Title: SIBUR Holding
1 SIBUR Holding
2DISCLAIMER
THIS PRESENTATION IS NOT FOR RELEASE, PUBLICATION
OR DISTRIBUTION IN OR INTO THE UNITED STATES,
CANADA, JAPAN, AUSTRALIA OR THE RUSSIAN
FEDERATION OR ANY JURISDICTION WHERE SUCH
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presentation is not an offer for sale of any
securities in the United States. Securities may
not be offered or sold in the United Sates absent
registration or an exemption from registration
under the U.S. Securities Act of 1933, as
amended. Sibur Holding has not registered and
does not intend to register any portion of any
offering in the United States or to conduct a
public offering of any securities in the United
States. This presentation is not a public offer
or advertisement of securities in the Russian
Federation, and is not an offer, or an invitation
to make offers, to purchase any securities in the
Russian Federation. This presentation does not
constitute an offer or invitation to sell or
issue, or any solicitation of any offer to
subscribe or purchase, any securities in any
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upon in connection with any contract or
investment decision or commitment whatsoever.
This presentation is only addressed to and
directed at (i) persons who are outside the
United Kingdom, or (ii) investment professionals
falling within Article 19(5) of the Financial
Services and Markets Act 2000 (Financial
Promotion) Order 2005 (the Order) and (iii)
high net worth entities, and other persons to
whom it may lawfully be communicated, falling
within Article 49(2) of the Order (all such
persons together being referred to as relevant
persons). This presentation must not be acted on
or relied on by persons who are not relevant
persons. Any investment or investment activity
to which this presentation relates is available
only to relevant persons and will be engaged in
only with such persons. This presentation and
its contents are confidential and should not be
distributed, published or reproduced (in whole or
in part) or disclosed by recipients to any other
person. Certain statements in this presentation
are not historical facts and are forward
looking within the meaning of Section 27A of the
Securities Act. Forward looking statements
include statements concerning our plans,
expectations, projections, objectives, targets,
goals, strategies, future events, future revenues
or performance, capital expenditures, financing
needs, plans or intentions relating to
acquisitions, our competitive strengths and
weaknesses, plans or goals relating to forecasted
production, reserves, financial position and
future operations and development, our business
strategy and the trends we anticipate in the
industries and the political and legal
environment in which we operate and other
information that is not historical information.
By their very nature, forward looking statements
involve inherent risks and uncertainties, both
general and specific, and risks exist that the
predictions, forecasts, projections and other
forward looking statements will not be achieved.
3SECTION 1 INTRODUCTION TO SIBUR
4INTRODUCTION TO SIBUR HOLDING
- Evident petrochemical leader in Russia, CIS, E.
Europe - Largest, most vertically integrated and most
profitable - Unique Siberian competitive advantage in
feedstock - Dominant upstream position in processing
associated petroleum gas - stable and growing - Strong track record, solid balance sheet,
transparent corporate governance - Synergy and counter-balance of business segments
through the cycles - Integration of business units allows stability in
volumes and profits - Highly attractive new investment projects to fuel
EPS growth - Construction of large, efficient plants in
