Indorama Vntrs Unsp/Adr

Good morning, welcome everyone and thank you for taking time for joining us for Indorama Ventures full year 2024 reserves briefing meeting. My name is Vikas Jalan, Investor Relations and Planning at IDL. Joining me today, Mr. D.K. Agarwal, Deputy Group CEO. Muthu Kumar, Parmasivam and Kumar Radha, President and Co-Leaders for CPAC segment. Alistair Amphor, joining us online from the U.S., Executive President for Indovina. And Diago Bori, Executive President for Fibers. A quick disclaimer, this meeting is being recorded and a replay of this session will be available on our website after the meeting. We have made a few assumptions and estimates on future industry and business trends based on an analysis of available information at this point in time. So with that, I now invite Mr. Agarwal to first share the business and financial highlights and after the prepared presentation, we will open up the session, the floor for Q&A. Over to you, please, Mr. Agarwal.

Thank you, Vikas. Very good morning to all of you joining us on the year-end analyst meet. As we always present, let us review the microeconomic landscape which directly or indirectly impacted the industry as well as our business. The world is passing through one of the biggest turmoil periods. In quarter four, the U.S. and China saw some marginal improvement. supported by rising production and new orders, while Europe remained challenging due to weak demand, as you can see on the extreme left top graph. The freight rates declined due to additional vessel capacity which got added, and we also saw improvement in Red Sea crisis. On energy front, weak demand and ample supply kept oil prices lower. They have been very volatile in fourth quarter 2024. Meanwhile, interest rate marginally declined and inflation continues to be moderated. Although, as you know, post-Trump policies, we see that interest rates may remain elevated for some time. Looking at what is the recent U.S. elections has impact on our business, are expected to support the U.S. economy in the coming years. As you know, the IVL has been a geographically diversified company. As a local producer in the United States, generating nearly 40% of the revenue of IVL and 50% of the EBITDA. And if you take entire Americas, include Brazil and America, Brazil and Mexico, it is 70% of IVL EBITDA. So IVL, we believe, will tend to benefit from potential tariff increases which may happen, potential corporate tax reductions and lower shale gas prices driven by increased oil and gas production. as drill baby drill works. However, this wind also brings headwinds, starting with inflationary pressure that could impact demand for certain products, particularly in the consumer demands like endovenia and fibre. Additionally, potential trade barriers would benefit IVL operation due to local production waste, as I mentioned. With these challenges, our significant presence in the United States provides us a strong advantage and overall we expect positive impact for IVL from this move in the United States. Now let me walk you through the financial results for the entire year. In 2024, we know that industry has been very challenging. IVL took decisions, timely actions to fortify its market leadership. and secure a sustainable growth path as the company pilots towards systemic generational change in the chemical industry. In a year of alignment, mobilization and launch management began executing a company's three years IVL 2.0 transformation strategy. As you can remember, in CMD, we announced in March, with a singular focus on optimizing global assets, this means shutting down high-cost assets, reducing debt, enhancing cash flows, and implementing next-generation digital and leadership program to achieve our stated 2026 targets. Now this, I am very happy to report that this disciplined self-help management actions helped bolstered full-year earning as global chemical markets continue to struggle through 2024 in one of the most challenging downturns in the recent industry history, as you might have noticed from results of many chemical industries. The industry's future is being irrevocably shaped by long-term macroeconomic themes, including the unequal impact of peak oil between East and West, as we know the feedstock disparity between East and West, China's ambition to continue to expand its own production, India's enormous growth engine, and one of the most unstable geopolitical environments in a generation. Amid this volatile backdrop, We are satisfied that I will post a full year reported EBITDA of $1.4 billion in 2024, which is an increase of 26%, an adjusted EBITDA of $1.522 billion, an increase of 10% year-on-year. Though performance varied from business to business, improved volume across all segments and proactive management actions resulted in the overall improved earning for the year. The pivots made this year from the assessment of make versus buy decision. As you know, we shut down a lot of PTA capacity. We went into buying PTA. Resulted in a 4% year-on-year rise in volumes. So we protected our end market on a like-to-like basis. Persistent overcapacity, particularly in our petrochemical business and PET, kept benchmark spreads under pressure, affecting the integrated PET and MTV businesses. There were some elements as polyester fiber and integrated MEG spreads improved through the year, boosting lifestyle fiber and maintaining intermediate chemical performance. You will see this in coming slides. Although there was an increase in volumes, industry challenges offset disadvantages. Steps taken by the management and a strong emphasis on cost control have significantly contributed to the improved performance this year. The asset optimization plan outlined in March, where we decided to rationalize few high-cost facilities, has thus far yielded an additional 48 million in fixed cost reduction in 2024, with further enhancement expected as rationalization progresses and additional savings materialize to support earning growth in 2025. We expect another 100 million additional fixed cost savings coming in 2025. These actions have contributed to higher operating rate for the group, climbing 8% in this year. Still in light of continued industry pressure, the company has determined that further management actions are necessary in addition to the significant measures already undertaken in 2024 in a sustained drive to achieve our stated 2000 IVL 2.0 objectives. And we will discuss these further details in the upcoming chemical markets in March 25, which is a week ahead. Lower energy costs, especially in Europe, provided an uplift of $55 million year-on-year across the group. Moreover, significant currency movements in certain markets, as you know, the currency has weakened. Brazil, Nigeria and Egypt brought a $48 million reduction in our fifth convergent cost, including variable and fixed. In 2024, looking at cash flow, IVL generated $1.33 billion of its cash flow from operation. Of which, 110 million was used for one-time severance and related expenses. As you know, we shut down some facilities. And 229 million was spent on higher short-term working capital to stabilize the supply chain for PTA and PX purchases. You know, we landed up with some high inventories in CPET business. And this extra working capital outflow is expected to reverse as cash flows in 2025 as the supply chain stabilizes. You will be pleased to note that fiber nearly improved their working capital by 100 million. So, CPAT increased by 300 plus and I think they will get normalized very soon in next coming two quarters. The consolidated fourth quarter adjusted EBITDA year on year was higher by 29% from improved operation, but lower quarter on quarter by 16% due to seasonality. So, that is on the fourth quarter. Now, it's important to get an update on IVL 2.0. It's a quick snapshot summarizing the update on asset optimization program. In second quarter 24, we executed a comprehensive asset rationalization program aimed at strengthening our asset base, improving cash flow, and enhancing quality of earnings. We took the bold steps of shutting down our PET, PTA assets in Rotterdam, PTA assets in Canada, EU assets in Australia and others where already impairments were taken in second quarter 2024. These actions as I mentioned earlier are already yielding results with initial fixed cost saving of $48 million realized in 2024 on track to achieve a saving of $160 to $170 million per annum which will basically translate into an EBITDA upliftment of $130 to $140 million per annum by 2025-2026. Alongside this cost savings, operating rates improved to 82% in second half 24 and 495 manpower reductions achieved in 2024 on these sites. This excludes the people whom we are further rationalizing in the fiber business. We also anticipate a one-time cash inflow of $150 to $200 million from land sales related to these racialized assets. Now, these are not accounted at present. This will be accounted on cash basis except for Rotterdam, where we have accounted for $51 million as a firm agreement is getting reached with the buyer. We will further provide update on IVL 2.0 in our coming CMD next week. Now, let us see our results in 2024 in more details versus 2023. As I mentioned, I will deliver 2024 adjusted EBITDA of $1.52 billion, which is an increase of 10% year-on-year against the performance year of 2023. As I mentioned, supported by a reduction in restocking challenges, a moderate recovery in volume growth by 4%, and fixed cost saving from rationalization efforts. If you look at segment-wise, CPAC performance improved, benefiting from a stronger performance in specialty chemicals. Cost savings from rationalization efforts helped offset the softer China benchmark spreads, as you know, China benchmark spreads have been very weak, demonstrating the effectiveness of our ongoing efficiency initiatives. Despite external market challenges, strategic cost controls and specialty product strength and health maintain the profitability of this segment. Looking ahead, the segment expects improved earnings supported by further fixed cost reduction as you will get annualized benefit from asset rationalization. Intermediate chemical performance got impacted due to lower MTB margins because MTB margins dropped, but they were offset with improved integrated MEG margins due to shell gas advantage. Indovenia delivered a strong performance with adjusted EBITDA up 29% year-on-year. Sales volume grew 4%, driven by destocking normalization and demand recovery in South America. North America benefited from higher integrated margins, while South America saw gains from a stronger sales mix. OMA growth was supported by crop solutions and home and personal care, with an additional $100 million in licensing income from downstream products. These are PO licensing. Now looking at the fiber business, the growth in fiber segment was primarily driven by improved lifestyle benchmark spreads. We have seen improvement in the fiber benchmark spreads in China and higher volumes in all market segments showing positive momentum in all three verticals. Moreover, the segment was benefited from reduced fixed costs through various management actions. The consolidated fourth quarter adjusted EBITDA year-on-year was higher by 29%, as you can see, $358 million, from improved operation but lower quarter-on-quarter by 15% due to seasonality factors. As you know, fourth quarter is normally weaker. Now, this is an important side to look at the regional breakup of IVL performance. Looking at performance on a regional level, in 2024, the company demonstrated robust regional performance across key markets. And I think there where the geographical diversity paid. You can see that Asia delivered a stronger performance, primarily supported by better lifestyle fibers, benefiting from improved PSF margins. CPET performance remained resilient due to increased volumes and higher premiums despite lower benchmark spreads. In Americas, which constitutes 70% of the IVL debita, continued to be a core strength due to its consolidated and well-protected market environment, which contributes nearly, as I mentioned, 70% of the EBITDA. Operations in Indovenia, which is basically entirely in Americas, delivered relatively better results, while CPET faced some challenges in MTV performance, which were normalized and offset with the improvement in integrated MEG margins. Meanwhile, the EMEA regions, and you can see a big swing in EMEA regions, experience a significant turnaround and this is the impact of our rationalization of the set. So, the strategic asset rationalization CPET enabled the company to adopt a make-or-buy approach for PTA procurement, thereby replacing the high-cost production with more cost-efficient purchasing. And additionally, fiber business achieved cost savings through transformation actions, further enhancing the region's recovery. So, this gives you a reasonable, a reasonable breakup of the earnings. Now, I hand over to Muthu to take us through the CPAT performance.

