Thai Oil Public Co. Ltd. · SET:TOP
Thai Oil Public — Q1 2019 Earnings Presentation
61 slides from Thai Oil Public's earnings presentation, May 15, 2019
Slide 1: Thai Oil Public Company Limited Q1/19 Analyst Presentation
-1- Thai Oil Public Company Limited Q1/19 Analyst Presentation 15 May 2019 Time : 10.00 - 12.00 hrs. Venue : ENCO, C Building, 6th Floor - Synergy Hall
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 Empower Human Life VISION through Sustainable Energy and Chemicals • To enrich stakeholders’ well-being and deliver sustainable returns MISSION built upon innovation, technology and resilient portfolio with top class management and accountable corporate gover
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 6th Consecutive Year as the Member of DJSI Emerging Markets and high ranked positions.
Slide 6: Presentation Agenda
-6- Presentation Agenda Q1/19 KEY HIGHLIGHTS Q1/19 PERFORMANCE ANALYSIS 2H/19 MARKET OUTLOOK
Slide 7: Q1/19 Key Highlights
Q1/19 KEY HIGHLIGHTS Sanaon
Slide 8: Q1/19 Key Market Drivers Highlights
Key Highlights -8- Q1/19 Key Market Drivers Highlights Refinery Soften refinery margins pressured by weak product spread pressured by Implication weak heating oil demand from mild winter and high gasoline inventory Mkt GRM at 3.0 $/bbl 1) worldwide. However, downside was partially offset by lower
Slide 9: Q1/19 Key Achievements
Key Highlights -9- Q1/19 Key Achievements Key Achievements Q1/19 TOP Group Net Profit Unit : million THB (MB) Operational Maintain high reliable production Net Operating Profit Stock gain/(loss) F/X Risk management gain/(loss) Excellence Q1/19 Q4/18 Reversal of Crude NRV /(Crude NRV) & Others i.e.
Slide 10: Q1/19 Margin and Productivity Improvement (VS Corporate Plan)
Key Highlights -10- Q1/19 Margin and Productivity Improvement (VS Corporate Plan) Cost Management 73 MB 161 MB General & Admin , Procurement & warehouse , Operation & Maintenance , Project & Manpower Margin Improvement management Unit: million THB (Hydrocarbon Management : HMR) and Productivity Impr
Slide 11: Q1/19 Performance Analysis
-11- Q1/19 PERFORMANCE ANALYSIS
Slide 12: Refinery: High U-Rate Operation and Robust Domestic & CLMV Sales
Refining -12- Refinery: High U-Rate Operation and Robust Domestic & CLMV Sales TOP/ Domestic Refinery Utilization Rate Domestic Oil Demand Unit: % Utilization Rate Q1/18 Q1/19 115% 116% 116% 2.2% 113% 115% 113% 800 108% 110% 600 1.6% 98% 98% 400 97% 97% 97% 98% 90% 94% 3.4% 200 2.2% 70% 0 * Q1/18 Q2
Slide 13: Q1/19: Lower Mkt GRM pressured by Weak Product Spread
Refining -13- Q1/19: Lower Mkt GRM pressured by Weak Product Spread Refinery Utilization Dubai Crude Price & Key Petroleum Product Spreads Q1/19 Q4/18 Q1/18 2018 2019 2018 116% 115% 113% $/bbl Q1 Q2 Q3 Q4 Q1 Q2TD* FY18 % MB Intake/OSP* DUBAI (DB) 63.9 72.1 74.3 67.4 63.5 70.4 69.4 36%/ 32%/ 39%/ ULG
Slide 14: Q1/19: Slightly Soften Aromatics Contribution pressured by Lower PX Spread
Aromatics/LAB -14- Q1/19: Slightly Soften Aromatics Contribution pressured by Lower PX Spread Aromatics Spreads and Margins Aromatics Production 2018 2019 2018 Q1/19 Q4/18 Q1/18 $/ton Q1 Q2 Q3 Q4 Q1 Q2TD* FY18 92% 94% 90% PX**-ULG95 304 268 451 528 508 290 388 Q1/19 Market BZ**-ULG95 231 126 126 81
