IRPC Public Company Limited. Analyst Meeting. 1Q12 Performance. 10 May 2012

Transcription

1 IRPC Public Company Limited Analyst Meeting 1Q12 Performance 10 May 2012

2 1Q12 Highlights AGENDA Operation Performance Financial Performance Industry Outlooks Project Progress & Future 2

3 Operation 1Q12 Highlights % YoY Real GDP Overview US Euro Zone Japan China Thailand World Q1/12f Q2/12f Real GDP in 2012f Bloomberg World Bank IMF World China Source: IMF, April 12, Yearly data / Bloomberg, 25 Apr 12. MKT GIM MKT GIM Utilities Petrochem Petroleum 83% 56% 86% %Utilization Q11 4Q11 1Q A/C GIM A/C GIM2 Utilities Petrochem Petroleum Q11 4Q11 1Q12 Global economy slowly improved after suffering a sluggish growth worldwide in Global GDP was projected to drop below 3% in Key challenges are global uncertainty and fragile growth, oil price volatility caused by geopolitical uncertainty, policy implications and financial stress in Euro zone. Crude oil price surged and became volatile mainly due to the anxiety of disruption in supply caused by the unrest in oil-producing countries in ME and North Africa. Average crude price in 1Q12 rose by 10 $/bbl (9%), from 106 $/bbl to 116 $/bbl. Refining margins were slightly weaker largely due to decrease in diesel spread after the end of winter and a higher crude price. Petrochemical was pressured by cost push whilst the demand was still sluggish because of concerns on China s policy and western economic crisis. 1Q12 average crude run was 184 KBD, increasing by 52% when compared to that in 4Q11 at 121 KBD as no more planned shutdown. Market GIM in 1Q12 was 7.4 $/bbl : refinery 4.5 $/bbl, petrochemical 1.5 $/bbl and utilities 1.4 $/bbl, lower than that in 4Q11 at 9.4 $/bbl as a result of squeezed margin and lower demand. 1Q12 stock gain was 0.3 $/bbl. (including hedging gain/(loss)&lcm) 3

4 1Q12 Highlights (Con t) Operation Operation Successful PMS implementation for CHP to prevent blackout and enhance plant reliability on 22 February Strategic cooperation with Sumsung Engineering Company by dispatching a group of expert engineers to start up Sumsung s refinery plant in UAE on 14 March Successful GHU Project, starting up on 10 February 2012 which can produce EURO 4 gasoline. PRP Project: 91.24% progression, 1 st MC on 2 May 2012 and expected commissioning on July Lube Group I Project: 89.96% progression Phoenix Project progression 27% at the average. Finance IRPC obtained 7,300 M and 175 M$ loan and committed line from banks in January Moodys affirmed IRPC s credit rating at Baa3 with stable outlook. Alternate change of accounting policy in realization of derivative instrument to reflect relevancy and compatibility with peers was implemented 4

5 Operation Performance 5

6 Oil Price Movement, Product Crack & GRM $/BBL Avg. Dubai Ending Price Dubai Dubai ULG Gasoil Fuel Oil S pore GRM Q11 2Q11 3Q11 4Q11 1Q12 Apr ULG 95 - DB $/BBL Q11 2Q 3Q 4Q 1Q12 Apr12 Gas oil - DB $/BBL Q11 2Q 3Q 4Q 1Q12 Apr12 1Q11 2Q 3Q 4Q 1Q12 Apr HSFO - DB $/BBL Average Dubai price in 1Q12 was 116 $/bbl, 10 $/bbl higher than that in previous quarter mainly as a consequence of geopolitical oil sanction on Iran as well as aggregate supply disruption in Sudan, Yemen and Syria. ULG spread improved as a result of the firm regional demand especially from Indonesia whilst refineries in Asia were under the maintenance. Diesel spread decreased mainly due to the end of winter and China s economic growth slow down. HSFO spread was higher continuously because of Japan s high demand for power generation. Moreover, the upgraded refinery plant started up. This brought about less fuel oil. Source: Platts, IRPC Analysis Team 6

7 Lube Base Price Movement $/Ton 2,000 Lube Base FO %S 500SN 150BS Asphalt 1,500 1, FO %S 1Q11 2Q11 3Q11 4Q11 1Q12 Apr SN FO %S Spread Q11 2Q 3Q 4Q 1Q12 Apr12 Asphalt FO %S Spread Q11 2Q 3Q 4Q 1Q12 Apr-12 $/Ton $/Ton Market GRM Lube Base Refined Q11 2Q 3Q 4Q 1Q12 Apr12 $/BBL Lube and asphalt spread decreased as a consequence of a slowdown in the investment in the infrastructure in China. 7