Thank you. Thank you, Kavalji. Sawadika. Good morning, everyone. We will cover the CPAT segment in specific. CPET, along with intermediate chemicals, delivered and adjusted a bit of 1.012 million, a solid 5% year-over-year increase, demonstrating our ability to navigate market headwinds while executing strategic optimizations as well as driving resilience through our management actions. Looking at combined PET here, which excludes IC, we will look at intermediate chemicals separately in a slide. Without IC, we delivered and adjusted a bit of 768 million, as you can see here. Overall, stronger specialty chemicals performance, as we saw earlier, and the cost savings is quite important. From the asset rationalization, helped offset the weaker China benchmark spreads, which dropped about $22 from 23 to 24. Now, integrated pet was focused on managing the oversupply, while enhancing efficiency, delivering 596 million in adjusted EBITDA, which is a drop of 4% year over year. Agile management actions, including 47 million in fixed cost savings from asset rationalization and stable PET sales volumes, minimize this impact from the oversupply situation and the drop in industry benchmark spreads. As we discussed earlier, We see the full benefit of the resuscitation coming in 2025-2026. The resuscitation efforts, as you all know, in 2024, a lot of it was focused on the CPET, this business, resulting from a comprehensive review of make-or-buy opportunities for PTA and the evolving industry landscape. Our management maintained PET sales through these efforts with volumes improving by 1% on a like-to-like basis through the year, underscoring resilient end market demand. In 2023, globally, there was a contraction in demand, which significantly improved in 2024, and we are estimating a growth of about 6% globally on the PET demand, including ARPIT. Looking ahead, 2025 will see full benefits of this rationalization efforts, including further fixed cost savings and a one-time gain of approximately 100 million from planned land sales from these rationalized assets. Now, looking at packaging, this vertical gave stable margins in a high-value business with an adjusted EBITDA of 98 million, which is a drop of 5% year-over-year, but a gain of 9% from volume growth as well as cost reduction measures were offset by reduced spreads due to the sharp devaluation in Nigerian and Egyptian currencies. Despite this, the business maintained a healthy EBITDA margin of 20%, reinforcing its position as a high-margin, value-driven segment. Now, looking at the specialty chemicals, this is a really strong turnaround story with adjusted EBITDA surging from 7 million in 2023 to 74 million in 2024. And there has been a growth both in volumes and spreads. And a lot of the benefit also came from the management actions taken on improving operational efficiency and market strategy. We will have some more detailed discussion on specialty chemicals in the next slide. Now, looking at the recycling, this vertical reported marginal improvement in performance this year, driven by higher volumes and lower energy costs. Similar to specialty chemicals, what we did last year, we have formed a new dedicated management team for the recycling vertical in order to bring more additional focus and forming a strong platform on recycling for future value creation. We just wanted to show, highlight what turnaround has been made on the specialty chemicals on this slide as a case study, let us say. Specialty chemicals, which is, you know, we talked about this turnaround. And this, the reason why we want to show is also to demonstrate our forward-looking business plan for the next three years, which has been focused on developing our value-added portfolio. And this slide, you can see the progress that we are making in that trend. Now, after a low point in 23, where the EBITDA was only 7 million, we have actively worked on making a significant recovery, which has shown the EBITDA increasing to 74 million. Now, this has been driven by a clear focus on operational excellence, organizational capacity and agility, as well as the market strategy, how we are optimizing the product value mix and the value pricing. So on the operational efficiency side, we have, through our management actions, have enhanced the plant reliability and yields, ensuring more efficient operations as well as considerable reduction in fixed cost. As far as the organization is concerned, we have reorganized to support innovation and growth, making our business more agile and responsive to evolving customer needs. On the approach to market, go-to-market strategy, it is focused on value pricing and an expanded customer and application base, looking at several new applications and the high-value applications in premium markets, leveraging on the strong partnerships that IVL has had with our global base of customers. Now, after this performance 24, we do see even greater potential ahead for this vertical. With more than 400 customers, including large global brands, 39 patents and a solid pipeline of innovative products. With some of these new innovations, we have also shown us pictures here. We are actively pursuing new levers for further growth in specialty chemicals, and we will make sure that this momentum continues. With that, I'll hand it over to my co-leader, Kumar Lata.

