Praxair, Inc. James S. Sawyer Executive Vice President and Chief Financial Officer. Morgan Stanley Global Chemicals Conference November 15, 2012

Transcription

1 Praxair, Inc. James S. Sawyer Executive Vice President and Chief Financial Officer Morgan Stanley Global Chemicals Conference November 15, 2012

2 Forward Looking Statement This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of These statements are based on management s reasonable expectations and assumptions as of the date the statements are made but involve risks and uncertainties. These risks and uncertainties include, without limitation: the performance of stock markets generally; developments in worldwide and national economies and other international events and circumstances; changes in foreign currencies and in interest rates; the cost and availability of electric power, natural gas and other raw materials; the ability to achieve price increases to offset cost increases; catastrophic events including natural disasters, epidemics and acts of war and terrorism; the ability to attract, hire, and retain qualified personnel; the impact of changes in financial accounting standards; the impact of changes in pension plan liabilities; the impact of tax, environmental, healthcare and other legislation and government regulation in jurisdictions in which the company operates; the cost and outcomes of investigations, litigation and regulatory proceedings; continued timely development and market acceptance of new products and applications; the impact of competitive products and pricing; future financial and operating performance of major customers and industries served; the impact of information technology system failures, network disruptions and breaches in data security; and the effectiveness and speed of integrating new acquisitions into the business. These risks and uncertainties may cause actual future results or circumstances to differ materially from the projections or estimates contained in the forward-looking statements. The company assumes no obligation to update or provide revisions to any forward-looking statement in response to changing circumstances. The above listed risks and uncertainties are further described in Item 1A (Risk Factors) in the company s Form 10-K and 10-Q reports filed with the SEC which should be reviewed carefully. Please consider the company s forward-looking statements in light of those risks. -2-

3 Unique Revenue Model On-Site/Pipeline 25% 15-year take-or-pay contracts Indexed to energy, inflation, currency Merchant Liquid 32% Exclusive supply agreements Sourced as by-product from on-site Packaged/Medical 27% Cylinder rental and specialty gas focus Sourced as by-product from bulk Integrated supply & contract terms drive high ROC -3-

4 Diverse Markets Manufacturing 24% Cutting O 2 Welding O 2, N 2, Ar, H 2, He, blends Glass O 2, N 2, Ar, H 2, He Automotive O 2, N 2, Ar, H 2, Xe, Ne Metals 18% Chemicals 10% Production O 2, N 2, H 2 Coal gasification O 2 Syngas production CO Process control specialty gases Electronics 9% Semiconductor process gases Photovoltaics N 2, Ar, SiH 4 Flat panel - O 2, N 2, Ar, H 2, He, NH 3 % of 2011 sales Steel production O 2 Stainless steel Ar, O 2 Metal finishing / coating H 2 Inerting Ar, N 2 Energy 11% Refining H 2 Natural gas fracturing N 2 Enhanced oil recovery N 2, CO 2 LNG in Brazil Healthcare 8% Hospitals O 2, N 2, CO 2 MRI He Sterilization sterilant gases Anesthesia N 2 O Food & Bev 6% Carbonation CO 2 Freezing N 2, CO 2 Inerting N 2 Hydrogenation H 2-4-

5 Current Macroeconomic Trends North America - 52% Manufacturing Energy Chemicals Metals Healthcare Food & Bev Electronics South America 20% Metals Chemicals Manufacturing Healthcare Food & Bev Energy Europe 15% Manufacturing Metals Chemicals Healthcare Food & Bev Electronics Asia 13% Metals Manufacturing Chemicals Food & Bev Energy Electronics % of 2011 sales -5-

6 Secular Growth Drivers Intact Emerging Economies Infrastructure development & domestic consumption Migrating application technologies Outsourcing of captive production Energy Global growth of refinery hydrogen Coal gasification in China Oil and gas well services Environment Air, water, waste regulations Development of alternative fuels Resource-efficient solutions -6-

7 Strong backlog - $ 2.6B capital Nikochem 350 TPD ASU Evraz NTMK 3,000 TPD ASU Vale 400 TPD ASU Yankuang Guohong 3,000 TPD ASU Valero Port Arthur 135 MM scfd SMR Deacero 500 TPD ASU Valero St. Charles 135 MM scfd SMR LA pipeline extension Oxiranchem 500 TPD ASU Chongqing 5,000 TPD ASU Arcelor Mittal 800 TPD ASU IOCL, Paradip 90 MM scfd SMR & 500 TPD ASU SAIL, Bhilai 2,500 TPD ASU 3Q12 project in backlog named projects have been announced ASU Air Separation Unit SMR Steam Methane Reformer New project development activity remains solid -7-

8 Strong Shale Activity Drives Significant Opportunities Bakken Marcellus Growth in Reserves and Production Natural Gas Spot Price ($ / MM btu) Fayetteville Barnett Haynesville Eagle Ford Major Shale Plays Shale Basins NGL Production (Kbpd) Horizontal Rig Count NG Reserves (Tcf) Oil & Gas Services New Projects US Industry Praxair # 1 in N. A. Significant assets $350MM sales* Shale opportunity Ethane crackers, methanol and derivatives Hydrocracking for refineries Chemical industry and manufacturing competitiveness Potential 0.5% increase in I.P. * 2012 estimates -8-

