IRPC Public Company Limited
Management Discussion and Analysis
Operating Results for the Third Quarter and the Nine-Month Period of 2024
World Members in Oil & Gas Refining and Marketing Sector for 11th Consecutive Year
Table of Contents
Executive Summary | 1 | |
Operating Performance | 4 | |
1. Operating Performance by Business Units | 4 | |
1.1 | Petroleum business unit | 4 |
1.2 | Petrochemical business unit | 9 |
1.3 | Power Plant and Utility business units | 13 |
2. Total Operating Performance | 14 | |
Financial Positions as of 30 September 2024 | 19 |
Executive Summary
Management Discussion and Analysis (MD&A) IRPC Public Company Limited and its subsidiaries
Operating Results for the Third Quarter and the Nine-Month Period of 2024
Executive Summary
Unit
QuarterChange
9M
YoY
3Q24 | 2Q24 | 3Q23 | QoQ | YoY |
2024 2023
Crude Intake | Million bbl | 18.25 | 18.32 | 17.17 | (0.4%) | 6% | 53.16 | 52.47 | 1% |
Sales[1] | Million Baht | 79,732 | 81,630 | 81,642 | (2%) | (2%) | 240,710 | 239,988 | 0.3% |
Net Sales [2] | Million Baht | 69,964 | 74,066 | 77,264 | (6%) | (9%) | 218,674 | 223,779 | (2%) |
Market GIM [3] | Million Baht | 3,650 | 3,465 | 5,373 | 5% | (32%) | 12,733 | 16,625 | (23%) |
USD/bbl | 5.72 | 5.12 | 8.87 | 12% | (36%) | 6.68 | 9.14 | (27%) | |
Accounting GIM | Million Baht | (1,350) | 4,869 | 8,939 | (128%) | (115%) | 11,421 | 17,488 | (35%) |
USD/bbl | (2.11) | 7.19 | 14.76 | (129%) | (114%) | 6.00 | 9.62 | (38%) | |
EBITDA | Million Baht | (4,843) | 1,439 | 5,880 | (>200%) | (182%) | 1,275 | 8,010 | (84%) |
Net Profit | Million Baht | (4,880) | (732) | 2,439 | (>200%) | (>200%) | (4,068) | 494 | (>200%) |
Note: [1] Sales include (1) Petroleum Sales (2) Petrochemical Sales (3) Power and Utilities Sales (4) Sales of tank farm and port service, etc
[2]
[3]
Net Sales include (1) Petroleum Sales (excluding excise tax) (2) Petrochemical Sales (3) Power and Utilities Sales Market GIM per bbl : [(Market GIM / Crude Intake)/Exchange Rate]
The operating results in the third quarter of 2024 (3Q24) compared to those in the
second quarter of 2024 (2Q24): In 3Q24, the Company registered net sales of Baht 69,964 million decreasing by Baht 4,102 million or by 6% from that in the previous quarter, mainly
3Q24 | 6% | 2Q24 | owing to a 10% decrease in average | |||
2% | 1% | selling | prices | following lower | crude oil | |
21% | 20% | price | versus | a 4% increase | in sales | |
69,964 | 74,066 | volume. For petroleum business unit, | ||||
77% | 79% | Market Gross Refining Margin (Market | ||||
GRM) rose mainly from an increase in the |
Petroleum | Petrochemical | Power & Utilities | spreads between Lube Base Oil product | ||
prices and Fuel Oil price, especially Asphalt spread that was supported by a decline in Fuel Oil price as well as a rise in domestic demand according to the acceleration of annual budget spending. Furthermore, petrochemical business unit obtained an increased Market Product to Feed (Market PTF) margin owing to the higher spreads between Styrenics product prices and raw material price due to the Chinese government's economic stimulus policy. Meanwhile, Power plant and utility business units contributed stable margin. Therefore, the Company
Management Discussion and Analysis and Operating Results for the Third Quarter and the Nine-Month Period of 2024 | 1 |
Executive Summary