Thank you, Motu. In 2024, intermediate chemicals delivered and adjusted a beta of $244 million, attracting some stability amid market adjustments. The segment saw good performance in integrated MEG and PEO business, benefiting from improved Asian MEG margins and a sustained serial gas advantage. However, MTBE business did face some headwinds as industry margins normalized from a record high in 2023, declining from $651 per ton to $445 a ton, impacted by new capacity additions. On a quarterly post-time point, in the fourth quarter of 2024, intermediate chemicals reported an adjusted beta of $49 million, marking a 31% quarter-on-quarter decline that was driven by seasonal shift in MTBE spreads, partially offset by normalization of gas tracker operations. We saw MTB performance soften as spreads fell from $460 a ton in the third quarter of 2024 to $249 a ton in the fourth quarter of 2024, mainly due to seasonal demand weakness and higher winter heating-related feedstock costs. Integrated MEG and PEO rebounded quarter-on-quarter, supported by the resumption of the gas cracker operations. Thank you. Now I hand it to Alastair, who is joining us online.

And good morning, everybody. Indovindia delivered a strong financial performance in 2024, with adjusted EBITDA rising to $352 million. which was a robust 29% year-on-year increase. The sales volume grew 4% year-on-year, primarily driven by the destocking normalization and demand recovery in South America. And this all supported a very positive momentum. The North American portfolio benefited from improved integrated margins, while the South American portfolio had a marked boost from improved sales mix towards higher margin products. overall each end market contributed to contribution margin growth year and year driven primarily by the crop solutions business and home and personal care in 2024 there was an additional licensing income of 11 million dollars from downstream products as dk mentioned management action on the australian facility has been completed in 2024 This brought fixed cost reductions of $1 million in 2024. However, we should see $15 million in 2025 on ongoing. The segment continues to serve our Australian customers through a trading model from its global network of sites, including India, from which benefits are to be reflected in our 2025 results. The segment continues its trajectory towards specialty offerings, with an agreement signed in 2024 to enquire two well-known brands from Cargill for the energy and resource market. These will augment both product offerings and also enhance our margins. Our strategy remains focused on driving sales growth and expanding our market presence, while internal transformation initiatives continue to unlock value. This disciplined approach reinforces our foundation for sustainable growth and long-term success in Indivinia. So as you know, Indivinia's portfolio is primarily driven by our HPA product portfolio. This makes up about 75% of our sales volume and delivers an EBITDA margin of about 18% in 2024 and 17% in Q4. Our Essentials business, which accounts for the remaining 25% of sales volume, is closely integrated with the production of these HPAs, creating operational synergies. The Essentials portfolio follows the commodity lifecycle and will gradually improve as the upcycle gains traction. In 2024, Essentials have shown a significant improvement year on year amid ongoing market challenges. as we think about our market segments home and personal care the demand have remained resilient the segments benefited from the launch of new products and optimized sales mix which have collectively accumulated in enhanced profitability on our crop solutions business your and your growth was supported by favorable post destocking conditions and consistent supply service from indovina which is recognized for its competitive local positioning, particularly in facilitating last-minute purchase decisions on low stock levels. These factors have contributed a notable increase in our market share. For NGM Resources, despite operating in a more competitive environment in Q4, due to the resumption of operations of key competitors in the US following a force majeure event, the segments continued to deliver solid sales performance. In coatings and construction, this segment experienced year-on-year growth driven by recovery market and increased market share, along with a better product mix. Thank you. I'll hand over to my colleague, Diego.

