Indorama Ventures Public Co. Ltd. · SET:IVL
Indorama Ventures Public — CLSA Investors' Forum 2010
41 slides from Indorama Ventures Public's conference presentation, Sep 13, 2010
Slide 1: Strong fundamentals - the growth story continues
Indorama Ventures Public Company Limited (“IVL”), listed on SET, Thailand Strong fundamentals - the growth story continues… CLSA Investors’ Forum Hong Kong September 13-14, 2010
Slide 2: Disclaimer
Disclaimer This presentation contains “forward-looking statements”, which are based on current expectations and projections about future events, and include all statements other than statements of historical facts, including, without limitation, any statements preceded by, followed by or that includ
Slide 3: Agenda
Agenda • Aspiration 2014 • Financial results Q2 2010 and 6M 2010 • Outlook 03 Q2 2010 Analyst Presentation
Slide 4: This is polyesters – products indispensable to everyday life
This is polyesters – products indispensable to everyday life Everyday – Everywhere Beverage Containers Food Packaging Apparels Home Textiles Non Wovens Technical Textiles 04 Q2 2010 Analyst Presentation
Slide 5: Aspiration 2014 and beyond
Aspiration 2014 and beyond Our Vision “Integrating the Polyester Value Chain” The Polyester Value Chain Refinery Aromatics plant PTA plant Naphtha PX PTA Steam Cracker MEG plant PET plant Ethylene MEG 05 Q2 2010 Analyst Presentation
Slide 6: Key goals and objectives
Key goals and objectives Maximize Total Stakeholder Return Minimize Stakeholder Risk Being a growth company, maintain a policy of Create an increasingly stronger balance sheet as 30% dividends to our shareholders. we grow, mitigating risks under different plausible industry scenarios Create capital
Slide 7: Moving towards undisputable leadership
Moving towards undisputable leadership Aspiration 2014 Cannot be imitated Difficult to imitate Can be imitated (but may not be) Easy to imitate 1995 to 2002 2003 to 2007 2008 to 2009 2010 to 2014 • New incumbents to polyester • Established assets over 3 • Established significant market • Establish u
Slide 8: Created superior market access
Created superior market access IVL Global footprint today PTA capacity by region Workington, UK Klaipeda, Lithuania (K tpa) Capacity (K tpa) Capacity (K tpa) PET: 155 PET: 198 Asheboro, USA Lopburi, Thailand Capacity (K tpa) Capacity (K tpa) 1,240 PET: 225 PET: 180, Packaging1 550 Thailand Europe Na
Slide 9: Consistent growth through focused commitment
Consistent growth through focused commitment Continuous growth and investment Major milestones achieved IVL Nameplate Capacity Acquisition of PTA and 2010 PET assets in Italy from Dow JV Establishment of AlphaPet plant in 2009 Decatur, USA Acquisition of PTA and 2008 (b) Polyester assets in Thailand
Slide 10: Optimized five elements to cost leadership
Optimized five elements to cost leadership Technology Conversion cost Cost leadership Well-known, latest generation High capacity utilization technologies Energy efficiency Lean workforce Scale Capital cost Integration Large scale, modern, efficient Low Greenfield/Brownfield capex facilities Attract
Slide 11: Growth capital successfully deployed
Growth capital successfully deployed Capital Deployed (US$ MM) EBITDA (US$ MM) 2,000 400 1,500 300 1,000 200 500 100 0 0 2006 2007 2008 2009 2010E Net operating debt Equity EBITDA EBITDA has grown 9% faster than our capital employed Note: Net operating debt = total interest bearing debt – project de
Slide 12: Planned capex and investments of over US$ 2.0 billion
Planned capex and investments of over US$ 2.0 billion (US$ MM) (Times) 3,000 1.5 2,500 1.3 Debt Service Coverage Ratio “DSCR” > 1.1 times 2,000 1.1 1,500 0.9 1,000 0.7 500 - 0.5 2010E 2011B 2012B 2013B 2014B Current net debt Implied net debt DSCR Visibility of earnings allows using leverage and inte
Slide 13: Spectacular polyester demand driven by consumer needs
Spectacular polyester demand driven by consumer needs Polyester (Fibers and PET) market demand (1991–2016E) (MM Tons) +9% CAGR Polyester has grown and expected to continue to grow at multiples of GDP growth Source: SBA CCI, IVL analysis 013 Q2 2010 Analyst Presentation
Slide 14: Polyester chain with proven sustainability and resilience
