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Transcript of OPPORTUNITY DAY Opportunity Day -...
IRPC Public Company Limited
17 May 2016
Opportunity DayOPPORTUNITY DAY
1Q/2016
Disclaimer
This presentation material has been prepared solely for informational purposes only. IRPC is furnishing it solely for use byprospective investors / analysts in the proposed event. IRPC makes no representations or warranties as to the accuracy orcompleteness of such information. By accepting this material each recipient agrees that IRPC shall not have any liability forany representations (express or implied) contained in, or for any omissions from this presentation.
The information contained herein does not purport to be all-inclusive or to contain all of the information that may be material to the recipient’s decision. Each recipient of the information and data contained herein should perform its own independent investigation and analysis of the transaction and the creditworthiness of IRPC . Reference in this Disclaimer to this shall include references to the Appendices (if any) hereto.
2
1Q/16 Highlight
Operation & Financial Performance
Industry Outlook
CEO’s Agenda
1
2
3
4
Agenda
3
13.1 14.7 13.7
(0.5) (3.5) (1.2)(0.02)
(1.3)(1.5)
12.5 9.9 11.0
49,941 45,470 38,250
YoY 23%
QoQ 16%
Highlight: 1Q/16 PerformanceOverview of Business
Net Sales(net excise)
Dubai
Unit: USD/BBL
3,832
447
3,014 Net income
Unit: MB
Unit: MB
4
1Q/15 1Q/16
YoY 21%
QoQ 574%
1. In 1Q/16, average Dubai price dropped to $30.4/bblfrom $40.7/bbl in 4Q/15, driven by the global supply glut situation, the new supply from Iran and the China’s economic slow down.
2. Net sales were 38,250 MB in 1Q/16, decreasing by 16% from 45,470 MB in 4Q/15 due to a decrease of 15% in the product prices and 1% in the sales volume.
3. Market GIM in 1Q/16 was $13.7/bbl, declining by $1.0/bbl compared to $14.7/bbl in 4Q/15 because of a lower product spreads offset by benefit of Everest program. With the lower stock loss, Accounting GIM was $11.0/bbl, rising from $9.9/bbl in 4Q/15.
4. Net profit was 3,014 MB in 1Q/16, increasing by 574% compared to 447 MB in 4Q/15.
4Q/15
Market GIM
Accounting GIM
Oil hedging
Unit: $/bbl
YoY 12%
QoQ 11%
Stock gain/(loss)& LCM
40.730.4
51.9
Comparison of Benchmark GIM & MKT GIM
5
13.4 13.5
11.6
13.1 14.7
13.7
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
1Q15 4Q15 1Q16
Benchmark GIM MKT GIM
$/bbl
* Benchmark GIM (Fixed Yield) calculated based on IRPC’s average yield during Jan-Apr 2015 (crude run @182 KBD)
*
Financial Highlight: 1Q/16 VS 1Q/15
• Crude intake of 17.0 M.bbl (187 KBD), increased from 1Q/15 by 0.8 M.bbl (7 KBD) or 5%
• Market GIM $13.7/bbl, increased by $0.6/bbl or 5% from higher spread of $0.3/bbl
and THB depreciation
• Everest increased $0.3/bbl or 243 MB
• Stock loss & Hedging + LCM was $-2.7/bbl (-1,632 MB), rose by $-2.1/bbl (-1,340 MB)
• Selling & OPEX decreased by 79 MB mainly from insurance, maintenance and
Corporate Image expenses decreased
• Income tax decreased : recording of deferred tax assets of 2015 outstanding net losses
821 MB and RTT liquidation 200 MB and lower of income tax expense 507 MB
• Others expenses increased: There was the reversal of doubtful account 2,823 MB in 1Q/15 while loss from
investment decreased 52 MB and financial cost reduced 311 MB
Exchange rate (THB/USD)As ofDec 31, 14 33.11 Mar 31, 15 32.70 Dec 31, 15 36.25 Mar 31, 16 35.41Average 1Q/15 = 32.79 1Q/16 = 35.83
