2Q/14 Analyst Meeting Presentation

Transcription

1 2Q/14 Analyst Meeting Presentation Bowon Vongsinudom, President & CEO Patiparn Sukorndhaman, EVP-Finance and Accounting Saroj Putthammawong, VP-Supply Sourcing St. Regis Hotel, Bangkok August 13, 2014

2 Disclaimer 2 This presentation includes forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realized from the proposals described herein. This presentation contains a number of forward-looking statements including, in particular, statements about future events, future financial performance, plans, strategies, expectations, prospects, competitive environment, regulation and supply and demand. PTTGC has based these forward-looking statements on its views with respect to future events and financial performance. Actual financial performance of the entities described herein could differ materially from that projected in the forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and financial performance may be better or worse than anticipated. Given these uncertainties, readers should not put undue reliance on any forward-looking statements. Forward-looking statements represent estimates and assumptions only as of the date that they were made. The information contained in this presentation is subject to change without notice and PTTGC does not undertake any duty to update the forward-looking statements, and the estimates and assumptions associated with them, except to the extent required by applicable laws and regulations.

3 Agenda 3 2Q/14 Business Highlights Strategy and Excellence Programs Updates - Excellence Programs Updates - International Business Directions 2Q/14 Operating Results Market Outlook

4 Agenda 4 2Q/14 Business Highlights Strategy and Excellence Programs Updates - Excellence Programs Updates - International Business Directions 2Q/14 Operating Results Market Outlook

5 2Q/14 Business Environments and Operations Economic Petrochemical Market US GDP rebounded with growth of 4% in 2Q/14, mainly driven by domestic consumption. Continuation of QE tapering. Major economic recovery, GDP growth 0.2%. Economy expanded for 4 consecutive quarters China announced GDP growth at 7.5%, better than expectation at 7.4%. PMI continues to improve Chinese PMI Market sentiment / confidence picked up after coup. Signs of improvement are upside stock market, better fund flow, and FX strengthening /14 2/14 3/14 4/14 5/14 6/14 7/14 HDPE PX MEG HDPE price remains strong from well balanced market with strong demand. Affirmed uptrend view of olefins chain Continuation of PX supply surplus pressured PX spread to decrease further in 2Q/14, but significant improvement in PX price at the end of quarter from shutdown/slowdown of high cost producers and postpone of new capacities. Soften spread from major surplus in comonomer while downstream demand lacked. Crude Oil Oil Market Dubai price Increased to 106 $/bbl in 2Q/14 from 104 $/bbl in 1Q/14 Tension in oil producing countries : Ukraine, Libya, and Iraq Dubai price surge at the end quarter from threat to Iraq crude supply Operation QoQ Refinery Improved performance from high CDU U-rate at 103%, better crude optimization, and increase in domestic sales, despite weak diesel and Fuel Oil crack Aromatics Lower performance with BTX U-rate at 89%, while PX spread decreased by -14% QoQ Petroleum Products Weak seasonal demand for petroleum product Diesel crack spread soften from Chinese supply surplus and export volume Olefins and Derivatives Improved Olefins U-Rate to 91% Unstable gas flow from PTT, resulted in using more NGL, which pressured EBITDA Margin Restructuring provision of Vencorex at 51% of THB 1,142 Mn 5

6 2Q/14 Business Highlights Performance Soften from Weak Aromatics Market and Vencorex Restructuring (Unit: Million Baht) 2Q/13 1Q/14 2Q/14 YoY QoQ 6M/13 6M/14 YoY Sale Revenue 111, , ,401 36% 4% 253, ,767 18% EBITDA 11,466 10,999 10,475-9% -5% 27,885 21,474-23% EBITDA Margin (%) 10% 8% 7% -3% -1% 11% 7% -4% Net Profit 4,172 6,296 6,085 46% -3% 16,247 12,381-24% Earnings Per Share (Baht/share) % -3% % Adjusted EBITDA * 12,888 11,574 11,534-11% 0% 29,950 23,108-23% Adjusted EBITDA Margin (%) 12% 8% 8% -4% 0% 12% 8% -4% Revenue and Adjusted EBITDA Structure EBITDA Margins % Adj. EBITDA Margin 2Q/13 1Q/14 2Q/14 Business Unit : Refinery Aromatics Olefins and Derivative Green HVS Average * Note: Adjusted EBITDA = EBITDA Stock Gain/(Loss) &NRV Provision for Business Restructuring of Vencorex 6

