Analyst Meeting 2Q9 Performance Friday 14 August 29
Agenda 2Q9 Management Highlights Operation Performance CAPEX Financial Performance Industry Outlooks 2
2Q9 Highlights Overview Operation Improving in significantly economic numbers shown the trough of recession finally arrived but slow recovery. Crude prices elevated resulting from better than expected in economic recovery, OPEC continuing production restraint, speculation, the unrest in Iran and Nigeria, and weaken USD. Outlook overview: Longer term recovery is expected though short-term difficulties exist Refining: Tough time ahead Petrochemical: Stronger for polyolefins, slowdown for styrenics 2Q9 average crude run 7% at optimum level. Market GIM in 2Q9 at 3.2 $/bbl: Refinery -1 $/bbl, Petrochemical 4.2 $/bbl. EPCC Contractor under process for CHP Project; completion in 1Q11. Cost reduction program, 1H9 cost reduced by USD 16.3 million or.69 $/bbl. Engaged international business consultant for business model restructuring. To be concluded by the end of August 9 Finance S&P Ratings affirmed IRPC s corporate credit rating and company's senior unsecured noted at BBB- with negative outlook and removed both ratings from Credit Watch. Fitch Ratings (Thailand) maintained IRPC s National Long-Term rating at A- and National Short-term rating at F2 with negative outlook Total ESOP exercised until June 29 was executed only 1.12% of total shares. 3
Operation Performance 4
Capacity Utilization Refinery Capacity Utilization 2 18 16 14 12 1 8 6 4 2 KBPCD 86% 51% 85% 29% 27 Crude run 28 Crude run 29 Crude run 27 % utilization 28 % utilization 29 % utilization 85% 85% 9% 89% 89% 89% 82% 85% 83% 88% 79% 73% 7% 7% 71% 66% 83% 87% 91% 93% 88% 76% 78% 73% 74% JAN FEB MAR APR MAY JUN. JUL. AUG. SEP. OCT. NOV. DEC. Y. AVG. 1% 9% 8% 8% 7% 61% 6% 5% 4% 3% 2% 1% % 8 7 Nameplate Capacity (LHS) Utilization 28 (LHS) Utilization 29 (LHS) %Utilization 27 (RHS) %Utilization 28 (RHS) %Utilization 29 (RHS) 16 14 Petrochemical and Lube 6 5 4 3 2 1 12 1 8 6 4 2 Ethylene Propylene Butadiene Benzene Toluene Mixed Xylene SM HDPE PP ABS/AS PS EPS Lube Base Oil Asphalt 5
2Q9 GRM & PTF 6 5 4 3 2 1-1 -2 2.3 1.5.8-1..2-1.2.4.8 -.3 1Q9 2Q9 1H9 Gross Refinery Margin $/BBL. MKT GRM A/C GRM $/BBL. 6 5 4 3 2 1 155 291 16 247 28 231 26 285 175 1Q9 2Q9 1H9 Lube Refined Product to Feed Styrenics Olefin 6 5 4 3 2 1 6 5 4 3 2 1 5.1 4.5 1..1 4.8.5 4.1 4.5 4.3 1Q9 2Q9 1H9 $/Ton MKT PTF $/Ton A/C PTF 189 321 125 246 27 233 215 293 185 1Q9 2Q9 1H9 Gross Integrated Margin $/BBL 16 14 Refined Petchem 12 1 8 6 5.3 3.2 4.1 4 3. 2 4.2 3.7 2.3.4-1. -2 1Q9 2Q9 1H9 $/BBL MKT GIM A/C GIM 16 14 Refined Petchem 12 1 8.4 9.1 8.8 8 6 3.3 4.6 4.1 4 2 5.1 4.5 4.8 1Q9 2Q9 1H9 Note: Based on Production 6
