Thai Oil Public Co. Ltd. · SET:TOP
Thai Oil Public — Q1 2018 Earnings Presentation
62 slides from Thai Oil Public's earnings presentation, May 15, 2018
Slide 1: Thai Oil Public Company Limited Q1/18 Analyst Presentation
-1- Thai Oil Public Company Limited Q1/18 Analyst Presentation 15 May 2018 Time : 14.00 - 16.00 hrs. Venue : Vibhavadee Ballroom C @ Centara Grand at Central Plaza Ladprao
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 Q1/18 KEY HIGHLIGHTS Q1/18 PERFORMANCE ANALYSIS 2H-18 MARKET OUTLOOK
Slide 7: Q1/18 Key Highlights
Q1/18 KEY HIGHLIGHTS Sanaon
Slide 8: Q1/18 Key Market Drivers Highlights
Key Highlights -8- Q1/18 Key Market Drivers Highlights Refinery Implication Soften refinery margins pressured by higher crude premium due to 1) supply tightness followings OPEC’s allocation cut. But negative Mkt GRM at 5.7 $/bbl impact was partially offset by robust middle distillate spread due to
Slide 9: Q1/18 Key Achievements
Key Highlights -9- Q1/18 Key Achievements Key Achievements Q1/18 TOP Group Net Profit Operational Unit : million THB (MB) Maintain high reliable production Excellence Q1/18 Q4/17 Net Operating Profit F/X gain/(loss) Reversal of NRV/(NRV) & Adjusted to cost Others i.e. Hedging gain/(loss) & Refiner
Slide 10: Q1/18 Profitability Improvement (VS Corporate Plan)
Key Highlights -10- Q1/18 Profitability Improvement (VS Corporate Plan) Cost Management General & Admin , Procurement & warehouse , Operation & Maintenance , Value Enhancement Project & Manpower management Margin Improvement Unit: million THB (Hydrocarbon Management) 28% Higher Intake 52 354 Higher
Slide 11: Q1/18 Performance Analysis
-11- Q1/18 PERFORMANCE ANALYSIS
Slide 12: Refinery: Maintain High Utilization Rate
Refining -12- Refinery: Maintain High Utilization Rate TOP/ Domestic Refinery Utilization Rate Domestic Oil Demand Unit: % Utilization Rate KBD Q1/17 Q1/18 4.5% 114% 111% 112% 112% 113% 112% 800 110% 108% 108% 3.4% 600 98% 98% 97% 400 90% 94% 4.7% 94% 7.6% 89% 90% 91% 200 70% 0 * Q1/17 Q2 Q3 Q4 Q1/1
Slide 13: Q1/18: Softer Market GRM Pressured by Higher Crude Premium
Refining -13- Q1/18: Soften Mkt GRM pressured by Higher Crude Premium But partially offset by Robust Middle Distillate Cracks Dubai Crude Price & Key Petroleum Product Spreads Refinery Utilization 2017 2018 2017 Q1/18 Q4/17 Q1/17 $/bbl Q1 Q2 Q3 Q4 Q1 Q2TD* FY17 113% 112% 111% DUBAI (DB) 53.1 49.8 50
Slide 14: Q1/18: Improved Aromatics Contribution supported by Strong Demand
Aromatics/LAB -14- Q1/18: Improved Aromatics Contribution supported by Strong Demand Aromatics Spreads and Margins Aromatics Production 2017 2018 2017 Q1/18 Q4/17 Q1/17 $/ton Q1 Q2 Q3 Q4 Q1 Q2TD* FY17 90% 82% 90% PX**-ULG95 312 273 258 260 304 277 276 Q1/18 Market BZ**-ULG95 346 226 195 213 231 140
Slide 15: Q1/18: Stable Contribution supported by Strong Base Oil Spread
Lube Base Oil -15- Q1/18: Stable Contribution supported by Strong Base Oil Spread Base Oil & Bitumen Spreads & Margins Base oil Production 2017 2018 2017 Q1/18 Q4/17 Q1/17 $/ton Q1 Q2 Q3 Q4 Q1 Q2TD* FY17 89% 88% 88% 500SN-HSFO 451 556 528 458 512 504 528 % Base Oil & Specialty Sales Volume BITUMEN-H
Slide 16: Q1/18 Power Sector Performance
Power -16- Q1/18 Power Sector Performance…Growing Contribution to the Group Power Business Sector Equity holding in SPP GPSC **** [74%] [100%] Power & Steam Sales ***TOP shareholding 24.29% (8.91% via TOP and 20.79% via TP) GPSC is an associate company of TOP. Electricity(1) 2,504 Equity method is a
Slide 17: Integrated Margin & Competitive Cash Cost
Financial -17- Integrated Margin & Competitive Cash Cost Gross Refining Margin Refinery’s Cash Cost (Unit: US$/bbl) (Unit: US$/bbl) Market GRM Accounting GRM (Market GRM + Stock G/L) Operating Cost Interest Expense (net) (excl. one-time non- operating item) 9.6 7.8 7.6 6.8 6.7 6.2 5.9 6.0 5.2 5.7 2.
