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    celanese 2009_february_roadshow_presentation celanese 2009_february_roadshow_presentation Presentation Transcript

    • Celanese Corporation February 2009 1
    • Forward looking statements; Reconciliation and use of non-GAAP measures to U.S. GAAP This presentation may contain “forward-looking statements,” which include information concerning the company’s plans, objectives, goals, strategies, future revenues or performance, capital expenditures, financing needs and other information that is not historical information. When used in this presentation, the words “outlook,” “forecast,” “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements are based upon current expectations and beliefs and various assumptions. There can be no assurance that the company will realize these expectations or that these beliefs will prove correct. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements contained in this release. Numerous factors, many of which are beyond the company’s control, could cause actual results to differ materially from those expressed as forward-looking statements. Certain of these risk factors are discussed in the company’s filings with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which it is made, and the company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. This presentation reflects three performance measures, operating EBITDA, adjusted earnings per share and adjusted free cash flow as non-U.S. GAAP measures. The most directly comparable financial measure presented in accordance with U.S. GAAP in our consolidated financial statements for operating EBITDA is operating profit; for adjusted earnings per share is earnings per common share-diluted; and for adjusted free cash flow is cash flow from operations. ►Operating EBITDA, a measure used by management to measure performance, is defined as operating profit from continuing operations, plus equity in net earnings from affiliates, other income and depreciation and amortization, and further adjusted for other charges and adjustments. We provide guidance on operating EBITDA and are unable to reconcile forecasted operating EBITDA to a GAAP financial measure because a forecast of other charges and other adjustments is not practical. Our management believes operating EBITDA is useful to investors because it is one of the primary measures our management uses for its planning and budgeting processes and to monitor and evaluate financial and operating results. Operating EBITDA is not a recognized term under U.S. GAAP and does not purport to be an alternative to operating profit as a measure of operating performance or to cash flow from operations as a measure of liquidity. Because not all companies use identical calculations, this presentation of operating EBITDA may not be comparable to other similarly titled measures of other companies. Additionally, operating EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements nor does it represent the amount used in our debt covenants. ►Adjusted earnings per share is a measure used by management to measure performance. It is defined as net earnings (loss) available to common shareholders plus preferred dividends, adjusted for other charges and adjustments, and divided by the number of basic common shares, diluted preferred shares, and options valued using the treasury method. We provide guidance on an adjusted earnings per share basis and are unable to reconcile forecasted adjusted earnings per share to a GAAP financial measure because a forecast of other charges and other adjustments is not practical. We believe that the presentation of this non-U.S. GAAP measure provides useful information to management and investors regarding various financial and business trends relating to our financial condition and results of operations, and that when U.S. GAAP information is viewed in conjunction with non-U.S. GAAP information, investors are provided with a more meaningful understanding of our ongoing operating performance. This non-U.S. GAAP information is not intended to be considered in