Suez Cement Co. · EGX:SUCE
Suez Cement — FY2013 Earnings Presentation
47 slides from Suez Cement's earnings presentation, Dec 31, 2013
Slide 1: Corporate Briefing
Corporate Briefing Suez www.suezcement.com.eg Title 1 Cairo,Cement December 31th 2013
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: Group Overview: SCGC at a glance
Group Overview Revenue Breakdown Others 6% 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 87 % than12M t/y cement MS 5 cement plants, 2 terminals, and 20 concrete batching un
Slide 6: Group Overview - Stock Market: Ownership Structure
Group Overview - Stock Market Nam e No. of Shares % SCC Ownership Structure Private Funds 2,594,087 1.43% Private Insurance Companies , Banks and 10,463,889 5.76% Name No. of Shares % institutions Misr Capital Investments, SAE 5,502,511 3.03% Individuals 3,772,950 2.07% Nasser Social Bank, SAE 2,3
Slide 7: Key milestones
Group Overview Key milestones A successful expansion path...paused since Arab spring 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
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
Group Overview Country rankings and market shares BELGIUM BULGARIA 3rd - 15% 30% - 1st CANADA KAZAKHSTAN 5th - 4% 14% - 4th U.S.A. 7th - 5% 2° MOROCCO THAILAND 2nd - 24% 15% - 4th SPAIN 2012 Revenues by Geography (after eliminations) INDIA 7th - 6% 7th n.m. Other Emerging Markets, Trading & Others 1
Slide 10: SCgC Group structure
Group Overview SCgC Group structure Arab Italcementi Group Others Investors 55.08% 25.48% 19.44% Suez Cement Company Tourah Helwan Cement Cement Hilal Cement RMCA - Alalameya Suez Lime Suez Bags Tecno Development (TPCC) (HCC) 51% 52% 49.66% Co. (SBC) Gravel for Industries 66.12% 99.54% 56.31% 45%
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 & 7.29 % Free Float 11.49% Public Sector Entities 13.99% 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 18000 25 EGX Code SUCE 16000 21.1 No. of Shares 181,856,507 20 14000 17.1 12000 15.4 15.5 15 Market Value 10000 Price Earning 10.7 8000 8.5 10 7.8 ≡ Market C
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 . After spectacular growth, through 2009, market remained flat while production capacities increased 50% to 67MT resulting in share dilution -2.1% 60 50 49.5 50.2 50.1 40 48.7 Market 48 30 Volumes* 38.5 20 34.5 30.1 M tons 10 28.5 0 2005 2006 2007 2008 2
Slide 16: Residential segment consumes more than 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 Infrastructure 10% segment still have Good Non perspectives in the short and Residential 5% medium term projects. Non-resident
Slide 17: Cement consumption concentrated in Greater Cairo & 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 32% 52% Delta 25% 26% Upper Egypt 11% 3% Others 32% 9% Population 2011*: 82.1 million Growth rate (2011-2013)*: 1.9%
Slide 18: 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% 11.3% 9.1% 90.9% 88.7% 91% 91% 2010 2011 2012 2013 Source: internal market intelligence Suez Cement Corporate Briefing 18
Slide 19: Investment Highlights
Investment Highlights Suez Cement Corporate Briefing 19
Slide 20: 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 21: 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 22: 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 23: 2013 YTD FY GOP Variance
2013 YTD FY GOP Variance Adverse Market and Energy supply conditions were fully mitigated by strong actions plan Pricing and internal efficiencies gains Margin loss from lower volumes (155 MEGP) allowed to offset impact from lower driven by market decline, last new entrants and volumes, clinker im
Slide 24: Evolution of SCGC OPC Bags Ex-works price
Evolution of SCGC OPC Bags Ex-works price (EGP/t) 4th Mar 13 1st Jun 13 Sales Tax 5% Sales Tax 5% + 1% 615EGP/ton commercial tax 603.5EGP/ton 9th Feb 13 Sales Tax 5% 18 Mar10 548.6EGP/ton +10EGP/ton 465EGP/ton 1st Jul10 Jan 10 Sales Tax 5% 496EGP/ton 10th Mar 09 455EGP/ton +10EGP/ton 465EGP/ton 9th
Slide 25: Egypt Domestic cement consumption
