Thai Oil Public Co. Ltd. · SET:TOP
Thai Oil Public — Q3 2018 Earnings Presentation
61 slides from Thai Oil Public's earnings presentation, Nov 19, 2018
Slide 1: Thai Oil Public Company Limited Q3/18 Analyst Presentation
-1- Thai Oil Public Company Limited Q3/18 Analyst Presentation 19 November 2018 Time : 10.00 - 12.00 hrs. Venue : ENCO, C Building, 6th Floor - Synergy Hall
Slide 2: Disclaimer
-2- Disclaimer The information contained in this presentation is intended solely for your personal reference. Please do not circulate this material. If you are not an intended recipient, you must not read, disclose, copy, retain, distribute or take any action in reliance upon it. Some statements mad
Slide 3: Corporate Vision, Mission and Values
-3- Corporate Vision, Mission and Values A LEADING FULLY INTEGRATED REFINING & PETROCHEMICAL VISION COMPANY IN ASIA PACIFIC • To be in top quartile on performance and return on investment • To create a high-performance organization that promotes MISSION teamwork, innovation and trust for sustainabil
Slide 4: Corporate Governance
-4- Corporate Governance Corporate Governance Policy Roles and Responsibilities The board of directors, management and all staff shall commit to moral principles, equitable treatment to all for Stakeholders stakeholders and perform their duties for the company’s interest with dedication, integrity,
Slide 5: Our Achievement in Sustainable Development
-5- Our Achievement in Sustainable Development 6th Consecutive Year as the Member of DJSI Emerging Markets 5th Consecutive Year of leading positions: Oil & Gas Refining & Marketing
Slide 6: Presentation Agenda
-6- Presentation Agenda Q3/18 KEY HIGHLIGHTS Q3/18 PERFORMANCE ANALYSIS 2019 MARKET OUTLOOK
Slide 7: Q3/18 Key Highlights
Q3/18 KEY HIGHLIGHTS Sanaon
Slide 8: Q3/18 Key Market Drivers Highlights
Key Highlights -8- Q3/18 Key Market Drivers Highlights Refinery Improved refinery margins supported by lower crude premium due Implication to more supplies of light crude oil in the market Mkt GRM at 5.0 $/bbl 1) Rising crude price driven by supply tightness from 1) decreasing (Q2/18 = 4.0 $/bbl
Slide 9: Q3/18 Key Achievements
Key Highlights -9- Q3/18 Key Achievements Key Achievements Q3/18 TOP Group Net Profit Operational Unit : million THB (MB) Maintain high reliable production Excellence Q2/18 Q3/18 9M/18 Net Operating Profit F/X gain/(loss) Reversal of NRV/(NRV) & Adjusted to cost Others i.e. Hedging gain/(loss) & R
Slide 10: Q3/18 Margin and Productivity Improvement (VS Corporate Plan)
Key Highlights -10- Q3/18 Margin and Productivity Improvement (VS Corporate Plan) Cost Management 121 MB 134 MB General & Admin , Procurement & warehouse , Operation & Maintenance , Project & Manpower Margin Improvement management (Hydrocarbon Management : HMR) and Productivity Improvement Unit: mil
Slide 11: Q3/18 Performance Analysis
-11- Q3/18 PERFORMANCE ANALYSIS
Slide 12: Refinery: Maintain High Utilization Rate
