Financial results for Q3 2018

Transcription

1 Financial results for Q Warsaw, 22 November 2018

2 Financial results for Q CIECH Group Management Board 2 Dawid Jakubowicz President of the Management Board An expert with the international operational experience in building the value of companies from the chemical, mining, energy, automotive and new technologies sectors. Since 2010 he has been associated with Kulczyk Investments, where manages the investment portfolio. He worked for the international KPMG Audyt company. He has been a member of the Supervisory Board of CIECH S.A. since June Artur Osuchowski Member of the Management Board He was responsible for the development of services in the scope of strategic projects, reorganization of companies operations and projects related to the financing of operations, as well as the support of direct investments in KPMG Advisory. Previously, he was a senior consultant at Corporate Finance in EY and participated in M&A projects on the capital and strategic market as well as in restructuring projects. Mirosław Skowron Member of the Management Board An expert in the energy and construction industry. He has experience in creating the strategy and organizational transformation, project and risk management. For many years he was associated with energy projects. He held the management functions, including at PeBeKa S.A. (Grupa KGHM), Polimex-Energetyka Sp. z o.o., Energa Elektrownie Ostrołęka S.A., Energa Invest S.A., PGE Elektrownia Opole S.A. Krzysztof Szlaga Member of the Management Board He has the long experience in conducting the complex restructuring processes in the heavy industry. Until 2018 associated with LW Bogdanka S.A. where held the position of the President and earlier Deputy President of the Management Board for Purchases and Investments. Also held the management functions at Ruch S.A., CTL Logistics S.A. Previously associated with the corporate finance and the restructuring projects at Roland Berger.

3 Financial results for Q Q executive summary 3 PLN 883 m revenues (Q1-Q3: PLN m) PLN 132 m adj. EBITDA (Q1-Q3: PLN 472 m) 15.0% adj. EBITDA margin (Q1-Q3: 17.5%) Stable demand in soda ash on the global markets. Growing prices of energy raw materials and furnace fuel, an increase in the price of CO 2 certificates. Implemented planned downtime in Romania. Continuation of the investment of a production plant for sodium bicarbonate and a plant of evaporated salt in Germany. Commencement of business integration with Proplan and the intensification of foreign sales of AGRO products. Higher sales of silicates thanks to the new installation. Dividend payment. Adj. EBITDA - adjusted for untypical one-off events

4 1. Most important events of Q Financial results for Q Outlook 4. Appendix

5 Most important events of Q Market environment: raw materials Coking coal and coke prices [USD/t] 110 Coal prices [USD/t] Coking coal - spot Coking coal - benchmark Coke - ARA ports ARA (cal. 25 GJ/t) PSCMI1 (cal. 25 GJ/t) German Gaspool (GLP) Natural Gas - 1M Forwards [EUR/MWh] CO 2 emission allowances [EUR/t] Source: Bloomberg, IHS, Average value for Q * Australia Premium Coking Coal Average value for Q3

6 Most important events of Q Market environment: currency situation 6 EUR/PLN 4,5 4, The depreciation of PLN and RON, respectively in relation to EUR and USD, has a positive effect on the Group's financial results. 4,1 4, USD/RON Average value for Q3 The Group applies natural hedging and instruments securing it against foreign currency changes, according to the adopted policy. 3,9 3, Average value for Q Annual net exposure of the Group (revenues in foreign currency vs. costs in foreign currency) in 2017: EUR 100 m and USD 60 m.

