56 slides from Turkiye Petrol Rafinerileri A.s's investor presentation, March 2022
Slide 1: Investor Presentation
Investor Presentation March 2022 Hizmete Özel / Confidential 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 Hizmete Özel / Confidential
Slide 4: Brent Crude Prices
Brent Crude Prices $/bbl 5yr range 5 yr ave 2021 2022 110 + OPEC ++ production cuts 100 98.2 + Impact of Iran & Venezuela sanctions + Improved mobility following vaccine 90 87.2 83.7 deployments 81.4 80 75.0 74.6 73.0 74.1 70.8 - Concerns on global economic 68.7 70 65.6 64.7 62.2 development 60 54.8
Slide 5: Global Refinery Capacity Changes
Global Refinery Capacity Changes Expectations until 2025: • 73% of net capacity additions will come from Asia & Middle East • Net capacity and demand in Europe will remain roughly unchanged 2019-2025 Net Capacity Additions Capacity Additions by Region Closures Openings 2.6 Asia 44% 2.3 1.6 1.5 Middl
Slide 6: Middle Distillate Cracks
Middle Distillate Cracks $/bbl Diesel Jet Fuel 5yr range 5 yr ave 2021 2022 5 yr range 5 yr ave 2021 2022 20 20 15 12.9 15 12.6 9.4 10 10.8 12.0 11.8 10.4 10.0 9.3 10 9.5 8.0 6.6 5 6.8 4.1 4.9 5.0 5.1 3.0 2.3 2.7 2.5 5 5.7 1.8 0.9 1.9 3.7 4.1 0 4.8 0 -5 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 1
Slide 7: Gasoline and High Sulphur Fuel Oil Cracks
Gasoline and High Sulphur Fuel Oil Cracks $/bbl Gasoline High Sulphur Fuel Oil 5yr range 2022 2021 5 yr ave 5 yr range 2022 2021 5 yr ave 20 0 -5 15 -6.4 15.7 -10.7 -10.4 -11.0 15.1 -10 -11.7 -9.7 -12.9 -12.6 14.1 -13.9 -14.5 -13.6 13.7 12.7 12.7 -16.0 -15 11.6 11.5 -17.3 10 10.4 10.6 10.8 10.6 -20
Slide 8: Heavy Crude Price Differentials to Brent ($/bbl)
Heavy Crude Price Differentials to Brent ($/bbl) 2 00 -2 -4 -6 -8 Arab Heavy Basrah Heavy -10 Kirkuk Iran OPEC+ Cut OPEC+ OPEC+ Cut Ural Sanctions Decision disagreement Decision Average* -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 4 5 6 7 8 9 10 11 12 1
Slide 9: Turkish Market
Turkish Market Hizmete Özel / Confidential Hizmete Özel / Confidential
Slide 10: Turkish Market, 12M 2021
Turkish Market, 12M 2021 Q4 Q3 Q2 Q1 Diesel Jet1 24.9 26.3 5.3 Million 25.2 Tons 6.7 6.8 +2.6% 7.0 1.3 3.4 -1.0% 7.4 1.7 2.4 + 39.4% 7.0 7.4 + 4.4% 1.0 +51.2% 0.6 +59.1% 1.1 +18.4% 6.3 1.3 0.7 6.1 5.3 0.2 +258.5% 0.8 1.0 0.9 -36.2% 0.6 5.2 5.6 +0.6% 5.6 2019 2020 2021 2019 2020 2021 Gasoline LPG 3.0
Slide 11: Turkey's Net Import / Export Balance
Turkey’s Net Import / Export Balance Million Import Export Tüpraş’ Market Share Tons 0.4 0.3 2020 12M Jet -0.4 0.3 0.1 Diesel 41% -5.9 Jet 87% -8.8 Diesel -13.6 -13.2 Gasoline 97% -12.3 1.9 3.0 Gasoline 2.4 Fuel Choice of Passenger Cars 2021 3.2 2.8 EV/Hybrid , 1% -2.9 -3.0 Diesel; LPG; LPG -3.2 Die
Slide 12: Company Overview
Company Overview Hizmete Özel / Confidential Hizmete Özel / Confidential
Slide 13: Tüpraş Shareholder Structure
Tüpraş Shareholder Structure Tüpraş is Turkey’s biggest industrial company and leading refiner. Koç Holding Aygaz Opet 77% 20% 3% Energy Investments Inc. (SPV) 51% 79.98% Foreign Ownership¹ 57% 40% Free Float 49% 100% Domestic Ownership 43% 100% ¹As of December 31st,2021 Apr-22 Hizmete Özel / Confid
Slide 14: Tüpraş' Refining Assets & Distribution Network
Tüpraş’ Refining Assets & Distribution Network İzmit İzmir Kırıkkale Batman Total Capacity (mn tons) 11.3 11.9 5.4 1.4 30 Turkey’s petroleum Nelson Complexity 14.5 7.66 6.32 1.83 9.5 product needs Storage Capacity (mn m3) 3.0 2.5 1.3 0.3 7.0 Baku Others; Tüpraş; OPET Marmara Terminal İstanbul 45% 55
