Thai Oil Public Co. Ltd. · SET:TOP
Thai Oil Public — Q4 2016 Earnings Presentation
62 slides from Thai Oil Public's earnings presentation, Feb 17, 2017
Slide 1: Q4 & FY/2016 Analyst Presentation
Thai Oil Public Company Limited Q4 & FY/2016 Analyst Presentation 17 Feb 2017 Time : 10.00am. - 12.00pm. Venue : ENCO - Synergy Hall Building C, 6th Floor
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 The World Most Sustainable Oil & Gas Refining and Marketing Company (from 28 invited companies in oil & gas refining and marketing industry) For 4 consecutive years 60 industries 3,420 companies invited 2,473 companies assessed* For 4 consecutive years
Slide 6: Presentation Agenda
-6- Presentation Agenda 2016 KEY HIGHLIGHTS Q4 & 2016 PERFORMANCE ANALYSIS 1H-17 & 2017 MARKET OUTLOOK
Slide 7: 2016 Key Highlights
-7- 2016 KEY HIGHLIGHTS
Slide 8: 2016 Key Market Drivers Highlights
Key Highlights -8- 2016 Key Market Drivers Highlights Refinery Rising Dubai crude price Dec/16 compared to Dec/15 Implication supported by agreement of OPEC & Non-OPEC to cut oil 1.6 $/bbl inventory gain* output by 1.8 MBD in 1H/17. (from stock loss (1.9) $/bbl in 2015) * * Based on refinery intak
Slide 9: 2016 Key Achievements
Key Highlights -9- 2016 Key Achievements Key Achievements 2016 TOP Group Net Profit Unit : million THB (MB) Operational Maintain high reliable production Excellence Net Operating Profit (before tax) Profitability Improvement 2016 2015 Stock G/(L) (before tax) Reversal of NRV/(NRV) (before tax) Ref
Slide 10: 2016 Profitability Improvement
Key Highlights -10- 2016 Profitability Improvement Cost Management General & Admin , Procurement & warehouse , Operation & Margin Improvement Maintenance , Project & (Supply & Marketing / Manpower management Unit: million THB Hydrocarbon Management) Higher domestic/ 527 CLMV petroleum sale 521 257 O
Slide 11: 2016 Dividend Payment
Key Highlights -11- 2016 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 10.40 9.19 9.40 7.82 8.13 7.28 5.91 6.04 5.97 4.39 4.57 2.75 3.00***
Slide 12: Q4 & 2016 Performance Analysis
-12- Q4 & 2016 PERFORMANCE ANALYSIS
Slide 13: Refinery: Ongoing High Utilization Rate & Domestic Sales Portion
Refining -13- Refinery: Ongoing High Utilization Rate & Domestic Sales Portion TOP/ Domestic Refinery Utilization Rate Domestic Oil Demand Unit: % Utilization Rate 2015 2016 110% 109% 110% 110% 106%107%107% 107% 107% 108%108% KBD 5.4% 800 600 3.1% 90% 94% 95% 94% 95% 95% 94% 91% 91% 400 9.8% 88% 89%
Slide 14: Q4/16: Stronger Mkt GRM & Stock Gain from Rising DB Price
Refining -14- Q4/16: Stronger Mkt GRM & Stock Gain from Rising DB Price Dubai Crude Price & Key Petroleum Product Spreads Refinery Utilization Q3/16 Q4/16 2016 2015 2015 2016 2015 107% 110% 108% 108% $/bbl Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY16 FY15 DUBAI (DB) 51.9 61.3 49.7 40.7 30.4 43.2 43.2 48.3 41.3 50.9
Slide 15: Q4/16: Fallen Margins Mainly Pressured by Lower PX spread
Aromatics/LAB -15- Q4/16: Fallen Margins Mainly Pressured by Lower PX spread Aromatics Spreads and Margins Aromatics Production 2015 2016 2015 Q3/16 Q4/16 2016 2015 $/ton Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY16 FY15 80% 82% 81% 81% PX*-ULG95 255 246 233 288 332 315 341 280 317 256 Q1TD’17 (10 Feb 17) PX-ULG95
Slide 16: Q4/16: Soften Contribution as Declined Lube base & Bitumen spread
Lube Base Oil -16- Q4/16: Soften Contribution as Declined Lube base & Bitumen spread Base Oil & Bitumen Spreads & Margins Base oil Production 2015 2016 2015 Q3/16 Q4/16 2016 2015 $/ton Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY16 FY15 62%* 88% 81% 86% * 1-month MTA of Lube Base complex during Aug-Sep 2016 500SN-HSF
