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Investor-Update-September-2009

VIEWS: 7 PAGES: 38

									Evonik.
Power to create.

Investor Update


September 2009
      Key credit highlights

       • Leading global Specialty Chemicals player                                 Megatrends

       • Activities in Energy and Real Estate with low risk profiles                 Energy
                                                                                    Efficiency
       • Excellent market positions and balanced product portfolio in Chemicals

       • Strong R&D pipeline in Chemicals with focused product development

           responding to megatrends                                                  Health &
                                                                                     Wellness

       • Strong commitment to EBITDA & Cash Flow improvement to secure

           competitive edge

       • Supportive shareholders with focus on long-term and sustainable          Globalization &
                                                                                  Demography

           value creation




September 2009 | Investor Presentation                                                           Page | 1
    A resolute management team




          Dr. Klaus Engel (53)                 Dr. Wolfgang Colberg (49)                                  Ralf Blauth (58)
    Chairman of the Executive Board                  Chief Financial Officer                    Chief Human Resources Officer


               25 Years of Experience                    23 Years of Experience                           38 Years of Experience

2007-2008:                                  2001-2009:                                       2006-2009:
Board member of Evonik                      CFO BSH Bosch Siemens Hausgeräte                 Member of the Degussa-Board and HRO
2006:
                                            before 2001:                                     2005-2006:
CEO Degussa AG and member of RAG-Board
2001:                                       different positions in Robert Bosch Group        Member of the RAG Coal Int.Board and HRO

CEO Brenntag AG                             inter alia                                       before 2002:
before 1999:
                                            • General Manager for Turkey and Central Asia    various positions within the Works Council of
various positions in Stinnes AG, Creanova
Spezialchemie GmbH and Hüls AG, VEBA AG                                                      Degussa AG, VEBA/ E.ON and Hüls AG
                                            • Senior Vice President Central Purchasing and

                                             Logistics
                                                                                                                                        Page 2
       Ownership structure

       •      RAG Stiftung (foundation)
                  • public mandate from the German
                    Government to further develop the
                    group’s business with the ultimate target    74.99%                            25.01%

                    of an IPO of up to 75%
       •      25.01% acquired by CVC Funds in June 2008                   Evonik Industries AG

       •      Strong alignment of both shareholders
       •      Three well established business areas                       Evonik Degussa GmbH
              Chemicals, Energy and Real Estate
                                                                100%
                                                                          Evonik Steag GmbH
                  • Evonik Degussa GmbH since 1873
                  • Evonik Steag GmbH since 1937                          Evonik Immobilien GmbH

                  • Evonik Immobilien GmbH since 1999




September 2009 | Investor Presentation                                                             Page | 3
       Evonik operates in three Business Areas

                                          Sales €15.9 bn; EBITDA €2.2 bn; 40,767 employees (2008)

                                         Chemicals                                 Energy                 Real Estate




       • A leader in specialty chemicals                                • Leading coal power plant   • Residential portfolio
                                                                          developer & operator         of.~60,000 units
       • Broad spectrum of products and applications
                                                                        • Sales:       €3.6bn        • 50% stake in THS
       • Sales:                  €11.5bn                                                               (~75,000 units)
                                                                        • EBITDA:      €545m
       • EBITDA:                 €1.6bn                                                              • Sales:       €375m
                                                                        • Employees: 4,702
       • Employees: 31,728                                                                           • EBITDA:      €217m
                                                                        • Activities in approx. 40
       • Production plants in 28 countries, activities all around         countries                  • Employees: 443
         the world




September 2009 | Investor Presentation                                                                                    Page | 4
       Evonik Chemicals –
       A leader in Specialty Chemicals
                                                         2008 Sales (€ bn)

       Strong market positions
                                                             16 15.4
                  • # 1-3 market positions in 80% of
                                                             14
                    sales
                                                             12                11.5
       Strong R & D footprint
                                                             10                                     9.3




                                                                                 Evonik Chemicals
                  • More than 20 % of sales generated         8                                           7.0 7.0
                    from products younger than 5 years                                                                            6.6
                                                              6                                                                             5.6 5.4
                                                                                                                                                                4.8
                                                                                                                                                                         4.3
       High focus on earnings & cash flow                     4                                                                                                                    3.9
       stability                                                                                                                                                                          1.9
                                                              2                                                                                                                                   1.3 1.1

