Being part of all our lives
Presentation Overview • • • • • • • •
Yule Catto - key themes (slide 3) Yule Catto - the Synthomer Polymers business (slide 4) Synthomer - an introduction (slides 5-20) Integration – synergy update (slides 21-24) Synthomer - products and markets (slides 25-34) Synthomer – profitable growth in Asian (slides 35-49) Synthomer – product development (slides 50-X) Synthomer – operational excellence (slides X-X)
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Key Themes • Continued strong progression in Group profitability • Group clearly focused on Polymers • The acquisition of PolymerLatex will drive medium term profitability improvement from commercial integration and cost synergies • Significant and increasing exposure to high growth emerging markets • Geographic balance and market leadership positions create good growth dynamics • Strong balance sheet Being part of all our lives
3
Yule Catto – Dominated by Polymer Chemicals SYNTHOMER – the Polymer Chemical business of Yule Catto Europe & North America 56% of Group turnover 13 manufacturing plants
Asia & ROW 39% of Group turnover 8 manufacturing plants
• Water based polymers used in a diverse range of applications including: • Protective gloves • • • • •
Adhesives Paints Carpets Varnishes and lacquers Paper
• Speciality chemicals including Lithenes, Polyvinyl Alcohol and Poly Chloroprene for applications such as: • Regulation of PVC manufacture •
Motor industry sealants
Pharma Chemicals - 5% of Group turnover
• Manufacture of Active Pharmaceutical Ingredients for both generic and ethical drug manufacture
Being part of all our lives
4
Introduction to Synthomer – Yule Catto’s Polymer business
www.synthomer.com
Overview of Synthomer Latex 50%
Dispersions 23% Nitrile 37%
H1 2011 Sales £664.3 million (Underlying Pro-forma Basis)
SBR 63%
Compounds 5% Specialities 22%
Sales by Business Unit Functional Polymers 14.4%
Performance Polymers 6.7%
Sales by Destination
Sales by Product
Asia 27%
Construction & Coatings 23.1%
East Europe and ROW 4%
West Europe 55%
Paper 14.7%
Carpet & Foam 19.1%
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Health & Protection 22.0%
South Africa and Middle East 10% Americas 4%
6
Scale & Scope of Synthomer Our Business
-
Aqueous Emulsion Polymers and Speciality Chemicals Producer Sales H1 2011 £664.3 million (Pro-forma Basis) 1.3 Million wet tonnes per annum 34 production & toll units globally 1,900 people
Our Technology
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Strong heritage from our Parent Companies Lattices [Styrene Butadiene (XSBR) & Acrylonitrile Butadiene (XNBR)] Dispersions [Acrylic Polymers & Vinylic Homo/Co Polymers] Specialities [Liquid Polybutadiene & Polyvinyl Alcohol]
-
Health & Protection Coatings & Construction Carpet & Foam Paper Functional Polymer Performance Polymer
Our Markets
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(22%) (23%) (19%) (15%) (14%) (7%)
7
Key Facets of the Aqueous Emulsion Polymers Business • 50% Water − Logistics costs rapidly become a significant proportion of total cost. − Need to manufacture close to customers − “In Built” defence mechanism to “Out of Region” competitors.
• We don’t sell a chemical – We sell a formulation − Intimate knowledge of customers products/production process. − Significant technical service element to sales. − Deep “know how” required.