recorded Market Gross Integrated Margin (Market GIM) of Baht 3,650 million or USD 5.72 per barrel increasing by 5% from that in the prior quarter. However, concerns over the sluggish China, U.S. and Europe economies led to the lower crude oil price resulting in a stock loss of Baht 3,366 million or USD
5.27 per barrel and a Net Realizable Value (NRV) of Baht 1,634 million or USD 2.56 per barrel. All previously mentioned led to a net inventory loss of Baht 5,000 million or USD 7.83 per barrel. Therefore, the Company recorded a loss on an Accounting Gross Integrated Margin (Accounting GIM) of Baht 1,350 million or USD 2.11 per barrel compared to Accounting GIM of Baht 4,869 million or USD 7.19 per barrel in the prior quarter. Moreover, there were losses on earnings before interest, tax, depreciation and amortization (EBITDA) of Baht 4,843 million compared to an EBITDA of Baht 1,439 million in the previous quarter. According to Thai Baht appreciation in 3Q24, the Company recorded a gain on financial derivatives of Baht 763 million as well as a gain on foreign exchange from U.S. dollar borrowing of Baht 182 million. In addition, there was an unrealized gain on oil hedging of Baht 575 million due to the decreasing crude oil price. Meanwhile, the Company recorded the depreciation expense of Baht 2,327 million rising by 4%, along with the net finance cost of Baht 687 million increasing by 12% due to higher borrowing and increased interest rates following market situation. As a result, the Company recorded a net loss of Baht 4,880 million in 3Q24. The loss increased by Baht 4,148 million from that in 2Q24.
The operating results in the third quarter of 2024 (3Q24) compared to those in the
third quarter of 2023 (3Q23): the Company's net sales decreased by Baht 7,300 million or by 9% from that in the same period last year, mainly due to an 11% decrease in average selling prices versus a 2% increase in sales volume. For petroleum business unit, the Market GRM declined mainly from Refinery group because of a significant drop in the spreads of Diesel and Gasoline compared to Dubai crude oil price. Meanwhile, the Market PTF for petrochemical business unit increased owing to rises in spreads of product prices and raw material prices, especially those of PP and products in Styrenics group, while Power plant and utility business units obtained stable margin. Hence, the Company recorded a drop in the Market GIM by 32%. However, there was a net inventory loss of Baht 5,000 million in 3Q24 of which the loss rose by Baht 8,566 million from that in 3Q23. Therefore, there was a loss on Accounting GIM of Baht 1,350 million of which the loss increased by 115% compared to that in 3Q23. These led a to loss on EBITDA amounting to Baht 4,843 million of which the loss was up by 182% from that in the same period last year. Moreover, the Company recorded the depreciation expense of Baht 2,327 million rising by 7% compared to that in the same period last year owing to an additional asset from Ultra Clean Fuel (UCF) project, along with the net finance cost of Baht 687 million increasing by 28% compared to that in 3Q23. Meanwhile, the Company recorded a gain on financial derivatives of Baht 763 million, a gain on foreign exchange from U.S. dollar borrowing of Baht 182 million and an unrealized gain on oil hedging of Baht 575 million. Consequently, the Company's 3Q24 net loss was Baht 4,880 million. The loss increased by Baht 7,319 million compared to net profit of Baht 2,439 million in 3Q23.
