Investor Presentation - Mexichem Statements In addition to historical information, this presentation...
Transcript of Investor Presentation - Mexichem Statements In addition to historical information, this presentation...
Forward-Looking Statements
In addition to historical information, this presentation
contains "forward-looking" statements that reflect
management's expectations for the future. The words
“anticipate,” “believe,” “expect,” “hope,” “have the intention
of,” “might,” “plan,” “should” and similar expressions
generally indicate comments on expectations. The final
results may be materially different from current expectations
due to several factors, which include, but are not limited to,
global and local changes in politics, the economy, business,
competition, market and regulatory factors, cyclical trends in
relevant sectors; as well as other factors that are highlighted
under the title “Risk Factors” on the annual report submitted
by Mexichem to the Mexican National Banking and
Securities Commission (CNBV).
The forward-looking statements included herein represent
Mexichem’s views as of the date of this press release.
Mexichem undertakes no obligation to revise or update
publicly any forward-looking statement for any reason unless
required by law.”
Mexichem has implemented a new Code of Ethics that rules
its relationships with its employees, clients, suppliers and
general groups. Mexichem’s Code of Ethics is available for
consulting in the following link:
http://www.mexichem.com/Codigo_de_etica.html.
Additionally, according to the terms contained in the
Securities Exchange Act No 42, Mexichem Audit Committee
established a mechanism of contact, which allows that any
person that knows the unfulfilment of operational and
accounting records guidelines and lack of internal controls of
the Code of Ethics, from the Company itself or from the
subsidiaries that this controls, file a complaint which is
anonymously guaranteed. The whistleblower program is
facilitated by a third party. The telephone number in Mexico
is 01-800-062-12-03.
The website is: http://www.ethic-line.com/mexichem
and contact e-mail is: [email protected].
Mexichem’s Audit Committee will be notified of all complaints
for immediate investigation.
2
Fourth Quarter 2015 represented a strong finish to the year
The Company demonstrated substantial resilience to major headwinds facing global industrials:
Currency Fluctuations
Volatility in Oil Prices
Recent acquisitions: Dura-Line (U.S.) and Vestolit (Germany) performed above projections
Joint Ventures (PMV with PEMEX) and the Ethylene Cracker (with OxyChem) remain on schedule and on budget – bringing Mexichem significant vertical integration
2015 accomplishments set the stage for continued profits in 2016 and beyond
3
Strategic Highlights: 2015
4
MEXICHEM TODAY
2
10
1
312(1)
167
MEXICHEM IN 2003
>30
>120
16
>4,600
18x
1,800 >18,000
Notes:
1. Reported figures under Mexican FRS and converted into dollars using an FX of 10.8 MXN/USD
2. 2003 market cap figures as of 12/31/2003; Market cap as of 12/31/2015
Company Overview: Mexichem by the Numbers Major Transformation Over Last 12 Years
Countries
Facilities
R&D centers
Employees
Revenues
50(1) 905
5,708
EBITDA
Market Cap(2)
18x
28x (2)
Mexichem at a Glance Global Leader in the Chemicals and Plastics Markets
5
Notes:
Revenues and EBITDA margin correspond to 2015; Figures before intercompany eliminations
Fluent
● Pipes and fittings
● Irrigation systems
● Datacom
Fluor ● Fluorspar
● Hydrofluoric acid
● Refrigerants
● Aluminum fluoride
Joint Venture
with
Joint Venture
with
Fluor
Value Chain
Ehylene
Value Chain
Revenuesl: $608 mm
EBITDA margin: 40%
Revenues: $2,140 mm
EBITDA margin: 15%
Revenues: $3,123 mm
EBITDA margin: 13%
Vinyl ● PVC & Specialty resins
● Compounds & plastifiers
● Derivatives
Mexichem Energy
Company Overview Track Record of Strategic Acquisitions
6
50 72 189 228
392 472 457 645
830 962 899 821 905
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: Company filings, public information and CapIQ as of 12/31/2014
Fluorita de Rio Verde
Quimica Fluor
43% of Mexichem (Camesa subsidiary)
Camesa trade name becomes Mexichem
EBITDA (US$mm)
