TPCC
Taiwan Prosperity Chemical Corporation
4Q/2013
Investors’ Conference
April 2, 2014
TPCC
Disclaimer
The forward-looking statements contained in this presentation are
subject to risks and uncertainties and actual results may differ
materially from those expressed or implied in these forward-looking
statements.
Taiwan Prosperity Chemical Corporation makes no representation or
warranty as to the accuracy or completeness of these forward-looking
statements and nor does Taiwan Prosperity Chemical Corporation
undertake any obligation to update any forward-looking statements,
whether as a result of new information or future events.
TPCC
Agenda
• Company Snapshot
• 4Q/2013 Financial Results
• Business Overview
• Capital Expenditure
• Year 2014 Business Outlook
3
TPCC 4
Taiwan Prosperity Chemical Corp.
Established: May, 1991
Headquarter: Taipei, Taiwan
IPO in Taiwan: October, 2007
Paid in Capital: NT$ 2,920 million
Market Cap:
(as of 03/25/2014 , NTD 30.85 per share) NTD 9,008 million
(USD/NTD=30.525) ( USD 295 million )
Production facility: Lin Yuan, Kaohsiung, Taiwan
Employees: 217
(as of 12/31/2013)
TPCC
Production Facility
Kaohsiung
(TPCC)
Beijing
Shanghai
1.Cumene
(460 KTA)
2.Phenol/Acetone
(360 KTA/221 KTA)
3.Bisphenol-A
(107 KTA)
4.Anone
(150 KTA)
5.MAN
(40 KTA)
6.H2-I
(7K Nm3/hr)
H2-II
(8.1K Nm3/hr)
TPCC
Agenda
6
• Company Snapshot
• 4Q/2013 Financial Results
• Business Overview
• Capital Expenditure
• Year 2013 Business Outlook
TPCC 7
4Q/2013 Statement of Comprehensive Income
(In NT millions except otherwise noted) 4Q / 13 3Q / 13 4Q / 12 QoQ / % YoY / %
Net Sales 5,759 5,588 6,235 3 (8)
COGS 5,917 5,737 6,215 3 (5)
Gross Profit (158) (149) 20 6 (890)
Gross Margin (2.7%) (2.7%) 0.3% 0 (3)
Operating Expense 132 124 150 6 (12)
Operating Income (290) (273) (130) 6 (123)
Operating Margin (5.0%) (4.9%) (2.1%) (0.1) (2.9)
Non-operating Income/(Expense) (25) 3 (11) (986) 125
Income before Tax (315) (270) (141) 17 123
Income Tax Benefit/(Expense) 53 37 22 43 141
Net Income (262) (233) (119) 12 120
Net Margin (4.5%) (4.2%) (1.9%) (0.3) (2.6)
TPCC
4Q/2013 Statement of Comprehensive Income
(In NT millions except otherwise noted) 4Q/13 3Q/13 4Q/12 QoQ / % YoY / %
Net Income (262) (233) (119) (12) (120)
Other Comprehensive Income(Loss) 57 92 16 (38) 256
Total Comprehensive Income(Loss) (205) (141) (103) (45) (99)
Basic EPS (NT$) (0.90) (0.80) (0.40) (13) (125)
ROE (%) (4.0%) (4.6%) 0.6% 0.6 (4.6)
ROA (%) (1.4%) (2.3%) 0.8% 0.9 (2.2)
Free Cash Flow(1) 228 957 492 (76) (54)
(1) Free Cash Flow = Operating Cash Flow - CAPEX - L/T Investment
8
TPCC
Year 2013 Statement of Comprehensive Income (In NT millions except otherwise noted) 2013 2012 YoY / %
Net Sales 22,579 25,426 (11)
COGS 22,786 24,928 (9)
Gross Profit (207) 498 (142)
Gross Margin (0.9%) 2.0% (3)
Operating Expense 512 622 (18)
Operating Income (719) (124) 480
Operating Margin (3.2%) (0.5%) (2.7)
Non-operating Income/(Expense) (48) 4 (1,300)
Income before Tax (767) (120) 539
Income Tax Benefit/(Expense) 114 22 418
Net Income (653) (98) 566
Net Margin (2.9%) (0.4%) (2.5)
9
TPCC
Year 2013 Statement of Comprehensive Income
10
(In NT millions except otherwise noted) 2013 2012 YoY / %
Net Income (653) (98) 566
Other Comprehensive Income(Loss) 239 107 123
Total Comprehensive Income(Loss) (414) 10 (4,240)
Basic EPS (NT$) (2.24) (0.33) 579