Slide 15: Q1/19: Soften Contribution as Lower Lube Base Spread
Lube Base Oil -15- Q1/19: Soften Contribution as Lower Lube Base Spread Base Oil & Bitumen Spreads & Margins Base oil Production 2018 2019 2018 Q1/19 Q4/18 Q1/18 $/ton Q1 Q2 Q3 Q4 Q1 Q2TD* FY18 89% 86% 89% 500SN-HSFO 512 481 417 376 330 270 447 % Base Oil & Specialty Sales Volume BITUMEN-HSFO (56) (
Slide 16: Q1/19 Power Sector Performance…Growing Contribution to the Group
Power -16- Q1/19 Power Sector Performance…Growing Contribution to the Group Power Business Sector Equity holding in SPP GPSC **** 74% 100% ***TOP shareholding 24.29% (8.91% Power & Steam Sales via TOP and 20.79% via TP) 2,544 GPSC is an associate company of TOP. Electricity(1) Equity method is appli
Slide 17: Integrated Margin & Competitive Cash Cost
Financial -17- Integrated Margin & Competitive Cash Cost Gross Refining Margin Refinery’s Cash Cost (Unit: US$/bbl) (Unit: US$/bbl) Market GRM Accounting GRM (Market GRM + Stock G/L) Operating Cost Interest Expense (net) (excl. one-time non- operating item) 7.6 6.8 6.7 6.2 Higher refinery cash cost
Slide 18: Q1/19: Performance Breakdown by Business Unit
Performance Breakdown -18- Q1/19: Performance Breakdown by Business Unit Utilization/Production (%) & Net Profit (million THB) Key Points • Refinery: continued high run rate to capture strong demand in domestic and Indochina market • Aromatic/LAB: stable run rate to capture ongoing decent margins (2
Slide 19: Q1/19 TOP Group Consolidated P&L
Financial -19- Q1/19 TOP Group Consolidated P&L (Unit : million THB) Q1/19 Q4/18 QoQ Q1/18 YoY QoQ analysis (A) Sales Revenue 91,626 100,150 (8,524) 91,536 90 (A) Decrease overall sales volume and (B) product prices following lower Hedging Gain / (Loss) (166) (852) 686 102 (268) quarterly average cr
Slide 20: Q1/19 TOP Group Consolidated Cash Flow
Financial -20- Q1/19 TOP Group Consolidated Cash Flow (Unit: Million THB) (Unit: Million THB) Investments Operating Cash Flow Q1/19 Q1/18 Q1/19 Q1/18 Investments 7,878 2,915 Operating Cash Flow 3,891 7,636 ST investments 11,309 4,352 Net income & non-cash adj. 6,459 7,157 + Available for sale - (680
Slide 21: Q1/19 TOP Group Strong Financial Position & Financial Ratios
Financial -21- Q1/19 TOP Group Strong Financial Position & Financial Ratios Statements of Financial Position Consolidated Long-Term Debt as at 31 Mar 19 (Unit: million THB) Total IBD Net Debt 268,613 272,231 102,026 million THB 433 million THB Trade Payable 35,080 39,266 (US$ 3,190 million (US$ 14 m
Slide 22: 2H-2019 Market Outlook
2H-2019 MARKET OUTLOOK • Crude Oil • Petroleum Products • Aromatics • Base Oil & Bitumen • Linear Alkyl Benzene (LAB)
Slide 23: Crude Oil
CRUDE OIL
Slide 24: Increasing Oil Supply to Balance Iran and Venezuela Output Loss
Crude Oil -24- Increasing Oil Supply to Balance Iran and Venezuela Output Loss Dubai Price Movement $/BBL U.S. Re-imposed Falling Risk Assets Supply Loss OPEC-led Cut as FED raised rates from Iran and 100 Deal Extended Sanctions on Iran Venezuela on until the Dec-18 Concern Over OPEC-led Cut Supply
Slide 25: Concern of Tighten Supply from Iran and Venezuela amid Increasing Non-OPEC Production
