Q1 2020 Earnings Presentation · Earnings Presentation 3 Diesel-4.1 Jet Fuel-5.7 HS Fuel Oil-9.7...
Transcript of Q1 2020 Earnings Presentation · Earnings Presentation 3 Diesel-4.1 Jet Fuel-5.7 HS Fuel Oil-9.7...
Hizmete Özel / Confidential
Q1 2020 Earnings Presentation
21 May 2020
Hizmete Özel / Confidential
Disclaimer
www.tupras.com.tr21/05/2020Earnings Presentation 2
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 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.
Hizmete Özel / Confidential
15
30
45
60
75
90
02/01/2019 02/04/2019 02/07/2019 02/10/2019 02/01/2020
Q1 2020 Key Market Highlights
www.tupras.com.tr21/05/2020Earnings Presentation 3
Diesel-4.1
Jet Fuel-5.7
HS Fuel Oil-9.7
Gasoline+2.4
Sharp decline in Brent in Q1 2020
Glo
bal
Oil
Mar
ket
Turk
ish
Mar
ket
Turkey product demand not showing Covid-19 impact in first two months
Mid-distillate and HSFO cracks performed weaker
*Including transit flight consumption
Crack margins compared to Q1 2019, $/bbl Q1 2019 Ave.63.2 $/bbl
Q1 2020 Ave.50.3 $/bbl
2M 2020 vs 2M 20195.94
5.97
6.23
6.52
5.8
6
6.2
6.4
6.6
6.8
31/12 10/1 20/1 30/1 9/2 19/2 29/2 10/3 20/3 30/3
$/TL
TL deprecation accelerated in Q1 2020
+0.03 TL
+0.26 TL
+0.29 TL
+7.7%
Diesel
+7.3%
Gasoline Fuel Oil
-34.8%+0.2%
Jet Fuel*
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Q1 2020 Tüpraş Highlights
www.tupras.com.tr 421/05/2020Earnings Presentation
In Q1 20206.0 -1,3076.2
Million tons of
Total Production
Million TL
EBITDA
Million tons of
Total Sales
• Weak Q1 performance is largely a result of sharp drop in Brent prices.
• Looking forward, recovery in Brent prices will reflect to Tüpraş accordingly.
Being local helps in elevated freight cost environment
Widening trend in differentials continues
Sharp drop in Brent price is the lead factor behind weak results
-2,500
-2,000
-1,500
-1,000
-500
0
500
1,000
1,500
2,000
2,500
-100
-80
-60
-40
-20
0
20
40
60
80
100
Q1
'17
Q2
'17
Q3
'17
Q4
'17
Q1
'18
Q2
'18
Q3
'18
Q4
'18
Q1
'19
Q2
'19
Q3
'19
Q4
'19
Q1
'20
Inv. impact (TRYm) Chg. in Brent pr.(TRY, q/q)
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Jan
-19
Mar
-19
May
-19
Jul-
19
Sep
-19
No
v-1
9
Jan
-20
Mar
-20
CIF-FOB Price Spread ($/bbl)
-6
-5
-4
-3
-2
-1
0
Q1
'18
Q2
'18
Q3
'18
Q4
'18
Q1
'19
Q2
'19
Q3
'19
Q4
'19
Q1
'20
Average* of Heavy Crude-Brent Differentials ($/bbl)
* Simple average of Arab Heavy, Basrah Heavy, Kirkuk, Kuwait and Ural.
• Freight costs continue to rise as floating storage usage of ships continues.
• This elevation supports our competitiveness against importers.
• Widening in heavy crude differentials, which began as refiners started preparing for IMO 2020 in H2 2019, resumed in Q1 2020 as well.
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Market
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-5.8
-9.9
-12.4
-28.9
-15.5
Q1 Q2 Q3 Q4
High Sulphur Fuel Oil
15.4
12.2
15.6
14.511.3
Q1 Q2 Q3 Q4
Diesel
Quarterly Crack Margin Comparison ($/bbl) in 2016 - 2020
www.tupras.com.tr5/21/2020Earnings Presentation 6
Covid-19 impact on crack margins has started to be visible for jet and gasoline in late Q1 2020.
