Indorama Ventures Public Co. Ltd. · SET:IVL
Indorama Ventures Public — Indorama Ventures — FY2010 Earnings Presentation
36 slides from Indorama Ventures Public's earnings presentation, Mar 3, 2011
Slide 1: Indorama Ventures reveals its best annual growth… and more to come
Indorama Ventures reveals its best annual growth… and more to come Analyst Meeting Thailand Opportunity Day at SET March 3, 2011 1
Slide 2: Disclaimer
Disclaimer This presentation contains “forward-looking statements”, which are based on current expectations and projections about future events, and include all statements other than statements of historical facts, including, without limitation, any statements preceded by, followed by or that includ
Slide 3: Unique investment opportunity with significant further growth to come
Unique investment opportunity with significant further growth to come The polyester chain: highly attractive, consumer-led industry Unique value creating Global leader in the business model & Polyester Value Chain strategy Consistent track record Compelling financial of value creation returns for in
Slide 4: Section 1: Unique value creating business model & strategy
Section 1: Unique value creating business model & strategy 4
Slide 5: The global polyester chain industry leader
The global polyester chain industry leader Operating assets in all key global regions Revenues 2010 = US$3,055 MM (1) EBITDA 2010 = US$435 MM (1) Production Volume 2010 = 3,186Kt EBITDA/t 2010 = US$136 (1) Rotterdam, Bobingen & Asheboro, USA Netherlands (2) Guben,Germany Klaipeda, Lithuania Lopburi,
Slide 6: The global polyester chain industry leader
The global polyester chain industry leader Operating assets in all key global regions PET Fibres PTA •• Revenue: US$1,832 (1) •• Revenue: (1) •• Revenue: (1) Revenue: US$1,832MM MM (1) Revenue: US$429 US$429MM MM (1) Revenue: US$1,514 US$1,514MMMM (1) Key Statistics •• EBITDA: US$237 (1) •• EBITDA:
Slide 7: Industry leader in North America and Europe
Industry leader in North America and Europe Major PET consuming markets and growing IVL largest PET producer in North America IVL largest PET producer in Europe with 5 sites and with 4 sites and 32% market share 27% market share PET Capacity (MMt) PET Capacity (MMt) 6.00 4.00 Demand PET Demand PET 5
Slide 8: The Indorama value creation strategy
The Indorama value creation strategy Focus on the Polyester Value Chain Only ● Indispensable to everyday life, with resilient, consumer-driven demand ● Focused management team to capitalise on market opportunities Intelligent & Highly Disciplined Intense & Dynamic Customer Focus Expansion Policy ● H
Slide 9: Section 2: The polyester chain: highly attractive, consumer-led industry
Section 2: The polyester chain: highly attractive, consumer-led industry 9
Slide 10: Polyester chain products are indispensable, present in numerous everyday consumer items
Polyester chain products are indispensable, present in numerous everyday consumer items Fast Moving Energy Polyester Value Chain Consumer Goods Preforms/ PET & PTA Packaging Polyester & Fibres Beverages Food Pharma Home Care Personal Care Apparel Home Textiles Industrial Flexible Food Packaging Elec
Slide 11: Structural changes to the polyester chain industry underpin on-going demand growth
Structural changes to the polyester chain industry underpins on-going demand growth Polyester fibre continues to replace cotton and other PET continues to gain market share against glass & metal fibres… Share of total fibre demand (%) Share of total beverage packaging (%) 100 12 100 19 15 15 16 16 7
Slide 12: Global beverage packaging market growing at CAGR 4%
Global beverage packaging market growing at CAGR 4% PET higher growth, increasing marketshare in global packaging mix Global Beverage Packing Consumption Global Beverage Packaging Mix Bottles BN Units (%) % R: 4 CAG Total Global Packaging PET Metal Glass Others Source: Euromonitor
Slide 13: Environmentally friendly
Environmentally friendly Polyester products are more environmentally friendly than competing products Polyester fibre: “Life Cycle Assessment” (1) PET resin Water Required In Fibre Production (Kg per unit of fibre) Energy Required To Produce Packaging for 100 Koz of soft drink (MM Btu) 25,000 28 26.
