Thai Oil Public Co. Ltd. · SET:TOP
Thai Oil Public — Q4 2015 Earnings Presentation
65 slides from Thai Oil Public's earnings presentation, Feb 15, 2016
Slide 1: Q4 & FY/2015 Analyst Presentation
Thai Oil Public Company Limited Q4 & FY/2015 Analyst Presentation 15 Feb 2016 Time : 9.30 - 12.00 pm. 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 Policy
-4- Corporate Governance Policy Roles and Responsibilities for Corporate Governance Policy Stakeholders The board of directors, management • Truthfully report company’s situation and and all staff shall commit to moral future trends to all stakeholders equally principles, equitable treatment to all
Slide 5: Presentation Agenda
-5- Presentation Agenda 2015 KEY HIGHLIGHTS KEY PROJECT UPDATE Q4 & 2015 PERFORMANCE ANALYSIS 1H16 & 2016 MARKET OUTLOOK
Slide 6: 2015 Key Highlights
-6- 2015 KEY HIGHLIGHTS
Slide 7: 2015 Key Market Drivers Highlights
Key Highlights -7- 2015 Key Market Drivers Highlights Refinery Implication Robust refining margins supported by higher gasoline Highest Yearly Mkt GRM cracks from better demand during low oil price, soften since listed 2004 (7.8 vs 5.7 in 2014) crude premium and lower F&L $26/bbl drop in Dubai c
Slide 8: 2015 Key Events / Achievements
Key Highlights -8- 2015 Key Events / Achievements Key Events / Achievements 2015 TOP Group Net Profit Unit : million THB (MB) High Refinery run at 108% to capture strong Mkt GRM & optimized run for Net Operating Profit (before tax) Stock G/(L) (before tax) Aromatic & Lube Base Reversal of NRV/(NRV
Slide 9: Key Project Update
-9- KEY PROJECT UPDATE
Slide 10: Key Project Progress Update: LAB
Ongoing Project Update -10- Key Project Progress Update : LAB Project Detail Progress • TPX JV with Mitsui (75% : 25%) 100%* • Upgrade existing Benzene and Kerosene into higher Linear Alkyl valued product; LAB which is an intermediate feedstock Benzene in production of surfactant (detergent) (LAB) •
Slide 11: LABIX Commercial Sales Plan
Ongoing Project Update -11- LABIX Commercial Sales Plan “In 2016 Thailand LAB Demand is estimated at 79 Kton/Yr (100% Import) and after starts up LABIX targets domestic market share at 70-80% ” Thailand LAB Demand & LABIX Target Domestic Market Share LABIX Planned Domestic vs Export Sale (%) Other S
Slide 12: Key Project Progress Update: 2 SPPs
Ongoing Project Update -12- Key Project Progress Update : 2 SPPs Project Detail Progress • Low risk power business enhance income stability 99%* • Support reliability of electricity & steam supply for TOP Group TOP SPP • Develop 2 new SPP power plants; (2 blocks of SPP) • Total power capacity 239 MW
Slide 13: Key Project Progress Update: SPPs Business Model
Ongoing Project Update -13- Key Project Progress Update : 2 SPPs Business Model 90 MW 90 MW Block 1 * Capacity : 124 MW 8 MW COD : April 2016 Natural Gas 28 MW Block 2 Capacity : 115 MW * 6 MW COD : June 2016 Steam 498 T/H * Internally-used electricity for 2 blocks = 6 MW Steam Expected EBITDA Elect
Slide 14: 2016 Key Margin Improvement Projects
Other Key Margin Improvement Projects in 2016 -14- 2016 Key Margin Improvement Projects “Besides LAB & TOP SPP, other 2016 Key margins improvement projects from current Business Units will help further enhance Group Margins / EBITDA / Net Profit” Project Category Example of Sub-Activities Benefits C
Slide 15: Q4 & 2015 Performance Analysis
-15- Q4 & 2015 PERFORMANCE ANALYSIS
Slide 16: Thailand Leading Refinery: Superior Utilization/Commercial
Refining -16- Thailand Leading Refinery : Superior Utilization/ Commercial Total Thailand Crude Refining Capacity 1,252 kbd1 TOP’s Refinery Utilization vs. Industry4 Thai Oil 22% Share Fang Nameplate Capacity TOP Refinery Overall Industry (Thailand) (3 kbd) Thai Oil (275 kbd) 108% 110% 107% 108% PTT
Slide 17: Q4/15: Healthy Mkt GRM Driven by Recovered Middle Distillate Spread
Refining -17- Q4/15: Healthy Mkt GRM Driven by Recovered Middle Distillate Spread Dubai Crude Price & Key Petroleum Product Spreads Refinery Utilization 2014 2015 2014 2014 Q4/15 2015 $/bbl Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY15 FY14 98% 110% 108% DUBAI (DB) 104.4 106.1 101.5 74.4 51.9 61.3 49.7 40.7 50.9 96.