Slide 17: Q4/16 Power Sector Performance…One of Future Earnings Driver
Power -17- Q4/16 Power Sector Performance…One of Future Earnings Driver Power Business Sector Equity holding in SPP GPSC **** Power & Steam Sales ***TOP shareholding 24.29% (8.91% via TOP and 20.79% via TP) GPSC is an associate company of TOP. Electricity(1) 2,055 Equity method is applied to recogni
Slide 18: Integrated Margin & Competitive Cash Cost
Financial -18- Integrated Margin & Competitive Cash Cost Gross Refining Margin Refinery’s Cash Cost (Unit: US$/bbl) (Unit: US$/bbl) Market GRM Accounting GRM (Market GRM + Stock G/L) Operating Cost Interest Expense (net) 9.5 (excl. one-time non- 7.8 operating item) 6.8 5.9 6.0 5.1 5.7 5.2 4.3 2.1 2.
Slide 19: 2016: Performance Breakdown by Business Unit
Performance Breakdown -19- 2016: Performance Breakdown by Business Unit Utilization/Production (%) & Net Profit (million THB) Key Points • Refinery: better contribution driven by high u- rate & inventory gain tracking oil price • Aromatic/LAB: higher contribution from improved product spreads & addi
Slide 20: 2016 TOP Group Consolidated P&L
Financial -20- 2016 TOP Group Consolidated P&L (million THB) Q4/16 Q3/16 QoQ+/(-) Q4/15 YoY+/(-) 2016 2015 YoY+/(-) Sales Revenue 77,104 68,476 8,628 68,446 8,658 274,739 293,569 (18,830)A A Lower overall product price level compared to Hedging Gain / (Loss) (330) 206 (536) 1,053 (1,383) (243) 1,489
Slide 21: 2016 TOP Group Consolidated Cash Flow
Financial -21- 2016 TOP Group Consolidated Cash Flow (Unit: Million THB) (Unit: Million THB) Operating Cash Flow Investments 2016 2015 2016 2015 Operating Cash Flow 23,182 31,708 Investments (18,352) 2,530 Net income & non-cash adj. 32,832 25,453 + ST investments (12,057) 12,881 Change in working ca
Slide 22: 2016 TOP Group Strong Financial Position & Financial Ratios
Financial -22- 2016 TOP Group Strong Financial Position & Financial Ratios Statements of Financial Position Consolidated Long-Term Debt as at 31 Dec 16 1) (Unit: million THB) Total Long-Term Debt Net Debt 192,166 203,865 217,731 75,434 million THB 15,526 million THB Cash & ST 30,700 (US$ 2,095 milli
Slide 23: 1H-17 & 2017 Market Outlook
-23- 1H-17 & 2017 MARKET OUTLOOK • Crude Oil • Petroleum Products • Aromatics • Base Oil & Bitumen • Linear Alkyl Benzene (LAB)
Slide 24: Crude Oil
-24- CRUDE OIL
Slide 25: Crude Oil Market: Oil Market to Rebalance in 2017
Crude Oil -25- Crude Oil Market: Oil Market to Rebalance in 2017 Dubai Price Movement $/BBL China’s stock OPEC failed to No consensus on 80 market crash output freeze OPEC agreed to cut agree on an 60 output ceiling BREXIT output to 32.5 MBD 40 Non-OPEC agreed to cut Iran’s nuclear Canada wildfire o
Slide 26: Expectation of High Compliance For Output Cut Deal
Crude Oil -26- 1 Expectation of High Compliance For Output Cut Deal A High Compliance From OPEC and Non-OPEC B Bigger Cut Than Agreed Level From Saudi OPEC & Non-OPEC Supply Cut MBD Major OPEC Production Cut MBD 0.8 2.0 1.722 123% 0.6 1.5 1.450 0.558 0.4 0.372 40% 0.2 59% 92% 1.0 0.0 1.164 Saudi Ara
Slide 27: Rebalancing Oil Market, Driven By Output Cut Deal and Growing Oil Demand
Crude Oil -27- Rebalancing Oil Market, Driven By Output Cut Deal and 2 Growing Oil Demand A Market to Rebalance in 2017 B Growing Oil Demand on Improving Economy Global Demand/Supply Balance Global Oil Demand Growth (MBD) MBD MBD 100 2017 4.0 2.0 Demand: + 1.3 MBD YoY 98 Supply: + 0.1 MBD YoY 3.0 1.
