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Marcus Wallenburg Price Award Ceremony

Marcus Wallenburg Price Award Ceremony. NOVA Chemicals Corporation “Driving Shareholder Value through Productivity/Cycle Time” Presentation by: Wes Lucas President, Styrenics. NOVA Chemicals Corporation. Creating Shareholder Value. Through productivity/

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Marcus Wallenburg Price Award Ceremony

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  1. Marcus Wallenburg Price Award Ceremony NOVA Chemicals Corporation “Driving Shareholder Value through Productivity/Cycle Time” Presentation by: Wes Lucas President, Styrenics

  2. NOVA Chemicals Corporation Creating Shareholder Value Through productivity/ cycle time improvements in commodity plastics

  3. What is NOVA Chemicals? • NCX on stock exchanges (NYSE, TSE) • Leading commodity chemical company • 1999 sales of approximately $3 billion USD • Focused on polystyrene, polyethylene, and petrochemicals • 21 plants producing about 6 million kt

  4. What did NOVA Chemicals’ products become?

  5. North American #1 Polystyrene #1 EPS #1 Styrene #1 Performance Styrenics #5 Polyethylene #4 Ethylene Europe #1 EPS #1 Performance Styrenics #5 Polystyrene NOVA Chemicals’ Market Position World #1 Performance Styrenics #2 EPS #3 Polystyrene #4 Styrene #7 Ethylene #12 Polyethylene Good positions Vs. Dow, BASF, Atochem, etc.

  6. NOVA Chemical’s Operations EUROPE NORTH AMERICA Joffre Carrington Breda Carrington Sarnia Ribécourt Berre Montréal Springfield Corunna Joliet Beaver Valley Peru Painesville Belpre Chesapeake Bayport Channelview Decatur Shell acquisition pending

  7. Chesapeake Plant

  8. NOVA Chemicals’ Performance 200 NCX 180 +63% 160 140 Commodity index 120 Specialty index +9% +7% S&P 400 +2% 100 80 Jan 01 Feb 15 Apr 01 May 16 Jun 30 Aug 14 Sep 28 Outperformed peers and market Chemical Indices vs. S&P 400, Source: CSFB

  9. Shareholder value driven by: #2 #1 Focused Strategy 1. Focus on commodity chemicals 2. Deliver lowest cost 3. Build on add to sustainable competitive advantage 4. Invest only for high returns 5. Industry consolidator Great Execution 1. Productivity and cycle time improvement 2. Participate in industry consolidation 3. Eliminate non-strategic assets 4. Enhance marketing efforts

  10. Productivity/Cycle Time Improvement Starts here at the top

  11. Productivity/Cycle Time Improvement • Focus • Cycle Time improvement • “Excellence in everything • we do!” • Highest quality in industry for entire supply chain • Right quality • Right on time • Operational Excellence • Build core capability in improvement • Top-Down leadership • Bottom-Up execution • Cultural revolution • Fact based management • Fanatical focus Core Capability in improving how we work

  12. Styrenics Productivity/Cycle Time Priorities #1 Cost Lowest cost #2 Customer Highest value #3 Capital Doing more with less #4 Purchasing 5% reduction/year #5 People Building skills/capabilities

  13. #1 Cost 1997 1998 1999 00 E Continuously driving productivity/cycle time

  14. #2 Customer - Electronics Example Trends Markets NCX’s Role • Internet use • Multimedia use • Electronification • Computers • Electronics • Peripherals • Electrical appliances • Replace over-engineered materials • Higher performance • electronics • co-polymers • compound • color • New products • computers • peripherals Sell value and solutions, not just plastics

  15. #2 Customer Market Customer 1997 2000 1997 2000 Value Service Price Unattractive Attractive Segmentation increasing profits

  16. #1 Simplify Process #2 Eliminate Waste #3 Change Behaviors #4 Drive Perfect Execution #5 Speed-up Cycle Time Higher Income Less Capital =  =  #3 Capital • Total Plant Reliability • Six Sigma • Total Plant Reliability • Six Sigma • Faster • More • More with less capital “Act like Owner” “Less is Better” + + + + • How We Work? • What We Need? • Eliminate • Eliminate + + + + Doing more with less capital

  17. #4 Purchasing Price Drive 4% reduction in purchasing by total cost of ownership Terms Yields Inventories Thru-put Logistics Supplier’s technology Supplier’s Support

  18. #5 People • Leadership - Leader’s job to drive improvement • Skills - Training, training, training • Process - Formal process in setting targets/measuring/reporting • Tools - Working smarter • Aspirations - “Unrealistically high”

  19. Shareholder value driven by: #2 #1 Focused Strategy 1. Focus on commodity chemicals 2. Deliver lowest cost 3. Build on add to sustainable competitive advantage 4. Invest only for high returns 5. Industry consolidator Great Execution 1. Productivity and cycle time improvement 2. Participate in industry consolidation 3. Eliminate non-strategic assets 4. Enhance marketing efforts

  20. Shareholder Value US $ Analyst peak share price estimates Average analyst 12-18 month target price Q3 98 Q4 98 Q1 99 Q2 99 Q3 99 Average NCX share price on NYSE

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