7 Agenda 7 2Q/14 Business Highlights Strategy and Excellence Programs Updates - Excellence Programs Updates - International Business Directions 2Q/14 Operating Results Market Outlook

8 Excellence Programs Update 2Q/14 EBITDA UPLIFT Excellence Programs (MUSD) 2014 Target 6M/14 Actual Est Target Synergy Excellence -Heavy Gas (Offgas) -Pure H2 via PSA -C3/C4 Stream -3 Streams (Heavy Gasoline, LCB, CB) -Heavy Aromatics Marketing Excellence (MUSD) -Customer Portfolio Management -Product Development -Pricing Excellence Operational Excellence -Total 47 projects in Energy Saving Projects -7 Plant Reliability Projects -6 Cost Reduction/Optimization Projects Total * Debottleneck EBITDA uplift includes 1Q/14 BV project starts up 3Q/15 TOCGC Plant Improvement Project 4Q/15 PX Expansion starts up Not Including PTTPE Cracker Debottlenecking and LLDPE Expansion

9 Excellence Programs Updates Execution of Core Uplift Projects According to Target 9 Synergy Projects Pure H2 via New PSA Progress Construction Progress at 99%, but partially start up. Slight delay to Aug from the delay delivery of re-specification tail gas compressor Fully Operate in mid-aug Off Gas upgrading at Olefins Construction Progress at 66% Target COD 2Q/14 4Q/14 Debottlenecking & Expansion Projects TOCGC Plant Improvement Project Progress Construction Progress at 37% Phenol 2 Project Construction Progress at 60% Target COD 3Q/15 3Q/15 PX Expansion Project Construction Progress at 24% 4Q/15 PTTPE Cracker Debottlenecking BEP (Basic Engineering Package) 2016 LLDPE Expansion BEP (Basic Engineering Package 2017

10 PTTGC International Business Direction Updates Global Operating Location Second PLA Plant in Southeast Asia HDI Derivative Sales and Marketing Offices / Representatives Brazil, China, France, Germany, India, Italy, Korea, Netherlands Poland, Russia, Spain, Taiwan, Thailand, Turkey, USA Brazil, Germany, Hong Kong, Japan, Korea, Malaysia, UK, USA Australia, Belgium, Brazil, Chile, China, Colombia, France, Germany, Hong Kong, India, Italy, Israel, Japan, Korea, Mexico, Netherlands, New Zealand, Peru, Philippines, Poland, Russia, South Africa, Spain, Taiwan, Thailand, Turkey, USA 10

11 Vencorex Business Directions Business Restructuring 11 Rationale of Investment 51% 49% Transaction: Investment transaction completed on May 31, % stake Investment capital to 121 million Objective: To step into HVS (PU Chain) by using the technology and knowhow (TDI & HDI) from Vencorex To maintain existing business and expand business in Asia To Forward integration into downstream Business Directions 1. Expand and enhance HDI Business 2. Continue R&D for TDI and HDI Process Improvement 3. Vencorex s France operations base will become HDI Monomer Hub and Center of High Technology Product Development 4. Conversion of TDI to HDI Monomer in France while sustaining strong TDI customer base in Europe 5. Seek for Business Partner of Isocyanates & PU to expand the Business in Asia Manufacturing Site Pont-de- Claix Freeport, Texas Rayong Restructuring of Vencorex ASIA TDI Reactor 125 KTA New HDI Reactor 70 KTA By 2016 HDI Monomer HDI Derivatives 24 KTA HDI Derivatives 11 KTA New HDI Derivatives New HDI Derivatives 12 KTA Construction Site Progress at 11% Target Commissioning by 3Q/15 Integrated PU Complex Restructuring Provision at 51% of 1,142 M. Baht HDI Derivatives in Thailand Investment: EUR 40 million Expected IRR: >15% Integrated PU Complex in Asia HDI Monomer & Derivatives TDI HDI Major Applications High value coating HDI Monomer TDI Major Applications Flexible Foam CASE

