Turkiye Petrol Rafinerileri A.s. · BIST:TUPRS
Turkiye Petrol Rafinerileri A.s — Tüpraş — Investor Presentation (September 2022)
60 slides from Turkiye Petrol Rafinerileri A.s's investor presentation, September 2022
Slide 1: Investor Presentation
Investor Presentation Sep 2022 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 5yr range 5 yr ave 2021 2022 + OPEC ++ production cuts 130 + Impact of Iran & Venezuela sanctions 123.7 118.8 + Improved mobility following vaccine 110 113.3 112.7 deployments 104.4 + Russia-Ukraine war 98.2 100.0 90 83.7 87.2 81.4 - Concerns on global economic 73.0 75.0 70.
Slide 5: Global Refinery Capacity Changes
Global Refinery Capacity Changes Expectations until 2025: • 73% of net capacity additions will come from Asia & Middle East • Net capacity and demand in Europe will remain roughly unchanged 2019-2025 Net Capacity Additions Capacity Additions by Region Closures Openings 2.6 Asia 44% 2.3 1.6 1.5 Middl
Slide 6: Middle Distillate Cracks
Middle Distillate Cracks $/bbl Diesel Jet Fuel 5 yr range 5 yr ave 2021 2022 5yr range 5 yr ave 2021 2022 50 47.1 54.2 55 45.2 45 50 42.3 39.0 40 44.2 45 41.6 35 40 37.4 38.4 30 30.8 35 31.6 24.0 25 30 25 20 20 15 12.9 15 12.0 12.6 10 11.8 10.4 10.8 9.5 9.4 9.3 10 5 10.0 8.0 6.8 6.6 4.9 5.0 5.1 4.1
Slide 7: Gasoline and High Sulphur Fuel Oil Cracks
Gasoline and High Sulphur Fuel Oil Cracks $/bbl Gasoline High Sulphur Fuel Oil 5yr range 2022 2021 5 yr ave 5 yr range 2022 2021 5 yr ave 50 0 44.0 45 -5 40 -6.4 -10.7 -10.4 38.0 -10 -11.7 -11.0 -12.6 -9.7 -12.9 -13.6 -13.9 -14.5 35 -15 -16.0 -17.3 30 -20.2 25.7 -20 -22.2 25 24.7 -25 20 -26.5 -26.4
Slide 8: Heavy Crude Price Differentials to Brent ($/bbl)
Heavy Crude Price Differentials to Brent ($/bbl) 5 0 -5 -10 Arab Heavy -15 Basrah Heavy Kirkuk CPC Iran OPEC+ Cut OPEC+ OPEC+ Cut Russia – Average* Sanctions 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 11 12 1 2 3 4 5 6 7
Slide 9: Turkish Market
Turkish Market Hizmete Özel / Confidential
Slide 10: Turkish Market, 6M 2022
Turkish Market, 6M 2022 Q1 Q2 Diesel Jet1 Million Tons 11.9 11.4 11.3 10.9 2.3 2.1 6.1 5.3 6.3 6.1 + 60.1% - 4.3% 1.3 1.3 1.2 1.1 0.2 0.7 5.2 5.6 5.6 5.4 1.0 0.9 0.9 0.6 2019 2020 2021 2022 2019 2020 2021 2022 Gasoline 1.4 LPG 1.1 1.2 2.0 1.0 1.7 1.8 1.7 0.8 0.6 0.5 0.6 1.1 0.8 0.9 0.9 + 24.6% -3.4%
Slide 11: Turkey's Net Import / Export Balance
Turkey’s Net Import / Export Balance Million Import Export Tüpraş’ Market Share Tons 0.4 0.3 2021 12M Jet -0.4 0.3 0.1 Diesel 44% -5.9 Jet 86% -8.8 Diesel -13.6 -13.2 Gasoline 97% -12.3 1.9 3.0 Gasoline 2.4 Fuel Choice of Passenger Cars 2021 3.2 2.8 EV/Hybrid , 1% -2.9 -3.0 Diesel; LPG; LPG -3.2 Die
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% Foreign Ownership 40% 57% Free Float2 100% 46.78% Domestic 100% Ownership
Slide 14: Tüpraş' Refining Assets & Distribution Network
Tüpraş’ Refining Assets & Distribution Network İzmit İzmir Kırıkkale Batman Total Capacity (mn tons) 11.3 11.9 5.4 1.4 30 Turkey’s petroleum Nelson Complexity 14.5 7.66 6.32 1.83 9.5 product needs Storage Capacity (mn m3 ) 3.0 2.5 1.3 0.3 7.0 Baku Others; Tüpraş; OPET Marmara Terminal İstanbul 45% 5
Slide 15: Nelson Complexity of Refining Companies
Nelson Complexity of Refining Companies Sep-22 Hizmete Özel / Confidential Investor Presentation Company Overview www.tupras.com.tr 15
Slide 16: Tüpraş Subsidiaries
Tüpraş Subsidiaries OPET - Distribution Tüpraş Share: 40% • 1,827 stations as of 30 June 2022 • As of May 2022 Market share: 18.8% in white products; 24.2% in black products Tüpraş Trading UK - Trading Tüpraş Share: 100% Over 7 million tons of product trade More than 3 million tons of spot crude oil
