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<strong>Evonik</strong>.<br />
Power to create.<br />
Investors Conference<br />
Call<br />
Dr. Wolfgang Colberg, CFO<br />
Ute Wolf, Group Finance Director<br />
5 October 2009
Key credit highlights<br />
• Leading global Specialty Chemicals player<br />
• Activities in Energy and Real Estate with low risk profiles<br />
• Excellent market positions and balanced product portfolio in Chemicals<br />
• Strong R&D pipeline in Chemicals with focused product development<br />
responding to megatrends<br />
• Strong commitment to EBITDA & Cash Flow improvement to secure<br />
competitive edge<br />
• Supportive shareholders with focus on long-term and sustainable<br />
value creation<br />
5 October 2009 | Investors Conference Call<br />
Megatrends<br />
Energy<br />
Efficiency<br />
Health &<br />
Wellness<br />
Globalization &<br />
Demography<br />
Page | 1
A resolute management team<br />
Dr. Klaus Engel (53)<br />
Chairman of the Executive Board<br />
25 Years of Experience<br />
2007-2008:<br />
Board member of <strong>Evonik</strong><br />
2006:<br />
CEO Degussa AG and member of RAG-Board<br />
2001:<br />
CEO Brenntag AG<br />
before 1999:<br />
various positions in Stinnes AG, Creanova<br />
Spezialchemie GmbH and Hüls AG, VEBA AG<br />
5 October 2009 | Investors Conference Call<br />
Dr. Wolfgang Colberg (49)<br />
2001-2009:<br />
Chief Financial Officer<br />
23 Years of Experience<br />
CFO BSH Bosch Siemens Hausgeräte<br />
before 2001:<br />
different positions in Robert Bosch Group<br />
inter alia<br />
• General Manager for Turkey and Central Asia<br />
• Senior Vice President Central Purchasing and<br />
Logistics<br />
Ralf Blauth (58)<br />
Chief Human Resources Officer<br />
38 Years of Experience<br />
2006-2009:<br />
Member of the Degussa-Board and HRO<br />
2005-2006:<br />
Member of the RAG Coal Int.Board and HRO<br />
before 2002:<br />
various positions within the Works Council of<br />
Degussa AG, VEBA/ E.ON and Hüls AG<br />
Page 2
Ownership structure<br />
• RAG Stiftung (foundation)<br />
• public mandate from the German<br />
Government to further develop the<br />
group’s business with the ultimate target<br />
of an IPO of up to 75%<br />
• 25.01% acquired by CVC Funds in June 2008<br />
• Strong alignment of both shareholders<br />
• Three well established business areas<br />
Chemicals, Energy and Real Estate<br />
• <strong>Evonik</strong> Degussa GmbH since 1873<br />
• <strong>Evonik</strong> Steag GmbH since 1937<br />
• <strong>Evonik</strong> Immobilien GmbH since 1999<br />
5 October 2009 | Investors Conference Call<br />
74.99%<br />
100%<br />
<strong>Evonik</strong> <strong>Industries</strong> AG<br />
<strong>Evonik</strong> Degussa GmbH<br />
<strong>Evonik</strong> Steag GmbH<br />
<strong>Evonik</strong> Immobilien GmbH<br />
25.01%<br />
Page | 3
<strong>Evonik</strong> operates in three Business Areas<br />
• A leader in specialty chemicals<br />
5 October 2009 | Investors Conference Call<br />
Sales €15.9 bn; EBITDA €2.2 bn; 40,767 employees (2008)<br />
• Broad spectrum of products and applications<br />
• Sales: €11.5bn<br />
• EBITDA: €1.6bn<br />
• Employees: 31,728<br />
Chemicals<br />
• Production plants in 28 countries, activities all around<br />
the world<br />
Energy<br />
• Leading coal power plant<br />
developer & operator<br />
• Sales: €3.6bn<br />
• EBITDA: €545m<br />
• Employees: 4,702<br />
• Activities in approx. 40<br />
countries<br />
Real Estate<br />
• Residential portfolio<br />
of.~60,000 units<br />
• 50% stake in THS<br />
(~75,000 units)<br />
• Sales: €375m<br />
• EBITDA: €217m<br />
• Employees: 443<br />
Page | 4
<strong>Evonik</strong> Chemicals –<br />
A leader in Specialty Chemicals<br />
Strong market positions<br />
• # 1-3 market positions in 80% of<br />
sales<br />
Strong R & D footprint<br />
• More than 20 % of sales generated<br />
