Financial results for 2017FY - CIECH · The CIECH Group purchases coke, anthracite and ... [PLN...
Transcript of Financial results for 2017FY - CIECH · The CIECH Group purchases coke, anthracite and ... [PLN...
Financial results for 2017FY
Warsaw, 27th March 2018
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2017 – executive summaryFinancial results for 2017
3 579 mln PLNrevenues
Slightly lower sales prices of soda ash and salt.
Higher costs of coking coal, furnace fuel, gas and technological steam and of raw materials for resin and foam.
A very good season (Q4 2016 – Q3 2017) in crop protection chemicals – a significant increase in sales and market share.
Successfully completed pre-season sales in crop – historically the best quarter of CIECH Sarzyna.
Development of the product portfolio in the areas of salt, resins and crop protection chemicals.
Very strong competition in the foam, silicate and glass markets.
A negative impact of currency rates on business: EUR/PLN and USD/RON.
23%Adj. EBITDA margin
808 mln PLNAdj. EBITDA
EBITDA (Z) – adjusted for untypical one-off events yoy
1. The most important events in 2017
2. Financial results for 2017FY and Q4 2017
3. Outlook for coming quarters
4. Appendix
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100
140
180
220
260
300
Coking coal - spot*Coaling coal - benchmark
01.01.2016 31.12.2017Coke - ARA ports
5,0
9,0
13,0
17,0
21,0
25,0
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Market environment: raw materialsThe most important events in 2017
30
40
50
60
70
80
90
100
110 ARA (cal. 25 GJ/t)PMSCI1 (average cal. 22 GJ/t)
The CIECH Group purchases coke, anthracite and part of coal on the basis of contracts each timenegotiated (volumes and prices). Thus, market listings help to estimate the trend but not the actual contract prices of CIECH. Moreover, the Group usesits stocks firstly.
The formula of gas prices is generally based on market listings (the Group applies partial hedging).
17.20
14.14
01.01.2016 31.12.2017
01.01.2016 31.12.2017
Coking coal and coke prices [USD/t] Coal prices [USD/t]
German Gaspool (GLP) Natural Gas – 1M Forwards
Source: Bloomberg. IHS. www.polskirynekwegla.pl * Australia Premium Coking Coal
3,5
3,7
3,9
4,1
4,3
4,5
4,7
USDRON
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Market environment : FX situationThe most important events in 2017
3,5
3,7
3,9
4,1
4,3
4,5
4,7
EURPLNThe Group applies instruments securing it against foreign currency changes, according to the adopted policy. Therefore,the EUR/PLN changes were not so painful.
Annual net exposure of the Group (revenues in foreign currency vs. costs in foreign currency) in 2017:
• aprox. 100 mln EUR;
• aprox. 60 mln USD.
4.054.06
01.01.2016 31.12.2017
01.01.2016 31.12.2017
4,264,36
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Business and investments: soda ash and sobicThe most important events in 2017
Higher sales volume of soda ash.
Continuation of investments in desulphurisation and denitrification in power plants in Poland.
Slightly lower sales prices of soda ash.
In Q4 2017 soda ash priceincrease in overseas markets.
Continuation of the pharmaceutical grade sodium bicarbonate investment in Germany.
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Business and investments: salt businessThe most important events in 2017
A considerable increase in the sales of salt tablets and salt in 25 kg packaging.
A decision to start the preparatory stage of investment in a new salt production plant in Germany.
Obtaining a GMP+ certificate for feed salt.
Completion of the construction of a modern high storage capacity warehouse for salt products. Lower than expected production volumes.
A decision to widen the salt product portfolio with salt granules and salt licks for animals.
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Business and investments: organic segmentThe most important events in 2017
Increase in the efficiency and capacity of foam production – mainly due to completed investment in a long block warehouse; higher sales.
Record revenue from pre-season sales in Q4 2017 (higher volumes and prices).
Increase in the prices of raw materials for the production of foams and resins.
The development of sales of new foams (including regenerated foams and foams for scouring sponges).
A record season in crop protection chemicals and an increase in market share.
Further registrations of crop protection chemicals.
New product categories: specialised fertilisers and BIO ZIEMOVIT brand products.
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Business: silicate and glass segmentThe most important events in 2017
A after saison sales campaign in the lantern business in Q4 2017.
