investor relations 2012. balanced product mix among petrochemicals such as pe/pvc/ca 2 shareholders...
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Investor Relations 2012
Balanced product mix among petrochemicals such as PE/PVC/CA
2
Shareholders & Business Portfolio
HanwhaGroup42.7%Floating
Shares53.5%
Foreign Ownership
15.73% (as of jun, 2012)
◎ Shareholder Structure
◎ Business Portfolio by Product (as of Dec. 2011) (as of Dec.2011)
OP Contribution by Product
PE 38.2%, PVC 26.7%, CA 41.3%,
Others -6.2%
3
Sites & Product Flowchart
(as of Dec. 2011)
(1,000 tons/yr)
Seoul HQ
Daejeon R&D Center
Ulsan Plant
Yeosu PlantYeochun NCC
90385247305176194
8075
530M
W
• LDPE/EVA• EDC • VCM • PVC/PSR• Chlorine• NAOH• PLZ• PA• MA• PV Cell
327355
1,106350297123645710
8025
• LDPE• LLDPE• EDC• VCM• PVC• OA• Chlorine• NAOH• HCL• ECH
(as of Dec. 2011)
760
Chlorine
NaOH
Electrolysis
EDC
Salt
Water
Pyrolysis
VCM
Polymerization
PVC
Ethylene
YNCC
PolymerizationPE
EVA
W & C
Compounding
Naphtha
◎ Site Location & Products ◎ Product Flowchart (Full Integration of Vinyl Chain)
Unique Business Structure via Vertical Integration
Hanwha L&C
4
Business Affiliates & Capacity
Vertical Integration from Upstream to Downstream
Chlor-Alkali(CA)
Polyvinyl chloride(PVC)
LDPE (EVA 140) LLDPE
EDC VCM PVC/ PSR PLZ OA
Naphtha Cracker
Ethylene 1,910
Propylene 970
BTX 792
SM 290
BD 240
1,491597600
160123
453
355
821904
25
Yeochun NCC (YNCC) Hanwha Chemical Hanwha L&C
(1,000 tons/yr)
(1,000 tons/yr)
Chlorine NaOHECH
Plastic Processing
(as of Dec. 2011)
(Asian No. 2 NCC, 50% stake) (Plastic processing, 100% stake)
Floorings
PVC Tiles
Automotive Parts
Artificial Marble
Solar EVA Sheets
Polyethylene(PE)
5
◎ Ethylene/Propylene Capacity
(1,000 tons/yr, Korea Petrochemical Industry Association)
◎ EVA/LDPE Capacity
Hanwha
LG chemical
Honam
453
280
110
100 Samsung Total
◎ LLDPE Capacity
Honam
SK Energy
290
125
70
Samsung Total
LG Chemical
180
904
◎ Chlor-Alkali Capacity (Caustic Soda)
Hanwha
LG Chemical210
Samsung Fine190
Others165
355 Hanwha
Honam
Samsung Total
YNCC*
(*50% owned by Hanwha Chemical)
LG Chemical
SK Energy
1,530
1,860
2,630
2,800
2,880
Strong Presence in the Korean Petrochemical Industry
Economies of Scale
6
Saudi Arabia / Jubail
EVA/LDPE plant under construction
(200,000 tons/yr)
China / Ningbo
PVC plant (300,000 tons/yr)
Thailand / Bangplee
ASR plant (10,000 tons/yr)
China / Qidong
Hanwha SolarOne(Ingot/Wafer 400MV/yr
Cell 500MV, Module 900MV)
Aggressively pursuing global expansion since 2008
Global Operations
Performance Summary of 2011
Income Statement
2009 2010 2011 2012 1H
Revenues 3,034 3,628 3,970 1,768
OP 411 483 472 96
Pre-tax profit
418 367 546 178
Net profit 343 284 412 143
Balance Sheet
2009 2010 2011 2012 1H
Total assets
4,818 5,731 6,234 6,451
Total liab. 2,149 2,582 2,771 2,935
SHE 2,669 3,149 3,463 3,517
(KRW bn)
(KRW bn)
7
Financial Summary
◎ Parent-only Results
Income Statement
2009 2010 2011 2012 1H
Revenues 5,343 6,341 7,943 3,047
OP 583 655 326 77
Pre-tax profit
469 706 281 4
Net profit 354 487 167 28
Balance Sheet
2009 2010 2011 2012 1H
Total assets
7,184 10,977 11,854 12,077
Total liab. 4,364 6,275 7,056 7,405
SHE 2,820 4,702 4,798 4,671
(KRW bn)
(KRW bn)
◎ Consolidated Results
(Numbers in 2008 and 2009 based on K-GAAP, and numbers in 2010 and 2011 based on K-IFRS)
8
Profitability & Financial Soundness
◎ Consolidated Operating Profit
◎ Parent-only Operating Profit
◎ Liabilities-to-Equity Ratio
◎ Interest Coverage
Financial Status
9
Raw Material Price Trend
◎ Crude Oil ◎ Naphta / Ethylene
Oil, Naphtha & Ethylene Price
($/ton)($/ton)
‘12/07
10
Product Price Trend (PE)
◎ LDPE & Spread ◎ LLDPE & Spread
PE PRICE
($/ton)($/ton)
11
Product Price Trend (PVC/CA)
◎ Caustic Soda ◎ PVC Price & Spread
Caustic Soda & PVC
($/ton)($/ton)
12
Core Business Selection & Intensification
Dedicated to increasing profit and maintaining our position as the market leader in the PE, CA and PVC industries by enhancing our global competitiveness
Expanding into New Future Businesses
Pursuing continuous growth and stable profit by expanding our business into solar, bio, battery materials, nano and other promising industries of the 21st century
Global Chemical Leader 2015
Management Strategy
13
Specialty Maker
EVA W&C Compound Alkali-Soluble Resin
HCC is one of the top 3 in ASR industry and is the only player based in Asia
