SIBUR REPORTS 9M 2019 IFRS RESULTS

Moscow, 29 October 2019. PAO SIBUR Holding, an integrated petrochemicals company, today publishes its operational and financial results for the nine months ended 30 September 2019 in accordance with International Financial Reporting Standards (IFRS).

Key highlights and corporate developments:

• Revenue decreased by 4.5% due to negative dynamics in the Plastics, Elastomers & Intermediates segment, as well as in the Midstream segment. This decline was driven by unfavourable global market conditions. Revenue growth in the Olefins & Polyolefins segment partially offset the decline in overall revenue.
• The EBITDA margin was 32%, remaining at a consistently high level against the industry average.
• EBITDA decreased by 16% and amounted to RUB 126 billion, primarily on the back of weaker results in the Midstream segment, as well as in the Plastics, Elastomers & Intermediates segment. This effect was partially offset by stronger results in the Olefins & Polyolefins segment, whose EBITDA increased by 18.8%.
• Net profit increased by 24.4% to RUB 103.2 billion, mainly due to the revaluation of the Company’s FX-denominated debt.
• Debt balance increased by 17.1% to RUB 389.2 billion from RUB 332.4 billion as of 31 December 2018. This higher debt balance was driven by further drawdowns of open credit lines for financing the ZapSibNeftekhim project and partial utilisation of proceeds from the new Eurobond issue, as well as by recognition of lease obligations as part of financial liabilities in accordance with the newly adopted IFRS 16 “Leases” starting 1 January 2019.
• Net debt/EBITDA was 2.1x, up from 1.6x as of 31 December 2018 as a result of a higher net debt position and lower financial results in the reporting period.
• The ZapSibNeftekhim complex is nearing the completion of its commissioning and start-up phase: test volumes of polypropylene and polyethylene are being produced from the plant’s own cracker feedstock mix.
• SIBUR’s subsidiary BIAXPLEN purchased a 50% stake in Manucor S.p.A., a European producer of BOPP film.
• SIBUR and Sinopec agreed on the creation of a JV in China to produce nitrile butadiene rubber (NBR) at a capacity of 50 thousand tonnes per annum. SIBUR and Sinopec’s shares in the enterprise will amount to 40% and 60%, respectively.
• SIBUR and Gazprom signed a preliminary agreement setting out the key commercial terms for the supply of liquefied petroleum gas (LPG) from Gazprom’s Amur Gas Processing Plant (GPP) to SIBUR’s Amur Gas Chemical Complex (GCC). According to the agreement, Gazprom will supply annually 1.5 million tonnes of LPG and ethane fraction to the Amur GCC at formula-based prices.

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

“The flexibility of SIBUR’s business model, which we achieved through the development of mutually complementary businesses, has ensured the Company’s strong financial results and allows it to demonstrate a stable operating margin in today’s challenging global market conditions. At present, there is pressure on the prices of key industry products amid the US-China trade war, as well as a slowdown in the global economy. I would like to note that, even in the current conditions, SIBUR remains one of the most profitable petrochemical companies in the world: its EBITDA margin is consistently higher than the industry average. SIBUR’s strategic ZapSibNeftekhim project is completing its commissioning and start-up phase; test volumes of polypropylene and polyethylene are being successfully produced from our own cracker feedstock. At this early stage, we are already seeing positive effects that promise to generate significant sales growth after the project launch. In addition, we successfully placed Eurobond issue in Q3 that allowed the Company to raise funds from a wide pool of global investors. These will be used to further implement our growth strategy and refinance the Company’s debt portfolio.”

Operating results

In 9M 2019, SIBUR’s gas processing plants (GPPs) processed 16.7 billion cubic metres⁽¹⁾ of APG, an increase of 1.8% year-on-year. As a result, dry stripped gas (DSG) output totalled 14.5 billion cubic metres⁽¹⁾. Raw NGL fractionation volumes increased by 0.4% year-on-year to 5.7 million tonnes⁽²⁾.

SIBUR increased the sales volumes for the majority of its products in the petrochemicals segments, as well as the Midstream segment, in comparison with the same period of 2018.

Financial results

In 9M 2019, revenue decreased by 4.5% year-on-year to RUB 395.4 billion, with the following dynamics across business segments:

Olefins & Polyolefins revenue increased by 4% year-on-year to RUB 77.9 billion as a result of sales growth accompanied by a weak pricing environment in rouble terms for several products in the segment.

Plastics, Elastomers & Intermediates revenue decreased by 6.1% year-on-year to RUB 117.1 billion, largely due to lower selling prices in rouble terms for the majority of the product mix and a reduction in MTBE purchases for resale.

Midstream revenue decreased by 6.6% to RUB 162.6 billion on the back of lower LPG and naphtha prices.

EBITDA decreased by 16.0% to RUB 126.2 billion as a result of a 20.0% decline in EBITDA in the Midstream segment. The latter was caused by a drop in LPG and naphtha prices, as well as a decline in operating results for the Plastics, Elastomers & Intermediates segment against the background of narrowing spreads, growth in fixed costs, and an increase in the volume of external purchases of TFK during the expansion of capacities in Blagoveshchensk (Bashkortostan).

Net profit increased by 24.4% to RUB 103.2 billion, largely on the back of the revaluation of the Company’s FX-denominated debt.

Capital expenditures⁽³⁾ decreased by 4.5% year-on-year to RUB 100.2 billion. The ZapSibNeftekhim complex has nearly completed the final stage of project implementation.

Borrowings

As of 30 September 2019, total debt amounted to RUB 389.2 billion, an increase of 17.1% from 31 December 2018. This higher debt balance was driven by further drawdowns of open credit lines for financing the ZapSibNeftekhim project and partial utilisation of proceeds from the new Eurobond placement, as well as by recognition of lease obligations as part of financial liabilities in accordance with the newly adopted IFRS 16 “Leases” starting 1 January 2019.

Net debt as of 30 September 2019 increased by 18.8% compared to 31 December 2018 and amounted to RUB 377.3 billion against the backdrop of an increase in total debt.

The net debt to EBITDA ratio was 2.1x as of 30 September 2019 as a result of a higher net debt position and lower financial results in the reporting period

The full version of the Consolidated Interim Condensed Financial Information (unaudited) as of and for the nine months ended 30 September 2019 in accordance with IFRS is available on our website (http://investors.sibur.com/results-centre/financial-results.aspx).

About SIBUR

SIBUR is the leader of the Russian petrochemical industry and one of the largest companies globally in this sector. It has more than 26,000 employees. The Company’s unique vertically integrated business model allows it to create highly competitive products consumed in the chemical, fast moving consumer goods (FMCG), automotive, construction, energy and other industries in 80 countries worldwide.

SIBUR helps to reduce CO₂ emissions stemming from the burning of oil extraction by-products, such as associated petroleum gas (APG), by recycling them instead. In 2018, SIBUR processed 22.3 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 2018, SIBUR reported revenue of USD 9.1 billion and EBITDA of USD 3.2 billion. Over the past 10 years, SIBUR has implemented a number of large-scale investment projects worth more than RUB 850 billion. Each year, the Company spends no less than 70% of its EBITDA to finance the investment programme, while maintaining a balanced debt burden.

Investor Relations

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