PERFORMANCE YOU CAN TRUST Refinery Olefins Aromatics Polymers EO Based Performance Green Chemicals HVS High Volume Specialties Services and Others Investor Presentation Thailand Focus 2013 Grand Hyatt Erawan, Bangkok August 28-29, 2013
Disclaimer This presentation includes forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realized from the proposals described herein. This presentation contains a number of forward-looking statements including, in particular, statements about future events, future financial performance, plans, strategies, expectations, prospects, competitive environment, regulation and supply and demand. PTTGC has based these forward-looking statements on its views with respect to future events and financial performance. Actual financial performance of the entities described herein could differ materially from that projected in the forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and financial performance may be better or worse than anticipated. Given these uncertainties, readers should not put undue reliance on any forward-looking statements. Forward-looking statements represent estimates and assumptions only as of the date that they were made. The information contained in this presentation is subject to change without notice and PTTGC does not undertake any duty to update the forward-looking statements, and the estimates and assumptions associated with them, except to the extent required by applicable laws and regulations. 2
Agenda Incidents Update PTTGC Business Update Strategy and Execution Market Outlook 2Q/13 Operating Results 3
Oil Spill Committee and Execution leakage WHAT HAPPENED? On July 27, 2013 leakage in the flexible hose was found at the SPM while discharging crude oil. The leakage resulted in oil spill of 54,341 liters. PTTGC and other agencies coordinate in cleaning up by using dispersants. Last portion of oil slick reach Prao Bay, Samed Island. On-shore cleanup operation was done quickly and effectively. Currently all oil slick has been cleaned and the Refinery is operating at full capacity as usual. EXECUTION Set up working team led by CEO, President, Heads of business unit on oil spill management as follows: 1. Cleanup team continue to clean up oil spill in all affected areas both on and off shore 2. Remedy team work with government authorities regarding financial compensation for the effected persons i.e. fisheries, hawkers stalls 3. Restoration team monitor and recover marine environment and affected resources including water quality 4. Legal team work closely with insurance company and third party legal team to claim insurance and to seek legal position for any claim from authorities 5. Communication team set up spokesperson, IR and PR work together to communicate accurate messages to all stakeholders including public and private sectors 4
Oil Spill SPM has been back in operation since August 15, 2013. PTTGC & Samed Community clean the beach Prao Bay is back! Together with volunteers pick up crude residual Ready for tourists 5
PTT s GSP#5 Shutdown On August 14, 2013, Thunder storm and lightning strike on the Waste Heat Recovery Unit or WHRU of PTT s GSP#5 which is the gas supplier of PTTGC s I4-2 plant (Olefins production capacity of 450 KTA) PTT anticipated that the repairs will take approximately 3-5 months. PTTGC has arranged preliminary mitigation plans due to GSP#5 s shutdown as follows. 1. Coordinate with related parties including PTT to source for natural gas and/or search for natural gas from other sources 2. Allocate natural gas, especially ethane among PTTGC s olefins plants to maximize the value and to reallocate olefins products to efficiently operate both upstream and downstream products to minimize impact to PTTGC s performance and customers. Estimated the maximum preliminary impact of approximately 400 million Baht per month. PTTGC has Property Damage and Business Interruption insurance policy which cover suppliers extension. PTTGC and the insurer are currently in the process of appraising the claim value. 6
Agenda Incidents Update PTTGC Business Update Strategy and Execution Market Outlook 2Q/13 Operating Results 7
A Chemical Flagship of PTT Group with Compelling Strengths Largest gas-based petrochemical producer in Thailand and the fifth in Asia Highly competitive cost structure with pricing arrangement for gas feedstock based upon equitable return on investment for both PTT and PTTGC Fully integrated petrochemical and refinery operations with diversified product portfolio covering full hydrocarbon chain Strong footprint in fast growing regions with 5 operating countries worldwide Committed to operational excellence targeting best in class/ first quartile business efficiency $1.1bn NET PROFIT 3,509 EMPLOYEES $18.8bn SALES 8.45 MTPA CAPACITY 2012 Figures, FX THB 30 $812mn FREE CASH FLOW* $1.9bn EBITDA >= 30% DIVIDEND POLICY *Free cash flow for investment after excluding debt service and dividend 8
