SIBUR REPORTS H1 2019 IFRS RESULTS

Moscow, 30 July 2019. PJSC SIBUR Holding, an integrated petrochemicals company, today publishes its operational and financial results for the three and six months ended 30 June 2019 in accordance with International Financial Reporting Standards (IFRS).

Highlights

  • Revenue increased by 3.3% year-on-year to RUB 266.3 billion due to an increase in all reporting segments.
  • EBITDA decreased by 3.4% year-on-year to RUB 86.1 billion mainly due to a decrease in Plastics, Elastomers and Intermediates EBITDA.
  • EBITDA margin totaled 32.3%, remaining at a consistently high level relative to industry average.
  • Net profit increased by 69.2% to RUB 77.6 billlion, largely on the back of the revaluation of the Company’s FX-denominated debt.
  • Total debt increased by 10.6% to RUB 367.6 billion with Net debt/EBITDA ratio standing at 1,76х.
  • At the ZapSibNeftekhim complex, the main construction and installation works have been completed, commissioning is in progress: test volumes of polypropylene are being supplied to customers, the first batches of polyethylene have been received.
  • Fitch Ratings has upgraded SIBUR’s long-term issuer default rating (IDR) to ‘BBB-’ from ‘BB+’. The Outlook is Stable.
  • In July, SIBUR and Gazprom Neft have consolidated 100% of the authorized capital in Poliom, a polypropylene plant in Omsk
  • SIBUR and Sinopec signed a distribution agreement to supply polyethylene to China from SIBUR’s ZapSibNeftekhim plant, and a Term Sheet regulating key principals of a potential joint venture (JV) for development and operations of the Amur Gas Chemical Complex (AGCC). Subject to SIBUR's final investment decision, Sinopec is expected to participate at a 40% share stake in the JV (June 2019).

Dmitry Konov, SIBUR’s CEO:

“SIBUR has once again demonstrated its operational excellence, as well as stable financial and operating performance despite a challenging global market environment. The Company maintains a consistently high EBITDA margin outperforming its peers, while revenue continues to grow and the leverage remains comfortable. The completion of ZapSibNeftekhim ahead of schedule and the launch of production will contribute to SIBUR’s financial and operating performance in the near future. The project commissioning will greatly boost our sales, thus highlighting the paramount importance of deals with our Chinese partners for ZapSibNeftekhim’s products to access the world’s largest market.”

Operational results

In the first half of 2019, SIBUR’s gas processing plants (GPPs) processed 11.0 billion cubic metres(1) of APG, an increase of 2.0% year-on-year. As a result, dry stripped gas (DSG) output totalled 9.5 billion cubic metres(1). Raw NGL fractionation volumes decreased by 0.8% year-on-year to 3.7 million tonnes(1).LPG sales volumes increased by 4.5% year-on-year to 2.7 billion cubic metres. DSG sales volumes increased by 1.7% to 9.1 billion cubic metres.

Despite the increase of polypropylene production by 14.4%, we observed a decrease in sales volumes by 4.4% to 280 thousand tonnes due to substantial inventory accumulation as we used propylene from our Tobolsk site as a feedstock for ZapSib during commissioning works. Polyethylene (LDPE) sales volumes decreased by 4.2% to 130.6 thousand tonnes as a result of targeted decrease in operating rates aimed at quality improvements in Tomsk. Plastics and organic synthesis products sales volumes decreased by 1.8% to 380.0 thousand tonnes due to maintenance shutdowns at PET and alcohols production lines, as well as the stop of MTBE purchases from 3rd parties under trading arrangements. Our elastomers sales volumes increased by 8.2% to 268.6 thousand tonnes following the decrease in inventory accumulation in the end of 2018.