Average Dubai price 1Q/15 = $51.89/bbl1Q/16 = $30.42/bbl
6
Unit : MB
Net Profit1Q/15
Net Profit1Q/16
Volume Increase
Margin Increase
Stock loss& Hedging
+ LCM
OthersEverest Project
Selling Exp. + OPEX
FX. Gain
3,832 341
678 243 1,340
79 163
1,528 2,510
3,014
Tax
Highlight: Everest Project
7
Procurement area
Commercial area
Operations area
Corporate area
• Optimize crude selection, product blending and hydrocarbon stock
• Enhance throughput & yield by adjusting production unit parameter
• Maximize energy efficiency and reduce loss in production units
• Improve efficiency and effectiveness of maintenance
• Reduce production unit downtime and minimize operating days lost
• Maximize commercial value generation from refined petroleum and petrochemical products
• Optimize timing, duration and cost of turnaround
• Spend optimization with key expenditure categories
• Optimize small CAPEX spend for highest value expenditures
• Develop capabilities to sustain both performance and health
• Improve organizational health practices for top quartile outcomes
• Optimize planning and policies to ensure continued productivity enhancement
2,083
549
399
385
19
177
47
0.5
3,416 243Total
Target
Y2016
Actual
1Q2016Unit: MB
Highlight: 1Q/16 Update
UHV Project Progress: COD in May 2016
8
• IRPC – Darby Trading entered into long term sales agreement of Slack Wax in order to expand into the US and European markets
IRPC’s Achievement
• Top Company Awards
2016
Marketing
• TPM Excellence Award 2015, Category A
• Moody’s changed IRPC’s rating outlook to stable and confirmed its Ba1 rating on 18 March 2016,
reflects improvement in operating performance and earnings
Moody’s Change Rating to Stable Outlook
• Thailand Quality Class Award 2015
PPE+PPC Project Progress: 32% as of Mar 2016
1Q/16 Highlight
Operation & Financial Performance
Industry Outlook
CEO’s Agenda
1
2
3
4
Agenda
9
10
Petroleum Performance
4Q/14 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16 Change QoQ
Dubai 74.4 51.9 61.3 49.7 40.7 30.4 -25%
Naphtha Spread -5.1 1.4 -0.5 -1.2 7.1 6.1 -14%
ULG95 Spread 13.4 15.3 19.8 19.3 18.7 18.8 1%
Gas Oil Spread 16.0 16.3 13.7 10.8 13.8 9.6 -30%
Fuel Oil Spread -5.6 -1.8 -3.5 -8.1 -6.5 -5.2 20%
-20
0
20
40
60
80
100
Dubai Price and Petroleum Spread$/bbl
Dubai
Fuel Oil
ULG95 Spread
Naphtha Spread
Gas Oil Spread
Naphtha spread: dropped
due to higher supply from
ME and India, plus more
supply from Europe to Asia.
ULG95 spread: rose owing
to increasing demand in
ASEAN and Australia
Gas Oil spread: dropped
as more supply from China
and ME despite demand
expanded from India, and
Vietnam and regional
refineries’ S/D.
Fuel oil spread: rose
from higher demand with
lower of product price
Crude oil price: continued to move
down due to its oversupply. Plus,
more pressure came from the excess
supply from Iran and China’s
economic stagnation.
11
Petroleum Performance
4Q/14 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16 Change QoQ
Fuel Oil 437 318 367 265 217 160 -26%
150BS Spread 776 720 740 833 815 844 4%
500SN Spread 493 369 399 514 471 442 -6%
Asphalt Spread 85 23 20 83 96 -7 -107%
-200
0
200
400
600
800
1,000
Fuel Oil Price and Lube Base Oil Spread$/MT
Fuel Oil
150BS Spread
500SN Spread
Asphalt Spread
Lube base oil spread :
moved down due to the
oversupply and the
replacement of Group II.
Asphalt spread:
dropped due to the
higher demand in 4Q15
especially from Europe,
Vietnam and domestic
demand.
