52 slides from Turkiye Petrol Rafinerileri A.s's investor presentation, June 2020
Slide 1: Investor Presentation
Investor Presentation June 2020 Hizmete Özel / Confidential
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements that reflect the Company management’s current views with respect to certain future events. Although it is believed that the expectations reflected in these statements are reasonable, they may be affected by variables and changes in und
Slide 3: Refining Market
Refining Market Hizmete Özel / Confidential
Slide 4: Brent Crude Prices
Brent Crude Prices + OPEC ++ production cut - Concerns on global economic development + Impact of Iran & Venezuela sanctions - Covid-19 related demand drop + Escalating regional tension - Storage capacity fill up $/bbl 90 81.2 80 70 67.0 2018 ave. 2017 ave. 71.0 $/bbl 60 2019 ave. 55.4 54.3 $/bbl 64
Slide 5: Global Refinery Capacity Changes
Global Refinery Capacity Changes Expectations until 2024: • ~80% of net capacity additions will come from Asia & Middle East • Net capacity and demand in Europe will remain roughly unchanged 2012-2018 Net Capacity Additions by Region 2019-2024 Net Capacity Additions Asia & Middle East Other Total Eu
Slide 6: Middle Distillate Cracks
Middle Distillate Cracks $/bbl Diesel Jet Fuel 5yr range 2019 2020 5 yr ave 5yr range 5 yr ave 2019 2020 25 25 20 17.0 17.4 16.4 20 14.8 17.9 15 14.4 13.8 13.2 16.2 16.2 16.6 10.9 11.2 12.5 14.9 15.0 15 14.1 10 10.4 13.9 10.3 12.5 12.9 7.9 9.3 5.8 12.2 11.4 5 10 11.2 9.7 11.3 10.1 0 5 5.0 -1.7 -5 -3
Slide 7: Gasoline and High Sulphur Fuel Oil Cracks
Gasoline and High Sulphur Fuel Oil Cracks $/bbl Gasoline High Sulphur Fuel Oil 5yr range 2020 2019 5 yr ave 5yr range 2020 2019 5 yr ave 25 0 -5.0 -4.8 -5.5 -7.0 -6.9 -8.4 -8.6 -7.8 20 -9.8 -10 -11.3 -13.4 15 14.7 -16.9 -15.8 12.1 -20 11.0 -22.5 12.0 10 9.9 9.8 10.6 -22.4 10.0 9.4 9.0 7.7 -30 5 -31.
Slide 8: Crude Price Differentials to Brent
Crude Price Differentials to Brent In Q1 2020, differentials widened compared to Q4 2019 on the back of higher supply against weaker demand and IMO driven feedstock shift to lighter crude 2 00 -2 Arab Heavy -4 Basrah Heavy Kirkuk -6 Kuwait Ural -8 Average* -10 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018
Slide 9: Turkish Market
Turkish Market Hizmete Özel / Confidential
Slide 10: Turkish Consumption 2015-2018
Turkish Consumption 2015-2018 Million Tons Diesel Jet Fuel 24.20 -2.4% 23.60 4.99 +8.5% 22.30 +10.4% +8.5% 4.58 20.60 -3.9% +2.7% 4.52 4.40 2015 2016 2017 2018 2015 2016 2017 2018 Gasoline Fuel Oil¹ +1.8% 2.34 0.6 0.58 2.30 +3.1% 0.49 2.23 -3.5% 0.39 +6.5% 2.10 -15.7% -20.1% 2015 2016 2017 2018 2015
Slide 11: Turkish Market, 12M 2019
Turkish Market, 12M 2019 Diesel demand contraction in H1 has been mostly off set in H2. Aviation driven jet demand has been healthy. Million Tons Diesel ¹Jet Fuel 30.0 6.0 -0.4% 5.0 +6.5% 20.0 4.0 25.01 24.90 4.99 5.31 10.0 3.0 0.0 2.0 2018 2019 2018 2019 Gasoline ²Fuel Oil 3 1.5 1.0 2 +3.2% +0.5% 2
Slide 12: Turkish Market, 3M 2020
