SIBUR reports FY 2017 IFRS results

SIBUR REPORTS FY 2017 IFRS RESULTS

Moscow, 28 February 2018. PAO SIBUR Holding, an integrated gas processing and petrochemicals company, today published its operational and financial results for the full year 2017 in accordance with International Financial Reporting Standards (IFRS).

Operational highlights

  • APG processing volumes increased by 1.6% year-on-year(1)
  • Natural gas production increased by 1.5% year-on-year(1)
  • Raw NGL fractionation volumes increased by 6.7% year-on-year(2)
  • LPG production volumes increased by 8.0% year-on-year(2)
  • PP production increased by 10.0% year-on-year
  • PE production volumes increased by 10.9% year-on-year
  • Elastomers production increased by 9.0% year-on-year

Financial highlights:

  • Revenue increased by 10.4% year-on-year
  • Profit increased by 6.3% year-on-year
  • EBITDA increased by 15.2% year-on-year
  • Adjusted EBITDA(3) increased by 13.1% year-on-year
  • EBITDA margin amounted to 35.4%
  • Total debt decreased by 8.6% year-on-year

Operational Results

In 2017 SIBUR’s gas processing plants (GPPs) processed 22.8 billion cubic metres of APG, an increase of 1.6%(1) year-on-year largely attributable to higher supplies from oil companies and higher capacity load at previously expanded gas processing facilities. As a result, production of natural gas rose by 1.5% year-on-year to 19.7 billion cubic metres(1). Raw NGL fractionation volumes increased by 6.7% year-on-year to 8.7 million tonnes(2) following the expansion of fractionation facilities in Tobolsk.

Natural gas sales volumes increased by 1.3% year-on-year to 18.5 billion cubic metres. External LPG sales volumes increased by 4.5% year-on-year to 4.9 million tonnes.

In 2017 SIBUR increased sales volumes of majority of its petrochemical products. Sales volumes of polypropylene increased by 10.9% year-on-year to 598 thousand tonnes(4), while sales volumes of polyethylene increased by 12.6% year-on-year to 268 thousand tonnes(4) - both following the increased production at our new and upgraded facilities in Tobolsk and Tomsk.

Sales of elastomers increased by 9.7% year-on-year to 485 thousand tonnes, inter alia following the increased capacity load at SBS production in Voronezh on the back of improved market environment . Our sales of plastics and organic synthesis products remained flat year-on-year at 771 thousand tonnes. Sales of intermediates increased by 13.0% year-on-year to 520 thousand tonnes due to higher propylene production volumes following the change of feedstock composition at our crackers, and higher external sales of benzene during the maintenance shutdown at our production site in Perm.

Operational results
  Year ended 31 December Change
Thousand tonnes, except as stated 2017 2016 %
Processing and production volumes      
APG processing(1) (million cubic metres) 22,782 22,415 1,6%
APG processing, SIBUR's share(5) (million cubic metres) 22,280 21,927 1,6%
Natural gas production(1) (million cubic metres) 19,722 19,427 1,5%
Natural gas production, SIBUR's share(5)(million cubic metres) 19,343 19,051 1,5%
Raw NGL fractionation(2) 8,722 8,177 6,7%
Raw NGL fractionation, SIBUR’s share 7,522 7,246 3,8%
Production of PP and PE 925 839 10,3%
Production of plastics, elastomers and intermediates 1,378 1,344 2,5%
Sales volumes      
Natural gas (million cubic metres) 18,477 18,241 1.3%
LPG 4,924 4,712 4,5%
Petrochemical products 3,625 3,438 5.4%
PP(4) 598 539 10.9%
PE(4) 268 238 12.6%
Elastomers 485 442 9.7%
Plastics and organic synthesis products 771 776 (0.6%)
Intermediates and other chemicals 520 460 13.0%

Financial results

Our integrated business model and investments in new production facilities enabled us to counterbalance the shifts in segments’ margins and improve SIBUR results with EBITDA up by 15.2% to RR 160,851 million year-on-year and EBITDA margin reaching 35.4%.

This performance was significantly attributable to higher energy products’ prices, while our petrochemicals businesses encountered higher intragroup feedstock costs, which was partially compensated by higher selling volumes.

Our revenue increased by 10.4% year-on-year to RR 454,619 million on increased production and sales volumes, as well as positive price dynamics in LPG and elastomers:

  • Feedstock & Energy segment revenue increased by 7.9% year-on-year to RR 184,199 million largely on higher LPG prices and sales volumes.
  • Olefins & Polyolefins segment revenue increased by 1.5% year-on-year to RR 88,135 million on higher PP and PE production capacities load significantly offset by Rouble appreciation that resulted in lower export revenue, and by decrease in BOPP-film sales volumes.
  • Plastics, Elastomers & Intermediates segment revenue increased by 12.4% year-on-year to RR 146,877 million mainly due to higher elastomers revenue on higher capacity load following the favourable market environment.
  • Unallocated revenue increased by half year-on-year to RR 35,408 million, which was driven by higher revenue from NIPIGAZ services and sales of power following the acquisition of Tobolsk Heating and Power Plant in February 2016.