Slide 28: Risks Over Rising Crude Oil Supply
Crude Oil -28- 3 Risks Over Rising Crude Oil Supply A Rising Libyan Output After Being Disrupted B Concerns Over Resuming Nigeria’s Oil Supply MBD Libya’s Oil Production MBD Nigeria’s Oil Production 2.5 2.5 Capacity : 2.2 MBD 2.0 2.0 Capacity : 1.6 MBD 1.5 1.5 Gov’t Target :1.25 MBD Market view :1.0
Slide 29: Petroleum Products
-29- PETROLEUM PRODUCTS
Slide 30: Still-High Margins from Demand Outpacing Refinery Addition
Refinery -30- Still-High Margins from Demand Outpacing Refinery Addition Singapore Cracking GRM ($/BBL) 8.5 8.0 7.9 7.6 7.7 6.7 6.8 5.8 6.1 6.2 5.0 5.2 Y2014 Q1-15 Q2-15 Q3-15 Q4-15 Y2015 Q1-16 Q2-16 Q3-16 Q4-16 Y2016 Q1TD-17* ($/BBL) Q1-16 Q2-16 Q3-16 Q4-16 2016 Q1TD-17* Key Highlights in 1H-17 ULG
Slide 31: Better Gasoline Margins on Solid Demand Growth and Low ME Supply
Refinery -31- Better Gasoline Margins on Solid Demand Growth 1 and Low ME Supply A Still-high Gasoline Demand from Low Oil Prices B Deficit in Q2/17 on High Demand MBD Asia Pacific Gasoline Demand MBD Asia Pacific Gasoline Balance 7.5 600 1H-17 : 7.0 MBD (+4% YoY) 400 7.0 200 6.5 0 6.0 -200 Jan Feb
Slide 32: Steady Middle Distillate Cracks from Recovered Demand and Cold Weather
Refinery -32- Steady Middle Distillate Cracks from Recovered 2 Demand on Improved Economy and Cold Weather A Better Demand from Recovered Global Economy B Greater Demand due to Cold Weather Asia Pacific Middle Distillate Demand U.S. Middle Distillate Demand MBD MBD 13.0 6.0 1H-17 : 11.7 MBD (+2.4% Y
Slide 33: Firm Refinery Margins in 2017 as Demand Outpaces Refinery Addition
Refinery -33- Firm Refinery Margins in 2017 as Demand Outpaces Refinery Addition Lower refinery addition in 2017 due to regulatory restrictions in Japan and delayed startup of two Chinese mega refineries CDU Addition VS Additional Demand – AP & ME Middle East China Other AP Japan India Vietnam Tea
Slide 34: Thailand Oil Demand Growth
Domestic -34- Thailand Oil Demand Growth Thailand Oil Demand Growth Average Year on Year Y 2015(B) Y 2016(B) Y 2017(C) 2011-2015(B) Mogas (A) +7.1% +13.3% +9.8% +1.3% Jet/Kero +4.4% +9.7% +6.8% +3.7% Diesel (A) +3.4% +4.0% +3.1% +2.4% Total +4.4% +7.1% +5.4% +2.3% GDP +3.4% +2.8% N/A +3.2%(D) Thaila
Slide 35: Aromatics
-35- AROMATICS
Slide 36: Firm Aromatics Market due to Strong Downstream Demand
Aromatics -36- Firm Aromatics Market due to Strong Downstream Demand Aromatics Market PX CFR Taiwan-ULG95 ($/TON) BZ FOB Korea-ULG95 ($/TON) 370 332 315 341 317 288 280 299 255 246 256 233 185 156 138 174 163 98 115 101 97 74 Q4-15 Q1-16 Q1-15 Q2-15 Q3-15 Q2-16 Q3-16 Q4-16 Y2015 Y2016 Q1TD-17* Y2015
Slide 37: Positive PX Outlook due to Strong Chinese Polyester Demand
Aromatics -37- 1 Positive PX Outlook due to Strong Chinese Polyester Demand A New PTA Capacity Addition Supports Market B Heavy Maintenance in Q2-17 Supports Market AP & ME PX and PTA Capacity Addition Asian PX and PTA Plant Maintenance Mil TON Mil TON Two fires at NE Asia refineries in 1.0 1.5 end-
Slide 38: Firm Chinese SM Demand Drives BZ Market