Good morning. Good morning, everybody. In 2024, fiber segment delivered an adjusted EBITDA of $159 million. reflecting a strong 26% year-on-year growth and 57% year-on-year if we exclude the one-time insurance payment that impacted positively in 2023. The growth was primarily driven by improved industry spreads in the lifestyle and higher volumes across all market segments. Let's now break it down by market. In lifestyle, we achieved a significant improvement with a steady bit of 40 million, marking a robust 205 year-on-year growth. This was driven by improved fiber industry spreads and 5% year-on-year increase in volumes due to higher demand. The European restructuring of our lifestyle business announced in Q3 will consolidate the filament assets, enhance operating rates and reduce fixed costs by $13 million. The machine relocation has begun and is expected to be completed by Q2 2025. In the hygiene market, we report an adjusted EBITDA of 47 million, which is an increase of 17% year-on-year, driven by rising volumes and high margin by using competitive raw material from Asia. In mobility, we deliver an adjusted EBITDA of 72 million, a 50% increase from the previous year, excluding the one-time insurance payment. and this is an all-time performance year for us. Growth was driven by ARRA replacement tire demand. OEM demand remained weak. The OER rebound has been observed in recent weeks, supported by government stimulus in China. Management action on fixed cost optimization are yielding results, with $19 million year-on-year reduction net of inflation. As of now, all fixed cost reduction do not yet include savings for plan asset rationalization activities in this segment, which will be implemented in 2025. Back to you, DK.

