Thai Oil Public Co. Ltd. · SET:TOP
Thai Oil Public — Q4 2018 Earnings Presentation
61 slides from Thai Oil Public's earnings presentation, Feb 25, 2019
Slide 1: Q4 & FY/18 Analyst Presentation
-1- Thai Oil Public Company Limited Q4 & FY/18 Analyst Presentation 25 February 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 5th Consecutive Year of leading positions: Oil & Gas Refining & Marketing
Slide 6: Presentation Agenda
-6- Presentation Agenda 2018 KEY HIGHLIGHTS 2018 PERFORMANCE ANALYSIS 1H/19 MARKET OUTLOOK
Slide 7: 2018 Key Highlights
2018 KEY HIGHLIGHTS Sanaon
Slide 8: 2018 Key Market Drivers Highlights
Key Highlights -8- 2018 Key Market Drivers Highlights Refinery Soften refinery margins pressured by higher crude premium due to Implication supply tightness followings OPEC’s cut and weak gasoline spread due to Mkt GRM at 4.7 $/bbl 1) high inventory worldwide. But negative impact was partially off
Slide 9: 2018 Key Achievements
Key Highlights -9- 2018 Key Achievements Key Achievements 2018 TOP Group Net Profit Operational Unit : million THB (MB) Maintain high reliable production Net Operating Profit F/X gain/(loss) Excellence 2018 2017 Reversal of NRV/(NRV) & Adjusted to cost Others i.e. Hedging gain/(loss) & Refinery 11
Slide 10: 2018 Margin and Productivity Improvement
Key Highlights -10- 2018 Margin and Productivity Improvement (VS Corporate Plan) Cost Management 523 MB 610 MB General & Admin , Procurement & warehouse , Operation & Maintenance , Project & Manpower Margin Improvement management Unit: million THB (Hydrocarbon Management : HMR) and Productivity Impr
Slide 11: 2018 Performance Analysis
-11- 2018 PERFORMANCE ANALYSIS
Slide 12: Refinery: Maintain High Utilization Rate
Refining -12- Refinery: Maintain High Utilization Rate TOP/ Domestic Refinery Utilization Rate Domestic Oil Demand Unit: % Utilization Rate KBD 2017 2018 2.6% 114% 115% 115% 800 111% 112% 112%113% 108% 112%113% 110% 600 1.5% 98% 98% 97% 400 97% 98% 3.3% 90% 94% 94% 97% 5.4% 89% 90% 200 70% 0 ** Q1/1
Slide 13: Q4/18: Lower Mkt GRM pressured by Weak Gasoline Spread
Refining -13- Q4/18: Lower Mkt GRM pressured by Weak Gasoline Spread Refinery Utilization Dubai Crude Price & Key Petroleum Product Spreads Q3/18 Q4/18 2018 2017 2017 2018 2017 115% 115% 113% 112% $/bbl Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY18 FY17 % MB Intake/OSP* DUBAI (DB) 53.1 49.8 50.5 59.3 63.9 72.1 74.3
Slide 14: Q4/18: Robust Aromatics Contribution supported by Strong PX spread
Aromatics/LAB -14- Q4/18: Robust Aromatics Contribution supported by Strong PX spread Aromatics Spreads and Margins Aromatics Production 2017 2018 2017 Q3/18 Q4/18 2018 2017 $/ton Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY18 FY17 89% 94% 89% 83% PX**-ULG95 312 273 258 260 304 268 451 528 388 276 Q1TD’19 (15 Feb 19)
Slide 15: Q4/18: Stable Contribution as Soften Lube Base Spread
Lube Base Oil -15- Q4/18: Stable Contribution as Soften Lube Base Spread Base Oil & Bitumen Spreads & Margins Base oil Production 2017 2018 2017 Q3/18 Q4/18 2018 2017 $/ton Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY18 FY17 72% 86% 84% 88% % Base Oil & Specialty Sales Volume 500SN-HSFO 451 556 528 458 512 481 417 37
