Carbon Fiber Industry Update Maturing of the Carbon Fiber Industry

Carbon Fibre Futures Conference 2017 March 2nd 2017 Daniel Pichler

CarbConsult GmbH CF Futures Conf 2017 Geelong – conference attendees only

•

We are seeing very large applications developing for carbon fiber in aeronautic, wind and automotive industries.

•

The carbon fiber and composites industry is becoming more mature.

•

A few players are benefitting, but many are struggling.

•

We have observed and analyzed the industry in depth over the years, and we have developed some thoughts, views, and identified some key success factors.

•

Surviving in this environment requires intelligent vision, tailored strategies, and well planned and executed implementation.

Today’s Agenda / Topics:

•

The Carbon Fiber Market

•

Tendency Towards Consolidation

•

Key Factors For Success

CF Futures Conf 2017 Geelong – conference attendees only

1

a little bit about Daniel Pichler University of Notre Dame, IN, USA B.Arch. (Civil Engineering), hons. - MBA Finance & Marketing

London Business School - Senior Executive Program

-

Pittsburgh, PA, USA PA IN MI 1950

1960

IN 1970

7 1980

1990

2000

2010

2020

2030

2040

4 Hitco Carbon Composites, CA, USA 8 Ladish Co, CA, USA (metal aerostructure bits) 4

Schlosser Forge Co, CA, USA (metal a/c engine bits) 13

SGL Group, USA, UK, Germany 3 Aksa (DowAksa), Istanbul, Turkey 3 HCC, Moscow, Russia 2 CarbConsult, Germany (UK)

2050

2060

Strategic Planning (4) Engineering Mgmt. (2) Mktg./Sales/ Bus.Devel. (12) General Mgmt. (19)

15. Broadstairs, Kent, UK (current) 16. Stockholm, Sweden (current)

CF Futures Conf 2017 Geelong – conference attendees only

2

Agenda / Topics • The Carbon Fiber Market • Tendency Towards Consolidation • Key Factors For Success

CF Futures Conf 2017 Geelong – conference attendees only

3

Why high performance carbon fiber? 1 kg of CFRP can replace up to 4 kg of steel The automotive example: weight savings of carbon fiber vs steel and aluminium

100%

average part weight 50% in same application

40 %

55 %

100 60

75 %

45 25

0% Steel

Aluminium

Carbon fiber part quasi-iso tropic applic. (e.g., biaxial fabric)

Autos

Aeronautics

Carbon fiber part based on UD fiber (e.g., UD-fabric, prepreg, tape)

Wind

Cost effective, performance delivering, weight savings similarly drives the use of CF in aeronautics and most other applications; in wind turbine blades it is CFRP vs GRFP as a similar story

Source: Audi; CarbConsult

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4

During the last 6-7 years, the carbon fiber market has grown by 8-13% p.a.

Global demand in carbon fiber In 1.000 tons

(+13%) (+13%)

Other markets:

(+13%) (-8%)

(+9%) 38

35

2009

2010

(+8%) 41

2011

(+7%) 44

2012

(+9%)

70 62 55

48

2013

2014

2015

•

Acrylic fiber: 2 mio mt (30x)

•

Glass fiber (reinf.): 5 mio mt (70x)

•

Aluminium: 40 mio mt (600x)

•

Steel: 1,6 b. mt (2.000x)

•

Concrete: 6 b. mt (9.000x)

2016*

* CarbConsult estimates based on end user apparent consumption, producer apparent production, and supply-demand balance Source: CarbConsult

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5

Aeronautics, Wind, and Auto are the largest applications today… …and the most interesting for the foreseeable future Global CF demand by application in 2015 total ~62.000t small tow vs heavy tow CF: 1-24k 50k 65%

35%

000mt

12

12 9 7

6 4

4

4 2

2

Source: CarbConsult

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6

During the last 10-20 years, the carbon fiber market has shifted significantly towards industrial applications as they have developed Development of Global Demand for Carbon Fiber 50

150kt industrial applications have grown steadily…

40

30

60kt

20

25kt

10

4kt

from 30% 20 years ago, to more than 60% today

13kt

0 1985 Sport Goods

Industrial applications share:

1995 Aeronautic

2005 Industrial

2015 Wind

20 years ago 10 years ago about 1/3

about 40%

2025

Automotive

today more than 60%

Source: CarbConsult

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7

The growth trend for industrial applications of carbon fiber is expected to continue to develop and further dominate the end uses Development of Global Demand for Carbon Fiber 50

150kt 40

industrial applications are growing increasingly rapidly:

30

60kt

20

25kt

10

4kt

-

wind

-

autos

-

others

13kt

0 1985 Sport Goods

Industrial applications share:

1995 Aeronautic

2005 Industrial

20 years ago 10 years ago about 1/3

about 40%

2015 Wind

today

2025 Automotive

tomorrow

about 60% more than 80%

Source: CarbConsult

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8

The biggest potential segment for carbon fiber is in autos, but the magnitude and timing of the outlook is uncertain Background:

Current Situation:

CO2 targets and associated likely vehicle weight reductions

1 brand 100k (5%) of their 2 mio auto production >5.000mt CF p.a.

long term depletion of fossil fuels and fuel price trends

increasing adoption and share of alt. energy vehicles

EV’s registered: 2011: 50k 2015: 500k Today: performance cars • specialty applications • EVs just starting • lightweighting coming • a few prod’n pgms • all auto applications = 10kt of CF p.a. •

Future (?):

>30 brands 90 mio vehicles p.a. (EVs tbd: 30% = 30 mio p.a.)

likely future: • several prod’n pgms • more EVs • =50kt of CF p.a. potential future: • 10% cars x20kg =200kt our scenarios for 2025: • 50kt of CF in • 100kt auto applics • 150kt

Sources: ICCT; EIA; GWEC; wiki; CarbConsult

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1970 1970 1971 1971 1972 1972 1973 1973 1974 1974 1975 rods fishing 1975 1976 1976 1977 1977 1978 1978 1979 1979 1980 1980 1981 1981 1982 1982 military aircraft 1983 1983 golf shafts; racquets 1984 1984 1985 1985 1986 1986 1987 1987 1988 1988 CAC primary structures 1989 1989 1990 1990 1991 1991 1992 1992 1993 1993 1994 1994 1995 1995 1996 1996 1997 1997 1998 1998 1999 1999 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 Vestas & 2006 2006 Gamesa wind 2007 2007 2008 2008 2009 financial crisis 2009 2010 2010 2011 2011 B-787 & A-350 2012 2012 2013 2013 2014 2014 BMW 7-series 2015 2015 (100k cars of 100 mio) 2016 2016

A little bit of history: 45 years of growing demand for carbon fiber

world demand for carbon fiber 1970 to present

year-on-year growth 15% 5%

CF Futures Conf 2017 Geelong – conference attendees only since 2000, most years growth 5% < YoY < 15%

(70kt in 2016) 62kt demand in 2015

Source: CarbConsult

10

Today, significant overcapacity exists for the production of carbon fiber... CF overcapacity

in 1.000t per year

the recent gains in effective capacity:

•

SGL‘s new plant in Moses Lake, WA, US is backed by their customer partner BMW

•

Hexcel built new plant in Spain and already added new lines to support it‘s long term customer partner Airbus

•

Toray has added capacity in all plants and a large new plant in Korea

140

125 120

100

95

effective capacity is less than nominal capacity due to product type and mix knock down factors* ~50% over-capacity

80

• • ~33% over-capacity •

60

•

2 new players in Korea; one gaining fast acceptance Mitsubishi new large tow product and capacity in Japan Chinese companies have installed more than 12.000t in recent years; most are not yet functional; 1 or 2 look like they are succeeding Alabuga-Fibres has a erected new plant and 1st line in Alabuga, RU

40

62

70

more additional capacity on the horizon: 20

0

Capacity

Demand 2015

•

Mitsubishi is expanding in Sacramento and has announced acquiring SGL/WY plant

•

Teijin/Toho has announced considerations for a new plant in US

• •

no one readily gives up market share

Demand 2016

* note: the knock down from nominal to effective capacity varies by producer and product mix Source: CarbConsult

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equipment and engineering companies not inactive 11

Overall capacity vs demand for carbon fiber After 25 years with more-or-less the same 8 producers, the last 6 years have seen many new entrants enter.