Specialty PVC resins
Fluorita de Mexico
Market performance
Shareholders’ return
• 5yrs: 38.4%
• 10yrs: 1,750.0%
7
To Pipes and End-Products From Chemicals
Company Overview: Mexichem by the Numbers Major Transformation Over Last 4 Years
Sales
EBITDA
46% 34% 33% 33% 36%
20%
16% 12% 11% 10%
34% 49% 55% 56% 53%
2011 2012 2013 2014 LTM15
Vinyl Fluor Fluent
2015
38% 31% 33% 26% 35%
39% 36% 27% 31% 27%
29% 34% 42% 44% 45%
2011 2012 2013 2014 2015
Vinyl Fluor Fluent Holding
2015
EBITDA 2011 vs 2015 ($m)
Source: EBITDA as reported 2011 and 2015 figures
$196
$49
$70
$38
$26
$3
$-
$50
$100
$150
$200
$250
$300
$350
2011 2015
FluorDownstream
Brazil
Venezuela
- $202m
% from Mexichem EBITDA 35% 10%
8
Company Overview: Mexichem by the Numbers Mexichem’s EBITDA 2015 is highly affected by $202 million in comparison with 2011 by FX and market conditions on Fluor (downstream), Brazil and Venezuela
Highlights
9
1.
Vertical
Integration:
Ensuring Supply of
raw material +
Building Specialty
Product Portfolio
2.
Margin - Versus
Volume – Driven
3.
Mexichem’s Growth
Model:
Presence by
Industry and
Specific Markets
4.
Strong Financial
Position
5.
Focused
Leadership
Through
Collaboration &
Simplicity
1. Vertical Integration Ensuring Supply to Mitigate Volatility & Increase Cost Competitiveness
10
Ethylene Chain Overview
- One of the largest PVC resin and one of the leading piping player worldwide
1B - Margin/Value Added
1A - Cost and Supply
Salt
Ethane
Chlorine &
Caustic
PVC Resin
Compounds
Mexichem products
+ – VERTICAL INTEGRATION THROUGHOUT THE VALUE CHAIN
VOLATILITY
Ethylene
VCM Fluent
Specialty Resin
On-going joint ventures / announced acquisitions
1.Vertical Integration: Ethylene Ethylene is our Most Important Raw Material
11
1B - Margin/Value Added
1A - Cost and Supply
Ethylene Price Components
Ethane
27%
Others
10% Ethylene Margin
63%
Ethylene Cracker + PMV Joint Venture =
90% of the Vinyl Group’s Ethylene
Supply*
December 2014
December 2015
Others
10%
Ethane
57% Ethylene Margin
34%
Source: Company fillings, *Once PMV and Ethylene cracker are fully operational.
12
Source: IHS Chemical
1B - Margin/Value Added
1A - Cost and Supply
1.Vertical Integration: Ethylene Worldwide Ethylene Cash Costs: Amid Oil Price Declines, North America Is
The Most Profitable Region to Produce Ethylene
1. Building Specialty Products Portfolio Acquisition of Vestolit (in Vinyl)
13
Vestolit Overview
• Europe’s 6th largest PVC manufacturer
‒ Focused on specialty products
• Europe’s only manufacturer of High Impact
Suspension PVC for weather-resistant windows
• Europe’s second-largest producer of paste PVC
for floors and wallpapers, among others
• Total installed PVC capacity is 415 KTon / yr
• Vertical integration from Salt, Chlorine and VCM
through Specialty PVC resin
RATIONALE
• Integrate higher value-added products
• Synergies with PolyOne acquisition and Pemex JV
Salt
Ethane
Chlorine &
Caustic
Ethylene
VCM PVC Resin
Compounds Fluent Specialty
1B – Margin/Value Added
1A – Cost and Supply
14
389 364
280
170 150
130 112
100 100 100 100
Vinnolit Mexichem Solvay TianjinBohai
Chemical
ShenyangChemical
CNSGAnhui Hong
Sifang
KEM ONE Hanwha FPC YidongGroup
TianyeGroup
Source: IHS & Global Paste PVC Resin Industry Report 2014
1. Building Specialty Products Portfolio Specialty PVC Resins Producers Worldwide (Kton)
1B – Margin/Value Added
1A – Cost and Supply
1. Building Specialty Products Portfolio Acquisition of Dura-Line (in Fluent)
15
Dura-Line Overview
• Global leader in high-density polyethylene
(HDPE) conduit, duct and pressure-pipe
solutions
• Applications: telecom / data communications,
energy and infrastructure industries
• Manufacturing facilities: North America (US &
Mexico), India, Oman, Europe, and South Africa
• Benefits from Dura-Line’s product segments and
global footprint:
‒ Technology, market position and blue-chip
customers will allow Mexichem’s expansion
in these segments
‒ Platform for Mexichem’s products in new
geographies
Rationale
• Integrate high value-added polyethylene
products
• Enter growth markets
Salt
Ethane
Chlorine &
Caustic
Ethylene
VCM PVC Resin
Compounds Fluent Specialty
1B – Margin/Value Added
1A – Cost and Supply
Highlights
16
1.
