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Clariant AG Interim / Quarterly Report 2004
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Interim / Quarterly Report
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9-Month Results 2004
Conference Call, November 9, 2004
Disclaimer
This presentation contains certain statements that are neither reported financial results nor other historical information. This presentation also includes forward-looking statements.
Because these forward-looking statements are subject to risks and uncertainties, actual future results may differ materially from those expressed in or implied by the statements. Many of these risks and uncertainties relate to factors that are beyond Clariant's ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behavior of other market participants, the actions of governmental regulators and other risk factors such as: the timing and strength of new product offerings; pricing strategies of competitors; the Company's ability to continue to receive adequate products from its vendors on acceptable terms, or at all, and to continue to obtain sufficient financing to meet its liquidity needs; and changes in the political, social and regulatory framework in which the Company operates or in economic or technological trends or conditions, including currency fluctuations, inflation and consumer confidence, on a global, regional or national basis.
9-Month Results 2004
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document. Clariant does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of these materials.
Agenda
Key Factors, Nine Months 2004
Financial Review
Transformation Program Update
Summary & Outlook
9-Month Results 2004
Financial Review
Transformation Program update
Summary & Outlook
9 Months 2004 –Good growth across all regions
QSales increased 7% in LC terms, to CHF 6.550 bn
QImproved pricing trend in most businesses
QStrong sales in Americas and Asia; modest growth in Europe
QStrong volume growth, up 10%
3rd Quarter sales particularly robust
9-Month Results 2004
Slide 4
Q
Financial Review
Transformation Program update
Summary & Outlook
9-Month Results 2004
Slide 5
Q
Q
Improved performance amid Transformation Program
- QImproved Operating Income* at CHF 517 mn from CHF 466 mn
- QNet income up sharply, to CHF 170 mn from a loss of CHF 49 mn
- QOperating Cash flow surged to CHF 561 mn from CHF 164 mn
- QNet debt down to CHF 1.3 bn from 3.5 bn a year ago
- Transformation Program on track
- Sales of Electronic Materials, Lancaster Synthesis and SF-Chem completed
Financial Review
Summary & Outlook
Transformation Program update Key financial group figures 9 Months 2004
Net debt 1,304 2,905 3,487
as per Sep 04 Dec 03 Sep 03
Equity 2,242 1,176 1,015
| h9MtonsiCHFnmn | 2004 | %fSloaes | *2003like-foliker- | %fSloaes | ChangCHF | i%enLC |
|---|---|---|---|---|---|---|
| Slaes | 6,550 | 6,159 | 6+ | 7+ | ||
| Gfitrosspro | 2,016 | 32.2% | 981,4 | 32.2% | 6+ | 7+ |
| EBITDA | 746 | %11.4 | 648 | %10.5 | 15+ | 18+ |
| EBITDAbfoiolittereexcepnaems | 076 | %11.6 | 274 | 8%11. | 5+ | 7+ |
| Oingincbfotperaomeereiolidttexcepnaemsanizaiof gdwillttamorn ooo | 517 | %7.9 | 466 | %7.6 | 11+ | 13+ |
| Oiitperangncome | 469 | 2%7. | 285 | 4.2% | 82+ | 89+ |
| ()Niltencomeoss | 017 | 2.%6 | 94- |
9-Month Results 2004
Slide 6
* The numbers for 2003 were like-for-like to account for the sales of business activities in 2003. Sales in 2003: Cellulose Ethers of the Division Functional Chemicals and AP Chemicals, UK, of the Division Life Science & Electronic Chemicals. All activities were sold effective as per the end of 2003.
