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Safe Harbor Language. Statements in this presentation relating to matters that are not historical facts are forward-looking statements. These forward-looking statements are just predictions or expectations and are subject to risks and uncertainties. Actual results could differ materially, based on
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1. Solid Strategy, Confident ExecutionMorgan StanleyGlobal Chemical ConferenceFebruary 13, 2003Dan SmithPresident and CEO
2. Safe Harbor Language
3. Company Overview
4. Lyondell Has Built a Balanced Portfolio
5. The Recent Years Have Been a Period of Optimization Mid 1990’s
Formation years
LCR Contract and JV
Equistar JV
IC&D Acquisition
1999-2002
Position and Optimize
Portfolio Adjustments
Capacity Rationalization
Project Reorientation
Organization Effectiveness
Best practices
Organization design
6. A Firm Foundation Has Been Established Portfolio Adjustments
Capacity Rationalization
Project Reorientation
Organization Effectiveness
$2.5B Revenue
Divestitures - Specialties, polyols
Acquisitions - Oxy transaction
2Blbs of Capacity
Olefins, Polyethylene
Reinitiate : IC&D projects
Cancel/Delay : Equistar projects
Infrastructure Enhanced
Synergies - $300MM
7. Processes and Systems Have Steadily Improved the Capital Utilization Within the Enterprise
8. A Snapshot of Operating Metrics Highlights the Success
9. A Brief Portfolio Review IC&D
LCR
Equistar
10. Our Propylene Oxide and Derivatives Business (IC&D) Benefits from a Strong Position and a Stable Industry Structure
11. PO Technology is Entering its Third Generation of Innovation
12. LCR Important Cash Generator
13. Equistar is a Leading Ethylene Producer #2 in North America
#3 in world
Leader in industry consolidation
Competitive position based on feedstock flexibility
14. Commodity Exposure Drives Cash Flow
15. Significant Cash and Earnings Generation in Up-Cycle
16. N. American Supply/Demand Imbalance is Differential to Global Situation
17. Effective Ethylene Operating Rates Move Toward 95% Early in 2003 Chevron/Phillips (650 Mn) +#22 down as of Q1 2002 staying down thru 2003
Equistar(800 Mn) down as of Q1 2002 staying down
Huntsman Pt Neches (500 Mn)down Q1 2002 staying down down thru 2003
Exxon Mobil(755 Mn) down Q4 2002 staying down through 2003-A problem for LCR !!
( therefore,I did not add this to the outages but took it out of “Unplanned”)
Dow Seadrift (100% of 975) down in Q4 2003- shutdown--based on capability to find C=C
Dow Texas City (100% of 1500) down in Q4 2003- shutdown--based on capability finding C=C
Add 2% unassigned shutdown equal to 100 Mn lBs/Mo
All these are collected in the blue marble shaded “Shutdown” area and have been extracted from “Turnarounds” and “Unplanned” Chevron/Phillips (650 Mn) +#22 down as of Q1 2002 staying down thru 2003
Equistar(800 Mn) down as of Q1 2002 staying down
Huntsman Pt Neches (500 Mn)down Q1 2002 staying down down thru 2003
Exxon Mobil(755 Mn) down Q4 2002 staying down through 2003-A problem for LCR !!
( therefore,I did not add this to the outages but took it out of “Unplanned”)
Dow Seadrift (100% of 975) down in Q4 2003- shutdown--based on capability to find C=C
Dow Texas City (100% of 1500) down in Q4 2003- shutdown--based on capability finding C=C
Add 2% unassigned shutdown equal to 100 Mn lBs/Mo
All these are collected in the blue marble shaded “Shutdown” area and have been extracted from “Turnarounds” and “Unplanned”
21. Asia is the Most Economic Destination for Middle East Ethylene Derivatives
22. As Such, Asia is the Natural Market for Middle East Production
23. Success in Asia Demands a Strategy That Addresses the Region’s Diverse Characteristics Distance between markets
Wide ranging economic/political/social climates
Many producer and varying motivations
Hydrocarbon resources
24. Our Core Beliefs Guide Our Approach to the Asian Market PO Chain:
Current presence:
US and European Export
Nihon Oxirane JV
C2= Chain:
Not differential
25. Our Financial Strategy is Unchanged Maintain Sufficient Liquidity
Repay Debt
26. We Have Maintained Significant Liquidity
27. Cash Flow Has Supported the Interest and Dividend Requirements
28. We Have Actively Managed Our Maturity Profile
29. De-leveraging Will Benefit All Stakeholders Impact of Lyondell debt reduction at constant capitalization1:
Debt Reduction
$1B $2B
Debt to capitalization 54% 36%
Avoided interest expense $100MM/Yr $200MM/Yr
Earnings improvement 40¢/share 80¢/share
Share price improvement at
constant capitalization $6/share $12/share