Indorama Ventures Public Company Limited

And thank you for taking time joining us for Indorama Ventures third quarter results briefing. My name is Vikas Jalan, Investment Relations and Corporate Responsibilities at IBO. Joining me today, we have Mr. Alok Lohia, Group CEO, Mr. D.K. Agarwal, Deputy Group CEO, Muthu Kumar, Pramashivam and Kumar Ladha, co-leaders at CPAT segment, Sunil Marwa, President for Indovida segment, Alistair M. Port, Executive President for Indovina, and Diego Bori, Executive President for Fibers Business. Quick disclaimer that this meeting is being recorded and a replay of this session will be available on our website after the meeting. We have made few assumptions and estimates on future trends for industry and business, which are based on analysis and available information at this point in time. So with that, I now invite Mr. Luria to first give the opening remarks. Over to you, Mr. Luria, please.

Thank you, Vikas. Thank you, Vikas. Good afternoon, ladies and gentlemen. Another disappointing quarter, and I would like to share with you what is happening in the world of the industry, in the world of chemical industry. So, the global ecosystem has we all recognize is undergoing a period of transformative shifts, impacted by the geopolitical tensions, unprecedented technological advances, changing demographics leading to changing consumer behavior, and environmental factors. Meanwhile, the chemical industry is in the middle of a perfect storm. battling record over capacity and poor demand primarily in the downstream automotive and construction sector, which impacts a host of consumers and demand for petrochemical products. While reflecting on CMD, I had trust on the industry's prudence to manage itself in a balanced growth manner, taking into recognition the large capacities that have come on stream in the U.S. and in China. This initiative is well thought through by the industry players, including IVL. But unfortunately, the supply chain disruptions from the new tariff measures means an additional pivot to bake into the plans, which should be better visible as the tariffs on China and India get sorted out. We were quite successful towards achieving these objectives, but I have to admit that the margin pressure that the industry is inflicting on itself is unprecedented. The correction is in transition with the serious capacity footprint optimization taking place globally. And it has now also got the attention of regional governments with China taking anti-involution and convening meetings with PTA-PET players to address concerns. South Korea showing interest in its petrochemical industry, Europe willing to listen to trade matters, and recently announced PET tariffs in the US, as well as Brazil's extension of higher PET import duty. Initially in Brazil, the government is working on a $3 billion plan to incentivize on sustainability for chemical industry, which will help free stock purchases in the region. The stock price of a firm reflects its performance, which for IVL and for the industry as a whole has been depressed. What the stock price also reflects is a firm's readiness to emerge from troughs, based on leadership's ability to realign its portfolio and cost-to-modernity and fit-for-purpose business model, which I know is being shaped at IVL, though unfortunately is not recognized due to the continuing high debt levels in proportion to our EBITDA. The decline in Brent oil price coupled with high interest rates and persistent inflation in certain sectors just as housing, has resulted in slowed business sentiments. Demand within the value chain has slowed. Restocking has been deferred amid volatile price cycles, and cash flow is being conserved, as can be seen in the reduction of working capital. Although the reduction in working capital slide, when we get to it, I'll explain a bit more, that the reduction has been more because of the falling oil prices as well as the 2.3 million tonne of capacity that has been rationalised at IVL, rather than management actions which are still to take place. And finally, I hope that there is a delayed consumption coming out from the markets in the same way as we saw travel post-COVID. Next slide, please. This is how IVL's business is across regions. And as we can see, all regions have got impacted over the last five quarters. What is interesting for me to see in this is that the drop in the last three quarters has come from this period when we have this new tariff from the new administration in the US. So though we were already on weak earnings in 2024, This year in 2025, we have got further impacted by the uncertainties created by the tariffs. What we can also see in this slide is that there is a consistent drop in the EBITDA margins in each of the three main regions for IVL. So there has been this impact from the tariff that we are passing through and we are adopting and adapting to. I believe that the end to the Russian Ukraine clash has to be the most defining upside for this European region and the recent actions by Brussels to consider trade regulations on imports will bear fruit in an industry which is fighting within their means to keep their heads above the water. We have been taking several self-help actions and we will be better positioned to capitalize on these when global trade and consumer demand adjusts and realign to the emerging world order like all leading industry players we had started preparing for the overcapacity scenario since late 2022 which we shared at capital markets day in 2024 but i admit that i have grossly underestimated in our 2025 cmd the impact of the tariffs that the new administration has brought to the fore. Our 2023 assessment was primarily led by the impact from the Ukraine-Russia conflict and the impact from the electrification on regional energy disparity. The execution on these plans were at full swing, based on which our expectations for a better 2025 over 2024 was built. But these hopes are now dashed. Due to the still unknown implications from the tariff dialogue, which has enhanced geopolitical risk. Next, please. Since we began working on IVL 2.0 in 2023, we have executed on a number of structural actions. We have rationalized 2.7 million tons of capacity since 2023 and taken impairment of approximately 1.2 billion US dollars. The majority of these actions are in Europe. We removed three big CPET sites, including a large integrated site in the Netherlands. On top of what you see here, savings and fixed costs in future quarters are progressing. And for example, we have also reshuffled our fiber European portfolio. We shifted our German lifestyle operations to our Italian facility, resulting in a 200 headcount reduction and a total annualized cost saving of $13 billion to come in future quarters. I'm proud of our teams in identifying and taking proactive measures timely. We are now seeing the rest of the industry take similar actions. These actions are positioning the company to a leaner and more efficient portfolio, a fit for purpose footprint in the changing landscape. During the last quarter, we instituted an internal study to do a strategic review of our integrated EOEG business which has been performing below our expectations due to certain reliability issues, current benign industry environment. The project rebound, as it's called, study concluded that the assets through the support of some projects have a significant upside potential relative to current performance. On operational performance, these projects are being initiated under the oversight of a strong project management office. we should be able to see a ramp up of performance in the year 2026 and beyond. Though the current industry environment would not permit adequate returns to the shareholders, the market outlook provides the improved margins and returns in the medium to long term. The recent trade action in some countries like in India does provide for a US producer like IVL to rework its MEG marketplace and flow to improve its overall profitability. Our focus in the coming year will be operational excellence at the same time looking at different strategic options in the medium to long term. Next, please. The proactive management action started in N22. And we first impaired a few assets to optimize our portfolio. This continued with shaft workers in 2023 and in 2024. 126 million fixed cost reduction has got completed. And as you can see from the slide, that much cost has been reduced over the fixed cost in LTM 3Q23. Our continuous improvement programs and the additional transformation actions that each of the segments are taking on has helped to at least overcome inflation and therefore the entire asset optimization cost improvements has flowed into our P&L. Next, please. Despite our IVL 2.0 deleveraging plans, our net debt levels have not decreased over the last three years, in part due to the elevated interest costs amid a volatile business environment. In the past four years, SOFR, which is our benchmark interest rate, went up by over 300 basis points, which impacted our interest costs by around $200 million each year. And this $200 million is what has in one way, I can see, increased our total debt level, which in other way is that the working capital reduction, which comes in the next slide, maybe we can go on to the next slide. The working capital reduction, as I mentioned earlier, from $2.2 billion to $1.1 billion currently has been all a factor of the asset optimization, asset rationalization, as well as the Brent crude oil price decline. But when it comes to working capital days, as we can see, it has more or less stayed at this 90 days level. And this is where I believe the disruption by reduced availability of materials, we had to redefine our supply chains. And the changes were happening so rapidly that we were not able to act fast enough to benefit from our management actions to reduce our working capital days. But this is a work that is going on in full swing at the moment. I believe there is going to be more deep dive by our segments to reduce their working capital needs and sort out the supply chain issues that are now demanding better synchronization between free stock sourcing and the final consumption centers. We also are deploying IBP, integrated business planning tools. So with the availability of our SAP data, with the improvement on having that data being able to talk to the tools like IBP. These are all the technological advancements that our teams are now deploying in their management actions. And I do believe that over the next year or two, we would see a significant reduction in our total working capital days. Next, please. On the last slide on segments, basically on the industry player side, I believe we would see over the next 12 to 24 months, a host of mergers and partnerships to bring synergies and optimize the capacity and cost dynamics. At IVL, we are truly at advanced stage with a bunch of collaborations that will enhance our balance sheet and quality of earnings across each of our business segments. In Indovenia, there is an advancement on the R&D front. There is investment going on in Indovenia, and maybe Alastair can talk about that, in making a separate sales channel, employing some sales force to better market the HVA formulations. Our capacity utilization, as you will see from MD&A, keeps coming down, and that is representing the lukewarm market sentiments, market demand. And as the capacity relation improves, we would see enhancement of earnings, irrespective of the margin environment. And finally, the freight rate stabilization should remove a lot of uncertainty now that the Middle East crisis is averted and I think we'll get more sense on where the freight rates will normalize. And then we can use our IBP and our global platform to best place the products to our customers. With that, I would like to hand over to Mr. DK Agarwal for the next, sorry, to Muthu for the CPAT segment. Thank you.

