pdf Financial results for 1H2015

Financial results
for H1 2015
Warsaw, 27th August 2015
1
Characteristics of CIECH Group
2
Key events in 1H 2015
3
Results of CIECH Group in 1H 2015
CIECH Group profile
Phot. Unsaturated Polyester Resin
70 years on global markets
The CIECH Group is one of the leaders in the European chemical market. It comprises 8 production
plants, commercial companies and service providers.
The main products of the CIECH Group are: soda ash (second largest supplier in Europe), sodium
bicarbonate, salt, epoxy and polyester resins, AGRO products, glass products and other chemical
products. The above are used e.g. in glass, food and furniture industry, in the manufacturing of
detergents, as well as in agriculture and construction industry.
CIECH Group profile
The CIECH Group operates in four segments
Soda segment
Organic segment
Silicates and glass
segment
Transportation
segment
Companies
CIECH Soda Polska
CIECH Soda Deutschand
CIECH Soda Romania
CIECH Sarzyna
CIECH Pianki
CIECH Vitrosilicon
CIECH Cargo
CIECH Transclean
Products
Services
soda ash
sodium bicarbonate
vacuum salt
epoxy resins, saturated and
unsaturated polyester resins,
crop protection products
polyurethane foams
lanterns and jars, sodium
and potassium silicates
transport services,
forwarding services,
load handling, siding,
lease of train carriages
Recipients
glass industry, detergents,
food industry,
pharmaceutical industry
and household articles
agriculture, production of
furniture and paints
chemical, food industry,
manufacturing of
detergents and paints,
household products
mainly CIECH Group
companies
Markets
global, European, domestic
global, European, domestic
global, European, domestic
domestic
Shareholders structure of CIECH SA
Since 9th June 2014, KI Chemistry (Kulczyk Investments Capital Group) has been
the majority shareholder of CIECH
Kulczyk Investments is an international investment company, focused on investment opportunities in global
emerging markets. The strategic industries of Kulczyk Investments are natural resources, energy, infrastructure,
chemical industry and real estate.
KI Chemistry
Other
27.7%
Government
of Norway
1.7%
Pension
funds and
Mutual funds
19.5%
51.1 %
Nationale Nederlanden OFE
9.5 %
KI Chemistry
AVIVA OFE
51.1%
3.3 %
Norwegian government
1.7 %
MetLife OFE
1.7 %
Nordea OFE
1.3 %
AXA OFE
1.3 %
Pocztylion OFE
1.2 %
Pioneer TFI
1.2 %
Other
27.7 %
OFE – Pension Fund
TFI – Mutual Fund
The shareholders’ structure is based on the list of shareholders presented during the Ordinary Shareholders' Meeting on 30th June 2015 and a specification of the shares
of OFE in public companies as at 31st December 2014. Before 27th August 2015, the aforementioned shareholders did not announce any changes in their shares of the
share capital according to Art. 69 of the Law on Public Offering.
5
Key events in 1H 2015
Key events in 1H 2015
Area
Restructuring of CIECH Sarzyna
New names of companies in the CIECH Group
Sales and marketing
Entry into force of the agreement with Solvay for supply of sodium
silicate
Conclusion of the agreement for the purchase of coal
Development
Completion of the first stage of the development of the soda plant
production capacity in Inowrocław – project Soda +200
Completion of the capacity increase of dry salt
Full utilisation of production capacities in CIECH Soda Romania
as a result of capacity extension program
Finance
Repayment of silent partners contribution (ca. 12 EURm) – Group
CIECH Soda Deutschland
Change of the Group auditor
7
Results of CIECH Group in 1H 2015
Profit and Loss Statement
Significant profitability improvement in H1 2015
PLNm
H1 2015 H1 2014 H1 2013 FY r/r FY r/r %
2 000
1 883
1 800
Sales revenue
1 658
1 659
1 883
-1
0%
1 600
Gross margin
434
357
324
77
22%
1 400
26,2%
21,5%
241
152
14,5%
9,2%
351
253
21,2%
15,2%
381
273
23,0%
16,5%
139
27
Gross margin %
EBIT
EBIT %
EBITDA
EBITDA %
Normalized EBITDA
Normalized EBITDA %
Net result
1.
2.
89
59%
6,4% 5,3 pp.
226
98
107
39%
112
20,0%
16,5%
1 000
15,0%
12,6%
800
10,0%
400
381
237
273
H1 2013
H1 2014
5,0%
200
39%
12,6% 6,5 pp.
56
1 658
600
12,0% 6,0 pp.
237
1 659
1 200
17,2% 4,7 pp.