Vertical Integration:
Ensuring Supply +
Building Specialty
Product Portfolio
2.
Margin - Versus
Volume – Driven
3.
Mexichem’s Growth
Model:
Presence by
Industry and
Specific Markets
4.
Strong Financial
Position
5.
Focused
Leadership
Through
Collaboration &
Simplicity
2. Margin Growth vs Volume Growth
17
• In May 2012, Mexichem acquired Wavin
• The leading supplier of pipe systems and solutions in Europe
• Complete portfolio for Above Ground and Below Ground Systems
• Business drivers: energy efficiency, material & resources, climate change
• Successful restructuring of operations in less than two years
‒ Cost rationalization strategy: closed 11 plants to focus on most profitable operations
‒ EBTIDA margin improvement from 2.5% in 2012 to 10% in 2015 (>4.0x increase) amid virtually flat revenue growth
Fluent Europe Revenues in EUR and in USD ($MM)
Fluent Europe EBITDA Margin(1)
(% of Total Revenue)
Note:
1. EBITDA figures exclude restructuring costs and a benefit of US$17MM in 4Q13
1,582 1,544 1,594
1,310 1,232 1,164 1,197 1,180
-
500
1,000
1,500
2,000
2012 2013 2014 2015
USD EUR
4.3%
10.3%
12.0%
2.8%
5.5%
11.2%
7.6%*
5.7% 6.1%
12.4%
14.5%
9.4%
Q1 Q2 Q3 Q4
2013 2014 2015
Sequential
improvement
18
Fluorspar
Sulphuric
Acid
HF
Aluminum
Fluoride
Refrigerant
Gases
2. Margin Growth vs Volume Growth
80%
12%
8% Gases –
134a
Gases –
Medical
Fluorspar,
HF & ALF3
0%
20%
40%
60%
80%
100%
2014 2015
Cement Steel & Others
15% 30%
Fluor EBITDA by Product (2015)
Metallurgic Fluorspar Sales Volume
($MM)
(% of total contribution)
• Fluor Business Group is focus to increase its presence on:
• Cement industry in upstream
• Medical applications in downstream
• Largest fluorspar mine in the world in one site
• Production of ~20% of global fluorspar needs and proven reserves for the next 40 years
• Mexichem has developed Fluorine-based solutions for the cement industry to optimize clinker production
• Only non-Chinese, fully vertical integrated producer of refrigerant gases
• The leading manufacturer and supplier of medical propellants:
• Around 100 million people uses propelled with Zephex®
• Propellant for 85% of the world’s metered dose inhalers
Highlights
19
1.
Vertical Integration:
Ensuring Supply +
Building Specialty
Product Portfolio
2.
Margin - Versus
Volume – Driven
3.
Mexichem’s
Growth Model:
Presence by
Industry and
Specific Markets
4.
Strong Financial
Position
5.
