Thai Oil Public Co. Ltd. · SET:TOP
Thai Oil Public — Q3 2016 Earnings Presentation
60 slides from Thai Oil Public's earnings presentation, Nov 11, 2016
Slide 1: Q3/2016 Analyst Presentation
Thai Oil Public Company Limited Q3/2016 Analyst Presentation 11 Nov 2016 Time : 14.30pm. - 16.30pm. 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 3rd Consecutive Year of leading positions: Energy Industry Group Leader Oil and Gas Industry Leader 4th Consecutive Year as the Member of DJSI Emerging Markets 2nd Consecutive Year of leading positions: Oil and Gas Industry Leader
Slide 6: Presentation Agenda
-6- Presentation Agenda Q3/16 KEY HIGHLIGHTS Q3/16 PERFORMANCE ANALYSIS Q4-16 & 2017 MARKET OUTLOOK
Slide 7: Q3/16 Key Highlights
-7- Q3/16 KEY HIGHLIGHTS
Slide 8: Q3/16 Key Market Drivers Highlights
Key Highlights -8- Q3/16 Key Market Drivers Highlights Refinery Implication Slightly soften MKT GRM mainly pressured by lower Soften Mkt GRM at 4.3 $/bbl* gasoline spread from abundant inventory worldwide but (Q2/16 = 4.4 $/bbl) offset by lower crude premium & stronger fuel oil spread Weaken Dub
Slide 9: Q3/16 Key Achievements
Key Highlights -9- Q3/16 Key Achievements Key Achievements Q3/16 TOP Group Net Profit Unit : million THB (MB) Operational Optimized Refinery & Aromatics Net Operating Profit (before tax) Stock G/(L) (before tax) Excellence run, while lower run on Lube Base due to Reversal of NRV/(NRV) (before tax)
Slide 10: Q3/16 Performance Analysis
-10- Q3/16 PERFORMANCE ANALYSIS
Slide 11: Refinery: Ongoing High Utilization Rate & Domestic Sales Portion
-11- Refinery: Ongoing High Utilization Rate & Domestic Sales Portion TOP/ Domestic Refinery Utilization Rate Domestic Oil Demand Unit: % Utilization Rate 9M/2015 9M/2016 110% 109% 110% 106%107%107% 107% 107% 108% KBD 102% 6.2% 98% 800 600 3.7% 90% 94% 95% 94% 95% 92% 94% 91% 400 11.1% 88% 89% 7.5%
Slide 12: Q3/16: Stable Market GRM but Incurred Inventory Loss
Refining -12- Q3/16: Stable Market GRM but Incurred Inventory Loss Dubai Crude Price & Key Petroleum Product Spreads Refinery Utilization 2015 2016 2015 Q2/16 Q3/16 9M/16 $/bbl Q1 Q2 Q3 Q4 Q1 Q2 Q3 9M FY15 109% 107% 108% DUBAI (DB) 51.9 61.3 49.7 40.7 30.4 43.2 43.2 38.9 50.9 % MB Intake/OSP* ULG95
Slide 13: Q3/16: Improved Margins by Good Demand & Lower Feed Cost
Aromatics/LAB -13- Q3/16: Improved Margins by Good Demand & Lower Feed Cost Aromatics Spreads and Margins Aromatics Production 2015 2016 2015 Q2/16 Q3/16 9M/16 $/ton Q1 Q2 Q3 Q4 Q1 Q2 Q3 9M FY15 80% 80% 80% PX*-ULG95 255 246 233 288 332 315 341 329 256 Q4TD (2 Nov 16) PX-ULG95 = 270 $/ton BZ-ULG95 9
Slide 14: Q3/16: Improved P2F Supported by Higher Domestic Sales Portion
