PETRONAS Chemicals Group Bhd. · MYX:PCHEM
PETRONAS Chemicals Group Bhd — Q1 2019 Earnings Presentation
35 slides from PETRONAS Chemicals Group Bhd's earnings presentation, May 24, 2019
Slide 1: Quarterly Analyst Briefing for the Quarter Ended 31 March 2019
PRODUCT STEWARDSHIP a HEALTH & SAFETY ‘SHAREHOLDER VALUE ENVIRONMENT SOCIETAL NEEDS BIODIVERSITY PETRONAS PETRONAS CHEMICALS GROUP BERHAD Quarterly Analyst Briefing for the Quarter Ended 31 March 2019 24th May 2019 3.30pm
Slide 2: Disclaimer
)» Disclaimer PETRONAS Warranties and Exclusion of Liability PETRONAS Chemicals Group Berhad ("PCG"), its subsidiaries and related corporations confirm that care has been taken in ensuring the accuracy and correctness of information, statements, text, articles, data, images and other materials conta
Slide 3: Agenda
© PETRONAS Key Highlights Performance Highlights Moving Forward Acquisition of Da Vinci Group B.V Q&A 00000
Slide 4: Key Highlights
© PETRONAS Key Highlights
Slide 5: Petrochemicals Market Spreads
PETRONAS Petrochemicals Market Spreads USDIMT 4q 2018 2Q 2018 3Q 2018 4Q 2018 1Q 2019 USD/bbl UsD/mt Petrochemicals Market Spread USD/bbl 400 90 350 80 1 Average Spread 70 60 -_ _— —_ ~_ 50 100 F&M 40 50 average spread** 0 30 Yan Fey Ma, Aor. a, Yun. Yu, Aue Sey. Coe. Mo, 20. Yan. Fe, 19 Ig 1g Ig ha
Slide 6: 1Q 2019 Highlights
Key Highlights 1Q 2019 Highlights © PETRONAS = Plant utilisation (PU) at 95 % ¢ Major maintenance completed at PC Methanol « Lower production volume by 5% = Sales volume declined 14% y-o-y - Weak downstream and derivatives demand ¢ Lower average product prices = PAT declined = Lower EBITDA due to; w
Slide 7: Financial Highlights
© PETRONAS Financial Highlights
Slide 8: 1Q 2019 Group Financial Results
Financials 1Q 2019 Group Financial Results Production Volume, kMT 4Q 2018 | 1Q 2018 (1%) (5%) PETRONAS Lower production volume YoY and QoQ on: > Lower plant utilisation rate > Higher level of maintenance activities Revenue, RM million 4Q 2018 1Q 2018 (18%) (17%) Weaker YoY and QoQ due to: > Lower pr
Slide 9: Financials: Olefins & Derivatives
Financials : Olefins & Derivatives © 7 . PETRONAS Financials Others —— (RM million) 3,155 3,224 2,749 FEM 1,106 1,032 1,367 733 1Q 2019 ; : Revenue 1Q 2018 4Q 2018 1Q 2019 (RM million) Ml Revenue SSE EBITDA e Market was weak inline with lower energy prices coupled with economic worries. ° Lower earn
Slide 10: Financials: Fertilisers & Methanol
Financials : Fertilisers & Methanol © 5 : PETRONAS Financials (RM million) 1,831 1,850 1,367 779 676 587 1Q 2019 F&M | Revenue ; ; (RM million) 1,367 1Q 2018 4Q 2018 1Q 2019 l@l™ Revenue @@ EBITDA ¢ Weaker on low energy prices and oversupply — Others ¢ Lower earnings due to: >» Lower product prices
Slide 11: Balance Sheet as at March 2019
Financials Balance Sheet as at 31 March 2019 37,365 358 12,329 As at 31.12.2018 Total Assets (RM million) 36,619 295 Others Cash & cash equivalents 11,648 Trade & other receivable: Trade & Other inventorie Investment in joint ventures and associates Property, plant and equipment (PPE) As at 31.03.20
Slide 12: Cash flow movement
(1,521) 1,431 (543) 12,329 (48) 11,648 Page 9
Slide 13: Manufacturing
© PETRONAS Manufacturing
Slide 14: Plant utilisation and production
100% 95% 94% 95% 79% 1Q 2018 2Q 2018 3Q 2018 4Q 2018 1Q 2019 25.0 96% 92% 95% 100% 91% 20.0 85% 90% Industrial Standard, 85% 80% 15.0 80% 10.0 70% 8.1 9.2 10.1 10.4 60% 7.7 5.0 2.6 50% 0.0 2014 2015 2016 2017 2018 YTD 2019 Page 10
Slide 15: Operational performance indicators
10 100% 120% 100% 94% 97% 9 110% 93% 100% 86% 8 90% 7 80% 73% 6 70% 5 60% 4 4.0 3.8 3.9 3.3 3.5 3.8 50% 3 40% 2 30% 1.0 1 20% 0 1059 1009 990 2013 2014 2015 2016 2017 2018 YTD 2019 274 2016 2017 2018 YTD 2019 263 270 274 232 225 1Q 2018 2Q 2018 3Q 2018 4Q 2018 1Q 2019 Page 11
Slide 16: Operational performance indicators
120% 10.0 110% 9.0 100% 93% 90% 89% 92% 8.0 2219 2226 90% 74% 75% 80% 7.0 80% 6.0 6.4 6.5 1371 662 70% 5.0 60% 5.0 4.0 2016 2017 2018 YTD 2019 50% 4.0 4.1 4.3 3.0 40% 2.0 30% 1.6 1.0 662 20% 0.0 643 653 2013 2014 2015 2016 2017 2018 YTD 509 421 2019 1Q 2018 2Q 2018 3Q 2018 4Q 2018 1Q 2019 2,104 2,08
Slide 17: Operation & Maintenance Readiness
OPERATION & MAINTENANCE READINESS Photo of EOEG Plant citral | menthol | citronellol Page 13
Slide 18: Operation: Conclusion
