3Q/2015 Analyst Meeting...
Transcript of 3Q/2015 Analyst Meeting...
The Synergy Hall, EnCo C : November 17, 2015
3Q/2015 Analyst Meeting Presentation
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.
Management Re-shuffle
SVP – Polymers Business
Unit
EVP – EO Based
Performance Business
Unit
SVP – Marketing, Commercial and Supply
EVP – Finance and Accounting
EVP – Corporate Strategy
EVP – Organizational Effectiveness
EVP – External Affairs
SVP – Corporate
Affairs
SVP – Science and Innovation
EVP – Project
Executive Director
EVP – GPC Olefins
SVP – GPC Refinery
and Shared Facilities
SVP – GPC Aromatics
SVP – CAPEX
Excellence
SVP – Quality, Safety,
Occupational Health and
Environment
Mr. Supattanapong Punmeechaow
Mr. Prasert Bunsumpun Chairman
Miss Duangkamol Settanung
SVP – Green
Chemicals Business
Unit
SVP - Phenol
Business Unit
EVP – International
Business Operations
Board of Directors
President and CEO
COU – Upstream Petrochemical Business
COD – Downstream Petrochemical Business
VP – Internal Audit
Audit Committee
Risk Management Committee
Nomination and Remuneration Committee
CG Committee
Mr. Patiparn Sukorndhaman
Mr.Saroj Putthammawong
Mr.Athavudhi Hirunburana
Effective Jan 1, 2016
SVP – Technical
and Operations
SVP - High Volume Specialties
Business Unit
3
• PX spread plunged
• Vencorex restructuring
• S/D of GSP5 • S/D of I-1
and I-4/1
Adjusted EBITDA Margin remain strong under crude oil price volatility and economics uncertainty
11,498 11,340 15,582 13,954 11,606 13,785
10,511
8% 8%
11% 12% 12% 12% 11%
0%
5%
10%
15%
-
5,000
10,000
15,000
20,000
1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
Adj. EBITDA Adj. EBIDTA Margin
-
20.00
40.00
60.00
80.00
100.00
120.00
Unit: USD/BBL Dubai price
Crimea Crisis
Unit: MB
Uprising of IS troops in Iraq Cold weather hit historical high record
Highest US oil production in the past 30 years
US QE Tapering
Continually strong USD
OPEC&IEA cut global oil demand growth
OPEC remain production capacity
Saudi Arabia reduce oil price to maintain market share
Major OPEC members continue to decrease selling price
• Improved chemical price
• Refinery spread squeezed
• Declined HDPE price
• Aromatics II S/D
Iran and world powers deal is done
Chinese Yuan devalued
4
Agenda
5
STRATEGIC EXECUTION
3Q/2015 FINANCIAL RESULTS
MARKET OUTLOOK
Strategic Plans : Major Projects
3Q/15 4Q/15 2016 2017 2018 2019 2020 2021
Phenol II • Progress: 99% TOCGC Improvement
• Construction Completed • Under Performance test run
PO/Polyol US Petrochemical Complex
2015
Aromatics II Debott. • Progress : 99.5%
HDI Monomer France mLLDPE
HDI Derivative Thailand
MTP Retrofit
Offgas TOCGC ARO2 Phenol2 HDI Thailand HDI France MLLDPE PO/Polyol US
Petrochem
CAPEX 180 MUSD 94.2 MUSD 128.8 MUSD 345 MUSD 40 MEUR 17 MEUR 288.2 MUSD 1,000 MUSD
Additional Ethylene
Ethylene 1 MTA
Additional PetChem* (per year)
EOE 90KTA 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 150 KTA
HDPE 700 KTA MEG 500 KTA EO 100 KTA
EBITDA Uplift/Year**
22 MUSD 26 MUSD 24 MUSD 63 MUSD 8 MEUR 4 MEUR 59 MUSD
* 100% stake of additional capacity ** Estimate EBITDA uplift with 100% stake at mid cycle price
6
Excellence Project Update
Performance Excellence Target Crude $109
(M$)
9M/15 Actual (M$)
FY2015 Estimate
(M$)
Synergy Excellence 149 19 26
Marketing Excellence 86 77 104
Operational Excellence 68 48 67
Total 303 144 197
Synergy Excellence : EBITDA Uplift lower than target due to… o Low crude price vs. target which based on Dubai
at 109 USD/bbl o Off gas project delayed (in preparation for
hydrocarbon feed in after Aromatics 2 return from shutdown in 4Q/15)
o Additional off gas volume from refinery after refinery turnaround in 2Q/2016
7
Off gas project at Olefins I-1 plant
Map Ta Phut Retrofit : The Possibilities
Objective : Utilize light naphtha being sold to external customers
Downstream Product Value Creation
Timeline
ARO FFU
Condensate MaxEne Unit Olefins Cracker
HN
Aromatics Complex HN
n-Paraffin Olefins Products
Aromatics Products
Upstream Maximize Product Value
To Create Additional Olefins Feedstock Volume • Install MaxEne Unit within Aromatics plant to generate n-
Paraffin for Naphtha cracker
MTP Retrofit Configuration is to be finalized by end of 2015
To Utilize Gas Feedstock from Modified Olefins Plant
• Debottleneck PTTPE Plant to use excess gas feedstock reshuffled from modified olefins plant
Possibilities under study
8
Modify Olefins Cracker for Flexible Feedstock
To Utilize naphtha being sold to spot market for captive use
• Modify olefins plant (i.e. I-1) to be flexible in feedstock and resilience to feedstock price
• Modify olefins plant to run as a pure naphtha cracker
• Create Olefins and by products capacity addition
Refinery Modify Olefins I-1 LN
Capacity Expansion Study
PE / Special PE
EO / EG
PP
Acrylic Acid SAP
SM
MMA MS
Butadiene
AN ABS / SAN
PS / Special PS
Potential Product
Existing Product
Legends PTTGROUP Product
SSBR/TPE/PBR
Compound
Polyurethane Chain Updates
PO/Polyols Project Update • License : Signed engineering service agreement for both PO and
Polyols
• Finance: Exploring project financing, engaging potential lenders
• Engineering : Issued TOR for FEED contractor, expect to award contractor by December 2015
• Marketing: Shortlisted PO customers and conducting market survey for Polyols potential buyers in 5 countries
• Partners:
Isocyanate Update
2016 2017
4Q/16 Set up JV company
2019
2Q/17 Construction
COD 4Q/19
• TDI Development : Engaging 2 external consultants to jointly develop a specific Basic Engineering Design Package (BEDP) for a future unit development in Asia. Proceeding with technology and process improvement to optimize productivity and cost efficiency.
