Suez Cement Co. · EGX:SUCE
Suez Cement — Q2 2015 Earnings Presentation
47 slides from Suez Cement's earnings presentation, Jun 30, 2015
Slide 1: Corporate Briefing
Corporate Briefing Suez http://www.suezcement.com.eg Title 1 Cairo,Cement June 30th 2015
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 Others Ready 3% SCGC Group at a glance Mix 9 % Egypt’s cement market leader Part of the world’s fifth largest global cement producer Total production capacity of more Cement 88% than12M t/y cement MS 5 cement plants, 2 terminals, and 20 SCGC concrete batchi
Slide 6: Group Overview - Stock Market
Group Overview - Stock Market Nam e No. of Shares % SCC Ownership Structure Private Funds 7,354,716 4.04% Private Insurance Companies , Banks and 8,416,574 4.63% Name No. of Shares % institutions Misr Capital Investments, SAE 4,675,198 2.57% Individuals 2,945,045 1.62% Nasser Social Bank, SAE 2,30
Slide 7: Key milestones
Group Overview Key milestones 2014 A successful expansion path...paused since Arab spring 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
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 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: SCgC Group structure
Group Overview SCgC Group structure Arab Italcementi Group Others Investors 55.08% 25.54% 19.38% 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 & 7.24 % Free Float 12.24% Public Sector Entities 13.30% Itacementi Public/Priva Group te
Slide 12: Strong decline in Price/Earning multiple
Group Overview - Stock Market Strong decline in Price/Earning multiple which started to bounce back Suez Cement ( In M EGP ) Market Cap P/ER 14000 25 12000 20 EGX Code SUCE 20 No. of Shares 181,856,507 17.1 16.8 10000 14 8000 15 Market Value 10.7 Price Earning 6000 8.5 10 7.2 7.8 6.5 4000 5.6 ≡ Ma
Slide 13: Market Overview
Market Overview Suez Cement Corporate Briefing 13
Slide 14: Egypt Macroeconomic Outlook
Market Overview Egypt Macroeconomic Outlook Macroeconomic Data 2009 2010 2011 2012 2013 F 2014 F 2015 F Population 79.7 81.1 82.5 80.7 82.1 83.4 84.7 Real GDP growth % 4.7 5.1 1.4 2.2 2.2 2.2 3.0 Inflation rate % 15.7 11.7 10.1 7.2 9.4 10.5 11.5 Construction industry real growth % 11.4 13.2 3.7 3.
Slide 15: Egypt market volumes and SCGC market share
Market Overview Egypt Macroeconomic Outlook 60 50 -2.1% 50.2 50.1 50.1 40 48.7 Market 30 48 49.5 Volumes* 38.5 +3.8% 20 34.5 M tons 10 13.5 13.0 0 2007 2008 2009 2010 2011 2012 2013 2014 2013 2014Q2 2015 Q2 30% 31% 31% 28% 24% 22% 20% 18% 15% 15% 12 10 SCGC MS % 11.1 8 11.7 9.8 10.6 10.9 6 SCGC 8.