12 Natureworks Expanding PLA Sales and Application Rationale of Investment Transaction: Investment transaction completed on May 31, % stake Investment capital to USD 150 million Objective: To build second plant potentially in Asia Capture Mega trend i.e. environment and resource scarcity. To Produce PLA from diversified feedstock Way Forward: To expand PLA sales and application To grow sales volume by approximately 10-15% p.a. in the next 3 year Focus Growth on Oil Field Service Application To be bio plastic hub in Southeast Asia R&D for new application To built second Plant in Southeast Asia In the process of front end engineering Jacobs Engineering has been awarded the engineering design contract. Location to be finalized by 1Q/15 Varieties of New Products Application Manufacturing facility, located in Blair, Nebraska, USA Nameplate capacity of 150 KTA of PLA Sales Volume Growth at 16% p.a. in the past 5 Year Unit: KTA Note: U-Rate base on Effective Capacity for the year Capacity: 2009 at 125 KTA, 2012 at 140 KTA, 2013 at 150 KTA 12

13 Emery Oleochemical Way Forward: To strengthen Basic Oleochemical and explore specialties oleo chemical Two main strategies going forward Oleo Basic Chemical : strengthened cost competitive position Specialties Oleo Chemical : High value added product portfolio via growth Projects Strengthened Oleo Basics Business and Grow into Specialties Oleochemical Business New specialties Products Sulfactants Thickeners Ethoxylates Sodium Lauryl Sulfate (SLS) New Bio- Polyols and Recycled Polyols 13

14 Myriant World Class Biotechnology R&D Center 14 R&D Technology and Knowhow Transfer Downstream Products from Bio-based Feedstock Synergy and Collaboration Di-acids products provider Linkage to PU Chain Linkage to Nylon Chain from Bio-based Joint marketing activities and share customer base information Execute Strategic IPs Di-acids Market

15 JV with Pertamina Updates Indo Thai Trading 15 JV Marketing & Trading Holding Structure ITT Office Grand Opening in Jakarta 49% 51% Supply Chain in Indonesia Unit : KTA Annual Volume Sales Target ITT Organization Nominated by Pertamina Nominated by PTTGC Pertamina, PTTGC or local new hire Product Source Others HDPE, LDPE LLDPE, MEG PP Others Customers

16 Strategic Direction 16 EXCELLENCE EXECUTION 1-STEP ADJACENCIES 1 st Quartile Performance ROIC > 14% Listed in Globally Sustainability Index CORE UPLIFT PROJECTS EBITDA Uplift 15-30% ( ) Debottlenecking NEW GEOGRAPHIES ASEAN: Pertamina CHINA: Sinochem NEW PRODUCTS System House: Compounding: PC, PU, Nylon 6-6 KNOW HOW GREEN + R&D Center Synergy Excellence Marketing Excellence Operational Excellence AUTOMOTIVE E&E CONSTRUCTION Oleochemicals PLA Succinic Acid PLA/PBS Compound

17 Agenda 17 2Q/14 Business Highlights Strategy and Excellence Programs Updates - Excellence Programs Updates - International Business Directions 2Q/14 Operating Results Market Outlook

18 Business Environment and Operations Recap Average Dubai Crude Price USD/BBL Dubai crude increased from average at $/BBL in 1Q/14 to average $/BBL in 2Q/14 from unrests stiuation in oil producing countries. As a result, PTTGC reported Stock Gain (Net NRV) of 1,180 MB for the quarter FX Gain amounting to 71 MB, from foreign currency forward contract despite a slight depreciation in Baht from end 1Q/14 at Baht/USD to end 2Q/14 at Baht/USD Aromatics & Refinery price dropped while HDPE remained strong 100 Diesel-Dubai 16.0 USD/BBL -5% YoY -10% QoQ Q/12 2Q/12 3Q/12 4Q/12 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 FO Dubai USD/BBL -190% YoY -25% QoQ PX-Cond 333 USD/Ton -38% YoY -14% QoQ BZ-Cond 369 USD/Ton - 11% YoY -3% QoQ HDPE 1,569 USD/Ton +9% YoY +1% QoQ MEG 1,093 USD/Ton -7% YoY -8% QoQ Average and Closing FX : THB/USD* Overall utilization rate of major businesses Average FX Closing FX Q/12 2Q/12 3Q/12 4Q/12 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 *Source: BOT Selling Rate 18

