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.

Thank you, Motu. Indovida, the packaging segment of Indorama, delivered EBITDA of Thai Baht 1.3 billion in Q2-26, increasing both year-on-year and quarter-on-quarter, while still maintaining EBITDA margin at high teens levels. The performance was supported by our market leading position in packaging, also the customer intimacy model that we have built over the years and continued operational improvements. The 62% year-on-year EBITDA increase was primarily driven by strong demand across various markets, particularly in Thailand, Myanmar, Egypt and Ghana. The continued ramp-up in Tanzania following the March 2025 startup of the Greenfield facility there enabled a full quarter contribution, leading to incremental volumes and enhanced EBITDA earnings. EBITDA increased 76% quarter-on-quarter, reflecting strong volume growth across all regions. Driven by strengthened, heightened domestic demand which was supported by seasonal uplifts due to hot weather and inventory restocking by brand owners amid the Middle East conflict. Higher volume was also driven by organic growth initiatives through new product introductions, line expansions, continued customer wins and additional volume. Margined improved due to disciplined pricing actions across Asia and African markets on back of the Middle East war and dramatural availability concerns, which we were very well supported by the CPET segment of Indorama. Thank you. I pass it on to Ellis. Thanks, Sunil. Good afternoon, everyone.

Indovina delivered a strong quarter two EBITDA of Thai baht 4.688 billion. Increasing 94% year-on-year and 173% quarter-on-quarter Overall, our EBITDA margins reached 19.4% across the portfolio while the HVA margin was 21.1% The strong year-on-year and quarter-on-quarter improvement was driven by both HVA and Essentials experiencing strong performance with our agile pricing and our S&OE approach and our ongoing commercial excellence initiatives, assisted by the tailwinds of the current supply chain disruptions. With our concentration in the US, Brazil and India, and 90% of our products sold in consumer-led end markets, we're benefiting from our local, the local and geographically advantaged production, linked to strong customer and supplier relationships. HVA remained the key earnings contributor, accounting for 80% of Indivinia's EBITDA. The HVA EBITDA increased 59% year-on-year and 114% quarter-on-quarter, primarily driven by the stronger results in surfactants, ethanolamines and propylene glycol, while essentials also improved with higher contributions from LAB and solvents. Overall, the quarter reflected a combination of favorable market conditions, strong commercial execution, with disciplined pricing and ongoing transformation initiatives, supporting the margin expansion and earnings quality. Moving to our market review, the home and personal care markets on margins improved across the regions. In North America, we continue to develop opportunities to grow our business across both Tier 1 and Tier 2 customers. And in both South America and APAC, we saw margin upsides sustained by price increases. On the crop solutions, I think the quarter was as expected before the South American crop season starts. But farmers' profitability and credit concerns still loom across the globe. On energy and resources, quarter two margins improved as energy prices and demand also improved. And then in Coatings and Performance Solutions, the Coatings side was as expected, but on the Performance Solutions side, we saw new opportunities for our Jeff Cool range, which were landed in data center growth, along with new product launches. Our management teams continue to focus on creating value with our EC2 initiatives, driving earnings higher with our Commercial Excellence Program, Managing Variable Costs Through Our Procurement Excellence, Reducing Our Fixed Costs Where Possible, and Maintaining Our Peer-Leading Working Capital Management Ratios. Thank you. I'll pass on to Diego.

Thank you, Alistair, and good afternoon. Fibers delivered sequential earnings improvement during second quarter 26, despite continued weakness across several end markets. EBTDA increased to Thai Baht 1.873 billion, Up 39% year-on-year and 113% quarter-on-quarter, supported by pricing action, improved product mix, and realization of lower-cost inventory. While volumes remain below prior year levels, stable aging demand, portfolio optimization efforts, and transformation action help mitigate persistent market weakness in lifestyle and mobility. Performance remains mixed across the verticals. The aging vertical, which is our diaper business, continue to provide resilient earnings supported by stable demand in healthcare and personal care application. The U.S. business delivering to performance while operational improvement lifted profitability in a non-woven portfolio during the quarter. In the lifestyle vertical, which is our textile business, margins benefited from lower cost inventory carried over from first quarter 26, resulting inventory gains despite broadly threat industry margins. However, earnings remain affected by cautious consumer spending and ongoing customer destocking. Management made deliberate production cuts in the quarter in order to avoid inventory build-up, protecting margin quality and cash conversion, particularly in India. The mobility vertical, which is our tire business and airbag business, remain under structural pressure from weaker automotive demand and excess global tire core capacity, particularly in China. Management continue leveraging its global customer relationships to regain volumes and strengthen pricing. With limited support from market condition, management remain focused on initiative within its control. The business continue executing its portfolio optimization and operational discipline. These initiatives are intended to strengthen the business by improving resilience, enhancing cash generation, and reducing dependence on a broad market recovery. Thank you. Back to you,

