Suez Cement Co. · EGX:SUCE
Suez Cement — FY2012 Earnings Presentation
46 slides from Suez Cement's earnings presentation, Dec 31, 2012
Slide 1: Corporate Briefing
Corporate Briefing Suez www.suezcement.com.eg Title 1 Cairo,Cement December 31 st 2012
Slide 2: Contents
Contents Group Overview Market Overview Investment Highlights Financial Highlights Suez Cement Corporate Briefing 2
Slide 3: Group Overview
Group Overview Suez Cement Corporate Briefing 3
Slide 4: 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 5: SCgC Group at a glance
Group Overview Revenue Breakdown SCgC Group at a glance Ready Mix Others %3 %7 Egypt’s cement market leader Part of the world’s fifth largest global cement producer Total production capacity of more Cement %90 than12M t/y cement Cement market share 5 cement plants, 2 terminals, and 20 SCGC
Slide 6: SCgC Group structure
Group Overview SCgC Group structure Italcementi Group Suez Cement Company (SCC) 55,08 % Tourah Helwan Cement Cement Hilal Cement RMUP Suez Lime Suez Bags Axim Egypt Development Tecno (TPCC) (HCC) 51% 52% 49.66% Co. (SBC) 98.28% for Industries Gravel 66.12% 99.47% 56.31% 98.28% 45% Suez for Import
Slide 7: Key milestones
Group Overview Key milestones A successful expansion path... 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 entered the Egyptian market Suez
Slide 8: SCgC Industrial network
Group Overview SCgC Industrial network Suez plant 5 production facilities located in Torah plant Kattameya Helwan, Tourah, Kattameya, Suez Helwan plant plant and El Minya. Menya plant Total production capacity of 12 million metric tons of cement. Approximately 18 percent market share of grey
Slide 9: Group country rankings and market shares (2011 est.)
Group country rankings and market shares (2011 est.) BELGIUM BULGARIA 3rd - 15% 30% - 1st CANADA KAZAKHSTAN 5th - 4% 14% - 4th U.S.A. CHINA 7th - 5% 2° n.m. n.m. MOROCCO THAILAND 2nd - 26% 15% - 4th 2011 Revenues: Breakdown by Geography (after eliminations) SPAIN INDIA 7th - 6% Other Emerging Market
Slide 10: SCC Ownership Structure
Group Overview - Stock Market SCC Ownership Structure Name No. of Shares % Name No. of Share % Misr Capital Investments, SAE 6,793,289 3.74% Ciments Francies 22,485,545 12.36% * Private Nasser Social Bank, SAE 2,307,866 1.27% Individuals Sector MENAF 47,373,830 26.05% Social insurance Funds for Pu
Slide 11: 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 Private (71,524,200 shares) Sector Free Float Entities & 12.32% Free Float 9.61% Public Sector Entities Public 15.09% Itacementi Sector Group En
Slide 12: Suez Cement Company Share Price Performance
15 20 25 35 40 50 30 45 9/1/2012 16/01/2012 23/01/2012 31/01/2012 8/2/2012 Suez Cement 15/02/2012 22/02/2012 29/02/2012 7/3/2012 14/03/2012 21/03/2012 28/03/2012 Suez Cement 2011/2012 4/4/2012 11/4/2012 22/04/2012 30/04/2012 8/5/2012 15/05/2012 22/05/2012 ≡ 52 WK Low (EGP) ≡ Close Price (EGP) ≡ 52 W
Slide 13: Market Capitalization: strong decline in EBITDA multiple
Group Overview - Stock Market Market Capitalization : strong decline in EBITDA multiple Suez Cement ( In M EGP ) 18000 16400 16000 14000 12000 12000 10500 10000 8446 8000 6911 6000 5200 4000 4106 4101 4000 2900 2300 2000 7.1x 8.2x 12.6x 8.3x 6.0x 2.1x 3.9x 3.3x 3.4x 3.9x 0 2002 2003 2004 2005 2006
Slide 14: Market Overview
Market Overview Suez Cement Corporate Briefing 14
Slide 15: Egypt Macroeconomic Outlook
Market Overview Egypt Macroeconomic Outlook 2008 2009 2010 2011 2012 2013 2014 09-14 CAGR a) actual actual actual actual Population growtth (%) 1.8 1.8 1.6 1.6 1.8 1.8 1.8 0.0% Gross Domestic Product (% yoy)* 6.0 4.0 4.5 4.5 4.5 4.5 4.5 2.4% Gross Fixed Capital Formation (% yoy) 32.8 -3.7 10.9 16.
