Итоги работы СИБУРа за 9 месяцев 2019г.

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9M 2019 Operational and Financial Results

29 October 2019


DISCLAIMER

The information contained herein pertaining to SIBUR (the "Company") has been provided by the Company solely for use at this presentation. By attending this presentation, or by reading these presentation slides, you agree to be bound by the limitations set out below. This presentation does not constitute or form part of, and should not be construed as, an offer, solicitation or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of the Company, nor shall any part of it nor the fact of its distribution form part of, or be relied on in connection with, any contract or investment decision relating thereto.

No representation or warranty, either express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness, correctness or reliability of the information contained herein. It should not be regarded by recipients as a substitute for the exercise of their own judgment. The Company accepts no responsibility for any losses howsoever arising, directly or indirectly, from this presentation or its contents. The material contained in this presentation is presented solely for information purposes and is not to be construed as providing investment advice. As such, it has no regard to the specific investment objectives, financial situation or particular needs of any recipient. There may be material variances between estimated data set forth in this presentation and actual results, and between the data set forth in this presentation and corresponding data previously published by or on behalf of the Company. This presentation contains forward-looking statements, including (without limitation) statements containing the words "anticipates," "expects," "intends," "may," "plans," “forecasts,” "projects," "will," "would", "targets,“ “believes” and similar words. These statements are based on the current expectations and projections of the Company about future events and are subject to change without notice. All statements, other than statements of historical fact, contained herein are forward-looking statements. Forward-looking statements are subject to inherent risks and uncertainties, such that future events and actual results may differ materially from those set forth in, contemplated by or underlying such forward-looking statements. The Company may not actually achieve or realize its plans, intentions or expectations. There can be no assurance that the Company's actual results will not differ materially from the expectations set forth in such forward-looking statements. Factors that could cause actual results to differ from such expectations include, but are not limited to, the state of the global economy, the ability of the petrochemical sector to maintain levels of growth and development, risks related to petrochemical prices and regional political and security concerns. The above is not an exhaustive list of the factors that could cause actual results to differ materially from the expectations set forth in such forward-looking statements. The Company and its Affiliates are under no obligation to update the information, opinions or forward-looking statements in this presentation.

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9M 2019 HIGHLIGHTS Key Developments

Key Results

FINANCIALS

  

Revenue at RUB 395 bln (-5% y-o-y) / $6.1 bln (-10% y-o-y) EBITDA at RUB 126 bln (-16% y-o-y) / $1.9 bln (-21% y-o-y)

  

RUB bln

Adj. EBITDA at RUB 135 bln (-12% y-o-y) / $2.1 bln (-17% y-o-y)

INVESTMENTS

EBITDA and EBITDA margin (%)

Revenue

RUB bln

(5%) 414

in RUB terms

36% 395

Net Debt / LTM EBITDA

32% (16%)

150

ZapSib: commissioning and start-up works are underway - cracker unit operating in a test mode, first tonnes of PE and PP produced

126

2.1x(1) 1.6x

Amur: preliminary 1.5mt LPG supply agreement signed with Gazprom leading to project capacity uplift from 1.5 mt of PE to 2.7 mt of PE/PP (September) SIBUR entered into a binding contract for the sale of its petrochemical facilities in Togliatti to Tatneft (October)

9M18 +0,4% y-o-y

9M19

9M18

2,767 ths tn

9M19 +0.4% y-o-y

31 Dec'18 30 Sep'19

5,699 ths tn

CORPORATE

   (1)

S&P assigned SIBUR BBB- investment grade with stable outlook (August); SIBUR now has IG-rate from 3 major rating agencies Five-year Eurobonds issue of $500 million at a 3.45% coupon rate (September)

Petrochemical products +6,7% y-o-y

Raw NGL fractionation

4,927 ths tn

Midstream products

0.40 LTIF

SIBUR joined UN Global Compact (September) Our net debt increased primarily due to new Eurobond placement in September 2019 and Group’s adoption of IFRS 16 starting 1 January 2019

