Thai Oil Public Co. Ltd. · SET:TOP
Thai Oil Public — Q3 2017 Earnings Presentation
62 slides from Thai Oil Public's earnings presentation, Nov 15, 2017
Slide 1: Thai Oil Public Company Limited Q3/2017 Analyst Presentation
-1- Thai Oil Public Company Limited Q3/2017 Analyst Presentation 15 November 2017 Time : 10.00 - 12.00 am. 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
-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 4th Consecutive Year of leading positions: Energy Industry Group Leader Oil & Gas Refining & Marketing industry Leader
Slide 6: Presentation Agenda
-6- Presentation Agenda Q3/17 KEY HIGHLIGHTS Q3/17 PERFORMANCE ANALYSIS Q4/17 & 2018 MARKET OUTLOOK
Slide 7: Q3/17 Key Highlights
Q3/17 KEY HIGHLIGHTS Sanaon
Slide 8: Q3/17 Key Market Drivers Highlights
Key Highlights -8- Q3/17 Key Market Drivers Highlights Refinery Robust Market GRM supported by stronger product spread due to Implication 1) supply disruption in U.S. by hurricane Harvey and unplanned Robust Mkt GRM at 8.1 $/bbl shutdown refineries in EU (Q2/17 = 6.1 $/bbl) Higher crude price dr
Slide 9: Q3/17 Reliable Operation & Ongoing Competitive Cash Cost
Key Highlights -9- Q3/17 Reliable Operation & Ongoing Competitive Cash Cost Key Achievements Q3/17 TOP Group Net Profit Operational Maintain high reliable production Net Operating Profit Unit : million THB (MB) Excellence Q3/17 Q2/17 Stock G/(L) Reversal of NRV/(NRV) & Adjusted to cost Refinery 11
Slide 10: Q3/17 Profitability Improvement (VS Corporate Plan)
Key Highlights -10- Q3/17 Profitability Improvement (VS Corporate Plan) Cost Management General & Admin , Procurement Margin Improvement & warehouse , Operation & (Supply & Marketing / Maintenance , Project & Hydrocarbon Management / Manpower management Unit: million THB ) 49 LP Upgrading Model , 66
Slide 11: Q3/17 Performance Analysis
-11- Q3/17 PERFORMANCE ANALYSIS
Slide 12: Refinery: Recorded High Quarterly Utilization Rate
Refining -12- Refinery: Recorded High Quarterly Utilization Rate TOP/ Domestic Refinery Utilization Rate Domestic Oil Demand Unit: % Utilization Rate 9M/16 9M/17 114% 112% KBD 110%111% 110% 107% 109% 107% 108% 108% 3.4% 800 98% 600 3.0% 98% 90% 95% 94% 400 4.0% 91% 88% 89% 89% 90% 91% 3.9% 85% 200 0
Slide 13: Q3/17: Robust Market GRM as Strong Product Spread supported by Supply Tightness
Refining -13- Q3/17: Robust Mkt GRM as Strong Product Spread supported by Supply Tightness Dubai Crude Price & Key Petroleum Product Spreads Refinery Utilization 2016 2017 2016 Q2/17 Q3/17 9M/17 $/bbl Q1 Q2 Q3 Q4 Q1 Q2 Q3 9M FY16 112% 114% 112% DUBAI (DB) 30.4 43.2 43.2 48.3 53.1 49.8 50.5 51.1 41.3
Slide 14: Q3/17: Lower Aromatics Contribution pressured by Higher Regional Supply
Aromatics/LAB -14- Q3/17: Lower Contribution pressured by Higher Regional Supply Aromatics Spreads and Margins Aromatics Production 2016 2017 2016 Q2/17 Q3/17 9M/17 $/ton Q1 Q2 Q3 Q4 Q1 Q2 Q3 9M FY16 78% 81% 83% PX**-ULG95 332 315 341 280 312 273 258 273 317 Q4TD’17 (10 Nov 17) PX-ULG95 = 244 $/ton
Slide 15: Q3/17: Slightly Lower Lube Base Oil Contribution
Lube Base Oil -15- Q3/17: Slightly Lower Contribution pressured by Increased Lube Supply But partially offset by Improved Bitumen Spread Base Oil & Bitumen Spreads & Margins Base oil Production 2016 2017 2016 Q2/17 Q3/17 9M/17 $/ton Q1 Q2 Q3 Q4 Q1 Q2 Q3 9M FY16 90% 88% 89% 500SN-HSFO 427 409 443 367
Slide 16: Q3/17 Power Sector Performance
Power -16- Q3/17 Power Sector Performance…Growing Contribution to the Group Power Business Sector Equity holding in SPP GPSC **** Power & Steam Sales ***TOP shareholding 24.29% (8.91% via TOP and 20.79% via TP) 1,885 1,442 GPSC is an associate company of TOP. Electricity(1) Equity method is applied
Slide 17: Integrated Margin & Competitive Cash Cost
Financial -17- Integrated Margin & Competitive Cash Cost Gross Refining Margin Refinery’s Cash Cost (Unit: US$/bbl) (Unit: US$/bbl) Market GRM Accounting GRM (Market GRM + Stock G/L) Operating Cost Interest Expense (net) 10.5 (excl. one-time non- operating item) 7.8 8.1 6.8 6.5 5.7 5.9 6.3 6.96.9 5.
