51 slides from Turkiye Petrol Rafinerileri A.s's investor presentation, August 2020
Slide 1: Investor Presentation
Investor Presentation August 2020 Hizmete Özel / Confidential
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 variables and changes in und
Slide 3: Refining Market
Refining Market Hizmete Özel / Confidential
Slide 4: Brent Crude Prices
Brent Crude Prices + OPEC ++ production cut - Concerns on global economic development + Impact of Iran & Venezuela sanctions - Covid-19 related demand drop + Escalating regional tension - Storage capacity fill up $/bbl 90 81.2 80 70 67.0 2018 ave. 2017 ave. 71.0 $/bbl 60 2019 ave. 55.4 54.3 $/bbl 64
Slide 5: Global Refinery Capacity Changes
Global Refinery Capacity Changes Expectations until 2024: • ~80% of net capacity additions will come from Asia & Middle East • Net capacity and demand in Europe will remain roughly unchanged 2012-2018 Net Capacity Additions by Region 2019-2024 Net Capacity Additions Asia & Middle East Other Total Eu
Slide 6: Middle Distillate Cracks
Middle Distillate Cracks $/bbl Diesel Jet Fuel 5yr range 2019 2020 5 yr ave 5yr range 5 yr ave 2019 2020 25 25 20 17.0 17.4 16.4 20 14.8 17.9 15 14.4 13.8 13.2 16.2 16.2 16.6 10.9 11.2 12.5 14.9 15.0 15 14.1 10 10.4 13.9 10.3 12.5 12.9 7.9 9.3 5.8 12.2 11.4 5 10 11.2 9.7 11.3 10.1 6.4 -0.6 0 -1.6 5
Slide 7: Gasoline and High Sulphur Fuel Oil Cracks
Gasoline and High Sulphur Fuel Oil Cracks $/bbl Gasoline High Sulphur Fuel Oil 5yr range 2020 2019 5 yr ave 5yr range 2020 2019 5 yr ave 25 0 -5.0 -4.8 -5.5 -7.0 -7.1 -8.4 -8.6 -7.8 -8.1 -6.9 20 -10 -9.8 -11.3 -13.4 15 14.7 -16.9 -15.8 12.1 -20 11.0 -22.5 12.0 10 9.9 9.8 10.6 -22.4 10.0 9.4 9.0 7.7
Slide 8: Crude Price Differentials to Brent
Crude Price Differentials to Brent Due to the initial OPEC+ disagreement in March, differentials were wider in Q2 compared to Q1. Volatility in differentials continue due to various factors affecting demand and supply dynamics. 2 00 -2 Arab Heavy -4 Basrah Heavy -6 Kirkuk Ural -8 Average* Iran OPEC+
Slide 9: Turkish Market
Turkish Market Hizmete Özel / Confidential
Slide 10: Turkish Consumption 2016-2019
Turkish Consumption 2016-2019 Million Tons Diesel Jet Fuel 28 -2.4% -4.4% 8 +8.3% 24.2 23.6 22.3 22.5 +6.5% 5.3 +10.5% 5.0 4.4 +2.6% 4.5 14 4 0 0 2016 2017 2018 2019 2016 2017 2018 2019 Gasoline Fuel Oil¹ 4 2 2.3 +1.2% 2.3 +3.0% 2.4 2.2 +3.1% 2 1 0.6 -16% 0.5 -27% -3.2% 0.4 0.3 0 0 2016 2017 2018 20
Slide 11: Turkish Market, 5M 2020
Turkish Market, 5M 2020 Covid-19 impact on jet demand was deeper as of May while diesel demand was relatively resilient. Million Tons Diesel ¹Jet Fuel 10 3.0 -6.0% -47.1% 5 1.5 9.29 8.73 1.86 0.98 0 0.0 2019 2020 2019 2020 Gasoline ²Fuel Oil 2 1.0 1 -13.4% 0.5 -35.1% 0.91 0.79 0.21 0.14 0 0.0 2019 2
Slide 12: Turkey's Net Import / Export Balance
Turkey’s Net Import / Export Balance Million 2016 2017 2018 2019 Tons 4 Export 2.8 3.0 0.1 0.3 0 -4 -3.0 -3.4 -8 -8.7 -12 Import -12.3 -16 LPG Gasoline Diesel Jet Aug-20 Hizmete Özel / Confidential Investor Presentation Turkish Market www.tupras.com.tr 12
Slide 13: Company Overview
Company Overview Hizmete Özel / Confidential
Slide 14: Tüpraş Shareholder Structure
Tüpraş Shareholder Structure Tüpraş is Turkey’s biggest industrial company and leading refiner. Koç Holding Aygaz Opet 77% 20% 3% Energy Investments Inc. (SPV) 51% Domestic Ditaş Ownership 22% 79.98% Opet Free Float 40% 49% Foreign Körfez Ulaştırma Ownership 78% 100% ¹As of December 31th,2019 Aug-20
