2q/14 analyst meeting presentation - ptt global...
TRANSCRIPT
2Q/14 Analyst Meeting Presentation
St. Regis Hotel, Bangkok August 13, 2014
Bowon Vongsinudom, President & CEO
Patiparn Sukorndhaman, EVP-Finance and Accounting
Saroj Putthammawong, VP-Supply Sourcing
Disclaimer
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.
2
Agenda
3
2Q/14 Business Highlights
Strategy and Excellence Programs Updates - Excellence Programs Updates - International Business Directions
2Q/14 Operating Results
Market Outlook
Agenda
4
2Q/14 Business Highlights
Strategy and Excellence Programs Updates - Excellence Programs Updates - International Business Directions
2Q/14 Operating Results
Market Outlook
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
Olefins and Derivatives • Improved Olefins U-Rate to 91% • Unstable gas flow from PTT, resulted in using
more NGL, which pressured EBITDA Margin
2Q/14 Business Environments and Operations
5
• Major economic recovery, GDP growth 0.2%. Economy expanded for 4 consecutive quarters
• US GDP rebounded with growth of 4% in 2Q/14, mainly driven by domestic consumption. Continuation of QE tapering.
Crude Oil • 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
• Market sentiment / confidence picked up after coup. Signs of improvement are upside stock market, better fund flow, and FX strengthening.
• China announced GDP growth at 7.5%, better than expectation at 7.4%. PMI continues to improve.
Operation QoQ Oil Market
Economic Petrochemical Market
• 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.
HDPE
PX
MEG • Soften spread from major surplus in co-monomer while downstream demand lacked.
Petroleum Products • Weak seasonal demand for petroleum product • Diesel crack spread soften from Chinese supply surplus and
export volume
Chinese PMI
50.5 50.2 50.3 50.4
50.8 51.0
51.7
50.050.551.051.552.0
1/14 2/14 3/14 4/14 5/14 6/14 7/14
Restructuring provision of Vencorex at 51% of THB 1,142 Mn
2Q/14 Business Highlights Performance Soften from Weak Aromatics Market and Vencorex Restructuring
6
EBITDA Margins Revenue and Adjusted EBITDA Structure
(Unit: Million Baht) 2Q/13 1Q/14 2Q/14 YoY QoQ 6M/13 6M/14 YoY
Sale Revenue 111,887 146,366 152,401 36% 4% 253,195 298,767 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) 0.93 1.40 1.35 46% -3% 3.60 2.75 -24%
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%
* Note: Adjusted EBITDA = EBITDA – Stock Gain/(Loss) &NRV – Provision for Business Restructuring of Vencorex
% Adj. EBITDA Margin 2Q/13 1Q/14 2Q/14Business Unit :
Refinery 2 3 4Aromatics 12 3 -2Olefins and Derivative 28 24 25Green 3 4 4HVS -2 3 1
Average 12 8 8
Agenda
7
2Q/14 Business Highlights
Strategy and Excellence Programs Updates - Excellence Programs Updates - International Business Directions
2Q/14 Operating Results
Market Outlook
Target
* 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
Excellence Programs Update 2Q/14 EBITDA UPLIFT
(MUSD)
Excellence Programs (MUSD)
2014 Target
6M/14 Actual
Est. 2014
Synergy Excellence
83 16.8 58 -Heavy Gas (Offgas) -Pure H2 via PSA -C3/C4 Stream -3 Streams (Heavy Gasoline, LCB, CB) -Heavy Aromatics
Marketing Excellence
80 47.2 80 -Customer Portfolio Management
-Product Development -Pricing Excellence
Operational Excellence
31.0 15.9 36 -Total 47 projects in 2014 -34 Energy Saving Projects -7 Plant Reliability Projects -6 Cost Reduction/Optimization Projects
Total 194 79.9 174
Excellence Programs Updates Execution of Core Uplift Projects According to Target
9
Synergy Projects
• 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
