Thai Oil Public Co. Ltd. · SET:TOP
Thai Oil Public — Q2 2017 Earnings Presentation
61 slides from Thai Oil Public's earnings presentation, Aug 16, 2017
Slide 1: Thai Oil Public Company Limited Q2/2017 Analyst Presentation
-1- Thai Oil Public Company Limited Q2/2017 Analyst Presentation 16 August 2017 Time : 2:30 – 5:00 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
-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 Q2/17 KEY HIGHLIGHTS Q2/17 PERFORMANCE ANALYSIS Q4/17 MARKET OUTLOOK
Slide 7: Q2/17 Key Highlights
-7- Q2/17 KEY HIGHLIGHTS
Slide 8: Q2/17 Key Market Drivers Highlights
Key Highlights -8- Q2/17 Key Market Drivers Highlights Refinery Lower Market GRM pressured by lower product spread especially Implication 1) weaker gasoline from high U.S. inventory and soften middle Lower Mkt GRM at 6.1 $/bbl distillate as a decrease in demand after winter. However, lower (Q1/17
Slide 9: Q2/17 Reliable Operation & Ongoing Competitive Cash Cost
Key Highlights -9- Q2/17 Reliable Operation & Ongoing Competitive Cash Cost Key Achievements Q2/17 TOP Group Net Profit Unit : million THB (MB) Operational Maintain high reliable production Net Operating Profit Profitability Improvement Excellence Q2/17 Q1/17 Stock G/(L) Reversal of NRV /(NRV) Ref
Slide 10: Q2/17 Profitability Improvement (VS Corporate Plan)
Key Highlights -10- Q2/17 Profitability Improvement (VS Corporate Plan) Cost Management General & Admin , Procurement Margin Improvement & warehouse , Operation & (Supply & Marketing / Maintenance , Project & Hydrocarbon Management / Manpower management Unit: million THB ) 48 LP Upgrading Model , Pr
Slide 11: Q2/17 Performance Analysis
-11- Q2/17 PERFORMANCE ANALYSIS
Slide 12: Refinery: Recorded High Quarterly Utilization Rate
Refining -12- Refinery: Recorded High Quarterly Utilization Rate TOP/ Domestic Refinery Utilization Rate Domestic Oil Demand Unit: % Utilization Rate 1H/16 1H/17 112% 110%111% 108% KBD 110% 107% 109% 107% 108% 3.0% 800 98% 600 2.3% 90% 95% 94% 91% 400 3.8% 91% 89% 91% 88% 89% 4.4% 85% 200 0 70% * Mo
Slide 13: Q2/17: Slightly Soften Mkt GRM as Lower Product Spread partially offset by Lower Crude Premium
Refining -13- Q2/17: Slightly Soften Mkt GRM as Lower Product Spread partially offset by Lower Crude Premium Dubai Crude Price & Key Petroleum Product Spreads Refinery Utilization 2016 2017 2016 Q1/17 Q2/17 1H/17 $/bbl Q1 Q2 Q3 Q4 Q1 Q2 1H Q3TD* FY16 111% 112% 112% DUBAI (DB) 30.4 43.2 43.2 48.3 53.
Slide 14: Q2/17: Lower Contribution pressured by New PX/BZ Supplies
Aromatics/LAB -14- Q2/17: Lower Contribution pressured by New PX/BZ Supplies Aromatics Spreads and Margins Aromatics Production 2016 2017 2016 Q1/17 Q2/17 1H/17 $/ton Q1 Q2 Q3 Q4 Q1 Q2 1H Q3TD * FY16 90% 78% 84% PX**-ULG95 332 315 341 280 312 273 292 273 317 Q2/17 Market BZ**-ULG95 156 138 174 185 3
Slide 15: Q2/17: Stable Contribution supported by Strong Base Oil Spread
Lube Base Oil -15- Q2/17: Stable Contribution supported by Strong Base Oil Spread Base Oil & Bitumen Spreads & Margins Base oil Production 2016 2017 2016 Q1/17 Q2/17 1H/17 $/ton Q1 Q2 Q3 Q4 Q1 Q2 1H Q3TD * FY16 88% 90% 89% 500SN-HSFO 427 409 443 367 451 556 503 556 412 % Base Oil & Specialty Sales V
Slide 16: Q2/17 Power Sector Performance…Growing Contribution to the Group
Power -16- Q2/17 Power Sector Performance…Growing Contribution to the Group Power Business Sector Equity holding in SPP GPSC **** Power & Steam Sales ***TOP shareholding 24.29% (8.91% via TOP and 20.79% via TP) GPSC is an associate company of TOP. Electricity(1) 809 1,242 Equity method is applied to
Slide 17: Integrated Margin & Competitive Cash Cost
Financial -17- Integrated Margin & Competitive Cash Cost Gross Refining Margin Refinery’s Cash Cost (Unit: US$/bbl) (Unit: US$/bbl) Market GRM Accounting GRM (Market GRM + Stock G/L) Operating Cost Interest Expense (net) (excl. one-time non- operating item) 7.8 6.8 6.5 6.3 5.7 5.9 6.3 6.1 5.2 5.1 3.
