1Q/2016 ANALYST MEETING PRESENTATION

Transcription

1 1Q/2016 ANALYST MEETING PRESENTATION

2 Agenda STRATEGIC EXECUTION 1Q/2016 FINANCIAL RESULTS MARKET OUTLOOK APPENDIX 2

3 Agenda STRATEGIC EXECUTION 1Q/2016 FINANCIAL RESULTS MARKET OUTLOOK APPENDIX 3

4 1Q/2016 Highlight Market Environment (+) Rebound of oil price from $31.21/bbl at end 2015 to $36.01/bbl at end 1Q16 (+) Reduce in US crude production of around 21 KBD to 9,140 KBD (+) US rig count decreased 234 rigs YoY to 464 rigs (+) Aromatic producer major S/D in 1H16 (+) HDPE price move up from bottom at $1,075/T in Jan to $1,112/T in March (-) Drop in Gas Oil spread from more supply (-) MEG spread dropped from demand slowdown $43.96 /bbl $31.21 /bbl PTTGC s Performance Despite external factors Lower refinery crack spread Lower HDPE price 25 Internally we were able to Increase Aromatics in sales volume Mitigate Olefins 3 shutdown by building PE inventory 20 PTTGC maintained Adj. EBITDA margin at 12% January February March April 4

5 1Q/2016 Highlight ARO II Expansion on stream Commission : Dec 2015 COD : May 2016 Capacity : PX 115 KTA, BZ 35 KTA, OX 20 KTA CAPEX : MUSD EBITDA Uplift /Y*: 24 MUSD Phenol II commissioning Commission :Feb 2016 COD : May 2016 Capacity : PH 250 KTA AC 155 KTA CAPEX : 345 MUSD EBITDA Uplift /Y*: 63 MUSD VCR TH ready for commissioning Commission :2Q/2016 COD : 3Q/2016 Capacity : HDI Deriv. 12 KTA CAPEX : 43 MUSD Product : HDI derivative EBITDA Uplift /Y*: 9 MUSD Treasury Stock Program Closed Total repurchased 48,553,000 shares or 1.077% of the total paid-up capital at average price of baht/share. Repurchase period ended March 7. VCR FR ready for commissioning Commission : 2Q/ 2016 COD : 3Q/2016 Capacity : HDI Mono. 70 KTA CAPEX : 18 MUSD Product : HDI monomer EBITDA Uplift /Y*: 24 MUSD *EBITDA Uplift per year at mid cycle price 5

6 Strategic Direction Sustain Core To be a Leading chemical company for Better living Accelerate Growth levers Balance Business & Social Value Performance excellence Maximize value creation Map Ta Phut retrofit International hub Performance chemicals Green business Sustainable development Effective CSR programs Stakeholder management 6

7 Sustain Core : Value Creation Top Down Study Due diligence process to estimate project potential Detail Study Develop initiatives and execution plans Implementation Execute per plan to capture value 6 Weeks 12 Weeks 18 Months Plant Operational Excellence Commercial & Marketing Excellence Capex Excellence Procurement Excellence Asset Performance Excellence 7

8 Sustain Core :MTP Retrofit Project Scope Build new Cracker 500 KTA ethylene for flexible feed cracker to utilize internal naphtha Maximize utilization of the existing utilities and support facilities to reduce investment cost Project Update Issued pre qualification enquiry package to prospect bidders. Awarded project manager contractor Issued conceptual design to licensors Completed EPCa Scope package Submitted BOI application Timeline : Q/18 COD 2020 ITB Construction 8

9 Automotive E&E Construction Accelerate Growth Levers : PO & Polyols Project Polyols 130 KTA System House 40 KTA Licensor Project Update Completed PO & Polyols market survey Building sale & marketing strategy Ongoing FEED work and preparing ITB Preparing EIA report Negotiating feedstock arrangement Engaged FA and expect FID in 4Q/16 Timeline : PO Market Survey Polyols Market Survey Merchant Volume 20% 200 KTA Merchant Market 80% Reserved Volume Captive and Committed 80% After surveyed 106 customers, we have arrived to Potential Customers Market survey result concluded that SEA and India are the target market. Target market growth rate average at 5-7 % during The highest growth rate is in Automotive segment 6.8 % Marketing strategy is to focus on high value application segment 9 9

