Investor Presentation - Microsoft · Investor Presentation Turkish Market, 2018 (Million tons) 12...
Transcript of Investor Presentation - Microsoft · Investor Presentation Turkish Market, 2018 (Million tons) 12...
Investor Presentation
www.tupras.com.tr
Hizmete Özel / Confidential
Investor Presentation April 2019
Investor Presentation
www.tupras.com.tr
Hizmete Özel / Confidential
Disclaimer
This presentation contains forward-looking statements that reflect the Company management’s
current views with respect to certain future events. Although it is believed that the expectations
reflected in these statements are reasonable, they may be affected by a variety of variables and
changes in underlying assumptions that could cause actual results to differ materially.
Neither Tüpraş nor any of its directors, managers or employees nor any other person shall have
any liability whatsoever for any loss arising from use of this presentation.
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Content
3CONTENT
• Refining Market Slides
• Turkish Market Slides
• Company Overview Slides
• Operations Slides
• Key Financials Slides
• Outlook Slides
• Appendix Slides
4-9
10-13
14-18
19-23
24-37
38-43
44-49
REFINING
MARKET
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68.0
0
10
20
30
40
50
60
70
80
90
100Brent
Brent Crude Oil Prices ($/bbl)
CONS
• Increase in number of rigs & shale
production in US
• Inventory Levels
• Impact of trade tariff negotiations
• Weak PMI in Europe and China
PROS
• OPEC+ supply cut through 2018 – 1H 2019
• Political instabilities in Middle East, Africa
and Latin America
• Healthy PMI data in developing countries
• Potential impact of sanctions
36.5
REFINING INDUSTRY
Source : Platts
As of March 29th.
5
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Refinery Capacity Change (mb/d)
6
2.7
0.5
1.9 2.0
1.5
0.5
2019 2020 2021 2022 2023 2024
Asia & Middle East Other
Source:, Reuters, International Energy Agency, Tüpraş, sector reports and news.
2019-2024 Net Capacity Additions
REFINING INDUSTRY
2.1
1.0
1.7
0.5
1.3
-1.0
0.2
-1.4
China
India
Middle East
Other Asia
Other
Japan
N. America
Europe
2012-2018 Net Capacity Additions by Region
1.2
1.1
0.6
1.1
0.8
-0.1
0.9 0.91.0
0.9
0.6
0.4
2019 2020 2021 2022 2023 2024
RefineryThroughput
Refinery Products Demand
2019-2024 Additional Refinery Throughput vs. Demand
Expectations until 2024:
• ~78% of net capacity additions to come from Asia & Middle East
• Global utilization rate to decline from 82% (2018) to 79% (2024)
• Net capacity and demand in Europe to remain roughly unchanged
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Middle Distillate Cracks ($/bbl)
7
7.2
10.0
10.4
11.5
12.1 12.212.6
13.614.3
13.7 13.6
15.9
14.1
15.5
19.5
15.014.9
16.2
15.0
0
5
10
15
20
Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec
2016 2017 2018 2019
6.6
9.19.5
11.411.9
14.413.7
14.413.9
13.2 13.3
14.4
12.5
14.3
18.1
15.214.4
13.813.2
0
5
10
15
20
Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec
Diesel Jet Fuel
REFINING INDUSTRY
Source : Platts
As of March 29th.
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18.6
11.913.5
9.710.210.6
12.0 12.1
13.0 13.1 13.4
14.4
9.6
5.55.0
3.51.7
2.9
9.0
0
5
10
15
20
Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec
2016 2017 2018 2019
Gasoline and High Sulphur Fuel Oil Cracks ($/bbl)
8
-12.5
-10.2
-8.7
-12.2
-13.2
-11.9
-12.7
-15.2
-13.0
-9.1
-8.3 -8.5
-13.2
-10.9
-3.7
-6.8
-7.0
-5.0-5.5
-20
-15
-10
-5
0
Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec
Gasoline High Sulphur Fuel Oil
REFINING INDUSTRY
Source : Platts
As of March 29th.
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Crude Price Differentials ($/bbl)
Heavy Crude differentials narrowed in Q4 with Iran sanctions and OPEC+ cut decision.
Heavy Crude Price Differentials
-10
-8
-6
-4
-2
0
15
Q1
15
Q2
15
Q3
15
Q4
16
Q1
16
Q2
16
Q3
16
Q4
17
Q1
17
Q2
17
Q3
17
Q4
18
Q1
18
Q2
18
Q3
18
Q4
Iran Heavy Kirkuk Kuwait Basra Heavy Arab Heavy Ural
Brent
Source : Platts
As of february 15th.