Aromatics/LAB -14- Q3/16: Improved P2F Supported by Higher Domestic Sales Portion LAB Price, Spread, Production & P2F Margin Market Highlight + Slightly soften LAB spread 2016 pressured by low seasonal $/ton Q1* Q2 Q3 9M* demand during monsoon season in Asia LAB 1,087 1,156 1,155 1,133 Performance H
Slide 15: Q3/16: Fallen Contribution as Planned Maintenance & Lower Base Oil Sales
Lube Base Oil -15- Q3/16: Fallen Contribution as Planned Maintenance & Lower Base Oil Sales Volume Base Oil & Bitumen Spreads & Margins Base oil Production 2015 2016 2015 Q2/16 Q3/16 9M/16 $/ton Q1 Q2 Q3 Q4 Q1 Q2 Q3 9M FY15 84% 62% 78% 500SN-HSFO 369 399 506 450 427 409 443 427 431 Q4TD (2 Nov 16) 5
Slide 16: Q3/16 Power Sector Performance
Power -16- Q3/16 Power Sector Performance…One of Future Earnings Driver Power Business Sector Equity holding in SPP GPSC **** Power & Steam Sales ***TOP shareholding 24.29% (8.91% via TOP and 20.79% via TP) GPSC is an associate company of TOP. Equity method is applied to recognize Electricity(1) 1,4
Slide 17: Integrated Margin & Competitive Cash Cost
Financial -17- Integrated Margin & Competitive Cash Cost Gross Refining Margin Refinery’s Cash Cost (Unit: US$/bbl) (Unit: US$/bbl) Market GRM Accounting GRM (Market GRM + Stock G/L) Operating Cost Interest Expense (net) (excl. one-time non- 8.6 operating item) 7.8 5.7 5.9 6.1 5.8 5.1 5.1 4.9 4.3 4.
Slide 18: Q3/16: Performance Breakdown
Performance Breakdown -18- Q3/16: Performance Breakdown Utilization/Production (%) & Net Profit (million THB) Key Points • Refinery: max run to capture strong domestic market • Aromatic/LAB: optimized aromatic run serving good downstream demand & more contribution from LAB due to improving domestic
Slide 19: Q3/16 TOP Group Consolidated P&L
Financial -19- Q3/16 TOP Group Consolidated P&L (million THB) Q3/16 Q2/16 QoQ+/(-) Q3/15 YoY+/(-) 9M/16 9M/15 YoY+/(-) Sales Revenue 68,476 72,368 (3,892) 74,721 (6,245) 197,635 225,123 (27,488) Hedging Gain 206 (147) 353 547 (341) 87 436 (349) EBITDA 5,392 10,545 (5,153) 2,931 2,461 22,590 19,144 3
Slide 20: 9M/16 TOP Group Consolidated Cash Flow
Financial -20- 9M/16 TOP Group Consolidated Cash Flow (Unit: Million THB) (Unit: Million THB) Operating Cash Flow Investments 9M/16 9M/15 9M/16 9M/15 Operating Cash Flow 17,273 22,537 Investments (20,579) (7,041) Net income & non-cash adj. 22,830 17,950 + ST investments (15,803) 2,253 Change in work
Slide 21: Q3/16 TOP Group Strong Financial Position & Financial Ratios
Financial -21- Q3/16 TOP Group Strong Financial Position & Financial Ratios Statements of Financial Position Consolidated Long-Term Debt as at 30 Sep 16 1) (Unit: million THB) Total Long-Term Debt Net Debt 192,166 206,209 203,865 74,374 million THB 19,134 million THB Cash & ST (US$ 2,133 million (US
