Analyst presentation Half Year Results 2015 …...This presentation contains forward looking...
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Transcript of Analyst presentation Half Year Results 2015 …...This presentation contains forward looking...
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This presentation contains forward looking statements concerning the financial condition, results andoperations of The New Zealand Refining Company Limited (hereafter referred to as “Refining NZ”).
Forward looking statements are subject to the risks and uncertainties associated with the refiningenvironment, including price and foreign currency fluctuations, production results, demand for RefiningNZ’s services and other conditions.
Forward looking statements are based on management’s current expectations and assumptions andinvolve known and unknown risks and uncertainties that could cause actual results, performance orevents to differ materially from those expressed or implied in these statements.
Forward looking statements include among other things, statements concerning the potential exposure
Disclaimer
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Forward looking statements include among other things, statements concerning the potential exposureof Refining NZ to market risk and statements expressing management’s expectations, beliefs, estimates,forecasts, projections and assumptions.
Forward looking statements are identified by the use of terms and phrases such as “anticipate”,“believe”, “could”, “estimate”, “expect”, “goals”, “intend”, “may”, “objectives”, “outlook”, “plan”,“probably”, “project”, “risks”, “seek”, “should”, “target”, “will” and similar terms and phrases.
Readers should not place undue reliance on forward looking statements.
In light of these risks, results could differ materially from those stated, implied or inferred from theforward looking statements contained in this announcement.
Each forward looking statement speaks only as of the date of this announcement, 20 August 2015.
ContextResultsStrategic updateLook forward
Overview
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Look forward
H1 14 H1 15
TCRF, rolling 12-month (# per million hours) 5.75 5.00
LTIF, rolling 12-month (# per million hours) 0.96 0.50
Tier 1 process safety incidents (#) 1 1
Releases outside consent (#) 2 0
Two different halves…
Healthand safety
DELIVERINGWORLD CLASS
PERFORMANCE
Environmental
DELIVER AWORLD CLASS
PERFORMANCE
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Throughput (million barrels) 19.9 20.9
Operational cash flow* (NZ$m) (19.1) 129.8
Gross Refinery Margin (US$/barrel) 1.66 9.09
Operational availability 88.4% 95.4%
Net profit/(loss) after tax – Group (NZ$m) (7.0) 65.3
Crude price (US$/barrel) 105 57
Exchange rate (US$) 0.84 0.74
* Operational cash flow pre cap adjustment (H1 2015), fee floor (H1 2014), BAU CAPEX and financing cost.See Appendix 2: non-GAAP reconciliation.
Quality andreliability
BUILD ON
ELEMENTS OF OURCUSTOMERPROMISE
Competitiveness
IMPROVE OUR
Strong first half 2015 gasoline demand growthDriven by US price demand elasticity and a growing China and India middle class
2015 year on year gasoline growthUS + 2.5% 300 kbdChina + 11.0% 260 kbdIndia + 9.8% 60 kbd
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Next Half Year 2016-2017
• Oil co’s turn downdownstream investment
• Margins boosted by closures,delays, strong demand
• 0.64mb/d new capacityoutweighs demand
• China car sales slip3.4% but India up
Weaker 2nd half with positive medium-termAccording to oil industry experts…
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downstream investment
• No new refineries
• Additions to 2020 down by2.8mb/d
• China/India 2015…could leadto prolonged higher margins
3.4% but India up
• New ME capacity to berelieved by Aus, Japan,Taiwan closures
• Asian refining marginsweaken, and runsreduced
Margin at the cap
2014 H2 2015 H1
Refining NZ Margin 8.24 9.09
Typical uplift vs Singapore Complex 3 - 4
Period-specific elements:- RNZ crude vs. Dubai- Margin initiatives- Plant availability- High throughput- Residue de-stocking
1.300.68
--
0.402.38
1.300.75
(0.60)(0.50)
-0.95
Refining NZ margin
5.90
4.27
8.24
9.09
US$/barrel
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2.38 0.95
Total uplift achieved for period 5.90 4.27
Singapore Complex Range 1 - 2
Period-specific:- Low crude price (fuel cost)- Product lag- Gasoline strength
0.600.40
-
2.20-
1.00
Singapore Complex for period 2.34 4.82
Singapore complex margin
2.34
4.82
Highly competitive…
H1 2015
H2 2014
Competitive
GRM(US$/bbl)
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Footnote: 30 is the customers’ approximate crude and product working capital days using Refining NZWACC is the weighted average capital cost of the individual customer1.10 is the approximate per barrel coastal freight cost between Whangarei and the import centres
of Tauranga, Seaview and LyttletonGRM excludes floor, ceiling or shutdown effect