1.2 2.1 1.5 1.4 1.8
7.0 7.6
7.4 7.3 7.6
1.3
1.4 1.5 1.4
1.6 0.8
1.0 0.9 1.2 0.6 0.2
0.2 0.2 0.2 0.3
10.5 12.3 11.4 11.5 11.8
1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
60% 57% 61% 53% 50%
19% 19%30%
34%27%
7% 10%
9% 10%
9%
14% 15% 3%14%
1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
Others
Domestic
Far East
Middle East
Premium over Dubai($/bbl)
Petroleum Group : Production
1Q/16, the crude intake was 187 KBD (87% utilization), higher than the rate in 4Q/15 because of the maintenance shutdown in ADU1 during 4Q/15.
Sweet Crude volume was 92 KBD in 1Q/16, rising by 11 KBD from 4Q/15 due to the higher Products spread of Light Distillates.
The utilization rate of Lube Base Oil plant in 1Q/16 was 100%, reducing from 107% in 4Q/15 due to the maintenance shutdown in Lube Unit.
Remark : Excluding internal use quantity 12
Crude Run (KBD)
84% 89% 82% 84% 87%
180 192 177 181 187
% Utilization
Crude Intake
2.00 2.26 2.69 2.71 4.12
Refinery
Unit : Mbbl
LPG & Others
Naphtha
Gasoline
Diesel
Fuel oil Asphalt
Lube Base
1.0 0.8 0.9
1.0 1.0
0.9 0.9 0.9
0.9 0.8
1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
Lube Base oil
Unit : Mbbl
1.9 1.8 1.81.9
1.8
Local
59%
Export
41%
Petroleum Group : Sales & GRM
Local
67%
Export
33%
1Q/16
Sales Distribution
1Q/16 : Petroleum sales volume decreased by 2% and the average product prices decreased by 20% compared to 4Q/15
The proportion of sales was 67% domestic and 33% export while it was 59% domestic and 41% export in 4Q/15. The higher domestic sales were mainly in Diesel and Asphalt products
Market GRM was $6.0/bbl (3,625 MB), decreasing by$1.1/bbl (628 MB) from 4Q/15 because of the lower spreadof refinery products.
4Q/15
13
Remark : Sales include products swap transaction with PTTGC /Lube include VGOHT sales during fire incident
Sales Volume & Revenue
12.9 14.2 13.3 13.7 13.2
2.5 1.9 1.8 1.8 2.0
15.4 16.1 15.1 15.5 15.2
1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
Lube Base
Refinery
Unit : Mbbl
29,867 35,675 29,159 27,579 20,981 Refinery
6,391 5,314 4,818 4,492 3,985 Lube Base
36,258 40,989 33,977 32,071 24,966 Petroleum
Unit : MB
YoY 2% QoQ 2%
5.2 3.8
2.4
4.4 3.2
1.8
2.2
2.4
2.7
2.8
7.0
6.0
4.8
7.1
6.0
1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
Lube Base
Refinery
Market GRM
Crude intake (Mbbl)
Unit : $/bbl
Top 5 Export Destination :Singapore, Malaysia, Laos, Cambodia, Burma
16.2 17.5 16.3 16.7 17.0
14
Petrochemical Performance
4Q/14 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16 Change QoQ
Naphtha 647 494 563 461 445 344 -23%
PP 1,451 1,149 1,356 1,126 1,003 944 -6%
HDPE 1,548 1,293 1,454 1,411 1,301 1,251 -4%
PP Spread 804 655 793 665 558 600 8%
HDPE Spread 901 799 891 950 856 907 6%
0
500
1,000
1,500
2,000
Polyolefins Price and Spread$/MT
Naphtha
PP Spread
PP
HDPE Spread
HDPE
PP spread: increased
because of the tight
supply owing to
refineries’ maintenance
shutdown in the region.
HDPE spread: moved
up because the
demand was stronger
due to the economic
recovery.
Remark : Petrochemical Product Prices calculated based on proportion of sales volume
15
Petrochemical Performance
ABS spread:
was higher from
positive economic
outlook and the
healthy demand
expansion.
