Suez Cement Co. · EGX:SUCE
Suez Cement — FY2016 Earnings Presentation
42 slides from Suez Cement's earnings presentation, May 11, 2017
Slide 1: Corporate Briefing
Corporate Briefing 31-12-2016
Slide 2: Contents
Contents Group Overview Market Overview Investment Highlights Financial Highlights 11/05/17 - 2 Corporate Briefing
Slide 3: Group Overview: Vision and Mission
Group Overview Vision and Mission Building our vision To be a world class local business building a better and sustainable future for all our stakeholders Building our mission To create value in the building materials sector through the Innovative and sustainable use of natural resources for t
Slide 4: Group Overview: SCGC Group at a glance
Group Overview SCGC Group at a glance Egypt’s cement market leader Part of the world’s third largest global cement producer Total production capacity of more than12M t/y cement 5 cement plants, 2 terminals, and 20 concrete batching units Strong commitment to Environment protection and so
Slide 5: Group Overview: Industrial network
Group Overview SCgC Industrial network Suez plant Torah plant 5 production facilities located in Helwan, Tourah, Kattameya, Kattameya plant Suez and El Minya. Helwan plant Total production capacity of 12 million metric tons of cement. Menya plant Approximately 14 percent market share of grey
Slide 6: Group Overview: Key milestones
Group Overview Key milestones 2014 – A successful expansion path. SCC acquired 50 % of ICC 2007 JV between SCC and UNICALCE SCC acquired 51% of Hilal Cement - Kuwait 2006 SCC acquired Ready Mix Beton & DECOM 2005 Suez Cement (SCC) acquired 99% of Helwan Cement Company 2001 Italcementi Group
Slide 7: Suez Cement group structure
Group Overview Suez Cement group structure HeidelbergCement Others 55.08% 44.92% Suez Cement Company Helal RMCA- Tecno Development TPCC HCC SBC Alalmeya ICC- (KSA) Cement – Suez Lime for industries (Kuwait) Gravel 66.12% 98.54% 56.32% 50% 49.66% 98.28% 52% 45% 51% Suez Suez Transport Import and an
Slide 8: Group Overview - Stock Market: Shareholders
Group Overview - Stock Market Suez Cement Shareholders - Dec 2016 Name % Others Ciments Francies 12.36% MENAF 26.05% 10.11% CIMENTS DU MAROC CIMAR 11.66% TERCIM S A S 5.00% Tourah Cement Company SAE 0.00% HeidelbergCement 55.08% United Co. for Provendrs 1.55% Ibrahem Abd Allh Bonean Co. 0.00% Public
Slide 9: Companies listed in the Egyptian Stock Market
Group Overview - Stock Market 3 Companies are listed in the Egyptian Stock Market Suez Cement Company (181,856,507 shares) Tourah Portland Cement Company (71,524,200 shares) Free Float Private Sector 8.65 % Entities & Free Float 12.06% Public Sector Entities 13.42% HeidelbergCement Public/Private
Slide 10: Stock Market: strong decline in market price starting to bounce back
Group Overview - Stock Market 25 Strong decline in market price which started to bounce back 7000 Thousands 23.17 ≡ Market Cap (EGP million) 2,870 EGX Code SUCE ≡ Closing Price (EGP) 15,78 6000 20 ≡ 52 WK High (EGP) 23,17 No. of Shares 181,856,507 ≡ 52 WK Low (EGP) 8,91 17.24 5000 ≡ 52 WK Avg. Vol
Slide 11: Market Overview: Egypt Macroeconomic Outlook
Market Overview Egypt Macroeconomic Outlook 11/05/17 - 11 Corporate Briefing
Slide 12: Egypt Macroeconomic Outlook: market volumes
Market Overview Egypt Macroeconomic Outlook 60 50 56. 6 53. 8 50. 2 50. 1 51. 3 40 49. 5 48. 7 30 48 Market 20 38. 5 14. 9 34. 5 Volumes* 10 14. 5 M tons 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2015 2016 Q4 Q4 12 10 11.1 8 11.7 9.8 10.6 10.9 8.1 7.8 SCGC MS % 6 7.5 8.2 7.6 4 SCGC 2 2.0
Slide 13: Residential segment consumes more than 40% of cement
Market Overview The residential segment consumes more than 40% of the total cement consumption Residential Although the tough situation this segment still have Good perspectives in the short and medium term projects. Non-residential Sharp drop expected in the tourism & industrial sectors d
Slide 14: Cement consumption concentrated in Greater Cairo & Delta
Market Overview More than 60% of Egypt’s cement consumption is concentrated in Greater Cairo & Delta Cement dispatch/ region % from SCGC MS% Market Greater Cairo 29% 32% Delta 35% 36% Upper Egypt 20% 0.5% Others 16% 31.5% Population 2014*: 84.6 million Growth rate (2011-2013)*: 1.9% Age pr
Slide 15: Egypt Grey Cement Market Structural Demand
