VisionWorks. Roadmap to Profitable Growth. Gottfried Plumpe. Member of the Board, Bayer MaterialScience

Transcription

1 VisionWorks Roadmap to Profitable Growth Gottfried Plumpe Member of the Board, Bayer MaterialScience CSFB Field Trip September 22, 2004

2 Safe Harbor This presentation contains forward-looking statements based on current assumptions and forecasts made by Bayer Group management. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. These factors include those discussed in our public reports filed with the Frankfurt Stock Exchange and with the U.S. Securities and Exchange Commission (including our Form 20-F). The company assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments.

3 Bayer MaterialScience Portfolio and sales breakdown 2003 Polyurethanes Total Sales 7.5 billion Polycarbonates Main Products: MDI, TDI, TPU, Polyols for Insulation, Comfort and Specialities Global Position: #1 Production Sites*: 16 45% 3% 8% 19% 25% Main Products: Makrolon for Inj. Molding, ODS, Blends and Sheets Global Position: #2 Production Sites*: 4 Wolff Walsrode Coating Raw Materials H.C. Starck Main Products: Methyl- & Nitrocelluloses Global Position: #2 Production Sites*: 2 *) finished goods Gottfried Plumpe Page # 1 Main Products: Refractory metals and ceramic materials Global Position Ta 0 :#1 Production Sites*: 4 Main Products: Aliph. and arom. isocyanates for coating applications Global Position: #1 Production Sites*: 8 Bayer MaterialScience The formation of two new companies Lanxess Commodities TDI PET BRB MDI ABS/SAN Growth in volume ,5% TRP PC PC-Sheets RUC +6% +4% STY SCP FIB BMI Resins H.C. Starck Blends Wolff W. +8% Systemhouses PTF +4% TPU Specialties +4% BCH Gottfried Plumpe Page # 2

4 Bayer MaterialScience Performance goal EBITDA sales margin 21% Long-term aspiration Performance Driver Leadership in above average growing markets 18% 2006 commitment Cost efficiency of a technology leader in an optimized structure Innovation approach to discover customer needs of tomorrow Gottfried Plumpe Page # 3 Bayer MaterialScience Future roadmap Leadership in above average growing markets Growth-Target of 1.5 global GDP Full exploitation of growth potential in Asia Cost efficiency of a technology leader in an optimized structure Innovation approach to discover customer needs of tomorrow Gottfried Plumpe Page # 4

5 Bayer MaterialScience Portfolio driven by growth and market leadership Growth** EMEA BMS Position Americas APAC Global Polycarbonates +8% p.a. #1 #2 #2 #2 (ms = 30%) Polyurethanes Thermoplastic Polyurethanes +5% p.a. #1 #1 #1 #1 (ms = 26%) +4% p.a. #2 #3 #2 #1 (ms = 15%) Coating, Adhesives & Sealants +5% p.a. #1* #1* #1* #1* (ms > 40%) *) aliph. und arom. isocyanate **) Gesamtmarkt Gottfried Plumpe Page # 5 Focus on Asia GDP growth CAGR World-GDP: 3.5% 5.3% 6.8% 4.0% 2.5% 6.5% North-America incl. Mexico 4.0% Western Europe India Greater China S-Korea 1.8% Japan LATAM, Middle East, Africa 5.3% ASEAN Gottfried Plumpe Page # 6

6 Key Industries: Production By Region Automotive 66 Mio Units 60 Mio Units 9.5% +7.7 %p.a. 8.0% Construction Investment 3,350 billion 3,100 billion 10.0% +6.6 %p.a. 9.0% Electrical / Electronics 2,500 billion 19.0% 2,000 billion +6.6 %p.a. 26.5% +0.7 %p.a. 24.5% 26.5% +3.8 %p.a. 27.0% 17.5% 29.5% +3.8 %p.a 30.0% 30.5% +2.9 %p.a. 30.5% 26.0% +0.9 %p.a. 25.0% 27.5% +0.9 %p.a. 28.5% 35.0% +3.4 %p.a. 35.5% 38.5% +2.2 %p.a. 38.0% 25.0% +2.2 %p.a. 23.0% EMEA Americas Asia/Pacific w/o Gr. China Gr. China Gottfried Plumpe Page # 7 Focus on Asia Investment- & sales share Investment Planning Asian sales share Bayer MaterialScience 2003/2007 Total 2.1 billion Europe, Middle East, Africa 39% Asia Pacific 40% 83% 75% 17% 25% Americas 21% Gottfried Plumpe Page # 8

7 Going East Upcoming investment projects Shanghai Strengthen our regional competitiveness through local production in China PCS PUR CAS PC 100 kt in kt in 2009 MDI Splitter in kt in 2008 TDI 150 kt in 2009 Desmodur L 11 kt in 2004 HDI up to 50 kt PCS: Polycarbonates PUR: Polyurethanes CAS: Coating Raw Materials Gottfried Plumpe Page # 9 Caojing An integrated production site Bayer premises: 1.50 square kilometers Total investments: 1.8 Billion US$ until 2009 Fully integrated site structure with energy and raw material supply cluster Gottfried Plumpe Page # 10

8 Our First Move Polyisocyanates for Coating Raw Materials Phase 1 Phase 1: Desmodur N Production of 11.5 kt/yr. started April 2003 Phase 2: Desmodur L Production of 11 kt/yr. to start 4Q.2004 Phase 2 Phase 3: HDI Production of 30 kt planned for 2007 Phase 3 Competitive Position through Integrated Production Concept Economy of Scale Innovative Technology: Gas-Phase Phosgenation First Mover Gottfried Plumpe Page # 11 Bayer MaterialScience Future roadmap Leadership in above average growing markets Cost efficiency of a technology leader in an optimized structure Concentration on World-Scale Plants Built on Best-in in-class Technology Innovation approach to discover customer needs of tomorrow Gottfried Plumpe Page # 12