2010-11 and beyond, using the uniquely
competitive raw materials base of W. Siberia
5SIBUR HOLDING IS RUSSIAS LARGEST PETROCHEMICALS
COMPANYRevenue in 2007 ( bln, 25.55 R/ average
exchange rate)
4.18
3.19
2.44
2.23
5.58
0.70
Petrochemical products
SIBUR Holding
Salavatnefte-orgsintez
Nizhnekamsk-neftekhim
Lukoil-Neftekhim
Kazanorg-sintez
4.18
0.93
0.92
0.25
Tires
SIBUR Holding
Amtel-Vredestein
Nizhnekamsk Shina
0.93
0.30
0.17
2.58
Mineral Fertilizers
SIBUR Holding
1.15
1.13
0.91
0.30
SIBUR Holding
Acron
Eurochem
Uralkali
Silvinit
Estimation including
fertilizers Source Company's report
6OVERVIEW OF SIBUR HOLDING ASSET BASE
- Advantages
- Proximity to markets
- Flexibility - resources are reallocated between
plants given various market conditions - Business stability
- Disadvantages
- High transport costs
- Additional overheads
Yuzhno-Balyksky GPP
SIBUR-Geotekstil
Nyagangazpererabotka
JSC SIBUR
Noyabrskgazpererabotka
Yaroslavl Tire Plant
Gubkinsky GPP
SIBUR-Neftekhim
Metafraks
EUROPE
Sibur-PETF
Spetszisterny
Tomskneftekhim
Head office in Moscow
Siburgazservice
Sibmetakhim
LLC SIBUR
Plastic
Kemerovsky Azot
Orton
Voronezhsintezkauchuk
AMERICA
Krasnoyarsk Rubber Plant
CIS
Omskshina
ASIA
Matador-Omskshina
Tobolsk-Neftekhim
Uralshina
Hydrocarbon Feedstock
Voltyre-Prom
Synthetic Rubbers
SIBUR-Khimprom
SIBUR-Volzhsky
Plastics and Organic Synthesis
Volzhsky Azotno-Kislorodny Zavod
Uralorgsintez
Mineral Fertilizers
Volzhsky Kauchuk
Toliattikauchuk
SIBUR-Russian Tires
Novokuibyshev NHK
Logistics and Operations Support
Saransky Plant Rezinotekhnika
A diverse, vertically-integrated asset portfolio
7SIBUR HOLDING IS A MAJOR PLAYER IN MOST OF ITS
PRODUCT SEGMENTS2007
PRODUCTION
- INTERMEDIATES
- Intermediates are used as raw materials in the
production of different types of polymers and
other petrochemicals - Because of transport limitations export and
import of intermediates are very limited - Intermediates are usually processed where they
are manufactured
49
Butadiene
32
Isoprene
Propylene
28
- FINAL PRODUCTS PE, PP, TIRES
- These final products are competitive only in the
domestic market - Because of under investment in these chemical
segments there is a significant import share in
the domestic market - Domestic chemical producers plan to expand
output reducing imports
23
Polypropylene
Tires
34
17
Polyethylene
- FINAL PRODUCTS FERTILIZERS, LPG, RUBBERS
- These final products are competitive in foreign
markets - Domestic output significantly exceeds domestic
demand, so a significant volume of these products
goes to export
Synthetic rubbers
42
30
LPG
Nitrogen fertilizers
8
Source Company analysis
8SIBURS BUSINESS IS ORGANIZED AROUND FIVE
DIVISIONS BASED ON PRODUCT SPECIALIZATION AND
MANAGEMENT STRATEGIC FOCUS
MARKET SALES
FERTILIZERS Sales RUR 12 bln
Fertilizers
Natural gas
HYDROCARBON FEEDSTOCK Sales RUR 49 bln
SIBUR RUSSIAN TIRES Sales RUR 26 bln
Rubbers Caprolactam Cords
Tires
SYNTHETIC RUBBERS Sales RUR 44 bln
LPG
Monomers, rubbers, MTBE, solvents, absorbents
APG NGL Distillate
PLASTICS AND ORGANIC SYNTHESIS Sales RUR 41 bln
LPG Naphtha
Polyethylene, polypropylene, polystyrene, PET,
PVC, glycols
Dry gas, LPG
Core business
Non-core business
Operationally independent Note Sales figures
are based on managerial accounting (2007) and
include external and internal turnovers
9SECURE FEEDSTOCK, VERTICAL INTEGRATION AND
PRODUCT DIVERSITY
40
95
CHEMICAL BUSINESS
FEEDSTOCK BUSINESS
SOLD TO MARKET
SOLD TO MARKET
OILGAS COMPANIES
Fertilizers SOLD TO MARKET
Nitrogen Fertilizers Production SIBUR-Fertilizers
PROCESSING
Sibur Gas Processing Plants incl. JV with
TNK-BP
Dry gas
5
Production of plastics, rubbers and other
petrochemicals
Plastics SOLD TO MARKET
Gas fractionation plants
APG
NGL
PROCESSING
LPG
60
