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    versalis seminar versalis seminar Presentation Transcript

    • eni.comversalis seminar18 April 2013
    • agenda11versalis todayInefficient sites, over-reliance on commodity chemicalsLack of exposure to fast-growing Asian marketsStrong position in some performance segments22our turnaround planTackle critical sites and reduce capacity in basic chemicals222 Tackle critical sites and reduce capacity in basic chemicalsRefocus on performance productsIncrease presence in fast growing markets33expected resultsBreakeven by 2016 (+€500m of ebit vs 2012)€300m of pro-forma ebit by 2017-18Re-balanced portfolio with strategic profitability
    • versalis today: the management teamDaniele FerrariCEO30 years in the industryEmanuele TagliabueBU Intermediates32 years in the industryGiovanni CassutiBU Polyethylene19 years in the industryFranco MeropialiPlanning & Control18 years in the industry3Marco ChiappaniBU Styrenics25 years in the industryCarmine MasulloBU Elastomers29 years in the industrySergio LombardiniCTO25 years in the industryStefano SoccolBusiness Developmentand Licensing21 years in the industry
    • poor results have been a drag on group earningsversalis results€mEbit-10%-5%0%5%10%-2000200400Pro-formaEbitda/sales42017-2018 EBIT Pro-forma including JVsstrong turnaround upside-25%-20%-15%-10%-800-600-4002007 2008 2009 2010 2011 2012 2017/182007@ 2012 scenario
    • key reasons for underperformance and lack of optionality11Sub-optimalindustrialfootprintCreated by political events rather than strategicdesign22Productionportfolioexposed to70% sales on commodity products522portfolioexposed tocommodity70% sales on commodity products33Europeanmarketoriented> 90 % sales into mature markets (Italy and EU)
    • 1. sub-optimal industrial footprintOpportunistic divestments19581958--19921992 19931993--20012001 20022002--20112011Imposed acquisitions Efficiency programme6Attributed ~20 sites in Italy[e.g. Porto Torres with €800m ofcash absorption 2002-2012]poor industrial footprint as result of our historyFrom 42 to 16 sites €500m 2006-2012[e.g. Energy efficiency, crackerclosures, logistics]
    • 2. over-reliance on commodity chemicals ...Sales EBITDA-100-50050EVA€6.4bn€ mln30%differentiatedproducts-€200m7IntermediatesElastomers StyrenicsPolyethylene-250-200-150-10070%commoditiesIntermediatesElastomers-Styrenics-EVAPolyethyleneFigures relate to 2010-2012 average per annum
    • … suffering from cost competition100% = European priceWest European ethylenefeedstock uncompetitivePolyethylene prices underpressure from ME importsNew challenges from US shalegas expansionPolyethylene margin breakdown8difficult competitiveenvironment for basechemicals in Europegas expansion70%15%30%West European Middle East USAEthylene Logistic Fixed Costs Cash margin
    • 3. focus on mature markets of Italy and EuropeAsiaEast EuropeWest EuropeItalyOther2012 sales by area2012 production by area%9headquarters plants sales networkRest of EuropeItaly2012 production by area%
    • market dynamics: some segments see little additional supply...3120C2C1 +othernaphthaethane100Under pressurecurrently suffering from MEand US importsfurther pressure from up to40% increase in US ethylenecapacity by 201610231016feestock slateC5-C10C4C3naphthaRelatively protectedlittle incremental naphtha-based capacity to comeonstreamincreasing demand C4-10 asfeedstock
    • ... and lots more demandMobility SustainabilityDemographicchangeUrbanizationHousing &ConstructionGlobal megatrends relevant to versalis11Increasingdemand of highperformancetyresMorebiodegradablematerialsIncreasingconsumergoodsPopulationgrowth inemergingcountriesEnergy efficiencyin new buildingHigh demand forelastomersOpportunities ingreen chemicalsFavourable marketsin Asia and LatinAmericaOpportunities inhydrocarbonresinsStrong demand forStyrenics (EPS)
    • we are well positioned in these strong and growing segmentsStrong position in growing segments1° elastomer producer in Europe3° styrenics producer in Europe2° EVA producer in EuropeConsolidated client relationshipsStrong customer reputation and brand recognitionStrong position in growing segments1° elastomer producer in Europe3° styrenics producer in Europe2° EVA producer in EuropeConsolidated client relationshipsStrong customer reputation and brand recognition12Relationship with key global customersExtensive technical assistanceLeading R&DPre-eminent technological position (390 patents)Development of green partnershipsOpportunities to develop business in oil service solutionRelationship with key global customersExtensive technical assistanceLeading R&DPre-eminent technological position (390 patents)Development of green partnershipsOpportunities to develop business in oil service solution
