Analyst Meeting. 1Q08 Performance. Friday 16 May 2008

Transcription

1 Analyst Meeting 1Q08 Performance Friday 16 May 2008

2 Agenda 1Q08 Management Highlights Sales Report GRM & Plant Utilization CAPEX Financial Performance Industry Outlooks Conclusion 2

3 1Q08 Highlight Overview Finance 1Q08 average crude run at 84%, decreased 2% YoY, 6% QoQ Integrated GRM in 1Q08 at 9.68 $/bbl, slim margin in refinery, shortfall alleviate by our integration nature, petrochemical lifted up GRM. The combination of lower utilization and GRM caused gross profit to decline 20% YoY, 36% QoQ High volatilities in refining markets affected by soaring crude prices, weaken USD, flow of investment money into commodities markets and ongoing geopolitical concerns in a number of producing countries, including Nigeria, Iraq, and Venezuela Tension on crude price to continue as OPEC maintain its production levels despite high prices Cost reduction efforts shown the results, SG&A excluding loss from sales of investment reduced by 186 million Baht Changing accounting policy for inventory from LIFO to weighted average 2007 Dividend totaled 0.30 baht/share or 51.6% payout ratio Redeemed THB 360 million 10-year Baht Bond 3

4 Sales Report 4

5 1Q08 Product Sales Value by Market Oil products (~ 72% of sales value) Petrochemical products (~ 27% of sales value) Export 28% Domestic 72% Export & Reexport 36% Domestic 64% 1Q08 sales included Baht 2,978 million or USD 92 million excise tax & all oil funds mill.baht Oil Petrochem. Total mill.usd Oil Petrochem. Total 1Q07 35, ,385 = 49,878 OR 1Q07 1, = 1,467 1Q08 44,106 16,457 60,563 1Q08 1, , : FX 34 Baht/USD, 1Q08 : FX Baht/USD, 5

6 1Q08 Petroleum Product Sales Volume Mogas 9% LPG 2% Fuel Oil 0.2% Others 1% Naphtha 4% Lube 5% Asphalt Wax 8% Mogas 11% Fuel Oil LPG 1% 0.2% Others 1% Naphtha 4% Value Lube 6% Asphalt Wax 4% ATB 13% ATB 19% Diesel 52% Diesel 59% 1Q08 Volume = 1,987 m Ltrs 1Q07 Volume = 2,134 m Ltrs 1Q08 Volume = 1,987 m Ltrs 4Q07 Volume = 2,317 m Ltrs 1Q08 Value = Bt 44,106 m 1Q07 Value = Bt 35,493 m 1Q08 Value = Bt 44,106 m 4Q07 Value = Bt 49,415 m 6

7 Q2 07 Petrochemical Products Sale 1Q08 Petrochemical Product Sales Volume EPS 2% PS Polyol 9% 1% Others 2% EB/SM 0.5% BTX 21% Value EPS 2% PS Polyol 9% 2% Others 0% EB/SM 1% BTX 14% PP 31% CD-1 2% ABS 7% HDPE 8% Olefins PP 16% 35% CD-1 3% ABS 9% HDPE 9% Olefins 16% 1Q08 = 364,951 M/T 1Q07 = 342,216 M/T 1Q08 = Bt 16,457 m 1Q07 = Bt 14,385 m 1Q08 = 364,951 M/T 4Q07 = 368,911 M/T 1Q08 = Bt 16,457 m 4Q07 = Bt 15,830 m 7

8 GRM & Plant Utilization 8

9 1Q08 GRM: Soften due to market tension US$ / bbl GRM Petchem & others GRM Oil Integrated GRM 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q

10 Oil Capacity Utilization KBPCD 2006 Crude run 2007 Crude run 2008 Crude run 2006 % utilization 2007 % utilization 2008 % utilization % 89% 89% 89% 83% 87% 91% 93% 100% 88% 85% 85% 85% 90% 86% 82% 87% 86% 90% 84% 81% 84% 80% 82% 83% 84% 79% 70% 68% 38% JAN FEB MAR APR MAY JUN. JUL. AUG. SEP. OCT. NOV. DEC. Y. AVG. 60% 50% 40% 30% 20% 10% 0% 1Q07 2Q07 3Q07 4Q Q08 % Utilization 87% 88% 87% 90% 88% 84% 45-day turnaround 06 10

