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Muir presentation

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  • 1. Successful Growth in a Mature Market Bob MuirVice President – New Business Development Infineum International Reproduction of any material whether by photocopying or storing in any medium by electronic means or otherwise is prohibited without prior written consent of Infineum International Limited. © Copyright INFINEUM INTERNATIONAL LIMITED 2004. All rights reserved
  • 2. Who we are? A leading developer of lubricant and fuel additive technologies? Circa $1.5 billion global enterprise? 50/50 joint venture between Shell and ExxonMobil? 70 years history © Copyright INFINEUM INTERNATIONAL LIMITED 2004
  • 3. Changing Slow demand growth Increasingly tough Industry Global annual lube growth 0.5 % yr emissions legislation drives specifications & costs Short product life cycles persist 1989 - Fuel volatility limits set as engine test costs continue rising. 1990 - EPA sets S limits in Diesel development cost vs payback 1992 - Euro I emissions introduced time becomes unsustainable 1996 - Leaded gasoline removed in US forcing closer industry alliances 1996 - Euro II emissions introduced 2000 - Fuel volatility limits set Life Cycle 2005 - 30-50% reductions vs 2000 in HDD of Formulations (Years) 3000 10 years Development 1000 Costs Difficult trading conditions (kUS$) Year 1930 1960 1990 2010 The Lubricant & Fuel Additives Industry Customers under pressure Increased industry forcing mergers & JV’s competition & consolidation 1997 - BP-Mobil JV in Europe1992 - Ethyl purchases Amoco additives OEM No. of OEM’ s 1998 - Shell & Texaco USA Mkting JV1996 - Ethyl purchases Texaco additives 60 mergers 52 1998 - Pennzoil & Quaker State merge1998 - Lubrizol purchases Adibis 50 40 30 continue, 1999 - BP-Amoco: ExxonMobil;1998 - Infineum gains approval1999 - Infineum operational 30 20 19 industry Repsol YPF; TotalFina 10 structure 2000 - BP-Amoco-Castrol-Arco; TFE 0 1964 1980 1998 may 2001 - ChevronTexaco: BPCastrol/Aral: Shell/DEA North-America Asia Europe change 2001 - Shell/PQS © Copyright INFINEUM INTERNATIONAL LIMITED 2004
  • 4. Technology Drivers – a Virtuous Circle? Better Better cleanliness durability Longer service Better fuel intervals economy Longer oil drains Cleaner fuels Which result in: Reduced emissions Hardware changes Fuel additivation & Fuel additives, flow lube grade proliferation improvers, lubricity improvers, cetane Change in improvers, Greater use of base oils & additives detergents non-conventional eg lower P, S, ash base stocks in ( low/medium SAPs) lubricants © Copyright INFINEUM INTERNATIONAL LIMITED 2004
  • 5. Hi-Tech ‘ Mature’Industry ……… but with inexorable environmental drivers? Technologies complex and costly? Markets large, risk averse? ‘ Growth Platforms’to consolidate opportunities © Copyright INFINEUM INTERNATIONAL LIMITED 2004
  • 6. Possible Growth Platforms:Distillate Fuel/Refinery Additives ULS Diesel China New LS East USA High T diesel Europe detergents Markets cold flow OEM Relationship Existing Wax crystal NOVA 2 NOVA 3 Modification High T Additives for Polymer design detergents/ ULS Fuels Harms testing stabilisers Existing New Capabilities © Copyright INFINEUM INTERNATIONAL LIMITED 2004
  • 7. NBD Lessons Learned? Profitable growth opportunities can be created in mature businesses ? We can ‘ know’the future? Success founded strongly in Infineum competencies? Challenges of new business requires, different skills and approaches, persistence and patience ? Often challenges existing business model eg emission trading? As projects advance, increased focus and dedication of resources is critical for early commercial success? ‘ Growth Platforms’provide a sound model for future success © Copyright INFINEUM INTERNATIONAL LIMITED 2004
  • 8. The information contained in this document is based upon data believed to be reliable at the time of going to press and relates only to the matters specifically mentioned in this document. Although Infineum has usedreasonable skill and care in the preparation of this information, in the absence of any overriding obligations arising under a specific contract to supply goods or services,: no representation, warranty (express orimplied), or guarantee is made as to the suitability, accuracy, reliability of completeness of the information; nothing in this document shall reduce the user’ responsibility to satisfy itself as to the suitability, accuracy, sreliability, and completeness of such information for its particular use; there is no warranty against intellectual property infringement; and Infineum shall not be liable for any loss, damage or injury that may occurfrom the use of this information other than death or personal injury caused by its negligence. No statement shall be construed as an endorsement of any product or process. For greater certainty, before use ofinformation contained in this document, particularly if it is used for a purpose or under conditions which are abnormal or not reasonably foreseeable, it must be reviewed with the supplier of such information. “Infineum” "Dobanax” “ , , Paratac” “, Synacto” “, Vektron”and the corporate mark comprising the interlocking ripple device are trademarks of Infineum International Ltd. “Vistone”is a trademark of Exxon Mobil Corporation used under licence by Infineum International Limited. ? Copyright INFINEUM INTERNATIONAL LIMITED 2004. All rights reserved.