Focused
Leadership
Through
Collaboration &
Simplicity
20
South America
23%
Europe
35%
USA
16%
AMEA
3%
MEX & Cent.Am
23%
3. Mexichem’s Growth Model Total Sales Distribution by Region (all in USD terms)
• Our presence in >30 countries (mainly through our Fluent business) can be used as a growth platform for all our products
• Given our existing presence and potential future growth opportunities, Mexichem has identified 5 countries and 3 regions where our growth strategy will be uniquely focused:
Countries
– India
– United States
– Brazil
– Turkey
– Colombia
Regions
– Southeast Asia
– Africa
– ME
21
3. Mexichem’s Growth Model Mexichem has over 30 avenues for growth worldwide
Compounds
General Resins
Specialty Resins
Fluorspar (Met)
Chemicals
Refrigerants
Medical
H&C
Datacom
Geotextiles
Irrigation
(Mexico)
(México)
(UK)
(UK)
(Netherlands)
(USA)
(Colombia)
(Guatemala)
Category Global Expert
(Mexico)
(Colombia)
Fluent
Fluor
Vinyl 1
2
3
Business Group
Translate the strategy in Business
Case + Commercial Execution
Develop Business Case with Country
Head + Know How
Role Accountabilities P&L will be rolled up under both
parties to incentive businesses
and tracking
Results
3. Mexichem’s Growth Model Global Experts will foster and prioritize for growth in their categories, based on
the strategic plan
22
Highlights
23
1.
Vertical Integration:
Ensuring Supply +
Building Specialty
Product Portfolio
2.
Margin - Versus
Volume – Driven
3.
Mexichem’s Growth
Model:
Presence by
Industry and
Specific Markets
4.
Strong Financial
Position
5.
Focused
Leadership
Through
Collaboration &
Simplicity
• On a constant currency basis excluding restructuring charges:
Revenues and EBITDA would have increased 13% and 22%, respectively
24
4. Strong Financial Position Summary of 2015 Results
0 47 18
83
924
400
750
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2042 2044
Bank debt Debt Securities
4. Manageable Debt Profile and Long-Term Maturity Profile
25
Comfortable Debt Amortization Profile US$MM, as of December 31, 2015
More than 98% of
debt in long term
Conservative Leverage Ratios Most Debt at HoldCo Level
91%
4% 4% 1%
Holding Vinyl Fluor Fluent
Debt by Division (2015)
Alignment of Debt to Revenue Currency
Debt by Currency
(2015)
1.8x
2.4x 2.4x
2.7x 2.6x
1.1x
0.7x
1.0x
2.0x
1.9x
2011 2012 2013 2014 2015
Total Debt / EBITDA Net Debt / EBITDA
Self Imposed target of 2.0x over
medium term
58%
34%
8%
US$ Euro Others
• US$1.5B revolving credit facility (100% available)
Source: Company filings
Fitch Ratings BBB
S&P BBB-
Moody’s Baa3
4. Stable Financial Performance
Consistent Revenue Growth; and EBITDA Resilience Despite Industry Cyclicality
(US$MM)
3,846
4,7685,177
5,549 5,708
830 962 899 821 905
0
2,000
4,000
6,000
2011 2012 2013 2014 2015
4. Consistent Investment in New Projects
27
Market
VCM
Ethane
Ethylene Salt
Chlorine
Caustic
PVC
~56% ~44%
+ = Ingleside
Cracker
OxyChem
Ingleside
VCM Facility
Mexichem
PVC Facilities
Ethylene VCM
JV with Oxychem to Build an Ethylene
Cracker
JV with PEMEX(1) to Produce Ethylene and VCM Capture the shale gas opportunity as a competitive advantage of NA
$173 $252 $276 $231 $276
$322
$725 $532
$1,061
$390
2011 2012 2013 2014 2015
Non M&A M&A CAPEX (incl. JV's)
$666
$1,292
$808 $977
$495
Capex (US$MM)
Note:
1. PEMEX’s contribution corresponds to part of Complejo Pajaritos
50%/50%
Operating Cash Flow before CAPEX/ EBITDA
4. Strong Cash Flow Conversion
28
(US$MM)
Source: Company filings, * Including discontinued operations in UK and Rumania
65%
78%
86%
99%
2012 2013 2014* 2015*
-121 -108 -107 -108 -119 -120
-133
67 60 62 62 60 57 56
53 58 59 60 59 55 46
dec-14 mar-15 apr-15 may-15 jun-15 sep-15 dec-15
Cash Conversion Cycle
4. Working Capital Cycle
29
Days Payables
Outstanding
Days Inventory
Outstanding
Days Sales
Outstanding
Source: Company filings
(Days)
-1 10 8 -1 0 -8
-31 -
Highlights
30
1.
