Slide 1: 2019 Annual Results Presentation
2019 ANNUAL RESULTS REFINING NZ 2019 RESULTS PRESENTATION PRESENTATION 27 February 2020
Slide 2: Disclaimer
REFINING NZ 2019 RESULTS PRESENTATION DISCLAIMER • This presentation contains forward looking statements concerning the financial condition, results and operations of The New Zealand Refining Company Limited (hereafter referred to as “Refining NZ”). • Forward looking statements are subject to the ri
Slide 3: Agenda
REFINING NZ 2019 RESULTS PRESENTATION AGENDA PERFORMANCE LOOKING AHEAD
Slide 4: 2019 Highlights
REFINING NZ 2019 RESULTS PRESENTATION AGENDA 2019 Highlights: PERFORMANCE – Outstanding health, safety and environmental performance LOOKING AHEAD – Excellent operational performance – highest annual crude and condensate intake – highest annual refined product make & customer product offtakes – Cost
Slide 5: Excellent operational and safety performance
HIGHLIGHTS REFINING NZ Excellent operational and safety performance 2019 RESULTS PRESENTATION FY 18 FY 19 Personal TRCF [1,2] 0.76 0.27 Tier 1 (>US$25k) [2] 2 0 Process Gross Refining Margin EBITDA Tier 2 (>US$2.5k) [2] 3 0 5.34 118 Releases outside consent 5 1 USD PER BARREL NZD M 6.31 per barrel i
Slide 6: EBITDA delivered in line with Profit Matrix
EBITDA REFINING NZ Delivered in line with Profit Matrix 2019 RESULTS PRESENTATION EBITDA Refining $77m Distribution $37m Laboratory $4m $118m The above chart excludes any movement in pass through costs such as natural gas, sulphur and carbon. See our Financial Statements for further detail, availabl
Slide 7: Factors impacting refining margin
FACTORS IMPACTING REFINING MARGIN Market disruption and volatility REFINING NZ 2019 RESULTS PRESENTATION Weaker petrol and diesel margins: - Capacity additions - Increased Chinese exports IMO 2020 MARPOL impacts - Prices moved contrary to market expectations US sanctions on China - Crude freight rat
Slide 8: Refinery achieved strong uplift over low Singapore margin
REFINERY ACHIEVED STRONG UPLIFT Driven by optimised product make and strong operational OVER LOW SINGAPORE MARGIN performance REFINING NZ 2019 RESULTS PRESENTATION 2018 2019 Delta US$/BARREL Freight 1.93 1.80 (0.13) Product quality 0.99 0.75 (0.24) Plant availability (1.02) (0.13) 0.89 Crude cost an
Slide 9: Government inquiries
GOVERNMENT INQUIRIES REFINING NZ Findings highlight critical role in fuels supply chain 2019 RESULTS PRESENTATION Auckland Fuel Supply Disruption - The Refinery to Auckland Pipeline was operated properly - Refinery invests in new infrastructure ahead of demand Retail Fuel Market Study - Recognised t
Slide 10: Contributing to a low emissions economy
CONTRIBUTING TO A LOW EMISSIONS ECONOMY Strong record of emissions reduction REFINING NZ 2019 RESULTS PRESENTATION - Te Mahi Hou the largest carbon reduction by a single project in NZ* - Equivalent to taking 60,000 Corollas off the road** CO2 intensity improvement - Pursuing further energy saving in
Slide 11: FGE forecasts: coronavirus impact and margin recovery
REFINING NZ 2019 RESULTS PRESENTATION FGE forecasts: PERFORMANCE – Coronavirus to impact demand and supply in 2020 LOOKING AHEAD – Margins to recover based on – High sulphur fuel oil cracks – Crude freight rates – Asian demand growth to outstrip refining capacity additions from 2021 RNZ ready to ben
Slide 12: Asia capacity and demand growth
ASIA CAPACITY AND DEMAND GROWTH Forecasts point to high refinery utilisation (caveat: Chinese REFINING NZ exports) 2019 RESULTS PRESENTATION kb/d Actual Forecast 2020: margin pressure impacts demand growth - China exports - New refineries operational early: China, Brunei - Outbreak of coronavirus 20
