irpresentation september

8/8/2019 IRpresentation September

1/34

Petkim Petrochemical Holding Corp.

Presentation to Analysts

October 2010


2/34

AGENDA

1 I World Economy & Petrochemical Industry

2 I A Glance at Petkim

3 I Investments

4 I Growth Plans and Strategies

5 I Key Financials

2


3/34

-2,4

-4,1-5,2

3,32,4

9,1

-0,2

-4,7-3,6

-7,9

5,7

1

4,3

9,4

7,16,1

2

10

3,6 3,42,9

1,31,8

4,1

9,68,4

4,2

US EU Japan Russia China India Brazil Turkey C&EE

2009

2010

2011

2009 2010 2011

Advanced Econ. -3,2 2,6 2,4

Emerging Econ. 2 ,5 6,8 6 ,4

World Economy & Petrochemical Industry

0

200

400

600

800

1.000

1.200

Oca.06 Oca.07 Oca.08 Oca.09 Oca.10 Oca.11

Fiyatlar($/MT)

-100

-50

0

50

100

150

200

M

arjlar($/MT)

Nafta-Ham Petrol Ham Petrol (Brent)

Benzin (CIF NWE) Nafta (CIF NWE)

SLIGHT RECOVERY IS OBSERVED BEGINNING

FROM THE SECOND HALF OF 2009. MODESTGROWTH IS OBSERVED IN 2010.

DUE TO THE CRISIS GROWTH RATESDECELERATED IN ALMOST EVERY REGION OF

THE WORLD. BUT RECOVERY IS EXPECTED FOR2010

THE ICIS PETROCHEMICAL INDEX ROSE TO 299IN JUNE 2010, A GAIN OF %90 OVER THE

FEBRUARY READING OF 157.

RECOVERY IS EXPECTED IN OPERATING

RATES AS GLOBAL DEMAND IMPROVES.

Source: IMF, World Economic Outlook(WEO), September 2010

150

200

250

300

350

400

Mar.05 Oct-05May.06Dec-06 Jul-07 Feb-08Sep-08 Apr-09 Nov-09 Haz.10

ICIS Petrochemical Index (IPEX)*

%90

Global Basic Chemicals and EBIT ContributionDollars Per Metric Ton

Crude Oil Naphtha Gasoline Price Expectations

3

World Economic Growth Rate (%)Economic Growth in Selected Economies (%, yoy) Regional & World Ethylene Operating Rates (%)

OIL PRICES ARE EXPECTED TO REMAINBETWEEN USD 75-85 RANGE IN 2010.NAPHTHA AND GASOLINE PRICES ARE

EXPECTED TO FOLLOW CRUDE OIL.

* An indicator of average change in world petchem prices for basket of 12 essential petchem products in US, WE and Northeast Asian markets

Source: CEFIC Source: CMAI

Source: CMAI

Source: CMAI

Source: CMAI

FUTURE EARNINGS ARE EXPECTED TOSTRENGHTEN WITH THE CONSOLIDATION,M&A IN INDUSTRY AND SUCCESSFULECONOMIC STIMULUS

World North Asia South Asia India


4/34

AGENDA



3 I Investments


5 I Key Financials

4


5/34

PETKM

5


6/34

ETHYLENE

C4

NAPHTHA-LPG

PROPYLENE

AROMATICS

ETHYLENE

C4

NAPHTHA-LPG

PROPYLENE

AROMATICSETHYLENE

Petrochemicals from Naphtha

6

LDPEBags, greenhouse covers, film,cables, toys, pipes, bottles, hoses,

packagingHDPEPackaging film, construction andwater pipes, bottles, soft drinkcrates, toys, jerry cans, barrels

MEG

Polyester fiber, polyester film,antifreeze

VCM - PVC - EDCPipes, window and door frames,blinds and shutters, cables, bottles,construction materials, packaging

film, floor tiles, serum bags

CA-CAUSTIC SODATextile, detergent

PROPYLENE

PPKnitting yarn, sacks,carpet thread, ropesand hawsers, tablecloths, napkins,

doormats, felt, hoses,radiator pipes, fishingnets, brushes, blankets

ACNTextile fibers, artificialwool, ABS (AcrylonitrileButadiene Styrene)resins

C4

BUTADIENE

RubberAutomobile tire

AROMATICS

BENZENE, TOLUENE

Detergent, white goods,Solvents, explosives,pharmaceuticals,cosmetics

O-X - PA

Pigments, plasticizers,synthetic chemicals,polyester

P-X - PTAPolyester fiber, polyesterresin, polyester film


7/34

Company Overview

Established in 1965/Second complex commissioned in 1985

The sole petrochemical producer in Turkey

25% domestic market share and well positioned assets inan ever growing market

USD 1.412 mn net sales (9M 2010) USD 99 mn EBITDA (9M 2010)