Pure H2 via New PSA
Progress
Off Gas upgrading at Olefins • Construction Progress at 66%
Target COD
2Q/14
4Q/14
Debottlenecking & Expansion Projects
• Construction Progress at 37% TOCGC Plant Improvement Project
Progress
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
Brazil, China, France, Germany, India, Italy, Korea, Netherlands Poland, Russia, Spain, Taiwan, Thailand, Turkey, USA
PTTGC International Business Direction Updates
10
Second PLA Plant in Southeast Asia
HDI Derivative
Sales and Marketing Offices /
Representatives
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
Global Operating Location
Vencorex Business Directions Business Restructuring
11
Man
ufa
ctu
rin
g S
ite
ASIA
Pont-de-Claix
Freeport, Texas
Rayong
TDI Reactor 125 KTA
New HDI Reactor 70 KTA By 2016
HDI Derivatives
24 KTA
Restructuring of Vencorex
HDI Derivatives
11 KTA
New HDI Derivatives
HDI Monomer
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
HDI Monomer
TDI
Transaction: • Investment transaction completed on May 31,
2012 • 51% 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
51% 49%
Rationale of Investment
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
Flex
ible
Fo
am
CA
SE
TDI Major Applications
HDI Major Applications
Hig
h v
alu
e co
atin
g
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
Natureworks Expanding PLA Sales and Application
12
Sales Volume Growth at 16% p.a. in the past 5 Year
Varieties of New Products Application
Note: U-Rate base on Effective Capacity for the year Capacity: 2009 at 125 KTA, 2012 at 140 KTA, 2013 at 150 KTA
• Manufacturing facility, located in Blair, Nebraska, USA • Nameplate capacity of 150 KTA of PLA
Rationale of Investment
Transaction: • Investment transaction completed on May 31, 2012 • 50% 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
Unit: KTA
Emery Oleochemical
13
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
• Sulfactants Thickeners
• Ethoxylates
• Sodium Lauryl Sulfate (SLS)
• New Bio- Polyols and Recycled Polyols
New specialties Products
Myriant World Class Biotechnology R&D Center
14
“Synergy and Collaboration”
Di-acids Market
Downstream Products from Bio-based Feedstock R&D Technology and Knowhow Transfer
• 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
JV with Pertamina Updates “Indo Thai Trading”
15
49% 51%
HDPE, LDPE LLDPE, MEG
ITT Office Grand Opening in Jakarta
ITT Organization
Nominated by Pertamina
Nominated by PTTGC
Pertamina, PTTGC or local new hire
Customers
JV Marketing & Trading Holding Structure
Supply Chain in Indonesia
PP
Product Source
Annual Volume Sales Target Unit : KTA
Others Others
ASEAN: Pertamina
CHINA: Sinochem
Strategic Direction
Debottlenecking
Synergy Excellence
Marketing Excellence
Operational Excellence
NEW GEOGRAPHIES NEW PRODUCTS
System House: Compounding:
PC, PU, Nylon 6-6
1-STEP ADJACENCIES
EXCELLENCE EXECUTION
Oleochemicals
PLA
Succinic Acid
PLA/PBS Compound
KNOW HOW
CORE UPLIFT PROJECTS
GREEN
+ R&D
Center
AUTOMOTIVE E&E CONSTRUCTION
EBITDA Uplift
15-30% (2012-2017)
1st Quartile Performance ROIC > 14%
Listed in Globally
Sustainability Index
16
Agenda
17
2Q/14 Business Highlights
Strategy and Excellence Programs Updates - Excellence Programs Updates - International Business Directions
2Q/14 Operating Results
Market Outlook
Business Environment and Operations Recap
18
Dubai crude increased from average at 104.5 $/BBL in 1Q/14 to
average 106.1 $/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
32.58 Baht/USD to end 2Q/14 at 32.60 Baht/USD
Aromatics & Refinery price dropped while HDPE remained strong