                  • Diversified product portfolio and         0
                    customer base



                                                                                Evonik Chemicals




                                                                                                                    Rohm & Haas
                                                                                                          Solvay*




                                                                                                                                                     Clariant
                                                                  Akzo Nobel




                                                                                                                                                                                          Lonza

                                                                                                                                                                                                  Altana
                                                                                                                                  Lanxess

                                                                                                                                            Arkema



                                                                                                                                                                Rhodia

                                                                                                                                                                          Wacker
                                                                                                    DSM




                                                                                                                                                                                   Ciba




                                                                                                                                                                                                               Croda
                  • Continuous improvement in cost
                    efficiency                                                                                                                                           *without Pharma




September 2009 | Investor Presentation                                                                                                                                                                     Page | 5
       Evonik Chemicals –
       Strong market positions


     % of sales from
     products with
     #1-3 market
     positions                             100%
                                                         88%                           91%            89%
                                                                        77%
                                                                                                                   49%




       Business                          Inorganic    Consumer        Health &      Coatings &    Performance    Industrial
       Unit                              Materials    Specialties     Nutrition     Additives     Polymers       Chemicals

       Examples                    • Silicas         • PU Foam      • Methionine   • Isophorone   • PA 12       • H2O2
                                   • Silanes           Additives    • Precious       Chemistry    • Metha-      • 1-Butene
                                                     • Super-         Metal        • Coating        crylates
                                                       absorber       Powder         Additives
                                                                      Catalysts


September 2009 | Investor Presentation                                                                                   Page | 6
      Evonik Chemicals –
      Product excellence - examples

                                            Consumer Specialties
                                   FAVOR®




                     Superabsorber                Personal Care    Polyurethane Additives




                                              Health & Nutrition




                         Methionine                 Catalysts         Exclusive Synthesis &
                                                                          Amino Acids

September 2009 | Investor Presentation                                                        Page | 7
      Evonik Chemicals –
      Global presence

         Sales & property, plant & equipment (PP&E) by region 2008                               • More than 100
                                                                                                   production sites in 28
                                                  Germany:
                                                                                                   countries
                                             Sales        €2.9bn
               NAFTA:                        PP&E         €2.2bn
                                                                                                 • Leading market
        Sales         €2.3bn                                                                       presence in Europe
        PP&E          €0.6bn

                                         Rest of Europe:                              Asia:      • Strong footprint in
                                         Sales     €3.5bn                     Sales     €2.0bn     NAFTA
                                         PP&E      €0.6bn                     PP&E      €0.6bn
                                                                                                 • Excellent bridgehead in
          Latin America:
                                                                                                   emerging markets
        Sales        €0.6bn
        PP&E         €0.1bn                                                                        (Eastern Europe, China)
                                                             Rest of World:
                                                            Sales  €0.2bn
                                                            PP&E < €0.1bn



                                                 Total:
                                         Sales      €11.5bn
                                         PP&E       €4.1bn
September 2009 | Investor Presentation                                                                                   Page | 8
      Evonik Chemicals –
      Diversified end market portfolio
                                         Sales by End Markets (2008)
                                                   €11.5bn

                     Pharma                                                     Home / Personal Care




                                                      Other
                       Metal                           9%                             Plastic
                                                                    19%
                                                4%
                                           5%


                                         7%

                  Construction                                                         Auto
                                                                          18%
                                         11%



                                                 9%
                                                              18%
                       Food                                                           Coating




September 2009 | Investor Presentation                                                                 Page | 9
      Evonik Chemicals –
      Strategy

                                                   Our Vision for Chemicals

           • Consistent market orientation and customer focus
           • Leverage innovation and technology as global competitive advantage
           • Actively develop portfolio – materialize sustainable and profitable growth options


                                            Short and Long-Term Financial Targets

           • Operating profitability / superior operating margins
                               EBITDA margin above average of best-in class Specialty Chemicals peers

           • Value generation / value creation across the economic cycle
                               ROCE of Chemicals business area will exceed its internal capital charge in
                               any given year
                               ROCE > pre-tax cost of capital of 9.0%

