FY 2017 Operational and Financial Results. 28 February 2018

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Transcription:

FY 2017 Operational and Financial Results 28 February 2018

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

2017 HIGHLIGHTS CORPORATE SIBUR Key Developments Investment grade from Moody s at Baa3 with stable outlook Placement of $500 mln Eurobond due in 2023 with 4 1 / 8 percent coupon Deleveraging with total debt down by 8.6% to 312 bln at YE and net leverage down to 1.6x from 2.0x in rouble terms last year Sale of 100% stake in Uralorgsintez for 22 bln OPERATIONS All-times high processing and production volumes (APG processing at 22.8 bln cm, raw NGL fractionation at 8.7 mln tn) (1) Full capacity utilisation at PP production in Tobolsk with EBITDA margin at 55% EBITDA at 161 bln (up 15% y-o-y) / $2.8 bln (up 32% y-o-y) INVESTMENTS ZapSib: 71% overall execution progress as of 2017YE, deliveries of all heavy-lift equipment completed CapEx budget for 2018 expected at 170 bln (1) Including JV and processing volumes. (2) PP and PE. (3) Including SIBUR s portion of JV EBITDA. mln tn Raw NGL fractionation +4% 7.2 7.5 +10% 455 bln REVENUE SIBUR Key Results 000 tn Polyolefins (2) +10% 839 925 +15% 161 bln Petchem production Plastics & Elastomers +3% 1,344 1,378 EBITDA Adj. EBITDA (3) 35.4% 1.6x 1.6 Net Debt/EBITDA 0.36 EBITDA margin Net debt / EBITDA LTIF +13% 169 bln 3

ZAPSIB PROGRESS UPDATE Please follow the link to see the video of the construction site: https://www.sibur.ru/en/press-center/video/ Progress Update Overall execution progress 71% as of 31 Dec 17 vs 38% as of 31 Dec 16 Project Residual Budget for 2018-2020 (1) $ 4.2 bln Progress by stage as of 31 Dec 2017: FEED Detail Engineering 100 99 $ 40% 30% 55% 10% SIBUR own funds VEB & RDIF (2) Procurement 91 30% 35% ECA (3) Construction 54 Residual Budget Funding Sources Progress by major units: Steam cracker 72% PE unit 71% PP unit 77% All large-scale equipment delivered to Tobolsk ahead of schedule Mobilisation on site at peak (20,000+ construction workers) 300 bln invested by 2017YE Preparations for the Launch 887 engineers and technical staff engaged in on-site operations and employee training Cross-functional team ZapSib Go to Market formed Logistics upgrade in process: Platform in Tobolsk: 52% progress Hub in Kaluga region (in partnership with Karl Schmidt): 11% progress (1) Data as of 31 December 2017. Numbers and respective percentages calculated based on exchange rates as of 31 December 2017: /$ at 57.6, /$ at 68.9. (2) Cash balances as of 31 December 2017. VEB stands for Vnesheconombank. RDIF stands for Russian Direct Investment Fund. (3) Undrawn or unutilised amount of ECA (Export Credit Agency). 4

ANOTHER YEAR OF RESILIENT PERFORMANCE 109 2.5 79 70 +8% 79 15 7 8 16 2013 29% (8%) +30% 100 (47%) Brent price 53 54 (avg $/bbl) 44 +24% (17%) SIBUR EBITDA (17%) ($ bln) +32% 2.7 2.8 2.2 (6%) 2.1 SIBUR EBITDA 161 ( bln) 136 140 +15% 103 +3% 89 Feedstock & Energy +32% 66 61 37 49 45 34 32 30 2014 2015 32% (1) 36% 34% 35% Olefins & Polyolefins Plastics, Elastomers & Intermediates Unallocated EBITDA margin (1) Adjusted for estimated value of naphtha trading operations via Ust-Luga, ceased in 2015. 5