Diesel-Dubai 16.0 USD/BBL -5% YoY -10% QoQ
FO – Dubai -10.7 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
Overall utilization rate of major businesses
*Source: BOT Selling Rate
Average Dubai Crude Price USD/BBL
Average and Closing FX : THB/USD*
109.1
105.5
116.1
106.4 106.3 107.4 108.2
100.8
106.3 106.8 104.5
106.1
90
95
100
105
110
115
120
2012 2013 1Q/12 2Q/12 3Q/12 4Q/12 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14
31.22 30.86 31.14 31.43 31.50 30.82 29.94 30.03 31.62 31.87 32.80 32.59
30.99
31.97
30.97 30.78
29.45
31.27 31.53
32.95 32.58 32.60
2012 2013 1Q/12 2Q/12 3Q/12 4Q/12 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14
Average FX Closing FX
16.5 15.3 18.4
14.6 12.4 9.2
14.6 16.1
6M/13 6M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14
Refinery Performance Slight Decline of Mkt GRM
19
ULG
95
- D
B
JET
- D
B
Die
sel
- D
B
FO -
DB
Petroleum Product Spread (USD/BBL)
+10% YoY +10% QoQ
-7% YoY -16% QoQ
-5% YoY -10% QoQ
-190% YoY -25% QoQ
Gross Refinery Margin (USD/BBL)
Total Intake (KBD)
82% 102% 101% 63% 98% 103% 101% 103%
Sales Volume (KBD)
+63% YoY +5% QoQ
CDU U-Rate
+70% YoY +2% QoQ
Note: In 2Q/13, Refinery had Planned Turnaround of 38 days
17.8 15.6 20.3 15.3 17.0 17.3 17.0 14.3
6M/13 6M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14
18.2 16.9 19.6 16.8 17.3 17.7 17.8 16.0
6M/13 6M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14
(5.5) (9.6) (7.4)
(3.7)
(10.7) (10.5) (8.5) (10.7)
6M/13 6M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14
3.59 4.46 4.37 2.38
3.48 3.42 4.48 4.44
(1.51) (0.91) (2.45)
4.21
1.11
(0.69)
0.73 0.64
0.49 0.27
1.23
0.98
0.78 0.33 0.66
2.72
4.99 3.73
1.16
8.67
5.30 4.12
5.83
(10.00)
(8.00)
(6.00)
(4.00)
(2.00)
-
2.00
4.00
6.00
8.00
(3.00)
(1.00)
1.00
3.00
5.00
7.00
9.00
11.00
6M/13 6M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14
Market GRM Stock Gain/(Loss) Net NRV
Hedging Gain/(Loss) Accounting GRM
119.0 147.6 146.4
91.8 142.4 149.1 146.5 148.6
46.8
55.9 57.8
36.0
55.5 69.4 52.5 59.3
165.8
203.5 204.2
127.8
197.8 218.4
198.9 208.0
6M/13 6M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14
Crude Condenstate Residue & Others
8% 7% 9% 5% 9% 8% 5% 8% 14% 13% 15% 13% 15% 13% 14% 13%
52% 52% 51% 54% 52% 49% 52% 51%
11% 13% 11% 10% 12% 15% 13% 13%
15% 16% 14% 16% 12% 15% 16% 16%
147 187 183 111 176 196 185 188
6M/13 6M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14
Naphtha +Ref.Jet
Diesel
Fuel Oil
Aromatics Performance Soften PX hitting hard on Aromatic Business
Pri
ces
PX
FEC
P -
Co
nd
B
Z S
po
t -
Co
nd
Aromatics Products Prices and Spread (USD/Ton)
-38% YoY -14% QoQ
-11% YoY -3% QoQ
Products to Feed Margin (USD/Ton BTX)
BTX U-Rate and Sales Volume (KTons)
88% 90% 92% 84% 91% 93% 91% 89% BTX U-Rate
20
910 920 948 871
930 937 917 924
1,514
1,280
1,618
1,409 1,440 1,440
1,303 1,256 1,332
1,295 1,379
1,286 1,258 1,283
1,297
1,293
800
1000
1200
1400
1600
1800
6M/13 6M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14
Condensate Erawan PX FECP BZ Spot Korea
423 375 430 415 328 346 380 369
6M/13 6M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14
604
360
669 539 510 502
386 333
6M/13 6M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14
7% 7% 8% 5% 4% 3% 7% 6%
26% 26% 26% 26% 31% 30% 25% 28%
43% 43% 43% 42% 43% 43% 43% 43%
24% 24% 22% 26% 22% 24% 24% 23%
1,634 1,666 824 810 876 836 806 860
6M/13 6M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14
BZ Group
PX Group
Naphtha Group
Other By-Products
359
125
394 325
260 222 165
86
(0.81)
(24.41)
16.52
(1.45) (45.97)
84.10
