59 slides from Turkiye Petrol Rafinerileri A.s's investor presentation, August 2018
Slide 1: Investor Presentation August 2018
Investor Presentation August 2018
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 a variety of variables and c
Slide 3: Content
Content • Refining Market Slides 4-10 • Turkish Market Slides 12-15 • Company Overview Slides 16-26 • Operations Slides 27-32 • Key Financials Slides 33-44 • Outlook Slides 45-50 • Appendix Slides 50-58 Investor Presentation www.tupras.com.tr CONTENT 3
Slide 4: Refining Market
REFINING MARKET mu 5
Slide 5: Brent Crude Oil Prices ($/bbl)
Brent Crude Oil Prices ($/bbl) 80 75,9 PROS • OPEC & non OPEC supply cut 69 • Political instabilities in Middle East • Future of nuclear agreement • Healthy PMI data in developing countries 58 • Expectation of high global GDP 47 CONS • Increase in number of rigs & production in US • Concerns about f
Slide 6: Refinery Capacity Change
Refinery Capacity Change Thousand Barrels/Day 4000 200 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 420 3000 70 244 270 330 520 156 36 2000 120 417 530 300 343 526 510 46 76 160 40 1000 334 200 198 160 250 400 105 150 244 390 810 181 150 364 640 120 84 63 340 302 135 180 40 305 160 195 52 65 20
Slide 7: Middle Distillate Cracks ($/bbl)
Middle Distillate Cracks ($/bbl) 2015 2016 2017 2018 20 Diesel 20 Jet Fuel 16 16 15,9 14,8 15,1 14,3 13,6 13,7 13,6 14,4 14,4 14,5 12 13,7 13,9 12,6 11,5 12 13,2 13,3 12,1 12,2 11,4 10,0 11,9 10,4 9,1 9,5 8 7,6 8 8,0 7,2 6,6 4 4 0 0 Jan Feb Mar Apr May Jun July *Aug Sep Oct Nov Dec Jan Feb Mar Apr M
Slide 8: Gasoline and High Sulphur Fuel Oil Cracks ($/bbl)
Gasoline and High Sulphur Fuel Oil Cracks ($/bbl) 2015 2016 2017 2018 Gasoline High Sulphur Fuel Oil 24 -4 18,6 -7 18 -8,3 -8,0 -8,7 15,7 -9,1 -10,2 10,4 14,8 -10 10,9 12 13,0 13,1 13,4 11,9 -12,2 12,0 12,1 -12,5 -11,9 9,8 10,2 10,6 9,7 -14 -13,2 -12,7 -13,0 6 -15,2 -17 -16,7 0 -20 Jan Feb Mar Apr M
Slide 9: Quarterly Product Crack Margins ($/bbl)
Quarterly Product Crack Margins ($/bbl) Diesel and jet fuel cracks increased by 29% and 39% respectively; while gasoline and fuel oil cracks declined compared to 2017 Q2. Diesel 2015 2016 2017 2018 Jet Fuel 1615,7 15,2 16 14,6 14,4 14 13,1 14 12,4 12,4 12 13,9 1213,3 13,8 11,2 12,0 10,7 10,8 12,3 10
Slide 10: Crude Price Differentials ($/bbl)
Crude Price Differentials ($/bbl) Price differential between Brent and select Middle Eastern heavy crudes widened by 0.4 $/bbl on average in Q2 2018 vs Q2 2017, driven mainly by complex refinery maintenances. Ural Differentials Heavy Crude Price Differentials 1 Brent Brent 0 0 -0,6 -0,3 -0,9 Beginni
Slide 11: Turkish Market
TURKISH MARKET mu 5
Slide 12: Turkish Economy Strengths
Turkish Economy Strengths Population (mn) GDP (%) 10 82 9,2 2002-2014 4.9% 1.4% growth in last 5 yrs 8,8 2010-2014 5.4% 7,5 81 0-40 yrs >65% 7,4 5 80 82 81 81 4,2 4,0 2,5 79 80 3,0 2,9 79 2,1 78 0 2016 2017 2018 2019 2020 2010 2011 2012 2013 2014 2015 2016 2017 Diesel Consumption (mn ton) Car owners
Slide 13: Turkish Consumption (Million tons) 2015-2017
Turkish Consumption (Million tons) 2015-2017 Diesel Jet Fuel 2017 24,17 2017 4,52 +2.7% +8.3% 2016 22,31 2016 4,40 -4% +8.5% 4,58 2015 20,56 2015 10 14 17 21 24 0 1 2 3 4 5 Gasoline Fuel Oil* 2017 2,30 2017 0,49 -15.7% +3.1% 2016 2,23 2016 0,58 -3.5% +6.5% 2015 2,10 2015 0,60 Kaynak: EMRA 0 *Bunker
Slide 14: Strong Turkish Market, 6M 2018 (Million tons)