9 Site Consolidation Program More than 30% of Bayer MaterialScience sites are involved Production Sites Bayer MaterialScience Sheffield South Deerfield Berlin Newark Institute (closed) New Martinsville Columbus Baytown Channelview Santa Clara Coatzacoalcos (closed) Rieme (closed) Fos-Sur-Mer El Prat Tarragona Filago Nera Montoro Belford Roxo Maasvlakte Antwerpen Tielt Bomlitz Brunsbüttel Uerdingen Dormagen Leverkusen Goslar Walsrode Bitterfeld Darmstadt Mannheim Cuddalore Cheltenham Example: Closure of small and ineffective TDI-plants Sakai Niihama Pusan Kimhae Caojing Guangyi Lin Yuan Map Ta Phut Anyer Gottfried Plumpe Page # 13 Achieving Economy of Scale Site consolidation program for Polyurethanes is on track Index 2002 = 100% 180% 160% 140% 120% 100% 80% 60% 40% 100% 111% 86% Average Capacity 121% 79% 133% 75% Number of Production Units 140% 71% 151% 151% 64% 64% 157% 158% % 71% Measures: Closing of small and ineffective production units (Rieme, LEV, COA,...) Smart Debottlenecking of existing production units (BTN, TAR, BRU...) Building of new World Scale production facilities with leading technology (DOR, CAO,...) Gottfried Plumpe Page # 14

10 Achieving Economy of Scale Site consolidation program for Polyurethanes is on track Index 2001 = 100% PET MDI TDI 100% spec. Production Costs 80% 60% 100% -4% -9% 87% 100% -7% -12% 81% 100% -16% -13% 71% 40% Cost Effect Volume Effect Gottfried Plumpe Page # 15 Bayer MaterialScience Cost efficiency by Best in Class Technology for PUR business Example: New High-Performance Catalyst for TDA-Process Benefits: Reduced investment costs due to strongly increased reactor capacity Lower raw material costs due to increased TDA yield Energy recovery in an integrated site structure Status: Successful plant scale performance test in 2003 Gottfried Plumpe Page # 16

11 Bayer MaterialScience Cost efficiency by Best in Class Technology for PUR business Example: Oxygen Depolarised Cathode (ODC) Technology Benefits: ODC technology for HCl electrolysis with 30% less power consumption Closed chlorine recycle to supply isocyanate plants Jointly developed with UHDENORA and De Nora North America and ready for licensing and marketing Status: First commercial HCl electrolysis with ODC technology successfully started up in Brunsbuettel Gottfried Plumpe Page # 17 Bayer MaterialScience Future roadmap Leadership in above average growing markets Cost efficiency of a technology leader in an optimized structure Innovation approach to discover customer needs of tomorrow Innovation in close cooperation with our customers Identification and benefit from new megatrends Gottfried Plumpe Page # 18

12 Innovation Driver for future high volume markets Development of Bayer Polycarbonate Capacity (kt/a) Sheets >1971 Automotive Glazing > kt/a Optical Data Storage >1982 Films > Gottfried Plumpe Page # 19 Life cycle management Automotive Glazing [kt] Global Market Volume (estimate) Main driving forces for Makrolon in Automotive Glazing: Design Flexibility Weight Reduction Optimized Center of Gravity System Performance Approach 1,6 kt BMS Gottfried Plumpe Page # 20

13 New Megatrend: Smart Surfaces Lighting film technology for illumination applications Refrigerator Plane lighting for vehicles, electronic devices, textiles, in-door applications... Dashboard Handbag Gottfried Plumpe Page # 21 New Megatrend: Ambient Intelligence Intelligent packages with electronic barcodes BAYTRON, a conductive polymer for low end microprocessors BAYTRON printed on flexible film Gottfried Plumpe Page # 22

14 From Megatrends to Roadmaps Bayer MaterialScience is one step ahead! Multi-company expert panels: Close contact to customers to ensure first hand information and competence Innovation is focused on real customer needs Expert panels are pre-competitive due to open discussions Win-Win situation for our customers and Bayer MaterialScience Example: Expert panel Automotive Electro/Electronics 2015 Gottfried Plumpe Page # 23 Q2 04: Strong underlying Growth million Q Q % yoy % yoy Portfolio & Fx. adj. Sales 1,854 2, EBITDA EBIT Special items (38) 0 - EBIT underlying Gross cash flow Net cash flow (19) Gottfried Plumpe Page # 24

15 Q2 04: Regional Sales Development 1) Materials (PC, TPU, WW, H.C. Starck) Systems (PU, CAS, IBC) Sales: 800m, +18.3% Sales: 1,291m, +14.1% Lat.Am./ Africa/ Middle East +23.0% 52m 342m Europe +6.2% Lat.Am./ Africa/ Middle East 138m +21.8% 575m Europe +7.6% Asia/ Pacific +31.2% 228m 178m North America +27.7% Asia/ Pacific +21.1% 194m 384m North America +18.1% 1) Currency adjusted Gottfried Plumpe Page # 25 Our Vision Works Our commitment: Bayer MaterialScience will capitalize on market leadership and best-in in-class cost structures... Business portfolio will be focused on growth markets Expansion into Asia offers significant potential for growth Site consolidation program will show ongoing positive effects The focus will be put on sufficiently backward-integrated world-scale facilities Researching new areas of application will fuel growth and strengthen customer relationships... to reach its target of 18% / 21% EBITDA-margin Gottfried Plumpe Page # 26