Olson citigroup v2


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Olson citigroup v2

  1. 1. DELIVERING SOLUTIONS. DELIVERING GROWTH.DuPontRick OlsonSenior Vice PresidentCorporate Productivity & Business Process Simplification2011 Citi Basic Materials SymposiumNovember 29, 2011
  2. 2. Regulation G The attached charts include company information that does not conform to generally accepted accounting principles (GAAP). Management believes that an analysis of this data is meaningful to investors because it provides insight with respect to ongoing operating results of the company and allows investors to better evaluate the financial results of the company. These measures should not be viewed as an alternative to GAAP measures of performance. Furthermore, these measures may not be consistent with similar measures provided by other companies. This data should be read in conjunction with the previously published company’ reports on Form 10-K, 10-Q and 8-K. These reports along with reconciliations of non-GAAP measures to GAAP results are available on the Investor Center website at www.dupont.com.Forward Looking Statements During the course of this presentation we may make forward-looking statements or provide forward- looking information. All statements that address expectations or projections about the future are forward-looking statements. Some of these statements include words such as “plans,” “expects,” “will,” "believes," “intends,” and “estimates.” Although they reflect our current expectations, these statements are not guarantees of future performance, but involve a number of risks, uncertainties, and assumptions. Some of those risk factors include: fluctuations in energy and raw material prices; failure to develop and market new products and optimally manage product life cycles; global economic and capital markets conditions; litigation and environmental matters; changes in laws and regulations or political conditions; and business or supply disruptions. The Company does not undertake to update any forward-looking statements as a result of future developments or new information. 2
  3. 3. DUPONT FINANCIAL HIGHLIGHTS * Excludes significant items. Refer to company website for detailed reconciliations of non-GAAP measures. 3
  4. 4. 2010 SEGMENT SALESPro Forma Basis (including Danisco acquisition) $B 9 8 7 6 5 4 3 2 1 0 Agriculture Nutrition & Safety & Electronics & Ind Perf Coatings Perf Chem Perf Mats Health Protection Comm Biosciences 4
  6. 6. DuPont is driving critical cross-company enablersto address these challenges and maximize our resultsin the areas of: Innovation Differential portfolio management Productivity 6
  7. 7. QUESTION…Productivity has been an important area of focus for DuPont.What specific actions are you taking to improve productivity and how do youmeasure your success? What are your productivity goals for 2011 and 2012? 7
  8. 8. PRODUCTIVITYDisciplined processes deliver ongoing productivity Focused Effective Measured • Improving • Standard tools and • Measure progress efficiency and techniques to solve enabling reduced effectiveness problems costs and across supply increased capacity chains • Eliminating inefficiencies and • Comprehensive • Proactively creating sustained competitive anticipating value benchmarking market dynamics 8
  9. 9. FIXED COST PRODUCTIVITY 2010-2012 Target: $1B Fixed Cost Productivity 2010 result: >$400 million 2011 goal: $300 million … $250 million delivered through 3Q 2012 goal: $300 million Fixed Cost* as % of Sales 46.2% 44.6% 42.5% 41.2% 41.5% 41.0% 40% 39% 2005 2006 2007 2008 2009 2010 2011E 2012E* Data exclude significant items in all periods. See company website for detailed reconciliations of non-GAAP measures. 9
  10. 10. WORKING CAPITAL PRODUCTIVITY 2010-2012 Target: $1B Working Capital Productivity 2010 result: >$700 million 2011 goal: $300 million … tracking well toward goal through 3Q 2012 goal: $300 million NWC* Turnover: Achieved 13% Productivity in 2010 13% Productivity 5.5 NWC Turnover 4.9 NWC Turnover 2009 2010* Excludes cash, cash equivalents, marketable securities and short term borrowings. 10