Vertical Integration:
Ensuring Supply +
Building Specialty
Product Portfolio
2.
Margin - Versus
Volume – Driven
3.
Mexichem’s Growth
Model:
Presence by
Industry and
Specific Markets
4.
Strong Financial
Position
5.
Focused
Leadership
Through
Collaboration &
Simplicity
31
South America
+7,000
USA
+2,000
AMEA
+30
MEX & Cent.Am
+3,000
Europe
+6,000
5. Focused Leadership Through Collaboration More than >18,000 employees
5. Focused leadership Through Collaboration
32
A. Carrillo CEO
P. Chari President, Fluent
Business Group
>30
>35
R.Guzmán CFO
M. Roef President, Fluent
Europe
>25
>25
A. Soto General Counsel
V. Aguilera President, Fluent
LatAm
>20
>35
A. Rodríguez Corporate VP, HR
G. Álvarez VP Energy
Business Group
>20
15
A. Mugica President, Fluor
Business Group
>25
>20
C. Manrique President, Vinyl
Business Group
JL. Guzmán VP Corporate
Internal Audit
>30
>20
~20 years of professional experience
Pedro Martínez VP IT
>18
Source: IHS (formerly CMAI)
0
20
40
60
80
100
120
0
500
1,000
1,500
2,000
Jan-2
01
0
Mar-
2010
May-2
010
Jul-201
0
Sep-2
01
0
Nov-2
010
Jan-2
01
1
Mar-
2011
May-2
011
Jul-201
1
Sep-2
01
1
Nov-2
011
Jan-2
01
2
Mar-
2012
May-2
012
Jul-201
2
Sep-2
01
2
Nov-2
012
Jan-2
01
3
Mar-
2013
May-2
013
Jul-201
3
Sep-2
01
3
Nov-2
013
Jan-2
01
4
Mar-
2014
May-2
014
Jul-201
4
Sep-2
01
4
Nov-2
014
Jan-2
01
5
Mar-
2015
May-2
015
Jul-201
5
Sep-2
01
5
Nov-2
015
Ethylene-Spot USA (Left) PVC Export USA (Left) Crude Oil WTI (Right)
1. Vertical Integration: Tested in 4Q14 Prices of oil and ethylene falling rapidly
35
EBITDA** without FX in 4Q14, and non recurrent effects of 4Q13
64
22
4Q13 4Q14
66
4Q13 4Q14
Vinyl Business Group
Resins, compounds & derivatives EBITDA USD$MM
~30M USD 66% 59%
Salt
Ethane
Chlorine &
Caustic
Ethylene
VCM PVC Resin
Compounds Fluent Specialty
1B – Margin/Value Added
1A – Cost and Supply
USD/ ton USD/ barrel
Fluent Business Group EBITDA* USD$MM
5%
8%
14% 10%
Source: IHS (formerly CMAI)
0
20
40
60
80
100
120
0
500
1,000
1,500
2,000
Jan-2
01
0
Mar-
2010
May-2
010
Jul-201
0
Sep-2
01
0
Nov-2
010
Jan-2
01
1
Mar-
2011
May-2
011
Jul-201
1
Sep-2
01
1
Nov-2
011
Jan-2
01
2
Mar-
2012
May-2
012
Jul-201
2
Sep-2
01
2
Nov-2
012
Jan-2
01
3
Mar-
2013
May-2
013
Jul-201
3
Sep-2
01
3
Nov-2
013
Jan-2
01
4
Mar-
2014
May-2
014
Jul-201
4
Sep-2
01
4
Nov-2
014
Jan-2
01
5
Mar-
2015
May-2
015
Jul-201
5
Sep-2
01
5
Nov-2
015
Ethylene-Spot USA (Left) PVC Export USA (Left) Crude Oil WTI (Right)
1. Vertical Integration: Margin Expansions in 4Q15 Prices of oil, ethylene and PVC resins
36
22
74
0
100
4Q14 4Q15
66
83
0
100
4Q14 4Q15
Vinyl Business Group
Positive performance on PMV + Resins, compounds & derivatives EBITDA* USD$MM
5% 26%
15% 244%
Fluent Business Group
