Alpek Polyester (PET). Pearl River, USA Petrochemicals
Contents Overview Recent Developments Strategy Outlook
Overview Alpek Polyester (PTA, PET). Columbia, USA
Alpek at a glance LTM 3Q18 US $6.6 Billion Revenues US $834 Million EBITDA 26 Plants ~5,900 Employees
Leading position across product portfolio Sales by product (%) 73% Polyester Polyester (PTA, PET, rpet, Fibers) 73% #1 PTA-PET producer in America 27% Plastics & Chemicals Polypropylene (PP) 12% Expandable Polystyrene (EPS) Caprolactam (CPL) & Fertilizers Specialty & Industrial Chemicals 8% 4% 3% #2 PET producer Worldwide #1 EPS producer in America Only PP and CPL producer in Mexico
Focus on consumer end-markets Volume by end-use Others 11% Consumer Goods 22% Food and Beverages 66%
Sustainable growth track record Volume Index Polyester acquisition in Brazil U.S. PTA/PET plant acquisitions IPO (BMV) Acquisition of first PTA plant PP plant start-up (JV) CPL plant acquisition First U.S. polyester plant acquisitions EPS capacity expansion (JV) First recycling plant (JV) First power cogeneration plant Thirty-year CAGR: +8% 1988 1993 1998 2003 2008 2013 2018
Financial performance EBITDA LTM (US$ Million) Net Leverage (Times) 834 3.2 3.3 3.1 2.9 564 376 384 407 1.9 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18
Recent Developments
Global margin recovery PTA/PET (Asia, Integrated) Polypropylene (North America) Caprolactam (Asia) +61% +15% +48% Average 2014-2017 2018 1 Average 2014-2017 2018 1 Average 2014-2017 2018 1 (1) Sep 18 YTD Note: Industry figures; source: WoodMackenzie, IHS Markit, ICIS
Actively engaged in transformational events PTA & PET Capacity Share in the Americas 2017 2018 PTA Alpek 36% Alpek 47% Suape/Citepe acquisition PET Alpek 36% M&G Bankruptcy Alpek 44% Source: WoodMackenzie, Alpek
Suape/Citepe acquisition Access to strategic market One of three PET producers in the region Attractive growth potential Competitive asset Only integrated PTA/PET site in the region Enhanced footprint in the Americas Alpek Polyester (PTA, PET, Fibers). Suape/Citepe, Brazil
Ongoing turnaround at Suape/Citepe Foto informe 2016 pg 33 Initial achievements Cost reduction Increased production Enhanced profitability Customer relationship Opportunities Cost optimization Plant reliability Energy savings
M&G bankruptcy 1 Relevant role in Mexico Restructure First Lien Acquisition DIP Financing Secure PTA supply Maximize debt recovery 2 Corpus Christi Chapter 11 Process Winning Bid 1 in partnership with Indorama & FENC Access to most competitive PTA/PET in the Americas 1) FTC approval process in progress
Power cogeneration Power Rate Index (Mexico) 109% Two plants (Mexico) 445 MW Cosoleacaque: 95 MW Altamira: 350 MW J J A S O N D J F M A M J J A S 2017 2018
Potential divestment considerations 4Q17 3Q18 Power Rate Mexico ( /kwh) 5.7 1 12.0 2 Construction (Altamira) Alpek Leverage (Net debt / EBITDA) 87% 98% 3.3x 1.9x 1) January 2018 2) September 2018 Alpek Polyester (Power cogeneration). Altamira, México
Strategy Indelpro (PP). Altamira, México
Strategic priorities Strengthen Core Business Growth PET Sustainability Alpek Polyester (PET). Columbia, USA
Strengthen Core Business Strengthen core business Cambiar foto Ensure profitability throughout margin cycles Cost improvement Enhance position in the Americas Reliability, quality and innovation Secure competitive feedstock/power supply
Enhance profitability Strengthen Core Business US PET Conversion Cost (Index 2014: 100) PTA Sales Mix -20% 91% Domestic / Integrated 40% 2014 3Q18 YTD 2014 2018 Proforma
Strengthen Core Business Key opportunities Lever Integrex technology Altamira PTA Brazil expansion (PTA and Fibers) Paraxylene / MEG / propylene integration Ammonia & ethylene storage spheres
Growth Growth Deliver returns following US $1 Billion investments Suape/Citepe Altamira Cogeneration Corpus Christi PTA/PET Vertical integration Strategic and opportunistic M&A Focus on synergies Explore new geographies Alpek Polyester (PET). Pearl River, USA
Growth Disciplined capital allocation >15% IRR (unlevered, dollar-denominated) Foto Maintain healthy capital structure Competitive assets / relevant markets Preference for existing or related businesses Strategic fit
Key PET advantages Global Recycling Rate (%) PET Sustainability 55 100% recyclable 14 Lower cost and energy consumption vs aluminum and glass Lightweight and resistant PET Other Plastics Source: Ellen MacArthur Foundation ( The New Plastics Economy )
Developments PET Sustainability Operating two recycling facilities ( 90 Kta) USA: #1 PET recycler Argentina: only food-grade recycler Expand recycled content offering Customer-oriented initiatives Bio-content Product development (lightweighting)
Outlook Indelpro (PP). Altamira, México
Build upon robust cash generation Selected cash flow items (US$ Million) 864 896 858 717 712 Cash CAPEX + Dividends 2014 2015 2016 2017 LTM 3Q18
Focus Enhance market position Ensure profitability throughout margin cycles Deliver returns on recent investments Pursue profitable growth Maintain disciplined capital allocation
Alpek Polyester (PET). Pearl River, USA Petrochemicals