Slide 16: Egypt Market Volumes and Market Share
Market Overview Egypt Macroeconomic Outlook 3.0% -1.8% 5.1% 24.8% 10.4% 60 51.1 40 48.6 Market 48 49.5 Volumes* 38.5 20 34.5 M tons 0 2007 2008 2009 2010 2011 2012 MS % 08 MS % 09 MS% 11 MS%12 MS % 07 MS % 10 16.2 20. % 24. 22.4 28. 2% 30. 4% % 7% 3% 75. 79 69. 71. 77.6 83. 7% 6% % 3% % 8% 12 10 S
Slide 17: Residential segment consumes over 57% of cement
Market Overview The residential segment consumes more than 57% of the total cement consumption Residential Cement Final Destination Although the tough situation this Infrastructure, segment still have Good 15% perspectives in the short and medium term projects. Residential, 70% Non-residenti
Slide 18: Cement consumption concentrated in Greater Cairo & Delta
Market Overview Around 60% of total domestic cement consumption is concentrated in Greater Cairo & Delta Cement dispatch/ region Market % SCGC of Total MS% Greater Cairo 32% 59% Delta 25% 30% Upper Egypt 11% 1% Others 32% 10% Population 2010*: 89.5 million Growth rate (2011-2012)*: 1.9% Ag
Slide 19: Evolution of OPC Bag – Bulk Ratio
Market Overview Evolution of OPC Bag – Bulk Ratio in the Egyptian Market 60.0 50.0 4.7 5.0 5.6 4.5 40.0 30.0 44.2 47.0 43.0 43.9 20.0 10.0 0.0 A 2009 A 2010 A 2011 2012 Bags Market Bulk Market Source: internal market intelligence Suez Cement Corporate Briefing 19
Slide 20: Egypt Grey Cement Market
Market Overview Egypt Grey Cement Market Structural Demand (Mt) 80,000 70,000 65,8MT 58,8M 60,000 2014 50,000 2004 752 330 Kg/inhab Kg/inhab 40,000 1999 2009 414 616 Kg/inhab Kg/inhab 30,000 20,000 Actual Forecast 10,000 Consumption Mt 51.1 51.1 % variation 12.5% 5.7% - a) 2004-2009 Compound Annua
Slide 21: Evolution of SCGC OPC Bags Ex-works price
Evolution of SCGC OPC Bags Ex-works price (EGP/t) 1st Jul10 18 Mar10 Sales Tax 5% +10EGP/ton 496EGP/ton 4th Aug 08 10th Mar 09 465EGP/ton +25EGP/ton +10EGP/ton 455EGP/ton 465EG/ton Jan 10 455EGP/ton 9th Jun 10 +10EGP/ton 475EGP/ton OPC: Ordinary Portland Cement Suez Cement 21
Slide 22: RMC market recorded -1.3% CAGR over 5 years
Market Overview The RMC market recorded - 1.3% CAGR over the last 5 years Market 10 Volumes* Mm3 5 7.48 6.63 7.10 6.99 5.59 0 2008 2009 2010 2011 2012 MS MS MS 16.41 MS 13.33 MS 13.51 20.3 % % % 17.36 % % RMB & 2.00 Decom 1.53 1.20 1.17 0.93 0.99 Volumes - Mm3 2008 2009 2010 2011 2012 *Source: Int
Slide 23: Investment Highlights
Investment Highlights Suez Cement Corporate Briefing 23
Slide 24: 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 Italcementi Group is the world’s fifth largest cement producer with an annual production capacity of approximately 70 million tons of cement. The Parent Company, Italcementi S.p.A., is
Slide 25: Attractive Business Model
Investment Highlights Attractive Business Model Suez for Import and Export Suez for Transportation and Trade Co. Importation Distribution Retailing Cement Quarrying Bagging Production Suez Bags Co. Helwan Bags Co. Bulk Concrete RMC Admixtures RMB Co. AXIM Egypt Co. A Fully Vertically Integrated Pl
Slide 26: Operational Efficiencies in the pipeline
Investment Highlights Operational Efficiencies in the pipeline De-bottlenecking first , then installing state-of-the art kiln and mill production lines replacing the less efficient ones Switching from gas and fuel towards coal and pet coke, widely used in most countries, to lessen the impact o
Slide 27: 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 o Acquisitions n Egypt and MENA e Aggregates Helwan Cement D De-bottleneckings Co. o
Slide 28: Differentiation strategy and product range
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 Prem
Slide 29: 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 30: 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 31: Quality and environmental key achievements
Investment Highlights - Sustainable Development Our quality and environmental key achievements • Shifting from fuel to natural gas in Helwan and Tourah plants. • Utilizing agricultural wastes, sewage sludge's • Recycling of bypass dust • concealment of historical bypass dust Environmental • Pollut
