Thai Oil Public Co. Ltd. · SET:TOP
Thai Oil Public — Q4 2017 Earnings Presentation
61 slides from Thai Oil Public's earnings presentation, Feb 19, 2018
Slide 1: Q4 & FY/2017 Analyst Presentation
-1- Thai Oil Public Company Limited Q4 & FY/2017 Analyst Presentation 19 February 2018 Time : 10.00 - 12.00 am. 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 5th 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 2017 KEY HIGHLIGHTS Q4 & 2017 PERFORMANCE ANALYSIS 1H-18 MARKET OUTLOOK
Slide 7: 2017 Key Highlights
2017 KEY HIGHLIGHTS Sanaon
Slide 8: 2017 Key Market Drivers Highlights
Key Highlights -8- 2017 Key Market Drivers Highlights Refinery Implication Robust refining margins supported by higher middle distillate 1) spread due to improving regional demand, particularly China, and Mkt GRM at 6.7 $/bbl strong fuel oil spread backed by bunker demand. (2016 = 5.2 $/bbl) 1) In
Slide 9: 2017 Key Achievements
Key Highlights -9- 2017 Key Achievements Key Achievements 2017 TOP Group Net Profit Recorded high refinery annual utilization Unit : million THB (MB) Operational Stock gain/(loss) Net Operating Profit Excellence rate Reversal of NRV/(NRV) & Adjusted to cost Others i.e. Hedging gain/(loss) & Non-re
Slide 10: 2017 Profitability Improvement (VS Corporate Plan)
Key Highlights -10- 2017 Profitability Improvement (VS Corporate Plan) Cost Management General & Admin , Margin Improvement Procurement & warehouse , (Supply & Marketing / Operation & Maintenance , Hydrocarbon Management / Project & Manpower management Unit: million THB ) 37% LP Upgrading Model , 52
Slide 11: 2017 Dividend Payment
Financial -11- 2017 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 7.82 8.13 7.28 5.91 6.04 5.97 4.39 4.57 3.75 2.75 3
Slide 12: Q4 & 2017 Performance Analysis
-12- Q4 & 2017 PERFORMANCE ANALYSIS
Slide 13: Refinery: Recorded High Annual Utilization Rate
Refining -13- Refinery: Recorded High Annual Utilization Rate TOP/ Domestic Refinery Utilization Rate Domestic Oil Demand Unit: % Utilization Rate 2016 2017 111% 112% 114% 112% 112% KBD 110% 110% 107% 109% 107% 108% 108% 3.4% 800 600 2.9% 98% 98% 90% 95% 94% 94% 400 3.7% 91% 88% 89% 89% 90% 91% 4.4%
Slide 14: Q4/17: Softer Market GRM Pressured by Increased Supply
Refining -14- Q4/17: Soften Mkt GRM pressured by Increased Supply after Resumption from Unplanned Shutdown in U.S. and Higher Crude Premium Dubai Crude Price & Key Petroleum Product Spreads Refinery Utilization Q3/17 Q4/17 2017 2016 2016 2017 2016 114% 112% 112% 108% $/bbl Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY
Slide 15: Q4/17: Improved Aromatics Contribution
Aromatics/LAB -15- Q4/17: Improved Contribution supported by strong downstream demand Aromatics Spreads and Margins Aromatics Production 2016 2017 2016 Q3/17 Q4/17 2017 2016 $/ton Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY17 FY16 81% 82% 83% 81% PX**-ULG95 332 315 341 280 312 273 258 260 276 317 Q1TD’18 (13 Feb 18)
Slide 16: Q4/17: Slightly Lower Lube Base Oil Contribution
Lube Base Oil -16- Q4/17: Slightly Lower Contribution Pressured by Lower Demand and Increased Lube Supply after Resumption from Maintenance Base Oil & Bitumen Spreads & Margins Base oil Production 2016 2017 2016 Q3/17 Q4/17 2017 2016 $/ton Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY17 FY16 88% 88% 88% 81% 500SN-HSFO
Slide 17: Q4/17 Power Sector Performance
Power -17- Q4/17 Power Sector Performance…Growing Contribution to the Group Power Business Sector Equity holding in SPP GPSC **** Power & Steam Sales ***TOP shareholding 24.29% (8.91% via TOP and 20.79% via TP) GPSC is an associate company of TOP. Electricity(1) 2,055 2,504 Equity method is applied