Efficient sales of glassy sodium silicate from the investment completed in 2016 – a contract with Solvay completed as planned.
A decision to change the use of one glass furnace – switching from the production of glass packaging to silicates.
Very strong competition in the glass packaging market, mainly from smallglass manufacturers and plants in Ukraine.
1. The most important events in 2017
2. Financial results for 2017FY and Q4 2017
3. Outlook for coming quarters
4. Appendix
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Profit and loss accountFinancial results for 2017FY and Q4 2017
[PLN million] 2017FY 2016FY yoy Q4 2017 Q4 2016 yoy
Revenue 3 579.4 3 455.3 3.6% 961.7 907.8 5.9%
EBIT 588.8 660.3 -10.8% 207.4 162.1 27.9%
EBIT margin 16.4% 19.1% -2.7 p.p. 21.6% 17.9% 3.7 p.p.
EBITDA 833.2 883.8 -5.7% 270.0 221.7 21.8%
EBITDA margin 23.3% 25.6% -2.3 p.p. 28.1% 24.4% 3.7 p.p.
Adj. EBITDA 808.1 876.8 -7.8% 251.1 230.0 9.2%
Adj. EBITDA margin 22.6% 25.4% -2.8 p.p. 26.1% 25.3% 0.8 p.p.
Net result 394.0 594.1 -33.7% 137.7 174.2 -21.0%
Net margin 11.0% 17.2% -6.2 p.p. 14.3% 19.2% -4.9 p.p.
EBITDA (Z) – EBITDA adjusted for untypical one-off events
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Results vs. consensusFinancial results for 2017FY and Q4 2017
[mln PLN] Q4 2017 Consensus Q4 2017 Range of forecasts
Revenue961.7 925.2 896.4 - 959.6
EBIT207.4 167.7 157.3 - 175.0
EBIT margin21.6% 18.1%
EBITDA270.0 230.2 218.3 - 237.0
EBITDA margin28.1% 24.9%
Adj. EBITDA251.1 230.2 218.3 - 237.0
Adj. EBITDA margin26.1% 24.9%
Net result137.7 127.2 114.2 - 135.4
Net margin14.3% 13.8%
Consensus based on forecasts of 6 brokerage houeses
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Soda segmentFinancial results for 2017FY and Q4 2017
Q1 Q2 Q3 Q4Q4: the upside yoy
• higher soda sales volumes;
• higher soda sales prices on overseas markets;
• a higher average price of salt due to a change in the product mix (higher sales of packaged dry salt; mainly salt tablets and 25 kg salt; lower sales of wet salt);
• replacement of coke by cheaper anthracite ;
• higher earnings on energy sales in Germany.
Q4: the downside yoy
• lower soda sales prices from Poland and Germany;
• higher prices of furnace fuel, coking coal and gas;
• lower sales volume of salt;
• strengthening of PLN in relation to EUR and RON in relation to USD (partly offset by currencyhedging).
Revenue [PLN million] Adj. EBITDA [PLN million]
Commentary yoy
181 161
207164
198
161
208
205
2016 2017
590 619
614 590
606 587
637 634
2016 2017
-0.4% -1.6%
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Organic segmentFinancial results for 2017FY and Q4 2017
Q4 : the upside yoy
• Crop protection chemicals – higher volumes and prices in pre-season sales;
• Resins – higher profitability of sales (a change in the customer and product portfolio towards higher margins);
• Foams – an increase in sales volume due to strong demand; a further increase in production efficiency; an increase in production capacity; development of new products.
Q4: the downside yoy
• Resins – slightly lower sales volumes due to lower demand and stronger competition; problems with the availability of some raw materials and a price increase;
• Foams – higher prices of basic raw materials (TDI, polyols).
Q1 Q2 Q3 Q4
Revenue [PLN million] Adj. EBITDA [PLN million]
Commentary yoy
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Silicates and glass segmentFinancial results for 2017FY and Q4 2017
Q4: the upside yoy
• Silicates – a slightly higher sales volume of sodium silicates;
• Glass packaging – development of the portfolio towards individual designs; higher sales volumes.
Q4: the downside yoy
• Silicates – high price pressure from the competition;
• Glass packaging – intensified competitor activity and further price pressure; lower demand for lanterns from retail customers.
