Univar N.V. First Half 2002 Results

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Univar N.V. First Half 2002 Results

• Amsterdam

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UNIVAR Back to the basics of distribution

• Our first half performance, while within the
  low-end range of managements expectations, is
  disappointing.
• We have been challenged by a number of issues
• A poor economic environment, characterized by
  chaotic financial markets and uncertainty among
  our customers.
• The distraction of the split-off from Vopak.
• The completion of the integration of our EE
  acquisition.
• Our organization now is free to focus on the
  opportunities and challenges of the chemical
  distribution marketplace
• One vision
• One mission
• One commitment to deliver on the fundamentals

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Highlights H1 2002

• Group operating income (EBITA) US 51.3 millions
• Down 22.4 on pro-forma 2001
• Net income 2002 H1 US 7.1million
• Compared to loss of US 4.3 million in 2001
• Univar split-off is complete
• Shares begin trading on Euronext Amsterdam July
  1, 2002
• Restructuring underway in Univars European
  operations
• Full year EBITA expected to exceed pro-forma 2001
  performance of US 96.4 million
• Continued recovery in markets served by Univar
• Further fundamental business process improvements

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Key results H1 2002

• Pro forma
• In US millions H1 2002 H1 2001
  change
• Net Sales 2,266.3 2,485.1 - 8.8
• Group operating income before depreciation
• and amortisation (EBITDA) 75.4
  93.7 - 9.5
• Group operating income before amortisation
• (EBITA) 51.3 66.1 22.4
• EBITA margin (EBITA Net Sales) 2.3
  2.7
• Net income (loss) 7.1
  (4.3)
• In US
• Net income per Common share before
• extraordinary results 0.34
  0.61
• Net income (loss) per Common share 0.21
  (0.17)
• Cash flow return (CFROI) 11.1 15.6

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Results by Segment

• North America
• Pro forma
• In US (millions) H1 2002 H1 2001
  change
• Net Sales 1,540.0 1,640.7 - 6.1
• Group operating income before depreciation
• and amortisation (EBITDA) 52.1 61.1
  -14.7
• Group operating income before amortisation
• (EBITA) 37.6 44.5 -15.5
• EBITA margin (EBITA Net sales) 2.4
  2.7
• Cash flow return (CFROI) 13 17
  
• Net sales decreased by US 100.7 million. Gross
  margin percentage increased, while
• operating expenses declined by 1.2.

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Results by Segment

• Europe
• Pro forma
• In US (millions) H1 2002 H1 2001
  change
• Net Sales 726.3 844. 4 -14.0
• Group operating income before depreciation
• and amortisation (EBITDA) 23.9 32.4
  -26.2
• Group operating income before amortisation
• (EBITA) 14.3 21.4 -33.2
• EBITA margin (EBITA Net sales) 2.0
  2.5
• Cash flow return (CFROI) 10 14
  
• Net sales decreased by US 118.1 million. Gross
  margin percentage increased, while
• operating expenses declined by 5.4.

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Outlook for 2002 remains positive

• Disappointing H1 results are attributable to a
  difficult first quarter second quarter
  performance mirrors year ago.
• We anticipate the global recovery will continue,
  and momentum of the second quarter to carry
  forward.
• Absent material adverse events or deterioration
  of economic conditions , we expect
• Gradual improvement in demand for both commodity
  and specialty products
• Income from operations before amortisation of
  goodwill (EBITA) for 2002 to exceed the pro-forma
  EBITA reported for 2001.

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Univars competitive situation is improved

• Disappointing financial performance has its roots
  in the difficult economic environment facing the
  industrial world.
• But we cannot ignore the impact of
  Univar-specific events, now largely behind us
• Our split-off from Royal Vopak is complete.
• The integration of Ellis Everard is complete.
• Management reorganization in the US is complete,
  with a parallel effort in Europe well underway.
• We have moved to simplify operations, clarify
  reporting relationships and facilitate timely
  decision making to better compete in our chosen
  markets.

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Univar Europe A new European strategy

• Adoption of a single trading name Univar -
  across Europe
• Simplification of the interface between Univar
  and its suppliers
• Becoming the low cost provider of choice
• Implementation of a back-to-basics approach
• Strategic decentralization
• Highly capable country manager structure with
  appropriate autonomy
• Group coordination of leveragable skills key
  product management, accounting and finance,
  information technology, and SHE.

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Univar USA Countering a business slowdown

• Moving to establish Univar USA as the lowest cost
  provider in the chemical distribution channel
• Optimisation of physical and capital assets
• Technology assisted productivity improvements
• Elimination of errors and rework in delivery of
  services
• Drive growth though exploitation of market
  leadership position
• Focused marketing effort behind key managed and
  Univar-branded products
• National price coordination of key commodity
  products

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Univar Canada Continued record performance

• Adept management and fortunate planning have
  allowed continued growth despite economic
  conditions.
• Implementing a trans-Canada structure for the
  marketing and procurement of select products.
• Consolidate our leadership position in Canada.
• Support key product and supplier management
  programs now being implemented.

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Business process improvements

• We are committed to improve our economic
  performance by improving the fundamentals of our
  business.
• We will use our size, capabilities and
  competitive insights to better leverage our
  opportunities.
• Implementing process improvement teams to share
  best practices across Univar
• Led by key managers from our operating units
• Facilitated and monitored by our corporate
  organization
• Expanded face-to-face working opportunities for
  our developing global management team

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Pension costs

• Univar disclosed in the Information Memorandum
  dated May 31, 2002 that potential material
  financial impacts could result from continued
  stock price deterioration.
• A gap between the value of pension plan assets
  and total future pension plan liabilities in the
  US of US 29 million (after-tax) identified at
  that time.
• We are currently evaluating the most appropriate
  method of accounting for pensions, including
  expansion of our use of US FAS 87 to all Univar
  entities.
• Such a decision would direct any charge
  attributable to deterioration of the value of
  pension assets directly to balance sheet equity
  and would not result in a current PL expense.

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The commitments of management remain as outlined
in the Information Memorandum

• Univar will grow its market share, through
  organic growth, acquisition and strategic
  relationships.
• Univar will continue to enhance its position as
  the low cost distributor, and will refocus our
  efforts in Europe. We will exploit our local and
  market specific capabilities while implementing
  best practice approaches across the business
  entity.
• Over the next three years, we will achieve
  average annual growth in net sales of between 1
  and 2 percent in excess of local GDP growth
  improve EBITA margin to 3.5 percent or more and
  target a Net debt to EBITDA ratio of 2.5 1 with
  an interest cover ratio of at least 5.

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Appendix
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Overview Univar
Process Repackage

• Largest chemical distributor in North America
  (est. mkt. share 15 US, 33 Canada)
• 2nd largest in Europe (8 est. mkt. share)
• Serve wide range of industries
• NA 190,000 customers
• Europe 60,000 customers

• 195 distribution centers
• Own substantial fleet of trucks (NA)
• 3rd party trucks and tank trucks (Europe)

• Bulk /large quantities acquired from major
  international chemical manufacturers
• Commodity chemicals
• Specialty chemicals
• Extensive product line
• NA 50,000
• Europe 25,000

• Services quantities matched to demands of
  customer
• Related services
• Blending
• Managing customer inventories
• Technical support
• Packaging
• labeling