2008_sept_17_creditsuisse_djt
TRANSCRIPT
David J. TaylorVice PresidentVice PresidentEnergy BusinessesCredit Suisse Chemicals ConferenceSeptember 17, 2008
ForwardForward Looking Statements Looking Statements ForwardForward--Looking Statements Looking Statements NOTE: This document contains “forward-looking statements” within the safe harbor provisions of the Private S iti Liti ti R f A t f 1995 Th f d l ki t t t b d t’Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s reasonable expectations and assumptions as of the date of this document regarding important risk factors. Actual performance and financial results may differ materially from projections and estimates expressed in the forward-looking statements because of many factors, including, without limitation, overall economic and business conditions different than those currently anticipated; future financial and operating performance ofbusiness conditions different than those currently anticipated; future financial and operating performance of major customers and industries served by the Company; the impact of competitive products and pricing; interruption in ordinary sources of supply of raw materials; the ability to recover unanticipated increased energy and raw material costs from customers; costs and outcomes of litigation or regulatory activities; consequences of acts of war or terrorism impacting the United States’ and other markets; the effects of a pandemic or a natural disaster; the ability to attract, hire and retain qualified personnel in all regions of the world where the company operates; charges related to portfolio management, goodwill recoverability, business restructuring and cost reduction actions; the success of implementing cost reduction programs; the timing, impact, and other uncertainties of future acquisitions or divestitures; unanticipated contract t i ti t ll ti t t f j t l i ifi t fl t ti i i t tterminations or customer cancellation or postponement of projects or sales; significant fluctuations in interest rates and foreign currencies from that currently anticipated; the continued availability of capital funding sources in all of the company’s foreign operations; the impact of new or changed environmental, healthcare, tax or other legislation and regulations in jurisdictions in which the Company and its affiliates operate; the impact of new or changed financial accounting standards; and the timing and rate at which tax credits can beimpact of new or changed financial accounting standards; and the timing and rate at which tax credits can be utilized. The Company disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this document to reflect any change in the Company’s assumptions, beliefs or expectations or any change in events, conditions or circumstances upon which any such forward-looking statements are based.
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g
Air Products Air Products At lAt lAt a glanceAt a glance $10B in revenues $10B in revenues Diverse markets and geographies Positioned for continued long-term value creation
FY07 Geographic SalesFY07 S t S l FY07 Geographic SalesAsia(17%)
FY07 Segment SalesROW (2%)
MerchantGases
TonnageGases
United States(44%)
Gases(34%)
Gases(31%)
Europe(32%)
Canada/LatinEquipment &
Energy
Healthcare(7%) Electronics &
Performance Materials(22%)
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Canada/LatinAmerica (5%)
Energy(6%)
(22%)
Air Products Value PropositionAir Products Value PropositionP fit bl G thP fit bl G thProfitable GrowthProfitable Growth Stabilityy
– Long term contracts– Consistent and predictable
cash flowscash flows – Strong balance sheet
Growth Growth– Solid project backlog– High bidding activity– Energy opportunities
Improving returnsM i i t– Margin improvement
– Productivity– Increasing dividends
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Increasing dividends– Share buyback
Enabling Energy and Environmental Enabling Energy and Environmental Solutions for Today and TomorrowSolutions for Today and TomorrowSolutions for Today and TomorrowSolutions for Today and Tomorrow
Air Products E bl
Energy Conversion & Environmental In-use
B fitEnabler & Environmental Applications Benefit
Hydrogen & Desulfurization /Low sulfur, cleaner
burning fuels
H d & F li
Hydrogen & Integration Solutions
Desulfurization / Refining / Upgrading
burning fuelsIncreased conversion
of a barrel of oil
Hydrogen & Fueling Solutions Fuel Cells Enabling H2 economy
Liquefied Natural Gas Natural gas (remote & ti l(LNG) Heat
Exchangersnon-conventional
liquefactionNatural gas supply
(remote, non-conventional, liquefied
NitrogenRegasificationWell fracturing
Electronic Gases Solar PV Renewable energy
Well fracturing
Oxygen & Integration Solutions
Gas to Liquids (GTL)Coal to Liquids (CTL) Fuel diversity
Enabling Energy and Environmental Enabling Energy and Environmental Solutions for Today and TomorrowSolutions for Today and TomorrowSolutions for Today and TomorrowSolutions for Today and Tomorrow
*Emerging Opportunities
Air Products E bl
Energy Conversion & Environmental In-use
B fit
Oxygen & Integration Combustion processes for steel
Energy efficiency &criteria pollutant
Enabler & Environmental Applications Benefit
Petcoke gasification
Solutions processes for steel, cement, glass, etc.