September 2009 | Investor Presentation                                                                      Page | 10
       Evonik Chemicals –
       Benchmark setting innovation process
                                                                              New patents 2003 - 2008
       Strong Intellectual Property portfolio                     350
                                                                              329          313
                                                                                                       347          340         353
                                                                                                                                   319*
                                                                                                          298          289

       • >300 new patent applications every year and                              228         224


         >20,000 patents in total                                   136



       • ~ one third of sales generated from patent-protected
                                                                   2003         2004        2005        2006         2007         2008
         products/technologies                                          # of 1st patent applications           thereof covering China
                                                                                                                *as of 10 September 2009




       Customer benefit determines R&D intensity                        Strong commitment to R&D …

       • Measurable customer benefit as decisive factor (e.g.             €300m plus annual research and
                                                                             development expenditure
         customer bonding, supply chain integration)                         (~3% R&D to sales ratio)

       • Overall R&D expenses almost 3% of sales                process improvement                                 15% explorative
                                                                30%                                                 research


       1 Euro R&D expenditure = 1.5 Euros new annual sales
                                                                 application
                                                                 development                                          new product
                                                                 15%                                                  development
                                                                                                                      40%

                                                                            85% of R&D in Business Units


September 2009 | Investor Presentation                                                                                               Page | 11
      Evonik Chemicals –
      Product innovation - examples

                                         Inorganic Materials




                  Advanced Silanes                       Functional Silanes     Lithium-Ion Technology




                                                   Performance Polymers
                                   ROHACELL®                       PLEXIGLAS®




             High Performance Polymers                    Acrylic Polymers         Acrylic Monomers




September 2009 | Investor Presentation                                                                   Page | 12
      Evonik Energy-
      Low risk business model

       • Germany's fifth largest producer of electricity
       • Unique & low risk business model
       • Dedicated leadership in generation and development
       • World class engineering and operations know-how
       • Successful German blueprint for international projects


                                                       Focus on Power Generation and Related Services

     Electric
                                         Coal Supply                   Generation                    Grid           Distribution
     Power
     Value Chain
                                            Evonik Energy's Business Model


                                                         Leading Independent Power Plant Developer


                           Planning                                      Construction                       Operation




September 2009 | Investor Presentation                                                                                             Page | 13
      Evonik Energy-
      Strong asset base

                               Overview                                      Selected Highlights

                                                                            Iskenderun 1/2, Turkey
           • Portfolio of 11 hard coal and                                  Hard coal; 1,320 MW; Commercial operation date (COD) 2003
             2 refinery power plants
                                                                                 • Largest and most efficient power plant in Turkey
           • Total capacity of ~9,700 MW                                         • Expansion option (Ayas; COD 2013)
             thereof ~1,700 MW abroad           Iskenderun 1/2

           • High quality assets                                            Mindanao, Philippines
                                                                            Hard coal; 232 MW; COD 2006
               • International power plants
                 <10 years old                                                   • Expansion option (Mindanao II; COD 2015)

               • Ongoing modernization of       Mindanao

                 domestic power plants
                                                                            Walsum 10, Germany
                 (retrofit)                                                 Hard Coal; 790 MW; COD 2010

               • No decommissioning within                                       • First fossil-fired plant with efficiency >45% worldwide
                 next 10 years
                                                Walsum 10


                                                             Expansion Options

           • Overall expansion opportunities at existing sites currently >4,000 MW (coal or gas)

September 2009 | Investor Presentation                                                                                                Page | 14
      Evonik Real Estate


       • Attractive residential real estate portfolio           Key portfolio cities within
                                                                 North Rhine-Westphalia
       • Present in North Rhine-Westphalia with growing
         demand and migration into urban agglomerations

       • Focused on attractive micro-locations

       • Long-term stable cash flow & earnings base

       • Asset value of €2.7bn (IAS 40) and debt of €0.6bn at
         the end of 2008

       • Continuous focus on efficiency improvements




September 2009 | Investor Presentation                                                        Page | 15
       Solid Financial Performance for the
       Evonik Group 2006 - 2008



                          Sales 2006 – 2008 (€ m)                      EBITDA 2006 – 2008 (€ m)                  Capex 2006 – 2008 (€ m)