SNOE is now translating our inventory ambition into measurable execution. At CMD, we identified inventory as a structural opportunity with IVL's turnover materially below global peers and laid out the actions required to improve inventory management through real-time discipline, integrated planning, digital tools, and tighter management of slow-moving and safety stocks. We are now starting to see tangible progress. Inventory volume has reduced from 1.5 million tons at the end of 2025 to 1.4 million tons in the second quarter, while inventory turnover has improved from 4.7 times to 5 times in the same period. This improvement reflects the increasing discipline being embedded through S&OE, giving us better visibility across demand, production, and inventory, enabling faster decisions on stock levels, and better coordination across our global network. Importantly, this is not simply about reducing inventory. It is about carrying the right inventory at the right places in the right time while maintaining customer service and operational reliability. While we still have further opportunities, the direction is encouraging. We remain focused on structurally improving inventory turnover and releasing working capital, supporting stronger cash conversion and our broader deleveraging objectives. Turning to our balance sheet, deleveraging remains firmly on track. During the first half of the year, we generated approximately $29.7 billion of EBITDA and $25.9 billion of operating cash flow after maintenance capex, representing an EBITDA conversion of 87%. This was supported by disciplined working capital management and continued inventory optimization. The strong cash generation allowed us to fully fund our interest costs, dividends, and growth investments while still reducing our net debt by $9.6 billion. This progress is also clearly reflected in our leverage ratios. Net debt to EBITDA declined from 7.6 times to 5.3 times, while net debt to equity improved from 1.83 to 1.56 times, achieving the full-year capital market state target ahead of schedule. Let me close by reiterating the four key messages of today. First, this quarter reinforced the value of our structural platform advantages. Our diversified global footprint, integrated value chain, and local-for-local operating model enabled us to respond quickly to market and supply disruptions and capture opportunities across our businesses and regions. Secondly, our management self-help actions are gaining traction. With disciplined production and sharper SMLE execution, Improving inventory control, visibility, and accountability. Third, we delivered a broad-based earnings improvement across all segments supported by favorable market conditions. Deleveraging remains firmly on track. Stronger earnings, disciplined working capital management, and continued focus on cash conversion are translating into stronger cash generation and lower net debt. We remain focused on converting earnings into free cash flow and further strengthening the balance sheet. Finally, we reaffirm our 2026 outlook and remain committed to our 2028 ambitions. While some of the exceptional industry tailwinds are expected to normalize, the improvements we are making within our control are structural and ongoing. Overall, the first half of 2026 demonstrates the progress we are making under IVL 2.0 and give us confidence in our direction as we move through the remainder of the year. Thank you.

Hello. Okay, I think we can open the floor for questions. Khun Komsan, I think you have the first question. We'd like to ask you a question.

Yes, thank you very much. Can you hear me?

Yes, we can hear you, Khun Komsan.

Yes. I would like to, could you please add color on the intermediate EBITDA that came in at 96? How much is that coming from NVC? Is that 27 million is the right number? And on NVCVE, 50 million US dollars is the right number and the rest would be... I recall that in the fourth quarter you mentioned that... Anil Kumar Sharma, Anil Kumar Sharma, Anil Kumar Sharma, So your first question was on MEG and unfortunately for us MTB was outperformer in intermediate chemical and

MEG was not. We have project rebound for our MEG business which I think last year we said that it is on strategic review and what we have done this year is that we have taken a very long halt in the IVOC Clear Lake facility practically for three months. to review deeply on what are the equipment related reliability issues that we need to fix. So the business did very well because within that business is both the cracker and the MTBE as well which both of them performed well during the quarter. So the MEG business itself was not an outperformer during quarter two. Can you repeat what were your other points?

In terms of breakdown, I reckon that you made 96 million of the data from intermediate. Is that most of it coming from MTBE? Because I probably calculated it's supposed to be over 15 million US dollars. And another question would be on...

Yeah, I don't have that number in front of me. Maybe we'll come back to you with that. But yes, MTB would be the leading number in that. But the cracker margins, as you would have noticed, have also been pretty good in the U.S. Because with the crude oil price hike in quarter two, fortunately the ethane price in the U.S. did not spike. Thank you very much. Ethylene Crack Margin Benefits in North America, in Indo-Venia. And as we know in North America, the ethylene supplies are all that pipeline to each other. So although our IBOC facility, we kept it down, but we could get the revenue benefit from ethylene from the cracker in Louisiana. So, the exact split between the two, I would have to share with you later.

And MTDE, normally the third quarter was the best quarter for MTDE, which the demand was linked to gasoline tax, which is now very strong. Are you seeing that as well?