• HDI Derivatives Thailand: Under construction with project progress of 95%
• Convert TDI to HDI, France: Detailed engineering & construction of new parts, project progress : 20%
• HDI Derivatives in Freeport, USA : Under feasibility study
9
Isocyanate • TDI/HDI
EO
Polyols System House PO Propylene
PU Formulation PU Raw Materials Feedstock
Cumene
1
2 160 KTA
• MDI
Capacity 200 KTA PO
Licensor
Capacity 130 KTA Polyols
Licensor
PO Polyols/ System House
Total CAPEX of approx. USD 1 Bn
Majority Shareholder
Majority Shareholder
1 2
COD: 2016 Cap.: 12 KTA CAPEX: 40 MEUR
COD: 2016 Cap.: 70 KTA CAPEX: 17 MEUR
COD: 2019 Cap.: 12 KTA
• Selected 2 FEED contractors : Fluor-Technip-SK (FTSK) and Bechtel-JGC-Samsung (BJS) • Process design package by Technip, INEOs and SD to be completed by end of the year
• Developing ethane feedstock supply agreement • In discussion with utilities providers and pipeline network
companies • To finalize sell purchase agreement at least 50% of required
volume by year end
• Finalized land option agreements to use the land during FEED study period
• Federal, State, and local put project as high priority • Land owners are doing site works and will deliver clean land • Community outreach program start on November 2015
• Discussing with potential 3rd partner for JV possibility • Shortlist additional potential partners who are local marketing companies, offtakers with and
without capacity reservation, and local O&M
• FEED contractors are working on vendor shortlist for ECA financing • Developing information memorandum for potential lenders
• On going discussion with potential product offtakers, capacity reservation offtakers, and logistic providers
• Market survey by customer conducted around 34% of target customers, expect to complete within 1Q/16
US Petrochemical Complex Updates
1.FEED
2. Feedstock
3. Marketing and Logistic
4. Site, permitting & State support
5. Partner
6. Finance
Project Updates
10
Indonesia Project
11
Project Update Pertamina has recently prioritized its refinery project
investment plan o Balikpapan and Cilacap refinery upgrade
projects will be proceeded as the first priority o Other refinery upgrades, including Balongan, are
planned for a later phase
Pertamina is evaluating options for the new location for the planned integrated refinery and petrochemical complex
PTTGC is well positioned as a strong candidate for project partner due to
o Strong relationship with Pertamina o Knowledge of the industry and Indonesia
market
In the meantime, PTTGC and Pertamina are continuing to collaborate closely in the sales and marketing activities under ITT, a joint venture between PTTGC and Pertamin
IndoThai Trading: PTTGC supplies PE which accounts for 70%. Pertamina supplies PP, 30% of ITT’s total sales volume.
HDPE
LDPE
EO/EG
PP
BD
Pygas
Naphtha based cracker
1.5 MTA
Petrochemical Complex
Petrochemical Complex in Indonesia to • Expand production facilities • Capture domestic demand • Replace import volume
Trading JV : IndoThai Trading • ITT as marketing arm • Currently earning market
share by selling PTTGC’s and PERTAMINA’s polymer
.