Financial Review
Summary & Outlook
Transformation Program update Key financial group figures 3rd Quarter 2004
| d3QtrareruiCHFnmn | 2004% | fSloaes | 2003*like-foliker- | %fSloaes | ChangCHF | i%enCL |
|---|---|---|---|---|---|---|
| Slaes | 2,311 | 2,041 | 4+ | 9+ | ||
| Gfitrosspro | 647 | 30.4% | 622 | 30.4% | 4+ | 8+ |
| EBITDA | 245 | %11.5 | 166 | 8.%1 | 84+ | 60+ |
| EBITDAbfoiolittereexcepnaems | 215 | 10.1% | 206 | 10.1% | 4+ | 6+ |
| Oingincbfotperaomeereiolidttexcepnaemsanizaiof gdwillttamorn ooo | 130 | %6.1 | 121 | %5.9 | 7+ | 9+ |
| Oiitperangncome | 152 | 7.1% | 70 | 3.4% | ||
| ()Niltencomeoss | 44 | 2.%1 | 25 | 2%1. |
* The numbers for 2003 were like-for-like to account for the sales of business activities in 2003. Sales in 2003: Cellulose Ethers of the Division Functional Chemicals and AP Chemicals, UK, of the Division Life Science & Electronic Chemicals. All activities were sold effective as per the end of 2003.
9-Month Results 2004
Financial Review
Transformation Program update
Summary & Outlook
Positive volume development in 9 Months 2004
9 Months 2004 versus 9 Months 2003, continuing operations*
9-Month Results 2004
* Continuing Operations: On August 5, 2003, Clariant sold the Business Unit Electronic Materials pertaining to the Division LSE. As a consequence, Electronic Materials is now disclosed as Discontinuing Operations for both 2004 and 2003. In 2003, the Business Unit Cellulose Ethers pertaining to the Division FUN was sold.
Positive price trend continues
Financial Review
Transformation Program update
Summary & Outlook
9-Month Results 2004
Group sales, 9 Months 2004
by region (continuing operations)
Financial Review
Transformation Program update
Summary & Outlook
9-Month Results 2004
Slide 11
Divisional sales and margins 9 Months 2004 vs. 9 Months 2003 (continuing operations*)
| 9Mhtons | 9M2004 | Change | EBITDAMa | ii%**rgnn |
|---|---|---|---|---|
| iCHFnmn | 20042003vs | |||
| Slaes | LCi%n | 2004 | 2003 | |
| TilLhPChiltt&exe,eaeraperemcas | 1,672 | 4+ | 11.1 | 10.7 |
| PiAddiit&tgmensves | 1,406 | 6+ | 16.4 | 14.6 |
| bhMttaseraces | 852 | 8+ | 12.6 | 11.3 |
| ilChilFtunconaemcas | 1,464 | 13+ | 13.5 | 12.4 |
| LifSiEliChil&tecenceecroncemcas | 687 | 4- | 4.6 | 4.4 |
| liiiTtttoaconnungoperaons | 6,162 | 6+ |
* Continuing Operations: On August 5, 2003, Clariant sold the Business Unit Electronic Materials pertaining to the Division LSE. As a consequence, Electronic Materials is now disclosed as Discontinuing Operations for both 2004 and 2003. In 2003, the Business Unit Cellulose Ethers pertaining to the Division FUN was sold.
**EBITDA before exceptional items
Divisional overview
Key Factors 9 Months 2004
Financial Review
Transformation Program update
Summary & Outlook
QTextile, Leather & Paper Chemicals
– Strong growth across most businesses with good volumes and better pricing climate
–Shift to Asia continues, with less volume growth in textile dyes
- – Positive EBIT development due to higher volumes, but margin affected by restructuring measures
- –Operating margins dragged down by Textile Dyes business
- – Textile Chemicals, Leather and Paper showed improved performance
9-Month Results 2004
Divisional overview
Q
- Pigments & Additives
- – Strong volumes, especially in Coatings amid improved pricing climate
- –Plastics and Printing industries recovering
- –Margin increased mainly due to better capacity utilization
- –Higher demand for "more colorful products"
- Q Masterbatches
- –Strong growth above market rates
- – Plastic market continued to respond to better global economic conditions
- –Margins rose mainly due to stronger volumes
- –Improved trading conditions in the Americas
Key Factors 9 Months 2004
Financial Review
Transformation Program update
Summary & Outlook
9-Month Results 2004
Financial Review
Summary & Outlook
Transformation Program update Divisional overview
QFunctional Chemicals
- –Strongest volume growth in the Group across all businesses
- –Increased performance by volume growth and better cost control
- –Excellent performance in crop protection and oil field services
QLife Science Chemicals
- – Ongoing difficult market conditions with weak sales across all businesses
- –Price pressure easing in Custom Synthesis
- –Pharma faced tougher market conditions and contract losses
- –Improved performance in Specialty Fine Chemicals
9-Month Results 2004
Financial Review
Transformation Program update
Summary & Outlook
EBITDA analysis, 9 Months 2004
9 Months 2004 vs 9 Months 2003 – continuing operations*
9-Month Results 2004
* Continuing Operations: On August 5, 2003, Clariant sold the Business Unit Electronic Materials pertaining to the Division LSE. As a consequence, Electronic Materials is now disclosed as Discontinuing Operations for both 2004 and 2003. In 2003, the Business Unit Cellulose Ethers pertaining to the Division FUN was sold.
