3Q/14 ANALYST MEETING PRESENTATIONinvestor.pttgcgroup.com/misc/presentation/20141114... ·...
Transcript of 3Q/14 ANALYST MEETING PRESENTATIONinvestor.pttgcgroup.com/misc/presentation/20141114... ·...
3Q/14 ANALYST MEETING PRESENTATION
St. Regis Hotel, Bangkok November 14, 2014
Supattanapong Punmeechaow, President & CEO
Patiparn Sukorndhaman, EVP-Finance and Accounting
Sriwan Eamrungroj, EVP -Marketing, Commercial and Supply
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
1. MISSION TO BE CONTINUED
2. 3Q/14 OPERATING RESULTS
3. MARKET OUTLOOK
AGENDA
4
1. MISSION TO BE CONTINUED
2. 3Q/14 OPERATING RESULTS
3. MARKET OUTLOOK
MISSION TO BE CONTINUED Delivering a Sustainable Growth and balancing all Stakeholders ‘ interests
* Effective October 1, 2014
Supattanapong Punmeechaow, President & CEO
PTTGC’s Top Management Team’s Commitment
5
Vision To Be a Leading Chemical Company For Better Living
Mission
SUSTAINABLE GROWTH WITH WORLD CLASS SUCCESS
6
ENVIRONMENT
Asia Responsible Entrepreneurship Awards
A Member of United Nations Global Compact at Advanced Level [UNGC]
ASEAN CG Scorecard 1 of 17 Thai Corporates
Award by CDP in Climate Disclosure Leader for 2 Consecutive years & ranked 1 of 7 leading companies
Best Public Company of the Year 2014
Forbes Global 2000 Rank #687 in Global 2000 Rank #14 in Diversified Chemicals
American Chemical Society Global Top 50 Rank #39
2nd Consecutive years
ICIS TOP 100 Awards Rank # 22
Thailand’s Top Corporate Brand Values 2014
Carbon Footprint for Product Certification from Thailand Greenhouse Gas Organization
The first company in Thailand who received the Carbon Neutral certification
Board of the year Awards 2013 for Distinctive Practices
Excellence in SHE Conditions for 16 Consecutives
AMCHAM CSR Excellence Recognition 2013 Silver level in Creative partnership
HIGH STANDARD OPERATIONS & WORK PROCESS
7
Eneg
y Ef
fici
ency
1st
Qu
arti
le
2nd Q
uar
tile
3rd Q
uar
tile
4th Q
uar
tile
4th Quartile 3rd Quartile 2nd Quartile 1st Quartile
Reliability
Refinery
Aromatics
Olefins
Polymers : HDPE, Polymers : LDPE Polymers : LLDPE
EO-Based Performance
YTD Plant Operation(1) as of Sep. 14 Management System
Note: 1) Internal Calculation base on Solomon and Phillip Townsend Methodology
Energy Efficiency and Reliability drop from its normal standard due to the unstable feedstock supply from PTT’s GSP #5 technical problem from Lightning Strike since Aug. 2013 and I4-1 Shutdown in Feb. 2014. Layout the Infrastructure with Single Enterprise
Resource Planning (ERP) • Integrated End to End Work Process and will Support
Future Business Expansion
Real-time Dashboard
Real-time Performance
Strategic Performance Management
ON GOING STRATEGIC DIRECTION
8
GREEN
CORE UPLIFT PROJECTS
1-STEP ADJACENCIES
Marketing Excellence
Debottlenecking
Operational Excellence
Synergy Excellence
NEW GEOGRAPHIES NEW PRODUCTS
ASEAN: Pertamina
CHINA: Sinochem
US: Shale Gas
System House
Compounding
PC, PU, Nylon 6-6
Oleochemical
PLA
Succinic Acid
PLA/PBS Compound
EXCELLENCE
EXECUTION EBITDA Uplift
15-30% (2012-2017)
1st Quartile
Performance
ROIC > 14%
Listed in Globally
Sustainability Index
CORE UPLIFTS: PROJECTS UPDATE
9
Pure H2 via New PSA
PTTPE Cracker Debottlenecking
12% Olefins Increase
New LLDPE +300 KTA
SYNERGY
TO BE FINALIZED
Phenol 2 Project
Target COD: 3Q/15
TOCGC Plant Improvement Project
Target COD: 3Q/15
Aromatics 2 Debottlenecking
Project (PX Expansion)
Target COD: 4Q/15
EOE +90 KTA
PX +115 KTA BZ + 35 KTA OX + 20 KTA
Phenol +250 KTA Acetone +155 KTA
DEBOTTLENECKING & EXPANSION
CAPACITY CAPEX (M.USD)
348
94.2
128.8
UNDER CONSTRUCTION PROJECTS
CONSTRUCTION PROGRESS
77%
53%
43%
LLDPE Expansion
Off Gas upgrading at Olefins
Delay to 1Q/15 from Target: 4Q/14
