62 slides from Turkiye Petrol Rafinerileri A.s's investor presentation, December 2023
Slide 1: Investor Presentation
Investor Presentation December 2023 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 $/bbl 130 5 yr range 5 yr ave 123.7 2022 2023 + Russian-Ukraine war 118.8 + Impact of sanctions 113.3 112.7 + Post-pandemic demand recovery 104.4 110 100.0 98.2 89.9 93.3 91.7 87.2 90 94.0 - Recession fears 91.1 84.9 86.2 81.1 - Zero Covid Policy and its impact on 82.8 82.5 83.3 7
Slide 5: Global Refinery Capacity Changes
Global Refinery Capacity Changes Expectations until 2025: • In the 2019-2025 period, 67% of the net capacity increase comes from Asia and 39% from the Middle East Region. • 67% of the closures intensified after the pandemic come from the OECD region. 2019-2025 Net Capacity Additions Capacity Additio
Slide 6: Middle Distillate Cracks
Middle Distillate Cracks $/bbl Diesel Jet Fuel 5 yr range 5 yr ave 2022 2023 5 yr range 5 yr ave 2022 2023 50 60 47.1 45 43.3 45.2 57.1 55 54.2 42.3 40.7 39.6 40 50 39.0 38.4 46.8 34.3 45 35 40.5 44.2 43.8 32.6 41.6 30.8 29.2 29.7 33.7 40 30 37.4 38.4 35.1 35 34.8 35.3 22.7 25 26.1 29.3 24.0 31.6 30
Slide 7: Gasoline and High Sulphur Fuel Oil Cracks
Gasoline and High Sulphur Fuel Oil Cracks $/bbl Gasoline High Sulphur Fuel Oil 5yr range 2023 2022 5 yr ave 5 yr range 2023 2022 5 yr ave 50 0 45 44.0 -5 -6.9 -7.6 40 -10.0 -10 38.0 -11.7 35 -13.3 30.6 -15 28.5 -18.3 30 -16.0 -19.0 26.1 25.2 25.7 -20 -18.2 -19.5 -20.2 25 24.7 21.7 21.8 -22.2 20.4 19
Slide 8: Heavy Crude Price Differentials to Brent ($/bbl)
Heavy Crude Price Differentials to Brent ($/bbl) 5 Arab Heavy Kirkuk CPC Average* Basrah Heavy 0 -5 -10 -15 Iran OPEC+ Cut OPEC+ Cut OPEC+ OPEC+ Cut Russia – Sanctions Decision Decision Disagreement Decision Ukraine War -20 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 1
Slide 9: Turkish Market
Turkish Market Hizmete Özel / Confidential
Slide 10: Turkish Market, 9M 2023
Turkish Market, 9M 2023 Q1 Q2 Q3 Diesel Jet Fuel1 Million 19.3 19.3 Tons 18.2 18.3 18.1 7.4 7.2 7.0 7.4 6.6 4.0 4.1 3.5 1.7 2.4 1.7 6.1 5.3 6.3 6.1 6.5 +7.0% 1.4 +18.9% 1.8 1.3 0.7 1.1 1.2 1.4 5.2 5.6 5.6 5.4 5.6 0.2 0.8 1.0 0.9 0.6 0.9 1.1 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 Gasoline
Slide 11: Turkey's Net Import / Export Balance
Turkey’s Net Import / Export Balance Million Import Export Market Share of Tüpraş Tons -0.2 -0.2 2022 12M Jet 0.4 0.3 -0.4 Diesel 48% -7.3 Jet 85% -8.0 Diesel -5.9 -8.8 Gasoline 98% -13.6 2.0 1.6 Gasoline 1.9 Fuel Choice of Passenger Cars 2022 3.0 2.4 EV/Hybrid , 1% -2.8 -2.9 Diesel; LPG; LPG -2.9 D
Slide 12: Company Overview
Company Overview Hizmete Özel / Confidential
Slide 13: Tüpraş Shareholder Structure
Tüpraş Shareholder Structure Tüpraş is Turkey’s biggest industrial company and leading refiner. Koç Holding Aygaz Opet Koç Holding andGroup Other Koç Other Koç 77% 20% 3% 6.82% 6.83% Energy Investments Inc. (SPV) 46.4% 79.98% 41.7% Foreign Ownership 43%1 100% Free Float2 46.78% 100% 99.23% Domestic
Slide 14: Tüpraş' Refining Assets & Distribution Network
Tüpraş’ Refining Assets & Distribution Network İzmit Capacity: 11.3 mn t Nelson Compl.: 14.5 Storage: 3.0 mn m3 Kırıkkale Capacity: 5.4 mn t Nelson Compl.: 6.32 Storage: 1.3 mn m3 İzmir Capacity: 11.9 mn t Nelson Compl.: 7.66 Storage: 2.5 mn m3 Batman Capacity: 1.4 mn t Nelson Compl.: 1.8 Storage: 0
Slide 15: Nelson Complexity of Refining Companies
