Q Operational and Financial Results. 10 June 2014

Transcription

1 Q Operational and Financial Results 10 June 2014

2 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. 2

3 AGENDA 1. Q1 2014: Key Developments and Highlights 2. Operational and Financial Results 3. Questions and Answers 4. Appendices 3

4 KEY HIGHLIGHTS External Environment Q Market environment was generally challenging in Q1 14 Nearly stagnancy in Russian economy; marginally lower GDP growth in China; signs of recovery in EU and US GDP Lower prices for oil and majority of derivative products (in USD terms) Persistently challenging market environment for synthetic rubbers Indexation of natural gas prices Growth in average Q1 14 price of 14.9% y-o-y Depreciation of RR against USD and EUR Average RR/USD rate up by 14.9% y-o-y Average RR/EUR rate up by 19.3% y-o-y One-off Factors Q March 2014: acquisition of a 49% stake in Yugragazpererabotka RR 52,773 million in non-cash gain Increase in debt to fund the transaction Unscheduled shutdown at steam cracker in Kstovo and rapid recovery SIBUR: Key Developments 2014 YTD Redefinition of commercial contracts with Rosneft Significant progress on investment programme implementation Second GFU in Tobolsk launched Purovsk Pyt-Yakh Tobolsk pipeline at advanced stage, certain sections launched PET capacity expansion completed, BOPP-films production line launched JV agreement with Gazprom neft and Titan Group based on Omsk Polypropylene Plant (Poliom) Agreement on potential investment in Ust-Luga transshipment facility between SIBUR, RDIF, Gazprombank and a group of foreign investors Tobolsk-Polymer increase in capacity utilisation Divestment of PVC cable compounds production 4

5 Q KEY OPERATIONAL AND FINANCIAL HIGHLIGHTS APG processing volumes increased by 6.0% y-o-y Raw NGL fractionation volumes increased by 6.8% y-o-y Operational Results Natural gas sales volumes decreased by 17.8% y-o-y NGLs sales volumes increased by 40.5% y-o-y Petrochemical products sales volumes decreased by 6.2% y-o-y Revenue increased by 20.9% to RR 80.0 bln EBITDA increased by 10.1% y-o-y to RR 22.6 bln, for an EBITDA margin of 28.2% Net profit surged 263.1% y-o-y to RR 56.8 bln Financial Results Adjusted net profit (1) decreased by 40.2% to RR 7.9 bln Cash flow from operations decreased by 27.0% y-o-y to RR 16.9 bln CapEx decreased by 36.4% y-o-y to RR 13.7 bln Net Debt to EBITDA at 1.48x as of 31 Mar 14 vs 1.17x as of 31 Dec 13 Notes: (1) Net profit adjusted for non-cash charge related to the equity-settled share-based payment plans and the non-cash gain on acquisition and deconsolidation of OOO Yugragazpererabotka. 5

6 PROGRESS ON INVESTMENT PROGRAMME 2014 YTD Project Second GFU in Tobolsk Description Expansion of raw NGL fractionation capacity to 6.6 million tonnes from 3.8 million tonnes per annum Fractionation unit and certain infrastructure completed and launched CapEx: RR 14 bln Purovsk Pyt-Yakh Tobolsk Pipeline Construction at advanced stage Launch of certain sections in 2014, entire pipeline to be launched in 2015 Overall completion status 93% as of 1 Jun 14 CapEx: ~RR 63 bln (RR 45.8 bln spent as of 31 Mar 14) Expansion of BOPP-film production in Novokuybyshevsk Launch of new BOPP-film production line with the total annual nameplate capacity of 30,500 tonnes CapEx: RR 1.9 bln Expansion of PET production in Blagoveshchensk Annual nameplate PET production capacity of 210,000 tonnes CapEx: RR 1.9 bln 6

7 AGENDA 1. Q1 2014: Key Developments and Highlights 2. Operational and Financial Results 3. Questions and Answers 4. Appendices 7

8 MACRO ENVIRONMENT Russian GDP Growth (1) Consumer Price Index (y-o-y) (1) Producer Price Index (y-o-y) (1) 0.8% 0.9% (2) 7.0% 6.9% 3.0% 5.2% Average Exchange Rate (3) RR / USD % Exchange Rate (3) RR / USD 9.0% 2.3% Effective Average Electricity Tariffs RR per kw / hour % 31 Dec'12 31 Mar'13 31 Dec'13 31 Mar'14 Source: (1) Russian Federal State Statistics Service (2) Preliminary Data (3) CBR 8