Slide 15: Tüpraş's Refining Assets & Distribution Network
Tüpraş’s Refining Assets & Distribution Network + Tüpraş supplies ~55% of Turkey’s petroleum product needs + Tüpraş benefits from an integrated system Baku-Tbilisi-Ceyhan Oil Pipeline optimization with its high complexity, procurement and logistics flexibility Turkey‘s Storage Capacity Iraq-Turkey O
Slide 16: Nelson Complexity of Refining Companies
Nelson Complexity of Refining Companies Aug-20 Hizmete Özel / Confidential Investor Presentation Company Overview www.tupras.com.tr 16
Slide 17: Tüpraş Subsidiaries
Tüpraş Subsidiaries OPET, Distribution, Tüpraş Share: 40% DİTAŞ, Marine Transport, Tüpraş Share: 79.98% • 1,722 stations as of 30 Jun 2020 • 3 Crude Oil Tanker: 479,765 DWT • As of May 2020 Market share: 19.4% in white products; 19.1% in black • 1 Crude Oil - Product Tanker: 51,532 DWT products • 10
Slide 18: Operations
Operations Hizmete Özel / Confidential
Slide 19: Crude Suppliers of Tüpraş
Crude Suppliers of Tüpraş In 2019, Tüpraş purchased 15 different types of crude from 8 countries with gravities ranging between 20-47 API. Main Crude Suppliers in 2019 Crude Oil Imports by Region (%) Africa America Europe CIS Middle East 81 79 76 71 65 67 63 55 34 17 12 1315 1311 14 14 14 12 10 10 1
Slide 20: H1 Product Yields
H1 Product Yields 2019 H1 2020 H1 LPG Other BitumenOther LPG 4% Bitumen 1% 7% 2% 3% Kok 10% Gasoline Kok Gasoline 2% Other 4% Other 20% 20% Fuel Oil white Light Fuel Oil white 2% Black Prod. 1% Light 12% 2% Distil. Black Prod. 17% Distil. 22% 25% 24% Naphtha Naphtha 1% 1% Jet Mid. Distil. Mid. Disti
Slide 21: Annual Product Yields
Annual Product Yields 2018 2019 Other LPG OtherLPG Asphalt 2% 3% Asphalt Kok 2% 4% 12% 8% Gasoline 3% Gasoline Kok Other Other 3% 20% 20% white Light Fuel Oil White Light Fuel Oil Black Prod. 2% Distil. 9% Black Prod. 2% Distil. 7% 21% 25% 20% Naphtha 25% Naphtha 1% 1% Mid. Distil. Mid. Distil. Jet
Slide 22: Capacity Utilization and Quarterly Production Volume
Capacity Utilization and Quarterly Production Volume • We produced 4.9 million tons in Q2 2020 • Capacity utilization for Q2 2020 was 69.5%, mainly due to lower demand. Quarterly QuarterlyProduction Production(Million (Mn tons) Tons) Capacity Utilization Capacity Utilization 1 (%) (%) 2016 2017 2018
Slide 23: Sales
Sales • Tüpraş generated 29.2 million tons of total sales 2019. Total Sales Customer Groups 2019 mn tons 31.5 28.7 30.3 29.8 29.2 Other Export 5.5 5.8 4.2 23% 6.5 6.8 LPG 6% 3% Bitumen Exports Jet 6% 24.8 25.7 25.6 Total Sales, 9% Military Domestic Sales 22.2 22.4 2019 THY Opet 2% 29.2 mn tons 5% 20
Slide 24: Financials
Financials Key Financials Hizmete Özel / Confidential
Slide 25: Refining Margin
Refining Margin Tüpraş Net Margin Mediterranean Premium to the benchmark Mediterranean $/bbl peers’ refining margin due to: 9.3 8.1 6.5 6.0 • Ability to use heavier and sour crudes with higher 5.3 4.8 4.6 complexity 3.2 4.0 3.7 • Access to a wide range of cheaper sources of crude 2.5 1.7 1.9 1.7 1.1
Slide 26: Tüpraş and Med Refining Margins
Tüpraş and Med Refining Margins Average Margins Tüpraş Net Margin Med Margin 9.3 8.1 5.3 4.6 3.7 3.5 2.7 1.7 1.1 0.6 2017 12M 2018 12M 2019 12M 2019 H1 2020 H1 Gross Inventory Clean Gross Clean NET Net ($/bbl) Med Margin Margin Effect Margin Margin Margin 2020 Q2 6.3 -1.3 7.5 2.2 0.9 -0.6 2020 H1 6.