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 Residential Sharp drop expected
Slide 17: 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% 19% Population 2014*: 84.6 million Growth rate (2011-2013)*: 1.9% Age prof
Slide 18: Egypt Grey Cement Market
Market Overview Egypt Grey Cement Market Structural Demand (Mt) z H1 Actual Forecast Consumption Mt 26,462 53,871 Suez Cement Title 18
Slide 19: Evolution of SCGC OPC Bags Ex-works price
Evolution of SCGC OPC Bags Ex-works price (EGP/t) 7th Sep14 Apr14 +20EGP/ton 1st Jun 13 Mar14 +37EGP/ton 720EGP/ton Sales Tax 5% + 1% +49EGP/ton 700EGP/ton commercial tax 663EGP/ton 4th Mar 13 603.5EGP/ton Sales Tax 5% 615EGP/ton 22nd Feb14 614EGP/ton 9th Feb 13 Sales Tax 5% 548.6EGP/ton OPC: Ordina
Slide 20: Evolution of OPC Bag – Bulk Ratio
Market Overview Evolution of OPC Bag – Bulk Ratio in the Egyptian Market 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 Starting to use Coal instead of Gas. Decreasing the clinker ratio in cement production through the use of alternative raw materials can
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 2015 – Q2
Social Initiatives for 2015 – Q2 On the occasion of the World Day for Safety and Health at Work, the celebration was organized across the five plants on April 28th 2015. 2015’s theme has been the risk hunting for unsafe conditions. Employees were invited to participate and were given a game poster
Slide 34: Social Initiatives for 2015 – Q2
Social Initiatives for 2015 – Q2 The Company during the holy month of Ramadan supported Charity activities. 4,000 Ramadan bags which include the basic food needs for the fasting month were distributed, as well as totally 9,000 meals in the Charity Tents organized in Tourah and Helwan districts (30
Slide 35: 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 (2009 – 2013) 2010 2011 2012 2013 2014 Q2 2014 Q2 2015
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: SCgC Cost Breakdown
Financial Highlights June 2015 SCgC Cost Breakdown Others An increasingly energy intensive industry… 29% Power 14% Fuel Others 43% 56% Power Energy represents 70 % 12% of the production cost Fuel 45% Energy represents 57% of the production cost December 2014 SCgC Cost Breakdown Suez Cement Corpora
Slide 39: Fuel and electricity price increases
Financial Highlights Fuel prices increased by more than 50% since Feb 2013 388.5 400 Electricity EGP/MWH245x 3 since268 2004 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 June 2015 key results (Consolidated)
YTD June 2015 key results (Consolidated) With domestic volumes stable, exports drop and an 8% grey cement price erosion, revenues fell 14.9% as compared to Q2 2014. The energy increase (July 2014) and inflation were offset by efficiency gains and cost reduction measures. EBITDA lost 163 MEGP (44%) f
Slide 41: YTD June 2015 GOP Bridge
YTD June 2015 GOP Bridge In Millions of local currency Cement -71 557 -390 121 275 -59 117 Clinker Fixed cost PY Volume Price - VC Efficiencies Ac 15 purchase inflation 557 -71 -390 117 -59 121 275 Suez Cement Corporate Briefing 41
Slide 42: Quarterly EBITDA 2012-2015
Financial Highlights EGPm Quarterly EBITDA 2012-2015 400 350 373 300 337 300 315 316 300 300 250 268 269 289 185 200 241 242 265 210 150 165 160 100 139 50 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 Suez Cement 42
Slide 43: Financial Highlights
Financial Highlights June June MEGP 2011 2012 2013 2014 2014 2015 Revenues 4,820 4,597 5,049 6,152 3,171 2,866 EBITDA - recurring 1,199 1,051 1,061 1,154 689 370 % on revenues 24.9% 22.9% 21.0% 18.8% 21.7% 12.9% EBIT 837 702 681 705 476 140 % on revenues 17.4% 15.3% 13.5% 11.5% 15 % 4.9% Net Profit
Slide 44: Strong equity structure with growing cash
Financial Highlights Strong equity structure with growing accumulation of cash MEGP 2011 2012 2013 2014 June 2014 June 2015 Total L-T Assets 6703 6654 6,842 7,277 7132 7,119 Inventory 998 804 844 1,194 942 1,392 Account Receivables 247 268 204 220 231 196 Cash and Cash Equivalents 1448 1622 1814 1
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)% 6,380 6,152 6,152 2,155 2,120 5,542 4,196 4,820 4,597 5,049 2,866 1,757 1,863 3,171 1
Slide 46: Dividend pay out since 2006
Financial Highlights More than EGP 4 BN dividend pay out since 2006 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 1.7 182 1.65 364 363 300 309 300 1.0* 309 182 182 182 118 2006 2007
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 Figures are in MEGP CapEx 614 408 407 324 252 230 231 89 2009 2010 2011 2012 2013 2014 Q2 2014 Q2 20