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1 Albemarle Corporation Fine Chemicals UBS Grass Roots Chemical Conference February 16, 2005 John Nicols Vice President Fine Chemicals.

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Presentation on theme: "1 Albemarle Corporation Fine Chemicals UBS Grass Roots Chemical Conference February 16, 2005 John Nicols Vice President Fine Chemicals."— Presentation transcript:

1 1 Albemarle Corporation Fine Chemicals UBS Grass Roots Chemical Conference February 16, 2005 John Nicols Vice President Fine Chemicals

2 2 Cautionary Statement Some of this presentation constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of Although Albemarle Corporation believes its expectations reflected in the presentation are based on reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results will not differ materially. Factors that could cause actual results to differ from expectations include, without limitation, the timing of orders received from customers; the gain or loss of significant customers; competition from other manufacturers; changes in demand for our products; increases in the cost of raw materials and energy, and our inability to pass through such increases to our customers; changes in the market in general; fluctuations in foreign currencies; significant changes in new product introductions, resulting in increased capital spending; and the integration of the Akzo Nobel Refinery Catalysts business into our operations. Additional factors that could cause Albemarle’s results to differ materially from those described in the forward- looking statements can be found in our prospectus dated January 13 th, 2005, filed pursuant to SEC Rule 424(b).

3 3 Albemarle History Albemarle Paper Manufacturing Company opens with a handful of employees producing Kraft and blotting paper The antiknock properties of tetraethyl lead (TEL) as a gasoline additive are discovered after a lengthy search by a team of General Motors research chemists. TEL is to be the principal product of Ethyl Corporation for more than 40 years Ethyl Gasoline Corporation changes its name to Ethyl Corporation to characterize a broader interest than just gasoline products Albemarle Paper Manufacturing Company borrows $200 million and purchases Ethyl Corporation (Delaware), a corporation 13 times its size, and Ethyl Corporation (Virginia) is formed. Floyd D. Gottwald becomes Chairman of the Board Ethyl leaves paper manufacturing with the sale of Oxford Paper. Ethyl opens a chemical plant in Feluy, Belgium to make aluminum alkyls Ethyl acquires Dow Chemical's bromine chemicals business and its Magnolia, Arkansas, plant Ethyl spins off its chemical businesses to create an independent, publicly traded company named Albemarle Corporation Albemarle sells its alpha olefins, polyalphaolefins and synthetic alcohols businesses to Amoco for about $500 million Albemarle energizes M&A effort to grow the company based on longstanding foundation technologies of bromine and organometallic chemistry, supported by exceptional skill in process technology.

4 4 Tender Offer For A&W; Created Cash Gain Formed Jordan Bromine Co; Started Project for ’02 Startup Acquired Ferro BrPS FR Bus Took ownership In Jinhai Polymer & Expanded 2X Acquired Martinswerk-- Largest global mineral based FR and Performance Chemicals Acquired ChemFirst Fine Chemicals; Integrated with ALB to form Fine Chemistry Services Formed Stannica JV with Atofina— crude tin stabilizers for PVC Announced China Trading Company Acquired lube and fuel anti-oxidants of Ethyl Acquired Phosphorus Flame Retardants of Rhodia 2004 Acquired refining catalyst segment of Akzo Nobel Fine Chemicals JV / Acquisition Activity Acquired Atofina S.A. Bromine Fine Chemicals Acquired assets of Korean distributor of Albemarle; other products

5 5 Company Overview Albemarle is a global producer of specialty chemicals with leading market positions in a majority of its product lines Albemarle provides innovative development, manufacturing and marketing of complex chemicals and services that create exceptional customer value while maximizing shareholder wealth.  Diversified mix of solution-based products sold to a wide range of customers and end markets –Over 3,400 customers –End markets include consumer electronics, petroleum refining, packaging, construction, automotive, pharmachemicals and agrichemicals  Broad geographic footprint –Sales in approximately 100 countries –38 locations (inc. JVs) in North and South America, Europe and Asia –Approximately 3,700 employees worldwide  2004 Results (1) -Net Sales$1,514 million -Net Income $76 million (up 13% over 2003) -EPS $1.78 (1) Year ending December 31, 2004 includes 5 months refinery catalysts business. Excludes special items, unaudited results