Slide 22: Q4-16 & 2017 Market Outlook
-22- Q4-16 & 2017 MARKET OUTLOOK • Crude Oil • Petroleum Products • Aromatics • Base Oil & Bitumen • Linear Alkyl Benzene (LAB)
Slide 23: Crude Oil
-23- CRUDE OIL
Slide 24: Crude Oil Market: Oil Market Rebalances in 2017
Crude Oil -24- Crude Oil Market: Oil Market Rebalances in 2017 Dubai Price Movement $/BBL China’s stock OPEC failed to No consensus on 1 2 80 market crash output freeze agree on an 60 output ceiling BREXIT 40 Iran’s nuclear Canada wildfire 20 deal done & Nigerian outages OPEC targets 32.5- Iran’s nu
Slide 25: Uncertainty Over OPEC Cut Deal in Q4-16
Crude Oil -25- 1 Uncertainty Over OPEC Cut Deal in Q4-16 A Increasing Oil Price Due to OPEC’s Talk to Cut C Possible OPEC Output Cut Amid High Risk $/BBL ICE Brent Crude Price Movement UNIT: MBD 70 “Potential Increase from HIGH 23-24 Nov: OPEC pre-talk 25 Nov: OPEC/non-OPEC Iran, Iraq, Libya and Nig
Slide 26: Market Rebalancing from Lower U.S. Oil Output and Firm Demand Growth in 2017
Crude Oil Market Rebalancing from Lower U.S. Oil Output and -26- 2 Firm Demand Growth in 2017 A Declining U.S. Oil Output B Market to Rebalance in 2017 MBD Non-OPEC Oil Supply Change (YoY) MBD Global Demand/Supply Balance MBD 1.5 100 4.0 2017 1.0 Demand: + 1.2 MBD YoY 3.0 98 Supply: + 0.4 MBD YoY 0.
Slide 27: Petroleum Products
-27- PETROLEUM PRODUCTS
Slide 28: Higher Refinery Margins from Demand Growth Outpacing Refinery Capacity Addition
Refinery -28- Higher Refinery Margins from Demand Growth Outpacing Refinery Capacity Addition Singapore Cracking GRM ($/BBL) 8.5 8.0 7.9 7.6 7.7 5.8 6.1 5.0 5.2 Y2014 Q1-15 Q2-15 Q3-15 Q4-15 Y2015 Q1-16 Q2-16 Q3-16 Q4-16TD Y2016TD Actual Forecast Sources: Reuters, TOP’s estimate ($/BBL) Q1-16 Q2-16
Slide 29: Better Refinery Margins in Q4-16 from Tighter Supply and Improved Distillate Demand
Refinery Better Refinery Margins in Q4-16 from Tighter -29- 1 Supply and Improved Distillate Demand A Tight Supply from Shutdown of Mega Refineries B Demand on the Upside from La NiNa Saudi Arabia and India Gasoline Export Percent of La Nina Development KBD Yasref (400KBD) & 800 Reliance Industries
Slide 30: Higher Refinery Margins in 2017 from Demand Growth Outpacing Refinery Capacity Addition
Refinery -30- Higher Refinery Margins in 2017 from Demand Growth 2 Outpacing Refinery Capacity Addition Demand Growth Better Than Refinery Addition in 2017 CDU Addition VS Additional Demand – AP & ME Middle East China Other AP Japan India Vietnam Teapot Net Addition AP & ME Demand KBD 1400 1200 1000
Slide 31: Higher Refinery Margins in 2017 (Cont.)
