May 218
Disclaimer 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 a variety of 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.
Content Refining Market Slides 4-1 Turkish Market Slides 11-15 Company Overview Slides 16-25 Operations Slides 26-31 Key Financials Slides 32-42 Outlook Slides 43-48 Appendix Slides 49-56 3
REFINING MARKET
Brent Crude Oil Prices ($/bbl) 8 69 58 76 PROS OPEC & non OPEC supply cut Political instabilities in Middle East Future of nuclear agreement Healthy PMI data in developing countries Expectation of high global GDP 47 CONS Increase in number of rigs & production in US 36 Concerns about future of OPEC & non OPEC product cuts Inventory Levels 25 4.1.216 26, 1.2.216 29.2.216 3.3.216 27.4.216 26.5.216 24.6.216 22.7.216 19.8.216 19.9.216 17.1.216 14.11.216 12.12.216 12.1.217 9.2.217 9.3.217 6.4.217 4.5.217 23.5.217 2.6.217 18.7.217 15.8.217 13.9.217 11.1.217 8.11.217 6.12.217 8.1.218 5.2.218 5.3.218 4.4.218 2.5.218 3.5.218 High crude exports of OPEC Source : Platts As of May 3th REFINING INDUSTRY 5
Refinery Capacity Change Thousand Barrels/Day 4 3 2 1-1 -2-3 1,8 1,4,9,5, 2 42 7 244 27 52 53 16 334 81 1,7 1,8 1 36 12 3 526 25 15 64-116 Net Capacity Additions (mb/d) 29 21 211 212 213 214 215 216 217 218 33 156 417 51 4 181 34 16 2 244 15 12 84 135 195-22 1,8 1,5 1,3 1,3 1,1,6,6,3 212 213 214 215 216 217 218 219 22 221 222 223 China India Middle East Other Asia Other Japan North America Europe 343 46 76 4 198 39 32 18 4 52 1,5-255 -145-24 -14-4,7-443 -13-143 -91 15 16 364 63 35 65 2-543 -486-19 -266-775 -421-546 -352-189 -268-57 Source:, Reuters, International Energy Agency, Tüpraş, sector reports and news REFINING INDUSTRY 6
Middle Distillate Cracks ($/bbl) 215 216 217 218 2 Diesel 2 Jet Fuel 16 16 14,8 13,6 12 12,1 12,2 12,6 1,4 14,3 11,5 1, 15,1 12 11,9 14,4 13,7 14,4 13,8 11,4 9,1 8 7,2 7,6 8 9,5 6,6 8, 4 4 Jan Feb Mar Apr *May Jun July Aug Sep Oct Nov Dec Jan Feb Mar Apr *May Jun July Aug Sep Oct Nov Dec Source : Platts As of May 3th REFINING INDUSTRY 7
Gasoline and High Sulphur Fuel Oil Cracks ($/bbl) 24 Gasoline 215 216 217 218-4 High Sulphur Fuel Oil 18,6 18-7 15,7-8,7-11,9-1,2 121,4 12, 12,1 9,8 1,2 1,6 13, 11,9 9,7-12,5-14 -13,2-11,9-12,7-13,1-12,2 6-17 -15,2-16,7 Jan Feb Mar Apr *May Jun July Aug Sep Oct Nov Dec -2 Jan Feb Mar Apr *May Jun July Aug Sep Oct Nov Dec Source : Platts As of May 3th REFINING INDUSTRY 8
Quarterly Product Crack Margins ($/bbl) While diesel & jet cracks outperformed in Q1 218 compared to a year ago, gasoline & fuel oil cracks declined significantly during the same time frame. 1615,7 14 12 1 12,3 2 18 15,2 1,5 1,7 19,4 Diesel 9,2 8 8,9 7,9 6 Q1 Q2 Q3 Q4 Gasoline 14,6 13,1 18,9 12,4 1,8 11,2 1615,2 14,5 15, 14 14,3 13,5 13,3 13, 12,8 12 1,9 1,9 1,9 1 Q1 Q2 Q3 Q4 215 216 217 218 Jet Fuel 16 14,4 14 12 1 9,5 13,3 11,2 9,9 12,4 1,5 12, 8 7,3 7,7 8 6 Q1 Q2 Q3 Q4-4 -8-9,1-11,6-12,1-12 -16-12,6-13,2 High Sulphur Fuel Oil -7, -6,9-15 -13,1-1,6-2 Q1 Q2 Q3 Q4 9,4 1,2-1, -9,4-15,5 REFINING INDUSTRY 9
Crude Price Differentials ($/bbl) Ural Differentials Heavy Crude Price Differentials 1 Brent Brent -,6-1 -1,2-1,6-2 -2,1-2,3-2,4-1,8 -,3-1,3-2 -4-6 -3-8 -4 Jan Feb Mar Apr *May Jun Jul Aug Sep Oct Nov Dec 212-217 Min. 215 216 217 218-1 11Q1 11Q2 11Q3 11Q4 12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 14Q4 15Q1 15Q2 15Q3 15Q4 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 17Q4 18Q1 *18Q2 Iran Heavy Kirkuk Kuwait Basra Heavy Arab Heavy *18Q2: April and May data REFINING INDUSTRY 1
