1Q/2016 ANALYST MEETING PRESENTATION
29
1Q/2016 ANALYST MEETING PRESENTATION
Transcript of 1Q/2016 ANALYST MEETING PRESENTATION
1Q/2016 ANALYST MEETING PRESENTATION
Agenda
STRATEGIC EXECUTION
1Q/2016 FINANCIAL RESULTS
MARKET OUTLOOK
APPENDIX
2
Agenda
STRATEGIC EXECUTION
1Q/2016 FINANCIAL RESULTS
MARKET OUTLOOK
APPENDIX
3
April 20
25
30
35
40
45
1Q/2016 Highlight
4 January February March
Dubai @ $31.21 /bbl
Dubai @ $43.96 /bbl (+) 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
Market Environment
PTTGC’s Performance Despite external factors
• Lower refinery crack spread • Lower HDPE price
Internally we were able to … • Increase Aromatics in sales volume • Mitigate Olefins 3 shutdown by building PE inventory
PTTGC maintained Adj. EBITDA margin at 12%
1Q/2016 Highlight
ARO II Expansion on stream
Phenol II commissioning
• Commission : Dec 2015 • COD : May 2016 • Capacity :
• PX 115 KTA, • BZ 35 KTA, • OX 20 KTA
• CAPEX : 128.8 MUSD • EBITDA Uplift /Y*: 24 MUSD
VCR TH ready for commissioning
Treasury Stock Program Closed
• Total repurchased 48,553,000 shares or 1.077% of the total paid-up capital at average price of 50.14 baht/share. Repurchase period ended March 7.
VCR FR 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
• Commission : 2Q/ 2016 • COD : 3Q/2016 • Capacity :
• HDI Mono. 70 KTA • CAPEX : 18 MUSD • Product : HDI monomer • EBITDA Uplift /Y*: 24 MUSD
• Commission :Feb 2016 • COD : May 2016 • Capacity :
• PH 250 KTA • AC 155 KTA
• CAPEX : 345 MUSD • EBITDA Uplift /Y*: 63 MUSD
*EBITDA Uplift per year at mid cycle price 5
Strategic Direction
Sustain Core
Accelerate Growth levers
Balance Business & Social
Value
To be a Leading chemical company for Better living
Performance excellence
Maximize value creation
Map Ta Phut retrofit
International hub
Performance chemicals
Green business
Sustainable development
Effective CSR programs
Stakeholder management
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Implementation Detail Study
Sustain Core : Value Creation
Plant Operational Excellence
Top Down Study
• Due diligence process to estimate project potential
• Develop initiatives and execution plans
• Execute per plan to capture value
6 Weeks 12 Weeks 18 Months
Commercial & Marketing Excellence
Procurement Excellence
Capex Excellence
Asset Performance
Excellence 7
OLE 1
OLE 2/1
OLE 2/2
OLE3
LN
BV Unit
Ethane
LPG
Ethane/Propane/LPG
New Flexible Feed
Cracker
LN
1.5 MTA
Project Diagram
• 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 Scope Unit: KTA
500
261
163
208
• Issued pre qualification enquiry
package to prospect bidders.
• Awarded project manager
contractor
• Issued conceptual design to
licensors
• Completed EPCa Scope package
• Submitted BOI application
Sustain Core :MTP Retrofit
Project Update
Timeline :
2018 2020
1Q/18 Construction
COD 2020
2016
ITB
Ad
ditio
nal C
apacity
Ethylen
e 50
0 K
TA, P
rop
ylene 2
61
KTA
8
Captive and Committed
80%
Merchant Volume
20%
9
200 KTA
Merchant Market
≈ 80% Reserved Volume
PO Market Survey Polyols Market Survey
• 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
Project Update
Market survey result concluded that SEA and India are the target market. • Target market growth rate average
at 5 - 7 % during 2014 - 2023 • The highest growth rate is in
Automotive segment 6.8 % Marketing strategy is to focus on high value application segment
2016
4Q/16 FID
2019
COD 2Q/19 Timeline :
Accelerate Growth Levers : PO & Polyols Project
Co
nst
ruct
ion
Polyols 130 KTA System House 40 KTA -------------------------------------- Licensor
E&E
Au
tom
oti
ve
After surveyed 106 customers, we have arrived to Potential Customers
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Accelerate Growth Levers : US Petrochemical Complex
• Investment cost justify investment return • Enough ethane capacity with competitive
pricing structure • Partner can distribute products in N. America
Key Criteria for FID
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
Project Overview
Marcellus Shale Gas Reserve
United States
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• 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
• Three customers have confirmed to expand business in Mae Sot area
Accelerate Growth Levers : Growing in AEC Market
• 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.
