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11 May 200611 May 2006
Thai Oil Public Company Limited
Analyst Presentation1st Quarter 2006 Performance
Thai Oil Public Company Limited
Analyst Presentation1st Quarter 2006 Performance
www.thaioil.co.thwww.thaioil.co.th
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DisclaimerDisclaimer
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intended solely for your personal reference. Please do
not circulate this material. If you are not an intended
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distribute or take any action in reliance upon it.
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I)I) Quarterly HighlightsQuarterly Highlights
II)II) Operational UpdateOperational Update
III)III) Financial PerformanceFinancial Performance
IV)IV) Investment ProjectsInvestment Projects
PresentationPresentation OutlineOutline
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I) Quarterly HighlightI) Quarterly Highlightss
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Flagship refinery of the PTT group
Largest, most complex & highly integrated refinery in Thailand
One of the most complex in the region – Nelson index = 8.6
Thai refining industry’s most capable and experienced management and staff
2nd largest in Thailand in terms of total revenue ~ US$ 6.3 bn. in 2005
8th largest market cap. & 5th most liquidly traded on SET – mkt cap ~ US$ 3.5 bn. (3% of SET)
Ranked in Forbes’ global survey among 2,000 biggest companies - one of 13 Thai companies. TOP ranked # 1,330 in 2005, improving from # 1,595 from the previous year
Largest and arguably most successful IPO / listing (US$ 830 mn.) on SET since PTT’s in 2001
Highest credit-rated amongst pure-play refineries in the region – Moody’s Baa1& S&P’s BBB
Thaioil – One of Thailand’s Premier CompaniesThaioilThaioil –– One of ThailandOne of Thailand’’s Premier Companiess Premier Companies
Note: As of 30 March 2006PTT 49.54%
Free Float (Thai) 19.81% Free Float (Foreign) 23.47%
Others 7.18%
Thaioil’s Shareholding Structure
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Achieved high refinery intake of 106%.Maximized group operational synergy through Area Production Unit management (TLB/TPX).Completed TLB hot oil & Mercury Removal Unit (MRU) tie-in activities.
Achieved high refinery intake of 106%.Maximized group operational synergy through Area Production Unit management (TLB/TPX).Completed TLB hot oil & Mercury Removal Unit (MRU) tie-in activities.
Operation
TLB underwent 1st major turnaround to improve plant efficiency while maintaining profitability.IPT advanced transformer repair work by 2 months ahead of plan.
TLB underwent 1st major turnaround to improve plant efficiency while maintaining profitability.IPT advanced transformer repair work by 2 months ahead of plan.
Served customers demand with higher domestic sale.Completed feasibility study & risk assessment of Ethanol project.
Served customers demand with higher domestic sale.Completed feasibility study & risk assessment of Ethanol project.
Business
Modified scope of TPX expansion project to increase PX production. Terms and conditions finalized with EPC contractors.
Modified scope of TPX expansion project to increase PX production. Terms and conditions finalized with EPC contractors.
Repaid US$100 mn. of revolving loan facility in Jan.Declared dividend of Bt. 3.5/share (40% payout). Payment on 4 May’06.
Repaid US$100 mn. of revolving loan facility in Jan.Declared dividend of Bt. 3.5/share (40% payout). Payment on 4 May’06.
Finance
TPX prepaid high-cost supplier loan of US$ 20 mn. in Jan’06. TPX is negotiating with lenders to lower interest/release security in Q2/06. TP and TLB paid dividend of Bt. 1.25/sh. and Bt. 1.75/sh., respectively.
TPX prepaid high-cost supplier loan of US$ 20 mn. in Jan’06. TPX is negotiating with lenders to lower interest/release security in Q2/06. TP and TLB paid dividend of Bt. 1.25/sh. and Bt. 1.75/sh., respectively.
Quarterly HighlightsQuarterly Highlights
Thaioil Subsidiaries
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Financial HighlightsFinancial Highlights
Bt. mn.
Consolidate Financial Performance
+35%
6,338 5,351
Q1/05 Q1/06*Percentage was based on total amount before deducting inter-company transaction.
Refinery50%
Q1/06
Bt. 4,086 mn.Bt. 4,086 mn.
Subsidiaries50%
Refinery83%
Q1/05
Bt. 3,691 mn.Bt. 3,691 mn.
Subsidiaries17%
+11%
Sales Revenue
Net Profit
4,0863,691
EBITDA
-16%
+11%
47,942
64,859
EBITDA declined 16% (YoY) to Bt. 5,351 mn. The declining GRM during 1st half of Q1 was due to inability of product prices to rise as fast as crude prices, in turn driven by geopolitical tensions.