isolation or as a substitute for U.S. GAAP financial information. ►The tax rate used for adjusted earnings per share is the tax rate based on our original guidance communicated at the company’s investor day in December 2007. We adjust this tax rate during the year only if there is a substantial change in our underlying operations; an updated forecast would not necessarily result in a change to our tax rate used for adjusted earnings per share. The adjusted tax rate may differ significantly from the tax rate used for U.S. GAAP reporting in any given reporting period. It is not practical to reconcile our prospective adjusted tax rate to the actual U.S. GAAP tax rate in any future period. ►Adjusted free cash flow is defined as cash flow from operations less capital expenditures, other productive asset purchases, operating cash from discontinued operations and certain other charges. We believe that the presentation of this non-U.S. GAAP measure provides useful information to management and investors regarding changes to the company’s cash flow. Our management and credit analysts use adjusted free cash flow to evaluate the company’s liquidity and assess credit quality. This non-U.S. GAAP measure is not intended to be considered in isolation or as a substitute for U.S. GAAP financial information. 2
    • Celanese: a leading global integrated producer of chemicals and advanced materials Superior Value Creation Strategy Industry Leader Clear focus on growth and ► value creation Geographically balanced ● global positions Culture Diversified end market Leading Global ● Strong performance exposure Integrated Producer built on shared of Chemicals and Solid Cash Generation ► principles and Advanced Materials objectives Significant Strategic Growth ► Capability Execution Track record of execution ● Demonstrated track record Clearly defined ● of delivering results opportunities 3
    • Globally balanced and integrated businesses aligned to sustain value and accelerate growth Differentiated Intermediates Specialty Products Building Block Acetate Consumer Specialties Anhydride (CS) Nutrinova and esters Acetic Acid Emulsions Industrial Raw VAM PVOH Specialties Materials (IS) AT Plastics Formaldehyde Ticona Advanced Engineering Acetyl Intermediates Engineered Polymers (AI) Materials (AEM) Affiliates 4
    • Celanese executes against a simple strategic foundation FOCUS Participate in businesses where we have a sustainable competitive advantage Celanese INVESTMENT REDEPLOYMENT Divest non-core assets and Leverage and build on Strategic revitalize underperforming advantaged positions that Pillars businesses optimize our portfolio GROWTH Aggressively align with our customers and their markets to capture growth 5
    • Today’s portfolio: more resilient with increased specialty focus Strategic objectives Operating EBITDA1 ► continue to drive specialty Acetyl Intermediates Advanced Engineered Materials focus Consumer and Industrial Specialties Essentially all growth has come ● 1,400 from specialty businesses since 1,200 2005 ● Able to maintain relatively $ in millions 53% 1,000 stable contributions from 54% specialties in an uncertain 800 61% environment 600 Resulting in: ► 400 Increased overall earnings ● 47% 46% power of the portfolio 39% 200 ● Reduced volatility - ● Higher level of normalized 2005 2007 2008 earnings 6 12005, 2007 and 2008 Operating EBITDA excludes Other Activities of ($122), ($82) and ($87), respectively, for the periods presented
    • 2008 financial performance 4th Qtr 2008 4th Qtr 2007 $ in millions (except EPS) FY 2008 FY 2007 Sales $1,760 $6,444 $1,286 $6,823 Operating Profit/(Loss) $324 $748 ($152) $440 Adjusted EPS $0.93 $3.29 ($0.38) $2.77 Operating EBITDA $349 $1,294 $68 $1,169 Adjusted Free Cash Flow $385 $372 Fourth quarter 2008 results characterized by: Sustained earnings performance from our Consumer Specialties business ► Solid cash generation ► Unprecedented end-consumer supply chain destocking ► Global recessionary trends driving weakness in industrial and consumer demand ► Inventory accounting impact of ~$0.48/share included in Adjusted EPS1 ► 7 1$101 million inventory accounting impact tax effected at 26% divided by 155.9 million diluted shares for the three months ended December 31, 2008