Thank you, Diago. So now let's look at the summary of the results from 23 to 24. I think you heard all the business segments. And this bridge shows you the complete work management actions have been taken. and what industry impact has been there. In 2024, as you mentioned, achieved an adjusted EBITDA of $1.52 billion, making an improvement from $1.39 million in 2023. This growth was driven by $122 million increase in volumes across all segments, as you saw presentation by other segments, supported by recovery in demand following the ease of destocking situation and commercial excellence. So not only value pricing and the volumes, what we got back into the system. As I mentioned, industry benchmark spreads had a negative impact of $131 million, largely due to weaker spreads in integrated PET and MTB, which is normalized from record high in 2023. You can see an impact of an MTB of $144 million in integrated PET in $99 million and a positive in integrated MEG by $86 million and $19 million in the Fiber. So basically, if you summarize, the MTB loss was offsetted by the integrated MPG spread. So the industry impact was $131 million. The contribution margins improved our EBITDA by $60 million, mainly driven by lower energy prices, as energy prices were lower. On the last bucket, our asset rationalization efforts have started to yield benefits, contributing $48 million in fixed cost reductions, which is from the shutdown sites, and as I mentioned, another $100 million will roll in 2025. Management actions and inflation control measure further supported a $35 million reduction in fixed costs, so total was nearly $83 million. Our broader transformation journey enabled us to offset cost inflation while the depreciation of emerging markets currency further contributed to the cost reduction. These combined efforts reflect our strategic focus on driving operational efficiency and enhancing earning resilience amid market volatility. Now let's look at how our debt profile has evolved. In 2024, IOL generated $1.335 billion as a cash flow from operation, of which $110 million was used for one-time severances and related expenses on shutdown sites, And $229 million was spent on higher short-term working capital due to higher year-end inventory caused by supply chain disruption due to Red Sea crisis, particularly as I mentioned in CPET segment. These extra working capital outflow is expected to reverse as in 2025 as the supply chain stabilizes. And as I mentioned, CPET has nearly 300 million impact and which we expect to recover soon. As a result, the reported operating cash flow was 996 million, of which 730 million was allocated to maintenance capex and financing costs, including perpetual interest. The remaining 257 million free cash flow for IVL shareholder helped reduce net debt from 6.84 to 6.58 billion dollars. After dividends and growth capex, net debt stood at $6.89 billion, similar to the start of the year, and a one-time default payment of $150 million for the 2022 Occitano acquisition increased the net debt to $7 billion. In 2024, we were affected by volatility of exchange rate moments on Thai baht denominated debt. To provide a clear understanding, we have shown net debt after removing such exchange impact. Management actions remain focused on generating free cash flow and anticipates growth in 2025 and 2026 driven by management actions, volume improvements, proceeds from the sale of land of rationalized assets, plant IPOs as we mentioned and divestiture leading to net debt reduction in line with the strategic goals. So if you see, nearly $500 million of debt got increased due to three factors. One is the net working capital outflow of $229 million, $110 million of severances, and $150 million of one-time Oxfino payment. So these are one-time effects, and the working capital we hope to release very soon in 2025. Now, at the end of 2024, our adjusted net debt equity stood at 1.3 times, 3 times, with a DSCR of 1.32 times. Our adjusted net debt equity calculation excludes non-operating debt on the assets with the work in progress and the impact of lease liabilities and non-cash exchange rate movements in debt and equity to ensure a more accurate reflection of our financial position by removing non-cash accounting adjustments. We maintain, as you can see, a balanced debt structure with 47% fixed and 53% floating, providing flexibility to optimize financing costs as interest rates stabilize at peak levels across major markets. The benchmark rates expected to decline globally, we saw a decent reduction in Thailand by 25 basis points yesterday, were well positioned to benefit from lower interest costs in the years ahead. We have successfully completed, during 2024, refinancing of $1.8 billion through bank loans and issuance of FIBA debentures, achieved increases of debt maturity profile and saved interest costs by $10 to $11 million per annum. This has also allowed us to extend our repayment profile, which is now spreading over 10 years with longer average maturity of 4.5 years. We already have a 2025 refinancing plan, which is progressing very well, with a focus on further extending debt maturity while securing lower spreads. We have further planned $1.9 billion of refinancing in 2025, mainly for re-capitalization of Indovenia prior to IPO enlisting. The term sheets have been already negotiated with the bankers. The funds will be utilized to repay outstanding long-term loan and extend repayment profile. So, right-hand side what you see the long-term debt repayment schedule is after that refinancing. So, what is important that we maintain in this difficult time? A strong liquidity of $2.1 billion at the end of 2024, providing financial flexibility to navigate the market conditions and support our strategic priorities. It is important to understand little bit impact on our equity particularly at the end of the year as the Brazilian real was very weak. Our equity was impacted by non-cash exchange rate movement as we have investments in dollar and Brazilian real. Thai baht strengthened against Brazilian real by 7% in 4th quarter 2024 and 22% over the year contributing a total negative equity impact of $409 million in 2024. This impact, as you know, is a non-cash translation loss. It is temporary and has started to reverse in first quarter 2025, following the current weakening of Thai Baht against USD and Brazil in real. We are reviewing our financial policies to minimize the impact of FX rate movement, such as in Brazil, where the currency weakened substantially, affecting our closing net debt and other comprehensive income. Our ESG link financing accounts for 30% of the total debt, Reinforcing our strong alignment with sustainability-focused financial strategy, this reflects our commitment to integrate the ECG principles into both our operations and capital structure as a part of our long-term financial roadmap. We didn't do great in working capital, so that's the area which we need to address. Our working capital days increased from 82 to 88 days by year-end, as I mentioned, due to higher year-end inventories caused by supply chain disruption due to Red Sea crisis, particularly in CPET segment. This resulted in a working capital outflow of $229 million, which we expect to normalize in 2025, and further improved by leveraging on digital tools like IBP. As you can see, CapEx is another key focus area to improve the free cash flow, where we will invest only in sustainability and high return projects. Most of our further spending will go towards essential maintenance to ensure operational reliability. In 2024, total CapEx was 190 million lower than the levels announced in CMD in March last year. As you can see, it was $470 million versus 668. Looking ahead, we remain committed to optimize working capital, strengthening cash flow, deleveraging the balance sheet, and maintaining disciplined capital allocation. Now, let us summarize. Sorry, there is another slide here. As you might have heard, Indorama Venture is pleased to announce a 24.9% minority investment in EPL Limited, a listed company in India, who is a leading global packaging company, Through our subsidy INB, we will acquire this straight from Blackstone for approximately $220 million, which is Thaibas 7.44 billion and INR 250 per share. TPL, as you can see on the slide, is a global leader in innovative packaging, producing over 8 billion tubes annually, with $498 million revenue as reported last time and $97 million EBITDA for 2023-2024. The company operates 21 manufacturing facilities across 11 countries, serving blue-chip customers across three key product segments. EPL's strong market position, innovation-driven approach, and sustainability focus complements IVL's global strategy. This transition is expected to be completed in the next few months after the statutory approvals. IVL remains focused on enhancing shareholders' value through disciplined capital allocation. So, let us summarize an introspection of 24 performance. As you know, we will be soon meeting for CMD. The chemical industry remains very challenging due to overcapacity and benchmark margins remaining below cash cost as you have seen across all the chemical industries, olefins, aromatics, refineries. We are happy that timely management actions in rationalizing high cost assets help in mitigating industry headwinds. We are proactively navigating these complexities through IVL 2.0 with a strong focus on organic growth, operational efficiency and financial discipline. Cost efficiency and operational optimization supported by asset rationalization and Olympus 2.0 will help maintain our first quartile cost production and we will continue to look at it and mitigating the impact from industry headwinds. So we are not dependent on revival of the margins. Digital transformation initiatives including SAP S4 HANA, AI-driven optimization will further enhance operational efficiency, streamline supply chain and improve decision making. Improvement in D-stocking as you saw situation in all the business segments along with the commercial excellence led to volume recovery across all businesses. Our working capital days increased from 82 to 88 days by year-end as I mentioned due to higher year-end inventories. particularly in CPET segment. This resulted in working capital outflow of 229 million and we expect this to normalize in 2025 and further improve by liberating on digital tools. As I mentioned, we remain committed to financial discipline, ensuring cash conservation and strategic capital allocation across all businesses. Overall, as a summary, I would say management is pleased with the company's performance in 2024, notwithstanding the challenging industry environment. The past year marked a historical milestone in Indorama Ventures' journey as it leaned into the fundamental industry shifts and sought boldly to take advantages of the changes. The company has transitioned from its legacy asset acquisition model and management is now focused on directing the pace of transformation in a more mature phase marked by organic growth, cash flow generation and new era of partnership towards long-term sustainable growth. Lastly, I'm pleased to invite you all to our Capital Market Day on March 5th, where we'll provide deeper insight into our strategic roadmap and long-term growth trajectory. We look forward to see you at CMB, and thank you for your patience. Now we can take your questions, please. Thank you.