121
25,0%
23,0%
0
0,0%
Sales revenue
423%
H1 2015
Normalized EBITDA
Normalized EBITDA %
Decrease in revenues results mainly from the discountinuation of trading with sulphur (revenues lower by 105 PLNm). Revenues positively influenced
by higher soda prices and appreciation of USD in comparison to PLN and RON
Profitability improvement due to the decrease in purchase prices of raw materials and energy (coal, gas) and increase in the efficiency of soda ash
production process
9
Profit and Loss Statement vs analyst
consensus
Results of Q2 2015 slightly above the analysts expectations
Sales revenue
841
817
Consensus
range
Q2 2015
768 - 901
EBIT
124
117
92,5 - 131
EBIT %
14,7%
14,3%
-
EBITDA
178
172
143,8 - 187
21,2%
21,0%
-
188
172
143,8 - 187
22,3%
21,0%
-
86
68
53,8 - 82
10,2%
8,4%
-
mln PLN
EBITDA %
Normalized EBITDA
Normalized EBITDA %
Net profit
Net profit %
Results
Consensus
Q2 2015
10
Financial Results for Business
Segments
Continuing dominant contribution of soda segment in the consolidated
revenues
Total (PLNm)
993
889
823
845
795
814
824
62%
59%
810
817
841
51%
55%
59%
Revenues
61%
66%
66%
19%
27%
25%
3%
1%
8%
3%
1%
2014 Q3
2014 Q4
5%
4%
-1%
2015 Q1
6%
4%
-1%
2015 Q2
69%
69%
Soda segment
Organic segment
33%
20%
Silicates and glass segment
Transport segment
Other
27%
21%
9%
10%
11%
7%
8%
2%
2013 Q1
2013 Q2
24%
21%
15%
6%
27%
2013 Q3
2013 Q4
13%
3%
-1%
2014 Q1
10%
3%
-2%
2014 Q2
12%
11
Financial Results for Business
Segments
In Q2 2015 decrease in share of organic segment in consolidated EBITDA
250
220
Total (PLNm)
193
188
200
170
154
Normalized EBITDA
150
129
112
148
119
125
105
79
Soda segment
84%
82%
100
75%
Organic segment
71%
88%
120
82%
87%
77%
70
92%
Silicates and glass segment
124%
50
Transport segment
Other
0
30%
22%
4%
-10%
7%
0%
22%
12%
7%
-7%
6%
6%
15%
17%
11%
5%
3%
-6%
7%
2%
-6%
7%
4%
-9%
11%
8%
1%
-12%
2014 Q1
2014 Q2
2014 Q3
2014 Q4
9%
4%
2%
-5%
6%
2%
-2%
2015 Q1
2015 Q2
20
-37%
2013 Q1
2013 Q2
2013 Q3
2013 Q4
-50
-30
12
Soda segment
Results of the segment, in PLNm
+40%
+9%
YTD
1003
1092
245
+45%
342
+46%
299
205
217
316
560
108
137
IV Q
490
141
III Q
177
504
129
121
131
126
114
499
536
2014
2015
Revenues
158
152
557
II Q
IQ
97
114
2014
165
146
91
2015
2014
Gross profit on sales
2015
EBITDA
158
91
2014
2015
Normalized EBITDA
Key factors affecting the Soda segment results in H1 2015
+
Increase in the prices of soda. Increase in sales volumes as an effect of the new capacities in Poland (+60 ktpa – first stage of project SODA +200) and Romania (+60
ktpa)
Appreciation of USD, in comparison to PLN and RON, competitive prices of European manufacturers in relation to the import from North America
Increase in sales of sodium bicarbonate to more profitable customers
Decrease in purchase prices of raw materials (coal, natural gas) and furnace fuel (coke, anthracite) in Poland and Germany
Increase in the effectiveness of soda ash production process, improvement in consumption rates of raw materials and energy
–
Limited demand for soda ash light
High supply and intensive activities of competitors on the salt market, pressure on reducing prices
Decrease in electricity prices in Germany
13
Organic segment
Results of the segment, in PLNm
-6%
-2%
YTD
442,0
433,2
77,4
+5%
72,5
III Q
48,7
50,6
7
28
IV Q
51,2
11
15
154
48,7
+4%
17
12
198
18
32
217
209
225
224
2014
2015
II Q
30
23
23
46
42
26
2014
2015
2014
33
26
18
33
IQ
Revenues
Gross profit on sales
2015
EBITDA
2014
2015
Normalized EBITDA
Key factors affecting the Organic segment results in H1 2015
+
Increase in the sales volume of epoxy resins and the sales volume of saturated polyester resins, increase in sales prices of unsaturated polyester resins as a result
of the strengthening of the USD against the EUR (lower price competitiveness and decrease in demand for import from the Far East)
Good results on sale of unsaturated poliester resins. Increase in sales of more profitable products (gelcoats and topcoats). Lower prices of basic raw materials in
Q1 2015 (Styrene, Phthalic anhydride, Maleic anhydride)
Stable demand for polyurethane foams, moderate increase in the sale prices. Decrease in TDI prices
–