1500 1,500 1200 1100
600
200 60 24 11
Estimated Demand for PE Product (KTA) in 2015
Potential demand in AEC with high growth rate
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Agenda
STRATEGIC EXECUTION
1Q/2016 FINANCIAL RESULTS
MARKET OUTLOOK
APPENDIX
12
Business Environment & Operations Recap
Average and Ending Dubai Crude Price: USD/BBL
Average and Closing FX : THB/USD
32.48
34.25
32.65 33.26 35.25 35.84 35.67
32.70
33.93
36.53 36.25
35.41
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
Average FX Closing FX
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.
o FX Gain amounting to 632 M.THB, resulting from appreciation in THB against USD from ending at 36.25 THB/USD in 4Q/15 to ending at
35.41 in 1Q/16.
o Modest Refinery GRM, better adjusted EBITDA margin in Aromatics and healthy Olefins margin
96.6
50.9
51.9 61.3 49.7 40.7 30.4
53.4 60.2
43.5 31.8
34.9
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
Average Price Closing Price
1Q/15 4Q/15 1Q/16YoY +/(-)
QoQ +/(-)
CDU Utilization Rate 102% 99% 93% -8% -5% ULG95 - Dubai 15.4 18.7 18.8 23% 1% Jet - Dubai 17.1 14.1 11.7 -32% -17% Diesel - Dubai 16.3 13.8 9.6 -41% -30% Fuel Oil - Dubai -1.9 -6.6 -5.2 -178% 21%GRM on CDU (USD/BBL) 8.0 8.3 6.1 -23% -26%
BTX Utilization Rate 88% 66% 90% 2% 24% PX- Condensate 333 410 415 25% 1% BZ- Condensate 217 230 272 25% 18%Market P2F (USD/Ton) 219 251 201 -8% -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 - 0.65 Ethylene 236 165 74 -69% -55%% Adj. EBITDA Margin 19 22 20 1 -2
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147.5 145.3 147.6 144.2 146.4 143.1 135.5
56.2 60.0 60.5 66.9 49.7 62.9 63.9
203.7 205.3 208.1 211.1 196.1 206.0 199.4
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
Crude Condenstate Residue & Others
Refinery Performance Modest Refinery GRM
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Petroleum Products - Dubai Spread (USD/BBL) Total Intake (KBD)
Sales Volume (KBD)
Gross Refinery Margin (USD/BBL)
14.3 18.3 15.3 19.8 19.3 18.7 18.8
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
ULG
95
- D
B
JET
- D
B
Die
sel -
DB
FO -
DB
15.9 13.9 17.1 13.5 10.9 14.1 11.7
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
16.1 13.7 16.3 13.7 10.8 13.8 9.6
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
+23% YoY +1% QoQ
+28% YoY
(8.3) (5.0) (1.9)
(3.6) (8.1) (6.5) (5.2)
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
-32% YoY -17% QoQ
-13% YoY
-41% YoY -30% QoQ
-15% YoY
-178% YoY +21% QoQ
+40% YoY
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16Market GRM 4.41 5.45 5.98 5.40 4.16 6.23 4.77 GRM on CDU 5.61 7.13 7.97 7.27 5.11 8.25 6.10 GRM on CRS 2.77 2.95 2.58 2.69 3.16 3.39 3.80
CDU U-Rate
-4% YoY -3% QoQ
102% 100% 101% 99% 93%
+1% YoY
102% 100%
4.41 5.45 5.98 5.40 4.16 6.23
4.77
(4.36) (1.25) (1.50)
2.22
(3.22) (2.47) (0.97)
0.94 0.93
(0.31)
(0.04)
(0.03)
3.86
0.07
0.98
5.13 4.17
7.59
0.91
7.63 3.86
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
Market GRM Stock Gain/(Loss) Net NRVHedging Gain/(Loss) Accounting GRM
8% 9% 9% 10% 9% 9% 15% 14% 13% 12% 14% 15% 13% 15%
50% 49% 46% 51% 49% 51% 48%
13% 11% 17% 10% 9% 10% 13% 15% 16% 16% 15% 17% 17% 8%
185 186 184 194 180 188 177
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
Others Fuel Oil Diesel Jet Naphtha+Ref.