Crude Oil -25- 1 Concern of Tighten Supply from Iran and Venezuela amid Increasing Non-OPEC Production A OPEC Cut with Steeper Than Deal in 1H-2019 B Lower Iran & Venezuela Supply on U.S. Sanction MBD OPEC-11 Production Iranian & Venezuelan Crude Oil Export 30 *OPEC-11 excludes Qatar (left OPEC duri
Slide 26: Rising U.S. Production to Impact OPEC Production Decision
Crude Oil -26- 2 Rising U.S. Production to Impact OPEC Production Decision A Surging U.S. Crude Output on Price Recovery BC Rising U.S. Pipeline Outflow Capacity in 2H-2019 MBD U.S. Crude Oil Production MBD MBD U.S. Crude Oil Pipeline Capacity 14.0 6.0 8.0 13.0 2H-19 5.0 7.0 12.0 6.0 (+0.6 MBD YoY)
Slide 27: Petroleum Products
PETROLEUM PRODUCTS
Slide 28: Improving Refining Margins from Rising Middle Distillate Crack Outweighing Weak Gasoline Market
Refinery -29- Improving Refining Margins from Rising Middle Distillate Crack Outweighing Weak Gasoline Market Singapore Cracking GRM ($/BBL) 7.7 8.2 6.7 7.2 7.1 7 6.1 6.4 6.4 6.1 6.1 5.9 5.0 5.2 4.2 3.7 3.2 Q1-16 Q2-16 Q3-16 Q4-16 Y2016 Q1-17 Q2-17 Q3-17 Q4-17 Y2017 Q1-18 Q2-18 Q3-18 Q4-18 Y2018 Q1-
Slide 29: Gasoline Cracks Supported by Peak Driving Season in Q3, Then Eased by Additional Supply
Refinery -30- 1 Gasoline Cracks Supported by Peak Driving Season in Q3, Then Eased by Additional Supply in Q4 A Declining Stock to 5-year Average Level B Strong U.S. Demand during Summer Global Gasoline Inventory U.S. Gasoline Demand MBBL MBD 300 2H-19: 9.3 MBD (+0.1 MBD vs 1H-19) 10.2 280 9.8 260 9
Slide 30: Improving Middle Distillate Cracks from Firm Seasonal and Bunker Demand for IMO 2020
Refinery -31- Improving Middle Distillate Cracks from Firm Seasonal and 2 Bunker Demand for IMO 2020 A Chance of Colder Winter than Previous Year B Firm Seasonal Demand with IMO 2020 Supportive Percent of La Niña Development Global Middle Distillate Demand MBD 39 2H-19: 37.4 MBD (+1.2 MBD vs 1H-19)
Slide 31: Demand Growth Outpacing Supply Addition
Refinery -32- 3 Demand Growth Outpacing Supply Addition Asia Pacific and Middle East Effective CDU Addition VS Additional Demand AP & ME Demand Growth Middle East China Other AP Japan India Vietnam Teapot Thailand Net Addition Operating Rate [RHS] Refinery Country Start-up CDU (KBD) KBD Rapid Malays
Slide 32: Thailand Oil Demand Growth
Domestic -33- Thailand Oil Demand Growth Thailand Oil Demand Growth (B) (B) (B) 1Q2019(B) Y2019F YoY Y2016 Y2017 Y2018 VS 1Q2018 VS 2018 Steady growth due to low oil Mogas (A) +9.8% +3.7% +3.3% +3.4% price Softer growth due to weaker Jet/Kero +6.8% +4.4% +5.4% +2.2% tourism and limited airport capac
Slide 33: Aromatics
AROMATICS
Slide 34: Pressured PX and BZ Markets due to Concerns of New Capacity in China
Aromatics -35- Pressured PX and BZ Markets due to Concerns of New Capacity in China Aromatics Market PX CFR Taiwan-ULG95 ($/TON) BZ FOB Korea-ULG95 ($/TON) 529 508 447 343 387 332315341 317 280 313 273258260276 304 268 290 225 212245 231 185 195 156138174 163 141 126127 81 18 Y2016 Y2017 Y2018 Q2TD-
Slide 35: Weaker PX market on Concerns of New Capacity in China