Slide 14: Significant consumer-driven demand
Significant consumer-driven demand Especially in emerging markets Asia is the largest and fastest growing market for PET Sustainable demand in mature economies and and polyester fibre substantial growth in emerging markets PET demand (MMt) Polyester fibre demand (MMt) PET consumption per capita (Kg)
Slide 15: Highly stable profitability
Highly stable profitability Resilient to economic cycles Polyester chain margins resilient through the economic cycle… Spread (US$/t) (1) GDP (% change) (2) PTA + PET GDP Source CMAI, PCI, IMF World Economic Outlook Database, IVL Analysis Notes 1. Blended (simple average) industry spread across thre
Slide 16: Section 3: Growing into undisputed global leadership – the 2014 goals
Section 3: Growing into undisputed global leadership – the 2014 goals 16
Slide 17: Growing to undisputed leadership: growth in capabilities
Growing to undisputed leadership: growth in capabilities Setting the Basics (Pre-2006) Established Global Player (2006-2010) Undisputable Leadership (2011-2014) Research and Development Branding and Green Initiatives Western Specialty Emerging Markets Scale Assets Scale Assets Presence in Large Mark
Slide 18: Growing to undisputed leadership: growth in scale
Growing to undisputed leadership: growth in scale Setting the Basics Established Global Player (2006-2010) Undisputable Leadership (2011-2014) (Pre-2006) Capacity growth 10 MMt goal for 2014 (MMt) 4.2 10.0 ~5.3 MMt by 1Q ‘11 ~5.8 MMt by end of 2011 0.5 2.1 2.7 3.2 5.8 0.5 2006 Strategic 2010 (1) Sig
Slide 19: Closing what we have signed already…
Closing what we have signed already… Capacity Business Region Overview Strategic Rationale Status (Kt) EUP Utility ● PTA / PET ● Netherlands ● 24 mw power and utility service at ● Captive consumption of power & ● 24 mw ● Closing: 4 May 2010 Closed Asset the site of Rotterdam utilities in Rotterdam P
Slide 20: Exploiting 2011–2014 opportunities in the active pipeline…
Exploiting 2011 – 2014 opportunities in the active pipeline… 2011 announced 2011 - 14 pipeline (3) PET (MMt) 4.4 0.4 1 .1 ● Rotterdam (expansion) ● India (greenfield) 1.5 1.4 ● Nigeria (greenfield) ● MEA 1 (greenfield) ● Various (debottleneck) ● MEA 2 (acquisition) 20 10 S ign ed in 2 01 1 201 1 -1
Slide 21: Disciplined approach to expansion
Disciplined approach to expansion Market Advantaged R&D new Synergy Scale Recycling Management access feedstock products potential Integrated: Integrated: MEA MEA Integrated: Integrated: India India Greenfield Fibre: Fibre: MEA MEA Fibre: Fibre: Indonesia Indonesia Trevira: Trevira:Europe Europe Acq
Slide 22: Section 4: Consistent track record of value creation
Section 4: Consistent track record of value creation 22
Slide 23: Strong leadership team with track record of value creation
Strong leadership team with track record of value creation Transformation of IVL through well executed expansions, acquisitions[&]integrations [] [ ] on all its promises Management team that has delivered IVL Revenues (US$MM) CAGR: 44% “We aim to be the undisputed leader in this industry through sca
Slide 24: IVL creates value with every growth initiative
IVL creates value with every growth initiatives Improving acquisitions Value creation initiatives Raw End New Supply Utilisation Technology Debottle- Utilities Asset Characteristics (1) Country Materials Market Product Chain Rate Upgrade necking Savings Integration Access Addition Savings ••Ottana O
Slide 25: How Indorama creates value: case studies
