TSRC — Call Transcript 2021

Jun 17, 2021

2021 TSRC – Global Specialty Polymers Virtual Investor Conference, 17[th] June 2021

Disclaimer

The information presented and referred herein are based upon the information obtained internally and externally from our company. Forward-looking operational results, financial condition and business results might be different from those information expressly or impliedly presented herein due to various factors, including but not limited to market risks, supply chains, market demand and our upcoming high-quality products. We undertake no obligation to publicly update or revise any statements regarding those information presented and referred herein in the event of any further changes or updates to the information presented herein.

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2021 TSRC Confidential and Proprietary

AGENDA

1. Introduction

• Thomas Lin, Deputy Spokesperson

2. 2020 & 1Q2021 Market and

• Joseph Chai, CEO

Business Review

3. 2020 & 1Q2021 Financial

• Edward Wang, CFO

Performance

4. Summary

• Joseph Chai, CEO

5. Q&A

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2021 TSRC Confidential and Proprietary

Introduction Thomas Lin, Deputy Spokesperson [1]

2020 & 1Q2021 Market and Business [2] Review Joseph Chai, CEO

Quick Snapshot of 2020 Performance

• Significant impact from COVID-19 pandemic which led to demand destruction and profit compression

• Very strong performance from SRD and mainland China market

• Business recovery from 2H2020 but recovery momentum was uneven

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Strong Rebound in 1Q2021 Performance

• Solid demand recovery across all product lines and market segments

• Favorable market factors resulted in improved profitability

• Supply constraint

• Healthy NR-BD price spread

• Economic recovery

• Solid business performance from JVs in India and mainland China

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SRD (1Q2021) – Leveraging favorable market factors to deliver outstanding earnings

• Grow volume and profitability due to supply disruptions, economic recovery, and heathy NR-BD spread

• Effective execution and timely respond to customer and market needs

• Strong demand in mainland China and rest of Asia

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2021 TSRC Confidential and Proprietary

AMD (1Q2021) – Broad base recovery in all geographies and market segments

• Stronger than expected economic recovery in EU/Americas with mainland China continues its strong growth

• Supply chain disruptions present challenges and opportunities

• Higher volume sales enabled by the new advanced SEBS line in Nantong

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2021 TSRC Confidential and Proprietary

Market Outlook

• Strong market recovery momentum in 1H2021

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• Some market uncertainties and volatilities expected in 2H2021 given fresh waves of pandemic in Asia

• With the market volatilities, some of the favorable market factors may vary in 2H2021

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Market Outlook (con’t)

• EU and Americas’ economic recovery remain on-track barring major/fresh COVID-19 outbreak

• The demand for materials for automotive, industrial, and consumer applications is projected to remain stable

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2021 TSRC Confidential and Proprietary

2020 & 1Q2021 Financial Performance [3] Edward Wang, CFO

2020 Financial Highlights

• 2020 financial results impacted by severe demand disruption amidst pandemic and impairment of intangible assets.

• Business recovery from 2H2020 especially in China while demand in North America and Europe remained soft.

• Excluding one-off impairment loss, EPS would have been NT$ 0.39 per share.

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In NT$M 2020 2019 YoY
Revenue 24,024 28,911 (17%)
Gross Profit 2,937 3,377 (13%)
Operating Profit 822 1,085 (24%)
Income before Tax 521 1,255 (59%)
Net income (22) 740 (103%)
EPS (NT$) (0.03) 0.90 (103%)
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2021 TSRC Confidential and Proprietary

Strong Performance in 1Q2021 as Economy Recovers

• 1Q2021 revenue growth driven by volume increase (+17% YoY) from strong demand across all applications and higher raw material prices.

• Significantly increased operating profit, leveraging favorable industry dynamics, including supply constraints, healthy NR-BD price gap, and positive impact from inventory valuation amidst price increases.

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Revenue (NT$M)
8,217
6,494 6,388
1Q20 4Q20 1Q21
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Net Income (NT$M)
897
268
59
1Q20 4Q20 1Q21
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Operating Profit (NT$M)
1,297
282
202
1Q20 4Q20 1Q21
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EPS (NT$)
1.09
0.32
0.07
1Q20 4Q20 1Q21
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2021 TSRC Confidential and Proprietary

Revenue By Geography

• 1Q2021 Volume growth (+17% YoY) reflecting strong auto recovery in China and channel inventory restocking in Europe and Americas.

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8,217
6,494 6,388 828 Others
1,007
745 643
Europe
1,009 829
Americas
6,163
4,541 4,749
Asia
1Q20 4Q20 1Q21
Amount in NT$M
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Major Equity Investment

• Strong result from ISRPL since 2H20, benefitting from India government’s stimulus plans and measures to curb ESBR imports.

• Improved performance of ARL-TSRC in line with China demand recovery.

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ISRPL ARL-TSRC APED
197
184
43
25 24
3 10
(2) (14)
1Q20 4Q20 1Q21
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Amount in NT$M

Note: Numbers shown as TSRC’s investment income of each investee

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2021 TSRC Confidential and Proprietary

Strengthened Position with Favorable Industry Dynamics

• Healthy NR-BD price gap contributes to market demand and profitability of synthetic rubber, despite short-term BD price fluctuation.

Unit: US$

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2,000 1,000
1,800
800
1,600
600
1,400
400
1,200
1,000 200
800
0
600
(200)
400
(400)
200
0 (600)
Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21
NR-BD price gap (RHS) ICIS BD CFR NEA (LHS)
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Summary Joseph Chai, CEO [4]

Summary

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2 3
Solid Business
Market Outlook
Execution
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1 2020 & 1Q2021 Business Performance

Strong rebound in Effective execution in 1Q2021 from the capturing strong market contractions in 2020 demand recovery

Market uncertainties and volatilities might appear in 2H2021 given fresh waves of pandemic

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Q&A

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THANK YOU

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