Slide 18: Q3/17: Performance Breakdown by Business Unit
Performance Breakdown -18- Q3/17: 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: lower contribution mainly from weaker product spread
Slide 19: Q3/17 TOP Group Consolidated P&L
Financial -19- Q3/17 TOP Group Consolidated P&L (million THB) Q3/17 Q2/17 QoQ+/(-) Q3/16 YoY+/(-) 9M/17 9M/16 YoY+/(-) QoQ analysis Sales Revenue 80,296 80,053 243 A) 68,476 11,820 247,945 197,635 50,310 A Mainly from overall sale volume and Hedging Gain / (Loss) (20) 36 (56) B) 206 (226) (70) 87 (1
Slide 20: 9M/17 TOP Group Consolidated Cash Flow
Financial -20- 9M/17 TOP Group Consolidated Cash Flow (Unit: Million THB) (Unit: Million THB) Investments Operating Cash Flow 9M/17 9M/16 9M/17 9M/16 Investments (17,267) (20,579) Operating Cash Flow 22,349 17,273 ST investments (12,716) (15,803) Net income & non-cash adj. 27,487 22,830 + Available
Slide 21: Q3/17 TOP Group Strong Financial Position & Financial Ratios
Financial -21- Q3/17 TOP Group Strong Financial Position & Financial Ratios Statements of Financial Position Consolidated Long-Term Debt as at 30 Sep 17 (Unit: million THB) Total Long-Term Debt Net Debt 217,731 208,051 215,491 66,612 million THB 8,845 million THB 30,700 Trade Payable Cash & ST 60,77
Slide 22: Q4-17 & 2018 Market Outlook
-22- Q4-17 & 2018 MARKET OUTLOOK • Crude Oil • Petroleum Products • Aromatics • Base Oil & Bitumen • Linear Alkyl Benzene (LAB)
Slide 23: Crude Oil
CRUDE OIL -23- Sanaon
Slide 24: Continued Oil Prices Recovery in 2018
Crude Oil -24- Continued Oil Prices Recovery in 2018 Yet Limited by Surging Supply from U.S., Nigeria and Libya Dubai Price Movement $/BBL Base Case: China’s stock OPEC failed to 1st OPEC-led supply OPEC Meeting 80 BREXIT Output Cut Extended market crash agree on an cut deal extension on 30th Nov Un
Slide 25: Prospects of Oil Supply Cut Deal Extension Until Dec-18
Crude Oil -25- 1 Prospects of Oil Supply Cut Deal Extension Until Dec-18 A Strong commitments by OPEC to curb outputs C Global oil stocks remain above the 5-year average Compliance Rates of Output Cut OECD Oil Stocks % 160 MBBL 140 3,400 Aug’17 : 3,015 MBBL 120 (+168.2 MBBL above 5-Year AVG) 100 3,2
Slide 26: Oil Market to Slightly Return into Surplus from Q1-18 Onwards
Crude Oil -26- 2 Oil Market to Slightly Return into Surplus from Q1-18 Onwards A Surging Non-OPEC supply, mainly from the U.S. C Supply growth to slightly outpace demand growth Non-OPEC Supply Growth (YoY) Global Supply/Demand Balance MBD +1.5 MBD MBD MBD 3.0 2018 (Base Case): (2018) 2.0 102 Demand
Slide 27: Petroleum Products
PETROLEUM PRODUCTS -27- Sanaon
Slide 28: Firm Margins from Demand Outpacing Supply
Refinery -28- Firm Margins from Demand Outpacing Supply Singapore Cracking GRM ($/BBL) 8.5 8.0 8.23 7.9 7.6 7.7 6.7 7.29 6.1 6.2 6.45 6.40 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 Q4TD- 17* Q4TD- ($/BBL) Q3-16 Q4-16 2016 Q1-17 Q2-17 Q3-17 17* Key Highligh
Slide 29: Demand Growth Continues to Outpace Refinery Addition
Refinery -29- 1 Demand Growth Continues to Outpace Refinery Addition Asia Pacific and Middle East Effective CDU Addition VS Additional Demand Middle East China Other AP Japan India Vietnam Teapot Net Addition AP & ME Demand Growth KBD Demand growth > New Capacity Addition 3500 3150 2500 1386 1431 15
Slide 30: Demand Growth Continues to Outpace Refinery Addition (2)
Refinery -30- 1 Demand Growth Continues to Outpace Refinery Addition (2) Asia Pacific and Middle East Surplus Refining Capacity High Expansion Slow Expansion and Strong Demand KBD 5000 3000 Refining Capacity Turning into Deficit 1000 in 2022 -1000 -3000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2