Slide 18: Integrated Margin & Competitive Cash Cost
Financial -18- Integrated Margin & Competitive Cash Cost Gross Refining Margin Refinery’s Cash Cost (Unit: US$/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 6.8 6.7 5.7 5.9 5.2 6.0 2.3 *
Slide 19: 2017: Performance Breakdown by Business Unit
Performance Breakdown -19- 2017: Performance Breakdown by Business Unit Utilization/Production (%) & Net Profit (million THB) Key Points • Refinery: higher utilization to capture decent margin and strong demand (local + Indochina) • Aromatic/LAB: despite stable margins, net profit contribution decli
Slide 20: 2017 TOP Group Consolidated P&L
Financial -20- 2017 TOP Group Consolidated P&L (million THB) Q4/17 Q3/17 QoQ+/(-) Q4/16 YoY+/(-) 2017 2016 YoY+/(-) YoY analysis Sales Revenue 89,443 80,296 9,147 77,104 12,339 337,388 274,739 62,649 A) A Mainly from overall sale Hedging Gain / (Loss) (63) (20) (43) (330) 267 (133) (243) 110 B) volu
Slide 21: 2017 TOP Group Consolidated Cash Flow
Financial -21- 2017 TOP Group Consolidated Cash Flow (Unit: Million THB) (Unit: Million THB) Investments Operating Cash Flow FY/17 FY/16 FY/17 FY/16 Investments (30,092) (18,352) Operating Cash Flow 34,417 23,182 ST investments (23,423) (12,057) Net income & non-cash adj. 38,568 32,832 + Available f
Slide 22: Strong Financial Position & Financial Ratios
Financial -22- 2017 TOP Group Strong Financial Position & Financial Ratios Statements of Financial Position Consolidated Long-Term Debt as at 31 Dec 17 (Unit: million THB) Total Long-Term Debt Net Cash 217,731 208,051 228,108 65,499 million THB 1,474 million THB 35,461 Trade Payable 30,700 24,572 (U
Slide 23: 1H-18 Market Outlook
-23- 1H-18 MARKET OUTLOOK • Crude Oil • Petroleum Products • Aromatics • Base Oil & Bitumen • Linear Alkyl Benzene (LAB)
Slide 24: Crude Oil
CRUDE OIL -24- Sanaon
Slide 25: Sustaining Crude Prices with Downward Trend amid Surging U.S. Supply
Crude Oil -25- Sustaining Crude Prices with Downward Trend amid Surging U.S. Supply Dubai Price Movement $/BBL OPEC and Non- Output cuts Robust demand and OPEC agreed to cut 1st OPEC-led supplyextended to lower U.S. output 80 cut deal extension end of 2018 from winter storm 1.8 MBD oil output 60 BRE
Slide 26: Oil Market Turning to Surplus in 1H-18 Pressured by U.S. Production
Crude Oil -26- 1 Oil Market Turning to Surplus in 1H-18 Pressured by Massive U.S. Oil Production A Rising U.S. Production to Above 10 MBD B Higher Price Heightens Shale Oil Production U.S. Crude Oil Production 2018 Annual Shale Oil Growth vs. WTI Price MBD MBD MBD, YoY 11.0 2.5 1.2 10.0 1.5 0.8 9.0
Slide 27: Supply Cut Deal to be a Double-edged Sword for OPEC
Crude Oil -27- 2 Supply Cut Deal to be a Double-edged Sword for OPEC A High Compliance from both Producers C OECD Oil Stocks Approaching 5-yr Average Compliance Rates of Output Cut OECD Oil Inventories % MBBL 160 3,200 140 120 3,100 100 80 3,000 60 40 2,900 20 0 2,800 Jan-17 Mar-17 May-17 Jul-17 Sep
Slide 28: Petroleum Products
-28- PETROLEUM PRODUCTS Sanaon
Slide 29: Firm Petroleum Product Market from Robust Demand and Limited Supply
Refinery -29- Firm Petroleum Product Market from Robust Demand Growth and Limited Supply Singapore Cracking GRM ($/BBL) 8.5 8.0 8.2 7.9 7.6 7.7 6.7 7.2 7.1 6.1 6.2 6.5 6.4 6.2 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 Q3-17 Q4-17 Y2017 Q1TD- 18* Q1TD- Key Highli
Slide 30: Firm Gasoline Margin Due to Healthy Demand