Yes, so what we are seeing in the third quarter, the July numbers are pretty strong. But what we see in August is that there has been a hike in export from China of MTBE to Mexico. And Latin America is one of our main markets for MTBE. So there has been a price decrease for MTBE in August at the moment. But we believe that the gasoline, because MTB as you know is linked to a gasoline additive, and during the second quarter and into July, we also have the, how do you call it, the driving season. So, the driving season lending benefit that we saw in the second quarter and into July. So, but again, with this continued impact on crude oil because of the Iran conflict, I think quarter 3 will be alright on the MTV side. On quarter 4, we would have a, we would face So, normally for us, the quarter four for MTBE would be a weaker period. Quarter three would be okay. I mean, at the moment, for the last 10 days, it's been weak for MTBE. But I think that may be temporary.

The last question is for Nini. I've also been seeing a lot of... The way we looked at our numbers is that we compared ourselves to 2022.

In Feb 2022, we had the Ukraine war. And we saw the same spike of, if you can put up that graph. So, in second quarter 22, we saw a spike because of the Ukraine war, which we saw again in the second quarter of 2026. But what we also witnessed is that In the past, we were working on a S&OP and because of the S&OP, we were more concentrating on production and enjoying the high spreads of Q1 and Q2 in 2022, which left us with a high inventory level when the price decline started. And on that price decline, we had to incur a lot of inventory losses. So, on this slide, as you can see, the red triangle depicts that we gave up the gains, we gave up more than the gains in the ensuing period in the second half of 2022 and the first half of 2023. And what this graph is meant to witness is that, yes, there was a steep fall in 2022-2023 from $378 to Thank you for watching this video. So, in some ways I can give that guidance that the drop this time is going to be less than 20% compared to back in 2022 when we had a nearly 40% drop. So, I think we are protecting our POMA, we are protecting our margins by careful inventory planning, careful production, giving a production Losing on unit cost is only 10-15 dollars compared to losing on inventory which could lead to hundreds of dollars. Does that answer your question? Thank you.

Okay, we have hands raised from Mayank. Mayank, would you like to pose your question?

Yes, sir. Firstly, congratulations on the inventory point. I think everybody on the podium has focused on it. I think the question really was more about how much more can you go from here in terms of managing working capital. Obviously, you have seen a lot better management as you kind of highlighted this quarter. Can you kind of talk about how you're thinking for the rest of the year and next year around managing working capital?

Yeah, go to slide 15, please.

Yes, we will put up the inventory terms slide, I think that is the one that we are emphasizing that. Our inventory terms, like we explained earlier and even at the CMD was that when we looked at our total inventory, it was much higher than what it needed to be in the commodity chemicals. And therefore, we have been looking at that and working on that for some time now. and that has helped in the first half of 2026 and it is still not where we want it to be. So we believe if we can achieve another one-turn improvement in the invented term, that will be significant and that will help both on the slide of the crude oil prices as it happens and as well as releasing working capital and decreasing debt. So our target over here would be six times.

Okay. And Mr. Lohia, if I was to kind of break it up in terms of how you are trying to manage this, because you obviously are also rationalizing capacity and trying to kind of focus on different parts of the business. Fibers obviously has been a challenging one. PET, how are you seeing about this? Souvik Roy Chowdhury, Aloke Lohia, Sanjay Ahuja, Sanjay Ahuja

and we have rationalized over 3 million tons of capacity. Those are already out of the system. So when we look at invented terms, we use the textbook definition, which is revenue and cost of goods sold. So I don't think rationalization plays any part in this improvement of invented terms. Invented terms is purely an outcome of setting Target inventories, which in the past, you know, we lived in a golden era till 2020. And in the golden era, we had margins, benchmark margins of $200. In the last couple of years, we are now trading at a benchmark margin of $100. So this $100 loss of benchmark margins in PET had to come from EBITDA. But What we are working on is that do we really need to have that much of inventory since we have so many sites in the world and we are a local for local and we have our own PTA as well in most of the regions. So therefore we looked at the entire holistically that what is the level of inventory that we need to carry and The purpose of carrying higher inventory is to serve your customers well. And we believe that with a better focus, a better weekly or even daily connect between the purchasing, between the sales and between the manufacturing can allow us and with better supply chain management can allow us to continue to Delight the customers but at the same time carry a lower capital employed in the working capital. In this volatile situation for the last 3-4 years, especially since COVID, the inventory that sits on you is going to devalue in value because we do believe that Precoil more or less is achieved. Electrification is driving businesses going forward. And therefore, ignoring the war, the value of crude oil probably is going to end up at 70 bucks. And at 70 bucks, you don't want to be holding inventory worth 90 bucks and then distributing it at 70 dollars. So this entire focus on inventory management allows us to, in cash, as well as to ensure that we don't give up in inventory value when the market corrects. The market correction is going to be more on the crude oil front than on the margin front. Because when you look at the total margin across the value chain, Especially when we look at North America, you saw the bulk of our earnings comes from North America. And in North America, with our shale gas to PET advantage, both paraxylene, PTA, PET, and with MTB as a proxy to MX, we find that we can retain the North American business value, but we have to be very, very careful, especially in Europe, Because we have long lead times from Asia to Europe and in Europe is where we have our weakest. Since we shut down two of our last sites for PTA in Europe, we are dependent on Asian PTA and now with the Red Sea also becoming a challenge, we just have to ensure that we don't get stuck with too much of inventory on the seas or at our sites. So we would rather be very careful on operating rates and only produce to fair value raw material because raw material in the last four months since the Hormuz closure has also spiked in terms of not only the benchmark spreads but there has been a premium to spot availability and therefore The segments are carefully managing that they're only buying spot material where they can pass it on to the customer with the customer's confirmation. So I think the whole rigor is around SNOE, Sales and Operations Execution, and that's serving us very well. It is still a new thing at IVL, but I think we made good progress in the first half, and I think second half we'll see the benefit of that especially in the sliding market.