CONSTRUCTION PROGRESS
91%
To Start Capturing Benefits in 2015
BV Project
Butadiene 75 KTA Butene-1 25 KTA
COMPLETED PROJECTS
348
272
DEBOTTLENECKING & EXPANSION
CAPACITY CAPEX (M.USD)
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
CORE UPLIFTS: BENEFITS UPDATE
(MUSD)
10
Excellence Programs (MUSD)
2014 Target
9M/14 Actual
Est. 2014
Synergy Excellence
83 32 46 -Heavy Gas (Offgas) -Pure H2 via PSA -C3/C4 Stream -3 Streams (Heavy Gasoline, LCB, CB) -Heavy Aromatics
Marketing Excellence
80 96 127 -Customer Portfolio Management
-Product Development -Pricing Excellence
Operational Excellence
31 28 37 -Total 47 projects in 2014 -34 Energy Saving Projects -7 Plant Reliability Projects -6 Cost Reduction/Optimization Projects
Total 194 156 210
1-STEP ADJACENCIES: NEW GEOGRAPHIES Pride of Indonesia
11
Existing Balongan Refinery
(125 KBD)
Potential Partners
New World Scale
Naphtha Based Cracker Expansion
Refinery
New Downstream
Petrochemical
2014
FID
• Continues to Increase Polymer Sales in Indonesia via ITT according to targets
2015 2016-2019 2020
Construction COD New Cracker + Downstream Petrochemical
Basic Engineering Design
Expected Project Timeline
Customers
• PTTGC will mainly focus on Petrochemical while PTT joined bidding for Refineries Expansion
LPG, (938 KTA) Naphtha (1,796 KTA)
Pertamina Refinery Unit VI Balongan
1-STEP ADJACENCIES: NEW PRODUCTS Completing the Jigsaw of PU Chain
12
• Shortlisting of Technology and Potential Partner
• Under Feasibility Studies • To Finalize Potential Partner by 2015
• Overall Progress at 26% as of Sep 14
• TDI conversion to world-scale HDI monomer
• Global technology center • New HDI derivatives plant in Thailand
• Capacity: 12 KTA • Investment: EUR 40 million • Expected IRR > 15% • Target Commissioning by 3Q/15
Vencorex Transformation
PO-Polyols & System House
System House
Formulation & End-use
Foam (67%)
CASE (33%)
Broad and diverse end-use applications
Polyols -Polyether
Polyols
Propylene Oxide (PO)
Isocyanate
TDI
MDI
HDI
PU Building Blocks
Isocyanate is a key building block.
1
2
PU
1
2 Ethylene
Oxide (EO)
MITIGATING THE RISKS Decline of Crude Oil Price
Corporate Risk Management System
Risk Mgmt Process Risk Criteria Risk Audit Monitor & Review
Decline Crude Oil Price
Stress Test
Close Monitoring Reviewing
Commercial and Financial Risk Management
Crude/Products Hedging
Inventory Hedging
FX Hedging
Inventory Mgmt.
Supply Chain Mgmt.
Optimization
Risk Assessment
Operational Excellence
Utility Management
Turnaround Excellence
Synergy Capital Project Mgmt.
Reliability & Asset Integrity
Customer Value /Portfolio Mgmt.
Pricing Excellence
Product Development
Marketing Excellence
Risk Management
13
MITIGATING THE RISKS Energy Reform
Corporate Risk Management System
Risk Mgmt Process Risk Criteria Risk Audit Monitor & Review
LPG (Price Increase from
Energy Reform)
Stress Test
Close Monitoring Reviewing
Increase Public Understanding
Risk Management Risk Assessment
Studies of Feedstock from US Shale Gas
Alternative Feedstock to fulfill Plant Flexibility
Studies of Logistics Facilities
Plant Optimization (Fully Flexible Feedstock Intake)
14
AGENDA
15
1. MISSION TO BE CONTINUED
2. 3Q/14 OPERATING RESULTS
3. MARKET OUTLOOK
BUSINESS ENVIRONMENT AND OPERATIONS RECAP Outperform Olefins & Derivatives Business Beat Declining Crude Oil
Surplus crude and weak demand pressured Dubai crude to decline
from average at 106.1 USD/BBL in 2Q/14 to average 101.5
USD/BBL in 3Q/14. As a result , PTTGC reported Stock Loss & NRV
totaling 2,841 M.THB for the quarter
FX Gain amounting to 381 M.THB, resulting from slight
appreciation in THB against USD from end 2Q/14 at 32.60
THB/USD to end 3Q/14 at 32.52 THB/USD.