Turkish Market, 3M 2020 Diesel demand recovery since H2 2019 continued while jet demand started to show Covid-19 impact. Million Tons Diesel ¹Jet Fuel 6.0 1.1 +8.4% -13.3% 1.0 5.5 0.9 5.0 0.8 5.64 1.02 5.20 0.7 0.88 4.5 0.6 4.0 0.5 2019 2020 2019 2020 Gasoline ²Fuel Oil 0.8 0.5 0.7 0.4 0.6 +4.4% 0.3
Slide 13: Turkey's Net Import / Export Balance
Turkey’s Net Import / Export Balance Million 2016 2017 2018 2019 Tons 4 Export 2.8 3.0 0.1 0.3 0 -4 -3.0 -3.4 -8 -8.7 -12 Import -12.3 -16 LPG Gasoline Diesel Jet Jun-20 Hizmete Özel / Confidential Investor Presentation Turkish Market www.tupras.com.tr 13
Slide 14: Company Overview
Company Overview Hizmete Özel / Confidential
Slide 15: Tüpraş Shareholder Structure
Tüpraş Shareholder Structure Tüpraş is Turkey’s biggest industrial company and leading refiner. Koç Holding Aygaz Opet 77% 20% 3% Energy Investments Inc. (SPV) 51% Domestic Ditaş Ownership 22% 79.98% Opet Free Float 40% 49% Foreign Körfez Ulaştırma Ownership 78% 100% ¹As of December 31th,2019 Jun-20
Slide 16: Tüpraş's Refining Assets & Distribution Network
Tüpraş’s Refining Assets & Distribution Network + Tüpraş supplies ~55% of Turkey’s petroleum product needs + Tüpraş benefits from an integrated system Baku-Tbilisi-Ceyhan Oil Pipeline optimization with its high complexity, procurement and logistics flexibility Turkey‘s Storage Capacity Iraq-Turkey O
Slide 17: Nelson Complexity of Refining Companies
Nelson Complexity of Refining Companies Jun-20 Hizmete Özel / Confidential Investor Presentation Company Overview www.tupras.com.tr 17
Slide 18: Tüpraş Subsidiaries
Tüpraş Subsidiaries OPET, Distribution, Tüpraş Share: 40% DİTAŞ, Marine Transport, Tüpraş Share: 79.98% • 1,693 stations as of 31 Mar 2020 • 3 Crude Oil Tanker: 479,765 DWT • As of February 2020 Market share: 20.1% in white products; 20.2% in • 1 Crude Oil - Product Tanker: 51,532 DWT black products
Slide 19: Operations
Operations Hizmete Özel / Confidential
Slide 20: Crude Suppliers of Tüpraş
Crude Suppliers of Tüpraş In 2019, Tüpraş purchased 15 different types of crude from 8 countries with gravities ranging between 20-47 API. Main Crude Suppliers in 2019 Crude Oil Imports by Region (%) Africa America Europe CIS Middle East 81 79 76 71 65 67 63 55 34 17 12 1315 1311 14 14 14 12 10 10 1
Slide 21: Q1 Product Yields
Q1 Product Yields 2019 Q1 2020 Q1 Asphalt LPG 5% Other 4% AsphaltOtherLPG Kok 2% Kok 7% 1% 4% 2% Gasoline 4% Gasoline Other Fuel Oil Other Fuel Oil 20% 2% 21% white Light white 15% Black Prod. 2% Light 2% Distil. Black Prod. 13% Distil. 21% 26% 25% Naphtha Naphtha 2% 1% Mid. Distil. Mid. Distil. 51%
Slide 22: Annual Product Yields
Annual Product Yields 2018 2019 Other LPG OtherLPG Asphalt 2% 3% Asphalt Kok 2% 4% 12% 8% Gasoline 3% Gasoline Kok Other Other 3% 20% 20% white Light Fuel Oil White Light Fuel Oil Black Prod. 2% Distil. 9% Black Prod. 2% Distil. 7% 21% 25% 20% Naphtha 25% Naphtha 1% 1% Mid. Distil. Mid. Distil. Jet
Slide 23: Capacity Utilization and Quarterly Production Volume