Market Overview Egypt Grey Cement Market Structural Demand (Mt) 11/05/17 - 15 Corporate Briefing
Slide 16: Evolution of SCGC OPC Bags Ex-works price
Market Overview 1st Nov16 21thNov 16 7thDec 16 Evolution of SCGC OPC Bags Ex-works price (EGP/t) -50EGP/ton 1st July 16 -20EGP/ton -30EGP/ton 750EGP/ton 12th Mar 16 26th April 16 14th May 16 +50EGP/ton 15thOct 16 700EGP/ton 740EGP/ton -40EGP/ton +10EGP/ton -40EGP/ton 1th June 16 650EGP/ton +20EGP/
Slide 17: Evolution of OPC Bag – Bulk Ratio in Egyptian Market
Market Overview Evolution of OPC Bag – Bulk Ratio in the Egyptian Market Source: internal market intelligence 11/05/17 - 17 Corporate Briefing
Slide 18: Part of a global player with access to best practices
Investment Highlights Being part of a global player, SCgC has an immediate access to worldwide best practices World class management team Strong corporate governance Global industrial and distribution network Technical Know-how, R&D, and Highest operating, control & risk World class Health, Safety
Slide 19: Attractive Business Model
Investment Highlights Attractive Business Model Suez for Import and Export Co. Suez for Transportation and Trade Importation Distribution Retailing Cement Quarrying Bagging Production Suez Bags Co. Helwan Bags Co. Bulk RMC Concrete Admixtures RMB Co. A Fully Vertically Integrated Player 11/05/17 -
Slide 20: Operational Efficiencies in the pipeline
Investment Highlights Operational Efficiencies in the pipeline Installing state-of-the art kiln and mill production lines replacing the less efficient ones Expanding the use of Coal (instead of Gas/Fuel Oil) at all Group plants. Decreasing the clinker ratio in cement production through the u
Slide 21: Improving Market conditions; fuel flexibility strategy
Investment Highlights Improving Market conditions Market recovery from 48 to 60 Million Tons (25%) Limited capacity addition anticipated (5 to 6%) => Capacity utilization should increase from mid 70s to mid 90s Implementing fuel flexibility strategy Coal and Petcoke to release gas & fuel o
Slide 22: Suez Cement Mid Term Plan
Investment Highlights Suez Cement Mid Term Plan Efficiency gains Energy consumption optimization (wet kilns decommissioned, waste heat recovery…) Headcount progressive alignment to industry benchmark (850 employees to retire through 2020) Sustainability Energy strategy to mitigate CO2 em
Slide 23: Organic and inorganic growth
Investment Highlights SCC considers both organic and inorganic growth to increase the production capacity Growth T Organic Growth Inorganic Growth o b e New Licenses Replacement of the D inefficient lines Possible Acquisitions o Egypt and MENA n e Aggregates D De-bottleneckings to o replace least
Slide 24: Differentiation strategy: 13 types of cements
Investment Highlights As a Business-Level strategy, SCgC implements a differentiation strategy in its marketing approach that provides value to customers and is worth a premium price 13 Different types of cements Original Products Premium Products Special Products Ordinary Portland Cement (CEM I
Slide 25: Sustainable Development: Vision
Investment Highlights - Sustainable Development Vision SCgC is aware of the importance of its social role and promotes a socially responsible behavior among all of its employees. The Company believes that Sustainable Development, as a combination of economic prosperity, environmental protectio
Slide 26: Commitment to Environment Protection
Investment Highlights - Sustainable Development Commitment to Environment Protection We are committed to: Constantly monitor each of our sites to reduce and prevent any possible effect on the environment. Optimize the use of non-renewable resources in our production processes Enforce the b
Slide 27: Quality and environmental key achievements
Investment Highlights - Sustainable Development Our quality and environmental key achievements • Establishing new Coal mills in Kattameya and Suez. • Utilizing agricultural wastes, sewage sludge's • Recycling of bypass dust • concealment of historical bypass dust Environmental • Pollution abatemen
Slide 28: Social initiatives
Investment Highlights - Sustainable Development Social initiatives Our efforts have been focused on: Safety in the workplace and industrial hygiene; Direct and indirect local employment according to the requirements of its activity; Responsible restructuring; Assessment of employee satis