Slide 16: Q4/18 Power Sector Performance
Power -16- Q4/18 Power Sector Performance… Contribution to the Group Power Business Sector Equity holding in SPP GPSC **** 74% 100% ***TOP shareholding 24.29% (8.91% Power & Steam Sales via TOP and 20.79% via TP) GPSC is an associate company of TOP. 2,544 Equity method is applied to recognize Electr
Slide 17: Integrated Margin & Competitive Cash Cost
Financial -17- Integrated Margin & Competitive Cash Cost Gross Refining Margin Refinery’s Cash Cost (Unit: US$/bbl) (Unit: US$/bbl) Market GRM Accounting GRM (Market GRM + Stock G/L) Operating Cost Interest Expense (net) (excl. one-time non- 9.6 operating item) 7.8 7.6 Higher refinery cash cost in 6
Slide 18: 2018: Performance Breakdown by Business Unit
Performance Breakdown -18- 2018: Performance Breakdown by Business Unit Utilization/Production (%) & Net Profit (million THB) Key Points • Refinery: record high run rate to capture strong demand in domestic and Indochina market • Aromatic/LAB: higher run rate to capture robust PX spread due to suppl
Slide 19: 2018 TOP Group Consolidated P&L
Financial -19- 2018 TOP Group Consolidated P&L (Unit : million THB) Q4/18 Q3/18 QoQ Q4/17 YoY FY/18 FY/17 YoY YoY analysis Sales Revenue 99,755 101,261 (1,506) 89,443 10,312 389,344 337,388 51,956 (A) (A) Increase overall product Hedging Gain / (Loss) (852) (140) (712) (63) (789) (821) (133) (688) p
Slide 20: 2018 TOP Group Consolidated Cash Flow
Financial -20- 2018 TOP Group Consolidated Cash Flow (Unit: Million THB) (Unit: Million THB) Investments Operating Cash Flow FY/18 FY/17 FY/18 FY/17 Investments (25,846) (30,092) Operating Cash Flow 18,313 34,417 Dividend income 772 740 Net income & non-cash adj. 23,978 38,568 + ST investments (21,5
Slide 21: 2018 TOP Group Strong Financial Position & Financial Ratios
Financial -21- 2018 TOP Group Strong Financial Position & Financial Ratios Statements of Financial Position Consolidated Long-Term Debt as at 31 Dec 18 (Unit: million THB) Total IBD Net Cash 228,108 241,473 268,613 107,059 million THB 202 million THB Cash & ST 37,473 Trade Payable (US$ 3,283 million
Slide 22: 2018 Dividend Payment
Financial -22- 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 3.75 2
Slide 23: 1H/19 Market Outlook
-23- 1H/19 MARKET OUTLOOK • Crude Oil • Petroleum Products • Aromatics • Base Oil & Bitumen • Linear Alkyl Benzene (LAB)
Slide 24: Crude Oil
CRUDE OIL
Slide 25: Recovering Oil Price on Tighter than Expected Supply
Crude Oil -25- Recovering Oil Price on Tighter than Expected Supply Dubai Price Movement $/BBL OPEC-led Cut U.S. Re-imposed Falling Risk Assets as FED raised rates 100 Deal Extended Sanctions on Iran until the Dec-18 Concern Over OPEC-led Cut Supply Loss in Iran U.S.-China Trade 80 Deal Started 1st
Slide 26: Tightening Supply on OPEC Production Cut Deal and Tumbling Supplies
Crude Oil -26- 1 Tightening Supply on OPEC Production Cut Deal and Tumbling Supplies in Iran and Venezuela A OPEC Production to Continue Declining B Limited Iranian Outflow on Sanction Uncertainty MBD OPEC-11 Production Iranian Crude Oil Production 28 *OPEC’s January 2019 output according to Reuter’
