Q2 & 1H/08 Results Analyst Presentation August 14, 2008 Thai - - PowerPoint PPT Presentation

Q2 & 1H/08 Results Analyst Presentation

August 14, 2008

Thai Oil Public Company Limited

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Disclaimer

The information contained in this presentation is intended solely for your personal reference. Please do not circulate this material. If you are not an intended recipient, you must not read, disclose, copy, retain, distribute or take any action in reliance upon it.

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Corporate Vision, Mission & Value

TOP seeks to be one of the leading fully integrated refining and petrochemical companies in the region recognized for our sustainable growth, optimum stakeholder value, and commitment to environmental and social well-being.

VISION

• To be PTT’s flagship refinery through optimized

management of the group’s refining portfolio

• To expand facilities to better meet domestic

demand growth

• To enhance the competitive advantage of our

power generation operations to further solidify the core refining business

• To create a high-performance organization that

promotes teamwork, innovation and trust

MISSION

P = Professionalism O = Ownership & Commitment S = Social Responsibility I = Integrity T = Teamwork and Collaboration I = Initiative V = Vision Focus E = Excellent Striving

CORPORATE VALUE

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Presentation Outline

Business Outlook Performance Analysis Q2/08 & 1H/08 Highlights

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Q2/08 Key Highlights

• In Q2/08, TOP operated at an optimal 105% utilization with refinery

intake of 288 kbd, bringing the integrated intake to 301 kbd.

• Following the successful completion of TPX expansion, aromatic capacity

increases from 420 KMTA to 900 KMTA , with full benefits to be captured as from Q3/08.

• TOP continues to enhance integration amongst group to maximize

margins & reduce costs. This was reaffirmed by ASEAN Energy Award 2008 we received for Best Practice in Energy Management.

• TOP group reported a record net profit for Q2/08 of Bt 10,546 million,

allowing 1H/08 net profit to achieve Bt 14,420 million.

• Expansion benefit, inventory gain and strong middle distillate spreads

were key attributing factors to the foregoing favorable performance.

• Group’s integrated margins were US$ 12/bbl (Bt 2.5/litre) and

US$ 8.9/bbl (Bt 1.9/litre) for Q2/08 and 1H/08, respectively.

• Notwithstanding volatile financial market, TOP successfully launched a

5-years THB Bond worth Bt 3 billion at an attractive pricing. A cross currency swap was entered to convert into $ 93.5 million, USD exposure.

Overall Operation & Business Finance

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Thaioil Receives The Best ASEAN Energy Awards 2008

• This achievement is a result of

the Company’s vision and commitment to energy saving gained through corporate culture, campaigns, and training.

• Energy saving measures have

been continuously and strictly implemented to achieve the highest energy efficiency

• Initiative “Online Cleaning”

which resulted in energy consumption reduced significantly and saving cost of Baht 238.5 million in the period

• f 2005 – 2007.

256 301 255 294

Q2/07 Q2/08 1H/07 1H/08

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Financial Highlights

Q2/08 1H/08

6,619 10,546 12,562 14,420

Q2/07 Q2/08 1H/07 1H/08 Q2/08 1H/08

*Percentage was before deducting inter-company transaction.

(Unit: MB)

Integrated Margins Consolidated Net Profit Net Profit Breakdown*

70% 20% 7%3% 87% 6% 4%3%

1H/07 12,562 MB 14,420 MB 1H/08

Integrated Intakes

Q2/08 1H/08

7.07 6.16 EPS

(THB/Share) (Unit: KBD) (Unit: $/bbl)

18% 15% 15% 8% 59% 15% 5.17 3.24

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Presentation Outline

Business Outlook Performance Analysis Q2/08 & 1H/08 Highlights

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40 80 120 160

Oil Price Movement

Q1/07 Q2 Q3 Q4

Tapis Dubai

(US$/bbl)

Q1/08

Crude Prices

Q2

68.4 104.1

86 128 97

Dubai 83 117

Extraordinary rise in oil prices (DB + 50% in 6 months, peaking at $141/BBL)

