presentation by laurent schmitt, president of rhodia polyamide
TRANSCRIPT
1
Rhodia Analyst Day
September 5-6th, 2006
Polyamide - Rhodia Analyst Day - September 6th, 20062
Laurent Schmitt, President
September 6th, 2006
Rhodia Polyamide
Polyamide - Rhodia Analyst Day - September 6th, 20063
Forward looking statements and Regulation G
The presentation today may include the display of some company data
that do not directly conform to generally acceptable accounting principles, or GAAP.
Management believes that the presentation of some non-GAAP data provides investors with additional insight into the ongoing
operations of the business.
These measures should not be viewedas an alternative to GAAP measures of performance.
Furthermore, these measures may not be consistent with similar measures provided
by other companies.
This presentation contains elements that are not historical facts, including,
without limitation, certain statements on future expectations and other forward-looking statements.
Such statements are based on management’s current views and assumptions and involve known and unknown risks and uncertainties
that could cause actual results, performance or events to differ materially
from those anticipated.
Copies of all recent filings, and additional information about Rhodia, are available through our web site:
http://www.rhodia.com
Polyamide - Rhodia Analyst Day - September 6th, 20064
An organizational structure ready to take up Polyamide’s future challenges
Polyamide - Rhodia Analyst Day - September 6th, 20065
A sustainable pillar of Rhodia
Polyamide Strategy: Focus on Intermediates, Engineering Plastics & Asia
Intermediates & Polymers: the Polyamide power
Engineering Plastics: the innovation force
Growing in Asia
Agenda
Polyamide - Rhodia Analyst Day - September 6th, 20066
A sustainable pillar
of Rhodia
Polyamide - Rhodia Analyst Day - September 6th, 20067
35% Group Net Sales 21% Group employees43% Group EBITDA
A key business in Rhodia
Performance Materials
Strengthen global leadership Expand in Asia
Functional Chemicals
Organics and Services
Grow throughinnovation
Take advantage of consolidation opportunities
Generatefree cash-flow
Novecare
Silcea
Eco Services
Organics
Energy ServicesPolyamide
Acetow
Polyamide - Rhodia Analyst Day - September 6th, 20068
Recurring EBITDA
€ 243 million
Employees
4,000
Net Sales
€ 1,710 million
Industrial sites
14 plants in the world
N°2 in Polyamide
6.6
N°3 in Engineering
Plastics
2005
Rhodia Polyamide
Polyamide - Rhodia Analyst Day - September 6th, 20069
Well spread product range & customer base
Nylon Intermediates
40%
44%
16%
35%
5%
Intermediates & Engineering Plastics (€m)
> 85% sales
Strong developing market
presence (€m)
Intermediatesexcept AA
AdipicAcid
EngineeringPlastics
Fibers
Others
Europe
Asia
SouthAmerica
North America
24%
760
279
592
5%
Non Nylon Intermediates (Phenol & solvents)
21%
361
268
414
21235%
16%
44%
79
421
An increase of 55%
in last 5 yrs
Polyamide - Rhodia Analyst Day - September 6th, 200610
Auto
Electric & Electronics
Consumer & Industrial Goods
29%
7%
12%
Well-diversified final marketsfor Rhodia Polyamide
Clothing & shoes
Construction
Others
7%
26%
8%
Coatings & adhesives
11%
Polyamide - Rhodia Analyst Day - September 6th, 200611
A complete polyamide chain
Engineering Plastics
Industrial Yarns
Technical &
Consumer Fibers
Textile Yarns
Polyamide
Nylon
salt
HMDAADN
PA 6.6
PA 6
KA-Oil
Cumene Phenol Cyclohexanol
Butadiene
Caprolactam
Cyclohexane
Solvents
Intermediates & Polymers
Nat Gas
Naphtha
Benzene
Propylene
Nat Gas
Benzene
Nat Gas
Benzene
Nat Gas
Nat Gas
Nat Gas HCN
Worldwide Brazil only
Ammonia
Adipic
acid
Raw materials
10% of sales
90% of sales
Polyamide - Rhodia Analyst Day - September 6th, 200612
A worldwide industrial network
Manufacturing Plant
Application & Technology Development Centre