Opec Cut
DecisionOpec Cut
Decision
Iran
Sanctions
REFINING INDUSTRY9
TURKISH
MARKET
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Turkish Consumption 2015-2017 (Million tons)
11
Diesel
-3.9%
Jet Fuel
0.49
0.58
0.60
0 0 0 0 1 1
2017
2016
2015
Fuel Oil*Gasoline
+6.5% -3.5%
24.17
22.31
20.56
0 4 7 11 14 18 21 25
2017
2016
2015
+8.5%
+8.3% +2.7%
+3.1% -15.7%
REFINING INDUSTRY
2.30
2.23
2.10
2017
2016
2015
4.52
4.40
4.58
2017
2016
2015
*Bunker excluded.
Source: EMRA
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Turkish Market, 2018 (Million tons)
12REFINING INDUSTRY
• Tüpraş is well positioned in a growing, short market.
• Diesel and jet fuel consumption in Turkey grew in 2018 with infrastructure projects and aviation growth.
*Bunker excluded.
Source: EMRA
4.99
4.52
4 5 5
2018
2017
Diesel
+10,5%
Jet Fuel
0.39
0.49
0 0 0 0 0 0 0
2018
2017
Fuel Oil*
2.34
2.30
2018
2017
Gasoline
+3,5%
+1,8% -20,1%
25.01
24.17
6 9 12 14 17 20 23
2018
2017
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Turkey’s Import / Export Balance (Net) (Million Tons)
13
-3.1
2.4
-12.0
1.0
0.0
-3.2
2.4
-13.6
1.4
-0.4
-16
-12
-8
-4
0
4
LPG Gasoline Diesel Fuel Oil Jet
2013 2014 2015 2016 2017 2018
Import
Export
REFINING INDUSTRY
Source: EMRA
COMPANY
OVERVIEW
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16%
84%
Tüpraş Shareholder Structure
15
Energy Investments Inc. (SPV)
Free Float
*Distribution of Domestic/
Foreign Ownership of Tüpraş
Shares
*As of December 31st, 2018.
Foreign
Ownership
Domestic
Ownership
COMPANY OVERVIEW
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Tüpraş Refining Assets & Distribution Network
16
Turkey Storage
Capacity
Tüpraş : 50%
Opet : 7%
Other Companies : 43%
İzmit
• 11.0 MT Capacity
• NC: 14.5
• Storage Capacity: 2.99 mn m3
İzmir
• 11.0 MT Capacity
• NC: 7.66
• Storage Capacity:2.51 mn m3
• Base oil 400 k tons
Kırıkkale
• 5.0 MT Capacity
• NC: 6.32
• Storage Capacity: 1.27 mn m3
Batman
• 1.1 MT Capacity
• NC: 1.83
• Storage Capacity:0.27 mn m3
Total Capacity : 28.1 mn ton
Nelson Complexity : 9.5
Tüpraş Storage Cap. : 7.0 mn m3
OPET Storage Cap. : 1.0 mn m3
COMPANY OVERVIEW
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Nelson Complexity of Refining Companies
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Tüpraş Subsidiaries
3 Crude Oil Tanker: 479,765 DWT
1 Crude Oil - Product Tanker: 51,532 DWT
7 Product Tanker: 90,534 DWT“ 1,615 stations as of 2018
Market share: 17.7% in white products; 36.1% in black products
OPET, Distribution, Tüpraş Share: 40%
Körfez Ulaştırma, Railway Transport, Tüpraş Share: 100%
~7% share in Turkish rail freight market
Operates with 491 cistern wagons and 5 diesel locomotives.
Ordered 5 locomotives to be delivered for Q2-2019.
DİTAŞ, Marine Transport, Tüpraş Share: 79.98%
๏ We have opened a trading office in London to:
๏ Trading office will be an important step in Tüpraş’s integration to global energy market.
Closely monitor
international market
opportunities,
Support import and
export operations,
Create additional value
from supply chain and sales
activities.