Flexible Feedstock and Highly Competitive Cost Structure Feedstock Supply Product Marketing Olefins Customers Others Ethane, Propane, LPG Olefins / Polymers C 2 -C 4 100% Polymers (1) 54% (2) Others Condensate Aromatics C 5 -C 9 46% (2) Crude Oil Refinery C 10 -C 25 30% (2) 70% (2) Others Flexible Feedstock and By-Product Enhancement Feedstock Supply Commercial Agreements PTTGC's refinery (145 KBD) is one of the most complex refineries in Thailand, with Nelson Index of 10.17 and refining capacity accounting for 13% of country s total capacity Value enhancement from by-product exchange among Olefins, Aromatics and Refinery units highlights operational integration and efficiency: - CR from Aromatics units sent to Refinery to produce middle distillate - Pygas from Olefins unit sent to Aromatics for BTX - Offgas from Refinery sent to Cracker for olefins products 1. PTT owns 50%, PTTGC and IRPC each owns 25% in PTTPM. 2. FY12 USD/Ton 1,200 1,000 800 600 400 200-103 318 Product Marketing Commercial Agreements Global Ethylene Cash Cost by Region 2012E (3) 799 824 830 883 951 967 MDE NAM NEA LPG NAM MDE LPG MDE NEA SEA WEP Ethane Ethane Naphtha Naphtha Naphtha Naphtha Naphtha Source: IHS (formerly CMAI) as of July 2012. Note: MDE = Middle East, NAM = North America, NEA = Northeast Asia, SEA = Southeast Asia, WEP = Western Europe. 3. PTTGC ethylene cash cost is based on Company estimate and ethane cracker only. 2012 PTTGC cash cost takes into account the effect of the renewal of gas price agreement. 4. MDE cash costs are average values of Iran and Saudi Arabia. (4) (5) (5) 1,006 9
2Q/13 and 1H/13 Sales Portion by Business Unit 2Q/13 Sales Split Domestic : Export (Volume) 1H/13 Thailand s Market Share Refinery Aromatics Olefins Domestic 75% 63% 90% Export 37% 25% 10% HDPE Import, 21% Other, 41% PTTGC, 38% Polymers 39% 61% EO-based 78% 22% Green 76% 24% 0% 20% 40% 60% 80% 100% 1H/13 Sales Split Domestic : Export (Volume) LDPE Import, 29% Other, 32% PTTGC, 39% Domestic Export Refinery Aromatics Olefins Polymers 37% 76% 66% 89% 63% 24% 34% 11% LLDPE Import, 29% Other, 39% PTTGC, 32% EO-based 82% 18% Green 74% 26% 0% 20% 40% 60% 80% 100% 10
Fully Integrated Petrochemical and Refinery Operations with Diversified Product Portfolio Feedstock Upstream Intermediates Downstream Proximity to Suppliers and Customers Exchange Stream Products By-Products Ethylene EO MEG HDPE LDPE LLDPE Natural Gas Light Naphtha Cracker Propylene EB/SM PO Polyols Ethanolamine Ethoxylate PS ABS OffGas Mixed C4 Butadiene PP Condensate Reformate, Heavy Naphtha Pygas Aromatics Plants C3,C4 Benzene Toluene PTT Phenol Cumene Cyclohexane SBR Phenol PC BPA Acetone Epoxy Resins MMA PMMA Caprolactam Nylon 6 Crude Crude Palm Oil REFINERY & SHARED FACILITIES Refinery Condensate Residue, Hydrogen Cracker Bottom, Hydrogen Paraxylene Orthoxylene Oleochemicals AROMATICS OLEFINS POLYMERS TDI/HDI PTA PA Fatty Alcohol Methyl Ester (B-100) EO-BASED PERFORMANCE Potential Product Opportunities (1) GREEN CHEMICALS PU PET Fiber/Resin Plasticizer Petroleum Products Petroleum Products - LPG LPG - Reformate Reformate - Light Naphtha Naptha - Jet Fuel - Diesel - Fuel Fuel Oil Oil HIGH VOLUME SPECIALTIES 1. PTTGC does not currently produce these products. 11
Organization Chart and Business Units 12
Agenda Incidents Update PTTGC Business Update Strategy and Execution Market Outlook 2Q/13 Operating Results 13
PTTGC s Strategies Overview To be a Leading Chemical Company for Better Living 14
Execution Led by a Well Defined Strategy 1 2 3 4 5 Operational Excellence Marketing Excellence Synergy Project Excellence Debottleneck CAPEX Excellence Reliability improvement Energy efficiency improvement Cost reduction 24 projects completed out of 105 as of 1H/13 Product development Customer / Portfolio mgmt Strategic pricing Product upgrade Cost saving from share tank and facility Steam Cost reduction BV Project Quench Tower PX expansion PTTPE Cracker and Polymer Plants Debottleneck Capital Project Management Engineering Procurement Construction Project Mgmt. EBITDA Uplift (USD mn) Target EBITDA Uplift of Excellence Programs and Synergy Projects 2013-2017 Debottleneck 1Q/14 BV project starts up 3Q/15 PX expansion starts up 15