19 Refinery Performance Slight Decline of Mkt GRM ULG 95 - DB JET - DB Petroleum Product Spread (USD/BBL) % YoY +10% QoQ % YoY -16% QoQ CDU U-Rate Total Intake (KBD) 82% 102% 101% 63% 98% 103% 101% 103% Crude Condenstate Residue & Others % YoY +5% QoQ Diesel - DB % YoY -10% QoQ Gross Refinery Margin (USD/BBL) Market GRM Stock Gain/(Loss) Net NRV Hedging Gain/(Loss) Accounting GRM FO - DB Naphtha + Ref. Jet (5.5) (9.6) (7.4) (3.7) (10.7) Sales Volume (KBD) (10.5) (8.5) (10.7) % 16% 14% 16% 12% 15% 16% 16% 11% 13% 11% 10% 12% 15% 13% 13% -190% YoY -25% QoQ +70% YoY +2% QoQ (1.00) (3.00) (0.69) (1.51) (0.91) (2.45) (2.00) (4.00) (6.00) (8.00) (10.00) Diesel 52% 52% 51% 54% 52% 49% 52% 51% Fuel Oil 14% 13% 15% 13% 15% 13% 14% 13% 8% 7% 9% 5% 9% 8% 5% 8% Note: In 2Q/13, Refinery had Planned Turnaround of 38 days 19

20 Aromatics Performance Soften PX hitting hard on Aromatic Business 20 Aromatics Products Prices and Spread (USD/Ton) BTX U-Rate and Sales Volume (KTons) Prices Condensate Erawan PX FECP BZ Spot Korea 1,618 1,514 1,409 1,440 1,440 1,295 1,379 1,332 1,280 1,303 1,293 1,286 1,258 1,283 1,256 1, BTX U-Rate BZ Group PX Group Naphtha Group Other By-Products 88% 90% 92% 84% 91% 93% 91% 89% 1,634 1, % 24% 22% 26% 22% 24% 24% 23% 43% 43% 43% 42% 43% 43% 43% 43% 26% 26% 26% 26% 31% 30% 25% 28% 6% YoY 7% QoQ PX FECP - Cond BZ Spot - Cond % YoY -3% QoQ % YoY -14% QoQ (100) 7% 7% 8% 5% 4% 3% 7% 6% Products to Feed Margin (USD/Ton BTX) Market P2F Hedging Gain/(Loss) Stock Gain/(Loss) Net NRV Accounting P2F (24.41) (1.45) (45.97) (7.90) (0.81) (100)

21 Olefins and Derivatives Performance Strong HDPE Price Prices MEG ACP 0.65Ethylene HDPE - Naphtha 1,700 1,500 1,300 1, Olefins Derivatives Prices and Spread (USD/Ton) HDPE (FILM) SEA LLDPE CFR SEA LDPE CFR SE Asia MEG ACP Naphtha MOPJ 1,452 1,455 1,463 1, ,622 1,459 1,444 1,569 1,664 1,639 1,605 1,569 1,477 1,561 1,433 1,490 1,549 1,560 1,578 1,482 1,536 1,554 1,569 1,443 1,489 1,282 1,137 1,173 1,208 1,143 1,182 1, HDPE (FILM) SEA 1,463 1,561 1,482 1,443 1,489 1,536 1,554 1,569 LLDPE CFR SEA 1,455 1,569 1,477 1,433 1,490 1,549 1,560 1,578 LDPE CFR SE Asia 1,452 1,622 1,459 1,444 1,569 1,664 1,639 1,605 MEG ACP 1,228 1,137 1,282 1,173 1,143 1,208 1,182 1,093 Naphtha MOPJ % YoY +0% QoQ -57% YoY -38% QoQ HDPE Price +9% YoY +1% QoQ 29% 25% U-Rate (%) Olefins 95% 84% 97% 93% 75% 93% 77% 91% HDPE 103% 100% 109% 96% 106% 113% 93% 107% LLDPE 93% 105% 113% 72% 113% 114% 99% 112% LDPE 100% 104% 101% 99% 5% 101% 115% 93% Total PE 99% 102% 109% 89% 88% 111% 99% 106% MEG 99% 82% 97% 100% 92% 86% 65% 99% Sales Volume (KTon) Olefins HDPE LLDPE LDPE Total PE MEG GAS : NAPHTHA Intake % Ethane Other Gas Naphtha 1,984 1,715 1, Kton 11% 12% 12% 10% 4% 12% 14% 11% 35% 31% 33% 36% 31% 35% 25% 35% 54% 57% 55% 54% 65% Adjusted EBITDA Margin 30% 28% 26% 53% 61% 54% 24% 24% 25% 21