Slide 18: Q1/18: Performance Breakdown by Business Unit
Performance Breakdown -18- Q1/18: Performance Breakdown by Business Unit Utilization/Production (%) & Net Profit (million THB) Key Points • Refinery: higher utilization to capture decent margin and strong demand (local + Indochina) • Aromatic/LAB: higher contribution from higher production and impro
Slide 19: Q1/18 TOP Group Consolidated P&L
Financial -19- Q1/18 TOP Group Consolidated P&L QoQ analysis A A Mainly from overall sale B volume and product price increased C B Mainly from gain in dated time spread hedge D C Mainly from huge stock gain in Q4/17 D Mainly from lower E operating cost E Realized gain on AP/AR & unrealized gain on U
Slide 20: Q1/18 TOP Group Consolidated Cash Flow
Financial -20- Q1/18 TOP Group Consolidated Cash Flow (Unit: Million THB) (Unit: Million THB) Investments Operating Cash Flow Q1/18 Q1/17 Q1/18 Q1/17 Investments 2,896 (2,891) Operating Cash Flow 7,636 10,089 ST investments 4,352 244 Net income & non-cash adj. 7,157 10,047 + Available for sale (680)
Slide 21: Q1/18 TOP Group Strong Financial Position & Financial Ratios
Financial -21- Q1/18 TOP Group Strong Financial Position & Financial Ratios Statements of Financial Position Consolidated Long-Term Debt as at 31 Mar 18 (Unit: million THB) Total Long-Term Debt Net Cash 228,108 241,040 72,257 million THB 8,234 million THB 36,075 Trade Payable Cash & ST 35,461 / Othe
Slide 22: Thaioil Liability Management (LM)
-22- Thaioil Liability Management (LM) Before Thaioil Treasury Center (TTC) After Thaioil Treasury Center (TTC) Establishment Establishment USD Bond Value (Million) Portion USD Bond Value (Million) Portion TOP 2023 216 M$ 22% TOP 2023 500 M$ 50% TOP 2043 173 M$ 17% TTC 2023 284 M$ 28% TOP 2043 500 M
Slide 23: 2H-18 Market Outlook
-23- 2H-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: Soaring Oil Prices, Driven by Strong Fundamentals and Geopolitical Risks
Crude Oil -25- Soaring Oil Prices, Driven by Strong Fundamentals and Concerns over Geopolitical Risks Dubai Price Movement $/BBL U.S. re-imposed U.S. oil production 1st OPEC-led OPEC-led cut deal Keystone & Forties to reach 11 MBD 80 OPEC-led Cut supply cut deal extended until the Pipeline leakage s
Slide 26: Tighter Oil Market on Strong Fundamentals and Escalating Geopolitical Risks
Crude Oil -26- 1 Tighter Oil Market on Strong Fundamentals and Escalating Geopolitical Risks A U.S. Sanctions to Hit Iranian Oil Exports C Solid Oil Demand on Strong Global Economic Recovery Iran’s Crude Oil Export AVG. 300 KBD World Oil Demand Growth (YoY) By end-2018 If U.S. decides to MBD MBD res
Slide 27: Surging U.S. Crude Output to Cap the Upward Momentum
Crude Oil -27- 2 Surging U.S. Crude Output to Cap the Upward Momentum A Surging Non-OPEC Supply Led by U.S. Output B Rising U.S. Output to over 11 MBD, An All-Time High Non-OPEC Supply Growth (YoY) U.S. Crude Oil Production MBD MBD 12.0 4.0 MBD + 1.4 MBD (2018) 3.0 10.0 2.0 + 1.8 MBD (2018) 8.0 0.0
Slide 28: Petroleum Products
-28- PETROLEUM PRODUCTS Sanaon
Slide 29: Moderate Refining Margins Supported by Solid Demand and Limited Capacity Addition
Refinery -29- Moderate Refining Margins Supported by Solid Demand and Limited Capacity Addition Singapore Cracking GRM ($/BBL) 8.5 8.0 8.2 7.9 7.6 7.7 6.7 7.2 7.1 7.0 6.7 6.1 6.2 6.5 6.4 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- Q2TD- 18
Slide 30: Better Gasoline Margin from Firm Demand and Stable Chinese Exports
Refinery -30- Better Gasoline Margin from Firm Demand and Stable 1 Chinese Exports A Stock Draw to 5-yr Avg. from Strong Demand B Higher Demand Growth Led by China & India U.S. Gasoline Demand Asia Pacific Gasoline Demand MBD MBD 2H’18 : 9.41 MBD (+0.02 MBD YoY) 2H’18 : 7.17 MBD (+0.26 MBD YoY) 10.0
Slide 31: Stable Middle Distillate Cracks from Strong Demand and Low Inventories