10 Accelerate Growth Levers : US Petrochemical Complex Project Overview Key Criteria for FID Investment cost justify investment return Enough ethane capacity with competitive pricing structure Partner can distribute products in N. America Project Update FEED : FEED contractors on schedule to deliver cost estimates within 3Q/16 Feedstock : In discussion with specific names of ethane supplier to finalize contract terms Marketing & Logistic : Preparing marketing and sale plan as well as key terms in offtake agreement Received proposals from barge, railcar leasing, and packing service Discuss with potential offtaker. Permit: Signed off on the First Energy land option agreement Partner : Approached FA in the process to short list of potential partner United States Marcellus Shale Gas Reserve 10

11 Accelerate Growth Levers : Growing in AEC Market Sign MOU with Sahapat and DITP to collaborate in product development, area development and market development Introduce InnoPlus customer to the area and conduct survey for investment interest Potential demand in AEC with high growth rate Estimated Demand for PE Product (KTA) in 2015 Three customers have confirmed to expand business in Mae Sot area Indo Thai Trading (ITT) Trading company, a JV between PTTGC and Pertamina to penetrate into Indonesia polymer market. Sales of ITT has been increasing with volume of approx. 9,500 / month ,

12 Agenda STRATEGIC EXECUTION 1Q/2016 FINANCIAL RESULTS MARKET OUTLOOK APPENDIX 12

13 Business Environment & Operations Recap Average and Ending Dubai Crude Price: USD/BBL Average and Closing FX : THB/USD Average Price 53.4 Average FX Closing Price Closing FX o o o Surplus crude and weak demand pressured Dubai crude to decline from average at 40.7 USD/BBL in 4Q/15 to average at 30.4 USD/BBL in 1Q/16 (2015 year end closing at 31.8 USD/BBL). As a result, PTTGC reported Stock Loss & NRV totaling 274 M.THB for the year. FX Gain amounting to 632 M.THB, resulting from appreciation in THB against USD from ending at THB/USD in 4Q/15 to ending at in 1Q/16. Modest Refinery GRM, better adjusted EBITDA margin in Aromatics and healthy Olefins margin 1Q/15 4Q/15 1Q/16 YoY QoQ +/(-) +/(-) CDU Utilization Rate 102% 99% 93% -8% -5% ULG95 - Dubai % 1% Jet - Dubai % -17% Diesel - Dubai % -30% Fuel Oil - Dubai % 21% GRM on CDU (USD/BBL) % -26% BTX Utilization Rate 88% 66% 90% 2% 24% PX- Condensate % 1% BZ- Condensate % 18% Market P2F (USD/Ton) % -20% Olefins Utilization Rate 96% 97% 81% -14% -16% Polyethylene Utilization Rate 107% 103% 89% -19% -14% MEG Utilization Rate 108% 117% 96% -13% -21% HDPE Price 1,188 1,153 1,103-7% -4% MEG Ethylene % -55% % Adj. EBITDA Margin

14 FO - DB Diesel - DB JET - DB ULG 95 - DB Refinery Performance Modest Refinery GRM Petroleum Products - Dubai Spread (USD/BBL) +28% YoY % YoY % YoY +1% QoQ -32% YoY -17% QoQ Total Intake (KBD) CDU U-Rate 102% 100% 102% 100% 101% 99% 93% Crude Condenstate Residue & Others % YoY -4% YoY % QoQ % YoY -41% YoY -30% QoQ % YoY -178% YoY +21% QoQ (8.3) (5.0) (1.9) (3.6) Sales Volume (KBD) 9.6 (8.1) (6.5) (5.2) Others Fuel Oil Diesel Jet Naphtha+Ref % 16% 16% 15% 17% 17% 8% 13% 11% 17% 10% 9% 10% 13% 50% 49% 46% 51% 49% 51% 48% 14% 13% 12% 14% 15% 13% 15% 8% 9% 9% 10% 9% 9% 15% 0.94 Gross Refinery Margin (USD/BBL) Market GRM Hedging Gain/(Loss) (0.04) (1.25) (1.50) (4.36) (0.31) Stock Gain/(Loss) Net NRV Accounting GRM (3.22) (2.47) (0.03) (0.97) Market GRM GRM on CDU GRM on CRS