Rubbers SOLD TO MARKET
75
Naphtha, LPG
LPG
Naphtha
LPG, Naphtha
LPG
Rubbers PROCESSING
25
Tire Production SIBUR-Russian Tires
NGL
SOLD TO MARKET
100
- JV with TNK-BP (majority owned by SIBUR)
10SHAREHOLDERS AND CORPORATE STRUCTURE
GAZFUND
GAZPROMBANK
Business unit
Business unit structured as a separate legal
entity
251 share
70-1 share
Mineral Fertilizers SIBUR-Fertilizers (100)
Entities under control of SIBUR Holdings
subsidiaries
SIBUR HOLDING
100
?anagement company LLC SIBUR
- Kemerovsky Azot (74.64)
- Mineralnye udobrenia (3.15)
-
Tires SIBUR-Russian Tires (100)
Hydrocarbon Feedstock SiburTyumenGas (100)
Synthetic Rubbers
Plastic and Organic Synthesis
- SIBUR-Volzhsky (100)
- Yaroslavl Tire Plant (87.76)
- Omskshina (83.11)
- Uralshina (100)
- Voltyre-Prom (82.23)
- Saransky Plant Rezinotechnika (91.56)
- Matador-Omskshina (50)
- SIBUR-Neftekhim (99.99)
- Tomskneftekhim (100)
- Sibur-PETF (100)
- Plastic (67.10)
- SIBUR-Khimprom (100)
- SIBUR-Geotekstil (100)
- National Polymers (50)
- Orton (71.49)
- RusVinyl (50)
- Yugragazpererabotka (51)
- Gubkinsky GPP (100)
- Noyabrskgazpererabotka (100)
- Yuzhno-Balyksky GPP (100)
- Nyagangazpererabotka (100)
- Tobolsk-Neftekhim (100)
- Voronezhsintezkauchuk (75.00)
- Krasnoyarsk Rubber Plant (97.25)
- Toliattikauchuk (100)
- Novokuibyshev NHK (100)
- Volzhsky Kauchuk (100)
- Uralorgsintez (88.21)
Logistics and Operations Support
Methanol production Sibmetakhim (66.66)
- Spetszisterny (100)
- Siburgazservice (100)
- Volzhsky Azotno-KislorodnyZavod (91.27)
JV with TNK-BP (incorporating Belozerny GPP and
Nizhnevartovsky GPP) Only main subsidiaries
are presented Option rights to acquire 48,07
11CORPORATE GOVERNANCE
- The Company has adequate shareholder governance
procedures that are specified in internal bylaws
and regulations - SIBUR Holding has a formalized dividend policy
at a parent company level - The Company discloses data about its beneficial
shareholders - SIBUR Holdings financial transparency is high
(audited IFRS financials since 2003, auditor -
PWC) - SIBUR Holding provides information on its
strategy, operating performance and investment
program - The BOD includes two independent directors
- Board committees have been created recently and
will engage in the Boards decision-making
process (on audit, on remuneration, on finance,
on strategy and investments)
SHAREHOLDER RIGHTS
4.8
Dividends paid (RUR, bln)
0.2
2005
2006
TRANSPARENCY, DISCLOSURE
BOD STRUCTURE, EFFECTIVENESS
12SECTION 2 OPERATIONS AND FINANCIAL RESULTS
13OVERVIEW OF SIBURS PRODUCTION AND SALES CHAIN
SUPPLIERS
PRODUCTION Mln tones
SALES
11.4
Dry gas
2.9
LPG
2.0
Monomers
Rubbers
0.6
Polymers
0.5
Organic synthesis
1.1
Fertilizers
1.6
0.8
Fuel
Tires
11.8
APG associated petroleum gas NGL natural
gas liquefied LPG liquid petroleum gas
Bln m3 Mln items
diverse feedstock, product portfolio delivering
a stable business model
14HISTORICAL IFRS FINANCIALS OVERVIEW
100
100
100
100
14
39
38
67
39
70
44
77
Current assets
86
Equity
56
55
51
51
PPE
33
30
Liabilities
23
Other
6
6
10
6
2004
2005
2006
2007
Sources Consolidated audited IFRS data
15FINANCIAL BENCHMARKING2007
Sales, bln
Sales growth,
78.2
BASF
Westlake Chemical
28
24
66.1
SIBUR Holding
Dow Chemical
12.5
19
Chevron Philips Chemical
Borealis
8.9
18
Lanxess
BASF
8.6
Borealis
Dow Chemical
9
6.7
Nova Chemicals
Nova Chemicals
3
5.6
SIBUR Holding
Lanxess
2
3.2
Westlake Chemical
Chevron Philips Chemical
2
ROE,
Operating profit margin,
SIBUR Holding
29
SIBUR Holding
20
Borealis
27
9
BASF
BASF
22
8
Nova Chemicals
Dow Chemical
20
Dow Chemical
8
Chevron Philips Chemical
Borealis
17
7
Chevron Philips Chemical
9
7
Westlake Chemical
Lanxess
5
Westlake Chemical
8
Nova Chemicals
N/A
2
Lanxess
Source Companys annual reports
16SECTION 3 BUSINESS DEVELOPMENT