How Indorama creates value: case studies Operational improvements to acquired assets Eastman Chemical PET Assets Ottana PET & PTA Assets ● Acquisition of underperforming 2008 (1) 2010 ● Acquisition of non-performing 1H ’10A (2) 2H ’10A (3) asset (31 Mar ’08) assets (1 Jul ’10) Utilisation Remedial a
Slide 26: IVL creates value through well executed greenfield projects
IVL creates value through well executed greenfield projects AlphaPET: 432 Kt US Green field PET Plant Strategic Rationale Key Success Factors ● ● US is largest PET market in the world Diminishing supply due asset shutdown due to high production On-time On-time ● costs Existing producers use old tech
Slide 27: Section 5: Compelling financial returns for investors
Section 5: Compelling financial returns for investors 27
Slide 28: Strong operating performance as we grow…
Strong operating performance as we grow… Production has been growing… …and operating performance remains high Production volume (Kt) Capacity utilisation (%) 850 2010A = 3,186 Average: 98% 826 822 102% 100% 99% 100% 98% 97% 98% 97% 97% 800 776 760 762 750 739 734 75% 700 700 50% 650 600 25% 1Q '09A
Slide 29: ...generating financial results
...generating financial results Revenue EBITDA (US$ MM) (US$ MM) 900 838 141 733 737 752 150 628 115 608 602 101 600 499 92 89 100 80 79 62 300 50 0 0 1Q '09A 2Q '09A 3Q '09A 4Q '09A 1Q '10A 2Q '10A 3Q '10A 4Q '10A 1Q '09A 2Q '09A 3Q '09A 4Q '09A 1Q '10A 2Q '10A 3Q '10A 4Q '10A EBITDA / tonne of act
Slide 30: …and strong financial returns
…and strong financial returns Invested capital / tonne (1) Performance Financial Returns (ROCE) (US$ per tonne) (US$ per tonne) (%) Average = 16.5% 22% EBITDA / tonne 21% Estimated (2 Years) 123 650 Greenf ield 20% 19% 16% 16% 15% 14% Current 612 EBITDA / tonne 171 (4Q '10A) 9% 10% Estimated 450 Acq
Slide 31: 2014 Goals
2014 Goals Current (1) (2) 2014 Goal (2) 10.0 MMt Production capacity 3.2 MMt US$1.1 Bn+ EBITDA US$0.4 0.4 Bn c. 20% ROCE 17% 17.0% c. 1.0x 0.9x Net Debt / Equity Source: Company information Our goal is to grow to 10MMt while maintain our EBITDA per tonne, improving ROCE with only modestly higher le
Slide 32: Financing the 2014 goals
Financing the 2014 goals ● Total investment of US$3.8 billion required to reach 2014 goals ● US$0.9 billion for transactions signed in 2H ‘10 and closing by 1Q ’11 (either spent already or financing committed) ● Balance of US$2.9 billion will be spent 2011 to 2014 (financed through proceeds from rig
Slide 33: Outlook Q1, 2011
Outlook Q1, 2011 ● Strong demand for all products ● Earnings growth driven by: - Volume growth from completed projects in 2010 and acquisitions in Q1, 2011 - Higher integrated margins - Product innovation for speciality products to expand margins in long term ● Strong balance sheet to capture growth
Slide 34: Thank You
INDORAMA PT Thank You es oe a Home Textiles —— ) joven 34
Slide 35: Highly stable profitability
Highly stable profitability Ability to pass through price movement Polyester chain margins resilient through crude price movements… Spread (US$/t) (1) Price (US$ Barrel) (2) 600 140 120 100 400 80 523 542 510 496 486 492 60 455 442 444 200 40 20 0 0 -20 (200) -40 2002A 2003A 2004A 2005A 2006A 2007A
Slide 36: Summary Consolidated Financials
Summary Consolidated Financials Income Statement (THB MM) 2006 2007 2008 2009 2010 Sales 18,759 32,345 53,331 79,994 96,858 COGS 16,563 28,766 48,178 67,666 82,125 Gross profit 2,196 3,579 5,153 12,328 14,733 EBIT 1,087 1,879 2,271 7,946 10,445 EBITDA 1,702 2,641 3,838 11,106 13,777 Net profit befor