Global capacity and demand for carbon fiber

+ Alabuga/RU

+ AKSA/TR (DOWAksa)

In 1.000 tons

New Players (most built 1500t lines): + Aksa/TR (DOWAksa) (2 lines; 3.500t) + BlueStar/CN + FangDa/CN + Hebei/CN + CHTC/CN + ZhongFu/CN + Henshen/CN (4.000t) + TaeKwang/KR + Hyosung/KR + Alabuga/RU

125kt nameplate capacity Traditional players have also developed. +55kt 95kt “effective capacity” (33-50% excess net cap’y) New Plants: 70kt demand + Toray/KR (2 lines; 4.700t) + Hexcel/ES + SGL-BMW/US (6 lines; 9.000t)

2009

2010

2011

2012

2013

2014

* CarbConsult estimates Source: CarbConsult

CF Futures Conf 2017 Geelong – conference attendees only

2015*

2016*

.

.

Additional Production Lines: + Teijin/Toho/DE + MRC/JP + SGL/UK&US 12

Toray is the dominant player in carbon fiber CF Capacities in 2016 (nameplate capacities) In 1.000 tons 43 (35%)

15 (12%) 14

(80%)

12 9

9 6 4

4

3

3

2.5

1.5

1.5

Source: CarbConsult

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Locations of carbon fiber production plants: more than 30 worldwide, ranging from 1500-9000tpa capacity

USA:

UK-SGL4000 Germany-Teijin5000

Alabuga1500

Toray8000 Japan:

France-Toray5000

Toray9000

Hungary-Zoltek9000

Teijin6500

Turkey-DowAksa3500

MRC8000

Spain-Hexcel3000

Taiwan-FPC8800

(Teijin2400) MRC4000 SGL2000 SGL-BMW9000

Korea:

Hexcel6000

Toray4700

Cytec3000

Hyosung2500

Mexico:

Taekwang1500

Zoltek6000

China: Hengshen4000 Zhongfu2500

CarbonNexus100

Bluestar1500 Weihei1000 Sinopec1500 FangDa500(2000) Production Plant (capacity mt) Announced Production Plant

Hebei500 CHTC(500) several others

Source: CarbConsult

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The big picture: 45 years of carbon fiber demand vs capacity

1970 1971 1972 1973 1974 fishing rods 1975 1976 1977 1978 1979 1980 1981 1982 military aircraft 1983 golf shafts; racquets 1984 1985 1986 1987 1988 CAC primary structures 1989 1990 1991 1992 1993 1994 1995 1996 1997 many new 1998 1999 1000t CF lines 2000 2001 2002 2003 2004 2005 Vestas & 2006 Gamesa wind 2007 2008 many new 2009 financial crisis 2010 1500t-2700t CF lines 2011 many new players B-787 & A-350 2012 2013 2014 BMW 7-series 2015 (100k cars of 100 mio) 2016

world capacity and demand for carbon fiber 1970 to present

in 2000, a panel of experts estimated that from 1970-1999 the CF industry generated losses during 27 of 30 years

the same 8 players (sites / assets)

125kt nominal capacity +12 = 20 players 95kt effective capacity

(70kt in 2016?) 62kt demand in 2015

12 new players

= periods of excess capacity Source: CarbConsult

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15

45 years of carbon fiber demand vs capacity and an indication of price

1970 1971 1972 1973 1974 fishing rods 1975 1976 1977 1978 1979 1980 1981 1982 military aircraft 1983 golf shafts; racquets 1984 1985 1986 1987 1988 CAC primary structures 1989 1990 1991 1992 1993 1994 1995 1996 1997 many new 1998 1999 1000t CF lines 2000 2001 2002 2003 2004 2005 Vestas & 2006 Gamesa wind 2007 2008 many new 2009 financial crisis 2010 1500t-2700t CF lines 2011 many new players B-787 & A-350 2012 2013 2014 BMW 7-series 2015 (100k cars of 100 mio) 2016

world capacity, demand, price of carbon fiber 1970 to present 125kt nominal capacity +12 = 20 players 95kt effective capacity

(70kt in 2016?) 62kt demand in 2015

price of standard grade CF* * indicative average of 12-50k std strength and modulus CF; individual prices can and do vary significantly

the same 8 players (sites / assets)

12 new players

Source: CarbConsult estimates and analysis

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16

The growth trend for carbon fiber market is to continue the strong growth of the recent past (e.g., growth of >10% p.a.) Global demand in carbon fiber

150-200+ (>3x?)