PS spread:
jumped up from
product prices
uptrend due to
increasing demand.
4Q/14 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16 Change QoQ
Naphtha 647 494 563 461 445 344 -23%
ABS 1,766 1,562 1,658 1,433 1,202 1,198 0%
PS 1,463 1,168 1,494 1,267 1,098 1,153 5%
ABS Spread 1,119 1,068 1,095 972 757 854 13%
PS Spread 816 674 931 806 653 809 24%
0
500
1,000
1,500
2,000
Polystyrenics Price and Spread$/MT
Naphtha
PS Spread
PS
ABS Spread
ABS
Remark : Petrochemical Product Prices calculated based on proportion of sales volume
16
Petrochemical Performance
4Q/14 1Q/15 2Q/15 3Q/15 4Q/15 1Q/16 Change QoQ
Naphtha 647 494 563 461 445 344 -23%
Toluene 830 621 766 635 624 568 -9%
MX 809 663 785 686 671 598 -11%
Toluene Spread 183 127 203 174 179 224 25%
MX Spread 162 169 222 225 226 254 12%
0
300
600
900
Aromatics Price and Spread$/MT
Naphtha
MX Spread
Mixed Xylene
Toluene Spread
Toluene
Toluene spread: moved
up from strong Chinese
import to restock low
inventory and unplanned
shutdown in Singapore.
Mixed Xylene spread:
moved up from PX demand
expansion and the major
producers in Korea and
Japan’s planned shutdown
in 2Q/16.
Remark : Petrochemical Product Prices calculated based on proportion of sales volume
69 81 78 83 85
8 5 9
12 5
67 51 73 60 73
144 137
160 155 163
In 1Q/16, the utilization rate of Olefins was 94% When
compared to 89% in 4Q15, it increased by 5%. This was
because in 4Q/15, PP and HDPE units reduced the capacity
as DCC, feedstock unit, shutdown for the maintenance in
steam and boiler feed water system.
Petrochemical Group : Production
Remark : Utilization rate calculated based on the main products17
Aromatics & StyrenicsOlefins
52 55 67
52 55
125 133
127
121 134
177 188
194
173
189
Olefins
Polyolefins
1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
88% 90% 90% 89% 94% % Utilization
84% 86% 78% 84% 88% Polyolefins
92% 94% 101% 94% 99% Olefins
Unit : KMT
Styrenics
Aromatics
1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
87% 83% 97% 95% 99% % Utilization
88% 75% 97% 78% 92% Polystyrenics
95% 71% 106% 105% 97% Styrenics
83% 97% 92% 104% 106% Aromatics
Polystyrenics
Unit : KMT
In 1Q/16, the utilization rate was 99%, increasing from 95%
in 4Q/15 because ABS plant shutdown as planned for 11
days in 4Q/15
Local58%
Export42%
Petrochemical Group : Sales & PTF
Local60%
Export40%
Sales Distribution
1Q/164Q/15
18
1.0 2.1 2.7
1.9 1.8
4.0
4.8
5.5
4.7 4.9
5.0
6.9
8.2
6.6 6.7
1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
Unit : $/bbl
Olefins &Polyolefins
Aromatics &Styrenics
156 146 159 172 182
205 197 206 184 196
361 343 365 356 378
1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
Olefins &Polyolefins
Aromatics &Styrenics
Unit : KMT
Market PTF
Crude intake (Mbbl)
Sales Volume and Revenue
16.2 17.5 16.3 16.7 17.0
7,541 8,285 8,138 6,830 6,781 Olefins
5,355 5,446 5,780 5,737 5,690 Aro & Styrenics
12,896 13,731 13,918 12,567 12,471 Petrochemical
Unit : MB
YoY 5% QoQ 6%
91 180 211
149 140
258
302 322
299 308
187
251 274
231 233
1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
Unit : $/MT
Olefins &Polyolefins
Aromatics &Styrenics
Market PTFFeed intake (KMT)
251 278 276 262 270 Olefins
188 202 211 216 222 Aromatics
Top 5 Export Destination :Singapore, Hongkong, Japan, China, Vietnam
13.1 14.0 14.1 14.7 13.7
(0.5)
3.3
(3.1)
(3.5)
(1.2)
(0.0)
0.0
(0.7)(1.3)
(1.5)
12.5
17.3
10.3 9.9 11.0
1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
Hedging Stk G/(L) & LCM Market GIM
7.0 6.0 4.8 7.1 6.0
5.0 6.9 8.2 6.6
6.7
1.1 1.1 1.1 1.0
1.0
13.1 14.014.1 14.7
13.7
1Q/15 2Q/15 3Q/15 4Q/15 1Q/16
Power & Utility Petrochem Petroleum
• In 1Q/16, Market GIM was $13.7/bbl, rising by $0.6/bbl compared to $13.1 /bbl in 1Q/15.