Thank you. Audience, you can raise your hand, and then I'll invite you to ask your questions. In the meantime, so IST is joining us for the Q&A. While we wait, I got one question online. It says that if the Russian war ends, what kind of impact do we estimate ideally?

Yeah. If the Russian war ends, naturally, as you know, the Russian crude has been flowing into China, India. There has been an impact in the refinery operations in the diesel because the diesel crack margins went up. Naturally, we see the refinery still remain under pressure. But from IVL perspective, we don't see except the moment in the oil price because, as you know, Russia, we have a very – we have a hygiene business, which is quite profitable. And we continue to run those operations. So I don't see any major negative or impact. Rather, it will help in the recovery in the European demand. Diago, you want to add something?

No, as you said, we have an unwoven operation in Russia. I think if the wars end, I think it will be positive for us. We'll be able to get some of the demand that this plant used to supply, and we will also have less difficulty to find workers, which is one of our biggest issues today, and some stabilization in raw materials. So overall, for the aging business, that's a few million dollars positive.

Thank you. Kunning, I can see that you have raised your hand. Can you ask your question?

Yes. May I ask how much is the cost saving that reflects in the fourth quarter result and compared to the third quarter? And the second question is, what is the situation of the crop solution or the oil service segment fossil factor? Because the EBITDA received quite a drop in the fourth quarter. And could you give the outlook for the first and second quarter of the year? Thank you.

So I think the first question, if I got correct, the fourth quarter fixed cost saving, right? Yeah. So that is about how much it is?

Yeah. So the total fixed cost saving for six months in third and fourth quarter is 48. And the third quarter was 19 million. And the rest has come in the fourth quarter.

And as I mentioned that next year we will have the full year fixed cost saving. which will be nearly an incremental $100 million. As you know, Australia, Canada, Rotterdam, and Portugal. I'll leave now to Alistair to address the crop solution question. Alistair, please. Alistair, you are on mute if you are speaking. Sorry.

Thanks, DK, for the reminder. So the full question was the drop in EBITDA and then what do we see in quarter one? Is that correct?

Yeah, the crop solutions drop in the quarter EBITDA.

Yeah, so normally the crop solutions business works on seasons. In Q4, it's the normal ramping down. of the end of the crop season in South America. And Q1 and Q2 are normally the peak seasons for crop season in North America. So you see the North and South hemispheres changing. I think what we saw was, I mean, it wasn't a bad quarter at all based on 23 versus 24. So still a very, very good quarter I think but we did see that tail off as we were expecting so it was nothing that we weren't surprised at Q1 I think is starting off reasonably strong we're only halfway through the quarter so it's a little bit early to give any forecasts but we're seeing some pretty good demand coming through But obviously, that will be in North America. South America will kick in on quarter three, quarter four again next year. This year, sorry.

Sorry, can I ask further? So we would say in Romania to report a better EBITDA in the first quarter compared to the fourth, right? And also the second because you said the first and the second quarter would be the peak season for surfactant.

Yeah, what we normally see is Q1 and Q4 being the weaker quarters and Q2, Q3 being the stronger quarters. So that's our normal profile. Q4 obviously is people are destocking and getting their stock levels right for the year end and then the end of the crop seasons. And then Q1 is the normal ramp up into the northwest. American season so what you see is Q1 Q4 being the weakest quarters Q2 Q3 being the strongest quarters that said we're seeing Q1 starting off quite robustly given we've had a winter challenge in North America as you will have read that's had some impact we're still expecting Q1 to be quite strong Thank you

I've got one question online. It says that, can you explain more on the temporary CPET supply chain disruption that we have seen in the second half? Can we a little bit more expand on that?

This is a question for you to recover $300 million. Go ahead and explain well.

Yeah, so when this Israel-Gaza war started, of course, a lot of shipments got diverted through the Cape of Good Hope. instead of Red Sea, which resulted in a significant increase in the transit times from 30 to 40 days to almost 80 days plus. In some of the vessels, even took 100 days. So there was a significant impact to the transit time and thus the working capital. The other reason was also because the uncertainty of volatility in the transit times also. So that resulted in unexpected increase in working capital. Now what we have done is we have streamlined those as much as possible through dedicated charter vessels so that we have a better control on these transit times, even going through the Cape of Good Hope. But for the past few weeks, there has already been a lot of shift from the Cape of Good Hope to Red Sea. And now with a lot more improvement and progress on this settlement, Then there's more and more vessels now going through the Red Sea. There are still some operators who still are avoiding risk and going through Cape of Udub, but major part is already shifting to Red Sea, which will then directly reduce the transit time for our imported material. And that is what Mr. D.K. was mentioning. That should help us to reduce the working capital and release it during the first quarter. Hope that answers the question.

Yeah, and we're very hopeful to get it back. As you know, we rationalized our assets, so we went into PTA buying more than the manufacturing in Oram, which actually further aggravated the situation. And as Mutu explained, the time now and the entire planning is being very rigorously being looked into it. So we hope to release this working capital, yeah.

And that is both for Europe? to the make versus buy PTA. But also, you know, we have a large operation in Egypt and that cargo is also going through the same dynamics. So, it should help quite a bit both in Europe as well as for our Egypt raw material imports.

Thank you. Since we are on CPAT, so I will take the question on CPAT. So, Kunsancha is asking, can we provide a breakdown of our EBITDA in region. So he's asking for PET, but I think we have an overall IVL that we can show. And then what is the indicated break-even cost for MTB EET? And the third question is that the Chinese petrochemical can operate because they're getting a cheaper petroleum from Russia. So can we further explain on the Chinese petrochemical situation?

