North American Industrial Gases

Transcription

1 North American Industrial Gases Every Business is a Growth Business Jim Fuchs 1

2 Strongest North American Network On-site and Bulk Gases 2005 Sales $2.6 B Vancouver Fort Saskatchewan HYCO, Helium and Other 35% On-site (Ex HYCO) 29% Bulk Liquids 36% Seattle San Francisco Los Angeles Edmonton Garfield Denver Kingman Montreal Minneapolis Toronto Niagara Chicago Detroit Falls Bethlehem E. Chicago Kansas N. Royalton Delaware City St Louis 300 production plants 4 major pipeline systems 8,000 customer locations 1,500 distribution vehicles Austin Geismar Houston Merchant Plants Carbon Dioxide Plants Specialty Gas Plants Pipeline Systems Orlando Distributors Helium Transfill Dry Ice Coverage and capabilities drive reliability and growth 2

3 Sustainable Profitable Growth Relentless focus on execution Energy management Productivity / Six Sigma Operations excellence Safety / Compliance Robust economic model Pricing & contracting Contract portfolio optimization Broad, diversified customer base Providing value to customers at small fraction of their cost structure Optimize growth opportunities Energy opportunities: Hydrogen for refineries Oil & gas drilling Oil sands Applications technologies Steel Chemical Infrastructure rebuilding 3

4 From Power Outages to Hurricanes, Praxair Responds 2003 Blackout on East Coast 34 plants were restored after 8 hours, 50 after 24 hours No Praxair customers had a loss of product supply during entire event Proven System Reliability 2005 Hurricanes Katrina and Rita Praxair supplies industry and customers No customer runs out of product supply during entire event Product delivered - no matter what 4

5 Praxair dealt with a bad situation, not from how they could profit, but how they could do the right thing. president, Specialty Gases Southeast We re demanding customers. Praxair came in with a great attitude and kept our supply going when we needed it. strategic sourcing manager, PPG Industries Praxair has been an important, strategic supplier to Valero for many years, with a strong focus on reliability. Their ability to manage through the 2005 gulf coast hurricane season was very impressive and important to the operations of our refineries. vice president, Energy and Gases, Valero Energy Corporation 5

6 Importance of Liquid Business Demands keen management Pricing Contracting 2005 NAIG Sales Bulk Liquids 36% Energy Supply / demand Sales force effectiveness Liquid Volume +19% Highly profitable F 6

7 Cost Recovery and Margin Expansion Environment - rising energy and distribution costs Strategy - contract flexibility Results >85% allow product re- pricing >75% provide cost recovery Volume Power Costs Revenue Distribution Costs Cap. Utilization/ Loading Price Var. Margin Competitive Activity Continually review contracts, optimize portfolio and expand margins 7

8 Where Are We Finding Growth? 2005 Sales NAIG End-Markets 2005 YOY Growth Food / Bev Other 7% Chemicals 18% Gen. Mfg. 26% Metals 18% Energy 31% NAIG Sales IP Index* General Mfg. 13% 4% Energy (ex. NG) 19% (3)% Metals 5% (3)% Chemicals 11% 0% * Federal Reserve Industrial Production Dec 2005 Sales growing significantly faster than our end markets 8

9 Accelerating Growth from Applications Development Customer needs Cost reduction Productivity Environmental compliance Combustion Steel, cement, glass, aluminum reheat, chemicals Wastewater treatment Addition of oxygen in high BOD industrial environments Mixflo technology Pharmaceutical BioPharma clusters - integrated supply Cryogenic technologies Food freezing and chilling $50 MM of new applications technologies commercialized each year 9

10 Services - Extending Our Core Business Growth Strategy Extend industrial gas business Strengthens customer relationships Aligned with key end markets and customers Service Businesses Refining / energy industry services Magnetic resonance imaging (MRI) helium services Revenue ($MM) F Achieve scale and profitability targets with low capital intensity 10

11 Unprecedented Pipeline of New Projects Castlegar Fort Saskatchewan Edmonton Balmerton Plymouth Loveland Inver Grove Chicago Niagara Falls Richmond Garfield Tupman Wilmington Morenci Amarillo Whiting Columbia E. Chicago City Tell City Ville Platte Canton ASUs HyCO VPSA/N-Plants Texas City Salt Cavern Geismar Houston $125 MM of OP from new projects underway 11

12 Growth Programs and Drivers Services Annual Growth $300 MM F Revenues $2.87 B Core 50 Applications Oil Well Services Hydrogen 140 Expected annual sales growth of 10% 12