Slide 29: Social Initiatives for 2016 – Q4
Social Initiatives for 2016 – Q4 Driven by the company’s ongoing commitment to corporate social responsibility, SCGC has continued to promote initiatives that focused on key needs of local community members. In 2016, SCGC again made education and health key priorities. These initiatives also aim to
Slide 30: Social Initiatives for 2016 – Q4
Social Initiatives for 2016 – Q4 As part of its comprehensive Corporate Social Responsibility (CSR) Program Suez Cement donated LE 10 million to the Long Live Egypt Fund to contribute in the national campaign to fight Hepatitis C. Finally, the Company has always participated in charity activities du
Slide 31: Commitment to Safety
Investment Highlights - Sustainable Development Commitment to Safety Adopting the “Zero Accident” brings together all the necessary programmes required to establish a consistent Safety management system : PPE Working at heights LOTO Confined Space CSI Driving Code of Conduct Inspecti
Slide 32: Corporate Governance
Investment Highlights - Sustainable Development Corporate Governance Committed to efficiency, transparency and appropriate management Standing for business ethics and creation of value A well defined decision making structure Adopting consistent system of policies and procedures which comp
Slide 33: Energy-intensive industry: cost breakdown
Financial Highlights An increasingly energy intensive industry… Energy represents 70% of the production cost Others 30% Power 17% Fuel 53% YTD Dec 2016 SCGC Cost Breakdown 11/05/17 - 33 Corporate Briefing
Slide 34: Total Grey Fuel Mix
Financial Highlights Total Grey Fuel Mix 7% 6.4% 6% 8% 1% 1% 2% 4.3% 17% 29.2% 47% AF % PetCoke % 67% 48% Coal % Gas % 41.0% HFO % 28% 14% 24% 19.0% 18% 13% 2014 2015 2016 BDG 2017 11/05/17 - 34 Name of presentation - author, 8 pt
Slide 35: Fuel prices increases since 2013
Financial Highlights Fuel prices increased by more than 50% since Feb 2013 500 Electricity EGP/MWH x 4 since 2004 329 366 457 245 268 400 161.3 300 113.4 119.1 125 134 200 100 0 Before 30- 1-Dec-04 1-Dec-05 1-Oct-06 1-Sep-07 1-Jul-08 1-Jul-10 1-Jan-12 1-Jul-14 1-Jul-15 Sep 04 Fuel Oil EGP/t x 9 si
Slide 36: YTD December 2016 key results
Financial Highlights YTD December 2016 key results (Consolidated) 11/05/17 - 36 Corporate Briefing
Slide 37: EBITDA Evolution (Consolidated)
Financial Highlights EBITDA Evolution (Consolidated) EGPm 400 373 337 300 316 315 300 300 268 269 241 242 2012 200 210 2013 185 2014 160 165 2015 140 139 135 2016 100 83 52 2 0 Q1 Q2 Q3 Q4 11/05/17 - 37 Corporate Briefing
Slide 38: YTD December 2016 recurring EBITDA bridge
Financial Highlights EGPm YTD December 2016 recurring EBITDA (Consolidated): -Reversal in Gov. training (47) -Reversal clay fees provision +25 -Hilal & others effect (88) -Others +5 (126) (91) 419 14 (105) 7 -Staff (41) - Maintenance +7 -Others (57) -Fuel -Power +20 (56) 542 424 -Imported Clinker -c
Slide 39: Financial Highlights: 2012-2016 summary
Financial Highlights MEGP 2012 2013 2014 2015 2016 Revenues 4,597 5,049 6,152 5,642 6,142 EBITDA - recurring 1,051 1,061 1,154 424 542 % on revenues 22.9% 21.0% 18.8% 7.5% 8.8% EBIT 702 681 705 - 101 - 21 % on revenues 15.3% 13.5% 11.5% -1.8% -0.3% Net Profit ( Group Share) 524 538 500 - 60 -528 11/
Slide 40: Key Historical Financials
Financial Highlights Key Historical Financials : current environment heavily impacting results Revenue (EGPm) CAGR 07-16: +1% Rec. EBITDA (EGPm) CAGR 07-16: +3% 6,146 2,155 2,120 6,380 6,152 6,152 1,757 1,863 5,542 5,049 5,642 4,196 4,820 4,597 1,199 1,051 1,061 1,154 424 542 2007 2008 2009 2010 201
Slide 41: More than EGP 4.25 BN dividend pay out since 2007
Financial Highlights More than EGP 4.25 BN dividend pay out since 2007 Dividend distributed by SCC (EGPm) Dividend per Share (EGP/Share) Annual Dividends. 4.26 Interim Dividends. 774 3.9 182 709 2.65 2.65 2.65 592 482 482 482 2.0 2.0 2.0 182 1.65 364 364 300 300 182 300 1.0 182 182 182 0 118 2
Slide 42: Main Historical Acquisitions and Capex
Financial Highlights Main Historical Acquisitions and Capex Year Company Share Value 2005 Helwan Cement Co. 98.7% EGP 3.4bln 10/2006 RMB + RMBE 52% EGP 81M 8/2007 Hilal Cement (Kuwait) 51% EGP 262M CAPEX 614 533 408 324 407 230 252 258 2009 2010 2011 2012 2013 2014 2015 2016 Figures are in MEGP 11