recticel strategy update · 2017-08-29 · china india mdi demand and economic growth 2015 global...

1

November 2010

RECTICEL

Strategy Update

KBC – Small Cap Seminar

30 November 2010

Olivier Chapelle

Chief Executive Officer

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November 2010

Agenda

1. Strategic Review Process

2. Strategic Observations

3. Polyurethane Market

4. Individual Business Line Strategies

5. Recticel Portfolio & Strategy

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November 2010

Agenda






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November 2010

Phase I – March May 2010

▪ Insulation, Bedding, Flexible Foams, Automotive Interiors and Proseat

teams have developed their respective strategic plans

▪ Iterations and discussions with the Group, no Strategy consultant used

▪ Management Committee meeting of 7/8 June dedicated to reviewing the

Business Lines plans

Phase II – June 2010

▪ The Group has assessed its overall situation, market, portfolio of

businesses and growth opportunities, and has generated this strategy

proposal

▪ The recommendation is supported by the Management Committee

Strategic Process

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November 2010

Agenda






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November 2010

Through this exercise, we will try to provide answers to the following observations :

Recticel remains with a too high debt level, despite significant debt reduction

over the last three years,

Recticel has insufficient financial means to properly invest in and develop its

four business segments,

Recticel is currently concentrated in Europe (>95 % of sales),

Recticel is highly dependant on Insulation profits in Belgium, and exposed to

the structural long term risks of the Automotive Industry.

Recticel Today : strategic observations

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November 2010

Agenda






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November 2010

The global PU application market represented about €38Bn globally in 2009 :

About 11 million tons of raw materials were converted into PU applications

worldwide

Pacific

35%

CAGR 7%

NAFTA

21%

CAGR 4%

Europe

38%

CAGR 5%

Latin America

6%

CAGR 6%

% in volumes : sources BASF & Dow

Polyurethane market : Size

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November 2010

Polyurethane : Leading Markets & Applications

▪ Furniture & Bedding

▪ mattresses

▪ sofa & chair cushions, armrests

▪ office furniture

▪ Building & Construction

▪ rigid foam insulation panels

▪ sprayed polyurethane rigid foam

▪ carpet backing and cushioning

▪ Transportation

▪ seating foam, armrests, headrests

▪ fabrics back-foaming

▪ interiors skins : instrument & door panels

▪ steering wheels, roof liners

▪ energy absorbing foam

▪ acoustic foam (NVH)

▪ exterior panels

▪ interior & exterior coatings

▪ windows encapsulation

▪ Coatings, Adhesives, Elastomers, Sealants

▪ glues, paints and protective coatings

▪ pipe coatings

▪ sports tracks and turf

▪ filter encapsulation

▪ sealants for windows

▪ shoe soles

▪ gloves

▪ Appliances

▪ insulation

▪ Footwear

▪ soles

▪ Packaging

▪ Textile

sources : BASF, Dow, Bayer, Huntsman

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November 2010

Construction

22%

Transportation

14%

Appliances/Electrical

9%

Footwear

7%

Textile

4%

Packaging

3%

Others

11%

Furniture/Bedding

30%

% in volumes : sources BASF & Dow

Footwear and Textile segments are mainly located in Asia

All other segments are represented in all four regions

Polyurethane : Leading Markets & Applications

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November 2010

Polyurethane Market : Global Shift

Source: t, 2010

Asia

Europe

Americas

500

750

1000

1250

1500

1750

2000

2250

2500

2750

3000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Glo

ba

l M

DI D

em

an

d (

'00

0 T

es

)

10

100

1,000

10,000

100 1,000 10,000 100,000

GDP / Capita (US$)

MD

I / C

ap

ita

(g

)

USEU

China

India

MDI Demand and Economic Growth 2015

10

100

1,000

10,000

100 1,000 10,000 100,000

GDP / Capita (US$)

MD

I / C

ap

ita

(g

)

USEU

China

India

MDI Demand and Economic Growth 2015

Global MDI (70% of isocyanates volumes)

2010 YTD5 volumes already higher than

pre-crisis 2008 YTD5.... !!(Source : Huntsman)

Investment Priorities in raw material capacities :

- #1 is Asia/China

- Selective in EU

- No more investments in USA(Sources : Huntsman, BASF, DOW, Bayer)

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November 2010

Some worldwide MEGATRENDS have emerged, which are irreversible :

Environment protection, and Energy preservation

Building climate management : 22% of global energy consumption

From a “carbon footprint” standpoint : 1 oil barrel used to make PU

insulation board will return 156 barrel over lifetime

Invest in insulation is today 6 times more efficient than in photovoltaics

Stronger & Lighter : everything that moves will have to be lighter

Global Megatrends : Positive PU contributions

80

100

120

140

160

180

200

2002 2003 2004 2005 2006 2007 2008 2009 2010

General construction Insulation PU Insulation

Source : McKinsey & Co

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November 2010

Some worldwide MEGATRENDS have emerged, which are irreversible :

Demographics and Ageing

Nutrition of a growing and ageing population, eating more and more

proteins (1kg of meat requires 100kg of vegetal + 1.5m³ of water…)

Water Supply in quality and quantity is becoming a strategic goal

Emergence of new economical super-powers, such as China, and to a smaller

extent the other BRIC members and Middle-East

Luxury & Well Being for the fast developing middle/upper classes

Strong & Light for anything pertaining to Transportation means

Global Megatrends : Positive PU contributions

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November 2010

The PU application market is very fragmented :