  11. 11. WORKING CAPITAL PRODUCTIVITY Benchmarked versus 100+ companies based on public financial statements Trade Working Capital Productivity – DD* Average Period-end Position / Average Monthly Revenue Inferior Disadvantaged Parity Advantaged Superior3Q 20112Q 20111Q 2011 2010 2009 2008 2007 DuPont* Short-cycle businesses. Excludes Pioneer/DCP and Danisco 11
  12. 12. QUESTION…Are your expectations different for the growth businesses vs. theperformance businesses? How does your approach differ? 12
  13. 13. EXAMPLE … PERFORMANCE CHEMICALS (TiO2)Differentiated Process Technology 100% chloride technology DuPont one-step process Fixed Cost as % of SalesScale Largest in capacity All plants >100 kT per year 5% CAGR improvementCapital and fixed cost productivity Disciplined cost management using DuPont Production Systems (DPS)Variable Cost Productivity High conversion efficiency Substantial reduction of energy usage over last ten years 2008 2009 2010 2011E 2012E 13
  14. 14. EXAMPLE … PIONEERAgile & effective supply chains In-season sales represent opportunity, but require disciplined supply chain processes • ~10% of sales opportunities are in-season Project Focus • Shape demand around identified leader products • Closely monitor inventory levels • Optimize logistics – next day delivery Results • Reduced product returns (right product at the right location) • Improved inventory management at the field level • Increased sales and improved supply chain logistics 14
  15. 15. QUESTION…The TiO2 business has been performing very well and DuPont has continuedto increase prices. Given your prior experience, where do you think we arein the TiO2 cycle? Can margins stay at this level given escalating titaniumore prices? 15
  16. 16. TiO2 MARKET DYNAMICS Supply DemandAnnounced Capacity - DuPont200K tonnes Altamira expansion (2014)150K tonnes Debottlenecking projects (2012-2014) 16
  17. 17. QUESTION…With the purchase of Danisco complete, do you believe the portfoliotransformation is done?Where do you see the portfolio in 5 years? 17
  18. 18. DANISCO ACQUISITIONImpact to the Portfolio Ag & Nutrition Agriculture / Nutrition & Health 23% 28% Electronics & Communications 52% 48% 8% 9% Safety & Protection 11% 8% Industrial Biosciences 10% Performance Segments 3% 2010 DuPont Actual Sales 2010 DuPont – Danisco $31.5B Pro Forma Sales $34.2B 18
  19. 19. R&D INVESTMENT 2010 pro forma R&D investment ~$1.8B FOOD Decreasing Dependence on Fossil Fuels Increasing Food Production 15% Protecting People and Chemistry the Environment Engineering 11% ENERGY Materials Science Nanotechnology 60% Industrial Biotech 9% Chemicals and Ag Biotech Materials 5% ElectronicsPROTECTION Capital Allocation Aligned with Large Growth Opportunities 19
  20. 20. QUESTION…In the absence of any M&A, what are your priorities for cash use?Following the 9 million share repurchase in 3Q, should we expect morebuybacks in the future? 20
  21. 21. FINANCIAL DISCIPLINE PRINCIPLESUses of Cash • Maintain a strong balance sheet • Invest for growth in high return opportunities • Return excess cash to shareholders 21
  22. 22. FINANCIAL DISCIPLINE – CASH DEPLOYMENTPast 5 years(2006-2010) Share Repurchase 12% Capital Spending 44% Dividends $19B 39% 5% Acquisitions 5 yr Performance • ~$22B cash generated • ~$19B returned to shareholders or invested for growth – while maintaining strong balance sheet Strong Balance Sheet - - - data as of 12/31/2010 • $6.8B cash, cash equivalents & marketable securities • $3.5B net debt**Reconciliation of net debt can be found on the company website. 22
  23. 23. A LOOK AHEAD • Attractive long-term growth from innovation driven by challenges to: • Feed the world • Reduce dependency on fossil fuels • Protect people and the environment • Differential portfolio management affects capital allocation decisions, drives growth • Aggressive financial targets / transparency / accountability • Ongoing cost and capital productivity • Financial discipline© 2011 E.I. du Pont de Nemours and Company. All Rights Reserved. 23
  24. 24. You’re invited to join us…. DuPont Investor Day Dec 12 6pm – 8:30pm Dec 13 8am – 12:30pm Wilmington, Delaware 24