Celanese Corporation · NYSE:CE
Celanese — FY2002 Earnings Presentation
34 slides from Celanese's earnings presentation, 2003
Slide 1: A Strategy Paying Off
A Strategy Paying Off Perry Premdas Chief Financial Officer 1
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: Key Messages from this Meeting
Key Messages from this Meeting Track tat u s y S teg record d S tra an Core Business Next steps and Growth & Outlook Productivity 3
Slide 4: Celanese: Who We Are
Celanese: Who We Are > Leading chemical company 2002 Sales by Destination: € 4.3 bn. = #1 or # 2 in ~70% of revenue > 28 production and 6 R&D sites NAFTA Asia in 11 countries 16% > North American core 44% Non-consolidated = ~50% of sales, ~60% of its affiliates: ~€1bn sales 6% employees and ~70% of
Slide 5: Celanese Business Segments
Celanese Business Segments Acetyl Products Ticona Technical Polymers Performance Products Acetic acid, vinyl acetate, Polyacetal, polyester, UHMW- Nutrinova food ingredients polyvinyl alcohol, emulsions PE, liquid crystal polymers Sweetener, food preservatives, components for healthy nutrition Marke
Slide 6: 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 7: Combine Three Activities to One Strategic Thrust
Combine Three Activities to One Strategic Thrust Growth + Improving Productivity initiatives Value Restructuring + Building Portfolio optimization Competitiveness Non-core business Sharpening divestitures Focus 1999 2000 2001 2002 2003 Demerger Generating growth and productivity 7
Slide 8: Key Messages from this Meeting: Status and Strategy, Track record
Key Messages from this Meeting Status Track and Strategy record Core Business Next steps and Growth & Outlook Productivity 8
Slide 9: Significant Improvement in 2002
Significant Improvement in 2002 y-o-y in € millions FY 2001 FY 2002 chg. in % Net sales 4,777 4,325 (9) Operating Profit (488) 155 n.m. EBITDA excluding special charges 398 440 13 EBITDA excluding special charges margin 8.3% 10.2% n.m. Special (charges), net (496) 1 n.m. Net earnings (385) 187 n.m.
Slide 10: Improved Profitability: Especially in Acetyls and Ticona
Improved Profitability: Especially in Acetyls and Ticona EBITDA* in € million and % of sales 300 2001 2002 13.1% 250 9.7% 200 150 11.9% 12.1% 11.5% 100 6.7% 31.5% 34.2% 50 3.0% 2.4% 0 Acetyl Products Chemical Acetate Ticona Performance Intermediates Products Products Operating segment performance 20
Slide 11: Track Record: Productivity
Track Record: Productivity EBITDA* per Employee** EBITDA* per Employee** Trend € `000 50 40 30 20 1999 2000 2001 2002*** * Excluding special charges ** Employees per year end ***2002 Employee numbers exclude 642 emulsions employees 11
Slide 12: Track Record: Major Affiliates' Performance
Track Record: Major Affiliates*´ Performance > Regular income contribution > Special cash contribution In € millions In € millions 80 80 Cash dividends from equity investments 70 Earnings from equity investments 70 Special cash distribution Dividends from cost investments 60 60 50 50 40 40 30 30 20
Slide 13: Track Record: Resources
Track Record: Resources in € millions Drivers: 1200 >Continuous strong 1000 cash flow generation 800 >Focused initiatives 600 > Efficiency improvement > Trade Working Capital 400 reduction 200 >Selective capex 0 2000 2001 2002 Net financial Debt Capital Expenditures Depreciation Trade Working Capita
Slide 14: Net Financial Debt Reduced by 40%
Net Financial Debt Reduced by 40% In € million 835 € 387 Million -€150 Million 497 operating cash flow investing cash flow 12/31/2001 Operations Change in Trade Special Capex Acquisition Divestiture Other Exchange 12/31/2002 Equity of Working Charges of of investing Effect / Affiliates Capital Busin
Slide 15: Celanese EBITDA as % of Sales vs. Peer Group
Track Record: Peer Group** GAP Analysis 4,0 Celanese EBITDA* as % of Sales vs. Peer Group 2,0 Goal line 0,0 -2,0 -3.5 -4,0 -5,0 -6.1 -6,0 -7.2 -8,0 1999 2000 2001 9M 2002 Goal: 2% better *Excluding special charges ** Peer group: Dow Chemicals, DSM , Eastman Chemicals, ICI, Lyondell, Methanex, Millen
Slide 16: Key Messages from this Meeting: Growth & Productivity
Key Messages from this Meeting Status and Strategy Track record Core Business Next steps and Gro Prod wth & Outlook ucti vity 16
Slide 17: Regional Growth Focus – China
Regional Growth Focus – China Indexed GDP growth in %* 2002 Acetic Acid and VAM market China Total combined Volume = 11.1 mio. kta 200% 150% NAFTA 21% 100% Asia Pacific World 23% 50% EU 0% 18% China 30% 8% ROW '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 Acetate Engineering Plastics 2002 Engineering plas
Slide 18: Roadmap to Operational Excellence
Roadmap to Operational Excellence Increased Savings Streamline Maintenance Best in class 3 $ mio. Financial impact Cost / Replacement Value 1 per black belt Best in class 0 1 2001 2002 2000 2001 2002 Zero Injuries Increased Reliability % Lost Production due Injuries per 100 man years 1 to Equipment