13.8
10.8
16.1
13.18.1
Q1 Q2 Q3 Q4
Jet Fuel
4.5
10.5
12.4
8.56.9
Q1 Q2 Q3 Q4
Gasoline
2020 2019 2016-2020 Min - Max
Usage of FCC feedstock in VLSFO production
Lower demand due to IMO 2020-
+
Mild winter
- -
-
Weak demand on the back of slowing global economy and mild winter
Mild winter conditions supporting passenger car transport demand
Severe drop in global aviation activity due to the Covid-19 outbreak
+
Travel lockdowns around the globe driven by the Covid-19 outbreak
-Run cuts by simple refineries reduce supply+
Largely resilient against Covid-19 impact as diesel is used mostly for heavy duty transport and logistics
+
Hizmete Özel / Confidential
Heavy Crude Price Differentials to Brent ($/bbl)
www.tupras.com.tr 7
-10
-8
-6
-4
-2
0
2
Q1
20
17
Q2
20
17
Q3
20
17
Q4
20
17
Q1
20
18
Q2
20
18
Q3
20
18
Q4
20
18
Q1
20
19
Q2
20
19
Q3
20
19
Q4
20
19
Q1
20
20
Arab Heavy
Basrah Heavy
Kirkuk
Kuwait
Ural
Average*
0
OPEC+ Cut Decision
Iran Sanctions
*Simple average of listed differentials
In Q1 2020, differentials widened compared to Q4 2019 on the back of higher supply against weaker demand andIMO driven feedstock shift to lighter crude
21/05/2020Earnings Presentation
IMO preparations
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Operations
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Capacity Utilization and Quarterly Production Volume
www.tupras.com.tr21/05/2020Earnings Presentation 9
6.76.9
7.5
6.9
6.0
Q1 Q2 Q3 Q4
Quarterly Production (Million Tons)
2016 2017 2018 2019 2020
10
1
10
1
87 91
89 91 96
87
79
4 7
9 7 4 59
9
6
105 108
96 9894 96
105
96
85
2016 2017 2018 2019 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20
Capacity Utilization (%)
Crude Oil Semi Product Feedstock Total
*Capacity utilization calculation is based on 30 mn tons for Q1 2019 and onwards.
• We produced 6.0 mn tons in Q1 2020
• Capacity utilization for Q1 2020 was 85% with much higher white product yield at 86%.
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Sales in Q1 (Million Tons)
www.tupras.com.tr 10
5.1 5.0 5.2 5.24.6
1.8 2.31.0
2.1
1.6
6.97.2
6.2
7.2
6.2
Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020
Total Sales
Domestic Sales Exports
2.3 2.3 2.5 2.5 2.3
1.0 0.81.0 1.0
0.8
0.4 0.40.5 0.5
0.5
0.40.3
0.3 0.30.3
Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020
Domestic Sales of Selected Products
Diesel Jet Fuel Gasoline Bitumen
21/05/2020Earnings Presentation
Tüpraş generated 6.2 million tons of sales in Q1 2020.
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Financials
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Tüpraş Net Margin and Med Complex Margin Comparison ($/bbl)
www.tupras.com.tr21/05/2020Earnings Presentation 12
2.8
8.7
4.84.2
1.2
3.8
5.0
4.03.6
1.8
Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020
Q1 Margins
Tüpraş Net Med Margin
• Inventory loss and weaker crack margin environment were the main factors behind the decrease in Tüpraş net refining margin compared to Q1 2019.
• Med margin was higher than Tüpraş net refining margin mainly due to exclusion of inventory impact from its calculation.
Effect of hedging operations excluded from above calculations.
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Income Statement (Million TL)
www.tupras.com.tr21/05/2020Earnings Presentation 13
EBITDA realized as -1.3 billion TL in Q1 2020
*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.
Million TLQ1 Q1
%2020 2019
Net Sales 16,940 20,708 -18%
COGS -17,849 -19,717 9%
Gross Profit -909 991 -192%
Operating Expenses -458 -373 -23%
Income/Loss from other operations -349 -390 10%
Operating Profit -1,716 228 -852%
Income/Loss from equity investment -168 63 -368%
Operating Profit Before Fin. Income/Loss -1,885 291 -747%
Financial Income /Expense -913 -601 -52%
Profit Before Tax -2,798 -310 -802%
Net Profit (excluding minority interest) -2,265 -375 -504%
EBITDA *(mn.TL) -1,291 851 -252%
Inventory Gain/Loss -2,016 301 -770%
EBITDA* (mn. TL) CCS 725 550 32%
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Q1 Profit Before Tax Bridge (2019-2020)
www.tupras.com.tr21/05/2020Earnings Presentation 14
Decline in Profit Before Tax was driven by inventory loss due to sharp drop in Brent Price.