3


Please follow the link to see the video of the construction site: https://www.sibur.ru/en/press-center/video/

ZAPSIB PROGRESS UPDATE Progress Update

Preparations for the Launch & Distribution

Construction and pre-commissioning works completed at key processing and technological units

 

Production site panoramic view: cracker unit trial run

 

Client portfolio was formed on key markets based on preliminary pre-marketing activities in Russia, CIS, Turkey, Europe and Asia Distribution agreement signed with SINOPEC to supply polyethylene to China Logistics upgrade - platform in Tobolsk and Hub in Kaluga region (Karl Schmidt) launched and fully operational

Continued demobilisation of the contractors’ construction staff Commissioning and start-up works at advanced stage:

o

PP produced in a test run from third-party and internal feedstock

o

First PE produced from ethylene of cracker unit

Packaging of first batches of PP produced in a test run

Project Budget and Financing

   (1) (2) (3)

Invested as of 30 Sep’19(1): c.$7.7 bln (or RUB 469 bln) Residual budget for 4Q2019-2020 c.$1.2bln(2) Committed credit lines (ECA, NDB)(3) c.$564 mln

Calculated using annual average ₽/$ exchange rates and average exchange rates for the 1H’19 Calculated based on exchange rates ₽/$ at 65.61, ₽/€ at 74.93 ECA stands for Export Credit Agency. NDB stands for New Development Bank. Undrawn or unutilised amounts

4


MACRO ENVIRONMENT Average Oil Price (Brent)(1)

Russian GDP(2)

CPI & PPI(3) 30 Sep’19 / 30 Sep’18 30 Sep’18 / 30 Sep’17

$ / bbl

72.1

(10%) 64.7

14.6% 1.5%

1.2%

3.4%

4.0% (2.4%)

9M18

9M19

9M18

Average Exchange Rate(4)

9M19

EOP Exchange Rate(4)

6% 61.4

65.1

(2%) 65.6

64.4

(8%) 76.2

PPI

Tariffs Indexation

30 Sep’19 31 Dec’18

₽/$

CPI

70.3

Description

Effective Date

Indexation Rate

Regulated natural gas price

Aug 2018 Jul 2019

3.4% 1.4%

Railway transportation tariff

Jan 2019

3.6%

SIBUR effective avg. 9M19/9M18 electricity tariff 9M18 (1) (2) (3) (4)

9M19

₽/$

12.0%

₽/€

Source: Bloomberg Sources: 9M18 - Russian Federal State Statistics Service, 9M19 - Ministry of Economic Development of the Russian Federation (estimate) Source: Russian Federal State Statistics Service Source: Bank of Russia

5


MARKET ENVIRONMENT – MIDSTREAM Oil and FX $

RUB/USD

Midstream Brent

80

Change 9M19 vs. 9M18

$/t

700.0

Naphtha LPG DAF Brest

LPG CIF ARA Natural gas (RHS)

$/000 m3

95.0

600.0

85.0

500.0 +6% (10%)

60

40

75.0

400.0

Comments 

9M19 was marked by lower oil prices pressured by increased oil production in US outpacing OPEC+ cuts.

Production in 3Q19 remained flat - 100.5 mln bbl / day; US Permian basin was key contributor to oil production, resulting in LPG volumes surge

At the end of 3Q19, the rise in oil prices was temporarily caused by attacks on Saudi oil facilities in September, the price has then returned to the same levels

Russia and OPEC agree to extend OPEC+ agreement

Q-o-Q production cut in Saudi Arabia, flat in the US, growth in Russia

Source: Argus, FAS, Bloomberg

(19%) (22%)

200.0

65.0 (25%) 55.0

100.0

45.0 (3%)