HDPE price remained strong with Improving Aromatics
Diesel-Dubai 14.4 USD/BBL -17% YoY -10% QoQ
FO – Dubai -8.4 USD/BBL +21% YoY +21% QoQ
PX-Cond 479 USD/Ton -6% YoY +43% QoQ
BZ-Cond 430 USD/Ton +31% YoY +16% QoQ
HDPE 1,604 USD/Ton +8% YoY +2% QoQ
MEG 1,143 USD/Ton 0% YoY +5% QoQ
Overall utilization rate of major businesses
*Source: BOT Selling Rate
Average Dubai Crude Price
USD/BBL
Average and Closing FX : THB/USD*
3Q/13 2Q/14 3Q/14 9M/13 9M/14
Refinery CDU Utilization (%) 98 103 102 87 102
Aromatics BTX Utilization (%) 91 89 83 89 84
OlefinsUtilization (%) 75 91 94 88 87
Polymers Utilization (%) 88 106 104 95 103
EO Based MEG Utilization (%) 92 99 112 96 92
GreenME Utilization (%) 129 106 121 112 113FA Utilization (%) 139 117 101 128 110
Phenol Phenol Utilization (%) 124 131 132 125 114
109.1
105.5 104.0
116.1
106.4 106.3 107.4 108.2
100.8
106.3 106.8 104.5
106.1
101.5
2012 2013 9M/14 1Q/12 2Q/12 3Q/12 4Q/12 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14
31.08 30.73 31.00 31.29 31.36 30.68 29.80 29.89 31.48 31.73 32.66 32.45 32.10
30.99
31.97
30.97 30.78
29.45
31.27
31.53
32.95 32.58 32.60 32.52
2012 2013 1Q/12 2Q/12 3Q/12 4Q/12 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14
Average FX Closing FX
16
17.9 16.1 19.6 16.8 17.3 17.7 17.8 16.0 14.4
9M/13 9M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14
17.5 15.3 20.3
15.3 17.0 17.3 17.0 14.3 14.5
9M/13 9M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14
REFINERY PERFORMANCE Lower Crude Price in 3Q/14 Contribute to stock loss
ULG
95
- D
B
JET
- D
B
Die
sel
- D
B
FO -
DB
Petroleum Product Spread (USD/BBL)
+ 6% YoY -18% QoQ
-14% YoY + 1% QoQ
-17% YoY -10% QoQ
+21% YoY +21% QoQ
Gross Refinery Margin (USD/BBL)
Total Intake (KBD)
87% 102% 101% 63% 98% 103% 101% 103% 102%
Sales Volume (KBD)
+6% YoY +1% QoQ
CDU U-Rate
+2% YoY -5% QoQ
Note: In 2Q/13, Refinery had Planned Turnaround of 38 days
15.1 14.6 18.4
14.6 12.4
9.2
14.6 16.1 13.2
9M/13 9M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14
(7.3) (9.2) (7.4) (3.7)
(10.7) (10.5) (8.5) (10.7)
(8.4)
9M/13 9M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14
3.56 4.24 4.37 2.38
3.48 3.42 4.48 4.44 3.83
0.73
(0.96) (0.91)
(2.45)
4.21
1.11
(0.69)
0.73
(2.92)
0.77 0.56 0.27
1.23
0.98
0.78 0.33 0.66
0.70
5.06 3.84 3.73
1.16
8.67
5.30 4.12
5.83
1.61
(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
9M/13 9M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14
Market GRM Stock Gain/(Loss) Net NRV
Hedging Gain/(Loss) Accounting GRM
126.8 147.8 146.4
91.8 142.4 149.1 146.5 148.6 148.2
49.7 57.6 57.8
36.0
55.5 69.4
52.5 59.3 61.0
176.6 205.4 204.2
127.8
197.8 218.4
198.9 208.0 209.2
9M/13 9M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14
Crude Condenstate Residue & Others
9M/13 9M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14Market GRM 3.56 4.24 4.37 2.38 3.48 3.42 4.48 4.44 3.83 GRM on CDU 4.40 5.38 5.50 2.73 4.31 4.31 5.52 5.74 4.81 GRM on CRS 2.78 2.81 3.08 2.38 2.90 2.98 2.85 2.76 2.82
17
8% 7% 9% 5% 9% 8% 5% 8% 9% 14% 13% 15% 13% 15% 13% 14% 13% 14%
52% 52% 51% 54% 52% 49% 52% 51% 54%
11% 13% 11% 10% 12% 15% 13% 13% 12%
14% 14% 14% 16% 12% 15% 16% 16% 10%
156 184 183 111 176 196 185 188 179
9M/13 9M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14
Naphtha + Ref.
Jet
Diesel
Fuel Oil
Others
AROMATICS PERFORMANCE Improved PX and BZ spread
Pri
ces
PX
FEC
P -
Co
nd
B
Z S
po
t -
Co
nd
Aromatics Products Prices and Spread (USD/Ton)
-6% YoY +43% QoQ
+31% YoY +16% QoQ
Products to Feed Margin (USD/Ton BTX)
BTX U-Rate and Sales Volume (KTons)
BTX U-Rate
-6% YoY -4% QoQ
916 903 948
871 930 937 917 922
872
1,489
1,303
1,618
1,409 1,440 1,440
1,303 1,256
1,350 1,307
1,297
1,379
1,286 1,258 1,283
1,297 1,293
1,301
800
1000
1200
1400
1600
1800
9M/13 9M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14
Condensate Erawan PX FECP BZ Spot Korea
391 394 430 415 328 346 380 370
430
9M/13 9M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14
573
400
669
539 510 502
386 334
479
9M/13 9M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14
89% 84% 92% 84% 91% 93% 91% 89% 83%
18
6% 6% 8% 5% 4% 3% 7% 6% 4%
28% 28% 26% 26% 31% 30% 25% 28% 33%
43% 43% 43% 42% 43% 43% 43% 43% 42%
23% 23% 22% 26% 22% 24% 24% 23% 22%
