AkzoNobel Rotterdam - Nomura Rotterdam Botlek 22 September ...… · • Strong position in...

Industrial Chemicals

Rotterdam Botlek 22 September 2010Knut Schwalenberg

AkzoNobel Rotterdam - Nomura

Industrial ChemicalsIndustrial Chemicals - Nomura meeting 22 September 20102

AkzoNobel key facts

2009• Revenue €13.0 billion• 54,738 employees• EBITDA: €1.7 billion*

• EBIT: €1.1 billion*

• Net income: €285 million• Credit ratings: BBB+ (S&P) and Baa1 (Moody’s)

* Before incidentals. All data after reclassification of National Starch

Revenue by business area EBITDA* by business area

Performance Coatings

Decorative Paints

Specialty Chemicals

32%

35%

33% 32%

27%

41%


Specialty Chemicals key facts

2009• Revenue €4.4 billion• 10,928 employees• EBITDA: €738 million*

Revenue by business unit Revenue by geography

Functional Chemicals


Pulp and PaperChemicals

Surface Chemistry

Chemicals Pakistan

North America

Europe

Asia Pacific

Latin America

Other regions

33%

21%

16%

9%

21%

44%22%

9% 2%

23%

* Before incidentals. All data except revenue by geography after reclassification of National StarchIndustrial Chemicals - Nomura meeting 22 September 2010

Industrial Chemicals4

Our Specialty Chemicals portfolio


Surface ChemistryFunctional Chemicals Pulp and Paper Chemicals

Chemicals Pakistan

Industrial Chemicals - Nomura meeting 22 September 2010


The chemical industry value chain

Basechemicals

Performance/functionalchemicals


Surface Chemistry

Pulp and Paper Chemicals

Functional Chemicals

Chemicals Pakistan

Chemical intermediates

Base chemicals

Mining, oil, biomaterials ‘End’ products



Well positioned in key market segments

Revenue by key market segment

Residential construction

Non-residential construction

Transport

Consumer goods

2/3 of revenue in Consumer goods

• Varying from cleaning products to toilet paper

• Innovative sustainable solutions• Strong position in high-growth

markets

1/3 of revenue in construction & transport

• Varying from PVC to asphalt additives

• Innovative energy-saving solutions

• Strong position in high-growth markets



We built many market leadership positions in attractive niches

Chemicals Pakistan holds strong positions in various markets in Pakistan

FunctionalChemicals

IndustrialChemicals

Pulpand Paper

SurfaceChemistry

5

3

1

1

3Industrial

AgriculturalHome &

Personal care

CMC

Chelates, sulfur products,

polysulfides, organic peroxides,

1 1

1

Bleachingchemicals

Monochloro-acetic acid

(MCA)

Chlorine merchant,Caustic merchant,

Salt(all Europe)

1 12

1Ethylene amines,

metal alkyls, Elotex,

Bermocoll

Salt Specialties (N.

Europe)

12

3 Retentionand sizing chemicals



Industrial Chemicals key facts

H1 2010• Revenue € 512 million, excluding joint ventures• 1,800 employees, manufacturing plants in six

countries• Chlor-Alkali, Energy, Salt, Monochloroacetic Acid • Primarily focused on Europe

Revenue by segment/end-market Revenue by destination

Chemicals & m/m fibersManufacturingRubber & plasticsFoodPaperAgroPaint

93%

Asia PacificEuropeAmericas

4% 3%

53%4%

9%

5%

10%4%

11%

4%

Other


Industrial ChemicalsIndustrial Chemicals | Specialty Chemicals Teach In 10

Value chain of integrated businesses

Chlorine

Caustic

20% captive

80% public grid

Salt

• MCA

• Chloromethanes

• Water Treatment

• Ethylene Amines jv

ENERGY• Process steam• 300 MW base load

generation (AN share)

SALT• 4.200 kt CT (via waterways)

• 800 kt Specialties

• 500 kt De-icing

CHLOR-ALKALI • 1.100 kt chlorine (via pipelines)

• 1.200 kt caustic lye

• 300 MW base load requirement

DERIVATIVES • Worldwide business positions with the exception of water treatment

50% captive

50% merchant

20% captive

80% merchant

merchant

business



Operations & Market Positions

LeMoyneTaixing

Ohmi

Mariager

DelfzijlDeventer

RotterdamArnhem

BitterfeldHengelo

Ibbenbüren

Frankfurt

Amersfoort

Europe Worldwide

MCA 1

Chlorine & Caustic lye (merchant) 1

Chloromethanes (merchant) 1-2

Salt (chemical transformation) 1

Manufacturing

Joint ventures

R&D



- Zero incidents- Plant integrity & efficiency- Hassle free delivery

Operational Excellence

Sustainability

(Add.) Value creation

Our Anchors

- CSR (people, planet, profit)- Competitive energy supply

- Growing the business



Fulfilling our customers’ needs and dreams

Functionality and hassle free deliveryIndustrial Chemicals - Nomura meeting 22 September 2010


Sustainability

ENERGY• Co-generation ( 50%

higher fuel efficiency)• Renewable fuels

- Biomass

- Energy from waste

- Fuel cells & windparks

SALT• Secondary use of

caverns• Advanced anti-

caking agent (meso-Tartrate)

• Innovative crystallization technologies

CHLOR-ALKALI • Electrolysis efficiency

- From mercury tomembrane

- Zero gap technology

• Small remote controlled chlorine units

DERIVATIVES • Eco-efficient

applications

• CO2 based chemicals

• MCA

• Chloromethanes

• Water Treatment

• Ethylene Amines

Salt

• MCA• Chloromethanes• Water Treatment• Ethylene Amines



• Scale and state of the art technology

• Integrated manufacturing chains

• Restructuring paying off– Realigned chlor-alkali set-up– Realignment of MCA supply chain– Outsourcing of services– Focus on Operational Excellence

