Celanese Corporation · NYSE:CE
Celanese — Q3 2003 Earnings Presentation
33 slides from Celanese's earnings presentation, Oct 30, 2003
Slide 1: Solid Foundation for Selective Growth
Solid Foundation for Selective Growth Perry Premdas Chief Financial Officer 1 Q3 2003 Roadshow
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements in this presentation relating to future status or circumstances, including statements regarding management’s plans and objectives for future operations, products and services, are forward-looking statements of goals and expectations based on estimates, assumptio
Slide 3: Celanese: A Leading Chemical Company
Celanese: A Leading Chemical Company > #1 or # 2 in ~70% of revenue 2002 Sales by Destination: € 4.3 bn. > 25 production and 6 R&D sites in 11 countries NAFTA Asia > North American core 44% 18% = ~50% of sales, ~60% of its Non-consolidated Asian employees and ~70% of affiliates: ~€1bn sales assets 4
Slide 4: Celanese Presence in Asia
Celanese Presence in Asia 10 Celanese and JV sites in Asia: Polyplastics Ticona Korea Engineering Plastics Celanese Acetate Nantong Cellulose Fibers Co. Nanjing Celanese Chemicals* TEPCO, Polyplastics 2002 Sales by Destination: € 4.3 bn. subsidiary, Taiwan. Zhuhai and Kunming Fibers Co. NAFTA Asia N
Slide 5: Celanese Business Segments
Celanese Business Segments Full Year 2002 Acetyl Products Ticona Technical Polymers OP: €155 m. Acetic acid, vinyl acetate, Polyacetal, polyester, UHMW- polyvinyl alcohol, emulsions PE, liquid crystal polymers Sales: €4.3 bn Markets: Paints, coatings, Markets: Automotive, electrical, adhesives elect
Slide 6: Recent Progress on our Strategy
Recent Progress on our Strategy We optimized We improved We seized growth our portfolio productivity opportunities > Divestitures > FORWARD > Acquisition of completed Initiatives emulsions businesses ? Trespaphan > Operational > Capacity expansions/ ? US amines Excellence new plant: technical > Six
Slide 7: Financial Priorities
Financial Priorities > Improve performance = Operating Profit 8-10% over cycle = Maximize operating cash flow > Maintain strict investment discipline = Capital expenditures = Working Capital = Acquisition / divestment > Manage finances prudently = Maintain investment grade debt rating = Competitive
Slide 8: 3rd Quarter & YTD 2003 Results
3rd Quarter & YTD 2003 Results in € millions Q3 2002 Q3 2003 9M 2002 9M 2003 Net sales 1,038 1,073 3,256 3,262 Operating Profit 69 (60) 118 108 Depreciation and Amortization 69 65 218 205 Special (charges), net (2) (72) (5) 7 Earnings from continuing operations before taxes and minority interest 61
Slide 9: Third quarter at a glance
Third quarter at a glance Acetyl Products* Chemical Intermediates* 15% 30% 10% 20% 5% 10% 0% 0% -10% -5% -20% -10% -30% -15% -40% -20% Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 * Volume/price trend YOY Volume Price Q3 2003 Developments Q3 2003 Developments >
Slide 10: Third quarter at a glance
Third quarter at a glance Acetate Products* Ticona* 10% 15% 5% 10% 0% 5% -5% 0% -10% -5% -15% -10% Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 * Volume/price trend YOY Volume Price Q3 2003 Developments Q3 2003 Developments > Filament volumes rose on sales to >
Slide 11: Strong Cash from Operations
Strong Cash from Operations In € million 2003 Net Debt considerations : >Insurance recovery, €110 million inflow in H2 497 446 >Working Capital 2003 rise >Strong Operating Cash Flow € 206 Million -€161 Million >FY Capex approx. €200 million operating cash flow investing cash flow 12/31/2002 Operatio
Slide 12: Track Record
Track Record in € million, unless noted Cash Flow from Operating Activities Trade Working Capital* 522 902 387 697 605 618 206 48 2000 2001 2002 9M 2003 2000 2001 2002 9M 2003 Net Debt** Return on Equity (RoE)*** 1.146 9% 835 2% 497 446 -15% 2000 2001 2002 9M 2003 2000 2001 2002 ***Net Income / Aver
Slide 13: Business Overview
Business Overview 13 Q3 2003 Roadshow
Slide 14: Acetyls – Leading Market Position
Acetyls – Leading Market Position Acetic Acid Producers Vinyl Acetate Other Monomer Producers Millennium Dow 29% BP 8% 9% Kuraray 3% 6% Eastman 2% Azot Daicel 5% DuPont 6% Celanese 2% Jilin 2% 23% Dairen 7% Millennium 6% Nippon 4% Celanese Acetex Kuraray 3% 23% 5% Acetex 3% BP Other 23% 31% Total ca
Slide 15: Acetyl Technology Leadership
Acetyl Technology Leadership Acetic Acid Full Cash Cost Acetic Acid US$ per ton Global Demand > Primary technology: AO Plus™ > Leading technology in industry as demonstrated by expansion of Clear Lake Plant (1,200 kt capacity) Celanese best technology Vinyl Acetate Wood, Ethanol, > Primary technolog
Slide 16: China Is Fastest Growing Acetyls Market
China Is Fastest Growing Acetyls Market Acetic Acid kt Total Demand World-Scale Plant Planned 1800 1740 kt 1600 > 600,000 ton acetic acid facility 1400 Total Demand 1190 kt > Startup in late 2005/early 2006 1200 CAGR 10% 1000 800 > Based on leading, cost effective 600 technology 400 200 > More than
Slide 17: Leading Substitution to Ecologically Friendly Paints