R&D centre
Worldwide Headquarter
Regional Headquarter
Paulinia
Santo Andre
Mississauga
Sao Paulo
Detroit
Jacarei
San Bernardo
Qingdao
Asia
Seoul
Shanghai
Onsan
EuropeNorth/Latin America
14 industrial sites worldwide
Chalampé
Valence
Belle-Etoile
Blanes
Gorzow
Lyon
Freiburg
Ceriano
Polyamide - Rhodia Analyst Day - September 6th, 200613
Polyamide Strategy:
Focus on Intermediates,
Engineering Plastics & Asia
Polyamide - Rhodia Analyst Day - September 6th, 200614
Our Polyamide Strategy
Focus on Intermediates The key step in the supply chain to ensure our competitive leadership position
Focus on Engineering Plastics The key segment to capture growth (+ 5%)
Expand in Asia The key region to capture growth (+ 5%)
Strengthen our leading worldwide position in Polyamide 6.6
To capture additional growth
To generate increased margins
Polyamide - Rhodia Analyst Day - September 6th, 200615
PA 6.6: Our leading product with solid, sustainable margins
• Value added applications for a fast evolving market
• Unique technical properties vs PA 6- Higher temperature resistance of + 30°c- +15% higher dimensional stability- +20% to 30% higher mechanical properties
• We possess world renown process know-how & tools
• ADN is a key step for PA 6.6 production • ADN is a technology mastered by few players: High technological entry barriers
• Tight supply/demand balance
• Balanced raw material needs
• Benzene, butadiene, natural gas, naphtha
Polyamide - Rhodia Analyst Day - September 6th, 200616
Rhodia is 2nd largest PA 6.6 producer
• 10 first producers : 80% of the market
• 4 major integrated PA 6.6 producers represent 60% of the market
• 5 producers of ADN
Include Rhodia discop & Invista’s fibers disposal
0.2
0.2
0.3
0.3
0.4
0.6
0.9
1.0
1.4
3.2 31%
14%
10%
9%
6%
4%
3%
3%
2%
2%0.2
0.2
0.2
0.4
0.3
0.8
1.4
0.1
0.2
0.9
0.2
0.3
0.2
0.1
0.3
0.1
0.5
0.3
1.8
0 0.5 1 1.5 2 2.5 3 3.5
Liao Yang
CSM
Radici
Kordsa
Asahi
BASF
Du Pont
Solutia
Rhodia
Invista
€ bn
Intermediates
EP
Fibers
Polyamide - Rhodia Analyst Day - September 6th, 200617
Engineering Plastics & Asia: 2 high growth areas
In a worldwide Polyamide market of 6,000 Kt growing 2.4% p.a to 2010
ASIA2,365 KT
+ 5 % p.a
NORTH AMERICA1,885 KT
EUROPE1,635 KT(+0.8 %)
SOUTH AMERICA145 KT
Industrial Yarns1,085 KT(+2.2 %)
Staple Fibers430 KT(-2 %)
Carpet Yarns 1,010 KT(+1.1 %)
Engineering Plastics 2,000 KT
+5 % p.a
Textile Yarns1,505 KT(0.8 %) (+0.5 %)
Polyamide - Rhodia Analyst Day - September 6th, 200618
Intermediates & Polymers:
the Polyamide power
Polyamide - Rhodia Analyst Day - September 6th, 200619
A sustainable leadership
• Best in class competitive position in our key ADN technology
& in PA 6.6 intermediates
• Continuous industrial development to capture demand growth
• Tight supply/demand balance drives pricing power
• Innovative solutions for high value added specialty polymers
Polyamide - Rhodia Analyst Day - September 6th, 200620
Continuous manufacturingimprovement towards excellence
• Best-in-class cost position:
• Best competitive technology for ADN – our key product • A completely integrated industrial chain with most competitive technology
• A worldwide industrial network with continuous manufacturing improvement towards excellence (SIX SIGMA Iso WCM)
Belle Etoile (France)HMDA, Nylon Salt, Polymers 6.6
Chalampé (France)ADN, HMDA, Ka-oïl, AA, Nylon Salt
Paulinia (Brazil)Phenol, cyclohexanol,AA, HMDA, Nylon Salt
Santo Andre (Brazil)Polymers 6.6
R&D Centers WorldwideLyon, Paris
Onsan (KOREA)AA, Nylon Salt, Polymers 6.6
R&D Centers and Application Laboratory (Brazil) Paulinia
Freiburg (Germany) Polymers 6.6
Blanes (Spain) Nylon Salt, Polymers 6.6
Polyamide - Rhodia Analyst Day - September 6th, 200621
Industrial development to capture growth
Adipic Onsan2001
Polymer OnsanStart 2008
ADN Chalampé2000
PolymerFreiburg 2005
PolymerBlanès2006