Slide 18: Q4/15: Higher Aromatics Margins Supported by High Seasonal Demand
Aromatics -18- Q4/15: Higher Aromatics Margins Supported by High Seasonal Demand Aromatics Spreads and Margins Aromatics Production 2014 2015 2014 2014 Q4/15 2015 $/ton Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY15 FY14 82% 85% 81% PX*-ULG95 273 220 371 252 255 246 233 288 256 279 Market Highlight BZ-ULG95 285 254 3
Slide 19: Q4/15: Lube/Bitumen Stay Firm on Low Oil Price
Lube Base Oil -19- Q4/15: Lube/Bitumen Stay Firm on Low Oil Price Base Oil & Bitumen Spreads & Margins Base oil Production 2014 2015 2014 2014 Q4/15 2015 $/ton Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY15 FY14 92% 90% 86% 500SN-HSFO 486 501 500 493 369 399 506 450 431 495 Market Highlight BITUMEN-HSFO (69) (77) (66
Slide 20: Integrated Margin & Competitive Cash Cost
Financial -20- Integrated Margin & Competitive Cash Cost Gross Refining Margin Refinery’s Cash Cost (Unit: US$/bbl) (Unit: US$/bbl) Market GRM Accounting GRM (Market GRM + Stock G/L) Operating Cost Interest Expense (net) (excl. one-time non- operating item) 7.8 8.5 5.7 5.9 5.2 5.3 4.5 4.3 5.1 2.1 2.
Slide 21: Q4 & 2015: Performance Breakdown
Performance Breakdown -21- Q4 & 2015: Performance Breakdown Utilization/Production (%) & Net Profit (million THB) Key Points • TOP: max run to capture decent GRM & no major maintenance ***74% holding • TPX/TLB: improved contribution from higher P2F & lower energy cost (tracking lower crude price) •
Slide 22: 2015 TOP Group Consolidated P&L
Financial -22- 2015 TOP Group Consolidated P&L (million THB) Q4/15 Q3/15 QoQ+/(-) Q4/14R YoY+/(-) 2015 2014R YoY+/(-) Sales Revenue 68,446 74,721 (6,275) 88,545 (20,099) 293,569 390,090 (96,521) Hedging Gain 1,053 547 506 328 725 1,489 2,218 (729) EBITDA 6,348 2,931 3,417 (5,373) 11,721 25,492 2,651
Slide 23: 2015 TOP Group Consolidated Cash Flow
Financial -23- 2015 TOP Group Consolidated Cash Flow (Unit: Million THB) (Unit: Million THB) Operating Cash Flow Investments 2015 2014R 2015 2014R Operating Cash Flow 31,708 24,432 Investments 2,530 (20,346) Net income & non-cash adj. 25,453 7,763 + ST investments 12,881 (1,734) CAPEX (PP&E) & other
Slide 24: 2015 TOP Group Strong Financial Position & Financial Ratios
Financial -24- 2015 TOP Group Strong Financial Position & Financial Ratios Statements of Financial Position Consolidated Long-Term Debt as at 31 Dec 15 1) (Unit: million THB) Total Long-Term Debt Net Debt 193,607 192,166 75,093 million THB 22,377 million THB Cash & ST Trade Payable (US$ 2,072 millio
Slide 25: 2015 Dividend Payment
Financial -25- 2015 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 EPS 2H dividend 9.40 9.19 1H dividend Year Dividend 7.82 8.13 7.28 5.91 6.04 5.97 4.88 4.39 2.75 2.00 2.00 1.00 3.50
Slide 26: 1H16 & 2016 Market Outlook
-26- 1H16 & 2016 MARKET OUTLOOK • Crude Oil • Petroleum Products • Aromatics • Base Oil & Bitumen • LAB
Slide 27: Crude Oil
& ~ Group CRUDE OIL -27-
Slide 28: Crude Oil Market: Oil Market Rebalance is Still at Risk
Refinery -28- Crude Oil Market: Oil Market Rebalance is Still at Risk Dubai Price Movement $/BBL Shale Oil Declining US Greek Debt China’s Stock OPEC failed to Iran’s Nuclear Discussions to Boom Oil Rigs Default Market Crash agree on an Sanction Lifted Stabilize Oil 100 output ceiling Prices 80 60 4
