Bangchak Corporation Plc. Analyst Meeting Q 3 /19 Table of Content - - PowerPoint PPT Presentation

Bangchak Corporation Plc.

Analyst Meeting Q3/19

Table of Content

Q3/19 Financial Performance

02 03

Appendices

04

Q3/19 Performance Update

01

Business Updates

BCP Group Performance – Q3/19 Key Takeaways

Marketing

• Sales volume +5% YoY mainly from retail sales expansion, retail sales +9% YoY
• Retail sales market share continues to grow and peak at 16.5% in Sep’19
• B20 still a key growth driver

Refinery & Trading

• Crude run at exceptionally high level 110.8 KBD, despite planned shutdown
• Operating GRM stands tall at 7.68 $/BBL
• Inventory loss of 1,063 MB (effected from FX movement ~300 MB) impacted

bottom line Power Plant

• Performance soften from both TH and JP projects from seasonal factor, and one
• ff item make EBITDA in Q3/18 appear to be higher than usual
• Making entrance to hydro power plant in Sep’19

Bio-Based Product

• B100 performance starts to turnaround
• Ethanol sales volume grew YoY from capacity added, and grew QoQ as plants resumed

normal operation after maintenances in the previous quarter

• B100 and Ethanol margin improved, but crude glycerin margin is still a challenge

Natural Resources Realize share of loss from OKEA at 85 MB mainly due to weakening NOK, 1 cargo lifting (2 cargoes last quarter) and gas pipeline maintenance

* Operating EBITDA: exclude Inventory gain/loss, One-time items, Gain/loss from FX forward contracts

2,142 650 631 468 630 680 1,542 721 710 149 136 296 (81) 145 (101) 4,160 3,959 2,189 2,260 2,141 3,331

Refinery & Trading Marketing Power Plant Bio-Based Products Natural Resources

EBITDA Performance

1,856 528 370

Net Profit attributable to owners of the parent

Q3/18 Q2/19 Q3/19

Unit: THB Million Unit: THB Million

Q3/18 Q2/19 Q3/19 Accounting Operating

Operating EBITDA significantly recovered, but effected by stock loss

Bangchak Corporation Plc.

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EBITDA Performance – BCP Group

0% 50% 100% 150% 200%

0.5 1.5 2.5 3.5 4.5 5.5

Target 100%

Power Plant 2,168 Marketing 1,920 Refinery 1,799 Biofuel 626 E&P 21 9M/19 Performance Contribution from Each Business Unit Accounting EBITDA 6,289 Million Baht

Unit: THB Million

29% 31% 34%

10%

10,518 6,289 9M/18 9M/19 4,009 1,112 9M/18 9M/19

2.91 0.81

Unit: THB Million

EBITDA

Unit: THB Million

Net Profit 1/

1/ Profit attributable to owners of the parent Unit: THB/Share

EPS

Bangchak Corporation Plc.

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Refinery Business – Maintain high production rate & smooth operation

Production Profile

Actual Crude Run Unit: KBD

GRM Performance Unit: $/BBL

7.59 4.95 7.68 7.57 5.35 (0.21) (0.09) 0.02 (0.22) 0.66 (0.33) (3.70) 1.18 (1.34)

8.05 4.53 4.00 8.53 4.01 Q3/18 Q2/19 Q3/19 9M/18 9M/19

Operating GRM Hedging Inventory Gain/Loss

Q3/19 Refinery Group

• Acc. EBITDA 631 MB (-3% QoQ, -71% YoY)

Operating EBITDA 1,799 MB Crude Run at exceptionally high level at 110.8 KBD, despite the planned 30 days Hydrocracking Unit maintenance, and average production rate has reached highest record of 123.5 KBD in Sep’19 Operating GRM was strong mainly due to and high selling price

• f BCP’s LSFO, and some corrections in crack spread

1,163 MB Inventory Loss from the sharp crude price fall in Aug-Sep’19 (Q3/18 Inv. Gain 241 MB, Q2/19 Inv. Loss 107 MB)

