Thai Oil Public Co. Ltd. · SET:TOP
Thai Oil Public — Q2 2016 Earnings Presentation
64 slides from Thai Oil Public's earnings presentation, Aug 15, 2016
Slide 1: Q2/2016 Analyst Presentation
Thai Oil Public Company Limited Q2/2016 Analyst Presentation 15 Aug 2016 Time : 9.30am. - 12.00pm. 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 Policy
-4- Corporate Governance Policy Roles and Responsibilities for Corporate Governance Policy Stakeholders The board of directors, management • Truthfully report company’s situation and and all staff shall commit to moral future trends to all stakeholders equally principles, equitable treatment to all
Slide 5: Presentation Agenda
-5- Presentation Agenda Q2/16 KEY HIGHLIGHTS Q2/16 PERFORMANCE ANALYSIS 2H-16 & 1H-17 MARKET OUTLOOK TOP GROUP WAY FORWARD
Slide 6: Q2/16 Key Highlights
-6- Q2/16 KEY HIGHLIGHTS
Slide 7: Q2/16 Key Market Drivers Highlights
Key Highlights -7- Q2/16 Key Market Drivers Highlights Refinery Soften MKT GRM pressured by lower Gasoline spread Implication as high inventory worldwide which was more than Soften Mkt GRM at 4.4 * enough to serve demand during US driving season & $/bbl (Q1/16 = 6.1 $/bbl) Muslim Ramadan Rising
Slide 8: Q2/16 Key Achievements
Key Highlights -8- Q2/16 Key Achievements Key Achievements Q2/16 TOP Group Net Profit Unit : million THB (MB) Operational Maximized Refinery run & optimized run Excellence for Aromatics & Lube Base Net Operating Profit (before tax) Stock G/(L) (before tax) Reversal of NRV/(NRV) (before tax) Others
Slide 9: Key Projects Update: Successfully COD of LAB & TOP SPP
Key Projects Update -9- Key Projects Update : Successfully COD of LAB & TOP SPP Project : LAB Project : TOP SPP TPX 75% & Mitsui 25% , CAPEX 400 M$ TOP owns 100% , CAPEX 380 M$ Feedstock : Kerosene 532 KTA, Benzene 33 KTA Power capacity : 239 MW (20% TOP Group & 80% EGAT) Product : LAB 100 KTA, By P
Slide 10: Q2/16 Performance Analysis
-10- Q2/16 PERFORMANCE ANALYSIS
Slide 11: Refinery: Ongoing High Utilization Rate & Domestic Sales Portion
Refining -11- Refinery: Ongoing High Utilization Rate & Domestic Sales Portion TOP/ Domestic Refinery Utilization Rate Domestic Oil Demand Unit: % Utilization Rate 1H/2015 1H/2016 110% 109% 108% KBD 110% 106%107%107% 107% 102% 6.2% 98% 800 600 4.3% 90% 94% 95% 94% 95% 92% 94% 91% 400 10.9% 88% 6.1%
Slide 12: Q2/16: Softer Market GRM but Higher Accounting GRM
Refining -12- Q2/16: Soften Market GRM from Lower Gasoline Spread but Higher Accounting GRM due to Inventory Gain Dubai Crude Price & Key Petroleum Product Spreads Refinery Utilization 2015 2016 2015 Q1/16 Q2/16 1H/16 $/bbl Q1 Q2 Q3 Q4 Q1 Q2 1H Q3TD* FY15 107% 109% 108% DUBAI (DB) 51.9 61.3 49.7 40.