Slide 29: OPEC to Maintain High Production
Refinery -29- 1 OPEC to Maintain High Production A OPEC to Retain Market Share B Iran to Add 300-500 KBD of Exports by 1H-16 Record-High OPEC Production Iran’s Crude Exports by Destination MBD MBD Indonesia 2.5 34 rejoined OPEC U.S. and EU Sanctions +300-500 2.0 KBD 33 OPEC failed to agree on quota
Slide 30: Resilient Non-OPEC Production in Short Term
Refinery -30- 2 Resilient Non-OPEC Production in Short Term A No Sign of Significant Production Shutdown B New Project Delays Due to Low Oil Prices Operating Cash Cost Curve Break-Even Production Cost Curve $/BBL $/BBL >$80/BBL U.S. Stripper Wells 120 120 >$40/BBL $65-80/BBL Canadian Oil Sands, 100
Slide 31: Decelerated Global Oil Demand Growth
Refinery -31- 3 Decelerated Global Oil Demand Growth A Global Oil Demand to Slow Down B Lower Crude Oil Surplus in 2H-16 Global Oil Demand Growth (YoY) MBD Oil Market Balance MBD MBD 2.0 + 1.2 MBD YoY 98 2016 in 2016 Demand: + 1.2 MBD YoY Supply: + 0.7 MBD YoY 3.0 96 1.5 94 2.0 1.0 92 1.0 0.5 90 88
Slide 32: Petroleum Products
& ~ Group PETROLEUM PRODUCTS -32-
Slide 33: Moderate Refinery Margin in 2016 on Low Oil Prices
Refinery -33- Moderate Refinery Margin in 2016 on Low Oil Prices Singapore Cracking GRM ($/BBL) 9.2 8.5 7.9 8.0 7.6 5.8 6.3 5.8 6.1 4.8 5.3 Y2014 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 Y2015 1Q16TD 2016 Actual Forecast Sources: Reuters, TOP’s estimate ($/BBL) Q4-15 2015 Q1TD16* 2016(F)** Key Highli
Slide 34: Still High Gasoline Cracks Due to Solid Demand Growth on Low Oil Prices
Refinery -34- Still High Gasoline Cracks Due to Solid Demand 1 Growth on Low Oil Prices A Temporarily Soft Gasoline from High Stock C Low Oil Prices Continue to Support Demand US Gasoline Stocks Asia Pacific Gasoline Demand MBBL MBD Y2016 : +358 KBD 280 7.0 260 Heavy snow impacted more than 50 Ramad
Slide 35: Late Winter and Refinery Maintenance to Support Jet/Kero in 1H-16
Refinery -35- Late Winter and Refinery Maintenance to Support 2 Jet/Kero in 1H-16 A Sharp Drop in Temperatures Boosts Demand C Tight Global Market Refinery during Q2-16 on Refinery Maintenance MTA* (MBD) Temperatures in North Asia Global Refinery Maintenance (ºC) 5 MBD 0 7 -5 1H-16 Refinery MTA : +4
Slide 36: Softer Gasoil on Oversupply, but Expect to Recover in Late March
Refinery -36- Softer Gasoil on Oversupply, but Expect to Recover 3 in Late March on Seasonal Demand and Refinery MTA A Ample Gasoil Stocks on High Refinery Run B Supply floods Asia on Warm Winter in EU US/ARA/Singapore Gasoil Stock Saudi Arabia and India Gasoil Export MBBL KBD 220 High Run since Dec
Slide 37: Demand Growth Outpacing Supply Due to Refinery Closures
Refinery -37- Demand Growth Outpacing Supply Due to Refinery Closures CDU Addition VS Additional Demand – AP & ME Middle East China Australia Japan India Vietnam Other AP Net Addition AP & ME Demand KBD 1200 1000 800 624 600 454 503 445 400 246 200 135 0 -200 -400 2015 2016 2017 2018 2019 2020 Note:
Slide 38: Thailand Petroleum Demand Growth
