Metamorphosis Synonyms: alteration, change, evolution [Webster's]

Transcription

1 Indorama Ventures Public Company Limited ( IVL ) Metamorphosis Synonyms: alteration, change, evolution [Webster's] Corporate Day Arranged by TISCO Securities Bangkok, March 26, 2010

2 Disclaimer This presentation has been prepared by Indorama Ventures Public Company Limited ( IVL or the Company ) solely for use at a presentation to potential investors. By attending the meeting where the presentation is made, or by reading the presentation slides, you agree to the following limitations and notifications and represent that you are a person who is permitted under applicable law and regulation to receive information of the kind contained in this presentation. This presentation does not constitute or purport to be an offer of shares under the laws of Thailand, as the transactions described herein are subject to numerous conditions precedent, contingencies and approvals. This presentation is strictly confidential to the recipient, may not be reproduced, retransmitted or further distributed to the press or any other person, may not be reproduced in any form and may not be published, in whole or in part, for any purpose. 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3 Agenda Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Section 7 Section 8 Achieved Transformation Our Markets Our Feedstocks Our Business Prospects Our Performance Our Financial Position Our Growth Strategy Conclusions 3

4 Achieved Transformation IVL among the top 20 listed company s by market cap on SET IVL among the top 15 non-bank listed company by market cap on SET Free float enlarged 3 times, 29% of free float of IVL is equal to around Baht 20,700 MM Products resilient to recession, positive demand growth in the Polyester value chain Reduce volatility through seamless integration in the Polyester Value Chain Increase in gross margin through integration and optimized allocation of fixed overheads over larger revenue Lower effective tax, benefit from integration Stronger financial position to enable future consolidation Larger cashflow from operations to enable future integrated projects of economic sizes 1. Based on closing price of Baht per share on Tuesday, 23 March

5 Indorama Ventures Public Company Ltd IVL Listing & Trading Stock Exchange of Thailand SET Sector Petrochemicals Free float around 29.6% First day trading on February 5, 2010 Top 20 listed company s on SET by market capitalization Market capitalization THB 71,515 MM (1) Shareholding Structure Public 29.1% Issued and paid-up capital IPO Price Use of Proceeds Pre-IPO THB 3,351.5 MM Post-IPO THB 4,334.3 MM Par value THB 1 per share Increase in issued and paid-up capital consists of : IPO THB MM Exchange offer IRP minorities THB MM IPO price THB per share IPO funds raised in cash THB 4,080 MM International and domestic placement to institutional investors and individuals Market capitalization on IPO price THB 44,210 MM Repay existing indebtedness Acquisition of assets Working capital and general corporate purposes Indorama Resources Ltd., 70.9% (THB Bn) Market Capitalization 44 IPO 72 *Current 1. Based on closing price of Baht per share on Tuesday, 23 March

6 IVL: Vertically Integrated Indorama Ventures Public Company Limited Revenues = Baht 79,994 MM and EBITDA = Baht 10,636 MM PET (55% of Revenues, 53% of EBITDA) (1)(2) Polyester (15% of Revenue, 13% of EBITDA) (1)(2) PTA (30% of Revenue, 34% of EBITDA) (1)(2) Leadership in the fast growing PET resin market worldwide We are the world s second largest producer of PET resin by installed-capacity, as well as the only producer with operations in Asia, North America, and Europe, the three major PET resin regions Strong positions in attractive market segments of the fast growing global Polyester market We are a focused non-commodity polyester producer with superior manufacturing facilities and extensive product portfolio in Thailand, supplying to a broad range of end-use markets and customers worldwide Providing upstream integration to PET and Polyester businesses Our PTA business is located in Asia and Europe to provide vertical integration through the upstream production of raw materials to our PET and Polyester businesses, as well as to market product to external customers worldwide Driven by quality of assets, cost and management Notes: 1. Consolidated revenues for the year ended 2009 after elimination of intra-group sales 2. Operating EBITDA for the year ended 2009 based on pro-rata allocation of earnings of PTA business calculated on intra-group sales to PET and Polyester fibers 6

7 Agenda Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Section 7 Section 8 Achieved Transformation Our Markets Our Feedstocks Our Business Prospects Our Performance Our Financial Position Our Growth Strategy Conclusions 7

8 The Polyester Chain Global Polyester Chain Industry Overview 2009E and 2010F Demand (Million tonnes) Growth (%) Global Capacity Utilization (%) PX % 10.0% 81% 79% PTA % 9.6% 84% 86% Polyester Fiber % 10.0% 64% 67% PET Resin % 6.8% 79% 78% Source: SBA-CCI (February 2010) 8