In 2017, the EBITDA of our Feedstock & Energy segment increased by 47.6% year-on-year to RR 89,351 million. The increase resulted from wider spreads between selling prices for liquids and netbacks for our purchased hydrocarbon feedstock. The growth was somewhat negated by weaker EBITDA of our petrochemicals businesses as a result of flat spreads. The joint contribution of our Olefins & Polyolefins and Plastics, Elastomers & Intermediates segments decreased by 6.7% year-on-year to RR 74,994 million. In 2017, SIBUR recorded a 13.1% increase in Adjusted EBITDA, which totaled RR 168,748 million. This growth was fully driven by the growth in Group’s EBITDA.

Our net profit in 2017 totaled RR 120,246 million, a 6.3% growth year-on-year. The increase was primarily a result of growth in operating profit and gain on disposal of Uralorgsintez, which was partially offset by lower net finance income due to high base of 2016 when we observed significant FX fluctuations.

Our cash from operating activities increased by 10.9% on the back of increased EBITDA that was significantly offset by increased Income tax paid.

Capital expenditures(6) decreased by 7.0% year-on-year to 135,261 million mostly following the FX fluctuations that resulted in decreased Russian rouble payments for contracts denominated in Euro and US Dollars, as well as a result of substantial advances paid in 2016 ahead of further equipment deliveries for ZapSib project according to contract terms and shifts in payments to come in 2018.

Financial results
  Year ended 31 December Change
RR millions, except as stated 2017 2016 %
Revenue (net of VAT and export duties): 454,619 411,812 10.4%
Feedstock & Energy 184,199 170,708 7,9%
Olefins & Polyolefins 88,135 86,830 1,5%
Plastics, Elastomers & Intermediates 146,877 130,690 12.4%
Unallocated 35,408 23,584 50,1%
EBITDA 160,851 139,629 15,2%
EBITDA of reportable segments      
Feedstock & Energy 89,351 60,526 47,6%
Olefins & Polyolefins 44,636 48,909 (8,7%)
Plastics, Elastomers & Intermediates 30,358 31,508 (3,6%)
Adjusted EBITDA(3) 168,748 149,157 13.1%
EBITDA margin, % 35,4% 33.9%
Profit for the year 120,245 113,089 6.3%
Net cash from operating activities 152,677 137,694 10.9%
Net cash used in investing activities, including: (117,309) (142,243) (17.5%)
Capital expenditures(6) (135,261) (145,693) (7.0%)

Borrowings

In 2017, we continued focusing on improvement of our debt portfolio. As a result, our total debt decreased by 8.6% to RR 312,344 million as of 31 December 2017 from RR 341,813 million as of 31 December 2016, while net leverage improved to 1.6x from 2.0x in Russian rouble terms. The decrease was attributable to substantial repayment of conventional debt, partially offset by new drawdowns from ECA-backed credit facilities for ZapSib funding and new Eurobond placement.

In October 2017, we placed our six-year Eurobond due 2023 with 4.125% per annum coupon rate, raising USD 500 million in gross proceeds. In January 2018, we completed the redemption of previously placed bonds worth USD 1.0 billion amounting to USD 557 million.

Borrowings
RR millions, except as stated As of 31 December 2017 As of 31 December 2016 Change, %
Total debt 312,344 341,813 (8,6%)
Debt excluding related to ZapSib 139,147 182,128 (23,6%)
ZapSib related debt 173,197 159,685 (8,5%)
Net debt 263,888 281,178 (6.1%)
Debt excluding related to ZapSib 102,450 163,369 (37.2%)
ZapSib related debt 161,438 177,809 (37,0%)

Borrowings by scheduled maturities
RR millions, except as stated As of 31 December 2017 % of total borrowings As of 31 December 2016 % of total borrowings Change, %
Within one year  29,846 9,6%  22,188 6,5% (34,5%)
Between one and two years 33,021 10.6%  41,580 12,2% (20,6%)
Between two and five years 58,336 18,7%  135,411 39,6% (56.9%)
Between five and ten years 79,377 25,4%  25,569 7,5% (210,8%)
After 10 years  111,764 35,8% 117,066 34,2% (4,5)%
Total debt 312,344 100% 341,813 100% (8,6%)

The full version of the audited consolidated financial statements as of and for the year ended 31 December 2017 in accordance with International Financial Reporting Standards (IFRS) is available on our website (http://investors.sibur.com/results-centre/financial-results.aspx).

About SIBUR

SIBUR is a uniquely positioned vertically integrated gas processing and petrochemicals company. SIBUR owns and operates Russia’s largest gas processing business in terms of associated petroleum gas processing volumes, and is a leader in the Russian petrochemicals industry.

SIBUR operates 22 production sites located all over Russia, serving over 1,400 large customers engaged in the energy, chemical, fast moving consumer goods (FMCG), automotive, construction and other industries in approximately 80 countries worldwide and employed about 27,000 personnel.


International Media Relations

SIBUR LLC

Phone.: +7 (495) 937-17-26

E-mail: press@sibur.ru

www.sibur.com

Investor Relations

Phone: + 7 (495) 777-55-00 (*39-47)

SIBUR_IR@sibur.ru


(1) Including Gazprom Neft’s share in the processing / production volumes of Yuzhno-Priobskiy GPP.

(2) Including volumes under processing arrangements.

(3) EBITDA adjusted for the respective portion of EBITDA of joint ventures and associates.

(4) Excluding JVs

(5) Excluding Gazprom Neft’s share in the processing / production volumes of Yuzhno-Priobskiy GPP

(6) Includes purchase of property, plant and equipment, intangible assets and other non-current assets.

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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