Refining -12- Refinery: Maintain High Utilization Rate TOP/ Domestic Refinery Utilization Rate Domestic Oil Demand Unit: % Utilization Rate KBD 9M/17 9M/18 115% 2.3% 114% 111% 112% 112% 113% 108% 112% 800 111% 110% 600 1.0% 98% 98% 97% 400 97% 96% 90% 94% 2.7% 89% 90% 89% 6.2% 200 70% 0 * Q1/17 Q2 Q
Slide 13: Q3/18: Improved Mkt GRM supported by Lower Crude Premium
Refining -13- Q3/18: Improved Mkt GRM supported by Lower Crude Premium Dubai Crude Price & Key Petroleum Product Spreads Refinery Utilization 2017 2018 2017 Q2/18 Q3/18 9M/18 $/bbl Q1 Q2 Q3 Q4 Q1 Q2 Q3 9M Q4TD* FY17 108% 115% 112% DUBAI (DB) 53.1 49.8 50.5 59.3 63.9 72.1 74.3 70.1 74.5 53.2 % MB Int
Slide 14: Q3/18: Robust Aromatics Contribution supported by Strong PX spread
Aromatics/LAB -14- Q3/18: Robust Aromatics Contribution supported by Strong PX spread Aromatics Spreads and Margins Aromatics Production 2017 2018 2017 Q2/18 Q3/18 9M/18 $/ton Q1 Q2 Q3 Q4 Q1 Q2 Q3 9M Q4TD* FY17 84% 89% 88% PX**-ULG95 312 273 258 260 304 268 451 341 539 276 Q3/18 Market BZ**-ULG95 34
Slide 15: Q3/18: Lower Contribution as Soften Lube Base Spread
Lube Base Oil -15- Q3/18: Lower Contribution as Soften Lube Base Spread Base Oil & Bitumen Spreads & Margins Base oil Production 2017 2018 2017 Q2/18 Q3/18 9M/18 $/ton Q1 Q2 Q3 Q4 Q1 Q2 Q3 9M Q4TD * FY17 89% 72% 83% 500SN-HSFO 451 556 528 458 512 481 417 432 352 528 % Base Oil & Specialty Sales Volu
Slide 16: Q3/18 Power Sector Performance
Power -16- Q3/18 Power Sector Performance…Growing Contribution to the Group Power Business Sector Equity holding in SPP GPSC **** [74%] [100%] Power & Steam Sales ***TOP shareholding 24.29% (8.91% via TOP and 20.79% via TP) 2,504 GPSC is an associate company of TOP. Electricity(1) 1,912 Equity metho
Slide 17: Integrated Margin & Competitive Cash Cost
Financial -17- Integrated Margin & Competitive Cash Cost Gross Refining Margin Refinery’s Cash Cost (Unit: US$/bbl) (Unit: US$/bbl) Market GRM Accounting GRM (Market GRM + Stock G/L) Operating Cost Interest Expense (net) (excl. one-time non- operating item) 9.0 Higher group cash cost in Q2/18 7.8 ma
Slide 18: Q3/18: Performance Breakdown by Business Unit
Performance Breakdown -18- Q3/18: Performance Breakdown by Business Unit Utilization/Production (%) & Net Profit (million THB) Key Points • Refinery: record high run rate to capture strong demand in domestic and Indochina market • Aromatic/LAB: higher contribution mainly from robust PX spread due to
Slide 19: Q3/18 TOP Group Consolidated P&L
Financial -19- Q3/18 TOP Group Consolidated P&L (Unit : million THB) Q3/18 Q2/18 QoQ Q3/17 YoY 9M/18 9M/17 YoY QoQ analysis Sales Revenue 101,261 96,710 4,551 (A) 80,296 20,965 289,589 247,945 41,644 A Increase overall product Hedging Gain / (Loss) (140) 70 (210) (20) (120) 32 (70) 102 (B) prices fo
Slide 20: 9M/18 TOP Group Consolidated Cash Flow
Financial -20- 9M/18 TOP Group Consolidated Cash Flow (Unit: Million THB) (Unit: Million THB) Investments Operating Cash Flow 9M/18 9M/17 9M/18 9M/17 Investments 3,798 (17,267) Operating Cash Flow 7,213 22,349 Dividend income 768 740 Net income & non-cash adj. 25,478 27,487 + ST investments 4,257 (1