TURKISH MARKET
Turkish Economy Strengths Population (mn) 1 GDP (%) 82 81 1.4% growth in last 5 yrs -4 yrs >65% 7,5 9,2 8,8 22-214 4.9% 21-214 5.4% 7,4 8 79 78 82 81 81 8 79 216 217 218 219 22 5 2,5 4,2 4, 3, 2,9 2,1 21 211 212 213 214 215 216 217 27 26 25 24 23 22 21 Source: EMRA, TSI 22,3 Diesel Consumption (mn ton) 8.8% average growth in last 5 yrs 24,2 25,1 26,1 4% annual growth 27,7 216 217 218 219 22 REFINING INDUSTRY 22 165 Car ownership per thousand people 127 134 67% 11 55 214 215 216 217 176 213 12
Turkish Consumption (Milyon ton) 215-217 Diesel Jet Fuel 217 216 24,17 22,31 +8.3% 217 216 4,52 4,4 +2.7% -4% 215 2,56 +8.5% 215 4,58 1 14 17 21 24 Gasoline 1 2 3 4 5 Fuel Oil* 217 2,3 +3.1% 217,49-15.7% 216 215 2,23 2,1 +6.5% 216 215,58,6-3.5% Kaynak: EMRA *Bunker excluded. 1 2 2 3 REFINING INDUSTRY 1 13
Strong Turkish Market, 3M 218 (Million tons) Tüpraş is well positioned in a growing, short market. Diesel and jet fuel consumption in Turkey in the first 3 months of 218 grew significantly driven by infrastructure projects, aviation growth and consumption of heavy duty vehicles. Diesel Jet Fuel 218 5,61 +13.4% 218,97 +17.3% 217 4,95 217,83 1 2 4 5 6 Gasoline Fuel Oil* 218,52 218 +8.9%,14-25.3% 217,48 217,19 *Bunker excluded Source: EMRA REFINING INDUSTRY 14
Turkey s Import / Export Balance (Net) (Million Ton) 4 Export 2,4 3,2 1,,7,,3-4 -3,1-3,1-8 Import -12-16 -12, -13,2 213 214 215 216 217 LPG Gasoline Diesel Fuel Oil Jet Source EMRA REFINING INDUSTRY 15
COMPANY OVERVIEW
Tüpraş Shareholder Structure %77 %2 %3 Publicly Traded Energy Investments Inc. (SPV) %51 *Distribution of Domestic/ Foreign Ownership of Tüpraş Shares Foreign Ownership %18 %79,98 Free Float %4 %49 %1 Domestic Ownership %83 *As of December 31th, 217 COMPANY OVERVIEW 17
Tüpraş Refining Assets & Distribution Network Baku OPET Marmara Terminal 721, m3 İstanbul İzmit OPET Giresun Terminal 43,13 m3 Turkey Storage Ankara Kırıkkale Capacity İzmir Batman Tüpraş : 58% Opet : 9% Other Companies : 33% Total Capacity : 28.1 mn ton OPET Antalya Terminal OPET Mersin Terminal 19,392 m3 24, m3 Nelson Complexity : 9.5 Tüpraş Storage Cap. : 7.2 mn m 3 OPET Storage Cap. : 1.1 mn m3 Crude Pipeline Terminal Kirkuk Refinery İzmit 11. MT Capacity NC: 14.5 Storage Capacity: 3.3 mn m 3 İzmir 11. MT Capacity NC: 7.66 Storage Capacity:2.51 mn m 3 Base oil 4 k tons Kırıkkale 5. MT Capacity NC: 6.32 Storage Capacity: 1.41 mn m 3 Batman 1.1 MT Capacity NC: 1.83 Storage Capacity:.25 mn m 3 COMPANY OVERVIEW 18
High Complexity (Nelson Complexity of Refinining Companies) İzmit After RUP 15 1 5 14,5 14,5 Tüpraş After RUP 13, 12,6 11,8 11,6 11,5 11, 1,4 9,9 9,8 9,6 9,5 9,5 9,4 9,2 9,2 9, 8,8 8,7 8,4 Tüpraş Before RUP 8, 7,3 7,3 7,1 7,1 7,1 7,1 6,8 6,5 5,9 5,8 5,8 İzmit Ref. Valero Reliance Essar Marathon Oil Holly-Frontier Neste BP Tesoro Thai Oil IOCL Tüpraş-215 Hellenic PKN MOL SHELL Petrom Galp Saras Petrobras Tüpraş Lukoil HPCL CPCL BCP Esso(Thai) S-Oil MRPL SK Energy BPCL COMPANY OVERVIEW 19
Crude Suppliers of TÜPRAŞ (Million Tons) In 217, Tüpraş purchased 25 different types of crude oil from 14 countries, with gravities ranging between 18-47 API. 9 Africa America Europe CIS Middle East 8 7 6 65 67 63 71 76 79 5 Crude Type 217 4 %5,3 3 %36 %58,8 >34 3> 3-4 2 1 6 17 15 1 12 6 13 13 14 14 3 11 2 3 1 1 2 1 1 7 212 213 214 215 216 217 COMPANY OVERVIEW 2