2,510 2,488 824 810 876 836 806 860 822
9M/13 9M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14
BZ Group
PX Group
Naphtha Group
Other By-Products
325
178
396 323
262 221
166 86
290
14.01
(10.18) (1.45) (45.97)
84.10
26.94
(7.90)
40.44
(68.54) (0.26)
(0.81) (0.02)
339
167
395
277 346
248
158 127
221
(400)
(300)
(200)
(100)
-
100
200
300
400
(80)
(30)
20
70
120
170
220
270
320
370
420
9M/13 9M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14
Market P2F Stock Gain/(Loss) Net NRV
Hedging Gain/(Loss) Accounting P2F
1,471
1,576 1,482
1,443 1,489
1,536 1,554 1,569 1,604 1,466
1,580
1,477 1,433
1,490 1,549 1,560 1,578 1,601
1,491
1,615
1,459 1,444
1,569
1,664 1,639 1,605 1,601
1,199 1,139
1,282 1,173 1,143
1,208 1,182 1,093
1,143
913 933 961 858 920 946 935 951 913 700
800
900
1,000
1,100
1,200
1,300
1,400
1,500
1,600
1,700
9M/13 9M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14
HDPE (FILM) SEA LLDPE CFR SEA LDPE CFR SE AsiaMEG ACP Naphtha MOPJ
OLEFINS AND DERIVATIVES PERFORMANCE Continuing 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)
-36% YoY +20% QoQ
+22% YoY +12% QoQ
Adjusted EBITDA Margin
U-Rate (%)
GAS : NAPHTHA Intake %
HDPE Price +8% YoY +2% QoQ
Sales Volume (KTons)
KTons
9M/13 9M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14HDPE (FILM) SEA 1,471 1,576 1,482 1,443 1,489 1,536 1,554 1,569 1,604 LLDPE CFR SEA 1,466 1,580 1,477 1,433 1,490 1,549 1,560 1,578 1,601 LDPE CFR SE Asia 1,491 1,615 1,459 1,444 1,569 1,664 1,639 1,605 1,601 MEG ACP 1,199 1,139 1,282 1,173 1,143 1,208 1,182 1,093 1,143 Naphtha MOPJ 913 933 961 858 920 946 935 951 913
558 643
521 585 568 590 620 618 691
9M/13 9M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14
337
193
375 351 284 281
245
152 182
9M/13 9M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14
57% 57% 55% 54% 65% 53% 61% 54% 56%
34% 34% 33% 36% 31% 35% 25% 35% 40% 9% 9% 12% 10% 4% 12% 14% 11% 4%
2,740 2,669 1,012 972 756 969 790 925 955
9M/13 9M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14
Ethane Other Gas Naphtha
9M/13 9M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14 Olefins 565 474 200 218 147 190 134 168 172
HDPE 618 630 216 193 208 217 202 218 210 LLDPE 291 288 102 70 119 107 98 105 85 LDPE 171 239 75 71 25 47 72 92 75
Total PE 1,079 1,157 393 334 352 371 373 415 369 MEG 282 275 83 104 95 89 71 95 110
28% 26% 30% 28% 26% 24% 24% 25%
28%
9M/13 9M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14
19
9M/13 9M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14 Olefins 88% 87% 97% 93% 75% 93% 77% 91% 94%
HDPE 104% 105% 109% 96% 106% 113% 93% 107% 114% LLDPE 99% 98% 113% 72% 113% 114% 99% 112% 84% LDPE 68% 104% 101% 99% 5% 101% 115% 93% 104%
Total PE 95% 103% 109% 89% 88% 111% 99% 106% 104% MEG 96% 92% 97% 100% 92% 86% 65% 99% 112%
PHENOL AND BPA PERFORMANCE Improved Margin from Lower Surplus
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)
+207% YoY +78% QoQ
+9% YoY +54% QoQ
Adjusted EBITDA Margin
+6% YoY +11% QoQ
20
1,307 1,297 1,379
1,286 1,258 1,283 1,297 1,293 1,301
1,426 1,490 1,523
1,402 1,352 1,387 1,424 1,456
1,592
1,743 1,728 1,880
1,719 1,630 1,605 1,638
1,653
1,894
900
1100
1300
1500
1700
1900
9M/13 9M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14
Benzene Phenol BPA
9M/13 9M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14Phenol (CMP) 1,426 1,490 1,523 1,402 1,352 1,387 1,424 1,456 1,592 BPA (CMP) 1,743 1,728 1,880 1,719 1,630 1,605 1,638 1,653 1,894 Benzene 1,307 1,297 1,379 1,286 1,258 1,283 1,297 1,293 1,301
119
193 145 116 95 104 126
164
291
9M/13 9M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14
317
238
356 317
277 218 214 197
302
9M/13 9M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14
54% 56% 40%
55% 65% 54% 60% 58% 52%
46% 44% 60%
45% 35% 46% 40% 42% 48%
208 187 63 76 69 69 48 66 73
9M/13 9M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14
Phenol
BPA
U-Rate 9M/13 9M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14 Phenol 125% 114% 126% 127% 124% 130% 78% 131% 132%
BPA 99% 94% 64% 116% 116% 104% 70% 107% 104%
3%
10%
1% 4% 5% 4% 4%
7%
16%
9M/13 9M/14 1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14
9,574 7,611
8,719 9,545
30 26 25
28
-20
-15
