Apr 27, 2015 - Refinery. Polyester Fiber. PET Resin. PET Film. Food &. Beverage. Personal Care ..... 54%. 12%. HVA.
Investor Presentation 27th
April, 2015
Disclaimer This presentation and certain statements included herein contain “forward-looking statements” about the [financial condition and results of operations] of Indorama Ventures Public Company Limited (the “Company”), which are based on management’s current beliefs, assumptions, expectations and projections about future economic performance and events, considering the information currently available to the management. Any statements preceded by, followed by or that include the words “targets”, “believes”, “expects”, “aims”, “intends”, “will”, “may”, “anticipates”, “would”, “plans”, “could”, “should, “predicts”, “projects”, “estimates”, “foresees” or similar expressions or the negative thereof, identify or signal the presence of forward-looking statements as well as predictions, projections and forecasts of the economy or economic trends of the markets, which are not necessarily indicative of the future or likely performance of the Company. Such forward-looking statements, as well as those included in any other material discussed at the presentation, are not statements of historical facts and concern future circumstances and results and involve known and unknown risks, uncertainties and other important factors beyond the Company’s control that could cause the actual results, performance or achievements of the Company to be materially different from the expectations of future results, performance or achievements expressed or implied by such forwardlooking statements. Factors that could contribute to such differences include, but are not limited to: the highly competitive nature of the industries in which the Company operates; a potential recurrence of regional or global overcapacity; exposures to macro-economic, political, legal and regulatory risks in markets where the Company operates; dependence on availability, sourcing and cost of raw materials; ability to maintain cost structure and efficient operation of manufacturing facilities; shortages or disruptions of supplies to customers; operational risks of production facilities; costs and difficulties of integrating future acquired businesses and technologies; dependence of informal relationships with other Indorama group entities in Indonesia and India; project and other risks carried by significant capital investments including future development of new facilities; exchange rate and interest rate fluctuations; pending environmental lawsuits; changes in laws and regulations relating beverage containers and packaging; the impact of environmental, health and safety laws and regulations in the countries in which the Company operates. All such factors are difficult or impossible to predict and contain uncertainties that may materially affect actual results. New factors emerge from time to time, and it is not possible for management to predict all such factors or to assess the impact of each such factor on the Company. Such forward-looking statements are also based on numerous assumptions and estimates regarding the Company and its subsidiaries’ present and future business strategies and the environment in which the Company will operate in the future. Any forward-looking statements are not guarantees of future performance and speak only as at the date of this presentation, and none of the Company, nor any of its agents, employees or advisors intends or has any duty or obligation to supplement, amend, update or revise any such forwardlooking statements to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based or whether in the light of new information, future events or otherwise, except as may be required by applicable laws and stock exchange regulations. The above and other risks and uncertainties are described in the Company’s most recent annual registration statement (Form 56-1), and additional risks or uncertainties may be described from time to time in other reports filed by the Company with the Securities and Exchange Commission of Thailand and the Stock Exchange of Thailand. Given the aforementioned and other risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements as a prediction of actual results or otherwise. The results of operations for the periods reflected herein are not necessarily indicative of results that may be achieved for future periods, and the Company’s actual results may differ materially from those discussed in the forward-looking statements as a result of various factors not foreseen at the time of giving this presentation. This presentation must not be treated as advice relating to legal, taxation, financial, accounting or investment matters. By attending this presentation, you acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and of the risks and merits of any investment in the Shares, and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the Company’s business.
2
Index
3
I
Executive Summary
II
Company Overview
III
Strategy & Outlook
IV
Recent Announcements and M&A
V
Financial Updates
VI
Governance
I
Executive Summary
Our Value Chain Bridge Between Upstream Petrochemicals and Consumer Goods Our Suppliers
Indorama Value Chain
Our Customers
PX, Ethylene
PTA, MEG, Polyester, and HVA
Key End Use Markets
rPET
MEG Plant
PET Resin
Food & Beverage
Refinery
Crude Oil / Natural Gas
PET Film
Polyester Polymer Plant
Personal Care & Home Care
Polyester Fiber
Electronics PTA Plant
Specialty Polymers
Apparel Home Textile Specialty Fiber
Steam Cracker
Hygiene Automotive
PP Fibers PP Fiber
PA 66 Fibers
Automotive PA66 Fiber
Note: HVA is High Value Added products used in manufacturing of Specialties like Automotive, Hygiene, Personal Care and others 5
One Company, One Team, One Goal Transformative Growth of IVL 2009
2014
THB
THB
80B
244B
Revenue
Revenue
People at Core of Our Success
14,000+ direct employees worldwide
17 acquisitions successfully 13
55
Sites
Sites**