2Q/13 Key Achievement and EBITDA uplift 1H13 Core Uplift 1-Step Adjacencies Emerging Business Models Excellence Programs 1. Operational excellence 1.1 1H13 Target FY13 28 USD mn - Reliability improvement - Energy efficiency improvement - Cost reduction 2. Marketing excellence 84.6 113 USD mn - HVP sales performance exceeded target - increased portion of HVP from 10% to 14% of total polymers revenue - expanded 4 grades of HVP - Exported Mixed C4 and capture more value from mixed C4 quality premium - Exported PE sales to China, also allocated to strategic locations ie Indonesia for pre-marketing - Treated high sulfur diesel and kerosene from IRPC - Sold light naphtha as spot price to SPRC 3. Synergy projects 10.0 36 USD mn - C3, C4 and 3 stream projects completed ongoing projects progress as planned - offgas progress 20% - Pure H2 via new PSA progress 77% Total 95.7 177 USD mn 16
1-Step Adjacencies Direction Core Uplift 1-Step Adjacencies Emerging Business Models New Product New Geography C4 PU PC US Shale Gas China ASEAN Near-term Operate Butadiene Plant (BV Project) Expand HDI derivatives business in Thailand and HDI monomer in France To build PU system house with Partner in Thailand for niche market Seek for JV polyols and MDI Partner with global player Seek joint sales/mkt in ASEAN PC Compounding Mid-Term Expand into Synthetic rubber business by using butadiene from PTTGC and from JV Investment Plant Expand niche PU position to China with partner JV polyols and MDI plant Study, preparation, and seek opportunity for Cracker in US Strengthen sales & mkt on polymer/meg with partner Long-Term JV with key player who offer technology for synthetic rubber strategic owner business model Build fully integrated PU plant Full market coverage Expand capacity Strengthen market position Build asset in China Sales & mkt on special grade polymers / HVS products COD Pertamina petchem complex Enhance sales and mkt initiatives in AEC Buildup HVS Facilities Co-Investment with Parent/Sister Company Seeking Partnership-JV Shale Gas Field Owner/Operator Asian Company Build and Operate Back integrated to a cracker project in China Secure AEC market position 17
Existing and Upcoming Key Projects Core Uplift 1-Step Adjacencies Emerging Business Models Project Status Status New Products New Geographies Upcoming Upcoming Upcoming Existing Upcoming Competitive advantage over size and vicinity World-scale integrated petrochemical complex covering upstream to downstream Pave a way towards HVS product offering Signed HoA in Apr 2013 and to sign JV agreement by Dec 2013 Estimated investment of USD 4 bn, with D/E > 1 under project finance Secure access to China downstream market Signed MoU to jointly explore potential collaboration e.g., PU and PC chains and Bio-based chemicals Expand downstream product portfolio (PC and PO chain) and support HVS strategic initiative Signed HoA with Petronas and Itochu, target completion by 2017 for feasibility study Estimated USD 2 bn, PTTGC expects to contribute 25% of the equity component PTTGC holds 51% and is the owner of TDI and HDI technology which will pave the way to PU Phenol 2 Project will capture longer value chain of benzene and propylene. Pave a way towards downstream phenol derivatives. EHIA approved. Expected COD 3Q/15. CAPEX: Estimated investment of USD 148 mn, with D/E 2:1 (project financing) Under Feasibility Study Expect COD 2017 Expand Scope for collaboration on petrochemical plant Delay to 2017 for COD Target JV signing in 2014 Study on HDI derivatives Preparation for construction permits Polymers and Other HVS China Marketing Activities PU PC 18
Petrochemical Value Chain and the link with 1-Step Adjacencies Core Uplift 1-Step Adjacencies Emerging Business Models EC HDPE Ethylene VCM LDPE LLDPE PVC PC Application EO EG MEG Propylene Acrylic Acid PO PG PPG PP PA Butene-1 C4 IsoButylene Adiponitrile HDMA BR Nylon 6,6 Butadiene BDO THF PTMEG Styrene SBR PU Application Benzene Cyclo hexane Cyclo hexanone Capro lactam PS Nylon 6 Phenol BPA PC Cumene Acetone MMA PMMA Toluene Dinitro benzene MDA (Methylenediphenyl Diamine) MDI (Methylenediphenyl Diisocyanate) PU Dinitro toluene TDA (Toluenediamine) TDI HDI PBT PET Paraxylene PTA Polyester 19
Biochemical to Support Future Growth Core Uplift 1-Step Adjacencies Emerging Business Models PTTGC holds 50% in NatureWorks. A manufacture of polylactic acid (PLA) and lactides, plant-based biopolymers used to manufacture plastics and fibers with world scale PLA capacity of 150,000 ton/year. Applications Planned to build second plant potentially in Asia Studied the possibilities to use alternative feedstock PTTGC holds 47.25% in Myriant Corporation. A R&D based company with proven technology platform. In April 2013, Myriant Corporation had completed the construction of a 14,000 ton/year Succinic Acid Plant in Louisiana State and is currently commissioning. 20