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8
Emulsion Polymers Market Others 3%
Lattices 35%
Global Emulsion Polymers Market
Acrylic Dispersions 35%
17.5 Million Tonnes (wet) €18 Billion Value
Vinyl Dispersions 27%
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9
Europe – 29% Americas – 31% Asia – 36% ROW – 4%
Broad Product Offering Company
Products SBR
NBR
HSSBR
Acrylics
Vinylics
Synthomer (Global) BASF (Global) Dow (Global) Trinseo/Styron(Global) Celanese (Global) Kumho (Asia) LG ( Asia)
Optimised offer to the customer - the right product for the right application
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10
Synthomer’s Strategy In Europe • Create a strong, defendable and highly cash generative business by: • Market leading product range as a result of intimate knowledge of our
customers requirements and a highly capable R&D resource • Operating highly efficient “State of the art” production facilities which are well
located for access to customers and raw materials • Use these products and processes to create strong market positions that
deliver growth and defend unit margins through the cycle
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11
Synthomer’s Strategy In Asia and other developing economies • Grow strongly in existing and new business locations: •
Using the cash generated in Europe to finance growth both organically and through “Bolt on” acquisitions
•
Use our market leading products and production processes to build strong and lasting relationships with Asian regional customers and expand our relationships with Global multinationals
•
Utilise our existing management infra-structure in the region
Consistent EBIT growth of 5% per annum
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12
Strategic Priorities Task
Key Actions
Status
• Achieve integration synergies of at least £20m
• Detailed implementation plans
• Annualised run rate after 3 months - £4m • Confident of achieving target
• Increase exposure to “High Growth” economies
• €25m expansion in Pasir Gudang to provide further NBR and SBR capacity • “Bolt on” acquisitions and “Greenfield” investments
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13
• Main plant items on order • Completion target of Q3 2012 • Ongoing review of options
Strategic Priorities Task
Key Actions
Status
• Innovation
• Global head of R&D
• New organisation fully implemented
• Centres of excellence in key markets • Prioritised list of developments by key markets • High quality, cost effective production
• Quality focus
• Global production function
• Continue to drive production/process efficiencies
• Continuous improvement targets set
• Targeted investments in production capacity
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• Resources consolidated into state of the art facilities in Marl, Harlow and Kluang
14
• £20m to be invested in optimising production
The Global Emulsion Polymers Business Global Emulsion Polymers Market 17.5 Million Tonnes (wet) €18 Billion Value
CAGR +3.9% ROW ~6% NAM ~1%
Asia ~ 8% Europe ~1%
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15
Synthomer World Map Oulu, Finland (JV)
Hasselt
Stallingborough
Synthomer BV
Synthomer Ltd
Oss
Batley
Synthomer BV
Synthomer Ltd
Accrington
Langelsheim
William Blythe Ltd
Synthomer GmbH
Kluang
Ossett
Revertex (Malaysia) & Synthomer Sdn Bhd
Marl (2 (2 plants) plants) Dormagen (Tolling) (Tolling) Dormagen Worms
Synthomer Ltd
Harlow Synthomer Ltd
Synthomer Vietnam Co. Ltd
Johor Bahru
Mouscron
Malaysia
Synthomer SA
Filago Filago
Sant Celoni
Lliçà de Vall
Uquifa SA
Uquifa SA
Dammam Synthomer Middle East Company (JV)
Dubai UAE (Tolling)
Durban Revertex Chemicals (Pty) Ltd
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Ho Chi Minh City
16
Synthomer Has Strong Market Positions both Globally and Regionally #1
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Global NBR
-
Global HSSBR
-
MEA Dispersions
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SEA Dispersions
Synthomer is #2 Emulsion Polymers producer in Europe
European SBR #2 European Dispersions #3 In Europe Top 5 suppliers represent 80% of the market BUT In Asia Top 5 suppliers represent ONLY 25% of the market www.synthomer.com
17
Synthomer Vision -
Today
Vision 2015
Values
www.synthomer.com
TOP 5 Global Emulsion Polymer supplier Very strong position in Europe Solid base in S E Asia for continued expansion Excellent products and production processes
-
No 1 or 2 in target markets > 50 % sales from high growth emerging markets Consistent EBIT growth 5 % p.a.
