Title: Fine Chemicals
1Fine Chemicals
- A New Global Chemicals Leader Emerges
John Nicols, Vice President, Fine Chemicals May
25, 2004
2Caution Statement
- Some of the information presented in the pages of
this presentation constitutes forward-looking
comments within the meaning of the Private
Securities Litigation Reform Act of 1995.
Although Albemarle Corporation believes its
expectations are based on reasonable assumptions
within the bounds of its knowledge of its
business and operations, there can be no
assurance that actual results will not differ
materially from its expectations. - Factors which could cause actual results to
differ from expectations include, without
limitation, the timing of orders received from
customers, the gain or loss of significant
customers, competition from other manufacturers,
changes in demand for the Companys products,
increases in the cost of the product, changes in
the market in general, fluctuations in foreign
currencies, and significant changes in new
product introduction resulting in an increase in
capital project requests and approvals leading to
capital spending. - Such statements also include, but are not limited
to, statements about the proposed acquisition by
Albemarle Corporation of Akzo Nobels refinery
catalyst business, including financial and
operating results, the parties plans, beliefs,
expectations and intentions and other statements
that are not historical facts. Such statements
are based upon the current beliefs and
expectations of management and are subject to
significant risks and uncertainties. Actual
results may vary materially from those set forth
in the forward-looking statements. The following
factors, among others, could affect the
consummation of the proposed transaction
execution of a definitive sale and purchase
agreement, the advice from Akzo Nobels Works
Council, the expiration or termination of any
applicable waiting period under the
Hart-Scott-Rodino Act and the receipt of other
competition law clearances. The following
factors, among others, could affect the
anticipated results consummation of the
financing on terms favorable to the Company, the
ability to integrate successfully the acquired
business within the expected timeframes or at
all, and ongoing operations of the business.
Additional factors that could cause Albemarles
results to differ materially from those described
in the forward-looking statements can be found in
Albemarles Annual Report on Form 10-K for the
year ended December 31, 2003.
3Albemarle History
1887 - Albemarle Paper Manufacturing Company
opens with a handful of employees producing Kraft
and blotting paper.
1921 - The antiknock properties of tetraethyl
lead (TEL) as a gasoline additive are discovered
after a lengthy search by a team of General
Motors research chemists. TEL is to be the
principal product of Ethyl Corporation for more
than 40 years.
1942 - Ethyl Gasoline Corporation changes its
name to Ethyl Corporation to characterize a
broader interest than just gasoline products.
1962 - Albemarle Paper Manufacturing Company
borrows 200 million and purchases Ethyl
Corporation (Delaware), a corporation 13 times
its size, and Ethyl Corporation (Virginia) is
formed. Floyd D. Gottwald becomes Chairman of the
Board.
1976 - Ethyl leaves paper manufacturing with the
sale of Oxford Paper. Ethyl opens a chemical
plant in Feluy, Belgium to make aluminum alkyls.
1996 - Albemarle sells its alpha olefins,
polyalphaolefins and synthetic alcohols
businesses to Amoco for about 500 million.
1998 - Albemarle energizes MA effort to grow the
company based on longstanding foundation
technologies of bromine and organometallic
chemistry, supported by exceptional skill in
process technology.
1987 - Ethyl acquires Dow Chemical's bromine
chemicals business and its Magnolia, Arkansas,
plant.
