INEOS STYROLUTION KEVIN MCQUADE, CEO. INEOS Investor Day, May 3rd - 4th, 2016

Transcription

1 INEOS STYROLUTION KEVIN MCQUADE, CEO INEOS Investor Day, May 3rd - 4th, 2016

2 Agenda Business overview Business strategy Financial performance Current trading and outlook 2

3 BUSINESS OVERVIEW 3

4 INEOS Styrolution at a glance Global leader in styrenics 4

5 Styrenics provide a competitive edge for a wide range of customers Right solution for a broad range of applications across key industries Automotive Electronics Healthcare Construction Household Toys, sports, leisure Packaging Customer industry diversity allows for greater business stability 5

6 Long-term partner to over 4,000 customers including major brand owners Selection of key customers per industry Automotive Electronics Household Healtcare Construction Toys, sports, leisure Packaging LEGO Micros pec Genova Strong partnerships with blue chip customers add to greater business stability 6

7 Leading styrenics producer with global reach and proximity to customers Polystyrene: Global No. 1 Channahon PS Addyston INEOS ABS 1 ABS, Spec Sarnia SM Antwerp SM, ABS, PS, Spec Wingles PS Cologne Spec Schwarzheide Spec: Compounding Ludwigshafen Spec ABS Standard: Global No. 3; Americas & EMEA No. 1 Specialties: Global No. 1 Bayport SM Texas City Ulsan PS, ABS, Spec SM Altamira PS, ABS, Spec Decatur Styrene Monomer: Global No. 2 Dahej PS Vadodara Spec Map Ta Phut Spec PS Source: Nexant, INEOS Styrolution (1) INEOS Styrolution acts as exclusive distributor for the INEOS ABS plant in Addyston, Ohio. INEOS Styrolution holds leading positions in key markets 7

8 Compounding site Global low cost manufacturing platform in kmt Americas EMEA Asia Styrene Polystyrene Standard ABS Specialties * Schwarzheide is compounding only, its capacities are already included in Ludwigshafen and Cologne. ** INEOS Styrolution acts as exclusive distributor for INEOS ABS, Addyston produced products. 75 percent of all INEOS Styrolution s manufacturing facilities ideally positioned in the 1 st and 2 nd quartile of the cost curve 8

9 Number one priority: safety Safety track record according to OSHA rate* 1,3 1,2 1,1 1 0,9 0,8 0,7 0,6 0,5 0,4 0,3 0,2 0,1 0 0,56 0, ,30 0,29 0,41 0, Q1 16 Average OSHA rate Petchem and Polymers (US Dept. of Labor) Notes: * TCIR = Total Case Injury Rate per work hours (includes employees and contractors) Target 2016 =

10 BUSINESS STRATEGY 10

11 Triple Shift Strategy continues to make good progress Shift in regions Strategic investments to capture growth dynamics in emerging countries (e.g. China, India, Mexico) Expand sales and service footprint in Asia Thailand Specialties investment/ portfolio optimization Shift in portfolio Shift from PS to ABS Standard/ Specialties, enabling growth above market, reducing exposure to cyclicality Enhanced market position with distribution of INEOS ABS products PS consolidation: Indian Orchard & Trelleborg closure Shift in customer industries Increased focus on five attractive higher margin and growth industries supported by mega-trends Implementation of Global Key Account approach R&D investments (India, USA, Belgium) and external cooperations Ongoing value enhancement Early realization of Styrolution formation synergies & leveraging full integration into INEOS Accessing further profitability levers: margin enhancement, cost structure, collaborative innovation with customers Investments in styrene monomer plants to maintain 1 st quartile cost position 11

12 SM Capacity, MM Tons Global styrene market: tightening balances to drive utilization rates Capacity Utilization, % SM Global INEOS Styrolution positioning % % % % % Demand Capacity Utilization - Global Backward integration for PS, ABS Standard, Specialties and other derivatives Best-in-class plants in the 1st cost quartile position Four world-scale plants, three advantageously located in the U.S. benefiting from tightening supply/ demand balances Access to low to cost feedstock and energy from shale gas in North America Business performance 2015 Exceptional SM margins in Q2/ 15 and Q3/ 15 driven by competitors scheduled turnarounds and unplanned outages Global SM performance continues to be robust into 2016 despite crude oil volatility Source: INEOS Styrolution, IHS, and other external estimates (status April 2016) 12