11 1Q08 Utilization: Petrochemical and lube Nameplate Capacity (LHS) Utilization 2007 (LHS) Utilization 2008 (LHS) %Utilization 2006 (RHS) %Utilization 2007 (RHS) %Utilization 2008 (RHS) Ethylene Propylene Butadiene Benzene Toluene Mixed Xylene SM HDPE PP ABS/AS PS EPS Lube Base Oil Asphalt KTA % Utilization 20 0 Remark: Utilization 2008 = 1Q08 annualized 11

12 CAPEX 12

13 Future Project Progress As of March CAPEX Amount (Million USD) Phase I Benefit/year (Million USD/year) % IRR Start Complete Progress Purpose HDPE Compound % 2Q07 1Q09 54% Increase capacity from 17 KTA to 57 KTA ABS Expansion % 2Q07 1Q09 70% Increase capacity from 96 KTA to 117 KTA Power Plant % 2Q07 3Q09 35% CHP 200 MW for internal use, reduce power & steam cost, improve power stability Safety Improvement n/a n/a % Total Phase II New Reg_EURO IV n/a 14% Comply to regulation Petroleum n/a 22% Increase capacity from 215 to 250 kbpd & Improvement improve product slate Propylene Booster n/a 36% Increase capacity by 100 KTA Port Dredging n/a 16% Accommodate 300,000 ton VLCC Total 1, Grand Total 1,

14 Financial Performance 14

15 Financial Highlights Unit: Million Baht 1Q08 1Q07 %YoY 4Q07 %QoQ Net Sales 58,280 46, % 62, % Cost of Goods Sold (55,481) (42,817) 29.6 (58,042) (4.4) Gross Profit 2,799 3, % 4, % Gross Margin 4.8% 7.5% 7.0% Other Revenue SG&A (782) (885) -11.6% (1,640) -52.3% EBITDA 2,135 2, % 2, % EBITDA Margin 3.7% 6.0% 4.4% Depre. & Amort. (817) (765) (775) EBIT 1,318 2, % 1, % Net Interest Expenses (252) (59) (156) Pretax Profit 1,066 1,969 1, % Taxes (9) (10) (0) Net Profit before Extra. 1,057 1,959 1, % Doubtful Account (10) (116) (60) FX. Gain/(Losses) Investment Gain (Loss) (367) 450 (482) Asset Gain (Loss) Other Expenses (5) (5) (1) Net Profit 1,628 2, % 2, % No. Share (M.) 19,500 19,500 19,500 Norm. EPS % EPS % BV

16 Balance Sheet: Healthy financial position Cash & S/T Investment Other Assets 127,828 17,642 29,804 48,798 15, ,175 12,673 18,454 21,945 58, ,422 7,229 17,528 21,489 64,414 Unit: Millon Baht Interest Bearing Debt Other Liabilities PP & E 61,388 82,953 62,311 92,777 61,779 94,405 Equities Q08 Treasury policy : Net Debt/Equity < 1.0x Net Debt/EBITDA < 2.0x Current Status = 0.11x = 1.22x 16

17 Key Financial Ratios 1Q08 1Q07 4Q07 Liquidity & Leverage Ratio (Times) Quick Ratio Total IBD / Equity Net IBD / Equity Liabilities / Equity Net IBD / EBITDA IBD / EBITDA EBITDA / Interest Exp Profitability Ratio Gross Profit Margin 4.8% 7.5% 7.0% EBITDA Margin 3.7% 6.0% 4.4% Net Profit Margin 2.8% 6.0% 3.6% ROE 6.9% 12.7% 14.0% ROCE 5.8% 9.5% 11.7% 17

18 Industry Outlooks 18

19 Crude price climbed up, a period for setting a new paradigm Price :$/BBL Dubai 2008 S pore GRM 2008 S pore GRM 2007 Dubai 2007 Dubai 2006 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec GRM : $/BBL Surging oil prices resulting from supply concerns, plants/ pipes shutdown, labor strike, flow of money to commodities market. 1Q08 Singapore GRM was moving in the same seasonal trend, expecting upward GRM in 2Q08 on driving season plus upcoming Olympic games Foresee crude price above 100 $/bbl with S pore GRM around 7 $/bbl until year end 19

