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Evonik Resource Efficiency

Dr. C. Rettig

November 14, 2017 | UBS European Conference

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Resource EfficiencyEvonik’s major earnings contributor

Resilient:

Diversified end markets and businesses

Strong growth:

Consistent volume and earnings growth

Attractive margin:

Well above 20% with hardly any volatility

H1 2017 adj. EBITDA share

Approximately half of Group earnings … … as high-value specialty chemicals business

Resource Efficiency

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At Resource Efficiency,

we ensure efficiency and

sustainability – for business as

well as everyday life.

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Implications of Evonik strategy for Resource Efficiency segment

EBITDA margin > 22%

GDP+ growth rate

Strategic focus on growth engines

Specialty Additives & Smart Materials

Innovation leadership through globalization of R&D

Portfolio: “More balanced - more specialty”

Customer-focused

innovation

Open & performance-

oriented culture

Strong free cash flow generation

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Smart MaterialsHealth & Care

Strategic growth focus of EvonikRE addresses two growth engines as drivers for profitable & balanced growth

Four

growth

engines

NUTRITION & CARE RESOURCE EFFICIENCY

Animal Nutrition

Specialty Additives

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Resource Efficiency with accelerated growth track recordAir Products and Huber on top of high organic growth

20%

0.19

0.21

0.22

0.16

0.18

0.17

2017

~1.2

22%

2016

1.0

22%

2015

0.9

21%

2014

0.8

21%

2012

0.8

+7% (organic)

+1.3%

OrganicAP & Huber

1.0

0.5

0.0

4.5

4.0

3.5

3.0

2.5

2.0

1.5

2017

~5.4

2016

4.5

2015

4.3

2014

4.0

2012

+2.4%

+6% (organic)+4% (volume)

3.9

Consensus1Start of Resource EfficiencyConsensus1Start of Resource Efficiency

1. Vara analyst consensus as of August 17, 2017

Sales (EUR bn) EBITDA (EUR bn)

Favorable EBITDA development with high margin resilienceConsistent above GDP sales growth

EBITDA margin

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Resource Efficiency‘s key investment highlights

Resilient business: Portfolio with broad application scope and global footprint1

Focus of investments and M&A in growth engines Smart Materials & Specialty Additives2

New Growth Businesses for mid- and long-term growth in attractive adjacent fields3

Leading innovation: R&D Footprint outside Europe currently being strengthened4

Continuous efficiency improvement programs with current focus on e.g., digitalization

and process efficiency5

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RE achieves consistent GDP+ growth in attractive end markets

20171

estimate

Industrial flooring ~4-5%

Superinsulation materials >20%

Specialty Coating Additives: ~4-5%

Specialty Resins: ~6%

Structural Adhesives and Sealants: ~4-5%

Lead acid batteries: ~5%

Optical Fibres: ~4%

Automotive, transportation and machinery

Automotive plastics: ~5%

Low energy tires: ~5%

Automotive refinish coatings: 3-4%

Coatings & Adhesives

Construction

Dental: ~4%

Silicone Rubber: ~4%

Plastics & Rubber

Home, Lifestyle &

Personal Care

Others

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1. End market growth rate, CAGR 2016-2022

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~ $500 m

Huber Silica

Air ProductsPerformance Materials

Synergistic portfolio expansions of two growth engines:Acquisition of Air Products Performance Materials and Huber Silica

EBITDA margin: >20%

Market growth: ~4-6%

Seamless integration of recent acquisitions into existing businesses

Air Products

Epoxy Curing

AgentsCrosslinkers

Huber Silica Silica

Add. sales & exp. synergies

EBITDA margin: >20%

Market growth: ~4-5%

Coating

Additives

Silica for

Coatings

Air Products

Coating

Additives +

With up to $40 m expected

synergies on RE level

close to $300 m+

With ~ $20 m

expected synergies

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RE’s key investments will secure future growth (selected examples)

Extending Smart Materials growth engine

Expansion of Fumed Silica capacities in

Antwerp

Polyamide 12 powder expansion in Marl

Investment into Specialty Additives

Expansion of Oil Additives in Singapore

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Creates largest oil additives plant of Evonik worldwide & serves as Asian hub1

Ensures Evonik’s position as leading global producer of fumed silica

Secure leading position in New Growth Business Additive Manufacturing

New precipitated silica plant in South

Carolina, USA 5

Expansion of membrane business for gas

separation in Austria6

World-scale facility close to production plants of large tire manufacturers

Expansion Coating Additives in Germany

and China Strengthens Coating Additives hub in Asia

Doubling capacities in for New Growth Business Membranes

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2

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New Growth Businesses for mid- and long-term growth in attractive adjacent fields

RE‘s New Growth Businesses

Thermal Insulation

Advanced Tire Solutions

Additive Manufacturing

Surface Solutions

Membranes

Each New Growth Business with

sales potential of > €100 m

New Growth Businesses selected,

which show average CAGR of >20%

Acceleration of business

development through capturing M&A

opportunities outside RE's core

Example of recent successes:

Successful market entry with

Sepuran Natural Gas prototypes

Cooperation with HewlettPackard in

Additive Manufacturing

Technology M&A of Specialty

Additive production facility abcr labs

R&D projects are bundled to high value efforts

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Significant share of

R&D investments

dedicated to New

Growth Businesses

€40 m

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RE continuously emphasizes efficiency projects for bottom line growth

SCORE

Digitalization

Process

efficiency

Objectives

Optimizing supply chain processes in

Resource Efficiency

Establish an effective distribution network

strategy including fleet management

Introduction of end-to-end supply chain

planning and KPI supported performance

measurement system

Selected examples

Increase service level to customers while

minimizing costs

Optimize overall SG&A cost & increase

efficiency

Integration of recent acquisitions into

existing overhead structures

Streamlining internal processes

Introduce new type of customer centric

collaboration platform

Deploy artificial intelligence to advance

formulation capabilities

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Resource Efficiency is clearly committed to continue delivering strong financial performance

EBITDA margin of >22%

Sales growth ~6%

Strong free cash flow

generation

Historical financial performance 2014-2017 (consensus)

Clear commitment to

delivering strong financial

performance in 2018 and

beyondEBITDA growth ~7%

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