8 Aromatics Price Movement $/Ton 1,800 1,600 1,400 1,200 1, Aromatics Naphtha Benzene Toluene Mixed Xylene Naphtha 1Q11 2Q11 3Q11 4Q11 1Q12 Apr 12 BZ-Naphtha $/Ton Toluene - Naphtha $/Ton Q11 2Q 3Q 4Q 1Q12 Apr12 1Q11 2Q 3Q 4Q 1Q12 Apr12 MX-Naphtha $/Ton Q11 2Q 3Q 4Q 1Q12 Apr12 Aromatics spread slightly decreased due to the higher naphtha price whilst the demand was still stable and many refineries went into the maintenance shutdown in March. Seasonal heavy BZ turnarounds in Asia have commenced and BZ supply was limited. 8

9 Olefins Price Movement 2,000 Olefins Naphtha Ethylene Propylene HDPE PP $/Ton 1,500 1, Naphtha 1Q11 2Q11 3Q11 4Q11 1Q12 Apr 12 HDPE - Ethylene - Naphtha $/Ton PP - Propylene - Naphtha $/Ton HDPE - Ethylene Ethylene - NP Q11 2Q 3Q 4Q 1Q12 Apr PP - Propylene Propylene - NP Q11 2Q 3Q 4Q 1Q12 Apr12 Olefins spread decreased due to higher naphtha price and crude oil. Polyolefins spread was relatively stable. The demand slightly decreased as a result of the anxiety over the US and EURO economic situation. 9

10 $/Ton 2,500 Styrenics Movement Styrenics Styrene ABS PS EPS 2,000 1,500 1, Styrene 2Q11 1Q11 3Q11 4Q11 1Q12 Apr 12 SM - Naphtha $/Ton ABS - Feed $/Ton Q11 2Q 3Q 4Q 1Q12 Apr12 PS - SM - Naphtha $/Ton PS SM SM - NP Q11 2Q 3Q 4Q 1Q12 Apr12 Market PTF MKT PTF Aromatics Olefins Q11 2Q 3Q 4Q 1Q12 Apr Q11 2Q 3Q 4Q 1Q12 Apr12 Spread squeezed due to the shrinkage of demand caused directly by China s economic growth slowdown. $/Ton 10

11 GRM & PTF $/BBL MKT GRM Lube Base 7.0 Refined Q11 2Q 3Q 4Q 1Q Market GIM Power&Utility Petrochem Petroleum $/BBL Q11 2Q 3Q 4Q 1Q Stock Gain/(Loss) Net LCM & Oil Hedging $/BBL $/BBL MKT PTF Q11 2Q 3Q 4Q 1Q Aromatic Olefins Q11 2Q 3Q 4Q 1Q Accounting GIM Power&Utility Petrochem Petroleum $/BBL Q11 2Q 3Q 4Q 1Q

12 Optimized Operation Crude Intake Utilization Sweet Crude Sour Crude Unit : KBD Q11 4Q11 1Q12 FY11 % 100% 80% 60% 40% 20% Petroleum 99% 97% 82% 82% 79% 80% 56% 46% Refinery Lube 87% 86% 100% 80% 60% 40% 20% % 95% 96% 81% 71% 86% Petrochem 98% 94% 84% 59% 74% 55% Olefins Aromatic Styrenic 43% 101% 98% 83% MBBL % 1Q11 2Q 3Q 4Q 1Q12 0% 1Q11 2Q 3Q 4Q 1Q12 Petroleum Production Petrochemical Production MBBL MBBL MBBL MBBL 13% 12% 10% 10% 14% 14% 16% 14% 9% 8% 8% 8% Others** Naphtha Gasoline 309 KTon 196 KTon 321 KTon 1,130 KTon 19% 18% 20% 19% 19% 20% 19% 18% Aromatic Olefins 41% 43% 41% 43% Diesel 40% 36% 39% 38% Polyolefins 13% 14% 15% 14% 5% 6% 5% 4% 5% 5% 5% 5% 1Q11 4Q11 1Q12 FY11 **Others = Reformate + DCC Product + Intermediate Fuel Oil Lube Base Oil Asphalt 22% 26% 22% 25% 1Q11 4Q11 1Q12 FY11 Polystyrenics 12