7 Most important events of Q Business activities 7 Sales diversification on the key Asian markets Effective management of energy raw materials and furnace fuel SODA SEGMENT ORGANIC SEGMENT SILICATES & GLASS SEGMENT SEGMENT Implemented planned overhaul downtime in Romania Further exposure and increase in market shares on foreign markets in PPP, including overseas markets Exploitation of demand for precipitated silica Commencement of soda price negotiations for 2019 Continuation of works on the construction of a new production line of sodium bicarbonate of the pharmaceutical quality in Germany Finalization of the denitrification and desulphurisation investment Focus on sale of high-margin, specialty salt products Continuation of works on the construction of a new factory of evaporated salt in Germany Commencement of business integration with Proplan Preparation for the preseasonal PPP sales Effective management of the raw material situation for production of resins, foams and PPP Implementation of seasonal sales in packaging Continuation of foreign expansion, especially in the North America and Asia

8 1. Most important events of Q Financial results for Q Outlook 4. Appendix

9 Financial results for Q Profit and loss account 9 [PLN m] Q Q yoy Q1-Q Q1-Q yoy Revenue % % Gross profit on sales % % Gross profit on sales margin 18.8% 23.4% -4.7 p.p. 21.5% 24.3% -2.8 p.p. EBITDA % % EBITDA margin 14.8% 22.2% -7.3 p.p. 17.9% 21.5% -3.6 p.p. Adj. EBITDA % % Adj. EBITDA margin 15.0% 21.3% -6.4 p.p. 17.5% 21.3% -3.8 p.p. EBIT % % EBIT margin 6.8% 14.7% -7.9 p.p. 10.6% 14.6% -4.0 p.p. Net result % % Net margin 3.0% 10.2% -7.1 p.p. 7.4% 9.8% -2.4 p.p. Adj. EBITDA - adjusted for untypical one-off events

10 Financial results for Q Results vs. consensus 10 [PLN m] Q Consensus Q Range of forecasts Revenues EBITDA EBITDA margin 14.8% 15.8% - Adj. EBITDA Adj. EBITDA margin 14.9% 15.8% - EBIT EBIT margin 6.8% 8.1% - Net result Net margin 3.1% 5.6% - Consensus PAP based on 8 analysts forecasts

11 Financial results for Q Geographical structure of sale markets 11 Revenues Q Revenues Q % 8% 5% 9% 42% 39% 42% 43% 30% increase in revenue from sales to Asia by in Q (yoy) Poland European Union (excluding Poland) Other European Countries Asia Africa Other regions

12 Financial results for Q Soda segment 12 Q1 Q2 Q3 Q4 Revenue [PLN m] -0,3% Adj. EBITDA [PLN m] ,2% Q3: the upside yoy stable revenues due to the sustained demand for soda on global markets; higher prices on Asian markets; higher energy result in CSD; increase in prices of dry salt. Q3: the downside yoy lower than expected volumes of soda ash production due to planned production downtime in CSR and minor failures on production installations - impact on production costs; higher prices of energy raw materials and furnace fuel and CO 2 certificates; lower sales of salt. Comments yoy

13 Financial results for Q Organic segment 13 Q1 Q2 Q3 Q4 Revenue [PLN m] +13,1% Adj. EBITDA [PLN m] 10,9 20,2 +25,6% 13,7 15,6 21,2 16,3 Q3: the upside yoy AGRO - consolidation of Proplan's results; resins - sales increase in epoxy resins; foams - stable business. Q3: the downside yoy AGRO - lower sales of plant protection products: PPP market decline in Poland by 6.4% (in glyphosate -29%, in herbicides -9.5%)*, and drought in Australia; resins - growing prices of raw materials Comments yoy Source: PAMS

14 Financial results for Q Silicates & glass segment 14 Q1 Q2 Q3 Q4 60,6 Revenue [PLN m] +5,3% 63,8 Adj. EBITDA [PLN m] 10,6-6,7% 9,9 Q3: the upside yoy silicates - higher volumes of sales: increase in demand, mainly related to the development of precipitated silica industries; packaging - higher prices as a result of optimisation of the product portfolio, and high sales in relation to the high season in lanterns. Q3: the downside yoy higher raw material costs (gas and energy). 58,2 57,4 8,9 11,0 48,9 62,9 6,7 7, Comments yoy

