Company Presentation
November 2017
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Company Presentation November 2017 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
November 2017
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
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
are under no obligation to update the information, opinions or forward-looking statements in this presentation.
2
SIBUR AT A GLANCE
Unique integrated gas processing & petrochemicals
company
One of the highest EBITDA margin in the industry
worldwide
Diverse range of products, over 1,400 large customers
in approximately 70 countries
Credit rating at sovereign level at Moody’s (Ba1), rated
BB+ by Fitch. No history of downgrades throughout the cycle
World-scale investment project underway to triple
SIBUR polyolefin capacity
Who We Are
revenue
EBITDA
EBITDA margin
net leverage(1)
production sites in Russia
3
Revenue by Segment
40 20 33 7
%
Feedstock & Energy Olefins & Polyolefins Plastics, Elastomers & Intermediates Unallocated(2) 58 29 7 5 1
Revenue by Geography
%
Russia Europe Asia CIS Other
All above figures represent H1 2017 LTM results. SIBUR’s reporting currency is Russian rouble. Figures in $ were translated at the following $/₽ rates: 57.99 and 63.85 for the semi-annual periods ended 30 June 2017 and 31 December 2016, respectively. (1) Net Debt /EBITDA as of 30 June 2017 in $ terms. (2) Unallocated revenue is primarily derived from sales of EPC-services.
UNIQUE INTEGRATED GAS PROCESSING & PETROCHEMICALS COMPANY…
(1) Associated petroleum gas (APG) is a by-product of oil production. (2) Natural gas liquids (NGLs) include raw NGL, LPG (liquefied petroleum gas) and naphtha. Raw NGL is a by-product of gas production. (3) Includes LPG, naphtha and raw NGL. Composition may vary from year to year depending on market conditions and other limitations. (4) JV sales include PVC, caustic soda (RusVinyl) and PP (Poliom).
LOGISTICS CLIENTS SUPPLIERS 4
Feedstock & Energy Segment
APG(1) (21.9 bcmpa) NGLs(2) (4.0 mtpa)
gas processing gas fractionation 7.2 mtpa
PETROCHEMICALS Olefins & Polyolefins Segment Plastics, Elastomers & Intermediates Segment
1.1 mtpa 2.3 mtpa feedstock(3) LPG and naphtha (6.2 mtpa) natural gas (18.2 bcmpa) NGLs 5.9 mtpa 3.4 mtpa 0.7 mtpa(4)
Based on FY 2016 results
1,426 904 Adj. EBITDA(1) External revenue 2,315 526 EBITDA External revenue 2,811 1,162 External revenue EBITDA
Feedstock & Energy Olefins & Polyolefins Plastics, Elastomers & Intermediates Strategy Financial results ($ mln) Revenue structure Key end- markets
…OPERATING THREE HIGHLY PROFITABLE AND DIVERSIFIED BUSINESS SEGMENTS
5
Flat production Expansion (ZapSib, Tobolsk logistics hub) Development of tailored grades Selective opportunities targeting structural changes in domestic industries % 46 PP 25 PE 3
BOPP 20
6 % 31 69 domestic export % 43 57 domestic export % 53 47 domestic export % 56 LPG 27 natural gas 16 naphtha
1 % 15 33 plastics &
34 elastomers 17 MTBE & fuel additives
intermediates &
1
42.9%
EBITDA margin
34.5%
EBITDA margin
22.3%
EBITDA margin
All above figures represent H1 2017 LTM results. (1) Adjusted EBITDA, including share of the Group’s portion in joint ventures and associates EBITDA (darker shading).
OUTLINE
Unique features creating attractive investment opportunity p.7 Contact details p.19 FAQ p.20 Financial profile p.31
6
UNIQUE FEATURES CREATE ATTRACTIVE INVESTMENT OPPORTUNITY
COMPETITIVE ACCESS TO STRANDED FEEDSTOCK
hydrocarbon feedstock reserves in Russia
ROBUST PROFITABILITY THROUGH THE CYCLES
currencies serve as a natural hedge against energy cycles
UNIQUE GROWTH STRATEGY
ample feedstock stranded in the region
best-in-class margins
LEADERSHIP IN ATTRACTIVE DOMESTIC MARKET
7
Source: Wood Mackenzie.
