Indorama Ventures Public Co. Ltd. · SET:IVL
Indorama Ventures Public — Q2 2024 Earnings Presentation
36 slides from Indorama Ventures Public's earnings presentation, Aug 10, 2024
Slide 1: 2nd Quarter 2024 Financial Results
2nd Quarter 2024 Financial Results 9th Aug 2024 © Indorama Ventures 2024 1
Slide 2: Disclaimer
Disclaimer This presentation contains “forward-looking statements” of Indorama Ventures Public Company Limited (the “Company”) that relate to future events, which are, by their nature, subject to significant risks and uncertainties. All statements, other than statements of historical fact contained
Slide 3: Macroeconomic landscape
Macroeconomic landscape Economic Activity Stock Levels and Freight Rates SCFI1 Economic activities show a slowdown Manufacturing PMI ($/TEU) Stocks of Purchases PMI in growth in US, while China and 55 Destocking from 800 60 Expansion Europe remain challenging 4Q22 55 600 US SCFI 50 50 400 China PMI
Slide 4: 2Q 2024: Business Results
2Q 2024: Business Results 2Q 2024 Key Financials 1 Volume growth in 2Q24 with demand growth and ease of destocking Sale Volume Revenue 3.64MT $3,990M 2 Indovinya’s volumes and margins improved in line with industry trends 3% QoQ 1% YoY 5% QoQ 0% YoY Reported EBITDA Adjusted EBITDA 3 Asia integrated
Slide 5: Ease of destocking, QoQ volumes growth 3% in 2Q24
Ease of destocking, QoQ volumes growth 3% in 2Q24 Sales Volume (MT) 2Q24 sales volume grew 3% QoQ and 1% YoY, marking the end of destocking CPET Intermediates Chemicals 2.00 2.00 5.00 PET volumes continued to grow both 3.60 3.53 3.64 3.74 QoQ and YoY with brand owner 2.87 2.77 2.86 2.88 4.00 prefere
Slide 6: 2Q 2024 Results – IVL by Segments
2Q 2024 Results – IVL by Segments IVL Adjusted EBITDA ($M) QoQ 415 • Fibers’ performance remained stable 370 despite volume challenges. 33 366 39 • Indovinya demonstrated strong 53 39 1% 323 performance with higher volumes and QoQ 33 277 margins. 2Q24 vs 70 98 22 1Q24 53 • CPET benefited from volume
Slide 7: 2Q 2024 Results – IVL by Regions
2Q 2024 Results – IVL by Regions IVL Adjusted EBITDA ($M) 415 QoQ 370 366 • Asia benefited from higher volumes in 82 80 PET and improved regional mix, though 1% 323 56 benchmark integrated PET spreads went QoQ 42 277 down 2Q24 vs 1Q24 57 • Americas remained flat with robust Indovinya performance, ne
Slide 8: New CPET Leadership Team
CPET New CPET Leadership Team Dynamic, Strong, Experienced 40+ years combined expertise in all key regions Muthukumar Complementary strengths for strategic decisions Paramasivam Brings dynamism, agility and fresh ideas Next generation management in AI and IBP integration Takes forward IVL 2.0 vision
Slide 9: CPET vision aligned with IVL 2.0
CPET CPET vision aligned with IVL 2.0 New Leadership Team committed to build on the strong foundation and deliver Ensuring near term business Smooth transition into the hybrid • Co-leaders are internal appointees and are continuity regional x functional model ideally positioned to ensure business co
Slide 10: Integrated PET – focus on asset optimization to improve competitiveness
CPET Integrated PET – focus on asset optimization to improve competitiveness XXXXX PET demand stable and Low margin environment Management actions future proof 266 251 243 Sustain and expand +4.1% 42 206 market share 162 9 31 134 3 Optimize asset 17 1 33 portfolio 28 16 2010 2023 2030E 2019 2020 202
Slide 11: Recycling – attractive business with ongoing investment, successful turnaround
CPET Recycling – attractive business with ongoing investment, successful turnaround Management actions Transforming recycling business Op. Rate (%) Adjusted EBITDA ($M) Partner with our customers to create value 77% 85 61% 49% Improve operational and cost efficiency 9 -20 Continue to build out 2021
Slide 12: Specialty Chemicals – continue positive turnaround trajectory
CPET Specialty Chemicals – continue positive turnaround trajectory Successful turnaround of IVPG Measures to effect change IVPG EBITDA for 2023 and 1H2024 ($M) Yield and plant reliability improvement Fixed cost reduction executing Project Star 2023 1H2024 Sales & innovation focusing on high-margin b