In 1.000 tons

125 (2x?)

8-12% p.a.

105 70

35 (-8%)

2009

38 (+9%)

2010

41 (+8%)

2011

48

44 (+7%)

(+9%)

2012

2013

62 (+13%) 52 (+13%) (+13%)

2014

2015

2016*

?

will it be 2x larger?, or 3x?, or 4x?

?

90

2020*

2025*

•

Aerospace

•

Aerospace

•

Wind

•

Wind

•

Auto

•

Auto 

•

Others

•

Others

* CarbConsult estimates Source: CarbConsult

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17

How will future capacity develop to support the growing demand for carbon fiber? Global capacity and demand for carbon fiber In 1.000 tons

Existing Players: - Plant Expansions? - New Plants? New Players?: - New Plants? - New Countries? Alliances & co-operations? Partnerships? M & A?

150-200+kt demand?

after 25 years with the same 8 players, many New Entrants / New Plants since 2009 125kt nameplate capacity 95kt “effective capacity” (excess capacity)

90-115kt demand

70kt demand

2009

2010

2011

2012

2013

2014

capacity 2x or more?

2015*

2016*

2020*

+ automotive + wind + aerospace + others

2025*

* CarbConsult estimates Source: CarbConsult

CF Futures Conf 2017 Geelong – conference attendees only

18

Agenda / Topics • The Carbon Fiber Market • Tendency Towards Consolidation • Key Factors For Success

CF Futures Conf 2017 Geelong – conference attendees only

19

Composites companies in Europe, America, and Asia are being acquired as the industry develops and consolidates EUROPE

ASIA

USA

Hexagon Devold Amber Cobham Formax Umeco

3B

LM Wind Ahlstrom CCP Axson PPG Sora

Bond Laminates Krauss Maffei TCG TK Industries Xperion Wethje (82%)

Agility Aldila Dome Carbon

Fisipe Aksa-Dow JV

Deltatech (55%) Gamesa Polynt Saati

CSP

Challenge Co. Action Composites

Cytec

Tellhow Wind Power Blade

Enve

EDAC Citadel Glasforms Gordon Harris Magna PMC Baycomp Zoltek

Source: CarbConsult

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20

During the last 5-6 years, 1/3 of the European weavers, 1/2 of the European prepreggers, and 1/3 of the American prepreggers have all been acquired Weavers

Prepreggers

Europe

Americas

Asia

Europe

Americas

Asia

Hexcel

Hexcel

TEI

Hexcel

Toray

MRC

Cramer

TPI

Arisawa

Cytec (Solvay)

Hexcel

Toho Tenax

Porcher

FDI

Sakai Composite

ACG

Cytec (Solvay)

Toray

Sigmatex

Albany

Sakai Ovex

Gurit

Newport (MRC)

Topkey

Saati (Toray)

Sigmatex

Your Chag Carbon

SGL

ACG (Umeco)

Taiwan Strong

Chomarat

Barrday

GuangWei

Stesalit AG

Tencate

Hankuk

SGL Technic

Fiber Materials

Aosheng Hi-Tech

Structil

Park electrochemical

SK Chemicals

Carr Reinforcements

JB Martin

Dalian Xingke

Tencate

Umeco (Cytec)

Guangwei

G.Angeloni

BGF

Yixing Huaheng

Saati (Toray)

TCR

Aosheng

Fothergill

Cytec (Solvay)

Yixing Xinwei

Teximpianti

Aldila (MRC)

Jiangsu Yuije

Tencate

3Tex

Haining Chengrudan

C-M-P (DowAksa)

Hengshen

Formax (Hexcel)

A&P Technology

Sigmatex

PMC Baycomp (Tencate)

TK Industries (MRC)

Bally Ribbon Mills

Lianyungang

Amber (Tencate)

Fibercote

Gurit

DevoldAMT (Saertx)

Tencate

Chrong Yi

Saati (Toray)

Lewcote

Yokohama

Eurocarbon

Vectorply

MRC

Kumpers (SGL)