Slide 21: Q3/18 TOP Group Strong Financial Position & Financial Ratios
Financial -21- Q3/18 TOP Group Strong Financial Position & Financial Ratios Statements of Financial Position Consolidated Long-Term Debt as at 30 Sep 18 (Unit: million THB) Total IBD Net Debt 241,473 240,899 75,325 million THB 6,249 million THB 37,588 36,568 Trade Payable Cash & ST 76,910 69,076 / O
Slide 22: Strategic Investment Plan Approved by Board of Directors
Updated CAPEX plan -Use only for KM Session- -22- Strategic Investment Plan Approved by Board of Directors CAPEX Plan (Unit US$ million) Planned capital investment Project Total 2018 2019 2020 2021 2022 Reliability, Efficiency and Flexibility Improvement 27 35 Infrastructure Improvement - Lorry Expa
Slide 23: 2019 Market Outlook
2019 MARKET OUTLOOK • Crude Oil • Petroleum Products • Aromatics • Base Oil & Bitumen • Linear Alkyl Benzene (LAB)
Slide 24: Crude Oil
CRUDE OIL
Slide 25: Steady-to-Firm Oil Prices as OPEC Cuts Output amid Supply Risks
Crude Oil -25- Steady-to-Firm Oil Prices as OPEC Cuts Output amid Supply Risks Dubai Price Movement U.S. Grants Import $/BBL OPEC-led Cut U.S. Re-imposed Waivers to 8 Sanctions on Iran Countries 2 Supply Cut Case: 100 Deal Extended until the Dec-18 OPEC Cutting Output to Balance OPEC-led Cut Concern
Slide 26: Surplus Market as Supply Growth Overtakes Demand Growth
Crude Oil -26- 1 Surplus Market as Supply Growth Overtakes Demand Growth A Falling Iranian Crude Export as Sanction Hits B OPEC and Non-OPEC Outputs Cover Iran Loss Iran’s Crude Oil Export 2019 World Oil Supply Growth (YoY) MBD MBD 3.0 1.8 2.0 Other +1.6 MBD YoY 1.1 May’19: Import LATAM 2.0 1.0 waiv
Slide 27: OPEC Balancing Oil Market amid Emerging Supply Risks
Crude Oil -27- 2 OPEC Balancing Oil Market amid Emerging Supply Risks A OPEC to Eliminate Market Surplus B Venezuela’s Economic Crisis Pressures Output OPEC Crude Oil Production Venezuela’s Crude Oil Production MBD MBD 34 * Estimated 2019 OPEC Supply from ‘No Supply Cut Case’ 3.0 **IEA (Oct’18), OPE
Slide 28: Petroleum Products
PETROLEUM PRODUCTS
Slide 29: Stable-to-Firm Refining Margins from Strong Middle Distillate Crack and Demand Growth
Refinery -29- Stable-to-Firm Refining Margins from Strong Middle Distillate Crack and Demand Growth Outpacing Supply Addition Singapore Cracking GRM ($/BBL) 8.5 8 8.2 7.9 7.6 7.7 6.7 7.2 7.1 7.0 6.1 6.1 6.4 6.4 6.1 6.1 5.0 5.2 5.0 Q1-15 Q2-15 Q3-15 Q4-15 Y2015 Q1-16 Q2-16 Q3-16 Q4-16 Y2016 Q1-17 Q2-
Slide 30: Soft Gasoline Cracks Pressured by Abundant Supply
Refinery -30- 1 Soft Gasoline Cracks Pressured by Abundant Supply A High Supply Due to New Refineries’ Start-up B Flat U.S. Demand Growth from High Retail Price World Gasoline Supply Growth (YoY) U.S. Gasoline Demand KBD MBD 500 10.0 2019 : 9.4 MBD (+0.0 MBD YoY) 400 9.5 300 9.0 200 100 8.5 2018 201
Slide 31: Firm Middle Distillate Cracks from Healthy Demand Growth and Positive Sentiment Ahead of IMO
