Keybanc Roadshow November 27-28, 2007library.corporate-ir.net/library/11/117/117031/items/271531/alb_ir... · Keybanc Roadshow November 27-28, 2007. ... •China Growing Positions

Richard J. Diemer, Sr. VP and CFOSandra Rodriguez, Director of Investor Relations

Keybanc Roadshow November 27-28, 2007

Forward-Looking StatementsPortions of this presentation constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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 inability to pass through increases in costs and expenses for raw materials and energy; competition from other manufacturers; changes in demand for our products; the gain or loss of significant customers; fluctuations in foreign currencies and increased government regulation of our operations or our products.

Additional factors that could cause Albemarle’s results to differ materially from those described in the forward-looking statements can be found under “Risk Factors” in item 1A of our Annual Report for the period ended December 31, 2006.

SOLUTIONS

SUSTAINABILITY

CHEMISTRY

Using our creativity, teamwork, flexibility and enthusiasm to add real business value to our customer relationships

Doing the right things – in every community in which we operate -with regard to our employees, the environment and society in general

Continuing to push for innovation in the lab, which is essential for developing leading market positions and creating long-lasting customer value

Albemarle develops, manufactures and markets specialty chemicals and services that benefit many of the largest and most respected companies in the world. Our products are essential ingredients in brands that millions of people use every day to make their lives healthier, safer, cleaner and more enjoyable.

Strong Balanced Portfolio• Leading provider of specialty chemicals that go into products you use every day

• Technology and service-based business model yields innovative solutions

• Strong margin and cash flow businesses

• Committed to product and environmental stewardship

23%

39%

38%

Global Business Reach• Strong Americas foundation

• Acquisitions have helped build a strong European business

• Asia, Middle East and Russia represent the largest growth potential

39%

16%

44%

*2007 YTD

*2007 YTD

39%23%

38% PolymerAdditivesFineChemicalsCatalysts

44%

39% 17% Americas

Europe

Asia Pacific

2006 Net Sales—$2.4 Billion

Net Sales(in millions of dollars)

Net Income, Excluding Special Items(in millions of dollars)

174

Strong Position

•Middle East (Jordan)

•China

Growing Positions

•India

•FSU

•Brazil

Leading Innovation Platform

• Market driven development

• Trend setting innovations

• Long-term breakthrough technology

Continuously Improve Portfolio

• Optimize Assets

• Redeployed business resources

• Technology Partnership

•Exxon Mobil

•UOP

• Acquisitions

Innovation Portfolio Growth Emerging Markets

The combination of these three elements creates differentiated performance

How We Drive Our Business Segments

Innovation

Innovative Solution Provider• In 2006, Albemarle filed over 100 patents

- Currently ALB has 1,685 active patents and 1,617 pending/published patent applications

• Ended year with 28% of our sales from new products• Opened new technology center• Technology is focused on

- Alternative fuels- Green additives- Pure products

• Meeting customers’ needsand creating unique solutions

New Product Revenue Growth

% of sales by year

Growth Through Innovation

Inorganic FRs

Biodiesel Catalysts

Fuel Additives for Alternative Fuels

Poultry Biocides

Mercury Emission

Reduction

Emphasis on Safety and the Environment• Wildlife Habitat Certification at Orangeburg - “ Hundred Acre Woods”

• Energy-reducing efforts saved 604 billion BTUs in 2006• Reduced CO2 emissions 47,000 tons in 2006• Voluntary Emissions Control Action Program (VECAP) - a proactive and dynamic industry plan for product stewardship to understand, control and reduce emissions

Alternative Fuels TechnologyDevelopments Across CTL / GTL / Biomass Conversion

Steam Reforming

Coal Gasification

Biomass Gasification

(remote)GAS

COAL

BIO-MASS

FischerTropsch

Upgrading DIESEL

Vegetable Oil Crop

Veg. OilHydroconv. Upgrading

“BIO”DIESEL

Albemarle Catalyst Developments Across

Portfolio Growth

Net SalesDollars in millions

Segment Income (excluding special items)Dollars in millions

Polymer Additives—Innovation, Globalization

Polymer AdditivesGrowth Drivers• Demand in electronics, construction,

automotive and furniture industries

• Increasing fire safety standards (especially in Asia)

• Expanding uses for polymers

ALB Strength• Innovation and application skill • Strong position with market leaders• Expanding technology

2006 Net Sales $920Dollars in millions

74

26%

74%

26%

Flame Retardants Stabilizers & Curatives

1999

Formed Jordan Bromine Co. Ltd.