Thailand’s Oil Demand -38- Thailand’s Oil Demand in 2016 Thailand Petroleum Demand Growth Year on Year Y 2014 Y 2015 Y 2016(B) Mogas (A) +3.8% +13.3% +4.0% Jet/Kero -1.0% +9.7% +2.6% Diesel (A) +0.9% +4.0% +2.2% Fuel Oil -3.9% -1.4% -0.7% Total +1.0% +6.6% +2.6% GDP +0.9% +2.8%(C) +3.5%(C) Thailand’
Slide 39: Aromatics
& ~ Group AROMATICS -39-
Slide 40: Stable Aromatics Market on Reduced Run Rate and Improved Demand
Aromatics -40- Stable Aromatics Market on Reduced Run Rate and Improved Demand Aromatics Market PX-ULG95 ($/TON) BZ-ULG95 ($/TON) 371 327 279 273 288 268 285 252 255 246 233 256 254 220 207 98 115 101 97 74 Y2014 Y2015 4Q14 3Q15 1Q14 2Q14 3Q14 1Q15 2Q15 4Q15 2016 2016 Y2014 Y2015 1Q14 2Q14 3Q14 4Q14
Slide 41: Stable PX Market on PX Run Cuts and Firm U.S. Demand
Aromatics -41- 1 Stable PX Market on PX Run Cuts and Firm U.S. Demand A Reduced Run Rate Support PX and Gasoline Market B AP Nameplate PX Capacity Turnaround Utilization Mil TON AP/ME PX Demand and Capacity Mil TON 50 90% 5.0 40 46.9 4.0 44.1 41.1 37.6 80% 30 33.3 34.4 3.0 Unplanned Shutdown in 31.0
Slide 42: Stable BZ Market on Rising Chinese and U.S. Imports
Aromatics -42- 2 Stable BZ Market on Rising Chinese and U.S. Imports A Improved BZ Demand Supports Operating Rate B AP Nameplate BZ Capacity Turnaround Mil TON Utilization Mil TON AP/ME BZ Demand and Capacity 3.0 50 80% 40 37.7 38.7 39.6 2.0 30 34.4 36.8 Unplanned Shutdown 26.6 27.6 70% in China and
Slide 43: Base Oil & Bitumen
& ~ Group BASE OIL & BITUMEN -43-
Slide 44: Stable Base Oil Spread in 2016
Base Oil & Bitumen -44- Stable Base Oil Spread in 2016 on Gr.I Plant Closure and Low Fuel Oil Price Base Oil Market Base Oil Benchmark Spread ($/TON) 495 486 501 500 493 506 450 431 369 399 4Q15 Y2014 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Y2015 Y2016 500SN-HSFO (Actual) Forecast Key Highlights in 2016
Slide 45: Stable Base Oil Spread in 2016 (Capacity Growth)
Base Oil & Bitumen -45- Stable Base Oil Spread in 2016 on Gr.I Plant Closure and Low Fuel Oil Price Capacity Growth Mil TON 4.7 Group 3 1.1 Group 2 1.1 -0.2 Group 1 Net Capacity 2013 2014 2015 2016 Sources: Argus 2016 and TOP Estimate 500SN Group I vs HSFO Price Pressure from crude tumbling and new
Slide 46: Lower Bitumen Spread in 2016 on Softer Chinese Demand
Base Oil & Bitumen -46- Lower Bitumen Spread in 2016 on Softer Chinese Demand Bitumen Benchmark Spread ($/TON) A Import Volume of Major Asian Players 98 KTON/MONTH Growth rate: 28% CAGR in 2013-2015 85 82 56 23 20 567 461 346 -32 -69 -77 -66 Y2014 Y2015 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 2016 2
Slide 47: LAB
-47- LAB
Slide 48: Stable LAB Spread on Steady Demand
LAB -48- Stable LAB Spread on Steady Demand LAB Market LAB - BZ ($/TON) South East Asia LAB Balance KTA 200 651 100 592 560 587 549 526 519 499 543 571 0 -100 -200 -300 2013 2014 2015 2016 Y2014 Y2015 Y2016 4Q15 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Indonesia Thailand Malaysia LAB-BZ Forecast Philippin
Slide 49: Conclusion
& ~ Group CONCLUSION -49-
Slide 50: 2016 Market Outlook Conclusion
Conclusion -50- 2016 Market Outlook Conclusion Moderate margins as demand outpaces refinery Refinery additions Stable Aromatics market on reduced production Aromatics and firm demand in China and U.S. Stable Base oil spread on low Fuel Oil price and Gr.I plant closures, despite new Gr.II capacity Lu