Nelson Complexity of Refining Companies Dec-23 Hizmete Özel / Confidential Investor Presentation Company Overview www.tupras.com.tr 15
Slide 16: Tüpraş Subsidiaries
Tüpraş Subsidiaries OPET - Distribution Tüpraş Share: 41.7% • 1,866 stations as of 30 September 2023. • As of September 2023 Market share: 19.25% in white products; 27.65% in black products Tüpraş Trading UK - Trading Tüpraş Share: 100% Over 8 million tons of product trade More than 10 million tons
Slide 17: Tüpraş Subsidiaries
Tüpraş Subsidiaries DİTAŞ - Marine Transport Tüpraş Share: 79.98% • 4 Crude Oil Tanker: 470,067 DWT • 7 Product Tanker: 116,533 DWT • 4 Bitumen Tanker: 61,450 DWT Körfez Ulaştırma - Railway Transport Tüpraş Share: 100% • ~5% share in Turkish rail freight market • ~2.5 mn ton of product and semi-prod
Slide 18: Tüpraş Subsidiaries
Tüpraş Subsidiaries Entek Electricity Tüpraş’s Share : %99.23 • Entek’s installed power: 492 MW • 2 WPP with 116 MW capacity , 1 CCGT with 112 MW capacity, 8 Hydro Power Plants with total capacity of 264 MW. • Entek’s sales from production was 1.2 GWh, increased by 22% year on year in 2022 • EBITDA
Slide 19: Tüpraş Subsidiaries
Tüpraş Subsidiaries Entek - Electricity (Tüpraş Share: 99.23%) Entek’s Installed Capacity Production (000 MWh) 66 17.5 MW 112 MW MW 1,800 1,600 1,400 1,542 1,200 1,451 1,359 1,341 50 1,000 1,190 MW 178 800 1,038 28 MW 16.4 MW 600 MW 400 200 24.4 MW - 2019 2020 2021 2022 9M 2022 9M 2023 Natural Gas C
Slide 20: Operations
Operations Hizmete Özel / Confidential
Slide 21: Quarterly Product Yields
Quarterly Product Yields Q3 2022 Q3 2023 Other Other LPG Bitumen 2% LPG Bitumen 2% 3% 4% 14% 12% Gasoline Kok Gasoline Kok Other Other 22% 3% 21% 3% white white 2% Light Fuel Oil 2% Light Black Prod. Black Prod. Distil. Fuel Oil Distil. 5% 22% 20% 25% 6% 25% Naphtha Naphtha 0% 0% Mid. Distil. Mid. D
Slide 22: Annual Product Yields
Annual Product Yields 12M 2021 12M 2022 Other Other Bitumen 2% LPG 3% Bitumen 2% LPG Kok 8% 3% 10% 4% Gasoline Coke Other 3% Gasoline 21% Other Fuel Oil white 21% white 6% Black Prod. 2% Light Fuel Oil Black Prod. 2% Light 18% Distil. 6% 19% Distil. 25% Naphtha 26% 1% Naphtha 1% Mid. Distil. Jet Mid
Slide 23: Capacity Utilization and Quarterly Production Volume
Capacity Utilization and Quarterly Production Volume Quarterly Production (Million Tons) Capacity Utilization (%) 2021 2022 2023 Crude Oil Semi Product Feedstock Total 8 98 100 98 99 7.1 7.1 92 7 7 7.0 7 88 7 10 7.0 82 85 84 83 6.9 8 7 6.5 7 8 9 71 12 6.0 6 10 5.9 6.0 91 93 91 89 81 84 5.0 75 76 75
Slide 24: Sales
Sales • Tüpraş generated 29.5 million tons of total sales in 2022. Total Sales Customer Groups 2022 mn tons 29.8 29.2 29.5 Other 27.6 9% International 4.2 24.5 sales 6.8 6.0 5.9 Jet 21% 4.7 12% Exports Bitumen 25.6 Total Sales, 5% 22.4 21.7 23.5 Domestic Sales 19.8 2022 29.5 mn tons 2018 2019 2020 2
Slide 25: Quarterly Product Sales (Million Tons)
Quarterly Product Sales (Million Tons) Total Product Sales Domestic Sales of Selected Products Domestic Sales International Sales Diesel Jet Fuel Gasoline Bitumen 8.5 8.4 7.8 8.0 2.0 1.7 0.5 6.7 1.6 0.6 1.4 0.6 0.7 0.8 0.7 0.9 1.2 0.7 0.9 0.8 0.8 1.0 1.2 1.4 0.6 6.4 6.4 6.6 6.7 6.0 3.2 3.3 3.3 3.1 2
Slide 26: Financials
Financials Hizmete Özel / Confidential
Slide 27: Tüpraş and Med Refining Margins
Tüpraş and Med Refining Margins Tüpraş Net Margin Med Margin Clean Clean Gross Inventory Net Med Processed 28.2 ($/bbl) Gross NET Margin Effect Margin Margin* bbl (mn) Margin Margin 9M 2023 21.1 1.1 20.0 12.2 13.3 28.7 137.6 16.5 12M 2022 23.9 0.7 23.2 15.8 16.5 28.2 198.8 9M 2022 21.2 0.9 20.3 14.0