Continues to Strive for Strong Profitable Growth Sales in THB Bn Based on constant Dubai crude year 2012 at USD 109 per bbl Green ~ 800-900 563 ~ 620-650 HVS New Global Hub Green HVS Debottleneck Synergy Project Excellence Operational Excellence, Marketing Excellence, Capital Expenditure Excellence Expected EBITDA Benefit Uplift 15-30% Actual 2011 Target 2012 2017 Phase 1: Foundation for Growth Phase 2: The Growth Mode We aim to grow ~5 percent p.a. in the next ten years Target 2022 21
CAPEX to Support Growth Approved and Uncommitted CAPEX Plan for year 2013-2017 USD 4.5 Bn Uncommitted CAPEX USD 2.5 Bn from Cash Flows from Operation USD 4.5 Bn Green 5% Core Uplift 31% USD 2 Bn from Debt Financing USD 1 Bn secured from USD Bond Issued in Sep. 2012 1 Step 64%* Adjacencies 22
Agenda Incidents Update PTTGC Business Update Strategy and Execution Market Outlook 2Q/13 Operating Results 23
Key Trends for Petrochemical Market in 2H/13 Refinery Crude oil prices expected to gradually increase toward the end of the year and average around 103-106 usd/bbl Aromatics PX spread in 2H/13 expected to be softened than 1H/13 from new PX capacities BZ spread is expected to maintain in 2H13 due to the limited feedstock (Pygas) from lower run rate of Naphtha crackers, and improved BZ demand driven by SM Country Company Nameplate Cap. Capacity Effective Korea HC Petrochemical 2 800 800 Q1 2013 USA BP 400 233 Q2 2013 China Tenglong Aromatics 1 800 400 Q3 2013 China Petrochina Sichuan Petrochemical 650 162 Q4 2013 China Sinopec Hainan Refining 600 150 Q4 2013 China Tenglong Aromatics 2 800 200 Q4 2013 India ONGC Mangalore Petrochemicals 920 77 Q4 2013 Saudi Arabia SATORP (Al- Jubail) 660 55 Q4 2013 2013 Total 5,630 2,077 Country PX : New Expansion/Capacity 2013 (KTA) PTA : New Expansion/Capacity 2013 (KTA) Company Nameplate Cap. Capacity Effective Total Effe.Cap Brazil Petroquimica Suape 700 642 Q1 2013 0.6 Germany BP Schwedt -80-80 Q1 2013 Indonesia MC C Indonesia 2 30 30 Q1 2013 China Luoy ang C hemical Fibre Plant -350-204 Q2 2013 0.2 Indonesia PT Indorama Petrochemicals [ Poly pr 480 375 Q2 2013 China Xianglu Petrochemicals 2 (Zhangzhou) 2,200 733 Q3 2013 0.7 China Xianglu Petrochemicals 2 (Zhangzhou) 2,200 367 Q4 2013 Saudi Arabia Ibn Rushd 250 63 Q4 2013 Turkey Petkim Petrokimy a 30 8 Q4 2013 0.4 2013 Total 5.5 1.9 24
Key Trends for Petrochemical Market in 2H/13 Olefins Polymers Ethylene price should gradually increase in 2H/13 due to higher feedstock cost and high planned shutdown while new capacity is still limited - 800 KTA Sichuan (July-Aug) China s PE imported volume is still growing at 11% from 2012 Asia Ethylene Volume Loss in 2H/13 Mitsui Chem. 612 KTA 20 Jun-7 Aug PTTGC I4-1 515 KTA Aug (1.5 months) Mitsub Chem. 450 KTA Aug (1.5 months) FPCC 1035 KTA Mid-Sep 1.5 (months) ExxonMobil (Singapore) 875 KTA Oct (1 month) Optimal (Malaysia) 600 KTA Sep (1.5 months) * HDPE price expected to improve from higher feedstock cost and improved demand while new supply still limited LDPE price is expected to remain high due to PTTGC s unplanned shut down (300KTA, 3.5 month) and Malaysia Petline (255KTA, 1 Sep for 45 days) LLPE price is expected to remain under pressure from new supply Source: * General Administration of Customs of the People's Republic of China, PTTPM New Asia and Middle East PE capacity in 2H/13 HDPE Sinopec Wuhan 300 KTA (Jul 2013) (900 KTA) Sichuan PC 300 KTA (Aug 2013) NPC Kermanshah (Iran) 300 KTA (Dec 2013) LDPE/EVA Sipchem/Hanwha 200 kta (Q3 2013) LLDPE Exxon Mobil Singapore 2x650 KTA (1,900 KTA) Sinopec Wuhan 300 KTA (Jul 2013) Sichuan PC 300 KTA (Aug 2013) 25
Agenda Incidents Update PTTGC Business Update Strategy and Execution Market Outlook 2Q/13 Operating Results 26
2Q/13 Key Achievement and Milestone During 2Q/13 Paid 2.45 THB/share dividend with 47% payout ratio for 2H/12 performance. Total 2012 dividend payment was 3.40 THB/share equivalent to 45% payout ratio. Completed amalgamation between PTTUT and IPT. PTTGC holds 30.31% in GPSC to strengthen business operation of utilities. Acquire remaining 40% shareholding of PPCL from PTT to pursue its downstream investment and capture the fully integrated value of Phenol chain. PTTGC currently holds 100% since May 2,2013. Restatement of Financial Statements due to Purchase Price Adjustment (PPA) completion in 4Q/12, contributed mainly from investment in Vencorex. PPCL had secured funding for Phenol 2 project with investment cost of 348.3 MUSD, Debt/Equity ratio of 2:1. Debt will funded through project finance. After 2Q/13 Complete business transfer of BPE and PTTPE to PTTGC for more efficient and integrated operation LDPE Shutdown (capacity 300kton) for approximately 3.5 months to fix booster/primary compressor, currently waiting for spare part and target resume operation in October 2013. Oil Spill : Various measures were introduced to protect the environment and the community resulted from an oil leak into the sea amount to 54,341 liters. Signed MoU for strategic alliance for further collaboration on petrochemical plant with Sinochem Group 27