9 MARKET ENVIRONMENT (1) 000 USD per tonne except as stated (avg. for the period) 000 RR per thousand cubic metres of natural gas (avg. for the period) % (4.2%) Energy Products % (3.2%) 50.0 (3.8%) 30.0 Naphtha LPG CIF ARA (large) MTBE Natural gas Brent, USD per bbl (RHS) Basic Polymers 000 USD per tonne (avg. for the period) % % PP LDPE Synthetic Rubbers Plastics & Organic Synthesis 000 USD per tonne (avg. for the period) 000 USD per tonne (avg. for the period) (21.5%) (32.4%) (11.9%) (3.2%) (27.9%) Natural rubber (USD) Styrene-butadiene rubber ethylhexanol Butadiene Butyl rubber MEG Styrene PET Source: Argus, Platts, Bloomberg, ICIS, Chemease, Malaysian Rubber Board, Federal Tariff Service of Russian Federation Notes: (1) For detailed market data statistics please refer to Appendix. Prices quoted in EUR are converted to USD at average EUR / USD FX rates for the respective periods. +2.2% (1.7%) (6.0%) (10.4%) (16.6%) Expandable polystyrene Butyl acrylate 9

10 SIBUR FINANCIAL SUMMARY Revenue EBITDA Adjusted Net Profit % 80.0 EBITDA margin, % 31.0% 28.2% Adjusted margin, % 20.0% 9.9% % (40.2%) 7.9 Operating Cash Flow Cash Used in Investing Activities (1) Net Debt / EBITDA 23.1 (27.0%) % x 1.48x 31 Dec'13 31 Mar'14 (1) Includes CapEx and M&A. 10

11 REVENUE STRUCTURE AND DYNAMICS Revenue Total Energy Products Petrochemical Products Other Revenue % % 49.6 (0.3%) (28.7%) Revenue Split by Product Intermediates & other Q chemicals Processing services, Synthetic rubbers trading & other sales Basic polymers 9 LPG Plastics & 24 organic 12 % synthesis products 4 Raw NGL Naphtha MTBE & other fuels Natural gas Europe Revenue By region Split by Region Q Asia CIS Other Russia %

12 REVENUE DYNAMICS BY PRODUCT GROUP LPG Naphtha Natural gas MTBE Raw NGL +45.1% % (1.9%) (21.5%) % 2.9 Basic Polymers Synthetic Rubbers Plastics & Organic Synthesis Intermediates & Other Other Revenue % (21.3%) % (16.8%) 4.3 Trading and other sales Sales of processing services (28.7%)

13 ENERGY PRODUCTS: SALES VOLUMES AND PRICE DYNAMICS 682 LPG Sales volumes, 000 tonnes Change in effective avg. selling price, % +19.6% +21.3% 828 Naphtha Sales volumes, 000 tonnes Change in effective avg. selling price, % % % 530 3,524 Natural Gas Sales volumes, mln cubic metres Change in effective avg. selling price, % +19.3% (17.8%) 2,898 MTBE Sales volumes, 000 tonnes Change in effective avg. selling price, % +1.9% 139 (23.0%) Raw NGL Sales volumes, 000 tonnes Change in effective avg. selling price, % +19.1% +14.7% 180 Key Factors Higher sales volumes of LPG and naphtha due to expanded trading activities following the launch of Ust-Luga transshipment facility growth in production following the launch of second GFU in Tobolsk Growth in raw NGL sales on higher APG processing volumes; higher purchases from 3 rd parties Decrease in natural gas sales volumes due to substantial inventory sale in Q1 13 Higher LPG, naphtha and raw NGL selling prices despite moderate decline in international market prices...compensated by substantial RR depreciation Increase in natural gas selling price due to a 14.9% y-o-y indexation of regulated prices 13

14 PETROCHEMICALS: SALES VOLUMES AND PRICE DYNAMICS Basic Polymers Synthetic Rubbers Key Factors Sales volumes, 000 tonnes Change in effective avg. selling price, % % +35.3% 139 Plastics & Organic Synthesis Sales volumes, 000 tonnes Change in effective avg. selling price, % +7.0% 183 (4.4%) 175 Sales volumes, 000 tonnes Change in effective avg. selling price, % Intermediates & Other 136 (7.3%) (15.1%) Sales volumes, 000 tonnes Change in effective avg. selling price, % +23.9% (32.9%) 91 Basic polymers: Higher sales volumes due to growth in PP production following Tobolsk-Polymer launch and expanded PP trading activities Higher LDPE export prices following growth in international market prices Synthetic rubbers: Decrease in sales volumes primarily due to lower commodity rubbers production partially compensated by lower inventory accumulation Continued downward pricing trend for all rubber grades Plastics & organic synthesis: Lower sales volumes largely due to decrease in glycols production as a result of unscheduled shutdown of steam cracker in Kstovo deconsolidation of Plastic and decrease in production pending divestment of PVC cable compounds production at SIBUR-Neftekhim compensated by higher PET and BOPP-film production following capacity expansion Decline in market prices mitigated by substantial RR depreciation Intermediates & other chemicals: Lower sales volumes due to unscheduled shutdown of steam cracker in Kstovo Caprolactam decommissioning 14