criteria pollutantreduction
Waste to energy
IGCC
Biomass Gasification
Power
Renewable energy
Oxygen & Integration Solutions
& CO2 Capture
IGCC with CO2capture and
sequestration (CCS) Power with near-zero
Oxygen & Oxyfuel Integration Solutions
& CO2 CaptureCoal combustion
with CCS
near zero CO2 emissions
Ion Transport Membrane (ITM)
Oxygen for gasification and
combustionSignificant cost
reduction
Tonnage GasesTonnage GasesMarket Leader in Refinery HydrogenMarket Leader in Refinery HydrogenMarket Leader in Refinery HydrogenMarket Leader in Refinery Hydrogen
H2 Plant Operating Years
$3 billion in FY’07 sales Refinery, steel, chemicals H2 Plant Operating Years
APD . . .Widening Gap
Global #1 hydrogen supplier Operating experience Operating experience Significant global franchise
positions
1995 2000 2005
APD Comp. X Comp. Y Others
positions Disciplined capital
investments Strong economic drivers for
continued growth
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Tonnage GasesTonnage GasesHigh Growth SegmentHigh Growth SegmentHigh Growth SegmentHigh Growth Segment
Sales3500
Operating Income & Margin450 20.0%
$MM $MM
16% CAGR
1500
2000
2500
3000
200250300350400
14 0%
16.0%
18.0%16% CAGR
0
500
1000
1500
2004 2005 2006 20070
50100150
2004 2005 2006 200710.0%
12.0%
14.0%
2004 2005 2006 2007 2004 2005 2006 2007
Investment by Region • Significant profit growth and improvement
North Americag p g p
in returns on capital while bringing on new investments
• Significant large plant bidding opportunities
Asia
Europe & Middle East
Significant large plant bidding opportunities (both H2 & O2) continue
• Anticipate continued 10%-15% H2 growth
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Major Hydrogen PipelineMajor Hydrogen PipelinePositions Positions -- US/ Canada / Europe US/ Canada / Europe
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SarniaSarniaCanadaCanada
PlaquemineGeismar
Geismar
LouisianaLouisianaBaton Rouge
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Edmonton,Edmonton,CanadaCanada
40Suncor
Shell Refinery
40
Air Products Canada
Lake Pontchartrain
ConventCosmar
Taft
10
NolaNew Orleans
16
2121SherwoodPark
Petro-CanadaImperial Oil
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Corunna
ST.CLAIR RIVER
Chalmette14
14
Europoort
RotterdamRotterdam
DominguezChannel
91
190th
St.710
405
SouthernSouthernCaliforniaCalifornia Zwijndrecht
To Moerdijk
Pernis
Botlek
APD HyCO facilitiesH2 pipeline
BPCarson
ShellWilmingtonConoco Phillips
Carson
Van NessAve.
SepulvedaBlvd
LongBeachArpt.
Carson H2
405
110
1
To Moerdijk
Mont BelvieuBattlegroundCity of Houston
Lake CharlesBeaumont
73
6910
TexasTexas
CO pipelineSyngas pipelineConoco Phillips
Wilmington
Anaheim Street
Wilmington H2110
ValeroWilmington
Port Arthur
BayportPasadena
Clear Lake
Baytown 2
LaPorte
10
45
610
225
9
Clear LakeTexas City
Refining Hydrogen and EnergyRefining Hydrogen and EnergyD i i H d G thD i i H d G thDriving Hydrogen GrowthDriving Hydrogen Growth
Transport fuels growthMore heavy, sour crude
15%o e ea y, sou c ude
Clean fuels legislation 45%
25%
15%
Increased outsourcing trend Future opportunities ConversionFuture opportunities
– Gasification– GTL
ConversionCrudeClean FuelsOutsourcingGTL
– Oil sands– Non-conventional fuels
Outsourcing
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– Non-conventional fuels
Hydrogen Plant IntegrationHydrogen Plant IntegrationAdds Significant ValueAdds Significant ValueAdds Significant ValueAdds Significant Value
H2 toPipeline
Powerto Grid
Steamto Others
Hydrogen
REFINERYSteam
HC Feeds
Power
HC Feeds
FuelH2 Offgas
Air Products H2 / cogen plant
Large ASU Market Large ASU Market Significant Significant Opport nitiesOpport nitiesSignificant Significant Opportunities...Opportunities... High energy prices, new demands for cleaner High energy prices, new demands for cleaner
fuels/air and greenhouse gas reduction Large oxygen requirements: Large oxygen requirements:
– Gas-to-liquids projects:> 30,000 TPD– Gasification projects: >5,000 TPD per trainOpportunities in U.S./Europe for power pp p p
generation using low-value fuelsOpportunities in Canadian Oil Sands for pp
additional processing capability, limiting NG usageChina
Tonnage GasesTonnage GasesLeading the Leading the Way Way on Gasificationon Gasification APD is one of the largest
Leading the Leading the Way Way on Gasificationon Gasificationg
suppliers of oxygen to gasification facilities around the world (>10 large units)( g )
Designed, built, own, and operate units in Texas for syngas, H2 and CO for pipeline systems:p p y– NG based POX units (LaPorte)– Syngas cleanup / separation
