about ciech - investors presentation

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  • CIECH a modern, diversified chemical group on a stable path of growth

    Presentation of the CIECH Group

  • The CIECH Capital Group

    Who are we and what do we do?

    The CIECH Capital Group

    Who are we and what do we do?

  • 3

    We are one of the leaders of the Polish chemical market

    70 yearsin world markets

    8production plants

    more than 3.7 thousand employees

    in the Group

    more than

    10 yearsat the Warsaw Stock

    Exchange (GPW)

    and an important player in the European market.

    The CIECH Group

  • 4

    We are supported by a stable, strategic shareholder

    KI Chemistry

    Open Pension Fund (OFE) Nationale-Nederlanden

    Others (including Investment Fund Companies (TFI), Open Pension Funds(OFE), Asset Management companies, the Government of Norway, individual investors)

    52,699,909shares

    =52,699,909

    votes

    Since 9 June 2014, KI Chemistry (a company

    from the Kulczyk Investments group)

    has been the majority shareholder

    of CIECH

    9%51%

    40%

    As of 16 May 2016

    The CIECH Group

    KI confirms its long-term involvement in the

    process of building the companys market value. With

    particular emphasis on its intention of transforming

    CIECH into one of the leading chemical companies in the world.

  • 5

    Our business model is diversified

    Soda segment

    PLN 2,241 million of revenues

    PLN 656million of EBITDA (Adj.)

    Silicates and glass segment

    PLN 175 million of revenuesPLN 33 million of EBITDA (Adj.)

    Organic segment

    PLN 770 million of revenues

    PLN 85million of EBITDA (Adj.)

    Transport Segment

    PLN 123 million of revenuesPLN 13 million of EBITDA (Adj.)

    PLN 3,273 million of revenues

    PLN 748million of EBITDA (Adj.)

    Data for 2015

    EBITDA (Adj.) adjusted EBITDA; the Group also reports the Other segment which covers consolidation exclusions and corporate functions

    The CIECH Group

  • Segment

    6Soda segment

    Strong market position and diversification inside the segment

    Soda ash Baking soda Salt

    Used mainly to produce glass and granular detergents

    Used mainly to produce animal feed and food

    Used mainly in chemical and food industries and in water treatment

    processes

  • Segment

    7

    Dynamic development and market expansion

    Plant protection products Polyurethane foamsResins

    Used mainly by farmers (herbicides, fungicides, insecticides)

    Used mainly in production of upholstery furniture

    Used mainly to produce powder coating, varnishes, as well as in

    construction and transport industries

    Organic segment

  • Segment

    8

    Stable position and continued growth

    Glass products Silicates

    Used in niche markets: ornamental lanterns for candles, jars with glass tops and twist-off jars for food products

    Used for production of precipitated silica (applied mainly in the tyre industry), detergents, various types of seals,

    coatings and waterproof layers

    Silicates and glass segment

  • Segment

    9

    Concentration on services inside the Group

    Logistics inside the GroupRail transportTransshipment

    Transport Segment

  • 10

    Advantage connected with location of plants

    CIECH Soda PolskaInowrocaw, Janikowo

    CIECH Vitrosilicon

    ary, Iowa

    CIECH RomaniaRamnicu Valcea

    CIECH Soda DeutschlandStassfurt

    CIECH SarzynaNowa Sarzyna

    CIECH PiankiBydgoszcz

    Soda segment

    Organic segment

    Silicates and glass segment

    We have 8 production plants located in Poland, Germany and Romania.

    Production activity

  • Our activities are set by the Strategy

    adopted in 2014

  • 12

    Maximization of the CIECHs value through organic development

    Strategy of the CIECH Group for 2014-2019**

    1. Growth of revenues in the soda segment

    2. Twofold increase of the share in the Polish market of plant protection products

    3. Growth of adjusted EBITDA

    4. Growth of the Companys market value

    approx. PLN 3.8 billion

    average annual revenues from sale*

    approx. PLN 660 million

    average annual adjusted EBITDA*

    approx. 17%

    average annual adjusted EBITDA margin*

  • Previous years brought effective optimization activities and significant investments

  • 14

    We constantly generate higher profits and margins

    4 378

    3 5013 244 3 273

    2012 2013 2014 2015

    423 446514

    748

    2012 2013 2014 2015

    9,7%12,7%

    15,8%

    22,9%

    2012 2013 2014 2015

    Revenues [mPLN] EBITDA (Adj.) [mPLN]

    EBITDA (Adj.) adjusted EBITDA (adjusted by non-typical one-off events); data reported in the statement for a given year, also covers discontinued activity

    EBITDA Margin (Adj.) [mPLN]

    282

    526

    684

    838

    2012 2013 2014 2015

    Result on sale [mPLN]