integrated (2010-14)
100% management retention 4
19
Countries
Countries**
Note: *IVL Leadership survey conducted by McKinsey in Dec 2014 **Number of sites and countries include announced acquisitions up to Apr 2015 6
Top-quartile organizational health*
IVL 2014 - Advancing Sustainable Transformation 55 Sites 19
THB 244B Revenue (7.5 $B)
Countries
Portfolio Enhancement
THB 19.5B
Sales in
>100
EBITDA (600$M)
THB 20.4B OCF after Maint. Capex
0.83x
Countries
Earnings Growth
Reinforced Capital Structure
Delivery on Strategy
Net D/E Note: Core financials Number of sites and countries include announced acquisitions up to Apr 2015 7
14,000+ People
250+ Patents
Value Creation with Portfolio Enhancement Evolution Towards More Innovative and Resilient Businesses Revenue THB 210.8B EBITDA THB 14.3B
Revenue THB 229.1B EBITDA THB 15.0B
24%
27%
25% 9%
Revenue THB 243.9B EBITDA THB 19.5B
34% Year 2012
49% 66%
Year 2013
45% 49%
34% 40%
17% 28%
27%
16% 27%
Revenue EBITDA
HVA Note: Core financials 8
West Necessities
Year 2014
East Necessities
39% 44%
Scaling HVA Segment HVA (34% of IVL Revenue)
Case Study: Automotive Vertical ~$800M* Value Addition
Capacity 1.6 MMT
Revenue EBITDA THB 83.5B +52% YoY
Feedstock for PHP and PF
Revenue By End Market Industrial 22%
Tire Fabrics
Tire & Industrial Yarns
GIVL Side curtains
Auto & Functional 25%
Upholstery
Seatbelts
2014 THB 83.5B
Motor
Headliner Seat & side panels Hat rack
Filters Automotive hoses V-belts
Composites
Dashboard Interior trim Bumpers
Passenger airbags
Hygiene & Functional 26%
Trunk
Packaging 27%
Driver airbags Tire cord
Robust Growth, Margin Expansion Note: Core financials *Pro-forma revenue including ~$200M revenue of PF Asia for 2014 9
Side airbags Carpets
Global Reach with Local Presence Creates Advantage Truly Global Production Platform
Market Reach Beyond Compare 2014 Revenue Breakdown
Africa
South America New
17 Countries
23 Countries 4%3%
North America
Asia
3 Countries
27% 23 Countries
35%
Sales to >100 Countries 29%
3%
Europe
Middle East New (2014-15)
Global Reach
Existing (2013)
55 Sites
19 Countries
Truly Local
>85%
4 Continents Note: Core financials Number of sites and countries include announced acquisitions up to Apr 2015 10
33 Countries
12 Countries
Domestic Sales
Competitive Assets
25
Integrated sites
80%
of Business captures synergies from Integration
Top #1 Supplier to Major Consumer Brands ~70% of Revenue from #1 Market Positions #1
Global
#1
N. America
#1
EMEA
#1
SE Asia
#1
Europe
#1
SE Asia
#1
PP Hygiene Fiber Global
#1
PA66 Airbag Europe
PET Polymers
Polyester Fibers
High-Performance Fibers Source: Industry Data, IVL Analysis 11
(Not Exhaustive)
Earnings Growth Momentum THB 244B Revenue (7.5B$)
THB 19.5B EBITDA (600M$)
+6% YoY
+30% YoY
THB 5.1B
+146%
Net Income
YoY
THB 20.4B +123% OCF after Maint. Capex Note: FY 2014 Core financials 12
YoY
Organic growth and M&A Superior product mix with more HVA Lower absolute prices on crude fall
Higher EBITDA per ton Higher EBITDA margin Increase across all segments
More efficient capital structure More efficient tax structure Higher JV losses
Release of NWC with lower prices Operational excellence to reduce capital employed
EBITDA Increase Across All Segments HVA THB Billion
West Necessities THB Billion
+52% PET
1.0 2.7
Fiber
1.4
Feedstock
2013
$154 EBITDA / MT
3.6
PET
2.4
2.3
Feedstock
2014
2013
1.6
Fiber
3.2
0.2 0.8
Feedstock
2014
2013
$102 EBITDA / MT $109
Volume Growth Acquisitions of PHP, Adana PET Poland brownfield expansion Higher EO/EG utilization with new catalyst State of art CP-4 Fibers manufacturing site in Indonesia completed Note: Feedstock includes PTA and MEG business 13
+24% PET
5.4
5.0
$181
THB Billion
+17%
1.8
East Necessities
1.8 0.5 0.8 2014
$34 EBITDA / MT
$38
Margins and Cost 44% IVL 2014 EBITDA THB 19.5B
16%
40% $84 EBITDA / MT
$96
Higher spreads on superior product mix (+16% YoY) Relentless focus on operational excellence PTA in Asia underperforming but gradual recovery seen over next 2 years
Reinforced Capital Structure Capital Structure
Net Debt THB 63B
Total Debt THB 73B Debentures
Debt Profile
Total Equity THB 76B
LT Loan & Debentures Repayment Schedule 20%
Perpetual Debentures
2015
17%
2016 15%
7% LT Loan
Shareholders Equity
ST Loan
2018 12%
Higher liquidity Room for growth
2017
29%
2019 2020 & after
Total Debt by Currency
2014 EUR
NWC/Net Op Debt 46%
Net D/E 0.83
Effective Interest 4.4%
Liquidity 51.2 B
USD
Natural hedge Local currency debt THB include debentures
THB Total Debt
Note: FY 2014 financials , Liquidity = Unutilized banking lines + cash and cash under management, NWC=Net Working Capital Net Op Debt = Total Debt less Cash and Cash under management less project spending till date which is not operational yet 14
Strong Operating Cash Flow Operating Cash Flow
Investing & Financing Cash Flow
THB B 81.0
19.4
22.4
20.4 11.7
0.3
3.2
Core Income NWC & EBITDA Tax Others*
Net Debt 2013
OCF
Maint. CAPEX
Financial Costs
60.6
2.0 OCF after Maint. CAPEX
3.5
Growth CAPEX
Net Debt after OCF & Maintenance CAPEX
Clear Visibility of Cash Flow Note: Core financials * Includes inventory gains and losses 15
14.9
1.7 Dividends
0.2 Proceeds Forex & from Others Perpetual Debentures
62.8
Net Debt 2014
Supportive Macro and Industry Outlook
Economy
Forex
Crude Oil
Industry
Macroeconomic growth positive Forex supportive as business is US$-based Tailwinds from low crude environment Favorable industry outlook on demand growth vs limited capacity additions
16
Strategic Plan 2018 Vision To be an admired organization with focus on customers, stakeholders and employees
Strategy
A
Plan 2018
Expand in attractive, high value-added products and markets
Capacity ~10MMT+ ROCE ~15%+ Net Debt / Equity $100/ton Strong EBITDA growth with CAGR ~30%
IVL Differentiated Portfolio EBITDA $/MT % of IVL Vol.
106 61%
132 71%
112 77%
102 78%
112 82% 577
600
462
455
409 204
0 2010
2011
Volume (KMT)
2012
2013
West Feedstock
2,000
EBITDA $/MT
0
600
2014
PET & Fibers
500 HVA
IVL Asia PTA 154
116
5
20
21
% of IVL Vol.
