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May 6, 2016
1Q 2016 Earnings Call
2
Disclaimer
This presentation contains certain forward-looking statements with respect to our financial condition, results of operations andbusiness. These statements constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended. Forward-looking statements are statements of future expectations that are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among others, statements concerning the potential exposure to market risks, statements expressing management's expectations, beliefs, estimates, forecasts, projections and assumptions and statements that are not limited to statements of historical or present facts or conditions.
Forward-looking statements are typically identified by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “objectives,” “outlook,” “probably,” “project,” “will,” “seek,” “target” and other words of similar meaning. All these forward-looking statements are based on estimates and assumptions that, although believed to be reasonable, are inherently uncertain.There are important factors that could cause actual results to differ materially from those contemplated by such forward-lookingstatements. These factors include, among others: (a) negative or uncertain worldwide economic conditions; (b) volatility and cyclicality in the industries in which we operate; (c) operational risks inherent in chemicals manufacturing; (d) our dependence on majorcustomers; (e) our ability to compete in the industries in which we operate and the availability of substitutes for carbon black; (f) volatility in the costs and availability of raw materials and energy; (g) our relationships with our workforce; (h) environmental, health and safety regulations and the related costs of maintaining compliance and addressing liabilities; (i) current and potentially future investigations and enforcement actions by the EPA; For additional information see “Risk Factors” in our annual report on Form 20-F for the year ended December 31, 2015; (j) litigation or legal proceedings; (k) our ability to protect our intellectual property rights; (l) our ability to generate the funds required to service our debt and finance our operations; and (m) potential conflicts of interests with our principal shareholders.
In light of these risks, our results could differ materially from the forward-looking statements contained herein. You should not place undue reliance on forward-looking statements.
We present certain financial measures that are not recognized by International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”). These non-IFRS measures are Contribution Margin, Contribution Margin per Metric Ton, Adjusted EBITDA, Adjusted EPS, Net Working Capital and Capital Expenditures
Adjusted EBITDA, Adjusted EPS, Contribution Margins and Net Working Capital are not measures of performance under IFRS and should not be considered in isolation or construed as substitutes for revenue, consolidated profit (loss) for the period, operating result (EBIT), gross profit and other IFRS measures as an indicator of our operations in accordance with IFRS. For a reconciliation of these non-IFRS financial measures to the most directly comparable IFRS measures, see Appendix.
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Agenda
Jack ClemCEO
Charles Herlinger
CFO
• 1Q 2016 Highlights & Business Review
• Financial Review
• 2016 Economic & Market Outlook
• 2016 Guidance
• 2016 Operational Priorities
• Q&A
4
1Q 2016 Highlights
1Q16 1Q15Y-o-Y
Comparison
Total volume (kmt)
277.8 252.9 9.9%
Adjusted EBITDA (EUR/Millions)
54.0 53.9 0.1%
Adjusted EPS (EUR)
0.28 0.33 -15.2%
• Strong volume gains from both Specialty and Rubber
• Organic volume growth (excluding acquisition) a solid 4.9 %
• Strong Adjusted EBITDA performance
• Voluntary debt repayment of EUR 20 million
• Adjusted EPS decline reflects expected increase in depreciation expense
(1) Non-IFRS measures. See Appendix for reconciliation to the most directly comparable IFRS measures
(1)
(1)
5
1Q15
1Q 2016 Highlights
1Q16
Volume Mix Adjusted EBITDA
0%
20%
40%
60%
80%
100%
1Q16
Volume By Producing Location
0%
20%
40%
60%
80%
100%
1Q15Other 1%Africa 5%Brazil 7%
Korea 18%
NAFTA 32%
Europe 37%
Other 1%Africa 4%China 5%Brazil 8%
Korea 18%
NAFTA 29%
Europe 35%
Rubber Carbon Black (1)
79.8%
Specialty Carbon Black
20.2%
Specialty Carbon Black
21.3%
Rubber Carbon Black (1)
78.7%
1Q15
1Q16
Rubber Carbon Black
€25.3M
Specialty Carbon Black
€28.6M
Specialty Carbon Black
€34.5M
Rubber Carbon Black
€19.5M
Specialty Business Continues to Demonstrate the Successful Move to High Value Products
(1) 30.8% of 1Q16 Rubber Carbon Black volume, including OECQ, is higher value technical grade products versus 27.8% for 1Q15.