Tüpraş Trading UK, Trading, Tüpraş Share: 100%*
* Tüpraş Trading UK is a direct branch of Tüpraş18
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Crude Suppliers of Tüpraş (Million Tons)
20
6 610
2 2 33 3 1 0
12 13 1310 10 10
2
1715
1114 14
7
14
65 6763
7176
7981
0
10
20
30
40
50
60
70
80
90
2012 2013 2014 2015 2016 2017 2018
Africa America Europe CIS Middle East
In 2018, Tüpraş purchased 20 different types of crude oil from 12 countries, with gravities ranging between
19-47 API.
OPERATIONS
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LPG4%
Gasoline20%
Naphtha1%
Jet17%
ULSD33%
Other2%
Coke3%
Fuel Oil7%
Bitumen12%
Product Yields of Tüpraş (Million Tons, %)
21
White Products %76.27
Production 28.9 mn tons
API 30.3
White Products %77.39
Production 25.7 mn tons
API 30.99
2017
Light Distil.25.0%
Mid. Distil.50.3%
Other 2.1%
Black Prod.22.6%
LPG4%
Gasoline20%
Naphtha1%
Jet19%
ULSD33%
Other2%
Coke3%
Fuel Oil7%
Bitumen12%
Light Distil.24.6%
Mid. Distil.52.2%
Other 1.7%
Black Prod.21.5%
2018
OPERATIONS
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Capacity Utilization and Quarterly Production Volume (Million Tons, %)
99% Capacity Utilization in Q4 2018 (95% in Q4 2017), 96% for the whole year.
*Nameplate capacity calculated by standard 330 days of operations.
Quarterly Production (Million Tons)
4.5 4.6
5.4 5.5
5.6
6.9
7.37.4
6.66.7
7.27.4
7.1
7.87.7
6.3
5.2
6.2
7.7
6.6
4
5
6
7
8
9
Q1 Q2 Q3 Q4
2014 2015 2016 2017 2018
Capacity Utilization* (%)
71.3
98.1 100.9 101.4
90.0
67.3
85.4
107.2
89.03.6
4.4 4.4 6.7
5.0
10.7
7.1
7.3
9.0
75
103 105 108
95
78
93
115
99
2014 2015 2016 2017 Q42017
Q12018
Q22018
Q32018
Q42018
Crude Oil Semi Product Feedstock
12M 2018 CUR: 96%
OPERATIONS22
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Sales (Million Tons)
23
Tüpraş generated 29.8 million tons of total sales 2018. Jet fuel and diesel sales increased by 7.4% and
5.3% compared to 2017, respectively.
16.9
22.224.8 25.7 25.6
5.3
6.55.5 5.8 4.2
22.2
28.730.3 31.5 29.8
-1
5.25
11.5
17.75
24
30.25
2014 2015 2016 2017 2018
Domestic Sales
Export
6.79.2 10.8 11.3 11.9
3.9
4.84.5 4.5 4.9
1.8
2.02.2 2.2 2.2
1.9
2.93.4 3.5 2.9
14.3
18.920.9 21.6 21.9
2014 2015 2016 2017 2018
Diesel
Jet Fuel
Gasoline
Bitumen
Total Sales
Domestic Sales of
Key Products
OPERATIONS
Dist.; 50%
THY Opet; 10%
Jet; 6%
LPG; 3%
Other; 6%
Export; 14%
Bitumen; 10% Military;
1%
POAŞ27%
OPET30%
SHELL17%
BP13%
TP1%
AKPET4%
OTHER8%
Customer
Groups
Sales to
Distributors
29.8 mn tonnes
14.8 mn tonnes
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-2
0
2
4
6
8
10
12
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18
Month
Annual
Margin Environment ($/bbl)
25
Tüpraş’ 9.3 $/bbl Net Refining Margin in 2018 was higher than 4.7 $/bbl Med Complex margin.
Premium to the benchmark Mediterranean
peers’ refining margin due to:
• Refined products deficit characteristic to
the Turkish market
• Access to cheaper sources of crude oil
• Ability to use heavier and sour crudes
• Proximity to major suppliers
• Reduces transport costs
• Implemented cost reduction measures
• Energy efficiency programs
• Capacity to produce higher value added range
of refined products
• Direct pipeline connections with domestic clients
• High export capability
Med Complex
4.56
5.30
3.97 4.83
1.67 1.95
4.21
1.17
2.89
1.95
5.54
9.610.6
11.911.2
12.9
14.7
2.53.2
6.56.0
8.1
9.3
1.7 2.0
4.84.0
5.34.6
0
2
4
6
8
10
12
14
16
2013 2014 2015 2016 2017 2018
Tüpraş Gross Margin Tüpraş Net Margin Mediterranean
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Income Statement (Million TL)
26
Strong EBITDA generation continued in Q4 2018, Net Income supported further with FX and tax
revaluation gains.