26.94
(7.90)
40.44
335
142
393
278
344
249
157 127
(100)
-
100
200
300
400
(100)
-
100
200
300
400
500
6M/13 6M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14
Market P2F Hedging Gain/(Loss)
Stock Gain/(Loss) Net NRV Accounting P2F
6% YoY 7% QoQ
Olefins and Derivatives Performance Strong HDPE Price
Pri
ces
MEG
AC
P –
0.6
5Eth
ylen
e H
DP
E -
Nap
hth
a
Olefins Derivatives Prices and Spread (USD/Ton)
-57% YoY -38% QoQ
+6% YoY +0% QoQ
Adjusted EBITDA Margin
U-Rate (%)
GAS : NAPHTHA Intake %
HDPE Price +9% YoY +1% QoQ
21
Sales Volume (KTon)
1,463 1,561 1,482 1,443 1,489 1,536 1,554 1,569 1,455 1,569 1,477 1,433 1,490 1,549 1,560 1,578
1,452
1,622
1,459 1,444
1,569 1,664 1,639 1,605
1,228 1,137
1,282 1,173 1,143
1,208 1,182 1,093
910 943
961 858 920 946 935 951 700
900
1,100
1,300
1,500
1,700
6M/13 6M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14
HDPE (FILM) SEA LLDPE CFR SEA LDPE CFR SE AsiaMEG ACP Naphtha MOPJ
553
619
521
585 568
590 620 618
6M/13 6M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14
363
198
375 351 284 281 245
152
6M/13 6M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14
29% 25%
30% 28% 26% 24% 24% 25%
6M/13 6M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14
6M/13 6M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14HDPE (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 910 943 961 858 920 946 935 951
6M/13 6M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 Olefins 419 302 200 218 147 190 134 168
HDPE 410 420 216 193 208 217 202 218 LLDPE 172 203 102 70 119 107 98 105 LDPE 146 164 75 71 25 47 72 92
Total PE 727 788 393 334 352 371 373 415 MEG 187 166 83 104 95 89 71 95
6M/13 6M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 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%
54% 57% 55% 54% 65% 53% 61% 54%
35% 31% 33% 36% 31% 35% 25% 35%
11% 12% 12% 10% 4% 12% 14% 11%
1,984 1,715 1,012 972 756 969 790 925
6M/13 6M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14
Ethane Other Gas NaphthaKton
Phenol and BPA Performance Improved U-rate and Margin
Pri
ces
BP
A-P
hen
ol
Ph
eno
l-B
Z
Phenol/ BPA Prices and Spread (USD/Ton) U-Rate and Sales Volume (KTons)
Phenol 126% 104% 126% 127% 124% 130% 78% 131%
BPA 90% 88% 64% 116% 116% 104% 70% 107%
U-Rate
22
Sales Volume (Kton)
1,332 1,295 1,379
1,286 1,258 1,283 1,297 1,293
1,463 1,440 1,523
1,402 1,352 1,387 1,424 1,456
1,799 1,645
1,880
1,719 1,630 1,605 1,638
1,653
800
1000
1200
1400
1600
1800
2000
6M/13 6M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14
Benzene Phenol BPA
130 145 145 116 95 104 126 164
6M/13 6M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14
48% 59%
40% 55% 65%
54% 60% 58%
52% 41%
60% 45% 35%
46% 40% 42%
139 114 63 76 69 69 48 66
6M/13 6M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14
Phenol
BPA
+41% YoY +29% QoQ
-38% YoY -8% QoQ 337
205
356 317 277 218 214 197
6M/13 6M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14
6M/13 6M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14Phenol (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
2% 6%
1% 4% 5% 4% 4% 7%
6M/13 6M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14
Adjusted EBITDA Margin
-13% YoY 38% QoQ
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 Unit: MB Revenue and Adjusted EBITDA Structure
EBITDA Margins
Adjusted EBITDA
Margin at 30%
Adjusted EBITDA
Margin at 25%
% Adj. EBITDA Margin 2Q/13 1Q/14 2Q/14Business Unit :
Refinery 2 3 4Aromatics 12 3 -2Olefins and Derivative 28 24 25Green 3 4 4HVS -2 3 1
Average 12 8 8
Income Statement Soften from Lower PX Spreads and Vencorex Restructuring