Strong Turkish Market, 6M 2018 (Million tons) • Tüpraş is well positioned in a growing, short market. • Diesel and jet fuel consumption in Turkey grew significantly the first 6 months of 2018 driven by infrastructure projects and aviation growth. Diesel Jet Fuel +11.7% +13.6% 2018 12,19 2018 2,28 20
Slide 15: Turkey's Import / Export Balance (Net) (Million Tons)
Turkey’s Import / Export Balance (Net) (Million Tons) 4 Export 2,4 3,2 1,0 0,7 0,0 0,3 0 -3,1 -3,1 -4 -8 Import -12 -12,0 -13,2 2013 2014 2015 2016 2017 -16 LPG Gasoline Diesel Fuel Oil Jet Source EMRA Investor Presentation www.tupras.com.tr REFINING INDUSTRY 15
Slide 16: Company Overview
COMPANY OVERVIEW
Slide 17: Tüpraş Shareholder Structure
Tüpraş Shareholder Structure Publicly Traded %77 %20 %3 *Distribution of Domestic/ Foreign Ownership of Tüpraş Shares Energy Investments Inc. (SPV) %51 Domestic Ownership %18 %79,98 Free Float %40 %49 %83 Foreign Ownership %100 *As of December 31th, 2017 Investor Presentation www.tupras.com.tr COMPA
Slide 18: Tüpraş Refining Assets & Distribution Network
Tüpraş Refining Assets & Distribution Network Baku İstanbul OPET Marmara OPET Turkey Storage Terminal Giresun 721,000 m3 İzmit Terminal 43,130 m3 Ankara Kırıkkale Capacity Tüpraş : 58% İzmir Opet : 9% Batman Other Companies : 33% OPET OPET Antalya Mersin Terminal Terminal 19,392 m3 240,000 m3 Total
Slide 19: High Complexity (Nelson Complexity of Refining Companies)
High Complexity (Nelson Complexity of Refining Companies) İzmit After RUP 15 14,5 14,5 Tüpraş After RUP 13,0 12,6 Tüpraş 11,8 11,6 11,5 Before RUP 11,0 10 10,4 9,5 9,9 9,8 9,6 9,5 9,4 9,2 9,2 9,0 8,8 8,7 8,4 7,3 8,0 7,3 7,1 7,1 7,1 7,1 6,8 6,5 5,9 5,8 5,8 5 0 İzmit Ref. Valero Reliance Essar Maratho
Slide 20: Crude Suppliers of Tüpraş (Million Tons)
Crude Suppliers of TÜPRAŞ (Million Tons) In 2017, Tüpraş purchased 25 different types of crude oil from 14 countries, with gravities ranging between 18-47 API. Africa America Europe CIS Middle East 90 80 79 76 70 71 67 60 65 63 50 Crude Type 2017 40 %5,3 30 %36 20 17 10 1315 %58,8 10 12 1311 14 14 6
Slide 21: Sales By Customer (2017)
Sales By Customer (2017) Customer Groups Sales to Distributors Military Bitumen %1 OTHER %11 %13 POAŞ LUKOIL %26 %4 TP %3 Export Dist. %18 %45 BP %15 Other %6 Petkim OPET %1LPG %4 SHELL %25 Jet THY Opet %15 %5 %9 Total : 31.5 mn ton Distributors : 14.3 mn ton Investor Presentation www.tupras.com.tr
Slide 22: Competitive Advantages of Tüpraş
Competitive Advantages of Tüpraş Added Value Created Local Market Cost Base by Tüpraş Dynamics of Tüpraş Best Fit for the Market High Economic Growth Energy Efficient with high diesel yield High Complexity of Crude Oil & Feedstock Short on Diesel Tüpraş Cost Advantage Presence in all over Import Par
Slide 23: OPET - Tüpraş Share 40%
OPET -Tüpraş Share 40% Opet expanded its retail footprint to 1589 stations in June 2018 from 1560 stations in December 2017. Opet Sunpet 1800 1.589 1600 1.504 1.560 Market share as of 1.444 1400 1.325 1.356 1.393 446 May 2018 1.325 434 1.279 431 1200 435 418 427 410 394 1000 394 17.3% 29.9% 800 Whit
Slide 24: DİTAŞ, Marine Transport - Tüpraş Share 79.98%
DİTAŞ, Marine Transport -Tüpraş Share 79.98% 11 tugboats 3 Crude Oil Tanker :479.765 DWT 8 mooring boats 1 Crude Oil - Product Tanker : 51.532 DWT 2 service boats 7 Product Tanker : 90.534 DWT 1 pilot boat • One of the biggest Turkish marine transportation companies of crude oil and petroleum produc
Slide 25: Körfez Ulaştırma A.Ş. - Tüpraş Share 100%
