DuPont BioFuels: Strategy, Progress and Next Steps Citigroup October 3, 2006
Regulation G 2 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 previously published company reports on forms 10-K, 10-Q and 8-K. These reports along with reconciliations of non-gaap measures to GAAP are available on the investor center of www.dupont.com. Forward-Looking Statement During the course of this presentation, I would like to remind you that we may make forward-looking statements. All statements that address expectations or projections about the future are forward-looking statements. Some of these statements include words such as expects, anticipates, plans, intends, projects and indicates. Although they reflect our current expectations, these statements are not guarantees of future performance, but involve a number of risks, uncertainties, and assumptions. We urge you to review DuPont's SEC filings, particularly its latest annual report on Form 10-K and quarterly reports on Form 10-Q, for a discussion of some of the factors which could cause actual results to differ materially.
3 Transportation Fuels Opportunity Energy (in MM tons oil equiv./ year) 4000 3500 3000 2500 2000 Renewables Hydro Nuclear Coal Gas Oil 1500 1000 500 0 Transportation Stationary (Industry, Domestic, Agriculture) Electricity Generation Inter-fuel Conversion & Refining Source: IEA World Energy Outlook, BP.
Biofuels Growth Opportunity 2020 Estimates by Region 4 North America Biofuels - 30 B gals Current Production > 4.0 B gals Market growth + differentiated fuels and crop inputs EU & Eurasia Biofuels - 20 B gals Current Production ~ 1.1 B gals Less existing infrastructure, less homogeneous market South & Central America Biofuels - 7 B gals Current Production ~ 4.0 B gals Ethanol and sugarcane well established Cellulosic fuels opportunity Asia Pacific Biofuels - 30 B gals Currently ~ 1.7 B gals Less existing infrastructure less homogeneous market Source: Dept of Energy and DuPont/BP estimates
DuPont BioFuels Strategy Carbohydrates to Fuels & Chemicals 5 Agricultural Inputs Plant Feedstocks Conversion to Sugars Fermentation Processes Biofuels Biochemicals Seed Crop Protection CO2 Sugar Starch Ethanol Biobutanol Bio-PDO TM Biochemicals Cellulose Differentiated Products Biofuels Differentiated Strategy: Unique Technologies Across the Value Chain
6 Biofuels Growth Strategy: 3 Segments 1. Corn seed: Commercial Products + Strong Pipeline 2. Cellulosic Ethanol: Developing new enabling technology 3. Bio-butanol: Supplementing ethanol with a higher energy density, user-friendly fuel
1. Growing Ethanol Participation With Pioneer IndustrySelect Energy Products 7 Corn Seed Ethanol Hybrids with 2-4% higher fermentation yield and high fermentation rate Three generations of pipeline traits for ethanol fermentation yield and value Altered starch and fiber content More efficient fermentable substrates Enhanced co-products 2006 Milestones Advance projects to Phase I and achieve proof-of-concept Current Commercial Sales $300 million seeds + crop protection chemicals 106 105 104 103 102 101 100 99 98 97 96 Commodity Corn Pioneer Ethanol Corn
2. Cellulosic Ethanol : Opportunities for New Technology 8 40 Gal/Acre 391 Gal/Acre at 50% removal rate 155 Gal/Acre 310 Gal/Acre Images: www.ca.uky.edu & www.nativeaccess.com
9 Cellulosic Ethanol Process Development Stover Milling Pre-treatment Saccharification Glucose/Xylose C6/C5 Fermentation enzymes ethanologen Separation Ethanol Steam Electricity
10 Advancing Clean Sugar Fermentation 120 Zymomonas mobilis Concentration (g/l) 100 80 60 40 20 Glucose Xylose Ethanol 0 0 10 20 30 40 50 Time (hrs) Full conversion of C5 (xylose) and C6 (glucose) sugars at high titers
11 Cellulosic Ethanol Next Steps Continue to lead DOE project R&D focus: further reducing the cost and investment intensity. Commercial Metrics: $invest/gal, $cost/gal 2002 Continued R&D and Pilot Testing Target 9/2006 Time
12 3. BioButanol: Next Generation Biofuel Start with a blank sheet of paper what would you want an advanced biofuel to be? High energy density? Easy to handle and blend? Less corrosive? Can be produced from many feedstocks? Cost competitive with ethanol? Biobutanol X X X X DuPont R&D Target
13 Building a Better Biofuel Enabling Technology Cell Software by DuPont Metabolic Engineering Genome Technology leader Leveraging our Bio-PDO success Engineering the cell to produce the desired fuel at competitive cost Cell Factory
14 Bio-PDO Commercialization Facts $100 million investment 100 million ppa capacity Save oil equivalent of 10 million gallons gasoline/ year Schedule Mechanical Completion: June Plant Commissioning: 3Q Commercial Shipment: 4Q Loudon, Tennessee Plant DuPont Tate & Lyle Bio Products Company
15 DuPont - BP Biofuels Partnership Biobutanol Development & Launch RENEWABLE FEEDSTOCKS WORLDWIDE FUEL MARKETS BIOBUTANOL Powerful partnership Shared commitment Global reach Complementary capabilities
16 Biobutanol Solution Improved Performance From Renewable Sources TERMINAL ENHANCED FUEL STABILITY GOOD FIT WITH EXISTING PIPELINE INFRASTRUCTURE PRODUCTION COST COMPETITIVE VIA DUPONT BIOTECH REFINERY BLEND FLEXIBILITY 0 100% WITH GASOLINE AND ETHANOL PIPELINE RETAIL / CONSUMER IMPROVED MPG NO VEHICLE MODIFICATION
17 Biofuels Business Strategy Opportunity Ag Inputs to Biofuels Superior seed for more fuel/acre Crop protection for best yield at lowest cost. Biofuel Production Biobutanol software development Mixed sugar ethanol software development Cellulosic conversion technology Biofuel production at competitive cost Commercialization License & Sell Ag biotech - R&D intensive, large global growth potential Leverage R&D successes with licensees New product revenue and pricing Partner, License & Sell Partnership with BP to develop, make & market biobutanol Developing partnerships to commercialize cellulosic ethanol technology
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19 DuPont Biofuels Development Milestones Differentiated Transformative Seed & Crop Protection Solutions IndustrySelect Ethanol Hybrids - commercial Increased Ethanol II Phase 1 Increased Yield I Phase 1 Agricultural Inputs Seeds & Crop Protection 2006 Revenue > $300 million Advanced Fuels Butanol Biobutanol Initial Targets Achieved US & EU Fleet Testing Underway UK Plant Startup and Market Intro Cellulosic Fuels DOE Project Demonstration Unit Biofuels From Biomass
20 DuPont Innovation Across 3 Centuries Hagley Powder Mills Birthplace of DuPont DuPont R&D Advances Industrial Chemistry Polymer Science Nylon, Spandex, Teflon Tyvek, Kevlar, Nomex, Corian, Freon, TiO2, Suva, Kalrez, Viton, etc DuPont Bio Leadership Metabolic Engineering Seeds: Pioneer BioFuels Biomaterials: PDO, Sorona Biosurfaces Biomedical