                                                    9.9%
                                  2.3%                                          15.5%
                                                                 15.3%
                                                                                                  13.7%
                                                        15,873                                                                             1,160
               14,125                14,444                                                                               1,032
                                                                  2,157          2,236         2,171      935




                  1                  2              3



                      1                  2                 3       1               2               3
                                                                                                            1               2               3
               2006
               Sales                  2007
                                   Sales Growth          2008     2006
                                                                 EBITDA          2007          2008       2006            2007             2008

                      Sales          Sales Growth                  EBITDA      EBITDA-margin                Capex




September 2009 | Investor Presentation                                                                                                             Page | 16
      Performance 2008 by business unit

                           in € m                 External Sales   Change y-o-y   EBITDA   Change y-o-y

                           Evonik Group              15,873           +10%        2,171        -3%

                           Chemicals                 11,512            +9%        1,600        -1%
                           thereof:
                           Industrial Chemicals        2,737           +12%         363         0%
                           Inorganic Materials         2,208           +19%         315       -13%
                           Consumer Specialties        1,682            +3%         144       -24%
          Business Units




                           Health & Nutrition          1,505           +25%         450      +101%
                           Coatings & Additives        1,549            +1%         250       -17%
                           Performance Polymers        1,397            -3%         112       -41%


                           Energy                      3,649          +21%          545        -6%

                           Real Estate                   375           -11%         217      +15%

                           Others                        337           -21%         -191      -34%

September 2009 | Investor Presentation                                                               Page | 17
       Financial structure 2006 - 2008


                          in € m                                2006     2007     2008

                          Total Assets                          20,953   19,800   20,099

                          Shareholders equity                   4,320    5,081    5,192

                          Net financial debt                    4,979    3,924    4,583

                          Pension provisions                    4,070    3,894    3,900

                          EBITDA                                2,157    2,236    2,171

                          Net interest result                    -470     -466     -530

                          Operating cash flow pre NWC changes   1,147    1,445    1,137

                          Net working capital (NWC)             2,898    2,884    3,305




September 2009 | Investor Presentation                                                     Page | 18
      Balance sheet structure
                                         12.2008     06.2009   12.2008     06.2009


                                                                26%


                                                                              28%     Equity
                Non-current assets        68%


                                                         72%
                                                                52%

                                                                              53%     Non- Current liabilities



           Current assets excl.
                                          29%
       cash & cash equivalents
                                                         26%
                                                                22%
                                                                              19%     Current liabilities
      Cash & cash equivalents              3%            2%
                                         €20.1bn     €18.7bn   €20.1bn      €18.7bn

                                                Assets              Liabilities

September 2009 | Investor Presentation                                                                           Page | 19
       Current status of financing Q2/2009

       Key components                                             Debt Maturity Profile as of June 30, 2009 (in € m)
       • €2,829m syndicated loan facility
         due 03/2011
          • €2,250m revolving credit facility central
                                                                        2,250 RCF
            liquidity backup (€300m drawn)
                                                                                           1,500
       • €183.5m promissory notes (issued July
         2009) due 01/2013
                                                                            739                                                      756
                                                            526
       • €1,250m bond of Evonik Degussa                             390

         due 12/2013                                                                156             148    138
                                                                                                                    74          90




                                                                                                                                     nd
                                                           09




                                                                                                                   16


                                                                                                                            17
                                                                   10


                                                                           11


                                                                                   12


                                                                                           13


                                                                                                   14


                                                                                                           15
       • €1,579m long-term bilateral project




                                                                                                                                   yo
                                                        20




                                                                                20


                                                                                        20


                                                                                                20


                                                                                                        20


                                                                                                                20


                                                                                                                         20
                                                                20


                                                                        20




                                                                                                                                 be
                                                                                                                              d
         financings




                                                                                                                            an
                                                                                                                           18
                                                                                                                        20
           • €528m long-term mortgage backed real
             estate financings
           • €1,051m limited-recourse project
             financings in the Energy business
September 2009 | Investor Presentation                                                                                               Page | 20
       Finance strategy

       Evonik Industries AG is the finance and capital entity for the Group

       • Align finance structure
                  •      Minimize debt at subsidiary level
                  •      Asset based financing for Energy and selective Real Estate projects