USD Equivalents, bln (illustrative) Russian Roubles, bln SIBUR FINANCIAL SUMMARY (1) Revenue Adj. EBITDA Operating Cash Flow Investing Cash Flow (2) Net Leverage +10% 412 455 149 +13% 169 +11% 138 153 (18%) 142 117 2.0x 1.6x 31 Dec'16 31 Dec'17 Revenue Adj. EBITDA Operating Cash Flow Investing Cash Flow (2) Net Leverage 6.1 +27% 7.8 2.2 +30% 2.9 2.1 +27% 2.6 (5%) 2.1 2.0 2.2x 1.7x 31 Dec'16 31 Dec'17 Share of JVs and associates EBITDA (1) Values in USD estimated based on average /$ rate of 58.4 and 67.0 in 2017 and 2016, respectively. Net Debt for the purpose of Net Leverage calculation is converted in USD with respective end-of-period /$ and / exchange rates. (2) Includes CapEx and M&A. 6

MACRO ENVIRONMENT Average Oil Price (Brent) (1) Russian GDP (2) CPI & PPI (y-o-y) (2) 43.7 +24% 54.3 (0.2%) 1.5% 5.4% 2.5% 7.5% 8.4% CPI PPI Average Exchange Rate (3) EOP Exchange Rate (3) Tariffs Indexation / $ 67.0 (13%) 58.4 (5%) 60.7 63.8 57.6 2016 +8% 68.9 2017 Indexation Rate Effective Date 3.9% Jul 2017 Description Regulated natural gas price 6% Jan 2017 Railway transportation tariff / $ / 5% 2017/2016 SIBUR effective avg. electricity tariff (1) Bloomberg. (2) Russian Federal State Statistics Service. (3) CBR. 7

PRICING ENVIRONMENT Oil and FX Feedstock and Energy 100.0 80.0 60.0 40.0 20.0 (13%) +24% 0.6 0.5 0.4 000 $ per tonne (avg. for the period) - LHS 000 $ per 000 cubic metres of natural gas (avg. for the period) - RHS +17% +26% +40% +34% 0.06 0.05 0.04 0.03 0.0 Brent ($ / bbl) / $ 0.3 Naphtha LPG CIF ARA (large) LPG DAF Brest Natural gas (RHS) 0.02 Olefins and Polyolefins Plastics, Elastomers and Intermediates 1.6 1.4 1.2 1.0 0.8 000 $ per tonne (avg. for the period) +10% +3% +10% 1.6 1.4 1.2 1.0 0.8 0.6 000 $ per tonne (avg. for the period) +20% +15% +23% +76% +26% +15% +21% 0.6 PP LDPE PP (Russia) 0.4 MTBE PET MEG Polystyrene Natural rubber Butadiene Styrene Source: Argus, Platts, Bloomberg, ICIS, Chemease, Malaysian Rubber Board, Federal Antimonopoly Service of Russian Federation. 8

PRICING ENVIRONMENT: KEY SPREADS (ILLUSTRATIVE) Widening F&E Spread Spread: LPG benchmark purchased hydrocarbons avg. spread ~ 237 $/tn avg. spread ~ 327 $/tn Sustained O&P Spread Spread: PP benchmark LPG benchmark avg. spread ~ 639 $/tn avg. spread ~ 611 $/tn WA hydrocarbon feedstock price LPG CIF ARA LPG CIF ARA PP raffia China Main Port. Spot WA hydrocarbon feedstock price is calculated as follows: (APG purchase expenses + raw NGL purchase expenses) / (raw NGL production volumes from APG + raw NGL third-party purchase volumes) and translates into US dollars at /$ FX rate for respective periods. Sources for benchmarks: Argus, ICIS. 9

EBITDA DYNAMICS Adj. EBITDA Dynamics Segments $2,225 mln 34% 2016 2,083 EBITDA by Segment ($ mln) 628 F&E 2016 2017 903 1,531 31% 39% 35 O&P 2016 2017 730 765 46% 40% +30% ($ mln) 50 PE&I 2016 2017 470 520 24% 20% (40) Unallocated 2016 2017 (20) (60) (7) JV EBITDA 2016 2017 142 136 35% $2,892 mln 2,757 2017 x% EBITDA margin 10