Both product demand & prices staged an impressive rebouncesince the latter half.
EBITDA & net profit contributions from subs increased to 44% & 50% caused by higher margins, higher utilizations & the sale of MX to TPX in Apr’05. Group’s effective tax rate thereby reduced to 15%.
Net profit rose by 11% (YoY) to Bt 4,086 mn.
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II) Operational UpdateII) Operational Update
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232
149 149 149
66
175
0
50
100
150
200
250
TOP RRC SPRC Esso TPI BCP Aveutilization(Thailand)
0%
20%
40%
60%
80%
100%
764 765 712 717 731 738
92 8388 82
782
87%90%
84%
90% 90%85%
89%
0
200
400
600
800
1,000
1,200
Q1/05 Q2/05 Q3/05 Q4/05 1Q06 2004 200550%
55%
60%
65%
70%
75%
80%
85%
90%
Oil Demand Feed for PetrochemNet Export % Utilization rate (RHS)
Intake/Utilization by Refinery in Q1/06
Domestic Oil DemandDomestic Oil Demand Grew in Q1/06Grew in Q1/06
Domestic Oil Demand/Refinery Intake
(Intake)
Domestic demand in Q1/06 grew by 9% QoQ to 782 kbd, due mainly to increased demand in power generation (F/O), transport (Diesel), tourism (Jet).Diesel demand bounced back nearly to its pre-subsidy-removal level.Local refinery utilization hence increased to 90% (+5% QoQ).With complex configuration, Thaioil refinery was able to run the plant utilization at 106%, higher than other refineries in Thailand.
Remark: Exclude LR exchange between TOP/BCPSource: Ministry of Energy and Company
Kbd% Utilization106%
88%100%100%81%
55%
Intake
TOP RRC SPRC ESSO TPI BCP Ave. Utilization
90%
Avg.
Util
izat
ion
862 925 903911867920
98
394
317
77
122
96
Q4/05
121
424
341
83
124
97
Q1/06
+22%Fuel Oil
+2%Gasoline
+2%LPG
+8%
+8%
+8%
Middle Distillate
-Diesel
-Jet Fuel
Q1/06-Q4/05+/(-)
Oil Demand by Products Volume (Kbd)
921
Kbd % Utilization
10
Q1/06 Operational UpdateQ1/06 Operational Update
TOP - Utilization improved by 11% YoY, due to less shutdown time. A 6 days shutdown was for TLB hot oil and MRU projects tie-in.
TPX - Productivity improved 10% to nearly full capacity, following a change in catalyst in Jan’05.TLB - Productivity dropped by 7% due to its 1st major turnaround with no impact on earnings.IPT - Availability rose 10% YoY, due to lower outage time (72-days after transformer incident on
19 Jan’06 vs 90-days in Q1/05 with only one CT in operation). TP - Utilization rose 3% due to lower outage time (minor inspection of 10-days in Q1/06 vs
major inspection of 25-days in Q1/05). TM - Utilization was higher arising from higher fleet management efficiency.
57%
87%86%
47%
71%
89%95% 99%
91%89%
64%
106%
0%
20%
40%
60%
80%
100%
120%
Q1/05Q1/06
Increased utilization/ production
rates, leading to increase in
group profitability.
Refinery Utilization PX Production Lube Production Availability Utilization Utilization
TOP TPX TLB IPT TP TM
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TOP TOP –– High Utilization and EfficiencyHigh Utilization and Efficiency
Despite shutdown of 6 days (29 Jan - 3 Feb) for TLB hot oil and MRU projects tie-in,
Thaioil was able to maintain high utilization rate at 106% compared to 104% in 2005
due to:
Alternate on-line cleaning of furnace and crude heat exchanger train of all
crude distillation units (CDU-1, CDU-2, CDU-3).
Hydrocracker-1 shutdown for 2 weeks in Mar’06 :
For a planned catalysts change-out.
Opportunity taken to carry out interim shutdown of related units (HVU-3 and
CCR-1) for minor repairs and efficiency improvement activities.
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78% 80%
5% 6%17% 14%
18% 10% 16%
57%54%
60% 55%
31%
12%
28% 29%30%
Thaioil processed higher portion of indigenous crude at
the expense of FE and ME crudes, due to increased
Bongkot condensate supplied by PTT during shutdown
of the local aromatic plant.
Additionally, given the widening FE & ME crude oil
price gap, none of Far East crude was intake in Mar'06.
Further heavy ME crude was used to replace the
reduced long residue supply from BCP. This, coupled
with HCU-1 shutdown for catalyst change, increased
fuel oil production slightly to 12%. Incidentally, Q1/06
saw strong domestic F/O demand and hence relatively
strong price increase.