Refinery -31- Firm Middle Distillate Cracks from Healthy Demand Growth 2 and Positive Sentiment Ahead of IMO Implementation A High Supply Due to New Refineries’ Start-up B Higher Demand from Economic Growth World Middle Distillates Supply Growth (YoY) Asia Pacific & US Middle Distillate Demand KBD M
Slide 32: Demand Growth Outpacing Supply Addition
Refinery -32- 3 Demand Growth Outpacing Supply Addition Asia Pacific and Middle East Effective CDU Addition VS Additional Demand AP & ME Demand Growth Middle East China Other AP Japan India Vietnam Teapot Thailand Net Addition Operating Rate [RHS] KBD Operating Rate, % 3500 3150 100 95 2500 90 1386
Slide 33: Thailand Oil Demand Growth
Domestic -33- Thailand Oil Demand Growth Thailand Oil Demand Growth (B) (B) 9M/18(B) Y2019F Year on Year Y2016 Y2017 VS 9M/17 VS 2018 Steady demand growth due to Mogas (A) +9.8% +3.7% +2.7% lower oil price Softer demand growth due to Jet/Kero +6.8% +4.4% +6.2% limited airport capacity Higher demand
Slide 34: Aromatics
AROMATICS
Slide 35: Softer PX and BZ Markets on Concerns of Roll-Over Capacity
Aromatics -35- Softer PX and BZ Markets on Concerns of Roll-Over Capacity Aromatics Market PX CFR Taiwan-ULG95 ($/TON) BZ FOB Korea-ULG95 ($/TON) 539 343 447 245 231 332 315 341 225 317 313 304 195 212 280 273 258 260 276 268 156 138 174 185 163 126 127 74 Y2016 Y2017 Q4TD-18* Q2-18 Q1-16 Q2-16 Q3-1
Slide 36: Pressured PX Market from Roll-Over Capacity amid Slower Demand Growth
Aromatics -36- Pressured PX Market from Roll-Over Capacity amid Slower 1 Demand Growth A Roll-Over Capacity to Pressure PX Market in 2019 B PTA Demand Growth to Continually Boost PX Market AP/ME Effective PX Capacity Addition AP/ME PTA Demand by Sector Mil TON Fujian Line1 Heng Li 1 Mil TON 0.8MTA 2
Slide 37: Softer BZ Market on Concerns of Roll-Over Capacity, but still Supported by Chinese Demand
Aromatics -37- Softer BZ Market on Concerns of Roll-Over Capacity, but still 2 Supported by Chinese Demand A Slightly Higher Capacity Addition in 2019 B C Expect Lower BZ stock to Support Import in Mid-2019 AP/ME Effective BZ Capacity Addition KTON BZ Stock in East China Mil TON Fujian Line1 Heng Li
Slide 38: Base Oil & Bitumen
BASE OIL & BITUMEN
Slide 39: Soft Base Oil Market on New Additional Supply
Base Oil & Bitumen -39- Soft Base Oil Market on New Additional Supply 500SN – HSFO ($/TON) 1 AP Base Oil Effective Capacity Addition Heng Li : 300 KTA 556 528 512 482 300 KTA 427 409 443 451 458 498 417 Hainan : 500 KTA 367 412 352 500 KTA Mil TON ExxonMobil : 500 KTA 3 2.4 2 0.8 0.6 0.8 Y2016 Y2017
Slide 40: Stable Bitumen Market on Steady Regional Demand Growth
Base Oil & Bitumen -40- Stable Bitumen Market on Steady Regional Demand Growth Bitumen-HSFO ($/TON) 1 Firm Asia Bitumen Demand on Continuous Projects One belt one road Target to increase 20% -7 project of national highway -13 -48 -61 -49 -38 -29 -45 -31 -41 -35 length in FY19 -56 -67 -80 Y2016 Y2017
Slide 41: Linear Alkyl Benzene (LAB)
LINEAR ALKYL BENZENE (LAB)
Slide 42: Recovery of LAB Market Supported by Demand Growth and No Additional Capacity