And I think the last question Mr. Lohia for you was more in terms of the pricing and like considering the last quarter was one of the best quarters you have had in the industry. How are you thinking about passing on this cost increases? Have that been completely passed through across all the parts of the portfolio, Indovida, Fibers, PET? or is there some which is still a bit of a lag effect which you still have to work on?

I think we have passed on on every front as you can see from the results and as Diego was mentioning the one where we could not pass on the increases is where we took a large operating rate cut was on lifestyle fibers especially in India. They have a long supply chain I think in garments from fibers to garments. And I believe that that supply chain should be very tight because there was a cautious buying by customers. So we took the view that we would not produce and keep. So we cut our operating rates quite dramatically. And the other one would be mobility fiber. I think Especially Mobility Fiber in China, where we have a good presence. That business has been weaker recently. And that has just got to do with the industry, I think. Replacement tyres have not grown. There are actually replacement tyres, which is the main segment that we cater to in mobility. That business has been very muted. And so that's linked to industry. So I think we are more governed by industry in that than our self-help. But I think the ones that are going to do very well for us from a self-help standpoint is PET for sure, the entire share to PET advantage. Better SNOE performance for European sites and in Asia availability of raw material, ability to have local for local advantage. I think all of that will maintain. I am not yet, it is too early for us to say whether the industry spreads for PET which went down as low as $70 last year. Whether the markets next year would go back to $70 in karma times. I think not. I think the industry cannot work at that level of margin. And I do think it will go up to $100 plus. But it's too early for us to, we don't have enough data points to support that at the moment. So the way I'm looking at, you know, we have our capital market day commitment to double EBITDA from 2025 to 2028 to $2 billion. And we are on track of that based on our top-down measures that we are looking at. You know, we did a deep bottom-up budgeting last year to get to that number with self-help. We're on track with the self-help part. and without relying on margin improvement, our top-down analysis shows that we would get to that $2 billion. As the volatility of this raw material eases away, we have to ramp up our production. Operating rates in second quarter, I believe, was just below 80% for entire IVL. And that easily, if we can increase by 2 percentage points each year, and get to 84-85% by 2028. Each percentage point of operating rate increase on our current platform is for us after coma, I mean on a coma level, something like $50 million. So 4% increase means $200 million increase. So basically we are looking at all fine metrics on where to go. In a commodity business, as a leader, what I'm asking my management is that guys, why should we not be running at 90%? Let's get our SMOE really fully functional and let's in normal times operate at full rates. So that's how I believe that. So we don't double check. What I'm saying is if you've done a half yearly review, you know, I think most petrochemical companies must have done that because Times have changed quite rapidly since the last six months. And in our deep dive in our 26 second half and 2728 delivery, we believe we are on track to deliver on all the metrics that we have for our 28 business plan, which means including getting our net data beta to below three times. Very clear. Thank you. Thank you.

So we have a question related to inventory posted by Khun Phum Chan. The first question was that in the CMD, management mentioned of inventory of 68 billion Thai baht by the end of 2026. In the second quarter of 2026, inventory was 86 billion. Can we expect The inventory to decrease by 10 to 20 billion Thai baht in the next two quarters?

It's all, you know, like we've been talking today. The price of the inventory, the actual price of the inventory is dependent on the price of crude oil. So, if the crude oil which before the conflict was at $70, today it is at $90. If it goes back to that $70 level, then yes, we will be on target to reach a capital employed on inventory. And if the crude oil prices are higher, as you know from the slide that you saw earlier, the higher the crude oil price, the better I will enjoy some of the market earning standpoint. From a self-help point of view or absolute The absolute value of the inventory that we carry, that is determined by the value of the crude oil. So yes, we can get to that level and I believe since our fourth quarter estimates are based on $70 oil, I think we would be close to our inventory target levels. So the answer is yes.