EGYPT – Domestic cement consumption A rather stable series of boom & bust periods of ca. 5years 1980-1986 X2 1986-1994 stable at 15 Mt 1994-1999 X1.9 1999-2004 stable at 28 Mt 2004-2009 X1.7 2009-2013 stable at 48 Mt 2013-2018 X1.5 f : to 72Mt ? Italcementi Italcementi Suez Cement -Group Italcementi
Slide 26: 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 27: 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 28: 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 29: Differentiation strategy and cement types
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 30: Sustainable Development
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 31: 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 32: 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 33: 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 34: Social Initiatives for 2013
Social Initiatives for 2013 Stakeholder engagement - As part of our corporate social responsibility, Suez Cement Group of Companies (SCGC) signed an agreement in November 2013 (500,000 LE) to sponsor the ENACTUS Annual National Competition. ENACTUS is an international non-profit organization that br
Slide 35: Social Initiatives for 2013
Social Initiatives for 2013 Support to community - Helwan and Tourah Cement Companies are partnering with the Misr El Kheir Foundation to revitalize the Helwan Public Hospital. On December, 4th we signed a cooperation protocol agreement outlining the project at a special event held at Tourah Cement
Slide 36: 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 (2008 – 2013) 2008 2009 2010 2011 2012 2013 Employees
Slide 37: 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 38: Financial Highlights
Financial Highlights Suez Cement Corporate Briefing 38
Slide 39: Energy represents 67% of production cost
Financial Highlights An increasingly energy intensive industry… Energy represents 67 % of the production cost December 2013 SCgC Cost Breakdown 31 December 2013 Suez Cement Corporate Briefing 39
Slide 40: Fuel and electricity price increases
Financial Highlights Fuel prices increased by more than 50% as of Feb 2013 Electricity EGP/MWH x 3 since 2004 268 329 400 245 300 134 161.3 113.4 119.1 125 200 100 0 Before 30- 1-Dec-04 1-Dec-05 1-Oct-06 1-Sep-07 1-Jul-08 1-Jul-10 1-Jan-12 Sep 04 Fuel Oil EGP/t x 6 since 2004 1700 1624 1400 1000 1
Slide 41: YTD December 2013 key results (Consolidated)
YTD December 2013 key results (Consolidated) *Effect of subsidiaries of Hilal = 230 MEGP 31 December 2013 Corporate Briefing 41 Suez Cement
Slide 42: GOP Evolution and Quarterly EBITDA 2011-2013
GOP Evolution (Consolidated) While yearly average remain stable vs. 2012, the data shows a higher GOP in Q4 2013 vs. Q4 2012 average (11.16%). EGPm Quarterly EBITDA 2011-2013 500 400 456 356 300 300 337 265 300 263 315 268 269 200 234 241 242 100 153 139 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 20
Slide 43: Financial Highlights
Financial Highlights MEGP 2009 2010 2011 2012 2013 Revenues 6,380 6,152 4,820 4,597 5,049 EBITDA - recurring 2,155 2,120 1,199 1,051 1,061 % on revenues 33.7% 34.4% 24.9% 22.9% 21.0% EBIT 1,838 1,705 837 702 681 % on revenues 28.8% 27.7% 17.4% 15.3% 13.5% Net Profit ( Group Share) 1,301 1,236 568 52
Slide 44: Strong equity structure with growing cash
Financial Highlights Strong equity structure with growing accumulation of cash MEGP 2009 2010 2011 2012 2013 Total L-T Assets 6723 6742 6703 6654 6,842 Inventory 863 952 998 804 844 Account Receivables 199 243 247 268 204 Cash and Cash Equivalents 1486 1758 1448 1622 1817 Total Current Assets 2899
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 04-13: 13% Rec. EBITDA (EGPm) CAGR 04-13: 5% 5,049 1,863 2,155 2,120 6,380 6,152 4,820 4,597 4,196 5,542 1,297 1,443 1,757 1,199 1,0
Slide 46: Dividend pay out since 2004
Financial Highlights More than EGP 4 BN dividend pay out since 2004 Dividend distributed by SCC (EGPm) Dividend per Share (EGP/Share) 4.26 774 Annual Dividends. 3.9 182 Interim Dividends. 709 2.65 592 482 2.0 2.0 2.0 4.4 1.7 182 1.65 364 364 363 282 309 182 118 300 1.4 182 118 96 2004 2005 200
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 408 407 264 324 233 230 252 172 2006 2007 2008 2009 2010 2011 2012 2013 Figures are in MEGP 31