13 Polystyrene: markets with more balanced supply/ demand and improved margins on own measures PS volume development INEOS Styrolution positioning PS volumes PS sales PS EBITDA development Best technology plants in the 1st and 2nd cost quartile Asset optimization and best cost structure remain key Improved cost position and well utilized assets due to plant closures (Marl, Indian Orchard, Trelleborg) Western markets with more balanced supply/ demand Low to moderate global growth driven by Asia Lower benzene price benefits competitiveness of PS Well positioned with strong customers Business performance 2015 m Very strong performance on tightened supply/ % 62 EBITDA EBITDA margin 6% 6% % % 15% 10% 5% 0% demand balances, especially in the U.S. and top-ofcycle margins in 1HY/ 15 Strong 2015 performance continues into

14 ABS Standard: value increase through application and development work ABS volume* development INEOS Styrolution positioning ABS volumes ABS sales ABS EBITDA* development Best technology plants in 1st and 2nd cost quartile in each region INEOS ABS distribution agreement brought Styrolution to No.1 * in the Americas in addition to existing No.1 in EMEA Majority of global manufacturing capacities in Asia Significant capacity surplus in Asia driven by 2011/ 2012 new builds gradually being absorbed Business performance 2015 m EBITDA EBITDA margin 13% 20% 15% Improved 1HY/ 15 performance due to reasonable demand in Asia Strong USD drove exports from Asia more to the US and reduced import pressure in EMEA 50 7% 7% 8% % 5% Weakening economy in China increases import pressure on EMEA and the Americas in 2HY/ 15 and into % * Excluding INEOS ABS distribution agreement 14

15 Specialties growth driven by differentiation through customization and collaborative innovation Specialties volume development INEOS Styrolution positioning Specialties volumes Specialties sales Specialties EBITDA development Focus for Triple Shift growth strategy Broad portfolio of over 1,500 high performance products and high level of customized solutions Industry related, tailored services Product development through R&D cooperations with key customers and external partners Regional production for local markets Value pricing Good growth opportunities in focus industries Business performance 2015 m % EBITDA EBITDA margin 11% 12% 17% % 15% 10% 2015 performance with robust volume development and expanded margins Strong performance of 2015 to carry into 2016 with continued strength from the automotive industry and innovations % % 15

16 Integration of INEOS ABS and Styrolution businesses Automotive IP and Center Console ABS business integration INEOS Styrolution acts as exclusive distributor for all INEOS ABS-Addyston produced goods. Smooth go live of one market facing organization under INEOS Styrolution on October, 2015: Harmonized product and service portfolio as well as consolidated distributor portfolio in place. Core functions are merged and performed by INEOS Styrolution under arms-lengths conditions leading to shared cost savings. INEOS Styrolution receives a fee for its distribution activities. V-GoTM disposable insulin delivery device Benefits Profitable growth expected based on combined asset footprint and offering to market: Complementary and broadened product portfolio for automotive interior and exterior design Large medical portfolio expands our offering Helps entering new markets Cost savings by enhancing business efficiency: Integration of two organizations Transfer of best practices Leveraging of buying power 16

17 FINANCIAL PERFORMANCE 17

18 Positive trend in EBITDA generation since 2011 in m 800 EBITDA development* LTM Q1 16 BOC TOC *Excl. INEOS ABS Strong synergy delivery combined with top-of-cycle margins has driven EBITDA growth 18

19 Full year 2015 performance SALES BY PRODUCT GROUP SALES BY SEGMENT Global SM 22% Specialties 25% Total: 5.0 bn Global SM 22% EMEA 34% PS 38% ABS Standard 15% Asia Pacific 20% Americas 24% EBITDA BY PRODUCT GROUP EBITDA BY SEGMENT Global SM 25% PS 33% Specialties 28% ABS Standard 14% Total: 742 m Global SM 25% Asia Pacific 10% EMEA 31% Americas 34% Specialties most stable contributor to EBITDA Reasonably balanced portfolio of products and regions 19