- Product spreads $0.3/bbl
- Everest project $0.3/bbl
• Stock Loss & Oil Hedging + LCM was $ -2.7/bbl (-1,632 MB), rising by $2.1/bbl compared to $-0.6/bbl (-1,340 MB) in 1Q/15
• Accounting GIM was $11.0/bbl (6,691 MB), lower by $1.5/bbl from $12.5/bbl ( 6,722 MB) in 1Q/15.
Gross Integrated Margin (GIM)
19
• In 1Q/16, Market GIM was $13.7/bbl, dropping by $1.0/bbl compared to $14.7/bbl in 4Q/15.
- Product spreads $1.3/bbl
- Everest project $0.3/bbl
• Stock loss & Oil Hedging + LCM decreased by $2.1/bbl compared to $-4.8/bbl in 4Q/15
• Accounting GIM was $11.0/bbl (6,691 MB), higher by $1.1/bbl from $9.9/bbl ( 5,946 MB) in 4Q/15.
1Q/16 vs 4Q/151Q/16 vs 1Q/15
Accounting GIMMarket GIM
$/bbl $/bbl
Financial Highlight
Year
1Q/16 1Q/15 4Q/15 YoY QoQ 2015
Net sales 38,250 49,941 45,470 (23)% (16)% 199,595
Market GIM 8,323 7,014 8,804 19% (5)% 32,156
Stock Gain/(Loss) (1,002) (3,541) (1,985) 72% 50% (5,208)
LCM 290 3,259 (99) (91)% 393% 2,969
Oil Hedging Gain/(Loss) (920) (10) (774) N/A (19)% (1,176)
Accounting GIM 6,691 6,722 5,946 (0)% 13% 28,741
OPEX + Selling Exp. (3,250) (3,329) (4,207) 2% 23% (14,351)
Other Income 311 321 327 (3)% (5)% 2,643
EBITDA 3,752 3,714 2,066 1% 82% 17,033
Cost of Finance (196) (507) (221) 61% 11% (1,162)
FX Gain/(Loss) 338 174 117 94% 189% (1,288)
Impairment Gain/(Loss) - 24 (9) (100)% 100% 18
Investment Gain/(Loss) (33) (85) (30) 61% (10)% (157)
Other Expense (6) 2,824 (48) (100)% 88% 2,782
Income Tax 537 (992) (31) 154% N/A (2,346)
Net Profit 3,014 3,832 447 (21)% 574% 9,402
Unit : MBQuarter % Change
20
Financial Highlight: 1Q/16 VS 4Q/15
• Crude intake of 17.0 M.bbl (187 KBD), increased from 4Q/15 by 0.3 M.bbl (6 KBD) or 2%
• Market GIM $13.7/bbl, decreased by $1.0/bbl or 7% from lower spread of $1.3/bbl
and THB appreciation
• Everest increased $0.3/bbl or 243 MB
• Stock loss & Hedging + LCM was $-2.7/bbl (-1,632 MB), dropped by $2.1/bbl (1,226 MB)
• Selling & OPEX decreased by 957 MB mainly from manpower, insurance and
maintenance expenses decreased
• Income tax decreased : recording of deferred tax assets of 2015 outstanding net losses
821 MB and RTT liquidation 200 MB but higher of income tax expense 454 MB
• Others expenses decreased: depreciation, fin. Cost and doubtful account
Exchange rate (THB/USD)As ofSep 30, 15 36.53 Dec 31, 15 36.25Mar 31, 16 35.41Average4Q/15 = 36.00 1Q/16 = 35.83
Average Dubai price 4Q/15 = $40.71/bbl1Q/16 = $30.42/bbl
21
Unit : MB
447 171 942
243
1,226
957 221
567 124 3,014
Net Profit4Q/15
Net Profit1Q/16
Volume Increase
Margin Increase
Stock Loss& Hedging
+LCM
OthersEverest Project
FX. GainSelling Exp. + OPEX
Tax
22
Deferred Tax Assets
Remark : In 1Q16, the net gain from tax benefit of Baht 536 million was attributed to
deferred tax assets of Baht 1,021 million offset by 1Q16 income tax of Baht 485 million.
