Transcript library.corporate

Albemarle Corporation
Fine Chemicals
UBS Grass Roots Chemical Conference
February 16, 2005
John Nicols
Vice President Fine Chemicals
1
Cautionary Statement
Some of this presentation constitutes forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Although Albemarle Corporation believes its expectations reflected in the
presentation 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.
Factors that 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 our products; increases in the cost of raw materials and energy, and our inability to pass
through such increases to our customers; changes in the market in general; fluctuations in foreign currencies;
significant changes in new product introductions, resulting in increased capital spending; and the integration of
the Akzo Nobel Refinery Catalysts business into our operations.
Additional factors that could cause Albemarle’s results to differ materially from those described in the forwardlooking statements can be found in our prospectus dated January 13 th, 2005, filed pursuant to SEC Rule 424(b).
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Albemarle History
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1887 - 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.
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.
1976 - Ethyl leaves paper
manufacturing with the
sale of Oxford Paper. Ethyl
opens a chemical plant in
Feluy, Belgium to make
aluminum alkyls.
Fine Chemicals
JV / Acquisition Activity
2004
2003
2002
2001
2000
1999
Tender Offer
For A&W;
Created Cash
Gain
Formed Jordan
Bromine Co;
Started Project
for ’02 Startup
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Acquired
Ferro
BrPS FR Bus
Took
ownership
In Jinhai
Polymer
& Expanded
2X
Acquired
Martinswerk-Largest global
mineral based
FR and
Performance
Chemicals
Acquired
ChemFirst Fine
Chemicals;
Integrated with
ALB to form Fine
Chemistry
Services
Formed
Stannica JV
with Atofina—
crude tin
stabilizers for
PVC
Announced
China Trading
Company
Acquired lube and
fuel anti-oxidants
of Ethyl
Acquired
Phosphorus
Flame Retardants
of Rhodia
Acquired
Atofina S.A.
Bromine
Fine
Chemicals
Acquired
assets of
Korean
distributor of
Albemarle;
other
products
Acquired refining
catalyst segment
of Akzo Nobel
Company Overview
Albemarle is a global producer of specialty chemicals with leading market positions in
a majority of its product lines

Diversified mix of solution-based products sold to a wide range of customers and
end markets
–
–

Broad geographic footprint
–
–
–

Over 3,400 customers
End markets include consumer electronics, petroleum refining, packaging, construction,
automotive, pharmachemicals and agrichemicals
Sales in approximately 100 countries
38 locations (inc. JVs) in North and South America, Europe and Asia
Approximately 3,700 employees worldwide
2004 Results (1)
- Net Sales $1,514 million
- Net Income $76 million (up 13% over 2003)
- EPS
$1.78
Albemarle provides innovative development, manufacturing and marketing of complex chemicals and
services that create exceptional customer value while maximizing shareholder wealth.
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(1) Year ending December 31, 2004 includes 5 months refinery catalysts
business. Excludes special items, unaudited results
Broad Geographic Reach
Worldwide manufacturing complemented by sales, marketing and distribution
facilities in each of the world’s key regions
Teesport, UK
Avonmouth, UK
Amsterdam, The Netherlands
Amersfoort, The Netherlands
Tyrone, PA, USA
Bergheim, Germany
Dayton, OH, USA
Beijing, China
Richmond, VA, USA
Louvain-la-Neuve, Belgium
St. Jakob/Breitenau, Austria (JV)
Feluy, Belgium
Orangeburg, SC, USA
Seoul, Korea
La Voulte, France (JV)
Thann, France
Port-de-Bouc, France
Tokyo, Japan
Baton Rouge, LA, USA
Magnolia, AR, USA
Pasadena, TX, USA
Osaka, Japan, (NAA JV)
Safi, Jordan
(JBC JV)
Houston, TX, USA
Niihama, Japan
(Nippon Ketjen JV)
Shanghai, China (JVs)
Singapore
Zhejiang Province, China
Santa Cruz, Brazil
(FCC SA JV)
Business Center
2004 Sales (ex. JVs)
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Manufacturing Facility
Americas
42%
Europe
38%
R&D Facility
Asia
20%
Albemarle Corporation Today

Refinery Catalysts acquired July 31, 2004 for €616 million ($763 million)
– Significantly enhances existing business by adding attractive strong specialty
chemicals platform
–
–
–
–

