SIBUR reports 1Q 2019 IFRS results

Moscow, 30 April 2019. PAO SIBUR Holding, the largest integrated petrochemicals company in Russia, today announces its operational and financial results for the first quarter ended 31 March 2019 in accordance with International Financial Reporting Standards (IFRS).

Operational and financial highlights

  • Processing of associated petroleum gas (APG) increased by 2.4(1) year-on-year
  • Sales of liquefied petroleum gas (LPG) grew by 12.3%, while sales of naphtha were up 47.9% year-on-year
  • Sales volumes of elastomers rose by 9.6% year-on-year
  • Significant progress was made on ZapSibNeftekhim construction, which was 95% complete (including commissioning works) as of 31 March 2019. Construction works on the polypropylene unit and the logistics platform are completed, commissioning works are underway. First granules were produced on the polypropylene unit
  • Construction of the first phthalate-free DOTP plasticiser production facility in Russia and the largest in Europe was completed in Perm. The plant has a capacity of 100 thousand tonnes per year. As part of the start-up and commissioning works, trial shipments to clients are under way
  • Revenue grew by 9.0% year-on-year due to positive price developments in Ruble terms in most product groups
  • EBITDA increased by 4.5% year-on-year mainly due to increases in EBITDA in the Olefins & Polyolefins and Midstream segments
  • Net profit rose by 71.5% year-on-year due to the revaluation of debt denominated in foreign currency
  • In March 2019, the Board of Directors approved a new version of the Regulation on the Dividend Policy of PAO SIBUR Holding, according to which the Company’s goal is to earmark no less than 35% of adjusted IFRS profit for dividend payments to shareholders (the previous target was 25%)

Dmitry Konov, Chairman of the Management Board of SIBUR Holding, said: “Thanks to the flexibility of our business model, the Company once again demonstrated growth in key financial indicators and a steady operating margin in Q1 2019. At the same time, we made progress in the construction of our strategic project, ZapSibNeftekhim, which was 95% complete as of the end of March. As part of SIBUR’s strategy to expand production of products with high added value, we are also commissioning a facility that will produce dioctyl terephthalate (DOTP) at the Company’s Perm enterprise, which will be the largest DOTP plant in Europe. It is important to note that DOTP is a plasticiser that meets EU environmental requirements. It will be used in construction and other materials, and it also has excellent export potential.

The sustainability of the Company’s financial performance and the successful implementation of key projects provide the basis for increasing dividend payments to shareholders. In March, the Board of Directors approved the Company’s new dividend policy, which increases the share of dividends paid out from 25% of adjusted profit to not less than 35% starting in 2019. We are confident that the new dividend policy will ensure a long-term balance between the objectives of the Company’s continued profitable growth, maintaining a comfortable debt burden and ensuring a return on our shareholders’ investment.”

Operational results

In the first three months of 2019, SIBUR’s gas processing plants (GPPs) processed 5.6 billion cubic metres(1) of APG, an increase of 2.4% year-on-year. As a result, the GPPs produced 4.8 billion cubic metres(1) of dry stripped gas, up 2.1% year-on-year. Raw NGL fractionation volumes increased by 1.1% to 2.0 million tonnes(2). LPG sales volumes increased by 12.3% to 1.5 million tonnes. Naphtha sales rose by 47.5% to 298 thousand tonnes.

Polypropylene sales decreased by 9.1% to 130 thousand tonnes due to a maintenance shutdown in Tobolsk at the beginning of the year. Polyethylene sales volumes decreased by 6.7% to 63 thousand tonnes due to maintenance work to improve the physical and mechanical properties of the product in Tomsk. Plastics and organic synthesis products sales volumes decreased by 3.8% to 190 thousand tonnes, mainly due to the PET accumulation programme in anticipation of a planned maintenance shutdown, as well as the accumulation of alcohol reserves prior to the launch of DOTP production in Perm. Sales volumes of elastomers increased by 9.6% to 136 thousand tonnes mainly due to an increase in the volume of long-term contracts with tire companies. 