15 main plants, 8 auxiliary units

Located in Aliaa near Izmir

Sits on a land of 19 mn sqm Harbour, water dam, power generation unit (226 MW)

Adjacent to Tpra Aliaa Refinery

PETKM

FACILITIES

MAINFEEDSTOCK

PRODUCTS

PRODUCTION

Naphtha, LPG, C4, Condensate

Main product goups: olefins, polyolefins, vinylchain, aromatics and other basic chemicals

2.399 th. tons of gross production realized in 9M 2010

Realized capacity utilization rate of 97,7% (planned as

96% in 2010)

7


8/34

Relative Performance

100

120

140

160

180

200

220

Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct

ISE 100 PETKIM

Petkims Ownership Structure

Share Information (26 October 2010)

Stock Price Performance

Ownership Profile

Privatization process was completed in May2008. SOCAR&Turcas Consortium acquired51% stake in Petkim at an amount of USD

2.04 bn.

Closing Price (TRY/Share) 2,62

Market Cap (mn TRY) 2.620Market Cap (mn $) 1.854

Free Float (%) 38,7

Source: Reuters

Source: Reuters

Strong Performance

8

Free Float

38,7%

SOCAR Turcas

51,0%

PA

10,3%


9/34

Petkim: The Strong & Tangible Symbol of Economical & Strategical Partnership

TURCAS is the first privately-ownedpetroleum company in Turkey focusingon distrubution of oil products andenergy investments through itsinternational strategical partnerships

SOCAR, with large-scale investments inAzerbaijan is one of the worlds oldestpetroleum companies. SOCAR is a

shareholder and major supplier of the 50million ton capacity BTC crude oilpipeline and the BTE natural gaspipeline, which transports 6,6 billioncubic meters of natural gas to Turkey

PETKM

A BRIDGE LINKING AEGEAN TO CASPIAN

9


10/34

Products and Capacity

PETKIMALIAGA COMPLEX

START-UP 1985

TOTAL

Capacity 1,916,000 ton/yr

Other Products

1

Capacity954,000 ton/yr

Fiber Raw Materials

Capacity249,000 ton/yr

Thermoplastics

Capacity 713,000 ton/yr

1 Ethylene (520,000),VCM (152,000),

PA (34,000),Chlorine (100,000),Benzene (134,000),

MB (10,000),Plastic Products(4,000)

ETHYLENE 520

PROPYLENE 240

C4 140

PY-GAS 390

AROMATICS 320

BENZENE 134

P-X 136O-X 50

CHLORINE 100

VCM 152

PVC 150

LDPE 323

HDPE 96

PP 144

MEG 89

ACN 90

PTA 70

PA 34Power (MW) 226

Product Capacities(thousand tons)

PLANT CAPACITIES

10


11/34

1.371 1.3911.442

1.049

1.208

364 385 444

0

200

400

600

800

1000

1200

1400

1600

2007 2008 2009 9M 09 9M 10 Q3 09 Q2 10 Q3 10

Petkim: Net Sales

Net Sales (thousand tons)

Breakdown of Sales Volume 9M 2010

Net Sales (million USD)

Breakdown of Sales Revenues 9M 2010

11


12/34

Petkim: Exports

Breakdown of Exports Revenues by Product Type 9M 2010

Breakdown of Exports by Region 9M 2010

Exports Revenues by Years (million USD)

Petkim products are exported to nearly 60 different

countries Benzene, C4, LDPE, Py-Gas and P-X are the mainexports products.

The second exporter in chemical industry in Turkey in2009.