Thank you, Mr. Lawyer. We'll look at the snapshot on the combined pet financials here. The combined pet segment posted and adjusted a bit of 158 million in third quarter, down 17% sequential and 39% year-over-year. Volumes were lowered by 6% quarter-over-quarter, driven by the MTB turnaround. Weaker than usual seasonal pet demand, this primarily due to more rains than usual, and also cooler weather in some of our key markets, and to a certain extent, consumer sentiment, and also unplanned outages. The year-over-year decline in EBITDA was driven by challenged industry margins across products, higher energy costs, and the planned tar in POMTB, and this is an event that we have discussed in previous MEETs that it occurs once every five years. The quarter-over-quarter decline in EBITDA was driven by what we discussed earlier, weaker industry conditions, both on demand as well as on spreads, the planned turnaround, and few unplanned production outages. Now, talking about the individual verticals in the combined PET, integrated PET delivered and adjusted a bit of 124 million, down 22% quarter over quarter due to lower industry spreads, weaker than usual demand, and unplanned outages, including a fire event at one of our PET sites in Indonesia. Talking about intermediate chemicals, it reported and adjusted a bit of 19 million, down 33% quarter over quarter, driven by lower MTB volumes due to the tar, partially offset with higher ethylene production normalizing from the tar we had in the second quarter, and also an one-time $17 million gain from insurance income. Talking about specialty chemicals, it increased to 15 million from 4 million in the second quarter. This is supported by higher NDC campaign volumes and improvement in overall performance of the PAA business driven by the tariffs in US, although the market conditions for PAA in Europe it was weak. With respect to the overall industry dynamics, as we talked about earlier, mentioned by Mr. Lohia, the recently announced pet products in US and also the extension of the higher pet import duty at 20%, this was extended from October 2025 to now October 2026. These are beneficial. We are also closely monitoring the developments related to the anti-involution measures from the Chinese authorities, including the recent joint meeting that Mr. Luya mentioned between the authorities and the key PTA-PET players. But importantly, in parallel to all this, we continue to diligently focus on the controllables through various management actions, including on cost and capital discipline, and digital augmentation while leveraging on our global presence to provide customer-centric solutions. With that now, I would like my co-leader Kumar to provide a progress update on the management actions in CPET in the next slide. Over to you, Kumar.