Sales By Customer (217) Customer Groups Sales to Distributors Bitumen %11 Military %1 LUKOIL %4 TP %3 OTHER %13 POAŞ %26 Export %18 Dist. %45 BP %15 Other %6 Petkim %1LPG %4 Jet %5 THY Opet %9 SHELL %15 OPET %25 Total : 31.5 mn ton Distributors : 14.3 mn ton COMPANY OVERVIEW 21
Competitive Advantages of Tüpraş Added Value Created by Tüpraş Local Market Dynamics Cost Base of Tüpraş Best Fit for the Market with high diesel yield High Economic Growth Energy Efficient High Complexity of Tüpraş Short on Diesel Crude Oil & Feedstock Cost Advantage Presence in all over Turkey through refineries and terminals Import Parity Pricing (Freight advantage of Tüpraş) Economies of Scale COMPANY OVERVIEW 22
OPET 16 12 1.224 394 Opet 1.393 1.325 1.356 1.279 418 427 394 41 Sunpet 1.444 1.54 431 435 1.56 1.581 434 441 Opet expanded its retail footprint from 1.56 stations in December 217 to 1.581 stations in February 218. Market share as of February 218 8 White Product: 18.3% 4 83 885 915 938 966 1.9 1.73 1.126 1.14 Black Product: 15.31% 21 211 212 213 214 215 216 217 1Q 218 COMPANY OVERVIEW 23
DİTAŞ, Marine Transport -Tüpraş Share 79.98% 3 Crude Oil Tanker :479.765 DWT 1 Crude Oil - Product Tanker : 51.532 DWT 7 Product Tanker : 9.534 DWT 11 tugboats 8 mooring boats 2 service boats 1 pilot boat One of the biggest Turkish marine transportation companies of crude oil and petroleum products Carries mainly Tüpraş crude oil purchases and makes the transfer operations of product and semi-products 3 Crude Oil Product 25 2 15 1 5 21,9 23,3 3 18 6 19 3 15,2 15 11,8 6 17 9,6 8,4 5 3 4 9 7 6 5 211 212 213 214 215 216 217 253,7 mn $ Net Sales 49,6 mn $ Op. Profit COMPANY OVERVIEW 24
Körfez Ulaştırma A.Ş.- Tüpraş Share 1% Körfez Ulaştırma A.Ş. Turkey's First Private Railway Operator On June 16th, Freight Train Operator Certificate, On September 2th, Safety Management Certificate received Operates with 491 cistern wagons and 5 diesel locomotives 2,5 mn tons/ 218 Target year transport % 1 Market share COMPANY OVERVIEW 25
OPERATIONS
Lower Capacity Utilization and Quarterly Production Volume Capacity utilization and production decline in Q1 218 was due to maintenances in İzmir, Kırıkkale and Batman refineries. Our year-end guidances for capacity utilization and production have not been revised. Capacity Utilization* (%) Quarterly Production (Million Tons) 12 Crude Oil Other 99,7 16,4 9 214 215 216 217 218 9 6 68, 65,1 84,1 8,7 94,5 99,9 78, 67,3 8 7 6 7,1 6,6 6,7 5,6 7,8 7,7 7,3 7,4 6,9 7,4 7,2 6,3 3 5 5,2 5,4 5,5 Q1 214 Q1 215 Q1 216 Q1 217 Q1 218 4,5 4,6 4 Q1 Q2 Q3 Q4 *Nameplate capacity calculated by standard 33 days of operations. OPERATIONS 27
Q1 Product Yields 217 218 Bitumen %5 LPG %4 Bitumen %1 LPG %4 Coke %3 Other %2 Fuel Oil %12 Other %1,6 Black Prod. %2,9 Light Distil. %25,7 Gasoline %21 Naphtha %1 Coke %4 Other % Fuel Oil %7 Black Prod. %2,4 Light Distil. %25,9 Gasoline %22 Naphtha % Mid. Distil. %51,7 Mid. Distil. %53,7 ULSD %36 Jet %16 ULSD %34 Jet %19 White Products %78 White Products %79 Production 7. mn tons Production 5.2 mn tons API 31.8 API 31.33 OPERATIONS 28