Refinery -30- Firm Gasoline Margin Due to Healthy Demand Despite Higher 1 Chinese Exports A Tighter Market on Firm Demand & Refinery MTA B Steady U.S. Demand Despite Higher Crude Price Asia Pacific Gasoline Demand MBD U.S. Gasoline Demand MBD 10.2 7.4 1H-18: 9.2 MBD (+0 MBD YoY) 1H-18: 7.1 MBD (+0.2
Slide 31: Steady Middle Distillate Cracks
Refinery -31- Steady Middle Distillate Cracks from Robust Demand and 2 Limited Saudi Arabian Supply A Rising Asia Demand from Recovered Economy B Lower Surplus in H1-18 During Refinery MTA Period MBD Asia Pacific Gasoil Demand Asia Pacific Gasoil Balance 10.5 MBD 2.0 10.0 1H-18: 9.3 MBD (+0.21 MBD Y
Slide 32: Lower-than-expected Supply Addition from Nghi Son Delay and Jeddah Closure
Refinery -32- Lower-than-expected Supply Addition from the Start-up 3 Delay in Nghi Son and Jeddah’s Closure Asia Pacific and Middle East Effective CDU Addition VS Additional Demand Middle East China Other AP Japan India Vietnam Teapot Net Addition AP & ME Demand Growth KBD Demand growth > New Capac
Slide 33: Thailand Oil Demand Growth
Domestic -33- Thailand Oil Demand Growth Thailand Oil Demand Growth Average Year on Year Y2016(B) Y2017(B) Y2018F(C) 2015-2016(B) Mogas (A) +11.5% +9.8% +3.7% +3.1% Jet/Kero +8.2% +6.8% +4.4% +2.5% Diesel (A) +3.5% +3.1% +2.9% +1.9% Total +6.3% +5.4% +3.4% +2.3% GDP +3.1% +3.2% +3.9%(D) +3.9%(E) Tha
Slide 34: Aromatics
AROMATICS -34- Sanaon
Slide 35: PX and BZ Market Still Supported by Firm Fundamentals
Aromatics -35- PX and BZ Market Still Supported by Firm Market Fundamentals Aromatics Market PX CFR Taiwan-ULG95 ($/TON) BZ FOB Korea-ULG95 ($/TON) 332315341 343 317 313 288 280 297 255246 256 273258260276 233 245 243 225 185 195212 156138174 163 98 115 101 97 74 Y2015 Y2016 Y2017 Q1TD-18* Q3-16 Q1-
Slide 36: Firm PX Market supported by Summer Demand and New PTA Plants
Aromatics -36- Firm PX Market supported by Summer Demand and 1 New PTA Plants A Firm Polyester Demand to Support Market B High PTA Plants to Support PX Consumption in 2018 AP/ME Effective PX Capacity vs Demand Addition AP/ME Effective PTA Capacity Addition Operating Rate Mil TON PTA Mil TON PetroRab
Slide 37: Stable BZ Market on Firm Chinese Import Interest
Aromatics -37- Stable BZ Market on Firm Chinese Import Interest amid 2 Slightly Lower Demand Growth A Slightly Lower BZ Addition in 2018 to Support Market B Slightly Higher SM Capacity Addition in 2018 AP/ME Effective BZ Capacity vs Demand Addition AP/ME Effective SM Capacity Addition Mil TON Operat
Slide 38: Base Oil & Bitumen
BASE OIL & BITUMEN -38- Sanaon
Slide 39: Softer Base Oil Market due to Higher Plant Addition
Base Oil & Bitumen -39- Softer Base Oil Market due to Higher Plant Addition 500SN – HSFO ($/TON) A AP Base Oil Nameplate Capacity Addition Mil TON 556528 1.8 506 450431 427409443 451 458498 487 2.0 1.2 369399 367412 1.0 0.5 0.2 0.0 -1.0 2015 2016 2017 2018 Group 1 Group 2 Group 3 Net Capacity Y2015
Slide 40: Stable Bitumen Market on Firm Demand
Base Oil & Bitumen -40- Stable Bitumen Market on Firm Demand Bitumen-HSFO ($/TON) A Higher Import Demand from China and India Import Volume of Major Asian Players Mil TON 82 98 56 10.0 7.9 8.2 7.6 8.0 23 20 8.0 6.0 -7 -13 -38 -29 4.0 -48 -61 -49 -45 -31 -56 -80 2.0 0.0 Y2015 Y2016 Y2017 Q1-17 Q1TD-1
Slide 41: Linear Alkyl Benzene (LAB)
-41- Linear Alkyl Benzene (LAB)
Slide 42: Stable LAB Market due to Higher Demand amid Lower Plant Maintenance
LAB -42- Stable LAB Market due to Higher Demand amid Lower Plant Maintenance LAB Market LAB Spread** ($/TON) KTA AP/ME Effective Maintenance/Closure* 250 200 654666675627656 635627619 606 603 543 539 534522550 150 503 100 50 0 1H-17 2H-17 1H-18 2H-18 2017 2018 Y2015 Y2016 Y2017 Q1TD-18* Q1-15 Q2-15
