H Operational and Financial Results. 7 August 2018

Transcription

1 H Operational and Financial Results 7 August 2018

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 H HIGHLIGHTS OPERATIONS SIBUR Key Developments Revenue at 258 bln (up 22% y-o-y) / $4.3 bln (up 19% y-o-y) Adj. EBITDA at 94 bln (up 19% y-o-y) / $1.6 bln (up 16% y-o-y) Double-digit growth in revenue and EBITDA despite maintenance shutdowns in H at our key production sites All-times high LTM EBITDA at 175 bln / $3.0 bln Injury frequency (LTIF) down by 25% year-on-year INVESTMENTS ZapSib progress advanced to 84% from 71% as of 2017 year-end ZapSib financing totaled 354 bln since the project launch mln tn Raw NGL fractionation +6% SIBUR Key Results (H1 2018) 000 tn Polyolefins (1) +5% Petchem sales volumes Plastics & Elastomers (1%) CORPORATE +22% 258 bln +19% 89 bln +19% 94 bln Amur GCC update: final agreement with Gazprom for ethane supplies Rating updates: Fitch changed outlook for BB+ rating from negative to positive Investment grade from Moody s at Baa3 with stable outlook Revenue EBITDA Adj. EBITDA (2) % 1.7x Net Debt/EBITDA 0.27 EBITDA margin Net debt / EBITDA (3) LTIF (1) PP and PE. (2) Including SIBUR s portion of JV EBITDA. (3) In RUB terms. 3

4 ZAPSIB PROGRESS UPDATE Overall execution progress - 84% as of 30 Jun 18 vs 71% as of 31 Dec 17 Progress by stage as of 30 Jun 18: Engineering Procurement Construction Progress Update 76% 100% 97% Progress by major units: Steam cracker 86% PE unit 86% PP unit 93% Engineering works for the processing units and off-plot facilities have been completed Pre-commissioning works began on ethylene cracker and PP units Critical off-site facilities have been commissioned 354 bln (c.$6.0 bln (1) ) invested as of 30 Jun 18 Project Residual Budget for (2) $ c. $ 3.1 bln 40% 35% 25% Residual Budget 50% 10% 40% SIBUR own funds VEB (3) ECA (4) Funding Sources Preparations for the Launch & Distribution 92% of operational staff mobilised. Around 80% of ZapSib operational team will be sourced out of internal staff Pre-marketing initiatives covered more than two thousand customers in Russia, CIS, Turkey, Europe and Asia Logistics upgrade in process: Platform in Tobolsk: 81% progress Hub in Kaluga region (Karl Schmidt): 34% progress; trial operations launched Please follow the link to see the video of the construction site: (1) Calculated using annual average /$ exchange rates. (2) Data as of 30 June Numbers and respective percentages calculated based on exchange rates as of 30 June 2018: /$ at 62.8, / at (3) Cash balances as of 30 June VEB stands for Vnesheconombank. (4) Undrawn or unutilised amount of ECA (Export Credit Agency). 4

5 INTEGRATED BUSINESS MODEL PROVIDES RESILIENT PERFORMANCE AND STABLE MARGINS 109 (8%) 100 (47%) % (17%) % (17%) % (6%) % June 2018 LTM (2) 29% 32% (1) 36% 34% 35% 35% +7% Brent price (avg $/bbl) SIBUR EBITDA ($ bln) SIBUR EBITDA ( bln) Midstream Olefins & Polyolefins Plastics, Elastomers & Intermediates Unallocated EBITDA margin (1) Adjusted for estimated value of naphtha trading operations via Ust-Luga, ceased in (2) Twelve months ending 30 June

6 USD Equivalents, bln (illustrative) Russian Roubles, bln SIBUR FINANCIAL SUMMARY (1) Revenue Adj. EBITDA Operating Cash Flow CapEx (2) Net Leverage +22% % +12% 44% x 1.7x 31 Dec'17 30 Jun'18 Revenue Adj. EBITDA Operating Cash Flow CapEx (2) Net Leverage +19% % +9% 41% 1.7x 1.6x Dec'17 30 Jun'18 (1) Values in USD estimated based on average /$ rate of 59.4 and 58.0 in the first half of 2018 and 2017, respectively. Net Debt for the purpose of Net Leverage calculation is converted in USD with respective end-of-period /$ exchange rates. (2) Includes purchase of PPE, intangible assets and other non-current assets. 6

7 MACRO ENVIRONMENT Average Oil Price (Brent) (1) +36% % Russian GDP (2) 1.7% (3) CPI & PPI (y-o-y) (2) 30 Jun 18 / 30 Jun Jun 17 / 30 Jun % 4.4% 2.3% 2.9% H H CPI PPI / $ Average Exchange Rate (4) EOP Exchange Rate (4) 30 Jun Dec 17 Description Tariffs Indexation Effective Date Indexation Rate % % % 73.0 Regulated natural gas price Railway transportation tariff Jul % Jan % SIBUR effective avg. electricity tariff 2018/ % / $ / (1) Source: Bloomberg. (2) Source: Russian Federal State Statistics Service. (3) Source: Ministry of Economic Development of the Russian Federation (estimate). (4) Source: CBR. 7