Overall, Thaioil' s major crude intake were 78%from
Middle East and our product yields continued to meet
the country's demand in Q1/06.
Thaioil’s Crude Mix and Oil Product Yield
Flexible Configuration Allows forFlexible Configuration Allows forComplex Margin OptimizationComplex Margin Optimization
Middle East
Far East
Heav y
Light
Dist.
Middle
Q1/06
Local
2005
Crude ProductDomestic Demand
49.6069.2275.8867.159.6257.9567.57Q1/06
2005 64.03
Diesel0.5%
8.57
TP-DB
40.3167.6362.0949.3257.89
Fuel OilJetULG 95DubaiTapis
Average Oil Prices-MOPS (US$/bbl)
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Higher production rate at 99% and increased domestic
sale volume : Q1/06 Q1/05
PX production (KT) 86 78
PX domestic sale 70% 50%
TOP’s Technical Service Agreement (TSA) with SGSI
was extended to cover both TPX and TLB w/o additional
charges.
Benchmarking of plant performance with world-class
aromatics plants using Phillips Townsend as
consultant. Result to be available in Q2/06.
Expansion project will further enhance TPX’s
operational efficiency and profitability.
Higher production rate at 99% and increased domestic
sale volume : Q1/06 Q1/05
PX production (KT) 86 78
PX domestic sale 70% 50%
TOP’s Technical Service Agreement (TSA) with SGSI
was extended to cover both TPX and TLB w/o additional
charges.
Benchmarking of plant performance with world-class
aromatics plants using Phillips Townsend as
consultant. Result to be available in Q2/06.
Expansion project will further enhance TPX’s
operational efficiency and profitability.
TPX and TLB TPX and TLB –– Operational HighlightsOperational Highlights
TPXOperating TLB as one of TOP APU’s significantly improves plant performance.
Major turnaround was taken during 2 Mar – 5 Apr, 1st time since commencement of operation in 1997. Normally, turnaround time is for every 4 years.
The successful major turnaround exemplified the close collaboration b/w TLB & TOP.
Well-planned stock piling ahead of turnaround allowed TLB to enjoy high margin & maintain high profitability, virtually with no earning disruption.
Synergy projects:
TOP to use TLB’s hot oil for crude preheating which would increase CDU-1 feed by 5 kbd.
To maximize lube base production (through co-processing HCU bottom/LR and catalyst change).
TLB to use TOP’s cheaper refinery fuel oil in lieu of own expensive fuel (extract/slack wax).
To produce specialty product, Treated Distillate Aromatic Extract (TDAE).
Operating TLB as one of TOP APU’s significantly improves plant performance.
Major turnaround was taken during 2 Mar – 5 Apr, 1st time since commencement of operation in 1997. Normally, turnaround time is for every 4 years.
The successful major turnaround exemplified the close collaboration b/w TLB & TOP.
Well-planned stock piling ahead of turnaround allowed TLB to enjoy high margin & maintain high profitability, virtually with no earning disruption.
Synergy projects:
TOP to use TLB’s hot oil for crude preheating which would increase CDU-1 feed by 5 kbd.
To maximize lube base production (through co-processing HCU bottom/LR and catalyst change).
TLB to use TOP’s cheaper refinery fuel oil in lieu of own expensive fuel (extract/slack wax).
To produce specialty product, Treated Distillate Aromatic Extract (TDAE).
TLB
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III) Financial PerformanceIII) Financial Performance
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Oil Price Movement & Oil Price Movement & ThaioilThaioil’’ss GRMGRM
20
30
40
50
60
70
80
Jan' 0
5 F M A M J J A S O N DJa
n' 06 F M A
Oil Price Movement US$/bbl Diesel
GasolineTapis
Dubai
Fuel Oil
Remark: MX unit sold to TPX since 1 April 2005
Thaioil’s Gross Refinery Margin - LIFOUS$/bbl
0
2
4
6
8
108.75
6.55
8.527.50
6.62
3.00
4.65MX
MX
Q1/05 Q2/05 Q3//05 Q4/05 Q1/06 FY/04 FY/05
-15-55
152535
US$/bbl
Product - Dubai Spreads
Diesel - DB
Gasoline - DB
Fuel Oil - DB
Q1/05 Q2/05 Q3/05 Q4/05Jan’06 F M
15
5
-5
-15
25
35
MA
Geopolitical issues, especially intensified tension over Iran’s nuclear program and unrest in Nigeria, drove crude oil price to its all-time high.