1
COMPETITIVE ACCESS TO STRANDED FEEDSTOCK
2 4
77%
65% WESTERN SIBERIA – SIBUR feedstock base
Volga-Urals region
16% 9%
Caspian sea region Eastern Siberia
10%
8%
Far East
7% 5%
% Region’s share in Russian APG production (2016) % Region’s share in Russian unstable gas condensate production (2016)
APG Unstable gas condensate
C1 C5 C4 C3 C2 C7+ C6 C1 C3 C2 by- product of oil production core products for
companies
OIL FIELD GAS FIELD
by- product of gas production feedstock for SIBUR
STRATEGICALLY LOCATED IN WESTERN SIBERIA ‒ AT THE HEART OF HYDROCARBON FEEDSTOCK RESERVES IN RUSSIA
2%
Timan-Pechora region
1%
C4 C5 C6 C7+
8
Purovsky GCP (NOVATEK) SIBUR Tobolsk production site SIBUR infrastructure Third-party infrastructure
(1) Including Yuzhno-Priobskiy GPP operated under JV. (2) Source: Wood Mackenzie. (3) Does not include financing of JV and petchem capacities construction.
INTEGRATED INFRASTRUCTURE
SIBUR owns and operates the largest and most extensive infrastructure for processing and transportation of feedstock in Western Siberia
Western Siberia
HIGH BARRIERS TO ENTRY
the region in the last two decades
expansion and upgrade of the gas processing and transportation infrastructure in the region, incl:
ACCESS TO FEEDSTOCK(2)
SIBUR is the largest processor of oil&gas production by-products:
SIBUR ASSET BASE IN WESTERN SIBERIA
INTEGRATED PLATFORM WITH UNIQUE LARGE-SCALE TRANSPORTATION AND FEEDSTOCK PROCESSING INFRASTRUCTURE
SIBUR newly constructed / upgraded assets
1
COMPETITIVE ACCESS TO STRANDED FEEDSTOCK 9
Pricing drivers Contracts*
For suppliers: limited options for alternative APG utilisation and flaring fines Two types of contracts regulating purchase price indexation:
Purchase price is driven by NGLs netbacks and feedstock fraction composition
APG NGLs
2 4 6 2014 2015 2016
SIBUR APG avg purchase price** Russian regulated natural gas Saudi Arabia ethane US natural gas US ethane
$/MMBtu 300 600 900 2014 2015 2016
SIBUR raw NGL avg purchase price** SIBUR avg. NGLs petchem feedstock cost*** NA LPG mix ARA LPG mix ARA naphtha NA naphtha
Source: Bloomberg, Argus. SIBUR APG purchase prices are converted at 0.028 rate to translate into MMBtu and at the following ₽/$ average exchange rates: 67.03, 60.96 and 38.42 for the years 2016, 2015 and 2014, respectively. * As of 30 September 2017, unless otherwise stated. ** SIBUR carries modest cost of separation of APG and raw NGL into components. *** Represents effective average intragroup price, at which NGLs are sold from F&E segment to petchem segments. These prices are determined based on netbacks.
$/tonne
Feedstock competitively priced vs
Source for ~60% of NGLs available to SIBUR
year contracts
year contracts
LONG-TERM CONTRACTS WITH PRICING FORMULAS THAT SECURE SIBUR MARGINS
1
COMPETITIVE ACCESS TO STRANDED FEEDSTOCK 10 Source for ~40% of NGLs available to SIBUR
LEADING PLAYER IN THE ATTRACTIVE DOMESTIC MARKET
Source: Nexant Limited, IISPR, Alliance Analytics, Market report. (1) Based on product ranking in SIBUR domestic revenue from petrochemicals sales. #5 – MTBE, #7 – ethylene, #9 – alcohols, #10 – ethylene oxide, #12 – benzene.