    • 2008 portfolio components – financial highlights Celanese ($ in millions) 2008 Revenue1,2: $6,823 2008 Operating EBITDA2: $1,169 Advanced Engineered Consumer and Industrial Acetyl Intermediates Materials Specialties 2008 Revenue1: 2008 Revenue: $1,061 2008 Revenue: $2,561 $3,199 2008 Operating EBITDA: $170 2008 Operating EBITDA: $410 2008 Operating EBITDA: $676 Leading global producer Leading global producer Leading global integrated ► ► ► of engineered polymers of cellulose acetate producer of acetyl products products Strategic affiliates in Asia Significant presence in all ► ► Leading global producer three major regions ► of vinyl emulsion products 1Represents third party net sales for 2008 2Total 2008 Revenue and Operating EBITDA includes Other Activities of $2 and ($87), respectively 8
    • Peak and trough relative performance Relative Peak versus Trough Quarter – Operating EBITDA Acetyl Intermediates Advanced Engineered Materials Industrial Specialties Consumer Specialties Other Activities 18 – 20% Operating EBITDA Fourth Quarter Impacting Factors ► Seasonality 13 – 15% 22 – 25% 18 – 20% Inventory accounting ► 8 – 10% 10 – 12% impacts 21 – 23% 20 – 22% Customer destocking ► Normalized Normalized Peak Conditions Trough Conditions Trough defined as four quarters of sustained -1% to 1% global GDP 9 Note: Earnings from strategic affiliates included in total Operating EBITDA amounts but excluded from margin % amounts
    • Portfolio well-positioned to deliver and execute Relatively economically insensitive with stable earnings and cash ► Consumer flows Specialties ► Selective growth opportunities through customer partnerships GDP driven volumes ► Industrial ► Downstream integration mitigates volatility Specialties ► Opportunities for growth through innovation and globalization Innovation and extensive portfolio provides platform ► Advanced ► Executing on value recovery opportunities Engineered ► Automotive and durable good volumes drive market growth Materials Leading global position provides solid platform ► Acetyl ► GDP+ driven volumes Intermediates ► Advantaged technology and cost position Value Creation supported by solid cash generation, fiscal discipline and an optimized leverage portfolio 10
    • Trajectory of the portfolio for 2009 Stable volumes expected in 2009 ► Consumer Continued margin expansion with ongoing decreases in ► Specialties energy and raw material costs Volumes remain challenged in North America and Europe ► Industrial Continued success in Asia and new product development ► Specialties Raw material and energy cost reductions should positively ► impact margins Further reductions in US and Europe auto builds continue ► Advanced to pressure volumes Engineered Sustained higher pricing and easing input costs should ► Materials contribute to margin recovery Once destocking moderates, volumes expected to be at ► reduced levels in-line with weaker global demand Acetyl Intermediates Expect margins to stabilize based on advantaged ► technology and cost position 11
    • Identifying and executing actions to reduce spending Global Fixed Spending ~$1.5 billion on an annual basis Strengthen Reduce Fixed Spending Lower Scalable Costs Manufacturing Footprint non-scalable costs: potential closures: scalable spending ►Non-energy, ►Assessing ►Reduce through: SG&A Pardies Acid & VAM units • • Manufacturing Cangrejera VAM unit • • Block production at batch • manufacturing facilities R&D • actions being considered ►Other Other areas • Eliminate/reduce use of outside • contractors - $120 million already ►~$100 Decreased distribution costs • identified, sustainable reductions actions could yield ►Identified opportunities to be ►Additional ~$60 million in savings – identified demand dependent Fixed spending reductions position the portfolio to expand earnings 12