from products younger than 5 years<br />
High focus on earnings & cash flow<br />
stability<br />
• Diversified product portfolio and<br />
customer base<br />
• Continuous improvement in cost<br />
efficiency<br />
5 October 2009 | Investors Conference Call<br />
2008 Sales (€ bn)<br />
16<br />
14<br />
12<br />
10<br />
8<br />
6<br />
4<br />
2<br />
0<br />
15.4<br />
Akzo Nobel<br />
11.5<br />
<strong>Evonik</strong> Chemicals<br />
<strong>Evonik</strong> Chemicals<br />
9.3<br />
DSM<br />
7.0<br />
Solvay*<br />
7.0<br />
Rohm & Haas<br />
6.6<br />
Lanxess<br />
5.6<br />
Arkema<br />
5.4<br />
Clariant<br />
4.8<br />
Rhodia<br />
4.3<br />
Wacker<br />
3.9<br />
Ciba<br />
1.9<br />
Lonza<br />
*without Pharma<br />
1.3<br />
Altana<br />
1.1<br />
Croda<br />
Page | 5
<strong>Evonik</strong> Chemicals –<br />
Strong market positions<br />
% of sales from<br />
products with<br />
#1-3 market<br />
positions 100%<br />
Business<br />
Unit<br />
5 October 2009 | Investors Conference Call<br />
Inorganic<br />
Materials<br />
Examples • Silicas<br />
• Silanes<br />
88%<br />
Consumer<br />
Specialties<br />
• PU Foam<br />
Additives<br />
• Super-<br />
absorber<br />
77%<br />
Health &<br />
Nutrition<br />
• Methionine<br />
• Precious<br />
Metal<br />
Powder<br />
Catalysts<br />
91% 89%<br />
Coatings &<br />
Additives<br />
• Isophorone<br />
Chemistry<br />
• Coating<br />
Additives<br />
Performance<br />
Polymers<br />
• PA 12<br />
• Metha-<br />
crylates<br />
49%<br />
Industrial<br />
Chemicals<br />
• H 2 O 2<br />
• 1-Butene<br />
Page | 6
<strong>Evonik</strong> Chemicals –<br />
Benchmark setting innovation process<br />
Strong Intellectual Property portfolio<br />
• >300 new patent applications every year and<br />
>20,000 patents in total<br />
• ~ one third of sales generated from patent-protected<br />
products/technologies<br />
Customer benefit determines R&D intensity<br />
• Measurable customer benefit as decisive factor (e.g.<br />
customer bonding, supply chain integration)<br />
• Overall R&D expenses almost 3% of sales<br />
1 Euro R&D expenditure = 1.5 Euros new annual sales<br />
5 October 2009 | Investors Conference Call<br />
350<br />
136<br />
329<br />
313<br />
228 224<br />
347 340 353<br />
319<br />
298 289<br />
2003 2004 2005 2006 2007 2008<br />
# of 1st patent applications thereof covering China<br />
application<br />
development<br />
15%<br />
New patents 2003 - 2008<br />
process improvement<br />
30%<br />
*as of 10 September 2009<br />
Strong commitment to R&D …<br />
€300m plus annual research and<br />
development expenditure<br />
(~3% R&D to sales ratio)<br />
85% of R&D in Business Units<br />
*<br />
15% explorative<br />
research<br />
new product<br />
development<br />
40%<br />
Page | 7
<strong>Evonik</strong> Chemicals –<br />
Diversified end market portfolio<br />
Pharma<br />
Metal<br />
Construction<br />
Food<br />
5 October 2009 | Investors Conference Call<br />
Sales by End Markets (2008)<br />
€11.5bn<br />
7%<br />
11%<br />
5%<br />
4%<br />
9%<br />
Other<br />
9%<br />
18%<br />
19%<br />
18%<br />
Home / Personal Care<br />
Plastic<br />
Auto<br />
Coating<br />
Page | 8
<strong>Evonik</strong> Chemicals –<br />
Strategy<br />
• Consistent market orientation and customer focus<br />
• Leverage innovation and technology as global competitive advantage<br />
• Actively develop portfolio – materialize sustainable and profitable growth options<br />
5 October 2009 | Investors Conference Call<br />
Our Vision for Chemicals<br />
Short and Long-Term Financial Targets<br />
• Operating profitability / superior operating margins<br />
� EBITDA margin above average of best-in class Specialty Chemicals peers<br />
• Value generation / value creation across the economic cycle<br />
� ROCE of Chemicals business area will exceed its internal capital charge in<br />
any given year<br />