1H9 Product Sales Value by Market 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % 73,74 74% Sales Proportion 26,76 25% 28% 31% 67% 4,295 7% 134,997 66,371 26% 73% 29% 69% 2Q8 1Q9 2Q9 1H8 1H9 Petroleum Petrochemical Others Unit:M.Baht Total Products Sales: Local vs Export 73,74 26,76 4,295 134,997 66,371 1% 9% 8% 36% 3% 33% 33% 32% 7% 6% 5% 4% 7% 67% 3% 64% 67% 68% 2% 1% % 2Q8 1Q9 2Q9 1H8 1H9 Domestic Export Unit:M.Baht 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % 37% 31% 33% 63% Oil products: Local vs Export 54,484 17,345 28,35 69% 67% 98,59 45,695 33% 67% 32% 68% 2Q8 1Q9 2Q9 1H8 1H9 Unit:M.Baht Petrochemical products: Local vs Export 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % 18,499 8,192 11,3 36% 32% 36% 34,956 19,493 36% 34% 64% 68% 64% 64% 66% 2Q8 1Q9 2Q9 1H8 1H9 Unit:M.Baht 7
1H9 Petroleum Product Sales M. Liters 1,2 1, 8 2Q8 1Q9 2Q9 6 8 1,33 661 847 173 145 199 331 167 266 13 15 19 88 11 26 148 226 355 344 77 432 177 21 189 424 375 268 158 2,5 2, 1,5 M. Liters Volume: M.Liters 1H8 1H9 4 2 1, 5 Diesel Mogas ATB/LR Naphtha Lube Others Diesel Mogas ATB/LR Naphtha Lube Others 2,619 1,449 5,4 2,63 4,637 1,617 6,275 3,22 3,26 1,913 1,912 3,18 1,588 2,642 33,75 9,624 14,536 4, 35, 3, 25, 2, 15, 1, 5, M. Baht 2Q8 1Q9 2Q9 6,27 24,161 1,23 7,24 12,68 4,819 4,367 1,449 5,95 3,825 6,21 4,229 7, 6, 5, 4, 3, 2, 1, M. Baht 1H8 1H9 Value: M.Baht Diesel Mogas ATB/LR Naphtha Lube Others Diesel Mogas ATB/LR Naphtha Lube Others
1H9 Petrochemical Product Sales 14, Tons Tons 2Q8 1Q9 2Q9 3, Volume: M.Tons 12, 9 33,279 31,637 31,523 24,47 23,432 25,958 124,744 88,871 16,623 39,67 23,331 32,59 32,94 14,413 29,8 51,725 54,83 5,85 84,24 53,38 65,25 1, 8, 61,89 63,16 6, 5,425 49,39 71,264 55,921 42,93 34,638 24,929 195,494 18,819 15,68 16,535 118,243 4, 2, 25, 2, 15, 1, 5, 1H8 1H9 M.Baht HDPE ABS PP PS Olefin BTX Others HDPE ABS PP PS Olefin BTX Others 1,711 961 1,173 1,519 952 1,198 6,478 2,871 4,158 1,933 671 1,171 1,96 1,187 1,4 1,526 1,451 361 887 2,435 2,972 7, 6, 5, 4, 3, 2, 1, 2Q8 1Q9 2Q9 M.Baht 3,137 2,134 3,56 2,15 3,424 1,841 5,56 2,282 5,27 2,566 1,68 914 12,28 7,29 HDPE ABS PP PS Olefin BTX Others HDPE ABS PP PS Olefin BTX Others 14, 12, 1, 8, 6, 4, 2, Value: M.Baht 1H8 1H9
CAPEX 1