Slide 17: Tüpraş Subsidiaries
Tüpraş Subsidiaries DİTAŞ - Marine Transport Tüpraş Share: 79.98% • 2 Crude Oil Tanker: 314,906 DWT • 1 Crude Oil - Product Tanker: 49,990 DWT • 10 Product Tanker: 171,383 DWT Körfez Ulaştırma - Railway Transport Tüpraş Share: 100% • ~7% share in Turkish rail freight market • ~1.7 mn ton of product
Slide 18: Tüpraş Subsidiaries
Tüpraş Subsidiaries Entek - Electricity (Tüpraş Share: 99.24%) 442 MW total installed capacity EBITDA (million TL)* 66 17.5 MW 112 MW 800 MW 722 600 400 422 178 380 365 28 MW MW 200 16.4 MW 171 0 24.4 2019 2020 2021 6M 2021 6M 2022 MW PTF Price ($/MWh) CCGT Power Plant Hydroelectric Wind Power 220 P
Slide 19: Operations
Operations Hizmete Özel / Confidential
Slide 20: Crude Suppliers of Tüpraş
Crude Suppliers of Tüpraş In 2021, Tüpraş purchased 21 different types of crude from 11 countries with gravities ranging between 20-47 API. Main Crude Suppliers in 2021 Crude Oil Imports by Region (%) Middle East CIS Europe Africa America 3 3 1 2 3 2 2 10 12 12 11 10 10 10 14 3 7 14 7 13 14 21 34 21
Slide 21: Q2 2022 Product Yields
Q2 2022 Product Yields Q2 2021 Q2 2022 Other Other Bitumen 3% LPG Bitumen 2% LPG Kok 6% 3% 3% Kok 7% 4% Gasoline 3% Other Gasoline Fuel Oil 21% Other white 22% 7% Black Prod. 2% Fuel Oil white Light 9% Black Prod. 2% Light 17% Distil. Distil. 26% 19% Naphtha 26% Naphtha 1% 1% Mid. Distil. Jet Mid. D
Slide 22: Annual Product Yields
Annual Product Yields 2020 2021 Other LPG Other Bitumen 1% 3% Bitumen 2% LPG 12% Kok 8% 3% Kok Gasoline Other 4% Gasoline 3% 21% Other Fuel Oil white 21% Light Fuel Oil white 2% Black Prod. 1% Distil. 6% Black Prod. 2% Light 17% 25% 18% Distil. Naphtha 25% 1% Naphtha 1% Mid. Distil. Jet 57% 12% Mid.
Slide 23: Capacity Utilization and Quarterly Production Volume
Capacity Utilization and Quarterly Production Volume Quarterly Production (Million Tons) Capacity Utilization (%) 2019 2020 2021 2022 Crude Oil Semi Product Feedstock Total 8 98 98 100 7.1 7.0 96 96 6.9 91 7 7 7 88 4 8 9 82 85 5 7 6.5 7 8 65 6.0 6 9 93 93 91 91 87 86 81 76 75 5 56 4.6 4 Q1 Q2 Q3 Q4
Slide 24: Sales
Sales • Tüpraş generated 27.6 million tons of total sales in 2021. Total Sales Customer Groups 2021 mn tons 31.5 Other 29.8 29.2 International 27.6 10% 5.8 4.2 24.5 sales 6.8 5.9 21% 4.7 Jet 11% Bitumen Exports Total Sales, 25.7 25.6 6% Domestic Sales 22.4 19.8 21.7 2021 27.6 mn tons 2017 2018 2019
Slide 25: Product Sales in Q2 2022 (Million Tons)
Product Sales in Q2 2022 (Million Tons) • Tüpraş generated 7.3 million tons of sales in Q2 2022, 6% higher y-o-y. • Y-o-y growth in domestic jet fuel, gasoline, and diesel sales were strong with robust demand. Total Product Sales Domestic Sales of Selected Products Domestic Product Sales Internation
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 9.3 Gross Inventory Net Med ($/bbl) Gross NET 8.1 Margin Effect Margin Margin Margin Margin 5.7 Q2 2022* 25.6 0.0 25.6 19.8 19.8 44.7 5.3 4.6 3.7 2021 10.5 2.1 8.4 3.6 5.7 1.6 1.7 1.3 1.6 Q2 2021 8.8 1.8 7.0 2.8 4.6 0.3 2022G 1
Slide 28: Income Statement (Million TL)
Income Statement (Million TL) Q2 Q2 H1 H1 Details of Income Statement Million TL % % 2022 2021 2022 2021 • Y-o-y increase in Opex is mainly Net Sales 135,785 33,688 303% 212,326 53,509 297% driven by logistics expenses COGS -118,048 -30,724 284% -189,285 -49,018 286% increasing to 1 bn TL due to hig
Slide 29: Income Statement (Million TL)