Share of export in total sales 9M 2010 is 26%

12


13/34

-4

99

89

99

3439

31

-5

15

35

55

75

95

115

2008 2009 9M 09 9M 10 Q3 09 Q2 10 Q3 10

Petkim: Product Prices & Cost Breakdown

50

100

150

200

250

Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10

Thermoplastics Naphtha

RawMaterial78,7%

Labour5,2%

Energy

9,3%

Others

6,8%

0

500

1000

1500

2000

Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10

Naphtha Unit Price

Petkim Thermoplastics and Naphtha Price Changes

Raw Material and Product Prices (USD/ton)Raw Material and Product Prices (USD/ton)*

Cost Breakdown*

0

250

500

750

1.000

1.250

1.500

1.750

LDPE HDPE PP MEG PVC

Naphtha Cost Product Prices

Petkim EBITDA Performance (million USD)

* As of September 2010

13

Index (2007 January=100)


14/34

Petkim: A Remarkable Turnaround Driven by Operational Efficiencies

Efficiencies on Marketable Production Per Capita

Feedstock flexibility (switching from Naphthato LPG/C4)

Fuel flexibility in power generation

Maximization of capacity utilitization (95%)

Restructuring and rejuvenation of labor force

Initiatives for energy efficiencyimprovement

Process optimization

(APC, DCS implementation)

Increasing trading opportunities

Person

14

W. Europe Ethylene Capacity Utilitization Rates

60

65

70

75

80

85

9095

100

105

110

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2008 2009 2010

Petkim Ethylene Capacity Utilitization Rates (%)

Low capacitydue to incidental outage


15/34

AGENDA



3 I Investments


5 I Key Financials

15


16/34

Capital Expenditures and Planned Capacity Increases

Moderate gearing of capital investments instead of fully

financing with equity as it has been in the past

Increasing capacities of existing plants with minor capex-

smart debottlenecking investments

Maximizing production of LDPE, where Petkim has acompetitive advantage

Optimizing processes in the plants ( implementation of

Advanced Process Control and Distributed Control

Systems)

Investments to enhance egergy savings and operational

efficiencies on existing plants (such as rehabilitation workfor the furnaces of the aromatics plant)

72

50

78

154

6656

46

74

54

020

40

60

80

100120

140

160

2002

2003

2004

2005

2006

2007

2008

2009

2010P

Capital Expenditures of Petkim (million USD)

16

Ethylene 520 67 587 2012LDPE-T 133 27 160 2011PA 34 15 49 2012PTA 70 35 105 2012

Planned Capacity Increases (th ton)

Plants Current Additional After DateCapacity Cap Increase Cap Increase


17/34

Investment Highlights

PETKIMDominant producer25% market share

1998-2009 CAGRThermoplastics demand 6,5%GDP growth 3,0%

Growth Potential in the Domestic Market

One of the fastest growing markets

An attractive market, the second biggest importer ofpetrochemicals after China

More than 6000 small and medium sized companiesare active mainly in packaging, construction andautomotive fields

Petrochemical market size 6-7 billion USD

-15

-10

-5

0

5

10

15

20

25

30

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Thermoplastics Domestic Growth (%) GDP Growth (%)

0

500

1000

1500

2000

2500

3000

3500

4000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2015

E

Thermoplastics

Fiber Raw

U.S.A 90 75 76W.Europe 78 69 70Turkey 45 43 45Republic of China 30 28 30World 25 24 24Brazil 23 25 27India 6 5 6

Petrochemicals Domestic Demand (thousand ton)

Kg/capita 2007 2008 2009

Plastics Consumption per Capita

17


18/34

AGENDA



3 I Investments


5 I Key Financials

18


19/34

DOWNSTREAM

ADVANTAGES OF WIDE PRODUCT

RANGE

HIGH VALUE ADDED SPECIALTYCHEMICALS

STRATEGIC PARTNERSHIPS WITHCUSTOMERS OR OTHERINVESTORS (CLUSTER MODEL)

ENERGY

PRODUCTION

LOGISTICS & TRADING

UPSTREAM

SYNERGY WITH

SOCAR&TURCASREFINERY

Growth Plan and Strategy

4 PILLARS OF GROWTH PLAN

19


20/34

Feedstock Flexibility Logistics Increasing LPG utilization in feedslate of cracker

Utilization of Fluid CatalyticCracking (FCC) and C4 stream

Setting up an advanced steamcracker model for the utilization ofdifferent feedstocks and the factoryoptimization