So there's another question following that. Kunpum Chan is saying she understands the current inventory is around 1.4 million tons. Is asking whether 1.4 million tons is sustainable or whether IVL could operate smoothly at a low inventory level, say 1.2 million tons?

Yes, so that's exactly the 5 tons to 6 tons. So that one ton will get us to that 1.2 million ton level. So we believe it's sustainable. The businesses have to, you know, they've worked at 1.5, 1.6 million ton in the past. So for them to get that execution quality with better SMOE, that's the objective, that's the ambition and It doesn't mean that we'll be the best operator in the world. I think then we'll become a fair operator. Because what I'm thinking and looking at and learning is that how do the large trading firms operate? Large trading firms through price falls and price increases, they still make money. So what is that magic? What is the secret sauce to make money? So I think we are in the process of exploring that and I think we are making good progress. So I think we will maintain that and that is how we will be able to also deleverage. And the disadvantage of maintaining low inventory is that you won't see the peak earnings that you saw in quarter 2 because then you are giving up the upside. to protect the downside. And I'm happy to do that.

Okay. Khun Poom Chan has a follow-up question. It seems that there's a loss on asset re-evaluation of 849 million Thai Baht. Could you share some color on this? Yeah, Ashok.

Yeah, so this is specific to impairments taken in the fibers business for around 430 million Thai Bahts and in the combined PET business for around 370 million Thai Bahts. So these were, some of these assets were impaired in the past and there was a timing which was decided to shut them in 2026. So those actions have been taken. and the purpose of doing this is essentially to improve our quality of earnings and also as we reduce our costs also to improve the free cash flow.

Okay, we have a hand raised from Kushal. Kushal, would you like to pose your question?

Hi, this is Lohia and the management team. Congrats on a strong quarter and the successful deleveraging What did we do in the second quarter? We started the second quarter

Anil Kumar Sharma, Improvement in earnings has come from self-help and a third of the earnings improvement would have come from inventory gains. And that one third of the inventory gains is the one that I do expect that it will go away in the second half. But the two third of the self-help initiatives, that will stay with us. Reflect on Indovina. Indovina, we don't get inventory gains or losses. Indovina is more speciality business. So, the Indovina gains, which is quite remarkable in second quarter, it gained years from the crack margins. So, leaving aside the crack margins, rest of the business just grew because of better availability, better local for local availability and I think the self-help and the work that the management has done in Indovenia, that has protected the earnings. The CPET business, we got the improved earnings from MTBE. Again, it's not inventory gain loss. We got the earnings from cracker margins and from MTBE. The MTB, yes, is linked to the crude oil spike to some extent. But it's a blending component. So what we benefit in the second quarter for MTB would be the driving season to some extent. So it will be cyclical. It won't be a structural improvement. It will be a cyclical improvement. So Fibers wasn't a great quarter. So overall, there's nothing, nothing, nothing in there. The Indovida business did extremely well. We also started up a new plant in Tanzania. So the Indovida packaging business was, I think, a structural improvement. So it leaves us with the CPET business, the CPET business or the PET business, in which that inventory would have played some role, but Remember we also have firm long term commitments for our PET. So as much as we gain on the rising crude oil prices, some of it, not all of it, some of it is lost to lag effects from fixed price sales. So therefore When the oil gets back to $70, we will again start gaining on the fixed price deals that we have. And our fixed price deals are longer. So not all of it is inventory gain. It's net inventory gain. The area where we have identified looking at our historicals, we have moved from adjusted numbers to reported numbers. and I think that has been a big eye-opener for us in the sense that now we are looking at the earnings, the real earnings, the earnings that go into our cash flow and we are trying to explain those numbers rather than without meaning to, intentionally putting things under the carpet but then the adjusted numbers were always looking good enough so there was less forensics in it But now on a reported basis, we are putting up a lot more forensics. I do understand that I'm not able to explain to you all the details that you're seeking, but I think we will get up better for the next investor call from these questions that you're raising. We'll be able to get you more breakups, more granular data, what makes sense for you to have. but I don't want to leave the impression that all of this is inventory gain because it is not. I would say that one third is coming from entry gains. There is some losses from fixed price sales and a lot of gain is coming from the way we are operating today.

Sure. Maybe my second question is that I think Your utilizations are quite low in the second quarter and I think part of this is your deliberate strategy to sort of have a really lean sort of inventory levels. Any sort of guidance in the second half of the year in terms of how utilizations will look like, especially on Indovina?

I think Indovina is running fair, but I'll let Alistair quote on that.