Million TL
Hizmete Özel / Confidential
1.8
1.1
1.3 2.1
6.4
1.11.2
1.31.0 0.9
2.1
1.21.9 2.2
3.0
2016 2017 2018 2019 Q1 2020
Current Ratio & Net Debt / R. EBITDA
Net Debt / R. EBITDA
Current Ratio
Net Debt / R. EBITDA CSS
Financial Highlights
www.tupras.com.tr21/05/2020Earnings Presentation 15
3351,575 1,033 851
-1,291
688
1,542 2,2101,495867
1,5283,778
9561,505
1,237
1,887
7383,396
5,882
8,908
4,039
-1,291
2016 2017 2018 2019 2020
EBITDA (mn TL)Q1 Q2 Q3 Q4
79869 378
-375
-2,265
331
1,4571,027
870581
992
542
-155
803
4931,766
186
1,793
3,812 3,713
526
-2,265
2016 2017 2018 2019 2020
Net Income¹ (mn TL)
Q1 Q2 Q3 Q4
22%
41%37%
5%
-12%
2016 2017 2018 2019 Q1 2020
Return on Average Equity²
1) Excluding minority interest 2) Calculation based on rolling net income
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Balance Sheet Analysis (Billion TL)
www.tupras.com.tr21/05/2020Earnings Presentation 16
-0.2
2.1
4.7
1.6
-0.7
-2.3-3.6
-2.0
Dec-16 Dec-17 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20
Working Capital Requirement (Billion TL)
6.1 6.2
12.010.6 10.1
8.7 8.4
12.2
1.7 1.7
2.31.9 1.8 1.5 1.4
1.9
0
1
2
3
4
5
0
3
6
9
12
15
Dec-16 Dec-17 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20
Net DebtIn Billion TL In Billion $
Proactive Financial Management
• Net debt increased due to lower working capital contribution and TL depreciation
• Dynamic liquidity management ensures optimal cash and receivables management
8.1
6.5
1.8 1.7
4.8
0.2
1 year 1-2 years 2-3 years 3-4 years 4-5 years Over 5 years
Redemption Schedule (Billion TL)
TL Hard Currencybn TL bn $
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FX Exposure Management (31 March 2020)
www.tupras.com.tr21/05/2020Earnings Presentation 17
Cash
681
Forward 1,327CFH 753
Stock826
Receivables & Other Assets
94
Payables & OtherLiabilities
981
ST Financial Loans729
• RUP: 204• Other: 525
LT Financial Loans1,874
• RUP: 575• Eurobond: 700• Other Loans: 599
Consolidated Hard Currency Assets
Consolidated Hard Currency Liabilities
Million $
+97 mn $
Tüpraş continues to employ strict FX
policies to mitigate currency risks
stemming from volatility.
