SIBUR reports Q3 and 9M 2020 IFRS results

Moscow, 3 November 2020. PJSC SIBUR Holding, an integrated petrochemicals company, today publishes its operational and financial results for the third quarter and first nine months of 2020 in accordance with International Financial Reporting Standards (IFRS).

Operational and financial highlights:

• Continued ramp-up to nameplate capacity utilisation levels at ZapSibNeftekhim (ZapSib) ahead of schedule. The average utilisation rate of polypropylene and polyethylene production units reached 85% in the third quarter of 2020.
• Revenue growth of 17% quarter-on-quarter and 4% year-on-year to RUB 134 billion for the third quarter 2020 on the back of significantly stronger sales volumes in the Olefins & Polyolefins segment and recovery of prices for major products. Revenue for the first nine months of 2020 amounted to RUB 369 billion, down 7% year-on-year.
• EBITDA increase of 32% quarter-on-quarter and 20% year-on-year in Q3 2020 driven by the ramp-up of ZapSib, recovery of prices across major products, and cost cutting initiatives, resulting in an industry leading EBITDA margin of 36%.
• Net cash flow from operating activities of RUB 54 billion for the third quarter 2020, up 46% quarter-on-quarter and 63% year-on-year.
• Construction of Amur Gas Chemical Complex launched – a large-scale investment project to expand SIBUR’s petrochemicals segment, with total nameplate capacity of 2.7 million tonnes of polypropylene and polyethylene.
• Launch of the rPET project to produce PET with addition of recycled input materials at POLIEF, as part of SIBUR’s sustainable development strategy.
• Continued active construction phase of MAN facility at Tobolsk.

Peter O’Brien, Chief Financial Officer and member of the Management Board at SIBUR, said:

“In the third quarter, we achieved notable growth across operational and financial indicators both year-on-year and quarter-on-quarter, capitalizing on recently implemented optimisation measures and the recovery of prices for midstream products. SIBUR closed out the first nine months of this unprecedented year on a sure footing, demonstrating both the fundamental strength of its business model and its ability to adapt to external challenges.

“SIBUR also implemented a number of strategic sustainable development initiatives during the quarter, including the launch of a project to produce rPET granules at POLIEF. This project aims to further integrate circular economy principles into our business model.

“The Company continues to successfully deliver on its growth strategy highlighted by the profitable expansion of its petrochemical segment. In September, the average utilisation level at ZapSibNeftekhim reached 94%. The accelerated ramp-up of ZapSib helped to substantially mitigate the impact on SIBUR’s financial performance of lower prices for most products observed earlier in 2020.

“Despite challenging market conditions, we delivered significant EBITDA growth in Q3 and maintained industry leading margins of 36% for Q3 and 33% for 9M 2020.

“SIBUR’s strong financial position, as evidenced by its investment grade credit ratings from three leading international agencies, improved further in Q3 2020. Net debt to EBITDA in USD terms fell to 2.4x at the end Q3 versus 2.5x at the end of Q2. At the same time, we optimised our debt portfolio in terms of tenor and cost through recent successful placements of EUR- and RUB-denominated bonds.

“Our top priority remains the safety of our employees, partners, and customers. Our business, as confirmed by our Q3 and 9M performance, is prepared for the challenges presented by the pandemic, including the resulting volatility of the macroeconomic environment.”

Operational results

In the first nine months of 2020, SIBUR’s gas processing plants (GPPs) processed 16.1 billion cubic metres⁽¹⁾ of associated petroleum gas (APG), down 4% year-on-year. The decrease was due to a reduction in oil production stemming from the OPEC+ agreement and a cutback in APG supplies from oil companies. As a result, natural gas output totalled 13.9 billion cubic metres⁽¹⁾, down 4.1% year-on-year. Raw NGL fractionation volumes increased by 1.4% to 5.8 million tonnes(2). As a result of the increase in feedstock consumption by ZapSib, the volume of external LPG sales decreased by 35.1% to 2.6 million tonnes. Naphtha sales decreased by 13.5% to 792.8 thousand tonnes.

As a result of the completion of the main start-up operations at ZapSib, polypropylene sales increased by 60.8% to 826.7 thousand tonnes. Sales of polyethylene increased by more than 4.5 times to 920.2 thousand tonnes. Sales of BOPP films increased by 3.3% to 118.9 thousand tonnes due higher demand for packaging during the pandemic. Sales of plastics and organic synthesis products decreased by 1.1% to 602 thousand tonnes due to a drop in demand for MEG during the pandemic. Sales of elastomers decreased by 18.7% to 321 thousand tonnes due to the sale of Togliatti-based assets in November 2019.

Selected operating results

Financial results

In the third quarter of 2020, revenue increased by 3.8% year-on-year to RUB 134 billion. In the first nine months of 2020, revenue decreased by 6.6% year-on-year to RUB 369.3 billion. Changes in consolidated revenues were driven by the following dynamics by business segment:

• Olefins & Polyolefins revenue increased by 79.0% in the third quarter and by 65.9% in the first nine months of 2020, to RUB 51.5 billion and RUB 129.3 billion, respectively. This growth was largely attributable to higher sales of polypropylene and polyethylene from ZapSib and partially offset by lower prices for these products.
• Plastics, Elastomers & Intermediates revenue decreased by 26.4% in the third quarter and 27.3% in the first nine months of 2020 to RUB 28.0 billion and RUB 85.1 billion, respectively, mainly due to negative pricing dynamics in rouble terms for most products and the decrease in sales volumes of elastomers and MTBE stemming from the sale of Togliatti-based assets in the fourth quarter of 2019. This decrease was partly offset by stronger sales of DOTP following the launch of the new production facility in 2019.
• Midstream revenue decreased by 19.4% in the third quarter and by 30.8% in the first nine months of 2020 to RUB 38.6 billion and RUB 112.5 billion, respectively, on the back of higher internal consumption of LPG by ZapSib and negative pricing dynamics for LPG and naphtha.

Q3 EBITDA grew by 20.3% year-on-year to RUB 48.2 billion, driven by substantial EBITDA growth in the Olefins and Polyolefins segments due to higher sales of polypropylene and polyethylene produced at ZapSib. For the first nine months of 2020, EBITDA decreased by 3.3% to RUB 122 billion on the back of lower spreads for most product groups due to the negative pricing environment. In the Olefins & Polyolefins segment, this impact was partly offset by higher polypropylene and polyethylene sales from ZapSib. The EBITDA margin was 36% for the third quarter and 33% for the first nine months of 2020.

The net loss for the first nine months of 2020 was RUB 24.6 billion, driven by a loss on FX revaluations of RUB 96.5 billion (of USD- and EUR-denominated debt). Excluding exchange rate differences, adjusted net profit for the period amounted to RUB 71.9 billion.

Financial results

Borrowings

As of 30 September 2020, total debt amounted to RUB 491.2 billion, an increase of 29.4% from 31 December 2019. The increase was driven by the depreciation of the rouble against the US dollar and the euro. 

Net debt(5) as of 30 September 2020 increased by 28% compared to 31 December 2019 and amounted to RUB 463.8 billion.

Net Debt debt⁽⁵⁾ to EBITDA in US dollars was 2.4x as of 30 September 2020, down from 2.5x as of 30 June 2020.

The full version of the Consolidated Unaudited Interim Financial Information as of and for the three and nine months ended 30 September 2020 in accordance with IFRS is available on our website at 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 the contribution of joint ventures and associates

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

(5) Net debt is calculated as total debt (starting from 1 January 2019 including lease obligations) excluding cash and cash equivalents