Slide 13: Q2/16: Stable Aromatics Supported by Good Downstream Demand
Aromatics/LAB -13- Q2/16: Stable Aromatics Supported by Good Downstream Demand Aromatics Spreads and Margins Aromatics Production 2015 2016 2015 Q1/16 Q2/16 1H/16 $/ton Q1 Q2 Q3 Q4 Q1 Q2 1H Q3TD* FY15 80% 80% 80% PX*-ULG95 255 246 233 288 332 315 324 382 256 Market Highlight BZ-ULG95 98 115 74 101 1
Slide 14: Q2/16: Good LAB Margins Supported by Strong Regional Demand
Aromatics/LAB -14- Q2/16: Good LAB Margins Supported by Strong Regional Demand LAB Price and Spread LAB’s Production & P2F Margin Performance Highlight 2016 2016 + Improved P2F due to an uptick spread over BZ $/ton Q1 Q2 1H Q3TD * Q1 Q2 1H supported by firm demand in LAB 1,087 1,156 1,122 1,175 LAB
Slide 15: Q2/16: Stable Base Oil Contribution
Lube Base Oil -15- Q2/16: Stable Base Oil Contribution as Higher Seasonal Demand Offset Weaken Spread Base Oil & Bitumen Spreads & Margins Base oil Production 2015 2016 2015 Q1/16 Q2/16 1H/16 $/ton Q1 Q2 Q3 Q4 Q1 Q2 1H Q3TD * FY15 88% 84% 86% 500SN-HSFO 369 399 506 450 427 409 418 466 431 % Base Oil
Slide 16: Q2/16 Power Sector Performance
Power -16- Q2/16 Power Sector Performance…One of Future Earnings Driver Power Business Sector SPP Equity holding in TP / TOP SPP GPSC **** Power & Steam Sales ***TOP shareholding 24.29% (8.91% via TOP and 20.79% via TP) 287 GPSC is an associate company of TOP. Equity method is applied to recognize E
Slide 17: Integrated Margin & Competitive Cash Cost
Financial -17- Integrated Margin & Competitive Cash Cost Gross Refining Margin Refinery’s Cash Cost (Unit: US$/bbl) (Unit: US$/bbl) Market GRM Accounting GRM (Market GRM + Stock G/L) Operating Cost Interest Expense (net) (excl. one-time non- operating item) 7.8 8.6 5.7 5.9 6.1 6.9 5.1 5.1 4.4 5.2 4.
Slide 18: Q2/16: Performance Breakdown
Performance Breakdown -18- Q2/16: Performance Breakdown Utilization/Production (%) & Net Profit (million THB) Key Points • Refinery: max run to capture strong domestic market • Aromatic/LAB: optimized aromatic run serving good downstream demand & more contribution from LAB due to improving margins •
Slide 19: Q2/16 TOP Group Consolidated P&L
Financial -19- Q2/16 TOP Group Consolidated P&L (million THB) Q2/16 Q1/16 QoQ+/(-) Q2/15 YoY+/(-) 1H/16 1H/15 YoY+/(-) Sales Revenue 72,368 56,790 15,578 79,036 (6,668) 129,158 150,402 (21,244) Hedging Gain (147) 27 (174) (187) 40 (119) (111) (8) EBITDA 10,545 6,653 3,892 10,004 541 17,198 16,213 98
Slide 20: 1H/16 TOP Group Consolidated Cash Flow
Financial -20- 1H/16 TOP Group Consolidated Cash Flow (Unit: Million THB) (Unit: Million THB) Operating Cash Flow Investments 1H/16 1H/15 1H/16 1H/15 Operating Cash Flow 12,791 12,301 Investments (20,383) (9,769) Net income & non-cash adj. 16,891 14,502 + ST investments (16,595) (3,351) CAPEX (PP&E)
Slide 21: Strong Financial Position & Financial Ratios
Financial -21- Q2/16 TOP Group Strong Financial Position & Financial Ratios Statements of Financial Position Consolidated Long-Term Debt as at 30 Jun 16 1) (Unit: million THB) Total Long-Term Debt Net Debt 192,166 206,209 74,974 million THB 18,257 million THB Cash & ST (US$ 2,121 million (US$ 517 mi
Slide 22: 2H-16 & 1H-17 Market Outlook
-22- 2H-16 & 1H-17 MARKET OUTLOOK • Crude Oil • Petroleum Products • Aromatics • Base Oil & Bitumen • Linear Alkyl Benzene (LAB)
Slide 23: Crude Oil
-23- CRUDE OIL
Slide 24: Crude Oil Market: Oil Market Rebalance is Still at Risk
Crude Oil -24- Crude Oil Market: Oil Market Rebalance is Still at Risk Dubai Price Movement $/BBL China’s Stock OPEC failed to No consensus on 1 2 80 Market Crash agree on an output freeze output ceiling BREXIT 60 40 Iran’s Nuclear 20 Canada Wildfire OPEC & Deal Done Iran’s Nuclear & Nigerian outage
Slide 25: Bearish Sentiments over Rising Crude Oil Supply in Q3-16
Crude Oil -25- Bearish Sentiments over Rising Crude Oil Supply 1 in Q3-16 A Large Supply Disruptions are Resolving B Libya to Restore Output to 900 KBD in Dec’16 MBD Global Crude Supply Outages MBD Libya’s Oil Production Percent 4.0 5.0% 2.0 4.0% Civil Wars 3.0 3.0% 1.5 2.0 Target 900 KBD by 2.0% 1.