Leading Substitution to Ecologically Friendly Paints > Solvent containing Interior Paints 500 are substituted by VOC Emission 450 free Paints Opportunity zone European Interior Paint Market 400 > Europe mandate to reduce solvent 350 content drastically by 2007 300 > Celanese Emulsions pioneered K to
Slide 18: Utilization Profile
Utilization Profile Acetyl Segment Global Capacity Utilization Operating Profit 95% VAM 14% > Demand growth: 3-4% per year Acetic Acid 12% 90% > Market conditions improving Sgmt. OP as % 10% with economic recovery sales 8% > Limited world-scale acetyl 85% capacity additions 6% 80% > Significant amou
Slide 19: Ticona: Technology Enabler In Key Industries
Ticona: Technology Enabler In Key Industries Volumes by end use market Medical 3% 2002 Sales: € 757 million Automotive 53% Other 8% Alternate Celcon®/Hostaform® All Products Fabrication 5% Celanex® Electrical & Industrial 12% Appliances 6% Electronics 7% Consumer 6% Fortron® , Hostaform® (e.g. Telec
Slide 20: Example: The Hot Diesel Trend
Example: The Hot Diesel Trend Challenge 50% 45% > Chemical resistance 40% 40% > High fuel temperatures 33% 29% 30% Requirements 20% > Favorable aging characteristics at higher temperatures 10% Products 0% 1995 2000 2002 2005 > Hostaform®/Celcon® Market share (sales) of diesel powered Light Vehicles
Slide 21: Example: Medical Packaging Becomes Functional
Example: Medical Packaging Becomes Functional Asthma inhaler Disposable syringes - Constant elastic force Surgical instruments Insulin-Pen Needle-free devices - Optimized slip / - High stability friction properties Next step: Ticona product properties: Submit data to > Broad regulatory approval phys
Slide 22: Ticona Optimization Measures
Ticona Optimization Measures Sales and Administration Expenses > Consolidate sites/ capability per quarter: > Reduce complexity € 5-10 mio. > Enhance customer focus through 2004 > Accelerate Six Sigma Operations Benefits: > Capture productivity gains Starting > Consolidate compounding operations in
Slide 23: Celanese Progress in Operational Excellence
Celanese Progress in Operational Excellence 2001 2002 2003 Streamlined Forward restructuring organization Six Sigma Operations 2/’01 Lean Sigma Administration 1/’02 Design for Six Sigma Growth 1/’03 Digitization Advanced process control 3/’01 Real-time optimization 4/’02 Manufacturing Execution Syst
Slide 24: Committed And Invested Management
Committed And Invested Management > A minimum of one year’s salary invested in company shares by each senior manager > 60% of senior management compensation variable > Incentives reflected in income statement = 3.6 mil. stock appreciation rights outstanding (at September 30, 2003): ? quarterly mark-
Slide 25: A Solid Basis for Improving Performance
A Solid Basis for Improving Performance Portfolio Strategy implementation > #1 or #2 global supplier in 70% > Focus: of sales = on operational excellence > Acetyls - expansion along the = on technology, cost and value chain performance > Ticona - strong franchises with = on strong cash generation in
Slide 26: Investor Relations Contacts
Investor Relations Contacts Europe United States Todd Oliver Andrea Elliott Stratmann Stine phone: +49-(0)69-305-83199 +49-(0)69-305-4139 +1-908-522-7784 fax: +49-(0)69-305-83195 +49-(0)69-305-83195 +1-908-522-7583 email: [email protected] [email protected] [email protected] > Ticker
Slide 27: Celanese
‘Y Celanese
Slide 28: Additional Information
Additional Information 28 Q3 2003 Roadshow
Slide 29: Integration Down to End Use Markets
Integration Down to End Use Markets* Raw Materials Acetyl Products (e.g. natural gas, Technical Polymers Ticona ethylene) Acetate Products Performance Products Formalde- End use Markets Acetic Acid hyde Croton- aldehyde Vinyl Acetic Acetate PTA Acetate Anhydride Esters Ticona Polyvinyl Acetate Polyo
Slide 30: Year End 2003 Capacities of Large-Scale Products in kt/a
Year End 2003 Capacities of Large-Scale Products in kt/a Natural Gas Ethylene Propylene Special Olefins 125 million mmBTU/a Carbon Monoxide 725 kt/a 725 kt/a C4-C14, DCP, etc. Butane Methanol Acetic Acid Vinyl Acetate Acetaldehyde Butyraldehyde Crude Acrylic Acid Aldehydes Edmonton 850 Clear Lake 1,
Slide 31: Raw Material Consumption for Acetic Acid
Raw Material Consumption for Acetic Acid Disconnected from North American raw materials 22% 75% 0% 55% 2003 2006/2007 China* 25% 22% 2003 2006 North America* 2003 2006/2007 Non-natural gas based Singapore* “Stranded” gas based Market based Reducing exposure to US. Gulf natural gas * Per cent of glob
Slide 32: Reducing Exposure to North American Gas
Reducing Exposure to North American Gas Current ~110 Million* MM BTU usage p.a. North American Natural Gas usage (75% raw material; 25% energy) (Millions MMBTU) > Sourcing agreement for Methanol Raw Materials with Southern Chemical Corp. 22 > Carbon monoxide sourcing 6 “natural hedge” based on 14 hy
Slide 33: Major Investments
Major Investments Name Location Celanese Accounting Business share method Methanol, National Methanol Co. Saudi Arabia 25 % Cost Acetyl MTBE Products Clear Lake Methanol USA 50 % Equity Methanol Partners LP Kunming Cellulose China 30 % Cost Acetate tow Fibers Company Ltd. Acetate Zhuhai Cellulose Fi