Yeah, sure. So, if you think about Q3, It's a very seasonal quarter and typically our highest tonnage quarter. So I think you will see utilizations pretty high. I think across the Q4, obviously we come to the end of the year, people start the stocking and it becomes the seasonal shutdown areas. So you'll see utilizations go down as we control inventory. So, I think you'll see the two-quarter story. Very strong in Q3 and then slightly weaker in Q4. But as Mr. Lohia said, most of our plants today are running pretty full, albeit they're batched plants, so don't measure them like you measure a continuous unit at 95%. You've got to do great changes and create the specialty products.

Right, okay. And maybe my final question, I think the PTT spreads in China are starting to come off. Can you share some color in terms of what are the current dynamics and where do we see the spreads landing? Do we see them going back to pre-crisis levels or are they structurally higher than those levels? How should we think about it?

Yeah, sure. Thank you for the question. So, if you split the current dynamics into, let's say, four areas, what is happening on the operating rate by the industry in China, what is happening on their export demand, and what is happening also on the new capacity additions under inventory levels, right? These are the four key factors that determines the spreads. Now, what we saw was The spreads peaked during the second quarter because of the war of disruptions and that led to some of the assets restarting. So about a million tons of shutdown assets they restarted during July, mostly through during July. And at the same time another million tons of new capacity came up. So that's why we saw the spreads drop quickly. To that where we are right now about 100 to 110 which was basically the pre-war level. In terms of export demand there was there is some softening in the demand it was about 600,000 tons per month now it is about 500 and then in terms of the inventory levels the total inventory level has slightly reduced although the site inventory level is slightly higher but not a big change. The main factor that will determine what Mr. Lohia was also referring to is we are seeing to an extent improved industry discipline. So what I mean by that is in spite of this new capacities coming up, restarting, capacities restarting, we are now seeing the industry deliberately adjusting rates. So that we believe, that's what we will love to see for rest of the year, But we do believe that that will keep the spreads around the current levels for rest of the year. So just to give you some numbers, the operating rate peaked close to about 80% when these new capacities came as compared to earlier around this low 70s. But from that 80, now the industry has already started adjusting. Right now it is about 77%. So we expect this to go down further. and that will keep some support to the spreads. Even though we are moving out of the season, we expect that that will give support to the spreads. So Kushal, does that answer your question?

Yeah, no, that was clear. Thank you. Thank you.

Okay, we have another hand raised from Kunnapat. Kunnapat, we'd like to pose your question.

Hi Mr. Lohia and management team. Maybe before I start my question, I just want to go back to the earlier answer on the utilization. So that Mr. Kundalasta mentioned about the third quarter and fourth quarter utilization. Third quarter will be up and fourth quarter will be down. Is that for the group utilization or the particular segment of the company?

Yeah, hi Mr. Lohia. I think Alistair was only mentioning about Indogrenia. Ah, okay. So the group utilization for PET would go up as soon as the market, as soon as the raw metal prices stabilize, then we will take the operating rates up. We don't want to take the operating rates up while the crude oil is still high because we don't want to get stuck with any inventory build up. So, in PET business, our focus is on reduction of inventory further. And in fiber business, I think they have done a lot already. So, maybe fibers would have opportunity to improve it. For sure, I think fiber lifestyle would improve the operating rate in the second half.

You were expecting an increase in demand in Q3 for the lifestyle business. For mobility, normally Q3 is not the strongest quarter, but the biggest increase that we are expecting is in lifestyle with our Asian assets that make PET fibers. The demand has been soft. People have consumed inventory. We have managed to the demand. And now we are expecting the Q3, we should see the demand coming back. And so our operating rate will also increase in lifestyle, which is the PET fiber chain.

Yeah, so Indovina doesn't have a supply-demand issue or an inventory issue. So Indovina would be stable and fiber and PET should go up in operating rate.

My second question is on the, if I can go back to the second quarter, you know, looking at the industry spread, combined PET 279, looking at what happened to the industry in terms of the free stock shortage, and I look at the utilization rate of the CPET, you know, CPET actually down Q on Q. Even though spread now, you know, at almost the ceiling, and volume was so down, so I wonder what happened in, you know, to our CPET segment.

Kunnapa, that is what we are trying to understand and explain. You see, to your point, the margins are stable, the demand is stable, Souvik Roy Chowdhury So that is the whole change in understanding of the business In the past it was what you said, margins are good, operating rates, you can make money, produce full, irrespective of what the inventory value is. Now we are concentrating on the inventory value and we are saying, if a carrying inventory is a high cost, which it is because of the high raw material cost today, let's get rid of that inventory and then we will increase the operating rates when the raw material values come down. So it is how we want to do it today. So it is judgmental way of operating. This is a true what I call radical understanding. We started the year with what is a radical clarity and the radical clarity gave us all this information that how do we operate a commodity business better. And today what we are talking about is our radical understanding. So, it is management-led reduction of operating rate. We don't want to bid inventory, we want to reduce inventory. That's how we will increase our inventory term and reduce our debt.