Management Discussion and Analysis and Operating Results for the Third Quarter and the Nine-Month Period of 2024 | 2 |
Executive Summary
The operating results in the nine-month period of 2024 (9M24) compared to those
in the nine-monthperiod of 2023 (9M23): The Company registered net sales of Baht 218,674 million in 9M24 decreasing by 2% from that in the same period last year. This attributed to a 5% decrease in sales volume versus a 3% increase in average selling prices. For petroleum business unit, the Market GRM declined mainly from refinery group, especially decreases in spreads between Diesel and Gasoline prices and Dubai crude oil price. On the contrary, the petrochemical business unit's Market PTF increased. Meanwhile, Power plant and utility business units obtained stable margin. Hence, the Company recorded the Market GIM amounting to Baht 12,733 million or USD 6.68 per barrel declining by 23% from that in the same period last year. During the interval, the Company recorded a 9M24 stock loss of Baht 1,228 million or USD 0.64 per barrel and an NRV of Baht 382 million or USD 0.20 per barrel against a realized gain from oil hedging of Baht 298 million or USD 0.16 per barrel. All previously mentioned led to a net inventory loss of Baht 1,312 million or USD 0.68 per barrel. Therefore, an Accounting GIM in 9M24 was Baht 11,421 million or USD 6.00 per barrel declining by 35% from that in the same period last year. After deducting OPEX, there were EBITDA of Baht 1,275 million dropping by 84% from that in the same period last year. Meanwhile, the Company recorded the depreciation expense of Baht 6,711 million rising by 4% from that in 9M23, along with the net finance cost of Baht 1,800 million increasing by 17% compared to that in 9M23. In 9M24, according to Thai Baht appreciation, the Company recorded a gain on financial derivatives of Baht 401 million as well as a gain on foreign exchange from U.S. dollar borrowing of Baht 27 million. Furthermore, there were an unrealized gain on oil hedging of Baht 694 million due to the decreasing crude oil price, along with a gain on investments of Baht 766 million, which rose mainly from profit sharing from investments in joint ventures named 'WHA Industrial Estate Rayong Company Limited (WHAIER)'. This has started recognizing revenue from land sales since 2Q24. As a result, the Company recorded a net loss of Baht 4,068 million in 9M24 compared to the net profit of Baht 494 million in the same period last year.
Management Discussion and Analysis and Operating Results for the Third Quarter and the Nine-Month Period of 2024 | 3 |
Performance
Operating Performance
1. Operating Performance by Business Units
1.1 Petroleum business unit
1.1.1 Petroleum Market Overview
Crude oil situation in the third quarter of 2024 (3Q24): The global oil consumption was 105.9
million barrels per day enhancing by 1.8 million barrels per day from 2Q24 oil consumption of 104.1 million | |||
Dubai Price | barrels per day. The Dubai price | ||
Unit : USD/bbl | |||
in 3Q24 moved between USD | |||
150 | |||
130 | 70.95 per barrel and USD 87.65 | ||
110 | per barrel, with an average of | ||
90 | 87.65 | USD 78.31 per barrel declining by | |
70 | 2Q24 AVG price 70.95 | USD 6.94 per barrel from USD | |
50 | 85.25 | 85.25 per barrel in 2Q24. The | |
3Q24 AVG price | |||
30 | 78.31 | crude oil price was pressured | |
10 | mainly due to the hampered | ||
demand according to the sluggish |
Chinese economy being lulled by the property crisis, along with concerns about the U.S. and Europe economies whether it entered to the recession. In addition, there were concerns over the crude oil supply being thought to increase as OPEC and allies (OPEC+) announced in September 2024 to start resuming the production in December 2024 and the production will reach a normal level in November 2025 entailing the decelerated crude oil price in late-3Q24. In the meantime, geopolitical conflicts in the Middle East continuously fluctuated arousing uncertainties in the crude oil market.
Crude oil outlook in the fourth quarter of 2024 (4Q24): It is foreseen that the oil demand is supposed to slightly improve, mainly from Diesel and Fuel Oil thanks to the heating demand during winter, along with a possibility of the policy interest rate to be reduced. In the meantime, it is thought that the crude oil price will still face several uncertainties including geopolitical conflicts in the Middle East and China's economic conditions. Also, the OPEC+'s resuming production and a rise in production capacity in non-OPEC+areas are expected to be challenging factors for the crude oil market that need to be closely monitored.
Management Discussion and Analysis and Operating Results for the Third Quarter and the Nine-Month Period of 2024 | 4 |
Performance | ||||||||||||||||||||||||||||||||
1.1.2 Crude Intake and Capacity | ||||||||||||||||||||||||||||||||
Quarter | % Change | 9M | ||||||||||||||||||||||||||||||
Petroleum | YoY | |||||||||||||||||||||||||||||||
3Q24 | 2Q24 | 3Q23 | QoQ | YoY | 2024 | 2023 | ||||||||||||||||||||||||||
Crude Intake | ||||||||||||||||||||||||||||||||
Million barrels | 18.25 | 18.32 | 17.17 | (0.4%) | 6% | 53.16 | 52.47 | 1% | ||||||||||||||||||||||||
KBD | 198 | 201 | 187 | (1%) | 6% | 194 | 192 | 1% | ||||||||||||||||||||||||
Utilization Rate | ||||||||||||||||||||||||||||||||
Refinery | 95% | 97% | 88% | (2%) | 7% | 92% | 91% | 1% | ||||||||||||||||||||||||
RDCC | 108% | 81% | 101% | 27% | 7% | 99% | 108% | (9%) | ||||||||||||||||||||||||
Lube Base Oil | 91% | 83% | 83% | 8% | 8% | 80% | 89% | (9%) | ||||||||||||||||||||||||
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In 3Q24, crude intake was 18.25 million
barrels or 198,000 barrels per day. Refinery utilization rate was 95%.