300.0

Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19

Change 9M19 vs. 9M18

35.0 Q1/17Q2/17Q3/17Q4/17Q1/18Q2/18Q3/18Q4/18Q1/19Q2/19Q3/19

Comments – EU & US Hydrocarbons 9M19  LPG and naphtha benchmarks posted a much deeper decline compared to oil mainly driven by higher LPG volumes exported from US as a result of growth in oil and APG production and lower demand for naphtha as a feedstock for chemical producers 3Q19  LPG benchmarks further down as a result of significant growth in exports from the US  Naphtha benchmarks down due to the decrease in world oil prices, as well as lower demand (increased competition with LPG)

6


MARKET ENVIRONMENT – PETROCHEMICALS Polypropylene Spread to Naphtha (O&P) $ per tonne

China

Europe*

Change 9M19 vs. 9M18

Polyethylene** Spread to Naphtha (O&P) $ per tonne

China

Change 9M19 vs. 9M18

Europe*

Change 9M19 vs. 9M18

(22%)

400

+1%

600

600

PET-naphtha in China MEG-naphtha in Europe

600

900

900

PET & MEG Spreads to Naphtha (PE&I) $ per tonne

(8%)

(11%)

200 (20%)

300

Comments  China: weaker domestic demand due to trade war and depreciation of the RMB relative to the USD. Expectations of local capacity additions put additional pressure on prices.  Europe: balanced market with significant US imports partially compensated by unplanned local cracker outages.  Russia: more favourable environment in 1H19 resulted from maintenance shutdowns of major Russian producers followed by weaker Q3 pricing dynamics Source: IHS * Spot prices ** PE calculated as average LDPE, LLDPE and HDPE

(66%)

Q3/19

Q2/19

Q1/19

Q4/18

Q3/18

Q2/18

Q1/18

Q4/17

Q3/17

Q2/17

Q1/17

Q3/19

Q2/19

Q1/19

Q4/18

Q3/18

Q2/18

Q1/18

Q4/17

Q3/17

Q2/17

0 Q1/17

Q3/19

Q2/19

Q1/19

Q4/18

Q3/18

Q2/18

Q1/18

Q4/17

Q3/17

Q2/17

Q1/17

300

Comments

Comments

 China: markets remained under pressure on elevated geopolitical and US/China trade issues. Weaker demand and slower inventory build-up from converters exacerbated by price decline expectations.

 PET: in 1H18, supply shortage due to force majeure of major manufacturers and delay in new capacities launch. Commissioning of delayed capacities, reopening of repaired ones and cheaper feedstock resulted in weaker margins continuing through 9M19. Seasonal demand declining since midAugust.

 Europe: economic slowdown and negative customers expectations. European exports were competing to US products  Russia: domestic market dynamics were resilient to global benchmarks fluctuations, yet we observed weakening spread during the period

 MEG: new capacities in US and China, higher imports from US to EU due to higher duties in China; expectations of additional launches in end-2019  Russia: in line with China PET and European MEG with one-month lag 7


3Q 2019 FINANCIAL SUMMARY(1) Average Oil Price(2)

Revenue

4,935

3Q18

4,442

2Q19

Average LPG

3,997

3Q19

Price(2)

Russian Rubles, bln

RUB / bbl

$ / tn

320

2Q19

3Q19

Petchem index (IPEX)(3) Rebased to 100% in 1Q18 110% 90%

(34%)

(6%)

(5%) 156

135

(5%)

129 61

2Q19

3Q19

3Q18

Revenue USD Equivalents, mln (illustrative)

3Q18

404

CapEx(4)

(17%)

3Q18 581

EBITDA

42

40

35

31

33

2Q19

3Q19

3Q18

2Q19

3Q19

CapEx(4)

EBITDA

(16%) 2,385

6%

(33%)

(5%)

(5%) 2,097

1,999

(5%)

930

6%

529

650

620

2Q19

3Q19

503 476

70%

3Q18 Europe

2Q19

3Q19

3Q18

3Q18

2Q19

3Q19

NEA

World

(1) (2) (3) (4)