Körfez Ulaştırma A.Ş.- Tüpraş Share 100% Körfez Ulaştırma A.Ş. Turkey's First Private Railway Operator • On June 16th, Freight Train Operator Certificate, • On September 20th, Safety Management Certificate received • Operates with 491 cistern wagons and 5 diesel • locomotives 2,5 mn tons/ 2018 year
Slide 26: Enhancing our Trading Capabilities
Enhancing our Trading Capabilities ๏ We are opening a trading office in London to Closely monitor Support import and Create additional value international market export operations, from supply chain and opportunities, sales activities. ๏ London office is planned to be opened until the end of the yea
Slide 27: Operations
OPERATIONS
Slide 28: Capacity Utilization and Quarterly Production Volume
Capacity Utilization and Quarterly Production Volume • Capacity utilization and production decline in Q2 2018 compared to Q2 2017 was due to maintenances in İzmit, İzmir and Kırıkkale refineries. • Our year-end guidance for capacity utilization and production remains unchanged. Quarterly Production
Slide 29: H1 Product Yields
H1 Product Yields 2017 2018 Bitumen LPG LPG %4 Bitumen %4 %9 %12 Fuel Oil Gasoline Gasoline %9 %20 Fuel Oil %20 %5 Coke Coke Other Other %4 %3 %2,0 %1,8 Light Distil. Light Distil. Other Other Black Prod. %25,4 Black Prod. %24,7 %21,2 %2 %20,6 %2 Naphtha Naphtha %1 %0 Mid. Distil. Mid. Distil. %51,4
Slide 30: Increase in Domestic Sales (Million Tons)
Increase in Domestic Sales (Million Tons) • We generated 7.4 million tons of total sales in Q2 2018. • Domestic middle distillate sales were 4.4 million tons, 8.5% higher than Q2 2017. Total Sales in Q2 Domestic Sales of Key Products in Q2 Domestic Sales Export Diesel Jet Fuel Gasoline Bitumen 10 6
Slide 31: Investments (Million $)
Investments (Million $) • 9.5 Nelson complexity • High white product yield • Process more heavier and sour crudes • Run all refineries with 100% capacity utilization Ongoing Projects Avg. 943 mn$ 1.213 974 959 • Revamp of Crude Unit • FCC Modernization Avg. 278 mn$ 628 Avg. 247 mn$ • New Sulphur Uni
Slide 32: 2018 Expectations vs H1 2018 Results
2018 Expectations vs H1 2018 Results Brent Price ($/bbl) Capacity Utilisation (%) Brent ($/bbl) Tüpraş Expectation Min Tüpraş Expectation Max 15'H1 94 • Full Capacity Utilization target 80 • 70-75 $/bbl Average Brent Price Expectation • 85% Total Capacity 16'H1 101 • 70.6 $/bbl Brent Price average i
Slide 33: Key Financials
KEY FINANCIALS
Slide 34: Margin Environment ($/bbl)
Margin Environment ($/bbl) Tüpraş’ 12.3 $/bbl Net Refining Margin in Q2 2018 was higher than 7.9 $/bbl Med Complex margin. 10 Med Complex Month Premium to the benchmark Mediterranean peers’ 8 Annual refining margin due to: 6 5,54 4,83 5,30 3,97 4,21 4,4 4 • Refined products deficit characteristic to
Slide 35: Financial Highlights (Million $)
Financial Highlights (Million $) Tüpraş Net Debt/Rolling EBITDA was 1.5x as of June 30, 2018. EBITDA Net Income* 1700 1.614 1200 1.046 1.397 321 938 123 1408 422 950 817 285 1.125 435 283 1117 271 629 667 480 793 700 47 91 594 825 715 410 268 106 560 431 522 4th Q 309 435 175 256 344 3rd Q 450 405 5
Slide 36: Balance Sheet Analysis (Billion $)
Balance Sheet Analysis (Billion $) Given our strong liquidity management and cash generation capabilities, our financial loans decreased to 3.2 Billion $ ex-dividend. Cash & Cash Equivalents Trade Receivables 3,0 2,5 2,0 2,3 2,4 2,2 1,57 1,52 1,52 2,0 1,6 1,36 1,42 1,8 1,7 1,6 1,7 1,6 1,7 1,7 1,6 1,