HCC provides a broad range of choice to customers by offering 4 grades of standard ASR and 5 grades of specialty ASR
Environmentally friendly products have been developed to replace organic solvents in ink, paints and varnishes
Wire and cable compound is a polyolefin-based material added to functional polymers. It is highly functional, with a combination of electrical and mechanical characteristics, as well as strong processing capabilities
HCC is one of the top 3 in W&C compound industry and has been in the business since the early 80’s
HCC possesses in-house developed technology and offers full range of W&C compound facility design capability
In 1986, HCC began to produce EVA based on its own technology. HCC now produces various EVA grades, covering a wide range of vinyl acetate content with a melt index that meets the most stringent requirements of its clients
HCC is one of the very few in the industry with technology and experience to manufacture ultra clean & high VA content(above 30%) EVA grades for PV cell encapsulation, lamination coating, and hot melt adhesives application
Key Supplier of Specialty Products
14
PE Business Strategy
(1) Higher Contribution of Specialty Products
◎ Average Export Price by Product Type
◎ Sales Volume by Product Type
◎ Contribution Margin by Product Type
◎ Sales Volume Increase of Specialty Products
* Specialty Products : EVA, W/C, HS LLD, Blend
* Commodity Products : LDPE, LLDPE(commodity contribution margin per ton in 2008 = 100)
(1,000 tons) (KRW/ton)
15
◎ Company Overview
PE Business Strategy
(2) JV in Saudi Arabia to Secure Low-cost Feedstock
▶ Company Name : International Polymers Co. (IPC)
▶ J/V Structure : HCC 25%, Sipchem 75%
▶ Capacity : EVA/LDPE 200 kilotons/yr
▶ Feedstock : Ethane based ethylene (tolled by SABIC)
▶ Project Status : Signed JVA – July 2009 Awarded EPC contractor – Dec. 2010 Plant operation – 3Q 2013
Very tight supply due to shortfall in capacity and rapid increase in global demand driven by China and India
New demand in solar EVA sheet magnifying the supply shortage
◎ EVA Supply and Demand
16
◎ Asian No. 3 & Global Top 10 CA Maker through Capacity Expansion in 2010
CA Business Strategy
Strong Global Competitiveness & Advanced Cost Structure
Capacity expansion in Yeosu Plant (Caustic Soda: 130, Chlorine: 120, EDC: 150 kilotons/yr)
Chlorine is a product showing tendency for regional monopoly. Balanced supply/demand is expected through long-term contracts with BASF Korea, KPX Fine Chemical, Kumho Mitsui and LG-DOW.
Emerged as global top 10 maker in 2010 with production capacity of 900,000 tons of caustic soda and 820,000 tons of chlorine
772
902
2009 2010
NaOH (Caustic Soda)
701
821
2009 2010
(1,000 DMT)16.6%
17.1% 1,3411,491
2009 2010
EDC
11.2%
Cl (Chlorine)
(1,000 MT) (1,000 MT)
17
PVC Business Strategy
Wholly Independent PVC Plant in China
560
860
2009 2011
597
897
2009 2011VCM
PVC
(1,000 MT)
50.3%
53.6%
◎ Strategic Significance of China PVC Plant
Outstanding ROI compared to carbide process PVC plant
Boost in PVC chain profits via increased sales portion of CA/PVC from 2011
First global project of Hanwha Chemical
Stronger vinyl chain competitiveness : Emerge as a global PVC player
Maximize profitability through link with MDI business
Production Capacity : Oxy EDC 500, VCM 300, PVC 300 kilotons/yr
Location & Land Area : Zhejiang, Ningbo, 250,000 ㎡ S/T & Capex : Feb. 2011, KRW 360 bn
Feedstock : Anhydrous hydrochloric acid (long term contract with Wanhua)
◎ China PVC Plant Overview
◎ Effectiveness of China PVC Plant
◎ Capacity Expansion in 2011
(1,000 MT)
18
Solar Business
Global Leader in Solar Business by 2015
◎ Business Overview
Aggressively expanding Solar business as the new growth driver of Hanwha Chemical
Planning Polysilicon investment - Capa. & location : 10,000 tons/yr, Yeosu - Capex : KRW 1 trillions - Plant operation : 2H 2013
◎ Acquisition of Hanwha SolarOne in 2010
Ingot/wafer
Cost competitive manufacturing base
Accomplishing economies of scale : Ingot/Wafer 800MV / Cell 1.3GW / Module 1.5GW (by late 2011)
Qualified R&D & management talents
Core customers in Europe & America
Listed in NASDAQ (HSOL)
Cost competitive manufacturing base
Accomplishing economies of scale : Ingot/Wafer 800MV / Cell 1.3GW / Module 1.5GW (by late 2011)
Qualified R&D & management talents
Core customers in Europe & America
Listed in NASDAQ (HSOL)
400MW 500MW 900MW
19