SIBUR’s Leading Position in Russia (2016)
PP #1
relevance for SIBUR(1)
LDPE #3 BOPP-films #4 Expandable polystyrene #6 MEG #8 BR #13 SBR #14 2
LEADERSHIP IN ATTRACTIVE DOMESTIC MARKET
PET #2 SBS #11
11
5.4% 3.9% 3.3% 3.2% LLDPE HDPE PP LDPE
Russian Market Growth Fundamentals Kg per Capita Consumption of Polyolefins (2016)
Polypropylene Polyethylene
Russia Consumption Growth Outlook
CAGR, 2017-2025 8 16 18 19 Russia China Western Europe USA 13 18 30 40 Russia China Western Europe USA
PORTFOLIO DIVERSIFICATION: WIDE RANGE OF DEMAND DRIVERS SUSTAINING RESILIENT PERFORMANCE
3
ROBUST PROFITABILITY THROUGH THE CYCLES 12 Feedstock & Energy Olefins & Polyolefins Plastics, Elastomers & Intermediates Key drivers
global oil prices
and export duties
regulated natural gas prices
customer markets
markets
prices and crude C4 balances
36 56 7
Utilities and fuels Petrochemicals Traders Other
End- customers
% 58 10 12 9 11
FMCG, packaging Traders Construction Chemicals Other
% 22 19 14 13 13 12 7
Chemicals Automotive Fuels Construction FMCG Traders Other
%
All above figures represent data for H1 2017.
$ 4.6 bln $ 6.1 bln
SIBUR Revenue and Costs: Exposure to Oil and FX
LPG & naphtha Natural gas Olefins & polyolefins
Plastics & Elastomers
MTBE
Revenue OpEx
Feedstock & materials
Transportation & logistics D&A
Staff
Energy
ILLUSTRATIVE
FY 2016
NATURAL HEDGE: COUNTERBALANCING CHANGES IN OIL AND FX SUSTAIN SIBUR MARGIN
3
ROBUST PROFITABILITY THROUGH THE CYCLES
Other Other
13
11% 11% 15% 12% 24% 27% 21% 6% 12% 21% 11% 29%
Correlation with oil Hard currency ($, €) ₽ Brent $/bbl ₽/$ Russian Rouble Appreciation vs. Weak Oil(1)
60% 80% 100% 120% 140%
(1) Source: Bloomberg.
3
ROBUST PROFITABILITY THROUGH THE CYCLES 14 8 16 34 32 32 7 15 37 49 47 70 79 66 61 71
DOWNSTREAM INTEGRATION: FOUNDATION OF THE RESILIENT PERFORMANCE AND STABLE MARGINS
2014 2015 2016 H1 2017 LTM 2013 +32% +3% 136 140 149 +30% 103 Feedstock & Energy Plastics, Elastomers & Intermediates Unallocated Olefins & Polyolefins SIBUR EBITDA (₽ bln) EBITDA margin
EBITDA is translated in $ using the following ₽/$ average exchange rates: 60.91 for H1 2017 LTM, and 67.03, 60.96, 38.42 and 31.86 for the years 2016, 2015, 2014 and 2013, respectively. Source for average Brent price: Bloomberg. (1) Adjusted for estimated value of naphtha trading operations via Ust-Luga, ceased in 2015.
32%(1) 36% 34% 35% 29% 79 +7% 109 100 53 44 52 (47%) +16% (17%) (8%) 2.5 2.7 2.2 2.1 2.5 (17%) +18% (6%) +8% Brent price (avg $/bbl) SIBUR EBITDA ($ bln)
2012 2013 2014 2015 2016 5% 10% 15% 20% 25% 30% 35%
Source: Bloomberg (1) Nizhnekamskneftekhim.
A LEADING STABLE EBITDA MARGIN
3
ROBUST PROFITABILITY THROUGH THE CYCLES 15
(1)
(1) Illustrative. (2) per 1.35 tonne of LPG utilised for production of 1 tonne of polyolefins. (3) EBITDA is translated in $ using the following ₽/$ average exchange rates: 67.03, 60.96 and 38.42 and 31.86 for the years 2016, 2015, 2014 and 2013, respectively.