Acquired BrPS FR business from Ferro

Acquired interestin Jinhai Polymer

Acquired fuel and lube antioxidant business from Ethyl

Acquired ANTIBLAZE®Phosphorous flame retardants of Rhodia

Formed Stannica with Atofina (tin stabilizers for PVC)

Acquired assets of Korean distributor of Albemarle & other products

Construction of NanjingPolymer Appl. Lab

Acquired majority interestin Jinhai AOX JVs

Construction of PFR plant In Nanjing

Polymer AdditivesGrowth Platform

Acquired Martinswerk (global mineral-based FR business)

Acquired ChemFirst Fine Chemicals, incl. Firstcure ® curing agents

2000

2001

2002

20032004-6

2007

The Flame Retardant LeaderBroad, Innovative Product Portfolio• Bromine, Mineral, Phosphorus

Low-Cost Manufacturing• Bromine: plants located at low-cost brine locations (Arkansas and Jordan)

• Mineral: low capital cost in Europe; replicate in U.S., China

• Phosphorus: acquire/develop regional low-cost manufacturing locations; plant to be built in China

Broad Application & Product Innovation• Expand applications know-how into textiles

and coatings

• Developing new products to meet evolving requirements

Regulatory & Standards• FR makes ALB into a powerful partner for OEM’s and polymer

manufacturersProtecting

our families

Protectingour heroes

Protecting our businesse s

Net SalesDollars in millions

Segment Income (excluding special items)Dollars in millions

Fine Chemicals—Driving Margins

Fine ChemicalsGrowth Drivers• Demand growth in bromine-related products

• Innovators outsourcing custom manufacturing of actives and intermediates

• Focused synthesis on niche pharmaceuticals

ALB Strength• Global, low-cost bromine position • Strong customer relationships• Capability to support customers in development

of life sciences products

2006 Net Sales $609Dollars in millions

63 %37%

63%

Performace Chemicals FCSI

• Drive development of new Bromine applications with market leaders

• Hg removal from coal fired burner emission ramping up in 08-09

• Hydrocarbon manipulation developments longer term

• Major volume opportunity for Abzol® solvent in Asia now

• Bromine Technology Center to identify new applications

• Poultry Biocides and globalization of proprietary Bromine Biocides

Bromine Franchise

Fine Chemicals...Strategies

Avg Bromine Price/MT

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500200

2200

32004200

5200

62007

• Utilize custom manufacturing window to identify market segments of attraction and focus

1. Pharma- Increase number of API and Pharma Intermediate opportunities

- Acquire additional assets/businesses in this market space to add to capabilities

2. Specialty Monomers and Polymers- Developing niches that require special capability that we possess, such as

Organometallic, High Pressure, CGMP

• Increase the amount of Albemarle proprietary IP for niche API opportunities

Fine Chemistry Services

…..Strategies

Vision 2008: Create Financial Equality

30

40

50

60

70

80

90

Op

Pro

fit in

cl M

I exc

l Spe

cial

s $M

M

2005 2006 2007 2008

Operating Profit Growth of 19.4% per year

8% OPmargin

16% OPmargin

Catalysts—Accelerating Growth

Net SalesDollars in millions

Segment Income (excluding special items)Dollars in millions

Catalysts

Growth Drivers• Increasing demand for petroleum products• Tightening fuel quality specifications• Decreasing quality of crude oil feedstock• Growth in polyolefins

ALB Strength• Blue-chip customer and joint venture relationships• Proprietary technology, hydroprocessing• Customer technical service• Single-site support technology

2006 Net Sales $839Dollars in millions

86 %

14 %

14%

86%

Polyolefin Catalysts Refinery

The Solution Provider….

Leading Portfolio of grades for all major applicationsCustom tailored “stacks”Key Players: Albemarle, Criterion (owned by Shell) and ART(j.v. between Grace and Chevron)More than 2000 units worldwideCombination of catalysts tailored to individual unitAdds hydrogen, removes impurities (sulfur, metals, etc.)Batch process: unit shuts down to change catalysts; approximate 2-year cycle timeGlobal Market 2006— $2 billionAverage market growth 4-6% per year

Market growth (t/a)

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250

1980 1990 2000 2010 2020 2030

actual

forecast

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200

400

600

800

1000

1200

1400

1600

1950 1960 1970 1980 1990 2000 2010

ConventionalStarsNebula

Activity progression

Albemarle’s Hydroprocessing Catalysts

FCC Catalysts—The Gasoline Machine

• Global market 2006: >550,000 metric tons / $1 billion• Average market growth over the past five years, 2.5% p.a. (4.4% last two years)• Tightening supply/demand