13 Revenue Structure 50,410 Revenue 56,820 74,183 2% 2% 2% 24% 20% 20% 74% 78% 78% 1Q11 4Q11 1Q12 Unit : M Others Petrochem Petroleum Petroleum Sale 1Q11 4Q11 1Q12 1.Gasoline Gas Oil Fuel Oil Lube Base Oil & Asphalt Others Volume (M.bbl) Distribution Channel 30% 37% 33% 70% 63% 67% Export Domestic Petrochem Sale 1Q11 4Q11 1Q12 1.Aromatics Olefins Volume (KMT) Q11 4Q11 1Q12 13

14 Gross Integrated Margin (GIM) Gross Integrated Margin Stock G/(L) net LCM + Hedging Market GIM Ending Inventory (Million BBL) 31 Dec Mar 12 Crude Petroleum Petrochemical Total (0.9) 1Q11 4Q11 1Q12 FY11 Cost (USD/BBL) 31 Dec Mar 12 Crude Petroleum Petrochemical Q12 market GIM was 7.38 $/BBL, accounting for 3,856 MB, increasing by 608 M when compared to that in 4Q11. The variance came from: Impact of sales volume 1,662 MB Impact of price (1,085) MB CHP project 30 MB Stock/hedging gain was 0.34 $/BBL, accounting for 175 MB, increasing by 1.3 $/bbl when compared to that in 4Q11. This was because of the increase in crude oil price. 14

15 Financial Performance 15

16 Financial Performance Net Profit Cash Cost Unit : M 3, Crude Run Unit : KBD 184 Interest Exp. Opex Unit : $/bbl 2,764 1, ** (1,197) (325) (1,522) Stk G/(L) +LCM+Oil Hedging Operation Q11 4Q11 1Q12 1Q11 4Q11 1Q12 **Turnaround 31 Oct-18 Dec 11 M.BBL FX Q11 4Q11 1Q12 Net Sales MB 56,545 50,117 73,915 EBITDA MB 4, ,973 NP MB 3,773 (1,522) 944 EPS B/share 0.19 (0.07) 0.05 Unit : $/bbl 1Q11 4Q11 1Q12 ACC GIM MKT GIM ACC GRM MKT GRM Stock /Hedging Gain (Loss) 5.88 (0.94)

17 NP Variance Analysis 1Q12 vs 4Q11-1,522 2,466 MB 944 Benefit 2.18 MB/day 0.35 M$/day 2,000 Crude run 63 KBD 1, (1,000) (1,197) 1,662 1, (325) GIM 2.01 $/BBL (2,000) 4Q11 Volume Mkt Price CHP Stk G/(L) Others +LCM+ Oil Rev/(Exp) Hedging Asset Disposal MTM securities FX + Net Interest Exp. Others 1Q12 Operation Stock gain/(loss) + LCM + Oil Hedge 17

18 Financial Position Financial Position Debt Profile Unit: M Cash & ST Investment Other Assets PP&E 132, ,361 4,590 3,994 28,531 74,356 58,048 27,667 40,518 31,970 70,077 75,921 70,415 76,873 IBD Other Liabilities Equities Bond (USD) 18% Bond (BHT) 24% ST Debt 19% LT Debt 39% Net Debt = 35,928 M Loan (M.THB) ST Debt 7,555 LT Debt 15,972 Bond (USD) 7,351 Bond (BHT) 9,640 Total 40, Q12 Financial Ratios Debt Structure F X.USD/THB = Net Debt/EBITDA Net Debt/Equity Interest Rate (%) Currency (%) Q11 4Q11 1Q12 Note : EBITDA after LCM < 2.0x Q11 4Q11 1Q12 < 1.0x Fixed 47% Fixed USD 25% USD Float Float 53% Avg.Cost of Debt (%) 5.38 THB THB 75% 18

19 Cashflow Unit : M 1Q11 1Q12 Operating 3,644 (8,621) EBITDA 4,876 1,973 Changes in assets/liabilities (1,232) (10,594) + 1Q11 1Q12 Investing (866) (2,830) CAPEX (PP&E, Intangible asset) (867) (2,835) Other investments 1 5 Free Cash Flow 2,778 (11,451) + Financing ,802 Drawdown/(Re/Prepayment) of ST/LT Loan ,255 Interest and Dividend (351) (453) ESOP Beginning Cash 4,770 2,956 + Net Increase in Cash = 3, Ending Cash 7,979 3,307 19