Energy saving program

Opportunity for importing NG fromAzerbaijan

Power generation from wind

New distribution centers

Increased transportation by rail

Potential strategic partnershipopportunities in port business

Capability for storage facilities leasing

Short Term Growth Plans

TradingSales&Marketing

BusinessTransformation

Capacity Increase

Meeting total needs of customers Product trading that will be conductedfrom Aliaga and also from new logisticcenters

New financial instruments to promotesales

Capacity increase by:

Ethylene and thermoplastics revamping

Debottlenecking and modernization

Maximizing asset utllitization

Reviewing the current performance Assessing potential improvementareas in organization, maintenance,energy, HSE and operations

Improving IT infrastructure with ERPand integrated Manufacturing Execution

System (MES)

Energy

20


21/34

SECURING FEEDSTOCK WITH THE REFINERY

INTEGRATION

Mid to Long Term Growth PlansTO REACH 40% MARKET SHARE WITH

DOWNSTREAM INVESTMENTS VALUE SITE

SOCAR&TURCAS AEGEAN REFINERY

Allocation of 130 ha area for the refinery investment 10 million tons /year crude oil capacity Product slate: naphtha, LPG, diesel, kerosene, jet fuel (no gasoline)

30% investment cost reduction due to existing infrastructure Creation of synergy with the vertical integration Feedstock security for Petkim Additional revenue from services to the refinery

Available infrastructure for potential investments

Double digit demand growth in the Turkish chemical sector

Increasing competitive advantage with sinergies created

New investment opportunities with local and foreign companies

Cluster Model

21


22/34

LOGISTICS

To become one of the key logisticsmain terminals in the region

High capacity potential of containerhandling

High capacity potential of liquidand dry cargo handling

High capacity of logistics supportunits

Direct access to national railway

hubs and national transit ways andhighways

Tank Farm

ADVANTAGES Increasing harbour capacity and

utilization rate

Storage of various solid, liquid, andgas chemicals

Paving the way for potentialinvestments on transportation

Import and export opportunities forchemicals

Growth Plan and Strategy

GROWING WITH LOGISTICS INVESTMENTS

Exclusivity agreements have been signed with one of the industry-leading companies, APM Terminals BV, for thedevelopment of Petkim port, and negotiations are currently continuing.

22


23/34


24/34

Chemical Park Cluster Models

MARL Chemical Park (Germany)

Wilton International Teesside(England)

Shangay Chemical Park (China) Jurong Island (Singapore)

North-Pas de Calais (France)

Point Lisas Industrial Estate (Trinidad)

Zeitz Industrial Park (Germany)

Dow Value Park (Germany)

Antwerp (Belgium) Chemical Alliance Zone (USD)

Cluster Models

24

MARL Chemical Park (Germany) Antwerp (Belgium)

Wilton International Teesside (England)


25/34

Year 1960

25

Today

JURONG-Singapore

JURONG ISLANDS KEY FIGURES

Total Sales (billion USD) ~75Land (hectare) 3.200# of Operated Plants (unit) 95# of Labour 30.000Refinery Capacity (million barrel/day) ~1,3

# of Crackers (unit) 5Electricity Generation Capacity (mw) 4.650


26/34

PETKM & Jurong International

26

The world's most successful petrochemicalpark, Jurong Island, is a man-made landmass

created from seven islands, in which a numberof chemical companies co-exist.

Petkim signed a consultancy contract withJURONG International Pte Ltd. (JURONG)which has established the cluster model of

Jurong Island Chemical Park in Singapore andplanned chemical park fields in more than 40countries.

A Master Plan study is being conducted byJURONG in order to ensure the most efficientuse of the existing land and infrastructure and toestablish a chemical park that will integrate thevalue chain of upstream, downstream, energyand logistics.