Refinery -31- Higher Refinery Margins in 2017 from Demand Growth 2 Outpacing Refinery Capacity Addition (Cont.) A Better Middle Distillate from Recovered Demand B Strong Gasoline from Demand Outpacing Supply World Gasoil Demand & Supply Growth YoY World Gasoline Demand & Supply Growth YoY KBD KBD 12
Slide 32: Thailand Oil Demand Growth
Domestic -32- Thailand Oil Demand Growth Thailand Oil Demand Growth Average (B) 9M-16(B) Year on Year Y 2015 Y 2017(C) 2011-2015(B) (vs. 9M-15) Mogas (A) +7.1% +13.3% +11.1% +1.3% Jet/Kero +4.4% +9.7% +7.5% +3.7% Diesel (A) +3.4% +4.0% +3.7% +2.4% Total +4.4% +7.1% +6.2% +2.3% GDP +3.4% +2.8% N/A +3
Slide 33: Aromatics
-33- AROMATICS
Slide 34: Higher Additional Capacity Pressuring Aromatics Market
Aromatics -34- Higher Additional Capacity Pressuring Aromatics Market Aromatics Market PX CFR Taiwan-ULG95 ($/TON) BZ FOB Korea-ULG95 ($/TON) 332 341 315 319 288 270 255 246 256 233 174 156 148 138 115 101 110 98 97 74 Q3-16 Y2016TD Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Y2015 Q4TD-16 Q1-16 Y2016TD Q1-
Slide 35: Softer PX Market from New Capacity Addition
Aromatics -35- 1 Softer PX Market from New Capacity Addition A New PX Capacity Addition Pressures Market B Reducing Operating Rate amid Higher Capacity AP & ME Effective PX Capacity Addition AP & ME PX Demand and Capacity Operating Mil TON Reliance Industry is expected to start up Mil TON Rate phase
Slide 36: Stable BZ Market on Balancing Demand and Capacity Growth
Aromatics -36- 2 Stable BZ Market on Balancing Demand and Capacity Growth A New BZ Capacity Will Come Online in 2017 B Firmer Demand Growth Supports BZ Market AP & ME Effective BZ Capacity Addition AP & ME BZ Demand and Capacity Operating Mil TON Rate Mil TON Reliance Industry is expected to start u
Slide 37: Base Oil & Bitumen
-37- BASE OIL & BITUMEN
Slide 38: Stable Base Oil Market on Lower Global Base Oil Capacity Addition
Base Oil & Bitumen -38- Stable Base Oil Market on Lower Global Base Oil Capacity Addition 500SN – HSFO ($/TON) 1 Global Additional Nameplate Capacity 506 Mil TON 495 450 431 427 409 443 382 419 369 399 8.0 4.8 6.0 4.0 2.0 -0.3 Y2014 Y2015 Q4TD-16 Y2016TD Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 0.0
Slide 39: Softer Bitumen Market on Accumulated Inventory in 2017
Base Oil & Bitumen -39- Softer Bitumen Market on Accumulated Inventory in 2017 Bitumen-HSFO ($/TON) 1 Import Volume of Major Asian Players in 2016 98 KTON/MONTH China KTON/MONTH India 82 56 23 20 600 150 400 100 -32 -7 200 50 -48 -61 -64 -43 0 0 Y2016TD Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Y201
Slide 40: Linear Alkyl Benzene (LAB)
-40- Linear Alkyl Benzene (LAB)
Slide 41: Stronger LAB Market on Steady Demand Growth
LAB -41- Stronger LAB Market on Steady Demand Growth LAB Market LAB CFR SEA - BZ FOB Korea ($/TON) KTA Capacity-Demand 400 591 557 582 549 544 569 513 528 515 500 515 300 200 100 0 -100 Y2014 Y2015 Q4TD-16 Y2016TD Q1-15 Q2-15 Q3-15 Q3-15 Q1-16 Q2-16 Q3-16 -200 AP/ME SEA 2016 2017 LAB-BZ (Actual) For
Slide 42: Conclusion
-42- CONCLUSION
Slide 43: 2017 Market Outlook Conclusion
Conclusion -43- 2017 Market Outlook Conclusion (vs. 2016) Crude Oil Higher crude oil prices from rebalancing market Higher refinery margins from demand growth outpacing Refinery refinery capacity addition Softer Aromatics market from additional capacity outpaces Aromatics demand growth Stable Base O
Slide 44: Thank You
-44- Thank You Any queries, please contact: at email: ir@thaioilgroup.com Tel: 662-797-2999 / 662-797-2961 Fax: 662-797-2976
Slide 45: Appendix