� ROCE > pre-tax cost of capital of 9.0%<br />
Page | 9
<strong>Evonik</strong> Energy-<br />
Low risk business model<br />
• Germany's fifth largest producer of electricity<br />
• Unique & low risk business model<br />
• Dedicated leadership in generation and development<br />
• World class engineering and operations know-how<br />
• Successful German blueprint for international projects<br />
Electric<br />
Power<br />
Value Chain<br />
5 October 2009 | Investors Conference Call<br />
Coal Supply<br />
Focus on Power Generation and Related Services<br />
Generation<br />
<strong>Evonik</strong> Energy's Business Model<br />
Leading Independent Power Plant Developer<br />
Grid Distribution<br />
Planning Construction<br />
Operation<br />
Page | 10
<strong>Evonik</strong> Real Estate<br />
• Attractive residential real estate portfolio<br />
• Present in North Rhine-Westphalia with growing<br />
demand and migration into urban agglomerations<br />
• Focused on attractive micro-locations<br />
• Long-term stable cash flow & earnings base<br />
• Asset value of €2.7bn (IAS 40) and debt of €0.6bn at<br />
the end of 2008<br />
• Continuous focus on efficiency improvements<br />
5 October 2009 | Investors Conference Call<br />
Key portfolio cities within<br />
North Rhine-Westphalia<br />
Page | 11
Solid Financial Performance for the<br />
<strong>Evonik</strong> Group 2006 - 2008<br />
14,125<br />
Sales 2006 – 2008 (€ m) EBITDA 2006 – 2008 (€ m)<br />
Capex 2006 – 2008 (€ m)<br />
2.3%<br />
14,444<br />
1 2 3<br />
Sales 2006 Sales 2007 Growth 2008<br />
5 October 2009 | Investors Conference Call<br />
9.9%<br />
15,873<br />
1 2 3<br />
15.3%<br />
15.5%<br />
13.7%<br />
2,157 2,236 2,171<br />
1 2 3<br />
EBITDA 2006 2007 2008<br />
Sales Sales Growth EBITDA EBITDA-margin Capex<br />
935<br />
1,032<br />
1,160<br />
1 2 3<br />
2006 2007 2008<br />
Page | 12
Performance 2008 by business unit<br />
Business Units<br />
in € m External Sales Change y-o-y EBITDA Change y-o-y<br />
<strong>Evonik</strong> Group 15,873 +10% 2,171 -3%<br />
Chemicals 11,512 +9% 1,600 -1%<br />
thereof:<br />
Industrial Chemicals 2,737 +12% 363 0%<br />
Inorganic Materials 2,208 +19% 315 -13%<br />
Consumer Specialties 1,682 +3% 144 -24%<br />
Health & Nutrition 1,505 +25% 450 +101%<br />
Coatings & Additives 1,549 +1% 250 -17%<br />
Performance Polymers 1,397 -3% 112 -41%<br />
Energy 3,649 +21% 545 -6%<br />
Real Estate 375 -11% 217 +15%<br />
Others 337 -21% -191 -34%<br />
5 October 2009 | Investors Conference Call<br />
Page | 13
Financial structure 2006 - 2008<br />
5 October 2009 | Investors Conference Call<br />
in € m 2006 2007 2008<br />
Total Assets 20,953 19,800 20,099<br />
Shareholders equity 4,320 5,081 5,192<br />
Net financial debt 4,979 3,924 4,583<br />
Pension provisions 4,070 3,894 3,900<br />
EBITDA 2,157 2,236 2,171<br />
Net interest result -470 -466 -530<br />
Operating cash flow pre NWC changes 1,147 1,445 1,137<br />
Net working capital (NWC) 2,898 2,884 3,305<br />
Page | 14
Balance sheet structure<br />
Non-current assets<br />
Current assets excl.<br />
cash & cash equivalents<br />
Cash & cash equivalents<br />
5 October 2009 | Investors Conference Call<br />
12.2008<br />
68%<br />
29%<br />
3%<br />
€20.1bn<br />
06.2009 12.2008 06.2009<br />
72%<br />
26%<br />
2%<br />
€18.7bn<br />
26%<br />
52%<br />
22%<br />
€20.1bn<br />
Assets Liabilities<br />
28%<br />
53%<br />
19%<br />
€18.7bn<br />
Equity<br />
Non-current liabilities<br />
Current liabilities<br />
Page | 15
Current status of financing Q2/2009<br />
Key components<br />
• €2,829m syndicated loan facility<br />
due 03/2011<br />
• €2,250m revolving credit facility central<br />
liquidity backup (€300m drawn)<br />
• €183.5m promissory notes (issued July<br />
2009) due 01/2013<br />
• €1,250m bond of <strong>Evonik</strong> Degussa<br />
due 12/2013<br />
• €1,579m long-term bilateral project<br />