17SIBURS SUSTAINABLE COMPETITIVE ADVANTAGE
NATURAL LOGISTICAL SHIELD
AVAILABLE AND COST COMPETITIVE FEEDSTOCK BASE
Additional transportation costs give domestic
producers extra competitive advantage
Russian petchem plants
/equivalent tons
Rotterdam (Naphta)
Raw material prices Europe/USA/China vs. Russia
1992-2006
Rotterdam
China (Naphta)
Black Sea
USA (Natural gas)
Persian Gulf
China
Russia/Gazprom (Naphta)
Russia (Natural gas)
Indicative transport costs Russia China - 160
per ton Russia Europe - 120 per ton
Russia (APG)
DOMESTIC DEMAND IS A KEY DRIVER OF THE RUSSIAN
MARKET IN THE MID-TERM
COST COMPETITIVENESS
Polyethylene demand in 2006 (kg per capita)
Producers variable cash costs on foreign markets
(/ton)
Annual per capita demand growth for plastic
materials in 1980-2010 ()
POLYETHYLENE
RUBBERS
48.6
USA
Russia
327
Middle East
1 630
6.9
6.2
25.1
Japan
4.4
CHINESE MARKET
Russia
China
1 730
472
3.5
3.5
2.4
24.9
Hungary
China
603
10.3
Brazil
Japan
NAm
LAm
Asia
EEur
WEur
Northeast Asia
669
9.3
Turkey
9.2
China
Middle East
1 650
380
Russia
Russia
8.5
EUROPEAN MARKET
Russia
Europe
1 820
407
604
Europe
Sources Company analysis, PlasticsEurope, WG
Market Research Statistics
18RUSSIA WILL HAVE TO EXPORT ITS PETROCHEMICAL
PRODUCTS
Increase in light hydrocarbon supply
Reduction in flared APG volumesbn m3
Increase in wet natural gas production of
natural gas produced
60
100
wet
flared
20
57
utilized
dry
35
2007
2011
2007
2015
Conversion capacity growth outpaces domestic
demand
Russias projected polyethylene balance in 2011
Russias projected polypropylene balance in 2011
1 608
1 835
700
1 222
227
522
Consumption Production Net-export
Consumption Production Net-export
Additional petchem capacities in Russia have to
be globally cost competitive world-scale and
world-class with competitive raw materials and
product logistics
Source CMAI
19BUSINESS UNITS STRATEGIC GOALS ARE SET TO
INCREASE VALUE
STRATEGIC GOAL
- Gain stable long-term competitive advantage in
Western Siberia - Support leading positions by having long-term
relations with oil and independent gas companies
through long-term supply and JV contracts that
will limit their presence in petrochemical
business - Identify new feedstock sources, such as ethane,
and develop new regions such as Samara, Orenburg
and Eastern Siberia
HYDROCARBON FEEDSTOCK
- Strengthen and achieve leading positions in the
market by building export-oriented world-class
production capacities for polyolefins and
plastics - Leverage market opportunities in the fast growing
Russian plastic market - Build a professional team and create necessary
skills for investment project implementation
PLASTICS AND ORGANIC SYNTHESIS
- Sharpen profile as a regional market leader for
commodity rubber - Increase product quality and focus on domestic
and foreign clients requirements - Raise operational efficiency of current
production - Selectively introduce high-margin products with
market potential in Russia and CIS
SYNTHETIC RUBBERS
- Provide management resources to consolidate
management of Gazprom Groups mineral fertilizers
business - Identify opportunities to convert Gazprom Groups
feedstock resources into additional margins by
managing the implementation of a consolidation
strategy for independent fertilizer producers in
Russia - Create additional value through efficiency
improvements
MINERAL FERTILIZERS
- Increase enterprise value by selective
modernization and specialization of existing
production, cost-cutting and increasing output of
targeted types of tires and branded products - Build the most efficient tire production in
Russia - Seek a strategic partner for Sibur-Russian Tires,
while monitoring the domestic automobile industry
TIRES
20CAPITAL EXPENDITURES ARE TARGETED AT CORE