• 10
• 5

5 10 15 20 GO/DB UNL95/DB IK/DB FO/DB

AVG Crack spread movement ($/BBL)

50 60 70 80

DB DTD

AVG Crude oil price movement ($/BBL)

* Operating EBITDA: exclude Inventory gain/loss, One-time items, Gain/loss from FX forward contracts

118.8

112.7

110.8 98.4 111.2 99% 94% 92% 82% 93%

• 50%
• 30%
• 10%

10% 30% 50% 70% 90% 10 20 30 40 50 60 70 80 90 100 110 120 130 140

Q3/18 Q2/19 Q3/19 9M/18 9M/19

Crude Run Utilization

TAM

Bangchak Corporation Plc.

5 9% 12 % 4% 4% 53 % 50 % 13 % 14 % 19 % 18 % 3% 2% 9M/18 9M/19

Product Yield

LPG UNL Jet GO FO UCO

170 206 240 479 640 Q3/18 Q2/19 Q3/19 9M/18 9M/19

Distribution Channel – Retail market sales continues to grow as our main priority

284 307 334 342 359 179 190 184 167 149 51 86 58 50 50 93 82 112 111 108

50 100 150 200 250 300 350

Q1/15 Q3/15 Q1/16 Q3/16 Q1/17 Q3/17 Q1/18 Q3/18 Q1/19 Q3/19

Unit: ML/Mo

Total Sales Volume Retail Industrial Wholesales Exports (FO & UCO)

Q3/19 Marketing Group – Acc. EBITDA 680 MB (+8% QoQ, +45% YoY) Customer base expansion, and B20 diesel sales which doubles from the previous quarter, significantly pushed retail sales volume Industrial sales volume slightly soften from the low season combined with the intensified competition Net Marketing Margin

• Declined QoQ from the oil product price surged while retail price

adjustment was slower

• Increased YoY as retail price could better adjusted to the cost, while

there was diesel price ceiling in Q3/18 Non-oil business Bangchak Retail Revenue grew 16% QoQ and 41% YoY, through marketing campaigns and cost controlling measures reduce losses

Net Marketing Margin Unit: Baht/Litre

0.70 0.83 0.77 0.76 0.77 Q3/18 Q2/19 Q3/19 9M/18 9M/19

Retail

54%

Industrial

22%

Total Sales Volume

(% Portion of total sales volume in 3Q/19) Service Stations Factories, Jobbers, Aviations

Export

Very low sulfur Fuel Oil

8%

Other oil companies

16%

Wholesale

Unit: THB Million

Bangchak Retail Revenue

Bangchak Corporation Plc.

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Marketing Network – Increasing market share & Thruput per station

15.6% 12.5% 12.5% 9.1% 4.3% 1.7% 1.7% 1.7% 16.0% 12.2% 12.0% 10.0% 4.1% 2.0% 1.8% 1.7%

9M/18 9M/19

Retail sales volume market share (%) 40.9% 40.3%

+31

New Service Stations

9M/19

service stations as of Sep 2019

1,188

Standard Type

576 sites

(≈80% of Retail Sales Volume)

COOP Type

612 sites

(≈20% of Retail Sales Volume)

559 branches

Sep’19

+58 New stores

9M/19

46 stores

+3 New stores

9M/19

Sep’19

Supporting non-oil businesses Service stations outlets

436 479 510 496 498 128 131 125 118 116

495 464 452 446 430 2015 2016 2017 2018 9M/19

Thruput per station

Unit: K.Litre/Mo

BCP Standard

BCP Co-op AVG Major oil* (excl. BCP)

Source: DOEB

BCP market share reach all time high at 16.5% in Sep 2019

AVG Major oil includes PTT, ESSO, Shell, CALTEX Bangchak Corporation Plc.

7

Bangchak B20 Promotion Campaign

4 5 9 17 29 35 46 52 57

Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19

1.3% 1.8% 3.4% 6.4% 10.5% 13.9%

% of total Diesel sales through marketing business

B20 Sales Volume

Unit: Million Litre

17.7% 19.7% 22.6%

B20 sales volume more

than doubles its previous quarter’s sales

B20 is currently available in

and still expanding

Almost 550+ Covered ALL regions stations

Bangchak Corporation Plc.