8 PRICING ENVIRONMENT Oil and FX +36% +2% Midstream 000 $ per tonne (avg. for the period) - LHS 000 $ per 000 cubic metres of natural gas (avg. for the period) - RHS +31% +1% +24% +19% Brent ($ / bbl) / $ Naphtha LPG DAF Brest LPG CIF ARA (large) Natural gas (RHS) 000 $ per tonne (avg. for the period) Olefins and Polyolefins 000 $ per tonne (avg. for the period) Plastics, Elastomers and Intermediates H H 2018 PP rafia China Main Port PP Homopolymer Raffia FD NWE +10% +16% +20% -3% LDPE CFR China film PP (Russia) % -21% +13% +28% +17% -28% +15% 1H H 2018 MTBE PET MEG Polystyrene Natural rubber Butadiene Styrene Source: Argus, Platts, Bloomberg, ICIS, Chemease, Malaysian Rubber Board, Federal Antimonopoly Service of Russian Federation. 8

9 EBITDA DYNAMICS Adj. EBITDA Dynamics Segments % EBITDA margin 78.9 bln H % EBITDA by Segment ( bln) % EBITDA margin 20.4 Midstream H H % 42% (5.0) O&P H H % 31% +19% ( bln) (2.5) PE&I H H % 20% 1.2 Unallocated H H (2.1) (0.9) 0.8 JV EBITDA H H bln % H

10 CASH FLOWS HIGHLIGHTS bln H1 FY Cash Flow Reconciliation Net CF: (19) H1 FY Cash Flow Reconciliation bln Net CF: (25) 63 (49) 22 (9) (9) 71 (70) 61 (36) (2) (7) (15) (5) (3) 24 Cash as of Net OCF CapEx (1) M&A Interest & bank fees Dividends Net debt repayment Other Cash as of Cash as of Net OCF CapEx (1) Interest & bank fees Dividends Net debt repayment Other Cash as of Key Factors Net cash from operating activities increased by 12% y-o-y due to increase in EBITDA largely offset by the negative impact of working capital changes Net cash used in investing activities increased more than twofold y-o-y on proceeds from the divestment of AO Uralorgsintez for cash consideration of 22 bln in the first half of % increase in CapEx due to transition to the final stage of the project implementation Net cash used in financing activities decreased by half mainly as a result of lower net debt repayment compared to the first half of 2017 (1) Includes purchase of property, plant and equipment, intangible assets and other non-current assets. 10

11 DEBT PROFILE Key Figures RUB bln, except as stated 30 June December Jun 18 vs. 31 Dec 17, % Total debt % Conventional debt (10.7%) ZapSib related debt % Cash & cash equivalents (50.9%) Net debt % WA loan tenor (years) WA Conventional debt WA ZapSib related debt Available credit lines, incl % Committed % Overview As of 30 Jun 18 vs. 31 Dec 17 our total debt increased by 4.2% and net debt increased by 14.3% mainly due to new drawdowns on ZapSib and foreign exchange dynamics Average tenor improved to 7.0 from 6.9 years following Eurobond 18 redemption As of 30 Jun 18 net leverage increased to 1.7x from 1.6x as of 31 Dec 17 conventional net leverage remained at the same level of 0.6x ZapSib net leverage increased to 1.1x from 1.0x on on-going project financing Leverage Ratios 30 June December 2017 Debt / EBITDA 1.9x 1.9x Debt / EBITDA (in $) 1.8x 2.0x Net debt / EBITDA 1.7x 1.6x Conventional net debt 0.6x 0.6x ZapSib related net debt 1.1x 1.0x Net debt / EBITDA (in $) 1.6x 1.7x Loan portfolio structure as of 30 Jun 18 $ / / 60% 22% 18% Long-term/Short-term 98% Fixed/Floating 37% 63% Unsecured 100% 2% 11

12 LIQUIDITY AND DEBT MATURITY PROFILE (1) As of 30 June 2018, bln uncommitted credit lines 206 committed credit lines cash & cash equiv Liquidity After 2028 Loans Eurobonds RUB bonds ECA NWF Undrawn EUR ECA 123 (1) Items denominated in $ and are converted into at /$ and / FX rates as of 30 June

