Indorama Ventures Public Co. Ltd. · SET:IVL
Indorama Ventures Public — Q3 2010 Earnings Presentation
47 slides from Indorama Ventures Public's earnings presentation, Nov 15, 2010
Slide 1: IVL – Q3 2010 Analyst Presentation
IVL – Q3 2010 Analyst Presentation Strong Fundamentals – Strategy on Track November 15, 2010
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: Agenda
Agenda Highlight Q3 2010 Announced Growth Initiatives • Invista • China Financial results Q3 2010 and 9M 2010 Capital Raising Outlook 3
Slide 4: Highlights Q3 2010
Highlights Q3 2010 • Record financial performance • Acquisition of additional shares in TPT • Announced acquisition in China • Announced acquisition in USA and Mexico • Positive outlook for polyester value chain 4
Slide 5: Agenda
Agenda Highlight Q3 2010 Announced Growth Initiatives • Invista • China Financial results Q3 2010 and 9M 2010 Capital Raising Outlook 5
Slide 6: INVISTA – a premier polyester company with a rich heritage
INVISTA – a premier polyester company with a rich heritage Built on DuPont innovation and Koch business culture INVISTA North America Polyester Business Overview • Part of the business acquired by Koch Industries from DuPont and merged with KoSa Origin – INVISTA: formerly DuPont Textile and Interior
Slide 7: Competitive and efficient production platform
Competitive and efficient production platform Established track record of asset reliability • Located in Spartanburg, South Carolina • Total production capacity of 470,000 tpa – 400kTpa PET / Polymer, 65kT Fiber, 5kT Film • Differentiated product portfolio Spartanburg – Commodity / specialty PET, fi
Slide 8: “Once in a life-time” opportunity
“Once in a life-time’’ opportunity + Premier company with a rich heritage A definitive step to IVL’s High quality assets with track record sustainable growth + of reliability + Domestic reach into emerging markets Attractive presence in innovative + specialty businesses Strong R&D platform and well-
Slide 9: Strategic logic for acquisition
Strategic logic for acquisition • Reinforces IVL’s scale in NAFTA and globally creating the Scale & #1 NAFTA PET producer as well as the largest global Reliability producer of PET resins • Established track record of asset reliability • Significant footprint, favorable logistics, and duty Market adv
Slide 10: Strategic logic for acquisition (cont)
Strategic logic for acquisition (cont) • Arguably the most recognized brand in the industry Branding • Provides DuPont's legacy branding platform adding & universally known brands to IVL’s portfolio IP • Access to protected recipes and processes • Skilled scientists and technicians R&D • Pilot plant
Slide 11: Enhancing profile as global and regional leader
Enhancing profile as global and regional leader Creating the #1 NAFTA PET …as well as the largest producer market player… of PET globally NAFTA PET Producers (M tpa) Global Top 10 PET Producers(M tpa) 1.5 3.0 1.0 2.0 1.5 1.3 2.8 0.5 0.9 1.0 1.8 1.5 1.3 0.4 0.4 0.9 0.8 0.7 0.6 0.5 0.5 0.0 0.0 IVL M&G
Slide 12: Providing access to emerging Latin America market
Providing access to emerging Latin America market Market Characteristics Mexico 742 Kt Queretaro, Mexico Central • Latin America market comprising of Mexico, Capacity 480K tpa America & Caribbean Central America, Caribbean and South 118 Kt America Venezuela 91 Kt • The region has a population of 580
Slide 13: Latin America with significant upside potential for growth
Latin America with significant upside potential for growth Per capita consumption well-below Strong demand growth driven by income developed countries growth, population, demographics PET Per Capita Consumption – 2009 (kg) Latin America PET consumption (M tpa) 12 3.5 10 3.0 USA +7.0% Switzerland 2.5