Increase in Domestic Sales (Million Tons) We generated 6.2 million tons of total sales in Q1 218. Domestic diesel sales were 2.5 million tons, 8.6% higher than Q1 217. Total Sales in Q1 Domestic Sales of Key Products in Q1 Domestic Sales Export Diesel Jet Fuel Gasoline Bitumen 8 6 4 4,7 1,1 3,6 5,6 1,7 3,9 6,9 1,8 5,1 7,2 2,3 5, 6,2 1, 5,2 5 4 3 2 2,9,2,4,8 3,3,3,4,9 4,1,4,5 1, 3,9,3,4,8 4,4,3,5 1, 2 1 1,5 1,7 2,3 2,3 2,5 1Q 214 1Q 215 1Q 216 1Q 217 1Q 218 1Q 214 1Q 215 1Q 216 1Q 217 1Q 218 OPERATIONS 29
Investments (Million $) 9.5 Nelson complexity High white product yield Process more heavier and sour crudes Run all refineries with 1% capacity utilization Avg. 278 mn$ Avg. 943 mn$ 1.213 974 959 628 Avg. 247 mn$ 4 355 344 274 213 186 63 177 185 26 27 28 29 21 211 212 213 214 215 216 217 Q1 218 Ongoing Projects New Power Plant Revamp of Crude Unit FCC Modernization New Sulphur Units Energy Saving Projects Optimization of conversion units OPERATIONS 3
218 Expectations vs Q1 218 Results Brent Price ($/bbl) Capacity Utiliation (%) 8 14 12 7 6 69,2 65,2 65,9 Revised Average Brent Price Expectation for Full Year 218 from 55-6 $/bbl to 65-7 $/bbl 66.8 $/bbl Brent Price average in Q1 218 1 8 6 4 84,1 99,7 16,4 78 Full Capacity Utilization target for Full Year 218 78% Capacity Utilization in Q1 2 5 J-18 F-18 M-18 15'Q1 16'Q1 17'Q1 18'Q1 Margins ($/bbl) Capex (mn $) 1 Tüpraş Net Margin Med Margin 4 8 32 6 4 2 4,8 Q1 218 4, 7.5-8 $/bbl Expected Net Refining Margin for Full Year 218 4.8 $/bbl Net Refining Margin in Q1 218 24 16 8 213, 25 mn $ CAPEX for 185, Full Year 218 63 mn $ CAPEX in Q1 63, 216 217 Q1 218 OPERATIONS 31
KEY FINANCIALS
Margin Environment ($/bbl) Tüpraş 4.8 $/bbl Net Refining Margin in Q1 218 was higher than 4 $/bbl Med Complex margin. Premium to the benchmark Mediterranean peers refining margin due to: Refined products deficit characteristic to the Turkish market Access to cheaper sources of crude oil Ability to use heavier and sour crudes Proximity to major suppliers Reduces transport costs Implemented cost reduction measures Energy efficiency programs Capacity to produce higher value added range of refined products Direct pipeline connections with domestic clients High export capability 1 8 6 4 2-2 J-8 J-8 J-9 J-9 J-1 J-1 J-11 J-11 J-12 J-12 J-13 J-13 J-14 J-14 J-15 J-15 J-16 J-16 J-17 J-17 O 18 14 12 1 8 6 4 2 5,54 9,6 2,5 1,95 2,89 1,17 Med Complex 4,21 1,67 Tüpraş Gross Margin Tüpraş Net Margin Mediterranean 1,7 1,6 3,2 2, 11,9 6,5 4,8 213 214 215 216 217 Q1 218 11,2 1,95 6, 4, 4,83 12,9 8,1 3,97 5,3 11,6 5,3 4,8 Month Annual 4,1 4, OPERATIONS 33
Financial Highlights (Million $) Tüpraş generated 271 mn USD in EBITDA in Q1 218. EBITDA Net Income* 17 148 1117 825 533 242-5 -11-27 1.397 1.614 321 422 1.125 435 48 715 41 16 56 431 361 89 294 338 415 315 226 153 237 427 78 95 79 15 15 114 271 212 213 214 215 216 217 218 4th Q 3rd Q 2nd Q 1st Q 12 95 7 45 2-5 817 271 39 75 161 629 667 47 91 435 175 171 75 72 231 938 285 268 273 112 594 256 197 113 27 1.46 123 283 45 235 99 212 213 214 215 216 217 218 Net Debt- Net Debt/ *Rolling EBITDA Return of Average Equity (%) 3. 2.5 2. 1.5 1. 5 6 5 4 3 2,8 1 551 212-R 2,4 1.34 213 3,5 3,6 1.869 214 H1 Net Debt/Rolling EBITDA was calculated with USD figures *Excluding minority interest 1.598 214 9M 4,9 1.663 214 3,3 2,8 2.577 215 H1 KEY FINANCIALS 2.748 215 9M 2.37 215 2.391 216 H1 1.751 219 9M 1.729 216 Net Debt Net Debt/*R. EBITDA 1,7 2, 1,6 1,5 1,1 1,,7 1,1 1,6 1.555 217 Q1 1.68 217 H1 1.24 217 9M 1.657 217 2.331 218 1,3 211,32 212,24 213,26 214,35 215,4 216 Q1,11 216 H1,16 216 9M,22 216,45 217 Q1,55 217 H1,49 217 9M,41 217,17 218 34