Amid FX fluctuations, EBITDA margin expansions EBITDA* USD$MM 12%
8%
Salt
Ethane
Chlorine &
Caustic
Ethylene
VCM PVC Resin
Compounds Fluent Specialty
USD/ ton USD/ barrel
Ethylene Prices Worldwide
37
Source: IHS
Monthly World Ethylene Price – US$ per Metric Ton Last Update Date -14 /02 /2016
400
600
800
1,000
1,200
1,400
1,600
1,800
20
12
-11
20
12
-12
20
13
-01
20
13
-02
20
13
-03
20
13
-04
20
13
-05
20
13
-06
20
13
-07
20
13
-08
20
13
-09
20
13
-10
20
13
-11
20
13
-12
20
14
-01
20
14
-02
20
14
-03
20
14
-04
20
14
-05
20
14
-06
20
14
-07
20
14
-08
20
14
-09
20
14
-10
20
14
-11
20
14
-12
20
15
-01
20
15
-02
20
15
-03
20
15
-04
20
15
-05
20
15
-06
20
15
-07
20
15
-08
20
15
-09
20
15
-10
20
15
-11
20
15
-12
20
16
-01
20
16
-02
20
16
-03
20
16
-04
20
16
-05
20
16
-06
20
16
-07
20
16
-08
20
16
-09
20
16
-10
20
16
-11
20
16
-12
Pri
ce
Ethylene, Contract-Net Transaction Pipeline, Delivered US Gulf Coast Ethylene, Spot Pipeline, Average, Delivered US Gulf Coast
FORECAST
USD/ ton
3. Mexichem’s Markets and Product Categories
38
Fluor
Product Categories Examples
Vinyl
Fluent
• Fluorspar Met Grade
• Fluorspar Acid Grade
• Hydrofluoric Acid
• Anhydrite
• Aluminum Fluoride
• Refrigerants
• Technical propellants
• Medical propellants
Business units
• Base Chemicals
• Specialty Resins
• PVC Resins
• Compounds
• PA & Plasticizers
• Phosphates
• Other Chemicals
• Pipes & Fittings (PVC,
Polyethylene,
Polypropylene)
• Geosynthetics (woven &
non-woven)
• Irrigation systems
• Datacom & Infrastructure
Source: Company fillings, Markets as % of revenues of 2015
Markets Served
6%
57% 13%
4%
9% 6%
4% Medical
Refrigeration & Technical
propellants
Air Conditioning
3% 4%
4%
67%
13% 1% Automotive
Industrial
37%
38%
5%
13% 8%
Telecom
Oil & Gas
Infrastructure
Housing
Chemicals
Building & Construction
Agricultural
7% Wire and Cable
Paints
Aluminum
Home. lawn & garden
Medical
Wholesalers 46%
Building Contractors
17%
Retail 27%
End Users 4%
Governmental Institutions
2% Other 4%
LatAm
Salt
Ethane
Chlorine &
Caustic
Ethylene
VCM PVC Resin
Compounds Specialty
Fluent
Specific Markets: Sales by Distribution Channel
39
Wholesalers 78%
Building Contractors
12%
Retail 4%
End Users 0%
Governmental Institutions
2% Other 4%
Europe
3. Mexichem’s Markets and Product Categories
39
Source: Company fillings, Information as of 2015
Vertical Integration: Fluor Chain
40
60% Sold to Market
40% Sold to Market 100% Sold to Market
100% Sold to Market
Fluorspar
Sulphuric
Acid
HF
Aluminum Fluoride
Refrigerant
Gases
Strategy:
Downstream integration to
higher value added
products
Current products Future products
+ – VERTICAL INTEGRATION THROUGHOUT THE VALUE CHAIN
VOLATILITY
Source: Company filings