olson citigroup v2
TRANSCRIPT
DELIVERING SOLUTIONS. DELIVERING GROWTH.
Rick Olson
Senior Vice President
Corporate Productivity & Business Process Simplification
2011 Citi Basic Materials Symposium
November 29, 2011
DuPont
The attached charts include company information that does not conform to generally accepted
accounting principles (GAAP). Management believes that an analysis of this data is meaningful to
investors because it provides insight with respect to ongoing operating results of the company and
allows investors to better evaluate the financial results of the company. These measures should not be
viewed as an alternative to GAAP measures of performance. Furthermore, these measures may not be
consistent with similar measures provided by other companies.
This data should be read in conjunction with the previously published company’ reports on Form 10-K,
10-Q and 8-K. These reports along with reconciliations of non-GAAP measures to GAAP results are
available on the Investor Center website at www.dupont.com.
Forward Looking Statements
During the course of this presentation we may make forward-looking statements or provide forward-
looking information. All statements that address expectations or projections about the future are
forward-looking statements. Some of these statements include words such as “plans,” “expects,” “will,”
"believes," “intends,” and “estimates.” Although they reflect our current expectations, these statements
are not guarantees of future performance, but involve a number of risks, uncertainties, and
assumptions. Some of those risk factors include: fluctuations in energy and raw material prices; failure
to develop and market new products and optimally manage product life cycles; global economic and
capital markets conditions; litigation and environmental matters; changes in laws and regulations or
political conditions; and business or supply disruptions. The Company does not undertake to update
any forward-looking statements as a result of future developments or new information.
Regulation G
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DUPONT FINANCIAL HIGHLIGHTS
* Excludes significant items. Refer to company website for detailed reconciliations of non-GAAP measures. 3
2010 SEGMENT SALES Pro Forma Basis (including Danisco acquisition)
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5
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Agriculture Nutrition & Health
Safety & Protection
Electronics & Comm
Ind Biosciences
Perf Coatings Perf Chem Perf Mat's
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$B
We are applying our science to find solutions
to some really BIG challenges…
FOOD ENERGY PROTECTION
FEEDING THE
WORLD
REDUCING OUR
DEPENDENCE ON
FOSSIL FUELS
KEEPING PEOPLE &
THE ENVIRONMENT
SAFE
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DuPont is driving critical cross-company enablers
to address these challenges and maximize our results
in the areas of: Innovation
Differential portfolio management
Productivity
QUESTION…
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Productivity has been an important area of focus for DuPont.
What specific actions are you taking to improve productivity and how do you
measure your success? What are your productivity goals for 2011 and 2012?
PRODUCTIVITY Disciplined processes deliver ongoing productivity
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Focused
• Improving efficiency and effectiveness across supply chains
• Proactively anticipating market dynamics
Effective
• Standard tools and techniques to solve problems
• Eliminating inefficiencies and creating sustained value
Measured
• Measure progress enabling reduced costs and increased capacity
• Comprehensive competitive benchmarking
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FIXED COST PRODUCTIVITY
Fixed Cost* as % of Sales
2010-2012 Target: $1B Fixed Cost Productivity
2010 result: >$400 million
2011 goal: $300 million … $250 million delivered through 3Q
2012 goal: $300 million
44.6%
42.5%
41.0% 41.2%
46.2%
41.5%
40% 39%
2005 2006 2007 2008 2009 2010 2011E 2012E
* Data exclude significant items in all periods. See company website for detailed reconciliations of non-GAAP measures.
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WORKING CAPITAL PRODUCTIVITY
2010-2012 Target: $1B Working Capital Productivity
2010 result: >$700 million
2011 goal: $300 million … tracking well toward goal through 3Q
2012 goal: $300 million
NWC* Turnover: Achieved 13% Productivity in 2010
4.9 NWC Turnover
5.5 NWC Turnover
2009 2010
13% Productivity
* Excludes cash, cash equivalents, marketable securities and short term borrowings.