ROE (%) (9.9%) (1.3%) (8.6)
ROA (%) (4.3%) (0.3%) (4.0)
Total Assets 15,078 12,443 21
Total Liabilities 8,763 5,597 57
Total Shareholders' Equity 6,315 6,846 (8)
Free Cash Flow(1) 244 2,139 (89)
(1) Free Cash Flow = Operating Cash Flow - CAPEX - L/T Investment
TPCC
Sales/ GM & PAT
3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13
Sales 7,416 5,474 6,238 6,464 6,489 6,235 5,310 5,922 5,588 5,759
PAT 446 -65 194 -51 -124 -118 -53 -105 -233 -262
GM 9.4% 1.4% 6.0% 1.5% 0.1% 0.3% 1.1% 0.7% -2.7% -2.7%
-5%
0%
5%
10%
15%
20%
25%
-1,000
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000 NT$,M GM
11
TPCC
4Q/2013 Statement of Cash Flow
(In NT millions except otherwise noted) 4Q / 13 3Q / 13 4Q / 12
Cash Flows From Operating Activities
Income before Tax (315) (270) (140)
Adjustments to reconcile income
to net cash provided by operating activities637 1,244 748
Net cash generated from operating activities 321 974 608
Cash Flows From Investing Activities (140) 4 (100)
Cash Flows From Financing Activities (504) (79) (675)
Net Increase In Cash And Cash Equivalents (323) 899 (167)
Cash And Cash Equivalents, Begining Of Period 1,171 272 608
Cash And Cash Equivalents, End Of Period 848 1,171 441
12
TPCC
Year 2013 Statement of Cash Flow
(In NT millions except otherwise noted) 2013 2012
Cash Flows From Operating Activities
Income before Tax (768) (119)
Adjustments to reconcile income
to net cash provided by operating activities1,284 2,551
Net cash generated from operating activities 516 2,432
Cash Flows From Investing Activities (281) (265)
Cash Flows From Financing Activities 172 (2,442)
Net Increase In Cash And Cash Equivalents 407 (275)
Cash And Cash Equivalents, Begining Of Period 441 716
Cash And Cash Equivalents, End Of Period 848 441
13
TPCC
Solid Financial Structure
14
28 26 24
19 27
33
0
5
10
15
20
25
30
35
2007Y 2008Y 2009Y 2010Y 2011Y 1H/12
2.26
1.02
1.72 1.99
2.08
1.28
0.00
0.50
1.00
1.50
2.00
2.50
2007Y 2008Y 2009Y 2010Y 2011Y 1H/12
34% 43%
51% 45%
38%
52%
0%
10%
20%
30%
40%
50%
60%
2007Y 2008Y 2009Y 2010Y 2011Y 1H/12
24.8
17.1 19.5
31.1 29.8
24.1
10.0
15.0
20.0
25.0
30.0
35.0
40.0
2007Y 2008Y 2009Y 2010Y 2011Y 1H/12
Current Ratio
Debt Ratio (L/A)
Book Value per share
1.72
1.99
2.08
1.07
1.25
0
1
2
3
2009 2010 2011 2012 2013
51% 45%
38%
45%
58%
0%
20%
40%
60%
80%
2009 2010 2011 2012 2013
19.5
31.1
29.8 23.5
21.6 10
20
30
40
2009 2010 2011 2012 2013
58.5%
-1.2%
2.5%
30.6% 30.7%
36.1%
29.6% 26.3%
25.5%
18.7%
-20%
0%
20%
40%
60%
80%
2009 2010 2011 2012 2013
Net Debt/ Equity Debt/ Asset
Leverage Ratios
(%)
TPCC
Agenda
• Company Snapshot
• 4Q/2013 Financial Results
• Business Overview
• Capital Expenditure
• Year 2014 Business Outlook
15
TPCC
Source :TPCC
16
TPCC
Source :TPCC
17
TPCC
Worldwide Phenol Capacity & Demand Outlook
Source :TPCC
Unit:KT/YR 2012 2013 2014 2015
Phenol Capacity 10,828 11,496 12,101 12,914
Bisphenol A 4,142 4,076 4,269 4,471
Phenolic Resins 2,698 2,739 2,832 2,966
Anone 958 996 1,029 1,117
Others 1,154 1,088 1,122 1,140
Phenol Demand 8,952 8,899 9,252 9,694
Capacity - Demand 1,876 2,597 2,849 3,220
Utilization Rate, % 83% 77% 76% 75%
18
TPCC
China Phenol Capacity & Demand
Source: TPCC
Capacity Annual Growth Rate: 23.3% Demand Annual Growth Rate: 6.55%
19
TPCC
TPCC Sales Volume in Recent 5 Years (Unit : MT)
ps: Year 2013 decreased the production of BPA about 60KT.