24
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
2Q/13 1Q/14 2Q/14 YoY QoQ MB % MB % MB % MB % MB %
1 Sales Revenue 111,887 100 146,366 100 152,401 100 40,514 36 6,035 4
2 Feedstock Cost (87,594) (78) (121,151) (83) (126,966) (83) 39,372 45 5,815 5
3 Product to Feed Margin 24,293 22 25,215 17 25,435 17 1,142 5 220 1 4 Variable Cost (6,204) (6) (7,416) (5) (7,601) (5) 1,397 23 185 2 5 Fixed Cost (4,163) (4) (4,633) (3) (4,904) (3) 741 18 271 6
6 Stock Gain/(Loss) & NRV (1,422) (1) (575) 0 1,180 1 2,602 183 1,755 305
7 Gain/(Loss) Commodity Hedging 419 0 194 0 411 0 (8) (2) 217 112 8 Other Income 1,362 1 1,318 1 1,249 1 (113) (8) (69) (5) 9 SG&A (2,820) (3) (3,104) (2) (3,056) (2) 237 8 (48) (2)
Extraordinary Item
10 Provision for Business Restructuring ** (2,239) (1) (2,239) 100 (2,239) 100
11 EBITDA 11,466 10 10,999 8 10,475 7 (991) (9) (524) (5)
12 Depreciation & Amortization (4,187) (4) (4,202) (3) (4,415) (3) 228 5 213 5
13 EBIT 7,279 7 6,797 5 6,060 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) 602 0 71 0 2,797 103 (531) (88)
16 Shares of Profit/(Loss) from Investments (22) (0) 240 0 290 0 312 1,423 50 21
17 Income Tax Expense 509 0 (373) 0 (599) (0) 1,108 218 226 61
18 Net Profit 3,919 4 6,126 4 4,725 3 806 21 (1,401) (23)
19 Profit/(loss) attributable to:
20 Owners of the Company 4,172 4 6,296 4 6,085 4 1,913 46 (211) (3)
21 Non-controlling interests (252) (0) (170) 0 (1,360) (1) (1,108) (440) (1,190) (700)
22 Adjusted EBITDA * 12,888 12 11,574 8 11,534 8 (1,354) (11) (40) (0)
***
Income Statement Soften from Lower PX Spreads and Vencorex Restructuring
25
6M/13 6M/14 YoY MB % MB % MB %
1 Sales Revenue 253,195 100 298,767 100 45,572 18
2 Feedstock Cost (199,940) (79) (248,117) (83) 48,177 24
3 Product to Feed Margin 53,256 21 50,650 17 (2,606) (5) 4 Variable Cost (12,992) (5) (15,017) (5) 2,025 16 5 Fixed Cost (8,178) (3) (9,537) (3) 1,359 17
6 Stock Gain/(Loss) & NRV (2,065) (1) 605 0 2,670 129
7 Gain/(Loss) Commodity Hedging 567 0 605 0 38 7 8 Other Income 2,687 1 2,567 1 (120) (4) 9 SG&A (5,389) (2) (6,160) (2) 771 14
Extraordinary Item 0 0 0 0 0 0
10 Provision for Business Restructuring ** 0 0 (2,239) (1) (2,239) 100
11 EBITDA 27,885 11 21,474 7 (6,411) (23)
12 Depreciation & Amortization (8,140) (3) (8,617) (3) 477 6
13 EBIT 19,745 8 12,857 4 (6,888) (35)
14 Finance Cost (2,235) (1) (2,238) (1) 3 0
15 FX Gain/(Loss) (741) (0) 673 0 1,414 191
16 Shares of Profit/(Loss) from Investments (40) (0) 530 0 570 1,440
17 Income Tax Expense (711) (0) (972) (0) 261 37
18 Net Profit 16,019 6 10,850 4 (5,169) (32)
19 Profit/(loss) attributable to:
20 Owners of the Company 16,247 6 12,381 4 (3,866) (24)
21 Non-controlling interests (228) (0) (1,530) (1) (1,302) (572)
22 Adjusted EBITDA * 29,950 12 23,108 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
***
Strong Financial Position
26
Interest Rate Currencies
58 % Fixed 45 % THB
42 % Float 55 % USD & Others
Loan Type
• Cost of long term debts ~ 4.58% (Include
W/H Tax)
• Average loan life after refinancing - 5.31
Years
Treasury policy Net IBD to Equity ratio of ≤ 0.7x Net IBD to EBITDA ratio of ≤ 2.4x
THB 106 Bn
THB Bn
* After Refinance, including New THB Bond of 10,000 million THB
Maturity of Financial Debt* as at Jun. 30, 2014 Key Financial Ratios
1.30 1.34 1.41
0.31 0.28 0.30
0
0.3
0.6
0.9
1.2
1.5
31 Dec. 13 31 Mar. 14 30 Jun. 14
Net IBD/EBITDA NET IBD/Equity
14.44%
11.51% 12.51%
9.42% 7.97%
8.64%
5%
10%
15%
20%
31 Dec. 13 31 Mar. 14 30 Jun. 14
ROE ROA
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.