Slide 27: Income Statement
Income Statement EBITDA realized as 477 mn TL in Q2 2020. Q2 Q2 H1 H1 Million TL % % 2020 2019 2020 2019 Net Sales 9,280 23,953 -61% 26,219 44,661 -41% COGS -8,390 -22,282 -62% -26,239 -41,998 -38% Gross Profit 890 1,671 -47% -20 2,662 -101% Operating Expenses -520 -420 -24% -977 -793 -23% Income/Lo
Slide 28: Financial Highlights
Financial Highlights EBITDA (mn TL) Net Income¹ (mn TL) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 8,908 3,812 3,713 5,882 1,887 493 1,793 992 1,766 3,396 1,237 3,778 4,039 1,528 738 803 1,457 542 526 1,505 956 -814 581 1,027 186 -2,450 1,542 2,210 331 869 870 867 1,495 79 378 688 1,575 -375 1,033 851 477 -155 335 -2,
Slide 29: Balance Sheet Analysis
Balance Sheet Analysis Net Debt Redemption Schedule (Billion TL) bn TL bn $ In Billion TL In Billion $ TL Hard Currency 15 5 10.8 12.0 12.2 10.1 12 10.6 11.0 4 10.1 8.7 8.4 9 3 6.1 6.2 5.1 6 2 2.3 1.7 1.7 1.9 1.8 1.9 1.9 3 1.5 1.4 1.6 1 1.1 0.2 0 0 Dec-16 Dec-17 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Ma
Slide 30: Q2 Profit Before Tax Bridge (2019-2020)
Q2 Profit Before Tax Bridge (2019-2020) Despite sizeable support from wider differentials, Profit Before Tax declined with weaker crack margins, lower production and lack of inventory gain with respect to Q2 last year. Million TL Aug-20 Hizmete Özel / Confidential Investor Presentation Financials ww
Slide 31: Annual Profit Before Tax Bridge (2018-2019)
Annual Profit Before Tax Bridge (2018-2019) 2019 PBT was lower mainly due to narrow differentials, weaker crack margins and natural gas price hikes. Million TL Aug-20 Hizmete Özel / Confidential Investor Presentation Financials www.tupras.com.tr 31
Slide 32: Dividend (TL)
Dividend (TL) 20 120% EPS DPS Dividend Payout 18 101% 102% 16 89% 87% 14 79% 77% 80% 12 66% 64% 10 8 15.2 14.8 15.2 33% 13.6 40% 6 10.2 4 6.5 7.2 5.8 5.8 6.2 5.0 4.8 2 3.9 3.9 3.2 2.9 3.0 2.5 0% 2.10% 1.6 0.0 0 0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Aug-20 Hizmete Özel / Confident
Slide 33: Investments (Million $)
Investments (Million $) • c6.7 bn USD investments since privatization • Reached 9.5 Nelson Complexity • Capability to process heavier and more sour crude Ongoing Projects Avg. 943 Mn$ • Revamp of Crude Units • FCC Modernization 1213 • New Sulphur Units 974 959 • Energy Saving Projects • Optimization
Slide 34: H1 2020 Results
H1 2020 Results Capacity Utilization (%) H1 77.0 77.0 % total capacity 2020 utilization in H1 2020 Refining Margins ($/bbl) 0 20 40 60 80 100 Med Margin Tüpraş Net Margin Med FY Tüpraş FY Operationals Exp Target H1 FY Target 11.5 mn tons of sales 0.6 and 11.0 mn tons of H1 2020 24 25 production in H
Slide 35: Tüpraş Balance Sheet (Million TL)
Tüpraş Balance Sheet (Million TL) 30.06.2020 31.12.2019 Diff. Diff. (%) Current Assets 27,390 27,919 -529 -2 Cash & C. Equivalents 18,178 10,652 7,526 71 Trade Receivables 1,721 4,788 -3,067 -64 Derivatives 779 304 475 156 Inventories 5,503 9,469 -3,965 -42 Pre-paid expenses 269 237 32 13 Other Curr
Slide 36: Leading Corporate Governance Score
Leading Corporate Governance Score Tüpraş BIST Corporate Governance Rating Score Credit Rating Scores Overall 95.0 Foreign Currency Long Term Tüpraş BB- (Negative) B1 (Negative) Shareholders 95.5 Turkey BB- (Stable) B1 (Negative) B+ (Stable) Koç Holding B1 (Negative) BB- (Stable) Transparency 95.3 A
Slide 37: Financial Policy
Financial Policy Financial Discipline: Risk management policies focusing on areas such as leverage, liquidity, counterparty risk, commodity, interest rate and currency exposure. Proactive in liquidity risk management & targets/limits for financial ratios: Leverage & • Net financial debt/EBITDA • Cur
Slide 38: FX Exposure Management (30 Jun 2020)
FX Exposure Management (30 Jun 2020) Tüpraş continues to employ strict FX policies to mitigate Consolidated Hard Consolidated Hard currency risks stemming from volatility. Currency Assets Million $ Currency Liabilities Payables & Other • A significant portion of the Group's crude oil and refined Cas