WORKING CAPITAL PRODUCTIVITY
Benchmarked versus 100+ companies based on public financial statements
Trade Working Capital Productivity – DD* Average Period-end Position / Average Monthly Revenue
* Short-cycle businesses. Excludes Pioneer/DCP and Danisco 11
Inferior Disadvantaged Parity Advantaged Superior
2007
2008
2009
2010
2Q 2011
1Q 2011
DuPont
3Q 2011
QUESTION…
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Are your expectations different for the growth businesses vs. the
performance businesses? How does your approach differ?
5% CAGR
improvement
EXAMPLE … PERFORMANCE CHEMICALS (TiO2)
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Fixed Cost as % of Sales
Differentiated Process Technology 100% chloride technology DuPont one-step process Scale Largest in capacity All plants >100 kT per year Capital and fixed cost productivity Disciplined cost management using DuPont Production Systems (DPS) Variable Cost Productivity High conversion efficiency Substantial reduction of energy usage over last ten years
2008 2009 2010 2011E 2012E
EXAMPLE … PIONEER Agile & effective supply chains
In-season sales represent opportunity, but require disciplined supply chain
processes
• ~10% of sales opportunities are in-season
Project Focus
• Shape demand around identified leader products
• Closely monitor inventory levels
• Optimize logistics – next day delivery
Results
• Reduced product returns (right product at the right location)
• Improved inventory management at the field level
• Increased sales and improved supply chain logistics
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QUESTION…
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The TiO2 business has been performing very well and DuPont has continued
to increase prices. Given your prior experience, where do you think we are
in the TiO2 cycle? Can margins stay at this level given escalating titanium
ore prices?
TiO2 MARKET DYNAMICS
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Announced Capacity - DuPont
200K tonnes
Altamira expansion
(2014)
150K tonnes
Debottlenecking projects
(2012-2014)
Supply Demand
QUESTION…
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With the purchase of Danisco complete, do you believe the portfolio
transformation is done?
Where do you see the portfolio in 5 years?
28%
9%
11%
52%
Ag & Nutrition
Agriculture / Nutrition & Health
Electronics & Communications
Safety & Protection
Industrial Biosciences
Performance Segments
23%
8%
8%
10%
3%
48%
2010 DuPont Actual Sales
$31.5B
2010 DuPont – Danisco
Pro Forma Sales
$34.2B
DANISCO ACQUISITION Impact to the Portfolio
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15%
11%
9%
5%
60%
FOOD
ENERGY
PROTECTION
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R&D INVESTMENT 2010 pro forma R&D investment ~$1.8B
Chemistry
Engineering
Materials Science
Nanotechnology
Industrial Biotech
Ag Biotech
Increasing
Food Production
Decreasing Dependence
on Fossil Fuels
Protecting People and
the Environment
Chemicals and
Materials
Electronics
Capital Allocation Aligned with Large Growth Opportunities
QUESTION…
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In the absence of any M&A, what are your priorities for cash use?
Following the 9 million share repurchase in 3Q, should we expect more
buybacks in the future?
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FINANCIAL DISCIPLINE PRINCIPLES Uses of Cash
• Maintain a strong balance sheet
• Invest for growth in high return opportunities
• Return excess cash to shareholders
FINANCIAL DISCIPLINE – CASH DEPLOYMENT Past 5 years(2006-2010)
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5 yr Performance • ~$22B cash generated
• ~$19B returned to shareholders or invested for growth – while maintaining strong balance sheet
Strong Balance Sheet - - - data as of 12/31/2010 • $6.8B cash, cash equivalents & marketable securities
• $3.5B net debt*
44%
5%
39%
12%
Dividends
Share Repurchase
Acquisitions
Capital Spending
$19B
*Reconciliation of net debt can be found on the company website.
© 2011 E.I. du Pont de Nemours and Company. All Rights Reserved.
• Attractive long-term growth from innovation driven by challenges to:
• Differential portfolio management affects capital allocation decisions,
drives growth
• Aggressive financial targets / transparency / accountability
• Ongoing cost and capital productivity
• Financial discipline
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A LOOK AHEAD
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• Feed the world
• Reduce dependency on fossil fuels
• Protect people and the environment
DuPont Investor Day
Dec 12 6pm – 8:30pm
Dec 13 8am – 12:30pm
Wilmington, Delaware
You’re invited to join us….
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