    • CS: relatively economically insensitive with stable earnings and cash flows CS Operating EBITDA 2004 – 2010E Acetate Products ► revitalization completed in 2007 Growth Objective 350 Full synergy capture of ► 300 APL acquisition by Asian Growth1 2008 250 Nutrinova to offset European Initiative ► $ in millions price declines with 200 volume increases North America/Europe Revitalization 150 Modest growth beyond ► 2008: 100 Acetate Base Operating EBITDA Growth in Asia 50 continues at ~2% Nutrinova Operating EBITDA per year 0 Sustainable Operating 2004 2005 2006 2007 2008 2009E 2010E EBITDA 1Dividends from cost investments 13
    • IS: downstream integration mitigates earnings volatility Increased Value Reduced Volatility Technology and Production and Cycle Customer Driven Market Driven Earnings Improvement per volatility ~35% reduction Ton of Acetic Acid Profit Range per Ton ~30% of Acetic Acid ~10% Sell Acid Total Margin Sell VAM as Acid Margin Peak Average Trough as VAM Available VAE Profit Added Through Chain Acetyls versus Integrated Downstream Higher overall earnings through integrated chain ► ► Lower earnings volatility with downstream integration 14
    • IS: opportunities for growth through innovation and globalization Global Vinyl Emulsions Applications Driving Future Growth Future Growth 4.0 Applications Application >25% Rate Sales ($MM) ~30% 3.0 $ in billions ~25% Low VOC and nano $400 – $500 10+% increase in paints 2.0 vinyl space Engineered $200 – $300 3% - 5% fabrics/glass fiber 1.0 Enviro-friendly $100 – $200 8% adhesives 0.0 2006 Future China building/ $100 – $200 30+% construction Others Celanese $1.0 billion expansion = >$250 million in revenue 15
    • AEM: value recovery opportunities through easing input costs and pricing initiatives Indexed Variable Margin per Unit 100% Variable Margin as a % of Sales 75% Pricing 50% Raw Materials 25% & Energy 0% Current Trends 2005 2006 2007 2008 Significantly high raw material and energy costs impacted ► margins since 2005 ► Successful pricing actions and falling raw material costs drive margin expansion opportunities 16
    • AEM: automotive and durable good volumes drive market growth Growth in Value per Vehicle Current North American and ► North America & Europe European unit production trends under significant pressure Shift to smaller, more fuel efficient 20% vehicles Limited credit availability 16% Growth in value indexed to 2005 Value per vehicle expected to ► continue significant growth trend 12% Expansion in Asia adds organic ► 8% growth opportunities Increased focus on product ► 4% development applications Metal replacement 0% Fuel efficiency/Alternative fuels 2006 2007 2008 Increased electronics 17 Source: Celanese estimates
    • AI: advantaged technology and cost position 2009E Acetic Acid Cost Curve (kt) (based on nameplate capacity) Ethanol Ethylene Acetyl Highest Cost Intermediates China MeOH >15% ROIC Lower Cost China MeOH Avg Non-China MeOH Carbonylation Average Celanese Avg Other Leading Technology By Prod 0% 15% 30% 45% 60% 75% 90% Assumes Oil Effective Industry Utilization Rates at $60/barrel 18 Source: Celanese estimates, available public data
    • Celanese capital structure Primary Components Structure Characteristics Cash - $676 million Sources of Liquidity Credit Linked Revolver - Cost $137 million Revolver - $650 million Advance Fraport Payment ~$415 million Stability Debt Obligations Term Loan - $2.8 billion Other Debt Obligations - Flexibility $739 million Net Debt* - $2.4 billion Strong balance sheet provides flexibility and stability in current environment 19 * Represents proforma net debt including receipt of advance payment from Fraport
    • 2009 cash flow elements Elements of Cash Flows* Assumptions $ in millions Cash taxes expected to align Cash Taxes $80 - $120 ► with adjusted earnings profile Capital Expenditures $150 - $175 Productivity improvements and ► cost reduction programs remain Reserve Spending $50 - $60 a priority Net Interest $220 - $230 Net Interest expense based on ► current expectations of rates Pension $50 - $60 Available funding credits to ► Dividends/Debt Service $80 - $90 significantly offset required pension contributions over the Kelsterbach Relocation $350 - $370 next two years Fraport Advance Payment ~$415 *Starting from an Operating EBITDA base 20