39%
29%
23%
22%
18%
88
84
461
487
2012
2013
96
600
555 398
400 300 100 0
2010
194
EBITDA $M
127
200
EBITDA $/MT
1,500 146
150
f
125
EBITDA $M
200
200
IVL
4,000
EBITDA $M
400
6,000
Volume (KMT)
2011 PTA Asia
West Feedstock
2014 PET & Fibers
1,000
100
Average 10-14
50
6
25
23
2013
2014
0
500 0
2010
2011
2012
Volume (KMT) 19 Note: Core financials
EBITDA ($M)
7,000 6,000 5,000 4,000 3,000 2,000 1,000 0
Cyclical Asian PTA Business Year 10-14 Volume flat at ~1.2 MMt Volatile EBITDA margin Last 5 years average EBITDA of $65/t
HVA
IVL Differentiation vs Peers …2018 Outlook IVL Differentiated Portfolio 106 % of IVL Vol. 61%
EBITDA $/MT
132 71%
112 77%
102 78%
Portfolio Enhancement Year 15-18 Volume growth of 3.5 MMt Targeting superior EBITDA margins
112 82% 87%
1200
10,000
EBITDA $M
800 409
400
455
462
IVL
577 5,000
EBITDA $/MT
204
88
84
96 10,000
2010 2011 2012 2013 2014 2018E Volume (KMT)
West Feedstock
PET & Fibers
1050 HVA
IVL Asia PTA EBITDA $/MT
154
116
5
20
21
% of IVL Vol.
39%
29%
23%
22%
18%
13%
555
700 398
461
487
600
6,000
4,000 2,000
0
0 2010 2011 2012 2013 2014 2018E
1,500 146
150
f
8,000
350
194
EBITDA $M
200
127
0 EBITDA $M
0
125
Volume (KMT)
PTA Asia
West Feedstock
PET & Fibers
HVA
1,000
100
Average 10-14
50
6
25
23
0
500 0
2010
2011
2012
Volume (KMT) 20 Note: Core financials
2013
2014 2018E EBITDA ($M)
Cyclical Asian PTA Business Year 14-18 Volume flat at ~1.2 MMt Targeting last 5 years average EBITDA of $65/t Benefitting from 100% captive supply chain
Company Timelines 1995-2010
2010-2014 2003-2008
CHAPTER I
CHAPTER II
Commenced business in Thailand Entered into PET and Fiber industries Entered PET market in US and Europe Backward integrated into PTA
21
Expanded global reach across main markets Differentiated product portfolio with addition of HVA businesses Backward integrated into MEG
2008-Present 2014-2018
CHAPTER III
Extended global reach to all key mature and developing markets Enhanced and wellbalanced HVA portfolio Enhanced integration into raw materials
IVL 2018 - Creating Shared Value
“Confident, Caring, Sharing Together” Championing the Circular Economy
People at the Core of Our Business
Strong Business, Strong Governance
To be role model In our industry
Our SOLUTIONS serve needs
To set new standard To provide stability To be consistent
22
IVL Equity Structure Bloomberg Ticker: IVL (TB) Shareholding of IVL shares Bangkok Bank
Local Institution Foreign Institution
4.8% 8.2%
Shares, Warrants & PERP Total Number of Shares
• 4,814M shares
*Total Number of Warrants
• W1-481M units
and NVDR
8.7% 12.0% Retail 29% Free Float
Lohia Family
Perpetual Debentures (PERP)
66.4%
Dividend Policy Minimum 30% of Net Profit Shareholding structure as on March 31, 2015, *W1 with conversion price @36 thb/share expiring in Oct’2017 & 23 *W2 with conversion price @43 thb/share expiring in Oct’2018
• W2-370M units
• THB 15 billion issued in Oct’2014
II
Company Overview
2014 Highlights
Operational 8% Production growth year-on-year to 6.2 MMT Driving results through relentless focus on operational excellence Large Greenfield fiber plant in Indonesia completed successfully. Various energy projects under implementation in Indonesia to enhance cost leadership.
25
Financial 30% Core EBITDA growth year-on-year to THB 19.5 billion 114% Operating Cash Flow increase year-on-year to THB 22.4 billion Lowered Net Debt over Equity to 0.83 times as on Dec 2014
Strategic HVA growth in Automotive segment especially Safety. New markets growth for Necessities e.g.Turkey 23% growth in HVA Volumes year-on-year Strategic actions on less strategic sites and Rejuvenation of priority sites for long term competitiveness
Differentiated, High Growth Portfolio
IVL Portfolio
HVA
East Necessities
Capacity: 1.6 MMT Revenue: $2.6B EBITDA per MT : US$181
Capacity: 2.9 MMT Revenue: $2.9B EBITDA per MT : US$109
Capacity: 2.8 MMT Revenue: $2.0B EBITDA per MT : US$38
Products
HVA Fibers HVA PET & Packaging PEO
Commodity PET Commodity Polyester Fibers PTA & MEG
Commodity PET Commodity Polyester Fibers PTA
Regions
Global
North America EMEA
Asia
2014 Financial Highlights
IVL
Effective Capacity: 7.3 MMT
Note: * % of IVL 2014 Consolidated Revenues in US$ 26
West Necessities
Revenue: $7.5B
EBITDA per MT : US$96
Sustainable Innovations and Solutions for Future Needs
Comfort
Convenience
Safety
Health
Sustainability
Baby Diapers
Functional Packaging
Airbags
Air and Water Filtration
Sustainable Packaging
Worldwide R&D Centers
R&D Employees
6
125
Note: As of Jan 2015 27
Patents
Vitality Index
250+
~21%
Collaborative Innovation Projects
100+
HVA – Strategic Positioning IVL HVA Segment Profile – 2014
Capacity: 1.6 MMT
Revenue: $2.6B
EBITDA Growth: 44% YoY
Revenue By Segment
Revenue By Region
Revenue By End Market
Feedstock 9%
PET 28%
2014 $2.6B
Asia 20%
Note: 2014 financials in US$
Industrial 22% 2014 $2.6B
2014 $2.6B
