2008_Sept_17_CreditSuisse_DJT
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2008_Sept_17_CreditSuisse_DJT Presentation Transcript

  • 1. David J. Taylor Vice President Energy Businesses Credit Suisse Chemicals Conference September 17, 2008
  • 2. Forward- Forward-Looking Statements NOTE: This document contains “forward-looking statements” within the safe harbor provisions of the Private Securities Liti ti R f S iti Litigation Reform A t of 1995 Th Act f 1995. These forward-looking statements are based on management’s f d l ki tt t b d t’ reasonable expectations and assumptions as of the date of this document regarding important risk factors. Actual performance and financial results may differ materially from projections and estimates expressed in the forward-looking statements because of many factors, including, without limitation, overall economic and business conditions different than those currently anticipated; future financial and operating performance of major customers and industries served by the Company; the impact of competitive products and pricing; interruption in ordinary sources of supply of raw materials; the ability to recover unanticipated increased energy and raw material costs from customers; costs and outcomes of litigation or regulatory activities; consequences of acts of war or terrorism impacting the United States’ and other markets; the effects of a pandemic or a natural disaster; the ability to attract, hire and retain qualified personnel in all regions of the world where the company operates; charges related to portfolio management, goodwill recoverability, business restructuring and cost reduction actions; the success of implementing cost reduction programs; the timing, impact, and other uncertainties of future acquisitions or divestitures; unanticipated contract terminations or customer cancellation or postponement of projects or sales; significant fl t ti t i ti t ll ti t tf jt l i ifi t fluctuations in interest i it t rates and foreign currencies from that currently anticipated; the continued availability of capital funding sources in all of the company’s foreign operations; the impact of new or changed environmental, healthcare, tax or other legislation and regulations in jurisdictions in which the Company and its affiliates operate; the impact of new or changed financial accounting standards; and the timing and rate at which tax credits can be utilized. The Company disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this document to reflect any change in the Company’s assumptions, beliefs or expectations or any change in events, conditions or circumstances upon which any such forward-looking statements are based. g 2
  • 3. Air Products At a glance l  $10B in revenues  Diverse markets and geographies  Positioned for continued long-term value creation FY07 Geographic Sales FY07 S Segment S l t Sales ROW (2%) Asia (17%) Merchant Tonnage Gases Gases (34%) (31%) United States (44%) Healthcare Europe Electronics & (7%) (32%) Performance Materials Equipment & (22%) Canada/Latin Energy America (5%) (6%) 3
  • 4. Air Products Value Proposition Profitable G P fit bl Growth th  Stability y – Long term contracts – Consistent and predictable cash flows – Strong balance sheet  Growth – Solid project backlog – High bidding activity – Energy opportunities  Improving returns –MMargin improvement ii t – Productivity – Increasing dividends – Share buyback 4
  • 5. Enabling Energy and Environmental Solutions for Today and Tomorrow Energy Conversion In-use Air Products & Environmental Benefit B fit Enabler E bl Applications Low sulfur, cleaner Hydrogen & burning fuels Desulfurization / Integration Solutions Refining / Upgrading Increased conversion of a barrel of oil Hydrogen & F li Hd Fueling Fuel Cells Enabling H2 economy Solutions Natural gas (remote & Liquefied Natural Gas non-conventional ti l (LNG) Heat Natural gas supply liquefaction Exchangers (remote, non- Regasification conventional, liquefied Nitrogen Well fracturing Solar PV Renewable energy Electronic Gases Gas to Liquids (GTL) Oxygen & Integration Fuel diversity Solutions Coal to Liquids (CTL)
  • 6. Enabling Energy and Environmental Solutions for Today and Tomorrow *Emerging Opportunities Energy Conversion In-use Air Products & Environmental Benefit B fit Enabler E bl Applications Energy efficiency & Combustion Oxygen & Integration criteria pollutant processes for steel steel, Solutions reduction cement, glass, etc. Petcoke gasification Waste to energy IGCC Power Biomass Gasification Renewable energy Oxygen & IGCC with CO2 Integration Solutions capture and Power with & CO2 Capture sequestration (CCS) near zero near-zero CO2 emissions Oxygen & Oxyfuel Coal combustion Integration Solutions with CCS & CO2 Capture Oxygen for Significant cost Ion Transport gasification and reduction Membrane (ITM) combustion
  • 7. Tonnage Gases Market Leader in Refinery Hydrogen  $3 billion in FY’07 sales  Refinery, steel, chemicals H2 Plant Operating Years  Global #1 hydrogen supplier APD . . . Widening Gap  Operating experience  Significant global franchise positions  Disciplined capital 1995 2000 2005 investments APD Comp. X Comp. Y Others  Strong economic drivers for continued growth 7