22 Phenol and BPA Performance Improved U-rate and Margin 22 Phenol/ BPA Prices and Spread (USD/Ton) U-Rate and Sales Volume (KTons) Benzene Phenol BPA U-Rate Prices ,799 1,645 1,463 1,440 1,332 1,295 1,880 1,523 1,379 1,719 1,402 1,630 1,605 1,653 1,638 1,352 1,387 1,424 1,456 1,286 1,258 1,283 1,297 1,293 Phenol 126% 104% 126% 127% 124% 130% 78% 131% BPA 90% 88% 64% 116% 116% 104% 70% 107% Sales Volume (Kton) % YoY 38% QoQ 800 Phenol (CMP) 1,463 1,440 1,523 1,402 1,352 1,387 1,424 1,456 BPA (CMP) 1,799 1,645 1,880 1,719 1,630 1,605 1,638 1,653 Benzene 1,332 1,295 1,379 1,286 1,258 1,283 1,297 1,293 Phenol BPA 52% 41% 35% 45% 60% 46% 40% 42% 48% 59% 65% 55% 40% 54% 60% 58% BPA-Phenol Phenol-BZ % YoY +29% QoQ % YoY -8% QoQ Adjusted EBITDA Margin 6% 2% 1% 4% 5% 7% 4% 4%

23 Overview of Business Units Performance Margin soften from unstable gas flow and change in feed mix 23 2Q/14 Change in Olefins and Derivatives adj. EBITDA Revenue and Adjusted EBITDA Structure Unit: MB Adjusted EBITDA Margin at 30% Adjusted EBITDA Margin at 25% EBITDA Margins % Adj. EBITDA Margin 2Q/13 1Q/14 2Q/14 Business Unit : Refinery Aromatics Olefins and Derivative Green HVS Average

24 Income Statement Soften from Lower PX Spreads and Vencorex Restructuring 2Q/13 1Q/14 2Q/14 YoY QoQ MB % MB % MB % MB % MB % 1 Sales Revenue 111, , , , , Feedstock Cost (87,594) (78) (121,151) (83) (126,966) (83) 39, , Product to Feed Margin 24, , , , Variable Cost (6,204) (6) (7,416) (5) (7,601) (5) 1, Fixed Cost (4,163) (4) (4,633) (3) (4,904) (3) Stock Gain/(Loss) & NRV (1,422) (1) (575) 0 1, , , Gain/(Loss) Commodity Hedging (8) (2) Other Income 1, , ,249 1 (113) (8) (69) (5) 9 SG&A (2,820) (3) (3,104) (2) (3,056) (2) (48) (2) Extraordinary Item 10 Provision for Business Restructuring ** (2,239) (1) (2,239) 100 (2,239) EBITDA 11, , ,475 7 (991) (9) (524) (5) 12 Depreciation & Amortization (4,187) (4) (4,202) (3) (4,415) (3) EBIT 7, , ,060 4 (1,219) (17) (737) (11) 14 Finance Cost (1,120) (1) (1,141) (1) (1,097) (1) (23) (2) (44) (4) 15 FX Gain/(Loss) (2,726) (2) , (531) (88) 16 Shares of Profit/(Loss) from Investments (22) (0) , Income Tax Expense (373) 0 (599) (0) 1, Net Profit 3, , , (1,401) (23) 19 Profit/(loss) attributable to: 20 Owners of the Company 4, , , , (211) (3) 21 Non-controlling interests (252) (0) (170) 0 (1,360) *** (1) (1,108) (440) (1,190) (700) 22 Adjusted EBITDA * 12, , ,534 8 (1,354) (11) (40) (0) Note: * Adjusted EBITDA = EBITDA Stock Gain/(Loss) &NRV Provision for Business Restructuring of Vencorex ** Vencorex business restructuring provision at 100% share *** Vencorex business restructuring provision portion of 49% for non-controlling interests or Baht 1,097 million 24