(Unit : Million Baht)
Potential additional DTA from liquidation of subsidiaries in 2016 onwards
2,700 20% 540
Taxable Loss
Deferred Tax Assets Booking
Tax Loss Tax RateDeferred Tax
Assets
- Tax loss not yet recognized as DTAas of Jan 1, 2016
4,106 20% 821
- Write off in Rayong Tank Terminal Co.,LtdLiquidation
999 20% 200
Total 5,105 20% 1,021
Debt Portfolio
23
ST Loan1%
LT Loan (USD)10%
LT Loan33%
Bond (USD)15%
Bond (THB)41%
Debt StructureDebt Profile
Float 43 THB 60
Fixed 57 USD 40
Currency (%) Interest Rate (%)
Net Debt = 50,639 MB Ex. Rate = 35.41 Baht/$
54,568 50,128 50,639
Financial Ratios
0.85 0.99 1.05
1Q/15 4Q/15 1Q/16
0.76 0.66 0.64
1Q/15 4Q/15 1Q/16
< 1.0x
Net D/E CA/CL
Unit : MBNet Debt
Maturity of Financing Debt
2,370 2,740 3,040 2,540 3,740
10,270
354 708 708 3,364 708
354
5,000 -
7,386 5,000
3,364
6,890 8,427
7,724
3,448
19,561
10,904
7,812
17,514
2015 2016 2017 2018 2019 2020-24
Unit : MB
USD Bond
THB Bond
USD Loan
THB Loan
51,780 53,500 54,434
4,752 204 122
56,532 53,704 54,556
1,964 3,576 3,917 -
10,000
20,000
30,000
40,000
50,000
60,000
1Q/15 4Q/15 1Q/16
L/T Debt S/T Debt Cash
1Q/15 4Q/15 1Q/16
Cost of Debt 3.91% 4.15% 4.15%
Currency MB
ST Loan THB 122
LT Loan USD 155 5,467
LT Loan THB 17,920
Bond USD 238 8,422
Bond THB 22,625
Total 393 54,556
Debt
As of Mar 31, 2016
1Q/16 Highlight
Operation & Financial Performance
Industry Outlook
CEO’s Agenda
1
2
3
4
Agenda
24
Challenging Crude Oil Market: Volatile Crude Oil Price
25
26
Oil Price Forecast
World Oil Market Forecast
Source: IEA medium term 2016 , Feb 16
World oil supply / Demand balance 2015-2021
Source: IEA medium term 2016 , Feb 16
Crude Oil Price Forecast
30
40
50
60
70
80
90
100
110
120
2014 2015 2016 2017 2018
Brent
Barclays
BofA
BNP
GoldmanSachsJBC
$39-46
$53-61
$63-70
Source: Reuters , Apr 16
$/bbl
Brent
• Stock surplus will be gone by the end of 2017
Price signal will have to be there at least one year in advance for shale crude reserves to significantly contribute
Worries of large Saudi, Iranian or Libyan supply growth are unwarranted
Product markets are carefully balanced with strong demand growth and high refinery production/stock levels
Source: PIRA World oil forecast, Apr 16
Short-Term Crude Oil and Petroleum Products Outlook
Driving Determinants
27
KeyProducts
Price(1Q/16)
Spread(1Q/16)
2Q/16vs.