-10
-5
0
5
10
15
20
25
30
-1000
1000
3000
5000
7000
9000
11000
13000
15000
1Q/13 3Q/13 2Q/14 3Q/14 Oct-14
21
Olefins and Derivatives Performance
Ethane Flow (Ton/Hr)
HDPE Price ($/Ton)
EBITDA Margin (%)
EBITDA (M.THB)
Olefins Utilization Rate (%)
OVERVIEW OF BUSINESS UNITS’ PERFORMANCE Margin Supported by Stable Gas Flow Despite Weak Crude
3Q/14 Revenue and Adjusted EBITDA Structure
Adjusted EBITDA Margins
45%
19%
24%
6% 6% 0%
13%
16%
61%
1%6%
3%
145,820 MB 15,702 MB
Adjusted EBITDA Sales Revenue
% Adj. EBITDA Margin 3Q/13 2Q/14 3Q/14Business Unit :
Refinery 2 4 3Aromatics 8 (2) 9Olefins and Derivative 26 25 28Green 9 4 1HVS 4 1 11
Average 9 8 11
1482 1489 1569 1604 1564
97 75
91 94 100
254
221 229 242
272
INCOME STATEMENT – 3Q/14
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
***
3Q/2013 2Q/2014 3Q/2014 YoY QoQ
MB % MB % MB % MB % MB %
1 Sales Revenue 141,394 100 152,401 100 145,820 100 4,426 3 (6,581) (4)
2 Feedstock Cost (116,522) (82) (126,966) (83) (117,045) (80) 523 0 (9,921) (8)
3 Product to Feed Margin 24,872 18 25,435 17 28,775 20 3,903 16 3,340 13
4 Variable Cost (6,211) (4) (7,601) (5) (7,042) (5) 831 12 (559) (7)
5 Fixed Cost (4,028) (3) (4,904) (3) (4,337) (3) 309 8 (567) (12)
6 Stock Gain/(Loss) & NRV 3,768 3 1,180 1 (2,841) (2) (6,609) (175) (4,021) (341)
7 Gain/(Loss) Commodity Hedging 560 0 411 0 425 0 (135) (24) 14 3
8 Other Income 1,235 1 1,249 1 1,113 1 (122) (10) (136) (11)
9 SG&A (3,808) (3) (3,056) (2) (3,232) (2) (576) (15) 176 6
10 Extraordinary Item
11 Provision for Business Restructuring** 0 0 (2,239) (1) 0 0 0 0 2,239 100
12 EBITDA 16,388 12 10,475 7 12,861 9 (3,527) (22) 2,386 23
13 Depreciation & Amortization (4,149) (3) (4,415) (3) (4,308) (3) 159 4 (107) (2)
14 EBIT 12,239 9 6,060 4 8,553 6 (3,686) (30) 2,493 41
15 Finance Cost (1,144) (1) (1,097) (1) (1,095) (1) (49) (4) (2) (0)
16 FX Gain/(Loss) (738) (1) 71 0 381 0 1,119 152 310 437
17 Shares of profit/(loss) from investments (54) (0) 290 0 240 0 294 544 (50) (17)
18 Income Tax Expense (708) (1) (599) (0) (521) (0) (187) (26) (78) (13)
19 Net Profit 9,595 7 4,725 3 7,558 5 (2,037) (21) 2,833 60
20 Profit/(loss) attributable to:
21 Owners of the Company 9,610 7 6,085 4 7,591 5 (2,019) (21) 1,506 25
22 Non-controlling interests (15) (0) (1,360) (1) (33) (0) (18) (120) 1,327 98
23 Adjusted EBITDA * 12,619 9 11,534 8 15,702 11 3,083 24 4,168 36
22
***
INCOME STATEMENT – 9M/14
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
***
9M/2013 9M/2014 YoY
MB % MB % MB %
1 Sales Revenue 394,590 100 444,587 100 49,997 13
2 Feedstock Cost (316,462) (80) (365,162) (82) 48,700 15
3 Product to Feed Margin 78,128 20 79,425 18 1,297 2
4 Variable Cost (19,203) (5) (22,059) (5) 2,856 15
5 Fixed Cost (12,207) (3) (13,874) (3) 1,667 14
6 Stock Gain/(Loss) & NRV 1,703 0 (2,236) (1) (3,939) (231)
7 Gain/(Loss) Commodity Hedging 1,127 0 1,030 0 (97) (9)
8 Other Income 3,921 1 3,680 1 (241) (6)
9 SG&A (9,197) (2) (9,392) (2) 195 2
10 Extraordinary Item 0 0 0 0 0 0
11 Provision for Business Restructuring** 0 0 (2,239) (1) (2,239) (100)
12 EBITDA 44,273 11 34,335 8 (9,938) (22)
13 Depreciation & Amortization (12,289) (3) (12,925) (3) 636 5
14 EBIT 31,984 8 21,410 5 (10,574) (33)
15 Finance Cost (3,379) (1) (3,333) (1) (46) (1)
16 FX Gain/(Loss) (1,479) (0) 1,054 0 2,533 171
17 Shares of profit/(loss) from investments (93) (0) 771 0 864 927
18 Income Tax Expense (1,419) (0) (1,493) (0) 74 5
19 Net Profit 25,614 6 18,409 4 (7,205) (28)
20 Profit/(loss) attributable to:
21 Owners of the Company 25,857 7 19,971 4 (5,885) (23)
22 Non-controlling interests (243) (0) (1,563) (0) (1,320) (544)
23 Adjusted EBITDA * 42,570 11 38,810 9 (3,760) (9)
23
***
STRONG FINANCIAL POSITION
Interest Rate Currencies
61 % Fixed 50 % THB
39 % Float 50 % USD & Others
Loan Type
• Cost of long term debts ~ 4.54% (Include W/H Tax)
• Average loan life after refinancing - 5.19Years
Treasury policy Net IBD to Equity ratio of ≤ 0.7x Net IBD to EBITDA ratio of ≤ 2.4x
THB 116 Bn
THB Bn
* After Refinance
Maturity of Financial Debt* as at Sep. 30, 2014 Key Financial Ratios
Statements of Financial Position
As of Dec. 31, 2013 As of Sep. 30, 2014
THB 433 Bn THB 426 Bn Cash +ST Investment
CA
Non CA
PPE
Liab.
