Suez Cement Co. · EGX:SUCE
Suez Cement — FY2014 Earnings Presentation
47 slides from Suez Cement's earnings presentation, Dec 31, 2014
Slide 1: Corporate Briefing
Corporate Briefing Suez www.suezcement.com.eg Title 1 Cairo,Cement December 31st 2014
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: 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 5: Group Overview - Group at a glance
Group Overview Revenue Breakdown Others 3% SCGC Group at a glance Ready Mix 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 MS 5 cement plants, 2 terminals, and 20 SCGC *Others concret
Slide 6: Group Overview - Stock Market
Group Overview - Stock Market Nam e No. of Shares % SCC Ownership Structure Private Funds 3,041,762 1.67% Private Insurance Companies , Banks and 11,261,579 6.19% Name No. of Shares % institutions Misr Capital Investments, SAE 5,517,148 3.03% Individuals 3,067,803 1.69% Nasser Social Bank, SAE 2,3
Slide 7: Group Overview - Key milestones
Group Overview Key milestones 2014 A successful expansion path...paused since Arab spring SCC aquired 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
Slide 8: Group Overview - 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 15 percent market share of grey
Slide 9: Country rankings and market shares
Country rankings and market shares BELGIUM BULGARIA 3rd - 14% 31% - 1st KAZAKHSTAN 8% - 6th U.S.A. & CANADA 1st - 20% MOROCCO THAILAND 2nd - 24% 14% - 4th SPAIN 2013 Revenues by Geography (after eliminations) INDIA 7th - 6% 7th - 5% Other Emerging Markets, Trading & Others 7% FRANCE EGYPT 2nd - 30%
Slide 10: Group Overview - Group structure
Group Overview SCgC Group structure Arab Italcementi Group Others Investors 55.08% 25.52% 19.40% Suez Cement Company Tourah Helwan Cement Cement Hilal Cement RMCA - Alalameya Suez Lime Suez Bags Tecno Development ICC (TPCC) (HCC) 51% 52% 49.66% Co. (SBC) Gravel for Industries 50% 66.12% 99.54% 56.
Slide 11: Group Overview - 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 & 7.28 % Free Float 11.76% Public Sector Entities 13.76% Itacementi Public/Priva Group te
Slide 12: Group Overview - Stock Market
Group Overview - Stock Market Strong decline in Price/Earning multiple which started to bounce back Suez Cement ( In M EGP ) Market Cap P/ER EGX Code SUCE 18000 25 No. of Shares 181,856,507 21.1 16000 14000 17.1 16.8 20 15.5 12000 15 10000 10.7 Market Value 8000 8.5 7.2 7.8 10 Price Earning 6000 6
Slide 13: Market Overview
Market Overview Suez Cement Corporate Briefing 13
Slide 14: Egypt Macroeconomic Outlook
Market Overview Egypt Macroeconomic Outlook 2012e 2013f 2014f 2015f 2016f 2017f actual actual actual actual actual actual Population growtth 80.7 82.2 83.4 84.7 86.0 87.3 Gross Domestic Product (% yoy)* 6.0 4.0 4.5 4.5 4.5 4.5 Gross Fixed Capital Formation (% yoy) 32.8 -3.7 10.9 16.1 16.6 17.3 Inf
Slide 15: Market volumes and SCGC market share
Market Overview Egypt Macroeconomic Outlook 60 + 2.4 % 50 -2.1% 50.1 50.1 51.3 49.5 48.7 50.2 40 Market 48 30 Volumes* 38.5 20 34.5 M tons 28.5 30.1 10 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2013 2014 30% 31% 31% 28% 24% 22% 20% 18% 15% 15% 12 SCGC MS % 10 11.7 10.9 11.1 9.8 + 9.1 % 8 10.6
Slide 16: Residential segment consumes over 85% of cement
Market Overview The residential segment consumes more than 85% of the total cement consumption Residential Cement Final Destination Although the tough situation this segment still have Good perspectives in the short and medium term projects. Non-residential Infrastructure Sharp drop expect
Slide 17: Cement consumption concentrated in Greater Cairo and Delta
Market Overview More than 60% of total domestic cement consumption is concentrated in Greater Cairo & Delta Cement dispatch/ region Market % SCGC of Total MS% Greater Cairo 25% 52% Delta 35% 26% Upper Egypt 18% 3% Others 22% 19% Population 2014*: 84.6 million Growth rate (2011-2013)*: 1.9%
Slide 18: Egypt Grey Cement Market
Market Overview Egypt Grey Cement Market Structural Demand (Mt) 80,000 70,000 65,8MT 58,8M 60,000 50,000 2014 2004 752 330 Kg/inhab Kg/inhab 40,000 1999 2009 414 616 Kg/inhab Kg/inhab 30,000 20,000 z Actual Forecast 10,000 Consumption Mt 51,343 49,864 - Suez Cement Corporate Briefing 18
Slide 19: Evolution of SCGC OPC Bags Ex-works price
Evolution of SCGC OPC Bags Ex-works price (EGP/t) Apr14 +37EGP/ton 700EGP/ton 7th Sep14 +20EGP/ton 720EGP/ton 1st Jun 13 Mar14 Sales Tax 5% + 1% +49EGP/ton commercial tax 663EGP/ton 4th Mar 13 603.5EGP/ton Sales Tax 5% 615EGP/ton 22nd Feb14 9th Feb 13 18 Mar10 614EGP/ton Sales Tax 5% +10EGP/ton 548.