Adipic Chalampé1999
PolymerBelle Etoile
1998
Polymer Brazil2002
HMDA plantPaulinia1999
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Polyamide - Rhodia Analyst Day - September 6th, 200622
ADN demand Industry utilization rate
ADN: Tight supply vs demandset to remain – pricing power secure
94%
87%
86%
91%
89%
90%
91%
0
200
400
600
800
1000
1200
1400
1600
1800
1995
2002
2004
2006
2008
2010
2012
2014
2016
10%
20%
30%
40%
50%
60%
70%
80%
90%
100% • Tight supply vs demand balance for at least next 3 years
• Full capacity utilisation
• Maintenance shutdowns impact volume availability
• No new facilities announced (lead time 3 yrs)
Polyamide - Rhodia Analyst Day - September 6th, 200623
Innovative new products with high value added
• Tailor made solutions of specialty polymers for enhanced customer performance
• Aging resistant polymers to avoid plastics yellowing
• Anti-UV protected polymer for yarns used for automotive
• Antistatic polymers to improve non-woven fibers spinning process
• Very high tenacity for Sewing threads
• Specialty polymers for high tenacity Airbag
Polyamide - Rhodia Analyst Day - September 6th, 200624
Engineering Plastics:
the innovation force
Polyamide - Rhodia Analyst Day - September 6th, 200625
Key segment to capture growth
• Key advantages vs other downstream activities:
• Stronger market growth at 5% p.a compared to 2% or less
• Lower capital intensity of at least 5 times
• A strong worldwide leadership built on:• A proven success story
• Excellence in innovative solutions
• Proven customer intimacy
• Highly competitive industrial base and geographical network
Polyamide - Rhodia Analyst Day - September 6th, 200626
A strong worldwide leader
Automotive Electric & ElectronicsConsumer &
Industrial Goods
N°2 N°2N°1
ISO QS 9000ISO TS16949
ISO TS16949
ISO TS16949
ISO TS 14001
N°1
Rhodia’s Engineering Plastics
Polyamide - Rhodia Analyst Day - September 6th, 200627
+ 18%
+ 7%
+ 5%+ 6%
0%
+ 4%
10.9%
9.6%
10.7%
2003 2004 2005
Market growth Rhodia EP growth Rhodia market share
A proven success story
Polyamide - Rhodia Analyst Day - September 6th, 200628
Innovation is vital
• 30% of new products < 5 years old
• > 20 product ranges launched in 5 years
• R&D organization combining powerful know-how and proximity
• R&D Worldwide center in Lyon• R&D Tech centers in each zone• 8 Customer Support centers
• Creation of engineering plastics with high usage-value
• Safety increase• High performance• Comfort and design• Recyclability
CIG: Technyl® SIE&E: Technyl® flame retardant halogen and red phosphorous free
Automotive: Body panel, Technyl® Force, technological partnerships as Mucell…
Polyamide - Rhodia Analyst Day - September 6th, 200629
Dedicated customer intimacy is key
• Meet customer needs through multi-disciplinary team organisations
• Support customers in their growth strategy
• Serve smaller customers through an efficient distribution network
• Simplify customer back office processes with E-tool integration
Re-engineered customer relationship management
Polyamide - Rhodia Analyst Day - September 6th, 200630
• Doubling of average capacity per line in 5 years
• Site specialization per product line
Highly competitive industrial base and geographical network
Acquisition
Korea
1999
New plant
China
2006
New plant
Korea
2004
New plant
Canada
1999
Acquisiton
Poland
1999
De-bottlenecking
Poland
2001
Specialty products
acquisition
Poland
2002
De-bottlenecking
Italy
2003
De-bottlenecking
France
2005
De-bottlenecking
China
2005
1998 1999 2000 2001 2002 2003 2004 2005 2006
Polyamide - Rhodia Analyst Day - September 6th, 200631
Growing in Asia
Polyamide - Rhodia Analyst Day - September 6th, 200632
Adipic Onsan2001
Polymer OnsanStart 2008
Acquisition
EP Hyosung
Korea
1999
New Compounding
PlantShanghai
2006
New Compounding
Plant Onsan
2004
Manufacturing PlantApplication & Technology