Polyester chain with proven sustainability and resilience Polyester chain margins resilient …as well as to changes in through the economic cycle… crude oil prices Global Polyester chain spread vs. GDP (1997-2009) Global PTA/PET spread vs. Crude price (1997-2009) Spread1 World GDP2 Spread1 World GDP2
Slide 15: IVL Polyester value chain business .....Stronger in 2014
IVL Polyester value chain business .....Stronger in 2014 Key Success Factor IVL Business Strategy 1 • Multiple opportunities identified to maximise stakeholders value • Increase presence in Emerging Markets through acquisition and Domestic greenfield assets Presence in • Enhance market leadership in
Slide 16: 2014 portfolio will serve regional markets and extend global reach
2014 portfolio will serve regional markets and extend global reach to all key mature and developing markets North Europe China, East Asia, East Europe North America South Europe Middle East, Africa India South America SEA, Australia New assets by 2014 Existing assets Target Sales Geography Exports 0
Slide 17: IVL aims to be the largest Polyester company and the most Global
IVL aims to be the largest Polyester company and the most Global Fragmented industry provides significant scope for inorganic growth Top 10 PET producers account for Top 10 PET and Polyester fiber producers account 50% of global capacity for 32% of global polyester capacity Global PET capacity share
Slide 18: Agenda
Agenda • Aspiration 2014 • Financial results Q2 2010 and 6M 2010 • Outlook 018 Q2 2010 Analyst Presentation
Slide 19: 6M 2010 - High returns to shareholders
6M 2010 - High returns to shareholders 6M 6M (US$ MM) YoY % Comments 2009 2010 *Production • Higher sales revenues in all business segments on 1.44 1.53 7% (MM Tons) higher volumes and higher average selling prices • Significant strengthening of average Thai Baht against Sales 1,105 1,469 33% both E
Slide 20: The power of a global presence
The power of a global presence Strong growth across all geographies Europe (Sales in US$ MM) 501 19% North America Asia 296 420 573 53% 36% 423 193 6M 09 6M 10 ROW 6M 09 6M 10 6M 09 6M 10 100 45% 69 6M 09 6M 10 020 Q2 2010 Analyst Presentation
Slide 21: Q2 2010 - High returns to shareholders
Q2 2010 - High returns to shareholders Q2 Q1 Q2 (US$ MM) QoQ % YoY % Comments 2009 2010 2010 *Production (MM Tons) 0.74 0.76 0.77 2% 5% • QoQ stable sales revenues on lower sales volume but higher selling prices for PET and Polyester fibers and yarns Sales 608 733 737 1% 21% • YoY extremely weak ave
Slide 22: PTA: Impact from sharp fall in PX prices in 2Q 2010
PTA: Impact from sharp fall in PX prices in 2Q 2010 (US$ MM) Q2 2009 Q1 2010 Q2 2010 QoQ % YoY % Comments • Decrease in sales volume mainly from plant shutdown in Sales 181 194 180 -7% 0% Rotterdam and Indorama Petrochem in Q2 2010 • Industry spreads better YoY • Plant shutdown collided with steep d
Slide 23: PET Polymers: Margin improvement in Q2
PET Polymers: Margin improvement in Q2 (US$ MM) Q2 2009 Q1 2010 Q2 2010 QoQ % YoY % Comments • Higher production volumes with start-up of Line 2 in Sales 341 434 456 5% 34% AlphaPet, Alabama, USA • Increase in revenues from higher sales volumes and higher average selling prices • Stellar standalone
Slide 24: Polyester Fibers & Wool: Positive earnings momentum
Polyester Fibers & Wool : Positive earnings momentum (US$ MM) Q2 2009 Q1 2010 Q2 2010 QoQ % YoY % Comments • QoQ lower volumes as shutdown for maintainence at Sales 86 105 100 -4% 17% Rayong facility and shifting one production line in Rayong plant to produce PET • Increase in revenues from higher s
Slide 25: Reduced net debt
Reduced net debt Repaid long term loans and reduced short term loans from cash flow from operations and IPO proceeds IVL Net Financial Debt (THB bn) At 30-Jun-2009 At 30-Jun-2010 50 50 40 2.2 38.6 40 2.2 33.0 30 30 26.3 21.4 20 20 14.9 13.8 10 10 0 0 ST Debt1 LT Debt Cash Net Debt ST Debt2 LT Debt C
Slide 26: De-leverage, prepared for growth
De-leverage, prepared for growth Net Operating Debt / EBITDA (x) Net Gearing (%) 4x 100% 80% 3x -4% 60% -16% 2x 40% 2.7x 2.6x 65% 1x 55% 20% 0x 0% Q2 2009 Q2 2010 Q2 2009 Q2 2010 Note: Annualized EBITDA on net operating debt excludes debt for capex and investments not generating revenues 026 Q2 2010
Slide 27: Stable cashflow from operations despite strong Baht