20 Change in Accounting Policy Since 1 Jan 2012, IRPC has changed the accounting policies relating to the recognition of derivatives instruments by unrecognizing unrealized gain/(loss) on derivative financial instruments. This is to reflect relevancy and compatibility with peers. The effect of change in accounting policies has been adjusted retrospectively as follows: (Unit : M ) (Unit : M ) Statement of Income 1Q11 4Q Financial Position 31 Dec 2011 Other Income /(Expenses) (62) Other Current Asset (58) Finance Cost (50) (43) (103) Other Current Liabilities (49) Net Profit (165) Retained Earning (9) 20

21 Industry Outlook 21

22 Refining Industry Outlook World Product Demand Growth Source : PIRA Japan continued to consume more low-sulfur crudes and fuel oil due to dwindling nuclear power. Refinery upgrade keeps fuel oil supply tight. Consumption of LPG, Naphtha, gasoline and gasoil also continued to expand at a robust rate. Gas oil demand especially in Europe is anticipated to recover in Q3. Refinery closure at Atlantic basin supports product price. 22

23 Refining Industry Outlook (Con t) Asia Pacific Annual Demand Growth Asia Pacific demand growth in year 2012 is 3.6%. Nuclear power crisis results in elevated levels of crude oil and fuel oil burning for the next few years. China economic growth is slow in 2012 due to government efforts to cool the economy. Asia Pacific Incremental Product Demand Source : FGE Demand turns in the slower second half on lower growth from China, even though as Japan continues to consume more low-sulfur crudes and fuel oil due to dwindling nuclear power. Fuel oil demand led the way on the back of Japan and strong bunker demand, growing by 5.5%. Consumption of LPG, gasoline and gasoil also continues to rise at a robust rate. Source : FGE 23

24 PE Outlook Global Polyethylene Capacity Additions The remaining capacity starts mostly located in Asia, and will support growth within the region. The new addition capacity in 2016 onwards is expected in North America. The demand growth exceeding capacity growth during the period thereby driving global operating rates higher. Source : IHS Integrated Naphtha Cracker with Butadiene and BTX, margins will be supported by the continuing tightness in the Butadiene market. 24

25 PP Outlook World PP Supply & Demand Demand (4.2/5.2) Expected demand remain growth for polypropylene especially in Asia. Over the next 5 years, South East Asia will shift from a net importer to a significant net exporter of more than 500 million tons. The slow and steady demand destruction in developed markets like North America and West Europe will be off-set by healthier demand growth rates in developing market like China or South America. 25

26 ABS/PS Outlook ABS-Global Demand ABS market continue to grow ahead of global GDP, at the rate of about 5% per year over next 5 years. China have stimulated appliance demand dramatically although the economic slowdown. ABS demand dominated by Northeast Asia which accounts for 67% of global demand. PS-Global Demand Source : Styrolution commissioned study PS demand growth is expected to moderate but reach pre-recession levels in the timeframe. Demand prospects for PS are better than in recent years, due to the increasing cost profile of some competition resins. Producers are concerned with profitability than market share, which resulted in better return. Source : Styrolution comissioned study 26

27 EBIT of Global Base Chemical and Plastics Source : IHS April 2012 By 2013, the Global Base Chemical and Plastic EBIT will begin the next-up cycle returning to very high profits levels and fully emerged by

28 Project Progress

29 CHP Project Improvement Power Management System (PMS) Start commissioning on 22 Feb 2012 Generation Transmission Customers/Users Load shading, loop system to secure and balance power for both internal and external sale to the grid Proven system reliable result VS 2 times blackout caused by the grid in 1Q12 Cost saving from avoiding blackout approximately 200 M each time. Cost saving from CHP 3-5 M /d 29

30 Pre-Phoenix Projects: PRP Progress PRP Project : 91.24% Progress Propylene Booster (PRP) Completion : 2Q12 SCOPE New Propylene plant with increasing capacity 100 KTA. by Metathesis technology TIME Timeline for 1. EHIA approval : Sep DIW approval : End of May MC completion : June Commissioning : July COD : September 2012 Status Approved On progress On progress On progress On progress COST 2,000,000 Man hours without Loss Time Injury (LTI) Within Budget Achievement 30