Slide 18: Q2/17: Performance Breakdown by Business Unit
Performance Breakdown -18- Q2/17: Performance Breakdown by Business Unit Utilization/Production (%) & Net Profit (million THB) Key Points • Refinery: maximize utilization rate to capture decent margins and strong demand • Aromatic/LAB: lower contribution mainly from weaker product spread due to new
Slide 19: Q2/17 Key Highlight TOP Group Consolidated P&L
Financial -19- Q2/17 Key Highlight TOP Group Consolidated P&L (million THB) Q2/17 Q1/17 QoQ+/(-) Q2/16 YoY+/(-) 1H/17 1H/16 YoY+/(-) QoQ analysis Sales Revenue 80,053 87,596 (7,543) A) 72,368 7,685 167,649 129,158 38,491 A Decrease overall sale volume and product Hedging Gain / (Loss) 36 (86) 122 B)
Slide 20: 1H/17 TOP Group Consolidated Cash Flow
Financial -20- 1H/17 TOP Group Consolidated Cash Flow (Unit: Million THB) (Unit: Million THB) Investments Operating Cash Flow 6M/17 6M/16 6M/17 6M/16 Investments (12,664) (20,383) Operating Cash Flow 15,895 12,791 ST investments (8,301) (16,595) Net income & non-cash adj. 16,309 16,891 + Available f
Slide 21: Q2/17 TOP Group Strong Financial Position & Financial Ratios
Financial -21- Q2/17 TOP Group Strong Financial Position & Financial Ratios Statements of Financial Position Consolidated Long-Term Debt as at 30 Jun 17 (Unit: million THB) Total Long-Term Debt Net Debt 217,731 208,051 67,643 million THB 10,909 million THB Cash & ST 30,700 Trade Payable (US$ 1,981 m
Slide 22: Q4-17 Market Outlook
-22- Q4-17 MARKET OUTLOOK • Crude Oil • Petroleum Products • Aromatics • Base Oil & Bitumen • Linear Alkyl Benzene (LAB)
Slide 23: Crude Oil
-23- CRUDE OIL
Slide 24: Stable-to-Firm Crude Oil Price from Growing Demand amid Rising Supply
Crude Oil -24- Stable-to-Firm Crude Oil Price from Growing Demand amid Rising Supply Dubai Price Movement $/BBL China’s stock OPEC failed to No consensus on 80 market crash agree on an output freeze OPEC agreed to cut OPEC extended supply cut deal 60 output ceiling BREXIT output to 32.5 MBD Base Cas
Slide 25: Strong Global Oil Demand Growth to be Mostly Offset by Rising Oil Supply
Crude Oil -25- Strong Global Oil Demand Growth to be Mostly Offset 1 by Rising Oil Supply A Growing Oil Demand Continues to Support B Limited Supply with High Compliance MBD Global Demand Growth by Region (QoQ) % Compliance Level with Supply Cuts 1.5 1.28 120 0.99 1.0 100 0.48 80 0.5 60 0.0 40 -0.5
Slide 26: Risks over Surging U.S. Oil Outputs
Crude Oil -26- 2 Risks over Surging U.S. Oil Outputs A High Prices Could Resume Outputs from DUCs* B Libyan & Nigerian Could Reach Its Capacity DUCs* Counts in the U.S. Libya and Nigeria Oil Production MBD No. of DUCs* $/BBL 2.0 7000 120 6000 100 1.5 5000 80 4000 1.0 60 3000 40 0.5 2000 1000 20 0.0
Slide 27: Petroleum Products
-27- PETROLEUM PRODUCTS
Slide 28: Still-High Margins from Demand Outpacing Supply Addition
Refinery -28- Still-High Margins from Demand Outpacing Supply Addition Singapore Cracking GRM ($/BBL) 8.5 8.0 7.9 7.6 7.7 7.58 6.7 6.2 6.42 6.39 6.1 5.0 5.2 Q1-15 Q2-15 Q3-15 Q4-15 Y2015 Q1-16 Q2-16 Q3-16 Q4-16 Y2016 Q1-17 Q2-17 Q3TD- 17* Q3TD- ($/BBL) Q2-16 Q3-16 Q4-16 2016 Q1-17 Q2-17 17* Key High
Slide 29: Steadily High Middle Distillate Cracks from Strong Demand and Less Chinese Supply
Refinery -29- Steadily High Middle Distillate Cracks from Strong 1 Demand and Less Chinese Supply A Tight Market on Firm Demand and Limited Supply B Steady U.S. Demand on Strong Economy Asia Pacific Middle Distillate Demand U.S. Middle Distillate Demand MBD MBD Q4’17 : 12.0 MBD (+0.82 QoQ) Q4’17 : 5
Slide 30: Slightly Soft Gasoline Cracks from Weak Demand, But Remain Supported by Asian Market