15 Financial results for Q Transport segment 15 Q1 Q2 Q3 Q4 Revenue [PLN m] Adj. EBITDA [PLN m] Q3: the upside yoy focus on transport handling within the Group. Q3: the downside yoy lower volume of transport outside the Group due to moving of rolling stock to transport handling within the Group. +16,8% 36,0 30,8 37,6 31,7 29,5 34,8 3,1 5,3 2,2-28,9% 2,2 2,1 4, Comments yoy

16 Financial results for Q Cash flow - Q1-Q [PLN m] Q1-Q Q1-Q Adj. EBITDA Working capital Interest paid Taxes paid Others Cash flow from operating activities CAPEX Acquisition Other Cash flow from investment activities Free cash flow Debt financing Dividends Cash flow from financial activities Total net flow Closing balance of cash Simplified Operating activities: change in working capital mainly as a result of increased revenues, and as a result of this, higher level of receivables, less use of factoring compared to December 2017, increase in stocks (mainly raw materials and finished products in AGRO). Investment activities: expenses related to the implemented investment program in the CIECH Group at a higher level than in the previous year; other expenses mainly for the acquisition of Proplan (PLN 160 m), reduced by the proceeds from the sale of fixed assets. Financial activities: paid dividend (PLN 395 m) and surplus of loan funds.

17 Financial results for Q CAPEX - Q1-Q CAPEX* [PLN m] Proplan Development Environmental Stay in business R&D Other Q1-Q Q1-Q *According to statement of cash flows

18 Financial results for Q Debt 18 Net debt/ Adj. EBITDA , , ,7 2, , , , ,0 Net debt/ Adj. EBITDA ratio at a higher level than at the end of Net debt has changed mainly as a result of higher interest debt and lower cash balance (dividend payment, the acquisition of Proplan) Q Net debt [PLN m] Net debt/adj. EBITDA [PLN thousand] At the end of Q At the end of 2017 Debt ratio 57.2% 53.0% Long-term debt ratio 34.6% 29.5% Equity capital debt ratio 133.4% 112.6% Equity to assets ratio 42.8% 47.0% Gross financial liabilities Net financial liabilities Methodology of calculated ratios consistent with the financial statement

19 1. Most important events of Q Financial results for Q Outlook 4. Appendix

20 Outlook Market and prices of soda ash in Growth potential of soda ash prices in 2019 due to the favorable market environment In the following years demand for soda ash will grow Global demand and production capacity of soda ash* [m tons] Expected maintenance of a high growth rate of the global economy, also in 2019 (according to the IMF, the GDP dynamics at 3.7% level) Indian Subcontinent: +4.5%* Africa: +3.1%* CIECH is present in the fastest growing markets Central Europe: +2.1%* Middle East: +1.9%* 58,1 64,4 67,5 73,4 Stable increases in the business of soda ash recipients globally Flat glass: +2.1%* Packaging glass: +1.8%* Detergents: +1.6%* Chemical industry: +1.5%* Other glass: +2.3%* Metallurgy: +1.9%* Potential further closure of Chinese soda factories due to environmental policy - Chinese exports may still be constrained (in 2017 it amounted to 1.5 m t/y, which means a decrease by 23% y/y) Global demand Global capacity Persisting, booming soda ash market, despite new production capacities in Turkey Source: IHS, *CAGR No significant additional production capacity projects are planned in the coming years, excluding China and India

21 Outlook Continuation of the key investments 21 Sodium bicarbonate of pharmaceutical grade The possibility of producing the highest quality (for dialysis) and increasing the capacity of sodium bicarbonate with pharmaceutical quality (+50 t/y) New salt products Extension of the product portfolio with salt for dishwashers (granules) and salt licks for animals Evaporated salt in Germany Increase in production capacities (+450 t/y) by high-margin products, business expansion in Western European markets The desulphurization and denitrification investment in Janikowo Obtaining the appropriate NOx and SOx emission levels First effects: H First effects: Q First effects: 2020 First effects: Q Registration processes and product development in the area of plant protection products New generic and innovative products, an increase in foreign exposure, an access to new active substances R&D activities in the field of resins Development of specialized products precisely tailored to the customer needs, developed as part of joint projects, the comprehensive offer of resins and gel coats for the growing industries First effects: Q First effects: Q Selected investments carried out by the CIECH Group