Slide 26: Lower Crude Oil Surplus, Driven By Slowing U.S. Outputs
Crude Oil -26- Lower Crude Oil Surplus, Driven By 2 Slowing U.S. Outputs and Limited Iranian Production A Slowing U.S. production at Low Prices B US Shale Oil Set to Decline after the CAPEX Cuts Breakeven for New U.S. Production (WTI $/BBL) US Shale Oil Output Growth (YoY) $/BBL MBD 100 -0.7 MBD YoY
Slide 27: Petroleum Products
-27- PETROLEUM PRODUCTS
Slide 28: Higher Refinery Margins in Q4-16 On Improved Middle Distillate Cracks
Refinery -28- Higher Refinery Margins in Q4-16 On Improved Middle Distillate Cracks Singapore Cracking GRM ($/BBL) 8.5 8.0 7.9 7.6 7.7 5.8 6.1 5.0 4.7 Y2014 1Q15 2Q15 3Q15 4Q15 Y2015 1Q16 2Q16 3Q16TD 3Q16F 4Q16F 2016F 1H-17F Actual Forecast Sources: Reuters, TOP’s estimate ($/BBL) Q1-16 Q2-16 Q3TD-1
Slide 29: Soft Gasoline on Supply Glut in Short-term
Refinery -29- Soft Gasoline on Supply Glut in Short-term, 1 but Limited Downside in Q4-16 A Supply Surplus on Refinery Yield Switching B Rising Demand in Q4-16 on Australian demand Asia Pacific Refinery Gasoline and Gasoil Yield Asia Pacific Gasoline Demand KBD Percent 7,000 Ramadan Australia’s 37%
Slide 30: Lower Middle Distillate Cracks in Q3-16, But Recover in Q4-16
Refinery -30- Lower Middle Distillate Cracks in Q3-16, 2 But Recover in Q4-16 from Higher Demand A Chinese Gasoil Export on the High Side B Softer Demand During Monsoon Season KBD Chinese Gasoil Export MBD Indian Gasoil Demand 400 1.8 Rainy 300 1.6 Season 200 1.4 100 1.2 2016 2015 0 1.0 Jan-15 Jul-1
Slide 31: Demand Growth Better Than Refinery Addition
Refinery -31- Demand Growth Better Than Refinery Addition CDU Addition VS Additional Demand – AP & ME Middle East China Australia Japan India Other AP Vietnam Net Addition AP & ME Demand KBD 1200 1000 800 600 507 479 454 400 259 181 200 88 0 -200 -400 2015 2016 2017 2018 2019 2020 Note: Adjusted cap
Slide 32: Thailand Oil Demand Growth
Domestic -32- Thailand Oil Demand Growth Thailand Oil Demand Growth Average 1H-16(B) Year on Year Y 2015(B) Y 2016(C) 2011-2015(B) (vs. 1H-15) Mogas (A) +7.1% +13.3% +10.9% +10.0% Jet/Kero +4.4% +9.7% +6.1% +5.5% Diesel (A) +3.4% +4.0% +4.3% +4.2% Total +4.4% +7.1% +6.2% +5.9% GDP +3.4% +2.8% N/A +3
Slide 33: Aromatics
-33- AROMATICS
Slide 34: Aromatics Market Softens from New Capacity Addition
Aromatics -34- Aromatics Market Softens from New Capacity Addition despite Growing Aromatics Demand Aromatics Market PX CFR Taiwan-ULG95 ($/TON) BZ FOB Korea-ULG95 ($/TON) 382 332 315 193 288 156 255 246 233 256 138 115 101 97 98 74 Y2016F 4Q15 1Q16 4Q16F 1Q15 2Q15 3Q15 Y2015 2Q16 1H17F 3Q16TD 1H17F
Slide 35: Softer PX Market from New Capacity Addition
Aromatics -35- 1 Softer PX Market from New Capacity Addition A New PX Capacity Addition Pressures Market B Reducing Operation Rate amid Higher Capacity AP & ME Effective PX Capacity Addition AP & ME PX Demand and Capacity Operation Mil TON Mil TON Rate 2017 1.5 60 Demand: + 4.3% YoY 90% Capacity: +
Slide 36: Softer BZ Market from New Capacity Addition
Aromatics -36- 2 Softer BZ Market from New Capacity Addition A New BZ Capacity will Come Online in 2017 B Firmer Demand Growth Supports BZ market AP & ME Effective BZ Capacity Addition AP & ME BZ Demand and Capacity Operation Mil TON Rate Mil TON 2017 60 90% 1.0 Demand: + 4.0% YoY 50 Capacity: + 3.5