Refinery -31- Stable Middle Distillate Cracks from Strong Demand and 2 Low Inventories A Strong Demand Growth Drives Market Deficit B Tight Supply amid Inventories below 5-Year Avg. Asia Pacific Middle Distillate Demand U.S/ARA/SING Middle Distillate Inventories MBD MBBL 2H’18 : 12.0 MBD (+0.23 MBD
Slide 32: Lower-than-expected Supply Addition from Start-up Delay and Refinery Closure
Refinery -32- Lower-than-expected Supply Addition from the Start-up 3 Delay and Refinery Closure Asia Pacific and Middle East Effective CDU Addition VS Additional Demand AP & ME Demand Growth Middle East China Other AP Japan India Vietnam Teapot Net Addition Operating Rate [RHS] KBD Demand growth >
Slide 33: Thailand Oil Demand Growth
Domestic -33- Thailand Oil Demand Growth Thailand Oil Demand Growth (B) 3M/18(B) Year on Year Y2016 (B) Y2017 VS 3M/17 Y2018F(C) Mogas (A) +9.8% +3.7% +4.7% +3.8% Jet/Kero +6.8% +4.4% +7.6% +3.8% Diesel (A) +3.1% +2.9% +3.4% +3.1% Total +5.4% +3.4% +4.5% +3.4% GDP +3.2% +3.9%(D) N.A. +4.1%(E) Thaila
Slide 34: Aromatics
AROMATICS -34- Sanaon
Slide 35: PX and BZ Market still under Pressure on High Supply Addition
Aromatics -35- PX and BZ Market still under Pressure on High Supply Addition Aromatics Market PX CFR Taiwan-ULG95 ($/TON) BZ FOB Korea-ULG95 ($/TON) 332315341 317 343 313 304 288 280 273258260276 277 255246 256 245 233 225 212 231 185 195 156138174 163 140 98 115 101 97 74 Y2015 Y2016 Y2017 Q2-18* Q
Slide 36: Weaker PX Market due to Higher Capacity Addition and Asian Lower Maintenance
Aromatics -36- Weaker PX Market due to Higher Capacity Addition and Asian 1 Lower Maintenance A High Capacity Addition to Pressure Market C High PTA Plants Addition to Support PX Demand AP/ME Effective PX Capacity Addition AP/ME Effective PTA Capacity Addition Mil TON Mil TON Dragon Tongkun 2 JBF 3.
Slide 37: Weaker BZ Market due to Slightly Higher Capacity Addition and High BZ Stock
Aromatics -37- Weaker BZ Market due to Slightly Higher Capacity Addition 2 and High BZ stock A Slightly Higher BZ Plant Addition to Cap Upside C C Higher Expect SM Capacity Rising Addition SM Operating Rate Limits Downside after Seasonal M/T AP/ME Effective BZ Capacity Addition AP/ME Effective SM Ca
Slide 38: Base Oil & Bitumen
BASE OIL & BITUMEN -38- Sanaon
Slide 39: Softer Base Oil Market due to New Additional Supply
Base Oil & Bitumen -39- Softer Base Oil Market due to New Additional Supply 500SN – HSFO ($/TON) 1 AP Base Oil Nameplate Capacity Addition Mil TON 556528 512504 506 450431 427409443 412 451 458498 3.0 2.0 369399 367 2.0 0.5 1.2 1.0 0.2 0.0 -1.0 2015 2016 2017 2018 Group 1 Group 2 Group 3 Net Capacit
Slide 40: Soft Bitumen Market on Slow Regional Demand
Base Oil & Bitumen -40- Soft Bitumen Market on Slow Regional Demand Bitumen-HSFO ($/TON) 1 Slow Import Demand from Major Importers KTON/MONTH Indonesia KTON/MONTH Vietnam 82 98 150 60 56 23 20 100 40 50 20 -7 -13 -38 -29 0 0 -48 -61 -49 -45 -31 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 -56 -79 Q1-17 Q2-17 Q3-17
Slide 41: Linear Alkyl Benzene (LAB)
-41- Linear Alkyl Benzene (LAB)
Slide 42: Steady LAB Market On Higher Plant Maintenance
LAB -42- Steady LAB Market On Higher Plant Maintenance LAB Market LAB Spread** ($/TON) AP/ME Effective Maintenance/Closure* KTA 120 654666675627656 635627619 606 603 543 539 534522550 529545 100 80 60 40 20 0 Y2015 Y2016 Y2017 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q
Slide 43: Conclusion
CONCLUSION -43- Sanaon
Slide 44: 2H-18 Market Outlook Conclusion
Conclusion -44- 2H-18 Market Outlook Conclusion (vs. 1H-18) Crude Oil Soaring Oil Prices, Driven by Tightening Fundamentals and Concerns over Geopolitical Risks Moderate Refining Margins Supported by Solid Demand and Refinery Limited Capacity Addition Weaker Aromatics Market due to Higher Capacity A
Slide 45: Thank You
-45- Thank You Any queries, please contact: at email: ir@thaioilgroup.com Tel: 662-797-2999 / 662-797-2961 Fax: 662-797-2976