360
0
329 244
692
58
580
269
619 629
1642
58 0
500
1000
1500
2000
HDPE LDPE LLDPE MEG PP BD
Production Domestic Demand
With current demand, Indonesia requires > 1 world scale Petrochemical Complex
Indonesia market (2015, KT)
Agenda
12
STRATEGIC EXECUTION
3Q/2015 FINANCIAL RESULTS
MARKET OUTLOOK
o Dubai dipped from average at 61.3 USD/BBL in 2Q/15 to 49.7 USD/BBL in 3Q/15. As a result, PTTGC reported Stock Loss & NRV totaling to 2,687 M.THB in 3Q/15
o FX Loss amounting to 2,140 M.THB, resulting from depreciation in THB against USD from 33.93 THB/USD at the end of 2Q/15 to 36.53 THB/USD at the end of 3Q/15
o Modest Refinery GRM, declined Aromatics P2F, yet, strong Olefins margin
o Diesel-Dubai 10.8 USD/BBL -25% YoY -21% QoQ o ULG95-Dubai 19.3 USD/BBL +47% YoY -2% QoQ o FO – Dubai -8.1 USD/BBL +4% YoY -128% QoQ o PX-Cond 397 USD/Ton -17% YoY +1% QoQ o BZ-Cond 235 USD/Ton -45% YoY -14% QoQ o HDPE 1,234 USD/Ton -23% YoY -10% QoQ o MEG 1,025 USD/Ton -10% YoY -0% QoQ
o Overall utilization rate of major businesses
Average and Ending Dubai Crude Price: USD/BBL
Average and Closing FX : THB/USD
13
Business Environment and Operations Recap
104.0 54.3 104.5 106.1 101.5 74.4 51.9 61.3 49.7
104.8 109.2
94.6
52.9 53.4 60.2
43.5
9M/149M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
Average Price Closing Price
32.40 33.72 32.66 32.45 32.10 32.71 32.65 33.26 35.25
32.58 32.60 32.52 33.11
32.70
33.93
36.53
9M/149M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
Average FX Closing FX 3Q/14 2Q/15 3Q/15 YoY
+ /(-) QoQ + /(-)
Refinery CDU Utilization (%) 102% 100% 101% -1% 1%
Aromatics BTX Utilization (%) 82% 85% 57% -25% -28%
Olefins Utilization (%) 94% 89% 93% -1% 4%
Polymers Utilization (%) 104% 92% 113% 9% 21%
EO Based MEG Utilization (%) 112% 106% 51% -61% -55%
Phenol Phenol Utilization (%) 132% 121% 132% 0% 11% BPA Utilization (%) 104% 85% 107% 3% 22% 13
147.8 146.5 146.5 148.6 148.2 146.6 147.8 145.0 146.7
57.6 58.6 52.4 59.4 61.0 52.0 60.3 66.1 49.5
205.4 205.1 198.9 208.0 209.2 198.6 208.1 211.1 196.2
9M/14 9M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
Crude Condenstate Residue & Others
7% 9% 5% 8% 9% 9% 9% 10% 9% 13% 13% 14% 13% 14% 14% 12% 14% 15%
52% 49% 52% 51% 54% 45% 46% 51% 50%
13% 12% 13% 13% 12% 15% 17% 10% 9% 14% 16% 16% 16% 10% 16% 16% 15% 17%
184 186 185 188 179 186 184 194 180
9M/14 9M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
Others Fuel Oil Diesel Jet Naphtha+Ref.
(9.2) (4.5)
(8.5) (10.7) (8.4)
(5.6) (1.9) (3.6)
(8.1)
9M/14 9M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
16.1 13.6 17.8 16.0 14.4 16.0 16.3 13.7 10.8
9M/149M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
15.3 13.8 17.0 14.3 14.5 17.7 17.1 13.5 10.9
9M/149M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
14.6 18.2 14.6 16.1 13.2 13.4 15.3 19.8 19.3
9M/149M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
14
Refinery Performance Production optimization supported decent GRM
ULG
95
- D
B
JET
- D
B
Die
sel
- D
B
FO -
DB
Petroleum Products - Dubai Spread (USD/BBL) +47% YoY -2% QoQ
-25% YoY -19% QoQ
-25% YoY -21% QoQ
+4% YoY -128% QoQ
Gross Refinery Margin (USD/BBL)
Total Intake (KBD)
Sales Volume (KBD)
CDU U-Rate
+1% YoY -7% QoQ
102% 101% 101% 103% 102% 101% 102% 100% 101% -6% YoY -7% QoQ
14
4.24 5.16 4.48 4.44 3.83 4.91 5.98 5.40 4.16
(0.97) (0.82) (0.69)
0.73
(2.92)
(14.68)
(1.50)
2.22
(3.22)
0.56
(0.12)
0.33 0.66 0.70 2.08
(0.31) (0.04)
(0.03)
3.84 4.22 4.12
5.83 1.61
(7.69)
4.17 7.59
0.91
9M/14 9M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
Market GRM Stock Gain/(Loss) Net NRV
Hedging Gain/(Loss) Accounting GRM
9M/14 9M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15Market GRM 4.24 5.16 4.48 4.44 3.83 4.91 5.98 5.40 4.16 GRM on CDU 5.38 6.73 5.52 5.74 4.81 6.30 7.97 7.27 5.11 GRM on CRS 2.81 2.79 2.85 2.76 2.82 2.57 2.58 2.69 3.16
11% 8% 12% 12% 9% 11% 2% 13% 10%
28% 29% 25% 28% 33% 35% 28%
30% 30%
37% 39% 38% 37% 36% 33% 45%
36% 36%
23% 23% 24% 23% 22% 21% 25% 21% 25%
2,488 2,125 806 860 822 668 707 866 552
9M/149M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
BZ Group
PX Group
Naphtha Group
Other By-Products
30 35 18 29 42 13 41 31 34
9M/14 9M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
400 373 386 334 479 401 333 391 397
9M/14 9M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
394 241 380 370 430 320 217 271 235
9M/14 9M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
15