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In 3Q24, crude intake was 18.25 million barrels or 198,000 barrels per day (198 KBD). Refinery utilization rate was 95% softening by 2%, QoQ, while increasing by 7%, YoY, due to the production plan adjustment in 3Q23 to align with market conditions.
The utilization rate of RDCC plant in 3Q24 was 108% improving by 27%, QoQ, and by 7%, YoY, as RDCC plant resumed production after arranging a maintenance shutdown in 2Q24 taking 15 days.
The utilization rate of Lube Base Oil plant in 3Q24 was 91% increasing by 8% by comparing both QoQ and YoY.
1.1.3 Petroleum Sales
Sales Volume (Million Barrel) | ||||||||||||
Products | ||||||||||||
Quarter | 9M | |||||||||||
3Q24 | 2Q24 | 3Q23 | 2024 | 2023 | ||||||||
Refinery | 14.77 | 14.48 | 14.87 | 44.00 | 46.76 | |||||||
Lube Base Oil | 1.89 | 1.65 | 1.73 | 4.94 | 5.62 | |||||||
Total | 16.66 | 16.13 | 16.60 | 48.94 | 52.38 | |||||||
Sales Value (Million Baht)
Quarter | 9M | ||||||||||
3Q24 | 2Q24 | 3Q23 | 2024 | 2023 | |||||||
47,330 | 52,775 | 57,403 | 155,106 | 161,204 | |||||||
6,582 | 5,540 | 5,755 | 16,688 | 19,536 | |||||||
53,912 | 58,315 | 63,158 | 171,794 | 180,740 | |||||||
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In 3Q24, net sales of petroleum businesses moved down by 8%, QoQ, owing to an 11% drop in average selling prices versus a 3% increase in sales volume.
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In 3Q24, net sales of petroleum businesses were Baht 53,912 million moving down by Baht 4,403 million or by 8%, QoQ, mainly owing to an 11% drop in average selling prices following the decreased crude oil price versus a 3% increase in sales volume, from 16.13 million barrels to 16.66 million barrels. Most of the enhanced sales volume was contributed from Fuel Oil and Diesel.
Management Discussion and Analysis and Operating Results for the Third Quarter and the Nine-Month Period of 2024 | 5 |
Performance
By comparing YoY, the net sales of petroleum businesses decelerated by Baht 9,246 million or by 15%, mainly from a 15% contraction in average selling prices following the decreased crude oil price versus a 0.4% rise in sales volume. Most of the sales volume increase was from Lube Oil and Asphalt. The proportion of domestic and export of petroleum products in 3Q24 was 69% and 31%, respectively and most of the exported products were shipped to Singapore, Laos and Cambodia.
For 9M24, the net sales of petroleum businesses were Baht 171,794 million softening by Baht 8,946 million or by 5% from that in 9M23. This was mainly from a 7% decrease in sales volume versus a 2% increase in average selling prices. Most of the sales volume decrease was from Naphtha and Diesel. The proportion of domestic and export of petroleum products in 9M24 was 75% and 25%, respectively and most of the exported products were shipped to Singapore, Cambodia and Laos.