Financial Review
Transformation Program update
Summary & Outlook
EBITDA analysis, 3rd Quarter 2004
3rd Quarter 2004 versus 3rd Quarter 2003 – continuing operations*
9-Month Results 2004
Slide 16
* Continuing Operations: On August 5, 2003, Clariant sold the Business Unit Electronic Materials pertaining to the Division LSE. As a consequence, Electronic Materials is now disclosed as Discontinuing Operations for both 2004 and 2003. In 2003, the Business Unit Cellulose Ethers pertaining to the Division FUN was sold.
Financial Review
Transformation Program update
Summary & Outlook
9-Month Results 2004
Slide 17
Cash flow significantly improved
| iCHFnmn | M92004 | M92003 |
|---|---|---|
| Nltteresu | 017 | 11- |
| iiiiDt&tteprecaonamoraonz | 276 | 399 |
| Ohter | 97 | 41 |
| Oihflbftperangcasoweorekiiltworngcapa | 354 | 294 |
| Chikiiltangenworngcapa | 81+ | 265- |
| Oihfltperangcasow | 561 | 164 |
| Cildittapaepenrexu | 211- | 200- |
| Ohter | 436 | 30 |
| Chflbffiiasoweorenancng | 876 | 6- |
Financial result Interest expenses further reduced
| KeFatoycrsMohs9t2004n | iCHFnmn | 9M2004 | 9M2003 |
|---|---|---|---|
| iniaiewFlReancv | FiilInancancome | 23 | 30 |
| TrfoiontansrmaPrdateogramup | IEttneresxpenses | 281- | 141- |
| SuOu&looktmmary | Ohter | 25- | 17- |
| iilFnancaexpenses | 153- | 158- | |
| Clt,turrencyresune | 43- | 52- | |
| Tltoa | 317- | 801- |
9-Month Results 2004
Debt maturity profile on Sept. 30, 2004
Slide 209-Month Results 20042004Liquidity Maturities of financial debt Cash &equivalents Committed open lines in mn CHF uncommitted roll over loans maturities 2005 2006 2007 2008 2009Key Factors 9 Months 2004Financial ReviewTransformation Program update Summary & Outlook 1,514 750637 561179 349 690403020040060080010001200140016001800200022002400
Break-down of CPIP costs
Key Factors 9 Months 2004
Financial Review
Transformation Program update
Summary & Outlook
9-Month Results 2004
Financial Review
Transformation Program update
Summary & Outlook
9-Month Results 2004
Slide 23
Performance improvement measures over time
EBIT impact of measures*
performance improvement costs operational measures
structural measures*before business risks & price erosion
Key Factors 9 Months 2004Financial Review Transformation Program update Summary & Outlook
9-Month Results 2004
Slide 24
The way forward - refocusing portfolio
| Clitaranflitporoo | %foSlaes | Mktareitttaracveness | Ciittompeveiitposon | Elxampes | Clit saranttraegy |
|---|---|---|---|---|---|
| Siervcedirvenbiusnesses | %6070- | ihHg | Strong | ƒMbhttaseracesPferormanceƒdPanrocessChilemcasTilChtƒexeemCitoangsƒ | dExpan |
| Thlecnoogy/dirven-ihncebiusnesses | 0%1 | Hihbtguliltvoae | Sitrongnitceranareas | hParmaƒSilFitƒpecayneChilemcas | Slilteecveydleeopv |
| Cdit-osrvenbisnessesu | 2030%- | Low | WkteaoMdieum | Ctm SsoƒuhitynessilTtDexeyesƒ | Rttesrcreuu |
Financial Review
Transformation Program update
Summary & Outlook
Example: Halogen-free flame retardants
- New, broadly patented range of halogen-free, eco-friendly flame retardants: Exolit OP ®
- Innovation driver: EU directives compel manufacturers to phase out halogen based flame retardants.