Aromatics Performance 3Q/15 margin impacted by Aromatics 2 plant shutdown
Pri
ces
PX
FEC
P -
Co
nd
B
Z S
po
t -
Co
nd
Aromatics Products Prices and Spread (USD/Ton)
-17% YoY +1% QoQ
-45% YoY -14% QoQ Products to Feed Margin (USD/Ton BTX)
BTX U-Rate and Sales Volume (KTons)
BTX U-Rate -33% YoY
-36% QoQ
88% 77% 91% 89% 82% 63% 88% 85% 57%
Nap
hth
a -
Co
nd
-18% YoY +11% QoQ
178 207 166 86 290 164 219 216 183
(10.18) (2.65) (7.90)
40.44
(68.54) (398.22) (27.63)
54.93
(48.94) (0.02)
(0.37)
-
167 205
158 127
222
(235)
191 271
134
9M/14 9M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
Market P2F Stock Gain/(Loss) Net NRV
Hedging Gain/(Loss) Accounting P2F
903
471
917 922 872
634 453
533 427
1,303
844
1,303 1,256 1,350
1,035
785 924
823 1,297
712
1,297 1,293 1,301
954
670 804 661
9M/14 9M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
Condensate Erawan PX FECP BZ Spot Korea
15
1,576
1,266 1,554 1,569 1,604
1,448 1,188
1,375 1,234
1,580
1,260 1,560 1,578 1,601
1,431 1,181 1,375
1,224
1,615
1,279
1,639 1,605 1,601 1,440
1,192 1,401
1,244
1,139
985
1,182 1,093 1,143 1,035
903 1,027 1,025
933
506
935 951 913
647 494 563
461
9M/14 9M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
HDPE (FILM) SEA LLDPE CFR SEA LDPE CFR SE AsiaMEG ACP Naphtha MOPJ
193 252 245 152 182 246 236 126 394
9M/14 9M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15 16
Olefins and Derivatives Performance Margin stayed strong at 24%
Pri
ces
MEG
AC
P –
0.65
Ethy
lene
H
DPE
- N
apht
ha
Olefins Derivatives Prices and Spread (USD/Ton)
+116% YoY +214% QoQ
+12% YoY -5% QoQ
Adjusted EBITDA Margin
U-Rate (%)
GAS : NAPHTHA Intake %
HDPE Price -23% YoY -10% QoQ
Sales Volume (KTons)
KTons
643 760 620 618 691 802 694 812 774
9M/14 9M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
9M/14 9M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
Olefins 484 557 134 168 182 224 196 173 189
HDPE 630 633 202 218 210 243 219 195 219
LLDPE 288 276 98 105 85 120 108 69 99
LDPE 239 243 72 92 75 83 80 80 83
Total PE 1,157 1,152 373 415 369 446 407 344 402
MEG 275 290 71 95 110 107 102 108 80
9M/14 9M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
Olefins 87% 93% 77% 91% 94% 101% 96% 89% 93%
HDPE 105% 105% 93% 107% 114% 115% 109% 97% 109%
LLDPE 98% 95% 99% 112% 84% 105% 110% 61% 113%
LDPE 104% 114% 115% 93% 104% 106% 99% 119% 124%
Total PE 103% 104% 99% 106% 104% 111% 107% 92% 113%
MEG 92% 88% 65% 99% 112% 104% 108% 106% 51%
9M/14 9M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
HDPE (FILM) SEA 1,576 1,266 1,554 1,569 1,604 1,448 1,188 1,375 1,234
LLDPE CFR SEA 1,580 1,260 1,560 1,578 1,601 1,431 1,181 1,375 1,224
LDPE CFR SE Asia 1,615 1,279 1,639 1,605 1,601 1,440 1,192 1,401 1,244
MEG ACP 1,139 985 1,182 1,093 1,143 1,035 903 1,027 1,025
Naphtha MOPJ 933 506 935 951 913 647 494 563 461
26% 24% 24% 25% 28% 25% 19% 28% 24%
9M/14 9M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
56% 56% 60% 54% 56% 59% 56% 54% 57%
34% 36% 26% 35% 40% 36% 37% 38% 35% 9% 8% 13% 11% 4% 6% 7% 8% 8%
2,695 2,888 799 932 965 1,032 991 932 964
9M/14 9M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
Ethane Other Gas Naphtha
16
1,554 1,569 1,604 1,448
1,188 1,375
1,234
620 618 691 802 694
812 774
24% 25%
28%
25%
19%
28%
24%
0%
5%
10%
15%
20%
25%
30%
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
HDPE Price ($/Ton) HDPE-Naphtha ($/Ton) Adj. EBITDA Margin (%)
Olefins Adjusted EBITDA Margin maintain at normal level … despite lower HDPE price
Adj. EBITDA margin maintained o Benefit from high naphtha crack
spread o HDPE price dropped o I-4/2 shutdown
Adj. EBITDA margin declined o Lowest HDPE price o Less benefit from naphtha
cracker due to I-4/1 shutdown
Adj. EBITDA margin rebounded o HDPE price bounced o Benefit from high naphtha crack
spread
17
Adj. EBITDA margin declined o Lower HDPE price
1,190 430
HDPE Price By Product Feedstock Cost Variable Cost Fixed Cost EBITDA Margin
1,190
378
HDPE Price By Product Feedstock Cost Variable Cost Fixed Cost EBITDA Margin
Gas Cracker is still more competitive over Naphtha at Crude 43 $/BBL
Gas
Cra
cker
N
aph
tha
Cra
cker
Unit: USD/ton ethylene
Unit: USD/ton ethylene
18
Main Price Assumption
Crude ($/bbl) 43
Naphtha Price ($/Ton) 433
Ethylene ($/Ton) 1000
Propylene ($/Ton) 515
C3/C4 ($/Ton) 433
Phenol Mkt P2F
425
289
358
389
528
456
347
236
285
BPA Mkt P2F
148
285
103
112
228
299
402
318
137
238 321
214 197 302 360 454 355
154
