Forwardlooking Statements & NonGAAP Measures Information contained in these materials or presented orally on the earnings conference call, either in prepared remarks or in response to questions, contains forwardlooking statements.…
Methanex Investment Opportunity Methanol Global Leader Leading market share, competitive assets, strong balance sheet Positive Industry Outlook Healthy demand growth outlook, limited new supply Strong Cash Flow Generation &…
Industry Overview 60 million tonnes annual global demand1 Top producers account for half of global sales Largest competitors are stateowned No major competitive shift anticipated Methanex is the global leader 15% global…
Methanol End Uses 5 5
Methanol Usage.. By Derivative By Region Source: Methanex year ended December 31, 2014 6 6
Industry Review Strong Demand Growth Projected 7.8% CAGR, led by energy applications* 2004 2014 CAGR: Energy: 12.2% 2015 2018 CAGR: (000s tonnes) Energy: 12.1% Total: 6.3%* 90,000 Total: 7.8%* 80,000 70,000 60,000 50,000…
Demand / Supply Balance Demand expected to outpace new capacity over next several years A number of projects under discussion, but limited committed capital Expect supply gap will be filled through a combination of new China supply…
MethanoltoEnergy Methanol is primarily made from natural gas High priced oil versus natural gas creates substitution incentive Methanol is a liquid fuel and oil substitute Source: Historical annual data and forecast from IHS…
Methanol Industry Cost Curve China, Russia Exports, Germany, India, E. Europe Eq. Guinea, Indonesia, Iran, Malaysia, Methanex Plants, Oman, Qatar, Saudi, Trinidad (MHTL), Venezuela, USA Source: Methanex Steep cost…
Methanol to Olefins (MTO) Natural Gas Coal Ethylene Petroleum Residues Oxides (EO) Synthesis High Purity MEG Gas Ethylene Production Acrylic Acid (AA) Methanol to Methanol Olefins Production ACN High Purity Propylene…
MTO demand leading growth Methanol Estimated Number of Capacity Startup Plants (million MT) Completed 8 9.0 Q24 2015 6 6.5 H1 2016 2 3.5 Total 16 19 Najing Wisons 0.8 MMT merchant methanol to 0.3 MMT olefins plant 8…
Methanol Affordability into Olefins (MTO) MTO plants are not able to switch to Naptha as feedstock once constructed Many producers are integrated downstream beyond ethylene and propylene (polyethylene, monoethylene glycol,…
DiMethyl Ether (DME) DME can be blended directly with LPG (propane) up to approximately 20% DME demand is approximately 4 million tonnes per year. Future promising application for DME is as a diesel replacement: DME as propane…
Methanol as a Fuel Methanol has attractive features as a transportation fuel: Liquid fuel can be blended with gasoline and ethanol in todays vehicles at minimal incremental costs High octane fuel which reduces emissions when blended…
Fuel demand expected to continue growth Local Methanol Gasoline Implemented Province Standards Since Gansu M15 & M30 2009 Guizhou M15 2010 Hebei M15 & M30 2010 Heilongjiang M15 2005 Jiangsu M45 2009 Liaoning M15 2006 Shaanxi…
Methanol Fuel Blending Growing Outside China Several countries outside China in the assessment or nearcommercial stage for fuel blending, however minimal demand is included in current forecasts from these regions Iceland U.K.…
Methanol affordability as a fuel Methanol a highly affordable gasoline substitute in China Most fuel blending in China is at low percentages and sold based on volume China (Nanjing) Wholesale Gasoline Price:…
Methanol as a Marine Fuel Regulations Driving Change 40 MMTPA methanol equivalent market Stena Ferry Lines converting to methanol Global Emission Control Areas (ECAs) N. Europe and N. America introducing tighter ship…
Methanex Production Capacity Annual Chile USA (Geismar) Year Production Built Capacity (000 tonnes) Chile I, IV 1988 / 2005 1,720 Chile II, III 1996 / 1999 Geismar, Louisiana 201416 2,000 New Zealand Trinidad Egypt (50%) 2011…
