Turkiye Petrol Rafinerileri A.s. · BIST:TUPRS
Turkiye Petrol Rafinerileri A.s — Tüpraş — Investor Presentation (May 2023)
59 slides from Turkiye Petrol Rafinerileri A.s's investor presentation, May 2023
Slide 1: Investor Presentation
Investor Presentation May 2023 Hizmete Özel / Confidential
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements that reflect the Company management’s current views with respect to certain future events. Although it is believed that the expectations reflected in these statements are reasonable, they may be affected by variables and changes in und
Slide 3: Refining Market
Refining Market Hizmete Özel / Confidential
Slide 4: Brent Crude Prices
Brent Crude Prices $/bbl 130 5 yr range 5 yr ave 123.7 2022 2023 + Russian-Ukraine war 118.8 + Impact of sanctions 113.3 112.7 + Post-pandemic demand recovery 110 104.4 98.2 100.0 93.3 91.7 89.9 87.2 90 - Recession fears 84.9 81.1 - Zero Covid Policy and its impact on 82.8 82.5 78.6 Chinese demand 7
Slide 5: Global Refinery Capacity Changes
Global Refinery Capacity Changes Expectations until 2025: • In the 2019-2025 period, 67% of the net capacity increase comes from Asia and 39% from the Middle East Region. • 67% of the closures intensified after the pandemic come from the OECD region. 2019-2025 Net Capacity Additions Capacity Additio
Slide 6: Middle Distillate Cracks
Middle Distillate Cracks $/bbl Diesel Jet Fuel 5 yr range 5 yr ave 2022 2023 5 yr range 5 yr ave 2022 2023 50 60 47.1 45 43.3 45.2 57.1 55 54.2 42.3 40.7 39.6 40 50 39.0 38.4 46.8 35 45 44.2 40.5 43.8 41.6 33.7 40 30 30.8 37.4 38.4 35 35.3 25 26.1 24.0 31.6 30 20 19.8 25 26.3 25.6 15 20 12.9 11.3 10
Slide 7: Gasoline and High Sulphur Fuel Oil Cracks
Gasoline and High Sulphur Fuel Oil Cracks $/bbl Gasoline High Sulphur Fuel Oil 5yr range 2023 2022 5 yr ave 5 yr range 2023 2022 5 yr ave 50 0 45 44.0 -5 40 -10 38.0 35 -15 -18.3 30 -16.0 -19.0 25.2 25.7 -20 -20.2 25 24.7 21.7 21.8 -22.2 20.4 19.9 -25 20 -30.4 -26.5 -26.4 13.4 -30 -28.8 -27.9 15 12.
Slide 8: Heavy Crude Price Differentials to Brent ($/bbl)
Heavy Crude Price Differentials to Brent ($/bbl) 5 0 -5 -10 -15 Arab Heavy Basrah Heavy Kirkuk Iran OPEC+ Cut OPEC+ Cut Russia – CPC Sanctions Decision Decision Ukraine War Average* -20 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
Slide 9: Turkish Market
Turkish Market Hizmete Özel / Confidential
Slide 10: Turkish Market, 2M 2023
Turkish Market, 2M 2023 Jan Feb Diesel Jet1 Million Tons 3.6 3.4 3.5 3.5 3.3 0.7 0.7 0.7 0.6 1.8 1.7 1.8 1.7 1.7 0.3 0.4 0.3 0.4 0.3 +1.4% +27.5% 0.2 1.6 1.8 1.7 1.7 1.8 0.4 0.3 0.3 0.3 0.2 0.0 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 Gasoline LPG 0.5 0.7 0.5 0.6 0.6 0.3 0.4 0.5 0.5 0.3 0.3
Slide 11: Turkish Market, 12M 2022
Turkish Market, 12M 2022 Q1 Q2 Q3 Q4 Diesel 24.1 Jet1 Million 23.2 Tons 22.3 20.3 4.7 5.3 5.0 4.2 2.0 4.7 1.3 7.0 7.4 6.6 - 6.6% 3.4 1.2 + 38.0% 7.4 1.7 2.4 1.0 1.4 6.1 5.3 6.3 6.1 0.6 1.3 1.1 0.7 1.2 0.2 0.7 5.2 5.6 5.6 5.4 1.0 0.9 0.9 0.6 2019 2020 2021 2022 2019 2020 2021 2022 Gasoline LPG 3.0 3.