Slide 14: IVL’s portfolio enhancement
IVL’s portfolio enhancement Segmentation of the polyester industry Specialty INVISTA adds specialty business to IVL’s portfolio Commodity Polyester Intermediates Polyester Feedstock 14
Slide 15: Examples of innovative specialty products
Examples of innovative specialty products PolyShield, OxyClear, PolyClear polyester resins PolyShield® OxyClear™ Polyclear® EBM Co-polyester Resin PET Resin PET Resin Provides an excellent oxygen and Protects the quality, freshness, and Extrusion Blowmolding Grade carbon dioxide barrier taste of oxy
Slide 16: North America is an attractive PET market
North America is an attractive PET market North America PET spreads have been IVL has been able to generate strong consistently stable EBITDA, providing an average ROCE of 15% North America PET Industry Spreads (US$/MT) IVL North America EBITDA per tonne (US$/MT) 400 150 120 350 Ø 111 90 300 Ø 294 6
Slide 17: Truly transformative acquisition
Truly transformative acquisition • Sound standalone investment highlights Attractive • Highly competitive valuation Acquisition • Meets all of IVL’s acquisition criteria • Excellent strategic fit Strategic Fit • Significant cost synergies • Powerful growth synergies • Accelerates top-line growth Sha
Slide 18: Financially attractive acquisition
Financially attractive acquisition Transaction to close end Q1 2011 (USDMM) 17 174 Acquisition 420 Value 230 Fixed Net Assumed Total Assets WC Liabilities (USD/Ton) Fixed 600 Assets 228 Fixed Assets Replacement Value Note: Subject to adjustment to working capital on closing and any liability assumed
Slide 19: Agenda
Agenda Highlight Q3 2010 Announced Growth Initiatives • Invista • China Financial results Q3 2010 and 9M 2010 Capital Raising Outlook 19
Slide 20: An attractive opportunity to enter China market through an established asset base
An attractive opportunity to enter China market through an established asset base Target Asset Overview Seller • Guangdong Shinda UHMWPE Co • Total capacity of 406,000 tpa Capacity − Textile-grade 130kT tpa − Bottle-resin / Film-grade 276kT tpa Kaiping, Guangdong Capacity (tpa): • Inventa-Fischer te
Slide 21: China is the largest market for fiber and PET in the world
China is the largest market for fiber and PET in the world China is largest part of global …and expected to continue so demand structure… through 2015 % of Demand (2009) % of Demand (2015) 100 4 100 2 5 3 4 19 1 25 6 2 80 19 80 9 20 9 60 23 60 27 11 40 40 69 9 64 17 20 16 20 21 14 0 MMt 0 MMt 0 30 2
Slide 22: Substantial upside potential for PET growth
Substantial upside potential for PET growth PET Consumption per Capita vs. GDP (2009) PET Consumption Per Capita (kg) 12 Czech USA Saudi Arabia Switzerland 9 Spain Italy Austria France Greece Mexico Portugal Netherlands Bulgaria UK Sweden Romania Japan Australia 6 Cyprus Argentina Korea S Denmark Pa
Slide 23: Guangdong region with attractive supply/demand dynamics
Guangdong region with attractive supply/demand dynamics Despite strong demand, China with widening Strategy focuses on gaining a foothold in South capacity surplus China CAGR: 04-09 09-14 • South China i.e. Guangdong is a major demand (000 tpa) Demand 18% 12% centre 8,000 Supply 16% 11% 6,530 − Majo
Slide 24: Strategic logic for acquisition
Strategic logic for acquisition Transaction expected to close in Q1 2011 • High-quality, well maintained assets with track record of High-quality reliability asset • European equipment, Inventa-Fischer technology Competitive • Low conversion cost cost • Advantaged logistics cost position • Guangdong