• Continued strong demand from emerging economies
• Lower supply from non-OPEC producers
• Geopolitical disturbances
• Booming commodity trades as hedges against USD depreciation & inflation
• Speculation

55 65 70 91

6.3 7.9 3.9 4.7 4.5 9.6 7.1 7.1 Q1/07 Q2 Q3 Q4 Q1/08 Q2 1H/07 1H/08

• 35
• 25
• 15
• 5

5 15 25 35 45

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1H/08

Gross Refinery Margins

TOP’s Crude Mix & Product Yield

F/E Local M/E

Thailand’s Oil Demand

TOP’s Market GRM* (US$/bbl)

• 29.2

30.2 30.3

• 21.2

13.4

(US$/bbl) Product-DB Spreads

Spreads vs. Dubai Spreads (US$/bbl)

* which excluded stock gain and loss

Spreads vs. Dubai (US$/bbl)

14.6 16.5 16.4 19.4 23.0

Jet-DB GO-DB HSFO-DB GO-DB

Q1/07 Q2 Q3 Q4 Q1/08 16.7 Q2 37.6 30.3

1H/07 1H/08 TP-DB 8.8 11.9 ULG 95-DB 16.9 13.4 Jet-DB 16.7 30.2 GO-DB 15.6 30.3 FO-DB

• 10.5
• 21.2

ULG95-DB 81% 15% 4% 11% 10% 41% 45% 24% 12% 20% 17% 4% 16% LPG ULG Jet Diesel FO Q2

*

* LPG Market Price

82% 88% 82% 18% 12% 18%

FY/06 FY/07 1H/08

Export Domestic

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Oil Demand for Q2/2008

Domestic Oil Demand / Refinery Intake Domestic Oil Demand

Source: DOEB, Ministry of Energy. (KBD) (KBD)

TOP’s Domestic & Export Sales

LPG Jet/Kero Diesel FO Gasoline

45% 13% 11% 9% 13% Domestic Jobbers 1H/2008 Sales Breakdown 5% Export = 18% 4%

1H/08

(KBD)

738 724 704 726 743 718 731 738 110 120 104 140 160 155 115 158 86% 91% 91% 77% 91% 90% 88% 91% 0% 20% 40% 60% 80% 100% 200 400 600 800 1,000 1,200 1,400 Q1/07 Q2 Q3 Q4 Q1/08 Q2 1H/071H/08

Net Export Domestic Demand/Sales Utilization Rate

111 127 86 333 74 125 129 82 313 72 131 123 86 326 65

1H/07 2H/07 1H/08

18% 3% 12%

Refinery Intake

234 216 282

88 81 82 68 13 78 12 14 5 102 47 28 13

Q1/07 Q2 Q3 Q4 Q1/08 Q2 TL BZ MX PX

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Aromatics Business

Aromatic Spot Prices & Margins (US$/Ton)

400 600 800 1,000 1,200 1,400 1,600

PX MX ULG95 PX-ULG 95 542 473 395 268 257 Q1/07 Q2 Q3 Q4 Q1/08 BZ TL Q2 317 Product to Feed 133 123 121 107 50 93

TPX’s Product Sales & P2F

• In Q2/08, spread of PX&MX
• ver ULG 95 were widen

due to unplanned outage from TPPI plant in Indonesia.

• However, downstream

demand was reduced significantly as PTA could not pass on historical high PX price to customers.

• TPX’s P2F improved QoQ

following expansion completed in May.

Q2

(US$/Ton) (US$/bbl)

17.4 16.0 15.9 14.3 6.6 12.1

(Kton/Quarter)

200 400 600 800 1,000 1,200 1,400

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Lube Base Business

Base Oil & Bitumen Spot Prices & Margins (US$/Ton)

(US$/Ton)

500SN-HSFO 637 538 466 380 434 Q1/07 Q2 Q3 Q4 Q1/08 Q2 535

TLB’s Product Sales & P2F

500SN HSFO

• P2F improve QoQ

($88/ton to $153/ton) & YoY ($94/ton to $153/ton).