Operational results
Six months ended 30 June Change
Thousand tonnes, except as stated 2019 2018 %
Processing and production volumes
APG processing, SIBUR's share(1)  (million cubic metres) 10,987 10,769 2.0%
Raw NGL fractionation(2), SIBUR's share 3,716 3,746 (0.8%)
Sales volumes
Petrochemical products, including: 1,763 1,814 (2.8%)
PP 280 293 (4.4%)
PE (LDPE) 131 136 (3.7%)
Elastomers 269 248 8.5%
Plastics and organic synthesis products 380 387 (1.8%)
Intermediates and other chemicals 228 235 (3.0%)
Midstream products, including: 3,334 3,036 9.8%
LPG 2,735 2,616 4.5%
Naphtha 599 419 43.0%

Financial results

In the first half of 2019, revenue increased by 3.3% year-on-year to RUB 266.3 billion, with the following dynamics across the segments:

  • Olefins & Polyolefins revenue increased by 1.9% year-on-year to RUB 49.1 billion attributable to higher selling PP prices supported by the Russian ruble depreciation and temporary PP supply limitations on the domestic market. The effect was compensated by the decrease of sales.
  • Plastics, Elastomers & Intermediates revenue increased by 1.1% year-on-year to RUB 79.0 billion mainly due to positive pricing dynamics in ruble terms and higher elastomer sales volumes.
  • Midstream revenue increased by 7.7% year-on-year to RUB 114.7 billion following the increase of naphtha and LPG sales.

EBITDA decreased 3.4% year-on-year to RUB 86.1 billion following a 32.6% EBITDA decrease of Plastics, Elastomers & Intermediates segment due to increase in feedstock prices (mainly purchases of terephthalic acid from third parties during the maintenance shutdown at POLIEF) and as well as an increase in fixed costs.

Our net profit increased by 69.2% year-on-year to RUB 77.6 billion mainly due to revaluation of the Company’s FX-denominated debt.

Capital expenditures(3) decreased by 3.7% year-on-year to RUB 67.7 billion. The main construction and installation works have been completed, commissioning is in progress: test volumes of polypropylene are being supplied to customers, the first batches of polyethylene have been received.

Financial results
Six months ended 30 June Change
RUB millions, except as stated 2019 2018 %
Income statement highlights
Revenue (net of VAT and export duties) 266,279 257,694 3.3%
Adjusted EBITDA (4) 92,246 91,548 0.8%
EBITDA 86,116 89,188 (3.4%)
EBITDA margin, % 32.3% 34.6%
EBITDA of reportable segments
Olefins & Polyolefins 22,649 18,988 19.3%
Plastics, Elastomers & Intermediates 10,774 15,984 (32.6%)
Midstream 56,232 55,138 2.0%
Profit for the reporting period 77,608 45,868 69.2%
Cash flow highlights
Net cash from operating activities 55,208 70,645 (21.9%)
Net cash used in investing activities, including (60,951) (68,633) (11.2%)
Capital expenditures (67,685) (70,307) (3.7%)

Borrowings

As of 30 June 2019 total debt amounted to RUB 367.6 billion, an increase of 10.6% from 31 December 2018. The increase was mainly due to the inclusion of lease obligations (due to the Group’s adoption of IFRS 16 since 1 January 2019), as well as an increase in conventional debt and new drawdowns of ZapSib-related financing.

Our net debt(5) as of 30 June 2019 increased to RUB 348.7 billion, an increase of 9.8% from 31 December 2018 года on the back of the total debt increase.

Net debt/EBITDA ratio was 1,76х as of 30 June 2019.

Borrowings
RUB millions As of 30 June 2019 As of 31 December 2018 Change, %
Total debt 367,592 332,411 10.6%
Debt excluding related to ZapSib 98,246 86,637 13.4%
ZapSib related debt 251,857 245,774 2.5%
Cash and cash equivalents 18,925 14,783 28.0%
Net debt 348,667 317,628 9.8%
Debt excluding related to ZapSib 107,032 74,770 43.1%
ZapSib related debt 241,635 242,858 (0.5%)

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

For Editors:

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 850 billion rubles. Each year, the Company spends no less than 70% of its EBITDA to finance the investment program, while maintaining a balanced debt burden.

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

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

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

(4)(4) EBITDA adjusted for input from joint ventures and associate companies less non-controlling interest share of subsidiaries’ EBITDA

((5) Net debt is calculated as total debt less cash and cash equivalents


International Media Relations
  • Anna Lebed
  • Tel.: +7 (495) 937-17-26
    Fax: +7 (495) 777-55-00
  • E-mail: LebedAI@sibur.ru
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