IBD
Share Holder’s Equity
14.44%
11.51% 12.51% 11.52% 9.42%
7.97% 8.64% 7.95%
5%
10%
15%
20%
31 Dec. 13 31 Mar. 14 30 Jun. 14 30 Sep. 14
ROE ROA
1.30 1.34 1.41 1.52
0.31 0.28 0.30 0.30
0
0.3
0.6
0.9
1.2
1.5
31 Dec. 1331 Mar. 1430 Jun. 1430 Sep. 14
Net IBD/EBITDA NET IBD/Equity
24
AGENDA
25
1. MISSION TO BE CONTINUED
2. 3Q/14 OPERATING RESULTS
3. MARKET OUTLOOK
CRUDE OIL: Booming Shale Oil Adversely Affects Global Oil Prices This Year
26
80
90
100
110
120
Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14
USD/BBL
Refinery Maintenance
IEA Cut Oil Demand Growth
Iraq Crisis
Iran’s Sanction Lift
Conflict in Ukraine and Crimea
Resumed Libya Supply
Severe Winter Climate
Strong USD
Slow Euro/China’s Economy
U.S. Oil Production Hit 30-Year Highest at 8.7 MBD
JBC, Barclays, BNP, BoA, Citi, Standard Chartered, Morgan Stanley*
JP Morgan, Goldman Sachs*
• Shale oil output continues growing by technology advance
• Saudi Arabia fights for market share
• Libya/Iran increase output
• Euro/China’s economy slow down
• Stronger USD
• Ebola outbreak
• OPEC cuts production
• Lower oil prices stimulate economic and spur oil demand
• Supply disruption from geopolitics
* Reuters Poll on October 30, 2014
USD/BBL USD/BBL
Saudi Arabia Cut Official Selling Price
U.S. SHALE OIL AND GAS: Why Shale Oil Come out This Much?
27
MORE ADVANCED TECHNOLOFY MORE WET GAS FOUND MORE FUNDING FROM FINANCIAL INSTUTUTION
MORE PRODUCT EXPORT MBD
U.S. NET OIL PRODUCT EXPORT
LESS CRUDE IMPORT, ESPECIALLY LIGHT MBD
West African Crudes
REFINING BUSINESS: Fierce Competition with U.S. and M.E. Refiners
28
2015 Global Capacity Addition Outpaces Demand Growth
2012 2013 2014 2015
Net Capacity AdditionDemand Growth
2015 Major Addition (KBD) • Yanbu (Saudi) +400 • IOC (India) +300 • Petrobas (Brazil) +230 • CNOOC (China) +140 • NOCL (India) +125 • PetroChina +100 • Ruwais (UAE) +417 (Shift from 2016)
2015 Major Shutdown (KBD) • BP (Australia) -102
-10-8-6-4-202468
101214161820
2011 2012 2013 2014 (YTD) 2015 (F)
Diesel - Dubai
Gasoiline - Dubai
Fuel Oil - Dubai
2015 Margin Tends to be Softer than 2014
USD/BBL
14.80
12.00
-7.20
Source: PRISM, Oct 14
Factors to be Watched
Asia Has More Surplus Gasoil to Export in 2015
1,921
188 689
-294
899
1,205
650
1,130
LPG Naphtha Gasoline Jet/Kero Gasoil Fuel Oil
UNIT: KBD UNIT: KBD
Import from U.S./M.E.
Import from M.E./West
Export to Europe/Africa
Export to Europe/M.E. Export to
M.E./Africa
-1,195 -1,120
+164 +356
+750
-1,176
Import from the West
PRODUCT BALANCE IN ASIA 2015
REFINING CAPACITY GROWTH VS. DEMAND GROWTH
PRODUCT SPREAD VS. DUBAI CRUDE
Source: IEA, JBC (Oct 14)
15.85
14.57
-8.87
17.86
13.66 14.37
17.12 18.27
13.50
-8.00
-3.30 -4.03
• U.S. refineries run high operating rate and export products to Europe
• Narrower clean/dirty product spread
• Euro/China’s economy slow down
• European refineries permanently shut down or lower operating rates
• New refining capacity start-ups delay from plan
Source: JBC (Nov 14)
Gasoil
AROMATICS BUSINESS: Paraxylene Still in Down Cycle but Backed by Vigorous Benzene and Cyclohexane
29
More Paraxylene Capacity to Come in 2015
Low Cyclohexane Capacity Growth Boosts 2015 O/R Shale Gas Utilization Strengthens Benzene Margin
Lighter Feedstock Reduces Benzene Supply Growth in 2015
60%
64%
68%
72%
76%
80%
84%
88%
92%
0.0
2.0
4.0
6.0
8.0
10.0
2012 2013 2014 2015
Capacity AdditionDemand from PTAGlobal Operating Rate
MT
50%
55%
60%
65%
70%
75%
80%
-0.50.00.51.01.52.02.53.03.54.04.55.0
2012 2013 2014 2015
Capacity AdditionDemand GrowthGlobal Operating Rate
MT Operating Rate
2014 2015
N. America - 1,612 - 1,579
Europe - 454 - 400
N.E. Asia 189 - 378
S.E. Asia 651 789
S. Asia 603 907
Middle East 261 229
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2011 2012 2013 2014 2015 (F)
PX-MOPJ BZ-MOPJ
BZ (Korea) PX (Korea)
Source: PRISM, Oct 14 USD/MT
45%
50%
55%
60%
65%
70%
75%
-200
0
200
400
600
800
1,000
2012 2013 2014 2015
Capacity AdditionDemand GrowthGlobal Operating Rate