Q1 Q2 Q3 Q4
Revenue [PLN million] Adj. EBITDA [PLN million]
Commentary yoy
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Transport segmentFinancial results for 2017FY and Q4 2017
Q4: the upside yoy
• higher volume of Group internal and external shipments;
• a good market situation – higher demand for transport and higher transport rates (mainly due to large infrastructural investments).
Q4: the downside yoy
• a drop in average commercial speed due to a large number of repairs on railway lines
Q1 Q2 Q3 Q4
Revenue [PLN million] Adj. EBITDA [PLN million]
Commentary yoy
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Permanent deleveraging
[thousand PLN] At the end of 2017 At the end of 2016
Debt ratio 53.0% 60.8%
Long-term debt ratio 29.5% 37.7%
Equity capital debt ratio 112.6% 155.3%
Gross financial liabilities 1 426 428 1 610 867
Net financial liabilities 936 674 1 196 498
Financial results for 2017FY and Q4 2017
Q4 2017
Signed annex to the current Loan Agreement (mainly change in term and schedule of repayment).
Repayment of PLN 160 million bonds (December2017).
Methodology of calculated ratios consistent with the financial statement
1 261
1 479
1 213 1 182
1 361
1 196
9373,85
3,50
2,722,30
1,82
1,361,16
2011 2012 2013 2014 2015 2016 2017
Net debt Net debt / Adj. EBITDA
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Cash flow – 2017
[mln PLN] 2017 2016
EBITDA 833 884
Working capital -66 97
Interest paid -50 -55
Taxes paid -49 -54
Others -40 -35
Cash flow from operating activities 629 837
CAPEX -411 -490
Other 22 45
Cash flow from investment activities -389 -446
Free cash flow 240 391
Debt financing -166 -28
Dividends 0 -150
Cash flow from financial activities -166 -178
Total net flow 74 214
Closing balance of cash 490 414
Financial results for 2017FY and Q4 2017
Operating activities:
• change in working capital mainly due to the increase in Crop Protectioninventories, trading goods and an increase in the stock of some raw materials as well as an increase in receivables (high pre-season sales in Crop Protection and high sales of sodaash).
Investment activities
• CAPEX slightly lower than in 2016;
• the remaining are mainly the disposal of fixed assets and cash from repayment of loans.
Financial activities
• repayment of PLN 160 million bonds(December 2017).
Simplified
1. The most important events in 2017
2. Financial results for 2017FY and Q4 2017
3. Outlook for coming quarters
4. Appendix
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Business activitiesOutlook
Selected investments of the CIECH Group
Further takeovers of transport competency and consignment warehouses.
A decision to implement an investment in a new salt plant in Germany.
Continuation of registration processes for new products and active ingredients.
Effective cost management as regards raw materials for the production of foams and resins.
Intense R&D activities – development of the specialised resins.
Increasing the production capacity as regards glassysodium silicate through the use of a furnace whichcurrently is used for the production of glass packagings.
Further development of sales of CropProtection chemicals; increasing market shares and expansion abroad.
Exploiting supply limitations on Asian markets.
Higher soda and salt production volumes.
New salt products.