Key Raw Materials/Costs• Silicas• Aluminas• Energy—Natural gas

Main Players• W. R. Grace• Albemarle• BASF

FCC Catalysts – Tightening Supply

Emerging Markets

Global Growth Opportunities• Catalysts blending facility start up in China

• Phosphorous FR plant under construction in Nanjing,China

• Middle East/India regional headquarters in Dubai

• Office in Moscow to cover the Former Soviet Union (FSU)

• Expanding R&D facilities, ramping R&D spending in 2007

• Evaluating options to further expand in the Middle East and China

Albemarle Jordan Site

Geographic Expansion…. AP Region Growth Drivers

• Albemarle has fostered polymer additive relationships in the Pacific Rim for many years.

• The global electrical and electronics industries have migrated to Asia Pacific based on manufacturing economics, increasing the region's demand for polymer additives.

• Albemarle has been able to leverage relationships, knowledge of the region, and innovation, to gain a disproportionate share of that growth.

• With China's rapid rise in living standards, the region also has one of the fastest growing demands for refinery catalyst to produce more, and lower sulfur, gasoline and diesel fuel.

• With our new technology center, future manufacturing plants, andseveral JV's (refinery catalyst, aluminum alkyls, anti-oxidants), we are well positioned for continued growth in the region. Targeting fast growing construction and consumer electronics in the region.

CatalystsAdministrative and marketing officesAmersfoort, The Netherlands

CatalystsProduction of refinery catalysts, R&D activitiesAmsterdam, The Netherlands

Polymer Addit ivesProduction of phosphorous FRAvonmouth, Bristol, UK

Polymer Addit ives (Martinswerk)Production of FR and specialty products based on aluminum trihydrate and aluminum oxide, and R&D activitiesBergheim, Germany

EMEA HeadquartersRegional offices and research and customer technical service activitiesLouvain-La-Neuve, Belgium

Catalysts (Eurecat JV with IFP i nvestments)Refinery catalysts regeneration and treatment, R&D activitiesLa Voulte, France

Polymer Addit ives / Fine chemicalsProduction of bromine FR (BPS), fine chemicals and brominePort-de-Bouc, France

Polymer Addit ives(Jordan Br omine C o Ltd. JV with Arab Potas h Co Ltd.)Production of bromine, bromine derivatives and bromine FRSafi, Jordan

Polymer Addit ives (Magni fin JV with Radex H eraklith Industriebeteiligung AG)Production of magnesium hydroxide FRSt. Jakobs Breitenau, Austria

Fine ChemicalsProduction of emulsifiers, corrosion inhib itors, scale inhibitors and estersTeesport, UK

Catalysts (Nippon Ket jen JV)Production of refinery HPC catalystsNi ihama, Japan

Catalysts (Nippon Alumin ium Alky ls JV with Mitsui C hemicals Inc. )Production of aluminum alkylsOsaka, Japan

As ia-Pacific Headquarters Regional sales and administrative officesSin gapore

China Regiona l OfficesRegional sales officesGuangzhou, China

Australia Regional OfficesRegional sales officesMe lbourne, Autralia

Russia Regional OfficesRegional sales officesMoscow, Russia

China Regiona l OfficesRegional sales and administrative officesBeijing, Ch ina

Korea Regiona l OfficesRegional administrative officesSeoul, Korea

Japan Regional OfficesRegional sales and administrative officesTokyo, Japan

ASIAPACIFIC

EUROPEMIDDLE-

EASTAFRICA

NORTHAMERICA

SOUTH AMERICA

Polymer Addit ives / CatalystsR&D activities, production of FR, catalysts and additives, and Global Administrative HeadquartersBaton Rouge, Louisiana, USA

CatalystsSales and marketing officesHouston (Clear Lake), Texas, USA

Catalysts(Eurecat US Services JV with E urecat JV a nd IFP Investments)Refinery catalysts regenerationBayport (Pasadena), Texas, USA

Fine ChemicalsR&D activities and small-scale production offine chemicalsDayton, Ohio, USA

Polymer additives / Fine ChemicalsProduction of flame-retardants, bromine, inorganic bromides, agricultural intermediates and tertiary aminesMagno lia, Arkansas, USA

