Indorama Ventures Public Company Limited

Good afternoon, everyone, and thank you for joining us today for Indorama Ventures' second quarter 2026 results briefing. I'm Boraboon Singambut, moderating this call. Leading the presentation today will be Ms. Aratna Lohia Sharma, followed by our segment leaders, Mutu, Sunil, Alistair, Diego, who will lead us through the performance of their respective businesses. Following the prepared presentation, we'll open the floor for Q&A. Before we begin, please note that this meeting is being recorded and a replay will be available on our website following the session. Today's presentation includes certain assumptions and forward-looking estimates based on our current industry and business outlook, as well as the information available to us at this time. Over to you, please, Kunaratna.

Thank you, Borebun. Good afternoon, everyone, and thank you for joining us today. Let me start with the key messages for today's earnings call. IVL posted an exceptional Q2 and first-half performance driven by three primary factors. Firstly, the advantages coming from our structural platform. The company's integrated global platform and local-for-local manufacturing model have enabled the rapid reallocation of production, maintained reliable customer supply, and allowed for the selective capture of pricing opportunities across multiple geographies During this period of geopolitical volatility. Secondly, management continues to progress on improvement initiatives through operational discipline, including inventory management and a strategic focus on sales and operations execution, rigor, to enhance real-time visibility and accountability. And thirdly, favorable market conditions. Geopolitical events led to near-term supply disruptions, which drove higher benchmark spreads across the portfolio. Stronger pricing resulted from cost increases in crude oil-related feedstocks. De-leveraging remains on track with stronger cash generation and disciplined operations driving continued balance sheet improvement. Looking ahead, while we expect some earnings moderation in the second half as the temporary market tailwinds begin to normalize, we remain confident in our 2026 outlook and committed to our 2028 ambitions. The second quarter of 2026 marked a meaningful improvement in Indorama Ventures' earnings, building on the momentum established in the first quarter. In the first half of the year, consolidated revenue reached 245 billion baht, up 4% year-on-year, while EBITDA increased significantly by 61% to 29.7 billion baht. The earnings improvement was broad-based across all four segments and major regions, supported by favorable industry conditions together with management self-help initiatives. The implementation of SNOE rigor directly improved inventory performance. Inventory turnover increased from 4.7X in the fourth quarter of 2025 to five times in second quarter of 26, representing a structural improvement in converting earnings to cash that is expected to continue. Operating rates were deliberately moderated this year From 76% in the first quarter to 74% in quarter two. This reflects the conscious management choice to align production with inventory targets, thereby protecting margin quality and cash conversion in a period of volatile pricing. The balance sheet strengthened materially in the first half of 2026. Operating cash flow after maintenance capex reached 25.9 billion baht. Net debt was reduced. From 236 billion baht to 226 billion baht, and the net debt-to-equity ratio improves to 1.56 times, achieving the full-year capital market stay target ahead of schedule. Now turning to segment performance, combined PET leather improvement with an EBITDA of 19.9 billion baht in the first half of the year, rising by 111% year-on-year. and Quarter 2 was exceptional with an increase of 163% year-on-year, driven by a surge in China-integrated PET benchmark spreads. CPET's integrated shale-to-PET platform in North America, its global footprint and local-for-local business model remain important structural advantages as market conditions evolve. Indovita reached 2 billion baht in the first half, up 37%, driven by organic growth initiatives, a full quarter contribution from the new facility in Tanzania, as well as disciplined pricing action amid the current Middle East conflict. Indovina delivered a first-half 2026 EBITDA of 6.4 billion baht, increasing by 70% year-on-year, and a strong second-quarter EBITDA, Up 94% year-on-year. Performance is driven by commercial excellence initiatives and favorable market conditions, with improvements coming from both the HBA and Essentials portfolios. The segment benefited from geographically advantaged production in North America and shale gas advantage. Fibers posted $2.8 billion bought in the first half, declining by 9% year-on-year, but sequential improvement with quarter two EBITDA rising by 39% year-on-year. Stable hygiene demand, portfolio optimization efforts, and transformation actions helped offset market weakness in lifestyle and mobility end markets. On a regional basis, you can see that the earnings improved across all major regions, demonstrating the strength of IDL's diversified global footprint. The Americas remain the largest earnings contributor, while Europe and Asia also delivered stronger profitability. The North America portfolio also benefits from shale gas advantage, and the overall performance demonstrates how our local-for-local model enables us to respond quickly and capture opportunities during periods of market and supply disruption. Looking specifically at the second quarter, IDL reported a bid of 21.7 billion baht, increasing by 129% year-on-year and 169% quarter-on-quarter. The uplift was broad-based across segments and regions, supported by favorable industry tailwinds. Importantly, these market conditions were complemented by management actions and ongoing self-help initiatives, including disciplined commercial and operational execution. Again, the Americas portfolio, and specifically North America, benefited with the structural advantages, including the shale gas linkage for both the CPET and indivinia segments. As we highlighted last quarter, IVL is supported by four distinct competitive modes, and our performance in the first half of this year reinforces that these strengths are delivering tangible value. Our global local-for-local model provides supply chain resilience and enables us to capture opportunities during market disruptions. Our four distinct business engines benefit from a common global platform, leveraging scale, customer access, technical expertise, and feedstock integration. And in North America, our shale to PET integration continues to provide a structural cost advantage. Finally, our strengthened operating rhythm through S&OE improves their ability to align production and inventory with demand, supporting cash generation and deleveraging. We want to reiterate that these four modes remain fundamental to our resilience, competitiveness, and ability to create long-term value through the cycle. If you recall from the first quarter, we used this slide to explain how the different building blocks of our PET pricing come together, and importantly, the actions we were taking around inventory and S&OE. and this quarter we want to come back to that discussion because we have now had another period of significant market volatility and it provides a good test of whether these actions are working. The comparison with 2022 is particularly relevant. In 2022 crude prices increased very rapidly following the start of the Russian-Ukraine war and then fell sharply in the second half of the year. At that time we were carrying relatively high inventories with low inventory turnover. As feedstock prices declined, that inventory exposure translated into a significant compression of our realized premium. This time, we have faced another major disruption, with crude and feedstock prices again moving sharply. There has still been an impact on our premium, but importantly, we have been much more disciplined on inventory, deliberately aligning production with demand and inventory targets, rather than allowing high-cost inventory to build. At the same time, our focus on S&OE processes This has resulted in operating rates deliberately being moderated from 76% in Q1 to 74% in Q2. As a result, while there is still some impact from market volatility, we are managing that exposure better and responding more quickly than we could historically. And that's really the takeaway from this slide. S&OE and inventory turns are not simply working capital initiatives. They are strategic management tools that help us protect our local for local premium and improve the resilience of our earnings through the cycle. In the previous quarter, we explained how MTBE complements our shale to MEG integration and broadens the margin pool across our U.S. shale to PET platform. This quarter, the key point is how that advantage is behaving in a more volatile market environment. Geopolitical disruption has driven sharper movements in crude and sweet stock markets, and our integrated North America position has helped cushion part of that cost pressure while preserving differentiated economics across the chain. Looking into the second half, we expect PXMX pricing to remain supportive, which should continue to underpin MTB spreads. At the same time, some of the feedstock advantage is likely to moderate as methanol normalizes and butane costs rise seasonally into winter. The message for the second half of 26 is balanced. MTP pricing should remain supportive while the relative feedstock benefit may narrow somewhat. Importantly, the structural value of the platform remains unchanged. Our integrated feedstock position continues to reduce dependence on the conventional NAFTA route, Thank you so much, Aradhana. Combined Pet delivered an exceptional second quarter 26 with EBITDA increasing to 14.4 billion.