15 NET OPERATING EXPENSES STRUCTURE AND DYNAMICS Y-o-Y dynamics 73% 78% % Increase in goods for resale purchases on expanded trading activities following the launch of Ust-Luga transshipment facility Higher D&A expenses due to commissioning of new production facilities (Tobolsk-Polymer, Ust-Luga transshipment terminal) amortisation of assets and supply contracts following Yugragazpererabotka consolidation in Mar 14 Higher feedstock & materials on higher NGLs and APG purchase prices Increase in processing services due to Yugragazpererabotka deconsolidation from Mar 13 until Mar 14 Decrease in energy & utilities expenses due to Yugragazpererabotka deconsolidation from Mar 13 until Mar 14 Decrease in staff costs due to lower bonus provisions headcount optimisation Net Operating Expenses (1) 62.6 Structure Repairs & Processing maintenance of 3 rd parties Depreciation & amortisation Staff costs Energy & utilities Key Factors Rent 3 % Feedstock & materials 16 Transportation & logistics Q Goods for resale Goods for Resale 2% 13% % Feedstock & Materials 26% 24% % Energy & Utilities 12% 9% 7.8 (8.6%) 7.1 Depreciation & Amortisation 4% 7% % Processing Services 0% 2% 1.3 Staff Costs 11% 8% (7.9%) Note: (1) Operating expenses before equity-settled share-based payment plans. (2) Transportation, logistics and rent. x% % of revenue 15

16 CASH FLOW STATEMENT HIGHLIGHTS Key Developments Net cash from operating activities decreased by 27.0% y-o-y primarily due to negative impact from WC changes partially compensated by higher EBITDA Net cash used in investing activities increased by 61.0% y-o-y on 1 st tranche payment for the acquisition of Rosneft s 49% stake in Yugragazpererabotka contributions to the share capital of RusVinyl and Yuzhno-Priobskiy GPP... despite decrease in CapEx by 36.4% y-o-y Net cash from financing activities increased six times y-o-y primarily due to new borrowings to fund the acquisition of a 49% stake in Yugragazpererabotka RR mln, except as stated Three months ended 31 March Change % Net cash from operating activities 16,860 23,105 (27.0% ) Changes in working capital (3,122) 3,515 n/m Net cash used in investing activities, including (35,627) (22,131) 61.0% Acquisition of interest in subsidiaries, net of cash acquired (20,547) - n/m PPE (13,682) (21,507) (36.4%) Additional contribution to the share capital of joint ventures (1,575) (500) 215.0% Net cash from financing activities 22,135 3, % Effect of exchange rate changes on cash and cash equivalents Key Highlights 152 (93) n/m Net decrease in cash and cash equivalents 3,520 4,624 (23.9%) 16

17 DEBT STRUCTURE AND MATURITY PROFILE Debt Maturity Profile Mar < 1 y 1-2 y 2-5 y > 5 y Key Highlights Total debt increased by 30.8% primarily due to new borrowings to fund the acquisition of a 49% stake in Yugragazpererabotka revaluation of loans denominated in foreign currencies Net debt increased by 29.7% y-o-y As of 31 Mar 14, all of the debt was unsecured, except for RR16.5 bln outstanding under the Tobolsk-Polymer project finance facility In Apr 14 SIBUR entered into a 2-year RR 27 bln credit facility to refinance short-term debt Debt Currency Split USD 80 % 17 RR 3 31 Mar 14 EUR Notes: (1) Interest represents accrued interest, i.e. includes interest expense and capitalised interest. (2) Unaudited data Key Figures, except as stated 31 Mar Dec 2013 Change, % Debt % Cash & cash equivalents % Net debt % Average loan tenor (years) Available credit lines (14.8%) Debt / EBITDA 1.62x 1.27x Net debt / EBITDA 1.48x 1.17x EBITDA / Interest (1) 18x 17x, except as stated 31 May 2014 (2) 31 Mar 2014 Change, % Total debt % Maturity profile Short-term (38.8%) Long-term % Currency split USD (13.3%) RR % EUR % Credit lines % Committed % Uncommited % 17