Capacity Utilization and Quarterly Production Volume • We produced 6.0 mn tons in Q1 2020 • Capacity utilization for Q1 2020 was 85% with much higher white product yield at 86%. Quarterly Production Quarterly Production (Million Tons) Capacity Utilization Capacity Utilization 1 (%) (%) 2016 2017 201
Slide 24: Sales
Sales • Tüpraş generated 29.2 million tons of total sales 2019. Total Sales Customer Groups 2019 mn tons 31.5 28.7 30.3 29.8 29.2 Other Export 5.5 5.8 4.2 23% 6.5 6.8 LPG 6% 3% Bitumen Exports Jet 6% 24.8 25.7 25.6 Total Sales, 9% Military Domestic Sales 22.2 22.4 2019 THY Opet 2% 29.2 mn tons 5% 20
Slide 25: Financials: Key Financials
Financials Key Financials Hizmete Özel / Confidential
Slide 26: Refining Margin
Refining Margin Tüpraş Net Margin Mediterranean Premium to the benchmark Mediterranean $/bbl peers’ refining margin due to: 9.3 8.1 6.5 6.0 • Ability to use heavier and sour crudes with higher 5.3 4.8 4.6 complexity 3.2 4.0 3.7 • Access to a wide range of cheaper sources of crude 2.5 1.7 1.9 1.7 1.8
Slide 27: Tüpraş and Med Refining Margins
Tüpraş and Med Refining Margins Margins Tüpraş Net Margin Med Margin 9.3 8.1 5.3 4.6 4.2 3.7 3.6 1.7 1.8 1.2 2017 12M 2018 12M 2019 12M 2019 Q1 2020 Q1 Gross Inventory Clean Gross Clean NET Net ($/bbl) Med Margin Margin Effect Margin Margin Margin 2019 Q1 9.9 0.8 9.0 3.2 4.2 3.6 2019 12M 9.2 0.1 9.1
Slide 28: Income Statement
Income Statement Tüpraş generated 725 MTL EBITDA CSS in Q1 2020. Q1 Q1 Million TL % 2020 2019 Net Sales 16,940 20,708 -18% COGS -17,849 -19,717 9% Gross Profit -909 991 -192% Operating Expenses -458 -373 -23% Income/Loss from other operations -349 -390 10% Operating Profit -1,716 228 -852% Income/Lo
Slide 29: Financial Highlights
Financial Highlights EBITDA (mn TL) Net Income¹ (mn TL) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 8,908 3,812 3,713 1,887 493 5,882 1,793 992 1,766 1,237 3,778 4,039 3,396 542 1,528 738 803 1,457 526 1,505 956 581 1,027 186 1,542 2,210 331 869 870 867 1,495 79 378 688 1,575 -375 1,033 851 -155 335 -1,291 -2,265 -1,29
Slide 30: Balance Sheet Analysis
Balance Sheet Analysis Net Debt bn $ Redemption Schedule (Billion TL) In Billion TL In Billion $ TL Hard Currency 15 5 12.2 8.1 12.0 12 10.6 10.1 4 6.5 8.7 8.4 9 3 4.8 6.1 6.2 6 2 2.3 1.8 1.9 1.9 1.7 3 1.7 1.7 1.8 1.5 1 1.4 0.2 0 0 Dec-16 Dec-17 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 1 year 1-2 y
Slide 31: Q1 Profit Before Tax Bridge (2019-2020)
Q1 Profit Before Tax Bridge (2019-2020) Decline in Profit Before Tax was driven by inventory loss due to sharp drop in Brent Price. Million TL Jun-20 Hizmete Özel / Confidential Investor Presentation Financials www.tupras.com.tr 31
Slide 32: Annual Profit Before Tax Bridge (2018-2019)
Annual Profit Before Tax Bridge (2018-2019) 2019 PBT was lower mainly due to narrow differentials, weaker crack margins and natural gas price hikes. Million TL Jun-20 Hizmete Özel / Confidential Investor Presentation Financials www.tupras.com.tr 32
Slide 33: Dividend (TL)
Dividend (TL) 20 120% EPS DPS Dividend Payout 18 101% 102% 16 89% 87% 14 79% 77% 80% 12 66% 64% 10 8 15.2 14.8 15.2 33% 13.6 40% 6 10.2 4 6.5 7.2 5.8 5.8 6.2 5.0 4.8 2 3.9 3.9 3.2 2.9 3.0 2.5 0% 2.10% 1.6 0.0 0 0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Jun-20 Hizmete Özel / Confident