Key Financial Highlights (Unit: Million Baht) 2Q/2012 (Restated) 1Q/2013 2Q/2013 YoY QoQ 1H/12 1H/13 YoY Sale Revenue 139,241 141,309 111,887-20% -21% 272,906 253,196-7% EBITDA 7,537 16,419 11,466 52% -30% 22,525 27,885 24% EBITDA Margin (%) 5% 12% 10% 5% -1% 8% 11% 33% * Net Profit 1,508 12,075 4,172 177% -65% 11,360 16,247 43% EPS (THB/Baht) 0.33 2.68 0.93 182% -65% 2.52 3.60 43% *Net Profit 2Q/12 before restate = 851 MB Adjusted EBITDA 1 13,422 16,914 12,469-7% -26% 24,904 29,383 18% Adjusted EBITDA Margin (%) 10% 12% 11% 2% -1% 9% 12% 27% Revenue decreased 20% YoY primarily from lower sales of refinery, aromatics Refinery turnaround 44 days AROII turnaround 17 days I4-1 shutdown 10 days to prepare for Quench Oil Tower modification Reduce naphtha to gas portion (liquid/vapor ratio) from 0.95 to 0.60 Net Income increased 177% YoY from better performance and lower stock loss while decreased 65% QoQ due to lower utilization rates and lower spreads 28
Segmental Results 2Q/13 Olefins and Olefins Derivatives Business contributed greatly to EBITDA 2Q/13 Revenue Breakdown (%) Green 6% Olefins and Derivative 27% HVS 8% Others 0.02% Aromatics 23% Refinery 36% 2Q/13 Adjusted EBITDA Breakdown (%) Olefins and erivative 67% THB 112 Bn THB 12 Bn Green 2% HVS -1% Others 3.59% Refinery 3% Aromatics 26% Olefins and Derivative 61% 1H/13 Revenue Breakdown (%) Green 6% Olefins and Derivative 25% HVS 7% Others 0.06% THB 253 Bn Aromatics 22% Green 3% HVS 1% Refinery 41% 1H/13 Adjusted EBITDA Breakdown (%) THB 29 Bn Others 2.66% Refinery 8% Aromatics 25% Adjusted EBITDA Margin % by Core BU 2Q/12 1Q/13 2Q/13 Refinery 3 3 1 Aromatics 5 14 12 Olefins & Derivatives 27 30 28 Green 6 8 3 HVS 17 4-2 1H/12 1H/13 Refinery 3 2 Aromatics 5 13 Olefins & Derivatives 27 29 Green 6 6 HVS 12 1 29
Strong Financial Position Cash + ST Investment CA PPE Non CA Statements of Financial Position THB 436 Bn 60 101 61 59 137 86 120 240 224 238 234 35 40 THB 409 Bn 54 As of Dec 31, 2012 As of Jun. 30, 2013 Liab. IBD Share holders Equity Deben ture 61% Loan Type ST Loan 2% LT Loan 37% THB 120 Bn Interest Rate 70% Fixed 58% THB Currencies 30% Float 42% USD & Others Cost of long term debts ~ 5.0% (Include W/H Tax) Average loan life after refinancing - 5.2 Years Treasury policy Net IBD to Equity ratio of 0.7x Net IBD to EBITDA ratio of 2.4x Restructure of Loan Portfolio 6.7 Maturity of Financial Debt as at Jun. 30, 2013 14.3 8.1 9.5 PTTGC PPCL Others 15.1 15.6 7.8 11.7 0.5 THB Bn 31.0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 1.6x 1.4x 1.2x 1.0x 0.8x 0.6x 0.4x 0.2x 0.0x 1.34 Net IBD / EBITDA Net IBD/Equity 1.06 0.98 0.32 0.25 0.26 31 Dec. 12 31 Mar. 13 30 Jun. 13 Key Financial Ratios 20% 15% 10% 5% 16.15% 16.39% 10.43% ROE ROA 17.09% 11.13% 11.80% 31 Dec. 12 31 Mar. 13 30 Jun. 13 30
PTTGC s Way Forward FY13- another year to achieve high performance as targeted, with EBITDA uplift up to 30% towards 2017 following Operational Excellence, Marketing Excellence, Synergy Projects, and Debottlenecking Continue to pursue the target for strong profitable growth CAGR ~2-3% towards 2017 with expected revenue increase to THB 620-650 bn CAGR ~5-7% towards 2022 with expected revenue increase to THB 800-900 bn 31
Thank You For further information & enquiries, please contact our Investor Relations Team at IR@pttgcgroup.com 1. Thitipong Jurapornsiridee VP - Corporate Finance & IR Thitipong.j@pttgcgroup.com +662-265-8574 2. Panugorn Puengpradit IR Analyst Panugorn.p@pttgcgroup.com +662-140-8714 3. Prang Chudasring IR Analyst Prang.c@pttgcgroup.com +662-265-8327 32
Appendix 2Q/13 Segmental Result Product Additional Demand/Supply 33
Refinery BU Performance Total Production Volume (mbbl) and Yield 120% 100% 80% 60% 40% 20% 0% 17.5 17.6 10.7 33.5 28.4 Total Intake in KBD CDU U-Rate Others 6% 8% 5% Ref+LN 7% 7% 19% 20% 20% 20% 20% 9% 12% 9% Jet 10% 11% 98% 101% 51% 47% 49% Diesel 49% 48% 250 200 59 58 150 14% 14% 16% Fuel Oil 14% 15% 100 2Q/12 1Q/13 2Q/13 1H/12 1H/13 144 146 50 Unit: USD/BBL 2Q/12 1Q/13 2Q/13 YoY QoQ Market GRM 4.32 4.37 2.38-45% -46% CDU GRM 5.53 5.50 2.73-51% -50% CRS GRM 2.58 3.08 2.38-8% -23% Hedging Gain/(Loss) 0.58 0.27 1.23 112% 356% Stock Gain/(Loss) Net NRV -8.79-0.91-2.45-72% 169% Accounting GRM -3.89 3.73 1.15-130% -69% Unit: USD/BBL 2Q/12 1Q/13 2Q/13 YoY QoQ 1H/12 1H/13 YoY Dubai 106 108 101-5% -7% 104 111 6% ULG95-Dubai 14 18 15 7% -18% 17 14-15% Jet-Dubai 16 20 15-4% -24% 18 16-11% Diesel*-Dubai 18 20 17-5% -14% 18 17-7% Fuel Oil-Dubai -1-7 -4 175% -50% -6-1 -82% 450 400 350 300 0 Intake and U-Rate Crude CR+Other feed CDU rate 63% 36 93 100% 94 291 82% 94 239 2Q/12 1Q/13 2Q/13 1H/12 1H/13 120% 100% 80% 60% 40% 20% 0% EBITDA and Adj. EBITDA in THB bn 4.0 3.0 2.0 1.0 0.0-1.0-2.0-3.0-4.0-2.7 EBITDA 2.0 1.9 1.4 0.4 0.0 Adjusted EBITDA 3.5 2.3 1.3 1.4 2Q/12 1Q/13 2Q/13 1H/12 1H/13 * Diesel 0.05% Sulfur 34