F&E (FEEDSTOCK AND ENERGY) SEGMENT HIGHLIGHTS bln 31% 171 61 Segment Financial Performance 39% 184 89 External Revenue EBITDA EBITDA margin, % Revenue: +8% EBITDA: +48% $903 mln $1,531 mln EBITDA ($): +70% Key Factors Wider spreads (benchmark prices for liquids vs. netbacks for third-party hydrocarbon feedstock) Higher volumes of APG processing, which is more profitable compared to third-party purchased raw NGL Changes in sales mix: higher total sales volumes of LPG on production growth (incl. intercompany sales), lower naphtha sales largely on termination of trading agreement, termination of raw NGL sales Lower transportation costs due to the decrease in transported volumes; changes in sales and logistic structure mostly related to lower NGLs export sales and changes in our transport routes Revenue (1) Structure 2017 Product Revenues Development (% change y-o-y) (1) Naphtha 13 Other sales Volume Price Total LPG +4% +19% +25% Natural gas 26 % 60 LPG Natural gas +1% +2% +3% Naphtha (32%) +15% (23%) Raw NGL (100%) - (100%) (1) Represents external revenue. 11

O&P (OLEFINS & POLYOLEFINS) SEGMENT HIGHLIGHTS bln 46% External Revenue Higher sales volumes largely attributable to higher PP and PE 40% EBITDA 87 88 23 Segment Financial Performance 49 45 20 70% 55% O&P Revenue: +2% O&P EBITDA: (9%) EBITDA Tobolsk PP Tobolsk PP EBITDA margin $730 mln $765 mln EBITDA ($): +4.8% Key Factors production on increased average capacity utilisation rate at our sites in Tobolsk and Tomsk Lower selling prices for most products FX fluctuations resulted in tighter spread between feedstock and end-products in RR terms, while it was relatively flat in USD terms Revenue (1) Structure 2017 Product Revenues Development (% change y-o-y) (1) Olefins Other Volume Price Total BOPP-film 19 7 PP PP +11% (3%) +8% PE 24 % 48 PE +13% (10%) +1% BOPP-films (2%) (8%) (10%) Olefins +3% +12% +15% (1) Represents external revenue. 12

PE&I (PLASTICS, ELASTOMERS & INTERMEDIATES) SEGMENT HIGHLIGHTS bln 24% 20% 131 Segment Financial Performance 147 32 30 External Revenue EBITDA EBITDA margin, % Revenue: +12% EBITDA: (4%) $470 mln $520 mln EBITDA ($): +11% Key Factors Higher sales volumes of elastomers largely on higher utilisation rates to capture high Asian demand on commodity rubbers in the first half of 2017 Higher sales volumes of intermediates Tighter spreads for the majority of plastics & organic synthesis end-products, except for elastomers where we observed favourable prices outpacing feedstock costs New trading arrangements for MTBE and fuel additives decreasing EBITDA margin Revenue (1) Structure 2017 Intermediates and other chemicals MTBE and fuel additives 16 16 % Other sales 32 Plastics & Organic Synthesis Product Revenues Development (% change y-o-y) (1) Volume Price Total Plastics & Organic Synthesis (1%) +3% +3% Elastomers +10% +20% +32% MTBE & Fuel Additives 0% (1%) 0% Elastomers 35 Intermediates and other chemicals +13% +1% +14% (1) Represents external revenue. 13

OPERATING EXPENSES STRUCTURE AND DYNAMICS OpEx bln 75% 72% +7% 309 330 x% - % of revenue Key Factors Higher feedstock and materials higher purchase prices for hydrocarbon feedstock on growth of respective export netbacks, partially mitigated by RR appreciation Lower transportation & logistics overall lower transported volumes, especially raw NGL, partially compensated by higher volumes of LPG and naphtha changes in sales mix and logistics structure RR appreciation impact on international logistics partially offset by railway tariff indexation (+6% in Jan 2017) Higher energy & utilities production growth and higher energy and utilities tariffs partially offset by changes in perimeter Higher staff costs growth in headcount of NIPIGAZas a result of the expansion in their operations movements in bonus provision and increase in average salaries partially offset by decrease in headcount and changes in perimeter Higher purchases of goods for resale, compensated by higher external revenue adjusted for goods for resale OpEx increased by 4% 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 Energy & Utilities Staff Costs Goods for resale Other 20% 20% 18% 15% 9% 9% 8% 8% 3% 5% 16% 15% +12% 83 (9%) +8% 93 74 +3% 67 11% +63% 65 70 38 39 35 38 14 23 14