Slide 15: Nelson Complexity of Refining Companies
Nelson Complexity of Refining Companies Apr-22 Hizmete Özel / Confidential Investor Hizmete Özel Presentation / Confidential Company Overview www.tupras.com.tr 15
Slide 16: Tüpraş Subsidiaries
Tüpraş Subsidiaries OPET - Distribution Tüpraş Share: 40% • 1,802 stations as of 31 December 2021 • As of December 2021 Market share: 17.8% in white products; 22.6% in black products Tüpraş Trading UK - Trading Tüpraş Share: 100% Over 7 million tons of product trade More than 3 million tons of spot
Slide 17: Tüpraş Subsidiaries
Tüpraş Subsidiaries DİTAŞ - Marine Transport Tüpraş Share: 79.98% • 2 Crude Oil Tanker: 314,906 DWT • 1 Crude Oil - Product Tanker: 49,990 DWT • 10 Product Tanker: 171,383 DWT Körfez Ulaştırma - Railway Transport Tüpraş Share: 100% • ~7% share in Turkish rail freight market • ~1.7 mn ton of product
Slide 18: Operations
Operations Hizmete Özel / Confidential Hizmete Özel / Confidential
Slide 19: Crude Suppliers of Tüpraş
Crude Suppliers of Tüpraş In 2021, Tüpraş purchased 21 different types of crude from 11 countries with gravities ranging between 20-47 API. Main Crude Suppliers in 2021 Crude Oil Imports by Region (%) Middle East CIS Europe Africa America 3 3 1 2 3 2 2 10 12 12 11 10 10 10 14 3 7 14 7 13 14 21 34 21
Slide 20: Annual Product Yields
Annual Product Yields 2020 2021 Other LPG Other Bitumen 1% 3% Bitumen 2% LPG 12% Kok 8% 3% Kok Gasoline Other 4% Gasoline 3% 21% white Other 21% Fuel Oil Light Fuel Oil white 2% Black Prod. 1% Distil. 6% Black Prod. 2% Light 17% 25% 18% Distil. Naphtha 25% 1% Naphtha 1% Mid. Distil. Jet 57% 12% Mid.
Slide 21: Capacity Utilization and Quarterly Production Volume
Capacity Utilization and Quarterly Production Volume Quarterly Production (Million Tons) Capacity Utilization (%) 2017 2018 2019 2020 2021 Crude Oil Semi Product Feedstock Total 8 108 7 96 98 96 98 7.0 6.9 89 91 7 7 88 4 8 9 82 85 84 5 6.5 6 9 6 6 7 69 65 6.4 5 6 6.1 9 6.0 101 93 91 91 87 86 81 80 7
Slide 22: Sales
Sales • Tüpraş generated 27.6 million tons of total sales in 2021. Total Sales Customer Groups 2021 mn tons 31.5 Other 29.8 29.2 International 27.6 10% 5.8 4.2 24.5 sales 6.8 5.9 21% 4.7 Jet 11% Bitumen Exports Total Sales, 25.7 25.6 6% Domestic Sales 22.4 19.8 21.7 2021 27.6 mn tons 2017 2018 2019
Slide 23: Product Sales in Q4 (Million Tons)
Product Sales in Q4 (Million Tons) • Tüpraş generated 7.7 million tons of sales in Q4 2021, the highest fourth quarter figure since Q4’2015. • Gasoline, jet fuel and diesel sales were strong with improved domestic demand. Total Product Sales Domestic Sales of Selected Products Domestic Product Sales
Slide 24: Financials
Financials Hizmete Özel / Confidential Hizmete Özel / Confidential
Slide 25: Tüpraş and Med Refining Margins
Tüpraş and Med Refining Margins Clean Clean Gross Inventory Net Med ($/bbl) Gross NET Tüpraş Net Margin Med Margin Margin Effect Margin Margin Margin Margin 9.3 Q4 2021 14.0 3.7 10.4 5.5 9.1 3.6 8.1 2021 10.5 2.1 8.4 3.6 5.7 1.6 6.0 5.7 5.3 4.6 Q4 2020 5.6 0.7 4.8 -0.1 0.7 -0.1 3.6 3.7 1.7 2020 6.4
Slide 26: Income Statement (Million TL)