Aromatics BU Performance Total Production Volume in Kton and Yield Total intake in kton 120% 100% 80% 60% 40% 20% 0% 1,396 1,357 1,312 2,506 2,669 10% 11% 10% Others 10% 11% 29% 27% 28% Ref+LN 28% 27% 24% 23% 25% CR 23% 24% 15% 15% 15% BZ+CX 15% 15% 23% 24% 23% 23% 23% PX group 2Q/12 1Q/13 2Q/13 1H/12 1H/13 Unit: USD/Ton 2Q/12 1Q/13 2Q/13 YoY QoQ Market P2F 191 394 325 70% -18% (LCM)/LCM Reversal -25 0 0 N/A N/A Hedging Gain/(Loss) -2 0-1 N/A N/A Stock Gain/(Loss) -47-1 -46 N/A N/A Accounting P2F 117 393 278 138% -29% 3,500 3,000 2,500 2,000 1,500 1,000 Unit: USD/Ton 2Q/12 1Q/13 2Q/13 YoY QoQ 1H/12 1H/13 YoY Condensate 927 948 870-6% -8% 1,932 1,819-6% Paraxylene FECP-Condensate 569 669 539-5% -19% 1,125 1,208 7% Benzene Spot Korea-Condensate 180 430 415 131% -3% 356 846 138% Naphtha-Condensate -34 13-12 -65% -195% -19 1-104% 500 0 Condensate Reformate + Other feed BTX rate 90% 92% 90% 88% 84% 198 244 199 1,326 1,234 1,226 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 0.3 1.4 EBITDA 4.2 4.2 3.2 2.6 398 2,332 2,460 Adjusted EBITDA 443 2Q/12 1Q/13 2Q/13 1H/12 1H/13 EBITDA and Adj. EBITDA in THB bn 2.22.4 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 7.4 6.8 2Q/12 1Q/13 2Q/13 1H/12 1H/13 35
Olefins and Olefins Derivatives BU Performance Sales Volume in Kton and Utilization Rates 2Q/2012 1Q/2013 2Q/2013 1H/12 1H/13 Sale Utilization Sale Utilization Sale Utilization YoY QoQ Sale Utilization Sale Utilization YoY Olefins* Volume Rate Volume Rate Volume Rate Volume Rate Volume Rate 217 89% 200 97% 218 93% 1% 9% 392 87% 419 95% 7% HDPE 197 104% 216 109% 193 96% (2%) (11%) 379 105% 410 103% 8% LLDPE 70 77% 102 113% 70 72% 1% (31%) 169 88% 172 93% 2% LDPE 54 98% 75 101% 71 99% 31% (5%) 114 84% 146 100% 28% Total 320 94% 393 109% 334 90% 4% -15% 660 93% 727 99% 10% MEG 90 85% 83 97% 104 100% Total 16% intake 26% 159 82% 187 99% 18% *Olefins external sales Price and Spread in USD/ton Olefins Intake Gas Naphtha 883 1,012 972 1,766 1,984 12% 12% 10% 14% 11% Unit: USD/Ton 2Q/12 1Q/13 2Q/13 YoY QoQ 1H/12 1H/13 YoY Naphtha 894 961 858-4% -11% 958 910-5% HDPE 1,387 1,482 1,443 4% -3% 1,391 1,463 5% LLDPE 1,357 1,477 1,433 6% -3% 1,338 1,455 9% LDPE 1,362 1,459 1,444 6% -1% 1,377 1,452 5% MEG 1,167 1,282 1,173 1% -9% 1,202 1,228 2% 88% 88% 90% 86% 89% 2Q/12 1Q/13 2Q/13 1H/12 1H/13 Olefins and Olefins Derivatives Adjusted EBITDA Margin in THB bn 9.6 7.759 8.31 15.0 17.9 2Q/12 1Q/13 2Q/13 1H/12 1H/13 36
Phenol Performance Sales Volume in Kton and Utilization Rates Phenol BPA Phenol U-rate BPA U-rate Phenol Adjusted EBITDA in THB bn 160 140 120 100 80 60 40 20-122% 126% 127% 29 27% 25 60% 31 38 34 Phenol and BPA Market Spread in USD/ton 42 116% 2Q/12 1Q/13 2Q/13 YoY QoQ 1H/12 1H/13 YoY Phenol 1,407 1,523 1,402 0% -8% 1,440 1,463 2% Phenol-Bz 289 143 116-60% -19% 291 129-56% BPA-Phenol 246 357 317 29% -11% 232 337 46% Phenol and BPA P2F in USD/ton 110% 41.97 76 27% 126% 2Q/12 1Q/13 2Q/13 1H/12 1H/13 100% 67 88% 80% 72 140% 120% 60% 40% 20% 0% 0.21 0.15 0.28 0.4 0.4 2Q/12 1Q/13 2Q/13 1H/12 1H/13 2Q/12 1Q/13 2Q/13 YoY QoQ 1H/12 1H/13 YoY Phenol Margin 431 405 338-22% -17% 460 372-19% BPA Margin 185 282 221 19% -22% 166 252 52% P2F = PH + 0.62 AC 0.872 BZ 0.468 PY P2F = BPA - 0.853 PH 0.275 AC 37
2Q/13 Profit and Loss Statement 2Q/2012 1Q/2013 2Q/2013 YoY QoQ (Restate) THB Mn % THB Mn % THB Mn % THB Mn % THB Mn % 1 Sales Revenue 139,241 100 141,309 100 111,887 100 (27,354) (20) (29,422) (21) 2 Feedstock Cost (117,992) (85) (112,119) (79) (87,594) (78) (30,398) (26) (24,525) (22) 3 Product to Feed Margin 21,249 15 29,190 21 24,293 22 3,044 14 (4,897) (17) 4 Variable Cost (3,995) (3) (6,903) (5) (6,204) (6) 2,209 55 (699) (10) 5 Fixed Cost (3,374) (2) (4,128) (3) (4,163) (4) 789 23 35 1 6 Stock Gain/(Loss) & NRV (6,187) (4) (643) - (1,422) (1) (4,765) (77) 779 121 Gain/(Loss) Hedging 7 Commodity 302-148 - 419-117 39 271 183 8 Other Income 2,064 1 1,324 1 1,362 1 (702) (34) 38 3 9 SG&A (2,522) (2) (2,569) (2) (2,819) (3) 297 12 250 10 10 EBITDA 7,537 5 16,419 12 11,466 10 3,929 52 (4,953) (30) 11 Depreciation & Amortization (4,057) (3) (3,952) (3) (4,187) (4) 130 3 235 6 12 EBIT 3,480 2 12,467 9 7,279 7 3,799 109 (5,188) (42) Financing Expenses (Net 13 Interest Earned) (1,373) (1) (1,115) (1) (1,120) (1) (253) (18) 5-14 FX Gain/(Loss) (1,281) (1) 1,986 1 (2,726) (2) 1,445 113 740 37 15 Shares of gain/(loss)from investments 101 - (18) - (22) - (123) (122) (4) (22) 16 Corporate Income Tax 628 - (1,220) (1) 509 - (119) (19) 1,729 142 Net Profit After Income 17 Tax 1,555 1 12,100 9 3,920 4 2,365 152 (8,180) (68) Portion of Net Profit: 18 Shareholders 1,508 1 12,075 9 4,172 4 2,664 177 (7,903) (65) 19 Minorities 47-25 - (252) - 205 436 227 908 20 Adjusted EBITDA 13,422 10 16,914 12 12,469 11 (953) (7) (4,445) (26) 38