       • Establish Evonik Industries as a brand in financial markets
                  •      Rating planned in the near term
                  •      Improvement of financial profile

       • Create a long term, well balanced portfolio of financing instruments
                  •      Smooth out maturity profile
                  •      Secure access to multiple funding sources
                  •      Strong and reliable group of partner banks and capital market investors



September 2009 | Investor Presentation                                                             Page | 21
       Cash flow and net debt YTD June 2009
                                                                                                   Net debt development
                                                                             €-624m

                                         Cash flow development
                   €m                                                        €553m
                   5.000
                                   4,583      - 839
                                                                                            +428        - 160
                                                                                                                  - 71           3,959
                   4.000                               - 456                   + 164
                                                                 + 310


                   3.000


                   2.000


                   1.000


                          0
                                    Net       EBITDA   Change   Investment    Interest &   Change in    Other   Change in         Net
                                 Financial              NWC                       Tax      Provisions           Derivatives,   Financial
                                Debt end of                                                                      Bond &          Debt
                                   2008                                                                          Currency      H1/2009




September 2009 | Investor Presentation                                                                                                     Page | 22
      Financial performance through the last
      four quarters for the Evonik Group


           Sales Q3/2008 – Q2/2009 (€ m)                       EBITDA Q3/2008 – Q2/2009 (€ m)                    Capex Q3/2008 – Q2/2009 (€ m)

              -8.2%                                                                             16.6%
                                                             12.9%
   4,139                      -15.7%                                                                                      471
                      3,801                                   535
                                             -4.0%                                  10.3%        510
                                                                           9.5%
                                     3,205           3,076
                                                                          361
                                                                                      329
                                                                                                           252


                                                                                                                                    159           151




 Q3/2008          Q4/2008          Q1/2009       Q2/2009     Q3/2008     Q4/2008    Q1/2009     Q2/2009   Q3/2008        Q4/2008   Q1/2009     Q2/2009

      Sales       Sales Growth                                  EBITDA      EBITDA-margin                        Capex




September 2009 | Investor Presentation                                                                                                       Page | 23
      Decisive actions to improve
      earnings & cash flows

         Short-term stabilization of 2009 earnings and cash flow

        • Cost cutting target of €300m:                    H1 2009:       more than €200m
        • NWC reductions:                                  H1 2009:       €456m
        • Capex discipline:                                H1 2009:       €310m



         Sustainable efficiency improvements targets - program “On Track”

        • Sustained cost savings of €500m p.a. by 2012

        • Program includes: review of administrative functions in the Corporate Centre, Service
          Centre, site operations, procurement, complexity reduction




September 2009 | Investor Presentation                                                            Page | 24
       Outlook

       •      Environment remains challenging in the present economic crisis

       •      Lower sales and earnings anticipated for 2009

                  •      Since Q2/2009 stabilizing trend with slightly improving sales

                  •      Counteractions have significant positive impact on earnings and cash flow

       •      Consistent commitment to R&D in 2009 with over €300m spending



       •      Our Chemicals, Energy and Real Estate Business Areas are positioned at the forefront of
              their markets

       •      More than 80 percent of Chemicals sales generated from leading market positions

       •      Innovative capability as decisive success factor to generate growth and create value


September 2009 | Investor Presentation                                                               Page | 25
      Key credit highlights

       • Leading global Specialty Chemicals player

       • Activities in Energy and Real Estate with low risk profiles

       • Excellent market positions and balanced product portfolio in Chemicals

       • Strong R&D pipeline in Chemicals with focused product development responding to

           megatrends

       • Strong commitment to EBITDA & cash flow improvement to secure competitive edge

       • Supportive shareholders with focus on long-term and sustainable value creation




September 2009 | Investor Presentation                                                     Page | 26
Evonik.
Power to create.