Maybe I try to understand what you are saying. What about the industry level at about $180 per ton, you know, as of now? So what would be the production volume utilization that you are looking at now?

Well, I have to look at what is my inventory. If my inventory is at 5 tons, I would rather have it at 6 tons. So I would say buy less raw material, even at just $90, sell as much as you can, and take your inventory turns to 6 times. So inventory turns basically is that reduce the... Reduce the quantity of inventory that you are holding in the company. So, maybe we can do, I think we can do analysis for you. So, Kunapat, Bodybone will create an analysis to share with you.

Yes, I think that would be very helpful, you know, to understand a quarter, you know, volume

We want serious volume increase, we want procurement decreased so that the inventory, the finished goods inventory, actually total inventory, whether it is raw metal inventory, whether it is in transit inventory or in finished goods form, in any form, we want that inventory to go to six terms, which today is at five terms.

So maybe my, another question is on the, you know, the items in financial statement earlier that Kunachok mentioned about the asset rationalization in the FIBER and also the PET. Actually, there are two items in financial statement. This is one item. I'd like to know how far, you know, in terms of our plan, in terms of the asset rationalization Because I think in the last two years, we did a lot of restructuring, you know, that led us to a big impairment. And I thought that this was already done, but, you know, there are some more in second quarter. So how far, you know, have we done on this? And second item is on the tax expense, the 2.3 billion baht. I just joined the call a few minutes ago, so I'm not sure if this is already explained. Yeah, thank you.

Yeah, I'll ask Ashok to explain the tax question. But as far as impairments go, so I would say that we have, you know, I mentioned earlier that Project Rebound, our IC business, not IC as a whole, but our MEG business, whether the MEG business can make money for us or not. and that is something that we have now explored with taking a long shutdown of our plant in Clear Lake and from that we are getting good data on what the fix is. So I think by the time we talk again at the next EMD, we should be having a very clear focus on where our IC business sits or where the MEG business sits. So that is one that is still not determined. It is being carried out for value. Specialty Polymers Specialty Polymers is also a weak business for us. Part of it is in Europe, part of it is in the US. So those are the two businesses. I think the MEG business is with a larger impairment if we were to take one. But the

I think we are basically executing spot on all the plans that we presented at the last CMD. So I think we are not completely finished yet, but I think we are on track with the plan that was communicated at that time.

Yeah, so I don't think in fiber there's much left. There's nothing in endovida that's Very little if any in Rovina. So it's basically the MEG business which still remains a concern for me. But like I said, through this long stop, we have learned many things and we are looking at the cost to improve it.

Just want to clarify on the MEG asset. Have we been impaired this asset before?

No.

Okay, so what are we looking at, you know, if we were going to impair, you know, MET asset?

Do we know what is the carrying value of MET? Ivoque? Clear Lake?

Let the show come back.

I'll come back to you on that.

Okay, okay. Maybe my last question is on the key message. Do you want to answer the other point?

Yeah, yeah, I'll do that. So, I think when you... So, for the second quarter, the PVT is 8.8 billion Thai Baht and we have certain non-cash impairments and also expenses which have been restructuring charges which we have provided. So if we add up then our PBT would work out to around 10.8 billion Thai baht if we add up because these impairments and these restructuring charges are to those specific entities. So under 10.8 billion baht we have a tax expense of around 2.2 billion Thai baht. So which comes to an ATR of around 20% and our cash tax is around 1.5 billion baht. So I think when you are looking at it, then you will have to add up to the PBT the impairments and restructuring expenses that we have provided because those are non-cash and we cannot claim any deferred tax assets on those. So, you would have to look at it from a different, you will have to add it up and the ETR will work out to less than 20% and the cash tax to around 14 to 15%.

Okay, I have a last question on the slide 17 about the key message for the 26 outlook. When you mentioned that the second half of earnings moderation What do you mean by earnings moderation in the second half? Because the first half, you know, earnings, we get about, okay, if I get the core earnings in the second quarter, you got about 8, 9 billion baht. With the first quarter, you lost about 3 billion. So net first half, you got about 6 billion, 5 to 6 billion, so the The earnings moderation in the second half. So are we, because you didn't make any earnings in first quarter and looking at the spread so far. So are we looking at spread? Because later on, you know, you mentioned that you'll be expecting industry spread to stay at about this level. So it seems to me that the second half of the year, Thank you very much.