1Q/16
3Q/16vs.
2Q/16
Refinery ($/bbl) ($/bbl) Outlook Outlook
Dubai 30.4 -
ULG95 49.2 18.8
GAS OIL0.05%S
40.0 9.6
FO 25.2 -5.2
Lube Base Oil ($/T) ($/T) Outlook Outlook
500 SN 602 442
150 BS 1,004 844
• Gasoline crack expects improve over the next few months as higher demand in early June due to the start of Muslim fasting month. In addition, demand for gasoline in the U.S. will ramp up to the peak summer driving season.
• India’s export tempered by strong domestic demand.
• Fuel oil cracks down as China cut their imports owing to the tea kettle refineries ’s quotas to import crude (rather than use fuel oil as a feedstock).
• Pressure still on crude price due to global supply glut, failure of Doha talks. Fundamentals point to tightening balances and a gradual oil price recovery in 2H16/2017
• Price rebound in 2Q/16. Downstream end user replenish their inventory. Tight 500SN spot supply in 2Q because NE. Asia refinery prepare to turnaround and limit their spot cargo to the market
• Regional demand peak in 2Q when buyers replenish their inventories after price turns upward.
Short-Term Petrochemical Products Outlook
28
KeyProducts
Price(1Q/16)
Spread(1Q/16)
2Q/16vs.
1Q/16
3Q/16vs.
2Q/16
Olefins ($/T) ($/T) Outlook Outlook
Ethylene 1,012 668
HDPE 1,251 907
Propylene 649 304
PP 944 600
Styrenics ($/T) ($/T) Outlook Outlook
PS 1,153 809
ABS 1,198 854
Driving Determinants
• Tight supply in Asia due to scheduled turnaround
• Asia SM price is seen to be stable to soft as the supply tightness is easing
• Downstream demand is expected to increase by manufacturing activities improvement in 3Q as well as price outlook could be driven from an improving on feedstock recovery
• Tight supply in Asia due to scheduled turnaround and crackers shutdown in Asia and Middle East
• Naphtha price still high• Expected soft price in 3Q due to ample supply, and
thin demand from end users• Additional supply from ME as Petro Rabigh expands
its cracker from 1 mTon to 1.3 mTon• Expected slow demand in Malaysia and Indonesia, in
the run-up to the Eid holiday (July 5)
1Q/16 Highlight
Operation & Financial Performance
Industry Outlook
CEO’s Agenda
1
2
3
4
Agenda
29
30
Getting to the top and staying there
30
Height
29,029 ft.
Basecamp
(17,500’)
Camp l
(19,500’)
Camp ll
(21,000’)
Camp lll
(23,500’)
Camp lV
(26,300’)
2020
2016
2017
2018
2019
ROIC 14%1st Quartile ROIC in
Petroleum &
Petrochemical Industry
Performance
Health
+
31
From iceberg to EVEREST
$100m
$200m
$300m
32
Contents
EVEREST
Performance: $300m+
Health: top quartile
Operations area
▪ 234 initiatives
▪ 5.6b THB impact
90%
Commercial area
▪ 189 initiatives
▪ 1.5b THB impact
Procurement area
▪ 337 initiatives
▪ 0.45b THB impact
Corporate area
▪ 61 initiatives
▪ 1.8b THB impact
90% 73% 93%
8+4 M&SModel plant
ISC 2.0
Strategic
marketing
Pricing &
contracts
Go-to-
market
Innovation &
Product /
Service man-
agement
Optimization
of sales &
supply
Channel partner
management
Sales and Account
management
Sales
support
M&S
8+4
Talent
management
Performance
management
Analytical tools
and systems
Organization
and pivotal roles
A C
C D
1 2
7
43
6
5
8
e3 operating model
Systems: WAVE + instilling TO cadence
Functional skills: Consultant Academy
RTS
Problem solving
Communications
Team management
Performance management: KPI
cascading, performance reviews and
evaluation, coaching
Young Leaders program
OHI; iSpirit
Pe
rfo