Refinery -30- Slightly Soft Gasoline Cracks from Weak Demand, 2 But Remain Supported by Asian Market A Ample U.S. Inventories from Weak Demand B Firm Asian Demand Driven by China and India U.S. Gasoline Demand MBD Asia Pacific Gasoline Demand MBD Q4’17 : 9.3 MBD (-0.3 MBD QoQ) 7.5 10.0 9.6 7.0 9.2 6
Slide 31: Still-High Refinery Margins in 2017 as Demand Outpaces Refinery Addition
Refinery -31- Still-High Refinery Margins in 2017 as Demand Outpaces Refinery Addition Lower refinery addition in 2017 due to regulatory restrictions in Japan and delayed startup of refineries in China and Vietnam CDU Addition VS Additional Demand – AP & ME Middle East China Other AP Japan India T
Slide 32: Thailand Oil Demand Growth
Domestic -32- Thailand Oil Demand Growth Thailand Oil Demand Growth Average (B) YTD 6M/2017(B) Year on Year Y 2016 Y2017F(C) 2011-2015(B) (vs 6M/2016) Mogas (A) +7.1% +9.8% +3.8% +2.7% Jet/Kero +4.4% +6.8% +4.4% +3.6% Diesel (A) +3.4% +3.1% +2.3% +1.4% Total +4.4% +5.4% +3.0% +2.1% GDP +3.4% +3.2% N
Slide 33: Aromatics
-33- AROMATICS
Slide 34: Stable-to-Firm Aromatics Market on Lower Capacity Addition
Aromatics -34- Stable-to-Firm Aromatics Market on Lower Capacity Addition Aromatics Market PX CFR Taiwan-ULG95 ($/TON) BZ FOB Korea-ULG95 ($/TON) 332 315 341 346 317 312 288 280 273 273 255 246 256 233 226 195 156 138 174 185 163 98 115 101 97 74 Q3TD-17* Y2015 Y2016 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2
Slide 35: Improved PX Market on Lower Capacity Addition amid New Downstream Plant
Aromatics -35- Improved PX Market on Lower Capacity Addition 1 amid New Downstream Plant A Lower Capacity Addition in Q4-17 to Support Market B Supply Pressure due to Low Plant Maintenance in Q4-17 AP & ME Effective PX Capacity Addition AP PX Plant Maintenance Mil TON Mil TON PetroRabigh (1.34Mil TO
Slide 36: Stable BZ Market due to Lower Capacity Addition amid Thin Plant Maintenance
Aromatics -36- Stable BZ Market due to Lower Capacity Addition 2 amid Thin Plant Maintenance A Lower Capacity Addition in Q4-17 to Support Market B Supply Pressure due to Low Plant Maintenance in Q4-17 AP & ME Effective BZ Capacity Addition AP BZ Plant Maintenance Mil TON PetroRabigh (0.42Mil TON) M
Slide 37: Base Oil & Bitumen
-37- BASE OIL & BITUMEN
Slide 38: Softer Base Oil Market due to Lower Plant Maintenance
Base Oil & Bitumen -38- Softer Base Oil Market due to Lower Plant Maintenance 500SN – HSFO ($/TON) A AP Plant Maintenance (Effective Capacity) 556 556 Mil TON Group 1 Group 2 Group 3 Net Capacity 506 1.4 450 431 427 409 443 451 369 399 367 412 1.5 1.0 1.0 0.7 0.4 0.5 0.2 0.0 0.0 Y2015 Y2016 Q3TD-17*
Slide 39: Stable Bitumen Market on Firm Demand
Base Oil & Bitumen -39- Stable Bitumen Market on Firm Demand Bitumen-HSFO ($/TON) A Bitumen Import of Major Asian Players KTON/MONTH China KTON/MONTH India 82 98 2,000 400 56 23 20 1,000 200 -7 -13 -38 -29 0 0 -48 -61 -49 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 -80 Y2
Slide 40: Linear Alkyl Benzene (LAB)
-40- Linear Alkyl Benzene (LAB)
Slide 41: Steady LAB Market on Stable Maintenance and Better Demand after Rainy Season
LAB -41- Steady LAB Market on Stable Maintenance and Better Demand after Rainy Season LAB Market LAB Spread** ($/TON) AP/ME Effective Maintenance/Closure* KTA 150 654 666 675 627 656 635 627 619 606 603 567 543 539 100 50 0 Y2015 Y2016 Q3TD-17* Q1-15 Q1-16 Q1-17 Q2-15 Q3-15 Q4-15 Q2-16 Q3-16 Q4-16 Q
Slide 42: Conclusion
-42- CONCLUSION
Slide 43: Q4-17 Market Outlook Conclusion
Conclusion -43- Q4-17 Market Outlook Conclusion (vs. Q3-17) Crude Oil Stable-to-Firm Crude Oil Price from Growing Demand amid Rising Supply Refinery Still-High Margins from Demand Outpacing Supply Addition Aromatics Stable-to-Firm Aromatics Market on Lower Capacity Addition Softer Base Oil Market du