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Power Plant Business Bio-based Products Business Natural Resources Business

Powe BCP Group Portfolio – Refinery & Marketing Business BCP Group Portfolio – Subsidiaries

BCP Group Portfolio

Subsidiaries

Bangchak Corporation Plc.

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Power Plant Business – BCPG adding new capacity

139 148 148 34 15 15 158 158 158 14 14 14 69 345 335 404 Q3/18 Q2/19 Q3/19 Operating Capacity (MW PPA)

Solar Wind Solar Geothermal Wind

64.2 75.9 70.0 197.0 217.8 13.9 5.4 5.0 37.9 14.5 7.7 7.7

78.1 81.3 82.7 234.9 240.0

Q3/18 Q2/19 Q3/19 9M/18 9M/19

Laos JP TH

Electricity Sales

Unit: Million kWh

Acquisition of Hydro power plant Namsan 3A in Laos (69 MW)

• Diversification of income to new type of renewable energy

hydroelectric power generation

• Lao PDR has high potential of economic growth and hydro power

plant development Performance QoQ – lower electricity sales of solar projects in Thailand and Japan result from seasonality factor YoY – EBITDA performance decreased mainly from one off item from selling of Nagi & Nikaho project in Q3/18 Share of profit from associated companies Q3/19:

• Geothermal power plant 107 MB: higher from the lower

maintenance days

• Wind power plant 16 MB: stronger wind speed than the usual

seasonality and lower interest expense after negotiated

Hydro

Q3/19 Power Plant Group – EBITDA 710 MB (-2% QoQ, -54% YoY)

Bangchak Corporation Plc.

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Bio-Based Product Business – Performance started to improve

Q3/19 Bio-based Products Group

• Acc. EBITDA 296 MB (+118% QoQ, +98% YoY)

Biodiesel – Started to turnaround from B20 promotion

• Sales volume continuously improved
• B100 gross margin improved, but glycerin margin declined YoY

Ethanol – Capacity added and better raw material cost management

Gross margin significantly increased from:

• Higher sales volume (additional 100 KL/day capacity of KGI plant)
• BBE plant has better managed raw material cost
• KGI plant adjusted down molasses cost according to announced

domestic price to better reflect actual raw material cost

46 46 51 117 145 42 44 53 124 151 Q3/18 Q2/19 Q3/19 9M/18 9M/19 Sales Production

Ethanol Production & Sales Volume

Unit: Million litres 18 20 22 24 26 28 30 32 34 36

Ethanol Biodiesel

Biofuel Price Movement

Unit: Baht/litre Source: EPPO

66 82 87 207 240 63 74 80 195 221 Q3/18 Q2/19 Q3/19 9M/18 9M/19 Sales Production

Biodiesel Production & Sales Volume

Unit: Million litres

Bangchak Corporation Plc.

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Natural Resource Business – Petroleum Exploration & Production

Full quarter share of loss from OKEA 88 MB

• Production Uptime
• Draugen; increase from 86% (Q2/19) to 97% (Q3/19)
• Gjoa; decrease from 95% to 86% (planned shutdown)
• Exploration expenses; purchase of seismic data
• FX loss from the USD appreciation against NOK

8.64 9.24 9.65 10.49 10.50 8.14 0.37 0.31 0.34 Q1/19 Q2/19 Q3/19

Production Volume (Net to OKEA)

(unit: kboe/d)

56.2 60.7 56.4 6.49 4.05 2.97

• 1

1 3 5 7 9 11 13 15 10 20 30 40 50 60 70 Gas Price ($/MMBTU) Liquid Price ($/BBL)

Realized Prices

Source: OKEA

Ivar Assen Gjoa Draugen

Bangchak Corporation Plc.

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Table of Content

Q3/19 Financial Performance

02

Business Updates

03

Appendices

04

Q3/19 Performance Update

01

Bangchak Corporation Plc.