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Aromatics Performance Better Adjusted EBITDA Margin
Pri
ces
PX
FEC
P -
Co
nd
BZ
Spo
t -
Co
nd
Aromatics Products Prices and Spread (USD/Ton)
Products to Feed Margin (USD/Ton BTX)
BTX U-Rate and Sales Volume (KTons)
Nap
hth
a -
Co
nd
836
447 453 533
427 375 303
1,236
829 785 924
823 786 718 1,211
685 670 804 661 606 574
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
Condensate Erawan PX FECP BZ Spot Korea
375 238 217 271 235 230 272
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
400 383 333 391 397 410 415
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
25 44 41 31 34 69 41
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
-36% YoY
-4% YoY
+74% YoY
+25% YoY +1% QoQ
+25% YoY +18% QoQ
0% YoY -41% QoQ
11% 11% 2% 13% 10% 17%
7%
30% 31% 28%
30% 30% 35%
30%
36% 36% 45%
36% 36% 29%
39%
23% 22% 25% 21% 25% 19% 24%
3,156 2,921 707 866 552 796 841
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
BZ Group
PX Group
Naphtha Group
Other By-Products
BTX U-Rate
81% 74% 88% 85% 57% 66% 90%
+19% YoY +6% QoQ -7% YoY
174 217 219 216
183 251
201
(85.91) (8.57)
-
(27.63)
54.93
(48.94) (27.79)
16.41 -
2.54
88
209 191
271
134 226
217
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
Market P2F Stock Gain/(Loss) Net NRV
Hedging Gain/(Loss) Accounting P2F
15
Olefins and Derivatives Performance Margin remained strong at 20% even PTTPE shutdown
Pri
ces
MEG
AC
P –
0.6
5Et
hyl
ene
Olefins Derivatives Prices and Spread (USD/Ton) U-Rate (%)
Sales Volume (KTons)
HD
PE
- N
aph
tha
1,544 1,237
1,188
1,375 1,234 1,153
1,103
1,543 1,234
1,181 1,375
1,224 1,158
1,114
1,571
1,249 1,192 1,401
1,244 1,158
1,117
1,113
948 903
1,027 1,025 837 732
861
491 494 563 461 445
344
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
HDPE (FILM) SEA LLDPE CFR SEA LDPE CFR SE AsiaMEG ACP Naphtha MOPJ
HDPE Price -7% YoY
-4% QoQ
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
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 1,113 948 903 1,027 1,025 837 732
Naphtha MOPJ 861 491 494 563 461 445 344
682 747
694
812 774
708 759
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
206 230 236 126 394
165 74
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
-69% YoY -55% QoQ
+9% YoY +7% QoQ
+9% YoY
+12% YoY
GAS : NAPHTHA Intake %
Adjusted EBITDA Margin
57% 57% 56% 54% 57% 60% 51%
35% 35% 37% 38% 35% 31% 36%
8% 8% 7% 8% 8% 9% 12%
3,727 3,899 991 932 964 1,012 882
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
Ethane Other Gas Naphtha
26% 24% 19% 28% 24% 22% 20%
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
Olefins 708 760 196 173 189 203 156
HDPE 873 868 219 197 219 233 193
LLDPE 407 365 108 69 99 89 78
LDPE 323 333 80 80 83 90 73
Total PE 1,603 1,566 407 346 402 411 344
MEG 382 420 102 108 80 130 106
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
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%
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58% 55% 59% 48% 57% 53% 56%
42% 45% 41% 52% 43% 47% 44%
258 284 74 66 72 71 72
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
Phenol
BPA
268 269 454 355
154 114 166
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
Phenol and BPA Performance Higher Margin from Rising Product Spread
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)