Values in USD estimated based on average ₽/$ rate of 64.6, 64.6 and 65.5 in 3Q19, 2Q19 and 3Q18, respectively Source: Argus ICIS composite index, comprising 12 chemical products Includes purchase of PPE, intangible assets and other non-current assets

8


9M 2019 SIBUR FINANCIAL SUMMARY(1)

Russian Rubles, bln

Revenue

EBITDA

CapEx(2)

Net Leverage

(5%) 414

395

9M18

9M19

150

6.7

(16%) 126

9M18

Revenue USD Equivalents, bln (illustrative)

Net Operating Cash Flow

9M19

EBITDA

127

9M18

(5%) 88

105

100

1,6x

9M19

9M18

9M19

31 Dec'18

Net Operating Cash Flow

CapEx(2)

2,1x

30 Sep'19

Net Leverage(3)

(10%) 6.1 (21%) 2.4

9M18

(30%)

9M19

9M18

(34%) 1.9

2.1

9M19

9M18

1.4

1.7

9M19

9M18

(1) Values in USD estimated based on average ₽/$ rate of 65.1 and 61.4 in 9M19 and 9M18, respectively (2) Includes purchase of PPE, intangible assets and other non-current assets (3) Net Debt for the purpose of Net Leverage calculation is converted in USD with respective end-of-period ₽/$ exchange rates

(10%)

1.5

1.4x

9M19

31 Dec'18

2.2x

30 Sep'19

9


ADJUSTED EBITDA DYNAMICS Adjusted EBITDA Dynamics %

Segments %

EBITDA margin

EBITDA margin

9M18 RUB 153.0 bln

Consolidated EBITDA RUB 150.2 bln

Olefins& Polyolefins

9M18 9M19

Plastics, Elastomers& Intermediates

9M18 9M19

Midstream

9M18 9M19

5.6

(10.8)

(12%)

(19.1)

(RUB bln)

RUB 135.0 bln

Consolidated EBITDA RUB 126.2 bln

EBITDA by Segment (RUB bln)

36%

0.4

Unallocated

6.0

Adjustments(1)

29.5 35.1

31% 36%

21% 14%

27.1 16.3 95.3 76.2

45% 40%

9M18 (1.8) 9M19 (1.4) 9M18 9M19

2.9 8.9

32%

9M19 (1) Adjusted for SIBUR’s portion of EBITDA of JVs and associates less NCI share of subsidiaries’ EBITDA.

10


CASH FLOWS HIGHLIGHTS FY 2016 CashFlow FlowReconciliation Reconciliation 9M18 Cash RUB bln

FY 2017 CashFlow FlowReconciliation Reconciliation 9M19 Cash RUB bln

Net CF: (29.3)

147.4

(4.8)

(15.8)

Net CF: (2.9)

(104.9)

125.3

(8.5)

(28.3) (100.2)

(18.2) 48.5

Cash as of 31.12.17

OCF(1)

(27.1)

64.6 (9.8)

3.9

19.2

WC Income CapEx(2) Repay- Divi- Interest Other Cash change tax as of ment dends paid 30.09.18 paid of debt paid

14.8

(41.5) (9.4)

(4.9)

11.9

Cash OCF(1) WC Income CapEx(2)Proceeds Divi- Interest Other Cash as of change tax from dends paid as of 31.12.18 paid debt paid 30.09.19

Key Factors Affecting Cash Flows

    

OCF before WC changes decreased by 15.0% due to lower EBITDA Negative changes in working capital were primarily attributable to the increase in recoverable VAT balance Higher income tax paid due to:

 

substantial FX gain recognised in the period and one-off gain following the sale of LPG tank car fleet

utilisation of prepaid taxes in the first quarter of 2018

CapEx in line with approved budget Proceeds from debt as a result of new Eurobond issue in Sep’19 and drawdowns for ZapSib compared to repayment of Eurobonds 2013 in 1Q18

(1) Operating cash flow before working capital changes and income tax paid (2) Includes purchase of property, plant and equipment, intangible assets and other non-current assets.