Slide 28: Income Statement (Million TL)
Income Statement (Million TL) Q3 Q3 9M 9M Million TL % % 2023 2022 2023 2022 Net Sales 185.137 150.609 23% 382.369 365.739 5% COGS -152.334 -131.111 -16% -318.095 -322.428 1% Gross Profit 32.803 19.498 68% 64.274 43.311 48% Operating Expenses -3.752 -1.989 -89% -8.601 -5.150 -67% Income/Loss from ot
Slide 29: Income Statement (Million TL)
Income Statement (Million TL) Million TL(**) 2022 2021 % Net Sales 481,765 152,492 216% COGS -418,988 -136,632 -207% Gross Profit 62,777 15,860 296% Operating Expenses -8,235 -3,318 -148% Income/Loss from other operations -8,935 -11,766 24% Operating Profit 45,607 777 5773% Inc./Loss from Equity pic
Slide 30: Financial Highlights
Financial Highlights EBITDA (mn TL) Net Income1 (mn TL) 55,587 57,436 41,045 35,272 16,366 30,096 17,589 21,306 14,067 17,766 3,495 11,554 15,204 7,217 16,431 526 10,799 4,039 545 6,748 5,024 12,136 -2,494 1,103 2019 2020 2021* 2022* 2023 2019 2020 2021* 2022* 2023 Total Q4 Q3 Q2 Q1 Total Q4 Q3 Q2 Q
Slide 31: Balance Sheet Analysis
Balance Sheet Analysis Net Debt/Cash Cash Currency Redemption Schedule bn TL In Billion TL In Billion $ bn $ bn TL Breakdown TL Hard Currency 100 60 4 86.6 bn TL 40 3 80 1.4 1.3 25 0.9 2 21.5 20 8.4 9.4 12.0 1 60 20 -0.5 -0.4 0 -0.9 0 40 15 -20 -8.6 -1 9.5 -10.1 10 -16.5 -2 -40 -1.9 20 -3 5 0.5 2.0
Slide 32: Quarterly Profit Before Tax Bridge
Quarterly Profit Before Tax Bridge Strong cracks, higher inventory and positive net fx & interest impact boosted PBT, while differentials were relatively weak Million TL Dec-23 Hizmete Özel / Confidential Investor Presentation Financials www.tupras.com.tr 32
Slide 33: Profit Before Tax Bridge (2021 – 2022)
Profit Before Tax Bridge (2021 – 2022) 2022 PBT was positively impacted by stronger cracks and wider differential spreads. Million TL Dec-23 Hizmete Özel / Confidential Investor Presentation Financials www.tupras.com.tr 33
Slide 34: 2023 Expectations
2023 Expectations Tüpraş Net Refining Margin 11$/bbl -12$/bbl • 24-25 mn tons production, 29-30 mn tons sales and 85 - 90% capacity utilization Consolidated Capex ~350 million $ • ~60% of capex for sustainability focused energy efficiency and environmental projects Dec-23 Hizmete Özel / Confidential
Slide 35: 9M 2023 Results
9M 2023 Results Refining Margins ($/bbl) Capacity Utilization (%) 100 18.0 Tüpraş Net Refining Margin Tüpraş FY 90 16.0 80 Target 14.0 70 12.0 Tüpraş FY 60 10.0 Target 50 8.0 40 84.1 6.0 13.3 30 4.0 20 2.0 10 0.0 0 9M 2023 9M 2023 Operationals Total Capex (mn $)(*) 9M 2023 FY Target 400 350 300 30 2
Slide 36: Investments (Million $)
Investments (Million $) Avg. 460 Mn$ Avg. 350 Mn$ 296 980 250 320 400 300 7 After privatization Billion $ invesment 2006-2010 2011-2014 2015-2021 2022-2030 2031-2035 2035-2050 CURRENT PROJECTS ∼50% • FCC Modernization in İzmir of total capex • New Sulphur Recovery Unit in Kırıkkale ESG related • Sol
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. Liquidity risk management & targets/limits for financial ratios: Leverage & • Net financial debt/EBITDA • Current ratio Li
Slide 38: Strategy
Strategy Hizmete Özel / Confidential
Slide 39: Turkey's Transportation Energy Demand
Turkey’s Transportation Energy Demand Dec-23 Hizmete Özel / Confidential Investor Presentation Strategy www.tupras.com.tr 39
Slide 40: Strategic Transition Plan