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Significant Factors that affected BCP’s financial results

• BCP refinery had scheduled shutdown the Hydrocracking Unit for maintenance

(19 July - 19 Aug 2019)

• BCP group had Inventory Loss 1,185 MB
• BCP paid interim dividend form 1H/19 performance of 688 MB (0.50 THB/Share)
• BCPG had new investment by acquisition of all shares in NamSan 3A Power Sole Co., Ltd.

to invest in hydro power plant project in Loas 5,352 MB

• BCPG paid interim dividend form Q2/19 performance of 320 MB (0.16 THB/Share), paid to

BCP 224 MB

Q3/19 Highlights

Bangchak Corporation Plc.

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BCP - POWERPOINT 2019

53,461 48,326 46,481 143,244 140,343 Q3/18 Q2/19 Q3/19 9M/18 9M/19

REVENUE

3,821 2,588 2,447 11,007 7,215 Q3/18 Q2/19 Q3/19 9M/18 9M/19

GROSS PROFIT

REVENUE

• Revenue decreased mainly from petroleum-related businesses
• Lower oil price, even the BCP total sale volume rose

GROSS PROFIT

• The fluctuations in oil prices were the main reason for the

reduction in gross profits

• Improving Market GRM has been offset by high inventory loss

Unit: MB Unit: MB Q3 QoQ

• 4%

Q3 YoY

• 13%

9M YoY

• 2%

Q3 QoQ

• 5%

Q3 YoY

• 36%

9M YoY

• 34%

(Unit: $/BBL) Q3/18 Q2/19 Q3/19 9M/18 9M/19 Operating GRM 7.59 4.95 7.68 7.57 5.35

• Inv. G/L

0.66 (0.33) (3.70) 1.18 (1.34) Hedging (0.21) (0.09) 0.02 (0.22) 0.01 Accounting GRM 8.05 4.53 4.00 8.53 4.01 Q3/18 Q2/19 Q3/19 9M/18 9M/19 Average Price (THB/L) 23.0 21.6 20.1 22.3 20.7 Sales Volume (ML) 1,981 1,896 1,998 5,585 5,798

Statement of Income - Consolidated

Bangchak Corporation Plc.

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2,216 675 551 4,710 1,621 Q3/18 Q2/19 Q3/19 9M/18 9M/19

NET PROFIT

4,160 2,189 2,141 10,518 6,289 Q3/18 Q2/19 Q3/19 9M/18 9M/19

EBITDA

Unit: MB Q3 QoQ

• 2%

Q3 YoY

• 49%

9M YoY

• 40%

Q3 QoQ

• 18%

Q3 YoY

• 75%

9M YoY

• 66%

EBITDA

• Decreased gross performance was a mainly a consequence
• f the results from the petroleum-related businesses
• 9M/19 adjusted EBITDA decreased 13% YoY, while
• perating GRM dropped 29% YoY

Note: * profit from selling BCPG’s assets to an infrastructure fund in Japan

Statement of Income - Consolidated

10,518 6,289 9M/18 9M/19

Unit: MB

• Inv. gain 1,025 MB

Other income – IFF* 795 MB Adjusted EBITDA 8,698 MB

9M EBITDA

Adjusted EBITDA 7,565 MB

• Inv. loss
• 1,276 MB

Bangchak Corporation Plc.

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Solid Financial Position

Unit: MB

Asset 1. Cash and Cash Equivalents & ST Investment

• BCP Bond repayment 4,000 MB in Apr 19
• Dividend paid 1,664 MB
• Loan to related parties 807 MB
• 2. Account receivable

+ BCPT had higher account receivable from higher crude oil price

and trading volume compared YE2018.

• 3. PP&E

+

BCP 3,498 MB (upgrading project 2,501 MB), power plant assets (BCPG) 1,290 MB and ethanol plant expansion (BBGI) 334 MB

• Depreciation for 9M/19 of 3,335 MB

4. Intangible Asset +

Goodwill 1,084 MB and Intangible Asset 4,139 MB mostly from the acquisition of all shares in NamSan 3A Power Sole Co., Ltd. in Sep 19

Statements of Financial Position - Consolidated

+4%

48,877 49,538 30,896 25,783 46,464 11,813 21,367

30 SEP 19 30 SEP 19* Cash & ST Investment Non Current Assets PP&E

117,369

31 Dec 18 Current Asset

50,571 48,788 37,275 27,757 49,755 6,724 23,778

30 SEP 19 30 SEP 19* Liability Equity

122,321

30 Sep 19 Interest Bearing Debt

Bangchak Corporation Plc.