financings<br />
• €528m long-term mortgage backed real<br />
estate financings<br />
• €1,051m limited-recourse project<br />
financings in the Energy business<br />
5 October 2009 | Investors Conference Call<br />
2009<br />
526<br />
Debt Maturity Profile as of June 30, 2009 (in € m)<br />
2010<br />
390<br />
2,250 RCF<br />
2011<br />
739<br />
2012<br />
156<br />
1,500<br />
2013<br />
2014<br />
148 138<br />
2015<br />
2016<br />
74<br />
90<br />
756<br />
2017<br />
2018 and beyond<br />
Page | 16
Finance strategy<br />
<strong>Evonik</strong> <strong>Industries</strong> AG is the finance and capital entity for the Group<br />
• Align finance structure<br />
• Minimize debt at subsidiary level<br />
• Asset based financing for Energy and selective Real Estate projects<br />
• Establish <strong>Evonik</strong> <strong>Industries</strong> as a brand in financial markets<br />
• Rating planned in the near term<br />
• Improvement of financial profile<br />
• Create a long term, well balanced portfolio of financing instruments<br />
• Smooth out maturity profile<br />
• Secure access to multiple funding sources<br />
• Strong and reliable group of partner banks and capital market investors<br />
5 October 2009 | Investors Conference Call<br />
Page | 17
Cash flow and net debt YTD June 2009<br />
€m<br />
5.000<br />
4.000<br />
3.000<br />
2.000<br />
1.000<br />
5 October 2009 | Investors Conference Call<br />
0<br />
Cash flow development<br />
4,583 -839<br />
Net<br />
Financial<br />
Debt end of<br />
2008<br />
EBITDA Change<br />
NWC<br />
-456 + 310<br />
€-624m<br />
€553m<br />
+ 164<br />
Investment Interest &<br />
Tax<br />
Change in<br />
Provisions<br />
Net debt development<br />
-160<br />
+428 -71<br />
Other Change in<br />
Derivatives,<br />
Bond &<br />
Currency<br />
3,959<br />
Net<br />
Financial<br />
Debt<br />
H1/2009<br />
Page | 18
4,139<br />
Financial performance through the last<br />
four quarters for the <strong>Evonik</strong> Group<br />
Sales Q3/2008 – Q2/2009 (€ m)<br />
-8.2%<br />
3,801<br />
-15.7%<br />
3,205<br />
5 October 2009 | Investors Conference Call<br />
-4.0%<br />
3,076<br />
Q3/2008 Q4/2008 Q1/2009 Q2/2009<br />
EBITDA Q3/2008 – Q2/2009 (€ m)<br />
12.9%<br />
535<br />
Sales Sales Growth EBITDA EBITDA-margin<br />
Capex<br />
9.5%<br />
361<br />
10.3%<br />
329<br />
16.6%<br />
510<br />
Q3/2008 Q4/2008 Q1/2009 Q2/2009<br />
252<br />
Capex Q3/2008 – Q2/2009 (€ m)<br />
471<br />
159 151<br />
Q3/2008 Q4/2008 Q1/2009 Q2/2009<br />
Page | 19
Decisive actions to improve<br />
earnings & cash flows<br />
Short-term stabilization of 2009 earnings and cash flow<br />
• Cost cutting target of €300m: H1 2009: more than €200m<br />
• NWC reductions: H1 2009: €456m<br />
• Capex discipline: H1 2009: €310m<br />
Sustainable efficiency improvements targets - program “On Track”<br />
• Sustained cost savings of €500m p.a. by 2012<br />
• Program includes: review of administrative functions in the Corporate Centre, Service<br />
Centre, site operations, procurement, complexity reduction<br />
5 October 2009 | Investors Conference Call<br />
Page | 20
Outlook<br />
• Environment remains challenging in the present economic crisis<br />
• Lower sales and earnings anticipated for 2009<br />
• Since Q2/2009 stabilizing trend with slightly improving sales<br />
• Counteractions have significant positive impact on earnings and cash flow<br />
• Consistent commitment to R&D in 2009 with over €300m spending<br />
• Our Chemicals, Energy and Real Estate Business Areas are positioned at the forefront of<br />
their markets<br />
• More than 80 percent of Chemicals sales generated from leading market positions<br />
• Innovative capability as decisive success factor to generate growth and create value<br />
5 October 2009 | Investors Conference Call<br />
Page | 21
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