Strategic Transition Plan 2022-2030 2031-2035 Capex EBITDA Capex EBITDA Sustainable Refining ~60% ~90% ~30% ~70% Sustainable Aviation Fuel Zero Carbon Electricity ~40% ~10% ~70% ~30% Green Hydrogen Base Year: 2017 27% %35 Scope 1&2 Emission Reduction Sustainable & Profitable Tüpraş 2035 Average EBIT
Slide 41: Strategic Transition Plan – Investment Areas
Strategic Transition Plan – Investment Areas SUSTAINABLE REFINING ZERO CARBON ELECTRICITY Energy Efficiency and Decarbonization Projects Integrating Zero Carbon Electricity to produce Green H2 • Remain as a Major EBITDA Contributor • Ensure affordable green H2 production, capturing • Improve energy
Slide 42: Strategic Transition Plan – Emission Reduction
Strategic Transition Plan – Emission Reduction EMISSION REDUCTION SCOPE 1 & 2 BASE YEAR SCOPE 1 + 2 7.3 MN TONNES -27% -35% -49% We will invest in energy efficiency & decarbonization Projects, green hydrogen & zero carbon electricity usage in refining to reduce scope 1 & 2 emissions -100% 2017 2030
Slide 43: Strategic Transition Plan - Financials
Strategic Transition Plan - Financials Will eliminate our scope 1 & 2 emissions by 2050 while executing our plan and achieving these results. We are $350mn average CAPEX until 2035, totaling $5 bn. sustainable ROACE will remain above 25% creating ~$7bn total CF until 2035 and With ample CF, Net Debt
Slide 44: Strategic Transition Plan - Financials
Strategic Transition Plan - Financials Sound Financial Plan • Superior EBITDA generation and disciplined capex plan leads to very low external funding requirement. • Strong FCF generation ensures strong dividend potential • 80% dividend payout on average according to our new business model ~5 bn $ D
Slide 45: Digital Transformation
Digital Transformation Be Agile Design the Future 600 MN LINES OF DAILY DATA FROM 150K SENSORS DATA ANALYTICS CENTERS IN 2 UNIVERSITIES CONNECTED PEOPLE «E-PERMITS TO WORK» AT ALL LOCATIONS BY 2023 ARTIFICIAL INTELLIGENCE MODELS USE OF ROBOTIC TECHNOLOGIES CONNECTED CONNECTED DIGITAL OPERATIONS PROC
Slide 46: ESG
ESG Hizmete Özel / Confidential
Slide 47: Tüpraş's Environmental Highlights
Tüpraş’s Environmental Highlights Energy Intensity Achievements Energy Intensity Targets 99.1 99.1 102.2 5.6 2.6 98.44 2.8 0.1 91.2 94.9 93.5 2017 Ongoing Other Projects Future Energy Future Other 2030 Target Energy Efficiency Projects 2018 2019 2020 2021 2022* Efficiency Projects Projects Greenhous
Slide 48: Tüpraş's Social & Governance Highlights
Tüpraş’s Social & Governance Highlights Strong Policies have been effectively implemented for years Board of Directors’ Composition Committees under BoD Corporate Governance 11 members Risk Management Audit Corporate Governance Rating 9.65 Four members are Executive independent Ethics Health & Safet
Slide 49: Appendix
Appendix Hizmete Özel / Confidential
Slide 50: 2023 Refinery Maintenance Schedule
2023 Refinery Maintenance Schedule Refinery Unit Starting Quarter Duration (weeks) Purpose Planned Crude Oil & Vacuum Q1 7 Completed Batman Seasonal Crude Oil & Vacuum Q4 9 Planned FCC Q1 7 Completed Crude Oil, Vacuum, CCR, Q1 9 Revamp Completed İsom. İzmir Lube Complex Q1 9 Completed Crude Oil , Va
Slide 51: Turkish Market Fuel Consumption 2017-2022
Turkish Market Fuel Consumption 2017-2022 Million Jet Fuel* Tons Diesel 28 -2.4% -4.4% +0.5% +10.1% -1.6% 8 24.2 24.9 24.5 23.6 22.5 22.7 +6.5% 5.3 +38.0% +10.5% 5.0 4.5 4.7 -54.4% +39.4% 14 4 3.4 2.4 0 0 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 Gasoline LPG 4 5 +1.6% 4.1 +0.8% 4.