Adjusted EBITDA Margin
1,211
685 670 804
661 606 574
1,427
886 909 979 882 775 753
1,695
1,156 1,364 1,334
1,036 889 920
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
Benzene Phenol BPA
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
Phenol (CMP) 1,427 886 909 979 882 775 753
BPA (CMP) 1,695 1,156 1,364 1,334 1,036 889 920
Benzene 1,211 685 670 804 661 606 574
216 201 240
175 221
170 179
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
433 274 Phenol Mkt
P2F 347 236 285 227 200
BPA Mkt
P2F 186 242 402 318 137 112 162
-25% YoY +5% QoQ
-63% YoY +46% QoQ
-7% YoY
0% YoY
Sales Volume (KTons) -3% YoY
+1% QoQ +10% YoY
11% 9%
19%
7% 6% 1% 3%
2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
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U-Rate 2014 2015 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
Phenol 118% 130% 131% 121% 132% 134% 133%
BPA 99% 103% 114% 85% 107% 104% 108%
Overview of Business Unit’s Performance
% Adj. EBITDA Margin 1Q/15 4Q/15 1Q/16
Business Unit :Refinery 6 15 8Aromatics 13 11 14Olefins and Derivative 19 22 20Green 6 11 8HVS 12 3 (3)
Average 12 16 12
1Q/16 Revenue and Adjusted EBITDA Structure
80,764 M.Baht
9,789 M.Baht
(Unit: Million Baht) 1Q/15 4Q/15 1Q/16YoY
% + /(-)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) 1.25 1.04 1.06 -16% 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)
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1Q/2016 Income Statements Consolidated
1Q/2015 (restate) 4Q/2015 (restate) 1Q/2016 YoY QoQ MB % MB % MB % MB % MB %
Sales Revenue 99,251 100 96,088 100 80,764 100 (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 23,530 24 24,541 26 21,129 26 (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) 493 13% (649) -13%
3 Stock Gain/(Loss) & NRV (1,133) (1) (2,053) (2) (274) (0) 859 76% 1,779 87%
4 Gain/(Loss) Commodity Hedging (188) (0) 2,853 3 43 0 231 123% (2,810) -98%
5 Other Income 1,097 1 2,024 2 978 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) 0 0 0 N/A (2,531) N/A
EBITDA 10,473 11 10,386 11 9,515 12 (958) -9% (871) -8%
Depreciation & Amortization (3,979) (4) (4,208) (4) (4,141) (5) 162 4% (67) -2%
EBIT 6,494 7 6,178 6 5,374 7 (1,120) -17% (804) -13%
Finance Cost (1,076) (1) (937) (1) (822) (1) (254) -24% (115) -12%
8 FX Gain/(Loss) 526 1 510 1 632 1 106 20% 122 24%
9 Shares of profit/(loss) from investments 301 0 (209) (0) 178 0 (123) -41% 387 185%
10 Income Tax Expense (499) (1) (769) (1) (623) (1) 124 25% (146) -19%
Net Profit 5,746 6 4,773 5 4,739 6 (1,007) -18% (34) -1%
Profit/(loss) attributable to:
Owners of the Company 5,631 6 4,690 5 4,707 6 (924) -16% 17 0%
Non-controlling interests 115 0 83 0 32 0 (83) -72% (51) -61%
Adjusted EBITDA * 11,606 12 14,970 16 9,789 12 (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
Strong Financial Position
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Repayment Profile
Interest Rate Currencies
52% Fixed 60% THB
48% Float 40% USD & Others
Loan Type
• Cost of long term debts ~ 4.17% (Include W/H Tax)
• Average loan life after refinancing - 4.51 Years
Treasury policy Net IBD to EBITDA ratio of ≤ 2.4x Net IBD to Equity ratio of ≤ 0.7x
THB Bn
* After Refinance
Key Financial Ratios
Statements of Financial Position
As of Dec 31, 2015 As of Mar 31, 2016
THB 378 Bn THB 386 Bn
Cash +ST Investment
CA
Non CA
PPE
Liab.