• Flexible and efficient management of energy, the lifeline of our business

Costs leadership



• Low OWC levels

• Favorable investment turnover

• Strong positive contribution to cash flow

• Plants in excellent shape• Maintenance concept based on life cycle

• Chlor-Alkali 75% on membrane

• Energy mainly off-balance

IC contributes to the strong financial performance of Specialty Chemicals



Business leadership

Cost leadership

• Chemical Transformation Salt • Downstream products • Caustic lye

Marketleadership

• Existing sites

• New clusters



Chlor-Alkali



Chlorine- one of the most common element in nature• More chlorine than carbon in the nature

• Occurs naturally in humans, plants and animals

• Most common compound: salt (NaCl)

• 2.9% of world oceans

• Nature is producing 1- 2,000,000,000 t/Cl2 pa

• Scientists identified > 2,000 naturally-occurring chlorine-based compounds



Chlor-Alkali: Market and business characteristics• Chlorine is used in > 55 % of

overall chemical production and > 85 % of all pharmaceuticals. Biggest downstream user of chlorine is PVC, e. g. for window frames and pipes

• Caustic lye is a widely used alkali in the chemical, pulp and paper, textile, food and mineral industry

• Management of chlorine in chemical clusters is based on state of the art technology and pipeline connection with customers


http://www.hapag-lloyd.com/de/index.html


The Chlor-Alkali business of AkzoNobel

• Strong upstream but a minor downstream integration

AkzoNobel has a unique business model in the chlorine industry



IC business model creates up and down stream production integration




• Operates chlorine plants as utility units for customers who want to focus on downstream products

• 80% of the chlorine is supplied to 3rd parties and 95% of this by pipeline

• The business attractiveness of chlorine is determined by the market position and competitiveness of our customers




AkzoNobel supplies market leaders in a broad variety of segments

1.7

1.7

1.4

3.32.0

2.34.4

4.6

4.7

5.6

10.512.4

16.0

29.4

PVCMDIEpoxiesChloromethanesMCAAminesEcoFlame ret.LABAramidesSiliconTiO2AgroRest




• Operates 5 locations in Europe; 1.1 mln tons capacity• Manages multi-client clusters with divers portfolio

– Rotterdam: bulk chlorine applications like PVC, PUR and ECH

– Other locations: large variety of specialty applications




Chlorine production

Site Capacity (kt)• Rotterdam (NL) 620

• Frankfurt (D) 165

• Ibbenbüren (D) 125

• Delfzijl (NL) 110

• Bitterfeld (D) 90• Total 1,110




AN established its leading chlorine supply position in Europe based on:

• Broad technology basis ⇒ chlorine, caustic, hydrogen, HCl• Strong caustic market position and excellent logistical set-up• Closed loop concepts and recycling solutions for HCl side-

streams• Competence concerning safety and sustainability• Focus on innovation and customer service; Remote

Controlled Chlorine Production



AN outperforms the European competitionCA capacity utilization 2009/10, Europe (blue) vs AN (Yellow)

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

Jan Mar May Jul Jan Mar May Jul2009 2010Industrial Chemicals - Nomura meeting 22 September 2010


Site RotterdamAkzoNobel and Shin-Etsu



Caustic

Operational model multi-client cluster Rotterdam

AkzoNobel

Chlor-AlkaliShin-EtsuEDC / VCM

HuntsmanMDI

HexionECH

Cl2

HCl

HCl

EDC Ethylene Amines JV

CausticHydrogen

Electricity

Steam

Salt

Tronox TiO2

Nufarm Pesticides



• Be the independent #1 chlorine partner producing CA products and managing chlorine clusters in Europe

• Be the undisputed market leader in caustic in Europe• Maintain and expand leading positions in derivative products

to further improve and support the chlorine value chainThrough:• Organic growth with customers• Participation in the restructuring of the EU CA industry• Innovation focused on improving our unique core

competences and creating competitive advantagesBased on:• Sustainable financial performance and strong customer basis• State of the art assets and strong technology competences• Motivated and qualified workforce • Focus on sustainability and societal acceptance

Ambitions Chlor-Alkali in Europe



IC view on Europe

STRENGTHS

• Still big world market withhigh purchasing power

• Growth next door (EE)• Sufficient and broad specter of

raw materials• Sufficient basis for key industry

THREATS

• All eyes on Asia • Uncompetitive in labor intensive

sectors• One-sided regulations

(energy tax, REACH)

WEAKNESSES

• Energy pricing / environmentaltaxes

• Dependency on oil imports• “Spoiled” and expensive working

force• Aging population

OPPORTUNITIES

• Big fast growing EE markets• Excellent education institutions• Technology know-how leadership

in many sectors• Innovation driven market



Thank you for your attention!


Industrial ChemicalsIndustrial Chemicals - Nomura meeting 22 September 201034

Safe Harbor Statement

This presentation contains statements which address such key issues as AkzoNobel’s growth strategy, future financial results, market positions, product development, products in the pipeline, and product approvals. Such statements should be carefully considered, and it should be understood that many factors could cause forecasted and actual results to differ from these statements. These factors include, but are not limited to, price fluctuations, currency fluctuations, developments in raw material and personnel costs, pensions, physical and environmental risks, legal issues, and legislative, fiscal, and other regulatory measures. Stated competitive positions are based on management estimates supported by information provided by specialized external agencies. For a more comprehensive discussion of the risk factors affecting our business please see our latest Annual Report, a copy of which can be found on the company’s corporate websitewww.akzonobel.com.

http://www.akzonobel.com/

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