New Baht Bond
Agenda
27
2Q/14 Business Highlights
Strategy and Excellence Programs Updates - Excellence Programs Updates - International Business Directions
2Q/14 Operating Results
Market Outlook
Q1/
13
Q2/
13
Q3/
13
Q4/
13
Q1/
14
Q2/
14
Q3/
14
Q4/
14
2015
Crude Oil – Geopolitics and Gradual Economic Recovery Keep Oil Price High
• 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
IEA Forecasts oil Demand Growth 1.23 MBD This Year from Economic Recovery
Supply from Non-OPEC Keeps Growing
Geopolitics Keep Oil Price at High Level Factors to be Watched in H2/14
Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 2015
Source: IEA, July 2014
2013 2014 2015
Non- OPEC
OPEC*
GDP Growth (%)
2013 (A)
2014 (F)
U.S. 1.9 1.7
Euro -0.4 1.1
China 7.7 7.4
World 3.2 3.4
• Thanks to shale oil, U.S. will be no.1 oil producer at 11.44 mbd, followed by Russia at 10.92 mbd
• Saudi Arabia plays a balancer role to maintain oil price over USD 100/bbl
• Supply disruption from geopolitics is inevitable
0.07
108.2
100.8
106.3 106.8
104.5
106.1 106.2 105.7
103.0
UNIT: USD/BBL
54.86
36.76 36.35 36.56
56.32
57.52
Source: PRISM, July 2014
Average 2013 (A) 2014 (F) 2015 (F)
Dubai 105.5 105.6 103.0
28
UNIT: MBD
90.3
91.9
93.4
• Oil demand usually grows in Q3 and Q4 due to seasonality
Source: IEA, July 2014 *OPEC Supply includes crude and NGL
93.9
92.7
90.8
92.1 92.4
91.4
-12-8-4048
12162024
Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 2015
Diesel
Gasoiline
Fuel Oil
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
Refinery Maintenance in H2/14 Will Boost Margin Asian Middle Distillates Demand Will Pull Q4 Margin
Source: PRISM, July 2014
GRM 2013 (A) = $6.7/bbl GRM 2014 (F) = $5.9/bbl
29
Apr May Jun Jul Aug Sep Oct Nov Dec
UNIT: KBD
Source: JBC, August 2014
6,878 6,350
4,830
3,508
2,030 3,242
UNIT: USD/BBL
U.S. refiners take advantage of low-price domestic crudes to run high O/R for exporting to Europe, pressuring Asian refining margin.
In last three months, there are significant drops in additional refining capacity, mostly in China.
16.72
11.79
-9.36
PTTGC has 30% hedging in H2/14
U.S. O/R will be reduced after end of gasoline season.
4,309
4,943
3,207
Heavy turnaround in Asia Pacific and North America during Oct – Nov.
19.61 16.81 17.32 17.73 17.80
16.04
18.39
14.62 12.41
9.22
14.56 16.06
13.99
12.27
-7.31
-3.62
-10.66 -10.40 -8.46
-10.60 -10.35
17.40
13.10
-8.30
0200400600800
1,0001,2001,4001,6001,800
Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 2015
PX-MOPJ BZ-MOPJ
• 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
Capacity Loss in Q3 to Support PX Price
BZ to Support Aromatics Margin
Aromatics – Paraxylene to Be in Down Cycle Benzene to Be an Unsung Hero
Capacity Loss in Q3 to Support BZ Price
Production Cutbacks Ease an Impact of New PX Capacity
30
Source: IHS
Source: IHS
USD/MT Source: PRISM, July 2014
1,379
1,635 1,443 1,485 1,432
1,284 1,259 1,349 1,303
1,286 1,258 1,283 1,297 1,293 1,338 1,313
674
417
585
428 565
337 486
338 350 363 307 341 402 387 375 366
1,270
1,275
365 360
0
200
400
600
800
1,000
1,200
1,400
1,600
Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 2015
HDPE-Ethylene Ethylene-MOPJ
HDPE Ethylene
Ethylene/PE – Well Balanced Demand/Supply and Seasonal Demand Support Margin
31
Ethylene and PE Margins Continue Strong
Ethylene Capacity Loss to Supports Prices China’s PE Demand Continued Growing, Resulting in Increasing Import in H1/14
0%
5%
10%
15%
20%
Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14Source : Argus Dewitt