Slide 12: Turkey's Net Import / Export Balance
Turkey’s Net Import / Export Balance Million Import Export Market Share of Tüpraş Tons -0.2 -0.2 2022 12M Jet 0.4 0.3 -0.4 Diesel 48% -7.3 Jet 85% -8.0 Diesel -5.9 -8.8 Gasoline 98% -13.6 2.0 1.6 Gasoline 1.9 Fuel Choice of Passenger Cars 2022 3.0 2.4 EV/Hybrid , 1% -2.8 -2.9 Diesel; LPG; LPG -2.9 D
Slide 13: Company Overview
Company Overview Hizmete Özel / Confidential
Slide 14: Tüpraş Shareholder Structure
Tüpraş Shareholder Structure Tüpraş is Turkey’s biggest industrial company and leading refiner. Koç Holding Aygaz Opet Koç Holding andGroup Other Koç Other Koç 77% 20% 3% 6.82% 6.83% Energy Investments Inc. (SPV) 46.4% 79.98% 41.7% Foreign Ownership 43%1 100% Free Float2 46.78% 100% 99.23% Domestic
Slide 15: Tüpraş' Refining Assets & Distribution Network
Tüpraş’ Refining Assets & Distribution Network İzmit Capacity: 11.3 mn t Nelson Compl.: 14.5 Storage: 3.0 mn m3 Kırıkkale Capacity: 5.4 mn t Nelson Compl.: 6.32 Storage: 1.3 mn m3 İzmir Capacity: 11.9 mn t Nelson Compl.: 7.66 Storage: 2.5 mn m3 Batman Capacity: 1.4 mn t Nelson Compl.: 1.8 Storage: 0
Slide 16: Nelson Complexity of Refining Companies
Nelson Complexity of Refining Companies 03/05/2023 Hizmete Özel / Confidential Investor Presentation Company Overview www.tupras.com.tr 16
Slide 17: Tüpraş Subsidiaries
Tüpraş Subsidiaries OPET - Distribution Tüpraş Share: 41.7% • 1,866 stations as of 31 March 2023. • As of January 2023 Market share: 20.3% in white products; 30.2% in black products Tüpraş Trading UK - Trading Tüpraş Share: 100% Over 8 million tons of product trade More than 10 million tons of spot
Slide 18: Tüpraş Subsidiaries
Tüpraş Subsidiaries DİTAŞ - Marine Transport Tüpraş Share: 79.98% • 4 Crude Oil Tanker: 470,067 DWT • 7 Product Tanker: 116,533 DWT • 4 Bitumen Tanker: 61,450 DWT Körfez Ulaştırma - Railway Transport Tüpraş Share: 100% • ~5% share in Turkish rail freight market • ~2.5 mn ton of product and semi-prod
Slide 19: Tüpraş Subsidiaries
Tüpraş Subsidiaries Entek - Electricity (Tüpraş Share: 99.23%) Entek’s Installed Capacity Production (000 MWh) 66 17.5 MW 112 MW MW 1,800 1,600 1,400 1,542 1,200 1,451 1,359 1,341 1,000 178 800 28 MW 16.4 MW 600 MW 400 200 365 274 24.4 MW - 2019 2020 2021 2022 Q1 2022 Q1 2023 Natural Gas Combined Cy
Slide 20: Operations
Operations Hizmete Özel / Confidential
Slide 21: Q1 Product Yields
Q1 Product Yields Q1 2022 Q1 2023 Other Other Bitumen LPG Bitumen 2% LPG Kok 2% 4% 5% 4% Kok 8% 4% Gasoline 4% Gasoline Other 17% Fuel Oil Other 20% white 8% white Fuel Oil Light Black Prod. 2% Light 6% Black Prod. 2% Distil. Distil. 17% 18% Naphtha 26% 25% 4% Naphtha 2% Mid. Distil. Mid. Distil. 55
Slide 22: Annual Product Yields