Slide 20: Evolution of OPC Bag-Bulk Ratio
Market Overview Evolution of OPC Bag – Bulk Ratio in the Egyptian Market Bagged to Bulk Ratio Bags Bulk 9% 9% 10% 9% 9% 11% 91% 89% 91% 91% 90% 91% 2010 2011 2012 2013 2013 2014 Source: internal market intelligence Suez Cement Corporate Briefing 20
Slide 21: Investment Highlights
Investment Highlights Suez Cement Corporate Briefing 21
Slide 22: Part of a global player
Investment Highlights Being part of a global player, SCgC has an immediate access to worldwide best practices World class Strong corporate Global industrial and management team governance distribution network Technical Know-how, Highest operating, World class Health, R&D, and industry control & ri
Slide 23: 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. A Fully Vertically Integrated Player Suez Cemen
Slide 24: 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 25: Suez Cement Mid Term Plan
Suez Cement Mid Term Plan 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 & fu
Slide 26: Suez Cement Mid Term Plan
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 emissions from coal usage.
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 • 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 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 2014 – Q4
Social Initiatives for 2014 – Q4 • In October 2014 the company renewed its partnership with the Don Bosco Technical Institute in Cairo with an annual contribution of €100,000. The objective of the program is to promote technical and vocational education. The partnership started in 2006 with the upgr
Slide 34: Social Initiatives for 2014 – Q4
Social Initiatives for 2014 – Q4 • Finally, SCGC was one of the sponsors of the Revival of the Egyptian Museum Initiative that was launched on December 15, 2014 in the presence of Eng. Ibrahim Mahlab, the Prime Minister of Egypt, Prof. Dr. Mamdouh Eldamaty, the Minister of Antiquities, and Prof. Dr.
Slide 35: 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. Evolution of Frequency of Accidents1 (2009 – 2014) 2009 2010 2011 2012 2013 2014 Employees 2
Slide 36: 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 37: Financial Highlights
Financial Highlights Suez Cement Corporate Briefing 37
Slide 38: An increasingly energy intensive industry
Financial Highlights An increasingly energy intensive industry… Energy represents 57 % of the production cost December 2014 SCgC Cost Breakdown 31 December 2014 Suez Cement Corporate Briefing 38
Slide 39: Fuel prices increased since 2013
Financial Highlights Fuel prices increased by more than 50% since Feb 2013 388.5 400 Electricity EGP/MWH245x 3 since2682004 329 300 125 134 161.3 113.4 119.1 200 100 0 Before 30- Sep 1-Dec-04 1-Dec-05 1-Oct-06 1-Sep-07 1-Jul-08 1-Jul-10 1-Jan-12 1-Jul-14 04 Fuel Oil EGP/t x 9 since 2004 2500 2000
Slide 40: YTD December 2014 key results (Consolidated)
YTD December 2014 key results (Consolidated) Q4 sales slightly down as compared with a very strong Q4 2013. For the full year, sales are up strongly (+21.8%) from volumes (+5.5%) and pricing, translating to an 8.8% gain in EBITDA; costs were strongly impacted by the energy price increases and severe
Slide 41: 2014 YTD FY GOP Variance
2014 YTD FY GOP Variance Price increase and implementation of energy efficiency programs partialy mitigated the effect of Clinker purchase and energy price increases. 202 -246 110 -124 29 916 887 Clinker Fixed cost PY Volume Price - VC Efficiencies Ac 14 purchase inflation 916 110 202 -246 -124 29
Slide 42: Quarterly EBITDA 2012-2014
Financial Highlights EGPm Quarterly EBITDA 2012-2014 400 350 373 300 337 315 316 300 300 289 300 250 268 265 269 200 241 242 150 165 100 139 50 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 31 December 2014 Suez Cement Corporate Briefing 42
Slide 43: Financial Highlights
Financial Highlights MEGP 2010 2011 2012 2013 2014 Revenues 6,152 4,820 4,597 5,049 6,152 EBITDA - recurring 2,120 1,199 1,051 1,061 1,154 % on revenues 34.4% 24.9% 22.9% 21.0% 18.8% EBIT 1,705 837 702 681 705 % on revenues 27.7% 17.4% 15.3% 13.5% 11.5% Net Profit ( Group Share) 1,236 568 524 538 49
Slide 44: Strong equity structure with growing cash
Financial Highlights Strong equity structure with growing accumulation of cash MEGP 2010 2011 2012 2013 2014 Total L-T Assets 6742 6703 6654 6,842 7,277 Inventory 952 998 804 844 1,194 Account Receivables 243 247 268 204 220 Cash and Cash Equivalents 1758 1448 1622 1814 1,626 Total Current Assets
Slide 45: Key Historical Financials
Financial Highlights Key Historical Financials : current environment heavily impacting results but cash flow generation has been somehow resilient. Revenue (EGPm) CAGR 05-14: 10% Rec. EBITDA (EGPm) CAGR 05-14: (1)% 6,152 2,155 2,120 6,380 6,152 1,757 1,863 5,542 4,820 5,049 1,297 1,443 4,196 4,597 1
Slide 46: Dividend pay out since 2005
Financial Highlights More than EGP 4 BN dividend pay out since 2005 Dividend distributed by SCC (EGPm) Dividend per Share (EGP/Share) 4.26 774 Annual Dividends. 3.9 182 Interim Dividends. 709 2.65 2.65 592 482 482 2.0 2.0 2.0 4.4 1.7 182 1.65 300 364 363 282 309 309 182 300 182 118 2005 2006 2
Slide 47: 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 614 408 324 407 233 264 230 252 Figures are in MEGP 2007 2008 2009 2010 2011 2012 2013 2014 31