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Outlook for 2020
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Q1 2020 Results
www.tupras.com.tr21/05/2020Earnings Presentation 19
1.2
1.8
0 1 2 3 4 5
Q1
20
20
Refining Margins ($/bbl)
Med Margin Tüpraş Net Margin
84.6 % total capacity utilization in Q1 2020
6.0 6.224 25
Production Sales
OperationalsQ1 FY Target
6.2 mn tons of sales and 6.0 m tons of production in Q1 2020
29
125
Q1 2020 Target
Refining Capex (mn $)
29 mn$ refining CAPEX in Q1 2020
84.6
0 20 40 60 80 100
Q12020
Capacity Utilization (%)
1.2 $/bbl net refining margin in Q1 2020
Med FY Exp
Tüpraş FY Target
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2020 Refinery Maintenance Schedule
www.tupras.com.tr21/05/2020Earnings Presentation 20
Refinery Unit Quarter Duration (weeks) Status
Batman Plt 100/1100 Crude Oil & Vacuum Q1 10-12 Completed
İzmir
U-100 Crude Q1 9* Completed
U-4000 FCC Q4 6
U-9200 CCR Q1 3 Completed
U-9200 CCR Q4 7 Postponed to 2021
U-9600 Isomerization Q4 8 Postponed to 2021
U-9900 MQD Q4 7 Postponed to 2021
İzmit Plt-6 Desulphurizer Q4 4 Postponed to 2021
Kırıkkale
* This activity had started in Q4-19. Duration figure indicates the portion carried out in 2020
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2020 Expectations(*)
www.tupras.com.tr21/05/2020Earnings Presentation 21
• Ural-Brent differential widening compared to 2019
• Weak outlook for jet fuel and gasoline
Med Complex Refining Margin 1.0-2.0 $/bbl
• Weak outlook for jet fuel and gasoline cracks
• Resilient diesel and strong HSFO cracks
• Heavy crude differentials to widen
• ~24 mt production, ~25mt sales and 80 - 85% capacity utilization
Tüpraş Net Refining Margin 3.0-4.0 $/bbl
• Sulphur treatment units, improvement in storage units
Refining Capex ~125 million $
* During preparation of the revised 2020 expectations, it has been assumed that Covid-19's negative impact on crude oil and petroleum products demand will began to decrease by June and normal economic activity will resume starting from August.
Hizmete Özel / Confidential www.tupras.com.tr21/05/2020Earnings Presentation 22
Appendix
Hizmete Özel / Confidential
Turkish Market, Jan-Feb 2019/20 (Million tons)
www.tupras.com.tr21/05/2020Earnings Presentation 23
3.29 3.55
0.0
1.0
2.0
3.0
4.0
2019 2020
Diesel
+7.7%
0.11 0.070.0
0.3
0.6
0.9
1.2
2019 2020
²Fuel Oil
0.34 0.36
0.0
0.5
1.0
1.5
2019 2020
Gasoline
0.66 0.66
0.0
0.5
1.0
1.5
2.0
2019 2020
¹Jet FuelMillionTons
¹Transit flight consumption included²Bunker excluded
-34.8%+7.3%
+0.2%
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OPET
www.tupras.com.tr21/05/2020Earnings Presentation 24
Opet has 1,693 fuel stations as of March 2020.
885 915 938 966 1,009 1,073 1,126 1,152 1,175 1,181
394 410 418 427435
431434 463 495 5121,325 1,325 1,356 1,393
1,4441,504
1,5601,615
1,670 1,693
2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 2020
Opet Sunpet
Market Shareas of February 2020
20.10 %
White Product
20.21 %
Black Product
Hizmete Özel / Confidential
Crack Margin Effect on Tüpraş in Q1 (FOB Italy Prices)
www.tupras.com.tr21/05/2020Earnings Presentation 25
ProductProduct Price ($/ton) Tüpraş 2020 Crack Margin ($/bbl)
2020 Q1 2019 Q1 Production Yields 2020 Q1 2019 Q1
LPG 429 421 5.0% -12.0 -25.7Gasoline 464 550 21.4% 6.9 4.5Naphtha 381 473 1.0% -7.3 -9.8Jet Fuel 458 605 17.3% 8.1 13.8Diesel 458 585 39.2% 11.3 15.4Diesel 1000 448 570 1.5% 10.0 13.4Fuel Oil 1% 345 394 0.9% 3.0 -2.5Fuel Oil 3.5% 225 372 0.7% -15.5 -5.8Others 162 430 8.2% -14.5 -8.6