11


DEBT PROFILE Key Figures RUB bln, except as stated

Overview

30 September 2019

30 June 2019

31 December 2018

30 Sep’19 vs. 30 Jun’19, %

30 Sep’19 vs. 31 Dec’18, %

389.2 115.7

367.6 98.2

332.4 86.6

6% 18%

17% 33%

256.6

251.9

245.8

2%

4%

16.9

17.5

-

(3%)

n/m

11.9

18.9

14.8

(37%)

(20%)

377.3

348.7

317.6

8%

19%

6.2

6.3

7.1

3.6

3.0

3.1

7.5

7.8

8.5

313.7

323.9

391.9

(3%)

(20%)

73.4

90.0

133.8

(18%)

(45%)

Total debt Conventional debt ZapSib related debt

Lease liabilities Cash & cash equivalents Net debt WA loan tenor (years) WA Conventional debt WA ZapSib related debt Available credit lines, incl. Committed

30 September 2019 2.20x

Total debt increased mainly due to:

o o o   

New draw-downs for ZapSib funding Adoption of IFRS 16 from 1 January 2019

Placement of a USD 500 million Eurobonds maturing in 2024 at a 3.45% coupon rate

Net debt increased in line with total debt Net leverage increased to 2.1x from 1.6x Accumulated ZapSib investments of $7.7 bln is significantly higher than the overall debt balance of SIBUR

Loan portfolio structure as of 30 Sep’19

Leverage Ratios Debt / EBITDA

30 June 2019

1.86x

31 December 2018 1.65x

ZapSib Debt/Conventional

Debt / EBITDA (in $)

2.24x

1.93x

1.49x

$/€/₽

Net debt / EBITDA

2.13x

1.76x

1.58x

Long-term/Short-term

Conventional net debt ZapSib related net debt Net debt / EBITDA (in $)

0.69x 1.44x 2.17x

0.54x 1.22x 1.83x

0.37x 1.21x 1.43x

Fixed/Floating Unsecured

69%

31%

57%

27% 93%

38%

16% 7%

62% 100%

12


LIQUIDITY AND DEBT MATURITY PROFILE(1) As of 30 September 2019, ₽ bln

325

uncommitted credit lines

240

122 committed credit lines

59 36

73 cash & cash equiv.

12 Liquidity

30

49

22

17

12

11

11

2025

2026

2027

2028

2 4Q2019 Loans

2020

2021

2022

Eurobonds

2023 RUB bonds

2024

ECA

After 2028

NWF

(1) Items denominated in $ and € are converted into ₽ at ₽/$ and ₽/€ FX rates as of 30 September 2019.

13


APPENDIX

14


O&P (OLEFINS & POLYOLEFINS) SEGMENT HIGHLIGHTS Segment Financial Performance RUB bln

36%

31% 75

78

Key Factors

External Revenue EBITDA

35

30

Revenue: +4% EBITDA: +19% 9M18

9M19

$481 mln

$539 mln

Tobolsk PP Results RUB bln

48%

50%

17 14

Decline in PE prices followed negative dynamics of international benchmarks, partially supported by higher domestic prices for PP in the 1H 2019 as a result of temporary PP supply disruptions. EBITDA increase was driven by higher spreads as feedstock purchase price decline was outpacing the decrease in the benchmark and domestic prices for PE and PP.

EBITDA ($): +12%

Revenue(1) Structure 9M19

EBITDA margin EBITDA

Segment revenue increased on higher sales volumes of PP and PE.