Fibers 63% EMEA 40%
28
N.America 40%
Auto & Furnishing 25%
Hygiene & Functional 26%
Packaging 27%
Industry Leading HVA Businesses Auto & Furnishing
Revenue
Key End Markets
Market Positions
$0.6B
Industrial
25%*
$0.6B
Packaging
22%*
$0.7B
Hygiene & Functional
27%*
$0.7B
Tire Airbag Safety Belt Interior Fabrics
Filtration Construction Geotextiles
Beverage Packaging Food Packaging Specialties
Flame Retardant Home Textiles Diapers Wipes Medical Care
#1 Airbag Europe #2 Tire Europe #2 Tire China
#1 Industrial Europe
#1 Barrier Resins in N. America
#1 Hygiene Global #1 Flame Retardant Fibers Global
GDP++ Growth and Strong Entry Barriers Note: *% of IVL 2014 HVA Business Revenue 29
26%*
HVA Automotive Business *2014 Segment Revenue Highlights $0.8B
Strong Market Potential
High Barriers to Entry
Leading Market Positions
~6-8% long-term growth
Customer intimacy and know-how
Top supplier to key customers with 7% global market share
Airbags
Interior Textiles
Driver Airbag Passenger Airbag Side Curtains
Headliner Seat Cover
Seatbelts
Tires
Seatbelts Motor Belts Filters
Tire Carcass Cap Ply
PHP
Trevira
Germany Germany Europe #1
Note: *Performa revenue Trevira+ PHP+ Performance Fibers(PF) 30
#1
Airbag PA 6.6
#2
Tire PA 6.6
USA #2 Airbag PA 6.6
Top supplier of Auto Interiors
Performance Fibers
#2
China Airbag PA 6.6
#2
China China Polyester Tire Fabric
#3
Asia Polyester Tire Fabric
HVA Hygiene Business 2014 Segment Revenue Highlights $0.5B
Strong Market Potential
High Barriers to Entry
Leading Market Positions
~6-8% long-term growth
Customer intimacy and know-how
Top-1 supplier to key customers with 21% global market share
“Operating as a coordinated fiber group at strategic clients and within common R&D platforms.
Strategic Competitive Strengths
We have the tools necessary to become the preeminent global fiber supplier in the world”
IPI Rayong 31
Broad fiber portfolio Global supply capability Coordinated innovation Partnerships with global majors Global key account management Strong local sales and technical support
AURIGA
HVA - Financial Performance Production
Revenue
MMT 1.5
$B 1.3
1.0
0.5
3.0 2.5 2.0 1.5 1.0 0.5 0.0
1.1 0.9
0.0
2012
2013
2014
2.6
1.6
2012
Spread 800
400
710 537
544
200 0
2012
32
2013
2013
2014
EBITDA
$/MT 600
2.0
2014
$M 300 250 200 150 100 50 0
240 167 114
2012
2013
2014
West Necessities – Strategic Positioning IVL West Necessities Profile – 2014
Revenue: $2.9B
Capacity: 2.9 MMt
EBITDA Growth: 11% YoY
North America
MEG Capacity: 0.3 MMT
100% Integrated Note: 2014 financials in US$ 33
PET Capacity: 1.1 MMT
85% Domestic
EMEA
PTA
PET
Capacity: 0.4 MMT
Capacity: 1.1 MMT
100% Integrated
100% Domestic
West Necessities - Business Strengths North America Demand Growth
North America ~2%
EMEA West Europe ~2% Turkey ~6% Africa ~10-15%
Top 5: 100%
Key Business Drivers
PET Market Structure
Feedstock Market Structure
4.6 MMt
Top 5: ~70%
IVL Share 33%
Strong and stable PTA spreads Advantaged MEG feedstock
3.4 MMt
Strong and stable PTA spreads
Western business is distinguished by:
Business Strengths
Source: Industry Data, IVL Analysis 34
Scale
Consolidated sector
Superior margins / profitability
Low-cost feedstock
IVL Share 27%
European PET Business IVL Europe PET Asset Portfolio 2014
IVL Strategy Enhancing cost competitiveness while maintaining market leadership
Indorama Polymers Capacity: 418 KMT
North & West Europe
Capacity: 252 KMT
IVL Polymers
South East Capacity: 230 KMT Europe Turkey
IVL Adana PET Capacity: 130 KMT
35
Expansion of Rotterdam and Poland
Closure of Workington and Ottana
Orion Global Pet Capacity: 241 KMT
Polyplex
Expanding market reach with access to Turkey and South East Europe markets
Acquisition of Artenius in Turkey
Announced acquisition of Polyplex PET plant in Turkey
North American MEG Business Global Ethylene Cash Costs Cent/lb
US vs Asia MEG Spread
70
$/MT 350
60
300
50 40
US WACC NE Asia W.Europe
30
250 200 US Cost Advantage
150 100
10
50
0
0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
20
Asia MEG Spread 2014
US C2 MEG Price Advantage Difference (US less Asia)
Capitalizing Regional Cost Advantage Source: Industry Data, IVL Analysis 36
US MEG Spread 2014
West Necessities - Financial Performance Production
Revenue $B
MMT
4.0
4.0 3.0
2.0
0.6
0.6
1.8
1.8
0.7
2.0
1.7
1.0
0.0
3.3
3.4
2.9
2012
2013
2014
0.0
2012
PET
2013
2014
Feedstock
Spread
EBITDA
$/MT
$M
400
500 400 300 200 100 0
300 200 100
289
387 274
339
274
346
0
2012
2013 PET
37
Feedstock
2014
304
2012
238
263
2013
2014
East Necessities - Strategic Positioning East Necessities Profile – 2014
Capacity: 2.8 MMt
Revenue: $2.0B
EBITDA Growth: 17% YoY
Asia PET Capacity: 1.0 MMt
PTA
80% Domestic
Capacity: 1.3 MMt
100% Integrated
Fiber Capacity: 0.5 MMt 80% Domestic
Note: 2014 financials in US$ 38
East Necessities - Business Strengths PET
Key Business Drivers
PTA