Slide 13: Packaging (Indovida) - unlock hidden value and facilitate higher growth
CPET Packaging (Indovida) - unlock hidden value and facilitate higher growth Consistent high margins and compelling growth outlook Growth roadmap 8 19 21% Broaden geographic footprint, Countries Industrial Units EBITDA Margin1 focusing on Africa Market Market PET market Blue chip customers Countries
Slide 14: Digital - To take CPET to the next level of future readiness
CPET Digital - To take CPET to the next level of future readiness Digital transformation projects Optimize supply chain and decision-making processes connecting planning activities across all geographies; Provides visibility and decision support for swift market response Achieves Improvements planne
Slide 15: 2Q 2024 Results – Combined PET
CPET 2Q 2024 Results – Combined PET CPET Adjusted EBITDA ($M) Integrated PET: Adjusted EBITDA of 247 $125M remained stable QoQ but fell 40% YoY due to disappointing China benchmark spreads, though 3% YoY 187 growth in PET sales -8% 172 QoQ Packaging: 28% QoQ increase in 142 2Q24 vs 141 Adjusted EBIT
Slide 16: 2Q 2024 Results – Intermediate Chemicals
CPET 2Q 2024 Results – Intermediate Chemicals Intermediate Chemicals Adjusted EBITDA ($M) 82 Intermediates Chemicals: Adjusted 0% EBITDA of $62M, flat QoQ QoQ 50 days US gas cracker unplanned outage 2Q24 vs 66 resulted in a $17-18M EBITDA loss in 1Q24 62 62 2Q24 45 MTBE and Integrated MEG continued
Slide 17: 2Q 2024 Results – Indovinya
Indovinya 2Q 2024 Results – Indovinya Indovinya Adjusted EBITDA ($M) Home & Personal Care: Stronger demand in NA and resilient demand in SA and APAC, with overall volumes up 12% QoQ and 2% YoY +40% Crop Solutions: The Northern Hemisphere QoQ crop season boosted HVA sales and margins, 2Q24 vs with a
Slide 18: 2Q 2024 Results – Indovinya by Markets
Indovinya 2Q 2024 Results – Indovinya by Markets Revenue ($M) Volume (KT) 634 586 586 372 33% Indovinya 2Q23 1Q24 2Q24 340 30% 328 34% Adj EBITDA $M 53 70 98 38% HVA 60 71 98 36% 13% 15% 36% Essentials (7) (1) 0 14% Adj EBITDA Margin 13% 16% 16% 11% 12% % 9% 12% 16% 17% 13% 15% 13% HVA 13% 15% 20% E
Slide 19: Indovinya: Strong runway for long-term growth
Indovinya Indovinya: Strong runway for long-term growth Adjusted EBITDA ($M) Specialty Portfolio • Increase specialty market share Transformation from 23% to 40%. Benefits • Boost profit margins from 16% to over 20%. • Benefits from synergy and Baseline • Leverage innovation and transformation initi
Slide 20: 2Q 2024 Results – Fibers
Fibers 2Q 2024 Results – Fibers Fibers Adjusted EBITDA ($M) Stable performance amidst volume challenges 39 39 in Lifestyle, with positive YoY growth. 33 33 +2% Mobility: Strong growth in both QoQ and YoY 2 6 QoQ 16 metrics, benefiting from higher demand 2Q24 vs 22 24 supported by growth in replaceme
Slide 21: Lifestyle Fibers: Chinese Industry performance drivers
Fibers Lifestyle Fibers: Chinese Industry performance drivers Increase in Industry spreads in July getting supported by production reduction in China due to high inventory levels PSF Inventory Days PSF OR% 100.0% 25 88.3% 86.6% 87.4% 86.5% 86.8% 90.0% 84.8% 84.8% 80.9% 80.7% 80.4% 78.8% 79.1% 78.9%
Slide 22: Fibers: Stringent focus on Working Capital
Fibers Fibers: Stringent focus on Working Capital Fund release of $52M in 1H24 Initiatives for GWC Reduction Lower Inventory by 18 days & AR by 6 days 110 Working capital days • Full-time dedicated Captain for WC • Established targets - Benchmarking for each 100 entity (Based on past performances an
Slide 23: Refinancing at cost competitive pricing and ample liquidity
Refinancing at cost competitive pricing and ample liquidity $1.3B refinancing completed in 2024 After refinancing (Jun 2024) Refinancing completed $M $B in first six months of 2024 2024 0.3 0.1 0.4 6% 1. THB 10 billion Senior Unsecured Debentures $285 2025 0.4 0.4 0.7 11% 2. Ninja Loan Refinancing 5
Slide 24: Natural hedge on foreign currencies with global investments
Natural hedge on foreign currencies with global investments Natural Hedge Diversified Funding Long-Term Debt Repayment schedule (2) $B 7.4 7.4 30th Jun 2024 Others 4% Cash & cash under Liquidity $2.4B management 0.6 Working Capital 1.0 $B Loan 27% ROW Non operating debt(1) 0.9 38% 2024 0.3 0.1 0.4 6