15 Naphtha - Cond Prices PX FECP - Cond BZ Spot - Cond Aromatics Performance Better Adjusted EBITDA Margin Aromatics Products Prices and Spread (USD/Ton) 1,236 1, Condensate Erawan PX FECP BZ Spot Korea % YoY % YoY % YoY +25% YoY +18% QoQ +25% YoY +1% QoQ 0% YoY -41% QoQ BTX U-Rate BZ Group PX Group Naphtha Group Other By- Products (85.91) (8.57) BTX U-Rate and Sales Volume (KTons) 81% 74% 88% 85% 57% 66% 90% 3,156 2, % 22% 25% 21% 25% 19% 24% 36% 36% -7% YoY 45% 36% 36% 35% 30% 31% 30% 30% 30% 28% 11% 11% 13% 2% 10% 17% 7% Products to Feed Margin (USD/Ton BTX) (27.63) % 251 (48.94) (27.79) 39% Market P2F Stock Gain/(Loss) Net NRV Hedging Gain/(Loss) Accounting P2F % YoY +6% QoQ

16 MEG ACP 0.65Ethylene HDPE - Naphtha Prices Olefins and Derivatives Performance Margin remained strong at 20% even PTTPE shutdown Olefins Derivatives Prices and Spread (USD/Ton) U-Rate (%) HDPE (FILM) SEA LLDPE CFR SEA LDPE CFR SE Asia MEG ACP Naphtha MOPJ HDPE Price -7% YoY 1,571-4% QoQ 1,401 1,543 1,249 1,192 1,244 1,117 1,158 1,544 1,234 1,375 1,114 1,113 1,237 1,181 1,375 1,224 1,158 1,234 1,103 1, ,188 1,027 1, HDPE (FILM) SEA 1,544 1,237 1,188 1,375 1,234 1,153 1,103 LLDPE CFR SEA 1,543 1,234 1,181 1,375 1,224 1,158 1,114 LDPE CFR SE Asia 1,571 1,249 1,192 1,401 1,244 1,158 1,117 MEG ACP 1, ,027 1, Naphtha MOPJ % YoY % YoY +7% QoQ 759 Olefins 91% 94% 96% 89% 93% 97% 81% HDPE 107% 108% 109% 97% 109% 115% 95% LLDPE 100% 91% 110% 61% 113% 79% 76% LDPE 105% 111% 99% 119% 124% 104% 90% Total PE 105% 104% 107% 92% 113% 103% 89% MEG 95% 96% 108% 106% 51% 117% 96% Sales Volume (KTons) Olefins HDPE LLDPE LDPE Total PE 1,603 1, MEG GAS : NAPHTHA Intake % Ethane Other Gas Naphtha 3,727 3, , % 8% 7% 8% 8% 9% 12% 35% 35% 37% 38% 35% 31% 36% 57% 57% 56% 54% 57% 60% 51% +12% YoY % YoY -55% QoQ Adjusted EBITDA Margin 26% 24% 28% 19% 24% 22% 20% 16

17 BPA-Phenol Phenol-BZ Prices Phenol and BPA Performance Higher Margin from Rising Product Spread Phenol/ BPA Prices and Spread (USD/Ton) U-Rate and Sales Volume (KTons) 1,695 1,427 1,211 Benzene Phenol BPA 1,364 1,334 1,156 1, U-Rate Phenol 118% 130% 131% 121% 132% 134% 133% BPA 99% 103% 114% 85% 107% 104% 108% Sales Volume (KTons) +10% YoY % YoY +1% QoQ Phenol 42% 45% 41% 52% 43% 47% 44% Phenol (CMP) 1, BPA (CMP) 1,695 1,156 1,364 1,334 1, Benzene 1, % YoY % YoY +5% QoQ BPA 58% 55% 59% 48% 57% 53% 56% Adjusted EBITDA Margin Phenol Mkt P2F % YoY % YoY +46% QoQ 19% 11% 9% 7% 6% 1% 3% BPA Mkt P2F