Chomarat

Saertex

MC Gill Nelcote Phoenix TPC

Selcom

More recently, CFRP fabricators are becoming the most active targets Source: producers listed in CF Industry WorldWide Report by Tony Roberts, 2011; CarbConsult analysis

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The companies doing the acquiring are spread across Europe, America, and Asia EUROPE

ASIA

Polynt Solvay Amer

USA

Tencate Bayer SGL Saertex Siemens

Faurecia Meggitt Hexagon

Albany Teijin Sinomatech Toray ChemChina MRC Nippon Electric Glass

A.Schulman CSP Cytec Dow GE Hexcel

Sika

Lanxess Owens Corning Polyone Reichold

Source: CarbConsult

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Most of the acquirers are big multibillion enterprises including OEMS, big chemical companies, and major industry players With their strategic moves they are in one way or another portfolio building € billion turnover, approx. 110 75

20 18 12

11 8 5

4

2

2

1

1

Source: CarbConsult

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The leading Carbon Fiber manufacturers are forward integrated into prepreg and fabrics and CFRP fabricated parts Get closer to the end use, to customise solutions, and to capture additional value

$

$

$

$$$

PC&CF

Fabrics

Prepreg

CFRP

Toray

XXXX1

XXX4

XXX4

XXX4

SGL

XXX2

XX5

X

XX6

X

X7 XXX10

Teijin/Toho

XX

Mitsubishi

XXX3

X8

XXX9

XX

XXX11

XXX

Hexcel Solvay/Cytec

X

FPC

X

DOWAksa

X

XXX X

XX indicates multiple plants and/or mid- and down-stream activities 1 incl acq of Zoltek; 2 incl new SGL-BMW Auto CF; 3 incl acq SGL CF WY USA; 4 incl multiple activities worldwide; 5 incl SGL-BMW; 6 incl JV Brembo, SGL-Benteler; 6; incl CSP; 7 incl TK; 8 incl Japan+Newport+Aldila; 10 incl Japan+Dynetek+Aldila; 11 incl Formax Source: CarbConsult

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24

Carbon fiber manufacturers’ recent M&A activity Increasing demand in wind turbine and automotive segments, and strengthening their position downstream, are cited most often as drivers for their M&A activities •

Toray: acquired 2 prepreggers in Europe (Saati, DeltaPreg), and auto part manufacturer Dome Carbon

•

MRC: •

auto industry: acquired TK Industries to expand multiaxial fabric capacity, and CFRP auto part manufacturers «Wethje», «Challenge Co.» and «Action Composites».

•

wind turbine blades: MRC and Fiberline Composites will form a joint venture company for manufacturing and distributing carbon fiber composite laminates for wind turbine blades. MRC announced to acquire SGL’s US CF lines to meet the growing demand of large tow for wind blades.

•

USA prepreg market, MRC acquired Aldila.

•

Teijin: acquired Continental Structural Plastics (CSP) - intends to establish the foundations of an auto composite products business in No America, and to accelerate its expansion as a tier 1 supplier of high-performance composites to the global automotive market

•

Hexcel: acquired Formax to add mutiaxials in its portfolio, and increase presence in automotive and industrial applications

•

Cytec: acquired Umeco to strengthen its leadership in advanced composites and to expand the company’s presence outside the aerospace industry, specifically in automotive applications.

•

Toray acquired Zoltek for heavy tow CF to be active in auto and wind markets.

Source: CarbConsult

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Big chemical companies’ advanced composites related M&A Growth in advanced materials for lightweighting (automotive applications and others) is a main driver for their recent activities •

Solvay: acquired Cytec to take a major step for portfolio upgrade from chemicals to composite industry. Added CF and prepregs in its portfolio to boost its customer offerings in lightweighting with advanced materials in aerospace and automotive

•

Dow Chemicals: made a significant joint venture with Aksa Carbon Fiber to take further steps in its composites activities value chain

•

Sika: already has expertise in polyurethane and epoxy technology, acquired Axson to strengthen its resin sytems for advanced composites and tooling.

•

Lanxess: acquired Bond Laminates to add thermoplastic composite sheets in its product portfolio to expand its presence in automotive and other industrial applications.