9 Global Shift to Complex Refining Heavy / Sour Crude Component Mix Refinery Gases Hydrogen Plant Refined Product Mix Refinery Gases,1% Distillation Column Propane / Butane Refinery Gases, 9% Gasoline 15% Distillate 21% Furnace Vapor (Light) Low Octane Gasoline Reformer H 2 Source High Octane Gasoline Gasoline 46% Heavy 63% Liquid (Heavy) Vacuum Distillation Unit Kerosene / Diesel Light Gas Oil Medium Gas Oil Heavy Fuel Oil Hydrocracker Hydrotreater Fluid Cracker Coker Diesel / Jet fuel Gasoline Petcoke Diesel / Jet fuel Distillate 36% Jet Fuel Diesel Heating Oil Heavy 9% Volume expansion; Hydrogen intensity scf per barrel -9-

10 South America Venezuela Colombia Peru Brazil Bolivia Paraguay Chile Uruguay Argentina 2011 Sales $ 2.3B Existing Facility Pipeline Backlog Solid underlying fundamentals Infrastructure development 2014 World Cup and 2016 Olympics Domestic demand Exports of metals Energy Unrivaled network, strong #1 position 100 years of operations Fully-integrated on-site, merchant and packaged gases business Strong growth from project backlog Best positioned and preferred supplier -10-

11 Pipeline Complexes at Caojing Praxair Facility at SCIP Layout of Shanghai Chemical Industry Park GPC (SINOPEC) N 2,CDA,H 2 STYC O 2,N 2,CDA SCIPIG Phase 1 SECCO (BP+ SINOPEC JV) H 2, N 2 SLIC (BASF+ Huntsman JV) H 2,CO,N 2,CDA SBPC (BASF JV) H 2, CO, N 2,CDA BACH (BASF) H 2,N 2,CDA 50/50 Joint venture Expanding to 2 ASU s and 2 HYCO units >$20 B investment - Bayer, Sinopec, BASF and BP Expansions with Bayer, Sinopec/BP -11-

12 Strong Position in Key Geographies in India Large on-sites in key geographies with blue chips Long-term (15 years) take or pay contracts Inflation protection via cost pass through provisions Major Praxair Onsites Consolidating leadership in south and east Acquisitions Filling stations Optimize cost to serve Hospet Steel JSW Steel TATA Steel IOCL SAIL D Haldia India s 1st sale of gas Hydrogen plant at IOCL, Paradeep St Gobain -12-

13 Expanding in the Middle East and Russia Growth Drivers Massive infrastructure investment Metals, Petrochemicals Energy production Middle East Kuwait Bahrain Saudi Arabia Qatar UAE Middle East ROC jv leading position in UAE and Kuwait New oxygen contract for steel co Bahrain Russia Attractive opportunities in Urals district, Volgograd region and N. Novgorod diverse industries Significant outsourcing opportunity replace inefficient ASUs Russia Germany Romania Black Sea Turkey Poland Baltic Sea Ukraine Norway Sweden Belarus Finland MOSCOW Volgograd St. Petersburg N. Novgorod Uzbekistan Turkmenistan Ekaterinaburg Kazakstan China Same business model select new geographies -13-

14 Eco-portfolio 26% of 2011 sales Oxy-fuel Combustion VOC emissions control Water Treatment Energy efficient windows help customers reduce their environmental footprint -14-

15 We Generate Strong Cash Flow and Are Able to Reinvest and Return to Shareholders at A Greater Rate 25% 22% % of Sales (3-yr average) 20% 17% PRAXAIR 15% 15% Industry Average* 11% 10% 5% 0% 5% 6% 4% 1% Operating Cash Flow Capital Spend Dividends Share Repurchases Source: Bloomberg * Ex-Praxair -15-

16 Principles of Sustainable Development Governance and Integrity Maintain strong systems and a culture of global corporate governance, compliance, ethics, human rights, integrity and accountability. Strategic Leadership Stay current with, and take advantage of, emerging global opportunities, developments and challenges to position Praxair for the future. Customer Commitment Focus relentlessly on the delivery of customer value through continuous innovation that helps our customers enhance their product quality, service, reliability, productivity, safety, energy efficiency and environmental performance. Environmental Responsibility Achieve continuous environmental performance improvement and energy efficiency in our operations. Employee Safety and Development Provide opportunities that allow employees to develop to their fullest potential in a creative, inclusive and safe environment. Community Support Participate in community development in regions where we operate. Financial Performance Maintain year-on-year recognition from shareholders and stakeholders for top-tier financial performance. Stakeholder Engagement and Communication Partner with internal and external stakeholders to achieve a strong, secure and sustainable society, economy and environment. -16-