fine chemicals
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Fine Chemicals. A New Global Chemicals Leader Emerges. John Nicols, Vice President, Fine Chemicals May 25, 2004. Caution Statement. - PowerPoint PPT PresentationTRANSCRIPT
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Fine Chemicals
A New Global Chemicals Leader Emerges
John Nicols, Vice President, Fine Chemicals
May 25, 2004
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Caution Statement
Some of the information presented in the pages of this presentation constitutes forward-looking comments within the meaning of the Private Securities Litigation Reform Act of 1995. Although Albemarle Corporation believes its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results will not differ materially from its expectations.
Factors which could cause actual results to differ from expectations include, without limitation, the timing of orders received from customers, the gain or loss of significant customers, competition from other manufacturers, changes in demand for the Company’s products, increases in the cost of the product, changes in the market in general, fluctuations in foreign currencies, and significant changes in new product introduction resulting in an increase in capital project requests and approvals leading to capital spending.
Such statements also include, but are not limited to, statements about the proposed acquisition by Albemarle Corporation of Akzo Nobel’s refinery catalyst business, including financial and operating results, the parties’ plans, beliefs, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of management and are subject to significant risks and uncertainties. Actual results may vary materially from those set forth in the forward-looking statements. The following factors, among others, could affect the consummation of the proposed transaction: execution of a definitive sale and purchase agreement, the advice from Akzo Nobel’s Works Council, the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Act and the receipt of other competition law clearances. The following factors, among others, could affect the anticipated results: consummation of the financing on terms favorable to the Company, the ability to integrate successfully the acquired business within the expected timeframes or at all, and ongoing operations of the business. Additional factors that could cause Albemarle’s results to differ materially from those described in the forward-looking statements can be found in Albemarle’s Annual Report on Form 10-K for the year ended December 31, 2003.
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Albemarle History1887 - Albemarle Paper Manufacturing Company opens with a handful of employees producing Kraft and blotting paper.
1921 - The antiknock properties of tetraethyl lead (TEL) as a gasoline additive are discovered after a lengthy search by a team of General Motors research chemists. TEL is to be the principal product of Ethyl Corporation for more than 40 years.
1942 - Ethyl Gasoline Corporation changes its name to Ethyl Corporation to characterize a broader interest than just gasoline products.
1962 - Albemarle Paper Manufacturing Company borrows $200 million and purchases Ethyl Corporation (Delaware), a corporation 13 times its size, and Ethyl Corporation (Virginia) is formed. Floyd D. Gottwald becomes Chairman of the Board.
1976 - Ethyl leaves paper manufacturing with the sale of Oxford Paper. Ethyl opens a chemical plant in Feluy, Belgium to make aluminum alkyls.
1987 - Ethyl acquires Dow Chemical's bromine chemicals business and its Magnolia, Arkansas, plant.
1994 - Ethyl spins off its chemical businesses to create an independent, publicly traded company named Albemarle Corporation
1996 - Albemarle sells its alpha olefins, polyalphaolefins and synthetic alcohols businesses to Amoco for about $500 million.
1998 - Albemarle energizes M&A effort to grow the company based on longstanding foundation technologies of bromine and organometallic chemistry, supported by exceptional skill in process technology.