• Base oil price improved

due to tight supply as a result of lower run of base oil plants due to insufficient feedstock and switch to produce more gasoil rather than base oil.

• High by-product price

(extracts), but dragged by low bitumen price.

Bitumen

70 71 65 68 67 68 124 117 102 96 92 89 75 67 72 53 55 52 Q1/07 Q2 Q3 Q4 Q1/08 Q2

TDAE/Extract /Slack Wax Bitumen Base Oil

Product to Feed 105 94 79 69 88 153

(US$/Ton) (US$/bbl)

15.9 14.2 12.1 10.5 13.4 23.2 Q2

(Kton/Quarter)

15.9 14.2 12.1 10.5 13.4 23.2 15.1 18.3 Q1/07 Q2 Q3 Q4 Q1/08 Q2 1H/07 1H/08 17.4 16.0 15.9 14.3 6.6 12.1 16.7 9.5 Q1/07 Q2 Q3 Q4 Q1/08 Q2 1H/07 1H/08 6.3 7.9 3.9 4.7 4.5 9.6 7.1 7.1 Q1/07 Q2 Q3 Q4 Q1/08 Q2 1H/07 1H/08

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TOP Group’s Integrated Margins

Crude Product to Feed Market GRM* Product to Feed

(US$/bbl) (US$/bbl) (US$/bbl)

Integrated Margin * (US$/bbl)

• TOP Group’s integrated margin increased to

12.0 US$/bbl (+ 15% YoY or + 65% QoQ), due mainly to historical high middle distillate spread and lube base oil price.

* Calculated from integrated intake and reflected market GRM which excluded stock gain / loss * which excluded stock gain and loss

5.9 7.6 3.6 4.3 4.3 9.2 6.7 6.8 2.0 2.0 1.4 0.1 0.9 1.8 2.0 1.4 1.1 0.9 0.7 0.6 0.5 1.0 1.0 0.8 9.1 10.4 5.7 5.0 5.7 12.0 9.7 8.9

Q1/07 Q2 Q3 Q4 Q1/08 Q2 1H/071H/08

Refinery Utilization Aromatic Production Lube Base Production Plant Availability Plant Utilization Ship Utilization

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Q2/07 Q2/08 7.93 9.58 P2F

(US$/ton)

GRM

(US$/bbl)

P2F

(US$/ton)

Q2/2008 Net Profit Breakdown

Net Profit 9,528 475 493 (24) 60 23

Δ YoY +87%

• 60%

+45% +85%

• 31%

+92% Δ QoQ +197% +51% +252%

• 107%

+13% +264% 123 93 94 153

Performance Breakdown by Company - Q2/08

Q2/07 Q2/08

244 288 1.12 2.13 0.71 0.78 (KBD) (Kton/Day) (Kton/Day) 109% 105% 97% 87% 89% 104% 51% 91% 94% 80% 92% 99% (Unit: MB)

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(MB) Sales Revenue 72,070 126,953 54,883 +76% EBITDA 9,608 17,252 7,644 +80% Financial Charges (452) (517) 65 +14% FX G/L & CCS 446 (1,431) (1,877) -421% Tax Expense (1,893) (3,415) 1,522 +80% Net Profit 6,619 10,546 3,927 +59% TOP 5,107 9,528 4,412 +87% Subsidiaries 1,512 1,018 (494)

• 33%

EPS (THB/Share) 3.24 5.17 1.93 +60% THB/US$ - ending 34.67 33.66 (1.01)

• 3%

Effective Tax Rate (%)

22% 24% 2% +9%

1) Restated P&L regarding to the change of accounting policy

1H/07 1H/08 +/(-) % 7.1 7.1 0.0 0% 9.7 8.9

• 0.8
• 8%

136,498 223,266 86,768 +64% 17,980 23,058 5,078 +28% (924) (907) (17) +2% 1,300 (309) (1,609)

• 124%

(3,423) (4,568) 1,145 +33% 12,562 14,420 1,858 +15% 8,933 12,738 3,805 +43% 3,629 1,682 (1,947)