Geismar Project Update Geismar 1: Geismar 2: Completed On target on schedule for late Q1, 2016 Operating well, at more Estimated than rated 265 million capacity of remaining 3,000 tonnes to spend per day. Potential to…
Chile Potential Sources of Upside First prize: twoplant operation in Chile, supported by Ongoing unconventional gas exploration and development in Chile Argentina tolling arrangement Argentina shale gas (EIA estimates over 500 tcf in…
Impressive Financial Results Average Modified ROCE of 15% from 20052014 7.00 Adjusted EPS 50% 6.00 Modified ROCE Modified ROCE Adjusted EPS 40% 5.00 4.00 30% 3.00 20% 2.00 10% 1.00 0.00 0% 2005 2006 2007 2008…
Valuation Considerations Methanex is trading at a discount to replacement cost Capacity millions of tonnes 1 incl. Growth Trinidad 2.0 Chile 0.4 USA (Geismar) 2.0 New Zealand 2.4 Canada (Medicine Hat) 0.6 Egypt 0.6 Total 8.0…
Valuation Considerations Modest valuation relative to strong cash generation capability (millions of tonnes) 1 With Egypt & Full Operating Full Potential 2 3 Trinidad Restrictions Capacity (Chile 100%) Annual Operating Capacity 7.4…
Q115 Liquidity & Capex Outlook Strong financial position to execute growth opportunities Estimated Capital Expenditures 1 Debt & Liquidity at end of Q115 (US millions) (US millions) Total Debt 2 1,368 Geismar 265 Liquidity…
Leverage Rating Agency Perspective Leverage target = Investment Grade Pro Forma Balance Sheet with Geismar 2 Preserves financial flexibility (US billions unless indicated) Lowers cost of debt Total Debt 1 Q1'15 Access to longerterm…
Returning Cash to Shareholders Meaningful, sustainable and growing dividend 0.275/share per quarter, yield 2.0%1 46% of shares bought back since 2000 New 4.6 million share normal course issuer bid (5% of public float) expiring May 6,…
Summary Positive industry dynamics Global leader with competitive assets Solid franchise value that is difficult to replicate Global marketing, supply chain and shipping network Strong cash generation & financial position…
Q & A 3131
Appendix 3232
Methanol is.. Primarily produced from natural gas Natural Gas syngas Reforming 900oC CO CO2 H2 Steam [& Oxygen] Compression Cooling crude chemical grade Synthesis Distillation CH3OH CH3OH H2O APPENDIX 3333
Methanol Consumers Concentrated consumer base 30% of global demand from top 20 consumers Main consumers are large, global chemical companies: Celanese, BP, Momentive, Skyford, Sabic, BASF, etc. Methanex supplies primarily…
Methanex Cost Structure Natural gas Fixed Manufacturing and Longterm gas contracts have fixed base price and G&A costs variable component linked to the price of methanol Primarily people costs (approx. 1100 employees) Reduces…
Carbon Recycling International Renewable Methanol in Iceland CRIs GO Plant in Svartsengi, Iceland Worlds greenest methanol technology captures carbon dioxide from industrial emissions and converts it into Renewable Methanol…
Renewable Methanol Methanol and DME is produced from fossil fuels and renewables LNG = Liquefied Natural Gas; DME = DiMethyl Ether; OBATE = On Board Alcohol to Ether (i.e. methanol converted to DME on board ships) APPENDIX…
Methanex Global Supply Chain APPENDIX 3838
Operating Rates in China China has operated at 50% based on nameplate capacity; however, market is tighter than it appears and effective operating rate is 73% (source: MMSA) Many plants are not operational due to various factors…
Management Alignment Executive shareholding requirements: CEO 5 times salary in Methanex shares or share units Senior executives (5 members) 3 times salary Other senior management (50 employees) 1 times salary Shortterm incentive…
Methanol / DME as a Fuel Outside China Europe is blending methanol into fuel today (up to 3% blending permitted) Australia Coogee demonstration project targeting limited launch of methanol blends in early 2015 Israel M15 demo…
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