Strong market position in Thailand, Indonesia, and China
Captive supplies to PET and fibers
Focus on domestic sales
100% virtual integration within IVL provides higher utilization
Cost competitiveness from higher utilization and operational excellence programs
Strong presence in Thailand where PX is long
Expansion of HVA portfolio
Cost competitiveness with captive power and scale
Business Strengths
Captive supplies to packaging units Leading position in ASEAN and PRD China Integration with PTA
39
Cost competitiveness through scale, integration, and technology Captive power plant reduces costs Lower logistics due to next door raw material supplier in Thailand
East Necessities - Financial Performance Production
Revenue
MMT 3.0 2.5 2.0 1.5 1.0 0.5 0.0
$B
1.1
1.3
1.2
1.4
1.1
0.8
2012
2013 PET+Fiber
2.5 2.0 1.5 1.0 0.5 0.0
2014
1.8
2012
2013
2014
EBITDA
$/MT
$M 120
225
90
150
60 162
162
167
30
82
96
2013
2014
43
0
0
2012
40
2.0
PTA
Spreads
75
2.1
2013
2014
2012
III
Strategy and Outlook
Tailwinds from Low Crude Environment
Higher Demand for Our Products
More disposable income Higher GDP growth
Helping our End Customer Industries
$
Lower Working Capital Requirements Lower Conversion Cost
42
Lower input costs Lower transportation costs
Lower absolute prices reduce working capital needs
Lower energy costs Lower transportation costs
Changes in Crude Oil Price Are Passed Through Asia Spreads, Per Ton of PET, $/MT 2,000
Brent, $/bbl 140
120 1,600 100 1,200
80
800
60 40
400 20 0 Jan-09
0 Jan-10 Naphtha
Jan-11 PX
Ethylene
Jan-12 PTA
Jan-13 MEG
Jan-14 PET - Asia
Sharp Fall in Crude Prices in 4Q14
Source: Industry, IVL Analysis 43
Crude
Inventory Gains/Losses $/MT 500
$/MT 80 Correlation:
400
90%
60
300 40
200
20
100 0
0
-100
-20
-200 -40
-300
-400 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 Changes in PX Price Asia (LHS)
IVL Inventory Gain/(Loss) (RHS)
Market Forces Drive Inventory Gains/Losses Source: Industry, IVL Analysis 44
-60
Core Business Stability vs Upstream Energy & Upstream Feedstock
Intermediate Feedstock
PX
Downstream
PTA
IVL Core
West East
Crude Oil/ NG
PET, Fibers West
Ethylene
MEG
Volatility Index - East Spread Change – Quarterly ($/MT)
East
West
Volatility Index - West Spread Change - Quarterly ($/MT)
400
300 200
200
100 0
0
-100 -200
-200
-400 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 Upstream East (PX+C2+MEG) Source: Industry, IVL Data & Analysis 45
IVL Asia (PTA+PET/Fiber)
-300 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 Upstream West (PX+C2)
IVL West (PTA+MEG+PET/Fiber)
Long-Term Upstream Investments Beyond 2018 Projects under Review
Abu Dhabi Aromatics
Expected commercial start-up post 2018, hence not included in main pipeline of projects Under study with JV partner
Project River
Expected commercial start-up post 2018, hence not included in main pipeline of projects Under study with JV partner
Crash of Crude Prices Have Given a New Input to Strategy 46
IV
Recent Announcements and M&A
On Track with Our Plan Project
2014
Project CP-4
Project Panda
Project Thor
Project Aurelius
2015
Project Chip
Project Boston
Project Lion
48
Target
Type
Product
IPCI Indonesia
Greenfield
East Necessities
PHP Fibers
M&A
Artenius PET
Date
Production started in 1Q14
HVA
Acquisition completed on April 30, 2014
M&A
West Necessities
Acquisition completed on June 3, 2014
Polyplex
M&A
East Necessities
Acquisition completed on March 2, 2015
Performance Fibers
M&A
HVA
Acquisition completed on April 1, 2015
Bangkok Polyester
M&A
East Necessities
Announcement made on March 18, 2015 Expected completion in 2Q15
CEPSA Canada
M&A
West Necessities
Announcement made on March 23, 2015 Expected completion in 2Q15
Bangkok Polyester Attractive Standalone Opportunity Overview
Located in Rayong, Thailand
Capacity: 105 KMT
Average revenue (last 2 years): ~ $120M
Average utilization rate (last 2 years): ~90%
Strategic Location Close proximity to customers Next to Map Ta Phut and Asian Industrial estate for sourcing of PTA and MEG
Strong Customer Base Long-standing customer base both domestically and internationally
49
Proven Technology Proven German technology to enable quick integration into IVL stream
Unlocking Value Potential Opportunity for capacity expansion Opportunity for cost optimization
Capturing Growth in Fast-Developing Market PET Demand, MMt 0.8 CAGR ~8-10%
0.6
Capturing Market Growth
Neighboring Markets 0.3MMt
Neighboring Markets 0.4MMt
Thailand 0.3MMt
Thailand 0.4MMt
2014
2018 2014 Thailand PET Capacity, MMt
Enhancing Market Structure
Pre project Boston Project Boston 15% Thai Shinkong 28%
IVL 0.7 MMt 42%
Post project Boston
Leading Consolidation in Home market
IVL 57%
Thai Shinkong 28% 0.7 MMt 15%
Thai PET Resin
15%
Bangkok Polyester acquisition fits perfectly into IVL strategy Note: Neighboring markets include other Indochina countries: Vietnam, Cambodia, Myanmar, and Laos Source: Industry Data, IVL Analysis 50
