Oci Nv · EURONEXT:OCI
Oci Nv — Investor Presentation (March 2018)
50 slides from Oci Nv's investor presentation, March 2018
Slide 1: Investor Presentation March 2018
Investor Presentation March 2018
Slide 2: Disclaimer
Disclaimer IMPORTANT NOTICE: You must read the following before continuing. The following applies to the confidential information following this page, including oral statements made during the presentation and any question-and-answer session that follows the oral presentation (the "Confidential Info
Slide 3: Agenda
Agenda 1 Company Overview 2 Key Highlights 3 Assets overview 4 Summary of Key Financials 5 Appendix 3
Slide 4: OCI is a leading global provider and distributor of fertilizers and industrial chemicals
OCI is a leading global provider and distributor of fertilizers and industrial chemicals % of sales1 50% 50%2 Fertilizers Industrial Chemicals Products Ammonia, urea, CAN and UAN Methanol, melamine, DEF and industrial ammonia 4th largest global producer of nitrogen fertilizers by 5th largest global
Slide 5: A 10-year journey to become a globally diversified platform
A 10-year journey to become a globally diversified platform 2008 2013 Run-rate Site locations 1 5 8 Capacity: 1.3mtpa Capacity: 7.5mtpa Capacity: 13.4mtpa US (including 50% of Natgasoline) 13% North Africa Capacity split by 33% US geography1 Europe 39% 29% North North Africa Africa 58% Europe 100% 2
Slide 6: Production capacity footprint is well-positioned globally
Production capacity footprint is well-positioned globally1 US Europe MENA Iowa Fertilizer Company (IFCo) - Iowa, US OCI Nitrogen – Netherlands Egyptian Fertilizer Co (EFC) – Egypt Production and sales Acquired: 2010 Acquired: 2008 started April 2017 100% owned 100% owned 100% owned Produ
Slide 7: Agenda
Agenda 1 Company Overview 2 Key Highlights 3 Assets overview 4 Summary of Key Financials 5 Appendix 7
Slide 8: Key highlights
Key highlights 1 Global leader in nitrogen with excellent diversification 2 Favorable positioning on the cost curve with state of the art asset base 3 Highly strategic locations allow for enhanced netback pricing globally 4 Well timed capacity increases to capture favourable market outlook 5 An incu
Slide 9: Global leader in fertilizers and industrial chemicals
1 Global leader in fertilizers and industrial chemicals… Global Nitrogen fertilizer capacity in 20171 30 23.4 23.0 14.8 12.81 12.3 9.4 Globally competitive cost 25 positions Fertilizers 20 15 Advantageous selling price 10 position in the US Midwest Corn 5 Belt and US Gulf Industrial Hub, 0 acces
Slide 10: Excellent diversification across products and geographies
1 … with excellent diversification across products and geographies Production capacity by products Different end-markets 2016 maximum capacity Run-rate maximum capacity1 Fertilizer Fertilizer Industrial Industrial ammonia 12% ammonia ammonia ammonia 9% DEF 6% and seasonality / 17% Melamine 6% cycl
Slide 11: Favourable mix of products and geographies vs. competitors
1 Favourable mix of products and geographies vs. competitors Fertilizers Industrial Chemicals Competitor 1 Competitor 2 Competitor 3 Other Industrial Fertilizer Industrial Ammonia Other3 Ammonia Methanol Chemicals 2% DEF 10% Ammonia Methanol Urea 6% 100% 12% 6% 21% CAN 21% 11% Volume Other UAN 11% I
Slide 12: Favorable positions on the global cost curve for fertilizers
2 Favorable positions on the global cost curve for fertilizers… Urea global cost curve – Ex-Works production costs (2017) Key cost items ($/mt) $400 Energy (Natural gas) – Most important cost factor, with $350 OCI benefitting from excellent locations with low cost supply and favorable supply contr
Slide 13: Global cost curve for methanol
2 …as well as the global cost curve for methanol Methanol global cost curve – 2018 delivered cash cost to coastal China main ports (net available capacity) $600 2018E China demand (Jan 18 update) $500 $400 Positioned at the low end of the Methanol cost curve2 US$ per metric ton CFR East China1: $3