Aromatics -36- 1 Weaker PX market on Concerns of New Capacity in China A Higher Capacity Addition to Pressure in 2H-19 B Lower PX Maintenance in 2H-19 to Pressure Market AP/ME Effective PX Capacity Addition Asian PX Plant Turnaround in 2019 Mil TON K TON 6 Heng Li 1 Hainan Heng Li 2 600 2.25MTA 0.8M
Slide 36: Weak BZ Market due to Concerns of New Capacity amid High Stock in China
Aromatics -37- Weak BZ Market due to Concerns of New Capacity 2 amid High Stock in China A Higher Capacity Addition in 2H-19 B High BZ Stock in East China to Pressure Import Interest AP/ME Effective BZ Capacity Addition KTON BZ Stock in East China Mil TON 231 250 3 Heng Li 1 Hainan Heng Li 2 200 178
Slide 37: Base Oil & Bitumen
BASE OIL & BITUMEN
Slide 38: Soft Base Oil Market on High Supply in Asia
Base Oil & Bitumen -39- Soft Base Oil Market on High Supply in Asia 500SN – HSFO ($/TON) 1 AP Base Oil Effective Capacity Addition 556528 512482 458498 Mil TON Group 3 Group 2 Group 1 Net Capacity 427409443 412 451 417376447 367 330 1.4 270 1.5 0.9 1.0 0.4 0.3 Y2016 Y2017 Y2018 Q2TD-19* Q4-16 Q1-19
Slide 39: Soft Bitumen Market on Slow Demand in Asia
Base Oil & Bitumen -40- Soft Bitumen Market on Slow Demand in Asia Bitumen-HSFO ($/TON) 1 Slow demand during 2H-19 Kton/month Import Bitumen Volume -7 -13 -8 300 -19 -48 -61 -49 -38 -29 -45 -31 -41 -46 -40 -56 -67 200 -80 100 Y2016 Y2017 Y2018 Q1-16 Q4-16 Q1-17 Q2TD-19* Q2-16 Q3-16 Q2-17 Q3-17 Q4-17
Slide 40: Linear Alkyl Benzene (LAB)
Linear Alkyl Benzene (LAB)
Slide 41: Soft Demand in 2H-2019 due to Monsoon Season and Lower AP/ME LAB Plants Maintenance
LAB -42- Soft Demand in 2H-2019 due to Monsoon Season and Lower AP/ME LAB Plants Maintenance LAB Market K TON 2018 India LAB Import Volume LAB Spread* ($/TON) 70 60 50 635 627 619 606 603 640 615 620 40 574 543 539 534 522 550 529 566 562 30 Q1 Q2 Q3 Q4 KTA AP/ME Effective Maintenance/Closure*** 250
Slide 42: Conclusion
CONCLUSION
Slide 43: 2H-2019 Market Outlook Conclusion
Conclusion -44- 2H-2019 Market Outlook Conclusion (vs. 1H-2019) Crude Oil Increasing Oil Supply to Balance Iran and Venezuela Output Loss Improving Refining Margins Supported by Strong Refinery Middle Distillate Demand Outpacing Weak Gasoline Market Pressured PX and BZ Markets due to Concerns of New
Slide 44: Thank You
-45- Thank You Any queries, please contact: at email: ir@thaioilgroup.com Tel: 662-797-2999 / 662-797-2961 Fax: 662-797-2976
Slide 45: Appendix
-46- APPENDIX • Strategic Investment Plan • 2018 Dividend Payment • Optimized & Flexible Operations…Superior Performance • CDU Addition VS Additional Demand – AP & ME • World GRM / Inventories • Thailand petroleum demand by products
Slide 46: Strategic Investment Plan Approved by Board of Directors
CAPEX -Use only for KM Session- -47- Strategic Investment Plan Approved by Board of Directors CAPEX Plan (Unit US$ million) Planned capital investment Project 2019 2020 2021 2022 2023 Reliability, Efficiency and Flexibility Improvement 46 17 2 Infrastructure Improvement - Jetty 7&8 / Improvement 78
Slide 47: 2018 Dividend Payment
Financial -48- 2018 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 12.18 10.40 9.19 9.40 8.66 7.82 7.28 5.91 6.04 5.97 4.57 4.97 4.39 2.75 3