Slide 37: Base Oil & Bitumen
-37- BASE OIL & BITUMEN
Slide 38: Softer Base Oil Market in Q4-16 from Lower Demand
Base Oil & Bitumen -38- Softer Base Oil Market in Q4-16 from Lower Demand amid Higher Supply 500SN – HSFO ($/TON) 1 Global Additional Nameplate Capacity Mil TON 486 495 506 8.0 450 431 427 409 466 369 399 6.0 4.8 4.0 2.0 1.5 0.0 0.1 0.1 4Q16F Y2016F Y2013 Y2014 1Q15 2Q15 3Q15 4Q15 Y2015 1Q16 2Q16 1H
Slide 39: Stable Bitumen Market in Q4-16 from Pick-up Demand
Base Oil & Bitumen -39- Stable Bitumen Market in Q4-16 from Pick-up Demand before Year-end amid High Inventory Bitumen-HSFO ($/TON) 1 Import Volume of Major Asian Players in 2016 82 98 KTON/MONTH China KTON/MONTH India 56 600 200 23 20 300 100 -14 -32 -7 -48 -40 0 0 Jan-16 Mar-16 May-16 1H17F 3Q16TD
Slide 40: Linear Alkyl Benzene (LAB)
-40- Linear Alkyl Benzene (LAB)
Slide 41: Steady LAB Market from Tight Supply
LAB -41- Steady LAB Market from Tight Supply LAB Market LAB CFR SEA - BZ FOB Korea ($/TON) KTA Effective AP & ME Plant Maintenance 120 591 100 583 582 569 549 557 80 544 540 528 513 60 40 20 4Q16F Y2016F Y2013 Y2014 1Q15 2Q15 3Q15 4Q15 Y2015 1Q16 2Q16 1H2017F 3Q16TD 0 Q1-16 Q2-16 Q3-16 Q4-16 1H-17 L
Slide 42: Conclusion
-42- CONCLUSION
Slide 43: Q4-16 Market Outlook Conclusion
Conclusion -43- Q4-16 Market Outlook Conclusion (vs. Q3-16) Crude Oil Higher crude oil prices from slowing U.S. oil production Higher refinery margins from improved middle distillate Refinery cracks Softer Aromatics market from higher capacity addition Aromatics despite growing Aromatics demand Soft
Slide 44: TOP Group Way Forward
-44- TOP GROUP WAY FORWARD
Slide 45: TOP Group Way Forward 2H 2016 & 2017
-45- TOP GROUP Way Forward 2H 2016 & 2017 Short Term Driver Optimize LAB & New SPP performance after COD 1H 2016 Longer Term Driver CFP Study on track… doing FEED, which will be completed by Q1/17 In the meantime Strengthen Operational Excellence thru Cost Management (Orchestra) & Productivity
Slide 46: Cost Management: ORCHESTRA
-46- Cost Management : ORCHESTRA HARMONIZE FOR OUR FUTURE 1 Operation & Maintenance 4 Project Efficiency Development 2 Procurement & Warehouse 5 IT Support 3 Manpower Management 6 General & Admin
Slide 47: Productivity Improvement: TRANSCENDENCE
-47- Productivity Improvement : TRANSCENDENCE 1 2 3 47
Slide 48: Thank You
-48- Thank You Any queries, please contact: at email: ir@thaioilgroup.com Tel: 662-797-2999 / 662-797-2961 Fax: 662-797-2976
Slide 49: Appendix
-49- APPENDIX • Strategic Investment Plan • 2015 Dividend Payment • Optimized & Flexible Operations…Superior Performance • CDU Addition VS Additional Demand – AP & ME • World GRM / Inventories • Thailand petroleum demand by products
Slide 50: Strategic Investment Plan
Updated CAPEX plan -50- Strategic Investment Plan CAPEX Plan (Unit US$ million) Remaining capital investment Projects COD Total Project Cost Our CAPEX (2011-2018) 2015 2016 2017 2018 investments will Reliability, efficiency and flexibility 2013-2018 353 21 60 5 4 cover improvements improvement in pl
Slide 51: 2015 Dividend Payment