Slide 31: Steadily High Gasoline Cracks Driven by Growing Demand
Refinery -31- 2 Steadily High Gasoline Cracks Driven by Growing Demand A Firm Demand on Low Oil Price & Higher Car Sales B Demand Growth Outpaces Supply Growth Asia Pacific Gasoline Demand World Gasoline Demand & Supply Growth YoY MBD 2018 : 7.4 MBD (+0.33 MBD YoY) KBD Demand Supply 7.5 1500 1200 7.
Slide 32: Strong Middle Distillate Cracks from Robust Demand Growth and Limited Supply
Refinery -32- 3 Strong Middle Distillate Cracks from Robust Demand Growth and Limited Supply A Middle Distillate is Back in the Driver’s Seat B China’s Tax Changes on Components Imports KBD Global Oil Demand Growth by Products Chinese Middle Distillate Export KBD 1600 Potential 800 Loss Volumes 1200
Slide 33: Thailand Oil Demand Growth
Domestic -33- Thailand Oil Demand Growth Thailand Oil Demand Growth Average YTD 9M/2017(B) Year on Year Y2017F(C) Y2018F(C) 2015-2016(B) (vs 9M/2016) Mogas (A) +11.5% +4.0% +2.7% +3.1% Jet/Kero +8.2% +3.9% +3.6% +2.5% Diesel (A) +3.5% +3.0% +1.4% +1.9% Total +6.3% +3.4% +2.1% +2.3% GDP +3.1% +3.5%(D
Slide 34: Aromatics
AROMATICS -34- Sanaon
Slide 35: PX Market Still Under Pressure while BZ Market Relieves
Aromatics -35- PX Market Still Under Pressure while BZ Market Relieves Aromatics Market PX CFR Taiwan-ULG95 ($/TON) BZ FOB Korea-ULG95 ($/TON) 332 315 341 343 317 313 288 280 273 258 255 246 256 244 233 225 195 181 156 138 174 185 163 98 115 101 97 74 Y2015 Y2016 Q2-16 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16
Slide 36: Pressured PX Market due to New Capacity in AP/ME
Aromatics -36- Pressured PX Market due to New Capacity in AP/ME, 1 but Still Supported by Chinese Import A Higher Capacity Addition in 2018 to Pressure Market B High PTA Plants to Support PX Consumption in 2018 AP/ME Effective PX Capacity Addition AP/ME Effective PTA Capacity Addition Mil TON Mil TO
Slide 37: BZ Market still Supported by Lower Capacity Addition
Aromatics -37- BZ Market still Supported by Lower Capacity 2 Addition amid Rising Chinese Import A Slightly Lower BZ Addition in 2018 to Support Market B Lower SM Capacity Addition in 2018 AP/ME Effective BZ Capacity Addition AP/ME Effective SM Capacity Addition Mil TON Mil TON 1.6 1.0 PetroRabigh (
Slide 38: Base Oil & Bitumen
BASE OIL & BITUMEN -38- Sanaon
Slide 39: Softer Base Oil Market due to Higher Plant Addition
Base Oil & Bitumen -39- Softer Base Oil Market due to Higher Plant Addition 500SN – HSFO ($/TON) A AP Plant Maintenance (Effective Capacity) Group 1 Group 2 Group 3 Net Capacity 556 528 Mil TON 506 450 431 427 409 443 451 455 1.8 369 399 367 412 2.0 1.5 1.0 0.8 1.0 0.4 0.3 0.5 0.2 0.1 0.0 Q4TD-17* Q
Slide 40: Stable Bitumen Market on Firm Demand
Base Oil & Bitumen -40- Stable Bitumen Market on Firm Demand Bitumen-HSFO ($/TON) A Import Volume of Major Asian Players in 2017 KTON/MONTH China KTON/MONTH India 82 98 600 56 23 20 200 400 Flooding 200 100 -7 -13 -38 -29 -48 -61 -49 -46 0 0 -80 Apr Jan Jul Feb Jun Mar May Aug Apr Jan Jul Feb Jun Ma
Slide 41: Linear Alkyl Benzene (LAB)
-41- Linear Alkyl Benzene (LAB)
Slide 42: Improved LAB Market on Steady Demand Growth amid Low Capacity Addition
LAB -42- Improved LAB Market on Steady Demand Growth amid Low Capacity Addition LAB Market LAB Spread** ($/TON) Net Capacity - Demand KTA AP/ME demand growth = 2.6% 654 666 675 627 656 600 635 627 619 606 603 SEA demand growth = 3% 543 539 534 521 400 200 0 Y2015 Y2016 Q4TD-17* Q1-15 Q2-15 Q3-15 Q4-
