of Investor Relations Tel. : Mobile : Janna.Guenther@lanxess.com Tel. : Mobile : Andre.Simon@lanxess.com Jens Ussler Institutional Investors / Analysts Annika Klaus Assistant to Oliver Stratmann Tel. : Fax. : Mobile : Annika.Klaus@lanxess.com Tel. : Mobile : Jens.Ussler@lanxess.com Thorsten Zimmermann Institutional Investors / Analysts Tel. : Mobile : Thorsten.Zimmermann@lanxess.com 31