1. The most important events in 2017
2. Financial results for 2017FY and Q4 2017
3. Outlook for coming quarters
4. Appendix
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Profit and loss accountAppendix
[PLN thousand] 2017 2016 yoy
Sales revenues 3 579 393 3 455 335 3.6%
Cost of sales (2 662 729) (2 415 670) 10.2%
Gross profit/(loss) on sales 916 664 1 039 665 -11.8%
Other operating income 116 560 86 610 34.6%
Selling costs (263 481) (231 462) 13.8%
General and administrative expenses (141 402) (157 990) -10.5%
Other operating expenses (39 533) (76 503) -48.3%
Operating profit/(loss) 588 808 660 320 -10.8%
Financial income 13 499 23 551 -42.7%
Financial expenses (86 787) (59 595) 45.6%
Net financial income/(expenses) (73 288) (36 044) 103.3%
Profit/(loss) before tax 515 745 624 950 -17.5%
Income tax (121 770) (30 814) 295.2%
Net profit/(loss) on continuing operations 393 975 594 136 -33.7%
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Results by segmentsAppendix
[tys. PLN]Soda
segment
Organic
segment
Silicates and
glass
Transport
segment
Other
operations
Corporate
functions
Elimina-
tionsTOTAL
2017
Total sales revenues 2 429 920 871 557 229 345 124 454 122 792 - (198 675) 3 579 393
Cost of sales (1 673 847) (718 489) (176 945) (107 599) (94 694) - 108 845 (2 662 729)
Gross profit /(loss) on sales 756 073 153 068 52 400 16 855 28 098 - (89 830) 916 664
Operating profit /(loss) 523 035 66 874 17 187 9 764 23 857 (49 898) (2 011) 588 808
Profit /(loss) before tax 506 938 55 253 16 908 9 627 24 289 (95 259) (2 011) 515 745
Amortization/depreciation 181 335 29 894 19 657 5 846 2 443 5 213 - 244 388
EBITDA 704 370 96 768 36 844 15 610 26 300 (44 685) (2 011) 833 196
Adjusted EBITDA 690 667 96 517 36 768 16 064 14 858 (44 727) (2 010) 808 137
2016
Total sales revenues 2 446 568 766 119 190 168 119 220 108 193 - (174 933) 3 455 335
Cost of sales (1 567 354) (629 231) (139 118) (104 755) (75 906) - 100 694 (2 415 670)
Gross profit /(loss) on sales 879 214 136 888 51 050 14 465 32 287 - (74 239) 1 039 665
Operating profit /(loss) 632 658 48 163 19 225 3 077 30 050 (70 342) (2 511) 660 320
Profit /(loss) before tax 625 772 31 662 19 487 2 789 30 068 (82 317) (2 511) 624 950
Amortization/depreciation 166 779 29 669 15 450 5 777 1 152 4 647 - 223 474
EBITDA 799 437 77 832 34 675 8 854 31 202 (65 695) (2 511) 883 794
Adjusted EBITDA 793 921 79 543 34 676 13 976 19 015 (61 769) (2 530) 876 832
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Abbreviated balance sheetAppendix
[tys. PLN] 31 December 2017 31 December 2016
ASSETS
Total non-current assets 3 204 963 3 209 515
Total current assets 1 438 548 1 292 377
Total assets 4 643 511 4 501 892
EQUITY AND LIABILITIES
Equity attributable to shareholders of the parent 2 187 596 1 766 827
Total equity (2 951) (3 335)
Total non-current liabilities 2 184 645 1 763 492
Total current liabilities 1 369 282 1 695 514
Total liabilities 1 089 584 1 042 886
Total equity and liabilities 2 458 866 2 738 400
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Working capitalAppendix
[PLN thousand] 2017 2016
1. Current assets. including: 1 438 548 1 292 377
Inventory 364 517 299 265
Trade receivables and services and advances for deliveries 339 092 298 449
2. Cash and cash equivalents and short-term investments 547 733 474 340
3. Adjusted current assets (1-2) 890 815 818 037
4. Current liabilities. including: 1 089 584 1 042 886
Trade liabilities and advances taken 387 331 368 937
5. Short-term credits and other current financial liabilities* 234 483 199 067
6. Adjusted current liabilities (4-5) 855 101 843 819
7. Working capital including short-term credits(1-4) 348 964 249 491
8. Working capital (3-6) 35 714 (25 782)
* Other current financial liabilities include current bond liabilities. current finance lease liabilities + current derivative liabilities + factoring liabilities.
This document has been prepared solely for informational purposes. It includes only summary information. is not exhaustive. and may not be used as a sole basis for any assessment or analysis. CIECH S.A. makes no guarantees (explicit or implicit) regarding information presented herein and such information. including forecasts. estimates and opinions. should not be unduly relied upon. CIECH S.A. does not accept any responsibility for possible mistakes. omissions or irregularities found herein. The document is based on sources of information which CIECH S.A. deems to be reliable and accurate. however. it does not guarantee them to be exhaustive nor to fully reflect the actual situation. This document does not constitute an advertisement or a public offer of securities. It may include forward-looking statements that involve investment risks or uncertainties and may significantly differ from actual results. CIECH S.A does not accept any responsibility for consequences of decisions made based on this document. The responsibility lies exclusively with the party using the document. This document is protected by the Copyright and Related Rights Act. Copying. publishing or distributing it requires prior written consent of CIECH S.A.
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