Niznekamskneftekhim · RUS:NKNC
Niznekamskneftekhim — Nizhnekamskneftekhim — Investor Presentation (April 2012)
44 slides from Niznekamskneftekhim's investor presentation, April 2012
Slide 1: Nizhnekamskneftekhim: The Leading Russian Petrochemical Company
Nizhnekamskneftekhim: The Leading Russian Petrochemical Company Investor Presentation April 2012
Slide 2: Disclaimer
Disclaimer This Investor Presentation has been prepared by JSC “Nizhnekamskneftekhim” (“NKNK” or “Company”) for investors solely for informational purposes. The information contained herein has been prepared to assist prospective investors in making their own evaluation of the Company and does not p
Slide 3: Table of contents
Table of contents I. Introduction 5 II. Petrochemical market overview 9 III. Business overview 18 IV. Financial highlights 25 V. Corporate governance 30 VI. Conclusion 35 Appendix VII. Glossary 37 VIII. Detailed financials 39 IX. Other supplementary materials 42 3
Slide 4: Section I: Introduction
SECTION Ii Introduction
Slide 5: Company at a glance
Company at a glance Leading market positions Company overview Financials(b) Rubbers: The largest Russian petrochemical production complex (US$m) 2007 2008 2009 2010 2011 CAGR The largest producer of located in Nizhnekamsk, Tatarstan Production of more than 120 items in 4 main Revenue 2,549 3,1
Slide 6: NKNK's products
NKNK’s products ` Product Major application • Films • Pipes and fittings Polyethylene • Food and other packaging • Toys • Appliance housings Plastics • Films and pipes • Threads and fibres • Auto interior parts Polypropylene • Food and other packaging • Microelectronics • Appliance housings • Isolat
Slide 7: Investment highlights
Investment highlights Leading Russian petrochemical company: – the largest petrochemical complex in Russia – 2nd largest rubber(a) capacity globally Attractive petrochemical market Experienced management team with – 2nd largest Russian producer of plastics fundamentals: proven track-record: – sustai
Slide 8: Section II: Petrochemical market overview
SECTION II Petrochemical market overview
Slide 9: Global rubber market is forecasted to grow at 4.0% through 2017
Global rubber market is forecasted to grow at 4.0% through 2017 Global rubber market demand Capacity and utilisation rate (mtpa) (mtpa) Polyisoprene % 4.0 100% 100% 100% 100% 100% 100% 100% 100% -1 7F: 95% R ' 11 5.4 90% CA G 5.3 82% 82% 75% 5.1 90% 92% 85% 88% 85% 88% % 4.9 0.7 13% 83% 84% 83% 81%
Slide 10: Global plastics market is forecasted to grow at 4.5% through 2017
Global plastics market is forecasted to grow at 4.5% through 2017 Global plastics market demand Capacity and utilisation rate (mtpa) (mtpa) Polyethylene % : 4.5 7F 238 1 1-1 4% 100% 100% 100% 100% 100% G R' 229 10 CA 221 10 11 87% 87% 87% 88% 212 10 5% 86% 86% 83% 85% 86% 86% 86% 11 82% 83% 202 9 11
Slide 11: Highly attractive Russian petrochemical market
Highly attractive Russian petrochemical market Polystyrene(a) Polypropylene Polyethylene (mtpa) (mtpa) (mtpa) 1.3 2.7 2.7 1.3 2.6 0.4 1.2 2.5 0.4 0.4 1.2 0.4 0.4 0.4 1.0 2.2 2.1 1.9 2.0 0.3 0.9 1.7 1.7 1.7 0.8 0.8 Plastics demand 0.3 0.3 0.7 1.4 0.2 in Russia 0.2 0.2 0.6 0.7 1.3 0.2 0.5 0.4 2015 200
Slide 12: Demand potential for petrochemicals in Russia
Demand potential for petrochemicals in Russia Polyethylene consumption (2011) Polypropylene consumption (2011) (kg per capita) (kg per capita) Average(a): Average(a): 30.2 kg per capita 18.0 kg per capita +139% growth +217% growth potential potential 12.6 5.7 20.0 17.1 28.0 18.5 37.1 18.9 Russia Jap
Slide 13: Russian fiscal regime is very favorable for the petrochemical industry
Russian fiscal regime is very favorable for the petrochemical industry · On the one hand 0% export duty on petrochemical products Russian Export duty: crude oil vs. naphtha and LPG and, on the other hand, material export duties on naphtha (US$/ton) 409 399 395 and LPG provide a stimulus for Russian
Slide 14: Low production costs
Low production costs Global ethylene cost curve (2011) Global propylene cost curve (2011) (Cost of ethylene production) (Cost of propylene production) European and Asian European and Asian NKNK NKNK naphtha crackers naphtha crackers 012345678 10 9 11 9 11 12 13 15 16 17 18 19 20 21 22 23 24 25 26 27