•

Bayer Materials Science: acquired Thermoplast Composite to step in continuous fiber reinforced thermoplastics composites for automotive and IT applications

•

Polyone: acquired Polystrand, Gordon Composites and Glassforms to establish itself as a CFRP and GFRP part manufacturer.

•

Mitsubishi Chemical: Under the holding company Mitsubishi Chemical Holdings Corporation, three of its consolidated subsidiaries - Mitsubishi Chemical Corporation, Mitsubishi Plastics, Inc., and Mitsubishi Rayon Co., Ltd. (MRC) - will be integrated into a single chemical company.

•

ChemChina: owns Bluestar for CF & precursor manufacturing. To step in automotive industry with high-end plastic injection molding machinery, acquired KraussMaffei

Source: CarbConsult

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Advanced composites competitors are involved in M&A activity Increasing capacity and diversifying product range and capabilities are some of the main drivers for these recent activities •

Reichold: merged with Polynt in order to be a leading global, vertically-integrated manufacturer of resins for composites and coatings and of other specialized chemicals, including intermediates, plasticizers, additives and compounds.

•

A.Schulman: acquired Citadel Plastics to move one more step in the value chain - add thermoset composites and thermoplastic compounds- to its existing resin and compound business.

•

Hexagon: acquired Xperion to extend its capacity for filament wound pressure vessels in Europe; merged with Agility Fuel Systems to expand its market in natural gas fuel systems for medium and heavy-duty vehicles in North America

•

Sinomatech: acquired Tellhow Wind Power to increase its existing blade manufacturing capacity

•

Saertex: acquired Hexagon Devold to increase its existing capacity in multiaxial and unidirectional non woven reinforcements

•

Siemens: merged with Gamesa in wind turbine systems to achieve greater geographic reach, a broader portfolio of products, services and solutions and more robust financial stability.

•

Binani: acquired 3B to have glass fiber manufacturing facilities in Europe, and increase its global GF capacity.

•

Tencate: acquired Amber Composites to increase its thermoset prepreg capacity; and acquired PMC Baycomp to enter the high volume markets (e.g.automotive) with thermoplastic prepregs and composites.

•

GE: acquired its main wind blade supplier LM - the acquisition gives GE state-of-the-art knowledge of blade technology and creates a better foundation for global reach

Source: CarbConsult

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27

In addition to the M&A activities within the industry, we also see OEMs being involved through various partnerships and co-operations Joint ventures, partnerships, strategic cooperation to develop composites technology and secure supply

OEMs directly involved access new technologies and capabilities

Boeing – Toray

X

X

Airbus – Hexcel

X

X

BMW – SGL

X

X

ORNL – Ford – Dow

X

Toray – Nissan, Honda, Daimler

X

Teijin – GM

X

Cytec – Jaguar Land Rover

X

SGL – Samsung

X

GE – LM Wind

X

X

Faurecia – Sora

X

X

MRC – Fiberline

X

Source: CarbConsult

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28

Several players have been very active, taking several positions by way of multiple deals

ACG

WYOMING

Source: CarbConsult

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29

We have seen very high valuations in carbon fibers and composites deals driven by the large chemical companies Large Take-Over Deals in Carbon Fibers

Unseen financials:

Unseen financials:

600 million USD enterprise value in an all cash transaction

6 billion USD enterprise value in an all cash transaction

> 4 times sales

> 3 times sales

> 19 times EBITDA

> 15 times EBITDA

Source: CarbConsult. Source: yahoo finance Oct. 01, 2013. Zoltek: sales estimation based on 3 reported quarters, 4th quarter estimation based on previous year “quarter sales structure”. Enterprise value based on disclosed selling price to Toray.. Cytec information is based on Cytecs PA

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Agenda / Topics • The Carbon Fiber Market • Tendency Towards Consolidation • Key Factors For Success

CF Futures Conf 2017 Geelong – conference attendees only

31

Size Matters: Producers doing big business in carbon fiber and composites seen to do better results-wise Net revenue in EBIT in million Return on Sales million

FY

Segment

Hexcel

2015

Group results

$1,861

$332

17.9%

Toray (incl. Zoltek)

2015

Carbon Fiber Composite Materials

$1,581

$226

14.3%

Teijin (Toho/Tenax)

2015

Advanced Fibers and Composites

$1,358

$119

8.8%

Cytec

2014

Aerospace materials*

$1,001

$178

17.8%

SGL

2015

Carbon Fibers & Materials

327 €

9€

2.8%

DowAksa

2015

Carbon Fiber business

25 €

-39 €

-160%

BlueStar

2015

Carbon Fiber business

na.

neg.

neg.