Slide 48: 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** Thai Oil is able to diversify its type of crude intake and product outputs to maximize demand and margin %
Slide 49: Asia Pacific and Middle East Refinery Addition
Refinery -50- Asia Pacific and Middle East Refinery Addition Start-up Nameplate Country Company period) (KBD) AP & ME Demand Growth Middle East China Other AP Q1-18 Iran 120 Bandar Abbas - PGSOC/1 Japan India (Phase 2) Vietnam Teapot Vietnam 186 Nghi Son Net Addition KBD Q3-18 China 100 Petrochina H
Slide 50: Asian Margin Vs. US-EU margin
World GRM -51- Asian Margin Vs. US-EU margin SINGAPORE GRM EU - US Margins $/BBL $/BBL 14 40 12 10 30 8 6 20 4 2 0 10 -2 -4 0 -6 -8 -10 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 Jan-19 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 Jan-19 SING CRACK SING HYDRO BR
Slide 51: 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 2019 2018 avg 14-18
Slide 52: 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 2019 2018 avg 14-18 5yr-range 2019 2018 avg 14-18
Slide 53: 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 2019 2018 avg 14-18 5yr-range 2019
Slide 54: 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 2019 2018 avg 14-18 5yr-range 2019 20
Slide 55: 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 500 700 600 400 500 300 400 200 300 200 100 100 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 20
Slide 56: Domestic LPG Demand
Thailand petroleum demand by products -57- Domestic LPG Demand Thailand LPG Demand LPG Demand Highlight KT/Day 2019 2016 2017 2018 • In 1Q2019, LPG demand expanded 1.8% YoY on 20 the back of 14.2% YoY higher demand from 18.79 petrochemical sector, as a result of higher 18.28 18 17.30 substitute feed
Slide 57: Domestic Gasoline/Gasohol Demand
Thailand petroleum demand by products -58- Domestic Gasoline/Gasohol Demand Thailand Gasoline/Gasohol Demand GASOLINE/Gasohol Demand Highlight MML/Day 2019 2016 2017 2018 • In 1Q2019, Mogas demand rose by 3.4% YoY to 34 an average 31.9 ML/day. Although, the retail price 32.1732.29 of Mogas is higher
Slide 58: Domestic Jet Demand
Thailand petroleum demand by products -59- Domestic Jet Demand Thailand JET Demand JET Demand Highlight MML/Day 2019 2016 2017 2018 • In 1Q2019, Jet consumption increased 22 moderately by 2.2% YoY tapering off from last year as tourism sector encountered a slowdown in 20 growth following slower glob
Slide 59: Domestic Gasoil and NGV Demand
Thailand petroleum demand by products -60- Domestic Gasoil and NGV Demand Thailand Gasoil Demand Diesel Demand Highlight MML/Day 2019 2016 2017 2018 • In 1Q2019, Diesel demand rose by 1.6% YoY as a 72 result of the growth of Thai economy, backed up 70 by 9.5% higher commercial car sales and stable 6
Slide 60: Domestic Fuel Oil Demand
Thailand petroleum demand by products -61- Domestic Fuel Oil Demand Thailand Fuel Oil Demand Fuel Oil Demand Highlight MML/Day 2019 2016 2017 2018 • In 1Q2019, Fuel Oil consumption fell by 4.6% 8 YoY, as a result of 78.6% YoY slump in demand for power generation. Moreover, the demand for 6 industria
Slide 61: 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 — Q1 2019 Earnings Presentation on 6ix