POLYOLEFIN PRODUCTION IN WESTERN SIBERIA ‒ EFFICIENT MONETISATION OF AMPLE FEEDSTOCK STRANDED IN THE REGION
4 UNIQUE GROWTH STRATEGY
LPG Market price Transport, duties LPG netback in Tobolsk
Rationale for Polyolefin Production(1) PP Production in Tobolsk ‒ Strategy Validation
Added value
Polyolefin production cost less by-products Polyolefin netback in Tobolsk Transport, duties Polyolefin market price LPG(2) POLYOLEFINS
152 395 516 592 2013 2014 2015 2016 208 429 605 730 2013 2014 2015 2016
+106% +20% 46% 39% O&P EBITDA margin Total SIBUR PP production SIBUR PP production in Tobolsk O&P EBITDA(3) ($ mln) 13% 21% 500 ktpa PP production was launched in Tobolsk in the end of 2013
Contribution to Production Volumes Contribution to Economics of O&P Segment
kt
16 +41%
propane 55%
Project Description
ktpa
PE(1) 1,500 PP 500 propylene 525 ethane 10% n-butane 35%
ZAPSIB – SCALE-UP OF POLYOLEFIN PRODUCTION IN WESTERN SIBERIA
Strong position on global ethylene cost curve:
competitively priced stranded feedstock
Reducing exposure to energy price volatility
(1) PE includes HDPE and LLDPE. (2) Data as of 30 June 2017. Numbers and respective percentages calculated based on exchange rates as of 30 June 2017; ₽/$ at 58.94, ₽/€ at 67.31 . (3) Cash balances as of 30 June 2017. NWF stands for National Wealth Fund. RDIF stands for Russian Direct Investment Fund. ECA stands for Export Credit Agency.
4 UNIQUE GROWTH STRATEGY
ethylene 1,500 butadiene 94 ethylene cracker
Strong Position on the Ethylene Cost Curve (2021)
525 ktpa of propylene
production site in Tobolsk
Production Scheme Project CapEx for H2 2017-2020(2) and Current Status 65%
progress as of 31 Oct’17 ₽231 bln (excl. VAT) invested as of 30 Jun’17 since the project launch 64% 8% 28% $5.2 bln as of 30 Jun’17 ₽ 41% $ 33% € 26%
Funding Sources Residual Project Budget
SIBUR
NWF and RDIF(3) ECA(3)
Middle East ZapSib USA Russia Western Europe China
17
Source: Nexant 500 1,000 1,500 30 60 90 120 150 180 Cash Cost ($/tonne) Ethylene cumulative capacity (mtpa) High Case 70 $/bbl Medium Case 50 $/bbl Low Case 30 $/bbl
ZapSib
Oil Price Scenarios Source: Nexant
COMPETITIVE ACCESS TO STRANDED FEEDSTOCK ROBUST PROFITABILITY THROUGH THE CYCLES UNIQUE GROWTH STRATEGY LEADERSHIP IN ATTRACTIVE DOMESTIC MARKET
18
UNIQUE FEATURES CREATE ATTRACTIVE INVESTMENT OPPORTUNITY
INVESTOR RELATIONS CONTACTS
SIBUR_IR@sibur.ru +7 (495) 777-55-00 (*39-47) www.investors.sibur.com
19
SIBUR business 1. How do APG and raw NGL processing economics compare? 2. What is the correlation of petchem prices with oil? 3. What is the history of SIBUR’s credit rating? 4. What are SUBUR achievements in EHS(1)? ZapSib 5. How is progress evaluated for investment projects? 6. What is the track record of SIBUR team in investment projects execution? 7. How will SIBUR feedstock allocation change after the launch of the project? 8. How competitive is ZapSib at delivery to target markets? Strategy 9. What is the strategy post 2020?
Corporate
20
(1) Environmental, Health & Safety.