-
We create value for our customers We care about our employees and our neighbours We are responsible for minimising our impact on the environment We deliver for our shareholders
18
Polymers Profit Development (2006-2011) 70
64.8 60.2
60
53.7
50 EBIT 40 £’M
37.0
38.3
41.0 Full Year H1 (2011 pro-forma)
30.8
30
25.4 18.1
20
18.4
21.7
10 0 2006
2007
2008
2009
2010
New segmentation basis. History excludes Finewaters – sold in 2010 www.synthomer.com
19
2011
Key Factors for Synthomer’s Profitable Growth • • •
Access to multiple Polymer technologies Differentially managed product portfolio Commercial toughness & value selling
• • •
Access to Asian & Emerging Markets Manufacturing close to customers Proximity to suppliers
• • •
Cost effective production Flexible and effective organisation Fast & Commercially Focussed R&D
The Right Processes
• • •
Customer understanding & relationships Applications Technology & understanding Highly experienced & expert personnel
The Right Knowledge
The Right Locations
The Right Choice www.synthomer.com
The Right Product
PolymerLatex Acquisition Status Update www.synthomer.com
Acquisition Drivers • Excellent strategic fit − Complementary products/market positions − Well invested and located facilities in Europe and Asia − Similar but slightly stronger margins than Synthomer’s through the cycle − Accelerates Synthomer’s Asian expansion plans
• Attractive returns and growth opportunities − Annual “hard” cost synergies of at least £20m − Earnings accretive in first 12 months of ownership − Improved cash flow to invest in organic growth particularly in
“Developing” markets www.synthomer.com
22
Synergy Update • New organisation in place and operating successfully • Numerous projects running to improve operational and commercial efficiency • Highly confident of at least £20m of “hard” synergies • Anticipate £20m delivered in the second twelve months of ownership as announced at the time of the acquisition • Annualised run rate on £4m p.a. At the end of Q2 – three months post completion • Costs of delivery still expected to be in line with the original announcement - £20m cash costs and £23m capex
www.synthomer.com
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Synthomer’s Key Growth Drivers • Delivering the benefits from the PolymerLatex acquisition • Excellent products and market positions • High percentage of current sales to Asia and other high growth economies • Established strategy of growing around existing hubs, particularly in developing economies • New product development pipeline
www.synthomer.com
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Products and Markets Highly fragmented, highly specialised
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Six global Strategic Business Units focused on user industries •
Industry focused
•
Strategy formulated globally, executed regionally
•
Differential management according to segment
•
Transfer of best practice and expert knowledge
• •
Performance Polymers Functional Polymers
Paper
Health & Protection
Cross-regional leverage Close alignment with R&D
Carpet, Compounds & Foam
4 www.synthomer.com
Construction & Coatings
A wide range of polymers to a wide range of end uses Construction & Coatings SBR Latex
Nitrile Latex Acrylic/ Vinylic Speciality Latex Speciality Resins
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Functional Polymers
Paper
Carpet & Foam
Performance Polymers
Health & Protection
#1 or 2 in most targeted segments or regions Product Line Synthetic Latex
Dispersions
Speciality Latex
Speciality Resins
Type
Size (€m)
End-uses
Overview
Our Position
Competitors
XSBR
> €3bn
Coated Paper, Carpet, Construction, Textiles
Regional, (some niches), High entry barrier
#1 EMEA Niche in Asia/Nam
Styron, BASF
HS-SBR
€3bn
Regional
#4 EU, #1 ME
Celanese, Wacker, Vinavil
Adhesives, Gloves, Textiles
Global, Speciality
#2 EU and N Am
Lanxess, DuPont
Lipren® Pyratex®
85% share of the global disposable glove market
•
Synthomer is the only supplier with Nitrile Latex plants located in South East Asia
•
Our customer relationships and differentiated products have established a strong global no. 1 position, with 40% market share.
