Lanxess Ag · XETR:LXS
Lanxess — Q1 2005 Earnings Presentation
20 slides from Lanxess's earnings presentation, May 31, 2005
Slide 1: LANXESS Q1 2005 Results
LANXESS Q1 2005 Results May 2005 Q1 2005 Results Presentation, May 31, 2005 Chart No. 1
Slide 2: Safe Harbour Statement
Safe Harbour Statement This Presentation contains certain forward-looking statements, including assumptions, opinions 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, devel
Slide 3: Agenda
Agenda 1. Q1 2005 Highlights 2. Financial Update 3. Outlook & Guidance Q1 2005 Results Presentation, May 31, 2005 Chart No. 3
Slide 4: Q1 2005 Highlights
Q1 2005 Highlights Independence – Strategy change in PBR -from pure volume to profitability strategy- yields results – Strategy change in STY - regional centers produce and deliver for regional markets – Selling prices increased for many products amid supportive market environment Restructuring – Ad
Slide 5: Summary: Good First Quarter - A Further Step Towards Our Targets
Summary: Good First Quarter - A Further Step Towards Our Targets (€ m) Q1 2004 Q1 2005 ∆ in % – Q1 2005 expected to remain strongest quarter Sales 1,610 1,729 7.4% – Sales growth on the basis of strong pricing EBITDA pre except. 165 181 9.7% 10.5% – Price increases supported by Margin 10.2% economic
Slide 6: Agenda
Agenda 1. Q1 2005 Highlights 2. Financial Update 3. Outlook & Guidance Q1 2005 Results Presentation, May 31, 2005 Chart No. 6
Slide 7: The Year Started Reasonably Well
The Year Started Reasonably Well (€ m) Q1 2004 Q1 2005 ∆ absolut ∆ in % Sales 1,610 1,729 119 7% – Sales increase Cost of goods sold -1,241 -1,287 46 4% mainly due to higher selling SG&A -265 -282 17 6% prices R&D -35 -26 -9 -26% – Improved Other op. income/ expense 1 -18 -19 n.m. profitability due
Slide 8: Q1 2005 Sales Variance by Segment
Q1 2005 Sales Variance by Segment (approximate numbers) (€ m) Q1 2004 Price Volume Currency Q1 2005 Performance Rubber 326 ~ +15% ~ +6% ~ -1% 392 Engineering Plastics 407 ~ +15% ~ -12% ~ -1% 414 Chem. Intermediates 366 ~ +6% ~ +1% ~ -1% 389 Perf. Chemicals 478 ~ +2% ~ -1% ~ -1% 478 LANXESS 1,610 ~ +
Slide 9: Annual Earnings Seasonality
Annual Earnings Seasonality EBITDA pre exc. Sales in € million in € million 1.764 1.726 1.729 1800 1.673 300 1.610 1600 250 1400 1200 Vacation, 181 200 165 weaker product 1000 mix, additional expenses 150 800 115 (maintenance) 105 Better mix 600 of higher- 100 margin 62 400 BUs 50 200 0 0 Q1'04 Q2'0
Slide 10: Performance Rubber: Improved Results Due To New Strategy and Supportive Environment
Performance Rubber: Improved Results Due To New Strategy and Supportive Environment (€ m) Q1 2004 Q1 2005 – Increased selling prices mainly in PBR and BTR as well as higher Sales 326 392 volumes in TRP and PBR lead to higher sales and further EBIT 12 41 performance improvement Depr. / Amort. 20 15 –
Slide 11: Engineering Plastics: Still Dark but First Light Visible at the End of the Tunnel
Engineering Plastics: Still Dark but First Light Visible at the End of the Tunnel (€ m) Q1 2004 Q1 2005 – Only slightly higher sales as clear focus remains on performance Sales 407 414 improvement – Voluntary loss of unprofitable EBIT 3 24 sales volume mainly in STY; Depr. / Amort. 18 11 relatively
Slide 12: Chemical Intermediates: Overall Good Results with Highly Differential BU Performance
Chemical Intermediates: Overall Good Results with Highly Differential BU Performance – Sales growth driven by higher prices (€ m) Q1 2004 Q1 2005 and volumes in BAC which continued to perform very well Sales 366 389 – Slight volume decrease in IPG mainly due to a strong winter impacting EBIT 48 47 d
Slide 13: Performance Chemicals: Improvement on the Basis of Cost Reduction and Price Increases
Performance Chemicals: Improvement on the Basis of Cost Reduction and Price Increases (€ m) Q1 2004 Q1 2005 – Total sales remained flat with price increases mainly in RUC and FCC, Sales 478 478 partly offset by weaker pricing primarily in ION and TPC EBIT 33 43 – Volume increases mainly in ION Depr.
Slide 14: Reconciliation Column: Operational Focus
Reconciliation Column: Operational Focus (€ m) EBITDA pre exceptionals Q1 2004 Q1 2005 ∆ in% • Reconciliation reflects 32 75.0% items not allocable to Performance Rubber 56 operating segments Engineering Plastics 21 35 66.7% such as: Chemical Intermediates 81 65 -19.8% •Corporate Center Performance
Slide 15: Condensed Consolidated Balance Sheet
Condensed Consolidated Balance Sheet Dec 31, Mar 31, Dec 31, Mar 31, (€ m) 2004 2005 (€ m) 2004 2005 Non-current Assets Shareholders’ equity 1,351 1,171 Intangible assets 65 62 Minority stockholders’ interest 14 14 Property, plant & equipment 1,521 1,518 Investments 85 87 Provisions Pension & post e
Slide 16: Improved Operating Cash Flow Remains Weak - Predominantly due to Working Capital
Improved Operating Cash Flow Remains Weak - Predominantly due to Working Capital (€ m) Q1 2004 Q1 2005 EBIT 70 116 – Cash effect from higher EBIT did not offset Taxes Paid -17 -24 increase in working capital Depreciation & Amortization 95 65 – D&A in 2005 lower due to Change in Pension Accrual 7 0 a
Slide 17: Working Capital Increase Due to First Quarter Effects
Working Capital* Increase Due to First Quarter Effects 21.7% *** 25.9% 25.6% 26.1% 24.9% 3000 1.754 1.733 1.769 1.468 ** 1.714 ** – Inventory: Increase vs. 2500 year end on the back of 2000 risen raw material costs 1217 1191 and some operational 1098 1129 1137 1500 stock up 1000 – Receivables: Sligh
Slide 18: Agenda
Agenda 1. Q1 2005 Highlights 2. Financial Update 3. Outlook & Guidance Q1 2005 Results Presentation, May 31, 2005 Chart No. 18
Slide 19: Outlook and Guidance
Outlook and Guidance Underlying assumptions • Exchange rate €1.0 = ~USD1.30 • Economic environment satisfactory, moderate growth in H2 2005 • LANXESS tends to have a better mix of higher-margin BUs in first half of any year 2005 Guidance based on above assumptions • Some sales growth year over year
Slide 20: Independent. Sovereign. Autonomous.
INDEPENDENT. SOVEREIGN. AUTONOMOUS. PERFORMANCE DRIVEN SET-UP. SIGNIFICANT GLOBAL PLAYER. CLEAR STRATEGY FOR VALUE GENERATION. DISCIPLINED CASH MANAGEMENT. Q1 2005 Results Presentation, May 31, 2005 Chart No. 20