Slide 34: Investments (Million $)
Investments (Million $) • c6.7 bn USD investments since privatization • Reached 9.5 Nelson Complexity • Capability to process heavier and more sour crude Ongoing Projects Avg. 943 Mn$ • Revamp of Crude Units • FCC Modernization 1213 • New Sulphur Units 974 959 • Energy Saving Projects • Optimization
Slide 35: Q1 2020 Results
Q1 2020 Results Capacity Utilization (%) Q1 84.6 84.6 % total capacity 2020 utilization in Q1 2020 Refining Margins ($/bbl) 0 20 40 60 80 100 Med Margin Tüpraş Net Margin Med FY Tüpraş FY Operationals Exp Target Q1 FY Target 6.2 mn tons of sales and 1.8 6.0 m tons of Q1 2020 24 25 production in Q1 2
Slide 36: Tüpraş Balance Sheet (Million TL)
Tüpraş Balance Sheet (Million TL) 31.03.2020 31.12.2019 Diff. Diff. (%) Current Assets 22,939 27,919 -4,980 -18 Cash & C. Equivalents 10,995 10,652 343 3 Trade Receivables 4,423 4,788 -365 -8 Derivatives 756 304 452 149 Inventories 5,300 9,469 -4,168 -44 Pre-paid expenses 97 237 -140 -59 Other Curre
Slide 37: Leading Corporate Governance Score
Leading Corporate Governance Score Tüpraş BIST Corporate Governance Rating Score Credit Rating Scores Overall 95.0 Foreign Currency Long Term Tüpraş BB- (Negative) B1 (Negative) Shareholders 95.5 Turkey BB- (Stable) B1 (Negative) B+ (Stable) Koç Holding B1 (Negative) BB- (Stable) Transparency 95.3 A
Slide 38: Financial Policy
Financial Policy Financial Discipline: Risk management policies focusing on areas such as leverage, liquidity, counterparty risk, commodity, interest rate and currency exposure. Proactive in liquidity risk management & targets/limits for financial ratios: Leverage & • Net financial debt/EBITDA • Cur
Slide 39: FX Exposure Management (31 Mar 2020)
FX Exposure Management (31 Mar 2020) Tüpraş continues to employ strict FX policies to mitigate Consolidated Hard Consolidated Hard currency risks stemming from volatility. Currency Assets Million $ Currency Liabilities Payables & Other • A significant portion of the Group's crude oil and refined Cas
Slide 40: Appendix
Appendix Hizmete Özel / Confidential
Slide 41: 2020 Refinery Maintenance Schedule
2020 Refinery Maintenance Schedule Refinery Unit Quarter Duration (weeks) Status Batman Plt 100/1100 Crude Oil & Vacuum Q1 10-12 Completed U-100 Crude Q1 9* Completed U-4000 FCC Q4 6 U-9200 CCR Q1 3 Completed İzmir U-9200 CCR Q4 7 Postponed to 2021 U-9600 Isomerization Q4 8 Postponed to 2021 U-9900
Slide 42: 2020 Expectations
2020 Expectations(*) Med Complex Refining Margin 1.0-2.0 $/bbl • Ural-Brent differential widening compared to 2019 • Weak outlook for Jet fuel and gasoline Tüpraş Net Refining Margin 3.0-4.0 $/bbl • Weak outlook for jet fuel and gasoline cracks • Resilient diesel and strong HSFO cracks • Heavy crude
Slide 43: Competition - STAR Refinery