Slide 52: 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 3.9 -2.5 Petchem F. 0.2 2.6 2.8 Gasoline 6.1 6.1 3.3 2.8 • Feasibility studies began in 2010 and Jet Fuel 5.2 1.6 6.8 4.7 2.1 construction kicked off
Slide 53: 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 Dec-23
Slide 54: European Pump Price Comparison
European Pump Price Comparison Turkish fuel prices are highly competitive with other European countries. Gasoline (TL/Lt) Diesel (TL/Lt) Tax Without Tax Pump Price Without Tax Tax Pump Price 60 55.1 56.64 56.53 54.87 60 55.8 55.2 55 52.28 53.6 53.5 49.73 55 51.9 50 48.9 50 45 45 31.6 38.9 28.2 27.1
Slide 55: Tüpraş Balance Sheet (Million TL)
Tüpraş Balance Sheet (Million TL) 30.09.2023 31.12.2022* Diff. Diff. (%) Current Assets 196.666 119.711 76.955 64 Cash & C. Equivalents 86.621 49.770 36.850 74 Trade Receivables 42.096 21.418 20.679 97 Derivatives 1.958 3.597 -1.639 -46 Inventories 52.182 36.046 16.136 45 Pre-paid expenses 1.513 749
Slide 56: Dividend (TL)
Dividend (TL) Avg. Payout Ratio: 90%* 149.1 Strategic Transition 102% Dividend Plan 101% 79% 87% 89% 77% 66% 64% Our new business model enables us to pay ~80% average dividends and we will remain as a high dividend payer 33% 30% 15.2 14.8 45.4 10.2 12.7 7.2 3.2 2.5 2.9 3.0 5.0 3.9 5.8 3.9 4.8 1.6 5.
Slide 57: Tüpraş - Ratings
Tüpraş - Ratings Tüpraş BIST Corporate Governance Rating Score Credit Rating Scores Average 96.8 Foreign Currency Long Term Tüpraş B+ (Stable) B3 (Stable) Shareholders 95.9 Turkey B (Stable) B3 (Stable) B (Stable) Koç Holding B3 (Stable) B+(Stable) Transparency 98.0 Analyst Recommendations Stakehold
Slide 58: 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 59: 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. 3192 665 184 ~2.4 mt & Jet ~2.8 mt 909 132 Total Processing ~5.5 mn tons Total Output ~5.1mn tons Dec-23 Hizmete Özel
Slide 60: LPG and Naphtha Cracks
LPG and Naphtha Cracks $/bbl LPG Naphta 5yr range 2022 5 yr ave 2023 5yr range 2022 5 yr ave 2023 5 5 0 -2.7 -5 -4.5 -5 -7.2 -10 -6.4 -8.9 -10.5 -9.0 -15 -18.5 -15 -12.4 -15.4 -14.0 -23.2 -17.7 -18.9 -18.7 -17.8 -20 -20.0 -22.3 -25 -28.2 -24.0 -23.4 -21.5 -25 -23.1 -23.0 -22.1 -32.1 -34.6 -35.0 -35
Slide 61: Koç Holding
Koç Holding Turkey’s Leading Investment Holding Company • Koç Holding is Turkey’s largest industrial and services group • The only Turkish company in Fortune Global 5002. ~9% ~7% ~19% Koç Group’s Pioneer in its Sectors Combined Total Exports / Market Cap/ Revenues / Turkey’s Borsa Istanbul GDP1 Expo
Slide 62: Investor Presentation Latest
Investor Presentation Latest Webcast Sustainability Report Strategic Transition Plan tuprasir@tupras.com.tr Hizmete Özel / Confidential