2013
H1 2014
Not competitive
ContextResultsStrategic updateLook forward
Overview
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Look forward
Leveraging core strategic strengthsHigh operational availability, “on-spec” fuels
11* Excluding pass through costs of natural gas and sulphur
Costs under controlSome forex and inflationary pressure
Year on year First half Latest estimate
12See Appendix 1 for non-GAAP reconciliation
Borrowings down $73 million
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Return to dividend
Major Capex
> 40-60% NPAT
Major Capex
> 40-60% NPAT
Major Capex
> 40-60% NPAT
Interim dividend of
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Top quartileNZX 50
Net yield 5.3%
Top quartileNZX 50
Net yield 5.3%
Top quartileNZX 50
Net yield 5.3%
5 centsper share
full imputation creditsGearing
27% vs. 10-20%
Gearing
27% vs. 10-20%
Gearing
27% vs. 10-20%
ContextResultsStrategic updateLook forward
Overview
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Look forward
Growth going forward…Business enhancing initiatives continue in 2015/16
HCUammoniation
2015
US$0.08/bbl
CO2 facility(BOC)
2015
not in GRM
Process unitinitiatives
2015
US$0.04/bbl
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TMH
2016
US$0.90-1.10/bbl
Post TMHinitiatives
(being developed)
2016/17
US$0.15+/bbl
Bigger crudecargoes
2018
US$0.15-0.30/bbl
Morenatural gas
2016 H2
US$0.20-0.25/bbl
TMH to plan
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Progress to date
~40 consultations withTangata Whenua, keystakeholders, public
Studies underway:
Channel design
Progressing crude cargo proposal
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Channel design
Ship simulation
Hydrodynamics
Geomorphology
Ecology
Marine mammals
Recreation
One of a number of channel design options currently being investigated
Good progress on improving organisationalperformance
DIY
Maintenir
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Progress…
All employee share scheme
Strategic Alliancing - Pro-consulting International – Patrick Rottiers
Simulator for operator training
Lean
DIY Refining NZ BDOHoneywell
Revera
ContextResultsStrategic updateLook forward
Overview
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Look forward
Revised profit matrixNPAT and borrowings
2015 2016
Throughput 42 43-44
(Mbbl)
Capex ex TMH 48.5 70-80
($m) + growth
5-15
TMH 60 -
($m)
USD Exch. Rate
Actual H1 0.74 0.74 0.74 0.74 0.74 0.74 0.74
Forecast H2 0.55 0.60 0.65 0.70 0.75 0.80 0.85
Margin
Actual Forecast Full
H1 H2 Year
USD USD USD
44 41 38 35 33 32 30
335 340 344 347 350 353 355
63 59 54 51 48 45 43
308 315 320 325 330 334 337
9.09
9.09
5.49
6.00
2.00
3.00
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NPAT, $m
Borrowings,$m (5c interim div)
The profit matrix is subject to successfulcompletion of the current re-negotiation of thecollective agreement with the EPMU and FirstUnion
Industrial action could lead to a downwardrevision of these figures including a delayedstart-up of TMH
Shutdowns PFU/CDU1 HCU TBS*
- Units
- Timing Complete H1
- Duration ~3 ~2
(weeks)
*Hydrocracker unit top bed skim
83 77 71 66 62 59 55
280 289 297 304 309 315 319
103 95 88 82 77 72 68
252 264 274 282 289 295 301
122 113 104 97 91 86 81
224 238 250 260 269 276 283
142 131 121 113 105 99 93
203 214 227 238 248 257 265
162 149 137 128 120 113 106
183 196 207 217 228 238 247
174 159 147 136 127 119 112
170 185 198 209 218 229 239
42 Production, Mbbl
63 Non Processing Fee Revenue, $m
72 Depreciation, $m
8.03
8.54
9.00
9.09
9.09
6.51
7.02
7.52
8.00
8.91
9.09
9.09
5.00
6.00
7.00
9.09
9.09
4.00
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Appendix IReconciliation of Non-GAAP information
Costs used to measure the delivering of our cost promise represent total cash operating costs
incurred by the Parent Company.
This is reconciled to the financial statements as follows:
H1 2014 H1 2015
Full Yr
2012
Full Yr
2014
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H1 2014 H1 2015 2012 2014
$m $m $m $m
Cash costs market promise (Parent only) 66 78 169 142
Allowance for structural cost increases* - - (5) -
Other operating losses - - 2 1
Consolidation entries 1 1 1 2
Depreciation and disposal costs 34 34 63 71
Total Expenses - per Group financial statements 101 113 230 216
* As described in August 2013 analyst briefing
Appendix 2Reconciliation of Non-GAAP information
Cash generated from operation relates to the Parent Company, prior to adjustments for the cap/floor.
This is reconciled to the financial statements as follows:
H1 2014 H1 2015
$m $m
Cash generated from operations (19.1) 129.8
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Cash generated from operations (19.1) 129.8
Cap/floor payments 31.5 (4.4)
Parent Company cash generated from operations 12.4 125.4
Consolidation entries (0.7) 0.2
Group - cash generated from operations 11.7 125.6
Interest/GST/income tax 8.5 (8.6)
Net cash inflow from operating activities 20.2 117.0