Aromatics -38- 2 Firm Chinese SM Demand Drives BZ Market A Balanced Market due to New Downstream Plant B Heavy Maintenance in Q2-17 Supports Market AP & ME BZ and Downstream Capacity Addition AP BZ, SM and Phenol Plant Maintenance Mil TON Mil TON Two fires at NE Asia refineries in 0.5 1.0 end-Jan bo
Slide 39: Base Oil & Bitumen
-39- BASE OIL & BITUMEN
Slide 40: Firm Base Oil Market in H1 on Lower Global Capacity Addition
Base Oil & Bitumen -40- Firm Base Oil Market in H1 on Lower Global Base Oil Capacity Addition amid Seasonal Demand 500SN – HSFO ($/TON) 1 Global Additional Nameplate Capacity Mil TON Group 1 Group 2 Group 3 Net Capacity 495 506 2.0 450 431 427 409 443 369 399 367 412 392 0.1 0.6 0.3 0.0 -2.0 H1-16 H
Slide 41: Firm Bitumen Market on Seasonal Demand in the Region
Base Oil & Bitumen -41- Firm Bitumen Market on Seasonal Demand in the Region Bitumen-HSFO ($/TON) 1 Import Volume of Major Asian Players in 2016 KTON/MONTH China KTON/MONTH India 82 98 56 23 20 600 200 -32 -7 -22 300 100 -48 -61 -49 -80 0 0 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Y2014 Y2015
Slide 42: Linear Alkyl Benzene (LAB)
-42- Linear Alkyl Benzene (LAB)
Slide 43: Stable LAB Market on Higher Maintenance in China
LAB -43- Stable LAB Market on Higher Maintenance in China LAB Market LAB Spread** ($/TON) AP/ME Effective Maintenance KTA 707 654 666 675 627 656 200 635 627 619 606 543 487 150 100 50 0 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Y2014 Y2015 Y2016 Q1TD-17* H1-16 H2-16 H1-17 Others* India China
Slide 44: Conclusion
-44- CONCLUSION
Slide 45: 2017 Market Outlook Conclusion
Conclusion -45- 2017 Market Outlook Conclusion (vs. 2016) Crude Oil Oil Market to Rebalance in 2017, Driven by Output Cut Deal and Growing Oil Demand Still-High Margins from Demand Outpacing Refinery Addition Refinery Firm Aromatics Market from Stronger Demand Despite Aromatics Increasing New Capaci
Slide 46: Thank You
-46- Thank You Any queries, please contact: at email: ir@thaioilgroup.com Tel: 662-797-2999 / 662-797-2961 Fax: 662-797-2976
Slide 47: Appendix
-47- APPENDIX • Strategic Investment Plan • Optimized & Flexible Operations…Superior Performance • CDU Addition VS Additional Demand – AP & ME • World GRM / Inventories • Thailand petroleum demand by products
Slide 48: Strategic Investment Plan Approved by Board of Directors
Updated CAPEX plan -48- Strategic Investment Plan Approved by Board of Directors CAPEX Plan (Unit US$ million) Remaining capital investment Projects 2016 2017 2018 Reliability, Efficiency and Flexibility Improvement 32 45 25 Benzene Derivatives – LAB 41 11 13 Power – 2 SPPs 43 Infrastructure Improve
Slide 49: Optimized & Flexible Operations…Superior Performance
Crude -49- Optimized & Flexible Operations…Superior Performance Crude Assays based on Sources of Product Domestic demand for Reference Price TOP configuration* Crude output petroleum products** % S = 1.43 % S = 2.52 % S = 0.78 % S = 1.97 2% SAUDI 1 LPG 4% API = 32.0 API = 31.2 API = 39.4 API = 32.8
Slide 50: Asia Pacific & Middle East Refinery Addition
Refinery -50- Asia Pacific & Middle East Refinery Addition CDU Addition VS Additional Demand – AP & ME Start-up Country Nameplate Company period) (KBD) Middle East Other AP China Japan Q1-16 India 300 IOC Paradip India Teapot Q2-16 China 60 CNOOC Taizhou Vietnam Net Addition AP & ME Demand Q3-16 Qat