KT Operating Rate
Derivatives of CX
Caprolactam Adipic
Acid
Cyclohexanol Other
Operating Rate
-50 133
199
349
532
661
200
-113
70.3
73.2
1,542 1,497 1,474
1,250 1,156
1,104 1,207
1,301 1,277 1,161
400
5,200
3,985
1,200
2,400
2,500 2,100
87.1 87.0 81.7 81.0
-293
2,541
1,185
92
1,406
1,474 1,010
72.4 72.7 71.3
72.3
BZ Balance of Each Region
604 554 552 344 361
166 264 380 370 365
2015 New Capacity (MT) • Reliance 2,250 • Sinopec Hainan 600 • JSC KazMunaiGas 469 • PTTGC 120 Lotte Chemical (200) Total 3,239
Effective Cap 2015 1,392
Carry Over 2014 2,593
Total Eff. Cap. 2015 3,985 2,100
1,175
66.8 64.8
Source: PCI, IHS (Oct 14) Source: IHS (Oct 14)
Source: IHS (Oct 14)
MARKET SIZE 45.9 MTA MARKET SIZE 37.1 MTA
MARKET SIZE 5.7 MTA
30
Shale Gas Utilization Strengthens Benzene Margin Factors to be Watched
AROMATICS BUSINESS: Paraxylene Still in Down Cycle but Backed by Vigorous Benzene and Cyclohexane
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2011 2012 2013 2014 2015 (F)
PX-MOPJ BZ-MOPJ
BZ (Korea) PX (Korea)
Source: PRISM, Oct 14 USD/MT
1,542 1,497 1,474
1,250 1,156
1,104 1,207
1,301 1,277 1,161
604 554 552 344 361
166 264 380 370 365
• More lighter feedstock further tightens benzene supply
• Tight benzene supply makes cyclohexane more value
• Cheap U.S. condensate lowers Far East condensate prices
• North East Asia turns to be benzene net importer
• China’s slowdown economy affects polyester demand
• Lower phenol price substitutes cyclohexane demand for caprolactam
More Paraxylene Capacity to Come in 2015
60%
64%
68%
72%
76%
80%
84%
88%
92%
0.0
2.0
4.0
6.0
8.0
10.0
2012 2013 2014 2015
Capacity AdditionDemand from PTAGlobal Operating Rate
MT Operating Rate
400
5,200
3,985
1,200
2,400
2,500 2,100
87.1 87.0 81.7 81.0
2015 New Capacity (MT) • Reliance 2,250 • Sinopec Hainan 600 • JSC KazMunaiGas 469 • PTTGC 120 Lotte Chemical (200) Total 3,239
Effective Cap 2015 1,392
Carry Over 2014 2,593
Total Eff. Cap. 2015 3,985 2,100
Source: PCI, IHS (Oct 14)
Lighter Feedstock Reduces Benzene Supply Growth in 2015
50%
55%
60%
65%
70%
75%
80%
-0.50.00.51.01.52.02.53.03.54.04.55.0
2012 2013 2014 2015
Capacity AdditionDemand GrowthGlobal Operating Rate
MT Operating Rate
2014 2015
N. America - 1,612 - 1,579
Europe - 454 - 400
N.E. Asia 189 - 378
S.E. Asia 651 789
S. Asia 603 907
Middle East 261 229 -293
2,541
1,185
92
1,406
1,474 1,010
72.4 72.7 71.3
72.3
BZ Balance of Each Region
1,175
Source: IHS (Oct 14)
MARKET SIZE 45.9 MTA MARKET SIZE 37.1 MTA
POLYETHYLENE BUSINESS: Continue Strong Margin, U.S. Cracker Projects Likely to be Delayed and Costly
31
2015 Ethylene Demand Growth Outpaces Capacity Addition
Tight Ethylene Supports HDPE Price above USD 1,400/MT Factors to be Watched
Polyethylene Operating Rate Remains High in 2015
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2011 2012 2013 2014 2015
HDPE-Ethylene Ethylene-MOPJ
Ethylene HDPE
Source: PRISM, Oct 14 USD/MT
85.6
85.8
87.6 88.2 88.0
83
84
85
86
87
88
89
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
2012 2013 2014 2015 2016 Americas W.Europe Middle East/AfricaAsia Others Demand GrowthGlobal OR
MT % Operating Rate
83.6 83.2
84.9 84.9 83.9
80
81
82
83
84
85
86
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
2012 2013 2014 2015 2016 Americas W.Europe Middle East/AfricaAsia Others Demand GrowthGlobal OR
MT % Operating Rate
1,366 1,371 1,488
1,557 1,421
1,187 1,230 1,352 1,423 1,286
179 141 135
134 135
490 537 431
287 249
• U.S. cracker expansion projects are likely to be delayed and more costly
• More plant closures in Europe (1,645 KTA announced until 2015)
• Constraints of Coal-to-Olefins plants in China
• Lower oil price stimulates PE demand
• Weak naphtha price pulls HDPE price down
• Lower polypropylene (PP) price harms PE demand
2.3 3.9
5.8
6.0
6.1
1.8 2.9
3.6
4.2 4.2
Source: IHS (Oct 14) Source: IHS (Oct 14)
MARKET SIZE 145.0 MTA MARKET SIZE 89.1 MTA
PROPYLENE/BUTADIENE BUSINESS: Moderate Margins as a Result of Excess Capacity