Development Centre
R&D centreRegional Headquarter
Qingdao
Seoul
Shanghai
Onsan
Asia
A strong base in Asia well positionned for the future
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Polyamide - Rhodia Analyst Day - September 6th, 200633
Rhodia, the Polyamide 6.6 champion
Polyamide - Rhodia Analyst Day - September 6th, 200634
Jean-Claude Steinmetz, Vice-President
September 6th, 2006
Rhodia PolyamideAutomotive and Transportation Markets
Polyamide - Rhodia Analyst Day - September 6th, 200635
Rhodia & the Automotive market
Polyamide as a key lever for Rhodia's offerto the automotive market
Other Rhodia key technologies
Perspectives
Agenda
Polyamide - Rhodia Analyst Day - September 6th, 200636
Automotive market: long-lastingvehicle production growth
World light vehicle assembly
geographical repartition
World light vehicle assembly
2005-2010 growth per region
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Western Europe
Eastern Europe
USA
Asia except China & Japan
China
Japan
Mercosur
Others
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
2005 2008 2010
57%
43%
91%
7%+4% + 8%
+ 19%
+ 24%
WesternEurope
EasternEurope
USA
AsiaexceptChina & Japan
China
Japan
Mercosur
Others
Polyamide - Rhodia Analyst Day - September 6th, 200637
New pre-requisites requested by auto makers & legislators
• Energy efficiency • Decrease the vehicle weight to reduce fuel consumption
• Emission reduction
• Reduce CO2 and Nox emissions
• Economics of Scarcity
• Find new fuel alternatives to reduce dependence on oil
• Sustainable development
• Increase car recyclability
Polyamide - Rhodia Analyst Day - September 6th, 200638
Main markets
Automotive &
Transportation
Net Sales
> € 500 million
Core technologies
Engineering Plastics,
rare earth for catalysis,
silicas, additives
for lubricants
and coatings
Strong presencein growing regions
2005
Rhodia in the automotive market
Polyamide - Rhodia Analyst Day - September 6th, 200639
Plastics: A continuous penetration in automotive
Automotive percentage of material utilization
23% 27% 31%
11%14%
17%
66%59%
52%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1990 2000 2010
Steel / Metal
Polymers
Other material
Polyamide - Rhodia Analyst Day - September 6th, 200640
Confirmed by automakers
Source : Observatoire de l’Innovation Automobile
Elastomers
Ceramic
Glass
Aluminium
Composites 18%
Steel
Plastics
0% 10% 20% 30% 40% 50%
41%
19%
14%
3%
2%
1%
• Plastics as the major contributor of the evolution of the automotive industry for the last 10 years
• Question: "Over the last 10 years which types of materials have contributed the most to the evolution of the automotive industry" – 300 answers
Polyamide - Rhodia Analyst Day - September 6th, 200641
Polyamide: an answer to decreasevehicle weight and reduce fuel consumption
Weight of vehicles + 30 to 80 % over the past 20 years
"Environmental gain"Reduced fuel consumption
0.6 liters per 100 km
100 kg of plastics per vehicleequivalent to
200 to 300 kg of metal
700
800
900
1,000
1,100
1,200
1,300
1,400
1,500
1970 1980 1990 2000 2010
Toyota Corolla
Ford Escort
VW Golf
• 10% weight reduction on a vehicle allows to save from 5 to 6% on fuel consumption
• For Western Europe, it means
• 12 millions of tons of oil saved per year
• 30 millions of tons of CO2 that are not rejected in the atmosphere per year
Polyamide - Rhodia Analyst Day - September 6th, 200642
Polyamide: a way to face new fuel alternatives to reduce dependence on oil
• By increase of under-the-hood’s temperature profiles, the new fuel alternative will require some new materialevolution
• With a temperature resistance of 30°c above PA 6, PA 6.6 will more than ever become a key material under-the-hood
• Advantage of PA 6.6 vs PA 6• Barrier against other plastics substitution• New opportunities for PA 6.6