Income Statement (Million TL) Q4 Q4 12M 12M Million TL % % 2021 2020 2021 2020 Key Highlights of Income Statement Net Sales 56,470 19,990 182% 150,972 63,244 139% • Y-o-y increase in Opex is mainly COGS -48,569 -19,396 -150% -135,521 -61,480 -120% driven with higher logistics Gross Profit 7,902 593
Slide 27: Financial Highlights
Financial Highlights EBITDA (mn TL) Q1 Q2 Q3 Q4 Net Income¹ (mn TL) Q1 Q2 Q3 Q4 13,688 3,812 3,319 3,713 493 1,392 8,908 7,267 992 1,766 988 542 526 1,887 1,457 5,882 186 -2,494 1,027 1,700 869 870 1,237 3,778 4,039 2,739 378 376 -375 -760 1,528 738 -155 956 545 -2,265 1,542 2,210 2,512 1,495 383 1,
Slide 28: Balance Sheet Analysis
Balance Sheet Analysis Net Debt Redemption Schedule (Billion TL) bn TL bn $ In Billion TL In Billion $ TL Hard Currency 20 17.8 6 11.4 5 10.4 15 12.5 9.1 12.0 12.2 4 11.0 11.3 11.2 9.4 9.3 10 8.4 3 6.2 2 5 2.3 2.3 1.7 1.9 1 1.4 1.6 1.5 0.2 0.0 0.5 1.3 1.3 1.0 0 0.8 0 Dec-17 Dec-18 Dec-19 Mar-20 Jun-
Slide 29: Annual Profit Before Tax Bridge (2019-2021)
Annual Profit Before Tax Bridge (2019-2021) PBT performance was strong in 2021 with better operational performance and lower interest expenses as net FX impact mostly matched with inventory gains Million TL Inventory +9,118 FX -8,530 Apr-22 Hizmete Özel / Confidential Investor Hizmete Özel Presentat
Slide 30: 2022 Expectations
2022 Expectations Med Complex Refining Margin 2-3 $/bbl Tüpraş Net Refining Margin 4-5 $/bbl • 26-27 mt production, 28-29 mt sales and 90 - 95% capacity utilization Consolidated Capex ~300 million $ • ~45% of capex for sustainability focused energy efficiency and environmental projects • ~80 mn USD
Slide 31: 12M 2021 Results
12M 2021 Results Capacity Utilization (%) 88% total capacity Refining Margins ($/bbl) 12M 2021 87.7 utilization in 12M Med Margin Tüpraş Net Margin 2021 Med FY Tüpraş FY 0 10 20 30 40 50 60 70 80 90 100 Exp Target Operationals (mn Ton) 1.6 12M 2021 FY Target 27.6 mn tons of sales and 25.1 mn 12M 202
Slide 32: 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 33: 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 34: FX Exposure Management (31 December 2021)
FX Exposure Management (31 December 2021) Consolidated Hard Consolidated Hard Currency Assets Currency Liabilities Million $ Payables & Other Cash Liabilities 853 3,375 Tüpraş continues to employ strict FX Receivables & ST Financial Loans Other Assets policies to mitigate currency risks 360 320 • RU
Slide 35: Strategy
Strategy Hizmete Özel / Confidential Hizmete Özel / Confidential
Slide 36: 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 37: Strategic Transition Plan – Emission Reduction
Strategic Transition Plan – Emission Reduction EMISSION REDUCTION SCOPE 1 & 2 BASE YEAR SCOPE 1 + 2 7.2 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 38: 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 39: Strategic Transition Plan – Latest Updates
Strategic Transition Plan – Latest Updates SUSTAINABLE REFINING SUSTAINABLE AVIATION FUEL Value Added Products Feedstock & Basic Engineering • Signed basic engineering design • In talks with feedstock suppliers for agreement for alkylation project in İzmir potential collaboration. Refinery. • Identi
Slide 40: ESG
ESG Hizmete Özel / Confidential Hizmete Özel / Confidential
Slide 41: Tüpraş's Environmental Highlights
Tüpraş’s Environmental Highlights Sustainability program was kicked off back in 2008 and achieved many milestones in a decade Energy Intensity Achievements 102.2 Energy Intensity Targets 96.1 119.1 93.3 103.4 102.22 99.1 98.44 99.1 1.8 0.1 1.1 0.1 2017 2021 Target Ongoing Other Future Future Other 2