• 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
Seasonal Demand, Tight Supply and Delayed U.S. Crackers Support Prices
USD/MT Source: PRISM, July 2014
Source: IHS
0
2
4
6
8
10
12
Tota
lDe
man
d
Chin
aPr
oduc
tion
Impo
rt
Expo
rt
ME
NEA SE
A
NAF
TA EU
2013 2014
+12%
+6%
+9%
22% -3% 10% 33%
Sources : Global Trade Information Services, Chemease Production Data
+20%
28%
UNIT: MT
1,483 1,443 1,489 1,536 1,554 1,569 1,598 1,557
1,512
1,395 1,265
1,322 1,427 1,441 1,447 1,463 1,435 1,415
521 585 568 591 620 617 659 619 605
434 407 402 481 507 496 524 497 508
0200400600800
1,0001,2001,4001,6001,800
Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 2015
Propylene-MOPJ BD-MOPJ
Butadiene Propylene
Propylene – Still Affected by On-purpose Capacity Butadiene – T/A & Increasing Car Sales Support ST Margin
32
Expect to See Recovery from Q2/14
USD/MT
Propylene Capacity Loss to Supports Price in Q3 Another Seasonal BD Turnaround during Sep - Nov
0%
2%
4%
6%
8%
10%
12%
Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14Source : Argus Dewitt
• 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
Propylene and Butadiene Outlook
Source: PRISM, July 2014 1,731
1,306 1,297
1,344
1,129
1,336
1,367
1,524
1,369
1,373
1,279
1,246
1,479
1,327 1,308 1,320
1,432 1,330
345
770
439 486
415
209
421 579
434 439 328 294
387 539
370 494
413 423
0
200
400
600
800
1,000
1,200
1,400
Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 2015
MEG-(0.63 x Ethylene) MEG
MEG – A Series of T/A in H2 and Well Balanced Demand/Supply Make Margin Rebound
33
Expect to See Recovery from Q2/14
USD/MT
Demand Outpaces Capacity in 2014-15 A Series of Turnaround Will Tighten Market in H2
• 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
2014-15 • Coal-based-MEG plants still run at low operating
rate as well as new capacity might be delayed
Positive Outlook for MEG
Source: PRISM, July 2014
1,134
979 1,064 1,045
963 941 1,027
1,157 1,226
Thousand MT
0
20
40
60
80
100
0.0
0.5
1.0
1.5
2.0
2011 2012 2013 2014 2015
Global Additional Capacity Global Additional Demand % ORMillion MT
255 182 232
159 55 29
105
252 334
0.30 0.42
1.58
1.25 1.45
0
250
500
750
1,000
1,250
1,500
1,750
2,000
Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 2015
BPA Margin Phenol Margin BPA
Phenol Acetone
0
200
400
600
800
1,000
2013 2014 2015 2016 2017 2018
Phenol New Capacity BPA New Capacity
Phenol Additional Demand BPA Additional Demand
Turnaround in Q4/2014 Delays of New Supply Relieve Mkt Sentiment
Phenol/Acetone/BPA – Struggle for Survival
34
New Capacity Still Pressures Margin
Effective Capacity
0
20
40
60
80
100
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
PH BPA
UNIT: KTA
• 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
Better Sentiment from Project Delays and Capacity Loss
USD/MT Source: PRISM
UNIT: KTA
373
643
325
547
287
466
329
428
358
461
287
399
443
587
327
462
322
456
1,645
1,385
1,133
1,648
1,421
1,102
1,767
1,542
1,129
1,653
1,456
1,095
1,638
1,424
1,171
1,605
1,387
1,181
1,630
1,352
1,136
1,719
1,402
1,105
1,880
1,523
1,154
35
For further information & enquiries, please contact our Investor Relations Team at [email protected]
Thank You
1 Thitipong Jurapornsiridee VP - Corporate Finance & IR [email protected] +662-265-85742 Puvadol Vasudhara IR Manager [email protected] +662-140-87123 Panugorn Puengpradit IR Analyst [email protected] +662-140-87144 Prang Chudasring IR Analyst [email protected] +662-265-83275 Supika Charudhanes IR Analyst [email protected] +662-265-85336 Chutima Jarikasem IR Coordinator [email protected] +662-140-8713