Balance Sheet Analysis (Billion $) Given our strong liquidity management and cash generation capabilities, our cash position funded the highest dividend payout in our history. Cash & Cash Equivalents Trade Receivables 3, 2,4 1,8 1,2,6, 1,7 Mar.14 1,3 Jun.14 1,6 Sep.14 1,7 Dec.14 1,2 Mar.15 1, Jun.15,8 Sep.15 1, Dec.15 1,6 Mar.16 1,6 Jun.16 2,5 Sep.16 1,7 Dec.16 2, Mar.17 1,6 Jun.17 2,2 Sep.17 2,3 Dec.17 1,7 1,7 Mar.18 2, 1,6 1,2,8,4,71 Mar.14,52 Jun.14,51 Sep.14,9 Dec.14,2 Mar.15,66 Jun.15 1,7 Sep.15,88 Dec.15,7 Mar.16,91 Jun.16,75 Sep.16,91 Dec.16 1,9 Mar.17 1,15 Jun.17 1,57 Sep.17 1,36 Dec.17 1,42 1,42 Mar.18 Financial Loans Trade Payables 5, 4,3 3,6 2,9 2,1 1,4,7, LT Loans ST Loans 3,7 3,7 3,2 3,2 3,3,4,3,3,3,9 3, 3,3 2,8 2,9 2,9 Mar.14 214 1h 214 9M Dec 14 Mar.15 3,6 3,6,5,6 3,1 3, Jun.15 Sep.15 3,4,6 2,8 Dec.15 3,9 1, 2,9 Mar-16 4, 1,2 2,8 Jun-16 4,2 1,1 3,1 Sep-16 3,4 3,6,6,6 2,9 3, Dec.16 Mar.17 3,2 3,4 1,1 1,3 2,1 2,1 Jun.17 Sep.17 4, 4, 1,4 1,6 2,6 2,4 Dec.17 Mar.18 4 3 2 1 2,91 Mar.14 3,26 Jun.14 3,3 Sep.14 2,42 Dec.14 1,72 Mar.15 1,69 Jun.15 1,58 Sep.15 1,33 Dec.15 1,21 Mar-16 1,67 Jun-16 1,96 Sep-16 1,99 Dec.16 2,18 Mar.17 2,17 Jun.17 2,68 Sep.17 2,18 Dec.17 2,19 2,19 Mar.18 KEY FINANCIALS 35
Q1 Profit Before Tax Bridge (217-218) Decline in Profit Before Tax was driven by narrowing of crude oil differentials and impact of maintenances. Million TL 33,4 58,6 28,7 151,7 199,1 9,8 471,8 217 Crude Oil Differentials Crack Margin Effect Inventory Effect Maintenance Effect Other 218 KEY FINANCIALS 36
Dividend (TL) 16 Earings per Share Gross Dividend Total Payout 4 14 12 One of the highest dividend yield in BIST 15,22 13,6 3 1 1,18 8 2 6 4 2 7,16 6,5 6,2 5,83 4,96 4,78 3,93 3,85 3,24 2,94 2,98 2,31 2,5 1,73 1,58 28 29 21 211 212 213 214 215 216 217 1 212/213 EPS includes the tax incentive KEY FINANCIALS 37
Tüpraş Balance Sheet Million USD 31.12.217 31.3.218 Difference % Current Assets 5.399 5.144-256 -5 Cash & C. Equivalents 2.334 1.71-633 -27 Receivables 1.355 1.416 61 4 Derivatives 92 117 25 27 Inventories 1.43 1.71 298 21 Pre-paid expenses 17 11-5 -31 Other Current Assets 199 198-2 -1 Long Term Assets 4.718 4.526-192 -4 Financial Assets & Subsidiaries 33 272-31 -1 Fixed Assets 3.263 3.112-151 -5 Derivatives 27 33 6 24 Pre-paid expenses 26 51 25 95 Deferred Tax 813 765-49 -6 Other Long Term Assets 286 293 7 3 Total Assets 1.118 9.67-448 -4 Short Term Liabilities 4.686 5.335 649 14 Financial Loans 1.398 1.615 217 16 Payables 2.219 2.643 424 19 Derivatives 47 36-11 -23 Deferred Incomes 5 1-4 -83 Provisions 24 32 8 34 Other ST Liabilities 993 1.8 16 2 Long Term Liabilities 2.654 2.475-179 -7 Financial Loans 2.592 2.417-175 -7 Payables & Provisions 59 56-4 -6 Derivatives 1 1 43 Other LT Liabilities 1 1-8 Equity 2.75 1.832-919 -33 Minority Interests 28 28 Total Liabilities 1.118 9.67-448 -4 KEY FINANCIALS 38
Creating Competitive & Sustainable Shareholder Value Tüpraş has one of the highest Corporate Governance Ratings Foreign Currency Long Term Board 92,9 Tüpraş BBB-(Stable) Ba1 (Stable) Türkiye BB+ (Stable) Ba2 (Stable) BB- (Stable) Stakeholders 98,6 Koç Holding Ba1 (Stable) BBB- (Negative) Transparency 94, Analyst Recommendations Shareholders 95,5 %38 Overall 94,7 %62 Buy Hold 25 5 75 1 KEY FINANCIALS 39