6 6 Broad Geographic Reach 2004 Sales (ex. JVs) 42%38%20% AmericasEuropeAsia Worldwide manufacturing complemented by sales, marketing and distribution facilities in each of the world’s key regions Bergheim, Germany Teesport, UK Avonmouth, UK SA JV) Amersfoort, The Netherlands Santa Cruz, Brazil (FCC Houston, TX, USA Amsterdam, The Netherlands Dayton, OH, USA Tyrone, PA, USA Richmond, VA, USA Baton Rouge, LA, USA Magnolia, AR, USA Safi, Jordan (JBC JV) Orangeburg, SC, USA La Voulte, France (JV) Thann, France Port-de-Bouc, France Niihama, Japan (Nippon Ketjen JV) St. Jakob/Breitenau, Austria (JV) Shanghai, China (JVs) Feluy, Belgium Seoul, Korea Louvain-la-Neuve, Belgium Business Center Manufacturing Facility Beijing, China Singapore R&D Facility Pasadena, TX, USA Tokyo, Japan Osaka, Japan, (NAA JV) Zhejiang Province, China

7 7 Albemarle Corporation Today  Refinery Catalysts acquired July 31, 2004 for € 616 million ($763 million) –Significantly enhances existing business by adding attractive strong specialty chemicals platform –Leading positions in a market with strong industry fundamentals –Proprietary technology and service-driven business model –Strong margins and cash flows –Potential technology, raw material and other cost synergies  Balanced portfolio with common technology Approx. Net Sales Distribution Polymer Additives Catalysts Fine Chemicals Bromine integration Leading positions in major flame retardant chemistries Additives niches Global scope and reputation Leading positions in refinery and metallocene catalysts History of innovation Strong customer relationships Global scope and reputation 41% 30% 29%

8 8 Bromine Phosphorus Alumina Orthoalkylation Metal Alkyls Leading Market Positions in Major Product Categories Foundation Chemistries Solutions-Based Product Portfolio Leading Global Market Positions Flame Retardants Catalysts Plastic Additives Fuel Additives Agrichemicals Pharmaceuticals Performance Chemicals Bromine-based FRs Mineral FRs HPC Catalysts FCC Catalysts Alkyl Co-Catalysts Metallocene Co-Catalysts Alkylated Anilines Bromine Ibuprofen Process Technology Innovation Application “Know-How” Service Leading Customer Relationships Albemarle’s Formula for Success Source: Industry Research and Management Estimates.

9 9 Key Strategic Principles  Leverage Foundation Businesses and Technologies –Innovation allows for management of product rotation –Customer-driven product line expansions –Focus on higher-margin, solution-based products and services  Expand Global Reach –Expand with new and existing multinational customers –Target high-growth economies  Drive Low-Cost Manufacturing and Continuous Operational Improvement –Continuous cost reduction efforts –Flexible, multi-purpose sites  Establish Superior Customer and Technology Relationships –Drive innovation in regulatory-driven markets –Provide value-added products and services –Develop business with less capital and risk

10 10 Fine Chemicals

11 11 Albemarle Fine Chemicals Product Diversity Strategic Clusters Br2 & Derivatives Services & Intermediates Pharma Actives (APIs) Ag Actives Paper Chemicals Alumina Specialties Others Oilfield Chemicals Tertiary Amines K & Cl2 Derivatives Bromine Specialties Fine Chemistry Services Industrial Specialties Bromine Chemicals

12 12 New Strategy Potentials ? Manage for Cash Fine Chemicals Strategies Bromine Chemicals Leading Bromine Company Worldwide Fine Chemistry Services Industrial Specialties Serve Chemistry To Solve Customer Problems Widen & Deepen Access Into Key End Markets: Pharma & Ag Drive To Actives: Highest Chemistry Value Add Strategic Growth

13 13 New Strategy Potentials ? Manage for Cash Fine Chemicals Strategies Bromine Chemicals Leading Bromine Company Worldwide Fine Chemistry Services Industrial Specialties Serve Chemistry To Solve Customer Problems Widen & Deepen Access Into Key End Markets: Pharma & Ag Drive To Actives: Highest Chemistry Value Add Strategic Growth

14 14 World-Class Bromine Position Albemarle Bromine Production Albemrle holds strong positions in each of the key areas of the world’s bromine- using industries. Flame Retardants 40% Oilfield 24% Ag 12% Water Treatment 7% Pharma 3% Other 14% Low cost domestic reserves augmented by JV production on the Dead Sea Capturing growth through strong positions in key areas of the world’s bromine-using industries Bromine-Industry Usage USGS/Mining Engineering June 2003 M Lbs ’94’95’96’97’98’99’00’01’02’03’04 10-year CAGR = 7.5%