Operation: Conclusion © PETRONAS = Group plant utilisation was stable at 95% for the quarter = Stable operations in Olefins & Derivatives segment and in Fertilizer facilities = PIC-PETCHEM obtained on-spec final product for MEG, and two Polymer plants (LLDE and PP) = Completion of statutory turnarou
Slide 19: Commercial
© PETRONAS Commercial
Slide 20: Product market outlook
PETRONAS = |r | & | i Q1 2019 Ql e019 § (vs @4 2018) y (vs Q4 oe y Ample supply, thin High inventory in China Oversupply on top of Short supply demand and bearish 8 y slowdown in PTA & PET Pickup of demand before market sentiment Slowdown in business demand & after CNY activities; reluctant to hold
Slide 21: Product market outlook
Q1 2019 (vs Q4 2018) Unissued volume of Indian tender New capacity Q2 2019 (Outlook) New tender from India Improving demand in SEA Surplus supply Demand remain stable @ Short supply from Asia Balanced demand from industry and agricultural sector PETRONAS Q1 2019 (vs Q4 2018) Ample supply Lower deman
Slide 22: Moving Forward
© PETRONAS Moving Forward
Slide 23: Stabilising crude oil prices and geopolitical uncertainty
ar “™! Stabilising 6 25 Geopolitical crude oil prices uncertainty Demand remains strong Continued on protectionism PETRONAS
Slide 24: 2019 Focus Areas
2019 Focus Areas © PETRONAS Moving Forward /1) . ‘Ae 1. Uphold HSE as a Priority 2. Sustain world class Operational Excellence 3. Drive Commercial Excellence O > 4. Operationalise Pengerang e Integrated Complex 5. Venture into Specialty & Bio-based al Chemicals Page 18
Slide 25: PCG acquires Da Vinci Group B.V
© PETRONAS PCG acquires Da Vinci Group B.V
Slide 26: Strategy to grow specialty chemicals portfolio
PCG has a clear strategy to grow specialty chemicals portfolio © and future proof our business PETRONAS Sustain strength in basic petrochemicals Preferred Chemical Company Providing Innovative Customer Solutions O11 2 Regional Basic Petchem Specialty Derivatives Chemicals o eo o Increase basic petro
Slide 27: PCG aspires to double its earnings in 20 years
PCG aspires to double its earnings and expand its specialty chemicals portfolio in the next 20 years PETRONAS s Specialty s Commodity Earnings 1985 2018 +20 years Page 20
Slide 28: Growth levers to achieve aspiration
PCG has developed 3 growth levers to achieve its aspiration © PETRONAS : Build Specialt i i Extend Value Chin sacle SOCEMGNCUIETEN TS) Platform for Growth Further downstream Gain technology & Long-term investment in investment market access start-ups and R&D Opportunities 14 7 4 under evaluation Pag
Slide 29: Eight prioritised end-markets
In evaluating growth opportunities, PCG focuses on eight 6 prioritised end-markets PETRONAS Global Megatrends Prioritised End-Markets 3) Construction (SH) <7 BA Urbanisation . ; Paints & Coatings Fo Aging population ri i Increasing global Personal Care connections ~ Shift to emerging =9. markets and
Slide 30: Da Vinci Group overview
• • • • • • • • • • • • • • • • • • Page Page 30 23
Slide 31: Da Vinci as a stepping platform: Acquisition Rationale
Da Vinci is a an attractive stepping platform for PCG to grow S its specialty chemicals business Acquisition Rationale 1 Entry into profitable and growing business 2 Access to customised solution culture Gain new set of capabilities Attractive silicone business Good market position of Da Vinci Custo
Slide 32: Impact of the acquisition of Da Vinci Group B.V.
Impact of the acquisition of Da Vinci Group B.V. S PETRONAS SPA Signing Transaction Completion 15 May Quarter 4 rs re ee 192019 202019 302019 402019 @ Impact to PCG Upon completion of the Acquisition, Da Vinci will be a wholly-owned subsidiary of PCG and the financials of Da Vinci will be consolidat
Slide 33: In summary
‘nsummary. bs PETRONAS = PCG aspires to double its earnings and expand its specialty chemicals portfolio to about 20%- 25% in the next 20 years. = Da Vinci represents the first stepping platform for PCG to realise this aspiration given its strategic fit to the Group. = This acquisition allows PCG to
Slide 34: Question & Answer
© PETRONAS S Question & Answer
Slide 35: Thank You
Of PETRONAS >» THANK YOU For further enquiries please contact us at: PETRONAS Chemicals Group Berhad Level 10, Tower 3, Kuala Lumpur City Centre, 50088 Kuala Lumpur, MALAYSIA petronaschemicals_ir@petronas.com www.petronaschemicals.com
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