Transforming a long-established chemical … a long-established chemical company: the Versalis...
Transcript of Transforming a long-established chemical … a long-established chemical company: the Versalis...
Transforming a long-established chemical
company: the Versalis business caseFerrari Daniele
CEO Versalis
Dubai, November 28th, 2016
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RESTORING
Transformation in key words
MINDSET GROWTH COMMUNICATION RELATIONSHIPS
RESULTS ORIENTATION SENSE OF URGENCY
INNOVATION VISION TEAMWORK
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Before the turnaround: fragmented industrial footprint
Acquisitions, divestments and horizontal cost-cutting - with poor
strategic vision – made the company vulnerable
Attributed ~20 sites in Italy
[e.g. Porto Torres with €800m
of cash absorption 2002-2012]
1958-1992
Imposed
acquisitions
From 42 to 16 sites
1993-2001
Opportunistic
divestments
[e.g. Energy efficiency, cracker
closures, logistics]
2002-2011
Focus on
operational
efficiency
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… and a weak competitive market positioning
Product portfolio
based on commodities
Commercial activity
mainly in Europe
70% sales on poorly backward
integrated commodity products
> 90% sales into mature markets
(Italy and EU)
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The regressive spiral of human capital
Unclear strategy,
obsessive cost reduction1
Depressed innovation
environment 2
Minimized development
opportunities3
Loss of people motivation
and unexpressed potential4
Lack of growth,
regression5
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Transformation starts from people and knowledge …
• Strong customer reputation and brand recognition
• Highly experienced and specialized technical assistance teams
• More than 230 commercial resources for an overall portfolio of over 2,000 customers
• 30 proprietary technologies and more than 250 patents
• 4 research centres, 12 pilot plants and 25 laboratories
• 350 scientists in R&D and technology & engineering
Recognizing and making the most of our people’s competences and
know-how was the first step in order to restore trust
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… and needs a change of mindset
What we kept
• Chemical DNA
• Safety culture & Manufacturing Excellence
• Technological know-how & commercial relationships
What we targeted
• More active and flexible approach
• Stronger brand reputation
• Value creation through innovation and partnerships
What we left
• Lack of dynamism
• Reactive approach
• Fear of change
Leveraging on a restored strategic vision
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2012: a new name and identity
2011
2012…
Towards the new face of
chemicals…
Universality
Movement
Flexibility
Direction
Versatility
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A completely new market-oriented organization
PolyethyleneIntermediates Styrenics ElastomersOilfield
chemicals
Chemicals from
renewables
Rationalization of production capacity
Greater efficiency and integration
Selective growth in insulation
Upgrade of product portfolio
Synergies with Eni upstream activities
Performance-driven product development
Optimization of production mix
Opportunities for downstream integration
New production technologies
International development
Know-how enlargement
Technological leadership
• Organization nowhere aligned with industry standard and needed a strong revision
• New organization by business units, with leaner processes from production to market
• Cross technical support functions (R&D, Licensing, Business Development and Supply Chain)
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Market driven model: seizing opportunities from megatrends
Energy and Resource
Efficiency Population Growth
Growing wealth in
Emerging MarketsMobility/ Urbanization
Environmental
Impact and
Sustainability
Smart Materials
Packaging Building &
Construction
Technical
goods
Agriculture Tyres Large
Appliances
Automotive Other*
Polyethylene
Styrenics
Elastomers
* “Other” category includes Adhesives, Electronics & Electrical, Personal Care & Pharmaceuticals and Polymer Modification end-markets.
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The transformation plan: strategic pillars
Optimization of industrial structure
• Rationalisation
• Increased efficiency
International development
• Licensing and JV’s
• Extension of commercial platform
Strengthening of portfolio
• Strategic investments
• Specialty products, incl. bio-based
Streamlined industrial footprint
+ cost-effective
+ integrated
+ flexible
Stronger market position
+ specialties
+ global
+ “green”
… with an ongoing commitment
to market-driven technological
research and development
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The transformation plan: acting on each single unit
Optimization
of industrial
structure
2011 2012 2013 2014 2015 2016
Porto Torres (IT)Permanent shutdown of
Cracker, Polyethylene and
Aromatics units
Gela (IT)Shutdown of Polyethylene
Priolo (IT)Optimization of Cracker and
shutdown of Polyethylene
Hythe (UK)Closure of the site
Sarroch (IT)Spin-off/shutdown
Porto Marghera (IT)Utilities and logistics overhauling
Cracker continuing to be in operation
Strengthening
of portfolio
Dunkerque (FR)Reconfiguration of
Polyethylene plant
Mantova (IT)New GPPS line and cont.