Good. So I'll take one of the questions on China's petrochemical situation. I think that China do have a very huge overhang of the entire petrochemical. When you talk of olefin, you talk of integrated PET aromatics, which the capacity has got built up. Today, as you know, olefin, the world capacity utilization is 80%. So we do see these challenges of overcapacity in China continuing. But as you know, our business has been geographically diversified model. We have been working on a lot of trade barriers. And naturally, America's business is highly protected. So Chinese products cannot go. But this challenge of Chinese will continue. I don't think we have a breakdown from secret EBITDA, but you can see from here that 70% of ideal EBITDA is predominantly made in America, which is U.S., Mexico, and Brazil. And maybe the third question was breakeven cost of MTB. Kumar, you want to take that?

I think we'll revert on that point, get back to you with the breakeven on the cost of MTB.

But just if I can add, you know, how do we make MTB? MTB is made from butane. It's a PU-MTB technology. So basically a byproduct of PU is TBA. And we make butane and methanol. and then MTB. So, you see the MTB margins seasonally in fourth quarter are weak because you blend basically butane in the gasoline pool and which gets corrected in first quarter, second quarter and you see when the blending stops, the butane and the percentage of oil comes down significantly. So, you see always quarter by quarter, second quarter, third quarter earning bigger and it is also because the Refinery margins in second quarter, third quarter are high and this octane is linked to the refining margins and it has a premium over it. So I think the given cost we can provide you more specific data but yes the margins in fourth quarter will remain under pressure and this is basically a POMTB combined and it is still contributes as you saw the quarterly EBITDA even at the weak MTB margin.

Maybe just to add on this Chinese use of cheaper crude, one dynamic that we have seen is as compared to the peak refinery margins in 2024, towards later part of the year, they have been reducing. So the refinery margins are not as robust as before. And how that is relevant is because of one-third of the Chinese capacity, PET, is fully integrated. then it should have less impact on the subsidization of downstream spreads on PET. So, that is directly linked to that.

So, Vikas, do you have that integrated slide? I think this is an important point, which is that today the entire polyester value chain margin has compressed. You see this is a refinery margin which has compressed. But we have another slide, Vikas. where it is compressed entire polyester value chain margins, whether it is paraxylene, PTA, PET are compressed, they are much below the cost, people are losing money. So, question is how they became sustainable. So, these are the typical problem right now of the industry.

Thank you. I can see Naphat from CLSA. Can you ask your question for Naphat?

Hi, thank you for the presentation. Since we were talking about the PET industry, I may have one more question on PET. So what is the industry situation of the PET in China? Because I remember that we were talking about... you know, the declining of the upstream PX spread will pressure the Chinese producers and which they will, they should, we should see them cutting their run rate. And looking at the spread in January and February, I think it's down quarter and quarter quite a bit. So I wonder, you know, when should we see, how is the industry situation in China? Yeah. Yeah.

Muthu, you can take that question, please. Yeah. If you can go back to that slide, because the one that we were just showing. So here we have provided the quarter-wise margins and operating rate up to December of 24, our fourth quarter. You are absolutely right that after peaking in November and early part of December, the integrated spreads have come down considerably. in January and February. Now, that has been driven mainly because a lot of the capacity, new capacities came on stream that part of the year. And a large part of that capacity addition is also fully integrated by the Rongshan Group. So, that has resulted in this drop in margins. The other reason is also because the Chinese New Year was earlier than usual. So many of the manufacturing units, they took, you know, the shutdown earlier than planned. And they have not, I mean, there has been a deferral in their restarting. So combined these two, the margins have declined. Now what we are seeing is that after the inventory levels increased because of these reasons, Now with the unit starting back up and the downstream demand coming again, then the inventory level should start reducing and the operating rate should start improving. So now if you see that the operating rate which went highest in Q4 that has come down below 70%, that is expected to now start going up again. And that should help march onwards with the seasonal demand coming downstream units starting back up. Then we expect improvement in the margins from these lows. Overall for the year, we expect similar margins, integrated margin is 24. We don't expect a large improvement on an annual basis. But from the current levels in January, February, certainly we should see an improvement. And the other reason is if you go to that capacity addition, Vikas. So this will show you that the peak capacity addition already happened in 24. But you can see here almost 5 million tons of capacity got added. And a lot of that came during the second half, the effective basis. And that is what resulted in this temporary. Now 2025, if you see, that is dropping quite a bit. And in 26, it's less than a million tons. So going forward, this, although the capacity overhang will be there, the sharp drop in addition of new capacities will That should also help on the spreads. But overall, as I said earlier, 25 on an annual basis, we expect to be similar to 24. Hope that answers.

Yes. Okay. One more question. Maybe Kundi can address this issue. I think about the asset divestment that we, you know, the asset that we impaired last year and then we are thinking of divesting those assets. I wonder, is there any update on this?

So, I think that is, as you can see, our asset divestment, we are expecting 150 to 200 million one-time cash flow. Rotterdam, we already agreed for a sale of our land and the jetty. The plant and machinery is still being discussed. So that will get, and that's where the $51 million was accounted in fourth quarter auditors reversed it, but no cash flow came in. Then another big piece is Australia land, which has, you know, has a significant value in terms of $100 to $110 million, Canada land. So all this $150 to $200 million cash we expect to realize in 2025 and latest in the first quarter, 2026. So it's going, divestment is going as planned of the shutdown assets. And in addition, as you know, we are looking at divesting certain core assets. So that will keep you updated in the capital market.