Slide 25: Cash conservation and disciplined capital allocation
Cash conservation and disciplined capital allocation Working Capital Days CAPEX ($B) 4 Days 0.75 0.66 86 82 0.54 0.57 0.32 0.30 0.23 0.32 0.43 - 0.49 0.41 Maintenance 0.14 0.18 0.22 0.17 0.16 Growth 0.10 0.12 1Q24 2Q24 2023A 1H24A 2H24E 2024E 2025F 2026F $266M $123M Capex in 2Q241 WC inflow in 2Q24
Slide 26: Outlook
Outlook Volumes growth to continue in 2H24 with ease of destocking, however depressed 1 benchmark spreads to impact Integrated PET and Polyester Fiber businesses Lower ethane prices and widening shale gas advantage in the US to support ethylene crack 2 margins Click to edit Master title 3style Indov
Slide 27: Thank you
Thank you © Indorama Ventures 2024 27
Slide 28: Elevated ocean freights supporting high domestic prices
CPET Elevated ocean freights supporting high domestic prices SCFI ocean container spot freight rates ($/TEU) Situation 10,000 Prolonged Red Sea disruptions 9,000 leading to container shortage 8,000 and long leadtime 7,000 Asia-South America 6,000 Asia - USWC Asia- USEC 5,000 Implications 4,000 Asia-
Slide 29: PET capacity cycle in China reaching its peak in 2024
CPET PET capacity cycle in China reaching its peak in 2024 China PET capacity additions (MT) 6.0 • PET expansion in China 5.0 cools down as capacity cycle reaches its peak 4.0 • With the introduction of new capacities, the gradual phasing out of 3.0 small, old production lines has begun 2.0 • These
Slide 30: IVL’s global PET manufacturing footprint mitigates competition from Chinese imports
CPET IVL’s global PET manufacturing footprint mitigates competition from Chinese imports IVL PET sales split (%) Trade barriers Duties + ADD on China PET imports across main IVL markets 44% 20% impacted by Chinese impacted by Chinese imports imports US (Duty 6.5%+ ADD Mexico (Duty 35% since 9% 105-1
Slide 31: Shale gas advantage remained strong amidst low ethane price
CPET Shale gas advantage remained strong amidst low ethane price, expect ethylene margins to gradually improve with operating rates Shale gas adv. remained strong amidst Ethylene spreads increased in 2Q24 due to Expect spreads to improve as capacity low ethane price unplanned outage and turnarounds
Slide 32: Expect rationalization as Asian MEG producers operate at unsustainable margins
CPET Expect rationalization as Asian MEG producers has been operating at unsustainable margins, US producers to maintain shale gas advantage Global MEG capacity addition continues to Asia MEG spreads remained low as market NEA producers operate below cash cost, outpaced demand growth continued to be
Slide 33: US MTBE benchmark spreads remained above historical level
CPET US MTBE benchmark spreads remained above historical level amid tight gasoline market in the West, although falling slightly from 2023 peak Continued strength in MTBE prices from US butane and methanol prices remained US MTBE price elevated above historical tight gasoline market low level US MTB
Slide 34: China PET market shows green shoots of discipline recovery
CPET China PET market shows green shoots of discipline recovery 1 90% 88% 95% 97% 86% 100 % 2 300 82% 74% 77% 78% 90% 73% 75% 76% 250 Avg. 2019-23 = $226/T 80% China 70% 200 Integrated Asia Int. PET Spreads China PET 0.8 0.8 60% 150 0.7 0.7 95% 97% 0.6 0.7 0.7 50% PET Spreads1 90% 88% operating 0.5
Slide 35: China refining margins
CPET China refining margins Profit is weakening across private refineries China SOE gross refining margin1 China private refineries gross refining margin2 Note: 1. Incl. 30-day crude inventory, fully taxed 2. Incl. 45 -day crude inventory, partially taxed Source: Broker reports, IVL analysis © Indor
Slide 36: Key items below EBITDA & Capex
Key items below EBITDA & Capex Key items 2023A 1H24A 2H24E 2024E Remarks for 2024E Lower with assets optimizations Depreciation and Amortization ($M) 796 402 ~380 ~780 (US$35M p.a., full impact in 2025) Net Finance Cost ($M) 407 232 ~230 ~460 Total Capex ($M) 752 231 ~310 ~540 2Q24 = 123 Mainly Recy
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