Slide 19: Productivity initiatives
Case study Productivity initiatives Objective: Reduce variances in measuring quantities of products shipped > Results: Streamlined Six Organization = EBITDA improvement approx. Sigma €410,000 p.a. = Project Capital Expenses: €0 = Change from manual to automated measurement EHS system resulting in fe
Slide 20: Key Messages from this Meeting: Core Businesses
Key Messages from this Meeting Status and Strategy Track record Core s in es Bus Next steps and Growth & Outlook Productivity 20
Slide 21: Acetyl Products - Cost Leader
Acetyl Products - Cost Leader Natural Gas Price Acetic Acid Full Cash Cost US$ / MMBtu 12 US$ per ton Global Demand CMAI US$/MM BTU Natural Gas Wellhead 10 CZ world’s best 8 technology Wood, 6 Ethanol, etc. Natural Gas Price LPO/ Conventional Naptha 4 MeOH/CO AO Plus+/ Leading 2 Competition 0 0 400
Slide 22: Forward Integration
Forward Integration Performance Application- driven Basic chemicals chemicals markets 2002 Adhesives Acetate acid Enamels, Paints ester Emulsions Coatings Fleece textiles Vinyl acetate Emulsion Methanol Acetic acid monomer powders Construction Adhesives 2000 Acetic acid Safety glass anhydride Polyvi
Slide 23: Acetyl Products Segment
Acetyl Products Segment Industry Capacity Utilization (Acetic Acid) Industry Capacity Utilization (VAM) Industry Capacity Utilization** EBITDA* Margin EBITDA* % of Sales 100% 13% 15% 80% > Industry capacity utilization 60% > Industry capacity 10% 10% low-mid 80’s utilization low 80’s > Fragile econo
Slide 24: Ticona: Technology Enabler In Key Industries
Ticona: Technology Enabler In Key Industries Volumes by end use market 2002 Sales: € 757 million Other 8% Medical 3% Alternate Fabrication 5% Appliances 6% Automotive Electrical & Electronics All Products (e.g. Telecommunications) Consumer 6% Vectra® , Fortron® Industrial 12% Electrical & Automotive
Slide 25: More Celanese per Car
Case study More Celanese per Car Ticona - European Sales in Automotive Innovation driving growth 130,0% > Substitution of metal, 120,0% glass, other resins 110,0% > Improving existing 100,0% applications 90,0% 1998 1999 2000 2001 2002 > Developing new end use areas European sales in kg Western Europ
Slide 26: Ticona: The Innovation Business
Case study Ticona: The Innovation Business LCP - Liquid Crystal Polymer SIM Loc, Smart Card > very narrow tolerances reader for mobile phones possible > very high tensile strength Medi-Jector, which and very high elastic administers insulin with minimal discomfort module in flow direction > high imp
Slide 27: Ticona: Regional Position For Global Customers
Ticona: Regional Position For Global Customers Telford / UK Oberhausen / Germany Kelsterbach / Germany Fuji City/Japan Winona, MN Auburn Hills, MI (Polyplastics)* Florence, KY Summit, NJ Seoul / Korea(KEP) ** Bishop, TX Wilmington, NC*** (Fortron Industries) Nantong / China (Polyplastics/ Shelby, NC
Slide 28: 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 > Incentive programs = 5.2 mil. stock appreciation rights outstanding (at Dec 31, 2002): ? quarterly mark-to-market valuation = 1.2 mi
Slide 29: Ownership in Performance – Value Distribution to Shareholders
Ownership in Performance – Value Distribution to Shareholders > Share repurchase programs = 2000 – 10% of shares oustanding repurchased (5,591,500 shares) = 2002 / 2003 – Further share repurchase (up to 1,031,941 shares) = Proposal for a new authorization for share repurchases of up to a maximum of
Slide 30: Key Messages from this Meeting: Next steps and Outlook
Key Messages from this Meeting Status and Strategy Track record Core Business Next steps a Outlo nd Growth & ok Productivity 30
Slide 31: Wrap up
Wrap up > Focus on core businesses > Strong and improving value chain > Addressing challenges in the Intermediates segment > Pursuing growth and productivity Creating the future 31
Slide 32: Outlook for 2003
Outlook for 2003 > Limited visibility in global economies > Strong € to U.S. dollar exchange rate > Higher and volatile raw material and energy costs > Priority on efficiency and productivity improvement First half EBITDA at or slightly above level of last year 32
Slide 33: Investor Relations Contacts
Investor Relations Contacts Europe United States Michael Oliver Andrea Oberste-Wilms 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] a.stine@celanes
Slide 34: Glossary
Glossary > Abbreviations = ETP - Engineering Technical Polymers = LCP - Liquid crystal polymer = PBT - Polybutylene terepthalate (Polyester) = POM - Polyoxymethylene (Polyacetal) = PPS - Semi-crystalline polyphenylene sulphide = PVOH - Polyvinyl Alcohol = UHMW – PE - Ultra high molecular weightpolye