31 Phoenix Projects: EURO IV Project Progress Project Description: Upgrading Gasoline to be EURO IV spec. Capacity Expansion: None. CAPEX : 49 M$ / Benefits: 13 M$/yr GHU Project: 100% Completion Gasoline Euro IV (GHU) # 8 Petroleum quality improvement to clean fuel and green growth development Gasoline Euro IV (GHU): Start Up : 10 Feb 12 Operation with approx % Capacity Benefit in 1Q12 : 1.15 M$ Multi-pipeline for upgrading HSD Project: 45.1% Progress GHU Plant construction GHU Plant Diesel Euro IV: 1Q13 (on schedule) EIA approval since Sept 11 During construction process Pipe line installation permission DOH & CHERNGNERN SDAO: APPROVED MD / RID / IEAT : On Progress Benefit from swap in 1Q12: 3.37 M$ IRPC Multi- Product Pipeline PTTGC Euro IV Diesel 31

32 Phoenix Projects: Lube Group I Project Progress Project Description: High Value Added Lube specialty product, TDAE & Bright Stock Capacity Expansion: TDAE 28 KTA and 150-BS 38 KTA increasing. Benefits: 33 M$/yr # 7 Lube group 1 specialty product Project Progress : % Timeline for 1. MC Completion: Jun Commissioning : July COD : Aug 12 Status On Progress On Progress On Plan TDAE 22,000 TPA 150-BS 82,000 TPA Completion 2Q12 TDAE 50,000 TPA 150-BS 120,000 TPA CAPEX: 31 M$ EBIT 33 M$/yr 32

33 Phoenix Projects: Ethylene Specialty Development Progress Project Description: High Value Added Product of HDPE Specialty & PE Wax Capacity Expansion: None Benefits: 5 M$/yr HDPE 140 KTA Commodity Product HDPE 140 KTA Specialty Product # 3 Ethylene Specialty Development HDU I : Complete HDUII & Convert Plant : Completion 4Q12 Project Progress : % CAPEX: 9 M$ Timeline for 1.MC Completion: Dec 12 2.Commissioning : Jan 13 3.COD : Jan 13 Status On Progress On Plan On Plan EBIT 5 M$/yr 33

34 Investor Relations Contact : ir@irpc.co.th Tel , Fax presentation is available at 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. 34

35 Phoenix Projects: Progress Initiative No. STATUS E Execute S Study #1: Petrochem Operation and Energy Efficiency #2: Upstream Project for Hygiene and Value Added Products (UHV) E E ETP : Under Back Pressure Turbine modification. HDPE : Under package preparation for Butene-1 plant improvement. PP: Under TSA of PP Plant Improvement by Novolen During EPC bidding process. EHIA is in Focus group & Attitude survey (Kor.2) process. #3: Ethylene Specialty Products E HDU Phase I: Complete construction. HDU Phase II: Basic Engineering Design is developing. #4: EBSM Upgrading for ABS Specialties #5: Petroleum Operation and Energy Efficiency #6: Supply Chain Optimization (Griffin and Trading) E E E EBSM upgrading: EHIA approved by ONEP on June Public hearing has been done and expected for DIW approval in June Execute Energy Efficiency Improvement program with PTTES since April 2012 for 21 months. During consideration of the Steam Management program. Complete ISC phase 1 : Orion Program for schedule control implementation. #7: Lube Group I Specialty Products Focus E Under construction which expected to be completed in June 2012 and COD in July

36 Phoenix Projects: Progress Initiative No. STATUS E Execute S Study # 8. Petroleum Quality Improvement to Clean Fuel and Green Growth Development # 9. Maximize Tank Efficiency with LCT # 10. Dry Port Commercialization E E E GHU: Construction has completed and started up plant on 10 Feb GHU is operating now with ~ 80-90%. Multi-pipeline: EIA had already been approved. During EPC award and pipe line installation permission process. In year 2012 : Managing 45 tanks from 48 tanks (26 tanks for internal customer and 19 tanks for external customer) and already have 1.56.M$ benefit in the first quarter of BCT Port: Budget has been approved for basic infrastructure & foundation improvement to support further bulk business. # 11. Build and Sustain Land for Green Industrial Complex E IP: During final master plan and EHIA report preparation for submission to ONEP. Bankai: Under EIA approval process by expert committee of ONEP. # 12. I'M ACE: IRPC Service Solutions E On Going 1. Service Solution Smart Planning, 2. Financial EBIT tracking, 3. IRPC&TABS 2012 service contract preparation. # 13. Petrochem Catalyst Commercialization E During commercial production and catalyst testing by customer. # 14. Performance Chemical Business Development Project E PP-inline: During PMC award and EIA is in PP2 process. 36