Income Statement (Million TL) 12M 12M Million TL % 2021 2020 Net Sales 150,972 63,244 139% COGS -135,521 -61,480 -120% Gross Profit 15,451 1,764 776% Operating Expenses -3,242 -2,012 -61% Income/Loss from other operations -11,744 -371 -3065% Operating Profit 465 -619 - Inc./Loss from Eq. Pick ups &
Slide 30: Financial Highlights
Financial Highlights EBITDA (mn TL) Q1 Q2 Q3 Q4 Net Income¹ (mn TL) Q1 Q2 Q3 Q4 20,734 11,507 13,688 16,066 10,611 8,908 3,319 7,267 3,713 1,887 1,392 1,766 4,039 526 -2,494 988 542 3,778 545 2,739 1,027 186 1,700 738 378 870 376 896 956 -375 -760 2,210 2,512 4,668 1,495 383 -155 -2,265 1,033 851 97
Slide 31: Balance Sheet Analysis
Balance Sheet Analysis Net Debt bn TL In Billion TL In Billion $ bn $ Redemption Schedule (Billion TL) 2.2 TL Hard Currency $ equivalent 12.0 12.7 40 11.2 37.5 8.4 9.4 30 0.8 0.8 0.3 0.0 0.0 0.0 -0.3 20 1.3 12.9 13.8 2.3 1.4 0.8 0.9 10 4.6 -5.4 0.2 0.1 0.6 Dec-18 Dec-19 Dec-20 Dec-21 Mar-22 Jun-22 0
Slide 32: Profit Before Tax Bridge (Q2 2021 – Q2 2022)
Profit Before Tax Bridge (Q2 2021 – Q2 2022) Strong crack margins and wider differentials boosted PBT despite elevated energy expenses and TL devaluation. Million TL Sep-22 Hizmete Özel / Confidential Investor Presentation Financials www.tupras.com.tr 32
Slide 33: Annual Profit Before Tax Bridge (2020-2021)
Annual Profit Before Tax Bridge (2020-2021) PBT performance was strong in 2021 with better operational performance and lower interest expenses as net FX impact mostly matched with inventory gains Million TL +9,118 Inventory FX -8,530 Sep-22 Hizmete Özel / Confidential Investor Presentation Financial
Slide 34: 2022 Expectations
2022 Expectations Med Complex Refining Margin Expectation Withdrawn Tüpraş Net Refining Margin 13 - 14 $/bbl • 26-27 mt production, 28-29 mt sales and 90 - 95% capacity utilization Consolidated Capex ~200 million $ • ~45% of capex for sustainability focused energy efficiency and environmental projec
Slide 35: H1 2022 Results
H1 2022 Results Refining Margins ($/bbl) Capacity Utilization (%) 18.0 Tüpraş Net Margin 16.0 14.0 Tüpraş FY 100 Target 90 92% total capacity 12.0 80 utilization in H1 2022 10.0 70 8.0 60 6.0 13.0 50 92.0 13.8 mn tons of 40 4.0 30 sales and 13.1 mn 2.0 20 tons of production 0.0 10 in H1 2022 0 H1 20
Slide 36: Investments (Million $)
Investments (Million $) Achievements & Ongoing Projects Strategic Transition - Investment Program • c6.9 bn USD investments since privatization • 27% CO2 emission reduction by 2030 (scope1+2), 100% • Reached 9.5 Nelson Complexity reduction by 2050 • Capability to process heavier and more sour crude
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 June 2022)
FX Exposure Management (30 June 2022) Consolidated Hard Consolidated Hard Currency Assets Currency Liabilities Million $ Payables & Other Cash Liabilities 1,640 5,058 Tüpraş continues to employ strict FX Receivables & Other Assets ST Financial Loans policies to mitigate currency risks 192 312 • RUP:
Slide 39: Strategy
Strategy Hizmete Özel / Confidential
Slide 40: 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 41: 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 42: 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 ~ $9bn total CF until 2035 and With ample CF, Net Deb
Slide 43: Strategic Transition Plan – Latest Updates
Strategic Transition Plan – Latest Updates ZERO CARBON ELECTRICITY BIOFUELS The takeover process of Entek, our We are in the installation phase to produce first breakthrough in the field of sustainable aviation fuel, We will use zero-carbon electricity generation, Honeywell's UOP Ecofining™ technolo
Slide 44: ESG
ESG Hizmete Özel / Confidential