Financial Policy Financial Discipline: Risk management policies focusing on areas such as leverage, liquidity, counter party risk, interest rate, commodity and currency exposure Threshold and limits Net financial debt/ebitda Net foreign currency position/shareholders' equity Inventory and crack margin exposure Current ratio The fixed/floating profile of financial debt Liquidity: share of long term debt Counter party risk limits Counter party Risk Policy Deposit is kept, within certain limits, by banks that comply with the criteria determined in our policy Credit rating and strong capital base Cap on the maximum deposit allocated to a single bank Threshold for deposits subject to banks shareholders equity KEY FINANCIALS 4
Inventory & Crack Margin Hedge Inventory Hedging Policy Operational Hedge: Maintaining minimum amount of stock required for the refining activities Forward Pricing: Purchasing crude oil through forward-priced contracts Financial Hedge: Proxy Hedging (both crude oil and refined product inventories) Expected inventory exposure for the year end is hedged Derivative transactions: Asian swap, Zero Cost Collar Hedging ratio increasing throughout the year Crack margins: Gasoline, Diesel and Jet Fuel Cracks Margin Hedging Policy Derivative transactions: Asian Swaps Hedging Parameters: Budget figures, historical average prices of the cracks + standard deviations, market expectations Maximum hedge ratio: 5%, Tenor: up to next 4 quarters KEY FINANCIALS 41
FX Exposure Management (31 March 218) Active management of FX exposure kept the risk level within our limits. Consolidated Assets Consolidated Liabilities Million $ A significant portion of the Group's crude oil and refined product purchases are denominated in US Dollars. In addition, the Group finances its capital expenditures mostly through borrowings denominated in US Dollars. Natural Hedge: The Group is able to mitigate some of the impact of volatility in exchange rates through natural hedges: crude oil and refined product inventories are US Dollar denominated assets. Cash flow Hedge: RUP Facility financing loans designated as hedging instruments of highly probable export revenues. As a general Koç Holding financial policy, Group companies are allowed to keep foreign exchange positions within certain limits. Cash 1,393 Receivables & other assets 43 Stock 1,647 Forward & CFH 2,534 +14 mn $ Payables 1,86 ST Financial 1,254 RUP : 311 Eurobond : 7 LT Financial 2,417 RUP : 949 Eurobond 7 Other Loans : 768 * Cash flow hedge accounting : 1 1,194 mn $ KEY FINANCIALS 42
OUTLOOK
218 Refinery Maintenance Schedule & Capacity Utilization Our year-end total capacity utilization target has not changed. We expect full year-end total capacity utilization. Unit Quarter Duration (weeks) Reason *Plt 7 Crude Oil Unit Q4 17 - Q2 18 17 in 218 Revamp İzmir İzmit *Hydrocracker, DHP & Platformer Q1 5-6 Plt 4 FCC Q2 5-6 Plt 2 Crude Oil & Vacuum Unit Q4 5-6 Plt 5 Crude Oil & Vacuum Unit Q2 5-6 Plt 25 Crude Oil & Vacuum Unit Q4 5-6 Plt 47 Hydrocracker Complex Q2 4-5 Plt 63 CCR & DHP Q4 5-6 Periodic Maintenance Periodic Maintenance Kırıkkale *All Units Q1- Q2 9 Battery Shutdown Batman *Plt. 1/Crude Oil & Vacuum Q1 4-5 Periodic Maintenance 218 Crude Capacity Utilization 95,4 % 218 Total Capacity Utilization Full * Completed Maintenances OUTLOOK 44