Slide 46: Appendix
-46- APPENDIX • Strategic Investment Plan • Optimized & Flexible Operations…Superior Performance • 2017 Dividend payment • CDU Addition VS Additional Demand – AP & ME • World GRM / Inventories • Thailand petroleum demand by products
Slide 47: Strategic Investment Plan Approved by Board of Directors
Updated CAPEX plan -47- Strategic Investment Plan Approved by Board of Directors CAPEX Plan (Unit US$ million) Project Planned capital investment 2017 2018 2019 2020 Reliability, Efficiency and Flexibility Improvement 40 42 20 11 Infrastructure Improvement - Lorry Expansion 7 2 - Jetty 7&8 / Improve
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: 2017 Dividend Payment
Financial -49- 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 8.66 7.82 7.28 5.91 6.04 5.97 4.39 4.57 2.75 3.75 3
Slide 50: Asia Pacific and Middle East Refinery Addition
Refinery -50- Asia Pacific and Middle East Refinery Addition AP & ME Demand Growth Middle East China Other AP Start-up Nameplate Country Company Japan India period) (KBD) Vietnam Teapot Q3-17 India 42 HPCL Bhatinda Net Addition KBD China (Oct’16 > Jul’17) 260 CNPC/SA Anning 2000 China (Feb’17 > Sep’
Slide 51: Asian Margin Vs. US-EU margin
World GRM -51- 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 91.08% Total Capacity: 15.8 MBD 64.64% Total Capacity: 3.5 MBD 86.86% 18 3.7 17 11 3.
Slide 52: Global Crude Oil Inventories
Inventories -52- 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 53: Global Gasoline Inventories
Inventories -53- 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 54: Global Middle Distillate Inventories
Inventories -54- 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 55: Global Fuel Oil Inventories
Inventories -55- 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 56: China's Refined Product Exports
China Export -56- China’s Refined Product Exports KBD China’s Gasoline Exports KBD China’s Gasoil Exports Source : China Custom Source : China Custom 500 600 400 500 400 300 300 200 200 100 100 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 Dec 2015 2
Slide 57: Domestic LPG Demand
Thailand petroleum demand by products -57- Domestic LPG Demand Thailand LPG Demand LPG Demand Highlight • In Q1/2018, LPG demand jumped by 7.9%YoY on account of 29.9%YoY higher demand from petrochemical sector, as a result of higher substitute feedstock price. Moreover, LPG demand was also supported
Slide 58: Domestic Gasoline/Gasohol Demand
Thailand petroleum demand by products -58- Domestic Gasoline/Gasohol Demand Thailand Gasoline/Gasohol Demand GASOLINE/Gasohol Demand Highlight • In Q1/2018, Mogas demand rose moderately by 4.7%YoY to an average 30.8 ML/day. Although, the retail price of Mogas is higher, Mogas demand was still suppor
Slide 59: Domestic Jet Demand
Thailand petroleum demand by products -59- Domestic Jet Demand Thailand JET Demand JET Demand Highlight • In Q1/2018, Jet consumption increased significantly by 7.6% over the corresponding period last year mainly owning to booming tourism industry, leading to 5.4%YoY higher aircraft movement. The 15
Slide 60: Domestic Gasoil and NGV Demand
Thailand petroleum demand by products -60- Domestic Gasoil and NGV Demand Thailand Gasoil Demand Diesel Demand Highlight • In Q1/2018, Diesel demand rose moderately by 3.4% YoY as a result of higher growth of Thai economic recovery, according to higher Manufacturing Production Index (MPI) by 3.7%YoY
Slide 61: Domestic Fuel Oil Demand
Thailand petroleum demand by products -61- Domestic Fuel Oil Demand Thailand Fuel Oil Demand Fuel Oil Demand Highlight • In Q1/2018, Fuel Oil consumption rose slightly by 0.3%YoY, as a result of 12.0%YoY higher demand from transportation sector which takes approximately 61.1% of total Fuel Oil deman
Slide 62: Thank You
-62- 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 — Q1 2018 Earnings Presentation on 6ix