22 1. Most important events of Q Financial results for Q Outlook 4. Appendix

23 Appendix Profit and loss account 23 [PLN thousand] Q1-Q Q1-Q32017 yoy Q Q yoy Sales revenues % % Cost of sales % % Gross profit/(loss) on sales % % Other operating income % % Selling costs % % General and administrative expenses % % Other operating expenses % % Operating profit/(loss) % % Financial income % Financial expenses % % Net financial income/(expenses) % % Profit/(loss) before tax % % Income tax % % Net profit/(loss) on continuing operations % %

24 Appendix Results by segments - Q1-Q3 24 [PLN thousand] Soda segment Organic segment Silicates and glass Transport segment Other operations Corporate functions Eliminations TOTAL Q1-Q Total sales revenues Cost of sales Gross profit /(loss) on sales Operating profit /(loss) Profit /(loss) before tax Amortization/depreciation EBITDA Adjusted EBITDA Q1-Q Total sales revenues Cost of sales Gross profit /(loss) on sales Operating profit /(loss) Profit /(loss) before tax Amortization/depreciation EBITDA Adjusted EBITDA

25 Appendix Results by segments - Q3 25 [PLN thousand] Soda segment Organic segment Silicates and glass Transport segment Other operations Corporate functions Eliminations TOTAL Q Total sales revenues Cost of sales Gross profit /(loss) on sales Operating profit /(loss) Profit /(loss) before tax Amortization/depreciation EBITDA Adjusted EBITDA Q Total sales revenues Cost of sales Gross profit /(loss) on sales Operating profit /(loss) Profit /(loss) before tax Amortization/depreciation EBITDA Adjusted EBITDA

26 Appendix Abbreviated balance sheet 26 [PLN thousand] 30 September September 2018 ASSETS Total non-current assets Total current assets Total assets EQUITY AND LIABILITIES Equity attributable to shareholders of the parent Non-controlling interests (2 951) Total equity Total non-current liabilities Total current liabilities Total liabilities Total equity and liabilities

27 Appendix Working capital 27 [PLN thousand] 30 September September Current assets. including: Inventory Trade receivables and services and advances for deliveries Cash and cash equivalents and short-term investments Adjusted current assets (1-2) Current liabilities. including: Trade liabilities and advances taken Short-term credits and other current financial liabilities* Adjusted current liabilities (4-5) Working capital including short-term credits (1-4) Working capital (3-6) * Other current financial liabilities include current bond liabilities. current finance lease liabilities + current derivative liabilities + factoring liabilities.

28 Modern and diversified chemical group on a stable path of growth CONTACT FOR INVESTORS: Małgorzata Młynarska Management Board Representative for Investor Relations , malgorzata.mlynarska@ciechgroup.com This document has been prepared solely for informational purposes. It includes only summary information, is not exhaustive, and may not be used as a sole basis for any assessment or analysis. CIECH S.A. makes no guarantees (explicit or implicit) regarding information presented herein and such information, including forecasts, estimates and opinions, should not be unduly relied upon. CIECH S.A. does not accept any responsibility for possible mistakes, omissions or irregularities found herein. The document is based on sources of information which CIECH S.A. deems to be reliable and accurate, however, it does not guarantee them to be exhaustive nor to fully reflect the actual situation. This document does not constitute an advertisement or a public offer of securities. It may include forward-looking statements that involve investment risks or uncertainties and may significantly differ from actual results. CIECH S.A does not accept any responsibility for consequences of decisions made based on this document. The responsibility lies exclusively with the party using the document. This document is protected by the Copyright and Related Rights Act. Copying, publishing or distributing it requires prior written consent of CIECH S.A.