rma
nce
He
alt
h
2010
2013
2015
2017
Operational Efficiency Improvement
Asset Utilization Enhancement
Product and Service Improvement
Capacity and Products Expansion
Project Completion
• CHP I: Electricity +220 MW,
Steam +420 T/hr
• PRP: Propylene +100 KTA
• EURO IV: Gasoline 15 KBD, Diesel 10
KBD, Jet 15 KBD
• TDAE +28 KTA, 150BS +25 KTA
• EBSM +60 KTA, ABS/SAN +60 KTA
• Lube Blending +60 M.Ltrs./year
Margin Improvement
• Operational Excellence
• Commercial Excellence
• Procurement & HR
Excellence
Benefit +135 MUSD
Incremental Margin
Organization Health
• Capability Building
• Owner mindset &
Performance Orientation
• Cultural Changes• PX
• AA/SAP
Fully Integrated PP
• PP Expansion +160 KTA
• PP Compounding +140 KTA
New investments through JV
INDIVIDUAL OWNERSHIP
SYNERGY
PERFORMANCE EXCELLENCE
INNOVATION
RESPONSIBILITY FOR SOCIETY
INTEGRITY & ETHICS
TRUST & RESPECT
UHV Propylene +320 KTA
IRPC Strategic Roadmap to 2020
The future begins now creating shared value
Q & A
Environment
Social
Education & Sports
Labor & Human Rights
Religion
Public Health
Thank You
Investor Relations Contact: [email protected]
Tel. 02-649-7380, Fax. 02-649-7379
Presentation is available at
www.irpc.co.th
Click “Presentations”
This presentation material has been prepared solely for informational purposes only. IRPC is furnishing it solely for use by prospective investors / analysts in
the proposed event. IRPC makes no representations or warranties as to the accuracy or completeness of such information. By accepting this material each
recipient agrees that IRPC shall not have any liability for any representations (express or implied) contained in, or for any omissions from this presentation.
The information contained herein does not purport to be all-inclusive or to contain all of the Information that may be material to the recipient’s decision. Each
recipient of the information and data contained herein should perform its own independent investigation and analysis of the transaction and the creditworthiness of IRPC . Reference in this Disclaimer to this shall include references to the Appendices (if any) hereto.
Statement of Financial Position
MB %
Assets 163,781 163,174 607 0%
Cash and Mkt. Sec. 3,917 3,576 341 10%
AR 7,586 8,942 (1,356) (15)%
Inventory 21,661 21,306 355 2%
PPE & IP 117,386 115,997 1,389 1%
Other assets 13,231 13,352 (121) (1)%
Liabilities & Equity 163,781 163,174 607 0%
AP 23,764 25,741 (1,977) (7.7)%
IBD 54,556 53,704 851 2%
Other liabilities 6,506 7,850 (1,344) (17)%
Equity 78,955 75,878 3,077 4%
Unit : MB 31 Dec 15Change
31 Mar 16
36
Inventory• Volume increased from 8.93 Mbbl to 11.20 Mbbl• Price decreased 16% following the crude oil price• Inventory day = 47 days, increasing by 3 days from 31 Dec 15
EquityIncreasing by 4% : net profit 3,014 MB and fair value of available-for-sale investment increased 54 MB
PPE• Fixed Assets Purchase (mainly for UHV) 2,757 MB• Depreciation (1,368) MB
1,389 MB
AP• Decreasing by 8% from the lower in crude oil price offset by
increasing in crude purchased volume• AP day = 61 days increasing by 4 days from 31 Dec 15
IBD• Increasing by 2 % : Long-term loan drawdown 2,000 MB offset by loan
repayment 732 MB
AR• Decreasing by 15% from the lower in product price• AR day = 15 days, increasing by 3 days from 31 Dec 15
Cash• From Operation 2,244 MB• Investing & S/T investment (2,705) MB• Financing 802 MB
341 MB