1994 - Ethyl spins off its chemical businesses to
create an independent, publicly traded company
named Albemarle Corporation
4Current Business Segments
Polymer Chemicals
Fine Chemicals
- Flame Retardants
- Polyolefin Catalysts
- Other Polymer Additives
- Pharmaceuticals Agrichemicals
- Fine Chemistry Services
- Bromine, Bromine Derivatives and Specialty
Aluminas
Net Sales (2003) Operating Profit (2003) 480.4 million 49.0 million
Net Sales (2003) Operating Profit (2003) 629.9 million 70.3 million
5Albemarle Platform
Flame Retardants
1 Producer of bromine-based flame
retardants 1 Producer of mineral flame
retardants 1 Producer of alkyl-based
polyolefin catalysts 1 Producer of
metallocene co-catalysts 1 Producer of
ibuprofen 1 Producer of alkylated anilines 2
Producer of bromine
Catalysts
Pharma
Ag
Performance Chemicals
Additives
Technology Relationships Innovation
Aluminum Alkyls
Process Development
Bromine
6Key Markets
Markets Served Growth Rate
Construction 15 Carpet /Fabric, Roofing, Insulation, PVC stabilizers 5
Consumer Electronics 30 Printed Circuit Boards, Electronic Enclosures 8 -10
Pharma/Ag 20 Analgesics, Active Ingredients, Intermediate Ingredients, Pre-Emergent Herbicides 6 -10
Auto/Transport 10 Wire Cable, Polyurethane Body Panels, Polishing compounds, Brake linings 3-5
Packaging 10 Plastic films, Polymer compounds, Paper and pigments 3-5
Industrial 5 Water treatment, Oilfield fluids, Polishing compounds, Photo-graphic, Specialty glass (TV) 2-4
Other 10
- Diversity Balance Across Markets
- Strategic Account Management Work With Winners
- World Market Knowledge Direct Sales and Other
Effective Channels - Portfolio improvements fit focus
35
46
19
2003
7Balanced, Technology-Based PortfolioTop Tier
Performance 2004 Post-Acquisition
Fine Chemicals 26
- Bromine Franchise
- gt200 million in life sciences
- New product pipeline approaching 100
Additives 37
- Bromine integration
- 1 or 2 positions in major flame retardant
chemistries - Additives niches
- Global scope and reputation
Catalysts 37
- With Akzo Refinery Catalysts Acquisition
- 1 or 2 positions in refinery and metallocene
catalysts - History of innovation
- Strong customer relationships
- Global scope and reputation
8Fine Chemicals
9Albemarle Fine Chemicals Product Diversity
Strategic Clusters
Ag Actives
Pharma Actives (APIs)
Fine Chemistry Services
Fine Chem Svcs Ints
Others
Alumina Specs
Industrial Specialties
ASA Paper Sizes
Zeolites
K Cl2 Derivatives
Biocides/Abzol
Bromine Chemicals
Amines
Oilfield
Br2 Derivatives
10Fine Chemicals Strategies
Deliver Chemistry To Solve Customer Problems
-------------------------------------------------
------ Widen Deepen Access Into Key End
Markets Pharma Ag ----------------------------
--------------------------- Drive To Actives
Highest Chemistry Value Add
Fine Chemistry Services 40 of FC Sales
Industrial Specialties 25 of FC Sales
Strategic Growth
Manage for Cash
Goal
Bromine Chemicals 35 of FC Sales
1 Bromine Company In The World
New Strategy Potentials
11Fine Chemicals Rotation
Successfully Managing The Rejuvenation Of Our
Fine Chemicals Portfolio
6
6
Revenue MM
10
(16)
Other
Ag
24
(35)
FCS
Atofina Fine Chem
26
Zeolites
495
Bromine
480
2003
2004E
12Profit Growth In Fine Chemicals
Profit Perspective 2003 2004 2005 Comments
Raw Mats Energy - - - - Deceleration continues for a cycle?
Regulatory - - MeBr 2005 secure 2006 special uses or more?
Mature Products Pricing - - - 2004 peak of current maturity curve
Zeolites - - - - Sales and profit impact comparison goes away
Jordan Startup - 0 Jordan low cost will create favorable 05 conditions
Br Chem Pricing Accelerating due to favorable supply / demand
New Products Accelerating due to improved pipeline
Asset Utilization Continued year-on-year improvements
BOTTOM LINE - - - Stormy 03-04 period is followed by improving conditions across the portfolio.
13World-Class Bromine Position
Other14
FlameRetardants 40
Bromine-Industry Usage - 2002 USGS/Mining
Engineering June 2003 Albemarle holds strong
positions in each of the key areas of the worlds
bromine-using industries.