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Current Business Segments
Flame Retardants Polyolefin Catalysts Other Polymer Additives
– Net Sales (2003)
– Operating Profit (2003)
$629.9 million
$ 70.3 million
Polymer Chemicals
Pharmaceuticals & Agrichemicals Fine Chemistry Services Bromine, Bromine Derivatives and
Specialty Aluminas
– Net Sales (2003)
– Operating Profit (2003)
$480.4 million
$ 49.0 million
Fine Chemicals
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#1 Producer of bromine-based flame retardants
#1 Producer of mineral flame retardants
#1 Producer of alkyl-based polyolefin catalysts
#1 Producer of metallocene co-catalysts
#1 Producer of ibuprofen
#1 Producer of alkylated anilines
#2 Producer of bromine
PerformanceChemicals
Pharma
FlameRetardants
Ag
Additives
Catalysts
TechnologyRelationships
Innovation
Aluminum AlkylsBromine Process
Development
Albemarle Platform
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Key Markets
Diversity – Balance Across Markets Strategic Account Management – Work With
Winners World Market Knowledge – Direct Sales and
Other Effective Channels Portfolio improvements fit focus
46%35%
19%
2003
Markets Served Growth Rate
Construction 15%Carpet /Fabric, Roofing, Insulation, PVC stabilizers
5%
Consumer Electronics 30%Printed Circuit Boards, Electronic Enclosures
8 -10%
Pharma/Ag 20%Analgesics, Active Ingredients, Intermediate Ingredients, Pre-Emergent Herbicides
6 -10%
Auto/Transport 10%Wire & Cable, Polyurethane Body Panels, Polishing compounds, Brake linings
3-5%
Packaging 10%Plastic films, Polymer compounds, Paper and pigments
3-5%
Industrial 5%Water treatment, Oilfield fluids, Polishing compounds, Photo-graphic, Specialty glass (TV)
2-4%
Other 10%
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Balanced, Technology-Based Portfolio:“Top Tier” Performance – 2004 Post-Acquisition
• Bromine Franchise• >$200 million in life
sciences• New product pipeline
approaching 100
With Akzo Refinery Catalysts Acquisition:
• #1 or #2 positions in refinery and metallocene catalysts
• History of innovation• Strong customer relationships• Global scope and reputation
• Bromine integration• #1 or #2 positions in
major flame retardant chemistries
• Additives niches• Global scope and
reputation
Additives – 37%
Catalysts – 37%
Fine Chemicals – 26%
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Fine Chemicals
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Albemarle Fine Chemicals
Product Diversity Strategic Clusters
Br2 & Derivatives
Fine Chem Svcs & Int’s
Pharma Actives (APIs)
Ag Actives
ASA Paper SizesAlumina Spec’sOthers
OilfieldAmines
K & Cl2 DerivativesZeolites
Biocides/Abzol
Fine Chemistry Services
Industrial Specialties
Bromine Chemicals
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Manage for Cash
Fine Chemicals Strategies
Bromine Chemical
s35% of FC Sales
#1 Bromine Company
In The World
Fine Chemistry Services
40% of FC SalesIndustrial Specialtie
s25% of FC Sales
Deliver Chemistry To Solve Customer Problems -------------------------------------------------------
Widen & Deepen Access Into Key End Markets: Pharma & Ag
-------------------------------------------------------Drive To Actives:
Highest Chemistry Value Add
New Strategy Potentials
Strategic Growth
Goal:
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Fine Chemicals RotationSuccessfully Managing The Rejuvenation Successfully Managing The Rejuvenation Of Our Fine Chemicals PortfolioOf Our Fine Chemicals Portfolio
6
480
10
24
(16)
(35)
49526
Bromine
Atofina Fine Chem
FCS
2003
Ag
Zeolites
2004E
Revenue $MM6
Other
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Profit Growth In Fine ChemicalsProfit Perspective 2003 2004 2005 + Comments Raw Mats & Energy - - - - Deceleration continues for a cycle?
Regulatory - - MeBr 2005 secure; 2006 special uses or more?
Mature Products Pricing
- - - 2004 peak of current maturity curve
Zeolites - - - - Sales and profit impact comparison goes away
Jordan Startup - 0 Jordan low cost will create favorable ’05+ conditions
Br Chem Pricing + + + Accelerating due to favorable supply / demand
New Products + + + Accelerating due to improved pipeline
Asset Utilization + + + + Continued year-on-year improvements
BOTTOM LINE - - - Stormy 03-04 period is followed by improving conditions across the portfolio.
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World-Class Bromine Position
Albemarle’s production capturing market growth with premier, low cost domestic reserves and augmented by new production on the Dead Sea through joint venture Jordan Bromine Company
100
150
200
250
300
350
'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04
MM L
bs.
Albemarle Bromine Production
CAGR = 7.5%
Bromine-Industry Usage - 2002USGS/Mining Engineering June 2003
Albemarle holds strong positions in each of the key areas of the world’s bromine-using industries.