• 54%

6.16 7.07 0.91 +15% 34.67 33.66 (1.01)

• 3%

21% 23% 2.5% +12%

Consolidated Financial Performance

(US$/bbl) Q2/07 Q2/08 +/(-) % TOP’s GRM 7.9 9.6 1.7 +22% Integrated Margin 10.4 12.0 1.6 +15%

2)

2) Included stock gain and crack spread hedging activity 1) Restated P&L regarding to the change of accounting policy 2) Included stock gain and crack spread hedging activity

1)

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Solid Financial Position

(Unit: MB) Other Liabilities LT Debt

136,570 110,324 180,194

FY/06 FY/07

Equities Net Debt / EBITDA Net Debt / Equity

Treasury Policy

• Bt. 42,333 mn.

(US$ 1,305 mn.)

76% 15% 8% 1%

Currencies

As of 30 June 2008 (33.66 THB/US$)

Interest Rate

* Figures shown are unauditted from the company’s Certified Public Accountants

Net Debt / EBITDA ≤ 2.0x Net Debt / Equity ≤ 1.0x

Balance Sheet Financial Ratios

1H/08

THB Loan 25% US$ Loan 27% THB Bond 13% US$ Bond 35%

1H/08

Consolidated Long-Term Debt

Current Assets Non-Current Assets

60,166 71,837 81,207 19,706 32,891 56,654 30,452 31,842 42,333

38% 62% 44% 56% 1.0 0.9 0.9 1.0 0.4 0.4 0.3 0.4

FY/06 FY/07 Q1/08 1H/08 1H/08

US$ THB Float Fixed

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Presentation Outline

Business Outlook Performance Analysis Q2/08 & 1H/08 Highlights

• Global oil demand growth is forecast to decrease to 890 and 860 kbd in 2008 and 2009

respectively.

• Lower demand in OECD due to high prices and economic slow down, offsetting by robust

growth in developing countries with price subsidy.

Source: IEA, July 2008

Global Oil Demand Growth

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Global Oil Demand Growth

2007 2008 2009

• High price subsidy in developing

countries has limited impact on end- user’s consumption during high price period.

• Robust demand growth continues in

China and India.

Source: IEA and PVM, July 2008

Price Subsidy in the Region India and China Oil Demand

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Strong Demand in Subsidized Countries

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Reduced Non-OPEC Supply High OPEC Utilization Projected Crude Supply Depletion

Limited Crude Supply

• Non-OPEC supply declined, in particularly,

major oil fields in North Sea, Mexico and Russia.

• Even with higher OPEC production rate, it

would tighten spare capacity in the years to come.

• Assuming global oil demand growth of 1%

and depletion of current oil reserve of 3%, tightening of crude supply equation could be envisaged.

Source: IEA July 2008 / OPEC, EIA Morgan Stanley Research d.d. August 2008

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Crude Reserve Outlook

US Crude Stock OECD Europe Stock Japan Crude Stock China Crude Stock

Capacity 19 mbbl Capacity 19 mbbl Capacity 73 mbbl Capacity 15 mbbl Capacity 31 mbbl Capacity 33 mbbl Capacity 73 mbbl Capacity 44 mbbl Phase I: 2006-2007 Phase II: 2008-2010

Source: PIRA, 07/08/08 Source: Norwegian Energy (Morgan Stanley), Eurostock, 09/07/08

• High correlation between USD depreciation and crude price in 2007

up to Q1-08.

• Due to concern on too high oil prices & slow oil demand, capital funds

switched out from oil commodities.

Source: JPMorgan Energy Strategy, CFTC July 08

USD Depreciation & Speculation

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1 Position = 1,000 bbl

USD Crude Price

USD vs. Crude Oil Price Non-Commercial WTI Net Length

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Current Crude Oil Forward Price

As of 12 Aug, 2008 2008 2007 2006 2005

(Unit: US$/bbl)

Forward

Product Reserve Outlook

US Gasoline Stock Singapore Light Distillate Stock US Distillate Stock Singapore Middle Distillate Stock

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Source: PIRA, 07/08/08 Source: Platts, 07/08/08

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Distillate Stock Gasoline Stock

Product Reserve Outlook - Europe

Residual Stock

• Low distillate stock and high residue

stock will further support strong distillate margin and weak residue margin.