9 Spectacular Polyester Fiber Demand Growth A global demand CAGR of 8.5% from , well above GDP Polyester Fiber Consumer Demand by Region 2009E North America Real Global GDP (1) CAGR 09E- 13F = +3.4% 2013F North America European Union European Union Central Europe Middle East & Africa South America 32.5Mt Asia Central Europe Middle East & Africa Polyester Fiber Global Demand (2) CAGR 09E- 13F = +8.5% South America 44.2Mt Asia 1. Real GDP, US$-based, Constant 1998 Prices. Source: IMF 2. SBA-CCI (February 2010) 9

10 Spectacular PET Demand Growth A global demand CAGR of 7.6% from , well above GDP PET Resin Demand by Region 2009E 2013F European Union Real Global GDP (1) CAGR 09E- 13F = +3.4% Central Europe European Union Central Europe Middle East & Africa 15.1Mt North America Middle East & Africa 20.5Mt North America South America South America PET Resin Demand (2) Asia CAGR 09E- 13F = +7.6% Asia 1. Real GDP, US$-based, Constant 1998 Prices. Source: IMF 2. SBA-CCI (February 2010) 10

11 PTA expected to become tighter Driven by strong polyester demand and limited capacity additions Global/Asia PTA Structural Surplus/Deficit Surplus (Deficit) MMt Capacity Utilization (%) Source: SBA-CCI (February 2010) Surplus (deficit) at 96% capacity utilization less demand Global Asia 11

12 Polyester Margins Industry Monthly Integrated PTA/PET and PTA/DTY spreads Integrated PTA/PET Margins ( ) Integrated PTA/DTY Margins ( ) US$/tonne US$/tonne Source: SBA-CCI Spread definitions: PTA Spread = China Spot PTA CFR PET Spread = China Export FOB PET DTY Spread = China dom. 150 den 12

13 Agenda Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Section 7 Section 8 Achieved Transformation Our Markets Our Feedstocks Our Business Prospects Our Performance Our Financial Position Our Growth Strategy Conclusions 13

14 PX as well as MEG are expected to remain long Large supply additions, putting pressure on utilization rates PX Structural Surplus/Deficit MEG Structural Surplus/Deficit MMt Utilization (%) MMt Utilization (%) Source: SBA-CCI (February 2010) 14

15 Energy Prices Forecast Crude Oil and Natural Gas Quarterly Price Forecast Crude Oil Q/Q Price Forecast WTI, US$ per barrel Natural Gas Q/Q Price Forecast U.S. Gulf Coast Natural Gas Burner Tip, US$ per Million Btu Source: CMAI (February, 2010) *Current Month-to-Date Average Price 15

16 Agenda Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Section 7 Section 8 Achieved Transformation Our Markets Our Feedstocks Our Business Prospects Our Performance Our Financial Position Our Growth Strategy Conclusions 16

17 Polyester Industry Drivers Near Term & Short Term PX Tightness PTA Inventory Rebuilding Robust Polyester & PTA demand growth Continued capacity rationalization Delays in PTA/PET project start-ups Long PX/MEG supply position 17

18 PTA /PET and PX/MEG run counter-cycles Potential upside in margins for PTA/PET Polyester Chain Margin Distribution (Q/Q, Asia example) PTA/PET Uptrend PX/MEG Downtrend PTA/PET Downtrend PX/MEG Uptrend PTA/PET Uptrend PX/MEG Downtrend PTA/PET % PX/MEG % PTA/PET 31.8% PX/MEG 68.2% PTA/PET 42.5% PX/MEG 57.5% Source: SBA-CCI and IVL Analysis MEG spread = MEG CFR China less Asia Spot Ethylene CFR x 0.6 PX spread = ACP less Naphtha price PTA spread = PTA CFR China less ACP x 0.66 PET spread = PET China Average Price less (MEG CFR China x PTA CFR China x 0.87) 18

19 Agenda Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Section 7 Section 8 Achieved Transformation Our Markets Our Feedstocks Our Business Prospects Our Performance Our Financial Position Our Growth Strategy Conclusions 19

20 Higher returns to shareholders Return on equity Return on capital employed *Earnings per Share Achieve higher returns on a larger equity and capital base in year 2009 *Earnings per share based on issued and paid-up capital at the end of year Baht 3,352 million 20

21 Improved margins Gross Margin Operating EBITDA Margin Net Profit Margin Margin improvement from upward integration with PTA in year

22 Increase in volumes and utilization rate Products resilient to recession and global distribution platform Volume Growth ( ) PTA/PET Capacity Utilization ( ) ( 000 tpa) (%) 22

23 Achieve Higher Revenues and Operating EBITDA Revenues (THB Bn) Revenues (THB Bn) 2008 *Operating EBITDA (THB Bn) 2009 *Operating EBITDA (THB Bn) EBITDA Margin 9.5% 6.2% 7.0% 7.2% 11.6% 14.9% 12.8% 13.3% *Based on pro-rata allocation of EBITDA of PTA business calculated on intra-group sales to PET and Polyester fibers 23