Decrease in the sale prices of epoxy and saturated poliester resins related to the low level of prices of raw materials. The continuing oversupply of resins from Far
East
Decrease in the sales volume of unsaturated poliester resins. Low demand from domestic building industry results in price based competition. Pressure on the
decrease in product prices despite the increase in raw materials prices in Q2 2015
Strong competition on the plant protection products market, intensive activities of new distributors, low purchasing activity of farmers (unfavourable weather
conditions)
14
Silicates and glass segment
Results of the segment, in PLNm
-46%
-55%
YTD
190,4
86,4
41,8
+6%
22,7
67
17,0
+5%
18,0
17,0
8
8
11
11
17,9
16
IV Q
III Q
99
23
84
23
IQ
37
2014
2015
Revenues
11
10
13
50
107
10
11
II Q
19
2014
10
6
8
6
7
2015
2014
2015
2014
2015
Gross profit on sales
EBITDA
Normalized EBITDA
Key factors affecting the Silicates and glass segment results in H1 2015
+
Stable demand for sodium silicates
–
No trading sales of sulphur (expiration of the contract with the Azoty Group for supplies of the product), revenues lower by 105 PLNm, EBITDA lower by 4 PLNm
Solid results on sale of glass packages
Improvement in efectiveness of production process, decrease in consumption rates of gas, decrease in rejection rate
Lower sales of potassium silicates
Increase in raw materials prices for glass manufacturing (soda ash)
15
Transport segment
Results of the segment, in PLNm
+13%
+25%
YTD
49,8
62,4
6,9
+72%
7,8
+12%
8,5
4,9
7,3
8,1
0,9
23,6
0,2
0,9
IV Q
5,4
4,7
24,8
5,4
III Q
II Q
IQ
33,5
3,5
24,8
4,3
4,0
3,5
4,1
1,1
25,1
28,8
3,5
3,8
3,8
4,2
3,8
4,1
2014
2015
2014
2015
2014
2015
2014
2015
Revenues
Gross profit on sales
EBITDA
Normalized EBITDA
Key factors affecting the Transport segment results in H1 2015
+
Takeover of coal and coke shipments for CIECH Soda Polska from third-party contractors. Takeover of railway siding service in CIECH Sarzyna
–
Lower prices for transport services due to the lack of indexation
Intensification of restructuring activities
Takeover of transport services for purchasing of raw materials
Lower level of services performed by road transport as a result of Russian embargo imposed on hauliers from European Union
16
Normalized EBITDA
Key one-off adjustments
PLNm
Q2 2015
EBITDA
Category
Sale of assets
Assets valuation
One-offs events
Profit on sale of fixed assets
Impairment of property, plant and
equipment
Valuation of investment property to fair
value
Other provsions
Provision for environmental protection
Other
Other
Normalized EBITDA
Q1 2015
Q2 2014
Q2 2015 - Q2 2014
178,2
173,1
133,4
44,7
-9,7
-19,7
-20,9
11,2
0,1
0,5
0,3
-0,1
0,0
-6,02)
-18,85)
18,8
-0,2
-6,23)
0,0
-0,2
0,0
-5,44)
-0,1
0,1
-9,71)
-2,6
-2,2
-7,5
187,9
192,8
154,3
33,6
1) Recognition of provision for VAT liabilities (CIECH Soda Romania) -5,4 PLNm, Recognition of provision for employee benefits (CIECH) -4,4 PLNm
2) Impairment of EVZA contract (CIECH Soda Deutschand) -3,9 PLN and valuation of clients database -2,0 PLNm
3) Valuation of fixed assets (CIECH Nieruchomości) -6,2 PLNm
4) Recognition of provision for environmental liabilities (CIECH Soda Deutschland) -5,3 PLNm
5) Includes write-off of interests (14,7 PLNm ) of Ciech Trading loan in Infrastruktura Kapuściska, payment of redemption premium 4,6 PLNm, write-off of
debt issuance costs 3,1 PLNm
17
Normalized EBITDA H1 2015 vs. H1 2014
Improvement of results in all key companies of CIECH Group
higher sales of
epoxides; better results
on poliester resins;
worse results on PPC
higher prices;
FX rates;lower
volumes; higher
fixed cash costs;
lower EUA prices;
lower prices of
coke and coal;
lower selling
expenses
273
Results
2014
higher prices and
volumes; lower raw
materials prices;
higher fixed costs
4
53
5
higher prices;
lower prices of
raw materials;
lower sales
volumes; lower
fixed costs
1
0
1
5
11
lower costs of
gas;
improvement in
production
effectiveness;
higher fixed costs
381
intercompany eliminations
and no trading sales of
sulphur; higher fixed cost
at CIECH
29
20
CIECH
Soda Polska
higher prices;
higher volumes;
FX rates; higher
prices of raw
materials; higher
fixed cash costs
CIECH Soda CIECH Soda CIECH
Deutschland Romania Sarzyna