    • performance productsElastomers Styrenics1stproducer3rdproducer13Eva2ndproducer
    • versalis key strengths ...Strong position in growing segments1° elastomer producer in Europe3° styrenics producer in Europe2° EVA producer in EuropeConsolidated client relationshipsStrong customer reputation and brand recognitionStrong position in growing segments1° elastomer producer in Europe3° styrenics producer in Europe2° EVA producer in EuropeConsolidated client relationshipsStrong customer reputation and brand recognition14Strong customer reputation and brand recognitionRelationship with key global customersExtensive technical assistanceLeading R&DPre-eminent technological position (390 patents)Development of green partnershipsOpportunities to develop business in oil service solutionStrong customer reputation and brand recognitionRelationship with key global customersExtensive technical assistanceLeading R&DPre-eminent technological position (390 patents)Development of green partnershipsOpportunities to develop business in oil service solution
    • agenda11versalis todayInefficient sites and commodity chemicalsLack of exposure to fast-growing Asian marketsStrong position in some performance segments22our turnaround planTackle critical sites and reduce capacity in basic chemicals1522 Tackle critical sites and reduce capacity in basic chemicalsRefocus on performance productsIncrease presence in fast growing markets33expected resultsBreakeven by 2016 (+€500m of ebit vs 2012)€300m of pro-forma ebit by 2017-18Re-balanced portfolio with strategic optionality
    • the 3 key actions of our turnaround plan1. Fix problems:site reconversion,capacityrationalisation2. Portfoliorefocusing onperformance3. Internationalexpansion in fast-growing markets16performanceproducts
    • reconversion opportunity: critical sites-210110Porto Marghera€-40mEbitda€ m17versalis losses substantially due to three critical sitesNote: Sites EBITDA is average per annum 2008-2012 excluding R&D and headquarter costs-2103 critical sites11 sitesPriolo€-100mPorto Torres€-70m
    • Green project opportunitiesJV with Novamont, owner ofproprietary bio-technologiesAccess to land for crop cultivationGrowing bio-plastics market in EuropePorto Torres: from loss-making basic chemicals to greenktonEuropean bio-plastics market18180 3207201,7004,0002008 2009 2010 2015 2020kton20%CAGRSource: European Bioplastics 2012Porto Torres - challengesOld and inefficient chemical complex(270 kta tonnes ethylene capacity)~600 employeesAverage annual loss of €70 mln€800m of cash absorption 2002-2012
    • Porto Torres: the projectPorto Torres - EBITDAReconversion7 plants over three phases (2 under construction)350 kta of total bio-based productionUp and running Research CentreMore than 300 employeesInvestments1936%64%Porto Torres - EBITDA2008-11 2012 2015-16 2017-18pro forma€ mOverall JV investments: €500mEquity capex >€100mPhase 1-2Phase 3BreakevenInvestmentsFigures relate to average per annum
    • 20
    • 21
    • Porto Torres: the projectPorto Torres - EBITDAReconversion7 plants over three phases (2 under construction)350 kta of total bio-based productionUp and running Research CentreMore than 300 employeesInvestments2236%64%Porto Torres - EBITDA2008-11 2012 2015-16 2017/18pro forma€ mOverall JV investments: €500mEquity capex >€100mPhase 1-2Phase 3BreakevenInvestmentsFigures relate to average per annum
    • Resins – an opportunityPriolo: from loss-making basic chemicals to resinsHigh margin products$3bn market, growing at GDP+Growth in supply limited byfeedstocks23Versalis competitive edgePriolo - challengesInefficient and oversized crackerLoss making polyethylene plantAverage annual loss of €100mExisting C5-C9 capacity, notpreviously utilisedSynergic approach withElastomers and EVA
    • Priolo: the projectReconversionNew investment to recover internal flows(C5/C9)Development of new products (resins) tointegrate/expand our portfolioSales target $250mEfficiencyStop of Polyethylene (LLDPE) productionEthylene cracker rationalization (capacityfrom 790 to 490 kta) increasing operatingrates from today 55% to 90% in 2014Completedby YE 13Contributionfrom 201624Priolo – EBITDA€ m€400minvestments2012 efficiency reconversion 2017/18
    • Porto Marghera: restructuring options under studygreen chemistry – an opportunity fora future transformationfuture candidate site for bio-butadiene investmentsoptimisation of existing businessunder considerationGreen chemistry – an opportunity25apply versalis’ integrated approachto green chemistry to Margherakey site for logistics in NorthernItaly and for further ButadieneexpansionMarghera - challengesInefficient and under-utilisedcrackerLoss of site integration duringlast decadeAverage annual loss of €40mVersalis competitive edge