Million TL Q4 2018 Q4 2017 % 12M 2018 12M 2017 %
Net Sales 24,803 14,604 70 88,552 53,948 64
COGS -22,778 -13,204 73 -79,328 -47,734 66
Gross Profit 2,025 1,400 45 9,224 6,214 48
Operating Expenses -438 -357 23 -1,307 -1,150 14
Income/Loss from other operations 1,591 -265 -699 -2,181 -206 958
Operating Profit 3,178 778 308 5,736 4,857 18
Income/Loss from equity investment 72 61 18 257 234 9
Operating Profit Before Fin. Income/Loss 3,249 839 287 5,993 5,092 18
Financial Income /Expense -1,600 -85 1.786 -2,268 -618 267
Profit Before Tax 1,649 754 119 3,724 4,474 -17
Net Profit (including minority interest) 1,789 501 257 3,761 3,841 -2
EBITDA (*) 1,887 1,237 53 8,908 5,882 51
Inventory Gain/Loss -212 341 -162 2,741 612 348
EBITDA CCS (*) 2,100 896 134 6,167 5,270 17
* On CMB reports, EBIT includes extra items such as FX impacts of trade receivables and payables. In our EBITDA calculation, FX related items are excluded from EBIT as customary in international practices.
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Financial Highlights (Million TL)
27
Current Ratio & Net Debt/ EBITDA
EBITDA
Tüpraş achieved 1,887 MTL EBITDA in Q4 2018 with high capacity utilization and inventory gain.
Net Income
Return of Average Equity
24% 26%35%
22%
42%37%
0
0
0
0
0
1
1
2013 2014 2015 2016 2017 2018
130 513 278 83 876 387138
361 713
335
1,464
1,035819
379751
586
1,000
551
112217
822
809
501
1,789
1,1991,470
2,564
1,813
3,841 3,761
0
1,000
2,000
3,000
4,000
5,000
2013 2014 2015 2016 2017 2018
*Rolling EBITDA is calculated with dollar terms.
124
-77
367 335 1,575 1,033283-66
1,080 688
1,542 2,210
878489
1,144
867
1,528
3,778
1,066
340
1,2081,505
1,237
1,887
2,351
685
3,7993,396
5,882
8,908
0
2,500
5,000
7,500
10,000
2013 2014 2015 2016 2017 2018
4th Q
3rd Q
2nd Q
1st Q
1.22
5.63
1.81 1.79
1.061.34
0.940.82
0.991.08
1.15
1.31
0.0
0.4
0.7
1.1
1.4
0.00.61.21.82.43.03.64.24.85.46.0
2013 2014 2015 2016 2017 2018
Net Debt/EBITDA
Current Ratio
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7 6.95.7
4.5 4.6 4.84 3.5
4.95.9
7.1
9.5
7.7
9.68.4
10.5
12.6
16.7
7.7
0
5
9
14
18
Jun
-14
Se
p-1
4
Dec-1
4
Ma
r-15
Jun
-15
Se
p-1
5
Dec-1
5
Ma
r-16
Jun
-16
Se
p-1
6
Dec-1
6
Ma
r-17
Jun
-17
Se
p-1
7
Dec-1
7
Ma
r-18
Jun
-18
Se
p-1
8
Dec-1
8
Balance Sheet Analysis (Billion TL)
28
1.1 1.2
0.2 0.5
1.8
3.32.6
2.02.6
2.2
3.24.0 4.0
5.65.1
5.7
6.9
9.4
5.5
0.0
2.0
4.0
6.0
8.0
10.0
Jun
-14
Se
p-1
4
De
c-1
4
Ma
r-1
5
Jun
-15
Se
p-1
5
De
c-1
5
Ma
r-1
6
Jun
-16
Se
p-1
6
De
c-1
6
Ma
r-1
7
Jun
-17
Se
p-1
7
De
c-1
7
Ma
r-1
8
Jun
-18
Se
p-1
8
De
c-1
8
0.6 0.7 0.7 1.0 1.3 1.8 1.7 2.9 3.5 3.3 2.1 2.3
7.4 7.59.8 9.7
11.214.2 13.8
6.2 6.6 7.0 8.6 8.3 9.1 8.18.3 8.1 9.3
10.2 10.7
4.0 4.6
5.3 6.53.6
5.4 4.1
6.8 7.3 7.79.7 9.7
11.09.9
11.2 11.612.6 12.4 13.0
11.4 12.2
15.116.1
14.8
19.617.9
-2.9
0.0
2.9
5.7
8.6
11.4
14.3
17.1
20.0
Jun-1
4
Sep-1
4
Dec-1
4
Ma
r-15
Jun-1
5
Sep-1
5
Dec-1
5
Ma
r-16
Jun-1
6
Sep-1
6
Dec-1
6
Ma
r-17
Jun-1
7
Sep-1
7
Dec-1
7
Ma
r-18
Jun-1
8
Sep-1
8
Dec-1
8
ST Loans LT Loans
Strict financial management policies improved current ratio to 1.3x.