Illustrative Margin of APG Processing Illustrative Margin of NGL Processing
Margins high but volatile (relatively to NGLs feedstock processing) SIBUR has significantly increased share of NGLs in feedstock securing higher earning sustainability thanks to stable NGLs economics Margin substantially lower vs. APG processing but is highly robust and stable as purchase and selling prices are strongly correlated APG purchase price Processed NGL selling price NGL purchase price Processed NGL selling price Natural gas selling price
21
Source: Argus, Platts, Bloomberg, ICIS, Malaysian Rubber Board, Chemease, Federal Antimonopoly Service of Russian Federation
22
In $, Rebased to 100 In $, Rebased to 100 In $, Rebased to 100 In $, Rebased to 100 0% 50% 100% 150% 200% 250% 0% 20% 40% 60% 80% 100% 120% 140% 160% Natural Rubber Butadiene Contract, FD NWE Styrene Brent ₽/$ 0% 50% 100% 150% 200% 250% 20% 40% 60% 80% 100% Polystyrene MEG MTBE PET Brent ₽/$ 0% 50% 100% 150% 200% 250% 0% 20% 40% 60% 80% 100% 120% 140% LDPE PP raffia China Main Port PP MRC CPT Moscow Brent ₽/$ 0% 50% 100% 150% 200% 250% 0% 20% 40% 60% 80% 100% Brent Naphtha LPG CIF ARA (large) Natural gas LPG DAF Brest ₽/$
Feedstock & Energy Plastics, Elastomers & Intermediates (1/2) Plastics, Elastomers & Intermediates (2/2) Olefins & Polyolefins
₽/$ on secondary axis ₽/$ on secondary axis ₽/$ on secondary axis ₽/$ on secondary axis
SIBUR’S CREDIT RATINGS
Agency Initial rating Actual current rating ”Intrinsic” credit rating assessment Latest review Moody’s CFR Ba2 (2007) Ba1, Stable Baa2 (as of current rating grid) Baa1 (as of forward looking grid) February 2017 Fitch Lt IDR BB (2007) BB+, Negative BBB (credit rating excluding systemic risks) March 2017 SIBUR - Moody's SIBUR - Fitch RUSSIA - Moody's RUSSIA - Fitch 1 2 3 4 5 6 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 BBB/Baa2 BBB+/Baa1 BB-/Ba3 BBB+/Baa1 BB/Ba2 BB+/Ba1 BBB-/Baa3
Sources: Moody’s Credit Opinion dated 10 April 2017; Fitch Rating Report dated 31 March 2017.
“SIBUR's ratings are constrained by higher-than-average systemic risks associated with the Russian business and jurisdictional environment. Fitch assesses SIBUR's credit profile excluding these risks as in the 'BBB' category” “Sibur’s Ba1 corporate family rating is solidly positioned in its rating category and can potentially be constrained by Russia’s Ba1 sovereign rating with a stable outlook and the country's Ba1 foreign-currency bond ceiling”
No negative rating action despite sustained period of turbulence and downgrades of the sovereign in 2013-2015
Sources: Moody’s, Fitch.
23
Air Pollutant Emissions
‘000 tonnes 63 61 59 56 59 58 2011 2012 2013 2014 2015 2016
Water Discharge Waste Generation
Mcm(3) ‘000 tonnes 159 124 132 74 74 77 2011 2012 2013 2014 2015 2016 69 66 64 54 56 55 2011 2012 2013 2014 2015 2016
LTIF(2)
0.81 0.81 0.76 0.73 0.63 0.3 2011 2012 2013 2014 2015 2016
(1) Environmental, Health & Safety. (2) Lost Time Injury Frequency. (3) Million cubic meters.
24
SIBUR prevented about 7 million tonnes of harmful emissions and 71 million tonnes of CO2 equivalent by processing 22.4 bcm of APG in 2016
DETAIL ENGINEERING: drafting of project documentation 2 PROCUREMENT: manufacturing of equipment and its delivery to construction site 3
𝑇𝑢𝑏𝑓 𝑄𝑠𝑝𝑠𝑓𝑡𝑡 = 𝛾𝑘 × 𝑁
𝑘 𝑘 𝛾𝑘 ‒ weight of the item 𝑘 in the overall cost of items procured for the project 𝑁
𝑘 ‒ % completion of the item 𝑘 (measured by the contractor based on the
discrete milestone chain applicable for the item 𝑘)
CONSTRUCTION: assembling and installation of equipment, construction of production site facilities 4
𝑇𝑢𝑏𝑓 𝑄𝑠𝑝𝑠𝑓𝑡𝑡 = 𝛿𝑙 × 𝑄𝑙
𝑙 𝛿𝑙 ‒ weight of the item 𝑙 in the overall volume of construction man-hours 𝑄
𝑙 ‒ % completion of the item 𝑙 (measured by the owner based on the actual