Slide 27: Deficit Market in 1H-19 on Limited Supplies and Strong Demand
Crude Oil -27- 2 Deficit Market in 1H-19 on Limited Supplies and Strong Demand A Supply Growth Dragged Down by Output Cut C C Tighter Global Crude Oil Market in 2019 1H-19 World Oil Supply Growth (YoY) MBD Global Demand/Supply Balance MBD MBD *Canada announced to cut 2019 production by 0.3MBD **Non-
Slide 28: Petroleum Products
PETROLEUM PRODUCTS
Slide 29: Slightly Softer Refining Margins from Weak Gasoline Market
Refinery -29- Slightly Softer Refining Margins from Weak Gasoline Market and Still Supported by Recovering Middle Distillate Cracks Q-o-Q Singapore Cracking GRM ($/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 2.5 Q1-16 Q2-16 Q3-16 Q4-16 Y2016 Q1-17 Q2-17 Q3-17 Q4-17 Y2017 Q1-18 Q2-
Slide 30: Soft Gasoline Cracks Pressured by Abundant Supply
Refinery -30- 1 Soft Gasoline Cracks Pressured by Abundant Supply Until the Start of Maintenance Season and Summer Season A Above 5-year Average Stocks B Higher Malaysian Supply From New Refinery S/U MBBL Global Gasoline Inventory Malaysian Gasoline Supply KBD 300 150 300 KBD RAPID 280 Start-Up in M
Slide 31: Recovering Middle Distillate Cracks Q-o-Q
Refinery -31- Recovering Middle Distillate Cracks Q-o-Q from Firm 2 Demand and Tighter Supply A Warmer-than-normal Winter Pressuring Demand B High Chinese Exports Amid Higher Export Quota Percent of El Nino Development Chinese Middle Distillate Export KBD 1000 AVG 1H-18 : 717 KBD 13% LE 1H-19 : 703
Slide 32: 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] KBD Operating Rate, % 3500 3150 100 95 2500 90 1386
Slide 33: Thailand Oil Demand Growth
Domestic Thailand Oil Demand Growth Thailand Oil Demand Growth (B) (B) Y2018(B) Y2019F Year on Year Y2016 Y2017 VS 2017 VS 2018 Steady demand growth due to Mogas (A) +9.8% +3.7% +3.3% lower oil price Slightly softer demand growth Jet/Kero +6.8% +4.4% +5.4% due to limited airport capacity Steady dema
Slide 34: Aromatics
AROMATICS
Slide 35: Firm PX Market on Growing Demand against Softer BZ Market
Aromatics -35- Firm PX Market on Growing Demand against Softer BZ Market on Still-High Stock and Surplus Supply Aromatics Market PX CFR Taiwan-ULG95 ($/TON) BZ FOB Korea-ULG95 ($/TON) 529 543 343 447 387 245 332315341 225 231 280 317 313 273258260276 304 268 185 195212 156138174 163 141 126127 81 46
Slide 36: Firm PX market on Growing Demand Growth, but Pressured
Aromatics -36- Firm PX market on Growing Demand Growth, but Pressured 1 from Restart of Chinese Plant A Roll-Over Capacity to Pressure PX Market in 1H-19 B Tighten Supply in 1H from Peak Asian M/T in Mar-May AP/ME Effective PX Capacity Addition Asian PX Plant Turnaround in 2019 Mil TON Zhejiang 0.8M
Slide 37: Softer BZ Market due to High Stock in China
Aromatics -37- Softer BZ Market due to High Stock in China amid Stable 2 Capacity Addition A Stable Capacity Addition in 1H B Accumulated Stock to Weigh Down Chinese Import Vol. in 1H AP/ME Effective BZ Capacity Addition KTON BZ Stock in East China Mil TON 250 213 Fujian 1 Zhejiang 0.65MTA 2 TPPI 0.