Polymer Addit ives / Catalysts / Fine ChemicalsProduction of FR, aluminum alkyls and fine chemicals, including pharmaceutical actives, fuel additives, orthoalkylated phenols, polymer modifiers and phenolic antioxidantsOrangeburg, South Carolina, USA

Polymer Addit ives / Catalysts / Fine ChemicalsProduction of aluminum & magnesium alkyls, alkenyl succinic anhydride, orthoalkylates, and fine precipitated aluminum hydroxidesPasadena, Texas, USA

Globa l HeadquartersPrincipal executive officesR ichmond, Virgin ia, USA

Fine ChemicalsProduction of pharmaceutical intermediates and APIs.South Haven, Michigan, USA

Fine ChemicalsProduction of custom fine, agricultural intermediates, performance polymer products and R&D activitiesTyrone, Pennsylvania, USA

Catalysts(Fabrica Carioca de Catalisadores JV with P etrobras Quimica)Production of catalysts, and R&D activities for the FCC business.Santa Cruz, Brazil

China Regiona l OfficesRegional sales and administrative officesShanghai, Ch ina

Catalysts(Al Bilod Catalysts Co. JV with More n Orie n through Eurecat )Refinery catalysts regeneration and recycling servicesJubai l, Saudi Arab ia

Polymer Addit ives ( JV with S ha nghai J inhai a nd Nigbo Jinhai ) Production and marketing of polymer antioxidents Jinha i (Shanghai), China

Catalysts/Polymer Additives/R&DTechnology Center, catalysts repackaging facilityNanjing, China

Polymer Addit ives (Stannica JV w ith Arkema Group)Production of tin stabilizersMo bile, Alabama, USA

Performance History

Historical Performance/Objectives

Sales Growth Y/Y 5–6% +12 +39 +36

Segment Income Margin1, 2 >15% 14.1 10.9 10.3

Return on Capital Employed1 >10% 13.3 8.3 5.7

Dividends Growth Y/Y >10% 11.3 6.0 3.5

Net Debt to Capital 30–35% 34.7 44.0 56.8

TARGETS ACTUAL

2006 2005 2004

1 Excluding special items2 Excluding corporate

(in millions, except percentages) 1Q-3Q 2007 2006 2005

Net Sales 1,737$ 2,369$ 2,107$

Net Income1 174$ 201$ 114$

EBITDA1 328$ 391$ 300$

EBITDA Margins1 18.9% 16.5% 14.2%

Capital Expenditures 71$ 100$ 70$

Net Debt 551$ 546$ 731$

Net Debt as % of Total Capitalization 31.2% 34.7% 44.0%

Earnings Per Share1 1.79$ 2.07$ 1.20$

Albemarle Performance History

1 Excluding special items

$9.6$6.6 $9.7 $9.1 $11.9 $11.9 $12.4 $12.0$6.9 $46.8$35.9$19.2$19.4$15.0$14.2$0.00

$10.00

$20.00

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$40.00

$50.00

Feb-94

Dec-94

Dec-95

Dec-96

Dec-97

Dec-98

Dec-99

Dec-00

Dec-01

Dec-02

Dec-03

Dec-04

Dec-05

Dec-06

Oct-07

Closing Date

Stoc

k Pr

ice

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Cum

ulat

ive

Retu

rn

CAGR 16%+

CAGR 22%+

Cum. Return 654%

Return to Shareholders

Cumulative Cash Flow from Operations

Net Debt Compared to Net Debt to Cap

($mm)

($mm)

Net Debt to Capital22%

26%

57%

44%35%

• Strong Cash Flow History

• Cumulative Cash Flow above $1 billion since 2002

• Dividend increase 13 consecutive years

• Capital Expenditures of roughly $100 million/year

• Share repurchase program underway

• Net Debt reduction 42% since 2004

• Net Debt to Cap 35%

• Debt rating upgrade from Moodys and S&P during 2Q

Growth Vision

Strategies To Accomplish:Invest to serve customers & segments where our service, standards and technology are valued

Build & operate globally. Optimize low cost, environmentally sound manufacturing technologies

Leverage external partner competencies into our global business systems

Invest to develop new, sustainable product technologies and to enter attractive new, sustainable market arenas

Position for leadership in world’s fastest growing regions

Acquire for consolidation application technology excellence

• Leveraging our ability to identify and provide

solutions for the challenges our customers face• Emerging economy growth will establish future needs• Providing clean energy, food and materials

• Creating new environmentally sensitive polymer additives and fuel additives

• Creating a global fine chemicals service business

Albemarle is well positioned to have another successful year in 2008 and beyond

A Sustainable Corporate Model