work completed)
𝑇𝑢𝑏𝑓 𝑄𝑠𝑝𝑠𝑓𝑡𝑡 = 𝛽𝑗 × 𝑁𝑗
𝑗 𝛽𝑗 ‒ weight of the document 𝑗 in the project documentation pack (measured by the contractor based on complexity and labor content) 𝑁𝑗 ‒ % completion of the document 𝑗 (measured by the contractor based on the discrete milestone chain applicable for the document 𝑗)
FEED: front-end engineering and design 1 Project Evaluation Project Execution
25
Budget Execution Completion Year
Terms Committed in 2013 in Eurobond Prospectus vs Actuals
2.6%
3.3%
1.5% 6.6% 11.6%
Estimated expenditures (₽ bln) Purovsk–Tobolsk raw NGL pipeline 69.7 New PP production 56.8 Ust-Luga Terminal 20.6 GFU expansion from 3.8 to 6 mtpa 14.1 Steam cracker upgrade 8.3 New TPE production 4.4 Expansion of propylene intermediate depot 2.6 New BOPP-film production 2.5 Expansion of BOPP-film production 2.1 Expansion of PET production 1.8 Expansion of IIR production 1.4 Estimated 2015 2013 2013 2014 2014 2013 2013 2013 2014 2014 2013 Actual 2014 2013 2013 2014 2014 2013 2013 2013 2014 2014 2013
Budget Variance Investment project Republic of Bashkorstostan Location Western Siberia Tobolsk Leningrad region Tobolsk Kstovo Voronezh Tobolsk Tomsk Samara region Togliatti
26
2016 2022F
29% 6% 65% 58% 42% Sources Uses Sources Uses (PP in Tobolsk) ZapSib PP in Tobolsk
Higher share of feedstock is processed internally into petrochemical products providing higher margins
Petchem 35% Petchem SIBUR’s raw NGL production (sourced from APG) Third-party NGLs supplies Petrochemicals Energy products
27
28
250 500 750 1,000 1,250 1,500 10 20 30 40 50 60 Cash Cost ($/tonne) Cumulative Capacity (mtpa) 2021 WE $50 Middle East Russia USA China Western Europe
HDPE (2021) PP (2021)
Source: Nexant Limited.
Delivered to W.Europe Delivered to China
250 500 750 1,000 1,250 1,500 10 20 30 40 50 60 Cash Cost ($/tonne) Cumulative Capacity (mtpa) 2021 China $50 Middle East Russia USA China Western Europe 250 500 750 1,000 1,250 1,500 10 20 30 40 50 60 70 80 90 Cash Cost ($/tonne) Cumulative Capacity (mtpa) 2021 WE $50 Middle East Russia United States China Western Europe 250 500 750 1,000 1,250 1,500 10 20 30 40 50 60 70 80 90 Cash Cost ($/tonne) Cumulative Capacity (mtpa) 2021 China $50 Middle East Russia United States China Western Europe (incl. ZapSib) (incl. ZapSib) (incl. ZapSib) (incl. ZapSib)
2 4
Skovorodino Chayandinskoye Kovyktinskoye Blagoveshchensk Irkutsk Amur GPP (Gazprom)
Amur Chemical Plant (SIBUR) WESTERN SIBERIA EASTERN SIBERIA
Svobodny Power of Siberia Gas Pipeline Products: methane, ethane, propane, butane, pentane- hexane fraction Gas processing capacity(1)
42 bcm(2)
Helium production capacity
60 mcm(3)
(I) Gazprom and SIBUR – Joint investment project on construction of gas processing and chemical hub in the Amur region
(final investment decision expected after completion of basic design stage not earlier than 2018)
(1) Source: Gazprom. (2) Billion cubic metres. (3) Million cubic metres.
party infrastructure
in Russia ~10%
value chain
(II) Ideas for further strategic development
New Feedstock New Products
substitution, for instance
recently launched
their derivative product families, for instance
29
2016 world total polymers consumption: 243 mt
26 17 12 9 17 8 11 PVC PET LDPE LLDPE HDPE PP
Source: IHS Markit, Nexant
HomoPP RCP ICP %
PE & PP Sustainably Grow Faster than World GDP PE & PP ̶ Most Widely Used Polymers
Other
30 Global consumption of PO grows faster than World GDP
PE & PP Net Trades by Key Markets (mtpa)
0% 1% 2% 3% 4% 50 100 150 2012 2016 2020F 2024F
PE PP GDP (RHS)
’12-’16 PP: 5.0% PE: 3.8% GDP: 2.7% ’17-’25 4.1% 3.9% 3.1% mtpa %
5 15 2016 2025
2016 2025 PE PP
5 2016 2025 PE PP
2016 2025 PE PP
2016 2025 PE PP
China Western Europe Turkey Russia
PE PP
USA
dividend policy?