- Q Provides technical advantages and cost-effective solutions.
- Application examples: Plastic casings in electronic devices
- Q Status: Production started, market introduction proceeding well
9-Month Results 2004
Financial Review
Transformation Program update
Summary & Outlook
Example: Metallocene waxes
- Q Licocene® range of high-performance waxes from Metallocene catalysed polymerization of ethylene and propylene
- Q Innovation driver: Need for outstanding properties (true melting point, hardness, melt viscosity) and broad application fields
- Allows tailor-made solutions for individual customers
- Q Application examples: Bonding and coupling agent in glass fiber reinforced polymers, hot-melt adhesives, pigment preparations and coatings
- Q Status: Production started, market introduction proceeding well
9-Month Results 2004
Outlook
Key Factors 9 Months 2004
Financial Review
Transformation Program update
Summary & Outlook
9-Month Results 2004
Slide 27
- QImproved sales in local currency for continuing operations
- Q Improved operating income ex performance improvement costs for continuing operations
- Q Clariant targets confirmed
- –Cost base reduction of CHF 100-120 mn by end 2004
- –Further cost base reduction of approx. CHF 300 mn by end 2005
- –CHF 400 mn EBIT improvement by end 2007
- –Net working capital reduction of CHF 600 mn by end 2007 CHF
2004 – Increased profitability
Calendar of upcoming corporate events
| hM82005arc, | ll-lFY2004Rtuearesus |
|---|---|
| ilA7,2005pr | lGliAMtnnaeneraeengu |
| Ail122005pr, | EDiiddDtenaexv |
| M102005ay, | t1Q2005Rlsttuareresus |
| A42005tgsuu, | Hlf-YRl2005taearessu |
| Nb92005oemerv, | 9Mh2Rl005ttonessu- |
9-Month Results 2004
Your Investor Relations contacts
Holger Schimanke Head Investor Relations
[email protected] Phone +41 61 469 67 45Mobile +41 79 343 59 83
Daniel Leuthardt
[email protected] +41 61 469 67 49Mobile +41 79 763 93 80
To be added to the mailing list of Clariant and for other administrative matters, please contact Karine Huttenschmitt[email protected] +41 61 469 67 48
9-Month Results 2004
Fax +41 61 469 67 67Mobile +41 79 456 63 48 Clariant International LtdRothausstrasse 614132 MuttenzSwitzerland
Group & Strategy
Clariant PerformanceImprovement Program
Business
Current business structure
9-Month Results 2004
Slide 30
*Member of the Board of Management
Clariant's management team
Backup Information
Group & Strategy
Clariant PerformanceImprovement Program
Business
9-Month Results 2004
Slide 31
*Member of the Board of Management
The way forward
Asset Sales
Strengthening balance sheet
Refocusing portfolio
Backup Information
Group & Strategy
Clariant PerformanceImprovement Program
Business
9-Month Results 2004
Slide 32
Transformation Program wide-reaching series of actions
"New" ClariantReduced complexity Solid financial baseEfficient and profitable A leading specialty chemical company
Performance Improvements (CPIP) 9 Projects
- Operational measures -Structural measures
Facilitating CPIP Flexibility on timing when selling assets
Capital Increase
Group & Strategy
Business
Clariant PerformanceImprovement Program
The way forward
Strategic focus
QRecognized as a service-driven specialty chemicals Group
- –World-class customer service skills
- –Superior innovation and applications capabilities