Dated Brent ($/bbl) 50.3 63.2 95.2%
Total Crack Margin ($/bbl) Total Processed 2020 Q1 (mn bbl)
Total Effect (mn $) Total Effect (mn TL)2020 Q1 2019 Q1 Difference
5.5 5.6 -0.05 44.6 -2.2 -13
Hizmete Özel / Confidential
LPG4%
Gasoline21%
Naphtha1%
Jet17%Gasoil
43%
Fuel Oil2%
Kok4%
Asphalt7%
Other1%
LPG Gasoline Naphtha Jet Gasoil
Fuel Oil Kok Asphalt Other
Light Distil.25%
Mid. Distil.60%
Black Prod.13%
Other white
2%
Q1 Product Yields
www.tupras.com.tr21/05/2020Earnings Presentation 26
2020 Q1
White Product Yield (%) 85.7%
Production 6.0 mn tons
API 32.1
LPG4%
Gasoline20%
Naphtha2%
Jet17%
Gasoil33%
Fuel Oil15%
Kok2%
Asphalt5%Other
2%
LPG Gasoline Naphtha Jet Gasoil
Fuel Oil Kok Asphalt Other
Light Distil.26%
Mid. Distil.51%
Black Prod.21%
Other white
2%
2019 Q1
White Product Yield (%) 77.4%
Production 6.7 mn tons
API 32.4
Hizmete Özel / Confidential
Tüpraş Balance Sheet (Million TL)
www.tupras.com.tr21/05/2020Earnings Presentation 27
31.03.2020 31.12.2019 Diff. Diff. (%)Current Assets 22,939 27,919 -4,980 -18
Cash & C. Equivalents 10,995 10,652 343 3
Trade Receivables 4,423 4,788 -365 -8
Derivatives 756 304 452 149
Inventories 5,300 9,469 -4,168 -44
Pre-paid expenses 97 237 -140 -59
Other Current Assets 1,368 2,470 -1,102 -45
Long Term Assets 28,018 27,593 425 2
Financial Assets & Subsidiaries 1,084 1,363 -279 -20
Fixed Assets 20,752 20,587 164 1
Derivatives 105 99 6 6
Pre-paid expenses 172 199 -27 -13
Deferred Tax 4,341 3,768 573 15
Other Long Term Assets 1,565 1,578 -13 -1
Total Assets 50,956 55,512 -4,555 -8Short Term Liabilities 24,707 28,120 -3,413 -12
Financial Loans 8,076 5,178 2,899 56
Trade Payables 11,704 17,816 -6,112 -34
Derivatives 231 79 151 191
Provisions 178 117 61 52
Other ST Liabilities 4,517 4,930 -413 -8
Long Term Liabilities 15,458 14,255 1,203 8
Financial Loans 15,102 13,898 1,204 9
Payables & Provisions 315 316 -1 0
Derivatives 32 32 0 0
Other LT Liabilities 9 9 1 6
Total equity attributable to equity holders of the parent 10,615 12,963 -2,348 -18
Minority Interests 176 174 3 2
Total Liabilities & Equity 50,956 55,512 -4,555 -8
Hizmete Özel / Confidential
Tüpraş and Med Margins ($/bbl)
www.tupras.com.tr 28
($/bbl)Gross
MarginInventory
EffectClean Gross
MarginClean NET
MarginNet
MarginMed Margin
2019 Q1 9.9 0.8 9.0 3.2 4.2 3.6
2019 12M 9.2 0.1 9.1 3.6 3.7 1.7
2020 Q1 7.1 -2.7 9.8 3.9 1.2 1.8
8.1
9.3
3.74.2
1.2
5.34.6
1.7
3.6
1.8
2017 12M 2018 12M 2019 12M 2019 Q1 2020 Q1
Margins
Tüpraş Net Margin Med Margin
21/05/2020Earnings Presentation
Hizmete Özel / Confidential
Capacity Utilization (%)
www.tupras.com.tr 2921/05/2020Earnings Presentation
*Capacity utilization calculation is based on 30 mn tons for Q1 2019 and onwards. Nameplate capacity calculated by standard 330 days of operations.
101 101
87 91
4 7
97
105108
96 98
2016 2017 2018 2019
12M Capacity Utilization* (%)
Crude Oil Semi Product Feedstock Total
94100
67
8979
57
11
4
6
100
106
78
94
85
Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020
Q1 Capacity Utilization* (%)
Crude Oil Semi Product Feedstock Total
Hizmete Özel / Confidential
Finished Product and Semi Product Imports
21/05/2020Earnings Presentation 30
- -
189
233
-
HS Diesel ULSD Jet Fuel
Product Imports (Thousand Tons)
Q1 2020 Q1 2019
150 148
66
0
30
120
63
190
0
20
HVGO ASR F. Oil LSFO Naphtha MTBE
Intermediate Imports (Thousand Tons)
Q1 2020 Q1 2019
www.tupras.com.tr
Hizmete Özel / Confidential www.tupras.com.tr21/05/2020Earnings Presentation 31
www.tupras.com.tr