31
Shareholder Structure(1)
48.5 17.0 14.5 10.0 10.0
Current & former senior SIBUR managers Gennady Timchenko Leonid Mikhelson
%
Board of Directors Leonid Mikhelson
Chairman of the Management Board of NOVATEK
Dmitry Konov
Chairman of the Management Board of PJSC SIBUR Holding
Wang Dan
Executive Vice President
Alexander Dyukov
CEO of Gazprom Neft
Denis Nikienko
CEO of Ladoga Management
Vladimir Razumov
Member of the Management Board of PJSC SIBUR Holding
Kirill Shamalov
President of Ladoga Management
Ilya Tafintsev
Strategic Projects Director of NOVATEK
Gennady Timchenko
Member of the Board of Directors of NOVATEK
Ruben Vardanyan(2)
President of Vardanyan, Broitman & Partners
Chang Zhenyong
Vice President of Sinopec
(1) As of 30 June 2017. (2) Independent director in accordance with director independence criteria established by Russian law.
25% payout ratio targeted by dividend policy
and adjusted for exceptional non-cash income and expenses
32
4.0 6.2 8.5 8.7 8.5 8.3 6.2 6.1 0.8 1.9 2.9 2.6 2.5 2.7 2.2 2.1 20% 31% 35% 30% 29% 32% 36% 34% 2009 2010 2011 2012 2013 2014 2015 2016
Revenue, $ bln EBITDA, $ bln EBITDA margin, %
(1) (1)
Net debt/ EBITDA ($) 1.6x Ba2 BB 0.7x Ba2 BB 0.7x Ba2 BB 1.0x Ba1 BB+ 1.1x Ba1 BB+ 1.2x Ba1 BB+ 1.8x Ba1 BB+ 2.2x Ba1 BB+
(1) Adjusted for the estimated value of naphtha trading operations via Ust-Luga, ceased in 2015.
FINANCIAL PERFORMANCE
33
2.8 3.7 H1 2016 H1 2017 70.4 78.9 H1 2016 H1 2017 1.0 1.4 H1 2016 H1 2017 +35.8% 196.1 211.9 H1 2016 H1 2017
SIBUR FINANCIAL SUMMARY(1)
Operating Cash Flow Revenue CapEx(3) Russian Roubles, bln
(1) Values in USD estimated based on average RR/USD rate of 57.9862 and 70.2583 in H1 2017 and in H1 2016, respectively . (2) Adjusted EBITDA, including share of the Group’s portion in joint ventures and associates EBITDA. (3) Includes purchase of PPE, intangible assets and other non-current assets.
+8.1% 148.2 154.1 H1 2016 H1 2017
Operating Expenses
2.1 2.7 H1 2016 H1 2017
Operating Cash Flow Operating Expenses CapEx(3)
+26.0%
USD Equivalents, bln (illustrative) Revenue
+30.9% 59.9 63.3 H1 2016 H1 2017 +5.7% 84.9 48.7 H1 2016 H1 2017 0.9 1.1 H1 2016 H1 2017 +28.1% (42.6%) 1.2 0.8 H1 2016 H1 2017 (30.4%)
EBITDA(2)
+12.1%
EBITDA(2)
Share of JVs and associates EBITDA +4.0%
34
(36.4) 41.2 63.3 (48.7) 22.1 (7.6) (9.4) (2.8) (19.4)
CASH FLOW STATEMENT HIGHLIGHTS
H1 2016 Cash Flow Reconciliation H1 2017 Cash Flow Reconciliation
in project’s payments schedule with higher amounts to be paid in the second half of 2017
for ZapSib funding in H1 2017
Key Factors
(1) Includes purchase of property, plant and equipment, intangible assets and other non-current assets.