Competition - STAR Refinery Timeline Turkish Market Structure (mn tons) Turkish Turkey Tüpraş STAR Total Market Balance Demand Demand LPG 1.1 0.3 1.4 4.1 -2.7 Petchem F. 0.2 2.6 2.8 Gasoline 6.1 6.1 2.4 3.7 • Feasibility studies began in 2010 and Jet Fuel 5.2 1.6 6.8 5.2 1.6 construction kicked off
Slide 44: Competition - Regional Competition
Competition - Regional Competition • Tüpraş competes with 71 refineries in the Mediterranean and Black Sea markets. • Mediterranean regional product balance is also affected from Middle East, North West Europe and Asia flows Mediterranean Black Sea 54 Refineries ~7.8mbd 17 Refineries ~1.8mbd Jun-20
Slide 45: IMO 2020: Changes in Bunker Specification and Its Effects
IMO 2020: Changes in Bunker Specification and Its Effects HSFO replacement expectations Current compliant fuels Current Outlook • Marine Gasoil (Diesel): Easiest solution as it is already available • Very Low Sulphur Fuel Oil (VLSFO): Either through FCC with sweet crudes or by blending • Scrubbers:
Slide 46: Tüpraş Production Flow and Yield Breakdown
Tüpraş Production Flow and Yield Breakdown • Tüpraş has 30 million tons of production capacity • Tüpraş operates 4 refineries with an integrated system optimization program Flow Diagram # of Capacity Key Units Units (m3/d) LPG LPG, 3.5% MEROX CRUDE OIL 8 99,420 Gasoline Naphtha, VACUUM DIST. 8 42,75
Slide 47: RUP Feedstock and Production
RUP Feedstock and Production • Residuum Upgrade Plant (RUP) was completed in 2015 and it is the main conversion unit of Tüpraş. • First periodic maintenance was completed in Q2 2019. Total Processing ~4.50 mn tons Total Output ~4.25mn tons Jun-20 Hizmete Özel / Confidential Investor Presentation App
Slide 48: European Pump Price Comparison
European Pump Price Comparison Turkish fuel prices are highly competitive with other European countries. Gasoline (TL/Lt) Diesel (TL/Lt) Refinery Price Dist. Margin Tax Refinery Price Dist. Margin Tax 12 12 10 10 8 8 6.15 6.64 6.60 6.21 6.14 4.49 5.55 5.75 5.86 4.78 6 4.55 5.69 6 3.85 4.37 3.45 2.58
Slide 49: Tüpraş - ESG - Over a Decade of Dedication
Tüpraş - ESG - Over a Decade of Dedication ~480 31% energy efficiency increase in solid 36% projects leading to waste recovery decrease in fresh ~35,000 TJ saving water usage and 20 points 2.4 mt CO2 drop in Energy reduction Intensity Tüpraş kicked off its sustainability program back in 2008 and ach
Slide 50: Tüpraş - ESG - 2018 Achievements
Tüpraş - ESG - 2018 Achievements Environmental Responsibility Social Support Governance Excellence • Kırıkkale Refinery won the first • Signed agreement to support • 9.50 Corporate Governance Rating place, İzmit Refinery the second HeForShe (Global cooperation • 13% Female Representation at the and
Slide 51: Koç Holding
Koç Holding Turkey’s Leading Investment Holding Company • Koç Holding is Turkey’s largest industrial and services group in terms of revenues, exports, employees, taxes paid and market capitalization • The only Turkish company in Fortuna 5001. 8% 9% 15% • 26% CAGR in consolidated profit2 the last fiv
Slide 52: Latest
Investor Presentation Latest Webcast Sustainability Report contact us: tuprasir@tupras.com.tr Hizmete Özel / Confidential