Thai PET Resin
CEPSA Canada- Attractive Standalone Opportunity Overview
Part of Montreal petrochemical cluster Average revenue (last 4 years): > $500M
Strategic Location
Capacity: 600 KMT Average utilization rate (last 4 years): >90%
Integrated Production
Great accessibility to port and rail link
100% of PX feedstock through pipeline
Efficient and cost-effective supply chain management
First-quartile production cost base
Markets
Unlocking Value Potential
Capacity fully sold out
Capacity addition through debottlenecking
IVL can act as buffer for full utilization
Co-siting of future PET plant
51
Fully Integrated Business Model Creation of Sole PET Producer in N. America with Integration into both PTA and MEG IVOG Clear Lake, TX MEG Capacity 550 KMT
CEPSA Montreal, Canada PTA Capacity 600 KMT
Alphapet Decatur, AL
Starpet Asheboro, NC
Feedstock Requirement 481 KMT (Virtually integrated
Feedstock Requirement 287 KMT
with BP Decatur PTA)
IVP Queretaro, Mexico
Auriga Spartanburg, SC Feedstock Requirement 420 KMT
Feedstock Requirement 585 KMT
Post Project Lion
Pre Project Lion
Captive
Captive Merchant
53%
1.8
28%
MMT
Enhancing feedstock integration from ~50% to ~80%
Virtual 19% Note: Feedstock requirement = PTA x 0.86 + MEG x 0.34; Based on 90% capacity utilization in 2015 52
59%
1.8 MMT
22%
Virtual 19%
Merchant
Raw Material Margin Enhancement U.S. PET Value Chain Components - Total Equals PET Price ($/MT) PET Raw Material Margin over PX and C2
42% 38%
37%
38%
1,800 PTA Margin PET+MEG Margin
1,819 PTA Margin PET+MEG Margin
PX/C2 Cost
PX/C2 Cost
PX/C2 Cost
2011
2012
2013
1,954 PTA Margin 1,459 PTA Margin PET+MEG Margin PX/C2 Cost
2010
PET+MEG Margin
5-yr Average: Pre-PTA ~20%, Post-PTA ~40% Source: Industry Data, IVL Analysis 53
39%
1,626 PTA Margin PET+MEG Margin
PX/C2 Cost
2014
Superior and Consistent PTA Spreads Disciplined PTA Market Structure $/MT
US & Canada – Highly Consolidated 2 Merchant Producers
2.5
Superior PTA Spreads
0.6
0.6
0.3
Cepsa
Alpek
Eastman
500
400
$306/MT BP Merchant
Captive
Asia – Highly Fragmented
12.3 6.6 6.1
ø
300
$170/MT
200
32 Producers
ø
100
3.9
Yisheng Hengli Dragon BP #5 #6 #7 #8 #9 #10 #11 #12 #13 #14 #15 #16 #17 #18 #19 #20 #21 #22 #23 #24 #25 #26 #27 #28 #29 #30 #31 #32
0
BP
Advantaged market structure Note: 2014 Capacity in KMT; Published PTA spreads over PX Source: Industry Data, IVL Analysis 54
Asia
US
Building Presence in Attractive Tire Cord Market Growing Tire Cord Market… World Polyester/PA66 Tire Fabric Demand (MMT) ~6% CAGR 0.7 2009
0.9
Growth at GDP++ Demand driven by tire consumption Asia and China leading the growth
2014
…With Strong Barriers to Entry
✔ Life-Critical End Use Applications
✔ Long Customer Approval Process
✔ Production Know-How Source: Industry Data, IVL Analysis 55
✔ Customer Relationships Difficult to Break Into
Performance Fibers, China Creating Strong Platform for Sustainable Leadership IVL Tire Cord Business
Geographies
Europe
Europe PA66 TCF Capacity
Asia
China Polyester TCF Capacity
Peer A
Markets
47%
76 KMT 17%
36%
PHP
21%
148 KMT
Peer B
PA 6.6
Products
Synergies with Trevira and GIVL Source: Industry Data, IVL Analysis 56
10%
17%
Peer A PF Asia Peer B Peer C Peer D Others
Polyester
Double-digit EBITDA margin business Market leadership in Europe and Asia Complementary product and customer portfolio Technology leadership International management team
Driving Margin Expansion and Growth
Integration
Tire & Industrial Yarns
Feedstock for PHP and PF
Higher asset utilization for Trevira and GIVL Cost optimization Superior product mix Commercial excellence and know-how
Tire Fabrics
GIVL Synergy Realization Across the Value Chain PF to EU
PF Asia Revenue ($M) ~10% CAGR
PHP to Asia
Market Access
159
188
193
2012
2013
2014
PF to US
57
Cross-selling opportunities for PHP and PF globally without adding SG&A cost Strong growth momentum for PF Asia
PHP Fibers Highlights Diversified Product Portfolio
Truly Global Supplier of Airbag Yarns
Industrial PET 10 KMT 10%
Obernburg
Industrial NY66 13 KMT
37%
14% PET & NY66 Tire 37 KMT
NY66 Airbag 35 KMT
Scottsboro, AL Pingdingshan (Production JV) PHP 51%, ShenMa 49%
39%
Total Yarn Capacity 95 KT
Leading Market Positions Region
Fiber
Segment
No
Share
Main Players
NY66
Airbag
#1
53%
Invista, Nexis
PET
Tire
#2
24%
Hyosung, Kordsa, Shenma
North America
NY66
Airbag
#2
20%
Invista, Ascend
China
NY66
Airbag
#2
29%
Invista, Toray
Europe
58
Blue Chip Customer Base
Turkey is an Attractive Market A Rising Star on the Fringe of European market
Turkey in a Virtuous Cycle for Consumer Goods/Packaging Demand Strong Macro Fundamentals The world’s 16th and Europe 6th largest economy with GDP
$827B The fastest-growing emerging market in Europe with GDP growth of 5% in the last 10 years One of the world’s largest markets with 76M population and labor