18 Overview of Business Unit s Performance (Unit: Million Baht) 1Q/15 4Q/15 1Q/16 YoY QoQ % + /(-) % + /(-) Sales Revenue 99,251 96,088 80,764-19% -16% EBITDA 10,473 10,387 9,515-9% -8% EBITDA Margin (%) 11% 11% 12% 1% 1% Net Profit 5,631 4,690 4,707-16% 0% EPS (Baht/Share) % 1% Adjusted EBITDA* 11,606 14,970 9,789-16% -35% Adjusted EBITDA Margin (%) 12% 16% 12% 0% -3% Note: * Adjusted EBITDA refers EBITDA excluding impact of inventory value (Inventory and NRV) 1Q/16 Revenue and Adjusted EBITDA Structure 80,764 M.Baht 9,789 M.Baht % Adj. EBITDA Margin 1Q/15 4Q/15 1Q/16 Business Unit : Refinery Aromatics Olefins and Derivative Green HVS 12 3 (3) Average

19 1Q/2016 Income Statements Consolidated 1Q/2015 (restate) 4Q/2015 (restate) 1Q/2016 YoY QoQ MB % MB % MB % MB % MB % Sales Revenue 99, , , (18,487) -19% (15,324) -16% Feedstock Cost (75,721) (76) (71,547) (74) (59,635) (74) (16,086) -21% (11,912) -17% Product to Feed Margin 23, , , (2,401) -10% (3,412) -14% 1 Variable Cost (6,809) (7) (6,586) (7) (5,898) (7) (911) -13% (688) -10% 2 Fixed Cost (3,685) (4) (4,827) (5) (4,178) (5) % (649) -13% 3 Stock Gain/(Loss) & NRV (1,133) (1) (2,053) (2) (274) (0) % 1,779 87% 4 Gain/(Loss) Commodity Hedging (188) (0) 2, % (2,810) -98% 5 Other Income 1, , (119) -11% (1,046) -52% 6 SG&A (2,339) (2) (3,035) (3) (2,285) (3) (54) -2% (750) -25% 7 Extraordinary Item 0 0 (2,531) (3) N/A (2,531) N/A EBITDA 10, , , (958) -9% (871) -8% Depreciation & Amortization (3,979) (4) (4,208) (4) (4,141) (5) 162 4% (67) -2% EBIT 6, , ,374 7 (1,120) -17% (804) -13% Finance Cost (1,076) (1) (937) (1) (822) (1) (254) -24% (115) -12% 8 FX Gain/(Loss) % % 9 Shares of profit/(loss) from investments (209) (0) (123) -41% % 10 Income Tax Expense (499) (1) (769) (1) (623) (1) % (146) -19% Net Profit 5, , ,739 6 (1,007) -18% (34) -1% Profit/(loss) attributable to: Owners of the Company 5, , ,707 6 (924) -16% 17 0% Non-controlling interests (83) -72% (51) -61% Adjusted EBITDA * 11, , , (1,817) -16% (5,181) -35% Note: * Adjusted EBITDA refers to EBITDA excluding impact of inventory value (excludes Inventory gain/(loss) and NRV) and Extraordinary Item 19

20 Strong Financial Position Statements of Financial Position THB 378 Bn THB 386 Bn Loan Type Debenture, 47% ST Bank Loan, 0% Cash +ST Investment CA Liab. IBD THB 106 Bn LT Bank Loan, 53% Interest Rate Currencies PPE Non CA As of Dec 31, 2015 As of Mar 31, 2016 Share Holder s Equity 52% Fixed 60% THB 48% Float 40% USD & Others Cost of long term debts ~ 4.17% (Include W/H Tax) Average loan life after refinancing Years Repayment Profile THB Bn * After Refinance Total USD Bond THB Bond EUR Loan USD Loan THB Loan 1.59 Net IBD/EBITDA Key Financial Ratios NET IBD/Equity Mar Jun Sep Dec Mar % 7.57% Treasury policy Net IBD to EBITDA ratio of 2.4x Net IBD to Equity ratio of 0.7x 20 ROE 4.80% 4.92% 6.10% 4.27% ROA 8.99% 8.38% 7.36% 6.92% 31 Mar Jun Sep Dec Mar 16 20