Slide 45: Tüpraş's Environmental Highlights
Tüpraş’s Environmental Highlights Sustainability program was kicked off back in 2008 and achieved many milestones Energy Intensity Achievements 102.2 Energy Intensity Targets 96.1 119.1 93.3 103.4 102.22 99.1 98.44 99.1 1.8 0.1 1.1 0.1 93.5 2017 2021 Target Ongoing Other Future Future Other 2030 Tar
Slide 46: 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 12 members Risk Management Audit Corporate Governance Rating 9.58 One-third of the members Executive are independent Ethics He
Slide 47: Appendix
Appendix Hizmete Özel / Confidential
Slide 48: 2022 Refinery Maintenance Schedule
2022 Refinery Maintenance Schedule Refinery Unit Starting Quarter Duration (weeks) Purpose Status Crude Oil & Vacuum Q1 15 Done Batman Seasonal Crude Oil & Vacuum Q4 4 Planned Vacuum Q1 6 Periodic Done Lube Complex Q1 7 Maintenance Done İzmir Crude Oil Q4 9 Planned CCR & Isom. & Desulp. Revamp Q4 9
Slide 49: Turkish Market Fuel Consumption 2017-2021
Turkish Market Fuel Consumption 2017-2021 Million Tons Diesel Jet Fuel* 28 -2.4% -4.4% +0.5% +10.1% 24.9 8 24.2 23.6 22.5 22.7 +10.5% 5.0 +6.5% 5.3 -54.4% 4.5 14 4 +41.2% 3.4 2.4 0 0 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Gasoline LPG -7.4% 4 5 +1.6% 4.1 +0.8% 4.2 +1.2% 4.1 3.9 3.9 3.0 4
Slide 50: 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 4.2 -2.8 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 5.3 1.5 construction kicked off
Slide 51: 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 Sep-22
Slide 52: 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 Tax Refinery Price Tax 40 40 35 35 30 30 16.9 19.5 16.6 15.8 13.4 25 13.7 16.2 25 11.9 13.2 13.8 17.2 11.8 13.3 15.5 20 6.0 20 5.4 15 15 10 10 19.0
Slide 53: Tüpraş Balance Sheet (Million TL)
Tüpraş Balance Sheet (Million TL) 30.06.2022 31.12.2021 Diff. Diff. (%) Current Assets 120,342 65,429 54,913 84 Cash & C. Equivalents 37,503 20,400 17,103 84 Trade Receivables 26,999 13,517 13,482 100 Derivatives 2,601 3,818 -1,217 -32 Inventories 46,901 23,756 23,145 97 Pre-paid expenses 374 186 18
Slide 54: Dividend (TL)
Dividend (TL) Avg. Payout Ratio: 90%* Strategic Transition 101% 102% Dividend Plan 79% 87% 89% 77% 80% 66% 64% 15.2 15.2 13.6 14.8 13.3 10.2 Our new business model 5.8 5.8 6.5 7.2 6.2 enables us to pay ~80% average 5.0 3.9 3.9 4.8 3.2 2.5 2.9 3.0 1.6 0.0 2.1 0.0 0.0 0.0 33% dividends and we will rem
Slide 55: Tüpraş - Ratings
Tüpraş - Ratings Tüpraş BIST Corporate Governance Rating Score Credit Rating Scores Overall 95.8 Foreign Currency Long Term Tüpraş B (Negative) B3 (Stable) Shareholders 95.5 Turkey B (Negative) B3 (Stable) B+ (Negative) Koç Holding B3 (Stable) B+(Negative) Transparency 97.2 Analyst Recommendations S
Slide 56: 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 57: 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 Sep-22 Hizmete Özel / Confidential Investor Presentation App
Slide 58: LPG and Naphtha Cracks
LPG and Naphtha Cracks $/bbl LPG Naphta 5yr range 2022 2021 5 yr ave 5yr range 2022 2021 5 yr ave 5 5 -0.3 0 -2.1 -1.0 -3.2 0.3 0.9 -2.7 -4.2 0.2 0.1 -1.0 -5 -4.5 -3.6 -5 -8.1 -4.1-7.2 -10.0 -11.4 -10 -13.7 -15.8 -10.5 -15.7 -15 -17.2 -17.7 -19.6 -21.4 -15 -20 -18.9 -23.2 -27.7 -25 -24.0 -29.2 -25 -
Slide 59: 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. ~8 ~7% ~21% Koç Group’s Combined Total Exports / Pioneer in its Sectors Revenues / Turkey’s Market Cap/ Borsa Istanbul GDP1 Expor
Slide 60: Latest
Investor Presentation Latest Webcast Sustainability Report Strategic Transition Plan tuprasir@tupras.com.tr Hizmete Özel / Confidential