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 Approved by Board of Directors
Updated CAPEX plan -46- Strategic Investment Plan Approved by Board of Directors CAPEX Plan (Unit US$ million) Projects Planned capital investment 2016 2017 2018 2019 Reliability, Efficiency and Flexibility Improvement 32 48 18 8 Benzene Derivatives – LAB 41 11 13 Power – 2 SPPs 43 Infrastructure Im
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 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*** 2.00
Slide 48: Optimized & Flexible Operations…Superior Performance
Crude -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 LPG 4% API = 32.0 API = 31.2 API = 39.4 API = 32.8 Other
Slide 49: Asia Pacific and Middle East Refinery Addition
Refinery -49- Asia Pacific and Middle East Refinery Addition CDU Addition VS Additional Demand – AP & ME Start-up Nameplate Country Company Middle East Other AP period) (KBD) China Japan Q1-17 Iran 120 Bandar Abbas - PGSOC/1 India Teapot Vietnam Net Addition Q2-17 Oman 109 Sohar Bitumen/Orpic AP & M
Slide 50: Asian Margin Vs. US-EU margin
World GRM -50- Asian Margin Vs. US-EU margin U.S. Crude Refinery Input EU 16 Crude Refinery Input Japan Crude Refinery Input MBD MBD MBD 18 Total Capacity: 18.1 MBD Source : EIA 12 Total Capacity: 15.8 MBD Source : Euroil 4.5 Total Capacity: 3.5 MBD Source : METI 17 97.10% 67.22% 95.28% 11 4.0 16 15
Slide 51: Global Crude Oil Inventories
Inventories -51- 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 52: Global Gasoline Inventories
Inventories -52- 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 53: Global Middle Distillate Inventories
Inventories -53- 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 54: Global Fuel Oil Inventories
Inventories -54- 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 55: China's Refined Product Exports
China Export -55- 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 56: Domestic LPG Demand
Thailand petroleum demand by products -56- Domestic LPG Demand Thailand LPG Demand LPG Demand Highlight • In H1/17, LPG demand increased significantly by 4.4%YoY on account of 21.7%YoY higher demand from petrochemical sector, as a result of PTTGC major shutdown in May16-Jun16. Moreover, LPG demand w
Slide 57: Domestic Gasoline/Gasohol Demand
Thailand petroleum demand by products -57- Domestic Gasoline/Gasohol Demand Thailand Gasoline/Gasohol Demand GASOLINE/Gasohol Demand Highlight • In H1/17, Mogas demand rose moderately by 3.8%YoY to an average 29.7 ML/day. Although, the retail price of Mogas is higher, Mogas demand was still supporte
Slide 58: Domestic Jet Demand
Thailand petroleum demand by products -58- Domestic Jet Demand Thailand JET-A1 Demand JET Demand Highlight • In H1/17, Jet consumption increased significantly by 4.4% over the corresponding period last year mainly owning to booming tourism industry, leading to 5.7%YoY higher aircraft movement. The e
Slide 59: Domestic Gasoil and NGV Demand
Thailand petroleum demand by products -59- Domestic Gasoil and NGV Demand Thailand Gasoil Demand Diesel Demand Highlight • In H1/17, Diesel demand rose moderately by 2.3% YoY as a result of Thai economic recovery. However, Diesel demand was still pressured by flooding situation in Southern part of T
Slide 60: Domestic Fuel Oil Demand
Thailand petroleum demand by products -60- Domestic Fuel Oil Demand Thailand Fuel Oil Demand Fuel Oil Demand Highlight • In H1/17, Fuel Oil consumption fell sharply by 9.6%YoY, as a result of sharply falling by 53.9%YoY of electricity sector demand which pressured by fewer day of Myanmar gas field m
Slide 61: Thank You
-61- 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 — Q2 2017 Earnings Presentation on 6ix