force of 28M people Strategic location provides access to 1.5B regional population and combined GDP of $2.5T Source: IVL Research & Analysis 59
A Boom in Consumption Accelerated middle class growth with more than 10M new
middle class by 2020 Young and growing population expanding internal consumption with 50% of citizens under
30 years old 13th largest food and beverage market in the world, yet with strong upside for growth
Growing purchasing power of the lower income population
Strong Synergy Potential Scalable Opportunity and Synergies with IVL Adana PET
Clear #1 Producer in Turkey and SE Europe
Logistical & Customer Synergies
Capacity (KMT)
Polyplex 252 KMT
382
Istanbul Polyplex 252
216
80
Adana PET 130
IVL
Ankara
30 Competitor 1 Competitor 2 Competitor 3
Combined operations enable effective logistics coverage of Turkey and South East Europe markets Source: Industry Data, IVL Analysis 60
IVL Adana PET 130 KMT
CP4 – The Most Efficient Fiber Plant Globally Enhancing Our Cost Leadership
Project Completed
61
Started in 1Q14
V
Financial Updates
Consolidated Financials Revenue 2014 Feedstock
EBITDA Evolution PET
12%
59%
THB Billion 6.0
19.5
20.0
5.1
15.0
4.0
4.0 THB244 Billion
THB Billion
14.9 11.7
3.0 10.0
2.4
9.8
2.0 5.0 1.6
Fibers
5.1
0.0 4Q14 HVA
2013 Necessities
EBITDA Bridge
Volumes
Mix, Margin & Cost
4Q14 vs 4Q13
THB0.17 Billion
THB0.86 Billion
FY14 vs FY13
THB1.15 Billion
THB3.37 Billion
Note: All financials are Core Financials, Feedstock revenue represents external sales
7.8
0.0 4Q13
29%
63
2.0
2014
PET Segment PET Profile
EBITDA Evolution THB Billion
Production
Revenue
32% 50% 6.2 MMT
12%
EBITDA
THB Billion
3.0
10.0 2.5
59%
THB244 Billion 29%
18%
47% 32% THB19 Billion 21%
Fibers & Yarns
7.5
1.5 2.1
5.0
7.4 6.6
1.0 2.5
0.0
0.1 4Q13
0.4
0.0 4Q14 HVA
1.0
2013 Necessities
EBITDA Bridge
Volumes
Mix, Margin & Cost
4Q14 vs 4Q13
THB0.17 Billion
THB0.80 Billion
FY14 vs FY13
THB0.53 Billion
THB1.11 Billion
Note: All financials are Core Financials, Feedstock revenue represents external sales 64
Feedstock
7.6
2.0
1.4 PET
9.2
1.8 2014
Fibers & Yarns Segment Fibers & Yarns Profile
EBITDA Evolution THB Billion
Production 50%
18%
Revenue 59%
6.2 MMT
29%
THB244 Billion 12%
32%
EBITDA 47%
1.5
32%
5.0
1.0
1.0 0.0
0.5
1.0
4.0 0.3 3.0
Fibers & Yarns
Feedstock
0.9
0.0
3.6 2.7
0.0 4Q13
4Q14 HVA
2013 Necessities
EBITDA Bridge
Volumes
Mix, Margin & Cost
4Q14 vs 4Q13
THB0.21 Billion
THB0.03 Billion
FY14 vs FY13
THB0.76 Billion
THB0.44 Billion
Note: All financials are Core Financials, Feedstock revenue represents external sales 65
2.9 0.2
2.0 1.0
PET
4.1 0.5
1.2
21%
THB19 Billion
THB Billion
2014
Feedstock Segment Feedstock Profile
EBITDA Evolution THB Billion
Production 18%
32%
6.2 MMT
Revenue 12% 29% THB244 Billion
59%
50%
EBITDA
2.0
32% 21% THB19 Billion
THB Billion
1.5
8.0 1.5
1.4
6.3 6.0 4.5
1.0
47%
1.0
0.8
3.1 0.7
0.5
2.0
0.5 PET
Fibers & Yarns
Feedstock
1.4
0.0 4Q14 HVA
2013 Necessities
EBITDA Bridge
Volumes
Mix, Margin & Cost
4Q14 vs 4Q13
THB0.20 Billion
THB0.16 Billion
FY14 vs FY13
THB0.01 Billion
THB1.83 Billion
Note: All financials are Core Financials, Feedstock revenue represents external sales
2.4
0.0 4Q13
66
3.9
4.0
2014
Strong Balance Sheet Balance Sheet as of Dec 31, 2014 vs Dec 31, 2013 Fixed Capital & NWC THB Billion 152 150 Other NCA 3 2
Liabilities & Equity 152 150
118
Healthy Current Ratio 1.5
times 62
PPE Intangibles & LT Investments
120
76
Equity
12
31 Dec 31 2013
27 Dec 31 2014
Equity enhancement with perpetual debenture and
9 Other NCL
earnings in 2014 Lowered debt over 2013
65 Net Working Capital
Highlights 2014
60
LT Debt
16
2
ST Debt
Dec 31 2013
Dec 31 2014
Net Debt to Equity = 0.83 times Note: ST debt excludes Cash and Cash Equivalents 67
Core Financials Earnings Growth THB Million
4Q14
3Q14
4Q13
2014
2013
YoY%
Consolidated Sales(1)
54,625
63,606
57,638
243,907
229,120
6%
EBITDA(2)
5,050
4,252
4,022
19,481
14,966
30%
(2,050)
(2,086)
(1,882)
(8,099)
(7,051)
15%
Core EBIT
3,000
2,166
2,140
11,382
7,915
44%
Interest
(828)
(891)
(1,035)
(3,481)
(3,627)
(4)%
Core Profit before Tax
2,172
1,275
1,105
7,902
4,287
84%
39
(179)
25
(451)
(302)
49%
Deferred Tax
(354)
(139)
(364)
(1,163)
(991)
17%
Core Profit before JV and NCI
1,857
957
766
6,287
2,994
110%
Joint Ventures (JV) Income/(Loss)
(365)
(132)
(278)
(937)
(741)
(26)%
(63)
(31)
(13)
(285)
(191)
50%
Core Net Profit
1,428
795
474
5,065
2,062
146%
CAPEX and Investment(3)
3,659
2,506
1,398
13,726
6,971
97%
Net Operating Debt
58,013
70,256
72,991
58,013
72,991
(21)%
Net Working Capital Assets
26,492
27,108
31,093
26,492
31,093
(15)%
Total Equity(4)
75,555
61,172
61,568
75,555
61,568
23%
0.77
1.15
1.19
0.77
1.19
(35)%
9%
7%
7%
9%
6%
44%
Core
Depreciation
Current Tax
Non-controlling interests (NCI)
Net Operating Debt to Equity Net Operating Core ROCE (before JV)