Cash & Cash Equivalents Receivables
PayablesFinancial Loans
2.83.7 3.9
3.22.8 2.5
3.0
4.7 4.6
7.3
6.1
7.4
5.5
7.8
8.8
6.85.9
10.0
6.0
0.0
2.4
4.8
7.2
9.6
12.0
Jun
-14
Se
p-1
4
De
c-1
4
Ma
r-1
5
Jun
-15
Se
p-1
5
De
c-1
5
Ma
r-1
6
Jun
-16
Se
p-1
6
De
c-1
6
Ma
r-1
7
Jun
-17
Se
p-1
7
De
c-1
7
Ma
r-1
8
Jun
-18
Se
p-1
8
De
c-1
8
KEY FINANCIALS
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2018 Profit Before Tax Bridge
29
2018 PBT was lower mainly due to Crude Oil Differential and Crack Margin impacts. With the help of FX
based pricing, FX losses incurred from payables were recovered with Inventory Gains.
Million TL
KEY FINANCIALS
4.474
3.724
2.129
164
311
660
293
1.779
2017 Inventory Gain Crack Margin Crude OilDifferential
Production FX Other 2018
,
,
,
,
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Dividend (TL)
30
1.73
3.24 2.94
4.96
5.83
4.78
0.00
10.18
7.16
15.2214.83
2.31 2.502.98
3.93 3.85
1.580.00
6.50 6.20
13.60
15.15
-500
500
1500
2500
3500
4500
0
2
4
6
8
10
12
14
16
18
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Earings per Share Gross Dividend Total Payout
One of the highest dividend
yield in BIST
2012/2013 EPS includes the tax incentive.
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Investments (Million $)
31
• Revamp of Crude Unit
• FCC Modernization
• New Sulphur Units
• Energy Saving Projects
• Optimization of conversion units
• 9.5 Nelson complexity
• High white product yield
• Process more heavier and sour crudes
• Run all refineries with 100% capacity utilization
• 6 bn USD investments since privatization
Ongoing Projects
Avg. 247 mn$
Avg. 943 mn$
Avg. 278 mn$
274
355400
186177
628
974
1.213
959
344
213185
138
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
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2018 Results
32
Refining Margins ($/bbl)
9.3
4.6
0
2
4
6
8
10
Tüpraş Net Margin Med Margin
99
104
113
96
2015
2016
2017
2018
Axis Title
Capacity Utilisation (%)
25.7
29.8
5 9 13 17 21 25 29 33
Production
Sales
2018 Operational (mn ton)
Capex (mn $)
213
185
138
2016
2017
2018
• 96% Total Capacity
Utilization in 2018
• 29.8 mn tons of sales and
25.7 mn tons of production
in 2018
• 138 mn $ CAPEX in 2018
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Tüpraş Balance Sheet
33
Million TL 31/12/2018 31/12/2017 Difference % Difference
Current Assets 20,962 20,366 596 3
Cash & C. Equivalents 5,983 8,802 -2,819 -32
Receivables 5,429 5,027 402 8
Derivatives 176 347 -171 -49
Inventories 6,765 5,291 1,474 28
Pre-paid expenses 109 62 46 74
Other Current Assets 2,502 837 1,665 199
Long Term Assets 19,074 17,797 1,277 7
Financial Assets & Subsidiaries 1,271 1,148 123 11
Fixed Assets 12,397 12,369 29 0
Derivatives 168 101 68 67
Pre-paid expenses 378 99 279 281
Deferred Tax 3,566 3,068 498 16
Other Long Term Assets 1,293 1,013 280 28
Total Assets 40,036 38,163 1,873 5
Short Term Liabilities 15,950 17,676 -1,726 -10
Financial Loans 4,113 5,274 -1,160 -22
Payables 7,663 8,370 -707 -8
Derivatives 236 177 59 33
Deferred Incomes 5 20 -16 -76
Provisions 80 90 -10 -11
Other ST Liabilities 3,852 3,745 107 3
Long Term Liabilities 24,086 20,487 3,599 18
Financial Loans 13,836 9,777 4,059 42
Payables & Provisions 257 224 34 15
Derivatives 42 3 39 1,156
Other LT Liabilities 5 5 -1 -13
Equity 9,825 10,373 -549 -5
Minority Interests 121 104 17 16
Total Liabilities 40,036 38,163 1,873 5
KEY FINANCIALS
Investor Presentation
www.tupras.com.tr
Creating Competitive & Sustainable Shareholder Value