•
Innovation is core to Synthomer – latex for accelerator free gloves – Enhanced protection
www.synthomer.com
Coatings & Construction Water Based Dispersions
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The Asian Paints Market Paint Consumption (litre/head) vs Population (millions) 1600
Paint Consumption (litre/head)
25
1400 20 1200 1000
15
800 10
600 400
5 200 0
0 Indonesia
India
Vietnam
Philippines
China
Thailand
Paint Consumption (litre/head) Source: IRL
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Malaysia
Japan
South Korea
Population (millions)
Singapore
The Asian Paints Market SOUTH KOREA
JAPAN
Source: IRL
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Water-Based Dispersions •
Close customer relationships and a strong product portfolio allow us to achieve high market share in our local markets: – >50% in Malaysia & Singapore – >15% after only 3 years in Vietnam
•
Technology capability will lead to a strengthening of our product offer with opportunities to improve earnings
•
Strong customer relationships will be leveraged to benefit from their geographic expansion
•
We already sell to 8 of the top 10 global paint companies in Asia
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Summary •
Target is 50% of sales from Asia and emerging markets in three years
•
Already established a strong number 1 position in high growth markets
•
Sustainable competitive advantage, with healthy innovation pipelines
•
Well developed plans for growth by organic investment and bolt-on acquisitions
•
Trading Company now established in China to accelerate our growth plans there
•
Strong management team who have already delivered substantial growth
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Operational Excellence in Synthomer
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Operations – Leading technology, well positioned geographically Merging the production networks and technology will deliver synergies Production network matched to multiple product strategy Broad geographical coverage Leading process and product technology Best practice globally deployed Highest standards in Health, Safety, Environmental Compliance and Quality
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Network Optimisation provides synergies Production network synergies
Competitive network • Highly flexible • In the right region
Consolidation in Europe by depletion of overlaps and creating of economy of scale
• Close to customers -
Low freight costs
-
Fast response time
• Close to raw material suppliers -
Low freight costs
-
High availability
-
Integrated sites
Optimisation Strategy
Capitalise on strong market and technology positions
Expansion in Asia by using complementary strength in technology
• Consolidation in Europe • Expansion in Asia • Leverage of complementary technology – Conversion and cycle times – Yield improvement • Complexity reduction in raw material and finished products
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Production network with well-balanced mix of capabilities to serve the markets Production sites
Europe Latex • 6 plants • 4 countries
Europe Dispersions • 5 plants • 4 countries
MEA Dispersions • 3 plants • 3 countries
XSBR
HS-SBR
Acrylics
Perf.Polym., Comp. • 9 plants • 5 countries
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Others
Well-balanced mix of capacities – cost leadership positions in plants of global production scale – highly flexible mid-sized plants for smaller product groups
Flexible plants aligned to multiple product strategy enabling – diversification – fast reaction to changing requirements
• 2 plants • Malaysia • 2 plants • 2 countries
VAc(Co)
Asia Latex
Asia Dispersions
Nitrile
Effectively managed network “one large virtual plant”
- Select cost-optimal plant based on raw material cost position and logistics - ensure supply by approving more than one plant
European geographical coverage ensures competitive supply chain
Northern European market
• Freight optimisation crucial for minimisation of total product cost • Excellent geographic reach across North/South axis
Western and Central European market
• Plants in proximity to key customer concentrations Southern European market
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Asian geographical coverage ensures proximity to key markets and customers Malaysia as a hub to Asia •Two world scale latex facilities - Nitrile-latex in the centre of a booming glove industry - option to deliver SBR-latex to SEA and China •Acrylics plants to participate on fast growing paints and construction industry Vietnam will further strengthen presence in SEA •Acrylic plant to continue serving markets with plants close to customer needs
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Leading process technology based on specific know-how Competitive advantages
Specific know-how Reactor technology
Low process costs
Constant product quality
High innovation potential
Fast time to market
Reactor technology
World scale reactors
External seed
Direct feeding
Multiple reactor geometry and technology for XSBR, Acrylics/VAc and XNBR