66.2 59.9 (84.9) (12.3) (7.1) (53.8) (7.8) (105.9)
Net OCF CapEx(1) M&A Net debt repayments Dividends paid Interest paid Other Net CF Net OCF CapEx(1) Net debt repayment Dividends paid Interest paid Net CF
RR bln RR bln
Cash as of 30.06 Cash as of 30.06 Other
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RR bln, except as stated 31 Oct 2017(1) 30 Sep 2017(1) 31 Dec 2016 31 Oct vs. 31 Dec, % 30 Sep vs. 31 Dec, % Total debt 300 300 342 (12.4%) (12.2%) Conventional debt 134 134 182 (26.2%) (26.6%) ZapSib related debt 165 166 160 (3.4%) 4.1% Cash & cash equivalents 41 46 61 (33.2%) (24.7%) Net debt 259 254 281 (7.9%) (9.6%) Conventional net debt 102 103 163 (37.4%) (36.8%) ZapSib related net debt 157 151 118 33.0% 28.3% WA loan tenor (years) 7.2 6.9 6.8 WA Conventional debt 3.3 2.6 2.7 WA ZapSib related debt 10.2 10.3 11.4 Available credit lines, incl. 244.2 236.2 184.5 32.4% 28.0% Committed 120.5 122.2 112.5 7.2% 8.6%
DEBT PROFILE
Key Figures
30 Sep 2017(1) 31 Dec 2016 Debt / EBITDA 2.0x 2.4x Net debt / EBITDA 1.7x 2.0x Conventional net debt 0.7x 1.2x ZapSib related net debt 1.0x 0.8x Net debt / EBITDA (in $) 1.7x 2.2x
Leverage Ratios
100% 48% 85% 61% 52% 15% 18% 20% Unsecured Fixed/Floating Long-term/Short-term $/€/₽
Overview Loan Portfolio Structure as of 31 Oct’17
decreased by 12.4% and net debt decreased by 7.9% mainly due to substantial repayments of conventional debt
years following Eurobond’23 placement
decreased to 1.7x from 2.0x
0.7x from 1.2x on recent debt repayments
from 0.8x on on-going project financing
between 31 Jul’17 and 30 Sep’17
(1) Unaudited data.
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LIQUIDITY AND DEBT MATURITY PROFILE(1)
(1) Items denominated in $ and € are converted into ₽ based on FX rates as of 31 October 2017; ₽/$ at 57.9, ₽/€ at 67.2. (2) Debt maturing during 31 October - 31 December 2017.
40 120 124 285 1 30 34 31 25 22 65 14 14 14 14 127 Liquidity 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 After 2027 As of 31 October 2017, ₽ bln cash & cash equiv. committed credit lines uncommitted credit lines Eurobonds undrawn EUR ECA loans RR bonds ECA NWF
(2)
ZapSib mechanical completion 37
INVESTMENT PROGRAMME
347 347 Feedstock processing capacity, Transportation infrastructure Petrochemicals Other 54 54 94 94 102 102 193 192 59 59 Feedstock processing capacity, Transportation infrastructure Petrochemicals Other TOTAL
₽ bln (excl. VAT)
2011 – 2016
502 in 6yrs
Transportation infrastructure Feedstock processing capacity Petrochemicals Maintenance, R&D, IT, and other TOTAL
CapEx includes purchase of property, plant and equipment, as well as purchase of intangible assets and other non-current assets. Figures are available in SIBUR’s public reporting. (1) ZapSib CapEx denominated in $ and € was translated in ₽ using exchange rates as of 30 June 2017: 58.94 ₽/$ and 67.31 ₽/€
ZapSib CapEx
2017E – 2020F
Petrochemicals
450 in 4yrs
TOTAL ZapSib(1) Tobolsk logistics hub Maintenance, R&D, IT, and other
SIBUR plans to invest approximately ₽ 450 bln (excl. VAT) from 2017 to 2020
₽ 625 bln
Accumulated EBITDA
₽ 537 bln
Accumulated Net OCF
₽ bln (excl. VAT)
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CHANGES IN REPORTING TO REFLECT SIBUR STRATEGIC DEVELOPMENT
CHANGES IN REPORTABLE SEGMENTS
fundamentals
NEW METRICS: EBITDA ACCOUNTING FOR THE EXPANDING JV CONTRIBUTION
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CHANGES IN SIBUR REPORTABLE SEGMENTS
Energy Products LPG Naphtha Natural Gas Raw NGL Petrochemical Products MTBE Other Fuels & Fuel Additives Basic Polymers Synthetic Rubbers Plastics & Organic Synthesis Intermediates Feedstock & Energy Segment (F&E) Olefins & Polyolefins Segment (O&P) Plastics, Elastomers & Intermediates Segment (PE&I) BOPP
BEFORE 2016 AFTER 2016
Ethylene LPG Natural Gas Naphtha Raw NGL Other Sales Plastics & Organic Synthesis Elastomers MTBE & Fuel Additives Intermediates & Other Chemicals Other Sales PP PE BOPP Films Olefins Other Polymer Products Other Sales
40