Slide 32: 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 33: Social Initiatives for 2012
Social Initiatives for 2012 • Suez Cement Group Development Project with Helwan and Suez Universities will provide assistance and training of students to help develop critical skills needed to raise their competitive edge in the job market after graduation, in addition to other support that will enh
Slide 34: Commitment to Safety
Investment Highlights - Sustainable Development Commitment to Safety Adopting the “Zero Accident” brings together all the necessary programmers required to establish a consistent Safety management system. Evolution of Frequency of Accidents1 (2005 – 2012) 2005 2006 2007 2008 2009 2010 2011 2012
Slide 35: 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 36: Financial Highlights
Financial Highlights Suez Cement Corporate Briefing 36
Slide 37: An energy intensive industry
Financial Highlights An energy intensive industry… Energy represents 51 % of the production cost December 2012 SCgC cost breakdown Suez Cement Corporate Briefing 37
Slide 38: Electricity and Gas prices increased as of January 2012
Financial Highlights Electricity and Gas prices increased as of January 2012… Electricity EGP/MWH 329 400 245 268 300 161.3 113.4 119.1 125 134 200 100 0 Before 30- Sep 04 1-Dec-04 1-Dec-05 1-Oct-06 1-Sep-07 1-Jul-08 1-Jul-10 1-Jan-12 Fuel Oil EGP/t 1200 1000 1000 900 600 500 300 300 182 250 0 Bef
Slide 39: 2012 Q4 key results (Consolidated)
2012 Q4 key results (Consolidated) Corporate Briefing 39 Suez Cement
Slide 40: Financial Highlights
Financial Highlights Dec Dec MEGP Dec 2008 Dec 2009 Dec 2010 2011 2012 Revenues 5,542 6,380 6,152 4,820 4,597 EBITDA - recurring 1,863 2,155 2,120 1,199 1,051 % on revenues 33.6% 33.7% 34.4% 24.9% 22.9% EBIT 1,558 1,838 1,705 837 702 % on revenues 28.1% 28.8% 27.7% 17.4% 15.3% Net Profit 1,041 1300
Slide 41: Strong equity structure with growing accumulation of cash
Financial Highlights Strong equity structure with growing accumulation of cash MEGP Dec 2008 Dec 2009 Dec 2010 Dec 2011 Dec 2012 Total L-T Assets 6853 6723 6742 6703 6654 Inventory 944 863 952 998 804 Account Receivables 184 199 243 247 268 Cash and Cash Equivalents 1001 1486 1758 1448 1622 Total
Slide 42: Key Historical Financials
Financial Highlights Key Historical Financials : current environment heavily impacting results but cash flow generation has been somewhat resilient. Revenue(*) (EGPm) CAGR 01-12: 14% Rec. EBITDA (*) (EGPm) CAGR 01-12: 10% 2,155 2,120 6,380 6,152 1,757 1,863 5,542 4,820 4,597 1,297 1,443 1,199 1,051
Slide 43: More than 3.6BN EGP dividend pay out since 2005
Financial Highlights More than 3,6BN EGP dividend pay out since 2005 Dividend cash out distributed by SCC (EGPm) 774 182 Interim Dividends 709 Distributions 482 592 Annual Dividends 182 Distributions 364 364 363 282 309 118 182 108 96 96 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Slide 44: Main Historical Acquisitions and Capex
Financial Highlights Main Historical Acquisitions and Capex Year Company Share Value 2005 Helwan Cement Co. 98.7% EGP3.4bln 10/2006 RMB + RMBE 52% EGP81M 8/2007 Hilal Cement (Kuwait) 51% EGP262M CAPEX 422 345 233 264 252 230 172 2006 2007 2008 2009 2010 2011 2012 Figures are in MEGP 31 December 20
Slide 45: Strong capital structure and cash generating ability
Financial Highlights As a result, SCC enjoys a strong capital structure and cash generating ability which allow the Company the possibility of considering any financially and strategically attractive growth opportunity both domestically and within the region. Suez Cement Corporate Briefing 45
Slide 46: Summary of strengths and commitments
Financial Highlights An efficient manufacturer and A consolidated distributor, with a expertise in the leadership in manufacturing of cement business cement and ready- in regional market mixed concrete Commitment to provide markets with Commitment to high quality cement, Sustainable and adding value