Sluggish demand lingered from last year’s subsidy removal had kept refined product prices from rising as fast during 1st half of Q1/06.
However, recently product market tighten up due to shutdown of regional refineries and declining product stocks. Product-crude spreads was most narrowed in Feb’06, before reversing the trend.
GRM grew QoQ from US$ 3/bbl to US$ 4.65/bbl. However, GRM for Q1/06 is lower than Q1/05 due largely to lower stock gains and the sale of MX unit to TPX in Apr’05.
MX
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Financial Highlights Financial Highlights -- ConsolidatedConsolidated
(Bt. mn.) Q4/05* Q1/06 Q1/05 YoY YoY
+/(-) (%)
Sales Revenue 67,081 64,859 47,942 16,917 35
EBITDA 4,803 5,351 6,338 (987) (16)
Profit before FX and Tax 2,594 3,124 4,422 (1,298) (29)
FX Gain/(Loss) 38 1,673 251 1,422 567
Tax (249) (711) (982) 271 (28)
Net Profit 2,383 4,086 3,691 395 11
Thaioil 164 2,141 2,948 (807) (27)
Subsidiaries 2,219 1,945 743 1,202 162
EPS (Bt/share) 1.17 2.00 1.81 0.19 11
Bt./US$ - ending 41.17 38.94 39.25 (0.31) (1)
*Excluding special item, TLB’s impairment reversal in Q4/05 of Bt. 2,894 mn.
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TLB55%100%
Q1/06 Performance Breakdown by CompanyQ1/06 Performance Breakdown by CompanyQ1/06 Performance Breakdown by Company
Q1/06 / Q1/05 / Change(Bt. Mn.)
100%100%
TPX
56%24%
TP TM
IPT
Production 99% 89% +10%PX-Feed ($/t) 403 384 +5%EBITDA 1,360 644 +716Net Profit 1,284 471 +813
TOP
TPX performance improved significantly as a result of business restructuring by incorporating MX unit into its operation.Strong lube base market continued to enhance TLB’sperformance. Production dropped from major turnaround for 35 days, however, no impact on its earning.IPT’s transformer incident in Jan’06 reduced availability to 57%, yet better than Q1/05. Problem is expected to be fixed by end Jun’06.
Group effective tax rate for Q1/06 reduced to 15%.
Production 64% 71% -7%500SN-HSFO ($/t) 483 297 +63% EBITDA 461 305 +156Net Profit 379 275 +104
Utilization 89% 86% +3%
EBITDA 180 168 +12
Net Profit 103 88 +15
Utilization 91% 87% +4%
EBITDA 21 11 +10
Net Profit 7 35 (27)
Avail. 57% 47% +10%
EBITDA 310 (46) +356
Net Profit 363 253 +110
Utilization 106% 95% +11%GRM ($/bbl) 4.65 8.75 (47%)EBITDA 3,025 5,262 (2,237)Net Profit 2,141 2,948 (807)
Remark: Margin for PX production = PX-ULG95 in Q1/06 vs PX-MX in Q1/05
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0
3,000
6,000
9,000
12,000
15,000
Financial StrengthFinancial Strength
Debt Repayment Profile Bt. mn.
06 07 08 09 10 11 12 13 14 15 Year
Changes in B/S (FY/05 vs Q1/06)
-Total Assets: up ~Bt. 777 mn. (+1%) due to high working capital arising from high oil price
-Total LT Debts: down ~Bt. 7,064 mn. (-20%) due to loan repayment/prepayment by TOP and its subsidiaries
Total Equities: up ~Bt. 3,863 mn. (+6%) as a result of net profit in Q1/06.
Dec’03 Dec’05 Mar’06Dec’04
Key Financial Ratios
13.1
8.9
11.6
0.60.3 0.4
0.8 0.81.0
0.0
0.5
1.0
1.5
2.0
Q1/05 Q4/05 Q1/060.02.04.06.08.010.0
12.014.0
ICR LT Debt/Equity Net Debt/EBITDA
Interest Coverage
LT Debt/EquityNet Debt/EBITDA
Balance Sheet
101,935
124,169
Dec’03 Dec’05
Current Assets
Non-currentAssets
OtherLiabilities
TotalEquities
Bt. Mn.115,427
Mar’06Dec’04
Long-term Debts
52,421
40,28435,869
124,946
28,805
Remark: Convert by Bt. 40/US$
Avg. cost of debt ~ 6% p.a.Fixed interest ~ 57%US$ Loan ~ 80%
*Q1/06 EBITDA adjusted to full year
*
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Cash Flow in Q1/06Cash Flow in Q1/06
3,805Change in assets & liabilities
5,721Net income & non-cash adj.