34
71%
29%
Buy Hold
Foreign Currency
Long Term
Tüpraş BB+(Neg.) Ba2 (Negative)
Türkiye BB (Neg.) Ba3 (Negative) B+ (Stable)
Koç Holding Ba2 (Negative) BB- (Stable)
Analyst Recommendations
92.9
99.5
94.0
95.5
94.8
0 25 50 75 100
Board
Stakeholders
Transparency
Shareholders
Overall
Tüpraş has one of the highest Corporate Governance Ratings.
KEY FINANCIALS
Investor Presentation
www.tupras.com.tr
Financial Policy
35
Financial Discipline: Risk management policies focusing on areas such as leverage, liquidity, counterparty risk, commodity,
interest rate and currency exposure.
KEY FINANCIALS
Leverage
& Liquidity• Net financial debt/EBITDA
• Net financial debt/Equity
Proactive in liquidity risk management & targets/limits for financial ratios:
• Current ratio
• Share of long term debt
Counterparty
Risk Policy
• Credit rating assessment and strong capital base.
• Cap on the maximum deposit allocated to a single bank.
• Threshold for deposits subject to banks shareholders’ equity.
Deposit is kept within bank-based limits
Interest
Rate & Fx
• The fixed/floating profile of financial debt.
• Proactive management of FX risk with derivative instruments
• Zero FX exposure target.
Commodity
Hedging
Policy
• Operational hedge: Optimum stock policy & forward pricing mechanism.
• Financial hedge: Expected inventory exposure for the year end is hedged by using derivatives.
• Hedging ratio increasing throughout the year.
Inventory Hedging Policy:
• Financial hedge: Crack margin (gasoline, diesel, jet fuel, fuel oil) risk mitigation by using derivatives.
• Statistical / mechanical approach: Historical average prices + standard deviations.
• Hedge ratio between %0-%50 with up to 1 year hedge tenor.
Crack Margin Hedging Policy:
Investor Presentation
www.tupras.com.tr
FX Exposure Management (31 December 2018)
36
* Cash flow hedge accounting : 874 mn $
Tüpraş continues to employ strict FX policies to
mitigate currency risks stemming from volatility.
• A significant portion of the Group's crude oil and refined
product purchases are denominated in US Dollars. In
addition, the Group finances its capital expenditures
mostly through borrowings denominated in US Dollars.
• Natural Hedge: The Group is able to mitigate some of the
impact of volatility in exchange rates through natural
hedges: crude oil and refined product inventories are US
Dollar denominated assets.
• Cash flow Hedge: RUP Facility financing loans
designated as hedging instruments of highly probable
export revenues.
• As a general Koç Holding financial policy, Group
companies are allowed to keep foreign exchange
positions within certain limits.
KEY FINANCIALS
Consolidated
Assets
Consolidated
Liabilities
Cash
955
Receivables &
other assets
136
Stock
1,201
Forward & CFH
1,500
Payables
1,189
ST Financial
598• RUP : 182
• Other: 416
LT Financial
1,994• RUP : 780
• Eurobond 700• Other Loans : 514
+11 mn $
Million $
Investor Presentation
www.tupras.com.tr
Tüpraş: Growing, Resilient, Profitable
37
Tüpraş is a compelling investment case with strong sales growth, resilient and profitable operational
and financial structure.
• Operating in a diesel short market
(supplies 45% of the market) , along with
strong jet growth.
• Well poised to capture future
opportunities including IMO 2020 with its
output complexity.
• Continuous investment in logistics,
infrastructure and trading capabilities.
• Strong balance sheet with no
immediate rollover requirement.