Thank you. I can see some more questions which are related to more petrochemicals and CPETs. So I'll take them first. So we are asking that can we give a guideline on related to the new pricing of contracts in 2025 There's another question that what is the change in U.S. policy on petrochemical imports to U.S., the tariff and restriction that's across IVL? And the third one from Jagapong is that what's the progress of listing the packaging business?

So, I'll take the couple of them and then I'll ask Muthu to cover. So, U.S. imports tariff is positive for IVL. As you know, let's understand that U.S. U.S. has paid deficit in terms of PET. Nearly a million ton comes. Even from Mexico, there's a lot of PET and PET comes in. We don't know yet that whether the duties will be slapped on the Mexico and Canada. So naturally, this will have a positive impact because U.S. operating rates will go up. Also, we see that de minimis imports, there are some duties like diapers and all that end products. We also see this will help in the fibers business. So, overall tariffs will certainly help in entire IVL business portfolio. Listing of packaging business is on track. We are working on it. As you know, the packaging business has delivered consistent EBITDA. We have growth plants. We have building plant in the Njania. We are looking at other countries. So, that is targeted in first quarter 26, raising $250 million. The third, on the new contract pricing, I think U.S. is on the North America is on the positive side. But let Muthu answer that question in more detail. Thank you.

Yeah, thank you, Golji. Yeah, on the contract price, we have been able to lock in the contracts as we had planned in terms of volumes. And the projected growth in demand should support that. In terms of margins, America's certainly 25 versus 24, we see an improvement. In case of Europe, where there is also a large contract volume, also in the base spreads, we have been able to improve from 24 to 25. However, as you know that Europe also has a lot of influence from the Asian spreads. What happens on the Asian spread as well as on the freight rates. So that we will need to closely monitor. But overall, based on the dynamics, we've been able to improve the base spreads in Europe as well. And just to add on what the Trump administration, the new regulations and the tariffs that are coming in, if you look at CPAT, maybe I can break it into, let's say, three, four factors. One is on the material flow that is coming into U.S. on PET and PTA. Ideal does not have direct exposure on that as compared to some of our peers. So any tariff or disruption to that should help us as a large domestic player. Now, if there are going to be any cost increases on feedstock further upstream, that we should be in a position to pass it through to the customers, either through change in the published indices or other pass-through mechanisms we have in place. So that should be overall positive for IVL in U.S. Now, we are also carefully monitoring how the retaliatory measures would impact our business. So it is not only the tariffs that U.S. is putting in place, but also what happens if the partners, trading partners, you know, add retaliatory measures. So we are already taking actions to first to make sure that there is no disruption on our supplies to our customers, but then also how we mitigate any type of cost impact. The third factor is that because of the change in the approach of the U.S. administration, which basically is becoming more protectionist, We expect many of the other countries, and we do see that, taking similar approach, ensuring fair trade and that the domestic industry is protected. And this should help IVL because of our presence, domestic presence, large domestic presence in key markets, in terms of tariffs or trade measures in those markets, you should directly benefit us. And the last one I just wanted to highlight is also you all must have also seen the announcement of tariff, increased tariff, 25% on aluminum and steel imports. And as compared to the last time, this time it is also including countries which have FTA, free trade agreement with U.S. So we are monitoring that, and we believe that based on some of the comments made by large brand owners, We expect some type of pivoting shifting of demand if it continues to PET from aluminum. So we will continue to monitor that and see what we need to do to take benefit from that. So those are some of the areas how we are managing the new approach.

Thank you, Mattu. And I think the last one is quite important. As you know, the aluminum constitutes nearly, Mattu, 50%. of the CSG sales in U.S. and you've seen the comments. So let's keep the fingers crossed. Thank you.

Thank you, Mr. Agarwal. So Kaushal, thanks for your patience. So from Macquarie, so asking question, giving focus on deal averaging for IVL, what are the thought process on the EPL investment? What would be the guidance for further growth capabilities in 2025? And there's an accounting question, the cash conversion cost in fourth quarter 24 dropped significantly. Can you please give some color on the cash conversion cost in the fourth quarter?

So, on deliberating, I think as you know, the IVL is committed on deliberating of debt over EBITDA of below three times. So, our IPOs of endovenia and packaging and also the divestment, we are working on that. Naturally, this year, we could not deliver it because of the working capital increase. As you saw, $229 million, severance one time of $100 million and $150 million. Otherwise, we would have been delivered by $500 million. On EPL investment, it is a minority stake in the high growth market. As you can see, it is a very strong business. We don't have any plans to further invest in this business and have this minority stake. As far as growth capex is concerned, you are seeing that we reduced as compared to $2,490 million. $25 and $26 will provide you update in CMD. $25 is going to be higher because there are three turnarounds. One is for IWOC, which is the black hole plant, IWOL, which is the thin pecker plant, and MTB, which comes in once in five years, but will give you further update. I didn't understand the third cash conversion cost?

Yeah, so this is a clarification. This is cash conversion. So operating cash flow to EBITDA conversion in the fourth quarter. That's working capital.

Yeah, so OCF conversion has been poor. As you know that our working capital deployment of $229 million has been a big hit for us. And although if you take below, before that is $1.3 billion. And I think this will improve as we release more working capital in the coming years. So you can see 1.335 over 1.4, but major hit has been this two factors, working capital flow and the severance payment. So this cash conversion ratio will certainly improve in coming years, 25, 26.

Thank you. Audience, I don't see any other questions left. But if you have any questions, you can ask them now. There's no more questions online as well. So I think we can close the meeting today. And thank you very much for joining us. And we look forward to see you on 5th of March for our annual Capital Market Day event. It's being held at Sofitel in Bangkok. And for the overseas participants, you'll get the online link to join in. Please do join. Thank you.

Thank you.

Thank you very much. Thank you all so much. Bye.

Thank you.

Thank you.