FlameRetardants
40%
Oilfield24%
Ag12%
WaterTreatment
7%
Pharma3%
Other14%
Long Time In Motion
Keep Building Momentum
EDB For TEL – Ethyl Beginnings
1980SaytechAcquired
1987Dow Br’sAcquired
1993Thann
Acquired
2000#1 BrFRIn World
1999Ato & Ferro
BrFRs Acquired
2002JBC
Startup
2003AtoFina
BFCAcquired
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#1 Bromine Company
In The World
Pharma Int’s
MeBr
Br F R
Resource ManagedIn Fine Chemicals
MarketManaged
Bromine Specialties
High Volume Bromides
RelatedProducts
World-Class Bromine Position
Goal:
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Business Strategies
• Continue To Build & Drive The World’s Lowest Cost Global Bromine Sourcing Network
• Maximize Value While Ensuring #1 or #2 Share In All Significant Br Consuming Uses
• Lead In Developing New Applications For High Value Br Specialties
• Secure Advantage From Technologies Borrowing Bromides
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2001
3 Pharma Products3 Ag ProductsLeading BFC’s In EU1 cGMP FacilitySeveral New Prod’s In Pipeline
2003Historic Pharma/Ag/BFC ProductsIncreasing Pressures On IBP / NPXLeading US Custom Mfr3 Research Facilities (2 US, 1 EU)2 cGMP Facilities7 Flexible Multi-Product Sites80+ New Prod’s In Pipeline
Albemarle’s Fine Chemistry ServicesArea Of Major Strategic Change
Products Capabilities Globally Leading Capabilities
Flexible Plants’ Utilization Up Profit Up $4 MM in ’03 v. ’02
Stepping Up in ’04:Higher Utilizations Outsourcing Pharma New ALB Products
Success w/ Specialty API’s Profit Up $2 MM in ’03 v. ’02
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Fine Chemistry Services ModelFine Chemistry Services Model
Fine Chemistry Services & Intermediates
Industrial SpecialtiesPersonal CarePhoto Chems
Flavors / FragrancesEtc.
15%
ALB Actives (APIs)
Ibuprofen, Naproxen
ALB Actives
Methyl Bromide
Customer Needs & Opportunities
45%40%Ag
ALB IntermediatesCustom Mfr
Contract Research
PharmaALB Intermediates
Custom MfrContract Research
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Fine Chemistry Services SuccessesFine Chemistry Services Successes
0
20
40
60
80
100
120
J2003 F M A M J J A S O N D J2004
Inquiries for Custom Production Quotes
Pre-Clinical Phase I Phase II Phase IIIPatent
Protected Generic
Development Momentum 85 products in pipeline
27 1315 13 13 4
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Fine Chemistry Services & Intermediates
Industrial Specialties
Further Downstream in Market to Higher Chemistry Value
Customer Needs & Opportunities
AgALB Intermediates
Custom MfrContract Research
PharmaALB Intermediates
Custom MfrContract Research
Fine Chemistry Services: Build Synergistically
Gain More Market Access
Further Downstream in Market to Higher Chemistry Value
Other Market Servicing
Capability
Other Market Servicing
Capability
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Manage for Cash
Fine Chemicals Strategies
Bromine Chemical
s35% of FC Sales
#1 Bromine Company
In The World
Fine Chemistry Services
40% of FC SalesIndustrial Specialtie
s25% of FC Sales
Deliver Chemistry To Solve Customer Problems -------------------------------------------------------
Widen & Deepen Access Into Key End Markets: Pharma & Ag
-------------------------------------------------------Drive To Actives:
Highest Chemistry Value Add
New Strategy Potentials
Strategic Growth
Goal:
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Fine Chemicals: Conclusion Strong Accountable Team
Mitigating Near-Term Exceptional Situations Successfully Managing Portfolio Rejuvenation
Strong Positions Driving Our Strategic Successes Global Bromine Leadership – Tightening Supply Environment Broad Fine Chemistry Service Business Capabilities:
Developed, Entrenched Service Model Satisfying Our Targeted Client Base Leverages Corporate Chemistry / Process Development Foundation Strength Drives Us Into Attractive Pharma / Ag Markets For Chemistry / Innovation One Of Relatively Few Worldwide With Pharma / Ag Revenues > $200 MM
Sound Strategies Drive Improved Returns & Sustain Growth Disciplined Corporate Cost Focus – Improving Return on Assets Targeting Bolt-On Acquisitions, But Not Essential To Long Term
Fine Chemicals Success
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Fine Chemicals
A New Global Chemicals Leader Emerges
John Nicols, Vice President, Fine Chemicals
May 25, 2004