13 Capacity utilisation rate (1), % TWO-YEAR MAINTENANCE CYCLE AND POTENTIAL FOR CAPACITY CREEP PP Production in Tobolsk Cracker in Kstovo (ethylene) (2) biennial maintenance cycle annual maintenance cycle H1 of the year H2 of the year Estimated impact of maintenance shutdowns rescheduled from H2 to H1 in 2018 Key Takeaways Our operational results may fluctuate year-on-year due to biennial maintenance cycle In 2018, we rescheduled lengthy maintenance shutdowns at some of our production sites from H2 to H1 which resulted in lower production volumes and higher other feedstock and materials purchases year-on-year Our capacity utilisation rates adjusted for the maintenance shutdowns would be above100% Exceeding nameplate capacity is a typical industry practice and can be achieved by improvement of daily productivity providing potential for the capacity creep (1) Calculated as actual production divided by half-year nameplate capacity. (2) Based on 2016 nameplate capacity of 360 mtpa, which was expanded to 384 mtpa in

14 FINANCIAL CALENDAR 2018: SIBUR IS BACK TO QUARTERLY IFRS Operational and Financial Results Date H August M 2018 October

15 APPENDIX 15

16 MIDSTREAM SEGMENT HIGHLIGHTS Segment Financial Performance Key Factors bln 35% 42% External Revenue EBITDA EBITDA margin, % Wider spreads between benchmark prices for liquids and purchased hydrocarbon feedstock prices Higher volumes of raw NGL purchases and fractionation, resulted in higher LPG sales volumes Revenue: +34% EBITDA: +58% Alignment of intra-group pricing calculation to reflect changes in market environment for hydrocarbons $606 mln $936 mln EBITDA ($): +54% Natural gas Revenue (1) Structure H Naphtha Other sales % Product Revenues Development (% change y-o-y) (1) Volume Price Total LPG +18% +28% +51% Natural gas +1% +4% +5% 64 LPG Naphtha % +28% (1) Represents external revenue. 16

17 O&P (OLEFINS & POLYOLEFINS) SEGMENT HIGHLIGHTS Segment Financial Performance bln 43% External Revenue PP: favourable prices due to imbalances on international 31% EBITDA Revenue: +13% EBITDA: (21%) $414 mln $320 mln EBITDA ($): (23%) Key Factors markets LDPE: weak market environment due to capacities additions in Asia and on-going shift in customer preferences to LLDPE grade Tighter polyolefin spreads in higher oil environment combined with shift to higher share of more expensive naphtha feedstock Realignment of intra-group pricing calculation to shifted alternatives for Midstream segment bln 63% Tobolsk PP Results 47% 11 8 EBITDA margin EBITDA Revenue (1) Structure H BOPP-film PE (LDPE) Olefins Other 7 % 48 PP Product Revenues Development (% change y-o-y) (1) Volume Price Total PP +5% +13% +19% PE (LDPE) +3% (8%) (6%) BOPP-films (4%) +11% +6% Olefins (3%) +22% +18% (1) Represents external revenue. 17

18 PE&I (PLASTICS, ELASTOMERS & INTERMEDIATES) SEGMENT HIGHLIGHTS bln 23% Segment Financial Performance % External Revenue EBITDA EBITDA margin, % Revenue: +3% EBITDA: (14%) $312 mln $262 mln EBITDA ($): (16%) Key Factors Lower elastomers selling prices compared to high base of 2017 reflecting higher Asian demand for commodity rubbers Positive price dynamics within plastics and organic synthesis products, MTBE and fuel additives following growth in benchmarks Decrease in sales volumes of MTBE and fuel additives attributable to divestment of Uralorgsintez in April 2017 Higher prices for feedstock supplied internally from Midstream segment Revenue (1) Structure H Intermediates and other chemicals MTBE and fuel additives % Other sales 35 Plastics & Organic Synthesis Product Revenues Development (% change y-o-y) (1) Volume Price Total Plastics & Organic Synthesis (4%) +19% +14% Elastomers +4% (9%) (5%) MTBE & Fuel Additives (8%) +18% +8% Elastomers 33 Intermediates and other chemicals (14%) +9% (6%) (1) Represents external revenue. 18

19 OPERATING EXPENSES STRUCTURE AND DYNAMICS OpEx bln 73% 72% +21% x% - % of revenue Key Factors Higher feedstock and materials higher purchase prices for hydrocarbon feedstock mainly on growth of respective export netbacks and purchase volumes Higher transportation & logistics higher transported volumes of LPG, inter alia for export sales Higher staff costs growth in headcount of NIPIGAZ as a result of the expansion in their operations Increase in average salaries Higher energy & utilities primarily higher average electricity tariffs due to the indexation in the regions of our operations Higher purchases of goods for resale, compensated by higher external revenue Higher other expenses primarily attributable to growth of services provided by third parties on higher expenses of NIPIGAZ related to the subcontractors Feedstock & Materials Transport & Logistics Staff Costs Energy and Utilities Goods for resale Other 20% 23% 15% 14% 9% 9% 9% 8% 5% 6% 14% 14% +34% +22% 9% % +3% %