Operating results
  Three months ended
31 March
Change
Thousand tonnes, except as stated 2019 2018 %
Processing and production volumes
APG processing (mln cubic meters)(1) 5,582 5,450 2.4%
NGL fractionation, SIBUR’s share 1,967 1,946 1.1%
Sales volumes
Petrochemical products: 879 895 (1.8%)
PP 130 143 (9.1%)
PE (LDPE) 63 67 (6.7%)
Elastomers 136 124 9,6%
Plastics and organic synthesis products 190 197 (3.8%)
Intermediates and other chemicals 123 130 (5.1%)
Midstream segment products: 1,763 1,506 17.0%
LPG 1,465 1,305 12.3%
Naphtha 298 202 47.9%

Financial results

For the first three months of 2019, revenue increased by 9.0% year-on-year to RUB 131 billion with the following dynamics across segments:

  • Olefins & Polyolefins revenue increased by 4.1% to RUB 23.7 billion mainly due to positive price dynamics in Ruble terms for products in the segment due to the depreciation of the Ruble. In turn, this growth was offset by a slight decrease in revenue from sales of polyethylene due to a decrease in sales volumes.
  • Plastics, Elastomers & Intermediates revenue increased by 5.1% to RUB 38.2 billion largely due to positive price dynamics in Ruble terms for most products and higher sales volumes of elastomers.
  • Revenue from the Midstream segment increased by 18.2% to RUB 59.2 billion due to growth in sales volumes of LPG and naphtha, as well as positive price dynamics for LPG in Ruble terms due to the depreciation of the Ruble compared to the same period in 2018.

EBITDA increased by 4.5% to RUB 44.2 billion as a result of a 5.8% increase in EBITDA in the Olefins & Polyolefins segment and a 7.2% increase in Midstream segment due to positive dynamics in selling prices. This was partially offset by a decrease in EBITDA in the Plastics, Elastomers & Intermediates segment due to a short-term increase in the share of raw materials purchased from third parties during a planned shutdown of terephthalic acid production while upgrading and capacity expansion works were carried out in Blagoveshchensk.

At 33.7%, there was little change in EBITDA margin compared to the first quarter of 2018.

Net profit increased by 71.5% to RUB 46.0 billion mainly due to the revaluation of debts denominated in foreign currency.

Financial results

Financial results
  Three months ended
31 March
Change
RUB millions, except as stated 2019 2018 %
Revenue (net of VAT and export duties) 130,886 120,092 9.0%
EBITDA 44,161 42,261 4.5%
Adjusted EBITDA(3) 47,672 43,701 9.1%
EBITDA profit margin 33.7% 35.2%
EBITDA by segment:
Olefins & Polyolefins Olefins & Polyolefins 10,258 9,700 5.8%
Plastics, Elastomers & Intermediates 5,616 6,526 (13.9%)
Midstream 28,571 26,643 7.2%
Net profit 46,020 26,834 71.5%
Net cash from operating activities 23,257 32,532 (28.5%)
Net cash used in investing activities, including: (35,884) (31,837) 12.7%
Capital investments(4) (36,976) (31,875) 16.0%

Borrowings

As of 31 March 2019, total debt amounted to RUB 349.9 billion, an increase of 5.3% compared to 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. The increase was partially compensated by the currency revaluation of the credit portfolio due to the appreciation of the Ruble during the quarter.

Net debt(5) as of 31 March 2019 increased by 5.0% compared with 31 December 2018 to RUB 333.5 billion.

The net debt to EBITDA ratio was 1.6x as of 31 March 2019. 

Borrowings
  As of As of Change,
RUB millions 31 March
2019
31 December 2018 %
Total debt 349,923 332,411 5.3%
ZapSib-related debt 235,807 245,774 (4.1%)
Conventional debt 95,140 86,637 9.8%
Lease liabilities 18,976 - n/m
Cash and cash equivalents 16,437 14,783 11.2%
Net debt(5) 333,486 317,628 5.0%
ZapSib-related debt 226,361 242,858 (6.8%)
Conventional debt 107,125 74,770 43.3%

The full version of the unaudited consolidated interim condensed financial information prepared in accordance with IFRS, as of and for the three months ended 31 March 2019, is available on our website (http://investors.sibur.com/results-centre/financial-results.aspx?sc_lang=en).

 


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

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

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

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

(5) Net debt is calculated as total debt (since 1 January 2019, including lease liabilities) 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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