Slide 37: Q2 Profit Before Tax Bridge (2017-2018)
Q2 Profit Before Tax Bridge (2017-2018) Decline in profit before tax was driven by FX loss and decrease in production, partially offset by inventory gain. Million TL 1.166,8 148,7 143,1 365,9 1.166,8 FX Impact +360 1.083,7 65,0 1.434,8 925,2 2017 Inventory Inventory Stok Effect Crack Margins Crude O
Slide 38: Dividend (TL)
Dividend (TL) 16 Earings per Share Gross Dividend Total Payout 4000 15,22 14 One of the highest dividend 13,6 12 yield in BIST 3000 10 10,18 8 2000 7,16 6 6,5 6,2 5,83 4,96 4,78 4 1000 3,93 3,85 3,24 2,94 2,98 2 2,31 2,5 1,73 1,58 0 0 0 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2012/2013 E
Slide 39: Tüpraş Balance Sheet
Tüpraş Balance Sheet Million $ 31.12.2017 30.06.2018 Difference % Current Assets 5,399 4,813 -586 -11 Cash & C. Equivalents 2,334 1,291 -1,043 -45 Receivables 1,355 1,521 166 12 Derivatives 92 53 -39 -42 Inventories 1,403 1,689 286 20 Pre-paid expenses 17 32 15 93 Other Current Assets 199 227 28 14
Slide 40: Creating Competitive & Sustainable Shareholder Value
Creating Competitive & Sustainable Shareholder Value Tüpraş has one of the highest Corporate Governance Ratings Foreign Currency Long Term Board 92,9 Tüpraş BB+(Neg.) Ba2 (Negative) Türkiye BB (Neg.) Ba3 (Negative) B+ (Stable) Stakeholders 98,6 Koç Holding Ba2 (Negative) BB+ (Stable) Transparency 94
Slide 41: Financial Policy
Financial Policy Financial Discipline: Risk management policies focusing on areas such as leverage, liquidity, counter party risk, interest rate, commodity and currency exposure • Net financial debt/EBITDA • Net foreign currency position/shareholders' equity Threshold • Inventory and crack margin ex
Slide 42: Inventory & Crack Margin Hedge
Inventory & Crack Margin Hedge Operational Hedge: • Maintaining minimum amount of stock required for the refining activities Inventory • Forward Pricing: Purchasing crude oil through forward-priced contracts Hedging Financial Hedge: Proxy Hedging (both crude oil and refined product inventories) Poli
Slide 43: FX Exposure Management (30 June 2018)
FX Exposure Management (30 June 2018) Active management of FX exposure kept Consolidated Consolidated the risk level within our limits. Assets Liabilities Million $ • A significant portion of the Group's crude oil and refined Cash Payables product purchases are denominated in US Dollars. In 1,006 2,
Slide 44: Tüpraş: Growing, Resilient, Profitable
Tüpraş: Growing, Resilient, Profitable Tüpraş is a compelling investment case with strong sales growth, resilient and profitable operational and financial structure. Growing Resilient Profitable • Strong balance sheet with no • Operating in a diesel short market (supplies 45% of the market) , along
Slide 45: Outlook
OUTLOOK
Slide 46: 2018 Refinery Maintenance Schedule & Capacity Utilization
2018 Refinery Maintenance Schedule & Capacity Utilization Our year end total capacity utilization target has not changed. We expect full year-end total capacity utilization. Unit Quarter Duration (weeks) Reason *Plt 7000 Crude Oil Unit Q4 ’17 - Q2’ 18 17 in 2018 Revamp İzmir *Hydrocracker Q1 3 Perio
Slide 47: Future Expectations
Future Expectations We only updated our average Brent Price expectation. The rest of our expectations remain the same as before. Brent Price Average Brent price expectation in 2018 is revised to 70 - 75 $/bbl per barrel Estimation Med Complex Med Complex margin expectation is 4.75 - 5.00 $/bbl in 20