15 Long Time In Motion Keep Building Momentum EDB For TEL – Ethyl Beginnings 1980 Saytech Acquired 1987 Dow Br & FR Business Acquired 1993 Thann Acquired 2000 Ferro BrFRs Acquired 2002 JBC Startup 2003 AtoFina BFC Acquired 15 Leading Bromine Company In The World Pharma Int’s MeBr Br F R Resource Managed In Fine Chemicals Market Managed Bromine Specialties High Volume Bromides Related Products World-Class Bromine Position Goal Global Leader in BrFR

16 16 Bromine Chemicals: Business Strategies Continue To Build & Drive The World’s Lowest Cost Global Bromine Sourcing Network Maximize Value While Ensuring Leading Share In All Significant Bromine Consuming Uses Lead In Developing New Applications For High Value Bromine Specialties Secure Advantage From Technologies Borrowing Bromides

17 17 New Strategy Potentials ? Manage for Cash Fine Chemicals Strategies Bromine Chemicals Leading Bromine Company Worldwide Fine Chemistry Services Industrial Specialties Serve Chemistry To Solve Customer Problems Widen & Deepen Access Into Key End Markets: Pharma & Ag Drive To Actives: Highest Chemistry Value Add Strategic Growth

18 18 Fine Chemistry Services Model Fine Chemistry Services Industrial Specialties Personal Care Photo Chems Flavors / Fragrances Etc. ALB Actives (APIs) Ibuprofen, Naproxen ALB Actives Methyl Bromide Customer Needs & Opportunities Ag ALB Intermediates Custom Mfr Contract Research Pharma ALB Intermediates Custom Mfr Contract Research

19 Pharma Products 3 Ag Products Leading BFC’s In EU 1 cGMP Facility Several New Prod’s In Pipeline 2004 Historic Pharma/Ag/BFC Products Continued Pressures On IBP / NPX Leading US Custom Mfr 3 Research Facilities (2 US, 1 EU) 3 cGMP Facilities 7 Flexible Multi-Product Sites 90+ New Products In Pipeline Albemarle’s Fine Chemistry Services Area Of Major Strategic Change Products Capabilities Globally Leading Capabilities Flexible Plants’ Utilization Up Profit Up approx $10 MM in ’04 v. ’02 Stepping Up in ’05:  Utilizations / Better Mix  Pipeline Productivity  New Products / Capabilities  Owning Our Niches Success w/ Specialty API’s Profit Up approx $3 MM in ’04 v. ’02

20 20 Fine Chemistry Services New Product Pipeline Pre-Clinical Phase IPhase IIPhase III Patent Protected Generic % +4% +61% 90 products in our pharma pipeline

21 21 Fine Chemistry Services Industrial Specialties Further Downstream in Market to Higher Chemistry Value Customer Needs & Opportunities Ag ALB Intermediates Custom Mfr Contract Research Pharma ALB Intermediates Custom Mfr Contract Research Fine Chemistry Services: Build Synergistically Gain More Market Access Further Downstream in Market to Higher Chemistry Value Other Market Servicing Capability

22 22 Profit Growth In Fine Chemicals Profit Perspective Comments Raw Mats & Energy Continued Headwind in ’05, but not like ‘03 Regulatory -- Methyl Bromide secured for 2005 Mature Products Pricing peak, but select issues continue (i.e. China) Zeolites Sales and profit impact comparison goes away Jordan Startup -0 Jordan low cost will create favorable ’05+ conditions Br Chem Pricing ++ Accelerating due to favorable supply / demand New Products ++ Accelerating due to improved pipeline Asset Utilization + Continued year-on-year improvements BOTTOM LINE (19%)*(11%)*Poised & Healthier Leaving Peak ‘03 – ’04 Headwind Period * Change in operating profit versus prior year, excluding specials data unaudited. Last 3 quarters 2004 vs up 3%

23 23 Fine Chemicals: Investment Considerations  Strong Positions Driving Our Strategic Successes  Global Bromine Leadership – Tightening Supply Environment  Broad Fine Chemistry Service Business Capabilities: Developed, Entrenched Service Model Satisfying Our Targeted Client Base Leverages Corporate Chemistry / Process Development Foundation Strength Drives Us Into Attractive Pharma / Ag Markets For Chemistry / Innovation One Of Relatively Few Worldwide With Pharma / Ag Revenues > $200 MM  Sound Strategies Drive Improved Returns & Sustain Growth  Disciplined Corporate Cost Focus – Improving Return on Assets  M&A Activities Continue to Target Bolt-On Acquisitions, But Not Essential To Long Term Fine Chemicals Success  Strong Accountable Team  Mitigating Near-Term Exceptional Situations  Successfully Managing Portfolio Rejuvenation

24 24 Albemarle Corporation Fine Chemicals UBS Grass Roots Chemical Conference February 16, 2005 John Nicols Vice President Fine Chemicals


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