Slide 43: Conclusion
CONCLUSION -43- Sanaon
Slide 44: 1H-18 Market Outlook Conclusion
Conclusion -44- 1H-18 Market Outlook Conclusion (vs. 2H-17) Crude Oil Sustaining Crude Prices with Downward Trend amid Surging U.S. Supply Firm Petroleum Product Market from Robust Demand Growth Refinery and Limited Supply Stable-to-Firm Aromatics on Demand Growth and Aromatics Downstream Plant Addi
Slide 45: Thank You
-45- Thank You Any queries, please contact: at email: ir@thaioilgroup.com Tel: 662-797-2999 / 662-797-2961 Fax: 662-797-2976
Slide 46: Appendix
-46- APPENDIX • Strategic Investment Plan • Optimized & Flexible Operations…Superior Performance • CDU Addition VS Additional Demand – AP & ME • World GRM / Inventories • Thailand petroleum demand by products
Slide 47: Strategic Investment Plan Approved by Board of Directors
Updated CAPEX plan -47- Strategic Investment Plan Approved by Board of Directors CAPEX Plan (Unit US$ million) Project Planned capital investment 2017 2018 2019 Reliability, Efficiency and Flexibility Improvement 40 26 6 Benzene Derivatives – LAB 1 2 5 Power – 2 SPPs 2 Infrastructure Improvement - L
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 Teapot India Start-up Nameplate Country Company Japan Other AP period) (KBD) China ME Close Q3-17 42 India HPCL Bhatinda Middle East Net Addition AP & ME Demand Growth China (Oct’16 > Jul’17) 260 CNPC/SA Anning KBD China (Feb’17 > Sep’17)
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 Source : EIA Source : EurOil Source : METI 19 12 3.9 Total Capacity: 18.1 MBD 89.06% Total Capacity: 15.8 MBD 68.98% Total Capacity: 3.5 MBD 90.28% 18 3.7 17 11 3.
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 2018 2017 avg 13-16
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 2018 2017 avg 12-16 5yr-range 2018 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 2018 2017 avg 13-17 5yr-range 2018
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 2018 2017 avg 13-17 5yr-range 2018 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 400 600 350 500 300 250 400 200 300 150 200 100 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
Slide 56: Domestic LPG Demand
Thailand petroleum demand by products -56- Domestic LPG Demand Thailand LPG Demand LPG Demand Highlight • In 2017, LPG demand increased slightly by 0.9%YoY on account of 6.9%YoY higher demand from petrochemical sector, as a result of PTTGC major shutdown in May16-Jun16. Moreover, LPG demand was also
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 2017, Mogas demand rose moderately by 3.7%YoY to an average 30.0 ML/day. Although, the retail price of Mogas is higher, Mogas demand was still supported
Slide 58: Domestic Jet Demand
Thailand petroleum demand by products -58- Domestic Jet Demand Thailand JET-A1 Demand JET Demand Highlight • In 2017, Jet consumption increased significantly by 4.4% over the corresponding period last year mainly owning to booming tourism industry, leading to 5.4%YoY higher aircraft movement. The ex
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 2017, Diesel demand rose moderately by 2.9% YoY as a result of Thai economic recovery. However, Diesel demand was still pressured by flooding situation in Southern part of Th
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 2017, Fuel Oil consumption fell sharply by 6.6%YoY, as a result of sharply falling by 55.0%YoY of electricity sector demand which pressured by fewer day of Myanmar gas field ma
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 2017 Earnings Presentation on 6ix