    Financial situation

  • 15

    The most important implemented projectsDevelopment of the CIECH Group

    Soda +200 Projectincrease of the soda production capacity by

    additional 200 thousand tonnes per year

    Extension of plastics production installation

    increase of the production capacity of saturated polyester resins by 100%

    MCPA installationstate-of-art installation for manufacture of an active

    substance for production of plant protection products

    Modernization of the salt production installation

    intensification of dry salt production

    New calcinatorat the plantin Romania

    increase of the production capacity

  • 16

    Significant decrease in financial costs

    * HY bond interest

    Moody's rating:

    Ba3 / positive perspectiveStandard & Poors rating:

    BB- / stable perspective

    Financial situation

    Refinancing of the debt in 4Q2015

    Was

    9.5%*

    double-currency credit in PLN and EUR (of up to PLN 1.34 million)

    and revolving credit (of up to PLN 250 million)

    High Yield bonds of EUR 245 millionrevolving credit of up to PLN 100 millionother credit facilities

    Is

  • In 1Q 2016, continuation of very good financial

    results

  • 18

    Record EBITDA (Adj.)

    [PLN million] 1Q16 1Q15 yoy1Q16

    consensus1Q16

    forecasted range

    Revenue 826 817 1.1% 855 815 914

    Gross sales profit 244 214 14.0% - -

    Gross sales margin 29.5% 26.1% 3.4 p.p. - -

    EBIT 150 117 28,4% 146 138 156

    EBIT margin 18.2% 14.3% 3.9 p.p. 17.0% 15.6% - 18.8%

    EBITDA 204 173 17,6% 204 195 212

    EBITDA margin 24.6% 21.2% 3.4 p.p. 23.8% 21.9% - 25.5%

    Adjusted EBITDA 206 193 7,0% 204 195 212

    Adjusted EBITDA margin 25.0% 23.6% 1.4 p.p. 23.8% 21.9% - 25.5%

    Net result 102 53 92,1% 105 84 118

    Net margin 12.4% 6.5% 5.9 p.p. 12.3% 9.2% - 14.2%

    Financial results for 1Q16

    EBITDA (Adj.) adjusted EBITDA (adjusted by unusual one-off events, in 1Q2016, mainly a change in the level of provisions PLN -2.7 million); PAP consensus of 10 May of the current year, based on forecasts from 11 brokerage houses

  • 59% 62% 61%71% 66% 66% 72% 71%

    71%

    27% 27%24%

    19% 27%25% 19% 22%

    22%

    13% 10%12% 9%

    5% 6%6%

    5% 5%

    Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

    19

    Revenue

    2014

    845 814 799 786 817 841 801 814 826

    2015 2016

    Financial results for 1Q16

    Organic segment Glass and silicates segment Transport segment OtherSoda segment

  • 20

    EBITDA (Adj.)

    77%

    82% 86%

    101%

    82% 84%

    93%

    92%

    89%

    22%

    15%11%

    17%9%

    5%

    15%

    9%

    7%7%

    9%

    4%

    6%

    5%

    3%

    3%

    Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

    EBITDA (Adj.) adjusted EBITDA (adjusted by unusual one-off events, in 1Q2016, mainly a change in the level of provisions PLN -2.7 million)

    2014 2015 2016

    119 154 143 95 193 188 199 168 206

    Financial results for 1Q16

    Organic segment Glass and silicates segment Transport segment OtherSoda segment

  • 21

    Debt

    1 2611 479

    1 213 1 182

    1 3611 447

    3.9

    3.5

    2.72.3

    1.8 1.9

    2011 2012 2013 2014 2015 1Q2016

    Net debt Net debt / EBITDA (Adj.)

    [PLN million] At the end of 1Q16 At the end of 2015 change

    Debt ratio 64.1% 65.7% -1.6 p.p.

    Long-term debt ratio 45.7% 46.1% -0.4 p.p.

    Debt to equity ratio 178.8% 191.5% -12.7 p.p.

    Gross financial liabilities (PLN million) 1,579 1,564 +1.0%

    Net financial liabilities (PLN million) 1,447 1,361 +6.3%

    The Group systematically reduces its debt. At the end of 1Q16, the net debt / EBITDA (Adj.) ratio amounted to 1.9. According to the adopted strategy, the Group endeavours to reduce the ratio to the level below 1 in 2019.

    Thanks to refinancing of the debt in 1Q 2016, the Groups costs of debt servicing were much lower

    Financial results for 1Q16

    Methodology for calculating the metrics is consistent with the financial statement

  • Effective implementation of the strategy and strategic support of the owner translated into the growth of CIECHs market value in recent years

  • 23Growth of goodwill

    CIECH share price long-term growth trend

    Information chart

    20

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    45

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    85

    90

    2Q2014Acquisition of the majority package

    of CIECH shares by KI Chemistry

    4Q2014Adoption of

    strategy for 2014-2019