• Secure receivables portfolio, tight
working capital management.
• Pricing mechanism in place to address
commodity and FX fluctuations.
• Benefits from full system optimization
given high complexity, procurement and
logistics flexibility.
• Prudent hedging practices to ensure
stable earnings Outlook.
• High dividend pay-out ratio annually.
Growing Resilient Profitable
KEY FINANCIALS
OUTLOOK
Investor Presentation
www.tupras.com.tr
2019 Refinery Maintenance Schedule
39
Unit QuarterDuration
(weeks) Reason
İzmirPlt 100 Crude Oil Q4 2-3 Periodic Maintenance
Plt 9200 CCR Q1 2-3 Periodic Maintenance
İzmit
RUP Q1&Q2 12-13 Detailed Maintenance
Plt 2 Crude Oil & Vacuum Unit Q4 7-8 Periodic Maintenance
Plt 7 FCC Q4 5-6 Periodic Maintenance
Kırıkkale - - - -
Batman Plt 1100 Crude Oil & Vacuum Unit Q1&Q2 *3-4 Periodic Maintenance
* Total duration allocated among quarters
RUP Maintenance
Preparation and
planning phase: 2018
Maintenance Start: Feb 26
• Catalyst changes
• Checks on distillation columns, heat
exchangers and furnaces
• Detailed planned maintenance
Completion:
planned as late May 2019
OUTLOOK
Investor Presentation
www.tupras.com.tr
2019 Expectations
40
Med Complex margin expectation in 2019 is 3.75 – 4.25 $/bbl.
Net Tüpraş refinery margin expectation in 2019 is 6.0 – 7.0 $/bbl.
• Capacity utilization target is 95-100%.
• Production: ~28 million tons
• Total sales: ~30 million tons
Refining investments expectation is 250 Million $.
Med Complex
Margin
Tüpraş
Net Margin
Operations
Investment
OUTLOOK
Investor Presentation
www.tupras.com.tr
Competition # 1 (SOCAR-STAR Refinery)
• Goldman Sachs has acquired a 13% stake in SOCAR Turkey for $1.3 billion.
• Goldman Sachs has the right to resell 10% of its stakes to Socar, and the remaining 3% to
‘Sermaye Investments Limited’ owned by SOCAR within 6 years at the same price.
STAR Refinery (Total Cap. 10 mn ton)
2019
mn ton
Production
Turkish
DemandBalance
Tüpraş Star Total
LPG 1.1 0.3 1.4 4.1 -2.7
Petchem Feeds 0.2 2.6 2.8
Gasoline 6.1 6.1 2.4 3.7
Jet Fuel 5.2 1.6 6.8 5.2 1.6
Diesel 10.7 4.5 15.2 26.5 -11.3
Coke 0.8 0.7 1.5 4.6 -3.1
Fuel Oil 1.8 1.8 1.3 0.5
Bitumen 3.1 3.1 3.1
Star Refinery Production Numbers (k ton)
Fuels
Petrochemical
Feedstock
Diesel 4,500
Jet Fuel 1,600
Sulphur 158
Petrocoke 698
LPG 260
Naptha 1,600
Mixed xylene 460
Reformate 524
• 3.3 billion $ credit agreement. First
4 years grace period total 15-18
years term.
• Project finance is supplied to company
(1.5 Billion $).
• It is expected to be operational as of
2019.
Credit : 3.3 Billion $
Equity : 2.4 Billion $
Total
Investment: 5.7 Billion $
OUTLOOK 41
Investor Presentation
www.tupras.com.tr
Competition # 2 (Regional Competition)
42
• Tüpraş is competing with 71 refineries in the Mediterranean and Black Sea markets.
• Mediterranean regional product balance is also affected from Middle East, North West Europe and Asia.
Mediterranean Black Sea
54 Refineries
7.8 mn bpd
17 Refineries
1.8 mn bpd
OUTLOOK
Investor Presentation
www.tupras.com.tr
0
3
6
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Compliant HSFO Non-compliant HSFO ULSFO MGO LNG
Marine Bunker Specification Changes and Its Effects
43
IMO 2020: the sulphur cap for marine bunkers is reduced from 3.5% to 0.5% (5000ppm)
- effective from 1 Jan 2020.