20 Strong deleveraging track record continues Net debt development in m ,9x 578 1,6x 539 1,2x 1,1x 1,1x ,9x 438 0,8x 366 3,0x ,9x Re-leveraging to finance the buy-out of BASF s 50% share by INEOS 1,9x 1,7x ,3x 1,2x Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 3,0 2,5 2,0 1,5 1,0 0,5 0,0 Net debt Net debt/ LTM EBITDA 20

21 Improved creditworthiness: Solid B1/B+ Position Moody s 5 Ba1 4 Ba2 3 Ba3 2 B1 1 B2 B Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Moody's S&P S&P 5 BB+ 4 BB 3 BB- 2 B+ B 1 B- 0 Strong cash generation and sound capital structure are two of the key drivers for a positive rating development 21

22 Cash fixed costs reduction continues: representing roughly 9% of revenues Fixed cost evolution in m % AC 2011 AC 2012 AC 2013 AC 2014 AC 2015 AC 2016 fx $1.1 = 1.00; Excluding bonuses and management fee Further reductions targeted through running Cost Culture Initiative 22

23 Capital expenditures Capex cash out view in m Discretionary Capex which can be cut in a downturn Maintenance capex (50% could be cut temporarily during a downturn) E 1) Comprised of expansion and turnarounds according to management analysis. Legal, compliance and essential SHE Five specialty plants on stream since 2011 Capex fully financed through internal cash generation 23

24 Impact of decline in crude oil prices INEOS Styrolution view on the impact of the decline in oil price: Short-term impact: Positive margin development caused by a delay in the adjustment of sales prices to lower feedstock prices (as seen throughout 2015) Positive cash effect as a consequence of the release in working capital Negative impact on EBITDA due to inventory write-downs (as seen in Q4/ 14 and 2HY/ 15) Medium-term impact: Polymer margins are expected to return to normal mid-cycle levels (as seen in 2HY/ 15) Long-term impact: Lower prices in INEOS Styrolution s end products make some of our products and end consumer products more competitive, which should stimulate higher demand and subsequently lead to increased sales volumes Lower oil price tends to increase consumers disposable income 24

25 CURRENT TRADING AND OUTLOOK 25

26 Record first quarter 2016 performance SALES BY PRODUCT GROUP PS 40% Global SM 17% Specialties 27% ABS Standard 16% EBITDA BY PRODUCT GROUP Total: 1.1 bn SALES BY SEGMENT Asia Pacific 20% Global SM 17% EMEA 37% Americas 26% EBITDA BY SEGMENT Global SM 25% Specialties 31% Total: 208 m Global SM 25% Asia Pacific 6% EMEA 34% PS 32% ABS Standard 12% Americas 35% Polymers with upper-mid-cycle margins: Specialties with strong margins driven by robust demand especially from Automotive and Healthcare Continued strong PS margins and volumes in both, the Americas and EMEA Strong Global SM performance on the back of robust market conditions and supply constraints China weakness continues to impact the performance of Asia. ABS import pressure prevails in the Americas and EMEA 26

27 Outlook Assumptions for 2016 For 2016 we expect continued good volume demand and higher than mid-cycle margins: 2015 was exceptional year: we do not except a repetition of peak Q2/ 15 styrene monomer margins driven by supply constraints, and of Asia s particularly strong performance in 1HY/ 15. Polymer businesses to continue with strong margins in line with China s weakening economy continues to impact Asian business, in particular ABS Standard. Q2/ 16 likely to be in line with Q1/ 16. Outlook 2016 Assuming that demand holds up as well as taking into consideration cost savings and benefits resulting from the integration into INEOS, we expect to achieve a full year EBITDA for 2016 nearing the results of However, this target depends on global economic developments and is sensitive to price fluctuations of our main raw materials. 27

28 INEOS Styrolution the global leader in styrenics 1 A global leader throughout the styrenics value chain 2 Balanced product portfolio with greater specialty focus, backward integration providing a key advantage 3 Diverse base of blue-chip customers across a wide range of industries 4 World-class manufacturing platform with best cost technology 5 Flexible cost structure and efficient pass-through resulting in significant cashflow generation 6 Experienced and customer centric management team with proven track record 7 Improved stability and credit protection in a downside 28

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