25 Income Statement Soften from Lower PX Spreads and Vencorex Restructuring 6M/13 6M/14 YoY MB % MB % MB % 1 Sales Revenue 253, , , Feedstock Cost (199,940) (79) (248,117) (83) 48, Product to Feed Margin 53, , (2,606) (5) 4 Variable Cost (12,992) (5) (15,017) (5) 2, Fixed Cost (8,178) (3) (9,537) (3) 1, Stock Gain/(Loss) & NRV (2,065) (1) , Gain/(Loss) Commodity Hedging Other Income 2, ,567 1 (120) (4) 9 SG&A (5,389) (2) (6,160) (2) Extraordinary Item Provision for Business Restructuring ** 0 0 (2,239) (1) (2,239) EBITDA 27, ,474 7 (6,411) (23) 12 Depreciation & Amortization (8,140) (3) (8,617) (3) EBIT 19, ,857 4 (6,888) (35) 14 Finance Cost (2,235) (1) (2,238) (1) FX Gain/(Loss) (741) (0) , Shares of Profit/(Loss) from Investments (40) (0) , Income Tax Expense (711) (0) (972) (0) Net Profit 16, ,850 4 (5,169) (32) 19 Profit/(loss) attributable to: 20 Owners of the Company 16, ,381 4 (3,866) (24) 21 Non-controlling interests (228) (0) (1,530) *** (1) (1,302) (572) 22 Adjusted EBITDA * 29, ,108 8 (6,842) (23) Note: * Adjusted EBITDA = EBITDA Stock Gain/(Loss) &NRV Provision for Business Restructuring of Vencorex ** Vencorex business restructuring provision at 100% share *** Vencorex business restructuring provision portion of 49% for non-controlling interests or Baht 1,097 million 25

26 Strong Financial Position Loan Type Interest Rate Currencies 58 % Fixed 45 % THB 42 % Float 55 % USD & Others THB 106 Bn Cost of long term debts ~ 4.58% (Include W/H Tax) Average loan life after refinancing Years Success in Issuing new unsubordinated, unsecured debentures of THB 10,000 Mn Interest at 4.50%, Tenor 7 years Purpose to support investment and for general purpose Maintaining customer base. Maturity of Financial Debt* as at Jun. 30, 2014 Key Financial Ratios THB Bn Net IBD/EBITDA NET IBD/Equity ROE ROA % New Baht Bond % 10% 14.44% 9.42% 11.51% 7.97% 12.51% 8.64% 0 31 Dec Mar Jun. 14 5% 31 Dec Mar Jun. 14 Treasury policy Net IBD to Equity ratio of 0.7x Net IBD to EBITDA ratio of 2.4x * After Refinance, including New THB Bond of 10,000 million THB 26

27 Agenda 27 2Q/14 Business Highlights Strategy and Excellence Programs Updates - Excellence Programs Updates - International Business Directions 2Q/14 Operating Results Market Outlook

