Akzo Nobel N.V. · EURONEXT:AKZA
Akzo Nobel — Debt Investor Presentation (September 2008)
43 slides from Akzo Nobel's debt investor presentation, September 2008
Slide 1: Credit Investor Meetings
Keith Nichols, CFO September, 2008 Credit Investor Meetings
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains statements which address such key issues as AkzoNobel’s growth strategy, future financial results, market positions, product development, products in the pipeline, and product approvals. Such statements should be carefully considered, and it should be
Slide 3: Agenda
Agenda AkzoNobel history and business today 4 Financial results 11 Business line overviews 17 Financing strategy 35 Appendix 40 Credit Investor Meetings - September 2008
Slide 4: AkzoNobel history and business today
AkzoNobel history and business today Credit Investor Meetings - September 2008 4
Slide 5: History of AkzoNobel
History of AkzoNobel AkzoNobel’s history goes back to 1777. Through the years, innovative individuals, mergers between companies and outstanding growth has formed what today is one of the world’s most successful industrial companies Key dates in AkzoNobel recent history: 1994 - Akzo and Nobel Indust
Slide 6: The new AkzoNobel – key facts
The new AkzoNobel – key facts Pro forma 2007* Revenue by segment • Revenue €14.4 billion Decorative Paints Specialty Chemicals • Around 60,000 employees Performance Coatings • EBITDA: €1.9 billion • EBIT: €1.4 billion 32% • Net income: €0.9 billion 31% • Pension under funding €1.5 billion *Before in
Slide 7: Diversified brand portfolio
Diversified brand portfolio Decorative Paints Specialty Chemicals Performance Coatings Credit Investor Meetings - September 2008 7
Slide 8: Geographical diversified revenues
Geographical diversified revenues 21% North America 49% Europe (incl. 7% US Deco) (incl. 7% Emerging Europe) 19% Asia Pacific 8% Latin America 3% Other regions Emerging market revenues are 35% of total revenue *Pro forma 2007 Credit Investor Meetings - September 2008 8
Slide 9: 2008 and beyond: actions and targets
2008 and beyond: actions and targets Done: Well on track 9On-sale to Henkel completed to capture €340mln of 9 Closed former ICI HQ synergies from 9 Integrated ICI financial reporting and consolidation flows the ICI acquisition. 9 Management structures in place In progress / on going: 55% by 2009 85%
Slide 10: Peer Group EBITDA Performance
Peer Group EBITDA Performance Peer Group EBITDA Begin August Margins 2007 2008 2008 2009 DuPont 19.5 % 19.0 % 18.3 % 18.7 % Hercules Inc. 18.3 % 19.1 % 17.6 % 19.4 % BASF AG 17.7 % 17.3 % 17.2 % 16.7 % PPG Industries Inc. 14.7 % 15.2 % 13.6 % 15.1 % Sherwin- Williams Co. 14.3 % 14.3 % 11.9 % 14.0 %
Slide 11: Financials
Financials Credit Investor Meetings - September 2008 11
Slide 12: Financial summary – key figures
Financial summary – key figures In € millions 1H08 1H07 Δ% FY2007 pro forma pro forma Revenue 7,376 7,277 1 14,442 Cost of sales (4,634) (4,492) (3) (9,050) Gross profit 2,742 2,785 (2) 5,392 EBITDA* 924 945 (2) 1,870 EBITDA margin* (in %) 12.5 13.0 12.9 EBIT 405 523 924 Profit before tax 348 475 86
Slide 13: Resilient performance in 1H08
Resilient performance in 1H08 Credit Investor Meetings - September 2008 13
Slide 14: 1H08: Strong autonomous revenue growth
1H08: Strong autonomous revenue growth % Total Volume Price Currency Acq./div. Decorative Paints (4) – 1 (6) 1 Performance Coatings – 2 3 (7) 2 Specialty Chemicals 6 5 7 (6) – AkzoNobel 1 3 4 (7) 1 Versus H1, 2007 pro-forma Revenue EBITDA before incidentals 800 In € millions In € millions 4,200 4,13
Slide 15: Managing raw material costs
Managing raw material costs Group Dealing with suppliers: - Purchasing power from our size - Centralized procurement for key raw materials - Differentiated supplier base Passing on price increases: - Leading market positions Number one coatings company by revenue - Product positioning that supports
Slide 16: Outlook
Outlook 2008 EBITDA estimated to end up close to FY2007 in constant currencies Credit Investor Meetings - September 2008 16
Slide 17: Business line overviews and results
Business line overviews and results Credit Investor Meetings - September 2008 17
Slide 18: Coatings – an attractive industry
Coatings – an attractive industry Credit Investor Meetings - September 2008 18
Slide 19: Coatings – an attractive industry with strong growth potential
Coatings – an attractive industry with strong growth potential Industry characteristics: - Strong and stable cash flow generation - Low cyclicality - Low capital intensity Industry consolidation: - Clear signs of consolidation in mature markets - Emerging markets still highly fragmented High growth
Slide 20: Stable margins through the cycle
Stable margins through the cycle Coatings industry – average LTM EBITDA margins (1) 15.0% 14.0% 13.0% 12.0% 2002 2003 2004 2005 2006 2007 2008 (1) Average LTM EBITDA Margins sourced from Capital IQ. Companies included: DuPont, Kansai Paint, PPG, RPM International, Sherwin- Willliams and Valspar Cred
Slide 21: World leader in Coatings
World leader in Coatings Credit Investor Meetings - September 2008 21
Slide 22: Strong growth potential
Strong growth potential (1) Spent per annum Credit Investor Meetings - September 2008 22
Slide 23: Decorative Paints
Decorative Paints Credit Investor Meetings - September 2008 23
Slide 24: Decorative Paints around the world
