Investor_Presentation_2008_Oct_2_Oppenheimer
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Investor_Presentation_2008_Oct_2_Oppenheimer Investor_Presentation_2008_Oct_2_Oppenheimer Presentation Transcript

  • Jeffry L. Byrne VP/GM, Tonnage Gases Oppenheimer 3rd Annual Industrials Conference October 2, 2008
  • Forward-Looking Statements Note: This document contains “forward-looking statements” including, without limitation, statements about the company’s expected fiscal fourth quarter results. These forward-looking statements are based on management’s reasonable expectations and assumptions as of the date of this document. Market conditions will continue to evolve, and additional investigation of damage from the fire and hurricanes and September results could impact the estimates provided today. The company does not intend to update this information until it announces fiscal fourth quarter results. Events or results described in forward looking statements may be influenced by many factors not anticipated by management, 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; 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; unanticipated contract terminations or customer cancellation or postponement of projects or sales; significant fluctuations in interest 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 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. 2
  • Air Products At a glance  $10B in revenues  Diverse markets and geographies  Positioned for continued long-term value creation FY07 Segment Sales FY07 Geographic 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
  • APD Transformation Creating Shareholder Value FY00 Sales FY07 Sales $5.7B $9.4B Merchant Tonnage Tonnage Merchant Electronics & Perf Mat’ls Healthcare Equipment Chemicals Healthcare & Energy Electronics & Performance Equipment Materials & Energy 4
  • Air Products Value Proposition Profitable Growth  Stability – Long term contracts – Consistent and predictable cash flows – Strong balance sheet  Growth – Solid project backlog – High bidding activity – Energy opportunities  Improving returns – Margin improvement – Productivity – Increasing dividends – Share buyback 5
  • Supply Modes Durable Business Models 10, 15 and 20-year contracts Take-or-pay minimum volumes Contractual energy Equipment & pass-through Services 18% Onsite/Pipeline Formula escalation 36% 3-5 year contracts Package Gases & Liquid/Bulk Regional business Specialty Materials 21% Cost pass-through/surcharges 25% 6
  • A Healthy Report Card Four consecutive years FY07 FY04 FY05 FY06 $7.1 $9.4 $6.4 $8.2 Sales ($B)……………… EPS ($/share)……....... $3.35 $2.45 $4.20 $2.80 ORONA (%) ………….. 12.4% 11.3% ROCE (%)…………….. 12.3% 11.2% SG&A / Sales (%)…… 12.8% 14.7% 14.2% 12.2% “A” rating Balance Sheet…………. Dividend increase & Shareholder Value……. share repurchase * Comparisons are non-GAAP. 7
  • Merchant Gases Strong Growth & Performance $MM $MM 12% CAGR Revenue by Region ($, FY07) Europe LB • Continue delivering double-digit growth Solid growth in Asia Europe PG  Expanding in Eastern/Central Europe North America  New offerings success Asia • Achieve 20% operating margins Equipment ROW 8
  • Electronics & Performance Materials Performance Improvement $MM $MM 11% CAGR Revenue by Region ($, FY07) • Profit and return improvement driven largely by Electronics turn-around Asia • Continue delivering double-digit growth (40%) North America • Growth in Photovoltaics (40%) • Achieve 15% operating margins Latin America (2%) Europe (18%) 9
  • Tonnage Gases High Growth Segment $MM $MM 16% CAGR Investment by Region • Significant profit growth and improvement 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 10
  • Refining Hydrogen and Energy Driving Hydrogen Growth  Transport fuels growth 15%  More heavy, sour crude 15% 45%  Clean fuels legislation 25%  Increased outsourcing trend  Future opportunities Conversion Crude – Gasification Clean Fuels – GTL Outsourcing – Oil sands – Non-conventional fuels 11
  • 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 14 Rotterdam Europoort Pernis Dominguez 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 Anaheim Street 10 Valero Wilmington Baytown 2 Syngas pipeline Conoco Phillips 610 Wilmington Wilmington H2 110 225 45 LaPorte Pasadena Bayport Clear Lake Texas City 12
  • 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
  • Tonnage Gases Leading the Way on Gasification  APD is one of the largest suppliers of oxygen to gasification facilities around the world (>10 large units)  Designed, built, own and operate units in Texas for syngas, H2 and CO for pipeline systems: – 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 14
  • Air Products Outlook  Future demand drivers are strong – High energy costs  efficiencies – High capital costs  debottlenecking – Environmental pressures  new applications  Globally well positioned with market leadership – Hydrogen for clean fuels – Oxygen for gasification – Electronics 15
  • Margin Improvement Goal 17% 14% 2010 2007 300 BP Operating Margin Improvement from … Cost Plant Improved Reduction Efficiency Mix 200BP 50BP 50BP 16
  • Capital Spending Outlook FY2008 PP&E CapEx $1.2B Capital leases 0.2 Total $1.4B FY2009 Forecast Total $1.7-$2.0B On-site includes long-term contracts reported in our Tonnage, Electronics and Merchant Gas business segments. Merchant includes liquid & bulk gas, packaged gas, specialty and performance materials and equipment & services capital. 17 Support includes maintenance capital and other non-revenue generating capital spending.
  • 2009 and Beyond Sustainable Double-Digit Growth at Superior Returns  Targeting sustainable double-digit EPS growth ● Targeting a total of 300BP margin improvement in FY’07 – FY’10 – Cost reduction and SG&A improvement – Improved business mix – Plant efficiency / incremental expansions  Targeting a ROCE 3% – 5% above our cost of capital More Focused, Less Cyclical, Higher Growth, Higher Returns 18
  • Thank you tell me more www.airproducts.com