27/34

27


28/34

AGENDA



3 I Investments


5 I Key Financials

28


29/34

Balance Sheet (Million USD) (IFRS)

Financials

Receivables, Inventories and Payables (Million USD)

31/12/2008 31/12/2009

149

58

115

293

19

1.123

19

11

116

208224

89

60

897

1. 123

166

19

567

1.403

58

265

52

376

51

975

1.403

Cash&Cash Equivalents

Trade ReceivablesInventories

Other Current Assets

Current Assets

Non-Current AssetsTOTAL ASSETS

Financial Liabilities

Other Payables

Trade Payables

Short-Term Liabilities

Long-Term Liabilities

Shareholders Equity

TOTAL LIABILITIES

830 836

30/09/2010Cash&Bank Debt (Million USD)

30

167

223206

14

610

8731.483

58

235

56

348

57

1.078

1.483


30/34

30

Financials

2007 2008 2009 Sep09 Sep10 3Q 09 2Q 10 3Q 10

Net Sales 1.671 1.795 1.342 937 1.412 377 470 491

Cost of Goods Sold (-) (1.514) (1.822) 1.269 (872) (1.305) (358) (421) (465)

Gross Profit (Loss) 157 (27) 73 65 106 19 49 26

Gross Profit (Loss) Margin 9,4% -1,5% 5,4% 6,9% 7,5% 5,1% 10,4% 5,3%

Operating Expenses (-) (74) (72) (44) (29) (42) (9) (15) (13)

Other Operating

Income/(Expenses),net (20) (3) (3) 2 (4) 1 (3) (0)

Operating Profit/(Loss) 63 (102) 26 38 61 11 31 13

Financial Income/(Expenses) (11) (20) 16 6 7 5 (6) 12

Profit/(Loss) Before Taxation 52 (122) 41 44 67 16 25 24

Deferred Tax (1) 5 34 (2) (5) 1 4 (5)

Net Profit/(Loss) for the Period 51 (117) 75 42 62 16 29 19

EBITDA 128 (4) 99 89 99 34 39 31

EBITDA Margin 7,7% -0,2% 7,4% 9,5% 7,0% 9,0% 8,4% 6,3%

Income Statement (Million USD) (IFRS )


31/34

PetkimPetkimss TodayToday

31

FITCH RATINGS

FOREIGN

CURRENCY

LONG TERM LONG TERM NATIONAL

June, 2010 BB- (negative) BB- (negative) A (tur) (negative)

May, 2009 BB- (negative) BB- (negative) AA- (tur) (negative)

September, 2008 BB- (stable) BB- (stable) AA- (tur) (stable)

January, 2008 BB (stable) BB (stable) AA (tur) (stable)

June, 2007 BB (stable) BB (stable) AA (tur) (stable)

April, 2007 BB (stable) BB (stable) AA- (tur) (stable)

February, 2006 BB- (stable) BB (stable) AA- (tur) (stable)

DATE

LOCAL CURRENCY

While many petrochemical companies credit ratingswere downgraded all around the world,

Fitchratings affirmed Petkims rating with BB-/negative outlook.


32/34

Corporate Governance Rating

Upgraded to an overall Corporate Governance rating of8,19 from previous one of7,71

A clear sign of a good compliance to CMB Corporate Governance Principles

An indication of imposing necessary policies and measures and confirmation of themanagement activities that are carried out at a high level of quality

Listed on the Istanbul Stock Exchange's prestigious Corporate Governance Index

Committed to improve its performance on Corporate Governance Principles compliance

Sub Categories Weight Grade Shareholders 25 % 8,00Public Disclosure and Transparency 35% 9,04Stakeholders 15% 9,26Board of Directors 25% 6,53

OVERALL 8,19

32


33/34


34/34

We welcome your questions, comments and suggestions. Our corporate headquarters office address is:

Petkim Petrochemical Holding Corp. PO. Box.12Aliaa, 35801 zmir/ TURKEY

To contact us with respect to shareholding relations for individual and corporate investors, please call directly or sendan e-mail to

Ms. Fsun UGANFinance ManagerTel :+90 232 616 1240 (Ext:4575)Direct :+90 232 616 6127E-mail :[email protected]

Mr.

afak AYI

I

IAssistant General Manager (Finance)Tel :+90 232 616 1240 (Ext: 2150)Fax :+90 232 616 2297E-mail :[email protected]

Mr. Hayati ZTRK

General ManagerTel :+90 232 616 1240 (Ext:2040)Direct :+90 232 616 2297Fax :+90 232 616 8519E-mail :[email protected]

Also, please visit our web site at www.petkim.com.trfor further information and queries.

Investor Relations

34

irpresentation september

Documents