21 2016 Outlook KEY ASSUMPTIONS Projected average 2016 dubai price $39.7 /bbl. Demand & Supply is expected to be more balanced from less US production and rig count, while partially offset by entering of Iran volume and maintain supply level by OPEC. REFINERY Lower utilization rate mainly due to planned shutdown in 2Q/16. GRM is expected to slightly decrease to approximately $ 4.7/bbl AROMATICS Performance is anticipated to improve from increasing in product spread in 1H/16 from S/D of major producers in Asia, almost 1 MTA capacity loss, which ease market in the 1H. Utilization rate is expected to increase from 74% in 2015 to 88% with expanded capacity of 160 KTA of aromatics product. OLEFINS & DERIVATIVES Expected more gas flow after completed T/A of PTTPE, able to reach 280t/h after T/A. HDPE naphtha spread maintains at more than $750/T and HDPE price is projected in uptrend as oil price and anticipated to be average around $1,160/T in this year. 21

22 Agenda STRATEGIC EXECUTION 1Q/2016 FINANCIAL RESULTS MARKET OUTLOOK APPENDIX 22

23 STEADY DEMAND GROWTH DRIVE MARKET MORE BALANCE IN 2 nd HALF 2016 Unit : MBD Source : JBC April 16 GLOBAL OIL SUPPLY vs DEMAND Non-OPEC Supply OPEC Supply Global Demand Q16 2Q16 3Q16 4Q MARKET HIGHLIGHT 2016 Growth (MBD) Demand +1.2 Supply +0.4 Raise of supply growth from previous expected due to faster Iran ramping up Slowdown in US production amid raising of Iran after sanction lifting Unit : MBD Source : IEA US (LHS) Iran (RHS) Jan DUBAI CRUDE PRICE TREND 2016 May Iran after sanctions lifted Saudi Arabia and Russia still maintain production at high level (Russia MBD, Saudi Mar 16) 70 Unit : $/BBL OPEC meeting on June 2 nd, 2016 unlikely to cut or freeze production due to Saudi & Iran rivalry. US shale oil production may resume from drilled but uncompleted (DUC) wells and additional rig count after crude price rise Q15 2Q15 3Q15 4Q15 1Q16 2Q16(F) 2016 (F) Source: PTTGC s estimate 23

24 REFINERY : CHINA EXPORT PRESSURES ASIA MARKET & RAISING MIDDLE EAST REFINERY RUN STABLE GROWTH IN ASIA AMID RAISE OF CHINA EXPORT THAILAND DEMAND IS STILL GROWING 2016 ASIA SUPPLY-DEMAND GROWTH Gasoline Source : JBC May Middle Distillate Unit : KBD MARKET HIGHLIGHT 4 50 Fuel Oil Surge of production and export volume from China teapot refineries cause some surplus in middle distillate. Drought & heatwave in Asia will boost diesel demand Supply Growth Demand Growth THAILAND CONSUMPTION (Q1 Monthly Average) 3,000 2,500 2,000 1,500 1, Unit : million liter/month +6% +12% +6% Q1/15 Q1/16 Q1/15 Q1/16 Q1/15 Q1/16 Gasoline Diesel Diesel Jet Jet PRICE TREND & FORECAST High refinery runs in light distillate yield put downward on gasoline spread China s refined product export (Gasoline Q1 62% export increase YoY) Peak of Asia Pacific refinery outage during maintenance in Q2 (nearly 1.5 MBD) and some refineries turndown during water shortage in drought season $/BBL ULG95 Dubai Diesel Dubai Fuel Oil Dubai Q15 3Q15 4Q15 1Q16 2Q16 (F) 2016 (F) Source: PTTGC s estimate 24

25 $/MT $/MT OLEFINS AND DERIVATIVES : STRONG DEMAND WHILE TIGHT ETHYLENE SUPPLY MEG : MARGINS IMPROVE ON SEASONAL DEMAND FROM CHINA Polyethylene OLEFINS AND DERIVATIVEAS HIGHLIGHTS In Asia, PE plants outage stay high in Q2, mainly in NEA region. NEA PE import is expected to grow nearly 7.2% YoY in Q2. HDPE spread over naphtha are expected at 750 $/MT. MEG Seasoning demand of PET bottle resin supports through Q2 16. Shell Bukom complex, including MEG 720 KTA is likely to restart earlier than expected in Jul-Aug. PROPYLENE MARKET HIGHLIGHTS New PDH plant startups struggle in S.Korea and China and peak cracker turnaround ease market surplus in H1 Strong ethylene price will squeeze margins on-purpose units (OCU) and less impact on the propylene balance. In Q2 16, Asia PP prices are expected to stay high driven by healthy demand for food packaging especially during Muslim fasting month of Ramadan in Jun TIGHT ETHYLENE SUPPLY WILL SUPPORT THEIR DERIVATIVES PRICES PROPYLENE PRICE IS STILL PRESSURED FROM ON-PURPOSE 1, , , Q15 2Q15 3Q15 4Q15 1Q16 2Q16 (F) 2016 (F) HDPE Price MEG Price Source: PTTGC s estimate 1, Q15 2Q15 3Q15 4Q15 1Q16 2Q16 (F) 2016 (F) Propylene-Naphtha Propylene Price PP Price Source: PTTGC s estimate 25