More than 100 foamers (Flexible Foam, Insulation, Seating) in Europe

Recticel (€1.3Bn), Inoac (€1.4Bn), Carpenter (€1Bn), Foamex (€0.5Bn), Vita

(€0.6Bn), Foamline (€0.4Bn), Organica (€0.3Bn) together represent 13% of

worldwide PU foaming market

By comparison, Bayer, BASF and Dow represent 50% of worldwide PU raw

material market, resulting in tremendous power to control raw material pricing

Polyurethane Market : Competition

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November 2010

The Polyurethane applications market is attractive :

It is a large, regional (seldom global) market of €38 Bn

Asia now the largest PU market

CAGR of 5% globally, faster than GDP by 2% thanks to material substitution

Versatile, high performance material, enabling proper positioning

Average market profitability (Ebit) higher than 5%

Broad range of applications & segments, offering diversification

opportunities and protection against cyclicality

Several applications are linked to worldwide Megatrends

Market : Conclusions

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November 2010

Agenda






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November 2010

STABILIZE & HARVEST through defensive set of measures

▪ Pursue product/process development, maximizing the “appeal” of our

technology & business

▪ Maximize new program acquisitions, with adequate profitability

(min. 30% contribution), re-utilizing existing idle assets

▪ Follow our customers in China, on a 100% Recticel basis

▪ Permanently adapt industrial footprint and capacity to customer needs

▪ Maintenance or utilities investments only

Interiors : Strategic Scenario

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November 2010

Optimize & Redeploy through new automotive business propositions

▪ Given the decline in value of the Foam Pads for seating applications, and

our significant market share, stabilize sales and optimize profitability

▪ Pursue R&D, and generate profitable sales growth with Trim Parts

(headrests, armrests), EPP solutions, headliners, loadfloors…

▪ Carefully evaluate customer request to be served in greater EU

▪ Minimize investment needs & capital intensive applications

▪ Permanently adapt industrial footprint and capacity to customer needs

Proseat : Strategic Scenario

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November 2010

GROW with a combination of organic and external initiatives

▪ Internal sales growth of 5% per year will be generated by :

▪ Deployment of foam & product innovation throughout our brand

portfolio

▪ Significant supporting marketing budget

▪ Focus on Nordic Countries, Switzerland

▪ France will not be an area of focus in the coming years

▪ Acquisition targets will be evaluated, with priority in Nordic Countries, UK

and Eastern Europe

▪ A project in China, jointly with Flexible Foam, will be set up and ready for

decision by March 2011

Bedding : Strategic Scenario

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November 2010

Rationalize & Upgrade with selective growth projects

▪ Rationalize & Upgrade through

▪ Plant shutdowns & Restructurings

▪ Divestment from non-core small activities

▪ Upgrading Investment plan

▪ Growth initiatives

▪ Agro-Foam segment

▪ Innovative corporate projects launches

▪ Expansion in China, jointly with Bedding

▪ Potential expansion in Turkey

Flexible Foam : Strategic Scenario

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November 2010

GROWTH as a combination of organic & external initiatives

▪ Focus on Europe and Building

▪ Internal sales growth of 8% per year will be generated by :

▪ Continued development in Belgium

▪ Commercial focus in France (Etics) and UK

▪ Fix our Netherlands commercial organisation

▪ Understand Germany, and prepare for Central Europe

▪ Acquisition targets will be evaluated

▪ Intensify R&D efforts to prepare the next Generation PUR/PIR products

Insulation : Strategic Scenario

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November 2010

Agenda






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November 2010

SWOT Analysis

Strengths

▪ competitive raw materials prices

▪ low cyclicality (several end-use mkt)

▪ strong brands

▪ competent R&D

▪ integration foaming/bedding

▪ good coverage of Europe

Weaknesses

▪ highly leveraged financial structure

▪ over exposure to Automotive in EU

▪ relative lack of talents

▪ underperforming activities/assets

▪ “European only”

▪ automotive: lack of bargaining power

Opportunities

▪ development in BRIC’s

▪ substitution of competitive material in

applications linked to Megatrends

▪ regulatory environment in EU in

favour of insulation

Threats

▪ raw material supplier concentration

▪ product stewardship

▪ fire resistance

▪ recyclability

▪ fragmented competition

▪ automotive: insourcing by OEM’s & T1’s

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November 2010

9-Box Grid : positioning of the 5 Recticel segments

C

o

m

p

e

t

i

t Insulation

i

v Bedding

i

t Flex Foam

y

Proseat

Interiors

M a r k e t A t t r a c t i v i t y

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November 2010

Recticel : Strategy

Keep Recticel focused on PU applications, focus on higher growth

segments on a broader international basis :

▪ Grow Insulation Solutions

▪ Grow Bedding Systems

▪ Rationalise and modernise Flexible foams, and seize selective growth area

▪ Stabilize Automotive, make it a consistent contributor to Recticel success

▪ Acquisition in Insulation

▪ Acquisition in Bedding

▪ Invest in China for Flex Foam, Bedding and maybe Insulation

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November 2010

Q & A

Thank you for your attention

recticel strategy update · 2017-08-29 · china india mdi demand and economic growth 2015 global...

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