28 Crude Oil Geopolitics and Gradual Economic Recovery Keep Oil Price High 28 UNIT: MBD 90.3 Q1/13 IEA Forecasts oil Demand Growth 1.23 MBD This Year from Economic Recovery 90.8 Q2/ Q3/13 Q4/13 Q1/14 Q2/ Q3/ Q4/ GDP Growth (%) 2013 (A) 2014 (F) U.S Euro China World Oil demand usually grows in Q3 and Q due to seasonality OPEC* Non- OPEC Supply from Non-OPEC Keeps Growing Thanks to shale oil, U.S. will be no.1 oil producer at mbd, followed by Russia at mbd Saudi Arabia plays a balancer role to maintain oil price over USD 100/bbl Supply disruption from geopolitics is inevitable Source: IEA, July 2014 Source: IEA, July 2014 *OPEC Supply includes crude and NGL Geopolitics Keep Oil Price at High Level Factors to be Watched in H2/14 UNIT: USD/BBL Average 2013 (A) 2014 (F) 2015 (F) Dubai Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/ Source: PRISM, July 2014 Global geopolitics: Ukraine: Leading to sanction on Russia which may affect global economy and Russia s oil supply in future Libya: Export only 230 kbd in Q2/14 Iraq: No impact to oil export so far (3.08 mbd in July) Impact after QE ends in October 2014 China s economy Manufacturing PMI reached 51.7 in July, highest in 2014 Diesel demand was back to normal at 3.58 mbd in June

29 Refinery Margin Will Be Recovered in Q4 from Rising Demand and Refinery Turnaround New Capacity Has Been Rationally Cancelled or Delayed U.S. Refiners Tend to Run Lower Rate in Q4/14 In last three months, there are significant drops in additional refining capacity, mostly in China. U.S. refiners take advantage of lowprice domestic crudes to run high O/R for exporting to Europe, pressuring Asian refining margin. U.S. O/R will be reduced after end of gasoline season. UNIT: KBD 6,878 Refinery Maintenance in H2/14 Will Boost Margin 6,350 Apr May Jun Jul Aug Sep Oct Nov Dec Source: JBC, August ,830 3,508 2,030 3,242 Heavy turnaround in Asia Pacific and North America during Oct Nov. 4,309 4,943 3,207 Asian Middle Distillates Demand Will Pull Q4 Margin Diesel 12 8 Gasoiline 4 Fuel Oil 0 UNIT: USD/BBL Source: PRISM, July GRM 2013 (A) = $6.7/bbl GRM 2014 (F) = $5.9/bbl Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/ PTTGC has 30% hedging in H2/14 29

30 Aromatics Paraxylene to Be in Down Cycle Benzene to Be an Unsung Hero 30 Capacity Loss in Q3 to Support PX Price Capacity Loss in Q3 to Support BZ Price Source: IHS Production Cutbacks Ease an Impact of New PX Capacity JX Nippon Oil announced running at 60-65% for Q3 TPPI remains offline with no plan to restart Dragon Aromatics PX plant (800 KTA) maintenance in Aug Guandong Refinery to be shut down late Aug for two months, impacting its 820-KTA PX plant Zhenhai Refinery to be shut down in Sep for one month, impacting its 620-KTA PX plant Mizushima s (370 KTA) and Idemitsu Kosan s (270 KTA) PX plants shutdown in Sep and Oct Source: IHS USD/MT Source: PRISM, July ,800 1,635 1,600 1,443 1,485 1,432 1,400 1,284 1,259 1,349 1,303 1,270 1,200 1,379 1,286 1,258 1,283 1,297 1,293 1,338 1,313 1,275 1,000 PX-MOPJ BZ-MOPJ BZ to Support Aromatics Margin Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/

31 Ethylene/PE Well Balanced Demand/Supply and Seasonal Demand Support Margin 31 20% 15% 10% 5% Ethylene Capacity Loss to Supports Prices 0% Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Source : Argus Dewitt Seasonal Demand, Tight Supply and Delayed U.S. Crackers Support Prices Seasonal demand for agricultural season and for manufacturing before New Year will support ethylene/pe prices Together with ethylene tight supply due to upcoming turnaround in Asia Taiwan s FPCC 1,200 KTA (Aug for 1.5 months) Japan s Tonen 515 KTA (Sep for 1 month) Singapore s Shell 800 KTA (Oct for 3 months) Operating rates of PE are higher than 82% throughout 2015 Possible delay of ethane cracker projects in U.S. could extend up-cycle period of ethylene/pe UNIT: MT % Total Demand USD/MT Source: PRISM, July ,536 1,554 1,569 1,598 1,600 1,483 1,443 1,489 1,557 1,512 1,400 1,427 1,441 1,447 1,463 1,435 1,395 1,415 1,200 1,322 1,265 1,000 HDPE-Ethylene Ethylene-MOPJ China s PE Demand Continued Growing, Resulting in Increasing Import in H1/14 +6% China Production Import +9% Export Sources : Global Trade Information Services, Chemease Production Data Source: IHS Ethylene and PE Margins Continue Strong % HDPE % ME NEA Ethylene -3% SEA 28% 10% 33% NAFTA Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/ EU