• Marine Gasoil (Diesel)
• Ultra Low Sulphur Fuel Oil (ULSFO)
• Scrubbers
• LNG
Compliance can be met with:
OUTLOOK
HSFO Replacement Expected in 2020, million b/d Gradual Change in Marine Bunker Fuels, thousand b/d
Expectations 2020 and beyond:
• MGO (Diesel) is expected to be the no.1 choice in 2020
• ULSFO/blend becomes more widespread through the years as
availability & compatibility issues get resolved
• Compliant HSFO use grows as scrubber numbers rise from
~2,000 after Jan 1st, 2020 (some ports started bans on open-loop scrubbers
thus this projection might change)
3.5
0.6
0.5
1.1
1.3
Current
HSFO
HSFO
Scrubbers
HSFO
Non-complianceULSFO MGO
Source : Market Reports
Appendix
Investor Presentation
www.tupras.com.tr
RUP feedstock and production (000 Tons)
45
Natural Gas 246
Vacuum Resid
1,214
Atm. Resid
3,036
Total Feed 4,496
Total Production
4,250
Raw Materials Products
APPENDİX
Investor Presentation
www.tupras.com.tr
Tüpraş Production Flow and Yield Breakdown
46
• Increased
conversion capacity
• Strong
integration among
refineries
APPENDİX
Investor Presentation
www.tupras.com.tr
European Pump Price Comparison
47
Not: Prices valid on 11 February 2019.
Gasoline (Krş / Lt)
211
324
210 233292
236294
242
62 65 4764 61
330
409 516 529 528554 595 596
604
733
791 809 820854
889 898
0
100
200
300
400
500
600
700
800
900
1,000
0
250
500
750
1000
TR Spa. Ger UK Eu19 Fra. Gre. Ita.
Pump No Tax Distr. Marg. Tax
Diesel 10 (Krş / Lt)
266
360
263347
395
273 286 275
63 78 69 55 63
272
349 398434
406 504 524 540601
709739
782 801847 865 878
0
100
200
300
400
500
600
700
800
900
1,000
0
100
200
300
400
500
600
700
800
900
1000
TR Spa. Ger. EU19 Gre. Fra. Ita. UK
APPENDİX
Investor Presentation
www.tupras.com.tr
Tüpraş - ESG
48ESG
92.9
99.5
94.0
95.5
94.8
0 25 50 75 100
Board
Stakeholders
Transparency
Shareholders
Overall
Foreign
Currency
Long Term
Tüpraş BB+ Ba2
Türkiye BB Ba3 B+
Koç
HoldingBa2 BB-
One of the highest Corporate
Governance Ratings3
Amount of water recycled:
20.8 mn m3
Water recycle ratio:
69.5%
Amount of solid waste recycled:
28.9 ktons
Solid waste recycle ratio:
88.6%
Energy cost saved:
36 million $
Greenhouse Gas Emission Reduced:
244 ktons CO2e
Environmental Training Provided:
10,391 person-hrs
Gender Equality
HeForShe (Global cooperation with UN Women
and Fenerbahçe Sports Club)
I Support Social Gender Equality for My
Country- (collaboration with Koç Holding)
Father Support Program in Batman Refinery
Education
Operational sponsorship for TEGV’s1 «Firefly
Mobile Learning Units Project» (262,627
students in 10 years)
Scholarship fund for TEV2 : «Our Energy For
Equality Never Ends»
Culture & Sports
Young Musicians on World Stages
Support for the Batman Disabled Sports Club
Association and Batman Tüpraşspor Football
Club
1 Education Volunteers Foundation of Turkey2 Turkish Education Foundation
In 2018
Environmental Responsibility Social Support Governance Excellence
3 Provided by CMB compliant SAHA Corporate Governance and Rating
Services Inc. (October 2018)
Investor Presentation
www.tupras.com.tr
Koç Holding
49
Turkey’s Leading Investment Holding Company
Turkey’s largest industrial and services group in terms
of revenues, exports, employees, taxes paid
and market capitalization.
Leading positions with clear competitive advantages in
sectors with long-term growth potential such as energy,
automotive, consumer durables and finance.
Pioneer in its Sectors
• The only Turkish company in Fortuna 5001.
• 20% CAGR in consolidated profit2 the last five years.
Notes : Data as of YE18, 2018 GDP reflects the projection of Turkish government’s New Economic Program.
(1) 2018 Report
(2) In TL terms between 2014-18
Turkey’s Leading Investment Holding Company
APPENDİX
Combined Revenues / GDP 8%
Total Exports / Turkey’s Exports 10%
Total MCap on Borsa Istanbul 16%