Leading positions in a market with strong industry fundamentals
Proprietary technology and service-driven business model
Strong margins and cash flows
Potential technology, raw material and other cost synergies
Balanced portfolio with common technology
Catalysts
Approx. Net Sales Distribution
•
Polymer Additives
•
•
•
•
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Bromine integration
Leading positions in major
flame retardant chemistries
Additives niches
Global scope and reputation
29%
41%
30%
Fine Chemicals
•
•
•
Leading positions in refinery and
metallocene catalysts
History of innovation
Strong customer relationships
Global scope and reputation
Leading Market Positions in Major Product Categories
Foundation
Chemistries
Solutions-Based
Product Portfolio
Process
Technology
Flame Retardants
Leading Global
Market Positions
Application
“Know-How”
Catalysts
Bromine
Bromine-based FRs
Mineral FRs
HPC Catalysts
Phosphorus
Plastic Additives
Alumina
Fuel Additives
Orthoalkylation
Agrichemicals
FCC Catalysts
Service
Alkyl Co-Catalysts
Metallocene Co-Catalysts
Alkylated Anilines
Pharmaceuticals
Metal Alkyls
Innovation
Performance
Chemicals
Leading
Customer
Relationships
Albemarle’s Formula for Success
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Source: Industry Research and Management Estimates.
Bromine
Ibuprofen
Key Strategic Principles




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Leverage Foundation Businesses and Technologies
–
Innovation allows for management of product rotation
–
Customer-driven product line expansions
–
Focus on higher-margin, solution-based products and services
Expand Global Reach
–
Expand with new and existing multinational customers
–
Target high-growth economies
Drive Low-Cost Manufacturing and Continuous Operational Improvement
–
Continuous cost reduction efforts
–
Flexible, multi-purpose sites
Establish Superior Customer and Technology Relationships
–
Drive innovation in regulatory-driven markets
–
Provide value-added products and services
–
Develop business with less capital and risk
Fine Chemicals
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Albemarle Fine Chemicals
Product Diversity
Strategic Clusters
Ag Actives
Pharma Actives (APIs)
Fine Chemistry Services
Services & Intermediates
Others
Alumina Specialties
Paper Chemicals
K & Cl2 Derivatives
Tertiary Amines
Bromine Specialties
Oilfield Chemicals
Br2 & Derivatives
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Industrial Specialties
Bromine Chemicals
Fine Chemicals Strategies
Serve Chemistry To
Solve Customer Problems
Fine
Chemistry
Services
-------------------------------------------------------
Widen & Deepen Access Into Key
End Markets: Pharma & Ag
-------------------------------------------------------
Drive To Actives:
Highest Chemistry Value Add
Industrial
Specialties
Strategic Growth
Manage for Cash
New Strategy Potentials ?
Bromine
Chemicals
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Leading Bromine
Company
Worldwide
Fine Chemicals Strategies
Serve Chemistry To
Solve Customer Problems
Fine
Chemistry
Services
-------------------------------------------------------
Widen & Deepen Access Into Key
End Markets: Pharma & Ag
-------------------------------------------------------
Drive To Actives:
Highest Chemistry Value Add
Industrial
Specialties
Strategic Growth
Manage for Cash
New Strategy Potentials ?
Bromine
Chemicals
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Leading Bromine
Company
Worldwide
World-Class Bromine Position
Pharma
3%
Other
14%
Water
Treatment
7%
Flame
Retardants
40%
Albemrle
holds strong
positions
in each
Capturing
growth
through
of the key areas
ofpositions
the world’s
strong
in bromineusing industries.
key areas of the world’s
bromine-using industries
Ag
12%
Albemarle Bromine Production
Oilfield
24%
350
Low cost domestic reserves
augmented by JV production
on the Dead Sea
M Lbs.
300
250
200
150
Bromine-Industry Usage - 2002
USGS/Mining Engineering June 2003
14
100
’94
’95
’96
’97
’98
’99
’00
’01
’02
’03 ’04
World-Class Bromine Position
Resource Managed
In Fine Chemicals
Bromine
Specialties
High
Volume
Bromides
Related
Products
Market
Managed
Pharma
Int’s
MeBr
Goal
Long Time In
Motion
Leading
Bromine
Company
In The World
Keep Building
Momentum
Br F R
EDB For TEL – Ethyl Beginnings
1980
1987
Saytech
Dow Br &
Acquired FR Business
Acquired
15
1993
Thann
Acquired
2000
Ferro
BrFRs
Acquired
Global
Leader
in BrFR
2002
JBC
Startup
2003
AtoFina
BFC
Acquired
Bromine Chemicals: Business Strategies
• Continue To Build & Drive The World’s Lowest
Cost Global Bromine Sourcing Network
• Maximize Value While Ensuring Leading Share In
All Significant Bromine Consuming Uses
• Lead In Developing New Applications For High
Value Bromine Specialties
• Secure Advantage From Technologies Borrowing
Bromides
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Fine Chemicals Strategies
Serve Chemistry To
Solve Customer Problems
Fine
Chemistry
Services
-------------------------------------------------------
Widen & Deepen Access Into Key
End Markets: Pharma & Ag
-------------------------------------------------------
Drive To Actives:
Highest Chemistry Value Add
Industrial
Specialties
Strategic Growth
Manage for Cash
New Strategy Potentials ?
Bromine
Chemicals
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Leading Bromine
Company
Worldwide
Fine Chemistry Services Model
Customer Needs & Opportunities
Fine Chemistry
Services
Ag
Pharma
ALB Intermediates
Custom Mfr
Contract Research
ALB Intermediates
Custom Mfr
Contract Research
ALB Actives
Methyl Bromide
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Industrial Specialties
Personal Care
Photo Chems
Flavors / Fragrances
Etc.
ALB Actives (APIs)
Ibuprofen, Naproxen
Albemarle’s Fine Chemistry Services
Area Of Major Strategic Change
2001
2004
3 Pharma Products
3 Ag Products
Leading BFC’s In EU
1 cGMP Facility
Several New Prod’s In
Pipeline
Historic Pharma/Ag/BFC Products
Continued Pressures On IBP / NPX
Leading US Custom Mfr
3 Research Facilities (2 US, 1 EU)
3 cGMP Facilities
7 Flexible Multi-Product Sites
90+ New Products In Pipeline
Products
Capabilities
Flexible Plants’ Utilization Up
Profit Up approx $10 MM in ’04 v. ’02
Success w/ Specialty API’s
Profit Up approx $3 MM in ’04 v. ’02
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Globally Leading
Capabilities
Stepping Up in ’05:

Utilizations / Better Mix
 Pipeline Productivity
 New Products / Capabilities
 Owning Our Niches
Fine Chemistry Services New Product Pipeline
90 products in our pharma pipeline
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20
15
10
15
4
Pre-Clinical
Phase I
Phase II
Phase III
Patent
Protected
Generic
+4%
+22%
+61%
2003
Inquiries
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2004
Quotes
Successful
Fine Chemistry Services: Build Synergistically
Customer Needs & Opportunities
Gain More Market Access
Other Market
Servicing
Capability
Fine Chemistry
Services
Other Market
Servicing
Capability
Ag
Pharma
ALB Intermediates
Custom Mfr
Contract Research
ALB Intermediates
Custom Mfr
Contract Research
Industrial Specialties
Further Downstream in
Market to Higher
Chemistry Value
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Further Downstream in
Market to Higher
Chemistry Value
Profit Growth In Fine Chemicals
Profit Perspective
2003
2004
Raw Mats & Energy
---
-
Continued Headwind in ’05, but not like ‘03
Regulatory
-
-
Methyl Bromide secured for 2005
Mature Products Pricing
-
--
Zeolites
-
---
Jordan Startup
-
0
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
(19%)*
(11%)*
Last 3 quarters 2004
vs. 2003 up 3%
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2005 + Comments
2004 peak, but select issues continue (i.e. China)
Sales and profit impact comparison goes away
Jordan low cost will create favorable ’05+ conditions
Poised & Healthier Leaving Peak ‘03 – ’04
Headwind Period
* Change in operating profit versus prior year, excluding specials.
2004 data unaudited.
Fine Chemicals: Investment Considerations
 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
 M&A Activities Continue to Target Bolt-On Acquisitions, But Not
Essential To Long Term Fine Chemicals Success
 Strong Accountable Team
 Mitigating Near-Term Exceptional Situations
 Successfully Managing Portfolio Rejuvenation
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Albemarle Corporation
Fine Chemicals
UBS Grass Roots Chemical Conference
February 16, 2005
John Nicols
Vice President Fine Chemicals
24