mass EPS plant
Guayule NR Experimental fields in
Southern Italy
Porto Torres (IT)start-up of Matrìca plants
Ravenna (IT)start-up of Butene-1 plant
Grangemouth (UK)start-up of new s-SBR line
Priolo (IT)New C9 Monomers plant
and beginning of C9 resins
project (JV Neville)
Mantova (IT)Development new pilot plant for ABS one-step breakthrough
technology
Ravenna (IT) New ‘specialties’ in Elastomers
Ferrara (IT) revamping EPDM lines and new EPDM line
International
develop-
ment
Versalis
International (Brussels)
Versalis Pacific
Trading (Shanghai)
Versalis
Pacific India (Mumbai)
JV Lotte Chemical (South Korea)
JV Genomatica bio-butadiene technology
Oilfield
chemicalsnew business line
Versalis
Americas (Houston)
Technology
partnership
Mesnac (China)
Total investments ~ 1,7 Bln €
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Building confidence: a step change in economic results
-481-395 -347
308 298
2012 2013 2014 2015 9 monthsof 2016
EBIT Adj (Mln €)• The actions carried out allowed to
maximise the benefit of the positive
outlook
• Operating break-even reached in 2015
- a year ahead of schedule
• 2016 expected results in line with last
year, with a positive FCF
• Confirmed target to consolidate a
strong financial position, leveraging on
innovation and portfolio development
+789
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Major KPI of the transformation
Field of action KPI 2012 2015 Notes
Optimization of
industrial
structure
N° of sites 17(11 Italy - 6 Europe)
12(8 Italy - 4 Europe)
Closures/spin-off: 2011: Feluy (B) - 2013: Gela (IT);
Settimo Milanese (IT) - 2014: Hythe (UK); Sarroch (IT)
Sites under MT
restructuring - 3
2011: P. Torres (IT) - 2013: Priolo (IT) –
2014: P. Marghera (IT)
Strengthening
of portfolio
New plants - 32014: Butene-1 (Ravenna IT) - 2014: Bio-Refinery
(Matrìca P.Torres IT) - 2015: s-SBR (Grangemouth UK)
% commodities 67% 56% Improved integration: 75% captive use
International
development
International
Partnerships/JV’s- 4 Lotte - Genomatica - Elevance - Neville
Business service
companies13
(Europe)
4(1 Europe - 3 worldwide)
Versalis International – Versalis Pacific Trading –
Versalis Pacific India – Versalis Americas
HSE (Injury Frequency Index) from 2.74 in 2012 to 0.28 in 2015
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Innovation for a sustainability-driven business model
Processes & Products
innovation for high performance
and improved environmental
footprint
New cross-competences
through partnerships (i.e. agro-
chemistry, compounding)
Fossil & bio-based synergies to
renew industrial platforms
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Bio-BDE: strategic raw material from alternative feedstock
• Partnership with Genomatica to develop a complete “end to end” process for the
production of bio-butadiene
• Versalis produced bio-butadiene from sugars at its research centers (pilot scale)
• Bio-butadiene has been used to make bio-rubber, specifically bio-polybutadiene
• The technology will be available for licensing
Bio-butadiene
1,3-BDO
separation
1st & 2nd catalytic
dehydration
BDE
PurificationFermentation
BDE
1st and 2nd
generation
sugars
GMO
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Green tyres: development of a breakthrough technology
• Strategic partnership with Ecombine and EVE
Rubber Institute (Mesnac group) in 2015
• Joint development of a breakthrough
technological platform in the tire
compounding, capable to produce extremely
high performance tires
• The agreement includes also the licensing of
Versalis’ proprietary elastomers technologies
• New milestone for Versalis ‘green tyre’
portfolio
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Smart packaging: essential oils for antimicrobial effect
Antimicrobial
effect
Blown film or
lamination
Guayule and
other plants
Essential
oil
Synthetic
Antimicrobial
Master
Turbo mix
Processing
• Protects foods during shipment
• Slows food spoilage
• Saves transportation costs due to lighter weight
Positive
Impact
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Styrenics: new ABS ‘one step’ technology
Development of a new and break-through
continuous mass ABS technology
Enhancement of portfolio top quality
specialties and access to new application
segments with higher added value and
demand growth
Lower total production costs and
environmental impact than market leading
technologies
Pilot plant start-up in H1 2017, industrial
plant basic engineering ongoing in parallel
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Innovation & transformation: how to lead them ?
Identify, assess, select the change
management leaders to speed up
transformation
Build a resilient and proactive leadership
team with a change of mindset
Balance and enhance the team’s talents
and competences, in order to multiply
successful results
Every transformation phase needs different styles of leadership,
organisational climate must be monitored
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Leadership patterns…in action
Turnaround
announced
Closures/
Shut-down
International
development
Restructuring
& new plants
Portfolio
upgrade
Operative
break-even
Transformation
still ongoing…
OR
GA
NIS
AT
IO
NA
L C
LIM
AT
E
2011 2012 2014 2015 20162013
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Leadership patterns…in action
Turnaround
announced
Closures/
Shut-down
International
development
Restructuring
& new plants
Portfolio
upgrade
Operative
break-even
Transformation
still ongoing…
VISIONARY
COACHING
AFFILIATIVE
DEMOCRATIC
COMMANDING
PACE-SETTING
2011 2012 2014 2015 20162013
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Conclusions: transformation at Versalis
Delivered:
a stronger and
internationally recognized
company
proactivity within the
global chemical industry
dynamics
a wide range of
optionality to our
shareholder
PROACTIVITY
INNOVATION
PROFITS
GROWTH
VISION
PEOPLE
Transformation mindsets should become an ongoing
process, allowing to quickly adapt to the evolving
industry environment