Polyamide - Rhodia Analyst Day - September 6th, 200643
Polyamide: a solution to increase car recyclability
• PA 6 and PA 6.6 offer • Good property retention• No additional costs in processing• Versatility in applications
• Ideal material to fulfill automakers requests concerning the use of minimum recycle contents
Polyamide - Rhodia Analyst Day - September 6th, 200644
Polyamide faces great perspectives in automotive
Option 22010 -> 11kg
873,000 T
2005 -> 9 kg : 576,000 T
Option 32010 -> 13kg
988,000 T
+ 54% + 72 %
Option 12010 -> 9 kg
684,000 T
2005 -> 63,000 000 vehicles2010 -> 76,000 000 vehicles
+ 21%
Natural automotive market growth
Perspective of plastic part gain in vehicle
Source: JD Powers
Polyamide - Rhodia Analyst Day - September 6th, 200645
Double Rhodia’s business in this field by 2011
Rhodia Automotive strategy: Engineering Plastics
Means
• Extend strong under-the-hood positions to:
• Structural parts• Body panels
• Bring new technological solutions
allowing automotive market to gain productivity
• High flow plastic for enhanced productivity• MuCell technology
Polyamide - Rhodia Analyst Day - September 6th, 200646
Rhodia Automotive strategy: Engineering Plastics
• Areas of research• Plastic’s flowability & dimensional stability• Composites• New processing technologies• Recyclability
Polyamide - Rhodia Analyst Day - September 6th, 200647
CO2 and Nox emissions stake
• Over the next 30 years, CO2 emissions related to transportation
will increase by 43% despite all the efforts already underway
27%
39%
14%
14%
14,000
16,000
Mt
+43%
+29%
+13%
+8%
30%
39%
12%
12%
Transport
Power
Industry
Residential+ services
Source: IEA WEO
2002 2030
Polyamide - Rhodia Analyst Day - September 6th, 200648
Leader thanks to a unique systemParticulate filters with the Eolys additive
= > 2 million of vehicles equipped
Rhodia’s particle filter & catalysis additives to reduce CO2 and Nox emissions
NOx
HC
CO
Leader in Rare Earth technology1 out of 3 catalytic converters worldwide
already contains Rhodia products= > 110 million of vehicles since 1995
Gasoline Engines
Particules
NOx
CO
Diesel Engines
PotentialPotential
• Sustained growth thanks to current & strengthening of environmental regulations
• Maintain market share through technology
PotentialPotential
• "Environmental gain" : -1 000 T of particles / year
=> Production more than doubled in the next 5 years
• New vehicles: 10 million cars with particle filters to be equipped by 2010 to respond to upcoming Euro V & Euro VI
=> Rhodia forecasts: minimum 5 million cars equipped with fuel-borne catalysts
• Retrofit: 4 to 5 million of potential for utility vehicles
Polyamide - Rhodia Analyst Day - September 6th, 200649
Rhodia’s silicasto reduce fuel consumption
500 million tires
Incorporate silicas from Rhodia
=> 1/3 of all automobiles in Europe
reducereduce
resultresult
whilewhile
High performance silicas such as "Zeosil"
to replace carbon black in tires
Rolling resistance by 20%
Fuel savings of 5%
Improving safety
(road holding, braking)
Rhodia N°1
• Twice as large as nearest competitor
A highly promising market
• Silica current growth rate:
3 times greater than carbon black
• Recent statement of US government
about silica’s substitution of carbon black
Polyamide - Rhodia Analyst Day - September 6th, 200650
A growth market for Rhodia
The automotive and transportation market is a fast-growing
market eager for innovation
The automotive and transportation market is a fast-growing
market eager for innovation
Rhodia owns key technologies to answer automotive
industry and legislators new needs
Rhodia owns key technologies to answer automotive
industry and legislators new needs
Over the next 5 years
Rhodia aims to double its sales in this market
Over the next 5 years
Rhodia aims to double its sales in this market
51
Rhodia Analyst Day
September 5-6th, 2006