20 GDP growth drives oil demand Major oil demand mainly from Asia New oil capacity mainly from ME and Asia % GDP growth US EU China India Japan World Source: Purvin&Gertz, 2008 World Petrochemical Conference, Mar 08 Reliance (India) to come on stream in Dec. 08, small impact to SE Asia refineries due to different markets IRPC Proposed Transportation Fuel Output (Million BBL / Year)

21 Refined oil prices shoot up, but not fuel oil spread Unit = USD / BBL Dubai ULG 95 -Dubai Gas Oil - Dubai Fuel Oil - Dubai ULG 95 Gas Oil 0.5%S Fuel Oil 180cst S pore GRM Dec07 J A N'08 F E B'08 M A R'08 1Q' Apr High gas oil spread but deep discount in fuel oil spread brought down GRM for non-complex refineries As refineries keep upgrading, fuel oil might come to scarcity, consequently, fuel oil price could be driven up 21

22 Polyolefin: Price inflated from costs. Unit = USD / Ton Naphtha Ethylene - Naptha HDPE - Naptha PP - Propylene 1,800 Ethylene Propylene HDPE PP 1,548 1,576 1,593 1,610 1,620 1,572 1,600 1,439 1,356 1,380 1,380 1,400 1,331 1,326 1,274 1,279 1,275 1,229 1,222 1,203 1,240 1,160 1,144 1,155 1,179 1,200 1,120 1, Q'07 2Q'07 3Q'07 4Q' Jan 08 Feb 08 Mar 08 1Q'08 25/4 2/5 Upstream Naphtha marked its new high on 9 May at $ 1,004/ ton following soaring crude price. This high cost brought down production volume of many olefins producers Monomer Ethylene demand dropped from high price Propylene strong demand despite high price resulting from limited supplies and strong demand in PP Downstream All are still in strong demand in Asia though environmental concerns, especially PP expected to grow 8% pa. in China during next 4 years. Foresee all prices at high levels, chasing after crude prices 22

23 China s s Basic Chemical: Import still required 23 Source: 2008 World Petrochemical Conference by Mar 26-27, million ton new supply from Middle East Huge demand to absorb outputs from Asia and Middle East: Although shrink in margin are anticipated, there re many factors may come to rescue: Naphtha-fed producers will be squeezed, bringing down overall olefins output Deferral of new outputs from Iran, Middle East, China due to logistic and technical problems High construction cost may deter newcomers Growing demand in China

24 World PS, ABS Supply/Demand Balance ABS PS Source : CMAI 2008 Presentation Still growing demand for ABS, while PS stagnant due to recycling encouragement and environmental concerns 24

25 Styrenic: Prices inflate, margin squeezes Unit = USD / Ton 2,000 1,800 1,600 1,400 1,200 Naphtha ABS - SM PS - SM PS - Naphtha Styrene ABS PS EPS 1,763 1,764 1,773 1,810 1,830 1,782 1,677 1,715 1,700 1,619 1,531 1,446 1,448 1,375 1,393 1,373 1,401 1,402 1,356 1,358 1,285 1,204 1, Q07 2Q07 3Q07 4Q JAN 08 FEB 08 MAR 08 1Q08 2 May 25

26 BTX: Margin shrinks from peak naphtha price 1,300 Price : $/MT 1, Naphtha 500 Jan 06 Mar 06 May 06 Jul 06 Sep 06 Nov 06 Jan 07 Mar 07 May 07 Jul 07 Sep 07 Nov 07 Jan 08 Mar 08 May 08 Jul 08 Sep 08 Nov 08 Note : 1. BTX price from Platt s (Benzene, Toluene & Mixed Xylene-FOB SEA). 2. Naphtha price from ICIS LOR (CFR Japan). 3. Forecast Price from CMAI as of Dec,07. 26

27 Conclusions & Strategy 27

28 Conclusions: On-going improvement initiatives Company Focus on cost efficiency and diversification Exploit benefit of integration to immunize the market fluctuation Market diversification, expand to new promising markets Product diversification, produce more specialty grade petrochemical products Reducing cost of manpower, streamlining work process Aim to trim down selling and administration expense by 10% Industry Upcoming of weak petrochemical margin is uncertain. Approaching oil peak season in Q2 as a driving season and upcoming Olympic games High demand in China and SE Asia Reliance (India) will firstly serve Europe. Fuel oil is forecasted to be in shortage during Forecasted petrochemical margin may deter those new comers. 28

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