Slide 14: Low cost position from feedstock and distribution infrastructure
2 OCI’s low cost position attributable to advantageous access to feedstock and distribution infrastructure… US Europe North Africa Access to natural gas Access to low Optionality to Access to low Top quartile Access to bio- 20-25 year gas 20 year take-or- feedstock cost US shale sour
Slide 15: Youngest asset base relative to peers
2 …while benefitting from the youngest asset base relative to peers… OCI's capacity breakdown per vintage World's ammonia capacity breakdown ex-China (% of total capacity) (% of total capacity) OCI Nitrogen 1 OCIP2 BioMCN EFC EBIC Sorfert IFCo Natgasoline ~70% of worlds’ capacity >20 years old Young
Slide 16: High plant efficiency at OCI Nitrogen facility
…with high plant efficiency at the OCI Nitrogen facility as a result of significant 2 investment Competitive energy efficiency of European ammonia plants1 (GJ/mt NH3 LHV) 1st Quartile 2nd Quartile 3rd Quartile 4th Quartile 39-49 36-38 33-35 32 32 32 32 32 33 31 31 31 30 30 30 28 29 29 25 1 2 3 4 5 6
Slide 17: Global footprint allowing exports to achieve highest netbacks
3 Global footprint allowing exports to achieve highest netbacks for products… A Global Placement Capabilities Strategic locations serving high demand regions Pipeline, rail and sea access 1.5mtpa of warehousing capacity globally 3.7 N America 10% Europe B 1.9 38% Asia North Africa provides for
Slide 18: Logistical advantages yielding inland premiums
3 …with logistical advantages yielding inland premiums UAN and ammonia inland premia versus US Gulf coast prices ($/mt) UAN US Midwest premium ($/mt) IFCo is positioned advantageously at the centre Ammonia US Midwest premium of the US Midwest Corn Belt 250 200 High transportation costs for pro
Slide 19: Structural supply-demand imbalance expected to support fertilizer prices
4 Structural supply-demand imbalance expected to support fertilizer prices Global urea capacity additions to slow to below demand growth… …contributing to fertilizer price recovery1 Ammonia NW Europe CFR ($/mt) Midcycle average ammonia NW Europe Nigeria India USA Egypt Europe & CIS Iran Indonesia Bo
Slide 20: Robust and growing global methanol market
4 Robust and growing global methanol market with limited supply coming on stream Methanol demand growth expected to significantly outstrip supply… …confirming highly favorable methanol price trajectory1 Million mt $/mt Methanol FOB USGC Contract ($/mt) Supply and Demand Figures are Cumulative Signif
Slide 21: Favorable feedstock price dynamics
4 Favorable feedstock price dynamics Abundant US shale gas development has pushed gas prices down1 ($/mmBtu) $8.0 $7.0 2012 forward curve $6.0 2014 forward curve $5.0 $4.0 Current forward curve $3.0 $2.0 Feb-12 Feb-15 Feb-18 Feb-21 Feb-24 Excess LNG supply heading for Europe… … as reflected in the c
Slide 22: Significant barriers to entry in Fertilizers and Industrial Chemicals
5 Significant barriers to entry in Fertilizers and Industrial Chemicals Total replacement costs1 (In $bn) Difficulty of raising equity and securing project financing Replacement costs – 2.8 Difficulty of obtaining fixed price EPC contracts (many North Scale difficult American projects have had s
Slide 23: Substantial cash generation ability post capex program
Substantial cash generation ability post extensive capex program directed towards 6 deleveraging Increasing run rate capacity (million mtpa)1… 13.4 +49% Net ammonia Completion of major $5bn+ capex program Urea 9.0 – No remaining material growth capex other than CAN UAN restart of mothballed second
Slide 24: Experienced key management team and Board
7 Experienced key management team and Board Key management Board of Directors Nassef Sawiris Hassan Badrawi Michael Bennett Chief Executive Officer Chief Financial Officer Independent Non-executive Director and Chairman 28 years at OCI NV 17 years at OCI NV 36 years of experience in the Nitrogen ind
Slide 25: Agenda