Future Project Progress: 27-212 As of June 29 CAPEX Amount (Million USD) Complete Projects Benefit/year (Million USD/year) Start Complete Progress Purpose / Remarks HDPE Compound * 12.6 3 2Q7 1Q9 1% Increase capacity from 17 KTA to 57 KTA ABS Expansion * 17.1 4 2Q7 1Q9 1% Increase capacity from 96 KTA to 117 KTA Total 29.7 7 Phase I Power Plant * 22. 39 2Q7 1Q11 45% CHP 216 MW for internal use, reduce power & steam cost, improve power stability Safety Improvement 39. n/a 2Q7 211 26% Continual improvement Total 259. 53 Phase II ABS Expansion 6 * n/a n/a On Revision Increase capacity from 117 KTA to 2 KTA New Reg_EURO IV n/a n/a On Revision Comply to regulation Petroleum Improvement n/a n/a On Revision Increase capacity from 215 to 265 kbpd & improve product slate Propylene Booster * 88. n/a 29 211 Increase capacity by 1 KTA Total 88. Grand Total 347. * Note: Projects financed by THB 1, local bank term loan 11
Project Progress: CHP Overall Work progress 45% Substation Demineral water plant 12
Financial Performance 13
Financial Highlights Unit: Million Baht 2Q9 2Q8 %YoY 1Q9 %QoQ 6m9 6m8 %YoY Sales 4,295 73,74-45.4% 26,76 54.5% 66,371 134,997-5.8% Net Sales 36,776 71,521-48.6% 24,47 52.9% 6,823 129,81-53.1% Cost of Goods Sold (32,687) (63,912) (48.9) (25,874) 26.3 (58,562) (119,392) (51.) Gross Profit 4,89 7,69-46.3% (1,827) -323.7% 2,261 1,48-78.3% Gross Margin 11.1% 1.6% -7.6% 3.7% 8.% Other Revenue (172) 246 256 85 363 SG&A (753) (935) -19.4% (72) 7.3% (1,456) (1,717) -15.2% EBITDA before LCM 3,163 6,92-54.3% (2,273) -239.2% 891 9,54-9.2% EBITDA Margin 8.6% 9.7% -9.5% 1.5% 7.% LCM 137-4,84 4,977 - EBITDA after LCM 3,3 6,92-52.3% 2,567 28.6% 5,868 9,54-35.2% Depre. & Amort. (831) (82) (8) (1,631) (1,637) EBIT 2,47 6,1-59.5% 1,767 39.8% 4,237 7,417-42.9% Net Financial Expenses (292) (247) (369) (661) (498) Pretax Profit 2,178 5,853-62.8% 1,398 55.8% 3,576 6,919-48.3% Taxes (17) (18) (15) (32) (27) Net Profit before Extra. 2,161 5,835-63.% 1,383 56.2% 3,544 6,891-48.6% Doubtful Account 12 (7) 1 13 (16) FX. Gain/(Loss), Swap 49 (474) 194 (75.) 243 479 (49.2) Investment Gain (Loss) 21 (257) 43 252 (624) Asset Gain (Loss) (5) 33 4 (1) 33 Other Expenses (3) (4) (3) (6) (9) Net Profit 2,423 5,126-52.7% 1,621 49.4% 4,44 6,754-4.1% No. Share (M.) 19,644 19,5 19,5 19,644 19,5 Norm. EPS.11.3.7 56.2%.18.35-49.1% EPS.12.26.8 49.4%.21.35-4.7% BV 3.64 4.9 3.59 3.64 4.9 8.9% 14
Balance Sheet: 133,175 Unit: Million Baht Cash & S/T Investment Other Assets 12,673 58,191 18,454 21,945 14,112 8,988 26,728 3,848 8,19 111,481 6,88 23,193 4,495 16,61 Interest Bearing Debt Other Liabilities PP & E 62,311 92,777 64,276 69,195 64,178 71,678 Equities 27 28 1H9 Treasury policy : Net Debt/Equity < 1.x Net Debt/EBITDA < 2.x Current Status =.23x = 1.4x 15