- – Leading-edge technologies in synthesis, color and surface effects
- QDefend and further improve market-leading positions
- QFocus on profitability and cash flow generation
9-Month Results 2004
Group & Strategy
Clariant PerformanceImprovement Program
Business
9-Month Results 2004
Slide 34
Two-thirds of asset sales program accomplished
**Units that:**Backup Information
- ... do not focus on service, and/or ... require high investments, and/or ... cannot achieve leading market positions
- QCellulose Ethers, sale completed
- QSales of Lancaster Synthesis & SF-Chem completed
- QPriority on maximizing value from disposals before speed
- QFull commitment to sell other businesses to refocus portfolio
- QRemaining one-third to be finished around year-end 2005
Asset sale equivalent to 15 - 20% of total turnover
Performance Improvement Program
Group & Strategy
Clariant PerformanceImprovement Program
Business
9-Month Results 2004
Divisional sales and margins 3rd Quarter 2004 vs. 2003 (continuing operations*)
| d3Qtrareru | dQCh3truarerange | EBITDAMii%argnn | ||
|---|---|---|---|---|
| iCHFnmn | 2004 | 20042003vs | ||
| Slaes | LCi%n | 2004 | 2003 | |
| TilLhPChiltt&exe,eaeraperemcas | 549 | 4+ | 11.1 | 8.7 |
| PiAddiit&tgmensves | 450 | 8+ | 15.8 | 11.5 |
| bhMttaseraces | 282 | 11+ | 12.1 | 10.6 |
| ilChilFtunconaemcas | 476 | 14+ | 14.3 | 12.6 |
| LifSiEliChil&tecenceecroncemcas | 240 | 1- | - | - |
| liiiTtttoaconnungoperaons | 1,997 | 7+ |
* Continuing Operations: On August 5, 2003, Clariant sold the Business Unit Electronic Materials pertaining to the Division LSE. As a consequence, Electronic Materials is now disclosed as Discontinuing Operations for both 2004 and 2003. In 2003, the Business Unit Cellulose Ethers pertaining to the Division FUN was sold.
**EBITDA before exceptional items
Group & Strategy
Clariant PerformanceImprovement Program
Business
Textile, Leather & Paper Chemicals
(continuing operations)
QClariant is worldwide
- –No. 1 in textile and leather chemicals
- –No. 2 in paper dyes
- –No. 3 in textile dyes
- Q Strong customer services through global tailor-made solutions
| h9Mtons | 2004 | %fSloaes | 2003 | %fSloaes | Chang | i%en |
|---|---|---|---|---|---|---|
| iCHFnmn | CHF | LC | ||||
| Slaes | 1,672 | 1,632 | 2+ | 4+ | ||
| EBITDAbfoiolittereexcepnaems | 185 | 11.1 | 174 | 10.7 | 6+ | 8+ |
| Oingincbfotperaomeereiolidttexcepnaemsanisiof gdwillttamoran ooo | 131 | 7.8 | 135 | 8.3 | 3- | 2- |
| Oiitperangncome | 44 | 2.6 | 105 | 6.4 | 58- | 56- |
| Sidiitttysemaceprecaoniblefixedttonangasses | 45 | 3.2 | 39 | 2.4 | 38+ | 39+ |
9-Month Results 2004
Group & Strategy
Clariant PerformanceImprovement Program
Business
Pigments & Additives
(continuing operations)
QClariant is
- –Worldwide No.1 in organic pigments
- –No. 1 in coating pigments
- –No. 2 in printing industries
- –No. 3 in plastic industries
QLeading edge surface technology
| 9Mhtons | 2004 | %fSloaes | 2003 | %fSloaes | Chang | i%en |
|---|---|---|---|---|---|---|
| iCHFnmn | CHF | CL | ||||
| Slaes | 01,46 | 331,4 | 5+ | 6+ | ||
| EBITDAbfoiolittereexcepnaems | 230 | 16.4 | 915 | 14.6 | 81+ | 91+ |
| Oingincbfotperaomeereiolidttexcepnaemsanisiof gdwillttamoran ooo | 817 | 12.7 | 814 | 11.1 | 20+ | 21+ |
| Oiitperangncome | 381 | 9.8 | 141 | 0.16 | 2- | 1- |
| Sidiitttsemaceprecaonyiblefixedttonangasses | 53 | 3.8 | 47 | 3.5 | 13+ | 13+ |