Decorative Paints around the world Revenue by origin 57% Europe 31% Americas 12% Asia Pacific (US 16%) Source: Actual 1H 08 Credit Investor Meetings - September 2008 24
Slide 25: Decorative Paints: geographical spread allows for stable margins
Decorative Paints: geographical spread allows for stable margins Underlying growth and acquisitions contributed 2 percent to revenue Continued double-digit autonomous growth in Asia and Latin America Revenue in Europe in constant currencies was ahead of 2007, US and UK revenue down in local currenci
Slide 26: Decorative Paints
Decorative Paints In € millions Revenue 1H08 1H07 Δ% FY2007 pro forma pro forma Decorative Paints Europe 1,474 1,494 (1) 2,869 Decorative Paints Americas 786 897 (12) 1,768 Decorative Paints Asia 318 299 6 669 Intragroup revenue / other (1) (2) (3) Total 2,577 2,688 (4) 5,303 Before incidentals EBIT
Slide 27: Performance Coatings
Performance Coatings Credit Investor Meetings - September 2008 27
Slide 28: Leading positions in Performance Coatings, technology driven leadership
Leading positions in Performance Coatings, technology driven leadership Industrial Activities: wood, coil, powder and plastic coatings. Contributes to a highly diversified range of end products Marine & Protective Coatings: marine, protective, aerospace and yacht coatings. Value-added proposition to
Slide 29: 1H08 Performance Coatings: EBITDA margin up at 12.7 percent
1H08 Performance Coatings: EBITDA margin up at 12.7 percent A strong half overall EBITDA margin increased to 12.7 percent Excellent half for Marine & Protective Coatings Solid results at Car Refinishes and Powder Coatings Industrial Finishes continues to be affected by weak US market conditions Cred
Slide 30: Performance Coatings
Performance Coatings In € millions Revenue 1H08 1H07 Δ% FY2007 pro forma pro forma Industrial Activities 999 1,007 (1) 2,032 Marine & Protective Coatings 662 632 5 1,251 Car Refinishes 455 467 (3) 910 Packaging Coatings 174 174 – 340 Intragroup revenue/other (19) (20) – (36) Total 2,271 2,260 – 4,49
Slide 31: Specialty Chemicals
Specialty Chemicals Credit Investor Meetings - September 2008 31
Slide 32: Leading positions in specialty chemicals markets and differentiation of end markets
Leading positions in specialty chemicals markets and differentiation of end markets Functional Chemicals - leading positions in 3 market sectors. Products contribute to a wide range of end products. Pulp & Paper – #1 worldwide in wet chlorine bleaching. “On site” supplier service at larger plants Ba
Slide 33: Specialty Chemicals
Specialty Chemicals In € millions Revenue 1H08 1H07 Δ% FY2007 pro forma pro forma Functional Chemicals 562 531 6 1,057 Pulp & Paper Chemicals 495 492 1 993 Base Chemicals 467 435 7 877 Surface Chemistry 412 390 6 770 Chemicals Pakistan 278 238 17 504 Polymer Chemicals 271 268 1 524 Intragroup revenu
Slide 34: 1H08 Specialty Chemicals: securing top-line growth
1H08 Specialty Chemicals: securing top- line growth Stable performance 12 percent underlying growth driven by significant price increases (7 percent) and higher volumes (5 percent) Higher raw materials and energy prices led to a lower EBITDA margin of 16.5 percent EBITDA, in constant currencies, up
Slide 35: Overview of financing strategy
Overview of financing strategy Credit Investor Meetings - September 2008 35
Slide 36: Debt profile
Debt profile AkzoNobel has significant liquidity headroom available Current debt profile 1200 In € million (equiv.) DEM Bonds 900 EUR Bonds USD Bonds Note: all USD bonds were originally from ICI 600 300 0 2008 2009 2010 2011 2012 2013 2014 $1 billion and €1.5 billion CP program backed up by €1.5 bil
Slide 37: Solid credit profile
Solid credit profile AkzoNobel Rating A3 by Moody’s and A- by S&P, both with negative outlook AkzoNobel is committed to maintain a strong investment grade rating through the cycle Rating agency ratios in line with A3 / A- guidance are monitored 1) Business profile is exceptionally strong - Transform
Slide 38: Solid credit profile
Solid credit profile 2) Conservative financial strategy in place - Directed towards conservative funding structure - Significant liquidity headroom 3) Board of Management commitment to financial strategy - Acquisition of ICI and share buy back program was funded from divestments, not incremental gro
Slide 39: Questions?
Questions? Credit Investor Meetings - September 2008 39
Slide 40: Appendix
Appendix Credit Investor Meetings - September 2008 40
Slide 41: US decorative market
US decorative market Largest (25%) and most attractive coatings market worldwide Under pressure since mid-2006 New build estimated 22% of decorative market new construction - non residential commercial and institutional new construction - residential residential maintenance/ repair 78% 54% 10% 46% 1
Slide 42: US Decorative paints at AkzoNobel
US Decorative paints at AkzoNobel US Deco paints sales FY 08 estimated at 6% of total company revenues Management action – new US Decorative Paints strategy Further restructuring, focus on selected end-user segments Cost reduction and margin improvement while maintaining market share. Credit Investo
Slide 43: Resilient margins through the cycle
Resilient margins through the cycle ICI Decorative Paints 3.0 14 2.5 12 GBP Billion 2.0 10 8 1.5 % 6 1.0 4 0.5 2 0.0 0 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 Turnover TP/Sales Akzo Nobel Coatings 7 20 6 5 15 € Billion 4 10 % 3 2 5 1 0 0 85 86 87 88 89 90 91 92 93 94 95
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