Source: Norwegian Energy (Morgan Stanley), Eurostock, 09/07/08

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Reuters Singapore GRM

1

(US$/bbl)

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TOTAL CDU: 7.8 MBD TOTAL CDU: 4.5 MBD TOTAL CDU: 2.6 MBD TOTAL CDU: 1.3 MBD TOTAL CDU: 1.3 MBD

Refinery Utilization Rate

US Refinery Utilization

TOTAL CDU: 17.2 MBD

Source: FACTS

MBD

EU Refinery Utilization

Source: FACTS, AP Petroleum Monthly , Jul-08 KBD KBD

• Impact of additional refining capacity in China and India of > 1 mbd in 2008 is likely to be less

severe than anticipated earlier due to price control and poor margin forcing inefficient refineries to cut runs.

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Refinery Utilization - China & India

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Conclusions

Even at high crude price, distillate demand growth continues in subsidized

• countries. Together with low distillate stock in EU, high distillate margin is

likely to sustain. Inflexibility of refining system to match structural shifts in demand growth has increased demand for certain crude types, creating conditions for higher crude price and distillate crack. Low GRM from poor gasoline/fuel oil margins and price control has forced inefficient refineries to cut run. Impact of new refining capacity addition is likely to be less severe than anticipated earlier. TOP realizes benefit from high GO/Jet production (~65%), achieving higher GRM than Sing. Cracking Margin even at controlled LPG price. TOP group is focusing on increasing Aromatics and Lube Base oil production to maximize integrated margin. Impact of lower domestic demand is less severe for TOP due to capability to produce high quality products (Euro IV) and export surplus at attractive prices.

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Q & A

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Thank You

Should you have any queries, please contact: Investor Relations at email: ir@thaioil.co.th Tel: 662-617-8300 Fax: 662-299-0128

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APPENDICES

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Domestic LPG Demand

Thailand LPG Demand LPG Demand by Sector

LPG Demand Highlight

• LPG demand continues

rising momentum on the capped price structure.

• Transportation fuel

switching causing local demand 6M up almost 20%

Outlook 2008

• The delay of government

action on increase of local LPG price will support LPG demand growth further.

Source : Department of Energy Business, Ministry of Energy

2005 2006 2007 2008

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Domestic Gasoline Demand

Thailand Gasoline Demand Gasoline Demand by Type

Source : Department of Energy Business, Ministry of Energy

Gasoline Demand Highlight

• Total gasoline demand

continues dropping heavily causing by high price, NGV promotion and non- promoted LPG switching.

Outlook 2008

• Relatively high gasoline

price will continue depress gasoline demand and support fuel switching to NGV/LPG.

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Domestic JET Demand

Thailand JET Demand JET demand and # of flights

Source : Department of Energy Business, Ministry of Energy

JET Demand Highlight

• Despite some growth

compared with last year, higher fuel surcharge slowdown travel and growth started to taper off.

Outlook 2008

• Relatively high fuel price

will continue to depress travel growth and demand in 2H.

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Domestic Gasoil Demand

Thailand Gasoil Demand B5 Sales

Source : Department of Energy Business, Ministry of Energy

Gasoil Demand Highlight

• Exceptional high gasoil

price has depressed demand, causing overall growth 1H down 2.0%.

Outlook 2008

• Negative impact from high

price will depress demand further, where growth for 2H 2008 is projected to decline ~4%.

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Thailand Fuel Oil Demand

Source : Department of Energy Business, Ministry of Energy

Domestic Fuel Oil Demand

Fuel Oil Demand Highlight

• After a surge in FO demand

in April as NG disruption, FO demand returned to normal trend of negative growth due to more NG supply.

Outlook 2008

• Expect fuel oil demand drop

~ 10%.