Slide 25: Agenda
Agenda Highlight Q3 2010 Announced Growth Initiatives • Invista • China Financial results Q3 2010 and 9M 2010 Capital Raising Outlook 25
Slide 26: 9M 2010 - High returns to shareholders
9M 2010 - High returns to shareholders (USD MM) 9M 2009 9M 2010 YoY % Comments Production1 • Higher sales revenues in all business segments on 2.17 2.36 9% higher volumes and higher average selling prices (MM Tons) Sales 1,707 2,222 30% • Significant strengthening of average Thai Baht against both E
Slide 27: The power of a global presence
The power of a global presence Strong growth across all geographies Europe (Sales in USD MM) 12% 731 Asia North America 652 32% 859 470 72% 653 274 9M 09 9M 10 ROW 9M 09 9M 10 9M 09 9M 10 27% 162 128 9M 09 9M 10 27
Slide 28: Q3 2010 - High returns to shareholders
Q3 2010 - High returns to shareholders Q3 Q2 Q3 Comments (USD MM) QoQ % YoY % 2009 2010 2010 • QoQ slight increase in sales revenues on higher sales volume but lower selling prices for all business segment Production1 0.73 0.77 0.82 6% 12% (MM Tons) • YoY extremely weak average Euro impacted transla
Slide 29: PET Polymers: Margin improvement in Q3
PET Polymers: Margin improvement in Q3 (USD MM) Q3 2009 Q2 2010 Q3 2010 QoQ % YoY % Comments • Higher production volumes with start-up of both lines in Sales 324 456 460 1% 42% AlphaPet, Alabama, USA • Increase in revenues from higher sales volumes. Average selling price increased YoY, though easing
Slide 30: Polyester Fibers & Wool: Positive earnings momentum
Polyester Fibers & Wool : Positive earnings momentum (USD MM) Q3 2009 Q2 2010 Q3 2010 QoQ % YoY % Comments • YoY lower volumes as shifting one production line in Sales 94 100 104 3% 11% Rayong plant to produce PET • Soaring cotton prices during 2010 lead to strong demand in polyester for substitutio
Slide 31: PTA: Improvement in volume and margins in 3Q 2010
PTA: Improvement in volume and margins in 3Q 2010 (USD MM) Q3 2009 Q2 2010 Q3 2010 QoQ % YoY % Comments • Increase in sales volume and margin mainly from strong Sales 184 180 188 4% 2% demand from polyesters. • Utilization rate and sales volume increase QoQ, as plant shutdown in Rotterdam and Indora
Slide 32: Improving margins in the polyester value chain from PTA integration
Improving margins in the polyester value chain from PTA integration Total PTA EBITDA around 55% of consolidated EBITDA Q3 2010 9M 2010 (USD MM) (USD MM) 80 47% Captive consumption 200 47% Captive consumption 60 8 150 21 22 54 40 100 64 159 20 50 34 84 0 0 PTA Operating Allocation to PET Allocation t
Slide 33: Reduced net debt
Reduced net debt Repaid long term loans and reduced short term loans from cash flow from operations and IPO proceeds IVL Net Financial Debt At 30-Sep-2009 At 30-Sep-2010 (THB bn) (THB bn) 50 50 40 40 1.8 30 30 2.8 25.6 20.0 20 20 37.4 28.8 10 10 13.6 11.6 0 0 ST Debt LT Debt Cash Net Debt ST Debt LT
Slide 34: De-leverage, prepared for committed growth
De-leverage, prepared for committed growth Net Operating Debt / EBITDA (x) Net Gearing (%) (Times) (Percentage) 100% 4x 80% 3x -48% 60% -23% 2x 3.8x 40% 1x 2.1x 63% 49% 20% 0x Q3 2009 Q3 2010 0% Q4 2009 Q1 2010 Note: Annualized EBITDA on net operating debt excludes debt for capex and investments not
Slide 35: Increasing cash flow from operations and free cash flow
Increasing cash flow from operations and free cash flow Free Cash Flow 9M 2009 9M 2010 (THB bn) (THB bn) Cash outflow for working capital on 10 10 increase in volume Completed capex in AlphaPet and selling prices Project, acquisition of utility 8 8 plant in Rotterdam, and equity 1.5 investment in Ot
Slide 36: Agenda