Annual Product Yields 12M 2021 12M 2022 Other Other Bitumen 2% LPG 3% Bitumen 2% LPG Kok 8% 3% 10% 4% Gasoline Coke Other 3% Gasoline 21% Other Fuel Oil white 21% white 6% Black Prod. 2% Light Fuel Oil Black Prod. 2% Light 18% Distil. 6% 19% Distil. 25% Naphtha 26% 1% Naphtha 1% Mid. Distil. Jet Mid
Slide 23: Capacity Utilization and Quarterly Production Volume
Capacity Utilization and Quarterly Production Volume Quarterly Production (Million Tons) Capacity Utilization (%) 2021 2022 2023 8 Crude Oil Semi Product Feedstock Total 7.1 7.0 7.0 98 100 98 7 96 92 7 6.9 7 88 7 9 82 85 84 6.5 8 7 6.0 7 8 9 71 6 6.0 10 93 5.0 91 91 87 84 5 81 76 75 75 61 4.6 4 Q1 Q
Slide 24: Sales
Sales • Tüpraş generated 29.5 million tons of total sales in 2022. Total Sales Customer Groups 2022 mn tons 29.8 29.2 29.5 Other 27.6 9% International 4.2 24.5 sales 6.8 6.0 5.9 Jet 21% 4.7 12% Exports Bitumen 25.6 Total Sales, 5% 22.4 21.7 23.5 Domestic Sales 19.8 2022 29.5 mn tons 2018 2019 2020 2
Slide 25: Product Sales in Q1 2023 (Million Tons)
Product Sales in Q1 2023 (Million Tons) • Tüpraş generated 6.3 million tons of sales in Q1 2023, 4% lower y-o-y. • Domestic sales were 3% higher y-o-y in Q1 2023 with better gasoline, jet fuel and bitumen sales. Total Product Sales Domestic Sales of Selected Products Diesel Jet Fuel Gasoline Bitumen
Slide 26: Financials
Financials Hizmete Özel / Confidential
Slide 27: Tüpraş and Med Refining Margins
Tüpraş and Med Refining Margins Tüpraş Net Margin Med Margin Clean Clean Gross Inventory Net Med Processed 28.2 ($/bbl) Gross NET Margin Effect Margin Margin* bbl (mn) Margin Margin Q1 2023 20.5 0.5 20.1 8.8 9.3 32.7 38.4 16.5 12M 2022 23.9 0.7 23.2 15.8 16.5 28.2 198.8 Q1 2022 11.8 4.7 7.1 0.5 5.2
Slide 28: Income Statement (Million TL)
Income Statement (Million TL) Q1 Q1 Million TL % 2023 2022(**) Net Sales 92,826 77,646 20% COGS -78,829 -71,950 -10% Gross Profit 13,997 5,695 146% Operating Expenses -2,206 -1,081 -104% Income/Loss from other operations -620 -1,522 59% Operating Profit 11,171 3,092 261% Inc./Loss from Equity pick u
Slide 29: Income Statement (Million TL)
Income Statement (Million TL) Million TL(**) 2022 2021 % Net Sales 481,765 152,492 216% COGS -418,988 -136,632 -207% Gross Profit 62,777 15,860 296% Operating Expenses -8,235 -3,318 -148% Income/Loss from other operations -8,935 -11,766 24% Operating Profit 45,607 777 5773% Inc./Loss from Equity pic
Slide 30: Financial Highlights
Financial Highlights EBITDA (mn TL) Net Income¹ (mn TL) 55,587 41,045 14,067 12,136 6,748 4,039 5,024 3,495 545 526 1,103 -2,494 2019 2020 2021 2022 Q1 2022 Q1 2023 2019 2020 2021 2022 Q1 2022 Q1 2023 Current Ratio & Net Debt / EBITDA Return on Average Equity (%) Net Debt /EBITDA Current Ratio 17.1
Slide 31: Balance Sheet Analysis
Balance Sheet Analysis Net Debt bn TL In Billion TL In Billion $ bn $ Redemption Schedule (Billion TL) TL Hard Currency $ equivalent 12.0 8.4 9.4 50 39.1 -0.9 -0.5 40 2.0 1.4 1.3 0.9 30 0.5 0.1 0.0 0.0 0.1 0.9 20 16.5 -8.6 10.5 10 1.9 1.1 -16.5 0.3 0.3 Dec-19 Dec-20 Dec-21* Dec-22* Mar-23 0 Cash & 1