Stable cashflow from operations despite strong Baht Free Cash Flow (THB bn) 6M 2009 6M 2010 Cash outflow for working 6 6 capital on increase in volume and selling prices 5 5 5.3 1.5 5.1 4 4 2.6 Completed capex in AlphaPet project and acquisition of utility 3 3 plant in Rotterdam 2.0 2 2 2.2 1 1.8 1
Slide 28: Ongoing value accretive projects
Ongoing value accretive projects Completed acquisition of Utility assets in Rotterdam and *PTA/PET plant in Italy Rotterdam Nigeria USA PET expansion PET Recycling PET Increase earnings . . . Increase book value . . . Increase margins . . . IRR > 20% . . . ROCE > 15% . . . *50:50 Joint Venture, comp
Slide 29: Africa an attractive opportunity for PET
Africa an attractive opportunity for PET Africa with significant PET upside potential Nigeria one of the largest African markets PET per capita (kg) (2009) PET demand (‘000 tpa) (2009) Africa with favorable supply/demand dynamics Nigeria is a growing market with no PET production (‘000 tpa) (‘000 tp
Slide 30: Agenda
Agenda • Aspiration 2014 • Financial results Q2 2010 and 6M 2010 • Outlook 030 Q2 2010 Analyst Presentation
Slide 31: In a league of our own
In a league of our own………. + Unparalleled Focus + Cost Leadership + Market Reach beyond compare + Integrated Business Model = Indorama Ventures Public Company Limited 031 Q2 2010 Analyst Presentation
Slide 32: IVL: Q3 Outlook
IVL : Q3 Outlook Strong demand for products PTA back on track in Q3, 2010 Expected margin improvement Higher volumes and margins to increase EBITDA Increase earnings YonY 032 Q2 2010 Analyst Presentation
Slide 33: Q&A
Q&A Visit our website www.indoramaventures.com 033 Q2 2010 Analyst Presentation
Slide 34: Achieved "Transformation"
Achieved “Transformation” IVL among Top 15 largest listed company by market cap on SET IVL among Top 10 largest non-bank listed company by market cap on SET Free float enlarged 5 times, 28% of free float of IVL is equal to around Baht *30,100 MM Products resilient to recession, positive demand growt
Slide 35: Indorama Ventures Public Company Ltd "IVL"
Indorama Ventures Public Company Ltd “IVL” Stock Exchange of Thailand “SET” Shareholding Structure Sector “Petrochemicals” Listing & Free float around 28.0% Trading First day trading on February 5, 2010 Top 15 listed company’s on SET by market capitalization Public 28.0% Market capitalization THB 10
Slide 36: Organizational & Ownership Structure
Organizational & Ownership Structure IVL Corporate Structure[1] Canopus International Ltd Mauritius PET operating subsidiary 99.99% PTA operating subsidiary Indorama Resources Ltd Public Thailand Shareholders Polyester Fibers and Yarns 71.97% 28.03% operating subsidiary Holding subsidiary Indorama V
Slide 37: IVL: Vertically Integrated
IVL: Vertically Integrated Indorama Ventures Public Company Limited Revenues = US$ 1,469 MM and EBITDA = US$ 181 MM PET Polyester PTA (60% of Revenue, 58% of EBITDA)(1)(2) (14% of Revenues, 14% of EBITDA)(1)(2) (26% of Revenue, 28% of EBITDA)(1)(2) Strong positions in attractive market Leadership in
Slide 38: Integrated business model
Integrated business model PX RAW MATERIAL PTA PET / POLYESTER FIBER & YARNS IRP Rotterdam IRP Workington Orion Global Pet IRH Rotterdam Netherlands UK Lithuania Netherlands 100% 200,000 tpa 155,000 tpa 198,000 tpa 350,000 tpa (co-located) PTA Used captively Ottana within Ottana PET operations in Lit
Slide 39: Global distribution network
Global distribution network 6M 2009 – Segment Sales Distribution 6M 2010 – Segment Sales Distribution 13% 14% 26% 31% 56% 60% PTA PET Polyester & Wool PTA PET Polyester & Wool 6M 2009 – Geographical Sales 6M 2010 – Geographical Sales 7% 7% 17% 38% 20% 39% 38% 34% Asia Europe North America ROW Asia E
Slide 40: Natural hedge and amortizing repayment schedule
Natural hedge and amortizing repayment schedule Long-Term Loans by Currency Repayment Schedule for Long Term Loans 24% 10% 18% 33% 38% 33% 43% THB US$ € <1 Year 1-3 Years 3-5 Years >5 Years 40 040 Q2 2010 Analyst Presentation
Slide 41: Summary Consolidated Financials
Summary Consolidated Financials Income Statement (THB MM) 2006 2007 2008 2009 6M 2010 Sales 18,759 32,345 53,331 79,994 47,970 COGS 16,563 28,766 48,178 67,666 41,414 Gross profit 2,196 3,579 5,153 12,328 6,556 EBIT 1,087 1,879 2,271 7,476 4,310 EBITDA 1,702 2,641 3,838 10,636 5,904 Net profit befor
Indorama Ventures Public Company — CLSA Investors' Forum 2010 on 6ix