Long-life productive assets in stainless steel and glass lined reactors Best-in-class cycle
Direct upscaling
Note: XSBR: Carboxylated Styrene Butadiene Rubber, XNBR: Carboxylated (Acrylo-) Nitrile Butadiene Rubber;
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Process & Technology know-how deployed production Stripper
Reactor
Chain TA Initiator
Stabilizers
Monomers
W Water
Mixer
Cooler
Air Treatment
Splitter
Waste Water Treatment
Steam
Polymerization
Degassing
Product Latex
Raw Materials
Road Tanker & Flexibag Container
Drums
Loading Bay www.synthomer.com
1 m³ Container
Control Room
QA Lab
Storage tank Latex
Storage
Process & Technology know-how deployed production Reactor Technology
Low VOC
Chain TA Initiator
W Water Stabilizers
Monomers
Recipe know how
Stripper
Reactor Mixer
Cooler
Air Treatment
Splitter
Waste Water Treatment
Steam
Polymerization
Raw Materials
Degassing Product Latex
Automation Road Tanker & FlexibilityFlexibag in Container
customer supply Drums
1 m³ Container
Loading Bay www.synthomer.com
Control Room
QA Lab
Quality & Consistency Storage tank
Latex
Storage
HSEQ-Management worldwide according to highest International standards Best-in-class standards implemented – Safety:
German /UK chemical industry
– Environmental: EMAS II / III or ISO 14001:2004 – Quality:
ISO 9001:2008 standard
Strong position on REACH & regulatory compliance Globally operated management systems worldwide to guarantee to meet HSEQ and compliance policy - annually reviewed
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Sustainable Profitable Growth through outstanding Innovation
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Value Added Formulating Components in Performance Applications
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Market Driven Innovation Generating Long Term Growth •
Responding to global megatrends – e.g., sustainability, urbanisation, energy efficiency, hygiene
•
Targeted innovation in high growth segments
•
Global co-ordination
•
Highly networked organisation – Internal and external
•
Efficiently managed for fast delivery and high commercial impact
www.synthomer.com
Global R&D Organisation •
Centres of Excellence – – –
●●
•
Over 100 R&D Staff –
●
–
www.synthomer.com
Marl, Germany Harlow, UK Kluang, Malaysia
Leadership team with 100+ years experience and strong track record of delivery 20% of staff with PhD
•
R&D co-located with applications and commercial teams
•
Well invested state of the art facilities
Polymerisation process know-how is core to innovation success Illustrative latex research and development parameters Process parameters
Lab polymerisation
~ 20 process Parameters determine product properties •
Direct monomers feed
•
Activator feed
•
Emulsifier, modifier feed
•
Temperature profile
•
Cooling
• • • • • •
Product properties ~ 20 end use properties
•
Binding power
•
Rheology
•
Cross-linking
•
Glass transition temperature
Stirring
•
Surface groups
Base
•
Mottling
•
VOCs
•
Printability
Process mode
•
Opacity
Other
•
UV-stability
•
Adhesion
•
Other
pH/buffer Pressure
Monomers • Styrene • Butadiene • Acrylate • Other
Water
Others
Test lab reactor
3 to 15kg
New latex particle
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Technology leadership in fast paced glove dipping market •
Rapid evolution of customer needs – Natural latex type feel – Low residual chemicals – Double dipping process
•
Advanced nitrile latex systems – “Soft & strong” grades – Proprietary self cross-linking technology – Tailored film formation systems
•
www.synthomer.com
45% of nitrile dipping sales from products launched in last 3 years and #1 global position
Responding to megatrends in global coatings market
www.synthomer.com
•
Green coatings systems • Low or no solvents • Free of harmful components • Cool roof technology
•
Strong growth in Asia and MEA • Speed to market
•
Dispersions technology in new applications • Direct to metal coatings • Elastomeric roof and wall coatings • Solvent free trim paints
•
Over 20 coatings products launched globally in last 3 years
Innovation in growing speciality pressure sensitive adhesives segment
www.synthomer.com
•
Diversification of applications • New substrates, e.g., metals, plastic • Thermal and water resistance • Environmental standards
•
Acrylic technology • High solids systems • Balance of cohesion and adhesion • Low volatile organic solvent
•
Recent product launches • Building insulation systems • Protective films, e.g., for electronic screens • Removable labels
•
20% of PSA sales from products launched in last 3 years and strong #2 position in Europe ̴
Delivering growth through technology development and product innovation •
Dynamic global organisation with extensive innovation network
•
State of the art equipment and high calibre staff
•
Excellent core technology with next generation platforms under development
•
Effective management of the product development pipeline
•
Strong track record of delivering commercially successful formulating solutions
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