Slide 43: Conclusion
CONCLUSION -43- Sanaon
Slide 44: 2018 Market Outlook Conclusion
Conclusion -44- 2018 Market Outlook Conclusion (vs. 2017) Crude Oil Continued Oil Prices Recovery in 2018 Yet Limited by Surging Supply from U.S., Nigeria and Libya Firm Margins from Demand Growth Outpacing Supply Refinery Addition PX Market Pressured by High Capacity Addition Aromatics BZ market Su
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 • 2017 Dividend Payment • Optimized & Flexible Operations…Superior Performance • 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) Planned capital investment Projects 2016 2017 2018 2019 Reliability, Efficiency and Flexibility Improvement 32 22 26 6 Environmental and fuel efficiency improvement 2 Benzene Derivatives –
Slide 48: 2017 Dividend Payment
Financial -48- 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 10.40 9.19 9.40 7.82 8.13 7.28 5.91 6.04 5.97 5.06 4.39 4.57 2.75 3.00 2.
Slide 49: Optimized & Flexible Operations…Superior Performance
Crude -49- 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 50: Asia Pacific and Middle East Refinery Addition
Refinery -50- Asia Pacific and Middle East Refinery Addition Teapot Vietnam Start-up Nameplate Country Company India Japan period) (KBD) Other AP China Q3-17 India 42 HPCL Bhatinda Middle East Net Addition AP & ME Demand Growth China (Oct’16 > Jul’17) 260 CNPC/SA Anning China (Feb’17 > Sep’17) 200 C
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 Total Capacity: 18.6 MBD 12 Total Capacity: 15.9 MBD 4.5 Total Capacity: 3.2723 MBD 18 86.10% 68.58% 87.09% 17 11 4.0
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 2016 2017 avg 12-16
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 2016 2017 avg 12-16 5yr-range 2016 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 2016 2017 avg 12-16 5yr-range 2016
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 2016 2017 avg 12-16 5yr-range 2016 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 350 600 300 500 250 400 200 300 150 200 100 50 100 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
Slide 57: Domestic LPG Demand
Thailand petroleum demand by products -57- Domestic LPG Demand Thailand LPG Demand LPG Demand Highlight • In 9M/17, LPG demand increased moderately by 1.3%YoY on account of 8.1%YoY higher demand from petrochemical sector, as a result of PTTGC major shutdown in May16-Jun16. Moreover, LPG demand was a
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 9M/17, Mogas demand rose moderately by 4.0%YoY to an average 30.3 ML/day. Although, the retail price of Mogas is higher, Mogas demand was still supporte
Slide 59: Domestic Jet Demand
Thailand petroleum demand by products -59- Domestic Jet Demand Thailand JET-A1 Demand JET Demand Highlight • In 9M/17, Jet consumption increased significantly by 3.9% over the corresponding period last year mainly owning to booming tourism industry, leading to 5.7%YoY higher aircraft movement. The e
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 9M/17, Diesel demand rose moderately by 3.0% YoY as a result of Thai economic recovery. However, Diesel demand was still pressured by flooding situation in Southern part of T
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 9M/17, Fuel Oil consumption fell sharply by 7.4%YoY, as a result of sharply falling by 53.7%YoY of electricity sector demand which pressured by fewer day of Myanmar gas field m
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 — Q3 2017 Earnings Presentation on 6ix