So we are going to have net earnings in the second half which we did not have in the first quarter as you mentioned but they won't be as high as what we had in the second quarter and our total 2026 capital market day expectations will be able to beat that and more importantly we are not giving a 27 number right here but what we are saying is that we believe that our 2028 ambitions will be achieved both in terms of EBITDA delivery as well as net debt delivery as well as EBITDA turns or net EBITDA so I think we are on track to deliver and it's a very ambitious goal from Without relying on improved margins, the whole point being that we set a goal at the beginning of the year that by 2028, in three years' time, we will double our EBITDA, reduce our net debt EBITDA to below three times. And what we are reaffirming today is that we are on track to do that.

Even trying to understand the message that you are communicating today, I remember we first talked about this second 26th outlook during the CMD and you seem to be very concerned about the industry outlook and now we have come more than halfway in 26th and you are more relaxed in terms of the second half. So can I say that we are more optimistic in the industry outlook than early in the year Would that be a fair statement?

So, absolutely, I mean, no denying that. But the question is why are we more optimistic or why are we more comfortable? The reason being because quarter 4 was such a disaster, quarter 4.25 was such a disaster. And January and February was a bit of a recovery on PET margins. And I think those margins could sustain, but they went even better than that. Now, where we are in the third quarter, we know that the P&T margins are back to where they were in January and February. And Muthu mentioned that we believe that these industry margins will sustain. So, yes, when we made the Capital Market Day presentation in March, before the war, we were... I think our peak margins Prior to this quarter was in 2022. Since 2023, 24, 25, those three years were where our business margins kept coming down. We took proactive measures. We took down businesses in Europe especially, which we thought, because of the change of the oil dynamics, because of the electrification, we thought that the Businesses in Europe are not going to be able to sustain itself against cheap imports from Asia. And those decisions have paid us off well. We don't have that baggage with us. Today, 95% of IVL businesses are sustainable at these margins. So that is where I feel comfortable that these margins are not going to last forever. But even at these margins, if we can make IVL segment create let's say earnings and deleverage we would be in a much better place going forward and what gives me confidence about IVL is basically our moats so our you know we have spoken of our local for local moat You have seen that play out in the second quarter. We have our shale gas to PET advantage in North America. You have seen that play out. And for me, those things took years to get built. But the new discovery of SNOE and the things that SNOE can do to how you run your balance sheet, how you run your business, how you How you create your margins. This is already playing out and helping us deleverage, helping us keep the margins in our pocket and not give it back when the prices come down. So I think all our modes are serving us well and this has become now a new mode for us, the SNOE as our new operating rhythm. So, on this slide, as you can see, it captures all of this. So, yes, I'm in a much more comfortable place than I was six months back. From a long-term perspective, not from a short-term perspective.

Okay, thank you. Maybe, you know, last question before I go. Any update on the asset sales? Thank you.

Well, we have ongoing negotiations with land. Most of the asset sales are basically to do with land sales. And that has got to do with both clearing up the land and getting the right price for it. So they are under negotiation. They are taking longer than what we communicated, I think, last year. But today there's a whole focus on those four pieces of land that we have and there's a regular update going on on that. So there's regular progress and I don't believe we have taken those land sales in our 2026 plan. They are there in the 2027 plan.

We have a hand raised from Kuna Monrat. Kuna Monrat, would you like to pose your question?

Thank you. Just one question for me. I'd like to know the details on the impairment on the MET plan. Which one of this? Is it the old world or the one that we acquired from the husband? And what is the basis or the rationale behind this impairment? Thank you.

Sorry, we are not saying it's impairment. We are saying we said last year that we have put up that IBOC. This is the old world, the 2011 acquisitions. This is the only MEG plant. We don't have cracker there. Our cracker is in Lake Charles, Louisiana. So this plant, the margin, the way the MEG business in North America is that it is transacted at export parity basis. Because North America has surplus MEG and we have to bring it to Asia to So that is hurting the economics of the MEG business. And therefore we are looking at that MEG business that how can we improve our conversion cost. So that is a question that is being deliberated because we have not been in the last 3-4 years, our operating rates have suffered because of reliability. So either we fix the reliability issue, in which case if we can run those plants at 90% plus, then it can be okay, it can give us a cost of capital. But at the moment, that MEG plant is not giving us a cost of capital. And what IVL has been doing for the last 3 years has been that We have been saying that all sites that cannot meet our return requirement, we need to assess the strategic importance to IVL. So in the case of IVL in 2011, it was a good strategic need. Today there is ample MEG in North America. So if we cannot create our return on capital from that site, then we have to see what are our options. But we have not yet declared that. That site is up for repair. That answer only came because Kunapath I think was asking that is there anything more in the portfolio that could come up. And I am saying these are things that we have announced in the past and we are still working on but we have not yet determined where we are. But we are taking active measures to come to that conclusion. So we should be Thank you. Thank you. Thank you.