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Solid Financial Position

Unit: MB

Liabilities

• 2. Interest Bearing Debt
• BCP bond repayment 4,000 MB

+ Loans from financial institutions increased by 6,289 MB

mainly from BCPG’s acquisition of all shares in NamSan 3A Power Sole Co., Ltd.

• 1. Account payable

+ Account payable at YE 2018 had usual less AP since

prepayment was made in December 2018

Equity

• Loss in foreign currency conversion of financial statement

615 MB

• Differences in net fair value change in available-for-sale

investment (LAC) decreased 46 MB

• 1. Other components of equity

Statements of Financial Position - Consolidated

Solid Financial Position

+4%

48,877 49,538 30,896 25,783 46,464 11,813 21,367

30 SEP 19 30 SEP 19* Cash & ST Investment Non Current Assets PP&E

117,369

31 Dec 18 Current Asset

50,571 48,788 37,275 27,757 49,755 6,724 23,778

30 SEP 19 30 SEP 19* Liability Equity

122,321

30 Sep 19 Interest Bearing Debt

Bangchak Corporation Plc.

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Beginning Cash Source of Cash FX adjustment Ending Cash (6,967) (4,666) (3,755) (3,798) 8,462 5,840 124

Unit: MB

Uses of Cash

Debt Service PPE

• Inv. in Sub

& Asso. Dividend & Tax paid and Others

11,551 6,496 (19,185) (295) 14,426

Others Cash from Operation Funding

Cash Flow from MB Main Activities Operating activities 4,873

+ Cash received from operating activities 5,840 MB

• Net cash used for operating assets and liabilities 446 MB
• Tax paid 522 MB

Investing activities (9,463)

• Investment in PPE 4,666 MB, Associated companies & JV and others 3,755 MB
• Loan to related companies 807 MB

Financing activities (169)

+ ST&LT loans from financial institutions 8,438 MB

• Bond repayment 4,000 MB and repaid long term loans to financial institutions 1,617 MB
• Financial cost and dividend paid 3,014 MB

Ending cash decreased 5,055 MB from YE2018

Cash Flow - Consolidated

Bangchak Corporation Plc.

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In October 2019, BCP issued 10,000MB subordinated perpetual debentures

BCP Perpetual Debentures TRIS Rating BBB+ Interest Rate 1st – 5th year is fixed rate at 5% per annum and will be adjusted every 5 year Payment Schedule Semi-annual (the Company has an ability to unlimitedly postpone the interest payment) BCP TRIS Rating

A/Stable

Events after The Reporting Period

Regarding the forthcoming adoption of the new TAS 32 accounting standard which will come into effect on 1 January 2020, the company had been aware of the impact of the TAS 32 and therefore consulted with its legal advisors and auditors to ensure that this bond will not have any problem complying with the accounting criteria to qualify as equity in accordance with the new standard.

Bangchak Corporation Plc.

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Table of Content

Q3/19 Financial Performance

02

Business Updates

03

Appendices

04

Q3/19 Performance Update

01

Refinery Business – 3E upgrading project progress & Advantages from IMO

Continuous Catalyst Regeneration Unit (CCR)

(CCR: Higher Capacity & maintenance cycle extension)

Progress updates – 3E Project

89%

Progress

Debottlenecking Hydrocracker Unit (HCU) Revamping

(Higher Optimal Crude Run: Distillate)

89%

Progress

Overall CCR Construction Area Cable Pulling Piping installation Beam Erection at CCR Reactors

On plan to be completed in 2020

Refinery readiness for changes

Plant Readiness for IMO

• Current market still justify sweet crude
• BCP ready to switch mode if sour crude oil makes more

economic sense Plant Readiness for B10

• No effect on refinery side, as diesel B10 specification will be

the same

• B100 specification change will be responsible by BBGI

Plant Readiness for product reduction

• Through CCR, BCP gains gasoline output and high – octane

product

Bangchak Corporation Plc.