9M/14 9M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
193 212 126 164
291 282 240 175 221
9M/14 9M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
Phenol and BPA Performance Lower Margin from Soften 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)
Sales Volume (KTons)
Adjusted EBITDA Margin
-2% YoY +10% QoQ
-24% YoY +26% QoQ
1,297
712
1,297 1,293 1,301
954 670 804
661
1,490
923
1,424 1,456 1,592
1,235
909 979 882
1,728
1,244
1,638 1,653
1,894
1,595 1,364 1,334
1,036
9M/14 9M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
Benzene Phenol BPA
56% 55% 60% 58% 52% 60% 59% 48% 57%
44% 45% 40% 42% 48% 40% 41% 52% 43%
187 212 48 66 73 70 74 66 72
9M/149M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
Phenol
BPA
U-Rate 9M/14 9M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15 Phenol 114% 128% 78% 131% 132% 132% 131% 121% 132%
BPA 94% 102% 70% 107% 104% 116% 114% 85% 107%
9M/14 9M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
Phenol (CMP) 1,490 923 1,424 1,456 1,592 1,235 909 979 882
BPA (CMP) 1,728 1,244 1,638 1,653 1,894 1,595 1,364 1,334 1,036
Benzene 1,297 712 1,297 1,293 1,301 954 670 804 661
10% 11%
4% 7%
16% 13%
19%
7% 6%
9M/14 9M/15 1Q/14 2Q/14 3Q/14 4Q/14 1Q/15 2Q/15 3Q/15
19
-49% YoY -57% QoQ
18%
4%
70%
2% 4%
2%
Adjusted EBITDA
45%
12%
33%
3% 7%
Sales Revenue
Overview of Business Unit’s Performance
3Q/15 Revenue and Adjusted EBITDA Structure
93,620 MB 10,511 MB
% Adjusted EBITDA Margin
(Unit: MB) 3Q/14R 2Q/15 3Q/15 YoY
% + /(-) QoQ
% + /(-)
Sales Revenue 141,081 111,169 93,620 -34% -16%
EBITDA 12,728 16,055 7,824 -39% -51%
EBITDA Margin (%) 9% 14% 8% -1% -6%
Net Profit 7,658 8,974 1,207 -84% -87%
EPS (Baht/Share) 1.70 1.99 0.27 -84% -87%
Adjusted EBITDA* 15,582 13,784 10,511 -33% -24%
Adjusted EBITDA Margin (%) 11% 12% 11% 0% -1% Note: * Adjusted EBITDA refers to EBITDA excluding impact of inventory value (Inventory gain/(loss) and NRV)
3Q/14R 2Q/15 3Q/15
Business Unit :
Refinery 3 5 4
Aromatics 9 9 4
Olefins and Derivative 28 28 24
Green 1 1 6
HVS 11 6 6
Average 11 12 11
20
21
3Q/15 Income Statements Consolidated
***
Note: * Adjusted EBITDA refers to EBITDA excluding impact of inventory value (excludes Inventory gain/(loss) and NRV) ** Restated 3Q/2014 Income Statements from the implementation of new accounting standards (Pack 5) *** Restated 2Q/2015 Income Statements to reflect share purchase of PTTPL on the basis of business combination under common control
3Q/2014** 2Q/2015*** 3Q/2015 YoY QoQ MB % MB % MB % MB % MB % 1 Sales Revenue 141,081 100 111,169 100 93,620 100 (47,461) -34% (17,549) -16% 2 Feedstock Cost (113,516) (80) (86,168) (78) (71,236) (76) (42,280) -37% (14,932) -17% 3 Product to Feed Margin 27,565 20 25,001 22 22,384 24 (5,181) -19% (2,617) -10% 4 Variable Cost (6,726) (5) (6,130) (6) (6,228) (7) (498) -7% 98 2% 5 Fixed Cost (3,896) (3) (4,003) (4) (3,974) (4) 78 2% (29) -1% 6 Stock Gain/(Loss) & NRV (2,854) (2) 2,271 2 (2,687) (3) 167 6% (4,958) -218% 7 Gain/(Loss) Commodity Hedging 428 0 (72) (0) 52 0 (376) -88% 124 172% 8 Other Income 898 1 1,373 1 877 1 (21) -2% (496) -36%
9 SG&A (2,687) (2) (2,384) (2) (2,600) (3) (87) -3% 216 9%
10 EBITDA 12,728 9 16,056 14 7,824 8 (4,904) -39% (8,232) -51%
11 Depreciation & Amortization (3,941) (3) (4,062) (4) (4,132) (4) 191 5% 70 2%
12 EBIT 8,787 6 11,994 11 3,692 4 (5,095) -58% (8,302) -69% 13 Finance Cost (1,071) (1) (993) (1) (960) (1) (111) -10% (33) -3% 14 FX Gain/(Loss) 380 0 (1,235) (1) (2,140) (2) (2,520) -663% (905) -73%
15 Shares of profit/(loss) from investments
137 0 162 0 485 1 348 254% 323 199%
16 Income Tax Expense (540) (0) (932) (1) 216 0 (756) -140% (1,148) -123% 17 Net Profit 7,693 5 8,996 8 1,293 1 (6,400) -83% (7,703) -86% Profit/(loss) attributable to:
18 Owners of the Company 7,658 5 8,974 8 1,207 1 (6,451) -84% (7,767) -87% 19 Non-controlling interests 35 0 22 0 86 0 51 146% 64 291%
20 Adjusted EBITDA* 15,582 11 13,785 12 10,511 11 (5,071) -33% (3,274) -24%
21
7.0 10.1
15.9 14.9 9.1
12.9 11.1
39.2
1.2 1.3
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
PTTGC PPCL Others
22
Strong Financial Position
Repayment Profile
Interest Rate Currencies
54% Fixed 62% THB
46% Float 38% USD&Others
Loan Type
• Cost of long term debts ~ 4.24% (Include W/H Tax)
• Average loan life after refinancing - 5.35 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, 2014 As of Sep 30, 2015
THB 381 Bn THB 394 Bn
Cash +ST Investment
CA
Non CA
PPE
Liab.