IBD
Share Holder’s Equity
THB 106 Bn
ST Bank Loan, 0%
LT Bank Loan, 53%
Debenture, 47%
1.59
1.28
1.72
1.30 1.12
0.23 0.21 0.26 0.25 0.21
31 Mar 15 30 Jun 15 30 Sep 15 31 Dec 15 31 Mar 16
Net IBD/EBITDA NET IBD/Equity
6.40% 7.57% 4.80%
8.99% 8.38%
4.92% 6.10% 4.27% 7.36% 6.92%
31 Mar 15 30 Jun 15 30 Sep 15 31 Dec 15 31 Mar 16
ROE ROA
9.7
15.8 15.0
8.8 13.2 12.4
1.2 1.3 1.4 1.4
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
USD Bond
THB Bond
EUR Loan
USD Loan
THB Loan
39.1 THB Bn
* After Refinance
9.8
16.0
11.2 9.0
13.5 12.8
1.2 1.3 1.4 1.4
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Total
USD Bond
THB Bond
EUR Loan
USD Loan
THB Loan
35.4
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2016 Outlook
KEY ASSUMPTIONS • Projected average 2016
dubai price $39.7 /bbl.
AROMATICS REFINERY • Lower utilization rate mainly
due to planned shutdown in 2Q/16. GRM is expected to slightly decrease to approximately $ 4.7/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.
OLEFINS & DERIVATIVES • 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.
• 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.
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Agenda
STRATEGIC EXECUTION
1Q/2016 FINANCIAL RESULTS
MARKET OUTLOOK
APPENDIX
22
STEADY DEMAND GROWTH DRIVE MARKET MORE BALANCE IN 2nd HALF 2016
MARKET HIGHLIGHT
• OPEC meeting on June 2nd, 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.
DUBAI CRUDE PRICE TREND 2016
GLOBAL OIL SUPPLY vs DEMAND
Unit : MBD
Source : JBC April’16
51.9
61.3
49.7
40.7
30.4
42.2 39.7
10
20
30
40
50
60
70
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16(F) 2016 (F)
Unit : $/BBL
38.9 39.4 39.9 40.1 39.6
57.0 56.6 56.4 56.7 56.7
93.9 94.9 96.6 96.4 95.5
95.9 96.0 96.4 96.8 96.3
0
20
40
60
80
100
120
1Q16 2Q16 3Q16 4Q16 2016
2016 Growth (MBD)
Demand +1.2
Supply +0.4
Non-OPEC Supply
OPEC Supply
Global Demand
• Raise of supply growth from previous expected due to faster Iran ramping up
Source: PTTGC’s estimate
Unit : MBD
Slowdown in US production amid raising of Iran after sanction lifting
Source : IEA
9.18 8.80
3.00
3.56
2.02.53.03.54.04.55.05.56.0
6.06.57.07.58.08.59.09.5
10.0US (LHS)
Iran after sanctions lifted
Jan’16 May’16
Iran (RHS)
• Saudi Arabia and Russia still maintain production at high level (Russia 11.25 MBD, Saudi 10.17 MBD @ Mar’16)
23
MARKET HIGHLIGHT PRICE TREND & FORECAST
STABLE GROWTH IN ASIA AMID RAISE OF CHINA EXPORT THAILAND DEMAND IS STILL GROWING
• 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
2016 ASIA SUPPLY-DEMAND GROWTH
-3.5 -8.1 -6.5 -5.2
-8.3 -7.0
19.8 19.3 18.7 18.8 16.1 16.9
13.7 10.8
13.8 9.6 9.6 10.4
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
2Q15 3Q15 4Q15 1Q16 2Q16 (F) 2016 (F)
$/BBL
Diesel – Dubai
ULG95 – Dubai
Fuel Oil – Dubai
Unit : KBD
0
500
1,000
1,500
2,000
2,500
3,000
Gasoline Diesel JetGasoline Diesel Jet
Unit : million liter/month
+12%
+6%
+6%
REFINERY : CHINA EXPORT PRESSURES ASIA MARKET & RAISING MIDDLE EAST REFINERY RUN
Source : JBC May 2016
THAILAND CONSUMPTION (Q1 Monthly Average)
Q1/15 Q1/16 Q1/15 Q1/16 Q1/15 Q1/16
258
178
4
275
161
50
050
100150200250300350
Gasoline MiddleDistillate
Fuel Oil
Supply Growth
Demand Growth
• Surge of production and export volume from China teapot refineries cause some surplus in middle distillate.