Pharma3
WaterTreatment7
Ag12
Albemarle Bromine Production
Oilfield 24
Albemarles production capturing market growth
with premier, low cost domestic reserves and
augmented by new production on the Dead Sea
through joint venture Jordan Bromine Company
14World-Class Bromine Position
Resource Managed In Fine Chemicals
Market Managed
Goal
Long Time In Motion Keep Building Momentum
Bromine Specialties
Pharma Ints
1 Bromine Company In The World
High Volume Bromides
MeBr
Related Products
Br F R
EDB For TEL Ethyl Beginnings
14
15Business Strategies
16Albemarles Fine Chemistry Services Area Of Major
Strategic Change
2001 3 Pharma Products 3 Ag Products Leading
BFCs In EU 1 cGMP Facility Several New Prods In
Pipeline
2003 Historic Pharma/Ag/BFC Products Increasing
Pressures On IBP / NPX Leading US Custom Mfr 3
Research Facilities (2 US, 1 EU) 2 cGMP
Facilities 7 Flexible Multi-Product Sites 80 New
Prods In Pipeline
Globally Leading Capabilities
Capabilities
Products
- Stepping Up in 04
- Higher Utilizations
- Outsourcing Pharma
- New ALB Products
Flexible Plants Utilization Up Profit Up 4 MM
in 03 v. 02
Success w/ Specialty APIs Profit Up 2 MM in
03 v. 02
17Fine Chemistry Services Model
Customer Needs Opportunities
Fine Chemistry Services Intermediates
40
45
Ag ALB Intermediates Custom Mfr Contract Research
Pharma ALB Intermediates Custom Mfr Contract
Research
15
Industrial Specialties Personal Care Photo
Chems Flavors / Fragrances Etc.
ALB Actives (APIs) Ibuprofen, Naproxen
ALB Actives Methyl Bromide
18Fine Chemistry Services Successes
27
13
15
13
13
4
Patent Protected
Pre-Clinical
Generic
Phase I
Phase II
Phase III
Development Momentum
85 products in pipeline
19 Fine Chemistry Services Build Synergistically
Customer Needs Opportunities
Gain More Market Access
Fine Chemistry Services Intermediates
Other Market Servicing Capability
Other Market Servicing Capability
Ag ALB Intermediates Custom Mfr Contract Research
Pharma ALB Intermediates Custom Mfr Contract
Research
Industrial Specialties
Further Downstream in Market to Higher Chemistry
Value
Further Downstream in Market to Higher Chemistry
Value
20Fine Chemicals Strategies
Deliver Chemistry To Solve Customer Problems
-------------------------------------------------
------ Widen Deepen Access Into Key End
Markets Pharma Ag ----------------------------
--------------------------- Drive To Actives
Highest Chemistry Value Add
Fine Chemistry Services 40 of FC Sales
Industrial Specialties 25 of FC Sales
Strategic Growth
Manage for Cash
Goal
Bromine Chemicals 35 of FC Sales
1 Bromine Company In The World
New Strategy Potentials
21Fine Chemicals Conclusion
- Strong Accountable Team
- Mitigating Near-Term Exceptional Situations
- Successfully Managing Portfolio Rejuvenation
- Strong Positions Driving Our Strategic Successes
- Global Bromine Leadership Tightening Supply
Environment - Broad Fine Chemistry Service Business
Capabilities - Developed, Entrenched Service Model Satisfying
Our Targeted Client Base - Leverages Corporate Chemistry / Process
Development Foundation Strength - Drives Us Into Attractive Pharma / Ag Markets For
Chemistry / Innovation - One Of Relatively Few Worldwide With Pharma / Ag
Revenues gt 200 MM - Sound Strategies Drive Improved Returns Sustain
Growth - Disciplined Corporate Cost Focus Improving
Return on Assets - Targeting Bolt-On Acquisitions, But Not Essential
To Long Term Fine Chemicals Success
22Fine Chemicals
- A New Global Chemicals Leader Emerges
John Nicols, Vice President, Fine Chemicals May
25, 2004