IBD
Share Holder’s Equity
1.97 1.59
1.28
1.72
0.30 0.23 0.21 0.26
31 Dec 14 31 Mar 15 30 Jun 15 30 Sep 15
Net IBD/EBITDA NET IBD/Equity
6.86% 6.40% 7.57% 4.80%
5.05% 4.92% 6.10%
4.21%
31 Dec 14 31 Mar 15 30 Jun 15 30 Sep 15
ROE ROA
THB 116 Bn
ST Bank Loan, 0%
LT Bank Loan, 51%
Debenture, 49%
22
Agenda
23
STRATEGIC EXECUTION
3Q/2015 FINANCIAL RESULTS
MARKET OUTLOOK
CRUDE OIL : SUPPLY GLUT REMAINS BUT BETTER BALANCE AS NON-OPEC PRODUCTION SLOWDOWN
FACTORS TO WATCH
• OPEC Policy
• Iran ramp up possibility in Q1
• Lifting the US ban on crude oil exports
• China’s economic slowdown
• Geopolitics & Middle East tension may cause supply disruption
• Rising demand in 2H 16
-
+
Q3-Q4 : ECONOMIC-DRIVEN MARKET SENTIMENT
30
35
40
45
50
55
60
65
70
Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15
Unit : $/bbl
Q3’2015
Q4’2015
• China’s economic downturn • Iran’s nuclear deal
• Winter crude demand & Brazil oil worker union strike
• OPEC unlikely to cut • Fed rate rise expectations
2016 OUTLOOK : SLOWDOWN OF NON-OPEC
• Slowdown in Non-OPEC supply growth, especially in US production
• EIA : US crude output at 8.8 (-0.5)MBD in 2016
9.1 9.1 9.2 9.3 9.4 9.4 9.4 9.6 9.5 9.3
9.1 9.1
8.6
8.8
9.0
9.2
9.4
9.6
9.8US Crude Oil Production (MBD)
PRICE TREND & FORECAST
51.9
61.3
49.7
44.6 40
45
50
55
60
65
70
Q1'15 Q2'15 Q3'15 Q4'15E 2015E 2016F
Ref : EIA, IEA, JBC, PRISM
Dubai Price (USD/BBL)
53-56 USD/bbl
51.9 USD/bbl
24
25
CRUDE OIL : SUPPLY GLUT REMAINS BUT BETTER BALANCE AS NON-OPEC PRODUCTION SLOWDOWN
Unit : MBD H1 2014 OPEC : 36.35 Non-OPEC : 56.30 Demand : 91.85 Surplus : +0.8 H2 2014 OPEC : 36.9 Non-OPEC : 57.75 Demand : 93.6 Surplus : +1.05
2016 OUTLOOK : SLOWDOWN OF NON-OPEC
• Slowdown in Non-OPEC supply growth, especially in US production
• EIA : US crude output at 8.8 (-0.5)MBD in 2016
9.1 9.1 9.2 9.3 9.4 9.4 9.4 9.6 9.5 9.3
9.1 9.1
8.6
8.8
9.0
9.2
9.4
9.6
9.8US Crude Oil Production (MBD)
• Global Oil Demand Growth FY2015 : 1.8 MBD FY2016 : 1.2 MBD
2016 OUTLOOK : DECLINING IN SURPLUS
Unit : MBD
36.6 37.8 38.3
57.0 58.3 57.8 92.7 94.5 95.7
0
20
40
60
80
100
120
2014 2015 2016
OPEC Non-OPEC Demand
2014 2015 2016
Non OPEC
OPEC
93.6 96.1 96.1 +0.4 +1.6 +0.9
PRICE TREND & FORECAST
51.9
61.3
49.7
44.6 40
45
50
55
60
65
70
Q1'15 Q2'15 Q3'15 Q4'15E 2015E 2016F
Ref : EIA, IEA, JBC, PRISM
Dubai Price (USD/BBL)
Demand
53-56 USD/bbl
51.9 USD/bbl
FACTORS TO WATCH
• OPEC Policy
• Iran ramp up possibility in Q1
• Lifting the US ban on crude oil exports
• China’s economic slowdown
• Geopolitics & Middle East tension may cause supply disruption
• Rising demand in 2H 16
-
+
25
Additional Asia CDU Capacities FY2016
REFINERY : MORE COMPETITION FROM NEW CAPACITY, HOWEVER, BOOSTED DEMAND STILL BACKS UP
Unit : MBD
• Paradip (300 kbd), India • NOCL (125 kbd), India • BPC (120 kbd), India • Sinopec (100 kbd), China
-1.8 -3.5
-8.1 -7.6
15.4
19.8 19.3 16.0
16.3 13.7
10.8 13.7
17.6 16.0
13.6 12.8
-5.3 -6.5 -15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
Q1'15 Q2'15 Q3'15 Q4'15E 2015E 2016F
FACTORS TO WATCH PRICE TREND & FORECAST
Q3-Q4 : DEMAND DRIVEN BY LOW CRUDE PRICE
• China’s economic slowdown
• Nuclear policy in Japan
• Low oil prices stimulate demand globally
• Postponement of new CDU capacity in China & India
+
USD/BBL
Diesel – Dubai
ULG95 – Dubai
Fuel Oil – Dubai
321 90 107 4
Gasoline Jet/Kero Diesel Fuel Oil
Unit : KBD
-
• New capacity 800 KBD in Middle East (Saudi & UAE) pushes more middle distillate to the market in Q3.