    • achieving increasing efficiency on commodity products...Capacity Operating ratesMln ton %-35%6570758085909526Leading mover on rationalisation Increasing operating rates to industry average2007 2017-18606520072008200920102011201220132014201520162017-18average european producers versalis
    • ... and increasing butadiene capacityButadiene scenario versalis responseOn purpose ButadieneDeveloping proprietary dehydro processto produce ButadienePilot plant on stream within 2013On purpose bio-Butadiene:10095908580752001501005027Producing more butadiene without additional ethyleneConstrained supplyPartnership withDevelop, license bio-butadiene productiontechnologyBuild the first plant based on the bio-butadiene technology700202220152013201120092007C4/C2C2 production
    • refocusing on performance products: elastomersElastomer scenario6.0versalis advantagesTechnological leadershipRelationship with key globalcustomersPirelliBridgestoneContinentalMichelinEmerging markets leading the wayEurope and N. America will grow inthe more advanced segmentsS-SBR, PBR and EPR growth rate >than commodities rubber282.82.34.56.04.7WorldAsiaLatinAmericaN.AmericaEurope2013-16 annual growth rateMichelinTotalStyrolutionHenkelFeedstock availability from NaphthacrackersMarket competence
    • new elastomer projects and resultsGrangemouth (2014)New s-SBR lineAsiaCommercial company in ChinaRavenna/Ferrara (2015/16)New s-SBR lineNew EPR lineNew SBC line29Elastomers salesLatin AmericaNew complex under considerationCommercial company in ChinaS.Korea: JV with HonamMalaysia JV with Petronas>100%ktonElastomers ebitda+€300m>15% Ebitda/Sales€m€600m ofinvestments2013-2016
    • JapanSouthKoreaTaiwanChinaShanghaifocus on international projectsSouth KoreaPartner: LOTTE ChemicalPlant start-up: end 2015Projected revenues: > $500mArea Asia/PacificDirect presence in AsiaOpening of commercial offices in Shanghai30IndonesiaJV CompanyProjected revenues: > $500mMalaysiaPartner: PETRONASPlant start-up: end 2017Projected revenues: > $700mMalaysia20% of versalis sales from emerging markets by 2017
    • new products: oil services solutions…Strong market $35bn, with3.5% annual growthLeverage partnership withE&P to develop ad hocoilfield chemicalschemicals for EORsolvents and drag reducerssmart chemicals (anti blow -out solutions)Internal productdevelopmentFormulatorSystem provider31out solutions)Utilize existing plants toproduce solvents withlimited reconversioninvestmentsFirst sales within end-2013Leveraging the partnership with eni E&Pdevelopment2013 2014 2015 2016
    • … and natural rubberThe versalis projectNatural rubber – an opportunityGlobal natural rubber consumptionNatural rubber demand set to growOpportunity to gain market edge withbetter production processStrategic partnership withto make natural rubber out ofGuayuleGuayule production: high quality,highly sustainable323.5% CAGR3.5% CAGR201520122009200620032000Initial focus on consumer and medicalspecialty marketsAgreement with to optimizethe process also for the tyre industry
    • agenda11versalis todayInefficient sites, over-reliance on commodity chemicalsLack of exposure to fast-growing Asian marketsStrong position in some performance segments22our turnaround planTackle critical sites and reduce capacity in basic chemicals3322 Tackle critical sites and reduce capacity in basic chemicalsRefocus on performance productsIncrease presence in fast growing markets33expected resultsBreakeven by 2016 (+€500m of ebit vs 2012)€300m of pro-forma ebit by 2017-18Re-balanced portfolio with sustainable profitability
    • a strong investment programme...Green ChemicalInternationalizationPortfoliorefocusingIRR%€ bnGreen ChemicalInternationalizationPortfoliorefocusingCAPEX0.8Stay inBusiness2.025%3410% 15% 20% 25% 30%refocusingIntegration/EfficiencyInvestment programme to deliver strong returnsrefocusing0.82009-2012 2013-16growth75%
    • € bn € bnProduction mix Ebitda... to rebalance the business6.46.8+75%~+0.935commoditiesdifferentiated products2017/182012-25%2017/182012
    • … and reach break-even and profitabilityBreak evenEBIT adj.€ m36RationalizationandintegrationRefocusing 20162012 2017/18(includingproformaJVs)Upsidepeak cyclescenario2013-2016: €500m of incremental EBIT at 2012 scenarioFigures are at 2012 scenario
    • closing remarks – versalis by the end of our turnaroundNo sites in structural lossRestructuring achieved with no social repercussionsIndustriallystreamlinedReduced production of commodities (-25%)Exposure to products with more stable marginsLess volatileresults37Increased differentiated products production (+75%)Exposure to growing Asia and Latin America marketsExposed toprofitableareasDelivering a sustainable chemicals business