Financial -51- 2015 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 9.40 9.19 1H dividend Year Dividend 7.82 8.13 7.28 5.91 6.04 5.97 4.39 4.57 2.75 2.00 2.00 1.00 3.5
Slide 52: Optimized & Flexible Operations…Superior Performance
-52- Optimized & Flexible Operations…Superior Performance Crude Assays based on Sources of Product Domestic demand for Reference Price TOP configuration* Crude output petroleum products** % S = 1.43 % S = 2.52 % S = 0.78 % S = 1.97 2% SAUDI 1 LPG Others *** 5% API = 32.0 API = 31.2 API = 39.4 API =
Slide 53: Demand Growth Outpacing Supply Due to Refinery Closures
Refinery -53- Demand Growth Outpacing Supply Due to Refinery Closures CDU Addition VS Additional Demand – AP & ME Start-up Country Nameplate Company period) (KBD) AP Additional Demand ME Additional Demand Q1-15 UAE 417 Ruwais Middle East China Q2-15 China 70 Local Rizhao Lanqiao Australia Japan Indi
Slide 54: Asian Margin Vs. US-EU margin
World GRM -54- Asian Margin Vs. US-EU margin 95.49% 60.94% 60.94% Total Capacity: 17.5 MBD Total Capacity: 17.0 MBD Total Capacity: 4.9 MBD Source: EIA, Norwegian Energy, Thai Oil
Slide 55: Crude Inventory
Inventories -55- Crude Inventory Source: Norwegian Energy
Slide 56: Global Distillate Inventory
Inventories -56- Global Distillate Inventory Source: Norwegian Energy
Slide 57: Fuel Oil Inventory
Inventories -57- Fuel Oil Inventory Source: Norwegian Energy
Slide 58: China's Product Export
China Export -58- China’s Product Export Source: Norwegian Energy
Slide 59: Domestic LPG Demand
-59- Domestic LPG Demand Thailand LPG Demand LPG Demand Highlight • In H1/16, LPG demand fell significantly by 12.1%YoY on account of lower usages in all sectors. Most of the decline came from petrochemical sector which its feedstock switching from LPG to Naphtha leading to 16%YoY drop in this secto
Slide 60: Domestic Gasoline Demand
-60- Domestic Gasoline Demand Thailand Gasoline Demand GASOLINE Demand Highlight • In H1/2016, Mogas demand jumped sharply by 10.9%YoY to an average 28.58 ML/day. This was mainly due to lower retail prices and higher number of passenger cars since the end of the last year, as a result of avoiding ne
Slide 61: Domestic Jet Demand
-61- Domestic Jet Demand Thailand JET-A1 Demand JET Demand Highlight • In H1/2016, Jet consumption increased significantly by 6.1% over the corresponding period last year mainly owning to booming tourism industry. The expansion in tourism sector was a result of increasing number of Chinese and Europ
Slide 62: Domestic Gasoil and NGV Demand
-62- Domestic Gasoil and NGV Demand Thailand Gasoil Demand Diesel Demand Highlight • In the first half of 2016, Diesel demand rose gradually by 4.3% YoY as relatively low retail prices boosted the consumption amidst higher number of accumulated commercial vehicles. Nevertheless, demand growth was cu
Slide 63: Domestic Fuel Oil Demand
-63- Domestic Fuel Oil Demand Thailand Fuel Oil Demand FUEL OIL Demand Highlight • In H1/2016, Fuel Oil consumption jumped rapidly by 15.6%YoY, as a result of sharply increase by 24.0%YoY in transportation demand. Last year, transport activity in Thai fishery was pressured by EU warning of the conce
Slide 64: Thank You
-64- 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 — Q2 2016 Earnings Presentation on 6ix