32 Propylene Still Affected by On-purpose Capacity Butadiene T/A & Increasing Car Sales Support ST Margin 32 Propylene Capacity Loss to Supports Price in Q3 Another Seasonal BD Turnaround during Sep - Nov 12% 10% 8% 6% 4% 2% 0% Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Source : Argus Dewitt Propylene and Butadiene Outlook 1,500 KTA of new propylene supply from PDH in China is likely to be delayed on-spec production until late Aug or Sep Scheduled BD capacity offline in Asia during Sep-Nov will tighten market and lessen export from region 2.3 million of global light vehicle sales this year will increase BD demand, although BD price will be capped by reduced operating rate of synthetic rubber as a result of squeeze margin Natural rubber stock in China is expected to decline more in Q3 due to reduced demand for loan collateral USD/MT 1,800 1,600 1,400 1,200 1, ,731 1,306 1, Expect to See Recovery from Q2/14 1, ,336 1, ,524 1,367 1,373 1,369 1,246 1,279 1,479 Propylene-MOPJ 579 Butadiene Source: PRISM, July ,432 1,327 1,308 1,320 BD-MOPJ 1,330 Propylene Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/

33 MEG A Series of T/A in H2 and Well Balanced Demand/Supply Make Margin Rebound 33 Demand Outpaces Capacity in A Series of Turnaround Will Tighten Market in H2 Million MT 2.0 Global Additional Capacity Global Additional Demand % OR 100 Thousand MT Positive Outlook for MEG Expect to See Recovery from Q2/14 Heavy turnaround in Saudi Arabia during H2/14 Textile manufacturing peak season during Sep-Oct Global operating rate sustains above 80% China still needs to import 7.2 million tons during Coal-based-MEG plants still run at low operating rate as well as new capacity might be delayed USD/MT 1,400 1,200 1, Source: PRISM, July ,226 1,157 1,134 1,064 1,045 1, MEG-(0.63 x Ethylene) MEG Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/

34 Phenol/Acetone/BPA Struggle for Survival 34 Delays of New Supply Relieve Mkt Sentiment Turnaround in Q4/2014 UNIT: KTA 1, Effective Capacity Phenol New Capacity Phenol Additional Demand BPA New Capacity BPA Additional Demand UNIT: KTA PH BPA Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Better Sentiment from Project Delays and Capacity Loss Market sentiment is relieved by delays of new capacity from 2014 to 2015 FCFC Ningbo s new phenol plant (300 KTA) Nan Ya Plastics new BPA plant (150 KTA) and Changchun Plastics new BPA plant (135 KTA) Despite of heavy expansion, maintenance shutdowns and delayed commissioning still make market tightened Changshu Changchun Chemical (300 KTA) to shut down in Oct Shanghai Sinopec Mitsui Chemicals (250 KTA) postpones start-up in Aug for more than one month USD/MT 2,000 1,750 1,500 1,250 1, New Capacity Still Pressures Margin BPA Margin Phenol Margin BPA Source: PRISM 1,880 Phenol Acetone 1,767 1,719 1,630 1,605 1,638 1,653 1,648 1,645 1,523 1,402 1,352 1,154 1,105 1, ,387 1,424 1,456 1,542 1,421 1,385 1,133 1,181 1,171 1,095 1,129 1, Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/

35 35 Thank You For further information & enquiries, please contact our Investor Relations Team at 1 Thitipong Jurapornsiridee VP - Corporate Finance & IR Thitipong.j@pttgcgroup.com Puvadol Vasudhara IR Manager Puvadol.v@pttgcgroup.com Panugorn Puengpradit IR Analyst Panugorn.p@pttgcgroup.com Prang Chudasring IR Analyst Prang.c@pttgcgroup.com Supika Charudhanes IR Analyst Supika.c@pttgcgroup.com Chutima Jarikasem IR Coordinator Chutima.j@pttgcgroup.com