Slide 51: Asian Margin Vs. US-EU margin
World GRM -51- Asian Margin Vs. US-EU margin Singapore GRM $/BBL US and EU GRM $/BBL 12 30 8 20 4 10 0 0 -4 -10 -8 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 SING CRACK SING HYDRO BRENT CRACK BRENT HYDRO WTI CRACK U.S. Crude Refinery Input EU 16 Crude Refinery Input Japan
Slide 52: Global Crude Oil Inventories
Inventories -52- 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 2016 2017 avg 12-16
Slide 53: Global Gasoline Inventories
Inventories -53- 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 2016 2017 avg 12-16 5yr-range 2016 2017 avg 12-16
Slide 54: Global Middle Distillate Inventories
Inventories -54- 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 2016 2017 avg 12-16 5yr-range 2016
Slide 55: Global Fuel Oil Inventories
Inventories -55- 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 2016 2017 avg 12-16 5yr-range 2016 20
Slide 56: China's Refined Product Exports
China Export -56- China’s Refined Product Exports KBD China’s Gasoline Exports KBD China’s Gasoil Exports Source : China Custom Source : China Custom 350 600 300 500 250 400 200 300 150 200 100 50 100 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
Slide 57: Domestic LPG Demand
Thailand petroleum demand by products -57- Domestic LPG Demand Thailand LPG Demand LPG Demand Highlight • In 2016, LPG demand fell significantly by 8.6%YoY on account of lower usages in all sectors. Most of the decline came from petrochemical sector which its feedstock switching from LPG to Naphtha
Slide 58: Domestic Gasoline/Gasohol Demand
Thailand petroleum demand by products -58- Domestic Gasoline/Gasohol Demand Thailand Gasoline/Gasohol Demand GASOLINE/Gasohol Demand Highlight • In 2016, Mogas demand jumped sharply by 9.8%YoY to an average 28.99 ML/day. This was mainly due to lower retail prices and higher number of passenger cars
Slide 59: Domestic Jet Demand
Thailand petroleum demand by products -59- Domestic Jet Demand Thailand JET-A1 Demand JET Demand Highlight • In 2016, Jet consumption increased significantly by 6.8% over the corresponding period last year mainly owning to booming tourism industry, leading to 8.6%YoY higher aircraft movement. The ex
Slide 60: Domestic Gasoil and NGV Demand
Thailand petroleum demand by products -60- Domestic Gasoil and NGV Demand Thailand Gasoil Demand Diesel Demand Highlight • In 2016, Diesel demand rose gradually by 3.1% YoY as relatively low retail prices boosted the consumption amidst higher number of accumulated commercial vehicles. Nevertheless,
Slide 61: Domestic Fuel Oil Demand
Thailand petroleum demand by products -61- Domestic Fuel Oil Demand Thailand Fuel Oil Demand Fuel Oil Demand Highlight • In 2016, Fuel Oil consumption jumped rapidly by 10.2%YoY, as a result of sharply increase by 12.3%YoY in transportation demand. Last year, transport activity in Thai fishery was p
Slide 62: Thank You
-62- 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 — Q4 2016 Earnings Presentation on 6ix