LAB -42- Recovery of LAB Market Supported by Demand Growth and No Additional Capacity LAB Market LAB Spread** ($/TON) LAB Capacity vs Demand in AP/ME Demand growth (2019) = 2.5% MTA Capacity growth (2019) = 0% 635 627 619 606 603 590 543 539 534 522 550 529 566 562 2.5 2.0 1.5 1.0 0.5 0.0 Y2016 Q4-1
Slide 43: Conclusion
CONCLUSION
Slide 44: 2019 Market Outlook Conclusion
Conclusion -44- 2019 Market Outlook Conclusion (vs. 2018) Crude Oil Steady-to-Firm Oil Prices as OPEC Cuts Output amid Supply Risks Stable-to-Firm Refining Margins from Strong Middle Distillate Refinery Crack and Demand Growth Outpacing Supply Addition Aromatics Softer PX and BZ Markets on Concerns
Slide 45: Thank You
-45- Thank You Any queries, please contact: at email: ir@thaioilgroup.com Tel: 662-797-2999 / 662-797-2961 Fax: 662-797-2976
Slide 46: Appendix
-46- APPENDIX • Optimized & Flexible Operations…Superior Performance • 2017 Dividend payment • CDU Addition VS Additional Demand – AP & ME • World GRM / Inventories • Thailand petroleum demand by products
Slide 47: Optimized & Flexible Operations…Superior Performance
Crude -47- Optimized & Flexible Operations…Superior Performance Crude Assays based on Sources of Product Domestic demand for Reference Price TOP configuration* Crude output petroleum products** Thai Oil is able to diversify its type of crude intake and product outputs to maximize demand and margin %
Slide 48: 2018 Dividend Payment
Financial -48- 2018 Dividend Payment Dividend Policy : Not less than 25% of consolidated net profit after deducting reserves, subject to cash flow and investment plan Unit : THB/Share EPSR 2H dividend 1H dividend Year Dividend 12.18 10.40 9.19 9.40 8.66 7.82 7.28 5.91 6.04 5.97 5.10 4.39 4.57 2.75 3
Slide 49: Asia Pacific and Middle East Refinery Addition
Refinery -49- Asia Pacific and Middle East Refinery Addition Start-up Nameplate Country Company period) (KBD) AP & ME Demand Growth Middle East China Other AP Q1-18 Iran 120 Bandar Abbas - PGSOC/1 Japan India (Phase 2) Vietnam Teapot Vietnam 186 Nghi Son Net Addition KBD Q3-18 China 100 Petrochina H
Slide 50: Asian Margin Vs. US-EU margin
World GRM -50- Asian Margin Vs. US-EU margin $/BBL SINGAPORE GRM $/BBL EU – US Margins 12 10 25 8 15 6 4 5 2 0 -5 Oct-16 Oct-17 Oct-18 Apr-16 Apr-17 Apr-18 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Oct-16 Oct-17 Oct-18 Apr-16 Apr-17 Apr-18 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 SING CRACK SING HY
Slide 51: Global Crude Oil Inventories
Inventories -51- Global Crude Oil Inventories U.S. Crude Stocks (excl. SPR) Crude Oil, Cushing, Oklahoma MBBL MBBL Source : EIA Source : EIA 600 80 550 70 500 60 50 450 40 400 30 350 20 300 10 250 0 1 5 9 13 17 21 25 29 33 37 41 45 49 1 5 9 13 17 21 25 29 33 37 41 45 49 5yr-range 2018 2017 avg 13-16
Slide 52: Global Gasoline Inventories
Inventories -52- Global Gasoline Inventories U.S. Gasoline Stocks Singapore Gasoline Stocks MBBL MBBL Source : EIA Source : IE Singapore 280 20 260 240 10 220 200 180 0 1 5 9 13 17 21 25 29 33 37 41 45 49 1 5 9 13 17 21 25 29 33 37 41 45 49 5yr-range 2018 2017 avg 12-16 5yr-range 2018 2017 avg 12-16