9-Month Results 2004
Group & Strategy
Clariant PerformanceImprovement Program
Business
Masterbatches
(continuing operations)
- QNo. 1 global supplier of color masterbatches
- Q Well-positioned key player in markets for additive preparations
- Q Strong customer services combined with leading color technology
| 9Mhtons | 2004 | %fSloaes | 2003 | %fSloaes | Chang | i%en |
|---|---|---|---|---|---|---|
| iCHFnmn | CHF | LC | ||||
| Slaes | 825 | 897 | 8+ | 8+ | ||
| EBITDAbfoiolittereexcepnaems | 107 | 12.6 | 89 | 11.3 | 20+ | 20+ |
| Oingincbfotperaomeereiolidttexcepnaemsanisiof gdwillttamoran ooo | 86 | 10.1 | 69 | 8.7 | 25+ | 25+ |
| Oiitperangncome | 77 | 9.0 | 65 | 8.2 | 81+ | 81+ |
| Sidiitttsemaceprecaonyiblefixedttonangasses | 21 | 2.5 | 20 | 2.5 | 5+ | 5+ |
9-Month Results 2004
Group & Strategy
Clariant PerformanceImprovement Program
Business
Functional Chemicals
(continuing operations)
- Q No. 2 for innovative detergent ingredients worldwide
- Q Leading partner with specialty chemicals for oil and gas production and the refining industry, personal care, de-icing, crop protection and biocide applications
| h9Mtons | 2004 | %fSloaes | 2003 | %fSloaes | Chang | i%en |
|---|---|---|---|---|---|---|
| iCHFnmn | tresa | d*te | CHF | LC | ||
| Slaes | 1,464 | 1,303 | 12+ | 13+ | ||
| EBITDAbfoiolittereexcepnaems | 197 | 13.5 | 161 | 12.4 | 22+ | 22+ |
| Oingincbfotperaomeereiolidttexcepnaemsanisiof gdwillttamoran ooo | 159 | 10.9 | 123 | 9.4 | 29+ | 29+ |
| Oiitperangncome | 171 | 11.7 | 19- | - | - | - |
| Sidiitttysemaceprecaoniblefixedttonangasses | 83 | 2.6 | 83 | 2.9 | 0 | 0 |
9-Month Results 2004
Slide 41
* In 2003, the Business Unit Cellulose Ethers pertaining to the Division FUN was sold.
Group & Strategy
Clariant PerformanceImprovement Program
Business
Life Science & Electronic Chemicals (continuing operations)
QAmong top 5 pharma suppliers
- QNo. 1 in Agro business (Custom Synthesis)
- QNo. 1 in specific Specialty Fine Chemicals areas
| 9Mhtons | 2004 | %fSloaes | 2003 | %fSloaes | Chang | i%en |
|---|---|---|---|---|---|---|
| iCHFnmn | tres | d*tae | CHF | CL | ||
| Slaes | 768 | 803 | 4- | 4- | ||
| EBITDAbfotiolitereexcepnaems | 35 | 4.6 | 35 | 4.4 | - | - |
| Otingincbfoperaomeereiolidttexcepnaemsanisiof gdwillttamoran ooo | 7- | - | 21- | - | - | - |
| Oiitperangncome | 85 | 11.1 | 44- | - | - | - |
| Sidiitttysemaceprecaonbdtilefixetonangasses | 41 | 5.3 | 56 | 7.0 | 27- | 27- |
9-Month Results 2004
Slide 42
* In 2003, the Business Unit Electronic Materials pertaining to the Division LSE was sold.
Group & Strategy
Clariant PerformanceImprovement Program
Business
Stable gross margin even at high oil prices
Crude Oil Brent USD / bbl Gross margin in %
No correlation of crude oil price and raw material costs on operational performance
9-Month Results 2004
1%
Group & Strategy
Clariant PerformanceImprovement Program
Business
Top 5 products in percentage of total raw material costs
| Rkianng | Pdtrouc | |
|---|---|---|
| 1 | Ehlteney | |
| 2 | dAiAitcecc | Gropu |
| 3 | Altcraesy | Tltoa%18~ |
| 4 | ihdidAAtcecnyre | |
| 5 | Vilttnaceaey |
9-Month Results 2004
Top 5 products - Petrochemical flow chart
Group & Strategy
Clariant PerformanceImprovement Program
Business
9-Month Results 2004
Divisional sales Full-year 2003 in end-user markets*
Slide 47
*continuing operations
GBP