24 Agenda Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Section 7 Section 8 Achieved Transformation Our Markets Our Feedstocks Our Business Prospects Our Performance Our Financial Position Our Growth Strategy Conclusions 24

25 Capital structure (THB Bn) IVL Balance Sheet as at 31-Dec-09 (THB Bn) IVL Net Financial Debt as at 31-Dec-09 *ST Debt includes short term loans, bank overdrafts and Baht 4.7 Bn in current portion of long term loans 25

26 Stronger financial position *Net Operating Debt/EBITDA (x) Net Gearing Long-Term Loans by Currency Repayment Schedule for Long Term Loans *Net operating debt includes net debt less project debt not generating revenues and earnings 26

27 Higher cash flow from operations (THB Bn) Funded from project loans and capital increase (THB Bn) Repayment of debt (1) (2) (1) Positive free cash flow in year 2009 and limited on-going capex requirement Notes: 1. After change in working capital, net financial expenses and income tax 2. Includes consolidation on acquisition of Indorama Petrochem, TPT Petrochemicals and Indorama Polyester Industries 27

28 No project execution risk (THB MM) Capital Expenditure by Business Segment Capex in Progress 5,000 4,000 4, , AlphaPet Line 2 project completion Capacity expansion in Petform 3,000 2,000 4, Capacity debottlenecking in Indorama Polyester 1,000 2,642 Annual maintenance capex of around US$ 15 million % of Sales 9.1% 4.7% Major capex and investment projects undertaken in year completed 28

29 Agenda Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Section 7 Section 8 Achieved Transformation Our Markets Our Feedstocks Our Business Prospects Our Performance Our Financial Position Our Growth Strategy Conclusions 29

30 Committed revenue growth in 2010 ( 000 tpa) Year 2009 Available for sale in Year 2010 ( 000 tpa) 1,593 1,600 IPI Rayong facility has switched one line with capacity 108,000 tpa to produce PET resins (1) (1) Around 20% growth in consolidated revenue from external sales Notes: 1. Captive sales to PET resins and Polyester fibers 30

31 Expand gross margin PTA Sourcing Increase PTA integration Captive consumption Virtual integration - strategic alliance with suppliers (AlphaPet located next door to BP Chemicals PTA plant) Lower conversion cost Optimize fixed overheads, scale from revenue growth 31

32 Our financial condition will be healthier Net gearing 90% 70% 50% Target level Net gearing to fall below 50% through: Cash from IPO proceeds received in February, 2010 Increase investment in IRP from 69.3% to 99.1% 30% 10% F Higher cashflow from operations Repayment of loans Prepare to enter next phase of growth through acquisitions and brownfield/greenfield expansions 32

33 Agenda Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Section 7 Section 8 Achieved Transformation Our Markets Our Feedstocks Our Business Prospects Our Performance Our Financial Position Our Growth Strategy Conclusions 33

34 Conclusions + Larger market cap and liquidity = High growth industry provides significant room for expansion Secured PTA feedstock through integration Favorable PX and MEG supply scenario Potential upside in margins for the polyester value chain Stronger financial position Committed top-line growth, Q in line with our expectations Promising 2010 outlook 34

35 Thank you Q&A 35

36 Organizational & Ownership Structure IVL Corporate Structure PET operating subsidiary PTA operating subsidiary Polyester Fibers and Wool Yarns operating subsidiary Holding subsidiary Canopus International Ltd Mauritius 99.99% Indorama Resources Ltd Thailand 70.90% Indorama Ventures PCL Thailand Public Shareholders % % 54.60% 99.55% 97.93% Indorama Petrochem Ltd Thailand TPT Petrochemicals PCL Thailand Indorama Polyester Industries PCL Thailand Indorama Holdings (Thailand) Ltd Thailand % UAB Indorama Holdings Europe Lithuania % 44.38% 54.47% (1) Indo Poly (Thailand) Ltd Thailand 72.60% 26.48% Indorama Polymers PCL Thailand % % % % 60.00% Indorama Holdings Rotterdam BV The Netherlands UAB Indorama Polymers Europe Lithuania Indorama Polymers Inc USA Asia Pet (Thailand) Ltd Thailand StarPet Inc USA Petform (Thailand) Ltd Thailand % Indorama Polymers Workington Ltd UK Indorama Polymers Rotterdam BV The Netherlands % % 20.00% 60.00% 20.00% Alpha Pet Inc USA UAB Orion Global Pet Lithuania Notes: As of 24 February Indo Poly (Thailand) Ltd is under liquidation after Entire Business Transfer to Indorama Polyester Industries PCL 36