Slide 32: Profit Before Tax Bridge (Q1 2022 – Q1 2023)
Profit Before Tax Bridge (Q1 2022 – Q1 2023) Strong cracks coupled with wider differentials boosted PBT in Q1 2023 despite higher energy costs y-o-y. Million TL 03/05/2023 Hizmete Özel / Confidential Earnings Presentation Financials www.tupras.com.tr 32
Slide 33: Profit Before Tax Bridge (2021 – 2022)
Profit Before Tax Bridge (2021 – 2022) 2022 PBT was positively impacted by stronger cracks and wider differential spreads. Million TL 03/05/2023 Hizmete Özel / Confidential Earnings Presentation Financials www.tupras.com.tr 33
Slide 34: 2023 Expectations
2023 Expectations Tüpraş Net Refining Margin 11$/bbl -12$/bbl • 24-25 mn tons production, 28-29 mn tons sales and 85 - 90% capacity utilization Consolidated Capex ~350 million $ • ~60% of capex for sustainability focused energy efficiency and environmental projects 03/05/2023 Hizmete Özel / Confiden
Slide 35: Q1 2023 Results
Q1 2023 Results Refining Margins ($/bbl) Capacity Utilization (%) 18.0 Tüpraş Net Margin 16.0 14.0 100 Tüpraş FY 90 70.7 % total capacity 12.0 Target 80 utilization in Q1 2023 10.0 70 8.0 60 50 6.3 mn tons of sales 6.0 40 4.0 9.3 30 70.7 and 5.0 mn tons of 2.0 20 production in Q1 0.0 10 2023 0 Q1 20
Slide 36: Investments (Million $)
Investments (Million $) Achievements & Ongoing Projects Strategic Transition - Investment Program • c6.9 bn USD investments since privatization • 27% CO2 emission reduction by 2030 (scope1+2), 100% • Reached 9.5 Nelson Complexity reduction by 2050 • Capability to process heavier and more sour crude
Slide 37: Financial Policy
Financial Policy Financial Discipline: Risk management policies focusing on areas such as leverage, liquidity, counterparty risk, commodity, interest rate and currency exposure. Proactive in liquidity risk management & targets/limits for financial ratios: Leverage & • Net financial debt/EBITDA • Cur
Slide 38: Strategy
Strategy Hizmete Özel / Confidential
Slide 39: Strategic Transition Plan – Investment Areas
Strategic Transition Plan – Investment Areas SUSTAINABLE REFINING ZERO CARBON ELECTRICITY Energy Efficiency and Decarbonization Projects Integrating Zero Carbon Electricity to produce Green H2 • Remain as a Major EBITDA Contributor • Ensure affordable green H2 production, capturing • Improve energy
Slide 40: Strategic Transition Plan – Emission Reduction
Strategic Transition Plan – Emission Reduction EMISSION REDUCTION SCOPE 1 & 2 BASE YEAR SCOPE 1 + 2 7.3 MN TONNES -27% -35% -49% We will invest in energy efficiency & decarbonization Projects, green hydrogen & zero carbon electricity usage in refining to reduce scope 1 & 2 emissions -100% 2017 2030
Slide 41: Strategic Transition Plan - Financials