Slide 15: Competitive landscape: Russian olefins production in 2011
Competitive landscape: Russian olefins production in 2011 Ethylene production Propylene production (ktpa) (ktpa) 22 10 10 10 24% 16% 12% 10% 10% 10% 8% 1% 8% 9% 9% 8% 8% 7% 5% 2% % % % % 601 300 402 315 138 137 143 259 254 129 245 126 214 112 106 196 98 71 33 36 NKNK NKNK Polymer Plant Stavrolen Nef
Slide 16: Competitive landscape: petrochemicals in 2011
Competitive landscape: petrochemicals in 2011 Rubbers (Global market) Plastics (Russian market) (ktpa) (ktpa) Polyisoprene capacity Polystyrene production 38% 28% 14% 6% 6% 5% 2% 1% 61% 14% 9% 9% 7% 246 182 188 90 41 40 30 43 27 27 10 4 22 Zeon Maoming NKNK Polymers Others JSR NKNK Goodyear P&G Prof
Slide 17: Section III: Business overview
SECTION III Business overview
Slide 18: Business model overview
Business model overview Nizhnekamskneftekhim assets perimeter 2011 sales: US$4,288m Olefins and other Olefins and derivatives sold to third parties sales: US$1,266m Other petrochemical products − Ethylene oxide − Propylene oxide Naphtha Ethylene − Alpha-olefins Propylene − Styrene Olefins complex
Slide 19: Feedstock supply
Feedstock supply Secure and efficient supply base Unique synergy and vertical integration Naphtha volumes LPG volumes Current Available Current Available (ktpa) (ktpa) (ktpa) (ktpa) 1,219 >2,000 134 250 Core products Olefin derivatives Third party (plastics, glycols) sales - >1,300 - 500 Other Olefi
Slide 20: Key production indicators
Key production indicators Rubbers Plastics Olefins and olefin derivatives Company’s core operations with over 40 years Most dynamic business area over the past years Core of the petrochemicals complex providing track record feedstock to the next value chain State-of-the-art production facili
Slide 21: Sales structure
Sales structure Product breakdown Geographic breakdown Butyl/ Halobutyl North 26% Other Other America 13% Asia 2% 3% Poly- isoprene 9% 51% Olefins CIS 16% Rubbers 10% 47% Poly- Domestic Export butadiene 50% 50% 23% Polystyrene 32% Plastics Polypropylene 24% 36% Europe (a) 76% Polyethylene 32% Rubber
Slide 22: Strategy
Strategy NKNK strategy pillars Capex program 6 year investment program contemplates over US$3bn Strengthen market position as a global capex spent primarily on the capacity expansion diversified producer of synthetic rubbers 2012-2013 – debottlenecking and increasing capacity of rubbers and plas
Slide 23: Capital expenditures overview
Capital expenditures overview Planned investments New petrochemical complex (olefins / plastics) In 2012 NKNK plans to focus on increasing The largest expansion project, will increase capacity for traditional company products – olefin / plastics production capacity by 1,460 rubbers and plastics kt
Slide 24: Section IV: Financial highlights
SECTION IV Financial highlights
Slide 25: Financial summary
Financial summary Change Strong financial results US$m(1) 2007 2008 2009 2010 2011 ‘10 – 2011 revenue increased 34.9% y-o-y to ‘11 US$4,288m (2010: US$3,178m) Income statement EBITDA increased substantially in 2011 Revenue 2,549 3,133 1,986 3,178 4,288 34.9% and reached US$853m (+60.8% y-o-y) Co
Slide 26: EBITDA evolution analysis
EBITDA evolution analysis EBITDA evolution 2010-2011 (US$m) 142 874 853 (623) 548 (90) EBITDA 2010 Change in Change in Change in Change in EBITDA 2011 product prices production COGS SG&A volumes Source: Company data Change in product prices and COGS are the main EBITDA drivers 26
Slide 27: Cost of sales overview
Cost of sales overview Raw materials cost is the key cost driver Cost of sales dynamics (US$m) In 2011 71% of COGS expenditures +47% 0% +30% Depreciation Other 3.6% 1.8% accounted to raw materials 3,126 3,126 3,177 3,177 3,167 3,112 Personnel costs 7.2% 2,419 (9)% (49)% Raw materials costs incre
Slide 28: Debt portfolio structure as of 31 March 2012
Debt portfolio structure as of 31 March 2012 Strong financial position Debt portfolio structure as of 31 March 2012 By type of instrument By currency Continuous deleveraging: Net debt/EBITDA EUR Eurobonds 12% ratio decreased from 2.7x in 2009 to 0.7x and 18% RUB 0.2x in 2010 and 2011 respectively 1