BUSINESSES AND OPERATING COST REDUCTION RUR Bln
149
46.1
Hydrocarbon feedstock
19.9
66.7
Plastics and organic synthesis
8.0
6.6
5.1
Other
17.7
1.6
Maintenance CAPEX
18.5
07
2008-2012
04
05
06
2003
Sources 2003-06 consolidated audited IFRS
data, 2007-2012 ?ompanys unaudited data and
analysis
21MAJOR INVESTMENT PROJECTS
WESTERN SIBERIA APG PROCESSING INCREASE
- Main project parameters
- Construction of Vyngapurovsky gas processing
plant, product pipeline system and loading rack
0.5 bln - Belozerny gas processing plant - third line
construction (incl. feedstock pipeline
construction and compressor station expansion)
0.5 bln - Renewal and construction of other production
capacities - Project realization - 2007-2011
- Estimated CAPEX 1.8 bln
22.5
APG processing capacities, bln ?³
58
14.2
2011
2007
PYROLYSIS PLANT MODERNIZATION AND POLYOLEFIN
PRODUCTION SET UP
- Main project parameters
- Building site Tomskneftekhim
- Reconstruction of the existing capacities
- Pyrolysis 380 thousand tons
- Polypropylene conversion to HDPE production
140 thousand tons - New capacities
- - Polypropylene 200 thousand tons
- Project realization - 2007-2011
- Estimated CAPEX 0.7 bln
Propylene
PP 200
Pyrolysis-380
HDPE 140
Ethylene
22MAJOR INVESTMENT PROJECTS
- Main project parameters
- Building site Tobolsk-Polymer
- Capacities
- Propylene 510 thousand tons
- Polypropylene 500 thousand tons
- Project realization - 2007-2011
- Estimated CAPEX 1.3 bln
- PMC Flour
- Licensors
- Dehydrogenation - UOP
- Polypropylene - INEOS
POLYPROPYLENE CONSTRUCTION IN TOBOLSK
PP 500
Dehydro-genation
Propylene 510
Propane 612
NGL 2500/3000
TOBOLSK Gas fractionation plant
PVC CONSTRUCTION IN N. NOVGOROD
- Main project parameters
- Building site SIBUR-Neftekhim
- Joint venture (SIBUR Holding and Solvin)
- Capacities
- PVC 330 thousand tons
- Caustic soda 220 thousand tons
- Project realization - 2006-2010
- Estimated CAPEX 0.9 bln
Electrolysis
Caustic soda 220
Salt 358
VCM
PVC - 330
Pyrolysis
VCM 332
Ethylene 156
23SIBUR HOLDING IN THE FUTURE
SIBUR 2007 SIBUR 2012
22 bln m3
Feedstock base APG processing NGL
consumption Output Polymers Synthetic
rubbers Mineral fertilizers Tires
Financials Consolidated Sales Polymers sales
14 bln m3
5 mln tons
3 mln tons
1.6 mln tons
0.5 mln tons
0.7 mln tons
0.6 mln tons
1.6 mln tons
Probably divested
11.8 mln items
Probably divested
7.1 bln
5.4 bln
2.0 bln (28)
0.7 bln (13)
Note financials for the year 2012 are calculated
with the use of 2007 year prices
24SIBUR INVESTMENT HIGHLIGHTS
- Evident market leadership in most major products
- Sustainable competitive advantage (due to access
to competitively priced feedstock) and track
record of financial success - Fully integrated company (unlike other Russian
petrochemical producers)
LEADING RUSSIAN PETROCHEMICALS POSITION
- Advantaged feedstock base ensures profitable cash
flow generation - High level of vertical integration further
strengthens business model - Dry gas production and sales constitute a natural
hedging instrument - Diverse product offering and customer base
ROBUST AND PROVEN BUSINESS MODEL
- Successful operational and financial turnaround
since 2002 - Demonstrated ability to meet/beat expectations
and deliver on key targets - Streamlined corporate structure aligned with
strategic goals consolidation of minority
interests largely achieved - Clear strategy and investment plans
STRONG MANAGEMENT WITH PROVEN TRACK RECORD
-
- Russia is well positioned in the global
petrochemical industry - Favorable geographical location to export to
major markets - Potential for growth in consumption of key
petrochemical products - Current global petrochemical prices are favorable
due to extended cycle
A COMPANY IN AN ATTRACTIVE INDUSTRY