Strategic Transition Plan - Financials Will eliminate our scope 1 & 2 emissions by 2050 while executing our plan and achieving these results. We are $350mn average CAPEX until 2035, totaling $5 bn. sustainable ROACE will remain above 25% creating ~ $9bn total CF until 2035 and With ample CF, Net Deb
Slide 42: Strategic Transition Plan - Latest Updates
Strategic Transition Plan - Latest Updates ZERO CARBON ELECTRICITY BIOFUELS As of Dec’22 end we have initiated ZCE capacity installations in our refineries with a total of 122.6 MW Solar & 12.6 MW Wind PP Basic engineering studies were completed Total Applications & Approvals (MW) Refineries Solar W
Slide 43: ESG
ESG Hizmete Özel / Confidential
Slide 44: Tüpraş's Environmental Highlights
Tüpraş’s Environmental Highlights Energy Intensity Achievements Energy Intensity Targets 99.1 99.1 102.2 5.6 2.6 98.44 2.8 0.1 91.2 94.9 93.5 2017 Ongoing Other Projects Future Energy Future Other 2030 Target Energy Efficiency Projects 2018 2019 2020 2021 2022* Efficiency Projects Projects Greenhous
Slide 45: Tüpraş's Social & Governance Highlights
Tüpraş’s Social & Governance Highlights Strong Policies have been effectively implemented for years Board of Directors’ Composition Committees under BoD Corporate Governance 11 members Risk Management Audit Corporate Governance Rating 9.65 Four members are Executive independent Ethics Health & Safet
Slide 46: Appendix
Appendix Hizmete Özel / Confidential
Slide 47: 2023 Refinery Maintenance Schedule
2023 Refinery Maintenance Schedule Refinery Unit Starting Quarter Duration (weeks) Purpose Planned Crude Oil & Vacuum Q1 7 Completed Batman Seasonal Crude Oil & Vacuum Q4 9 Planned FCC Q1 7 Completed Crude Oil, Vacuum, CCR, Q1 9 Revamp Completed İsom. İzmir Lube Complex Q1 9 Completed Crude Oil , Va
Slide 48: Turkish Market Fuel Consumption 2017-2021
Turkish Market Fuel Consumption 2017-2021 Million Tons Motorin Jet Fuel* 28 -2.4% -4.4% +0.5% +10.1% 24.9 8 24.2 23.6 22.5 22.7 +10.5% 5.0 +6.5% 5.3 -54.4% 4.5 14 4 +41.2% 3.4 2.4 0 0 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Gasoline LPG -7.4% 4 5 +1.6% 4.1 +0.8% 4.2 +1.2% 4.1 3.9 3.9 3.0 4
Slide 49: Competition - STAR Refinery
Competition - STAR Refinery Timeline Turkish Market Structure (mn tons) Turkish Turkey Tüpraş STAR Total Market Balance Demand Demand* LPG 1.1 0.3 1.4 4.2 -2.8 Petchem F. 0.2 2.6 2.8 Gasoline 6.1 6.1 2.4 3.7 • Feasibility studies began in 2010 and Jet Fuel 5.2 1.6 6.8 5.3 1.5 construction kicked off
Slide 50: Competition - Regional Competition
Competition - Regional Competition • Tüpraş competes with 71 refineries in the Mediterranean and Black Sea markets. • Mediterranean regional product balance is also affected from Middle East, North West Europe and Asia flows Mediterranean Black Sea 54 Refineries ~7.8mbd 17 Refineries ~1.8mbd 03/05/2