1.1.4 Crude Price and Petroleum Products Spread
Quarter
3Q24 | 2Q24 | 3Q23 | ||||
- Change
QoQ YoY
9M
YoY
2024 | 2023 |
Dubai Crude Oil (USD/bbl) | 78.31 | 85.25 | 86.74 | (8%) | (10%) | 81.62 | 81.61 | 0.01% |
Petroleum (USD/bbl) | ||||||||
Naphtha - Dubai | (6.1) | (12.4) | (17.9) | 51% | 66% | (8.8) | (13.0) | 32% |
ULG95 - Dubai | 11.1 | 13.1 | 18.9 | (15%) | (41%) | 14.0 | 18.1 | (23%) |
Gas Oil 0.05%S - Dubai | 12.7 | 13.7 | 26.9 | (7%) | (53%) | 16.0 | 22.2 | (28%) |
Gas Oil 0.001%S - Dubai | 13.6 | 14.8 | 28.8 | (8%) | (53%) | 17.2 | 24.3 | (29%) |
FO 180 3.5%S - Dubai | (5.3) | (5.1) | (5.3) | (4%) | 0% | (6.7) | (10.1) | 34% |
Lube Base Oil (USD/MT) | ||||||||
500SN - FO 180 3.5%S | 454 | 417 | 306 | 9% | 48% | 436 | 392 | 11% |
150BS - FO 180 3.5%S | 599 | 575 | 387 | 4% | 55% | 585 | 520 | 13% |
Asphalt - FO 180 3.5%S | (22) | (101) | (63) | 78% | 65% | (55) | 19 | (>200%) |
Remark : Uses Gas Oil 0.001%S (10 ppm : Euro 5 standard) instead of Gas Oil 0.05%S (500 ppm : Euro 3 standard) starting from 1 January 2024 being in accordance with the government's policy.
The spread between petroleum products and raw material price
The spread between petroleum products and Dubai crude oil price
- Naphtha Spread - Higher: Naphtha - Dubai spread in 3Q24 was USD -6.1 per barrel improving by 51% from USD -12.4 per barrel in 2Q24. This was because Naphtha demand rose according to startups of olefins plants in China and Indonesia, along with production resumption of several olefins producers from maintenance shutdowns. Also, Naphtha supply was partially limited owing to Ukraine's attack on refineries in Russia. Meanwhile, margins of olefin plants remained low. By comparing with 3Q23 of USD -17.9 per barrel, the spread increased by 66%.
Management Discussion and Analysis and Operating Results for the Third Quarter and the Nine-Month Period of 2024 | 6 |
Performance
- ULG95 Spread - Lower: ULG95 - Dubai spread in 3Q24 was USD 11.1 per barrel dropping by 15% from USD 13.1 per barrel in 2Q24. This was mainly due to limited Gasoline demand during monsoon season in Asia. In addition, the U.S. and China's economic conditions hampered driving activities despite driving season in the Northern Hemisphere that normally occurs in 3Q. Furthermore, new production capacity in Africa pressured the Gasoline market in terms of supply. By comparing with 3Q23 of USD 18.9 per barrel, the spread declined by 41%.
- Gas Oil 0.001%S Spread - Lower: Low Sulphur Gas Oil - Dubai spread in 3Q24 was USD 13.6 per barrel dropping by 8% from USD 14.8 per barrel in 2Q24. This was because Diesel demand in India and South Asia was curbed by the monsoon season, which dampened agricultural and industrial activities. Moreover, there were rising Diesel exports from the U.S. to Europe because of high
U.S. production limiting Europe's Diesel demand from Asia. By comparing with 3Q23 of USD 28.8 per barrel, the spread was down by 53%. - Fuel Oil Spread - Lower: High Sulphur Fuel Oil (HSFO) - Dubai spread in 3Q24 was USD -5.3 per barrel declining by 4% from USD -5.1 per barrel in 2Q24 as Fuel Oil demand for power generation in the Middle East waned seasonally owing to the end of summer in such region. By comparing with 3Q23 of USD -5.3 per barrel, the spread unchanged.
The spread between Lube Base Oil products and Fuel Oil price
- 500SN Spread - Higher: 500SN - Fuel Oil spread in 3Q24 was USD 454 per ton being up by 9% from USD 417 per ton in 2Q24 as Fuel Oil price softened; however, Lube Base Oil demand was stagnant owing to China's economic conditions that pressured manufacturing activities. By comparing with 3Q23 of USD 306 per ton, the spread rose by 48%.
- Asphalt Spread - Higher: Asphalt - Fuel Oil spread in 3Q24 was USD -22 per ton escalating by 78% from USD -101 per ton in 2Q24 because Fuel Oil price softened and domestic Asphalt demand enhanced thanks to boosted efforts for annual budget utilization, even if overall Asphalt demand was restrained by the monsoon season in Asia. By comparing with 3Q23 of USD -63 per ton, the spread soared by 65%.