Agenda 1 Company Overview 2 Key Highlights 3 Assets overview 4 Summary of Key Financials 5 Appendix 25
Slide 26: OCI overview – A leading global provider and distributor
OCI overview – A leading global provider and distributor in fertilizers and industrial chemicals Natgasoline is not a reportable segment of OCI’s IFCo and OCI as the entity is OCI Nitrogen Segment OCI Partners Fertilizer and Trading BioMCN North Africa not consolidated USA LLC Brand Ammonia Ammonia
Slide 27: OCI Nitrogen and Trading – overview
OCI Nitrogen and Trading IFCo and Trading North Africa OCI Partners BioMCN Natgasoline OCI Nitrogen and Trading – overview Overview Key Financial metrics Owned 100% by OCI NV ($m) 2015 2016 2017 – Approximately $450m spent between acquisition in 2010 and Sales volume - own product (kmt) 1,952 2,04
Slide 28: Iowa Fertilizer Company and OCI Fertilizers USA – overview
OCI Nitrogen and Trading IFCo and Trading North Africa OCI Partners BioMCN Natgasoline Iowa Fertilizer Company (“IFCo”) and OCI Fertilizers USA – overview Overview Key Financial metrics Owned 100% by OCI NV ($m) 2017 – Production start-up occurred in April 2017, with assets placed in Normalized pr
Slide 29: North Africa – overview
OCI Nitrogen and Trading IFCo and Trading North Africa OCI Partners BioMCN Natgasoline North Africa – overview Overview Key Financial metrics Sorfert (Algeria) owned at 51% by OCI NV1 ($m) 2015 2016 2017 – Remaining 49% owned by Algeria’s state-owned oil and gas company, Sonatrach Sales volume (km
Slide 30: Production restored to normal utilization rates
OCI Nitrogen and Trading IFCo and Trading North Africa OCI Partners BioMCN Natgasoline Production restored to normal utilization rates Operational issues Current status / Remedy EFC EFC Gas curtailments impacting volumes from Q4 2012 to Q4 The government organized LNG imports in Q4 2015 2015 on
Slide 31: OCI Partners – overview
OCI Nitrogen and Trading IFCo and Trading North Africa OCI Partners BioMCN Natgasoline OCI Partners – overview Overview Key Financial metrics 88.25% owned by OCI NV ($m) 2015 2016 2017 – Publically listed company in the US traded under ticker OCIP on Sales volume (kmt) 879 1,144 1,141 NYSE with ma
Slide 32: BioMCN – overview
OCI Nitrogen and Trading IFCo and Trading North Africa OCI Partners BioMCN Natgasoline BioMCN – overview Overview Key Financial metrics Owned 100% by OCI NV and acquired in 2015 ($m) 2016 2017 Located in the Chemiepark Delfzijl site in the north of the Sales volume (kmt) 362 464 Netherlands EBIT
Slide 33: Natgasoline – overview
OCI Nitrogen and Trading IFCo and Trading North Africa OCI Partners BioMCN Natgasoline Natgasoline – overview Overview Natgasoline products and facility overview 50% owned by OCI NV World-class methanol complex currently under construction ‒ 5000tpd capacity – Other 50% owned by CEL ‒ Expected m
Slide 34: Agenda
Agenda 1 Company Overview 2 Key Highlights 3 Assets overview 4 Summary of Key Financials 5 Appendix 34
Slide 35: Step change in capacity and favorable market backdrop
OCI NV benefitting from a step change in capacity and a favorable market backdrop Continuous growth of own product sales volume (000s metric tons)… …with increasing average benchmark prices ($/mt)… Own product 3rd party Production Ammonia NW Europe CFR Granular Urea Egypt FOB CAGR ‘16- capacity (mtp
Slide 36: Significant underlying profitability indicated by normalized FY2017 EBITDA
Significant underlying profitability indicated by normalized FY2017 EBITDA Does not include normalised cash 1 Expenses related to IFCo contributions from Natgasoline, Start-up costs at IFCo prior to the plant’s expected from 2018 onwards assets being placed in use, from an accounting perspective,
Slide 37: Further EBITDA contribution factors going forward
Further EBITDA contribution factors going forward Additional capacity and price recovery to further enhance profitability… 1 Natgasoline expected to commence production in Q2 2018 Brand new state-of-the-art 1.8 mt methanol facility in Texas $1.8bn estimated total replacement cost 50% owned by