• Drought & heatwave in Asia will boost diesel demand
Source: PTTGC’s estimate 24
339 376 275 142 305 271 257
833 940
736 587 649 677 661
1,149 1,344 1,134
995 929 1,073
996
0
500
1000
1500
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 (F) 2016 (F)
$/M
T
Propylene-Naphtha Propylene Price PP Price
OLEFINS AND DERIVATIVES : STRONG DEMAND WHILE TIGHT ETHYLENE SUPPLY
MEG : MARGINS IMPROVE ON SEASONAL DEMAND FROM CHINA
PROPYLENE PRICE IS STILL PRESSURED FROM ON-PURPOSE
OLEFINS AND DERIVATIVEAS HIGHLIGHTS TIGHT ETHYLENE SUPPLY WILL SUPPORT
THEIR DERIVATIVES PRICES
PROPYLENE MARKET HIGHLIGHTS
Polyethylene • 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.
• 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 16.
1188 1375 1234 1153 1103 1175 1160
780 943
765 606 633 653 657
0
500
1000
1500
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 (F) 2016 (F)
$/M
T
HDPE Price MEG Price
Source: PTTGC’s estimate
Source: PTTGC’s estimate
25
AROMATICS: NEW SUPPLY DELAY AND STABLE DEMAND SUPPORTED H1 MARGIN
PHENOL/BPA : SHORT TERM SUPPLY TIGHTNESS
AROMATICS HIGHLIGHTS
PHENOL & BPA : MARGIN BOTTOM OUT
AROMATICS: MARGIN GRADUALLY RECOVER
PHENOL/BPA 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 • 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 Source: PTTGC’s estimate,
333 372 360 348 406 410
385
176 240 200
161
230 260 225
0
100
200
300
400
500
1Q15 1Q152 3Q15 4Q15 1Q16 2Q16 (F) 2016 (F)
$/M
T
PX-Naphtha BZ-Naphtha
347
236
285 227
203
292 262
397
318
137 112
163
263 221
0
100
200
300
400
500
1Q15 1Q152 3Q15 4Q15 1Q16 2Q16 (F) 2016 (F)
$/M
T
Phenol P2F BPA P2F
Source: PTTGC’s estimate,
26
Agenda
STRATEGIC EXECUTION
1Q/2016 FINANCIAL RESULTS
MARKET OUTLOOK
APPENDIX
27
Strategic Investment
Existing Non Captive Upstream
and Downstream
HDI Deriv. 12 KTA
Phenol II 405 KTA Aromatics 170 KTA
HDI Monomer 70 KTA
mLLDPE 400 KTA
PO/Polyol 250 KTA
MTP Retrofit 761 KTA
8,000
8,500
9,000
9,500
10,000
10,500
11,000
2015A 2016F 2017F 2018F 2019F 2020F
ARO2 Phenol2 HDI Thailand HDI France MLLDPE PO/Polyol MTP Retrofit
CAPEX 128.8 MUSD 345 MUSD 43 MUSD 18 MUSD 288.2 MUSD TBC TBC
Additional PetChem* (per year)
PX 115 KTA BZ 35 KTA OX 20 KTA
PH 250 KTA AC 155 KTA
HDI Derivative 12 KTA
HDI Monomer 70 KTA
MLLDPE 400 KTA Hexene-1 34 KTA
PO 200 KTA Polyol
130 KTA
Ethylene 500 KTA Propylene 261 KTA
Period Q2’16 Q2’16 Q3’16 Q3’16 2018 2019 2020 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
For further information & enquiries, please contact our Investor Relations Team at [email protected]
Thank You
29
1 Thitipong Jurapornsiridee VP-Corporate Finance & IR [email protected] +662-265-8574
2 Jittasak Soonthornpan IR Manager [email protected] +662-265-8172
3 Prang Chudasring IR Analyst [email protected] +662-265-8327
4 Nattchanon Chawinsittangkul IR Analyst [email protected] +662-265-8364
5 Pantaree Nantanakom IR Analyst [email protected] +662-265-8714
6 Chutima Jarikasem IR Coordinator [email protected] +662-140-8713
