BP plc · LSE:BP.
BP — Investor Presentation (2004)
20 slides from BP's investor presentation, Aug 8, 2004
Slide 1: John Manzoni Refining & Marketing
JOHN MANZONI Refining and Marketing John Manzoni refining & marketing Thank you Iain ……… Ladies & Gentlemen. It’s my pleasure today to update you on the Refining and Marketing segment. 1
Slide 2: R&M Summary
R&M Summary r&m: summary z capture more customers z upgrade offer quality and unit margin z grow cash And I would like to start by reminding you of our objective, which, as I outlined last year, is essentially: - to capture more customers with the quality of our offer - to expand the unit margin on
Slide 3: Three main messages for R&M
Of course – the offer has to be backed up by a world class refining and supply organisation so that we can deliver the best products at the lowest possible cost. And third, our overall margin is determined by how well we run every part of our operation. I will show you today some of the operational
Slide 4: R&M: Business Models
R&M: Business Models r&m : business models 2003 operating capital employed (pro forma)* 5% 8% 6% refining retail business marketing 45% lubricants new markets 37% * Year End 2003 We run the refining and marketing business as 4 different sub-segments – each of which has a very different business mode
Slide 5: Refining: Portfolio Journey
Success in Business marketing relies on a detailed knowledge of our customer base, and matching the offer to the particular customer segment. That way, we can define bespoke offers where we need to, - for instance including a service component - or deliver ‘’high volume, lowest cost’’ solutions when
Slide 6: Refining portfolio shift toward US margins
• the quality and flexibility of the refinery configuration to maximise the capture of the available margin, • and how well we run the operation. We have been on a journey in refining over the last few years, which has significantly changed the shape of our portfolio. As you can see from this chart…
Slide 7: Refining: Portfolio Quality
18% higher than our nearest integrated competitor. This brings scale benefits which are a critical driver of cost efficiency. Refining: Portfolio Quality refining: portfolio quality capacity mbd margin margin $/bbl * $/bbl * 1.5 Mid West $5.6 $4.7 NWE 1.0 Gulf Coast $5.9 Med $4.2 0.5 West Coast $12.
Slide 8: Refining: Operations
The same is true to a more limited degree in Europe; the capacity we acquired from Veba was already well upgraded. It also positions us well in terms of exposure to the Rhine region- where we benefit from strong inland margins. While we have made great progress, we have further to go in improving th
Slide 9: Refinery cost and energy efficiency
Costs continue to be managed carefully – with unit costs flat or reducing. Around 40% of the operating costs in a refinery relate to the energy input costs – and thus energy efficiency is a critical indicator of cost efficiency. The chart shows our track record in improving the energy intensity inde
Slide 10: Refining: Investment
Refining: Investment refining: investment $bn 1.0 0.8 0.5 0.3 0.0 00 01 02 03 04 05 06 clean fuels and growth capital investment base capital investment* 04–06 BP estimates * excludes capital investment for turnarounds I’ve described how we are aligning our refining portfolio over time to match the
Slide 11: Marketing: Scale
Marketing : Scale marketing: scale retail customers per day millions 16 14 12 10 8 6 4 2 0 * * BP estimate source: corporate websites I want to turn now to our marketing business. As I said at the beginning – this is about our offer – it’s about our brands and our ability to continue to attract cust
Slide 12: Marketing: Business Customers
And it’s not only the number of retail customers which is exciting. Marketing: Business Customers marketing: business customers we are the largest supplier 23% of all LPG imports of American, the world’s into China are made by BP biggest airline BP provided the lubricants for the mars probe Castrol
Slide 13: Retail: Offer Quality
Retail: Offer Quality retail: offer quality shop sales premium fuels since launch $bn millions litres per month 6 150 5 4 100 3 2 50 1 0 0 00 01 02 03 prior year launch year We are working to make our offer continuously more attractive to customers so that they come preferentially to BP. There are t
Slide 14: Retail: Case Study – The UK
The growth of our total store sales since 2000 is shown on the chart. We have grown our same store sales by nearly 16%, compared to a market growth of nearer 6%. We have also upgraded our fuel offer with the introduction of Ultimate gasoline and diesel, which has efficiency, power, and environmental
Slide 15: Retail: Operations
We have focused our efforts in the UK and in the Chicago and Orlando markets in the US, where we have built a total of 79 new BP Connect stores over the year. This slide shows the results to date from the UK market. Store sales per square metre have so far grown by more than 10%. Throughput per site
Slide 16: Retail: Investment
material market share, are showing through in some important ways on the wider portfolio. Fuel volumes per site continue to increase – as a result of fewer, bigger, and more efficient sites, and our new fuel offers which are driving more customers to purchase BP fuel. And as we continue to improve o
Slide 17: Accelerating retail investment in metropolitan markets
As we build more convenience stores – our investment efficiency continues to improve. We have already reduced the cost to build a store by 25% over the last two years. We have been increasingly focusing our own capital into the metropolitan markets – where we have a convenience and fuel offer, and o
Slide 18: Lubricants: Offer Quality
Lubricants: Offer Quality lubricants: offer quality index % US premium products 2000 = 100 sales growth 12 110 10 105 8 6 100 4 95 BP volume* growth 2 lubricants market* growth 0 90 02 03 00 01 02 03 *market growth from PFC, BP projection 03, 04 lubricants market is automotive lubricants Finally - I
Slide 19: R&M: Summary
R & M: Summary r&m: summary z world scale marketing business z strong refining portfolio z high quality offer; continuously improving z focused on leading market positions So just to recap : We have a market facing business which serves as many customers per day as some of the largest and best marke
Slide 20: Closing remarks on margin capture and cash flow
I remain confident that we can continue our recent track record, and increase our capture of the available gross margin $ in the market place. At the very least, we aim to maintain our margins into the future – which, combined with an expanded capital base – should generate significantly increased c