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11 100 700 Current End of 2019 End of 2020

Refinery Business – Refinery Operational Excellence Program Refinery Operational Excellence Program Focus Area

Performance improvement:

• Production and Utilities
• Maintenance and Reliability
• Planning and Logistics
• Crude and Product Trading

Organizational Health:

• Capability development to sustain Performance

Where we are and What we achieved so far

• 162 Initiatives Potential
• Continue Coming Up with New Initiatives

Recurring Benefit (MB/Yr)

Realized Potential Potential Annualized benefit 1,000

Bangchak Corporation Plc.

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≈ ≈ ≈ ≈

Marketing Business – 2019 network expansion & promotional plans update Continue to increase market share in Retail Sales Service Station Network

New Stations expected in 2019

+58

Bangchak Hi-diesel S B10

Launched in Oct’19 with promotions tied with Bangchak’s loyalty card

Develop Inthanin concepts

Tailoring our business models to fit customer needs

Bangchak Corporation Plc.

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Bio-Based Products Business – Projects & Government policy updates

5 10 15 20 25 30 35 40

Refined Glycerin Crude Glycerin

(Current B100 by-product)

Refined Glycerin Plant expected to allow BBF to gain extra margin B10 Implementation Impact Efficiency enhancement

to cater B10 spec (Mono Glyceride 0.4%)

At full capacity (1 ML/day) To be done by Q1/20 Plant Capacity B100 Pricing Expect B100 price to be higher from the demand growth & higher spec CPO Situation Expect CPO price to improve from higher consumption rate Ethanol business outlook Molasses Price Expect Molasses price to be higher from the lower domestic sugarcane supply

+66 ML/Yr

200,000 L/D

To be done by Q3/20 Plant Capacity Additional plant - KGI-NP II Reduction of Gasoline Products Gov’t to promote E20 as main gasoline-based fuel will support ethanol demand Additional plant Refined Glycerin

27,000 Ton/Yr

Expected COD Q3/20

Crude Glycerin

≈33,000 Ton/Yr

Current By-Product

Sales vol.

Production vol.

Market Glycerin Price Unit: THB/Kg.

Source: ICIS

0.56 0.75 0.94 0.92 0.95 0.95 0.95 0.19 0.10 0.10 0.14 0.14 0.14 0.14 0.76 0.85 1.04 1.06 1.09 1.09 1.09

2018 2019 2020 2021 2022 2023 2024

Sales to BCP Sales to others B7/B10 (B20 Option) B10 (B7/B20 Option) B10 (B7 Option)

BIODIESEL SALES VOLUME

Unit: ML/Day

Sales could surpass capacity in 2021

Plant capacity*

* Plant capacity based

• n 330 operating days

Mandate Policy

Bangchak Corporation Plc.

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Natural Resources – OKEA activities going forward OKEA development projects timeline

Note: 80% of exploration programs are subsidized by Norwegian government

Development assets timeline Strategic Plan:

• Restoration of assets:

 Draugen upside  Yme & Grevling development

• Operational optimization:

digitalize, condition – based maintenance

• Continue explore for additional

reserves: APA2020 and M&A

• pportunities
• Cooperate w/ the service industry

when developing fields

Draugen Gjoa / Ivar Aasen Development assets and

• ther

prospects Target further debottlenecking and cost reductions

Skumnise expl. well Hasselmus FID Hasselmus 1st Gas Appraisal wells Gjoa Hamlet prospect planned well in 2020 Progress and de-risk Yme towards 1st oil 1H20 Mistral north appraisal and PL973 exploration drilling APA2019 firm well Ginny BOG2/PDO Grevling/Storskrymten DG2 Grevling

Bangchak Corporation Plc.

26

THANK YOU

ir@bangchak.co.th

• Tel. +662 335 4370, 4390, 8518

www.bangchak.co.th click Investor Relations

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