CASH FLOWS HIGHLIGHTS FY 2016 Cash Flow Reconciliation FY 2017 Cash Flow Reconciliation bln Net CF: (111) bln Net CF: (12) 138 (146) 61 153 (135) 22 (16) (20) 48 (25) (16) (64) Net OCF CapEx (1) Interest Dividends Net debt & bank fees repayment/ settlement 2 Other Cash as of 31.12.16 Net OCF CapEx (1) M&A Interest Dividends & bank fees (23) Net debt repayment 7 Other Cash as of 31.12.17 Key Factors Net cash from operating activities increased by 11% y-o-y due to increase in EBITDA largely offset by higher income tax paid Net cash used in investing activities decreased by 18% y-o-y on proceeds from the divestment of AO Uralorgsintez for cash consideration of RR 22 bln 7% decrease in CapEx Net cash used in financing activities decreased by half mainly as a result of lower debt repayment compared to last year (1) Includes purchase of property, plant and equipment, intangible assets and other non-current assets. 15

DEBT PROFILE Key Figures RR bln, except as stated 31 Jan 2018 31 Dec 2017 31 Dec 2016 Change, 31 Jan 18 to 31 Dec 17, % Total debt 283.9 312.3 341.8 (17.0%) Conventional debt 112.7 139.1 182.1 (38.1%) ZapSib related debt 171.2 173.2 159.7 7.2% Cash & cash equivalents 31.7 48.5 60.6 (47.7%) Net debt 252.2 263.9 281.2 (10.3%) Conventional net debt 89.8 102.4 163.4 (45.0%) ZapSib related net debt 162.4 161.4 117.8 37.9% WA loan tenor (years) 7.4 6.9 6.8 WA Conventional debt 3.7 3.1 2.7 WA ZapSib related debt 9.8 9.9 11.4 Available credit lines, incl. 270.2 271.3 184.5 46.4% Committed 132.1 131.8 112.5 17.4% Leverage Ratios 31 Dec 2017 31 Dec 2016 Debt / EBITDA 1.9x 2.4x Debt / EBITDA (in $) 2.0x 2.7x Net debt / EBITDA 1.6x 2.0x Conventional net debt 0.6x 1.2x ZapSib related net debt 1.0x 0.8x Net debt / EBITDA (in $) 1.7x 2.2x $ / / Long-term/Short-term Fixed/Floating Unsecured Overview As of 31 Jan 18 vs. 31 Dec 17 total debt decreased by 17.0% and net debt decreased by 10.3% mainly due to substantial repayments of conventional debt Average tenor improved to 7.4 from 6.8 years following Eurobond 23 placement and redemption of Eurobond 18 As of 31 Dec 17 net leverage decreased to 1.6x from 2.0x as of 31 Dec 16 conventional net leverage decreased to 0.6x from 1.2x on recent debt repayments ZapSib net leverage increased to 1.0x from 0.8x on on-going project financing Loan portfolio structure as of 31 Jan 18 35% 56% 98% 100% 23% 19% 65% 2% 16

LIQUIDITY AND DEBT MATURITY PROFILE (1) As of 31 January 2018, bln 302 uncommitted credit lines 138 committed credit lines 132 64 111 cash & cash equiv. 32 4 33 30 31 22 14 14 14 14 14 Liquidity 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 After 2028 loans Eurobonds RR bonds ECA NWF undrawn EUR ECA (1) Items denominated in $ and are converted into at /$ and / FX rates as of 31 January 2018. 17

FINANCIAL CALENDAR 2018: SIBUR IS BACK TO QUARTERLY IFRS Operational and Financial Results Date FY 2017 28 February 2018 Q1 2018 May 2018 H1 2018 August 2018 9M 2018 October 2018 18