Slide 51: European Pump Price Comparison
European Pump Price Comparison Turkish fuel prices are highly competitive with other European countries. Gasoline (TL/Lt) Diesel (TL/Lt) Refinery Price Tax Refinery Price Tax 40 40 35 35 30 30 21.9 20.4 18.5 20.5 21.5 15.8 15.2 16.6 19.1 25 15.3 18.3 25 13.2 20 20 5.7 5.2 15 15 10 10 18.7 18.3 19.1
Slide 52: Tüpraş Balance Sheet (Million TL)
Tüpraş Balance Sheet (Million TL) 31.03.2023 31.12.2022* Diff. Diff. (%) Current Assets 100,818 119,711 -18,893 -16 Cash & C. Equivalents 39,147 49,770 -10,624 -21 Trade Receivables 17,067 21,418 -4,351 -20 Derivatives 2,410 3,597 -1,187 -33 Inventories 35,412 36,046 -634 -2 Pre-paid expenses 360 74
Slide 53: Dividend (TL)
Dividend (TL) Avg. Payout Ratio: 90%* 149.1 Strategic Transition 102% Dividend Plan 101% 79% 87% 89% 77% 66% 64% Our new business model enables us to pay ~80% average dividends and we will remain as a high dividend payer 33% 30% 15.2 14.8 45.4 10.2 12.7 7.2 3.2 2.5 2.9 3.0 5.0 3.9 5.8 3.9 4.8 1.6 5.
Slide 54: Tüpraş - Ratings
Tüpraş - Ratings Tüpraş BIST Corporate Governance Rating Score Credit Rating Scores Average 96.5 Foreign Currency Long Term Tüpraş B (Stable) B3 (Stable) Shareholders 95.5 Turkey B (Negative) B3 (Stable) B+ (Negative) Koç Holding B3 (Stable) B+(Negative) Transparency 97.3 Analyst Recommendations Sta
Slide 55: Tüpraş Production Flow and Yield Breakdown
Tüpraş Production Flow and Yield Breakdown • Tüpraş has 30 million tons of production capacity • Tüpraş operates 4 refineries with an integrated system optimization program Flow Diagram # of Capacity Key Units Units (m3/d) LPG LPG, 3.5% MEROX CRUDE OIL 8 99,420 Gasoline Naphtha, VACUUM DIST. 8 42,75
Slide 56: RUP Feedstock and Production
RUP Feedstock and Production • Residuum Upgrade Plant (RUP) was completed in 2015 and it is the main conversion unit of Tüpraş. • First periodic maintenance was completed in Q2 2019. 3192 665 184 ~2.4 mt & Jet ~2.8 mt 909 132 Total Processing ~5.5 mn tons Total Output ~5.1mn tons 03/05/2023 Hizmete
Slide 57: LPG and Naphtha Cracks
LPG and Naphtha Cracks $/bbl LPG Naphta 5yr range 2022 5 yr ave 2023 5yr range 2022 5 yr ave 2023 5 5 0 -2.7 -5 -4.5 -5 -7.2 -6.4 -10 -10.5 -8.9 -9.05 -15 -15 -14.0 -18.5 -20 -18.9 -23.2 -21.5 -25 -28.2 -22.1 -24.0 -23.4 -23.1 -23.0 -25 -29.5 -35 -31.7 -30 -34.6 -30.8 -30.7 -39.9 -41.7 -39.6 -35 -42
Slide 58: Koç Holding
Koç Holding Turkey’s Leading Investment Holding Company • Koç Holding is Turkey’s largest industrial and services group • The only Turkish company in Fortune Global 5002. ~9% ~7% ~19% Koç Group’s Pioneer in its Sectors Combined Total Exports / Market Cap/ Revenues / Turkey’s Borsa Istanbul GDP1 Expo
Slide 59: Investor Presentation Latest
Investor Presentation Latest Webcast Sustainability Report Strategic Transition Plan tuprasir@tupras.com.tr Hizmete Özel / Confidential