Future Expectations We only updated our average Brent Price expectation. The rest of our expectations remains the same as before. Brent Price The average Brent price in 218 is expected to be 65-7 $/dollars per barrel Estimation Med Complex Margin We expect Med Complex margins to be between 4,75-5, dollars per barrel band in 218 Tüpraş Net Margin Net Tüpraş refinery margin is expected to be in the region of 7,5-8, dollars per barrel Operations Full Total Capacity Utilization using imported semi-products such as ASRFO and HVGO Production: approximately 28.3 million tons Total sales: 31. million tons Investment Refining investments is expected to be around 25 Million dollars. OUTLOOK 45
Competition # 1 (SOCAR-STAR Refinery) STAR Refinery (Total Cap. 1 mn ton) Goldman Sachs has acquired a 13 percent stake in SOCAR Turkey for $1.3 billion. Goldman Sachs has the right to resell 1 percent of its stakes to Socar, and the remaining 3 percent to Sermaye Investments Limited owned by SOCAR within 6 year at the same price. 219 mn ton Production Tüpraş Star Total Turkish Demand Balance LPG 1,1,3 1,4 4,1-2,7 Credit : 3.3 Billion $ Equity : 2.4 Billion $ Total Investment : 5.7 Billion $ 3,3 billion dollar credit agreement. First 4 year grace period total 15-18 year term. Project finance is supplied to company (US$ 1.5 billion) It is planned to be commissioned in 218. Petchem Feeds,2 2,6 2,8 Gasoline 6,1 6,1 2,4 3,7 Jet Fuel 5,2 1,6 6,8 5,2 1,6 Diesel 1,7 4,5 15,2 26,5-11,3 Star Refinery Production Numbers (K Ton) Coke,8,7 1,5 4,6-3,1 Fuels Petrochemical Feedstock Diesel 4.8 Jet Fuel 1.6 Sulphur 158 Petrocoke 698 LPG 26 Naptha 1.6 Mixed xylene 46 Reformate 524 Fuel Oil 1,8 1,8 1,3,5 Bitumen 3,1 3,1 3,1 OUTLOOK 46
Competition # 2 (Regional Competition) Tüpraş is competing with 71 refineries in the Mediterranean and Black Sea markets. Mediterranean regional product balance is also affected from Middle East, North West Europe and Asia. Mediterranean Black Sea Moldova Ukraine France Croatia Spain Portugal Italy Albania Greece Romania Russia Turkey Bulgaria Syria Tunisia Israel Morocco Algeria Libya 54 Refineries 7.8mn bpd OUTLOOK Georgia Turkey Egypt 17 Refineries 1.8mn bpd 47
Marine Bunker Specification Changes and Its Effects IMO, at the meeting held in October 216, lowered the sulphur emission cap from marine bunkers from 3.5% to.5% (5ppm): effective from 1 January 22. HS FO Scrubbed LS FO Diesel 2,1 LS Fuel Gap 1,8 LS Fuel Gap %19 Install Scrubber switch %5 to LNG %2 Other Mn b/d HS Fuel Oil %74 Buy Low Sulphur Fuel 216 22 222 Requirements of spec change can be achieved through; Use of lower sulphur blend stocks like ULSD (Diesel) Low Sulfur Fuel Oil production with light crudes Sulphur Fuel Reduction Systems (Scrubber) LNG Ship Owners Intention Survey 8% of global trade is done via marine transportation. 5. vessels are in operation. Bunker fuels account for; ~5% of global oil demand 4% of oil related sulphur emissions. OUTLOOK 48
Appendix
12M Product Yields 216 217 Bitumen %12 LPG %4 Bitumen %12 LPG %4 Coke %3 Other %2 Fuel Oil %7 Other %1,7 Black Prod. %22,3 Light Distil. %25,5 Gasoline %2 Naphtha %1 Coke %3 Other %2 Fuel Oil %7 Other %2,1 Black Prod. %22,6 Light Distil. %25, Gasoline %2 Naphtha %1 Mid. Distil. %5,4 Mid. Distil. %5,3 Jet %17 Jet %17 ULSD %33 White Product %76.56 ULSD %33 White Product %76.27 Production 27,93 mn tons Production 28,88 mn tons API 3,62 API 3,26 APPENDIX 5