26 $/MT $/MT AROMATICS: NEW SUPPLY DELAY AND STABLE DEMAND SUPPORTED H1 MARGIN PHENOL/BPA : SHORT TERM SUPPLY TIGHTNESS AROMATICS HIGHLIGHTS PX No new supply in H1 amid new 2.2 million mt/yr PX plant of Reliance sets to start in Sep. No restart dates were set for Dragon Aromatics 1.6 m ton/year and JAC s 800 KTA after fire hits tank yard. Seasonal demand of PET Resin, new 1.2 million ton/yr of PTA in China in Q2. BZ Resume China import demand from startup of new derivatives, SM and Phenol plants. Strong gasoline demand may limit feedstock to aromatics and lower on-purpose unit (STDP) run rate. PHENOL/BPA HIGHLIGHTS AROMATICS: MARGIN GRADUALLY RECOVER Q15 1Q152 3Q15 4Q15 1Q16 2Q16 (F) 2016 (F) PX-Naphtha BZ-Naphtha Source: PTTGC s estimate, PHENOL & BPA : MARGIN BOTTOM OUT Phenol Heavy turnaround and delay of new supply in 2Q caused higher margin KPB is going to shut its small production line (130KTA) after starting up its new plant (300KTA) BPA Heavy turnaround and regional plants capped utilization rate in 2Q caused higher margin Covestro s new BPA lines (100KTA, China). Together with PC, already started up but not yet smooth Q15 1Q152 3Q15 4Q15 1Q16 2Q16 (F) 2016 (F) Source: PTTGC s estimate, Phenol P2F BPA P2F 26

27 Agenda STRATEGIC EXECUTION 1Q/2016 FINANCIAL RESULTS MARKET OUTLOOK APPENDIX 27

28 Strategic Investment 11,000 10,500 MTP Retrofit 761 KTA 10,000 9,500 9,000 8,500 Existing Non Captive Upstream and Downstream HDI Monomer 70 KTA Phenol II 405 KTA Aromatics 170 KTA HDI Deriv. 12 KTA mlldpe 400 KTA PO/Polyol 250 KTA 8, A 2016F 2017F 2018F 2019F 2020F ARO2 Phenol2 HDI Thailand HDI France MLLDPE PO/Polyol MTP Retrofit CAPEX MUSD 345 MUSD 43 MUSD 18 MUSD MUSD TBC TBC MLLDPE Additional PX 115 KTA PH 250 KTA HDI HDI PO 200 KTA 400 KTA Ethylene 500 KTA PetChem* BZ 35 KTA AC 155 KTA Derivative Monomer Polyol Hexene-1 Propylene 261 KTA (per year) OX 20 KTA 12 KTA 70 KTA 130 KTA 34 KTA Period Q2 16 Q2 16 Q3 16 Q EBITDA Uplift/Year** 24 MUSD 63 MUSD 9 MUSD 24 MUSD 59 MUSD 100% stake of additional capacity ** Estimate EBITDA uplift with 100% stake at mid cycle price 28

29 Thank You For further information & enquiries, please contact our Investor Relations Team at 1 Thitipong Jurapornsiridee VP-Corporate Finance & IR Jittasak Soonthornpan IR Manager Jittasak.s@pttgcgroup.com Prang Chudasring IR Analyst Prang.c@pttgcgroup.com Nattchanon Chawinsittangkul IR Analyst Nattchanon.c@pttgcgroup.com Pantaree Nantanakom IR Analyst Pantaree.n@pttgcgroup.com Chutima Jarikasem IR Coordinator Chutima.j@pttgcgroup.com