Slide 48: Competition # 1 (SOCAR-STAR Refinery)
Competition # 1 (SOCAR-STAR Refinery) STAR Refinery (Total Cap. 10 mn ton) Production 2019 Turkish Balance mn ton Demand • Goldman Sachs has acquired a 13 percent stake in SOCAR Turkey for $1.3 billion. Tüpraş Star Total • Goldman Sachs has the right to resell 10 percent of its stakes to Socar, and
Slide 49: Competition # 2 (Regional Competition)
Competition # 2 (Regional Competition) • Tüpraş is competing 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. Mediterranean Black Sea Moldova Ukraine France Croatia Romania Russia Sp
Slide 50: Marine Bunker Specification Changes and Its Effects
Marine Bunker Specification Changes and Its Effects IMO, at the meeting held in October 2016, lowered the sulphur emission cap from marine bunkers from 3.5% to 0.5% (5000ppm): effective from 1 January 2020. %2 Other switch %5 to LNG HS FO Scrubbed 2,1 1,8 LS FO LS Fuel Gap %19 LS Fuel Gap Install Sc
Slide 51: Appendix
Appendix
Slide 52: Q2 Product Yields
Q2 Product Yields 2017 2018 LPG LPG Bitumen %4 Bitumen %4 %12 %14 Gasoline Gasoline Fuel Oil %20 Fuel Oil %20 %7 %3 Coke Other Coke Other %3 %2,5 %3 %3,3 Light Distil. Light Distil. Black Prod. %25,1 Other Black Prod. %23,7 Other Naphtha %21,4 Naphtha %20,9 %2 %3 %1 %2 Mid. Distil. Mid. Distil. %51,
Slide 53: Crack Margin Effect on Tüpraş in Q2 (FOB Italy Prices)
Crack Margin Effect on Tüpraş in Q2 (FOB Italy Prices) Product Price, $/ton Tüpraş Crack Margin, $/bbl 2018 Production 2018 2017 2018 2017 Yields LPG 488 357 3.3 -30.9 -18.1 Gasoline 707 521 18.4 12.7 14.3 Naphtha 618 417 0.6 -4.6 -2.7 Jet Fuel 693 470 18.9 13.8 9.9 Diesel 657 451 29.3 13.9 10.7 Die
Slide 54: Total Production
High Complexity (Resid Upgrading Units Production-(Thousand Tons) Raw Materials Products Doğal Gaz 246 Diesel Gasoline LPG Vakum Resid 1,214 2.883 522 69 Total Production Atm. Dip 4,250 3,036 PetroCoke Sulphur 690 86 Total Feed 4,496 Investor Presentation www.tupras.com.tr APPENDIX 54
Slide 55: Flexibility & Reliability; Multiple routes to maximum capacity
Flexibility & Reliability; Multiple routes to maksimum capacity Yields Number (%) Capacity Key units of units (m3/d) Flow Diagram LPG LPG 3.5% MEROX CRUDE OIL 8 97000 ISOMER. VACUUM 8 42320 GASOLINE 22.0% NAFTA Benzen NAPHTHA • Increased SPLITTER UNIFINER REFORMER Saturation HYDROCRACKER 4 18200 con
Slide 56: Competition (European Pump Price Comparison)
Competition (European Pump Price Comparison) Gasoline (Krş / Lt) Diesel 10 (Krş / Lt) Pump No Tax Distr. Marg. Tax 1000 900 801 804 783 870 870 800 727 748 487 476 827 457 790 806 550 547 693 770 508 394 371 487 700 658 750 708 477 363 482 311 370 600 566 624 308 243 500 500 400 300 50 61 59 45 50 5
Slide 57: Tüpraş HSE KPI: Loss Time Incident Frequency and Severity
Tüpraş HSE KPI: Loss Time Incident Frequency and Severity Frequency Ratios 8 Incident Frequency Including contractors Tüpraş Contractor Total 7,1 7,1 6,9 6 6,1 4,8 5,0 4 3,6 3,4 3,5 3,6 3,4 2,5 2,5 3,2 2,2 3,1 1,7 2,6 2,8 1,9 2 1,5 2,4 1,6 1,9 1,1 2,0 1,7 1,8 1,9 1,7 1,4 1,3 0,8 0,9 0 2000 2001 2002
Slide 58: Koç Holding
Koç Holding Turkey’s Leading Investment Holding Company Turkey’s largest industrial and services group in terms of revenues, exports, employees, taxes paid and market capitalization. Turkey’s Leading Investment Holding Company Combined Revenues / GDP 7% • The only Turkish company in Fortuna 5001 Tot
Slide 59: C)Tupras
C)Tupras Gv Koc