-45- APPENDIX • Strategic Investment Plan • 2016 Dividend Payment • Optimized & Flexible Operations…Superior Performance • CDU Addition VS Additional Demand – AP & ME • World GRM / Inventories • Thailand petroleum demand by products
Slide 46: Strategic Investment Plan
Updated CAPEX plan -46- Strategic Investment Plan CAPEX Plan (Unit US$ million) Remaining capital investment Projects COD Total Project Cost Our CAPEX (2011-2018) 2015 2016 2017 2018 investments will Reliability, efficiency and flexibility 2013-2018 353 21 60 5 4 cover improvements improvement in pl
Slide 47: 2016 Dividend Payment
Financial -47- 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 9.40 9.19 1H dividend Year Dividend 7.82 8.13 7.28 5.91 6.04 5.97 6.12 4.39 4.57 2.75 2.00 2.00 1.0
Slide 48: Optimized & Flexible Operations…Superior Performance
-48- 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 SAUDI 1 LPG Others *** 7% 4% API = 32.0 API = 31.2 API = 39.4 API =
Slide 49: Demand Growth Better Than Refinery Addition
Refinery -49- Demand Growth Better Than Refinery Addition CDU Addition VS Additional Demand – AP & ME Start-up Country Nameplate Company period (KBD) Middle East China Other AP Q1-16 India 300 IOC Paradip Japan India Vietnam Q2-16 China 60 CNOOC Taizhou Teapot Net Addition AP & ME Demand Q3-16 Qatar
Slide 50: Asian Margin Vs. US-EU margin
World GRM -50- Asian Margin Vs. US-EU margin 94.03% 62.62% 69.18% Total Capacity: 17.5 MBD Total Capacity: 17.0 MBD Total Capacity: 4.9 MBD Source: EIA, Norwegian Energy, Thai Oil
Slide 51: Crude Inventory
Inventories -51- Crude Inventory Source: Norwegian Energy
Slide 52: Global Distillate Inventory
Inventories -52- Global Distillate Inventory Source: Norwegian Energy
Slide 53: Fuel Oil Inventory
Inventories -53- Fuel Oil Inventory Source: Norwegian Energy
Slide 54: China's Product Export
China Export -54- China’s Product Export Source: Norwegian Energy
Slide 55: Domestic LPG Demand
Thailand petroleum demand by products -55- Domestic LPG Demand Thailand LPG Demand LPG Demand Highlight • In 9M/16, LPG demand fell significantly by 11.1%YoY on account of lower usages in all sectors. Most of the decline came from petrochemical sector which its feedstock switching from LPG to Naphth
Slide 56: Domestic Gasoline/Gasohol Demand
Thailand petroleum demand by products -56- Domestic Gasoline/Gasohol Demand Thailand Gasoline/Gasohol Demand GASOLINE/Gasohol Demand Highlight • In 9M/2016, Mogas demand jumped sharply by 11.1%YoY to an average 28.89 ML/day. This was mainly due to lower retail prices and higher number of passenger c
Slide 57: Domestic Jet Demand
Thailand petroleum demand by products -57- Domestic Jet Demand Thailand JET-A1 Demand JET Demand Highlight • In 9M/2016, Jet consumption increased significantly by 7.5% over the corresponding period last year mainly owning to booming tourism industry. The expansion in tourism sector was a result of
Slide 58: Domestic Gasoil and NGV Demand
Thailand petroleum demand by products -58- Domestic Gasoil and NGV Demand Thailand Gasoil Demand Diesel Demand Highlight • In 9M/2016, Diesel demand rose gradually by 3.7% YoY as relatively low retail prices boosted the consumption amidst higher number of accumulated commercial vehicles. Nevertheles
Slide 59: Domestic Fuel Oil Demand
Thailand petroleum demand by products -59- Domestic Fuel Oil Demand Thailand Fuel Oil Demand FUEL OIL Demand Highlight • In 9M/2016, Fuel Oil consumption jumped rapidly by 14.8%YoY, as a result of sharply increase by 19.7%YoY in transportation demand. Last year, transport activity in Thai fishery wa
Slide 60: Thank You
-60- 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 2016 Earnings Presentation on 6ix