Agenda Highlight Q3 2010 Announced Growth Initiatives • Invista • China Financial results Q3 2010 and 9M 2010 Capital Raising Outlook 36
Slide 37: Objective of Capital Raising
Objective of Capital Raising 1 Rights issue provides opportunity for existing shareholders to participate 2 Maintain growth momentum upto 2014 through acquisitions and expansions 3 Increase liquidity of shares Announced / Commited projects 2010 YTD are funded through internal cash and loans 37
Slide 38: Key highlights of rights issue
Key highlights of rights issue Rights issue allocation ratio is 9 existing shares for 1 TSR TSR offering price zero and can be exercised into 1 share Exercise price of TSR to be announced in the shareholders EGM Reserved 481,585,672 shares for exercise of TSR 38
Slide 39: Projects Announced and/or Completed in 2010
Projects Announced and/or Completed in 2010 • Acquisition of Utility plant in Rotterdam, Netherlands • Brownfield PET expansion in Rotterdam, Netherlands • JV investment in Ottana, Italy • Greenfiled PET plant in Nigeria • PET recycling project (Flake to resin) at AlphaPet, USA • 2MW solar power in
Slide 40: Committed investments will result in 60% volume growth
Committed investments will result in 60% volume growth Investment Cost YTD2010 Additional Capacity (USD MM) (MM Tonnes) 800 6.0 5.4 600 5.0 2.0 608 4.0 400 4.0 760 3.6 0.6 3.4 0.2 200 3.0 37 3.4 3.4 3.4 3.4 115 0 2.0 Q2 2010 Q3 2010 Q4 2010 YTD FY2009 Q2 2010 Q3 2010 Q4 2010 Q4 includes TPT, China,
Slide 41: Projects in pipeline to serve regional markets and extend global reach
Projects in pipeline to serve regional markets and extend global reach to all key developing markets 2014 IVL Portfolio and Global Reach North Europe China, East Asia, East Europe North America South Europe MEA India South America SEA, Australia Aspiration - 2014 Confirmed projects 2010 Existing ass
Slide 42: IVL: Q4 2010 and 2011 Outlook
IVL : Q4 2010 and 2011 Outlook Strong demand for products Earning contribution from increase shareholding TPT Alphapet operating at high utilization Increase in operating earnings Strong tailwind from PTA and cotton outlook 42
Slide 43: Q&A
Q&A Visit our website www.indoramaventures.com 43
Slide 44: PTA expected to become tighter going forward
PTA expected to become tighter going forward Securing PTA feedstock supply is becoming increasingly important PTA projected to become short in Asia… …as well as globally Asia PTA structural balance Global PTA structural balance Surplus Op. rate Surplus Op. rate (MMt) (%) (MMt) (%) 20 95% 20 95% 92%
Slide 45: Cotton prices reaching an all-time high on tight supply
Cotton prices reaching an all-time high on tight supply Favorable substitution for polyester fibers & yarns resulting in strong demand The gap between supply/demand has Cotton prices have skyrocketed since increased dramatically in 2010 hitting a trough in 2009 Cotton supply/demand (1995-2010) 2010
Slide 46: Global cotton supply has dwindled
Global cotton supply has dwindled Global cotton supply has contracted …primarily due to the sharply… following reasons (MMt) % Growth China output negatively impacted by cost and 2009-10 25.0 23.4 transportation -6.8% 21.9 • High seed costs, low cotton price in 2008/09 crop 4.7 year, price volatilit
Slide 47: Fiber demand has rebounded strongly
Fiber demand has rebounded strongly The V-shaped recovery of Fiber demand driven by consumer fiber demand demand recovery (MMt) YoY Growth (%) Apparel and textile sales have rebounded 100.0 10.0 8.4 8.4 • Consumer demand for textiles increased 6.3 6.3 5.0 dramatically after the recessionary lows of
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