    • Continued financial flexibility Long-Term Debt Repayment Stable, Flexible & Low Cost Advantages of structure: ► 3,000 ► LIBOR +150 – 175 bps ► Term loan maturity not until 2014 $ in millions ► 1% annual term loan amortization ► “Covenant-lite” – no financial maintenance covenants on term 100 loan Net debt is ~75% fixed with a ► 2008 average borrowing cost of ~6.96% 2009 2010 2011 2012 2013 Thereafter 21
    • Appendix 22
    • Consumer Specialties 4th Qtr 4th Qtr FY FY in millions 2008 2007 2008 2007 Net Sales $279 $1,111 $286 $1,155 Operating EBITDA $57 $274 $65 $293 Fourth Quarter 2008: ► Net sales increase primarily driven by higher pricing which more than offset lower volumes and unfavorable currency ► Easing raw material and energy costs resulted in margin expansion ► Operating EBITDA improvement demonstrates sustained earnings performance during challenging economic environment 23
    • Industrial Specialties 4th Qtr 4th Qtr FY FY in millions 2008 2007 2008 2007 Net Sales $331 $1,346 $277 $1,406 Operating EBITDA $41 $119 $8 $117 Fourth Quarter 2008: ► Net sales decrease primarily driven by lower volumes and unfavorable currency effects ► Higher pricing helped to offset significant volume declines ► Inventory accounting impacts ($15 million) and lower volumes primary reason for decrease in Operating EBITDA 24
    • Advanced Engineered Materials 4th Qtr 4th Qtr FY FY in millions 2008 2007 2008 2007 Net Sales $253 $1,061 $1,030 $195 Operating EBITDA $45 $252 ($3) $170 Fourth Quarter 2008: ► Net sales decreased as positive pricing actions and improved mix could not offset significant volume pressures ► Substantial reductions in US and European automotive production but only modest declines in many non-automotive applications ► Operating EBITDA loss due to lower volumes, inventory accounting impacts ($23 million) and lower affiliate earnings 25
    • Acetyl Intermediates 4th Qtr 4th Qtr FY FY in millions 2008 2007 2008 2007 Net Sales $1,083 $3,875 $3,615 $656 Operating EBITDA $231 $731 $21 $676 Fourth Quarter 2008: ► Decrease in net sales due to substantial volume declines and lower pricing ► Global recessionary trends and unprecedented inventory destocking drove decreased volumes ► Lower raw material and energy costs could not offset lower volumes and inventory accounting impacts ($63 million) ► Dividends from the Ibn Sina contributed $29 million to Operating EBITDA 26
    • Reg G: Reconciliation of Adjusted EPS Adjusted Earnings (Loss) Per Share - Reconciliation of a Non-U.S. GAAP Measure Three Months Ended Twelve Months Ended December 31, December 31, 2008 2007 2008 2007 (in $ millions, except per share data) Earnings (loss) from continuing operations 313 447 before tax and minority interests (178) 439 Non-GAAP Adjustments: 1 Other charges and other adjustments (93) 82 105 171 - 254 Refinancing costs - - Adjusted Earnings (loss) from continuing operations 220 783 before tax and minority interests (73) 610 2 Income tax (provision) benefit on adjusted earnings (62) (219) 19 (159) (1) Minority interests (1) - 1 Adjusted Earnings (loss) from continuing operations (54) 157 452 563 Preferred dividends (3) (10) (2) (10) Adjusted net earnings (loss) available to common shareholders (56) 154 442 553 Add back: Preferred dividends 3 10 2 10 Adjusted net earnings (loss) for adjusted EPS (54) 157 452 563 Diluted shares (millions) Weighted average shares outstanding 151.7 154.5 143.5 148.4 12.0 Assumed conversion of Preferred Shares 12.0 12.0 - 0.3 Assumed conversion of Restricted Stock 0.6 0.5 - 4.3 4.4 Assumed conversion of stock options 2.6 - Total diluted shares 168.6 171.2 143.5 163.5 Adjusted EPS (0.38) 0.93 2.77 3.29 1 See Table 7 for details 2 The adjusted tax rate for the three and twelve months ended December 31, 2008 is 26% based on the forecasted adjusted tax rate for 2008. 3 The impact of inventory accounting adjustments on Adjusted EPS is $0.48 calculated as $101 million tax effected at 26% divided by 155.9 million diluted shares for the three months ended December 31, 2008. 27