Investor Update
Appendix
      Balance-Sheet Evonik Group 2008
      Assets




September 2009 | Investor Presentation   Page | 28
       Balance-Sheet Evonik Group 2008
       Liabilities




September 2009 | Investor Presentation   Page | 29
      Income Statement Evonik Group 2008




September 2009 | Investor Presentation     Page | 30
      Cash flow Statement Evonik Group 2008




September 2009 | Investor Presentation        Page | 31
      Balance-Sheet Evonik Group H1/2009
      Assets




September 2009 | Investor Presentation     Page | 32
       Balance-Sheet Evonik Group H1/2009
       Liabilities




September 2009 | Investor Presentation      Page | 33
      Income Statement Evonik Group H1/2009




September 2009 | Investor Presentation        Page | 34
      Cash flow Statement Evonik Group
      H1/2009




September 2009 | Investor Presentation   Page | 35
 Business Area Real Estate –
 Key Financial Figures (1)
           Sales 2006 – 2008 (€ m)                                                                      EBITDA 2006 – 2008 (€ m)                                                          Capex 2006 – 2008 (€ m)

                            464
                                                  423
                                                                        375
                                                                                                                                                            217
                                                                                                                                 188
                                                                                                                    169
                                                                                                                                                                                                                                    103
                                                                                                                                                                                                 78                                                          87




                              1   (2)               2                     3                                                (2)                                                                          (2)
                           2006                  2007                  2008                                         2006
                                                                                                                      1
                                                                                                                                 2007
                                                                                                                                   2
                                                                                                                                                            2008
                                                                                                                                                              3
                                                                                                                                                                                                 2006
                                                                                                                                                                                                   1                                2007
                                                                                                                                                                                                                                      2                     2008
                                                                                                                                                                                                                                                               3




                                                                                                                                                  Size of units (2)                                       Units by # of rooms (2)
 Residential Portfolio (as of 31 Dec 2008)
                                                                                                                                                    > 100 sqm < 40 sqm                                                             1 room
                                                                                                                                                                                                                          5+ rooms
                                                                                                                                                       2,7%     2,6%                                                                0.7%
                                                                                                                                                                                                                            2.2%                 2 rooms
                                                                                                                                                                                                          4 rooms
                                                                                                                                        81-100 sqm                                                                                                18.9%
                                                                                                                                                                                                           16.8%
                                                                                                                                          11,7%
      Evonik Real Estate (100%)
        Evonik Real Estate                                                         THS stake)
                                                                               THS (50%(50%)
                                                                                                                                                                              41-60 sqm
                                                                                                                                                                                37.0%
  City                             # of Units                         City                            # of Units
  Duisburg                               9,791                        Essen                                 6,065
  Moers                                  5,590                        Gelsenkirchen                         5,953
  Dortmund                               5,094                        Lunen                                 4,935                       61-80 sqm
                                                                                                                                          45.9%
                                                                                                                                                                                                                                    3 rooms
  Essen                                  3,772                        Leverkusen                            4,568                                                                                                                    61.5%
  Lunen                                  3,460                        Dortmund                              3,767
  Dinslaken                              2,760                        Recklinghausen                        3,650
  Ahlen                                  2,734                        Oberhausen                            3,628                       Age structure of units (2)                                        Units by # of floors (2)
  Bottrop                                2,635                        Bottrop                               3,564
                                                                                                                                               since 1991                                                                              1 floor
  Hamm                                   2,537                        Marl                                  3,279                                 7.1%                   before 1930
                                                                                                                                                                                                                     5+ floors
                                                                                                                                                                                                                                        0.3%
                                                                                                                                                                                                                       6.8%
  Dusseldorf                             2,468                        Bochum                                2,766                       1976-1990                          19.9%
                                                                                                                                          8.5%                                                                4 floors
  Top 11 - 20                           13,264                        Top 11 - 20                          20,036                                                                                              17.4%
                                                                                                                                                                              1931-1947                                                                2 floors
  Other                                  5,290                        Other                                12,255                                                               2.5%                                                                    39.1%
                                                                                                                                   1966-1975
  Total                                 59,395                        Total                                74,466                    11.1%


                                                                                                                                                                             1948-1955
                                                                                                                                                                               21.2%


                                                                                                                                            1956-1965                                                                    3 floors
                                                                                                                                              29.7%                                                                       36.4%

Footnotes
1. Key financial figures do not fully reflect the 50% participation in THS, which is only included “at equity”
2. Evonik Real Estate residential portfolio (Total number of units: 59,395 as of 31.12.2008)

                                                                                                                                                                                                                                                                   Page | 36
Overview net financial debt




                              Page | 37

								
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