Key Financial Ratios 2Q9 2Q8 1Q9 6m9 6m8 Liquidity & Leverage Ratio (Times) Quick Ratio 1.2.93 1.34 1.2.93 Total IBD / Equity.32.3.36.32.3 Net IBD / Equity.23.25.2.23.25 Liabilities / Equity.56.56.51.56.56 Net IBD / EBITDA 1.4 1.32 1.37 1.4 1.32 IBD / EBITDA 1.98 1.58 2.46 1.98 1.58 EBITDA / Interest Exp. 1.27 25.95 7.21 8.66 15.62 Profitability Ratio Gross Profit Margin 11.1% 1.6% -7.6% 3.7% 8.% EBITDA Margin 9.% 9.7% 1.7% 9.6% 7.% Net Profit Margin 6.6% 7.2% 6.7% 6.6% 5.2% ROE 11.3% 14.1% 9.2% 11.3% 14.1% ROCE 8.5% 1.9% 6.7% 8.5% 1.9% Note: EBITDA before LCM 16
Industry Outlooks 17
Industry Outlooks Crude Oil Unstable & attached to economic state High volatile by looming the market Better than expected economic numbers Demands recovery in Asia especially in China Weak refinery margin take aback crude demand Geopolitical tension / strictly on OPEC production outputs US Dollar depreciation Refined Products Very lean margin, challenge to survive Thin spread from shrinkage of demand Cutback refining & swap product yield to heal market imbalance Weaken demand & continue to struggle Further twist into alternative energy Petrochemical Products Pace for a recovery Prices driven by cost push Demand rush back particularly in Asia Short capacity from cut run and turnaround Overhang concern from ME additional capacity 18
Refinery: Tough time ahead 18 16 Price : $/BBL 26 28 27 29 14 12 1 8 8 S/BBL 6 4 2 Jan 6 Mar 6 May 6 3 S/BBL ULG 95 Gasoil HSFO Dubai Jul Sep Nov Jan Mar 6 6 6 7 7 May Jul Sep Nov 7 7 7 7 Jan Mar May Jul Sep 8 8 8 8 8 Nov Jan Mar May 8 9 9 9 Jul Sep Nov 9 9 9 $/BBL 27 1Q8 2Q8 3Q8 4Q8 28 1Q9 Apr9 May 9 Jun9 2Q9 Jul 9 1Aug9 Dubai 68.34 91.43 116.91 113.34 52.6 93.57 44.27 5.1 57.85 69.76 59.24 64.82 7. ULG 95 83.48 15.12 129.84 119.29 56.32 12.64 54.8 6.46 68.5 77.57 68.84 72.83 8.18 Gas Oil.5%S 85.53 114.36 154.47 139.2 7.25 119.53 53.19 58.9 64.6 76.57 66.24 71.8 76.88 Fuel Oil 18cst 57.61 73.21 9.93 1.62 43.95 77.18 38.27 43.84 52.41 6.93 52.39 6.82 65.6 Note : 1. ULG95, GO.5%S & FO18 price from Platt s (FOB Singapore). 2. Dubai price from Platt s (FOB source basis). 19
Spread: More clamped Price : $/BBL 5 4 27 28 29 3 2 6.5 6.3 7.779.141.56 8.82 7.95 6.9 5.44 7.48 9.62 6.1 5.836.55 8.471.13 7.54 8.37 1 6.65 6.34 7.6 4.62 4.6 1.42 3.346.13 3.4 5.25 4.8 3. 2.4 (1) Jan-7 Feb-7 Mar-7 Apr-7 May-7 Jun-7 Jul-7 Aug-7 Sep-7 Oct-7 Nov-7 Dec-7 Jan-8 Feb-8 Mar-8 Apr-8 May-8 Jun-8 Jul-8 Aug-8 Sep-8 Oct-8 Nov-8 Dec-8 Jan-9 Feb-9 Mar-9 Apr-9 May-9 Jun-9 Jul-9 (2) (3) (4) S'pore GRM ULG 95 -Dubai Gas Oil.5%S - Dubai FO 18 - Dubai $/BBL 27 1Q8 2Q8 3Q8 4Q8 28 1Q9 Apr9 May 9 Jun9 2Q9 Jul 9 1Aug9 ULG 95 - Dubai 15.14 13.69 12.93 5.95 3.72 9.7 1.54 1.36 1.64 7.81 9.61 8.1 1.18 Gas Oil.5%S 17.19 22.93 37.56 25.68 17.65 25.96 8.83 7.99 6.21 6.81 7. 6.27 6.88 -Dubai Fuel Oil 18cst -1.73-18.22-25.98-12.72-8.64-16.39 --5.98-6.26-5.45-8.83-6.84-4. 4.94 -Dubai 2