Slide 13: Singapore product cracks outlook
SINGAPORE PRODUCT CRACKS OUTLOOK Expected to support our GRM REFINING NZ 2019 RESULTS PRESENTATION FGE OUTLOOK: - Petrol expected to improve - Diesel expected to remain supported - High sulphur fuel oil expected to recover quickly with increased scrubbers on ships - Recovery since December: -27 USD/
Slide 14: Responding to cyclical headwinds
RESPONDING TO CYCLICAL HEADWINDS Refining NZ taking action REFINING NZ 2019 RESULTS PRESENTATION Safety-critical maintenance progressing to plan Significant reduction in cash costs: - Capital programmes - Operating costs Broadening crude slate to accept cheaper crudes Optimising refinery yields & Tu
Slide 15: Operating costs under review
OPERATING COSTS UNDER REVIEW A sustainable cost base is expected going forward REFINING NZ 2019 RESULTS PRESENTATION Non-energy costs under control Long term trend forecast to be reversed 2019 one offs have rolled off Solar farm expected to partially mitigate the longer term energy price risk once o
Slide 16: Turnaround lookahead
TURNAROUND LOOKAHEAD REFINING NZ Optimising planned maintenance 2019 RESULTS PRESENTATION 2020 • Crude Distillation Unit (CDU1) • Hydrocracker Unit Top Bed Skim • CCR Platformer • Gasoil Hydrodesulphuriser (HDS3) 2021* • Hydrocracker unit • Crude Distillation Unit (CDU2) CDU1 * Timing of Turnaround
Slide 17: Long term sustain capital funding plan
LONG TERM SUSTAIN CAPITAL FUNDING PLAN Optimisation continues REFINING NZ 2019 RESULTS PRESENTATION Overall spend driven by Turnaround cycles First CCR Platformer inspection and catalyst replacement in 2020 2020 forecast down from previous guidance of $99m to $70m Forecast 10-year average $70m, stil
Slide 18: Refinery-Auckland Pipeline
REFINERY-AUCKLAND PIPELINE REFINING NZ Optimising key infrastructure for NZ’s biggest region 2019 RESULTS PRESENTATION Working to further increase pipeline capacity RAP provides >90% of Auckland’s fuel (100% of jet fuel) Safest, most environmentally-friendly, cost- effective distribution method Refi
Slide 19: Securing supply
SECURING SUPPLY REFINING NZ Ready to benefit from expected market recovery 2019 RESULTS PRESENTATION Continue to deliver safely, on time and in specification Minimise cash costs in response to market challenges Maximise revenue by broadening crude slate, further optimising refinery yields & optimisi
Slide 20: Funding position
FUNDING POSITION REFINING NZ Debt structure extended 2019 RESULTS PRESENTATION Facilities renewal in 2019: - Senior debt tenor extended from 1 to 3 years - Overall debt tenor 7+ years (including subordinated notes) Undrawn facilities of $103m $100m of interest rate swaps mature in December 2020 Lend
Slide 21: 2020 Profit Matrix
2020 PROFIT MATRIX REFINING NZ 2019 RESULTS PRESENTATION 21
Slide 22: Renewed leadership
RENEWED LEADERSHIP REFINING NZ 2019 RESULTS PRESENTATION Naomi James, Chief Executive Officer Andrew Brewer, Chief Operating Officer - Overall business leadership - Refinery leadership - Develop and execute strategy to maximise - Responsible for safe execution and maximising shareholder value cash g
Slide 23: Appendix 1: Glossary
REFINING NZ 2019 RESULTS PRESENTATION APPENDIX 1 Glossary • LTIF – Lost time injury frequency (rolling 12 month per 200,000 hours) • TRCF – Total recordable case frequency (rolling 12 month per 200,000 hours) • Tier 1 Process Safety Event (API 754) – A tier 1 Process Safety Event (PSE) is an unplann
Slide 24: 2019 Annual Results Presentation
2019 ANNUAL RESULTS REFINING NZ 2019 RESULTS PRESENTATION PRESENTATION 27 February 2020