Global PET Film Marketplace; Impact on Converting Industry Robert K Sinclair DuPont Teijin Films October 2004
Agenda Overview Market Environment PET Film Industry Impact on Converters
PET & PEN Films for High Performance Applications Key Capabilities PET and PEN polymer science Applications development $1.4B Revenue Product Portfolio Film processing PET and PEN polyester films Coated films Metallized films Sealant Films Shrink Films Stabilized films Specialty resins Key Markets Electronics Safety, Health and Protection Packaging Imaging Printing and Recording Media Industrial Applications 300,000 tes Capacity 4,000 People
Films for Electronics Capacitors Dry photo resist Digital Displays RFID Membrane Touch Switches Auto sensors, Flexible circuits Advanced Data Media storage
Films for Safety, Health and Protection Security, ID, health cards Passports Protective Labels Medical Test strips Sterile packaging Safety glass and window films
Packaging Films for Impact, Freshness and Convenience Flexible packaging Sealant films Shrink films Holographic films Barrier films Ovenable films Can lamination
Films for Imaging, Printing and Recording Media Graphic Arts Offset printing Flexo Proofing Ink Jet X-ray Flexible CD s Digital Stencil Thermal Transfer VHS Cassettes Photo/ APS photo Holographic films
Films for Industrial Applications up to 500 micron Wire and cables Industrial Imaging Motors Stamping Foils Coil Coating Cast and release
Macro Environment Raw material prices, driven primarily by energy costs, are expected to increase year over year Market prices up across the board (Oil, Natural Gas, Shipping/Freight, Copper, Aluminum) Growth in emerging markets compounds the issue Manufacturing output is high and expected to remain high - ISM Index at a 20 year High * Spot Price, Friday West Texas Intermediate 4 Week Moving Avg 1990s Avg. $19.70/bbl OIL8 94 95 96 U.S. Oil Prices * Dollars per Barrel Avg $/bbl 2000 $30.39 2001 $26.14 2002 $26.17 2003 $31.25 2004 $40.54e 2005 $42.16f 97 98 99 Actual August Futures 00 01 02 03 Avg. $29.40/bbl Since end of '99 04 05 50 40 30 20 10
Macro Environment Industry shifts US to Asia W Europe to E Europe US importing more finished goods from Asia W European growth anemic Positive underlying growth in Japan E Europe booming 180 160 140 120 100 80 IPIWORLD1 97 Manufacturing by Region 98 99 Indexes, 1997=100 US(6.0%) Japan (8.4%) Emerging Europe(12.6%) Asia ex Japan (15.0%) Western Europe(2.4%) Note: Data in legend latest yr/yr %chg. 00 01 02 03 04 180 160 140 120 100 80
Macro Environment Technology Shifts analogue to digital miniaturization info age to biological era technical progress accelerating Decrease in Size of Mechanical Devices 1 0.1 1965 1971 1978 1982 1987 1993 1998 2004 Impact speed is critical productivity and quality will continue to improve - dramatically intangibles will have most economic value technology and power will move to consumers 0.01 0.001 0.0001 Scale Expon. (Scale) 0.00001 0.000001
PET Film Demand - Global 400 350 300 250 200 150 100 50 0 Q1'94 Q3'94 Q1'95 Q3'95 Q1'96 Q3'96 Q1'97 Q3'97 Q1'98 K Tes Q3'98 Q1'99 Q3'99 Q1'00 Q3'00 Q1'01 Q3'01 Q1'02 Q3'02 Q1'03 Q3'03 Q1'04 Source: DuPont Teijin Films Market CAGR 6.4%
Global PET Film Demand (tes) 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Magnetics Packaging Imaging Electrical Industrial CAGR 6.4% 8.9% 0.9% 10.4% -4.8% Source: DuPont Teijin Films
PET Film Demand Asia (excluding Japan) 160 140 120 100 80 60 40 20 0 CAGR 12.7% Q1'94 Q3'94 Q1'95 Q3'95 Q1'96 Q3'96 Q1'97 Q3'97 Q1'98 Q3'98 Q1'99 Q3'99 Q1'00 Q3'00 Q1'01 K tes Q3'01 Q1'02 Q3'02 Q1'03 Q3'03 Q1'04 Source: DuPont Teijin Films Market
PET Film Demand Japan 70 60 50 40 30 20 10 0 Q1'94 Q3'94 Q1'95 Q3'95 Q1'96 Q3'96 Q1'97 Q3'97 K tes Q1'98 Q3'98 Q1'99 Q3'99 Q1'00 Q3'00 Q1'01 Q3'01 Q1'02 Q3'02 Q1'03 Q3'03 Q1'04 Source: DuPont Teijin Films and Industry estimates Source: DuPont Teijin Films Market CAGR 4.8%
PET Film Demand Western Europe 70 60 50 40 30 20 10 0 Q1'94 Q3'94 Q1'95 Q3'95 Q1'96 Q3'96 Q1'97 Q3'97 Q1'98 Q3'98 Q1'99 Q3'99 K tes Q1'00 Q3'00 Q1'01 Q3'01 Q1'02 Q3'02 Q1'03 Q3'03 Q1'04 Market Source: DuPont Teijin Films CAGR 2.4%
PET Film Demand North America 90 80 70 60 50 40 30 20 10 0 Q1'94 Q3'94 Q1'95 Q3'95 Q1'96 Q3'96 Q1'97 Q3'97 Q1'98 Q3'98 Q1'99 Q3'99 K Tes Q1'00 Q3'00 Q1'01 Q3'01 Q1'02 Q3'02 Q1'03 Q3'03 Q1'04 Source: DuPont Teijin Films ource: DuPont Teijin Films and Industry estimates Market CAGR 2.0%
PET Film Demand North America K Tes 78 76 74 72 70 68 66 64 62 60 58 Q1'01 Q3'01 Q1'02 Q3'02 Q1'03 Q3'03 Q1'04 Source: DuPont Teijin Films Market
100 95 90 85 80 Q1 '99 Q2 '99 Q3 '99 Q4 '99 Q1 '00 Q2 '00 Q3 '00 Q4 '00 Q1'01 Q2'01 Q3'01 Q4'01 Utilization (%) Q1'02 Q2'02 Q3'02 Q4'02 Q1'03 Q2'03 Q3'03 Q4'03 Q1'04 PET Film Industry Utilization Source: DuPont Teijin Films
Impact On Converters Dynamic price pressure retailers driving costs out of value chain raw material price pressure up through value chain demand/supply imbalance global economics changing regional differences More losers than winners more consolidation winners will win big US growth limited exciting new markets - - high risk significant churn (total growth > total decline) Innovation absolutely key Huge consequences from any mistakes Supply continuity will be increasingly more important Need to change business model for success
Summary Converter Industry innovation and scale essential economics will necessitate new business models need to focus on the what vs the how more consolidation PETF Industry global leverage innovation most critical new business models required more consolidation
World s Premier Producer of Polyester Films Melinex, Mylar, and Cronar are registered trademarks of DuPont Teijin Films U.S. Limited Partnership. Teijin and Tetoron are registered trademarks of Teijin Limited and are licensed to DuPont Teijin Films US, Limited Partnership. Teonex is registered trademark of Teijin DuPont Films Japan Limited and licensed to DuPont Teijin Films U.S. Limited Partnership. Copyright 2003 DuPont Teijin Films (UK) Ltd. All rights reserved.
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