  • 8. Tonnage Gases High Growth Segment $MM $MM Operating Income & Margin Sales 450 20.0% 3500 16% CAGR 400 3000 18.0% 350 2500 300 16.0% 2000 250 200 1500 14.0% 14 0% 150 1000 100 12.0% 500 50 0 10.0% 0 2004 2005 2006 2007 2004 2005 2006 2007 Investment by Region • Significant profit growth and improvement g p g p in returns on capital while bringing on new North America investments • Significant large plant bidding opportunities (both H2 & O2) continue Europe & Middle East • Anticipate continued 10%-15% H2 growth Asia 8
  • 9. Major Hydrogen Pipeline Positions - US/ Canada / Europe Sarnia Canada 40 Baton Rouge 40 Edmonton, Suncor Louisiana Canada Air Products Plaquemine Canada 40 Geismar Shell Refinery Geismar 16 Lake 10 ST. 16 Pontchartrain Cosmar CLAIR RIVER Convent Petro-Canada Imperial Oil Nola New Orleans Sherwood Taft Corunna Park 21 14 Chalmette Rotterdam 14 Europoort Dominguez Pernis Southern Channel 91 California 405 Zwijndrecht Botlek 190th St. 710 To Moerdijk Carson H2 Van Ness Long 110 Ave. Beach Arpt. Texas BP Lake Charles Sepulveda Blvd Beaumont Carson 405 APD HyCO facilities Shell Mont Belvieu 69 10 Wilmington Conoco Phillips City of Houston H2 pipeline Battleground 73 1 Carson CO pipeline Port Arthur 10 Anaheim Street Valero Wilmington Baytown 2 Syngas pipeline Conoco Phillips 610 Wilmington Wilmington H2 110 225 45 LaPorte Pasadena Bayport Clear Lake Texas City 9
  • 10. Refining Hydrogen and Energy Driving Hydrogen G Di i Hd Growth th  Transport fuels growth 15%  More heavy, sou c ude o e ea y, sour crude 15% 45%  Clean fuels legislation 25%  Increased outsourcing trend  Future opportunities Conversion – Gasification Crude Clean Fuels – GTL Outsourcing – Oil sands – Non-conventional fuels 10
  • 11. Hydrogen Plant Integration Adds Significant Value Steam Power H2 to to Others to Grid Pipeline Hydrogen Steam REFINERY Power HC Feeds H2 Offgas Fuel Air Products H2 / cogen plant
  • 12. Large ASU Market Significant Opportunities... Opport nities  High energy prices, new demands for cleaner fuels/air and greenhouse gas reduction  Large oxygen requirements: – Gas-to-liquids projects:> 30,000 TPD – Gasification projects: >5,000 TPD per train  Opportunities pp in U.S./Europe for power p p generation using low-value fuels  Opportunities pp in Canadian Oil Sands for additional processing capability, limiting NG usage  China
  • 13. Tonnage Gases Leading the Way on Gasification  APD is one of the largest g suppliers of oxygen to gasification facilities around the world (>10 large units) ( g )  Designed, built, own, and operate units in Texas for syngas, H2 and CO for pipeline systems: pp y – NG based POX units (LaPorte) – Syngas cleanup / separation facilities from heavy oil POX unit (Baytown)  Recently announced Tonnage relationship on O2 and H2: – Eastman Gasifier -Texas – Wison II, Weihe in China – BP Clean Power in California 13
  • 14. APD’s Differentiated Oxyfuel CO2 Capture Technolog Capt re Technology  Eliminates N2 from flue gas by burning the fuel in O2 g y g – Solution for retrofitting existing installed base of coal/oil-fired power plants – A li bl to new-build supercritical power plants Applicable t b ild iti l lt  APD’s patented Oxyfuel CO2 Capture and Purification – Potential to yield overall CO2 capture rate as high as 98% – Projected to be capable of removing up to 99% SOx and NOx d NO – Eliminates co-disposal of mercury, SOx and NOx wastes with the CO2 sequestration stream – Unlike post-combustion capture, does not add new chemicals into the process Unlocking t ti l f U l ki potential for stack-less t kl coal fired power generation
  • 15. Oxyfuel Power Plant with APD Technology Thl APD CO2 Transport Steam Boiler & Turbines O2 Supply & Sequestration 500 MWe CO2 Purification & Compression Oxygen ~10,000 tpd Flue Gas Coal Recycle APD Patented Technology gy
  • 16. 50% of Global Natural Gas Reserves are Remote Russia Iran Algeria Qatar Trinidad Egypt Nigeria Malaysia Venezuela Indonesia Remote Australia Natural Gas Source: APD, IEA APD Chile 16
  • 17. Transforming the LNG Market Maintaining Leadership Position  APD world leader in LNG equipment  Proprietary AP-X® technology helps make imported LNG more viable – 50% production increase from single train  High NG prices mean more remote gas is economically viable to develop  Increasing number of receiving terminals in US Europe US, and China  Anticipate 2 3 orders/year over next 5 years 2-3
  • 18. LNG Value Chain… APD - Best Positioned I d t i l G C B t P iti d Industrial Gas Company Pipeline gas Distribution Power P Generation Liquefaction Production Regasification Shipping Distribution & Use APD provides APD supplies N2 APD provides N2 APD supplies LNG heat offshore shipboard plants for BTU exchanger and systems for oil membrane adjustment process technology and gas systems to license recovery deliver dry APD utilized LNG nitrogen refrigeration for making industrial gases
  • 19. Outlook for Industrial Gases Continued Strength C ti d St th  Future demand drivers are strong – High energy costs  efficiencies – High capital costs  debottlenecking – Environmental pressures  new applications  Well positioned globally with market leadership – Hydrogen for clean fuels – Oxygen for gasification – Electronics 19
  • 20. 2008 and Beyond Sustainable Double-Digit Growth Double- g at Superior Returns  Targeting sustainable double-digit EPS growth double digit ● Targeting 300bp margin improvement over 3 years – Cost reduction and SG&A improvement – Improved business mix – Plant efficiency/incremental expansions  Targeting a ROCE 3% to 5% above our cost of capital More Focused, Less Cyclical, Higher Growth, Higher Returns Growth 20
  • 21. Thank you y tell me more ll www.airproducts.com p