9,526Operating Cash Flow
Bt. mn.
(1,996)CAPEX (PP&E)
294Other investment
(1,702)CAPEX & Investment
+
(158)Dividend payment
(42)Proceed from ST loans
(765)Interest
(5,737)Repayment of LT loans
(6,702)Financing
Free Cash Flow7,824
Beginning Cash
11,252
Net Increase in Cash
1,122
Ending Cash
12,374+ =
+
TOP’s dividend Bt 7,140 mn. in May’06.
At least 25% of net profit after specified reserve
Bt. 1.80/share paid in 2005 (25% dividend payout)
Bt. 3.50/share paid in 2006 (40% dividend payout)
Dividend
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IV) Investment ProjectsIV) Investment Projects
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US$ mn. 2005A 2006F 2007F Total
CDU-3 Debottlenecking 35 120 63 218
New Gas Turbine 6 27 10 43SBM 2 100 48 150
Refinery Expansion 43 247 121 411
Refinery expansion is well underway both cost and completion timing.
Completion is timely to meet rising domestic oil demand, while supplyremains tight.
Progress of Key Investment ProjectsProgress of Key Investment Projects-- Refinery ExpansionRefinery Expansion
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Progress of Key Investment ProjectsProgress of Key Investment Projects-- Refinery ExpansionRefinery Expansion
CDU-3 De-bottlenecking Gas Turbine SBM Expansion
Cost: US$ 218 mn. US$ 43 mn. US$ 150 mn.
equiv. ~ US$ 4,360/bbl
Size: + 50 kbd to 275 kbd 38 MW 52” diameter
(14.5 km long pipeline)
IRR: ~ 28% based on ~15% ~16%
US$ 4.5/bbl GRM
EPC: ABB CTCI SAIPEM
Est. C.O.D.: 2007 2007 2007
Benefits: To fulfill additional electricity demand for expansion projects
To serve growing domestic demand and to better utilize spared upgrading capacity
Freight saving of US$ 0.30/bbl for crude imported from Middle East
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US$ mn. 2005A 2006F 2007F Total
Refinery Expansion 43 247 121 411
TPX Expansion 10 136 136 282
Total 53 383 257 693
Capacity: Previous Plan Revised PlanPX 408 KTA (+60) 489 KTA (+141)BZ 160 KTA 177 KTATol 136 KTA 144 KTAMX 149 KTA (+77) 90 KTA (+18)Total 853 KTA 900 KTA
IRR : ~ 15% Expected C.O.D.: 2007
Benefits :
To capture added value in refinery value chain - aromatics (BTX) margin over ULG 95
To allow refinery to pioneer more stringent gasoline product spec (Euro IV)
Progress of Key Investment ProjectsProgress of Key Investment Projects-- TPX ExpansionTPX Expansion
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600
700
800
900
2004 2005 2006 2007 2008 2009 2010
CAGR(2004 -05) 5.5% p.a.
Thaioil Thaioil -- Strategic RoadmapStrategic Roadmap
Domestic Oil Demand Outlook(kbd)
+50 to 275 +5 to 225 (Q3)Capacity (kbd)
CDU-3/SBM/GTMRU/Hot OilProject Completion
+480 to 900Capacity (KTA)
TPX ExpansionProject Completion
700 MW350 mn. L/yrCapacity
New IPPEthanolProject CompletionPower / Other
Petrochemical
Refinery/Lube
2006 2007 2008 2009 2010
CAGR (2006-10) appx. 2 - 3 % p.a.
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ConclusionConclusion
Q1/06 saw net profit rise by 11% (YoY) to Bt. 4,086 mn.
Contributions from refinery grew QoQ, but declined YoY due to the effect of MXunit sale to TPX as well as lower stock gain.
Contributions from subsidiaries increased significantly as a result of strongmargins, higher utilization and also the effect of MX unit purchase.
Domestic demand, incl. diesel, showed strong recovery to near its pre-subsidy-removal level.
Regional product-crude price spreads widen significantly since end Feb’06. Drivingseason/harsh winter in US could provide further upside.
Outlook for the remainder of 2006 for both refinery & petrochem remains strong.IPT’s transformer problem is expected to be resolved within Q2, allowing it tocontribute fully in 2H/06.
Longer term outlook is bright, when investment projects start to be completed nextyear, fuelling TOP with capacity growth and allowing it to maximize values from itsintegrated petroleum/petrochemical complex.
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THANK YOU
Any further questions, please contact Investor Relations Dept.
Tel: (662) 299-0124
Fax: (662) 617-8295
Email: [email protected]
Website: www.thaioil.co.th