facilities from heavy oil POXfacilities from heavy oil POX unit (Baytown)
Recently announced Tonnage relationship on O and H :relationship on O2 and H2:– Eastman Gasifier -Texas– Wison II, Weihe in China
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– BP Clean Power in California
APD’s Differentiated Oxyfuel COAPD’s Differentiated Oxyfuel CO22Capt re Technolog Capt re Technolog Capture Technology Capture Technology Eliminates N2 from flue gas by burning the fuel in O22 g y g 2
– Solution for retrofitting existing installed base of coal/oil-fired power plantsA li bl t b ild iti l l t– Applicable to new-build supercritical power plants
APD’s patented Oxyfuel CO2 Capture and PurificationPotential to yield overall CO capture rate as high as– Potential to yield overall CO2 capture rate as high as 98%
– Projected to be capable of removing up to 99% SOx d NOand NOx
– Eliminates co-disposal of mercury, SOx and NOx wastes with the CO2 sequestration stream
– Unlike post-combustion capture, does not add new chemicals into the process
U l ki t ti l f t k l Unlocking potential for stack-less coal fired power generation
Oxyfuel Power Plant with APD Oxyfuel Power Plant with APD T h lT h lTechnologyTechnology
Steam Boiler & TurbinesO2 Supply CO2 Transport & Sequestration
APD
500 MWe
CO2 Purification& Compression
Oxygen~10,000 tpd
Coal Flue Gas Recycle APD Patented
Technologygy
50% of Global Natural Gas50% of Global Natural GasReserves are RemoteReserves are RemoteReserves are RemoteReserves are Remote
RussiaRussia
NigeriaNigeriaTrinidadTrinidad
AlgeriaAlgeriaEgyptEgypt
IranIranQatarQatar
VenezuelaVenezuela
NigeriaNigeria
Remote Remote Natural GasNatural Gas
MalaysiaMalaysia
AustraliaAustralia
IndonesiaIndonesia
Natural GasNatural Gas AustraliaAustralia
Source: APD IEASource: APD IEAChileChile Source: APD, IEASource: APD, IEA
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Transforming the LNG MarketTransforming the LNG MarketMaintaining Leadership PositionMaintaining Leadership PositionMaintaining Leadership PositionMaintaining Leadership Position APD world leader in LNG equipment APD world leader in LNG equipment Proprietary AP-X® technology helps make imported
LNG more viableLNG more viable– 50% production increase from single train
High NG prices mean more remote gas is economically High NG prices mean more remote gas is economically viable to develop
Increasing number of receiving terminals in US Europe Increasing number of receiving terminals in US, Europe and China
Anticipate 2 3 orders/year over next 5 years Anticipate 2-3 orders/year over next 5 years
LNG Value Chain…LNG Value Chain…APDAPD B t P iti d I d t i l G CB t P iti d I d t i l G CAPD APD -- Best Positioned Industrial Gas CompanyBest Positioned Industrial Gas Company
Pipeline gasDistributionDistribution
P
Production Liquefaction Shipping
PowerGeneration
Regasification Distribution & Use
APD supplies N APD provides APD provides NAPD supplies LNG heat APD supplies N2offshore systems for oil and gas recovery
APD provides shipboard membrane systems to deliver dry
APD provides N2plants for BTU adjustment
APD utilized LNG
APD supplies LNG heat exchanger andprocess technology license
deliver dry nitrogen
APD utilized LNG refrigeration for making industrial gases
Outlook for Industrial GasesOutlook for Industrial GasesC ti d St thC ti d St thContinued StrengthContinued Strength Future demand drivers are strongFuture demand drivers are strong
– High energy costs efficiencies– High capital costs debottleneckingHigh capital costs debottlenecking– Environmental pressures new applications
Well positioned globally with market leadership– Hydrogen for clean fuels– Oxygen for gasification– Electronics
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2008 and Beyond2008 and BeyondSustainable DoubleSustainable Double--Digit GrowthDigit Growthggat Superior Returnsat Superior Returns Targeting sustainable double-digit EPS growth Targeting sustainable double digit EPS growth● Targeting 300bp margin improvement over
3 years3 years– Cost reduction and SG&A improvement– Improved business mix– Plant efficiency/incremental expansions
Targeting a ROCE 3% to 5% above our cost of Targeting a ROCE 3% to 5% above our cost ofcapital
More Focused, Less Cyclical,More Focused, Less Cyclical,Higher Growth Higher ReturnsHigher Growth Higher Returns
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Higher Growth, Higher ReturnsHigher Growth, Higher Returns
Thank youy
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