SIBUR REPORTS 3Q AND 9M 2018 IFRS RESULTS

Moscow, 1 November 2018. PAO SIBUR Holding, an integrated petrochemicals company, today publishes its operational and financial results for the third quarter and nine months ended 30 September 2018 in accordance with International Financial Reporting Standards (IFRS).

3Q 2018 Operational and financial highlights

• Polypropylene sales volumes grew by 3.3% year-on-year
• Polyethylene sales volumes decreased by 17% year-on-year
• Plastics and organic synthesis products sales volumes increased by 18.0% year-on-year
• Naphtha sales rose by 22.5% year-on-year
• EBITDA increased by 49.9% year-on-year, with an EBITDA margin of 39.0%
• Revenue grew by 38.8% year-on-year due to positive price developments and higher sales volumes across most of the product mix

9M 2018 Operational and financial highlights

• Substantial progress on ZapSibNeftekhim construction: as of 30 September 2018, the project was 89% complete, compared to 71% as of 1 January 2018
• Polypropylene sales volumes grew by 4.6% year-on-year
• Plastics and organic synthesis products sales volumes increased by 2.4% year-on-year
• Gas fractionation volumes rose by 3.4%^([1]) year-on-year
• LPG sales volumes increased by 10.0% year-on-year
• EBITDA was 29.6% higher year-on-year
• Revenue grew by 27.6% year-on-year due to positive price developments and increase in sales volumes across most of the product mix

Dmitry Konov, Chairman of the Management Board of SIBUR Holding, said:

“In the first nine months of 2018, the Company delivered strong operational and financial results on the back of continued implementation of our strategy focused on boosting the production of cutting-edge products with high added value. Continuing growth of demand for petrochemicals has helped the Company increase sales volumes. In 9M 2018, SIBUR’s EBITDA almost reached the FY2017 result. As regards the construction of ZapSibNeftekhim, one of the largest global petrochemical complexes, it is going ahead of schedule.”

Operational results

In the first nine months of 2018, SIBUR’s gas processing plants (GPPs) processed 16.4 billion cubic metres^([2]) of APG, almost on a par year-on-year. As a result, natural gas output totalled 14.3 billion cubic metres⁽²⁾. Raw NGL fractionation volumes increased by 3.4% year-on-year to 5.7 million tonnes⁽¹⁾. Additional volumes contributed to the increase in LPG sales volumes by 10.0% year-on-year to 3.9 million tonnes. Natural gas sales volumes stayed flat and totalled 13.7 billion cubic metres.

Continuing growth of demand for petrochemicals helped increase sales volumes of most products in this segment year-on-year. Sales volumes of polypropylene increased by 4.6% year-on-year to 452 thousand tonnes. Sales volumes of polyethylene (LDPE) decreased by 4.0% to 194 thousand tonnes due to scheduled maintenance shutdown at the site in Tomsk. Sales volumes of plastics and organic synthesis products increased by 2.4% to 597 thousand tonnes as a result of higher alcohols and polystyrene production due to a two-year maintenance cycle at our production site in Perm in 2017. Sales volumes of elastomers increased by 0.8% year-on-year to 364 thousand tonnes.

Financial results

In the first nine months of 2018, revenue increased by 27.6% year-on-year to RUB 414.0 billion with the following dynamics across the segments:

• Olefins & Polyolefins revenue increased by 16.4% year-on-year to RUB 74.9 billion mainly due to positive market prices dynamics for PP, BOPP films and ethylene, and following the launch of new facilities as well as expansion of existing facilities. Revenue growth was partially offset by a slight decline in revenue from polyethylene sales.
• Plastics, Elastomers & Intermediates revenue increased by 13.3% to RUB 124.8 billion, largely due to positive pricing for plastics and organic synthesis products, as well as MTBE and high capacity utilisation of the new thermoplastic elastomers production facility.
• Overall growth was driven primarily by the strong performance of the Midstream segment, where revenue increased by 36.5% to RUB 174.1 billion largely due to higher LPG and Naphtha prices compared to the same period in 2017.

EBITDA increased by 29.6% to RUB 150.2 billion, due to an increase in EBITDA in the Midstream and the Plastics, Elastomers & Intermediates segments. This was partially offset by the decrease in EBITDA from the Olefins & Polyolefins segment as prices for feedstock increased faster than the prices for end-products.

Net profit decreased by 10.7% year-on-year to RUB 82.9 billion largely on the back of a substantial forex loss incurred due to the depreciation of the ruble against the euro and US dollar and revaluation of the Company’s FX-denominated debt in the first nine months of 2018 versus a gain on the disposal of Uralorgsintez recorded in the respective period of 2017.

Capital expenditure⁽³⁾ increased by 20.8% year-on-year to RUB 104.9 billion due to an increase in ZapSib related financing. Overall progress on the project increased from 71% as of 1 January 2018 to 89% as of 30 September 2018. As of 30 September 2018, investment in the project totalled RUB 377 billion, or approximately USD 6.3 billion.

Borrowings

As of 30 September 2018, total debt amounted to RUB 323 billion, an increase of 3.4% compared to 31 December 2017. The increase was attributable to new drawdowns of ZapSib related financing, as well as to the depreciation of the Russian ruble against the euro and US dollar. The increase in total debt was partially compensated by a decrease in debt not related to ZapSib.

SIBUR’s net debt⁽⁴⁾ increased by 15.1% to RUB 303.8 billion as of  30 September 2018.

As of 30 September 2018, the net debt to EBITDA ratio was 1.6х. 

The full version of the Consolidated Interim Condensed Financial Information (unaudited) as of and for the nine months ended 30 September 2018 in accordance with International Financial Reporting Standards (IFRS) is available on our website http://investors.sibur.com/results-centre/financial-results.aspx?sc_lang=ru-RU)

About SIBUR

SIBUR is the leader in the Russian petrochemicals industry and one of the largest companies globally in this sector. More than 27,000 employees work in SIBUR. The Company’s uniquely positioned vertically integrated business model allows it to create highly competitive products that contribute to the success of customers engaged in the chemical, fast moving consumer goods (FMCG), automotive, construction, energy and other industries in 80 countries worldwide.

SIBUR helps reduce CO2 emissions stemming from the burning of by-products of oil extraction, such as associated petroleum gas (APG), by recycling them instead. In 2017, SIBUR processed 22.8 billion cubic metres of APG thus cutting greenhouse emissions by 72 million tonnes, which is equivalent to the annual CO2 footprint of a middle-sized European country. In 2017, SIBUR reported revenue of USD 7.8 billion and adjusted EBITDA of USD 2.9 billion.

¹ Including volumes processed at third-party capacities and excluding third-party volumes processed at SIBUR’s capacities

² Excluding third-party volumes processed at SIBUR’s capacities

³ Including acquisition of primary assets, intangibles and other noncurrent assets

⁴ Net debt is calculated as total debt less cash and cash equivalents