• Winter season still boosts middle distillate demand for heating
• Transportation consumption drives gasoline spread
Ref : JBC, PRISM
2016 OUTLOOK : STRONG COMPETITION IN ASIA
6.6
12.6
1.5
6.5
11.5
2.7 0
2
4
6
8
10
12
14
16
18
20
Gasoline Middle Distillate Fuel Oil
Unit : MBD
Balance
Surplus
1.2
Growth in demand but more balance from new capacity
in India & China
More competition from
ME & India Balance
Asia import demand fulfilled
by Europe volume
Supply Demand Import
26
10.97 11.72
12.67
8.00
10.00
12.00
14.00
2014 2015F 2016F
FACTORS TO WATCH SQUEEZED SPREAD BUT CAN STAY OVER 700$/MT
NEA PE DEMAND REMAINS STRONG AMID SLOWDOWN OF CHINA’S ECONOMY
• Tighten ethylene supply. • Iran’s PE export after sanction lifting. • Delay of China’s new CTO plants (~2m tons).
MORE PE SUPPLY FROM NEW CAPACITY
POLYETHYLENE : STRONG DEMAND IN NEA WHILE MORE PE NEW CAPACITY
USD/MT
Source: PRISM, Oct 15
Northeast Asia PE Import Million Tons
• Slowdown of China’s economy.
• Competitiveness of lower polypropylene (PP) price.
Source: IHS
2.95 3.86 3.89
-2.0
0.0
2.0
4.0
6.0
8.0
2014 2015 2016
Million Tons Global PE Capacity Addition vs Demand Growth
Source: IHS
+
- 1188
1375 1234 1199 1249
1194
708 823 788 753 768 700
0
200
400
600
800
1000
1200
1400
1600
Q1-15 Q2-15 Q3-15 Q4-15E 2015E 2016F
HDPE Price
HDPE – MOPJ
NEA
NAM
ME
Indian
Europe
Demand
Growth
27
PROPYLENE : OVER-INVESTMENT IN CHINA HAS STARTED TO PRESSURE BUTADIENE : START TO RECOVER
FACTORS TO WATCH -PROPYLENE
• More competitive propane export from US • PP demand grows faster than expected
- +
CHINA PROPYLENE CAPACITY ADDITION SHIFTS TO ON-PURPOSE
CHINA BD OPERATING RATE STARTS TO INCREASE DUE TO A LACK OF NEW SUPPLY
28
Source : IHS
In fact, China capacity addition during 2015-16 are enough to supply the world demand growth
214
561 515
344 408
486
342 375
283
102
276 263
0
100
200
300
400
500
600
700
Q1-15 Q2-15 Q3-15 Q4-15E 2015E 2016F
SPREADS TEND TO BE SOFTENED IN 2H15 USD/MT
BD – MOPJ
PY – MOPJ
Source: PRISM, Oct 15
• Economic slowdown, especially in China and India • More BD supply from high-run rate of Naphtha
cracker • Recovery of natural rubber price • Delay startup of on-purpose units in China
-
+
FACTORS TO WATCH -BUTADIENE
Source : IHS
China BD Capacity Addition vs Demand Growth
28
PARAXYLENE : SURPLUS SUPPLY STILL PRESSURE ON MARGIN BENZENE : MARGIN SLIGHTLY IMPROVES IN 2016
FACTORS TO WATCH
• China economic slowdown • More benzene supply from naphtha cracker due to
strong olefins margin • Resume production of TPPI, JAC and Dragon
Aromatics
• Strong gasoline demand may limit feedstock to aromatics
• Growing BZ import demand from US
• Startup of SM and Phenol in Asia
-
+
IN 2016, PX MARKET REMAINS SURPLUS BENZENE – SLOWDOWN IN NEW SUPPLY IN BZ MARKET
333 372 360 352 354 354
176 240 200
149 191
206
0
100
200
300
400
500
Q1-15 Q2-15 Q3-15 Q4-15E 2015E 2016F
AROMATICS MARGINS STAY TO FIRM IN 2016 USD/MT
PX – MOPJ
Benzene – MOPJ
Source: PRISM, Oct 15
Source : PCI
2.90
4.47
2.88 3.52
2.11 1.05 1.93 2.15
0.0
1.0
2.0
3.0
4.0
5.0
6.0
2013 2014 2015 2016
Million Tons
Capacity addition Demand growth
1.69
2.26
1.05 0.71
0.99 0.85
1.06 1.09
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2013 2014 2015 2016
Million Tons
Capacity addition Demand growthSource : IHS
However, cutting run rates of high cost producers in Japan and S.Korea and rationalization in Europe will support the market.