Slide 38: Positive underlying free cash flow
Positive underlying free cash flow reflecting end of extensive capex program Adjusted EBITDA ($m) / Adjusted EBITDA Margin (%)1 34% 24% 28% Adjusted Underlying FCF ($m) 736 +36% 634 Actuals Actuals Actuals 2015 FY 2016 FY 2017 FY 467 Adjusted EBITDA1 736 467 634 (-) Net interest paid (265) (228) (23
Slide 39: Current capital structure
Current capital structure Current capital structure (Dec-17) Pro Forma xAdj. xNormalized Tranche Amount ($m) Adj. Amount ($m) % cap xEBITDA EBITDA PF EBITDA o/w OCIP1 228 211 439 o/w IFCo and OCI Fertilizers USA2 1,189 - 1,189 o/w OCIN and Trading 566 - 566 o/w BioMCN - - - o/w North Africa 1,072 -
Slide 40: Significant refinancing of subsidiary debt in Q1 2018
Significant refinancing of subsidiary debt undertaken in Q1 2018 in line with capital structure optimization strategy Dec 2017 Pro forma OCIN Instrument Amount Maturity Instrument Amount Maturity Netherlands Term loan €450m 2021 Term loan €425m 2021 BioMCN Instrument Amount Maturity Instrument Amoun
Slide 41: Risk management
Prudent financial policy, with a short-term focus on deleveraging Focus on deleveraging towards 2.0x net leverage Free cash flow will be prioritized to deleveraging Continue to optimise and simplify capital structure Capital structure Reduce weighted average cost of debt and extend debt matu
Slide 42: Agenda
Agenda 1 Company Overview 2 Key Highlights 3 Assets overview 4 Summary of Key Financials 5 Appendix 42
Slide 43: Nitrogen-fertilizers – flow diagram
Nitrogen-fertilizers – flow diagram Nitrogen Indicative Product Content Gas usage Natural Gas Ammonia 82% 32 mmbtu/mt (From Air) (From Air) Urea 46% from Ammonia UAN 28-32% from Ammonia DEF 15% from Ammonia Anhydrous Carbon Dioxide Ammonia Nitrogen (N) (Co2) (NH3) Nitric Acid Liquid Ammonium Liquid
Slide 44: Decline in Chinese urea exports
Decline in Chinese urea exports on the back of new environmental regulations and higher coal prices Historical Chinese urea exports and pricing ('000 mtpa) $/t 16,000 600 13,555 13,748 14,000 500 12,000 8,265 400 10,000 7,026 8,871 8,000 6,948 300 6,000 5,257 4,360 4,656 200 3,379 3,559 4,000 1,571
Slide 45: OCI's U.S. assets purchase natural gas at a discount to Henry Hub
OCI’s U.S. assets often purchase natural gas at a discount to Henry Hub granting a competitive advantage OCI’s US assets well positioned relative to Henry Hub index ($/mmBtu) 0.20 Chicago CG (IFCo Backup) Henry Hub 0.00 HSC (OCIP Primary) -0.20 -0.40 -0.60 ANR SW (IFCo Primary) -0.80 -1.00 Apr-18 Ja
Slide 46: Flexible production capabilities allow maximum production of most profitable products
Flexible production capabilities allow maximum production of most profitable products Max. Proven Capacities¹ Total Fertilizer Total Fertilizer ('000 metric tons) For Sale & Chemicals For Sale Plant Country Ownership2 Ammonia Ammonia Urea UAN4 CAN Methanol Melamine5 DEF Gross Net3 OCI Beaumont6 USA
Slide 47: Growing melamine market at stable prices
Growing melamine market at stable prices Main melamine manufacturers outside China – % global capacity 13% market share in 2017 (1,525kt of demand in 2017) OCI Nitrogen is the global leader in melamine, with the largest 11% single line melamine plant in the world OCI Nitrogen 9% Although China
Slide 48: Fast-growing DEF segment in the US, Europe and China
Fast-growing DEF segment in the US, Europe and China On the back of environmental constraints on diesel Billion gallons in Europe and the US, DEF consumption has been Forecasts increasing over the past years 1.44 1.48 15% CAGR 1.37 1.41 ‒ Introduction of Greenhouse Gas standards in 1.31 the US 1.2
Slide 49: OCI simplified structure chart
OCI simplified structure chart Sawiris Family Free-float 54.25%1 45.75%1 OCI N.V. 100% OCI Intermediate B.V. 100% 100% 100% OCI Fertilizer OCI Chemicals B.V. OCI Fertilizers B.V. International B.V. 100% 100% 100% 100% 100% Biomethanol Chemie Iowa Fertilizer OCI Chem 4 B.V. OCI Chem 2 B.V. Holding II
Slide 50: 50
50