CIECH
Pianki
CIECH
Vitrosilicon
CIECH
Cargo
CIECH
Transclean
CIECH
Trading
CIECH FK
and Other
Results
2015
18
Exchange rates
[PLN]
In Q2 2015 PLN slightly strenghtened against EUR (2,1 %) q-o-q*, and oraz
slightly weakened against USD (0,6 %) q-o-q*
4,5
Exposure to the exchange rate risk:
CIECH Group has long position in EUR (the net
operating exposure amounts to approx. 120 EURm
per year)
PLN/EUR
4,0
CIECH Group has long position in USD (the net
operating exposure amounts to approx. 20 USDm
per year)
3,5
A significant part of the EUR net operating
exposure is offset by the EUR bonds coupon
payments (approx. 23 EURm)
PLN/USD
3,0
2,5
IQ 2014
IQ 2014
IIQ 2014
* refers to the average F/X rate
IIIQ 2014
IVQ 2014
IQ 2015
IIQ 2015
19
Debt structure
In 2Q 2015 the cost of financing in PLN has decreased comparing to 1Q 2014 (WIBOR dropped by
0,1 p.p. q-o-q). The cost of financing in EUR was stable
0%
Exposure to the interest rate risk:
6%
13%
approximately 81% of the debt as of June 30th 2015 (HY bonds
denominated in EUR) was based on fixed interest rate
approximately 13% of the debt as of June 30th 2015 (bonds
denominated in PLN) was based on floating interest rate
(WIBOR 6M)
available revolving facility (100 PLNm limit) was based on
floating interest rate (WIBOR 1M, 3M or 6M) undrawn as of
June 30th 2015
81%
bonds PLN
bonds HY
overdraft EUR
overdraft PLN
approximately 6% of the debt as of June 30th 2015 (overdrafts
with 20 EURm limit) was based in floating interest rate
(EURIBOR 1M), drawn in the amount of 17,4 EURm
20
Financial activity and net debt
Leverage of CIECH Group on a stable and secure level
PLNm
Q2 2015 Q1 2015 Q2 2014
Result on financial activity
-15
-47
-60
Regular financial activities
-11
-46
-34
Currency translation differences
131)
-202)
-5
Borrowings costs
-24
-26
-30
0
0
1
Interest on receivables and liabilities
-4
-2
-263)
1 214
1 195
1 097
Net debt/Normalized EBITDA
2,0
2,0
2,3
OCF
58
144
156
FCF*
-31
28
95
Other
Net debt
Net debt (PLNm)
and net debt/EBITDA ratio
1 600
3,9
4,0
3,5
1 400
1 200
3,0
2,7
2,3
1 000
2,0
800
600
2,0
2,0
1 479
1 261
1 213
1 182
1 195
1 214
400
1,0
200
0
0,0
2011
2012
2013
2014
2015 Q1 2015 Q2
1) Includes 6,0 PLNm of currency translation differencies of CIECH loan in CIECH Soda Deutschland, 2,5 PLNm revaluation of receivables in foreign currencies, 2,0
PLNm revaluation of liabilities in foreign currencies
2) Includes 13,3 PLNm of currency translation differencies of CIECH loan in CIECH Soda Deutschland, 3,4 PLNm revaluation of reveivables in EUR
3) Includes write-off of interests (14,7 PLNm ) of Ciech Trading loan in Infrastruktura Kapuściska, payment of redemption premium 4,6 PLNm, write-off of debt
issuance costs 3,1 PLNm
* Cash Flow from operating and investment activities
21
Thank you for your attention
phot. CIECH Cargo
Legal disclaimers
This presentation have been prepared solely for informational purposes, contains summary information only and does not purport to be comprehensive
and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. CIECH S.A. makes no representation or
warranty (express or implied), and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained
herein. CIECH S.A. assumes no liability whatsoever as to any errors, omissions or misstatements contained herein. This presentation contains information
that is based on sources that CIECH S.A. considers to be reliable and accurate, but no representation or warranty (express or implied) is given that such
information is accurate, fair or complete.
This presentation does not constitute an advertisement or offer of any securities in public trading.
This document may contain statements concerning the future which constitute an investment risk or source of uncertainty and may be considerably
different from the actual results.
CIECH SA shall not be liable for the effects of decisions made on the basis of this document. Such liability rests exclusively upon the user of the document.
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from CIECH SA.
Not for release, publication or distribution, directly or indirectly, in whole or in part, in or into the United States of America, Australia, Canada or Japan.