29
1.07 0.77
1.25 1.35
0.0
0.5
1.0
1.5
2.0
2013 2014 2015 2016Capacity - Coal Capacity - Normal Demand
134
69
154
68
106
180
0.0
40.0
80.0
120.0
160.0
200.0
240.0
280.0
Q1-15 Q2-15 Q3-15 Q4-15E 2015E 2016F
FACTORS TO WATCH MEG MARGIN TO BE IMPROVED IN 2016
MARGIN SQUEEZED IN 2H 2015
• China’s policy to boost economy
• Polyester market growth
• MEG inventory in China
• Coal-based MEG technology in China
• Volatility of crude oil price -
+
MEG : MARGIN TENDS TO REDUCE IN 4Q15 AND EXPECTED TO IMPROVE IN 2016
USD/MT
Source: PRISM, Oct 15
MEG Margin
*MEG Margin = MEG – (0.63 x Ethylene)
200
400
600
800
ม.ค.
-15
ก.พ
.-15
มี.ค.
-15
เม.ย
.-15
พ.ค
.-15
มิ.ย.
-15
ก.ค.
-15
ส.ค.
-15
ก.ย.
-15
ต.ค.
-15
พ.ย
.-15
Thousand Tons
Source: ICIS
China’s inventory surges from speculation but seasonal demand lower than expected
USD/MT 2015 2016
MEG Margin 106 180
Ethylene 1,087 1,006
EXPECT SLIGHTLY TIGHT SUPPLY SITUATION IN 2016
Source: PCI , Nov 15
Million Tons Global MEG New capacity vs Demand growth
Chinese Coal-based industry will probably only run at 70%-75%
1.55 1.41
1.72 1.78
30
385
55
273
468
30
183 98 375
0
200
400
600
2013 2014 2015 2016
Capacity addition Demand growth
615
140
525 465
71
201 208 235
0
200
400
600
800
2013 2014 2015 2016
Capacity addition Demand growth
Thousand Tons
• Slightly recover from 2015 as less surplus supply • Capacity rationalization in US causes limited volume to
Asia, especially China • Potential delay of Rabigh Refining (275 KTA) from Q4-16
PHENOL/BPA : SLIGHTLY RECOVER IN 2016
Thousand Tons
• Less surplus from new capacity due to almost captive used
• SINOPEC SABIC Tianjin PC (240KTA) may be delayed startup due to the incident in Tianjin
PHENOL : LESS SURPLUS IN SUPPLY BIS-PHENOL A : BOTTOM OUT FROM 2H 2015
31
347
235
281 239
276 296
402
318
136 122
244 214
0
100
200
300
400
500
Q1-15 Q2-15 Q3-15 Q4-15E 2015E 2016F
Source: PRISM, Oct 15
USD/MT
PHENOL AND BPA MARGINS TO BE SOFTENED IN Q4
Phenol P2F
BPA P2F
FACTORS TO WATCH
• Producers cut run due to low margin
• The delay of new supply
• Capacity rationalization
• Volatility in feedstock prices
• Slowdown in downstream demand -
+
High restocking demand and lower feed cost +
Pressure from new capacity and demand
slowdown -
31
For further information & enquiries, please contact our Investor Relations Team at [email protected]
Thank You
1 Thitipong Jurapornsiridee VP-Corporate Finance & IR [email protected] +662-265-8574
2 Puvadol Vasudhara IR Manager [email protected] +662-140-8712
3 Prang Chudasring IR Analyst [email protected] +662-265-8327
4 Supika Charudhanes IR Analyst [email protected] +662-265-8533
5 Chutima Jarikasem IR Coordinator [email protected] +662-140-8713
32
APPENDIX
33
Shutdown Schedule
4Q/15 1Q/16 2Q/16 3Q/16 4Q/16
Refinery
I
II
PTTPE
I-1
I-4/1
I-4/2
Butadiene
I-1
BPE I
BPE II
LDPE
LLDPE
TOCGC
Phenol
BPA
Aromatics
Olefins
HDPE
Phenol
1-15 Jun (15)
3-31 Mar (29)
28 Jul -9 Nov (105)
12-31 Mar(20)
22 Feb-31 Mar (39)
Sep (22)
19 Sep-7 Oct (19)
9-24 Nov (16)
20 May-22 Jun (34)
Sep (16)
22 Feb-11 Mar (19)
Sep (15)
Sep (22)
4 May - 5 July (63)
34
Phenol and BPA Soon getting on up trend after hitting the bottom Phenol and BPA Market P2F Margin
Note: Phenol Market P2F: Phenol – 0.878 Benzene - 0.474 Propylene +0.616 Acetone BPA Market P2F: BPA – 0.853 Phenol – 0.273 Acetone
0
100
200
300
400
500
600
700
800
900
1,000
1,100
Jan
-98
Jan
-99
Jan
-00
Jan
-01
Jan
-02
Jan
-03
Jan
-04
Jan
-05
Jan
-06
Jan
-07
Jan
-08
Jan
-09
Jan
-10
Jan
-11
Jan
-12
Jan
-13
Jan
-14
Jan
-15
$/Ton
P2FM-PH P2FM-BPA
Phenol and BPA Market P2F Margin
35