By: ICN Bureau
Last updated : April 30, 2021 7:38 am
The share of petrochemicals in SIBUR’s EBITDA structure reached a record 65.6%
largest integrated petrochemicals company in Russia Sibur reported a revenue of RUB 173 bn, up 12.8% for Q1 2021. The company also posted EBITDA of RUB 74 bln, up 28.6% Q-o-Q. Peter O’Brien, Chief Financial Officer and member of the Management Board at SIBUR, said: “Our results for the first quarter of 2021 confirm that SIBUR has chosen the right long term development strategy, focusing on unlocking the potential of our new projects and gradually expanding our petrochemical business, which is demonstrating exceptional growth. As our new facilities reached design capacities, we were able to increase the share of sales of petrochemical products, which, together with higher prices observed in the quarter, drove the increases SIBUR’s EBITDA and EBITDA margin, which reached 42.4%.
“The Company’s results were supported by a favourable market environment amid the partial lifting of lockdown restrictions and the gradual recovery of the global economy. The increase in prices was also driven by a temporary supply and demand mismatch resulting from the shutdown of a number of US facilities amid heavy snowstorms in the two biggest oil refining states.
“Compared to last year, when the petrochemical sector was first hit by the pandemic, today the industry is demonstrating robust growth, consistently outpacing growth in the global economy.
“Thanks to the combination of these two factors – a favourable macro environment and the implementation of initiatives aimed at expanding the Company’s petrochemical business – the share of petrochemicals in SIBUR’s EBITDA structure reached a record 65.6%.
“Strong first-quarter results provided us with additional liquidity which we used to make early debt repayments. As a result, SIBUR’s net debt decreased by 12.5% compared to the end of 2020. The net debt to EBITDA ratio in RUB terms decreased to 1.6x from 2.3x at the end of 2020.
“In terms of operations during the ongoing COVID-19 pandemic, all our facilities were operating as normal as of the end of the reporting period, as opposed to the shift-camp work model that was introduced in 2020. Nevertheless, we continue monitoring the public health situation, and as our results over the past twelve months have demonstrated, we are ready to adapt as necessary.”
Financial results
In Q1 2021, revenue increased by 12.8% to RUB 173.4 billion, up from RUB 153.7 billion a quarter earlier, as a result of the following trends across business segments:
Revenue in the Olefins & Polyolefins segment increased by 27.7% quarter-on-quarter to RUB 74.1 billion. This growth was largely attributable to an increase in sales of polypropylene and polyethylene as a result of increased production at ZapSibNeftekhim, as well as to a rise in prices for these products.
Revenue in the Plastics, Elastomers & Intermediates segment increased by 17.0% to RUB 42 billion, mainly as a result of positive ruble pricing dynamics across all product groups.
Revenue in the Midstream segment increased by 10.9% to RUB 44.1 billion, mainly due to an increase in prices for LPG and naphtha and despite an increase in internal sales to Zapsib
In Q1 2021, operating expenses slightly increased quarter-on-quarter to RUB 115.6 billion from RUB 113.9 billion. This result was driven mainly by an increase in feedstock expenses amid higher purchasing volumes of raw NGL and naphtha and higher prices. These expenses were partially offset by a decline in expenses associated with third-party services and maintenance.
Capital expenditures decreased by 22.4% quarter-on-quarter to RUB 25.3 billion.
Operating results
In Q1 2021, SIBUR’s gas processing plants processed 4.8 billion cubic metres of APG, down 5.9% quarter-on-quarter, amid a decrease in associated petroleum gas (APG) supplies following the extension of the OPEC+ agreement and colder weather conditions in West Siberia. At the same time, raw NGL fractionation volumes remained nearly unchanged from Q4 2020 at 2 million tonnes. External LPG sales decreased by 11.9% to 669 thousand tonnes due to an increase in internal consumption as ZapSibNeftekhim reached its design capacity.
SIBUR increased sales of most of its petrochemical products compared with Q4 2020. Polypropylene sales increased by 10.3% to 321 thousand tonnes, and polyethylene sales increased by 11% to 434 thousand tonnesSales of plastics and organic synthesis products slightly decreased from 209 thousand tonnes in Q4 2020 to 203 thousand tonnes. Sales of elastomers remained unchanged from the previous quarter at 109 thousand tonnes.
In Q1 2021, EBITDA in the Olefins & Polyolefins segment reached RUB 36.5 billion, up 29.3% quarter-on-quarter and up 232.9% year-on-year. This growth was mainly due to an increase in polypropylene and polyethylene production volumes at ZapSibNeftekhim and positive price dynamics in the segment.
The segment’s EBITDA margin increased by 0.8 p.p. quarter-on-quarter to 42.7%.
The production of olefins and polyolefins increased by 2.5% quarter-on-quarter, as ZapSibNeftekhim reached its design capacity utilisation rate, thanks to which the production of polyethylene and polypropylene increased by 5.5% and 4.7%, respectively.
External sales of olefins and polyolefins rose 9.1% to 844.5 thousand tonnes quarter-on-quarter due to increased production volumes and sales of existing stockpiles from ZapSibNeftekhim.. Domestic sales increased by 51.4% year-on-year and amounted to 380.5 thousand tonnes.
In Q1 2021, the PE&I segment’s EBITDA reached RUB 11.7 billion, 41% higher than in Q4 2020 and more than five times higher than a year earlier. This was due, above all, to positive dynamics in prices for elastomers, MEG and EPS in the first quarter and despite an increase in feedstock prices for these products. The segment’s EBITDA margin increased by 4.2 p.p. to 26.4% quarter-on-quarter, due above all to an increase in product margins.