Appendix 2Q/13 Segmental Result Product Additional Demand/Supply 39
Dubai Crude Oil prices pressured by economic slowdown but minimized by ME politics USD/BBL 160 140 120 100 80 126 125 120 106 101 134 133 132 128 132 129 130 126 130 126 123 126 117 116 113 116 113 111 107 111 138 136 131 121 116 USD/BBL 80 70 60 50 40 60 40 20 0-20 19 18 17 16 16 16 17 18 13 12 14 14 15 15 10 10 10 10-5 -4-5 -5-5 -5 2011 2012 2013 2014 2015 2016 Gasoline 95-Dubai Jet-Dubai Diesel-Dubai Fuel Oil-Dubai Dubai Crude Gasoline 95 Jet Diesel Fuel Oil 30 20 10 0-10 USD/Barrel 2011 2012 2013 2014 2015 2016 Dubai Crude 106 117 116 113 116 121 Gasoline-Dubai 13 12 10 10 10 10 Jet-Dubai 19 17 16 16 17 18 Diesel-Dubai 18 16 14 14 15 15 Fuel Oil-Dubai -5-4 -5-5 -5-5 Source: PIRA, May 2012 40
USD/Ton 1,600 1,400 1,200 1,000 800 600 400 200 0 Unit : KMT 12,000 10,000 8,000 6,000 4,000 2,000 0-2,000 Olefins Improved derivatives demand will support to Olefins market 1,395 1,306 961 Short-term Price Forecast 1,297 1,333 1,283 1,265 1,294 1,280 858 868 845 434 407 439 427 466 435 438 345 1Q/13 2Q/13 3Q/13F 4Q/13F Fushun PC China 800 KMT Q1-10 to Q3-12 Daqing PC China 600 KMT Q1-11 to Q3-12 Saudi Polymers Saudi 1,200 KMT Q3-11 to Q3-12 Long-term Supply/Demand Sichuan PC China 1,000 KMT Q3-11 to Q3-13 ExxonMobil SG 1,000 KMT Q3-11 to Q2-13 SINOPEC Wuhan CH 800 KMT Q1-11 to Q3-13 BPCL India 220 KMT Q3-11 to Q4-15 Sinopec Zhijin China 300 KMT Q4-14 to Q2-15 Reliance India 1,350 KMT Q1-16 to Q3-16 Ilam Iran 458 KMT Q1-15 to Q1-16 2012 2013 2014 2015 2016 2017 CNOOC & Shell China 1,000 KMT Q1-16 to Q1-17 America Europe Middle East China Other Asia Additional demand Other Asia 17% China 39% Short-Term Olefins prices were expected to remain high in 2H-13 due to improve demand in derivatives markets in line with new PE plants in Asia will come on-stream However the market will be pressured from 1) Additional new supply in Asia (mainly from China) in the second half of the year 2) Turnaround and shutdown for maintenance of Asia cracker 3) Uncertain global economic outlook America 22% Middle East 19% Europe 3% Additional (2012-2017) (Unit : MMT) Supply Demand 37.81 30.92 Source: CMAI July 2013 41
USD/Ton 1,600 1,400 1,200 1,000 800 600 400 200 0 Unit : KMT 3,000 2,500 2,000 1,500 1,000 500 0-500 Polyethylene The market will be pressured from new supply in the short term 1,482 1,477 1,459 961 521 516 498 Short-term Price Forecast 1,443 1,444 1,433 1,430 1,402 1,428 1,389 1,385 1,363 858 868 845 585 586 561 517 562 544 518 557 449 1Q/13 2Q/13 3Q/13F 4Q/13F Fushun PC China 575 KMT Q1-10 to Q3-12 Daqing PC China 400 KMT Q1-11 to Q3-12 Saudi Polymers Saudi 550 KMT Q3-11 to Q3-12 HDPE Long-term Supply/Demand Sichuan PC China 300 KMT Q1-12 to Q3-13 Saudi Polymers Saudi 550 KMT Q3-11 to Q1-13 SINOPEC Wuhan CH 300 KMT Q1-11 to Q3-13 OPAL India 350 KMT Q1-13 to Q3-14 BPCL India 110 KMT Q3-13 to Q4-14 Shanxi Coking Corp China 150 KMT Q2-15 to Q2-16 Ilam Iran 300 KMT Q1-14 to Q1-15 2012 2013 2014 2015 2016 2017 Other Asia 11% China 42% America Europe Middle East China Other Asia Additional demand Short-Term More new PE supplies in Asia (Mainly from China) and strong buying resistance from end-use producers due to squeezed margin will weigh on PE markets especially in the second half of the year However, due to Q3-early Q4 13 will be the high manufacturing season, it will support PE demand to be improve America 21% Middle East 22% Europe 4% Additional (2012-2017) (Unit : MMT) Supply Demand 12.75 10.36 42
Unit : KMT 3,500 3,000 2,500 2,000 1,500 1,000 500 0-500 LLDPE & LDPE New Capacities and Closures ExxonMobil Sing. 1,300 KMT Q1-11 to Q4-12 Fushun PC China 225 KMT Q2-10 to Q3-12 LLDPE Long-term Supply/Demand SINOPEC Wuhan China 300 KMT Q1-11 to Q3-13 Sichuan PC China 300 KMT Q3-12 to Q3-13 OPAL India 350 KMT Q1-13 to Q3-14 Yulin Energy China 300 KMT Q2-13 to Q2-14 LDPE Long-term Supply/Demand CNOOC & Shell China 300 KMT Q1-16 to Q1-17 Other Asia 29% China 39% 2012 2013 2014 2015 2016 2017 America Europe Middle East China Other Asia Additional demand America 19% Middle East 13% Europe 0% Additional (2012-2017) (Unit : MMT) Supply Demand 11.74 7.91 Unit : KMT 2,000 1,500 1,000 500 0-500 QAPCO Qatar 300 KTA Q1-12 to Q3-12 Borouge UAE. 350 KTA Q1-14 to Q3-14 Reliance India 400 KTA Q1-15 to Q3-16 2012 2013 2014 2015 2016 2017 China 28% Europe 11% Other Asia 7% America Europe Middle East China Other Asia Additional demand Middle East 30% America 22% Additional (2012-2017) (Unit : MMT) Supply Demand 5.78 3.44 Source: CMAI July 2013 43