Crack Margin Effect on Tüpraş in Q1 (FOB Italy Prices) Weighted average of total crack margin difference in Q1 218 over Q1 217 indicates a -,4 $/bbl, yielding 58.6 million TL. Product Price, $/ton Tüpraş Crack Margin, $/bbl 218 217 218 Yield 218 217 LPG 485, 455,8 3,89-23,6-13,2 Gasoline 63,5 544,2 2,31 1,9 13,3 Naphtha 552,3 466,6,17-4,4-1,1 Jet Fuel 629,6 497,5 18,27 13,3 9,5 Diesel 588,5 478,4 31, 12,3 1,5 Diesel 1 577,3 47,8 1,22 1,8 9,5 Fuel Oil 1% 366, 314,5 1,73-1,3-5,3 Fuel Oil 3.5% 351,1 289,9 5,51-12,6-9,1 Others 322,9 269,5 12,46-12,8-8,8 94,6 Total Crack Margin,$/bbl 5,2 5,6 Margin Difference, $/bbl -,4 Total Processed, mn bbl 39, Total Effect, mn $ -15,4 Total Effect, mn TL -58,6 APPENDIX 51
High Complexity (Resid Upgrading Units Production-(Thousand Tons) Raw Materials Products Doğal Gaz 246 Vakum Resid 1,214 Diesel 2.883 Gasoline LPG 522 69 Total Production Atm. Dip 3,36 PetroCoke Sulphur 4,25 69 86 Total Feed 4,496 APPENDIX 52
Flexibility & Reliability; Multiple routes to maksimum capacity Key units Number of units Capacity (m3/d) CRUDE OIL 8 97 LPG MEROX Flow Diagram LPG Yields (%) 3.5% Increased conversion capacity Strong integration among refineries VACUUM 8 4232 HYDROCRACKER ISOMERISATION UNIFINER REFORMER 4 182 3 64 7 169 KERO/DIES EL (HDS) 1 373 NAFTA SPLITTER CRUDE OIL VACUMM DİST. ISOMER. UNIFINER REFORMER KERO / DIESEL HDS FCC Benzen Saturation FCC Benzin HDS GASOLINE NAPHTHA JET FUELOİL DIESEL 22.% 16.5% 33.9% FCC 2 47 COKER 1 82 NAPHTHA SPLITTER 8 More than one distillation and production units HYDROC. COKER Lube Oil Bitumen LUBE OIL BITUMEN & FUEL OİL.5% 19.9% LPG MEROX 6 OTHER 3.8% APPENDIX 53
Competition (European Pump Price Comparison) Gasoline (Krş / Lt) Pump No Tax Distr. Marg. Tax Diesel 1 (Krş / Lt) 1 75 624 38 78 37 77 482 79 86 477 487 827 58 87 87 55 547 9 8 7 6 5 566 243 658 311 693 363 727 394 783 457 748 371 81 84 487 476 5 4 25 51 266 338 39 248 5 263 319 58 261 32 55 268 3 2 1 5 272 347 61 269 333 59 267 377 45 269 5 279 TR Spa. UK Ger Eu19 Fra. Gre. Ita. TR Spa. Ger. EU19 Fra. Gre. UK Ita. Not: Prices valid on 21 May 218-Turkey pirice as of May 22th 218 APPENDIX 54
Tüpraş HSE KPI: Loss Time Incident Frequency and Severity Frequency Ratios 8 6 7,1 7,1 6,9 Incident Frequency 6,1 Including contractors Tüpraş Contractor Total 4 2 4,8 5, 3,6 3,4 3,5 3,6 1,9 1,7 1,8 1,9 1,3,8 2,,9 2 21 22 23 25 26 27 28 29 21 211 212 213 214 215 216 2,5 3,2 1,7 2,2 2,6 1,7 1,5 1,4 2,4 1,1 2,8 1,6 3,4 2,5 3,1 1,9 Loss Time Severity Frequency Rate 28 29 21 211 212 213 214 215 216 Tüpraş 92 44 4 53 65 61 59 719 11 Contractor 116 11 81 118 424 17 378 51 551 Total 15 73 57 83 29 26 38 315 354 loss time incident freaquency rate =number of incident *1/man hours loss severity frequency rate = loss time*1/man hours APPENDIX 55
Koç Holding Turkey s Leading Investment Holding Company Turkey s largest industrial and services group in terms of revenues, exports, employees, taxes paid and market capitalization. Turkey s Leading Investment Holding Company The only Turkish company in Fortuna 5 1 16% CARG in consolidated profit 2 the last five years Pioneer in its Sectors Leading positions with clear competitive advantages in sectors with long-term growth potential such as energy, automotive, consumer durables and finance. Combined Revenues / GDP Total Exports / Turkey s Exports Total MCap on Borsa İstanbul 7% 1% 19% Notes : Data as of YE17, 217 GDP reflects the projection of Turkish government s Medium Term Program (1)217 Report (2)In TL terms between APPENDIX 56