    • Reg G: Other Charges and Other Adjustments Reconciliation of Other Charges and Other Adjustments Other Charges: Three Months Ended Twelve Months Ended December 31, December 31, (in $ millions) 2008 2007 2008 2007 32 Employee termination benefits 5 2 21 11 Plant/office closures 7 7 - (4) Insurance recoveries associated with plumbing cases (2) - - 74 Long-term compensation triggered by Exit Event - - - 9 Asset impairments - 115 94 (40) Clear Lake insurance recoveries (40) (38) (15) (31) Resolution of commercial disputes with a vendor (31) - - - Sorbates settlement - (8) - Ticona Kelsterbach plant relocation 1 5 4 12 - Other 2 (1) (1) Total 84 (60) 108 58 1 Other Adjustments: Three Months Ended Twelve Months Ended Income December 31, December 31, Statement Classification (in $ millions) 2008 2007 2008 2007 Ethylene pipeline exit costs - 10 Other income (expense), net - (2) 8 Business optimization 18 SG&A 6 33 - Foreign exchange loss related to refinancing transaction 22 Other income (expense), net - - - Ticona Kelsterbach plant relocation - Cost of sales 2 (4) - Plant closures - Cost of sales 9 23 AT Plastics films sale - 7 Gain on disposition - - Gain on Edmonton sale (34) (34) Gain on disposition - - (7) Other 1 Various 4 13 21 (33) 63 24 Total 105 (93) 171 82 Total other charges and other adjustments 1 These items are included in net earnings but not included in other charges. 28
    • 29 Segment Data and Reconciliation of Operating Profit (Loss) to Operating EBITDA - a Non-U.S. GAAP Measure Three Months Ended Twelve Months Ended December 31, December 31, (in $ millions) 2008 2007 2008 2007 Net Sales 195 1,061 Advanced Engineered Materials 253 1,030 286 1,155 Consumer Specialties 279 1,111 277 1,406 Industrial Specialties 331 1,346 656 3,875 Acetyl Intermediates 1,083 3,615 1 Other Activities 1 2 0 2 (129) (676) Intersegment eliminations (186) (660) Total 1,286 1,760 6,823 6,444 Operating Profit (Loss) (48) 32 Advanced Engineered Materials 30 133 52 190 Consumer Specialties 69 199 (8) 47 Industrial Specialties 26 28 (116) 309 Acetyl Intermediates 276 616 1 Other Activities (32) (138) (77) (228) Total (152) 324 440 748 Equity Earnings, Cost - Dividend Income and Other Income (Expense) 5 37 Advanced Engineered Materials 7 55 (2) 47 Consumer Specialties 3 40 - - Industrial Specialties - - 30 125 Acetyl Intermediates 27 78 1 Other Activities 3 20 8 - Total 36 45 229 173 Other Charges and Other Adjustments 2 22 25 Advanced Engineered Materials (10) (5) 2 3 Consumer Specialties (27) (16) 2 13 Industrial Specialties (1) 32 75 108 Acetyl Intermediates (97) (69) 1 Other Activities 4 22 42 140 Total 105 (93) 171 82 Depreciation and Amortization Expense 18 76 Advanced Engineered Materials 18 69 13 53 Consumer Specialties 12 51 14 57 Industrial Specialties 16 59 32 134 Acetyl Intermediates 25 106 1 Other Activities 2 6 9 2 Total 79 73 329 291 Reg G: Reconciliation of Operating EBITDA Operating EBITDA (3) 170 Advanced Engineered Materials 45 252 65 293 Consumer Specialties 57 274 8 117 Industrial Specialties 41 119 21 676 Acetyl Intermediates 231 731 1 Other Activities (23) (87) (25) (82) Total 68 349 1,169 1,294 1 Other Activities primarily includes corporate selling, general and administrative expenses and the results from captive insurance companies. 2 See Table 7.
    • Reg G: Reconciliation of Net Debt December 31, December 31, 2008 2007 (in $ millions) Short-term borrowings and current installments of long-term debt - third party and affiliates 272 233 Long-term debt 3,284 3,300 Total debt 3,533 3,556 Less: Cash and cash equivalents 825 676 Net Debt 2,857 2,731 Reg G: 2007 – 2008 Adjusted Free Cash Flow 2007 2008 Net cash provided by operating activities 566 573 Adjustments to operating cash for discontinued operations 84 (3) Capital expenditures (288) (274) 1 Other charges and adjustments 23 76 Adjusted free cash flow 385 372 1Amounts primarily associated with certain other charges and adjustments and the cash outflows for purchases of other productive assets that are classified as ‘investing activities’ for U.S. GAAP purposes 30