Note (1) Consolidated financials are based upon elimination of intra-company (or intra business segment) transactions (2) Core EBITDA is Consolidated EBITDA less Inventory gain/ (loss) 2014 Core EBITDA includes a LOP (loss of profit) Lopburi flooding of THB 140 MM 2013 Core EBITDA includes a LOP Lopburi flooding of THB 899 MM (3)CAPEX and investment (including net proceeds from sales of PPE and investments) are on a cash basis as per cash flow statement (4) Includes Subordinated Perpetual Debentures valued at THB 14,874 million as on December 31, 2014 68
Non Operational/Extraordinary Items Core Financials to Reported Financials Reconciliation THB Million
3Q14
4Q13
2014
2013
YoY%
1,428
795
474
5,065
2,062
146%
(2,392)
80
(376)
(3,522)
(928)
(279)%
(964)
875
98
1,543
1,134
36%
11
(288)
(568)
(58)
192
Acquisition cost & pre-operative expense
(90)
(14)
0
(126)
32
Gain on Bargain Purchases and Impairments (Net)
103
-
(299)
506
(299)
Insurance Claims (Lopburi Flood Related)
-
-
(1)
-
791
(3)
(274)
(268)
(438)
(332)
(32)%
(953)
587
(469)
1,485
1,326
12%
Core Net Profit Add: Inventory Gain/(Loss) Net Profit Before Extraordinary Items Add: Non Operational/ Extraordinary Income or (Expense)
Other Extraordinary Income/(Expense)*
Net Profit After Tax & Minority
4Q14
*Mainly includes on-time expenses on U.S. reorganization Note: Gain on bargain purchase needs to be accounted for on completion of any acquisition as per Thai Accounting Standards 69
Cash Flow $690M OCF from Healthy Operations & Working Capital Inflows THB Million 2014
2013 ( R )
US$ Million YoY
2014
2013 ( R )
YoY
19,481
14,966
30%
600
487
23%
Cash Income tax
(259)
(497)
(48)%
(8)
(16)
(51)%
Net working capital and others (1)
3,199
(4,005)
N.A.
98
(130)
N.A.
22,421
10,464
114%
690
341
103%
(11,714)
(5,658)
107%
(361)
(184)
96%
Maintenance CAPEX
(2,012)
(1,313)
53%
(62)
(43)
45%
Net Financial Costs
(3,478)
(3,922)
(11)%
(107)
(128)
(16)%
Dividends
(1,654)
(1,626)
2%
(51)
(53)
(4)%
Proceed from perpetual debentures
14,874
-
100%
458
-
100%
(180)
(2,861)
94%
(3)
82
(18,258)
4,915
(565)
(15)
Core EBITDA
Operating Cash Flow (OCF) Net Growth & Investments CAPEX(2)
Effect of Foreign Exchange Changes and Others(3) Increase/(Decrease) in Net Debt
Note : Periods with (“R)” are restated numbers as per change from prior year financial statements (1) Includes inventory gains and losses (2) Includes net proceeds from disposals of PPE and also include other non-current investments. (3) Includes effect of Exchange rate changes on balance held in foreign currencies & others. 70
VI
Governance
Strong Business, Strong Governance Experienced Board Members Governance Framework
14 Board Members
3 Sub-Committees
7 Independent Directors 7 Executive and Non-Executive Directors
Audit Committee
Executive Committee
Sustainability Committee
6
Nomination, Compensation and Corporate Governance Committee
Executive Members
Independent Directors
Rathian Srimongkol Independent Director ***** President and CEO, Krungthai Card PCL
72
Maris Samaram Independent Director ***** Independent Director and Chairman of Audit Committee, Siam Commercial Bank PCL
William E. Heinecke Independent Director ***** Founder, Chairman and CEO, Minor International PCL and its subsidiaries
Dr. Siri Ganjarerndee Independent Director ***** Director of the Bank of Thailand Board, Former Assistant Governor at Bank of Thailand
Kanit Si Independent Director ***** Executive Vice President, Bangkok Bank PCL
Apisak Tantivorawong Independent Director ***** Former President Krung Thai Bank PCL, Chairman of Quality Houses PCL
Russell Kekuewa Independent Director ***** Former Vice President for South and Southeast Asia, Tetra Pak
Top Quartile Organizational Health Global Benchmark Top Quartile Second Quartile Third Quartile Bottom Quartile
IVL = Top quartile health overall Direction 73
74
Accountability
72 External Orientation 81
Coordination & Control 78
Innovation & Learning 71
Leadership 80
▪ The overall health score is the best
Capabilities
Motivation
available predictor of an organization's future capacity to perform
83
58
▪ Companies with top quartile health
Climate
deliver on average 3x greater TRS over time
Note: Percentage agreement on outcome effectiveness Source: Indorama Ventures Leadership OHI Survey (n=89); Global Benchmark (n=1,259,322) by McKinsey 73
68
2014 Recognitions Reflect Our Strong Commitment
74
Forbes 2014 Asia’s Fab 50 Companies
BCG 2014 BCG Global Challengers
ICIS 2014 ICIS Top 100 Chemical Companies
IHS 2014 Chemical Week’s Billion-Dollar Club
The Stock Exchange of Thailand 2014 Top Corporate Governance Award
Thai Institute of Directors 2014 CSR Recognition Award
Thai Institute of Directors 2014 Outstanding Sustainability Report Award
IR Magazine Top 75 for IR in South East Asia in 2014
For Further Information on Indorama Ventures, please visit the Investor Section of: Indoramaventures.com