Volume 486,148 587,477 601,101 624,090 527,039
20
TPCC
Sales Destination of 2013 vs 2012
2012 48% 14% 15% 10% 6% 4% 1% 2%
2013 54% 18% 8% 8% 4% 4% 2% 2%
21
TPCC
TPCC Business Migration
Cumene Plant Phenol/Acetone /AMS Plant
Anone Plant
BPA Plant
Propylene
Benzene
cumene
Phenol
Acetone
Anone
BPA
Acetone
Phenol
Cumene
AMS AMS
H2
Started With 4 Sites And 6 Products
22
TPCC
TPCC Business Migration
Cumene Plant Phenol/Acetone /AMS Plant
Anone Plant
BPA Plant
Propylene
Benzene
cumene
Phenol
Acetone
Anone
BPA
Acetone
Phenol
Cumene
AMS AMS
H2 Plant
H2 Plant
No 1 Steam/MAn Plant
No 2 Steam/MAn Plant
BDO Plant THF Plant
LNG
BDO
THF
GBL
MAn
LNG
nC4
nC4
Migrate to 10 Sites And 10 Products
Possessed Capacity Leased Capacity – To Be Completed By Q4 2013
23
TPCC
BDO PLANT
24
TPCC
TPCC BDO Derivatives Development Plant
C4 SPLITER
MAN PLANT
BDO PLANT
PTMEG PLANT
NMP PLANT
NHEP PLANT
POLYOL PLANT
PBT PLANT
C4
n-C4
Crude Man
GBL THF
BDO
NVP PLANT
PVP PLANT
PVP
NHEP
NVP
NMP
SPANDEX PLANT
TPU COPOLYESTER
SPANDEX FIBER
PU PLANT
PU Paint
PU Foam
PU Adhesive
PU Leather
PBT COMPOUNDING PLANT
ENGINEERING PLASTICS
The High Value-added Petrochemical
25
TPCC
MAn Series Production Capacity
2013* 2012 20XX*
80 KTA 40 KTA
BDO eq. Expansion
68 KTA 34 KTA
MAn Expansion
*: TPCC estimation
26
TPCC
Agenda
• Company Snapshot
• 4Q/2013 Financial Results
• Business Overview
• Capital Expenditure
• Year 2014 Business Outlook
27
TPCC
Capital Expenditures NT$ M
3,065
539 539
586
30 49
0
500
1,000
1,500
2,000
2,500
2009 2010 2011 2012 2013 2014E
28
TPCC
Agenda
• Company Snapshot
• 4Q/2013 Financial Results
• Business Overview
• Capital Expenditure
• Year 2014 Business Outlook
29
TPCC
FY/2014 Business Outlook-1
• Benzene
1. Supply from Asia will increase 2 million tons in 2nd half 2014 due to new capacity put in service.
2. Compared to year 2013, benzene price in 2014 shall be stable low.
• Propylene
1. The supply have been improved nowadays, due to CPC new cracker(No.6) and FRCC from CPC on stream from Q4/2013.
2. TPCC will reduce import quantity of propylene in 2014 compared to last year.
30
TPCC
FY/2014 Business Outlook-2
• Phenol Chain Market – U.S. and Europe economics recover, and China remained stable.Demand will be picked up gradually in 2014 compared to last year. There will be three new plants to be on stream in Q4 2014 in Asia, one existing plant will be permanent shutdown in Q3 2014, the impact for 2014 will not be so much, capacity utilization will maintain around the same level as 2013.
• Corporate strategy – To cope with threats in raw material and market trends, heavy attention will be paid to achievement of best possible margin rather than highest production. Reduce operation cost by flexible operation lines.
• Business strategy – Our strategy is to increase our sales to different countries/areas to reduce the dependence on China market. Utilized equipment leasing strategies to maintain revenue growth and acquired major new series of products (BDO/THF/GBL).
31
TPCC
Thank You
32
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