Suez Cement Co. · EGX:SUCE
Suez Cement — FY2015 Earnings Presentation
47 slides from Suez Cement's earnings presentation, Dec 31, 2015
Slide 1: Corporate Briefing
Corporate Briefing Suez www.suezcement.com.eg Title 1 Cairo,Cement December 31st 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: 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: SCGC Group at a glance
Group Overview Revenue Breakdown Others 7 % SCGC Group at a glance Ready Mix 13 % Egypt’s cement market leader Part of the world’s fifth largest global cement producer Cement 88% Total production capacity of more than12M t/y cement 5 cement plants, 2 terminals, and 20 concrete batching uni
Slide 6: Group Overview - Stock Market
Group Overview - Stock Market Nam e No. of Shares % SCC Ownership Structure Private Funds 7,429,382 4.09% Private Insurance Companies , Banks and 8,385,204 4.61% Name No. of Shares % institutions Misr Capital Investments, SAE 4,675,198 2.57% Individuals 2,913,547 1.60% Nasser Social Bank, SAE 2,30
Slide 7: Group Overview: 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: Group Overview: 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 7% - 7th U.S.A. & CANADA 1st - 20% MOROCCO THAILAND 2nd - 24% 13% - 4th SPAIN 2014 Revenues by Geography (after eliminations) INDIA 7th - 6% 8th - 5% Other Emerging Markets, Trading & Others 7% FRANCE EGYPT 2nd - 30%
Slide 10: Group Overview: 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 & 8.65 % Free Float 12.25% Public Sector Entities 13.29% 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 20 16.8 12000 15 10000 11.7 Market Value 10.7 8000 8.5 Price Earning 7.2 7.8 10 6000 6
Slide 13: Market Overview
Market Overview Suez Cement Corporate Briefing 13
Slide 14: Egypt macroeconomic outlook and pound devaluation
Outlook 2+10 Bdgt '16 EGYPT 2014 2015 2016 2016 GDP 4.3 4.0 e 3.0 4.3 Construction value added 10.1 8.0 e 4.5 7.0 Inflation 10.1 10.4 12.0 9.0 Exchange rate (local currency/€, level) C 9.42 8.55 9.67 8.75 Exchange rate (local currency/$, level) A 7.09 7.71 8.95 8.10 Short-term interest rate (T-bills
Slide 15: Market Overview: Egypt Macroeconomic Outlook
Market Overview Egypt Macroeconomic Outlook 60 50 53.8 -2.1% 50.2 50.1 51.3 40 48.7 Market 30 48 49.5 Volumes* 38.5 20 M tons 34.5 10 13.1 14.4 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2014 2015 Q4 Q4 12 10 SCGC MS % 11.1 8 11.7 9.8 10.6 10.9 8.1 6 7.5 8.2 7.6 SCGC 4 Volumes 2 M tons 2.0 2.4
Slide 16: Market Overview: residential segment consumption
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 40% Sharp drop expec
Slide 17: Market Overview: Cairo & Delta consumption
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% 31.5% Population 2014*: 84.6 million Growth rate (2011-2013)*: 1.9% Age pr
Slide 18: Market Overview: Egypt Grey Cement Market
Market Overview Egypt Grey Cement Market Structural Demand (Mt) z 2015 2015 Forecast Consumption Mt 53,806 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 Sep 13 Mar14 +37EGP/ton 720EGP/ton Sales Tax 5% + 1% +49EGP/ton 700EGP/ton commercial tax 663EGP/ton 4th Mar 13 Sales Tax 5% 603.5EGP/ton 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 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 cement products
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: Investment Highlights - 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 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 – Q4
Social Initiatives for 2015 – Q4 The Association for the Development and Enhancement of Women (ADEW), in cooperation with Helwan Cement Company (HCC) and Tourah Portland Cement Company (TPCC), kicked off the “Madrasti 2” (My School) project at a special conference that took place on October 27 at
Slide 34: Social Initiatives for 2015 – Q4
Social Initiatives for 2015 – Q4 During last November, Takatof Association dedicated 3 days to Suez local community in the renovated Omar Ibn El Khattab school, conducting ophthalmological outreach and old age Cataract in coordination with El Maghraby optics and a Sports Activities day under the s
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 : PPE Working at heights LOTO Confined Space CSI Driving Code of Conduct Inspecti
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: Energy represents 72% of production cost
Financial Highlights An increasingly energy intensive industry… Energy represents 72 % of the production cost December 2015 SCGC Cost Breakdown 31 December 2015 Suez Cement Corporate Briefing 38
Slide 39: Fuel and electricity price increases
Financial Highlights Fuel prices increased by more than 50% since Feb 2013 500 Electricity EGP/MWH x 4 since 2004 329 366 457 245 268 400 161.3 300 113.4 119.1 125 134 200 100 0 Before 30- 1-Dec-04 1-Dec-05 1-Oct-06 1-Sep-07 1-Jul-08 1-Jul-10 1-Jan-12 1-Jul-14 1-Jul-15 Sep 04 Fuel Oil EGP/t x 9 si
Slide 40: YTD December 2015 key results (Consolidated)
YTD December 2015 key results (Consolidated) Suez Cement 40
Slide 41: YTD Dec 2015 GOP Bridge
YTD Dec 2015 GOP Bridge In Millions of local currency Cement -11 887 -844 250 -121 100 239 Fixed Clinker PY Volume Price - VC cost Efficiencies Ac 15 purchase inflation 887 -11 -844 239 -121 100 250 Suez Cement Corporate Briefing 41
Slide 42: Quarterly EBITDA 2012-2015
GOP Evolution (Consolidated) EGPm Quarterly EBITDA 2012-2015 400 300 373 300 337 289 315 265 316 300 300 268 269 200 241 242 210 106 165 160 100 139 2 52 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 -100 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 Suez Cement
Slide 43: Financial Highlights
Financial Highlights MEGP 2011 2012 2013 2014 2015 Revenues 4,820 4,597 5,049 6,152 5,642 EBITDA - recurring 1,199 1,051 1,061 1,154 424 % on revenues 24.9% 22.9% 21.0% 18.8% 7.5% EBIT 837 702 681 705 - 101 % on revenues 17.4% 15.3% 13.5% 11.5% -1.8% Net Profit ( Group Share) 568 524 538 500 - 60 %
Slide 44: Strong equity structure with growing cash
Financial Highlights Strong equity structure with growing accumulation of cash MEGP 2011 2012 2013 2014 2015 Total L-T Assets 6703 6654 6,842 7,238 7,108 Inventory 998 804 844 1,194 1,251 Account Receivables 247 268 204 220 233 Cash and Cash Equivalents 1448 1622 1814 1,626 1,060 Total Current Ass
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 06-15: 5% Rec. EBITDA (EGPm) CAGR 06-15: (12)% 5,642 2,155 2,120 6,380 6,152 6,152 5,542 4,820 5,049 1,757 1,863 3,543 4,196 4,597 1
Slide 46: More than EGP 4.5 BN dividend pay out since 2006
Financial Highlights More than EGP 4.5 BN dividend pay out since 2006 Dividend distributed by SCC (EGPm) Dividend per Share (EGP/Share) 4.26 774 Annual Dividends. 3.9 182 709 2.65 Interim Dividends. 2.65 2.65* 592 482 482 482 2.0 2.0 2.0 1.7 182 1.65 364 363 300 300 309 300 182 309 182 182 118
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 614 408 407 264 324 252 258 230 2008 2009 2010 2011 2012 2013 2014 2015 Figures are in MEGP Su