(1)
6
Rubber Carbon Black Business
1Q16 1Q15Y-o-Y
Comparison
Volume (kmt) 218.7 201.8 +8.4%
Revenue (EUR/Millions) 149.2 192.4 -22.5%
Gross Profit (EUR/Millions) 36.3 43.6 -16.7%
Gross Profit/ton (EUR) 166.1 216.0 -23.1%
Adjusted EBITDA(EUR/Millions)
19.5 25.3 -23.0%
Adjusted EBITDA/ton (EUR) 89.2 125.6 -28.9%
Adjusted EBITDA Margin 13.1% 13.2% -10bps
Strong Volume Growth but Weaker Gross Profits Due to Impact of Raw Materials
� Growth in all regions at or above market demand, before impact of newly acquired facility in Qingdao, China (OECQ)
� Volume increase reflects good demand in Europe and Korea
� Volume gain of 2.2% before impact of 12.6 kmt contribution from OECQ
� Gross profit decreased due to negative feedstock cost developments, increased depreciation and to a lesser extent unfavorable foreign exchange translation
� Adjusted EBITDA decrease reflects decline in gross profit
(1) Variable manufacturing costs are assigned to products based on actual cost of consumption.Fixed manufacturing costs are assigned to products based on production line time. SG&Acosts are assigned to products based on designated personnel costs or consistentlyallocated based on the drivers of these costs
(1)
(1)
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Specialty Carbon Black Business
1Q16 1Q15Y-o-Y
Comparison
Volume (kmt) 59.2 51.1 +15.7%
Revenue (EUR/Millions) 97.1 98.0 -1.0%
Gross Profit (EUR/Millions) 45.3 38.8 +16.7%
Gross Profit/ton (EUR) 765.2 758.7 +0.9%
Adjusted EBITDA(EUR/Millions)
34.5 28.6 +20.7%
Adjusted EBITDA/ton (EUR) 582.5 558.6 +4.3%
Adjusted EBITDA Margin 35.5% 29.1% +640bps
� Above market growth in all regions
� Strong auto build globally as well as polymer market strength in Europe and Asia
� Good demand across all regions; Asia stronger than market would indicate
� Volume expansion as result of increased sales and technical presence in Asia and South America
� New products and product extensions growing rapidly, especially in Asia
� Gross profit improved with the ability to manage price in the face of lower feedstock costs
� Adjusted EBITDA per ton improvement reflects operating leverage
Continued Volume and Profit Growth Due to Increased Sales Penetration, Price Management and Successful Product Development
(1) Variable manufacturing costs are assigned to products based on actual cost of consumption.Fixed manufacturing costs are assigned to products based on production line time. SG&Acosts are assigned to products based on designated personnel costs or consistentlyallocated based on the drivers of these costs
(1)
(1)
8
109.8
114.2
10.3 (2.8)(3.0) (0.1)
1Q15 Volume Differential FX Other 1Q16
53.9
(2.7)
54.0
4.4 (2.0)0.4
1Q15 Other 1Q16ContributionMargin
FX onFixed Costs
Asia Sales
Support
1Q 2016 Consolidated Operating Results (1)
High Margin Specialty and Technical Rubber Grades (e.g. MRG) Offset Commodity Grades
Adjusted EBITDA Variance
Contribution Margin VarianceNot to scale
Not to scale
1Q16 1Q15Y-o-Y
Comparison
Volume (kmt) 277.8 252.9 9.9%
Revenue (EUR/Millions) 246.3 290.4 -15.2%
Contribution Margin (EUR/Millions) 114.2 109.8 4.1%
Contribution Margin/ton (EUR) 411.1 434.1 -5.3%
Operating Result (EBIT) (EUR/Millions) 30.5 36.3 -16.0%
Adjusted EBITDA (EUR/Millions) 54.0 53.9 0.1%
Adjusted EBITDA Margin 21.9% 18.6% +330bps
Profit or Loss for the Period (Net Income) (EUR/Millions)
13.4 14.8 -9.4%
EPS (EUR) 0.22 0.25 -12.0%
Adjusted EPS (EUR) 0.28 0.33 -15.2%
€M
€M
14.8
(3.6)
13.40.1
5.0 (2.9)
1Q15 Adj EBITDA Finance Costs Depreciation Other 1Q16
(3)
Net Income€M Not to scale
(1) See Appendix for reconciliation to the most directly comparable IFRS measures
(2) Includes OECQ Fixed Costs
(3) Primarily non-recurring items1Q15 1Q16OtherDepreciationFinance
CostsAdj
EBITDA
9
Cash at12/31/15
Cash Flowfrom
Operations
Capex Interest Dividends Other Cash PriorTo
VoluntaryActions
VoluntaryDebt
Payments
ShareBuyback
Cash at3/31/16
80.4
57.0
65.3
60.1 -23.1
-9.2
-10.0
17.0-20.0
-3.4
-2.4
2015 Cash Flow and Balance Sheet Highlights
(1) Includes EUR16.9 million change in working capital
(2) Interest payments
(3) Repurchased 312,912 Shares
(4) Net working capital = Inventories + Trade Receivables – Trade Payables
Balance Sheet Highlights2016 YTD Cash Flow Generation
In EUR/Millions
As of
March 31, 2016
Cash & Cash Equivalents 57.0