Slide 29: Section V: Corporate governance
SECTION V Corporate governance
Slide 30: Corporate governance overview
Corporate governance overview Key takeaways 11 members, including 2 INEDs Board of Directors The Board is responsible for determining NKNK’s strategy, development priorities, approving long-term plans and key programs for the operational activity, etc. Audit Committee 5 members Responsible
Slide 31: Board of Directors composition
Board of Directors composition Albert Shigabutdinov Chairman of the Board, CEO of TAIF Vladimir Busygin Deputy Chairman of the Board, CEO of NKNK Radik Sergey Nahil Maganov Ilshat Fardiyev(2) Jelko Milich Gaizatullin(1) Alekseev(1) Deputy Prime First Deputy CEO Minister of the Finance Minister Execu
Slide 32: Dividend policy
Dividend policy Dividend policy 2005-2010 announced dividends In accordance with the Dividend policy approved on 27 March 2007: (US$m) 2005 2006 2007 2008 2009 2010 The total amount of dividends is set to be not less than 15% of OJSC Dividends announced 11.4 36.7 48.1 22.8 4.0 70.8 Nizhnekamskneft
Slide 33: Section VI: Conclusion
SECTION VI Conclusion
Slide 34: Sound arguments to buy Nizhnekamskneftekhim shares
Sound arguments to buy Nizhnekamskneftekhim shares Leading Russian petrochemical company Attractive petrochemical market fundamentals Low-cost producer Integrated business model provides flexibility and cost competitiveness Attractive growth prospects Strong financial position Experien
Slide 35: Appendix I: Glossary
APPENDIX I Glossary
Slide 36: Glossary
Glossary Petrochemical Chemical products derived from petroleum Butyl/halobutyl Product of catalytic polymerisation of isobutylene and isoprene. Its key physical products (БК/ГБК) feature is low gas- and moisture permeability CMAI Chemical Market Associates, Inc. is the premier provider of market, p
Slide 37: Appendix II: Detailed financials
APPENDIX II Detailed financials
Slide 38: P&L
P&L US$m(1) 2007 2008 2009 2010 2011 Total revenues 2,549 3,133 1,986 3,178 4,288 COGS (excl D&A) (1,983) (2,455) (1,542) (2,298) (3,002) Gross profit 566 678 443 880 1,287 Gross profit margin (%) 22.2% 21.6% 22.3% 27.7% 30.0% SG&A costs (excl D&A) (289) (327) (268) (350) (433) EBITDA 276 351 175 53
Slide 39: Cash flow and balance sheet
Cash flow and balance sheet US$m(1) 2007 2008 2009 2010 2011 Net cash from operating activities 106 351 267 219 528 Net cash used for investing activities (164) (317) (97) (98) (212) Incl. Purchase of PP&E (277) (319) (97) (98) (271) Net cash received from/(used for) financing activities 43 30 (141)
Slide 40: Appendix III: Other supplementary materials
APPENDIX III Other supplementary materials
Slide 41: Current capitalisation and share price
Current capitalisation and share price Share price Shareholding structure Ordinary shares 1.4 1,400 By number of shares Preffered 1.2 1,200 12% Market capitalization: 1 1,000 US$1,490m 0.8 800 0.6 600 0.4 400 0.2 200 Ordinary 88% 0 0 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 Oct-10 Apr-11 Oct-11 Apr-12 Num
Slide 42: Securities
Securities Shares Bonds Issued in 1993. November 2001 Current volume – 1 830 239 750 pcs with RUB1 nominal RUB300m, 1 year, coupon – 20 – 20.5% value (1,611,256,000 ordinary and 218,983,750 preferred) May 2002 Ordinary shares from 14-04-97 and preferred from RUB1,500m, 3 years, coupon – 16 –
Slide 43: Credit rating
Credit rating Corporate family ratings Ba3 Long-term IDR B+ A- Long-term national rating (rus) Domestic corporate family ratings Aa3.ru Senior unsecured B+ Eurobond rating B1 Short-term IDR B Outlook Stable Outlook Stable NKNK originally obtained credit ratings from Moody's and Fitch in December 200
Slide 44: Contacts
Contacts Igor Larionov Deputy CEO, Head of Corporate Property and Strategic Development Department; Phone +7 (8555) 37-53-88; e-mail: [email protected] Valeriy Starkov CFO; Phone +7 (8555) 37-58-57; email: [email protected] Georgiy Alexandrov Head of Investor Relations and Risk Management Div
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