USD/Ton 1,600 1,400 1,200 1,000 800 600 400 200 0 MEG the market will be robust due to seasonal and strong derivative demand 1,395 1,282 961 375 351 Short-term Price Forecast 1,265 1,294 1,280 1,173 1,129 858 868 845 288 1,193 361 1Q/13 2Q/13 3Q/13F 4Q/12F Short-Term New MEG supplies will come on-stream in the second half of the year and persistently high port inventories in China will affect the market. However, buying sentiment is expected to be driven up from stronger demand in the downstream textiles and fabrics sectors in China due to seasonal demand and more new Polyester supply will start up in the second half of the year 2013 MEG Long-term Supply/Demand Unit : KMT 6,000 5,000 4,000 3,000 2,000 1,000 0 Henan Coal Chemical China 400 KTA Q1-13 to Q3-12 Henan Coal Chemical China 400 KTA Q1-13 to Q4-12 Petrochina Sichuan China 380 KTA Q3-13 to Q4-13 Ningbo Heyuan China 500 KTA Q4-12 to Q1-13 Qianxi Coal Chem China 400 KTA Q3-13 to Q1-14 2012 2013 2014 2015 2016 2017 America Europe India Middle East China 52% Other Asia 3% India 5% America 18% Europe 5% Middle East 17% Additional (2012-2017) (Unit : MMT) Supply Demand 14.06 8.27 China Other Asia Additional demand Source: PCI June 2013 44
Paraxylene Derivatives demand will support PX market Short-term Price Forecast USD/Ton 1,800 1,618 1,600 1,409 1,402 1,365 1,400 1,200 961 1,000 858 868 845 800 657 600 551 534 520 400 200 0 1Q/13 2Q/13 3Q/13F 4Q/13F Short-Term PX demand in year 2013 will be supported from new PTA plants in Asia (especially in China) will start up in and high manufacturing season in textile and fabric sectors in China However, additional new supply in Asia in 2H-13 and squeezed PTA margins and high inventory levels among downstream Polyester market will affect the PX market PX Long-term Supply/Demand Unit : KMT 6,000 5,000 4,000 3,000 2,000 1,000 0 Dalians Fujia2 China 700 KTA Q3-12 to Q4-12 Tenglong Aromatics1 China 800 KTA Q2-12 to Q2-13 SK Energy S. Korea 800 KTA Q3-12 to Q1-14 PetroRabigh Saudi. 1,400 KTA Q3-15 to Q3-16 2012 2013 2014 2015 2016 2017 Other Asia 36% China 20% America Europe India Middle East China Other Asia Additional demand America 2% Europe 4% Middle East 23% India 15% Additional (2012-2017) (Unit : MMT) Supply Demand 21.79 13.31 Source: PCI June 2013 45
USD/Ton 1,600 1,400 1,200 1,000 800 600 400 200 0 Benzene the market will still be driven by the main products 1,389 961 428 429 Short-term Price Forecast 1,287 858 1,232 1,212 868 845 364 367 1Q/13 2Q/13 3Q/13F 4Q/13F Short-Term Benzene supply will depend on the shutdown for maintenance of Aromatics plants and higher operating rate of Cracker in Asia due to high margin In addition, Benzene market will be depend on volatile crude and feedstock prices and improve demand from derivatives (SM and Phenol) market Unit : KMT 3,000 2,500 2,000 1,500 1,000 500 0-500 Daqing PC China 150 KTA Q1-13 to Q3-12 BZ Long-term Supply/Demand ExxonMobil Sing. 340 KTA Q1-13 to Q2-13 Anqing PC China 54 KTA Q3-12 to Q1-13 Samsung Total PC S. Korea 422 KTA Q4-14 to Q3-14 Reliance India 260 KTA Q1-16 to Q-15 Nghi Son Vietnam 246 KTA Q1-15 to Q3-17 2012 2013 2014 2015 2016 2017 Other Asia 55% America 1% America Europe Middle East China Other Asia Additional demand Middle East 9% Europe 2% China 33% Additional (2012-2017) (Unit : MMT) Supply Demand 8.13 8.20 Source: CMAI July 2013 46
USD/Ton 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Phenol Will be pressured from high feedstock prices and new additional supply 1,612 1,380 397 407 Short-term Price Forecast 1,531 1,327 1,345 1,277 1,232 1,257 243 239 1Q/13 2Q/13 3Q/13F 4Q/13F Phenol Long-term Supply/Demand Short-Term Phenol market remain continue to face rising cost and weak supply/demand balances Additionally, Phenol market will be pressured from new additional supply in Asia, mainly from China in the second half of the year Unit : KMT Lihuayi Group Taiwan 217 KTA 1,500 Q1-13 to Q4-12 1,000 500 FCFC China 300 KTA Q4-13 to Q1-14 SSMC China 250 KTA Q4-13 to Q1-14 Kumho P&B S. Korea 300 KTA Q3-14 to Q1-15 INEOS/Yangzi PC China 400 KTA Q3-14 to Q1-16 Other Asia 55% America 1% Europe 2% China 68% Additional (2012-2017) (Unit : MMT) Supply Demand 3.14 1.91 0-500 2012 2013 2014 2015 2016 2017 America Europe Middle East China Other Asia Additional demand Source: CMAI July 2013 47