Slide 51: Thank You
-51- Thank You Any queries, please contact: at email: ir@thaioilgroup.com Tel: 662-797-2999 / 662-797-2961 Fax: 662-797-2976
Slide 52: Appendix
-52- APPENDIX • CDU Addition VS Additional Demand – AP & ME • World GRM / Inventories • Thailand petroleum demand by products
Slide 53: Demand Growth Outpacing Supply Due to Refinery Closures
Refinery -53- Demand Growth Outpacing Supply Due to Refinery Closures Start-up Nameplate CDU Addition VS Additional Demand – AP & ME period) Country (KBD) Company AP Additional Demand ME Additional Demand Q1-15 UAE 417 Ruwais Middle East China Q2-15 China 70 Local Rizhao Lanqiao Australia Japan Q3-1
Slide 54: Asian Margin Vs. US-EU margin
World GRM -54- Asian Margin Vs. US-EU margin 93.85% 62.96% 65.12% Total Capacity: 17.5 MBD Total Capacity: 17.0 MBD Total Capacity: 4.9 MBD Source: EIA, Norwegian Energy, Thai Oil
Slide 55: Crude Inventory
Inventories -55- Crude Inventory Source: Norwegian Energy
Slide 56: Global Distillate Inventory
Inventories -56- Global Distillate Inventory Source: Norwegian Energy
Slide 57: Fuel Oil Inventory
Inventories -57- Fuel Oil Inventory Source: Norwegian Energy
Slide 58: China's Product Export
China Export -58- China’s Product Export Source: Norwegian Energy
Slide 59: Domestic LPG Demand
Domestic demand -59- Domestic LPG Demand Thailand LPG Demand LPG Demand Highlight • In 2015, LPG demand fell steeply by 10.0%YoY on account of lower usages in cooking, transportation and petrochemical sectors. Most of the decline came from cooking sector that faced higher retail prices and slowly-th
Slide 60: Domestic Gasoline Demand
Domestic demand -60- Domestic Gasoline Demand Thailand Gasoline Demand GASOLINE Demand Highlight • In 2015, Mogas demand jumped sharply by 13.3% from the same period last year to an average 26.40 mml/day. This was mainly due to a significant drop in retail prices and low-based last year which had th
Slide 61: Domestic Jet Demand
Domestic demand -61- Domestic Jet Demand Thailand JET-A1 Demand JET Demand Highlight • In 2015, Jet consumption increased significantly by 9.6% over the corresponding period last year mainly owning to reviving tourism sector. The expansion in tourism sector was a result of the return of Chinese and
Slide 62: Domestic Gasoil and NGV Demand
Domestic demand -62- Domestic Gasoil and NGV Demand Thailand Gasoil Demand Diesel Demand Highlight • In 2015, Diesel demand rose gradually by 4.0% YoY as relatively low retail prices boosted the consumption amidst strong agricultural demand from the peaking of harvesting season. Nevertheless, demand
Slide 63: Domestic Fuel Oil Demand
Domestic demand -63- Domestic Fuel Oil Demand Thailand Fuel Oil Demand FUEL OIL Demand Highlight • In 2015, Fuel Oil consumption dropped moderately by 1.7% from a year earlier as a result of lower amount of maintenance day of natural gas fields from Myanmar comparing to the last year. Consequently,
Slide 64: Thank You
-64- Thank You Any queries, please contact: at email: ir@thaioilgroup.com Tel: 662-797-2999 / 662-797-2961 Fax: 662-797-2976
Slide 65: Questions & Answers
by Tht Group Questions & Answers l, = QaeA -65-
Thai Oil Public Company — Q4 2015 Earnings Presentation on 6ix