Net Working Capital 172.3
Non-Current Debt 616.6
Total Liability and Equity 919.1
Net Debt 577.1
Net Debt/LTM Adjusted EBITDA 2.78x
Net Working Capital (in days) 64
€M
Continued Strong Cash Flow due to Capex Discipline and Balance Sheet Strengthening
Voluntary
Debt Payment
& Share Buyback
Cash Flow Generation Prior to Voluntary Actions:
€15.1M
(1)
(2)
€M
(4)
560
600
640
680
720
Non-Current Debt
Underlying Debt FX Impact
€M
150
175
200
225
Net Working Capital
(3)
10
EuropeNorth America
Asia PacificBrazil
+ 2.3 %
�Continued North American economic
growth expected
+ 1.8 %
�Recovery in the EU is expected to
continue
-3.8 %
�Brazilian recession is expected to
continue
+ 6.4 %
�Overall Asian economic growth will slow
relative to previous years. China estimated
at 6.5 %
Source: IMF World Economic Outlook database April 2016
2016 GDP Growth Expectations
Specialty Black Demand Historically Exceeds GDP
+ 2.3 %
-3.8 %
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Europe
Generally Slower Growth in Auto Build Expected with Continued Decline in South America
North America
Asia PacificSouth America
+ 2.4 %
�NAFTA automotive sales grow
moderately
+ 2.7 %
�Some decline in Eastern Europe offset by
strong growth in Western Europe
-6.0 %
�Further decline expected, mainly driven
by poor demand in Brazil
+ 4.1 %
�China accounts for the large majority of
market growth
Source: ScotiaBank Global Auto Report April 2016
Auto Build – 2016 Outlook
12
2016 Guidance and Cash Analysis
Adjusted EBITDA: EUR 205 to 225 million
Forecast assumptions:
• Volume growth in line with current GDP expectations
• Oil prices and foreign exchange rates at Q4 2015 levels
Other guidance metrics for FY 2016:
• Capital Expenditures: EUR 60 million• Depreciation: EUR 60 million• Amortization: EUR 20 million• Tax rate: 35%• Assumed Shares outstanding: 59.3 million
2016 Guidance
Key Takeaways
� Regular dividend
� Optimization capex
� Voluntary debt repayment
(EUR/Millions)
Maintenance Capex 30
Mandatory Debt Service 6
Interest Payments 34
Cash Tax Payments * 25
Change in NWC ** 0
Total Cash Requirements 95*
*Assumes mid-range 2016 Adjusted EBITDA guidance
** A $10 (decrease/increase) in Brent crude will likely (lower/raise) total cash requirements by causing NWC to (contract/expand) by roughly €19m - €20m over approximately a 3 month period
Base Business Annual Cash Requirements
Continued Strong Cash Conversion Expected Given Limited Maintenance Capex Needs and Reduced Interest Payments
Excess cash flow will be available to support:
Note: Stock repurchase program was announced in December, 2015
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2016 Operational Priorities
� Drive stronger growth of higher value added technical carbon black grades
– Continue building momentum in Specialty Carbon Black
– Expand specialty and technical grade mix at OECQ
– Deepen penetration in underserved specialty markets
� Address imbalance between rubber feedstock cost and product pricing
� Evaluate global production footprint for cost improvement opportunities
� Continue productivity and efficiency measures to improve Rubber Carbon Black’s Adjusted EBITDA
� Capital Expenditures
– Expand capacity of selected Specialty Carbon Black grades
– Continue attractive yield efficiency projects
� Advance Lighthouse projects
Appendix
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Historical Non-IFRS Metrics Reconciliation
1 Includes costs such as raw materials, packaging, utilities and distribution2 Finance costs, net consists of Finance income and Finance costs3 Other non-operating expenses in 2015 and 2016 primarily relates to costs in association with our EPA enforcement action.
Historical Non-IFRS Metrics Reconciliation (€million unless otherwise stated)
Three Months Ended March 31,
2015 2016
Revenue 290 246
Variable costs (1)-180 -132
Contribution Margin 110 114
Sales volume (in kmt) 253 278
Contribution Margin per Metric Ton 434 411
Profit or loss for the period 15 13
Income taxes 7 9
Profit or loss before income taxes 22 22
Finance costs, net (2)14 9
Operating result (EBIT) 36 31
Depreciation and amortization 17 19
EBITDA 53 50
Other non-operating (3)1 4
Adjusted EBITDA 54 54
Thereof Adjusted EBITDA Specialty Carbon Black 29 34
Thereof Adjusted EBITDA Rubber Carbon Black 25 20