10 new comers?

2015

Carbon Fiber business

na.

neg.

neg.

some we cannot see

2015

Carbon Fiber business

? .

? .

? .

* Includes principally advanced composites, carbon fiber, and structural film adhesives

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32

Technological know-how and leadership required: Precursor – the secret of making good carbon fiber is in the precursor precursor is >50% of the cost of carbon fiber

“PC know- how is more than 70% of the total know-how in carbon fiber” Prof. Hubert Jaeger, University of Dresden

carbonisation

precursor

“PC know- how is more than 60% of the total know-how in carbon fiber” Larry Butt, CarbConsult

having good precursor is 60-70-80% of the challenge

carbonisation

“PC know- how is more than 80% of the total know-how in carbon fiber” Steve Russell, ex-Hexcel R&D & opers; ex-SGL opers

precursor

Source: CarbConsult, Interviews with experts

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Key factors for success in carbon fiber / advanced composites Our suggestions • Size matters – big companies doing the deals

• Technology leadership is required – know what you are doing; establish and exploit competitive advantage • Forward integration is important – integrate your value chain • Access to significant financial funds to do the big deals • Customer intimacy is very helpful – co-operations and partnerships

• Vision, strategy, and a management team with strong technical and commercial background to be effective and successful

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Agenda / Topics • The Carbon Fiber Market • Tendency Towards Consolidation • Key Factors For Success

• What next?

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35

There are still many fish in the pond. Small fish. Big fish. New fish? Who have the big appetites? Who is going to be next? in US

in EUROPE •

Gurit

•

Cramer

•

Porcher

•

Sigmatex

•

Chomarat

•

Kumpers

•

Saertex

•

Selcom

•

Structil

•

others

•

TCR

•

TPI

•

FDI

•

Albany

•

Barrday

•

JB Martin

•

A&P

•

Vectorply

•

others

in Asia •

SKChemicals

•

Aosheng

•

Topkey

•

TaiwanStrong

•

others

Source: CarbConsult

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36

How is it all going to play out? Existing Players: - Plant Expansions? - New Plants?

New Players?: - New Plants? - New Countries?

Alliances & co-operations? Partnerships? M&A?

capacity 2x or more?

125-175+kt demand?

90-115kt demand

2009

2010

2011

2012

2013

2014

2015*

2016*

+ automotive + wind + aerospace + others

2020*

2025*

We don’t know. Our question for you: What part will you play in it? Source: CarbConsult

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37

.

Summary Main points:

•

The carbon fibre industry is shifting gear to becoming a more mature, a more developed, a more professional industry

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We are seeing very large applications developing in aeronautics, wind and automotive

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Numerous merger and acquisition activities (big and small)

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Big chemical groups are stepping in and taking control

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Still, only a few players are benefitting – the majority of the players are still struggling

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Intelligent and tailored strategies are required to ensure survival

CF Futures Conf 2017 Geelong – conference attendees only

What about your Vision? Your Strategy? Your Execution? …maybe you need the support of an experienced consultant? CarbConsult develop tailored strategic, commercial and technical solutions for our clients and partners based on detailed technical understanding and know-how up and down the value chain…

Client-oriented •

Carbon Fiber Companies

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Advanced Composites Companies

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Chemical Companies

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Investors

Experience-based*

HITCO CARBON COMPOSITES * Dr Jan Verdenhalven; Daniel Pichler

CF Futures Conf 2017 Geelong – conference attendees only

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Thank You! …happy to address your questions

CarbConsult GmbH Kurhausstraße 7 65719 Hofheim am Taunus

Daniel Pichler +44 777 360 7433 [email protected]

telefon: +49 (0) 6192 - 291765 telefax: +49 (0) 6192 - 291764 email: [email protected]

Dr Jan Verdenhalven +49 171 362 6203 [email protected]

CF Futures Conf 2017 Geelong – conference attendees only