18 FINANCIAL CALENDAR 2014 Event Date FY 2013 Operational and Financial Results 18 March 2014 Q Operational and Financial Results 10 June 2014 Q2 and H Operational and Financial Results Week of 15 September 2014 Q3 and 9M 2014 Operational and Financial Results Week of 8 December 2014 JUN 2014 M T W T F S S SEP 2014 M T W T F S S DEC 2014 M T W T F S S

19 Questions and Answers 19

20 Appendix 20

21 SIBUR AND ROSNEFT NEW FRAMEWORK FOR LONG-TERM COOPERATION New Contracts Increase in guaranteed APG supplies to 10 bcm p.a. from 6.6 bcm p.a. Increase in guaranteed sales of natural gas (1) Tenors for APG supplies and natural gas sales extended to 2032 (inclusive) from 2026 Rosneft s commitment to NGLs content in APG supplied to Yugragazpererabotka Acquisition of Control in Yugragazpererabotka Acquisition of a 49% interest in Yugragazpererabotka from Rosneft Group completed on 6 March 2014 Deal value of USD bln in cash USD bln paid in March 2014 USD 1 bln to be paid by 6 March 2015 Strategic Importance for SIBUR SIBUR gains full control over 3 GPPs with processing capacity of 13.4 bcm p.a. and related infrastructure Cementing long-term access to feedstock Operational and strategic synergies Impact on SIBUR Financials Consolidation as a wholly owned subsidiary from 6 March 2014 Overall improvement in SIBUR results Non-cash gain on equity interest (to be excluded from dividend base) Notes: (1) Natural gas produced at Nizhnevartovskiy GPP and Belozerniy GPP. 21

22 YUGRAGAZPERERABOTKA TRANSACTION IMPLICATIONS Pre Transaction Post Transaction Impact on SIBUR APG SIBUR purchases 51% of volumes supplied to Yugragazpererabotka GPPs, primarily from Rosneft Rosneft is responsible for the remaining 49% of volumes SIBUR purchases 100% of volumes supplied to Yugragazpererabotka GPPs, primarily from Rosneft Rosneft sells all volumes to SIBUR APG purchasing volumes and costs Raw NGL SIBUR obtains 51%, purchases 49% from Rosneft Rosneft obtains 49%, sells 49% to SIBUR SIBUR retains 100% Raw NGL production Raw NGL purchasing volumes and costs Natural Gas SIBUR obtains 51%, sells 51% to Rosneft Rosneft obtains 49%, purchases 51% from SIBUR SIBUR obtains 100%, sells all volumes from Nizhnevartovskiy and Belozerniy GPPs to Rosneft Natural gas production Sales volumes and revenue from sales of natural gas P&L (1) SIBUR pays to Yugragazpererabotka a processing fee reflected in OpEx as 3 rd party processing 100% OpEx consolidated OpEx (other than feedstock) Processing fee Non-cash gain on equity interest (2) CF BS SIBUR finances its share of Yugragazpererabotka CapEx via loans issued / investments in JVs SIBUR s 51% interest is accounted for as Investment in JV 100% CapEx consolidated CapEx Loans issued / investments in JVs 100% consolidated PP&E, goodwill, other non-current assets Accounts payable, total debt Notes: (1) Items other than revenue and feedstock costs. (2) For the purpose of dividends calculation net profit will be adjusted for this charge. 22

23 YUGRAGAZPERERABOTKA ACQUISITION: IMPLICATION ON SIBUR FINANCIALS Following the acquisition of control over Yugragazpererabotka, the Group has reflected the following transactions in its IFRS: Increase in PPE value in balance sheet Increase in intangible assets related to supply contracts of RR 115,816 Non-taxable gain resulted in higher deferred income tax liabilities RR 52,773 gain was recognised due to revaluation of SIBUR s previously held at historical cost 51% interest in Yugragazpererabotka Total cash consideration of RR 55,733 split between: cash outflow of RR 20,547 (1 st tranche payment) an increase of RR 35,185 in trade and other payables in balance sheet Increase in borrowings to fund the transaction Balance Sheet As of 31 Mar 14 As of 31 Mar 13 RR millions Assets Non-current assets Property, plant and equipment 313, ,198 Other intangible assets 119,926 4, Total non-current assets 493, ,887 Current assets Total current assets 75,497 68,544 Liabilities Non-current liabilities Deferred income tax liabilities 31,053 5, Total non-current liabilities 135, ,682 Current liabilities Short-term debt and current portion of long-term debt 68,551 42,743 Trade and other payables 71,566 36,458. Total current liabilities 143,208 81,480 Equity 295, ,154 P&L RR millions Q1 14 Q1 13 Revenue 80,002 66,184 Total OpEx (66,546) (48,435) Operating profit 13,456 17,749 Gain on acquisition of subsidiary 52, Profit before income tax 59,026 18,477 Income tax expense (2,252) (2,843) Profit for the reporting period 56,774 15,634 Cash Flow Statement RR millions Q1 14 Q1 13 CFO 16,860 23,105 CFI (35,627) (22,131) Acquisition of interest in subsidiaries, net of cash acquired (20,547) CFF 22,135 3,743 Net proceeds from debt 21,577 4, Net increase in cash and cash equivalents 3,520 4,624 Cash and cash equivalents, eop 11,468 18,194 23