32
New On-purpose Propylene Capacity Brings O/R Down
Margins to be Pressured by Excess Capacity Factors to be Watched
New Butadiene Capacity Pressures O/R in 2015
Source: PRISM, Oct 14 USD/MT
80.1 80.3 80.7
79.5
78.6
76
77
78
79
80
81
82
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
2012 2013 2014 2015 2016 Others Asia Middle East/AfricaW.Europe Americas Demand GrowthGlobal OR
MT % Operating Rate 79.8
78.0 76.4
75.0 75.9
69
71
73
75
77
79
81
0.0
0.2
0.4
0.6
0.8
1.0
1.2
2012 2013 2014 2015 2016 Americas W.Europe Middle East/AfricaAsia Others Demand GrowthGlobal OR
MT % Operating Rate
0
400
800
1,200
1,600
2,000
2,400
2,800
2011 2012 2013 2014 2015
Propylene-MOPJ Butadiene-MOPJ
Butadiene Propylene
• Constraints CTO/PDH plants in China
• High operating rate of ethylene increases propylene supply
• Falling natural rubber price lower butadiene demand
• Slow growth of vehicle sales
448 324 405 394 372
1,804 1,244
550 410 420
2,742
2,188 1,471
1,296 1,216
1,168 1,280 1,326
1,267 1,386
1.7
2.9 4.4 4.5
4.2
0.1
0.3 0.6 0.5
0.4
Source: IHS (Oct 14) Source: IHS (Oct 14)
MARKET SIZE 92.7 MTA MARKET SIZE 11.6 MTA
300
400
500
600
700
800
900
1,000
1,100
-
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2014 2015
USD/MT
MONOETHYLENE GLYCOL BUSINESS: Demand and Supply are Well Balanced but Price Depends on PTA
33
Capacity Grows Balanced with Demand
2015 Margin Tends to Improve from 2014 Factors to be Watched
Price will Rebound as Inventory Declines
MT
438
253 204
34 80
1,185
1,028 1,055
929 890
0
100
200
300
400
500
600
700
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
2011 2012 2013 2014 2015
MEG Margin (0.63xEthylene)MEG PricePTA Price
78%
80%
82%
84%
86%
88%
90%
0.0
0.5
1.0
1.5
2.0
2.5
2012 2013 2014 2015
Capacity AdditionDemand GrowthGlobal Operating Rate
MT Operating Rate
Source: PRISM, Oct 14 USD/MT
961
1,225 1,538
421
86.7
88.1 88.4
845
1,466
• Low production from coal-based due to quality
• Improved PTA price as high-cost producers cut run
• Slow polyester demand growth if China’s economy cools down
• Strong ethylene cost squeezes margin
• 840 KTA of coal-based MEG will start up in 2015
• But expect to be unable to run at high rate due to low quality
INVENTORY IN CHINA
MEG Demand
MEG Price (ASP)
1,286
88.3
1,101
Source: ICIS (Oct 14) Source: IHS (Oct 14)
MARKET SIZE 25.5 MTA
Low Season
PHENOL/BPA BUSINESS: Downward Pressure on Phenol Margin but BPA is OK
34
Two New Phenol Plants will Start up by End of 2014
Phenol Margin to be Softer but BPA will Improve Factors to be Watched
Little New More BPA Capacity in 2015 Makes OR Increase
55%
60%
65%
70%
75%
80%
85%
90%
95%
0
200
400
600
800
1,000
1,200
1,400
1,600
2012 2013 2014 2015
Capacity AdditionDemand GrowthGlobal Operating Rate
KT Operating Rate
45%
50%
55%
60%
65%
70%
75%
80%
85%
0
100
200
300
400
500
600
700
800
2012 2013 2014 2015
Capacity AdditionDemand GrowthGlobal Operating Rate
KT Operating Rate
698 407 338 428 358
373
168 196 171 218
2,084
1,675 1,710 1,718 1,612 1,663
1,443 1,416 1,462
1,313 1,069 1,010 1,125 1,099
1,002
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
2011 2012 2013 2014 (E) 2015 (F)
BPA Margin Phenol Margin BPAPhenol Acetone
Source: PRISM, Oct 14 USD/MT
615
160
725
204
Start up by end of 2014 • CEPSA Chemical
Shanghai (250 KTA)
• FCFC Ningbo (300 KTA)
Start up mid of 2015 • PTTGC 250 KTA
Start up 2015 • Nan Ya Plastics (150
KTA)
• Changchun Plastic (135 KTA)
385
55
306 258
87.8 80.0
285
91
182
55 286 148
78.8 72.1 74.4
210
• Strong benzene price squeezes phenol margin
• Market adaptability to deal with biggest oversupply situation
• Phenol-based caprolactam switch from cyclohexane
• Polycarbonate maintains high price and margin
845
75.5
77.2
Source: IHS (Oct 14) Source: IHS (Oct 14)
82.9
MARKET SIZE 5.4 MTA MARKET SIZE 10.0 MTA
35
For further information & enquiries, please contact our Investor Relations Team at [email protected]
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
Thank You