Quarterly EBITDA dynamics

Ethylene Other 7 5

BOPP-film

PP

18

10

9

11

12

12

2Q 19

3Q 19

10 8

% 18 9M18

9M19

PE (LDPE)

52 1Q 18

2Q 18

3Q 18

4Q 18

1Q 19

(1) Represents external revenue

15


PE&I (PLASTICS, ELASTOMERS & INTERMEDIATES) SEGMENT HIGHLIGHTS Segment Financial Performance RUB bln

21%

External Revenue EBITDA EBITDA margin, %

14%

125

117

27

Revenue: (6%) EBITDA: (40%)

16

9M18

9M19

$441 mln

EBITDA ($): (43%)

$250 mln

Key Factors

 

Revenue down due to negative pricing dynamics across the segment Plastics and Organic Synthesis volumes up slightly:

o o  

Higher MEG sales volumes and DOTP production Lower PET and alcohols sales volumes (due to maintenance shutdowns)

Elastomers revenue up on higher sales volumes EBITDA negatively affected by tighter spreads, as well as purchases of TPA instead of paraxylene during capacity expansion project and increased fixed costs in the reporting period

Revenue(1) Structure 9M19 Intermediates and other chemicals

Quarterly EBITDA dynamics 11

Other sales

9

14 1 MTBE and fuel additives Plastics & Organic Synthesis

% 35

8

7

14 36

6

5

5

1Q 19

2Q 19

3Q 19

Elastomers

1Q 18

2Q 18

3Q 18

4Q 18

(1) Represents external revenue

16


MIDSTREAM SEGMENT HIGHLIGHTS Segment Financial Performance RUB bln

45%

40%

174

76

 Revenue: (6%) EBITDA: (20%)

9M18

9M19

$1,551 mln

$1,171 mln

EBITDA ($): (25%)

Price benchmarks on LPG and naphtha were down on:

o o

External Revenue EBITDA EBITDA margin, %

163 95

Key Factors

Higher volumes imported to Europe from US Weaker demand in Europe caused by warmer winter season and logistical constraints

Higher external LPG sales volumes on shift towards higher share of internal naphtha consumption Naphtha sales volumes up as internally produced naphtha was redirected to external sales while purchased naphtha was used at our crackers to take advantage of logistic savings

Revenue(1) Structure 9M19 Naphtha 18

Natural gas

Quarterly EBITDA dynamics 40

Other sales 1

27

32

28

29

28 20

23

% 58

LPG 1Q 18

2Q 18

3Q 18

4Q 18

1Q 19

2Q 19

3Q 19

(1) Represents external revenue

17


OPERATING EXPENSES STRUCTURE AND DYNAMICS OpEx

Key Factors

 Lower feedstock and materials costs driven by lower

RUB bln 70%

76%

o o

+3%

299

290

netbacks largely offset by: > volumes of naphtha (40%) and raw NGL (8%) purchased

external purchases of TPA instead of paraxylene during shutdown as part of capacity expansion project in Blagoveshchensk

financial results of 2018

 Higher electricity tariffs to compensate for capital

 Higher transportation & logistics costs due to transfer of inhouse transportation services outside SIBUR‘s perimeter

9M18 x%

9M19

- % of revenue

Feedstock & Materials 22%

23%

 Higher staff costs (continued) o salaries indexation in mid-2018 o upward staff bonuses revision for the positive

 Higher staff costs o growth in the headcount of NIPIGAZ as a result of the

expenditures of generating companies under the CDA (Capacity Delivery Agreement) modernization program

 Lower purchases of goods for resale driven by lower volumes of MTBE purchases for resale and reduction in NIPIGAZ procurement volumes

expansion of its operations

Transport & Logistics 13%

15%

Staff Costs 8%

9%

Energy and Utilities 7%

8%

Goods for resale 6%

4%

Other 15%

17%

(2%) 91

+9%

+13%

90

+9% 53

9M18

9M19

9M18

+10%

59

9M19

33

36

9M18

9M19

(34%) 24

29

32

9M18

9M19

9M18

60

66

16 9M19

9M18

9M19 18


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