Cell Material & Bio Businesses
Global Presence based on Cathode Material
Completed in-house development of LiFePO4 production technology (patent registered )
Finished construction of a Semi- commercial plant with a capacity of 1,000 tons/yr
Product testing in process with EV & rechargeable battery makers
Developing anode & separator material
BioProduct
BatteryMaterial
Foundation for Bio Business through Antibody Therapeutics
Developing Biosimilar & new medicine (HD203 in phase III of clinical trial)
Commercial plant in construction with scheduled commercial production from 2013
Sales contract signed with Turkish pharmaceutical company in late 2010
Preparing a contract with a global major
20
Bio Business Update
BioProduct
Business Tie-up with Global Major Company
Partner : Merck (MSD) ☞ Contract signed on Jun.10 of 2011
Product : HD203 (Biosimilar of Enbrel®(etanercept))
Hanwha will receive an upfront payment and additional payments
associated with milestones for technology transfer and regulatory
progress as well as tiered royalties on sales
Merck will conduct clinical development, manufacturing and
commercializing of HD203 in global markets (except in Korea &
Turkey)
Clinical trial
Clinical trial
2007 2008 2009 2010 2011 2012201
32014 2015 2016Diseases
21
Bio Business Schedule
Bio Product R&D Pipelines
Rheumatoidarthritis
Breast cancer
Rectum cancer
R&D Preclinical trial Appr.
R&D Preclinical trial Clinical trial
R&DPreclinical
trialClinical trial CommercializationAppr.
R&D Preclinical trial CommercializationAppr.
R&DPreclinical
trialClinical trial
New DrugsNew DrugsNew DrugsNew Drugs
Bio-similarBio-similarBio-similarBio-similar
Rheumatoidarthritis
R&DPreclinical
trialClinical trial
Asthma
Rheumatoidarthritis
HD203
HD201
HD204
HD205
HD101
HD104
HD105 R&D Preclinical trial Clinical trialSolid tumors
22
Major Subsidiaries-Financial Results
◎ Yeochun NCC (Equity Method)◎ Hanwha L&C (Consolidation)
2007 2008 2009 2010
Total assets 2,173 2,098 2,204 2,508
Total liab. 1,174 1,537 1,312 1,288
SHE 999 561 892 1,220
Revenues 4,468 6,008 4,832 6,317
OP 296 (270) 344 538
NP 171 (238) 233 388
2007 2008 2009 2010
Total assets 849 968 886 1,046
Total liab. 505 602 475 633
SHE 344 366 411 413
Revenues 919 1,016 1,035 1,080
OP 42 40 49 26
NP 37 8 (8) 3
2007 2008 2009 2010
Total assets 1,022 1,064 1,416 1,532
Total liab. 589 631 663 749
SHE 433 433 753 783
Revenues 250 285 312 320
OP 35 38 47 31
NP 12 0.4 13 31
2007 2008 2009 2010
Total assets 1,082 1,127 1,328 1,526
Total liab. 706 750 791 1,027
SHE 376 377 537 499
Revenues 373 399 489 690
OP 22 17 32 3
NP 11 8 3 (16)
◎ Hanwha Galleria (Consolidation) ◎ Hanwha Hotels & Resorts (Equity Method)
(KRW bn) (KRW bn)
(KRW bn) (KRW bn)
This material contains forward-looking statements regarding the Company’s financial conditions,
operating performance and business plans that do not relate to historical facts or events. These
statements relate to events and depend on circumstances that may or may not occur in the future.
Forward-looking statements can be identified by the use of forward-looking terminology, including the
terms “estimates,” “expects,” “plans,” and “anticipates” or other variations of the terms or
comparable terminology.
Forward-looking statements involve inherent risks and uncertainties which may cause the actual
results or performance of the Company to be materially different from any future results or
performance expressly stated or implied in the forward-looking statements. The information herein is
based on the Company’s plans, estimations and assumptions regarding the operating environment
based on conditions as of the day of the presentation. Such plans and estimates may be modified due
to changes in the Company’s strategy and the operating environment.
The Company undertakes no responsibility to update or revise the forward-looking statements. The
Company and the Company’s executives do not assume any liability for losses resulting from the use
of the information herein (including losses caused by error). This document does not constitute an
invitation or recommendation to invest or otherwise deal in, or an offer to sell or the solicitation of an
offer to buy or subscribe for, any security. The information contained herein shall not serve as the
basis or grounds for related deals and agreements or investment decisions.
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