Polyolefins: Price driven by cost push 2,4 2, USD/MT Source: ICIS 26 27 28 29 1,6 1,2 8 4 Naphtha 6 4 2-2 Ethylene Propylene HDPE PP Jan 6 Mar 6 May 6 Jul 6 Sep 6 Nov 6 Jan 7 Mar 7 May 7 Jul 7 Sep 7 Nov 7 Jan 8 Mar 8 May 8 Jul 8 Sep 8 Nov 8 Jan 9 Mar 9 May 9 Jul 9 HDPE-Ethylene PP-Propylene Jan-6 Jul-6 Jan-7 Jul-7 Jan-8 Jul-8 Jan-9 Jul-9 $/MT 27 1Q8 2Q8 3Q8 4Q8 28 1Q9 Apr9 May9 Jun9 2Q9 Jul9 Naphtha 74 88 1,49 1,2 357 827 431 456 499 613 523 581 Ethylene 1,179 1,24 1,385 1,379 543 1,137 626 678 74 846 743 1,15 Propylene 1,153 1,293 1,523 1,572 626 1,254 672 815 752 823 797 997 HDPE 1,331 1,572 1,67 1,67 869 1,445 92 1,69 1,117 1,19 1,125 1,26 PP 1,334 1,58 1,732 1,785 828 1,463 878 1,65 1,89 1,122 1,92 1,171 Note : 1. HDPE, PP, Ethylene & Propylene price from ICIS LOR (CFR SEA). 2. Naphtha price from ICIS LOR (CFR Japan) 21
Polystyrenics: Continuing sluggish demand 2,4 2, USD/MT Source: ICIS 26 27 28 29 1,6 1,2 8 4 Naphtha 8 Styrene PS ABS EPS Jan 6 Mar 6 May 6 Jul 6 Sep 6 Nov 6 Jan 7 Mar 7 May 7 Jul 7 Sep 7 Nov 7 Jan 8 Mar 8 May 8 Jul 8 Sep 8 Nov 8 Jan 9 Mar 9 May 9 Jul 9 6 ABS-Feed ABS PS-Styrene 4 2-2 Jan-6 Jul-6 Jan-7 Jul-7 Jan-8 Jul-8 Jan-9 Jul-9 $/MT 27 1Q8 2Q8 3Q8 4Q8 28 1Q9 Apr9 May9 Jun9 2Q9 Jul9 Naphtha 74 88 1,49 1,2 357 827 431 456 499 613 523 581 Styrene 1,356 1,42 1,549 1,523 71 1,294 745 1,1 912 1,29 981 1,88 PS 1,459 1,478 1,639 1,724 1,3 1,468 885 1,146 1,67 1,113 1,18 1,234 ABS 1,7 1,782 1,952 2,129 1,462 1,831 1,13 1,364 1,351 1,388 1,367 1,399 EPS 1,512 1,519 1,75 1,765 993 1,496 888 1,158 1,52 1,119 1,19 1,225 Note : 1. PS, ABS, EPS & Styrene price from ICIS LOR (CFR SEA) 2. Naphtha price from ICIS LOR (CFR Japan). 22
World Economic: Weak recovery ahead GDP growth, % GDP growth, % 28 29F 21F 28 29F 21F G7.6-4.5.3 G7.6-3.9 1. --US 1.1-3.9.6 --US 1.1-2.8 1.2 --Japan -.7-8.7-1.9 --Japan -.7-7..3 --Euroland.7-3.4.3 --Euroland.6-4.3.8 EM Asia 6.8 3.6 5.5 EM Asia 6.8 4.2 5.8 --China 9. 7. 6.6 --China 9. 8.3 7.8 --India 7.3 4.6 6.1 --India 7.3 5.5 6. EMEA 4.3-1.8 3.7 EMEA 4.3-3.3 2.9 --Russia 5.6-2.4 4. --Russia 5.6-4.4 1.8 Latam 4.4-1.3 2.9 Latam 4.4-2.3 3. --Brazil 5.4-1. 3.5 --Brazil 5.4-1. 4. Industrial countries.7-4.2.3 Industrial countries.7-3.8 1. EM countries 5.8 1.4 4.5 EM countries 5.8 1.4 4.5 Global 2.8-1.9 2. Global 2.9-1.5 2.5 Note: Comparing to the previous World Outlook reported in March 29 Sources: Deutsche Bank, TISCO Research 23
Demand Growth from China Refined Products Petrochemical Products Polymer Imports to China Tons 1,7, 1,5, 28 29 All time high 1,3, 1,1, 9, 7, January February March April May June Source: Norwegian Energy, Morgan Stanley Commodity Research Source: ICIS Report 24
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