24 EQUITY-SETTLED SHARE-BASED PAYMENT PLANS Increase in Management s Stake On 28 June 2013, the Group s majority shareholders decreased their stake in the Group's share capital in favour of the Group s current and former directors and key management increase in the Group s directors and key management s stake to 17.5% from 5.5% grant of equity-settled share-based payment plans Management motivation for long-term employment Transaction has no impact on the Group s operations and financial results Payment Plans The programme comprises two plans with different vesting conditions: First Plan: granted shares vested to each participant in 5 tranches of 20% of the total shares granted conditional on their employment equal non-cash charges expected to be recorded on quarterly basis through H1 14 afterwards the first tranche will be completed and the quarterly charge will decrease Second Plan: granted shares immediately vested no future charges According to IFRS 2 Share-Based Payment the Group has to: recognise current and past service costs associated with the payment plans as non-cash operating expenses in P&L record the corresponding amounts as an increase in equity in balance sheet There are no current or future cash payments or liabilities under these plans P&L IFRS Treatment Q1 14 Q1 13 Revenue 80,002 66,184 Net OpEx (62,646) (48,435) Equity-settled sharebased payment plans (3,900) - Total OpEx (66,546) (48,435) Operating profit 13,456 17, Income tax expense (2,252) (2,843) Profit for the reporting period 56,774 15,634 Balance Sheet As of 31 Mar 14 As of 31 Mar 13 Equity Ordinary share capital 21,784 21,784 Share premium 9,357 9,357 Equity-settled sharebased payment plans 11,794 - Retained earnings 252, ,235 Total equity attributable to the Group s shareholders 294, ,376 24

25 MARKET PRICES Energy Products Basic Polymers Rebased to 100 Rebased to % 120% 100% 80% 100% 60% 40% Brent LPG CIF ARA (large) MTBE Naphtha CIF NWE Natural gas 80% LDPE CFR China film, Spot PP rafia China Main Port, Spot Synthetic Rubbers Plastics & Organic Synthesis Products Rebased to % Q Q Rebased to % Q Q % 120% 80% 60% 100% 40% 20% 0% Styrene butadiene rubber Butadiene Styrene Natural Rubber Butyl rubber 80% 60% Polystyrene, EPS block FOB Korea MEG Contract, FD NWE T2 2-ethylhexanol Spot, FD NWE Butyl acrylate Spot, FD NWE PET FOB China, Spot Source: Argus, Platts, Bloomberg, ICIS, Malaysian Rubber Board, Chemease, Federal Tariff Service of Russian Federation 25

26 MARKET PRICES (CONT D) PRODUCT QUOTE SOURCE ENERGY PRODUCTS Oil Brent (USD per bbl) Bloomberg Naphtha Naphtha CIF NWE Argus LPG LPG CIF ARA (large) Argus MTBE MTBE FOB Rotterdam / FOB ARA Platts Natural gas Natural gas wholesale price (for population) Federal Tariff Service of Russian Federation BASIC POLYMERS LDPE LDPE CFR China film, Spot ICIS PP PP rafia China Main Port, Spot ICIS SYNTHETIC RUBBERS Natural rubber NR SMR 20 Malaysian Rubber Board Butyl rubber IIR 1751 (yanshan) Chemease Butadiene Butadiene Contract, FD NWE ICIS Styrene-butadiene rubber ESBR 1500 Spot, FD NWE ICIS Styrene Styrene Spot, FOB Rotterdam ICIS PLASTICS & ORGANIC SYNTHESIS PRODUCTS PET PET FOB China, Spot ICIS Monoethylene glycol (MEG) MEG Contract, FD NWE T2 ICIS 2-ethylhexanol (alcohol) 2-ethylhexanol Spot, FD NWE ICIS Butyl acrylate Butyl acrylate Spot, FD NWE ICIS Expandable polystyrene Polystyrene, EPS block FOB Korea ICIS 26