Slide 53: Global Middle Distillate Inventories
Inventories -53- Global Middle Distillate Inventories U.S. Diesel Stocks Singapore Middle Distillate Stocks MBBL MBBL Source : EIA Source : IE Singapore 180 20 160 140 10 120 100 80 0 1 5 9 13 17 21 25 29 33 37 41 45 49 1 5 9 13 17 21 25 29 33 37 41 45 49 5yr-range 2018 2017 avg 13-17 5yr-range 2018
Slide 54: Global Fuel Oil Inventories
Inventories -54- Global Fuel Oil Inventories U.S. Residual Fuel Oil Stocks Singapore Residual Fuel Oil Stocks MBBL MBBL Source : EIA Source : IE Singapore 50 40 30 40 20 30 10 20 0 1 5 9 13 17 21 25 29 33 37 41 45 49 1 5 9 13 17 21 25 29 33 37 41 45 49 5yr-range 2018 2017 avg 13-17 5yr-range 2018 20
Slide 55: China's Refined Product Exports
China Export -55- China’s Refined Product Exports KBD China’s Gasoline Exports KBD China’s Gasoil Exports Source : China Custom Source : China Custom 500 600 400 500 400 300 300 200 200 100 100 0 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2015 2
Slide 56: Domestic LPG Demand
Thailand petroleum demand by products -56- Domestic LPG Demand Thailand LPG Demand LPG Demand Highlight KT/Day 2018 2015 2016 2017 • In 9M/2018, LPG demand jumped by 6.6% YoY 20 on the back of 24.7% YoY higher demand from 18.1 18.4 petrochemical sector, as a result of higher 17.5 17.8 17.8 18.0 17.8
Slide 57: Domestic Gasoline/Gasohol Demand
Thailand petroleum demand by products -57- Domestic Gasoline/Gasohol Demand Thailand Gasoline/Gasohol Demand GASOLINE/Gasohol Demand Highlight MML/Day 2018 2015 2016 2017 • In 9M/2018, Mogas demand rose moderately by 34 2.7% YoY to an average 30.8 ML/day. Although, 31.5 31.7 the retail price of Moga
Slide 58: Domestic Jet Demand
Thailand petroleum demand by products -58- Domestic Jet Demand Thailand JET Demand JET Demand Highlight MML/Day 2018 2015 2016 2017 • In 9M/2018, Jet consumption increased 21.6 22 21.0 21.2 significantly by 6.2% over the corresponding 19.7 period last year mainly owing to booming tourism 20 industry
Slide 59: Domestic Gasoil and NGV Demand
Thailand petroleum demand by products -59- Domestic Gasoil and NGV Demand Thailand Gasoil Demand Diesel Demand Highlight MML/Day 2018 2015 2016 2017 • In 9M/2018, Diesel demand rose moderately by 72 69.7 70.2 1.0% YoY as a result of the growth of Thai 70 economic, according to higher Manufacturing 6
Slide 60: Domestic Fuel Oil Demand
Thailand petroleum demand by products -60- Domestic Fuel Oil Demand Thailand Fuel Oil Demand Fuel Oil Demand Highlight MML/Day 2018 2015 2016 2017 • In 9M/2018, Fuel Oil consumption rose by 10 3.2%YoY, as a result of 18.9% YoY higher demand from transportation sector which takes 8 approximately 64.7
Slide 61: Thank You
-61- Thank You Any queries, please contact: at email: ir@thaioilgroup.com Tel: 662-797-2999 / 662-797-2961 Fax: 662-797-2976
Thai Oil Public Company — Q3 2018 Earnings Presentation on 6ix