Representing increases of 163% year-over-year and 164% quarter-over-quarter, driven by favorable market conditions and supported by management actions. Integrated PET benefited from a significant surge in China integrated PET benchmark spreads, which increased from an average of 132% in second quarter of 2025 and 176 per tonne in the first quarter of 26 to 279 per tonne in the second quarter of 26 following tighter industry operating rates, limited new capacity additions and temporary supply disruptions associated with geopolitical events. PET prices rose through the year from crude oil related feedstock increases and cost inflation in the segment was neutered Anil Kumar Sharma, Anil Kumar Sharma, Anil Kumar Sharma, while still ensuring business continuity to our customers through supply chain rigor and leveraging IVL's global network of manufacturing locations and raw material sources. Now talking about individual verticals, in the recycling vertical, the ongoing strong focus on management actions in terms of both operational and commercial excellence have shown results with H126 showing a positive EBITDA swing of about $17 million. Talking about specialty chemicals, it delivered stronger results during the second quarter, supported by higher margins and stronger volumes across the portfolio. Margins benefited from the NDC campaign run during this quarter. Intermediate chemicals also improved, supported by stronger US NTB industry spreads, which increased from an average of 263 per tonne in the second quarter of 2025 and 359 per tonne in the first quarter of 2026 to 587 per tonne in the second quarter of 2026, partly offset by lower volumes following the EOEG turnaround during this quarter. So while favorable market conditions were the primary driver of earnings improvement, strong commercial execution and the ongoing cost reduction initiatives also supported performance during this quarter. Management continued to strengthen the business fundamentals through enhanced sales and operations execution, better inventory discipline, and stronger working capital management All of which contributed to higher returns and stronger cash conversion. Would also like to take this opportunity to thank all of our customers for their continued support as well as all the CPAT colleagues for the commitment, hard work and the diligence they have shown throughout the past several months in mitigating any type of operational interruptions and ensuring business continuity. With that, I will hand it over to my colleague Sunil.