Management Discussion and Analysis and Operating Results for the Third Quarter and the Nine-Month Period of 2024 | 7 |
Performance
1.1.5 Gross Refining Margin
13,962 Unit: MB
1,715
Unit: USD/bbl |
7,751 | 6,231 | |||||
2,730 | 2,604 | 12,247 | ||||
7,227 | ||||||
1,074 | 5,147 | |||||
1,673 | ||||||
1,656 | ||||||
(3,611) | (996) | |||||
(1,938) | ||||||
3Q24 | 2Q24 | 3Q23 | 9M24 | 9M23 | ||
755 | 1,117 | 4,910 | 5,290 | 8,709 | ||
918 | 539 | 237 | 1,937 | 3,538 | ||
1,673 | 1,656 | 5,147 | 7,227 | 12,247 | ||
Accounting
GRM
Net Inventory gain (loss)
Market GRM
Refinery
Lube Base Oil
Market GRM
Accounting | ||||||||||
12.78 | GRM | |||||||||
4.04 | 4.29 | 3.28 | 7.68 | Net Inventory | ||||||
0.94 | ||||||||||
8.49 | gain (loss) | |||||||||
1.59 | 6.74 | |||||||||
2.62 | 3.79 | |||||||||
2.45 | ||||||||||
(5.65) | (0.51) | Market GRM | ||||||||
(3.03) | ||||||||||
3Q24 | 2Q24 | 3Q23 | 9M24 | 9M23 | ||||||
1.18 | 1.65 | 8.10 | 2.77 | 4.79 | Refinery | |||||
1.44 | 0.80 | 0.39 | 1.02 | 1.95 | Lube Base Oil | |||||
2.62 | 2.45 | 8.49 | 3.79 | 6.74 | Market GRM | |||||
The Market Gross Refining Margin (Market GRM) in 3Q24 was Baht 1,673 million or USD 2.62 per barrel increasing by Baht 17 million or USD 0.17 per barrel from that in 2Q24, mainly from an increase in Lube Base Oil Market GRM of USD 0.64 per barrel thanks to the improved spreads of products in Lube Base Oil group compared to Fuel Oil price, especially Asphalt spread being supported
by decreased Fuel Oil price and accelerated demand according to boosted efforts for annual budget utilization. On the other hand, Refinery Market GRM decreased by USD 0.47 per barrel, mainly from the lessened Gasoline and Diesel spreads compared to Dubai crude oil price.
By comparing YoY, the Market GRM reduced by Baht 3,474 million or USD 5.87 per barrel, mainly from Refinery Market GRM of USD 6.92 per barrel due to the significantly slumped Diesel and Gasoline spreads compared to Dubai crude oil price.
In 3Q24, there was a net inventory loss of the petroleum business equaling Baht 3,611 million or USD 5.65 per barrel, which led to a loss on Accounting Gross Refining Margin (loss on Accounting GRM) of Baht 1,938 million or USD 3.03 per barrel compared to the Accounting GRM of Baht 2,730 million or USD 4.04 per barrel in 2Q24 and the Accounting GRM of Baht 7,751 million or USD 12.78 per barrel in 3Q23.
For 9M24, the Market GRM was Baht 7,227 million or USD 3.79 per barrel decelerating by Baht 5,020 million or USD 2.95 per barrel from that in the same period last year. This was mainly due to a decrease in Refinery Market GRM by USD 2.02 per barrel from the declined spreads of Diesel and Gasoline compared to Dubai crude oil price, along with a decrease in Lube Base Oil Market GRM of USD 0.93 per barrel being mainly from the significant slump of Asphalt spread compared to Fuel Oil price. The Company booked a net inventory loss of Baht 996 million or USD 0.51 per barrel entailing the Accounting GRM of Baht 6,231 million or USD 3.28 per barrel decelerating by Baht 7,731 million or USD 4.40 per barrel from that in the same period last year.
Management Discussion and Analysis and Operating Results for the Third Quarter and the Nine-Month Period of 2024 | 8 |