Slide 39: Appendix
Appendix Hizmete Özel / Confidential
Slide 40: 2020 Refinery Maintenance Schedule
2020 Refinery Maintenance Schedule Refinery Unit Quarter Duration (weeks) Status Batman Plt 100/1100 Crude Oil & Vacuum Q1 10-12 Completed U-100 Crude Q1 9* Completed U-9200 CCR Q1 3 Completed U-4000 FCC Q4 6 Postponed to 2021 İzmir U-9200 CCR Q4 7 Postponed to 2021 U-9600 Isomerization Q4 8 Postpon
Slide 41: 2020 Expectations
2020 Expectations(*) Med Complex Refining Margin 1.0-2.0 $/bbl • Ural-Brent differential widening compared to 2019 • Weak outlook for jet fuel and gasoline Tüpraş Net Refining Margin 3.0-4.0 $/bbl • Weak outlook for jet fuel and gasoline cracks • Resilient diesel and strong HSFO cracks • ~24 mt prod
Slide 42: Competition - STAR Refinery
Competition - STAR Refinery Timeline Turkish Market Structure (mn tons) Turkish Turkey Tüpraş STAR Total Market Balance Demand Demand LPG 1.1 0.3 1.4 4.1 -2.7 Petchem F. 0.2 2.6 2.8 Gasoline 6.1 6.1 2.4 3.7 • Feasibility studies began in 2010 and Jet Fuel 5.2 1.6 6.8 5.2 1.6 construction kicked off
Slide 43: Competition - Regional Competition
Competition - Regional Competition • Tüpraş competes 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 flows Mediterranean Black Sea 54 Refineries ~7.8mbd 17 Refineries ~1.8mbd Aug-20
Slide 44: IMO 2020: Changes in Bunker Specification and Its Effects
IMO 2020: Changes in Bunker Specification and Its Effects HSFO replacement expectations Current compliant fuels Current Outlook • Marine Gasoil (Diesel): Easiest solution as it is already available • Very Low Sulphur Fuel Oil (VLSFO): Either through FCC with sweet crudes or by blending • Scrubbers:
Slide 45: Tüpraş Production Flow and Yield Breakdown
Tüpraş Production Flow and Yield Breakdown • Tüpraş has 30 million tons of production capacity • Tüpraş operates 4 refineries with an integrated system optimization program Flow Diagram # of Capacity Key Units Units (m3/d) LPG LPG, 3.5% MEROX CRUDE OIL 8 99,420 Gasoline Naphtha, VACUUM DIST. 8 42,75
Slide 46: RUP Feedstock and Production
RUP Feedstock and Production • Residuum Upgrade Plant (RUP) was completed in 2015 and it is the main conversion unit of Tüpraş. • First periodic maintenance was completed in Q2 2019. Total Processing ~4.50 mn tons Total Output ~4.25mn tons Aug-20 Hizmete Özel / Confidential Investor Presentation App
Slide 47: European Pump Price Comparison
European Pump Price Comparison Turkish fuel prices are highly competitive with other European countries. Gasoline (TL/Lt) Diesel (TL/Lt) Refinery Price Dist. Margin Tax Refinery Price Dist. Margin Tax 12 12 10 10 8 8 6.15 6.64 6.60 6.21 6.14 4.49 5.55 5.75 5.86 4.78 6 4.55 5.69 6 3.85 4.37 3.45 2.58
Slide 48: Tüpraş's Sustainability Efforts Over a Decade of Dedication
Tüpraş’s Sustainability Efforts Over a Decade of Dedication ~500 11.5% energy efficiency increase in solid 45.5% projects leading to waste recovery decrease in fresh Tüpraş kicked off its sustainability ~35,000 TJ saving water usage and 20.7 points program back in 2008 and achieved many milestones i
Slide 49: 2019 Achievements
2019 Achievements Environmental Responsibility Social Support Governance Excellence • Tüpraş won the first and jury • ~12,000 students have received • 9.50 Corporate Governance Rating special awards in Energy Efficiency robotic coding training within Our • 18% Female Representation at the in Industr
Slide 50: Koç Holding
Koç Holding Turkey’s Leading Investment Holding Company • Koç Holding is Turkey’s largest industrial and services group in terms of revenues, exports, employees, taxes paid and market capitalization • The only Turkish company in Fortuna 5001. 8% 9% 15% • 26% CAGR in consolidated profit2 the last fiv
Slide 51: Latest
Investor Presentation Latest Webcast Sustainability Report contact us: tuprasir@tupras.com.tr Hizmete Özel / Confidential