Slide 38: Base Oil & Bitumen
BASE OIL & BITUMEN
Slide 39: Soft Base Oil Market on Higher Capacity Addition
Base Oil & Bitumen -39- Soft Base Oil Market on Higher Capacity Addition 500SN – HSFO ($/TON) 1 AP Base Oil Effective Capacity Addition 556528 512482 458498 Mil TON Group 3 Group 2 Group 1 Net Capacity 427409443 451 417376447 1.8 367412 359 2.0 1.2 1.0 0.4 0.2 0.2 0.4 0.0 -1.0 Y2016 Y2017 Y2018 Q3-1
Slide 40: Stable Bitumen Market on Firm Demand
Base Oil & Bitumen -40- Stable Bitumen Market on Firm Demand Bitumen-HSFO ($/TON) 1 Firm Asian Bitumen Demand on Continuous Projects -7 China has set up $40 billion Silk Road Fund (One -13 -19 -48 -61 -49 -38 -29 -45 -31 -41 -46 -49 Belt, One Road) to roll out the initiative -56 -67 -80 India increa
Slide 41: Linear Alkyl Benzene (LAB)
Linear Alkyl Benzene (LAB)
Slide 42: Stable-to-Firm Demand in 1H-2019 for LAB
LAB -42- Stable-to-Firm Demand in 1H-2019 due to Peak Seasonal Demand in Summer, but Pressured by Lower Maintenance LAB Market K TON India LAB Import Volume LAB Spread* ($/TON) 80 2018 70 60 2015 635 627 619 634 50 606 603 573 612 40 2016 543 539 534 522 550 529 566 563 30 2017 Q1 Q2 Q3 Q4 KTA AP/ME
Slide 43: Conclusion
CONCLUSION
Slide 44: 1H-2019 Market Outlook Conclusion
Conclusion -44- 1H-2019 Market Outlook Conclusion (vs. 2H-2018) Crude Oil Recovering Oil Price on Tighter than Expected Supply Slightly Softer Refining Margins from Weak Gasoline Refinery Market and Still Supported by Recovering Middle Distillate Cracks Q-o-Q Firm PX Market on Growing Demand against
Slide 45: 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 46: Appendix
-46- 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 47: Strategic Investment Plan Approved by Board of Directors
-47- Strategic Investment Plan Approved by Board of Directors CAPEX Plan (Unit US$ million) Planned capital investment Project 2018 2019 2020 2021 2022 Reliability, Efficiency and Flexibility Improvement 37 60 17 2 Infrastructure Improvement - Lorry Expansion 1 - Jetty 7&8 / Improvement 29 83 5 - Of
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** 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 -49- 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 -50- Asian Margin Vs. US-EU margin SINGAPORE GRM EU - US Margins $/BBL $/BBL 14 40 12 10 30 8 6 4 20 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 -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 2019 2018 avg 14-18
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 2019 2018 avg 14-18 5yr-range 2019 2018 avg 14-18
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 2019 2018 avg 14-18 5yr-range 2019
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 2019 2018 avg 14-18 5yr-range 2019 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 500 600 400 500 400 300 300 200 200 100 100 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 2015 2
Slide 56: Domestic LPG Demand
Thailand petroleum demand by products -56- Domestic LPG Demand Thailand LPG Demand LPG Demand Highlight KT/Day 2018 2015 2016 2017 • In 2018, LPG demand jumped by 5.3% YoY on 20 the back of 20.7% YoY higher demand from 18.1 18.4 18.3 18.1 18.0 petrochemical sector, as a result of higher 17.5 17.8 17
Slide 57: Domestic Gasoline/Gasohol Demand
Thailand petroleum demand by products -57- Domestic Gasoline/Gasohol Demand Thailand Gasoline/Gasohol Demand GASOLINE/Gasohol Demand Highlight MML/Day 2018 2015 2016 2017 • In 2018, Mogas demand rose moderately by 34 33.1 3.3% YoY to an average 31.1 ML/day. Although, 31.5 31.7 31.5 the retail price
Slide 58: Domestic Jet Demand
Thailand petroleum demand by products -58- Domestic Jet Demand Thailand JET Demand JET Demand Highlight MML/Day 2018 2015 2016 2017 • In 2018, Jet consumption increased 21.6 22 21.0 21.2 20.9 significantly by 5.4% YoY owing to strong 19.7 20.0 tourism industry which leads to 6.5% YoY higher 20 aircr
Slide 59: Domestic Gasoil and NGV Demand
Thailand petroleum demand by products -59- Domestic Gasoil and NGV Demand Thailand Gasoil Demand Diesel Demand Highlight MML/Day 2018 2015 2016 2017 • In 2018, Diesel demand rose moderately by 72 69.7 70.2 1.5% YoY as a result of the growth of Thai 70 68.6 economic, according to higher Manufacturing
Slide 60: Domestic Fuel Oil Demand
Thailand petroleum demand by products -60- Domestic Fuel Oil Demand Thailand Fuel Oil Demand Fuel Oil Demand Highlight MML/Day 2018 2015 2016 2017 • In 2018, Fuel Oil consumption rose by 4.5% YoY, 10 as a result of 20.8% YoY higher demand from transportation sector which takes approximately 8 66.1%
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 — Q4 2018 Earnings Presentation on 6ix