Slide 42: 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 12 members Risk Management Audit Corporate Governance Rating 9.58 One-third of the members Executive are independent Ethics He
Slide 43: Appendix
Appendix Hizmete Özel / Confidential Hizmete Özel / Confidential
Slide 44: 2022 Refinery Maintenance Schedule
2022 Refinery Maintenance Schedule Refinery Unit Starting Quarter Duration (weeks) Purpose Status Crude Oil & Vacuum Q1 13 Ongoing Batman Seasonal Crude Oil & Vacuum Q4 4 Planned Vacuum Q1 6 Periodic Ongoing Maintenance Lube Complex Q1 6 Ongoing İzmir Crude Unit Q4 9 Planned CCR & Isomerization Q4 9
Slide 45: Turkish Consumption 2016-2020
Turkish Consumption 2016-2020 Million Tons Diesel Jet Fuel* 28 +8.3% 24.2 -2.4% -4.4% 8 22.3 23.6 22.5 +0.5% 22.7 +2.6% +10.5% +6.5% 5.0 5.3 4.5 -54.4% 4.4 14 4 2.4 0 0 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 Gasoline LPG +0.8% -7.4% 4 5 -0.6% +1.6% 4.1 4.1 4.1 4.2 3.9 +3.0% -2.5% 4 +3.1%
Slide 46: 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 47: 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 Apr-22
Slide 48: 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 Dist. Margin Tax Refinery Price Dist. Margin Tax 30 28.0 30 28.4 27.7 27.8 26.3 26.8 26.9 25.6 23.8 24.1 23.9 24.6 24.6 25 25 21.7 20 15.6 20 15.7 1
Slide 49: Tüpraş Balance Sheet (Million TL)
Tüpraş Balance Sheet (Million TL) 31.12.2021 31.12.2020 Diff. Diff. (%) Current Assets 65,429 30,663 34,766 113 Cash & C. Equivalents 20,400 19,825 575 3 Trade Receivables 13,517 1,736 11,781 679 Derivatives 3,818 380 3,438 904 Inventories 23,756 7,701 16,055 208 Pre-paid expenses 186 234 -47 -20 Ot
Slide 50: Dividend (TL)
Dividend (TL) Avg. Payout Ratio: 90%* 89% 102% Strategic Transition Dividend Plan 87% 80% 64% 15.2 14.8 15.2 13.6 10.2 Our new business model 6.5 7.2 6.2 enables us to pay ~80% average 2.1 0.0 0.0 dividends and we will remain as a high dividend payer -10.0 EPS DPS Dividend Payout 0% 0% 2015 2016 201
Slide 51: Tüpraş - Ratings
Tüpraş - Ratings Tüpraş BIST Corporate Governance Rating Score Credit Rating Scores Overall 95.8 Foreign Currency Long Term Tüpraş B+ (Negative) B2 (Negative) Shareholders 95.5 Turkey B+ (Negative) B2 (Negative) B+ (Stable) Koç Holding B2 (Negative) BB- (Stable) Transparency 97.2 Analyst Recommendat
Slide 52: 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 53: 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. Total Processing ~4.50 mn tons Total Output ~4.25mn tons Apr-22 Hizmete Özel / Confidential Investor Hizmete Özel Pre
Slide 54: LPG and Naphtha Cracks
LPG and Naphtha Cracks $/bbl LPG Naphtha 5yr range 2022 2021 5 yr ave 5yr range 2022 2021 5 yr ave 10 5 0 0 -0.3 0.9 -1.00.3 0.2 0.1 -8.1 -2.1 -10.0 -2.7 -1.0 -11.4 -3.2 -10 -4.2 -13.7 -15.8 -4.5 -3.6 -15.7 -17.2 -17.7 -5 -4.1 -19.6 -21.4 -20 -27.7 -24.0 -29.2 -10 -30 -29.5 -40 -15 1 2 3 4 5 6 7 8 9
Slide 55: 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. ~6% ~7% ~21% Koç Group’s Combined Total Exports / Pioneer in its Sectors Revenues / Turkey’s Market Cap/ Borsa Istanbul GDP1 Expo
Slide 56: Investor Presentation Latest
Investor Presentation Latest Webcast Sustainability Report Strategic Transition Plan tuprasir@tupras.com.tr Hizmete Özel / Confidential Hizmete Özel / Confidential